1
EXHIBIT 2.3
[HALTER FINANCIAL GROUP, INC. LETTERHEAD]
March 15, 1996
Xx. Xxxxxxx Xxxxxxx, President
Xxxxxxx'x Thunder Karts, Inc.
Xxxxxxx 00 Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Re: STOCK PURCHASE AGREEMENT (THE "STOCK PURCHASE AGREEMENT")
DATED JANUARY 16, 1996 BY AND AMONG HALTER FINANCIAL GROUP,
INC., XXXXXXX'X THUNDER KARTS, INC., A LOUISIANA CORPORATION
AND XX. XXXXXXX XXXXXXX
Dear Xxxxx:
In accordance with Section 9.11 of the Stock Purchase Agreement, this
letter agreement amends the Stock Purchase Agreement as follows:
1. The Subordinated Promissory Note set forth on Exhibit 2 has
been amended to read in its entirety as set forth on Exhibit 2 hereto;
2. The Non-competition Agreement set forth on Exhibit 4 of the
Stock Purchase Agreement has been replaced by the Non-competition agreements
set forth on Exhibits 4A and 4B hereto; and
3. The second to the last sentence of Section 4.1 is hereby
amended to read in its entirety as follows:
"Notwithstanding the foregoing, it is expressly acknowledged and agreed that
the Company will pay the Shareholder an aggregate of $1,000 per week for the
period beginning January 1, 1996 until the Closing Date for services to be
rendered to the Company, provided the Shareholder devotes at least 25 hours of
service to the Company per week during said period."
If the foregoing correctly sets forth our understanding, please
execute this letter agreement in the space provided below.
Sincerely,
Xxxxxxx X. Xxxxxx
President
AGREED and ACCEPTED on March 15, 1996:
By: /s/ XXXXXXX XXXXXXX
-------------------------------------------------
Xxxxxxx Xxxxxxx (individually and as
President of Xxxxxxx'x Thunder Karts, Inc.)
2
EXHIBIT 2
EXCEPT AS OTHERWISE PROVIDED HEREIN, THE RIGHTS OF PAYEE (AS HEREINAFTER
DEFINED) TO RECEIVE PAYMENT OF ANY PRINCIPAL OR INTEREST ON THIS SUBORDINATED
PROMISSORY NOTE IS SUBJECT AND SUBORDINATE TO THE PRIOR PAYMENT OF THE
PRINCIPAL OF, (AND PREMIUM, IF ANY) AND THE INTEREST ON, ALL OTHER INDEBTEDNESS
OF MAKER (AS HEREINAFTER DEFINED), NOW OUTSTANDING, WHETHER SECURED OR
UNSECURED, AND ANY DEFERRALS, RENEWALS, EXTENSIONS OF SUCH INDEBTEDNESS OR ANY
DEBENTURES, BONDS, OR NOTES EVIDENCING SUCH INDEBTEDNESS (THE "SENIOR
INDEBTEDNESS"). UPON ANY RECEIVERSHIP, INSOLVENCY, ASSIGNMENT FOR THE BENEFIT
OF CREDITORS, BANKRUPTCY, REORGANIZATION, SALE OF SUBSTANTIALLY ALL OF THE
ASSETS, DISSOLUTION, LIQUIDATION, OR ANY OTHER MARSHALLING OF THE ASSETS AND
LIABILITIES OF MAKER OR IF THIS SUBORDINATED PROMISSORY NOTE IS DECLARED DUE
AND PAYABLE IN ACCORDANCE WITH ITS TERMS, THEN NO AMOUNT SHALL BE PAID BY MAKER
WITH RESPECT TO THE PRINCIPAL AND INTEREST HEREON UNLESS AND UNTIL THE
PRINCIPAL OF, AND INTEREST ON, ALL SENIOR INDEBTEDNESS THEN OUTSTANDING IS PAID
IN FULL.
SUBORDINATED PROMISSORY NOTE
$1,000,000 Dallas, Texas March 15, 1996
FOR VALUE RECEIVED, the undersigned, Xxxxxxx'x Thunder Karts, Inc., a
Louisiana corporation ("Maker"), promises to pay to the order of Xxxxxxx
Xxxxxxx, an individual residing in the state of Louisiana (together with all
subsequent holders of this Note, collectively referred to as "Payee"), the
principal sum of One Million Dollars ($1,000,000), payable as provided herein,
plus accrued interest on the outstanding principal balance as herein specified.
The principal and accrued interest thereon shall be due and payable by
Maker to the Payee in accordance with the schedule set forth on Exhibit A
hereto. All past due interest shall bear interest at the highest rate permitted
by applicable law. Principal and accrued interest under this Note, or any
portion thereof, may be prepaid without penalty. All payments and prepayments
shall be applied first to accrued and unpaid interest, and the balance of any
such payments or prepayments shall be applied to outstanding principal in the
order of maturity.
Notwithstanding anything to the contrary contained herein, no
provisions of this Note shall require the payment or permit the collection of
interest in excess of the maximum rate permitted by applicable law. If any
interest in excess of such maximum rate is herein provided for, or shall be
adjudicated to be so provided, in this Note or otherwise in connection with this
transaction giving rise to the execution hereof, the provisions of this
paragraph shall govern and prevail, and
3
neither Maker nor the sureties, guarantors, successors or assigns of Maker
shall be obligated to pay the excess amount of such interest or any other
excess sum paid for the use, forbearance or detention of sums loaned pursuant
hereto. If for any reason interest in excess of the maximum rate of interest
permitted by applicable law shall be deemed, charged, required or permitted by
a court of competent jurisdiction, any such excess shall be applied as a
payment and reduction of the principal of indebtedness evidenced by this Note;
and, if the principal amount hereof has been paid in full, any remaining excess
shall forthwith be paid to Maker.
This Note is secured by a Security Agreement dated the date hereof
executed by the Pledgors named therein ("Pledgors") in favor of Payee covering
the collateral more fully described on Exhibit B hereto.
Maker, and any endorser or guarantors of this Note and all other
persons who may become liable for all or any part of the obligations
represented by this Note, severally waive presentment for payment, protest,
notice of protest and of nonpayment, notice of intention to accelerate, and
notice of acceleration.
In the event of default by Maker in the payment of any part of the
principal or interest on this Note when due and the continuance thereof for
fifteen (15) days following Maker's and Xxxxxxxx' receipt of written notice of
such default, the entire unpaid balance of principal and accrued interest on
this Note shall, at the option of Payee, become immediately due and payable.
Failure by the holder to exercise any option upon one (1) default will not
constitute a waiver thereof or the waiver of the right to exercise such option
in the event of a subsequent default. If after default this Note is placed in
the hands of an attorney for collection or is collected through judicial
proceedings, Maker shall pay, in addition to the sums referred to above, a
reasonable sum as collection or attorneys' fees and all other costs incurred by
the holder in collection of the unpaid amounts due hereunder.
In addition, in the event that the parent company of Maker, Karts
International Incorporated, successfully completes an underwritten public
offering of its common stock, the entire unpaid balance of principal and
accrued interest on this Note shall, at the option of Payee, become immediately
due and payable.
This Note is made and is performable in Dallas, Dallas County, Texas.
This Note shall be governed by and construed in accordance with the laws of the
State of Texas and the applicable laws of the United States of America.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
15th day of March, 1996.
XXXXXXX'X THUNDER KARTS, INC.
By: /s/ X. XXXX XXXXXXXX
--------------------------------
X. Xxxx Xxxxxxxx, President
2
4
EXHIBIT A
PAYMENT SCHEDULE
The following annualized amounts shall be paid in equal quarterly
payments during the years set forth below beginning on June 15, 1996:
Principal Total Amount
Year Interest Rate (%) Interest Payable Payable Payable
---- ----------------- ---------------- --------- ------------
1996-1997 8 $ 80,00 $ 0 $ 80,000
1997-1998 9 90,000 0 90,000
1998-1999 10 100,000 0 100,000
1999-2000 11 110,000 250,000 360,000
2000-2001 12 90,000 250,000 340,000
2001-2002 13 65,000 250,000 315,000
2002-2003 14 35,000 250,000 285,000
5
EXHIBIT B
COLLATERAL
Number of Shares Market Price Aggregate
Company of Common Stock Per Share Market Value
------- ---------------- ------------ -------------
Hunter Resources, Inc. 1,000,000 $ .50 $ 500,000.00
NewCare Health Corporation 196,464 2.545 500,000.88
TOTAL $1,000,000.88
6
EXHIBIT 4A
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (the "Agreement") is made and entered
into as of the 15th day of March, 1996, by and between Karts International
Incorporated. a Nevada corporation (the "Company") and Xxxxxxx Xxxxxxx
("Xxxxxxx"), an individual residing in the state of Louisiana.
WHEREAS, Xxxxxxx'x Thunder Karts, Inc. ("BTK") is a Louisiana
corporation engaged in the business of designing, manufacturing, marketing and
distributing go karts;
WHEREAS, Xxxxxxx, the sole shareholder of BTK, has entered into that
Stock Purchase Agreement dated the date hereof by and among Halter Financial
Group, Inc., BTK and Xxxxxxx whereby Halter Financial Group, Inc. will cause
the Company to acquire all of the issued and outstanding capital stock of BTK
from Xxxxxxx; and
WHEREAS, as a condition to closing the transactions contemplated by
such Stock Purchase Agreement, Xxxxxxx is obligated to enter into this
Agreement.
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereto agree as follows:
1. COVENANT NOT TO COMPETE: CONFIDENTIALITY
(a) Covenant Not to Compete. Except as provided herein and in that
Licensing Agreement dated the date hereof by and between Xxxxxxx and
the Company, during a period of five years from the date hereof (the
"Term"), Xxxxxxx shall not, within any jurisdiction in which the
Company, BTK or any subsidiary or affiliate thereof (collectively
referred to herein as the "Company") is duly qualified to do business
or within any marketing area in which the Company is doing a
substantial amount of business, directly or indirectly own, manage,
operate, control, be employed by or participate in the ownership,
management, operation or control of, or be connected in any manner
with, any business of the type and character engaged in and
competitive with that conducted by the Company. For these purposes,
Xxxxxxx'x ownership of securities of a public company not in excess of
one percent of any class of such securities shall not be considered to
be in competition with the Company. This Section 1 shall not apply to
Xx. Xxxxxxx'x activities in the State of Louisiana, which shall be
governed by that Non-competition Agreement (Louisiana Only) dated the
date hereof by and between the parties hereto and by the laws of the
State of Louisiana.
In addition, during the same Term, Xxxxxxx agrees to refrain
from interfering with the employment relationship between the Company
and its other employees by soliciting any of such individuals to
participate in other business ventures and agrees to refrain from
soliciting business from any client or prospective client of the
Company for Xxxxxxx or for any entity in which Xxxxxxx has an
interest.
7
It is the desire and intent of the parties that the provisions
of this Section 1 shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, to the extent that the
covenants hereunder shall be adjudicated to be invalid or
unenforceable in any one such jurisdiction, this Section 1 shall be
deemed amended to delete therefrom or reform the portion thus
adjudicated to be invalid or unenforceable, such deletion or
reformation to apply only with respect to the operation of this
Section 1 in the particular jurisdiction in which such adjudication is
made. Moreover, each provision of this Agreement is intended to be
severable; and in the event that any one or more of the provisions
contained in this Agreement shall for any reason be adjudicated to be
invalid or unenforceable in any jurisdiction, the same shall not
affect the validity or enforceability of any other provisions of this
Agreement in that jurisdiction, but this Agreement shall be construed
in such jurisdiction as if such invalid or unenforceable provision had
never been contained therein.
(b) Confidentiality. Xxxxxxx agrees that he will not divulge to
anyone (other than the Company or any persons employed or designated
by the Company) any knowledge or information of any type whatsoever of
a confidential nature relating to the business of the Company (unless
readily ascertainable from public or published information),
including, without limitation, discoveries, ideas, designs,
specifications, drawings, techniques, models, data, programs,
documentation, processes, know-how, customer lists, marketing plans,
and financial and technical information. Xxxxxxx further agrees not to
disclose, publish or make use of any such knowledge or information of
a confidential nature without the prior written consent of the
Company. Notwithstanding the foregoing, Xxxxxxx may disclose to third
parties certain types of intellectual property that he owns subject to
the terms and conditions of that Licensing Agreement dated the date
hereof by and between Xxxxxxx and the Company.
2. BREACH BY XXXXXXX. In the event of the breach by Xxxxxxx of
the terms and conditions of this Agreement to be performed by Xxxxxxx, or in
the event Xxxxxxx performs services for any person, firm or corporation engaged
in a competing line of business with the Company, the Company shall be
entitled, if it so elects, to institute and prosecute proceedings in any court
of competent jurisdiction, either in law or in equity, to obtain damages for
any breach of this Agreement, or to enforce the specific performance thereof by
Xxxxxxx, or to enjoin Xxxxxxx from performing services for any such other
person, firm or corporation.
3. ASSIGNMENT. The rights and obligations of the Company
hereunder shall be binding upon and run in favor of the successors and assigns
of the Company. In the event of any attempted assignment or transfer of rights
hereunder contrary to the provisions hereof, the Company shall have no further
liability for payments hereunder.
2
8
4. CAPTIONS. This Agreement contains the entire agreement between
the parties. It may not be changed orally, but only by agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought, and consented to in writing by the
Company. Paragraph headings are for convenience of reference only and shall not
be considered a part of this Agreement.
5. SEPARATE COUNSEL. Xxxxxxx hereby expressly acknowledges that
he has been advised that he has not been represented by Halter Financial Group,
Inc.'s or the Company's attorneys in this matter and has been advised and urged
to seek separate legal counsel for advice in this matter.
6. LAW GOVERNING. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, The Company has by its appropriate officer signed
this Agreement, and Xxxxxxx has signed this Agreement, on and as of the date
first above written.
KARTS INTERNATIONAL INCORPORATED
By:
----------------------------------------
Name:
----------------------------------
Title:
----------------------------------
--------------------------------------------
Xxxxxxx Xxxxxxx, individually
3
9
EXHIBIT 4B
NON-COMPETITION AGREEMENT
(LOUISIANA ONLY)
THIS NON-COMPETITION AGREEMENT (the "Agreement") is made and entered
into as of the 15th day of March, 1996, by and between Karts International
Incorporated, a Nevada corporation (the "Company") and Xxxxxxx Xxxxxxx
("Xxxxxxx"), an individual residing in the state of Louisiana.
WHEREAS, Xxxxxxx'x Thunder Karts, Inc. ("BTK") is a Louisiana
corporation engaged in the business of designing, manufacturing, marketing and
distributing go karts;
WHEREAS, Xxxxxxx, the sole shareholder of BTK, has entered into that
Stock Purchase Agreement dated the date hereof by and among Halter Financial
Group, Inc., BTK and Xxxxxxx whereby Halter Financial Group, Inc. will cause
the Company to acquire all of the issued and outstanding capital stock of BTK
from Xxxxxxx;
WHEREAS, the transactions contemplated by the Stock Purchase Agreement
include the acquisition of the goodwill of BTK; and
WHEREAS, as a condition to closing the transactions contemplated by
such Stock Purchase Agreement, Xxxxxxx is obligated to enter into this
Agreement.
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereto agree as follows:
1. COVENANT NOT TO COMPETE. Except as provided in that Licensing
Agreement dated the date hereof by and between Xxxxxxx and the Company, during
a period of two years from the date hereof (the "Term"), Xxxxxxx shall not,
within the Parishes located in the State of Louisiana listed on Annex A hereto
(the "Area"), so long as the Company engages in or carries on any like business
in the Area, directly or indirectly own, manage, operate, control, be employed
by or participate in the ownership, management, operation or control of, or be
connected in any manner with, any business of the type and character engaged in
and competitive with that conducted by the Company. For these purposes,
Xxxxxxx'x ownership of securities of a public company not in excess of one
percent of any class of such securities shall not be considered to be in
competition with the Company. Xxxxxxx hereby acknowledges and represents that
the Company engages in business in all of the Parishes listed on Annex A
hereto.
In addition, during the same Term, Xxxxxxx agrees to refrain from
interfering with the employment relationship between the Company and its other
employees by soliciting any of such individuals to participate in other
business ventures and agrees to refrain from soliciting business from any
client or prospective client of the Company for Xxxxxxx or for any entity in
which Xxxxxxx has an interest.
10
The parties acknowledge that Xxxxxxx'x business in other areas and the
benefits to the Company derived pursuant to the Agreement are such that the
restrictions appearing in this Section 1 will not impair Xx. Xxxxxxx'x ability
to earn a livelihood.
It is the desire and intent of the parties that the provisions of this
Section 1 shall be enforced to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, to the extent that the covenants hereunder shall be
adjudicated to be invalid or unenforceable in any one such jurisdiction, this
Section 1 shall be deemed amended to delete therefrom or reform the portion
thus adjudicated to be invalid or unenforceable, such deletion or reformation
to apply only with respect to the operation of this Section I in the particular
jurisdiction in which such adjudication is made. Moreover, each provision of
this Agreement is intended to be severable; and in the event that any one or
more of the provisions contained in this Agreement shall for any reason be
adjudicated to be invalid or unenforceable in any jurisdiction, the same shall
not affect the validity or enforceability of any other provisions of this
Agreement in that jurisdiction, but this Agreement shall be construed in such
jurisdiction as if such invalid or unenforceable provision had never been
contained therein.
2. BREACH BY XXXXXXX. In the event of the breach by Xxxxxxx of
the terms and conditions of this Agreement to be performed by Xxxxxxx, or in
the event Xxxxxxx performs services for any person, firm or corporation engaged
in a competing line of business with the Company, the Company shall be
entitled, if it so elects, to institute and prosecute proceedings in any court
of competent jurisdiction, either in law or in equity, to obtain damages for
any breach of this Agreement, or to enforce the specific performance thereof by
Xxxxxxx, or to enjoin Xxxxxxx from performing services for any such other
person, firm or corporation.
3. ASSIGNMENT. The rights and obligations of the Company
hereunder shall be binding upon and run in favor of the successors and assigns
of the Company. In the event of any attempted assignment or transfer of rights
hereunder contrary to the provisions hereof, the Company shall have no further
liability for payments hereunder.
4. CAPTIONS. This Agreement contains the entire agreement between
the parties. It may not be changed orally, but only by agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought, and consented to in writing by the
Company. Paragraph headings are for convenience of reference only and shall not
be considered a part of this Agreement.
5. SEPARATE COUNSEL. Xxxxxxx hereby expressly acknowledges that
he has been advised that he has not been represented by Halter Financial Group,
Inc.'s or the Company's attorneys in this matter and has been advised and urged
to seek separate legal counsel for advice in this matter.
2
11
6. LAW GOVERNING. This Agreement shall be governed by and
construed in accordance with the laws of the State of Louisiana.
IN WITNESS WHEREOF. The Company, has by its appropriate officer signed this
Agreement, and Xxxxxxx has signed this Agreement, on and as of the date first
above written.
KARTS INTERNATIONAL INCORPORATED
By:
----------------------------------------
Name:
----------------------------------
Title:
----------------------------------
--------------------------------------------
Xxxxxxx Xxxxxxx, individually
3
