[EXHIBIT 2.1]
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement) dated as of April
____, 2004 is by and among (i) Giant Motorsports, Inc., a Nevada
corporation ("Buyer"), (ii) King's Motorsports, Inc. d/b/a
Chicago Cycle, an Illinois corporation ("Seller"), (iii) Xx.
Xxxxx Xxxxxxx and (iv) Xx. Xxxxx Xxxxx (collectively, the
"Shareholders").
RECITALS
A. Seller owns and operates a retail motorcycle, all
terrain vehicle and off-road vehicle dealership at 0000 X.
Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx (the "Business").
B. Seller desires to sell and transfer to, and Buyer
desires to purchase and assume from Seller, substantially all of
the assets of the Business and specifically identified
liabilities and obligations of the Business, on the terms and
subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises
hereinafter set forth and other good and valuable consideration,
the parties hereto hereby agree as follows:
ARTICLE 1
ASSETS SUBJECT TO THIS AGREEMENT
--------------------------------
1.1 Purchase and Sale of Assets
---------------------------
Upon the terms and subject to the conditions of this
Agreement, Seller shall sell, assign, transfer, deliver and
convey to Buyer, and Buyer shall purchase and acquire from
Seller, at the Closing (as defined in Section 7.1 hereof), all
rights, properties and assets, wherever situated, owned by Seller
in connection with the Business (collectively, the "Acquired
Assets"), but expressly excluding therefrom the Excluded Assets
(as defined in Section 1.2 hereof). The Acquired Assets shall
include, without limitation, the following:
1.1.1 Tangible Personal Property
--------------------------
All machinery, equipment, attachments, tools,
supplies, tooling, furniture, fixtures, parts, accessories,
telephones, alarms, computers, office furniture and
equipment and all other tangible assets and personal
property of every kind and nature owned by Seller and used
in the Business as of the Closing, including, without
limitation, as set forth on Schedule 1.1.1 (the "Tangible
Personal Property").
1.1.2 Inventory
---------
All new and used inventory used in the Business at
the Closing (the "Inventory"). The parties acknowledge and
agree that Buyer shall purchase and/or obtain the rights to
the motorcycles, all terrain vehicles and off-road vehicles
separate and apart from this Agreement.
1.1.3 Assumed Contract
----------------
Except as otherwise provided in Section 2.2 hereof,
all rights and incidents of interest of, and benefits
accruing to, Seller in and to the Contracts (as defined in
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Section 4.1.4) listed or described on Schedule 1.1.3 hereto
(the "Assumed Contracts").
1.1.4 Records
-------
All books, files, documents, customers lists,
customers' records, supplier lists, supplier records,
promotional and advertising material, files of promotional
literature, technical information, correspondence, artwork,
operating records, other business information relating to
the Business which has been reduced to writing or other
records of Seller (collectively, "Records").
1.1.5 Going Concern Value
-------------------
The Business carried on and conducted by Seller as a
going concern, including any and all goodwill and similar
intangibles associated therewith.
1.1.6 Intangible Property Rights
--------------------------
All municipal, state and federal franchises,
permits, licenses, agreements, waivers, authorizations and
any and all other intangible property rights held or used in
connection with, or required for, the Business to the extent
transferable (the "Intangible Personal Property").
1.1.7 Intellectual Property
---------------------
Any shop rights or other rights to inventions,
formulas and proprietary software, patent, patent
applications, trade secrets, service marks, trademarks,
domain names, copyrights and trade names owned, licensed,
used or applied for by Seller and used exclusively in the
Business, including, without limitation, the items listed on
Schedule 1.1.7 hereto (collectively, the "Intellectual
Property").
1.1.8 Telephone and Facsimile Numbers
-------------------------------
All of Seller's right, title and interest in all
telephone and facsimile numbers and e-mail addresses used in
connection with the Business.
1.1.9 Warranty Claims
---------------
All rights under or pursuant to all warranties,
representations and guarantees made by suppliers,
manufacturers, contractors and other third parties in
connection with the operation of the Business and affecting
any of the Acquired Assets, in each case, only to the extent
transferable.
1.1.10 Scheduled Items
---------------
All of the items listed on Schedule 1.1.10.
1.2 Excluded Assets
---------------
Notwithstanding anything to the contrary contained in
this Agreement, only the following assets (collectively, the
"Excluded Assets") shall be retained by Seller and shall not be
included in the Acquired Assets sold, transferred, assigned,
conveyed and delivered to Buyer:
1.2.1 Cash
----
All cash and cash equivalents of Seller or relating
to the conduct of the Business outstanding as of the
Closing.
1.2.2 Accounts Receivable
-------------------
All accounts and notes receivable of Seller or
relating to the conduct of the Business outstanding as of
the Closing.
1.2.3 Tax Refunds
-----------
Any and all tax refunds associated with the Business
owed for periods prior to the Closing.
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1.2.4 Dealer Payments
---------------
Any and all dealer payments, holdbacks, retail
bonuses or like payments owed in connection with the
Business for periods prior to Closing.
1.2.5 Automobile Inventory
--------------------
The automobiles listed on Schedule 1.2.5.
1.2.6 Scheduled Items
---------------
All of the items listed on Schedule 1.2.6.
ARTICLE 2
ASSUMED LIABILITIES AND LIABILITIES NOT ASSUMED
-----------------------------------------------
2.1 Assumed Liabilities
-------------------
Upon the terms and subject to the conditions of this
Agreement, Buyer shall assume as of the Closing and thereafter
shall promptly pay, perform and fully satisfy when due only the
liabilities listed in this Section 2.1 (all such assumed
liabilities and obligations are hereinafter collectively referred
to as the "Assumed Liabilities"). The Assumed Liabilities shall
consist only of:
2.1.1 Assumed Contracts
-----------------
Those performance obligations of Seller arising
after the Closing Date to complete the services pursuant to
the Assumed Contracts listed on Schedule 1.1.3.
2.1.2 Post Closing Obligations
------------------------
Any and all obligations, payments or other
liabilities incurred by Buyer or which are associated with
the Acquired Assets and/or the Assumed Liabilities, which
arise after the Closing.
2.1.3 Floor Plan Financing. Subject to the receipt of
--------------------
Manufacturer Approvals (as defined in the Management Agreement),
the floor plan financing of Seller.
2.2 Liabilities Not Assumed
-----------------------
Except as set forth in Section 2.1 hereof, Buyer shall
have no responsibility for and shall not assume or be liable for
any liabilities or obligations of Seller whatsoever, whether
fixed, contingent or otherwise, and whether known or unknown
(collectively, "Liabilities Not Assumed"). Without in any
manner limiting the foregoing, except for liabilities expressly
assumed by Buyer in Section 2.1 hereof, the Liabilities Not
Assumed shall include the following:
(i) Any liabilities for federal, state or local property,
income, sales, use, franchise, payroll or any other tax or
assessment levied, imposed or incurred in connection with the
Business prior to the Closing, and any taxes associated with the
sale, transfer, delivery and conveyance of the Acquired Assets
pursuant to this Agreement;
(ii) Any liability or obligation associated with the employees or
agents of Seller incurred or arising from events occurring prior
to the Closing, including the payment of wages, any payment under
any employee benefit plan of Seller or any COBRA obligations to
Seller's employees;
(iii) Any liability or obligation arising out of the
violation of any federal, state or local statute, regulation,
rule, ordinance or other applicable law incurred or arising from
events occurring prior to the Closing; or
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(iv) Any action, suit or proceeding brought against Seller, or
its employees or agents, in connection with the Business that
were bought prior to the Closing.
ARTICLE 3
CONSIDERATION
-------------
3.1 Purchase Price
--------------
In full consideration of the sale, assignment transfer
and conveyance of the Acquired Assets and the other undertakings
of Seller in this Agreement, Buyer shall at the Closing (a)
assume, pay and perform the Assumed Liabilities, and (b) pay to
Seller an aggregate amount of Two Million Nine Hundred Twenty-
Five Thousand Dollars ($2,925,000.00) (the "Purchase Price")
payable as follows:
(i) One Million Two Hundred Fifty Thousand Dollars
($1,250,000.00) by cash or otherwise immediately available funds
at the Closing (less the $50,000 deposit previously paid by
Buyer); and
(ii) The balance of One Million Six Hundred Seventy-Five Thousand
Dollars ($1,675,000.00) pursuant to a secured promissory note, a
copy of which is attached hereto as Exhibit A and incorporated by
reference herein (the "Note").
3.2 Allocation of Purchase Price
----------------------------
The Purchase Price represents the amount agreed upon by
the parties to be the value of the Acquired Assets and the
Assumed Liabilities, and shall be allocated among the Acquired
Assets and Assumed Liabilities in a manner consistent with
Section 1060 of the Internal Revenue Code of 1986, as amended.
Each of the parties agrees that they will exchange and review
their respective I.R.S. Forms 8594 "Asset Acquisition
Statements" before they file them with the Internal Revenue
Service.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
------------------------------
4.1 Representations and Warranties of Seller and the
Shareholders
------------------------------------------------------
Seller and the Shareholders hereby jointly and severally
represent and warrant to Buyer as of the date of this Agreement
and as of the Closing that:
4.1.1 Power and Authority
-------------------
Seller is a corporation duly organized, validly
existing and in good standing under the laws of State of
Illinois and has the corporate power and authority to own,
operate, lease and use its assets and properties and the
corporate power and authority to carry on its business as
presently being conducted. Seller is duly qualified to do
business in each state in which it is required by law to be
so qualified.
4.1.2 Validity of Agreements
----------------------
This Agreement constitutes the legal, valid and
binding obligations of Seller, and is enforceable against
Seller in accordance with its terms. Seller has the
corporate power and authority to enter into this Agreement
and to undertake and perform fully the transactions
contemplated hereby or thereby. All necessary corporate
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action has been taken by and on behalf of Seller with
respect to the authorization, execution, delivery and
performance of this Agreement.
4.1.3 Acquired Assets
---------------
Except as set forth on Schedule 4.1.3, Seller shall
has good and marketable title to all of the Acquired Assets,
whether tangible or intangible, that it purports to own,
free and clear of any and all security interests,
hypothecations, liens, encumbrances, mortgages, pledges,
equities, charges, assessments, easements, covenants,
restrictions, reservations, defects in title, encroachments,
condemnation proceedings and other burdens or conflicting
interests ("Liens"). Seller's use of the Intangible
Personal Property and Intellectual Property does not and has
not infringed on the rights of any other person or entity.
4.1.4 No Conflicts
------------
Except as set forth on Schedule 4.1.4, the execution
and delivery and the performance by Seller of this
Agreement, and the consummation by Seller of the
transactions contemplated by this Agreement will not (a)
violate or conflict with any charter documents of Seller;
(b) result in the violation of or breach of or conflict with
any laws of any federal, state, local or foreign
governmental or any subdivision, agency, instrumentality,
authority, commission, board or bureau thereof or any
federal, state or local court (individually a "Governmental
Authority") applicable to Seller, any of the Acquired Assets
or the Business; (c) violate, conflict with, result in a
breach of, constitute a default under, or permit the
acceleration of any obligation under any note, debt
instrument, indenture, mortgage, lease, license, purchase or
sales order, sales commitment, security agreement or other
agreement commitment, undertaking, arrangement or contract,
whether written or oral, express or implied (collectively,
"Contracts"), to which Seller is a party or to or by which
the Business or any of the Acquired Assets may be subject or
bound; or (d) result in the creation or imposition in favor
of any person of any Liens upon any of the Acquired Assets.
4.1.5 Contracts
---------
Except as set forth on Schedule 4.1.4, all of the
Assumed Contracts and instruments set forth on Schedule
1.1.3 (or required to be set forth therein) can be assigned
to Buyer without notice to or consent of any other person
and are in full force and effect. With respect to each such
contract, (i) there exists no default or breach thereunder
by any party thereto; and (ii) there exists no event,
occurrence, condition or act which, with the giving of
notice, the lapse of time, or both, or the happening of any
other event or condition, would become a default by Seller
or, to the best of Seller's or the Shareholders' knowledge,
any other party thereto.
4.1.6 Taxes
-----
Seller and the Shareholders have duly and timely
filed all tax returns required to be filed by any of them
and have all taxes due or claimed to be due by any
Governmental Authority. There are no pending tax
examinations or tax claims asserted against Seller and/or
the Shareholders and there is no basis for any such claims.
4.1.7 Legal Matters
-------------
Except as set forth on Schedule 4.1.7, there are no
legal or administrative proceedings of any nature pending
or, to the best of Seller's or the Shareholders' knowledge,
threatened against or affecting Seller, and Seller is not in
default of any judgment, writ, injunction, or order of any
court or governmental agency. Seller has not received any
notice from any governmental entity asserting a violation by
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Seller of, or ordering Seller to comply with any laws,
regulations, or governmental pronouncements of any type, and
there are not pending any claims or investigations involving
asserted violations thereof. To the best of Seller's or the
Shareholder's knowledge, Seller has duly complied with all
statutes, regulations and governmental pronouncements of all
types and has acquired all licenses and permits required for
the operation of the Business.
4.1.8 Environmental Matters
---------------------
To the best of Seller's knowledge, Seller has
obtained all material permits, licenses and other
authorizations that are required to be obtained by Seller
for the operation of the Business under laws relative to the
environment, which the failure to so have obtained would
have caused a material adverse effect on the Business. To
the best of Seller's knowledge, Seller has handled, stored,
transported and disposed of its wastes, in compliance with
all such laws. To the best of Seller's knowledge, Seller
has complied with all terms and conditions of all such
required permits, licenses and authorizations, which the
failure to so have complied would have caused a material
adverse effect on the Business. To the Seller's of the
Shareholders knowledge, Seller has not received notice of
any claim, action, proceeding or investigation, relating to
the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, handling, discharge, or
release into the environment, of any pollutant, contaminant,
or hazardous or toxic material or waste.
4.1.9 Brokers' Fees
-------------
No person or entity has or, immediately following
the consummation of the transactions contemplated by this
Agreement will have, as a result of any act or omission of
Seller, any right, interest or valid claim against Seller or
Buyer for any commission, fee or other compensation as a
finder or broker in connection with the transactions
contemplated by this Agreement.
4.2 Representations and Warranties of Buyer
---------------------------------------
Buyer represents and warrants to Seller and the
Shareholders as follows:
4.2.1 Organization, Power and Authority
---------------------------------
Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Nevada and has the corporate power and authority to own,
operate, lease and use its assets and properties and the
corporate power and authority to carry on its business as
presently being conducted.
4.2.2 Validity of Agreements
----------------------
This Agreement constitutes the legal, valid and
binding obligations of Buyer, and are enforceable against
Buyer in accordance with its terms. Buyer has the corporate
power and authority to enter into this Agreement and to
undertake and perform fully the transactions contemplated
hereby or thereby. All necessary corporate action has been
taken by and on behalf of Buyer with respect to the
authorization, execution, delivery and performance of this
Agreement.
4.2.3 Brokers' Fees
-------------
No person or entity has or, immediately following
the consummation of the transactions contemplated by this
Agreement, will have, as a result of any act or omission of
Buyer, any right interest or valid claim against Buyer or
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Seller for any commission, fee or other compensation as a
finder or broker in connection with the transactions
contemplated by this Agreement.
4.2.4 No Conflicts
------------
Neither the execution and delivery nor the
performance by Buyer of this Agreement will (a) violate or
conflict with any charter documents of Buyer; (b) result in
the violation of or breach of or conflict with any laws of
any Governmental Authority applicable to Buyer.
ARTICLE 5
COVENANTS OF SELLER
-------------------
Unless Buyer otherwise agrees in writing, Seller and the
Shareholders covenant to Buyer as follows:
5.1 Access
------
Seller hereby grants to Buyer and its agents access to
the "deal jackets" and to all personnel, assets, Records and
documents if available, of Seller and shall furnish such
financial and operating information as Buyer reasonably may
request.
5.2 Transfer Taxes
--------------
Seller shall pay all sales, use or other taxes incurred
as a result of the sale of the Acquired Assets or the assignment
of the Assigned Contracts hereunder.
5.3 Operation of the Business
-------------------------
From the date of this Agreement until the Closing of the
transactions contemplated herein, Seller shall, and the
Shareholders shall cause Seller to, operate the Business in the
ordinary course and in accordance with past practice.
5.4 Tax Certificate
---------------
After the Closing, Seller shall obtain and deliver to
Buyer as soon as practicable a receipt of a certificate from the
Illinois Department of Taxation indicating Seller has paid all
sales taxes for the period through the date of Closing. As soon
as practicable after the Closing, Seller shall file a "Notice of
Sale or Purchase of Business Assets" with the Illinois Department
of Revenue and shall deliver to Buyer any correspondence or
report received from the Illinois Department of Revenue following
such filing.
ARTICLE 6
COVENANTS OF BUYER
------------------
Unless Seller otherwise agrees in writing, Buyer covenants
to Seller as follows:
6.1 Books and Records. Buyer shall grant Seller and the
-----------------
Shareholders reasonable access to the books and records of the
Business to enable the Seller and the Shareholders to prepare and
file any tax returns or for any legitimate business purpose.
ARTICLE 7
CONDITIONS TO CLOSING
---------------------
7.1 Obligations of Buyer
--------------------
Any obligations of Buyer to consummate this Agreement is
subject to and conditioned upon the following:
7.1.1 Employment
----------
As of Closing, Seller shall have terminated all of
its employees.
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7.1.2 Xxxx of Sale
------------
Buyer's receipt of a Xxxx of Sale in the form
attached hereto as Exhibit B, duly executed by Seller.
7.1.3 Assignment of Contracts
-----------------------
Buyer's receipt of an Assignment and Assumption
Agreement in the form attached hereto as Exhibit C (the
"Assignment and Assumption Agreement"), duly executed by
Seller.
7.1.4 Management Agreement
--------------------
Buyer's receipt of the Management Agreement in the
form attached hereto as Exhibit D (the "Management
Agreement"), duly executed by Seller.
7.1.5 Lease
-----
Buyer's receipt of the Lease in the form attached
hereto as Exhibit E (the "Lease"), duly executed by Sellers.
7.1.6 Officer's Certificate
---------------------
Buyer's receipt of a certificate from an officer of
Seller which certifies that joint resolutions of the Board
of Directors and the Shareholders of Seller, which are
attached thereto and which authorize execution and delivery
of this Agreement by Seller and consummation of the
transactions contemplated hereby by Seller, are true and
correct and which certifies the incumbency of the officers
who executed this Agreement.
7.2 Obligations of Seller
---------------------
Any obligations of Seller to consummate this Agreement is
subject to and conditioned upon the following:
7.2.1 Employment Agreement
--------------------
The receipt by Xxxxx Xxxxx of the Employment
Agreement attached hereto as Exhibit F, duly executed by
Buyer.
7.2.2 Assumption of Contracts
-----------------------
Seller's receipt of the Assignment and Assumption
Agreement, duly executed by Buyer.
7.2.3 Promissory Note
---------------
Seller's receipt of the Note, duly executed by
Buyer.
7.2.4 Lease
-----
Seller's receipt of the Lease, duly executed by
Buyer.
7.2.5 Guaranty. Seller's receipt of the Guaranty duly
--------
executed by Buyer, Xxxxxxx Xxxxx and Xxxxxxx Xxxxx.
7.2.6 Commercial Security Agreement. Seller's receipt
-----------------------------
of the Commercial Security Agreement duly executed by Buyer and
Chicago Cycle, Inc., a Nevada corporation in the form attached
hereto as Exhibit G.
7.2.7 Cash Purchase Price
-------------------
Seller's receipt of the cash portion of the Purchase
Price (less the $50,000 deposit already paid by Buyer).
7.2.8 Management Agreement
--------------------
Seller's receipt of the Management Agreement duly
executed by Buyer.
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7.2.9 Non-Competition Agreement
-------------------------
Xxxxx Xxxxxxx'x receipt of the Non-Competition
Agreement attached hereto as Exhibit F, duly executed by
Buyer (the "Non-Competition Agreement").
7.2.10 Officer's Certificate
---------------------
Seller's receipt of a certificate from an officer of
Buyer which certifies that resolutions of the Board of
Directors of Buyer, which are attached thereto and which
authorize execution and delivery of this Agreement by Buyer
and consummation of the transactions contemplated hereby by
Buyer, are true and correct and which certifies the
incumbency of the officers who executed this Agreement.
ARTICLE 8
CLOSING
-------
8.1 The Closing
-----------
The Closing of the transactions contemplated by this
Agreement shall occur on April __, 2004 at the offices of Xxxxxx
X. Xxxxxxxxx, Esq., 000 Xxxxxx Xxxx Xxxxx 000, Xxxxxxxxxx, XX
00000 or at such other time, date or place as the parties may
agree (the "Closing" or "Closing Date"). The Closing of the
transactions contemplated by this Agreement shall be deemed to
occur at 5:00 p.m. EST on the Closing Date.
8.2 Closing Deliveries by Seller
----------------------------
At the Closing, Seller shall deliver to Buyer the closing
documents referred to in Section 7.1.
8.3 Closing Deliveries by Buyer
---------------------------
At the Closing, Buyer shall deliver to Seller the cash
portion of the Purchase Price and the closing documents referred
to in Section 7.2.
ARTICLE 9
POST-CLOSING COVENANTS
----------------------
9.1 Further Assurances
------------------
After the Closing: (a) Seller shall from time to time, at
the request of Buyer and without further cost or expense to
Seller, prepare, execute and deliver or cause to be prepared,
executed and delivered, to Buyer such other instruments of
conveyance and transfer and take such other action as Buyer may
reasonably request so as more effectively to sell, transfer,
assign and deliver and vest in Buyer title to and possession of
the Acquired Assets as provided in this Agreement or otherwise to
consummate the transactions contemplated by this Agreement, and
(b) Buyer shall from time to time, at the request of Seller and
without further cost or expense to Buyer, prepare, execute and
deliver to Seller such other instruments of assumption and take
such other action as Seller may reasonably request so as more
effectively to assume the Assumed Liabilities or otherwise to
consummate the transactions contemplated by this Agreement.
Buyer shall deliver to Seller any Excluded Assets that Buyer may
receive or obtain possession of after the Closing.
9.2 Delivery of Property After Closing
----------------------------------
From and after the Closing, (a) Buyer shall transfer and
deliver to Seller, promptly after Buyer's receipt thereof, any
property that Buyer may receive that belongs to Seller, and (b)
Seller shall transfer and deliver to Buyer, promptly after
Seller's receipt thereof, any property that Seller may receive
that belongs to Buyer.
9.3 Survival of Representations, Warranties and Covenants
-----------------------------------------------------
The representations and warranties of Seller, the
Shareholders and Buyer, as the case may be, made in Article IV
hereof shall survive the date hereof and remain in effect for
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eighteen months (18) thereafter. The covenants and agreements
contained in this Agreement shall survive the Closing and remain
in effect indefinitely (unless a shorter period is specified
therein).
9.4 Indemnity
---------
(a) Seller and the Shareholders, jointly and
severally, shall indemnify and hold Buyer harmless from and
against any and all loss, cost, damage, expense and liability
(including, without limitation, reasonable attorney's fees) which
Buyer may suffer or incur in whole or in part by reason of any
breach of this Agreement, including, without limitation, any
breach of the representations and warranties made by Seller
and/or the Shareholders (collectively "Adverse Consequences").
Buyer (and its assignee, if applicable) is expressly permitted to
set off and apply any and all amounts due or to become due under
the Note against Adverse Consequences if not cured with in the
time period provided in (b) below. Buyer shall indemnify and
hold Seller harmless from and against any and all loss, cost,
damage, expense and liability (including, without limitation,
reasonable attorney's fees) which Seller or the Shareholders may
suffer or incur in whole or in part by reason of the breach of
this Agreement, including, without limitation, any breach of the
representations and warranties made by Buyer.
(b) Any breach of this Agreement shall not be deemed
to occur until the allegedly breaching party has received written
notice describing the breach from the other party and has failed
to cure the breach within ten (10) business days of the receipt
of such notice (if such breach is curable).
9.5 Pre-Closing Warranty Contracts
------------------------------
From and after the Closing, Buyer shall service the pre
closing service warranty contracts (the "Pre Closing Service
Contracts") set forth on Schedule 9.5, in accordance with their
respective terms.
9.6 Release of Personal Guarantees. From and after the Closing,
------------------------------
Buyer shall use commercially reasonably efforts to obtain
releases of the personal guarantees made by the Shareholders in
connection with the floor plan financing of the Business.
ARTICLE 10
CONFIDENTIALITY AND NON-COMPETE
-------------------------------
10.1 Confidential Information
------------------------
Seller and the Shareholders acknowledge that they have
had access to information of the Business which may include
Confidential Information. For purposes hereof, the term
"Confidential Information" shall include, but not by way of
limitation, trade secrets concerning the Business and the
Acquired Assets, product specifications, know-how, processes,
Records, customer and supplier lists and the location of any such
customers or suppliers, current and anticipated customer
requirements, price lists, market studies, business plans, any
information, however documented, that is a trade secret under
applicable law, and all other information associated with the
products and services of the Business. The term "Confidential
Material" does not include information which (i) becomes
generally available to the public other than as a result of a
disclosure by Seller or the Shareholders; or (ii) was available
to Seller or the Shareholders on a non-confidential basis prior
to its disclosure by Seller, the Shareholders or their
representatives.
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Seller and the Shareholders agree that they shall not,
without the prior written authorization of the Buyer, directly or
indirectly use, divulge, furnish or make accessible to any
company, person or other entity any Confidential Information, but
instead shall keep all Confidential Information strictly and
absolutely confidential. Further, Seller and the Shareholders
will take all actions reasonably required of them to prevent
their employees, agents and representatives, as the case may be,
from using or divulging such information in a manner or for a
purpose that may be contrary to the best interest of Buyer. In
the event that Seller or the Shareholders are required (by oral
questions, interrogatories, requests for information or
documents, subpoena, confidential or similar process) to disclose
any Confidential Information, it is agreed that it will cooperate
with Buyer and provide it with prompt notice of such request(s)
so that it may seek an appropriate protective order and/or waive
compliance by the other with the provisions of this Agreement.
If, in the absence of a protective order or the receipt of a
waiver hereunder, Seller and/or the Shareholders is nonetheless,
in the opinion of its counsel, legally required to disclose
Confidential Information to any tribunal or else stand liable for
contempt or suffer other censure or penalty, they may disclose
such information to such tribunal without liability hereunder.
10.2 Covenant Not to Compete
-----------------------
Seller recognizes that Buyer's decision to enter into
this Agreement is induced in part by of the covenants and
assurances made by Seller in this Agreement, that its covenant
not to compete and other agreements set forth herein are
necessary to insure the continuity of the Business, and the
reputation of the Business, and that irreparable harm and damage
will be done to the Business if Seller competes with Buyer or the
Business or breaches the other agreements herein. Therefore,
except as specifically agreed to by Buyer in writing, the Seller
agrees that:
(i) Seller and any Affiliated Entity (as hereinafter defined),
for a period of two (2) years from the Closing Date (the
"Restriction Period") shall not, anywhere within a 100 mile
radius of the Business, participate or engage in, directly or
indirectly (as an owner, partner, shareholder, consultant,
officer, director, employee, independent contractor, consultant,
advisor or in any other capacity calling for the rendition of
services, advice, or acts of management, operation or control), a
Competitive Business (as hereinafter defined).
(ii) During the Restriction Period, neither Seller nor any
Affiliated Entity, shall directly or indirectly solicit, in
connection with any Competitive Business, any existing customers
of the Seller.
(iii) During the Restriction Period, neither Seller nor any
Affiliated Entity, shall solicit for employment or call upon any
person who is, at that time of such solicitation, an employee of
Buyer for the purpose of or with the intent of enticing such
employee away from or out of the employ of Buyer.
Seller affirmatively acknowledges that, in view of the overall
transaction, the geographic limitations and the period of
restriction are reasonable. It is specifically agreed that the
period during which the agreements and covenants of Seller made
in this Section 10.2 shall be effective and shall be computed by
excluding from such computation any time during which Seller is
in violation of any provision of this Section 10.2. For purposes
herein, "Affiliated Entity" means any corporation, partnership,
11
joint venture, limited liability company or other entity which,
directly or indirectly, is controlled by, controls, or is under
common control with Seller. "Control" means and includes, but is
not necessarily limited to, (A) the ownership of one percent (1%)
or more of the voting securities or other voting interest of any
corporation, partnership, joint venture or other business entity,
or (B) the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
such corporation, partnership, joint venture, limited liability
company, or other business entity. "Competitive Business" shall
mean the business of retail sales of motorcycles, all terrain
vehicles and/or off-road vehicles and any other in any activity
competitive with the Business. Provided, however, that
"Competitive Business" shall not include the sale of new and used
choppers, used motorcycles (but only to the extent that sales of
such used motorcycles by Seller or any Affiliated Entity
collectively do not exceed 100 used motorcycles in any calendar
year), and new and used automobiles.
10.3 Irreparable Harm
----------------
The Shareholders and Seller acknowledge that their
compliance with this Agreement is necessary to preserve and
protect the proprietary rights, Confidential Information and the
goodwill of Buyer and the Business as a going concern, and that
the failure of both of them to comply fully with the provisions
of this Article X will result in irreparable and continuing
injury to Buyer for which there will be no adequate remedy at
law. Because of the difficulty of measuring economic losses as a
result of a breach of the covenants contained in Article X by
Buyer and because of the immediate and irreparable loss, Seller
and the Shareholders agree that Buyer shall be entitled, in
addition to such other forms of relief as may be proper, to all
forms of equitable relief (including, but not limited to, the
issuance of an injunction and/or temporary restraining order) as
may be necessary to cause the Shareholders and Seller to comply
with the terms of this Article X or to otherwise make the harmed
party whole.
10.4 Reformation
-----------
If any of the covenants contained in this Article X are
found by a court of competent jurisdiction to be invalid or
unenforceable as against public policy or for any other reason,
such court is directed to exercise its discretion to reform such
covenant to the end that Seller and the Shareholders shall be
subject to confidentiality, noncompetition and noninterference
covenants that are reasonable under the circumstances and are
enforceable by Buyer. The provisions of this Article X shall
survive the termination of this Agreement; provided, however, the
terms of Section 10.2 shall cease to be of further force and
effect if there is an unremedied payment default under the Note.
ARTICLE 11
MISCELLANEOUS
-------------
11.1 Amendment
---------
This Agreement may be amended only by an agreement or
instrument in writing which refers to this Agreement and is duly
executed on behalf of the parties hereto.
11.2 Notices
-------
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been
duly given (i) when received personally delivered or sent by
facsimile, or (ii) within one business day after being sent by
recognized overnight delivery service, and in each case addressed
as follows:
12
(a) if to Buyer to: Xxxxxxx Xxxxx
c/o Yukon Int'l, Inc.
00000 Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxx 00000
with a copy to: Xxxxxxx X. Xxxxxxxxx, Esq.
Benesch, Friedlander, Xxxxxx & Xxxxxxx, LLP
0000 XX Xxxxx
Xxxxxxxxx, Xxxx 00000
(b) if to Seller to: King's Motorsports, Inc.
000 X. Xxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxxx, President
with a copy to: Xxxxxx X. Xxxxxxxxx, Eaq.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
000-000-0000
Fax (000) 000-0000
if to Xxxxx Xxxxxxx to: Xxxxx Xxxxxxx
000 X. Xxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
with a copy to: Xxxxxx X. Xxxxxxxxx, Eaq.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
000-000-0000
Fax (000) 000-0000
(d) if to Xxxxx Xxxxx to: Xxxxx Xxxxx
0000 Xxxxxx Xxxxx Xx.
Xxxxxxxxx, XX 00000
with a copy to: Xxxxxx X. Xxxxxx, Esq.
Xxxxx, Dub & Xxxxxx, Ltd.
000 XxXxxxx Xx
Xxxxxxxx Xxxx, XX 00000
000-000-0000
Fax (000) 000-0000
Any party by written notice to the other party may change the
address or the persons to whom notices thereof shall be directed.
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11.3 Expenses
--------
Each party shall bear their own costs and expenses in
connection with this Agreement and the transactions contemplated
hereby.
11.4 Waivers
-------
Either party may waive in writing compliance by the other
party with any of the terms contained in this Agreement (except
such, any, as may be imposed by law). Any waiver by Seller or
Buyer of any breach of, or failure to comply with, any provision
of this Agreement by another party shall not be construed as, or
constitute, a continuing waiver of such provision, or a waiver of
any other breach of, or failure to comply with, any other
provision of this Agreement.
11.5 Assignment
----------
This Agreement and the rights and duties hereunder shall
be binding upon and inure to the benefit of the successors and
permitted assigns of each of the parties to this Agreement, but
shall not be assignable or delegable by any party without the
prior written consent of the other; provided, however, that upon
notice to Seller, Buyer may assign its rights under this
Agreement to a wholly owned subsidiary of Buyer without Seller's
or the Shareholders' approval but such assignment shall not
relieve Buyer of any obligations owed to Seller or the
Shareholders under this Agreement.
11.6 Complete Agreement
------------------
This Agreement (including the documents referred to
herein) sets forth the entire understanding of the parties hereto
with respect to the subject matter hereof and supersede all prior
agreements, covenants, arrangements, communications,
representations or warranties, whether oral or written, by either
party or any representative of either party hereto.
11.7 Governing Laws
--------------
This Agreement shall be construed and enforced in
accordance with and governed by the internal substantive laws of
the State of Illinois, without giving effect to the principles of
conflicts of law thereof. Each of the parties irrevocably
submits to the jurisdiction and venue of the federal and state
courts located in the county of Xxxx, County, Chicago, Illinois.
11.8 Third Parties
-------------
Nothing herein expressed or implied is intended or shall
be construed to confer upon or give to any person, other than the
parties to this Agreement, any rights or remedies under or by
reason of this Agreement.
11.9 Severability
------------
If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of this
Agreement will nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any
party hereto. Upon any such determination that any term, or
other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner, to the
end that the transactions contemplated by this Agreement are
consummated to the extent possible.
11.10 Counterparts
------------
This Agreement may be executed by the parties to this
Agreement in one or more counterparts, each of which shall be
deemed to be an original, but all of which together shall
constitute one and the same agreement.
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11.11 Risk of Loss
------------
Risk of loss of, or damage or destruction to, the
Acquired Assets shall be borne by Seller until the Closing. In
the event of damage or destruction to the Acquired Assets, Seller
shall promptly notify Buyer.
[Signature Page Follows]
15
INTENDING TO BE LEGALLY BOUND, the parties hereto have
executed or caused this Agreement to be executed by their duly
authorized officers as of the day and year first above written.
"SELLER"
King's Motorsports, Inc.
By:
____________, President
"SHAREHOLDERS" (only as to those
specific provisions of this
Agreement applicable to the
Shareholders)
Xxxxx Xxxxxxx
Xxxxx Xxxxx
"BUYER"
Giant Motorsports, Inc.
By:
__________, President
16
