STOCK PURCHASE AGREEMENT
THIS AGREEMENT, made this 3rd day May, 1997, by and between:.XXXXXX XXXXXXX, an
adult individual residing at 000 Xxxxxxxx Xx, Xxxxxxxxx
Xxxxxx,XxxXxxxxxX0000(xxxxxxxxxxx referred to as SELLER)
AND
MAJOR ACQUISITIONCORP. a corporation organized under the laws of the State of
New York, having its principal office located at 00-00 Xxx Xxxxxxx Xxxxxxxxx,
Xxxxx 0000, Xxx Xxxxxxx, Xxx Xxxx II 41 5 (hereinafter referred to as 'BUYER')
AND
Xxxxxx Xxxxxxx, Esquire, whose address is 000 Xxxxx Xxxxxx., Xxx Xxxx, Xxx Xxxx
00000 (hereinafter referred to as escrow agent);
WITNESSETH:
WHERE AS, SELLER has entered Into a certain Letterof Intent. dated December 11,
1996 with BUYER for the sale to BUYER of all of his stockholdings in Xxxxx
Xxxxx. Inc, and Major Chrysler, Plymouth, Jeep Eagle, Inc. (collectively, the
Corporation and the parties desire that this Agreemerrt will formalize and
evidence their final understandings concerning such sale.and purchase
transaction; and
WHEREAS, in conjunction wfth such sale and purrhase transaction the parties
desire to provide for an as of the Shares as hereinafter defined, the Deposit as
hereinafter defined and the payment of the Purchase Price Balance as hereinafter
defined. pending closing of the transaction. and therefore, simultaneously
herewith, the parties
have entered into that certain escrow agreement ("Escrow Agreement") attached
hereto as Exhibit "A" and made a part hereof by this reference; and
WHEREAS, under the Escrow Agreement, Escrow Agent has agreed to act as
EscrowAgent to hold and deliver both the Shares and the Purchase Price as
hereinafter defined according to the provisions thereof and hereof.
NOW, THEREFORE, with the foregoing recitals incorporated herein and in
consideration of the mutual covenants herein contained, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
STOCK PURCHASE
1.1. Sale of Shares. SELLER shall sell to BUYER, on the terms and conditions
of this Agreement, and BUYER shall purchase from SELLER, on the terms and
conditions of this Agreement, the following shares of the indicated companies
(the "Shares"): Ten (10) shares of Xxxxx Xxxxx, Inc., a New York corporation.
Fifty (50) shares of Major Chrysler, Plymouth, Jeep Eagle, Inc., a New York
corporation.
1.2. Delivery of Shares. Seller shall deliver and the Escrow Agent shall
receive and acknowledge receipt of, stock certificates representing the Shares,
together with executed blank stock powers with signature guarantees for each
certificate (the defined term 'Shares' is deemed to include the executed blank
stock powers and signature guarantees) for purposes of the Agreement,
simultaneously with the delivery by Buyer to the Escrow Agent of the Deposit.
Escrow Agent agrees to hold, safeguard, account for
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and return and/or deliver the Shares in accordance with the terms and conditions
of the Escrow Agreement.
1.3. Purchase Price. BUYER shall pay the sum of FOUR MILLION ($4,000,000.00)
DOLLARS (the "Purchase Price") for the Shares in the following manner:
1.3.1. Upon execution hereof, BUYER shall deliver a deposit in the
amount of Four Hundred Thousand ($400.000.00) Dollars (the "Deposit") to the
Escrow Agent, who shall hold the Deposit as provided in the Escrow Agreement -,
1.3.2. Upon satisfaction of all of the contingencies set forth in
paragraph 1.4 below, BUYER shall deliver the balance of the Purchase Price in
the amount of Three Million Six Hundred Thousand ($3,600,000.00) Dollars
("Purchase Price Balance") to the Escrow Agent who shall hold the Purchase Price
Balance as provided in the Escrow Agreement .
1.4. Contingencies.
1.4.1. The parties hereto expressly agree and acknowledge that the
payment of the Purchase Price Balance and the Close of Escrow, as hereinafter
defined, are expressly contingent upon the following:
1.4.1.1. The Seller shall have obtained the approval of all automotive
franchising manufacturers (the "Factory Approval") which have franchise
agreements with the Corporations to sell new vehicles and parts. The parties
acknowledge and agree that in the event some or all of the Factory Approvals are
not obtained on or before the Closing Date, as that term is defined in that
certain Plan and Agreement of Merger by and between Fidelity Holdings, Inc.
("Fidelity"), Major Automotive
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Group, Inc. ("MAG"), Major Acquisition Corp. ("MAC") and Xxxxx Xxxxxxx
("Xxxxxxx"), (the "Merger Agreement") the parties may either (i) extend the
Closing Date in order to provide the Seller with additional time to obtain the
Factory Approval or (II') the Buyer may proceed with the Close of Escrow in
which event the Purchase Price shall be adjusted 'in accordance with the
allocations set forth on the attached Schedule 6 ("Partial Closing"). In the
event of the occurrence of Partial Closing (i) the Escrow Agent shall deliver
those shares for the Corporations for which Factory Approvals have been obtained
and shall deliver the applicable portion of the Deposit to Seller, and (ii) the
Seller shall be under a continuing obligation to obtain the remaining Factory
Approvals upon the obtaining of which, the Seller shall be paid the balance of
the Purchase Price. Seller may waive receiving any further monies post Close of
Escrow upon delivery of written notice of his inability to obtain the remaining
Factory Approvals to Buyer in which event Escrow Agent shall deliver to Seller
those shares in those Corporations for which Factory Approval was not obtained.
1.4.1.2. Buyer's obtaining and delivering to Escrow Agent unconditional
releases from all of the creditors set forth on Exhibit "C", attached hereto,
and by this reference made a part hereof, releasing Seller from any and all
liability as a primary obligor or as a guarantor for any and all debts owed each
such creditor ("Releases"). This contingency may be waived by Seller in the
event Buyer is unable to obtain all of the Releases in which event, Buyer shall
be required to post sufficient collateral to protect Seller to Seller's
satisfaction until the Releases are obtained or the underlying debts satisfied.
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1.4.1.3. The consummation of that certain Plan and Agreement of Merger
dated March, 1997 by and among Fidelity, MAG and Buyer- and
1.4.1.4. Seller and Buyer shall, on or before the Closing of Escrow
Date, as hereinafter defined, have reached an agreement as to any adjustment in
the Purchase Price as a result of Seller's loans receivable, paid in capital,
cash reserves and loans payable to the Corporations.
1.4.2. In the event that the Merger Agreement is not consummated for any
reason, or the Closing and/or Partial Closing have not been extended, completed
or partially completed in accordance with Article 1.4.1.1 above, this Agreement
shall be null and void ab initio in which event the Deposit shall be returned to
Buyer, together with interest thereon, the Shares shall be returned to Seller,
together with all dividends and distributions paid, and the parties shall have
no further rights or obligations with respect to each other.
1.5. Closing. Closing of this sale and purchase transaction shall be held at
10:00 a.m., at the offices of Buyer, on the Close of Escrow Date as hereinafter
defined.
1.6. Default by SELLER. This transaction is for the sale and purchase of the
Shares. In the event of the failure or refusal of SELLER to deliver any of the
Shares, which failure or refusal shall not relieve SELLER of his obligations
hereunder, BUYER may, at its option and without prejudice to its rights against
SELLER, pursue all rights and remedies that it may have as against SELLER,
including, without limitation, the right of specific performance.
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1.7. Default by BUYER. In the event of the failure or refusal of BUYER to
perform any of its obligations under this Agreement, which failure or refusal
shall not relieve BUYER of its obligations hereunder, SELLER may, at his option
and without pre'udice to his rights against BUYER, pursue all rights and
remedies that he may have as against BUYER, including, without limitation, the
right of specific performance or, in the alternative, Seller may retain the
Deposit as liquidated damages, it being agreed that the Deposit represents a
reasonable calculation of the damages which the Seller would sustain as a result
of the breach of this Agreement by Buyer.
1.8. SELLER's Representations and Warranties with respect to the Shares. In
addition to the business representations and warranties of SELLER contained 'in
Paragraph 1.9 following, SELLER represents and warrants to the best of his
knowledge and belief that: (a) the Corporations are legally organized and in
good standing in their respective states of incorporation; (b) the Shares are
duly authorized, validly issued and outstanding, and are fully-paid and
non-assessable; and (c) the Shares are free and clear of all liens,
encumbrances, security interests, charges, pledges and hypothecations, there is
no prior agreement respecting the sale of such shares to any person or entity,
and SELLER is the sole legal and beneficial owner of such Shares with full right
and authority to sell and transfer such shares to BUYER.
1.9. SELLER's Representations and Warranties. For purposes of this Agreement,
"Material Adverse Effect" means, with respect to the Corporations, a material
adverse effect on the business, operations, or financial condition of either of
the Corporations. For purposes of this Agreement, "Taxes" shall mean all taxes,
fees, levies,
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duties. charges or other assessments imposed by any federal, state, county,
local or foreign government, taxing authority, subdivision or agency thereof.
including interest. penalties. additions to tax or additional amounts thereto.
In addition to the foregoing representations and warranties of SELLER relating
to the Shares, SELLER represents and warrants to the best of his knowledge and
belief as follows-.
1.9. 1. Consents and Approvals- No Violations.
(i) Except for applicable requirements of New York securities
law. no filing with, and no permit, authorization, consent or approval of any
public body or authority is necessary for the consummation by the Corporations
of the transactions contemplated by this Agreement.
(ii) Neither the execution and delivery of Lhis Agreement by
SELLER, the consummation by SELLER of the transactions contemplated hereby, nor
compliance by SELLER with any of the provisions hereof will (i) conflict with or
result in any breach of any provision of the Corporations' Articles of
Incorporation or Bylaws; (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration or result in the creation
of any lien) under any of the terms, conditions or provisions of any note, bond.
mortgage, indenture, license, contract, agreement or other instrument or
obligation to which either of the Corporations is a party or by which they or
any of their properties or assets may be bound; or (iii) violate any order,
writ, injunction. decree. statute, rule or regulation applicable to the
Corporations or any of their properties or assets.
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(iii) The foregoing provisions of this Article 1.9.1
notwithstanding, the Seller shall have thirty (30) days from the execution
hereof to conduct a review of all information and/or documentation for the
purpose of determining (i) if a default or violation as set forth in this
subparagraph exists or (ii) if any consents and/or approvals are necessary to
consummate this transaction. In the event that it is determined that a default
or violation exists or may exist, or a consent or approval is necessary, the
Seller shall notify the Buyer of such and provide the Buyer with the
information. documentation and records discovered, and make a good faith effort
using due diligence to obtain any such con sents and approvals or to remedy any
such defaults or violations. In the event the Seller is unable to obtain such
consents or approvals or to remedv such defaults or violations. he shall work
towards obtaining replacements for the defaulted/violated Agreements or Buyer
may waive same. If Buyer does not so waive, the parties may decide to terminate
this Agreement, in which event this Agreement shall be deemed null and void ab
initio.
1.9.2. Reports. The balance sheets of the Corporations for the year
ended December 31, 1996, including any notes or schedules thereto (the
"Corporations' Balance Sheets") and the related statements of profits and losses
for the year then ended do not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading and fairly present the
financial positions of the Corporations as of the respective dates thereof.
Except as and to the extent provided in the Corporations' Balance Sheets, the
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Corporations did not have at December 31, 1996, any liabilities required by
generally accepted accounting principals to be reflected on a balance sheet.
1.9.3. Absence of Certain Changes. Since December 31, 1996, the
Corporations (i) have not suffered a Material Adverse Effect, (ii) have not
entered into any transaction, or conducted their businesses or operations, other
than in the ordinary course of business and consistent with past practice, or
(iii) have not taken or agreed to take any of the following actions ("Material
Action")-.
1.9.3.1. (i) declare. set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, (ii) split. combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of. in lieu of or in substitution for shares of its
capital stock; or (iii) amend the terms of, repurchase, redeem or otherwise
acquire any of its securities or any securities of its subsidiaries, or propose
to do any of the foregoing;
1.9.3.2. authorize for issuance, issue, sell. deliver or agree or commit
to issue. sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities (including indebtedness having the right to
vote) or equity equivalents (including, without limitation, stock appreciation
rights), except as required pursuant to the agreements and instruments
outstanding on the date hereof, or amend in any material respect any of the
terms of any such securities or agreements outstanding on the day hereof; to do
any of the foregoing, consistent with past practice.
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1.9.3.3. amend or propose to amend either Corporations'Articies or
Certificate of Incorporation or Bylaws;
1.9.3.4. acquire, sell, lease, encumber, transfer or dispose of any
assets outside the ordinary course of business, consistent with past practice,
or any assets which are material to SELLER, BUYER, or the Corporations, as
applicable, taken as a whole or make any capital expenditures aggregating over
Twenty Thousand ($20,000.00) Dollars, except in each case pursuant to
obligations in effect on the date hereof. or enter into any contract, commitment
or transaction outside the ordinary course of business.
1.9.3.5. incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Corporations or guarantee (or become liable
for) any debt of others or make any loans, advances or capital contributions or
mortgage, pledge or otherwise encumber any material assets or create or suffer
any material lien thereupon other than in each case in the ordinary course of
business consistent with past practice;
1.9.3.6. pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unassented, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by, the
financial statements (or the notes thereto) of either of the Corporations, as
applicable, incurred in the course of business consistent with past practice or
settle any lawsuits relating to intellectual property:
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1.9.3.7. change any of the accounting principals or practices used by it
(except as required by generally accepted accounting principals)-,
1.9.3.8. except as required by law, (i) enter into, amend or terminate
any Benefit Plan (as hereinafter defined) or any agreement, arrangement, plan,
or policy between either of the Corporations and one or more of its directors or
executive officers, or (ii) increase in any manner the compensation or fringe
benefits of any director. officer or employee or pay any benefit not required by
any plan and arrangement as in effect as of the date hereof, except in the case
of non-officer employees for normal increases in the ordinary course of business
consistent with past practice that. in the aggregate, do not result in a
material increase in benefits or compensation expense. or enter into any
contract. agreement, commitment or arrangement to do any of the foregoing;
1.9.3.9. take any action that would tend not to preserve intact either
Corporation's present business organization, keep available the services of its
present officers and employees and preserve its relationship with customers,
suppliers, licensors, licensees, contractors, distributors and others having
business dealings with them; or
1.9.3.10. (i) agree to take any of the foregoing actions, or (ii) take
any action that would or is reasonably likely to result in any of the
representations and warranties of either of the Corporations set forth in this
Agreement being untrue.
1.9.4. No Undisclosed Liabilities. Since December 31, 1996, neither of the
Corporations has incurred any liabilities (absolute, accrued, contingent or
otherwise) that are material, in the aggregate. to the business, operations or
financial condition of either
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of the Corporations, except for liabilities incurred in the ordinary course of
business, and consistent with past practices and liabilities incurred in
connection with this Agreement.
1.9.5. No Default. Neither of the Corporations is in default or violation
(and no event has occurred which with notice or the lapse of time or both would
constitute a default or violation) of any term, condition or provision of (i)
the Articles of Incorporation or the Bylaws of either of the Corporations, (ii)
any note. bond, mortgage, indenture. license, contract. agreement or other
instrument or obligation to which either of the Corporations is a party or by
which the Corporations or any of their properties or assets may be bound, or
(iii) any order, writ, injunction, decree, statute, rule or regulation
applicable to the Corporations, except in the case of (ii) or (iii) for defaults
or violations which would not. in the aggregate, have a Material Adverse Effect
and which would not prevent or materially delay the consummation of the
transactions contemplated hereby.
1.9.6. Litication. There are no actions, suits, proceedings or, to the best
knowledge of the Corporations, investigations pending or, to the best knowledge
of the Corporations, threatened involving the Corporations, at law or in equity,
or before any governmental entity which, in the aggregate, are reasonably likely
to have a Material Adverse Effect.
1.9.7. Comoliance with Applicable Law. The business of the Corporations is
not being conducted in violation of any applicable law, ordinance, rule,
regulation. decree or order of any governmental entity, except for violations
which, in the aggregate, do not and would not have a Material Adverse Effect.
The Corporations hold all permits. licenses, variances, exemptions, orders and
approvals of all governmental entities
12
necessary for the lawful conduct of their businesses (the "Corporations'
Permits"), except for failures to hold such Corporations' Permits which would
not. in the aggregate, have a Material Adverse Effect. The Corporations are in
compliance with the terms of the Corporations' Permits, except where the failure
to do so would not, in the aggregate. have a Material Adverse Effect.
1.9.8. Taxes. The Corporations have duly filed all material federal, state.
local and foreign tax returns required to be filed by them, and the Corporations
have duly paid, caused to be paid or made adequate provision for the payment of
all Taxes required to be paid in respect of the periods covered by such returns
and have made adequate provision for payment of all Taxes anticipated to be
payable in respect of all calendar periods since the periods covered by such
returns. All deficiencies and assessments asserted as a result of any
examinations or other audits by federal, state, local or foreign taxing
authorities have been paid, fully settled or adequately provided for in the
financial statements of the Corporations and no issue or claim has been asserted
for Taxes by any taxing authority for any prior period, the adverse
determination of which would result in a deficiency which would have a Material
Adverse Effect, other than those heretofore paid or provided for. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any federal, state or local income tax return of the Corporations.
1.9.9. ERISA.
1.9.9.1. With respect to each employee benefit plan (including, without
limitation, any "employee benefit plan," as defined in Section'3(3) of the
Employee Retirement Income Security Act of 'i 974, as amended ("ERISA")), and
any material bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
insurance or other plan, arrangement or understanding (whether or not legally
binding) (all the foregoing being herein called "Benefit Plans"), maintained or
contributed to by the Corporations, the Corporations have made available to
BUYER a true and correct copy of, where applicable, (i) the most recent annual
report (Form 5500) filed with the Internal Revenue Service (the "IRS"), (II')
such Benefit Plan, (iii) each trust agreement, insurance contract. and
third-party administration agreement, if any, relating to such Benefit P!an,
(iv) the most recent actuarial report or valuation relating to any Benefit Plan
sub'ect to Title IV of ERISA, (v) the most recent IRS determination letter, and
(vi) the summary plan description. No amendments or promises have been made with
respect to any Benefit Plan which would increase after the date of this
Agreement the expense of maintaining such Benefit Plan.
1.9.9.2. No Benefit Plans of the Corporations nor benefit plans of any
entity which would be treated as a "single employer" with either of the
Corporations under Section 4001 (b) of ERISA are subject to Title IV of ERISA.
1.9.9.3. With respect to Benefit Plans of the Corporations, in the
aggregate, no event has occurred, and to the knowledge of the Corporations,
there exists no condition or set of circumstances which are reasonably likely to
occur in connection with which either of the Corporations would be subject to
any liability that would have a Material Adverse Effect (except liability for
benefit claims and funding obligations payable
14
in the ordinary course), under ERISA, the Internal Revenue Code of 1986, as
amended (the "Code") or any other applicable law.
1.9.9.4. With respect to Benefit Plans of either of the Corporations, in
the aggregate, there are no funded benefit obligations for which contributions
have not been made or properly accrued and there are no unfunded benefit
obligations which have not been accounted for by reserves, or otherwise properly
fcotnoted in accordance with generally accepted accounting principals, on the
consolidated financial statements of the Corporations. except for obligations
which would not, in the aggregate, have a Material Adverse Effect.
1.9.9.5. Each of the Benefit Plans has been administered in compliance
with its terms in all material respects and is in compliance with applicable
laws and regulations, except for failures to comply which, in the aggregate,
would not have a Material Adverse Effect.
1.9.9.6. Each of the Benefit Plans which is intended to be a qualified
plan within the meaning of Section 401 (a) of the Code has been determined by
the IRS to be so qualified and nothing has occurred to cause the loss of such
qualified status.
1.9.9.7. The Corporations have no obligations for retiree health,
medical or life insurance benefits under any plan referred to in this Section
1.9 other than (i) coverage mandated by applicable law, (ii) deferred
compensation benefits accrued as liabilities on the financial statements of the
Corporations, or (iii) benefits the full cost of which are borne by the current
or former employee (or his or her beneficiary).
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1.9.10. Intellectual Property. No claim is pending, or, to the knowledge of
the Corporations, threatened to the effect that the present or past operations
of either of the Corporations infringe upon or conflict with the rights of
others with respect to any intellectual property (including, without limitation,
licenses, copyrights, drawings, trade secrets, know-how and computer software)
necessary to permit the Corporations to conduct their business as now operated
(the Corporations Intellectual Property") and no claim is pending or, to the
best knowledge of the Corporations, threatened to the effect that any of the
Corporations Intellectual Property is invalid or unenforceable. The Corporations
have provided BUYER with a list of all licenses. patents, patent rights. patent
applications, trademarks. trademark applications, trade names. copyrights and
service marks. No contract, agreement or understanding between either of Lhe
Corporations and any other party exists which would impede or prevent the
continued use by the Corporations of the entire right, title and interest of the
Corporations to the Corporations Intellectual Property.
1.9.11. Emoloyee Relations. The Corporations have provided the BUYER with a
complete and correct list of all employment, compensation, severance. consulting
or indemnification contracts between the Corporations and its present or former
employees, officers, directors, and consultants to the extent that the
Corporations have any continuing obligations thereunder.
1.9.12. Material Contracts. The Corporations have made available to the BUYER
a complete and accurate list of all contracts, agreements and instru ments to
which the Corporations are a party or by which either of them or any of their
properties or assets may be bound that (i) relate to the leasing of real
property or (ii) provide for
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payments in any one year in excess of Twenty Thousand ($20,000.00) Dollars. Each
of such contracts, agreements and instruments is valid and binding and in full
force and effect and, to the best knowledge of the Corporations, there has not
occurred any default by any party thereto which remains unremedied as of the
date hereof.
1.10. BUYER's Representations and Warranties. To the best of its knowledge
and belief, BUYER represents and warrants as follows:
1.10.1. Organization. BUYER is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and has
the corporate power to own, lease and operate all of its properties and assets
and to carry on its business as now being conducted. Neither the ownership of
its properties nor the conduct of its business requires BUYER to be qualified to
do business in any other jurisdiction. BUYER has heretofore delivered or will
promptly deliver to SELLER accurate and complete copies of BUYER's Certificate
of Incorporation and Bylaws, as currently in effect.
1.10.2. Authority Relative to this Agreement. BUYER has the corporate
power to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of BUYER and the holders of a majority of
the outstanding shares of BUYER. No other actions are required by law or the
Articles of Incorporation or Bylaws of BUYER to authorize the execution and
delivery of this Agreement or the consummation of the actions contemplated
hereby. This Agreement has
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been duly and validly executed and delivered by BUYER and constitutes a valid
and binding agreement of BUYER, enforceable against BUYER in accordance with its
terms.
1.10.3. Consents and Approvals: No Violations. Except for applicable
requirements of New York securities law, no filing with, and no permit,
authorization, consent or approval of any public body or authority is necessary
for the consummation by BUYER of the transactions contemplated by this
Agreement. Neither the execution and delivery of this Agreement by BUYER, the
consummation by BUYER of the transactions contemplated hereby, nor compliance by
BUYER with any of the provisions hereof will (1) conflict with or result in any
breach of any provision of BUYER's Articles of Incorporation or Bylaws; (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or result in the creation of any lien) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, agreement or other instrument or obligation to which BUYER is
a party or by which it or any of its properties or assets may be bound; or (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to BUYER or any of its properties or assets.
1.10.4. No Default. BUYER is not in default or violation (and no event has
occurred which with notice or the lapse of time or both would constitute a
default or violation) of any term, condition or provision of (i) its Articles of
Incorporation or Bylaws, (ii) any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which BUYER is a party
or by which BUYER or any of its properties or assets may be bound, or (iii) any
order, writ, injunction, decree, statute. rule or regulation
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applicable to BUYER, except in the case of (ii) or (iii) for defaults or
violations which would not, in the aggregate, have a Material Adverse Effect and
which would not prevent or materially delay the consummation of the transactions
contemplated hereby.
1.10.5. Litigation. There are no actions, suits, proceedings or, to the best
knowledge of BUYER, investigations pending or, to the best knowledge of BUYER,
threatened involving BUYER. at law or in equity, or before any governmental
entity which, in the aggregate, are reasonably likely to have a Material Adverse
Effect.
1.10.6. Compliance with Applicable Law. The business of BUYER is not being
conducted in violation of any applicable law, ordinance. rule. regulation,
decree or order of any governmental entity, except for violations which, in the
aggregate, do not and would not have a Material Adverse Effect. The BUYER hold
all permits, licenses. variances, exemptions, orders and approvals of all
governmental entities necessary for the lawful conduct of its business (the
"BUYER's Permits"), except for failures to hold such BUYER's Permits which would
not. in the aggregate, have a Material Adverse Effect. BUYER is in compliance
with the terms of the BUYER's Permits, except where the failure to do so would
not, in the aggregate, have a Material Adverse Effect.
1.10.7. Taxes. BUYER has duly filed all material federal, state, local and
foreign tax returns required to be filed by them, and BUYER has duly paid,
caused to be paid or made adequate provision for the payment of all Taxes
required to be paid in respect of the periods covered by such returns and have
made adequate provision for payment of all Taxes anticipated to be payable in
respect of all calendar periods since the periods covered by such returns. All
deficiencies and assessments asserted as a result
19
of any examinations or other audits by federal, state, local or foreign taxing
authorities have been paid, fully settled or adequately provided for in the
financial statements of BUYER and no issue or claim has been asserted for Taxes
by any taxing authority for any prior period, the adverse determination of which
would result in a deficiency which would have a Material Adverse Effect, other
than those heretofore paid or provided for. There are no outstanding agreements
or waivers extending the statutory period of limitation applicable to any
federal, state or local income tax return of BUYER.
ARTICLE II
ESCROW
2.1 Appointment of Escrow Agent. SELLER and BUYER hereby appoint and
designate Xxxxxx Xxxxxxx, Esquire as the Escrow Agent for the purposes set forth
in this Agreement. Upon the terms and conditions of this Agreement, the Escrow
Agent hereby accepts such appointment and agrees to act as provided herein.
2.2 Deposit of Purchase Price and Shares.
2.2.1. At or before the time specified in Paragraph 1.3. BUYER shall
deliver to Escrow Agent the Deposit in the form of a Cashier's, Treasurer's or
Bank Check. The interest on such funds shall be paid to the party ultimately
receiving such funds under the terms and conditions of this Agreement.
2.2.2. At or before the time specified in paragraph 1.3, Buyer shall
deliver to Escrow Agent the Purchase Price Balance in the form of a Cashier's,
Treasurer's or Bank Check. The interest on such funds shall be paid to the party
ultimately receiving such funds under the terms and conditions of this
Agreement.
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2.2.3. At or before the time specified in paragraph 1.2. Seller shall
deliver to Escrow Agent the Shares.
2.3. Voting of Escrowed Shares. Until Closing, SELLER shall have the right to
vote the escrowed Shares on all corporate issues and questions requiring a vote
of the stockholders of either Corporation or upon which a vote of the
stockholders of either Corporation is taken; provided, however, that SELLER
shall not vote the escrowed Shares in any manner that shall be inconsistent with
the terms of this Agreement.
2.4. Dividends and Distributions on the Escrowed Shares. Prior to Closing,
any dividends or distributions declared or made with respect to the escrowed
Shares shall be delivered to the Escrow Agent who shall hold such funds or
property for delivery to the party ultimately receiving the Shares.
2.5. Closing of Escrow. The Escrow Agent shall terminate the escrow and
deliver the Shares to Buyer together with all dividends and distributions paid.
and deliver all of the Purchase Price by Bank or Certified Check to the order of
the Seller together with all interest thereon ("Close of Escrow") on the third
day following the earliest to occur of the following (should the third day fall
on a weekend or holiday, the third day shall be deemed to be the next business
day thereafter) ("Close of Escrow Date"):
2.5.1. Completion by Fidelity of the Offering, as set forth and more
fully defined on the attached Exhibit "D", attached hereto and made a part
hereof by this reference;
2.5.2. Such time as Buyer and Fidelity, shall elect: or
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2.5.3. Thirty (30) days after satisfaction of all contingencies set
forth in Article 1.4.
2.6. Compensation to Escrow Agent. SELLER and BUYER shall each pay one half
of the charges of the Escrow Agent, and any aftorney's fees, expenses and other
costs incurred by the Escrow Agent in connection with the administration of the
provisions of this Escrow Agreement.
2.7. Limited Duties of Escrow Agent. The Escrow Agent undertakes to perform
only such duties as are required pursuant to the Escrow Agreement and no implied
duties or obligations shall be read into the Escrow Agreement against the Escrow
Agent.
2.8. Writings and signatures. The Escrow Agent may act in reliance upon any
writing or instrument or signature which it, in good faith, believes to be
genuine. may assume the validity and accuracy of any statement or assertion
contained in such a writing or instrument and may assume that any person
purporting to give any writing, notice, advice, or instructions in connection
with the provisions hereof has been duly authorized to do so. The Escrow Agent
shall not be liable in any manner for the sufficiency or correctness as to form,
manner and execution, or validity of any instrument deposited in this escrow,
nor as to the identity, authority, or right of any person executing the same.
2.9. Indemnification of Escrow. BUYER and SELLER hereby agree jointly and
severally, to indemnify the Escrow Agent and hold it harmless from any and all
claims, liabilities, losses, actions, suits or proceedings at law or in equity,
or any other expenses. fees, or charges of any character or nature, which it may
incur or with which it may be threatened by reason of its acting as Escrow Agent
under this Agreement; and in
22
connection therewith, to indemnify the Escrow Agent against any and all
expenses. including attorneys' fees and the cost of defending any action, suit
or proceeding or resisting any claim.
2.10. Dispute Resolution. If the parties shall be in disagreement about the
interpretation of this Agreement, or about the rights and obligations, or the
propriety, of any action contemplated by the Escrow Agency hereunder, the Escrow
Agent may, at its sole discretion, file an action in interpleader to resolve
such disagreement. The Escrow Agent shall be indemnified for all costs,
including reasonable attorneys' fees, in connection with the aforesaid
interpleader action, and shall be fully protected in suspending all or a part of
its activities under the Escrow Agreement until a final judgment in the
interpleader action is received. As an alternative to the filing of an action in
interpleader in the event of a dispute, the Escrow Agent, at its option, may
suspend all or a part of its activities under the Escrow Agreement until the
Escrow Agent receives an agreement between the parties settling the dispute or a
court order directing the Escrow Agent to take a specified course of action. In
the event that the Escrow Agent chooses the latter course of action, the Escrow
Agent shall be fully protected in suspending all or a part of its activities
under this Escrow Agreement until the Escrow Agent receives an agreement between
the parties settling the dispute or a court order directing the Escrow Agent to
take a specified course of action.
2.11. Independent Counsel. The Escrow Agent may consult with counsel of its
own choice and shall have full and complete authorization and protection for any
action taken or suffered by it hereunder in good faith and in accordance with
the opinion of such
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counsel. The Escrow Agent shall otherwise not be liable for any mistakes of fact
or error of judgment, or for any acts or omissions of any kind unless caused by
its wilful misconduct or gross negligence.
2.12. Resignation. The Escrow Agent may resign upon thirty days written
notice to both parties. SELLER shall thereupon appoint a successor Escrow Agent.
If a successor Escrow Agent is not appointed by SELLER within the first
twenty-one days of the thirty day period, the Escrow Agent shall notify BUYER
who shall thereupon appoint a successor Escrow Agent. If a successor Escrow
Agent is not appointed within the thirty day period, the Escrow Agent may
petition the court to name a successor.
ARTICLE III
MISCELLANEOUS
3.1. Notices. Anv notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by certified mail to
the addresses as noted in this Agreement or such other address as a party may
designate in writing to all parties to this Agreement.
3.2. Waiver of Breach. The waiver by any party of a breach of any provision
of this Agreement by any other party shall not operate or be construed as a
waiver of any subsequent breach by such other party.
3.3. Benefit. The rights and obligations of all parties under this Agreement
shall inure to the benefit of, and shall be binding upon their heirs,
administrators, representatives, successors, and assigns.
3.4. Entire Agreement. This Agreement contains the entire agreement of the
parties and may be modified only by agreement in writing signed by the party or
parties
24
against whom enforcement of any waiver, change, modification, extension, or
discharge is sought
3.6. Severability. If provision of this Agreement is round to be invalid or
unenforceable, this Agreement shall be considered divisible as to provision,
what shall be inoperative, though that provision be not inclusive of this
Agreement -shall be valid and binding as herein.
IN WITNESS WHEREOF, the parties have executed this Escrow Agreement on the
day and year first written above.
SELLER:
/s/ Xxxxxx Xxxxxxx
------------------
XXXXXX XXXXXXX
BUYER:
MAJOR ACQUISITION CORP.
BY:____________________
ESCROW AGENT
/s/ Xxxxxx Xxxxxxx
-----------------------
XXXXXX XXXXXXX, ESQUIRE
STOCK PURCHASE AGREEMENT
Exhibit "A"
ESCROW AGREEMENT
STOCK PURCHASE AGREEMENT
EXHIBIT "B"
XXXXX XXXXX, INC. $2,000,000.00
MAJOR CHRYSLER, PLYMOUTH, JEEP, EAGLE, INC. $2,000,000.00
STOCK PURCHASE AGREEMENT
Exhibit "C"
ESCROW AGREEMENT
AGREEMENT made as of the 6th day of March 1997, by and between Major
Acquisition Corp, a New York Corp., with offices at 00-00 Xxx Xxxxxxx Xxxx, Xxx
Xxxxxxx, XX 00000 (hereinafter "Major"), Xxxxxx Xxxxxxx, an individual residing
at 000 Xxxxxxxx Xxxx, Xxxxxxxxx, XX 00000 (hereinafter "Xxxxxxx") and Xxxxxx X.
Xxxxxxx, Esq., 000 Xxxxx Xxx., Xxx Xxxx, XX 00000 (hereafter "Escrowee" or
"Escrow Agent").
ESCROWEE
WHEREAS, Major and Xxxxxxx have entered into an agreement dated March 6, 1997
and titled "Stock Purchase" whereby major will purchase and Xxxxxxx will sell
stock his interests in the Corporations (the "Agreement");
WHEREAS, Major and Xxxxxxx are desirous of having Escrowee act as Escrow
Agent to receive a four hunderd thousand dollars ($400,000.00) and shares as
defined in the Agreement (collectively to be called "Deposit");
WHEREAS, Major and Xxxxxxx are desirous are of setting forth the terms and
conditions under which Escrowee shall hold and disburse the Deposit received by
Escrowee pursuant to this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and representations
contained herein and intending to be legally bound the parties agree as follows:
1. The Deposit to be paid in accordance with the Agreement and shall be paid
directly to Escrowee.
2. The parties hereto agree that the total amount received by Escrowee in
connection with the transaction is the Deposit.
3. The Escrowee shall terminate the escrow and deliver the Deposit to Buyer
as provided for
in the Agreement.
4. Excrowee represents that he will act as fiduciary in accordance with the
judiciary law and other ethical or legal standards for attorneys admitted to
practice in the State of New York.
5. In determining the obligation under this Agreement, Escrowee shall rely
solely upon ;this Escrow Agreement, with the exception of disbursing the Deposit
which shall be in accordance with the Agreement, and the obligations of
attorneys acting as a fiduciary in accordance with New York Law as described
above. In event a dispute arises with respect to the monies held in escrow by
Escrowee, Escrowee may hold the monies in escrow pending an Agreement signed by
the parties or until final determination from a court of competent jurisdiction
and all applicable appeal periods having expired.
6. It is agreed that the duties of the Escrowee are only as specifically
provided, are purely ministerial in nature, and that Escrowee shallincur no
liability whatsoever except for willful misconduct or gross negligence. Xxxxxxx
and Major hereby release Escrowee in good faith in performance of its duties
hereunder.
7. The Escrowee undertakes to perform only such duties as are required
pursuant to this Agreement and no implied duties or obligations shall be read
into this Escrow Agreement against the Escroww.
8. The Escrowee may act in reliance upon any writing or instrument or
signature which it, in good faith, believes to be genuine, may assume the
validity and accuracy of any statement or assertion contained in such writing or
instrument and may assume that any person purporting to give any writing,
notice, advise or instructions in connection with the provisions hereof has been
duly athorized to do so. The Escrowee shall not be liable in any manner for the
sufficiency or corectness as to form, manner and execution, or validity of any
instrument deposited in this escrow, nor as to
the identity, authority or right of any person executing the same.
9. Buyer and Seller hereby agree jointly and severally, to indemnify the
Escrowee and hold it harmless from any and all claims, liabilities, losses,
actions, suits or proceedings at law or in equity, or any other expenses, fees
or charges of any character or nature, which it may incur or with which it may
be threatened by reason of its acting as Escrowee under this Agreement; and in
connection therewith, to indemnify the Escrowee against all expenses, including
attorney's fees and the cost of defending any action, suit or proceeding or
restraining claim.
10. If the partieis shall be in disagreement about the interpretation of this
Agreement, or about the rights and obligations, or the propriety, of any action
contemplated by the Escrow Agency hereunder, the Escrow Agent may, at its sole
discretion, file an action in interpleader to resolve such disagreement. The
Escrow Agent shall be indemnified for all costs, including reasonable attorney's
fees, in connection with the aforesaid interpleader action, and shall be fully
protected in suspending all or a part of its activities under this Escrow
Agreement until a final judgment in the interpleader action is received. As an
alternatve to the filing of an action in interpleader in the event of a dispute,
the Escrow Agent, at its option, xxx suspend all or a part of its activities
under this Escrow Agreement until the Escrow receives an agreement between the
parties settling the dispute or a court order directing the Escrow Agent, at its
option, may suspend all or a part of its activities under this Escrow Agreemnt
until the Escrow receives an agreement between the partieis settling the dispute
or a court order directing the Escrow Agent to take sa specified court of
action. In the event that the Escrow Agent chooses the latter course of action,
the Escrow Agent shall be fully protected in suspending all or a part of its
activities under this Escrow Agreement until the Escrow Agent receives an
agreement between the partieis settling the dispute or a court order directing
the Escrow Agent to take a specified course of action.
11. The Escrow Agent may consult with counsel of its own choice and shall
have full and complete authorization and protection for any action taken or
suffered by it hereunder in good faith
and in accordance with the opinion os such counsel. The Escrow Agent shall
otherwise not be liable for any mistakes of fact or error of judgment, or for
any acts or omissions of any kind unless caused by its wilful misconduct or
gross negligence.
12. The Escrow Agent may resign upon thirty days written notice to both
parties. Seller shall thereupon appoint a successor Escrow Agent. If a successor
Escrow Agent is not appointedby Seller within the first twenty0one days of the
thirty day period, the Escrow Agent xxxx notify Buyer who shall thereuppon
appoint a successor Escrow Agent. If a successor Escrow Agent is not appointed
within the thirty day period, the Excrow Agent may petition the court to name a
successor.
13. This Agreement embodies the complete and final Agreement and
understanding between the partieis hereto and supersedes alal prior agreement
and understanding relating to the subject matter hereof.
14. This Agreement may not be amended, changed, altered, modified or
terminated except by a written instrument signed by all parties hereto.
15. All questions arising hereunder and the rights of the parties shall be
construed in accordance with the laws of the State of New York and any action or
proceeding shall be commenced in the State Courts of State of New York as
provided for under the CPLR.
16. In the event any provision of this Agreement is deemed unenforceable,
such determination shall not effect any of the other provisions herein.
17. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by the partieis hereto
that day and year above written.
/s/ Xxxxxx Xxxxxxx
-----------------------
Xxxxxx Xxxxxxx
Major Acquistion Corp.
/s/ Xxxxx Xxxxx
-----------------------
By: Xxxxx Xxxxx VP
/s/ Xxxxxx X. Xxxxxxx
-----------------------
Xxxxxx X. Xxxxxxx, Esq.
