Contract
STOCK PURCHASE AGREEMENT, made as of the
1st day of May,
2009, by and between XXXXXX
XXXXXXXXX and
XXXXXXX
XXXXXXXXX (collectively,
the “Buyer”) and
DCAP GROUP, INC.
(the “Seller”).
RECITALS
WHEREAS, DCAP Management
Corp., a New York corporation (“Management”), having its principal place of
business at 0000 Xxxxxxxx, Xxxxxxx, Xxx Xxxx 00000, was duly organized under and
by virtue of the laws of the State of New York.
WHEREAS, the Seller is the
owner of one hundred (100) shares of Common Stock, no par value, of Management
(the “Management Shares”) which represents all of Management=s issued and
outstanding shares.
WHEREAS, Dealers Choice
Automotive Planning Inc., a New York corporation (“Dealers Choice”), having
its principal place of business at 0000 Xxxxxxxx, Xxxxxxx, Xxx Xxxx
00000, was duly organized under and by virtue of the laws of the State of New
York.
WHEREAS, the Seller is the
owner of one hundred (100) shares of Common Stock, no par value, of Dealers
Choice (the “Dealers Choice Shares”) which represents all of Dealers
Choice=s issued and
outstanding shares.
WHEREAS, DCAP Agency, Inc., a
New York corporation (“Agency” and together with Management and Dealers Choice,
the “Company”), having its principal place of business at 0000 Xxxxxxxx,
Xxxxxxx, Xxx Xxxx 00000, was duly organized under and by virtue of the laws of
the State of New York.
WHEREAS, the Seller is the
owner of fifty (50) shares of Common Stock, no par value, of Agency (the “Agency
Shares” and together with the Management Shares and the Dealers Choice Shares,
the “Shares”) which represents 50% of Agency’s issued and outstanding
shares.
WHEREAS, the Seller desires to
sell, and the Buyer desires to purchase, all of the Shares subject to the terms
and conditions set forth herein.
NOW, THEREFORE, the parties
agree as follows:
1. Sale of
Stock; Security. (a) For and in consideration of the Purchase
Price (as hereinafter defined), the Seller hereby sells to the Buyer, and the
Buyer hereby purchases from the Seller, all of the Shares.
(b) The
aggregate purchase price for the Shares is Two Hundred Thousand Dollars
($200,000) (the “Purchase Price”), payable by delivery to the Seller, on the
date hereof, of a promissory note in the principal amount of Two Hundred
Thousand Dollars ($200,000) (the “Promissory Note”).
(c) As
security for the satisfaction of the Buyer’s obligations under the Promissory
Note, simultaneously herewith, the Buyer is granting to the Seller a security
interest in all of the Shares pursuant to a Pledge Agreement of even date
between the Seller and the Buyer (the “Pledge Agreement”).
2. Representations
of the Seller. The Seller represents and warrants to the Buyer
as follows:
(a) Ownership
of Shares. The Seller is the
sole owner and holder of the Shares, free and clear of all liens and
encumbrances.
(b) Capitalization.
(i) The
authorized capital stock of each of Management and Dealers Choice consists of
two hundred (200) shares of Common Stock, no par value, one hundred (100) of
which are issued and outstanding and held by the Seller.
(ii) The
authorized capital stock of Agency consists of two hundred (200) shares of
Common Stock, no par value, one hundred (100) of which are issued and
outstanding. The Seller holds fifty (50) of such shares.
(iii) There are
no subscriptions, options, warrants, rights, calls or other commitments to which
the Company or the Seller is a party, or by which any of them is bound, calling
for the issuance, sale, transfer or other disposition of any class of securities
of the Company and there are no outstanding securities or instruments of the
Company convertible into or exchangeable for shares of Common Stock or any other
securities of the
Company.
(c) Consents. No consent of any
governmental or other regulatory agency, court or third party is required to be
received by or on the part of the Seller to enable it to enter into and carry
out this Agreement and the transactions contemplated hereby.
(d) Authority;
Binding Nature of Agreement. The Seller has
the power to enter into this Agreement and to carry out its obligations
hereunder. This Agreement constitutes the valid and binding
obligation of the Seller, and is enforceable in accordance with its
terms.
(e) No
Breach. Neither
the execution and delivery of this Agreement, nor compliance by the Seller with
any of the provisions hereof, nor the consummation of the transactions
contemplated hereby, will:
(i) violate
any provision of the Certificate of Incorporation or By-Laws, each as amended,
of the Seller;
(ii) violate
any judgment, order, injunction, decree or award against, or binding upon, the
Seller;
(iii) violate
or otherwise breach the terms of any agreement or understanding, written or
oral, to which the Seller is a party or is otherwise bound; or
(iv) violate
any law or regulation of any jurisdiction relating to the Seller.
(f) Brokers. The Seller has
not engaged, consented to, or authorized any broker, finder, investment banker
or other third party to act on its behalf, directly or indirectly, as a broker
or finder in connection with the transactions contemplated by this
Agreement.
(g) Liabilities. Except
as set forth on Schedule 2(g), the Company has no liabilities; provided,
however, that no representation or warranty is made with respect to any
liabilities, actual or contingent, of the Company to any current or former
franchisee of Management or any affiliate of any such franchisee or any other
liability not required by generally accepted accounting principles to be
disclosed on a balance sheet.
(h) Accounts
Receivable. Attached hereto as Schedule 2(h) is a listing of
the Company’s accounts receivable (the “Accounts Receivable”).
(i) Notes
Receivable. Attached hereto as Schedule 2(i) is a listing of
the Company’s notes receivable (the “Notes Receivable”).
(j) Threatened
Actions. The Seller is not currently aware of any threatened
legal action against Management.
3. Representations
of the Buyer. The Buyer represents and warrants to the Seller
as follows:
(a) Consents. No consent of any
governmental or other regulatory agency, court or third party is required to be
received by or on the part of either Buyer to enable him to enter into and carry
out this Agreement, the Promissory Note or the Pledge Agreement and the
transactions contemplated hereby or thereby.
(b) Authority;
Binding Nature of Agreement. Each Buyer has
the power to enter into this Agreement, the Promissory Note and the Pledge
Agreement and to carry out his obligations hereunder and
thereunder. This Agreement, the Promissory Note and the Pledge
Agreement constitute the valid and binding obligations of the Buyer and are
enforceable in accordance with their respective terms.
(c) No
Breach. Neither the
execution and delivery of this Agreement, the Promissory Note or the Pledge
Agreement, nor compliance by the Buyer with any of the provisions hereof or
thereof, nor the consummation of the transactions contemplated hereby or
thereby, will:
(i) violate
any judgment, order, injunction, decree or award against, or binding upon,
either Buyer;
(ii) violate
or otherwise breach the terms of any agreement or understanding, written or
oral, to which either Buyer is a party or is otherwise bound; or
(iii) violate
any law or regulation of any jurisdiction relating to either Buyer.
(d) Brokers. Neither
Buyer has engaged, consented to, or authorized any broker, finder, investment
banker or other third party to act on his behalf, directly or indirectly, as a
broker or finder in connection with the transactions contemplated by this
Agreement.
(e) Acknowledgment. The
Buyer acknowledges that, prior to the Closing, the Company has transferred to
the Seller or a subsidiary thereof all of the cash of the Company and Dealers
Choice has transferred to the Seller or a subsidiary thereof all of its right,
title and interest in and to a certain boat owned by Dealers Choice, and,
following the Closing, the Company shall have no cash and Dealers Choice shall
have no right, title or interest in or to such boat.
4. Closing.
(a) Time and
Location. The closing (the
“Closing”) provided for herein shall take place simultaneously with the
execution of this Agreement at the offices of Certilman Balin Xxxxx & Xxxxx,
LLP, 00 Xxxxxxx Xxxxxx, Xxxx Xxxxxx, Xxx Xxxx 00000. The Closing
shall be deemed effective as of the opening of business on May 1,
2009.
(b) Items to
be Delivered by the Seller. At the Closing,
the Seller will deliver or cause to be delivered to the Buyer:
(i) certificates
representing the Shares, together with stock powers, duly executed in blank by
the Seller;
(ii) the
resignation of each officer and director of the Company;
(iii) the
Pledge Agreement, executed on behalf of the Seller; and
(iv) Trademark
Assignment pursuant to which the Seller assigns to Management all of its right,
title and interest in and to trademark registration numbers 3282660 pertaining
to the name “DCAP Insurance” and 3282658 pertaining to the “DCAP”
logo.
(c) Items
to be Delivered by the Buyer. At the Closing, the Buyer will
deliver or cause to be delivered to the Seller:
(i) the
Promissory Note executed by the Buyer; and
(ii) the
Pledge Agreement, executed by the Buyer, together with the certificates
representing the Shares and stock powers, duly executed in blank by the
Buyer.
5. Post-Closing
Covenants. (a) The Seller agrees that, within thirty (30) days
following the Closing, it shall deliver to the Buyer an unaudited combined
balance sheet of the Company as of April 30, 2009 (the “Closing Balance Sheet”)
and an unaudited combined statement of operations of the Company for the period
from January 1, 2009 through April 30, 2009 (the “Closing Statement of
Operations”). The Closing Balance Sheet will reflect that the Company
has no liabilities.
(b) Following
the Closing, Management will offer Xxxxxxxx Xxxxxxx (“Xxxxxxx”) continued
employment on such terms as are mutually agreeable to Management and
Xxxxxxx.
(c) Promptly
following the Closing, (i) the Company, at its expense, will remove
from the Seller’s premises all equipment and files of the Company and (ii) the
Seller will deliver to the Company all data of the Company stored on the
Seller’s servers.
(d) Following
the Closing and through January 31, 2018 (the “Applicable Period”),
(i) Management
will not waive, release or discharge any obligation of any current or future
franchisee of Management (a “Franchisee”) set forth in a franchise agreement in
effect as of the Closing or hereinafter entered into or amended, that relates in
any respect to Payments Inc. and its successors and assigns (“Payments Inc.”),
including any obligation to use Payments Inc. for premium financing and/or to
refer its customers who desire premium financing to Payments Inc.;
(ii) Management
will provide in each new or amended franchise agreement entered into with a
Franchisee that, during the Applicable Period, the Franchisee will refer each of
its customers who desire premium financing to Payments Inc., and only to
Payments Inc.;
(iii) each
Buyer will cause each of the Franchisees in which he has an interest, direct or
indirect, including the Franchisees set forth on Schedule 5(d), to refer each of
its customers who desire premium financing to Payments Inc. and only to Payments
Inc.; and
(iv) neither
the Company nor the Buyer, directly or indirectly, will encourage or assist any
Franchisee to enter into any agreement, arrangement or understanding with any
premium finance company other than Payments Inc. or to refer any of their
customers to any premium finance company other than Payments Inc.
(e) The Buyer
and the Company acknowledge and agree that, following the Closing, the Seller
and its subsidiaries shall have the right to use the name “DCAP” and the “DCAP”
logo, on a royalty-free basis; provided, however, that, in the event of the
conversion of Commercial Mutual Insurance Company from an advance premium
cooperative to a stock property and casualty insurance company, the Seller shall
change its name to one that does not contain the name “DCAP.” In the
event that such name change does not occur by the time of the next annual
meeting of shareholders of the Seller, the Seller will propose to its
shareholders at such meeting that they approve a change in the name of the
Seller to one that does not contain the name “DCAP.”
(f) Following
the Closing, the Company will comply with all required payroll tax notices and
filings and will continue to use ADP for its payroll processing, in each case
with respect to the year ending December 31, 2009. The Seller will
assist the Company with any such notices and filings to the extent they relate
to the pre-Closing period.
(g) The Buyer
will cause the Company and each successor to and assign of the Company and its
business to comply with the foregoing covenants.
6. Amendment. No provision
hereof may be changed, waived, discharged, or terminated orally, or in any
manner other than by an instrument in writing signed by the party against which
the enforcement of the change, waiver, discharge, or termination is
sought.
7. Binding
Effect. This Agreement
shall be binding upon and inure to the benefit of the respective parties, and
their successors and assigns, heirs and personal representatives.
8. Counterparts. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original.
9. Entire
Agreement. This Agreement
constitutes the entire understanding between the parties with respect to the
subject matter hereof and supersedes any previous written or oral agreement with
respect thereto. The express representations, warranties and
covenants set forth in this Agreement constitute all of the representations,
warranties and covenants of the parties and upon which the parties have
relied. Without limiting the generality of the foregoing, except as
expressly provided for in Sections 2(g) and 5(a), no representation or warranty
is being made by the Seller with respect to the business, assets, properties,
condition (financial or otherwise) or prospects of the Company, any agreement to
which the Company is a party or is otherwise bound, the collectability of the
Accounts Receivable or the Notes Receivable, Management’s relationship with its
franchisees, the Closing Balance Sheet or the Closing Statement of
Operations.
10. Construction. This Agreement is
made under and shall be construed in accordance with the laws of the State of
New York applicable to contracts made and performed within the State of New
York. As used herein, the term “including” shall mean “including
without limitation,” all references to the masculine pronoun or the neuter shall
be deemed to refer to the other where applicable and all references to the
singular shall be deemed to refer to the plural, and vice versa, where
applicable.
11. Notices. Any and all notices or other
communications or deliveries required or permitted to be given or made pursuant
to any of the provisions of this Agreement shall be deemed to have been duly
given or made for all purposes when hand delivered or sent by certified or
registered mail (return receipt requested, postage prepaid), facsimile
transmission, or overnight mail or courier, addressed as follows:
If to the
Seller, at:
0000
Xxxxxxxx
Xxxxxxx,
Xxx Xxxx 00000
Attention: President
Telecopier
Number: (000) 000-0000
With a
copy to:
Certilman
Balin Xxxxx & Xxxxx, LLP
00
Xxxxxxx Xxxxxx
Xxxx
Xxxxxx, Xxx Xxxx 00000
Attention:
Xxxx Xxxxxxx, Esq.
Telecopier
Number: (000) 000-0000
If to the
Buyer, at:
Xxxxxx
Xxxxxxxxx
00 Xxxx
Xxxxxxx Xxxxxxx
Xxxxxxxx,
Xxx Xxxx 00000
Telecopier
Number: (000) 000-0000
and
Xxxxxxx
Xxxxxxxxx
000 Xxxxx
Xxxxxxxx
Xxxxxxxxxx,
Xxx Xxxx 00000
Telecopier
Number: (000) 000-0000
or at
such other address as any party may specify by notice given to the other parties
in accordance with this Section 11.
12. Further
Assurances. On or after the
date hereof, the parties shall take all such further actions and execute and
deliver all such further instruments and documents as may be necessary or
appropriate to carry out the transactions contemplated by this
Agreement.
13. Severability. In the event any
clause, section or part of this Agreement shall be held or declared to be void,
illegal or invalid for any reason, all other clauses, sections or parts of this
Agreement which can be effected without such void, illegal or invalid clause,
section or part shall nevertheless continue in full force and
effect.
14. Headings. The headings or
captions in this Agreement are for convenience of reference only and do not in
any way modify, interpret or construe the intent of the parties or affect any of
the provisions of this Agreement.
15. Representation
by Counsel; Interpretation. Each party
acknowledges that he or it has been represented by counsel, or has
been afforded the opportunity to be represented by counsel, in connection with
this Agreement and the transactions contemplated hereby. Accordingly,
any rule or law or any legal decision that would require the interpretation of
any claimed ambiguities in this Agreement against the party that
drafted it has no application and is expressly waived by the
parties. The provisions of this Agreement shall be interpreted in a
reasonable manner to give effect to the intent of the parties
hereto.
16. Joint and
Several Obligation. All of the obligations of the Buyer
hereunder shall be joint and several with respect to each person constituting
the Buyer.
17. No Third
Party Beneficiaries. No person or entity not a party to this
Agreement shall be entitled to rely upon or enforce any of the provisions
hereof.
[Remainder
of page intentionally left blank. Signature page
follows.]
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
/s/
Xxxxxx
Xxxxxxxxx
/s/
Xxxxxxx
Xxxxxxxxx
DCAP GROUP, INC.
By: /s/
Xxxxx
Xxxxxxxxx, President
Agreed
to:
DCAP
MANAGEMENT CORP.
By: /s/
DEALERS
CHOICE AUTOMOTIVE
PLANNING
INC.
By: /s/
DCAP
AGENCY, INC.
By: /s/