STOCK PURCHASE AGREEMENT
AGREEMENT made this 17th day of May, 2000, by and between DCAP GROUP INC.,
maintaining an office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
(hereinafter referred to as "Seller"), DEALERS CHOICE AUTOMOTIVE PLANNING, INC.,
maintaining an office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ (hereinafter
referred to as "The Central Office"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (hereinafter referred to
as the "Other Shareholder"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, maintaining an office at ▇▇
▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter referred to as "Buyer"), and
DCAP RIDGEWOOD, INC, a New York Corporation, having its principal place of
business at ▇▇-▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, DCAP BAYSIDE, INC., a New
York Corporation, having its principal place of business at ▇▇-▇▇ ▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,▇▇▇▇▇, DCAP FREEPORT, INC., a New York Corporation, having its
principal place of business at ▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, and MC DCAP, INC., a New York Corporation, having its principal place of
business at ▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, (hereinafter
collectively referred to as "The Corporations").
WITNESSETH:
WHEREAS, the parties hereto, in furtherance of their mutual interests,
desire to formalize and confirm their prior understanding and present agreement
as to the ownership, management, operation and/or control of The Corporations
and as to their respective interests therein; AND
WHEREAS, the DCAP RIDGEWOOD INC. was duly organized under and by virtue of
the laws of the State of New York, on the 13th day of June, 1995; AND
WHEREAS, the DCAP BAYSIDE INC was duly organized under and by virtue of the
laws of the State of New York, on the 18th day of January, 1996; AND
WHEREAS, the DCAP FREEPORT INC was duly organized under and by virtue of
the laws of the State of New York, on the 25th day of July, 1996; AND
WHEREAS, the MC DCAP INC was duly organized under and by virtue of the laws
of the State of New York, on the 30th day of July, 1997; AND
WHEREAS, The Corporations are engaged in the business of insurance and any
other lawful purpose allowed under the laws of the State of New York; AND
WHEREAS, the parties represent that the aggregate number of shares which
each of The Corporations have been authorized to issue are, respectively, two
hundred (200) no par value common shares and further represent that DCAP GROUP
INC.and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ each presently owns 50% of the outstanding stock in
each of the Corporations all being fully paid and non-accessible; AND
WHEREAS, each of the parties to this agreement represent that there are no
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outstanding liens or encumbrances against each of their respective shares and
further represent that no transfer, assignment, gift or other disposition of
said shares has occurred nor is any pending with the exception of the transfer
contemplated herein, to wit, the sale of the shares held by the Seller to the
Buyer; AND
WHEREAS, Seller represents that it is authorized to sell its shares in The
Corporation (the "Shares") and by this agreement has the power to sell the
Shares ; AND
WHEREAS, each of the individual parties to this agreement represents and
acknowledges that there is no written agreement affecting the ownership of the
shares of stock of The Corporations, or the operation, management or control of
The Corporations with the exception of this document and the shareholder's
agreement dated May 15, 1995; AND
WHEREAS, it is the intention of the parties hereto that the rights of the
parties as defined in the shareholders agreement dated May 15, 1995, are
superseded as to the terms, parties and signatories therein by this agreement;
AND
WHEREAS, Seller is desirous of selling the Shares of The Corporations and
the Buyer is desirous of purchasing same;
NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants
and agreements of the parties hereinafter set forth, the parties heretofore
mentioned agree as follows:
I. No representations or warranties have been made by either party to the
other, or by anyone else, except as expressly set forth in this agreement, and
this agreement is not being executed in reliance upon any representations or
warranty not expressly set forth herein. Without limiting the foregoing, no
representations or warranties have been made by the Buyer to Seller or by anyone
else to Seller or by Seller to the Buyer or by anyone else to the Buyer, with
respect to the past, present or future income or assets of The Corporations,
except that the Seller represents to Buyer that the monthly Balance Sheets and
Profit and Loss Statements of The Corporations it prepared for and delivered to
The Corporations are true and correct to the knowledge of Seller. That Buyer and
Seller have been advised by their respective attorneys of their right to compel
discovery and inspection of The Corporations' books and records; and of their
right to have accountants, appraisers or others investigate, appraise or
evaluate the Corporations' business and property. That Buyer and Seller have
exercised these rights and have instructed their respective attorneys not to
take any further steps, themselves or through others, in connection with
discovery, inspection, investigation, appraisal or evaluation of The
Corporations' business or property.
II. The parties acknowledge that they are entering into this agreement freely
and voluntarily; that they have ascertained and weighed all the facts and
circumstances likely to influence their judgment herein; that they have sought
and obtained legal advice independently of each other; that they have been duly
appraised of their respective legal rights; that all the provisions hereof, as
well as all questions pertaining thereto, have been fully and satisfactorily
explained to them; that they have given due consideration to such provisions and
questions, and that they clearly understand and assent to all the questions
thereof.
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III. (a) On the terms and subject to the conditions of this Agreement, the
Seller will sell, transfer, and deliver to Buyer, and Buyer will purchase from
Seller, Fifty Shares (50) of each of The Corporations, representing fifty
percent (50%) of the issued and outstanding shares of Common Stock in each of
the corporations, that being the total owned by the Seller for the purchase
price of Two Hundred Sixty Seven Thousand Four Hundred and Fifty Four Dollars
($267,454.00). Buyer shall receive a credit at closing of One Hundred Twenty Six
Thousand Dollars ($126,000.00) against the purchase price representing the
franchise fees received by Seller for the three franchises sold within the
territories protected by the Certilman/Greenvald agreements, leaving a balance
due to Seller from Buyer in the amount of One Hundred Forty One Thousand and
Four Hundred and Fifty Four Dollars ($141,454.00). The purchase price includes
the payoff of the debt owed by The Corporations to The Central Office.
(b) The balance of the Purchase Price and the amount of the deficit shall
be payable as follows:
1. Sixty- Six Thousand Dollars ($66,000.00) payable at rate of Six
Thousand Dollars ($6,000.00) per month starting on the first
anniversary of the closing and continuing for eleven months
thereafter, monthly payments are to be paid no later than the
fifth day of the month in which they are due.
2. The balance, Seventy Five Thousand and Four Hundred Fifty Four
Dollars ($75,454.00), shall be paid in equal monthly installments
over five years, together with six percent (6%) interest,
commencing on the second anniversary date after the closing.
(c) The Corporations (four stores) will become DCAP Insurance and Income
Tax Preparation Franchisees for no franchise fee.
1. The annual franchise charges of Eighteen Thousand Dollars
($18,000.00) per store due in the first year shall all be paid at
the closing. The only credit that will apply to these fees are as
referred to in paragraph 4 below.
2. The annual charges for the second year shall be waived.
3. Commencing at the third year, the franchise charges of Sixteen
Hundred Dollars ($1,600.00) per month shall be payable monthly.
4. In the event of the sale of a franchise within the current
geographic boundaries of any of The Corporations' stores, the
annual franchise charges for such store shall be waived for six
months from the date the sale of such franchise is concluded,
however, the aggregate of such waivers shall not exceed four for
all stores. As a result of the sale of the Elmhurst Franchise in
May 2000, the annual franchise charges for the MC DCAP Store
referred to in paragraph 1 above is hereby waived so that the
franchise charges due at the closing for such store are reduced
to $9,000.00.
(d) Franchise agreements shall be similar to those for any other DCAP
conversion franchise and will contain the following provisions:
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1. The Franchise agreements will eliminate the geographic boundary
prohibitions Certilman/Greenvald presently has and will be
similar to those presently found in other franchise agreements;
namely the franchise territory would be limited to the zip code
assigned at the store (except in Bayside where there are three
zip codes, 11361, 11360 and 11364).
2. Buyer will have a right of first refusal for Ten (10) days on all
franchise locations at adjoining zip codes from the date of the
signing of the Prospectus by a prospective franchisee.
3. The MC DCAP store will continue to receive the Woodside calls
(718-533-8300) and will keep the commissions on renewals of old
Woodside customers and will receive all corresponding paperwork
including but not limited to renewal declarations, intent to
cancel notices, cancellation notices, amended declarations and
renewal offers. MC DCAP hereby ratifies it prior agreement with
Seller dated 12/6/99 and acknowledges its responsibility for the
payments thereunder.
4. To the extent that it remains legal, The Central Office will
continue to pay commissions for the sale of premium financing
through Payments, Inc. at the same rate as presently paid to
Seller owned stores.
(e) Buyer and Other Shareholder will terminate the present shareholder
agreements, thereby eliminating both the geographic boundary limitations and any
salary payable by Seller to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. For so long as The Central Office
is able, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, shall remain covered under their Errors and Omissions
policy, and further, shall retain the right to be covered under the Group Health
Plan.
(f) Buyer will waive the return of the $40,000 franchise fee advanced by
Buyer but not used (except that it will be applied against any current franchise
fee for any new franchise Buyer or his designee opens, except ▇▇▇▇▇▇ Heights,
Corona or Woodside).
(g) The Buyer shall have the right to a transitional period of up to 120
days from the Closing to shift record keeping from the Central Office to The
Corporations' offices. During such period, allocated expenses for items still
handled by The Central Office will continue to be charged, but no franchise
charges shall be payable. Further, during such period all policies and
endorsements will continue to be processed by the Central Office. Upon The
Corporations' request, all addresses for accounts handled by The Corporations'
stores, as well as addresses pertaining to any bills for services or products
rendered for the account of The Corporations, shall be changed to ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, or any other address so designated
by The Corporations. In addition, at the Closing Seller shall deliver to Buyer
copies of all real estate and equipment leases, and all other records pertaining
to the ownership and operation of The Corporations business, including, but not
limited to, the names, addresses and contacts of all insurance companies and all
supplies and equipment vendors.
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(h) Upon the Closing the geographic prohibitions pertaining to the sale of
franchises located at Corona, Woodside and ▇▇▇▇▇▇ Heights shall be irrevocably
waived by Buyer and the Other Shareholder and terminated.
(i) Irrespective of any other provision of the purchase agreement, so long
as neither party is in default, the franchisee will not of its own volition
terminate the franchise agreement so long as the indebtedness to DCAP Group Inc.
referred to in Paragraph III remains unpaid.
IV. The Closing (the "Closing") of the purchase and sale of the Shares shall be
held at the Corporate offices of DCAP GROUP INC located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ May 17, 2000, at 9:30 A.M. or at such other reasonable date
and time agreed to by the parties. At the Closing, (a) Buyer will deliver to the
Seller by check payable to the order of the Seller in the amount of Seventy Two
Thousand Dollars ($72,000.00), such amount representing the franchise charges
for the four stores together with a Promissory Note (substantially in the form
annexed hereto as Schedule A) in the amount of One Hundred Forty One Thousand
Four Hundred and Fifty Four Dollars ($141,454.00), bearing interest beginning at
the second anniversary date of the closing at the rate of six percent (6%) per
annum, and due and payable as set forth in the Paragraph III above and (b) the
Seller shall deliver to Buyer certificates representing Fifty (50) Shares in the
each of the corporations, to be held by Seller pursuant to the terms of the
Pledge Agreement referred to in Paragraph V hereof. Buyer's failure to pay the
balance due under the note within ten (10) days of its due date, after ten (10)
days written notice, by certified mail, return receipt requested, shall
constitute a default.
V. As security for the payment of the Promissory Note referred to in paragraph
III hereof, the certificates(s) issued in the name of the Buyer and representing
the Shares (the "Certificates") being purchased, together with stock powers
endorsed in blank, shall be deposited with Seller under a Pledge Agreement
substantially in the form annexed hereto as Schedule "B". The Seller shall keep
the Certificate(s) together with stock powers in its possession until the
Promissory Note has been paid in full.
VI. (a) Seller and The Corporations represent that the sale hereunder is not in
contravention of their respective certificates of incorporation, by-laws and/or
the Shareholder Agreements dated May 15, 1992, and that the sale hereunder has
been consented to by their respective Board of Directors and by all of the
shareholders of The Corporations.
(b) The rights of the parties as defined in the shareholder agreements
dated May 15, 1995, are superseded as to the terms, parties and signatories
therein by this agreement. Notwithstanding the foregoing, in the event Buyer
materially defaults in payment of his monetary obligations to Seller beyond all
cure periods provided for in this stock transfer agreement, then in that event
only and at the option of Seller, the May 15, 1995, shareholder agreements shall
be reinstated and Seller shall be restored to their fifty (50%) per cent
interest in the corporations.
VII. The parties agree that all software and intellectual property shall remain
the property of Seller subject to The Corporations use under its license or
franchise agreements with Seller.
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VIII. The Corporations and Buyer shall defend and indemnify and hold harmless
Seller, and each of its assigns and legal representatives from any and all
liability for contracts, debts, or taxes (including interest and penalties) due
municipal taxing authorities for which the Corporations or may become liable
from the Closing onward.
IX. If in connection with any Federal, State or City income, franchise,
corporate or sales tax returns heretofore or hereafter filed by The
Corporations, up to and including the date of Closing, there is a deficiency
assessment, the amount ultimately determined to be due thereon, including
penalties, interest, and reasonable attorney's and accountant's fees incurred by
The Corporations in defending or challenging said assessment, shall be paid pro
rata by Seller and The Corporations. In the event a refund is due The
Corporations for any tax year up to and including calendar year 1999, including
December 31, 1999, then in that event, The Corporations and Seller shall share
said refund pro rata. Each party agrees to promptly notify and cooperate fully
with the other in the event of any audit or examination by a taxing authority of
The Corporation's tax returns and agrees to furnish to the party being examined
or his designees, promptly and without charge, such papers, records, documents
and information as may be reasonably appropriate in connection with such audit
or examination.
X. Buyer acknowledges and represents that he will execute at Closing the
following documents to evidence his debt to Seller.
(a) A Promissory Note in the sum of One Hundred and Forty One Thousand Four
Hundred and Fifty Four Dollars ($141,454.00) in the form annexed as Schedule A.
(b) A Security Agreement and UCC-1 Financial Statements(state & county)
executed by The Corporations.
(c) A pledge agreement in the form annexed as Schedule B.
XI. (a) The Corporations and Buyer acknowledge and represent that the Note shall
be due on any dissolution of The Corporations; on any bankruptcy filing by The
Corporations which is not withdrawn within thirty (30) days of the filing; on
the transfer or conveyance of substantially all of the assets of The
Corporations. For purposes of this paragraph XI, a transfer or conveyance of
fifty-one (51%) percent or more of the shares of The Corporations, whether in a
single transaction or in the aggregate, excluding all transfers to members of
Buyer's family, shall be deemed to be a transfer which will result in the
Promissory Note immediately becoming due at the option of Seller.
(b) Buyer, The Other Shareholder and The Corporations further covenant that
none of the One Hundred(100) remaining but unissued shares of stock shall be
issued until Seller is paid in full.
(c) Except for the obligations, promises and agreements herein set forth
and to be performed by the parties hereto, the Corporation and Certilman hereby,
for themselves and for their legal representatives, forever release and
discharge Seller and its heirs and legal representatives from any and all debts,
sums of money, accounts, contracts, claims, causes of action, suits, dues,
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reckoning, bonds, bills, specialties, covenants, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents, executions, and
demands whatsoever, in law or in equity, which they had, now has or hereafter
can, shall or may have, by reason of any matter including but not limited to
Sellers status as a shareholder in The Corporations through and including from
the beginning of the world to the date of the Closing.
XII. (a) The parties represent to each other that Seller has been represented by
Weil & ▇▇▇▇▇▇▇▇▇▇. ▇▇-▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇.
(b) The parties represent to each other that Buyer and The Corporations
have been represented by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esquire, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇.
(c) Each of the parties shall be responsible for attorneys' fees to be paid
to their respective counsel.
XIII. Any and all notices, designations, consents, offers, or other
communications provided for herein shall be given in writing by certified mail,
return receipt requested, which shall be addressed in the case of Seller to DCAP
GROUP INC. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and in the case of
Buyer, The Other Shareholder or The Corporations at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ or such other address as may be designated by each party. Each such
notice shall be deemed given at the time mailed.
XIV. The parties hereto agree that it is their intention and covenant that this
agreement and performance hereunder and all suits and special proceedings
hereunder be construed in accordance with and under and pursuant to the laws of
the State of New York and that in any action, special proceeding, or other
proceedings that may be brought arising out of, in connection with, or by reason
of this agreement, the laws of the State of New York shall be applicable and
shall govern to the exclusion of the law of any other forum, without regard to
the jurisdiction in which any action or special proceeding may be instituted.
The parties hereto agree and consent to the selection of Nassau County as the
proper venue for any lawsuits or actions which are to be commenced or
instituted.
XV. (a) This agreement and all the obligations and covenants hereunder shall
bind the parties hereto, their heirs, executors, administrators, legal
representatives and assigns and shall enure to the benefit of their respective
heirs, executors, administrators, legal representatives and assigns.
(b) No modification, rescission, or amendment to this agreement shall be
effective unless in writing and signed by the parties hereto.
(c) This agreement and its provisions merge any prior agreements, if any,
of the parties and is the complete and entire agreement of the parties.
(d) Each of the parties hereto, without cost to the other, shall at any
time and from time to time hereafter execute and deliver any and all further
instruments and assurances and perform any acts that the other party may
reasonably request for the purpose of giving full force and effect to the
provisions of this agreement.
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(e) Each of the parties has read this agreement prior to the signing
thereof.
(f) In the event that any term, provision, paragraph or Article of this
Agreement is or is declared illegal, void or unenforceable, same shall not
affect or impair the other terms, provisions, paragraphs or Articles of this
Agreement. The doctrine of severability shall be applied.
(g) This agreement may be executed in one or more counterparts each of
which shall be deemed an original.
(h) Any waiver of either party of any provision of this agreement, or of
any right hereunder, shall not be deemed a continuing waiver and shall not
prevent or estop such party from thereafter enforcing such provision or right,
and the failure of either party to insist in any one or more instances upon the
strict performance of any of the terms or provisions of this agreement by the
other party shall not be construed as a waiver or relinquishment for the future
of any such terms or provisions, but the same shall continue in full force and
effect.
XVI. This agreement shall be deemed a ▇▇▇▇ of sale of the stock herein.
XVII. This agreement is conditioned upon the signing of Franchise Agreements
for The Corporations acceptable to both parties on or before May 31, 2000.
IN WITNESS WHEREOF, the parties acknowledge that this agreement was
executed on the date first written above.
Seller Central Office
DCAP GROUP INC. DEALERS CHOICE AUTOMOTIVE PLANNING INC.
By: By:
Buyer Consented to by
"Other Shareholder"
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
DCAP Ridgewood, Inc.
DCAP Bayside, Inc.
DCAP Freeport, Inc.
MCDCAP, Inc.
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