Exhibit 10.10
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), entered into this 12th
day of February, 1997, by and among FIRST CHOICE AUTO FINANCE, INC., a
Florida corporation (the "Buyer"), XXXXXX INDUSTRIES, INC., a Florida
corporation ("Xxxxxx") and X.X. XXXX, XX, an individual (the
"Stockholder");
W I T N E S S E T H:
WHEREAS, Wholesale Acquisitions, Inc.("WAI"), a Florida corporation is
engaged in a business consisting primarily of wholesale acquisitions and
sales activities in connection with the sale of used automobiles and other
consumer vehicles (the " WAI Business"); and
WHEREAS, Team Automobile Sales & Service, Inc. ("Team"), a Florida
corporation, is engaged in a business consisting primarily of retail sales
activities in connection with the sale of used automobiles and other
consumer vehicles (the "Team Business"); and
WHEREAS, for purposes herein, the WAI Business and the Team Business
shall be jointly referred to as the "Business" unless the context shall
require otherwise; and
WHEREAS, the Stockholder is the record and beneficial owner of all of
the issued and outstanding capital stock of WAI (the "WAI Stock") and of
the issued and outstanding stock of Team (the " Team Stock"); the WAI
Stock and the Team Stock are hereby referred to jointly as the "Stock"
unless the context shall require otherwise;
WHEREAS, the Buyer desires to purchase from the Stockholder, and the
Stockholder desires to sell to the Buyer, all upon the terms and subject to
the conditions set forth in this Agreement, all (and not less than all) of
the Stock, and the businesses of WAI and Team, as going concerns; and
WHEREAS, Xxxxxx owns all the outstanding capital stock of the parent
of the Buyer;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereby agree as of the Effective
Date, as follows:
1. ACQUISITION OF THE STOCK.
1.1 Exchange of Shares. Subject to the terms and conditions of
this Agreement, on the date hereof, Buyer is purchasing and acquiring from
the Stockholder, and the Stockholder is selling and transferring to Buyer,
all (and not less than all) of the Stock, in exchange for the consideration
provided in Section 2 below. In furtherance thereof, the Stockholder is,
simultaneously with the execution and delivery of this Agreement,
delivering to the Buyer the certificates representing all of the Stock,
duly endorsed for transfer or accompanied by stock powers executed in blank
for transfer.
1.2 Books and Records. On the date hereof, in addition to the
delivery and transfer of the Stock to the Buyer, the Stockholder is
delivering, and causing WAI and Team to deliver, to the Buyer all of the
stock books, records and minute books of each of them, all financial and
accounting books and records of each of them, and all referral, client,
customer and sales records of each of them.
1.3 Effective Date. The effective date (the "Effective Date")
of the transactions contemplated hereby shall be February 11, 1997.
2. CONSIDERATION.
2.1 Purchase Price. The total purchase price for the WAI Stock
shall be Four Hundred Five Thousand and No/100ths Dollars ($405,000). The
total purchase price for the Team Stock shall be One Million Ninety Five
Thousand and No/100ths Dollars ($1,095,000). Unless the context shall
otherwise require, the purchase price for the WAI Stock and the purchase
price for the Team Stock shall be jointly referred to herein as the
"Purchase Price."
2.2 Payment of Purchase Price. The Purchase Price shall be
paid by the Buyer executing and delivering a promissory note (the "Note")
in the form of that attached hereto as Schedule 2.2(b), which shall contain
the following terms and conditions:
(i) The principal of the Note shall be paid as
follows:
(1) Due in full the earlier of: (i) one (1) year
from the date of the Note, or (ii) fifteen (15) days
after the date on which Xxxxxx and/or any of its
corporate affiliates shall consummate a public offering
of its equity securities of at least $20,000,000.00.
(2) Fifty Thousand and No/100ths Dollars
($50,000.00) shall be paid in cash at closing.
(3) Beginning on 1 March 1997, and on the first
day of each calendar month thereafter, a principal
payment of Thirty Thousand and no/100ths Dollars
($30,000.00) shall be due and payable.
(ii) The Note shall bear interest a the rate of eight
percent (8%) per annum, with interest payable on
the first day of each calendar month, beginning on
1 March 1997, in arrears.
(iii) The Note shall be guaranteed by Xxxxxx in the
form of the Corporate Guaranty attached hereto as
Schedule 2.2(b).
The Buyer, with a guarantee by Xxxxxx, shall assume the debt of Stockholder
to Xxxxxxx Bank of Central Florida, N.A., in the approximate principal
balance of Three Hundred Thousand and 00/100ths Dollars ($300,000), the
payment of which shall satisfy the obligation of WAI to the Stockholder in
the same amount. Buyer acknowledges that such Xxxxxxx Bank obligation is
due in March, 1997, and agrees to make payment in full directly to Xxxxxxx
Bank. Upon such payment, the obligation of WAI to the Stockholder will be
satisfied to the same extent as the payments made to Xxxxxxx Bank.
3. INTENTIONALLY LEFT BLANK
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER.
In connection with the sale and transfer of the Stock to the Buyer,
the Stockholder hereby represents and warrants to the Buyer as set forth
below. For purposes hereof "Material Adverse Effect" shall mean any event,
occurrence or circumstance which (a) has or is reasonably likely to have a
material adverse effect on the financial condition, results of operations,
business or prospects of the Company taken as a whole, or the Buyer and its
affiliates taken as a whole, as applicable, (b) would materially impair
such party's ability to perform its obligations under this Agreement or the
consummation of any of the transactions contemplated hereby, or (c) results
in an adverse effect that is Two Thousand and 00/100ths Dollars ($2,000.00)
or greater on any particular item related to the Buyer's purchase of the
Business hereunder.
4.1 Title to the Stock. The Stockholder is the valid and lawful
record and beneficial owner of all of the Stock. All of the Stock has been
duly authorized and validly issued and is fully paid and non-assessable,
and is free and clear of all pledges, liens, claims, charges, options,
calls, encumbrances, restrictions and assessments whatsoever (except any
restrictions which may be created by operation of state or federal
securities laws). The Buyer is receiving from the Stockholder good, valid
and marketable title to all of the Stock, free and clear of all pledges,
liens, claims, charges, options, calls, encumbrances, restrictions and
assessments whatsoever (except any restrictions which may be created by
operation of state or federal securities laws).
4.2 Valid and Binding Agreement; No Breach.
(a) The Stockholder has full legal right, power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement constitutes the legal,
valid and binding obligation of the Stockholder, enforceable against the
Stockholder in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency, reorganization and
other laws affecting creditors' rights generally, and except that the
remedy of specific performance or similar equitable relief is available
only at the discretion of the court before which enforcement is sought.
(b) Except as disclosed in Schedule 4.2 annexed hereto,
neither the execution and delivery of this Agreement by the Stockholder,
nor compliance with the terms and provisions of this Agreement on the part
of the Stockholder, will, under circumstances that would result in a
Material Adverse Effect: (i) violate any statute or regulation of any
governmental authority, domestic or foreign, affecting WAI, Team or the
Stockholder; (ii) require the issuance of any authorization, license,
consent or approval of any federal or state governmental agency; or (iii)
conflict with or result in a breach of any of the terms, conditions or
provisions of any judgment, order, injunction, decree, note, indenture,
loan agreement or other agreement or instrument to which WAI, Team or the
Stockholder is a party, or by which WAI, Team or the Stockholder is bound,
or constitute a default thereunder, or require the consent of any other
party to any of the foregoing.
4.3 Organization, Good Standing and Qualification WAI and Team
are corporations duly organized, validly existing and in good standing
under the laws of the State of Florida, with full corporate power and
authority to own their assets and conduct their business as owned and
conducted on the date hereof. WAI and Team are not required to be
qualified as a foreign corporation under the laws of any jurisdiction.
True and complete copies of the Articles of Incorporation and Bylaws of WAI
and Team (including all amendments thereto), and a correct and complete
list of the officers and directors of WAI and Team, are annexed hereto as
Schedule 4.3.
4.4 Capital Structure; Equity Ownership.
(a) The authorized capital stock of WAI and Team is as set
forth in their Articles of Incorporation as included in Schedule 4.3, and
the Stock constitutes and represents all of the outstanding capital stock
of WAI and Team.
(b) There are no outstanding subscriptions, options,
rights, warrants, convertible securities or other agreements or calls,
demands or commitments obligating WAI or Team to issue, transfer or
purchase any shares of their capital stock, or obligating the Stockholder
to transfer any shares of the Stock. No shares of capital stock of WAI or
Team are reserved for issuance pursuant to stock options, warrants,
agreements or other rights to purchase capital stock.
4.5 Subsidiaries and Investments. Neither WAI nor Team owns,
directly or indirectly, any stock or other equity securities of any
corporation or entity, or has any direct or indirect equity or ownership
interest in any person, firm, partnership, corporation, venture or business
other than the business conducted by WAI and Team, respectively.
4.6 Financial Information.
(a) Annexed hereto as Schedule 4.6(a) are the audited
financial statements (including balance sheet, income statement, statement
of stockholders' equity, statement of cash flows, and notes thereto) for
WAI and Team as of December 31, 1994 and December 31, 1995 and for each of
the years then ended, and the unaudited financial statements for WAI and
Team as of December 31, 1996 for the twelve (12) months then ended and as
of January 31, 1997 and for the month then ended (collectively, the
"Financial Statements"), all of which fairly reflect, in all material
respects, the financial condition and results of operations of WAI and Team
in accordance with generally accepted accounting principles consistently
applied, as of the dates thereof and for the periods then ended; and,
without limitation of the foregoing, neither WAI nor Team has any material
liabilities, fixed or contingent, known or unknown, except to the extent
reflected in the most recent of such Financial Statements or thereafter
incurred in the normal course of their businesses. The Financial
Statements (as of the dates thereof and for the periods covered thereby)
are in accordance with the books and records of WAI and Team, which are
complete and accurate in all material respects.
(b) The Buyer has been provided the payment histories of
each of the credit agreements, finance leases and other agreements
underlying the Receivables (defined below), all of which fairly present the
dates and amounts of all receipts and disbursements under or in respect of
such credit agreements, finance leases and other agreements. Except as and
to the extent reflected in such payment histories, (i) all payments under
such credit agreements, finance leases and other agreements have been made
in a full and timely manner, and (ii) there have been no prepayments made
in respect of any such credit agreements, finance leases or other
agreements.
(c) Annexed hereto as Schedule 4.6(c) is a listing of all
debts and obligations and guarantees to which WAI or Team is a party and
all obligations of others which are secured by property of WAI or Team, and
the current principal amount of, accrued interest on, and any amount
guaranteed under all such debts, obligations, or guarantees. Schedule
4.6(c) contains a separate listing of all debt obligations of WAI or Team
to the Stockholder and members of the Stockholder's family. Except as set
forth on Schedule 4.6(c), WAI and Team are not in default under any such
debt obligations or guarantees, and the consummation of the transactions
contemplated hereby will not result in any default on or acceleration of,
or any consent being required as to, any debt, obligation, or guarantee
described on Schedule 4.6(c).
4.7 No Material Changes. Except as disclosed in Schedule 4.7
annexed hereto, since the date of the most recent of the Financial
Statements, (a) the businesses of WAI and Team have been operated solely in
the normal course, (b) there have been no changes which in the aggregate
would have a Material Adverse Effect in the financial condition, operations
or business of the Company from that reflected in such Financial
Statements, (c) neither WAI nor Team has incurred any material obligation
or liability except in the normal course of business, (d) neither WAI nor
Team has effected or suffered any material modification in its collection
practices, or with respect to the timing and manner of payment of its
accounts payable, and (e) there has not been any (i) sale, assignment or
transfer by WAI or Team of any assets or other part of their businesses,
excluding the sale or disposition of inventory, and/or the sale of loans,
in the ordinary course of business, (ii) acquisitions or commitments to
acquire (whether by purchase, lease or otherwise) any capital assets by WAI
or Team wherein the aggregate payments will exceed $10,000, (iii) increase
or commitment to increase the compensation or benefits of any employees of
WAI or Team, (iv) implementation or institution of any bonus, benefit,
profit-sharing, pension, retirement or other plan or similar arrangement
which was not in existence on December 31, 1996, or (v) new employment
agreement, or modification of any existing employment agreement, by WAI or
Team.
4.8 Tax Matters.
(a) WAI and Team have, to the date hereof timely filed all
tax reports and tax returns required to be filed by WAI and Team, and WAI
and Team have paid all taxes, assessments and other impositions as and to
the extent required by applicable law. All federal, state and local
income, franchise, sales, use, property, excise and other taxes (including
interest and penalties and including estimated tax installments where
required to be filed and paid) due from or with respect to WAI and Team as
of the date hereof have been fully paid, and all taxes and other
assessments and levies which WAI or Team is required by law to withhold or
to collect have been duly withheld and collected and have been paid over to
the proper governmental authorities to the extent due and payable. There
are no outstanding or pending claims, deficiencies or assessments for
taxes, interest or penalties with respect to any taxable period of WAI or
Team.
(b) Except as disclosed in Schedule 4.8 annexed hereto,
there are no audits pending with respect to any federal, state or local tax
reports or tax returns of WAI or Team, and no waiver of statutes of
limitations have been given or requested with respect to any tax years or
tax filings of WAI or Team.
(c) WAI and Team have to the date hereof been electing
small business corporations under Subchapter S of the Internal Revenue Code
of 1986, as amended (the "Code"), and the corresponding tax provisions of
Florida law, and have filed all tax reports required to be filed by WAI or
Team on or prior to the date hereof. WAI and Team have further, to the
date hereof, filed all other tax reports and tax returns required to be
filed by WAI or Team, and WAI, Team and the Stockholder (as applicable)
have paid all taxes, assessments and other impositions as and to the extent
required by applicable law. Without limitation of the foregoing, WAI and
Team have made all required filings and payments to the date hereof in
respect of franchise, sales, use, property, excise and other taxes
(including interest and penalties and including estimated tax installments
as required), and there are no outstanding or pending claims, deficiencies
or assessments with respect to any taxes, interest or penalties of WAI or
Team. WAI and Team have previously distributed to the Stockholder (and any
former stockholder) all amounts which have been, are, or will be
distributable to such persons in respect of all completed tax years of WAI
and Team and the 1997 tax year to date. The amounts distributed in respect
of the 1996 tax year were not (on a proportionate basis) in excess of the
distribution for prior years, and the 1997 distributions are not in excess
of 40% of 1997 net income of either of them.
4.9 Title and Condition of the Assets. Except for liens arising
under the instruments described on Schedule 4.9, WAI and Team have and own
good and marketable title to all of their assets, free and clear of all
liens, pledges, claims, security interests and encumbrances of every kind
and nature, except for liens, pledges, claims, security interests or
encumbrances which in the aggregate would not have a Material Adverse
Effect. WAI and Team have delivered to the Buyer all material documents
pertaining to the liens referred to in the preceding sentence. All of the
fixed assets of WAI and Team (to the extent that a failure would have a
Material Adverse Affect) are in good operating condition and repair
(reasonable wear and tear excepted), are adequate for its use in the
Business as presently conducted, and are sufficient for the continued
conduct of such Business. All buildings, and all fixtures, equipment and
other property and assets which are material to the Business on a
consolidated basis, held under leases or subleases by WAI or Team are held
under valid instruments enforceable in accordance with their respective
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, and similar laws of general applicability
affecting creditors rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity).
4.10 Receivables. All of the Receivables (whether reflected in
the Financial Statements or thereafter created or acquired by WAI or Team
prior to the Effective Date), (a) have arisen in the normal course of
business of WAI or Team, (b) to the Stockholder's actual knowledge are not
subject to any counterclaims, set-offs, allowances or discounts of any
kind, except for counter claims set-offs , allowances, or discounts which
would not result in a Material Adverse Effect on a per item basis, and (c)
have been, are and will be valid and generally collectible in the ordinary
course of the Business; and the Stockholder has no knowledge of any
material or unusual risk of non-payment for any of the Receivables. Except
as set forth on Schedule 4.10, WAI and Team have possession of all
documents that represent the Receivables. Except for circumstances which
would not result in a Material Adverse Effect on a per item basis, all the
Receivables are genuine, valid, and legally binding obligations of the
borrowers thereunder, have been duly executed by a borrower of legal
capacity and are enforceable in accordance with their terms, except as
enforcement thereof may be limited by (i) bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity (whether applied in a proceeding, in equity
or at law), (ii) state laws requiring creditors to proceed against the
collateral before pursuing the borrower, and (iii) state laws on
deficiencies, except where the invalidity or enforceability of Receivables
would not have a Material Adverse Effect on a per item basis. Neither the
operation of any of the terms of the Receivables, nor the exercise of any
right thereunder has rendered the related security interest or note
unenforceable, in whole or in part, or subjected it to any right of
rescission, setoff, counterclaim or defense, and no such right of
rescission, setoff, counterclaim or defense has been asserted with respect
thereto. The instruments representing the Receivables are in compliance
with applicable laws and regulations and accurately represent the
principal, interest, payment and other terms of the Receivables, except for
circumstances which would not result in a Material Adverse Effect on a per
item basis. For purposes hereof, the "Receivables" shall mean all finance
receivables, accounts receivable, notes receivable and other rights to
receive payment (including any related guaranties, security deposits or
other collateral therefor) under credit agreements, finance leases and
other such agreements entered into in the Business, including but not
limited to those credit agreements, finance leases and other agreements
listed or described on Schedule 4.10 annexed hereto.
4.11 Inventory. All of the inventory (the "Inventory") (whether
reflected in the Financial Statements or thereafter acquired by WAI or Team
prior to the Effective Date) is of a quality, age and quantity consistent
with the historical practices of WAI and Team, and is valued on the books
of WAI and Team at cost. Schedule 4.11 sets forth a true and complete
listing of the Inventory as of the date set forth on such schedule and
includes a listing of the make, model, year, and vehicle identification
number for each item of Inventory listed on such schedule. None of the
Inventory is subject to any lien, charge, or encumbrance, except as set
forth on Schedule 4.11.
4.12 Legal Compliance.
(a) To the actual knowledge of the Shareholder, WAI and
Team are, and for the past three (3) years have been, in compliance in all
material respects with all laws, statutes, regulations, rules and
ordinances applicable to the conduct of their businesses (including,
without limitation, all applicable environmental laws, statutes,
regulations, rules and ordinances), and have in full force and effect all
licenses, permits and other authorizations required for the conduct of
their businesses as presently constituted; and neither WAI nor Team is in
default or violation in respect of or under any of the foregoing. The
Stockholder is not aware of any past or present condition or circumstance
in the business of WAI or Team (including, without limitation, with respect
to any real property now or previously occupied by WAI or Team) which could
give rise to any material liability under any such law, statute,
regulation, rule or ordinance.
(b) Except as set forth on Schedule 4.12(b) attached
hereto, neither WAI nor Team has generated, operated, processed,
distributed, transported, used, treated, stored, handled, emitted,
discharged, released or disposed of (or caused any person or entity to do
any of the foregoing or assisted any person or entity in doing any of the
foregoing) any oil, gasoline, petroleum-related products, hazardous
substances, hazardous waste, or pollutants or contaminants (as defined by
CERCLA), including, without limitation, asbestos or asbestos containing
materials, PCB's or urea formaldehyde, except in accordance with applicable
laws or any product which may give ride to Hazardous Materials Liabilities.
For purposes hereof, the following terms shall have the following meanings:
(i) The term "Hazardous Materials" shall mean (a)
hazardous materials, contaminants, constituents, medical wastes, hazardous
or infectious wastes and hazardous substances as those terms are now
defined in any Environmental Laws, including without limitation the
following statutes and their implementing regulations: the Hazardous
Materials Transportation Act, 49 U.S.C. 9601 et seq. (the "HMTA"), the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act, 42 U.S.C. et
seq. (as so amended, "CERCLA"), The Clean Water Act, 33 U.S.C. 1251 et
seq. (the "CWA"), and the Clean Air Act, 42 U.S.C. 7401 et seq. (the
"CAA"); (b) petroleum, including crude oil and any fractions thereof; (c)
natural gas, synthetic gas and any mixtures thereof; (d) asbestos and/or
asbestos-containing materials; and (e) polychlorinated biphenyl ("PCBs") or
materials or fluids containing PCBs in excess of 50 parts per million;
(ii) The term "Hazardous Materials Liabilities" shall
mean any and all damages, losses, liabilities, disabilities, fines,
penalties, costs or expenses (including reasonable attorneys' fees)
incurred or to be incurred, whether absolute, fixed or contingent, civil or
criminal, and whether arising under federal law or state law, incurred or
to be incurred in connection with the handling, storage, transportation, or
disposal of any Hazardous Materials; and
(iii) The term "Environmental Laws" shall mean any
statute, law, ordinance, code, rule, regulation, policy, guideline, permit,
consent, approval, license, judgment, order, writ, decree or authorization,
including the requirement to register storage tanks, established or enacted
for, or relating to, the protection of the environment or the health and
safety of any person (including, without limitation, those relating to 9a)
the HMTA, CERCLA, the CWA, the CAA or the Resource Conservation and
Recovery Act, 42 U.S.C. 6903 et seq.; (b) emissions, discharges, releases
or threatened releases of Hazardous Materials into the environment,
including, without limitation, into ambient air, soil, sediments, land
surface or subsurface, buildings or facilities, surface water, ground
water, publicly-owned treatment works, septic systems or land; or (c) the
generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Materials.
(c) Neither WAI, Team nor the Stockholder has received any
written notice of default or violation, nor, to the best of the
Stockholder's knowledge, are WAI or Team or any of their directors,
officers or employees in default or violation, with respect to any
judgment, order, writ, injunction, decree, demand or assessment issued by
any court or any federal, state, local, municipal or other governmental
agency, board, commission, bureau, instrumentality or department, domestic
or foreign, relating to any aspect of the business, affairs, properties or
assets of WAI or Team. Neither WAI, Team nor the Stockholder has received
written notice of, been charged with, or is, to the best of the
Stockholder's knowledge, under investigation with respect to, any violation
of any provision of any federal, state, local, municipal or other law or
administrative rule or regulation, domestic or foreign, relating to any
aspect of the business, affairs, properties or assets of WAI or Team, which
violation would have a material adverse effect on WAI or Team, its
businesses or any material portion of its assets.
4.13 Real Property.
(a) Schedule 4.13 annexed hereto lists and describes all
real property owned, held or leased by WAI or Team. WAI or Team holds good
and marketable title to the real property and leasehold interests listed in
Schedule 4.13, subject only to those liens and mortgages set forth in
Schedule 4.13, except for liens, pledges, claims, security interests or
encumbrances which in the aggregate would not have a Material Adverse
Effect. Neither WAI, Team nor the Stockholder has received notice that any
such real property or any buildings or improvements thereon (collectively,
the "Facilities") or the use thereof by WAI or Team is in violation of any
applicable building, zoning or other law, ordinance or regulation affecting
such real property, and no covenants, easements, rights-of-way or
conditions of record impair such use, except as set forth in Schedule 4.13.
Neither WAI nor Team owns or leases any real property which is not listed
in Schedule 4.13, nor does WAI or Team have any interest in any other real
property, including partnerships, joint ventures, trust deeds or land sale
contracts.
(b) Each of the leases described in Schedule 4.13 is in
full force and effect and constitutes a valid and binding obligation of WAI
or Team and, to the best knowledge of the Stockholder, the other parties
thereto. Neither WAI, Team nor the Stockholder has received any notice of
default with respect to any term or condition of any of the leases
identified in Schedule 4.13, nor is WAI or Team in default or arrears in
the performance or satisfaction of any material agreement or condition on
their part to be performed or satisfied thereunder. Except as disclosed
in Schedule 4.13, no waiver of default or indulgence has been granted by
any of the lessors under said leases, and no event has occurred which,
after notice or lapse of time or both, would constitute a default
thereunder, or would permit the acceleration of any obligation of any party
thereto.
(c) Except as set forth in Schedule 4.13, all of the
buildings, fixtures and other improvements located on the Facilities are
accessible by public roads, and are adequate for use in the businesses as
presently conducted; and the operation of the Facilities as presently
conducted is not in violation of any applicable building code, zoning
ordinance or other law or regulation.
4.14 Insurance. WAI and Team maintain, have in full force and
effect, and have paid all premiums in respect of insurance covering their
businesses and assets against such hazards and in such amounts as are noted
on the attached Schedule 4.14.
4.15 Employees. Except as disclosed in Schedule 4.15 annexed
hereto, neither WAI or Team is a party to or bound by any collective
bargaining agreement, employment agreement, consulting agreement or other
commitment for the employment or retention of any person, and no union is
now certified or has claimed the right to be certified as a collective
bargaining agent to represent any employees of WAI or Team. Neither WAI
nor Team has had any material labor difficulty in the past two (2) years,
and neither WAI, Team nor the Stockholder has received notice of any unfair
labor practice charges against WAI or Team or any actual or alleged
violation by WAI or Team of any law, regulation, or order affecting the
collective bargaining rights of employees, equal opportunity in employment,
or employee health, safety, welfare, or wages and hours.
4.16 Employee Benefits. Neither WAI nor Team maintains and
neither is required to make any contributions to any pension, profit-
sharing, retirement, deferred compensation or other such plan or
arrangement for the benefit of any employee, former employee or other
person, and neither WAI nor Team has any obligations with respect to
deferred compensation or future benefits to any past or present employee.
Schedule 4.16 annexed hereto fairly summarizes the employee benefits
currently granted by WAI and Team to their employees.
4.17 Contracts and Commitments. WAI and Team have previously
provided reasonable access to the Buyer and its representatives to permit
such persons to inspect and copy all of the credit agreements, finance
leases and other agreements underlying the Receivables. Other than (a)
such credit agreements, finance leases and other agreements underlying the
Receivables, and (b) those contracts and commitments listed on Schedule
4.17 annexed hereto, there is no contract, agreement, commitment or
understanding which is material to the ongoing operation of the Business.
To the Stockholder's actual knowledge, all of such agreements and contracts
are in full force and effect, and there is no material default or non-
performance outstanding thereunder.
4.18 Litigation. Except as set forth in Schedule 4.18, there is
no pending or, to the actual knowledge of the Stockholder, threatened
litigation, arbitration, administrative proceeding or other legal action or
proceeding against WAI or Team or relating to their businesses. The
Stockholder is not aware of any state of facts, events, conditions or
occurrences which the Stockholder reasonably believes would properly
constitute grounds for or the basis of any suit, action, arbitration,
proceeding or investigation against or with respect to WAI or Team.
4.19 Intellectual Property. To the Stockholder's actual
knowledge WAI and Team have the valid right to utilize all trade names and
other intellectual property utilized in their businesses, and have not
received notice of any claimed infringement of any of such intellectual
property with the rights or property of any other person. The Buyer
acknowledges that the trade name/trademark/service xxxx, "R.C. Hills," will
not be usable by WAI or Team or the Buyer and on the ninetieth (90th) day
after the date of closing all use by the Buyer, WAI or Team will cease.
4.20 Bank Accounts. Annexed hereto as Schedule 4.20 is a correct
and complete list of all bank accounts and safe deposit boxes maintained by
or on behalf of WAI or Team, with indication of all persons having
signatory, access or other authority with respect thereto.
4.21 Going Concern. The Stockholder has no knowledge of any
fact, event, circumstance or condition (including but not limited to any
announced or anticipated changes in the policies of any material supplier,
referral source, client or customer) that would materially impair the
ability of WAI and Team to continue the Business in substantially the
manner heretofore conducted (other than general, industry-wide conditions).
4.22 Disclosure and Duty of Inquiry. The Buyer is not and will
not be required to undertake any independent investigation to determine the
truth, accuracy and completeness of the representations and warranties made
by the Stockholder in this Agreement.
4.23 Allowance for Uncollectible Accounts. The Buyer and Xxxxxx
accept the amount of the allowance for uncollectible accounts shown in the
Financial Statements as adequate in each case as of the dates thereof.
Stockholder shall have no responsibility related to such allowance and
makes no representation or warranty in regard thereto.
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
In connection with the Buyer's acquisition of the Stock, the Buyer and
Xxxxxx hereby represent and warrant to the Stockholder as follows:
5.1 Organization, Good Standing and Qualification. The Buyer
and Xxxxxx are corporations duly organized, validly existing and in good
standing under the laws of the State of Florida, with all necessary power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Buyer is qualified to do business in
each foreign jurisdiction in which its business requires it to be
qualified.
5.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by the Buyer and by Xxxxxx has been duly and validly
authorized by the Boards of Directors of the Buyer and Xxxxxx. No further
corporate authorization is required on the part of the Buyer or Xxxxxx to
consummate the transactions contemplated hereby.
5.3 Valid and Binding Agreement; No Breach.
(a) The Buyer and Xxxxxx each have full legal right, power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement constitutes the legal,
valid and binding obligation of the Buyer and of Xxxxxx, enforceable
against the Buyer and Xxxxxx in accordance with its terms, except to the
extent that such enforceability may be limited by bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights generally, and
except that the remedy of specific performance or similar equitable relief
is available only at the discretion of the court before which enforcement
is sought.
(b) Except as disclosed in Schedule 5.3 annexed hereto,
neither the execution and delivery of this Agreement by the Buyer or
Xxxxxx, nor compliance with the terms and provisions of this Agreement on
the part of the Buyer or Xxxxxx, will, under circumstances that would
result in a Material Adverse Effect: (i) violate any statute or regulation
of any governmental authority, domestic or foreign, affecting the Buyer,
Xxxxxx, or any of its subsidiaries; (ii) require the issuance of any
authorization, license, consent or approval of any federal or state
governmental agency; or (iii) conflict with or result in a breach of any of
the terms, conditions or provisions of any judgment, order, injunction,
decree, note, indenture, loan agreement or other agreement or instrument to
which the Buyer, Xxxxxx or any of Xxxxxx'x subsidiaries is a party, or by
which the Buyer, Xxxxxx or any of Xxxxxx'x subsidiaries is bound, or
constitute a default thereunder, or require the consent of any other party
to any of the foregoing.
5.4 No Breach of Statute or Contract. Neither the execution and
delivery of this Agreement by the Buyer or Xxxxxx, nor compliance with the
terms and provisions of this Agreement on the part of the Buyer or Xxxxxx,
will: (a) violate any statute or regulation of any governmental authority,
domestic or foreign, affecting the Buyer or Xxxxxx; (b) require the
issuance of any authorization, license, consent or approval of any federal
or state governmental agency; (c) conflict with or result in a breach of
any of the terms, conditions or provisions of any judgment, order,
injunction, decree, note, indenture, loan agreement or other agreement or
instrument to which the Buyer or Xxxxxx is a party, or by which the Buyer
or Xxxxxx is bound, or constitute a default thereunder; or (d) require the
consent of any third party under any outstanding statute, regulation,
judgment, order, injunction, decree, agreement or instrument to which the
Buyer or Xxxxxx is a party, or by which the Buyer or Xxxxxx is bound.
5.5 Investment. The Buyer is purchasing the Stock for its own
account for investment, and not with a view to the resale or distribution
thereof in violation of any applicable securities laws.
5.6 Disclosure and Duty of Inquiry. The Stockholder is not and
will not be required to undertake any independent investigation to
determine the truth, accuracy and completeness of the representations and
warranties made by the Buyer and Xxxxxx in this Agreement.
6. ADDITIONAL AGREEMENTS.
6.1 Resignations. In addition to the other deliveries being
made pursuant to this Agreement on the date hereof, the Stockholder is
causing to be executed and delivered to WAI and Team, respectively, the
resignations of all officers and directors of each of them (except to the
extent that such resignations are not being required by the Buyer).
6.2 Audit of Financial Statements. The Stockholder shall, from
time to time as and when requested by the Buyer from and after the date
hereof, cooperate with and assist the Buyer in all reasonable respects in
dealing with the accountants heretofore retained by either WAI or Team, in
order that the Buyer and its accountants may obtain copies of all work
papers utilized or prepared by WAI's or Team's accountants in connection
with their review of the Financial Statements, and consult with their
accountants as and to the extent necessary or appropriate in connection
with the preparation of audited financial statements of them for all
periods from and after January 1, 1993 in accordance with Regulation S-X of
the Securities and Exchange Commission. Any reasonable out-of-pocket
expenses incurred or paid to third parties by Stockholder in complying with
this Section 6.2 shall be reimbursed by Buyer, except that any such
expenses exceeding $500 shall be approved by Buyer prior to such expenses
being incurred.
6.3 1997 Tax Treatment. The parties hereby confirm and consent
that the income of WAI and Team in respect of 1997 shall not be prorated as
between the Stockholder (on the one hand) and the Buyer (on the other
hand), but shall be determined based on actual income for that portion of
1997 through the date hereof and for that portion of 1997 subsequent to the
date hereof, with each of them having been deemed to have closed their
books for these purposes on and as of the date hereof. The "closing of the
books" shall be accomplished in a manner that is consistent with accounting
conventions and procedures used in closing the books in prior years for
year end closings. All allocations or determinations of accounting
questions will be handled in cooperation with the Shareholder. It is
agreed that the intent shall be to minimize, to the extent possible, the
income to be allocated to the Stockholder for the short period.
6.4 Intentionally Omitted.
6.5 Access to Records. Subsequent to the consummation of the
acquisition contemplated by this Agreement, the Buyer agrees to reasonably
cooperate with the Stockholder in accessing the records of WAI and Team for
periods prior to the Effective Date for Stockholder's reasonable needs,
including, but not limited to, responding to inquiries from tax
authorities, determining information related to transactions occurring in
such prior periods, and the other reasonable business and personal needs of
the Stockholder.
6.6 Release/Indemnification from Specified Loans. The Buyer
indemnifies and agrees to hold the Stockholder harmless, from and after
closing, from the following loans made to the Company, which loans were co-
signed or guaranteed personally by the Stockholder:
(i) Xxxxxxx Bank, N.A. original principal balance
$34,120.95, dated October 8, 1996.
7. [INTENTIONALLY OMITTED].
8. INDEMNIFICATION.
8.1 General.
(a) The Stockholder shall defend, indemnify and hold
harmless the Buyer and Xxxxxx (for purposes of this Article 8, the Buyer
and Xxxxxx are referred to collectively as the "Buyer") from, against and
in respect of any and all claims, losses, costs, expenses, obligations,
liabilities, damages, recoveries and deficiencies, including interest,
penalties and reasonable attorneys' fees, that the Buyer may incur, sustain
or suffer ("Buyer Losses") as a result of any breach of, or failure by the
Stockholder, WAI or Team to perform, any of the representations,
warranties, covenants or agreements of any of them contained in this
Agreement or in any Schedule(s) furnished by or on behalf of WAI, Team, or
the Stockholder under this Agreement.
(b) The Buyer shall defend, indemnify and hold harmless the
Stockholder from, against and in respect of any and all claims, losses,
costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorneys' fees,
that the Stockholder may incur, sustain or suffer ("Stockholder Losses") as
a result of any breach of, or failure by the Buyer to perform, any of the
representations, warranties, covenants or agreements of the Buyer contained
in this Agreement or in any Schedule(s) furnished by or on behalf of Buyer
and/or Xxxxxx under this Agreement.
(c) Subject to the limitations of Section 8.2, the
representations, warranties and covenants contained herein shall survive
the closing hereunder to the extent any party hereto is entitled to
indemnification hereunder for any breach of any representation, warranty or
covenant contained herein.
(d) The Stockholder's indemnification obligations hereunder
are secured by a Stock Pledge and Security Agreement of even date herewith
among the Stockholder, the Buyer, and Xxxxxx Industries, Inc.
8.2 Limitations on Certain Indemnity.
(a) Notwithstanding any other provision of this Agreement
to the contrary, (i) the Stockholder shall not be liable to the Buyer with
respect to Buyer Losses unless and until the aggregate amount of all Buyer
Losses shall exceed the sum of Fifty Thousand and 00/100ths Dollars
($50,000.00) (the "Stockholder Basket"), and (ii) the Stockholder shall
thereafter be liable for all Buyer Losses in excess of the Stockholder
Basket, provided that the Stockholder's maximum aggregate liability in
respect of all Buyer Losses shall not, in the absence of proven fraud by
the Stockholder, WAI or Team in respect of any particular Buyer Losses, in
any event exceed the limitations set forth in Section 8.2(c) below;
provided, however, that the Stockholder Basket and such limitation on
liability shall not be available with respect to, and there shall not be
counted against the Stockholder Basket or such limitation of liability, any
Buyer Losses arising by reason of any Buyer Losses involving proven fraud
by the Stockholder, WAI or Team.
(b) Notwithstanding any other provision of this Agreement
to the contrary, (i) the Buyer shall not be liable to the Stockholder with
respect to Stockholder Losses unless and until the aggregate amount of all
Stockholder Losses shall exceed the sum of Fifty Thousand and 00/100ths
Dollars ($50,000.00) (the "Buyer Basket"), and (ii) the Buyer shall
thereafter be liable for all Stockholder Losses in excess of the Buyer
Basket; provided, however that the Buyer Basket shall not be available with
respect to, and there shall not be counted against the Buyer Basket any
Stockholder Losses arising by reason of any Stockholder Losses involving
proven fraud by the Buyer, its principal shareholders, officers, employees
or directors.
(c) Except with respect to any Buyer Losses involving
proven fraud by the Stockholder, WAI or Team, the Stockholder shall not be
required to pay indemnification hereunder in an aggregate amount in excess
of Purchase Price, to the extent actually received by the Stockholder under
the terms of this Agreement.
(d) The Buyer shall be entitled to indemnification by the
Stockholder for Buyer Losses only in respect of claims for which notice of
claim shall have been given to the Stockholder on or before March 31, 1997.
The Stockholder shall be entitled to indemnification by the Buyer for
Stockholder Losses only in respect of claims for which notice of claim
shall have been given to the Buyer on or before March 31, 1998.
8.3 Claims for Indemnity. Whenever a claim shall arise for
which any party shall be entitled to indemnification hereunder the
indemnified party shall notify the indemnifying party or parties in writing
within sixty (60) days of the indemnified party's first receipt of notice
of, or the indemnified party's obtaining actual knowledge of, such claim,
and in any event within such shorter period as may be necessary for the
indemnifying party or parties to take appropriate action to resist such
claim. Such notice shall specify all facts known to the indemnified party
giving rise to such indemnity rights and shall estimate (to the extent
reasonably possible) the amount of potential liability arising therefrom.
If an indemnifying party shall be duly notified of such dispute, the
parties shall attempt to settle and compromise the same or may agree to
submit the same to arbitration or, if unable or unwilling to do any of the
foregoing, such dispute shall be settled by appropriate litigation, and any
rights of indemnification established by reason of such settlement,
compromise, arbitration or litigation shall promptly thereafter be paid and
satisfied by those indemnifying parties obligated to make indemnification
hereunder.
8.4 Right to Defend. If the facts giving rise to any claim for
indemnification shall involve any actual or threatened action or demand by
any third party against the indemnified party or any of its affiliates, the
indemnifying party or parties shall be entitled (without prejudice to the
indemnified party's right to participate at its own expense through counsel
of its own choosing), at their expense and through a single counsel of
their own choosing, to defend or prosecute such claim in the name of the
indemnifying party or parties, or any of them, or if necessary, in the name
of the indemnified party. In any event, the indemnified party shall give
the indemnifying party advance written notice of any proposed compromise or
settlement of any such claim. If the remedy sought in any such action or
demand is solely money damages, the indemnifying party shall have fifteen
(15) days after receipt of such notice of settlement to object to the
proposed compromise or settlement, and if it does so object, the
indemnifying party shall be required to undertake, conduct and control,
through counsel of its own choosing and at its sole expense, the settlement
or defense thereof, and the indemnified party shall cooperate with the
indemnifying party in connection therewith.
9. POST-CLOSING EVENTS.
9.1 Announcements. With respect to the initial announcement of
the consummation of the transactions pursuant to this Agreement and of any
of the terms thereof, neither party shall make such an announcement without
the prior review and approval thereof by the Buyer (in the case of any
proposed disclosure or public announcement by the Stockholder) or the
Stockholder (in the case of any proposed disclosure or public announcement
by the Buyer), such approval not to be unreasonably withheld or delayed.
9.2 Bank Accounts. Upon the consummation of the transactions
pursuant to this Agreement, the Stockholder shall cooperate with the Buyer
to promptly modify to the Buyer's satisfaction the signatory and access
arrangements for all bank accounts and safe deposit boxes maintained by or
in the name of WAI or Team.
9.3 Further Assurances. From time to time from and after the
date hereof, the parties will execute and deliver to one another any and
all further agreements, instruments, certificates and other documents as
may reasonably be requested by any other party in order more fully to
consummate the transactions contemplated hereby, and to effect an orderly
transition of the ownership and operations of the Business.
10. COSTS.
10.1 Finder's or Broker's Fees. Each of the Buyer, Xxxxxx, and
the Stockholder represents and warrants that neither it nor he nor any of
their respective affiliates have dealt with any broker or finder in
connection with any of the transactions contemplated by this Agreement, and
no broker or other person is entitled to any commission or finder's fee in
connection with any of these transactions.
10.2 Expenses. The parties (except as provided in Section 10.3)
shall each pay all costs and expenses incurred or to be incurred by them,
respectively, in negotiating and preparing this Agreement and in closing
and carrying out the transactions contemplated by this Agreement.
10.3 Stockholder's Costs. The Buyer shall pay the reasonable
attorneys' and accountants' fees and costs associated with the negotiation
and consummation of this transaction. Such fees and costs shall be paid
immediately upon receipt of an invoice from the Stockholder's attorneys or
accountants. The attorneys and accountants shall have the rights of
enforcement provided in this Agreement and are intended beneficiaries of
this provision.
11. FORM OF AGREEMENT.
11.1 Effect of Headings. The Section headings used in this
Agreement and the titles of the Schedules hereto are included for purposes
of convenience only, and shall not affect the construction or
interpretation of any of the provisions hereof or of the information set
forth in such Schedules.
11.2 Entire Agreement; Waivers. This Agreement and the other
agreements and instruments referred to herein constitute the entire
agreement between the parties pertaining to the subject matter hereof, and
supersede all prior agreements or understandings as to such subject matter.
No party hereto has made any representation or warranty or given any
covenant to the other except as set forth in this Agreement, the Schedules
hereto, and the other agreements and instruments referred to herein. No
waiver of any of the provisions of this Agreement shall be deemed, or shall
constitute, a waiver of any other provisions, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
11.3 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12. PARTIES.
12.1 Parties in Interest. Nothing in this Agreement, whether
expressed or implied, is intended to confer any rights or remedies under or
by reason of this Agreement on any persons other than the parties to it and
their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns, nor is anything in this
Agreement intended to relieve or discharge the obligations or liability of
any third persons to any party to this Agreement, nor shall any provision
give any third persons any right of subrogation or action over or against
any party to this Agreement.
12.2 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
to have been duly given (a) on the date of service if served personally on
the party to whom notice is to be given, (b) on the day after the date sent
by recognized overnight courier service, properly addressed and with all
charges prepaid or billed to the account of the sender, or (c) on the third
day after mailing if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, postage prepaid, and properly
addressed as follows:
(i) If to the Stockholder:
X. X. Xxxx, XX
0000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
(ii) With a copy to:
Xxxxx X. Xxxxxxx, Esq.
Milam, Otero, Xxxxxx, Xxxxxx & Xxxxxxx, P.A.
0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
(iii) If to Xxxxxx or the Buyer:
First Choice Auto Finance, Inc.
Xxxxxx Industries, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxx Xxxxxxxxxx, Jr.
General Counsel
or to such other address as any party shall have specified by notice in
writing given to the other party.
13. MISCELLANEOUS.
13.1 Amendments and Modifications. No amendment or modification
of this Agreement or any Schedule hereto shall be valid unless made in
writing and signed by the party to be charged therewith.
13.2 Non-Assignability; Binding Effect. Neither this Agreement,
nor any of the rights or obligations of the parties hereunder, shall be
assignable by any party hereto without the prior written consent of all
other parties hereto. Otherwise, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, personal representatives, successors and
permitted assigns.
13.3 Governing Law; Jurisdiction. This Agreement shall be
construed and interpreted and the rights granted herein governed in
accordance with the laws of the State of Florida applicable to contracts
made and to be performed wholly within such State.
13.4 Costs of Enforcement. In the event that any party is
required to bring an action to enforce its rights hereunder, the
substantially prevailing party shall recover from the substantially non-
prevailing party all of the substantially prevailing party's attorneys'
fees and costs (the "Expenses") incurred in such action. For purposes
herein, the Expenses shall include investigatory, trial, appeal,
bankruptcy, mediation and arbitration expenses, and all costs of collection
and shall cover fees and costs for the lawyers, experts, paralegals and
clerks, and all other persons reasonably necessary as part of the
enforcement process. All such Expenses shall bear interest from the date
incurred until the date paid at the highest rate of interest permitted in
Florida. The parties request that a court award the actual Expenses
incurred by the substantially prevailing party, recognizing that it is the
parties intention that the substantially prevailing party should be made
completely whole. Costs incurred in enforcing this Section shall be
included in Expenses.
13.5 Time of the Essence. Time is of the essence for all
performances under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on and as
of the date first set forth above.
The Buyer:
FIRST CHOICE AUTO FINANCE, INC.,
a Florida corporation
By: /S/J. Xxxx Xxxxxxxxxx, Xx.
Title:Asst. V.P.
The Stockholder:
/S/ X.X. Xxxx, XX
X. X. XXXX, XX
Xxxxxx:
XXXXXX INDUSTRIES, INC.,
a Florida corporation
By: /S/J. Xxxx Xxxxxxxxxx, Xx.
Title: Asst. V. P.
