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EXHIBIT 2.2
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STOCK PURCHASE AGREEMENT
BY AND AMONG
PAACO, INC.,
PREMIUM AUTO ACCEPTANCE CORPORATION,
LARRY LANGE, DANIEL CHU AND TED LANGE
AND
CROWN GROUP, INC.
DATED ON OR AS OF FEBRUARY 1, 1998
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TABLE OF CONTENTS
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ARTICLE I - PURCHASE AND SALE OF SHARES........................................................................... 1
Section 1.1 Sale of the Shareholder Shares......................................................... 1
Section 1.2 Sale of Company Shares................................................................. 1
Section 1.3 Purchase Price......................................................................... 1
Section 1.4 Closing................................................................................ 2
Section 1.5 Delivery by the Shareholders and the Companies......................................... 2
Section 1.6 Delivery by the Buyer.................................................................. 2
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND THE COMPANIES................................. 2
Section 2.1 Ownership of the Shares; Equity Capital Structure...................................... 2
Section 2.2 Organization; Good Standing............................................................ 3
Section 2.3 Authorization.......................................................................... 3
Section 2.4 No Violation........................................................................... 3
Section 2.5 Subsidiaries........................................................................... 4
Section 2.6 Contracts and Other Commitments........................................................ 4
Section 2.7 Permits................................................................................ 4
Section 2.8 Compliance With Other Instruments...................................................... 4
Section 2.9 Litigation............................................................................. 5
Section 2.10 Title to Property and Assets; Leases................................................... 5
Section 2.11 Financial Statements................................................................... 5
Section 2.12 Changes................................................................................ 5
Section 2.13 Employees; Employee Compensation....................................................... 5
Section 2.14 Tax Returns, Payments, and Elections................................................... 6
Section 2.15 Environmental and Safety Laws.......................................................... 6
Section 2.16 No Liabilities Not Shown in Financial Statements....................................... 6
Section 2.17 Loans to Shareholders, Officers or Affiliates.......................................... 6
Section 2.18 Compliance With Laws................................................................... 6
Section 2.19 Insurance Coverage..................................................................... 7
Section 2.20 Employee Relations..................................................................... 7
Section 2.21 Trademarks and Licenses................................................................ 7
Section 2.22 Guarantees............................................................................. 7
Section 2.23 OSHA................................................................................... 7
Section 2.24 Books and Records...................................................................... 8
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE BUYER......................................................... 8
Section 3.1 Organization; Good Standing............................................................ 8
Section 3.2 Authorization.......................................................................... 8
Section 3.3 Valid and Binding Agreement............................................................ 8
Section 3.4 No Violation........................................................................... 8
Section 3.5 Purchase Entirely for Own Account...................................................... 8
Section 3.6 Independent Investigation.............................................................. 9
Section 3.7 Investment Experience.................................................................. 9
Section 3.8 Accredited Investor; U.S. Person....................................................... 9
Section 3.9 Restricted Securities.................................................................. 9
Section 3.10 Public Sale............................................................................ 9
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Section 3.11 Investment Company Act................................................................. 9
ARTICLE IV - ADDITIONAL AGREEMENTS............................................................................... 10
Section 4.1 Access to Information; Confidentiality................................................ 10
Section 4.2 Shareholders' Agreement............................................................... 10
Section 4.3 Employment Agreement.................................................................. 10
Section 4.4 Shareholder Warrants.................................................................. 10
Section 4.5 Conduct of Business................................................................... 10
Section 4.6 Pay-off of Debenture.................................................................. 10
ARTICLE V - CONDITIONS OF THE BUYER'S OBLIGATIONS AT CLOSING..................................................... 11
Section 5.1 Representations and Warranties........................................................ 11
Section 5.2 Performance........................................................................... 11
Section 5.3 Compliance Certificate................................................................ 11
Section 5.4 Shareholders' Agreement............................................................... 11
Section 5.5 Employment Agreement.................................................................. 11
Section 5.6 Finova Credit Facility................................................................ 11
Section 5.7 Opinion of Counsel.................................................................... 11
Section 5.8 Buyer Warrants........................................................................ 12
Section 5.9 Consents Prior to Closing............................................................. 12
Section 5.10 No Material Adverse Changes........................................................... 12
Section 5.11 Absence of Litigation................................................................. 12
ARTICLE VI - CONDITIONS OF THE SHAREHOLDERS' OBLIGATIONS AT CLOSING.............................................. 12
Section 6.1 Representations and Warranties........................................................ 12
Section 6.2 Performance........................................................................... 12
Section 6.3 Compliance Certificate................................................................ 12
Section 6.4 Shareholders' Agreement............................................................... 12
Section 6.5 Employment Agreement.................................................................. 12
Section 6.6 Shareholder Warrants.................................................................. 12
Section 6.7 Opinion of Counsel.................................................................... 12
ARTICLE VII - SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION....................................................... 13
Section 7.1 Survival of Representations........................................................... 13
Section 7.2 Agreement to Indemnify................................................................ 13
Section 7.3 Limitation of Liability............................................................... 13
Section 7.4 Conditions of Indemnification......................................................... 14
Section 7.5 Remedies Cumulative................................................................... 15
ARTICLE VIII - TERMINATION; AMENDMENT AND WAIVER................................................................. 15
Section 8.1 Termination of Agreement.............................................................. 15
Section 8.2 Effect of Termination................................................................. 15
Section 8.3 Amendment, Extension and Waiver....................................................... 15
ARTICLE IX - MISCELLANEOUS....................................................................................... 15
Section 9.1 Entire Agreement...................................................................... 15
Section 9.2 Successors and Assigns................................................................ 15
Section 9.3 Governing Law and Venue............................................................... 16
Section 9.4 Counterparts.......................................................................... 16
Section 9.5 Titles and Subtitles.................................................................. 16
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Section 9.6 Notices............................................................................... 16
Section 9.7 Finder's Fees......................................................................... 16
Section 9.8 Amendments and Waivers................................................................ 16
Section 9.9 Severability.......................................................................... 16
Section 9.10. Future Actions........................................................................ 16
Section 9.11. Public Announcements.................................................................. 17
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated on or as of the 1st day
of February, 1998, by and among Larry Lange, Daniel Chu and Ted Lange
(collectively, the "Shareholders"), PAACO, Inc., a Texas corporation ("PAACO"),
Premium Auto Acceptance Corporation ("Premium" and, together with PAACO, the
"Companies"), and Crown Group, Inc., a Texas corporation (the "Buyer").
WHEREAS, the Shareholders own all of the issued and outstanding shares of
common stock, par value $.01 per share, of PAACO ("PAACO Common Stock") and all
of the issued and outstanding shares of common stock, no par value, of Premium
("Premium Common Stock" and, together with PAACO Common Stock, the "Common
Stock"); and
WHEREAS, the Shareholders desire to sell to the Buyer, and the Buyer
desires to purchase from the Shareholders, that number of shares of PAACO Common
Stock and Premium Common Stock set forth beside each Shareholder's name on Annex
A attached hereto (collectively, the "Shareholder Shares"); and
WHEREAS, PAACO and Premium desire to issue and sell to the Buyer, and the
Buyer desires to purchase from PAACO and Premium, 33,334 shares of PAACO Common
Stock and 334 shares of Premium Common Stock, respectively (collectively, the
"Company Shares" and, together with the Shareholder Shares, the "Shares");
WHEREAS, the Buyer has warrants (collectively, the "Buyer Warrants") to
purchase 8,511 shares of PAACO Common Stock and 85 shares of Premium Common
Stock and intends to exercise such warrants in connection with the acquisition
of the Shares;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions set forth
herein, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
SECTION 1.1 SALE OF THE SHAREHOLDER SHARES. Subject to the terms and
conditions of this Agreement, at the Closing, the Buyer agrees to purchase and
each Shareholder, severally and not jointly, agrees to sell to the Buyer the
Shareholder Shares at the purchase price set forth below.
SECTION 1.2 SALE OF COMPANY SHARES. Subject to the terms and conditions of
this Agreement, at the Closing, the Buyer agrees to purchase and each Company
agrees to sell to the Buyer the Company Shares at the purchase price set forth
below.
SECTION 1.3 PURCHASE PRICE.
(a) In consideration of the sale of the Shareholder Shares to the Buyer,
the Buyer shall pay to the Shareholders at the Closing an aggregate purchase
price (the "Shareholder Purchase Price") of $4,166,628.33 in cash. The allocable
portion of the Shareholder Purchase Price shall be allocated between the
Shareholders as set forth on Annex A.
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(b) In consideration of the sale of the Company Shares to the Buyer, the
Buyer shall pay to the Companies at the Closing an aggregate purchase price (the
"Company Purchase Price" and, together with the Shareholder Purchase Price, the
"Purchase Price") of $4,166,753.34 in cash. The allocable portion of the Company
Purchase Price shall be allocated among the Companies as set forth on Annex A.
SECTION 1.4 CLOSING. The purchase and sale of the Shares shall take place
at the offices of Thompson & Knight, P.C., 1700 Pacific Avenue, Dallas, Texas,
at 10:00 a.m., on February 1, 1998, or at such other time and place as the
Shareholders, the Companies and the Buyer shall mutually agree, either orally or
in writing (which time and place are designated as the "Closing").
SECTION 1.5 DELIVERY BY THE SHAREHOLDERS AND THE COMPANIES. At the Closing,
each Shareholder and Company shall deliver or cause to be delivered to the
Buyer:
(a) a stock certificate or certificates representing all of the Shares
being sold by such Shareholder or Company, accompanied by stock powers duly
executed in blank, and otherwise in form acceptable to the Buyer for transfer on
the books of the Companies; and
(b) all other documents, instruments or writings required to be delivered
by such Shareholder or Company at or prior to the Closing pursuant to this
Agreement or otherwise required to be delivered by such Shareholder or Company
at or prior to the Closing.
SECTION 1.6 DELIVERY BY THE BUYER. At the Closing, the Buyer shall deliver
or cause to be delivered to each of the Shareholders and Companies:
(a) a wire transfer to an account or accounts designated within three days
of Closing in an amount equal to the Purchase Price payable to such Shareholder
or Company in accordance with Annex A; and
(b) all other documents, instruments or writings required to be delivered
by the Buyer at or prior to the Closing pursuant to this Agreement or otherwise
required to be delivered by the Buyer at or prior to the Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND THE COMPANIES
The Shareholders and the Companies jointly and severally represent and
warrant to, and agree with the Buyer that, except as set forth on the Schedule
of Exceptions furnished to the Buyer and attached hereto as Annex B,
specifically identifying the relevant subparagraph(s) hereof:
SECTION 2.1 OWNERSHIP OF THE SHARES; EQUITY CAPITAL STRUCTURE.
(a) Each Shareholder is the record and beneficial owner of, and upon
consummation of the transactions contemplated hereby the Buyer will acquire
good, valid and marketable title to, the Shares held by each such Shareholder,
free and clear of all liens, claims, options, pledges, security interests,
charges, encumbrances, agreements and restrictions.
(b) The Company Shares to be issued by the Company at the Closing have been
duly authorized for such issuance and, when issued and delivered by the Company
in accordance with the provisions of this
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Agreement, will be validly issued, fully paid and nonassessable. The issuance of
the Company Shares under this Agreement is not subject to any preemptive or
similar rights.
(c) The authorized capital stock of PAACO consists solely of 1,000,000
shares of common stock, par value $.01 per share, of which 100,000 shares are
issued and outstanding and which are owned beneficially and of record by the
Shareholders as set forth on Annex A. The authorized capital stock of Premium
consists solely of 100,000 shares of common stock, no par value, of which 1,000
shares are issued and outstanding and which are owned beneficially and of record
by the Shareholders as set forth on Annex A. All of the issued and outstanding
shares of Common Stock have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable and are not subject to and were not
issued in violation of any preemptive rights.
(d) Except as set forth above or in Section 2.1 of the Schedule of
Exceptions, and except for the Buyer Warrants, there are not now, and at the
Closing, except for the Shareholder Warrants (as hereinafter defined) to be
issued by the Companies at the Closing, there will not be, any shares of capital
stock of the Companies issued or outstanding or any subscriptions, options,
warrants, calls, rights, convertible securities or other rights or other
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock or other securities of the Companies or the voting or
transfer of the capital stock of the Companies.
SECTION 2.2 ORGANIZATION; GOOD STANDING. Each Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and has all requisite corporate power and authority to own and operate its
properties and assets and to carry on its business as currently conducted, to
execute and deliver this Agreement, the Shareholders' Agreement (as defined
below) and to carry out the provisions of this Agreement. The Shareholders have
delivered to the Buyer complete and correct copies of the Articles of
Incorporation (duly certified by the Secretary of State of Texas) and Bylaws
(certified by the Secretary of the Companies) as in effect on the date hereof.
SECTION 2.3 AUTHORIZATION.
(a) Each Company has duly authorized the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. No
further corporate action on the part of the Companies is necessary to authorize
the execution of this Agreement or to consummate the transactions contemplated
hereby. Except as set forth in Section 2.3 of the Schedule of Exceptions, each
Shareholder now has and at the Closing will have full right, power and authority
to sell and transfer the Shares held by such Shareholder.
(b) This Agreement constitutes a valid and binding agreement of the
Shareholders and the Companies, enforceable against each such party in
accordance with its terms subject to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity.
SECTION 2.4 NO VIOLATION. Except as set forth in Section 2.4 of the
Schedule of Exceptions, neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will (i) violate
or conflict with any provision of the charter or bylaws of either Company, (ii)
constitute a violation of or a default or breach (or an event which, with notice
or lapse of time, or both, would constitute a default) under, or result in the
termination of, accelerate the performance required by or give rise to any right
of termination, acceleration, cancellation or amendment under, or result in the
creation of any mortgages, pledges, liens, security interests, encumbrances,
charges or claims of any kind (whether absolute, accrued, contingent or
otherwise) (collectively, "Liens") upon either of the Companies or any of their
respective assets
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or have any other adverse effect under, any term or provision of any contract,
commitment, understanding, arrangement, agreement or restriction of any kind or
character to which either of the Companies is a party or by which any of them or
any of their respective assets or property may be bound, or (iii) cause, or give
any person grounds to cause (with or without notice, the passage of time or
both), the maturity of any material debt, liability or obligation of either
Company to be accelerated or increase any such liability or obligation of either
Company except, in the case of (ii) or (iii), where such violations,
terminations, conflicts, accelerations, defaults, breaches or grounds and right
of termination, cancellation, acceleration and amendment would not have a
material adverse effect on either Company taken as a whole or prevent or delay
the consummation of the transactions contemplated hereby. Except as set forth in
Section 2.4 of the Schedule of Exceptions, no filing with, notification to, and
no permit, consent, approval, authorization or action by any federal, state,
local, foreign or other governmental agency, instrumentality, commission,
authority, board or body (collectively, a "governmental agency") is required in
connection with the execution, delivery and performance by the Shareholders or
the Companies of this Agreement, or the consummation by the Shareholders or the
Companies, as the case may be, of the transactions contemplated hereby, except
where the failure to make such filing, give notice or to obtain such permit,
consent, approval, authorization or action would not have a material adverse
effect on either Company taken as a whole or prevent or delay the consummation
of the transactions contemplated hereby.
SECTION 2.5 SUBSIDIARIES. Except as set forth in Section 2.5 of the
Schedule of Exceptions, neither Company owns or controls, directly or
indirectly, any interest in any other corporation, association or other business
entity.
SECTION 2.6 CONTRACTS AND OTHER COMMITMENTS. Except as set forth in Section
2.6 of the Schedule of Exceptions, neither Company has any contract, agreement,
lease, commitment or proposed transaction, written or oral, absolute or
contingent, other than (i) contracts that were entered into in the ordinary
course of business and (ii) contracts terminable at will by such Company on no
more than thirty (30) days' notice without cost or liability to such Company.
SECTION 2.7 PERMITS. To the best knowledge of the Shareholders and the
Companies, each Company has all franchises, permits and licenses necessary for
the conduct of its business as now being conducted by such Company, the lack of
which could materially and adversely affect the business, properties, prospects
or financial condition of such Company. To the best knowledge of the
Shareholders and the Companies, neither Company is in default in any material
respect under any of such franchises, permits, licenses or other similar
authority.
SECTION 2.8 COMPLIANCE WITH OTHER INSTRUMENTS. Neither Company is in
violation or default in any material respect of any provision of its charter or
bylaws or of any provision of any mortgage, indenture, agreement, instrument or
contract to which it is a party or by which it is bound or, to the best
knowledge of the Shareholders and the Companies, of any federal or state
judgment, order, writ or decree applicable to such Company, the violation of
which would materially and adversely affect the business, properties, prospects
or financial condition of such Company. The execution, delivery and performance
by each Company of this Agreement and the consummation of the transactions
contemplated hereby will not result in any such violation or be in material
conflict with or constitute, with or without the passage of time or giving of
notice, a material default under any such provisions.
SECTION 2.9 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the best knowledge of the Shareholders and the
Companies, threatened against either Company that questions the validity of this
Agreement or the right of either Company to enter into such agreement or to
consummate the transactions contemplated hereby, or, except as set forth in
Section 2.9 of the Schedule of Exceptions, against
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either Company that involve any claim not fully covered by insurance or provided
for by adequate reserves as set forth in the Financial Statements (as defined
below). Neither Company is a party to, or to the best knowledge of the
Shareholders and the Companies, named in any order, writ, injunction, judgment
or decree of any court, government agency or instrumentality.
SECTION 2.10 TITLE TO PROPERTY AND ASSETS; LEASES. Except (i) as reflected
in the Financial Statements (as defined in paragraph 2.11), (ii) for liens for
current taxes not yet delinquent, (iii) for liens imposed by law and incurred in
the ordinary course of business for obligations not past due to carriers,
warehousemen, laborers, materialmen and the like, (iv) for liens in respect of
pledges or deposits under workers' compensation laws or similar legislation or
(v) for defects in title that do not, individually or in the aggregate,
materially interfere with the use of such property, each Company owns its
property and assets free and clear of all liens, claims and encumbrances. With
respect to the property and assets it leases, each Company is in compliance in
all material respects with such leases and, to the best knowledge of the
Shareholders and the Companies, holds a valid leasehold interest free of any
liens, claims or encumbrances, subject to clauses (i)-(v) above.
SECTION 2.11 FINANCIAL STATEMENTS. Each Company has delivered to the Buyer
(i) its audited financial statements at December 31, 1996 and for the fiscal
year then ended and (ii) its unaudited financial statements at October 31, 1997
and for the ten months then ended (collectively, the "Financial Statements").
The Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated and with each other. To the best knowledge of the Shareholders
and the Companies, the Financial Statements fairly and accurately present the
financial condition and operating results of the Companies as of the date and
for the period indicated therein and all of its respective assets and
liabilities. Except to the extent reflected or reserved against in the Financial
Statements, and notes thereto, or in the Schedule of Exceptions, the Companies
are not obligated for, nor are any of their assets or properties subject to, any
liabilities (whether accrued, absolute, contingent or otherwise) or adverse
obligations whether or not such liabilities or obligations are normally shown or
reflected on a balance sheet, other than liabilities and obligations arising in
the ordinary course of business since the date of the Financial Statements, none
of which are material and adverse.
SECTION 2.12 CHANGES. To the best knowledge of the Shareholders and the
Companies, since October 31, 1997, there has not been any event or condition
that has materially and adversely affected the financial condition of either
Company, nor has either Company suffered any damage, destruction or loss,
whether or not covered by insurance, which materially and adversely affects the
assets or business of the Companies.
SECTION 2.13 EMPLOYEES; EMPLOYEE COMPENSATION. There is no strike, labor
dispute or union organization activity pending or, to the best knowledge of the
Shareholders and the Companies, threatened between it and its employees and none
of such Company's employees belongs to any union or collective bargaining unit.
To the best knowledge of the Shareholders and the Companies, each Company has
complied in all material respects with all applicable state and federal equal
opportunity and other laws related to employment. Except as set forth in Section
2.13 of the Schedule of Exceptions, neither Company is a party to or bound by
any currently effective employment contract.
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SECTION 2.14 TAX RETURNS, PAYMENTS, AND ELECTIONS. Except as set forth in
Section 2.14 of the Schedule of Exceptions, each Company has filed all tax
returns and reports required by law, and these returns and reports are true and
correct in all material respects. The amounts recorded for taxes on the
Financial Statements are sufficient for the payment of all due but unpaid
federal, state, county, local or other taxes (including any interest or
penalties) of the Companies involved, accrued for or applicable to the period
ended on the dates thereof and for all years and periods prior thereto. To the
best knowledge of the Shareholders and the Companies, each Company has paid all
taxes and other assessments due, except those contested by it in good faith,
which are set forth in Section 2.14 of the Schedule of Exceptions. Neither
Company has had any tax deficiency proposed or assessed against it, nor has
either Company executed any waiver of any statute of limitations on the
assessment or collection of any tax or governmental charge. No examinations by
the Internal Revenue Service of the federal income tax returns of either Company
for any taxable year are pending. To the best knowledge of the Shareholders and
the Companies, each Company has withheld or collected from each payment made to
each of its employees, the amount of all taxes, including, but not limited to,
federal income taxes, Federal Insurance Contribution Act taxes and Federal
Unemployment Tax Act taxes required to be withheld or collected therefrom, and
has paid the same to the proper tax receiving officers or authorized
depositaries. True and complete copies of the federal income tax returns of the
Companies for the years ending December 31, 1995 and 1996 have been delivered to
the Buyer.
SECTION 2.15 ENVIRONMENTAL AND SAFETY LAWS. Except as set forth in Section
2.15 of the Schedule of Exceptions, to the best knowledge of the Shareholders
and the Companies, without any investigation, neither Company is in any material
respect in violation of, or subject to any existing, pending or, to the best
knowledge of the Shareholders and the Companies, threatened proceeding by any
governmental agency or authority relating to, or subject to any remedial
obligation under, any applicable statute, law or regulation relating to the
environment ("Applicable Environmental Law"), and to the best knowledge of the
Shareholders and the Companies, without any investigation, no material
expenditures are or will be required in order to comply with any such existing
Applicable Environmental Law, other than such violations, proceedings, remedial
obligations or expenditures that would not have a material adverse effect on
such Company's financial condition.
SECTION 2.16 NO LIABILITIES NOT SHOWN IN FINANCIAL STATEMENTS. Except as
disclosed in the Financial Statements, herein or as disclosed to the Buyer in
writing, neither of the Companies has any material liabilities, absolute or
contingent, whether or not asserted, that are not reflected therein. For the
purposes hereof, the term "material" shall mean in excess of $10,000.
SECTION 2.17 LOANS TO SHAREHOLDERS, OFFICERS OR AFFILIATES. There are no
loans or other obligations payable to or by shareholders, officers, directors or
employees of the Companies, except obligations incurred or accrued in the
ordinary course of business in respect of salaries, wages and reimbursements of
expenses, and except as disclosed in the Financial Statements or which shall be
paid off or extinguished at the Closing Date.
SECTION 2.18. COMPLIANCE WITH LAWS. To the best knowledge of the
Shareholders and the Companies, except as set forth in Section 2.18 of the
Schedule of Exceptions, the Companies have complied in all material respects
with all applicable federal, state, municipal and other political subdivision or
governmental agency statutes, ordinances and regulations in every applicable
jurisdiction, in respect of the ownership of their properties and the conduct of
their business, including any labor, minimum wage or employment regulations.
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SECTION 2.19. INSURANCE COVERAGE. Set forth in Section 2.19 of the Schedule
of Exceptions is a list of the policies of casualty, liability, use and
occupancy, and workers' compensation and other forms of insurance of each
Company that are now duly in force.
SECTION 2.20. EMPLOYEE RELATIONS. Section 2.20 of the Schedule of
Exceptions sets forth a list of all bonus, incentive, compensation, disability
pension, profit sharing, retirement, deferred compensation, group insurance or
employee welfare plans of any nature whatsoever (collectively, the "Plans").
(a) The Companies do not have in effect any pension, profit sharing or
other retirement plan, whether or not qualified. The Companies do not
contribute, or have any obligation to make any payments or contributions, to a
multi-employer plan, as that term is defined in Section 3(37) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and the Companies
do not have any actual or potential liability under Section 4201 of ERISA for
any complete or partial withdrawal from a multi-employer plan.
(b) The Plans comply in all material respects with the requirements of all
applicable laws. There are no actions, suits, claims or investigations pending
or, to the best knowledge of the Shareholders or the Companies, threatened with
respect to any Plan. There is no liability required to be accrued under the
Plans except to the extent reflected in the Financial Statements. The Companies
have made or set aside funds to make full payment of all amounts which the
Companies are required to pay prior to the date hereof under the terms of each
Plan, or under any governmental rule or regulation relating to employment
matters. The present value of the vested accrued benefits, if any, under each
Plan does not exceed the current value of the assets of each Plan. No
termination of any Plan by the Companies at or prior to the Closing Date has
resulted or will result in the imposition of any liabilities on the Companies.
(c) Each "Group Health Plan" (within the meaning of Section 162(i)(3) of
the Internal Revenue Code of 1986) maintained by the Companies has been
administered in good faith compliance with the reasonable interpretation of the
continuation coverage requirements contained in Title X of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (COBRA).
SECTION 2.21. TRADEMARKS AND LICENSES. Section 2.21 of the Schedule of
Exceptions sets forth a complete and accurate list of all licenses, trademark
applications, trade names, trade name applications, copyrights and copyright
applications owned by or licensed to the Companies or in which the Companies
have any right or interest. To the best knowledge of the Shareholders and the
Companies, the conduct of the business of the Companies does not conflict with
or infringe upon any trademark, trade name, trade secret or copyright of others.
The Companies have received no notice of any claim of infringement or other
complaint that its operations conflict with or infringe upon the trade names,
trademarks, trade secrets or copyrights of others.
SECTION 2.22. GUARANTEES. Except for guarantees of obligations of the other
Company, neither Company has given any guarantee, indemnity, warranty or bond,
or incurred any other similar obligation or created any security for or in
respect of, liabilities, actual or contingent, of any other person or entity.
SECTION 2.23. OSHA. The Companies have not received notice of any violation
by the Companies, and to the best knowledge of the Shareholders and the
Companies, the Companies are not in violation of and have not been in violation
of the Occupational Safety and Health Act of 1970, including the rules and
regulations thereunder, or any other federal, state or local laws, including
rules and regulations thereunder, regulating or otherwise affecting employee
health and safety.
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SECTION 2.24. BOOKS AND RECORDS. The books and records of the Companies are
in all material respects complete and correct.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to, and agrees with the
Shareholders and the Companies that:
SECTION 3.1 ORGANIZATION; GOOD STANDING. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and has all requisite corporate power and authority to own and operate its
properties and assets and to carry on its business as currently conducted, to
execute and deliver this Agreement, the Shareholder's Agreement and to carry out
the provisions of this Agreement.
SECTION 3.2 AUTHORIZATION. Buyer has duly authorized the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby. No further corporate actions on the part of the Buyer are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
SECTION 3.3 VALID AND BINDING AGREEMENT. This Agreement constitutes a valid
and binding agreement of the Buyer, enforceable against the Buyer in accordance
with its terms subject to applicable bankruptcy, reorganization, insolvency,
moratorium and similar laws affecting creditors' rights generally from time to
time in effect and the general principles of equity.
SECTION 3.4 NO VIOLATION. Neither the execution and delivery of this
Agreement nor the consummation by the Buyer of the transactions contemplated
hereby will (i) violate or conflict with any statute, law, ordinance, rule,
regulation, order, writ, injunction, judgment or decree applicable to the Buyer
or by which any of its properties may be bound or affected, (ii) violate or
conflict with any provisions of the Certificate of Incorporation or Bylaws of
the Buyer, (iii) constitute a violation of or default or breach (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
or result in the termination of, accelerate the performance required by, give
rise to any right of termination, cancellation, acceleration or amendment under,
or result in the creation of any Lien upon the Buyer or any of its assets or
have any other adverse affect under, any term or provision of any contract,
commitment, understanding, arrangement, agreement or restriction of any kind or
character to which the Buyer is a party or by which any of its assets or
properties may be bound, subject or affected, or (iv) cause, or give any person
grounds to cause (with or without notice, the passage of time or both), the
maturity of any material debt, liability or obligation of the Buyer to be
accelerated or increase any such liability or obligation of Buyer in any
material respect, except, in the case of (i), (iii) and (iv), where such
violations, terminations, conflicts, accelerations, defaults, breaches or
grounds and rights of termination, cancellation, acceleration and amendment
would not have a material adverse effect on either of the Companies taken as a
whole or prevent or delay the consummation of the transactions contemplated
hereby.
SECTION 3.5 PURCHASE ENTIRELY FOR OWN ACCOUNT. Subject to Section 9.2
hereof, the Buyer is purchasing the Shares for investment for such Buyer's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof. The Buyer has no present intention of selling,
granting any participation in or otherwise distributing the same. The Buyer
further represents that it does not have any
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contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Shares.
SECTION 3.6 INDEPENDENT INVESTIGATION. The Buyer acknowledges and affirms
to the Shareholders that in making the decision to enter into this Agreement and
to consummate the transactions contemplated hereby, the Buyer, except for the
express representations, warranties and covenants made in Article II hereof (all
of which shall be binding regardless of any investigation made by the Buyer),
has relied solely on the basis of its own independent investigation, analysis
and evaluation of the Companies and each of the Companies' properties, assets,
business, financial condition, operations and prospects.
SECTION 3.7 INVESTMENT EXPERIENCE. The Buyer represents that it is
experienced in evaluating and investing in securities of companies and
acknowledges that it can bear the economic risk of its investment and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the investment in the Shares. The Buyer also
represents it has not been organized for the purpose of acquiring the Shares.
SECTION 3.8 ACCREDITED INVESTOR; U.S. PERSON.
(a) The Buyer is an "Accredited Investor" as such term is defined in
Regulation D of the Securities Act of 1933, as amended.
(b) The Buyer is a citizen or resident of the United States or Canada, or
any state, territory or possession thereof (a "U.S. Person").
SECTION 3.9 RESTRICTED SECURITIES. The Buyer understands that the Shares
may not be sold, transferred or otherwise disposed of without complying with the
provisions of Article III of the Shareholders' Agreement, including registration
under the Securities Act or a written opinion of counsel or "no-action" letter
from the Securities and Exchange Commission relating to an exemption therefrom,
and that in the absence of an effective registration statement covering the
Shares or an available exemption from registration under the Securities Act, the
Shares must be held indefinitely. In particular, the Buyer is aware that the
Shares may not be sold pursuant to Rule 144 promulgated under the Securities Act
unless all of the conditions of that Rule are met. Among the conditions for use
of Rule 144 may be the availability of current information to the public about
either Company. Such information is not now available and neither Company has
any present plans to make such information available.
SECTION 3.10 PUBLIC SALE. The Buyer agrees not to make, without complying
with the provisions of Article III of the Shareholders' Agreement and the prior
written consent of each Company, any public offering or sale of the Shares,
although permitted to do so pursuant to Rule 144(k) promulgated under the
Securities Act, until the earlier of (i) the date on which the Companies effect
their initial registered public offering pursuant to the Securities Act or (ii)
the date on which they become a registered company pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended.
SECTION 3.11 INVESTMENT COMPANY ACT. To the best knowledge of the Buyer,
the Buyer is not and, after giving effect to the purchase of the Shares, will
not be an "investment company" as defined in the Investment Company Act of 1940.
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ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.1 ACCESS TO INFORMATION; CONFIDENTIALITY. Between the date hereof
and the Closing, the Shareholders and the Companies (i) shall give the Buyer and
its authorized representatives reasonable access to all employees, offices and
other facilities, and all books and records, including work papers and other
materials prepared by the Companies' independent public accountants, of the
Companies, (ii) shall permit the Buyer and its authorized representatives to
make such inspections as they may reasonably require, and (iii) shall cause the
Companies' officers to furnish the Buyer and its authorized representatives with
such financial and operating data and other information with respect to the
Companies as the Buyer may from time to time reasonably request; provided,
however, that the Shareholders and the Companies shall have the right to have a
representative present at all times.
SECTION 4.2 SHAREHOLDERS' AGREEMENT. The Shareholders, the Companies and
the Buyer shall enter into a Shareholders' Agreement (the "Shareholders'
Agreement") at (and subject to the occurrence of) the Closing pursuant to which
the parties thereto shall agree to certain restrictions upon the sale and
transfer of shares of PAACO Common Stock and Premium Common Stock on the terms
set forth therein. The Shareholders' Agreement shall be in substantially the
form set forth as Annex D.
SECTION 4.3 EMPLOYMENT AGREEMENT. Each of the Shareholders and the
Companies shall enter into an Employment Agreement (the "Employment Agreement")
at (and subject to the occurrence of) the Closing pursuant to which the
Companies shall agree to employ each Shareholder for the period and on the terms
set forth therein and in which each Shareholder shall covenant not to compete
against the Companies on the terms set forth therein. The Employment Agreement
shall be in substantially the form set forth as Annex E.
SECTION 4.4 SHAREHOLDER WARRANTS. At, and subject to the occurrence of, the
Closing, the Companies shall issue to the Shareholders warrants (collectively,
the "Shareholder Warrants") to purchase up to an aggregate of 8,511 shares of
PAACO Common Stock and 85 shares of Premium Common Stock, subject to the terms
and provisions of such Shareholder Warrants. The Shareholder Warrants shall be
in substantially the form set forth as Annex F.
SECTION 4.5 CONDUCT OF BUSINESS. Except as otherwise contemplated by this
Agreement, from the date hereof until the Closing, the business of the Companies
will be conducted diligently and only in the ordinary course. For purposes of
this Section 4.5, the phrase "ordinary course" shall mean the conduct of the
business of the Companies in the manner which the Companies conducted their
business in the last fiscal year ended prior to the execution of this Agreement,
following their usual accounting practices, making ordinary accruals, incurring
ordinary liabilities or expenditures and making ordinary contracts and
commitments.
SECTION 4.6 PAY-OFF OF DEBENTURE. At, and subject to the occurrence of the
Closing, the 18% Debenture Due January 13, 2000 in the principal amount of
$3,000,000 from the Companies to the Buyer, dated January 13, 1998 (the
"Debenture"), shall be paid in full.
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ARTICLE V
CONDITIONS OF THE BUYER'S OBLIGATIONS AT CLOSING
The obligations of the Buyer under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against the Buyer unless it consents in
writing thereto:
SECTION 5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Shareholders and the Companies contained in Article II shall
be true in all material respects on and as of the Closing with the same effect
as though such representations and warranties had been made on and as of the
date of the Closing.
SECTION 5.2 PERFORMANCE. Each Company and each Shareholder shall have
performed and complied in all material respects with all agreements, obligations
and conditions contained in this Agreement that are required to be performed or
complied with by it or him on or before the Closing.
SECTION 5.3 COMPLIANCE CERTIFICATE. The President of each Company and each
Shareholder shall deliver to the Buyer at the Closing a certificate certifying
that the conditions specified in Sections 5.1 and 5.2 have been fulfilled.
SECTION 5.4 SHAREHOLDERS' AGREEMENT. The Shareholders shall have entered
into the Shareholders' Agreement.
SECTION 5.5 EMPLOYMENT AGREEMENT. Each of the Shareholders shall have
entered into the Employment Agreement.
SECTION 5.6 FINOVA CREDIT FACILITY. The Companies' senior lender ("Finova")
will have consented to the transactions contemplated herein.
SECTION 5.7 OPINION OF COUNSEL. The Buyer shall have received the opinion,
subject to customary assumptions, of Thompson & Knight, P.C., counsel for the
Shareholders and the Companies, dated the Closing Date, to the effect that:
(a) each of the Companies is a corporation duly organized, validly existing
and in good standing under the laws of the State of Texas and has the corporate
power to carry on its business as it is now being conducted;
(b) this Agreement has been duly authorized, executed and delivered by the
Companies, and (assuming valid execution and delivery by the other parties
hereto) is, or will be upon such execution, the legal, valid and binding
obligation of each of the Companies, enforceable in accordance with its terms
(except as otherwise limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights, and except that such
counsel need not express an opinion as to whether any covenant contained herein
is specifically enforceable);
(c) this Agreement has been duly executed and delivered by the
Shareholders, and (assuming legal competency of the Shareholders and delivery by
the other parties hereto) is, or will be upon such execution, the valid and
binding obligation of each of the Shareholders, enforceable in accordance with
its terms (except as otherwise limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting
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creditor's rights, and except that such counsel need not express an opinion as
to whether any covenant contained herein is specifically enforceable).
SECTION 5.8 BUYER WARRANTS. The Buyer shall have exercised the Buyer
Warrants.
SECTION 5.9 CONSENTS PRIOR TO CLOSING. The Shareholders and the Companies
shall have obtained all material approvals and consents which must be obtained
in order to effectuate the transactions contemplated hereby and to satisfy the
terms and provisions hereof.
SECTION 5.10 NO MATERIAL ADVERSE CHANGES. The Shareholders and the
Companies shall have delivered to the Buyer their certificate stating that there
has been no material adverse change in the business, operations, financial
condition or properties of the Companies since the date hereof.
SECTION 5.11 ABSENCE OF LITIGATION. No litigation, governmental action,
insolvency, receivership or other proceeding shall have been threatened,
asserted or commenced with respect to the transactions contemplated herein.
ARTICLE VI
CONDITIONS OF THE SHAREHOLDERS' OBLIGATIONS AT CLOSING
The obligations of the Shareholders to the Buyer under this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions by the Buyer:
SECTION 6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Buyer contained in Article III shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the Closing.
SECTION 6.2 PERFORMANCE. The Buyer shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing.
SECTION 6.3 COMPLIANCE CERTIFICATE. The Buyer shall deliver to the
Shareholders at the Closing a certificate certifying that the conditions
specified in Section 6.1 have been fulfilled.
SECTION 6.4 SHAREHOLDERS' AGREEMENT. The Buyer shall have entered into the
Shareholders' Agreement.
SECTION 6.5 EMPLOYMENT AGREEMENT. The Companies shall have entered into the
Employment Agreements.
SECTION 6.6 SHAREHOLDER WARRANTS. The Companies shall have issued the
Shareholder Warrants.
SECTION 6.7 OPINION OF COUNSEL. The Shareholders and the Companies shall
have received the opinion, subject to customary assumptions, of T.J. Falgout,
III, executive vice president and general counsel for the Buyer, dated the
Closing Date, to the effect that:
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(a) the Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas and has the corporate power to
carry on its business as it is now being conducted;
(b) this Agreement has been duly authorized, executed and delivered by
Crown, and (assuming valid execution and delivery by the other parties hereto)
is, or will be upon such execution, the legal, valid and binding obligation of
the Buyer, enforceable in accordance with its terms (except as otherwise limited
by bankruptcy, insolvency, reorganization, moratorium and similar laws effecting
creditor's rights, and except that such counsel need not express an opinion as
to whether any covenant contained herein is specifically enforceable).
ARTICLE VII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
SECTION 7.1 SURVIVAL OF REPRESENTATIONS. Subject to Section 7.3 hereof, the
representations and warranties made by the Shareholders and each Company
contained in Article II of this Agreement and the representations and warranties
made by the Buyer contained in Article III of this Agreement shall survive the
Closing for a period of one year, except for representations made in Section
2.14, which representations shall survive the Closing until a date which is six
(6) months after the applicable statute of limitations has expired.
SECTION 7.2 AGREEMENT TO INDEMNIFY.
(a) Subject to the terms and conditions of this Article VII, each of the
Shareholders and the Companies hereby agrees jointly and severally to indemnify,
defend and hold harmless the Buyer and its successors and assigns (collectively,
the "Buyer Group") from and against all claims, actions or causes of action,
assessments, demands, losses, damages, judgments, settlements, liabilities,
costs and expenses, including, without limitation, interest, penalties and
reasonable attorneys' and accounting fees and expenses of any nature whatsoever,
whether actual or consequential (collectively, "Damages"), asserted against,
imposed upon or incurred directly by any member of the Buyer Group by reason of
or resulting from a breach of any representation or warranty, covenant,
agreement or undertaking by the Shareholders or the Companies contained herein.
(b) Subject to the terms and conditions of this Article VII, the Buyer
hereby agrees to indemnify, defend and hold harmless each Shareholder and the
Companies and their respective subsidiaries, and each officer and director of
the Companies or of any of their respective subsidiaries and each affiliate
thereof (collectively, the "Seller Group"), and their successors and assigns,
from and against all Damages, asserted against, resulting to, imposed upon or
incurred by any member of the Seller Group, directly or indirectly, by reason of
or resulting from a breach of any representation, warranty, covenant, agreement
or undertaking of the Buyer contained herein.
SECTION 7.3 LIMITATION OF LIABILITY. The obligations and liabilities of
each Shareholder with respect to Buyer Claims under Section 7.2 hereof to the
Buyer Group and the Buyer with respect to Seller Claims under Section 7.2 hereof
to the Seller Group shall be subject to the following limitations:
(a) No indemnification shall be required to be made by any Shareholder
under this Article VII with respect to any Buyer Claims which results from the
breach of any representation, except to the extent that the aggregate amount of
Damages with respect to all of such claims incurred by the Buyer Group exceeds
$25,000, in which case, the Shareholders shall be liable only for Damages in
excess of such amount.
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(b) The amount of Damages any party is required to pay to indemnify any
other party pursuant to Section 7.2 as a result of any Buyer Claim or Seller
Claim shall be reduced to the extent of any amounts actually received by the
party seeking indemnification after the Closing Date pursuant to the terms of
insurance policies (if any) covering such claim.
(c) The amount of Damages payable by a Shareholder pursuant to Section 7.2
as a result of any Buyer Claim (i) shall be reduced by the amount of any tax
benefit actually realized by any member of the Buyer Group as a result of such
Buyer Claim, and (ii) such reduced amount shall be increased by the amount of
any taxes actually payable by any member of the Buyer Group as a result of such
Shareholder's payment of Damages for such Buyer Claim.
(d) No indemnification shall be required to be made by any Shareholder
under this Article VII to the extent the aggregate amount of Damages incurred by
the Buyer Group and paid by such Shareholder exceeds the cash Purchase Price
received by such Shareholder pursuant to this Agreement.
SECTION 7.4 CONDITIONS OF INDEMNIFICATION. The obligations and liabilities
of the Shareholders and the Companies to indemnify the Buyer Group and the Buyer
to indemnify the Seller Group under Section 7.2 hereof with respect to Buyer
Claims and Seller Claims, respectively, resulting from the assertion of
liability by third parties shall be subject to the following terms and
conditions:
(a) The indemnified party will give the indemnifying party prompt notice of
any such claim, and the indemnifying party will undertake the defense thereof by
representatives of its own choosing reasonably satisfactory to the indemnified
party, provided that failure to provide such notice will not relieve the
indemnifying party of its obligations hereunder unless it is actually prejudiced
by such failure to receive such notice. If the indemnifying party, within ten
(10) days after notice of any such claim, fails to defend such claim, the
indemnified party will (upon further notice to the indemnifying party) have the
right to undertake the defense, compromise or settlement of such claim on behalf
of and for the account and risk of indemnifying party.
(b) Anything in this Section 7.4 to the contrary notwithstanding, (i) an
indemnified party shall have the right, at its own cost and expense, to defend,
compromise or settle or participate in the defense, compromise or settlement of
such claim, (ii) the indemnifying party shall not, without the written consent
of the indemnified party, settle or compromise any claim or consent to the entry
of any judgment (x) which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the indemnified party a release from
all liability in respect of such claim or (y) as a result of which injunctive or
other equitable relief would be imposed against the indemnified party, and (iii)
the indemnified party shall have the right to control the defense or settlement
of that portion of any claim which seeks an order, injunction or other equitable
relief against the indemnified party which, if successful, could materially
interfere with the business, operations, assets, financial condition or
prospects of the indemnified party; provided, however, that in connection with
the defense or settlement of the portion of such claim which seeks equitable
relief, the indemnified party shall cooperate with the indemnifying party and
use its reasonable best efforts to limit the liability of the indemnifying party
for the damages portion of such claim.
SECTION 7.5 REMEDIES CUMULATIVE. Except as otherwise provided herein, the
remedies provided herein shall be cumulative and shall not preclude the
assertion by either party hereto of any other rights or the seeking of any other
remedies against the other party hereto.
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ARTICLE VIII
TERMINATION; AMENDMENT AND WAIVER
SECTION 8.1 TERMINATION OF AGREEMENT. This Agreement may be terminated at
any time prior to the Closing:
(a) By mutual written agreement of the Buyer, each of the Shareholders and
the Companies;
(b) By either the Buyer or each of the Shareholders if the Closing shall
not have occurred on or before February 28, 1998, unless such failure to close
shall be due to a breach of this Agreement by the party seeking to terminate the
Agreement pursuant to this Section; or
(c) If a United States court of competent jurisdiction shall permanently
enjoin the consummation of the transactions contemplated hereby and such
injunction shall be final and nonappealable.
SECTION 8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided above, this Agreement shall forthwith become void and
there shall be no liability on the part of any party hereto (or any of their
respective officers or directors). Nothing contained in this Section 8.2 shall
relieve any party from liability for any breach of this Agreement.
SECTION 8.3 AMENDMENT, EXTENSION AND WAIVER. The Buyer, the Companies and
the Shareholders may amend this Agreement at any time by an instrument in
writing signed on behalf of each of the parties hereto. Any agreement on the
part of a party hereto to any waiver of compliance with any of the agreements or
conditions contained herein shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
SECTION 9.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
permitted transferees of any shares of Common Stock sold hereunder). Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
SECTION 9.3 GOVERNING LAW AND VENUE. This Agreement shall be governed by
and construed under the laws of the State of Texas and venue for any dispute
arising hereunder shall be in Dallas County, Texas, and the parties hereto
irrevocably submit to the jurisdiction of the federal and state courts located
in Dallas County, Texas.
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SECTION 9.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 9.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
SECTION 9.6 NOTICES. Unless otherwise provided, all notices and other
communications required or permitted under this Agreement shall be in writing
and shall be mailed by United States first-class mail, postage prepaid, sent by
facsimile or delivered personally by hand or by a nationally recognized courier
addressed to the party to be notified at the address or facsimile number
indicated for such person on the signature page hereof, or at such other address
or facsimile number as such party may designate by ten (10) days' advance
written notice to the other parties hereto. All such notices and other written
communications shall be effective on the date of mailing, facsimile transfer or
delivery.
SECTION 9.7 FINDER'S FEES. The Buyer agrees to indemnify and to hold
harmless each of the Shareholders and each Company from any liability for any
commission or compensation in the nature of a finder's fee (and the cost and
expenses of defending against such liability or asserted liability) for which
the Buyer or any of its officers, partners, employees, agents or representatives
is responsible. Each of the Shareholders and each Company agrees to indemnify
and hold harmless the Buyer from any liability for any commission or
compensation in the nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for which any of the
Shareholders or either of the Companies or any of either's officers, employees,
agents or representatives is responsible. The Shareholders and the Companies
hereby acknowledge that the Buyer has paid to John A. Drossos and JAD Capital,
Inc. a finder's fee in the aggregate amount of $200,000, and the Companies
hereby agree to reimburse the Buyer for such fee at the Closing.
SECTION 9.8 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the unanimous written consent of the parties hereto.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any securities purchased under this Agreement at the
time outstanding (including securities into which such securities have been
converted), each future holder of all such securities, and each Company.
SECTION 9.9 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision or provisions
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms; provided, however, that if any such provision or
provisions may be made enforceable by limitation thereof, then such provision
shall be deemed to be so limited and shall be enforceable to the maximum extent
permitted by law.
SECTION 9.10. FUTURE ACTIONS. The Companies, the Shareholders and the Buyer
shall execute and deliver all such future instruments and take such other and
further action as may be reasonably necessary or appropriate to carry out the
provisions of this Agreement and the intention of the parties as expressed
herein.
SECTION 9.11. PUBLIC ANNOUNCEMENTS. No publication and/or press release of
any nature shall be issued pertaining to this Agreement or the transaction
contemplated hereby without the prior written approval of the Buyer and the
Shareholders, except as may be required by law.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SPOUSES: SHAREHOLDERS: ADDRESSES:
- ------------------- -----------------------
Larry Lange PAACO, Inc.
605 S. Loop 12
Irving, Texas 75060
- ------------------- -----------------------
Daniel Chu PAACO, Inc.
605 S. Loop 12
Irving, Texas 75060
-----------------------
Ted Lange PAACO, Inc.
605 S. Loop 12
Irving, Texas 75060
PAACO, INC.
By:
--------------------
Daniel Chu PAACO, Inc.
President 605 S. Loop 12
Irving, Texas 75060
PREMIUM AUTO ACCEPTANCE CORPORATION
By:
--------------------
Daniel Chu PAACO, Inc.
President 605 S. Loop 12
Irving, Texas 75060
BUYER:
CROWN GROUP, INC.
By:
--------------------
Edward R. McMurphy Crown Group, Inc.
President 4040 N. MacArthur Blvd.
Suite 100
Irving, Texas 75038
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