Exhibit 2.11
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
this 8th day of October, 1997, by and among CROSS-CONTINENT AUTO RETAILERS, INC.
("Purchaser"), a Delaware corporation; THE CHAISSON FAMILY TRUST R-501 (the
"Seller"); and JRJ INVESTMENTS, INC. (the "Company"), a Nevada corporation.
RECITALS
A. The Company owns and operates a dealership known as "Chaisson Motor
Cars," located at 2333 S. Decatur, Las Vegas, Nevada (the "Las Vegas
Dealership"), and a dealership known as "Chaisson BMW," located at 261 Auto Mall
Drive, Henderson, Nevada (the "Henderson Dealership"); hereinafter referred to
individually as a "Dealership" and collectively as the "Dealerships."
B. The Company has been granted and operates the following new automobile
manufacturer's franchises at the Las Vegas Dealership:
1. Land Rover,
2. Jaguar,
3. Volkswagen,
4. Audi,
5. Bentley and Rolls Royce, and
6. BMW;
and has been granted a Satellite Location Addendum to its dealer agreement with
BMW to operate a BMW new automobile manufacturer's franchise at the Henderson
Dealership. Pursuant to the Satellite Location Addendum, the Henderson
Dealership will be the primary BMW location and the Las Vegas Dealership will be
the satellite location.
C. The Company leases the premises (the "Las Vegas Premises") on which
the Las Vegas Dealership is located pursuant to a lease agreement with JRJ
Properties, a Nevada general partnership (the "Las Vegas Lease").
D. The Company leases the premises (the "Henderson Premises") on which
the Henderson Dealership is located pursuant to a lease agreement with the
Seller (the "Henderson Lease").
E. Seller owns a tract of approximately 2.5 acres (the "2.5 Acre Tract")
adjacent to the Henderson Premises and having an address of 251 Auto Mall Drive.
F. The Seller is the owner of all of the issued and outstanding shares of
capital stock of the Company (the "Shares").
G. Subject to the terms and conditions set forth in this Agreement,
Purchaser desires to purchase all of the Shares, and Seller desires to sell all
of the Shares to Purchaser.
AGREEMENT
In consideration of the mutual covenants, agreements, representations, and
warranties set forth in this Agreement, Purchaser, Seller, and the Company agree
as follows:
1. PURCHASE AND SALE OF THE SHARES. Subject to and upon the terms
and conditions of this Agreement, at the Closing (hereinafter defined) Seller
shall sell, transfer, convey, assign, and deliver to the Purchaser, and
Purchaser shall purchase, acquire and accept from Seller, all of the Shares,
free and clear of all security interests, liens, claims, agreements,
encumbrances, or restrictions of any kind, whether written or oral.
2. PURCHASE PRICE. The purchase price to be paid by Purchaser to
Sellers for the Shares shall be $17,760,000 (the "Purchase Price"), subject to
the adjustment set forth in Paragraph 3 of this Agreement.
3. ADJUSTMENT TO THE PURCHASE PRICE. In the event the Net Worth
(hereinafter defined) is more or less than $3,000,000, the Purchase Price shall
be increased or decreased by an amount equal to the difference between
$3,000,000 and the Net Worth. As used in this Agreement, the term "Net Worth"
shall mean the net worth of the Company as shown as total shareholders' equity
on the balance sheet of the Company, as adjusted by the Net Worth Adjustments
(hereinafter defined), as of the last business day prior to the Closing.
4. PAYMENT OF PURCHASE PRICE. At Closing Purchaser shall pay the
Purchase Price, as adjusted, as follows:
a. $13,000,000, plus or minus the amount of any increase or
reduction in the Purchase Price in accordance with paragraph
3 hereof, by cashier's check or other immediately available
funds (the "Cash");
b. Purchaser shall execute and deliver a promissory note to
Seller in the original principal amount of $2,760,000 (the
"Note"), bearing interest on the unpaid principal at eight
percent (8%) per annum, payable in sixty (60) equal monthly
installments of principal and interest in the amount of
$55,962 per month. The Note shall be in the form of Exhibit
"A" hereto.
c. Purchaser shall issue to Seller 128,205 shares of restricted
common stock (the "Restricted Stock"); provided, however,
that if the closing price for Purchaser's common stock on
the first anniversary of the Closing Date is less than
$15.60 per share, Purchaser shall either (i) issue to Seller
shares of its fully registered, unrestricted common stock
(the "Unrestricted Shares") so that the aggregate value of
the Restricted Shares and the Unrestricted Shares issued to
Seller
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(based on the closing price for Purchaser's common stock on
the first anniversary of the Closing Date) shall equal
$2,000,000, or (ii) pay to Seller in the form of a cashier's
check or other immediately available funds an amount equal
to the difference between $2,000,000 and the product of the
number of Restricted Shares that are required to be issued
to Seller on the Closing Date times the closing price for
Purchaser's common stock on the first anniversary of the
Closing Date.
Purchaser shall not issue any fractional shares and shall
pay Seller cash in lieu of any fractional shares based on a
price of $15.60 per share or the closing price of
Purchaser's common stock as quoted in THE WALL STREET
JOURNAL on the first anniversary of the Closing Date,
whichever date is applicable.
The certificates representing any Restricted Shares that are
issued to Seller shall bear a restrictive legend that the
stock has not been registered under applicable federal and
state securities laws. It is understood and agreed that
Purchaser has not agreed to register the Restricted Shares
that is to be issued to Seller.
5. CLOSING. Subject to the terms and conditions set forth in this
Agreement, the closing ("Closing") of the purchase and sale of the Shares shall
take place at the offices of Jones, Jones, Close & Brown, Chartered, 3773 Howard
Hughes Parkway, Third Floor South, Las Vegas, Nevada 89109, or at such other
place as may be mutually agreed upon by Purchaser and Seller, on the earlier of
(i) as soon as practicable following the date on which all conditions to the
obligations of the parties hereunder (other than those requiring the taking of
action at the Closing) have been satisfied or waived, or (ii) November 3, 1997,
subject to the mutual agreement of the parties to select another date. The date
on which the Closing is to occur is hereinafter referred to as the "Closing
Date."
6. TRANSACTIONS AT CLOSING. The following transactions shall take
place at Closing:
a. DELIVERIES BY SELLER. The Seller shall deliver the
following to the Purchaser:
(i) Stock certificates representing the Shares in duly
transferrable form;
(ii) Such other documents and instruments as Purchaser
may reasonably request in order to vest in Purchaser
good and marketable title to the Shares and to any
and all right, title, interest or claim of any kind
that Seller may have in the properties, assets or
business of the Company;
(iii) The Las Vegas Lease, the Henderson Lease, and a
lease of the 2.5 acre tract (the "2.5 Acre Lease"),
in the forms of Exhibits "B," "C," and "D" hereto
(collectively, the "Leases");
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(iv) Copies of resolutions of the Board of Directors of
the Company, duly certified by its Secretary, in
form reasonably satisfactory to Purchaser's counsel,
authorizing the execution, delivery and performance
of this Agreement and all other documents to which
the Company is a party as contemplated hereby, and
all actions to be taken by the Company hereunder and
thereunder;
(v) A Seller's certificate in the form of Exhibit "E"
hereto, duly executed by the Seller and the Company;
(vi) An opinion of counsel to the Seller, in the form of
Exhibit "F" hereto;
(vii) An Investment Letter executed by Seller, in the form
of Exhibit "G" hereto;
(vii) A Registration Rights Agreement (the "Registration
Rights Agreement") executed by Seller, in the form
of Exhibit "H" hereto;
(ix) The Seller's Escrow Agreement;
(x) Any instruments and other documents specifically
required by this Agreement, to which Seller or the
Company is a party, that are not otherwise set forth
in this subparagraph 6(a); and
(xi) Any other instruments or documents deemed reasonably
necessary or desirable by the Purchaser in order to
consummate the transactions contemplated hereby.
b. DELIVERIES BY PURCHASER. The Purchaser shall deliver the
following to the Seller:
(i) The Cash, the Note, and a stock certificate
representing the Restricted Shares;
(ii) Copies of resolutions of the Board of Directors of
the Purchaser, duly certified by its Secretary, in
form reasonably satisfactory to Seller's counsel,
authorizing the execution, delivery and performance
of this Agreement and all other documents to which
the Purchaser is a party as contemplated hereby, and
all action to be taken by Purchaser hereunder and
thereunder;
(iii) The Registration Rights Agreement executed by
Purchaser;
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(iv) A Purchaser's Certificate in the form of Exhibit I
hereto, duly executed by the Purchaser;
(v) An opinion of counsel to the Purchaser, in the form
of Exhibit J hereto;
(vi) The Employment Agreements referenced in subparagraph
7(o);
(vii) Any instruments and other documents specifically
required by this Agreement, to which Purchaser is a
party, that are not otherwise set forth in this
subparagraph 6(b); and
(viii) Any other instruments or documents deemed reasonably
necessary or desirable by the Seller in order to
consummate the transactions contemplated hereby.
7. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANY.
The Seller and the Company jointly and severally represent and warrant to
Purchaser, effective as of the date of this Agreement and again at Closing, each
of the following:
a. AUTHORITY AND BINDING AGREEMENT. Seller has the legal power
and capacity to enter into this Agreement and to perform its
obligations hereunder. This Agreement has been duly and
validly executed and delivered by Seller and the Company and
is a valid and binding obligation of Seller and the Company
(relating to those certain agreements of the Company
contained in this Agreement), enforceable against Seller and
the Company in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to the enforcement of creditors' rights generally
and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity
or at law). Seller has (i) good and marketable title to the
Shares, free and clear of any security interests, liens,
claims, agreements, encumbrances, or restrictions of any
kind, and (ii) the complete and unrestricted right, power,
and authority to sell, transfer, and assign the Shares in
accordance with this Agreement.
b. ORGANIZATION AND STANDING. Seller is duly formed, validly
existing, and in good standing under the laws of the State
of Nevada and has all necessary power and authority to own
the Shares. The Company is duly incorporated, is validly
existing, and is in good standing under the laws of the
State of Nevada and has all necessary power and authority to
own, lease, and operate its properties and assets and to
conduct its business as its business is now being conducted.
Seller has delivered to Purchaser complete and accurate
copies of the Company's articles of incorporation and
bylaws, including all amendments thereto and have made
available to Purchaser its minute book and stock records.
At Closing,
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Schedule 7(b) will set forth a complete and accurate list
of all officers, directors and assumed or fictitious names
of the Company as of the date of this Agreement. The
Company is qualified to do business and is in good standing
in each state in which it transacts business. The Company
does not have any subsidiaries nor any direct or indirect
equity interest in any corporation, partnership, or other
entity. The Company is a "small business corporation" and
has maintained a valid election to be an "S" corporation
under Subchapter S of the Internal Revenue Code of 1986,
as amended.
c. CAPITALIZATION. The authorized capital stock of the Company
consists of 2,500 shares of common stock, having no par
value. On the date hereof, Seller owns beneficially and of
record 100 shares of common stock of the Company, which
comprises the Shares. The Shares (i) constitute all of the
issued and outstanding shares of capital stock of the
Company, (ii) have been validly authorized and issued, (iii)
are fully paid and nonassessable, (iv) have not been issued
in violation of any preemptive rights or of any federal or
state securities laws, and (v) are not subject to any
agreement that relates to the voting or control of any of
the Shares. There are and will be on the Closing Date no
outstanding subscriptions, options, rights, warrants,
convertible securities, or any other agreements or
commitments obligating the Company to issue, deliver, or
sell any additional shares of its capital stock of any class
or any other securities of any kind. There are no bonds,
debentures, notes, or other indebtedness or securities of
the Company having the right to vote on any matters on which
the shareholders of the Company may vote. There are no
outstanding rights, agreements, or arrangements of any kind
obligating the Company to repurchase, redeem, or otherwise
acquire any shares of capital stock or other voting
securities of the Company.
d. NO CONFLICTS. Neither the execution and delivery of this
Agreement nor the fulfillment of or compliance with the
terms and provisions hereof will (i) violate, conflict with,
or result in a breach of the terms, conditions or provisions
of, or constitute a default or an event which, with notice
or lapse of time or both, would constitute a default under,
(y) the articles of incorporation or bylaws of the Company,
or (z) any contract, agreement, mortgage, deed of trust, or
other instrument or obligation to which the Seller or the
Company is a party or by which either of them is bound,
except for agreements between the Company and the respective
manufacturers (or the authorized sales/distributor entities
directly or indirectly owned by the respective
manufacturers) of Land Rover, Volkswagen, Audi, Bentley and
Rolls Royce or BMW (individually, a "Manufacturer" and
collectively, the "Manufacturers"), which require the
consent of the Manufacturer; (iii) other than with respect
to obtaining the consents referenced in subparagraph 7(e)(i)
and (iii), violate any provision of any applicable law or
regulation or of any order, decree, writ or injunction of
any court or governmental body, or (iv) result in the
creation or imposition of
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any lien, charge, restriction, security interest or
encumbrance of any kind whatsoever on any property or asset
of the Company or on the Shares.
e. CONSENTS. No consent or approval by, or any notification
of or filing with, any governmental entity or agency or any
other person or entity is required in connection with the
execution, delivery or performance of this Agreement by
Seller or the Company, other than consent from (i) the
Nevada Department of Motor Vehicles, (ii) the Manufacturers,
or (iii) the Federal Trade Commission (the "FTC") and the
United States Department of Justice (the "Justice
Department") under the Hart-Scott-Rodino Act.
f. REAL PROPERTY. At Closing, Schedule 7(f) will set forth a
complete and accurate (i) legal description of all real
property owned by the Company, and (ii) description of each
lease or sublease of real property under which the Company
holds a leasehold interest. Each of the leases and
subleases and subleases are in full force and effect and
constitutes a legal, valid and binding obligation of the
parties thereto. The Company has performed the covenants
required to be performed by it under each of the leases and
subleases to which it is a party and is not in default under
any of the leases or subleases to which it is a party. To
the best of Seller's and the Company's knowledge, the zoning
of each tract of real property owned, leased or otherwise
utilized by the Company permits the presently existing
improvements and the continuation of the business presently
being conducted on such real property. To the best of
Seller's and the Company's knowledge, there are no pending
or proposed changes to such zoning or of any pending or
proposed condemnation action, affecting any real property
owned, leased or otherwise utilized by the Company.
g. TANGIBLE PERSONAL PROPERTY. At Closing, Schedule 7(g) will
set forth a complete and accurate description of (i) all
equipment, furniture, fixtures, and other tangible personal
property (other than inventory) owned by the Company, and
(ii) each lease of personal property under which the Company
holds a leasehold interest. Each of the leases is in full
force and effect and constitutes a legal, valid, and binding
obligation of the parties thereto. The Company has
performed the covenants required to be performed by it under
each of the leases to which it is a party and is not in
default under any of the leases to which it is a party. To
the best of Seller's and the Company's knowledge, the
Tangible Personal Property (hereinafter defined) is in good
repair and operating condition, has been regularly and
properly maintained and fully serviced, and is suitable for
the purposes for which it is presently being used. All
Tangible Personal Property described on Schedule 7(g) shall
be at one or the other of the Dealerships, in good working
order and condition, and free and clear of all liens and
other encumbrances. As used in this Agreement, the term
"Tangible Personal Property" shall mean all tangible
personal property that is listed on the appraisal of
Marshall & Stevens, dated February 14, 1997, together with
that
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certain schedule of Additions/Deductions to Marshall &
Stevens Appraisal previously agreed to by and between the
Company and Purchaser (the "Appraisal"), adjusted to include
those items of tangible personal property acquired by the
Company and to exclude those items of tangible personal
property disposed of by the Company, in the ordinary course
of business subsequent to the Appraisal, owned by the
Company on the Closing Date.
h. INVENTORIES. At Closing, Schedule 7(h) will set forth a
complete and accurate description of the New Vehicle
Inventory (hereinafter defined), Used Vehicle Inventory
(hereinafter defined), and Parts and Accessories Inventory
(hereinafter defined). As used in this Agreement, the term
"New Vehicle Inventory" shall mean all new vehicles and
demonstrators having less than 6,000 miles on the odometer
owned by the Company on the Closing Date; and the term "Used
Vehicle Inventory" shall mean all used vehicles and
demonstrators having 6,000 miles or more on the odometer
owned by the Company on the Closing Date; and the term
"Parts and Accessories Inventory" shall mean all parts and
accessories purchased from the Manufacturers or other
reputable suppliers and owned by the Company on the Closing
Date. To the best of Seller's and the Company's knowledge,
each inventory of the Company consists of goods of a
quality and in quantities that are saleable in the ordinary
course of the Company's business with normal mark-up at
prevailing market prices. All parts and accessories in the
Parts and Accessories Inventory are in returnable condition,
are undamaged parts and accessories, are still in the
original, resalable merchandising package, are in unbroken
lots, are listed for sale in the current dealer parts and
accessories price schedule of each Manufacturer or other
supplier, and were purchased directly from the Manufacturers
or other reliable suppliers.
i. LICENSES AND PERMITS. At Closing, Schedule 7(i) will set
forth a complete and accurate description of all permits,
licenses, franchises, certificates, and similar items and
rights, owned or held by the Company (hereinafter
collectively referred to as the "Licenses and Permits").
The Licenses and Permits (i) are adequate for the operation
of the Company's business, and (ii) are valid and in full
force and effect, except as set forth on Schedule 7(i).
Other than with respect to obtaining the consents referenced
in subparagraph 7(e), no additional permit, license,
franchise, certificate, or similar item or right is required
by the Company for the operation of its business.
j. INTELLECTUAL PROPERTY. At Closing, Schedule 7(j) will set
forth a complete and accurate description of all
intellectual property presently in use by the Company, which
intellectual property includes (without limitation) software
patents, trademarks, tradenames, service marks, copyrights,
trade secrets, customer lists, inventions, formulas,
methods, processes, advertising materials, Internet sites,
and any other proprietary information or property
("Intellectual Property"). There are no outstanding
licenses or consents to third parties granting the right
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to use any Intellectual Property owned by the Company. To
the best of Seller's and the Company's knowledge, no
Intellectual Property used by the Company infringes on any
rights owned or held by any other person or entity, and no
person is infringing on the rights of the Company in any
Intellectual Property used by the Company. Any royalties or
fees payable by the Company to any third party by reason of
the use of any Intellectual Property by the Company is set
forth on Schedule 7(j). No additional Intellectual Property
is required by the Company for the continued operation of
its business, in the manner now conducted.
k. TITLE TO PROPERTIES AND ENCUMBRANCES. Other than with
respect to obtaining the consents referenced in subparagraph
7(e), the Company has good and marketable title to (or, (i)
in the case of leased property, valid and subsisting
leasehold interests in, and (ii) in the case of Intellectual
Property, a valid right to use) all of its properties and
assets, including (without limitation) the properties and
assets that will be listed on Schedules 7(f), 7(g), 7(h),
7(i) and 7(j). The properties and assets of the Company are
subject to no liens, deeds of trust, mortgages,
encumbrances, conditional sales agreements, security
interests, claims, or restrictions of any kind or character,
except for (i) the encumbrances that will be listed on
Schedule 7(k) to which Purchaser consents, and (ii) liens
for current taxes not yet due and payable or for taxes the
validity of which are being contested in good faith by
appropriate proceedings.
l. FINANCIAL STATEMENTS. The Company has delivered to the
Purchaser copies of balance sheets for the Company dated
August 31, 1997 (the "Balance Sheet Date"), and statements
of income and retained earnings for the periods ending
August 31, 1997 (hereinafter collectively referred to as the
"Financial Statements"). The Financial Statements are
unaudited. To the best of Seller's and the Company's
knowledge, (i) the Financial Statements fairly present the
financial condition of the Company at the dates mentioned
and the results of its operations for the periods specified
and were prepared in accordance with its normal and
customary accounting procedures; and (ii) the balance sheet
in the Financial Statements (y) discloses all of the debts,
liabilities, and obligations of any nature (whether
absolute, accrued, contingent, or otherwise, and whether due
or to become due) of the Company as of the Balance Sheet
Date and (z) includes appropriate reserves for all taxes and
other liabilities accrued or due at such dates but not yet
paid.
m. INDEBTEDNESS FOR BORROWED MONEY AND GUARANTIES. At
Closing, Schedule 7(m) will set forth a complete and
accurate description of the Company's indebtedness for
borrowed money. Seller has delivered to the Purchaser
complete and accurate copies of all instruments evidencing
or relating to the Company's indebtedness for borrowed
money. To the best of Seller's and the Company's knowledge,
the Company is not in default or violation of any
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provision of any agreement evidencing or relating to its
indebtedness for borrowed money. Schedule 7(m) will also set
forth a complete and accurate list of (i) all guaranties by
the Company of any obligation or liability of any person or
entity, including (without limitation) any guaranties of
installment sales contracts or leases, (ii) all warranties
on vehicles that have been sold by the Company for the last
three (3) years for which there is any contingency of
liability for the Company, and (iii) all loans from the
Company to any person or entity.
n. TAX MATTERS. To the best of Seller's and the Company's
knowledge, (i) the Company has filed or will file all
federal, state, local and foreign tax returns and tax
reports required to be filed by it for periods ending on or
prior to the Closing Date; (ii) all such returns and reports
are and will be correct and complete in all material
respects; and (iii) all federal, state, local, and foreign
income, profits, franchise, property, excise, sales, use,
occupation, payroll, employment, and other taxes and
assessments for periods ending on or prior to the Closing
Date that are or will be due and payable by the Company on
or before the Closing have been or will be properly
computed, duly reported, fully paid, and discharged. Seller
has no actual knowledge of any unpaid taxes that require
payment by the Company, except for current taxes not yet due
and payable. To the best of Seller's and the Company's
knowledge, (i) no issues have been raised in writing with
the Company by the Internal Revenue Service or any other
taxing authority in connection with any tax return or tax
report filed by the Company, and (ii) the Company has not
executed any waiver of the statute of limitations on the
assessment or collection of any tax. Seller agrees to
indemnify and hold harmless the Purchaser with respect to
any income or other tax (and any penalties and interest
payable with respect thereto) reportable and payable by
Seller or the Company which arise from the operation of the
Company prior to Closing or arise as a result of the
transactions contemplated by this Agreement.
o. TRANSACTIONS SINCE THE BALANCE SHEET DATE. Since the
Balance Sheet Date, except as set forth on Schedule 7(o):
(i) other than negotiating three (3) year written employment
agreements to be executed on or before the Closing Date (the
"Employment Agreements") with each of James J. Chaisson,
Jr., John P. Chaisson, and Ryan A. Cook (individually, a
"Key Employee" and collectively, the "Key Employees"), the
Company has not incurred any debts, liabilities, or
obligations, except current liabilities in the ordinary
course of business; discharged or satisfied any liens or
encumbrances, or paid any debts, liabilities, or
obligations, except in the ordinary course of business;
mortgaged, pledged, or otherwise subjected to any lien or
other encumbrance any of its properties or assets; canceled
any debt or claim; sold or transferred any properties or
assets, except the Jaguar Assets (hereinafter defined) and
sales from inventory in the ordinary course of business; nor
entered into any transaction other than in the
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ordinary course of business; (ii) other than with respect to
the Jaguar Assets, there has not been any material adverse
change in the business, operations, properties, assets,
revenues, earnings, liabilities, or condition (financial or
otherwise) of the Company; (iii) there has not been any
declaration, setting aside or payment of any dividend or
other distribution in respect of, or any direct or indirect
redemption, purchase or other acquisition of, any of the
capital stock of the Company; (iv) the Company has not
issued or sold or contracted to issue or sell any stock,
securities or options, of any nature whatsoever; (v) the
Company has not increased the compensation, commissions,
bonuses, or other remuneration payable to any officer,
director, employee, or to any other person or entity,
whether now or hereafter payable, including any increase
pursuant to any pension, profit-sharing or other plan or
commitment, (vi) there has not been any damage, destruction
or loss (whether or not covered by insurance) affecting any
asset or property of the Company; (vii) the Company has not
made any capital expenditure or capital expenditure
commitment, individually or in the aggregate, in excess of
$25,000.00; (viii) the Company has not made any loan or
advance to any person or entity or guaranteed any obligation
or liability of any person or entity, including (without
limitation) any guaranties of any installment sales
contracts or leases, other than as will be set forth on
Schedule 7(m); (ix) the Company has not given any
indemnifications to any person or entity; (x) the Company
has not acquired any properties or assets other than in the
ordinary course of business; (xi) the Company has not made
any change in its method of accounting or accounting
practices, including (without limitation) any change in
depreciation or amortization policies or rates; (xii) the
Company has not granted any waiver or release of any claim
or right held by it; (xiii) the Company has not amended or
terminated any material contract, agreement, or license to
which it is a party; (xiv) the Company has not made any
material write-down of the value of any asset of the Company
or any material write-off as uncollectible of any account
receivable or note receivable; (xv) the Company has not
changed its past practices in the acquisition or sale of its
new vehicle, used vehicle, or parts and accessories
inventories; and (xvi) the Company has not agreed, in
writing or otherwise, to do or permit any of the foregoing;
p. LITIGATION. At Closing, Schedule 7(p) will set forth a
complete and accurate description of all actions, suits,
claims, investigations or legal, administrative or
arbitration proceedings, pending or threatened, whether at
law or in equity, involving the Company or any of its
properties, assets, or business, and all judgments, orders,
decrees, writs or injunctions of any court or governmental
department, commission, agency, instrumentality or
arbitrator applicable to Seller or to the Company. Neither
the Seller nor the Company has any actual knowledge of any
facts that might result in any other action, suit, claim,
investigation, or legal, administrative or arbitration
proceeding.
q. COMPLIANCE WITH LAWS.
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(i) To the best of Seller's and the Company's knowledge,
the Company has complied and is in compliance in all
material respects with all federal, state, local and
foreign laws, ordinances, rules, codes, regulations,
and orders (including those related to environmental
protection and occupational safety and health)
applicable to the Company.
(ii) To the best of Seller's and the Company's knowledge,
there are no past or present events, conditions,
circumstances, activities, practices, incidents,
plans or actions, based on or resulting from the
conduct of the business of the Company, including
the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or
handling, or the emission, discharge, release, or
threatened release into the environment, of any
pollutant, contaminant, chemical, or industrial
toxic or hazardous material, substance or waste,
which violates any laws or the regulations
promulgated thereunder currently in effect relating
to pollution or protection of the environment (the
"Environmental Laws"), including (without
limitation) the Comprehensive Environmental
Response, Compensation, and Liability Act
("CERCLA"), or any plan, order, decree, judgment,
injunction, notice or demand letter from a
governmental department, commission, agency or
instrumentality applicable to the Company, or which
could give rise to any common law or other legal
liability. To the best of Seller's and the
Company's knowledge, all real property currently or
formerly owned, leased or otherwise utilized by the
Company contains no spill, deposit, or discharge of
any hazardous substance (as that term is currently
defined under CERCLA or any applicable state law),
for which the Company could be liable.
(iii) At Closing, Schedule 7(q) will set forth a complete
and accurate description of each underground storage
tank of any kind or nature that is located on any
real property currently or formerly owned, leased or
otherwise utilized by the Company. Schedule 7(q)
will also set forth a complete history of each such
underground storage tank, including the dates and
types of all tests.
(iv) The Company will deliver to Purchaser copies of all
existing environmental site audits in the possession
of the Seller or the Company that cover any real
property currently or formerly owned, leased, or
otherwise utilized by the Company.
r. CONTRACTS AND AGREEMENTS. At Closing, Schedule 7(r) will
set forth a complete and accurate description of all
material written or oral contracts and agreements to which
the Company is a party or by which it or any of its
property is bound, unless any such contract or agreement is
set forth on either
12
Schedule 7(f), 7(g), 7(s), 7(t), 7(u) or 7(v). All such
contracts and agreements are in full force and effect and
are binding upon the parties thereto, and, other than with
respect to obtaining the consents required from the
Manufacturers, none of the parties thereto are in breach of
any of the provisions thereof.
s. EMPLOYEE BENEFIT PLANS. At Closing, Schedule 7(s) will set
forth a complete and accurate description of all pension,
retirement, savings, deferred compensation, profit sharing,
stock option, bonus, incentive, severance, retirement,
health, insurance and other employee benefit plans that are
binding upon the Company. To the best of Seller's and the
Company's knowledge, there have been no material defaults,
breaches, or omissions by the Company or any fiduciary under
any of such plans.
t. INSURANCE. At Closing, Schedule 7(t) will set forth a
complete and accurate description of all insurance,
including (without limitation) property damage insurance,
general liability insurance, worker's compensation, and
group health insurance maintained by the Company and will
summarize the substantive terms of each of the insurance
policies, including (without limitation) whether the
insurance policies are "claims made" or "occurrence"
policies. The Company is carrying insurance that is
reasonable in light of the risks attendant to the business
and activities in which the Company is engaged. All of the
insurance is in full force and effect and will not be
affected by, or terminated or lapse by reason of, the
transactions contemplated by this Agreement.
u. PERSONNEL. At Closing, Schedule 7(u) will set forth a
complete and accurate list of (i) all current employees of
the Company and all independent contractors regularly
performing services on behalf of the Company, (ii) their
respective rates of compensation, including any salary,
bonus or other payment arrangement made with any of them,
and (iii) any accrued vacation of any employees of the
Company. Except as set forth on Schedule 7(u), the Company
does not have any employment agreements or contracts between
the Company and any person or entity. No employee of the
Company is represented by any union or collective bargaining
agent. The Company is not a party to or bound by any
collective bargaining agreement, nor has the Company
experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. The
Company has not, to the Seller's actual knowledge, committed
any unfair labor practice. Seller has no actual knowledge
of any organizational effort being made or threatened by or
on behalf of any labor union with respect to employees of
the Company within the past five (5) years. To the best of
Seller's and the Company's knowledge, the Company has (i)
paid or has made provision for the payment of all
compensation due any person or entity, (ii) complied in all
material respects with all applicable laws, rules, and
regulations relating to the employment of labor, including
those related to wages, hours, collective bargaining and the
payment and withholding of taxes,
13
and (iii) withheld and paid to the appropriate governmental
authority, or is holding for payment not yet due to such
authority, all amounts required by law or agreement to be
withheld from the compensation of its employees.
v. ACCOUNTS RECEIVABLE. At Closing, Schedule 7(v) will set
forth a complete and accurate list of all accounts
receivable and notes receivable of the Company and an aging
analysis of the accounts receivable. To the best of
Seller's and the Company's knowledge, except as set forth on
Schedule 7(v), (i) all accounts receivable and notes
receivable of the Company are valid and enforceable claims,
arose in the ordinary course of business, require no further
performance by the Company, and are collectible without
resort to litigation; and (ii) no material objection, claim,
or offset has been made regarding any of the accounts
receivable or notes receivable. There are and at Closing
there will be no payables or receivables due or owing
between Seller and the Company.
w. BROKERS. Other than Elysium Enterprises, Inc. (the
"Broker"), neither Seller nor the Company has employed,
directly or indirectly, any broker or finder, or incurred
any liability for any brokerage fees, commissions, or
finder's fees, and other than the Broker, no broker or
finder has acted directly or indirectly for Seller or the
Company in connection with this Agreement or the
transactions contemplated by this Agreement.
x. DELIVERY OF DOCUMENTS. Complete and accurate copies of all
written instruments listed or described on the schedules
attached hereto or that will be attached hereto have been or
will be furnished to Purchaser. The Company will make
available to Purchaser, to the extent requested by
Purchaser, all books, records, and facilities of the
Company.
y. BANK ACCOUNTS AND POWERS OF ATTORNEY. At Closing, Schedule
7(y) will set forth a complete and accurate list of (i) the
names and addresses of all persons holding a power of
attorney on behalf of the Company, and (ii) the account
numbers and names of all banks or other financial
institutions in which the Company currently has an account,
deposit, or safe deposit box, with the names of all persons
authorized to draw on the accounts or deposits or to have
access to the boxes.
z. DISCLOSURE.
(i) To the best of Seller's and the Company's knowledge,
there have been no events, transactions or
information relating to the Company which, singly or
in the aggregate could reasonably be expected to
have a material adverse affect on the business,
operations, properties, assets, revenues, earnings,
liabilities, or condition (financial or otherwise)
of the Company. To the best of Seller's's and the
Company's knowledge, no representation
14
or warranty by Seller or the Company in this Agreement
or in any of the exhibits attached hereto, or other
statement in any other writing furnished or to be
furnished to Purchaser by or on behalf of Seller or the
Company in connection with the transactions
contemplated by this Agreement, contains or will
contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary
to make the statements contained herein not misleading.
(ii) Except for the failure to obtain any consent set
forth in subparagraph 7(e), Seller has no actual
knowledge, (i) of any reason why the Company cannot
continue its business in the same manner following
the execution of this Agreement and the Closing as
it has been operated prior thereto, or (ii) at any
time in the foreseeable future the business of the
Company shall be materially adversely affected by
any event, except to the extent that the Purchaser
causes the business of the Company to change
following the Closing.
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to Seller, effective as of the date of this Agreement
and again at Closing, each of the following:
a. INCORPORATION. Purchaser is duly incorporated, is validly
existing, and is in good standing under the laws of the
State of Delaware and has all necessary power and authority
to own, lease, and operate its properties and assets and to
conduct its business as its business is now being conducted.
Purchaser has delivered to Seller complete and accurate
copies of Purchaser's articles of incorporation and bylaws,
including all amendments thereto. The Purchaser is
qualified to do business and is in good standing in each
state in which it transacts business.
b. AUTHORITY AND BINDING AGREEMENT. Purchaser has the
corporate power and authority to enter into this Agreement
and to perform its obligations hereunder. This Agreement
has been duly and validly executed and delivered by
Purchaser and is a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with
its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to the enforcement
of creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
c. NO CONFLICTS. Neither the execution and delivery of this
Agreement nor the consummation of the transactions
contemplated by this Agreement will (i) violate, conflict
with, or result in a breach of the terms, conditions or
provisions of, or constitute a default or an event which,
with notice or lapse of time or
15
both, would constitute a default under, (y) the articles
of incorporation or bylaws of the Purchaser, or (z) any
contract, agreement, mortgage, deed of trust, or other
instrument or obligation to which the Purchaser is a party
or by which it is bound, (iii) other than with respect to
obtaining the consents referenced in subparagraph 7(e)(i)
and (iii), violate any provision of any applicable law or
regulation or of any order, decree, writ or injunction of
any court or governmental body, or (iv) result in the
creation or imposition of any lien, charge, restriction,
security interest or encumbrance of any kind whatsoever on
any property or asset of the Purchaser or on the
Restricted Shares.
d. BROKERS. Other than the Broker, the Purchaser has not
employed, directly or indirectly, any broker or finder, or
incurred any liability for any brokerage fees, commissions
or finders' fees, and other than the Broker, no broker or
finder has acted directly or indirectly for the Purchaser in
connection with this Agreement or the transactions
contemplated by this Agreement.
e. LITIGATION. Purchaser is not a party to any pending or, to
its actual knowledge, any threatened claim, action, suit,
investigation or proceeding, or subject to any order,
judgment or decree, except for matters which in the
aggregate, will not have, or cannot reasonably be expected
to have, a materially adverse effect on the financial
condition of the Purchaser, and none that would affect the
Purchaser's ability to consummate the transactions and
perform its obligations contemplated hereby.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by the parties in this Agreement or in any
certificate, schedule, statement, document or instrument furnished hereunder or
in connection with the negotiation, execution and performance of this Agreement
shall survive the Closing for a period of three (3) years, and any claim or
cause of action for indemnification under subparagraph 15(a) or paragraph 16
for breaches of representations or warranties set forth in this Agreement or in
any exhibit or document furnished hereto may be made in respect of such matters
within three (3) years after the Closing Date. Notwithstanding any
investigation or audit conducted before or after the Closing or the decision of
any party to complete the Closing, each party shall be entitled to rely upon the
representations and warranties set forth herein for the time period set forth
above.
10. SELLER'S OBLIGATIONS PRIOR TO CLOSING. Seller agrees to do the
following prior to Closing:
a. CONDUCT OF BUSINESS BY THE COMPANY PRIOR TO THE CLOSING
DATE. Seller shall cause the Company to conduct its
operations according to the ordinary and usual course of
business reasonably consistent with past and current
practices, to maintain and preserve its business
organization, assets and properties, and vendor and supplier
relationships, and to retain the services of its officers,
employees, agents, and independent contractors, and shall
not, without the prior
16
written consent of Purchaser, allow the Company to engage
in any practice, take any action, or enter into any
transaction outside of the ordinary course of business.
Without limiting the generality of the foregoing, Seller
shall prohibit the Company, without the prior written consent
of Purchaser, from directly or indirectly taking any of the
actions described in subparagraph 7(o).
b. FULL ACCESS. Seller shall cause the Company to permit
Purchaser and representatives of the Purchaser to have full
access to and to examine, at all reasonable times and
places, and in a manner so as not to interfere with the
normal business operations of the Company; the books,
records, properties, assets and operations of the Company.
Such examination shall include access to the officers,
directors, employees, agents and representatives of the
Company. Seller shall cause the Company to furnish to
Purchaser and representatives of Purchaser with such
financial, operating and other data and information, and
copies of documents with respect to the Company, as
Purchaser shall from time to time request. Such access and
information shall not in any way affect or diminish any of
the representations or warranties made in this Agreement.
c. AUDIT. Seller shall cause the Company to permit an audit
(the "Audit") to be conducted under generally accepted
auditing standards, of the books, records, and financial
statements of the Company for 1996, and through September
30, 1997, and any additional period requested by the
Purchaser or required by applicable law, and shall cause
Audited Financial Statements (hereinafter defined) to be
prepared in accordance with generally accepted accounting
principles, which shall include reserves for any extended
warranties, charge-backs, inventory write downs,
repossessions, contracts in transit, and any other
appropriate accruals and reserves. As used in this
Agreement, "Audited Financial Statements" shall mean an
audited (i) balance sheet, dated September 30, 1997, for the
Company, and (ii) income statement for the nine (9) month
period ending September 30, 1997, for the Company. The
Audit will be conducted by Purchaser's accountants, Price
Waterhouse, LLP. Seller agrees to cause the full
cooperation of the officers, directors, employees and
accountants of the Company in the Audit. The start date of
the Audit is anticipated to be October 13, 1997. In
addition, as near as possible to the Closing Date, Price
Waterhouse shall review the books and records of the Company
for the period after September 30, 1997, and prepare a
letter setting forth the unaudited adjustments that should
be made to the Net Worth (the "Net Worth Adjustments").
d. NOTICE OF ADVERSE CHANGES. Seller shall give prompt written
notice to Purchaser of any material adverse change in the
business, operations, properties, assets, revenues,
earnings, liabilities, or condition (financial or otherwise)
of the Company.
17
e. STANDSTILL. From the date hereof to the earlier of the
Closing Date or the date this Agreement expires or
terminates, Seller shall not, directly or indirectly,
through any officer, director, employee, or otherwise, (i)
solicit or initiate the submission of any proposal or offer
from any person or entity (including any officers or
employees of the Company) relating to any liquidation,
dissolution, recapitalization, merger, consolidation,
acquisition, or purchase of all or a material portion of the
assets and properties of the Company, or the acquisition or
purchase of any equity interest in the Company, or (ii)
participate in any negotiations regarding, or furnish to any
other person or entity any information with respect to, or
otherwise cooperate in any manner with, or assist or
participate in, facilitate or encourage, any effort or
attempt by any other person or entity to do or seek any of
the foregoing.
f. FURTHER ASSURANCES. Seller shall from time to time, upon
the request of Purchaser, execute and deliver to Purchaser
such further instruments and take such other action as
Purchaser may reasonably request, in order to consummate the
transactions contemplated by this Agreement in accordance
with its terms.
g. INSURANCE AND RISK OF LOSS. Until the Closing, Seller shall
cause the Company to maintain the insurance the Company is
carrying in connection with the operation of the Dealership,
including (without limitation) property damage insurance,
general liability insurance, worker's compensation, and
group health insurance. The Seller and the Company shall
have the risk of loss for damage by fire or other casualty
to the assets and properties of the Company before Closing.
In the event of any material loss or damage to the assets
and properties of the Company prior to Closing, Purchaser
shall have the option to terminate this Agreement.
11. PURCHASER'S OBLIGATIONS PRIOR TO CLOSING. Purchaser agrees to
do the following prior to Closing:
a. DUE DILIGENCE. Until the transactions contemplated by this
Agreement close or this Agreement expires or terminates,
Purchaser may conduct such investigations, reviews and
inspections of the business, operations, properties, assets,
revenues, earnings, liabilities, and condition (financial or
otherwise) of the Company as Purchaser and Purchaser's
representatives deem necessary or desirable to determine
whether a material adverse change in the Company has
occurred.
b. FURTHER ASSURANCES. Purchaser shall from time to time, upon
the request of the Seller, execute and deliver to Seller
such further instruments and take such further action as the
Seller may reasonably request, in order to consummate the
transactions contemplated by this Agreement in accordance
with its terms.
18
c. PURCHASER'S NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
REGARDING THE COMPANY. Purchaser acknowledges that it may
possibly have access to certain confidential information of
the Company, including (without limitation) lists of
accounts, operational policies, and pricing and costs
policies (the "Confidential Information"). The Purchaser
agrees that it will not disclose such Confidential
Information to any person or entity for any purpose or
reason whatsoever, except to employees and authorized
representatives of the Purchaser, or as required by law,
unless such Confidential Information becomes known to the
public generally through no fault of the Purchaser. In the
event of a breach or threatened breach by Purchaser of the
provisions of this subparagraph, the Seller and/or the
Company shall be entitled to temporary restraining order,
without bond, and an injunction restraining the Purchaser
from disclosing, in whole or in part, such Confidential
Information. Nothing herein shall be construed as
prohibiting the Seller and/or the Company from pursuing any
other available remedy for such breach or threatened breach,
including the recovery of damages.
12. SELLER'S AND PURCHASER'S OBLIGATIONS PRIOR TO CLOSING.
a. ASSISTANCE. Seller and Purchaser agree to use their best
efforts to create a workable, smooth and orderly transition
of Purchaser's acquisition of the Company.
b. HART-SCOTT-RODINO NOTIFICATION. The parties shall, if and
to the extent required by law, prepare, and Purchaser shall
file, all reports or other documents required or requested
by the FTC or the Justice Department under the
Hart-Scott-Rodino Act, and all regulations promulgated
thereunder, concerning the transactions contemplated by this
Agreement, and comply promptly with any request by the FTC
or the Justice Department for additional information
concerning such transactions, so that the waiting period
specified in the Hart-Scott-Rodino Act will expire as soon
as reasonably possible after the execution and delivery of
this Agreement. The parties agree to furnish to one another
such information concerning the Purchaser, the Seller, and
the Company as the parties need to perform their obligations
hereunder. The Purchaser agrees to pay all filing fees and
costs due governmental agencies with regard to the
notification under and compliance with the Hart-Scott-Rodino
Act and all regulations promulgated thereunder.
c. PHYSICAL INVENTORIES. On or before November 2, 1997,
Purchaser and Seller shall conduct a physical inventory of
the New Vehicle Inventory, the Used Vehicle Inventory, the
Parts and Accessories Inventory, and the Tangible Personal
Property. The physical inventories shall be collectively
referred to in this Agreement as the "Physical Inventories."
The value of the New Vehicle Inventory, the Used Vehicle
Inventory, the Parts and Accessories Inventory, and the
Tangible Personal Property shall be determined as follows:
19
(i) Purchaser and Seller shall calculate the value of
the New Vehicle Inventory. The value of each new
vehicle shall be the cash sum equal to the factory
invoice price (excluding any Company internal
profit) to the Company, less any factory holdback
rebate and any other factory rebate or incentive,
advertising credits and interest credits, which the
Company may have received prior to the Closing, plus
performed PDI at the Company's cost (excluding any
internal profit), options added at the Company's
cost (excluding any internal profit), and any
freight and handling charges paid, prior to the
Closing. Any demonstrator and rental vehicle shall
be valued for a cash sum equal to an amount as
calculated above, except demonstrators and rental
vehicles having 6,000 miles or more on the odometer
shall be treated as a Used Vehicle. The value of
any new vehicle shall be decreased by an amount
equal to the Company's cost (excluding any internal
profit) of repair for any physically damaged
vehicle. Seller agrees that all factory rebates and
other credits on any new vehicles sold after the
Closing shall be retained by the Company.
(ii) Purchaser and Seller shall agree to the value of the
Used Vehicle Inventory. Any demonstrators and rental
vehicles having less than 6,000 miles on the
odometer shall be treated as a New Vehicle.
(iii) Purchaser and Seller shall calculate the value of
the Parts and Accessories Inventory. The value of
the parts and accessories shall be the cost of the
parts and accessories set forth in the dealer parts
and accessories price schedule in effect on the date
of the inventory for the applicable Manufacturer or
other reliable supplier. The Seller agrees that all
rebates and credits on any parts or accessories
shall be retained by the Company.
(iv) Purchaser and Seller shall calculate the value of
the Tangible Personal Property. The value of any
item of tangible personal property listed in the
Appraisal shall be the value of the property set
forth in the Appraisal, and the value of any item of
tangible personal property that is not listed in the
Appraisal shall be the Company's actual cost
(excluding any internal profit).
13. CONDITIONS PRECEDENT TO OBLIGATION OF PURCHASER. The obligation
of Purchaser to consummate the transactions contemplated by this Agreement is
subject to the satisfaction on or prior to the Closing Date of the following
conditions, each of which may be waived by the Purchaser:
a. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations and warranties made by the Seller and the
Company in or pursuant to this Agreement shall be true and
correct in all material respects as of the Closing Date with
the same effect as though such representations and
warranties were
20
made on the Closing Date, except to the extent that such
representations and warranties expressly relate to any
earlier date. Seller and the Company shall have performed
and complied with all the covenants and agreements and
satisfied all the conditions required by this Agreement to
be performed, complied with or satisfied by Seller and the
Company on or prior to the Closing Date. Seller must have
delivered to the Purchaser a certificate dated as of the
Closing Date certifying that this condition has been
fulfilled.
b. NO ADVERSE CHANGE. Purchaser shall have determined, to its
satisfaction, that as of the Closing Date, there has been no
material adverse change in the business, operations,
properties, assets, revenues, earnings, liabilities or
condition (financial or otherwise) of the Company.
c. EXHIBITS. Purchaser shall have timely received all exhibits
to this Agreement.
d. TRANSFER OF SHARES. The certificate(s) representing the
Shares shall have been transferred and conveyed by Seller to
Purchaser in a manner and by instruments acceptable to
Purchaser and its counsel, free and clear of all liens,
claims, encumbrances, or restrictions of any kind.
Contemporaneously with the consummation of the transfer of
the Shares, Seller shall put Purchaser in full possession
and enjoyment of all properties and assets of the Company.
In addition, Purchaser shall have received the complete
stock ledgers, minute books and other corporate records of
the Company.
e. THIRD PARTY APPROVALS. This Agreement and the transactions
contemplated by this Agreement shall have received all
required approvals and consents from all persons and
entities from which such approvals or consents are required,
including (without limitation) (i) the Manufacturers, (ii)
the FTC and the Justice Department under the
Hart-Scott-Rodino Act and the regulations promulgated
thereunder, and (iii) the Nevada Department of Motor
Vehicles. Without limiting the generality of the foregoing,
each Manufacturer other than BMW must approve Purchaser as
the dealer for that manufacturer in Las Vegas, Nevada prior
to Closing and BMW must approve Purchaser as the dealer in
Henderson and Las Vegas, Nevada prior to Closing.
f. COMPLIANCE WITH SECURITIES LAWS. Purchaser shall have (i)
received the Investment Letter, (ii) received the
Registration Rights Agreement, and (iii) determined that all
state and federal securities laws have been fully satisfied
relating to the purchase of the Shares by Purchaser.
g. LEASES. The Purchaser shall have received the Leases,
executed by the respective landlords.
h. PHYSICAL INVENTORIES. Purchaser shall have conducted the
Physical Inventories.
21
i. APPROVAL OF DOCUMENTATION. The form and substance of all
opinions, certificates, instruments and other documents
delivered to Purchaser in connection with this Agreement
shall be satisfactory in all reasonable respects to
Purchaser and Purchaser's counsel.
j. CORPORATE DIRECTORS AND OFFICERS. The composition of the
directors and officers of the Company shall be as requested
by Purchaser, effective as of the Closing.
k. OPINION OF COUNSEL TO SELLER AND THE COMPANY. Seller and
the Company shall have delivered to Purchaser an opinion of
counsel reasonably satisfactory to Purchaser, dated as of
the Closing Date, that contains such opinions that are
reasonably requested by Purchaser, including (without
limitation with respect to the Seller) an opinion that the
Shares were issued and will be transferred to Purchaser, in
compliance with all state securities laws.
l. HART-SCOTT-RODINO WAITING PERIOD. The applicable waiting
period under the Hart-Scott-Rodino Act, and the regulations
promulgated thereunder, shall have expired.
m. AUDIT. Price Waterhouse shall have timely performed the
Audit, prepared the Audited Financial Statements, and
delivered a copy of the Audited Financial Statements to
Purchaser.
p. ADDITIONAL INFORMATION. Seller and the Company shall have
furnished to Purchaser and Purchaser's counsel such
additional information, certificates, and other documents as
Purchaser shall have reasonably requested.
14. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER. The obligation
of Seller to consummate the transactions contemplated by this Agreement is
subject to the satisfaction on or prior to the Closing Date of the following
conditions, each of which may be waived by the Seller:
a. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations and warranties made by the Purchaser in or
pursuant to this Agreement shall be true and correct in all
material respects as of the Closing Date with the same
effect as though such representations and warranties were
made on the Closing Date, except to the extent that such
representations and warranties expressly relate to an
earlier date, and Purchaser shall have performed and
complied with all of the covenants and agreements and
satisfied all the conditions required by this Agreement to
be performed, complied with or satisfied by Purchaser on or
prior to the Closing Date. The Purchaser must have
delivered to the Sellers a certificate dated as of the
Closing Date certifying that this condition has been
fulfilled.
22
b. DELIVERY OF PURCHASE PRICE. The Purchaser shall have
delivered (i) the Cash, (ii) the Note and (iii) the
Restricted Shares.
c. LEASES. Seller shall have received the Leases, executed by
the Company.
d. APPROVAL OF DOCUMENTATION. The form and substance of all
certificates and other documents required to be delivered to
Seller in connection with this Agreement shall be
satisfactory in all reasonable respects to Seller and
Seller's counsel.
e. ADDITIONAL INFORMATION. Purchaser shall have furnished to
Seller and Seller's counsel such additional information,
certificates, and other documents as Seller shall have
reasonably requested.
15. SELLER'S OBLIGATIONS AFTER CLOSING.
a. GENERAL INDEMNITY. Seller shall indemnify, defend and hold
Purchaser and its successors and assigns (the "Purchaser
Indemnified Parties") harmless from and against any and all
liabilities, damages, losses, claims, costs and expenses,
including (without limitation) reasonable attorneys' fees,
arising from or related to (i) any breach of any
representation, warranty, covenant or agreement made by
Seller in this Agreement, or in any certificate or other
document delivered on behalf of Seller or the
nonperformance of any covenant or obligation of Seller
under this Agreement, (ii) any debts, liabilities, or
obligations of any nature (whether absolute, accrued,
contingent or otherwise and whether due or to become due) of
the Company at the Balance Sheet Date that are not reflected
in the Financial Statements, (iii) the conduct of the
business or other operations of the Company prior to the
Closing Date, (iv) the failure of Seller or the Company to
comply with any federal, state, or local tax laws for any
matter occurring prior to the Closing Date or applicable to
the transactions contemplated by this Agreement, and (v) any
and all actions, suits, proceedings, demands and judgments,
arising from or related to any of the matters set forth in
this subparagraph 15(a).
b. ENVIRONMENTAL INDEMNIFICATION. With respect to any existing
or future liability arising out of any condition, activity
or event existing or occurring prior to the Closing Date
with respect to the Las Vegas Premises, the Henderson
Premises or the 2.5 Acre Tract that violates or violated any
Environmental Laws or for which there may be any
environmental liability in tort, or otherwise, the Seller
agrees that it will indemnify, defend and hold harmless the
Purchaser Indemnified Parties from and against all claims,
damages, actions, suits, proceedings, demands, assessments,
adjustments, costs, and expenses, including reasonable
attorneys' fees and expenses of investigation, incurred by
any Purchaser Indemnified Party as a result of such
environmental condition and
23
further including, if necessary, the costs and expenses of
any remediation, transportation, incineration, treatment, or
other necessary and appropriate disposition or mitigation of
such environmental condition.
c. SELLER'S NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
REGARDING THE COMPANY. Seller acknowledges that the Seller
has in the past, currently has, and in the future may
possibly have access to Confidential Information. Seller
agrees that the Seller will not disclose such Confidential
Information to any person or entity for any purpose or
reason whatsoever except to employees and authorized
representatives of the Purchaser, or as required by law,
unless the Confidential Information becomes known to the
public generally through no fault of the Seller. In the
event of a breach or threatened breach by the Seller of this
subparagraph, the Purchaser shall be entitled to a temporary
restraining order, without bond, and an injunction
restraining the Seller from disclosing, in whole or in part,
such Confidential Information. Nothing herein shall be
construed as prohibiting the Purchaser from pursuing any
other available remedy for such breach or threatened breach,
including the recovery of damages.
d. SELLER'S AND CHAISSON'S COVENANT NOT TO COMPETE. Both
Seller and James J. Chaisson, Sr. ("Chaisson") agree that
they will not, either directly or indirectly, alone or with
others, either as an employee, owner, partner, agent,
stockholder, member, director, officer or otherwise:
(i) enter into or engage in the business of operating a
new vehicle dealership, warranty repair business, or
other related new vehicle business with respect to
any of Land Rover, Volkswagen, Audi, Bentley and
Rolls Royce or BMW automobiles within the Las Vegas
or Henderson, Nevada metropolitan areas (the
"Restricted Area") for a term of three (3) years
from the Closing Date (the "Restricted Period").
(ii) Further, neither the Seller nor Chaisson will
individually, collectively or in conjunction with
others, directly or indirectly, within the
Restricted Period and Restricted Area, directly or
indirectly, solicit or hire any employee of the
Company or encourage any such employee to leave such
employment unless such employee's employment with
the Company or the Purchaser has been terminated.
Seller and Chaisson also agree that in the event of
a breach of these covenants, the Purchaser may
protect its rights by injunction or otherwise.
16. PURCHASER'S OBLIGATIONS AFTER CLOSING.
a. GENERAL INDEMNITY. Purchaser shall indemnify, defend and
hold Seller and its successors and assigns (the "Seller
Indemnified Parties") harmless from and against any and all
liabilities, damages, losses, claims, costs and expenses,
24
including (without limitation) reasonable attorneys' fees,
arising from or related to (i) any breach of any
representation, warranty, covenant or agreement made by
Purchaser in this Agreement, or in any certificate or other
document delivered on behalf of Purchaser or the
nonperformance of any covenant or obligation of Purchaser
under this Agreement, (ii) any debts, liabilities, or
obligations of any nature (whether absolute, accrued,
contingent or otherwise and whether due or to become due) of
the Company accruing after the Closing, (iii) the conduct of
the business or other operations of the Company after the
Closing, (iv) the failure of Purchaser to comply with any
federal, state, or local tax laws for any matter occurring
after the Closing or applicable to the transactions
contemplated by this Agreement, and (v) any and all actions,
suits, proceedings, demands and judgments, arising from or
related to any of the matters set forth in this subparagraph
16(a).
b. ENVIRONMENTAL INDEMNIFICATION. With respect to any future
liability arising out of any condition, activity or event,
caused by, or under the control of, the Purchaser or the
Company occurring after the Closing with respect to the Las
Vegas Premises, the Henderson Premises or the 2.5 Acre
Tract, during the term of the respective Leases therefor,
that violates any Environmental Laws or for which there may
be any environmental liability in tort, or otherwise, the
Purchaser agrees that it will indemnify, defend and hold
harmless the Seller Indemnified Parties from and against all
claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs, and expenses, including
reasonable attorneys' fees and expenses of investigation,
incurred by any Seller Indemnified Party as a result of such
environmental condition and further including, if necessary,
the costs and expenses of any remediation, transportation,
incineration, treatment, or other necessary and appropriate
disposition or mitigation of such environmental condition.
c. PRE-CLOSING PROFITS FROM OPERATIONS. In addition to payment
of the Purchaser Price, Purchaser agrees that it will, or
will cause the Company to, pay to Seller an amount equal to
the net profits from the operation of the Company from
September 30, 1997, through the last business day prior to
the Closing to the extent such net profits from operations
have not been included as a Net Worth Adjustment (the "Final
Distribution"). The Final Distribution shall be paid to
Seller no later than twenty days following the Closing.
17. INFORMATION REGARDING THE PURCHASER.
a. INSIDER LIABILITY. Seller acknowledges that trading in the
Purchaser's securities by persons possessing material
non-public information may result in private lawsuits for
damages or to civil or criminal proceedings by the
Securities and Exchange Commission. Seller also
acknowledges that liability may be imposed on insiders who
privately disclose otherwise non-public material information
where such disclosure coincide with trading Purchaser's
securities by such insiders or by the recipients of such
information.
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b. SELLER'S NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
REGARDING THE PURCHASER. Seller acknowledges that the
Seller may possibly have access to certain confidential
information of the Purchaser. Seller agrees that the
Seller will not disclose such confidential information to
any person or entity for any purpose or reason whatsoever
except as required by law, unless the confidential
information becomes known to the public generally through no
fault of the Seller. In the event of a breach or threatened
breach by the Seller of this subparagraph, the Purchaser
shall be entitled to a temporary restraining order, without
bond, and an injunction restraining the Seller from
disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as
prohibiting the Purchaser from pursuing any other available
remedy for such breach or threatened breach, including the
recovery damages.
18. TERMINATION.
a. MUTUAL CONSENT. This Agreement may be terminated by the
written consent of the parties.
b. BY THE PURCHASER. This Agreement may be terminated by
written notice of termination given by the Purchaser to
Seller if a material default should be made by Seller in the
observance of or in the due and timely performance by Seller
of any of the agreements and covenants of the Seller herein
contained, or if there shall have been a material breach by
Seller of any of the warranties and representations of the
Seller herein contained, or if the conditions of this
Agreement to be complied with or performed by Seller at or
before Closing shall not have been complied with or
performed at the time required for such compliance or
performance and such noncompliance or nonperformance shall
not have been waived by the Purchaser.
c. BY THE SELLER. This Agreement may be terminated by written
notice of termination given by the Seller to the Purchaser
if a material default should be made by the Purchaser in the
observance of or in the due and timely performance by the
Purchaser of any of the agreements and covenants of the
Purchaser herein contained, or if there shall have been a
material breach by the Purchaser of any of the warranties
and representations of the Purchaser, of if the conditions
of this Agreement to be complied with or performed by the
Purchaser at or before Closing shall not have been complied
with or performed at the time required for such compliance
or performance and such noncompliance or nonperformance
shall not have been waived by the Seller.
19. SECTION 338(h)(10) ELECTIONS.
a. Seller agrees to make an election under Section 338(h)(10)
of the Internal Revenue Code and all comparable elections
under state and local tax law with respect to the Company.
26
b. Purchaser and Seller shall jointly file Form 8023-A with the
Internal Revenue Service in accordance with Section 338 of
the Internal Revenue Code and the regulations thereunder no
later than the 15th day of the ninth month beginning after
the month that includes the Closing Date in accordance with
Internal Revenue Code Section 338(g) and Treasury Regulation
Section 1.338(h)(10)-1(d)(2).
c. Purchaser and Seller shall allocate the Purchase Price to
the assets conveyed pursuant to this Agreement using a
reasonable asset valuation which will be agreed to by
Purchaser and Seller no later than ninety (90) days after
the Closing Date. In all events, however, Purchaser and
Seller agree to conformity of the treatment of all asset
allocations with respect to the Section 338(h)(10)
elections.
20. ADDITIONAL AGREEMENTS.
a. CHAISSON MOTORS CARS AND CHAISSON BMW NAMES. The Seller
consents for all purposes to the Purchaser's continued use
of the Chaisson Motor Cars, Chaisson BMW, and any other
names including the word "Chaisson" (collectively, the
"Chaisson Names") that are, or could be used, in connection
with the operation of the Dealerships within the Restricted
Area. Purchaser is not obligated to use any Chaisson Names.
Seller shall not be prohibited from using the name Chaisson
in any non-competing business venture, or from using any
Chaisson Name if Purchaser ceases using the name Chaisson in
connection with all of its automobile dealerships within the
Restricted Area. The parties acknowledge that the
Dealerships' television, radio and print advertisements
aimed at the Restricted Area may also be broadcast or
distributed outside the Restricted Area, and the Seller
agrees such advertisements shall not be a violation of this
Agreement, and
(i) No separate consideration, over and above the
Purchase Price, is owed by the Purchaser to the
Seller for this consent to use the Chaisson Names as
provided herein.
(ii) As soon as practicable after the Closing, the Seller
and Purchaser agree to file any required
certificates, terminations or consents necessary to
allow Purchaser to use the Chaisson Names. The
parties mutually agree to take other reasonable
steps as from time to time may be appropriate to
avoid confusion and mistake by third parties as to
their respective corporate identities.
(iii) The Purchaser's right to use the Chaisson Names in
the Restricted Area shall be binding on the Seller
and on all of its successors, assigns, transferees,
and licensees, and every sale, assignment, license
or transaction entered into by the Seller shall be
expressly subject to the Purchaser's continued right
to use the Chaisson Names in the Restricted Area as
provided in this Agreement.
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(iv) Other provisions hereof to the contrary
notwithstanding, Purchaser's right to continued use
of the Chaisson Names shall absolutely terminate on
the first to occur of the termination of this
Agreement, the mutual agreement of the Seller and
the Purchaser after Closing, or the Purchaser's
cessation of use thereof in the Restricted Area.
b. EMPLOYEE LIST. To the extent not set forth in Schedule
7(u), Seller agrees to provide, at least ten (10) days prior
to Closing, a list of all employees of the Company. Such
list shall contain the employee's name, employment
description, annual compensation or formula for computing
such annual compensation, accrued vacation pay, and
tentative vacation plans.
d. JAGUAR FRANCHISE. Purchaser and Seller agree that Purchaser
is not purchasing the Jaguar franchise or the Jaguar parts
and accessories (the "Jaguar Assets"). Prior to Closing,
the Company shall distribute the Jaguar Assets to the
Seller. Seller shall have until June 30, 1998, to relocate
the Jaguar Assets. Prior to the relocation of the Jaguar
Assets, the Company shall manage and operate the Jaguar
Assets under a Management Agreement with the Seller, or an
entity wholly owned by Seller, in the form of Exhibit "K"
hereto.
e. APPROVAL BY THE MANUFACTURERS. Notwithstanding anything
contained in this Agreement to the contrary, if by November
1, 1997 (i) BMW and Volkswagen have approved the
transactions contemplated by this Agreement, (ii) any other
Manufacturer has not approved the transactions contemplated
by this Agreement, and (iii) all other conditions to the
obligations of the parties hereunder (other than those
requiring the taking of action at the Closing) have been
satisfied or waived, Purchaser and Seller shall close the
transactions contemplated by this Agreement but shall place
that portion of the Purchase Price which equals the amounts
set forth on Schedule 20(e) for any Manufacturers that have
not given their approval into an interest bearing account
under an escrow agreement (the "Escrow Agreement") between
Purchaser and Seller. The Escrow Agreement shall be in the
form of Exhibit "L" hereto. The Company shall manage the
franchise for each Manufacturer that has not given its
approval by the Closing, under a Management Agreement in the
form of Exhibit "K" hereto.
21. GENERAL PROVISIONS.
a. ENTIRE AGREEMENT. This Agreement contains and constitutes
the entire agreement between the parties regarding the
subject matter hereof and supersedes all prior agreements
and understandings between the parties relating to the
subject matter of this Agreement. There are no agreements,
understandings, restrictions, warranties or representations
between the parties relating to the subject matter hereof
other than those set forth in this Agreement. This
Agreement is not intended to have any legal effect
whatsoever, or to be a
28
legally binding agreement, or any evidence thereof, until it
has been signed by Seller, the Company, and the Purchaser.
b. EXHIBITS. Preliminary drafts of all Schedules and Exhibits
A through Fshall be prepared by the Seller on or before
October 24, 1997, and delivered to Purchaser for Purchaser's
review. Preliminary drafts of Exhibits G through L shall be
prepared by Purchaser on or before October 24, 1997, and
delivered to Seller for Seller's review. Final Schedules
and Exhibits shall be prepared by the party that prepared
the preliminary drafts, initialed by the parties, and
attached to this Agreement on or before the Closing Date.
When attached to this Agreement, the Schedules and Exhibits
shall be made a part of this Agreement by reference.
SCHEDULES:
Schedule 7(b) Officers, Directors, and Assumed Names
Schedule 7(f) Real Property
Schedule 7(g) Tangible Personal Property
Schedule 7(h) Inventories
Schedule 7(i) Licenses
Schedule 7(j) Intellectual Property
Schedule 7(k) Encumbrances
Schedule 7(m) Indebtedness and Guaranties
Schedule 7(p) Litigation
Schedule 7(o) Transactions Since the Balance Sheet Date
Schedule 7(q) Underground Storage Tanks
Schedule 7(r) Contracts and Agreements
Schedule 7(s) Employee Benefit Plans
Schedule 7(t) Insurance
Schedule 7(u) Personnel
Schedule 7(v) Accounts Receivable
Schedule 7(y) Bank Accounts and Powers of Attorney
Schedule 20(e) Manufacturer Allocation
EXHIBITS:
Exhibit "A" The Note
Exhibit "B" Las Vegas Lease
Exhibit "C" Henderson Lease
Exhibit "D" 2.5 Acre Lease
Exhibit "E" Seller's Certificate
Exhibit "F" Opinion of Sellers' Counsel
Exhibit "G" Investment Letter
Exhibit "H" Registration Rights Agreement
Exhibit "I" Purchaser's Certificate
Exhibit "J" Opinion of Purchaser's Counsel
Exhibit "K" Management Agreement
29
Exhibit "L" Escrow Agreement
c. THIRD PARTY CONSENTS. The Seller and the Purchaser
mutually agree to cooperate and use their respective
reasonable, good faith efforts to prepare all documentation,
to effect all filings and to obtain all permits, consents,
approvals, and authorizations of all third parties and
governmental entities as may be necessary to consummate the
transactions contemplated by this Agreement.
d. FURTHER ACTIONS. From time to time, as and when requested
by any parties hereto, the other parties shall execute and
deliver, or cause to be executed and delivered, all such
documents and instruments and shall take, or cause to be
taken, all such further or other actions as such other
parties may reasonably deem necessary or desirable to
consummate the transactions contemplated by this Agreement.
e. PUBLICITY. The parties hereto agree that no public release
or announcement concerning the terms of the transactions
contemplated by this Agreement shall be issued by any party
without the prior written consent of the other parties
(which consent shall not be unreasonably withheld), except
as such release or announcement may be required by law, in
which case the party required to make the release or
announcement shall allow the other parties reasonable time
to comment on such release or announcement in advance of
such issuance.
f. AMENDMENT. This Agreement may not be amended, modified, or
terminated except by an instrument in writing signed by all
parties to this Agreement.
g. CONSTRUCTION. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine or
neuter gender thereof or to the plurals of each, as the
identity of the person or persons or the context may
require. The descriptive headings contained in this
Agreement are for reference purposes only and are not
intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement or any provision
contained in this Agreement.
h. INVALIDITY. If any provision contained in this Agreement
shall for any reason be held to be invalid, illegal, void or
unenforceable in any respect, such provision shall be deemed
modified so as to constitute a provision conforming as
nearly as possible to such invalid, illegal, void or
unenforceable provision while still remaining valid and
enforceable; and the remaining terms or provisions contained
herein shall not be affected thereby.
i. EXPENSES. Whether or not the transactions contemplated by
this Agreement are consummated, each of the parties to this
Agreement shall be responsible for its own costs and
expenses incurred in connection with the preparation and
negotiation of this Agreement and with the transactions
contemplated hereby.
30
j. BINDING EFFECT AND ASSIGNMENT. This Agreement shall be
binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, administrators,
executors, successors and permitted assigns. Purchaser may
assign its rights under this Agreement to an affiliated
entity, and thereafter the Purchaser and its assignee shall
be fully obligated, responsible and liable for the
performance of the Purchaser's obligations hereunder. Seller
may not assign any of its rights or delegate any of its
obligations hereunder. Any assignment in violation of this
Agreement shall be void.
k. ATTORNEYS' FEES. In the event any party instigates
litigation to enforce or protect its rights under this
Agreement, the party prevailing in any such litigation shall
be entitled, in addition to all other relief, to reasonable
attorneys' fees, out-of-pocket costs and disbursements
relating to such litigation.
l. NOTICES. All notices and other communications hereunder
shall be (i) in writing, dated with the current date of such
notice, and signed by the party giving such notice, and (ii)
mailed, postpaid, registered or certified, return receipt
requested, addressed to the party to be notified, or
delivered by personal delivery or by overnight courier.
Notice shall be deemed given when received by the party to
be notified or when the party to be notified refuses to
accept delivery of the notice. The initial addresses of the
parties shall be as follows:
IF TO PURCHASER:
Cross-Continent Auto Retailers, Inc.
1201 S. Taylor
P.O. Box 750
Amarillo, Texas 79105-0750
ATTENTION: ROBERT W. HALL
(806) 374-8653
IF TO SELLER:
The Chaisson Family Trust
c/o James J. Chaisson, Sr.
40 Innisbrook
Las Vegas, Nevada 89113
with a copy to:
Jones, Jones, Close & Brown, Chartered
3773 Howard Hughes Parkway, 3rd Floor South
Las Vegas, Nevada 89109
Attention: Douglas G. Crosby, Esq.
31
The parties hereto shall have the right from time to time to
change their respective addresses by not less than ten (10)
days prior written notice to the other parties.
m. DEFINITION OF KNOWLEDGE. As used in this Agreement, the
Seller's or the Company's "actual knowledge" or "knowledge"
shall include the knowledge of the Seller and the employees
and agents of the Company. Each representation and warranty
that is limited to the Seller's or the Company's "actual
knowledge" or "knowledge" is made with the understanding
that the Seller or the Company has made a good faith effort
to examine whatever sources of information as are in the
possession or control of the Seller or the Company in order
to verify the truth and accuracy of such representation and
warranty.
n. TIME IS OF THE ESSENCE. Time shall be of the essence with
respect to this Agreement and the consummation of the
transactions contemplated hereby.
o. REMEDIES. None of the remedies provided for in this
Agreement shall be the exclusive remedy of any party for a
breach of this Agreement. The parties hereto shall have the
right to seek any other remedy at law or in equity in lieu
of or in addition to any remedies provided for in this
Agreement.
p. SURVIVAL OF OBLIGATIONS. To the extent necessary to carry
out the terms and provisions of this Agreement, the
obligations and rights arising from or related to this
Agreement shall survive the Closing and shall not be merged
into the various documents executed and delivered at the
time of the Closing.
q. WAIVER. No waiver of any breach or default hereunder shall
be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed
a waiver of any subsequent breach or default of the same or
similar nature.
r. GOVERNING LAW. This Agreement shall be construed, enforced,
and governed in accordance with the laws of the State of
Nevada.
s. MEDIATION AND VENUE. If a dispute arises out of or relates
to this Agreement, or the breach thereof, and if the dispute
cannot be settled through negotiation, the parties agree
first to try in good faith to settle the dispute by
mediation administered by the American Arbitration
Association under its Commercial Mediation Rules before
resorting to arbitration, litigation, or some other dispute
resolution procedure. The jurisdiction and venue for any
proceeding, whether by mediation, arbitration, litigation or
other dispute resolution procedure, shall be Clark County,
Nevada.
t. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute
one and the same instrument.
32
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PURCHASER: CROSS-CONTINENT AUTO RETAILERS, INC.,
a Delaware corporation
By: /s/ BILL GILLILAND
------------------------------------------------
Bill Gilliland, Chairman and Chief Executive Officer
SELLER: THE CHAISSON FAMILY TRUST R-501
By: /s/ JAMES J. CHAISSON, JR.
------------------------------------------------
James J. Chaisson, Sr., Trustee
COMPANY: JRJ INVESTMENTS, INC., a Nevada corporation
By: /s/ JAMES J. CHAISSON, SR.
------------------------------------------------
James J. Chaisson, Sr., President
33