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EXHIBIT (1)
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
CROWN GROUP, INC.
AND
SMART CHOICE AUTOMOTIVE GROUP, INC.
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TABLE OF CONTENTS
1. Sale and Purchase of the Shares......................................................................... 1
2. Purchase and Payment.................................................................................... 2
(a) Purchase Price. ............................................................................... 2
(b) Further Assurances. ........................................................................... 2
3. Representations and Warranties of the Company........................................................... 2
(a) Organization and Standing of the Company....................................................... 2
(b) Subsidiaries................................................................................... 2
(c) Capital Stock.................................................................................. 3
(d) Corporate Proceedings of the Company........................................................... 4
(e) Financial Statements........................................................................... 4
(f) Absence of Certain Changes or Events........................................................... 5
(g) Tax Matters.................................................................................... 8
(h) Title to Properties and Related Matters........................................................ 9
(i) Consents and Approvals......................................................................... 10
(j) Receivables.................................................................................... 10
(k) Litigation and Proceedings..................................................................... 10
(l) Insurance Coverage............................................................................. 11
(m) Employee Benefits.............................................................................. 12
(n) Employee Relations............................................................................. 14
(o) Patents, Trademarks and Licenses............................................................... 14
(p) Approvals, Authorizations and Regulations...................................................... 14
(q) Inventory...................................................................................... 15
(r) Guarantees, Etc................................................................................ 15
(s) OSHA........................................................................................... 16
(t) No Defaults.................................................................................... 16
(u) No Conflicts................................................................................... 16
(v) Brokers........................................................................................ 17
(w) Environmental Matters.......................................................................... 17
(x) Permits, Licenses, Etc......................................................................... 19
(y) Software....................................................................................... 20
(z) Disclosure..................................................................................... 20
4. Representations and Warranties of the Purchaser......................................................... 20
(a) Organization, Standing and Authority of the Purchaser.......................................... 20
(b) No Violation................................................................................... 21
(c) Corporate Proceedings of the Purchaser......................................................... 21
(d) Financial Statements........................................................................... 21
(e) Brokers........................................................................................ 22
(f) Accredited Investor/Investment................................................................. 22
(g) Due Diligence.................................................................................. 22
(h) No Knowledge of Breach......................................................................... 23
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5. Closing Actions......................................................................................... 23
(a) Resignations................................................................................... 23
(b) Opinion of the Company's Counsel............................................................... 24
(c) Opinion of Purchaser's Counsel................................................................. 25
(d) Ready Finance Debt............................................................................. 26
(e) Conversion of Other Company Debt............................................................... 26
(f) High Capital Funding, LLC...................................................................... 26
(g) Conversion of Company Preferred Stock.......................................................... 26
(h) Merger of Paaco Automotive Group, Inc.......................................................... 27
(i) Grant to the Purchaser of Options, Warrants, Etc............................................... 27
(j) Finova Capital Corporation..................................................................... 28
(k) No Material Adverse Changes.................................................................... 28
(l) Consents....................................................................................... 28
(m) Certified Resolutions of the Company........................................................... 28
(n) Certified Resolutions of the Purchaser......................................................... 29
(o) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing and Approval.......................................................... 29
(p) Employment/Consulting Agreements............................................................... 29
(q) Settlement of Existing Litigation.............................................................. 30
(r) Bankers Insurance Company Investment........................................................... 30
6. The Closing............................................................................................. 30
7. Nature and Survival of Representations and Warranties................................................... 30
(a) Nature of Statements........................................................................... 30
(b) Survival of Representations and Warranties..................................................... 30
8. Indemnification by Company and Related Matters.......................................................... 31
9. Indemnification by the Purchaser and Related Matters.................................................... 32
10. Expenses................................................................................................ 33
11. Notices................................................................................................. 34
12. Miscellaneous........................................................................................... 35
(a) Assignment..................................................................................... 35
(b) Section and Paragraph Headings................................................................. 35
(c) Amendment...................................................................................... 35
(d) Entire Agreement............................................................................... 35
(e) Knowledge...................................................................................... 35
(f) Public Announcements........................................................................... 35
(g) Counterparts................................................................................... 36
(h) Governing Law.................................................................................. 36
(i) Material Adverse Effect........................................................................ 36
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated on or as of December 1, 1999, by
and between CROWN GROUP, INC., a Texas corporation (the "Purchaser" or "Crown
Group"), and SMART CHOICE AUTOMOTIVE GROUP, INC., a Florida corporation (the
"Company" or "Smart Choice").
W I T N E S S E T H:
WHEREAS, the Purchaser desires to purchase 150,000 shares of the
Series E Convertible Preferred Stock, $.01 par value per share, of the Company
(herein referred to as the "Shares"), and the Company desires to sell the
Shares to the Purchaser, all upon the terms and conditions set forth herein;
and
WHEREAS, this Agreement sets forth the terms and conditions to which
the parties have agreed and further contemplates the execution and delivery of
certain collateral agreements and the consummation of certain related
transactions hereinafter described;
NOW, THEREFORE, in consideration of the mutual promises and covenants
of the parties, the parties agree as follows:
1. Sale and Purchase of the Shares. The Company hereby sells,
assigns and conveys to the Purchaser on the Closing Date (as hereinafter
defined), free and clear of all security interests, pledges, liens, charges and
encumbrances, the Shares and transfers and delivers to the Purchaser the
certificates evidencing the Shares. The Purchaser hereby purchases and accepts
the Shares for the consideration set forth in Section 2(a) hereof.
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2. Purchase and Payment.
(a) Purchase Price. The total purchase price (the
"Purchase Price") for the Shares is Three Million ($3,000,000)
Dollars, payable by the Purchaser to the Company at Closing (as
hereinafter defined), by wire transfer funds.
(b) Further Assurances. The Company hereby agrees to
execute and deliver from time to time at the request of the Purchaser
and without further consideration, such additional instruments of
conveyance and transfer and to take such other action as the Purchaser
may reasonably require to more effectively convey, assign, transfer
and deliver the Shares to the Purchaser.
3. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with the Purchaser that:
(a) Organization and Standing of the Company. The Company
and each of the Company Subsidiaries (as hereinafter defined) is a
corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation. The Company and the
Company Subsidiaries have all requisite corporate power and authority
to conduct their respective businesses as they are now being
conducted. The Company has delivered to the Purchaser complete and
correct copies of the Articles of Incorporation (duly certified by the
Secretary of State of the respective states of incorporation) and
By-Laws (certified by the Secretary of the Company or the Company
Subsidiaries, as the case may be) of the Company and the Company
Subsidiaries as in effect on the date hereof.
(b) Subsidiaries. All direct and indirect subsidiaries of
the Company (individually, a "Company Subsidiary," and collectively,
the "Company
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Subsidiaries") are listed on Schedule 3(b) attached hereto. Except for
the Company Subsidiaries, the Company does not own, directly or
indirectly, any of the outstanding capital stock or securities
convertible into capital stock of any other corporation, or own,
directly or indirectly, any participating interest in any partnership,
joint venture or other business enterprise.
(c) Capital Stock. The total authorized capital stock of
the Company consists of 50,000,000 shares of Common Stock, $.01 par
value per share (the "Company Common Stock"), of which as of August
16, 1999, 7,782,277 shares have been issued and are outstanding, and
5,000,000 shares of Preferred Stock, $.01 par value per share, (the
"Company Preferred Stock"), of which (i) 440 shares of Series A
Convertible Preferred Stock (the "Company Series A Preferred Stock"),
have been issued and no shares are outstanding, (ii) 220 shares of
Series B Convertible Preferred Stock (the "Company Series B Preferred
Stock"), have been issued and are outstanding, (iii) 24.98 shares of
Series C Convertible Preferred Stock (the "Company Series C Preferred
Stock"), have been issued and are outstanding, (iv) 350 shares of
Series D Convertible Preferred Stock (the "Company Series D Preferred
Stock"), have been issued and are outstanding, and (v) no shares of
Series E Convertible Preferred Stock (the "Company Series E Preferred
Stock"), have been issued and are outstanding. A true and correct copy
of the Sixth Articles of Amendment to the Articles of Incorporation of
the Company authorizing the designation of the Company Series E
Preferred Stock is attached hereto as Exhibit "A." Except as set forth
in Schedule 3(c) attached hereto, there are no existing options,
warrants, calls, commitments or other rights of any character
(including
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conversion or preemptive rights) relating to the acquisition of any
issued or unissued capital stock or other securities of the Company
(collectively, the "Existing Options").
(d) Corporate Proceedings of the Company. The execution,
delivery and performance of this Agreement has been authorized by the
Board of Directors of the Company and this Agreement constitutes the
valid and legally binding obligation of the Company, enforceable in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(e) Financial Statements. The Company has delivered to the
Purchaser correct and complete copies of the Company's and the Company
Subsidiaries' consolidated unaudited monthly financial statements
consisting of consolidated balance sheets of the Company and the
Company Subsidiaries as of the end of each month from January 1999
through September 1999 and the related statements of income for the
periods then ended. The Company has also delivered to the Purchaser
correct and complete copies of financial statements consisting of the
consolidated balance sheets of the Company and the Company
Subsidiaries as of December 31, 1998 and the related consolidated
statements of income, stockholders' equity and cash flows for the
period then ended, all of which have been audited by the firm of BDO
▇▇▇▇▇▇▇, LLP (the "Audited Financial Statements"). All such unaudited
financial statements and the Audited Financial Statements are referred
to herein collectively as the "Financial Statements." The Financial
Statements are in
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accordance with the books and records of the Company and the Company
Subsidiaries in all material respects, and there have not been any
material transactions that have not been recorded in the accounting
records underlying such Financial Statements. In addition, The
Financial Statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied and
present accurately, in all material respects, the financial position
of the Company and the Company Subsidiaries as of the dates thereof,
and the results of their operations for the periods then ended,
provided, however, that the unaudited financial statements may be
subject to year-end adjustments and such unaudited financial
statements lack footnotes and other presentation items. The balance
sheet of the Company and the Company Subsidiaries as of September 30,
1999 is referred to herein as the "Company Balance Sheet," and the
date thereof is referred to as the "Company Balance Sheet Date."
(f) Absence of Certain Changes or Events. Except as set
forth in Schedule 3(f) or except as contemplated by this Agreement,
since the Company Balance Sheet Date, none of the Company and the
Company Subsidiaries has:
(i) issued, delivered or agreed to issue or
deliver any stock, bonds or other corporate securities
(whether authorized and unissued or held in the treasury) or
granted or agreed to grant any options, warrants or other
rights calling for the issuance thereof;
(ii) except as otherwise permitted herein,
borrowed or agreed to borrow any funds or incurred, or become
subject to, any obligation
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or liability (absolute or contingent) except in the ordinary
course of business in customary amounts;
(iii) paid any obligation or liability (absolute
or contingent) except in the ordinary course of business in
customary amounts;
(iv) paid any obligation or liability (absolute
or contingent) other than current liabilities reflected in or
shown on the Financial Statements (or the notes thereto) and
obligations or liabilities incurred since the date thereof
and permitted to be so incurred by the foregoing clause (ii)
of this Section 3(f);
(v) declared or made, or agreed to declare or
make, any payment of dividends or distribution of any assets
of any kind whatsoever to the Company or affiliates of the
Company, or purchased or redeemed any shares of its capital
stock;
(vi) sold or transferred, or agreed to sell or
transfer, any of its assets, properties or rights (except
sales in the ordinary course of business) or cancelled or
agreed to cancel, any debts or claims;
(vii) entered or agreed to enter into any
agreement or arrangement granting any preferential rights to
purchase substantially all of the assets, properties or
rights of the Company or the Company Subsidiaries (including
management and control thereof), or requiring the consent of
any party to the transfer and assignment of such assets,
properties or rights (or changes in management or control
thereof), or providing for the merger or consolidation of the
Company or the
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Company Subsidiaries with or into another corporation, other
than as described in this Agreement and the documents
contemplated hereby;
(viii) waived any rights of material value;
(ix) except in the ordinary course of business,
made or permitted any amendment or termination of any
material contract, agreement or license to which it is a
party;
(x) made any accrual or arrangement for the
payment of bonuses or special compensation of any kind or any
severance or termination pay to any present or former officer
or employee;
(xi) increased the rate of compensation payable
or to become payable by it to any of its officers or key
employees compensated at a rate in excess of $50,000 per
annum; or made any increase in any profit sharing, bonus,
incentive, deferred compensation, insurance, pension,
retirement or other employee benefit plan, payment or
arrangement made to, for or with any such officers or key
employees;
(xii) committed to purchase inventories, parts,
supplies or other items in excess of its normal, ordinary and
usual requirements or at excessive prices, all computed based
on historical practices of the Company and the Company
Subsidiaries;
(xiii) experienced any significant labor trouble;
or
(xiv) suffered any material losses or any damage,
destruction or loss, whether or not covered by insurance,
which materially and adversely affects its assets or
business, or had any material adverse
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change in the business, of the Company or the Company
Subsidiaries, in each case, which would reasonably be
expected to have a Material Adverse Effect on the Company or
the Company Subsidiaries.
(g) Tax Matters. All United States, state, county and
local and other taxes, including without limitation, income taxes,
payroll taxes, corporate franchise taxes, sales, excise and use taxes
and ad valorem taxes, due and payable by the Company and the Company
Subsidiaries for the periods ended prior to the date hereof, have been
paid or accrued and there is no further liability (whether or not
disclosed on their respective tax returns) for any taxes relating to
such periods, and no interest or penalties have accrued or are
accruing with respect thereto, except for taxes that are being
contested in good faith by appropriate proceedings and as to which
adequate reserves have been reflected on the Financial Statements and
established (and through and including the Closing Date will
establish) reserves that are adequate for the payment of all taxes not
yet due and payable with respect to the results of operations through
the Closing Date. The Company and the Company Subsidiaries have timely
filed in materially correct form all tax returns and reports required
to be filed by them on or before the date of this Agreement with all
such taxing authorities, except as otherwise set forth on Schedule
3(g). The liability for Federal, state and local taxes reflected on
the most recent Company's Financial Statements, if any, represents at
the date thereof, reasonable and adequate provision for the payment of
all accrued and unpaid Federal, state and local taxes of the Company
and the Company Subsidiaries. No assessments of deficiencies have been
made against the Company or the Company Subsidiaries, and no
extensions of time
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are in effect for the filing of any returns or the assessment of
deficiencies. To the Company's knowledge, no examinations by the
Internal Revenue Service of the Federal income tax returns of the
Company or the Company Subsidiaries for any taxable year are presently
pending. The Company has delivered to the Purchaser true and complete
copies of all of the Company's and the Company Subsidiaries' Federal
and state Income Tax Returns and payroll tax returns for each of their
fiscal years from 1995 through 1998.
(h) Title to Properties and Related Matters. The assets
reflected in the Financial Statements were at the date thereof, and,
except for assets consumed or disposed of in the ordinary course of
business since the date thereof, are now owned by the Company or the
Company Subsidiaries by good title, free and clear from all security
interests, mortgages, liens, claims, defects and encumbrances except
liens, charges or encumbrances discussed or referred to in the
Financial Statements, the related notes or schedules thereto or in
Schedule 3(h) delivered to the Purchaser pursuant to this Section 3.
Except as disclosed in Schedule 3(h), all such assets are in good
operating condition and repair, subject to ordinary wear and tear. All
of such assets have been properly maintained, with no extraordinary
maintenance planned or anticipated, and are adequate and sufficient
for the operation of the Company's and the Company Subsidiaries'
business as historically operated by the Company and the Company
Subsidiaries. There are no material capital expenditures currently
contemplated or necessary to maintain the current operation of the
Company's and the Company Subsidiaries' business. The Nissan and Volvo
new car dealerships owned by the Company have been sold and all
indebtedness related thereto or
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secured by the assets thereof, has been released, or will be released
promptly after Closing.
(i) Consents and Approvals. No notification,
authorization, permit, consent or approval of, or notice to, or filing
with, any governmental or regulatory authority or other third party is
required to be obtained, given or made, or waiting period required to
expire as a condition to the lawful execution and delivery of this
Agreement, the consummation by the Company of the transaction
contemplated herein, or the fulfillment of the terms and compliance
with the provisions hereof, except for such permits, consents,
licenses, approvals or authorizations or declarations, exemptions,
filings or registrations (a) disclosed in Schedule 3(i) or (b) the
failure of which to obtain or make do not and will not (A) affect the
validity and enforceability of this Agreement or (B) either
individually or in the aggregate reasonably be expected to have a
Material Adverse Effect.
(j) Receivables. All notes receivable, contracts
receivable and accounts receivable (collectively, the "Receivables")
are properly reflected on the Company's and the Company Subsidiaries'
books and records are valid and have arisen in the ordinary course of
business. None of such Receivables has been the subject of any
factoring by the Company or the Company Subsidiaries.
(k) Litigation and Proceedings. Except as described in
Schedule 3(k), there are no actions, suits or proceedings pending or,
to the knowledge of the Company or the Company Subsidiaries,
threatened against or affecting the Company or the Company
Subsidiaries, at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality,
domestic or
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foreign, or before any arbitrator of any kind, which would be
reasonably expected to result in any judgment or liability not fully
covered by casualty or liability insurance (less applicable deductible
or retention, if any) and have a Material Adverse Effect. Neither the
Company nor the Company Subsidiaries are in default with respect to
any judgment, order, writ, injunction, decree, award, or, to the
Company's knowledge, in default with respect to any rule or regulation
of any court, arbitrator or governmental department, commission,
board, bureau, agency or instrumentality which default would
reasonably be expected to have a Material Adverse Effect.
(l) Insurance Coverage. With respect to each such
insurance policy owned by the Company and the Company Subsidiaries:
(A) the policy is legal, valid, binding, enforceable, except as the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally
and the availability of equitable remedies may be limited by equitable
principles of general applicability, and in full force and effect with
respect to the periods and risks which such policy purports to insure;
(B) the policy will continue to be legal, valid, binding, enforceable
and in full force and effect in accordance with its terms on the same
terms immediately following the consummation of the transactions
contemplated hereby; (C) neither the Company nor the Company
Subsidiaries are in breach or default (including with respect to the
payment of premiums or the giving of notices) of any material term
thereto, and to the Company's knowledge, no event has occurred which,
with notice or the lapse of time, would reasonably be expected to
constitute such a breach or default, or permit termination,
modification or acceleration under the policy; and (D) to the
Company's
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knowledge, no party to the policy has repudiated any provision
thereof. To the knowledge of the Company, the Company and the Company
Subsidiaries have been covered during the past five years by insurance
in scope and amount customary and reasonable for the businesses in
which it has engaged during such period. The Company and the Company
Subsidiaries do not have any self-insurance arrangements affecting the
Company and the Company Subsidiaries. "Self insurance arrangements"
means any arrangement by which the Company and the Company
Subsidiaries have assumed risks in scope and amount customarily
insured by businesses in the Company's and the Company Subsidiaries'
industry and geographic region.
(m) Employee Benefits.
(i) The Company and the Company Subsidiaries
have complied and currently are in compliance, both as to
form and operation, in all material respects with the
applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Internal
Revenue Code of 1986, as amended (the "Code"), respectively,
with respect to each "employee benefit plan" as defined under
Section 3(3) of ERISA, except where the failure to comply
would not reasonably be expected to have a Material Adverse
Effect.
(ii) Neither the Company nor the Company
Subsidiaries have ever maintained, adopted or established,
contributed or been required to contribute to, or otherwise
participated or been required to
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participate in, a "multiemployer plan" (as defined in Section
3(37) of ERISA). No amount is due or owing from the Company
or any Company Subsidiary on account of any withdrawal
therefrom.
(iii) Neither the Company nor the Company
Subsidiaries have incurred any liability with respect to a
Plan, including, without limitation, under ERISA, (including,
without limitation, Title I or Title IV of ERISA, other than
liability for premiums due to the Pension Benefit Guaranty
Corporation ("PBGC")), the Code or other applicable law,
which has not been satisfied in full and, to the knowledge of
the Company, no event has occurred, and there exists no known
condition or set of circumstances, which would reasonably be
expected to result in the imposition of any liability with
respect to a Plan, including, without limitation, under ERISA
(including, without limitation, Title I or Title IV of
ERISA), the Code or other applicable law with respect to the
Plan, wherein any such liability, individually or in the
aggregate, would reasonably be expected to have a Material
Adverse Effect.
(iv) Except as set forth in Schedule 3(m)
attached hereto, neither the Company nor the Company
Subsidiaries have any outstanding commitments to provide or
to cause to be provided any severance or other
post-employment benefit, salary continuation, termination,
disability, death, retirement, health or medical benefit or
similar benefit to any person (including, without limitation,
any
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former or current employee) that has not been reflected in
the Company's Financial Statements.
(n) Employee Relations. The Company and the Company
Subsidiaries are in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours of employees, and
there is no labor strike, dispute, slowdown or representation campaign
or work-stoppage pending or, to the Company's knowledge, threatened
with respect to employees of the Company or the Company Subsidiaries.
Except as disclosed in Schedule 3(n), there is not, pending or, to the
Company's knowledge, threatened, any unfair labor practice complaint
against the Company or the Company Subsidiaries pending before any
relevant authority or union representation petition respecting the
employees of the Company or the Company Subsidiaries.
(o) Patents, Trademarks and Licenses. Neither the
Company nor the Company Subsidiaries have any patents or patent
applications pending. Schedule 3(o) contains an accurate and complete
list of all trademarks, trade names, service marks and copyrights of
the Company. None of the foregoing is registered nor have any
applications for such registration been made. Neither the Company nor
the Company Subsidiaries have received any notice of any claim of
infringement or other complaint that its operations conflict with or
infringe upon the patents, trade names, trademarks, trade secrets,
copyrights or product formulas of others.
(p) Approvals, Authorizations and Regulations. Except as
disclosed in Schedule 3(p), the Company's and the Company
Subsidiaries' business is being
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conducted in compliance with all applicable laws, ordinances, rules
and regulations of all governmental authorities, and neither the
Company, the Company Subsidiaries, nor any officer, director,
stockholder, agent or employee has violated any law, ordinance, rule
or regulation in connection with the Company's and the Company
Subsidiaries' business, except for such violations as would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Further, other than as disclosed on Schedule
3(p), neither the Company nor the Company Subsidiaries have received
any notice (written or otherwise) from any governmental authority
asserting or investigating any alleged failure to comply with any
applicable law, ordinance or regulation, except for such failure as
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(q) Inventory. None of the used vehicle inventories of
the Company and the Company Subsidiaries are obsolete, defective or
otherwise not saleable or usable in the ordinary course of business in
any material respects, except to the extent of the inventory reserve
reflected in the unaudited financial statements for the month ended
September 30, 1999.
(r) Guarantees, Etc. Except as disclosed in Schedule
3(r), neither the Company nor the Company Subsidiaries have 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 that remains outstanding.
All guaranties of the Company and the Company Subsidiaries on behalf
of any person other than another Company Subsidiary (excluding the
Company Subsidiaries that owned the Nissan and Volvo dealerships) have
been terminated.
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(s) OSHA. Neither the Company nor the Company
Subsidiaries have received notice of any violation by the Company or
the Company Subsidiaries, and to the Company's knowledge, neither the
Company nor any Company Subsidiary is in violation of and has not been
in violation of, the Occupational Safety and Health Act of 1970,
including rules and regulations thereunder, or any other federal,
state, local or foreign laws, including rules and regulations
thereunder, regulating or otherwise affecting employee health and
safety which would reasonably be expected to have a Material Adverse
Effect.
(t) No Defaults. Except as set forth on Schedule 3(t)
attached hereto, neither the Company nor the Company Subsidiaries are
in default under, nor has any event occurred which with notice or
lapse of time or both, would reasonably be expected to result in a
waiver (except caused by the statute of limitations) of any material
right or default under, any outstanding indenture, mortgage, lease,
contract or agreement to which the Company or any of the Company
Subsidiaries is a party or by which the Company, the Company
Subsidiaries or their assets may be bound, or under any provision of
the Company's or the Company Subsidiaries' Articles of Incorporation
or By-Laws, which would reasonably be expected to have a Material
Adverse Effect.
(u) No Conflicts. The execution and performance of this
Agreement by the Company and the Company Subsidiaries in accordance
with its terms and the transactions contemplated hereby will not
violate any provision of or result in a breach of or constitute a
default under the Articles of Incorporation or By-Laws of the Company
and the Company Subsidiaries, or under any order, writ, injunction or
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decree of any court, governmental agency or arbitration tribunal, or
under any contract, agreement or instrument to which the Company or
any Company Subsidiary is a party or by which its properties may be
bound, or under any law, statute or regulation, except where the
violation, conflict, breach or default would not reasonably be
expected to have a Material Adverse Effect.
(v) Brokers. The Company is not a party to nor in any
way obligated under a contract or other agreement, and there are no
outstanding claims against any of them, for the payment of any
broker's or finder's fees in connection with the origin, negotiation,
execution or performance of this Agreement.
(w) Environmental Matters.
(i) For the purposes of this Agreement, the
following definitions shall apply:
Environment: Ambient air, surface water, groundwater, soil,
sediment and land.
Environmental Conditions: Any environmental contamination of
any kind or nature resulting from the presence of Hazardous
Materials in the surface soils, subsurface soils, surface
waters or groundwater.
Environmental Laws: All existing federal, state or local laws
or ordinances and any regulations, rules, or administrative
or judicial rulings issued or promulgated thereunder and
common law relating to (a) Releases or threatened Releases of
Hazardous Materials or materials containing Hazardous
Materials; the manufacture, handling, transport, use,
treatment, storage or disposal of Hazardous Materials or
materials containing Hazardous Materials; or otherwise
relating to the protection of human health or the
Environment, including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act, 42
U.S.C. ss. 9601 et seq., ("CERCLA"), the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq.,
("RCRA"), the Clean Water Act, 33-U.S.C. ss. 1251 et seq.,
the Clean Air Act, 42 U.S.C. ss. 7401 et seq., the Toxic
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Substances Control Act, 15 U.S.C. ss. 2601 et seq., ("TSCA"),
and all state analogues and counterparts to any of the
foregoing.
Facilities: The real property and improvements located at the
locations owned or leased by the Company or the Company
Subsidiaries.
Hazardous Materials: Any substance defined as "Hazardous
Waste", "Hazardous Substance", "Hazardous Material",
pollutant or contaminant under any existing Environmental
Laws. Hazardous Materials include, without limitation,
asbestos, polychlorinated biphenyls and petroleum products.
Release: Any spilling, leaking, pumping, pouring, leaching,
emitting, emptying, discharging, injecting, escaping, dumping
or disposing of Hazardous Materials or materials containing
Hazardous Materials into the Environment.
(ii) Except as would not reasonably be expected
to have a Material Adverse Effect or as disclosed in Schedule
3(w), there are no Environmental Conditions on, at, under or
emanating from the Facilities.
(iii) Except as would not reasonably be expected
to have a Material Adverse Effect or as disclosed in Schedule
3(w), neither the Company nor any Company Subsidiary has
received any notice claiming or alleging that the Company or
any Company Subsidiary has violated any applicable
Environmental Laws; or is responsible or potentially
responsible for any remedial or removal action under any
applicable Environmental Laws, and to the Company's
knowledge, no such claim is threatened.
(iv) Except as would not reasonably be expected
to have a Material Adverse Effect or as disclosed in Schedule
3(w):
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(1) the Company and the Company Subsidiaries have
all Permits required under applicable Environmental
Laws that are necessary to conduct the business of
the Company and the Company Subsidiaries as
presently conducted, the absence of which would have
a material adverse effect on the Company or the
Company Subsidiaries (the "Material Environmental
Permits"), and has provided copies of all the
Material Environmental Permits to the Purchaser;
(2) all the Material Environmental Permits are in
full force and effect and neither the Company nor
any Company Subsidiary is in material default of any
thereof;
(3) there is no threatened suspension, cancellation
or non-renewal of any of the Material Environmental
Permits or any basis for such suspension,
cancellation or non-renewal; and
(4) the Company and the Company Subsidiaries shall
renew all the Material Environmental Permits that
shall expire on or before Closing.
(v) PCB Items. Except as would not reasonably be
expected to have a Material Adverse Effect or as disclosed in
Schedule 3(w), none of the assets of the Company or the
Company Subsidiaries is a PCB Item (as defined in 40 C.F.R.
ss. 761.3).
(x) Permits, Licenses, Etc. The Company and the Company
Subsidiaries have all Permits (except for Environmental Permits, which
are the subject of specific representations and warranties in Section
3(x) hereof), that are required in order to carry on the Company's and
the Company Subsidiaries' business as presently conducted, the absence
of which would reasonably be expected to result in a Material Adverse
Effect on the Company or the Company Subsidiaries (the "Material
Permits"). All Material Permits are in full force and effect, and, to
the knowledge of
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the Company, no suspension, cancellation or non-renewal of any
Material Permit is threatened, nor, to the best of the Company's
knowledge, does there exist any basis for such suspension,
cancellation or non-renewal.
(y) Software. To the Company's knowledge, all operating
and applications computer programs and data bases (the "Software")
which the Company and the Company Subsidiaries use is owned outright
by the Company and the Company Subsidiaries or if any Software is not
owned by the Company or the Company Subsidiaries, the Company and the
Company Subsidiaries have the right to use the same pursuant to
existing leases or licenses therefor. To the knowledge of the Company,
none of the Software presently used by the Company and the Company
Subsidiaries, and no present use thereof, infringes upon or violates
any patent, copyright, trade secret or other proprietary right of
anyone else and no claim with respect to any such infringement or
violation is known to be threatened.
(z) Disclosure. No representation or warranty by the
Company or the Company Subsidiaries contained in this Agreement,
including the Schedules attached hereto, taken as a whole, contains
any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein and therein not
misleading.
4. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants to the Company that:
(a) Organization, Standing and Authority of the
Purchaser. The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas,
and has full corporate power and authority to
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conduct its business as it is now being conducted, to enter into and
carry out the provisions of this Agreement.
(b) No Violation. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will violate any provision of the Articles of Incorporation or
By-Laws of the Purchaser, violate any provision of any agreement or
other obligation to which the Purchaser is a party or by which the
Purchaser is bound or to which its assets are subject, or violate or
result in a breach of, constitute a default under, any judgment,
order, decree, rule or regulation of any court or governmental agency
to which the Purchaser is subject.
(c) Corporate Proceedings of the Purchaser. The
execution, delivery and performance of this Agreement has been
authorized by the Board of Directors of the Purchaser and this
Agreement constitutes the valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally
and the availability of equitable remedies may be limited by equitable
principles of general applicability.
(d) Financial Statements. The Purchaser has delivered to
the Company (i) the audited consolidated balance sheet of the
Purchaser at April 30, 1999 and the related consolidated statements of
operations, cash flows and changes in stockholder's equity for the
Purchaser, all for the year then ended, together with the related
notes thereto, as certified by PricewaterhouseCoopers, LLP, Certified
Public Accountants, and (ii) the unaudited consolidated balance sheet
of the Purchaser at July 31, 1999 (the "Crown Financial Statement
Date") and the related unaudited
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consolidated statements of operations and cash flows for the
Purchaser, all for the three (3) months then ended, as certified by
the Chief Financial Officer of the Purchaser (hereinafter collectively
called the "Crown Financial Statements"). The Crown Financial
Statements (x) are in accordance with the books of account and records
of the Purchaser and fairly present the consolidated financial
position of the Purchaser at the dates indicated, (y) contain and
reflect reserves for all material liabilities and (z) were prepared in
accordance with GAAP on a basis consistent with prior accounting
periods.
(e) Brokers. The Purchaser is not a party to or in any
way obligated under a contract or other agreement, and there are no
outstanding claims against it, for the payment of any broker's or
finder's fees in connection with the origin, negotiation, execution or
performance of this Agreement.
(f) Accredited Investor/Investment. The Purchaser is an
"accredited investor" as that term is defined under Regulation D
promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended. The Shares will be acquired for
investment and not with a view to distribution thereof, nor with any
intention of distributing or selling or otherwise disposing of the
Shares.
(g) Due Diligence. The Purchaser is an informed and
sophisticated person and is experienced in the evaluation and purchase
of companies such as the Company and the Company Subsidiaries. In
making the decision to enter into this Agreement and consummate the
transactions contemplated hereby, and the documents related thereto,
the Purchaser has relied on its own independent investigation of the
Company and the Company Subsidiaries as of this date and upon
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the representations and warranties and covenants in this Agreement and
has relied on the investigations conducted by the Purchaser's agents.
The Purchaser acknowledges that the Company and the Company
Subsidiaries have made no representation or warranty as to the
prospects, financial or otherwise, of the Company and the Company
Subsidiaries. The Purchaser has conducted its own inspection and
examination of the Company and the Company Subsidiaries conducted by
the Purchaser's agents and is not relying on representations or
warranties of any nature made by or on behalf of or imputed to the
Company and the Company Subsidiaries except as expressly set forth in
this Agreement. Notwithstanding the foregoing, no investigation by the
Purchaser heretofore or hereafter made shall affect the
representations and warranties of the Company, and each such
representation and warranty shall survive any such investigation.
(h) No Knowledge of Breach. Neither the Purchaser nor
the Purchaser's agents know of any breach of warranty or any
misrepresentation by the Company or the Company Subsidiaries
hereunder.
5. Closing Actions. The following actions have taken place prior
to the Closing Date or are taking place on the Closing Date contemporaneously
with the Closing:
(a) Resignations. The Company hereby delivers to the
Purchaser the resignations of those officers and directors of the
Company and the Company Subsidiaries (effective on the Closing Date)
as may be requested by the Purchaser, and the remaining directors of
the Company have elected the persons designated by the Purchaser to
the Board of Directors of the Company. The By-Laws of the Company are
also being amended in a manner satisfactory to the Purchaser.
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27
(b) Opinion of the Company's Counsel. The Purchaser is
receiving the opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Legal Officer for
the Company and the Company Subsidiaries, dated the Closing Date, to
the effect that:
(i) each of the Company and the Company
Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Florida and has corporate power to carry on its business as
it is now being conducted;
(ii) to such counsel's knowledge, the authorized
capital stock and the outstanding shares of the Company and
the Company Subsidiaries are as set forth herein, and the
Shares are duly and validly issued, fully paid,
non-assessable and outstanding;
(iii) the consummation of the transactions
contemplated by this Agreement will not result in the breach
of or constitute a default under the Articles of
Incorporation or By-Laws of the Company and the Company
Subsidiaries, or, to such counsel's knowledge, any loan,
credit or similar agreement or any court decree to which the
Company or the Company Subsidiaries are a party or by which
the Company or the Company Subsidiaries, or their respective
properties may be bound; and
(iv) this Agreement has been duly executed and
delivered by the Company and constitutes the valid and
binding obligation of the Company enforceable in accordance
with its terms (except as otherwise limited by bankruptcy,
insolvency, reorganization,
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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) Opinion of Purchaser's Counsel. The Company is
receiving the opinion of ▇. ▇. ▇▇▇▇▇▇▇, III, General Counsel for the
Purchaser, dated the Closing Date, to the effect that:
(i) the Purchaser is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Texas and has corporate power to carry
on its business as it is now being conducted.
(ii) this Agreement has been duly authorized,
executed and delivered by the Purchaser, and (assuming valid
execution and delivery by the other parties hereto) is, or
will be upon such execution, the valid and binding obligation
of the Purchaser 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 or therein is
specifically enforceable); and
(iii) to such counsel's knowledge, the
consummation of the transactions contemplated by this
Agreement will not result in the breach of or constitute a
default under the Articles of Incorporation or By-Laws of the
Purchaser, or any loan, credit or similar agreement
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29
or any court decree to which the Purchaser is a party or by
which the Purchaser or its properties may be bound.
(d) Ready Finance Debt. The Purchaser has acquired from
Ready Finance, Inc. ("Ready Finance") two promissory notes issued by
the Company having a principal amount of approximately $4,300,000 plus
accrued and unpaid interest (the "Ready Finance Debt"). The Ready
Finance Debt is being converted into shares of Company Series E
Preferred Stock at a conversion price of $39.00 for each dollar of
such Ready Finance Debt.
(e) Conversion of Other Company Debt. The indebtedness
of the Company to the creditors listed on Schedule 5(e) attached
hereto is being converted into shares of Company Common Stock at the
conversion prices set forth on Schedule 5(e) for each dollar of such
debt, and there shall be no more than $2,601,760.31 of such
indebtedness outstanding at Closing.
(f) High Capital Funding, LLC. The indebtedness of the
Company to High Capital Funding, LLC ("High Capital") in the aggregate
principal amount of $2,000,000 plus accrued interest (the "High
Capital Debt") has been modified and amended such that $1,000,000 of
the High Capital Debt is being paid at Closing, with $275,000 of the
balance being due and payable six (6) months after the Closing Date
and $725,000 of the balance being due and payable two (2) years after
the Closing Date. The deferred amount shall bear interest at the rate
of ten (10%) percent per annum, payable monthly.
(g) Conversion of Company Preferred Stock. All of the
outstanding Preferred Stock of the Company and all accumulated
dividends with respect thereto
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30
is being converted into shares of Company Common Stock at the
conversion price set forth on Schedule 5(g) for each dollar of Company
Preferred Stock (including accumulated dividends) outstanding.
(h) Merger of Paaco Automotive Group, Inc. A subsidiary
of the Company is merging (the "Merger") with Paaco Automotive Group,
Inc., a Texas corporation ("Paaco") in exchange for the number of
shares of Company Series E Preferred Stock such that at Closing, as a
result of the Merger, the Purchaser shall own, in conjunction with the
shares of Company Series E Preferred Stock issued to the Purchaser
hereunder and pursuant to Section 5(d) hereof, not less than seventy
(70%) percent of the issued and outstanding capital stock of the
Company (the "Purchaser's Percentage Ownership"). The number of shares
of Company Series E Preferred Stock to be issued to the Purchaser as a
result of the Merger is 1,105,046.44, subject to adjustment at
Closing, as set forth in the immediately preceding sentence, so that
the Purchaser will own the Purchaser's Ownership Percentage. The
Merger is being consummated in accordance with the terms and
provisions of the Merger Agreement between Paaco and the Company (or a
subsidiary thereof), in substantially the form of the Merger Agreement
attached hereto as Exhibit "B."
(i) Grant to the Purchaser of Options, Warrants, Etc.
The Purchaser is being granted options or warrants (the "Purchaser's
Warrants") to purchase shares of Common Stock of the Company on the
same terms and conditions that any options or warrants are issued by
the Company on or prior to the Closing Date, such that the Purchaser
shall have the right to maintain the Purchaser's Percentage Ownership
by
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exercising the Purchaser's Warrants. The Purchaser's Warrants grant to
the Purchaser the right to purchase 1,950,000 shares of Common Stock
of the Company at the purchase price of $.20 per share.
(j) Finova Capital Corporation. The senior debt
facilities of the Company and Paaco with Finova Capital Corporation
have been modified in a manner acceptable to the Purchaser, and an
amendment to the respective loan agreements of the Company and Paaco
with Finova Capital Corporation evidencing such modifications has been
entered into on or before the Closing Date.
(k) No Material Adverse Changes. Prior to the Closing
Date, there has been no material adverse change in the business,
operations, financial condition or properties of the Company and the
Company Subsidiaries, taken in the aggregate, since the Company
Balance Sheet Date, and the Purchaser has received a certificate dated
the Closing Date, signed by the President or a Vice President of the
Company to the effect that such is the case.
(l) Consents. The Company has obtained all approvals and
consents which must be obtained in order to effectuate the transaction
contemplated hereby and to satisfy the terms and conditions of this
Agreement, other than those approvals and consents, the failure of
which to obtain would not reasonably be expected to have a Material
Adverse Effect.
(m) Certified Resolutions of the Company. The Purchaser
has received resolutions of the Board of Directors of the Company,
certified by the Secretary or an Assistant Secretary of the Company,
authorizing the execution, delivery and
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32
performance of this Agreement and the issuance to the Purchaser of
shares of Company Series E Preferred Stock as set forth herein.
(n) Certified Resolutions of the Purchaser. The Company
has received resolutions of the Board of Directors of the Purchaser,
certified by the Secretary or an Assistant Secretary of the Purchaser,
authorizing the execution, delivery and performance of this Agreement.
(o) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing and Approval. The Purchaser
and the Company (and any other required parties) have made all
necessary filings with the Federal Trade Commission required by the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, the required
waiting periods thereunder have expired or early termination thereof
has been granted, and the parties have not received any objection to
the consummation of the transactions contemplated by this Agreement.
(p) Employment/Consulting Agreements. Each of the
employment or consulting agreements listed on Schedule 5(p) attached
hereto (which Schedule shall include all agreements requiring the
payment by the Company of more than $50,000) have been terminated
(except as stated in Schedule 5(p)) without liability to the Company,
and the Company has entered into (i) new employment agreements with
▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, (ii) an agreement for the
continuation of employment with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and (iii) an
agreement for the continuation of consulting with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, all
of which shall be on terms acceptable to the Purchaser.
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(q) Settlement of Existing Litigation. The Company has
settled, or reached agreements to settle, the lawsuits listed on
Schedule 5(q) attached hereto for the respective amounts set forth on
Schedule 5(q).
(r) Bankers Insurance Company Investment. Bankers
Insurance Company has purchased shares of Company Common Stock for the
aggregate purchase price of $1,000,000.
6. The Closing. The execution and delivery of this Agreement and
the instruments, certificates and other documents required hereunder (the
"Closing") is taking place at the offices of Crown Group, Inc., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. local time
on December 1, 1999. The date and time of such execution and delivery is herein
called the "Closing Date", and the effective date of the Closing shall be 12:01
a.m., Dallas, Texas time on the Closing Date. On the Closing Date, certificates
representing the Shares are being delivered by the Company against delivery of
the Purchase Price pursuant to Section 2 hereof, and Closing shall be deemed to
have occurred when such deliveries have been made by the Purchaser and the
Company in accordance with the terms hereof.
7. Nature and Survival of Representations and Warranties.
(a) Nature of Statements. All statements contained in
any schedule or any certificate or other instrument delivered by or on
behalf of the Company or the Purchaser pursuant to this Agreement or
in connection with the transactions contemplated hereby shall be
deemed representations and warranties made by the Company or the
Purchaser, as the case may be.
(b) Survival of Representations and Warranties. All
representations, warranties, covenants, agreements and undertakings
contained herein or in any
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34
Schedule, certificate or other document shall remain operative and in
full force and effect, and shall survive the Closing Date and the
delivery of all consideration and documents pursuant to this
Agreement, and shall continue in effect for a period of two (2) years
after the Closing Date and, as to representations made by the Company
concerning or affecting any tax liability of the Company or the
Company Subsidiaries, until a date which is six (6) months after the
statute of limitations has run against the Federal, state and local
government; provided, however, that any such representation, warranty,
covenant, agreement or undertaking as to which a bona fide claim shall
have been asserted during such survival period shall continue in
effect until such time as such claim shall have been resolved in
accordance with the terms of this Agreement.
8. Indemnification by Company and Related Matters.
(a) Indemnification by Company. The Company agrees to
defend, indemnify and hold harmless the Purchaser and its successors
and assigns, from, against and in respect of any and all loss or
damage resulting from:
(i) the breach by the Company of any of its
warranties, representations, covenants, agreements or
undertakings contained herein; and
(ii) any liability arising out of any and all
actions, suits, proceedings, claims, demands, judgments,
costs and expenses (including reasonable legal and accounting
fees) incident to any of the foregoing (collectively, the
"Losses"), provided that the Purchaser makes a written claim
for indemnification against the Company
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35
within the applicable survival period and further provided
that neither the Company nor the Company Subsidiaries will
have any obligation to indemnify the Purchaser from and
against any Losses until the Purchaser has suffered Losses by
reason of all such breaches in excess of a $50,000 aggregate
deductible (the "Indemnification Threshold") (and after the
Indemnification Threshold is reached, the Company will be
obligated to only indemnify the Purchaser from and against
further such Losses, that is, for amounts greater than
$50,000) or thereafter to the extent of the Losses the
Purchaser has suffered by reason of all such breaches exceeds
a $5,000,000 aggregate ceiling (after which point neither the
Company nor the Company Subsidiaries will have any obligation
to indemnify the Purchaser from and against further such
Losses.
9. Indemnification by the Purchaser and Related Matters.
(a) Indemnification by the Purchaser. The Purchaser
agrees to defend, indemnify and hold harmless the Company, its
successors and assigns from, against and in respect of any and all
loss or damage resulting from:
(i) the breach by the Purchaser of any of its
warranties, representations, covenants, agreements or
undertakings contained herein; and
(ii) any liability arising out of any and all
actions, suits, proceedings, claims, demands, judgments,
costs and expenses (including reasonable legal and accounting
fees) incident to any of the
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36
foregoing (collectively, the "Losses"), provided that the
Company or the Company Subsidiaries make(s) a written claim
for indemnification against the Purchaser within the
applicable survival period and further provided that the
Purchaser will not have to indemnify the Company and the
Company Subsidiaries from and against any Losses until the
Company and the Company Subsidiaries have suffered Losses by
reason of all such breaches in excess of a $50,000 aggregate
deductible (the "Indemnification Threshold") (and after the
Indemnification Threshold is reached, the Purchaser will be
obligated to only indemnify the Company and the Company
Subsidiaries from and against further such Losses, that is,
for amounts greater than $50,000) or thereafter to the extent
of the Losses the Company and the Company Subsidiaries have
suffered by reason of all such breaches exceeds a $500,000
aggregate ceiling (after which point the Purchaser will have
not any obligation to indemnify the Company and the Company
Subsidiaries against further such Losses.
10. Expenses. The Company and the Purchaser shall pay their or
its own expenses (including without limitation counsel and accounting fees and
expenses) incident to the preparation and carrying out of this Agreement and
the consummation of the transactions contemplated hereby. The Purchaser and the
Company shall each pay one half (1/2) of the filing fee related to the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ notification and report.
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11. Notices. All notices, demands and requests which may be given
or which are required to be given by either party to the other, and any
exercise of a right of termination provided by this Agreement, shall be in
writing and shall be deemed effective when either: personally delivered to the
intended recipient; sent by certified or registered mail, return receipt
requested, addressed to the intended recipient at the address specified below;
delivered in person to the address set forth below for the party to which the
notice was given; deposited into the custody of a nationally recognized
overnight delivery service such as Federal Express Corporation, ▇▇▇▇▇ or
Purolator, addressed to such party at the address specified below; or sent by
facsimile, telegram or telex, provided that receipt for such facsimile,
telegram or telex is verified by the sender and followed by a notice sent in
accordance with one of the other provisions set forth above. Notices shall be
effective on the date of delivery or receipt, of, if delivery is not accepted,
on the earlier of the date that delivery is refused or four (4) days after the
date the notice is mailed. For purposes of this Section, the addresses of the
parties for all notices are as follows (unless changes by similar notice in
writing are given by the particular person whose address is to be changed):
(a) if to the Company, to Smart Choice Automotive Group,
Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇;
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, President and Chief Executive Officer; Fax
▇▇▇-▇▇▇-▇▇▇▇;
With a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Legal Officer, Smart
Choice Automotive Group, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇; Fax ▇▇▇-▇▇▇-▇▇▇▇;
(b) or if to the Purchaser, to Crown Croup, Inc., ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President; Fax ▇▇▇-▇▇▇-▇▇▇▇;
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With a copy to ▇. ▇. ▇▇▇▇▇▇▇, III, Executive Vice President
and General Counsel, Crown Croup, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; Fax ▇▇▇-▇▇▇-▇▇▇▇.
Any party hereto may designate a different address by written notice given to
the other parties.
12. Miscellaneous.
(a) Assignment. This Agreement may not be assigned by
any party hereto without the prior written consent of the other
parties.
(b) Section and Paragraph Headings. The Section and
Paragraph headings of this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement.
(c) Amendment. This Agreement may be amended only by an
instrument in writing executed by the parties hereto.
(d) Entire Agreement. This Agreement and the Exhibits,
Schedules, certificates and documents referred to herein constitute
the entire agreement of the parties, and supersede all understandings
with respect to the subject matter hereof.
(e) Knowledge. "Knowledge" of a natural person means
actual knowledge of such natural person, and "knowledge" of a
corporate person means actual knowledge of the directors and executive
officers of such corporate person, in each case (unless otherwise
specifically set forth to the contrary) after reasonable inquiry and
investigation.
(f) Public Announcements. No publication and/or press
release of any nature shall be issued pertaining to this Agreement or
the transaction contemplated
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hereby without the prior written approval of the Purchaser and the
Company, except as may be required by law.
(g) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
(h) Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY 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 COURTS OF THE STATE OF TEXAS.
(i) Material Adverse Effect. "Material Adverse Effect"
means a material adverse effect on the business of the Company and the
Company Subsidiaries, taken as a whole.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties on or as of the date and year first above written.
PURCHASER:
CROWN GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
COMPANY:
SMART CHOICE AUTOMOTIVE GROUP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, President
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SCHEDULES AND EXHIBITS
SCHEDULE DESCRIPTION
-------- -----------
3(b) Subsidiaries
3(c) Warrants, Options, Etc.
3(f) Certain Changes or Events
3(g) Tax Matters
3(h) Title to Properties and Related Matters
3(i) Consents and Approvals
3(k) Litigation and Proceedings
3(m) Certain Employee Benefits in Case of Termination, Death, Disability,
Severance, Etc.
3(n) Employee Relations
3(o) Patents, Trademarks and Licenses
3(p) Approvals, Authorizations and Regulations
3(r) Guaranties
3(t) Company Defaults
3(w) Environmental Matters
5(e) Other Company Creditors
5(g) Conversion of Company Preferred Stock
5(p) Employment/Consulting Agreements to be Terminated
5(q) Existing Litigation to be Settled
EXHIBIT DESCRIPTION
------- -----------
"A" Sixth Articles of Amendment to the Articles of Incorporation of the Company
"B" Merger Agreement
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