[EXHIBIT 2.1]
ASSET PURCHASE AGREEMENT
THIS ASSET
PURCHASE AGREEMENT ("Agreement) dated as of April
____, 2004 is by and among (i) Giant
Motorsports, Inc., a Nevada
corporation ("Buyer"), (ii) King's Motorsports, Inc. d/b/a
Chicago Cycle, an Illinois corporation ("Seller"),
(iii) Mr.
Jason Haubner and (iv) Mr. Jerry Fokas (collectively, the
"Shareholders").
RECITALS
A. Seller owns and operates a retail motorcycle, all
terrain vehicle and off-road vehicle dealership at 7320 N.
Western Avenue, Chicago, Illinois (the
"Business").
B. Seller desires to sell and transfer to, and Buyer
desires to purchase and assume from Seller,
substantially all
of
the assets of the Business and specifically identified
liabilities and obligations of the Business,
on the terms and
subject to the conditions contained
herein.
NOW,
THEREFORE,
in consideration of the mutual promises
hereinafter set forth and other good and
valuable consideration,
the parties hereto hereby agree as
follows:
ARTICLE 1
ASSETS SUBJECT TO THIS AGREEMENT
--------------------------------
1.1 Purchase and Sale of Assets
---------------------------
Upon the terms and subject to the
conditions of
this
Agreement, Seller shall sell, assign, transfer, deliver and
convey to Buyer, and Buyer shall purchase and acquire from
Seller, at the Closing (as defined in Section
7.1 hereof), all
rights, properties and assets, wherever
situated, owned by Seller
in connection with the Business (collectively,
the "Acquired
Assets"), but expressly excluding therefrom
the Excluded
Assets
(as defined in Section 1.2 hereof).
The Acquired Assets
shall
include, without limitation, the
following:
1.1.1 Tangible
Personal Property
--------------------------
All machinery,
equipment,
attachments,
tools,
supplies,
tooling, furniture,
fixtures, parts, accessories,
telephones,
alarms,
computers,
office furniture and
equipment
and all other tangible assets and personal
property
of every kind and
nature owned by Seller and used
in the Business as of the Closing, including, without
limitation,
as set forth on Schedule 1.1.1 (the
"Tangible
Personal
Property").
1.1.2 Inventory
---------
All new and used inventory used in the Business at
the Closing (the "Inventory").
The parties
acknowledge and
agree that Buyer
shall purchase and/or obtain the rights to
the motorcycles, all terrain vehicles
and off-road vehicles
separate and
apart from this Agreement.
1.1.3 Assumed
Contract
----------------
Except as otherwise provided in Section 2.2 hereof,
all rights and incidents of interest of, and benefits
accruing
to, Seller in and to
the Contracts (as defined in
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Section 4.1.4)
listed or described on Schedule 1.1.3 hereto
(the "Assumed
Contracts").
1.1.4 Records
-------
All books,
files, documents, customers lists,
customers'
records,
supplier lists, supplier records,
promotional
and advertising
material, files of
promotional
literature,
technical information, correspondence, artwork,
operating
records, other
business information
relating to
the Business which has been reduced to
writing or other
records of
Seller (collectively, "Records").
1.1.5 Going Concern
Value
-------------------
The Business carried on and conducted by Seller as a
going
concern, including any
and all goodwill and
similar
intangibles
associated therewith.
1.1.6 Intangible
Property Rights
--------------------------
All municipal,
state and federal franchises,
permits,
licenses, agreements,
waivers, authorizations and
any and all
other intangible property rights held or used in
connection with,
or required for, the Business to the extent
transferable
(the "Intangible Personal Property").
1.1.7 Intellectual
Property
---------------------
Any shop rights or other rights to inventions,
formulas
and proprietary software, patent, patent
applications,
trade secrets, service marks, trademarks,
domain
names, copyrights and trade names owned,
licensed,
used
or applied for by
Seller and used exclusively in the
Business,
including, without limitation, the items listed on
Schedule
1.1.7
hereto (collectively, the "Intellectual
Property").
1.1.8 Telephone and
Facsimile Numbers
-------------------------------
All of Seller's right,
title and interest in
all
telephone and
facsimile numbers and e-mail addresses used in
connection with
the Business.
1.1.9 Warranty
Claims
---------------
All rights
under or pursuant to
all warranties,
representations
and guarantees made by suppliers,
manufacturers,
contractors
and other third parties in
connection with
the operation of the Business and affecting
any of the
Acquired Assets, in each case, only to the extent
transferable.
1.1.10
Scheduled Items
---------------
All of the items listed on Schedule 1.1.10.
1.2 Excluded Assets
---------------
Notwithstanding
anything to the contrary contained in
this Agreement, only the following assets (collectively, the
"Excluded Assets") shall be retained by
Seller and shall not
be
included in the Acquired Assets sold, transferred, assigned,
conveyed and delivered to Buyer:
1.2.1 Cash
----
All cash and cash equivalents of Seller or relating
to the conduct of the Business outstanding as of the
Closing.
1.2.2 Accounts
Receivable
-------------------
All accounts and notes receivable of Seller or
relating
to the conduct of the
Business outstanding
as of
the Closing.
1.2.3 Tax Refunds
-----------
Any and all tax refunds associated with the Business
owed for periods
prior to the Closing.
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1.2.4 Dealer
Payments
---------------
Any and all dealer payments, holdbacks, retail
bonuses or like payments owed in connection with the
Business for
periods prior to Closing.
1.2.5 Automobile
Inventory
--------------------
The automobiles listed on Schedule 1.2.5.
1.2.6 Scheduled
Items
---------------
All of the items listed on Schedule 1.2.6.
ARTICLE 2
ASSUMED LIABILITIES AND LIABILITIES NOT ASSUMED
-----------------------------------------------
2.1 Assumed Liabilities
-------------------
Upon the terms and subject to the conditions
of this
Agreement, Buyer shall assume as of the
Closing and
thereafter
shall promptly pay, perform and fully
satisfy when due only
the
liabilities listed in this Section 2.1 (all such assumed
liabilities and obligations are hereinafter
collectively referred
to as the "Assumed Liabilities").
The Assumed
Liabilities shall
consist only of:
2.1.1 Assumed
Contracts
-----------------
Those performance
obligations of
Seller arising
after the
Closing Date to complete the services pursuant to
the Assumed
Contracts listed on Schedule 1.1.3.
2.1.2 Post Closing
Obligations
------------------------
Any and
all obligations, payments or other
liabilities
incurred by Buyer or
which are associated
with
the Acquired Assets and/or the Assumed
Liabilities, which
arise after the
Closing.
2.1.3 Floor Plan
Financing.
Subject to the receipt of
--------------------
Manufacturer
Approvals (as defined in the Management Agreement),
the floor plan
financing of Seller.
2.2 Liabilities Not Assumed
-----------------------
Except as set forth in
Section 2.1 hereof, Buyer shall
have no responsibility for and shall not
assume or be liable
for
any liabilities or obligations of Seller whatsoever, whether
fixed, contingent or otherwise, and whether
known or unknown
(collectively, "Liabilities Not Assumed"). Without in any
manner limiting the foregoing, except for
liabilities
expressly
assumed by Buyer in Section 2.1 hereof, the
Liabilities
Not
Assumed shall include the following:
(i) Any liabilities for federal, state
or local property,
income, sales, use, franchise, payroll or any other tax or
assessment levied, imposed or incurred in connection with the
Business prior to the Closing, and any taxes associated with
the
sale, transfer, delivery and conveyance of the Acquired Assets
pursuant to this Agreement;
(ii) Any
liability or obligation associated with the employees or
agents of Seller incurred or arising from events occurring
prior
to the Closing, including the payment of wages, any payment
under
any employee benefit plan of Seller or any COBRA obligations to
Seller's employees;
(iii) Any liability or
obligation arising out of the
violation of any federal, state or local statute, regulation,
rule, ordinance or other applicable law incurred or arising
from
events occurring prior to the Closing; or
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(iv) Any action,
suit or proceeding brought against Seller, or
its employees or agents, in connection with the Business that
were bought prior to the Closing.
ARTICLE 3
CONSIDERATION
-------------
3.1 Purchase Price
--------------
In full consideration
of the sale, assignment transfer
and conveyance of the Acquired Assets
and the other undertakings
of Seller in this Agreement, Buyer shall at
the Closing (a)
assume, pay and perform the Assumed
Liabilities, and (b)
pay to
Seller an aggregate amount of Two Million
Nine Hundred
Twenty-
Five Thousand Dollars ($2,925,000.00) (the "Purchase Price")
payable as follows:
(i) One Million Two Hundred Fifty
Thousand Dollars
($1,250,000.00) by cash or otherwise immediately available
funds
at the Closing (less the $50,000 deposit previously paid by
Buyer); and
(ii) The balance
of One Million Six Hundred Seventy-Five Thousand
Dollars ($1,675,000.00) pursuant to a secured promissory note,
a
copy of which is attached hereto as Exhibit A and incorporated
by
reference herein (the "Note").
3.2 Allocation of Purchase Price
----------------------------
The Purchase Price represents the amount agreed upon by
the parties to be the value of the Acquired
Assets and the
Assumed Liabilities, and shall be
allocated among the
Acquired
Assets and Assumed Liabilities in a manner consistent with
Section 1060 of the Internal Revenue Code
of 1986, as
amended.
Each of the parties agrees that they will
exchange and
review
their respective I.R.S. Forms 8594 "Asset Acquisition
Statements" before they file them with the Internal Revenue
Service.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
------------------------------
4.1 Representations and Warranties of Seller and the
Shareholders
------------------------------------------------------
Seller and the Shareholders hereby jointly and severally
represent and warrant to Buyer as of the
date of this
Agreement
and as of the Closing that:
4.1.1 Power and
Authority
-------------------
Seller is a corporation duly organized,
validly
existing
and in good standing
under the laws of
State of
Illinois and has
the corporate power and authority to own,
operate,
lease and use its assets and properties
and the
corporate
power and authority to
carry on its business
as
presently being
conducted. Seller is
duly qualified to
do
business in each
state in which it is required by law to be
so qualified.
4.1.2 Validity of
Agreements
----------------------
This Agreement
constitutes the legal,
valid and
binding
obligations
of Seller, and is
enforceable
against
Seller
in accordance with its terms. Seller has the
corporate
power and authority to
enter into this
Agreement
and to undertake and perform fully the transactions
contemplated
hereby or thereby. All necessary corporate
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action
has been taken by and on behalf of Seller with
respect
to the authorization, execution, delivery and
performance of
this Agreement.
4.1.3 Acquired
Assets
---------------
Except as set forth on Schedule 4.1.3, Seller shall
has good and
marketable title to all of the Acquired Assets,
whether
tangible or intangible, that it purports
to own,
free
and clear of any and all security interests,
hypothecations,
liens, encumbrances, mortgages, pledges,
equities,
charges,
assessments,
easements,
covenants,
restrictions,
reservations, defects in title, encroachments,
condemnation
proceedings and other
burdens or
conflicting
interests
("Liens").
Seller's
use of the Intangible
Personal
Property and Intellectual Property does not and has
not infringed on
the rights of any other person or entity.
4.1.4 No Conflicts
------------
Except as set forth on Schedule 4.1.4, the execution
and delivery and the performance by Seller of this
Agreement,
and the consummation by Seller of the
transactions
contemplated by this
Agreement will
not (a)
violate
or conflict with any charter
documents of
Seller;
(b) result in
the violation of or breach of or conflict with
any laws of any federal, state, local or foreign
governmental
or any subdivision, agency,
instrumentality,
authority,
commission,
board or bureau thereof or any
federal,
state or local court
(individually a "Governmental
Authority")
applicable to Seller, any of the Acquired Assets
or the Business; (c) violate, conflict
with, result in
a
breach
of, constitute a default under, or permit the
acceleration
of any obligation under any note, debt
instrument,
indenture, mortgage, lease, license, purchase or
sales
order, sales
commitment, security agreement or other
agreement
commitment,
undertaking, arrangement or contract,
whether
written or oral,
express or implied
(collectively,
"Contracts"), to
which Seller is a party or to or by which
the Business or
any of the Acquired Assets may be subject or
bound; or (d)
result in the creation or imposition in favor
of any person of
any Liens upon any of the Acquired Assets.
4.1.5 Contracts
---------
Except as set forth on Schedule 4.1.4, all of the
Assumed
Contracts and instruments set forth on Schedule
1.1.3
(or required to be set
forth therein) can be assigned
to Buyer without notice to or consent of
any other person
and are in full
force and effect. With
respect to each such
contract,
(i) there exists no
default or breach
thereunder
by any party thereto; and (ii) there exists no event,
occurrence,
condition or act which, with the giving of
notice, the
lapse of time, or both, or the happening of any
other
event or condition,
would become a default by Seller
or, to the best of Seller's or the
Shareholders' knowledge,
any other party
thereto.
4.1.6 Taxes
-----
Seller and the
Shareholders have duly
and timely
filed
all tax returns
required to be filed by any of them
and have all taxes due or claimed to be due by any
Governmental
Authority.
There
are no pending tax
examinations
or tax claims asserted
against Seller
and/or
the Shareholders
and there is no basis for any such claims.
4.1.7 Legal
Matters
-------------
Except as set forth on Schedule 4.1.7, there are no
legal
or administrative proceedings of any
nature pending
or, to the best of Seller's or the
Shareholders' knowledge,
threatened
against or affecting Seller, and Seller is not in
default of any
judgment, writ, injunction, or order of any
court
or governmental
agency. Seller has not
received any
notice from any
governmental entity asserting a violation by
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Seller
of, or ordering Seller to comply
with any laws,
regulations, or
governmental pronouncements of any type, and
there are not
pending any claims or investigations involving
asserted
violations thereof. To
the best of Seller's or the
Shareholder's
knowledge, Seller has duly complied with all
statutes,
regulations and governmental pronouncements of all
types and has
acquired all licenses and permits required for
the operation of
the Business.
4.1.8 Environmental
Matters
---------------------
To the best of Seller's knowledge, Seller has
obtained
all material permits, licenses and other
authorizations
that are required to
be obtained by
Seller
for the
operation of the Business under laws relative to the
environment,
which the failure to so have
obtained would
have
caused a material
adverse effect on the Business. To
the best of Seller's knowledge, Seller
has handled, stored,
transported
and disposed of its
wastes, in compliance
with
all such laws. To the best of Seller's knowledge,
Seller
has complied with all terms and conditions
of all such
required
permits, licenses and authorizations,
which the
failure
to so have complied would have caused
a material
adverse
effect on the Business. To the Seller's of the
Shareholders knowledge, Seller has not received
notice of
any claim,
action, proceeding or
investigation, relating to
the manufacture, processing,
distribution, use,
treatment,
storage,
disposal,
transport,
handling, discharge, or
release into the
environment, of any pollutant, contaminant,
or hazardous or
toxic material or waste.
4.1.9 Brokers'
Fees
-------------
No person or entity
has or, immediately
following
the consummation of the transactions
contemplated by
this
Agreement
will have, as a result
of any act or omission
of
Seller, any
right, interest or valid claim against Seller or
Buyer
for any commission, fee or other
compensation as
a
finder
or broker in connection with the transactions
contemplated by
this Agreement.
4.2 Representations and Warranties of
Buyer
---------------------------------------
Buyer represents
and warrants to Seller and the
Shareholders
