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FIRST CASH FINANCIAL SERVICES INC | CENTRAL AMERICA CAPITAL, SA DE CV | YA SERVICIOS, SA DE CV. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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EXHIBIT 10.1 STOCK PURCHASE AGREEMENT among YA SERVICIOS, S.A. DE C.V., SOFOM, E.N.R., FIRST CASH, S.A. DE C.V. and JEFF A. BARRON, CHRISTOPHER CLOUD TIDWELL, and CENTRAL AMERICA CAPITAL, S.A. DE C.V. December 1, 2008
EXHIBITS EXHIBIT A - Financial Statements EXHIBIT B - Leased Property EXHIBIT C - Promissory Notes EXHIBIT D - Form of Resignation and Release EXHIBIT E - Settlement Agreement and Mutual Release EXHIBIT F - First Cash Guaranties EXHIBIT G - Recurring Obligations EXHIBIT H-1 - Subordination and Intercreditor Agreement (Barron) EXHIBIT H-2 - Subordination and Intercreditor Agreement (Tidwell) EXHIBIT I-1 - Spanish-Language SPA (Barron to Servicios) EXHIBIT I-2 - Spanish-Language SPA (Tidwell to Servicios) EXHIBIT I-3 - Spanish-Language SPA (Tidwell to FCSA)
STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT ( "Agreement" ) dated as of December 1, 2008 (" Effective Date ") is entered into by and among YA SERVICIOS, S.A. DE C.V., SOFOM, E.N.R., a Mexican Corporation, ( "Servicios" ), FIRST CASH, S.A. DE C.V., a Mexican corporation ( "FCSA" ) (Servicios and FCSA each a " Purchaser ", and together " Purchasers "); CENTRAL AMERICA CAPITAL, S.A. DE C.V., a Mexican corporation (the "Company" ), JEFF A. BARRON, an individual ( "Barron" ), and CHRISTOPHER CLOUD TIDWELL, an individual ( "Tidwell" ) (Barron and Tidwell each a "Shareholder", and together, "Shareholders" ), with reference to the following facts: RECITALS A. Shareholders own all of the issued and outstanding shares of the capital stock of the Company. B. The parties hereto entered into a Stock Purchase Agreement dated as of October 30, 2008 (hereafter called the "Terminated Agreement"), which the Purchasers terminated on November 26, 2008, by means of a termination notice dated November 25, 2008. In accordance with the terms of the Terminated Agreement, the Mutual Release and the First Cash Guaranty as defined therein was simultaneously terminated. The parties hereto agree that the Terminated Agreement, the Mutual Release and the First Cash Guaranty as defined in the Terminated Agreement have no further force or effect. This Agreement, and the documents called for herein, including a newly executed Mutual Release and First Cash Guaranties, represent a new agreement of the parties. C. Purchasers continue to desire to purchase all of the shares held by Shareholders (the " Shares "), and Shareholders continue to desire to sell such Shares to Purchasers, upon and subject to the terms and conditions set forth below. D. All terms used in this Agreement with initial upper-case letters which are not defined within the text of the Agreement itself are defined in Section 10.15. E. Simultaneously with execution of this Agreement, the parties are executing and delivering the Mutual Release (as defined herein). F. Simultaneously with execution of this Agreement, First Cash Financial Services, Inc., a Delaware corporation ( "First Cash" ), is executing and delivering to each Shareholder a guaranty in favor of such Shareholder of the payment and performance of the obligations of the Purchasers under this Agreement and the Notes, in the forms attached as Exhibit F hereto (such guaranties are collectively called the "First Cash Guaranties"). AGREEMENT NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter made, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE 1 Upon the terms and subject to the conditions specified in this Agreement, on the Closing Date, Shareholders shall sell, assign, convey, transfer and deliver to Purchasers, and Purchasers shall purchase from Shareholders, the entire right, title and interest in and to the Shares from Shareholders in the amounts set forth below: There are 3 Classes of Shares in the Company. The chart below identifies each Class of Shares in the Company, the number of Shares of each Class owned by each Shareholder, the total number of Shares held by each Shareholder, and the percentage of outstanding Stock of the Company held by each Shareholder.
To Shareholders' Knowledge, each Class of the Shares has identical ownership and voting rights. The percentages set forth above for Shareholders shall be collectively referred to as the "Shareholders' Percentages " or individually as a "Shareholder's Percentage ." Purchasers shall acquire the entire right, title and interest in and to all of the Shares free and clear of all Encumbrances of any kind whatsoever, other than restrictions on subsequent transfers of such Shares of the type generally imposed under applicable securities and corporate laws. FCSA shall acquire 1 Class A Share only and the balance of all Shares (Class A, Class B and Class C) shall be acquired by Servicios. Subject to the terms and conditions of this Agreement, Purchasers agree to purchase the Shares and Shareholders agree to sell the Shares for an amount equal to Twenty-Five Million Dollars ($25,000,000.00) (the "Purchase Price" ), allocated between Shareholders as follows:
1.2.1 Closing Payments On the Closing Date, Purchasers shall make payments (" Closing Payments ") totaling Twenty-Five Million and No/100 Dollars (US $25,000,000.00) of which (a) Five Million and No/100 Dollars (US $5,000,000.00) will be paid in immediately available funds via wire transfer to each Shareholder in accordance with the respective Shareholders' Percentages, (b) Five Million and No/100 Dollars (US $5,000,000.00) will be withheld for payment to the Hacienda on behalf of the Shareholders as stated in Section 1.2.1.3 in accordance with the respective Shareholders' Percentages and (c) Ten Million and No/100 Dollars (US $10,000,000.00) will be paid by the execution and delivery to Shareholders of two promissory notes as described in Section 1.2.1.4 below (the "Four Year Notes"), and (d) Five Million and No/100 Dollars (US $5,000,000.00) will be paid by the execution and delivery to Shareholders of two promissory notes as described in Section 1.2.1.4 below (the "Short Term Notes"). The Closing Payments shall be allocated and paid by Purchasers as follows: 1.2.1.1 Four Million Two Hundred Forty Nine Thousand Nine Hundred Eighty Nine and 40/100 Dollars (US $4,249,989.40) of the Purchase Price shall be paid by wire transfer of immediately available funds to an account designated by Barron. 1.2.1.2 Seven Hundred Fifty Thousand Ten and 60/100 Dollars (US $750,010.60) of the Purchase Price shall be paid by wire transfer of immediately available funds to an account designated by Tidwell. 1.2.1.3 Purchasers will pay, on behalf of Shareholders, the Mexican Tax Ministry (also known as the Hacienda) or such tax collection authority as is required by Mexican law, the US $5,000,000 that is required to be withheld from the purchase price under Mexican Tax law for the payment of Shareholders' Mexican Tax obligations on the entire Purchase Price. Purchasers shall pay such taxes when due. The payments to the Hacienda of such taxes shall be allocated Four Million Two Hundred Forty Nine Thousand Nine Hundred Eighty Nine and 40/100 Dollars (US $4,249,989.40) on behalf of Barron, and Seven Hundred Fifty Thousand Ten and 60/100 Dollars (US $750,010.60) on behalf of Tidwell. The payment by Purchaser of the aforesaid Tax payments shall be in Mexican Pesos in immediately available funds to the Hacienda on, or on the Business Date immediately preceding, the date when such taxes shall become due (which the Parties believe to be January 17, 2009), and shall be evidenced in a manner mutually agreed in writing by Shareholders and Purchaser. To the extent that Purchasers shall be able to obtain a currency exchange rate for payment of the Taxes required by this Section 1.2.1.3, that is more favorable than the US Dollar exchange rate quoted on December 1, 2008 in the Wall Street Journal, any such savings on the currency exchange rate for the Tax payment shall be divided fifty percent to Purchasers, and fifty percent to Shareholders, in accordance with their respective Shareholders' Percentages. The parties agree that payment of the Taxes as required by this Section 1.2.1.3 satisfies the Mexican Tax law requirements on withholding requirements for the entire Purchase Price, and upon Purchasers' payment of such Taxes in accordance with this Section 1.2.1.3, Purchasers shall have no further liability to Shareholders for the aforesaid Tax amounts paid to the Mexican authorities. 1.2.1.4 FCSA's Purchase Price obligations shall be fully satisfied out of the cash portion of the Closing Payments paid to Shareholders. Servicios' Purchase Price obligations shall be satisfied by a combination of the cash portion of the Closing Payments paid to Shareholders plus that portion of the Purchase Price to be paid to the Shareholders by the Notes described in this Section 1.2.1.4. Fifteen Million and No/100 Dollars (US $15,000,000.00) of the Purchase Price shall be paid to Shareholders upon the terms and conditions of the Promissory Notes (the "Notes") from Servicios to the Shareholders in the form of four individual Notes, one Four Year Note to each Shareholder, and one Short Term Note to each Shareholder, in the Shareholders' Percentages, and which four Notes will have an aggregate principal amount of Fifteen Million and No/100 Dollars (US $15,000,000.00). The Notes shall be substantially in the forms attached hereto as Exhibit "C". Barron and Tidwell agree to execute the Subordination and Intercreditor Agreements attached as Exhibit "H-1" and "H-2", respectively, as a condition of the Closing. The parties agree that payment of the Taxes as required by Section 1.2.1.3 satisfies the Mexican Tax law requirements on withholding requirements for the entire Purchase Price, and upon Purchasers' payment of such Taxes in accordance with Section 1.2.1.3, Servicios shall make no deduction on payments due to the Shareholders on the Notes for any reason whatsoever (save and except as expressly provided for in the Notes). ARTICLE 2 The Shareholders, jointly and severally, represent and warrant and covenant to Purchasers and the parent corporation of Purchasers, First Cash, that, except as disclosed in a schedule furnished by Sellers to Purchasers pursuant to the Terminated Agreement, or as supplemented by an attachment hereto (collectively, the "Disclosure Schedule" ) or, except as otherwise learned by any of Purchasers, First Cash or their agents during their due diligence conducted on or prior to the date hereof, the following matters in this Article 2 are true and accurate in all material respects, or will be true and accurate in all material respects as of the Closing Date. The authorized, issued and currently outstanding capital stock of the Company, and the holders thereof, are set forth in Section 1.1. However, the public records of stock ownership as filed with the Foreign Investments Commission of Mexico may not be current, and may need supplemental filings done and fees paid by Shareholders or the Company before Closing to update the records at such Commission, which obligation shall be that of the Shareholders. Regardless of any inconsistency that may exist in the public records, Shareholders represent that neither J. Alan Barron ("Alan Barron") nor any entity owned or controlled by Alan Barron owns any stock in the Company, or has any rights to acquire stock in the Company. 2.1.2 Shareholders' Stock Ownership Each Shareholder holds of record and beneficially owns the number of shares of common stock of the Company set forth next to his name in Section 1.1, and such shares are free and clear of any Encumbrances, restrictions on transfer (other than any restrictions under securities or similar laws), claims, taxes, security interests, options, warrants, rights, contracts, calls, commitments, equities and demands. However, the public records of stock ownership as filed with the Foreign Investments Commission of Mexico may not be current, and may require supplemental filings done and fees paid by Shareholders or the Company after Closing to update the records at such Commission. All of the Shares have been duly authorized and validly issued and are fully paid and nonassessable; provided, that if either Purchasers or Shareholders discover that there was any irregularity on due authorization, issuance or nonassessability of the Shares, then Shareholders will use their best reasonable efforts to correct such irregularity before Closing. Neither Shareholder is a party to any option, warrant, right, contract, call, put, or other agreement or commitment providing for the disposition or acquisition of any shares of the Company (other than this Agreement). Neither Shareholder is a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any shares of the Company. None of the outstanding equity securities or other securities of the Company was issued in violation of securities laws or any other Legal Requirement. The Company does not own or have any Contract to acquire, any equity securities or other securities of any Person or any direct or indirect equity or owner interest in any other business. The delivery by Shareholders of certificates evidencing the Shares, duly endorsed for transfer or accompanied by stock transfer powers duly endorsed in blank, will transfer valid title to the Shares to Purchasers, free and clear of any and all Encumbrances whatsoever. 2.2 Authority ; Binding Agreement; No Conflict 2.2.1 Power The Company and Shareholders have full power and authority to execute and deliver, and perform their obligations under this Agreement and to consummate the transactions contemplated hereby, including, but not limited to the execution and delivery of all documents and agreements set forth and described herein, to Shareholders' Knowledge, without obtaining the consent of approval of any other Person, Governmental Authority or other entity of any kind or description whatsoever. To Shareholders' Knowledge, Shareholders represent that there are no filings, consents or approvals necessary to consummate the transactions contemplated by this Agreement, other than the possible requirement for supplemental filings to be done and fees paid by Shareholders or the Company (at Shareholders' expense) before Closing to update the records at the Foreign Investments Commission of Mexico. 2.2.2 Authorization; Binding Agreement The execution, delivery and performance of this Agreement (and all documents set forth or described herein) by Shareholders has been duly authorized by all necessary action on the part of Shareholders. This Agreement (and all documents set forth or described herein) constitutes a legal, valid and binding obligation of Company and Shareholders, and, assuming the due authorization, execution and delivery by the other parties hereto, enforceable in accordance with its terms, except to the extent that such validity, binding effect and enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors' rights generally from time to time in effect and to general equitable principles. 2.2.3 No Conflict Neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated by this Agreement or the related documents being executed in connection herewith will, directly or indirectly (with or without notice or lapse of time); 2.2.3.1 contravene, conflict with, or result in a violation of (a) any provision of the Organizational Documents of the Company, or (b) any resolution adopted by the board of directors or the stockholders of the Company; and in connection therewith, Shareholders hereby waive all pre-emptive or preferential rights or rights of first refusal they may have under the Company's Organizational Documents or applicable Mexican law (if any such rights exist); 2.2.3.2 contravene, conflict with, or result in a violation of, or give any Governmental Authority or other Person the right to challenge any of the transactions contemplated by this Agreement or the related documents being executed in connection herewith or to exercise any remedy or obtain any relief under, any Legal Requirement Known to Shareholders or any Order Known to Shareholders to which the Company or Shareholders, or any of the assets owned or used by the Company, or the Shares may be subject; 2.2.3.3 to the Knowledge of Shareholders, result in a violation of any of the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization that is held by the Company or that otherwise relates to the business of, or any of the assets owned or used by, the Company; 2.2.3.4 to the Knowledge of Shareholders, cause Purchasers or the Company to become subject to, or to become liable for the payment of, any Tax (save and except for the Tax contemplated and for which appropriate provisions are being made pursuant to Section 1.2.1.3 of this Agreement); 2.2.3.5 to the Knowledge of Shareholders, cause any of the assets owned by the Company to be reassessed or revalued by any taxing authority or other Governmental Body; 2.2.3.6 to the Knowledge of Shareholders, result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Material Contract to which the Company and/or any Shareholder is a party; or 2.2.3.7 result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned or used by the Company. (a) Attached as Exhibit A hereto are copies of (i) the Balance Sheet of the Company as of October 31, 2008, and (ii) the Income Statement of the Company for the period from January 1, 2008, through October 31, 2008 (the " 2008 Financial Statements ") which fairly represent the financial position and results of operations of the Company (stated in Mexican Pesos), as of the respective dates of the 2008 Financial Statements and for each of the period then ended (subject, in the case of unaudited interim financial statements, to normal, recurring adjustments including year-end audit adjustments, which are not expected to have a Company Material Adverse Effect taken as a whole), prepared on an accrual basis of accounting. The 2008 Financial Statements, together with the Disclosure Schedule or as otherwise disclosed in this Agreement, accurately reflect all Liabilities of the Company as of October 31, 2008 Known to Shareholders, which will be supplemented within twenty (20) days after the Closing with (i) an income statement for the one month period ended November 30, 2008, and prepared to the best of Knowledge of Shareholders after due inquiry and investigation, and (ii) a balance sheet containing all Liabilities of the Company Known to Shareholders as of November 30, 2008. (b) Attached as Exhibit A hereto are copies of (i) the Balance Sheets of the Company as of December 31, 2006 and December 31, 2007, and (ii) the Income Statements of the Company for the years ended December 31, 2006 and 2007 (collectively, the " Prior Years' Financial Statements ") which fairly represent the financial position and results of operations of the Company (stated in Mexican Pesos), as of the respective dates of the Prior Years' Financial Statements and for each of the respective periods then ended (subject, in the case of unaudited interim financial statements, to normal, recurring adjustments including year-end audit adjustments, which are not expected to have a Company Material Adverse Effect taken as a whole). prepared predominantly on a cash basis of accounting. To Shareholders' Knowledge, all Taxes owed by the Company or relating to the business or assets of the Company (whether or not shown on any Tax Return) have been paid or, in the case of current Taxes not yet due or payable, will be duly provided for in the October 31, 2008 Balance Sheet. Shareholders represent that such Taxes that have become due prior to the Closing have been paid prior to Closing at the Company's expense, and that any unpaid Taxes accrued prior to Closing but not yet due are in an amount that does not have a Company Material Adverse Effect. 2.4.2 Provisions for Unpaid Taxes To Shareholders' Knowledge, the provisions for Taxes due by the Company (as opposed to any reserve for deferred Taxes established to reflect timing differences between book and Tax income) in the October 31, 2008 Balance Sheet are sufficient for all unpaid Taxes, whether or not disputed, of the Company as of October 31, 2008. As of the Closing Date, such provisions for Taxes, as adjusted for the passage of time through the Closing Date, will be sufficient for the then-unpaid Taxes of the Company. 2.4.3 Tax Returns To Shareholders' Knowledge, the Company has filed or caused to be filed (on a timely basis, subject to any permissible extensions, since its formation) all Tax Returns that are or were required to be filed by the Company pursuant to applicable Legal Requirements. Purchasers agree not to reopen any tax years not brought to their attention by the Governmental Authorities. 2.5.1 Real Property The Company does not own, nor has it or its predecessors ever owned, any real property. 2.5.2 Leased Property Exhibit B to the Terminated Agreement lists all real property leased or subleased to the Company, and includes correct and complete copies of the leases and subleases listed in the Disclosure Schedule, (except that a new lease for Store #10 (in replacement of the old lease for such store) has been entered into at Purchaser's request since the date of the Terminated Agreement, a copy of which new lease has been provided to Purchaser (all of the foregoing are collectively called the " Leases "). To the Knowledge of Shareholders, each Lease is legal, valid, binding, enforceable and in full force and effect. Shareholders disclose some of the landlords have required that one or both of the Shareholders execute a Lease not only on the Company's behalf, but also as a fiador (guarantor). It is Shareholders' belief that fiadors may be required to own real estate in Mexico, and neither of them does, but to Shareholders' Knowledge, such irregularity should not be a basis for termination of a Lease after the Closing Date, and Shareholders have not received a formal request from any landlord regarding the termination of any Lease agreement for such reason. 2.5.3 Personal Property The Company has good title to its items of personal property free and clear of all Encumbrances. All tangible personal property of the Company other than Inventory is in good working order, operating condition and state of repair, ordinary wear and tear excepted. The Disclosure Schedule lists each lease or other agreement or understanding (including all amendments) under which any tangible personal property other than Inventory having a cost or aggregate capital lease obligations in excess of US $10,000.00 is held or used (indicating for each lease (i) a description of the property leased thereunder, including location, (ii) the term thereof and a description of any available renewal periods, (iii) the rental and other material payment terms, (iv) the owner of the property subject to such equipment lease and (v) whether any consents are required under such lease in connection with the transactions contemplated by this Agreement). The Personal Property of the Company shall include without limitation all Personal Property of the Company as of October 31, 2008, save and except items written off or disposed of in Ordinary Course of Business. To Shareholders' Knowledge, the Inventory is suitable and usable for its intended purpose in the Ordinary Course of Business, and the Inventory balance shown on the Financial Statements (rather than in any notes thereto) is presented on a cost basis in accordance with the past custom and practice of the Company. Since the Effective Date, no Inventory has been sold or disposed of except through redemptions by customers, or sales or write-offs in the Ordinary Course of Business, consistent with past practices. To Shareholders' Knowledge, all Consigned Inventory is salable in the Ordinary Course of Business. The Company's internal records accurately identify Consigned Inventory as separate from Inventory. The Balance Sheets of the Company as of October 31, 2008, show the total cost basis of the Inventory and the Consigned Inventory in all material respects. Since the Effective Date, no Consigned Inventory has been sold or disposed of except through redemptions by customers, or sales or write-offs in the Ordinary Course of Business, consistent with past practices. To Shareholders' Knowledge, complete copies of the minute books (containing the records of meetings of stockholders and the board of directors), and the stock and stockholder record books of the Company through the Effective Date are attached to the Disclosure Schedule. However, the public records of stock ownership as filed with the Foreign Investments Commission of Mexico may not be current, and may require supplemental filings and fees paid by Shareholders or the Company before Closing to update the records at such Commission. The Parties agree that any changes to the minute books that may be necessary or appropriate for such purpose may be made to the minute books and stock books between the Effective Date and the Closing Date. Shareholders agree to furnish any supplemental minute book or stock book information relating to such changes to Purchasers within five (5) days of any such filing or amendment, and Purchasers agree not to object to such changes so long as such changes do not have a Company Material Adverse Effect or change the Shareholders' Percentages. To Shareholder's Knowledge, Exhibit G hereto is a list of all material recurring obligations of the Company. 2.9 Proceedings and Litigation There is no Proceeding or litigation pending against the Company, or to the Knowledge of Shareholders, threatened against the Company, excepting the litigation threatened and previously filed by First Cash against the Company, and except for several suits by former employees of the Company or of its employee leasing vendors, all of which are listed on the Disclosure Schedule. The only material trademark used by the Company to identify itself is "Presta Max", or a derivative thereof. It is not a registered trademark in Mexico or the United States. Barron has filed in the United States Patent and Trademark Office a notice of intent to use such trademark. Barron hereby abandons and quitclaims his rights, if any, to the "Presta Max" mark and application therefor without any warranty by Barron as to the scope, validity or exclusiveness of his rights to such mark, anything about such mark or any claims of infringement. Purchasers acknowledge that they are attributing no value to such mark. To the Knowledge of Shareholders, the Company provides the payments and benefits to all employees as required by Legal Requirements. Shareholders advise Purchasers that if Purchasers move employees to a new company after Closing, Shareholders have no Knowledge of the effects upon employees' salaries or benefits, including acceleration thereof, and advise Purchasers to consider such possibility. ARTICLE 3 As an inducement to Shareholders to enter into this Agreement, Purchasers, jointly and severally, represent and warrant to Shareholders as follows, intending that Shareholders shall rely on such representations and warranties in connection with the transactions set forth herein: 3.1 Organization of Purchaser s To Purchasers' Knowledge, both Servicios and FCSA are corporations duly organized, validly existing, and in good standing under the laws of Mexico. Purchasers have all requisite company power and authority to own, lease and operate their assets and properties and to carry on their business as now conducted. 3.2 Authority; Binding Agreement Purchasers have full power and authority to execute and deliver, and perform their obligations under this Agreement and to consummate the transactions contemplated hereby, including, but not limited to the execution and delivery of all documents and agreements set forth and described herein, without obtaining the consent or approval of any other Person, governmental authority or other entity of any kind or description. Within the Knowledge of Purchasers, there are no filings, consents or approvals necessary on the part of Purchasers, the Shareholders or the Company which are necessary in order to consummate the transactions contemplated by this Agreement. 3.2.2 Authorization; Binding Agreement The execution, delivery and performance of this Agreement by Purchasers has been duly authorized by all necessary action on the part of Purchasers. Each of this Agreement, and the Notes is a legal, valid and binding obligation of the Purchaser or Purchasers signing same, enforceable in accordance with its terms, except to the extent that such validity, binding effect and enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors' rights generally from time to time in effect and to general equitable principles. The Mutual Release is a legal, valid and binding obligation of First Cash enforceable in accordance with its terms, except to the extent that such validity, binding effect and enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors' rights generally from time to time in effect and to general equitable principles. 3.2.3 Financial Ability Purchasers have the financial ability to pay the Purchase Price in the manner provided in this Agreement. Purchasers represent that they have conducted their own due diligence concerning the Company, its books, records and Financial Statements, and that Purchasers are satisfied with the scope of their due diligence, and the results thereof, and are not relying on any written or unwritten representations from or about the Company or from the Shareholders except those specifically made by Shareholders in this Agreement, the Exhibits or the Schedules (including the Disclosure Schedule). Purchasers have satisfied themselves as to the Purchasers' assumption that the Company's adjusted EBITDA for 2008 would likely equal approximately sixty to sixty-five million pesos. Purchasers hereby acknowledge that Shareholders and the Company have not represented such result, do not represent such result and hereby expressly disclaim any forecast. 3.4 Post-Closing Covenants of Purchaser s 3.4.1 Closing Cash Purchasers will handle Closing Cash and make payments as stated in Section 4.5. 3.4.2 Maintain Records Purchasers will maintain all books and records of the Company until it certifies in writing to Sellers that all their indemnification obligations under Article 9 have ended. 3.4.3 Lease Guaranties Purchasers will timely make all payments on Leases due or accruing after the Closing Date, so that no landlord makes a claim or demand against either Shareholder as a guarantor or "fiador" on such Lease. ARTICLE 4 The parties covenant and agree to take the following actions between the Effective Date and the Closing Date: Each party will use its good faith efforts to obtain as soon as is practicable such consents and approvals of, or waivers by, and make such filings with, all third parties and governmental authorities (including, without limitation, any consents, filings or approvals of any foreign governmental authorities) necessary to permit or expedite the consummation of the transactions contemplated by this Agreement. 4.2 Conduct of Business Pending Closing Shareholders agree that after the date of this Agreement and pending the Closing, and except as otherwise consented to or approved by Purchasers in writing (which consent or approval shall not unreasonably withheld and which consent (or disapproval) shall be timely given), or except as otherwise provided herein, Shareholders shall cause the following covenants to be satisfied: The Company shall use Commercially Reasonable Efforts to carry on its business in the Ordinary Course of Business and substantially in the same manner as heretofore conducted, including without limitation making loans to customers in accordance with the Company's past practices. The Company shall use Commercially Reasonable Efforts to preserve its organization intact, to retain its present employees and to preserve the goodwill of the Company's suppliers, customers and others having business relations with the Company, including, but not limited to, payment of all obligations to trade creditors consistent with past business practices. 4.2.3 Comply with Legal Requirements and Obligations The Company shall use Commercially Reasonable Efforts to perform all its material obligations under agreements, including lease agreements, relating to or affecting the assets, properties and rights of the Company and comply with all Legal Requirements within Knowledge of Shareholders which if violated might result in a Company Material Adverse Effect. 4.3 Maintain and Protect Assets Shareholders shall cause the Company to continue all normal and customary repairs, servicing, replacement, and upkeep of its equipment, properties and facilities, so as to maintain such equipment, properties and facilities in as good working order and condition as at present, ordinary wear and tear excepted. 4.4 Restrictions on Activities Shareholders shall ensure that the Company shall not: Amend its Organizational Documents in any way, or amend any Material Contract governing the operation of the Company in such a way that would have a Material Adverse Effect on the transactions contemplated by this Agreement. Notwithstanding the foregoing, Shareholders advise Purchasers that the Company has recently entered into a Lease amendment and renewal for Store #3, which among other things requires increased rental payments, and a new lease for Store #10, and that copies thereof have been included among the Leases; Issue or sell any shares of capital stock of any class or any securities convertible into or exchangeable for any such shares or any options, warrants or other rights calling for or permitting the issuance, transfer, sale or delivery of any such shares or securities, or otherwise enter into any arrangement or contract with respect to any such shares or securities or make any other changes in its capital structure; provided, however, that the Company has not previously documented the Shareholders' stock ownership with certificates, and that this Agreement shall not prohibit the Company from creating and delivering share certificates to the Shareholders in an amount consistent with the Shares being purchased by Purchasers; Merge or consolidate or agree to a merger or consolidation with or into any corporation or other entity; Borrow or agree to borrow any funds or incur, or assume or become subject to, whether directly or by way of guarantee or otherwise, any obligation or liability with respect to the operation of the business of the Company, including without limitation indebtedness for money borrowed or purchase money indebtedness, except obligations and liabilities incurred in the Ordinary Course of Business and not exceeding US $25,000.00, except as consented to or approved by Purchasers in writing; 4.4.5 Discharge of Other Parties Pay, discharge or satisfy any claim, liability or obligation relating to the Company, other than the payment, discharge or satisfaction of any claim, liability or obligation in the Ordinary Course of Business (including costs and expenses related to this transaction), which may include the Company's efforts to settle claims by past or present employees; Permit or allow any of the properties or assets of the Company to be subject to any Encumbrance of any kind, or sell, assign, lease, transfer or otherwise dispose of any such properties or assets, except, in each case, in the Ordinary Course of Business; 4.4.7 Inventory and Consigned Inventory Make sales of Inventory or Consigned Inventory other than in the Ordinary Course of Business and consistent with the historical practices of the Company, or write down or up the value of the Inventory or Consigned Inventory of the Company, except for write-downs, write-ups and write-offs in the Ordinary Course of Business; Except in the Ordinary Course of Business or as required by law, adopt or amend any compensation plan, or grant, or become obligated to grant, any general increase in the compensation of officers or employees of the Company (including any such increase pursuant to any compensation plan) or any increase in the compensation payable or to become payable to any such officer, employee, consultant or agent, make any change in any compensation plan or other employee welfare or benefit arrangement except pursuant to existing compensation plans or enter into any employment or similar agreement or arrangement (excluding immaterial oral agreements or arrangements) with any employee of the Company. Nothing in this Agreement prohibits Shareholders from receiving money from the Company, or causing the Company to pay or distribute money to the Shareholders, at any time prior to Closing, so long as the Closing Cash is maintained in accordance with Section 4.5. Any payments or distributions to the Shareholders initiated prior to Closing are permitted by this Section, even if they are not fully effectuated prior to Closing, so long as the Closing Cash is maintained in accordance with Section 4.5; Make any capital expenditure or enter into any contract or commitment therefor or incur or agree to incur any liability therefor, relating to the Company, except in the Ordinary Course of Business or to replace a capital item that fails to operate properly, or if such expenditure or commitment therefor does not exceed US $10,000.00; 4.4.10 Additional Employees Hire additional employees except in the Ordinary Course of Business; 4.4.11 Accounting Methods Make any material change in its accounting methods, except for improvements and corrections thereto that have been discussed with Purchasers during their due diligence; 4.4.12 Waiver of Contract Rights Waive any material right under any Material Contract or terminate or fail to renew any Material Contract, if any such waiver or termination would have a Company Material Adverse Effect; or 4.4.13 Encumbrance of Assets Encumber any of the Company's assets. 4.5 Cash Payments and Distributions Prior to the Closing, Shareholders may cause the Company to make Cash distributions to Shareholders, whether by dividend or compensation, provided that, as of the Closing, the Company retains Closing Cash in an amount sufficient to pay all current liabilities, accruals and expenses incurred and accrued through the Closing Date. However, in no event will Cash distributions to Shareholders exceed $150,000 during the period between October 31, 2008 and Closing (which shall not include legal fees paid between October 31, 2008 and Closing). Shareholders also shall be permitted to reimburse themselves for the prepaid rent for Store #10. Any Closing Cash left in the Company's stores or bank accounts, or otherwise left in or with the Company on the Closing Date are purely for the convenience of Purchasers, will first be applied to pay any unpaid payroll, utility bills, lease payments or Taxes accrued by the Company through November 30, 2008, and the balance of the Closing Cash will be paid by Purchasers to the Shareholders in accordance with their respective Shareholders' Percentage within thirty (30) days of the Closing Date, such payments to be considered a reimbursement to Shareholders, and shall not be considered part of the Purchase Price. The Company is permitted, but not required, to pay any unpaid payroll, utility bills, lease payments or Taxes accrued by the Company through November 30, 2008, even if such payments are made earlier than required or earlier than such payments historically have been made. Shareholders shall pay Purchasers any shortfall in the Closing Cash on demand. 4.6 Disclosure Schedule Update From and after the Effective Date until the Closing Date, Shareholders shall promptly notify Purchasers, by written update to the Disclosure Schedule, of the occurrence or non-occurrence of any event which would be likely to cause any prior representation to no longer be true, and Purchasers agree not to object to such changes so long as such changes do not have a Company Material Adverse Effect or change the Shareholders' Percentages. The delivery of any notice permitted in this section shall cure any breach of any representation or warranty requiring disclosure of such matter as of the Effective Date. 4.7 Access and Due Diligence Investigation Purchasers acknowledge that Shareholders have, and have caused the Company and its Representatives to, (a) afford Purchasers and their Representatives and prospective lenders and their Representatives (collectively, "Purchasers' Advisors") full and free access to the Company's personnel, properties, books and records, and other documents and data, (b) afford Purchasers and Purchasers' Advisors full and free access to all suppliers, customers, landlords, creditors and others having any business relationship with the Company, (c) furnish Purchasers and Purchasers' Advisors with copies of all such contracts, books and records, and other existing documents and data as Purchasers have requested, and (d) furnish Purchasers and Purchasers' Advisors with such additional financial, operating, and other data and information as Purchasers have requested. Until such time, if any, as this Agreement is terminated pursuant to Article 7, Shareholders will not, and will cause the Company's directors not to, directly or indirectly solicit, initiate, or encourage any inquiries or proposals from, discuss or negotiate with, provide any non-public information to, or consider the merits of any unsolicited inquiries or proposals from, any Person (other than Purchaser) relating to any transaction involving the sale of the business or assets of the Company, or any of the capital stock of the Company, or any merger, consolidation, business combination, or similar transaction involving the Company. All parties will use reasonable efforts and cooperate with the other parties to cause the conditions to Closing to be satisfied. ARTICLE 5 5.1 Conditions to Obligations of Shareholders The obligations of Shareholders to consummate the transactions provided for in this Agreement are subject to the fulfillment or written waiver, on or prior to the Closing Date, of each of the following conditions: 5.1.1 Covenants; Representations Purchasers shall have performed all agreements and covenants required hereby to be performed by them prior to or on the Closing Date, shall have paid the Purchase Price and made all deliveries at Closing required of Purchasers by this Agreement, and all representations and warranties of Purchasers shall continue to be true and correct as of the Closing Date. All consents, approvals and waivers from Governmental Authorities and other Persons Known to Purchasers necessary to permit the transactions contemplated by this Agreement shall have been obtained. In addition, Purchasers and Shareholders and the Company shall take such actions as reasonably requested by Purchasers i | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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