UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 11, 1997
Texas Equipment Corporation
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(Exact name of small business issuer as specified in its charter)
Nevada 33-47921-A 62-1459870
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(State or other jurisdiction (Commission File ( I.R.S.Employer
of incorporation) Number) Identification No.)
1305 Hobbs Highway, Seminole TX 79360
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code: (915) 758-3643
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10 Greene St., Suite 800, New York, New York 10012
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(Former name, former address and former fiscal year, if
changed since last report)
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Items 2. Acquisition or Disposition of Assets
On July 11, 1997, the registrant acquired from C.J.'s Equipment, Inc.,
two Southeast New Mexico John Deere dealerships. The registrant will continue to
operate the dealership located in Artesia, New Mexico, and close the other
dealership, located in Roswell, New Mexico.
The registrant purchased the assets of C.J.'s Equipment, Inc., paying
an aggregate of $1,283,253.62. Of this amount, $829,423.81 is for the
acquisition of parts and new equipment and financed by Deere Credit through its
usual dealership programs. The registrant paid $165,829.81 for furniture and
other equipment. In addition the registrant paid $288,000 for land, buildings
and vehicles of which $76,000 was paid by non-interest bearing notes. The
balance, $212,000, was paid through the use of a credit facility provided by
Midland American Bank.
Item 5. Other Events
On August 11, 1997, the registrant, Texas Equipment Co., Inc., Paul
Condit, John Condit and Jeffrey Condit settled all litigation with Jonathan
Braun, Charles Platkin and Marinex Multimedia Corporation ("Marinex"). Pursuant
to the terms of the settlement, all existing litigation between these parties
will be dismissed with prejudice. Insofar as the litigation involves Michael
Killman or Charles Barkley, the litigation will be dismissed without prejudice.
In the agreement Messrs. Braun and Platkin have agreed, among other
terms of the settlement, to cease the operations of Marinex, return 250,000
shares of the registrant's Common Stock, and pay all outstanding obligations of
Marinex. Messrs. Braun and Platkin will retain cash compensation for services
for all of 1997. In addition, the settlement voids certain provisions of the
agreement whereby the registrant acquired its wholly owned subsidiary, Texas
Equipment Co., Inc. The provisions voided include the right to nominate a
director of the registrant by Messrs. Braun and Platkin, the right of Messrs.
Braun and Platkin to put Common Stock to the registrant, and the right of the
registrant to require John Condit, Paul Condit II, or Jeffrey Condit to return
Common Stock to the registrant. As part of the settlement, Mr. Braun will resign
from the registrant's board of directors.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
It is impractable to provide the required financial
statements of the business acquired. The financial
statement will be filed no later than October 11,
1997.
(b) Proforma financial information
It is impractable to provide pro forma financial
statements. The pro forma financial statements will
be filed no later than October 11, 1997.
(c) Exhibits
10(j) Purchase and Sale Agreement between
registrant and C. J.'s Equipment, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act or 1934, the
registrant has duly caused this report to be signed on its behalf, thereby duly
authorized.
Texas Equipment Corporation
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Paul Condit, President
Date: August 11, 1997
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Addendum to Purchase and Sale Agreement
THIS ADDENDUM to that certain Purchase and Sale Agreement made by and
between C.J.'s EQUIPMENT, INC. ("CJ's"), CHARLES MULCOCK, et ux. MARCETTA C.
MULCOCK ("Mulcocks"), collectively referred to herein as "Sellers" and "New
Mexico Implement Company, Inc".
WHEREAS, the parties desire to amend Paragraphs, 1, 2 and 6 of the
Purchase and Sale Agreement ("Agreement") executed contemporaneously herewith;
W I T N E S S E T H:
1. Paragraphs 1 and 2 of the Agreement are deleted as written and amended
as follows:
Furniture, Fixtures, Shop Tools and Equipment. Purchaser will pay to
Sellers the sum of $175,000 for all of the furniture, computer data, customer
list, service manuals, parts manuals, fixtures, shop tools and equipment
described in Exhibits "A-1", "A-2," "B-1" and "B-2" and entitled respectively
"Capital Assets, Artesia," "Capital Assets, Roswell," "Special Tools, Artesia"
and "Special Tools, Roswell."
A. The furniture, fixtures, shop tools and shop equipment
described under this Paragraph 1 will not include the hardware
bin with miscellaneous hardware and computer described as Item
No. 14 and Items 1, 2 and 3 on Exhibit "A-1," five cellular
telephones and associated telephone numbers and personal items
of the sellers.
B. Assets being purchased under this paragraph in addition to the
assets described above will include the telephone number for
CJ's, customer lists, parts history, service manuals and parts
manuals.
C. No physical inventory will be conducted of CJ's.
D. The purchase price under this paragraph shall be paid $
125,000.00 at closing, with the balance to be paid as follows:
A promissory note in the amount of $50,000.00, interest free,
with installments of $25,000.00 due and payable on the first
day of January, 1998, and $25,000.00 due and payable on
January 1, 1999.
2. Paragraph 6 of the Agreement will be amended as follows:
6. Rolling Stock and Vehicles. Following closing of the sale as set forth
herein, Seller and Purchaser will inspect the vehicles and items of
rolling stock of Seller. Purchaser will make an offer to purchase each
individual item to Seller and Seller will accept or reject Purchaser's
offer for each item of rolling stock and vehicles.
3. This Addendum is incorporated by reference in the Agreement as if fully
set forth therein.
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EXECUTED this 1st day of July, 1997.
C.J.'S EQUIPMENT, INC.
By: /s/ Charles Mulcock
Charles Mulcock, President
/s/ Charles Mulcock
Charles Mulcock, Individually
/s/ Marcetta Mulcock
Marcetta Mulcock, Individually
NEW MEXICO IMPLEMENT COMPANY, INC.
By: /s/ Paul Condit, President
Paul Condit, President
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PURCHASE AND SALE AGREEMENT
This Agreement made by and between C. J.'s Equipment, Inc. (hereinafter
C.J's), Charles Mulcock, et ux. Marcetta C. Mulcock (hereinafter "Mulcocks"), P.
O. Box 1303, Artesia, New Mexico, (with CJ's and Mulcocks collectively referred
to herein as "Sellers") and New Mexico Implement Company, Inc., a New Mexico
corporation (hereinafter referred to as "Purchaser").
I.
Sellers shall sell to Purchaser and Purchaser shall purchase from
Sellers, free from all liabilities and encumbrances, certain assets owned by
Sellers and used in connection with Sellers' business, C.J.'s Equipment, Inc. of
Artesia and Roswell, New Mexico. The sale includes certain items of Sellers'
stock in trade, merchandise, furniture, fixtures, equipment, and all of Sellers'
right, title and interest to the real property upon which Sellers' Artesia, New
Mexico, place of business is located. The assets subject to this Purchase and
Sale Agreement are specifically enumerated in the attached Exhibit A through D
and Sellers specifically reserve unto themselves any and all property, items,
and rights not expressly described on the attached exhibits.
II.
The purchase price to be paid to Sellers by Purchaser for the assets
covered by this agreement is to be determined based on the following terms,
conditions and amounts:
1. Furniture and Fixtures: Purchaser will pay to Sellers the sum of
$100,000.00 for the furniture and fixtures described on Exhibits "A-1"
and "A-2" entitled "Capital Assets, Artesia," and "Capital Assets,
Roswell," with the exception of Item No. 123 on Exhibit A-1, being
Sellers' computer system, consisting of hardware and software, which is
not subject to this Purchase and Sale Agreement. Immediately prior to
closing, Purchaser and Sellers shall conduct a joint inventory to
confirm the presence of the items listed on Exhibits "A-1" and "A-2" at
Sellers' places of business. Should any items be missing and not
locatable by the time of closing, the purchase price shall be adjusted
by deducting from the $100,000.00 to be paid by Purchaser to Sellers an
amount equal to 55% of the dollar amount shown for such missing item(s)
in the "Cost New" column on Exhibits "A-1" and "A-2."
2. Tools and Equipment: Purchaser will pay to Sellers the sum of
$25,000.00 for the shop tools and equipment itemized on Exhibits "B-1"
and "B-2" entitled "Special Tools, Artesia," and "Special Tools,
Roswell." Prior to closing, Purchaser and Sellers shall conduct a joint
inventory of the Special Tools located at Sellers' places of business.
Should any itemized entries be missing in their entirety, and not
locatable by the time of closing, the $25,000.00 price allocated to
Shop Tools and Equipment will be adjusted by deducting 53% of the
dollar amount shown for such missing item(s) in the "Cost New" column
on Exhibits "B-1" and "B-2."
3. Real Property and Improvements: Purchaser will pay to
Mulcocks the sum of $212,000.00 for the real property and building
constituting C.J.'s current business location in Artesia, New Mexico,
as more specifically described on Exhibit D attached hereto. Mulcocks
will deliver title to said real property free and clear of all liens
and encumbrances, and will deliver to Purchaser an owner's policy of
title insurance.
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4. Deere Parts: Following an inventory by Sellers and Purchaser,
Purchaser will purchase all of Sellers' John Deere Company parts at a
price equal to 90% of the invoice price for all John Deere parts that
are returnable to John Deere Company, and those which have had sales
since July 1, 1995, and 40% of the invoice price for all John Deere
Company parts that are not returnable to John Deere Company and which
have not had sales since July 1, 1995.
5. Other Parts: Following an inventory by Sellers and Purchaser,
Purchaser will purchase all of Sellers' parts supplied by parties other
than John Deere Company at a price equal to 80% of the invoice price
for all parts which have had sales since July 1, 1995, and 30% of the
invoice price for all parts which have not had sales since July 1,
1995.
6. Rolling Stock and Vehicles: Following an appraisal by an independent
third-party appraiser selected by Sellers and Purchaser of each of the
vehicles and/or items of rolling stock listed on Exhibit "C", Sellers
shall have the option of (a) selling any vehicle and/or item of rolling
stock to Purchaser at the appraised value, or (b) retaining such
vehicle or item of rolling stock.
Notwithstanding the foregoing, the parties have previously entered into
an agreement with respect to the purchase price for item No. 7 on
Exhibit "C", being a shop made cotton picker trailer, NM145659.
Purchaser shall pay Sellers the amount of $6,500.00 for this item, and
the same will not be subject to the appraisal procedure hereinabove.
Similarly, Item Nos. 1, 2 and 3 as shown on the attached Exhibit "C"
shall be retained by Sellers, and shall not be subject to the terms and
provisions of this agreement.
7. Allied Equipment: Purchaser shall purchase from Sellers all new
equipment supplied by parties other than John Deere Company or its
affiliates for an amount equal to 90% of the invoice price, plus 90% of
the cost of delivery, freight, and set-up, subject to inspection by
Purchaser and Sellers for completeness of the equipment.
8. Used Equipment Subject to Deere Floor Plan: Following an appraisal
by an independent third-party appraiser selected by Sellers and
Purchaser, and an inspection to determine completeness of each item of
used equipment subject to John Deere Company floor plan financing.
Purchaser shall pay to Sellers an amount equal to the difference
between one-half the appraised retail value of said used equipment and
the amount of the floor plan financing due and owing to John Deere
Company. Purchaser shall then assume all indebtedness owed to John
Deere Company, with the exception that Sellers shall be liable to John
Deere Company for the difference between the appraised retail value and
the amount owed on the John Deere Company floor plan for any item of
used equipment with an appraised retail value which is less than the
amount of the John Deere Company floor plan financing amount due and
owing. All used equipment owned by Sellers which is not subject to John
Deere Company floor plan financing shall be retained by Sellers.
Purchaser agrees to allow Sellers to place such used equipment on the
lot or in the yard at the current place of business of C.J.'s Equipment
in Artesia, New Mexico, and Purchaser will further allow Sellers the
use of such premises in order to sell the used equipment to be retained
by Sellers. Sellers agree that all such used equipment will be removed
from the current location of C.J.'s Equipment in Artesia, New Mexico,
on or before January 1, 1998.
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9. Work in Progress: Purchaser shall pay to Sellers the full retail
value of all labor for customer and warranty work which is in progress
as of the closing date of this agreement. Said payment shall be based
upon actual work orders and parts tickets, provided such parts tickets
are current and based upon "Service Pricing Guide" values provided by
John Deere Company. In calculating the amount to be paid by Purchaser
to Sellers for work in progress, parts for warranty work shall be
included at the net dealer cost plus 10%. Parts for customer ordered
work in progress (non-warranty) will be calculated at full retail
value.
10. Equipment on Order: Purchaser shall pay to Sellers an amount equal
to 4% of the invoice price for all items of new equipment ordered from
John Deere Company by Sellers after April 2, 1997, but which is not
delivered until after the closing date of this agreement.
11. Assets and Accounts Retained: Sellers shall retain all of its
accounts receivable and shall be liable for all accounts payable as of
the date of closing. Sellers will retain all interest in its volume
discount for all orders for new John Deer Equipment placed with John
Deer on or before April 2, 1997, notwithstanding the actual delivery
and/or settlement date of such equipment. With respect to orders placed
with John Deer subsequent to April 2, 1997, Sellers will retain the
full amount of the volume discount attributable to orders where deliver
and/or settlement occurs prior to the date of closing. Sellers will
retain all interest in its dealer reserve account pursuant to its
agreements with John Deer, and Sellers will reserve all of it's "dealer
compensation" previously generated by its retail financing.
III.
Upon the determination of the purchase price as provided hereinabove
(with the exception of the real property owned by Mulcocks), Purchaser shall pay
Sellers said total purchase price by certified check payable to the order of
C.J.'s at the time of closing. With respect to the real property to be acquired
by Purchaser from Mulcocks, the closing of that transaction shall occur
immediately after the closing of the acquisition by Purchaser of the other
assets as contemplated herein. The $212,000.00 purchase price for the real
property and improvements to be sold to Purchasers by Mulcocks will be subject
to adjustments as provided for herein, and Purchaser shall remit the total
purchase price by certified check payable to the order of Mulcocks.
IV.
Sellers warrant and represent that all of the items of property listed
on the Exhibits "A", "B" and "C" attached hereto are located at the premises and
Sellers will not remove any of such property from such locations, except as may
be required in ordinary course of trade or business up to the date of closing,
and further excepting personal items of Sellers not listed on said exhibits,
which Sellers may remove at any time.
V.
Purchaser waives compliance with the Bulk Sales Act. It shall publish
notice of the sale and purchase under the provisions of the Uniform Commercial
Code.
VI.
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The closing of this transaction shall take place at Sellers' current
place of business in Artesia, New Mexico, on or before July 11, 1997. At the
time of closing, CJ's shall execute and deliver to Purchaser the appropriate
bills of sale, vehicle titles, transfers or other evidence of title relative to
the items of personal property described on Exhibits "A", "B" and "C". At a
separate closing, Mulcocks shall execute and deliver to Purchaser the
appropriate deed to the real property and improvements described on Exhibit "D",
together with an owner's policy of title insurance in the amount of the purchase
price, and evidence of an environmental assessment relative to the real
property. At each closing, Purchaser shall pay to CJ's and Mulcocks, as provided
for herein, the full purchase price for the assets and property conveyed. At the
time of closing, Sellers shall deliver to Purchaser's possession of all property
and assets covered by this agreement. Notwithstanding the foregoing, Purchaser
agrees that Mr. Charles Mulcock and Ms. Peggy Scott shall retain possession of
Ms. Scott's office at the Artesia, New Mexico, location of C.J.'s Equipment for
a period not to exceed 60 days after the date of closing. Mr. Mulcock and Ms.
Scott shall have exclusive right to possession of Ms. Scott's office for said 60
day period, with unrestricted access to said office at all times.
VII.
Seller represent insofar as known to sellers:
(a) That the financial statements, tax returns, balance sheets
and other financial information made available for inspection by
Purchaser fairly presents the financial position of C.
J.'s Equipment, Inc. at the dates and for the periods provided.
(b) That there are no liabilities or obligations accrued,
absolute, contingent, or otherwise, that have arisen or relate to any
matter not detailed in such financial data insofar as is known to
Sellers.
(c) Since April 2, 1997, there has not been any material
adverse change in the financial condition, operation, sales or net
income of C.J.'s Equipment, Inc., nor has there been any loss, damage
or destruction to properties or assets, tangible and intangible, to the
company.
(d) Since April 2, 1997, there has not been any claim,
litigation, event or condition of any character that materially
adversely affects the assets covered by this agreement.
(e) Since April 2, 1997, there has not been any disposition
(except in the ordinary course of business) or agreement to sell,
transfer or dispose of property, except as contemplated in this
agreement.
(f) To the best of Sellers' knowledge, there are no unpaid
taxes (save and except that portion of current ad valorem taxes) that
are or could become a lien on the property or assets to be conveyed to
Purchaser. Notwithstanding the foregoing, it is understood that CJ's
has not filed its 1996 corporate income tax return, having obtained an
extension.
All of the foregoing representations, warranties and provisions of this
agreement shall survive the closing and shall be true as of the date of closing.
VIII.
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Sellers will obtain, if available, an affidavit or certificate from the
Taxation and Revenue Department of "No Sales Tax Due" and an affidavit or
certificate from the New Mexico Department of Labor showing "No Employment Tax
Due."
IX.
With respect to the real property, ad valorem property taxes shall be
prorated to the date of closing upon the amount of the 1996 taxes. Utility
meters shall be read on the morning of the closing prior to the closing.
Insurance premiums or insurance policies which may be transferred to the
Purchaser shall be prorated to the date of closing.
X.
All prepaid expenses shall be prorated to the date of closing.
Purchaser shall assume all expenses accruing from the date of the closing, and
Purchaser will reimburse Sellers for the cost of 1997 John Deere
technical/mechanical training previously paid by Sellers.
XI.
Sellers make the following representations, which will survive the
closing.
(a) Sellers are the owners of and have good and marketable
title to the business and property referred to herein, free of all
debts, liens, security interest and encumbrances, except the debts to
creditors previously disclosed to Purchaser and debts of public record.
(b) Sellers have entered into no contract relating to the
business and property referred to except as previously disclosed.
(c) No judgments, liens, actions or proceedings are pending
or threatened against said Sellers.
(d) Sellers have to their knowledge complied with all laws,
rules and regulations relating to the property.
(e) Sellers have paid in full, or will arrange for the payment
in full at the time required by law, all state and federal employee
income tax withholding, federal social security tax, withholding,
employment taxes, unemployment insurance, sales and use taxes, business
or license fees, and all other business related or governmental
charges.
XII.
Sellers will continue to conduct business up to date of the closing
provided herein in the normal and regular manner and will not enter into any
contract except as may be required in the regular course of business.
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XIII.
Sellers will assume all risk of loss due to fire or other casualty up
to the time of closing. If any loss occurs before the closing date, either party
may terminate this agreement by giving written notice hereof to the other party.
Upon such termination, neither party shall have any liability hereunder.
XIV.
If either party defaults in their performance of this agreement, this
agreement may be enforced by suit in specific performance. The defaulting party
shall pay the attorney's fees incurred by the other party.
Purchaser, by defaulting waives its right to specific performance hereof.
XV.
Seller and Purchaser each represent to the other that no broker was
involved in this transaction.
XVI.
This agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns. This agreement shall be
governed by New Mexico law.
XVII.
No delay or failure by either party to exercise any right under this
agreement and no partial or single exercise of that right shall constitute a
waiver of that or any other right, unless otherwise expressly provided herein.
XVIII.
All notices hereunder shall be in writing and personally delivered or
mailed by certified mail, postage prepaid, return receipt requested, addressed
to the parties at the address set out under the name of each party.
XIX.
Sellers agree to transfer to its employee experience rating, if
transferable, to Purchaser, without liability on its part.
EXECUTED this _______day of ______________, 1997.
SELLERS: PURCHASER:
C.J.'s Equipment, New Mexico Implement Company, Inc.
By:______________________ By ___________________________
Charles Mulcock Paul Condit
President President
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Charles Mulcock
Individually
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Marcetta C. Mulcock
Individually
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