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EXHIBIT 10.5
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is entered into this 25th day of January, 1999, by and
between ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, Inc., a Texas corporation d/b/a/ ▇▇▇▇ ▇▇▇▇▇▇
Toyota ("Seller"), and Delaware Acquisitions - T, L.L.C., a Delaware limited
liability company ("Purchaser").
EXPLANATORY STATEMENT
WHEREAS, Seller is presently a party to a Sales and Service Agreement with
Gulf States Toyota, Inc. ("Toyota") ("Manufacturer"); which provide for the sale
and service of Toyota vehicles ("Dealership") at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Dealership Location"); and
WHEREAS, Purchaser wishes to acquire substantially all of the assets of
Seller for the purpose of succeeding Seller as the authorized Toyota dealer at
the Dealership Location.
WHEREAS, the Seller is one of six (6) affiliated companies (the
"Companies") that own dealerships that sell new vehicles manufactured by various
manufacturers;
WHEREAS, the Purchaser and affiliates has made an offer to buy
substantially all of the assets of the Companies under the terms and conditions
set forth herein;
WHEREAS, the Companies are dependent on each other for management skills,
training, "best practices," and economies of scale, and the Seller could not
operate its business effectively without the benefits it receives from the other
Companies;
WHEREAS, while the parties have allocated the value of the goodwill among
the Companies based upon an objective formula, the effect of each Company on the
combined goodwill of all of the Companies as a group is significantly greater
than the goodwill allocated to each Company separately;
WHEREAS, the Seller would not sell the Assets to Purchaser unless Purchaser
continues the existing relationships among the Companies and Purchaser and
affiliates buy substantially all of the assets of the Companies;
WHEREAS, the Purchaser's agreement to purchase the assets of Seller is
contingent upon Purchaser's and affiliates ability to acquire substantially all
of the assets of the Companies;
WHEREAS, it is the expectation of both Seller and Purchaser and a material
term of this Agreement that substantially all of the assets of all of the
Companies will be controlled by one entity and their names, local management,
employees and goodwill be preserved;
NOW, THEREFORE, in consideration of the above premises and the mutual
promises set forth in this Agreement, the receipt and sufficiency of which are
hereby acknowledged, the Seller and Purchaser hereby agree as follows and each
of the Companies agrees as set forth in separate agreements (the "Related
Agreements") of even date herewith, with each purchaser under each
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Related Agreement, all of which are conditioned on the purchase by Purchaser or
affiliates of substantially all of the assets of the Companies, and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. ▇▇▇▇▇▇▇ Money. Purchaser has delivered to Seller the ▇▇▇▇▇▇▇ Money
deposit of Fifty Thousand and No/100 Dollars ($50,000.00). If the transactions
contemplated by this Agreement are consummated, the ▇▇▇▇▇▇▇ Money shall be
delivered to Seller at Closing (as hereinafter defined) and applied against the
Purchase Price. If sale fails to close for any reason other than Purchaser's
default, the ▇▇▇▇▇▇▇ Money shall be refunded to Purchaser. If Purchaser elects
not to close for any reason other than: (i) Seller's default; or (ii) failure to
satisfy the approvals required in Section 4.1, below; the ▇▇▇▇▇▇▇ Money shall be
paid to Seller as full and complete liquidated damages in full relief and
discharge of any and all obligations of Purchaser hereunder. Upon execution of
this Agreement, Purchaser has delivered to Seller, and Seller acknowledges
receipt of, One Hundred and no/100 Dollars ($100.00) (the "Independent
Consideration"), as consideration for Purchaser's right to purchase the Assets
and for Seller's execution, delivery and performance of this Agreement. The
Independent Consideration is in addition to and independent of any other
consideration or payment provided for in this Agreement, is non-refundable and
shall be retained by Seller notwithstanding any other provision of this
Agreement.
2. Purchase and Sale. Subject to the terms and conditions of this
Agreement, Seller agrees to sell and deliver to Purchaser, and Purchaser agrees
to purchase and take from Seller certain assets, property rights, tangible and
intangible, of the Dealership more specifically described below ("Assets"), all
of which are presently being used in the operation of the Dealership, for the
purpose of succeeding the Seller as the authorized Toyota dealer at the
Dealership Location.
2.1. Purchase Price. The purchase price for the Assets to be sold and
transferred by Seller to Purchaser shall be the total of the items listed in
Sections 2.1.1. through 2.1.10. (collectively, the "Purchase Price"):
2.1.1. Purchaser agrees to purchase all new, unused and undamaged
current model year motor vehicles with less than Six Thousand
(6,000) miles in Seller's inventory at the Closing Date (as
hereinafter defined). Vehicles with more than Six Thousand
(6,000) miles shall be considered used and sold pursuant to the
terms of Section 2.1.2, below. Purchaser shall pay factory
invoice, less: holdback, floor plan assistance or interest
credits, model year change-over allowances, full fuel tank
reimbursement, or other manufacturer allowances or incentives
paid or payable to Seller. Vehicles in inventory which
previously have been delivered to a customer together with the
Manufacturer's Certificate of Origin ("MCO") (e.g. "unwinds" or
"back-outs") shall be considered used cars and sold pursuant to
the terms of section 2.1.2, below. Seller will furnish proper
documentation (including an "R.D.R. card", "sale card," or
comparable documentation) to Purchaser so that Purchaser may
subsequently sell, transfer and register such vehicles as new
vehicles. Seller shall disclose all damage as well as any
repairs made to any vehicle. Any vehicle previously damaged,
even if repaired, if the cost of repairing such damage exceeds
or has exceeded Five Hundred Dollars ($500), shall be
considered used cars and sold pursuant to the terms of section
2.1.2, below. Installed accessories shall be
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purchased at actual dealer cost, except Purchaser shall not pay
for rust-proofing, undercoating, scotch-guarding,
non-Manufacturer alarm systems, interrupt systems, theft
prevention devices and similar dealer additions. A list of new
vehicles together with the information to calculate the
Purchase Price, will be provided to Purchaser at least Five (5)
days prior to the Closing Date.
2.1.2. Purchaser will purchase all of the used vehicle inventory of
Seller, which are less than Seventy Five (75) days old, at the
book value of the vehicles, as reflected on Seller's books,
less the "Pack" added to the book value of the vehicles by
Seller. Purchaser will purchase all of the used vehicle
inventory of Seller, which is more than Seventy Five (75) days
old, at the current wholesale market value of the vehicles as
determined by the Purchaser, provided that Seller may retain
any of said used vehicles if Seller is not satisfied with the
valuation established. Seller shall deliver titles to all used
vehicles within One Hundred Twenty (120) days after the Closing
Date. Seller guarantees the delivery of the used car titles to
Purchaser. If Seller is unable to deliver the title to a
vehicle within One Hundred Twenty (120) days after the Closing
Date, Seller will repurchase the vehicle.
2.1.3. Purchaser agrees to purchase Seller's actual verifiable
inventory of new, unused, undamaged and non-obsolete
Manufacturer's parts and accessories. Purchase Price will be
those dealer prices in accordance with the Manufacturer's Price
Schedules in effect on the Closing Date. Seller shall assign to
Purchaser the termination rights provided by each
Manufacturer's Sales and Service Agreement, to the extent same
exist or are assignable. In the alternative, Seller agrees to
allow Purchaser to exercise any and all Seller's termination
rights in Seller's name.
2.1.4. Purchaser agrees to purchase Seller's actual verifiable
inventory of after-market parts and accessories. The Purchase
Price will be the dealer's actual cost.
2.1.5. Purchaser agrees to purchase Seller's work in process for an
amount equal to Seller's actual cost for sublet repairs and
Seller's internal rate for labor and parts, as reflected on
outstanding repair orders as of the Closing Date.
2.1.6. Purchaser shall purchase all oil and grease in Seller's
possession at Seller's cost.
2.1.7. Purchaser shall purchase from Seller all of the fixed assets
including all machinery and shop equipment, special tools,
parts and accessories equipment, furniture and fixtures, and
company vehicles. Purchaser shall purchase the fixed assets of
Seller listed in SCHEDULE 2.1 ("Fixed Asset List") attached
hereto, for Thirty Eight Thousand Four Hundred Ninety and
no/100 Dollars ($38,490.00). The Fixed Asset List shall be
deemed to include all fixed assets located at the Dealership
Location, even if omitted from SCHEDULE 2.1, unless said asset
is specifically listed on SCHEDULE 2.2 ("Retained Assets")
attached hereto, in which case the asset shall be retained by
Seller. Seller agrees to provide Purchaser with SCHEDULES 2.1
and SCHEDULE 2.2 for attachment hereto, on or before March 15,
1999.
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2.1.8. Seller will transfer to Purchaser all parts catalogues, service
manuals, films, videos, instructional materials, vehicle
literature, supplies and other assets used in the sales or
service of Toyota vehicles and used vehicles ("Other Assets")
(specifically excluding Retained Assets") whether or not such
assets are considered fixed assets or are reported as such on
Seller's books and records or listed on the attached SCHEDULE
2.1. Purchaser shall purchase the Other Assets of Seller for
Five Thousand and no/100 Dollars ($5,000.00).
2.1.9. Purchaser will assume Seller's obligations under the lease
agreements and contracts listed on the attached SCHEDULE 2.4
("Leased Assets"). Purchaser will also assume the obligations
for the computer, telephone, copier, and manufacturer required
leased equipment. In addition Purchaser will assume other
leases not otherwise described above with a total monthly
obligation not to exceed One Thousand and no/100 Dollars
($1,000.00) per month, in the aggregate. A copy of the lease
agreements and contract listed on SCHEDULE 2.4, together with
any amendments thereto, shall be delivered to Purchaser as soon
as practical after execution of this Agreement. Seller agrees
to provide Purchaser with SCHEDULE 2.4 for attachment hereto,
on or before March 15, 1999.
2.1.10. Purchaser shall receive all contract rights, warranties, and
intangible assets, including the right to use Seller's
telephone numbers. Purchaser shall receive all sales and
service files and parts records, customer lists, computer files
containing sales and service files, parts records and customer
lists and all other information and documents which are
necessary and/or which might be useful in the furtherance of
the dealership business (Seller shall retain its employee
personnel files, general ledgers, sub-ledgers, canceled checks,
journals, vouchers, tax returns and other accounting ledgers.).
Purchaser agrees to pay Seller for the goodwill, the sum of
Four Million Two Hundred Thirty Five Thousand Nine Hundred
Fifty Five and No/100 Dollars ($4,235,955.00).
2.2. Liens and Encumbrances. All Assets will be transferred free of
any liens or encumbrances, except for the obligations which Purchaser agrees to
assume, as listed on the attached Schedule 2.3 ("Assumed Liabilities").
3. Supplemental Agreements.
3.1. Maintenance of Business Prior to Closing. Seller agrees that
prior to Closing it shall operate its business in a manner consistent with prior
business practice. In connection therewith, the parties agree that Seller may
dealer trade vehicles for similar models, but Seller shall not liquidate or
otherwise dispose of any of its new vehicles other than in the ordinary course
of business to retail buyers. Seller agrees to maintain its advertising
expenditures and activities commensurate with prior business practices. Seller
shall not advertise a "Going Out of Business" sale. Seller agrees to pay (or
contest, if disputed) Seller's trade payables, including Seller's telephone and
yellow pages bills, through the Closing Date. All revenue and expenses prior to
Closing shall be the benefit and burden of Seller.
3.2. Seller's Name. Seller shall assign all rights to the name "▇▇▇▇
▇▇▇▇▇▇ Toyota" to Purchaser. Purchaser may not assign this Agreement or any
right hereunder to any unrelated
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third party. Seller values its name and reputation in the community, has
investigated Group 1 and its management and believes that Group 1 and Purchaser
will preserve and carry forward the name and reputation that Seller, and its
primary owner, ▇▇▇▇ ▇▇▇▇▇▇, whose name is used in the business, has established
in its community for many years. Purchaser and Group 1 agree that it will not
assign this Agreement or any rights hereunder to any unrelated third party, and
in the event that substantially all of the assets of the Dealership or the
equity ownership of the Dealership are acquired by any party other than Group 1
or an entity controlled by Group 1, the name "▇▇▇▇▇▇" shall immediately cease to
be used in the promotion and name of the dealership so acquired by the third
party. In the event there is an adverse change in the operations to the extent
that the integrity of the name ▇▇▇▇ ▇▇▇▇▇▇ is impacted, Seller shall have the
opportunity to request the Board of Directors of Group 1 ("Board"), that the
name "▇▇▇▇▇▇" be removed from the dealership within a reasonable period of time.
After due consideration of the facts and circumstances of this request, the
decision of the Board will be final.
3.3. Prepaids. Seller shall retain all prepaid accounts, provided however,
that Seller and Purchaser may review the prepaid accounts and transfer any such
prepaid accounts as they determine mutually beneficial, at the amount agreed to
by them.
3.4. Liabilities. Purchaser is not assuming the floor plan liabilities of
Seller. As of the Closing Date, Seller and Purchaser shall obtain the complete
release and discharge of the floor plan liability secured by liens on vehicles
or other assets conveyed under this Agreement. Purchaser is not assuming any
other liabilities of Seller, except as otherwise provided herein.
3.5. Retail Orders. On the Closing Date, Seller shall turn over or assign
by proper and appropriate instruments to Purchaser all unfulfilled retail orders
and customer deposits attributable thereto, held by Seller as of the Closing
Date. Purchaser shall assume such retail orders and responsibility to the
customer for making future delivery of any vehicle covered by the orders.
3.6. Allocation of Purchase Price. Purchaser and Seller agree that the
purchase price is allocated for the purposes of Section 1060 of the Internal
Revenue Code 1986, as amended, in accordance with the value set forth for each
class of asset and for each corporation, as listed on the attached EXHIBIT "A"
("Allocation of Purchase Price"). The parties hereto agree that each of them
will timely file with the Internal Revenue Service Form 8594 and that all tax
returns or other tax information any party hereto files or cause to be filed
with any governmental agency including the Internal Revenue Service, will be
prepared in a manner that is consistent with this section.
3.7. Property Taxes. All real and personal property taxes on property owned
or leased by Seller, which are not covered by the VIT (as hereinafter defined),
for the current year shall be prorated to the Closing Date. If the amount of
property taxes for the current tax year has not been fixed by the Closing Date,
the proration of such taxes shall be based upon the preceding tax year's
assessment. Purchaser shall receive the prorated taxes and shall pay the full
tax amount when due. Purchaser shall collect and remit the "vehicle inventory
tax" under Section 23.122 of the Texas Property Tax Code ("VIT") on each vehicle
sold by Purchaser after the Closing Date through December 31, 1999. All such
remittances shall be applied to the 1999 VIT liability of
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the Dealership. If the aggregate of all remittances is not sufficient to fully
discharge Dealership's liability, Seller shall be liable for the balance of tax
owing.
3.8. Information Releases. Purchaser and the Seller will jointly prepare
and issue all releases of information relating to the sale. Subject to the prior
sentence, if inquiries are made by any person with respect to any transaction
contemplated by this Agreement, Seller and Purchaser will consult each other
prior to responding to such inquiries.
3.9. Business Records. Seller shall not copy or remove any of the records
described in Section 2.10 from the dealership premises prior to the Closing Date
and shall return any of such records previously removed. Seller agrees that such
information is extremely important to Purchaser and promises to retain such
information in strict confidence and will not disclose any such information to
Purchaser's competitors or other parties. Purchaser agrees that Purchaser will
retain such information for a period not less than seven (7) years after the
Closing Date and that Seller and Seller's representatives may have access to
review and copy such information during Purchaser's regular business hours if
such information is necessary for Seller's business purposes. Purchaser and its
representatives may have access to review and copy any records retained by
Seller during Seller's regular business hours if such information is necessary
in Purchaser's operation of the dealership business after Closing. Seller agrees
to remove all retained records from the Dealership Location with thirty (30)
days after the Closing Date. If Purchaser wishes to destroy any of the business
records transferred by Seller, within Seven (7) years of the Closing Date,
Purchaser shall notify Seller prior to such destruction, in order that Seller
may retain such records.
3.10. Access of Purchaser. During the period from the date of this
Agreement to the Closing Date, Purchaser shall have full and free access to the
offices, property, records, files, books of account and tax returns of Seller
insofar as they relate to the Dealership business (save and except employee
files), through Seller's employees, independent public accountants and outside
consultants; provided however, that such access shall be conducted at a mutually
convenient time to be determined by Purchaser and Seller, during normal business
hours and in a manner that does not unreasonably interfere with Seller's normal
operations and employee relations.
3.11. Confidentiality. Group 1, Purchaser, Seller and Stockholders agree,
and they agree to cause their officers, directors, employees, representatives
and consultants, to hold in confidence and not to disclose to others for any
reason whatsoever, any and all non-public information received by it or its
representatives in connection with this transaction, including but not limited
to all terms, conditions and agreements related to this transaction, except (i)
as required by law; and (ii) for disclosure to officers, directors, employees,
attorneys, accountants and other representatives of Seller as necessary in
connection with the transactions contemplated hereby or as necessary to the
operation of Seller's business. In the event the transactions contemplated by
this Agreement are not consummated, Seller will return all non-public documents
and other material obtained from Purchaser or its representatives in connection
with the transactions contemplated hereby or certify to Purchaser that all such
information has been destroyed. Neither party will make a public statement
without the other parties consent.
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3.12. Post Closing Accounting. Purchaser and Seller agree that if
subsequent to Closing either party receives any funds (including credits on
accounts) to which the other party is entitled, such party will immediately pay
such amounts to the other party. Purchaser will assist Seller with the
collection of Seller's receivables. Purchaser and Seller will cooperate to
pro-rate all ▇▇▇▇▇▇▇▇ received by either party, which include charges applicable
to both Purchaser and Seller. Purchaser further agrees: (i) that if subsequent
to Closing Purchaser receives any amounts of money to which any Seller is
entitled, such as, but not limited to, manufacturer payments relative to
warranty work or holdback, Purchaser will immediately make payment to such
Seller of any such amount; and (ii) to assist each Seller in collecting any
amounts due and owing to such Seller from the applicable manufacturer, such as
for warranty work or holdbacks.
3.13. Termination. Seller, at no further cost or expense, may terminate
this Agreement if at any time after the date first written above and prior to
the Closing Date, the closing price of the Group 1 Automotive, Inc. ("Group 1")
Common Stock on the New York Stock Exchange is less than Five and no/100 Dollars
($5.00) per share (as adjusted for splits).
3.14. Finance Reserves. Purchaser shall receive all finance reserves, if
any, and shall assume responsibility for all chargebacks of unearned finance
income, vehicle service contracts and credit life insurance, other than
chargebacks from default or early payoff prior to the customer making three (3)
regular installment payments under the agreement.
3.15. Stock Options. An integral consideration for this Agreement and the
Related Agreements is the post-closing acceptance of non-dealer ownership of the
employer by select employees of Seller. To aid in this employee acceptance of
the change in ownership of employer, Group 1 agrees to make available to
selected employees options to acquire Group 1 common stock on the same basis as
employees of its other dealerships. The numbers of such options will be
consistent with the numbers of options awarded to other similarly sized Group 1
owned dealerships. Nothing herein shall be construed to mean that any employee
is entitled to, or will receive, any stock options.
3.16. Expenses. Regardless of whether the transaction contemplated herein
is consummated, all costs and expenses in connection with this Agreement and the
transactions contemplated hereby incurred by Purchaser shall be paid by
Purchaser and all such costs and expenses incurred by Sellers and Stockholders
shall be paid by the Sellers; provided, however, that Group 1 shall pay for all
costs associated with (i) preparation of the HSR Act filing and the HSR filing
fees; and (ii) application and approval process with the Manufacturer.
3.17. Right of First Refusal. If within Ten (10) years of the Closing Date,
Purchaser agrees to transfer the Sales and Service Agreement for Toyota
("Franchise") to an independent third party (an entity not owned or controlled
by Group 1), in a transaction that is not part of the Manufacturer's channelling
or alignment programs (e.g. "Project 2000"), any such agreement shall be subject
to the terms and provisions of this Section 3.17 and Seller shall have the right
of first refusal upon such assets transferred. If Purchaser enters into an
agreement to transfer the Franchise ("Transfer Agreement") in a transaction
which is subject to this right of first refusal, then Purchaser shall deliver a
copy of the Transfer Agreement together with the financial and operating
information provided to the prospective transferee, to Seller ("Notice"). Seller
will
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have thirty (30) days from the Notice date to exercise Seller's right to
assume the prospective transferee's position under the Transfer Agreement. If
Seller exercises the right of first refusal, Seller must comply with all terms,
conditions and covenants of the Transfer Agreement. If Seller does not respond
to the Notice within thirty (30) days it will be deemed refused by Seller. If
Seller does not exercise the right of first refusal, then Purchaser may complete
the transaction contemplated in the Transfer Agreement, upon the terms and
conditions contained therein. If Purchaser does not close the transaction
contemplated in the Transfer Agreement within One Hundred Eighty (180) days,
then Seller's right of first refusal on such assets shall be reinstated.
3.18. Benefit Plans. Group 1 shall cause the employee benefit plans and
programs maintained after the Closing Date by Group 1 and Purchaser to recognize
each current employee's years of service and level of seniority prior to the
Closing Date with Seller and their affiliates for purposes of terms of
employment and eligibility, vesting, and benefit determination under such plans
and programs (other than benefit accruals under any defined benefit pension
plan).
4. Conditions to Sale.
4.1. Conditions Precedent to Obligations of Purchaser. The
obligation of Purchaser with respect to actions to be taken by Purchaser at or
before the Closing are subject to the satisfaction, or the written waiver by the
Purchaser of each of the following conditions:
4.1.1. Approval of Purchaser, at Purchaser's sole cost and expense,
for a new Sales and Service Agreement for Toyota.
4.1.2. Approval for and receipt by Purchaser of all appropriate
licenses and permits for operation of the Dealership at the
Dealership Location, including but not limited to approval by
the Motor Vehicle Division of the Texas Department of
Transportation as the franchise dealer for Toyota at the
Dealership Location.
4.1.3. All representations and warranties of Seller as set forth
herein are true and accurate as of the Closing Date and Seller
has performed or is prepared to perform at Closing, all of its
obligations, covenants and agreements hereunder to be performed
prior to or at Closing.
4.1.4. Delivery of the documents, certificates and resolutions
described in Section 5.2, in form and substance reasonably
satisfactory to Purchaser.
4.1.5. Receipt of a Phase I environmental survey, and any Phase II
procedures recommended by the survey firm, at Seller's expense,
prepared by a firm approved in writing by Purchaser, showing no
environmental problems or recommended actions, (as determined
by Purchaser in its discretion).
4.1.6. Execution and delivery of a lease agreement in the form
attached hereto as Exhibit "B" for the Dealership Location
("Lease Agreement").
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4.1.7. Execution and delivery of an employment agreement by and
between Group 1 and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and Group 1 and ▇▇▇▇
▇▇▇▇▇▇ in the form attached hereto as Exhibit "C1" and Exhibit
"C2" (respectively "Employment Agreements").
4.1.8. Closing of the transactions contemplated in the Related
Agreements pursuant to the terms of the Related Agreements.
4.1.9. Receipt by Purchaser, at Seller's expense, of a Lessee's Title
Insurance Commitment, issued by the Title Company, approved by
Purchaser, subject only to the Permitted Exceptions, as
described on SCHEDULE 4.1 ("Permitted Title Exceptions").
4.1.10. Receipt by Purchaser, at Seller's expense, of a current ALTA
survey to ACSM urban class standards, of the Property showing
the location of all of the Improvements, prepared by a licensed
surveyor, approved by Purchaser.
4.1.11. The applicable waiting period under the HSR Act with respect to
the transactions contemplated by this Agreement shall have
expired or been terminated.
4.1.12. Purchaser shall have received the opinion of Seller's legal
counsel, dated the Closing Date and satisfactory in form and
substance to Purchaser and its counsel, as to the following
items, with customary qualifications and in reliance upon
documents customarily relied upon in giving such opinions. Such
opinion may be limited to matters governed by the federal laws
of the United States and the laws of the state of Texas.
(a) Due incorporation and existence of Seller and the
corporate power of Seller to execute, deliver and perform
the Asset Purchase Agreement.
(b) Due authorization, execution and delivery of the Asset
Purchase Agreement, ▇▇▇▇ of Sale and Lease (as to the
Stockholders of Seller and entities controlled by them
which are party to the Lease).
(c) Binding effect of the Asset Purchase Agreement and Bills
of Sale.
(d) Absence of any violation of the charter or by-laws of
Seller by reason of the execution, delivery or
performance of Asset Purchase Agreement.
4.1.13. Closing of the transactions contemplated in the Related
Agreements.
4.2. Conditions Precedent to Obligations of Seller. The obligation
of Seller with respect to actions to be taken by Seller at or before the Closing
are subject to the satisfaction, or the written waiver by the Seller of each of
the following conditions:
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4.2.1. All representations and warranties of Purchaser as set forth
herein are true and accurate as of the Closing Date and
Purchaser has performed all of its obligations, covenants and
agreements hereunder to be performed prior to or at Closing.
4.2.2. Execution and delivery of the Lease Agreement and related lease
guaranty in the form attached hereto as Exhibit "D" ("Lease
Guaranty").
4.2.3. Execution and delivery of the Employment Agreements.
4.2.4. Closing of the transactions contemplated in the Related
Agreements pursuant to the terms of the Related Agreements.
4.2.5. Seller shall have received the opinion of Purchaser's legal
counsel, as of the Closing Date and satisfactory in form and
substance to Sellers, Stockholders and their counsel, as to the
following items, with customary qualifications and in reliance
upon documents customarily relied upon in giving such opinions.
Such opinion may be limited to matters governed by the federal
laws of the United States and the laws of the states of
Delaware and Texas.
(a) Due incorporation and existence of Purchaser and the
power of to execute, deliver and perform the Asset
Purchase Agreement.
(b) Due authorization, execution and delivery of the Asset
Purchase Agreement, Lease, and related Lease Guaranty
agreement.
(c) Binding effect of the Asset Purchase Agreement, Lease,
and Lease Guarantee agreements, with certain
qualifications.
(d) Absence of any violation of the articles of organization,
operating agreement of Purchaser, or the charter or
by-laws of Purchaser by reason of the execution, delivery
or performance of Asset Purchase Agreement.
(e) Due incorporation and existence of Group 1, and the
shares of Group 1 Common Stock have been duly authorized,
and when issued in accordance with the terms of the Asset
Purchase Agreement, will be fully paid and
non-assessable.
4.2.6. Closing of the transactions contemplated in the Related
Agreements.
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5. Closing.
5.1. Time of Closing. Unless otherwise agreed to in writing by the
parties, Closing shall take place in Lubbock, Texas, on the first Monday
following the receipt of the approvals required in Section 4.1.1, 4.1.2, and
4.1.11., above, and receipt of the approvals required in Section 4.1.1, 4.1.2
and 4.1.11 of each of the Related Agreements ("Closing Date"). Provided however,
that if the Closing has not taken place by September 30, 1999, then Seller or
Purchaser at no further cost or expense as a result of the act of terminating,
may terminate this Agreement at any time by written notice to the other party.
5.2. Seller's Actions at Closing. At Closing, Seller shall deliver
to Purchaser at Seller's sole cost and expense, such bills of sales,
endorsements, assignments, and other good and sufficient instruments of
conveyance and transfer as provided for herein, and any other instruments in
form and substance acceptable to Purchaser as shall be necessary to vest
effective in Purchaser all right, title, and interest in and to the Assets, free
and clear of all liens, charges, encumbrances, pledges or claims of any nature
(except as provided herein), including without limitation, the following:
5.2.1. General bills of sale fully and properly executed by Seller
vesting in Purchaser good and marketable title to the Assets,
in the form attached hereto as Exhibit "E" ("▇▇▇▇ of Sale").
5.2.2. Fully and properly executed transfers of MCOs for all vehicles
transferred to Purchaser.
5.2.3. Fully and properly executed transfers of title for all company
vehicles and used vehicles, subject to the provisions of
Section 2.1.2.
5.2.4. A certificate executed by Seller's president in his corporate
and not in his individual capacity, certifying that, as of the
Closing Date, all of the representations and warranties of
Seller are true and correct in all respects and that each and
every covenant and agreement to be performed by Seller prior to
or as of the Closing Date pursuant to this agreement has been
performed in all respects.
5.2.5. A certificate of corporate existence in good standing for
Seller from the State of Texas dated within thirty (30) days of
the Closing Date.
5.2.6. A copy of resolutions duly adopted by Seller authorizing and
approving Seller's performance of the transaction contemplated
herein and the execution and delivery of all documents in
connection with such transactions, certified by the secretary
of Seller, as true in full force as of the Closing Date.
5.2.7. Possession of the Assets.
5.2.8. Such other instruments and documents as Purchaser may
reasonably consider necessary to effect the transactions
contemplated herein.
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5.2.9. Executed Lease Agreement.
5.2.10. Executed Employment Agreements.
5.2.11. Opinion of Seller's counsel referred to in Section 4.1.13.
5.2.12. Such other instruments and documents as Purchaser may
reasonably consider necessary to effect the transactions
contemplated herein.
5.3. Actions of Purchaser at Closing. At the Closing, Purchaser
shall deliver the following:
5.3.1. Payment for the Purchase Price of the Assets less the ▇▇▇▇▇▇▇
Money, and release any claim to the ▇▇▇▇▇▇▇ Money ("Closing
Payment"), as follows:
(a) The number of shares of Group 1 Common Stock equal to (x) One
Million Two Hundred Fifty Thousand and no/100 Dollars
($1,250,000.00), divided by (y) the average closing price of
the Group 1 Common Stock on the New York Stock Exchange for the
Five (5) consecutive trading days ended on the third trading
day prior to the Closing Date. The stock certificates
representing the Group 1 Common Stock shall be delivered to the
Stockholders within Five (5) business days after the Closing
Date. No fractional shares of Group 1 Common Stock will be
issued, but in lieu thereof, Seller shall receive cash for any
fractional shares.
(b) Immediately available funds to Seller in the amount of Purchase
Price less: (i) the ▇▇▇▇▇▇▇ Money, and (ii) One Million Two
Hundred Fifty Thousand and no/100 Dollars ($1,250,000.00),
shall be delivered (or wired) to Seller on the Closing Date.
5.3.2. A copy of resolutions duly adopted by Purchaser authorizing and
approving Purchaser's performance of the transactions
contemplated herein and the execution and delivery of all
documents in connection with such transactions, certified by
the secretary of Purchaser, as true in full force as of the
Closing Date.
5.3.3. A certificate executed by Purchaser's Manager certifying that,
as of the Closing Date, all of the representations and
warranties of Purchaser are true and correct in all respects
and that each and every covenant and agreement to be performed
by Purchaser prior to or as of the Closing Date pursuant to
this Agreement has been performed in all respects.
5.3.4. A certificate of existence for Purchaser from the State of
Delaware.
5.3.5. Executed Lease Agreement and Lease Guaranty.
5.3.6. Executed Employment Agreements.
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5.3.7. Opinion of Purchaser's counsel referred to in Section 4.2.5.
5.3.8. Such other instruments and documents as Purchaser may
reasonably consider necessary to effect the transactions
contemplated herein.
6. Representations and Warranties. All representations and warranties made
herein by Purchaser and Seller shall be continuing and shall be true and correct
on and as of the Closing Date with the same force and effect as if made at that
time, and shall not be affected by any investigation, verification, or approval
by any party hereto or by anyone acting on behalf of any such party.
6.1. Purchaser. Purchaser represents and warrants to Seller as
follows:
6.1.1. Purchaser is a Delaware limited liability company duly
organized, validly existing and in good standing under the laws
of the State of Delaware. Purchaser has all requisite authority
and power to enter into this Agreement and performs its
obligations herein. The execution and delivery of this
Agreement and the consummation by Purchaser of the transactions
contemplated herein have been authorized by all requisite
company actions on the part of Purchaser.
6.1.2. This Agreement constitutes the valid and binding obligations of
Purchaser enforceable in accordance with its terms. All
documents or agreements being executed and delivered at closing
by Purchasers will constitute valid and binding obligations of
Purchaser enforceable in accordance with its terms.
6.1.3. Neither the execution or delivery of this Agreement by
Purchaser nor the consummation by Purchaser of the transactions
contemplated herein will (i) conflict with or result in a
breach of, the terms, conditions or provisions of, or
constitute a default under the Articles of Organization,
Operating Agreement, resolutions or consents of Purchaser, or
any indenture, mortgage, lease, agreement or other instrument
to which Purchaser is a party; or (ii) violate any law or
regulation to which Purchaser is or will be subject.
6.1.4. Purchaser is not aware of any facts or matters of which Seller
is not aware which would materially and adversely affect
Purchaser's future business operations or the current or future
value of Purchaser's stock or securities.
6.1.5. Purchaser, to the best of Purchaser's knowledge, warrants that
there are no actions, suits, claims, investigations or other
proceedings pending and there is no action, suit, claim,
investigation, proceeding, grievance, or controversy threatened
against the Purchaser that could affect the ability to
consummate the transaction contemplated in this Agreement.
Furthermore, no governmental agency has at any time challenged
or questioned, or commenced or given notice of intention to
commence any investigation relating to the transactions which
are the subject of this Agreement.
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6.1.6. Purchaser will use is best efforts to obtain the approvals
described in Section 4.1.1, 4.1.2 and 4.1.11.
6.1.7. Purchaser acknowledges and represents and warrants to Seller,
that Purchaser, either directly or through affiliates, has
purchased automobile dealerships, and continues to own and
operate automobile dealerships. As a result, Purchaser is
knowledgeable and familiar with all aspects of purchasing,
owning and operating automobile dealership, and the potential
economic consequences (favorable and unfavorable) that can
occur in the purchase and operation of an automobile
dealership. Purchaser shall conduct its own due diligence and
shall rely solely on its own inspection, examination and
investigation in making the decision to purchase the Assets and
enter in the transaction described in or contemplated by this
Agreement, and Purchaser acknowledges that no independent
investigation or verification has been or will be made by any
of the Seller with respect to the accuracy or completeness of
the information supplied by any Seller concerning any of the
Assets and of Seller's business. Except for the warranty of
title contained in the ▇▇▇▇ of Sale and the representations and
warranties contained in Section 6.2, Seller expressly disclaims
any and all representations, warranties, or guarantees, of any
kind, oral or written, express or implied, including, without
limitation the value, condition, merchantability,
marketability, suitability or fitness for a particular use or
purpose of any of the Assets. Seller is not, and will not make
any representation or warranty express or implied, as to future
profitability of the Dealership or whether Purchaser will be
able to retain any or all of those franchises if they are so
transferred to Purchaser.
6.2. Seller's. Seller represents and warrants to Purchaser as
follows:
6.2.1. Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas. Seller is
qualified to do business in Texas, and Seller has all requisite
authority and power to enter into this Agreement. Furthermore,
Seller is duly authorized to own, lease or otherwise hold the
Assets conveyed under this Agreement. The execution, delivery
and performance of this Agreement by Seller and the
consummation by Seller of the transactions contemplated herein
have been authorized by all requisite corporate actions on the
part of the Seller. This Agreement constitutes the valid and
binding obligation of Seller, enforceable in accordance with
its terms.
6.2.2. Neither the execution or delivery of this Agreement by Seller
nor the consummation by Seller of the transactions contemplated
herein will (i) conflict with or result in a breach of, the
terms, conditions or provisions of, or constitute a default
under, or result in the creation of a lien or encumbrance on
any of the property conveyed pursuant to this Agreement,
pursuant to the Articles of Incorporation or Bylaws of Seller,
or any indenture, mortgage, lease, agreement or other
instrument to which Seller is a party or by which any of the
Assets conveyed pursuant to this Agreement may be bound or
affected; or (ii) violate any law or
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regulation to which Seller is or will be subject to whereby
either them or any of the Assets conveyed pursuant to this
Agreement is bound.
6.2.3. Except for the leased property, Seller has good and marketable
title to all the property conveyed pursuant to this Agreement,
free and clear of all agreements, obligations, liabilities,
security interests, pledges, restrictions, mortgages, liens,
claims or encumbrances of any kind or any conditional sale
agreement or other title retention agreement, except as
specifically set forth on SCHEDULE 6.1.
6.2.4. Seller, to the best of Seller's knowledge, warrants that there
are no actions, suits, claims, investigations or other
proceedings pending and there is no action, suit, claim,
investigation, proceeding, grievance, or controversy threatened
against the Seller that could affect the ability to convey the
Assets conveyed pursuant to this Agreement. Furthermore, no
governmental agency has at any time challenged or questioned,
or commenced or given notice of intention to commence any
investigation relating to the Seller's ownership of the Assets
conveyed pursuant to this Agreement.
6.2.5. To the best of Seller's knowledge, the Seller is in compliance
in all material respects with all laws, rules, regulations, and
other legal requirements relating to the prevention of
pollution and the protection of the environment (collectively,
"Environmental Laws"). To the best of Seller's knowledge,
including all items included in the Phase I Survey, there is no
other physical condition existing on any property ever owned or
operated by the Company nor are there any physical conditions
existing on any other property that may have been affected by
the Company's operations which could give rise to any material
remedial obligation under any Environmental Laws or which could
result in any material liability to any third party pursuant to
any Environmental Laws.
6.2.6. Seller is not aware of any facts or matters of which Purchaser
is not aware which would materially and adversely affect
Seller's future business operations or the assets acquired
hereunder.
6.2.7. To the best of Seller's knowledge, all historical operating
information provided to Purchaser is materially accurate.
7. Additional Representations and Warranties of Seller and the
Stockholders. Prior to Closing, Seller will cause each Stockholder to execute an
agreement in which each Stockholder, severally and not jointly, represents and
warrants to Purchaser and Group 1 that:
7.1. Investment Intent. The Seller intends to distribute some or all of the
Closing Payment to its stockholders on or shortly after the Closing Date. The
Seller and each Stockholder makes the following representations relating to his,
her or its acquisition of shares of Group 1 Common Stock: (i) such Stockholder
will be acquiring the shares of Group 1 Common Stock to be issued pursuant to
the Acquisition to such Stockholder solely for such Stockholder's account, for
investment purposes only and with no current intention or plan to distribute,
sell or
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otherwise dispose of any of those shares in connection with any distribution
(except by way of gift to a charitable foundation, provided that such foundation
executes a customary investor representation letter with respect to exemptions
from the Securities Act of 1933 ("Securities Act") and any applicable state blue
sky laws); (ii) such Stockholder is not a party to any agreement or other
arrangement for the disposition of any shares of Group 1 Common Stock; (iii)
such Stockholder is an "accredited investor" as defined in Securities Act Rule
501(a); (iv) such Stockholder (A) is able to bear the economic risk of an
investment in the Group 1 Common Stock acquired pursuant to this Agreement, (B)
can afford to sustain a total loss of that investment, (C) has such acknowledge
and experience in financial and business matters, and such past participation in
investment that he or she is capable of evaluating the merits and risks of the
proposed investment in the Group 1 Common Stock, (D) has received and reviewed
the SEC Documents, (E) has had an adequate opportunity to ask questions and
receive answers from the officers of Group 1 concerning any and all matters
relating to the transactions contemplated hereby, including the background and
experience of the current officers and directors of Group 1, the plans for
operations of the business of Group 1, the business, operations and financial
condition of Group 1 and any plans of Group 1 for additional acquisitions, and
(F) has asked all questions of the nature described in the preceding clause (E),
and all those questions have been answered to his or her satisfaction; (v) such
Stockholder acknowledges that the shares of Group 1 Common Stock to be delivered
to such Stockholder pursuant to the Acquisition have not been and will not be
registered under the Securities Act or qualified under applicable blue sky laws
and therefore may not be resold by such Stockholder without compliance with Rule
144 of the Securities Act; (vi) such Stockholder, if a corporation, partnership,
trust or other entity, acknowledges that it was not formed for the specific
purpose of acquiring the Group 1 Common Stock; and (viii) without limiting all
of the foregoing, such Stockholder agrees not to dispose of any portion of Group
1 Common Stock unless (1) a registration statement under the Securities Act is
in effect as to the applicable shares and the disposition is made in accordance
with that registration statement, or (2) the Stockholder has notified Group 1 of
the proposed disposition, disposition is made though Merrill, Lynch, ▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated or ▇▇▇▇▇▇▇, Sachs & Co., Inc., or any of their
successors or affiliates, subject to SEC Rule 144 and such disposition is made
in compliance with any other requirements of the Securities Act. SEC Documents
means, Group 1's most recent annual report, definitive proxy statement filed
with the annual report and Form 10-K.
7.2. Restrictions on Transfer of Group 1 Common Stock.
7.2.1. During the one-year period ending on the anniversary of the
Closing Date (the "Restricted Period"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇") will not voluntarily: (i) sell, assign, exchange,
transfer, encumber, pledge, distribute, appoint or otherwise
dispose of (A) any shares of Group 1 Common Stock received by
▇▇▇▇▇▇▇ in the Acquisition or (B) any interest in (including
any option to buy or sell) any of those shares of Group 1
Common Stock, in whole or in part, and Group 1 will have no
obligation to, and shall not, treat any such attempted transfer
as effective for any purpose or (ii) engage in any transaction,
whether or not with respect to any shares of Group 1 Common
Stock or any interest therein, the intent or effect of which is
to reduce the risk of owning the shares of Group 1 Common Stock
acquired pursuant to this Agreement (including, for example,
engaging in put, call, short sale,
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straddle or similar market transactions). Notwithstanding the
foregoing, ▇▇▇▇▇▇▇ may: (i) pledge shares of Group 1 Common
Stock, provided that the pledgee of such shares shall agree not
to sell or otherwise dispose of any such shares for the
Restricted Period; (ii) transfer shares to immediate family
members or the estate of any such individual (including without
limitation, any transfer by ▇▇▇▇▇▇▇ to or among any trust,
custodial or other similar accounts or funds that are for the
benefit of his or her immediate family members), provided that
such person or entity shall agree not to sell or otherwise
dispose of any such shares for the Restricted Period; and (iii)
transfer shares by will or laws of descent and distribution or
otherwise by reason of such ▇▇▇▇▇▇▇ death. The certificates
evidencing the Group 1 Common Stock delivered to ▇▇▇▇▇▇▇
pursuant to this Agreement will bear a legend substantially in
the form set forth below and containing such other information
as Group 1 may deem necessary or appropriate:
EXCEPT PURSUANT TO THE TERMS OF THE ASSET PURCHASE AGREEMENT AMONG THE
ISSUER, THE HOLDER OF THIS CERTIFICATE AND THE OTHER PARTIES THERETO,
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE VOLUNTARILY SOLD,
ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED,
APPOINTED OR OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE
REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED VOLUNTARY SALE, ASSIGNMENT,
EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION, APPOINTMENT, OR
OTHER DISPOSITION OF ANY OF THOSE SHARES, DURING THE ONE-YEAR PERIOD
ENDING ON ________________[DATE THAT IS THE ANNIVERSARY OF THE CLOSING
DATE] (THE "RESTRICTED PERIOD"). ON THE WRITTEN REQUEST OF THE HOLDER
OF THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE
LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE
DATE SPECIFIED ABOVE.
7.2.2. Seller and each Stockholder, severally and not jointly with any
other person, (i) acknowledges that the shares of Group 1
Common Stock to be delivered to Seller and that Stockholder
pursuant to this Agreement have not been and, if applicable,
will not be registered under the Securities Act and therefore
may not be resold by Seller or that Stockholder without
compliance with the Securities Act and (ii) covenants that none
of the shares of Group 1 Common Stock issued to Seller or that
Stockholder pursuant to this Agreement will be offered, sold,
assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all the
applicable provisions of the Securities Act and the rules and
regulations of the Commission and applicable state securities
laws and regulations. All certificates evidencing shares of
Group 1 Common Stock issued pursuant to this Agreement will
bear the following legend in addition to the legend prescribed
by Section 7.2.1:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL SUCH SHARES ARE REGISTERED UNDER SUCH ACT, OR SUCH
STATE LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS
OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED."
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In addition, certificates evidencing shares of Group 1 Common Stock
issued pursuant to the Acquisition to Seller and each Stockholder will bear
any legend required by the securities or blue sky laws of the state in
which Seller or that Stockholder resides.
8. Indemnification.
8.1. Purchaser's Obligation to Indemnify. Purchaser shall indemnify
and hold Seller harmless from and against any and all liability, loss, damage,
or deficiency resulting from: (i) any misrepresentation, breach of warranty, or
nonfulfillment of any agreement on the part of Purchaser under this Agreement;
(ii) any misrepresentations in or occasioned by any certificate, document, or
other instrument furnished or to be furnished by Purchaser herein; (iii)
Purchaser's ownership, management and conduct of the Assets subsequent to
Closing; (iv) any misrepresentation, inaccuracy, or failure of any
representation or warranty of Purchaser; and (v) any and all actions, suits,
proceedings, claims, demands, assessments, judgments, costs, and expenses,
including without limitation, legal fees and expenses incident to any of the
foregoing or incurred in investigating or attempting to void the same or to
oppose the imposition thereof or in enforcing this indemnity.
8.2. Seller's Obligation to Indemnify. Seller agrees to indemnify,
defend and hold Group 1 and Purchaser harmless (subject to the limitations and
conditions set forth in Sections 8.3 and 8.4) from all Indemnifiable Damages (as
defined below) resulting from: (i) any misrepresentation, breach of warranty or
nonfulfillment of any agreement on the part of Seller under this Agreement; (ii)
any misrepresentation in or occasioned by any certificate, document, or other
instrument or to be furnished by Seller herein; (iii) except for liabilities
otherwise assumed, the ownership, management, and operations of, and interests
in or to the Assets prior to the Closing of this Agreement; (iv) any
misrepresentation, inaccuracy, or failure of any representation or warranty of
Seller; and (v) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including without limitation, legal
fees and expenses incident to any of the foregoing or incurred in investigating
or attempting to void the same or to oppose the imposition thereof or in
enforcing this indemnity. Each Stockholder will agree to indemnify, defend and
hold Group 1 harmless (subject to the limitations in Section 8.3 and 8.4) from
all Indemnifiable Damages resulting from such Stockholder's breach of Section 7.
8.3. Notice to Indemnifying Party. To be entitled to such
indemnification, the party claiming indemnification ("Indemnified Party") shall
give the other party ("Indemnifying Party") prompt written notice of the
assertion by a third party of any claim with respect to which the Indemnified
Party might bring a claim for indemnification herein, and in all events must
have supplied such notice to the Indemnifying Party within the applicable period
for defense of such claim. This indemnification shall survive the consummation
of the transactions contemplated herein and shall remain in effect for a period
of four (4) years after the Closing Date. The remedies provided under this
section shall be cumulative and shall not preclude any party from asserting any
other rights or seeking any other remedies against any other party hereto. At
the option of the Indemnifying Party, sums due under this section may be offset
against any sums which may be due the Indemnified Party under Any Other
Agreement between them.
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8.4. Limitation of Indemnity. Notwithstanding anything to the contrary
contained in this Article 8, the Indemnified Party shall have no claim for
Indemnifiable Damages unless and until all Indemnifiable Damages incurred under
this Section 8.4 of each Related Agreement with each Other Company exceeds Two
Hundred Fifty Thousand and no/100 ($250,000.00) ("Basket Amount"), in which
event the Indemnifying Party shall be liable for only such Indemnifiable Damages
in excess of the Basket Amount; provided, however, that the limitations of (i)
this Section 8.4 shall not apply to (i) any fraud or intentional
misrepresentation, (ii) any intentional breach under this Agreement, (iii) any
misrepresentation or breach under Sections 6.2.1, 6.2.2, 6.2.3 or 3.16 and (iv)
any liabilities of Stockholders or Seller other than Assumed Liabilities.
Additionally, Seller shall not be liable for Indemnifiable Damages in excess of
the Purchase Price, nor shall a Stockholder be liable in excess of the value of
the Group 1 stock received by such Stockholder.
9. Provisions Respecting Employees.
9.1. Dealership Employees. Seller will notify all of its employees who are
engaged at or in connection with the operations of the Dealership (the
"Employees") that the Assets are being sold to Purchaser. Seller shall terminate
all employees effective on the Closing Date and except as otherwise provided in
Section 9.2, Seller assumes the responsibility and obligation for discharging
any and all benefits owed to such terminated employees. Purchaser will receive
applications for employment from such employees and will decide in its sole and
absolute discretion which persons to hire, if any.
9.2. Indemnification for Wages, Severance and Other Obligations. Seller
shall be liable to the Employees for all wages, severance benefits, and other
obligations of any kind whatsoever, including, without limitation, obligations
and liabilities under Seller's Plans (as hereinafter defined), which accrued
through the day before the Closing and shall hold Purchaser harmless from and
indemnify Purchaser against, any and all such liabilities to Employees.
Purchaser agrees to carryover the employees "seniority status" with regard to
vacation days and other compensated leave. Purchaser shall assume the Seller's
obligations for accrued and unused vacation and sick leave on the Closing Date.
9.3. COBRA Indemnification and Information. Seller shall pay and be liable
to Purchaser and shall assume, indemnify, defend and hold harmless Purchaser
from and against and in respect of any and all losses, damages, liabilities,
taxes, and sanctions that arise under the Consolidated Omnibus Budget
Reconciliation Act of 1984 ("COBRA") and the Code, interest and penalties,
costs, and expenses (including without limitation disbursements and reasonable
legal fees incurred in connection therewith, and in seeking indemnification
therefor, and any amounts or expenses required to be paid or incurred in
connection with any action, suit, proceeding, claim, appeal, demand, assessment,
or judgment) imposed upon, incurred by, or assessed against, Purchaser and any
of its employees arising by reason of or relating to any failure to comply with
the continuation of health care coverage of COBRA and Sections 601 through 608
of ERISA which failure occurred with respect to any current or prior employee of
Seller or any qualified beneficiary of such employee (as defined in COBRA) on or
prior to the date of Closing or as otherwise required as a result of any
transactions or matters contemplated by this agreement.
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10. General Provisions.
10.1. Notices. Any notice, demand, or communication required, permitted, or
desired to be given hereunder shall be in writing and shall be deemed
effectively given when personally delivered or mailed by prepaid, certified
mail, return receipt requested, addressed as follows:
If to Seller: ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, Inc.
c/o ▇▇▇▇ ▇▇▇▇▇▇ Ford, Inc.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
2112 Indiana
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
If to Purchaser: Delaware Acquisitions - T, L.L.C.
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address, and to the attention of such other person or officer,
as either party may designate, at the addresses that the party may designate by
like written notice.
10.2. Exhibits. The exhibits attached hereto or included herein are made a
part hereof for all purposes. As used herein, the expression "this Agreement"
means the body of this Agreement and such Exhibits; and the expressions
"herein", "hereof", and "hereunder" and other words of similar import refer to
this Agreement and such Exhibits as a whole and not to any particular part or
subdivision thereof.
10.3. Survival of Obligations. The respective representations, warranties,
covenants, and agreements of the parties to this Agreement shall survive
consummation of the transactions contemplated herein and shall continue in full
force and effect after the Closing without expiration.
10.4. Broker's Fees. Purchaser covenants that it has neither incurred any
obligations for commissions, brokers fees or other related matters. Seller
covenants that it has not incurred any obligations for commissions, brokers fees
or other related matters. It is further agreed that in the event any claims are
made for commissions, brokers fees or other related items, the party incurring
such obligation shall hold the other harmless therefrom.
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10.5. Governing Law. This Agreement will be governed by, construed and
enforced in accordance with the laws of the state of Texas.
10.6. Attorney's Fees. If this Agreement or any term or provision hereof
becomes the subject of litigation, the prevailing party in such litigation will
be entitled to recover from the non-prevailing party court costs and reasonable
attorney's fees.
10.7. Entire Agreement. This Agreement and the other agreements of even
date herewith (herein "Any Other Agreement") and the agreements attached as
exhibits hereto, contains the entire understanding of the parties with respect
to the sale of the assets of Seller to Purchaser and supersedes all prior
agreements, arrangements and understandings, whether written or oral, relating
to the subject matter hereof and all of them are merged into this Agreement.
10.8. Severability. Any provision of this agreement which is prohibited or
unenforceable, in whole or in part, in any jurisdiction shall be ineffective
only to the extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof.
10.9. Amendment. This Agreement may not be amended by any oral agreement or
understanding but only by an amendment in writing executed by the parties
hereto.
10.10. Binding Effect. The terms, conditions and covenants of this
Agreement shall apply to, inure to the benefit of and be binding upon each of
the parties hereto and their respective successors and permitted assigns. This
Agreement or a portion thereof may be assigned by either party upon receipt of
the written consent of the non-assigning party.
10.11. Further Instruments. Seller shall make, execute and deliver in due
form, such other and further instruments as Purchaser may deem necessary to
carry out and further the purposes of this Agreement.
10.12. Specific Performance. The parties hereto recognize that the
Purchaser's remedies at law for damages in the event of breach of this Agreement
are inadequate and accordingly, it is the intention of the parties that the
obligations and duties of the parties hereunder shall be enforceable in equity
by specific performance, and further the Purchaser's remedy is specifically
limited to specific performance.
10.13. Headings. The section headings contained in this Agreement are for
convenience only and shall not affect in any way the meaning or interpretation
of the Agreement.
10.14. Multiple Counterparts. This Agreement may be executed in a number of
identical counterparts which, taken together, shall constitute collectively one
(1) agreement; but in making proof of this Agreement, it shall not be necessary
to produce or account for more than one such counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement in multiple
original on the date first written above.
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"PURCHASER"
Delaware Acquisitions - T, L.L.C.,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇, Manager
"SELLER"
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, Inc.
a Texas corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, Vice President
23
ASSET PURCHASE AGREEMENT
EXHIBIT "A"
ALLOCATION OF PURCHASE PRICE
AMONG CONVEYED ASSETS UNDER
SECTION 1060 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED
-----------------------------------------
Class I Cash and Cash Equivalents $
Class II Certificates of Deposit, U.S. Government
Securities, Marketable Stocks or Securities $
Class III All other tangible and intangible assets,
whether or not depreciable or amortizable,
except goodwill (see attached Allocated Exhibit) $
Class IV All Section 197 intangibles, except those in the
nature of goodwill $
Class V Goodwill $
Total of Classes, I, II, III, IV, and V $
--------------------------------------------------------------------------------
1. Date of Sale: ,1999.
----------
2. Are the aggregate fair market values listed for each of asset Classes
I, II and III the amounts agree upon in the sales contract or in a
separate written document:
Yes No
------- ---------
3. Were any of the following purchased or entered into:
License or covenant not to compete, lease agreement, employment contract,
management contract, or similar arrangement with Seller (or managers,
directors, owners or employees of Seller)?
Yes No
---------- ---------
If "yes," specify (a) type of agreement and (b) maximum amount of
consideration (not including interest) paid or to be paid under agreement.
Attach separate sheet detailing the above.
Under the penalties of perjury, the undersigned parties to this Agreement
certify that the information provided on this form, to the best of our knowledge
and belief, is true, correct and complete.
PURCHASER: SELLER:
Delaware Acquisitions - T, L.L.C. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, Inc.
Taxpayer ID No. Taxpayer ID No. ▇▇-▇▇▇▇▇▇▇
--------------------
BY: BY:
------------------------------- -------------------------------
24
ASSET PURCHASE AGREEMENT
EXHIBIT "B"
LEASE AGREEMENT
25
ASSET PURCHASE AGREEMENT
EXHIBIT "C1"
EMPLOYMENT AGREEMENT - ▇▇▇▇▇▇▇
26
ASSET PURCHASE AGREEMENT
EXHIBIT "C2"
EMPLOYMENT AGREEMENT - ▇▇▇▇▇▇
27
ASSET PURCHASE AGREEMENT
EXHIBIT "D"
LEASE GUARANTY
28
ASSET PURCHASE AGREEMENT
EXHIBIT "E"
▇▇▇▇ OF SALE
29
ASSET PURCHASE AGREEMENT
SCHEDULE 2.1
FIXED ASSET LIST
30
ASSET PURCHASE AGREEMENT
SCHEDULE 2.2
RETAINED ASSET LIST
31
ASSET PURCHASE AGREEMENT
SCHEDULE 2.3
ASSUMED LIABILITIES
32
ASSET PURCHASE AGREEMENT
SCHEDULE 2.4
LEASED ASSETS
33
ASSET PURCHASE AGREEMENT
SCHEDULE 6.1
LIENS AND ENCUMBRANCES
34
ASSET PURCHASE AGREEMENT
SCHEDULE 6.2
SELLER'S PLANS
