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EXHIBIT 10.(s)
ASSET PURCHASE AGREEMENT
BETWEEN
ALLIED DISTRIBUTING COMPANY OF HOUSTON, INC.
AUTO PARTS INVESTMENT GROUP, INC.
(SELLER)
AND
▇▇▇▇▇▇ AUTOMOTIVE GROUP, INC.
(PURCHASER)
DATED AS OF FEBRUARY 26, 1999
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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TABLE OF CONTENTS
Page No.
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ARTICLE I DEFINITIONS............................................................................1
Section 1.1 Definitions............................................................................1
ARTICLE II SALE AND PURCHASE OF PURCHASED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES......................................................7
Section 2.1 Purchase and Sale of Purchased Assets..................................................7
Section 2.2 Assumption of Obligations and Liabilities..............................................7
Section 2.3 Inventory Levels and Purchase Price....................................................8
Section 2.4 Physical Inventory; Determination of Purchased Inventory..............................11
Section 2.5 Allocation of Purchase Price..........................................................12
Section 2.6 Sale at Closing Date..................................................................12
Section 2.7 Apportionments........................................................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER..............................................12
Section 3.1 Authority of Seller...................................................................12
Section 3.2 No Conflict or Violation..............................................................13
Section 3.3 Consents and Approvals................................................................13
Section 3.4 Compliance with Law...................................................................13
Section 3.5 Permits, Notices......................................................................13
Section 3.6 Ownership of Purchased Assets.........................................................13
Section 3.7 Assigned Contracts....................................................................14
Section 3.8 Labor Relations.......................................................................14
Section 3.9 Litigation............................................................................14
Section 3.10 Brokers...............................................................................14
Section 3.11 Existing Condition....................................................................14
Section 3.12 Condition of Tangible Assets..........................................................15
Section 3.13 Tax and Other Returns and Reports.....................................................15
Section 3.14 Contracts and Commitments.............................................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................17
Section 4.1 Authority of Purchaser................................................................17
Section 4.2 No Conflict or Violation..............................................................17
Section 4.3 Consents and Approvals................................................................18
Section 4.4 Availability of Funds.................................................................18
Section 4.5 Litigation............................................................................18
Section 4.6 Brokers...............................................................................18
ARTICLE V CERTAIN COVENANTS OF SELLER...........................................................18
Section 5.1 Conduct of Business Before the Closing Date...........................................18
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Section 5.2 In General............................................................................18
Section 5.3 Information and Access................................................................19
Section 5.4 Further Assurances....................................................................19
Section 5.5 Reasonable Efforts....................................................................19
Section 5.6 Cure of Defaults......................................................................19
Section 5.7 Audit of Operations at Business Locations.............................................19
Section 5.8 Severance; Vacation and Sick Leave....................................................19
Section 5.9 Worker's Compensation/OSHA............................................................20
Section 5.10 Grievances............................................................................20
Section 5.11 Seller Certification..................................................................20
Section 5.12 Seller Indemnity......................................................................21
Section 5.13 No Solicitation.......................................................................21
ARTICLE VI CERTAIN COVENANTS OF PURCHASER........................................................22
Section 6.1 Reasonable Efforts....................................................................22
Section 6.2 Performance Under Assigned Contracts..................................................22
Section 6.3 Purchaser Financing...................................................................22
Section 6.4 Purchaser Indemnity...................................................................22
ARTICLE VII CONDITIONS TO SELLER'S OBLIGATIONS....................................................23
Section 7.1 Representations and Warranties........................................................23
Section 7.2 Compliance with Agreement.............................................................23
Section 7.3 Consents..............................................................................23
Section 7.4 Purchaser's Closing Deliveries and Obligations........................................23
Section 7.5 Availability of Purchaser Financing...................................................23
Section 7.6 No Adverse Proceeding.................................................................23
Section 7.7 Minimum Inventory to be Purchased Amount..............................................24
Section 7.8 Fairness Opinion......................................................................24
Section 7.9 Shareholder and ESOP Participant Approval.............................................24
ARTICLE VIII CONDITIONS TO PURCHASER'S OBLIGATIONS.................................................24
Section 8.1 Representations and Warranties........................................................24
Section 8.2 Compliance with Agreement.............................................................24
Section 8.3 No Adverse Proceeding.................................................................24
Section 8.4 Consents..............................................................................24
Section 8.5 Seller's Closing Deliveries and Obligations...........................................25
ARTICLE IX THE CLOSING AND TERMINATION...........................................................25
Section 9.1 The Closing...........................................................................25
Section 9.2 Termination...........................................................................26
Section 9.3 Effects of Termination................................................................27
ARTICLE X TAXES.................................................................................28
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Section 10.1 Taxes Related to Purchase of Assets...................................................28
Section 10.2 Proration of Real and Personal Property Taxes.........................................28
Section 10.3 Cooperation on Tax Matters............................................................28
ARTICLE XI EMPLOYEES AND EMPLOYEE BENEFIT PLANS..................................................29
Section 11.1 Current Intent Regarding Business Employees; WARN.....................................29
ARTICLE XII MISCELLANEOUS PROVISIONS..............................................................29
Section 12.1 Representations and Warranties........................................................29
Section 12.2 Notices...............................................................................30
Section 12.3 Notice Regarding Indemnities, Limitation of Indemnity, Etc............................30
Section 12.4 Amendments............................................................................32
Section 12.5 Assignment............................................................................32
Section 12.6 Announcements.........................................................................32
Section 12.7 Expenses..............................................................................32
Section 12.8 Entire Agreement......................................................................33
Section 12.9 Descriptive Headings..................................................................33
Section 12.10 Counterparts..........................................................................33
Section 12.11 Governing Law; Jurisdiction...........................................................33
Section 12.12 Construction..........................................................................33
Section 12.13 Severability..........................................................................33
Section 12.14 Confidentiality.......................................................................33
Section 12.15 Exhibits..............................................................................34
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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SCHEDULES
Schedule A Accounts Payable
Schedule B Accounts Receivable
Schedule C Fixed Assets
Schedule D Intellectual Property
Schedule E Inventory
Schedule F Purchased Inventory
Schedule G Real Estate
Schedule H Shareholder Notes
Schedule I Third Party Notes
Schedule 2.2 Accrued Employee Benefits
Schedule 2.3 Deposits
Schedule 3.3 Consents and Approvals
Schedule 3.4 Noncompliance
Schedule 3.5 Permits
Schedule 3.7 Assigned Contracts
Schedule 3.8 Collective Bargaining Agreements
Schedule 3.9 Litigation
Schedule 3.11 Existing Condition
Schedule 3.12 Condition of Tangible Assets
Schedule 3.13 Tax and Other Returns and Reports
Schedule 3.14 Contracts and Commitments
Schedule 4.4 Committed Financing
EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of ▇▇▇▇ of Sale and Assumption Agreement
Exhibit C Commitment Letter - December 10, 1998
Exhibit D Form of Real Estate Lease
Exhibit E Form of Employment Agreement
Exhibit F Calculation of Purchase Price
Exhibit G Form of Promissory Note
Exhibit H Form of Shareholder Escrow Agreement
Exhibit I Form of Assignment and Assumption of Leases
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered
into as of the 26th day of February, 1999 between ALLIED DISTRIBUTING COMPANY
OF HOUSTON, INC., TIN: ▇▇-▇▇▇▇▇▇▇ ("ALLIED") a Texas corporation, and AUTO
PARTS INVESTMENT GROUP, INC., TIN: ▇▇-▇▇▇▇▇▇▇ ("APIG"), a Texas corporation
(Allied and APIG, collectively referred to as "SELLER") and ▇▇▇▇▇▇ AUTOMOTIVE
GROUP, INC., (TIN: ▇▇-▇▇▇▇▇▇▇) a Louisiana corporation ("Purchaser").
RECITALS
WHEREAS, Seller is engaged in the business of selling and distributing
automotive replacement parts, accessories and supplies and operates
distribution and sales centers located on leased premises in Houston, San
Antonio, Austin, Port Lavaca, ▇▇▇▇▇▇▇▇, Bacliff, Goliad and Brenham, State of
Texas (the "BUSINESS LOCATIONS");
WHEREAS, Purchaser desires to purchase from Seller and Seller desires
to sell to Purchaser, certain of the assets associated with the Seller's
operations at the Business Locations, subject to certain liabilities, all on
the terms and subject to the conditions set forth herein; and
WHEREAS, in connection with its contemplated purchase of assets,
Purchaser desires to conduct business at the Business Locations and to hire
substantially all of Seller's employees currently employed at the Business
Locations, all on the terms and subject to the conditions set forth herein and
in the Ancillary Agreements.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Unless otherwise defined herein, the terms
defined in the introductory paragraph and the Recitals to this Agreement shall
have the respective meanings specified therein, and the following terms shall
have the meanings specified below:
"ACCOUNTS PAYABLE" means all accounts payable incurred in the
ordinary course of Business as set forth on SCHEDULE ▇.
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"ACCOUNTS RECEIVABLE" means all accounts receivable allocable
to the Business, as well and all rights to ▇▇▇▇ customers for products
shipped or services rendered on or prior to the Closing Date, as
described in SCHEDULE B annexed hereto.
"ALLIED" and "APIG" has the meaning set forth in the preamble.
"AFFILIATE" means "affiliate" as defined in Rule 405
promulgated under the Securities Act of 1933, as amended.
"AGREEMENT" has the meaning set forth in the preamble and
shall include all Schedules and Exhibits hereto.
"ANCILLARY AGREEMENTS" means, collectively, the Assignment
and Assumption Agreements, the ▇▇▇▇ of Sale and Assumption Agreement,
the Real Estate Lease and the Employment Agreements.
"APPORTIONMENT DATE" has the meaning set forth in SECTION 2.7.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the form of
Assignment and Assumption Agreement to be executed at Closing by
Purchaser and Seller for each of the Assigned Contracts, in
substantially the form attached hereto as EXHIBIT A.
"ASSIGNED CONTRACTS" means the Leases and the contracts to be
assigned by Seller to Purchaser and set forth on SCHEDULE 3.7.
"ASSUMED LIABILITIES" has the meaning set forth in SECTION
2.2.
"▇▇▇▇ OF SALE AND ASSUMPTION AGREEMENT" means the ▇▇▇▇ of
Sale and Assumption Agreement to be executed at Closing by Purchaser
and Seller in substantially the form attached hereto as EXHIBIT B.
"BOOK VALUE" with respect to Accounts Receivable, means the
net book value of an Account Receivable, as reflected on Seller's
books and records relating to such Account Receivable, including all
interest or finance charges allocable thereto.
"BUSINESS" means Seller's business operations conducted at
the Business Locations.
"BUSINESS DAY" means a day, other than a Saturday or a
Sunday, on which commercial banks are not required or authorized to
close in Houston, Texas.
"BUSINESS EMPLOYEES" means employees of the Seller whose
duties relate primarily to the Business.
"BUSINESS LOCATIONS" has the meaning set forth in the
Recitals hereto.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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"CLOSING" has the meaning set forth in SECTION 9.1.
"CLOSING DATE" has the meaning set forth in SECTION 9.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTED FINANCING" means funds available pursuant to a
written commitment letter issued by ▇▇▇▇▇▇ Business Credit, a division
of ▇▇▇▇▇▇ Financial, Inc. ("▇▇▇▇▇▇") dated December 10, 1998, a copy
of which is attached hereto as EXHIBIT C, or other similar
documentation from a commercial bank or other lending institution,
which lender, commitment letter and other documentation are acceptable
to Seller and Purchaser.
"DIRTY CORE AND WARRANTY INVENTORY" means any and all used
cores and warranty inventory present at the Business Locations as
contemplated by this Agreement.
"EMPLOYEE AGREEMENTS" means those agreements in substantially
the form attached hereto as Exhibit E in connection with the
employment by Purchaser of ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
"EXCLUDED ASSETS" means all of Seller's assets other than
those specifically defined as Purchased Assets.
"FIXED ASSETS" means, to the extent used in the Business, (i)
all of the machinery, equipment, furniture, fixtures, signs, vehicles
and leasehold improvements located at the Business Locations on the
Closing Date and which are owned by Seller, a list of which is
attached as SCHEDULE C, which list shall be updated on the Closing
Date, and (ii) to the extent assignable, any rights of Seller to the
warranties, licenses and other similar rights with respect thereto.
"GAAP" means United States generally accepted accounting
principles, applied on a consistent basis and consistent with Seller's
historical practices, as in effect from time to time.
"GOVERNMENTAL AGENCY" means (a) any international, foreign,
federal, state, county, local or municipal governmental or
administrative agency or political subdivision thereof, (b) any
governmental authority, board, bureau, commission, department or
instrumentality, or (c) any court or administrative tribunal.
"INTELLECTUAL PROPERTY" means to the extent used in the
Business the inventions, copyrights, trademarks, trade names, and
applications, any related trademarks or logos and applications,
including any rights to the ownership and use of the names "Allied
Distributing Company of Houston, Inc.," "▇▇▇▇▇ ▇▇▇▇▇", and any other
trade name used by any Subsidiary of Seller, trade secrets,
proprietary know-how and use and application know-how, product
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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formulae, manufacturing, engineering and other drawings, technology,
technical information, engineering data, design and engineering
specifications, production standards and practices and promotional
literature, goodwill and other intellectual property and rights, in
each case used by the Seller in connection with the business,
including without limitation, such intellectual property as is listed
on SCHEDULE D.
"INVENTORY" means all items of New Inventory and Dirty Core
and Warranty Inventory. Schedule E, which shall be prepared in
accordance with SECTION 2.4 hereof and annexed to this Agreement on
the Closing Date, shall set forth a description of the Inventory.
"INVENTORY VALUE" means the invoice cost to Allied per item
of Inventory or means the invoice cost to Allied plus a maximum of 5%
per item of Inventory to APIG.
"IRS" means the Internal Revenue Service of the United States
Department of the Treasury.
"KNOWLEDGE" as applied to Seller means the actual knowledge
of the President, Chief Executive Officer or the Chief Financial
Officer of Seller and as applied to Purchaser means the actual
knowledge of the President, the Chief Executive Officer, the Chairman
of the Board or the Chief Financial Officer.
"LEASED PROPERTY" means the premises subject to the Leases.
"LEASES" means the real estate leases listed on SCHEDULE 3.7.
"LIEN" means any mortgage, pledge, security interest, charge
or other encumbrance.
"NEW INVENTORY" means all items of new automotive inventory,
including core charges associated with such inventory, if applicable,
owned by Seller and on hand at the Business Locations on various
specified dates as contemplated by this Agreement.
"PERMIT" means any permit, approval, authorization, license,
variance or permission required by a Governmental Agency under any
applicable law.
"PERSON" means any individual, partnership, corporation,
trust, association, limited liability company, Governmental Agency or
other entity.
"PHYSICAL INVENTORY DATE" means the last day of the Physical
Inventory Period.
"PHYSICAL INVENTORY PERIOD" has the meaning set forth in
SECTION 2.4(a).
"PURCHASE PRICE" has the meaning set forth in SECTION 2.3.
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"PURCHASED ASSETS" means all of the Seller's right, title and
interest in and to the following:
(a) the Purchased Inventory;
(b) the Fixed Assets;
(c) the Assigned Contracts;
(d) records relating primarily to the Purchased
Assets, and copies of personnel files for
Business Employees;
(e) to the extent legally assignable, all
Permits required to conduct business at the
Business Locations
(f) independent customer lists and other
information and data relating to the
independent customers of the Business at
the Business Locations;
(g) all deposits (including security deposits)
and prepayments made by Seller under any of
the Assigned Contracts
(h) all of the Accounts Receivable;
(i) all of Seller's Third Party Notes
receivable;
(j) the Real Estate
(k) Intellectual Property
(l) all cash or cash equivalents
(m) all right, title and interest of Seller in
Auto Value;
(n) all bulk office supplies;
provided, however, that notwithstanding any of the foregoing
provisions of this definition, the Purchased Assets shall not include
any Excluded Assets.
"PURCHASED INVENTORY" has the meaning set forth in SECTION
2.4(b), a complete list of which Purchased Inventory shall be annexed
to this Agreement as SCHEDULE F on the Closing Date.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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"REAL ESTATE" means that property described on SCHEDULE G.
"REAL ESTATE LEASE" means a lease agreement to be executed at
Closing in substantially the form attached hereto as Exhibit D between
ADCO Development Partnership and Purchaser and covering the property
located at 3100 Pawnee, ▇▇▇▇▇▇ County, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
"SCHEDULES" means the various Schedules referred to in this
Agreement delivered separately to Purchaser on or before the date of
this Agreement, except as otherwise specified in this Agreement.
Purchaser acknowledges that the Schedules provided at execution of the
Agreement have been prepared in good faith but are subject to further
review and correction by Seller and shall not be deemed true and
correct until delivered at Closing.
"SHAREHOLDER NOTES" means each note as set forth on SCHEDULE
H.
"TAX RETURN" means any report, return, information return,
filing, claim for refund or other information, including any schedules
or attachments thereto, and any amendments to any of the foregoing
required to be supplied to a taxing authority in connection with
Taxes.
"TAXES" means all federal, state, local and foreign taxes,
including income, gross receipts, excise, employment, sales, use,
transfer, license, payroll, franchise, severance, stamp, withholding,
Social Security, unemployment, disability, real property, personal
property, registration, alternative or add-on minimum, estimated or
other tax, including any interest, penalties or additions thereto,
whether disputed or not.
"THIRD PARTY NOTES" means each non-Affiliate note that is not
in default or arrears as set forth on SCHEDULE I.
"TRANSACTION TAXES" has the meaning set forth in SECTION
10.1.
"TRUE-UP" means the final reconciliation of all assets
purchased, less liabilities assumed.
"TRUE-UP DATE" means the date ninety (90) days after Closing
when the final reconciliation is completed.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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ARTICLE II
SALE AND PURCHASE OF PURCHASED ASSETS AND ASSUMPTION OF ASSUMED LIABILITIES
SECTION 2.1 PURCHASE AND SALE OF PURCHASED ASSETS. On the terms and
subject to the conditions set forth in this Agreement, at the Closing Purchaser
shall purchase from Seller and Seller shall sell, transfer, assign, convey and
deliver to Purchaser at the Business Locations, all of Seller's right, title
and interest in and to the Purchased Assets provided, however, that Seller
shall be entitled to retain copies of all books and records, in whatever form,
included in the Purchased Assets.
SECTION 2.2 ASSUMPTION OF OBLIGATIONS AND LIABILITIES. On the terms
and subject to the conditions set forth in this Agreement, at the Closing,
Purchaser will assume and pay, perform, discharge and be responsible for all of
the following liabilities of Seller (collectively, the "ASSUMED LIABILITIES"):
(a) all obligations and liabilities of Seller under the
Assigned Contracts which accrue on and after the
Closing Date;
(b) all obligations and liabilities of Seller relating
to the Leased Property which accrue on and after the
Closing Date;
(c) all obligations and liabilities set forth in Article
XI;
(d) Accounts Payable;
(e) all indebtedness incurred in the ordinary course of
the business in connection with Loan #________ with
Frost National Bank;
(f) Shareholder Notes;
(g) Third Party Notes; and
(h) accrued employee benefits set forth on Schedule 2.2.
Purchaser shall not assume or pay, perform, discharge or be
responsible for any of the obligations or liabilities of Seller other than the
Assumed Liabilities. Without limiting any of Purchaser's obligations under
ARTICLE XI hereof with respect to the Business Employees, Purchaser expressly
does not assume any obligations or liabilities of Seller that arise prior to
the Closing Date with respect to the Business Employees. Seller shall not
assume or be responsible for any obligations or liabilities of Purchaser that
arise from and after the Closing Date with respect to the Business Employees.
Notwithstanding the foregoing, at Closing, Seller will supply Purchaser with a
listing of all obligations and liabilities with respect to Business Employees'
accrued vacation leave/pay, sick leave/pay and other compensable benefits due
employees of the business, said listing to be made on Schedule 2.2, and the
Purchase Price to be paid by Purchaser to Seller hereunder shall be reduced by
the total amount shown on said Schedule. Purchaser shall have no liability
whatsoever for any liabilities of Seller, including, without limitation, (i)
any claim, regardless of
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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when made or asserted, which arises out of or is based upon any express or
implied representation, warranty, agreement or guarantee made by the Seller, or
alleged to have been made by the Seller, or which is opposed or asserted to be
imposed by operation of law, in connection with any product manufactured,
shipped or installed by or on behalf of the Seller or for any service performed
by or on behalf of the Seller, including, without limitation, any claim
relating to the repair or replacement of any such product and any claim seeking
recovery for property damage, consequential damages, loss, lost revenue or
income or personal injury or (ii) liability or obligation in respect of any
federal, state or local income or other tax payable with respect to the
Business or the Purchased Assets for any period prior to the Closing Date.
SECTION 2.3 INVENTORY LEVELS AND PURCHASE PRICE.
(a) On the terms and subject to the conditions set forth in
this Agreement, the purchase price payable by Purchaser to
Seller for the Purchased Assets shall be an aggregate amount
equal to the sum of the following (the "Purchase Price"),
payable on various dates as described in this SECTION 2.3:
(i) One Hundred percent (100%) of the Inventory
Value for all of the items of New Inventory
to be purchased by Purchaser in accordance
with the terms of this Agreement; plus
(ii) One Hundred percent (100%) of the
depreciated book value for the Fixed
Assets; plus
(iii) deposits, including security deposits (and
prepayments made by Seller under the
Assigned Contracts) as set forth in SECTION
2.3 and as specifically described in
SCHEDULE 2.3; plus
(iv) an amount equal to One Hundred percent
(100%) of the Book Value of any and all of
the Accounts Receivable, less the sum of
$150,000.00; provided however, that on the
True-up Date Purchaser shall assign to
Seller all such Accounts Receivable that
have not been collected by Purchaser
("Uncollected Receivables") on or before
the True-up Date, and on the True-up Date
Purchaser shall pay to Seller the amount by
which $150,000 exceeds the value of the
Uncollected Receivables and, further, if
Purchaser receives any amount in payment of
any portion of the Uncollected Receivables
after the True-up Date, Purchaser shall
forward such amounts to Seller no later
than five days after receipt thereof;
provided, however, that if the value of the
Uncollected Receivables assigned to Seller
exceeds the sum of $150,000, Seller shall
pay to Purchaser on the True-up Date the
amount of such excess; plus
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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(v) an amount equal to One Hundred percent
(100%) of the invoice cost to Allied or
APIG, as applicable, of the Dirty Core and
Warranty Inventory to be purchased by
Purchaser in accordance with the terms of
this Agreement; provided, however, that the
invoice cost to APIG of any item shall not
exceed the invoice cost of such item to
Allied by more than five percent; plus
(vi) an amount equal to the most recent
valuation report of the value of the Real
Estate but in no event less than
$293,158.00; plus
(vii) an amount equal to the aggregate principal
balance and accrued but unpaid interest of
the Third Party Notes; plus
(viii) One hundred percent (100%) of the
depreciated book value of Seller's right,
title and interest in Auto Value; plus
(ix) cash or cash equivalents.
(b) On the Closing Date, Purchaser shall pay to Seller an
amount equal to the Purchase Price in cash, by wire transfer
of immediately available funds (pursuant to written
instructions to be provided by Seller to Purchaser), equal to
the sum of those portions of the Purchase Price provided for
in SECTIONS 2.3(a)(i), 2.3(a)(ii), 2.3(a)(iii), 2.3(a)(iv),
2.3(a)(v), 2.3(a)(vi), 2.3(a)(vii), 2.3(a)(viii) AND
2.3(a)(ix) hereof less an amount equal to the sum of SECTIONS
2.2(b), 2.2(d), 2.2(e), 2.2(f), 2.2(g), 2.2(h) AND 2.3(d),
each item being set forth together with the amount of such
item on the form entitled "Preliminary Calculation of
Purchase Price" attached hereto as EXHIBIT F showing the
calculation of the amount of the preliminary purchase price
(such amount, the "Closing Date Payment"), less an escrow
amount of $400,000.00 to be deposited in such form on a pro
rata basis as the consideration is received by Seller (73.12%
in cash and 26.88% in promissory notes in the form attached
as EXHIBIT G) in an interest-bearing escrow account to be
held and distributed by an escrow agent in accord with the
escrow agreement in substantially the form attached hereto as
EXHIBIT H for the purpose of providing the source of payment
of indemnity claims against Seller and any sums which may be
due from Seller as a result of the True-up provided for in
SECTION 2.3(a)(iv) AND SECTION 2.3(e).
(c) On or before 5:00 p.m. on the third business day
preceding the Closing, Purchaser shall be advised in writing
as to each Shareholder Note the following:
(i) the principal balance and accrued interest
payable as of the date of Closing; and
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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15
(ii) whether the Note holder elects to be paid
in full on the date of Closing; or
(iii) the Note holder will assign said Note to
Purchaser with Purchaser assuming same
terms, conditions and obligations as
contained in said Note;
(d) the Closing Date Payment shall be reduced by 26.8800%.
This percentage represents the total percentage ownership of
the following shareholders (the "Beneficiaries"):
▇▇▇ ▇▇▇▇▇▇▇▇▇ 2,928 shares 5.9239%
▇▇▇▇▇ ▇▇▇▇▇▇▇ 976 shares 1.9746%
▇▇▇▇ ▇▇▇▇▇▇▇ 976 shares 1.9746%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 704 shares 1.4243%
▇▇▇▇▇▇ ▇▇▇▇▇▇ 640 shares 1.2948%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇/▇▇▇ ▇▇▇▇▇▇▇▇ 294 shares .5948%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 2,928 shares 5.9239%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. 1,280 shares 2.5897%
▇▇▇▇▇ ▇▇▇▇▇▇▇ 640 shares 1.2948%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 640 shares 1.2948%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 640 shares 1.2948%
▇▇▇▇▇ ▇▇▇▇▇▇▇ 640 shares 1.2948%
--------
26.8800%
At Closing, Purchaser shall execute a promissory note in favor of
Seller for the benefit of each of the Beneficiaries in an amount equal
to that percentage of the Closing Date Payment set forth above
opposite such Beneficiary's name less twenty (20%) percent of such
amount. Purchaser shall execute an additional promissory note in favor
of Seller for the benefit of each of the Beneficiaries in an amount
equal to such twenty percent and such note shall be placed in the
escrow described in SECTION 2.3(b) above. Each such note shall bear
interest at Chase Manhattan Prime and shall be payable in 36 monthly
installments to Seller for the benefit of each of the Beneficiaries as
provided by a form of the note attached as EXHIBIT G.
(e) Within 90 days after the Closing Date, Purchaser shall
prepare, on the form attached hereto as EXHIBIT F, and
deliver to Seller a "Final Calculation of Purchase Price"
showing Purchaser's final calculation of the items on such
form as of the close of business on the Closing Date. If
Seller objects to the Final Calculation of
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
Page 10 of 35
16
Purchase Price, Seller shall deliver to Purchaser a detailed
statement describing such objections within fifteen days
after receiving the Final Calculation of Purchase Price.
Seller and Purchaser shall use reasonable efforts to resolve
any such objections. If a final resolution is not obtained
within fifteen days after Purchaser has received the
statement of objections, Seller and Purchaser will select a
mutually acceptable accounting firm to resolve any remaining
objections. If Seller and Purchaser are unable to agree on an
accounting firm, they will select by lot a nationally
recognized accounting firm (which shall not include any
accounting firm that is providing or has provided services to
either Seller or Purchaser or an Affiliate thereof). The
determination of any accounting firm so selected will be set
forth in writing and will be conclusive and binding on Seller
and Purchaser. Purchaser shall revise the Final Calculation
of Purchase Price as appropriate to reflect the resolution of
any objections pursuant hereto. If the Final Calculation of
Purchase Price results in an amount that exceeds the Closing
Date Payment, Purchaser shall pay, on the same basis as the
Closing Date Payment was paid, such amount to Seller within
five days of final resolution. If such calculation results in
an amount that is less than the Closing Date Payment, such
amount shall be released within five days of final resolution
to Purchaser from the escrow in cash and by reduction of the
promissory notes in the same proportions as the Closing Date
Payment was paid. Any expenses relating to the engagement of
the accounting firm shall be allocated between Seller and
Buyer by the accounting firm in the proportion that the
amount in dispute decided in favor of the challenging party
bears to the entire amount in dispute.
SECTION 2.4 PHYSICAL INVENTORY; DETERMINATION OF PURCHASED INVENTORY.
(a) Commencing on or about 5:00 p.m. on the 27th day of
March, 1999, or as the parties may otherwise mutually agree
continuing over the next two days (the "PHYSICAL INVENTORY
PERIOD"), employees or representatives of Seller and
Purchaser will jointly conduct a physical inventory count of
the clean, current and salable inventory, the Dirty Core and
Warranty Inventory and the Fixed Assets at the Business
Locations. A written, itemized list setting forth
specifically all such items of Inventory physically accounted
for which are clean, current and salable and all items of the
Dirty Core and Warranty Inventory shall be prepared by Seller
with the assistance of Purchaser, and shall, on the Closing
Date, be attached hereto as SCHEDULE E, with such revisions
made by Seller with the assistance of Purchaser as are
necessary to reflect any changes in the Inventory that occur
during the period commencing immediately after the Physical
Inventory Date and ending on the Closing Date. Seller and
Purchaser shall each bear their own costs associated with
conducting the physical inventory. Only Inventory in a
current price sheet or still readily available from the
manufacturer will be purchased by Purchaser.
(b) At the completion of the physical inventory conducted
pursuant to SECTION 2.4(a), Purchaser shall prepare a list of
Inventory to be purchased in
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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17
accordance with the provisions of this Agreement, (such items
of inventory, collectively, the "PURCHASED INVENTORY"), which
list shall be: (i) adjusted as of the Closing Date by Seller
with the assistance of Purchaser to reflect changes in the
Purchased Inventory that occur during the period commencing
immediately after the Physical Inventory Date and ending on
the Closing Date; and (ii) attached to this Agreement on the
Closing Date as SCHEDULE F.
SECTION 2.5 ALLOCATION OF PURCHASE PRICE. To the extent required by
law after the Closing Date, Purchaser and Seller shall prepare and file those
statements or forms (including Form 8594) required by Section 1060 of the Code
and the Treasury regulations thereunder and shall file such statements or forms
with their respective federal income Tax Returns. The parties shall prepare
such statements or forms consistently with any agreed allocation of all or a
portion of the Purchase Price to the Purchased Assets. Each party shall provide
the other party with a copy of such statements or forms as filed.
SECTION 2.6 SALE AT CLOSING DATE. The sale, transfer, assignment and
delivery by Seller of the Purchased Assets to Purchaser, and the assumption by
Purchaser of the Assumed Liabilities, as herein provided shall be effected on
the Closing Date by (a) the execution and delivery by Seller and Purchaser of
an Assignment and Assumption Agreement for the Lease and each of the Assigned
Contracts substantially in the form of EXHIBIT A, pursuant to which Assignment
and Assumption Agreements Purchaser shall be subject to all liabilities and
obligations under the Assigned Contracts which accrue after the Closing Date,
and (b) with respect to the other Purchased Assets and Assumed Liabilities, by
the execution and delivery by the Seller and Purchaser of the ▇▇▇▇ of Sale and
Assumption Agreement substantially in the form of EXHIBIT B.
SECTION 2.7 APPORTIONMENTS. The following amounts are to be
apportioned as of 12:00 midnight on the day preceding the Closing Date (the
"APPORTIONMENT DATE") (i) water, sewer and utility charges and real estate
taxes, to the extent all or any are payable under the Leases; and (ii) such
other apportionments and adjustments as are customarily apportioned in
transactions of this nature. Except as otherwise provided herein, all
prorations shall be made on the basis of actual bills, to the extent available,
or, in the absence of such actual bills, on good faith estimates of Seller
based on the most recent ▇▇▇▇ received by Seller. All prorations shall be
adjusted within ten (10) Business Days of Seller's receipt of the final bills.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to SECTION 3.12, the Seller represents and warrants to
Purchaser as follows:
SECTION 3.1 AUTHORITY OF SELLER. Each Seller is a corporation validly
existing and in good standing under the laws of the State of Texas Seller has
full corporate power and authority to execute and deliver this Agreement and
each of the Ancillary Agreements, and the execution and delivery
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
Page 12 of 35
18
by each Seller of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of each
Seller, and this Agreement constitutes, and each of the Ancillary Agreements
upon its execution will constitute, the legal, valid and binding obligation of
each Seller enforceable in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium, or
similar laws from time to time in effect which affect creditors' rights
generally, and by legal and equitable limitations on the enforceability of
specific remedies and subject to receipt of the consents, waivers and approvals
specified on SCHEDULE 3.3.
SECTION 3.2 NO CONFLICT OR VIOLATION. The execution, delivery and
performance by each Seller of this Agreement and the Ancillary Agreements do
not and will not violate or conflict with any provision of the Certificate of
Incorporation or By-laws of each Seller and, assuming that the consents,
waivers, authorizations, approvals, declarations, filings and registrations
referred to in SECTION 3.3 are obtained or made, do not and will not violate or
result in a material breach of or constitute (with due notice or lapse of time
or both) a material default under any Assigned Contract.
SECTION 3.3 CONSENTS AND APPROVALS. SCHEDULE 3.3 sets forth a true and
complete list of each material consent, waiver, authorization or approval of
any Person in connection with any Assigned Contract that is required for the
execution and delivery of this Agreement by each Seller or the performance by
each Seller of its obligations hereunder.
SECTION 3.4 COMPLIANCE WITH LAW. Except as set forth on SCHEDULE 3.4,
to Seller's Knowledge each Seller has not received written notice of any
violation of any law, regulation, order or other legal requirement, and is not
in default in any material respect under any order, writ, judgment, award,
injunction or decree of any Governmental Agency, applicable to the Purchased
Assets.
SECTION 3.5 PERMITS, NOTICES. Attached hereto as SCHEDULE 3.5 is a
complete list of all governmental permits, licenses and authorizations
(collectively, the "Permits") which each Seller has obtained to operate the
business. To Seller's knowledge and belief, no other governmental permits,
licenses or authorizations were necessary to operate and continue the Facility
and the Business. To Seller's knowledge and belief, Seller was not in breach of
the terms of any of the Permits and had paid all necessary fees associated
therewith and there were no other permits necessary for the operation of the
Business. Except as disclosed on SCHEDULE 3.5, Seller had not received and to
Seller's knowledge and belief, there did not exist, any notice, notification or
inquiry from any governmental or quasi-governmental agency to the effect that
the Business or any of the Assets was in violation of any law, ordinance, rule,
regulation, license, permit or authorization as of the date of execution of
this Agreement.
SECTION 3.6 OWNERSHIP OF PURCHASED ASSETS. Other than the real
property subject to the Leases and any items of property subject to the
Assigned Contracts, Seller is the owner of the Purchased Assets. At the Closing
Purchaser will receive, good title to all such Purchased Assets, free and clear
of any Liens, provided however, that Seller makes no representation or warranty
as
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
Page 13 of 35
19
to the existence or absence of any Lien: (i) on the real property subject to
the Leases; (ii) on any items of property subject to the Assigned Contracts.
Seller has good, valid and marketable title to all of the Assets, real,
personal and mixed, including all of the properties and assets used by the
Business (except in each case for Assets sold or otherwise disposed of in the
ordinary course of business consistent with past practice), free and clear of
all mortgages, liens, pledges, security interests, charges, claims,
restrictions and other encumbrances and defects of title of any nature
whatsoever, except liens for current taxes not yet due and payable. To Seller's
knowledge and belief, all leases, licenses, permits and authorizations in any
manner related to the Purchased assets or the Business and all other
instruments, documents and agreements pursuant to which Seller has obtained the
right to use any real or personal property in connection with the Business are
in good standing, valid and effective in accordance with their respective
terms, and there is not under any of such instruments, documents or agreements
any existing default or event which with notice or lapse of time, or both,
would constitute a default and in respect of which Seller has not taken
adequate steps to prevent a default from occurring.
SECTION 3.7 ASSIGNED CONTRACTS. True and complete copies of the
Assigned Contracts listed on SCHEDULE 3.7 have been provided or made available
by Seller to Purchaser. Neither Seller nor, to Seller's Knowledge, any other
party under any of the Assigned Contracts, has commenced any action against the
other or given or received any written notice of any material default or
violation under any Assigned Contract which was not withdrawn or dismissed.
Each of the Lease and the other Assigned Contracts listed on SCHEDULE 3.7 is or
will be at the Closing valid, binding and in full force and effect as against
Seller, except as otherwise set forth on SCHEDULE 3.7.
SECTION 3.8 LABOR RELATIONS. Except as set forth on SCHEDULE 3.8,
Seller is not party to any collective bargaining agreement covering Business
Employees. To Seller's Knowledge, no organizational effort is presently being
made or threatened in writing by or on behalf of any labor union with respect
to Business Employees.
SECTION 3.9 LITIGATION. Except as set forth on SCHEDULE 3.9, there are
no actions, causes of action, claims, suits or proceedings pending or, to
Seller's Knowledge, threatened against Seller which seek to restrain or enjoin
the consummation of the transactions contemplated hereby.
SECTION 3.10 BROKERS. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by Seller without the
intervention of any other Person acting on Seller's behalf in such manner as to
give rise to any valid claim by any such Person against Purchaser for a
finder's fee, brokerage commission or other similar payment based on an
arrangement with Seller.
SECTION 3.11 EXISTING CONDITION. To Seller's knowledge and belief,
except as disclosed on SCHEDULE 3.11 hereto, Seller, in relation to the
Business, has not:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
Page 14 of 35
20
(a) Sold, assigned or transferred any of the assets or other
interests in the Business except in the ordinary course of
business consistent with past practice;
(b) Mortgaged, pledged or subjected to any lien, pledge,
mortgage, security interest, conditional sales contract or
other encumbrance of any nature whatsoever of any Purchased
Assets, other than the liens, if any, of current taxes not
yet due and payable or liens which will be discharged or
satisfied by the Closing Date
(c) Suffered any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the
Assets
(d) Suffered any material adverse change to the condition of
the Purchased Assets.
SECTION 3.12 CONDITION OF TANGIBLE ASSETS. To Seller's knowledge and
belief, except as disclosed on SCHEDULE 3.12 hereto all buildings, structures,
facilities, automobiles, trucks, other vehicles, machinery, equipment and other
material items of personal property owned or used by Seller in the Business are
in good operating condition and repair, subject to normal wear and maintenance,
are usable in the regular and ordinary course of the Business and conform in
all material respects to all applicable laws, ordinances, codes, rules and
regulations relating to their construction, use and operation. To Seller's
knowledge and belief, no person other than Seller owns any vehicles, equipment
or other tangible assets or properties situated on property subject to the
Leases or necessary to the operation of the Business, except for leased items
disclosed on other Schedules hereto and for items of immaterial value.
SECTION 3.13 TAX AND OTHER RETURNS AND REPORTS. To Seller's knowledge
and belief, except as disclosed on SCHEDULE 3.13 hereto, (a) all federal, state
and local tax returns, reports and statements (including all income tax,
unemployment compensation, social security, payroll, sales and use, excise,
privilege, property, ad valorem, franchise, license, school and any other tax
under laws of the United States or any state or municipal or political
subdivision thereof) required to be filed by Seller in connection with the
Business (the "Tax Returns") have been filed with the appropriate governmental
agencies in all jurisdictions in which such returns, reports and statements are
required to be filed, and all such returns, reports and statements properly
reflect the tax liabilities of Seller in relation to the Business for the
periods, properties or events covered thereby; (b) all federal, state and local
taxes, assessments, interest, penalties, deficiencies, fees and other
governmental charges or impositions, including those enumerated above in
respect of the Tax Returns, which are called for by the Tax Returns, or claimed
to be due by any taxing authority from Seller, or upon or measured by Seller's
properties, assets or income (the "Taxes"), have been properly accrued or paid;
(c) Seller has not received any notice of assessment or proposed assessment by
the Internal Revenue Service or any other taxing authority in connection with
any Tax Returns and there are no pending tax examinations of or tax claims
asserted against Seller or any of its assets or properties; (d) there are no
tax liens (other than any lien for current taxes not yet due and payable) on
any of the Assets; (e) Seller has no knowledge of any basis for any additional
assessment
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
Page 15 of 35
21
of any Taxes in relation to the Business; and (f) Seller has made all deposits
required by law to be made with respect to employees' withholding taxes.
SECTION 3.14 CONTRACTS AND COMMITMENTS. To Seller's knowledge and
belief, except as listed and described on SCHEDULE 3.14 Seller, in relation to
the Business, is not a party to any written or oral:
(a) Agreement, contract or commitment with any present or
former shareholder, director, officer, employee or consultant
or for the employment of any person, including any consultant
(b) Agreement, contract, commitment or arrangement with any
labor union or other representative of employees;
(c) Agreements, contracts or commitments for the future
purchase of, or payment for, supplies or products, or for the
performance of services by a third party, involving the
expenditures of $10,000.00, or more
(d) Agreements, contracts or commitments to sell or supply
products or to perform services, involving $10,000.00 in
value
(e) Agreements, contracts or commitments not otherwise listed
on SCHEDULE 3.14 hereto and continuing over a period of more
than six months from the date hereof or exceeding $10,000.00
in value
(f) Representative or sales agency agreement, contract or
commitment;
(g) Lease under which Seller is either the lessor or lessee
(h) Agreement, contract or commitment for any charitable or
political contribution;
(i) Agreements, contracts or commitments for any capital
expenditure in excess of $10,000.00;
(j) Agreement, contract or commitment limiting or restraining
it from engaging or competing in any lines of business with
any person nor is any officer or employee of the Business
subject to any such agreement, contract or commitment;
(k) License, franchise, distributorship or other agreement,
including those which relate in whole or in part to any
patent, trademark, or copyright or to any ideas, technical
assistance or other know-how of or used by the Business; or
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
Page 16 of 35
22
(l) Material agreement or contract not made in the ordinary
course of business.
To Seller's knowledge and belief, except as may be disclosed on
SCHEDULE 3.14, each of the agreements, contracts, commitments, leases and other
instruments, documents and undertakings listed on SCHEDULE 3.14 is valid and
enforceable in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium, or similar laws from
time to time in effect which affect creditors' rights generally, and by legal
and equitable limitations on the enforceability of specific remedies, the
parties thereto are in compliance with the provisions thereof, no party is in
default in the performance, observance or fulfillment of any material
obligation, covenant or condition contained therein and no event has occurred
which with or without the giving of notice or lapse of time, or both, would
constitute a default thereunder, furthermore, except as may be disclosed on
SCHEDULE 3.14, no such agreement, contract, commitment, lease or other
instrument, document or undertaking, in the reasonable opinion of the Seller,
contains any contractual requirement with which there is a reasonable
likelihood Seller or any other thereto will be unable to comply.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
SECTION 4.1 AUTHORITY OF PURCHASER. Purchaser is a corporation,
validly existing, and in good standing under the laws of the State of
Louisiana. Purchaser has full corporate power and authority to execute and
deliver this Agreement, and the execution and delivery by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of Purchaser, and this Agreement constitutes the legal, valid and binding
obligation of Purchaser enforceable in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, or similar laws from time to time in effect which affect creditors'
rights generally, and by legal and equitable limitations on the enforceability
of specific remedies. Purchaser has full corporate power and authority to own
its properties and to carry on the business presently being conducted by it.
SECTION 4.2 NO CONFLICT OR VIOLATION. The execution, delivery and
performance by Purchaser of this Agreement and the Ancillary Agreements do not
and will not violate or conflict with any provision of the Certificate of
Incorporation or By-laws of Purchaser and do not and will not violate any
provision of law, or any order, judgment or decree of any court or other
Governmental Agency applicable to Purchaser, or violate or result in a material
breach of or constitute (with due notice or lapse of time or both) a default
under any loan agreement, mortgage, security agreement, indenture or other
instrument to which Purchaser is a party or by which it is bound.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
Page 17 of 35
23
SECTION 4.3 CONSENTS AND APPROVALS. The execution, delivery and
performance by Purchaser of this Agreement do not require the consent or
approval of, or filing with, any Governmental Agency or other entity or person
except: (i) as may be required to effect the transfer of any Permits; or (ii)
such consents, approvals and filings, the failure to obtain or make which would
not, individually or in the aggregate, have a material adverse effect on its
ability to consummate the transactions contemplated hereby.
SECTION 4.4 AVAILABILITY OF FUNDS. Purchaser has obtained Committed
Financing as described on SCHEDULE 4.4 hereto, sufficient to allow it to pay
the Purchase Price at the times and in the manner set forth in this Agreement
and to satisfy all its other obligations under this Agreement, and on the date
of this Agreement Purchaser has provided Seller with all documentation relating
to such Committed Financing.
SECTION 4.5 LITIGATION. There are no actions, causes of action,
claims, suits, proceedings, orders, writs, injunctions, or decrees pending or,
to the knowledge of Purchaser, threatened against Purchaser at law or in equity
or before or by any governmental agency, which seek to restrain or enjoin the
consummation of the transactions contemplated hereby or that could otherwise
adversely affect the ability of Purchaser to perform its obligations hereunder.
SECTION 4.6 BROKERS. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by Purchaser without
the intervention of any other person acting on its behalf in such manner as to
give rise to any valid claim by any such person against the Seller or their
Affiliates for a finder's fee, brokerage commission or other similar payment
based on an arrangement with Purchaser.
ARTICLE V
CERTAIN COVENANTS OF SELLER
Seller covenants with Purchaser that from and after the date hereof
through the Closing Date:
SECTION 5.1 CONDUCT OF BUSINESS BEFORE THE CLOSING DATE. Seller shall
not, except as required or expressly permitted pursuant to the terms hereof,
make any material change in the Fixed Assets or enter into any transaction
respecting the Purchased Assets, other than (a) sales of Inventory in the
ordinary course of the Business, or (b) other transactions in the ordinary
course of the Business, in either case substantially consistent with Seller's
past practices or as otherwise contemplated by this Agreement.
SECTION 5.2 IN GENERAL. Except to the extent expressly provided
otherwise in this Agreement, Seller shall be responsible for any and all wages,
vacations, holidays, union checkoff dues, bereavement pay, jury duty pay,
disability income, supplemental unemployment benefits, personal or sick leave
pay, payroll expenses and, other benefits under any of the Seller's employee
benefit plans, arising out of the employment of employees ("Employees") by
Seller which are earned
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
Page 18 of 35
24
prior to the Closing Date (regardless of when such amounts are payable) and
Purchaser shall be responsible for and assume all liability for any and all
such amounts (or any comparable amounts under Purchaser's plans) to Employees
that are earned on or after the Closing Date.
SECTION 5.3 INFORMATION AND ACCESS. Seller will permit representatives
of Purchaser to have reasonable access during normal business hours after
reasonable notice from Purchaser to Seller, and in a manner so as not to
interfere with the normal operations, to all premises, properties, personnel,
accountants, books, records, contracts and documents of or pertaining to the
Purchased Assets. Purchaser and each of its representatives will treat and hold
such information as confidential. Purchaser shall indemnify, defend and hold
harmless Seller, the lessor under the Lease and their respective Affiliates
from and against any and all claims, demands, causes of action, losses,
damages, liabilities, cost and expenses (including, without limitation,
attorneys' fees and disbursements), suffered or incurred by such Persons in
connection with (i) Purchaser's and/or Purchaser's representatives' entry upon
the Leased Property, or (ii) any and all other activities undertaken by
Purchaser or Purchaser's representatives pursuant to this SECTION 5.3. The
parties hereto agree and acknowledge that the Purchaser's obligations hereunder
shall not be subject to any "due diligence" condition.
SECTION 5.4 FURTHER ASSURANCES. Upon the request of Purchaser at any
time after the Closing Date, to the extent that Seller is able to comply with
the requirements of this section, Seller shall forthwith execute and deliver
such documents as Purchaser or its counsel may reasonably request to effectuate
the purposes of this Agreement.
SECTION 5.5 REASONABLE EFFORTS. Upon the terms and subject to the
conditions of this Agreement, Seller will use commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary or proper consistent with applicable law to consummate and
make effective in the most expeditious manner practicable the transactions
contemplated hereby.
SECTION 5.6 CURE OF DEFAULTS. Seller shall (i) cure any default in
base rental payments arising under the Leases and outstanding as of the Closing
Date; and (ii) use commercially reasonable efforts to cure any and all other
defaults with respect to the Assigned Contracts.
SECTION 5.7 AUDIT OF OPERATIONS AT BUSINESS LOCATIONS. No later than
sixty-five (65) days following the Closing Date Seller shall obtain from its
accounting firm an audit of the business operations relating exclusively to the
Business Locations, and including profit and loss statements and balance sheets
and such other documentation and financial information regarding Seller's
operations related to the Business Locations as of December 31, 1998 and
provide a copy of all such documentation to Purchaser.
SECTION 5.8 SEVERANCE; VACATION AND SICK LEAVE. Seller shall otherwise
indemnify and hold Purchaser harmless, to the extent Purchaser is not otherwise
liable, on account of any claim by
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
Page 19 of 35
25
any Business Employees with respect to any amounts owed to such Business
Employees for severance or unused vacation and sick leave accrued as of the
Closing Date.
SECTION 5.9 WORKER'S COMPENSATION/OSHA
(a) Seller shall retain responsibility for all workers'
compensation claims filed by Employees either prior to or
subsequent to the Closing Date for injuries sustained prior
to the Closing Date. Purchaser shall be responsible for all
workers' compensation claims related to the Business which
are not the responsibility of Seller under the preceding
sentence.
(b) Seller shall retain responsibility for any monetary fines
or penalties assessed under the Occupational Safety and
Health Act ("OSHA") and similar state and local statutes and
ordinances and that are assessed with respect to citations
outstanding at the Closing Date ("Outstanding Citations")
which citations relate to the Business or to the Employees.
Purchaser shall promptly take, and shall assume
responsibility for, all remedial and nonmonetary action
required as a result of any Outstanding Citations but Seller
shall indemnify and hold harmless Purchaser from all costs
incurred as a result of such actions. Purchaser shall be
responsible for all citations relating to the Business or to
the Employees made after the Closing Date.
SECTION 5.10 GRIEVANCES. Seller shall be responsible for (i) the
resolution of all filed grievances attributable to events occurring prior to
the Closing Date and (ii) the payment of any amounts in the nature of back pay
or employee compensation in respect of such grievances for periods before or
after the Closing Date and all other expenses incident thereto.
SECTION 5.11 SELLER CERTIFICATION. Section 1445 of the Internal
Revenue Code provides that a purchaser of a U.S. real property interest must
withhold tax if the Seller is a foreign person. In connection therewith, Seller
warrants that withholding of tax is not required upon disposition of the U.S.
real property interest being sold pursuant to this Agreement, agrees to hold
Purchaser harmless from any liability under Section 1445 or any interest or
penalties imposed in connection therewith, and represents the following:
(a) Seller is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as these terms are defined
in Internal Revenue Code and Income Tax Regulations);
(b) Seller's U.S. Employer Identification No. is ▇▇-▇▇▇▇▇▇▇;
(c) Seller's office address is _________________; and
(d) Seller shall provide on or before the Closing Date a
certification of nonforeign status as provided in Treas. Reg.
Section 1.4445-T(b))2)(iii)(B).
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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Seller consents that the information contained in this SECTION 5.11 may be
disclosed to the Internal Revenue Service by the Purchaser.
SECTION 5.12 SELLER INDEMNITY. To the extent not otherwise provided
herein, Seller agrees to defend, indemnify and hold harmless Purchaser from and
against:
(a) All debts, liabilities and obligations arising out of or
in any way relating to the operation of the Business accruing
prior to the Closing Date or from events occurring prior to
the Closing with respect to the ownership, management,
operation and maintenance of the Business;
(b) Any actual loss, liability or damage suffered or incurred
by Purchaser because any representation or warranty contained
in this Agreement, or in any document furnished to Purchaser
by Seller in connection with the Closing hereunder, shall be
false or misleading in any material respect; and all
reasonable costs and expenses (including reasonable
attorneys' fees) incurred by Purchaser in connection with any
action, suit, proceeding, demand, assessment or judgment
incident to any of the matters indemnified against in this
provision.
SECTION 5.13 NO SOLICITATION. Seller shall not, directly or
indirectly, through any officer, director, employee, representative or agent,
solicit or encourage the initiation or submission of any inquiries, proposals
or offers regarding any acquisition, merger, take-over bid, sale of all or
substantially all of the assets of, or sales of shares of capital stock of
Seller, whether or not in writing and whether or not delivered to the
shareholders of Seller generally (including without limitation by way of a
tender offer), or similar transactions involving Seller (any of the foregoing
inquiries or proposals being referred to herein as an "Acquisition Proposal"),
provided however, that nothing contained in this Agreement shall prevent the
board of directors of Seller from referring any third party to this SECTION
5.13. Nothing contained in this SECTION 5.13 or any other provision of this
Agreement shall prevent the board of directors of Seller from considering or
negotiating an unsolicited bona fide written Acquisition Proposal. If the board
of directors of Seller, after duly considering advice, written or otherwise, of
outside counsel and financial advisors to Seller, determines in good faith that
it would be consistent with its fiduciary responsibilities to approve or
recommend (and in connection therewith withdraw or modify its approval or
recommendation of this Agreement and the transactions contemplated hereby) a
Superior Proposal (as defined below), then notwithstanding any such approval or
recommendation (i) Seller shall not enter into any agreement with respect to
the Superior Proposal and (ii) any other obligation of the Company under this
Agreement shall not be affected, unless this Agreement is terminated pursuant
to SECTION 9.2 hereof before or simultaneously with the grant of such approval
or the making of such recommendation. As used herein, the term "Superior
Proposal" means a bona fide proposal made by a third party to acquire Seller
pursuant to a tender or exchange offer, a merger, a sale of all or
substantially all of its assets or otherwise that the board of directors of
Seller determines in its good faith judgment to be more favorable to Seller
than the transactions contemplated by this Agreement (after considering the
advice, written or otherwise, of the professional advisors of Seller). In
making
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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a determination of whether a Superior Proposal is more favorable, the
board of directors of Seller shall consider not only the price offered by the
third party as compared to the total consideration set forth in this Agreement,
but shall also make any other meaningful comparison of the relative benefits
offered to Seller by this Agreement as compared to this transaction proposed by
the third party. Notwithstanding any other provisions to the contrary herein,
in the event this Agreement is terminated pursuant to SECTION 9.2(C) then, in
such an event, Seller shall pay to Purchaser a non-refundable break-up fee of
Four Hundred Thousand ($400,000.00) Dollars.
ARTICLE VI
CERTAIN COVENANTS OF PURCHASER
SECTION 6.1 REASONABLE EFFORTS. Upon the terms and subject to the
conditions of this Agreement, Purchaser will use commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary or proper consistent with applicable law to
consummate and make effective in the most expeditious manner practicable the
transactions contemplated hereby.
SECTION 6.2 PERFORMANCE UNDER ASSIGNED CONTRACTS. Purchaser agrees
that from and after the Closing Date it shall (i) assume all obligations and
liabilities under the Assigned Contracts which accrue after the Closing Date,
(ii) take all actions necessary to satisfy its obligations under the terms and
conditions of each of the Assigned Contracts and (iii) indemnify and hold
harmless Seller for any damages arising out of a breach of this covenant.
SECTION 6.3 PURCHASER FINANCING. Purchaser shall, from the date of
this Agreement until and including the Closing Date, maintain the availability
of funds pursuant to the Committed Financing set forth on SCHEDULE 4.4, and, in
the event that such financing becomes unavailable, shall (i) use commercially
reasonable efforts to obtain alternative Committed Financing and (ii) in the
event that Purchaser is unable to obtain such alternative Committed Financing,
accept such alternative financing as may be arranged by Seller, provided that
such Seller arranged financing is on terms no less favorable to Purchaser than
the Committed Financing set forth on SCHEDULE 4.4 (it being understood that
Seller shall be under no obligation to obtain alternative financing for
Purchaser).
SECTION 6.4 PURCHASER INDEMNITY. To the extent not otherwise provided
herein or not inconsistent with any other provision hereof, Purchaser agrees to
defend, indemnify and hold Seller harmless from and against:
(a) All debts, liabilities and obligations arising out of or
in any way relating to the operation of the Business accruing
subsequent to the Closing or from events occurring subsequent
to the Closing with respect to the ownership, management,
operation, maintenance and repair of the Business;
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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(b) Any actual loss, liability, or damage suffered or
incurred by Seller because of any representation or warranty
contained in this Agreement, or in any document furnished to
Seller by Purchaser in connection with the Closing hereunder,
shall be false or misleading in any material respect; and
(C) All reasonable costs and expenses (including reasonable
attorneys' fees) incurred by Seller in connection with any
suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this provision.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions contemplated
by this Agreement are subject to the satisfaction of each of the following
conditions on or prior to the Closing Date:
SECTION 7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser contained in this Agreement shall be true on and as of
the Closing Date in all material respects as though such representations and
warranties were made on and as of the Closing Date.
SECTION 7.2 COMPLIANCE WITH AGREEMENT. Purchaser shall have performed
and complied in all material respects (and in all respects in the case of
Article II hereof) with all covenants and conditions to be performed or
complied with by it on or prior to the Closing Date.
SECTION 7.3 CONSENTS. Any consent required in connection with the
assignment to Purchaser of the Lease, and any consents required in connection
with the assignment of those other Assigned Contracts listed in SCHEDULE 3.3
hereto shall have been duly obtained and shall be in full force and effect on
the Closing Date.
SECTION 7.4 PURCHASER'S CLOSING DELIVERIES AND OBLIGATIONS. Purchaser
shall have delivered all items and satisfied all obligations pursuant to
SECTION 9.1(b).
SECTION 7.5 AVAILABILITY OF PURCHASER FINANCING. The Committed
Financing set forth on Schedule 4.4 shall be available to Purchaser on the
Closing Date, or alternate financing is available to Purchaser to the
satisfaction of Seller.
SECTION 7.6 NO ADVERSE PROCEEDING. As of the Closing Date, there shall
not have been instituted or be pending or threatened any suit, action or other
proceeding by any Governmental Agency or any other Person in which it is sought
to restrain or prohibit the transactions contemplated by this Agreement.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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29
SECTION 7.7 MINIMUM INVENTORY TO BE PURCHASED AMOUNT. If the result of
Seller's physical inventory conducted pursuant to Section 2.4 varies more than
five (5%) percent from the inventory shown on the report generated by its
inventory control system immediately before such physical inventory is
conducted, either Seller or Purchaser may terminate this Agreement.
Notwithstanding any provision to the contrary herein, if either party
terminates pursuant to this section, no allocation of fees, costs or expenses
provided under SECTION 9.3 shall apply, and each party hereto shall bear its
own expenses.
SECTION 7.8 FAIRNESS OPINION. The trustees of the Employee Stock
Ownership Plan shall have received an opinion of _________________________
relating to fairness of the transaction in substance and form satisfactory to
the trustees.
SECTION 7.9 SHAREHOLDER AND ESOP PARTICIPANT APPROVAL. Seller shall
have obtained the required approval of the shareholders of Seller and the
participants in Seller's Employee Stock Ownership Plan.
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (unless waived in
writing by Purchaser) of each of the following conditions on or prior to the
Closing Date:
SECTION 8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement shall be true on and as of the
Closing Date in all material respects.
SECTION 8.2 COMPLIANCE WITH AGREEMENT. Seller shall have performed and
complied in all material respects with all covenants and conditions to be
performed or complied with by it on or prior to the Closing Date.
SECTION 8.3 NO ADVERSE PROCEEDING. As of the Closing Date, there shall
not have been instituted or be pending or threatened any suit, action or other
proceeding by any Governmental Agency or any other Person in which it is sought
to restrain or prohibit the transactions contemplated by this Agreement.
SECTION 8.4 CONSENTS. The following consents shall have been duly
obtained and shall be in full force and effect on the Closing Date: (i) the
consent, if any, required in connection with the assignment to Purchaser of the
Leases; and (II) the consents, if any, required in connection with the
assignment of those other Assigned Contracts listed in SCHEDULE 3.3 hereto.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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30
SECTION 8.5 SELLER'S CLOSING DELIVERIES AND OBLIGATIONS. Seller shall
have delivered all items and satisfied all obligations pursuant to SECTION
9.1(a).
ARTICLE IX
THE CLOSING AND TERMINATION
SECTION 9.1 THE CLOSING. The Closing of the transactions contemplated
hereby (the "CLOSING") shall be held on the _____ day of ________, 1999 (the
"CLOSING DATE") The Closing shall be held at the
_________________________________________. At the Closing, all of the
transactions provided for in ARTICLE II hereof shall be consummated on a
substantially concurrent basis.
(a) SELLER'S DELIVERIES AND OBLIGATIONS AT CLOSING. At the
Closing, Seller shall deliver (or cause to be delivered) to
Purchaser the following (in form and substance reasonably
satisfactory to counsel for Purchaser):
(i) a duly executed Assignment and Assumption
Agreement assigning to Purchaser the rights, title,
interest, and obligations in, under, and to each of
the Assigned Contracts being assigned to Purchaser,
substantially in the form attached hereto as EXHIBIT
A;
(ii) a duly executed ▇▇▇▇ of Sale and Assumption
Agreement and such other documents or instruments of
transfer necessary to vest in Purchaser full and
complete title to the Purchased Inventory and Fixed
Assets, free and clear of all liens, pledges,
security interests, and encumbrances, on the Closing
Date, substantially in the form attached hereto as
EXHIBIT B;
(iii) A duly executed Assignment and Assumption of
Leases assigning the rights, title, interest, and
obligations in, under, and to the Leases to
Purchaser, substantially in the form attached hereto
as EXHIBIT I;
(iv) the Employment Agreements, each duly executed
by the employee named therein;
(v) the Real Estate Lease, duly executed by ADCO
Development Partnership;
(vi) certified resolutions of the directors of
Seller approving and authorizing the transactions
contemplated by this Agreement;
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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31
(vii) a certificate, executed by a duly authorized
officer of Seller, to the effect that all conditions
to closing set forth in SECTION 8.1 and SECTION 8.2
have been satisfied; and
(viii) such other instruments, documents, and
considerations which may be reasonably required by
Purchaser or Purchaser's counsel to effectuate the
transaction contemplated by this Agreement
(b) PURCHASER'S DELIVERIES AND OBLIGATIONS AT CLOSING. At the
Closing, Purchaser shall deliver (or cause to be delivered)
to Seller the following (in form and substance reasonably
satisfactory to counsel for Seller):
(i) payment of the Purchase Price and other
amounts in accordance with the terms and conditions
set forth in SECTION 2.3 and other applicable
provisions of this Agreement;
(ii) a duly executed Assignment and Assumption
Agreement accepting the assignment of the rights,
title, interest, and obligations in, under, and to
each of the Assigned Contracts being assigned to
Purchaser, substantially in the form attached hereto
as EXHIBIT A;
(iii) a duly executed Assignment and Assumption of
Leases accepting the assignment of the rights,
title, interest, and obligations in, under, and to
the Leases, substantially in the form attached
hereto as EXHIBIT I;
(iv) the Employment Agreements, duly executed by
Purchaser;
(v) the Real Estate Lease, duly executed by
Purchaser;
(vi) certified resolutions of the directors of
Purchaser approving and authorizing the transactions
contemplated by this Agreement;
(vii) a certificate, executed by a duly authorized
officer of Purchaser, to the effect that all the
conditions to closing set forth in SECTION 7.1 and
SECTION 7.2 have been satisfied;
(viii) such other instruments, documents, and
considerations which may be reasonably required by
Purchaser or Purchaser's counsel to effectuate the
transaction contemplated by this Agreement.
SECTION 9.2 TERMINATION. Anything in this Agreement to the contrary
notwithstanding, this Agreement and the transactions contemplated hereby may be
terminated in any of the following ways at any time before the Closing and in
no other manner:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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32
(a) by mutual written consent of Purchaser and Seller;
(b) by Seller if Purchaser is in breach in any material
respect of any of its representations made in this Agreement,
or is in violation or default of any of its covenants or
agreements in this Agreement if the breach or default is not
cured within ten (10) days after written notice by Seller;
(C) by Seller if Seller receives and accepts a Superior
Proposal pursuant tO SECTION 5.13 and pays to Purchaser a
non-refundable break-up fee of Four Hundred Thousand
($400,000.00) Dollars;
(d) by Purchaser, if Seller is in breach in any material
respect of any of its representations made in this Agreement
or is in violation or default of any of its covenants or
agreements in this Agreement which breach or default is not
cured within ten (10) Business Days after written notice by
Purchaser;
(e) by Purchaser, if at any point up until and including the
Closing Date, Purchaser does not have available Committed
Financing.
SECTION 9.3 EFFECTS OF TERMINATION
(a) In the event this Agreement is terminated pursuant to
SECTION 9.2, except as provided in this SECTION 9.3, all
further obligations of the parties hereunder shall terminate
and such termination shall be without liability of any party
(or any stockholder, director, officer, employee, agent,
consultant or representative of such party) to any other
party to this Agreement; provided, however, that: (i) if such
termination shall result from the willful failure of
Purchaser to perform a covenant of this Agreement or from a
breach of its representations in SECTION 4.4, Purchaser shall
be liable for any and all losses, damages and expenses
incurred or suffered by Seller as a result of such breach or
failure to perform in an amount not to exceed $75,000.00 and
the cost of obtaining the fairness opinion; (ii) if such
termination shall result from the willful failure of Seller
to perform a material covenant of this Agreement, other than
failure to perform through acceptance of a Superior Proposal,
Seller shall be liable for any and all losses, damages and
expenses incurred or suffered by Purchaser as a result of
Seller's failure to perform, in an amount not to exceed
$150,000.00; and (iii) if this Agreement is terminated
pursuant to SECTION 9.2(a) or SECTION 9.2(e) Purchaser shall
reimburse Seller for all expenses, including professional
fees, incurred in obtaining a fairness opinion with respect
to the transaction contemplated hereby. The provisions of
this SECTION 9.3 shall survive any termination hereof
pursuant to SECTION 9.2 except if this Agreement is
terminated pursuant to SECTION 9.2(c). The remedies set forth
in this SECTION 9.3 shall be
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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the sole and exclusive remedies for any termination pursuant
to SECTIONS 9.2(a), 9.2(b), 9.2(d) AND 9.2(e).
(b) The foregoing provisions of this SECTION 9.3 shall not
limit the rights of the parties hereto to seek specific
performance of any obligation hereunder of any other party.
ARTICLE X
TAXES
The parties hereto hereby covenant and agree as follows:
SECTION 10.1 TAXES RELATED TO PURCHASE OF ASSETS. The parties
recognize and acknowledge that the sale, transfer, assignment and delivery of
the Purchased Assets may be subject to state and local transfer, recording,
stamp or other similar transfer taxes (collectively, "TRANSACTION TAXES") that
may be imposed by reason of the sale, transfer, assignment and delivery of the
Purchased Assets. If Transaction Taxes are assessed for any reason, then
Purchaser shall pay such Transaction Taxes along with any recording and filing
fees. Purchaser and Seller agree to cooperate to determine the amount of
Transaction Taxes payable in connection with the transactions contemplated
under this Agreement. Transaction Taxes shall not include any Taxes for which
Seller is responsible under SECTION 10.2. At the Closing, Purchaser shall remit
to the Seller such properly completed resale exemption certificates and other
similar certificates or instruments as are applicable to claim available
exemptions from the payment of sales, transfer, use or other similar taxes
under applicable law. Purchaser and Seller shall cooperate in preparing such
forms and will execute and deliver such affidavits and forms as are reasonably
requested by the other party.
SECTION 10.2 PRORATION OF REAL AND PERSONAL PROPERTY TAXES. Personal
and real property taxes and assessments on the Purchased Assets shall be
prorated between Purchaser and Seller as of the Apportionment Date, provided,
however, that Seller shall not be responsible for any increased assessments on
real and personal property resulting from the transactions contemplated hereby.
All such prorations shall be allocated so that items relating to time periods
ending prior to the Closing Date shall be allocated to Seller and items related
to time periods beginning on or after the Closing Date shall be allocated to
Purchaser The amount of all such prorations shall be settled and paid on the
Closing Date.
SECTION 10.3 COOPERATION ON TAX MATTERS. Purchaser and Seller agree to
furnish or cause to be furnished to each other, as promptly as practicable,
such information and assistance relating to the Purchased Assets as is
reasonably necessary for the preparation and filing of any return, claim for
refund or other required or optional filings relating to tax matters, for the
preparation for and proof of facts during any tax audit, for the preparation
for any tax protest, for the prosecution or
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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34
defense of any suit or other proceeding relating to tax matters and for the
answer of any governmental or regulatory inquiry relating to tax matters.
Purchaser agrees to retain possession of all files and records
delivered to Purchaser by Seller for a period of at least six years from the
Closing Date. In addition, from and after the Closing Date, Purchaser agrees
that it will provide access to Seller and its attorneys, accountants and other
representatives (after reasonable notice and during normal business hours and
without charge) to such files and records as Seller may reasonably deem
necessary to properly prepare for, file, prove, answer, prosecute and/or defend
any such return, filing, audit, protest, claim, suit, inquiry or other
proceeding.
ARTICLE XI
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
SECTION 11.1 CURRENT INTENT REGARDING BUSINESS EMPLOYEES; WARN
Without making any other commitment regarding the Business Employees,
Purchaser commits to hire, as of the Closing Date, substantially all of the
current Business Employees and each such employee hired shall, for all purposes
under Purchaser's employee benefit plans, be credited with such employee's
period of service with Seller. Purchaser shall provide each such employee with
employee benefits, other than an ESOP or program of similar nature, that are
substantially similar to the employee benefits currently being provided to such
employee by Seller. Purchaser assumes no obligation, liability, or
responsibility of Seller with respect to the Business Employees. Purchaser's
obligation with respect to the Business Employees who accept employment with
Purchaser shall commence as of the Closing Date. Purchaser shall be responsible
for any obligations or Liabilities to the Business Employees under the Worker
Adjustment and Retraining Notification Act and any similar state or local
"plant closing" law ("WARN") to the extent WARN thresholds are exceeded as a
result of actions taken by the Purchaser on or after the Closing Date with
respect to the Business Employees. Seller shall be responsible for any
obligations or Liabilities to the Business Employees under WARN as a result of
actions taken by Seller prior to the Closing Date.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties to this Agreement made in this Agreement, subject to
the exceptions thereto, will not be affected by any information furnished to,
or any investigation conducted by, any of them or their representatives in
connection with the subject matter of this Agreement. The representations and
warranties contained in this Agreement shall survive the Closing for a period
of eighteen months.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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SECTION 12.2 NOTICES. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered
personally to the recipient, (b) when sent to the recipient by telecopy
(receipt electronically confirmed by sender's telecopy machine) if during
normal business hours of the recipient, otherwise on the next Business Day, (c)
one (1) Business Day after the date when sent to the recipient by reputable
express courier service (charges prepaid) or (d) seven (7) Business Days after
the date when mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications will be sent to the Seller and to Purchaser at the addresses
indicated below:
If to Purchaser: ▇▇▇▇▇▇ Automotive Group, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
With a copy ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(which shall not ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
constitute notice) to: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
With a copy ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
(which shall not ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
constitute notice) to: ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
If to Seller: Allied Distributing Company of Houston, Inc.
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
With a copy
(which shall not
constitute notice) to:
or to such other address as any party hereto may, from time to time, designate
in writing delivered pursuant to the terms of this Section.
SECTION 12.3 NOTICE REGARDING INDEMNITIES, LIMITATION OF INDEMNITY,
ETC. Except to the extent expressly provided elsewhere in this Agreement, the
following procedures shall be followed with respect to all claims for
indemnification under this Agreement and all obligations of
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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indemnification hereunder shall be subject to compliance by the party to be
indemnified with such procedures.
(a) The indemnitee shall give prompt written notice to the
indemnitor of any claim that might give rise to a claim by
the indemnitee against the indemnitor pursuant to this
Agreement, stating the nature and basis of such claims and
the estimated amounts thereof.
(b) If any action, suit or proceeding is brought against an
indemnitee with respect to which an indemnitor may have a
liability pursuant to this Agreement, the action, suit or
proceeding shall, upon (i) the written acknowledgment by the
indemnitor that it has the obligation to indemnify the
indemnitee under the indemnity agreements contained herein
and (ii) the making of reasonably adequate provisions by the
indemnitor to ensure the indemnitee of the ability of the
indemnitor to satisfy its obligation hereunder, be defended
(including all proceedings on appeal or for review that
counsel for the indemnitor shall deem appropriate) by, and
may be settled or compromised by, the indemnitor. Prior to
receipt by the indemnitee of the indemnitor's written
acknowledgment and provision as required by clauses (i) and
(ii) of the preceding sentence, the indemnitee shall have the
right to contest or defend (and, if the indemnitee has not
received such written acknowledgment and provision within
thirty business days after the indemnitee has provided
written notice as required by SECTION 12.2 above, to settle
or compromise) such action, suit or proceeding at the expense
of the indemnitor. In addition to the foregoing, the
indemnitee may by written notice to the indemnitor require
the indemnitor to assume the defense of any action, suit or
proceeding with respect to which the indemnitor may have
liability pursuant to this Agreement. The indemnitee shall
have the right to employ its own counsel in connection with
any action, suit or proceeding being defended by the
indemnitor pursuant hereto, but the fees and expenses of such
counsel shall be at the indemnitee's own expense unless (i)
the employment of such counsel and the payment of such fees
and expenses shall have been specifically authorized by the
indemnitor in connection with the defense of such action,
suit or proceeding or (ii) the indemnitee shall have
reasonably concluded and notified the indemnitor that there
may be specific defenses available to it that are different
from or in addition to those available to the indemnitor or
that such action, suit or proceeding involves or could have
an effect upon matters beyond the scope of the indemnity
agreements contained herein. In either of which events (A)
the indemnitor, to the extent made necessary by such
defenses, shall not have the right to direct the defense of
such action, suit or proceeding on behalf of the indemnitee
and (B) only that portion of such fees and expenses
reasonably related to matters covered by the indemnity
agreements contained herein shall be borne by the indemnitor.
The indemnitor shall keep the indemnitee fully informed of
such action, suit or proceeding at all stages thereof whether
or not the indemnitee is so represented. The indemnitor shall
make available to the indemnitee and its attorneys
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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and accountants all books and records of the indemnitor
relating to such proceedings or litigations, and the parties
hereto agree to render to each other such assistance as they
may reasonably require to ensure the proper and adequate
investigation, and the defense or settlement, of any such
action, suit or proceeding.
(C) The indemnitee shall be entitled to compromise and settle
all actions, suits or proceedings as to which the indemnitor
does not have or does not exercise the right to assume the
defense, without consent of the indemnitor, provided, that it
acts reasonably and in good faith in doing so. The indemnitee
shall keep the indemnitor fully informed of such action, suit
or proceeding at all states thereof.
(d) No claim for indemnification shall be made pursuant to
SECTION 5.12 or SECTION 6.4 unless the amount of such claim
exceeds $1,000 and no claims shall be paid pursuant to such
provisions until the aggregate of such claims exceeds $25,000
and then only to the extent that all claims made exceed
$25,000. Indemnification by Seller shall be limited to and
provided solely from the funds held pursuant to the Escrow
Agreement. In determining the amount of any indemnity, there
shall be taken into account by the party to be indemnified
any tax benefit, insurance proceeds or other similar recovery
or offset realized, directly or indirectly, as a result of
such indemnification.
SECTION 12.4 AMENDMENTS. The terms, provisions and conditions of this
Agreement may not be changed, modified or amended in any manner except by an
instrument in writing duly executed by each of the parties hereto.
SECTION 12.5 ASSIGNMENT. This Agreement is binding upon and inures to
the benefit of the successors and assigns of each party to this Agreement, but
no rights, obligations or liabilities under this Agreement may be assigned by
any party without the prior written consent of the other parties hereto.
SECTION 12.6 ANNOUNCEMENTS. All press releases, notices to customers
and suppliers and other announcements prior to the Closing Date with respect to
this Agreement and the transactions contemplated by this Agreement shall be
approved by both Purchaser and Seller prior to the issuance thereof; provided
that any party may make any public disclosure it believes in good faith is
required by law or regulation (in which case the disclosing party shall advise
the other party (which shall be Seller in the case of disclosure proposed to be
made by Purchaser and Purchaser in the case of disclosure proposed to be made
by Seller) prior to making such disclosure and provide such other party an
opportunity to review the proposed disclosure).
SECTION 12.7 EXPENSES. Except as otherwise set forth in this
Agreement, each party to this Agreement shall bear all of its legal,
accounting, investment banking and other expenses incurred by it or on its
behalf in connection with the transactions contemplated by this Agreement,
whether or not such transactions are consummated.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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38
SECTION 12.8 ENTIRE AGREEMENT. Other than the obligations set forth in
the Confidentiality Agreements entered in contemplation of this Agreement, this
Agreement and the Ancillary Agreements constitute the entire agreement between
the parties hereto with respect to the subject matter hereof and supersede and
are in full substitution for any and all prior agreements and understandings
between them relating to such subject matter. The Exhibits and Schedules to
this Agreement are hereby incorporated and made a part hereof and are an
integral part of this Agreement.
SECTION 12.9 DESCRIPTIVE HEADINGS. The descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
SECTION 12.10 COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by any one or more
parties hereto, and each such executed counterpart shall be, and shall be
deemed to be, an original, but all of which shall constitute, and shall be
deemed to constitute, in the aggregate but one and the same instrument.
SECTION 12.11 GOVERNING LAW; JURISDICTION. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the laws
of the State of Texas, without giving effect to the conflict of laws principles
thereof.
SECTION 12.12 CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
Any references to any federal, state, local or foreign statute or law will also
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Unless the context otherwise requires: (a) a term has the
meaning assigned to it by this Agreement; (b) an accounting term not otherwise
defined has the meaning assigned to by GAAP; (c) the word "or" is not
exclusive; (d) the words "include", "includes" and "including" shall be deemed
to be followed by the words "without limitation"; (e) words in the singular
include the plural and in the plural include the singular; (f) provisions apply
to successive events and transactions; and (g) "$" means the currency of the
United States of America.
SECTION 12.13 SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument. Furthermore, in lieu of any such
invalid or unenforceable term or provision, the parties hereto intend that
there shall be added as a part of this Agreement a provision as similar in
terms to such invalid or unenforceable provision as may be possible and be
valid and enforceable.
SECTION 12.14 CONFIDENTIALITY. Seller and Purchaser agree to keep, and
to cause each of their affiliates, directors, officers, and employees to keep,
confidential any and all confidential
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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39
information of the other party that either receives in the course of performing
its obligations hereunder (except that such information may be shared, on a
confidential basis, with the party's attorneys and auditors) and will not,
without the other party's written consent, use any of such confidential
information except as reasonably necessary to perform its duties under this or
another of its agreements with the other party. Upon termination of this
Agreement, each party will return, and will cause its affiliates to return, to
the other party, all original documents and copies of the confidential
information which are in its possession.
SECTION 12.15 EXHIBITS. Notwithstanding anything to the contrary in
this Agreement, the exhibits attached hereto are provided in good faith as a
form of document similar to that which the parties to this Agreement intend to
execute at the closing of this transaction, but the parties to this Agreement
hereby acknowledge and agree that such forms remain subject to further
negotiation by such parties before execution thereof.
IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered
this Agreement as of the day and year first written above.
SELLER:
ALLIED DISTRIBUTING COMPANY OF HOUSTON, INC.
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
AUTO PARTS INVESTMENT GROUP, INC.
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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PURCHASER:
▇▇▇▇▇▇ AUTOMOTIVE GROUP, INC.
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
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