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Exhibit 2.2
ASSET PURCHASE AGREEMENT
DATED SEPTEMBER 22, 1999
BY AND AMONG
RUSH TRUCK CENTERS OF NEW MEXICO, INC.
NEW MEXICO PETERBILT, INC. d/b/a SOUTHWEST PETERBILT
AND
XXXXXX XXXXXXX, XX.
COVERING THE PURCHASE
OF SPECIFIED ASSETS OF
NEW MEXICO PETERBILT, INC.
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TABLE OF CONTENTS
1. GENERAL DEFINITIONS........................................1
1.1 Affiliate.........................................1
1.2 Albuquerque Assignment............................2
1.3 Albuquerque Landlord..............................2
1.4 Albuquerque Lease.................................2
1.5 Article...........................................2
1.6 Arizona Purchase Agreement........................2
1.7 Assets............................................2
1.8 Balance Sheet Date................................2
1.9 Best Knowledge....................................2
1.10 Bonus Payment.....................................2
1.11 Closing...........................................2
1.12 Closing Date......................................2
1.13 Closing Price.....................................2
1.14 Commission. ......................................2
1.15 Common Stock......................................2
1.16 Contracts.........................................2
1.17 Control...........................................3
1.18 Dealer Cost.......................................3
1.19 Deposits..........................................3
1.20 Disclosure Schedule...............................3
1.21 ERISA.............................................3
1.22 Exchange Act......................................3
1.23 Excluded Assets...................................3
1.24 Fair Market Value Warrant.........................3
1.25 GMC...............................................3
1.26 GMC Excluded Assets...............................3
1.27 GMC Operating Agreement...........................3
1.28 Governmental Authority............................3
1.29 Governmental Requirement..........................4
1.30 HSR Act...........................................4
1.31 New Contracts.....................................4
1.33 Person............................................4
1.34 Purchase Price....................................4
1.35 Purchaser Claims..................................4
1.36 Purchaser Damages.................................4
1.38 Purchaser Indemnified Parties.....................4
1.39 Reference Balance Sheet...........................4
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1.40 Registration Rights Agreements....................5
1.42 Rush..............................................5
1.43 Schedule..........................................5
1.45 SEC Documents.....................................5
1.46 Section...........................................5
1.47 Securities........................................5
1.48 Securities Act....................................5
1.49 Securities Laws...................................5
1.51 Seller Claims.....................................5
1.52 Seller Damages....................................5
1.55 Seller Indemnifying Parties.......................6
1.57 Southwest Peterbilt...............................6
1.58 Southwest Truck Center............................6
1.59 Stock Consideration...............................6
1.60 Subsidiary........................................6
1.61 Taxes.............................................6
1.62 Territory.........................................6
1.63 Underwater Warrant................................6
1.64 Warrant Stock.....................................6
2. PURCHASE AND SALE OF THE ASSETS; CLOSING DATE..............6
2.1 Assets to be Purchased............................6
2.2 Purchase and Sale.................................8
2.3 Delivery of Assets and Transfer Documents.........8
2.4 Closing; Closing Date.............................8
3. PURCHASE PRICE.............................................8
3.1 Price and Payment.................................8
3.2 Assumed Obligations..............................10
3.3 Damage to Assets.................................10
3.4 Adjustment of Purchase Price.....................11
3.5 Sales and Use Tax................................11
3.6 Allocation of Purchase Price.....................11
4. REPRESENTATIONS AND WARRANTIES OF SELLER
AND SHAREHOLDER...........................................11
4.1 Incorporation....................................11
4.2 Share Capital....................................12
4.3 Financial Statements.............................12
4.4 Events Since the Balance Sheet Date..............12
4.5 Customer List....................................13
4.6 Taxes and Governmental Returns...................13
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4.7 Employee Matters...................................14
4.8 Contracts and Agreements...........................14
4.9 Effect of Agreement................................16
4.10 Properties, Assets and Leasehold Estates...........16
4.11 Intangible Property................................17
4.12 Suits, Actions and Claims..........................17
4.13 Licenses and Permits; Compliance With
Governmental Requirements..........................17
4.14 Authorization......................................18
4.15 Records............................................18
4.16 Environmental Protection Laws......................18
4.18 Securities Laws Matters............................21
4.19 Brokers and Finders................................22
4.20 Deposits...........................................22
4.21 Work Orders........................................23
4.22 Telephone Numbers..................................23
4.23 No Untrue Statements...............................23
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.................23
5.1 Incorporation......................................23
5.2 Authorization......................................23
5.3 SEC Documents......................................23
5.4 Brokers and Finders................................24
5.5 Effect of Agreement................................24
6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNIFICATIONS,
GUARANTEES, REPRESENTATIONS AND WARRANTIES OF SELLER AND
SHAREHOLDER.................................................25
7. CONTRACTS PRIOR TO THE CLOSING DATE.........................25
7.1 Approval of Contracts..............................25
7.2 Contracts Included in Assets.......................25
8. COVENANTS OF SELLER AND SHAREHOLDER PRIOR
TO CLOSING DATE.............................................25
8.1 Access to Information..............................25
8.2 General Affirmative Covenants......................25
8.3 General Negative Covenants.........................26
8.4 Disclosure of Misrepresentations and Breaches......27
8.5 Government Filings.................................27
8.6 Access to and Inspection of Premises,
Facilities and Equipment...........................27
9. COVENANTS REGARDING THE CLOSING.............................28
9.1 Covenants of Seller and Shareholder................28
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9.2 Covenants of Purchaser............................28
9.3 Inventory Audit...................................28
10. CONDITIONS TO OBLIGATIONS OF PURCHASER.....................29
10.1 Accuracy of Representations and Warranties
and Fulfillment of Covenants......................29
10.2 No Governmental Actions...........................29
10.3 No Adverse Change.................................29
10.4 Update of Contracts...............................29
10.5 No Material Adverse Information...................30
10.6 Notices and Consents..............................30
10.7 Lease Documents...................................30
10.8 Other Documents...................................30
10.9 Dealer License....................................30
10.10 Inventory Audit...................................30
10.11 Due Diligence.....................................30
10.12 Dealership Agreement..............................30
10.13 Governmental Approvals............................31
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER..............31
11.1 Accuracy of Representations and Warranties
and Fulfillment of Covenants......................31
11.2 Governmental Approvals............................31
11.3 Lease Documents...................................31
11.4 Other Documents...................................31
11.5 Inventory Audit...................................31
11.6 Registration Rights Agreement.....................31
11.8 Operating Agreements..............................31
11.9 Governmental Approvals............................32
12. SPECIAL CLOSING AND POST-CLOSING COVENANTS.................32
12.1 Further Assurances................................32
12.2 Delivery of Funds and Other Assets
Collected by Seller...............................32
12.3 Change of Name of Seller..........................32
12.4 Access to Files...................................32
12.5 Exchange Act Filing; Cooperation..................33
12.6 Nondisclosure of Confidential Information.........33
12.7 Assignment of Contracts...........................34
12.9 Agreement Regarding GMC Excluded Assets...........36
13. INDEMNITY BY SELLER AND SHAREHOLDER........................36
13.1 Indemnity.........................................36
13.2 Environmental Liability of the Seller
Indemnifying Parties..............................37
13.3 Notice of Claim...................................38
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13.4 Right of the Seller Indemnifying Parties
to Participate in Defense.........................39
13.5 Payment...........................................39
13.6 Limit of Liability of Shareholder.................39
14. INDEMNITY BY PURCHASER.....................................40
14.1 Indemnity.........................................40
14.2 Environmental Liability of Purchaser..............41
14.3 Notice of Claim...................................42
14.4 Right of Purchaser to Participate in Defense......42
14.5 Payment...........................................42
15. REAL PROPERTY..............................................42
16. SPECIAL PROVISIONS REGARDING EMPLOYEES OF .................43
16.1 New Employees of Purchaser........................43
16.2 No Hiring Commitment..............................43
16.3 Existing Employee Benefit Plans; Assumption
of Vacation and Sick Leave Obligations............43
17. TERMINATION................................................43
17.1 Mutual Consent....................................43
17.2 Failure of Conditions.............................44
17.3 Failure to Close..................................44
18. NOTICES....................................................44
19. GENERAL PROVISIONS.........................................45
19.1 Governing Law; Interpretation; Section
Headings..........................................45
19.2 Severability......................................46
19.3 Entire Agreement..................................46
19.4 Expenses..........................................46
19.5 Further Actions...................................46
19.6 Binding Effect....................................47
19.7 Assignment........................................47
19.8 Amendment; Waiver.................................47
19.9 Gender; Numbers...................................47
19.10 Counterparts......................................47
19.11 Telecopy Execution and Delivery...................47
19.12 Press Releases....................................47
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into this 22nd day of September, 1999, by and among (i) New Mexico Peterbilt,
Inc., d/b/a Southwest Peterbilt, a New Mexico corporation ("Seller"), (ii)
Xxxxxx Xxxxxxx, Xx., the owner of a portion of the capital stock of Seller
("Shareholder"), and (iii) Rush Truck Centers of New Mexico, Inc., a Delaware
corporation ("Purchaser").
W I T N E S S E T H :
WHEREAS, Seller is the owner of all right, title and interest in and
to the assets described in Section 2.1 hereto (the "Assets"), with such Assets
being the assets currently used in the conduct of the heavy duty truck sales
and service business and various related businesses operated by Seller in the
State of New Mexico (collectively, the "Business");
WHEREAS, Seller desires to sell the Assets to Purchaser and Purchaser
desires to acquire the Assets from Seller, all pursuant to this Agreement as
hereinafter provided;
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the execution and delivery of this Agreement, and to set forth
certain additional agreements related to the transactions contemplated hereby;
and
WHEREAS, pursuant to an Asset Purchase Agreement (the "Arizona
Purchase Agreement") of even date herewith between Rush Truck Centers of
Arizona, Inc., a Delaware corporation, Southwest Peterbilt, Inc., an Arizona
corporation and an Affiliate (as defined below) of Seller ("Southwest
Peterbilt"), Southwest Truck Center, Inc., an Arizona corporation and an
Affiliate of Seller ("Southwest Truck Center") (Southwest Peterbilt and
Southwest Truck Center, collectively the "Arizona Dealers") and Shareholder,
the Arizona Dealers have agreed to sell to Rush Truck Centers of Arizona, Inc.
the heavy duty truck sales and service and various related businesses operated
by the Arizona Dealers in the State of Arizona;
NOW, THEREFORE, for and in consideration of the premises, the mutual
representations, warranties and covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. GENERAL DEFINITIONS. For purposes of this Agreement, the following
terms shall have the respective meanings set forth below:
1.1 Affiliate. "Affiliate" of any Person shall mean any Person
Controlling, Controlled by or under common Control with such Person.
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1.2 Albuquerque Assignment. "Albuquerque Assignment" shall have the
meaning assigned thereto in Article 15.
1.3 Albuquerque Landlord. "Albuquerque Landlord" shall have the
meaning assigned thereto in Article 15.
1.4 Albuquerque Lease. "Albuquerque Lease" shall have the meaning
assigned thereto in Article 15.
1.5 Article. "Article" shall mean an Article of this Agreement, unless
otherwise stated.
1.6 Arizona Purchase Agreement. "Arizona Purchase Agreement" shall
have the meaning assigned thereto in the recitals hereto.
1.7 Assets. "Assets" shall have meaning assigned thereto in Section
2.1.
1.8 Balance Sheet Date. "Balance Sheet Date" shall have the meaning
assigned thereto in Section 4.3.
1.9 Best Knowledge. "Best Knowledge" shall mean both what a Person
knew as well as what the Person should have known had the person exercised
reasonable diligence. When used with respect to a Person other than a natural
person, the term "Best Knowledge" shall include matters that are known to the
directors, officers and employees of the Person.
1.10 Bonus Payment. "Bonus Payment" shall have the meaning assigned
thereto in Section 3.1.
1.11 Closing. "Closing" shall have the meaning assigned thereto in
Section 2.4.
1.12 Closing Date. "Closing Date" shall have the meaning assigned
thereto in Section 2.4.
1.13 Closing Price. "Closing Price" shall mean the average weighted
closing price of the Common Stock on The Nasdaq National Market during the ten
(10) consecutive trading day period ending at the close of the third trading
day preceding the Closing Date.
1.14 Commission. "Commission" shall mean the United States Securities
and Exchange Commission.
1.15 Common Stock. "Common Stock" shall mean the Common Stock of Rush,
$.01 par value per share.
1.16 Contracts. "Contracts" shall have the meaning assigned thereto in
Section 4.8.
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1.17 Control. "Control" and all derivations thereof shall mean the
ability to either (i) vote (or direct the vote of) 50% or more of the voting
interests in any Person or (ii) direct the affairs of another, whether through
voting power, contract or otherwise.
1.18 Dealer Cost. "Dealer Cost" shall mean manufacturer's invoice
price to Seller, reduced by the amount of all manufacturer's rebates,
allowances and other price reductions paid or credited to Seller on such
vehicle (other than the manufacturer's reimbursement for dealer preparation and
delivery expenses and any floor plan interest credits for such vehicle), plus
such Seller's actual cost and expense of installation of dealer-installed
options on such vehicle and the pre-delivery inspection costs incurred by
Seller in the normal course of business that are not reimbursed by the
manufacturer; provided such inspection costs for each motor vehicle shall be
limited to the lesser of the actual cost of such pre-delivery inspection to the
new or used truck department of Seller and $500 per Class 8 truck and $250 per
Class 7 truck included in the Assets.
1.19 Deposits. "Deposits" shall have the meaning assigned thereto in
Section 4.20.
1.20 Disclosure Schedule. "Disclosure Schedule" shall have the meaning
assigned thereto in Article 4.
1.21 ERISA. "ERISA" shall have the meaning assigned thereto in Section
4.7.
1.22 Exchange Act. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
1.23 Excluded Assets. "Excluded Assets" shall have the meaning
assigned thereto in Section 2.1.
1.24 Fair Market Value Warrant. "Fair Market Value Warrant" shall have
the meaning assigned thereto in Section 3.1.
1.25 GMC. "GMC" shall mean GMC Truck Division and any successor
thereto.
1.26 GMC Excluded Assets. "GMC Excluded Assets" shall have the meaning
assigned thereto in Section 2.1.
1.27 GMC Operating Agreement. "GMC Operating Agreement" shall have the
meaning assigned thereto in Section 11.8.
1.28 Governmental Authority. "Governmental Authority" shall mean any
and all foreign, federal, state or local governments, governmental
institutions, public authorities and governmental entities of any nature
whatsoever, and any subdivisions or instrumentalities thereof, including, but
not limited to, departments, boards, bureaus, commissions, agencies, courts,
administrations and
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panels, and any divisions or instrumentalities thereof, whether permanent or ad
hoc and whether now or hereafter constituted or existing.
1.29 Governmental Requirement. "Governmental Requirement" shall mean
any and all laws (including, but not limited to, applicable common law
principles), statutes, ordinances, codes, rules, regulations, interpretations,
guidelines, directions, orders, judgments, writs, injunctions, decrees,
decisions or similar items or pronouncements, promulgated, issued, passed or
set forth by any Governmental Authority.
1.30 HSR Act. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
1.31 New Contracts. "New Contracts" shall have the meaning assigned
thereto in Section 10.4.
1.32 Non-Shareholder Employment Agreements. "Non-Shareholder
Employment Agreements" shall have the meaning assigned thereto in Section 10.7.
1.33 Person. "Person" shall mean any natural person, any Governmental
Authority and any entity the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, joint ventures, joint stock companies, trusts,
estates, companies and associations, whether organized for profit or otherwise.
1.34 Purchase Price. "Purchase Price" shall have the meaning assigned
thereto in Section 3.1.
1.35 Purchaser Claims. "Purchaser Claims" shall have the meaning
assigned thereto in Section 13.3.
1.36 Purchaser Damages. "Purchaser Damages" shall have the meaning
assigned thereto in Section 13.1.
1.37 Purchaser Environmental Liabilities. "Purchaser Environmental
Liabilities" shall have the meaning assigned thereto in Section 13.2.
1.38 Purchaser Indemnified Parties. "Purchaser Indemnified Parties"
shall have the meaning assigned thereto in Section 13.1.
1.39 Reference Balance Sheet. "Reference Balance Sheet" shall have the
meaning assigned thereto in Section 4.3.
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1.40 Registration Rights Agreements. "Registration Rights Agreements"
shall have the meaning assigned thereto in Section 11.6.
1.41 Rule 144. "Rule 144" shall mean Rule 144, as amended, under the
Securities Act.
1.42 Rush. "Rush" shall mean Rush Enterprises, Inc., a Texas
corporation and the parent corporation of Purchaser.
1.43 Schedule. "Schedule" shall mean the Schedules to this Agreement,
unless otherwise stated, and shall include the Disclosure Schedule. The
Schedules to this Agreement may be attached to this Agreement or may be set
forth in a separate document denoted as the Schedules to this Agreement, or
both.
1.44 SEC. "SEC" shall mean the United States Securities and Exchange
Commission and any successor thereto.
1.45 SEC Documents. "SEC Documents" shall have the meaning assigned
thereto in Section 5.3.
1.46 Section. "Section" shall mean a Section of this Agreement, unless
otherwise stated.
1.47 Securities. "Securities" shall have the meaning assigned thereto
in Section 4.17.
1.48 Securities Act. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.49 Securities Laws. "Securities Laws" shall have the meaning
assigned thereto in Section 4.18.
1.50 Seller Certificate. "Seller Certificate" shall mean the
certificate to be delivered at Closing to Purchaser pursuant to Article 11.
1.51 Seller Claims. "Seller Claims" shall have the meaning assigned
thereto in Section 14.2.
1.52 Seller Damages. "Seller Damages" shall have the meaning assigned
thereto in Section 14.2.
1.53 Seller Environmental Liabilities. "Seller Environmental
Liabilities" shall have the meaning assigned thereto in Section 14.2.
1.54 Seller Indemnified Parties. "Seller Indemnified Parties" shall
have the meaning assigned thereto in Section 13.1.
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1.55 Seller Indemnifying Parties. "Seller Indemnifying Parties" and
"Seller Indemnifying Party" shall have the meanings assigned thereto in Section
13.1.
1.56 Shareholder Employment Agreement. "Shareholder Employment
Agreement" shall have the meaning assigned thereto in Section 10.7.
1.57 Southwest Peterbilt. "Southwest Peterbilt" shall have the meaning
assigned thereto in the recitals hereto.
1.58 Southwest Truck Center. "Southwest Truck Center" shall have the
meaning assigned thereto in the recitals hereto.
1.59 Stock Consideration. "Stock Consideration" shall have the meaning
assigned thereto in Section 3.1.
1.60 Subsidiary. "Subsidiary" shall mean, with respect to any Person
(the "parent"), (a) any corporation, association, joint venture, partnership or
other business entity of which securities or other ownership interests
representing more than 50% of the ordinary voting power or beneficial interest
are, at the time as of which any determination is being made, owned or
controlled by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent and (b) any joint venture or
partnership of which the parent or any Subsidiary of the parent is a general
partner or has responsibility for its management.
1.61 Taxes. "Tax" and "Taxes" shall mean any and all income, excise,
franchise or other taxes and all other charges or fees imposed or collected by
any Governmental Authority or pursuant to any Governmental Requirement, and
shall also include any and all penalties, interest, deficiencies, assessments
and other charges with respect thereto.
1.62 Territory. "Territory" shall have the meaning assigned thereto in
Section 3.1.
1.63 Underwater Warrant. "Underwater Warrant" shall have the meaning
assigned thereto in Section 3.1.
1.64 Warrant Stock. "Warrant Stock" shall mean the number of shares of
Common Stock equal to $4,000,000 divided by the Closing Price and the result
multiplied by 0.15.
2. PURCHASE AND SALE OF THE ASSETS; CLOSING DATE.
2.1 Assets to be Purchased. The assets to be purchased from Seller are
the following assets held by Seller as of the Closing for use in connection
with all or any part of the Business (collectively, the "Assets"):
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(a) subject to the provisions relating to Excluded Assets set
forth in this Section 2.1, all new 1998, 1999 and 2000 Peterbilt and
GMC motor vehicles inventory,
(b) subject to the provisions relating to Excluded Assets set
forth in this Section 2.1, all new, current and returnable parts and
accessories inventory and all chassis kits,
(c) all miscellaneous inventories, including gas, diesel
fuel, oil, grease, paint and body shop materials,
(d) all work in process and sublet repairs on vehicles in
Seller's service departments,
(e) all of Seller's leasehold improvements, including all
signs, furniture, fixtures and office equipment, other than the
leasehold improvements set forth on Schedule 2.1,
(f) all shop equipment and special tools, and all parts and
accessories equipment,
(g) all company vehicles, excluding the vehicles set forth on
Schedule 2.1,
(h) all promotional, advertising and training materials,
(i) all sales files and customer lists, and all warranty and
service and customer service and repair files,
(j) to the extent transferable, all intangible assets of
Seller to do business in the State of New Mexico as a motor vehicle
dealer, including any permits or licenses issued by any department or
agency of the State of New Mexico for Seller's dealerships,
(k) subject to agreement on price pursuant to Section 3.1
below, all prepaid expenses and deposits,
(l) subject to agreement on price pursuant to Section 3.1
below, all used vehicles,
(m) subject to agreement on price pursuant to Section 3.1
below, all new obsolete parts and accessories and all used parts and
accessories,
(n) subject to the provisions relating to Excluded Assets set
forth in this Section 2.1, all customer deposits and agreements to
sell Peterbilt or GMC vehicles ordered but not delivered to the
customer at the time of Closing, and
(o) subject to the provisions relating to Excluded Assets set
forth in Section 3.1(h), all accounts receivable from finance
companies.
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All other assets of Seller not described in this Section 2.1,
including, without limitation, cash, bank accounts, and the assets described on
Schedule 2.1 (collectively, the "Excluded Assets"), shall not be sold by Seller
to Purchaser. Additionally, notwithstanding anything herein to the contrary, in
the event Purchaser does not enter into a dealer sales and service agreement
with GMC on or before the Closing Date, the GMC vehicles, parts and accessories
inventory and chassis kits and the customer deposits and agreements to sell GMC
vehicles will not be included in the Assets, but will be included in the
Excluded Assets (such GMC Excluded Assets, other than the customer deposits and
agreements to sell GMC vehicles, are hereinafter referred to as the "GMC
Excluded Assets").
2.2 Purchase and Sale. Subject to the terms and conditions herein
contained, Seller agrees to sell, assign, transfer and deliver the Assets to
Purchaser at the Closing (as hereinafter defined), free and clear of any liens
or encumbrances of any nature whatsoever (except for liens, encumbrances or
obligations, if any, expressly assumed by Purchaser hereunder). Subject to the
terms and conditions herein contained, Purchaser agrees to purchase from Seller
the Assets in consideration for the Purchase Price (as hereinafter defined)
payable as set forth in Section 3.
2.3 Delivery of Assets and Transfer Documents. At the Closing, Seller
and Shareholder shall take all steps necessary to put Purchaser in possession
of the Assets, free and clear of any liens or encumbrances of any nature
whatsoever (except for liens, encumbrances or obligations, if any, expressly
assumed by Purchaser hereunder), and shall deliver to Purchaser (i) a duly
executed General Conveyance, Assignment and Assumption Agreement covering the
Assets and the Assumed Obligations, in substantially the form attached hereto
as Exhibit 2.3, (ii) duly executed title and transfer documents covering any
assets for which there exists a certificate of title, and (iii) such other duly
executed transfer and release documents as Purchaser shall reasonably request
to evidence the transfer of the Assets to Purchaser free and clear of any liens
or encumbrances of any nature whatsoever (except for liens, encumbrances or
obligations, if any, expressly assumed by Purchaser hereunder).
2.4 Closing; Closing Date. Subject to the terms and conditions herein
contained, the consummation of the transactions referenced above shall take
place (the "Closing") on or before October 1, 1999, at 10:00 a.m., local time,
at the offices of Seller's counsel in Phoenix, Arizona, or at such other time,
date and place as Purchaser and Seller shall in writing designate. The date of
the Closing is referred to herein as the "Closing Date".
3. PURCHASE PRICE.
3.1 Price and Payment. Subject to adjustment as provided in Sections
3.3 and 3.4 with respect to damaged assets, prorations, deposits and certain
other items, the aggregate consideration (the "Purchase Price") to be paid by
Purchaser for the Assets is as follows:
(a) $1,650,000 to be paid in cash by wire transfer at
Closing, plus
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(b) 53,333 shares of Common stock to be issued at
Closing (the "Stock Consideration"), plus
(c) an amount to be paid in cash at Closing equal to
Dealer Cost for each vehicle described in Section
2.1(a), plus
(d) an amount to be paid in cash at Closing equal to the
replacement cost of the items described in Sections
2.1(b) and (c), plus
(e) an amount to be paid in cash at Closing equal to
Seller's actual cost of the work in process and
sublet repairs described in Section 2.1(d), plus
(f) an amount to be paid in cash at Closing equal to the
depreciated book value (determined in accordance
with generally accepted accounting principles,
consistently applied) at Closing of the items
described in Sections 2.1(e), (f) and (g), plus
(g) an amount to be agreed upon by Seller and Purchaser
to be paid in cash at Closing for the items
described in Sections 2.1(k), (l) and (m) (provided
that if Seller and Purchaser cannot agree on the
amount to be paid for any Asset described in these
Sections, such Asset shall be an Excluded Asset),
plus
(h) an amount to be paid in cash at Closing equal to the
net book value of the accounts receivable described
in Section 2.1(o), less an amount estimated by
Seller and Purchaser to be payable or deductible in
the future for prepayments and bad debts in
connection with repossessions with respect to such
accounts receivable (provided that if Seller and
Purchaser cannot agree on such amount, such Asset
shall be an Excluded Asset), plus
(i) one of the following, at the election of
Shareholder, to be issued at Closing: (a) a warrant
(the "Fair Market Value Warrant") to purchase the
Warrant Stock at an exercise price equal to the
Closing Price, (b) a warrant (the "Underwater
Warrant") to purchase the Warrant Stock at an
exercise price equal to $5.00 greater than the
Closing Price plus the agreement of Purchaser to pay
Seller a consulting fee of $2,750 per month, or (c)
the agreement of Purchaser to pay Seller a
consulting fee of $3,501 per month. The Fair Market
Value Warrant and the Underwater Warrant shall
expire on the date the Bonus Payment is paid. The
consulting fee shall be payable monthly on the last
day of each month until the date the Bonus Payment
is paid. Shareholder must make the election on or
before Closing and must make the same election for
Southwest Peterbilt, Seller and Southwest Truck
Center.
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The warrant shall be issued and the consulting fee
shall be paid, upon such other terms and conditions
as the parties thereto may agree.
When and if Purchaser and/or its Affiliates sell 750 or more new Class
7 or 8 Peterbilt trucks in the Territory or outside the Territory through sales
personnel employed in the Territory (including sales to any affiliated leasing
company or division in the Territory), Purchaser shall pay Seller at the end of
the calendar month in which such performance criteria is satisfied, but no
earlier than at the end of the 24 month period after the Closing Date, an
amount equal to $600,000 (the "Bonus Payment"). The Bonus Payment, if paid,
shall be paid in cash by wire transfer and shall be additional consideration
for the Assets and shall be included in the Purchase Price. The "Territory"
shall be defined as the territory under Seller's and the Arizona Dealers'
dealership agreements with Peterbilt Motors Company, a division of PACCAR, Inc.
("PACCAR").
Within 15 calendar days after the end of each calendar month prior to
the date the Bonus Payment is paid, Purchaser shall provide Seller a written
report detailing the number of Class 7 and 8 Peterbilt trucks sold in the
Territory or through sales personnel employed in the Territory during such
month, together with all supporting documentation reasonably requested by
Seller, at Purchaser's cost and expense. Purchaser shall, and shall cause its
Affiliates, employees, agents, representatives, officers and directors to use
their best efforts to sell Class 7 and 8 Peterbilt trucks in the Territory
prior to the date the Bonus Payment is paid.
All cash payments at Closing shall be subject to the adjustment
provisions of Sections 3.3 and 3.4. Purchaser shall not pay any cash or issue
any Common Stock for the conveyance of the items identified in Sections 2.1(h),
(i), (j), (m) and (n).
3.2 Assumed Obligations. At the Closing, Purchaser shall assume and
agree to timely discharge (a) the obligations of Seller under all contracts and
agreements transferred by Seller to Purchaser under this Agreement that are (i)
listed and described on Schedule 4.8 or on the updated list of contracts
required by Section 10.4 and (ii) accepted in writing by Purchaser pursuant to
the provisions of Section 4.8, Article 7 or Section 10.4, (b) certain vacation
and sick leave obligations of Seller pursuant to Section 16.3 and (c) all
contingent obligations related to the accounts receivable referenced in Section
2.1(n) to the extent such accounts receivable are included in the Assets;
provided that Purchaser specifically does not assume any liabilities of Seller
under any contracts or agreements with respect to any breaches of such
contracts or agreements occurring on or before the Closing Date or any damages
to third parties resulting from acts, events or omissions occurring on or
before the Closing Date. Except as specifically set forth in this Section 3.2,
Purchaser shall not assume, and shall not be treated as having assumed, any
liability or obligation of Seller of any nature whatsoever.
3.3 Damage to Assets. If, on or before the Closing Date, any of the
Assets are damaged or destroyed, Seller will immediately notify Purchaser in
writing of such damage or destruction. In the event of any such damage or
destruction, Purchaser shall (i) remove any or all of the damaged
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or destroyed asset or assets it does not desire to purchase from the Assets to
be purchased hereunder and reduce the cash portion of the Purchase Price by an
amount equal to the portion of the Purchase Price attributable to the damaged
or destroyed asset or assets so removed and (ii) complete the purchase of the
remainder of the Assets and reduce the cash portion of the Purchase Price by
the loss in fair market value of any damaged or destroyed Assets that are
purchased by Purchaser.
3.4 Adjustment of Purchase Price. The Purchase Price shall be adjusted
on the Closing Date (i) to reduce the Purchase Price by the amount allocated to
any damaged or destroyed Assets as contemplated by Section 3.3; (ii) to account
for a proration of property taxes on the Assets, lease payments, utilities and
other items commonly prorated; (iii) to account for any Deposits held by Seller
on the Closing Date; and (iv) to reduce the Purchase Price for the value of any
vacation and sick time obligations of Seller assumed by Purchaser pursuant to
Section 16.3. Three (3) days prior to the Closing Date, Seller will provide
Purchaser with a statement of adjustments showing all proposed adjustments to
the Purchase Price, such statement of adjustments having all reasonable back up
documentation for such suggested adjustments. Purchaser and Seller will work to
finalize all required adjustments prior to the Closing Date.
3.5 Sales and Use Tax. Seller shall be responsible for payment to the
appropriate Governmental Authority of all sales and use tax in connection with
the consummation of the transactions contemplated by this Agreement.
3.6 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets to the extent relevant for income tax purposes in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended,
and Schedule 3.6 attached hereto. The parties agree to report the transactions
contemplated by this Agreement for tax purposes in accordance with the
allocation shown on Schedule 3.6, and each party will indemnify and hold each
other party harmless from any loss, cost, damage, additional tax or expense
(including attorneys' fees) arising from any failure by the indemnifying party
to so report such transactions.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER. Seller
and Shareholder hereby jointly and severally represent and warrant to Purchaser
that the statements contained in this Article 4 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Article 4), except as set forth in
the disclosure schedule delivered by Seller and Shareholder to Purchaser on the
date hereof and initialed by Seller and Shareholder (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the numbered paragraphs contained in this Article 4, and any
disclosure on any part of the Disclosure Schedule shall be deemed a disclosure
on all other parts of the Disclosure Schedule provided the required disclosure
is fully and accurately disclosed.
4.1 Incorporation. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of its incorporation,
and is duly authorized, qualified and
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licensed under all applicable Governmental Requirements to carry on its
business in the places and in the manner as now conducted in the State of New
Mexico. Seller is not qualified as a foreign corporation in any jurisdiction,
and Seller is not required to qualify or otherwise be authorized to do business
as a foreign corporation in any jurisdiction in order to carry on any of its
businesses as now conducted or to own, lease or operate the Assets.
4.2 Share Capital. Part 4.2 of the Disclosure Schedule is a list of
all Persons owning capital stock of Seller with an indication thereon of the
class of capital stock and the number of shares of each class owned by each
such Person.
4.3 Financial Statements. Seller has delivered to Purchaser copies of
the following combined financial statements for Southwest Peterbilt and
affiliates, all of which financial statements are included in Schedule 4.3
hereto:
(a) Unaudited Balance Sheet (the "Reference Balance Sheet")
as of July 31, 1999, (the "Balance Sheet Date") and Unaudited Income
Statement for the seven-month period ended on the Balance Sheet Date;
and
(b) Audited Balance Sheets, Income Statements and Statements
of Changes in Financial Position for Seller's two (2) most recent
fiscal years.
All financial statements supplied to Purchaser by Seller, whether or not
included in Schedule 4.3 hereto, are and will be true and accurate in all
material respects, have been and will be prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated, and will present fairly in all material respects the
financial condition of Seller as of the dates and for the periods indicated
thereon, except as otherwise indicated in the notes thereto. The Reference
Balance Sheet reflects, as of the Balance Sheet Date, all liabilities, debts
and obligations of any nature of Seller, whether accrued, absolute, contingent
or otherwise, and whether due, or to become due, including, but not limited to,
liabilities, debts or obligations on account of Taxes to the extent such items
are required to be reflected on such balance sheet under generally acceptable
accounting principles consistently applied.
4.4 Events Since the Balance Sheet Date. Since the Balance Sheet Date,
there has not been:
(a) any change in the condition (financial or otherwise) or
in the properties, assets, liabilities, business or prospects of all
or any part of the Business, except normal and usual changes in the
ordinary course of business, none of which has been adverse and all of
which in the aggregate have not been adverse;
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(b) any labor trouble, strike or any other occurrence, event
or condition affecting the employees of Seller that adversely affects
the condition (financial or otherwise) of the Assets or all or any
part of the Business;
(c) any breach or default by Seller or, to the Best Knowledge
of Seller and Shareholder, by any other party, under any agreement or
obligation included in the Assets or by which any of the Assets are
bound;
(d) any damage, destruction or loss (whether or not covered
by insurance) adversely affecting the Assets or the Business;
(e) to the Best Knowledge of Seller and Shareholder, any
legislative or regulatory change adversely affecting the Assets or the
Business;
(f) any change in the types, nature, composition or quality
of the services of the Business, any adverse change in the
contributions of any of the service lines of the Business to the
revenues or net income of such Business, or any adverse change in the
sales, revenue or net income of the Business;
(g) any transaction related to or affecting the Assets or the
Business other than transactions in the ordinary course of business of
Seller; or
(h) any other occurrence, event or condition that has
adversely affected (or can reasonably be expected to adversely affect)
the Assets or the Business.
4.5 Customer List. Part 4.5 of the Disclosure Schedule sets forth a
true, correct and complete list of all customers of the Business to which
Seller has sold or provided products or services during the two (2) years
immediately preceding the date hereof. Immediately prior to the Closing, Seller
shall deliver to Purchaser a true, correct and complete update of this list as
of the Closing Date.
4.6 Taxes and Governmental Returns. As of the date hereof, all Tax
returns, information returns and governmental reports of every nature required
by any Governmental Authority or Governmental Requirement to be filed by Seller
or which include or should include Seller, including, but not limited to, those
relating to Taxes of any nature to which Seller or any of its business is
subject ("Governmental Returns"), have been filed for all periods ending on or
before the date hereof (except for any returns not yet due), and all Taxes
shown to be due and payable on such Governmental Returns or on any assessments
related to such Governmental Returns have been paid. All such Governmental
Returns and reports and the information and data contained therein have been
properly and accurately compiled and completed, fairly present the information
purported to be shown therein, and reflect all Tax liabilities of Seller for
the periods covered by such Governmental Returns. Seller has no unpaid
liability for any Taxes of any nature whatsoever for
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any period prior to the date hereof. To the Best Knowledge of Seller and
Shareholder, none of the Governmental Returns of Seller or that include Seller
have been audited, and none are now under audit, by any Governmental Authority.
There are no agreements, waivers or other arrangements providing for an
extension of time with respect to the assessment of any Taxes of any nature
against Seller or with respect to any Governmental Return filed by Seller or
that include Seller, or any suits or other actions, proceedings, investigations
or claims now pending or threatened against Seller with respect to any Taxes or
any matters under discussion with any Governmental Authority relating to any
Taxes, or any claims for additional Taxes asserted by any Governmental
Authority.
4.7 Employee Matters. Part 4.7 of the Disclosure Schedule sets forth a
true and complete list of the names of and current annual compensation paid by
Seller to each employee of Seller utilized in connection with the operation of
the Business. With respect to each employee hired after November 6, 1986, a
copy of the Form I-9 completed pursuant to the Immigration Reform and Control
Act of 1986, and the rules and regulations promulgated thereunder, has been
attached to Part 4.7 of the Disclosure Schedule. Seller does not have any
employee benefit plans (including, but not limited to, pension plans and health
or welfare plans), arrangements or understandings, whether formal or informal.
Purchaser will have no liability with respect to any such plans as a result of
the transactions contemplated by this Agreement. Seller does not now contribute
and has not ever contributed to a "multiemployer plan" as defined in section
4001(a)(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Seller has complied with all applicable provisions of ERISA and all
rules and regulations promulgated thereunder and neither Seller nor any
trustee, administrator, fiduciary, agent or employee thereof has at anytime
been involved in a transaction that would constitute a "prohibited transaction"
within the meaning of Section 406 of ERISA. Seller is not a party to any
collective bargaining or other union agreements. Seller has not, within the
last five years, had or been threatened with any union activities, work
stoppages or other labor trouble with respect to its employees which had or
might have had a material adverse effect on any of the Business. To the Best
Knowledge of Seller and Shareholder, no union activities, work stoppages or
other labor trouble with respect to the employees of any of the customers or
suppliers of the Business are pending or threatened which might have an adverse
effect on the Business. Other than wage increases in the ordinary course of
business, since the Balance Sheet Date, Seller has not made any commitment or
agreement to increase the wages or modify the conditions or terms of employment
of any of the employees of Seller used in connection with the Business, and
between the date of this Agreement and the Closing Date, Seller will not make
any agreement to increase the wages or modify the conditions or terms of
employment of any of the employees of Seller used in connection with the
Business without the prior written approval of Purchaser.
4.8 Contracts and Agreements. Part 4.8 of the Disclosure Schedule sets
forth a true and complete list of and briefly describes (including termination
date) all of the following contracts, agreements, leases, licenses, plans,
arrangements or commitments, written or oral, that relate to the Assets or the
Business (including all amendments, supplements and modifications thereto):
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(a) all contracts, agreements or commitments in respect of
the sale of products or services or the purchase of raw materials,
supplies or other products or utilities;
(b) all offers, tenders or the like outstanding and capable
of being converted into an obligation of Seller by the passage of time
or by an acceptance or other act of some other person or entity or
both;
(c) all sales, agency or distributorship agreements or
franchises or legally enforceable commitments or obligations with
respect thereto;
(d) all collective bargaining agreements, union agreements,
employment agreements, consulting agreements or agreements providing
for the services of an independent contractor;
(e) all profit-sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health
insurance or other employee benefit plans, agreements, arrangements or
commitments of any nature whatsoever, whether or not legally binding,
and all agreements with any present or former officer, director or
shareholder of Seller;
(f) all loan or credit agreements, indentures, guarantees
(other than endorsements made for collection), mortgages, pledges,
conditional sales or other title retention agreements, and all
equipment financing obligations, lease and lease-purchase agreements
relating to or affecting the Assets or the Business;
(g) all leases related to the Assets or the Business;
(h) all performance bonds, bid bonds, surety bonds and the
like, all contracts and bids covered by such bonds, and all letters of
credit and guaranties;
(i) all consent decrees and other judgments, decrees or
orders, settlement agreements and agreements relating to competitive
activities, requiring or prohibiting any future action;
(j) all accounts, notes and other receivables, and all
security therefor, and all documents and agreements related thereto;
(k) all contracts or agreements of any nature with any
shareholder of Seller or any Affiliate of any shareholder of Seller;
and
(l) all contracts, commitments and agreements entered into
outside the ordinary course of the operation of the Business.
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All of such contracts, agreements, leases, licenses, plans, arrangements, and
commitments and all other such items included in the Assets but not
specifically described above (collectively, the "Contracts") are valid, binding
and in full force and effect in accordance with their terms and conditions and
there is no existing default thereunder or breach thereof by Seller, or, to the
Best Knowledge of Seller and Shareholder, by any other party to the Contracts,
or any conditions which, with the passage of time or the giving of notice or
both, might constitute such a default by Seller, or, to the Best Knowledge of
Seller and Shareholder, by any other party to the Contracts, and the Contracts
will not be breached by or give any other party a right of termination as a
result of the transactions contemplated by this Agreement. To the Best
Knowledge of Seller and Shareholder there is no reason why any of the Contracts
(i) will result in a loss to Purchaser on completion by performance or (ii)
cannot readily be fulfilled or performed by Purchaser with the Assets on time
without undue or unusual expenditure of money or effort. Copies of all of the
documents (or in the case of oral commitments, descriptions of the material
terms thereof) relevant to the Contracts listed in Part 4.8 of the Disclosure
Schedule have been delivered by Seller to Purchaser, and such copies and/or
descriptions are true, complete and accurate and include all amendments,
supplements or modifications thereto. After reviewing the Contracts, Purchaser
may, at its sole option, choose not to assume one or more of the Contracts,
and, within 30 days of receipt by Purchaser of all information reasonably
requested by Purchaser with respect to the Contracts, Purchaser shall notify
Seller of which Contracts, if any, Purchaser does not intend to assume
hereunder. Except for Contracts, if any, that Purchaser notifies Seller that it
will not assume, all of the Contracts are and shall be included in the Assets.
All of the material Contracts may be assigned to Purchaser without the approval
or consent of any Person, or, if such approval or consent is required, it will
be obtained by Seller and delivered to Purchaser at or prior to the Closing.
4.9 Effect of Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not (i)
result in any breach of any of the terms or conditions of, or constitute a
default under, the Articles of Incorporation or other charter documents or
bylaws of Seller, or any commitment, mortgage, note, bond, debenture, deed of
trust, contract, agreement, license or other instrument or obligation to which
Seller is now a party or by which Seller or any of its properties or assets may
be bound or affected; (ii) result in any violation of any Governmental
Requirement applicable to Seller, the Assets or the Business; (iii) cause
Purchaser to lose the benefit of any right or privilege included in the Assets;
(iv) relieve any Person of any obligation (whether contractual or otherwise) or
enable any Person to terminate any such obligation or any right or benefit
enjoyed by Seller or to exercise any right under any agreement in respect of
the Assets or the Business; or (v) require notice to or the consent,
authorization, approval or order of any Person (except as may be contemplated
by the last sentence of Section 4.8). To the Best Knowledge of Seller and
Shareholder, the business relationships of clients, customers and suppliers of
the Business will not be adversely affected by the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
4.10 Properties, Assets and Leasehold Estates. Seller owns or has the
right to use (pursuant to a valid lease or license disclosed on Part 4.8 of the
Disclosure Schedule) all operating
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assets and properties necessary for Seller to conduct the Business in the
manner presently conducted by Seller, and all of such operating assets and
properties (or, in the case of leased assets, the leases covering such assets)
are included in the Assets. Seller has good and marketable title to all the
Assets, free and clear of all mortgages, liens, pledges, conditional sales
agreements, charges, easements, covenants, assessments, options, restrictions
and encumbrances of any nature whatsoever. The plants, structures, equipment,
vehicles and other tangible properties included in the Assets and the tangible
property leased by Seller under leases included in the Assets are in good
operating condition and repair, normal wear and tear excepted, and are capable
of being used for their intended purpose in the Business as now conducted. The
Assets include all existing warranties and service contracts with respect to
any of the Assets to the extent the same are capable of being assigned to
Purchaser. During the past two years, there has not been any significant
interruption of the Business due to the breakdown or inadequate maintenance of
any of the Assets. All plants, structures, equipment, vehicles and other
tangible properties included in the Assets, and the present use of all such
items, conform to all applicable Governmental Requirements, and no notice of
any violation of any such Governmental Requirements relating to such assets or
their use has been received by Seller. The Assets include all easements, rights
of ingress and egress, and utilities and services necessary for the conduct of
the Business.
4.11 Intangible Property. The operation of the Business as now
conducted by Seller does not require the use of or consist of any rights under
any trademarks, trade names, brand names, service marks or copyrights other
than "Peterbilt", "Ford", "GMC", "Southwest Peterbilt", "New Mexico Peterbilt",
"New Mexico Peterbilt - GMC Trucks", "Cummins", "Detroit Diesel",
"Caterpillar", "New Mexico Peterbilt - Ford Trucks" and "New Mexico Truck
Leasing".
4.12 Suits, Actions and Claims. There are no suits, actions, claims,
inquiries or investigations by any Person, or any legal, administrative or
arbitration proceedings in which Seller is engaged or which are pending or, to
the Best Knowledge of Seller and Shareholder, threatened against or affecting
Seller or any of its properties, assets or business, or to which Seller is or
might become a party, or which question the validity or legality of the
transactions contemplated hereby, no basis or grounds for any such suit,
action, claim, inquiry, investigation or proceeding exists, and there is no
outstanding order, writ, injunction or decree of any Governmental Authority
against or affecting Seller or any of its properties, assets or business.
Without limiting the foregoing, neither Seller nor Shareholder has any Best
Knowledge of any state of facts or the occurrence of any event forming the
basis of any present or potential claim against Seller.
4.13 Licenses and Permits; Compliance With Governmental Requirements.
Part 4.13 of the Disclosure Schedule sets forth a true and complete list of all
licenses and permits necessary for the conduct of the Business. Seller has all
such licenses and permits validly issued to it and in its name, and all such
licenses and permits are in full force and effect. True and correct copies of
all such licenses and permits are attached to Part 4.13 of the Disclosure
Schedule. No violations are or have been recorded in respect of such licenses
or permits and no proceeding is pending or, to the Best Knowledge of Seller and
Shareholder, threatened seeking the revocation or limitation of any
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of such licenses or permits. All such licenses and permits that are subject to
transfer are included in the Assets, and all such licenses and permits that are
not subject to transfer are conspicuously marked as such on Part 4.13 of the
Disclosure Schedule. Seller has complied in all material respects with all
Governmental Requirements applicable to its business, and all Governmental
Requirements with respect to the distribution and sale of products and services
by it.
4.14 Authorization. Seller and Shareholder have full legal right,
power, and authority to enter into and deliver this Agreement and to consummate
the transactions set forth herein and to perform all the terms and conditions
hereof to be performed by them. The execution and delivery of this Agreement by
Seller and Shareholder and the performance by each of them of the transactions
contemplated herein have been duly and validly authorized by all requisite
corporate action of Seller and by Shareholder, and this Agreement has been duly
and validly executed and delivered by Seller and Shareholder and is the legal,
valid and binding obligation of each of them, enforceable against each of them
in accordance with its terms, except as limited by applicable bankruptcy,
moratorium, insolvency or other similar laws affecting generally the rights of
creditors or by principles of equity.
4.15 Records. The books, records and minutes kept by Seller with
respect to the Assets and the Business, including, but not limited to, all
customer files, service agreements, quotations, correspondence, route sheets
and historic revenue data of Seller, contain records of all matters required to
be included therein by any Governmental Requirement or by generally accepted
accounting principles, and such books, records and minutes are true, accurate
and complete in all material respects and (except for corporate minute books
and stock records) are included in the Assets.
4.16 Environmental Protection Laws.
(a) For purposes of this Section 4.16, unless the context
otherwise specifies or requires, the following terms shall have the
meaning herein defined:
(i) "Waste Materials" shall mean
(A) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976, 42.
U.S.C. xx.xx. 6901 et seq., as amended from time to
time, and regulations promulgated thereunder;
(B) any "hazardous substance" as defined by
the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C.
xx.xx. 9601, et seq., as amended from time to time;
(C) asbestos;
(D) polychlorinated biphenyls;
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(E) underground storage tanks, whether
empty, filled or partially filled with any
substance;
(F) any other substance the presence of
which is prohibited by any Governmental Requirement;
and
(G) any other substance which by any
Governmental Requirement requires special handling
or notification of any federal, state or local
governmental entity in its collection, storage,
treatment, recycling, or disposal.
(ii) "Waste Materials Contamination" shall mean the
presence of Waste Materials on, in or under any property
whatsoever which is associated with or is in any way related
to the Assets or the Business, including the improvements,
facilities, soil, ground, water or air.
(b) All business conducted by Seller, including but not
limited to the Business, has been and is being operated, and the
assets of Seller, including but not limited to the Assets, have been
and are being used and were obtained, in all respects in compliance
with all Governmental Requirements.
(c) Seller is not now, and has not ever been, in violation of
any Governmental Requirement. The Assets, the Business and all of the
operations of Seller are in full compliance with all Governmental
Requirements relating to Waste Materials, and no judicial or
administrative actions, including non-compliance orders or demand
letters, are pending that relate to such Governmental Requirements.
Without in any way limiting the foregoing, Seller and Shareholder
hereby jointly and severally specifically represent and warrant that
to the Best Knowledge of Seller and Shareholder:
(i) Seller has complied with all applicable
Governmental Requirements relating to pollution and
environmental control;
(ii) Seller is not in violation of any of the
permits described in or required to be described on Part 4.13
of the Disclosure Schedule or any Governmental Requirement
regulating emissions, discharges or releases (including
solids, liquids and gases) into the environment or the proper
transportation, handling, storage, treatment or disposal of
materials;
(iii) Seller has received all permits and approvals
with respect to emissions, discharges or releases (including
solids, liquids and gases) into the environment and the
proper transportation, handling, storage, treatment and
disposal
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of materials required for the operation of the businesses of
Seller as presently conducted;
(iv) Seller has kept all records and made all
filings required by applicable Governmental Requirements with
respect to emissions, discharges or releases (including
solids, liquids and gases) into the environment and the
proper transportation, handling, storage, treatment and
disposal of materials;
(v) All hazardous waste, hazardous materials and
hazardous substances attributable to the Assets, the Business
or the operations of Seller on, in or under any real property
owned or leased by Seller have been removed and no past or
present disposal, spill, or other release of hazardous waste,
hazardous materials or hazardous substances attributable to
the Assets, the Business or the operations of Seller on, in,
under or adjacent to any real property owned or leased by
Seller will subject Purchaser to corrective or response
action or any other liability under any Governmental
Requirement or the common law;
(vi) No investigation, administrative order, consent
order and agreement, litigation or settlement with respect to
Waste Materials or Waste Materials Contamination is proposed,
threatened, anticipated or in existence with respect to the
Assets or the Business. None of the Assets are currently on,
and to the Best Knowledge of Seller and Shareholder, have
ever been on, any federal or state "Superfund" or "Superlien"
list.
(vii) Seller does not have any contingent
liabilities under any Governmental Requirement to any Person,
whether or not such contingent liability is required pursuant
to generally accepted accounting principles to be reflected
on the financial statements of Seller, in connection with any
emission, discharge or release of any hazardous or toxic
waste, substance or constituent or any other substance into
the environment caused by Seller; and
(viii) Seller has not handled, treated, stored,
generated, transported or disposed of any Waste Material in
contravention of any Governmental Requirement, and there have
been no acts or omissions of Seller or any of its agents or
employees that would result in liability under any
Governmental Requirement.
(d) Seller has, and has listed on Part 4.13 of the Disclosure
Schedule, all necessary environmental and operations permits for
operations relating to the Business or the Assets.
4.17 No Underground Storage Tanks. Except as described in the
Disclosure Schedule, there are no underground storage tanks located on any of
the premises to be leased by Purchaser pursuant to the provisions of Article
15.
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4.18 Securities Laws Matters.
(a) Except as expressly set forth in the Registration Rights
Agreements, Seller recognizes and understands that the Stock
Consideration, the warrants described in Section 3.1, and the Common
Stock issued upon exercise of such warrants (collectively, the
"Securities") will not be registered under the Securities Act, or
under the securities laws of any state (the Securities Act and such
securities laws, collectively the "Securities Laws"). The Securities
are not being so registered in reliance upon exemptions from the
Securities Laws which are predicated, in part, on the representations,
warranties and agreements of Seller contained herein.
(b) (i) Seller has business knowledge and experience, such
experience being based on actual participation therein, (ii) Seller is
capable of evaluating the merits and risks of an investment in the
Securities and the suitability thereof as an investment therefor,
(iii) the Securities will be acquired solely for investment and not
with a view toward resale or redistribution in violation of the
Securities Laws, (iv) in connection with the transactions contemplated
hereby, no assurances have been made concerning the future results of
Purchaser or Rush or any Affiliate thereof or as to the value of the
Securities and (v) Seller is an "accredited investor" within the
meaning of (i) Regulation D promulgated by the SEC pursuant to the
Securities Act and (ii) the New Mexico Securities Act and the
regulations promulgated thereunder. Seller understands that neither
Purchaser nor Rush is under any obligation to file a registration
statement or to take any other action under the Securities Laws with
respect to any such Securities except as expressly set forth in the
Registration Rights Agreements.
(c) Seller has consulted with Seller's own counsel in regard
to the Securities Laws and is fully aware (i) of the circumstances
under which Seller is required to hold the Securities, (ii) of the
limitations on the transfer or disposition of the Securities, (iii)
that the Securities must be held indefinitely unless the transfer
thereof is registered under the Securities Laws or an exemption from
registration is available and (iv) that no exemption from registration
is likely to become available for at least one year from the date of
acquisition of the Securities. Seller has been advised by Seller's
counsel as to the provisions of Rules 144 and 145 as promulgated by
the Commission under the Securities Act and has been advised of the
applicable limitations thereof. Seller acknowledges that Purchaser and
Rush are relying upon the truth and accuracy of the representations
and warranties in this Section 4.18 by Seller in consummating the
transactions contemplated by this Agreement without registering the
Securities under the Securities Laws.
(d) Seller has been furnished with (i) the definitive proxy
statement filed with the Commission in connection with the annual
meeting of stockholders of Rush held on May 18, 1999 and (ii) copies
of Rush's Amendment No. 2 to Form S-1 Registration Statement and
Prospectus to Form S-1 filed on Form 424(b)(4), Annual Report on Form
10-K for the year
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ended December 31, 1998, and Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1999 and June 30, 1999, filed with the
Commission under the Exchange Act. Seller has been furnished with the
complete financial statements of Rush for the fiscal years ended 1996,
1997 and 1998. Seller has been furnished with a summary description of
the terms of the Common Stock and Purchaser and Rush have made
available to Seller the opportunity to ask questions and receive
answers concerning the terms and conditions of the transactions
contemplated by this Agreement and to obtain any additional
information which they possess or could reasonably acquire for the
purpose of verifying the accuracy of information furnished to Seller
as set forth herein or for the purpose of considering the transactions
contemplated hereby. Rush has offered to make available to Seller upon
request at any time all exhibits filed by Rush with the Commission as
part of any of the reports filed therewith.
(e) Seller agrees that the certificates representing the
Securities will be imprinted with the following legend, the terms of
which are specifically agreed to:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS AND ARE
"RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE 144
UNDER THE ACT. NEITHER THE SHARES NOR ANY INTEREST THEREIN
MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE
SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH
ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THE
HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY
TO THE COUNSEL FOR THIS CORPORATION, IS AVAILABLE.
Seller understands and agrees that appropriate stop transfer notations will be
placed in the records of Rush and with its transfer agent in respect of the
Securities.
4.19 Brokers and Finders. No broker or finder has acted for Seller or
Shareholder in connection with this Agreement or the transactions contemplated
by this Agreement and no broker or finder is entitled to any brokerage or
finder's fee or to any commission in respect thereof based in any way on
agreements, arrangements or understandings made by or on behalf of Seller or
Shareholder.
4.20 Deposits. Seller does not hold any deposits or prepayments by
third parties with respect to any of the Assets or the Business ("Deposits")
which are not reflected as liabilities on
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Seller's Reference Balance Sheet. If Seller holds any Deposits as of the
Closing Date, Purchaser will be given credit against the cash portion of the
Purchase Price for the amount of any such Deposits pursuant to Section 3.4
hereof.
4.21 Work Orders. There are no outstanding work orders or contracts
relating to any portion of the Assets from or required by any policy of
insurance, fire department, sanitation department, health authority or other
governmental authority nor is there any matter under discussion with any such
parties or authorities relating to work orders or contracts.
4.22 Telephone Numbers. All telephone numbers used by Seller in
connection with the Business are included in the Assets and will not be used by
Seller or Shareholder following the Closing, except by Shareholder in the
conduct of Purchaser's business.
4.23 No Untrue Statements. The statements, representations and
warranties of Seller and Shareholder set forth in this Agreement, the
Schedules, the Seller Certificate and the exhibits and annexes attached hereto
do not include (and in the case of the Seller Certificate, will not include)
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements, representations and warranties made not
misleading. To the Best Knowledge of Seller and Shareholder, there is no fact
or matter that is not disclosed to Purchaser in this Agreement or the Schedules
that materially and adversely affects or, so far as Seller or Shareholder can
now reasonably foresee, could materially and adversely affect the condition
(financial or otherwise) of any of the Assets or the Business or the ability of
Seller or Shareholder to perform their respective obligations under this
Agreement.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to Seller as follows:
5.1 Incorporation. Purchaser and Rush are each a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and the State of Texas, respectively.
5.2 Authorization. Purchaser has full legal right and corporate power
to enter into and deliver this Agreement and to consummate the transactions set
forth herein and to perform all the terms and conditions hereof to be performed
by it. This Agreement has been duly executed and delivered by Purchaser and is
a legal, valid and binding obligation of Purchaser enforceable in accordance
with its terms, except as limited by applicable bankruptcy, moratorium,
insolvency or other laws affecting generally the rights of creditors or by
principles of equity.
5.3 SEC Documents. Rush has provided to Seller and Shareholder copies
of its Annual Report on Form 10-K for the year ended December 31, 1998, its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and June
30, 1999, its proxy statement with respect to the Annual Meeting of
Stockholders held on May 18, 1999, and its Amendment No. 2 to Form S-1
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Registration Statement and Prospectus to Form S-1 filed on Form 424(b)(4) (such
documents collectively referred to herein as the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder applicable to such SEC Documents, and none of
the SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The consolidated financial statements of Rush
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of Rush and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (except in the case of
interim period financial information for normal year-end adjustments). All
material agreements, contracts and other documents required to be filed as
exhibits to the SEC Documents have been so filed. The consolidated balance
sheet included in Rush's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999 reflects, as of the date thereof, all liabilities, debts and
obligations of any nature, kind or manner of Rush and its subsidiaries, whether
direct, accrued, absolute, contingent or otherwise, and whether due or to
become due that are required to be reflected on such balance sheet under
generally accepted accounting principles consistently applied.
5.4 Brokers and Finders. No broker or finder has acted for Purchaser
or Rush in connection with this Agreement or the transactions contemplated by
this Agreement and no broker or finder is entitled to any brokerage or finder's
fee or to any commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of Purchaser or Rush.
5.5 Effect of Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not (i)
result in any breach of any of the terms or conditions of, or constitute a
default under, the Articles of Incorporation or other charter documents or
bylaws of Purchaser, or any commitment, mortgage, note, bond, debenture, deed
of trust, contract, agreement, license or other instrument or obligation to
which Purchaser is now a party or by which Purchaser or any of its properties
or assets may be bound or affected; or (ii) result in any violation of any
Governmental Requirement applicable to Purchaser.
5.6 Stock Consideration. The shares of Common Stock representing the
Stock Consideration to be delivered to Seller are duly authorized and will be,
when issued, validly issued, fully paid and non-assessable, and free and clear
of all liens, claims, rights, charges, encumbrances and security interests of
whatsoever nature or type other than those imposed by Seller and restrictions
imposed by Rule 144 and any other Securities Laws.
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6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNIFICATIONS, GUARANTEES,
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER. All statements of
fact contained in this Agreement, the Schedules, the Seller
Certificate and the exhibits and annexes attached hereto delivered by or on
behalf of Seller or Shareholder shall be deemed representations and warranties
of Seller and Shareholder hereunder. Regardless of any investigation at any
time made by or on behalf of Purchaser, all indemnifications, guarantees,
covenants, agreements, representations and warranties made by Seller or
Shareholder hereunder or pursuant hereto or in connection with the transactions
contemplated hereby shall survive for eighteen months after the Closing Date,
except with respect to (a) the representations and warranties set forth in
Section 4.6, which shall survive until the sixth anniversary of the Closing
Date, (b) the representations and warranties set forth in Sections 4.16 and
4.17, which shall survive until the fifth anniversary of the Closing Date and
(c) the representations and warranties set forth in Section 4.18, which shall
survive the Closing Date indefinitely.
7. CONTRACTS PRIOR TO THE CLOSING DATE.
7.1 Approval of Contracts. Except in the ordinary course of business
and consistent with past practice, Seller shall not enter into or amend any
contracts related to the Business or the Assets between the date hereof and the
Closing Date unless approved in writing by Purchaser. Seller will provide all
information relating to each such contract or amendment that is necessary or
requested by Purchaser to enable Purchaser to make an informed decision
regarding approval of such contract or amendment.
7.2 Contracts Included in Assets. Any contracts, agreements or
commitments (or amendments to such items) related to the Business or the Assets
that are entered into by Seller between the date hereof and the Closing Date
and are approved pursuant to the provisions of Section 7.1, shall be included
in the Assets (with no addition to the Purchase Price) and shall be assumed by
Purchaser pursuant to Section 3.2.
8. COVENANTS OF SELLER AND SHAREHOLDER PRIOR TO CLOSING DATE. Seller
and Shareholder hereby covenant and agree that between the date of this
Agreement and the Closing Date:
8.1 Access to Information. Seller shall afford to the officers and
authorized representatives of Purchaser access to the plants, properties,
documents, books and records of Seller related to the Assets and the Business
and shall furnish Purchaser with such financial and operating data and other
information regarding the Assets and the Business and as Purchaser may from
time to time reasonably request.
8.2 General Affirmative Covenants. Seller shall, and Shareholder shall
cause Seller to:
(a) conduct the Business only in the ordinary course;
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(b) maintain the Assets in good working order and condition,
ordinary wear and tear excepted;
(c) perform all its obligations under agreements relating to
or affecting the Assets or the Business;
(d) keep in full force and effect adequate insurance coverage
on the Assets and the operation of the Business;
(e) use its best efforts to maintain and preserve the
Business, and retain its present employees, customers, suppliers and
others having business relations with it;
(f) duly and timely file all reports or returns required to
be filed with any Governmental Authority, and promptly pay all Taxes
levied or assessed upon it or its properties or upon any part thereof;
(g) duly observe and conform to all Governmental Requirements
relating to the Assets or its properties or to the operation and
conduct of its business and all covenants, terms and conditions upon
or under which any of its properties are held;
(h) remove and have released, by payment or otherwise, all
liens and encumbrances of any nature whatsoever on the Assets (except
for liens and encumbrances, if any, specifically assumed by Purchaser
pursuant to this Agreement);
(i) duly and timely take all actions necessary to carry out
the transactions contemplated hereby;
(j) deliver to Purchaser on or before the 15th day of each
month true and correct unaudited combined monthly balance sheets and
statements of income for Southwest Peterbilt and affiliates for the
immediately preceding month;
(k) deliver to Purchaser on or before the Closing Date any
additional financial information reasonably requested by Purchaser to
allow Purchaser to timely comply with its reporting requirements under
the Exchange Act, all in form and substance sufficient to allow
Purchaser to timely comply with such reporting requirements; and
(l) preserve and maintain the goodwill of the Business.
8.3 General Negative Covenants. Seller shall not take, and Shareholder
will not permit Seller to take, any of the following actions without the prior
written consent of Purchaser:
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(a) entering into or amending or assuming any contract,
agreement, obligation, lease, license or commitment related to the
Business or the Assets (or of a type included in the Assets) other
than in accordance with the provisions of Section 7.1;
(b) except in the ordinary course of business and consistent
with past practice, selling, leasing, abandoning or otherwise
disposing of any of the Assets, including, but not limited to, real
property, machinery, equipment or other operating properties;
(c) engaging in any activities or transactions that might
adversely affect the Assets or the Business;
(d) making any organizational change or personnel change, or
increasing the compensation or benefits of any officer or employee of
Seller, other than normal compensation and benefit adjustments in the
ordinary course of the Business consistent with past practice; or
(e) selling or agreeing to sell 10 or more new trucks in any
single transaction or any series of related transactions at a gross
margin of less than 3 1/2% or purchasing or agreeing to purchase 10 or
more used trucks in a single transaction or any series of related
transactions.
8.4 Disclosure of Misrepresentations and Breaches. If any of the
representations or warranties of Seller or Shareholder hereunder are determined
by Seller or Shareholder to have been incorrect when made, or are determined by
Seller or Shareholder to be incorrect as of any date subsequent to the date
hereof, or if any of the covenants of Seller or Shareholder contained in this
Agreement have not been complied with timely, then Seller and Shareholder shall
immediately notify Purchaser to such effect (provided that such notice shall in
no way limit the rights of Purchaser (i) under Articles 10 and 17 to terminate
this Agreement or refuse to consummate the transactions contemplated hereby or
(ii) to enforce any rights or remedies it may have hereunder).
8.5 Government Filings. Seller and Shareholder shall cooperate with
Purchaser and its representatives in the preparation of any documents or other
material that may be required by any Governmental Authority in connection with
the Assets or the Business or the transactions contemplated hereby. With
respect to any filing required by the HSR Act, Purchaser, on the one hand, and
Seller, on the other hand, shall split the cost of any such filing fees, and
each party shall pay their own attorneys' fees.
8.6 Access to and Inspection of Premises, Facilities and Equipment.
Seller shall afford the officers and authorized representatives of Purchaser
access to the premises, facilities and tangible assets included in the Assets
and the premises to be leased by Purchaser pursuant to the provisions of
Article 15 for the purpose of inspecting such premises, facilities and
equipment in such manner as Purchaser shall deem appropriate, including, but
not limited to, an environmental inspection and
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audit to be conducted by GEO-Consul. The cost of such environmental inspection
and audit shall be split equally between Purchaser and Seller, provided that
GEO-Consul shall address all reports generated by such inspection and audit to
Purchaser and Seller and shall authorize Purchaser and Seller to each rely on
all reports generated by such inspection and audit. If upon completion of such
inspection, Purchaser finds any conditions which Purchaser, in its sole
discretion, considers to be unacceptable, Purchaser shall have the right to
terminate this Agreement pursuant to Articles 10 and 17.
9. COVENANTS REGARDING THE CLOSING.
9.1 Covenants of Seller and Shareholder. Seller and Shareholder hereby
covenant and agree that they shall (i) use commercially reasonable efforts to
cause all of their representations and warranties set forth in this Agreement
to be true on and as of the Closing Date, (ii) use commercially reasonable
efforts to cause all of their obligations that are to be fulfilled on or prior
to the Closing Date to be so fulfilled, (iii) use commercially reasonable
efforts to cause all conditions to the Closing set forth in this Agreement to
be satisfied on or prior to the Closing Date, and (iv) deliver to Purchaser at
the Closing the certificates, updated lists, notices, consents, authorizations,
approvals, agreements, leases, transfer documents, receipts, and amendments
contemplated by Article 10 (with such additions or exceptions to such items as
are necessary to make the statements set forth in such items accurate, provided
that if any of such additions or exceptions cause any of the conditions to
Purchaser's obligations hereunder as set forth in Article 10 not to be
fulfilled, such additions and exceptions shall in no way limit the rights of
Purchaser under Articles 10 and 18 to terminate this Agreement or refuse to
consummate the transactions contemplated hereby).
9.2 Covenants of Purchaser. Purchaser hereby covenants and agrees that
it shall (i) use commercially reasonable efforts to cause all of its
representations and warranties set forth in this Agreement to be true on and as
of the Closing Date, (ii) use commercially reasonable efforts to cause all of
its obligations that are to be fulfilled on or prior to the Closing Date to be
so fulfilled, (iii) use commercially reasonable efforts to cause all conditions
to the Closing set forth in this Agreement to be satisfied on or prior to the
Closing Date (provided that failure by Purchaser to comply with a second
requirement for information under the HSR Act or to comply with any requested
divestiture of assets or to enter into any consent or similar order or
agreement shall not constitute a failure of Purchaser to use commercially
reasonable efforts), and (iv) deliver to Seller at the Closing the certificate
contemplated by Article 11 (with such additions or exceptions to such
certificate as are necessary to make the statements set forth in such
certificate accurate, provided that if any of such additions or exceptions
cause any of the conditions to Seller's obligations hereunder as set forth in
Article 11 not to be fulfilled, such additions and exceptions shall in no way
limit the rights of Seller under Articles 11 and 18 to terminate this Agreement
or to refuse to consummate the transactions contemplated hereby).
9.3 Inventory Audit. Within five days prior to Closing, Seller and
Purchaser shall each appoint one or more representatives knowledgeable in the
heavy duty truck business, and shall cause
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such representatives to conduct an audit (in accordance with generally accepted
accounting principles, consistently applied) of the inventory of the Assets as
of the Closing Date. Each party shall bear their cost of conducting such audit.
10. CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser hereunder are, at the option of Purchaser, subject to the
satisfaction, on or prior to the Closing Date, of the following conditions (any
of which may be waived by Purchaser, in its sole discretion):
10.1 Accuracy of Representations and Warranties and Fulfillment of
Covenants. The representations and warranties of Seller and Shareholder
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date. Each and
all of the agreements and covenants of Seller and Shareholder to be performed
on or before the Closing Date pursuant to the terms hereof shall have been
performed in all material respects. Seller and Shareholder shall have delivered
to Purchaser a certificate dated the Closing Date and executed by Seller and
Shareholder to all such effects or disclosing any such representation or
warranty not so true and correct or any such agreement or covenant not so
performed.
10.2 No Governmental Actions. No action or proceeding before any
Governmental Authority shall have been instituted or threatened to restrain or
prohibit the transactions contemplated by this Agreement. No Governmental
Authority shall have taken any other action as a result of which the management
of Purchaser reasonably deems it inadvisable to proceed with the transactions
contemplated by this Agreement.
10.3 No Adverse Change. No material adverse change in the Business
shall have occurred, and no loss or damage to any of the Assets, whether or not
covered by insurance, shall have occurred since the Balance Sheet Date, and
Seller shall have delivered to Purchaser a certificate dated the Closing Date
and executed by Seller and Shareholder to all such effects.
10.4 Update of Contracts. Seller and Shareholder shall have delivered
to Purchaser an accurate list, as of the Closing Date, showing (i) all
agreements, contracts and commitments of the type listed on Part 4.8 of the
Disclosure Schedule entered into since the date of this Agreement (including,
but not limited to, amendments, if any, to the items listed on Part 4.8 of the
Disclosure Schedule), and (ii) all other agreements, contracts and commitments
related to the Business or the Assets entered into since the date of this
Agreement, together with true, complete and accurate copies of all documents
(or in the case of oral commitments, descriptions of the material terms
thereof) relevant to the items on the list (the "New Contracts"). Purchaser
shall have the opportunity to review the New Contracts, and shall have the
right to delay the Closing for up to five (5) days if it in its sole discretion
Purchaser deems such a delay necessary to enable it to adequately review the
New Contracts. All of the New Contracts that are approved in writing by
Purchaser prior to the Closing, as it may be delayed, (whether such approval by
Purchaser is given before or after Seller
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executes the New Contract) shall be included in the Assets (with no addition to
the Purchase Price) and the future obligations of Seller thereunder shall be
assumed by Purchaser pursuant to Section 3.2. Any New Contracts that are not
approved in writing by Purchaser prior to the Closing, as it may be delayed,
shall remain the sole obligation of Seller and shall not be assumed by
Purchaser, and Purchaser shall have no obligation or liability with respect
thereto.
10.5 No Material Adverse Information. The investigations with respect
to Seller, the Assets and the Business, performed by Purchaser's professional
advisors and other representatives shall not have revealed any material adverse
information concerning Seller, the Assets or the Business that has not been
made known to Purchaser in writing prior to the date of this Agreement.
10.6 Notices and Consents. No notice to or consent, authorization,
approval or order of any Person shall be required for the consummation of the
transactions contemplated by this Agreement (except for notices that have been
duly and timely given and consents, authorizations and approvals that have been
obtained). True and correct copies of all required notices, consents,
authorizations and approvals shall have been delivered to Purchaser and shall
be satisfactory in form and substance to Purchaser and its counsel.
10.7 Lease Documents. Seller shall have executed and delivered to
Purchaser the Albuquerque Assignment, and the Albuquerque Landlord shall have
executed and delivered to Purchaser a Landlord Estoppel and Consent in form and
substance acceptable to Purchaser.
10.8 Other Documents. Seller and Shareholder shall have delivered or
caused to be delivered all other documents, agreements, resolutions,
certificates or declarations as Purchaser or its attorneys may reasonably
request.
10.9 Dealer License. Purchaser shall have obtained written approval to
be licensed as a New Motor Vehicle Dealer by the appropriate department or
agency of the State of New Mexico to do business as a motor vehicle dealer at
the present locations of the dealerships; provided, however, that Purchaser
shall use its reasonable best efforts to secure such approval prior to Closing.
10.10 Inventory Audit. The inventory audit contemplated by Section 9.3
shall have been completed and the results thereof shall be satisfactory to
Purchaser.
10.11 Due Diligence. Purchaser shall be satisfied with the results of
its continuing legal, accounting and other due diligence regarding Seller and
the Business.
10.12 Dealership Agreement. Purchaser and PACCAR shall have executed
and delivered a dealer sales and service agreement, and ancillary or related
agreements, in form and substance satisfactory to Purchaser.
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10.13 Governmental Approvals. All necessary government and regulatory
approvals have been obtained and all required waiting periods under the HSR Act
shall have expired or been terminated.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations of
Seller hereunder are, at its option, subject to the satisfaction, on or prior to
the Closing Date, of the following conditions (any of which may be waived by
Seller in its sole discretion):
11.1 Accuracy of Representations and Warranties and Fulfillment of
Covenants. The representations and warranties of Purchaser contained in this
Agreement shall be true and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date. Each of the agreements and covenants of Purchaser to be performed on
or before the Closing Date shall have been performed. Purchaser shall have
delivered to Seller a certificate dated the Closing Date and executed by
Purchaser to all such effects.
11.2 Governmental Approvals. No action or proceeding before any
Governmental Authority shall have been instituted or threatened to restrain or
prohibit the transactions contemplated by this Agreement. No Governmental
Authority shall have taken any other action as a result of which the management
of Seller reasonably deems it inadvisable to proceed with the transactions
contemplated by this Agreement.
11.3 Lease Documents. Purchaser shall have executed and delivered to
Seller the Albuquerque Assignment.
11.4 Other Documents. Purchaser shall have delivered or caused to be
delivered all other documents, agreements, resolutions, certificates or
declarations as Seller and Shareholder or their attorneys may reasonably
request, including stock certificates evidencing the Stock Consideration.
11.5 Inventory Audit. The inventory audit contemplated by Section 9.3
shall have been completed and the results thereof satisfactory to Seller.
11.6 Registration Rights Agreement. Rush shall have executed and
delivered to Seller the registration rights agreement in substantially the form
attached hereto as Exhibit 11.7(a) and, if Shareholder elects to receive the
Warrants referenced in Section 3.1, the registration rights agreement in
substantially the form attached hereto as Exhibit 11.7(b) (collectively, the
"Registration Rights Agreements").
11.7 Listing of Stock Consideration. Rush shall have listed the shares
of Common Stock representing the Stock Consideration on The Nasdaq National
Market.
11.8 Operating Agreements. Purchaser shall have executed and delivered
(a) an Operating Agreement relating to the GMC inventory of new and used
vehicles, parts and accessories held by
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Seller as of the Closing in substantially the form of the agreement attached
hereto as Exhibit 11.10 (the "GMC Operating Agreement").
11.9 Governmental Approvals. All necessary government and regulatory
approvals have been obtained and all required waiting periods under the HSR Act
shall have expired or been terminated.
12. SPECIAL CLOSING AND POST-CLOSING COVENANTS.
12.1 Further Assurances. After Closing, as and when requested by any
party hereto from time to time, the other parties hereto shall and shall cause
their Affiliates to execute and deliver, or cause to be executed and delivered,
such documents and instruments and shall take, or cause to be taken, such
further or other actions as may be reasonably necessary to carry out the
purposes of this Agreement including, without limitation, executing and
delivering any instrument Purchaser may request to convey the Assets to
Purchaser as required by this Agreement.
12.2 Delivery of Funds and Other Assets Collected by Seller. To the
extent Seller receives any funds or other assets in payment of receivables, or
in connection with any other Assets, being sold to Purchaser pursuant hereto,
Seller shall immediately deliver such funds and assets to Purchaser and take
all steps necessary to vest title to such funds and assets in Purchaser.
12.3 Change of Name of Seller. Immediately upon the occurrence of the
Closing, Seller and Shareholder shall cease using the name "Southwest
Peterbilt", "New Mexico Peterbilt", "New Mexico Peterbilt - GMC Trucks", "New
Mexico Peterbilt - Ford Trucks" and "New Mexico Truck Leasing" and all
derivations thereof, and covenant and agree that after Closing they will not,
directly or indirectly, use such names or any derivation thereof, in connection
with selling, servicing, renting, leasing, insuring or financing new or used
Class 3 through 8 trucks; provided (i) Shareholder may use such names for a
period of one year following the Closing for the sole purpose of winding up the
affairs of Seller, so long as such use does not involve the selling, servicing,
renting, leasing, insuring or financing new or used Class 3 through 8 trucks,
compete with any business activity which Rush or any of its Affiliates engages
or interfere with the use of such names by Rush or any of its Affiliates, and
(ii) Seller and Shareholder may use such names in connection with selling,
renting or leasing any Excluded Asset.
12.4 Access to Files. For a period of five years after the Closing, or
such longer term as Seller or Shareholder may reasonably require if Seller or
Shareholder is then involved in litigation or under investigation or audit by a
governmental agency or bureau relating to Seller or the Assets, Purchaser shall
maintain and give Seller and Shareholder and their respective representatives
full access to the premises of Purchaser and full access to, and shall permit
Seller and Shareholder and their respective representatives, at their own
expense, to make photocopies of, all originals of the files and records
relating to Seller or the Assets.
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12.5 Exchange Act Filing; Cooperation. After the Closing, Seller
shall, at the cost and expense of Purchaser, reasonably cooperate with and
provide information to Purchaser as is necessary for Purchaser to comply with
its reporting obligations under the Exchange Act.
12.6 Nondisclosure of Confidential Information.
(a) By Seller and Shareholder. Seller and Shareholder
recognize and acknowledge that they have and will have access to
certain confidential information) of Seller that is included in the
Assets (including, but not limited to, lists of customers, and costs
and financial information) that after the consummation of the
transactions contemplated hereby will be valuable, special and unique
property of Purchaser. Seller and Shareholder agree that they will not
disclose, and they will use their best efforts to prevent disclosure
by any other Person of, any such confidential information to, nor any
discussion of any of the terms of this Agreement with, any Person for
any purpose or reason whatsoever, except to authorized representatives
of Purchaser. Seller and Shareholder recognize and agree that
violation of any of the agreements contained in this Section 12.6(a)
will cause irreparable damage or injury to Purchaser, the exact amount
of which may be impossible to ascertain, and that, for such reason,
among others, Purchaser shall be entitled to an injunction, without
the necessity of posting bond therefor, restraining any further
violation of such agreements. Such rights to any injunction shall be
in addition to, and not in limitation of, any other rights and
remedies Purchaser may have at law or in equity against Seller or
Shareholder.
(b) By Purchaser. Purchaser recognizes and acknowledges that
it may have access to certain confidential information of Seller that
is not included in or connected with the Assets and not used or
necessary for the Business that after the consummation of the
transactions contemplated hereby will be valuable, special and unique
property of Seller. Purchaser agrees that it will not disclose, and
will use its best efforts to prevent disclosure by any other Person
of, any such confidential information to any Person for any purpose or
reason whatsoever, except to authorized representatives of Purchaser.
Purchaser recognizes and agrees that violation of any of the
agreements contained in this Section 12.6(b) will cause irreparable
damage or injury to Seller, the exact amount of which may be
impossible to ascertain, and that, for such reason, among others,
Seller shall be entitled to an injunction, without the necessity of
posting bond therefor, restraining any further violation of such
agreements. Such rights to any injunction shall be in addition to, and
not in limitation of, any other rights and remedies Seller may have at
law or in equity against Purchaser.
(c) Exceptions. The foregoing restrictions will not apply to
any information which (a) becomes available to the public generally
(otherwise than by reason of a breach of the provisions of this
Section 12.6), (b) can be shown by written records to have been known
by the disclosing party prior to the date of this Agreement or (c) is
lawfully acquired by the disclosing party from another person. In the
event any confidential information protected by this Section 12.6 is
required to be disclosed under court or governmental order,
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rule or regulation, the party required to disclose such confidential
information shall immediately provide the party entitled to protection
hereunder with notice thereof and shall give full and complete
cooperation to such party in its efforts to object to, and to obtain
protection of any confidential information that is the subject of,
such required disclosure.
12.7 Assignment of Contracts. Notwithstanding any other provision of
this Agreement, nothing in this Agreement or any related document shall be
construed as an attempt to assign (i) any Contract which, as a matter of law or
by its terms, is nonassignable without the consent of the other parties thereto
unless such consent has been given, or (ii) any Contract or claim as to which
all of the remedies for the enforcement thereof enjoyed by Seller would not, as
a matter of law or by its terms, pass to Purchaser as an incident of the
transfers and assignments to be made under this Agreement. In order, however,
that the full value of every Contract and claim of the character described in
clauses (i) and (ii) above and all claims and demands on such Contracts may be
realized for the benefit of Purchaser, Seller, at the request and expense and
under the direction of Purchaser, shall take all such action and do or cause to
be done all such things as will, in the opinion of Purchaser, be necessary or
proper in order that the obligations of Seller under such Contracts may be
performed in such manner that the value of such Contract will be preserved and
will inure to the benefit of Purchaser, and for, and to facilitate, the
collection of the moneys due and payable and to become due and payable
thereunder to Purchaser in and under every such contract and claim. Seller
shall promptly pay over to Purchaser all moneys collected by or paid to it in
respect of every such contract, claim or demand. Nothing in this Section 12.7
shall relieve Seller or Shareholder of their obligations to obtain any consents
required for the transfer of the Assets and all rights thereunder to Purchaser,
or shall relieve Seller or Shareholder from any liability to Purchaser for
failure to obtain such consents.
12.8 Non-Compete, Non-Solicitation.
(a) Non-Competition. In consideration of the benefits of this
Agreement to Seller and Shareholder and as a material inducement to
Purchaser to enter into this Agreement and to pay the Purchase Price,
Seller and Shareholder, hereby covenant and agree that for a period of
five years after the Closing Date, Seller and Shareholder shall not,
and each shall cause their Affiliates (not including any family member
of Shareholder) not to, directly or indirectly, as proprietor,
partner, stockholder, director, officer, employee, consultant, joint
venturer, investor or in any other capacity, engage in, or own,
manage, operate or control, or participate in the ownership,
management, operation or control, of any entity which engages in the
sale, servicing, renting, leasing, insuring or financing of new or
used Class 3 through 8 trucks (not including construction equipment)
in any geographical or commercial markets in which Rush or any of its
Affiliates (including Purchaser) conducts such business on the Closing
Date; provided, however, the foregoing shall not, in any event,
prohibit Seller or Shareholder from (i) purchasing and holding as an
investment not more than 1% of any class of publicly traded securities
of any entity which conducts such business, so long as neither Seller
nor Shareholder participates in any way in the management, operation
or
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control of such entity or (ii) selling or otherwise disposing of any
vehicles, parts and accessories inventory or chassis kits held by the
Business as of the Closing Date that are not transferred to Purchaser
pursuant to the terms of this Agreement. It is further recognized and
agreed that, even though the activity may not be restricted under the
foregoing provision, for a period of five years following the Closing
Date, neither Seller nor Shareholder shall, and each shall cause their
Affiliates not to, provide any services to any person or entity which
may be used against, or in conflict with the interests of, Purchaser
or an Affiliate of Purchaser.
(b) Judicial Reformation. Seller and Shareholder acknowledge
that, given the nature of Purchaser and its Affiliates' business, the
covenants contained in this Section 12.8 establish reasonable
limitations as to time, geographic area and scope of activity to be
restrained and do not impose a greater restraint than is reasonably
necessary to protect and preserve the goodwill of Purchaser and its
Affiliates' business and to protect their legitimate business
interests. If, however, this Section 12.8 is determined by any court
of competent jurisdiction or an arbitrator pursuant to Section 20.1 to
be unenforceable by reason of it extending for too long a period of
time or over too large a geographic area or by reason of it being too
extensive in any other respect or for any other reason, it will be
interpreted to extend only over the longest period of time for which
it may be enforceable and/or over the largest geographic area as to
which it may be enforceable and/or to the maximum extent in all other
aspects as to which it may be enforceable, all as determined by such
court or arbitrator.
(c) Customer Lists, Non-Solicitation. In consideration of the
benefits of this Agreement to Seller and Shareholder and as a material
inducement to Purchaser to enter into this Agreement and to pay the
Purchase Price, Seller and Shareholder hereby further covenant and
agree that for a period of five years following the Closing Date,
Seller and Shareholder shall not, and each shall cause their
Affiliates not to, directly or indirectly, (a) use or make known to
any person or entity the names or addresses of any clients or
customers of Seller, Purchaser or any Affiliate of Purchaser or any
other information pertaining to them, (b) call on, solicit, take away
or attempt to call on, solicit or take away any clients or customers
of Seller, Purchaser or any Affiliate of Purchaser, or (c) solicit for
employment, recruit, hire or attempt to recruit or hire any employees
of Seller, Purchaser or any Affiliate of Purchaser.
(d) Equitable Relief. In the event of a breach or a
threatened breach by Shareholder or Seller of any of the provisions
contained in this Section 12.8, each acknowledges that Purchaser and
its Affiliates will suffer irreparable injury not fully compensable by
money damages and, therefore, will not have an adequate remedy
available at law. Accordingly, Purchaser shall be entitled, without
the necessity of posting a bond, to obtain such injunctive relief or
other equitable remedy from any court of competent jurisdiction as may
be necessary or appropriate to prevent or curtail any such breach,
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threatened or actual. The foregoing shall be in addition to and
without prejudice to any other rights that Purchaser may have under
this Agreement, at law or in equity, including, without limitation,
the right to xxx for damages.
(e) Covenants Independent. The covenants of Seller and
Shareholder contained in this Section 12.8 will be construed as
independent of any other provision in this Agreement, and the
existence of any claim or cause of action by Seller or Shareholder, or
any of them, against Purchaser or any Affiliate of Purchaser will not
constitute a defense to the enforcement by Purchaser of said
provisions. Seller and Shareholder understand that the provisions
contained in this Section 12.8 are essential elements of the
transactions contemplated by this Agreement and, but for their
agreement to be bound by the provisions of this Section 12.8,
Purchaser would not have agreed to enter into this Agreement and the
transactions contemplated herein. Seller and Shareholder have each
been advised to consult with, and each represents that it or he has
consulted with, counsel in order to be informed in all respects
concerning the reasonableness and propriety of the provisions of this
Section 12.8 and each acknowledges that the provisions of this Section
12.8 are reasonable in all respects.
12.9 Agreement Regarding GMC Excluded Assets. If as of the date that
is six months after the Closing Date, Purchaser has not entered into a dealer
sales and service agreement with GMC, the GMC Excluded Assets have not been
sold pursuant to the GMC Operating Agreement and Seller is not able to transfer
the GMC Excluded Assets to GMC or an Affiliate of GMC, Purchaser will purchase
the GMC Excluded Assets from Seller and Seller shall sell the GMC Excluded
Assets to Purchaser for the price indicated for such items in Section 3.1. The
closing for such sale and purchase shall take place at a date and time that is
mutually agreeable to the parties, which shall be no more than 30 days after
Seller provides Purchaser written notice that Seller is not able to transfer
the GMC Excluded Assets to GMC or an Affiliate of GMC. Seller, at its sole cost
and expense, shall provide all documentation and evidence reasonably requested
by Purchaser to enable Purchaser to verify that the conditions to Purchaser's
purchase obligations hereunder have been satisfied. At such closing, Purchaser
shall pay the amount due Seller by wire transfer of immediately available funds
to an account designated by Seller.
13. INDEMNITY BY SELLER AND SHAREHOLDER.
13.1 Indemnity. Seller and Shareholder (collectively, the "Seller
Indemnifying Parties" and individually, a "Seller Indemnifying Party") shall,
and hereby do, jointly and severally indemnify, hold harmless and defend
Purchaser and its officers, directors, employees, agents, consultants,
representatives and Affiliates (collectively, the "Purchaser Indemnified
Parties") from and against any and all penalties, demands, damages, punitive
damages, losses, liabilities, suits, costs, costs of any settlement or
judgment, claims of any and every kind whatsoever, refund obligations
(including, without limitation, interest and penalties thereon) and remediation
costs and expenses (including, without limitation, reasonable attorneys' fees),
of or to any of the Purchaser
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Indemnified Parties ("Purchaser Damages"), which may now or in the future be
paid, incurred or suffered by or asserted against the Purchaser Indemnified
Parties by any Person resulting or arising from or incurred in connection with
any one or more of the following (provided that this Section 13.1 shall not
apply to any items that have been expressly assumed by Purchaser under this
Agreement):
(a) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related
in any way to the Assets or the Business to the extent such liability
or claim for liability arises in connection with any action, omission
or event occurring on or prior to the Closing Date (including, but not
limited to, claims for product liability with respect to products
manufactured, distributed or sold by Seller on or prior to the Closing
Date);
(b) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related
to any liens, obligations or encumbrances of any nature whatsoever
against or in any way related to the Assets or the Business which have
not been expressly assumed by Purchaser hereunder;
(c) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related
to Taxes of Seller;
(d) any liability or claim for liability (whether or not
successful) related to any lawsuit or threatened lawsuit or claim
involving any Seller Indemnifying Party other than claims brought by
any Seller Indemnifying Parties pursuant to Article 14;
(e) any misrepresentation, breach of warranty or
nonfulfillment of any covenant or agreement on the part of a Seller
Indemnifying Party under this Agreement or from any misrepresentation
in or omission from any Schedule, the Seller Certificate or the
exhibits and annexes hereto;
(f) any liability or claim for liability against Purchaser or
any of the Assets to the extent such liability or claim for liability
arises in connection with the failure of Purchaser and Seller to
comply with any applicable bulk transfer law; and
(g) all actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including costs of court and
reasonable attorneys' fees) incident to any of the foregoing.
13.2 Environmental Liability of the Seller Indemnifying Parties.
Notwithstanding anything herein to the contrary, the Seller Indemnifying
Parties shall have no liability or obligation to indemnify hereunder for any
Purchaser Environmental Liabilities arising from acts, events or omissions
occurring prior to Seller's operation of the Business on any real property
owned, leased
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or used by Seller or any environmental condition or liability disclosed on the
Disclosure Schedule. The Seller Indemnifying Parties, jointly and severally,
shall retain liability for, and the Seller Indemnifying Parties, jointly and
severally, shall indemnify, hold harmless and defend the Purchaser Indemnified
Parties from and against all claims (whether in contract, in tort or otherwise,
and whether or not successful), fines, penalties, liabilities, damages and
losses, including but not limited to remedial, removal, response, abatement,
clean-up, investigation and monitoring costs and any other related costs and
expenses incurred (whether any claims or causes of action relating thereto be
asserted in common law or under statute and regardless of form including strict
liability and negligence) (collectively referred to as "Purchaser Environmental
Liabilities") arising from (a) any violation of any Requirement of
Environmental Law or Environmental Permits (as those terms are hereinafter
defined) of any Seller Indemnifying Party occurring or existing between the
date Seller began conducting business on each parcel of real estate owned,
leased or used by Seller and the Closing Date, (b) any acts, omissions,
conditions, facts, or circumstances occurring or existing between the date
Seller began conducting business on each parcel of real estate owned, leased or
used by Seller and the Closing Date with respect to the Assets, the Business or
the operations of Seller which give rise to an Environmental Claim (as
hereinafter defined) before or after the date hereof, and (c) any failure of
any Seller Indemnifying Party to obtain or maintain, between the date Seller
began conducting business on each parcel of real estate owned, leased or used
by Seller and the Closing Date, any Environmental Permit. For purposes of this
Section 13.2 the term "Environmental Claim" means any action, lawsuit, claim or
proceeding by any Person relating to the Assets or the Business or the
operations or the business of Seller which seeks to impose liability for (i)
noise, (ii) pollution or contamination or threatened pollution or contamination
of the air, surface water, groundwater or land, (iii) solid, gaseous or liquid
waste generation, handling, treatment, storage, disposal or transportation,
(iv) exposure to hazardous or toxic substances or (v) non-compliance with any
Requirement of Environmental Law. An "Environmental Claim" includes, without
limitation, a proceeding to terminate a permit or license to the extent that
such a proceeding attempts to redress violations of the applicable permit or
license or any Requirement of Environmental Law as alleged by any Governmental
Authority. For purposes of this Section 13.2, the term "Environmental Permit"
means any permit, license, approval or other authorization related to, used in
connection with or necessary for the operation or use of the Business or the
Assets, or the operations or the businesses of Seller under any applicable
Requirement of Environmental Law. For purposes of this Section 13.2, the term
"Requirement of Environmental Law" means all Governmental Requirements related
to health or the environment, including, but not limited to, all Governmental
Requirements that relate to (i) noise, (ii) pollution or protection of the air,
surface water, groundwater or land, (iii) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation, (iv)
exposure to hazardous or toxic substances, or (v) any other matters related to
health or the environment.
13.3 Notice of Claim. Purchaser agrees that upon its discovery of
facts giving rise to a claim for indemnity under the provisions of this
Agreement, including receipt by it or any Purchaser Indemnified Party of notice
of any demand, assertion, claim, action or proceeding, judicial or otherwise,
by any Person with respect to any matter as to which any of the Purchaser
Indemnified
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Parties are entitled to indemnity under the provisions of this Agreement (such
actions being collectively referred to herein as a "Purchaser Claim"),
Purchaser will give prompt notice thereof in writing to the Seller Indemnifying
Parties together with a statement of such information respecting any of the
foregoing as it shall then have; provided that any delay in giving or failure
to give such notice shall not limit the rights of Purchaser or any Purchaser
Indemnified Party to indemnity hereunder except in accordance with the time
limitations provided in Section 13.10 and to the extent that the Seller
Indemnifying Parties are shown to have been damaged by such delay or failure.
13.4 Right of the Seller Indemnifying Parties to Participate in
Defense. With respect to any Purchaser Claim as to which any of the Purchaser
Indemnified Parties seeks indemnity hereunder, Purchaser shall provide the
Seller Indemnifying Parties with the opportunity to participate in the defense
of such Purchaser Claim with counsel of the Seller Indemnifying Parties' choice
and at the Seller Indemnifying Parties' cost and expense and shall not, without
the consent of Shareholder, which consent shall not be unreasonably withheld,
settle any such Purchaser Claim, so long as the Seller Indemnifying Parties
shall have unconditionally acknowledged their obligation to indemnify hereunder
with respect to such Purchaser Claim. To the extent reasonably requested by
Purchaser, the Seller Indemnifying Parties shall reasonably cooperate with
Purchaser and its representatives and counsel in any dispute or defense related
to any Purchaser Claim.
13.5 Payment. The Seller Indemnifying Parties shall promptly pay to
Purchaser or such other Purchaser Indemnified Party as may be entitled to
indemnity hereunder in cash by wire transfer the amount of any Purchaser
Damages to which Purchaser or such Purchaser Indemnified Party may become
entitled by reason of the provisions of this Agreement.
13.6 Limit of Liability of Shareholder. Notwithstanding any other
provisions of this Agreement, the aggregate liability of the Seller
Indemnifying Parties under this Agreement and the Arizona Purchase Agreement,
whether as a party to this Agreement or as guarantor of Seller's obligations
under this Agreement or the Arizona Purchase Agreement, shall be limited to
$3,000,000, except that such limit shall be $5,000,000 for breach of the
representations and warranties set forth in Sections 4.6, 4.16 and 4.17 or any
indemnification claim under this Agreement relating to environmental matters.
13.7 Limitations on Indemnification. Notwithstanding any provision of
this Agreement, the Seller Indemnifying Parties shall not be liable for any
matter that could be made the subject of a claim under this Article 13 or under
Article 13 of the Arizona Purchase Agreement regarding any claims, losses,
expenses or other liabilities until the aggregate amount thereof exceeds
$250,000 and after such threshold amount has been attained, all claims, other
than those aggregated to reach the threshold, shall be indemnified hereunder.
13.8 Insurance and Refunds. The Seller Indemnifying Parties'
indemnification obligations shall be reduced to the extent that the subject
matter of the claim is covered by and paid to Purchaser or its Affiliates
pursuant to a warranty or indemnification from a third party or third party
insurance.
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The amount of indemnification due from the Seller Indemnifying Parties with
respect to any claim shall be reduced by the effect of any tax deduction,
credit, refund or other tax benefit to Purchaser or it Affiliates relating to
the same tax period and resulting from the subject matter of that claim and
such indemnification.
13.9 Offset Provisions. Notwithstanding any other provisions of this
Agreement, in the event, between the Closing Date and the date the Bonus
Payment is paid, the Seller Indemnifying Parties become obligated to pay sums
to Purchaser or any Purchaser Indemnified Party under this Agreement or any of
the documents or agreements referenced herein or contemplated hereby (whether
as a result of indemnity, breach of contract or otherwise), Purchaser shall
have the right to and shall be obligated to reduce and offset payments due on
the Bonus Payment in such amount or amounts as Purchaser (and any Purchaser
Indemnified Party that is not promptly paid by the Seller Indemnifying Parties)
is entitled to receive from the Seller Indemnifying Parties, and any such
offset shall be deemed to be a payment of the Bonus Payment to the extent of
such offset; provided, however, that any such offset shall not relieve the
Seller Indemnifying Parties from paying all amounts that are due in excess of
the amount offset. Prior to any offset under this Section 13.9, Purchaser shall
have provided to the Seller Indemnifying Parties a notice of Purchaser Claim as
described in Section 13.3 or an otherwise reasonably detailed description of
the matter giving rise to such offset.
13.10 Time Limits for Indemnity Claims. Any claim for indemnification
under this Article 13 must be made within the time periods set forth in Article
6.
14. INDEMNITY BY PURCHASER.
14.1 Indemnity. Purchaser shall, and hereby does indemnify, hold
harmless and defend Seller and Shareholder (the "Seller Indemnified Parties")
at all times from and after the date of this Agreement, from and against any
and all penalties, demands, damages, punitive damages, losses, liabilities,
suits, costs, costs of any settlement or judgment, claims of any and every kind
whatsoever, refund obligations (including, without limitation, interest and
penalties thereon), remediation costs and expenses (including, without
limitation, reasonable attorneys' fees), of or to any of the Seller Indemnified
Parties ("Seller Damages"), which may now or in the future be paid, incurred or
suffered by or asserted against the Seller Indemnified Parties by any Person
resulting or arising from or incurred in connection with any one or more of the
following:
(a) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related
in any way to the Assets or the Business to the extent such liability
or claim for liability arises in connection with any action, omission
or event occurring after the Closing Date (including, but not limited
to, claims for product liability with respect to products
manufactured, distributed or sold by Purchaser after the Closing
Date); and
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(b) any misrepresentation, breach of warranty or
nonfulfillment of any covenant or agreement on the part of Purchaser
under this Agreement or from any misrepresentation in or omission from
any list, schedule, certificate or other instrument furnished or to be
furnished to Seller or Shareholder pursuant to the terms of this
Agreement.
14.2 Environmental Liability of Purchaser. Notwithstanding any other
provision of this Agreement, including, but not limited to the rights to
indemnity set forth in Section 14.1, and in addition thereto, Purchaser shall
indemnify, hold harmless and defend the Seller Indemnified Parties, at all
times from and after the Closing Date, from and against all claims (whether in
contract, in tort or otherwise, and whether or not successful), fines,
penalties, liabilities, damages and losses, including but not limited to
remedial, removal, response, abatement, clean-up, investigation and monitoring
costs and any other related costs and expenses incurred (whether any claims or
causes of action relating thereto be asserted in common law or under statute
and regardless of form including strict liability and negligence) (collectively
referred to as "Seller Environmental Liabilities") arising from (a) any
violation of any Requirement of Environmental Law or Environmental Permits (as
those terms are hereinafter defined) of Purchaser occurring after the Closing
Date, (b) any acts, omissions, conditions, facts, or circumstances occurring
after the Closing Date with respect to the Assets, the Business or the
operations of Purchaser which give rise to an Environmental Claim (as
hereinafter defined) during the time Purchaser is the owner of the Assets and
the operator of the Business, and (c) any failure of Seller or Shareholder to
obtain or maintain after the Closing Date, any Environmental Permit. For
purposes of this Section 14.2, the term "Environmental Claim" means any action,
lawsuit, claim or proceeding by any Person relating to the Assets or the
Business or the operations or the Business which seeks to impose liability for
(i) noise, (ii) pollution or contamination or threatened pollution or
contamination of the air, surface water, groundwater or land, (iii) solid,
gaseous or liquid waste generation, handling, treatment, storage, disposal or
transportation, (iv) exposure to hazardous or toxic substances or (v)
non-compliance with any Requirement of Environmental Law. An "Environmental
Claim" includes, without limitation, a proceeding to terminate a permit or
license to the extent that such a proceeding attempts to redress violations of
the applicable permit or license or any Requirement of Environmental Law as
alleged by any Governmental Authority. For purposes of this Section 14.2, the
term "Environmental Permit" means any permit, license, approval or other
authorization related to, used in connection with or necessary for the
operation or use the Business or the Assets, or the operations or the Business
under any applicable Requirement of Environmental Law. For purposes of this
Section 14.2, the term "Requirement of Environmental Law" means all
Governmental Requirements related to health or the environment, including, but
not limited to, all Governmental Requirements that relate to (i) noise, (ii)
pollution or protection of the air, surface water, groundwater or land, (iii)
solid, gaseous or liquid waste generation, handling, treatment, storage,
disposal or transportation, (iv) exposure to hazardous or toxic substances, or
(v) any other matters related to health or the environment. Notwithstanding
anything herein to the contrary, Purchaser shall have no liability or
obligation to indemnify hereunder for any Seller Environmental Liabilities
arising from acts, events or omissions occurring after Purchaser ceases to
operate the Business on
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any of the premises to be owned, leased or used by Purchaser pursuant to the
provisions of Article 15.
14.3 Notice of Claim. Seller and Shareholder agree that upon their
discovery of facts giving rise to a claim for indemnity under the provisions of
this Agreement, including receipt by Seller or Shareholder of notice of any
demand, assertion, claim, action or proceeding, judicial or otherwise, by any
Person with respect to any matter as to which Seller or Shareholder is entitled
to indemnity under the provisions of this Agreement (such actions being
collectively referred to herein as a "Seller Claim"), Seller and Shareholder
will give prompt notice thereof in writing to Purchaser together with a
statement of such information respecting any of the foregoing as they shall
then have; provided that any delay in giving or failure to give such notice
shall not limit the rights of Seller or Shareholder to indemnity hereunder
except to the extent that Purchaser is shown to have been damaged by such delay
or failure.
14.4 Right of Purchaser to Participate in Defense. With respect to any
Seller Claim as to which Seller or Shareholder seeks indemnity hereunder,
Seller and Shareholder shall provide Purchaser with the opportunity to
participate in the defense of such Seller Claim with counsel of Purchaser's
choice and at Purchaser's cost and expense. To the extent reasonably requested
by Seller and Shareholder, Purchaser shall reasonably cooperate with Seller and
Shareholder and their representatives and counsel in any dispute or defense
related to any Seller Claim.
14.5 Payment. The Purchaser Indemnifying Parties shall promptly pay to
Seller and/or Shareholder, as applicable, in cash by wire transfer the amount
of any Seller Damages to which Seller and/or Shareholder, as applicable, may
become entitled by reason of the provisions of this Agreement.
14.6 Limitations on Indemnification. Notwithstanding any provision of
this Agreement, Purchaser shall not be liable for any matter that could be made
the subject of a claim under this Article 14 and Article 14 of the Arizona
Purchase Agreement regarding any claims, losses, expenses or other liabilities
until the aggregate amount thereof exceeds $250,000 and after such threshold
amount has been attained, all claims, other than those aggregated to reach the
threshold, shall be indemnified hereunder.
14.7 Insurance and Refunds. Purchaser's indemnification obligations
shall be reduced to the extent that the subject matter of the claim is covered
by and paid to Seller or its Affiliates pursuant to a warranty or
indemnification from a third party or third party insurance. The amount of
indemnification due from Purchaser with respect to any claim shall be reduced
by the effect of any tax deduction, credit, refund or other tax benefit to
either of Seller or its Affiliates relating to the same tax period and
resulting from the subject matter of that claim and such indemnification.
15. REAL PROPERTY. At Closing, New Mexico Peterbilt shall assign to
Purchaser its rights and Purchaser shall assume New Mexico Peterbilt's
obligations under that certain Lease
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Agreement between New Mexico Peterbilt and El Paso Land and Holding
("Albuquerque Landlord") dated March 13, 1996 (the "Albuquerque Lease")
relating to property on which New Mexico Peterbilt's Albuquerque, New Mexico
dealership is located. To evidence such assignment and assumption, New Mexico
Peterbilt and Purchaser shall enter into an Assignment and Assumption of
Tenant's Interest in Lease in substantially the form attached hereto as Exhibit
15 (the "Albuquerque Assignment"). New Mexico Peterbilt shall obtain all
consents necessary to assign its rights and obligations under the Albuquerque
Lease to Purchaser at Closing, including, without limitation, the assignment of
the purchase option in favor of New Mexico Peterbilt contained therein.
16. SPECIAL PROVISIONS REGARDING EMPLOYEES OF SELLER.
16.1 New Employees of Purchaser. It is the intention of Purchaser, and
Seller hereby acknowledges and agrees with such position, that any employees of
Seller that Purchaser hires will be new employees of Purchaser as of the
Closing Date or the date of hire, which ever is later. Such new employees shall
be entitled only to such compensation and employee benefits as are agreed to by
such employees and Purchaser, or as are otherwise provided by Purchaser, in its
sole discretion.
16.2 No Hiring Commitment. Purchaser specifically does not commit to
hire any of the employees of the Business, and Seller specifically understands
and acknowledges this fact. However, notwithstanding Purchaser's position,
Purchaser will review its needs in anticipation of the purchase of the Assets
with a view to hiring certain of the employees of Seller as of the Closing
Date. In its review, Purchaser expects to be able to review employee records
and conduct employee interviews. Seller agrees that after the date hereof it
will make, on a confidential basis, its employee records available to Purchaser
and permit Purchaser to contact its employees for the purpose of conducting
employee interviews. Seller further agrees to make employees designated by
Purchaser available to Purchaser for such purpose.
16.3 Existing Employee Benefit Plans; Assumption of Vacation and Sick
Leave Obligations. At the Closing, Purchaser shall assume Seller's obligations
to employees of Seller hired by Purchaser for accrued but unused vacation and
sick leave, and the Purchase Price shall be reduced by the dollar value of such
obligation. Except for vacation and sick leave time assumed by Purchaser as set
forth above, Purchaser shall have no obligation after the Closing to continue
any pension plans or work benefit plans currently offered by Seller to its
employees. Except for vacation and sick leave time assumed by Purchaser as set
forth above, Seller and Shareholder jointly and severally agree to indemnify
and hold harmless Purchaser from and against any claim which may arise because
of the failure to continue such pension plans or work benefit programs.
17. TERMINATION. This Agreement may be terminated without further
obligation of the parties, as follows:
17.1 Mutual Consent. This Agreement may be terminated at any time
prior to Closing by mutual written consent of the parties hereto.
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17.2 Failure of Conditions. This Agreement may be terminated by either
party hereto, if the conditions, as set forth in this Agreement, to such
party's obligations under this Agreement are not fulfilled on or prior to the
Closing Date; provided that any such termination for any other reason shall not
otherwise limit the remedies otherwise available to such party as a result of
misrepresentations of or breaches by the other party.
17.3 Failure to Close. This Agreement will automatically terminate on
December 1, 1999, if the Closing shall not have occurred on or before such
date, unless the parties shall have otherwise agreed in writing prior to such
date. No party will be liable in damages to any other party as a result of
termination pursuant to this Article 17 unless the failure of the Closing was
due to the failure of such party to comply with the terms of this Agreement.
18. NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, given by prepaid telex
or telegram or by facsimile or other similar instantaneous electronic
transmission device or mailed first class, postage prepaid, certified United
States mail, return receipt requested, as follows:
(a) If to Purchaser, at:
If mailed:
P. O. Xxx 00000
Xxx Xxxxxxx, Xxxxx 00000
If personally delivered or delivered by overnight courier:
0000 XX 00 Xxxx
Xxx Xxxxxxx, Xxxxx 00000
Attention: W. Xxxxxx Xxxx
Facsimile No.: (000) 000-0000
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With a copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) If to Seller or Shareholder, at:
0000 Xxx Xxxxx
Xxxxxxxxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Xx.
With a copy to:
With a copy to:
Greenberg, Traurig, P.A.
Xxx Xxxx Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Facsimile No.: (000) 000-0000
Any party may change its address for notice by giving to the other party
written notice of such change. Any notice given under this Article 18 shall be
effective when received at the address for notice for the party to which the
notice is given.
19. GENERAL PROVISIONS.
19.1 Governing Law; Interpretation; Section Headings. This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Texas, without regard to conflict-of-law principles. The parties
agree to submit to the jurisdiction of the state and federal courts of the
State of Arizona with respect to the breach or interpretation of Sections 12.3
and 12.8 of this Agreement or the enforcement of any and all rights, duties,
obligations, powers and other relations among the parties arising under this
Agreement. Exclusive venue for any action arising under Sections 12.3 and 12.8
of this Agreement shall be Phoenix, Maricopa County, Arizona. Except for the
provisions of Sections 12.3 and 12.8 of this Agreement, with respect to which
Purchaser and its Affiliates expressly reserve the right to petition a court
directly for injunctive and other relief, any claim, dispute or controversy of
any nature whatsoever, including but not limited
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to tort claims or contract disputes between the parties to this Agreement or
their respective heirs, executors, administrators, legal representatives,
successors and assigns, as applicable, arising out of or related to the terms
and conditions of this Agreement, including the implementation, applicability
or interpretation thereof, shall be resolved in accordance with the dispute
resolution procedures set forth in Appendix A attached hereto and made a part
hereof. The section headings contained herein are for purposes of convenience
only, and shall not be deemed to constitute a part of this Agreement or to
affect the meaning or interpretation of this Agreement in any way.
19.2 Severability. Should any provision of this Agreement be held
unenforceable or invalid under the laws of the United States of America or the
State of Texas, or under any other applicable laws of any other jurisdiction,
then the parties hereto agree that such provision shall be deemed modified for
purposes of performance of this Agreement in such jurisdiction to the extent
necessary to render it lawful and enforceable, or if such a modification is not
possible without materially altering the intention of the parties hereto, then
such provision shall be severed herefrom for purposes of performance of this
Agreement in such jurisdiction. The validity of the remaining provisions of
this Agreement shall not be affected by any such modification or severance,
except that if any severance materially alters the intentions of the parties
hereto as expressed herein (a modification being permitted only if there is no
material alteration), then the parties hereto shall use commercially reasonable
efforts to agree to appropriate equitable amendments to this Agreement in light
of such severance, and if no such agreement can be reached within a reasonable
time, any party hereto may initiate arbitration under the then current
commercial arbitration rules of the American Arbitration Association to
determine and effect such appropriate equitable amendments.
19.3 Entire Agreement. This Agreement, the Schedules and the documents
and agreements referenced herein set forth the entire agreement and
understanding of the parties hereto with respect to the transactions
contemplated hereby, and supersede all prior agreements, arrangements and
understandings related to the subject matter hereof. No representation,
promise, inducement or statement of intention has been made by any party hereto
which is not embodied or referenced in this Agreement, the Schedules or the
documents or agreements referenced herein, and no party hereto shall be bound
by or liable for any alleged representation, promise, inducement or statement
of intention not so set forth.
19.4 Expenses. Whether or not the transactions contemplated hereby are
consummated, each of the parties will pay all costs and expenses of its or his
performance of and compliance with this Agreement.
19.5 Further Actions. From time to time, at the request of any party
hereto, the other parties hereto shall execute and deliver such instruments and
take such action as may be reasonably requested to evidence the transactions
contemplated hereby.
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19.6 Binding Effect. All the terms, provisions, covenants and
conditions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns.
19.7 Assignment. This Agreement and the rights and obligations of the
parties hereto shall not be assigned or delegated by any party hereto without
the prior written consent of the other parties hereto.
19.8 Amendment; Waiver. This Agreement may be amended, modified,
superseded or canceled, and any of the terms, provisions, representations,
warranties, covenants or conditions hereof may be waived, only by a written
instrument executed by all parties hereto, or, in the case of a waiver, by the
party waiving compliance. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
to enforce the same. No waiver by any party of any condition contained in this
Agreement, or of the breach of any term, provision, representation, warranty or
covenant contained in this Agreement, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such
condition or breach, or as a waiver of any other condition or of the breach of
any other term, provision, representation, warranty or covenant.
19.9 Gender; Numbers. All references in this Agreement to the
masculine, feminine or neuter genders shall, where appropriate, be deemed to
include all other genders. All plurals used in this Agreement shall, where
appropriate, be deemed to be singular, and vice versa.
19.10 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement
shall be binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of the parties reflected hereon as
signatories.
19.11 Telecopy Execution and Delivery. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto,
and an executed copy of this Agreement may be delivered by one or more parties
hereto by facsimile or similar instantaneous electronic transmission device
pursuant to which the signature of or on behalf of such party can be seen, and
such execution and delivery shall be considered valid, binding and effective
for all purposes. At the request of any party hereto, all parties hereto agree
to execute an original of this Agreement as well as any facsimile, telecopy or
other reproduction hereof.
19.12 Press Releases. No press releases or other public announcement
with respect to this Agreement or the transactions contemplated herein shall be
made prior to the Closing Date without the joint approval of Purchaser and
Seller, except as required by law.
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19.13 Review of Counsel. Each party hereto acknowledges that it and
its counsel have received, reviewed and been involved in the drafting of this
Agreement and the agreements referenced herein to be executed at Closing and
that normal rules of construction, to the effect that ambiguities are to be
resolved against the drafting party, shall not apply.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date first above written.
PURCHASER:
RUSH TRUCK CENTERS OF
NEW MEXICO, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SELLER:
NEW MEXICO PETERBILT, INC. d/b/a
SOUTHWEST PETERBILT
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SHAREHOLDER:
---------------------------------------
Xxxxxx Xxxxxxx, Xx.
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APPENDIX A
DISPUTE RESOLUTION PROCEDURES
Re: Asset Purchase Agreement dated September __, 1999 (including any
amendments, the "Agreement"), by and among (i) New Mexico Peterbilt, Inc.,
d/b/a Southwest Peterbilt, a New Mexico corporation ("Seller"), (ii) Xxxxxx
Xxxxxxx, Xx., the owner of a portion of the capital stock of Seller
("Shareholder"), and (iii) Rush Truck Centers of New Mexico, Inc., a Delaware
corporation ("Purchaser"). Unless otherwise defined in this Appendix A, terms
defined in the Agreement and used herein shall have the meanings set forth
therein.
A. Related Parties. For purposes hereof, Seller and Shareholder shall
be considered one party and Purchaser and Rush shall be considered one party.
B. Negotiations. If any claim, dispute or controversy described in
Section 20.1 of the Agreement (collectively, the "Dispute") arises, either
party may, by written notice to the party, have the Dispute referred to the
persons designated below for attempted resolution by good faith negotiations
within 45 days (5 days with respect to any dispute under Section 13.9 of the
Agreement) after such written notice is received. Such designated persons are
as follows:
1. Purchaser and Rush. The Chairman of the Board and Chief
Executive Officer of Rush or his designee; and
2. Seller and Shareholder. Shareholder or his or her
designee.
Any settlement reached by the parties under this Paragraph B shall not be
binding until reduced to writing and signed by both parties. When reduced to
writing, such settlement agreement shall supersede all other agreements,
written or oral, to the extent such agreements specifically pertain to the
matters so settled. If the above-designated persons are unable to resolve such
dispute within such 45-day period, either party may invoke the provisions of
Paragraph C below.
C. Arbitration. All Disputes shall be settled by negotiation among the
parties as described in Paragraph A above or, if such negotiation is
unsuccessful, by binding arbitration in accordance with procedures set forth in
Paragraphs D and E below.
D. Notice. Notice of demand for binding arbitration by one party shall
be given in writing to the other party pursuant to notice provisions of the
Agreement. In no event may a notice of demand of any kind be filed more than
one (1) year after the date the Dispute is first asserted in writing to the
other party pursuant to Paragraph B above, and if such demand is not timely
filed, the Dispute referenced in the notice given pursuant to Paragraph B above
shall be deemed released, waived, barred and unenforceable for all time, and
barred as if by statute of limitations.
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E. Binding Arbitration. Upon filing of a notice of demand for binding
arbitration by either party, arbitration shall be commenced and conducted as
follows:
3. Arbitrators. All Disputes and related matters in question
shall be referred to and decided and settled by a panel of three arbitrators,
one selected by Purchaser, one selected by Shareholder and the third selected
by the two arbitrators so selected. Selection of the arbitrators to be selected
by Purchaser and Shareholder shall be made within ten (10) business days after
the date of giving of a notice of demand for arbitration, and the two
arbitrators so appointed shall appoint the third within 10 business days
following their appointment. No person who has a bias, or financial or personal
interest in the result of the arbitration or any past or present relationship
with the parties or their representatives shall serve as arbitrator
4. Cost of Arbitration. The cost of arbitration proceedings,
including without limitation the arbitrators' compensation and expenses,
hearing room charges, court reporter transcript charges etc., shall be borne by
the parties equally or otherwise as the arbitrators may determine. The
arbitrators may award the prevailing party its reasonable attorneys' fees and
costs incurred in connection with the arbitration. The arbitrators are
specifically instructed to award attorneys' fees for instances of abuse in the
discovery process.
5. Location of Proceedings. The arbitration proceedings shall
be held in Phoenix, Arizona, unless the parties agree otherwise.
6. Pre-hearing Discovery. The parties shall have the right to
conduct and enforce pre- hearing discovery in accordance with the then current
Federal Rules of Civil Procedure, subject to these limitations:
(a) Each party may serve no more than one set of
interrogatories limited to 30 questions, including sub-parts;
(b) Each party may depose the other party's expert
witnesses who will be called to testify at the hearing, plus two fact
witnesses without regard to whether they will be called to testify
(each party will be entitled to a total of no more than 24 hours of
deposition time of the other party's witnesses), provided however,
that the arbitrators may provide for additional depositions upon
showing of good cause; and
(c) Document discovery and other discovery shall be
under the control of and enforceable by the arbitrators.
7. Discovery disputes. All discovery disputes shall be
decided by the arbitrators. The arbitrators are empowered;
(a) to issue subpoenas to compel pre-hearing
document or deposition discovery;
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(b) to enforce the discovery rights and obligations
of the parties; and
(c) to otherwise control the scheduling and conduct
of the proceedings.
Notwithstanding any contrary foregoing provisions, the arbitrators shall have
the power and authority to, and to the fullest extent practicable shall,
abbreviate arbitration discovery in a manner which is fair to all parties in
order to expedite the conclusion of each alternative dispute resolution
proceeding.
8. Pre-hearing Conference. Within fifteen (15) days after
selection of the third arbitrator, or as soon thereafter as is mutually
convenient to the arbitrators, the arbitrators shall hold a pre- hearing
conference to establish schedules for completion of discovery, for exchange of
exhibit and witness lists, for arbitration briefs and for the hearing, and to
decide procedural matters and address all other questions that may be
presented.
9. Hearing Procedures. The hearing shall be conducted to
preserve its privacy and to allow reasonable procedural due process. Rules of
evidence need not be strictly followed, and the hearing shall be streamlined as
follows:
(a) Documents shall be self-authenticating, subject
to valid objection by the opposing party;
(b) Expert reports, witness biographies, depositions
and affidavits may be utilized, subject to the opponent's right of a
live cross-examination of the witness in person;
(c) Charts, graphs and summaries shall be utilized
to present voluminous data, provided (i) that the underlying data is
made available to the opposing party thirty (30) days prior to the
hearing, and (ii) that the preparer of each chart, graph or summary is
available for explanation and live cross-examination in person;
(d) The hearing should be held on consecutive
business days without interruption to the maximum extent practicable;
and
(e) The arbitrators shall establish all other
procedural rules for the conduct of the arbitration in accordance with
the rules of arbitration of the Center for Public Resources.
10. Governing Law. This arbitration provision shall be
governed by, and all rights and obligations specifically enforceable under and
pursuant to, the Federal Arbitration Act (9 U.S.C. Section 1, et seq.)
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00. Consolidation. No arbitration shall include, by
consolidation, joinder or in any other manner, any additional person not a
party to the Agreement, except by written consent of both parties containing a
specific reference to these provisions.
12. Award. The arbitrators are empowered to render an award
of general compensatory damages and equitable relief (including, without
limitations, injunctive relief), but are not empowered to award exemplary,
special or punitive damages. The award rendered by the arbitrators (a) shall be
final, (b) shall not constitute a basis for collateral estoppel as to any issue
and (c) shall not be subject to vacation or modification.
13. Confidentiality. The parties hereto will maintain the
substance of any proceedings hereunder in confidence and the arbitrators, prior
to any proceedings hereunder, will sign an agreement whereby the arbitrators
agree to keep the substance of any proceedings hereunder in confidence.
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