EXHIBIT 10.43
STOCK PURCHASE AGREEMENT
BY AND AMONG
BHE, INC., AN OKLAHOMA CORPORATION
AND
XXX XXXXXX GERMAN IMPORTS, INC.,
AN OKLAHOMA CORPORATION
AND
GROUP 1 HOLDINGS - DC, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
DATED EFFECTIVE JANUARY 1, 2003
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ARTICLE 1 TERMS OF THE TRANSACTION.........................................1
1.1 Agreement to Sell and to Purchase the Shares......................1
1.2 Purchase Price....................................................1
1.3 Closing .......................................................1
1.4 Closing Obligations...............................................2
1.5 Adjustments.......................................................3
1.6 Payment .......................................................4
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE SELLERS....................4
2.1 Disclosure .......................................................4
2.2 Organization and Good Standing....................................4
2.3 Authority. .......................................................4
2.4 Not Used .......................................................5
2.5 Absence of Conflicts..............................................5
2.6 Capital Stock.....................................................5
2.7 Financial Statements..............................................6
2.8 Books and Records.................................................6
2.9 Assets; Encumbrances..............................................6
2.10 Condition and Sufficiency of Assets...............................7
2.11 Accounts Receivables..............................................7
2.12 Inventory .......................................................7
2.13 No Undisclosed Liabilities........................................7
2.14 Taxes .......................................................7
2.15 Employee Benefits.................................................8
2.16 Compliance with Laws..............................................9
2.17 Legal Proceedings.................................................9
2.18 Absence of Changes................................................9
2.19 Contracts and Commitments........................................10
2.20 Insurance ......................................................11
2.21 Environmental Matters............................................11
2.22 Employees ......................................................13
2.23 Intellectual Property............................................14
2.24 Certain Payments.................................................14
2.25 Relationships with Related Persons...............................15
2.26 Brokers or Finders...............................................15
2.27 Leased Assets....................................................15
2.28 Not Used ......................................................16
2.29 Finance & Insurance Programs.....................................16
2.30 Subsidiaries and Investments.....................................16
2.31 Permits, Etc.....................................................17
2.32 Powers of Attorney...............................................17
2.33 Bank Accounts, Credit Cards, Safe Deposit Boxes and Cellular
Telephones. ..........................................17
2.34 Warranties.......................................................17
2.35 Directors and Officers...........................................17
2.36 Suppliers and Customers..........................................17
2.37 Former Subsidiaries..............................................17
2.38 Not Used ......................................................17
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2.39 Litigation Regarding Seller......................................17
2.40 Approvals ......................................................18
2.41 Manufacturer Communications......................................18
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER.........................18
3.1 Organization and Good Standing...................................18
3.2 Authority. ......................................................18
3.3 No Conflict......................................................18
3.4 Certain Proceedings..............................................18
3.5 Brokers or Finders...............................................19
3.6 Misstatements and Omissions......................................19
ARTICLE 4 COVENANTS OF EACH ACQUIRED COMPANY AND OF THE
SELLERS PRIOR TO CLOSING.........................................19
4.1 Access ......................................................19
4.2 Operation of the Businesses of each Acquired Company.............19
4.3 Prohibited Activities............................................19
4.4 Required Approvals...............................................20
4.5 Notification.....................................................20
4.6 Payment of Indebtedness by Related Persons.......................20
4.7 No Negotiation...................................................20
4.8 Best Efforts.....................................................20
4.9 Removal of Related Party Guarantees..............................20
4.10 Related Party Agreements.........................................21
4.11 Intentionally Omitted............................................21
4.12 Intentionally Omitted............................................21
ARTICLE 5 COVENANTS OF BUYER PRIOR TO CLOSING DATE........................21
5.1 Not Used. ......................................................21
5.2 Not Used ......................................................21
5.3 Not Used ......................................................21
5.4 Best Efforts.....................................................21
ARTICLE 6 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.............21
6.1 Accuracy of Representations......................................21
6.2 Sellers' Performance.............................................22
6.3 Consents ......................................................22
6.4 Additional Conditions Precedent..................................22
6.5 Resignation of Directors and Officers............................23
6.6 Manufacturer Approval............................................23
6.7 No Injunction....................................................23
ARTICLE 7 CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE...........23
7.1 Accuracy of Representations......................................23
7.2 Buyer's Performance..............................................23
7.3 Consents ......................................................23
7.4 Lease ......................................................23
7.5 Release of Guarantees............................................23
7.6 Assignment of Option to Purchase.................................23
7.7 Additional Documents.............................................23
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7.8 No Injunction....................................................24
ARTICLE 8 POSTCLOSING AND OTHER COVENANTS.................................24
8.1 General ......................................................24
8.2 Litigation Support...............................................24
8.3 Transition ......................................................24
8.4 PostClosing Notifications........................................24
8.5 Transfer Taxes...................................................24
8.6 Tax Periods Ending on or Before the Closing Date.................24
8.7 Release ......................................................25
8.8 NonCompetition Obligations.......................................25
8.9 Intentionally Omitted............................................25
8.10 IRCss.338 Election...............................................25
ARTICLE 9 TERMINATION.....................................................26
9.1 Termination Events...............................................26
9.2 Effect of Termination............................................26
ARTICLE 10 INDEMNIFICATION; REMEDIES .....................................26
10.1 Survival ......................................................26
10.2 Indemnification by Sellers.......................................26
10.3 Indemnification by Buyer.........................................27
10.4 Claims for Indemnification.......................................27
10.5 Procedures for Indemnification Third Party Claims...............27
10.6 Procedures for Indemnification Other Claims.....................28
10.7 Limitations of Indemnification...................................28
10.8 Setoff ......................................................28
10.9 Applicability....................................................28
10.10 Setoff ......................................................28
ARTICLE 11 GENERAL PROVISIONS............................................29
11.1 Expenses ......................................................29
11.2 Public Announcements.............................................29
11.3 Confidentiality..................................................29
11.4 Notices ......................................................29
11.5 Insider Liability................................................30
11.6 Waiver ......................................................30
11.7 Entire Agreement and Modification................................31
11.8 Schedules ......................................................31
11.9 Assignments, Successors, and No ThirdParty Rights................31
11.10 Severability.....................................................31
11.11 Section Headings, Construction...................................31
11.12 Time Of Essence..................................................31
11.13 Governing Law....................................................31
11.14 Counterparts.....................................................31
11.15 Attorneys' Fees..................................................31
11.16 Concurrent Conditions............................................31
11.17 Jurisdiction; Arbitration........................................32
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ARTICLE 12 DEFINITIONS ...................................................32
"Acquired Companies"......................................................32
"Affiliate" ......................................................32
"Affiliate Payables"......................................................33
"Applicable Contract".....................................................33
"Balance Sheet" ......................................................33
"Best Efforts" ......................................................33
"Breach" ......................................................33
"Business Day" ......................................................33
"Closing Date" ......................................................33
"Company" ......................................................33
"Consent" ......................................................33
"Contemplated Transactions"...............................................33
"Contract" ......................................................33
"Dealership Location".....................................................33
"Disclosure Letter" ......................................................33
"Employee Plan" ......................................................33
"Encumbrance" ......................................................34
"Environment" ......................................................34
"Environmental, Health, and Safety Liabilities"...........................34
"Environmental Law" ......................................................34
"ERISA" ......................................................34
"Facilities" ......................................................35
"Ford" ......................................................35
"GAAP" ......................................................35
"Governmental Authorization"..............................................35
"Governmental Body" ......................................................35
"Group 1" ......................................................35
"Guaranty" ......................................................35
"Hazardous Activity"......................................................35
"Hazardous Materials".....................................................35
"IRC" ......................................................35
"IRS" ......................................................36
"Knowledge" ......................................................36
"Legal Requirement" ......................................................36
"Manufacturer" ......................................................36
"Material Agreement"......................................................36
"Material Environmental Liability"........................................36
"Modified GAAP" ......................................................36
"Occupational Safety and Health Law"......................................36
"Order" ......................................................36
"Ordinary Course of Business".............................................36
"Organizational Documents"................................................36
"Person" ......................................................36
"Proceeding" ......................................................36
"Purchase Price" ......................................................36
"Real Properties" ......................................................37
"Related Guarantees"......................................................37
"Related Party Agreement".................................................37
"Related Person" ......................................................37
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"Release" ......................................................37
"Representative" ......................................................37
"Schedule" ......................................................37
"Securities Act" ......................................................37
"Shares" ......................................................37
"Subsidiary" ......................................................37
"Tax Return" ......................................................38
"Threat of Release" ......................................................38
"Threatened" ......................................................38
ANNEX I STOCK OWNERSHIP...................................................40
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") dated effective January 1,
2003, is among BHE, INC., an Oklahoma corporation ("Buyer"), and XXX XXXXXX
GERMAN IMPORTS, INC., an Oklahoma corporation ("Company"), and the persons
whose names are set forth on ANNEX I hereto (collectively and individually
"Sellers") which Sellers are, directly and indirectly, the holders in the
aggregate of one hundred percent (100%) of the issued and outstanding shares of
capital stock of the Company (the "Shares"). Terms capitalized but not
otherwise defined herein have the meanings ascribed to them in Article 12.
W I T N E S S E T H
WHEREAS, based upon the representations and warranties herein made by
Sellers and on the terms and subject to the conditions contained herein, Buyer
wishes to purchase from Sellers all the Shares;
WHEREAS, based upon the representations and warranties herein made by
Buyer and on the terms and subject to the conditions contained herein, Sellers
wish to sell to Buyer all the Shares; and
WHEREAS, the parties agree to make elections under IRC ss. 338(h)(10)
and all comparable elections under applicable state and local tax law with
respect to the Company;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
ARTICLE 1
TERMS OF THE TRANSACTION
1.1 AGREEMENT TO SELL AND TO PURCHASE THE SHARES. At the Closing, and
on the terms and subject to the conditions set forth in this Agreement, Sellers
shall sell to Buyer, and Buyer shall purchase from Sellers, the Shares, as set
forth on ANNEX I. The Shares shall be delivered to the Buyer free and clear of
all Encumbrances.
1.2 PURCHASE PRICE. The purchase price (the "Purchase Price") for the
Shares shall be an amount equal to the total stockholder's equity of the
Company on the Closing Date, determined in accordance with Modified GAAP,
except that for purposes of determining the Purchase Price, the adjusted
goodwill (goodwill minus accumulated amortization) of the Company shall be
deemed to be five million one hundred thousand and no/100 dollars
($5,100,000.00). All assets shall be fully recorded and all liabilities,
including interest and taxes, shall be fully accrued as of the Closing Date.
Buyer and Sellers shall calculate and mutually agree to the estimated Purchase
Price based upon the information available as of a date not more than ten (10)
days prior to the Closing Date, and in accordance with the provisions herein
for calculating the Purchase Price, on or before the Closing Date ("Estimated
Purchase Price").
1.3 CLOSING. The effective date of the purchase and sale ("Effective
Closing Date") provided for in this Agreement will be the first Monday
following receipt of the approval and consents specified in SECTIONS 6.3,
6.4(C), AND 6.6 or such other time as the parties mutually agree. The closing
of the sale of the Shares hereunder ("Closing") shall take place at the offices
of the Company, or such other place as Buyer and Sellers agree, at 10:00 a.m.
(local time) on the first Wednesday following the Effective Closing Date.
Subject to the provisions of SECTION 9.1(E), failure to consummate the purchase
and sale provided for in this Agreement on the date and time and at the place
determined pursuant to this SECTION 1.3 will not result in the termination of
this Agreement and will not relieve any party of any obligation under this
Agreement.
1.4 CLOSING OBLIGATIONS. At the Closing:
(a) Sellers will deliver to Buyer:
(1) A certificate or certificates representing
the Shares, duly endorsed in blank or with
a fully executed stock power attached, all
in proper form for transfer;
(2) Certificate executed by each Seller
representing and warranting to Buyer that
each of Seller's representations and
warranties in this Agreement was accurate
as of the date the Disclosure Letter is
first delivered to Buyer and is accurate in
all material respects (except that where
any statement in representation or warranty
expressly includes a standard of
materiality, such statement shall be true
and correct in all respects giving effect
to such standard) as of the Closing Date,
except that those representations and
warranties which address matters only as of
a particular date shall remain true and
correct in all material respects (except
that where any statement in a
representation or warranty expressly
includes a standard of materiality, such
statement shall be true and correct in all
respects giving effect to such standard) as
if made on the Closing Date (giving full
effect to any supplements to the Schedules
that were delivered by Sellers to Buyer
prior to the Closing Date);
(3) Certificate of good standing for each
Acquired Company in the state of its
incorporation, certified as of a date not
more than ten (10) days before the Closing
Date;
(4) Lien searches for federal and state tax
liens, judgment liens, and other liens on
standard form of Request for Information
(Uniform Commercial Code Form UCC-11) for
entries in the name of every Acquired
Company (including any assumed names)
completed and certified by the County Clerk
of Oklahoma County, and the Secretary of
State of the State of Oklahoma, dated no
earlier than ten (10) days prior to Closing
Date and showing the absence of any
Encumbrances; provided, however, that it is
understood that these offices may not
certify a search for all types of liens.
(5) Evidence in form reasonably satisfactory to
Buyer of the receipt of each of the
governmental and third-party consents,
approvals and waivers described in SECTIONS
2.5 AND 2.19;
(6) Evidence in form reasonably satisfactory to
Buyer of the payment or discharge, as
applicable, of the loans and payables
described in SECTION 4.6;
(7) The written resignations described in
SECTION 6.5;
(8) All minute books, including the
Organizational Documents, stock transfer
ledgers and corporate seal of each Acquired
Company;
(9) Such additional certificates, instruments,
documents, information and materials
required to be delivered by Sellers and
their affiliates under this Agreement and
otherwise as Buyer may reasonably request;
and
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(10) Consents of landlords, if required by
reason of the sale of the Shares, for
leases upon property owned by third-parties
who are not Affiliates of Sellers.
(b) Buyer will deliver to Sellers:
(1) Payment of the Estimated Purchase Price;
(2) Certificate executed by Buyer to the effect
that, except as otherwise stated in such
certificate, each of Buyer's
representations and warranties in this
Agreement was accurate as of the date of
this Agreement and is accurate in all
material respects (except that where any
statement in representation or warranty
expressly includes a standard of
materiality, such statement shall be true
and correct in all respects giving effect
to such standard) as of the Closing Date,
except that those representations and
warranties which address matters only as of
a particular date shall remain true and
correct in all material respects (except
that where any statement in a
representation or warranty expressly
includes a standard of materiality, such
statement shall be true and correct in all
respects giving effect to such standard) as
of such date, as if made on the Closing
Date;
(3) Certificate of good standing of Buyer in
the state of Buyer's formation, certified
as of a date not more than ten (10) days
before the Closing Date;
(4) Such additional certificates, instruments,
documents, information and material
required to be delivered by Buyer or its
Affiliates under this Agreement and
otherwise as Sellers may reasonable
request;
(5) Releases of Sellers' guaranties, as
required in SECTIONS 5.3 and any releases
received under SECTION 5.4; and
(6) Guaranty of Buyer of any new or existing
Leases executed by the Acquired Companies
at Closing.
1.5 ADJUSTMENTS. The adjustment amount ("Adjustment Amount")(which may
be a positive or negative number) will be equal to the difference between the
final computation of the Purchase Price and the Estimated Purchase Price. Buyer
will prepare a computation of the Purchase Price, in reasonable detail, within
sixty (60) days after the Closing Date . Seller will have thirty (30) days to
review the computation the Purchase Price. In the event Seller disagrees with
Buyer's computation of the Purchase Price, Seller shall give written notice of
such disagreement within such 30-day period, which notice shall specifically
identify the nature of the disagreement and shall set forth Seller's
computation of the Purchase Price. Buyer and Sellers shall negotiate in good
faith to reconcile the difference, if any, between Buyer and Sellers's
computation of the Purchase Price. If Buyer and Sellers cannot agree to the
computation of the Purchase Price within thirty (30) days following Buyer's
receipt of such notice, then the issues in dispute will be submitted to an
independent public accounting firm ("Accountants") selected by Buyer and
Sellers within thirty (30) days from the date of the expiration of the 30-day
period specified in the preceding sentence for resolution or if Buyer and
Seller do not agree on the selection of the Accountants, the Accountants shall
be Xxxxxx X. Xxxxx & Company. If issues in dispute are submitted to the
Accountants for resolution: (i) the Accountants shall resolve such dispute by
the Accountants' determination of the Purchase Price in accordance with the
provisions of Section 1.2, (ii) each party will furnish to the Accountants such
work papers and other documents and information relating to the disputed issues
as the Accountants may request and are available to that party, and will be
afforded the opportunity
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to present to the Accountants any material relating to the determination and to
discuss the determination with the Accountants; (iii) the determination by the
Accountants, as set forth in a notice delivered to both parties by the
Accountants, will be binding and conclusive on the parties; and (iv) Buyer and
Sellers will each bear fifty percent (50%) of the fees and expenses of the
Accountants for such determination.
1.6 PAYMENT. All payments of the Purchase Price and the Adjustment
Amount by Buyer to Sellers shall be payable by wire transfer of immediately
available funds to the account of the Sellers, which shall be designated by
Sellers in writing at least five (5) full Business Days prior to the Payment
Date. The Purchase Price shall be paid on the following dates (if applicable in
each case) (in each case a "Payment Date"):
(a) The Estimated Purchase Price on the Closing Date.
(b) On the fifth (5th) business day following the final
determination of the Adjustment Amount, if the Purchase Price is greater than
the Estimated Purchase Price made pursuant to Section 1.6(a), Buyer will pay
the Adjustment Amount to Sellers, and if the Purchase Price is less than the
Estimated Purchase Price, Sellers will pay the Adjustment Amount to Buyer.
Payments to Sellers must be made in the manner provided in this Section 1.6.
Payments to Buyer must be made by wire transfer to such bank account as Buyer
will specify.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Subject to the exceptions the Disclosure Letter contains, Seller
represents and warrants to Buyer as follows:
2.1 DISCLOSURE. No representation or warranty by Sellers in this
Agreement or in any of the exhibits attached hereto, or other statement in
writing or certificate furnished or to be furnished to Buyer by or on behalf of
Sellers or an Acquired Company prior to the Closing in connection with the
transactions contemplated by this Agreement, contains or will contain any
untrue statement of a material fact, or omits or will omit to state a material
fact necessary to make the statements contained herein, in light of the
circumstances in which they are made, not misleading.
2.2 ORGANIZATION AND GOOD STANDING. SCHEDULE 2.2 ("Organization")
contains a complete and accurate list of each Acquired Company, its name, its
jurisdiction of incorporation, other jurisdictions in which it is authorized to
do business, and its capitalization (including the identity of each stockholder
and the number of shares held by each). Each Acquired Company is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, with full power and authority to conduct its
business as it is now being conducted, to own or use the properties and assets
that it purports to own or use, and to perform all its obligations under
Material Agreements. No Acquired Company is qualified to do business as a
foreign corporation in any other state or jurisdiction and no such
qualification is required. Sellers have delivered to Buyer copies of the
Organizational Documents of each Acquired Company, as currently in effect.
2.3 AUTHORITY. Each of the Sellers has full legal right, power,
capacity and authority to execute, deliver and perform its obligations pursuant
to this Agreement and to execute, deliver and perform its obligations under
each instrument, document or agreement required hereby to be executed and
delivered by such Sellers at, or prior to, the Closing. This Agreement has
been, and each instrument, document or agreement required hereby to be executed
and delivered by such Sellers at, or prior to, the Closing will then be, duly
executed and delivered by such Seller, and this Agreement constitutes and, to
the extent it purports to obligate such Seller, each such instrument, document
or agreement will constitute (assuming due authorization, execution and
delivery by each other party thereto), the legal, valid and binding obligation
of such Seller enforceable against it in accordance with its terms, except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or
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other laws of general application relating to or affecting the enforcement of
creditors' rights generally, and (ii) the application of general principles of
equity (regardless of whether that enforceability is considered in a proceeding
in equity or at law). Except as disclosed in SCHEDULE 2.5, each Acquired
Company has the right, power, and authority to execute and deliver and to
perform its obligations under any agreements and documents to be provided under
this Agreement.
2.4 NOT USED.
2.5 ABSENCE OF CONFLICTS.
(a) Except to the extent set forth in SCHEDULE 2.5
("Conflicts"), neither the execution and delivery by any Seller of this
Agreement or any instrument, document or agreement required hereby to be
executed and delivered by it at, or prior to, the Closing, nor the performance
by such Sellers of its obligations under this Agreement or any such instrument
will (A) violate or breach the terms of or cause a default under (i) any
applicable Law, (ii) any applicable Order or any applicable rule or regulation
of any Court or Governmental Authority, (iii) any contract or agreement to
which such Seller is a party or by which it, or any of its properties, is
bound, or (B) result in the creation or imposition of any Lien on any of the
properties or assets of such Seller, or (C) result in the cancellation,
forfeiture, revocation, suspension or adverse modification of any existing
consent, approval, authorization, license, permit, certificate or order of any
Court or Governmental Authority, or (D) with the passage of time or the giving
of notice or the taking of any action of any third party have any of the
effects set forth in clause (A), (B) or (C) of this SECTION 2.5.
(b) Except as set forth in SCHEDULE 2.5, neither the
execution and delivery of this Agreement nor the consummation or performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time): (i) contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents of any of the
Acquired Companies, or (B) any resolution adopted by the board of directors or
stockholders of any Acquired Company; (ii) contravene, conflict with, or result
in a violation of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which an
Acquired Company or Seller, or any of the assets owned or used by the Acquired
Companies, may be subject; (iii) contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Acquired Companies or that
otherwise relates to the business of, or any of the assets owned or used by an
Acquired Company; (iv) cause Buyer or the Acquired Companies to become subject
to, or to become liable for the payment of, any Tax; (v) cause any of the
assets owned by the Acquired Companies to be reassessed or revalued by any
taxing authority or other Governmental Body; (vi) contravene, conflict with, or
result in a violation or breach of any provision of, or give any Person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any Material
Agreement; (vii) result in the imposition or creation of any Encumbrance upon
or with respect to any of the assets owned or used by the Acquired Companies ;
or (viii) give rise to any right of first refusal or other similar right of any
person to acquire the Shares or any of the assets of any of the Acquired
Companies, whether pursuant to any contract, Legal Requirement or otherwise,
except for any such right of first refusal or similar right that has lapsed
without exercise prior to the Closing Date or been waived in writing by an
instrument executed and delivered to Seller prior to the Closing Date. Except
as set forth in SCHEDULE 2.5, no Seller nor any of the Acquired Companies are
or will be required to give any notice to or obtain any Consent from any Person
in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
2.6 CAPITAL STOCK. Seller is the beneficial and record owner of the
number of Shares, as set forth in ANNEX I, free and clear of any lien, claim,
pledge, encumbrance or other adverse claim. Except for such Shares set forth in
ANNEX I hereto, no Seller owns, beneficially or of record, any capital stock or
other security, including without limitation any option, warrant or right
entitling the
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holder thereof to purchase or otherwise acquire any shares of capital stock, of
any Acquired Company. The Seller is a "United States person" as that term is
defined in IRC ss. 7701(a)(30) and the regulations promulgated thereunder.
Except as set forth in SCHEDULE 2.6 ("Capital Stock"): (a) no Acquired Company
has any obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire or reacquire any of its equity securities or any interests therein or
to pay any dividend or make any distribution in respect thereof; (b) no
transaction has been effected in contemplation of the Contemplated
Transactions, and no action in contemplation of Contemplated Transactions has
been taken, respecting the equity ownership of an Acquired Company; (c) all of
the outstanding equity securities of each Acquired Company have been duly
authorized and validly issued and are fully paid and nonassessable; and (d) no
legend or other reference to any purported Encumbrance appears upon any
certificate representing equity securities of any Acquired Company. There are
no Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities of any Acquired Company. None of the outstanding
equity securities or other securities of any Acquired Company was issued in
violation of the Securities Act or any other Legal Requirement. No Acquired
Company owns, or has any Contract to acquire, any equity securities or other
securities of any Person (other than Company) or any direct or indirect equity
or ownership interest in any other business. The Company owns one hundred
percent (100%) of the issued and outstanding common shares of each Acquired
Company (other than the Company) that is a corporation.
2.7 FINANCIAL STATEMENTS. Attached to SCHEDULE 2.7 ("Financial
Statements") are the following financial statements: (a) consolidated balance
sheets of the Acquired Companies as at December 31, 2001 and October 31, 2002
(the October 31, 2002 balance sheet is called the "Balance Sheet"), and the
related statements of income and changes in stockholders' equity (in
Mercedes-Benz financial statement format), for the period from inception to
December 31, 2001, or the ten-month period ended October 31, 2002, as the case
may be. Except as set forth in SCHEDULE 2.7, such financial statements and
notes fairly present the consolidated financial condition and the consolidated
results of operations and changes in stockholders' equity of the Acquired
Companies as at the respective dates of and for the periods referred to in such
financial statements, all in accordance with Modified GAAP; Except as set forth
in SCHEDULE 2.7, the financial statements referred to in this SECTION 2.7
reflect the consistent application of such accounting principles throughout the
periods involved. No financial statements of any Person other than the Acquired
Companies are required by Modified GAAP to be included in the financial
statements of the Acquired Companies.
2.8 BOOKS AND RECORDS. The books of account, minute books, stock
record books, and other records of the Acquired Companies, all of which have
been made available to Buyer, are complete and correct in all material respects
and have been maintained in accordance with sound business practices and the
requirements of Section 13(b)(2) of the Securities Exchange Act of 1934, as
amended (regardless of whether or not the Acquired Company is subject to that
Section), including the maintenance of an adequate system of internal controls.
The minute or record books of each Acquired Company contains accurate and
complete records of all corporate action taken by, such Acquired Company's
stockholders and board of directors, including any committee of such board. At
the Closing, all of those books and records will be in the possession of the
Company.
2.9 ASSETS; ENCUMBRANCES. The Acquired Companies have good title to
all assets, rights, interests and other properties, real, personal and mixed,
tangible and intangible, owned by it (collectively, the "Assets") and all
Assets owned by the Acquired Businesses as of October 31, 2002 are reflected on
the Balance Sheet. SCHEDULE 2.9 ("Assets; Encumbrances") contains a complete
and accurate list of all real property, leaseholds, or other interests therein
owned by the Companies. The Assets include all properties and assets (real,
personal and mixed, tangible and intangible) owned by the Companies. Except as
provided in SCHEDULE 2.9, all Assets are free and clear of all Encumbrances
other than Permitted Encumbrances (as hereinafter defined), except liens for
current taxes not yet due.
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2.10 CONDITION AND SUFFICIENCY OF ASSETS. Except as provided in
SCHEDULE 2.10 ("Condition and Sufficiency of Assets"), the buildings, plants,
structures, and equipment of the Acquired Companies are structurally sound, are
in good operating condition and repair, and are adequate for the uses to which
they are being put, and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs. Notwithstanding the foregoing, no representation is
made as to any requirement which may be imposed hereafter by Manufacturer to
upgrade any facility pursuant to Manufacturer's facilities requirements.
2.11 ACCOUNTS RECEIVABLES. Except as provided in SCHEDULE 2.11
("Accounts Receivable"), all receivables of the Acquired Companies, including
but not limited to factory, rebate, warranty, employee, trade and accounts
receivable that are reflected on the Balance Sheet or on the accounting records
of the Acquired Companies as of the Closing Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of business
of the Acquired Companies and are collectible at the aggregate recorded amounts
thereof, subject to the reserves for doubtful accounts maintained by the
Acquired Companies in the ordinary course of business, and are not subject to
any known counterclaims or set offs. An adequate reserve for doubtful accounts
for the Acquired Companies have been established and such reserve is consistent
with the operation of the Acquired Companies in the ordinary course of their
business and their past practice. SCHEDULE 2.11 contains a complete and
accurate summary of all Accounts Receivable as of the end of the month prior to
the date of this Agreement, which list sets forth the aging of such Accounts
Receivable.
2.12 INVENTORY. Except as provided in SCHEDULE 2.12 ("Inventory"), all
inventory of the Acquired Companies, whether or not reflected in the Balance
Sheet, consists of a quality and quantity usable and salable in their ordinary
course of their business, except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net realizable
value in the Balance Sheet or on the accounting records of the Acquired
Companies as of the Closing Date, as the case may be. All inventories not
written off have been priced at the lower of cost or net realizable value on a
first in, first out basis. The quantities of each item of inventory are not
excessive, but are reasonable in the present circumstances of the Acquired
Companies.
2.13 NO UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE 2.13
("Liabilities"), and except for Environmental matters which are the subject of
SECTION 2.21, the Acquired Companies have no liabilities or obligations of any
nature except for liabilities or obligations reflected or reserved against in
the Balance Sheet and current liabilities incurred in the Ordinary Course of
Business since the date thereof and except for liabilities which are not
required under GAAP to be reflected on the Balance Sheet.
2.14 TAXES. Except as provided in SCHEDULE 2.14 ("Taxes"):
(a) All federal, state and local tax returns and tax reports
required as of the date hereof to be filed by the Acquired Companies for
taxable periods ending prior to the date hereof have been duly and timely filed
prior to the due date thereof (as such due date may have been lawfully
extended) by the Acquired Companies with the appropriate governmental agencies,
and all such returns and reports are true, correct and complete in all material
respects (material meaning it does not affect the tax liability).
(b) All federal, state and local income, profits, franchise,
sales, use, occupation, property, excise, payroll, withholding, employment,
estimated and other taxes of any nature, including interest, penalties and
other additions to such taxes ("Taxes"), payable by, or due from, the Acquired
Companies for all periods prior to the date hereof have been fully paid or
adequately reserved for by the Acquired Companies or, with respect to Taxes
required to be accrued, the Acquired Companies
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have properly accrued or will properly accrue such Taxes in the ordinary course
of business consistent with past practice of the Acquired Companies.
(c) A list of the tax years for which the federal income tax
returns of the Acquired Companies have been examined by the IRS and accepted is
contained on SCHEDULE 2.14. None of the Acquired Companies has received any
notice of any assessed or proposed claim or deficiency against it in respect
of, or of any present dispute between it and any governmental agency
concerning, any Taxes. No examination or audit of any tax return or report of
the Acquired Companies by any applicable taxing authority is currently in
progress and there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any tax return or report of the
Acquired Companies. Copies of all federal, state and local tax returns and
reports required to be filed by the Acquired Companies for all tax years since
the Inception Date, together with all schedules and attachments thereto, have
been delivered by the Sellers to the Buyer.
(d) From the Inception Date through December 31, 2001, all of
the Acquired Companies were members of an "affiliated group" of corporations as
defined in IRC ss. 1504(a) which filed consolidated returns for federal income
tax purposes, with the Company owning one hundred percent (100%) of the other
Acquired Companies. No consent under IRC ss. 341 has been made affecting the
Acquired Companies. The Acquired Companies are not a party to any agreement or
arrangement that would result in the payment of any "excess parachute payments"
under IRC ss. 280G. No Acquired Company is required to make any adjustment
under IRC ss. 481(a). No power of attorney relating to Taxes is currently in
effect for any of the Acquired Companies.
(e) The charges, accruals, and reserves with respect to Taxes
on the respective books of the Acquired Companies are adequate (determined in
accordance with Modified GAAP) and are at least equal to that Acquired
Companies liability for Taxes. There exists no proposed tax assessment against
any Acquired Companies except as disclosed in the Financial Statements. No
consent to the application of IRC ss. 341(f)(2) has been filed with respect to
any property or assets held, acquired, or to be acquired by any Acquired
Companies. All Taxes that any of the Acquired Companies is or was required by
Legal Requirements to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Governmental Body or
other Person.
(f) There is no tax sharing agreement that will require any
payment by any Acquired Companies after the date of this Agreement.
2.15 EMPLOYEE BENEFITS. All capitalized terms used in this SECTION
2.15 but not defined in this Section 2.15 or elsewhere in this Agreement shall
have the meanings set forth in ERISA or the IRC. The Company has listed in
SCHEDULE 2.15 ("Employee Benefits") and has delivered or made available to the
Buyer true and complete copies of all Employee Plans and related documents,
established, maintained or contributed to by the Acquired Companies (which
shall include for this purpose and for the purpose of all of the
representations in this SECTION 2.15, each Acquired Company and all employers,
whether or not incorporated, that are treated together with the Acquired
Companies as a single employer with the meaning of IRC ss. 414). Where
applicable, each Employee Plan: (i) has been administered in material
compliance with the terms of such Employee Plan and the requirements of ERISA
and the IRC; and (ii) is in material compliance with the reporting and
disclosure requirements of ERISA and the IRC. The Acquired Companies do not
maintain or contribute to, and have never maintained or contributed to, an
Employee Plan subject to Title IV of ERISA or a "multiemployer plan." There are
no facts relating to any Employee Plan that (i) have resulted in a "prohibited
transaction" of a material nature or have resulted or is reasonably likely to
result in the imposition of a material excise tax, penalty or liability
pursuant to IRC ss. 4975, (ii) have resulted in a material breach of fiduciary
duty or violation of Part 4 of Title I of ERISA, or (iii) have resulted or
could result in any material liability (whether or not asserted as of the date
hereof) of the Acquired Companies or any ERISA affiliate pursuant to IRC ss.
412 arising under or related to any event, act or
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omission occurring on or prior to the date hereof. Each Employee Plan that is
intended to qualify under IRC ss. 401(a) or to be exempt under IRC ss.
501(c)(g) is so qualified or exempt as of the date hereof in each case as such
Employee Plan has received favorable determination letters from the IRS with
respect thereto. To the Knowledge of the Seller and each Acquired Company, the
amendments to and operation of any Employee Plan subsequent to the issuance of
such determination letters do not adversely affect the qualified status of any
such Employee Plan. No Employee Plan has an "accumulated funding deficiency" as
of the date hereof, whether or not waived, and no waiver has been applied for.
Each Acquired Company has made no promises or incurred any liability under any
Employee Plan or otherwise to provide health or other welfare benefits to
former employees of each Acquired Company, except as specifically required by
law. There are no pending or, to the Knowledge of the Seller and each Acquired
Company, threatened claims (other than routine claims for benefit) or lawsuits
with respect to the Acquired Companies Employee Plans.
2.16 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 2.16
("Compliance with Laws"), the Acquired Companies have conducted their
operations and business in material compliance with, and all of the Assets
(including all of the Real Property) comply in all material respects with, all
applicable Legal Requirements (including, without limitation, Legal
Requirements relating to anticompetitive practices, contracts, discrimination,
employee benefits, employment, health, safety, fire, building and zoning, but
excluding Environmental Laws which are the subject of SECTION 2.21 hereof). The
Acquired Companies have not received any notification of any asserted present
or past uncured failure by them to comply with such Legal Requirement. Set
forth in SCHEDULE 2.16 are all Orders applicable to the Acquired Companies or
their business or operations. The Sellers have delivered to the Buyer copies of
all reports filed since January 1, 1998, if any, of the Acquired Companies
required to be submitted under the Federal Occupational Safety and Health Act
of 1970, as amended, and under all other applicable Occupational Safety and
Health Laws. The deficiencies, if any, noted on such reports have been
corrected by the Acquired Companies and any deficiencies noted by inspection
through the Closing Date will have been corrected by the Acquired Companies by
the Closing Date.
2.17 LEGAL PROCEEDINGS. Except as set forth in SCHEDULE 2.17 ("Legal
Proceedings"), and except for Environmental matters which are the subject of
SECTION 2.21, there are no Proceedings pending, or, to the Knowledge of each
Seller and Acquired Company, Threatened or probable of assertion, against the
Acquired Companies or relating to their assets, business or operations or the
transactions contemplated by this Agreement, and neither the Seller nor any
Acquired Company has Knowledge of any basis for the institution of any such
Proceeding. No Order which is presently in effect has been entered against or
served upon the Acquired Companies relating to the Acquired Companies or their
assets, business or operations. SCHEDULE 2.17 contains a complete list of all
Proceedings (whether with any governmental, consumer advocacy organization, or
quasi governmental organization) filed, served upon or disclosed to Sellers or
the Acquired Companies since the Inception Date relating to any Acquired
Company sales or adverting practices.
2.18 ABSENCE OF CHANGES. Except as set forth in SCHEDULE 2.18
("Absence of Changes"), since the Inception Date, the business of the Acquired
Companies has been operated in the ordinary course, and, except as set forth on
SCHEDULE 2.18 or as contemplated by the provisions of this Agreement, there has
not been incurred, nor has there occurred since the Inception Date: (a) any
damage, destruction or loss (whether or not covered by insurance), adversely
affecting the business or assets of the Acquired Companies in excess of Fifty
Thousand Dollars ($50,000); (b) any strikes, work stoppages or other labor
disputes involving the employees of the Acquired Companies; (c) any sale,
transfer, pledge or other disposition of any of the assets of the Acquired
Companies having an aggregate book value of Fifty Thousand Dollars ($50,000) or
more (except sales of vehicles and parts inventory in the ordinary course of
business); (d) any declaration or payment of any dividend or other distribution
in respect of its capital stock or any redemption, repurchase or other
acquisition of its capital stock, (e) any amendment, termination, waiver or
cancellation of any Material Agreement or any termination, amendment, waiver or
cancellation of any material right or claim of the Acquired
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Companies under any Material Agreement (except in each case in the ordinary
course of business); (f) any (1) general uniform increase in the compensation
of the employees of the Acquired Companies (including, without limitation, any
increase pursuant to any bonus, pension, profit-sharing, deferred compensation
or other plan or commitment), (2) increase in any such compensation payable to
any individual officer, director, consultant or agent thereof, or (3) loan or
commitment therefor made by the Acquired Companies to any officer, director,
stockholder, employee, consultant or agent of the Acquired Companies; (g) any
change in the accounting methods, procedures or practices followed by the
Acquired Companies or any change in depreciation or amortization policies or
rates theretofore adopted by the Acquired Companies; (h) any material change in
policies, operations or practices of the Acquired Companies with respect to
business operations followed by the Acquired Companies, including, without
limitation, with respect to selling methods, returns, discounts or other terms
of sale, or with respect to the policies, operations or practices of the
Acquired Companies concerning the employees of the Acquired Companies; (i) any
capital appropriation or expenditure or commitment therefor on behalf of the
Acquired Companies in excess of Twenty-Five Thousand Dollars ($25,000)
individually or One Hundred Thousand Dollars ($100,000) in the aggregate
(exclusive of individual items, each not in excess of Five Thousand Dollars
($5,000); (j) any write- down or write-up of the value of any inventory or
equipment of the Acquired Companies or any material increase in inventory
levels; (k) any account receivable in excess of Twenty-Five Thousand Dollars
($25,000) or note receivable in excess of Twenty-Five Thousand Dollars
($25,000) owing to the Acquired Companies which (1) has been written off as
uncollectible, in whole or in part, (2) has had asserted against them any
claim, refusal or right of setoff, or (3) the account or note debtor has
refused to, or threatened not to, pay for any reason, or such account or note
debtor has, to the Knowledge of Sellers, become insolvent or bankrupt; (l) any
other change in the condition (financial or otherwise), business operations,
assets, earnings, business or prospects of the Acquired Companies which, in the
judgment of the Sellers, has, or could reasonably be expected to have, a
material adverse effect on the assets, business or operations of the Acquired
Companies; or (m) any agreement, whether in writing or otherwise, for the
Acquired Companies to take any of the actions enumerated in this SECTION 2.18.
2.19 CONTRACTS AND COMMITMENTS.
(a) Except as set forth in SCHEDULE 2.19 ("Contracts and
Commitments"), the Sellers and each Acquired Company have provided Buyer with a
complete, accurate list of, or made available to Buyer copies of each of the
following (each a "Company Commitment") to which an Acquired Company is a party
or by which any of its properties is bound and which presently remains
executory in whole or in any part: (i) each partnership or joint venture
agreement; (ii) each guaranty or suretyship, indemnification or contribution
agreement or performance bond (other than any Guaranty limited as to recourse
to no more than Five Thousand Dollars ($5,000) and any Guaranty of any
automobile or other vehicle retail installment sales contract entered into and
sold to a financial institution in the ordinary course of business); (iii) each
instrument, agreement or other obligation evidencing or relating to
indebtedness of an Acquired Company involving more than Twenty-Five Thousand
Dollars ($25,000) in any single case, or to money lent or to be lent to another
Person involving more than One Hundred Thousand Dollars ($100,000) in the
aggregate, other than any of its dealership customers in connection with the
purchase, or the refinancing of the purchase, of any vehicle; (iv) each
contract to purchase or sell real property; (v) each agreement with brokers of
motor vehicles or sales or commission agents, public relations or advertising
agencies, accountants or attorneys (other than in connection with this
Agreement and the transactions contemplated hereby) involving total payments
within any twelve (12) month period in excess of Ten Thousand Dollars ($10,000)
and which is not terminable without penalty and no more than thirty (30) days'
prior notice; (vi) each Related Party Agreement involving total payments within
any twelve (12) month period in excess of Ten Thousand Dollars ($10,000) and
which is not terminable without penalty on no more than thirty (30) days' prior
notice; (vii) each contract containing any noncompetition agreement, covenant
or undertaking; (viii) each dealer sales and service agreement to which an
Acquired Company is a party and each other agreement providing for the purchase
from
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a supplier of all or substantially all the requirements of an Acquired Company
of a particular product or service; or (ix) each other agreement or commitment
not made in the ordinary course of business which is material to the Acquired
Companies.
(b) True, correct and complete copies of all written Company
Commitments have heretofore been delivered or made available to Buyer. Except
as accurately set forth in SCHEDULE 2.19: (i) there are no existing or asserted
defaults, events of default or events, occurrences, acts or omissions that,
with the giving of notice or lapse of time or both, would constitute defaults
or events of default under any Company Commitment material to the Acquired
Companies by an Acquired Company or, to the Knowledge of each Seller or
Acquired Company, any other party thereto; and (ii) no penalties have been
incurred, nor are amendments pending, with respect to the Company Commitments
that are material to the Acquired Companies. All Company Commitments are in
full force and effect and are valid and enforceable obligations of the Acquired
Company, and, to the Knowledge of each Seller and Acquired Company, the other
parties thereto in accordance with their respective terms and no defenses,
off-sets or counterclaims have been asserted or, to the Knowledge of the
Acquired Companies, may be made by any party thereto (other than by an Acquired
Company), nor has an Acquired Company waived any rights thereunder, except as
described in SCHEDULE 2.19.
(c) Except as disclosed in SCHEDULE 2.19 or contemplated
hereby or by any other Transaction Document to which an Acquired Company or
Stockholder is a party, none of the Acquired Companies or Sellers has received
notice of any plan or intention of any other party to any Company Commitment
that is material to the Acquired Companies to exercise any right to cancel or
terminate that Company Commitment, and neither the Acquired Companies nor
Sellers has Knowledge of any condition or state of facts which would justify
the exercise of such a right.
2.20 INSURANCE. SCHEDULE 2.20 ("Insurance") sets forth a list of all
policies of insurance currently in effect relating to the business or
operations of the Acquired Companies, true and complete copies of which have
been furnished to Buyer. Such insurance policies are in full force and effect.
The Acquired Companies are presently insured, and since the Inception Date have
been insured, against such risks as companies engaged in the same or
substantially similar business would customarily be insured. The Acquired
Companies have given in a timely manner to their insurers all notices required
to be given under such insurance policies with respect to all claims and
actions covered by insurance, and, except as set forth in SCHEDULE 2.20, no
insurer has denied coverage of any such claims or actions or reserved its
rights in respect of or rejected any of such claims. The Acquired Companies
have not received any notice or other communication from any such insurer
canceling or materially amending any of such insurance policies, and no such
cancellation is pending or, to the Knowledge of each Seller and Acquired
Company, threatened. The execution of this Agreement and the consummation of
the transactions contemplated hereby will not cause such insurance policies to
lapse, terminate or be canceled and will not result in any party thereto having
the right to terminate or cancel such insurance policies. Set forth in SCHEDULE
2.20 is a summary of information pertaining to insured claims against the
Acquired Companies during the past two (2) years. Except as set forth in
SCHEDULE 2.20, all of such claims are fully satisfied or are being defended by
the insurance carrier and involve no exposure to the Acquired Companies. Also
set forth in SCHEDULE 2.20 is: (i) a listing of the pending litigation and
claims against any Acquired Company; (ii) a summary of the settlements or
losses paid by any Acquired Company since the Inception Date, on any uninsured
claim in excess of Twenty-Five Thousand Dollars ($25,000); and (iii) to the
extent not reported above, a listing of all current customer claims, in excess
of Five Thousand Dollars ($5,000).
2.21 ENVIRONMENTAL MATTERS. Except as it relates to the matters set
forth in SCHEDULE 2.21 ("Environmental Matters") and matters that are not
reasonably expected to result in a Material Environmental Liability to Buyer or
any Acquired Company:
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(a) To the Knowledge of each Seller and Acquired Company,
each Acquired Company is, and at all times has been, in material compliance
with, and has not been and is not in violation of or liable under, any
Environmental Law such that any Acquired Company could reasonably be expected
to incur any Material Environmental Liability. To the Knowledge of each Seller
and Acquired Company, neither Sellers nor any Acquired Company has any basis to
reasonably expect, nor has any of them or any other Person for whose conduct
they are or may be held to be responsible received, any actual or Threatened
order, notice, or other communication from (i) any Governmental Body or private
citizen acting in the public interest, or (ii) the current or prior owner or
operator of any Facilities, of any actual or potential violation or failure to
comply with any Environmental Law, or of any actual or Threatened obligation to
undertake or bear the cost of any Material Environmental Liability with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which Sellers or an Acquired Company has had an
interest, or with respect to any property or Facility at which Hazardous
Materials were generated, manufactured, refined, stored, disposed, imported,
used, or processed by Sellers, an Acquired Company, or any other Person for
whose conduct they are or may be held responsible.
(b) To the Knowledge of each Seller and Acquired Company
there are no pending or Threatened claims, Encumbrances, or other restrictions
of any nature, resulting from any Material Environmental Liability or arising
under or pursuant to any Environmental Law, with respect to or affecting any of
the Facilities or any other properties and assets (whether real, personal, or
mixed) in which Sellers or an Acquired Company has or had an interest.
(c) None of Sellers nor any Acquired Companies have any
Knowledge that any Seller, nor any Acquired Company has received any written
citation, directive, inquiry, notice, Order, summons, warning, or other written
communication that relates to Hazardous Activity, Hazardous Materials, or any
alleged, actual, or potential violation or failure to comply with any
Environmental Law, or of any alleged, actual, or potential obligation to
undertake or bear the cost of any Environmental, Health, and Safety Liabilities
with respect to any of the Facilities or any other properties or assets
(whether real, personal, or mixed) in which Sellers or an Acquired Company had
an interest, or with respect to any property or facility to which Hazardous
Materials generated, manufactured, refined, transferred, imported, used, or
processed by Sellers, any Acquired Company, or any other Person for whose
conduct they are or may be held responsible, have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
(d) To the Knowledge of each Seller and Acquired Company,
neither Sellers nor any Acquired Company, or any other Person for whose conduct
they are or may be held responsible, has any Material Environmental Liability
with respect to the Facilities or with respect to any other properties and
assets (whether real, personal, or mixed) in which any Acquired Company has or
had an interest.
(e) To the Knowledge of each Seller and Acquired Company,
other than Hazardous Materials normally utilized in automobile dealerships, all
of which are properly stored, used and disposed of by the Acquired Companies,
there are no Hazardous Materials present on or in the Environment at the
Facilities, including any Hazardous Materials contained in barrels, above or
underground storage tanks, landfills, land deposits, dumps, equipment (whether
moveable or fixed) or other containers, either temporary or permanent, and
deposited or located in land, water, sumps, or any other part of the Facilities
or such adjoining property, or incorporated into any structure therein or
thereon.
(f) To the Knowledge of each Seller and Acquired Company,
there has been no Release, or Threat of Release, of any Hazardous Materials at
or from the Facilities, or from or by any other properties and assets (whether
real, personal, or mixed) in which an Acquired Company has or had an interest,
whether by an Acquired Company, or any other Person.
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(g) Sellers have delivered to Buyer true and complete copies
and results of any written reports, studies, analyses, tests, or monitoring
possessed or initiated by any Seller or any Acquired Company pertaining to
Hazardous Materials or Hazardous Activities in, on, or under the Facilities, or
concerning compliance by an Acquired Company with any Environmental Law.
(h) None of the Acquired Companies has transported or
disposed of, or arranged for the transportation or disposal of, any Hazardous
Materials to any location (i) which, to the Knowledge of any Seller or Acquired
Company, is listed on the National Priorities List, the CERCLIS list under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, or any similar federal, state or local list, or (ii) about which
any of the Acquired Companies has received or has reason to expect to receive a
potentially responsible party notice or other notice under any Environmental
Law.
(i) None of the Acquired Companies nor the Sellers have
received any written notice or claim alleging that any employee of the Acquired
Companies in the course of his or her employment with the Acquired Companies
has been exposed to any Hazardous Materials or other substance, generated,
produced or used by the Acquired Companies which could give rise to any claim
(whether or not such claim has been asserted) against the Acquired Companies.
(j) The Acquired Companies have not agreed to assume, defend,
undertake, guarantee, or provide indemnification for, any liability, including,
without limitation, any obligation for corrective or remedial action, of any
other person under any Environmental Law for environmental matters or
conditions.
2.22 EMPLOYEES.
(a) Except as provided in SCHEDULE 2.22 ("Employees"), (i)
the Acquired Companies are not delinquent in the payment to or on behalf of
their past or present employees of any wages, salaries, commissions, bonuses,
benefit plan contributions or other compensation for all periods prior to the
date hereof, or of any amount which is due and payable to any state or state
fund pursuant to any workers' compensation statute, rule or regulation or any
amount which is due and payable to any workers' compensation claimant; (ii)
there are no collective bargaining agreements currently in effect between the
Acquired Companies and labor unions or organizations representing any employees
of the Acquired Companies; (iii) no collective bargaining agreement is
currently being negotiated by the Acquired Companies; (iv) to the Knowledge of
each Seller and Acquired Company, there are no union organizational drives in
progress and there has been no formal or informal request to the Acquired
Companies for collective bargaining or for an employee election from any union
or from the National Labor Relations Board; and (v) no dispute exists between
the Acquired Companies and any of their sales representatives or, to the
Knowledge of each Seller and Acquired Company, between any such sales
representatives with respect to territory, commissions, products or any other
terms of their representation of the Acquired Companies.
(b) SCHEDULE 2.22 contains a complete and accurate list, as
of its date, of the following information for each employee or director of the
Acquired Companies, including each employee on leave of absence or layoff
status: employer; name; job title; current compensation paid or payable and any
change in compensation since the Inception Date; vacation accrued; and service
credited for purposes of vesting and eligibility to participate under an
Acquired Company's pension, retirement, profit-sharing, thrift-savings,
deferred compensation, stock bonus, stock option, cash bonus, employee stock
ownership (including investment credit or payroll stock ownership), severance
pay, insurance, medical, welfare, or vacation plan, other Employee Pension
Benefit Plan or Employee Welfare Benefit Plan, or any other employee benefit
plan or any Director Plan. The information contained on SCHEDULE 2.22 shall
satisfy Sellers' disclosure obligations with respect to any representation or
warranty calling for such information.
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(c) Except as provided in SCHEDULE 2.22, to the Knowledge of
each Seller and Acquired Company, no employee or director of an Acquired
Company is a party to, or is otherwise bound by, any agreement or arrangement,
including any confidentiality, noncompetition, or proprietary rights agreement,
between such employee or director and any other Person ("Proprietary Rights
Agreement") that in any way adversely affects or will affect (i) the
performance of his duties as an employee or director of any of the Acquired
Companies, or (ii) the ability of an Acquired Company to conduct its business,
including any Proprietary Rights Agreement with any Seller or the Acquired
Company by any such employee or director. To Sellers' Knowledge, no director,
officer, or other key employee of an Acquired Company intends to terminate his
employment with such Acquired Company.
(d) SCHEDULE 2.22 also contains a complete and accurate list,
as of its date, of the following information for each retired employee or
director of the Acquired Companies, or their dependents, receiving benefits or
scheduled to receive benefits in the future: name, pension benefit, pension
option election, retiree medical insurance coverage, retiree life insurance
coverage, and other benefits. Except as set forth in SCHEDULE 2.22, Sellers and
Acquired Companies have not entered into any severance or similar arrangement
in respect of any present or former personnel that shall result in any
obligation (absolute or contingent) of any of the Acquired Companies to make
any payment to any present or former personnel following termination of
employment, including the termination of employment effected by the
Contemplated Transactions. Except as set forth in SCHEDULE 2.22, the
Contemplated Transactions will not trigger any severance or similar arrangement
payable by any Acquired Companies after the Closing.
2.23 INTELLECTUAL PROPERTY. Except as set forth in SCHEDULE 2.23
("Intellectual Property"), the Acquired Companies own, or are licensed or
otherwise have the right to use, all Intellectual Property that is necessary
for the conduct of the business and operations of the Acquired Companies as
currently conducted. To the Knowledge of each Seller and Acquired Company, (i)
the use of the Intellectual Property by the Acquired Companies and their
Subsidiaries does not infringe on the rights of any Person, and (ii) no Person
is infringing on any right of the Acquired Companies with respect to any
Intellectual Property. No claims are pending or, to the Knowledge of each
Seller and Acquired Company, Threatened that the Acquired Companies are
infringing or otherwise adversely affecting the rights of any Person with
regard to any Intellectual Property. All of the Intellectual Property that is
owned by the Acquired Companies is owned free and clear of all encumbrances and
was not misappropriated from any Person. All of the Intellectual Property that
is licensed by the Acquired Companies is licensed pursuant to valid and
existing license agreements. The consummation of the transactions contemplated
by this Agreement will not result in the loss of any Intellectual Property.
Except as set forth in SCHEDULE 2.23, the Acquired Companies do not pay a
royalty to anyone under, any license or similar agreement. The Acquired
Companies have the right to use the names "Mercedes-Benz of Oklahoma City" in
the Oklahoma City, Oklahoma area, and, to the Knowledge of each Seller and
Acquired Company, no third party (other than affiliates of Buyer) uses, or has
the right to use, in such Area, such name or any derivation thereof in
connection with the manufacture, sale, marketing or distribution of products or
services commonly associated with a Mercedes-Benz automobile dealership.
2.24 CERTAIN PAYMENTS. Since the Inception Date, no Acquired Company,
director or officer of an Acquired Company, or to the Knowledge of each Seller
and Acquired Company, any agent, employee or other Person associated with or
acting for or on behalf of an Acquired Company, has directly or indirectly (a)
made any contribution, gift, bribe, rebate, payoff, influence payment,
kickback, or other payment to any Person, private or public, regardless of
form, whether in money, property, or services (i) to obtain favorable treatment
in securing business, (ii) to pay for favorable treatment for business secured,
(iii) to obtain special concessions or for special concessions already
obtained, for or in respect of an Acquired Company, or (iv) in violation of any
Legal Requirement, (b) established or maintained any fund that has not been
recorded in the books and records of the Acquired Companies.
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2.25 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth on
SCHEDULE 2.25 ("Relationships with Related Persons"), or as contemplated by
this Agreement, no Seller or any Related Person of Sellers or of an Acquired
Company has, any interest in any Assets. No Seller or any Related Person of
Sellers or of the Company owns (of record or as a beneficial owner) an equity
interest or any other financial or profit interest in, a Person that has (i)
had business dealings or a material financial interest in any transaction with
an Acquired Company, or (ii) engaged in competition with any Acquired Company
with respect to any line of the products or services of such Acquired Company
(a "Competing Business") in any market presently served by such Acquired
Company. Except as set forth in SCHEDULE 2.25, there are no transactions
between the Acquired Companies and the Sellers (including the Sellers'
Affiliates), or any of the directors, officers or management employees of the
Acquired Companies, or the family members or Affiliates of any of the above
(other than for services as employees, officers and directors), including,
without limitation, any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from, the Sellers,
or any such officer, director or salaried employee, family member, or Affiliate
or any corporation, partnership, trust or other entity in which such family
member, Affiliate, officer, director or employee has a substantial interest or
is a shareholder, officer, director, trustee or partner.
2.26 BROKERS OR FINDERS. Sellers will indemnify and hold Buyer
harmless from any obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement or the Contemplated Transactions, alleged to be
due by any Acquired Company or by Buyer by reason of any agreement made by
Sellers or the Acquired Companies.
2.27 LEASED ASSETS.
(a) The Acquired Companies do not lease any real property or
any interest therein except as set forth in SCHEDULE 2.27(A) ("Leased
Properties"), which sets forth the location and size of, principal improvements
and buildings on the Leased Properties, including the Acquired Companies'
leasehold improvements located upon each Leased Property. True, correct and
complete copies of all leases covering Leased Properties have been delivered to
Buyer. Except as set forth in SCHEDULE 2.27(A), (i) the Acquired Companies have
good and valid title to their leasehold interest of their Leased Property, free
and clear of any lien other than conditions, covenants and restrictions which
do not materially adversely affect the present use of the Leased Properties
("Permitted Encumbrances"); (ii) there are no pending or, to the Knowledge of
each Seller and Acquired Company, Threatened condemnation proceedings, suits or
administrative actions relating to the Leased Properties or other matters
affecting adversely the current use or occupancy thereof; (iii) the buildings
and improvements are located within the boundary lines of the parcels of land
constituting each Leased Property, are not in violation of applicable setback
requirements, local comprehensive plan provisions, zoning laws and ordinances
(and none of the properties or buildings or improvements thereon are subject to
"permitted non-conforming use" or "permitted non-conforming structure"
classifications), building code requirements, permits, licenses or other forms
of approval by any Governmental Authority, and do not encroach on any easement
which may burden the land; (iv) all facilities have received all Governmental
Authorizations (including licenses and permits) required in connection with the
ownership or operation thereof and have been operated and are in compliance
with applicable Legal Requirements, including the Americans with Disabilities
Act; (v) there are no contracts granted to or by the Acquired Companies, or, to
the Knowledge of each Seller and Acquired Company, by the owners of the parcels
of the Leased Property, granting to any party or parties the right of use or
occupancy of any portion of the parcels of Leased Property; (vi) there are no
outstanding options or rights of first refusal granted to or by Sellers or the
Acquired Companies to purchase the parcels of Leased Property, or any portion
thereof or interest therein; (vii) there are no parties (other than the
Acquired Companies) in possession of the parcels of Leased Property, (viii) all
facilities located on the parcels of Leased Property are supplied with
utilities and other services necessary for the operation of such facilities;
(ix) each parcel of Leased Property abuts on and has
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direct vehicular access to a public road, or has access to a public road; (x)
all improvements and buildings on the Leased Property are in good repair and
adequate for the use of such Leased Property in the manner in which presently
used; and (xi) there are no material service contracts, management agreements
or similar agreements granted by Sellers or the Acquired Companies which affect
the parcels of Leased Property; (xii) with respect to each lease of a Leased
Property, no event or condition currently exists which would give rise to a
material repair or restoration obligation if such lease were to terminate;
(xiii) none of the Sellers nor any Acquired Companies has any Knowledge of any
event or condition which currently exists which would create a legal or other
impediment to the use of the Leased Property as currently used, or would
increase the additional charges or other sums payable by the tenant under any
of the leases of a Leased Property (including, without limitation, any pending
tax reassessment or other special assessment affecting the Leased Property).
(b) SCHEDULE 2.27(B) sets forth a list of all material
machinery, equipment, motor vehicles and furniture and fixtures leased by the
Acquired Companies ("Leased Equipment"). Sellers have provided Buyer with true,
correct and complete copies and descriptions of all agreements for Leased
Equipment, whether written or oral, under which the Acquired Companies are
lessee of or hold or operate any items of machinery, equipment, motor vehicles,
furniture and fixtures or other property (other than real property) owned by
any third-party. Except as provided in SCHEDULE 2.27(B), the Leased Equipment
is in good operating condition, maintenance and repair in accordance with
industry standards, taking into account the age and current use thereof.
2.28 NOT USED.
2.29 FINANCE & INSURANCE PROGRAMS. SCHEDULE 2.29(A) ("Finance &
Insurance Programs") contains a complete and accurate list and brief
description of all programs of any type related to credit life insurance,
accident and health insurance, vehicle maintenance, vehicle service or vehicle
warranty programs extended (even if there are insurance policies, stop loss
agreements or other resources available to satisfy obligations of those
programs) or sold by any Acquired Company since the Inception Date, and any
type of agreement for the sale, assignment or discount of retail installment
sales contracts or notes by any Acquired Company since the Inception Date.
Sellers or the Acquired Companies have (i) delivered or made available to Buyer
true, correct and complete copies of all contracts, policies, agreements and
commitments with respect to any of such programs; (ii) correct and complete
histories of chargebacks with respect to any of such program; (iii) paid all
premiums and taxes due and payable with respect to any of the foregoing.
Sellers represent and warrant that: (i) all applicable insurers or
administrators with respect to the foregoing have paid all valid claims, except
claims being contested in good faith, and no Acquired Company has any direct,
indirect or contingent liabilities or obligations with respect thereto; and
(ii) no event has occurred which, to the Knowledge of each Seller and Acquired
Company, would materially increase the level of chargebacks on finance income,
vehicle service contracts, or credit, accident and health insurance commissions
over historical levels since the Inception Date. SCHEDULE 2.29(B) (" Affiliated
Insurance Companies") contains a complete and accurate list of all Affiliates
of Sellers or any Acquired Company which has undertaken any actuarial risk
(e.g. vehicle service companies or insurance companies) related to any type of
credit life insurance, accident and health insurance, vehicle service
contracts, or other products sold by any Acquired Company since the Inception
Date ("Affiliated Insurance Companies"). Sellers represent and warrant that all
Affiliated Insurance Companies have adequate funds to cover all future
liabilities, including but not limited to cancellation premium refunds and
anticipated future claims, calculated using sound actuarial assumptions and
conservative risk and experience assumptions.
2.30 SUBSIDIARIES AND INVESTMENTS. The Acquired Companies do not own
or maintain, directly or indirectly, any capital stock of or other equity or
ownership or proprietary interest in any other corporation, partnership,
association, trust, joint venture or other entity and does not have any
commitment to contribute to the capital of, make loans to, or share in the
losses of, any such entity.
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2.31 PERMITS, ETC. Set forth on SCHEDULE 2.31 ("Permits") is a list of
all material governmental licenses, permits, approvals, certificates of
inspection and other authorizations, filings and registrations that are
necessary for the Acquired Companies to own and operate their business as
presently conducted (collectively, the "Permits"). All such Permits have been
duly and lawfully obtained by the Acquired Companies and are in full force and
effect. There is no proceeding pending, or, to the Knowledge of each Seller and
Acquired Company, threatened or probable of assertion, to revoke or limit any
such Permit. Except as set forth on SCHEDULE 2.31, none of the Contemplated
Transactions will terminate, violate or limit the effectiveness of any such
Permit.
2.32 POWERS OF ATTORNEY. Except as set forth in SCHEDULE 2.32 ("Powers
of Attorney"), there are no persons, firms, associations, corporations or
business organizations or entities holding general or special powers of
attorney from the Acquired Companies.
2.33 BANK ACCOUNTS, CREDIT CARDS, SAFE DEPOSIT BOXES AND CELLULAR
TELEPHONES. SCHEDULE 2.33 ("Bank Accounts, Credit Cards, Safe Deposit Boxes and
Cellular Telephones") lists all bank accounts, credit cards and safe deposit
boxes in the name of, or controlled by, the Acquired Companies, and all
cellular telephones provided and/or paid for by the Acquired Companies, and
details about the persons having access to or authority over such accounts,
credit cards, safe deposit boxes and cellular telephones.
2.34 WARRANTIES. Set forth on SCHEDULE 2.34 ("Warranties") are
descriptions or copies of the forms of all express warranties and disclaimers
of warranty made by the Acquired Companies (separate and distinct from any
applicable Manufacturers', suppliers' or other third-parties' warranties or
disclaimers of warranties) since the Inception Date to customers or users of
the vehicles, parts, products or services of the Acquired Companies. There have
been no breach of warranty or breach of representation claims against the
Acquired Companies since the Inception Date which have resulted in any cost,
expenditure or exposure to the Acquired Companies of more than Fifty Thousand
Dollars ($50,000) individually or Five Hundred Thousand Dollars ($500,000) in
the aggregate.
2.35 DIRECTORS AND OFFICERS. Set forth on SCHEDULE 2.35 ("Directors
and Officers") is a true and correct list of the names and titles of each
director and officer of each of the Acquired Companies.
2.36 SUPPLIERS AND CUSTOMERS. Except as set forth in SCHEDULE 2.36,
the Acquired Companies are not required to provide bonding or any other
security arrangements in connection with any transactions with any of their
respective customers and suppliers. To the Knowledge of each Seller and
Acquired Company, no such supplier, customer or creditor intends or has
threatened, or reasonably could be expected, to terminate or modify any of
their relationships with the Acquired Companies; provided, however, that
certain consents, as set forth in SECTION 2.5, are required in connection with
the consummation of the Contemplated Transactions.
2.37 FORMER SUBSIDIARIES. Except as set forth on SCHEDULE 2.37, no
Acquired Company has any direct, indirect or contingent liability associated
with any former subsidiaries or Affiliates of any Acquired Companies. Set forth
on SCHEDULE 2.37 ("Former Subsidiaries and Affiliates") is a complete list of
all former subsidiaries and affiliates of any Acquired Company. Sellers shall
deliver to Buyer copies of all documents related to the sale of all former
subsidiaries and affiliates and any further documents which might create a
direct, indirect or contingent liability to any Acquired Company.
2.38 NOT USED.
2.39 LITIGATION REGARDING SELLER. Except to the extent set forth in
SCHEDULE 2.39 ("Litigation"), there are no Proceedings pending or, to the
Knowledge of each Seller and Acquired Company, Threatened or probable of
assertion, against any of the Sellers relating to the Shares, this
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Agreement or the transactions contemplated hereby before any Governmental Body.
None of the Sellers nor any Acquired Companies know of any basis for the
institution of any such Proceeding. No Order has been entered against or served
upon the Sellers relating to the Shares, this Agreement or the transactions
contemplated hereby.
2.40 APPROVALS. Except for applicable requirements, if any, of the HSR
Act, no filing or registration with, and no Governmental Authorization is
required by any applicable Legal Requirement to permit Sellers to execute,
deliver or perform this Agreement or any instrument required hereby to be
executed and delivered by them at the Closing.
2.41 MANUFACTURER COMMUNICATIONS. Except as set forth on SCHEDULE 2.41
("Manufacturer Communications"), and except for notices which are no longer
applicable, the Manufacturer has not: (a) notified the Sellers of any
deficiency in dealership operations, including, but not limited to, the
following areas: (i) brand imaging, (ii) facility conditions, (iii) sales
efficiency, (iv) customer satisfaction, (v) warranty work and reimbursement, or
(vi) sales incentives; (b) otherwise advised the Sellers of a present or future
need for facility improvements or upgrades in connection with the Acquired
Companies' business; or (c) notified the Sellers of the awarding or possible
awarding of their franchise to an entity or entities other than the Acquired
Company in the metropolitan statistical area in which the Acquired Company
operates.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
3.1 ORGANIZATION AND GOOD STANDING. Buyer is an Oklahoma corporation
duly organized, validly existing and in good standing under the laws of the
State of Oklahoma.
3.2 AUTHORITY. This Agreement constitutes the legal, valid, and
binding obligation of Buyer, enforceable against Buyer pursuant to the terms of
this Agreement, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity. Buyer has the corporate power and authority to execute, deliver and
perform its obligations under each instrument, document or agreement required
hereby to be executed and delivered by Buyer at, or prior to, the Closing. This
Agreement has been, and each instrument, document or agreement required hereby
to be executed and delivered by Buyer at, or prior to, the Closing will then
be, duly executed and delivered by Buyer, and this Agreement constitutes and,
to the extent it purports to obligate Buyer, each such instrument, document or
agreement will constitute (assuming due authorization, execution and delivery
by each other party thereto), the legal, valid and binding obligation of Buyer
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
3.3 NO CONFLICT. Neither the execution and delivery of this Agreement
by Buyer nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to any
Contract to which Buyer is a party or by which Buyer may be bound. Buyer is not
and will not be required to obtain any Consent from any Person in connection
with the execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
3.4 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
Threatened.
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3.5 BROKERS OR FINDERS. Buyer will indemnify and hold Sellers harmless
from any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection
with this Agreement or the Contemplated Transactions, alleged to be due by any
Buyer.
3.6 MISSTATEMENTS AND OMISSIONS. No representation and warranty by the
Buyer contained in this Agreement, and no statement contained in any
certificate or Schedule furnished or to be furnished by the Buyer to the
Sellers in connection with this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make such representation and warranty or such statement
not misleading.
ARTICLE 4
COVENANTS OF EACH ACQUIRED COMPANY AND OF THE
SELLERS PRIOR TO CLOSING
4.1 ACCESS. Between the date of this Agreement and the Closing Date,
Sellers will, and will cause each Acquired Company and its Representatives to,
(a) afford Buyer and its Representatives reasonable access to the Acquired
Company's personnel, properties, contracts, books and records, and other
documents and data, (b) furnish Buyer with copies of all such contracts, books
and records, and other existing documents and data as Buyer may reasonably
request, and (c) furnish Buyer with such additional financial, operating, and
other data and information as Buyer may reasonably request; provided however,
that such access shall be conducted at a mutually convenient time to be
determined by Buyer and Sellers, during normal business hours and in a manner
that does not unreasonably interfere with Sellers' normal operations and
employee relations; and provided, further, that access to personnel may be
limited by Sellers to key employees and shall require advance notice to
Sellers.
4.2 OPERATION OF THE BUSINESSES OF EACH ACQUIRED COMPANY. Between the
date of this Agreement and the Closing Date, Sellers will, and will cause each
Acquired Company to: (i) conduct the business of each Acquired Company only in
the Ordinary Course of Business and in a manner consistent with prior business
practice; (ii) use their Best Efforts to preserve intact the current business
organization of each Acquired Company, keep available the services of the
current officers, employees, and agents of each Acquired Company, and maintain
the relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with each Acquired
Company; (iii) confer with Buyer concerning operational matters of a material
nature (e.g. ordering vehicles, major advertising plans, etc.); and (iv)
otherwise report periodically to Buyer concerning the status of the business,
operations, and finances of each Acquired Company. Each Acquired Company and
Sellers will not omit to take any action that is inconsistent with any
representation or warranty of the Sellers, or that would cause any such
representation or warranty to be untrue or incorrect in any material respect if
such representation or warranty were made immediately following the taking of
or failure to take such action. In connection therewith, the parties agree that
the Acquired Companies may dealer trade vehicles for similar models, but they
shall not liquidate or otherwise dispose of any of their new vehicles other
than in the ordinary course of business to retail buyers. Sellers agree to
cause the Acquired Companies to maintain their advertising expenditures and
activities commensurate with prior business practices. The Acquired Companies
shall not advertise a "Going Out of Business," "Retirement Sale" or any similar
type of sale.
4.3 PROHIBITED ACTIVITIES. Except as otherwise expressly permitted or
contemplated by this Agreement, between the date of this Agreement and the
Closing Date, Sellers will not, and will cause each Acquired Company not to,
without the prior consent of Buyer, take any affirmative action, or fail to
take any reasonable action within their control, as a result of which any of
the changes or events listed in SECTION 2.18 is likely to occur. Sellers will
cause each Acquired Company not to: (i) make any changes to its Organizational
Documents; (ii) directly or indirectly redeem, retire, purchase, or otherwise
acquire or obtain the surrender of any stock, option, warrant or derivative of
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any Acquired Company or Affiliate; (iii) issue any stock, option, warrant,
bond, or derivative of any Acquired Company or Affiliate; (iv) make any
investment in the stock, indebtedness, or any derivative security of any Person
other than an Acquired Company; (v) enter into any transaction which is outside
the ordinary course of business or prohibited hereby; (vi) declare, set aside,
make or pay any dividend or other distribution, payable in cash, stock,
property or otherwise, with respect to any of the capital stock of any of the
Acquired Companies (other than dividends or distributions to another Acquired
Company), (vii) enter into any agreement with respect to the voting of the
capital stock of any of the Acquired Companies; or (viii) incur any
indebtedness for borrowed money; provided, however, that commencement of
construction projects set forth on SCHEDULE 4.3 (and the associated borrowings)
shall be permitted.
4.4 REQUIRED APPROVALS. As promptly as practicable after the date of
this Agreement, Sellers will, and will cause each Acquired Company to, make all
filings required by Legal Requirements to be made by them in order to
consummate the Contemplated Transactions.
4.5 NOTIFICATION. Between the date of this Agreement and the Closing
Date, each of the Sellers will promptly notify Buyer in writing if such Seller
or any Acquired Company becomes aware of any fact or condition that causes or
constitutes a Breach of any of Sellers' representations and warranties as of
the date of the Disclosure Letter first is delivered to Buyer, or if such
Sellers or any Acquired Company becomes aware of the occurrence after the date
of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a Breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Between the date
of this Agreement and the Closing Date, should any such fact or condition
require any change in the Schedules if the Schedules were dated the date of the
occurrence or discovery of any such fact or condition, Sellers will promptly
deliver to Buyer a supplement to the Schedule specifying such change. During
the same period, each Seller will promptly notify Buyer of the occurrence of
any Breach of any covenant of Sellers in this Article 4 or of the occurrence of
any event that may make the satisfaction of the conditions in Article 6
impossible or unlikely.
4.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Sellers will cause all
indebtedness owed to any Acquired Company by either Sellers or any Related
Person of either of the Sellers, or any of their Affiliates, to be paid in full
prior to or at Closing.
4.7 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Article 9, Sellers will not, and will cause each
Acquired Company and each of their Representatives not to, directly or
indirectly solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any unsolicited inquiries or proposals from, any Person (other
than Buyer) relating to any transaction involving the sale of the business or
assets (other than in the ordinary course of Business or as necessary pursuant
to a sale of any of the Real Properties to a third party or to obtain the
consent of the Manufacturer to the sale of the Shares hereunder) of each
Acquired Company, or any of the capital stock of any Acquired Company, or any
merger, consolidation, business combination, or similar transaction involving
any Acquired Company. Sellers shall promptly advice Buyer of any such inquiry
or proposal so received.
4.8 BEST EFFORTS. Between the date of this Agreement and the Closing
Date, Sellers will use their Best Efforts to cause the conditions in Article 6
to be satisfied.
4.9 REMOVAL OF RELATED PARTY GUARANTEES. Each Acquired Company and the
Sellers agree to take, or cause to be taken, all appropriate action, and do, or
cause to be done, all things necessary, proper or advisable to terminate, waive
or release all Related Guarantees. All Related Guarantees are disclosed on
SCHEDULE 4.9 ("Related Party Guarantees").
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4.10 RELATED PARTY AGREEMENTS. Each Acquired Company agrees, and the
Sellers agree to cause each Acquired Company, not to enter into any Related
Party Agreements or engage in any transactions with the Sellers or their
Affiliates, except for those Related Party Agreements or transactions with
Affiliates that are required by this Agreement or disclosed on SCHEDULES 4.10
("Related Party Agreements") as agreements or transactions that shall not be
subject to this SECTION 4.10. Prior to the Closing: (i) each Acquired Company
shall pay in full or otherwise discharge all amounts payable by each Acquired
Company to, or loans made to each Acquired Company by, the Sellers or other
Affiliates of each Acquired Company, or the members of their respective
families; and (ii) the Sellers or other Affiliates of each Acquired Company, or
the members of their respective families, shall pay in full to each Acquired
Company any amounts payable by such Persons to each Acquired Company and any
loans made by each Acquired Company to such Persons not otherwise required to
be forgiven by the terms of this Agreement.
ARTICLE 5
COVENANTS OF BUYER PRIOR TO CLOSING DATE
5.1 NOT USED.
5.2 NOT USED.
5.3 NOT USED.
5.4 BEST EFFORTS. Except as set forth in the proviso to SECTION 9.1,
between the date of this Agreement and the Closing Date, Buyer will use its
Best Efforts to cause the conditions in Article 7 to be satisfied, including
execution and delivery of a guaranty of the Lease Agreement by Buyer or the
guaranty of the obligations of the Acquired Companies under new leases relating
to the Leased Properties, if necessary, to obtain the release of Sellers from
their guaranty(s) of any Leases for Real Properties not owned by Affiliates of
Sellers, provided that any action taken by Buyer pursuant to this Section 5.4,
including the execution of any such guaranty, may be made conditional upon the
occurrence of the Closing. If the landlord will not release the Sellers'
guaranty, then Buyer agrees that, following the Closing, it will indemnify and
hold Sellers harmless from and against any and all liability, loss, damage, or
deficiency resulting from any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, and expenses, including without
limitation, legal fees and expenses, arising out of the Seller's guaranty of
the Lease Agreement.
ARTICLE 6
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other
actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
6.1 ACCURACY OF REPRESENTATIONS.
(a) All of Sellers' representations and warranties in this
Agreement, must have been accurate as of the date the Disclosure Letter first
is delivered to Buyer and must be accurate in all material respects (except
that where any statement in a representation or warranty expressly includes a
standard of materiality, such statement shall be true and correct in all
respects giving effect to such standard), as of the Closing Date as if made on
the Closing Date, except that those representations and warranties which
address matters only as of a particular date shall remain true and correct in
all material respects (except that where any statement in a representation or
warranty
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expressly includes a standard of materiality, such statement shall be true and
correct in all respects giving effect to such standard) as of such date.
(b) Each of Sellers' representations and warranties in
SECTIONS 2.3 AND 2.6 must have been accurate in all respects as of the date the
Disclosure Letter first is delivered to Buyer, and must be accurate in all
respects as of the Closing Date as if made on the Closing Date.
6.2 SELLERS' PERFORMANCE.
(a) All of the covenants and obligations that Sellers are
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing Date (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
(b) Each document required to be delivered pursuant to
SECTION 1.4(A) must have been delivered, and each of the other covenants and
obligations in SECTIONS 4.6 AND 4.9 must have been performed and complied with
in all respects.
6.3 CONSENTS. Each of the Consents identified in SCHEDULES 2.5 AND
2.19, must have been obtained and must be in full force and effect.
6.4 ADDITIONAL CONDITIONS PRECEDENT. Each of the following shall have
occurred:
(a) Not Used.
(b) Buyer shall have received such other documents as Buyer
may reasonably request for the purpose of (i) evidencing the accuracy of any of
Sellers' representations and warranties hereunder, (ii) evidencing the
performance by all Sellers of, or the compliance by all Sellers with, any
covenant or obligation required to be performed or complied with by such
Sellers, (iii) evidencing the satisfaction of any condition referred to in this
Article 6, or (iv) otherwise facilitating the consummation or performance of
any of the Contemplated Transactions;
(c) Buyer shall have received evidence, satisfactory to
Buyer, that all Related Party Agreements shall have been terminated and all
Related Guarantees shall have been terminated, waived or released pursuant to
SECTION 4.9 AND 4.10;
(d) Since the date of this Agreement, no material adverse
change in the business, condition (financial or otherwise), assets or
operations of the Acquired Companies, taken as a whole, shall have occurred,
and each Acquired Company shall not have suffered any damage, destruction or
loss of assets (whether or not covered by insurance) materially adversely
affecting the properties or business of the Acquired Company, and Buyer shall
have received a certificate signed by the chief executive officer of each
Acquired Company dated the Closing Date to such effect;
(e) Receipt by Buyer of Phase I Environmental Surveys, at the
Buyer's expense, prepared by Dames & Xxxxx, showing no environmental problems
or recommended actions, which will be performed at the discretion of Buyer;
(f) Buyer shall have completed its due diligence
investigations of each Acquired Company and each leased premises on or before
sixty (60) days from the execution date of this Agreement ("Due Diligence
Deadline"), and Buyer shall have determined, in its sole discretion, that it is
satisfied with the results of such investigation, including any matter set
forth in any of the Schedules; and
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(g) The closing under the Ford Stock Purchase Agreement shall
have occurred simultaneously with the closing of the transactions contemplated
by this Agreement.
6.5 RESIGNATION OF DIRECTORS AND OFFICERS. Sellers shall have
delivered to Buyer the written resignations of the directors and officers of
each Acquired Company.
6.6 MANUFACTURER APPROVAL. Buyer shall have received approval to be
the authorized Mercedes-Benz dealer under a dealer agreement with Mercedes-Benz
for the downtown Oklahoma City area.
6.7 NO INJUNCTION. There must not be in effect any Legal Requirement
or any injunction or other Order that (a) prohibits the purchase of the Shares
by Buyer, and (b) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
ARTICLE 7
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate as of the date of this Agreement and must be accurate as of the
Closing Date as if made on the Closing Date.
7.2 BUYER'S PERFORMANCE. All of the covenants and obligations that
Buyer is required to perform or to comply with pursuant to this Agreement at or
prior to the Closing Date (considered collectively), and each of these
covenants and obligations (considered individually), must have been performed
and complied with in all material respects. Buyer must have delivered each of
the documents required to be delivered by Buyer pursuant to SECTION 1.4(B).
7.3 CONSENTS. Each of the Consents identified in SCHEDULE 2.5 AND
SCHEDULE 2.19 must have been obtained and must be in full force and effect.
7.4 LEASE. Seller shall have obtained the release of Group 1's
guaranty of the liabilities of the Acquired Companies under the lease
agreement, dated as of the 13th day of December, 1999, between the Company, JAB
Real Estate Company, L.P. and Benchmark Motors, Inc. ("Lease Agreement") or, in
lieu thereof, Buyer shall have executed and delivered to Group 1 an indemnity
agreement, in form and substance satisfactory to Seller, providing full
indemnification to Group 1 for all liabilities and other obligations arising
under the Lease Agreement or the related guaranty from and after the Closing
Date.
7.5 RELEASE OF GUARANTEES. Release of Sellers from any and all
personal guarantees of liabilities of the Acquired Companies incurred in the
operation of the business of the Acquired Companies, including financing
obligations and obligation under letters of credit but excluding the guaranty
of the Lease Agreement (which is governed by SECTION 7.4).
7.6 FORD STOCK PURCHASE AGREEMENT. The simultaneous closing under the
Ford Stock Purchase Agreement shall have occurred.
7.7 ADDITIONAL DOCUMENTS. Buyer must have caused the following
documents to be delivered to Sellers and the following event must have
occurred:
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(a) A copy of Buyer's approval to be the authorized
Mercedes-Benz dealer under a dealer agreement with Mercedes-Benz for the
downtown Oklahoma City area; and
(b) such other documents as Sellers may reasonably request
for the purpose of (i) evidencing the accuracy of any representation or
warranty of Buyer, (ii) evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required to be performed
or complied with by Buyer, (iii) evidencing the satisfaction of any condition
referred to in this SECTION 7.7, or (iv) otherwise facilitating the
consummation of any of the Contemplated Transactions.
7.8 NO INJUNCTION. There must not be in effect any Legal Requirement
or any injunction or other Order that (a) prohibits the sale of the Shares by
Sellers to Buyer, and (b) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
ARTICLE 8
POST-CLOSING AND OTHER COVENANTS
8.1 GENERAL. In case, at any time after the Closing, any further
action is necessary or desirable to carry out the purchase and sale of the
Shares and the other purposes and intent of this Agreement, each of the parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other Party reasonably may request.
8.2 LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving each Acquired Company, or its business or Assets,
Sellers or the Shares, each of the other Parties will cooperate with the
contesting or defending Party and his or its counsel in the contest or defense,
make available its personnel, and provide such testimony and access to its
books and records as shall be reasonably necessary for the contest or defense,
all at the sole cost and expense of the contesting or defending Party (unless
the contesting or defending Party is entitled to indemnification therefor as
provided elsewhere in this Agreement).
8.3 NOT USED.
8.4 POST-CLOSING NOTIFICATIONS. Buyer and the Sellers will, and each
will cause their respective Affiliates to, comply with any post-Closing
notification or other requirements, to the extent then applicable to such
Party, of any antitrust, trade competition, investment or control, export or
other Law of any Governmental Body having jurisdiction over Buyer, each
Acquired Company or the Sellers.
8.5 TRANSFER TAXES. All sales and other transfer Taxes imposed by any
taxing authority, domestic or foreign, with respect to the sale of the Shares
or otherwise on account of this Agreement or Contemplated Transactions shall be
borne by Buyer.
8.6 TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. The Sellers
shall prepare and file or cause to be prepared and filed, all income tax
returns, including amended returns, for each Acquired Company for all periods
ending on or prior to the Closing Date, which are required to be filed after
the Closing Date. The Sellers shall provide to Buyer a copy of the tax returns
proposed to be filed pursuant to the preceding sentence, a reasonable time in
advance of such filing date, and shall make such revisions to such tax returns
as are reasonably and appropriately requested by Buyer. The Sellers shall not
file such tax returns without the consent of Buyer, which consent will not be
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unreasonably withheld or delayed. Failure of Buyer to respond within thirty
(30) days of the date when a draft of the relevant tax return is delivered to
Buyer will be deemed to be the consent of Buyer. Buyer will not permit any
Acquired Companies to file an amendment to any income tax returns for any year
ended prior to the Closing Date, without Sellers' prior written consent, which
consent shall not be unreasonably withheld or delayed.
8.7 RELEASE.
(a) As of the Closing Date, each of the Sellers does hereby
for himself or his heirs, executors, administrators and legal representatives
release, acquit and forever discharge each Acquired Company of and from any and
all claims, demands, liabilities, responsibilities, disputes, causes of action
and obligations of every nature whatsoever, liquidated or unliquidated, known
or unknown, matured or unmatured, fixed or contingent, which each of such
Sellers now has, owns or holds or has at any time previously had, owned or held
against each Acquired Company or its Subsidiaries INCLUDING WITHOUT LIMITATION
ALL LIABILITIES CREATED AS A RESULT OF THE NEGLIGENCE, GROSS NEGLIGENCE AND
WILLFUL ACTS of each Acquired Company and their employees and agents, existing
as of the Closing Date or relating to any matter that occurred on or prior to
the Closing; provided, however, that any claims, liabilities, debts or causes
of action that may arise in connection with the failure of any of the parties
hereto to perform any of their obligations hereunder or under any other
agreement relating to the transactions contemplated hereby or from any breaches
by any of them of any representations or warranties herein or in connection
with any of such other agreements shall not be released or discharged pursuant
to this Agreement; and provided further any liabilities under any Employee Plan
listed on Schedule 2.15 hereto shall not be released, and that any rights of
Sellers against any Acquired Company for indemnification shall not be released,
to the extent such claim for indemnification does not give rise to a breach of
the provisions of this Agreement.
(b) Each of the Sellers represents and warrants that he has
not previously assigned or transferred, or purported to assign or transfer, to
any person or entity whatsoever all or any part of the claims, demands,
liabilities, responsibilities, disputes, causes of action or obligations
released herein. Each of the Sellers covenants and agrees that he will not
assign or transfer to any person or entity whatsoever all or any part of the
claims, demands, liabilities, responsibilities, disputes, causes of action or
obligations to be released herein. Each of the Sellers represents and warrants
that he has read and understands all of the provisions of this SECTION 8.7 and
that he has been represented by legal counsel of his own choosing in connection
with the negotiation, execution and delivery of this Agreement.
8.8 NOT USED.
8.9 NOT USED.
8.10 IRC SS. 338 ELECTION.
(a) Sellers agree to make elections under IRC ss. 338(h)(10) and all
comparable elections under applicable state and local tax law with respect to
the Company.
(b) Buyer and Sellers shall jointly file Form 8023-A with the IRS in
accordance with Section 338 of the IRC and the regulations thereunder no later
than the 15th day of the ninth month beginning after the month that includes
the Closing Date in accordance with IRC ss. 338(g) and Treasury Regulation
Section 1.338(h)(10)-1(d)(2).
(c) Buyer and Sellers shall allocate the Purchase Price to the assets
conveyed pursuant to this Agreement using a reasonable asset valuation which
will be agreed to by Buyer and Sellers at the Closing. In all events, however,
Buyer and Sellers agree to conformity of treatment of all asset allocations
with respect to the Section 338(h)(10) elections.
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ARTICLE 9
TERMINATION
9.1 TERMINATION EVENTS. This Agreement may, by notice given prior to
or at the Closing, be terminated:
(a) by either Buyer or Sellers if a material Breach of any
provision of this Agreement has been committed by the other party and such
Breach has not been waived by the party entitled to waive such Breach;
(b) (i) by Buyer if any of the conditions in SECTION 6 have
not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Buyer to
comply with its obligations under this Agreement) and Buyer has not waived such
condition on or before the Closing Date; or (ii) by Sellers, if any of the
conditions in SECTION 7 has not been satisfied of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Sellers to comply with their obligations under this Agreement)
and Sellers have not waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Sellers;
(d) by Buyer, on or before the Due Diligence Deadline, by
notice to Sellers, that the results of the due diligence inspection are not
satisfactory to Buyer, as permitted by SECTION 6.4(M); and
(e) by either Buyer or Sellers if the Closing has not
occurred (other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before June 30, 2003, or such later date as the parties may agree upon.
9.2 EFFECT OF TERMINATION. Each party's right of termination under
SECTION 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an
election of remedies. If this Agreement is terminated pursuant to SECTION 9.1,
all further obligations of the parties under this Agreement will terminate,
except that the obligations in SECTIONS 11.1 AND 11.3 will survive.
ARTICLE 10
INDEMNIFICATION; REMEDIES
10.1 SURVIVAL. All statements contained in any certificate delivered
hereunder at the Closing by or on behalf of any of the parties pursuant to this
Agreement shall be deemed representations and warranties by the respective
parties hereunder unless otherwise expressly provided herein. The
representations and warranties of the Sellers or the Buyer contained in this
Agreement, including those contained in any certificate delivered hereunder at
the Closing, shall survive the Closing for a period of three (3) years with the
exception of: (i) the representations and warranties of the Sellers contained
in SECTION 2.14, which shall survive the Closing until the expiration of the
applicable tax statutes of limitation plus a period of sixty (60) days; and
(ii) the representations and warranties of the Sellers contained in SECTIONS
2.2, 2.3, AND 2.6, which shall survive the Closing indefinitely. As to each
representation and warranty of the parties hereto, the date to which such
representation and warranty shall survive is hereinafter referred to as the
"Survival Date."
10.2 INDEMNIFICATION BY SELLERS. Sellers, jointly and severally, agree
to indemnify and hold harmless the Buyer, each Acquired Company and their
Affiliates, successors and assigns (collectively the "Buyer's Indemnitees")
harmless from and against, for and in respect of, any and all damages, losses,
obligations, liabilities, demands, judgments, injuries, penalties, claims,
actions or
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causes of action, encumbrances, costs, and expenses (including, without
limitation, reasonable attorneys' fees and expert witness fees), suffered,
sustained, incurred or required to be paid by any Buyer Indemnitee ("Damages")
arising out of, based upon, in connection with, or as a result of: (a) the
untruth, inaccuracy or breach of any representation and warranty of the Sellers
(including any loss of life, injury to persons or property, remediation costs
or damages, arising from Environmental, Health, and Safety Liabilities)
contained in or made pursuant to this Agreement, including the Disclosure
Letter and in any certificate delivered hereunder at the Closing; and (b) the
breach or nonfulfillment of any covenant or agreement of the Sellers contained
in this Agreement or in any other agreement, document or instrument delivered
hereunder at the Closing. In determining Damages in respect of any liability
for Taxes, offsetting tax benefits, such as a deduction in a subsequent year,
shall be taken into consideration.
10.3 INDEMNIFICATION BY BUYER. Buyer hereby agrees to indemnify and
hold harmless the Sellers and their successors and assigns (collectively
"Sellers' Indemnitees") from or against, for and in respect of, any and all
Damages suffered, sustained, incurred or required to be paid by any Sellers'
Indemnitee arising out of, based upon or in connection with or as a result of:
(a) the untruth, inaccuracy or breach of any representation and warranty of the
Buyer contained in or made pursuant to this Agreement, including in any
Schedule or certificate delivered hereunder at the Closing; or (b) the breach
or nonfulfillment of any covenant or agreement of the Buyer contained in this
Agreement; or (c) any obligations arising from the ownership or operation of
the Acquired Companies after the Closing Date.
10.4 CLAIMS FOR INDEMNIFICATION. No claim for indemnification with
respect to a breach of a representation, warranty or covenant shall be made
under this Agreement after the applicable Survival Date unless prior to such
Survival Date the Buyer Indemnitee or the Sellers' Indemnitee, as the case may
be, shall have given the Sellers or the Buyer, as the case may be, written
notice of such claim for indemnification based upon actual loss sustained, or
potential loss anticipated, as a result of the existence of any claim, demand,
suit, or cause of action against such Buyer's Indemnitee or Sellers'
Indemnitee.
10.5 PROCEDURES FOR INDEMNIFICATION -- THIRD PARTY CLAIMS. The
procedures to be followed by the Buyer and the Sellers with respect to
indemnification hereunder regarding claims by third persons which could give
rise to an indemnification obligation hereunder shall be as follows:
(a) Promptly after receipt by any Buyer's Indemnitee or
Sellers' Indemnitee of notice of the commencement of any action or proceeding
(including, without limitation, any notice relating to a tax audit) or the
assertion of any claim by a third person which the person receiving such notice
has reason to believe may result in a claim by it for indemnity pursuant to
this Agreement, the indemnified person shall give a written notice of such
action, proceeding or claim to the party against whom indemnification pursuant
hereto is sought (the "Indemnifying Party"), setting forth in reasonable detail
the nature of such action, proceeding or claim, including copies of any
documents and written correspondence from such third person to such Buyer's
Indemnitee or Sellers' Indemnitee.
(b) The Indemnifying Party shall be entitled, at its own
expense, to participate in the defense of such action, proceeding or claim,
and, if (i) the action, proceeding or claim involved seeks (and continues to
seek) solely monetary damages, environmental remediation or related to any
liability for taxes, (ii) the Indemnifying Party confirms, in writing, its
obligation hereunder to indemnify and hold harmless the Indemnified Party with
respect to such damages in their entirety subject to the limits in SECTION
10.7, and (iii) the Indemnifying Party, in the reasonable judgment of the
Indemnified Party, shall be able to satisfy any adverse judgment as a result of
its indemnification obligation with respect to such action, proceeding or
claim, then the Indemnifying Party shall be entitled to assume and control such
defense with counsel chosen by the Indemnifying Party and approved by the
Indemnified Party, which approval shall not be unreasonably withheld or
delayed. The Indemnified Party shall be entitled to participate therein after
such assumption, the costs of such
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participation following such assumption to be at its own expense. Upon assuming
such defense, the Indemnifying Party shall have full rights to enter into any
monetary compromise or settlement which is dispositive of the matters involved;
provided, that such settlement is paid in full by the Indemnifying Party and
will not have any direct or indirect continuing material adverse effect upon
the Indemnified Party; and, provided further, that in the event of settlement
of claims for environmental remediation, the Indemnifying Party may perform
such other acts, including the placement of monitors or other remediation
equipment upon the Leased Properties, as may be necessary to resolve such
claim.
(c) With respect to any action, proceeding or claim as to
which (i) the Indemnifying Party does not have the right to assume the defense
or (ii) the Indemnifying Party shall not have exercised its right to assume the
defense, the Indemnified Party shall assume and control the defense of and
contest such action, proceeding or claim with counsel chosen by it and approved
by the Indemnifying Party, which approval shall not be unreasonably withheld.
The Indemnifying Party shall be entitled to participate in the defense of such
action, proceeding or claim, the cost of such participation to be at its own
expense. The Indemnifying Party shall be obligated to pay the reasonable
attorneys' fees and expenses of the Indemnified Party. The Indemnified Party
may not settle such action, proceeding or claim without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld.
(d) Both the Indemnifying Party and the Indemnified Party
shall cooperate fully with one another in connection with the defense,
compromise or settlement of any such action, proceeding or claim, including,
without limitation, by making available to the other all pertinent information
and witnesses within its control.
10.6 PROCEDURES FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be
asserted by notice to the Indemnifying Party by the Indemnified Party.
10.7 LIMITATIONS OF INDEMNIFICATION. Notwithstanding anything to the
contrary contained in this Article 10, the Indemnifying Party's liability for
Damages shall be limited as follows: (a) the Indemnified Party shall have no
claim for Damages unless and until all Damages incurred by the Indemnified
Party exceed an aggregate of Two Hundred Fifty Thousand Dollars ($250,000) in
which event the Indemnifying Party shall be liable for only such Damages in
excess of Two Hundred Fifty Thousand Dollars ($250,000); and (b) the total
amount of Damages for which the Indemnifying Party shall be liable to the
Indemnified Party shall not exceed the Purchase Price. However, this SECTION
10.7. will not apply to any Breach of any of Sellers' representations and
warranties contained in SECTIONS 2.2, 2.3 AND 2.6.
10.8 NOT USED.
10.9 APPLICABILITY. THE PROVISIONS OF THIS ARTICLE 10 SHALL APPLY
NOTWITHSTANDING THE JOINT OR CONCURRENT NEGLIGENCE OR JOINT OR CONCURRENT
STRICT LIABILITY OR OTHER FAULT OF THE INDEMNIFIED PARTY. IF BOTH THE
INDEMNIFIED PARTY AND THE INDEMNIFYING PARTY ARE NEGLIGENT OR OTHERWISE AT
FAULT OR STRICTLY LIABLE WITHOUT FAULT, THE CONTRACTUAL OBLIGATIONS OF
INDEMNIFICATION UNDER THIS ARTICLE 10 SHALL CONTINUE, BUT THE INDEMNIFYING
PARTY SHALL INDEMNIFY THE INDEMNIFIED PARTY ONLY FOR THE PERCENTAGE OF
RESPONSIBILITY FOR THE DAMAGE OR INJURIES INCLUDING ATTORNEYS FEES ATTRIBUTABLE
TO THE INDEMNIFYING PARTY.
10.10 ADDITIONAL RIGHTS. In the event of a breach of the
representation set forth in clause (viii) of Section 2.5(b), specifically
relating to the existing dealer sales and service agreement or the Oklahoma
Motor Vehicle Act, that is discovered within thirty (30) days following the
Closing, the
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Buyer may elect, in lieu of a claim for Damages pursuant to the other
provisions of this Article 10, to rescind the transactions contemplated by this
Agreement by giving notice to Seller of such breach and Buyer's determination
to exercise this remedy. In the event Buyer exercises such right of rescission,
(i) Seller shall cooperate with Buyer to promptly take any and all action
reasonable necessary to rescind the transactions contemplated by this
Agreement, (ii) the transactions contemplated by the Ford Stock Purchase
Agreement shall also be rescinded, and (iii) Buyer shall cooperate with Seller
to promptly take any and all action necessary to rescind the transactions
contemplated by the Ford Stock Purchase Agreement.
ARTICLE 11
GENERAL PROVISIONS
11.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants. In the event of termination
of this Agreement, the obligation of each party to pay its own expenses will be
subject to any rights of such party arising from a breach of this Agreement by
another party.
11.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as Buyer and Sellers
jointly determine, unless required by applicable Legal Requirements. Unless
consented to by Buyer in advance or required by Legal Requirements, prior to
the Closing Date, Sellers shall, and shall cause each Acquired Company to, keep
this Agreement strictly confidential and may not make any disclosure of this
Agreement to any Person except for disclosure to officers, directors,
employees, attorneys, accountants and other representatives, or the
Manufacturer or its Representatives, as necessary in connection with the
transactions contemplated hereby or as necessary to the operation of Sellers'
business. Sellers and Buyer will consult with each other concerning the means
by which each Acquired Company's employees (except as permitted by the
preceding sentence), customers, and suppliers and others having dealings with
each Acquired Company will be informed of the Contemplated Transactions, and
Buyer will have the right to be present for any such communication.
11.3 CONFIDENTIALITY. Sellers and Buyer agree, and agree to cause
their officers, directors, employees, representatives agents and consultants,
to hold in confidence and not to disclose to others for any reason whatsoever,
any and all non-public information received by them or their representatives in
connection with this transaction, including but not limited to all terms,
conditions and covenants related to this transaction and this Agreement, and
Buyer's pricing models, methodology, customs or practices related to the
acquisition of automobile dealerships, except (i) as required by law; and (ii)
for disclosure to officers, directors, employees, attorneys, accountants and
other representatives, or the Manufacturer or its Representatives, as necessary
in connection with the transactions contemplated hereby or as necessary to the
operation of Sellers' or Buyer's business. In the event the transactions
contemplated by this Agreement are not consummated, Sellers and Buyer will
return all non-public documents and other material obtained from the other or
their respective representatives in connection with the transactions
contemplated hereby or certify to the other that all such information has been
destroyed. The provisions of this Section shall survive the Closing or
termination of this Agreement.
11.4 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand, (b) sent by telecopier (with confirmation of
receipt), provided that a copy is mailed by registered mail, return receipt
requested, or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses
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and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
Sellers: Group 1 Holdings - DC, L.L.C.
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone (000) 000-0000
Telecopier (000) 000-0000
Attention: Xxxx X. Xxxxxx
Company: Xxx Xxxxxx German Imports, Inc.
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone (000) 000-0000
Telecopier (000) 000-0000
Attention: Xxxx X. Xxxxxx
with a copy to: Xxxxxx & Xxxxxx
2300 First City Tower
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Telephone (000) 000-0000
Telecopier (000) 000-0000
Attention: Xxxx Xxxxxx, Esq.
Buyer: BHE, INC.
X.X. Xxx 0000
Xxxxxx, Xxxxxxxx 00000
with a copy to: Xxxxx Xxxxx L.L.P.
One Shell Plaza
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxxx X. Paris, Esq.
11.5 NOT USED.
11.6 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
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11.7 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
11.8 SCHEDULES. Sellers shall prepare and furnish the Disclosure
Letter, containing the Schedules, to Buyer on or before the date thirty (30)
days from the date of this Agreement. Sellers may supplement the Disclosure
Letter at any time prior to the Closing Date in accordance with the provisions
of SECTION 4.5.
11.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other parties, except that Buyer may assign any of its rights under this
Agreement to any Affiliate of Buyer, but Buyer shall not be relieved of any of
its obligations hereunder. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Except as expressly provided
in this Agreement, nothing in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement.
11.10 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions
of this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.11 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Agreement. All words used in
this Agreement will be construed to be of such gender or number as the
circumstances require. Unless the context otherwise requires, the word
"including" does not limit the preceding words or terms. The parties have
jointly participated in the negotiation and drafting this Agreement. In the
event of an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumptions or burdens of proof shall arise favoring any party by virtue of
the authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context
requires otherwise.
11.12 TIME OF ESSENCE. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
11.13 GOVERNING LAW. This Agreement will be governed by the laws of
the State of Texas without regard to conflicts of laws principles.
11.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
11.15 ATTORNEYS' FEES. In the event any Party instigates litigation to
enforce or protect its rights under this Agreement, the Party substantially
prevailing in any such litigation shall be entitled, in addition to all other
relief, to reasonable attorneys' fees, out-of-pocket costs and disbursements
relating to such litigation.
11.16 CONCURRENT CONDITIONS. The performance or tender of performance
at Closing of all matters applicable to a Party under this Agreement shall be
deemed concurrent conditions and no
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Party shall be required at Closing to perform, or tender performance of, the
obligations of such Party hereunder unless, coincident therewith, each other
Party from whom performance is required under this Agreement performs or
tenders performance of its obligations hereunder.
11.17 JURISDICTION; ARBITRATION.
(a) Subject to the other provisions of this SECTION 11.17,
any judicial proceeding brought with respect to this Agreement must be brought
in any court of competent jurisdiction in the State of Oklahoma, and, by
execution and delivery of this Agreement, each party hereto (i) accepts,
generally and unconditionally, the exclusive jurisdiction of such courts and
any related appellate court, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement, and (ii) irrevocably waives
any objection it may now or hereafter have as to the venue of any such suit,
action or proceeding brought in such court or that such court is an
inconvenient forum.
(b) Any dispute, claim or controversy arising out of or
relating to this Agreement (except for accounting matters provided for in
Article 1 hereto), or the interpretation or breach hereof (including, without
limitation, any of the foregoing based upon a claim to any termination fee
hereunder), shall be resolved by binding arbitration under the commercial
arbitration rules of the American Arbitration Association (the "AAA RULES") to
the extent such AAA Rules are not inconsistent with this Agreement. Judgment
upon the award of the arbitrators may be entered in any court having
jurisdiction thereof or such court may be asked to judicially confirm the award
and order its enforcement, as the case may be. The demand for arbitration shall
be made by any Party hereto within a reasonable time after the claim, dispute
or other matter in question has arisen, and in any event shall not be made
after the date when institution of legal proceedings, based on such claim,
dispute or other matter in question, would be barred by the applicable statute
of limitations. The arbitration panel shall consist of three (3) arbitrators,
one of whom shall be appointed by Buyer and another of whom shall be appointed
by Seller, within thirty (30) days after any request for arbitration hereunder.
The two arbitrators thus appointed shall choose the third arbitrator within
thirty (30) days after their appointment; provided however, that if the two (2)
arbitrators fail to appoint the third (3rd) arbitrator within thirty (30) days
after their appointment, either arbitrator may petition the American
Arbitration Association to make the appointment. The place of arbitration shall
be Oklahoma City, Oklahoma. The arbitrators shall be instructed to render their
decision within sixty (60) days after their selection and to allocate all costs
and expenses of such arbitration (including legal and accounting fees and
expenses of the respective parties) to the parties in the proportions that
reflect their relative success on the merits (including the successful
assertion of any defenses).
(c) Nothing contained in this SECTION 11.17 shall prevent any
Party hereto from seeking any equitable relief to which it would otherwise be
entitled from a court of competent jurisdiction.
ARTICLE 12
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article 12:
"ACQUIRED COMPANIES" -- shall mean the Company and its Subsidiaries (if any),
collectively.
"AFFILIATE" -- shall mean, as applied to another Person, (i) any Person
directly or indirectly owning, controlling or holding with power to vote ten
percent (10%) or more of the voting securities of or Equity Interests in such
other Person; (ii) any Person ten percent (10%) or more of whose outstanding
voting securities or Equity Interests are directly or indirectly owned,
controlled or held with power to vote by such other Person; (iii) any Person
directly or indirectly controlling, controlled by or under
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common control with such other Person; (iv) any officer, director, or partner
of such other Person, or any family member of any of the foregoing and (v) any
Entity for which any Person described in clause (iv) acts as a director,
officer or partner; provided, however that neither Sellers nor any of their
"Affiliates" (other than Buyer, Buyer's parent and Subsidiaries or Buyer's
parent) shall be "Affiliates" of Buyer or any of its Affiliates for any purpose
of this Agreement.
"AFFILIATE PAYABLES" -- shall mean all amounts owing to an Acquired Company
from any Sellers or any Affiliate thereof, or from any of the Acquired
Company's officers or employees.
"APPLICABLE CONTRACT" -- shall mean any Contract (a) under which an Acquired
Company has or may acquire any rights, (b) under which any Acquired Company has
or may become subject to any obligation or liability, or (c) by which any
Acquired Company or any of the assets owned or used by it is or may become
bound.
"BALANCE SHEET" -- as defined in SECTION 2.7.
"BEST EFFORTS" -- the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to ensure that such result is
achieved as expeditiously as possible.
"BREACH" -- a "Breach" of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
"BUSINESS DAY" - is a day other than a Saturday, a Sunday or a day on which
banks are closed in the State of Oklahoma.
"CLOSING DATE" - the date and time as of which the Closing actually takes
place.
"COMPANY" - means Xxx Xxxxxx German Imports, Inc., an Oklahoma corporation.
"CONSENT" - any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" - all of the transactions contemplated by this
Agreement, including: (i) the sale of the Shares by Sellers to Buyer; (ii) the
execution, delivery, and performance of the Mercedes Stock Purchase Agreement
and the Lease Agreement; (iii) the performance by Buyer and Sellers of their
respective covenants and obligations under this Agreement; and (iv) Buyer's
acquisition and ownership of the Shares and exercise of control over the
Company.
"CONTRACT" -- any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"DEALERSHIP LOCATION" - means I-40 and Xxxxxxxx, Oklahoma City, Oklahoma.
"DISCLOSURE LETTER" - the compilation of all the schedules delivered by Sellers
to Buyer as provided herein; all references to Schedules in this Agreement
refer to Schedules or parts of the Disclosure Letter.
"EMPLOYEE PLAN" - shall include all plans described in Section 3(3) of the
ERISA and also shall include, without limitation, any deferred compensation,
stock, employee or retiree pension benefit,
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welfare benefit or other similar fringe or employee benefit plan, program,
policy, contract or arrangement, written or oral, qualified or nonqualified,
funded or unfunded, foreign or domestic, covering employees or former employees
of the Company and maintained or contributed to by the Company.
"ENCUMBRANCE" -- any charge, claim, community property interest, condition,
equitable interest, option, pledge, security interest, right of first refusal,
or restriction of any kind, including any restriction on use, voting, transfer,
receipt of income, or exercise of any other attribute of ownership, or
restrictions or claims of any kind, nature or description.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" -- any cost, damages, expense,
liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to: (i) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products); (ii) fines, penalties,
judgments, awards, settlements, legal or administrative proceedings, damages,
losses, claims, demands and response, investigative, remedial, or inspection
costs and expenses arising under Environmental Law or Occupational Safety and
Health Law; (iii) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other
remediation or response actions ("Cleanup") required by applicable
Environmental Law or Occupational Safety and Health Law (whether or not such
Cleanup has been required or requested by any Governmental Body or any other
Person) and for any natural resource damages; or (iv) any other compliance,
corrective, investigative, or remedial measures required under Environmental
Law or Occupational Safety and Health Law. The terms "removal," "remedial," and
"response action," include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. ss. 9601 et seq., as amended ("CERCLA").
"ENVIRONMENTAL LAW" -- any Legal Requirement, as amended, that requires or
relates to: (i) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment; (ii) preventing or reducing to
acceptable levels the release of pollutants or hazardous substances or
materials into the Environment; (iii) reducing the quantities, preventing the
release, or minimizing the hazardous characteristics of wastes that are
generated; (iv) assuring that products are designed, formulated, packaged, and
used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of; (v) protecting resources, species, or
ecological amenities; (vi) reducing to acceptable levels the risks inherent in
the transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances; (vii) cleaning up pollutants that have been
released, preventing the threat of release, or paying the costs of such clean
up or prevention; or (viii) making responsible parties pay private parties, or
groups of them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest to recover for
injuries done to public assets, including but not limited to the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et
seq., as amended ("CERCLA").
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any successor
law, and regulations and rules issued pursuant to that Act or any successor
law.
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"FACILITIES" -- any real property, leaseholds, or other interests currently or
formerly owned or operated by Company and any buildings, plants, structures, or
fixtures currently or formerly owned or operated by the Company.
"FORD STOCK PURCHASE AGREEMENT" -- the stock purchase agreement of even date
herewith by and among Group 1 Holdings-F, L.L.C., Xxxxxx Xxxx, Inc., and Xxxxxx
X. Xxxxxx XX.
"MERCEDES-BENZ" -- means Mercedes-Benz of North America.
"GAAP" -- generally accepted United States accounting principles, applied on a
consistent basis, from period to period.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit, waiver,
or other authorization issued, granted, given, or otherwise made available by
or under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"GOVERNMENTAL BODY" -- any: (i) nation, state, county, city, town, village,
district, or other jurisdiction of any nature; (ii) federal, state, local,
municipal, foreign, or other government; (iii) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal); (iv)
multi-national organization or body; or (v) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
"GROUP 1" - means Group 1 Automotive, Inc.
"GUARANTY" -- means, for any specified Person, without duplication, any
liability, contingent or otherwise, of that Person guaranteeing or otherwise
becoming liable for any obligation of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, and including any liability of
the specified Person, direct or indirect, (a) to purchase or pay (or to advance
or supply funds for the purchase of) any security for the payment of that
obligation, (b) to purchase property, securities or services for the purpose of
assuring the owner of that obligation of its payment or (c) to maintain working
capital, equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay that obligation;
provided, that the term "Guaranty" does not include endorsements for collection
or deposit in the ordinary course of the endorser's business.
"HAZARDOUS ACTIVITY" -- the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release,
storage, transfer, transportation, treatment, or use of Hazardous Materials in,
on, under, about, or from the Facilities or any part thereof into the
Environment, and any other act, business, operation, or thing that increases
the danger, or risk of danger, or poses an unreasonable risk of harm to persons
or property on or off the Facilities, or that may affect the value of the
Facilities or the Company.
"HAZARDOUS MATERIALS" -- any waste or other substance that is listed, defined,
designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and
specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"INCEPTION DATE" -- means December 13, 1999.
"IRC" -- the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
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"IRS" -- the United States Internal Revenue Service or any successor agency,
and, to the extent relevant, the United States Department of the Treasury.
"KNOWLEDGE" -- an individual will be deemed to have "Knowledge" of a particular
fact or other matter if: (i) such individual is actually aware of such fact or
other matter; or (ii) a prudent individual should have discovered or become
aware of such fact or matter in the ordinary course of conduct of the normal
duties and obligations of such individual bearing in mind that individual's
position with the Company. A Person (other than an individual) will be deemed
to have "Knowledge" of a particular fact or other matter if any individual who
is serving, or who has at any time served, as a director or officer of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty, as amended.
"MANUFACTURER" -- means Mercedes-Benz of North America, Inc.
"MATERIAL AGREEMENT" -- means all leases and all other contracts, agreements,
documents, instruments, guarantees, plans, understandings or arrangements,
written or oral, which are material to the Company or its business or the
Assets.
"MATERIAL ENVIRONMENTAL LIABILITY" -- any occurrence of an Environmental,
Health, and Safety Liability the expected liability of which exceeds
Twenty-Five Thousand Dollars ($25,000).
"MODIFIED GAAP" - generally accepted United States accounting principles, as
modified by Manufacturer's Dealer Accounting Manual accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet and the
other financial statements referred to in 2.7 were prepared, from period to
period (unless otherwise specifically disclosed).
"OCCUPATIONAL SAFETY AND HEALTH LAW" -- any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private
(consisting of those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working
conditions.
"ORDER" -- any award, decision, injunction, judgment, order, ruling, subpoena,
or verdict entered, issued, made, or rendered by any court, administrative
agency, or other Governmental Body or by any arbitrator.
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of incorporation
and the bylaws of a corporation; (b) any charter or similar document adopted or
filed in connection with the creation, formation, or organization of a Person;
and (c) any amendment to any of the foregoing.
"PARTY" - Buyer and Sellers and their respective permitted assigns hereunder.
"PERSON" -- any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PURCHASE PRICE" -- means the amount specified in SECTION 1.2.
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"REAL PROPERTIES" -- means all real property, whether owned or leased,
including buildings and improvements listed on SCHEDULE 1.6(B).
"RELATED GUARANTEES" - are the Company guarantees of indebtedness or other
obligations of any of the Company's officers, directors, shareholders or
employees or their Affiliates except for the other Acquired Companies.
"RELATED PARTY AGREEMENT" -- are any contracts or other formal or informal
understandings between any Acquired Company and any of its officers, directors,
employees, agents or stockholders or its Affiliates.
"RELATED PERSON" -- with respect to a particular individual: (i) each other
member of such individual's Family; (ii) any Person that is directly or
indirectly controlled by such individual or one or more members of such
individual's Family; (iii) any Person in which such individual or members of
such individual's Family hold (individually or in the aggregate) a Material
Interest; and (iv) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer,
partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual: (i) any
Person that directly or indirectly controls, is directly or indirectly
controlled by, or is directly or indirectly under common control with such
specified Person; (ii) any Person that holds a Material Interest in such
specified Person; (iii) each Person that serves as a director, officer,
partner, executor, or trustee of such specified Person (or in a similar
capacity); (iv) any Person in which such specified Person holds a Material
Interest; (v) any Person with respect to which such specified Person serves as
a general partner or a trustee (or in a similar capacity); and (vi) any Related
Person of any individual described in clause (ii) or (iii).
For purposes of this definition, (i) the "Family" of an individual
includes (1) the individual, (2) the individual's spouse, (3) any other natural
person who is related to the individual or the individual's spouse within the
second degree, and (4) any other natural person who resides with such
individual, and (ii) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least fifty
percent (50%) of the outstanding voting power of a Person or equity securities
or other equity interests representing at least fifty percent (50%) of the
outstanding equity securities or equity interests in a Person.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"SCHEDULE" -- the schedules or parts of the Disclosure Letter, delivered by
Sellers to Buyer, as provided herein.
"SECURITIES ACT" -- the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"SHARES" -- as defined in the introduction of this Agreement.
"SUBSIDIARY" -- with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
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policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" or
"Subsidiaries"means a corporation, limited liability company, limited
partnership, partnership, or other entity owned in whole or part by the
Company.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment
of any tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any tax.
"THREAT OF RELEASE" -- a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may
result from such Release.
"THREATENED" -- a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made (in
writing) or any notice has been given (in writing), or if any other event has
occurred or any other circumstances exist, that would lead a prudent Person to
conclude that such a claim, Proceeding, dispute, action, or other matter is
likely to be asserted, commenced, taken, or otherwise pursued in the future.
[The remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
"SELLERS"
GROUP 1 HOLDINGS - DC, L.L.C., a Delaware
limited liability company
/s/ XXXXX X. XXXXXXXX
By:_____________________________________________
Xxxxx X. Xxxxxxxx, Executive Vice President
"COMPANY"
XXX XXXXXX GERMAN IMPORTS, INC.,
an Oklahoma corporation
/s/ XXXXX X. XXXXXXXX
By:_____________________________________________
Xxxxx X. Xxxxxxxx, Vice President
"BUYER"
BHE, INC.,
an Oklahoma corporation
/s/ XXXXXX X. XXXXXX XX
By:_____________________________________________
Xxxxxx X. Xxxxxx XX, President
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STOCK PURCHASE AGREEMENT
ANNEX I
STOCK OWNERSHIP
% OF
NO. OF OUTSTANDING
SELLERS SHARES COMMON STOCK
------- ------ ------------
Group 1 Holdings - DC, Inc. 1,000 100%
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