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EXHIBIT 10.(q)
ASSET PURCHASE AGREEMENT
BETWEEN
U. S. PARTS CORPORATION, XXX XXXXXX
AND
XXXXXX AUTOMOTIVE GROUP, INC.
DATED AS OF FEBRUARY 26, 1999
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TABLE OF CONTENTS
PAGE NO.
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ARTICLE I. 1
1.1 Definitions. 1
ARTICLE II - SALE AND PURCHASE OF PURCHASED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES 5
2.1 Purchase and Sale of Purchased Assets. 5
2.2 Assumption of Obligations and Liabilities. 5
2.3 Assigned Contracts. 6
2.4 Purchase Price. 6
2.5 Allocation of Consideration. 7
2.6 Bulk Sales Laws. 7
2.7 Pre-closing Payments. 7
2.8 Post-closing Adjustment. 7
ARTICLE III - CLOSING 7
3.1 Sale on Closing Date. 7
ARTICLE IV. - OBLIGATIONS, REPRESENTATIONS AND WARRANTIES
OF SELLER 8
4.1 Authority of Seller. 8
4.2 No Conflict or Violation. 8
4.3 Consents and Approvals. 8
4.4 Compliance with Law. 8
4.5 Permits. 8
4.6 Ownership of Purchased Assets. 8
4.7 Assigned Contracts 9
4.8 Labor Relations. 9
4.9 Litigation. 9
4.10 Brokers. 9
4.11 Indemnification 9
ARTICLE V. - OBLIGATIONS, REPRESENTATIONS AND WARRANTIES OF
PURCHASER 10
5.1 Authority of Purchaser. 10
5.2 No Conflict or Violation. 11
5.3 Consents and Approvals. 11
5.4 Availability of Funds. 11
5.5 Litigation. 11
5.6 Brokers 11
5.7 Capitalization. 11
5.8 Purchaser Public Information. 12
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ARTICLE VI. - CERTAIN COVENANTS OF SELLER 12
6.1 Conduct of Business Before the Closing Date. 12
6.2 Information and Access. 12
6.3 Further Assurances. 12
6.4 Reasonable Efforts. 13
6.5 Assignment of Contracts. 13
6.6 Cure of Defaults. 13
6.7 Audit of Operations at Business Area. 13
ARTICLE VII. - CERTAIN COVENANTS OF PURCHASER 13
7.1 Conduct of Business Before the Closing Date. 13
7.2 Reasonable Efforts. 13
7.3 Performance under assigned contracts. 14
7.4 Purchaser Financing. 14
7.5 Board Membership. 14
7.6 Information and Access. 14
ARTICLE VIII. - CONDITIONS TO SELLER'S OBLIGATIONS 14
8.1 Representations and Warranties. 14
8.2 Compliance with Agreement. 14
8.3 Availability of Purchaser Financing. 14
8.4 No Adverse Proceeding. 15
8.5 Ancillary Agreements. 15
8.6 Election as Officer and Director. 15
8.7 Xxxxxx Stock Price. 15
8.8 Shareholder Loans. 15
8.9 Release. 15
ARTICLE IX. - CONDITIONS TO PURCHASER'S OBLIGATIONS 15
9.1 Representations and Warranties. 15
9.2 Compliance with Agreement. 15
9.3 No Adverse Proceeding. 16
9.4 Ancillary Agreements. 16
ARTICLE X. - CLOSING 16
10.1 The Closing. 16
10.2 Seller's Deliveries and Obligations at Closing. 16
10.3 Purchaser's Deliveries and Obligations at Closing. 17
10.4 Termination. 18
ARTICLE XI. - EMPLOYEE MATTERS 19
11.1 Employment of Seller's Employees. 19
11.2 Accrued Vacation. 19
11.3 Employment Taxes. 19
ARTICLE XII. - MISCELLANEOUS PROVISIONS 20
12.1 Notices. 20
12.2 Amendments. 21
12.3 Assignment 21
12.4 Announcements. 21
12.5 Expenses 21
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12.6 Entire Agreement. 21
12.7 Descriptive Headings. 21
12.8 Counterparts. 21
12.9 Governing Law; Jurisdiction. 21
12.10 Construction. 21
12.11 Severability. 21
12.12 Confidentiality. 22
12.13 Knowledge. 22
12.13 Schedules. 22
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SCHEDULE
LETTER/NUMBER SCHEDULE NAME
Schedule A Fixed Assets
Schedule B Inventory
Schedule C Assigned and Other Contracts
Schedule D Accounts Receivable
Schedule E Allocation of Purchase Price and Value of Xxxxxx Shares
Schedule F Liens
Schedule G Financing Agreement
Schedule H Confidentiality
Schedule I Conflicts
Schedule J Litigation
Schedule K Subscriptions & Options
Schedule L Intellectual Property
Schedule M Pre-Closing Payments
Schedule N Consignment Inventory
Schedule O Accrued Vacation
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of February 26, 1999 between U. S. PARTS CORPORATION, a Texas
corporation, (hereinafter referred to as "Seller") and Xxxxxx Automotive Group,
Inc., a Louisiana corporation (hereinafter referred to as "Purchaser").
RECITALS
WHEREAS, Seller is engaged in the business of selling and distributing
automotive replacement parts, accessories and supplies and operates wholesale
outlets primarily in the Houston, Texas market (such metropolitan area being
hereinafter referred to as the "Business Area");
WHEREAS, Purchaser desires to purchase from Seller and Seller desires
to sell to Purchaser, substantially all of the assets associated with the
Seller's operations, subject to certain liabilities, all on the terms and
subject to the conditions set forth herein and in the Ancillary Agreements;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
1.1 DEFINITIONS. Unless otherwise defined herein, the terms defined in
the introductory paragraph and the Recitals to this Agreement shall have the
respective meanings specified therein, and the following terms shall have the
meanings specified below:
"Accounts Receivable" means all accounts receivable
attributable to the conduct of Seller's Business, and all rights to
xxxx customers for products shipped or services rendered on or prior
to the Closing Date. Schedule D sets forth a description of the
accounts receivable as of the date hereof.
"Ancillary Agreements" means the following agreements or
instruments contemplated by this Agreement: the Registration Rights
and Lock-up Agreement, the Employment Agreement, each of the
Non-competition Covenants, the Voting Agreement, the Stock Option
Agreement, the Assignment and Assumption Agreement, the Xxxx of Sale
and Assumption Agreement, and the Assignment and Assumption of Leases
Agreement, all of which shall be in such form and substance as may be
reasonably satisfactory to Purchaser and Seller.
"Assigned Contracts" means the Leases and Other Contracts to
be assigned by Seller to Purchaser and set forth on Schedule C.
"Audit" has the meaning set forth in Section 6.7.
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"Xxxx of Sale and Assumption Agreement" means the Xxxx of
Sale and Assumption Agreement to be executed at Closing by Purchaser
and Seller in such form and substance as may be reasonably
satisfactory to Purchaser and Seller.
"Business" means the entirety of Seller's business operations
conducted in the Business Area.
"Business Day" means a day, other than a Saturday or a
Sunday, on which commercial banks are not required to be open or are
authorized to close in The City of Houston.
"Business Employees" means employees of the Seller whose
duties relate primarily to the Business.
"Business Area" has the meaning set forth in the Recitals
hereto.
"Committed Financing" means funds available pursuant to a
written commitment letter or other similar documentation from a
commercial bank or other lending institution, which lender, commitment
letter and other documentation are acceptable to Seller, in an amount
that is sufficient to enable Purchaser to consummate the transactions
contemplated hereby.
"Consignment Inventory" means all inventory in the possession
of Seller that has been consigned to Seller by KEM Manufacturing
Company, Inc. ("KEM").
"Excluded Assets" means all of the Seller's right, title and
interest in and to the following:
(a) claims of Seller for refunds of or loss carry forwards
with respect to taxes attributable to any period prior to the Closing
Date;
(b) records and documents subject to confidentiality
provisions, claims of privilege, or other restrictions on access, as
listed on Schedule H;
(c) OMITTED
(d) all documents relating to the organization, maintenance
and existence of the Seller as a corporation, including its corporate
charter, bylaws, taxpayer and other identification numbers;
(e) the three automobiles reflected in Seller's financial
statements that are used by Xxx Xxxxxx (1998 GMC Yukon), Xxxxxxx
Xxxxxx (1995 Chevrolet Suburban) and Xxxx Xxxxxx (1998 GMC Sierra);
and
(f) any rights of Seller under this Agreement or any of the
Ancillary Agreements.
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"Fixed Assets" means, to the extent used in the Business, (i)
all of the machinery, equipment, furniture, fixtures, signs, vehicles
and leasehold improvements of the Business on the Closing Date and
which are owned by Seller, a list of which is set forth on Schedule A,
which list shall be updated on the Closing Date, and (ii) to the
extent assignable, any rights of Seller to the warranties, licenses
and other similar rights with respect thereto.
"GAAP" means United States generally accepted accounting
principles, applied on a consistent basis and consistent with Seller's
historical practices, as in effect from time to time.
"Governmental Agency" means any U.S. federal, state or local
court, executive office, legislature, governmental agency or ministry,
commission, or administrative, regulatory or self-regulatory authority
or instrumentality.
"Income Tax Liability" means an amount, reasonably estimated
by Seller, equal to the aggregate income tax liability of Seller's
shareholders created by and attributable to Seller's Pre-Closing
Income, calculated at a tax rate of 39.6%.
"Intellectual Property" means to the extent used in the
Business the inventions, copyrights, trademarks, trade names, and
applications, any related trademarks or logos and applications,
including any rights to the ownership and use of the names "U. S.
Parts" "Full Service" and any other trade name used by any Subsidiary
of Seller, trade secrets, proprietary know-how and use and application
know-how, product formulae, manufacturing, engineering and other
drawings, technology, technical information, engineering data, design
and engineering specifications, production standards and practices and
promotional literature, goodwill and other intellectual property and
rights, in each case used by the Seller in connection with the
business including without limitation the intellectual property listed
on Schedule L.
"Inventory" means all items held for resale or for return to
the manufacturer that relate to the Business.
"Leased Property" means the various premises subject to the
various Leases.
"Leases" mean the warehouse/store leases for all premises
operated by Seller in the Business Area and the lease for the premises
used for Seller's corporate offices.
"Lien" means any mortgage, pledge, security interest, charge
or other encumbrance.
"Material Adverse Effect" means a material adverse effect on
the financial condition, business or results of operations of a party,
taken as a whole, other than such effects attributable to general
economic conditions or other changes generally affecting companies in
the same business as such party.
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"Non-competition Covenants" means the three-year
non-competition covenants to be executed at Closing by each of Xxx
Xxxxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxxx and Xxxxx Xxxxxx in such form and
substance as may be reasonably satisfactory to Purchaser and Seller.
"Other Contracts" means the contracts, personal property
leases and other instruments which are listed on the Other Contracts
Schedule included as part of Schedule C and any other contacts,
personal property leases and other instruments entered into by Seller
in the ordinary course of business after the date hereof and that
relate to the Business.
"Permit" means any permit, approval, authorization, license,
variance or permission required by a Governmental Agency under any
applicable law.
"Permitted Liens" means: (i) Liens securing the bank
indebtedness reflected on the audited financial statements of Seller
contemplated by Section 6.7 hereof; (ii) those Liens with respect to
assets of Seller set forth on Schedule F, (iii) Liens for water and
sewer charges, taxes and other governmental charges and levies not yet
due and payable or being contested in good faith; and (iv) other Liens
(including, without limitation, mechanics', couriers', landlords',
workers', repairers', materialmen's, warehousemen's, special
assessments not yet delinquent, recorded easements, covenants and
other restrictions, utility easements, building restrictions,
encroachments, zoning restrictions and other similar Liens) arising in
the ordinary course of business as would not in the aggregate have a
Material Adverse Effect.
"Pre-Closing Income" means Seller's income from the conduct
of its business from January 1, 1998 to the Closing Date, excluding
any gain to be recognized as a result of the consummation of the
transaction contemplated hereby and excluding any amounts constituting
penalties, interest, fines or similar charges.
"Purchase Orders" means all outstanding purchase orders
incurred in the ordinary course of business and in existence on the
Closing Date.
"Purchased Assets" means all of the Seller's right, title and
interest in and to the following assets of the Business as of the
Closing:
(a) all Cash;
(b) all Fixed Assets;
(c) all Assigned Contracts;
(d) all records in any manner relating to the
Purchased Assets, including, but not limited to copies of personnel
files for Business Employees, but excluding any records constituting
Excluded Assets;
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(e) to the extent legally assignable, all Permits
required to conduct business at the Business Area;
(f) customer lists and other information and data
relating to the customers of the Business in the Business Area;
(g) all deposits (including security deposits) and
prepayments made by Seller under any of the Assigned Contracts
(including future discounts and rebates from sales/purchases);
(h) all of the Accounts Receivable;
(i) all of the Inventory;
(j) all vehicles owned by Seller;
(k) Intellectual Property.
"Registration Rights and Lock-up Agreement" means the agreement
providing certain registration rights with respect to, and restrictions on the
transfer of, the Xxxxxx Shares in form and substance reasonably satisfactory to
Purchaser and Seller.
ARTICLE II
SALE AND PURCHASE OF PURCHASED ASSETS
AND ASSUMPTION OF ASSUMED LIABILITIES
2.1 PURCHASE AND SALE OF PURCHASED ASSETS. On the terms and subject to
the conditions set forth in this Agreement, at the Closing Purchaser shall
purchase from Seller and Seller shall sell, transfer, assign, convey and
deliver to Purchaser in the Business Area, all of Seller's right, title and
interest in and to the Purchased Assets.
2.2 ASSUMPTION OF OBLIGATIONS AND LIABILITIES. On the terms and
subject to the conditions set forth in this Agreement, from and after the
Closing, Purchaser will assume and pay, perform, discharge and be responsible
for all of the following liabilities of Seller (collectively, the "Assumed
Liabilities"):
(a) Purchaser shall assume all liabilities included in the
balance sheet as of December 31, 1998, plus liabilities incurred after that
date in the ordinary course of business, as well as all liabilities to KEM with
respect to the Consignment Inventory, liabilities for earned but unused
employee vacation pay and liabilities under the Assigned Contracts and Purchase
Orders and transfer fees, if any, payable as a result of assignment of
Purchaser's agreement with Triad; and
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(b) Purchaser shall assume all liabilities respecting
Seller's existing employee benefit programs and incentive plans or, at
Purchaser's option, shall replace said benefits of plans with benefit and
incentive plans equal or superior to Seller's existing benefit and incentive
plans.
(c) Purchaser shall assume all liabilities for property taxes
of Seller attributable to periods prior to the Closing Date to the extent
accrued for on the Closing Date Financial Statements and all liabilities for
franchise taxes due after the Closing Date.
Except as set forth above or expressly provided elsewhere herein, Purchaser
shall not assume or pay, perform, discharge or be responsible for any income
tax liability of Seller related to this transaction, nor any contingent
liabilities with regard to any claims or lawsuits against Seller, whether
pending at the time of closing or filed after closing but attributable to
pre-closing acts or omissions of Seller, its agents, employees or
representatives. Further, Purchaser does not assume any liability for
investment bank fees of Seller or any of its shareholders related to this
transaction.
2.3 ASSIGNED CONTRACTS. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
lease, contract or agreement or any claim, right, benefit or obligation
thereunder or resulting therefrom if an assignment thereof, without the consent
of a third party thereto, would constitute a breach or violation thereof and
such consent has not been received. If such a consent is required and has not
been received, the Seller will cooperate with the Purchaser in any reasonable
arrangement that: (i) provides for the Purchaser the benefits under any such
leases, contracts or agreements until such time as the required consent is
obtained; and (ii) requires the Purchaser to promptly make any payments due and
perform any obligations under such lease, contract or agreement and
attributable to the period after the Closing Date; provided, however, that the
Seller shall not be required to cooperate in any such arrangement if doing so
would be reasonably likely to result in a materially adverse effect on Seller.
2.4 PURCHASE PRICE.
(A) On the terms and subject to the conditions set forth in
this Agreement, the purchase price payable by Purchaser to Seller for the
Purchased Assets shall be the following (in the aggregate, the "Purchase
Price":
I. At the Closing, Eight (8) million dollars,
payable by delivery of a promissory note of Purchaser, which note
shall bear interest at a rate of 6.5% per annum, and be payable in two
(2) installments of principal (the first installment to be in the
amount of seven million, nine hundred, sixty thousand dollars
($7,960,000.00), payable on the first Business Day following the
closing and the second installment being in the amount of forty
thousand dollars ($40,000.00), payable by January 1, 2000) and which
shall be secured with respect to the first installment by a bank
letter of credit; plus
II. At the Closing, Six hundred thousand (600,000)
shares of common stock of Xxxxxx Automotive, Inc. (The "Xxxxxx
Shares"), with demand and piggyback registration rights and subject to
the restrictions on transfer set forth in the Registration Rights and
Lock-up Agreement, which Xxxxxx Shares shall be delivered free of any
Liens, and the issuance of which shall not give rise to any preemptive
rights.
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2.5 ALLOCATION OF CONSIDERATION. The Purchase Price shall be allocated
among the Purchased Assets based on the book value of such assets and otherwise
in accordance with the principles set forth on Schedule E. Seller and Purchaser
shall each make all required filings under Section 1060 of the Code (as herein
defined) consistent with such allocation and shall not take any position
inconsistent with such allocation in any other of their respective tax returns.
Schedule E also sets forth the parties' mutual agreement as to the value of
Xxxxxx Shares to be delivered in connection herewith.
2.6 BULK SALES LAWS. The parties hereto waive compliance with the
requirements of any applicable bulk sales laws in connection with the
consummation of the transactions contemplated hereby. Seller agrees to
indemnify Purchaser for any losses sustained by Purchaser as a result of the
failure of the parties to so comply with any applicable bulk sales laws.
2.7 PRE-CLOSING PAYMENTS. Notwithstanding anything herein to the
contrary, Seller shall be entitled to draw such amounts under its bank line of
credit as may be necessary to: (i) distribute cash to Seller's shareholders in
respect of their Income Tax Liability; (ii) pay the out-of-pocket expenses of
X. X. Xxxxxx contemplated by Section 4.9 hereof; and (iii) pay the
out-of-pocket expenses of Seller in connection with this transaction other than
the expenses to be paid by Xxx Xxxxxx as contemplated by Section 4.9 hereof.
The proceeds of such draws may be used by Seller prior to or promptly following
the Closing for the distributions and payments contemplated by the preceding
sentence. All of the foregoing shall be listed on Schedule M, to be attached
hereto and subject to update at Closing.
2.8 POST-CLOSING ADJUSTMENT. In the event that Seller's actual
Pre-Closing Income for the year 1998 and/or the pre-closing portion of 1999 is
greater or less than the amount estimated by Seller for purposes of calculating
the Income Tax Liability of its Shareholders, Purchaser shall pay to Seller or
Seller shall pay to Purchaser, as the case may be, such amount as may be
necessary to adjust for any underpayment or overpayment of the Income Tax
Liability, calculating such liability at an assumed tax rate of 39.6%. Seller
shall deliver to Purchaser a K-1 and 1120 reflecting Seller's actual
Pre-Closing Income no later than 30 days after the filing of same, and any
payments required under this Section 2.8 shall be made to the party entitled to
such payment within five (5) Business Days thereafter.
ARTICLE III
CLOSING
3.1 SALE ON CLOSING DATE. The sale, transfer, assignment and delivery
by Seller of the Purchased Assets to Purchaser, and the assumption by Purchaser
of the Assumed Liabilities, as herein provided shall be effected on the Closing
Date by: (a) the execution and delivery by Seller and Purchaser of an
Assignment and Assumption Agreement for Assigned Contracts and Purchase Orders
in form and substance reasonably satisfactory to Purchaser and Seller, pursuant
to which Assignment and Assumption Agreements Purchaser shall be subject to all
liabilities and obligations under the Assigned Contracts which relate to
periods, events or circumstances after the Closing Date,
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and (b) with respect to the other Purchased Assets and Assumed Liabilities, by
the execution and delivery by the Seller and Purchaser of the Xxxx of Sale and
Assumption Agreement in form and substance reasonably satisfactory to Purchaser
and Seller.
ARTICLE IV
OBLIGATIONS, REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 AUTHORITY OF SELLER. Seller is a corporation validly existing and
in good standing under the laws of the State of Texas, Seller has full
corporate power and authority to execute and deliver this Agreement and each of
the Ancillary Agreements to which Seller is a party, and the execution and
delivery by Seller of this Agreement and such Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of Seller,
and this Agreement constitutes, and each of the Ancillary Agreements to which
Seller is a party upon its execution will constitute, the legal, valid and
binding obligation of Seller enforceable in accordance with its terms. Seller
has full corporate power and authority to own its properties and to carry on
the Business in the Business Area presently being conducted by it.
4.2 NO CONFLICT OR VIOLATION. Except as set forth on Schedule I, the
execution, delivery and performance by Seller of this Agreement and the
Ancillary Agreements to which Seller is a party do not and will not violate or
conflict with any provision of the Articles of Incorporation or By-laws of
Seller and do not and will not violate or result in a material breach of or
constitute (with due notice or lapse of time or both) a material default under
any Assigned Contract, except for any violations, breaches or defaults that do
not result in a Material Adverse Effect.
4.3 CONSENTS AND APPROVALS. Seller will use commercially reasonable
efforts to secure the assignment of the Assigned Contracts to Purchaser.
4.4 COMPLIANCE WITH LAW. Seller warrants that Seller has not received
written notice of any violation of any law, regulation, order or other legal
requirement, and, to the best of Seller's knowledge, is not in default under
any order, writ, judgment, award, injunction or decree of any Governmental
Agency applicable to the Purchased Assets, except for any such violations or
defaults that are not reasonably likely to have a Material Adverse Effect.
4.5 PERMITS. All permits material to the operation of Seller's
business in the Business Locations have been provided or made available for
inspection to Purchaser by Seller, and, to the extent transferable under the
law, will be transferred at Closing.
4.6 OWNERSHIP OF PURCHASED ASSETS. Other than the Consignment
Inventory, a listing of which is set forth on Schedule M, real property subject
to the Leases and any items of property subject to the Other Contracts, Seller
is the owner of the Purchased Assets. At the Closing, Buyer will receive good
title to all such Purchased Assets, free and clear of any Liens save and except
Permitted Liens and those specifically listed on Schedule F, provided however,
that Seller makes no representation or warranty as to the existence or absence
of any Lien: (i) on the real property subject to the Lease; (ii) on any items
of property subject to the Other Contracts.
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4.7 ASSIGNED CONTRACTS. True and complete copies of the Assigned
Contracts listed on Schedule C have been provided or will be made available by
Seller to Purchaser. Neither Seller nor, to the best of Seller's knowledge, any
other party under any of the Assigned Contracts, has commenced any action
against the other or given or received any written notice of any material
default or violation under any Assigned Contract which was not withdrawn or
dismissed. To the best of Seller's knowledge, the Leases and each of the other
Assigned Contracts listed on Schedule C is or will be at the Closing valid,
binding and in full force and effect as against Seller.
4.8 LABOR RELATIONS. Seller is not party to any collective bargaining
agreement covering Business Employees. To the best of Seller's knowledge, no
organizational effort is presently being made or threatened in writing by or on
behalf of any labor union with respect to Business Employees.
4.9 LITIGATION. Seller warrants that there are no actions, causes of
action, claims, suits or proceedings pending or, to Seller's knowledge,
threatened against Seller which seek to restrain or enjoin the consummation of
the transactions contemplated hereby. Further, Seller warrants that, to the
best of its knowledge, it is not presently a party to any litigation in State
of Federal court, and further, that no party has indicated its intention to
file suit against Seller.
4.10 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Seller without the
intervention of any other Person acting on Seller's behalf in such manner as to
give rise to any valid claim by any such Person against Purchaser for a
finder's fee, brokerage commission or other similar payment based on an
arrangement with Seller, other than investment banking firm fees. Prior to
closing, Seller specifically agrees herein to pay any and all out-of-pocket
expenses of X. X. Xxxxxx, not to exceed fifty thousand dollars ($50,000.00).
All other investment banking firm fees of any firm acting on Seller's or its
shareholders' behalf, including those of the GulfStar Group, will be paid by
Xxx Xxxxxx, individually.
4.11 INDEMNIFICATION - (a) Seller agrees to indemnify and hold
Purchaser harmless for any claims, suits, actions or other proceedings
attributable to the conduct of the Business prior to the Closing, whether said
claims, suits, actions or other proceedings are made or filed prior to or
subsequent to Closing. Said indemnification includes, but is not limited to any
amounts recovered by claimant(s), as well as all expenses, including attorney's
fees, incurred by Purchaser in defending said claims, suits, actions or other
proceedings. Notwithstanding the provisions of this Section 4.11(a), (i) the
Seller shall not be liable under this Section 4.11 unless and until (x) the
aggregate amount of losses incurred by Purchaser with respect to claims
asserted prior to the first anniversary of the Closing Date exceeds fifty
thousand dollars ($50,000.00), at which time the Seller shall be liable for all
such losses of the Purchaser with respect to such claims in excess of such
fifty thousand dollars ($50,000.00) and (y) the aggregate amount of losses
incurred by Purchaser with respect to claims asserted on or after the first
anniversary of the Closing Date exceeds two hundred fifty thousand dollars
($250,000.00) at which time the Seller shall be liable for all such losses of
the Purchaser with respect to such claims in excess of such two hundred fifty
thousand dollars ($250,000.00), (ii) the aggregate liability of the Seller
under this Section 4.11(a) shall be limited to four million dollars
($4,000,000.00) with respect to claims asserted prior to the first anniversary
of the Closing Date and two million dollars ($2,000,000.00) with respect to
claims asserted thereafter and (iii) all losses shall be calculated net of any
accruals with respect thereto on the financial
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statements of Seller for the year ended December 31, 1998. The representations
and agreements of Seller in this Agreement (including Seller's indemnification
obligation under this Section 4.11(a) shall survive for a period of three years
from the Closing Date, at which time they shall expire.
(b) In the case of any claim asserted by a third party against
Purchaser, notice shall be given by Purchaser to Seller promptly after
Purchaser has knowledge of any claim as to which indemnity may be sought, and
Purchaser shall permit Seller, at Seller's expense, to assume the defense of
any claim or any litigation resulting therefrom, provided that (i) the counsel
for Seller who shall conduct the defense of any such claim or litigation shall
be reasonably satisfactory to Purchaser and (ii) Purchaser may participate in
(but not control) such defense at Purchaser's expense. Except with the prior
written consent of Purchaser, which consent shall not be unreasonably withheld,
Seller shall not, in the defense of any such claim or litigation, consent to
entry of any judgment or enter into any settlement that provides for injunctive
or other non-monetary relief affecting Purchaser. Seller and Purchaser shall
cooperate in the defense of any claim or litigation subject to this Section
4.11 and the records of each shall be available to the other with respect to
such defense.
(c) At the Closing, Seller shall pledge the Xxxxxx Shares to Purchaser
to secure the obligations of Seller under clause (a) of this Section 4.11. Upon
either the mutual agreement of Seller and Purchaser or the final, non-appealable
determination by a court of competent jurisdiction as to the amount of any
indemnity payable to Purchaser hereunder, Purchaser shall be entitled to retain
such number of the Xxxxxx Shares, valued at Fair Market Value, as represent the
amount of indemnity owed to Purchaser; provided, however, that Seller may elect
to pay any indemnity in cash rather than permit the applicable number of Xxxxxx
Shares to be retained by Purchaser. For purposes hereof, the Fair Market Value
of the Xxxxxx Shares shall be equal to (i) the average closing sales price of
Purchaser's common stock on the Nasdaq National Market System for the ten (10)
trading days ending on the date the indemnity amount payable is determined or
(ii) if Purchaser's common stock is not then traded on the Nasdaq National
Market System, such amount as shall be determined by an independent appraiser
agreed upon by the parties.
ARTICLE V
OBLIGATIONS, REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 AUTHORITY OF PURCHASER. Purchaser is a Louisiana corporation,
validly existing, and in good standing under the laws of such jurisdiction and
is duly qualified to do business in the State of Texas. Purchaser has full
corporate power and authority to execute and deliver this Agreement and each of
the Ancillary Agreements, and the execution and delivery by Purchaser of this
Agreement and each of the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Purchaser, and this
Agreement and each of the Ancillary Agreements upon their execution will
constitute the legal, valid and binding
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obligation of Purchaser enforceable in accordance with its terms. Purchaser has
full corporate power and authority to own its properties and to carry on the
business presently being conducted by it.
5.2 NO CONFLICT OR VIOLATION. The execution, delivery and performance
by Purchaser of this Agreement and the Ancillary Agreements do not and will not
violate or conflict with any provision of the Certificate of Incorporation or
By-laws of Purchaser and do not and will not violate any provision of law, or
any order, judgment or decree of any court or other Governmental Agency
applicable to Purchaser, or violate or result in a material breach of or
constitute (with due notice or lapse of time or both) a default under any loan
agreement, mortgage, security agreement, indenture or other instrument to which
Purchaser is a party or by which it is bound, except for any violations,
breaches or defaults that do not result in a Material Adverse Effect.
5.3 CONSENTS AND APPROVALS. The execution, delivery and performance by
Purchaser of this Agreement do not require the consent or approval of, or
filing with, any Governmental Agency or other entity or person except: (i) as
may be required to effect the transfer of any Permits; or (ii) such consents,
approvals and filings, the failure to obtain or make which would not,
individually or in the aggregate, have a material adverse effect on its ability
to consummate the transactions contemplated hereby.
5.4 AVAILABILITY OF FUNDS. Purchaser has obtained Committed Financing
as described on Schedule G hereto, sufficient to allow it to pay the Purchase
Price at the times and in the manner set forth in this Agreement and to satisfy
all its other obligations under this Agreement, and on the date of this
Agreement Purchaser has provided Seller with all documentation relating to such
Committed Financing.
5.5 LITIGATION. There are no actions, causes of action, claims, suits,
proceedings, orders, writs, injunctions, or decrees pending or, to the
knowledge of Purchaser, threatened against Purchaser at law or in equity or
before or by any governmental agency, which seek to restrain or enjoin the
consummation of the transactions contemplated hereby or that could otherwise
adversely affect the ability of Purchaser to perform its obligations hereunder.
Except as set forth on Schedule J, Purchaser warrants that, to the best of its
knowledge, it is not presently a party to any litigation in any state or
federal court, and further, that no party has indicated its intention to file
suit against Purchaser. To the best of Purchaser's knowledge, the litigation
described on Schedule J is not reasonably likely to have a Material Adverse
Effect. Purchaser has furnished a copy of Purchaser's insurance policy that
provides coverage for the litigation described on Schedule J, and the coverage
provided by such policy is adequate in scope and amount to cover any judgment
against Seller or amount payable in settlement by Seller in connection with
such litigation.
5.6 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Purchaser without the
intervention of any other person acting on its behalf in such manner as to give
rise to any valid claim by any such person against the Seller or their
Affiliates for a finder's fee, brokerage commission or other similar payment
based on an arrangement with Purchaser.
5.7 CAPITALIZATION. The total authorized capital stock of Purchaser
consists of 10,000,000 shares of common stock, par value $.01 per share, of
which 4,550,000 shares are issued and outstanding on the date hereof and
2,000,000 shares of preferred stock, no par value, none of which are issued and
outstanding on the date hereof. All of the outstanding shares of capital stock
of Purchaser have been, and the Xxxxxx Shares will be, duly authorized and
validly issued, fully paid and non-assessable, and not issued in violation of
the terms of any agreement binding upon Purchaser. No holder of any of the
capital stock of Purchaser has any preemptive or rescission rights
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with respect to such capital stock under any agreement, the applicable charter
documents of Purchaser, or under any applicable federal or state laws, rules or
regulations. Except as set forth in Purchaser's most recent Form 10-K and 10-Q
filings under the Securities Exchange Act of 1934, as amended, and those listed
on Schedule K, there are no outstanding subscriptions, options, warrants,
convertible securities, calls, commitments, agreements or rights (contingent or
otherwise) to purchase or otherwise acquire from Purchaser any shares of , or
any securities convertible into, the capital stock of Purchaser.
5.8 PURCHASER PUBLIC INFORMATION. Purchaser has heretofore made
available to Seller a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by it with the
Securities and Exchange Commission ("SEC") (as any such documents have since
the time of their original filing been amended, the "Purchaser Documents")
since January 1, 1996, which are all the documents (other than preliminary
material) that it was required to file with the SEC since such date. As of
their respective dates, the Purchaser documents did not contain any untrue
statements of material facts or omit to state material facts required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements in the Purchaser Documents present fairly the financial position and
result of operations of Purchaser for the periods indicated subject, in the
case of unaudited statements, to the effect of year-end adjustment. Except as
set forth in the Purchaser Documents, Purchaser has not suffered, incurred or
experienced any fact, circumstance or condition that has, or is reasonably
likely to have a Material Adverse Effect.
ARTICLE VI
CERTAIN COVENANTS OF SELLER
6.1 CONDUCT OF BUSINESS BEFORE THE CLOSING DATE. Seller shall not make
any material change in the Fixed Assets or enter into any material transaction
respecting the Purchased Assets, other than (a) sales of Inventory in the
ordinary course of the Business, or (b) other transactions in the ordinary
course of the Business, in either case substantially consistent with Seller's
past practices or as otherwise contemplated by this Agreement, including
maintenance and preservation, in a manner consistent with Seller's past
practices, of the property, business and goodwill of customers, suppliers and
vendors.
6.2 INFORMATION AND ACCESS. Seller will permit representatives of
Purchaser to have reasonable access during normal business hours after
reasonable notice from Purchaser to Seller, and in a manner so as not to
interfere with the normal operations, to all premises, properties, personnel,
books, records, contracts and documents of or pertaining to the Purchased
Assets and will use its commercially reasonable best efforts to provide such
access to the accountants for the Business. Purchaser and each of its
representatives will treat and hold such information as confidential. Purchaser
shall indemnify, defend and hold harmless Seller, the lessors under the Leases
and their respective Affiliates from and against any and all claims, demands,
causes of action, losses, damages, liabilities, cost and expenses (including,
without limitation, attorneys' fees and disbursements), suffered or incurred by
such Persons in connection with Purchaser's and/or Purchaser's representatives'
entry upon the Leased Property and/or conduct of the investigation contemplated
by this Section 6.2. The parties hereto agree and acknowledge that the
Purchaser's obligations hereunder shall not be subject to any "due diligence"
condition.
6.3 FURTHER ASSURANCES. Upon the request of Purchaser at any time
after the Closing Date, to the extent that Seller is able to comply with the
requirements of this section without
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unreasonable effort or significant expense, Seller shall forthwith execute and
deliver such documents as Purchaser or its counsel may reasonably request to
effectuate the purposes and intent of this Agreement.
6.4 REASONABLE EFFORTS. Upon the terms and subject to the conditions
of this Agreement, Seller will use commercially reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary or proper consistent with applicable law to consummate and make
effective in the most expeditious manner practicable the transactions
contemplated hereby.
6.5 ASSIGNMENT OF CONTRACTS. Seller shall use commercially reasonable
efforts to secure assignment of the Assigned Contracts to Purchaser.
6.6 CURE OF DEFAULTS. Seller shall (i) cure any default in base rental
payments (other than defaults that Seller is contesting in good faith) arising
under the Leases and known by Seller to be outstanding as of the Closing Date;
and (ii) use commercially reasonable efforts to cure any and all other defaults
known by Seller to be outstanding as of the Closing Date with respect to the
Assigned Contracts.
6.7 AUDIT OF OPERATIONS AT BUSINESS AREA. By the time of signing of
this agreement, Seller will have supplied Purchaser with consolidated financial
statements of Seller as of December 31, 1996, that have been reviewed but not
audited by KPMG Peat Marwick or Xxxxxx & Xxxxxx, audited consolidated financial
statements of Seller as of December 31, 1997, with an unqualified "clean"
opinion thereon for the year ended December 31, 1997, from KPMG Peat Marwick,
and/or Xxxxxx & Xxxxxx (the "Audited Statements"), and unaudited monthly
financial statements of Seller for each month after January 1, 1998, until
closing (collectively, the "Pre-Closing Financial Statements"). Such audited
annual and unaudited monthly financial statements shall fairly present the
financial position and results of operations of Seller for the periods
indicated subject, in the case of the unaudited statements, to the effect of
year-end adjustments. Seller will use its commercially reasonable best efforts
to cause its employees and Xxx Xxxxxx to cooperate, assist and make available
financial information within their possession needed by auditors to complete
audited consolidated financial statements for the years ended December 31, 1996
and December 31, 1998 with an unqualified "clean" opinion. The Pre-Closing
Financial Statements must demonstrate no material adverse change in the
business mix, operations, results of operation or financial condition of Seller
as was reflected in the audited financial statements of Seller for the fiscal
year ending December 31, 1997.
ARTICLE VII
CERTAIN COVENANTS OF PURCHASER
7.1 CONDUCT OF BUSINESS BEFORE THE CLOSING DATE. Purchaser shall not
make any material change in the operation of its business, save and except
acquisitions presently contemplated, and other than (a) sales of Inventory in
the ordinary course of business, or (b) other transactions in the ordinary
course of business, in either case substantially consistent with Purchaser's
past practices or as otherwise contemplated by this Agreement, including
maintenance and preservation, in a manner consistent with Purchaser's past
practices of the property, business and goodwill of customers, suppliers and
vendors.
7.2 REASONABLE EFFORTS. Upon the terms and subject to the conditions
of this Agreement, Purchaser will use commercially reasonable efforts to take,
or cause to be taken, all action, and to do, or cause to be done, all things
necessary or proper consistent with applicable law to consummate and make
effective in the most expeditious manner practicable the transactions
contemplated hereby.
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7.3 PERFORMANCE UNDER ASSIGNED CONTRACTS. Purchaser agrees that from
and after the Closing Date it shall (i) assume all obligations and liabilities
under the Assigned Contracts which relate to periods, events or circumstances
after the Closing Date, (ii) take all actions necessary to satisfy its
obligations under the terms and conditions of each of the Assigned Contracts
and (iii) indemnify and hold harmless Seller for any damages arising out of a
breach of this covenant.
7.4 PURCHASER FINANCING. Purchaser shall, from the date of this
Agreement until and including the Closing Date, maintain the availability of
funds pursuant to the Committed Financing set forth on Schedule G, and, in the
event that such financing becomes unavailable, shall (i) obtain alternative
Committed Financing and (ii) in the event that Purchaser is unable to obtain
such alternative Committed Financing, accept such alternative financing as may
be arranged by Seller, provided that such Seller arranged financing is on terms
no less favorable to Purchaser than the Committed Financing set forth on
Schedule G (it being understood that Seller shall be under no obligation to
obtain alternative financing for Purchaser).
7.5 BOARD MEMBERSHIP. Purchaser shall use its commercially reasonable
best efforts (i) to cause its Board of Directors to amend Purchaser's Bylaws to
increase the number of members of the Board of Directors by one member and
cause Xxx Xxxxxx to be elected, effective as of the Closing Date, to fill the
vacancy created by such expansion of the Board and (ii) to cause Xxxxxxx X.
Xxxxxx to execute a Voting Agreement, in form and substance reasonably
satisfactory to Purchaser and Seller, with respect to the restructure of the
Board of Directors to provide for four independent directors and three employee
directors.
7.6 INFORMATION AND ACCESS. For a period of five (5) years after the
Closing Date, Purchaser shall retain, and Seller and its representatives and
successors shall have reasonable access (including the right to make copies),
during normal business hours, to all of the books and records purchased by
Purchaser hereunder as part of the Purchased Assets, to the extent that such
access may reasonably be required by Seller, its representatives and successors
in connection with matters relating to or affected by the operation of the
Purchased Assets or the Business prior to the Closing. After such five (5) year
period, all such records may be destroyed, except those books or records which
Seller specifically requests be retained by Purchaser, provided, however, that
cost of storing (or delivering to Seller) such retained books or records shall
be borne by Seller.
ARTICLE VIII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions contemplated
hereby are subject to the fulfillment on or prior to the Closing Date of each
of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Purchaser contained in this Agreement shall be true on and as of the Closing
Date in all material respects as though such representations and warranties
were made on and as of the Closing Date.
8.2 COMPLIANCE WITH AGREEMENT. Purchaser shall have performed and
complied in all material respects (and in all respects in the case of Article
II hereof) with all covenants and conditions to be performed or complied with
by it on or prior to the Closing Date.
8.3 AVAILABILITY OF PURCHASER FINANCING. The Committed Financing set
forth on Schedule G or alternate financing sufficient to consummate the
transactions contemplated hereby shall be available to Purchaser on the Closing
Date.
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8.4 NO ADVERSE PROCEEDING. As of the Closing Date, there shall not
have been instituted or be pending or threatened any suit, action or other
proceeding by any Governmental Agency or any other Person in which it is sought
to restrain or prohibit the transactions contemplated by this Agreement.
8.5 ANCILLARY AGREEMENTS. Purchaser and Xxxxxxx X. Xxxxxx shall have
executed and delivered to Seller each of the Ancillary Agreements to which it
or he is a party.
8.6 ELECTION AS OFFICER AND DIRECTOR. Xxx Xxxxxx shall have been duly
elected as a member of the Board of Directors and as President of Purchaser
effective as of the Closing Date.
8.7 XXXXXX STOCK PRICE. The average closing sales price for the common
stock of Purchaser, as reported on the Nasdaq National Market System, for the
ten (10) trading days ending on the day preceding the Closing Date, shall not
be less than $2.00.
8.8 SHAREHOLDER LOANS. The loans to Seller from its shareholders shall
have been repaid in full.
8.9 RELEASE. Xxx Xxxxxx shall have been released (and shall have been
furnished with appropriate documentation evidencing such release) from any
personal liability on or guarantees of any of the Leases or other Assigned
Contracts. In the event that one or more of such releases cannot be obtained,
Purchaser may offer, and Xxx Xxxxxx, in his sole discretion may accept, an
indemnification agreement with respect to any liability related to such
guarantees or other personal liability.
ARTICLE IX
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to consummate the transactions
contemplated hereby are subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller contained in this Agreement shall be true on and as of the Closing
Date in all material respects as though such representations and warranties
were made on and as of the Closing Date.
9.2 COMPLIANCE WITH AGREEMENT. Seller shall have performed and
complied in all material respects with all covenants and conditions to be
performed or complied with by it on or prior to the Closing Date.
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9.3 NO ADVERSE PROCEEDING. As of the Closing Date, there shall not
have been instituted or be pending or threatened any suit, action or other
proceeding by any Governmental Agency or any other Person in which it is sought
to restrain or prohibit the transactions contemplated by this Agreement.
9.4 ANCILLARY AGREEMENTS. Seller and Xxx Xxxxxx shall have executed
and delivered to Purchaser each of the Ancillary Agreements to which Seller or
Xx. Xxxxxx is a party. Each of the Non-Competition covenants shall have been
executed and delivered to Purchaser.
ARTICLE X
CLOSING
10.1 THE CLOSING. The Closing of the purchase and sale of the
Purchased Assets (the "Closing") shall be held no later than March 15, 1999
(the "Closing Date"). The Closing shall be held in Houston, Texas. At the
Closing, all of the transactions provided for in Article II hereof shall be
consummated on a substantially concurrent basis.
10.2 SELLER'S DELIVERIES AND OBLIGATIONS AT CLOSING. At the Closing,
Seller shall deliver (or cause to be delivered) to Purchaser the following (in
form and substance reasonably satisfactory to counsel for Purchaser):
I. a duly executed Assignment and Assumption
Agreement assigning to Purchaser the rights, title, interest, and
obligations in, under, and to each of the Other Contracts being
assigned to Purchaser;
II. a duly executed Xxxx of Sale and Assumption
Agreement and such other documents or instruments of transfer necessary
to vest in Purchaser full and complete title to the Purchased Inventory
and Fixed Assets, free and clear of all liens, pledges, security
interests, and encumbrances other than those listed on Schedule F, on
the Closing Date;
III. OMITTED;
IV. The Registration Rights and Lock-Up Agreement
duly executed by Seller;
V. The Employment Agreement and the Stock Option
Agreement (which shall provide for the grant to Xxx Xxxxxx of an option
to purchase 300,000 shares of Purchaser's common stock) duly executed
by Xxx Xxxxxx;
VI. The Non-Competition Covenants duly executed by
each of Xxxxxxx Xxxxxx, Xxxx Xxxxxx and Xxxxx Xxxxxx;
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VII. certified resolutions of the directors of Seller
approving and authorizing the transactions contemplated by this
Agreement;
VIII. a certificate, executed by a duly authorized
officer of Seller, to the effect that all conditions to closing set
forth in Section 8.1 and Section 8.2 have been satisfied; and
IX. such other instruments, documents, and
considerations which may be reasonably required by Purchaser or
Purchaser's counsel to effectuate the transaction contemplated by this
Agreement.
10.3 PURCHASER'S DELIVERIES AND OBLIGATIONS AT CLOSING. At the
Closing, Purchaser shall deliver (or cause to be delivered) to Seller the
following (in form and substance reasonably satisfactory to counsel for
Seller):
I. payment of the Purchase Price and other amounts in
accordance with the terms and conditions set forth in Section 2.3 and
other applicable provisions of this Agreement;
II. a duly executed certificate registered in the
name of Seller, evidencing the Xxxxxx Shares in a form reasonably
satisfactory to Seller's counsel;
III. a duly executed Assignment and Assumption of
Leases, accepting the assignment of the rights, title, interest, and
assuming the obligations in , under and to each of the Other contracts
being assigned to Purchaser;
IV. OMITTED;
V. the Registration Rights and Lock-Up Agreement duly
executed by Purchaser;
VI. the Employment Agreement and Stock Option
Agreement duly executed by Purchaser;
VII. the Voting Agreement duly executed by Xxxxxxx X.
Xxxxxx;
VIII. certified resolutions of the directors of
Purchaser approving and authorizing the transactions contemplated by
this Agreement;
IX. a certificate, executed by a duly authorized
officer of Purchaser, to the effect that all the conditions to Closing
set forth in Section 9.1 and 9.2 have been satisfied;
X. such other instruments, documents, and
considerations which may be reasonably required by Buyer or Buyer's
counsel to effectuate the transaction contemplated by this Agreement.
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10.4 TERMINATION. Anything in this Agreement to the contrary
notwithstanding, this Agreement and the transactions contemplated hereby may be
terminated in any of the following ways at any time before the Closing and in
no other manner:
I. by mutual written consent of Purchaser and Seller;
II. by either Purchaser or Seller if the Closing
shall not have occurred by March 15, 1999;
III. by Seller if Purchaser is in breach in any
material respect of any of its representations made in this Agreement,
or is in violation or default of any of its covenants or agreements in
this Agreement if the breach or default is not cured within five (5)
days after written notice by Seller; or
IV. by Purchaser, if Seller is in breach in any
material respect of any of its representations made in this Agreement
or is in violation or default of any of its covenants or agreements in
this Agreement which breach or default is not cured within five (5)
days after written notice by Purchaser.
Any termination of this Agreement under clause (I)
or (II) of this Section 10.4 shall be without any further liability or
obligation on the part of either Seller or Purchaser. Any termination
of this Agreement under clauses (III) or (IV) of this Section 10.4
shall be without prejudice to any rights or causes of actions the
terminating party may have against the other party.
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ARTICLE XI
EMPLOYEE MATTERS
11.1 EMPLOYMENT OF SELLER'S EMPLOYEES.
(a) Effective as of the Closing Date, Purchaser shall offer employment
to all employees of Seller at wage or salary levels, as applicable, no less
than the wage or salary levels of each such person in effect at the Closing
Date. Those employees who accept such offers of employment effective as of the
Closing Date shall be referred to herein as the "Transferred Employees".
Purchaser acknowledges and agrees that solely for purposes of the Worker
Adjustment and Retraining Notification Act (the "WARN Act"), any person who is
an employee of Seller (other than other part-time employees as defined under
the WARN Act) as of the Closing Date shall be deemed an employee of Purchaser
for purposes of the WARN Act on the Closing Date. With respect to such "deemed"
employees, Purchaser further agrees and acknowledges that Purchaser will be
responsible for all applicable notices and liabilities under the WARN Act or
any of Seller's employee benefit plans or arrangements resulting from the
termination of any such employees on and after the Closing Date. In addition,
effective as of Closing Date, Purchaser shall adopt, and agree to pay and
perform all obligations under the employee benefit plans and arrangements of
Seller in effect as of the Closing Date; provided, however, that Purchaser may
substitute for such employee benefit plans and arrangements any employee
benefit plans or arrangements of Purchaser equal or superior to those of
Seller. Purchaser agrees to recognize the Transferred Employees service with
Seller for purposes of eligibility to participate and vesting of benefits in
any employee benefit plans or arrangements of Purchaser.
11.2 ACCRUED VACATION. As of the Closing Date, Purchaser shall assume
all of Seller's obligations with respect to accrued but unpaid vacation for
Seller's employees. Schedule O sets forth the accrued but unpaid vacation for
Seller's employees as of March 1, 1999.
11.3 EMPLOYMENT TAXES.
(a) Seller and Purchaser each will (i) treat Purchaser as a "successor
employer" and Seller as a "predecessor," within the meaning of Sections
3121(a)(1) and 3306(b)(1) of the Internal Revenue Code of 1986, as amended
("Code") with respect to Transferred Employees who are employed by the
Purchaser for purposes of taxes imposed under the United States Federal
Unemployment Act ("FUTA") or the United States Federal Insurance Contributions
Act ("FICA") and (ii) cooperate with each other to avoid, to the extent
possible, the filing of more than one IRS Form W-2 with respect to each such
Transferred Employee for the calendar year within which the Closing Date
occurs.
(b) At the request of Purchaser with respect to any particular
applicable tax law relating to employment, unemployment insurance, Social
Security, disability, workers' compensation, payroll, health care or other
similar tax other than taxes imposed under FICA and FUTA, Seller and Purchaser
will each (i) treat Purchaser as a successor employer and Seller as a
predecessor employer, within the meaning of the relevant provisions of such tax
law, with respect to Transferred Employees who are employed by Purchaser, to
the extent permitted by applicable state and local laws and (ii)
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cooperate with each other to avoid, to the extent possible, the filing of more
than one individual information reporting form pursuant to each such tax law
with respect to each such Transferred Employee for the calendar year within
which the Closing Date occurs.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given (a) when delivered personally to
the recipient, (b) one (1) Business Day after the date when sent to the
recipient by reputable express courier service (charges prepaid) or (d) seven
(7) Business Days after the date when mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications will be sent to the Seller and to Purchaser at
the addresses indicated below:
If to Purchaser: Xxxxxx Automotive Group, Inc.
0000 X. XxxXxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No. 000-000-0000
With a copy Xxxxxxx Xxxxx, Esq.
(which shall not 0000 Xxxxx Xxxxxx
constitute notice) to: Xxxxxxxxxx, Xxxxxxxxx 00000
Facsimile No. 000-000-0000
With a copy Xxxxx X. Xxxxxx, Esq.
(which shall not Xxxxxxx & Xxxxxx, L.L.C.
constitute notice) to: 0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile No. 000-000-0000
If to Seller: U. S. Parts Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxx
Facsimile No. 000-000-0000
With a copy Xxxxx X. Xxxxxx, Esq.
(which shall not Mayor, Day, Xxxxxxxx & Xxxxxx, LLP
constitute notice) to: 000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
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or to such other address as any party hereto may, from time to time, designate
in writing delivered pursuant to the terms of this Section.
12.2 AMENDMENTS. The terms, provisions and conditions of this Agreement
may not be changed, modified or amended in any manner except by an instrument
in writing duly executed by each of the parties hereto.
12.3 ASSIGNMENT. This Agreement is binding upon and inures to the
benefit of the successors and assigns of each party to this Agreement, but no
rights, obligations or liabilities under this Agreement may be assigned by any
party without the prior written consent of the other parties hereto.
12.4 ANNOUNCEMENTS. All press releases, notices to customers and
suppliers and other announcements prior to the Closing Date with respect to
this Agreement and the transactions contemplated by this Agreement shall be
approved by both Purchaser and Seller prior to the issuance thereof; provided
that any party may make any public disclosure it believes in good faith is
required by law or regulation (in which case the disclosing party shall advise
the other party (which shall be Seller in the case of disclosure proposed to be
made by Purchaser and Purchaser in the case of disclosure proposed to be made
by Seller) prior to making such disclosure and provide such other party an
opportunity to review the proposed disclosure).
12.5 EXPENSES. Except as otherwise set forth in this Agreement, each
party to this Agreement shall bear all of its legal, accounting, investment
banking and other expenses incurred by it or on its behalf in connection with
the transactions contemplated by this Agreement, whether or not such
transactions are consummated.
12.6 ENTIRE AGREEMENT. Other than the obligations set forth in the
Confidentiality Agreements entered in contemplation of this Agreement, this
Agreement and the Ancillary Agreements constitute the entire agreement between
the parties hereto with respect to the subject matter hereof and supersede and
are in full substitution for any and all prior agreements and understandings
between them relating to such subject matter. The Schedules to this Agreement
are hereby incorporated and made a part hereof and are an integral part of this
Agreement.
12.7 DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
12.8 COUNTERPARTS. For the convenience of the parties, any number of
counterparts of this Agreement may be executed by any one or more parties
hereto, and each such executed counterpart shall be, and shall be deemed to be,
an original, but all of which shall constitute, and shall be deemed to
constitute, in the aggregate but one and the same instrument.
12.9 GOVERNING LAW; JURISDICTION. This Agreement shall be construed,
performed and enforced in accordance with, and governed by, the laws of the
State of Texas, without giving effect to the conflict of laws principles
thereof.
12.10 CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will
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be applied against any party. Any references to any federal, state, local or
foreign statute or law will also refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. Unless the context otherwise
requires: (a) a term has the meaning assigned to it by this Agreement; (b) an
accounting term not otherwise defined has the meaning assigned to by GAAP; (c)
the word "or" is not exclusive; (d) the words "include", "includes" and
"including" shall be deemed to be followed by the words "without limitation";
(e) words in the singular include the plural and in the plural include the
singular; (f) provisions apply to successive events and transactions; and (g)
"$" means the currency of the United States of America.
12.11 SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument. Furthermore, in lieu of any such
invalid or unenforceable term or provision, the parties hereto intend that
there shall be added as a part of this Agreement a provision as similar in
terms to such invalid or unenforceable provision as may be possible and be
valid and enforceable.
12.12 CONFIDENTIALITY. Seller and Purchaser agree to keep, and to cause
each of their affiliates, directors, officers, and employees to keep,
confidential any and all confidential information of the other party that
either receives in the course of performing its obligations hereunder (except
that such information may be shared, on a confidential basis, with the party's
attorneys and auditors) and will not, without the other party's written
consent, use any of such confidential information except as reasonably
necessary to perform its duties under this or another of its agreements with
the other party. Upon termination of this Agreement, each party will return,
and will cause its affiliates to return, to the other party, all original
documents and copies of the confidential information which are in its
possession.
12.13 KNOWLEDGE. Reference to the "knowledge" of a party to this
Agreement or to matters "known" by a party to this Agreement shall mean or
refer to the actual knowledge of the president or any other executive officer
of such party.
12.14 SCHEDULES. Each of Purchaser and Seller shall use its reasonable
best efforts to complete, correct or supplement and deliver to the other as soon
as reasonably practicable the schedules to this Agreement that are to be
prepared by such party. Upon agreement by Purchaser and Seller to the form and
content of such schedules, they shall be substituted for the schedules attached
hereto and become a part hereof. In the event all of the schedules hereto have
not been agreed to and attached by March 5, 1999, this Agreement shall
automatically be null and void and have no further force or effect.
IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered
this Agreement as of the day and year first written above.
SELLER:
U. S. PARTS CORPORATION
BY:
XXX XXXXXX,
PRESIDENT AND CEO
PURCHASER:
XXXXXX AUTOMOTIVE GROUP, INC.
BY:
XXXXXXX X. XXXXXX,
PRESIDENT AND CEO
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