EXHIBIT 2.1
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AGREEMENT OF PURCHASE AND SALE
This Agreement of Purchase and Sale ("AGREEMENT") is entered into this 30th day
of December, 2004, by and among Vehicle Recycling Solutions, LLC, a Delaware
limited liability company ("VRS"), each of the Business Sellers and Property
Owners (each as defined below), and Pick-N-Pull Auto Dismantlers, a California
general partnership ("PNP"). PNP, on the one hand, and the Sellers (defined
below), on the other hand, are each referred to herein as a "PARTY" and together
as the "PARTIES."
BACKGROUND AND PURPOSE
A. VRS, through its 100% wholly owned subsidiaries, operates self-service
automobile dismantling and recycling facilities located in St. Louis,
Missouri, Kansas City, Missouri, Columbus, Ohio and Virginia Beach,
Virginia (collectively, the "BUSINESS(ES)").
B. The Business in St. Louis, Missouri is (i) owned and operated by
U-Wrench-It Auto Parts of St. Louis, LLC, a Delaware limited liability
company, of which VRS is the sole member ("UWI-STL"), and (ii)
conducted on real property owned by U-Wrench-It St. Louis Properties,
LLC, a Delaware limited liability company, of which VRS is the Sole
member ("UWI-STL PROPERTIES").
C. The Business in Kansas City, Missouri is (i) owned and operated by
U-Wrench-It Auto Parts of Kansas City, LLC, a Delaware limited
liability company, of which VRS is the sole member ("UWI-KC"), and
(ii) conducted on real property owned by U-Wrench-It Kansas City
Properties, LLC, a Delaware limited liability company, of which VRS is
the Sole member ("UWI-KC PROPERTIES").
D. The Business in Virginia Beach, Virginia is (i) owned and operated by
U-Wrench-It Auto Parts of Virginia Beach, LLC, a Delaware limited
liability company, of which VRS is the sole member ("UWI-VAB"), and
(ii) conducted on real property owned by U-Wrench-It Virginia Beach
Properties, LLC, a Delaware limited liability company, of which VRS is
the Sole member- ("UWI-VAB PROPERTIES").
E. The Business in Columbus, Ohio is (i) owned and operated by
U-Wrench-It Auto Parts of Columbus, LLC, a Delaware limited liability
company, of which VRS is the sole member ("UWI-COL"), and (ii)
conducted on real property leased to U-Wrench-It Columbus Properties,
LLC, a Delaware limited liability company, of which VRS is the Sole
member ("UWI-COL PROPERTIES") from CRC Ohio Management LLC (the
"Leased Facility").
F. Each of UWI-STL Properties, UW-KC Properties, UWI-VAB Properties and
UWI-COL Properties are referred to herein collectively as the
"PROPERTY OWNERS." Each of UWI-STL, UW-KC, UWI-VAB and UWI-COL are
referred to herein collectively as the "BUSINESS SELLERS." VRS, the
Business Sellers and the Property Owners are referred to herein
collectively as the "SELLER" or "SELLERS."
G. Buyer desires to purchase and/or lease, or cause one of its newly
formed subsidiary limited liability companies (each a "BUSINESS
BUYER") to purchase and/or lease, from the
Business Sellers and the Property Owners and the Business Sellers and
the Property Owners desire to sell and/or lease to the Business
Buyers, certain of the Business Sellers' and Property Owners' assets,
properties and rights related to the Businesses upon the terms and
subject to conditions of this Agreement. PNP and the Business Buyers
are referred to herein collectively as the "BUYER."
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants, representations, warranties, conditions, and agreements contained
herein and in the related agreements, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the Parties agree as follows:
1. PURCHASE AND SALE OF THE BUSINESS.
1.1 ASSETS TO BE TRANSFERRED. At the Closing (defined below) on the
Closing Date (defined below) and effective as of the Effective Time (defined
below), VRS shall and shall cause the Business Sellers to sell, assign, transfer
and convey to Buyer and the Business Buyers, and Buyer and the Business Buyers
shall purchase, acquire and accept from VRS and the Business Sellers, all of
Seller's and the Business Sellers' right, title and interest in, to and under
all the assets, properties and rights, real, personal or mixed, tangible or
intangible, wherever located, which are owned or held by VRS and the Business
Sellers in connection with the Businesses as of the Effective Time (the
"ASSETS"), including without limitation all assets, properties and rights owned
or held by VRS and the Business Sellers and described in the following clauses
(a) through (k):
(a) The inventory of automobiles and automobile parts located at
each of the Facilities (defined below) (collectively, "INVENTORY"). The
Inventory is sold in "as is" condition;
(b) The equipment, vehicles, machinery and fixtures used in the
operation of the Businesses and more particularly described in EXHIBIT A
(collectively, "EQUIPMENT");
(c) The goodwill of the Businesses (the "GOODWILL"), including,
without limitation, the full benefit of all trade contracts, commitments and
agreements, whether verbal or written to which VRS and the Business Sellers may
be entitled in respect of the Businesses;
(d) All licenses, registrations, permits and qualifications of
the Businesses required by any governmental or regulatory authority, to the
extent transferable;
(e) All trade secrets, research data, designs, proprietary
know-how, technical information, specifications and materials in whatever form
used in or relating to the Businesses and all rights and interests in and to the
Intellectual Property (defined below), including all goodwill associated
therewith;
(f) All right, title and interest of the Seller and the Business
Sellers in computer software and documentation therefor used in the Businesses,
including all electronic data, processing systems, source codes, program
specifications, input data, report layouts and formats, operating and training
manuals, and all revisions, enhancements and modifications thereto, in whatever
form and media;
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(g) All books, records, files and documents relating to the
Businesses, including without limitation, books of account, ledgers, journals,
sales and purchase records, lists of suppliers, cost and pricing information,
business reports, plans and projections and all other correspondence, data and
information, financial or otherwise in any format and media whatsoever; the full
benefit of all maintenance contracts, warranties and warranty rights (express or
implied) which may apply to any of the Assets;
(h) The full benefit of any other rights or privileges belonging
to VRS and the Business Sellers related to the Businesses, together with the
exclusive right of Buyer and the Business Buyers to each represent itself as
carrying on the Businesses in continuation of and in succession to VRS and the
Business Sellers, including use of the existing telephone numbers and, subject
to the License Agreement, the exclusive right to use any words indicating that
the Businesses are so carried on, including the right to use the Trademark
(defined below) in connection with the Businesses to be carried on by Buyer and
the Business Buyers;
(i) The existing leases with Banc of America Leasing & Capital,
LLC ("B of A Leasing") for the forklifts and car crushers described on EXHIBIT B
(collectively, the "ELKO LEASES"), including the right to exercise the buy-out
option, for the amount described on EXHIBIT B, under the Elko Leases financed
through Bank of America, N.A. and B of A Leasing. Notwithstanding anything else
contained herein, the Parties acknowledge that the Buyer shall exercise the
buy-out option contained in the Elko Leases by paying directly to B of A Leasing
an amount representing the entire outstanding amount owed to B of A Leasing
under the Elko Leases, and Bank of America N.A. or B of A Leasing, as
applicable, shall release the Seller from any obligation under the Elko Leases;
(j) $60,000 in ▇▇▇▇▇ cash, at least $8,000 of which shall be in
the cash drawers at each of the four Facilities (defined below) on the Closing
Date; and
(k) Any warranties and guaranties relating to the Equipment or
the Facilities and all files, books and records in the possession of Seller, any
Business Seller, any Property Owner or any of its affiliates or agents, relating
to or reasonably required for the post-closing operation of the Business.
1.2 THE LEASES.
(a) At the Closing, VRS shall and shall cause each of UWI-STL
Properties, UWI-KC Properties and UWI-VAB Properties, and subject to SECTION
1.2(B) below UWI-COL, to enter into a lease with Buyer or a Business Buyer for
the real property owned or leased by such Property Owner and used in connection
with the Businesses (collectively, the "LEASES" and individually, a "LEASE"),
including all buildings, improvements, water rights, air rights, mineral rights,
privileges, hereditaments and all appurtenances attached thereto and all
fixtures located thereon, including the right to any easements or rights-of-way
adjacent to the real estate (collectively, the "FACILITIES" and individually, a
"FACILITY"), in the form attached hereto as and more particularly described in
EXHIBIT C.
(b) At the Closing, in the event that UWI-COL shall not have
completed the purchase of the Leased Facility from CRC Ohio, Management LLC,
Seller shall and shall
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cause UWI-COL Properties to enter into a sublease with Buyer or a Business Buyer
for the Leased Facility (the "SUBLEASE"), including all buildings, improvements,
water rights, air rights, mineral rights, privileges, hereditaments and all
appurtenances attached thereto and all fixtures located thereon, including the
right to any easements or rights-of-way adjacent to the real estate (the Leased
Facility referred to herein collectively with the Facilities of the other
Property Owners as the "FACILITIES" and individually as a "FACILITY"), in the
form attached hereto as and more particularly described in EXHIBIT C.
(c) VRS shall cause UWI-COL Properties to purchase the Leased
Facility within 2 years of the Closing. In the event UWI-COL fails to complete
such purchase by such date, then the rent due under the Sublease at that time
and thereafter shall be reduced by 20% until such purchase is completed as set
forth in the Sublease for such Facility.
1.3 NON-COMPETE AND NON-SOLICITATION. In addition, at the Closing
Buyer, VRS and each of VRS' members (collectively, the "DESIGNATED INDIVIDUALS")
shall enter into non-compete and non-solicitation agreements in the form of
EXHIBIT D (the "SELLER NON-COMPETE AGREEMENT").
1.4 EXCLUDED ASSETS AND LIABILITIES.
(a) Buyer shall not purchase any of the assets or liabilities of
VRS or the Business Sellers' other than the Assets. Notwithstanding any
provision in this Agreement to the contrary, the following assets are excluded
from the Assets and shall remain the property of VRS, the Business Sellers and
the Property Owners after the Closing: (i) all cash in excess of $60,000 of
▇▇▇▇▇ cash, (ii) accounts receivable, (iii) fee simple title to any real estate,
(iv) 2 automobiles used by employees, a 1998 Buick Park Avenue, VIN:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ and a 2004 GMC Pickup TK25753 VIN: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, (v)
loader leases with B of A Leasing under lease schedule ▇▇▇▇▇-▇▇▇▇▇-▇▇▇ (which is
incorrectly referenced by B of A Leasing in their account records as Customer
Unit ID 307600303, Unit Number 2773796), lease schedule ▇▇▇▇▇-▇▇▇▇▇-▇▇▇ (which
is incorrectly referenced by B of A Leasing in their account records as Customer
Unit ID 307600304, Unit Number 2774182) and lease schedule ▇▇▇▇▇-▇▇▇▇▇-▇▇▇
(which is incorrectly referenced by B of A Leasing in their account records as
Customer Unit ID 307600305, Unit Number 2774546), (vi) any security deposits,
which shall be forwarded to Seller by Buyer within 30 days of receipt of same by
Buyer; (vii) the Volvo L90C articulating frame front end loader, serial # 62295,
and (viii) the SD-80 PDS-2 Rough Terrain ▇▇▇▇▇▇▇ Fork Lift at the Virginia Beach
Facility, which Buyer agrees to purchase from Seller within four days following
Closing for a purchase price of $51,324.00, subject to reasonable inspection and
provided such equipment is in good working order.
(b) Buyer shall not assume or in any way be liable for the
payment, performance and discharge of any liabilities or obligations of VRS, the
Business Sellers or the Property Owners whatsoever, whether liquidated or
unliquidated, known or unknown, contingent or otherwise, related to the
Businesses, the employees of the Businesses, the Assets, the Facilities or
operations conducted thereat, except as specifically provided in EXHIBIT E. No
other statement in or provision of this Agreement and no other statement,
written or oral, action or failure to act includes or constitutes any such
assumption or agreement, and any statement to the contrary by any person is
unauthorized and hereby disclaimed.
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2. PURCHASE PRICE; PAYMENT.
2.1 PURCHASE PRICE. The purchase price that Buyer shall pay to VRS and
the Business Sellers for the Assets and the Seller Non-Compete Agreement shall
be $18,500,000 (the "PURCHASE PRICE"). The parties agree that the Purchase Price
shall be allocated for tax purposes as set out in EXHIBIT F and each party shall
file their respective tax returns in accordance with such allocation.
2.2 PAYMENT. On the Closing Date, Buyer shall deliver, by wire
transfer of immediately-available funds:
(a) The Purchase Price to VRS, less the Holdback Amount (defined
below) and less any portion of the Purchase Price delivered by Buyer directly to
Seller's lenders in order to release such lenders' liens on the Assets, the debt
with respect to the ▇▇▇▇▇▇▇ Fork Lift to be purchased by Buyer following closing
and described in SECTION 1.4(A)(VIII), and the debt secured by the Facilities to
be leased to Buyer and the debt related to the four Hydrostatic loaders
described in SECTION 1.4(A)(V) (the "PAY-OFF AMOUNT");
(b) The Holdback Amount to the Escrowee (defined below) in
accordance with SECTION 3.2 below; and
(c) The Pay-off Amount to Sellers' lenders on behalf of and for
the benefit of VRS.
3. CLOSING AND ESCROW.
3.1 CLOSING. The consummation of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at 9:00 a.m. at the offices of ▇▇▇▇▇
▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ on
January 10, 2005, or such other date as the Parties may mutually agree in
writing (the "CLOSING DATE"), effective as of 12:01 a.m. on the Closing Date
(the "EFFECTIVE TIME"). Should this transaction fail to close on or before the
Closing Date for any reason whatsoever, the Parties at their option by mutual
agreement may extend the date for the Closing, subject to the other terms of
this Agreement, for a reasonable amount of time to permit Buyer or Sellers to
perform or complete any condition or obligation necessary for the Closing, in
which event such extended date shall be deemed the Closing Date. In the event
the Closing Date determined herein falls on a Saturday, Sunday or other day that
is a U.S. legal holiday, the Closing Date shall be the next immediately
following normal business day.
3.2 ESCROW. For the purposes of dealing with the Holdback Amount the
Parties shall execute and deliver the Escrow Agreement attached hereto as
EXHIBIT G (the "ESCROW AGREEMENT") establishing an escrow ("ESCROW") with
Commerce Bank, N.A. (the "ESCROWEE"), on or before the Closing Date.
3.3 CLOSING COSTS. Except as otherwise specifically provided herein,
certain costs and expenses shall be born by each of the Parties as set for the
on EXHIBIT H attached hereto. Each Party shall pay its own legal and accounting
fees and expenses. Sellers and Buyer shall each pay one-half (1/2) of any fees
to the Escrowee. All costs associated with the transfer
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of Assets hereunder shall be borne equally by the Parties, other than the
Intellectual Property. Buyer shall bear all costs associated with the transfer
of Intellectual Property.
3.4 DELIVERIES.
(a) BY SELLERS. VRS shall execute and deliver or cause the
appropriate Business Sellers and Property Owners to execute and deliver the
following to the Buyer on or before the Closing Date, all in form and substance
reasonably acceptable to Buyer:
(i) A ▇▇▇▇ of Sale for the Assets;
(ii) Assignments from Sellers of the contracts and the
intangibles to be transferred to Buyer hereunder (the "ASSIGNMENT AND ASSUMPTION
OF Contracts");
(iii) The Equipment Lease from Al-▇▇▇ pursuant to which
Seller will lease to Buyer four pieces of hydrostatic equipment described
therein, in the form of EXHIBIT I (the "EQUIPMENT LEASE");
(iv) The Seller Non-Compete Agreement, dated as of the
Closing Date and fully executed by Seller and the Designated Individuals;
(v) The Escrow Agreement;
(vi) The Leases and the Sublease, each in duplicate;
(vii) The IP License Agreement and Software License
Agreements (each as defined in SECTION 10);
(viii) A certified copy of the resolutions adopted by the
members of Seller and approving and authorizing VRS, the Business Sellers and
the Property Owners to enter into the transactions contemplated hereunder;
(ix) The written release of all Liens relating to the Assets
executed by the holder of or parties to each such Lien satisfactory in substance
and form to Buyer and its counsel; provided, however, that written evidence of
such Lien releases may be delivered after Closing so long as Buyer has received,
on or before Closing, a pay-off letter from the holder of each of such Liens
stating that the Liens will be released upon the payment of the related
indebtedness;
(x) An assignment from VRS of the Intellectual Property to
be transferred hereunder (the "IP ASSIGNMENT");
(xi) The certificate of Sellers certifying that the
conditions contained in SECTION 4.1(A) and SECTION 4.1(B) have been satisfied;
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(xii) Pay-off letters from Bank of America, N.A. and any
other lenders or evidence of payment of certain liabilities to Sellers,
including bank debt and other similar long term indebtedness to third parties;
(xiii) The transaction closing statement executed by Buyer
and Seller at Closing (the "CLOSING STATEMENT") describing all payments made at
Closing;
(xiv) In the event that Seller has not fully completed the
purchase of the Leased Facility prior to the Closing Date, a Consent, Estoppel
and Non-Disturbance Agreement from the Landlord of the Leased Facility, which
shall include consent for the sublease of such Facility from UWI-COL to Buyer,
in the form attached hereto as EXHIBIT J, and a tenant's affidavit acceptable to
the Buyer's title company so that such title company can issue leasehold title
insurance;
(xv) An owner's affidavit with respect to each of the
Virginia Beach, St. Louis and Kansas City Facilities, and a tenant's affidavit
in respect of the Leased Facility, in each case in the form attached as EXHIBIT
K; and
(xvi) Such further instruments and documents as Buyer may
reasonably require to assure the full and effective sale, transfer, conveyance,
assignment or delivery to it of the Assets and the performance of Sellers'
obligations hereunder.
(b) BY BUYER. Buyer shall execute and deliver the following to
VRS, the Business Sellers or the Property Owners, as appropriate, on or before
the Closing Date, all in form and substance reasonably acceptable to Seller:
(i) The Leases, each in duplicate;
(ii) The Sublease, in the event that Buyer has not completed
the purchase of the Leased Facility;
(iii) The Escrow Agreement;
(iv) The Seller Non-Compete Agreement;
(v) The IP License Agreement and Software License Agreement;
(vi) The Equipment Lease;
(vii) The Assignment and Assumption of Contracts;
(viii) A certified copy of the resolutions adopted by the
Board of Directors of each of the partners of Buyer approving and authorizing
Buyer to enter into the transactions contemplated hereunder;
(ix) The certificate of Buyer certifying that the conditions
contained in SECTION 4.2(A) and SECTION 4.2(B) have been satisfied;
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(x) The Closing Statement describing all payments made at
Closing; and
(xi) Such further instruments and documents as Seller may
reasonably require to assure the full and effective sale, transfer, conveyance,
assignment or delivery to it of the Assets and the performance of Buyer's
obligations hereunder.
(c) BOOKS AND RECORDS. On the Closing Date, Seller shall have the
originals or photocopies of all files, books and records in the possession of
Seller, any of the Business Sellers or Property Owners or any of its affiliates
or agents relating to the operation of the Businesses available for Buyer at any
of the Facilities. For a period of at least 90 days following the Closing Date,
Seller shall provide Buyer with reasonable access during normal business hours
to any books or records related to the Businesses pre-Closing which are located
at the Seller's administration offices in Ottumwa, Iowa, in order to confirm
that all such books and records are properly delivered to Buyer. From and after
the Closing, for a period to expire on the later of 7 years or until the
indemnification obligations of the Seller are fully satisfied, Buyer agrees to
preserve and provide Seller and its agents, attorneys and representatives
reasonable access during normal business hours to all files, books and records
delivered by Seller to Buyer, wherever located.
4. CONDITIONS TO CLOSING.
4.1 BUYER'S CONDITIONS TO CLOSING. Buyer's obligation to proceed with
the Closing is subject to the satisfaction or waiver by Buyer of each of the
conditions set forth below, which are for Buyer's benefit only:
(a) Sellers' representations and warranties set forth in this
Agreement shall be true and correct in all material respects, except for those
representations and warranties that are qualified as to materiality which shall
be true and correct in all respect, on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, except for
modifications to any representation or warranty, which may have been agreed to
in writing by Buyer.
(b) Sellers shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement and the
Leases to be performed or complied with by the Sellers on or prior to the
Closing Date.
(c) Seller shall have delivered or caused to be delivered to
Buyer the documents required of Sellers and the Designated Individuals pursuant
to SECTION 3.4(A) and complied with the requirements of SECTION 3.4(C).
(d) All consents and approvals from Governmental Bodies (defined
below) and third parties under contracts necessary to ensure that Buyer will
continue to have the same full rights with respect to the Assets as Seller had
immediately prior to the consummation of the transaction contemplated hereunder
shall have been obtained.
(e) Seller, as of the Closing Date, is in compliance with all of
its terms regarding delivery of the Facilities to Buyer.
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(f) During the Interim Period (defined below) there will have
been no changes in the Businesses, except changes which have occurred in the
ordinary course of a Business and which individually or in the aggregate, have
not affected and which would not reasonably be expected to affect the condition
of any of the Businesses in any material adverse respect. Without limiting the
generality of the foregoing:
(i) no damage to or destruction of any material part of the
Assets shall have occurred, whether or not covered by insurance;
(ii) Seller shall have at least 1,200 cars at each of the
St. Louis, MO and Virginia Beach, VA Facilities and at least 1,000 cars at each
of the Kansas City, MO and Columbus, OH Facilities and no material change in the
quality or age of the Inventory shall have occurred;
(iii) none of the automobile suppliers of any of the
Businesses that account for greater than 5% of any of the Businesses (by dollar
volume) shall have ceased or advised Seller or Buyer of its intention to cease
delivering or selling to the applicable Business; and
(iv) no directive, order, decision or ruling of any court,
tribunal or regulatory authority shall have been made, which would impose any
limitations or conditions which would have a material adverse effect on any of
the Businesses or which prohibits or prevents the consummation of the
transactions contemplated by this Agreement.
(g) Buyer has obtained any and all licenses, permits,
registrations, certificates and authorizations necessary to operate the
Businesses or the Facilities, including without limitation those set forth on
Schedule 11.1(t) hereto and a letter from the zoning authority for the city of
Columbus, Ohio confirming that the use of the UWI-COL Properties' Facilities as
a salvage yard is a legal non-conforming use; provided that Buyer has been
diligent in its efforts to obtain such items and except where the failure to
obtain such items would not reasonably be expected to have a material adverse
affect on the Business following the Closing Date.
4.2 SELLER'S CONDITIONS TO CLOSING. Seller's obligation to proceed
with the Closing is subject to the satisfaction or waiver by Seller of each of
the conditions set forth below, which are for Seller's benefit only:
(a) The representations and warranties of Buyer in this Agreement
shall be true and correct in all material respects, except for those
representations and warranties that are qualified as to materiality which shall
be true and correct in all respects, on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, except for
modifications to any representation or warranty, which may have been agreed to
in writing by Seller.
(b) Buyer shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to be
performed or complied with by Buyer on or prior to the Closing Date.
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(c) Buyer has obtained a letter from the zoning authority for the
city of Columbus, Ohio confirming that the use of the UWI-COL Properties'
Facilities as a salvage yard is a legal non-conforming use.
(d) Buyer shall have delivered (i) the amounts set forth in
SECTION 2.2 to the parties designated therein, (ii) the amounts set forth in
SECTION 1.1(I) to B of A Leasing, and (iii) the documents required of Buyer
pursuant to SECTION 3.4(B).
5. POSSESSION. Possession of the Facilities and the Assets shall be
delivered to Buyer on the Closing Date and the Leases shall commence on the
Closing Date. On the Closing Date, Seller shall deliver to Buyer keys to all
locks on the Facilities in the possession of Seller or Seller's agents or
employees.
6. RISK OF LOSS. The risk of loss to each Facility by fire, flood or other
casualty shall be borne by Seller up to the Effective Time. In the event of any
such loss or damage, if the estimated cost of repair or restoration is less than
Three Hundred Fifty Thousand Dollars ($350,000), Seller shall be allowed a
reasonable time, not to exceed sixty (60) days from the date of the event giving
rise to the loss or damage (the "OCCURRENCE"), to replace such loss or repair
such damage to Buyer's reasonable satisfaction (collectively, the "REPAIRS"). In
the event the estimated cost of Repairs exceeds Three Hundred Fifty Thousand
Dollars ($350,000), Seller shall have the option by giving notice to Buyer of
its election, not later than ten (10) days following receipt of notice of the
Occurrence, but not the obligation, to complete such Repairs within a reasonable
time, not to exceed ninety (90) days from the date of the Occurrence. If Seller
fails to deliver such notice, it shall be deemed to have elected to complete the
Repairs. In the event Seller fails to complete such Repairs within the
applicable time period, Buyer shall have the option to (i) terminate this
Agreement, whereupon the Parties shall have no further obligations under this
Agreement, except as otherwise expressly provided herein, or (ii) proceed with
the Closing in accordance with the terms of this Agreement, provided, however,
Seller shall assign any insurance proceeds received (or the right to receive
such proceeds) as a result of such loss or damage to Buyer at Closing. Buyer
shall give Seller written notice of its election within ten (10) days following
the applicable period for Seller to complete the Repairs. If Buyer fails to so
notify Seller, Buyer shall be deemed to have elected to terminate this
Agreement.
7. SALES TAX; BULK SALES NOTICES. Any sales tax and other taxes (other than
income taxes of the Seller) due as a result of the transactions contemplated by
this Agreement shall be shared equally by the Parties. The Buyer acknowledges
that the Business Sellers will not comply with the notice provisions of any bulk
sales transfer laws. The Sellers shall indemnify, defend and hold the Buyer
harmless from any liability arising from such non-compliance.
8. CONDUCT OF BUSINESS. From the date hereof until the Closing (the
"INTERIM PERIOD"), Seller shall maintain adequate resources and personnel
sufficient to conduct the Businesses and maintain the Assets and the Facilities
with prudence and diligence at least equal to the conduct of the Businesses and
maintenance of the Assets and the Facilities prior to the date hereof. Without
limiting the generality of the foregoing, Seller shall (i) at its own cost keep
all insurances coverages in full force and effect; (ii) at its own cost operate
and maintain the Facilities and all Equipment in their condition and repair on
the date hereof, ordinary wear and tear excepted, and (iii) not enter into any
transaction not in the ordinary course of business nor
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terminate, amend modify or extend any existing lease, agreement, or contract.
During the Interim Period, Seller shall cooperate with Buyer in order to insure
the uninterrupted operation of business during the transfer of the Businesses
and the Assets by Seller to Buyer. Seller shall take such actions as are
reasonable to effect an orderly transition of the Businesses to Buyer,
including, to make appropriate employees reasonably available to Buyer for
purposes of carrying out the provisions of this Agreement on Seller's behalf.
Seller shall use its best efforts to cooperate with Buyer to assist Buyer in
obtaining any necessary licenses, permits, registrations, certificates or
authorizations.
9. EMPLOYEES AND BENEFIT PLANS. Buyer shall have the right, at the Buyer's
sole option, to offer employment as of the Closing to current employees of
Seller (the employees that accept such offer of employment are referred to as
"TRANSFERRED EMPLOYEES"); provided, however, that nothing shall be construed to
limit or restrict Buyer's ability to terminate the employment of the Transferred
Employees following the Closing or to require Buyer to maintain the terms of
such employment, including any particular level of benefits. Seller shall be
responsible for all employment-related liabilities incurred or accrued prior to,
or as a result of the Closing, and for any employment-related liabilities
arising at the time of or after Closing, including without limitation, under the
Worker Adjustment and Retraining Notification Act of 1998 or similar applicable
state laws, and any liabilities in connection with all salaries, wages,
termination pay, wrongful dismissal claims, holiday pay, employment insurance
premiums, Workers' Compensation payments, income tax and applicable pension plan
deductions and other payments to be made to or on behalf of the employees or
otherwise, whether such claims are asserted before or after Closing, but
excluding any accrued vacation pay which shall be the responsibility of Buyer.
Buyer shall be responsible for employment related liabilities with respect to
the Transferred Employees, which accrue and are the results of events occurring
after the Closing. Buyer agrees to allow Seller to retain the full-time services
of ▇▇▇▇▇ ▇▇▇▇▇▇ for up to 30 days following Closing.
10. USAGE OF INTELLECTUAL PROPERTY AND LICENSES.
10.1 INTELLECTUAL PROPERTY LICENSE. The Assets purchased by Buyer
hereunder include (1) the registered trademark "U Wrench It", which shall be
referred to in this Agreement as the "TRADEMARK", (2) certain know-how and trade
secrets which shall be referred to as the "Know-How", and (3) certain software
(the "Software"), in each case as more particularly described in the IP License
Agreement (defined below). Certain members and affiliates of Seller, including
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and affiliates controlled by them shall each be
entitled to use the Trademark, Software, and the Know-How in accordance with and
subject to the terms and provisions of an Intellectual Property License
Agreement (the "IP LICENSE AGREEMENTS") in the form attached hereto as and more
particularly described in EXHIBIT L.
10.2 SOFTWARE AND KNOW-HOW LICENSE. Buyer shall permit J.H.K. Venture
Capital Limited Partnership and affiliates controlled by it to use the Software
and know-how in accordance with and subject to the terms and provisions of a
Software and Know-How License Agreement in the form attached hereto and as more
particularly described in EXHIBIT M, and will use commercially reasonable
efforts to provide Seller with any updates to such Software package, for so long
as Buyer continues the active use of such Software; provided, however that
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Buyer may discontinue its active use of such Software in its sole discretion at
any time. The Parties acknowledge that Buyer is not making any representation or
warranty regarding such Software or upgrades and Buyer will not provide any
"help line" support, installation or manuals.
11. REPRESENTATIONS AND WARRANTIES.
11.1 SELLERS' REPRESENTATIONS AND WARRANTIES. Sellers hereby make the
following representations and warranties, each of which is true and correct on
the date hereof and shall survive the Closing to the extent set forth herein:
(a) DUE ORGANIZATION, AUTHORITY AND QUALIFICATION. Each of
Seller, the Business Sellers and the Property Owners is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware and has all requisite power and lawful authority to own,
lease and operate its properties and to carry on its business, including the
Businesses.
(b) AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Each of Seller,
the Business Sellers and the Property Owners has the requisite power and
authority to enter into, execute and deliver this Agreement and each and/or
every agreement and instrument contemplated hereby to which the Sellers are or
will be a party, and to perform fully its obligations hereunder and thereunder.
This Agreement has been duly executed and delivered by Seller, and each and
every agreement and instrument contemplated by this Agreement to which Seller, a
Business Seller or a Property Owner is a party will be duly executed and
delivered by such Seller, Business Seller or Property Owner and (assuming due
execution and delivery by Buyer) this Agreement and each such other agreement
and instrument will be valid and binding obligations of such Seller, Business
Seller or Property Owner (and with respect to the Seller Non-Compete Agreement,
each Designated Individual), enforceable against such Seller, Business Seller or
Property Owner (and the Designated Individual, as applicable) in accordance with
their respective terms, except as such enforceability may be subject to (i) any
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at Law or in equity). Except as expressly set forth on Schedule
11.1(b), no Seller, Business Seller or Property Owner is a party to or bound by
any agreement in relation to the Businesses or any order, Law or requirement of
any Governmental Body which does or would (1) restrict or limit its right to
carry on any activities of the Businesses in the ordinary course of such
Businesses or to solicit business from any party, (2) or any such agreement or
any order, Law or requirement of any Governmental Body which does or would (i)
conflict with or be breached or violated or the obligations thereunder
accelerated or increased (whether or not with notice or lapse of time, or both)
by the execution, delivery or performance by such Seller, Business Seller or
Property Owner of this Agreement or (ii) prevent the carrying out of the
transactions contemplated hereby. The transactions contemplated hereby will not
result in the creation of any lien, security interest, financing statement,
mortgage, indenture, deed of trust, pledge, charge, adverse claim, easement,
restriction or other encumbrance (each individually a "LIEN") against such
Seller, Business Seller or Property Owner, the Facilities or the Assets.
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(c) COMPLIANCE WITH INSURANCE REQUIREMENTS. Each of the Sellers
has at all times since inception of its business maintained insurance as
required by Law or any contract to which it is or has been a party, including
without limitation general comprehensive liability, unemployment and workers'
compensation coverage. Schedule 11.1(c) sets forth the insurance maintained by
the Sellers, together with the amount of coverage for each policy. All of such
insurance policies are in full force and effect (with respect to the applicable
coverage periods), and none of the Sellers is in default with respect to any of
its obligations under any of such insurance policies. The cost of such insurance
is accurately reflected in the Financial Statements. None of the Sellers has
received any notice from any insurer of any the Businesses, the Facilities or
the Assets stating that any requirement of its insurance policy has been
violated, or requiring any work to be performed as a condition to the renewal of
any insurance policy, nor does Seller, the Business Sellers or the Property
Owners have any knowledge after due inquiry of the existence of any such
violation, which has not been cured.
(d) COMPLIANCE WITH LAWS AND LITIGATION. To Sellers' knowledge
after due inquiry, neither Seller, the Business Sellers nor the Property Owners,
in connection with the operation of the Businesses, nor any of the Assets or the
Facilities are in material violation of, or currently the subject of a claim of
remedial or similar obligation under any applicable order, judgment, injunction,
award, decree or writ (collectively, "ORDERS"), or any applicable law, statute,
code, ordinance, regulation or other requirement, excluding Environmental Laws
(defined below) (collectively, "LAWS"), of any government or political
subdivision thereof, or any agency or instrumentality of any such government or
political subdivision, or any court or arbitrator (collectively, "GOVERNMENTAL
BODIES"), there are no conditions that may result in remedial or similar
obligations with respect to the Facilities or the operations thereat, or the
Assets, and none of the Sellers has received written notice that any such
violation is being or may be alleged. Further, except as set forth on Schedule
11.1(d) there are no actions, suits, claims or legal, administrative or arbitral
proceedings or investigations (collectively, "CLAIMS") pending or, to the
knowledge of the Sellers, threatened against or involving Seller, the Business
Sellers, the Property Owners, the Facilities or any operations thereat, or any
of the Assets. Sellers are not now operating under or subject to or in default
of any Order or Law or any other requirement of any Governmental Body relating
to their properties or the Businesses.
(e) NO BREACH. Neither the execution and delivery by the Sellers
of this Agreement or the other related agreements, documents and instruments
required for Closing, the consummation of the proposed transaction, nor the
Seller's performance of this Agreement or the performance of Seller, the
Business Sellers or the Property Owners of any other related agreement, document
or instrument requires the Sellers to obtain any consent, approval or action of,
or make any filing with or give any notice to, any Governmental Body or any
other person or entity.
(f) THE INVENTORY. Except as set forth in Schedule 11.1(f), the
Business Sellers are the sole owners of the Inventory, free and clear of all
Claims, charges, Liens or rights of others of any nature, description or kind
whatsoever. The Inventory is fit for its intended use, is in compliance with all
applicable Laws and at a level, quality and age which is consistent with the
Business Sellers' past practices for normal operations. The Inventory contains
the normal volume of resalable parts.
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(g) THE EQUIPMENT. Except as set forth in Schedule 11.1(g), the
Business Sellers are the sole owner of the Equipment, free and clear of all
claims, charges, liens, encumbrances, security agreements, or rights of others
of any nature, description or kind whatsoever.
(h) PERSONAL PROPERTY LEASES. Set forth on Schedule 11.1(h) is a
list of certain personal property leases and purchase contracts (the "PERSONAL
PROPERTY LEASES"). Seller has made available to Buyer a true, correct and
complete copy of each Personal Property Lease. Except as set forth on Schedule
11.1(h), all rentals due under such leases have been paid and there exists no
default by the Sellers or by any other party to such leases under the terms
thereof and no event has occurred which, upon passage of time or the giving of
notice, or both, would result in any event of default by the Sellers or by any
other party to such leases, or prevent the Sellers from exercising and obtaining
the benefits of any rights or options contained therein. Except as set forth in
Schedule 11.1(h), the Sellers have all right, title and interest of the lessee
under the terms of said leases, free of all Liens and all such leases are valid
and in full force and effect.
(i) THE FACILITIES. Except as set forth on Schedule 11.1(i):
(i) Except for UWI-COL Properties and except as set forth in
Schedule 11.1(i), the Property Owners own fee simple title to the Facilities and
none of the Facilities is subject to any Lien. UWI-COL Properties has a valid
and binding lease and option to purchase with respect to the Leased Facility,
true and correct copies of which have been provided to the Buyer. Seller will
cause UWI-COL Properties to exercise such option and close on the purchase of
the Leased Facility within 2 years of the Closing. Each Property Owner has full
authority to enter into a lease for each of the Facilities pursuant to the terms
of this Agreement. UWI-COL Properties has the full authority to enter into a
sublease of the Leased Facility, and to purchase the Columbus Facility as
described above.
(ii) At Closing, Buyer shall have the right to maintain or
use such Facilities and to conduct such activities thereon as maintained, used
or conducted by the Sellers on the date hereof. At Closing, Buyer shall have all
rights, easements and agreements necessary for the use and maintenance of water,
gas, electric, telephone, sewer or other utility pipelines, poles, wires,
conduits or other like facilities, and appurtenances thereto, over, across and
under the Facilities. To Sellers' knowledge after due inquiry, there is no
condition affecting the Facilities or the improvements located thereon which
requires repair or correction to restore the same to reasonable operating
condition.
(iii) Except as set forth in Schedule 11.1(i)(iii), none of
the Sellers has received notice from any Governmental Body or any proposed or
threatened condemnation, eminent domain action or rezoning against the Facility.
If any of the Sellers becomes aware of any of the foregoing after the date
hereof (whether arising before or after the date hereof), but prior to the
Closing Date, it shall give prompt notice thereof to Buyer. In the event that
Buyer receives notice of any condemnation or similar action regarding any of the
Facilities, Buyer may, in Buyer's sole and absolute discretion but without
obligation to do so, terminate this Agreement, and this Agreement shall then
automatically terminate and neither party shall thereafter have any further
obligations or liability under this Agreement, except as
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otherwise expressly provided for herein. If Buyer does not elect to terminate
this Agreement following receipt of such notice, then any condemnation or
similar awards received by the Sellers, whether received before or after
Closing, shall be deemed to be included in the Assets and the Sellers shall
promptly deliver the same to Buyer.
(iv) Each Business Seller and/or Property Owner possesses a
valid use permit for auto dismantling for each Facility. Seller will provide
documentation satisfactory to Buyer of the valid use permit for auto dismantling
for each Facility. The Sellers have operated the Businesses and each Facility in
accordance with the requirements and limitations of such use permits.
(j) ENVIRONMENTAL CONDITIONS.
(i) Seller has disclosed and made available to Buyer true,
complete and correct copies of all reports, studies, investigations, audits,
analysis, tests or monitoring in the possession of or initiated or prepared by
or on behalf of the Sellers pertaining to any environmental matter relating to
any Premises, Hazardous Substances or compliance with Environmental Laws,
Environmental Permits and employee safety.
(ii) As used in this Agreement, the term "PREMISES" means
the Facilities and related real property; the term "ENVIRONMENTAL LAWS" means
all federal, state and local statutes, regulations, ordinances, judgments,
decrees and permits pertaining to the protection of human health, safety or the
environment; the term "ENVIRONMENTAL PERMITS" means all required permits,
licenses and authorizations required by any Environmental Law; and the term
"HAZARDOUS SUBSTANCES" means any hazardous, toxic, radioactive or infectious
substance, pollutant, material or waste as defined, listed or regulated under
any Environmental Law, including, without limitation, petroleum oil and its
fractions.
(k) BUSINESS IN COMPLIANCE. Except as set forth in Schedule
11.1(k), each of Seller, the Business Sellers and the Property Owners is (A)
validly and properly registered, authorized or licensed and in good standing
under the appropriate laws of each and every jurisdiction in which the nature of
the Assets or the nature of the Businesses make such qualification necessary;
and (B) is in compliance with all laws, ordinances and regulations of all
Governmental Bodies relating to the conduct of the Businesses and of all terms
and conditions of its licenses, permits, registrations, certificates or
authorizations, and there is no proceeding in progress, pending or threatened
that could result in the revocation, cancellation or suspension of any permits,
licenses, registrations, certificates or authorizations necessary or desirable
for the operation of any of the Premises and the Businesses.
(l) SELLER'S FINANCIAL STATEMENTS AND FINANCIAL RECORDS. The
financial statements previously delivered to Buyer and attached hereto as
Schedule 11.1(l) are identified as VRS' Consolidated Balance Sheets as of
December 31, 2002 and December 31, 2003 and the related Statements of
Operations, Members' Equity and Cash Flows for the periods then ended and the
Business Sellers' Balance Sheets and Income Statements as of June 30, 2004
(collectively, the "FINANCIAL STATEMENTS"). Seller's books, records and
Financial Statements are true, correct and complete in all material respects and
have been prepared in accordance with Generally Accepted Accounting Principles
applied on a consistent basis, except that the June 30,
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2004 Balance Sheets and Income Statements of the Business Sellers do not include
normal year-end adjustments. The Financial Statements present fairly and
accurately the revenues, financial condition, financial position, assets and
liabilities (whether accrued, absolute, contingent or otherwise) of the
Businesses and the results of all of the operations of the Businesses for the
periods indicated in the Financial Statements.
(m) FINANCIAL CONDITION OF BUSINESSES. The Sellers have no
liabilities with respect to the Businesses (whether accrued, absolute,
contingent or otherwise) of any kind, except: (i) liabilities disclosed or
provided for in the most recent part of the Financial Statements; and (ii)
liabilities incurred in the ordinary course of business since the date of the
most recent Financial Statements that are not inconsistent with past practice,
and which do not have in the aggregate, a material adverse effect upon the
business, assets, financial condition or results of operations of the
Businesses. The financial condition of the Businesses is now at least as good as
the financial condition reflected in the Financial Statements.
(n) CONDITION OF ASSETS.
(i) All of the Assets (except Inventory) are in normal
working condition and are in a normal state of repair and maintenance.
(ii) To Seller's knowledge after due inquiry, Seller is not
aware of any viruses affecting the computer systems, including hardware and
software, and the Sellers have taken, and will continue to take, all steps and
implement all procedures to reasonably necessary to protect such systems from
viruses until the Closing Date.
(o) INTELLECTUAL PROPERTY.
(i) Schedule 11.1(o) sets forth the registered Intellectual
Property (defined below) of the Sellers. Except as set forth in Schedule
11.1(o), the Intellectual Property is owned by the Sellers free and clear of all
encumbrances and is in good standing and duly registered in all appropriate
offices to preserve the rights thereof and thereto; there are no royalties or
other fees required to be paid by the Sellers to any other person with respect
to the Intellectual Property; the Intellectual Property is valid and enforceable
and encompasses all proprietary rights necessary or desirable for the operation
of the Businesses as presently conducted and as proposed to be conducted and the
Sellers have the exclusive right to use the Intellectual Property.
(ii) To the best of Sellers' knowledge, the conduct of the
Businesses does not infringe upon the patents, trade marks, trade names,
copyrights or other intellectual property, domestic or foreign, of any other
person, firm or corporation; or involve the use of trade marks or trade names
that would constitute acts of unfair competition or infringement.
(iii) There has been no claim made or, to Sellers'
knowledge, threatened, against the Sellers asserting the invalidity, misuse or
unenforceability of any of the Intellectual Property or challenging the Sellers'
right to use or ownership of any of the Intellectual Property, and there are no
valid grounds for any such claim or challenge.
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(iv) The consummation of the transactions contemplated by
this Agreement will not alter, impair or extinguish the Sellers' rights in and
to any of the Intellectual Property.
For the purposes of this Agreement, "INTELLECTUAL PROPERTY" means all trade
names (including without limitation "U-Wrench-It" and any derivations thereof),
trade marks, trade ▇▇▇▇ applications and registrations, industrial designs,
patents, patent applications and registrations, copyrights, copyright
applications and registrations, both domestic and foreign, used in whole or in
part or required for the proper carrying on of the Businesses.
(p) TAX MATTERS.
(i) Each of the Sellers has paid all Government Charges
(defined below) that are due and payable by it on or before the date hereof.
There are no actions, suits, proceedings, investigations, or inquiries now
pending or made or, to the best of the knowledge of the Sellers, threatened
against the Sellers in respect of Government Charges. Each of the Sellers has
withheld from each amount paid or credited to any person the amount of
Government Charges required to be withheld therefrom and has remitted such
Government Charges to the proper tax or other receiving authorities within the
time required under applicable legislation. All income tax returns required to
be filed by the Sellers have been accurately and properly filed. Without
limiting the foregoing, none of the tax returns contains any position that is,
or would be, subject to penalties under section 6662 of the Code (or any
corresponding provisions of state or local tax law). For the purposes hereof,
"GOVERNMENT CHARGES" means all taxes, levies, assessments, re-assessments and
other charges together with all penalties, interest and fines with respect
thereto, payable to any Governmental Bodies.
(ii) There are no Liens for taxes (other than for current
taxes not yet due and payable) upon any Assets.
(iii) None of the Sellers is a party to or bound by any tax
indemnity, tax sharing or tax allocation agreement or arrangement, and none of
the Sellers (i) is and never has been a member of an "affiliated group" within
the meaning of Section 1504 of the Code or (ii) has any liability for the taxes
of any other party under Treasury Regulation Section 1.1502-6 (or similar
provision of state or local Law) as a transferee or successor, by contract or
otherwise.
(iv) None of the Sellers has conducted the Businesses
outside the States of Missouri, Ohio and Virginia in a manner that would subject
it to the income tax of a state other than such states.
(v) None of the Sellers has received from any federal, state
or local tax authority any (i) notice indicating an intent to open an audit or
other review; (ii) request for information related to tax matters; or (iii)
notice of deficiency or proposed adjustment for any amount of tax proposed,
asserted, or assessed by any tax authority against it.
(q) WARRANTIES AND DISCOUNTS. Other than in the ordinary course
of business, the Sellers have not given any guarantee or warranty of any of the
products sold or
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services provided as part of the Businesses or incurred any repair or
maintenance obligations to customers of the Businesses or entered into any
agreement with any customer which would require repurchase of products, price
adjustment, refund, discount or concession to any customer.
(r) EMPLOYMENT AGREEMENTS AND LABOR MATTERS. There are no
outstanding employment agreements relating to anyone working in any of the
Businesses and there are no employees of any of the Businesses who are not "at
will" employees. Further, there are no existing or, to the best of the knowledge
of the Sellers, threatened labor strikes or labor disputes, grievances,
controversies or other labor troubles affecting any of the Businesses and there
are no agreements with any labor union or collective agreements of any kind to
which any of the Sellers is a party in the operation of the Businesses. To the
best of the Sellers' knowledge there are and have been no attempts to organize
or establish any labor union with respect to the Businesses or any controversy
existing, pending or, to the Sellers' knowledge, threatened with any association
or union or collective bargaining representative of the employees of the
Sellers. No current or former employee of any of the Sellers has any claim
against any of the Sellers on account of or for (i) overtime pay, other than
overtime pay for the current payroll period, (ii) wages or salary (excluding
current bonus accruals and amounts accruing under pension and profit sharing
plans) for any period other than the current payroll period, (iii) vacation,
time off or pay in lieu of vacation or time off, other than that earned in
respect of the current fiscal year, or (iv) any violation of any Law relating to
minimum wages or maximum hours of work. No claim has been made that remains
outstanding for breach of any contract of employment or for services or for
severance or redundancy payments or protective awards or for compensation for
unfair dismissal or for failure to comply with any Law concerning employment
rights or in relation to any alleged sex or race discrimination or for any other
liability accruing from the termination or variation of any contract of
employment or for services, nor is any of the Sellers aware that any such claim
has been threatened or is pending.
(s) OUTSTANDING AGREEMENTS.
(i) None of the Sellers is a party to or bound by any
agreement, contract or commitment, whether written or verbal, relating to the
Businesses (collectively, the "CONTRACTS" and individually, a "CONTRACT"),
except for those described on Schedule 11.1(s) or those made in the ordinary
course of business under which the Sellers have a financial obligation of less
than $20,000 per annum and which can be terminated by the Sellers without
payment of any damages or penalty by giving not more than 30 days notice. None
of the Sellers has received any notice of any intention to terminate, repudiate
or disclaim any Contract. Each of the Contracts is a valid, binding and
enforceable obligation of the Sellers and the other parties thereto, in
accordance with its terms and conditions, except that such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights generally and
general equitable principles. Except as indicated in Schedule 11.1(s), (x) the
Sellers are not, (y) to the extent it would create a current or future liability
of Buyer and/or the Sellers, the Sellers have not been, and (z) no other party
to a Contract is in material breach or violation of or default under any
Contract, and no event has occurred that, with the passage of time or the giving
of notice, or both, would constitute, and neither the execution of this
Agreement nor the Closing hereunder do or will constitute or result in, such a
breach, violation or default on the part of any party thereto, cause the
acceleration of any obligation of the Sellers or any other party thereto, or the
creation of a Lien upon the Assets,
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or require any consent thereunder. Seller has delivered or caused to be
delivered to Buyer a true, complete and accurate copy of each Contract.
(t) LICENSES AND PERMITS. The Sellers possess all licenses,
permits and other authorizations and approvals required for the conduct of the
Businesses at all times prior to the Closing, such licenses, permits and
authorization are listed on Schedule 11.1(t), and each such license or permit is
valid and in full force and effect. Each of the Sellers is in compliance with
all such licenses, permits and authorizations. No such license, permit or
authorization has been, or to Sellers' knowledge is threatened to be, revoked,
canceled, suspended or materially adversely modified. Neither the execution of
this Agreement nor the Closing do or will constitute or result in a default
under or violation of any such license, permit or authorization, except to the
extent Sellers' failure to continue its business operations after Closing
results in the cancellation of any such license, permit or other authorization.
Sellers make no representation as to the transferability of any such license,
permit or other authorization.
(u) SELLERS' KNOWLEDGE. Except as set forth in Schedule 11.1(u),
since December 31, 2003, to Sellers' knowledge, no adverse event, circumstance
or condition (financial or otherwise) relating to the Assets or the Businesses
has occurred which would reasonably be expected to have a material adverse
effect on the Business or the Assets.
Each of the Sellers acknowledges that the foregoing warranties and
representations are material and are being relied upon by Buyer (the continued
truth and accuracy of which shall constitute a condition precedent to Buyer's
obligations hereunder). Each of the Sellers represents and warrants to, and
covenants with Buyer that Seller's representations and warranties set forth in
this SECTION 11.1 will be true and correct as of the Closing Date. Each of the
Sellers agrees to take no voluntary and intentional actions or omissions to act,
which would cause any of Sellers' representations, warranties or covenants
contained in this Agreement to become untrue. If, after the date hereof and
prior to the Closing Date, any of the Sellers becomes aware that any of Sellers'
representations, warranties or covenants are, or have become, untrue (whether
occurring before or after the date hereof), with or without the voluntary and
intentional act or omission to act of any of the Sellers, then Seller shall
promptly give written notice of such fact to Buyer. In such event, Buyer may, in
Buyer's sole and absolute discretion but without obligation to do so, terminate
this Agreement prior to Closing if such matter has a material adverse effect on
the Business or the Assets, in which event neither Party shall thereafter have
any further obligations or liability under this Agreement, except as otherwise
expressly provided herein.
11.2 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer hereby makes the
following representations and warranties, each of which is true and correct on
the date hereof and shall survive the Closing Date and the transactions
contemplated hereby to the extent set forth herein.
(a) DUE ORGANIZATION, AUTHORITY AND QUALIFICATION. Buyer is a
general partnership duly organized, validly existing and in good standing under
the laws of the State of California and has all requisite power and lawful
authority to own, lease and operate its properties and to carry on its business.
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(b) AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Buyer has the
requisite power and authority to enter into, execute and deliver this Agreement
and each and every agreement and instrument contemplated hereby to which Buyer
is or will be a party, and to perform fully Buyer's obligations hereunder and
thereunder. This Agreement has been duly executed and delivered by Buyer, and
each and every agreement and instrument contemplated by this Agreement to which
Buyer is a party will be duly executed and delivered by Buyer and (assuming due
execution and delivery by the Sellers) this Agreement and each such other
agreement and instrument will be valid and binding obligations of Buyer
enforceable against Buyer in accordance with their respective terms, except as
such enforceability may be subject to (i) any bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity). Buyer is not a party to or bound by any agreement or any order or
requirement of any court or Governmental Body which would restrict or limit its
ability to perform its obligations hereunder.
(c) Buyer has disclosed and made available to Seller true,
complete and correct copies of the Bridgewater power point presentation,
including the related raw data, attached hereto as Schedule 11.2(c).
Buyer acknowledges that the foregoing warranties and representations are
material and are being relied upon by Seller (the continued truth and accuracy
of which shall constitute a condition precedent to Seller's obligations
hereunder). Buyer represents and warrants to, and covenants with Seller that
Buyer's representations and warranties set forth in this SECTION 11.2 will be
true and correct as of the Closing Date. Buyer agrees to take no voluntary and
intentional actions or omissions to act which would cause any of Buyer's
representations, warranties or covenants in this Agreement to become untrue. If,
after the date hereof and prior to the Closing Date, Buyer becomes aware that
any of Buyer's representations, warranties or covenants are, or have become
untrue (whether occurring before or after the date hereof), with or without the
voluntary and intentional act or omission to act of Buyer, then Buyer shall
promptly give written notice of such fact to Seller. In such event, Seller may,
in Seller's sole and absolute discretion but without obligation to do so,
terminate this Agreement, in which event neither Party shall thereafter have any
further obligations or liability under this Agreement, except as otherwise
expressly provided for herein.
12. INDEMNIFICATION.
12.1 SURVIVAL OF REPRESENTATIONS. Except as otherwise provided herein,
all representations and warranties contained in this Agreement or in any
certificate or other closing document delivered by or on behalf of the Parties
pursuant to this Agreement or in connection with this transaction shall survive
the Closing Date for a period of two (2) years; provided, however, that such
expiration shall have no effect on any notice of claim made prior to such
expiration with respect to any breach of such representation or warranty
occurring prior to such expiration and set out in such notice of claim; and
provided further , that the representations and warranties contained in (i)
SECTION 11.1(A) (Due Organization, Authority and Qualification), SECTION 11.1(b)
(Authority to Execute and Perform Agreements), Section 11.1(j) (Environmental)
and any representation regarding title or ownership of the Assets shall survive
the Closing Date indefinitely, (ii) SECTION 11.1(P) (Tax Matters) shall survive
the Closing Date
20
until the expiration of the applicable statutes of limitation, and (iii) SECTION
11.1(N)(I) (Condition of Assets) shall survive the Closing Date for 4 days.
12.2 BY SELLER. Seller agrees to indemnify, defend and hold Buyer and
its affiliates, including the shareholders, directors, officers, partners,
employees, successors, assigns, representatives and agents ("BUYER INDEMNIFIED
PARTIES"), harmless from and against, any loss, cost, liability, claim, expense,
penalty or fine, including reasonable attorneys' fees (without regard to whether
litigation is commenced) ("LOSSES") suffered or incurred, directly or
indirectly, as a result of
(a) any breach by Seller of any of Seller's representations,
warranties, covenants or obligations contained in this Agreement;
(b) the ownership or operation of the Businesses prior to the
Effective Time; or
(c) the matters set forth on Schedule 11.1(d), Schedule 11.1(k),
Schedule 11.1(o) and Schedule 11.1(t).
In addition, Seller hereby releases and agrees to
indemnify, defend and hold harmless Buyer and its affiliates, including their
shareholders, directors, officers, partners, employees, successors, assigns,
representatives and agents from and against any and all claims arising from or
in connection with any breach by UWI-COL Properties of any obligation arising
under that certain Ground Lease dated December 9, 2000 by and among CRC Ohio
Management Company, LLC, acting on behalf of and as agent for Columbus Recycling
LLC, as lessor, and UWI-COL Properties, as lessee, as amended by that certain
First Amendment to Ground Lease dated January 9, 2002, that certain Letter
Agreement dated December 9, 2000, captioned "2716 Groveport Road Auto Salvage
Property" and that certain Letter Agreement dated January 9, 2002 captioned
"Letter Agreement to amend Letter of Intent dated December 9, 2000", including,
without limitation, the obligation of UWI-COL Properties to maintain certain
environmental liability insurance for the fluid containment building located on
the Columbus, Ohio Facility for a period (3) years from the date of termination
of the Lease for the Columbus, Ohio Facility.
12.3 BY BUYER. Buyer agrees to indemnify, defend and hold Seller and
its affiliates, including the shareholders, directors, officers, partners,
employees, successors, assigns, representatives and agents ("SELLER INDEMNIFIED
PARTIES"), harmless from any Losses suffered or incurred, directly or
indirectly, as a result of any breach by Buyer of any of Buyer's
representations, warranties, covenants or obligations contained in this
Agreement or the ownership or operation of the Businesses following the
Effective Time.
12.4 NOTICE OF CLAIM. A Party seeking indemnification hereunder shall
promptly notify the other Party of the existence of any matter to which the
indemnification obligations would apply; provided however, that the right of a
Party to be indemnified hereunder shall not be adversely affected by a failure
to give such notice unless, and then only to the extent that, the other Party is
actually prejudiced thereby; and provided further that a Party seeking
indemnification will notify the other Party prior to taking any action with
respect to such matter
21
other than necessary emergency actions. The indemnified Party shall give the
indemnifying Party the opportunity to defend a third-party claim at its own
expense and with counsel of its own selection as long as the indemnifying Party
has agreed to accept responsibility for any potential liability for such claim;
provided that the indemnified Party shall at all times also have the right to
fully participate in the defense at its own expense, subject to its right to
payment (including reimbursement for legal fees) as provided in SECTION 12.5
below. With respect to any claim made under this SECTION 12.4, the indemnifying
Party shall have two weeks to notify the indemnified Party of its intent to cure
the applicable breach and provide a plan pursuant to which such cure will take
place. The indemnified Party shall have the right to reasonably approve any such
plan to cure. If such plan is approved by the indemnified Party, the
indemnifying Party shall maintain the right to cure such breach provided that
such Party is diligent in its efforts to effect such cure.
12.5 HOLDBACK; ESCROW. Buyer shall withhold One Million Dollars
$1,000,000 from the Purchase Price as a fund from which all or a portion of
Seller's indemnification obligations under this SECTION 12 and the Leases may be
satisfied, by paying such funds into Escrow ("HOLDBACK AMOUNT") pursuant to the
terms of the Escrow Agreement and to be distributed in accordance with the
notice and claim submission procedures contained in the Escrow Agreement. In the
event Buyer is entitled to indemnity from Seller under this Agreement or the
Leases, without prejudice to the rights of Buyer to seek any recovery from and
against Seller, Buyer shall be entitled to recover all or any portion of such
claimed amount to the extent of the Holdback Amount held in the Escrow;
provided, however, that Buyer shall first make a claim against the Holdback
Amount before exercising its rights under SECTION 12.6 OR SECTION 12.8(C).
Claims under the Escrow shall bear interest from the date on which the claim is
asserted until paid at the rate of interest, if any, earned on funds held in the
Escrow. Except as provided in the preceding sentence, all interest earned on the
Holdback Amount shall be payable to Seller. Provided that there has not been any
claim made by Buyer against the Holdback Amount (or if such claim has been made,
it has been satisfactorily resolved between the parties), the Holdback Amount
(or the balance thereof remaining after deducting payments made to Buyer from
the Holdback Amount) shall be paid to Seller on the first anniversary of the
Closing.
12.6 CLAIMS IN EXCESS OF HOLDBACK AND SET-OFF. In the event Buyer
makes claims for indemnification under this Agreement which, individually or in
the aggregate are in excess of the amount then remaining in Escrow and Seller
disputes such excess claims, then the Parties shall submit such disputed claims
in excess of the Holdback Amount to binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Seller
shall pay Buyer the amount of any award to Buyer in such arbitration; provided,
however, that Buyer shall also be entitled to set-off such amount as awarded by
the arbitrator and any amounts subject to set off by a Buyer Indemnified Party
under Section 17.2 of any Lease or the Sublease from any amount due from Buyer
to Seller under the Leases or Sublease.
12.7 LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything
contained in this SECTION 12 to the contrary, the provisions for indemnity
contained in SECTION 12.2 of this Agreement for a breach of the representations
and warranties contained in SECTION 11 of this Agreement, and the provisions for
indemnity contained in SECTION 12.8 of this Agreement (except with respect to
any Environmental Losses for which Buyer is entitled to indemnity under
22
Section 13(a)), shall be effective only when the aggregate amount of all Losses
or Environmental Losses for which such indemnification is sought from Seller
under such sections exceeds Fifty Thousand U.S. Dollars (US$50,000), in which
case the Buyer shall be entitled to indemnification of its Losses or
Environmental Losses only in excess thereof.
12.8 ENVIRONMENTAL INDEMNIFICATION.
(a) BY SELLER. Seller agrees to indemnify, defend and hold the
Buyer Indemnified Parties harmless from and against, any Losses, including,
without limitation, remediation and clean-up costs and reasonable attorneys'
fees ("ENVIRONMENTAL LOSSES") suffered or incurred, directly or indirectly, as a
result of (i) the presence or release of Hazardous Substances on or migrating
from any of the Premises to the extent remediation or clean-up is required under
applicable Environmental Laws, or (ii) any actual or alleged violation of any
Environmental Law or Environmental Permit arising out of or resulting from the
operation of the Businesses or the condition of the Premises ("ENVIRONMENTAL
MATTERS"), in each case to the extent existing or occurring prior to the Closing
Date, and Orders or Claims relating thereto, except that the foregoing indemnity
obligations shall not apply to any portion of the Environmental Losses caused by
or resulting from the negligence or willful misconduct of the Buyer Indemnified
Parties.
(b) BY BUYER. Buyer agrees to indemnify, defend and hold Seller
Indemnified Parties harmless from and against, any Environmental Losses suffered
or incurred, directly or indirectly, as a result of Environmental Matters, to
the extent first occurring after release, discharge or action taken on or after
the Closing Date (except if taken or caused by Seller or any of its affiliates),
and any Orders or Claims relating thereto, except that the foregoing indemnity
obligations shall not apply to any portion of the Environmental Losses caused by
or resulting from the negligence or willful misconduct of the Seller Indemnified
Parties.
(c) SET-OFF FOR ENVIRONMENTAL LOSSES. Buyer, in addition to the
remedies available to it under any other provision of this Agreement, at law or
in equity, shall be entitled to set-off against any amounts due from Buyer to
Sellers under this Agreement, the Leases or the Sublease, subject to, and after
first seeking redress under, SECTION 12.5 and SECTION 12.7 of this Agreement,
the amount of any Environmental Losses for which an arbitration panel or court
of competent jurisdiction has finally determined that Seller is obligated to
indemnify any Buyer Indemnified Party under this SECTION 12.8; provided,
however, that if the Buyer believes that any Buyer Indemnified Party is entitled
to indemnification from Seller for Environmental Losses that such party is then
incurring under any Order or Claim by a third party or Governmental Body that
has not been finally resolved within one year after Buyer provided notice of
such suit or claim to Seller, then Buyer shall be entitled to set-off such
amount. Notwithstanding the foregoing, Buyer shall be required to repay Seller
the amount of any Environmental Losses so set-off for which an arbitration panel
or a court of competent jurisdiction finally determines that any Buyer
Indemnified Party was not entitled to indemnification from Seller under this
Section 12.8, plus interest from the date of set-off through the date of payment
at the prime lending rate as reported in the Wall Street Journal.
23
(d) PAYMENT FOR SELLER ENVIRONMENTAL LOSSES. Within ten (10)
business days after receipt of a written request from Seller and delivery of
reasonable supporting documentation, Buyer shall either pay Seller, by wire
transfer of immediately available funds, for Environmental Losses asserted by
Seller under SECTION 12.8(B) above or give notice to Buyer specifying in
reasonable detail the points of disagreement.
(e) SURVIVAL. Notwithstanding the survivability or limits, if
any, of any representation or warranty contained in this Agreement, Seller and
Buyer agree that the indemnification provided under this SECTION 12.8 shall
survive without expiration.
12.9 SECURITY FOR OBLIGATIONS. As security for Sellers' obligations
under this SECTION 12, each of the Property Owners hereby agrees that, for two
(2) years following the Closing Date, it shall not sell such property or any
interest therein without first obtaining the prior written consent of the Buyer,
which consent may be withheld in Buyer's sole discretion; provided, however,
each of the Property Owners shall be permitted to borrow up to $500,000 secured
by a lien on its respective property as permitted under the Lease or Sublease to
Buyer or Business Buyer for such property.
13. ENVIRONMENTAL COVENANTS.
(a) Buyer may complete the activities described on Schedule 13(a)
at Buyer's sole cost and expense in compliance with all applicable Environmental
Laws and Environmental Permits after the Closing Date, except that Seller shall
have the right to review and approve Buyer's plans for completing such
activities prior to their commencement, which approval will not be unreasonably
withheld, conditioned or delayed. Buyer shall be entitled to indemnification
from Seller pursuant to SECTION 12.8 herein for any Environmental Losses
incurred by Buyer in completing the activities described in Schedule 13(a).
Buyer will prepare and provide Seller with a report for each activity
summarizing the completion thereof, including, without limitation, copies of all
assessments and information on the testing transportation and disposal of any
contaminated media as a part of the activities within a reasonable period of
time after Buyer completes such activity.
(b) Seller may complete the additional activities described on
Schedule 13(b) at Seller's sole cost and expense in compliance with all
applicable Environmental Laws and Environmental Permits, provided that Seller
shall fully indemnify Buyer pursuant to SECTION 12.8 herein for any
Environmental Losses incurred by Buyer as a result of any of the activities
described in Schedule 13(b). Access shall be provided in accordance with the
Access Agreement attached hereto as EXHIBIT N. Seller shall diligently pursue
the completion of the activities in a manner to minimize interfere with the
operations of Buyer at any of the Premises. In the event of any material
interference with Buyer's operations due to any of the activities described
solely in Schedule 13(b), Seller shall reimburse Buyer for its losses in
accordance with SECTION 13(F). Seller shall have until the date one hundred
eighty (180) days from the Closing Date to complete any excavation of soil
pursuant to the activities described on Schedule 13(b), except if more time is
required by a Governmental Body. Seller shall continue to have access after such
time for the purposes of conducting any additional groundwater assessment,
monitoring or remediation other than excavation of soils until such activities
are complete. Except with respect to activities described in SECTION 13(C),
Seller shall not notify any Governmental Body concerning the
24
activities (other than to clear utilities or any required land disturbance
permit or erosion or sediment control plan) unless information discovered in
performing the activities requires Seller to make a notification to a
Governmental Body under an applicable Environmental Law or Environmental Permit.
Seller will prepare and provide Buyer with a report for each activity
summarizing the completion thereof, including, without limitation, copies of all
assessments and information on the testing transportation and disposal of any
contaminated media as a part of the activities within a reasonable period of
time after Seller completes such activity.
(c) Seller may contact the Virginia Department of Environmental
Quality concerning item C.1 on Schedule 13(b) and pursue a no further action
letter for the petroleum release identified therein subject to the terms of
SECTION 13(B) (other than notification to a Governmental Body), provided that
Seller shall fully indemnify Buyer pursuant to SECTION 12.8 herein for any
Environmental Losses incurred by Buyer as a result of Seller's actions pursuant
to this Section 13(c); and provided further, that in the event of any material
interference with Buyer's operations due to Seller's actions pursuant to this
Section 13(c), Seller shall reimburse Buyer for its losses in accordance with
SECTION 13(F).
(d) In the event that Seller is able to characterize the extent
of the contamination identified in item D.2 on Schedule 13(b) in situ such that
the full extent of any proposed excavation can be determined prior to excavation
of soils, Seller shall have the right to make the appropriate notification to
the United States Environmental Protection Agency and to excavate the
contaminated soil in the area upon the prior written consent of Buyer which
shall not be unreasonably withheld or delayed provided that Seller has entered
into a contract for the purchase of the Premises from the owner and subject to
the terms of SECTION 13(B) (other than notification to a Governmental Body).
(e) Except with respect to the activities described on Schedule
13(a), Buyer shall not excavate the soils at any of the Premises, without the
prior written consent of Seller, which consent shall not be unreasonably
withheld, conditioned or delayed, unless such excavation occurs at a depth that
is no greater than 30 inches below the existing ground surface. Notwithstanding
the foregoing or anything else to the contrary contained in this Agreement,
Buyer shall have the right to take any emergency actions, without the Seller's
prior written consent, that are necessary to comply with Environmental Laws or
Environmental Permits and shall provide notice of the same with reasonable
detail to Seller as soon as reasonably practicable.
(f) Buyer's losses attributable to any material interference
with, or Buyer's inability to use, all or any portion of a Facility due to any
of the activities described solely in Schedule 13(b) shall include its loss of
net revenue (gross revenue minus sales taxes minus 22%) attributable to parts
sales and customer admissions, but shall exclude all other revenue, including,
but not limited to, scrap sales. For purposes of calculating such losses,
average net revenue on parts sales and customer admissions for the Seller for
the same month or months in 2004 (based upon the Seller's financial statements)
during which Buyer experienced such losses shall be the baseline amount, and
such amount shall be adjusted by taking into account (i) only the actual portion
of the Facility Buyer is unable to use, unless such interference shuts down (A)
the processing of vehicles, in which case that will be considered 50% of the
Premises for purposes of calculating such losses, or (B) the sales of vehicle
parts completely, in
25
which case that will be considered 100% of the Premises for purposes of
calculating such losses and (ii) the actual use by Buyer of such portion of the
Facility immediately prior to the remediation. Buyer agrees that in no event
shall its loss of net revenue under the foregoing provision be deemed to exceed
the Purchase Price.
(g) If Buyer acquires actual knowledge of a violation of any
Environmental Permit of the Businesses that existed prior to the Closing Date
and that continued after the Closing Date, Buyer shall use commercially
reasonable efforts to correct such violation within a reasonable time after such
discovery.
14. NO BROKERS. Buyer and Seller warrant each to the other that no broker's
commission or finder's fee is payable with regard to the proposed transaction
described in this Agreement. Buyer and Seller shall each indemnify, save, defend
and hold the other harmless from and against any and all real estate brokerage
commissions, finder's fees and all costs and expenses (including legal fees) of
investigating and defending any such claims, payable to any broker or finder
which such indemnifying party may have engaged or is claimed to have engaged in
connection with this transaction. This SECTION 14 shall survive the Closing or
the termination of this Agreement, as the case may be.
15. VIRGINIA BEACH EMINENT DOMAIN MATTERS.
15.1 POTENTIAL TAKING. The Parties acknowledge that the Facility owned
by UWI-VAB Properties is subject to a potential taking by eminent domain by the
City of Virginia Beach. Based on a survey of the property, no buildings are to
be constructed within the westerly 300 feet of the property, as this area is
reserved for the "future construction of the propose SE Expressway." The City of
Virginia Beach Transportation Planner has informed the Parties that a proposed
road project known as the SE Expressway would ultimately require the taking of a
section of the Virginia Beach Facility approximately 300 feet by 400 feet along
▇▇▇▇▇ Avenue. The taking of the contemplated area would significantly affect
access to the Virginia Beach Facility and the current parking area.
15.2 TRIGGERING OF OPTION. In the event that the above described
taking occurs within 5 years following the date of this Agreement, Seller shall
procure a comparable amount of real property adjacent to the Virginia Beach
Facility so that there is no disruption or diminishment of Buyer's availability
of real property, and lease such property to Buyer in accordance with the terms
and provisions of the Lease of the Virginia Beach Facility, and the rent under
such Lease shall not increase or decrease except by the mutual agreement of the
Parties. In the event that Buyer is not reasonably satisfied that the additional
property procured by Seller and leased to Buyer in replacement of the property
taken by the City of Virginia Beach is reasonably adequate and comparable to the
taken property, then Buyer shall have the option (the "PUT OPTION") to sell to
Seller, and Seller shall have the obligation to buy from Buyer, the remainder of
the Virginia Beach Facility, which shall include normal levels/amounts of
inventory and equipment, for the price set forth in SECTION 15.3 below.
15.3 PRICE. The exercise price ("EXERCISE PRICE") for the purchase of
the Virginia Beach Facility under the Put Option shall be determined based upon
the date (the
26
"NOTICE DATE") that Buyer provides Seller with written notice of its exercise of
the Put Option. The Exercise Price shall be:
(a) $4,625,000 if the Notice Date is within 1 year following the
date of this Agreement;
(b) $3,700,000 if the Notice Date is more than 1 year following
the date of this Agreement and within 2 years following the date of this
Agreement;
(c) $2,775,000 if the Notice Date is more than 2 years following
the date of this Agreement and within 3 years following the date of this
Agreement;
(d) $1,850,000 if the Notice Date is more than 3 years following
the date of this Agreement and within 4 years following the date of this
Agreement;
(e) $925,000 if the Notice Date is more than 4 years following
the date of this Agreement and within 5 years following the date of this
Agreement; or
(f) $0 if the Notice Date is 5 or more years following the date
of this Agreement.
15.4 CLOSING OF OPTION TRANSACTION. The closing of the purchase and
sale under the Put Option shall be no more than 30 days following the Notice
Date, unless as extended by the mutual agreement of the Parties.
16. SELLER REIMBURSEMENT FOR WARRANTY EXPENSES. Seller maintains a policy
of providing a money-back guarantee to customers. In the event that customers of
the Business make claims to Buyer under such money-back guarantee for any Sales
by Seller prior to Closing within 30 days following the Closing, Buyer shall
refund such customers and at the end of such 30 day period, Buyer shall provide
Seller with written notice of the total amount refunded by Buyer to customers,
including actual customer receipts with respect to the refunds, and Seller shall
promptly reimburse Buyer for such amount. Buyer and Seller agree that Seller
will not be required to reimburse Buyer for any customer refunds due to core
charges.
17. MISCELLANEOUS.
17.1 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto) constitutes the entire agreement between the Parties, all oral
agreements being merged herein, and supersedes all prior representations. There
are no representations, agreements, arrangements, or understandings, oral or
written, between or among the parties relating to the subject matter of this
Agreement that are not fully expressed herein.
17.2 AMENDMENT. The provisions of this Agreement may be modified at
any time by agreement of the parties. Any such agreement hereafter made shall be
ineffective to modify this Agreement in any respect unless in writing and signed
by the parties against whom enforcement of the modification or discharge is
sought.
27
17.3 WAIVER. Any of the terms or conditions of this Agreement may be
waived at any time by the Party entitled to the benefit thereof, but no such
waiver shall affect or impair the right of the waiving party to require
observance, performance or satisfaction either of that term or condition as it
applies on a subsequent occasion or of any other term or condition.
17.4 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be transferred, delegated, or assigned
(by operation of law or otherwise), by the Parties hereto without the prior
written consent of the other Party, except that (i) Buyer shall have the right
to transfer and assign any or all of its rights and obligations hereunder to any
entity which at the time of such transfer and assignment is controlled by Buyer
or by the affiliates of Buyer, including without limitation to newly formed
limited liability companies formed for the purpose of purchasing and owning the
Assets and leasing the Facilities, provided that Buyer shall not be relieved of
its obligations hereunder and (ii) Seller shall have the right to assign its
rights to receive payments, but not its obligations, hereunder.
17.5 SUCCESSION. Subject to the provisions otherwise contained in this
Agreement, this Agreement shall inure to the benefit of and be binding on the
successors and assigns of the respective parties.
17.6 PARTIES IN INTEREST. Nothing in this Agreement, whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any persons other than the Parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any Party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action against any Party to this Agreement.
17.7 SPECIFIC PERFORMANCE. Each Party's obligations under this
Agreement are unique. The Parties each acknowledge that, if any Party should
default in performance of the duties and obligations imposed by this Agreement,
it would be extremely impracticable to measure the resulting damages.
Accordingly, the non-defaulting Party, in addition to any other available rights
or remedies available to it at law or in equity, may ▇▇▇ in equity for specific
performance, and the Parties each expressly waive the defense that a remedy in
damages will be adequate.
17.8 NOTICES. Any notice under this Agreement shall be in writing, and
any written notice or other document shall be deemed to have been duly given (i)
on the date of personal service on the Parties, (ii) on the third business day
after mailing, if the document is mailed by registered or certified mail, (iii)
one day after being sent by professional or overnight courier or messenger
service guaranteeing one-day delivery, with receipt confirmed by the courier, or
(iv) on the date of transmission if sent by telegram, telex, telecopy or other
means of electronic transmission resulting in written copies, with receipt
confirmed. Any such notice shall be delivered or addressed to the Parties at the
addresses set forth below or at the most recent address specified by the
addressee through written notice under this provision. A copy of all notices to
Buyer shall be sent to Buyer's address to the attention of the Chief Financial
Officer. Failure to give notice in accordance with any of the foregoing methods
shall not defeat the effectiveness of notice actually received by the addressee.
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If to Buyer:
Pick-N-Pull Auto Dismantlers
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇ LLP
One Metropolitan Square, Suite 3600
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller.
Vehicle Recycling Solutions, LLC
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
Court Square Building
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
17.9 LEGAL FEES; PREJUDGMENT INTEREST. If the services of counsel are
required by any Party to secure the performance of this Agreement or otherwise
upon the breach or default of another Party to this Agreement, or if any
judicial remedy or arbitration is necessary to enforce or interpret any
provision of this Agreement or the rights and duties of any person in relation
thereto, the prevailing Party shall be entitled to reasonable attorneys' fees,
costs and other expenses, in addition to any other relief to which such Party
may be entitled. Any award of damages following judicial remedy or arbitration
as a result of the breach of this Agreement or any of its provisions shall
include an award of prejudgment interest from the date of the breach at the
prime rate of interest as published in the Wall Street Journal.
29
17.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if the parties had all signed the same
document. All counterparts shall be construed together and shall constitute one
agreement.
17.11 CAPTIONS. All paragraph captions are for reference only and
shall not be considered in construing this Agreement.
17.12 SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
the Agreement which can be given effect without the invalid provision shall
continue in full force and effect and shall in no way be impaired or
invalidated.
17.13 GOVERNING LAW. The rights and obligations of the parties and the
interpretation and performance of this Agreement shall be governed by the laws
of Missouri, without regard to its choice of law principles.
17.14 EXHIBITS. All exhibits and schedules to which reference is made
are deemed incorporated in this Agreement whether or not actually attached.
17.15 GENDER AND NUMBER. As used in this Agreement, the masculine,
feminine, or neuter gender, and the singular or plural number, shall each be
deemed to include the others whenever the context so indicates.
17.16 CUMULATIVE REMEDIES. No remedy or election hereunder shall be
deemed exclusive but shall whenever possible be cumulative with all other
remedies available at law or in equity; provided that in no event shall any
Party be liable to the other for consequential or punitive damages.
17.17 ADDITIONAL DOCUMENTS. From time to time prior to and after the
Closing, Buyer and Seller shall execute and deliver such instruments of transfer
and other documents as may be reasonably requested by the other Party and/or the
Escrowee to carry out the purpose and intent of this Agreement.
17.18 CONSTRUCTION. Buyer and Seller hereby acknowledge and agree that
(i) each Party to this Agreement is of equal bargaining strength, (ii) each
Party has actively participated in the drafting, preparation and negotiation of
this Agreement, (iii) each Party has consulted or has had the opportunity to
consult with such party's own independent counsel, and such other professionals
as such Party deems appropriate relative to any and all matters contemplated
under this Agreement, (iv) each Party and such Party's counsel and advisors have
reviewed this Agreement and following such review each party agrees to enter
into this Agreement, and (v) any rule of construction to the effect that
ambiguities are to be resolved against the drafting party(ies) shall not apply
in the interpretation of this Agreement, or any portions hereof or any
amendments hereto. For purposes of this Agreement (i) "knowledge" shall mean the
actual awareness of a particular fact, and (ii) "knowledge after due inquiry"
shall mean knowledge that would have been acquired by an officer or director of
the Sellers upon appropriate inquiry and investigation. The words "know,"
"knowing" and "known" shall be construed accordingly.
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17.19 TERMINATION. This Agreement may be terminated at any time prior
to the Closing only by (i) mutual written consent of Seller and Buyer; (ii) by
Seller or Buyer if the other Party shall have breached any provisions of this
Agreement and shall not have cured such breach within 10 days of receiving
notice of such breach by the non-breaching party; or (iii) by Seller or Buyer if
the Closing shall not have occurred on or before January 10, 2005, other than as
a result of the breach of this Agreement by the Party seeking to so terminate
this Agreement; provided, however, that the right to terminate this Agreement
under this SECTION 17.19 shall not be available to any Party whose willful
failure to fulfill any obligation hereunder or other breach of this Agreement
has been the cause of, or resulted in, the failure of the Closing to occur on or
before such date. Notwithstanding the foregoing or anything else to the contrary
in this Agreement, Seller and Buyer acknowledge and agree that the failure of
the Buyer to obtain the zoning letter for the UWI-COL Properties' Facilities by
January 10, 2005 in accordance with SECTION 4.1(G) and SECTION 4.2(C) shall not
be deemed a willful failure to fulfill any obligation hereunder or a breach of
this Agreement by either party and that, unless such condition is waived by the
Buyer and the Seller, either party shall have the right to terminate this
Agreement as provided in this SECTION 17.19. In the event of any termination of
this Agreement as provided in this SECTION 17.19, this Agreement shall forthwith
become wholly void and of no further force and effect and there shall be no
liability on the part of Buyer or Seller.
17.20 CONFIDENTIALITY. The Parties agree that, except to the extent
required by law, NASDAQ rules or the disclosure policies of Buyer's corporate
parent, no disclosure or announcement concerning this Agreement or the
transaction contemplated hereunder shall be made without Buyer and Seller's
prior written approval; provided, however, that the parties agree that the
corporate parent of Buyer may issue a mutually agreed upon press release and
file a current report on Form 8-K upon both the execution and closing of this
Agreement and may make additional disclosure and file this Agreement with the
SEC as required by applicable law and SEC rules. Notwithstanding the foregoing,
no such disclosure, announcement or press release shall disclose the names of
the principals of Sellers. In the event the Closing has not occurred and this
Agreement is terminated in accordance with SECTION 17.19, each party shall
either return to the other, or certify the destruction of, all documents, work
papers and other material (including all copies thereof) obtained in connection
with the transaction contemplated hereby and will use all reasonable efforts,
including instructing its employees and others who have had access to such
information, to keep confidential and not to use any such information, unless
such information is now or hereafter disclosed, through no act or omission of
such party, in any manner making such information available to the general
public.
[Remainder of page left intentionally blank; signature page to follow.]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day
and year first above written.
THIS CONTRACT CONTAINS BINDING ARBITRATION PROVISIONS WHICH MAY BE ENFORCED BY
THE PARTIES.
BUYER: SELLER:
Pick-N-Pull Auto Dismantlers
By: Norprop, Inc., a general partner Vehicle Recycling Solutions, LLC
By: /s/ ▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------- -------------------------------
Its: Authorized Agent Its: President
-------------------------------- ------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇. Address: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------- --------------------------
Facsimile: Facsimile: ▇▇▇ ▇▇▇-▇▇▇▇
-------------------------- ------------------------
BUSINESS SELLERS AND PROPERTY OWNERS:
U-WRENCH-IT AUTO PARTS OF ST. LOUIS, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Title: President
-----------------------------------------
U-WRENCH-IT ST. LOUIS PROPERTIES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Title: President
-----------------------------------------
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U-WRENCH-IT AUTO PARTS OF KANSAS CITY, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Title: President
-----------------------------------------
U-WRENCH-IT KANSAS CITY PROPERTIES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Title: President
-----------------------------------------
U-WRENCH-IT AUTO PARTS OF VIRGINIA BEACH, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Title: President
-----------------------------------------
U-WRENCH-IT VIRGINIA BEACH PROPERTIES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Title: President
-----------------------------------------
U-WRENCH-IT AUTO PARTS OF COLUMBUS, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Title: President
-----------------------------------------
U-WRENCH-IT COLUMBUS PROPERTIES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Title: President
-----------------------------------------
33