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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
DATED SEPTEMBER 22, 1999
BY AND AMONG
RUSH TRUCK CENTERS OF ARIZONA, INC.
SOUTHWEST PETERBILT, INC.
SOUTHWEST TRUCK CENTER, INC. d/b/a SOUTHWEST PETERBILT
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
COVERING THE PURCHASE
OF SPECIFIED ASSETS OF
SOUTHWEST PETERBILT, INC.
AND
SOUTHWEST TRUCK CENTER, INC.
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TABLE OF CONTENTS
1. GENERAL DEFINITIONS.................................................1
1.1 Affiliate..................................................1
1.2 Article....................................................2
1.3 Assets.....................................................2
1.4 Balance Sheet Date.........................................2
1.5 Best Knowledge.............................................2
1.6 Bonus Payment..............................................2
1.7 ▇▇▇▇▇▇▇▇ Assignment........................................2
1.8 ▇▇▇▇▇▇▇▇ Landlord..........................................2
1.9 ▇▇▇▇▇▇▇▇ Lease.............................................2
1.10 Closing....................................................2
1.11 Closing Date...............................................2
1.12 Closing Price..............................................2
1.13 Commission. ...............................................2
1.14 Common Stock...............................................2
1.15 Contracts..................................................2
1.16 Control....................................................3
1.17 Dealer Cost................................................3
1.18 Deposits...................................................3
1.19 DI Investment..............................................3
1.20 Disclosure Schedule........................................3
1.21 ERISA......................................................3
1.22 Exchange Act...............................................3
1.23 Excluded Assets............................................3
1.24 Flagstaff Assignment.......................................3
1.25 Flagstaff Landlord.........................................3
1.26 Flagstaff Lease............................................3
1.27 GMC........................................................3
1.28 GMC Excluded Assets........................................4
1.29 GMC Operating Agreement....................................4
1.30 Governmental Returns.......................................4
1.31 Governmental Authority.....................................4
1.32 Governmental Requirement...................................4
1.33 HSR Act....................................................4
1.34 Lease Documents............................................4
1.35 New Contracts..............................................4
1.36 New Mexico Peterbilt.......................................4
1.37 New Mexico Purchase Agreement..............................4
1.38 Non-Shareholder Employment Agreements......................4
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1.39 Person.....................................................5
1.42 Purchase Price.............................................5
1.43 Purchaser Claims...........................................5
1.44 Purchaser Damages..........................................5
1.45 Purchaser Environmental Liabilities........................5
1.46 Purchaser Indemnified Parties..............................5
1.47 Reference Balance Sheet....................................5
1.48 Registration Rights Agreements.............................5
1.50 Rush.......................................................5
1.51 Schedule...................................................5
1.53 SEC Documents..............................................6
1.54 Section....................................................6
1.55 Securities.................................................6
1.56 Securities Act.............................................6
1.57 Securities Laws............................................6
1.59 Seller Claims..............................................6
1.60 Seller Damages.............................................6
1.61 Seller Environmental Liabilities...........................6
1.62 Seller Indemnified Parties.................................6
1.63 Seller Indemnifying Parties................................6
1.65 Southwest Peterbilt Bonus Payment..........................6
1.66 Southwest Peterbilt Fair Market Value Warrant..............6
1.67 Southwest Peterbilt Purchase Price.........................7
1.68 Southwest Peterbilt Stock Consideration....................7
1.69 Southwest Peterbilt Underwater Warrant.....................7
1.70 Southwest Peterbilt Warrant Stock..........................7
1.71 Southwest Truck Center Bonus Payment.......................7
1.72 Southwest Truck Center Fair Market Value Warrant...........7
1.73 Southwest Truck Center Purchase Price......................7
1.74 Southwest Truck Center Stock Consideration.................7
1.75 Southwest Truck Center Underwater Warrant..................7
1.76 Southwest Truck Center Warrant Stock.......................7
1.77 Stock Consideration........................................7
1.78 Subsidiary.................................................7
1.79 Taxes......................................................8
1.80 Territory..................................................8
1.81 Tucson Dealership Property.................................8
1.82 Tucson Landlord............................................8
1.83 Tucson Landlord Purchase Agreement.........................8
1.84 Tucson Lease...............................................8
1.85 Tucson Property............................................8
1.86 Tucson Purchase Agreement..................................8
1.87 Tucson Purchaser Lease.....................................8
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1.88 Tucson Sublease............................................8
2. PURCHASE AND SALE OF THE ASSETS; CLOSING DATE.......................8
2.1 Assets to be Purchased.....................................8
2.2 Purchase and Sale.........................................10
2.3 Delivery of Assets and Transfer Documents.................10
2.4 Closing; Closing Date.....................................10
3. PURCHASE PRICE.....................................................10
3.1 Price and Payment.........................................11
3.2 Assumed Obligations.......................................14
3.3 Damage to Assets..........................................14
3.4 Adjustment of Purchase Price..............................15
3.5 Sales and Use Tax.........................................15
3.6 Allocation of Purchase Price..............................15
4. REPRESENTATIONS AND WARRANTIES OF SELLERS AND SHAREHOLDER..........15
4.1 Incorporation.............................................16
4.2 Share Capital.............................................16
4.3 Financial Statements......................................16
4.4 Events Since the Balance Sheet Date.......................16
4.5 Customer List.............................................17
4.6 Taxes and Governmental Returns............................17
4.7 Employee Matters..........................................18
4.8 Contracts and Agreements..................................19
4.9 Effect of Agreement.......................................20
4.10 Properties, Assets and Leasehold Estates..................21
4.11 Intangible Property.......................................21
4.12 Suits, Actions and Claims.................................21
4.13 Licenses and Permits; Compliance With Governmental
Requirements..............................................22
4.14 Authorization.............................................22
4.15 Records...................................................22
4.16 Environmental Protection Laws.............................22
4.17 No Underground Storage Tanks..............................25
4.18 Securities Laws Matters...................................25
4.19 Brokers and Finders.......................................27
4.20 Deposits..................................................27
4.21 Work Orders...............................................27
4.22 Telephone Numbers.........................................27
4.23 No Untrue Statements......................................27
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER........................27
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5.1 Incorporation.............................................28
5.2 Authorization.............................................28
5.3 SEC Documents.............................................28
5.4 Brokers and Finders.......................................28
5.5 Effect of Agreement.......................................29
6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNIFICATIONS,
GUARANTEES, REPRESENTATIONS AND WARRANTIES OF SELLERS AND
SHAREHOLDER........................................................29
7. CONTRACTS PRIOR TO THE CLOSING DATE................................29
7.1 Approval of Contracts.....................................29
7.2 Contracts Included in Assets..............................29
8. COVENANTS OF SELLERS AND SHAREHOLDER PRIOR TO CLOSING DATE.........30
8.1 Access to Information.....................................30
8.2 General Affirmative Covenants.............................30
8.3 General Negative Covenants................................31
8.4 Disclosure of Misrepresentations and Breaches.............31
8.5 Government Filings........................................32
8.6 Access to and Inspection of Premises, Facilities and
Equipment.................................................32
9. COVENANTS REGARDING THE CLOSING....................................32
9.1 Covenants of Sellers and Shareholder......................32
9.2 Covenants of Purchaser....................................33
9.3 Inventory Audit...........................................33
10. CONDITIONS TO OBLIGATIONS OF PURCHASER.............................33
10.1 Accuracy of Representations and Warranties and Fulfillment
of Covenants..............................................33
10.2 No Governmental Actions...................................33
10.3 No Adverse Change.........................................34
10.4 Update of Contracts.......................................34
10.5 No Material Adverse Information...........................34
10.6 Notices and Consents......................................34
10.7 Employment Agreements.....................................34
10.8 Lease Documents...........................................35
10.9 Other Documents...........................................35
10.10 Dealer License............................................35
10.11 Inventory Audit...........................................35
10.12 Due Diligence.............................................35
10.13 Dealership Agreement......................................35
10.14 Governmental Approvals....................................35
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11. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS.....................35
11.1 Accuracy of Representations and Warranties and Fulfillment
of Covenants..............................................35
11.2 Governmental Approvals....................................36
11.3 Employment Agreements.....................................36
11.4 Lease Documents...........................................36
11.5 Other Documents...........................................36
11.6 Inventory Audit...........................................36
11.7 Registration Rights Agreement.............................36
11.9 Tucson Lease Guaranty Release.............................36
11.10 Operating Agreements......................................36
11.11 Governmental Approvals....................................36
12. SPECIAL CLOSING AND POST-CLOSING COVENANTS.........................37
12.1 Further Assurances........................................37
12.2 Delivery of Funds and Other Assets Collected by Sellers...37
12.3 Change of Name of Sellers.................................37
12.4 Access to Files...........................................37
12.5 Exchange Act Filing; Cooperation..........................37
12.6 Nondisclosure of Confidential Information.................37
12.7 Assignment of Contracts...................................38
12.8 Non-Compete, Non-Solicitation.............................39
12.9 Agreement Regarding GMC Excluded Assets...................41
13. INDEMNITY BY SELLERS AND SHAREHOLDER...............................41
13.1 Indemnity.................................................41
13.2 Environmental Liability of the Seller Indemnifying
Parties...................................................42
13.3 Notice of Claim...........................................43
13.4 Right of the Seller Indemnifying Parties to Participate
in Defense................................................44
13.5 Payment...................................................44
13.6 Limit of Liability of the Seller Indemnifying Parties.....44
14. INDEMNITY BY PURCHASER.............................................45
14.1 Indemnity.................................................45
14.2 Environmental Liability of Purchaser......................45
14.3 Notice of Claim...........................................46
14.4 Right of Purchaser to Participate in Defense..............47
14.5 Payment...................................................47
15. REAL PROPERTY......................................................47
16. SPECIAL PROVISIONS REGARDING EMPLOYEES OF SELLER...................49
16.1 New Employees of Purchaser................................49
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16.2 No Hiring Commitment......................................49
16.3 Existing Employee Benefit Plans; Assumption of Vacation
and Sick Leave Obligations................................49
17. TERMINATION........................................................50
17.1 Mutual Consent............................................50
17.2 Failure of Conditions.....................................50
17.3 Failure to Close..........................................50
18. NOTICES............................................................50
19. GENERAL PROVISIONS.................................................51
19.1 Governing Law; Interpretation; Section Headings...........51
19.2 Severability..............................................52
19.3 Entire Agreement..........................................52
19.4 Expenses..................................................52
19.5 Further Actions...........................................52
19.6 Binding Effect............................................53
19.7 Assignment................................................53
19.8 Amendment; Waiver.........................................53
19.9 Gender; Numbers...........................................53
19.10 Counterparts..............................................53
19.11 Telecopy Execution and Delivery...........................53
19.12 Press Releases............................................53
19.13 Review of Counsel.........................................54
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into this 22nd day of September, 1999, by and among (i) Southwest Peterbilt,
Inc., an Arizona corporation ("Southwest Peterbilt"); (ii) Southwest Truck
Center, Inc., d/b/a Southwest Peterbilt, an Arizona corporation ("Southwest
Truck Center") (Southwest Peterbilt and Southwest Truck Center, individually a
"Seller" and collectively referred to herein as "Sellers") (iii) ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇., the owner of a portion of the capital stock of each Seller
("Shareholder"), and (iv) Rush Truck Centers of Arizona, Inc., a Delaware
corporation ("Purchaser").
W I T N E S S E T H :
WHEREAS, Sellers collectively are the owners of all right, title and
interest in and to the assets described in Section 2.1 hereto (the "Assets"),
with such Assets being the assets currently used in the conduct of the heavy
duty truck sales and service business and various related businesses operated
by Sellers in the State of Arizona (collectively, the "Business");
WHEREAS, Sellers desire to sell the Assets to Purchaser and Purchaser
desires to acquire the Assets from Sellers, all pursuant to this Agreement as
hereinafter provided;
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the execution and delivery of this Agreement, and to set forth
certain additional agreements related to the transactions contemplated hereby;
and
WHEREAS, pursuant to an Asset Purchase Agreement (the "New Mexico
Purchase Agreement") of even date herewith between (i) Rush Truck Centers of
New Mexico, Inc., a Delaware corporation, (ii) New Mexico Peterbilt, Inc., a
New Mexico corporation and an Affiliate (as defined below) of Sellers ("New
Mexico Peterbilt") and (iii) Shareholder, New Mexico Peterbilt has agreed to
sell to Rush Truck Centers of New Mexico, Inc. the heavy duty truck sales and
service and various related businesses operated by New Mexico Peterbilt in the
State of New Mexico;
NOW, THEREFORE, for and in consideration of the premises, the mutual
representations, warranties and covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. GENERAL DEFINITIONS. For purposes of this Agreement, the following
terms shall have the respective meanings set forth below:
1.1 Affiliate. "Affiliate" of any Person shall mean any Person
Controlling, Controlled by or under common Control with such Person.
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1.2 Article. "Article" shall mean an Article of this Agreement, unless
otherwise stated.
1.3 Assets. "Assets" shall have meaning assigned thereto in Section
2.1.
1.4 Balance Sheet Date. "Balance Sheet Date" shall have the meaning
assigned thereto in Section 4.3.
1.5 Best Knowledge. "Best Knowledge" shall mean both what a Person
knew as well as what the Person should have known had the person exercised
reasonable diligence. When used with respect to a Person other than a natural
person, the term "Best Knowledge" shall include matters that are known to the
directors, officers and employees of the Person.
1.6 Bonus Payment. "Bonus Payment" shall have the meaning assigned
thereto in Section 3.1.
1.7 ▇▇▇▇▇▇▇▇ Assignment. "▇▇▇▇▇▇▇▇ Assignment" shall have the meaning
assigned thereto in Section 15(a).
1.8 ▇▇▇▇▇▇▇▇ Landlord. "▇▇▇▇▇▇▇▇ Landlord" shall have the meaning
assigned thereto in Section 15(a).
1.9 ▇▇▇▇▇▇▇▇ Lease. "▇▇▇▇▇▇▇▇ Lease" shall have the meaning assigned
thereto in Section 15(a).
1.10 Closing. "Closing" shall have the meaning assigned thereto in
Section 2.4.
1.11 Closing Date. "Closing Date" shall have the meaning assigned
thereto in Section 2.4.
1.12 Closing Price. "Closing Price" shall mean the average weighted
closing price of the Common Stock on The Nasdaq National Market during the ten
(10) consecutive trading day period ending at the close of the third trading
day preceding the Closing Date.
1.13 Commission. "Commission" shall mean the United States Securities
and Exchange Commission.
1.14 Common Stock. "Common Stock" shall mean the Common Stock of Rush,
$.01 par value per share.
1.15 Contracts. "Contracts" shall have the meaning assigned thereto in
Section 4.8.
1.16 Control. "Control" and all derivations thereof shall mean the
ability to either (i) vote (or direct the vote of) 50% or more of the voting
interests in any Person or (ii) direct the affairs of another, whether through
voting power, contract or otherwise.
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1.17 Dealer Cost. "Dealer Cost" shall mean manufacturer's invoice
price to Seller, reduced by the amount of all manufacturer's rebates,
allowances and other price reductions paid or credited to Seller on such
vehicle (other than the manufacturer's reimbursement for dealer preparation and
delivery expenses and any floor plan interest credits for such vehicle), plus
such Seller's actual cost and expense of installation of dealer-installed
options on such vehicle and the pre-delivery inspection costs incurred by
Sellers in the normal course of business that are not reimbursed by the
manufacturer; provided such inspection costs for each motor vehicle shall be
limited to the lesser of the actual cost of such pre-delivery inspection to the
new or used truck department of Sellers and $500 per Class 8 truck and $250 per
Class 7 truck included in the Assets.
1.18 Deposits. "Deposits" shall have the meaning assigned thereto in
Section 4.20.
1.19 DI Investment. "DI Investment" shall mean DI Investment Limited
Partnership LLP, an Arizona limited partnership.
1.20 Disclosure Schedule. "Disclosure Schedule" shall have the meaning
assigned thereto in Article 4.
1.21 ERISA. "ERISA" shall have the meaning assigned thereto in Section
4.7.
1.22 Exchange Act. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
1.23 Excluded Assets. "Excluded Assets" shall have the meaning
assigned thereto in Section 2.1.
1.24 Flagstaff Assignment. "Flagstaff Assignment" shall have the
meaning assigned thereto in Section 15(b).
1.25 Flagstaff Landlord. "Flagstaff Landlord" shall have the meaning
assigned thereto in Section 15(b).
1.26 Flagstaff Lease. "Flagstaff Lease" shall have the meaning
assigned thereto in Section 15(b).
1.27 GMC. "GMC" shall mean GMC Truck Division and any successor
thereto.
1.28 GMC Excluded Assets. "GMC Excluded Assets" shall have the meaning
assigned thereto in Section 2.1.
1.29 GMC Operating Agreement. "GMC Operating Agreement" shall have the
meaning assigned thereto in Section 11.10.
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1.30 Governmental Returns. "Governmental Returns" shall have the
meaning assigned thereto in Section 4.6.
1.31 Governmental Authority. "Governmental Authority" shall mean any
and all foreign, federal, state or local governments, governmental
institutions, public authorities and governmental entities of any nature
whatsoever, and any subdivisions or instrumentalities thereof, including, but
not limited to, departments, boards, bureaus, commissions, agencies, courts,
administrations and panels, and any divisions or instrumentalities thereof,
whether permanent or ad hoc and whether now or hereafter constituted or
existing.
1.32 Governmental Requirement. "Governmental Requirement" shall mean
any and all laws (including, but not limited to, applicable common law
principles), statutes, ordinances, codes, rules, regulations, interpretations,
guidelines, directions, orders, judgments, writs, injunctions, decrees,
decisions or similar items or pronouncements, promulgated, issued, passed or
set forth by any Governmental Authority.
1.33 HSR Act. "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
1.34 Lease Documents. "Lease Documents" shall mean the ▇▇▇▇▇▇▇▇
Assignment, the Flagstaff Assignment, the Phoenix Lease and either the Tucson
Purchaser Lease or the Tucson Sublease, as appropriate.
1.35 New Contracts. "New Contracts" shall have the meaning assigned
thereto in Section 10.4.
1.36 New Mexico Peterbilt. "New Mexico Peterbilt" shall have the
meaning assigned thereto in the recitals hereto.
1.37 New Mexico Purchase Agreement. "New Mexico Purchase Agreement"
shall have the meaning assigned thereto in the recitals hereto.
1.38 Non-Shareholder Employment Agreements. "Non-Shareholder
Employment Agreements" shall have the meaning assigned thereto in Section 10.7.
1.39 Person. "Person" shall mean any natural person, any Governmental
Authority and any entity the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, joint ventures, joint stock companies, trusts,
estates, companies and associations, whether organized for profit or otherwise.
1.40 Phoenix Lease. "Phoenix Lease" shall have the meaning assigned
thereto in Section 15(d).
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1.41 Phoenix Purchase Agreement. "Phoenix Purchase Agreement" shall
have the meaning assigned thereto in Section 2.5.
1.42 Purchase Price. "Purchase Price" shall have the meaning assigned
thereto in Section 3.1.
1.43 Purchaser Claims. "Purchaser Claims" shall have the meaning
assigned thereto in Section 13.3.
1.44 Purchaser Damages. "Purchaser Damages" shall have the meaning
assigned thereto in Section 13.1.
1.45 Purchaser Environmental Liabilities. "Purchaser Environmental
Liabilities" shall have the meaning assigned thereto in Section 13.2.
1.46 Purchaser Indemnified Parties. "Purchaser Indemnified Parties"
shall have the meaning assigned thereto in Section 13.1.
1.47 Reference Balance Sheet. "Reference Balance Sheet" shall have the
meaning assigned thereto in Section 4.3.
1.48 Registration Rights Agreements. "Registration Rights Agreements"
shall have the meaning assigned thereto in Section 11.7.
1.49 Rule 144. "Rule 144" shall mean Rule 144, as amended, under the
Securities Act.
1.50 Rush. "Rush" shall mean Rush Enterprises, Inc., a Texas
corporation and the parent corporation of Purchaser.
1.51 Schedule. "Schedule" shall mean the Schedules to this Agreement,
unless otherwise stated, and shall include the Disclosure Schedule. The
Schedules to this Agreement may be attached to this Agreement or may be set
forth in a separate document denoted as the Schedules to this Agreement, or
both.
1.52 SEC. "SEC" shall mean the United States Securities and Exchange
Commission and any successor thereto.
1.53 SEC Documents. "SEC Documents" shall have the meaning assigned
thereto in Section 5.3.
1.54 Section. "Section" shall mean a Section of this Agreement, unless
otherwise stated.
1.55 Securities. "Securities" shall have the meaning assigned thereto
in Section 4.18.
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1.56 Securities Act. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.57 Securities Laws. "Securities Laws" shall have the meaning
assigned thereto in Section 4.18.
1.58 Seller Certificate. "Seller Certificate" shall mean the
certificate to be delivered at Closing to Purchaser pursuant to Article 11.
1.59 Seller Claims. "Seller Claims" shall have the meaning assigned
thereto in Section 14.2.
1.60 Seller Damages. "Seller Damages" shall have the meaning assigned
thereto in Section 14.2.
1.61 Seller Environmental Liabilities. "Seller Environmental
Liabilities" shall have the meaning assigned thereto in Section 14.2.
1.62 Seller Indemnified Parties. "Seller Indemnified Parties" shall
have the meaning assigned thereto in Section 13.1.
1.63 Seller Indemnifying Parties. "Seller Indemnifying Parties" and
"Seller Indemnifying Party" shall have the meanings assigned thereto in Section
13.1.
1.64 Shareholder Employment Agreement. "Shareholder Employment
Agreement" shall have the meaning assigned thereto in Section 10.7.
1.65 Southwest Peterbilt Bonus Payment. "Southwest Peterbilt Bonus
Payment" shall have the meaning assigned thereto in Section 3.1.
1.66 Southwest Peterbilt Fair Market Value Warrant. "Southwest
Peterbilt Fair Market Value Warrant" shall have the meaning assigned thereto in
Section 3.1(a).
1.67 Southwest Peterbilt Purchase Price. "Southwest Peterbilt Purchase
Price" shall have the meaning assigned thereto in Section 3.1(a).
1.68 Southwest Peterbilt Stock Consideration. "Southwest Peterbilt
Stock Consideration" shall have the meaning assigned thereto in Section 3.1(a).
1.69 Southwest Peterbilt Underwater Warrant. "Southwest Peterbilt
Underwater Warrant" shall have the meaning assigned thereto in Section 3.1(a).
1.70 Southwest Peterbilt Warrant Stock. "Southwest Peterbilt Warrant
Stock" shall mean the number of shares of Common Stock equal to $4,000,000
divided by the Closing Price and the result multiplied by 0.77.
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1.71 Southwest Truck Center Bonus Payment. "Southwest Truck Center
Bonus Payment" shall have the meaning assigned thereto in Section 3.1.
1.72 Southwest Truck Center Fair Market Value Warrant. "Southwest
Truck Center Fair Market Value Warrant" shall have the meaning assigned thereto
in Section 3.1(b).
1.73 Southwest Truck Center Purchase Price. "Southwest Truck Center
Purchase Price" shall have the meaning assigned thereto in Section 3.1(b).
1.74 Southwest Truck Center Stock Consideration. "Southwest Truck
Center Stock Consideration" shall have the meaning assigned thereto in Section
3.1(b).
1.75 Southwest Truck Center Underwater Warrant. "Southwest Truck
Center Underwater Warrant" shall have the meaning assigned thereto in Section
3.1(b).
1.76 Southwest Truck Center Warrant Stock. "Southwest Truck Center
Warrant Stock" shall mean the number of shares of Common Stock equal to
$4,000,000 divided by the Closing Price and the result multiplied by 0.08.
1.77 Stock Consideration. "Stock Consideration" shall mean the
Southwest Peterbilt Stock Consideration and the Southwest Truck Center Stock
Consideration.
1.78 Subsidiary. "Subsidiary" shall mean, with respect to any Person
(the "parent"), (a) any corporation, association, joint venture, partnership or
other business entity of which securities or other ownership interests
representing more than 50% of the ordinary voting power or beneficial interest
are, at the time as of which any determination is being made, owned or
controlled by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent and (b) any joint venture or
partnership of which the parent or any Subsidiary of the parent is a general
partner or has responsibility for its management.
1.79 Taxes. "Tax" and "Taxes" shall mean any and all income, excise,
franchise or other taxes and all other charges or fees imposed or collected by
any Governmental Authority or pursuant to any Governmental Requirement, and
shall also include any and all penalties, interest, deficiencies, assessments
and other charges with respect thereto.
1.80 Territory. "Territory" shall have the meaning assigned thereto in
Section 3.1.
1.81 Tucson Dealership Property. "Tucson Dealership Property" shall
have the meaning assigned thereto in Section 15(c).
1.82 Tucson Landlord. "Tucson Landlord" shall have the meaning
assigned thereto in Section 15(c).
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1.83 Tucson Landlord Purchase Agreement. "Tucson Landlord Purchase
Agreement" shall have the meaning assigned thereto in Section 15(c).
1.84 Tucson Lease. "Tucson Lease" shall have the meaning assigned
thereto in Section 15(c).
1.85 Tucson Property. "Tucson Property" shall have the meaning
assigned thereto in Section 2.5.
1.86 Tucson Purchase Agreement. "Tucson Purchase Agreement" shall have
the meaning assigned thereto in Section 2.5.
1.87 Tucson Purchaser Lease. "Tucson Purchaser Lease" shall have the
meaning assigned thereto in Section 15(c).
1.88 Tucson Sublease. "Tucson Sublease" shall have the meaning
assigned thereto in Section 15(c).
2. PURCHASE AND SALE OF THE ASSETS; CLOSING DATE.
2.1 Assets to be Purchased. The assets to be purchased from Sellers
are the following assets held by any of Sellers as of the Closing for use in
connection with all or any part of the Business (collectively, the "Assets"):
(a) subject to the provisions relating to Excluded Assets set
forth in this Section 2.1, all new 1998, 1999 and 2000 Peterbilt and
GMC motor vehicles inventory,
(b) subject to the provisions relating to Excluded Assets set
forth in this Section 2.1, all new, current and returnable parts and
accessories inventory and all chassis kits,
(c) all miscellaneous inventories, including gas, diesel
fuel, oil, grease, paint and body shop materials,
(d) all work in process and sublet repairs on vehicles in
Sellers' service departments,
(e) all of Sellers' leasehold improvements, including all
signs, furniture, fixtures and office equipment, other than the
leasehold improvements set forth on Schedule 2.1,
(f) all shop equipment and special tools, and all parts and
accessories equipment,
(g) all company vehicles, excluding the vehicles set forth on
Schedule 2.1,
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(h) all promotional, advertising and training materials,
(i) all sales files and customer lists, and all warranty and
service and customer service and repair files,
(j) to the extent transferable, all intangible assets of
Sellers to do business in the State of Arizona as motor vehicle
dealers, including any permits or licenses issued by any department or
agency of the State of Arizona for Sellers' dealerships,
(k) subject to agreement on price pursuant to Section 3.1
below, all prepaid expenses and deposits,
(l) subject to agreement on price pursuant to Section 3.1
below, all used vehicles,
(m) subject to agreement on price pursuant to Section 3.1
below, all new obsolete parts and accessories and all used parts and
accessories,
(n) subject to the provisions relating to Excluded Assets set
forth in this Section 2.1, all customer deposits and agreements to
sell Peterbilt or GMC vehicles ordered but not delivered to the
customer at the time of Closing, and
(o) subject to the provisions relating to Excluded Assets set
forth in Sections 3.1(a)(viii) and 3.1(b)(viii) below, all accounts
receivable from finance companies.
All other assets of Sellers not described in this Section 2.1,
including, without limitation, cash, bank accounts, and the assets described on
Schedule 2.1 (collectively, the "Excluded Assets"), shall not be sold by
Sellers to Purchaser. Additionally, notwithstanding anything herein to the
contrary, in the event Purchaser does not enter into a dealer sales and service
agreement with GMC on or before the Closing Date, the GMC vehicles, parts and
accessories inventory and chassis kits and the customer deposits and agreements
to sell GMC vehicles will not be included in the Assets, but will be included
in the Excluded Assets, other than the customer deposits and agreements to sell
GMC vehicles, are hereinafter referred to as the "GMC Excluded Assets").
2.2 Purchase and Sale. Subject to the terms and conditions herein
contained, Sellers agree to sell, assign, transfer and deliver the Assets to
Purchaser at the Closing (as hereinafter defined), free and clear of any liens
or encumbrances of any nature whatsoever (except for liens, encumbrances or
obligations, if any, expressly assumed by Purchaser hereunder). Subject to the
terms and conditions herein contained, Purchaser agrees to purchase from
Sellers the Assets in consideration for the Purchase Price (as hereinafter
defined) payable as set forth in Section 3.
2.3 Delivery of Assets and Transfer Documents. At the Closing, Sellers
and Shareholder shall take all steps necessary to put Purchaser in possession
of the Assets, free and clear of any liens or encumbrances of any nature
whatsoever (except for liens, encumbrances or obligations, if any,
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expressly assumed by Purchaser hereunder), and shall deliver to Purchaser (i) a
duly executed General Conveyance, Assignment and Assumption Agreement covering
the Assets and the Assumed Obligations, in substantially the form attached
hereto as Exhibit 2.3, (ii) duly executed title and transfer documents covering
any assets for which there exists a certificate of title and (iii) such other
duly executed transfer and release documents as Purchaser shall reasonably
request to evidence the transfer of the Assets to Purchaser free and clear of
any liens or encumbrances of any nature whatsoever (except for liens,
encumbrances or obligations, if any, expressly assumed by Purchaser hereunder).
2.4 Closing; Closing Date. Subject to the terms and conditions herein
contained, the consummation of the transactions referenced above shall take
place (the "Closing") on or before October 1, 1999, at 10:00 a.m., local time,
at the offices of Sellers' counsel in Phoenix, Arizona, or at such other time,
date and place as Purchaser and Sellers shall in writing designate. The date of
the Closing is referred to herein as the "Closing Date".
2.5 Purchase of Phoenix and Tucson Property. Simultaneously with the
execution and delivery of this Agreement, (a) Purchaser and DI Investment have
executed and delivered a Contract for Purchase and Sale (the "Phoenix Purchase
Agreement") covering the dealership property in Phoenix, Arizona, and (b)
Purchaser and Southwest Peterbilt have executed and delivered a Contract for
Purchase and Sale (the "Tucson Purchase Agreement") covering the dealership
property in Tucson, Arizona and the approximately 2.02 acres adjoining such
property (collectively, the "Tucson Property").
3. PURCHASE PRICE.
3.1 Price and Payment. Subject to adjustment as provided in Sections
3.3 and 3.4 with respect to damaged assets, prorations, deposits and certain
other items, the aggregate consideration (the "Purchase Price") to be paid by
Purchaser for the Assets is as follows:
(a) to Southwest Peterbilt (the "Southwest Peterbilt Purchase
Price"):
(i) $8,470,000 plus an amount determined by
deducting $725,000 from the value of the real property
covered by the Tuscon lease, plus the approximately 2.02
acres adjoining such real property, as determined by the
appraisal currently on order by Purchaser, to be paid in cash
by wire transfer at Closing, plus
(ii) 273,779 shares of Common stock to be issued and
delivered to Southwest Peterbilt at Closing (the
"Southwest Peterbilt Stock Consideration"), plus
(iii) an amount to be paid in cash at Closing equal
to Dealer Cost for each vehicle described in Section
2.1(a) which is conveyed by Southwest Peterbilt to
Purchaser, plus
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(iv) an amount to be paid in cash at Closing equal
to the replacement cost of the items described in
Sections 2.1(b) and (c) which are conveyed by
Southwest Peterbilt to Purchaser, plus
(v) an amount to be paid in cash at Closing equal to
Southwest Peterbilt's actual cost of the work in
process and sublet repairs described in Section
2.1(d) which are conveyed by Southwest Peterbilt to
Purchaser, plus
(vi) an amount to be paid in cash at Closing equal
to the depreciated book value (determined in
accordance with generally accepted accounting
principles, consistently applied) at Closing of the
items described in Sections 2.1(e), (f) and (g)
which are conveyed by Southwest Peterbilt to
Purchaser, plus
(vii) an amount to be agreed upon by Southwest
Peterbilt and Purchaser to be paid in cash at
Closing for the items described in Sections 2.1(k),
(l) and (m) which are conveyed by Southwest
Peterbilt to Purchaser (provided that if Southwest
Peterbilt and Purchaser cannot agree on the amount
to be paid for any Asset described in these
Sections, such Asset shall be an Excluded Asset),
plus
(viii) an amount to be paid in cash at Closing equal
to the net book value of the accounts receivable
described in Section 2.1(o) which are conveyed by
Southwest Peterbilt to Purchaser, less an amount
estimated by Southwest Peterbilt and Purchaser to be
payable or deductible in the future for prepayments
and bad debts in connection with repossessions with
respect to such accounts receivable (provided that
if Southwest Peterbilt and Purchaser cannot agree on
such amount, such Asset shall be an Excluded Asset),
plus
(ix) one of the following, at the election of
Shareholder, to be issued at Closing: (a) a warrant
(the "Southwest Peterbilt Fair Market Value
Warrant") to purchase the Southwest Peterbilt
Warrant Stock at an exercise price equal to the
Closing Price, (b) a warrant (the "Southwest
Peterbilt Underwater Warrant") to purchase the
Southwest Peterbilt Warrant Stock at an exercise
price equal to $5.00 greater than the Closing Price
plus the agreement of Purchaser to pay Southwest
Peterbilt a consulting fee of $14,116 per month, or
(c) the agreement of Purchaser to pay Southwest
Peterbilt a consulting fee of $17,965 per month. The
Southwest Peterbilt Fair Market Value Warrant and
the Southwest Peterbilt Underwater Warrant shall
expire on the date the Bonus Payment is paid. The
consulting fee shall be payable monthly on the last
day of each month until the date the Bonus Payment
is paid. Shareholder must make the election on or
before Closing and must make the same election for
Southwest Peterbilt, New Mexico Peterbilt and
Southwest Truck Center.
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The warrant shall be issued and the consulting fee
shall be paid, upon such other terms and conditions
as the parties thereto may agree.
(b) to Southwest Truck Center (the "Southwest Truck
Center Purchase Price"):
(i) $880,000 to be paid in cash by wire transfer at
Closing, plus
(ii) 28,444 shares of Common Stock to be issued and
delivered to Southwest Truck Center at Closing (the
"Southwest Truck Center Stock Consideration"), plus
(iii) an amount to be paid in cash at Closing equal
to Dealer Cost for each vehicle described in Section
2.1(a) which is conveyed by Southwest Truck Center
to Purchaser, plus
(iv) an amount to be paid in cash at Closing equal
to the replacement cost of the items described in
Sections 2.1(b) and (c) which are conveyed by
Southwest Truck Center to Purchaser, plus
(v) an amount to be paid in cash at Closing equal to
Southwest Truck Center's actual cost of the work in
process and sublet repairs described in Section
2.1(d) which are conveyed by Southwest Truck Center
to Purchaser, plus
(vi) an amount to be paid in cash at Closing equal
to the depreciated book value (determined in
accordance with generally accepted accounting
principles, consistently applied) at Closing of the
items described in Sections 2.1(e), (f) and (g)
which are conveyed by Southwest Truck Center to
Purchaser, plus
(vii) an amount to be agreed upon by Southwest Truck
Center and Purchaser to be paid in cash at Closing
for the items described in Sections 2.1(k), (l) and
(m) which are conveyed by Southwest Truck Center to
Purchaser (provided that if Southwest Truck Center
and Purchaser cannot agree on the amount to be paid
for any Asset described in these Sections, such
Asset shall be an Excluded Asset), plus
(viii) an amount to be paid in cash at Closing equal
to the net book value of the accounts receivable
described in Section 2.1(o) which are conveyed by
Southwest Truck Center to Purchaser, less an amount
estimated by Southwest Truck Center and
Purchaser to be payable or deductible in the future
for prepayments and bad debts in connection with
repossessions with respect to such accounts
receivable (provided that if Southwest Truck Center
and
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Purchaser cannot agree on such amount, such Asset
shall be an Excluded Asset), plus
(ix) one of the following, at the election of
Shareholder, to be issued at Closing: (a) a warrant
(the "Southwest Truck Center Fair Market Value
Warrant") to purchase the Southwest Truck Center
Warrant Stock at an exercise price equal to the
Closing Price, (b) a warrant (the "Southwest Truck
Center Underwater Warrant") to purchase the
Southwest Truck Center Warrant Stock at an exercise
price equal to $5.00 greater than the Closing Price
plus the agreement of Purchaser to pay Southwest
Truck Center a consulting fee of $1,467 per month,
or (c) the agreement of Purchaser to pay Southwest
Truck Center a consulting fee of $1,867 per month.
The Southwest Truck Center Fair Market Value Warrant
and the Southwest Truck Center Underwater Warrant
shall expire on the date the Bonus Payment is paid.
The consulting fee shall be payable monthly on the
last day of each month until the date the Bonus
Payment is paid. Shareholder must make the election
on or before Closing and must make the same election
for Southwest Peterbilt, New Mexico Peterbilt and
Southwest Truck Center. The warrant shall be issued
and the consulting fee shall be paid, upon such
other terms and conditions as the parties thereto
may agree.
When and if Purchaser and/or its Affiliates sell 750 or more new Class
7 or 8 Peterbilt trucks in the Territory or outside the Territory through sales
personnel employed in the Territory (including sales to any affiliated leasing
company or division in the Territory), Purchaser shall pay at the end of the
calendar month in which such performance criteria is satisfied, but no earlier
than at the end of the 24 month period after the Closing Date, (a) to Southwest
Peterbilt an amount equal to $3,080,000 (the "Southwest Peterbilt Bonus
Payment") and (b) to Southwest Truck Center an amount equal to $320,000 (the
"Southwest Truck Center Bonus Payment") (the Southwest Peterbilt Bonus Payment
and the Southwest Truck Center Bonus Payment, collectively the "Bonus
Payment"). The Bonus Payment, if paid, shall be paid in cash by wire transfer
and shall be additional consideration for the Assets and shall be included in
the Purchase Price. The "Territory" shall be defined as the territory under
Sellers' and New Mexico Peterbilt's dealership agreements with Peterbilt Motors
Company, a division of PACCAR, Inc. ("PACCAR").
Within 15 calendar days after the end of each calendar month prior to
the date the Bonus Payment is paid, Purchaser shall provide Sellers a written
report detailing the number of Class 7 and 8 Peterbilt trucks sold in the
Territory or through sales personnel employed in the Territory (including sales
to any affiliated leasing company or division in the Territory) during such
month, together with all supporting documentation reasonably requested by
Sellers, at Purchaser's cost and expense. Purchaser shall, and shall cause its
Affiliates, employees, agents, representatives, officers and directors to use
their best efforts to sell Class 7 and 8 Peterbilt trucks in the Territory
prior to the date the Bonus Payment is paid.
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All cash payments at Closing shall be subject to the adjustment
provisions of Sections 3.3 and 3.4. Purchaser shall not pay any cash or issue
any Common Stock for the conveyance of the items identified in Sections 2.1(h),
(i), (j), (m) and (n).
3.2 Assumed Obligations. At the Closing, Purchaser shall assume and
agree to timely discharge (a) the obligations of Sellers under all contracts
and agreements transferred by Sellers to Purchaser under this Agreement that
are (i) listed and described on Schedule 4.8 or on the updated list of
contracts required by Section 10.4 and (ii) accepted in writing by Purchaser
pursuant to the provisions of Section 4.8, Article 7 or Section 10.4, (b)
certain vacation and sick leave obligations of Sellers pursuant to Section 16.3
and (c) all contingent obligations related to the accounts receivable
referenced in Section 2.1(n) to the extent such accounts receivable are
included in the Assets; provided that Purchaser specifically does not assume
any liabilities of Sellers or either of them under any contracts or agreements
with respect to any breaches of such contracts or agreements occurring on or
before the Closing Date or any damages to third parties resulting from acts,
events or omissions occurring on or before the Closing Date. Except as
specifically set forth in this Section 3.2, Purchaser shall not assume, and
shall not be treated as having assumed, any liability or obligation of Sellers
or either of them of any nature whatsoever.
3.3 Damage to Assets. If, on or before the Closing Date, any of the
Assets are damaged or destroyed, Sellers will immediately notify Purchaser in
writing of such damage or destruction. In the event of any such damage or
destruction, Purchaser shall (i) remove any or all of the damaged or destroyed
asset or assets it does not desire to purchase from the Assets to be purchased
hereunder and reduce the cash portion of the Purchase Price by an amount equal
to the portion of the Purchase Price attributable to the damaged or destroyed
asset or assets so removed and (ii) complete the purchase of the remainder of
the Assets and reduce the cash portion of the Purchase Price due Seller whose
asset(s) were removed by the loss in fair market value of any damaged or
destroyed Assets that are purchased by Purchaser.
3.4 Adjustment of Purchase Price. The Purchase Price shall be adjusted
on the Closing Date (i) to reduce the Purchase Price by the amount allocated to
any damaged or destroyed Assets as contemplated by Section 3.3; (ii) to account
for a proration of property taxes on the Assets, lease payments, utilities and
other items commonly prorated; (iii) to account for any Deposits held by
Sellers on the Closing Date; and (iv) to reduce the Purchase Price for the
value of any vacation and sick time obligations of Sellers assumed by Purchaser
pursuant to Section 16.3. Three (3) days prior to the Closing Date, Sellers
will provide Purchaser with a statement of adjustments showing all proposed
adjustments to the Purchase Price, such statement of adjustments having all
reasonable back up documentation for such suggested adjustments. Purchaser and
Sellers will work to finalize all required adjustments prior to the Closing
Date.
3.5 Sales and Use Tax. Sellers shall be jointly and severally
responsible for payment to the appropriate Governmental Authority of all sales
and use tax in connection with the consummation of the transactions
contemplated by this Agreement.
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3.6 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets to the extent relevant for income tax purposes in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended,
and Schedule 3.6 attached hereto. The parties agree to report the transactions
contemplated by this Agreement for tax purposes in accordance with the
allocation shown on Schedule 3.6, and each party will indemnify and hold each
other party harmless from any loss, cost, damage, additional tax or expense
(including attorneys' fees) arising from any failure by the indemnifying party
to so report such transactions.
4. REPRESENTATIONS AND WARRANTIES OF SELLERS AND SHAREHOLDER. Sellers
and Shareholder hereby jointly and severally represent and warrant to Purchaser
that the statements contained in this Article 4 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Article 4), except as set forth in
the disclosure schedule delivered by Sellers and Shareholder to Purchaser on
the date hereof and initialed by Sellers and Shareholder (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the numbered paragraphs contained in this Article 4, and any
disclosure on any part of the Disclosure Schedule shall be deemed a disclosure
on all other parts of the Disclosure Schedule provided the required disclosure
is fully and accurately disclosed.
4.1 Incorporation. Each Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of its
incorporation, and is duly authorized, qualified and licensed under all
applicable Governmental Requirements to carry on its business in the places and
in the manner as now conducted in the State of Arizona. Neither Seller is not
qualified as a foreign corporation in any jurisdiction, and neither Seller is
required to qualify or otherwise be authorized to do business as a foreign
corporation in any jurisdiction in order to carry on any of their respective
businesses as now conducted or to own, lease or operate the Assets.
4.2 Share Capital. Part 4.2(A) of the Disclosure Schedule is a list of
all Persons owning capital stock of Southwest Peterbilt with an indication
thereon of the class of capital stock and the number of shares of each class
owned by each such Person, and Part 4.2(B) of the Disclosure Schedule is a list
of all Persons owning capital stock of Southwest Truck Center with an
indication thereon of the class of capital stock and the number of shares of
each class owned by each such Person.
4.3 Financial Statements. Sellers have delivered to Purchaser copies
of the following combined financial statements for Southwest Peterbilt and
affiliates, all of which financial statements are included in Schedule 4.3
hereto:
(a) compiled combined Unaudited Balance Sheet (the "Reference
Balance Sheet") as of July 31, 1999, (the "Balance Sheet Date") and
Unaudited Income Statement for the seven-month period ended on the
Balance Sheet Date; and
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(b) compiled combined Audited Balance Sheets, Income
Statements and Statements of Changes in Financial Position for
Sellers' two (2) most recent fiscal years.
All financial statements supplied to Purchaser by Sellers, whether or not
included in Schedule 4.3 hereto, are and will be true and accurate in all
material respects, have been and will be prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated, and will present fairly in all material respects the
financial condition of Southwest Peterbilt and affiliates as of the dates and
for the periods indicated thereon, except as otherwise indicated in the notes
thereto. The Reference Balance Sheet reflects, as of the Balance Sheet Date,
all liabilities, debts and obligations of any nature of Sellers, whether
accrued, absolute, contingent or otherwise, and whether due, or to become due,
including, but not limited to, liabilities, debts or obligations on account of
Taxes to the extent such items are required to be reflected on such balance
sheet under generally acceptable accounting principles consistently applied.
4.4 Events Since the Balance Sheet Date. Since the Balance Sheet Date,
there has not been:
(a) any change in the condition (financial or otherwise) or
in the properties, assets, liabilities, business or prospects of all
or any part of the Business, except normal and usual changes in the
ordinary course of business, none of which has been adverse and all of
which in the aggregate have not been adverse;
(b) any labor trouble, strike or any other occurrence, event
or condition affecting the employees of either Seller that adversely
affects the condition (financial or otherwise) of the Assets or all or
any part of the Business;
(c) any breach or default by either Seller or, to the Best
Knowledge of each Seller and Shareholder, by any other party, under
any agreement or obligation included in the Assets or by which any of
the Assets are bound;
(d) any damage, destruction or loss (whether or not covered
by insurance) adversely affecting the Assets or the Business;
(e) to the Best Knowledge of each Seller and Shareholder, any
legislative or regulatory change adversely affecting the Assets or the
Business;
(f) any change in the types, nature, composition or quality
of the services of the Business, any adverse change in the
contributions of any of the service lines of the Business to the
revenues or net income of such Business, or any adverse change in the
sales, revenue or net income of the Business;
(g) any transaction related to or affecting the Assets or the
Business other than transactions in the ordinary course of business of
Sellers; or
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(h) any other occurrence, event or condition that has
adversely affected (or can reasonably be expected to adversely affect)
the Assets or the Business.
4.5 Customer List. Part 4.5 of the Disclosure Schedule sets forth a
true, correct and complete list of all customers of the Business to which
either Seller has sold or provided products or services during the two (2)
years immediately preceding the date hereof (with an indication thereon of
which Seller(s) has sold or provided products or services). Immediately prior
to the Closing, Sellers shall deliver to Purchaser a true, correct and complete
update of this list as of the Closing Date.
4.6 Taxes and Governmental Returns. As of the date hereof, all Tax
returns, information returns and governmental reports of every nature required
by any Governmental Authority or Governmental Requirement to be filed by either
Seller or which include or should include either Seller, including, but not
limited to, those relating to Taxes of any nature to which either Seller or any
of either of their business is subject ("Governmental Returns"), have been
filed for all periods ending on or before the date hereof (except for any
returns not yet due), and all Taxes shown to be due and payable on such
Governmental Returns or on any assessments related to such Governmental Returns
have been paid. All such Governmental Returns and reports and the information
and data contained therein have been properly and accurately compiled and
completed, fairly present the information purported to be shown therein, and
reflect all Tax liabilities of the applicable Seller for the periods covered by
such Governmental Returns. Neither Seller has any unpaid liability for any
Taxes of any nature whatsoever for any period prior to the date hereof. To the
Best Knowledge of each Seller and Shareholder, none of the Governmental Returns
of either Seller or that include either Seller have been audited, and none are
now under audit, by any Governmental Authority. There are no agreements,
waivers or other arrangements providing for an extension of time with respect
to the assessment of any Taxes of any nature against either Seller or with
respect to any Governmental Return filed by either Seller or that include
either Seller, or any suits or other actions, proceedings, investigations or
claims now pending or threatened against either Seller with respect to any
Taxes or any matters under discussion with any Governmental Authority relating
to any Taxes, or any claims for additional Taxes asserted by any Governmental
Authority.
4.7 Employee Matters. Part 4.7 of the Disclosure Schedule sets forth a
true and complete list of the names of and current annual compensation paid by
Sellers to each employee of Sellers utilized in connection with the operation
of the Business (with an indication thereon of which Seller is the employer of
such employee and which Seller paid such compensation). With respect to each
employee hired after November 6, 1986, a copy of the Form I-9 completed
pursuant to the Immigration Reform and Control Act of 1986, and the rules and
regulations promulgated thereunder, has been attached to Part 4.7 of the
Disclosure Schedule. Neither Seller has any employee benefit plans (including,
but not limited to, pension plans and health or welfare plans), arrangements or
understandings, whether formal or informal. Purchaser will have no liability
with respect to any such plans as a result of the transactions contemplated by
this Agreement. Neither Seller now contributes or has ever contributed to a
"multiemployer plan" as defined in section 4001(a)(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Sellers have
complied with all
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applicable provisions of ERISA and all rules and regulations promulgated
thereunder and neither of Sellers nor any trustee, administrator, fiduciary,
agent or employee thereof has at anytime been involved in a transaction that
would constitute a "prohibited transaction" within the meaning of Section 406
of ERISA. Neither Seller is a party to any collective bargaining or other union
agreements. Neither Seller has, within the last five years, had or been
threatened with any union activities, work stoppages or other labor trouble
with respect to its employees which had or might have had a material adverse
effect on any of the Business. To the Best Knowledge of each Seller and
Shareholder, no union activities, work stoppages or other labor trouble with
respect to the employees of any of the customers or suppliers of the Business
are pending or threatened which might have an adverse effect on the Business.
Other than wage increases in the ordinary course of business, since the Balance
Sheet Date, Sellers have not made any commitment or agreement to increase the
wages or modify the conditions or terms of employment of any of the employees
of either Seller used in connection with the Business, and between the date of
this Agreement and the Closing Date, Sellers will not make any agreement to
increase the wages or modify the conditions or terms of employment of any of
the employees of either Seller used in connection with the Business without the
prior written approval of Purchaser.
4.8 Contracts and Agreements. Part 4.8 of the Disclosure Schedule sets
forth a true and complete list of and briefly describes (including termination
date and which Seller is the contracting party) all of the following contracts,
agreements, leases, licenses, plans, arrangements or commitments, written or
oral, that relate to the Assets or the Business (including all amendments,
supplements and modifications thereto):
(a) all contracts, agreements or commitments in respect of
the sale of products or services or the purchase of raw materials,
supplies or other products or utilities;
(b) all offers, tenders or the like outstanding and capable
of being converted into an obligation of either Seller by the passage
of time or by an acceptance or other act of some other person or
entity or both;
(c) all sales, agency or distributorship agreements or
franchises or legally enforceable commitments or obligations with
respect thereto;
(d) all collective bargaining agreements, union agreements,
employment agreements, consulting agreements or agreements providing
for the services of an independent contractor;
(e) all profit-sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health
insurance or other employee benefit plans, agreements, arrangements or
commitments of any nature whatsoever, whether or not legally binding,
and all agreements with any present or former officer, director or
shareholder of either Seller;
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(f) all loan or credit agreements, indentures, guarantees
(other than endorsements made for collection), mortgages, pledges,
conditional sales or other title retention agreements, and all
equipment financing obligations, lease and lease-purchase agreements
relating to or affecting the Assets or the Business;
(g) all leases related to the Assets or the Business;
(h) all performance bonds, bid bonds, surety bonds and the
like, all contracts and bids covered by such bonds, and all letters of
credit and guaranties;
(i) all consent decrees and other judgments, decrees or
orders, settlement agreements and agreements relating to competitive
activities, requiring or prohibiting any future action;
(j) all accounts, notes and other receivables, and all
security therefor, and all documents and agreements related thereto;
(k) all contracts or agreements of any nature with any
shareholder of either Seller or any Affiliate of any shareholder of
either Seller; and
(l) all contracts, commitments and agreements entered into
outside the ordinary course of the operation of the Business.
All of such contracts, agreements, leases, licenses, plans, arrangements, and
commitments and all other such items included in the Assets but not
specifically described above (collectively, the "Contracts") are valid, binding
and in full force and effect in accordance with their terms and conditions and
there is no existing default thereunder or breach thereof by either Seller, or,
to the Best Knowledge of each Seller and Shareholder, by any other party to the
Contracts, or any conditions which, with the passage of time or the giving of
notice or both, might constitute such a default by either Seller, or, to the
Best Knowledge of each Seller and Shareholder, by any other party to the
Contracts, and the Contracts will not be breached by or give any other party a
right of termination as a result of the transactions contemplated by this
Agreement. To the Best Knowledge of each Seller and Shareholder there is no
reason why any of the Contracts (i) will result in a loss to Purchaser on
completion by performance or (ii) cannot readily be fulfilled or performed by
Purchaser with the Assets on time without undue or unusual expenditure of money
or effort. Copies of all of the documents (or in the case of oral commitments,
descriptions of the material terms thereof) relevant to the Contracts listed in
Part 4.8 of the Disclosure Schedule have been delivered by Sellers to
Purchaser, and such copies and/or descriptions are true, complete and accurate
and include all amendments, supplements or modifications thereto. After
reviewing the Contracts, Purchaser may, at its sole option, choose not to
assume one or more of the Contracts, and, within 30 days of receipt by
Purchaser of all information reasonably requested by Purchaser with respect to
the Contracts, Purchaser shall notify Sellers of which Contracts, if any,
Purchaser does not intend to assume hereunder. Except for Contracts, if any,
that Purchaser notifies Sellers that it will not assume, all of
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the Contracts are and shall be included in the Assets. All of the material
Contracts may be assigned to Purchaser without the approval or consent of any
Person, or, if such approval or consent is required, it will be obtained by
Sellers and delivered to Purchaser at or prior to the Closing.
4.9 Effect of Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not (i)
result in any breach of any of the terms or conditions of, or constitute a
default under, the Articles of Incorporation or other charter documents or
bylaws of either Seller, or any commitment, mortgage, note, bond, debenture,
deed of trust, contract, agreement, license or other instrument or obligation
to which either Seller is now a party or by which either Seller or any of their
respective properties or assets may be bound or affected; (ii) result in any
violation of any Governmental Requirement applicable to either Seller, the
Assets or the Business; (iii) cause Purchaser to lose the benefit of any right
or privilege included in the Assets; (iv) relieve any Person of any obligation
(whether contractual or otherwise) or enable any Person to terminate any such
obligation or any right or benefit enjoyed by either Seller or to exercise any
right under any agreement in respect of the Assets or the Business; or (v)
require notice to or the consent, authorization, approval or order of any
Person (except as may be contemplated by the last sentence of Section 4.8). To
the Best Knowledge of each Seller and Shareholder, the business relationships
of clients, customers and suppliers of the Business will not be adversely
affected by the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
4.10 Properties, Assets and Leasehold Estates. Each Seller owns or has
the right to use (pursuant to a valid lease or license disclosed on Part 4.8 of
the Disclosure Schedule) all operating assets and properties necessary for
Sellers to conduct the Business in the manner presently conducted by Sellers,
and all of such operating assets and properties (or, in the case of leased
assets, the leases covering such assets) are included in the Assets. Sellers
have good and marketable title to all the Assets, free and clear of all
mortgages, liens, pledges, conditional sales agreements, charges, easements,
covenants, assessments, options, restrictions and encumbrances of any nature
whatsoever. The plants, structures, equipment, vehicles and other tangible
properties included in the Assets and the tangible property leased by Sellers
under leases included in the Assets are in good operating condition and repair,
normal wear and tear excepted, and are capable of being used for their intended
purpose in the Business as now conducted. The Assets include all existing
warranties and service contracts with respect to any of the Assets to the
extent the same are capable of being assigned to Purchaser. During the past two
years, there has not been any significant interruption of the Business due to
the breakdown or inadequate maintenance of any of the Assets. All plants,
structures, equipment, vehicles and other tangible properties included in the
Assets, and the present use of all such items, conform to all applicable
Governmental Requirements, and no notice of any violation of any such
Governmental Requirements relating to such assets or their use has been
received by either Seller. The Assets include all easements, rights of ingress
and egress, and utilities and services necessary for the conduct of the
Business.
4.11 Intangible Property. The operation of the Business as now
conducted by Sellers does not require the use of or consist of any rights under
any trademarks, trade names, brand names,
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service marks or copyrights other than "Peterbilt", "Ford", "GMC", "Southwest
Peterbilt", "Southwest Truck Center", "Southwest Peterbilt - GMC Trucks",
"Southwest Peterbilt - Ford Trucks", "Caterpillar", "Cummins", "Detroit
Diesel", and "Southwest Truck Leasing".
4.12 Suits, Actions and Claims. There are no suits, actions, claims,
inquiries or investigations by any Person, or any legal, administrative or
arbitration proceedings in which either Seller is engaged or which are pending
or, to the Best Knowledge of each Seller and Shareholder, threatened against or
affecting either Seller or any of either of their properties, assets or
business, or to which either Seller is or might become a party, or which
question the validity or legality of the transactions contemplated hereby, no
basis or grounds for any such suit, action, claim, inquiry, investigation or
proceeding exists, and there is no outstanding order, writ, injunction or
decree of any Governmental Authority against or affecting either Seller or any
of either of their properties, assets or business. Without limiting the
foregoing, neither of Sellers nor Shareholder has any Best Knowledge of any
state of facts or the occurrence of any event forming the basis of any present
or potential claim against either Seller.
4.13 Licenses and Permits; Compliance With Governmental Requirements.
Part 4.13 of the Disclosure Schedule sets forth a true and complete list of all
licenses and permits necessary for the conduct of the Business. Sellers have
all such licenses and permits validly issued to them and in their name, and all
such licenses and permits are in full force and effect. True and correct copies
of all such licenses and permits are attached to Part 4.13 of the Disclosure
Schedule. No violations are or have been recorded in respect of such licenses
or permits and no proceeding is pending or, to the Best Knowledge of each
Seller and Shareholder, threatened seeking the revocation or limitation of any
of such licenses or permits. All such licenses and permits that are subject to
transfer are included in the Assets, and all such licenses and permits that are
not subject to transfer are conspicuously marked as such on Part 4.13 of the
Disclosure Schedule. Each Seller has complied in all material respects with all
Governmental Requirements applicable to its business, and all Governmental
Requirements with respect to the distribution and sale of products and services
by it.
4.14 Authorization. Sellers and Shareholder have full legal right,
power, and authority to enter into and deliver this Agreement and to consummate
the transactions set forth herein and to perform all the terms and conditions
hereof to be performed by them. The execution and delivery of this Agreement by
Sellers and Shareholder and the performance by each of them of the transactions
contemplated herein have been duly and validly authorized by all requisite
corporate action of Sellers and by Shareholder, and this Agreement has been
duly and validly executed and delivered by Sellers and Shareholder and is the
legal, valid and binding obligation of each of them, enforceable against each
of them in accordance with its terms, except as limited by applicable
bankruptcy, moratorium, insolvency or other similar laws affecting generally
the rights of creditors or by principles of equity.
4.15 Records. The books, records and minutes kept by Sellers with
respect to the Assets and the Business, including, but not limited to, all
customer files, service agreements, quotations, correspondence, route sheets
and historic revenue data of Sellers, contain records of all matters required
to be included therein by any Governmental Requirement or by generally accepted
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accounting principles, and such books, records and minutes are true, accurate
and complete in all material respects and (except for corporate minute books
and stock records) are included in the Assets.
4.16 Environmental Protection Laws.
(a) For purposes of this Section 4.16, unless the context
otherwise specifies or requires, the following terms shall have the
meaning herein defined:
(i) "Waste Materials" shall mean
(A) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976, 42.
U.S.C. Sections 6901 et seq., as amended from time
to time, and regulations promulgated thereunder;
(B) any "hazardous substance" as defined by
the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C.
Sections 9601, et seq., as amended from time to
time;
(C) asbestos;
(D) polychlorinated biphenyls;
(E) underground storage tanks, whether
empty, filled or partially filled with any
substance;
(F) any other substance the presence of
which is prohibited by any Governmental Requirement;
and
(G) any other substance which by any
Governmental Requirement requires special handling
or notification of any federal, state or local
governmental entity in its collection, storage,
treatment, recycling, or disposal.
(ii) "Waste Materials Contamination" shall mean the
presence of Waste Materials on, in or under any property
whatsoever which is associated with or is in any way related
to the Assets or the Business, including the improvements,
facilities, soil, ground, water or air.
(b) All business conducted by Sellers, including but not
limited to the Business, has been and is being operated, and the
assets of Sellers, including but not limited to the Assets, have been
and are being used and were obtained, in all respects in compliance
with all Governmental Requirements.
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(c) Neither Seller is now, and neither ever has been, in
violation of any Governmental Requirement. The Assets, the Business
and all of the operations of Sellers are in full compliance with all
Governmental Requirements relating to Waste Materials, and no judicial
or administrative actions, including non-compliance orders or demand
letters, are pending that relate to such Governmental Requirements.
Without in any way limiting the foregoing, Sellers and Shareholder
hereby jointly and severally specifically represent and warrant that
to the Best Knowledge of each Seller and Shareholder:
(i) Sellers have complied with all applicable
Governmental Requirements relating to pollution and
environmental control;
(ii) Neither Seller is in violation of any of the
permits described in or required to be described on Part 4.13
of the Disclosure Schedule or any Governmental Requirement
regulating emissions, discharges or releases (including
solids, liquids and gases) into the environment or the proper
transportation, handling, storage, treatment or disposal of
materials;
(iii) Each Seller has received all permits and
approvals with respect to emissions, discharges or releases
(including solids, liquids and gases) into the environment
and the proper transportation, handling, storage, treatment
and disposal of materials required for the operation of the
businesses of such Seller as presently conducted;
(iv) Each Seller has kept all records and made all
filings required by applicable Governmental Requirements with
respect to emissions, discharges or releases (including
solids, liquids and gases) into the environment and the
proper transportation, handling, storage, treatment and
disposal of materials;
(v) All hazardous waste, hazardous materials and
hazardous substances attributable to the Assets, the Business
or the operations of Sellers on, in or under any real
property owned or leased by Sellers have been removed and no
past or present disposal, spill, or other release of
hazardous waste, hazardous materials or hazardous substances
attributable to the Assets, the Business or the operations of
Sellers on, in, under or adjacent to any real property owned
or leased by Sellers will subject Purchaser to corrective or
response action or any other liability under any Governmental
Requirement or the common law;
(vi) No investigation, administrative order, consent
order and agreement, litigation or settlement with respect to
Waste Materials or Waste Materials Contamination is proposed,
threatened, anticipated or in existence with respect to the
Assets or the Business. None of the Assets are currently on,
and to the Best Knowledge of each Seller and Shareholder,
have ever been on, any federal or state "Superfund" or
"Superlien" list.
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(vii) Neither Seller has any contingent liabilities
under any Governmental Requirement to any Person, whether or
not such contingent liability is required pursuant to
generally accepted accounting principles to be reflected on
the financial statements of Sellers, in connection with any
emission, discharge or release of any hazardous or toxic
waste, substance or constituent or any other substance into
the environment caused by Seller; and
(viii) Neither Seller has handled, treated, stored,
generated, transported or disposed of any Waste Material in
contravention of any Governmental Requirement, and there have
been no acts or omissions of either Seller or any of either
of their agents or employees that would result in liability
under any Governmental Requirement.
(d) Sellers have, and have listed on Part 4.13 of the
Disclosure Schedule, all necessary environmental and operations
permits for operations relating to the Business or the Assets.
4.17 No Underground Storage Tanks. Except as described in the
Disclosure Schedule, there are no underground storage tanks located on any of
the premises to be leased by Purchaser pursuant to the provisions of Article
15.
4.18 Securities Laws Matters.
(a) Except as expressly set forth in the Registration Rights
Agreements, Sellers recognize and understand that the Stock
Consideration, the warrants described in Section 3.1 and the Common
Stock issued upon exercise of such warrants (collectively, the
"Securities") will not be registered under the Securities Act, or
under the securities laws of any state (the Securities Act and such
securities laws, collectively the "Securities Laws"). The Securities
are not being so registered in reliance upon exemptions from the
Securities Laws which are predicated, in part, on the representations,
warranties and agreements of Sellers contained herein.
(b) (i) Sellers have business knowledge and experience, such
experience being based on actual participation therein, (ii) Sellers
are capable of evaluating the merits and risks of an investment in the
Securities and the suitability thereof as an investment therefor,
(iii) the Securities will be acquired solely for investment and not
with a view toward resale or redistribution in violation of the
Securities Laws, (iv) in connection with the transactions contemplated
hereby, no assurances have been made concerning the future results of
Purchaser or Rush or any Affiliate thereof or as to the value of the
Securities and (v) Sellers are each an "accredited investor" within
the meaning of (a) Regulation D promulgated by the SEC pursuant to the
Securities Act and (b) the Arizona Securities Act and the regulations
promulgated thereunder. Sellers understand that neither Purchaser nor
Rush is under any obligation to file a registration statement or to
take any other action under the Securities
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Laws with respect to any such Securities except as expressly set forth
in the Registration Rights Agreements.
(c) Sellers have consulted with Sellers' own counsel in
regard to the Securities Laws and are fully aware (i) of the
circumstances under which Sellers are required to hold the Securities,
(ii) of the limitations on the transfer or disposition of the
Securities, (iii) that the Securities must be held indefinitely unless
the transfer thereof is registered under the Securities Laws or an
exemption from registration is available and (iv) that no exemption
from registration is likely to become available for at least one year
from the date of acquisition of the Securities. Sellers have been
advised by Sellers' counsel as to the provisions of Rules 144 and 145
as promulgated by the Commission under the Securities Act and have
been advised of the applicable limitations thereof. Sellers
acknowledge that Purchaser and Rush are relying upon the truth and
accuracy of the representations and warranties in this Section 4.18 by
Sellers in consummating the transactions contemplated by this
Agreement without registering the Securities under the Securities
Laws.
(d) Sellers have been furnished with (i) the definitive proxy
statement filed with the Commission in connection with the annual
meeting of stockholders of Rush held on May 18, 1999 and (ii) copies
of Rush's Amendment No. 2 to Form S-1Registration Statement and
Prospectus to Form S-1 filed on Form 424(b)(4), Annual Report on Form
10-K for the year ended December 31, 1998, and Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1999 and June 30, 1999,
filed with the Commission under the Exchange Act. Sellers have been
furnished with the complete financial statements of Rush for the
fiscal years ended 1996, 1997 and 1998. Sellers have been furnished
with a summary description of the terms of the Common Stock and
Purchaser and Rush have made available to Sellers the opportunity to
ask questions and receive answers concerning the terms and conditions
of the transactions contemplated by this Agreement and to obtain any
additional information which they possess or could reasonably acquire
for the purpose of verifying the accuracy of information furnished to
Sellers as set forth herein or for the purpose of considering the
transactions contemplated hereby. Rush has offered to make available
to Sellers upon request at any time all exhibits filed by Rush with
the Commission as part of any of the reports filed therewith.
(e) Sellers agree that the certificates representing the
Securities will be imprinted with the following legend, the terms of
which are specifically agreed to:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS AND ARE
"RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE 144
UNDER THE ACT. NEITHER THE SHARES NOR ANY INTEREST THEREIN
MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED
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OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND SUCH STATE SECURITIES LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE
OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION
ARE REASONABLY SATISFACTORY TO THE COUNSEL FOR THIS
CORPORATION, IS AVAILABLE.
Sellers understand and agree that appropriate stop transfer notations will be
placed in the records of Rush and with its transfer agent in respect of the
Securities.
4.19 Brokers and Finders. No broker or finder has acted for any Seller
or Shareholder in connection with this Agreement or the transactions
contemplated by this Agreement and no broker or finder is entitled to any
brokerage or finder's fee or to any commission in respect thereof based in any
way on agreements, arrangements or understandings made by or on behalf of any
Seller or Shareholder.
4.20 Deposits. Neither Seller holds any deposits or prepayments by
third parties with respect to any of the Assets or the Business ("Deposits")
which are not reflected as liabilities on such Seller's Reference Balance
Sheet. If either Seller holds any Deposits as of the Closing Date, Purchaser
will be given credit against the cash portion of the Purchase Price of the
applicable Seller for the amount of any such Deposits pursuant to Section 3.4
hereof.
4.21 Work Orders. There are no outstanding work orders or contracts
relating to any portion of the Assets from or required by any policy of
insurance, fire department, sanitation department, health authority or other
governmental authority nor is there any matter under discussion with any such
parties or authorities relating to work orders or contracts.
4.22 Telephone Numbers. All telephone numbers used by either Seller in
connection with the Business are included in the Assets and will not be used by
any Seller or Shareholder following the Closing, except by Shareholder in the
conduct of Purchaser's business.
4.23 No Untrue Statements. The statements, representations and
warranties of Sellers and Shareholder set forth in this Agreement, the
Schedules, the Seller Certificate and the exhibits and annexes attached hereto
do not include (and in the case of the Seller Certificate, will not include)
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements, representations and warranties made not
misleading. To the Best Knowledge of each Seller and Shareholder, there is no
fact or matter that is not disclosed to Purchaser in this Agreement or the
Schedules that materially and adversely affects or, so far as each Seller or
Shareholder can now reasonably foresee, could materially and adversely affect
the condition (financial or otherwise) of any of the Assets or the Business or
the ability of any Seller or Shareholder to perform their respective
obligations under this Agreement.
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5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to Sellers as follows:
5.1 Incorporation. Purchaser and Rush are each a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and the State of Texas, respectively.
5.2 Authorization. Purchaser has full legal right and corporate power
to enter into and deliver this Agreement and to consummate the transactions set
forth herein and to perform all the terms and conditions hereof to be performed
by it. This Agreement has been duly executed and delivered by Purchaser and is
a legal, valid and binding obligation of Purchaser enforceable in accordance
with its terms, except as limited by applicable bankruptcy, moratorium,
insolvency or other laws affecting generally the rights of creditors or by
principles of equity.
5.3 SEC Documents. Rush has provided to Sellers and Shareholder copies
of its Annual Report on Form 10-K for the year ended December 31, 1998, its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and June
30, 1999, its proxy statement with respect to the Annual Meeting of
Stockholders held on May 18, 1999, and its Amendment No. 2 to Form S-1
Registration Statement and Prospectus to Form S-1 filed on Form 424(b)(4) (such
documents collectively referred to herein as the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder applicable to such SEC Documents, and none of
the SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The consolidated financial statements of Rush
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of Rush and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (except in the case of
interim period financial information for normal year-end adjustments). All
material agreements, contracts and other documents required to be filed as
exhibits to the SEC Documents have been so filed. The consolidated balance
sheet included in Rush's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999 reflects, as of the date thereof, all liabilities, debts and
obligations of any nature, kind or manner of Rush and its subsidiaries, whether
direct, accrued, absolute, contingent or otherwise, and whether due or to
become due that are required to be reflected on such balance sheet under
generally accepted accounting principles consistently applied.
5.4 Brokers and Finders. No broker or finder has acted for Purchaser
or Rush in connection with this Agreement or the transactions contemplated by
this Agreement and no broker
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or finder is entitled to any brokerage or finder's fee or to any commission in
respect thereof based in any way on agreements, arrangements or understandings
made by or on behalf of Purchaser or Rush.
5.5 Effect of Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not (i)
result in any breach of any of the terms or conditions of, or constitute a
default under, the Articles of Incorporation or other charter documents or
bylaws of Purchaser, or any commitment, mortgage, note, bond, debenture, deed
of trust, contract, agreement, license or other instrument or obligation to
which Purchaser is now a party or by which Purchaser or any of its properties
or assets may be bound or affected; or (ii) result in any violation of any
Governmental Requirement applicable to Purchaser.
5.6 Stock Consideration. The shares of Common Stock representing the
Stock Consideration to be delivered to Sellers are duly authorized and will be,
when issued, validly issued, fully paid and non-assessable, and free and clear
of all liens, claims, rights, charges, encumbrances and security interests of
whatsoever nature or type other than those imposed by Sellers and restrictions
imposed by Rule 144 and any other Securities Laws.
6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNIFICATIONS, GUARANTEES,
REPRESENTATIONS AND WARRANTIES OF SELLERS AND SHAREHOLDER. All statements of
fact contained in this Agreement, the Schedules, the Seller Certificate and the
exhibits and annexes attached hereto delivered by or on behalf of Sellers or
Shareholder shall be deemed representations and warranties of Sellers and
Shareholder hereunder. Regardless of any investigation at any time made by or on
behalf of Purchaser, all indemnifications, guarantees, covenants, agreements,
representations and warranties made by Sellers or Shareholder hereunder or
pursuant hereto or in connection with the transactions contemplated hereby shall
survive for eighteen months after the Closing Date, except with respect to (a)
the representations and warranties set forth in Section 4.6, which shall survive
until the sixth anniversary of the Closing Date, (b) the representations and
warranties set forth in Sections 4.16 and 4.17, which shall survive until the
fifth anniversary of the Closing Date and (c) the representations and warranties
set forth in Section 4.18, which shall survive the Closing Date indefinitely.
7. CONTRACTS PRIOR TO THE CLOSING DATE.
7.1 Approval of Contracts. Except in the ordinary course of business
and consistent with past practice, Sellers shall not enter into or amend any
contracts related to the Business or the Assets between the date hereof and the
Closing Date unless approved in writing by Purchaser. Sellers will provide all
information relating to each such contract or amendment that is necessary or
requested by Purchaser to enable Purchaser to make an informed decision
regarding approval of such contract or amendment.
7.2 Contracts Included in Assets. Any contracts, agreements or
commitments (or amendments to such items) related to the Business or the Assets
that are entered into by Sellers between the date hereof and the Closing Date
and are approved pursuant to the provisions of Section
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7.1, shall be included in the Assets (with no addition to the Purchase Price)
and shall be assumed by Purchaser pursuant to Section 3.2.
8. COVENANTS OF SELLERS AND SHAREHOLDER PRIOR TO CLOSING DATE. Sellers
and Shareholder hereby jointly and severally covenant and agree that between
the date of this Agreement and the Closing Date:
8.1 Access to Information. Sellers shall afford to the officers and
authorized representatives of Purchaser access to the plants, properties,
documents, books and records of Sellers related to the Assets and the Business
and shall furnish Purchaser with such financial and operating data and other
information regarding the Assets and the Business and as Purchaser may from
time to time reasonably request.
8.2 General Affirmative Covenants. Each Seller shall, and Shareholder
shall cause each Seller to:
(a) conduct the Business only in the ordinary course;
(b) maintain the Assets in good working order and condition,
ordinary wear and tear excepted;
(c) perform all its obligations under agreements relating to
or affecting the Assets or the Business;
(d) keep in full force and effect adequate insurance coverage
on the Assets and the operation of the Business;
(e) use its best efforts to maintain and preserve the
Business, and retain its present employees, customers, suppliers and
others having business relations with it;
(f) duly and timely file all reports or returns required to
be filed with any Governmental Authority, and promptly pay all Taxes
levied or assessed upon it or its properties or upon any part thereof;
(g) duly observe and conform to all Governmental Requirements
relating to the Assets or its properties or to the operation and
conduct of its business and all covenants, terms and conditions upon
or under which any of its properties are held;
(h) remove and have released, by payment or otherwise, all
liens and encumbrances of any nature whatsoever on the Assets (except
for liens and encumbrances, if any, specifically assumed by Purchaser
pursuant to this Agreement);
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(i) duly and timely take all actions necessary to carry out
the transactions contemplated hereby;
(j) deliver to Purchaser on or before the 15th day of each
month true and correct unaudited combined monthly balance sheets and
statements of income for Southwest Peterbilt and affiliates for the
immediately preceding month;
(k) deliver to Purchaser on or before the Closing Date any
additional financial information reasonably requested by Purchaser to
allow Purchaser to timely comply with its reporting requirements under
the Exchange Act, all in form and substance sufficient to allow
Purchaser to timely comply with such reporting requirements; and
(l) preserve and maintain the goodwill of the Business.
8.3 General Negative Covenants. Sellers shall not take, and
Shareholder will not permit either Seller to take, any of the following actions
without the prior written consent of Purchaser:
(a) entering into or amending or assuming any contract,
agreement, obligation, lease, license or commitment related to the
Business or the Assets (or of a type included in the Assets) other
than in accordance with the provisions of Section 7.1;
(b) except in the ordinary course of business and consistent
with past practice, selling, leasing, abandoning or otherwise
disposing of any of the Assets, including, but not limited to, real
property, machinery, equipment or other operating properties;
(c) engaging in any activities or transactions that might
adversely affect the Assets or the Business;
(d) making any organizational change or personnel change, or
increasing the compensation or benefits of any officer or employee of
either Seller, other than normal compensation and benefit adjustments
in the ordinary course of the Business consistent with past practice;
or
(e) selling or agreeing to sell 10 or more new trucks in any
single transaction or any series of related transactions at a gross
margin of less than 3 1/2% or purchasing or agreeing to purchase 10 or
more used trucks in a single transaction or any series of related
transactions.
8.4 Disclosure of Misrepresentations and Breaches. If any of the
representations or warranties of Sellers or Shareholder hereunder are
determined by Sellers or Shareholder to have been incorrect when made, or are
determined by Sellers or Shareholder to be incorrect as of any date subsequent
to the date hereof, or if any of the covenants of Sellers or Shareholder
contained in this Agreement have not been complied with timely, then Sellers
and Shareholder shall immediately notify
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Purchaser to such effect (provided that such notice shall in no way limit the
rights of Purchaser (i) under Articles 10 and 17 to terminate this Agreement or
refuse to consummate the transactions contemplated hereby or (ii) to enforce
any rights or remedies it may have hereunder).
8.5 Government Filings. Sellers and Shareholder shall cooperate with
Purchaser and its representatives in the preparation of any documents or other
material that may be required by any Governmental Authority in connection with
the Assets or the Business or the transactions contemplated hereby. With
respect to any filing required by the HSR Act, Purchaser, on the one hand, and
Sellers, on the other hand, shall split the cost of any such filing fees, and
each party shall pay their own attorneys' fees.
8.6 Access to and Inspection of Premises, Facilities and Equipment.
Sellers shall afford the officers and authorized representatives of Purchaser
access to the premises, facilities and tangible assets included in the Assets
and the premises to be leased by Purchaser pursuant to the provisions of
Article 15 for the purpose of inspecting such premises, facilities and
equipment in such manner as Purchaser shall deem appropriate, including, but
not limited to, an environmental inspection and audit to be conducted by
GEO-Consul. The cost of such environmental inspection and audit shall be split
equally between Purchaser and Sellers, provided that GEO-Consul shall address
all reports generated by such inspection and audit to Purchaser and Sellers and
shall authorize Purchaser and Sellers to each rely on all reports generated by
such inspection and audit. If upon completion of such inspection, Purchaser
finds any conditions which Purchaser, in its sole discretion, considers to be
unacceptable, Purchaser shall have the right to cause the applicable Seller to
pay 50% of the first $200,000 to remedy such unacceptable condition and, in the
event the amount required to remedy such unacceptable condition exceeds
$200,000, Purchaser shall have the right to terminate this Agreement pursuant
to Articles 10 and 17.
9. COVENANTS REGARDING THE CLOSING.
9.1 Covenants of Sellers and Shareholder. Sellers and Shareholder
hereby covenant and agree that they shall (i) use commercially reasonable
efforts to cause all of their representations and warranties set forth in this
Agreement to be true on and as of the Closing Date, (ii) use commercially
reasonable efforts to cause all of their obligations that are to be fulfilled
on or prior to the Closing Date to be so fulfilled, (iii) use commercially
reasonable efforts to cause all conditions to the Closing set forth in this
Agreement to be satisfied on or prior to the Closing Date, and (iv) deliver to
Purchaser at the Closing the certificates, updated lists, notices, consents,
authorizations, approvals, agreements, leases, transfer documents, receipts,
and amendments contemplated by Article 10 (with such additions or exceptions to
such items as are necessary to make the statements set forth in such items
accurate, provided that if any of such additions or exceptions cause any of the
conditions to Purchaser's obligations hereunder as set forth in Article 10 not
to be fulfilled, such additions and exceptions shall in no way limit the rights
of Purchaser under Articles 10 and 18 to terminate this Agreement or refuse to
consummate the transactions contemplated hereby).
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9.2 Covenants of Purchaser. Purchaser hereby covenants and agrees that
it shall (i) use commercially reasonable efforts to cause all of its
representations and warranties set forth in this Agreement to be true on and as
of the Closing Date, (ii) use commercially reasonable efforts to cause all of
its obligations that are to be fulfilled on or prior to the Closing Date to be
so fulfilled, (iii) use commercially reasonable efforts to cause all conditions
to the Closing set forth in this Agreement to be satisfied on or prior to the
Closing Date (provided that failure by Purchaser to comply with a second
requirement for information under the HSR Act or to comply with any requested
divestiture of assets or to enter into any consent or similar order or
agreement shall not constitute a failure of Purchaser to use commercially
reasonable efforts), and (iv) deliver to Sellers at the Closing the certificate
contemplated by Article 11 (with such additions or exceptions to such
certificate as are necessary to make the statements set forth in such
certificate accurate, provided that if any of such additions or exceptions
cause any of the conditions to Sellers' obligations hereunder as set forth in
Article 11 not to be fulfilled, such additions and exceptions shall in no way
limit the rights of Sellers under Articles 11 and 18 to terminate this
Agreement or to refuse to consummate the transactions contemplated hereby).
9.3 Inventory Audit. Within five days prior to Closing, Sellers and
Purchaser shall each appoint one or more representatives knowledgeable in the
heavy duty truck business, and shall cause such representatives to conduct an
audit (in accordance with generally accepted accounting principles,
consistently applied) of the inventory of the Assets as of the Closing Date.
Each party shall bear their cost of conducting such audit.
10. CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser hereunder are, at the option of Purchaser, subject to the
satisfaction, on or prior to the Closing Date, of the following conditions (any
of which may be waived by Purchaser, in its sole discretion):
10.1 Accuracy of Representations and Warranties and Fulfillment of
Covenants. The representations and warranties of Sellers and Shareholder
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date. Each and
all of the agreements and covenants of Sellers and Shareholder to be performed
on or before the Closing Date pursuant to the terms hereof shall have been
performed in all material respects. Sellers and Shareholder shall have
delivered to Purchaser a certificate dated the Closing Date and executed by
Sellers and Shareholder to all such effects or disclosing any such
representation or warranty not so true and correct or any such agreement or
covenant not so performed.
10.2 No Governmental Actions. No action or proceeding before any
Governmental Authority shall have been instituted or threatened to restrain or
prohibit the transactions contemplated by this Agreement. No Governmental
Authority shall have taken any other action as a result of which the management
of Purchaser reasonably deems it inadvisable to proceed with the transactions
contemplated by this Agreement.
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10.3 No Adverse Change. No material adverse change in the Business
shall have occurred, and no loss or damage to any of the Assets, whether or not
covered by insurance, shall have occurred since the Balance Sheet Date, and
Sellers shall have delivered to Purchaser a certificate dated the Closing Date
and executed by Sellers and Shareholder to all such effects.
10.4 Update of Contracts. Sellers and Shareholder shall have delivered
to Purchaser an accurate list, as of the Closing Date, showing (i) all
agreements, contracts and commitments of the type listed on Part 4.8 of the
Disclosure Schedule entered into since the date of this Agreement (including,
but not limited to, amendments, if any, to the items listed on Part 4.8 of the
Disclosure Schedule), and (ii) all other agreements, contracts and commitments
related to the Business or the Assets entered into since the date of this
Agreement, together with true, complete and accurate copies of all documents
(or in the case of oral commitments, descriptions of the material terms
thereof) relevant to the items on the list (the "New Contracts"). Purchaser
shall have the opportunity to review the New Contracts, and shall have the
right to delay the Closing for up to five (5) days if it in its sole discretion
Purchaser deems such a delay necessary to enable it to adequately review the
New Contracts. All of the New Contracts that are approved in writing by
Purchaser prior to the Closing, as it may be delayed, (whether such approval by
Purchaser is given before or after the applicable Seller executes the New
Contract) shall be included in the Assets (with no addition to the Purchase
Price) and the future obligations of such Seller thereunder shall be assumed by
Purchaser pursuant to Section 3.2. Any New Contracts that are not approved in
writing by Purchaser prior to the Closing, as it may be delayed, shall remain
the sole obligation of Sellers and shall not be assumed by Purchaser, and
Purchaser shall have no obligation or liability with respect thereto.
10.5 No Material Adverse Information. The investigations with respect
to Sellers, the Assets and the Business, performed by Purchaser's professional
advisors and other representatives shall not have revealed any material adverse
information concerning Sellers, the Assets or the Business that has not been
made known to Purchaser in writing prior to the date of this Agreement.
10.6 Notices and Consents. No notice to or consent, authorization,
approval or order of any Person shall be required for the consummation of the
transactions contemplated by this Agreement (except for notices that have been
duly and timely given and consents, authorizations and approvals that have been
obtained). True and correct copies of all required notices, consents,
authorizations and approvals shall have been delivered to Purchaser and shall
be satisfactory in form and substance to Purchaser and its counsel.
10.7 Employment Agreements. Each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. shall have executed and delivered to Purchaser an
employment agreement in substantially the form of the agreement attached hereto
as Exhibit 10.7(a) ("Non-Shareholder Employment Agreements") and Shareholder
shall have executed and delivered to Purchaser an employment agreement in
substantially the form of the agreement attached hereto as Exhibit 10.7(b) (the
"Shareholder Employment Agreement").
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10.8 Lease Documents. Sellers shall have executed and delivered to
Purchaser the Lease Documents; DI Investment shall have executed, acknowledged
and delivered to Purchaser a memorandum of lease for the Phoenix Lease and, if
applicable, the Tucson Purchaser Lease, each in form and substance reasonably
acceptable to the parties thereto; and the Flagstaff Landlord, the ▇▇▇▇▇▇▇▇
Landlord and the Tucson Landlord, as applicable, shall have executed and
delivered to Purchaser a landlord estoppel and consent relating to the
Flagstaff Lease, the ▇▇▇▇▇▇▇▇ Lease and the Tucson Lease, each in form and
substance reasonably acceptable to Purchaser.
10.9 Other Documents. Sellers and Shareholder shall have delivered or
caused to be delivered all other documents, agreements, resolutions,
certificates or declarations as Purchaser or its attorneys may reasonably
request.
10.10 Dealer License. Purchaser shall have obtained written approval
to be licensed as a New Motor Vehicle Dealer by the appropriate department or
agency of the State of Arizona to do business as a motor vehicle dealer at the
present locations of the dealerships; provided, however, that Purchaser shall
use its reasonable best efforts to secure such approval prior to Closing.
10.11 Inventory Audit. The inventory audit contemplated by Section 9.3
shall have been completed and the results thereof shall be satisfactory to
Purchaser.
10.12 Due Diligence. Purchaser shall be satisfied with the results of
its continuing legal, accounting and other due diligence regarding Sellers and
the Business.
10.13 Dealership Agreement. Purchaser and PACCAR shall have executed
and delivered a dealer sales and service agreement, and ancillary or related
agreements, in form and substance satisfactory to Purchaser.
10.14 Governmental Approvals. All necessary government and regulatory
approvals have been obtained and all required waiting periods under the HSR Act
shall have expired or been terminated.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS. The obligations of
Sellers hereunder are, at their option, subject to the satisfaction, on or
prior to the Closing Date, of the following conditions (any of which may be
waived by Sellers in their sole discretion):
11.1 Accuracy of Representations and Warranties and Fulfillment of
Covenants. The representations and warranties of Purchaser contained in this
Agreement shall be true and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date. Each of the agreements and covenants of Purchaser to be performed on
or before the Closing Date shall have been performed. Purchaser shall have
delivered to Sellers a certificate dated the Closing Date and executed by
Purchaser to all such effects.
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11.2 Governmental Approvals. No action or proceeding before any
Governmental Authority shall have been instituted or threatened to restrain or
prohibit the transactions contemplated by this Agreement. No Governmental
Authority shall have taken any other action as a result of which the management
of Sellers reasonably deem it inadvisable to proceed with the transactions
contemplated by this Agreement.
11.3 Employment Agreements. Purchaser shall have executed and
delivered the Non- Shareholder Employment Agreements and the Shareholder
Employment Agreement.
11.4 Lease Documents. Purchaser shall have executed and delivered to
Seller or DI Investment, as applicable, the Lease Documents.
11.5 Other Documents. Purchaser shall have delivered or caused to be
delivered all other documents, agreements, resolutions, certificates or
declarations as Sellers or Shareholder or their attorneys may reasonably
request, including stock certificates evidencing the Stock Consideration.
11.6 Inventory Audit. The inventory audit contemplated by Section 9.3
shall have been completed and the results thereof satisfactory to Sellers.
11.7 Registration Rights Agreement. Rush shall have executed and
delivered to Sellers the registration rights agreement in substantially the
form attached hereto as Exhibit 11.7(a) and, if Shareholder elects to receive
the Warrants referenced in Section 3.1, the registration rights agreement in
substantially the form attached hereto as Exhibit 11.7(b) (collectively, the
"Registration Rights Agreements").
11.8 Listing of Stock Consideration. Rush shall have listed the shares
of Common Stock representing the Stock Consideration on The Nasdaq National
Market.
11.9 Tucson Lease Guaranty Release. Shareholder and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
shall have been released from all obligations under the guaranty each has
signed relating to the Tucson Lease.
11.10 Operating Agreements. Purchaser shall have executed and
delivered an Operating Agreement relating to the GMC inventory of new and used
vehicles, parts and accessories held by Sellers as of the Closing in
substantially the form of the agreement attached hereto as Exhibit 11.10 (the
"GMC Operating Agreement").
11.11 Governmental Approvals. All necessary government and regulatory
approvals have been obtained and all required waiting periods under the HSR Act
shall have expired or been terminated.
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12. SPECIAL CLOSING AND POST-CLOSING COVENANTS.
12.1 Further Assurances. After Closing, as and when requested by any
party hereto from time to time, the other parties hereto shall and shall cause
their Affiliates to execute and deliver, or cause to be executed and delivered,
such documents and instruments and shall take, or cause to be taken, such
further or other actions as may be reasonably necessary to carry out the
purposes of this Agreement including, without limitation, executing and
delivering any instrument Purchaser may request to convey the Assets to
Purchaser as required by this Agreement.
12.2 Delivery of Funds and Other Assets Collected by Sellers. To the
extent either Seller receives any funds or other assets in payment of
receivables, or in connection with any other Assets, being sold to Purchaser
pursuant hereto, Sellers shall immediately deliver such funds and assets to
Purchaser and take all steps necessary to vest title to such funds and assets
in Purchaser.
12.3 Change of Name of Sellers. Immediately upon the occurrence of the
Closing, Sellers and Shareholder shall cease using the name "Southwest
Peterbilt", "Southwest Truck Center" "Southwest Peterbilt - GMC Trucks",
"Southwest Peterbilt - Ford Trucks" and "Southwest Truck Leasing" and all
derivations thereof, and covenant and agree that after Closing they will not,
directly or indirectly, use such names or any derivation thereof, in connection
with selling, servicing, renting, leasing, insuring or financing new or used
Class 3 through 8 trucks; provided (i) Shareholder may use such names for a
period of one year following the Closing for the sole purpose of winding up the
affairs of Sellers, so long as such use does not involve the selling,
servicing, renting, leasing, insuring or financing new or used Class 3 through
8 trucks, or interfere with the use of such names by Rush or any of its
Affiliates, and (ii) Seller and Shareholder may use such names in connection
with selling, renting or leasing any Excluded Asset.
12.4 Access to Files. For a period of five years after the Closing, or
such longer term as Sellers or Shareholder may reasonably require if any Seller
or Shareholder is then involved in litigation or under investigation or audit
by a governmental agency or bureau relating to Sellers or the Assets, Purchaser
shall maintain and give Sellers and Shareholder and their respective
representatives full access to the premises of Purchaser and full access to,
and shall permit Sellers and Shareholder and their respective representatives,
at their own expense, to make photocopies of, all originals of the files and
records relating to Sellers or the Assets.
12.5 Exchange Act Filing; Cooperation. After the Closing, Sellers
shall, at the cost and expense of Purchaser, reasonably cooperate with and
provide information to Purchaser as is necessary for Purchaser to comply with
its reporting obligations under the Exchange Act.
12.6 Nondisclosure of Confidential Information.
(a) By Sellers and Shareholder. Sellers and Shareholder
recognize and acknowledge that they have and will have access to
certain confidential information of Sellers that is included in the
Assets (including, but not limited to, lists of customers, and
costs and
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financial information) that after the consummation of the
transactions contemplated hereby will be valuable, special and unique
property of Purchaser. Sellers and Shareholder agree that they will
not disclose, and they will use their best efforts to prevent
disclosure by any other Person of, any such confidential information
to, nor any discussion of any of the terms of this Agreement with, any
Person for any purpose or reason whatsoever, except to authorized
representatives of Purchaser. Sellers and Shareholder recognize and
agree that violation of any of the agreements contained in this
Section 12.6(a) will cause irreparable damage or injury to Purchaser,
the exact amount of which may be impossible to ascertain, and that,
for such reason, among others, Purchaser shall be entitled to an
injunction, without the necessity of posting bond therefor,
restraining any further violation of such agreements. Such rights to
any injunction shall be in addition to, and not in limitation of, any
other rights and remedies Purchaser may have at law or in equity
against Sellers or Shareholder.
(b) By Purchaser. Purchaser recognizes and acknowledges that
it may have access to certain confidential information of Sellers that
is not included in or connected with the Assets and not used or
necessary for the Business that after the consummation of the
transactions contemplated hereby will be valuable, special and unique
property of Sellers. Purchaser agrees that it will not disclose, and
will use its best efforts to prevent disclosure by any other Person
of, any such confidential information to any Person for any purpose or
reason whatsoever, except to authorized representatives of Purchaser.
Purchaser recognizes and agrees that violation of any of the
agreements contained in this Section 12.6(b) will cause irreparable
damage or injury to Sellers, the exact amount of which may be
impossible to ascertain, and that, for such reason, among others,
Sellers shall be entitled to an injunction, without the necessity of
posting bond therefor, restraining any further violation of such
agreements. Such rights to any injunction shall be in addition to, and
not in limitation of, any other rights and remedies Sellers may have
at law or in equity against Purchaser.
(c) Exceptions. The foregoing restrictions will not apply to
any information which (a) becomes available to the public generally
(otherwise than by reason of a breach of the provisions of this
Section 12.6), (b) can be shown by written records to have been known
by the disclosing party prior to the date of this Agreement or (c) is
lawfully acquired by the disclosing party from another person. In the
event any confidential information protected by this Section 12.6 is
required to be disclosed under court or governmental order, rule or
regulation, the party required to disclose such confidential
information shall immediately provide the party entitled to protection
hereunder with notice thereof and shall give full and complete
cooperation to such party in its efforts to object to, and to obtain
protection of any confidential information that is the subject of,
such required disclosure.
12.7 Assignment of Contracts. Notwithstanding any other provision of
this Agreement, nothing in this Agreement or any related document shall be
construed as an attempt to assign (i) any Contract which, as a matter of law or
by its terms, is nonassignable without the consent of the other parties thereto
unless such consent has been given, or (ii) any Contract or claim as to which
all of the remedies for the enforcement thereof enjoyed by Sellers would not,
as a matter of law or by its terms,
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pass to Purchaser as an incident of the transfers and assignments to be made
under this Agreement. In order, however, that the full value of every Contract
and claim of the character described in clauses (i) and (ii) above and all
claims and demands on such Contracts may be realized for the benefit of
Purchaser, Sellers, at the request and expense and under the direction of
Purchaser, shall take all such action and do or cause to be done all such
things as will, in the opinion of Purchaser, be necessary or proper in order
that the obligations of Sellers under such Contracts may be performed in such
manner that the value of such Contract will be preserved and will inure to the
benefit of Purchaser, and for, and to facilitate, the collection of the moneys
due and payable and to become due and payable thereunder to Purchaser in and
under every such contract and claim. Sellers shall promptly pay over to
Purchaser all moneys collected by or paid to it in respect of every such
contract, claim or demand. Nothing in this Section 12.7 shall relieve Sellers
or Shareholder of their obligations to obtain any consents required for the
transfer of the Assets and all rights thereunder to Purchaser, or shall relieve
Sellers or Shareholder from any liability to Purchaser for failure to obtain
such consents.
12.8 Non-Compete, Non-Solicitation.
(a) Non-Competition. In consideration of the benefits of this
Agreement to Sellers and Shareholder and as a material inducement to
Purchaser to enter into this Agreement and to pay the Purchase Price,
Sellers and Shareholder, hereby covenant and agree that for a period
of five years after the Closing Date, Sellers and Shareholder shall
not, and each shall cause their Affiliates (not including any family
member of Shareholder) not to, directly or indirectly, as proprietor,
partner, stockholder, director, officer, employee, consultant, joint
venturer, investor or in any other capacity, engage in, or own,
manage, operate or control, or participate in the ownership,
management, operation or control, of any entity which engages in the
sale, servicing, renting, leasing, insuring or financing of new or
used Class 3 through 8 truck (not including construction equipment) in
any geographical or commercial markets in which Rush or any of its
Affiliates (including Purchaser) conducts business on the Closing
Date; provided, however, the foregoing shall not, in any event,
prohibit Sellers or Shareholder from (i) purchasing and holding as an
investment not more than 1% of any class of publicly traded securities
of any entity which conducts such business, so long as neither of
Sellers nor Shareholder participate in any way in the management,
operation or control of such entity or (ii) selling, leasing or
otherwise disposing of any vehicles, parts and accessories inventory
or chassis kits held by the Business as of the Closing Date that are
not transferred to Purchaser pursuant to the terms of this Agreement.
It is further recognized and agreed that, even though the activity may
not be restricted under the foregoing provision, for a period of five
years following the Closing Date, neither Sellers nor Shareholder
shall, and each shall cause their Affiliates not to, provide any
services to any person or entity which may be used against, or in
conflict with the interests of, Purchaser or an Affiliate of
Purchaser.
(b) Judicial Reformation. Sellers and Shareholder acknowledge
that, given the nature of Purchaser and its Affiliates' business, the
covenants contained in this Section 12.8 establish reasonable
limitations as to time, geographic area and scope of activity to be
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restrained and do not impose a greater restraint than is reasonably
necessary to protect and preserve the goodwill of Purchaser and its
Affiliates' business and to protect their legitimate business
interests. If, however, this Section 12.8 is determined by any court
of competent jurisdiction or an arbitrator pursuant to Section 20.1 to
be unenforceable by reason of it extending for too long a period of
time or over too large a geographic area or by reason of it being too
extensive in any other respect or for any other reason, it will be
interpreted to extend only over the longest period of time for which
it may be enforceable and/or over the largest geographic area as to
which it may be enforceable and/or to the maximum extent in all other
aspects as to which it may be enforceable, all as determined by such
court or arbitrator.
(c) Customer Lists, Non-Solicitation. In consideration of the
benefits of this Agreement to Sellers and Shareholder and as a
material inducement to Purchaser to enter into this Agreement and to
pay the Purchase Price, Sellers and Shareholder hereby further
covenant and agree that for a period of five years following the
Closing Date, Sellers and Shareholder shall not, and each shall cause
their Affiliates not to, directly or indirectly, (a) use or make known
to any person or entity the names or addresses of any clients or
customers of either of Sellers, Purchaser or any Affiliate of
Purchaser or any other information pertaining to them, (b) call on,
solicit, take away or attempt to call on, solicit or take away any
clients or customers of either of Sellers, Purchaser or any Affiliate
of Purchaser, or (c) solicit for employment, recruit, hire or attempt
to recruit or hire any employees of either of Sellers, Purchaser or
any Affiliate of Purchaser.
(d) Equitable Relief. In the event of a breach or a
threatened breach by Shareholder or either of Sellers of any of the
provisions contained in this Section 12.8, each acknowledges that
Purchaser and its Affiliates will suffer irreparable injury not fully
compensable by money damages and, therefore, will not have an adequate
remedy available at law. Accordingly, Purchaser shall be entitled,
without the necessity of posting a bond, to obtain such injunctive
relief or other equitable remedy from any court of competent
jurisdiction as may be necessary or appropriate to prevent or curtail
any such breach, threatened or actual. The foregoing shall be in
addition to and without prejudice to any other rights that Purchaser
may have under this Agreement, at law or in equity, including, without
limitation, the right to ▇▇▇ for damages.
(e) Covenants Independent. The covenants of Sellers and
Shareholder contained in this Section 12.8 will be construed as
independent of any other provision in this Agreement, and the
existence of any claim or cause of action by Sellers or Shareholder,
or any of them, against Purchaser or any Affiliate of Purchaser will
not constitute a defense to the enforcement by Purchaser of said
provisions. Sellers and Shareholder understand that the provisions
contained in this Section 12.8 are essential elements of the
transactions contemplated by this Agreement and, but for their
agreement to be bound by the provisions of this Section 12.8,
Purchaser would not have agreed to enter into this Agreement and the
transactions contemplated herein. Each of Sellers and Shareholder has
been advised to
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consult with, and represents that it or he has consulted with, counsel
in order to be informed in all respects concerning the reasonableness
and propriety of the provisions of this Section 12.8 and each
acknowledges that the provisions of this Section 12.8 are reasonable
in all respects.
12.9 Agreement Regarding GMC Excluded Assets. If as of the date that
is six months after the Closing Date, Purchaser has not entered into a dealer
sales and service agreement with GMC, the GMC Excluded Assets have not been
sold pursuant to the GMC Operating Agreement and Sellers are not able to
transfer the GMC Excluded Assets to GMC or an Affiliate of GMC, Purchaser will
purchase the GMC Excluded Assets from Sellers and Sellers shall sell the GMC
Excluded Assets to Purchaser for the price indicated for such items in Section
3.1. The closing for such sale and purchase shall take place at a date and time
that is mutually agreeable to the parties, which shall be no more than 30 days
after Sellers provide Purchaser written notice that Sellers are not able to
transfer the GMC Excluded Assets to GMC or an Affiliate of GMC. Sellers, at
their sole cost and expense, shall provide all documentation and evidence
reasonably requested by Purchaser to enable Purchaser to verify that the
conditions to Purchaser's purchase obligations hereunder have been satisfied.
At such closing, Purchaser shall pay the amount due Sellers by wire transfer of
immediately available funds to an account jointly designated by Sellers.
13. INDEMNITY BY SELLERS AND SHAREHOLDER.
13.1 Indemnity. Sellers and Shareholder (collectively, the "Seller
Indemnifying Parties", and individually, a "Seller Indemnifying Party") shall,
and hereby do, jointly and severally indemnify, hold harmless and defend
Purchaser and its officers, directors, employees, agents, consultants,
representatives and Affiliates (collectively, the "Purchaser Indemnified
Parties") from and against any and all penalties, demands, damages, punitive
damages, losses, liabilities, suits, costs, costs of any settlement or
judgment, claims of any and every kind whatsoever, refund obligations
(including, without limitation, interest and penalties thereon) and remediation
costs and expenses (including, without limitation, reasonable attorneys' fees),
of or to any of the Purchaser Indemnified Parties ("Purchaser Damages"), which
may now or in the future be paid, incurred or suffered by or asserted against
the Purchaser Indemnified Parties by any Person resulting or arising from or
incurred in connection with any one or more of the following (provided that
this Section 13.1 shall not apply to any items that have been expressly assumed
by Purchaser under this Agreement):
(a) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related
in any way to the Assets or the Business to the extent such liability
or claim for liability arises in connection with any action, omission
or event occurring on or prior to the Closing Date (including, but not
limited to, claims for product liability with respect to products
manufactured, distributed or sold by either Seller on or prior to the
Closing Date);
(b) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related
to any liens, obligations or encumbrances of any nature
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whatsoever against or in any way related to the Assets or the Business
which have not been expressly assumed by Purchaser hereunder;
(c) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related
to Taxes of either Seller;
(d) any liability or claim for liability (whether or not
successful) related to any lawsuit or threatened lawsuit or claim
involving any Seller Indemnifying Party other than claims brought by
any Seller Indemnifying Parties pursuant to Article 14;
(e) any misrepresentation, breach of warranty or
nonfulfillment of any covenant or agreement on the part of a Seller
Indemnifying Party under this Agreement or from any misrepresentation
in or omission from any Schedule, the Seller Certificate or the
exhibits and annexes hereto;
(f) any liability or claim for liability against Purchaser or
any of the Assets to the extent such liability or claim for liability
arises in connection with the failure of Purchaser and Sellers to
comply with any applicable bulk transfer law; and
(g) all actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including costs of court and
reasonable attorneys' fees) incident to any of the foregoing.
13.2 Environmental Liability of the Seller Indemnifying Parties.
Notwithstanding anything herein to the contrary, the Seller Indemnifying
Parties shall have no liability or obligation to indemnify hereunder for any
Purchaser Environmental Liabilities arising from acts, events or omissions
occurring prior to either of Sellers' operation of the Business on any real
property owned, leased or used by either of Sellers or any environmental
condition or liability disclosed on the Disclosure Schedule. The Seller
Indemnifying Parties, jointly and severally, shall retain liability for, and
the Seller Indemnifying Parties, jointly and severally, shall indemnify, hold
harmless and defend the Purchaser Indemnified Parties from and against all
claims (whether in contract, in tort or otherwise, and whether or not
successful), fines, penalties, liabilities, damages and losses, including but
not limited to remedial, removal, response, abatement, clean-up, investigation
and monitoring costs and any other related costs and expenses incurred (whether
any claims or causes of action relating thereto be asserted in common law or
under statute and regardless of form including strict liability and negligence)
(collectively referred to as "Purchaser Environmental Liabilities") arising
from (a) any violation of any Requirement of Environmental Law or Environmental
Permits (as those terms are hereinafter defined) of any Seller Indemnifying
Party occurring or existing between the date either Seller began conducting
business on each parcel of real estate owned, leased or used by either Seller
and the Closing Date, (b) any acts, omissions, conditions, facts, or
circumstances occurring or existing between the date either Seller began
conducting business on each parcel of real estate owned, leased or used by
either Seller and the Closing Date with respect to the Assets, the Business or
the operations of Sellers which give rise to an Environmental Claim (as
hereinafter defined) before or
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after the date hereof, and (c) any failure of any Seller Indemnifying Party to
obtain or maintain, between the date either Seller began conducting business on
each parcel of real estate owned, leased or used by either Seller and the
Closing Date, any Environmental Permit. For purposes of this Section 13.2, the
term "Environmental Claim" means any action, lawsuit, claim or proceeding by
any Person relating to the Assets or the Business or the operations or the
business of either Seller which seeks to impose liability for (i) noise, (ii)
pollution or contamination or threatened pollution or contamination of the air,
surface water, groundwater or land, (iii) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation, (iv)
exposure to hazardous or toxic substances or (v) non-compliance with any
Requirement of Environmental Law. An "Environmental Claim" includes, without
limitation, a proceeding to terminate a permit or license to the extent that
such a proceeding attempts to redress violations of the applicable permit or
license or any Requirement of Environmental Law as alleged by any Governmental
Authority. For purposes of this Section 13.2, the term "Environmental Permit"
means any permit, license, approval or other authorization related to, used in
connection with or necessary for the operation or use of the Business or the
Assets, or the operations or the businesses of either Seller under any
applicable Requirement of Environmental Law. For purposes of this Section 13.2,
the term "Requirement of Environmental Law" means all Governmental Requirements
related to health or the environment, including, but not limited to, all
Governmental Requirements that relate to (i) noise, (ii) pollution or
protection of the air, surface water, groundwater or land, (iii) solid, gaseous
or liquid waste generation, handling, treatment, storage, disposal or
transportation, (iv) exposure to hazardous or toxic substances, or (v) any
other matters related to health or the environment.
13.3 Notice of Claim. Purchaser agrees that upon its discovery of
facts giving rise to a claim for indemnity under the provisions of this
Agreement, including receipt by it or any Purchaser Indemnified Party of notice
of any demand, assertion, claim, action or proceeding, judicial or otherwise,
by any Person with respect to any matter as to which any of the Purchaser
Indemnified Parties are entitled to indemnity under the provisions of this
Agreement (such actions being collectively referred to herein as a "Purchaser
Claim"), Purchaser will give prompt notice thereof in writing to the Seller
Indemnifying Parties together with a statement of such information respecting
any of the foregoing as it shall then have; provided that any delay in giving
or failure to give such notice shall not limit the rights of Purchaser or any
Purchaser Indemnified Party to indemnity hereunder except in accordance with
the time limitations provided in Section 13.10 and to the extent that the
Seller Indemnifying Parties are shown to have been damaged by such delay or
failure.
13.4 Right of the Seller Indemnifying Parties to Participate in
Defense. With respect to any Purchaser Claim as to which any of the Purchaser
Indemnified Parties seeks indemnity hereunder, Purchaser shall provide the
Seller Indemnifying Parties with the opportunity to participate in the defense
of such Purchaser Claim with counsel of the Seller Indemnifying Parties' choice
and at the Seller Indemnifying Parties' cost and expense and shall not, without
the consent of Shareholder, which consent shall not be unreasonably withheld,
settle any such Purchaser Claim, so long as the Seller Indemnifying Parties
shall have unconditionally acknowledged their obligation to indemnify hereunder
with respect to such Purchaser Claim. To the extent reasonably requested by
Purchaser,
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the Seller Indemnifying Parties shall reasonably cooperate with Purchaser and
its representatives and counsel in any dispute or defense related to any
Purchaser Claim.
13.5 Payment. The Seller Indemnifying Parties shall promptly pay to
Purchaser or such other Purchaser Indemnified Party as may be entitled to
indemnity hereunder in cash by wire transfer the amount of any Purchaser
Damages to which Purchaser or such Purchaser Indemnified Party may become
entitled by reason of the provisions of this Agreement.
13.6 Limit of Liability of the Seller Indemnifying Parties.
Notwithstanding any other provisions of this Agreement, the aggregate liability
of the Seller Indemnifying Parties under this Agreement and the New Mexico
Purchase Agreement, whether as a party to this Agreement or as guarantor of
Sellers' obligations under this Agreement or the New Mexico Purchase Agreement,
shall be limited to $3,000,000, except that such limit shall be $5,000,000 for
breach of the representations and warranties set forth in Sections 4.6, 4.16
and 4.17 or any indemnification claim under this Agreement relating to
environmental matters.
13.7 Limitations on Indemnification. Notwithstanding any provision of
this Agreement, the Seller Indemnifying Parties shall not be liable for any
matter that could be made the subject of a claim under this Article 13 or under
Article 13 of the New Mexico Purchase Agreement regarding any claims, losses,
expenses or other liabilities until the aggregate amount thereof exceeds
$250,000 and after such threshold amount has been attained, all claims, other
than those aggregated to reach the threshold, shall be indemnified hereunder.
13.8 Insurance and Refunds. The Seller Indemnifying Parties'
indemnification obligations shall be reduced to the extent that the subject
matter of the claim is covered by and paid to Purchaser or its Affiliates
pursuant to a warranty or indemnification from a third party or third party
insurance. The amount of indemnification due from the Seller Indemnifying
Parties with respect to any claim shall be reduced by the effect of any tax
deduction, credit, refund or other tax benefit to Purchaser or it Affiliates
relating to the same tax period and resulting from the subject matter of that
claim and such indemnification.
13.9 Offset Provisions. Notwithstanding any other provisions of this
Agreement, in the event, between the Closing Date and the date the Bonus
Payment is paid, the Seller Indemnifying Parties become obligated to pay sums
to Purchaser or any Purchaser Indemnified Party under this Agreement or any of
the documents or agreements referenced herein or contemplated hereby (whether
as a result of indemnity, breach of contract or otherwise), Purchaser shall
have the right to and shall be obligated to reduce and offset payments due on
the Bonus Payment in such amount or amounts as Purchaser (and any Purchaser
Indemnified Party that is not promptly paid by the Seller Indemnifying Parties)
is entitled to receive from the Seller Indemnifying Parties, and any such
offset shall be deemed to be a payment of the Bonus Payment to the extent of
such offset; provided, however, that any such offset shall not relieve the
Seller Indemnifying Parties from paying all amounts that are due in excess of
the amount offset. Prior to any offset under this Section 13.9, Purchaser
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shall have provided to the Seller Indemnifying Parties a notice of Purchaser
Claim as described in Section 13.3 or an otherwise reasonably detailed
description of the matter giving rise to such offset.
13.10 Time Limits for Indemnity Claims. Any claim for indemnification
under this Article 13 must be made within the time periods set forth in Article
6.
14. INDEMNITY BY PURCHASER.
14.1 Indemnity. Purchaser shall, and hereby does indemnify, hold
harmless and defend Sellers and Shareholder (the "Seller Indemnified Parties")
at all times from and after the date of this Agreement, from and against any
and all penalties, demands, damages, punitive damages, losses, liabilities,
suits, costs, costs of any settlement or judgment, claims of any and every kind
whatsoever, refund obligations (including, without limitation, interest and
penalties thereon), remediation costs and expenses (including, without
limitation, reasonable attorneys' fees), of or to any of the Seller Indemnified
Parties ("Seller Damages"), which may now or in the future be paid, incurred or
suffered by or asserted against the Seller Indemnified Parties by any Person
resulting or arising from or incurred in connection with any one or more of the
following:
(a) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related
in any way to the Assets or the Business to the extent such liability
or claim for liability arises in connection with any action, omission
or event occurring after the Closing Date (including, but not limited
to, claims for product liability with respect to products
manufactured, distributed or sold by Purchaser after the Closing
Date); and
(b) any misrepresentation, breach of warranty or
nonfulfillment of any covenant or agreement on the part of Purchaser
under this Agreement or from any misrepresentation in or omission from
any list, schedule, certificate or other instrument furnished or to be
furnished to Sellers or Shareholder pursuant to the terms of this
Agreement.
14.2 Environmental Liability of Purchaser. Notwithstanding any other
provision of this Agreement, including, but not limited to the rights to
indemnity set forth in Section 14.1, and in addition thereto, Purchaser shall
indemnify, hold harmless and defend the Seller Indemnified Parties, at all
times from and after the Closing Date, from and against all claims (whether in
contract, in tort or otherwise, and whether or not successful), fines,
penalties, liabilities, damages and losses, including but not limited to
remedial, removal, response, abatement, clean-up, investigation and monitoring
costs and any other related costs and expenses incurred (whether any claims or
causes of action relating thereto be asserted in common law or under statute
and regardless of form including strict liability and negligence) (collectively
referred to as "Seller Environmental Liabilities") arising from (a) any
violation of any Requirement of Environmental Law or Environmental Permits (as
those terms are hereinafter defined) of Purchaser occurring after the Closing
Date, (b) any acts, omissions, conditions, facts, or circumstances occurring
after the Closing Date with respect to the Assets, the Business or the
operations of Purchaser which give rise to an Environmental Claim (as
hereinafter
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defined) during the time Purchaser is the owner of the Assets and the operator
of the Business, and (c) any failure of Sellers or Shareholder to obtain or
maintain after the Closing Date, any Environmental Permit. For purposes of this
Section 14.2, the term "Environmental Claim" means any action, lawsuit, claim
or proceeding by any Person relating to the Assets or the Business or the
operations or the Business which seeks to impose liability for (i) noise, (ii)
pollution or contamination or threatened pollution or contamination of the air,
surface water, groundwater or land, (iii) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation, (iv)
exposure to hazardous or toxic substances or (v) non-compliance with any
Requirement of Environmental Law. An "Environmental Claim" includes, without
limitation, a proceeding to terminate a permit or license to the extent that
such a proceeding attempts to redress violations of the applicable permit or
license or any Requirement of Environmental Law as alleged by any Governmental
Authority. For purposes of this Section 14.2, the term "Environmental Permit"
means any permit, license, approval or other authorization related to, used in
connection with or necessary for the operation or use the Business or the
Assets, or the operations or the Business under any applicable Requirement of
Environmental Law. For purposes of this Section 14.2, the term "Requirement of
Environmental Law" means all Governmental Requirements related to health or the
environment, including, but not limited to, all Governmental Requirements that
relate to (i) noise, (ii) pollution or protection of the air, surface water,
groundwater or land, (iii) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation, (iv) exposure to hazardous or
toxic substances, or (v) any other matters related to health or the
environment. Notwithstanding anything herein to the contrary, Purchaser shall
have no liability or obligation to indemnify hereunder for any Seller
Environmental Liabilities arising from acts, events or omissions occurring
after Purchaser ceases to operate the Business on any of the premises to be
owned, leased or used by Purchaser pursuant to the provisions of Article 15.
14.3 Notice of Claim. Sellers and Shareholder agree that upon their
discovery of facts giving rise to a claim for indemnity under the provisions of
this Agreement, including receipt by Sellers or Shareholder of notice of any
demand, assertion, claim, action or proceeding, judicial or otherwise, by any
Person with respect to any matter as to which Sellers or Shareholder are
entitled to indemnity under the provisions of this Agreement (such actions
being collectively referred to herein as a "Seller Claim"), Sellers and
Shareholder will give prompt notice thereof in writing to Purchaser together
with a statement of such information respecting any of the foregoing as they
shall then have; provided that any delay in giving or failure to give such
notice shall not limit the rights of Sellers or Shareholder to indemnity
hereunder except to the extent that Purchaser is shown to have been damaged by
such delay or failure.
14.4 Right of Purchaser to Participate in Defense. With respect to any
Seller Claim as to which Sellers or Shareholder seeks indemnity hereunder,
Sellers and Shareholder shall provide Purchaser with the opportunity to
participate in the defense of such Seller Claim with counsel of Purchaser's
choice and at Purchaser's cost and expense. To the extent reasonably requested
by Sellers and Shareholder, Purchaser shall reasonably cooperate with Sellers
and Shareholder and their representatives and counsel in any dispute or defense
related to any Seller Claim.
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14.5 Payment. The Purchaser Indemnifying Parties shall promptly pay to
Sellers and/or Shareholder, as applicable, in cash by wire transfer the amount
of any Seller Damages to which Sellers and/or Shareholder, as applicable, may
become entitled by reason of the provisions of this Agreement.
14.6 Limitations on Indemnification. Notwithstanding any provision of
this Agreement, Purchaser shall not be liable for any matter that could be made
the subject of a claim under this Article 14 and Article 14 of the New Mexico
Purchase Agreement regarding any claims, losses, expenses or other liabilities
until the aggregate amount thereof exceeds $250,000 and after such threshold
amount has been attained, all claims, other than those aggregated to reach the
threshold, shall be indemnified hereunder.
14.7 Insurance and Refunds. Purchaser's indemnification obligations
shall be reduced to the extent that the subject matter of the claim is covered
by and paid to Sellers or their Affiliates pursuant to a warranty or
indemnification from a third party or third party insurance. The amount of
indemnification due from Purchaser with respect to any claim shall be reduced
by the effect of any tax deduction, credit, refund or other tax benefit to
either of Sellers or their Affiliates relating to the same tax period and
resulting from the subject matter of that claim and such indemnification.
15. REAL PROPERTY.
(a) Chandler, Arizona Dealership. At Closing, Southwest
Peterbilt shall assign to Purchaser its rights and Purchaser shall
assume Southwest Peterbilt's obligations under that certain Lease
Agreement between Southwest Peterbilt and Orsett/Palm Limited
Partnership ("Chandler Landlord") dated May 14, 1995 (the "Chandler
Lease") relating to property on which Southwest Peterbilt's Chandler,
Arizona dealership is located. To evidence such assignment and
assumption, Southwest Peterbilt and Purchaser shall enter into an
Assignment and Assumption of Tenant's Interest in Lease in
substantially the form attached hereto as Exhibit 15(a) (the "Chandler
Assignment"). Southwest Peterbilt shall obtain all consents necessary
to assign its rights and obligations under the Chandler Lease to
Purchaser at Closing.
(b) Flagstaff, Arizona Dealership. At Closing, Southwest
Peterbilt shall assign to Purchaser its rights and Purchaser shall
assume Southwest Peterbilt's obligations under that certain Lease
Agreement between Southwest Peterbilt and ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇,
trustees ("Flagstaff Landlord") dated July 1, 1994 (the "Flagstaff
Lease") relating to property on which Southwest Peterbilt's Flagstaff,
Arizona dealership is located. To evidence such assignment and
assumption, Southwest Peterbilt and Purchaser shall enter into an
Assignment and Assumption of Tenant's Interest in Lease attached
hereto as Exhibit 15(b) (the "Flagstaff Assignment"). Southwest
Peterbilt shall obtain all consents necessary to assign its rights and
obligations under the Flagstaff Lease to Purchaser at Closing,
including, without limitation, the assignment of the purchase option
in favor of Southwest Peterbilt contained therein.
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(c) Tucson, Arizona Dealership. Sellers represent and warrant
to Purchaser that Southwest Peterbilt is currently leasing the
property on which Southwest Peterbilt's Tucson, Arizona dealership is
located (the "Tucson Dealership Property") pursuant to a certain Lease
Agreement between Southwest Peterbilt and ▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(the "Tucson Landlord") dated October 6, 1993 (the "Tucson Lease") and
that DI Investment has entered into a Contract for Sale and Purchase
(the "Tucson Landlord Purchase Agreement") pursuant to which DI
Investment has agreed to purchase from the Tucson Landlord, and the
Tucson Landlord has agreed to sell to DI Investment, the Tucson
Property. At Closing:
(i) If DI Investment and the Tucson Landlord have
not closed on the Tucson Landlord Purchase
Agreement, Southwest Peterbilt and Purchaser shall
enter into a sublease agreement (the "Tucson
Sublease") in form and substance acceptable to
Purchaser pursuant to which Purchaser will sublease
from Southwest Peterbilt the Tucson Dealership
Property on the same terms and conditions as the
Tucson Lease, and Shareholder shall cause DI
Investment to use its best efforts to close as soon
thereafter as reasonably possible on such purchase
agreement. As soon as reasonably possible after the
closing on such purchase agreement, Purchaser and DI
Investment shall close on the Tucson Purchase
Agreement, provided that the conditions to closing
contained therein are met or waived by the
appropriate party. Southwest Peterbilt shall use
reasonable efforts to obtain all consents necessary
to sublease the Tucson Dealership Property to
Purchaser at Closing.
(ii) If DI Investment and the Tucson Landlord have
closed on the Tucson Landlord Purchase Agreement, DI
Investment and Purchaser shall enter into a lease
agreement in substantially the form of the Lease
Agreement attached hereto as Exhibit 15(c) (the
"Tucson Purchaser Lease"), and DI Investment and
Purchaser will each use their reasonable efforts to
close as soon thereafter as reasonably possible on
the Tucson Purchase Agreement, provided the
conditions to closing contained therein are met or
waived by the appropriate party.
(d) Phoenix, Arizona Dealership. At Closing, Shareholder
shall cause DI Investment, to enter into a lease agreement with
Purchaser in substantially the form of the Lease Agreement attached
hereto as Exhibit 15(d) (the "Phoenix Lease"), pursuant to which DI
Investment will lease to Purchaser the property on which Southwest
Peterbilt's Phoenix, Arizona dealership is located, and DI Investment
and Purchaser will each use their reasonable efforts to close as soon
thereafter as reasonably possible on the Phoenix Purchase Agreement,
provided the conditions to closing contained therein are met or waived
by the appropriate party.
Shareholder shall cause DI Investment to fulfill its obligations under
Sections 15(c) and (d).
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16. SPECIAL PROVISIONS REGARDING EMPLOYEES OF SELLERS.
16.1 New Employees of Purchaser. It is the intention of Purchaser, and
Sellers hereby acknowledge and agree with such position, that any employees of
Sellers that Purchaser hires will be new employees of Purchaser as of the
Closing Date or the date of hire, which ever is later. Such new employees shall
be entitled only to such compensation and employee benefits as are agreed to by
such employees and Purchaser, or as are otherwise provided by Purchaser, in its
sole discretion.
16.2 No Hiring Commitment. Purchaser specifically does not commit to
hire any of the employees of the Business, and Sellers specifically understand
and acknowledge this fact. However, notwithstanding Purchaser's position,
Purchaser will review its needs in anticipation of the purchase of the Assets
with a view to hiring certain of the employees of Sellers as of the Closing
Date. In its review, Purchaser expects to be able to review employee records
and conduct employee interviews. Sellers agree that after the date hereof they
will make, on a confidential basis, their respective employee records available
to Purchaser and permit Purchaser to contact their respective employees for the
purpose of conducting employee interviews. Sellers further agree to make
employees designated by Purchaser available to Purchaser for such purpose.
16.3 Existing Employee Benefit Plans; Assumption of Vacation and Sick
Leave Obligations. At the Closing, Purchaser shall assume Sellers' obligations
to employees of Sellers hired by Purchaser for accrued but unused vacation and
sick leave, and the Purchase Price shall be reduced by the dollar value of such
obligation. Except for vacation and sick leave time assumed by Purchaser as set
forth above, Purchaser shall have no obligation after the Closing to continue
any pension plans or work benefit plans currently offered by Sellers to their
employees. Except for vacation and sick leave time assumed by Purchaser as set
forth above, Sellers and Shareholder jointly and severally agree to indemnify
and hold harmless Purchaser from and against any claim which may arise because
of the failure to continue such pension plans or work benefit programs.
17. TERMINATION. This Agreement may be terminated without further
obligation of the parties, as follows:
17.1 Mutual Consent. This Agreement may be terminated at any time
prior to Closing by mutual written consent of the parties hereto.
17.2 Failure of Conditions. This Agreement may be terminated by either
party hereto, if the conditions, as set forth in this Agreement, to such
party's obligations under this Agreement are not fulfilled on or prior to the
Closing Date; provided that any such termination for any other reason shall not
otherwise limit the remedies otherwise available to such party as a result of
misrepresentations of or breaches by the other party.
17.3 Failure to Close. This Agreement will automatically terminate on
December 1, 1999, if the Closing shall not have occurred on or before such
date, unless the parties shall have otherwise agreed in writing prior to such
date. No party will be liable in damages to any other party as a result
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of termination pursuant to this Article 17 unless the failure of the Closing
was due to the failure of such party to comply with the terms of this
Agreement.
18. NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, given by prepaid telex
or telegram or by facsimile or other similar instantaneous electronic
transmission device or mailed first class, postage prepaid, certified United
States mail, return receipt requested, as follows:
(a) If to Purchaser, at:
If mailed:
P. O. ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If personally delivered or delivered by overnight
courier:
▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to any of Sellers or Shareholder, at:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
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With a copy to:
Greenberg, Traurig, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address for notice by giving to the other party
written notice of such change. Any notice given under this Article 18 shall be
effective when received at the address for notice for the party to which the
notice is given.
19. GENERAL PROVISIONS.
19.1 Governing Law; Interpretation; Section Headings. This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Texas, without regard to conflict-of-law principles. The parties
agree to submit to the jurisdiction of the state and federal courts of the
State of Arizona with respect to the breach or interpretation of Sections 12.3
and 12.8 of this Agreement or the enforcement of any and all rights, duties,
obligations, powers and other relations among the parties arising under this
Agreement. Exclusive venue for any action arising under Sections 12.3 and 12.8
of this Agreement shall be Phoenix, Maricopa County, Arizona. Except for the
provisions of Sections 12.3 and 12.8 of this Agreement, with respect to which
Purchaser and its Affiliates expressly reserve the right to petition a court
directly for injunctive and other relief, any claim, dispute or controversy of
any nature whatsoever, including but not limited to tort claims or contract
disputes between the parties to this Agreement or their respective heirs,
executors, administrators, legal representatives, successors and assigns, as
applicable, arising out of or related to the terms and conditions of this
Agreement, including the implementation, applicability or interpretation
thereof, shall be resolved in accordance with the dispute resolution procedures
set forth in Appendix A attached hereto and made a part hereof. The section
headings contained herein are for purposes of convenience only, and shall not
be deemed to constitute a part of this Agreement or to affect the meaning or
interpretation of this Agreement in any way.
19.2 Severability. Should any provision of this Agreement be held
unenforceable or invalid under the laws of the United States of America or the
State of Texas, or under any other applicable laws of any other jurisdiction,
then the parties hereto agree that such provision shall be deemed modified for
purposes of performance of this Agreement in such jurisdiction to the extent
necessary to render it lawful and enforceable, or if such a modification is not
possible without materially altering the intention of the parties hereto, then
such provision shall be severed herefrom for purposes of performance of this
Agreement in such jurisdiction. The validity of the remaining provisions of
this Agreement shall not be affected by any such modification or severance,
except that if any severance materially alters the intentions of the parties
hereto as expressed herein (a modification being permitted only if there is no
material alteration), then the parties hereto shall use commercially reasonable
efforts to agree to appropriate equitable amendments to this Agreement in light
of such
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severance, and if no such agreement can be reached within a reasonable time,
any party hereto may initiate arbitration under the then current commercial
arbitration rules of the American Arbitration Association to determine and
effect such appropriate equitable amendments.
19.3 Entire Agreement. This Agreement, the Schedules and the documents
and agreements referenced herein set forth the entire agreement and
understanding of the parties hereto with respect to the transactions
contemplated hereby, and supersede all prior agreements, arrangements and
understandings related to the subject matter hereof. No representation,
promise, inducement or statement of intention has been made by any party hereto
which is not embodied or referenced in this Agreement, the Schedules or the
documents or agreements referenced herein, and no party hereto shall be bound
by or liable for any alleged representation, promise, inducement or statement
of intention not so set forth.
19.4 Expenses. Whether or not the transactions contemplated hereby are
consummated, each of the parties will pay all costs and expenses of its or his
performance of and compliance with this Agreement.
19.5 Further Actions. From time to time, at the request of any party
hereto, the other parties hereto shall execute and deliver such instruments and
take such action as may be reasonably requested to evidence the transactions
contemplated hereby.
19.6 Binding Effect. All the terms, provisions, covenants and
conditions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns.
19.7 Assignment. This Agreement and the rights and obligations of the
parties hereto shall not be assigned or delegated by any party hereto without
the prior written consent of the other parties hereto.
19.8 Amendment; Waiver. This Agreement may be amended, modified,
superseded or canceled, and any of the terms, provisions, representations,
warranties, covenants or conditions hereof may be waived, only by a written
instrument executed by all parties hereto, or, in the case of a waiver, by the
party waiving compliance. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
to enforce the same. No waiver by any party of any condition contained in this
Agreement, or of the breach of any term, provision, representation, warranty or
covenant contained in this Agreement, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such
condition or breach, or as a waiver of any other condition or of the breach of
any other term, provision, representation, warranty or covenant.
19.9 Gender; Numbers. All references in this Agreement to the
masculine, feminine or neuter genders shall, where appropriate, be deemed to
include all other genders. All plurals used in this Agreement shall, where
appropriate, be deemed to be singular, and vice versa.
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19.10 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement
shall be binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of the parties reflected hereon as
signatories.
19.11 Telecopy Execution and Delivery. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto,
and an executed copy of this Agreement may be delivered by one or more parties
hereto by facsimile or similar instantaneous electronic transmission device
pursuant to which the signature of or on behalf of such party can be seen, and
such execution and delivery shall be considered valid, binding and effective
for all purposes. At the request of any party hereto, all parties hereto agree
to execute an original of this Agreement as well as any facsimile, telecopy or
other reproduction hereof.
19.12 Press Releases. No press releases or other public announcement
with respect to this Agreement or the transactions contemplated herein shall be
made prior to the Closing Date without the joint approval of Purchaser and
Sellers, except as required by law.
19.13 Review of Counsel. Each party hereto acknowledges that it and
its counsel have received, reviewed and been involved in the drafting of this
Agreement and the agreements referenced herein to be executed at Closing and
that normal rules of construction, to the effect that ambiguities are to be
resolved against the drafting party, shall not apply.
[Signatures on following page]
53
60
IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date first above written.
PURCHASER:
RUSH TRUCK CENTERS OF
ARIZONA, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
SELLERS:
SOUTHWEST PETERBILT, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
SOUTHWEST TRUCK CENTER, INC.
d/b/a SOUTHWEST PETERBILT
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
SHAREHOLDER:
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
61
APPENDIX A
DISPUTE RESOLUTION PROCEDURES
Re: Asset Purchase Agreement dated September __, 1999 (including any
amendments, the "Agreement"), by and among (i) Southwest Peterbilt, Inc., an
Arizona corporation ("Southwest Peterbilt"); (ii) Southwest Truck Center, Inc.,
d/b/a Southwest Peterbilt, an Arizona corporation ("Southwest Truck Center")
(Southwest Peterbilt and Southwest Truck Center, collectively referred to
herein as "Seller") (iii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., the owner of a portion of the
capital stock of each Seller ("Shareholder"), and (iv) Rush Truck Centers of
Arizona, Inc., a Delaware corporation ("Purchaser"). Unless otherwise defined
in this Appendix A, terms defined in the Agreement and used herein shall have
the meanings set forth therein.
A. Related Parties. For purposes hereof, Seller and Shareholder shall be
considered one party and Purchaser and Rush shall be considered one party.
B. Negotiations. If any claim, dispute or controversy described in
Section 20.1 of the Agreement (collectively, the "Dispute") arises, either
party may, by written notice to the party, have the Dispute referred to the
persons designated below for attempted resolution by good faith negotiations
within 45 days (5 days with respect to any dispute under Section 13.9 of the
Agreement) after such written notice is received. Such designated persons are
as follows:
1. Purchaser and Rush. The Chairman of the Board and Chief Executive
Officer of Rush or his designee; and
2. Seller and Shareholder. Shareholder or his or her designee.
Any settlement reached by the parties under this Paragraph B shall not be
binding until reduced to writing and signed by both parties. When reduced to
writing, such settlement agreement shall supersede all other agreements,
written or oral, to the extent such agreements specifically pertain to the
matters so settled. If the above-designated persons are unable to resolve such
dispute within such 45-day period, either party may invoke the provisions of
Paragraph C below.
C. Arbitration. All Disputes shall be settled by negotiation among the
parties as described in Paragraph A above or, if such negotiation is
unsuccessful, by binding arbitration in accordance with procedures set forth in
Paragraphs D and E below.
D. Notice. Notice of demand for binding arbitration by one party shall be
given in writing to the other party pursuant to notice provisions of the
Agreement. In no event may a notice of demand of any kind be filed more than
one (1) year after the date the Dispute is first asserted in writing to the
other party pursuant to Paragraph B above, and if such demand is not timely
filed, the Dispute referenced in the notice given pursuant to Paragraph B above
shall be deemed released, waived, barred and unenforceable for all time, and
barred as if by statute of limitations.
Appendix A-1-
62
N. Binding Arbitration. Upon filing of a notice of demand for binding
arbitration by either party, arbitration shall be commenced and conducted as
follows:
1. Arbitrators. All Disputes and related matters in question shall be
referred to and decided and settled by a panel of three arbitrators, one
selected by Purchaser, one selected by Shareholder and the third selected by
the two arbitrators so selected. Selection of the arbitrators to be selected by
Purchaser and Shareholder shall be made within ten (10) business days after the
date of giving of a notice of demand for arbitration, and the two arbitrators
so appointed shall appoint the third within 10 business days following their
appointment. No person who has a bias, or financial or personal interest in the
result of the arbitration or any past or present relationship with the parties
or their representatives shall serve as arbitrator
2. Cost of Arbitration. The cost of arbitration proceedings, including
without limitation the arbitrators' compensation and expenses, hearing room
charges, court reporter transcript charges etc., shall be borne by the parties
equally or otherwise as the arbitrators may determine. The arbitrators may
award the prevailing party its reasonable attorneys' fees and costs incurred in
connection with the arbitration. The arbitrators are specifically instructed to
award attorneys' fees for instances of abuse in the discovery process.
3. Location of Proceedings. The arbitration proceedings shall be held
in Phoenix, Arizona, unless the parties agree otherwise.
4. Pre-hearing Discovery. The parties shall have the right to conduct
and enforce pre- hearing discovery in accordance with the then current Federal
Rules of Civil Procedure, subject to these limitations:
(a) Each party may serve no more than one set of
interrogatories limited to 30 questions, including sub-parts;
(b) Each party may depose the other party's expert witnesses
who will be called to testify at the hearing, plus two fact witnesses
without regard to whether they will be called to testify (each party will
be entitled to a total of no more than 24 hours of deposition time of the
other party's witnesses), provided however, that the arbitrators may
provide for additional depositions upon showing of good cause; and
(c) Document discovery and other discovery shall be under the
control of and enforceable by the arbitrators.
5. Discovery disputes. All discovery disputes shall be decided by the
arbitrators. The arbitrators are empowered;
(a) to issue subpoenas to compel pre-hearing document or
deposition discovery;
Appendix A-2-
63
(b) to enforce the discovery rights and obligations of the
parties; and
(c) to otherwise control the scheduling and conduct of the
proceedings.
Notwithstanding any contrary foregoing provisions, the arbitrators shall have
the power and authority to, and to the fullest extent practicable shall,
abbreviate arbitration discovery in a manner which is fair to all parties in
order to expedite the conclusion of each alternative dispute resolution
proceeding.
6. Pre-hearing Conference. Within fifteen (15) days after selection of
the third arbitrator, or as soon thereafter as is mutually convenient to the
arbitrators, the arbitrators shall hold a pre- hearing conference to establish
schedules for completion of discovery, for exchange of exhibit and witness
lists, for arbitration briefs and for the hearing, and to decide procedural
matters and address all other questions that may be presented.
7. Hearing Procedures. The hearing shall be conducted to preserve its
privacy and to allow reasonable procedural due process. Rules of evidence need
not be strictly followed, and the hearing shall be streamlined as follows:
(a) Documents shall be self-authenticating, subject to valid
objection by the opposing party;
(b) Expert reports, witness biographies, depositions and
affidavits may be utilized, subject to the opponent's right of a live
cross-examination of the witness in person;
(c) Charts, graphs and summaries shall be utilized to present
voluminous data, provided (i) that the underlying data is made available
to the opposing party thirty (30) days prior to the hearing, and (ii)
that the preparer of each chart, graph or summary is available for
explanation and live cross-examination in person;
(d) The hearing should be held on consecutive business days
without interruption to the maximum extent practicable; and
(e) The arbitrators shall establish all other procedural
rules for the conduct of the arbitration in accordance with the rules of
arbitration of the Center for Public Resources.
8. Governing Law. This arbitration provision shall be governed by, and
all rights and obligations specifically enforceable under and pursuant to, the
Federal Arbitration Act (9 U.S.C. ss. 1, et seq.)
9. Consolidation. No arbitration shall include, by consolidation,
joinder or in any other manner, any additional person not a party to the
Agreement, except by written consent of both parties containing a specific
reference to these provisions.
Appendix ▇-▇-
▇▇
▇▇. Award. The arbitrators are empowered to render an award of general
compensatory damages and equitable relief (including, without limitations,
injunctive relief), but are not empowered to award exemplary, special or
punitive damages. The award rendered by the arbitrators (a) shall be final, (b)
shall not constitute a basis for collateral estoppel as to any issue and (c)
shall not be subject to vacation or modification.
11. Confidentiality. The parties hereto will maintain the substance of
any proceedings hereunder in confidence and the arbitrators, prior to any
proceedings hereunder, will sign an agreement whereby the arbitrators agree to
keep the substance of any proceedings hereunder in confidence.
Appendix A-4-