<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) OCTOBER 4, 1999
RUSH ENTERPRISES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
TEXAS 0-20797 74-1733016
----- ------- ----------
(State or other jurisdiction (Commission I.R.S. Employer
of incorporation) file no.) identification no.)
8810 I.H. 10 EAST, SAN ANTONIO, TEXAS 78218
-------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (210) 661-4511
<PAGE> 2
Item 2 Acquisition of Assets
On October 4, 1999, the registrant, Rush Enterprises, Inc. ("Rush"),
caused its wholly owned subsidiaries, Rush Truck Centers of Arizona, Inc. and
Rush Truck Centers of New Mexico, Inc., to acquire substantially all of the
assets of Southwest Peterbilt, Inc. and its Affiliates, Southwest Truck Center,
Inc., and New Mexico Peterbilt, Inc., (collectively "Southwest") Peterbilt truck
dealers. (the "Acquisition") Rush will account for the Acquisition as a
purchase. The effective date of the Acquisition was October 1, 1999.
The total consideration paid by Rush to Southwest was approximately
$23.9 million which consisted of 355,556 shares of common stock, $.01 par value,
of Rush and cash of approximately $18.3 million, of which $6.8 million was drawn
under Rush's credit agreements with General Motors Acceptance Corporation and
PACCAR, Inc., and $11.5 million was derived from Rush's internal funds. An
additional $4.0 million in cash may be paid by Rush to Southwest based upon the
achievement of certain performance based objectives. The amount of consideration
paid by Rush for the assets of Southwest was arrived at through arms'-length
negotiations between Rush and Southwest and was based on a variety of factors,
including the historical book value and historical cash flow of Southwest, and
the value of goodwill of Southwest, and the nature of the industry.
Prior to the Acquisition, there was no material relationship between
Rush and Southwest.
The assets acquired by Rush were utilized by Southwest for sales of new
and used Peterbilt trucks and parts and service. Rush intends to continue such
use of acquired assets.
2
<PAGE> 3
ITEM 7 Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Southwest Peterbilt, Inc. and Affiliates:
We have audited the accompanying combined balance sheet of SOUTHWEST PETERBILT,
INC. AND AFFILIATES as of December 31, 1998, and the related combined statements
of income, stockholders' equity and cash flows for the year then ended. These
combined financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these combined
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Southwest
Peterbilt, Inc. and Affiliates as of December 31, 1998, and the combined results
of their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Phoenix, Arizona,
February 18, 1999
3
<PAGE> 4
SOUTHWEST PETERBILT, INC. AND AFFILIATES
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
ASSETS 1998 1999
----------- -----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 467,848 $ 1,248,565
Accounts receivable, net of allowance for doubtful accounts and
repossession losses of $193,531 and $249,445 (Notes 3, 4, 6 and 7) 2,616,784 3,141,584
Inventories (Notes 3, 5, 6 and 7) 10,035,507 9,560,702
Other current assets 161,515 243,328
----------- -----------
Total current assets 13,281,654 14,194,179
PROPERTY AND EQUIPMENT, at cost less accumulated
depreciation of $1,704,835 and $1,818,764, respectively
(Notes 3, 6 and 7)
697,143 667,466
OTHER ASSETS 3,564 3,003
----------- -----------
$13,982,361 $14,864,648
=========== ===========
</TABLE>
The accompanying notes are an integral part of these combined balance sheets.
4
<PAGE> 5
SOUTHWEST PETERBILT, INC. AND AFFILIATES
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1999
----------- -----------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 2,134,010 $ 2,144,733
Accrued expenses 1,451,868 1,224,325
Floor plan notes payable (Note 6) 1,904,688 1,810,843
Current portion of long-term debt (Note 7) 155,000 --
----------- -----------
Total current liabilities 5,645,566 5,179,901
----------- -----------
LONG-TERM DEBT, net of current portion (Note 7) 137,500 --
----------- -----------
COMMITMENTS AND CONTINGENCIES (Notes 8 through 12)
STOCKHOLDERS' EQUITY:
Common stock:
Southwest Peterbilt, Inc., $10 stated value, authorized, 1,000,000 shares,
issued 72,368 shares 723,680 723,680
Southwest Truck Center, Inc., $10 par value, authorized 500,000
voting shares and 500,000 nonvoting shares, issued 32,500 voting
shares 325,000 325,000
Southwest Truck Leasing, Inc., $10 par value, authorized 500,000 voting shares
and 500,000 nonvoting shares, issued 9,750 voting shares
97,500 97,500
New Mexico Peterbilt, Inc., $1 par value, authorized 1,000,000 shares,
issued 72,368 shares 72,368 72,368
----------- -----------
Total common stock 1,218,548 1,218,548
Additional paid-in capital 191,468 191,468
Retained earnings 6,789,279 8,274,731
----------- -----------
Total stockholders' equity 8,199,295 9,684,747
----------- -----------
$13,982,361 $14,864,648
=========== ===========
</TABLE>
The accompanying notes are an integral part of these combined balance sheets.
5
<PAGE> 6
SOUTHWEST PETERBILT, INC. AND AFFILIATES
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Six Months Ended
June 30
December 31, ------------------------------
1998 1999 1998
------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C>
NET SALES $ 79,244,871 $ 42,202,602 $ 40,588,988
FINANCE AND INSURANCE INCOME 543,599 309,853 243,873
COST OF SALES 64,515,056 34,261,040 33,467,147
------------ ------------ ------------
GROSS PROFIT 15,273,414 8,251,415 7,365,714
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 10,883,606 5,682,835 5,399,336
DEPRECIATION 267,096 113,929 132,280
------------ ------------ ------------
INCOME FROM OPERATIONS 4,122,712 2,454,651 1,834,098
INTEREST EXPENSE (INCOME) 71,642 (22,657) 68,614
OTHER (EXPENSE) INCOME, net 957 (21,856) 2,762
------------ ------------ ------------
NET INCOME $ 4,052,027 $ 2,455,452 $ 1,768,246
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
combined financial statements.
6
<PAGE> 7
SOUTHWEST PETERBILT, INC. AND AFFILIATES
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Southwest Southwest
Southwest Peterbilt, Inc., Truck Center, Inc., Truck Leasing, Inc.,
Common Stock Common Stock Common Stock
--------------------------- --------------------------- ---------------------------
Shares Shares Shares
Issued Amount Issued Amount Issued Amount
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1997 72,368 $ 723,680 32,500 $ 325,000 9,750 $ 97,500
Net income -- -- -- -- -- --
Distributions to stockholders -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, December 31, 1998 72,368 723,680 32,500 325,000 9,750 97,500
Net income (unaudited) -- -- -- -- -- --
Distributions to stockholders
(unaudited) -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, June 30, 1999 (unaudited) 72,368 $ 723,680 32,500 $ 325,000 9,750 $ 97,500
=========== =========== =========== =========== =========== ===========
<CAPTION>
New Mexico
Peterbilt, Inc.,
Common Stock
--------------------------- Additional
Shares Paid-In Retained
Issued Amount Capital Earnings Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1997 72,368 $ 72,368 $ 191,468 $ 4,557,252 $ 5,967,268
Net income -- -- -- 4,052,027 4,052,027
Distributions to stockholders -- -- -- (1,820,000) (1,820,000)
----------- ----------- ----------- ----------- -----------
BALANCE, December 31, 1998 72,368 72,368 191,468 6,789,279 8,199,295
Net income (unaudited) -- -- -- 2,455,452 2,455,452
Distributions to stockholders
(unaudited) -- -- -- (970,000) (970,000)
----------- ----------- ----------- ----------- -----------
BALANCE, June 30, 1999 (unaudited) 72,368 $ 72,368 $ 191,468 $ 8,274,731 $ 9,684,747
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of
these combined financial statements.
7
<PAGE> 8
SOUTHWEST PETERBILT, INC. AND AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30
December 31, ----------------------------
1998 1999 1998
----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,052,027 $ 2,455,452 $ 1,768,246
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation 267,096 113,929 132,280
Change in assets and liabilities:
Accounts receivable, net (451,846) (524,800) (1,826,845)
Inventories (1,032,062) 474,805 (1,064,725)
Other assets (43,471) (81,252) (184,404)
Accounts payable 37,866 10,723 310,982
Accrued expenses 250,442 (227,543) 59,086
----------- ----------- -----------
Net cash provided by (used in)
operating activities 3,080,052 2,221,314 (805,380)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (158,464) (84,252) (145,759)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on line of credit, net -- -- 500,000
(Payments) borrowings on floor plan financing, net (565,561) (93,845) 1,458,153
Principal repayments on long-term debt (282,500) (292,500) (155,000)
Distributions to stockholders (1,820,000) (970,000) (735,000)
----------- ----------- -----------
Net cash provided by (used in)
financing activities (2,668,061) (1,356,345) 1,068,153
----------- ----------- -----------
NET INCREASE IN CASH 253,527 780,717
117,014
CASH AND CASH EQUIVALENTS,
beginning of year 214,321 467,848 214,321
----------- ----------- -----------
CASH AND CASH EQUIVALENTS,
end of year $ 467,848 $ 1,248,565 $ 331,335
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ 176,985 $ 24,202 $ 113,452
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of
these combined financial statements.
8
<PAGE> 9
SOUTHWEST PETERBILT, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1998
(1) PRINCIPLES OF COMBINATION AND BASIS OF PRESENTATION:
The accompanying financial statements present the combined financial position,
results of operations and cash flows of Southwest Peterbilt, Inc. (an Arizona
corporation), Southwest Truck Center, Inc. (an Arizona corporation), New Mexico
Peterbilt, Inc. (a New Mexico corporation), and Southwest Truck Leasing, Inc.
(an Arizona corporation) (the Companies). All four corporations are under common
control of the same stockholder group. All significant intercompany transactions
and balances have been eliminated in these combined financial statements.
(2) DESCRIPTION OF BUSINESS:
The Companies serve customers in Arizona and New Mexico from their facilities
located in Phoenix, Arizona; Chandler, Arizona; Flagstaff, Arizona; Tucson,
Arizona; and Albuquerque, New Mexico. Principal business activities include
sales of new Peterbilt, GMC, and Ford trucks, used trucks, new and used
trailers, parts, mechanical services and body shop services. Sales are generally
to municipalities and companies and individuals involved in the transportation
and construction industries.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION POLICIES
Income on the sale of vehicles is recognized when the seller and customer
execute a purchase contract, the vehicle is delivered and payment is negotiated
according to the contract terms. Finance income related to the sale of a vehicle
is recognized over the period of the respective finance contract on the
effective interest rate method if the finance contract is retained by the
Companies. During 1999 and 1998, no finance contracts were retained for any
significant length of time by the Companies but were generally sold, either
without recourse or with limited recourse, to certain finance companies
concurrent with the sale of the related vehicle. Gain or loss is recognized by
the Companies upon the sale of such finance contracts to the finance companies,
net of a provision for estimated repossession losses and early repayment
penalties. Parts and service revenue is earned at the time the Companies sell
the parts to its customers, or at the time the Companies complete the service
work order related to service provided to the customer's vehicle.
9
<PAGE> 10
FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments has been determined by the
Companies using available market information and valuation methodologies.
Considerable judgment is required in estimating fair values. Accordingly, the
estimates may not be indicative of the amounts the Companies could realize in a
current market exchange. The carrying amounts of cash and cash equivalents,
accounts receivable, accounts payable and accrued expenses approximate fair
value due to the short-term maturities of these instruments. Long-term debt and
floor plan notes payable approximate fair value as rates on these instruments
approximate market rates currently available for instruments with similar terms
and remaining maturities.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a remaining maturity of
90 days or less when purchased to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or market value. Cost is determined
by specific identification for new and used truck inventory and by utilizing a
method that approximates the first-in, first-out method for parts and
accessories.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost with depreciation computed using
predominantly accelerated methods over the estimated useful lives of the assets,
ranging from three to ten years. Leasehold improvements are amortized, on the
same basis, over 10 years, the expected length of the lease term. Accumulated
amortization related to leasehold improvements was $52,652 at December 31, 1998.
Maintenance and repairs are charged against income when incurred. Expenditures
for major renewals, replacements and betterments, which extend the assets'
estimated useful life, are capitalized.
Property and equipment consisted of the following at December 31:
<TABLE>
<CAPTION>
1998
----------
<S> <C>
Machinery and equipment $1,236,945
Furniture and fixtures 584,468
Service vehicles 398,093
Leasehold improvements 182,472
----------
2,401,978
Less - accumulated depreciation 1,704,835
----------
$ 697,143
==========
</TABLE>
10
<PAGE> 11
ALLOWANCE FOR DOUBTFUL ACCOUNTS AND REPOSSESSION LOSSES
The Companies provide an allowance for doubtful accounts and repossession losses
after considering historical loss experience and other factors, which might
affect the collectibility of accounts receivable and the ability of customers to
meet their obligations on finance contracts sold by the Companies.
INCOME TAXES
No provision for income taxes is included in these combined financial statements
because all corporations have elected S corporation status. The stockholders,
rather than the corporations, are liable for income taxes on corporate taxable
income.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of contingent assets and liabilities and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENT
During 1998, the Companies adopted Statement of Financial Accounting Standards
No. 131, Disclosures About Segments of an Enterprise and Related Information,
which established revised standards for the reporting of financial and
descriptive information about operating segments in financial statements.
The Companies have determined that they have one reportable operating segment.
Accordingly, the Companies have not presented separate financial information for
their operating segment as the Companies' financial statements present their one
reportable segment.
INTERIM FINANCIAL REPORTING
The accompanying unaudited combined interim financial statements of the
Companies have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows for
the periods presented have been made. The results of operations for the
six-month period ended June 30, 1999 are not necessarily indicative of the
operating results that may be expected for the entire year ending December 31,
1999.
11
<PAGE> 12
(4) ACCOUNTS RECEIVABLE:
Accounts receivable consisted of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
----------- -----------
<S> <C> <C>
Trade accounts receivable from sale of vehicles $ 590,576 $ 1,147,642
Other trade receivables 1,824,872 1,750,191
Warranty claims 327,516 371,260
Other accounts receivable 67,351 121,936
----------- -----------
2,810,315 3,391,029
Less - allowance for doubtful accounts and
repossession losses (193,531) (249,445)
----------- -----------
$ 2,616,784 $ 3,141,584
=========== ===========
</TABLE>
(5) INVENTORIES:
Inventories consisted of the following at:
<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
----------- -----------
<S> <C> <C>
New and used trucks and trailers $ 6,524,968 $ 6,179,367
Parts, accessories and other 3,249,361 3,139,130
Service work in process 261,178 242,205
----------- -----------
Total inventories $10,035,507 $ 9,560,702
=========== ===========
</TABLE>
(6) FLOOR PLAN NOTES PAYABLE AND LINE OF CREDIT:
The Companies maintain inventory flooring notes payable to a bank permitting
maximum borrowings of $9,800,000 with interest payable monthly at LIBOR plus
2.25%. At December 31, 1998 the LIBOR rate was 5.63%. These notes are secured by
and payable as specific new trucks are sold. Inventories which serve as
collateral for the floorplan agreement totaled approximately $3,928,000 at
December 31, 1998. The weighted average balance outstanding for the year ending
December 31, 1998 related to the floor plan notes payable was approximately
$3,021,000 with an average interest rate of 7.50%.
The Companies have a revolving line of credit with a bank, permitting maximum
borrowings of $3,500,000. Interest is payable monthly ranging from LIBOR plus
2.25% to prime. The prime rate at December 31, 1998 was 7.75%. The line matures
June 30, 1999, and is secured by accounts receivable, inventory, property and
equipment. Under the terms of the revolving line of credit, the Companies are
obligated to comply with certain financial covenants including maintaining a
certain minimum tangible net worth, current ratio and net worth ratio. At
December 31, 1998, there were no balances outstanding under the line of credit
and the Companies were in compliance with all debt covenants. The weighted
average balance outstanding for the year ending December 31, 1998 related to the
revolving line of credit was $371,000 with an average interest rate of 7.50%.
12
<PAGE> 13
(7) LONG-TERM DEBT:
Long-term debt consisted of the following at December 31:
<TABLE>
1998
---------
<S> <C>
Notes payable to a bank, due in monthly installments of $16,667 plus
interest at prime, secured by accounts receivable, inventory and equipment
Notes mature between
June 1999 and March 2001 $ 292,500
Less - current portion (155,000)
---------
Long-term debt, net of current portion $ 137,500
=========
</TABLE>
Scheduled principal maturities of long-term debt are as follows:
<TABLE>
<S> <C>
1999 $ 155,000
2000 110,000
2001 27,500
---------
$ 292,500
=========
</TABLE>
(8) LEASE COMMITMENTS:
Rent expense under operating leases for buildings and equipment for the years
ended December 31, 1998, amounted to approximately $492,000.
The future minimum lease commitments under these operating leases as of December
31, 1998, are as follows:
<TABLE>
<CAPTION>
Fiscal Year
Ending
December 31
-----------
<S> <C>
1999 $ 220,887
2000 154,800
2001 83,200
2002 57,000
2003 47,500
---------
$ 563,387
=========
</TABLE>
13
<PAGE> 14
(9) 401(k) PLAN:
Employees who have one full year of service and have attained age 21 are
eligible to participate in the Companies' Internal Revenue Code Section 401(k)
Plan. Participants may defer a maximum of 10% of their compensation. The
Companies will match an annually elected discretionary percentage of
participants' contributions. Participants are fully vested in their compensation
deferrals. The Companies' matching contributions are 100% vested after three
full years of service. Matching contributions totaled approximately $54,000 for
the year ended December 31, 1998.
(10) MAJOR SUPPLIERS AND DEALERSHIP AGREEMENTS:
The Companies have entered into dealership agreements with various companies
(Manufacturers). These agreements are nonexclusive agreements that allow the
Companies to stock, sell at retail and service trucks and products of the
Manufacturers in the Companies' defined markets. The agreements allow the
Companies to use the Manufacturer's name, trade symbols and intellectual
property and expire as follows:
<TABLE>
<CAPTION>
Manufacturer Expiration Dates
------------ ----------------
<S> <C>
Peterbilt July 20, 2000
GMC October 31, 2000
Ford Indefinite
</TABLE>
These agreements impose a number of restrictions and obligations on the
Companies, including restrictions on a change in control of the Companies and
the maintenance of certain required levels of working capital. Violation of such
restrictions could result in the loss of the Companies' right to purchase the
manufacturers' products and use of the Manufacturers' trademarks. As of December
31, 1998, the Companies' management believes it was in compliance with all the
restrictions of its Manufacturer agreements.
The Companies purchase most of their new vehicles and parts from PACCAR, the
maker of Peterbilt trucks and parts, at prevailing prices charged to all
franchised dealers. Sales of new Peterbilt trucks accounted for 88% of the
Companies' new vehicle sales for the year ended December 31, 1998.
(11) CONCENTRATIONS OF CREDIT RISK:
Financial instruments that potentially subject the Companies to significant
concentrations of credit risk consist principally of cash and accounts
receivable.
The Companies maintain their cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Companies have not experienced any losses
in such accounts. Management believes it is not exposed to any significant
credit risk related to cash.
A majority of the Companies' business is concentrated in the United States heavy
duty trucking market and related aftermarkets. The Companies control credit risk
through credit approvals, and by selling certain trade receivables without
recourse. Related to the Companies' finance contracts, after the finance
contract is entered into, the Company generally sells the contracts to a third
party. Some finance contracts are sold with recourse (see Note 12).
14
<PAGE> 15
(12) COMMITMENTS AND CONTINGENCIES:
The Companies are contingently liable to finance companies for certain notes
sold to such finance companies related to the sale of trucks. The Companies'
recourse liability related to sold finance contracts is generally limited to 10%
to 20% of the outstanding amount of each note sold to the finance company with
the aggregate recourse liability at December 31, 1998 being limited to
approximately $140,000. The Companies provide an allowance for repossession
losses and early repayment penalties.
The Companies act as a partial self-insurer for their employee health insurance
programs. Losses and claims are accrued as incurred. The Companies have
purchased insurance reducing their maximum liability for any one health claim to
$35,000 and the maximum annual liability for all claims in the aggregate to
approximately $450,000.
There are redemption agreements with all minority shareholders which provide
that upon the minority shareholder's request, death or disability, or
termination of employment, the Companies shall redeem all shares owned by such
shareholder at a per share price derived from the book value of the Companies'
stock. Minority shareholdings approximated 28.4% at December 31, 1998.
The Companies are involved in certain legal proceedings arising in the normal
course of business. In the opinion of management, the Companies potential
exposure under pending legal proceedings is adequately provided for in the
accompanying combined financial statements.
(13) RELATED PARTY TRANSACTION:
In 1998, the Companies entered into a verbal agreement with the Donahue Family
Partnership which is under common control of the Companies' President, to lease
the land and building located at 2600 W. McDowell Road, Phoenix, Arizona. The
Companies make monthly lease payments to the Donahue Family Partnership, of
approximately $16,000, and for the year ended December 31, 1998, the total
payments to the related party were approximately $65,000. The agreement is on a
month-to-month basis. Management believes the lease payments have been
consummated on terms equivalent to those that prevail in an arm's-length
transaction.
15
<PAGE> 16
(b) Pro Forma Financial Information.
RUSH ENTERPRISES, INC.
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
The following unaudited pro forma condensed consolidated financial statements
give effect to the acquisition by Rush Enterprises, Inc. and Subsidiaries
(Rush), of certain assets of Southwest Peterbilt, Inc., Southwest Truck Center,
Inc., and New Mexico Peterbilt, Inc., ("Southwest") a Peterbilt truck dealer,
using the purchase method of accounting, and are based on estimates and
assumptions set forth below and in the notes to such statements These pro forma
condensed consolidated financial statements are based upon the historical
financial statements of Rush adjusted to give effect to the acquisition which
took place on October 4, 1999.
The financial information of Rush is based upon its audited consolidated
financial statements for the year ended December 31, 1998, and its unaudited
consolidated financial statements as of and for the six-month period ended June
30, 1999. An audited combined balance sheet as of December 31, 1998, and audited
combined statements of income as of December 31, 1998, of Southwest are included
herein.
The unaudited pro forma condensed consolidated statements of income for the year
ended December 31, 1998, and the six-month period ended June 30, 1999, have been
prepared on the assumption that the transaction had occurred on January 1, 1999.
The unaudited pro forma condensed consolidated balance sheet has been prepared
on the assumption that the transaction had occurred as of Rush's latest interim
balance sheet, June 30, 1999.
The pro forma adjustments are based upon preliminary estimates, available
information and certain assumptions that management deemed appropriate. Final
purchase accounting adjustments will be made on the basis of appraisals and
evaluations and, therefore, may differ from the pro forma adjustments presented
herein. The unaudited pro forma final information does not profess to represent
Rush's results of operations or financial position had the above transaction, in
fact, occurred on these dates, or project the combined Company's financial
position or results of operations for any future date or period. The pro forma
condensed consolidated financial statements should be read in conjunction with
Rush's consolidated historical financial statements and notes thereto, contained
in Rush's Annual Report on Form 10-K and Rush's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1999. The Company's future historical financial
statements will reflect the acquisition of Southwest as of October 4, 1999.
16
<PAGE> 17
RUSH ENTERPRISES, INC., AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Rush Southwest
Enterprises, Peterbilt, Inc.
Inc., and Affiliates
June 30, June 30, Pro Forma Total
1999 1999 Adjustments(1) Pro Forma
------------ --------------- -------------- ------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 13,008 $ 1,249 $ (12,783)(A) $ 1,474
Accounts receivable, net 18,326 3,141 (3,141)(B) 18,326
Inventories 138,793 9,561 (2,044)(B) 146,310
Prepaid expenses and other 523 243 (241)(B) 525
------------ ------------ ------------ ------------
Total current assets 170,650 14,194 (18,209) 166,635
PROPERTY AND EQUIPMENT, net 68,855 668 (316)(B) 69,207
OTHER ASSETS, net 17,835 3 16,553(C) 34,391
------------ ------------ ------------ ------------
Total assets $ 257,340 $ 14,865 $ (1,972) $ 270,233
============ ============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Floor plan notes payable $ 115,544 $ 1,811 $ 2,987(A) $ 120,342
Current maturities of long-term debt 5,904 -- -- 5,904
Advances outstanding under lines of credit 10 -- 2,000(A) 2,010
Trade accounts payable 6,990 2,145 (2,145)(B) 6,990
Accrued expenses 15,414 1,224 (685)(B) 15,953
Note payable to shareholder 8,850 -- -- 8,850
------------ ------------ ------------ ------------
Total current liabilities 152,712 5,180 2,157 160,049
DEFERRED INCOME TAX LIABILITY, net 2,630 -- -- 2,630
LONG-TERM DEBT, net of current maturities 41,924 -- -- 41,924
SHAREHOLDERS' EQUITY 60,074 9,685 (4,129)(D) 65,630
------------ ------------ ------------ ------------
Total liabilities and shareholders' equity $ 257,340 $ 14,865 $ (1,972) $ 270,233
============ ============ ============ ============
</TABLE>
See accompanying notes to pro forma unaudited condensed
consolidated financial statements.
17
<PAGE> 18
RUSH ENTERPRISES, INC., AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Earnings Per Share - Unaudited)
<TABLE>
<CAPTION>
Rush Southwest
Enterprises, Peterbilt, Inc.
Inc., and Affiliates
Year Ended Year Ended
December 31, December 31, Pro Forma Total
1998 1998 Adjustments(1) Pro Forma
---------------- ---------------- ---------------- ----------------
(Audited)
<S> <C> <C> <C> <C>
REVENUES $ 612,785 $ 79,789 $ -- $ 692,574
COST OF PRODUCTS SOLD 508,242 64,515 -- 572,757
---------------- ---------------- ---------------- ----------------
GROSS PROFIT 104,543 15,274 -- 119,817
SELLING, GENERAL AND ADMINISTRATIVE 75,849 10,884 180(E) 86,913
DEPRECIATION AND AMORTIZATION 4,813 267 589(C) 5,669
---------------- ---------------- ---------------- ----------------
OPERATING INCOME 23,881 4,123 (769) 27,235
INTEREST EXPENSE 5,884 71 1,370(F) 7,325
---------------- ---------------- ---------------- ----------------
INCOME BEFORE INCOME TAXES 17,997 4,052 (2,139) 19,910
PROVISION FOR INCOME TAXES 7,200 -- 765(G) 7,965
---------------- ---------------- ---------------- ----------------
NET INCOME $ 10,797 $ 4,052 $ (2,904) $ 11,945
================ ================ ================ ================
BASIC AND DILUTED EARNINGS PER SHARE: $ 1.62 $ 1.71
================ ================
WEIGHTED-AVERAGE SHARES OUTSTANDING:
Basic 6,644 356(D) 7,000
================ ================ ================
Diluted 6,670 356(D) 7,026
================ ================ ================
</TABLE>
See accompanying notes to pro forma unaudited condensed
consolidated financial statements.
18
<PAGE> 19
RUSH ENTERPRISES, INC., AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Earnings Per Share - Unaudited)
<TABLE>
<CAPTION>
Rush Southwest
Enterprises, Peterbilt, Inc.
Inc., Six and Affiliates
Months Six Months
Ended Ended
June 30, June 30, Pro Forma Total
1999 1999 Adjustments(1) Pro Forma
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
REVENUES $ 367,255 $ 42,491 $ -- $ 409,746
COST OF PRODUCTS SOLD 303,887 34,261 -- 338,148
--------------- --------------- --------------- ---------------
GROSS PROFIT 63,368 8,230 -- 71,598
SELLING, GENERAL AND ADMINISTRATIVE 45,207 5,683 90(E) 50,980
DEPRECIATION AND AMORTIZATION 2,787 114 295(C) 3,196
--------------- --------------- --------------- ---------------
OPERATING INCOME 15,374 2,433 (385) 17,422
INTEREST EXPENSE (INCOME) 3,366 (23) 685(F) 4,028
--------------- --------------- --------------- ---------------
INCOME BEFORE INCOME TAXES 12,008 2,456 (1,070) 13,394
PROVISION FOR INCOME TAXES 4,803 -- 554(G) 5,357
--------------- --------------- --------------- ---------------
NET INCOME $ 7,205 $ 2,456 $ (1,624) $ 8,037
=============== =============== =============== ===============
EARNINGS PER SHARE:
Basic $ 1.08 $ 1.15
=============== ===============
Diluted $ 1.07 $ 1.13
=============== ===============
WEIGHTED-AVERAGE SHARES OUTSTANDING:
Basic 6,646 356(D) 7,002
=============== =============== ===============
Diluted 6,757 356(D) 7,113
=============== =============== ===============
</TABLE>
See accompanying notes to pro forma unaudited condensed
consolidated financial statements.
19
<PAGE> 20
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands, except share amounts)
(Unaudited)
1. Pro forma adjustments related to the Acquisition:
A. These adjustments reflect the consideration paid for Southwest, which
consisted of approximately $11,534 in cash, $4,798 in floor plan
financing of inventory, and $2,000 of borrowings under a line of
credit.
B. These are the assets and liabilities not acquired as part of this
business combination.
C. Record the goodwill associated with the acquisition of Southwest along
with the related amortization of goodwill over its estimated useful
life of 30 years.
D. Record the issuance of 355,556 shares of Rush's common stock, $.01 par
value, to the seller, at a price of $15.625 per common share.
E. Reflects additional annual compensation expense to be paid to the
previous owner of Southwest.
F. Depicts the additional interest incurred related to the borrowings
associated with the acquisition of Southwest.
G. Provide for federal and state income tax expense at an effective tax
rate of 40 percent as if Southwest had been taxed as a C corporation
for the year ended December 31, 1998, and the six-month period ended
June 30, 1999.
(c) Exhibits.
Exhibit Description
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., and Edward Donahue, Sr.
2.2 Asset Purchase Agreement dated September 22, 1999 by and among
Rush Truck Centers of New Mexico, Inc., New Mexico Peterbilt,
Inc. and Edward Donahue, Sr.
10.1 Registration Rights Agreement dated October 1, 1999 by and among
Rush Enterprises, Inc., Southwest Peterbilt, Inc., Southwest
Truck Center, Inc., and New Mexico Peterbilt, Inc.
20
<PAGE> 21
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 19, 1999
RUSH ENTERPRISES, INC.
By /s/ Martin A. Naegelin, Jr.
-----------------------------
Martin A. Naegelin, Jr.
Vice President, Finance and
Chief Financial Officer
21
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
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., and Edward Donahue, Sr.
2.2 Asset Purchase Agreement dated September 22, 1999 by and among
Rush Truck Centers of New Mexico, Inc., New Mexico Peterbilt,
Inc. and Edward Donahue, Sr.
10.1 Registration Rights Agreement dated October 1, 1999 by and among
Rush Enterprises, Inc., Southwest Peterbilt, Inc., Southwest
Truck Center, Inc., and New Mexico Peterbilt, Inc.
</TABLE>
<PAGE> 1
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
EDWARD DONAHUE, SR.
COVERING THE PURCHASE
OF SPECIFIED ASSETS OF
SOUTHWEST PETERBILT, INC.
AND
SOUTHWEST TRUCK CENTER, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
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 Chandler Assignment........................................2
1.8 Chandler Landlord..........................................2
1.9 Chandler 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
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
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
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
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
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
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
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
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
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C>
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
</TABLE>
vi
<PAGE> 8
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) Edward
Donahue, Sr., 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.
<PAGE> 9
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 Chandler Assignment. "Chandler Assignment" shall have the meaning
assigned thereto in Section 15(a).
1.8 Chandler Landlord. "Chandler Landlord" shall have the meaning
assigned thereto in Section 15(a).
1.9 Chandler Lease. "Chandler 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.
2
<PAGE> 10
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.
3
<PAGE> 11
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 Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
1.34 Lease Documents. "Lease Documents" shall mean the Chandler
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).
4
<PAGE> 12
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 James E. Donahue, John T. Donahue
and Edward T. Donahue, Jr. 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 Chandler
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 Chandler 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 Constance Donahue
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 sue 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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<PAGE> 48
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 Roger and Kathy Esplin,
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 Gene I. and Marvyl W. Wendt
(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. Box 34630
San Antonio, Texas 78265
If personally delivered or delivered by overnight
courier:
8810 IH 10 East
San Antonio, Texas 78219
Attention: W. Marvin Rush
Facsimile No.: (210) 662-8017
With a copy to:
Fulbright & Jaworski L.L.P.
300 Convent Street, Suite 2200
San Antonio, Texas 78205
Attention: Phillip M. Renfro, Esq.
Facsimile No.: (210) 270-7205
(b) If to any of Sellers or Shareholder, at:
1117 Oro Vista
Litchfield Park, AZ 85340
Attention: Edward Donahue, Sr.
49
<PAGE> 57
With a copy to:
Greenberg, Traurig, P.A.
One East Camelback Road, Suite 1100
Phoenix, Arizona 85012
Attention: Robert S. Kant, Esq.
Facsimile No.: (602) 263-2900
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
50
<PAGE> 58
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.
51
<PAGE> 59
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
<PAGE> 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:
------------------------------------
Edward Donahue, Sr.
<PAGE> 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) Edward Donahue, Sr., 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-
<PAGE> 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-
<PAGE> 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 A-3-
<PAGE> 64
10. 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-
<PAGE> 1
Exhibit 2.2
ASSET PURCHASE AGREEMENT
DATED SEPTEMBER 22, 1999
BY AND AMONG
RUSH TRUCK CENTERS OF NEW MEXICO, INC.
NEW MEXICO PETERBILT, INC. d/b/a SOUTHWEST PETERBILT
AND
EDWARD DONAHUE, SR.
COVERING THE PURCHASE
OF SPECIFIED ASSETS OF
NEW MEXICO PETERBILT, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. GENERAL DEFINITIONS........................................1
1.1 Affiliate.........................................1
1.2 Albuquerque Assignment............................2
1.3 Albuquerque Landlord..............................2
1.4 Albuquerque Lease.................................2
1.5 Article...........................................2
1.6 Arizona Purchase Agreement........................2
1.7 Assets............................................2
1.8 Balance Sheet Date................................2
1.9 Best Knowledge....................................2
1.10 Bonus Payment.....................................2
1.11 Closing...........................................2
1.12 Closing Date......................................2
1.13 Closing Price.....................................2
1.14 Commission. ......................................2
1.15 Common Stock......................................2
1.16 Contracts.........................................2
1.17 Control...........................................3
1.18 Dealer Cost.......................................3
1.19 Deposits..........................................3
1.20 Disclosure Schedule...............................3
1.21 ERISA.............................................3
1.22 Exchange Act......................................3
1.23 Excluded Assets...................................3
1.24 Fair Market Value Warrant.........................3
1.25 GMC...............................................3
1.26 GMC Excluded Assets...............................3
1.27 GMC Operating Agreement...........................3
1.28 Governmental Authority............................3
1.29 Governmental Requirement..........................4
1.30 HSR Act...........................................4
1.31 New Contracts.....................................4
1.33 Person............................................4
1.34 Purchase Price....................................4
1.35 Purchaser Claims..................................4
1.36 Purchaser Damages.................................4
1.38 Purchaser Indemnified Parties.....................4
1.39 Reference Balance Sheet...........................4
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
1.40 Registration Rights Agreements....................5
1.42 Rush..............................................5
1.43 Schedule..........................................5
1.45 SEC Documents.....................................5
1.46 Section...........................................5
1.47 Securities........................................5
1.48 Securities Act....................................5
1.49 Securities Laws...................................5
1.51 Seller Claims.....................................5
1.52 Seller Damages....................................5
1.55 Seller Indemnifying Parties.......................6
1.57 Southwest Peterbilt...............................6
1.58 Southwest Truck Center............................6
1.59 Stock Consideration...............................6
1.60 Subsidiary........................................6
1.61 Taxes.............................................6
1.62 Territory.........................................6
1.63 Underwater Warrant................................6
1.64 Warrant Stock.....................................6
2. PURCHASE AND SALE OF THE ASSETS; CLOSING DATE..............6
2.1 Assets to be Purchased............................6
2.2 Purchase and Sale.................................8
2.3 Delivery of Assets and Transfer Documents.........8
2.4 Closing; Closing Date.............................8
3. PURCHASE PRICE.............................................8
3.1 Price and Payment.................................8
3.2 Assumed Obligations..............................10
3.3 Damage to Assets.................................10
3.4 Adjustment of Purchase Price.....................11
3.5 Sales and Use Tax................................11
3.6 Allocation of Purchase Price.....................11
4. REPRESENTATIONS AND WARRANTIES OF SELLER
AND SHAREHOLDER...........................................11
4.1 Incorporation....................................11
4.2 Share Capital....................................12
4.3 Financial Statements.............................12
4.4 Events Since the Balance Sheet Date..............12
4.5 Customer List....................................13
4.6 Taxes and Governmental Returns...................13
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
4.7 Employee Matters...................................14
4.8 Contracts and Agreements...........................14
4.9 Effect of Agreement................................16
4.10 Properties, Assets and Leasehold Estates...........16
4.11 Intangible Property................................17
4.12 Suits, Actions and Claims..........................17
4.13 Licenses and Permits; Compliance With
Governmental Requirements..........................17
4.14 Authorization......................................18
4.15 Records............................................18
4.16 Environmental Protection Laws......................18
4.18 Securities Laws Matters............................21
4.19 Brokers and Finders................................22
4.20 Deposits...........................................22
4.21 Work Orders........................................23
4.22 Telephone Numbers..................................23
4.23 No Untrue Statements...............................23
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.................23
5.1 Incorporation......................................23
5.2 Authorization......................................23
5.3 SEC Documents......................................23
5.4 Brokers and Finders................................24
5.5 Effect of Agreement................................24
6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNIFICATIONS,
GUARANTEES, REPRESENTATIONS AND WARRANTIES OF SELLER AND
SHAREHOLDER.................................................25
7. CONTRACTS PRIOR TO THE CLOSING DATE.........................25
7.1 Approval of Contracts..............................25
7.2 Contracts Included in Assets.......................25
8. COVENANTS OF SELLER AND SHAREHOLDER PRIOR
TO CLOSING DATE.............................................25
8.1 Access to Information..............................25
8.2 General Affirmative Covenants......................25
8.3 General Negative Covenants.........................26
8.4 Disclosure of Misrepresentations and Breaches......27
8.5 Government Filings.................................27
8.6 Access to and Inspection of Premises,
Facilities and Equipment...........................27
9. COVENANTS REGARDING THE CLOSING.............................28
9.1 Covenants of Seller and Shareholder................28
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
9.2 Covenants of Purchaser............................28
9.3 Inventory Audit...................................28
10. CONDITIONS TO OBLIGATIONS OF PURCHASER.....................29
10.1 Accuracy of Representations and Warranties
and Fulfillment of Covenants......................29
10.2 No Governmental Actions...........................29
10.3 No Adverse Change.................................29
10.4 Update of Contracts...............................29
10.5 No Material Adverse Information...................30
10.6 Notices and Consents..............................30
10.7 Lease Documents...................................30
10.8 Other Documents...................................30
10.9 Dealer License....................................30
10.10 Inventory Audit...................................30
10.11 Due Diligence.....................................30
10.12 Dealership Agreement..............................30
10.13 Governmental Approvals............................31
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER..............31
11.1 Accuracy of Representations and Warranties
and Fulfillment of Covenants......................31
11.2 Governmental Approvals............................31
11.3 Lease Documents...................................31
11.4 Other Documents...................................31
11.5 Inventory Audit...................................31
11.6 Registration Rights Agreement.....................31
11.8 Operating Agreements..............................31
11.9 Governmental Approvals............................32
12. SPECIAL CLOSING AND POST-CLOSING COVENANTS.................32
12.1 Further Assurances................................32
12.2 Delivery of Funds and Other Assets
Collected by Seller...............................32
12.3 Change of Name of Seller..........................32
12.4 Access to Files...................................32
12.5 Exchange Act Filing; Cooperation..................33
12.6 Nondisclosure of Confidential Information.........33
12.7 Assignment of Contracts...........................34
12.9 Agreement Regarding GMC Excluded Assets...........36
13. INDEMNITY BY SELLER AND SHAREHOLDER........................36
13.1 Indemnity.........................................36
13.2 Environmental Liability of the Seller
Indemnifying Parties..............................37
13.3 Notice of Claim...................................38
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C> <C>
13.4 Right of the Seller Indemnifying Parties
to Participate in Defense.........................39
13.5 Payment...........................................39
13.6 Limit of Liability of Shareholder.................39
14. INDEMNITY BY PURCHASER.....................................40
14.1 Indemnity.........................................40
14.2 Environmental Liability of Purchaser..............41
14.3 Notice of Claim...................................42
14.4 Right of Purchaser to Participate in Defense......42
14.5 Payment...........................................42
15. REAL PROPERTY..............................................42
16. SPECIAL PROVISIONS REGARDING EMPLOYEES OF .................43
16.1 New Employees of Purchaser........................43
16.2 No Hiring Commitment..............................43
16.3 Existing Employee Benefit Plans; Assumption
of Vacation and Sick Leave Obligations............43
17. TERMINATION................................................43
17.1 Mutual Consent....................................43
17.2 Failure of Conditions.............................44
17.3 Failure to Close..................................44
18. NOTICES....................................................44
19. GENERAL PROVISIONS.........................................45
19.1 Governing Law; Interpretation; Section
Headings..........................................45
19.2 Severability......................................46
19.3 Entire Agreement..................................46
19.4 Expenses..........................................46
19.5 Further Actions...................................46
19.6 Binding Effect....................................47
19.7 Assignment........................................47
19.8 Amendment; Waiver.................................47
19.9 Gender; Numbers...................................47
19.10 Counterparts......................................47
19.11 Telecopy Execution and Delivery...................47
19.12 Press Releases....................................47
</TABLE>
-v-
<PAGE> 7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into this 22nd day of September, 1999, by and among (i) New Mexico Peterbilt,
Inc., d/b/a Southwest Peterbilt, a New Mexico corporation ("Seller"), (ii)
Edward Donahue, Sr., the owner of a portion of the capital stock of Seller
("Shareholder"), and (iii) Rush Truck Centers of New Mexico, Inc., a Delaware
corporation ("Purchaser").
W I T N E S S E T H :
WHEREAS, Seller is the owner of all right, title and interest in and
to the assets described in Section 2.1 hereto (the "Assets"), with such Assets
being the assets currently used in the conduct of the heavy duty truck sales
and service business and various related businesses operated by Seller in the
State of New Mexico (collectively, the "Business");
WHEREAS, Seller desires to sell the Assets to Purchaser and Purchaser
desires to acquire the Assets from Seller, all pursuant to this Agreement as
hereinafter provided;
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the execution and delivery of this Agreement, and to set forth
certain additional agreements related to the transactions contemplated hereby;
and
WHEREAS, pursuant to an Asset Purchase Agreement (the "Arizona
Purchase Agreement") of even date herewith between Rush Truck Centers of
Arizona, Inc., a Delaware corporation, Southwest Peterbilt, Inc., an Arizona
corporation and an Affiliate (as defined below) of Seller ("Southwest
Peterbilt"), Southwest Truck Center, Inc., an Arizona corporation and an
Affiliate of Seller ("Southwest Truck Center") (Southwest Peterbilt and
Southwest Truck Center, collectively the "Arizona Dealers") and Shareholder,
the Arizona Dealers have agreed to sell to Rush Truck Centers of Arizona, Inc.
the heavy duty truck sales and service and various related businesses operated
by the Arizona Dealers in the State of Arizona;
NOW, THEREFORE, for and in consideration of the premises, the mutual
representations, warranties and covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. GENERAL DEFINITIONS. For purposes of this Agreement, the following
terms shall have the respective meanings set forth below:
1.1 Affiliate. "Affiliate" of any Person shall mean any Person
Controlling, Controlled by or under common Control with such Person.
1
<PAGE> 8
1.2 Albuquerque Assignment. "Albuquerque Assignment" shall have the
meaning assigned thereto in Article 15.
1.3 Albuquerque Landlord. "Albuquerque Landlord" shall have the
meaning assigned thereto in Article 15.
1.4 Albuquerque Lease. "Albuquerque Lease" shall have the meaning
assigned thereto in Article 15.
1.5 Article. "Article" shall mean an Article of this Agreement, unless
otherwise stated.
1.6 Arizona Purchase Agreement. "Arizona Purchase Agreement" shall
have the meaning assigned thereto in the recitals hereto.
1.7 Assets. "Assets" shall have meaning assigned thereto in Section
2.1.
1.8 Balance Sheet Date. "Balance Sheet Date" shall have the meaning
assigned thereto in Section 4.3.
1.9 Best Knowledge. "Best Knowledge" shall mean both what a Person
knew as well as what the Person should have known had the person exercised
reasonable diligence. When used with respect to a Person other than a natural
person, the term "Best Knowledge" shall include matters that are known to the
directors, officers and employees of the Person.
1.10 Bonus Payment. "Bonus Payment" shall have the meaning assigned
thereto in Section 3.1.
1.11 Closing. "Closing" shall have the meaning assigned thereto in
Section 2.4.
1.12 Closing Date. "Closing Date" shall have the meaning assigned
thereto in Section 2.4.
1.13 Closing Price. "Closing Price" shall mean the average weighted
closing price of the Common Stock on The Nasdaq National Market during the ten
(10) consecutive trading day period ending at the close of the third trading
day preceding the Closing Date.
1.14 Commission. "Commission" shall mean the United States Securities
and Exchange Commission.
1.15 Common Stock. "Common Stock" shall mean the Common Stock of Rush,
$.01 par value per share.
1.16 Contracts. "Contracts" shall have the meaning assigned thereto in
Section 4.8.
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1.17 Control. "Control" and all derivations thereof shall mean the
ability to either (i) vote (or direct the vote of) 50% or more of the voting
interests in any Person or (ii) direct the affairs of another, whether through
voting power, contract or otherwise.
1.18 Dealer Cost. "Dealer Cost" shall mean manufacturer's invoice
price to Seller, reduced by the amount of all manufacturer's rebates,
allowances and other price reductions paid or credited to Seller on such
vehicle (other than the manufacturer's reimbursement for dealer preparation and
delivery expenses and any floor plan interest credits for such vehicle), plus
such Seller's actual cost and expense of installation of dealer-installed
options on such vehicle and the pre-delivery inspection costs incurred by
Seller in the normal course of business that are not reimbursed by the
manufacturer; provided such inspection costs for each motor vehicle shall be
limited to the lesser of the actual cost of such pre-delivery inspection to the
new or used truck department of Seller and $500 per Class 8 truck and $250 per
Class 7 truck included in the Assets.
1.19 Deposits. "Deposits" shall have the meaning assigned thereto in
Section 4.20.
1.20 Disclosure Schedule. "Disclosure Schedule" shall have the meaning
assigned thereto in Article 4.
1.21 ERISA. "ERISA" shall have the meaning assigned thereto in Section
4.7.
1.22 Exchange Act. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
1.23 Excluded Assets. "Excluded Assets" shall have the meaning
assigned thereto in Section 2.1.
1.24 Fair Market Value Warrant. "Fair Market Value Warrant" shall have
the meaning assigned thereto in Section 3.1.
1.25 GMC. "GMC" shall mean GMC Truck Division and any successor
thereto.
1.26 GMC Excluded Assets. "GMC Excluded Assets" shall have the meaning
assigned thereto in Section 2.1.
1.27 GMC Operating Agreement. "GMC Operating Agreement" shall have the
meaning assigned thereto in Section 11.8.
1.28 Governmental Authority. "Governmental Authority" shall mean any
and all foreign, federal, state or local governments, governmental
institutions, public authorities and governmental entities of any nature
whatsoever, and any subdivisions or instrumentalities thereof, including, but
not limited to, departments, boards, bureaus, commissions, agencies, courts,
administrations and
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panels, and any divisions or instrumentalities thereof, whether permanent or ad
hoc and whether now or hereafter constituted or existing.
1.29 Governmental Requirement. "Governmental Requirement" shall mean
any and all laws (including, but not limited to, applicable common law
principles), statutes, ordinances, codes, rules, regulations, interpretations,
guidelines, directions, orders, judgments, writs, injunctions, decrees,
decisions or similar items or pronouncements, promulgated, issued, passed or
set forth by any Governmental Authority.
1.30 HSR Act. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
1.31 New Contracts. "New Contracts" shall have the meaning assigned
thereto in Section 10.4.
1.32 Non-Shareholder Employment Agreements. "Non-Shareholder
Employment Agreements" shall have the meaning assigned thereto in Section 10.7.
1.33 Person. "Person" shall mean any natural person, any Governmental
Authority and any entity the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, joint ventures, joint stock companies, trusts,
estates, companies and associations, whether organized for profit or otherwise.
1.34 Purchase Price. "Purchase Price" shall have the meaning assigned
thereto in Section 3.1.
1.35 Purchaser Claims. "Purchaser Claims" shall have the meaning
assigned thereto in Section 13.3.
1.36 Purchaser Damages. "Purchaser Damages" shall have the meaning
assigned thereto in Section 13.1.
1.37 Purchaser Environmental Liabilities. "Purchaser Environmental
Liabilities" shall have the meaning assigned thereto in Section 13.2.
1.38 Purchaser Indemnified Parties. "Purchaser Indemnified Parties"
shall have the meaning assigned thereto in Section 13.1.
1.39 Reference Balance Sheet. "Reference Balance Sheet" shall have the
meaning assigned thereto in Section 4.3.
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1.40 Registration Rights Agreements. "Registration Rights Agreements"
shall have the meaning assigned thereto in Section 11.6.
1.41 Rule 144. "Rule 144" shall mean Rule 144, as amended, under the
Securities Act.
1.42 Rush. "Rush" shall mean Rush Enterprises, Inc., a Texas
corporation and the parent corporation of Purchaser.
1.43 Schedule. "Schedule" shall mean the Schedules to this Agreement,
unless otherwise stated, and shall include the Disclosure Schedule. The
Schedules to this Agreement may be attached to this Agreement or may be set
forth in a separate document denoted as the Schedules to this Agreement, or
both.
1.44 SEC. "SEC" shall mean the United States Securities and Exchange
Commission and any successor thereto.
1.45 SEC Documents. "SEC Documents" shall have the meaning assigned
thereto in Section 5.3.
1.46 Section. "Section" shall mean a Section of this Agreement, unless
otherwise stated.
1.47 Securities. "Securities" shall have the meaning assigned thereto
in Section 4.17.
1.48 Securities Act. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.49 Securities Laws. "Securities Laws" shall have the meaning
assigned thereto in Section 4.18.
1.50 Seller Certificate. "Seller Certificate" shall mean the
certificate to be delivered at Closing to Purchaser pursuant to Article 11.
1.51 Seller Claims. "Seller Claims" shall have the meaning assigned
thereto in Section 14.2.
1.52 Seller Damages. "Seller Damages" shall have the meaning assigned
thereto in Section 14.2.
1.53 Seller Environmental Liabilities. "Seller Environmental
Liabilities" shall have the meaning assigned thereto in Section 14.2.
1.54 Seller Indemnified Parties. "Seller Indemnified Parties" shall
have the meaning assigned thereto in Section 13.1.
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1.55 Seller Indemnifying Parties. "Seller Indemnifying Parties" and
"Seller Indemnifying Party" shall have the meanings assigned thereto in Section
13.1.
1.56 Shareholder Employment Agreement. "Shareholder Employment
Agreement" shall have the meaning assigned thereto in Section 10.7.
1.57 Southwest Peterbilt. "Southwest Peterbilt" shall have the meaning
assigned thereto in the recitals hereto.
1.58 Southwest Truck Center. "Southwest Truck Center" shall have the
meaning assigned thereto in the recitals hereto.
1.59 Stock Consideration. "Stock Consideration" shall have the meaning
assigned thereto in Section 3.1.
1.60 Subsidiary. "Subsidiary" shall mean, with respect to any Person
(the "parent"), (a) any corporation, association, joint venture, partnership or
other business entity of which securities or other ownership interests
representing more than 50% of the ordinary voting power or beneficial interest
are, at the time as of which any determination is being made, owned or
controlled by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent and (b) any joint venture or
partnership of which the parent or any Subsidiary of the parent is a general
partner or has responsibility for its management.
1.61 Taxes. "Tax" and "Taxes" shall mean any and all income, excise,
franchise or other taxes and all other charges or fees imposed or collected by
any Governmental Authority or pursuant to any Governmental Requirement, and
shall also include any and all penalties, interest, deficiencies, assessments
and other charges with respect thereto.
1.62 Territory. "Territory" shall have the meaning assigned thereto in
Section 3.1.
1.63 Underwater Warrant. "Underwater Warrant" shall have the meaning
assigned thereto in Section 3.1.
1.64 Warrant Stock. "Warrant Stock" shall mean the number of shares of
Common Stock equal to $4,000,000 divided by the Closing Price and the result
multiplied by 0.15.
2. PURCHASE AND SALE OF THE ASSETS; CLOSING DATE.
2.1 Assets to be Purchased. The assets to be purchased from Seller are
the following assets held by Seller as of the Closing for use in connection
with all or any part of the Business (collectively, the "Assets"):
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(a) subject to the provisions relating to Excluded Assets set
forth in this Section 2.1, all new 1998, 1999 and 2000 Peterbilt and
GMC motor vehicles inventory,
(b) subject to the provisions relating to Excluded Assets set
forth in this Section 2.1, all new, current and returnable parts and
accessories inventory and all chassis kits,
(c) all miscellaneous inventories, including gas, diesel
fuel, oil, grease, paint and body shop materials,
(d) all work in process and sublet repairs on vehicles in
Seller's service departments,
(e) all of Seller's leasehold improvements, including all
signs, furniture, fixtures and office equipment, other than the
leasehold improvements set forth on Schedule 2.1,
(f) all shop equipment and special tools, and all parts and
accessories equipment,
(g) all company vehicles, excluding the vehicles set forth on
Schedule 2.1,
(h) all promotional, advertising and training materials,
(i) all sales files and customer lists, and all warranty and
service and customer service and repair files,
(j) to the extent transferable, all intangible assets of
Seller to do business in the State of New Mexico as a motor vehicle
dealer, including any permits or licenses issued by any department or
agency of the State of New Mexico for Seller's dealerships,
(k) subject to agreement on price pursuant to Section 3.1
below, all prepaid expenses and deposits,
(l) subject to agreement on price pursuant to Section 3.1
below, all used vehicles,
(m) subject to agreement on price pursuant to Section 3.1
below, all new obsolete parts and accessories and all used parts and
accessories,
(n) subject to the provisions relating to Excluded Assets set
forth in this Section 2.1, all customer deposits and agreements to
sell Peterbilt or GMC vehicles ordered but not delivered to the
customer at the time of Closing, and
(o) subject to the provisions relating to Excluded Assets set
forth in Section 3.1(h), all accounts receivable from finance
companies.
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All other assets of Seller not described in this Section 2.1,
including, without limitation, cash, bank accounts, and the assets described on
Schedule 2.1 (collectively, the "Excluded Assets"), shall not be sold by Seller
to Purchaser. Additionally, notwithstanding anything herein to the contrary, in
the event Purchaser does not enter into a dealer sales and service agreement
with GMC on or before the Closing Date, the GMC vehicles, parts and accessories
inventory and chassis kits and the customer deposits and agreements to sell GMC
vehicles will not be included in the Assets, but will be included in the
Excluded Assets (such GMC Excluded Assets, other than the customer deposits and
agreements to sell GMC vehicles, are hereinafter referred to as the "GMC
Excluded Assets").
2.2 Purchase and Sale. Subject to the terms and conditions herein
contained, Seller agrees to sell, assign, transfer and deliver the Assets to
Purchaser at the Closing (as hereinafter defined), free and clear of any liens
or encumbrances of any nature whatsoever (except for liens, encumbrances or
obligations, if any, expressly assumed by Purchaser hereunder). Subject to the
terms and conditions herein contained, Purchaser agrees to purchase from Seller
the Assets in consideration for the Purchase Price (as hereinafter defined)
payable as set forth in Section 3.
2.3 Delivery of Assets and Transfer Documents. At the Closing, Seller
and Shareholder shall take all steps necessary to put Purchaser in possession
of the Assets, free and clear of any liens or encumbrances of any nature
whatsoever (except for liens, encumbrances or obligations, if any, expressly
assumed by Purchaser hereunder), and shall deliver to Purchaser (i) a duly
executed General Conveyance, Assignment and Assumption Agreement covering the
Assets and the Assumed Obligations, in substantially the form attached hereto
as Exhibit 2.3, (ii) duly executed title and transfer documents covering any
assets for which there exists a certificate of title, and (iii) such other duly
executed transfer and release documents as Purchaser shall reasonably request
to evidence the transfer of the Assets to Purchaser free and clear of any liens
or encumbrances of any nature whatsoever (except for liens, encumbrances or
obligations, if any, expressly assumed by Purchaser hereunder).
2.4 Closing; Closing Date. Subject to the terms and conditions herein
contained, the consummation of the transactions referenced above shall take
place (the "Closing") on or before October 1, 1999, at 10:00 a.m., local time,
at the offices of Seller's counsel in Phoenix, Arizona, or at such other time,
date and place as Purchaser and Seller shall in writing designate. The date of
the Closing is referred to herein as the "Closing Date".
3. PURCHASE PRICE.
3.1 Price and Payment. Subject to adjustment as provided in Sections
3.3 and 3.4 with respect to damaged assets, prorations, deposits and certain
other items, the aggregate consideration (the "Purchase Price") to be paid by
Purchaser for the Assets is as follows:
(a) $1,650,000 to be paid in cash by wire transfer at
Closing, plus
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(b) 53,333 shares of Common stock to be issued at
Closing (the "Stock Consideration"), plus
(c) an amount to be paid in cash at Closing equal to
Dealer Cost for each vehicle described in Section
2.1(a), plus
(d) an amount to be paid in cash at Closing equal to the
replacement cost of the items described in Sections
2.1(b) and (c), plus
(e) an amount to be paid in cash at Closing equal to
Seller's actual cost of the work in process and
sublet repairs described in Section 2.1(d), plus
(f) an amount to be paid in cash at Closing equal to the
depreciated book value (determined in accordance
with generally accepted accounting principles,
consistently applied) at Closing of the items
described in Sections 2.1(e), (f) and (g), plus
(g) an amount to be agreed upon by Seller and Purchaser
to be paid in cash at Closing for the items
described in Sections 2.1(k), (l) and (m) (provided
that if Seller and Purchaser cannot agree on the
amount to be paid for any Asset described in these
Sections, such Asset shall be an Excluded Asset),
plus
(h) an amount to be paid in cash at Closing equal to the
net book value of the accounts receivable described
in Section 2.1(o), less an amount estimated by
Seller and Purchaser to be payable or deductible in
the future for prepayments and bad debts in
connection with repossessions with respect to such
accounts receivable (provided that if Seller and
Purchaser cannot agree on such amount, such Asset
shall be an Excluded Asset), plus
(i) one of the following, at the election of
Shareholder, to be issued at Closing: (a) a warrant
(the "Fair Market Value Warrant") to purchase the
Warrant Stock at an exercise price equal to the
Closing Price, (b) a warrant (the "Underwater
Warrant") to purchase the Warrant Stock at an
exercise price equal to $5.00 greater than the
Closing Price plus the agreement of Purchaser to pay
Seller a consulting fee of $2,750 per month, or (c)
the agreement of Purchaser to pay Seller a
consulting fee of $3,501 per month. The Fair Market
Value Warrant and the Underwater Warrant shall
expire on the date the Bonus Payment is paid. The
consulting fee shall be payable monthly on the last
day of each month until the date the Bonus Payment
is paid. Shareholder must make the election on or
before Closing and must make the same election for
Southwest Peterbilt, Seller and Southwest Truck
Center.
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The warrant shall be issued and the consulting fee
shall be paid, upon such other terms and conditions
as the parties thereto may agree.
When and if Purchaser and/or its Affiliates sell 750 or more new Class
7 or 8 Peterbilt trucks in the Territory or outside the Territory through sales
personnel employed in the Territory (including sales to any affiliated leasing
company or division in the Territory), Purchaser shall pay Seller at the end of
the calendar month in which such performance criteria is satisfied, but no
earlier than at the end of the 24 month period after the Closing Date, an
amount equal to $600,000 (the "Bonus Payment"). The Bonus Payment, if paid,
shall be paid in cash by wire transfer and shall be additional consideration
for the Assets and shall be included in the Purchase Price. The "Territory"
shall be defined as the territory under Seller's and the Arizona Dealers'
dealership agreements with Peterbilt Motors Company, a division of PACCAR, Inc.
("PACCAR").
Within 15 calendar days after the end of each calendar month prior to
the date the Bonus Payment is paid, Purchaser shall provide Seller a written
report detailing the number of Class 7 and 8 Peterbilt trucks sold in the
Territory or through sales personnel employed in the Territory during such
month, together with all supporting documentation reasonably requested by
Seller, at Purchaser's cost and expense. Purchaser shall, and shall cause its
Affiliates, employees, agents, representatives, officers and directors to use
their best efforts to sell Class 7 and 8 Peterbilt trucks in the Territory
prior to the date the Bonus Payment is paid.
All cash payments at Closing shall be subject to the adjustment
provisions of Sections 3.3 and 3.4. Purchaser shall not pay any cash or issue
any Common Stock for the conveyance of the items identified in Sections 2.1(h),
(i), (j), (m) and (n).
3.2 Assumed Obligations. At the Closing, Purchaser shall assume and
agree to timely discharge (a) the obligations of Seller under all contracts and
agreements transferred by Seller to Purchaser under this Agreement that are (i)
listed and described on Schedule 4.8 or on the updated list of contracts
required by Section 10.4 and (ii) accepted in writing by Purchaser pursuant to
the provisions of Section 4.8, Article 7 or Section 10.4, (b) certain vacation
and sick leave obligations of Seller pursuant to Section 16.3 and (c) all
contingent obligations related to the accounts receivable referenced in Section
2.1(n) to the extent such accounts receivable are included in the Assets;
provided that Purchaser specifically does not assume any liabilities of Seller
under any contracts or agreements with respect to any breaches of such
contracts or agreements occurring on or before the Closing Date or any damages
to third parties resulting from acts, events or omissions occurring on or
before the Closing Date. Except as specifically set forth in this Section 3.2,
Purchaser shall not assume, and shall not be treated as having assumed, any
liability or obligation of Seller of any nature whatsoever.
3.3 Damage to Assets. If, on or before the Closing Date, any of the
Assets are damaged or destroyed, Seller will immediately notify Purchaser in
writing of such damage or destruction. In the event of any such damage or
destruction, Purchaser shall (i) remove any or all of the damaged
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<PAGE> 17
or destroyed asset or assets it does not desire to purchase from the Assets to
be purchased hereunder and reduce the cash portion of the Purchase Price by an
amount equal to the portion of the Purchase Price attributable to the damaged
or destroyed asset or assets so removed and (ii) complete the purchase of the
remainder of the Assets and reduce the cash portion of the Purchase Price by
the loss in fair market value of any damaged or destroyed Assets that are
purchased by Purchaser.
3.4 Adjustment of Purchase Price. The Purchase Price shall be adjusted
on the Closing Date (i) to reduce the Purchase Price by the amount allocated to
any damaged or destroyed Assets as contemplated by Section 3.3; (ii) to account
for a proration of property taxes on the Assets, lease payments, utilities and
other items commonly prorated; (iii) to account for any Deposits held by Seller
on the Closing Date; and (iv) to reduce the Purchase Price for the value of any
vacation and sick time obligations of Seller assumed by Purchaser pursuant to
Section 16.3. Three (3) days prior to the Closing Date, Seller will provide
Purchaser with a statement of adjustments showing all proposed adjustments to
the Purchase Price, such statement of adjustments having all reasonable back up
documentation for such suggested adjustments. Purchaser and Seller will work to
finalize all required adjustments prior to the Closing Date.
3.5 Sales and Use Tax. Seller shall be responsible for payment to the
appropriate Governmental Authority of all sales and use tax in connection with
the consummation of the transactions contemplated by this Agreement.
3.6 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets to the extent relevant for income tax purposes in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended,
and Schedule 3.6 attached hereto. The parties agree to report the transactions
contemplated by this Agreement for tax purposes in accordance with the
allocation shown on Schedule 3.6, and each party will indemnify and hold each
other party harmless from any loss, cost, damage, additional tax or expense
(including attorneys' fees) arising from any failure by the indemnifying party
to so report such transactions.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER. Seller
and Shareholder hereby jointly and severally represent and warrant to Purchaser
that the statements contained in this Article 4 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Article 4), except as set forth in
the disclosure schedule delivered by Seller and Shareholder to Purchaser on the
date hereof and initialed by Seller and Shareholder (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the numbered paragraphs contained in this Article 4, and any
disclosure on any part of the Disclosure Schedule shall be deemed a disclosure
on all other parts of the Disclosure Schedule provided the required disclosure
is fully and accurately disclosed.
4.1 Incorporation. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of its incorporation,
and is duly authorized, qualified and
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licensed under all applicable Governmental Requirements to carry on its
business in the places and in the manner as now conducted in the State of New
Mexico. Seller is not qualified as a foreign corporation in any jurisdiction,
and Seller is not required to qualify or otherwise be authorized to do business
as a foreign corporation in any jurisdiction in order to carry on any of its
businesses as now conducted or to own, lease or operate the Assets.
4.2 Share Capital. Part 4.2 of the Disclosure Schedule is a list of
all Persons owning capital stock of Seller with an indication thereon of the
class of capital stock and the number of shares of each class owned by each
such Person.
4.3 Financial Statements. Seller has delivered to Purchaser copies of
the following combined financial statements for Southwest Peterbilt and
affiliates, all of which financial statements are included in Schedule 4.3
hereto:
(a) Unaudited Balance Sheet (the "Reference Balance Sheet")
as of July 31, 1999, (the "Balance Sheet Date") and Unaudited Income
Statement for the seven-month period ended on the Balance Sheet Date;
and
(b) Audited Balance Sheets, Income Statements and Statements
of Changes in Financial Position for Seller's two (2) most recent
fiscal years.
All financial statements supplied to Purchaser by Seller, whether or not
included in Schedule 4.3 hereto, are and will be true and accurate in all
material respects, have been and will be prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated, and will present fairly in all material respects the
financial condition of Seller as of the dates and for the periods indicated
thereon, except as otherwise indicated in the notes thereto. The Reference
Balance Sheet reflects, as of the Balance Sheet Date, all liabilities, debts
and obligations of any nature of Seller, whether accrued, absolute, contingent
or otherwise, and whether due, or to become due, including, but not limited to,
liabilities, debts or obligations on account of Taxes to the extent such items
are required to be reflected on such balance sheet under generally acceptable
accounting principles consistently applied.
4.4 Events Since the Balance Sheet Date. Since the Balance Sheet Date,
there has not been:
(a) any change in the condition (financial or otherwise) or
in the properties, assets, liabilities, business or prospects of all
or any part of the Business, except normal and usual changes in the
ordinary course of business, none of which has been adverse and all of
which in the aggregate have not been adverse;
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(b) any labor trouble, strike or any other occurrence, event
or condition affecting the employees of Seller that adversely affects
the condition (financial or otherwise) of the Assets or all or any
part of the Business;
(c) any breach or default by Seller or, to the Best Knowledge
of Seller and Shareholder, by any other party, under any agreement or
obligation included in the Assets or by which any of the Assets are
bound;
(d) any damage, destruction or loss (whether or not covered
by insurance) adversely affecting the Assets or the Business;
(e) to the Best Knowledge of Seller and Shareholder, any
legislative or regulatory change adversely affecting the Assets or the
Business;
(f) any change in the types, nature, composition or quality
of the services of the Business, any adverse change in the
contributions of any of the service lines of the Business to the
revenues or net income of such Business, or any adverse change in the
sales, revenue or net income of the Business;
(g) any transaction related to or affecting the Assets or the
Business other than transactions in the ordinary course of business of
Seller; or
(h) any other occurrence, event or condition that has
adversely affected (or can reasonably be expected to adversely affect)
the Assets or the Business.
4.5 Customer List. Part 4.5 of the Disclosure Schedule sets forth a
true, correct and complete list of all customers of the Business to which
Seller has sold or provided products or services during the two (2) years
immediately preceding the date hereof. Immediately prior to the Closing, Seller
shall deliver to Purchaser a true, correct and complete update of this list as
of the Closing Date.
4.6 Taxes and Governmental Returns. As of the date hereof, all Tax
returns, information returns and governmental reports of every nature required
by any Governmental Authority or Governmental Requirement to be filed by Seller
or which include or should include Seller, including, but not limited to, those
relating to Taxes of any nature to which Seller or any of its business is
subject ("Governmental Returns"), have been filed for all periods ending on or
before the date hereof (except for any returns not yet due), and all Taxes
shown to be due and payable on such Governmental Returns or on any assessments
related to such Governmental Returns have been paid. All such Governmental
Returns and reports and the information and data contained therein have been
properly and accurately compiled and completed, fairly present the information
purported to be shown therein, and reflect all Tax liabilities of Seller for
the periods covered by such Governmental Returns. Seller has no unpaid
liability for any Taxes of any nature whatsoever for
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any period prior to the date hereof. To the Best Knowledge of Seller and
Shareholder, none of the Governmental Returns of Seller or that include Seller
have been audited, and none are now under audit, by any Governmental Authority.
There are no agreements, waivers or other arrangements providing for an
extension of time with respect to the assessment of any Taxes of any nature
against Seller or with respect to any Governmental Return filed by Seller or
that include Seller, or any suits or other actions, proceedings, investigations
or claims now pending or threatened against Seller with respect to any Taxes or
any matters under discussion with any Governmental Authority relating to any
Taxes, or any claims for additional Taxes asserted by any Governmental
Authority.
4.7 Employee Matters. Part 4.7 of the Disclosure Schedule sets forth a
true and complete list of the names of and current annual compensation paid by
Seller to each employee of Seller utilized in connection with the operation of
the Business. With respect to each employee hired after November 6, 1986, a
copy of the Form I-9 completed pursuant to the Immigration Reform and Control
Act of 1986, and the rules and regulations promulgated thereunder, has been
attached to Part 4.7 of the Disclosure Schedule. Seller does not have any
employee benefit plans (including, but not limited to, pension plans and health
or welfare plans), arrangements or understandings, whether formal or informal.
Purchaser will have no liability with respect to any such plans as a result of
the transactions contemplated by this Agreement. Seller does not now contribute
and has not ever contributed to a "multiemployer plan" as defined in section
4001(a)(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Seller has complied with all applicable provisions of ERISA and all
rules and regulations promulgated thereunder and neither Seller nor any
trustee, administrator, fiduciary, agent or employee thereof has at anytime
been involved in a transaction that would constitute a "prohibited transaction"
within the meaning of Section 406 of ERISA. Seller is not a party to any
collective bargaining or other union agreements. Seller has not, within the
last five years, had or been threatened with any union activities, work
stoppages or other labor trouble with respect to its employees which had or
might have had a material adverse effect on any of the Business. To the Best
Knowledge of Seller and Shareholder, no union activities, work stoppages or
other labor trouble with respect to the employees of any of the customers or
suppliers of the Business are pending or threatened which might have an adverse
effect on the Business. Other than wage increases in the ordinary course of
business, since the Balance Sheet Date, Seller has not made any commitment or
agreement to increase the wages or modify the conditions or terms of employment
of any of the employees of Seller used in connection with the Business, and
between the date of this Agreement and the Closing Date, Seller will not make
any agreement to increase the wages or modify the conditions or terms of
employment of any of the employees of Seller used in connection with the
Business without the prior written approval of Purchaser.
4.8 Contracts and Agreements. Part 4.8 of the Disclosure Schedule sets
forth a true and complete list of and briefly describes (including termination
date) all of the following contracts, agreements, leases, licenses, plans,
arrangements or commitments, written or oral, that relate to the Assets or the
Business (including all amendments, supplements and modifications thereto):
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(a) all contracts, agreements or commitments in respect of
the sale of products or services or the purchase of raw materials,
supplies or other products or utilities;
(b) all offers, tenders or the like outstanding and capable
of being converted into an obligation of Seller by the passage of time
or by an acceptance or other act of some other person or entity or
both;
(c) all sales, agency or distributorship agreements or
franchises or legally enforceable commitments or obligations with
respect thereto;
(d) all collective bargaining agreements, union agreements,
employment agreements, consulting agreements or agreements providing
for the services of an independent contractor;
(e) all profit-sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health
insurance or other employee benefit plans, agreements, arrangements or
commitments of any nature whatsoever, whether or not legally binding,
and all agreements with any present or former officer, director or
shareholder of Seller;
(f) all loan or credit agreements, indentures, guarantees
(other than endorsements made for collection), mortgages, pledges,
conditional sales or other title retention agreements, and all
equipment financing obligations, lease and lease-purchase agreements
relating to or affecting the Assets or the Business;
(g) all leases related to the Assets or the Business;
(h) all performance bonds, bid bonds, surety bonds and the
like, all contracts and bids covered by such bonds, and all letters of
credit and guaranties;
(i) all consent decrees and other judgments, decrees or
orders, settlement agreements and agreements relating to competitive
activities, requiring or prohibiting any future action;
(j) all accounts, notes and other receivables, and all
security therefor, and all documents and agreements related thereto;
(k) all contracts or agreements of any nature with any
shareholder of Seller or any Affiliate of any shareholder of Seller;
and
(l) all contracts, commitments and agreements entered into
outside the ordinary course of the operation of the Business.
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All of such contracts, agreements, leases, licenses, plans, arrangements, and
commitments and all other such items included in the Assets but not
specifically described above (collectively, the "Contracts") are valid, binding
and in full force and effect in accordance with their terms and conditions and
there is no existing default thereunder or breach thereof by Seller, or, to the
Best Knowledge of Seller and Shareholder, by any other party to the Contracts,
or any conditions which, with the passage of time or the giving of notice or
both, might constitute such a default by Seller, or, to the Best Knowledge of
Seller and Shareholder, by any other party to the Contracts, and the Contracts
will not be breached by or give any other party a right of termination as a
result of the transactions contemplated by this Agreement. To the Best
Knowledge of Seller and Shareholder there is no reason why any of the Contracts
(i) will result in a loss to Purchaser on completion by performance or (ii)
cannot readily be fulfilled or performed by Purchaser with the Assets on time
without undue or unusual expenditure of money or effort. Copies of all of the
documents (or in the case of oral commitments, descriptions of the material
terms thereof) relevant to the Contracts listed in Part 4.8 of the Disclosure
Schedule have been delivered by Seller to Purchaser, and such copies and/or
descriptions are true, complete and accurate and include all amendments,
supplements or modifications thereto. After reviewing the Contracts, Purchaser
may, at its sole option, choose not to assume one or more of the Contracts,
and, within 30 days of receipt by Purchaser of all information reasonably
requested by Purchaser with respect to the Contracts, Purchaser shall notify
Seller of which Contracts, if any, Purchaser does not intend to assume
hereunder. Except for Contracts, if any, that Purchaser notifies Seller that it
will not assume, all of the Contracts are and shall be included in the Assets.
All of the material Contracts may be assigned to Purchaser without the approval
or consent of any Person, or, if such approval or consent is required, it will
be obtained by Seller and delivered to Purchaser at or prior to the Closing.
4.9 Effect of Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not (i)
result in any breach of any of the terms or conditions of, or constitute a
default under, the Articles of Incorporation or other charter documents or
bylaws of Seller, or any commitment, mortgage, note, bond, debenture, deed of
trust, contract, agreement, license or other instrument or obligation to which
Seller is now a party or by which Seller or any of its properties or assets may
be bound or affected; (ii) result in any violation of any Governmental
Requirement applicable to Seller, the Assets or the Business; (iii) cause
Purchaser to lose the benefit of any right or privilege included in the Assets;
(iv) relieve any Person of any obligation (whether contractual or otherwise) or
enable any Person to terminate any such obligation or any right or benefit
enjoyed by Seller or to exercise any right under any agreement in respect of
the Assets or the Business; or (v) require notice to or the consent,
authorization, approval or order of any Person (except as may be contemplated
by the last sentence of Section 4.8). To the Best Knowledge of Seller and
Shareholder, the business relationships of clients, customers and suppliers of
the Business will not be adversely affected by the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
4.10 Properties, Assets and Leasehold Estates. Seller owns or has the
right to use (pursuant to a valid lease or license disclosed on Part 4.8 of the
Disclosure Schedule) all operating
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assets and properties necessary for Seller to conduct the Business in the
manner presently conducted by Seller, and all of such operating assets and
properties (or, in the case of leased assets, the leases covering such assets)
are included in the Assets. Seller has good and marketable title to all the
Assets, free and clear of all mortgages, liens, pledges, conditional sales
agreements, charges, easements, covenants, assessments, options, restrictions
and encumbrances of any nature whatsoever. The plants, structures, equipment,
vehicles and other tangible properties included in the Assets and the tangible
property leased by Seller under leases included in the Assets are in good
operating condition and repair, normal wear and tear excepted, and are capable
of being used for their intended purpose in the Business as now conducted. The
Assets include all existing warranties and service contracts with respect to
any of the Assets to the extent the same are capable of being assigned to
Purchaser. During the past two years, there has not been any significant
interruption of the Business due to the breakdown or inadequate maintenance of
any of the Assets. All plants, structures, equipment, vehicles and other
tangible properties included in the Assets, and the present use of all such
items, conform to all applicable Governmental Requirements, and no notice of
any violation of any such Governmental Requirements relating to such assets or
their use has been received by Seller. The Assets include all easements, rights
of ingress and egress, and utilities and services necessary for the conduct of
the Business.
4.11 Intangible Property. The operation of the Business as now
conducted by Seller does not require the use of or consist of any rights under
any trademarks, trade names, brand names, service marks or copyrights other
than "Peterbilt", "Ford", "GMC", "Southwest Peterbilt", "New Mexico Peterbilt",
"New Mexico Peterbilt - GMC Trucks", "Cummins", "Detroit Diesel",
"Caterpillar", "New Mexico Peterbilt - Ford Trucks" and "New Mexico Truck
Leasing".
4.12 Suits, Actions and Claims. There are no suits, actions, claims,
inquiries or investigations by any Person, or any legal, administrative or
arbitration proceedings in which Seller is engaged or which are pending or, to
the Best Knowledge of Seller and Shareholder, threatened against or affecting
Seller or any of its properties, assets or business, or to which Seller is or
might become a party, or which question the validity or legality of the
transactions contemplated hereby, no basis or grounds for any such suit,
action, claim, inquiry, investigation or proceeding exists, and there is no
outstanding order, writ, injunction or decree of any Governmental Authority
against or affecting Seller or any of its properties, assets or business.
Without limiting the foregoing, neither Seller nor Shareholder has any Best
Knowledge of any state of facts or the occurrence of any event forming the
basis of any present or potential claim against Seller.
4.13 Licenses and Permits; Compliance With Governmental Requirements.
Part 4.13 of the Disclosure Schedule sets forth a true and complete list of all
licenses and permits necessary for the conduct of the Business. Seller has all
such licenses and permits validly issued to it and in its name, and all such
licenses and permits are in full force and effect. True and correct copies of
all such licenses and permits are attached to Part 4.13 of the Disclosure
Schedule. No violations are or have been recorded in respect of such licenses
or permits and no proceeding is pending or, to the Best Knowledge of Seller and
Shareholder, threatened seeking the revocation or limitation of any
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of such licenses or permits. All such licenses and permits that are subject to
transfer are included in the Assets, and all such licenses and permits that are
not subject to transfer are conspicuously marked as such on Part 4.13 of the
Disclosure Schedule. Seller has complied in all material respects with all
Governmental Requirements applicable to its business, and all Governmental
Requirements with respect to the distribution and sale of products and services
by it.
4.14 Authorization. Seller and Shareholder have full legal right,
power, and authority to enter into and deliver this Agreement and to consummate
the transactions set forth herein and to perform all the terms and conditions
hereof to be performed by them. The execution and delivery of this Agreement by
Seller and Shareholder and the performance by each of them of the transactions
contemplated herein have been duly and validly authorized by all requisite
corporate action of Seller and by Shareholder, and this Agreement has been duly
and validly executed and delivered by Seller and Shareholder and is the legal,
valid and binding obligation of each of them, enforceable against each of them
in accordance with its terms, except as limited by applicable bankruptcy,
moratorium, insolvency or other similar laws affecting generally the rights of
creditors or by principles of equity.
4.15 Records. The books, records and minutes kept by Seller with
respect to the Assets and the Business, including, but not limited to, all
customer files, service agreements, quotations, correspondence, route sheets
and historic revenue data of Seller, contain records of all matters required to
be included therein by any Governmental Requirement or by generally accepted
accounting principles, and such books, records and minutes are true, accurate
and complete in all material respects and (except for corporate minute books
and stock records) are included in the Assets.
4.16 Environmental Protection Laws.
(a) For purposes of this Section 4.16, unless the context
otherwise specifies or requires, the following terms shall have the
meaning herein defined:
(i) "Waste Materials" shall mean
(A) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976, 42.
U.S.C. ss.ss. 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.
ss.ss. 9601, et seq., as amended from time to time;
(C) asbestos;
(D) polychlorinated biphenyls;
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(E) underground storage tanks, whether
empty, filled or partially filled with any
substance;
(F) any other substance the presence of
which is prohibited by any Governmental Requirement;
and
(G) any other substance which by any
Governmental Requirement requires special handling
or notification of any federal, state or local
governmental entity in its collection, storage,
treatment, recycling, or disposal.
(ii) "Waste Materials Contamination" shall mean the
presence of Waste Materials on, in or under any property
whatsoever which is associated with or is in any way related
to the Assets or the Business, including the improvements,
facilities, soil, ground, water or air.
(b) All business conducted by Seller, including but not
limited to the Business, has been and is being operated, and the
assets of Seller, including but not limited to the Assets, have been
and are being used and were obtained, in all respects in compliance
with all Governmental Requirements.
(c) Seller is not now, and has not ever been, in violation of
any Governmental Requirement. The Assets, the Business and all of the
operations of Seller are in full compliance with all Governmental
Requirements relating to Waste Materials, and no judicial or
administrative actions, including non-compliance orders or demand
letters, are pending that relate to such Governmental Requirements.
Without in any way limiting the foregoing, Seller and Shareholder
hereby jointly and severally specifically represent and warrant that
to the Best Knowledge of Seller and Shareholder:
(i) Seller has complied with all applicable
Governmental Requirements relating to pollution and
environmental control;
(ii) Seller is not in violation of any of the
permits described in or required to be described on Part 4.13
of the Disclosure Schedule or any Governmental Requirement
regulating emissions, discharges or releases (including
solids, liquids and gases) into the environment or the proper
transportation, handling, storage, treatment or disposal of
materials;
(iii) Seller has received all permits and approvals
with respect to emissions, discharges or releases (including
solids, liquids and gases) into the environment and the
proper transportation, handling, storage, treatment and
disposal
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of materials required for the operation of the businesses of
Seller as presently conducted;
(iv) Seller has kept all records and made all
filings required by applicable Governmental Requirements with
respect to emissions, discharges or releases (including
solids, liquids and gases) into the environment and the
proper transportation, handling, storage, treatment and
disposal of materials;
(v) All hazardous waste, hazardous materials and
hazardous substances attributable to the Assets, the Business
or the operations of Seller on, in or under any real property
owned or leased by Seller have been removed and no past or
present disposal, spill, or other release of hazardous waste,
hazardous materials or hazardous substances attributable to
the Assets, the Business or the operations of Seller on, in,
under or adjacent to any real property owned or leased by
Seller will subject Purchaser to corrective or response
action or any other liability under any Governmental
Requirement or the common law;
(vi) No investigation, administrative order, consent
order and agreement, litigation or settlement with respect to
Waste Materials or Waste Materials Contamination is proposed,
threatened, anticipated or in existence with respect to the
Assets or the Business. None of the Assets are currently on,
and to the Best Knowledge of Seller and Shareholder, have
ever been on, any federal or state "Superfund" or "Superlien"
list.
(vii) Seller does not have any contingent
liabilities under any Governmental Requirement to any Person,
whether or not such contingent liability is required pursuant
to generally accepted accounting principles to be reflected
on the financial statements of Seller, in connection with any
emission, discharge or release of any hazardous or toxic
waste, substance or constituent or any other substance into
the environment caused by Seller; and
(viii) Seller has not handled, treated, stored,
generated, transported or disposed of any Waste Material in
contravention of any Governmental Requirement, and there have
been no acts or omissions of Seller or any of its agents or
employees that would result in liability under any
Governmental Requirement.
(d) Seller has, and has listed on Part 4.13 of the Disclosure
Schedule, all necessary environmental and operations permits for
operations relating to the Business or the Assets.
4.17 No Underground Storage Tanks. Except as described in the
Disclosure Schedule, there are no underground storage tanks located on any of
the premises to be leased by Purchaser pursuant to the provisions of Article
15.
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4.18 Securities Laws Matters.
(a) Except as expressly set forth in the Registration Rights
Agreements, Seller recognizes and understands that the Stock
Consideration, the warrants described in Section 3.1, and the Common
Stock issued upon exercise of such warrants (collectively, the
"Securities") will not be registered under the Securities Act, or
under the securities laws of any state (the Securities Act and such
securities laws, collectively the "Securities Laws"). The Securities
are not being so registered in reliance upon exemptions from the
Securities Laws which are predicated, in part, on the representations,
warranties and agreements of Seller contained herein.
(b) (i) Seller has business knowledge and experience, such
experience being based on actual participation therein, (ii) Seller is
capable of evaluating the merits and risks of an investment in the
Securities and the suitability thereof as an investment therefor,
(iii) the Securities will be acquired solely for investment and not
with a view toward resale or redistribution in violation of the
Securities Laws, (iv) in connection with the transactions contemplated
hereby, no assurances have been made concerning the future results of
Purchaser or Rush or any Affiliate thereof or as to the value of the
Securities and (v) Seller is an "accredited investor" within the
meaning of (i) Regulation D promulgated by the SEC pursuant to the
Securities Act and (ii) the New Mexico Securities Act and the
regulations promulgated thereunder. Seller understands that neither
Purchaser nor Rush is under any obligation to file a registration
statement or to take any other action under the Securities Laws with
respect to any such Securities except as expressly set forth in the
Registration Rights Agreements.
(c) Seller has consulted with Seller's own counsel in regard
to the Securities Laws and is fully aware (i) of the circumstances
under which Seller is required to hold the Securities, (ii) of the
limitations on the transfer or disposition of the Securities, (iii)
that the Securities must be held indefinitely unless the transfer
thereof is registered under the Securities Laws or an exemption from
registration is available and (iv) that no exemption from registration
is likely to become available for at least one year from the date of
acquisition of the Securities. Seller has been advised by Seller's
counsel as to the provisions of Rules 144 and 145 as promulgated by
the Commission under the Securities Act and has been advised of the
applicable limitations thereof. Seller acknowledges that Purchaser and
Rush are relying upon the truth and accuracy of the representations
and warranties in this Section 4.18 by Seller in consummating the
transactions contemplated by this Agreement without registering the
Securities under the Securities Laws.
(d) Seller has been furnished with (i) the definitive proxy
statement filed with the Commission in connection with the annual
meeting of stockholders of Rush held on May 18, 1999 and (ii) copies
of Rush's Amendment No. 2 to Form S-1 Registration Statement and
Prospectus to Form S-1 filed on Form 424(b)(4), Annual Report on Form
10-K for the year
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ended December 31, 1998, and Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1999 and June 30, 1999, filed with the
Commission under the Exchange Act. Seller has been furnished with the
complete financial statements of Rush for the fiscal years ended 1996,
1997 and 1998. Seller has been furnished with a summary description of
the terms of the Common Stock and Purchaser and Rush have made
available to Seller the opportunity to ask questions and receive
answers concerning the terms and conditions of the transactions
contemplated by this Agreement and to obtain any additional
information which they possess or could reasonably acquire for the
purpose of verifying the accuracy of information furnished to Seller
as set forth herein or for the purpose of considering the transactions
contemplated hereby. Rush has offered to make available to Seller upon
request at any time all exhibits filed by Rush with the Commission as
part of any of the reports filed therewith.
(e) Seller agrees that the certificates representing the
Securities will be imprinted with the following legend, the terms of
which are specifically agreed to:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS AND ARE
"RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE 144
UNDER THE ACT. NEITHER THE SHARES NOR ANY INTEREST THEREIN
MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE
SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH
ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THE
HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY
TO THE COUNSEL FOR THIS CORPORATION, IS AVAILABLE.
Seller understands and agrees that appropriate stop transfer notations will be
placed in the records of Rush and with its transfer agent in respect of the
Securities.
4.19 Brokers and Finders. No broker or finder has acted for Seller or
Shareholder in connection with this Agreement or the transactions contemplated
by this Agreement and no broker or finder is entitled to any brokerage or
finder's fee or to any commission in respect thereof based in any way on
agreements, arrangements or understandings made by or on behalf of Seller or
Shareholder.
4.20 Deposits. Seller does not hold any deposits or prepayments by
third parties with respect to any of the Assets or the Business ("Deposits")
which are not reflected as liabilities on
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Seller's Reference Balance Sheet. If Seller holds any Deposits as of the
Closing Date, Purchaser will be given credit against the cash portion of the
Purchase Price for the amount of any such Deposits pursuant to Section 3.4
hereof.
4.21 Work Orders. There are no outstanding work orders or contracts
relating to any portion of the Assets from or required by any policy of
insurance, fire department, sanitation department, health authority or other
governmental authority nor is there any matter under discussion with any such
parties or authorities relating to work orders or contracts.
4.22 Telephone Numbers. All telephone numbers used by Seller in
connection with the Business are included in the Assets and will not be used by
Seller or Shareholder following the Closing, except by Shareholder in the
conduct of Purchaser's business.
4.23 No Untrue Statements. The statements, representations and
warranties of Seller and Shareholder set forth in this Agreement, the
Schedules, the Seller Certificate and the exhibits and annexes attached hereto
do not include (and in the case of the Seller Certificate, will not include)
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements, representations and warranties made not
misleading. To the Best Knowledge of Seller and Shareholder, there is no fact
or matter that is not disclosed to Purchaser in this Agreement or the Schedules
that materially and adversely affects or, so far as Seller or Shareholder can
now reasonably foresee, could materially and adversely affect the condition
(financial or otherwise) of any of the Assets or the Business or the ability of
Seller or Shareholder to perform their respective obligations under this
Agreement.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to Seller as follows:
5.1 Incorporation. Purchaser and Rush are each a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and the State of Texas, respectively.
5.2 Authorization. Purchaser has full legal right and corporate power
to enter into and deliver this Agreement and to consummate the transactions set
forth herein and to perform all the terms and conditions hereof to be performed
by it. This Agreement has been duly executed and delivered by Purchaser and is
a legal, valid and binding obligation of Purchaser enforceable in accordance
with its terms, except as limited by applicable bankruptcy, moratorium,
insolvency or other laws affecting generally the rights of creditors or by
principles of equity.
5.3 SEC Documents. Rush has provided to Seller and Shareholder copies
of its Annual Report on Form 10-K for the year ended December 31, 1998, its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and June
30, 1999, its proxy statement with respect to the Annual Meeting of
Stockholders held on May 18, 1999, and its Amendment No. 2 to Form S-1
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Registration Statement and Prospectus to Form S-1 filed on Form 424(b)(4) (such
documents collectively referred to herein as the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder applicable to such SEC Documents, and none of
the SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The consolidated financial statements of Rush
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of Rush and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (except in the case of
interim period financial information for normal year-end adjustments). All
material agreements, contracts and other documents required to be filed as
exhibits to the SEC Documents have been so filed. The consolidated balance
sheet included in Rush's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999 reflects, as of the date thereof, all liabilities, debts and
obligations of any nature, kind or manner of Rush and its subsidiaries, whether
direct, accrued, absolute, contingent or otherwise, and whether due or to
become due that are required to be reflected on such balance sheet under
generally accepted accounting principles consistently applied.
5.4 Brokers and Finders. No broker or finder has acted for Purchaser
or Rush in connection with this Agreement or the transactions contemplated by
this Agreement and no broker or finder is entitled to any brokerage or finder's
fee or to any commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of Purchaser or Rush.
5.5 Effect of Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not (i)
result in any breach of any of the terms or conditions of, or constitute a
default under, the Articles of Incorporation or other charter documents or
bylaws of Purchaser, or any commitment, mortgage, note, bond, debenture, deed
of trust, contract, agreement, license or other instrument or obligation to
which Purchaser is now a party or by which Purchaser or any of its properties
or assets may be bound or affected; or (ii) result in any violation of any
Governmental Requirement applicable to Purchaser.
5.6 Stock Consideration. The shares of Common Stock representing the
Stock Consideration to be delivered to Seller are duly authorized and will be,
when issued, validly issued, fully paid and non-assessable, and free and clear
of all liens, claims, rights, charges, encumbrances and security interests of
whatsoever nature or type other than those imposed by Seller and restrictions
imposed by Rule 144 and any other Securities Laws.
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6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNIFICATIONS, GUARANTEES,
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER. All statements of
fact contained in this Agreement, the Schedules, the Seller
Certificate and the exhibits and annexes attached hereto delivered by or on
behalf of Seller or Shareholder shall be deemed representations and warranties
of Seller and Shareholder hereunder. Regardless of any investigation at any
time made by or on behalf of Purchaser, all indemnifications, guarantees,
covenants, agreements, representations and warranties made by Seller or
Shareholder hereunder or pursuant hereto or in connection with the transactions
contemplated hereby shall survive for eighteen months after the Closing Date,
except with respect to (a) the representations and warranties set forth in
Section 4.6, which shall survive until the sixth anniversary of the Closing
Date, (b) the representations and warranties set forth in Sections 4.16 and
4.17, which shall survive until the fifth anniversary of the Closing Date and
(c) the representations and warranties set forth in Section 4.18, which shall
survive the Closing Date indefinitely.
7. CONTRACTS PRIOR TO THE CLOSING DATE.
7.1 Approval of Contracts. Except in the ordinary course of business
and consistent with past practice, Seller shall not enter into or amend any
contracts related to the Business or the Assets between the date hereof and the
Closing Date unless approved in writing by Purchaser. Seller will provide all
information relating to each such contract or amendment that is necessary or
requested by Purchaser to enable Purchaser to make an informed decision
regarding approval of such contract or amendment.
7.2 Contracts Included in Assets. Any contracts, agreements or
commitments (or amendments to such items) related to the Business or the Assets
that are entered into by Seller between the date hereof and the Closing Date
and are approved pursuant to the provisions of Section 7.1, shall be included
in the Assets (with no addition to the Purchase Price) and shall be assumed by
Purchaser pursuant to Section 3.2.
8. COVENANTS OF SELLER AND SHAREHOLDER PRIOR TO CLOSING DATE. Seller
and Shareholder hereby covenant and agree that between the date of this
Agreement and the Closing Date:
8.1 Access to Information. Seller shall afford to the officers and
authorized representatives of Purchaser access to the plants, properties,
documents, books and records of Seller related to the Assets and the Business
and shall furnish Purchaser with such financial and operating data and other
information regarding the Assets and the Business and as Purchaser may from
time to time reasonably request.
8.2 General Affirmative Covenants. Seller shall, and Shareholder shall
cause Seller to:
(a) conduct the Business only in the ordinary course;
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(b) maintain the Assets in good working order and condition,
ordinary wear and tear excepted;
(c) perform all its obligations under agreements relating to
or affecting the Assets or the Business;
(d) keep in full force and effect adequate insurance coverage
on the Assets and the operation of the Business;
(e) use its best efforts to maintain and preserve the
Business, and retain its present employees, customers, suppliers and
others having business relations with it;
(f) duly and timely file all reports or returns required to
be filed with any Governmental Authority, and promptly pay all Taxes
levied or assessed upon it or its properties or upon any part thereof;
(g) duly observe and conform to all Governmental Requirements
relating to the Assets or its properties or to the operation and
conduct of its business and all covenants, terms and conditions upon
or under which any of its properties are held;
(h) remove and have released, by payment or otherwise, all
liens and encumbrances of any nature whatsoever on the Assets (except
for liens and encumbrances, if any, specifically assumed by Purchaser
pursuant to this Agreement);
(i) duly and timely take all actions necessary to carry out
the transactions contemplated hereby;
(j) deliver to Purchaser on or before the 15th day of each
month true and correct unaudited combined monthly balance sheets and
statements of income for Southwest Peterbilt and affiliates for the
immediately preceding month;
(k) deliver to Purchaser on or before the Closing Date any
additional financial information reasonably requested by Purchaser to
allow Purchaser to timely comply with its reporting requirements under
the Exchange Act, all in form and substance sufficient to allow
Purchaser to timely comply with such reporting requirements; and
(l) preserve and maintain the goodwill of the Business.
8.3 General Negative Covenants. Seller shall not take, and Shareholder
will not permit Seller to take, any of the following actions without the prior
written consent of Purchaser:
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(a) entering into or amending or assuming any contract,
agreement, obligation, lease, license or commitment related to the
Business or the Assets (or of a type included in the Assets) other
than in accordance with the provisions of Section 7.1;
(b) except in the ordinary course of business and consistent
with past practice, selling, leasing, abandoning or otherwise
disposing of any of the Assets, including, but not limited to, real
property, machinery, equipment or other operating properties;
(c) engaging in any activities or transactions that might
adversely affect the Assets or the Business;
(d) making any organizational change or personnel change, or
increasing the compensation or benefits of any officer or employee of
Seller, other than normal compensation and benefit adjustments in the
ordinary course of the Business consistent with past practice; or
(e) selling or agreeing to sell 10 or more new trucks in any
single transaction or any series of related transactions at a gross
margin of less than 3 1/2% or purchasing or agreeing to purchase 10 or
more used trucks in a single transaction or any series of related
transactions.
8.4 Disclosure of Misrepresentations and Breaches. If any of the
representations or warranties of Seller or Shareholder hereunder are determined
by Seller or Shareholder to have been incorrect when made, or are determined by
Seller or Shareholder to be incorrect as of any date subsequent to the date
hereof, or if any of the covenants of Seller or Shareholder contained in this
Agreement have not been complied with timely, then Seller and Shareholder shall
immediately notify Purchaser to such effect (provided that such notice shall in
no way limit the rights of Purchaser (i) under Articles 10 and 17 to terminate
this Agreement or refuse to consummate the transactions contemplated hereby or
(ii) to enforce any rights or remedies it may have hereunder).
8.5 Government Filings. Seller and Shareholder shall cooperate with
Purchaser and its representatives in the preparation of any documents or other
material that may be required by any Governmental Authority in connection with
the Assets or the Business or the transactions contemplated hereby. With
respect to any filing required by the HSR Act, Purchaser, on the one hand, and
Seller, on the other hand, shall split the cost of any such filing fees, and
each party shall pay their own attorneys' fees.
8.6 Access to and Inspection of Premises, Facilities and Equipment.
Seller shall afford the officers and authorized representatives of Purchaser
access to the premises, facilities and tangible assets included in the Assets
and the premises to be leased by Purchaser pursuant to the provisions of
Article 15 for the purpose of inspecting such premises, facilities and
equipment in such manner as Purchaser shall deem appropriate, including, but
not limited to, an environmental inspection and
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audit to be conducted by GEO-Consul. The cost of such environmental inspection
and audit shall be split equally between Purchaser and Seller, provided that
GEO-Consul shall address all reports generated by such inspection and audit to
Purchaser and Seller and shall authorize Purchaser and Seller to each rely on
all reports generated by such inspection and audit. If upon completion of such
inspection, Purchaser finds any conditions which Purchaser, in its sole
discretion, considers to be unacceptable, Purchaser shall have the right to
terminate this Agreement pursuant to Articles 10 and 17.
9. COVENANTS REGARDING THE CLOSING.
9.1 Covenants of Seller and Shareholder. Seller and Shareholder hereby
covenant and agree that they shall (i) use commercially reasonable efforts to
cause all of their representations and warranties set forth in this Agreement
to be true on and as of the Closing Date, (ii) use commercially reasonable
efforts to cause all of their obligations that are to be fulfilled on or prior
to the Closing Date to be so fulfilled, (iii) use commercially reasonable
efforts to cause all conditions to the Closing set forth in this Agreement to
be satisfied on or prior to the Closing Date, and (iv) deliver to Purchaser at
the Closing the certificates, updated lists, notices, consents, authorizations,
approvals, agreements, leases, transfer documents, receipts, and amendments
contemplated by Article 10 (with such additions or exceptions to such items as
are necessary to make the statements set forth in such items accurate, provided
that if any of such additions or exceptions cause any of the conditions to
Purchaser's obligations hereunder as set forth in Article 10 not to be
fulfilled, such additions and exceptions shall in no way limit the rights of
Purchaser under Articles 10 and 18 to terminate this Agreement or refuse to
consummate the transactions contemplated hereby).
9.2 Covenants of Purchaser. Purchaser hereby covenants and agrees that
it shall (i) use commercially reasonable efforts to cause all of its
representations and warranties set forth in this Agreement to be true on and as
of the Closing Date, (ii) use commercially reasonable efforts to cause all of
its obligations that are to be fulfilled on or prior to the Closing Date to be
so fulfilled, (iii) use commercially reasonable efforts to cause all conditions
to the Closing set forth in this Agreement to be satisfied on or prior to the
Closing Date (provided that failure by Purchaser to comply with a second
requirement for information under the HSR Act or to comply with any requested
divestiture of assets or to enter into any consent or similar order or
agreement shall not constitute a failure of Purchaser to use commercially
reasonable efforts), and (iv) deliver to Seller at the Closing the certificate
contemplated by Article 11 (with such additions or exceptions to such
certificate as are necessary to make the statements set forth in such
certificate accurate, provided that if any of such additions or exceptions
cause any of the conditions to Seller's obligations hereunder as set forth in
Article 11 not to be fulfilled, such additions and exceptions shall in no way
limit the rights of Seller under Articles 11 and 18 to terminate this Agreement
or to refuse to consummate the transactions contemplated hereby).
9.3 Inventory Audit. Within five days prior to Closing, Seller and
Purchaser shall each appoint one or more representatives knowledgeable in the
heavy duty truck business, and shall cause
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such representatives to conduct an audit (in accordance with generally accepted
accounting principles, consistently applied) of the inventory of the Assets as
of the Closing Date. Each party shall bear their cost of conducting such audit.
10. CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser hereunder are, at the option of Purchaser, subject to the
satisfaction, on or prior to the Closing Date, of the following conditions (any
of which may be waived by Purchaser, in its sole discretion):
10.1 Accuracy of Representations and Warranties and Fulfillment of
Covenants. The representations and warranties of Seller and Shareholder
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date. Each and
all of the agreements and covenants of Seller and Shareholder to be performed
on or before the Closing Date pursuant to the terms hereof shall have been
performed in all material respects. Seller and Shareholder shall have delivered
to Purchaser a certificate dated the Closing Date and executed by Seller and
Shareholder to all such effects or disclosing any such representation or
warranty not so true and correct or any such agreement or covenant not so
performed.
10.2 No Governmental Actions. No action or proceeding before any
Governmental Authority shall have been instituted or threatened to restrain or
prohibit the transactions contemplated by this Agreement. No Governmental
Authority shall have taken any other action as a result of which the management
of Purchaser reasonably deems it inadvisable to proceed with the transactions
contemplated by this Agreement.
10.3 No Adverse Change. No material adverse change in the Business
shall have occurred, and no loss or damage to any of the Assets, whether or not
covered by insurance, shall have occurred since the Balance Sheet Date, and
Seller shall have delivered to Purchaser a certificate dated the Closing Date
and executed by Seller and Shareholder to all such effects.
10.4 Update of Contracts. Seller and Shareholder shall have delivered
to Purchaser an accurate list, as of the Closing Date, showing (i) all
agreements, contracts and commitments of the type listed on Part 4.8 of the
Disclosure Schedule entered into since the date of this Agreement (including,
but not limited to, amendments, if any, to the items listed on Part 4.8 of the
Disclosure Schedule), and (ii) all other agreements, contracts and commitments
related to the Business or the Assets entered into since the date of this
Agreement, together with true, complete and accurate copies of all documents
(or in the case of oral commitments, descriptions of the material terms
thereof) relevant to the items on the list (the "New Contracts"). Purchaser
shall have the opportunity to review the New Contracts, and shall have the
right to delay the Closing for up to five (5) days if it in its sole discretion
Purchaser deems such a delay necessary to enable it to adequately review the
New Contracts. All of the New Contracts that are approved in writing by
Purchaser prior to the Closing, as it may be delayed, (whether such approval by
Purchaser is given before or after Seller
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executes the New Contract) shall be included in the Assets (with no addition to
the Purchase Price) and the future obligations of Seller thereunder shall be
assumed by Purchaser pursuant to Section 3.2. Any New Contracts that are not
approved in writing by Purchaser prior to the Closing, as it may be delayed,
shall remain the sole obligation of Seller and shall not be assumed by
Purchaser, and Purchaser shall have no obligation or liability with respect
thereto.
10.5 No Material Adverse Information. The investigations with respect
to Seller, the Assets and the Business, performed by Purchaser's professional
advisors and other representatives shall not have revealed any material adverse
information concerning Seller, the Assets or the Business that has not been
made known to Purchaser in writing prior to the date of this Agreement.
10.6 Notices and Consents. No notice to or consent, authorization,
approval or order of any Person shall be required for the consummation of the
transactions contemplated by this Agreement (except for notices that have been
duly and timely given and consents, authorizations and approvals that have been
obtained). True and correct copies of all required notices, consents,
authorizations and approvals shall have been delivered to Purchaser and shall
be satisfactory in form and substance to Purchaser and its counsel.
10.7 Lease Documents. Seller shall have executed and delivered to
Purchaser the Albuquerque Assignment, and the Albuquerque Landlord shall have
executed and delivered to Purchaser a Landlord Estoppel and Consent in form and
substance acceptable to Purchaser.
10.8 Other Documents. Seller and Shareholder shall have delivered or
caused to be delivered all other documents, agreements, resolutions,
certificates or declarations as Purchaser or its attorneys may reasonably
request.
10.9 Dealer License. Purchaser shall have obtained written approval to
be licensed as a New Motor Vehicle Dealer by the appropriate department or
agency of the State of New Mexico to do business as a motor vehicle dealer at
the present locations of the dealerships; provided, however, that Purchaser
shall use its reasonable best efforts to secure such approval prior to Closing.
10.10 Inventory Audit. The inventory audit contemplated by Section 9.3
shall have been completed and the results thereof shall be satisfactory to
Purchaser.
10.11 Due Diligence. Purchaser shall be satisfied with the results of
its continuing legal, accounting and other due diligence regarding Seller and
the Business.
10.12 Dealership Agreement. Purchaser and PACCAR shall have executed
and delivered a dealer sales and service agreement, and ancillary or related
agreements, in form and substance satisfactory to Purchaser.
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10.13 Governmental Approvals. All necessary government and regulatory
approvals have been obtained and all required waiting periods under the HSR Act
shall have expired or been terminated.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations of
Seller hereunder are, at its option, subject to the satisfaction, on or prior to
the Closing Date, of the following conditions (any of which may be waived by
Seller in its sole discretion):
11.1 Accuracy of Representations and Warranties and Fulfillment of
Covenants. The representations and warranties of Purchaser contained in this
Agreement shall be true and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date. Each of the agreements and covenants of Purchaser to be performed on
or before the Closing Date shall have been performed. Purchaser shall have
delivered to Seller a certificate dated the Closing Date and executed by
Purchaser to all such effects.
11.2 Governmental Approvals. No action or proceeding before any
Governmental Authority shall have been instituted or threatened to restrain or
prohibit the transactions contemplated by this Agreement. No Governmental
Authority shall have taken any other action as a result of which the management
of Seller reasonably deems it inadvisable to proceed with the transactions
contemplated by this Agreement.
11.3 Lease Documents. Purchaser shall have executed and delivered to
Seller the Albuquerque Assignment.
11.4 Other Documents. Purchaser shall have delivered or caused to be
delivered all other documents, agreements, resolutions, certificates or
declarations as Seller and Shareholder or their attorneys may reasonably
request, including stock certificates evidencing the Stock Consideration.
11.5 Inventory Audit. The inventory audit contemplated by Section 9.3
shall have been completed and the results thereof satisfactory to Seller.
11.6 Registration Rights Agreement. Rush shall have executed and
delivered to Seller the registration rights agreement in substantially the form
attached hereto as Exhibit 11.7(a) and, if Shareholder elects to receive the
Warrants referenced in Section 3.1, the registration rights agreement in
substantially the form attached hereto as Exhibit 11.7(b) (collectively, the
"Registration Rights Agreements").
11.7 Listing of Stock Consideration. Rush shall have listed the shares
of Common Stock representing the Stock Consideration on The Nasdaq National
Market.
11.8 Operating Agreements. Purchaser shall have executed and delivered
(a) an Operating Agreement relating to the GMC inventory of new and used
vehicles, parts and accessories held by
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Seller as of the Closing in substantially the form of the agreement attached
hereto as Exhibit 11.10 (the "GMC Operating Agreement").
11.9 Governmental Approvals. All necessary government and regulatory
approvals have been obtained and all required waiting periods under the HSR Act
shall have expired or been terminated.
12. SPECIAL CLOSING AND POST-CLOSING COVENANTS.
12.1 Further Assurances. After Closing, as and when requested by any
party hereto from time to time, the other parties hereto shall and shall cause
their Affiliates to execute and deliver, or cause to be executed and delivered,
such documents and instruments and shall take, or cause to be taken, such
further or other actions as may be reasonably necessary to carry out the
purposes of this Agreement including, without limitation, executing and
delivering any instrument Purchaser may request to convey the Assets to
Purchaser as required by this Agreement.
12.2 Delivery of Funds and Other Assets Collected by Seller. To the
extent Seller receives any funds or other assets in payment of receivables, or
in connection with any other Assets, being sold to Purchaser pursuant hereto,
Seller shall immediately deliver such funds and assets to Purchaser and take
all steps necessary to vest title to such funds and assets in Purchaser.
12.3 Change of Name of Seller. Immediately upon the occurrence of the
Closing, Seller and Shareholder shall cease using the name "Southwest
Peterbilt", "New Mexico Peterbilt", "New Mexico Peterbilt - GMC Trucks", "New
Mexico Peterbilt - Ford Trucks" and "New Mexico Truck Leasing" and all
derivations thereof, and covenant and agree that after Closing they will not,
directly or indirectly, use such names or any derivation thereof, in connection
with selling, servicing, renting, leasing, insuring or financing new or used
Class 3 through 8 trucks; provided (i) Shareholder may use such names for a
period of one year following the Closing for the sole purpose of winding up the
affairs of Seller, so long as such use does not involve the selling, servicing,
renting, leasing, insuring or financing new or used Class 3 through 8 trucks,
compete with any business activity which Rush or any of its Affiliates engages
or interfere with the use of such names by Rush or any of its Affiliates, and
(ii) Seller and Shareholder may use such names in connection with selling,
renting or leasing any Excluded Asset.
12.4 Access to Files. For a period of five years after the Closing, or
such longer term as Seller or Shareholder may reasonably require if Seller or
Shareholder is then involved in litigation or under investigation or audit by a
governmental agency or bureau relating to Seller or the Assets, Purchaser shall
maintain and give Seller and Shareholder and their respective representatives
full access to the premises of Purchaser and full access to, and shall permit
Seller and Shareholder and their respective representatives, at their own
expense, to make photocopies of, all originals of the files and records
relating to Seller or the Assets.
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12.5 Exchange Act Filing; Cooperation. After the Closing, Seller
shall, at the cost and expense of Purchaser, reasonably cooperate with and
provide information to Purchaser as is necessary for Purchaser to comply with
its reporting obligations under the Exchange Act.
12.6 Nondisclosure of Confidential Information.
(a) By Seller and Shareholder. Seller and Shareholder
recognize and acknowledge that they have and will have access to
certain confidential information) of Seller that is included in the
Assets (including, but not limited to, lists of customers, and costs
and financial information) that after the consummation of the
transactions contemplated hereby will be valuable, special and unique
property of Purchaser. Seller and Shareholder agree that they will not
disclose, and they will use their best efforts to prevent disclosure
by any other Person of, any such confidential information to, nor any
discussion of any of the terms of this Agreement with, any Person for
any purpose or reason whatsoever, except to authorized representatives
of Purchaser. Seller and Shareholder recognize and agree that
violation of any of the agreements contained in this Section 12.6(a)
will cause irreparable damage or injury to Purchaser, the exact amount
of which may be impossible to ascertain, and that, for such reason,
among others, Purchaser shall be entitled to an injunction, without
the necessity of posting bond therefor, restraining any further
violation of such agreements. Such rights to any injunction shall be
in addition to, and not in limitation of, any other rights and
remedies Purchaser may have at law or in equity against Seller or
Shareholder.
(b) By Purchaser. Purchaser recognizes and acknowledges that
it may have access to certain confidential information of Seller that
is not included in or connected with the Assets and not used or
necessary for the Business that after the consummation of the
transactions contemplated hereby will be valuable, special and unique
property of Seller. Purchaser agrees that it will not disclose, and
will use its best efforts to prevent disclosure by any other Person
of, any such confidential information to any Person for any purpose or
reason whatsoever, except to authorized representatives of Purchaser.
Purchaser recognizes and agrees that violation of any of the
agreements contained in this Section 12.6(b) will cause irreparable
damage or injury to Seller, the exact amount of which may be
impossible to ascertain, and that, for such reason, among others,
Seller shall be entitled to an injunction, without the necessity of
posting bond therefor, restraining any further violation of such
agreements. Such rights to any injunction shall be in addition to, and
not in limitation of, any other rights and remedies Seller may have at
law or in equity against Purchaser.
(c) Exceptions. The foregoing restrictions will not apply to
any information which (a) becomes available to the public generally
(otherwise than by reason of a breach of the provisions of this
Section 12.6), (b) can be shown by written records to have been known
by the disclosing party prior to the date of this Agreement or (c) is
lawfully acquired by the disclosing party from another person. In the
event any confidential information protected by this Section 12.6 is
required to be disclosed under court or governmental order,
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rule or regulation, the party required to disclose such confidential
information shall immediately provide the party entitled to protection
hereunder with notice thereof and shall give full and complete
cooperation to such party in its efforts to object to, and to obtain
protection of any confidential information that is the subject of,
such required disclosure.
12.7 Assignment of Contracts. Notwithstanding any other provision of
this Agreement, nothing in this Agreement or any related document shall be
construed as an attempt to assign (i) any Contract which, as a matter of law or
by its terms, is nonassignable without the consent of the other parties thereto
unless such consent has been given, or (ii) any Contract or claim as to which
all of the remedies for the enforcement thereof enjoyed by Seller would not, as
a matter of law or by its terms, pass to Purchaser as an incident of the
transfers and assignments to be made under this Agreement. In order, however,
that the full value of every Contract and claim of the character described in
clauses (i) and (ii) above and all claims and demands on such Contracts may be
realized for the benefit of Purchaser, Seller, at the request and expense and
under the direction of Purchaser, shall take all such action and do or cause to
be done all such things as will, in the opinion of Purchaser, be necessary or
proper in order that the obligations of Seller under such Contracts may be
performed in such manner that the value of such Contract will be preserved and
will inure to the benefit of Purchaser, and for, and to facilitate, the
collection of the moneys due and payable and to become due and payable
thereunder to Purchaser in and under every such contract and claim. Seller
shall promptly pay over to Purchaser all moneys collected by or paid to it in
respect of every such contract, claim or demand. Nothing in this Section 12.7
shall relieve Seller or Shareholder of their obligations to obtain any consents
required for the transfer of the Assets and all rights thereunder to Purchaser,
or shall relieve Seller or Shareholder from any liability to Purchaser for
failure to obtain such consents.
12.8 Non-Compete, Non-Solicitation.
(a) Non-Competition. In consideration of the benefits of this
Agreement to Seller and Shareholder and as a material inducement to
Purchaser to enter into this Agreement and to pay the Purchase Price,
Seller and Shareholder, hereby covenant and agree that for a period of
five years after the Closing Date, Seller and Shareholder shall not,
and each shall cause their Affiliates (not including any family member
of Shareholder) not to, directly or indirectly, as proprietor,
partner, stockholder, director, officer, employee, consultant, joint
venturer, investor or in any other capacity, engage in, or own,
manage, operate or control, or participate in the ownership,
management, operation or control, of any entity which engages in the
sale, servicing, renting, leasing, insuring or financing of new or
used Class 3 through 8 trucks (not including construction equipment)
in any geographical or commercial markets in which Rush or any of its
Affiliates (including Purchaser) conducts such business on the Closing
Date; provided, however, the foregoing shall not, in any event,
prohibit Seller or Shareholder from (i) purchasing and holding as an
investment not more than 1% of any class of publicly traded securities
of any entity which conducts such business, so long as neither Seller
nor Shareholder participates in any way in the management, operation
or
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control of such entity or (ii) selling or otherwise disposing of any
vehicles, parts and accessories inventory or chassis kits held by the
Business as of the Closing Date that are not transferred to Purchaser
pursuant to the terms of this Agreement. It is further recognized and
agreed that, even though the activity may not be restricted under the
foregoing provision, for a period of five years following the Closing
Date, neither Seller nor Shareholder shall, and each shall cause their
Affiliates not to, provide any services to any person or entity which
may be used against, or in conflict with the interests of, Purchaser
or an Affiliate of Purchaser.
(b) Judicial Reformation. Seller and Shareholder acknowledge
that, given the nature of Purchaser and its Affiliates' business, the
covenants contained in this Section 12.8 establish reasonable
limitations as to time, geographic area and scope of activity to be
restrained and do not impose a greater restraint than is reasonably
necessary to protect and preserve the goodwill of Purchaser and its
Affiliates' business and to protect their legitimate business
interests. If, however, this Section 12.8 is determined by any court
of competent jurisdiction or an arbitrator pursuant to Section 20.1 to
be unenforceable by reason of it extending for too long a period of
time or over too large a geographic area or by reason of it being too
extensive in any other respect or for any other reason, it will be
interpreted to extend only over the longest period of time for which
it may be enforceable and/or over the largest geographic area as to
which it may be enforceable and/or to the maximum extent in all other
aspects as to which it may be enforceable, all as determined by such
court or arbitrator.
(c) Customer Lists, Non-Solicitation. In consideration of the
benefits of this Agreement to Seller and Shareholder and as a material
inducement to Purchaser to enter into this Agreement and to pay the
Purchase Price, Seller and Shareholder hereby further covenant and
agree that for a period of five years following the Closing Date,
Seller and Shareholder shall not, and each shall cause their
Affiliates not to, directly or indirectly, (a) use or make known to
any person or entity the names or addresses of any clients or
customers of Seller, Purchaser or any Affiliate of Purchaser or any
other information pertaining to them, (b) call on, solicit, take away
or attempt to call on, solicit or take away any clients or customers
of Seller, Purchaser or any Affiliate of Purchaser, or (c) solicit for
employment, recruit, hire or attempt to recruit or hire any employees
of Seller, Purchaser or any Affiliate of Purchaser.
(d) Equitable Relief. In the event of a breach or a
threatened breach by Shareholder or Seller of any of the provisions
contained in this Section 12.8, each acknowledges that Purchaser and
its Affiliates will suffer irreparable injury not fully compensable by
money damages and, therefore, will not have an adequate remedy
available at law. Accordingly, Purchaser shall be entitled, without
the necessity of posting a bond, to obtain such injunctive relief or
other equitable remedy from any court of competent jurisdiction as may
be necessary or appropriate to prevent or curtail any such breach,
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threatened or actual. The foregoing shall be in addition to and
without prejudice to any other rights that Purchaser may have under
this Agreement, at law or in equity, including, without limitation,
the right to sue for damages.
(e) Covenants Independent. The covenants of Seller and
Shareholder contained in this Section 12.8 will be construed as
independent of any other provision in this Agreement, and the
existence of any claim or cause of action by Seller or Shareholder, or
any of them, against Purchaser or any Affiliate of Purchaser will not
constitute a defense to the enforcement by Purchaser of said
provisions. Seller and Shareholder understand that the provisions
contained in this Section 12.8 are essential elements of the
transactions contemplated by this Agreement and, but for their
agreement to be bound by the provisions of this Section 12.8,
Purchaser would not have agreed to enter into this Agreement and the
transactions contemplated herein. Seller and Shareholder have each
been advised to consult with, and each represents that it or he has
consulted with, counsel in order to be informed in all respects
concerning the reasonableness and propriety of the provisions of this
Section 12.8 and each acknowledges that the provisions of this Section
12.8 are reasonable in all respects.
12.9 Agreement Regarding GMC Excluded Assets. If as of the date that
is six months after the Closing Date, Purchaser has not entered into a dealer
sales and service agreement with GMC, the GMC Excluded Assets have not been
sold pursuant to the GMC Operating Agreement and Seller is not able to transfer
the GMC Excluded Assets to GMC or an Affiliate of GMC, Purchaser will purchase
the GMC Excluded Assets from Seller and Seller shall sell the GMC Excluded
Assets to Purchaser for the price indicated for such items in Section 3.1. The
closing for such sale and purchase shall take place at a date and time that is
mutually agreeable to the parties, which shall be no more than 30 days after
Seller provides Purchaser written notice that Seller is not able to transfer
the GMC Excluded Assets to GMC or an Affiliate of GMC. Seller, at its sole cost
and expense, shall provide all documentation and evidence reasonably requested
by Purchaser to enable Purchaser to verify that the conditions to Purchaser's
purchase obligations hereunder have been satisfied. At such closing, Purchaser
shall pay the amount due Seller by wire transfer of immediately available funds
to an account designated by Seller.
13. INDEMNITY BY SELLER AND SHAREHOLDER.
13.1 Indemnity. Seller and Shareholder (collectively, the "Seller
Indemnifying Parties" and individually, a "Seller Indemnifying Party") shall,
and hereby do, jointly and severally indemnify, hold harmless and defend
Purchaser and its officers, directors, employees, agents, consultants,
representatives and Affiliates (collectively, the "Purchaser Indemnified
Parties") from and against any and all penalties, demands, damages, punitive
damages, losses, liabilities, suits, costs, costs of any settlement or
judgment, claims of any and every kind whatsoever, refund obligations
(including, without limitation, interest and penalties thereon) and remediation
costs and expenses (including, without limitation, reasonable attorneys' fees),
of or to any of the Purchaser
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Indemnified Parties ("Purchaser Damages"), which may now or in the future be
paid, incurred or suffered by or asserted against the Purchaser Indemnified
Parties by any Person resulting or arising from or incurred in connection with
any one or more of the following (provided that this Section 13.1 shall not
apply to any items that have been expressly assumed by Purchaser under this
Agreement):
(a) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related
in any way to the Assets or the Business to the extent such liability
or claim for liability arises in connection with any action, omission
or event occurring on or prior to the Closing Date (including, but not
limited to, claims for product liability with respect to products
manufactured, distributed or sold by Seller on or prior to the Closing
Date);
(b) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related
to any liens, obligations or encumbrances of any nature whatsoever
against or in any way related to the Assets or the Business which have
not been expressly assumed by Purchaser hereunder;
(c) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related
to Taxes of Seller;
(d) any liability or claim for liability (whether or not
successful) related to any lawsuit or threatened lawsuit or claim
involving any Seller Indemnifying Party other than claims brought by
any Seller Indemnifying Parties pursuant to Article 14;
(e) any misrepresentation, breach of warranty or
nonfulfillment of any covenant or agreement on the part of a Seller
Indemnifying Party under this Agreement or from any misrepresentation
in or omission from any Schedule, the Seller Certificate or the
exhibits and annexes hereto;
(f) any liability or claim for liability against Purchaser or
any of the Assets to the extent such liability or claim for liability
arises in connection with the failure of Purchaser and Seller to
comply with any applicable bulk transfer law; and
(g) all actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including costs of court and
reasonable attorneys' fees) incident to any of the foregoing.
13.2 Environmental Liability of the Seller Indemnifying Parties.
Notwithstanding anything herein to the contrary, the Seller Indemnifying
Parties shall have no liability or obligation to indemnify hereunder for any
Purchaser Environmental Liabilities arising from acts, events or omissions
occurring prior to Seller's operation of the Business on any real property
owned, leased
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or used by Seller or any environmental condition or liability disclosed on the
Disclosure Schedule. The Seller Indemnifying Parties, jointly and severally,
shall retain liability for, and the Seller Indemnifying Parties, jointly and
severally, shall indemnify, hold harmless and defend the Purchaser Indemnified
Parties from and against all claims (whether in contract, in tort or otherwise,
and whether or not successful), fines, penalties, liabilities, damages and
losses, including but not limited to remedial, removal, response, abatement,
clean-up, investigation and monitoring costs and any other related costs and
expenses incurred (whether any claims or causes of action relating thereto be
asserted in common law or under statute and regardless of form including strict
liability and negligence) (collectively referred to as "Purchaser Environmental
Liabilities") arising from (a) any violation of any Requirement of
Environmental Law or Environmental Permits (as those terms are hereinafter
defined) of any Seller Indemnifying Party occurring or existing between the
date Seller began conducting business on each parcel of real estate owned,
leased or used by Seller and the Closing Date, (b) any acts, omissions,
conditions, facts, or circumstances occurring or existing between the date
Seller began conducting business on each parcel of real estate owned, leased or
used by Seller and the Closing Date with respect to the Assets, the Business or
the operations of Seller which give rise to an Environmental Claim (as
hereinafter defined) before or after the date hereof, and (c) any failure of
any Seller Indemnifying Party to obtain or maintain, between the date Seller
began conducting business on each parcel of real estate owned, leased or used
by Seller and the Closing Date, any Environmental Permit. For purposes of this
Section 13.2 the term "Environmental Claim" means any action, lawsuit, claim or
proceeding by any Person relating to the Assets or the Business or the
operations or the business of Seller which seeks to impose liability for (i)
noise, (ii) pollution or contamination or threatened pollution or contamination
of the air, surface water, groundwater or land, (iii) solid, gaseous or liquid
waste generation, handling, treatment, storage, disposal or transportation,
(iv) exposure to hazardous or toxic substances or (v) non-compliance with any
Requirement of Environmental Law. An "Environmental Claim" includes, without
limitation, a proceeding to terminate a permit or license to the extent that
such a proceeding attempts to redress violations of the applicable permit or
license or any Requirement of Environmental Law as alleged by any Governmental
Authority. For purposes of this Section 13.2, the term "Environmental Permit"
means any permit, license, approval or other authorization related to, used in
connection with or necessary for the operation or use of the Business or the
Assets, or the operations or the businesses of Seller under any applicable
Requirement of Environmental Law. For purposes of this Section 13.2, the term
"Requirement of Environmental Law" means all Governmental Requirements related
to health or the environment, including, but not limited to, all Governmental
Requirements that relate to (i) noise, (ii) pollution or protection of the air,
surface water, groundwater or land, (iii) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation, (iv)
exposure to hazardous or toxic substances, or (v) any other matters related to
health or the environment.
13.3 Notice of Claim. Purchaser agrees that upon its discovery of
facts giving rise to a claim for indemnity under the provisions of this
Agreement, including receipt by it or any Purchaser Indemnified Party of notice
of any demand, assertion, claim, action or proceeding, judicial or otherwise,
by any Person with respect to any matter as to which any of the Purchaser
Indemnified
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<PAGE> 45
Parties are entitled to indemnity under the provisions of this Agreement (such
actions being collectively referred to herein as a "Purchaser Claim"),
Purchaser will give prompt notice thereof in writing to the Seller Indemnifying
Parties together with a statement of such information respecting any of the
foregoing as it shall then have; provided that any delay in giving or failure
to give such notice shall not limit the rights of Purchaser or any Purchaser
Indemnified Party to indemnity hereunder except in accordance with the time
limitations provided in Section 13.10 and to the extent that the Seller
Indemnifying Parties are shown to have been damaged by such delay or failure.
13.4 Right of the Seller Indemnifying Parties to Participate in
Defense. With respect to any Purchaser Claim as to which any of the Purchaser
Indemnified Parties seeks indemnity hereunder, Purchaser shall provide the
Seller Indemnifying Parties with the opportunity to participate in the defense
of such Purchaser Claim with counsel of the Seller Indemnifying Parties' choice
and at the Seller Indemnifying Parties' cost and expense and shall not, without
the consent of Shareholder, which consent shall not be unreasonably withheld,
settle any such Purchaser Claim, so long as the Seller Indemnifying Parties
shall have unconditionally acknowledged their obligation to indemnify hereunder
with respect to such Purchaser Claim. To the extent reasonably requested by
Purchaser, the Seller Indemnifying Parties shall reasonably cooperate with
Purchaser and its representatives and counsel in any dispute or defense related
to any Purchaser Claim.
13.5 Payment. The Seller Indemnifying Parties shall promptly pay to
Purchaser or such other Purchaser Indemnified Party as may be entitled to
indemnity hereunder in cash by wire transfer the amount of any Purchaser
Damages to which Purchaser or such Purchaser Indemnified Party may become
entitled by reason of the provisions of this Agreement.
13.6 Limit of Liability of Shareholder. Notwithstanding any other
provisions of this Agreement, the aggregate liability of the Seller
Indemnifying Parties under this Agreement and the Arizona Purchase Agreement,
whether as a party to this Agreement or as guarantor of Seller's obligations
under this Agreement or the Arizona Purchase Agreement, shall be limited to
$3,000,000, except that such limit shall be $5,000,000 for breach of the
representations and warranties set forth in Sections 4.6, 4.16 and 4.17 or any
indemnification claim under this Agreement relating to environmental matters.
13.7 Limitations on Indemnification. Notwithstanding any provision of
this Agreement, the Seller Indemnifying Parties shall not be liable for any
matter that could be made the subject of a claim under this Article 13 or under
Article 13 of the Arizona Purchase Agreement regarding any claims, losses,
expenses or other liabilities until the aggregate amount thereof exceeds
$250,000 and after such threshold amount has been attained, all claims, other
than those aggregated to reach the threshold, shall be indemnified hereunder.
13.8 Insurance and Refunds. The Seller Indemnifying Parties'
indemnification obligations shall be reduced to the extent that the subject
matter of the claim is covered by and paid to Purchaser or its Affiliates
pursuant to a warranty or indemnification from a third party or third party
insurance.
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<PAGE> 46
The amount of indemnification due from the Seller Indemnifying Parties with
respect to any claim shall be reduced by the effect of any tax deduction,
credit, refund or other tax benefit to Purchaser or it Affiliates relating to
the same tax period and resulting from the subject matter of that claim and
such indemnification.
13.9 Offset Provisions. Notwithstanding any other provisions of this
Agreement, in the event, between the Closing Date and the date the Bonus
Payment is paid, the Seller Indemnifying Parties become obligated to pay sums
to Purchaser or any Purchaser Indemnified Party under this Agreement or any of
the documents or agreements referenced herein or contemplated hereby (whether
as a result of indemnity, breach of contract or otherwise), Purchaser shall
have the right to and shall be obligated to reduce and offset payments due on
the Bonus Payment in such amount or amounts as Purchaser (and any Purchaser
Indemnified Party that is not promptly paid by the Seller Indemnifying Parties)
is entitled to receive from the Seller Indemnifying Parties, and any such
offset shall be deemed to be a payment of the Bonus Payment to the extent of
such offset; provided, however, that any such offset shall not relieve the
Seller Indemnifying Parties from paying all amounts that are due in excess of
the amount offset. Prior to any offset under this Section 13.9, Purchaser shall
have provided to the Seller Indemnifying Parties a notice of Purchaser Claim as
described in Section 13.3 or an otherwise reasonably detailed description of
the matter giving rise to such offset.
13.10 Time Limits for Indemnity Claims. Any claim for indemnification
under this Article 13 must be made within the time periods set forth in Article
6.
14. INDEMNITY BY PURCHASER.
14.1 Indemnity. Purchaser shall, and hereby does indemnify, hold
harmless and defend Seller and Shareholder (the "Seller Indemnified Parties")
at all times from and after the date of this Agreement, from and against any
and all penalties, demands, damages, punitive damages, losses, liabilities,
suits, costs, costs of any settlement or judgment, claims of any and every kind
whatsoever, refund obligations (including, without limitation, interest and
penalties thereon), remediation costs and expenses (including, without
limitation, reasonable attorneys' fees), of or to any of the Seller Indemnified
Parties ("Seller Damages"), which may now or in the future be paid, incurred or
suffered by or asserted against the Seller Indemnified Parties by any Person
resulting or arising from or incurred in connection with any one or more of the
following:
(a) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related
in any way to the Assets or the Business to the extent such liability
or claim for liability arises in connection with any action, omission
or event occurring after the Closing Date (including, but not limited
to, claims for product liability with respect to products
manufactured, distributed or sold by Purchaser after the Closing
Date); and
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<PAGE> 47
(b) any misrepresentation, breach of warranty or
nonfulfillment of any covenant or agreement on the part of Purchaser
under this Agreement or from any misrepresentation in or omission from
any list, schedule, certificate or other instrument furnished or to be
furnished to Seller or Shareholder pursuant to the terms of this
Agreement.
14.2 Environmental Liability of Purchaser. Notwithstanding any other
provision of this Agreement, including, but not limited to the rights to
indemnity set forth in Section 14.1, and in addition thereto, Purchaser shall
indemnify, hold harmless and defend the Seller Indemnified Parties, at all
times from and after the Closing Date, from and against all claims (whether in
contract, in tort or otherwise, and whether or not successful), fines,
penalties, liabilities, damages and losses, including but not limited to
remedial, removal, response, abatement, clean-up, investigation and monitoring
costs and any other related costs and expenses incurred (whether any claims or
causes of action relating thereto be asserted in common law or under statute
and regardless of form including strict liability and negligence) (collectively
referred to as "Seller Environmental Liabilities") arising from (a) any
violation of any Requirement of Environmental Law or Environmental Permits (as
those terms are hereinafter defined) of Purchaser occurring after the Closing
Date, (b) any acts, omissions, conditions, facts, or circumstances occurring
after the Closing Date with respect to the Assets, the Business or the
operations of Purchaser which give rise to an Environmental Claim (as
hereinafter defined) during the time Purchaser is the owner of the Assets and
the operator of the Business, and (c) any failure of Seller or Shareholder to
obtain or maintain after the Closing Date, any Environmental Permit. For
purposes of this Section 14.2, the term "Environmental Claim" means any action,
lawsuit, claim or proceeding by any Person relating to the Assets or the
Business or the operations or the Business which seeks to impose liability for
(i) noise, (ii) pollution or contamination or threatened pollution or
contamination of the air, surface water, groundwater or land, (iii) solid,
gaseous or liquid waste generation, handling, treatment, storage, disposal or
transportation, (iv) exposure to hazardous or toxic substances or (v)
non-compliance with any Requirement of Environmental Law. An "Environmental
Claim" includes, without limitation, a proceeding to terminate a permit or
license to the extent that such a proceeding attempts to redress violations of
the applicable permit or license or any Requirement of Environmental Law as
alleged by any Governmental Authority. For purposes of this Section 14.2, the
term "Environmental Permit" means any permit, license, approval or other
authorization related to, used in connection with or necessary for the
operation or use the Business or the Assets, or the operations or the Business
under any applicable Requirement of Environmental Law. For purposes of this
Section 14.2, the term "Requirement of Environmental Law" means all
Governmental Requirements related to health or the environment, including, but
not limited to, all Governmental Requirements that relate to (i) noise, (ii)
pollution or protection of the air, surface water, groundwater or land, (iii)
solid, gaseous or liquid waste generation, handling, treatment, storage,
disposal or transportation, (iv) exposure to hazardous or toxic substances, or
(v) any other matters related to health or the environment. Notwithstanding
anything herein to the contrary, Purchaser shall have no liability or
obligation to indemnify hereunder for any Seller Environmental Liabilities
arising from acts, events or omissions occurring after Purchaser ceases to
operate the Business on
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any of the premises to be owned, leased or used by Purchaser pursuant to the
provisions of Article 15.
14.3 Notice of Claim. Seller and Shareholder agree that upon their
discovery of facts giving rise to a claim for indemnity under the provisions of
this Agreement, including receipt by Seller or Shareholder of notice of any
demand, assertion, claim, action or proceeding, judicial or otherwise, by any
Person with respect to any matter as to which Seller or Shareholder is entitled
to indemnity under the provisions of this Agreement (such actions being
collectively referred to herein as a "Seller Claim"), Seller and Shareholder
will give prompt notice thereof in writing to Purchaser together with a
statement of such information respecting any of the foregoing as they shall
then have; provided that any delay in giving or failure to give such notice
shall not limit the rights of Seller or Shareholder to indemnity hereunder
except to the extent that Purchaser is shown to have been damaged by such delay
or failure.
14.4 Right of Purchaser to Participate in Defense. With respect to any
Seller Claim as to which Seller or Shareholder seeks indemnity hereunder,
Seller and Shareholder shall provide Purchaser with the opportunity to
participate in the defense of such Seller Claim with counsel of Purchaser's
choice and at Purchaser's cost and expense. To the extent reasonably requested
by Seller and Shareholder, Purchaser shall reasonably cooperate with Seller and
Shareholder and their representatives and counsel in any dispute or defense
related to any Seller Claim.
14.5 Payment. The Purchaser Indemnifying Parties shall promptly pay to
Seller and/or Shareholder, as applicable, in cash by wire transfer the amount
of any Seller Damages to which Seller and/or Shareholder, as applicable, may
become entitled by reason of the provisions of this Agreement.
14.6 Limitations on Indemnification. Notwithstanding any provision of
this Agreement, Purchaser shall not be liable for any matter that could be made
the subject of a claim under this Article 14 and Article 14 of the Arizona
Purchase Agreement regarding any claims, losses, expenses or other liabilities
until the aggregate amount thereof exceeds $250,000 and after such threshold
amount has been attained, all claims, other than those aggregated to reach the
threshold, shall be indemnified hereunder.
14.7 Insurance and Refunds. Purchaser's indemnification obligations
shall be reduced to the extent that the subject matter of the claim is covered
by and paid to Seller or its Affiliates pursuant to a warranty or
indemnification from a third party or third party insurance. The amount of
indemnification due from Purchaser with respect to any claim shall be reduced
by the effect of any tax deduction, credit, refund or other tax benefit to
either of Seller or its Affiliates relating to the same tax period and
resulting from the subject matter of that claim and such indemnification.
15. REAL PROPERTY. At Closing, New Mexico Peterbilt shall assign to
Purchaser its rights and Purchaser shall assume New Mexico Peterbilt's
obligations under that certain Lease
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Agreement between New Mexico Peterbilt and El Paso Land and Holding
("Albuquerque Landlord") dated March 13, 1996 (the "Albuquerque Lease")
relating to property on which New Mexico Peterbilt's Albuquerque, New Mexico
dealership is located. To evidence such assignment and assumption, New Mexico
Peterbilt and Purchaser shall enter into an Assignment and Assumption of
Tenant's Interest in Lease in substantially the form attached hereto as Exhibit
15 (the "Albuquerque Assignment"). New Mexico Peterbilt shall obtain all
consents necessary to assign its rights and obligations under the Albuquerque
Lease to Purchaser at Closing, including, without limitation, the assignment of
the purchase option in favor of New Mexico Peterbilt contained therein.
16. SPECIAL PROVISIONS REGARDING EMPLOYEES OF SELLER.
16.1 New Employees of Purchaser. It is the intention of Purchaser, and
Seller hereby acknowledges and agrees with such position, that any employees of
Seller that Purchaser hires will be new employees of Purchaser as of the
Closing Date or the date of hire, which ever is later. Such new employees shall
be entitled only to such compensation and employee benefits as are agreed to by
such employees and Purchaser, or as are otherwise provided by Purchaser, in its
sole discretion.
16.2 No Hiring Commitment. Purchaser specifically does not commit to
hire any of the employees of the Business, and Seller specifically understands
and acknowledges this fact. However, notwithstanding Purchaser's position,
Purchaser will review its needs in anticipation of the purchase of the Assets
with a view to hiring certain of the employees of Seller as of the Closing
Date. In its review, Purchaser expects to be able to review employee records
and conduct employee interviews. Seller agrees that after the date hereof it
will make, on a confidential basis, its employee records available to Purchaser
and permit Purchaser to contact its employees for the purpose of conducting
employee interviews. Seller further agrees to make employees designated by
Purchaser available to Purchaser for such purpose.
16.3 Existing Employee Benefit Plans; Assumption of Vacation and Sick
Leave Obligations. At the Closing, Purchaser shall assume Seller's obligations
to employees of Seller hired by Purchaser for accrued but unused vacation and
sick leave, and the Purchase Price shall be reduced by the dollar value of such
obligation. Except for vacation and sick leave time assumed by Purchaser as set
forth above, Purchaser shall have no obligation after the Closing to continue
any pension plans or work benefit plans currently offered by Seller to its
employees. Except for vacation and sick leave time assumed by Purchaser as set
forth above, Seller and Shareholder jointly and severally agree to indemnify
and hold harmless Purchaser from and against any claim which may arise because
of the failure to continue such pension plans or work benefit programs.
17. TERMINATION. This Agreement may be terminated without further
obligation of the parties, as follows:
17.1 Mutual Consent. This Agreement may be terminated at any time
prior to Closing by mutual written consent of the parties hereto.
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17.2 Failure of Conditions. This Agreement may be terminated by either
party hereto, if the conditions, as set forth in this Agreement, to such
party's obligations under this Agreement are not fulfilled on or prior to the
Closing Date; provided that any such termination for any other reason shall not
otherwise limit the remedies otherwise available to such party as a result of
misrepresentations of or breaches by the other party.
17.3 Failure to Close. This Agreement will automatically terminate on
December 1, 1999, if the Closing shall not have occurred on or before such
date, unless the parties shall have otherwise agreed in writing prior to such
date. No party will be liable in damages to any other party as a result of
termination pursuant to this Article 17 unless the failure of the Closing was
due to the failure of such party to comply with the terms of this Agreement.
18. NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, given by prepaid telex
or telegram or by facsimile or other similar instantaneous electronic
transmission device or mailed first class, postage prepaid, certified United
States mail, return receipt requested, as follows:
(a) If to Purchaser, at:
If mailed:
P. O. Box 34630
San Antonio, Texas 78265
If personally delivered or delivered by overnight courier:
8810 IH 10 East
San Antonio, Texas 78219
Attention: W. Marvin Rush
Facsimile No.: (210) 662-8017
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With a copy to:
Fulbright & Jaworski L.L.P.
300 Convent Street, Suite 2200
San Antonio, Texas 78205
Attention: Phillip M. Renfro, Esq.
Facsimile No.: (210) 270-7205
(b) If to Seller or Shareholder, at:
1117 Oro Vista
Litchfield Park, AZ 85340
Attention: Edward Donahue, Sr.
With a copy to:
With a copy to:
Greenberg, Traurig, P.A.
One East Camelback Road, Suite 1100
Phoenix, Arizona 85012
Attention: Robert S. Kant, Esq.
Facsimile No.: (602) 263-2900
Any party may change its address for notice by giving to the other party
written notice of such change. Any notice given under this Article 18 shall be
effective when received at the address for notice for the party to which the
notice is given.
19. GENERAL PROVISIONS.
19.1 Governing Law; Interpretation; Section Headings. This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Texas, without regard to conflict-of-law principles. The parties
agree to submit to the jurisdiction of the state and federal courts of the
State of Arizona with respect to the breach or interpretation of Sections 12.3
and 12.8 of this Agreement or the enforcement of any and all rights, duties,
obligations, powers and other relations among the parties arising under this
Agreement. Exclusive venue for any action arising under Sections 12.3 and 12.8
of this Agreement shall be Phoenix, Maricopa County, Arizona. Except for the
provisions of Sections 12.3 and 12.8 of this Agreement, with respect to which
Purchaser and its Affiliates expressly reserve the right to petition a court
directly for injunctive and other relief, any claim, dispute or controversy of
any nature whatsoever, including but not limited
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to tort claims or contract disputes between the parties to this Agreement or
their respective heirs, executors, administrators, legal representatives,
successors and assigns, as applicable, arising out of or related to the terms
and conditions of this Agreement, including the implementation, applicability
or interpretation thereof, shall be resolved in accordance with the dispute
resolution procedures set forth in Appendix A attached hereto and made a part
hereof. The section headings contained herein are for purposes of convenience
only, and shall not be deemed to constitute a part of this Agreement or to
affect the meaning or interpretation of this Agreement in any way.
19.2 Severability. Should any provision of this Agreement be held
unenforceable or invalid under the laws of the United States of America or the
State of Texas, or under any other applicable laws of any other jurisdiction,
then the parties hereto agree that such provision shall be deemed modified for
purposes of performance of this Agreement in such jurisdiction to the extent
necessary to render it lawful and enforceable, or if such a modification is not
possible without materially altering the intention of the parties hereto, then
such provision shall be severed herefrom for purposes of performance of this
Agreement in such jurisdiction. The validity of the remaining provisions of
this Agreement shall not be affected by any such modification or severance,
except that if any severance materially alters the intentions of the parties
hereto as expressed herein (a modification being permitted only if there is no
material alteration), then the parties hereto shall use commercially reasonable
efforts to agree to appropriate equitable amendments to this Agreement in light
of such severance, and if no such agreement can be reached within a reasonable
time, any party hereto may initiate arbitration under the then current
commercial arbitration rules of the American Arbitration Association to
determine and effect such appropriate equitable amendments.
19.3 Entire Agreement. This Agreement, the Schedules and the documents
and agreements referenced herein set forth the entire agreement and
understanding of the parties hereto with respect to the transactions
contemplated hereby, and supersede all prior agreements, arrangements and
understandings related to the subject matter hereof. No representation,
promise, inducement or statement of intention has been made by any party hereto
which is not embodied or referenced in this Agreement, the Schedules or the
documents or agreements referenced herein, and no party hereto shall be bound
by or liable for any alleged representation, promise, inducement or statement
of intention not so set forth.
19.4 Expenses. Whether or not the transactions contemplated hereby are
consummated, each of the parties will pay all costs and expenses of its or his
performance of and compliance with this Agreement.
19.5 Further Actions. From time to time, at the request of any party
hereto, the other parties hereto shall execute and deliver such instruments and
take such action as may be reasonably requested to evidence the transactions
contemplated hereby.
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19.6 Binding Effect. All the terms, provisions, covenants and
conditions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns.
19.7 Assignment. This Agreement and the rights and obligations of the
parties hereto shall not be assigned or delegated by any party hereto without
the prior written consent of the other parties hereto.
19.8 Amendment; Waiver. This Agreement may be amended, modified,
superseded or canceled, and any of the terms, provisions, representations,
warranties, covenants or conditions hereof may be waived, only by a written
instrument executed by all parties hereto, or, in the case of a waiver, by the
party waiving compliance. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
to enforce the same. No waiver by any party of any condition contained in this
Agreement, or of the breach of any term, provision, representation, warranty or
covenant contained in this Agreement, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such
condition or breach, or as a waiver of any other condition or of the breach of
any other term, provision, representation, warranty or covenant.
19.9 Gender; Numbers. All references in this Agreement to the
masculine, feminine or neuter genders shall, where appropriate, be deemed to
include all other genders. All plurals used in this Agreement shall, where
appropriate, be deemed to be singular, and vice versa.
19.10 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement
shall be binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of the parties reflected hereon as
signatories.
19.11 Telecopy Execution and Delivery. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto,
and an executed copy of this Agreement may be delivered by one or more parties
hereto by facsimile or similar instantaneous electronic transmission device
pursuant to which the signature of or on behalf of such party can be seen, and
such execution and delivery shall be considered valid, binding and effective
for all purposes. At the request of any party hereto, all parties hereto agree
to execute an original of this Agreement as well as any facsimile, telecopy or
other reproduction hereof.
19.12 Press Releases. No press releases or other public announcement
with respect to this Agreement or the transactions contemplated herein shall be
made prior to the Closing Date without the joint approval of Purchaser and
Seller, except as required by law.
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19.13 Review of Counsel. Each party hereto acknowledges that it and
its counsel have received, reviewed and been involved in the drafting of this
Agreement and the agreements referenced herein to be executed at Closing and
that normal rules of construction, to the effect that ambiguities are to be
resolved against the drafting party, shall not apply.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date first above written.
PURCHASER:
RUSH TRUCK CENTERS OF
NEW MEXICO, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SELLER:
NEW MEXICO PETERBILT, INC. d/b/a
SOUTHWEST PETERBILT
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SHAREHOLDER:
---------------------------------------
Edward Donahue, Sr.
<PAGE> 56
APPENDIX A
DISPUTE RESOLUTION PROCEDURES
Re: Asset Purchase Agreement dated September __, 1999 (including any
amendments, the "Agreement"), by and among (i) New Mexico Peterbilt, Inc.,
d/b/a Southwest Peterbilt, a New Mexico corporation ("Seller"), (ii) Edward
Donahue, Sr., the owner of a portion of the capital stock of Seller
("Shareholder"), and (iii) Rush Truck Centers of New Mexico, Inc., a Delaware
corporation ("Purchaser"). Unless otherwise defined in this Appendix A, terms
defined in the Agreement and used herein shall have the meanings set forth
therein.
A. Related Parties. For purposes hereof, Seller and Shareholder shall
be considered one party and Purchaser and Rush shall be considered one party.
B. Negotiations. If any claim, dispute or controversy described in
Section 20.1 of the Agreement (collectively, the "Dispute") arises, either
party may, by written notice to the party, have the Dispute referred to the
persons designated below for attempted resolution by good faith negotiations
within 45 days (5 days with respect to any dispute under Section 13.9 of the
Agreement) after such written notice is received. Such designated persons are
as follows:
1. Purchaser and Rush. The Chairman of the Board and Chief
Executive Officer of Rush or his designee; and
2. Seller and Shareholder. Shareholder or his or her
designee.
Any settlement reached by the parties under this Paragraph B shall not be
binding until reduced to writing and signed by both parties. When reduced to
writing, such settlement agreement shall supersede all other agreements,
written or oral, to the extent such agreements specifically pertain to the
matters so settled. If the above-designated persons are unable to resolve such
dispute within such 45-day period, either party may invoke the provisions of
Paragraph C below.
C. Arbitration. All Disputes shall be settled by negotiation among the
parties as described in Paragraph A above or, if such negotiation is
unsuccessful, by binding arbitration in accordance with procedures set forth in
Paragraphs D and E below.
D. Notice. Notice of demand for binding arbitration by one party shall
be given in writing to the other party pursuant to notice provisions of the
Agreement. In no event may a notice of demand of any kind be filed more than
one (1) year after the date the Dispute is first asserted in writing to the
other party pursuant to Paragraph B above, and if such demand is not timely
filed, the Dispute referenced in the notice given pursuant to Paragraph B above
shall be deemed released, waived, barred and unenforceable for all time, and
barred as if by statute of limitations.
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E. Binding Arbitration. Upon filing of a notice of demand for binding
arbitration by either party, arbitration shall be commenced and conducted as
follows:
3. Arbitrators. All Disputes and related matters in question
shall be referred to and decided and settled by a panel of three arbitrators,
one selected by Purchaser, one selected by Shareholder and the third selected
by the two arbitrators so selected. Selection of the arbitrators to be selected
by Purchaser and Shareholder shall be made within ten (10) business days after
the date of giving of a notice of demand for arbitration, and the two
arbitrators so appointed shall appoint the third within 10 business days
following their appointment. No person who has a bias, or financial or personal
interest in the result of the arbitration or any past or present relationship
with the parties or their representatives shall serve as arbitrator
4. Cost of Arbitration. The cost of arbitration proceedings,
including without limitation the arbitrators' compensation and expenses,
hearing room charges, court reporter transcript charges etc., shall be borne by
the parties equally or otherwise as the arbitrators may determine. The
arbitrators may award the prevailing party its reasonable attorneys' fees and
costs incurred in connection with the arbitration. The arbitrators are
specifically instructed to award attorneys' fees for instances of abuse in the
discovery process.
5. Location of Proceedings. The arbitration proceedings shall
be held in Phoenix, Arizona, unless the parties agree otherwise.
6. Pre-hearing Discovery. The parties shall have the right to
conduct and enforce pre- hearing discovery in accordance with the then current
Federal Rules of Civil Procedure, subject to these limitations:
(a) Each party may serve no more than one set of
interrogatories limited to 30 questions, including sub-parts;
(b) Each party may depose the other party's expert
witnesses who will be called to testify at the hearing, plus two fact
witnesses without regard to whether they will be called to testify
(each party will be entitled to a total of no more than 24 hours of
deposition time of the other party's witnesses), provided however,
that the arbitrators may provide for additional depositions upon
showing of good cause; and
(c) Document discovery and other discovery shall be
under the control of and enforceable by the arbitrators.
7. Discovery disputes. All discovery disputes shall be
decided by the arbitrators. The arbitrators are empowered;
(a) to issue subpoenas to compel pre-hearing
document or deposition discovery;
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(b) to enforce the discovery rights and obligations
of the parties; and
(c) to otherwise control the scheduling and conduct
of the proceedings.
Notwithstanding any contrary foregoing provisions, the arbitrators shall have
the power and authority to, and to the fullest extent practicable shall,
abbreviate arbitration discovery in a manner which is fair to all parties in
order to expedite the conclusion of each alternative dispute resolution
proceeding.
8. Pre-hearing Conference. Within fifteen (15) days after
selection of the third arbitrator, or as soon thereafter as is mutually
convenient to the arbitrators, the arbitrators shall hold a pre- hearing
conference to establish schedules for completion of discovery, for exchange of
exhibit and witness lists, for arbitration briefs and for the hearing, and to
decide procedural matters and address all other questions that may be
presented.
9. Hearing Procedures. The hearing shall be conducted to
preserve its privacy and to allow reasonable procedural due process. Rules of
evidence need not be strictly followed, and the hearing shall be streamlined as
follows:
(a) Documents shall be self-authenticating, subject
to valid objection by the opposing party;
(b) Expert reports, witness biographies, depositions
and affidavits may be utilized, subject to the opponent's right of a
live cross-examination of the witness in person;
(c) Charts, graphs and summaries shall be utilized
to present voluminous data, provided (i) that the underlying data is
made available to the opposing party thirty (30) days prior to the
hearing, and (ii) that the preparer of each chart, graph or summary is
available for explanation and live cross-examination in person;
(d) The hearing should be held on consecutive
business days without interruption to the maximum extent practicable;
and
(e) The arbitrators shall establish all other
procedural rules for the conduct of the arbitration in accordance with
the rules of arbitration of the Center for Public Resources.
10. Governing Law. This arbitration provision shall be
governed by, and all rights and obligations specifically enforceable under and
pursuant to, the Federal Arbitration Act (9 U.S.C. Section 1, et seq.)
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11. Consolidation. No arbitration shall include, by
consolidation, joinder or in any other manner, any additional person not a
party to the Agreement, except by written consent of both parties containing a
specific reference to these provisions.
12. Award. The arbitrators are empowered to render an award
of general compensatory damages and equitable relief (including, without
limitations, injunctive relief), but are not empowered to award exemplary,
special or punitive damages. The award rendered by the arbitrators (a) shall be
final, (b) shall not constitute a basis for collateral estoppel as to any issue
and (c) shall not be subject to vacation or modification.
13. Confidentiality. The parties hereto will maintain the
substance of any proceedings hereunder in confidence and the arbitrators, prior
to any proceedings hereunder, will sign an agreement whereby the arbitrators
agree to keep the substance of any proceedings hereunder in confidence.
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Exhibit 10.1
RUSH ENTERPRISES, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is entered into
as of October 1, 1999, by and among Rush Enterprises, Inc., a Delaware
corporation ("Company") and Southwest Peterbilt, Inc., an Arizona corporation
("Southwest Peterbilt"), Southwest Truck Center, Inc., an Arizona corporation
("Southwest Truck Center") and New Mexico Peterbilt, Inc., a New Mexico
corporation ("New Mexico Peterbilt", and together with Southwest Peterbilt and
Southwest Truck Center, "Holders").
RECITALS
A. Pursuant to an Asset Purchase Agreement (the "Arizona Purchase
Agreement") dated September 22, 1999, between Rush Truck Centers of Arizona,
Inc., a Delaware corporation and a subsidiary of Company, and Southwest
Peterbilt, Southwest Truck Center and Edward Donahue, Sr. ("Shareholder"),
Southwest Peterbilt holds 273,779 shares of Common Stock (as defined below) and
Southwest Truck Center holds 28,444 shares of Common Stock.
B. Pursuant to an Asset Purchase Agreement (the "New Mexico Purchase
Agreement") dated September 22, 1999, between Rush Truck Centers of New Mexico,
Inc., a Delaware corporation and a subsidiary of Company, and New Mexico
Peterbilt and Shareholder, New Mexico Peterbilt holds 53,333 shares of Common
Stock.
C. It is a condition precedent to Southwest Peterbilt and Southwest
Truck Center's obligations under the Arizona Purchase Agreement and to New
Mexico Peterbilt's obligations under the New Mexico Purchase Agreement that
Company execute and deliver this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS
For purposes of this Agreement:
(a) Commission. "Commission" shall mean the Securities and
Exchange Commission of the United States or any other United States
federal agency at the time administering the Securities Act.
(b) Common Stock. "Common Stock" shall mean the Common Stock
of Company, $.01 par value per share.
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(c) Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder, or any similar United States federal statute.
(d) Form S-3. "Form S-3" shall mean such form under the
Securities Act as in effect on the date hereof or any registration
form under the Securities Act subsequently adopted by the Commission
that similarly permits inclusion or incorporation of substantial
information by reference to other documents filed by Company with the
Commission.
(e) Other Holders. "Other Holders" shall mean holders of
Company securities, other than Holders, proposing to distribute their
securities pursuant to a registration under this Agreement.
(f) Register, Registered and Registration. "Register",
"registered" and "registration" shall mean a registration effected by
preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(g) Registrable Securities. "Registrable Securities" shall
mean the Common Stock issued to Southwest Peterbilt and Southwest
Truck Center pursuant to Sections 3.1(a)(ii) and 3.1(b)(ii) of the
Arizona Purchase Agreement and the Common Stock issued to New Mexico
Peterbilt pursuant to Section 3.1(b) of the New Mexico Purchase
Agreement, including Common Stock issued in connection with any
subdivision or combination of Common Stock, stock dividend,
consolidation or merger relating thereto; provided, however, that any
shares described above that have been transferred in a transaction in
which the registration rights hereunder have not been transferred
shall cease to be Registrable Securities upon such transfer.
(h) Registration Expenses. "Registration Expenses" shall mean
all expenses, except as otherwise stated below, incurred by Company in
complying with Sections 2 and 3 hereof, including, without limitation,
all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for Company, blue sky
fees and expenses, fees and disbursements of all independent certified
public accountants of Company (including, without limitation, the
expense of any special audit and, in connection with any underwritten
offering, "cold comfort" letters required by or incident to such
performance), fees and expenses incurred in connection with the
listing of the securities to be registered on each securities exchange
on which securities of the same class are then listed or the
qualification for trading of the securities to be registered in each
interdealer quotation system in which securities of the same class are
then traded, and fees and expenses associated with any NASD filing
required to be made in connection with such registration (but
excluding the compensation of regular employees of Company which shall
be paid in any event by Company).
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(i) Securities Act. "Securities Act" shall mean the
Securities Act of 1933, as amended, and the rules and regulations of
the Commission thereunder, or any similar United States federal
statute.
(j) Selling Expenses. "Selling Expenses" shall mean all
underwriting discounts, selling commissions and stock transfer taxes
applicable to the securities registered by Holders and all attorneys'
fees and expenses of counsel for Holders.
2. COMPANY REGISTRATION
(a) Notice of Registration. If at any time or from time to
time after the date hereof Company shall determine to register any of
its securities, either for its own account or the account of Other
Holders, other than (i) a registration relating solely to employee
benefit plans or (ii) a registration relating solely to a Commission
Rule 145 transaction, Company will:
(i) give prompt (and in any event within twenty (20)
days before the anticipated filing date of the related
registration statement) written notice thereof to each Holder
indicating the proposed offering price and describing the
plan of distribution; and
(ii) include in such registration and, at the
request of any Holder, in any underwriting involved therein,
all the Registrable Securities specified in a written request
by any Holder to Company, made within twenty (20) days after
receipt of such written notice from Company.
(b) Election Revocable. If, prior to the execution by a
Holder of the underwriting agreement contemplated by Subsection 2(c),
such Holder disapproves of the terms of any such underwriting, such
Holder may elect to withdraw therefrom by written notice to Company
and the managing underwriter. Any securities excluded or withdrawn
from such underwriting also shall be withdrawn from such registration,
and shall not be transferred in a public distribution prior to ninety
(90) days after the effective date of the registration statement
relating thereto, or such other shorter period of time as the
underwriters may require.
(c) Underwriting. If the registration of which Company gives
notice is for a registered public offering involving an underwriting,
Company shall so advise Holders. In such event, the right of any
Holder to registration pursuant to this Section 2 shall be conditioned
upon such Holder's participation in such underwriting and the
inclusion of Registrable Securities in the underwriting to the extent
provided in this Section 2.
All Holders proposing to distribute their securities through
such underwriting shall, together with Company, enter into an
underwriting agreement in customary form with the
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managing underwriter selected for such underwriting by Company.
Company may exclude from such underwriting the Registrable Securities
of any Holder who does not accept the terms agreed upon between
Company and the underwriters. Company shall use its reasonable best
efforts to cause the managing underwriter of such proposed
underwritten offering to permit the Registrable Securities proposed to
be included in such registration to be included in the registration
statement for such offering on the same terms and conditions as any
similar securities of Company included therein. Notwithstanding any
other provision of this Section 2, if the managing underwriter
determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the
Registrable Securities to be included in such registration. In such
event, Company shall so advise Holders, and the number of shares that
may be included in the registration and underwriting by Holders and
Other Holders shall be allocated among all Holders and all Other
Holders in proportion, as nearly as practicable, to the respective
amounts of Common Stock held by such Holders and Other Holders at the
time of filing of the registration statement. To facilitate the
allocation of shares in accordance with the above provisions, Company
may round the number of shares allocated to any Holder to the nearest
one hundred (100) shares.
(d) Right to Terminate Registration. Company shall have the
right to terminate or withdraw any registration initiated by it under
this Section 2 prior to the effectiveness of such registration whether
or not any Holder has elected to include Registrable Securities in
such registration.
3. REGISTRATION ON FORM S-3
(a) Request for Registration. If any Holder holding or
Holders in the aggregate holding 100,000 or more Registrable
Securities requests that Company file a registration statement on Form
S-3 (or any successor form to Form S-3) for a public offering of
shares of 100,000 or more Registrable Securities, and Company is a
registrant entitled to use Form S-3 to register the Registrable
Securities for such an offering, Company shall use its best efforts to
cause such Registrable Securities requested by Holders to be included
in such registration to be registered for the offering on such form
and to cause such Registrable Securities to be qualified in such
jurisdictions as Holders may reasonably request.
(b) Limitations. Notwithstanding the foregoing, Company shall
not be obligated to take any action pursuant to this Section 3:
(i) in any particular jurisdiction in which Company
would be required to execute a general consent to service of
process in effecting such registration, qualification or
compliance unless Company is already subject to service in
such jurisdiction and except as may be required by the
Securities Act;
(ii) If Company, within ten (10) days of the receipt
of the request of Holders requesting registration under this
Section 3, gives notice of its bona fide
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intention to effect the filing of a registration statement
with the Commission within ninety (90) days of receipt of such
request (other than with respect to a registration statement
relating to a Rule 145 transaction, an offering solely to
employees or any other registration which is not appropriate
for the registration of Registrable Securities);
(iii) during the period starting with the date
thirty (30) days prior to Company's good faith estimated date
of filing of, and ending on the date six (6) months
immediately following, the effective date of any registration
statement pertaining to securities of Company (other than a
registration of securities in a Rule 145 transaction or with
respect to an employee benefit plan), provided that Company
is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective;
(iv) if Company shall furnish to such Holder a
certificate signed by the Chief Executive Officer of Company
stating that in the good faith judgment of Company's Board of
Directors the filing of a registration statement would
require the disclosure of material information that Company
has a bona fide business purpose for preserving as
confidential and that is not then otherwise required to be
disclosed or it would be seriously detrimental to Company and
its shareholders for such Form S-3 to be effected at such
time, then Company's obligation to use its best efforts to
file a registration statement shall be deferred for a period
not to exceed one hundred twenty (120) days from the receipt
of the request to file such registration by such Holder,
provided, however, that Company shall not utilize this right
more than once in any twelve (12) month period; or
(v) after Company has effected one (1) registration
pursuant to this Section 3, and such registration has been
declared or ordered effective and has been available to
Holders for resale for a period of at least six consecutive
months.
4. COMPANY'S PURCHASE OBLIGATION
The next time Company has a registration statement ordered or declared
effective (which shall include the Form S-1 Company anticipates filing the
fourth quarter of 1999 for a public offering of approximately 2,000,000 shares
of Common Stock, whether or not such Form S-1 is ordered or declared effective
before or after the date hereof) (an "Offering"), Company shall have the
obligation to acquire all Registrable Securities held by Holders at such time
and each Holder shall be obligated to sell such Registrable Securities to
Company. Company shall give each Holder written notice of the effectiveness of
the registration statement on or before the later of three business days after
Company receives the proceeds for the Offering or three business days from the
date hereof. The closing of such purchase shall take place at a time mutually
agreed to by the parties thereto, which shall be no later than five business
days after Company gives the notice described above. The purchase price payable
to each Holder for the Registrable Securities held by such Holder shall be
equal to (i) the
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number of shares of Common Stock purchased from such Holder pursuant to this
Section 4 multiplied by the greater of (a) $16.875 and (b) the price per share
the Common Stock is sold to the public in the Offering less Holder's pro rata
share of all commissions charged in connection with the Offering. At the
closing, Company shall pay to each Holder the purchase price due such Holder in
cash by wire transfer against delivery of certificate(s) representing the
Registrable Securities Company is purchasing from such Holder, duly endorsed in
blank or accompanied by a duly executed stock power in blank, to effect the
transfer of the Registrable Securities to Company. The Registrable Securities
being purchased by Company shall be conveyed and delivered to Company free and
clear of all liens, security interests, encumbrances, options, calls or other
restrictions. Any assignment of Registrable Securities by a Holder shall be
made expressly subject to the provisions of this Section 4. Company shall have
the absolute right to terminate or withdraw any registration statement prior to
the effectiveness of such registration statement without any liability.
5. OBLIGATIONS OF COMPANY
Whenever required under this Agreement to effect the registration of
any Registrable Securities, Company shall, as expeditiously as reasonably
possible:
(a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities, use its best
efforts to cause such registration statement to become effective, and,
upon the request of Holders, keep such registration statement
effective for up to ninety (90) days.
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement.
(c) Furnish to Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they
may reasonably request in order to facilitate the disposition of all
securities covered by such registration statement.
(d) Use its commercially reasonable efforts to register and
qualify the securities covered by such registration statement under
such other securities or blue sky laws of such jurisdictions as shall
be reasonably requested by Holders, provided that Company shall not be
required in connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of process in
any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also
enter into and perform its obligations under such an agreement.
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<PAGE> 7
(f) Notify each Holder of Registrable Securities covered by
such registration statement, at any time when a prospectus relating
thereto covered by such registration statement is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing.
(g) At the request of any Holder requesting registration of
Registrable Securities pursuant to this Agreement, furnish on the date
that such Registrable Securities are delivered to the underwriters for
sale in connection with a registration pursuant to this Agreement (i)
an opinion, dated such date, of the counsel representing Company for
the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering,
addressed to the underwriters and (ii) a letter dated such date, from
the independent certified public accountants of Company, in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters.
(h) List the Registrable Securities being registered on any
national securities exchange on which a class of Company's equity
securities are listed or qualify the Registrable Securities being
registered for inclusion on Nasdaq if Company does not have a class of
equity securities listed on a national securities exchange.
6. OBLIGATIONS OF HOLDERS
It shall be a condition precedent to the obligations of Company to
take any action pursuant to this Agreement that Holders who have requested the
registration of Registrable Securities:
(a) Furnish to Company such information regarding themselves,
the Registrable Securities held by them and the intended method of
disposition of such securities as shall be reasonably requested by
Company or reasonably required to effect the registration of the
Registrable Securities;
(b) Cooperate in good faith with Company and the
underwriters, if any, in connection with such registration, including
executing any documents in connection with such registration as
Company or the underwriters may reasonably request and placing the
Registrable Securities in escrow or custody to facilitate the sale and
distribution thereof; and
(c) Make no further sales or other dispositions, or offers
therefor, of the Registrable Securities under such registration
statement if, during the effectiveness of such registration statement,
an intervening event should occur which, in the opinion of counsel to
Company, makes the prospectus included in such registration statement
no longer comply with the Securities Act, so long as written notice
containing the facts and legal conclusions
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relied upon by Company in this regard has been received by Holders
from Company, until such time as Holders have received from Company
copies of a new, amended or supplemented prospectus complying with the
Securities Act, which prospectus shall be delivered to Holders by
Company as soon as practicable after such notice.
7. CONFIDENTIALITY OF COMPANY INFORMATION
Each Holder agrees that it will keep confidential and will not
disclose or divulge or otherwise misuse any confidential, proprietary or secret
information which such Holder may obtain from Company unless such information
is or becomes known to such Holder from a source other than Company without
violation of any rights of Company, or is or becomes publicly known, or unless
Company gives its written consent to such Holder's release of such information,
except that no such written consent shall be required (and such Holder shall be
free to release such information to such recipient) if such information is to
be provided to such Holder's counsel or accountant (and the provision of such
information is directly necessary in order for such recipient to provide
services to such Holder), or to an officer, director, member or partner of such
Holder, provided that such Holder shall inform the recipient of the
confidential nature of such information, and such recipient agrees in writing
in advance of disclosure to treat the information as confidential.
8. EXPENSES OF REGISTRATION
(a) Registration Expenses. Company shall bear all
Registration Expenses incurred in connection with all registrations
pursuant to Sections 2 and 3 hereof.
(b) Selling Expenses. All Selling Expenses relating to
securities registered on behalf of Holders shall be borne by Holders
pro rata on the basis of the number of Registrable Securities so
registered.
9. DELAY OF REGISTRATION
No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any registration of Company as the result of
any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
10. INDEMNIFICATION
(a) By Company. Company will indemnify each Holder, each of
its officers and directors, partners, employees and agents, and each
person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or
compliance has ben effected pursuant to this Agreement, and each
underwriter, if any, and each person who controls any underwriter
within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or
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threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained (or
incorporated by reference) in any registration statement, prospectus,
offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by Company of the
Securities Act or any rule or regulation promulgated under the
Securities Act applicable to Company in connection with any such
registration, qualification or compliance, and Company will reimburse
each such Holder, each of its officers, directors, partners, employees
and agents, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage,
liability or action, provided that Company will not be liable to any
such Holder, controlling person or underwriter in any such case to the
extent that any such claim, loss, damage, liability or expense arises
out of or is based on any untrue statement or omission, or alleged
untrue statement or omission, made or incorporated by reference in
such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information
furnished to Company by an instrument duly executed by any Holder,
controlling person or underwriter and stated to be specifically for
use therein. If Holders are represented by counsel other than counsel
for Company, Company will not be obligated under this Section 10(a) to
reimburse legal fees and expenses of more than one separate counsel
for Holders.
(b) By Holders. Each Holder will indemnify Company, each of
its directors, officers, each underwriter, if any, of Company's
securities covered by such a registration statement, each person who
controls Company or such underwriter within the meaning of Section 15
of the Securities Act, and each other Holder, each of its officers,
directors, partners, employees and agents and each person controlling
such Holders within the meaning of Section 15 of the Securities Act,
against all expenses, claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained
(or incorporated by reference) in any such registration statement,
prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and will reimburse Company, such Holders, such directors,
officers, partners, employees and agents, underwriters or control
persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to
the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made (or incorporated by
reference) in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with
written information furnished to Company by an instrument duly
executed by such Holder and stated to be specifically for use therein.
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(c) Procedure for Indemnification. Each party entitled to
indemnification under paragraph (a) or (b) of this Section 10 (the
"Indemnified Party") shall, promptly after receipt of notice of any
claim or the commencement of any action against such Indemnified Party
in respect of which indemnity may be sought, notify the party required
to provide indemnification (the "Indemnifying Party") in writing of
the claim or the commencement thereof; provided that the failure of
the Indemnified Party to notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability which it may have to
an Indemnified Party pursuant to the provisions of this Section 10,
unless the Indemnifying Party was materially prejudiced by such
failure, and in no event shall such failure relieve the Indemnifying
Party from any other liability which it may have to such Indemnified
Party. If any such claim or action shall be brought against an
Indemnified Party, it shall notify the Indemnifying Party thereof and
provide the Indemnifying Party with the opportunity to participate in
the defense of such claim or action with counsel of the Indemnifying
Party's choice and at the Indemnifying Party's cost and expense and
shall not, without the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld, settle any claim or
action, so long as the Indemnifying Party shall have unconditionally
acknowledged its obligation to indemnify hereunder with respect to
such claim or action. To the extent reasonably requested by the
Indemnified Party, the Indemnifying Party shall reasonably cooperate
with the Indemnified Party and its representatives and counsel in any
dispute or defense related to any claim or action. The Indemnifying
Party shall promptly pay to the Indemnified Party in cash the amount
to which such Indemnified Party may become entitled by reason of the
provisions of this Section 10.
(d) Contribution. If the indemnification provided for in this
Section 10 shall for any reason be unavailable to an Indemnified Party
in respect of any loss, claim, damage or liability, or any action in
respect thereof, referred to herein, then each Indemnifying Party
shall, in lieu of indemnifying such Indemnified Party, contribute to
the amount paid or payable by such Indemnified Party as a result of
such loss, claim, damage or liability, or action in respect thereof,
in such proportion as shall be appropriate to reflect the relative
fault of the Indemnifying Party on the one hand and the Indemnified
Party on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Indemnifying Party on the
one hand or the Indemnified Party on the other, the intent of the
parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission, but not
by reference to any Indemnified Party's stock ownership in Company.
The amount paid or payable by an Indemnified Party as a result of the
loss, claim, damage or liability, or action in respect thereof,
referred to above in this paragraph shall be deemed to include, for
purposes of this paragraph, any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or
defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall
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<PAGE> 11
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Non-Securities Act Claims. Indemnification or, if
appropriate, contribution, similar to that specified in the preceding
provisions of this Section 10 (with appropriate modifications) shall
be given by Company and each Holder with respect to any required
registration or other qualification of Registrable Securities pursuant
to this Agreement under any federal or state law or regulation or
governmental authority other than the Securities Act.
(f) Payment. The Indemnifying Party shall promptly pay to the
Indemnified Party in cash the amount of such indemnity or, if
appropriate, contribution to which the Indemnified Party shall become
entitled by reason of the provisions of this Section 10.
11. RULE 144 REPORTING
With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of the
Registrable Securities to the public without registration, during such time as
a public market exists for the Common Stock, Company agrees to use its best
efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act,
at all times while Company is subject to the reporting requirements of
the Securities Act or the Exchange Act;
(b) File with the Commission in a timely manner all reports
and other documents required of Company under the Securities Act and
the Exchange Act (at any time while it is subject to such reporting
requirements); and
(c) Furnish to any Holder forthwith upon request a written
statement by Company as to its compliance with the reporting
requirements of Rule 144, and of the Securities Act and the Exchange
Act (at any time while it is subject to such reporting requirements),
a copy of the most recent annual or quarterly report of Company, and
such other reports and documents of Company and other information in
the possession of or reasonably obtainable by Company as such Holder
may reasonably request in availing itself of any rule or regulation of
the Commission allowing such Holder to sell any such securities
without registration.
12. ASSIGNMENT OF REGISTRATION RIGHTS
The rights to register Registrable Securities pursuant to this
Agreement may be assigned by a Holder to a transferee or assignee of such
securities who shall, upon such transfer or assignment, be deemed a "Holder"
under this Agreement; provided such transfer is effected in accordance with
applicable securities laws and all restrictions on transfer applicable to such
Registrable Securities and Company is, within a reasonable period of time after
such transfer, furnished with written notice of
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<PAGE> 12
the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; provided,
further, that such assignment shall be effective only if immediately following
such transfer, the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and that such transferee or
assignee is either (a) a shareholder of any Holder, (b) a member of the
immediate family of such a shareholder or (c) a trust for the benefit of such a
shareholder or such a shareholder's immediate family.
13. MISCELLANEOUS
(a) 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, at the address indicated for such party on the signature
pages hereof; provided that any party may change its address for
notice by giving to the other party written notice of such change.
Unless otherwise provided herein, any notice given under this Section
13(a) shall be effective when received at the address for notice for
the party to which the notice is given.
(b) Any term of this Agreement may be amended and the
observance of any term may be waived (either generally or in a
particular instance and either retroactively or prospectively) only
with the written consent of Company and the holders of a majority of
the Registrable Securities.
(c) If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be
excluded from this Agreement, and the balance of this Agreement shall
be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.
(d) This Agreement shall for all purposes be governed by and
construed in accordance with the laws of the State of Delaware,
without regard to conflict of law principles. The parties hereto agree
to submit to the jurisdiction of the federal and state courts of the
State of Arizona with respect to the breach or interpretation of this
Agreement or the enforcement of any and all rights, duties,
liabilities, obligations, powers and other relations among the parties
arising under this Agreement. The parties agree that non-exclusive
venue of any action hereunder shall be proper in Phoenix, Maricopa
County, Arizona.
(e) This Agreement may be executed 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.
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<PAGE> 13
(f) This Agreement constitutes the full and entire
understanding and agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements with respect
to the subject matter hereof.
(g) Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the
parties. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
(h) Each party acknowledges that it and its counsel have
received, reviewed and been involved in the drafting of this Agreement
and that normal rules of construction, to the effect that ambiguities
are to be resolved against the drafting party, shall not apply.
[signatures on next page]
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<PAGE> 14
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
RUSH ENTERPRISES, INC.
By:
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Name:
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Title:
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Addresses:
If mailed:
P. O. Box 34630
San Antonio, Texas 78265
If personally delivered
or delivered by overnight courier:
8810 IH 10 East
San Antonio, Texas 78219
SOUTHWEST PETERBILT, INC.
By:
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Name:
-----------------------------------
Title:
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Address:
SOUTHWEST TRUCK CENTER, INC.
By:
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Name:
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Title:
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Address:
<PAGE> 15
NEW MEXICO PETERBILT, INC.
By:
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Name:
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Title:
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Address:
