<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 (EVENT): March 10, 1999
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RANKIN AUTOMOTIVE GROUP, INC.
(Exact name of registrant as specified in its charter)
COMMISSION FILE NO: 0-28812
Louisiana 72-0838383
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
3709 S. MacArthur Drive
Alexandria, LA 71302
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(Address of principal executive offices) (Zip code)
(318) 487-1081
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Registrant's telephone number, including Area Code
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Item 2. Acquisition of Assets
On February 26, 1999, the Company signed Definitive Agreements
with three companies (US. Parts Corporation; Automotive & Industrial Supply Co.
Inc.; and Allied Distributing Company of Houston, Inc. and its subsidiary, Auto
Parts Investment Group, Inc.) to purchase substantially all of their assets and
assume certain of their liabilities. These Definitive Agreements were subject to
certain conditions including the closing of the credit facility provided by a
syndicate lead by Heller Financial, Inc. The credit facility was closed on March
10, 1999. Some of the proceeds from this new credit facility were used to
liquidate the previous existing $7.5 million credit facility with Hibernia
National Bank.
On March 10, 1999, the Company acquired from US. Parts
Corporation it's auto parts distribution center located in Houston, Texas as
well as the seventeen stores that it operates throughout Houston. The total
purchase price included 600,000 shares of Rankin Automotive Group, Inc. common
stock, $7.96 million of cash, issuance of a note payable for $40 thousand, the
assumption of certain liabilities estimated at $10.1 million and certain other
consideration. US. Parts Corporation had approximately $14.8 million of
inventory, $0.8 million of property and equipment and $3.9 million of accounts
receivable as of the date of acquisition. The cash portion of the purchase price
together with certain US. Parts indebtedness was paid using proceeds from the
credit facility established by the Company with Heller Financial, Inc.
On March 11, 1999, the Company acquired from Automotive &
Industrial Supply Co., Inc. (A&I) it's auto parts distribution center located in
Shreveport, Louisiana as well as the three stores that it operates in Shreveport
and the store it operates in Marshall, Texas. The total purchase price included
51,613 shares of Rankin Automotive Group, Inc. common stock, $3.4 million of
cash, the assumption of certain liabilities estimated at $1.2 million and
certain other consideration. Automotive & Industrial Supply Co., Inc. had an
estimated $2.8 million of inventory, $0.4 million of property and equipment and
$0.7 million of accounts receivable as of the date of acquisition. The cash
portion of the purchase price was paid using proceeds from the credit facility
established by the Company with Heller Financial, Inc.
The Company has signed a definitive agreement to acquire from
Allied Distributing Company of Houston, Inc. and its subsidiary, Auto Parts
Investment Group, Inc., it's auto parts distribution center and automotive paint
division located in Houston, Texas and its auto parts distribution center in San
Antonio as well as nine stores that it operates throughout Central and South
Texas. The total proposed purchase price would include $2.8 million of cash, the
assumption of certain liabilities estimated at $14.4 million and certain other
consideration. Allied has an estimated $12.3 million of inventory, $0.8 of
property and equipment and $4.0 million of accounts receivable. The cash portion
of the proposed purchase price, subject to availability, will be paid using
proceeds from the credit facility established by the Company with Heller
Financial, Inc. The consummation of the sale is subject to certain conditions
including the approval of Allied's shareholders. It is anticipated that this
approval will be obtained and that this transaction is scheduled for completion
prior to April 1, 1999.
The Company intends to continue using substantially all of
these facilities in its business.
As a result of the completion of the acquisitions of US.
Parts Corporation and Automotive & Industrial Supply, Co., Inc. the Company has
a new slate of officers and board of directors.
a. Officers
Randall B. Rankin Chief Executive Officer
Ali Attayi President and Chief Operating Officer
Terry Bryden Senior Vice President
Otis Al Cannon Senior Vice President
Steven Saterbak Vice President Finance, Treasurer and
Assistant Secretary
Nancy J. Grant Controller, Principal Accounting Officer,
Secretary and Assistant Treasurer
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b. Board of Directors
Randall B. Rankin Chairman of the Board
Ali Attayi
Otis Al Cannon
Ricky L. Sooter
Ricky D. Gunn
Harris Lake Smith, Jr.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
a. Financial Statements of Businesses Acquired.
It is impracticable at this time to provide the required
financial statements for the businesses acquired in the
completed acquisitions described in Item 2 above. The Company
is in the process of preparing the appropriate financial
statements. It is anticipated that such financial statements
will be available within 60 days from the date of this
report, and will be filed as an amendment to this report as
soon as practicable, but no later than 60 days after this
report has been filed.
b. Pro Forma Financial Information
No pro forma financial information with respect to the
completed acquisitions described in Item 2 above is available
at this time. It is anticipated that the required proforma
financial information will be available within 60 days from
the date of this report, and will be filed as an amendment to
this report as soon as practicable, but no later than 60 days
after this report has been filed.
c. Exhibits.
10.(q) Asset Purchase Agreement between US. Parts
Corporation and Rankin Automotive Group, Inc. dated
as of February 26, 1999.
10.(r) Asset Purchase Agreement between Automotive &
Industrial Supply Co., Inc. and Rankin Automotive
Group, Inc. dated as of February 26, 1999.
10.(s) Asset Purchase Agreement between Allied Distributing
Company of Houston, Inc.; Auto Parts Investment
Group, Inc.; and Rankin Automotive Group, Inc. dated
as of February 26, 1999.
10.(t) Copy of Heller Financial Corporation's loan agreement
dated March 10, 1999.
10.(u) Copy of employment contract between Rankin Automotive
Group, Inc. and Mr. Ali Attayi.
10.(v) Copy of Registration Rights and Lock-up Agreement
between Rankin Automotive Group, Inc. and Mr. Ali
Attayi.
10.(w) Copy of employment contract between Rankin Automotive
Group, Inc. and Mr. Otis Al Cannon.
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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, thereto duly authorized.
Rankin Automotive Group, Inc.
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(Registrant)
Dated: March 25, 1999 /s/ Randall B. Rankin
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Randall B. Rankin, Chief Executive Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
-----------
<S> <C>
10.(q) Asset Purchase Agreement between US. Parts Corporation
and Rankin Automotive Group, Inc. dated as of February 26, 1999.
10.(r) Asset Purchase Agreement between Automotive & Industrial Supply
Co., Inc. and Rankin Automotive Group, Inc. dated as of
February 26, 1999.
10.(s) Asset Purchase Agreement between Allied Distributing Company of
Houston, Inc.; Auto Parts Investment Group, Inc.; and Rankin
Automotive Group, Inc. dated as of February 26, 1999.
10.(t) Copy of Heller Financial Corporation's loan agreement dated
March 10, 1999.
10.(u) Copy of employment contract between Rankin Automotive Group, Inc.
and Mr. Ali Attayi.
10.(v) Copy of Registration Rights and Lock-up Agreement between Rankin
Automotive Group, Inc. and Mr. Ali Attayi.
10.(w) Copy of employment contract between Rankin Automotive Group, Inc.
and Mr. Otis Al Cannon.
</TABLE>
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EXHIBIT 10.(q)
ASSET PURCHASE AGREEMENT
BETWEEN
U. S. PARTS CORPORATION, ALI ATTAYI
AND
RANKIN AUTOMOTIVE GROUP, INC.
DATED AS OF FEBRUARY 26, 1999
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TABLE OF CONTENTS
<TABLE>
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PAGE NO.
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ARTICLE I. 1
1.1 Definitions. 1
ARTICLE II - SALE AND PURCHASE OF PURCHASED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES 5
2.1 Purchase and Sale of Purchased Assets. 5
2.2 Assumption of Obligations and Liabilities. 5
2.3 Assigned Contracts. 6
2.4 Purchase Price. 6
2.5 Allocation of Consideration. 7
2.6 Bulk Sales Laws. 7
2.7 Pre-closing Payments. 7
2.8 Post-closing Adjustment. 7
ARTICLE III - CLOSING 7
3.1 Sale on Closing Date. 7
ARTICLE IV. - OBLIGATIONS, REPRESENTATIONS AND WARRANTIES
OF SELLER 8
4.1 Authority of Seller. 8
4.2 No Conflict or Violation. 8
4.3 Consents and Approvals. 8
4.4 Compliance with Law. 8
4.5 Permits. 8
4.6 Ownership of Purchased Assets. 8
4.7 Assigned Contracts 9
4.8 Labor Relations. 9
4.9 Litigation. 9
4.10 Brokers. 9
4.11 Indemnification 9
ARTICLE V. - OBLIGATIONS, REPRESENTATIONS AND WARRANTIES OF
PURCHASER 10
5.1 Authority of Purchaser. 10
5.2 No Conflict or Violation. 11
5.3 Consents and Approvals. 11
5.4 Availability of Funds. 11
5.5 Litigation. 11
5.6 Brokers 11
5.7 Capitalization. 11
5.8 Purchaser Public Information. 12
</TABLE>
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<TABLE>
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ARTICLE VI. - CERTAIN COVENANTS OF SELLER 12
6.1 Conduct of Business Before the Closing Date. 12
6.2 Information and Access. 12
6.3 Further Assurances. 12
6.4 Reasonable Efforts. 13
6.5 Assignment of Contracts. 13
6.6 Cure of Defaults. 13
6.7 Audit of Operations at Business Area. 13
ARTICLE VII. - CERTAIN COVENANTS OF PURCHASER 13
7.1 Conduct of Business Before the Closing Date. 13
7.2 Reasonable Efforts. 13
7.3 Performance under assigned contracts. 14
7.4 Purchaser Financing. 14
7.5 Board Membership. 14
7.6 Information and Access. 14
ARTICLE VIII. - CONDITIONS TO SELLER'S OBLIGATIONS 14
8.1 Representations and Warranties. 14
8.2 Compliance with Agreement. 14
8.3 Availability of Purchaser Financing. 14
8.4 No Adverse Proceeding. 15
8.5 Ancillary Agreements. 15
8.6 Election as Officer and Director. 15
8.7 Rankin Stock Price. 15
8.8 Shareholder Loans. 15
8.9 Release. 15
ARTICLE IX. - CONDITIONS TO PURCHASER'S OBLIGATIONS 15
9.1 Representations and Warranties. 15
9.2 Compliance with Agreement. 15
9.3 No Adverse Proceeding. 16
9.4 Ancillary Agreements. 16
ARTICLE X. - CLOSING 16
10.1 The Closing. 16
10.2 Seller's Deliveries and Obligations at Closing. 16
10.3 Purchaser's Deliveries and Obligations at Closing. 17
10.4 Termination. 18
ARTICLE XI. - EMPLOYEE MATTERS 19
11.1 Employment of Seller's Employees. 19
11.2 Accrued Vacation. 19
11.3 Employment Taxes. 19
ARTICLE XII. - MISCELLANEOUS PROVISIONS 20
12.1 Notices. 20
12.2 Amendments. 21
12.3 Assignment 21
12.4 Announcements. 21
12.5 Expenses 21
</TABLE>
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<TABLE>
<S> <C>
12.6 Entire Agreement. 21
12.7 Descriptive Headings. 21
12.8 Counterparts. 21
12.9 Governing Law; Jurisdiction. 21
12.10 Construction. 21
12.11 Severability. 21
12.12 Confidentiality. 22
12.13 Knowledge. 22
12.13 Schedules. 22
</TABLE>
iii
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SCHEDULE
LETTER/NUMBER SCHEDULE NAME
Schedule A Fixed Assets
Schedule B Inventory
Schedule C Assigned and Other Contracts
Schedule D Accounts Receivable
Schedule E Allocation of Purchase Price and Value of Rankin Shares
Schedule F Liens
Schedule G Financing Agreement
Schedule H Confidentiality
Schedule I Conflicts
Schedule J Litigation
Schedule K Subscriptions & Options
Schedule L Intellectual Property
Schedule M Pre-Closing Payments
Schedule N Consignment Inventory
Schedule O Accrued Vacation
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of February 26, 1999 between U. S. PARTS CORPORATION, a Texas
corporation, (hereinafter referred to as "Seller") and Rankin Automotive Group,
Inc., a Louisiana corporation (hereinafter referred to as "Purchaser").
RECITALS
WHEREAS, Seller is engaged in the business of selling and distributing
automotive replacement parts, accessories and supplies and operates wholesale
outlets primarily in the Houston, Texas market (such metropolitan area being
hereinafter referred to as the "Business Area");
WHEREAS, Purchaser desires to purchase from Seller and Seller desires
to sell to Purchaser, substantially all of the assets associated with the
Seller's operations, subject to certain liabilities, all on the terms and
subject to the conditions set forth herein and in the Ancillary Agreements;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
1.1 DEFINITIONS. Unless otherwise defined herein, the terms defined in
the introductory paragraph and the Recitals to this Agreement shall have the
respective meanings specified therein, and the following terms shall have the
meanings specified below:
"Accounts Receivable" means all accounts receivable
attributable to the conduct of Seller's Business, and all rights to
bill customers for products shipped or services rendered on or prior
to the Closing Date. Schedule D sets forth a description of the
accounts receivable as of the date hereof.
"Ancillary Agreements" means the following agreements or
instruments contemplated by this Agreement: the Registration Rights
and Lock-up Agreement, the Employment Agreement, each of the
Non-competition Covenants, the Voting Agreement, the Stock Option
Agreement, the Assignment and Assumption Agreement, the Bill of Sale
and Assumption Agreement, and the Assignment and Assumption of Leases
Agreement, all of which shall be in such form and substance as may be
reasonably satisfactory to Purchaser and Seller.
"Assigned Contracts" means the Leases and Other Contracts to
be assigned by Seller to Purchaser and set forth on Schedule C.
"Audit" has the meaning set forth in Section 6.7.
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"Bill of Sale and Assumption Agreement" means the Bill of
Sale and Assumption Agreement to be executed at Closing by Purchaser
and Seller in such form and substance as may be reasonably
satisfactory to Purchaser and Seller.
"Business" means the entirety of Seller's business operations
conducted in the Business Area.
"Business Day" means a day, other than a Saturday or a
Sunday, on which commercial banks are not required to be open or are
authorized to close in The City of Houston.
"Business Employees" means employees of the Seller whose
duties relate primarily to the Business.
"Business Area" has the meaning set forth in the Recitals
hereto.
"Committed Financing" means funds available pursuant to a
written commitment letter or other similar documentation from a
commercial bank or other lending institution, which lender, commitment
letter and other documentation are acceptable to Seller, in an amount
that is sufficient to enable Purchaser to consummate the transactions
contemplated hereby.
"Consignment Inventory" means all inventory in the possession
of Seller that has been consigned to Seller by KEM Manufacturing
Company, Inc. ("KEM").
"Excluded Assets" means all of the Seller's right, title and
interest in and to the following:
(a) claims of Seller for refunds of or loss carry forwards
with respect to taxes attributable to any period prior to the Closing
Date;
(b) records and documents subject to confidentiality
provisions, claims of privilege, or other restrictions on access, as
listed on Schedule H;
(c) OMITTED
(d) all documents relating to the organization, maintenance
and existence of the Seller as a corporation, including its corporate
charter, bylaws, taxpayer and other identification numbers;
(e) the three automobiles reflected in Seller's financial
statements that are used by Ali Attayi (1998 GMC Yukon), Jeannie
Attayi (1995 Chevrolet Suburban) and Eric Attayi (1998 GMC Sierra);
and
(f) any rights of Seller under this Agreement or any of the
Ancillary Agreements.
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"Fixed Assets" means, to the extent used in the Business, (i)
all of the machinery, equipment, furniture, fixtures, signs, vehicles
and leasehold improvements of the Business on the Closing Date and
which are owned by Seller, a list of which is set forth on Schedule A,
which list shall be updated on the Closing Date, and (ii) to the
extent assignable, any rights of Seller to the warranties, licenses
and other similar rights with respect thereto.
"GAAP" means United States generally accepted accounting
principles, applied on a consistent basis and consistent with Seller's
historical practices, as in effect from time to time.
"Governmental Agency" means any U.S. federal, state or local
court, executive office, legislature, governmental agency or ministry,
commission, or administrative, regulatory or self-regulatory authority
or instrumentality.
"Income Tax Liability" means an amount, reasonably estimated
by Seller, equal to the aggregate income tax liability of Seller's
shareholders created by and attributable to Seller's Pre-Closing
Income, calculated at a tax rate of 39.6%.
"Intellectual Property" means to the extent used in the
Business the inventions, copyrights, trademarks, trade names, and
applications, any related trademarks or logos and applications,
including any rights to the ownership and use of the names "U. S.
Parts" "Full Service" and any other trade name used by any Subsidiary
of Seller, trade secrets, proprietary know-how and use and application
know-how, product formulae, manufacturing, engineering and other
drawings, technology, technical information, engineering data, design
and engineering specifications, production standards and practices and
promotional literature, goodwill and other intellectual property and
rights, in each case used by the Seller in connection with the
business including without limitation the intellectual property listed
on Schedule L.
"Inventory" means all items held for resale or for return to
the manufacturer that relate to the Business.
"Leased Property" means the various premises subject to the
various Leases.
"Leases" mean the warehouse/store leases for all premises
operated by Seller in the Business Area and the lease for the premises
used for Seller's corporate offices.
"Lien" means any mortgage, pledge, security interest, charge
or other encumbrance.
"Material Adverse Effect" means a material adverse effect on
the financial condition, business or results of operations of a party,
taken as a whole, other than such effects attributable to general
economic conditions or other changes generally affecting companies in
the same business as such party.
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"Non-competition Covenants" means the three-year
non-competition covenants to be executed at Closing by each of Ali
Attayi, Jeannie Attayi, Eric Attayi and Leyla Attayi in such form and
substance as may be reasonably satisfactory to Purchaser and Seller.
"Other Contracts" means the contracts, personal property
leases and other instruments which are listed on the Other Contracts
Schedule included as part of Schedule C and any other contacts,
personal property leases and other instruments entered into by Seller
in the ordinary course of business after the date hereof and that
relate to the Business.
"Permit" means any permit, approval, authorization, license,
variance or permission required by a Governmental Agency under any
applicable law.
"Permitted Liens" means: (i) Liens securing the bank
indebtedness reflected on the audited financial statements of Seller
contemplated by Section 6.7 hereof; (ii) those Liens with respect to
assets of Seller set forth on Schedule F, (iii) Liens for water and
sewer charges, taxes and other governmental charges and levies not yet
due and payable or being contested in good faith; and (iv) other Liens
(including, without limitation, mechanics', couriers', landlords',
workers', repairers', materialmen's, warehousemen's, special
assessments not yet delinquent, recorded easements, covenants and
other restrictions, utility easements, building restrictions,
encroachments, zoning restrictions and other similar Liens) arising in
the ordinary course of business as would not in the aggregate have a
Material Adverse Effect.
"Pre-Closing Income" means Seller's income from the conduct
of its business from January 1, 1998 to the Closing Date, excluding
any gain to be recognized as a result of the consummation of the
transaction contemplated hereby and excluding any amounts constituting
penalties, interest, fines or similar charges.
"Purchase Orders" means all outstanding purchase orders
incurred in the ordinary course of business and in existence on the
Closing Date.
"Purchased Assets" means all of the Seller's right, title and
interest in and to the following assets of the Business as of the
Closing:
(a) all Cash;
(b) all Fixed Assets;
(c) all Assigned Contracts;
(d) all records in any manner relating to the
Purchased Assets, including, but not limited to copies of personnel
files for Business Employees, but excluding any records constituting
Excluded Assets;
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(e) to the extent legally assignable, all Permits
required to conduct business at the Business Area;
(f) customer lists and other information and data
relating to the customers of the Business in the Business Area;
(g) all deposits (including security deposits) and
prepayments made by Seller under any of the Assigned Contracts
(including future discounts and rebates from sales/purchases);
(h) all of the Accounts Receivable;
(i) all of the Inventory;
(j) all vehicles owned by Seller;
(k) Intellectual Property.
"Registration Rights and Lock-up Agreement" means the agreement
providing certain registration rights with respect to, and restrictions on the
transfer of, the Rankin Shares in form and substance reasonably satisfactory to
Purchaser and Seller.
ARTICLE II
SALE AND PURCHASE OF PURCHASED ASSETS
AND ASSUMPTION OF ASSUMED LIABILITIES
2.1 PURCHASE AND SALE OF PURCHASED ASSETS. On the terms and subject to
the conditions set forth in this Agreement, at the Closing Purchaser shall
purchase from Seller and Seller shall sell, transfer, assign, convey and
deliver to Purchaser in the Business Area, all of Seller's right, title and
interest in and to the Purchased Assets.
2.2 ASSUMPTION OF OBLIGATIONS AND LIABILITIES. On the terms and
subject to the conditions set forth in this Agreement, from and after the
Closing, Purchaser will assume and pay, perform, discharge and be responsible
for all of the following liabilities of Seller (collectively, the "Assumed
Liabilities"):
(a) Purchaser shall assume all liabilities included in the
balance sheet as of December 31, 1998, plus liabilities incurred after that
date in the ordinary course of business, as well as all liabilities to KEM with
respect to the Consignment Inventory, liabilities for earned but unused
employee vacation pay and liabilities under the Assigned Contracts and Purchase
Orders and transfer fees, if any, payable as a result of assignment of
Purchaser's agreement with Triad; and
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(b) Purchaser shall assume all liabilities respecting
Seller's existing employee benefit programs and incentive plans or, at
Purchaser's option, shall replace said benefits of plans with benefit and
incentive plans equal or superior to Seller's existing benefit and incentive
plans.
(c) Purchaser shall assume all liabilities for property taxes
of Seller attributable to periods prior to the Closing Date to the extent
accrued for on the Closing Date Financial Statements and all liabilities for
franchise taxes due after the Closing Date.
Except as set forth above or expressly provided elsewhere herein, Purchaser
shall not assume or pay, perform, discharge or be responsible for any income
tax liability of Seller related to this transaction, nor any contingent
liabilities with regard to any claims or lawsuits against Seller, whether
pending at the time of closing or filed after closing but attributable to
pre-closing acts or omissions of Seller, its agents, employees or
representatives. Further, Purchaser does not assume any liability for
investment bank fees of Seller or any of its shareholders related to this
transaction.
2.3 ASSIGNED CONTRACTS. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
lease, contract or agreement or any claim, right, benefit or obligation
thereunder or resulting therefrom if an assignment thereof, without the consent
of a third party thereto, would constitute a breach or violation thereof and
such consent has not been received. If such a consent is required and has not
been received, the Seller will cooperate with the Purchaser in any reasonable
arrangement that: (i) provides for the Purchaser the benefits under any such
leases, contracts or agreements until such time as the required consent is
obtained; and (ii) requires the Purchaser to promptly make any payments due and
perform any obligations under such lease, contract or agreement and
attributable to the period after the Closing Date; provided, however, that the
Seller shall not be required to cooperate in any such arrangement if doing so
would be reasonably likely to result in a materially adverse effect on Seller.
2.4 PURCHASE PRICE.
(A) On the terms and subject to the conditions set forth in
this Agreement, the purchase price payable by Purchaser to Seller for the
Purchased Assets shall be the following (in the aggregate, the "Purchase
Price":
I. At the Closing, Eight (8) million dollars,
payable by delivery of a promissory note of Purchaser, which note
shall bear interest at a rate of 6.5% per annum, and be payable in two
(2) installments of principal (the first installment to be in the
amount of seven million, nine hundred, sixty thousand dollars
($7,960,000.00), payable on the first Business Day following the
closing and the second installment being in the amount of forty
thousand dollars ($40,000.00), payable by January 1, 2000) and which
shall be secured with respect to the first installment by a bank
letter of credit; plus
II. At the Closing, Six hundred thousand (600,000)
shares of common stock of Rankin Automotive, Inc. (The "Rankin
Shares"), with demand and piggyback registration rights and subject to
the restrictions on transfer set forth in the Registration Rights and
Lock-up Agreement, which Rankin Shares shall be delivered free of any
Liens, and the issuance of which shall not give rise to any preemptive
rights.
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2.5 ALLOCATION OF CONSIDERATION. The Purchase Price shall be allocated
among the Purchased Assets based on the book value of such assets and otherwise
in accordance with the principles set forth on Schedule E. Seller and Purchaser
shall each make all required filings under Section 1060 of the Code (as herein
defined) consistent with such allocation and shall not take any position
inconsistent with such allocation in any other of their respective tax returns.
Schedule E also sets forth the parties' mutual agreement as to the value of
Rankin Shares to be delivered in connection herewith.
2.6 BULK SALES LAWS. The parties hereto waive compliance with the
requirements of any applicable bulk sales laws in connection with the
consummation of the transactions contemplated hereby. Seller agrees to
indemnify Purchaser for any losses sustained by Purchaser as a result of the
failure of the parties to so comply with any applicable bulk sales laws.
2.7 PRE-CLOSING PAYMENTS. Notwithstanding anything herein to the
contrary, Seller shall be entitled to draw such amounts under its bank line of
credit as may be necessary to: (i) distribute cash to Seller's shareholders in
respect of their Income Tax Liability; (ii) pay the out-of-pocket expenses of
R. J. Cresci contemplated by Section 4.9 hereof; and (iii) pay the
out-of-pocket expenses of Seller in connection with this transaction other than
the expenses to be paid by Ali Attayi as contemplated by Section 4.9 hereof.
The proceeds of such draws may be used by Seller prior to or promptly following
the Closing for the distributions and payments contemplated by the preceding
sentence. All of the foregoing shall be listed on Schedule M, to be attached
hereto and subject to update at Closing.
2.8 POST-CLOSING ADJUSTMENT. In the event that Seller's actual
Pre-Closing Income for the year 1998 and/or the pre-closing portion of 1999 is
greater or less than the amount estimated by Seller for purposes of calculating
the Income Tax Liability of its Shareholders, Purchaser shall pay to Seller or
Seller shall pay to Purchaser, as the case may be, such amount as may be
necessary to adjust for any underpayment or overpayment of the Income Tax
Liability, calculating such liability at an assumed tax rate of 39.6%. Seller
shall deliver to Purchaser a K-1 and 1120 reflecting Seller's actual
Pre-Closing Income no later than 30 days after the filing of same, and any
payments required under this Section 2.8 shall be made to the party entitled to
such payment within five (5) Business Days thereafter.
ARTICLE III
CLOSING
3.1 SALE ON CLOSING DATE. The sale, transfer, assignment and delivery
by Seller of the Purchased Assets to Purchaser, and the assumption by Purchaser
of the Assumed Liabilities, as herein provided shall be effected on the Closing
Date by: (a) the execution and delivery by Seller and Purchaser of an
Assignment and Assumption Agreement for Assigned Contracts and Purchase Orders
in form and substance reasonably satisfactory to Purchaser and Seller, pursuant
to which Assignment and Assumption Agreements Purchaser shall be subject to all
liabilities and obligations under the Assigned Contracts which relate to
periods, events or circumstances after the Closing Date,
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and (b) with respect to the other Purchased Assets and Assumed Liabilities, by
the execution and delivery by the Seller and Purchaser of the Bill of Sale and
Assumption Agreement in form and substance reasonably satisfactory to Purchaser
and Seller.
ARTICLE IV
OBLIGATIONS, REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 AUTHORITY OF SELLER. Seller is a corporation validly existing and
in good standing under the laws of the State of Texas, Seller has full
corporate power and authority to execute and deliver this Agreement and each of
the Ancillary Agreements to which Seller is a party, and the execution and
delivery by Seller of this Agreement and such Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of Seller,
and this Agreement constitutes, and each of the Ancillary Agreements to which
Seller is a party upon its execution will constitute, the legal, valid and
binding obligation of Seller enforceable in accordance with its terms. Seller
has full corporate power and authority to own its properties and to carry on
the Business in the Business Area presently being conducted by it.
4.2 NO CONFLICT OR VIOLATION. Except as set forth on Schedule I, the
execution, delivery and performance by Seller of this Agreement and the
Ancillary Agreements to which Seller is a party do not and will not violate or
conflict with any provision of the Articles of Incorporation or By-laws of
Seller and do not and will not violate or result in a material breach of or
constitute (with due notice or lapse of time or both) a material default under
any Assigned Contract, except for any violations, breaches or defaults that do
not result in a Material Adverse Effect.
4.3 CONSENTS AND APPROVALS. Seller will use commercially reasonable
efforts to secure the assignment of the Assigned Contracts to Purchaser.
4.4 COMPLIANCE WITH LAW. Seller warrants that Seller has not received
written notice of any violation of any law, regulation, order or other legal
requirement, and, to the best of Seller's knowledge, is not in default under
any order, writ, judgment, award, injunction or decree of any Governmental
Agency applicable to the Purchased Assets, except for any such violations or
defaults that are not reasonably likely to have a Material Adverse Effect.
4.5 PERMITS. All permits material to the operation of Seller's
business in the Business Locations have been provided or made available for
inspection to Purchaser by Seller, and, to the extent transferable under the
law, will be transferred at Closing.
4.6 OWNERSHIP OF PURCHASED ASSETS. Other than the Consignment
Inventory, a listing of which is set forth on Schedule M, real property subject
to the Leases and any items of property subject to the Other Contracts, Seller
is the owner of the Purchased Assets. At the Closing, Buyer will receive good
title to all such Purchased Assets, free and clear of any Liens save and except
Permitted Liens and those specifically listed on Schedule F, provided however,
that Seller makes no representation or warranty as to the existence or absence
of any Lien: (i) on the real property subject to the Lease; (ii) on any items
of property subject to the Other Contracts.
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4.7 ASSIGNED CONTRACTS. True and complete copies of the Assigned
Contracts listed on Schedule C have been provided or will be made available by
Seller to Purchaser. Neither Seller nor, to the best of Seller's knowledge, any
other party under any of the Assigned Contracts, has commenced any action
against the other or given or received any written notice of any material
default or violation under any Assigned Contract which was not withdrawn or
dismissed. To the best of Seller's knowledge, the Leases and each of the other
Assigned Contracts listed on Schedule C is or will be at the Closing valid,
binding and in full force and effect as against Seller.
4.8 LABOR RELATIONS. Seller is not party to any collective bargaining
agreement covering Business Employees. To the best of Seller's knowledge, no
organizational effort is presently being made or threatened in writing by or on
behalf of any labor union with respect to Business Employees.
4.9 LITIGATION. Seller warrants that there are no actions, causes of
action, claims, suits or proceedings pending or, to Seller's knowledge,
threatened against Seller which seek to restrain or enjoin the consummation of
the transactions contemplated hereby. Further, Seller warrants that, to the
best of its knowledge, it is not presently a party to any litigation in State
of Federal court, and further, that no party has indicated its intention to
file suit against Seller.
4.10 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Seller without the
intervention of any other Person acting on Seller's behalf in such manner as to
give rise to any valid claim by any such Person against Purchaser for a
finder's fee, brokerage commission or other similar payment based on an
arrangement with Seller, other than investment banking firm fees. Prior to
closing, Seller specifically agrees herein to pay any and all out-of-pocket
expenses of R. J. Cresci, not to exceed fifty thousand dollars ($50,000.00).
All other investment banking firm fees of any firm acting on Seller's or its
shareholders' behalf, including those of the GulfStar Group, will be paid by
Ali Attayi, individually.
4.11 INDEMNIFICATION - (a) Seller agrees to indemnify and hold
Purchaser harmless for any claims, suits, actions or other proceedings
attributable to the conduct of the Business prior to the Closing, whether said
claims, suits, actions or other proceedings are made or filed prior to or
subsequent to Closing. Said indemnification includes, but is not limited to any
amounts recovered by claimant(s), as well as all expenses, including attorney's
fees, incurred by Purchaser in defending said claims, suits, actions or other
proceedings. Notwithstanding the provisions of this Section 4.11(a), (i) the
Seller shall not be liable under this Section 4.11 unless and until (x) the
aggregate amount of losses incurred by Purchaser with respect to claims
asserted prior to the first anniversary of the Closing Date exceeds fifty
thousand dollars ($50,000.00), at which time the Seller shall be liable for all
such losses of the Purchaser with respect to such claims in excess of such
fifty thousand dollars ($50,000.00) and (y) the aggregate amount of losses
incurred by Purchaser with respect to claims asserted on or after the first
anniversary of the Closing Date exceeds two hundred fifty thousand dollars
($250,000.00) at which time the Seller shall be liable for all such losses of
the Purchaser with respect to such claims in excess of such two hundred fifty
thousand dollars ($250,000.00), (ii) the aggregate liability of the Seller
under this Section 4.11(a) shall be limited to four million dollars
($4,000,000.00) with respect to claims asserted prior to the first anniversary
of the Closing Date and two million dollars ($2,000,000.00) with respect to
claims asserted thereafter and (iii) all losses shall be calculated net of any
accruals with respect thereto on the financial
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statements of Seller for the year ended December 31, 1998. The representations
and agreements of Seller in this Agreement (including Seller's indemnification
obligation under this Section 4.11(a) shall survive for a period of three years
from the Closing Date, at which time they shall expire.
(b) In the case of any claim asserted by a third party against
Purchaser, notice shall be given by Purchaser to Seller promptly after
Purchaser has knowledge of any claim as to which indemnity may be sought, and
Purchaser shall permit Seller, at Seller's expense, to assume the defense of
any claim or any litigation resulting therefrom, provided that (i) the counsel
for Seller who shall conduct the defense of any such claim or litigation shall
be reasonably satisfactory to Purchaser and (ii) Purchaser may participate in
(but not control) such defense at Purchaser's expense. Except with the prior
written consent of Purchaser, which consent shall not be unreasonably withheld,
Seller shall not, in the defense of any such claim or litigation, consent to
entry of any judgment or enter into any settlement that provides for injunctive
or other non-monetary relief affecting Purchaser. Seller and Purchaser shall
cooperate in the defense of any claim or litigation subject to this Section
4.11 and the records of each shall be available to the other with respect to
such defense.
(c) At the Closing, Seller shall pledge the Rankin Shares to Purchaser
to secure the obligations of Seller under clause (a) of this Section 4.11. Upon
either the mutual agreement of Seller and Purchaser or the final, non-appealable
determination by a court of competent jurisdiction as to the amount of any
indemnity payable to Purchaser hereunder, Purchaser shall be entitled to retain
such number of the Rankin Shares, valued at Fair Market Value, as represent the
amount of indemnity owed to Purchaser; provided, however, that Seller may elect
to pay any indemnity in cash rather than permit the applicable number of Rankin
Shares to be retained by Purchaser. For purposes hereof, the Fair Market Value
of the Rankin Shares shall be equal to (i) the average closing sales price of
Purchaser's common stock on the Nasdaq National Market System for the ten (10)
trading days ending on the date the indemnity amount payable is determined or
(ii) if Purchaser's common stock is not then traded on the Nasdaq National
Market System, such amount as shall be determined by an independent appraiser
agreed upon by the parties.
ARTICLE V
OBLIGATIONS, REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 AUTHORITY OF PURCHASER. Purchaser is a Louisiana corporation,
validly existing, and in good standing under the laws of such jurisdiction and
is duly qualified to do business in the State of Texas. Purchaser has full
corporate power and authority to execute and deliver this Agreement and each of
the Ancillary Agreements, and the execution and delivery by Purchaser of this
Agreement and each of the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Purchaser, and this
Agreement and each of the Ancillary Agreements upon their execution will
constitute the legal, valid and binding
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obligation of Purchaser enforceable in accordance with its terms. Purchaser has
full corporate power and authority to own its properties and to carry on the
business presently being conducted by it.
5.2 NO CONFLICT OR VIOLATION. The execution, delivery and performance
by Purchaser of this Agreement and the Ancillary Agreements do not and will not
violate or conflict with any provision of the Certificate of Incorporation or
By-laws of Purchaser and do not and will not violate any provision of law, or
any order, judgment or decree of any court or other Governmental Agency
applicable to Purchaser, or violate or result in a material breach of or
constitute (with due notice or lapse of time or both) a default under any loan
agreement, mortgage, security agreement, indenture or other instrument to which
Purchaser is a party or by which it is bound, except for any violations,
breaches or defaults that do not result in a Material Adverse Effect.
5.3 CONSENTS AND APPROVALS. The execution, delivery and performance by
Purchaser of this Agreement do not require the consent or approval of, or
filing with, any Governmental Agency or other entity or person except: (i) as
may be required to effect the transfer of any Permits; or (ii) such consents,
approvals and filings, the failure to obtain or make which would not,
individually or in the aggregate, have a material adverse effect on its ability
to consummate the transactions contemplated hereby.
5.4 AVAILABILITY OF FUNDS. Purchaser has obtained Committed Financing
as described on Schedule G hereto, sufficient to allow it to pay the Purchase
Price at the times and in the manner set forth in this Agreement and to satisfy
all its other obligations under this Agreement, and on the date of this
Agreement Purchaser has provided Seller with all documentation relating to such
Committed Financing.
5.5 LITIGATION. There are no actions, causes of action, claims, suits,
proceedings, orders, writs, injunctions, or decrees pending or, to the
knowledge of Purchaser, threatened against Purchaser at law or in equity or
before or by any governmental agency, which seek to restrain or enjoin the
consummation of the transactions contemplated hereby or that could otherwise
adversely affect the ability of Purchaser to perform its obligations hereunder.
Except as set forth on Schedule J, Purchaser warrants that, to the best of its
knowledge, it is not presently a party to any litigation in any state or
federal court, and further, that no party has indicated its intention to file
suit against Purchaser. To the best of Purchaser's knowledge, the litigation
described on Schedule J is not reasonably likely to have a Material Adverse
Effect. Purchaser has furnished a copy of Purchaser's insurance policy that
provides coverage for the litigation described on Schedule J, and the coverage
provided by such policy is adequate in scope and amount to cover any judgment
against Seller or amount payable in settlement by Seller in connection with
such litigation.
5.6 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Purchaser without the
intervention of any other person acting on its behalf in such manner as to give
rise to any valid claim by any such person against the Seller or their
Affiliates for a finder's fee, brokerage commission or other similar payment
based on an arrangement with Purchaser.
5.7 CAPITALIZATION. The total authorized capital stock of Purchaser
consists of 10,000,000 shares of common stock, par value $.01 per share, of
which 4,550,000 shares are issued and outstanding on the date hereof and
2,000,000 shares of preferred stock, no par value, none of which are issued and
outstanding on the date hereof. All of the outstanding shares of capital stock
of Purchaser have been, and the Rankin Shares will be, duly authorized and
validly issued, fully paid and non-assessable, and not issued in violation of
the terms of any agreement binding upon Purchaser. No holder of any of the
capital stock of Purchaser has any preemptive or rescission rights
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with respect to such capital stock under any agreement, the applicable charter
documents of Purchaser, or under any applicable federal or state laws, rules or
regulations. Except as set forth in Purchaser's most recent Form 10-K and 10-Q
filings under the Securities Exchange Act of 1934, as amended, and those listed
on Schedule K, there are no outstanding subscriptions, options, warrants,
convertible securities, calls, commitments, agreements or rights (contingent or
otherwise) to purchase or otherwise acquire from Purchaser any shares of , or
any securities convertible into, the capital stock of Purchaser.
5.8 PURCHASER PUBLIC INFORMATION. Purchaser has heretofore made
available to Seller a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by it with the
Securities and Exchange Commission ("SEC") (as any such documents have since
the time of their original filing been amended, the "Purchaser Documents")
since January 1, 1996, which are all the documents (other than preliminary
material) that it was required to file with the SEC since such date. As of
their respective dates, the Purchaser documents did not contain any untrue
statements of material facts or omit to state material facts required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements in the Purchaser Documents present fairly the financial position and
result of operations of Purchaser for the periods indicated subject, in the
case of unaudited statements, to the effect of year-end adjustment. Except as
set forth in the Purchaser Documents, Purchaser has not suffered, incurred or
experienced any fact, circumstance or condition that has, or is reasonably
likely to have a Material Adverse Effect.
ARTICLE VI
CERTAIN COVENANTS OF SELLER
6.1 CONDUCT OF BUSINESS BEFORE THE CLOSING DATE. Seller shall not make
any material change in the Fixed Assets or enter into any material transaction
respecting the Purchased Assets, other than (a) sales of Inventory in the
ordinary course of the Business, or (b) other transactions in the ordinary
course of the Business, in either case substantially consistent with Seller's
past practices or as otherwise contemplated by this Agreement, including
maintenance and preservation, in a manner consistent with Seller's past
practices, of the property, business and goodwill of customers, suppliers and
vendors.
6.2 INFORMATION AND ACCESS. Seller will permit representatives of
Purchaser to have reasonable access during normal business hours after
reasonable notice from Purchaser to Seller, and in a manner so as not to
interfere with the normal operations, to all premises, properties, personnel,
books, records, contracts and documents of or pertaining to the Purchased
Assets and will use its commercially reasonable best efforts to provide such
access to the accountants for the Business. Purchaser and each of its
representatives will treat and hold such information as confidential. Purchaser
shall indemnify, defend and hold harmless Seller, the lessors under the Leases
and their respective Affiliates from and against any and all claims, demands,
causes of action, losses, damages, liabilities, cost and expenses (including,
without limitation, attorneys' fees and disbursements), suffered or incurred by
such Persons in connection with Purchaser's and/or Purchaser's representatives'
entry upon the Leased Property and/or conduct of the investigation contemplated
by this Section 6.2. The parties hereto agree and acknowledge that the
Purchaser's obligations hereunder shall not be subject to any "due diligence"
condition.
6.3 FURTHER ASSURANCES. Upon the request of Purchaser at any time
after the Closing Date, to the extent that Seller is able to comply with the
requirements of this section without
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unreasonable effort or significant expense, Seller shall forthwith execute and
deliver such documents as Purchaser or its counsel may reasonably request to
effectuate the purposes and intent of this Agreement.
6.4 REASONABLE EFFORTS. Upon the terms and subject to the conditions
of this Agreement, Seller will use commercially reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary or proper consistent with applicable law to consummate and make
effective in the most expeditious manner practicable the transactions
contemplated hereby.
6.5 ASSIGNMENT OF CONTRACTS. Seller shall use commercially reasonable
efforts to secure assignment of the Assigned Contracts to Purchaser.
6.6 CURE OF DEFAULTS. Seller shall (i) cure any default in base rental
payments (other than defaults that Seller is contesting in good faith) arising
under the Leases and known by Seller to be outstanding as of the Closing Date;
and (ii) use commercially reasonable efforts to cure any and all other defaults
known by Seller to be outstanding as of the Closing Date with respect to the
Assigned Contracts.
6.7 AUDIT OF OPERATIONS AT BUSINESS AREA. By the time of signing of
this agreement, Seller will have supplied Purchaser with consolidated financial
statements of Seller as of December 31, 1996, that have been reviewed but not
audited by KPMG Peat Marwick or Nagesh & Carter, audited consolidated financial
statements of Seller as of December 31, 1997, with an unqualified "clean"
opinion thereon for the year ended December 31, 1997, from KPMG Peat Marwick,
and/or Nagesh & Carter (the "Audited Statements"), and unaudited monthly
financial statements of Seller for each month after January 1, 1998, until
closing (collectively, the "Pre-Closing Financial Statements"). Such audited
annual and unaudited monthly financial statements shall fairly present the
financial position and results of operations of Seller for the periods
indicated subject, in the case of the unaudited statements, to the effect of
year-end adjustments. Seller will use its commercially reasonable best efforts
to cause its employees and Ali Attayi to cooperate, assist and make available
financial information within their possession needed by auditors to complete
audited consolidated financial statements for the years ended December 31, 1996
and December 31, 1998 with an unqualified "clean" opinion. The Pre-Closing
Financial Statements must demonstrate no material adverse change in the
business mix, operations, results of operation or financial condition of Seller
as was reflected in the audited financial statements of Seller for the fiscal
year ending December 31, 1997.
ARTICLE VII
CERTAIN COVENANTS OF PURCHASER
7.1 CONDUCT OF BUSINESS BEFORE THE CLOSING DATE. Purchaser shall not
make any material change in the operation of its business, save and except
acquisitions presently contemplated, and other than (a) sales of Inventory in
the ordinary course of business, or (b) other transactions in the ordinary
course of business, in either case substantially consistent with Purchaser's
past practices or as otherwise contemplated by this Agreement, including
maintenance and preservation, in a manner consistent with Purchaser's past
practices of the property, business and goodwill of customers, suppliers and
vendors.
7.2 REASONABLE EFFORTS. Upon the terms and subject to the conditions
of this Agreement, Purchaser will use commercially reasonable efforts to take,
or cause to be taken, all action, and to do, or cause to be done, all things
necessary or proper consistent with applicable law to consummate and make
effective in the most expeditious manner practicable the transactions
contemplated hereby.
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7.3 PERFORMANCE UNDER ASSIGNED CONTRACTS. Purchaser agrees that from
and after the Closing Date it shall (i) assume all obligations and liabilities
under the Assigned Contracts which relate to periods, events or circumstances
after the Closing Date, (ii) take all actions necessary to satisfy its
obligations under the terms and conditions of each of the Assigned Contracts
and (iii) indemnify and hold harmless Seller for any damages arising out of a
breach of this covenant.
7.4 PURCHASER FINANCING. Purchaser shall, from the date of this
Agreement until and including the Closing Date, maintain the availability of
funds pursuant to the Committed Financing set forth on Schedule G, and, in the
event that such financing becomes unavailable, shall (i) obtain alternative
Committed Financing and (ii) in the event that Purchaser is unable to obtain
such alternative Committed Financing, accept such alternative financing as may
be arranged by Seller, provided that such Seller arranged financing is on terms
no less favorable to Purchaser than the Committed Financing set forth on
Schedule G (it being understood that Seller shall be under no obligation to
obtain alternative financing for Purchaser).
7.5 BOARD MEMBERSHIP. Purchaser shall use its commercially reasonable
best efforts (i) to cause its Board of Directors to amend Purchaser's Bylaws to
increase the number of members of the Board of Directors by one member and
cause Ali Attayi to be elected, effective as of the Closing Date, to fill the
vacancy created by such expansion of the Board and (ii) to cause Randall B.
Rankin to execute a Voting Agreement, in form and substance reasonably
satisfactory to Purchaser and Seller, with respect to the restructure of the
Board of Directors to provide for four independent directors and three employee
directors.
7.6 INFORMATION AND ACCESS. For a period of five (5) years after the
Closing Date, Purchaser shall retain, and Seller and its representatives and
successors shall have reasonable access (including the right to make copies),
during normal business hours, to all of the books and records purchased by
Purchaser hereunder as part of the Purchased Assets, to the extent that such
access may reasonably be required by Seller, its representatives and successors
in connection with matters relating to or affected by the operation of the
Purchased Assets or the Business prior to the Closing. After such five (5) year
period, all such records may be destroyed, except those books or records which
Seller specifically requests be retained by Purchaser, provided, however, that
cost of storing (or delivering to Seller) such retained books or records shall
be borne by Seller.
ARTICLE VIII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions contemplated
hereby are subject to the fulfillment on or prior to the Closing Date of each
of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Purchaser contained in this Agreement shall be true on and as of the Closing
Date in all material respects as though such representations and warranties
were made on and as of the Closing Date.
8.2 COMPLIANCE WITH AGREEMENT. Purchaser shall have performed and
complied in all material respects (and in all respects in the case of Article
II hereof) with all covenants and conditions to be performed or complied with
by it on or prior to the Closing Date.
8.3 AVAILABILITY OF PURCHASER FINANCING. The Committed Financing set
forth on Schedule G or alternate financing sufficient to consummate the
transactions contemplated hereby shall be available to Purchaser on the Closing
Date.
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8.4 NO ADVERSE PROCEEDING. As of the Closing Date, there shall not
have been instituted or be pending or threatened any suit, action or other
proceeding by any Governmental Agency or any other Person in which it is sought
to restrain or prohibit the transactions contemplated by this Agreement.
8.5 ANCILLARY AGREEMENTS. Purchaser and Randall B. Rankin shall have
executed and delivered to Seller each of the Ancillary Agreements to which it
or he is a party.
8.6 ELECTION AS OFFICER AND DIRECTOR. Ali Attayi shall have been duly
elected as a member of the Board of Directors and as President of Purchaser
effective as of the Closing Date.
8.7 RANKIN STOCK PRICE. The average closing sales price for the common
stock of Purchaser, as reported on the Nasdaq National Market System, for the
ten (10) trading days ending on the day preceding the Closing Date, shall not
be less than $2.00.
8.8 SHAREHOLDER LOANS. The loans to Seller from its shareholders shall
have been repaid in full.
8.9 RELEASE. Ali Attayi shall have been released (and shall have been
furnished with appropriate documentation evidencing such release) from any
personal liability on or guarantees of any of the Leases or other Assigned
Contracts. In the event that one or more of such releases cannot be obtained,
Purchaser may offer, and Ali Attayi, in his sole discretion may accept, an
indemnification agreement with respect to any liability related to such
guarantees or other personal liability.
ARTICLE IX
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to consummate the transactions
contemplated hereby are subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller contained in this Agreement shall be true on and as of the Closing
Date in all material respects as though such representations and warranties
were made on and as of the Closing Date.
9.2 COMPLIANCE WITH AGREEMENT. Seller shall have performed and
complied in all material respects with all covenants and conditions to be
performed or complied with by it on or prior to the Closing Date.
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9.3 NO ADVERSE PROCEEDING. As of the Closing Date, there shall not
have been instituted or be pending or threatened any suit, action or other
proceeding by any Governmental Agency or any other Person in which it is sought
to restrain or prohibit the transactions contemplated by this Agreement.
9.4 ANCILLARY AGREEMENTS. Seller and Ali Attayi shall have executed
and delivered to Purchaser each of the Ancillary Agreements to which Seller or
Mr. Attayi is a party. Each of the Non-Competition covenants shall have been
executed and delivered to Purchaser.
ARTICLE X
CLOSING
10.1 THE CLOSING. The Closing of the purchase and sale of the
Purchased Assets (the "Closing") shall be held no later than March 15, 1999
(the "Closing Date"). The Closing shall be held in Houston, Texas. At the
Closing, all of the transactions provided for in Article II hereof shall be
consummated on a substantially concurrent basis.
10.2 SELLER'S DELIVERIES AND OBLIGATIONS AT CLOSING. At the Closing,
Seller shall deliver (or cause to be delivered) to Purchaser the following (in
form and substance reasonably satisfactory to counsel for Purchaser):
I. a duly executed Assignment and Assumption
Agreement assigning to Purchaser the rights, title, interest, and
obligations in, under, and to each of the Other Contracts being
assigned to Purchaser;
II. a duly executed Bill of Sale and Assumption
Agreement and such other documents or instruments of transfer necessary
to vest in Purchaser full and complete title to the Purchased Inventory
and Fixed Assets, free and clear of all liens, pledges, security
interests, and encumbrances other than those listed on Schedule F, on
the Closing Date;
III. OMITTED;
IV. The Registration Rights and Lock-Up Agreement
duly executed by Seller;
V. The Employment Agreement and the Stock Option
Agreement (which shall provide for the grant to Ali Attayi of an option
to purchase 300,000 shares of Purchaser's common stock) duly executed
by Ali Attayi;
VI. The Non-Competition Covenants duly executed by
each of Jeannie Attayi, Eric Attayi and Leyla Attayi;
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VII. certified resolutions of the directors of Seller
approving and authorizing the transactions contemplated by this
Agreement;
VIII. a certificate, executed by a duly authorized
officer of Seller, to the effect that all conditions to closing set
forth in Section 8.1 and Section 8.2 have been satisfied; and
IX. such other instruments, documents, and
considerations which may be reasonably required by Purchaser or
Purchaser's counsel to effectuate the transaction contemplated by this
Agreement.
10.3 PURCHASER'S DELIVERIES AND OBLIGATIONS AT CLOSING. At the
Closing, Purchaser shall deliver (or cause to be delivered) to Seller the
following (in form and substance reasonably satisfactory to counsel for
Seller):
I. payment of the Purchase Price and other amounts in
accordance with the terms and conditions set forth in Section 2.3 and
other applicable provisions of this Agreement;
II. a duly executed certificate registered in the
name of Seller, evidencing the Rankin Shares in a form reasonably
satisfactory to Seller's counsel;
III. a duly executed Assignment and Assumption of
Leases, accepting the assignment of the rights, title, interest, and
assuming the obligations in , under and to each of the Other contracts
being assigned to Purchaser;
IV. OMITTED;
V. the Registration Rights and Lock-Up Agreement duly
executed by Purchaser;
VI. the Employment Agreement and Stock Option
Agreement duly executed by Purchaser;
VII. the Voting Agreement duly executed by Randall B.
Rankin;
VIII. certified resolutions of the directors of
Purchaser approving and authorizing the transactions contemplated by
this Agreement;
IX. a certificate, executed by a duly authorized
officer of Purchaser, to the effect that all the conditions to Closing
set forth in Section 9.1 and 9.2 have been satisfied;
X. such other instruments, documents, and
considerations which may be reasonably required by Buyer or Buyer's
counsel to effectuate the transaction contemplated by this Agreement.
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10.4 TERMINATION. Anything in this Agreement to the contrary
notwithstanding, this Agreement and the transactions contemplated hereby may be
terminated in any of the following ways at any time before the Closing and in
no other manner:
I. by mutual written consent of Purchaser and Seller;
II. by either Purchaser or Seller if the Closing
shall not have occurred by March 15, 1999;
III. by Seller if Purchaser is in breach in any
material respect of any of its representations made in this Agreement,
or is in violation or default of any of its covenants or agreements in
this Agreement if the breach or default is not cured within five (5)
days after written notice by Seller; or
IV. by Purchaser, if Seller is in breach in any
material respect of any of its representations made in this Agreement
or is in violation or default of any of its covenants or agreements in
this Agreement which breach or default is not cured within five (5)
days after written notice by Purchaser.
Any termination of this Agreement under clause (I)
or (II) of this Section 10.4 shall be without any further liability or
obligation on the part of either Seller or Purchaser. Any termination
of this Agreement under clauses (III) or (IV) of this Section 10.4
shall be without prejudice to any rights or causes of actions the
terminating party may have against the other party.
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ARTICLE XI
EMPLOYEE MATTERS
11.1 EMPLOYMENT OF SELLER'S EMPLOYEES.
(a) Effective as of the Closing Date, Purchaser shall offer employment
to all employees of Seller at wage or salary levels, as applicable, no less
than the wage or salary levels of each such person in effect at the Closing
Date. Those employees who accept such offers of employment effective as of the
Closing Date shall be referred to herein as the "Transferred Employees".
Purchaser acknowledges and agrees that solely for purposes of the Worker
Adjustment and Retraining Notification Act (the "WARN Act"), any person who is
an employee of Seller (other than other part-time employees as defined under
the WARN Act) as of the Closing Date shall be deemed an employee of Purchaser
for purposes of the WARN Act on the Closing Date. With respect to such "deemed"
employees, Purchaser further agrees and acknowledges that Purchaser will be
responsible for all applicable notices and liabilities under the WARN Act or
any of Seller's employee benefit plans or arrangements resulting from the
termination of any such employees on and after the Closing Date. In addition,
effective as of Closing Date, Purchaser shall adopt, and agree to pay and
perform all obligations under the employee benefit plans and arrangements of
Seller in effect as of the Closing Date; provided, however, that Purchaser may
substitute for such employee benefit plans and arrangements any employee
benefit plans or arrangements of Purchaser equal or superior to those of
Seller. Purchaser agrees to recognize the Transferred Employees service with
Seller for purposes of eligibility to participate and vesting of benefits in
any employee benefit plans or arrangements of Purchaser.
11.2 ACCRUED VACATION. As of the Closing Date, Purchaser shall assume
all of Seller's obligations with respect to accrued but unpaid vacation for
Seller's employees. Schedule O sets forth the accrued but unpaid vacation for
Seller's employees as of March 1, 1999.
11.3 EMPLOYMENT TAXES.
(a) Seller and Purchaser each will (i) treat Purchaser as a "successor
employer" and Seller as a "predecessor," within the meaning of Sections
3121(a)(1) and 3306(b)(1) of the Internal Revenue Code of 1986, as amended
("Code") with respect to Transferred Employees who are employed by the
Purchaser for purposes of taxes imposed under the United States Federal
Unemployment Act ("FUTA") or the United States Federal Insurance Contributions
Act ("FICA") and (ii) cooperate with each other to avoid, to the extent
possible, the filing of more than one IRS Form W-2 with respect to each such
Transferred Employee for the calendar year within which the Closing Date
occurs.
(b) At the request of Purchaser with respect to any particular
applicable tax law relating to employment, unemployment insurance, Social
Security, disability, workers' compensation, payroll, health care or other
similar tax other than taxes imposed under FICA and FUTA, Seller and Purchaser
will each (i) treat Purchaser as a successor employer and Seller as a
predecessor employer, within the meaning of the relevant provisions of such tax
law, with respect to Transferred Employees who are employed by Purchaser, to
the extent permitted by applicable state and local laws and (ii)
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cooperate with each other to avoid, to the extent possible, the filing of more
than one individual information reporting form pursuant to each such tax law
with respect to each such Transferred Employee for the calendar year within
which the Closing Date occurs.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given (a) when delivered personally to
the recipient, (b) one (1) Business Day after the date when sent to the
recipient by reputable express courier service (charges prepaid) or (d) seven
(7) Business Days after the date when mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications will be sent to the Seller and to Purchaser at
the addresses indicated below:
If to Purchaser: Rankin Automotive Group, Inc.
3709 S. MacArthur Drive
Alexandria, LA 71302
Attention: Randall B. Rankin
Facsimile No. 318-443-9952
With a copy Michael Glass, Esq.
(which shall not 1735 White Street
constitute notice) to: Alexandria, Louisiana 71301
Facsimile No. 318-473-4062
With a copy Ricky L. Sooter, Esq.
(which shall not Daniels & Sooter, L.L.C.
constitute notice) to: 3600 Jackson Street, Suite 106
Alexandria, LA 71303
Facsimile No. 318-448-8528
If to Seller: U. S. Parts Corporation
7223 Wynnwood Lane
Houston, Texas 77008
Attention: Ali Attayi
Facsimile No. 713-867-0554
With a copy Diana M. Hudson, Esq.
(which shall not Mayor, Day, Caldwell & Keeton, LLP
constitute notice) to: 700 Louisiana, Suite 1900
Houston, TX 77002
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or to such other address as any party hereto may, from time to time, designate
in writing delivered pursuant to the terms of this Section.
12.2 AMENDMENTS. The terms, provisions and conditions of this Agreement
may not be changed, modified or amended in any manner except by an instrument
in writing duly executed by each of the parties hereto.
12.3 ASSIGNMENT. This Agreement is binding upon and inures to the
benefit of the successors and assigns of each party to this Agreement, but no
rights, obligations or liabilities under this Agreement may be assigned by any
party without the prior written consent of the other parties hereto.
12.4 ANNOUNCEMENTS. All press releases, notices to customers and
suppliers and other announcements prior to the Closing Date with respect to
this Agreement and the transactions contemplated by this Agreement shall be
approved by both Purchaser and Seller prior to the issuance thereof; provided
that any party may make any public disclosure it believes in good faith is
required by law or regulation (in which case the disclosing party shall advise
the other party (which shall be Seller in the case of disclosure proposed to be
made by Purchaser and Purchaser in the case of disclosure proposed to be made
by Seller) prior to making such disclosure and provide such other party an
opportunity to review the proposed disclosure).
12.5 EXPENSES. Except as otherwise set forth in this Agreement, each
party to this Agreement shall bear all of its legal, accounting, investment
banking and other expenses incurred by it or on its behalf in connection with
the transactions contemplated by this Agreement, whether or not such
transactions are consummated.
12.6 ENTIRE AGREEMENT. Other than the obligations set forth in the
Confidentiality Agreements entered in contemplation of this Agreement, this
Agreement and the Ancillary Agreements constitute the entire agreement between
the parties hereto with respect to the subject matter hereof and supersede and
are in full substitution for any and all prior agreements and understandings
between them relating to such subject matter. The Schedules to this Agreement
are hereby incorporated and made a part hereof and are an integral part of this
Agreement.
12.7 DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
12.8 COUNTERPARTS. For the convenience of the parties, any number of
counterparts of this Agreement may be executed by any one or more parties
hereto, and each such executed counterpart shall be, and shall be deemed to be,
an original, but all of which shall constitute, and shall be deemed to
constitute, in the aggregate but one and the same instrument.
12.9 GOVERNING LAW; JURISDICTION. This Agreement shall be construed,
performed and enforced in accordance with, and governed by, the laws of the
State of Texas, without giving effect to the conflict of laws principles
thereof.
12.10 CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will
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be applied against any party. Any references to any federal, state, local or
foreign statute or law will also refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. Unless the context otherwise
requires: (a) a term has the meaning assigned to it by this Agreement; (b) an
accounting term not otherwise defined has the meaning assigned to by GAAP; (c)
the word "or" is not exclusive; (d) the words "include", "includes" and
"including" shall be deemed to be followed by the words "without limitation";
(e) words in the singular include the plural and in the plural include the
singular; (f) provisions apply to successive events and transactions; and (g)
"$" means the currency of the United States of America.
12.11 SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument. Furthermore, in lieu of any such
invalid or unenforceable term or provision, the parties hereto intend that
there shall be added as a part of this Agreement a provision as similar in
terms to such invalid or unenforceable provision as may be possible and be
valid and enforceable.
12.12 CONFIDENTIALITY. Seller and Purchaser agree to keep, and to cause
each of their affiliates, directors, officers, and employees to keep,
confidential any and all confidential information of the other party that
either receives in the course of performing its obligations hereunder (except
that such information may be shared, on a confidential basis, with the party's
attorneys and auditors) and will not, without the other party's written
consent, use any of such confidential information except as reasonably
necessary to perform its duties under this or another of its agreements with
the other party. Upon termination of this Agreement, each party will return,
and will cause its affiliates to return, to the other party, all original
documents and copies of the confidential information which are in its
possession.
12.13 KNOWLEDGE. Reference to the "knowledge" of a party to this
Agreement or to matters "known" by a party to this Agreement shall mean or
refer to the actual knowledge of the president or any other executive officer
of such party.
12.14 SCHEDULES. Each of Purchaser and Seller shall use its reasonable
best efforts to complete, correct or supplement and deliver to the other as soon
as reasonably practicable the schedules to this Agreement that are to be
prepared by such party. Upon agreement by Purchaser and Seller to the form and
content of such schedules, they shall be substituted for the schedules attached
hereto and become a part hereof. In the event all of the schedules hereto have
not been agreed to and attached by March 5, 1999, this Agreement shall
automatically be null and void and have no further force or effect.
IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered
this Agreement as of the day and year first written above.
SELLER:
U. S. PARTS CORPORATION
BY:
ALI ATTAYI,
PRESIDENT AND CEO
PURCHASER:
RANKIN AUTOMOTIVE GROUP, INC.
BY:
RANDALL B. RANKIN,
PRESIDENT AND CEO
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EXHIBIT 10.(r)
ASSET PURCHASE AGREEMENT
BETWEEN
AUTOMOTIVE & INDUSTRIAL SUPPLY, INC.
AND
RANKIN AUTOMOTIVE GROUP, INC.
Dated as of February 26, 1999
<PAGE> 2
SCHEDULE
LETTER/NUMBER SCHEDULE NAME
SCHEDULE A FIXED ASSETS
SCHEDULE B-1 INVENTORY
SCHEDULE B-2 PURCHASED INVENTORY
SCHEDULE C OTHER CONTRACTS
SCHEDULE D NOT APPLICABLE
SCHEDULE E ACCOUNTS RECEIVABLE
2.2 ACCRUED EMPLOYEE BENEFITS
2.3 DEPOSITS
3.3 CONSENTS AND APPROVALS
3.4 VIOLATIONS AND DEFAULTS
3.5 PERMITS
3.7 ASSIGNED CONTRACTS
3.8 COLLECTIVE BARGAINING AGREEMENTS
3.9 LITIGATION
3.11 DISCLOSURES
3.12 CONDITION OF ASSETS
3.13 TAXES
3.14 RESTRICTIVE AGREEMENTS
4.4 FINANCING AGREEMENTS
5.6 PRE-CLOSING DEFAULTS
EXHIBIT EXHIBIT NAME
A ASSIGNMENT AND ASSUMPTION AGREEMENT
B BILL OF SALE AND ASSUMPTION AGREEMENT
c COMMITMENT LETTER - DECEMBER 10, 1998
D ESCROW AGREEMENT
E EMPLOYMENT AGREEMENT
F INTELLECTUAL PROPERTY
Page ii of 27
<PAGE> 3
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (THE "AGREEMENT") IS MADE AND ENTERED
INTO AS OF THE 26th DAY OF FEBRUARY, 1999, BETWEEN AUTOMOTIVE & INDUSTRIAL
SUPPLY, INC., TIN: 72-0462313. ("SELLER") A LOUISIANA CORPORATION, AND RANKIN
AUTOMOTIVE GROUP, INC., A LOUISIANA CORPORATION C-PURCHASER").
RECITALS
WHEREAS, SELLER IS ENGAGED IN THE BUSINESS OF SELLING AND DISTRIBUTING
AUTOMOTIVE REPLACEMENT PARTS, ACCESSORIES AND SUPPLIES AND OPERATES
DISTRIBUTION AND SALES CENTERS LOCATED ON LEASED PREMISES IN THE STATE OF
LOUISIANA AND STATE OF TEXAS (THE "BUSINESS LOCATIONS");
WHEREAS, PURCHASER DESIRES TO PURCHASE FROM SELLER AND SELLER DESIRES
TO SELL TO PURCHASER, SUBSTANTIALLY ALL OF THE ASSETS ASSOCIATED WITH THE
SELLER'S OPERATIONS AT THE BUSINESS LOCATIONS, SUBJECT TO CERTAIN LIABILITIES,
ALL ON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH HEREIN; AND
WHEREAS, IN CONNECTION WITH ITS CONTEMPLATED PURCHASE OF ASSETS,
PURCHASER DESIRES TO CONDUCT BUSINESS AT THE BUSINESS LOCATIONS AND TO HIRE
SUBSTANTIALLY ALL OF SELLER'S EMPLOYEES CURRENTLY EMPLOYED AT THE BUSINESS
LOCATIONS, ALL ON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH HEREIN AND
IN THE ANCILLARY AGREEMENTS.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL
AGREEMENTS HEREIN CONTAINED, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES HERETO
AGREE AS FOLLOWS:
ARTICLE I
DEFINITIONS
(1.1) DEFINITIONS. UNLESS OTHERWISE DEFINED HEREIN, THE TERMS DEFINED
IN THE INTRODUCTORY PARAGRAPH AND THE RECITALS TO THIS AGREEMENT SHALL HAVE THE
RESPECTIVE MEANINGS SPECIFIED THEREIN, AND THE FOLLOWING TERMS SHALL HAVE THE
MEANINGS SPECIFIED BELOW:
"ACCOUNTS RECEIVABLE" MEANS ALL PERFORMING, COLLECTABLE ACCOUNTS
RECEIVABLE ALLOCABLE TO THE BUSINESS, AS WELL AS ALL RIGHTS TO BILL
CUSTOMERS FOR PRODUCTS SHIPPED OR SERVICES RENDERED ON OR PRIOR TO THE
CLOSING DATE, SUBJECT TO 'TRUE UP' PURSUANT TO SECTION 5.7, AS
DESCRIBED IN SCHEDULE E ANNEXED HERETO.
"AFFILIATE" MEANS "AFFILIATE" AS DEFINED IN RULE 405 PROMULGATED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
"AGREEMENT" HAS THE MEANING SET FORTH IN THE PREAMBLE AND SHALL
INCLUDE ALL SCHEDULES AND EXHIBITS HERETO.
"ANCILLARY AGREEMENTS" MEANS, COLLECTIVELY, THE EMPLOYMENT
AGREEMENTS SUBSTANTIALLY IN THE FORM OF EXHIBIT E HERETO, THE
ASSIGNMENT AND ASSUMPTION AGREEMENTS, AND THE BILL OF SALE AND
ASSUMPTION AGREEMENT.
Page 1 of 27
<PAGE> 4
"APPORTIONMENT DATE" HAS THE MEANING SET FORTH IN SECTION 2.8.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" MEANS THE FORM OF ASSIGNMENT
AND ASSUMPTION AGREEMENT TO BE EXECUTED AT CLOSING BY PURCHASER AND
SELLER FOR EACH OF THE ASSIGNED CONTRACTS, IN SUBSTANTIALLY THE FORM
ATTACHED HERETO As EXHIBIT A.
"ASSIGNED CONTRACTS" MEANS THE LEASES AND THE OTHER CONTRACTS TO BE
ASSIGNED BY SELLER TO PURCHASER AND SET FORTH ON SCHEDULE 3.7.
"ASSUMED LIABILITIES" HAS THE MEANING SET FORTH IN SECTION 2.2.
"AUDIT" HAS THE MEANING SET FORTH IN SECTION 5.7.
"BILL OF SALE AND ASSUMPTION AGREEMENT" MEANS THE BILL OF SALE AND
ASSUMPTION AGREEMENT TO BE EXECUTED AT CLOSING BY PURCHASER AND SELLER
IN SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT B.
"BUSINESS" MEANS SELLER'S BUSINESS OPERATIONS CONDUCTED AT THE
BUSINESS LOCATIONS.
"BUSINESS DAY" MEANS A DAY, OTHER THAN A SATURDAY OR A SUNDAY, ON
WHICH COMMERCIAL BANKS ARE NOT REQUIRED OR AUTHORIZED TO CLOSE IN THE
CITY OF NEW YORK.
"BUSINESS EMPLOYEES" MEANS EMPLOYEES OF THE SELLER WHOSE DUTIES
RELATE PRIMARILY TO THE BUSINESS.
"BUSINESS LOCATIONS" HAS THE MEANING SET FORTH IN THE RECITALS
HERETO.
"CLOSING" HAS THE MEANING SET FORTH IN SECTION 9.1 . "CLOSING DATE"
HAS THE MEANING SET FORTH IN SECTION 9.1.
"CODE" MEANS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
"COMMITTED FINANCING" MEANS FUNDS AVAILABLE PURSUANT TO A WRITTEN
COMMITMENT LETTER ISSUED BY HELLER BUSINESS CREDIT, A DIVISION OF
HELLER FINANCIAL, INC. ('HELLER') DATED DECEMBER 10, 1998, A COPY OF
WHICH IS ATTACHED HERETO AS EXHIBIT C, OR OTHER SIMILAR DOCUMENTATION
FROM A COMMERCIAL BANK OR OTHER LENDING INSTITUTION, WHICH LENDER,
COMMITMENT LETTER AND OTHER DOCUMENTATION ARE ACCEPTABLE TO SELLER AND
PURCHASER.
"EXCLUDED ASSETS" MEANS:
(A) THAT CERTAIN SIXTY-ONE THOUSAND DOLLAR ($61,000.00)
CASH VALUE LIFE INSURANCE POLICY;
(B) MISCELLANEOUS CORPORATE CASH NOT TO EXCEED THIRTY-FOUR
THOUSAND DOLLARS ($34,000.00);
(C) EMPLOYEE ACCOUNTS RECEIVABLES OF NO MORE THAN TWO
THOUSAND DOLLARS ($2,000.00);
Page 2 of 27
<PAGE> 5
(D) ACCOUNTS RECEIVABLE - OTHER - IN THE APPROXIMATE
AMOUNT OF FIFTY THOUSAND DOLLARS ($50,000.00), AS
REFLECTED ON SELLER'S BALANCE SHEET; AND
(E) STATE OF LOUISIANA FRANCHISE TAX RECEIVABLE.
"FIXED ASSETS" MEANS, TO THE EXTENT USED IN THE BUSINESS, (I) ALL
OF THE MACHINERY, EQUIPMENT, FURNITURE, FIXTURES, SIGNS, VEHICLES AND
LEASEHOLD IMPROVEMENTS WHICH ARE OWNED BY SELLER, A LIST OF WHICH IS
ATTACHED AS SCHEDULE A, WHICH LIST SHALL BE UPDATED ON THE CLOSING
DATE, AND (II) TO THE EXTENT ASSIGNABLE, ANY RIGHTS OF SELLER TO THE
WARRANTIES, LICENSES AND OTHER SIMILAR RIGHTS WITH RESPECT THERETO,
SUBJECT TO 'TRUE UP" PURSUANT TO SECTION 5.7.
"GAAP" MEANS UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES, APPLIED ON A CONSISTENT BASIS AND CONSISTENT WITH SELLER'S
HISTORICAL PRACTICES, AS IN EFFECT FROM TIME TO TIME.
"GOVERNMENTAL AGENCY" MEANS (A) ANY INTERNATIONAL, FOREIGN,
FEDERAL, STATE, COUNTY, LOCAL OR MUNICIPAL GOVERNMENTAL OR
ADMINISTRATIVE AGENCY OR POLITICAL SUBDIVISION THEREOF, (B) ANY
GOVERNMENTAL AUTHORITY, BOARD, BUREAU, COMMISSION, DEPARTMENT OR
INSTRUMENTALITY, OR (C) ANY COURT OR ADMINISTRATIVE TRIBUNAL.
"INTELLECTUAL PROPERTY" MEANS TO THE EXTENT USED IN THE BUSINESS
THE INVENTIONS, COPYRIGHTS, TRADEMARKS, TRADE NAMES, AND APPLICATIONS,
ANY RELATED TRADEMARKS OR LOGOS AND APPLICATIONS, INCLUDING ANY RIGHTS
TO THE OWNERSHIP AND USE OF THE NAMES "AUTOMOTIVE & INDUSTRIAL SUPPLY,"
"A & I", "KEN'S AUTO PARTS" AND ANY OTHER TRADE NAME USED BY ANY
SUBSIDIARY OF SELLER, TRADE SECRETS, PROPRIETARY KNOW-HOW AND USE AND
APPLICATION KNOWHOW, PRODUCT FORMULAE, MANUFACTURING, ENGINEERING AND
OTHER DRAWINGS, TECHNOLOGY, TECHNICAL INFORMATION, ENGINEERING DATA,
DESIGN AND ENGINEERING SPECIFICATIONS, PRODUCTION STANDARDS AND
PRACTICES AND PROMOTIONAL LITERATURE, GOODWILL AND OTHER INTELLECTUAL
PROPERTY AND RIGHTS, IN EACH CASE USED BY THE SELLER IN CONNECTION
WITH THE BUSINESS, INCLUDING WITHOUT LIMITATION, SUCH INTELLECTUAL
PROPERTY AS IS LISTED ON EXHIBIT F.
"INVENTORY" MEANS ALL ITEMS OF CLEAN, CURRENT AND SALABLE PRODUCTS
AS LISTED IN THE MANUFACTURER'S PRICE SHEET RELATING TO SAME. SCHEDULE
B-1, WHICH SHALL BE PREPARED IN ACCORDANCE WITH SECTION 2.4 HEREOF AND
ANNEXED TO THIS AGREEMENT ON THE CLOSING DATE, SHALL SET FORTH A
DESCRIPTION OF THE INVENTORY.
"INVENTORY VALUE" MEANS THE RAW ACQUISITION COST TO SELLER PER ITEM
OF INVENTORY.
"IRS" MEANS THE INTERNAL REVENUE SERVICE OF THE UNITED STATES
DEPARTMENT OF THE TREASURY.
"KNOWLEDGE" AS APPLIED TO SELLER MEANS THE ACTUAL KNOWLEDGE OF THE
PRESIDENT, CHIEF EXECUTIVE OFFICER OR THE CHIEF FINANCIAL OFFICER OF
SELLER AND AS APPLIED TO PURCHASER MEANS THE ACTUAL KNOWLEDGE OF THE
PRESIDENT,
Page 3 of 27
<PAGE> 6
THE CHIEF EXECUTIVE OFFICER, THE CHAIRMAN OF THE BOARD OR THE CHIEF
FINANCIAL OFFICER.
"LEASED PROPERTY" MEANS THE PREMISES SUBJECT TO THE LEASES.
"LEASES" MEANS THE REAL ESTATE LEASES AS SHOWN ON SCHEDULE 3.7.
"LIEN" MEANS ANY MORTGAGE, PLEDGE, SECURITY INTEREST, CHARGE OR
OTHER ENCUMBRANCE.
"OTHER CONTRACTS" MEANS THE CONTRACTS WHICH ARE LISTED ON THE OTHER
CONTRACTS SCHEDULE ATTACHED HERETO AS SCHEDULE C.
"PERMIT" MEANS ANY PERMIT, APPROVAL, AUTHORIZATION, LICENSE,
VARIANCE OR PERMISSION REQUIRED BY A GOVERNMENTAL AGENCY UNDER ANY
APPLICABLE LAW.
"PERSON" MEANS ANY INDIVIDUAL, PARTNERSHIP, CORPORATION, TRUST,
ASSOCIATION, LIMITED LIABILITY COMPANY, GOVERNMENTAL AGENCY OR OTHER
ENTITY.
"PHYSICAL INVENTORY DATE" MEANS THE LAST DAY OF THE PHYSICAL
INVENTORY PERIOD.
"PHYSICAL INVENTORY PERIOD" HAS THE MEANING SET FORTH IN SECTION
2.4(A).
"PURCHASE PRICE" HAS THE MEANING SET FORTH IN SECTION 2.3.
"PURCHASED ASSETS" MEANS ALL OF THE SELLER'S RIGHT, TITLE AND
INTEREST IN AND TO THE FOLLOWING:
(A) THE PURCHASED INVENTORY;
(B) THE FIXED ASSETS;
(C) THE ASSIGNED CONTRACTS;
(D) RECORDS RELATING PRIMARILY TO THE PURCHASED ASSETS,
AND COPIES OF PERSONNEL FILES FOR BUSINESS EMPLOYEES;
(E) TO THE EXTENT LEGALLY ASSIGNABLE, ALL PERMITS REQUIRED
TO CONDUCT BUSINESS AT THE BUSINESS LOCATIONS;
(F) CUSTOMER LISTS AND OTHER INFORMATION AND DATA RELATING
TO THE INDEPENDENT CUSTOMERS OF THE BUSINESS AT THE
BUSINESS LOCATIONS;
(G) ALL DEPOSITS (INCLUDING SECURITY DEPOSITS) AND
PREPAYMENTS MADE BY SELLER UNDER ANY OF THE ASSIGNED
CONTRACTS;
(H) ALL OF THE ACCOUNTS RECEIVABLE;
(I) ALL REBATES RECEIVABLE;
(J) ALL GOODWILL INHERENT IN THE BUSINESS;
Page 4 of 27
<PAGE> 7
(K) INTELLECTUAL PROPERTY;
PROVIDED, HOWEVER, THAT NOTWITHSTANDING ANY OF THE FOREGOING
PROVISIONS OF THIS DEFINITION, THE PURCHASED ASSETS SHALL NOT INCLUDE
ANY EXCLUDED ASSETS.
"PURCHASED INVENTORY" HAS THE MEANING SET FORTH IN SECTION 2.4(B),
A COMPLETE LIST OF WHICH PURCHASED INVENTORY SHALL BE ANNEXED TO THIS
AGREEMENT AS SCHEDULE B-2 ON THE CLOSING DATE, SAID LIST BASED ON THE
ACTUAL PHYSICAL INVENTORY TO BE CONDUCTED. SAID LIST AND THE PRICES TO
BE PAID THEREFOR SHALL BE SUBJECT TO "TRUE UP" PURSUANT TO SECTION
5.7.
"SCHEDULES" MEANS THE VARIOUS SCHEDULES REFERRED TO IN THIS
AGREEMENT DELIVERED SEPARATELY TO PURCHASER ON OR BEFORE THE DATE OF
THIS AGREEMENT, EXCEPT AS OTHERWISE SPECIFIED IN THIS AGREEMENT.
"TAX RETURN" MEANS ANY REPORT, RETURN, INFORMATION RETURN, FILING,
CLAIM FOR REFUND OR OTHER INFORMATION, INCLUDING ANY SCHEDULES OR
ATTACHMENTS THERETO, AND ANY AMENDMENTS TO ANY OF THE FOREGOING
REQUIRED TO BE SUPPLIED TO A TAXING AUTHORITY IN CONNECTION WITH
TAXES.
"TAXES" MEANS ALL FEDERAL, STATE, LOCAL AND FOREIGN TAXES,
INCLUDING INCOME, GROSS RECEIPTS, EXCISE, EMPLOYMENT, SALES, USE,
TRANSFER, LICENSE, PAYROLL, FRANCHISE, SEVERANCE, STAMP, WITHHOLDING,
SOCIAL SECURITY, UNEMPLOYMENT, DISABILITY, REAL PROPERTY, PERSONAL
PROPERTY, REGISTRATION, ALTERNATIVE OR ADD-ON MINIMUM, ESTIMATED OR
OTHER TAX, INCLUDING ANY INTEREST, PENALTIES OR ADDITIONS THERETO,
WHETHER DISPUTED OR NOT.
"TRANSACTION TAXES" HAS THE MEANING SET FORTH IN SECTION 10.1.
"TRUE UP" SHALL MEAN A RECONCILIATION OF ALL AMOUNTS TO BE PAID FOR
PURCHASED ASSETS AND ASSUMED LIABILITIES FROM THE AUDITED FINANCIAL
STATEMENTS FOR THE YEAR ENDING DECEMBER 31,1998, THROUGH THE DATE OF
CLOSING.
ARTICLE II
SALE AND PURCHASE OF
PURCHASED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES
SECTION 2.1 PURCHASE AND SALE OF PURCHASED ASSETS. ON THE TERMS AND
SUBJECT TO THE CONDITIONS SET FORTH IN THIS AGREEMENT, AT THE CLOSING,
PURCHASER SHALL PURCHASE FROM SELLER AND SELLER SHALL SELL, TRANSFER, ASSIGN,
CONVEY AND DELIVER TO PURCHASER AT THE BUSINESS LOCATIONS, ALL OF SELLER'S
RIGHT, TITLE AND INTEREST IN AND TO THE PURCHASED ASSETS PROVIDED, HOWEVER,
THAT SELLER SHALL BE ENTITLED TO RETAIN COPIES OF ALL BOOKS AND RECORDS, IN
WHATEVER FORM, INCLUDED IN THE PURCHASED ASSETS.
SECTION 2.2 ASSUMPTION OF OBLIGATIONS AND LIABILITIES. ON THE TERMS
AND SUBJECT TO THE CONDITIONS SET FORTH IN THIS AGREEMENT, FROM AND AFTER THE
CLOSING,
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<PAGE> 8
PURCHASER WILL ASSUME AND PAY, PERFORM, DISCHARGE AND BE RESPONSIBLE
FOR ALL OF THE FOLLOWING LIABILITIES OF SELLER (COLLECTIVELY, THE "ASSUMED
LIABILITIES"):
(A) ALL OBLIGATIONS AND LIABILITIES OF SELLER UNDER THE
ASSIGNED CONTRACTS WHICH ACCRUE ON AND AFTER THE
CLOSING DATE; AND
(B) ALL OBLIGATIONS AND LIABILITIES OF SELLER RELATING TO
THE LEASED PROPERTY WHICH ACCRUE ON AND AFTER THE
CLOSING DATE; AND
(C) ASSUMPTION OF ACCOUNTS PAYABLE, SALARIES PAYABLE, TAX
ACCRUALS (OTHER THAN INCOME TAX ACCRUALS), AMOUNTS
RELATED TO EMPLOYEE 401 K PAYABLE AS SHOWN ON CLOSING
BALANCE SHEET, INSURANCE PAYABLE AND OTHER ACCRUALS AS
REFLECTED BY THE AUDITED FINANCIAL STATEMENTS FOR THE
YEAR ENDING DECEMBER 31,1998, SUBJECT TO "TRUE-UP"
PURSUANT TO SECTIONS.7;
(D) ALL OBLIGATIONS AND LIABILITIES SET FORTH IN ARTICLE
XI.
PURCHASER SHALL NOT ASSUME OR PAY, PERFORM, DISCHARGE OR BE RESPONSIBLE FOR ANY
OF THE OBLIGATIONS OR LIABILITIES OF SELLER OTHER THAN THE ASSUMED LIABILITIES.
WITHOUT LIMITING ANY OF PURCHASER'S OBLIGATIONS UNDER ARTICLE XI HEREOF WITH
RESPECT TO THE BUSINESS EMPLOYEES, PURCHASER EXPRESSLY DOES NOT ASSUME ANY
OBLIGATIONS OR LIABILITIES OF SELLER THAT ARISE PRIOR TO THE CLOSING DATE WITH
RESPECT TO THE BUSINESS EMPLOYEES, SAVE AND EXCEPT THOSE DESCRIBED IN SECTION
2.2(C) ABOVE. SELLER SHALL NOT ASSUME OR BE RESPONSIBLE FOR ANY OBLIGATIONS OR
LIABILITIES OF PURCHASER THAT ARISE FROM AND AFTER THE CLOSING DATE WITH
RESPECT TO THE BUSINESS EMPLOYEES. NOTWITHSTANDING THE FOREGOING, AT CLOSING,
SELLER WILL SUPPLY PURCHASER WITH A LISTING OF ALL OBLIGATIONS AND LIABILITIES
WITH RESPECT To BUSINESS EMPLOYEES' ACCRUED VACATION LEAVE/PAY, SICK LEAVE PAY
AND OTHER COMPENSABLE BENEFITS DUE EMPLOYEES OF THE BUSINESS, SAID LISTING TO
BE MADE ON SCHEDULE 2.2(c). PURCHASER SHALL HAVE NO LIABILITY WHATSOEVER FOR
ANY LIABILITIES OF SELLER, INCLUDING, WITHOUT LIMITATION, (1) ANY CLAIM,
REGARDLESS OF WHEN MADE OR ASSERTED, WHICH ARISES OUT OF OR IS BASED UPON ANY
EXPRESS OR IMPLIED REPRESENTATION, WARRANTY, AGREEMENT OR GUARANTEE MADE BY THE
SELLER, OR ALLEGED TO HAVE BEEN MADE BY THE SELLER, OR WHICH IS IMPOSED OR
ASSERTED TO BE IMPOSED BY OPERATION OF LAW, IN CONNECTION WITH ANY PRODUCT
MANUFACTURED, SHIPPED OR INSTALLED BY OR ON BEHALF OF THE SELLER OR FOR ANY
SERVICE PERFORMED BY OR ON BEHALF OF THE SELLER, INCLUDING, WITHOUT LIMITATION,
ANY CLAIM RELATING TO THE REPAIR OR REPLACEMENT OF ANY SUCH PRODUCT AND ANY
CLAIM SEEKING RECOVERY FOR PROPERTY DAMAGE, CONSEQUENTIAL DAMAGES, LOSS, LOST
REVENUE OR INCOME OR PERSONAL INJURY OR (11) LIABILITY OR OBLIGATION IN RESPECT
OF ANY FEDERAL, STATE OR LOCAL INCOME OR OTHER TAX PAYABLE WITH RESPECT TO THE
BUSINESS OR THE PURCHASED ASSETS FOR ANY PERIOD PRIOR TO THE CLOSING DATE.
NOTWITHSTANDING THE ABOVE, THIS PROVISION DOES NOT CONSTITUTE A GUARANTEE BY
SELLER OF THE ACCOUNTS RECEIVABLES RELATED TO ANY SUCH PRODUCT OR SERVICE.
SECTION 2.3 PURCHASE PRICE.
(A) ON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH
IN THIS AGREEMENT, THE PURCHASE PRICE PAYABLE BY
PURCHASER TO SELLER FOR THE PURCHASED ASSETS SHALL BE
AN AGGREGATE AMOUNT EQUAL TO THE SUM OF THE FOLLOWING,
PAYABLE ON VARIOUS DATES AS DESCRIBED IN THIS SECTION
2.3:
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(I) EIGHT HUNDRED, SIXTY THOUSAND DOLLARS
($860,000.00) REPRESENTING GOODWILL; PLUS
100% OF THE BOOK VALUE OF THE GOODWILL
INHERENT IN THE BUSINESS; PLUS 100% OF THE
BOOK VALUE OF REBATES RECEIVABLE; PLUS 100%
OF BOOK VALUE OF FIXED ASSETS AS SHOWN ON
SELLER'S BALANCE SHEET AS OF CLOSING; PLUS
100% OF PURCHASED INVENTORY AT INVENTORY
VALUE, PLUS 100% OF ALL DEPOSITS AND
PREPAYMENTS MADE BY SELLER; PLUS PAYMENT OF
100% OF THE ACCOUNTS RECEIVABLES; LESS THE
AMOUNTS REPRESENTED BY THE OBLIGATIONS AND
LIABILITIES ASSUMED;
(II) LESS THE FOLLOWING:
THE SUM OF ($20,000.00) AS AN ADJUSTMENT
RESERVE FOR BAD DEBT ON ACCOUNTS
RECEIVABLES, SUBJECT TO "TRUE UP" PROVIDED
FOR IN SECTION 5.7, AND THE ENTIRETY LESS
AN ESCROW FOR THE ANTICIPATED "TRUE UP"
PROVIDED FOR IN SECTION 5.7 IN THE AMOUNT
OF ONE HUNDRED THOUSAND DOLLARS
($100,000.00), TO BE DISTRIBUTED AS
DESCRIBED IN AND CONTEMPLATED BY THE ESCROW
AGREEMENT ATTACHED HERETO AS EXHIBIT D;
(III) PROVIDED HOWEVER, THAT $200,000.00 OF THE
TOTAL PURCHASE PRICE REFERRED TO IN
2.3(A)(i) SHALL BE REPRESENTED BY
$200,000.00 WORTH OF RANKIN COMMON STOCK
VALUED AT THE PRICE PER SHARE OF RANKIN
COMMON STOCK AT THE CLOSE OF BUSINESS ON
THE DATE OF THE SIGNING OF THIS AGREEMENT.
(B) ON THE CLOSING DATE, PURCHASER SHALL PAY TO SELLER AN
AMOUNT EQUAL TO THE PURCHASE PRICE IN CASH, BY WIRE
TRANSFER OF IMMEDIATELY AVAILABLE FUNDS (PURSUANT TO
WRITTEN INSTRUCTIONS TO BE PROVIDED BY SELLER TO
PURCHASER), EQUAL TO THE SUM OF THOSE PORTIONS OF THE
PURCHASE PRICE PROVIDED FOR IN SECTIONS 2.3(A)(1)
HEREOF (SUCH AMOUNT, THE "CLOSING DATE PAYMENT"), LESS
THE ESCROW AMOUNT OF ONE HUNDRED THOUSAND DOLLARS
($100,000.00), WHICH SHALL BE DISTRIBUTED IN ACCORD
WITH THE ESCROW AGREEMENT ATTACHED HERETO AS EXHIBIT D,
AND FURTHER, PURCHASER WILL EFFECT A TRANSFER OF STOCK
AS PROVIDED FOR IN SECTION 2.3(A)(11), AND FURTHER
DELIVER THE ANCILLARY AGREEMENTS.
THE CLOSING DATE PAYMENT SHALL BE ADJUSTED, AND THE
REMAINDER OF THE PURCHASE PRICE SHALL BE PAID BY THE
PURCHASER, PURSUANT TO SECTIONS 2.4, AND 2.5 HEREOF.
SECTION 2.4 PHYSICAL INVENTORY; DETERMINATION OF PURCHASED INVENTORY.
(A) COMMENCING ON OR ABOUT 5:00 P.M. ON THE DAY OF
, 1999, CONTINUING OVER THE NEXT TWO DAYS
(THE "PHYSICAL INVENTORY PERIOD"), EMPLOYEES OR
REPRESENTATIVES OF SELLER AND PURCHASER WILL JOINTLY
CONDUCT A PHYSICAL INVENTORY COUNT OF THE CLEAN,
CURRENT AND SALABLE INVENTORY AND THE FIXED ASSETS
AT THE BUSINESS LOCATIONS. A WRITTEN, ITEMIZED LIST
SETTING FORTH SPECIFICALLY ALL SUCH ITEMS OF INVENTORY
PHYSICALLY ACCOUNTED FOR WHICH ARE CLEAN, CURRENT AND
SALABLE SHALL BE PREPARED BY SELLER WITH THE ASSISTANCE
OF PURCHASER, AND SHALL, ON THE
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<PAGE> 10
CLOSING DATE, BE ATTACHED HERETO AS SCHEDULE B-1, WITH
SUCH REVISIONS MADE BY SELLER WITH THE ASSISTANCE OF
PURCHASER AS ARE NECESSARY TO REFLECT ANY CHANGES IN
THE INVENTORY THAT OCCUR DURING THE PERIOD COMMENCING
IMMEDIATELY AFTER THE PHYSICAL INVENTORY DATE AND
ENDING ON THE CLOSING DATE. SELLER AND PURCHASER SHALL
EACH BEAR THEIR OWN COSTS ASSOCIATED WITH CONDUCTING
THE PHYSICAL INVENTORY. ONLY INVENTORY IN A CURRENT
PRICE SHEET OR STILL READILY AVAILABLE FROM THE
MANUFACTURER WILL BE PURCHASED BY PURCHASER. PURCHASER
WILL REIMBURSE SELLER FOR ITS LABOR COSTS ASSOCIATED
WITH THE TAKING OF THIS INVENTORY; HOWEVER, IT BEING
UNDERSTOOD AND AGREED THAT SAID REIMBURSEMENT IS NOT TO
INCLUDE COSTS ASSOCIATED WITH SALARIED OR MANAGEMENT
PERSONNEL.
(B) AT THE COMPLETION OF THE PHYSICAL INVENTORY CONDUCTED
PURSUANT TO SECTION 2.4(A), PURCHASER SHALL PREPARE A
LIST OF INVENTORY AND THE INVENTORY VALUE TO BE
PURCHASED IN ACCORDANCE WITH THE PROVISIONS OF THIS
AGREEMENT, (SUCH ITEMS OF INVENTORY, COLLECTIVELY, THE
"PURCHASED INVENTORY"), WHICH LIST SHALL BE: (1)
ADJUSTED AS OF THE CLOSING DATE BY SELLER WITH THE
ASSISTANCE OF PURCHASER TO REFLECT CHANGES IN THE
PURCHASED INVENTORY THAT OCCUR DURING THE PERIOD
COMMENCING IMMEDIATELY AFTER THE PHYSICAL INVENTORY
DATE AND ENDING ON THE CLOSING DATE; AND (11) ATTACHED
TO THIS AGREEMENT ON THE CLOSING DATE AS SCHEDULE B-2,
SAID INVENTORY AND INVENTORY VALUE SUBJECT TO THE
"TRUE UP" PROVIDED BY SECTION 5.7.
SECTION 2.5 ALLOCATION OF PURCHASE PRICE. TO THE EXTENT REQUIRED BY
LAW AFTER THE CLOSING DATE, PURCHASER AND SELLER SHALL PREPARE AND FILE THOSE
STATEMENTS OR FORMS (INCLUDING FORM 8594) REQUIRED BY SECTION 1060 OF THE CODE
AND THE TREASURY REGULATIONS THEREUNDER AND SHALL FILE SUCH STATEMENTS OR FORMS
WITH THEIR RESPECTIVE FEDERAL INCOME TAX RETURNS. THE PARTIES SHALL PREPARE
SUCH STATEMENTS OR FORMS CONSISTENTLY WITH ANY AGREED ALLOCATION OF ALL OR A
PORTION OF THE PURCHASE PRICE TO THE PURCHASED ASSETS. EACH PARTY SHALL PROVIDE
THE OTHER PARTY WITH A COPY OF SUCH STATEMENTS OR FORMS AS FILED.
SECTION 2.6 SALE AT CLOSING DATE. THE SALE, TRANSFER, ASSIGNMENT AND
DELIVERY BY SELLER OF THE PURCHASED ASSETS TO PURCHASER, AND THE ASSUMPTION BY
PURCHASER OF THE ASSUMED LIABILITIES, AS HEREIN PROVIDED SHALL BE EFFECTED ON
THE CLOSING DATE BY (A) THE EXECUTION AND DELIVERY BY SELLER AND PURCHASER OF
AN ASSIGNMENT AND ASSUMPTION AGREEMENT FOR THE LEASE AND EACH OF THE OTHER
CONTRACTS SUBSTANTIALLY IN THE FORM OF EXHIBIT A, PURSUANT TO WHICH ASSIGNMENT
AND ASSUMPTION AGREEMENTS PURCHASER SHALL BE SUBJECT TO ALL LIABILITIES AND
OBLIGATIONS UNDER THE ASSIGNED CONTRACTS WHICH ACCRUE AFTER THE CLOSING DATE,
AND (B) WITH RESPECT TO THE OTHER PURCHASED ASSETS AND ASSUMED LIABILITIES, BY
THE EXECUTION AND DELIVERY BY THE SELLER AND PURCHASER OF THE BILL OF SALE AND
ASSUMPTION AGREEMENT SUBSTANTIALLY IN THE FORM OF EXHIBIT B.
SECTION 2.7 APPORTIONMENTS. THE FOLLOWING AMOUNTS ARE TO BE
APPORTIONED AS OF 12:00 MIDNIGHT ON THE DAY PRECEDING THE CLOSING DATE (THE
"APPORTIONMENT DATE") (I) WATER, SEWER AND UTILITY CHARGES ; AND (II) SUCH
OTHER APPORTIONMENTS AND ADJUSTMENTS AS ARE CUSTOMARILY APPORTIONED IN
TRANSACTIONS OF THIS NATURE. EXCEPT AS OTHERWISE PROVIDED HEREIN, ALL
PRORATIONS SHALL BE MADE ON THE BASIS OF ACTUAL BILLS, TO THE EXTENT AVAILABLE,
OR, IN THE ABSENCE OF SUCH ACTUAL BILLS, ON GOOD FAITH ESTIMATES OF SELLER
BASED ON THE MOST RECENT BILL RECEIVED BY SELLER.
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<PAGE> 11
ALL PRORATIONS SHALL BE ADJUSTED WITHIN TEN (10) BUSINESS DAYS OF SELLER'S
RECEIPT OF THE FINAL BILLS.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
SUBJECT TO SECTION 3.12, THE SELLER REPRESENTS AND WARRANTS TO
PURCHASER AS FOLLOWS:
SECTION 3.1 AUTHORITY OF SELLER. SELLER IS A CORPORATION VALIDLY
EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF LOUISIANA SELLER
HAS FULL CORPORATE POWER AND AUTHORITY TO EXECUTE AND DELIVER THIS AGREEMENT
AND EACH OF THE ANCILLARY AGREEMENTS, AND THE EXECUTION AND DELIVERY BY EACH
SELLER OF THIS AGREEMENT AND THE ANCILLARY AGREEMENTS AND THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY HAVE BEEN DULY AND VALIDLY
AUTHORIZED BY ALL NECESSARY CORPORATE ACTION ON THE PART OF SELLER, AND THIS
AGREEMENT CONSTITUTES, AND EACH OF THE ANCILLARY AGREEMENTS UPON ITS EXECUTION
WILL CONSTITUTE, THE LEGAL, VALID AND BINDING OBLIGATION OF SELLER ENFORCEABLE
IN ACCORDANCE WITH ITS TERMS, SUBJECT TO RECEIPT OF THE CONSENTS, WAIVERS AND
APPROVALS SPECIFIED ON SCHEDULE 3.3, AND EXCEPT AS SUCH ENFORCEMENT MAY BE
LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY, MORATORIUM, OR SIMILAR LAWS FROM
TIME TO TIME IN EFFECT WHICH AFFECT CREDITORS' RIGHTS GENERALLY, AND BY LEGAL
AND EQUITABLE LIMITATIONS ON THE ENFORCEABILITY OF SPECIFIC REMEDIES.
SECTION 3.2 NO CONFLICT OR VIOLATION. THE EXECUTION, DELIVERY AND
PERFORMANCE BY SELLER OF THIS AGREEMENT AND THE ANCILLARY AGREEMENTS DO NOT AND
WILL NOT VIOLATE OR CONFLICT WITH ANY PROVISION OF THE CERTIFICATE OF
INCORPORATION OR BY-LAWS OF SELLER AND, ASSUMING THAT THE CONSENTS, WAIVERS,
AUTHORIZATIONS, APPROVALS, DECLARATIONS, FILINGS AND REGISTRATIONS REFERRED TO
IN SECTION 3.3 ARE OBTAINED OR MADE, DO NOT AND WILL NOT VIOLATE OR RESULT IN A
MATERIAL BREACH OF OR CONSTITUTE (WITH DUE NOTICE OR LAPSE OF TIME OR BOTH) A
MATERIAL DEFAULT UNDER ANY ASSIGNED CONTRACT.
SECTION 3.3 CONSENTS AND APPROVALS. SCHEDULE 3.3 SETS FORTH A TRUE AND
COMPLETE LIST OF EACH MATERIAL CONSENT, WAIVER, AUTHORIZATION OR APPROVAL OF
ANY PERSON IN CONNECTION WITH ANY ASSIGNED CONTRACT THAT IS REQUIRED FOR THE
EXECUTION AND DELIVERY OF THIS AGREEMENT BY SELLER OR THE PERFORMANCE BY SELLER
OF ITS OBLIGATIONS HEREUNDER.
SECTION 3.4 COMPLIANCE WITH LAW. EXCEPT AS SET FORTH ON SCHEDULE 3.4,
TO SELLER'S KNOWLEDGE SELLER HAS NOT RECEIVED WRITTEN NOTICE OF ANY VIOLATION
OF ANY LAW, REGULATION, ORDER OR OTHER LEGAL REQUIREMENT, AND IS NOT IN DEFAULT
IN ANY MATERIAL RESPECT UNDER ANY ORDER, WRIT, JUDGMENT, AWARD, INJUNCTION OR
DECREE OF ANY GOVERNMENTAL AGENCY, APPLICABLE TO THE PURCHASED ASSETS.
SECTION 3.5 PERMITS, NOTICES. ATTACHED HERETO AS SCHEDULE 3.5 IS A
COMPLETE LIST OF ALL GOVERNMENTAL PERMITS, LICENSES AND AUTHORIZATIONS
(COLLECTIVELY, THE 'PERMITS') WHICH SELLER HAS OBTAINED TO OPERATE THE
BUSINESS. TO SELLER'S KNOWLEDGE, NO OTHER GOVERNMENTAL PERMITS, LICENSES OR
AUTHORIZATIONS WERE NECESSARY TO OPERATE AND CONTINUE THE FACILITY AND THE
BUSINESS. To SELLER'S KNOWLEDGE, SELLER WAS NOT IN BREACH OF THE TERMS OF ANY
OF THE PERMITS AND HAD PAID ALL NECESSARY FEES ASSOCIATED THEREWITH AND THERE
WERE NO OTHER PERMITS
Page 9 of 27
<PAGE> 12
NECESSARY FOR THE OPERATION OF THE BUSINESS. EXCEPT AS DISCLOSED ON SCHEDULE
3.5, SELLER HAD NOT RECEIVED AND TO SELLER'S KNOWLEDGE, THERE DID NOT EXIST,
ANY NOTICE, NOTIFICATION OR INQUIRY FROM ANY GOVERNMENTAL OR QUASI-GOVERNMENTAL
AGENCY TO THE EFFECT THAT THE BUSINESS OR ANY OF THE ASSETS WAS IN VIOLATION OF
ANY LAW, ORDINANCE, RULE, REGULATION, LICENSE, PERMIT OR AUTHORIZATION AS OF
THE DATE OF EXECUTION OF THIS AGREEMENT.
SECTION 3.6 OWNERSHIP OF PURCHASED ASSETS AND PAYMENT OF OUTSTANDING
LOANS. OTHER THAN THE REAL PROPERTY SUBJECT TO THE LEASES AND ANY ITEMS OF
PROPERTY SUBJECT TO THE OTHER CONTRACTS, SELLER IS THE OWNER OF THE PURCHASED
ASSETS. AT THE CLOSING BUYER WILL RECEIVE, GOOD TITLE TO ALL SUCH PURCHASED
ASSETS, FREE AND CLEAR OF ANY LIENS, IT SPECIFICALLY BEING AGREED HEREIN THAT
SELLER WILL PAY, RETIRE AND SATISFY ALL OF THE SHAREHOLDER NOTES AND LOANS
RELATED TO CAPITAL LEASES, OUTSTANDING NOTES, LINES OF CREDIT AND TERM LOANS
ASSOCIATED WITH THE BUSINESS, SAID LOANS IN THE AMOUNT REPRESENTED ON THE
AUDITED FINANCIAL STATEMENTS OF THE YEAR ENDING DECEMBER 31, 1998, THROUGH THE
DATE OF CLOSING. SUBJECT TO THE ABOVE, SELLER MAKES NO REPRESENTATION OR
WARRANTY AS TO THE EXISTENCE OR ABSENCE OF ANY LIEN: (I) ON THE REAL PROPERTY
SUBJECT TO THE LEASES; (II) ON ANY ITEMS OF PROPERTY SUBJECT TO THE OTHER
CONTRACTS. SELLER HAS GOOD, VALID AND MARKETABLE TITLE TO ALL OF THE ASSETS,
REAL, PERSONAL AND MIXED, INCLUDING ALL OF THE PROPERTIES AND ASSETS USED BY
THE BUSINESS (EXCEPT IN EACH CASE FOR ASSETS SOLD OR OTHERWISE DISPOSED OF IN
THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE), FREE AND CLEAR
OF ALL MORTGAGES, LIENS, PLEDGES, SECURITY INTERESTS, CHARGES, CLAIMS,
RESTRICTIONS AND OTHER ENCUMBRANCES AND DEFECTS OF TITLE OF ANY NATURE
WHATSOEVER, EXCEPT LIENS FOR CURRENT TAXES NOT YET DUE AND PAYABLE. TO SELLER'S
KNOWLEDGE, ALL LEASES, LICENSES, PERMITS AND AUTHORIZATIONS IN ANY MANNER
RELATED TO THE PURCHASED ASSETS OR THE BUSINESS AND ALL OTHER INSTRUMENTS,
DOCUMENTS AND AGREEMENTS PURSUANT TO WHICH SELLER HAS OBTAINED THE RIGHT TO USE
ANY REAL OR PERSONAL PROPERTY IN CONNECTION WITH THE BUSINESS ARE IN GOOD
STANDING, VALID AND EFFECTIVE IN ACCORDANCE WITH THEIR RESPECTIVE TERMS, AND
THERE IS NOT UNDER ANY OF SUCH INSTRUMENTS, DOCUMENTS OR AGREEMENTS ANY
EXISTING DEFAULT OR EVENT WHICH WITH NOTICE OR LAPSE OF TIME, OR BOTH, WOULD
CONSTITUTE A DEFAULT AND IN RESPECT OF WHICH SELLER HAS NOT TAKEN ADEQUATE
STEPS TO PREVENT A DEFAULT FROM OCCURRING.
SECTION 3.7 ASSIGNED CONTRACTS. TRUE AND COMPLETE COPIES OF THE
ASSIGNED CONTRACTS LISTED ON SCHEDULE 3.7 HAVE BEEN PROVIDED OR MADE AVAILABLE
BY SELLER TO PURCHASER. NEITHER SELLER NOR, TO SELLER's KNOWLEDGE, ANY OTHER
PARTY UNDER ANY OF THE ASSIGNED CONTRACTS, HAS COMMENCED ANY ACTION AGAINST THE
OTHER OR GIVEN OR RECEIVED ANY WRITTEN NOTICE OF ANY MATERIAL DEFAULT OR
VIOLATION UNDER ANY ASSIGNED CONTRACT WHICH WAS NOT WITHDRAWN OR DISMISSED. THE
LEASE AND EACH OF THE OTHER ASSIGNED CONTRACTS LISTED ON SCHEDULE 3.7 IS OR
WILL BE AT THE CLOSING VALID, BINDING AND IN FULL FORCE AND EFFECT AS AGAINST
SELLER, EXCEPT AS OTHERWISE SET FORTH ON SCHEDULE 3.7 OR SCHEDULE C.
SECTION 3.8 LABOR RELATIONS. EXCEPT AS SET FORTH ON SCHEDULE 3.8,
SELLER IS NOT PARTY TO ANY COLLECTIVE BARGAINING AGREEMENT COVERING BUSINESS
EMPLOYEES. TO SELLER'S KNOWLEDGE, NO ORGANIZATIONAL EFFORT IS PRESENTLY BEING
MADE OR THREATENED IN WRITING BY OR ON BEHALF OF ANY LABOR UNION WITH RESPECT
TO BUSINESS EMPLOYEES.
SECTION 3.9 LITIGATION. EXCEPT AS SET FORTH ON SCHEDULE 3.9, THERE ARE
NO ACTIONS, CAUSES OF ACTION, CLAIMS, SUITS OR PROCEEDINGS PENDING OR, TO
SELLER's
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<PAGE> 13
KNOWLEDGE, THREATENED AGAINST SELLER WHICH SEEK TO RESTRAIN OR ENJOIN THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 3.10 BROKERS. ALL NEGOTIATIONS RELATIVE TO THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREBY HAVE BEEN CARRIED ON BY SELLER WITHOUT THE
INTERVENTION OF ANY OTHER PERSON ACTING ON SELLER'S BEHALF IN SUCH MANNER AS TO
GIVE RISE TO ANY VALID CLAIM BY ANY SUCH PERSON AGAINST PURCHASER FOR A
FINDER'S FEE, BROKERAGE COMMISSION OR OTHER SIMILAR PAYMENT BASED ON AN
ARRANGEMENT WITH SELLER.
SECTION 3.11 EXISTING CONDITION. TO SELLER'S KNOWLEDGE, EXCEPT AS
DISCLOSED ON SCHEDULE 3.11 HERETO, SELLER, IN RELATION TO THE BUSINESS, HAS
NOT:
(A) SOLD, ASSIGNED OR TRANSFERRED ANY OF THE ASSETS OR
OTHER INTERESTS IN THE BUSINESS EXCEPT IN THE ORDINARY
COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE;
(B) MORTGAGED, PLEDGED OR SUBJECTED TO ANY LIEN, PLEDGE,
MORTGAGE, SECURITY INTEREST, CONDITIONAL SALES
CONTRACT OR OTHER ENCUMBRANCE OF ANY NATURE WHATSOEVER
OF ANY PURCHASED ASSETS, OTHER THAN THE LIENS, IF ANY,
OF CURRENT TAXES NOT YET DUE AND PAYABLE OR LIENS
WHICH WILL BE DISCHARGED OR SATISFIED BY THE CLOSING
DATE;
(C) SUFFERED ANY DAMAGE, DESTRUCTION OR LOSS, WHETHER OR
NOT COVERED BY INSURANCE, MATERIALLY AND ADVERSELY
AFFECTING THE ASSETS;
(D) SUFFERED ANY MATERIAL ADVERSE CHANGE TO THE CONDITION
OF THE PURCHASED ASSETS.
SECTION 3.12 CONDITION OF TANGIBLE ASSETS. TO SELLER'S KNOWLEDGE,
EXCEPT AS DISCLOSED ON SCHEDULE 3.12 HERETO, ALL PURCHASED ASSETS ARE IN GOOD
OPERATING CONDITION AND REPAIR, SUBJECT TO NORMAL WEAR AND MAINTENANCE, ARE
USABLE IN THE REGULAR AND ORDINARY COURSE OF THE BUSINESS AND CONFORM TO ALL
APPLICABLE LAWS, ORDINANCES, CODES, RULES AND REGULATIONS RELATING TO THEIR
CONSTRUCTION, USE AND OPERATION. TO SELLER'S KNOWLEDGE, NO PERSON OTHER THAN
SELLER OWNS ANY VEHICLES, EQUIPMENT OR OTHER TANGIBLE ASSETS OR PROPERTIES
SITUATED ON PROPERTY SUBJECT TO THE LEASES OR NECESSARY TO THE OPERATION OF THE
BUSINESS, EXCEPT FOR LEASED ITEMS DISCLOSED ON OTHER SCHEDULES HERETO AND FOR
ITEMS OF IMMATERIAL VALUE.
SECTION 3.13 TAX AND OTHER RETURNS AND REPORTS. TO SELLER'S KNOWLEDGE,
EXCEPT AS DISCLOSED ON SCHEDULE 3.13 HERETO, (A) ALL FEDERAL, STATE AND LOCAL
TAX RETURNS, REPORTS AND STATEMENTS (INCLUDING ALL INCOME TAX, UNEMPLOYMENT
COMPENSATION, SOCIAL SECURITY, PAYROLL, SALES AND USE, EXCISE, PRIVILEGE,
PROPERTY, AD VALOREM, FRANCHISE, LICENSE, SCHOOL AND ANY OTHER TAX UNDER LAWS
OF THE UNITED STATES OR ANY STATE OR MUNICIPAL OR POLITICAL SUBDIVISION
THEREOF) REQUIRED TO BE FILED BY SELLER IN CONNECTION WITH THE BUSINESS (THE
'TAX RETURNS') HAVE BEEN FILED WITH THE APPROPRIATE GOVERNMENTAL AGENCIES IN
ALL JURISDICTIONS IN WHICH SUCH RETURNS, REPORTS AND STATEMENTS ARE REQUIRED TO
BE FILED, AND ALL SUCH RETURNS, REPORTS AND STATEMENTS PROPERLY REFLECT THE TAX
LIABILITIES OF SELLER IN RELATION TO THE BUSINESS FOR THE PERIODS, PROPERTIES
OR EVENTS COVERED THEREBY; (B) ALL FEDERAL, STATE AND LOCAL TAXES, ASSESSMENTS,
INTEREST, PENALTIES, DEFICIENCIES, FEES AND OTHER GOVERNMENTAL CHARGES OR
IMPOSITIONS, INCLUDING THOSE ENUMERATED
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<PAGE> 14
ABOVE IN RESPECT OF THE TAX RETURNS, WHICH ARE CALLED FOR BY THE TAX RETURNS,
OR CLAIMED TO BE DUE BY ANY TAXING AUTHORITY FROM SELLER, OR UPON OR MEASURED
BY SELLER'S PROPERTIES, ASSETS OR INCOME (THE "TAXES"), HAVE BEEN PROPERLY
ACCRUED OR PAID; (C) SELLER HAS NOT RECEIVED ANY NOTICE OF ASSESSMENT OR
PROPOSED ASSESSMENT BY THE INTERNAL REVENUE SERVICE OR ANY OTHER TAXING
AUTHORITY IN CONNECTION WITH ANY TAX RETURNS AND THERE ARE NO PENDING TAX
EXAMINATIONS OF OR TAX CLAIMS ASSERTED AGAINST SELLER OR ANY OF ITS ASSETS OR
PROPERTIES; (D) THERE ARE NO TAX LIENS (OTHER THAN ANY LIEN FOR CURRENT TAXES
NOT YET DUE AND PAYABLE) ON ANY OF THE ASSETS; (F) SELLER HAS NO KNOWLEDGE OF
ANY BASIS FOR ANY ADDITIONAL ASSESSMENT OF ANY TAXES IN RELATION TO THE
BUSINESS; AND (E) SELLER HAS MADE ALL DEPOSITS REQUIRED BY LAW TO BE MADE WITH
RESPECT TO EMPLOYEES' WITHHOLDING TAXES.
SECTION 3.14 CONTRACTS AND COMMITMENTS. TO SELLER'S KNOWLEDGE, EXCEPT
AS LISTED AND DESCRIBED ON SCHEDULE 3.14 SELLER, IN RELATION TO THE BUSINESS,
IS NOT A PARTY TO ANY WRITTEN OR ORAL:
(A) AGREEMENT, CONTRACT OR COMMITMENT WITH ANY PRESENT OR
FORMER SHAREHOLDER, DIRECTOR, OFFICER, EMPLOYEE OR
CONSULTANT OR FOR THE EMPLOYMENT OF ANY PERSON,
INCLUDING ANY CONSULTANT;
(B) AGREEMENT, CONTRACT, COMMITMENT OR ARRANGEMENT WITH
ANY LABOR UNION OR OTHER REPRESENTATIVE OF EMPLOYEES
OTHER THAN: NONE;
(C) AGREEMENTS, CONTRACTS OR COMMITMENTS FOR THE FUTURE
PURCHASE OF, OR PAYMENT FOR, SUPPLIES OR PRODUCTS, OR
FOR THE PERFORMANCE OF SERVICES BY A THIRD PARTY,
INVOLVING THE EXPENDITURES OF $5.,000.00, OR MORE;
(D) AGREEMENTS, CONTRACTS OR COMMITMENTS TO SELL OR SUPPLY
PRODUCTS OR TO PERFORM SERVICES, INVOLVING $5,,000.00
IN VALUE;
(E) AGREEMENTS, CONTRACTS OR COMMITMENTS NOT OTHERWISE
LISTED ON SCHEDULE 3.14 HERETO AND CONTINUING OVER A
PERIOD OF MORE THAN SIX MONTHS FROM THE DATE HEREOF OR
EXCEEDING $5,000.00 IN VALUE;
(F) REPRESENTATIVE OR SALES AGENCY AGREEMENT, CONTRACT OR
COMMITMENT;
(G) LEASE UNDER WHICH SELLER IS EITHER THE LESSOR OR
LESSEE, EXCEPT AS LISTED ON SCHEDULE 3.14;
(H) AGREEMENT, CONTRACT OR COMMITMENT FOR ANY CHARITABLE
OR POLITICAL CONTRIBUTION;
(I) AGREEMENTS, CONTRACTS OR COMMITMENTS FOR ANY CAPITAL
EXPENDITURE IN EXCESS OF $5,000.00.
(J) AGREEMENT, CONTRACTOR COMMITMENT LIMITING OR
RESTRAINING IT FROM ENGAGING OR COMPETING IN ANY LINES
OF BUSINESS WITH ANY PERSON NOR IS ANY OFFICER OR
EMPLOYEE OF THE BUSINESS SUBJECT TO ANY SUCH
AGREEMENT, CONTRACT OR COMMITMENT;
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<PAGE> 15
(K) LICENSE, FRANCHISE, DISTRIBUTORSHIP OR OTHER
AGREEMENT, INCLUDING THOSE WHICH RELATE IN WHOLE OR IN
PART TO ANY PATENT, TRADEMARK, OR COPYRIGHT OR TO ANY
IDEAS, TECHNICAL ASSISTANCE OR OTHER KNOW-HOW OF OR
USED BY THE BUSINESS; OR
(L) MATERIAL AGREEMENT OR CONTRACT NOT MADE IN THE
ORDINARY COURSE OF BUSINESS.
T0 SELLER'S KNOWLEDGE, EXCEPT AS MAY BE DISCLOSED ON SCHEDULE 3.14, EACH OF THE
AGREEMENTS, CONTRACTS, COMMITMENTS, LEASES AND OTHER INSTRUMENTS, DOCUMENTS AND
UNDERTAKINGS LISTED ON SCHEDULE 3.14 IS VALID AND ENFORCEABLE IN ACCORDANCE
WITH ITS TERMS, THE PARTIES THERETO ARE IN COMPLIANCE WITH THE PROVISIONS
THEREOF, NO PARTY IS IN DEFAULT IN THE PERFORMANCE, OBSERVANCE OR FULFILLMENT
OF ANY MATERIAL OBLIGATION, COVENANT OR CONDITION CONTAINED THEREIN AND NO
EVENT HAS OCCURRED WHICH WITH OR WITHOUT THE GIVING OF NOTICE OR LAPSE OF TIME,
OR BOTH, WOULD CONSTITUTE A DEFAULT THEREUNDER, FURTHERMORE, EXCEPT AS MAY BE
DISCLOSED ON SCHEDULE 3.14, NO SUCH AGREEMENT, CONTRACT, COMMITMENT, LEASE OR
OTHER INSTRUMENT, DOCUMENT OR UNDERTAKING, IN THE REASONABLE OPINION OF THE
SELLER, CONTAINS ANY CONTRACTUAL REQUIREMENT WITH WHICH THERE IS A REASONABLE
LIKELIHOOD SELLER OR ANY OTHER THERETO WILL BE UNABLE TO COMPLY.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
PURCHASER REPRESENTS AND WARRANTS TO SELLER AS FOLLOWS:
SECTION 4.1 AUTHORITY OF PURCHASER. PURCHASER IS A CORPORATION,
VALIDLY EXISTING, AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF
LOUISIANA. PURCHASER HAS FULL CORPORATE POWER AND AUTHORITY TO EXECUTE AND
DELIVER THIS AGREEMENT AND EACH OF THE ANCILLARY AGREEMENTS, AND THE EXECUTION
AND DELIVERY BY PURCHASER OF THIS AGREEMENT AND THE ANCILLARY AGREEMENTS AND
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY HAVE BEEN DULY AND
VALIDLY AUTHORIZED BY ALL NECESSARY CORPORATE ACTION ON THE PART OF PURCHASER,
AND THIS AGREEMENT CONSTITUTES, AND EACH OF THE ANCILLARY AGREEMENTS UPON ITS
EXECUTION WILL CONSTITUTE, THE LEGAL, VALID AND BINDING OBLIGATION OF PURCHASER
ENFORCEABLE IN ACCORDANCE WITH THEIR TERMS, EXCEPT AS SUCH ENFORCEMENT MAY BE
LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY, MORATORIUM, OR SIMILAR LAWS FROM
TIME TO TIME IN EFFECT WHICH AFFECT CREDITORS' RIGHTS GENERALLY, AND BY LEGAL
AND EQUITABLE LIMITATIONS ON THE ENFORCEABILITY OF SPECIFIC REMEDIES. PURCHASER
HAS FULL CORPORATE POWER AND AUTHORITY TO OWN ITS PROPERTIES AND TO CARRY ON
THE BUSINESS PRESENTLY BEING CONDUCTED BY IT.
SECTION 4.2 NO CONFLICT OR VIOLATION. THE EXECUTION, DELIVERY AND
PERFORMANCE BY PURCHASER OF THIS AGREEMENT AND THE ANCILLARY AGREEMENTS DO NOT
AND WILL NOT VIOLATE OR CONFLICT WITH ANY PROVISION OF THE CERTIFICATE OF
INCORPORATION OR BY-LAWS OF PURCHASER AND DO NOT AND WILL NOT VIOLATE ANY
PROVISION OF LAW, OR ANY ORDER, JUDGMENT OR DECREE OF ANY COURT OR OTHER
GOVERNMENTAL AGENCY APPLICABLE TO PURCHASER, OR VIOLATE OR RESULT IN A MATERIAL
BREACH OF OR CONSTITUTE (WITH DUE NOTICE OR LAPSE OF TIME OR BOTH) A DEFAULT
UNDER ANY LOAN AGREEMENT, MORTGAGE, SECURITY AGREEMENT, INDENTURE OR OTHER
INSTRUMENT TO WHICH PURCHASER IS A PARTY OR BY WHICH IT IS BOUND.
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SECTION 4.3 CONSENTS AND APPROVALS. THE EXECUTION, DELIVERY AND
PERFORMANCE BY PURCHASER OF THIS AGREEMENT DO NOT REQUIRE THE CONSENT OR
APPROVAL OF, OR FILING WITH, ANY GOVERNMENTAL AGENCY OR OTHER ENTITY OR PERSON
EXCEPT: (I) AS MAY BE REQUIRED TO EFFECT THE TRANSFER OF ANY PERMITS; OR (II)
SUCH CONSENTS, APPROVALS AND FILINGS, THE FAILURE TO OBTAIN OR MAKE WHICH WOULD
NOT, INDIVIDUALLY OR IN THE AGGREGATE, HAVE A MATERIAL ADVERSE EFFECT ON ITS
ABILITY TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 4.4 AVAILABILITY OF FUNDS. PURCHASER HAS OBTAINED COMMITTED
FINANCING AS DESCRIBED ON SCHEDULE 4.4 HERETO, SUFFICIENT TO ALLOW IT TO PAY
THE PURCHASE PRICE AT THE TIMES AND IN THE MANNER SET FORTH IN THIS AGREEMENT
AND TO SATISFY ALL ITS OTHER OBLIGATIONS UNDER THIS AGREEMENT, AND ON THE DATE
OF THIS AGREEMENT PURCHASER HAS PROVIDED SELLER WITH ALL DOCUMENTATION RELATING
TO SUCH COMMITTED FINANCING.
SECTION 4.5 LITIGATION. THERE ARE NO ACTIONS, CAUSES OF ACTION,
CLAIMS, SUITS, PROCEEDINGS, ORDERS, WRITS, INJUNCTIONS, OR DECREES PENDING OR,
TO THE KNOWLEDGE OF PURCHASER, THREATENED AGAINST PURCHASER AT LAW OR IN EQUITY
OR BEFORE OR BY ANY GOVERNMENTAL AGENCY, WHICH SEEK TO RESTRAIN OR ENJOIN THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THAT COULD OTHERWISE
ADVERSELY AFFECT THE ABILITY OF PURCHASER TO PERFORM ITS OBLIGATIONS HEREUNDER.
SECTION 4.6 BROKERS. ALL NEGOTIATIONS RELATIVE TO THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREBY HAVE BEEN CARRIED ON BY PURCHASER WITHOUT
THE INTERVENTION OF ANY OTHER PERSON ACTING ON ITS BEHALF IN SUCH MANNER AS TO
GIVE RISE TO ANY VALID CLAIM BY ANY SUCH PERSON AGAINST THE SELLER OR THEIR
AFFILIATES FOR A FINDER'S FEE, BROKERAGE COMMISSION OR OTHER SIMILAR PAYMENT
BASED ON AN ARRANGEMENT WITH PURCHASER.
ARTICLE V
CERTAIN COVENANTS OF SELLER
SELLER COVENANTS WITH PURCHASER THAT FROM AND AFTER THE DATE HEREOF
THROUGH THE CLOSING DATE:
SECTION 5.1 CONDUCT OF BUSINESS BEFORE THE CLOSING DATE. SELLER SHALL
NOT, EXCEPT AS REQUIRED OR EXPRESSLY PERMITTED PURSUANT TO THE TERMS HEREOF,
MAKE ANY MATERIAL CHANGE IN THE BUSINESS, FIXED ASSETS, CAPITAL STRUCTURE, OR
CONTRACTUAL OR EMPLOYMENT RELATIONSHIPS, OR ENTER INTO ANY TRANSACTION
RESPECTING THE PURCHASED ASSETS, OTHER THAN (A) SALES OF INVENTORY IN THE
ORDINARY COURSE OF THE BUSINESS, OR (B) OTHER TRANSACTIONS IN THE ORDINARY
COURSE OF THE BUSINESS, IN EITHER CASE SUBSTANTIALLY CONSISTENT WITH SELLER'S
PAST PRACTICES OR AS OTHERWISE CONTEMPLATED BY THIS AGREEMENT. FURTHER, THERE
SHALL BE NO MATERIAL ADVERSE CHANGE AS OF THE SIGNING OF THE DEFINITIVE
AGREEMENT IN THE BUSINESS MIX, OPERATIONS, RESULTS OF OPERATIONS OR FINANCIAL
CONDITION OF SELLER AS REFLECTED IN THE AUDITED FINANCIAL STATEMENTS BY PEAT
MARWICK OF SELLER FOR THE FISCAL YEAR ENDED AS OF THE SAME DATE (DECEMBER 31,
1998). THERE SHALL HAVE BEEN AND SHALL BE NO SIGNIFICANT CHANGE IN THE
MANAGEMENT OF SELLER FROM OCTOBER 7,1998 UNTIL THE CLOSING WITHOUT THE EXPRESS
CONSENT OF PURCHASER.
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SECTION 5.2 IN GENERAL. EXCEPT TO THE EXTENT EXPRESSLY PROVIDED
OTHERWISE IN THIS AGREEMENT, SELLER SHALL BE RESPONSIBLE FOR ANY AND ALL WAGES,
VACATIONS, HOLIDAYS, UNION CHECKOFF DUES, BEREAVEMENT PAY, JURY DUTY PAY,
DISABILITY INCOME, SUPPLEMENTAL UNEMPLOYMENT BENEFITS, PERSONAL OR SICK LEAVE
PAY, PAYROLL EXPENSES AND, OTHER BENEFITS UNDER ANY OF THE SELLER'S EMPLOYEE
BENEFIT PLANS, ARISING OUT OF THE EMPLOYMENT OF EMPLOYEES ("EMPLOYEES") BY
SELLER WHICH ARE EARNED PRIOR TO THE CLOSING DATE (REGARDLESS OF WHEN SUCH
AMOUNTS ARE PAYABLE) AND PURCHASER SHALL BE RESPONSIBLE FOR AND ASSUME ALL
LIABILITY FOR ACCRUED VACATION BENEFITS AS REFLECTED ON THE AUGUST 31,1998,
BALANCE SHEET, SUBJECT TO "TRUE UP" PURSUANT TO SECTION 5.7, AND ANY AND ALL
SUCH AMOUNTS (OR ANY COMPARABLE AMOUNTS UNDER PURCHASER'S PLANS) TO EMPLOYEES
THAT ARE EARNED ON OR AFTER THE CLOSING DATE.
SECTION 5.3 INFORMATION AND ACCESS. SELLER WILL PERMIT REPRESENTATIVES
OF PURCHASER TO HAVE REASONABLE ACCESS DURING NORMAL BUSINESS HOURS AFTER
REASONABLE NOTICE FROM PURCHASER TO SELLER, AND IN A MANNER SO AS NOT TO
INTERFERE WITH THE NORMAL OPERATIONS, TO ALL PREMISES, PROPERTIES, PERSONNEL,
ACCOUNTANTS, BOOKS, RECORDS, CONTRACTS AND DOCUMENTS OF OR PERTAINING TO THE
PURCHASED ASSETS. PURCHASER AND EACH OF ITS REPRESENTATIVES WILL TREAT AND HOLD
SUCH INFORMATION AS CONFIDENTIAL. PURCHASER SHALL INDEMNIFY, DEFEND AND HOLD
HARMLESS SELLER, THE LESSOR UNDER THE LEASE AND THEIR RESPECTIVE AFFILIATES
FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION, LOSSES,
DAMAGES, LIABILITIES, COST AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
ATTORNEYS' FEES AND DISBURSEMENTS), SUFFERED OR INCURRED BY SUCH PERSONS IN
CONNECTION WITH (I) PURCHASER'S AND/OR PURCHASER'S REPRESENTATIVES' ENTRY UPON
THE LEASED PROPERTY, OR (II) ANY AND ALL OTHER ACTIVITIES UNDERTAKEN BY
PURCHASER OR PURCHASER'S REPRESENTATIVES PURSUANT TO THIS SECTION 5.3.
SECTION 5.4 FURTHER ASSURANCES. UPON THE REQUEST OF PURCHASER AT ANY
TIME AFTER THE CLOSING DATE, TO THE EXTENT THAT SELLER IS ABLE TO COMPLY WITH
THE REQUIREMENTS OF THIS SECTION, SELLER SHALL FORTHWITH EXECUTE AND DELIVER
SUCH DOCUMENTS AS PURCHASER OR ITS COUNSEL MAY REASONABLY REQUEST TO EFFECTUATE
THE PURPOSES OF THIS AGREEMENT.
SECTION 5.5 REASONABLE EFFORTS. UPON THE TERMS AND SUBJECT TO THE
CONDITIONS OF THIS AGREEMENT, SELLER WILL USE COMMERCIALLY REASONABLE EFFORTS
TO TAKE, OR CAUSE TO BE TAKEN, ALL ACTIONS, AND TO DO, OR CAUSE TO BE DONE, ALL
THINGS NECESSARY OR PROPER CONSISTENT WITH APPLICABLE LAW TO CONSUMMATE AND
MAKE EFFECTIVE IN THE MOST EXPEDITIOUS MANNER PRACTICABLE THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 5.6 CURE OF DEFAULTS. SELLER SHALL (I) CURE ANY DEFAULT IN
BASE RENTAL PAYMENTS ARISING UNDER THE LEASE AND OUTSTANDING AS OF THE CLOSING
DATE; AND (II) USE COMMERCIALLY REASONABLE EFFORTS TO CURE ANY AND ALL OTHER
DEFAULTS WITH RESPECT TO THE ASSIGNED CONTRACTS. SHOULD SELLER FOR SOME REASON
BE UNABLE TO CURE SUCH DEFAULT, SELLER WILL PROVIDE A SCHEDULE TO BE DESIGNATED
SCHEDULE 5.6, AND SELLER WILL PROVIDE INDEMNITY AGREEMENTS FOR ANY SUCH
DEFAULTS, AGREEING TO FULLY INDEMNIFY PURCHASER FOR ANY LOSS OR DAMAGES
SUSTAINED AS A RESULT OF SAID DEFAULT, PURCHASER MAINTAINING, IN ITS SOLE
DISCRETION, THE RIGHT TO WAIVE ANY OR ALL SUCH DEFAULTS.
SECTION 5.7 AUDIT OF OPERATIONS AT BUSINESS LOCATIONS. PRIOR TO
CLOSING, SELLER SHALL PROVIDE PURCHASER WITH INTERIM, UNAUDITED FINANCIAL
STATEMENTS FOR SELLER FOR THE TWELVE (12) MONTHS ENDED DECEMBER, 1998 AND
MONTHLY FINANCIAL STATEMENTS OF SELLER FOR EACH MONTH AFTER DECEMBER, 1998
UNTIL THE CLOSING, AND SUCH FINANCIAL STATEMENTS SHALL BE TRUE, COMPLETE AND
CORRECT IN ALL MATERIAL RESPECTS AND THE INVENTORY AND RECEIVABLES THEREIN
FAIRLY STATED. THE AFOREMENTIONED INTERIM UNAUDITED FINANCIAL STATEMENTS DO NOT
REFLECT ANY MATERIAL ADVERSE CHANGE IN SELLER'S RESULTS OF OPERATIONS AND
FINANCIAL CONDITION AS COMPARED TO SELLER'S RESULTS AND OPERATIONS AND
FINANCIAL CONDITION AS REFLECTED IN THE REVIEWED FINANCIAL STATEMENTS OF SELLER
PREVIOUSLY PROVIDED TO PURCHASER. PURCHASER SHALL PAY SELLER $20,000.00 FOR THE
COST OF THE DECEMBER 31, 1998 AUDIT OF SELLER. WITHIN SIXTY (60) DAYS AFTER THE
CLOSING, A "TRUE UP" AND AUDIT WILL OCCUR TO DETERMINE THE APPROPRIATE AMOUNT
OF THE PURCHASE PRICE TO BE PAID FROM ESCROW BASED ON A FINAL DETERMINATION OF
THE PURCHASED ASSETS, THE COSTS OF SUCH TRUE UP AND AUDIT TO BE PAID BY
PURCHASER.
SECTION 5.8 SEVERANCE; VACATION AND SICK LEAVE. SELLER SHALL OTHERWISE
INDEMNIFY AND HOLD PURCHASER HARMLESS, TO THE EXTENT PURCHASER IS NOT OTHERWISE
LIABLE, ON ACCOUNT OF ANY CLAIM BY ANY BUSINESS EMPLOYEES WITH RESPECT TO ANY
AMOUNTS OWED TO SUCH BUSINESS EMPLOYEES FOR SEVERANCE OR UNUSED VACATION AND
SICK LEAVE EARNED AS OF THE CLOSING DATE.
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SECTION 5.9 WORKER'S COMPENSATION/OSHA.
(A) SELLER SHALL RETAIN RESPONSIBILITY FOR ALL WORKERS'
COMPENSATION CLAIMS FILED BY EMPLOYEES EITHER PRIOR TO
OR SUBSEQUENT TO THE CLOSING DATE FOR INJURIES
SUSTAINED PRIOR TO THE CLOSING DATE. PURCHASER SHALL
BE RESPONSIBLE FOR ALL WORKERS' COMPENSATION CLAIMS
RELATED TO THE BUSINESS WHICH ARE NOT THE
RESPONSIBILITY OF SELLER UNDER THE PRECEDING SENTENCE.
(B) SELLER SHALL RETAIN RESPONSIBILITY FOR ANY MONETARY
FINES OR PENALTIES ASSESSED UNDER THE OCCUPATIONAL
SAFETY AND HEALTH ACT ('OSHA') AND SIMILAR STATE AND
LOCAL STATUTES AND ORDINANCES AND THAT ARE ASSESSED
WITH RESPECT TO CITATIONS OUTSTANDING AT THE CLOSING
DATE ('OUTSTANDING CITATIONS') WHICH CITATIONS RELATE
TO THE BUSINESS OR TO THE EMPLOYEES. PURCHASER SHALL
PROMPTLY TAKE, AND SHALL ASSUME RESPONSIBILITY FOR,
ALL REMEDIAL AND NON-MONETARY ACTION REQUIRED AS A
RESULT OF ANY OUTSTANDING CITATIONS BUT SELLER SHALL
INDEMNIFY AND HOLD HARMLESS PURCHASE FROM ALL COSTS
INCURRED AS A RESULT OF SUCH ACTIONS. PURCHASER SHALL
BE RESPONSIBLE FOR ALL CITATIONS RELATING TO THE
BUSINESS OR TO THE EMPLOYEES MADE AFTER THE CLOSING
DATE.
SECTION 5.10 GRIEVANCES. SELLER SHALL BE RESPONSIBLE FOR (I) THE
RESOLUTION OF ALL FILED GRIEVANCES ATTRIBUTABLE TO EVENTS OCCURRING PRIOR TO
THE CLOSING DATE AND (II) THE PAYMENT OF ANY AMOUNTS IN THE NATURE OF BACK PAY
OR EMPLOYEE COMPENSATION IN RESPECT OF SUCH GRIEVANCES FOR PERIODS BEFORE OR
AFTER THE CLOSING DATE AND ALL OTHER EXPENSES INCIDENT THERETO.
SECTION 5.11 SELLER CERTIFICATION. SECTION 1445 OF THE INTERNAL
REVENUE CODE PROVIDES THAT A PURCHASER OF A U.S. REAL PROPERTY INTEREST MUST
WITHHOLD TAX IF THE SELLER IS A FOREIGN PERSON. IN CONNECTION THEREWITH, SELLER
WARRANTS THAT WITHHOLDING OF TAX IS NOT REQUIRED UPON DISPOSITION OF THE U.S.
REAL PROPERTY INTEREST BEING SOLD PURSUANT TO THIS AGREEMENT, AGREES TO HOLD
PURCHASER HARMLESS FROM ANY LIABILITY UNDER SECTION 1445 OR ANY INTEREST OR
PENALTIES IMPOSED IN CONNECTION THEREWITH, AND REPRESENTS THE FOLLOWING:
(A) SELLER IS NOT A FOREIGN CORPORATION, FOREIGN
PARTNERSHIP, FOREIGN TRUST, OR FOREIGN ESTATE (AS
THESE TERMS ARE DEFINED IN INTERNAL REVENUE CODE AND
INCOME TAX REGULATIONS);
(B) SELLER'S U.S. EMPLOYER IDENTIFICATION NO. IS
72-0462313;
(C) SELLER'S OFFICE ADDRESS is 725 BERT KOUNS INDUSTRIAL
LOOP, SHREVEPORT, LOUISIANA 71118; AND
(D) SELLER SHALL PROVIDE ON OR BEFORE THE CLOSING DATE A
CERTIFICATION OF NONFOREIGN STATUS AS PROVIDED IN
TREAS. REG. SECTION 1.4445-T(B))2)(iii)(B).
SELLER CONSENTS THAT THE INFORMATION CONTAINED IN THIS SECTION 5.11 MAY BE
DISCLOSED TO THE INTERNAL REVENUE SERVICE BY THE PURCHASER.
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SECTION 5.12 SELLER INDEMNITY. TO THE EXTENT NOT OTHERWISE PROVIDED
HEREIN, EXCEPT FOR ASSUMED LIABILITIES, SELLER AGREES TO DEFEND, INDEMNIFY AND
HOLD HARMLESS PURCHASER FROM AND AGAINST:
(A) ALL DEBTS, LIABILITIES AND OBLIGATIONS ARISING OUT OF
OR IN ANYWAY RELATING TO THE OPERATION OF THE BUSINESS
ACCRUING PRIOR TO THE CLOSING DATE OR FROM EVENTS
OCCURRING PRIOR TO THE CLOSING WITH RESPECT TO THE
OWNERSHIP, MANAGEMENT, OPERATION AND MAINTENANCE OF
THE BUSINESS;
(B) ANY ACTUAL LOSS, LIABILITY OR DAMAGE SUFFERED OR
INCURRED BY PURCHASER BECAUSE ANY REPRESENTATION OR
WARRANTY CONTAINED IN THIS AGREEMENT, OR IN ANY
DOCUMENT FURNISHED TO PURCHASER BY SELLER IN
CONNECTION WITH THE CLOSING HEREUNDER, SHALL BE FALSE
OR MISLEADING IN ANY MATERIAL RESPECT; AND
(C) ALL REASONABLE COSTS AND EXPENSES (INCLUDING
REASONABLE ATTORNEYS' FEES) INCURRED BY PURCHASER IN
CONNECTION WITH ANY ACTION, SUIT, PROCEEDING, DEMAND,
ASSESSMENT OR JUDGMENT INCIDENT TO ANY OF THE MATTERS
INDEMNIFIED AGAINST IN THIS PROVISION.
ARTICLE VI
CERTAIN COVENANTS OF PURCHASER
SECTION 6.1 REASONABLE EFFORTS AND FURTHER ASSURANCES. UPON THE TERMS
AND SUBJECT TO THE CONDITIONS OF THIS AGREEMENT, PURCHASER WILL USE
COMMERCIALLY REASONABLE EFFORTS TO TAKE, OR CAUSE TO BE TAKEN, ALL ACTION, AND
TO DO, OR CAUSE TO BE DONE, ALL THINGS NECESSARY OR PROPER CONSISTENT WITH
APPLICABLE LAW TO CONSUMMATE AND MAKE EFFECTIVE IN THE MOST EXPEDITIOUS MANNER
PRACTICABLE THE TRANSACTIONS CONTEMPLATED HEREBY. UPON THE REQUEST OF PURCHASER
AT ANY TIME AFTER THE CLOSING DATE, TO THE EXTENT THAT SELLER IS ABLE TO COMPLY
WITH THE REQUIREMENTS OF THIS SECTION, SELLER SHALL FORTHWITH EXECUTE AND
DELIVER SUCH DOCUMENTS AS PURCHASER OR ITS COUNSEL MAY REASONABLY REQUEST TO
EFFECTUATE THE PURPOSES OF THIS AGREEMENT.
SECTION 6.2 PERFORMANCE UNDER ASSIGNED CONTRACTS. PURCHASER AGREES
THAT FROM AND AFTER THE CLOSING DATE IT SHALL (I) ASSUME ALL OBLIGATIONS AND
LIABILITIES UNDER THE ASSIGNED CONTRACTS WHICH ACCRUE AFTER THE CLOSING DATE,
(II) TAKE ALL ACTIONS NECESSARY TO SATISFY ITS OBLIGATIONS UNDER THE TERMS AND
CONDITIONS OF EACH OF THE ASSIGNED CONTRACTS AND (III) INDEMNIFY AND HOLD
HARMLESS SELLER FOR ANY LOSS OR DAMAGES ARISING OUT OF A BREACH OF THIS
COVENANT.
SECTION 6.3 PURCHASER FINANCING. PURCHASER SHALL, FROM THE DATE OF
THIS AGREEMENT UNTIL AND INCLUDING THE CLOSING DATE, MAINTAIN THE AVAILABILITY
OF FUNDS PURSUANT TO THE COMMITTED FINANCING SET FORTH ON SCHEDULE 4.4, AND, IN
THE EVENT THAT SUCH FINANCING BECOMES UNAVAILABLE, SHALL (I) USE COMMERCIALLY
REASONABLE EFFORTS TO OBTAIN ALTERNATIVE COMMITTED FINANCING AND (II) IN THE
EVENT THAT PURCHASER IS UNABLE TO OBTAIN SUCH ALTERNATIVE COMMITTED FINANCING,
ACCEPT SUCH ALTERNATIVE FINANCING AS MAY BE ARRANGED BY SELLER, PROVIDED THAT
SUCH SELLER ARRANGED FINANCING IS ON TERMS NO LESS FAVORABLE TO PURCHASER THAN
THE
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<PAGE> 20
COMMITTED FINANCING SET FORTH ON SCHEDULE 4.4 (IT BEING UNDERSTOOD THAT SELLER
SHALL BE UNDER NO OBLIGATION TO OBTAIN ALTERNATIVE FINANCING FOR PURCHASER).
SELLER ACKNOWLEDGES AND CONSENTS TO AND AGREES TO EXECUTE A CONSENT TO
COLLATERAL ASSIGNMENT OF ASSET PURCHASE AGREEMENT BY RANKIN AUTOMOTIVE GROUP,
INC. TO HELLER FINANCIAL, INC.
SECTION 6.4 PURCHASER INDEMNITY. TO THE EXTENT NOT OTHERWISE PROVIDED
HEREIN OR NOT INCONSISTENT WITH ANY OTHER PROVISION HEREOF, PURCHASER AGREES TO
DEFEND, INDEMNIFY AND HOLD SELLER HARMLESS FROM AND AGAINST:
(A) ALL DEBTS, LIABILITIES AND OBLIGATIONS ARISING OUT OF
OR IN ANYWAY RELATING TO THE OPERATION OF THE BUSINESS
ACCRUING SUBSEQUENT TO THE CLOSING OR FROM EVENTS
OCCURRING SUBSEQUENT TO THE CLOSING WITH RESPECT TO
THE OWNERSHIP, MANAGEMENT, OPERATION, MAINTENANCE AND
REPAIR OF THE BUSINESS;
(B) ANY ACTUAL LOSS, LIABILITY, OR DAMAGE SUFFERED OR
INCURRED BY SELLER BECAUSE OF ANY REPRESENTATION OR
WARRANTY CONTAINED IN THIS AGREEMENT, OR IN ANY
DOCUMENT FURNISHED TO SELLER BY PURCHASER IN
CONNECTION WITH THE CLOSING HEREUNDER, SHALL BE FALSE
OR MISLEADING IN ANY MATERIAL RESPECT; AND
(C) ALL REASONABLE COSTS AND EXPENSES (INCLUDING
REASONABLE ATTORNEYS' FEES) INCURRED BY SELLER IN
CONNECTION WITH ANY SUIT, PROCEEDING, DEMAND,
ASSESSMENT OR JUDGMENT INCIDENT TO ANY OF THE MATTERS
INDEMNIFIED AGAINST IN THIS PROVISION.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
THE OBLIGATIONS OF SELLER TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT ARE SUBJECT TO THE SATISFACTION OF EACH OF THE FOLLOWING
CONDITIONS ON OR PRIOR TO THE CLOSING DATE:
SECTION 7.1 REPRESENTATIONS AND WARRANTIES. THE REPRESENTATIONS AND
WARRANTIES OF PURCHASER CONTAINED IN THIS AGREEMENT SHALL BE TRUE ON AND AS OF
THE CLOSING DATE IN ALL MATERIAL RESPECTS AS THOUGH SUCH REPRESENTATIONS AND
WARRANTIES WERE MADE ON AND AS OF THE CLOSING DATE.
SECTION 7.2 COMPLIANCE WITH AGREEMENT. PURCHASER SHALL HAVE PERFORMED
AND COMPLIED IN ALL MATERIAL RESPECTS (AND IN ALL RESPECTS IN THE CASE OF
ARTICLE 11 HEREOF) WITH ALL COVENANTS AND CONDITIONS TO BE PERFORMED OR
COMPLIED WITH BY IT ON OR PRIOR TO THE CLOSING DATE.
SECTION 7.3 CONSENTS. ANY CONSENT REQUIRED IN CONNECTION WITH THE
ASSIGNMENT TO PURCHASER OF THE LEASE, AND ANY CONSENTS REQUIRED IN CONNECTION
WITH THE ASSIGNMENT OF THOSE OTHER ASSIGNED CONTRACTS LISTED IN SCHEDULE 3.7
HERETO SHALL HAVE BEEN DULY OBTAINED AND SHALL BE IN FULL FORCE AND EFFECT ON
THE CLOSING DATE.
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<PAGE> 21
SECTION 7.4 PURCHASER'S CLOSING DELIVERIES AND OBLIGATIONS. PURCHASER
SHALL HAVE DELIVERED ALL ITEMS AND SATISFIED ALL OBLIGATIONS PURSUANT TO
SECTION 9.1 (C).
SECTION 7.5 AVAILABILITY OF PURCHASER FINANCING. THE COMMITTED
FINANCING SET FORTH ON SCHEDULE 4.4 SHALL BE AVAILABLE TO PURCHASER ON THE
CLOSING DATE, OR ALTERNATE FINANCING IS AVAILABLE TO PURCHASER TO THE
SATISFACTION OF SELLER.
SECTION 7.6 NO ADVERSE PROCEEDING. AS OF THE CLOSING DATE, THERE SHALL
NOT HAVE BEEN INSTITUTED OR BE PENDING OR THREATENED ANY SUIT, ACTION OR OTHER
PROCEEDING BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON IN WHICH IT IS SOUGHT
TO RESTRAIN OR PROHIBIT THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS
THE OBLIGATION OF PURCHASER TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT IS SUBJECT TO THE SATISFACTION (UNLESS WAIVED IN
WRITING BY PURCHASER) OF EACH OF THE FOLLOWING CONDITIONS ON OR PRIOR TO THE
CLOSING DATE:
SECTION 8.1 REPRESENTATIONS AND WARRANTIES. THE REPRESENTATIONS AND
WARRANTIES OF SELLER CONTAINED IN THIS AGREEMENT SHALL BE TRUE ON AND AS OF THE
CLOSING DATE IN ALL MATERIAL RESPECTS.
SECTION 8.2 COMPLIANCE WITH AGREEMENT. SELLER SHALL HAVE PERFORMED AND
COMPLIED IN ALL MATERIAL RESPECTS WITH ALL COVENANTS AND CONDITIONS TO BE
PERFORMED OR COMPLIED WITH BY IT ON OR PRIOR TO THE CLOSING DATE.
SECTION 8.3 NO ADVERSE PROCEEDING. AS OF THE CLOSING DATE, THERE SHALL
NOT HAVE BEEN INSTITUTED OR BE PENDING OR THREATENED ANY SUIT, ACTION OR OTHER
PROCEEDING BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON IN WHICH IT IS SOUGHT
TO RESTRAIN OR PROHIBIT THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
SECTION 8.4 CONSENTS. THE FOLLOWING CONSENTS SHALL HAVE BEEN DULY
OBTAINED AND SHALL BE IN FULL FORCE AND EFFECT ON THE CLOSING DATE: (I) THE
CONSENT, IF ANY, REQUIRED IN CONNECTION WITH THE ASSIGNMENT TO PURCHASER OF THE
LEASES; AND (II) THE CONSENTS, IF ANY, REQUIRED IN CONNECTION WITH THE
ASSIGNMENT OF THOSE OTHER ASSIGNED CONTRACTS LISTED IN SCHEDULE 3.7 HERETO.
SECTION 8.5 SELLER'S CLOSING DELIVERIES AND OBLIGATIONS. SELLER SHALL
HAVE DELIVERED ALL ITEMS AND SATISFIED ALL OBLIGATIONS PURSUANT TO SECTION 9.1
(B).
ARTICLE IX
THE CLOSING AND TERMINATION
SECTION 9.1 THE CLOSING. THE CLOSING SHALL BE HELD ON THE ___ DAY OF
___________________________, 1999 (THE "CLOSING DATE") THE CLOSING SHALL BE
HELD AT THE __________ AT THE CLOSING, ALL OF THE TRANSACTIONS PROVIDED FOR IN
ARTICLE II HEREOF SHALL BE CONSUMMATED ON A SUBSTANTIALLY CONCURRENT BASIS.
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<PAGE> 22
(A) SELLER's DELIVERIES AND OBLIGATIONS AT CLOSING. AT THE
CLOSING, SELLER SHALL DELIVER (OR CAUSE TO BE
DELIVERED) TO PURCHASER THE FOLLOWING (IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO COUNSEL FOR
PURCHASER):
(I) A DULY EXECUTED ASSIGNMENT AND ASSUMPTION
AGREEMENT ASSIGNING TO PURCHASER THE RIGHTS,
TITLE, INTEREST, AND OBLIGATIONS IN, UNDER, AND
TO EACH OF THE OTHER CONTRACTS BEING ASSIGNED TO
PURCHASER, SUBSTANTIALLY IN THE FORM ATTACHED
HERETO As EXHIBIT A;
(II) A DULY EXECUTED BILL OF SALE AND ASSUMPTION
AGREEMENT AND SUCH OTHER DOCUMENTS OR INSTRUMENTS
OF TRANSFER NECESSARY TO VEST IN PURCHASER FULL
AND COMPLETE TITLE TO THE PURCHASED INVENTORY AND
FIXED ASSETS, FREE AND CLEAR OF ALL LIENS,
PLEDGES, SECURITY INTERESTS, AND ENCUMBRANCES, ON
THE CLOSING DATE, SUBSTANTIALLY IN THE FORM
ATTACHED HERETO As EXHIBIT B; A DULY EXECUTED
ASSIGNMENT AND ASSUMPTION OF LEASE ASSIGNING THE
RIGHTS, TITLE, INTEREST, AND OBLIGATIONS IN,
UNDER, AND TO THE LEASES TO PURCHASER,
SUBSTANTIALLY IN THE FORM ATTACHED HERETO As
EXHIBIT A;
(III)CERTIFIED RESOLUTIONS OF THE DIRECTORS OF SELLER
APPROVING AND AUTHORIZING THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT;
(IV) A CERTIFICATE, EXECUTED BY A DULY AUTHORIZED
OFFICER OF SELLER, TO THE EFFECT THAT ALL
CONDITIONS TO CLOSING SET FORTH IN SECTION 8.1
AND SECTION 8.2 HAVE BEEN SATISFIED; AND
(V) SUCH OTHER INSTRUMENTS, DOCUMENTS, AND
CONSIDERATIONS WHICH MAY BE REASONABLY REQUIRED
BY PURCHASER OR PURCHASER's COUNSEL TO EFFECTUATE
THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT.
(B) PURCHASER'S DELIVERIES AND OBLIGATIONS AT CLOSING. AT
THE CLOSING, PURCHASER SHALL DELIVER (OR CAUSE TO BE
DELIVERED) TO SELLER THE FOLLOWING (IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO COUNSEL FOR
SELLER):
(I) PAYMENT OF THE PURCHASE PRICE AND OTHER AMOUNTS
IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET
FORTH IN SECTION 2.3 AND OTHER APPLICABLE
PROVISIONS OF THIS AGREEMENT;
(II) A DULY EXECUTED ASSIGNMENT AND ASSUMPTION
AGREEMENT ACCEPTING THE ASSIGNMENT OF THE RIGHTS,
TITLE, INTEREST, AND OBLIGATIONS IN, UNDER, AND
TO EACH OF THE OTHER CONTRACTS BEING ASSIGNED TO
PURCHASER, SUBSTANTIALLY IN THE FORM ATTACHED
HERETO AS EXHIBIT A;
Page 20 of 27
<PAGE> 23
(III)A DULY EXECUTED ASSIGNMENT AND ASSUMPTION OF
LEASES ACCEPTING THE ASSIGNMENT OF THE RIGHTS,
TITLE, INTEREST, AND OBLIGATIONS IN, UNDER, AND
TO THE LEASES, SUBSTANTIALLY IN THE FORM ATTACHED
HERETO AS EXHIBIT A;
(IV) CERTIFIED RESOLUTIONS OF THE DIRECTORS OF
PURCHASER APPROVING AND AUTHORIZING THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT;
(V) A CERTIFICATE, EXECUTED BY A DULY AUTHORIZED
OFFICER OF PURCHASER, TO THE EFFECT THAT ALL THE
CONDITIONS TO CLOSING SET FORTH IN SECTION 7.1
AND SECTION 7.2 HAVE BEEN SATISFIED;
(VI) SUCH OTHER INSTRUMENTS, DOCUMENTS, AND
CONSIDERATIONS WHICH MAY BE REASONABLY REQUIRED
BY PURCHASER OR PURCHASER'S COUNSEL TO EFFECTUATE
THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT.
SECTION 9.2 TERMINATION. ANYTHING IN THIS AGREEMENT TO THE CONTRARY
NOTWITHSTANDING, THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY MAY BE
TERMINATED IN ANY OF THE FOLLOWING WAYS AT ANY TIME BEFORE THE CLOSING AND IN
NO OTHER MANNER:
(A) BY MUTUAL WRITTEN CONSENT OF PURCHASER AND SELLER; OR
(B) BY SELLER, IF PURCHASER IS IN BREACH IN ANY MATERIAL
RESPECT OF ANY OF ITS REPRESENTATIONS MADE IN THIS
AGREEMENT, OR IS IN VIOLATION OR DEFAULT OF ANY OF ITS
COVENANTS OR AGREEMENTS IN THIS AGREEMENT IF THE
BREACH OR DEFAULT IS NOT CURED WITHIN TEN (I 0)
BUSINESS DAYS AFTER WRITTEN NOTICE BY SELLER;
(C) BY PURCHASER, IF SELLER IS IN BREACH IN ANY MATERIAL
RESPECT OF ANY OF ITS REPRESENTATIONS MADE IN THIS
AGREEMENT OR IS IN VIOLATION OR DEFAULT OF ANY OF ITS
COVENANTS OR AGREEMENTS IN THIS AGREEMENT WHICH BREACH
OR DEFAULT IS NOT CURED WITHIN TEN (10) BUSINESS DAYS
AFTER WRITTEN NOTICE BY PURCHASER.
(D) BY PURCHASER, IF AT ANY POINT UP UNTIL AND INCLUDING
THE CLOSING DATE, PURCHASER DOES NOT HAVE AVAILABLE
COMMITTED FINANCING.
SECTION 9.3 EFFECTS OF TERMINATION.
(A) IN THE EVENT THIS AGREEMENT IS TERMINATED PURSUANT TO
SECTION 9.2, EXCEPT AS PROVIDED IN THIS SECTION 9.3,
ALL FURTHER OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
TERMINATE. IF THIS AGREEMENT IS TERMINATED AS
PERMITTED BY SECTION 9.2(B), PURCHASER SHALL BE LIABLE
FOR ANY AND ALL LOSSES, DAMAGES AND EXPENSES INCURRED
OR SUFFERED BY SELLER AS A RESULT OF SUCH FAILURE TO
PERFORM. IF THIS AGREEMENTS IS TERMINATED AS PERMITTED
BY SECTION 9.2(C), SELLER SHALL BE LIABLE FOR ANY AND
ALL LOSSES, DAMAGES, AND EXPENSES INCURRED OR SUFFERED
BY PURCHASER AS A RESULT OF SUCH FAILURE TO PERFORM.
IF THIS AGREEMENT IS TERMINATED BY SELLER PURSUANT TO
SECTION 9.2(D), PURCHASER SHALL BE LIABLE FOR
LIQUIDATED DAMAGES IN THE AMOUNT OF TWENTY-FIVE
THOUSAND DOLLARS ($25,000.00). THE PROVISIONS OF THIS
SECTION 9.3 SHALL SURVIVE ANY TERMINATION HEREOF
PURSUANT TO SECTION 9.2.
(B) THE FOREGOING PROVISIONS OF THIS SECTION 9.3 SHALL NOT
LIMIT THE RIGHTS OF THE PARTIES HERETO TO SEEK SPECIFIC
PERFORMANCE OF ANY OBLIGATION HEREUNDER OF ANY OTHER
PARTY.
Page 21 of 27
<PAGE> 24
ARTICLE X
TAXES
THE PARTIES HERETO HEREBY COVENANT AND AGREE AS FOLLOWS:
SECTION 10.1 TAXES RELATED TO PURCHASE OF ASSETS. THE PARTIES
RECOGNIZE AND ACKNOWLEDGE THAT, BECAUSE THE SALE, TRANSFER, ASSIGNMENT AND
DELIVERY OF THE PURCHASED ASSETS MAY BE SUBJECT STATE AND LOCAL TRANSFER,
RECORDING, STAMP OR OTHER SIMILAR TRANSFER TAXES (COLLECTIVELY, "TRANSACTION
TAXES") WHICH MAY BE IMPOSED BY REASON OF THE SALE, TRANSFER, ASSIGNMENT AND
DELIVERY OF THE PURCHASED ASSETS; PROVIDED, HOWEVER, THAT IF TRANSACTION TAXES
ARE ASSESSED FOR ANY REASON, THEN PURCHASER SHALL PAY SUCH TRANSACTION TAXES
ALONG WITH ANY RECORDING AND FILING FEES. PURCHASER AND SELLER AGREE TO
COOPERATE TO DETERMINE THE AMOUNT OF TRANSACTION TAXES PAYABLE IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT. TRANSACTION TAXES
SHALL NOT INCLUDE ANY TAXES FOR WHICH SELLER IS RESPONSIBLE UNDER SECTION 10.2.
AT THE CLOSING, PURCHASER SHALL REMIT TO THE SELLER SUCH PROPERLY COMPLETED
RESALE EXEMPTION CERTIFICATES AND OTHER SIMILAR CERTIFICATES OR INSTRUMENTS AS
ARE APPLICABLE TO CLAIM AVAILABLE EXEMPTIONS FROM THE PAYMENT OF SALES,
TRANSFER, USE OR OTHER SIMILAR TAXES UNDER APPLICABLE LAW. PURCHASER AND SELLER
SHALL COOPERATE IN PREPARING SUCH FORMS AND WILL EXECUTE AND DELIVER SUCH
AFFIDAVITS AND FORMS AS ARE REASONABLY REQUESTED BY THE OTHER PARTY.
SECTION 10.2 COOPERATION ON TAX MATTERS. PURCHASER AND SELLER AGREE TO
FURNISH OR CAUSE TO BE FURNISHED TO EACH OTHER, AS PROMPTLY AS PRACTICABLE,
SUCH INFORMATION AND ASSISTANCE RELATING TO THE PURCHASED ASSETS AS IS
REASONABLY NECESSARY FOR THE PREPARATION AND FILING OF ANY RETURN, CLAIM FOR
REFUND OR OTHER REQUIRED OR OPTIONAL FILINGS RELATING TO TAX MATTERS, FOR THE
PREPARATION FOR AND PROOF OF FACTS DURING ANY TAX AUDIT, FOR THE PREPARATION
FOR ANY TAX PROTEST, FOR THE PROSECUTION OR DEFENSE OF ANY SUIT OR OTHER
PROCEEDING RELATING TO TAX MATTERS AND FOR THE ANSWER OF ANY GOVERNMENTAL OR
REGULATORY INQUIRY RELATING TO TAX MATTERS.
PURCHASER AGREES TO RETAIN POSSESSION OF ALL FILES AND RECORDS
DELIVERED TO PURCHASER BY SELLER FOR A PERIOD OF AT LEAST SIX YEARS FROM THE
CLOSING DATE. IN ADDITION, FROM AND AFTER THE CLOSING DATE, PURCHASER AGREES
THAT IT WILL PROVIDE ACCESS TO SELLER AND ITS ATTORNEYS, ACCOUNTANTS AND OTHER
REPRESENTATIVES (AFTER REASONABLE NOTICE AND DURING NORMAL BUSINESS HOURS AND
WITHOUT CHARGE) TO SUCH FILES AND RECORDS AS SELLER MAY REASONABLY DEEM
NECESSARY TO PROPERLY PREPARE FOR, FILE, PROVE, ANSWER, PROSECUTE AND/OR DEFEND
ANY SUCH RETURN, FILING, AUDIT, PROTEST, CLAIM, SUIT, INQUIRY OR OTHER
PROCEEDING.
ARTICLE XI
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
SECTION 11.1 CURRENT INTENT REGARDING BUSINESS EMPLOYEES; WARN.
WITHOUT MAKING ANY OTHER COMMITMENT REGARDING THE BUSINESS EMPLOYEES,
PURCHASER COMMITS TO HIRE, AS OF THE CLOSING DATE, SUBSTANTIALLY ALL OF THE
CURRENT BUSINESS EMPLOYEES. PURCHASER ALSO STATES THAT ITS CURRENT INTENT IS TO
Page 22 of 27
<PAGE> 25
HIRE MOST OR ALL OF THE CURRENT BUSINESS EMPLOYEES ON OR FOLLOWING THE CLOSING
DATE. PURCHASER ASSUMES NO OBLIGATION, LIABILITY, OR RESPONSIBILITY OF SELLER
WITH RESPECT TO THE BUSINESS EMPLOYEES. PURCHASER'S OBLIGATION WITH RESPECT TO
THE BUSINESS EMPLOYEES WHO ACCEPT EMPLOYMENT WITH PURCHASER SHALL COMMENCE AS
OF THE CLOSING DATE. PURCHASER SHALL BE RESPONSIBLE FOR ANY OBLIGATIONS OR
LIABILITIES TO THE BUSINESS EMPLOYEES UNDER THE WORKER ADJUSTMENT AND
RETRAINING NOTIFICATION ACT AND ANY SIMILAR STATE OR LOCAL "PLANT CLOSING" LAW
("WARN") TO THE EXTENT WARN THRESHOLDS ARE EXCEEDED AS A RESULT OF ACTIONS
TAKEN BY THE PURCHASER ON OR AFTER THE CLOSING DATE WITH RESPECT TO THE
BUSINESS EMPLOYEES. SELLER SHALL BE RESPONSIBLE FOR ANY OBLIGATIONS OR
LIABILITIES TO THE BUSINESS EMPLOYEES UNDER WARN AS A RESULT OF ACTIONS TAKEN
BY SELLER PRIOR TO THE CLOSING DATE.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1 REPRESENTATIONS AND WARRANTIES. THE REPRESENTATIONS AND
WARRANTIES OF THE PARTIES TO THIS AGREEMENT MADE IN THIS AGREEMENT, SUBJECT TO
THE EXCEPTIONS THERETO, WILL NOT BE AFFECTED BY ANY INFORMATION FURNISHED TO,
OR ANY INVESTIGATION CONDUCTED BY, ANY OF THEM OR THEIR REPRESENTATIVES IN
CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT. NONE OF THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT SHALL SURVIVE THE
CLOSING.
SECTION 12.2 NOTICES. ALL NOTICES, DEMANDS OR OTHER COMMUNICATIONS TO
BE GIVEN OR DELIVERED UNDER OR BY REASON OF THE PROVISIONS OF THIS AGREEMENT
SHALL BE IN WRITING AND SHALL BE DEEMED TO HAVE BEEN GIVEN (A) WHEN DELIVERED
PERSONALLY TO THE RECIPIENT, (B) WHEN SENT TO THE RECIPIENT BY TELECOPY
(RECEIPT ELECTRONICALLY CONFIRMED BY SENDER'S TELECOPY MACHINE) IF DURING
NORMAL BUSINESS HOURS OF THE RECIPIENT, OTHERWISE ON THE NEXT BUSINESS DAY, (C)
ONE (1) BUSINESS DAY AFTER THE DATE WHEN SENT TO THE RECIPIENT BY REPUTABLE
EXPRESS COURIER SERVICE (CHARGES PREPAID) OR (D) SEVEN (7) BUSINESS DAYS AFTER
THE DATE WHEN MAILED TO THE RECIPIENT BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED AND POSTAGE PREPAID. SUCH NOTICES, DEMANDS AND OTHER
COMMUNICATIONS WILL BE SENT TO THE SELLER AND TO PURCHASER AT THE ADDRESSES
INDICATED BELOW:
IF TO PURCHASER: RANKIN AUTOMOTIVE GROUP, INC.
3709 S. MACARTHUR DRIVE
ALEXANDRIA, LA 71302
ATTENTION: RANDALL B. RANKIN
FACSIMILE No. 318-443-9952
WITH A COPY RICKY L. SOOTER
(WHICH SHALL NOT DANIELS & SOOTER, L.L.C.
CONSTITUTE NOTICE) TO: 3600 JACKSON STREET, SUITE I 06
ALEXANDRIA, LA 71306
FACSIMILE No. 318-448-8528
WITH A COPY MICHAEL GLASS, Esq.
(WHICH SHALL NOT 1735 WHITE STREET
CONSTITUTE NOTICE) TO: ALEXANDRIA, LOUISIANA 71301
FACSIMILE No. 318-473-4062
Page 23 of 27
<PAGE> 26
IF TO SELLER: AUTOMOTIVE & INDUSTRIAL SUPPLY, INC.
C/O AL CANNON
725 BERT KOUNS
SHREVEPORT, LA 71118
FACSIMILE No. 318-683-1235
WITH A COPY GLENN L. LANGLEY, ESQ.
(WHICH SHALL NOT COOK, YANCEY, KING & GALLOWAY
CONSTITUTE NOTICE) TO: 333 TEXAS STREET, SUITE 1700
SHREVEPORT, LA 71220
FACSIMILE No. 318-227-7850
OR TO SUCH OTHER ADDRESS AS ANY PARTY HERETO MAY, FROM TIME TO TIME, DESIGNATE
IN WRITING DELIVERED PURSUANT TO THE TERMS OF THIS SECTION.
SECTION 12.3 NOTICE REGARDING INDEMNITIES, LIMITATION OF INDEMNITY,
ETC. EXCEPT TO THE EXTENT EXPRESSLY PROVIDED ELSEWHERE IN THIS AGREEMENT, THE
FOLLOWING PROCEDURES SHALL BE FOLLOWED WITH RESPECT TO ALL CLAIMS FOR
INDEMNIFICATION UNDER THIS AGREEMENT AND ALL OBLIGATIONS OF INDEMNIFICATION
HEREUNDER SHALL BE SUBJECT TO COMPLIANCE BY THE PARTY TO BE INDEMNIFIED WITH
SUCH PROCEDURES:
(A) THE IDEMNITEE SHALL GIVE PROMPT WRITTEN NOTICE TO THE
INDEMNITOR OF ANY CLAIM THAT MIGHT GIVE RISE TO A
CLAIM BY THE INDEMNITEE AGAINST THE INDEMNITOR
PURSUANT TO THIS AGREEMENT, STATING THE NATURE AND
BASIS OF SUCH CLAIMS AND THE ESTIMATED AMOUNTS
THEREOF.
(B) IF ANY ACTION, SUIT OR PROCEEDING IS BROUGHT AGAINST
AN INDEMNITEE WITH RESPECT TO WHICH AN INDEMNITOR MAY
HAVE A LIABILITY PURSUANT TO THIS AGREEMENT, THE
ACTION, SUIT OR PROCEEDING SHALL, UPON
(I) THE WRITTEN ACKNOWLEDGMENT BY THE INDEMNITOR THAT
IT HAS THE OBLIGATION TO INDEMNIFY THE INDEMNITEE
UNDER THE INDEMNITY AGREEMENTS CONTAINED HEREIN;
AND
(II) THE MAKING OF REASONABLY ADEQUATE PROVISIONS BY
THE INDEMNITOR TO ENSURE THE INDEMNITEE OF THE
ABILITY OF THE INDEMNITOR TO SATISFY ITS
OBLIGATION HEREUNDER BE DEFENDED (INCLUDING ALL
PROCEEDINGS ON APPEAL OR FOR REVIEW THAT COUNSEL
FOR THE INDEMNITOR SHALL DEEM APPROPRIATE) BY,
AND MAY BE SETTLED OR COMPROMISED BY, THE
INDEMNITOR. PRIOR TO RECEIPT BY THE INDEMNITEE OF
THE INDEMNITOR'S WRITTEN ACKNOWLEDGMENT, THE
INDEMNITEE SHALL HAVE THE RIGHT TO CONTEST OR
DEFEND (AND, IF THE INDEMNITEE HAS NOT RECEIVED
SUCH WRITTEN ACKNOWLEDGMENT AND PROVISION WITHIN
30 BUSINESS DAYS AFTER THE INDEMNITEE HAS
PROVIDED WRITTEN NOTICE AS REQUIRED BY SECTION
12.2 ABOVE, TO SETTLE OR COMPROMISE) SUCH ACTION,
SUIT OR PROCEEDING AT THE EXPENSE OF THE
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<PAGE> 27
INDEMNITOR. IN ADDITION TO THE FOREGOING, THE
INDEMNITEE MAY BY WRITTEN NOTICE TO THE
INDEMNITOR REQUIRE THE INDEMNITOR TO ASSUME THE
DEFENSE OF ANY ACTION, SUIT OR PROCEEDING WITH
RESPECT TO WHICH THE INDEMNITOR MAY HAVE
LIABILITY PURSUANT TO THIS AGREEMENT. THE
INDEMNITEE SHALL HAVE THE RIGHT TO EMPLOY ITS OWN
COUNSEL IN CONNECTION WITH ANY ACTION, SUIT OR
PROCEEDING BEING DEFENDED BY THE INDEMNITOR
PURSUANT HERETO, BUT THE FEES AND EXPENSES OF
SUCH COUNSEL SHALL BE AT THE INDEMNITEE'S OWN
EXPENSE UNLESS (I) THE EMPLOYMENT OF SUCH COUNSEL
AND THE PAYMENT OF SUCH FEES AND EXPENSES SHALL
HAVE BEEN SPECIFICALLY AUTHORIZED BY THE
INDEMNITOR IN CONNECTION WITH THE DEFENSE OF SUCH
ACTION, SUIT OR PROCEEDING OR (II) THE INDEMNITEE
SHALL HAVE REASONABLY CONCLUDED AND NOTIFIED THE
INDEMNITOR THAT THERE MAY BE SPECIFIC DEFENSES
AVAILABLE TO IT THAT ARE DIFFERENT FROM OR IN
ADDITION TO THOSE AVAILABLE TO THE INDEMNITOR OR
THAT SUCH ACTION, SUIT OR PROCEEDING INVOLVES OR
COULD HAVE AN EFFECT UPON MATTERS BEYOND THE
SCOPE OF THE INDEMNITY AGREEMENTS CONTAINED
HEREIN. IN EITHER OF WHICH EVENTS (A) THE
INDEMNITOR, TO THE EXTENT MADE NECESSARY BY SUCH
DEFENSES, SHALL NOT HAVE THE RIGHT TO DIRECT THE
DEFENSE OF SUCH ACTION, SUIT OR PROCEEDING ON
BEHALF OF THE INDEMNITEE AND (B) ONLY THAT
PORTION OF SUCH FEES AND EXPENSES REASONABLY
RELATED TO MATTERS COVERED BY THE INDEMNITY
AGREEMENTS CONTAINED HEREIN SHALL BE BORNE BY THE
INDEMNITOR. THE INDEMNITOR SHALL KEEP THE
INDEMNITEE FULLY INFORMED OF SUCH ACTION, SUITE
OR PROCEEDING AT ALL STAGES THERE OF WHETHER OR
NOT THE INDEMNITEE IS SO REPRESENTED. THE
INDEMNITOR SHALL MAKE AVAILABLE TO THE INDEMNITEE
AND ITS ATTORNEYS AND ACCOUNTANTS ALL BOOKS AND
RECORDS OF THE INDEMNITOR RELATING TO SUCH
PROCEEDINGS OR LITIGATIONS, AND THE PARTIES
HERETO AGREE TO RENDER TO EACH OTHER SUCH
ASSISTANCE AS THEY MAY REASONABLE REQUIRE TO
ENSURE THE PROPER AND ADEQUATE INVESTIGATION, AND
THE DEFENSE OR SETTLEMENT, OF ANY SUCH ACTION,
SUIT OR PROCEEDING.
(III)THE INDEMNITEE SHALL BE ENTITLED TO COMPROMISE
AND SETTLE ALL ACTIONS, SUITS OR PROCEEDINGS AS
TO WHICH THE INDEMNITOR DOES NOT HAVE OR DOES NOT
EXERCISE THE RIGHT TO ASSUME THE DEFENSE, WITHOUT
CONSENT OF THE INDEMNITOR, PROVIDED, THAT IT ACTS
REASONABLY AND IN GOOD FAITH IN DOING SO. THE
INDEMNITEE SHALL KEEP THE INDEMNITOR FULLY
INFORMED OF SUCH ACTION, SUIT OR PROCEEDING AT
ALL STATES THEREOF.
(IV) NO CLAIM FOR INDEMNIFICATION SHALL BE MADE
PURSUANT TO SECTION 5.13 OR SECTION 6.4 UNLESS
THE AMOUNT OF SUCH CLAIM EXCEEDS $5,000.00, BUT
EACH CLAIM PAID PURSUANT TO SUCH PROVISIONS SHALL
BE THE FULL AMOUNT OF SUCH CLAIM.
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<PAGE> 28
SECTION 12.4 AMENDMENTS. THE TERMS, PROVISIONS AND CONDITIONS OF THIS
AGREEMENT MAY NOT BE CHANGED, MODIFIED OR AMENDED IN ANY MANNER EXCEPT BY AN
INSTRUMENT IN WRITING DULY EXECUTED BY EACH OF THE PARTIES HERETO.
SECTION 12.5 ASSIGNMENT. THIS AGREEMENT IS BINDING UPON AND INURES TO
THE BENEFIT OF THE SUCCESSORS AND ASSIGNS OF EACH PARTY TO THIS AGREEMENT
EXCEPT AS PROVIDED PURSUANT TO SECTION 6.3. BUT NO RIGHTS, OBLIGATIONS OR
LIABILITIES UNDER THIS AGREEMENT MAY BE ASSIGNED BY ANY PARTY WITHOUT THE PRIOR
WRITTEN CONSENT OF THE OTHER PARTIES HERETO.
SECTION 12.6 ANNOUNCEMENTS. THE TIMING OF ALL PRESS RELEASES, NOTICES
TO CUSTOMERS AND SUPPLIERS AND OTHER ANNOUNCEMENTS PRIOR TO THE CLOSING DATE
WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT SHALL BE APPROVED BY BOTH PURCHASER AND SELLER PRIOR TO THE ISSUANCE
THEREOF; PROVIDED THAT ANY PARTY MAY MAKE ANY PUBLIC DISCLOSURE IT BELIEVES IN
GOOD FAITH IS REQUIRED BY LAW OR REGULATION (IN WHICH CASE THE DISCLOSING PARTY
SHALL ADVISE THE OTHER PARTY (WHICH SHALL BE SELLER IN THE CASE OF DISCLOSURE
PROPOSED TO BE MADE BY PURCHASER AND PURCHASER IN THE CASE OF DISCLOSURE
PROPOSED TO BE MADE BY SELLER) PRIOR TO MAKING SUCH DISCLOSURE AND PROVIDE SUCH
OTHER PARTY AN OPPORTUNITY TO REVIEW THE PROPOSED DISCLOSURE).
SECTION 12.7 EXPENSES. EXCEPT AS OTHERWISE SET FORTH IN THIS
AGREEMENT, EACH PARTY TO THIS AGREEMENT SHALL BEAR ALL OF ITS LEGAL,
ACCOUNTING, INVESTMENT BANKING AND OTHER EXPENSES INCURRED BY IT OR ON ITS
BEHALF IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT,
WHETHER OR NOT SUCH TRANSACTIONS ARE CONSUMMATED.
SECTION 12.8 ENTIRE AGREEMENT. OTHER THAN THE OBLIGATIONS SET FORTH IN
THE CONFIDENTIALITY AGREEMENTS ENTERED IN CONTEMPLATION OF THIS AGREEMENT, THIS
AGREEMENT AND THE ANCILLARY AGREEMENTS CONSTITUTE THE ENTIRE AGREEMENT BETWEEN
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE AND
ARE IN FULL SUBSTITUTION FOR ANY AND ALL PRIOR AGREEMENTS AND UNDERSTANDINGS
BETWEEN THEM RELATING TO SUCH SUBJECT MATTER. THE EXHIBITS AND SCHEDULES TO
THIS AGREEMENT ARE HEREBY INCORPORATED AND MADE A PART HEREOF AND ARE AN
INTEGRAL PART OF THIS AGREEMENT.
SECTION 12.9 DESCRIPTIVE HEADINGS. THE DESCRIPTIVE HEADINGS OF THE
SEVERAL SECTIONS OF THIS AGREEMENT ARE INSERTED FOR CONVENIENCE ONLY AND SHALL
NOT CONTROL OR AFFECT THE MEANING OR CONSTRUCTION OF ANY OF THE PROVISIONS
HEREOF.
SECTION 12.10 COUNTERPARTS. FOR THE CONVENIENCE OF THE PARTIES, ANY
NUMBER OF COUNTERPARTS OF THIS AGREEMENT MAY BE EXECUTED BY ANY ONE OR MORE
PARTIES HERETO, AND EACH SUCH EXECUTED COUNTERPART SHALL BE, AND SHALL BE
DEEMED TO BE, AN ORIGINAL, BUT ALL OF WHICH SHALL CONSTITUTE, AND SHALL BE
DEEMED TO CONSTITUTE, IN THE AGGREGATE BUT ONE AND THE SAME INSTRUMENT.
SECTION 12.11 GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE
CONSTRUED, PERFORMED AND ENFORCED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS
OF THE STATE OF LOUISIANA.
SECTION 12.12 CONSTRUCTION. THE LANGUAGE USED IN THIS AGREEMENT WILL
BE DEEMED TO BE THE LANGUAGE CHOSEN BY THE PARTIES TO EXPRESS THEIR MUTUAL
INTENT, AND NO RULE OF STRICT CONSTRUCTION WILL BE APPLIED AGAINST ANY PARTY.
ANY
Page 26 of 27
<PAGE> 29
REFERENCES TO ANY FEDERAL, STATE, LOCAL OR FOREIGN STATUTE OR LAW WILL ALSO
REFER TO ALL RULES AND REGULATIONS PROMULGATED THEREUNDER, UNLESS THE CONTEXT
REQUIRES OTHERWISE. UNLESS THE CONTEXT OTHERWISE REQUIRES: (A) A TERM HAS THE
MEANING ASSIGNED TO IT BY THIS AGREEMENT; (B) AN ACCOUNTING TERM NOT OTHERWISE
DEFINED HAS THE MEANING ASSIGNED TO BY GAAP; (C) THE WORD 'OR' IS NOT
EXCLUSIVE; (D) THE WORDS "INCLUDE", 'INCLUDES" AND 'INCLUDING" SHALL BE DEEMED
TO BE FOLLOWED BY THE WORDS "WITHOUT LIMITATION"; (E) WORDS IN THE SINGULAR
INCLUDE THE PLURAL AND IN THE PLURAL INCLUDE THE SINGULAR; (F) PROVISIONS APPLY
TO SUCCESSIVE EVENTS AND TRANSACTIONS; AND (G) "$" MEANS THE CURRENCY OF THE
UNITED STATES OF AMERICA.
SECTION 12.13 SEVERABILITY. IN THE EVENT THAT ANY ONE OR MORE OF THE
PROVISIONS CONTAINED IN THIS AGREEMENT OR IN ANY OTHER INSTRUMENT REFERRED TO
HEREIN SHALL, FOR ANY REASON, BE HELD TO BE INVALID, ILLEGAL OR UNENFORCEABLE
IN ANY RESPECT, THEN TO THE MAXIMUM EXTENT PERMITTED BY LAW, SUCH INVALIDITY,
ILLEGALITY OR UNENFORCEABILITY SHALL NOT AFFECT ANY OTHER PROVISION OF THIS
AGREEMENT OR ANY OTHER SUCH INSTRUMENT. FURTHERMORE, IN LIEU OF ANY SUCH
INVALID OR UNENFORCEABLE TERM OR PROVISION, THE PARTIES HERETO INTEND THAT
THERE SHALL BE ADDED AS A PART OF THIS AGREEMENT A PROVISION AS SIMILAR IN
TERMS TO SUCH INVALID OR UNENFORCEABLE PROVISION AS MAY BE POSSIBLE AND BE
VALID AND ENFORCEABLE.
SECTION 12.14 CONFIDENTIALITY. SELLER AND PURCHASER AGREE TO KEEP, AND
TO CAUSE EACH OF THEIR AFFILIATES, DIRECTORS, OFFICERS, AND EMPLOYEES TO KEEP,
CONFIDENTIAL ANY AND ALL CONFIDENTIAL INFORMATION OF THE OTHER PARTY THAT
EITHER RECEIVES IN THE COURSE OF PERFORMING ITS OBLIGATIONS HEREUNDER (EXCEPT
THAT SUCH INFORMATION MAY BE SHARED, ON A CONFIDENTIAL BASIS, WITH THE PARTY'S
ATTORNEYS AND AUDITORS) AND WILL NOT, WITHOUT THE OTHER PARTY'S WRITTEN
CONSENT, USE ANY OF SUCH CONFIDENTIAL INFORMATION EXCEPT AS REASONABLY
NECESSARY TO PERFORM ITS DUTIES UNDER THIS OR ANOTHER OF ITS AGREEMENTS WITH
THE OTHER PARTY. UPON TERMINATION OF THIS AGREEMENT, EACH PARTY WILL RETURN,
AND WILL CAUSE ITS AFFILIATES TO RETURN, TO THE OTHER PARTY, ALL ORIGINAL
DOCUMENTS AND COPIES OF THE CONFIDENTIAL INFORMATION WHICH ARE IN ITS
POSSESSION. THE OBLIGATIONS OF CONFIDENTIALITY ASSUMED BY THE PARTIES HEREIN
SHALL SURVIVE THIS AGREEMENT IN PERPETUITY.
SECTION 12.15 SCHEDULES. EACH OF PURCHASER AND SELLER SHALL USE ITS
REASONABLE AND BEST EFFORTS TO COMPLETE AND DELIVER TO THE OTHER, AS SOON AS
REASONABLY PRACTICAL, THE EXHIBITS AND SCHEDULES TO THIS AGREEMENT THAT ARE TO
BE PREPARED BY SUCH PARTY. UPON AGREEMENT BY PURCHASER AND SELLER TO THE FORM
AND CONTENT OF SUCH EXHIBITS AND SCHEDULES, THEY SHALL BE ATTACHED HERETO AND
BECOME A PART HEREOF. THE EXHIBITS AND SCHEDULES ATTACHED TO THE AGREEMENT AT
THE TIME THE AGREEMENT IS SIGNED REPRESENT THE PARTIES GENERAL INTENTIONS AND
ARE SUBJECT TO CHANGE.
IN WITNESS WHEREOF, SELLER AND PURCHASER HAVE EXECUTED AND DELIVERED
THIS AGREEMENT AS OF THE DAY AND YEAR FIRST WRITTEN ABOVE.
SELLER:
AUTOMOTIVE & INDUSTRIAL SUPPLY, INC.
BY:
-----------------------------------------
NAME: OTIS A. CANNON, JR.
TITLE: VICE-PRESIDENT
PURCHASER:
RANKIN AUTOMOTIVE GROUP, INC.
BY:
-----------------------------------------
NAME: RANDALL B. RANKIN
TITLE: PRESIDENT
Page 27 of 27
<PAGE> 1
EXHIBIT 10.(s)
ASSET PURCHASE AGREEMENT
BETWEEN
ALLIED DISTRIBUTING COMPANY OF HOUSTON, INC.
AUTO PARTS INVESTMENT GROUP, INC.
(SELLER)
AND
RANKIN AUTOMOTIVE GROUP, INC.
(PURCHASER)
DATED AS OF FEBRUARY 26, 1999
Daniels & Sooter, L.L.C.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
ARTICLE I DEFINITIONS............................................................................1
Section 1.1 Definitions............................................................................1
ARTICLE II SALE AND PURCHASE OF PURCHASED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES......................................................7
Section 2.1 Purchase and Sale of Purchased Assets..................................................7
Section 2.2 Assumption of Obligations and Liabilities..............................................7
Section 2.3 Inventory Levels and Purchase Price....................................................8
Section 2.4 Physical Inventory; Determination of Purchased Inventory..............................11
Section 2.5 Allocation of Purchase Price..........................................................12
Section 2.6 Sale at Closing Date..................................................................12
Section 2.7 Apportionments........................................................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER..............................................12
Section 3.1 Authority of Seller...................................................................12
Section 3.2 No Conflict or Violation..............................................................13
Section 3.3 Consents and Approvals................................................................13
Section 3.4 Compliance with Law...................................................................13
Section 3.5 Permits, Notices......................................................................13
Section 3.6 Ownership of Purchased Assets.........................................................13
Section 3.7 Assigned Contracts....................................................................14
Section 3.8 Labor Relations.......................................................................14
Section 3.9 Litigation............................................................................14
Section 3.10 Brokers...............................................................................14
Section 3.11 Existing Condition....................................................................14
Section 3.12 Condition of Tangible Assets..........................................................15
Section 3.13 Tax and Other Returns and Reports.....................................................15
Section 3.14 Contracts and Commitments.............................................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................17
Section 4.1 Authority of Purchaser................................................................17
Section 4.2 No Conflict or Violation..............................................................17
Section 4.3 Consents and Approvals................................................................18
Section 4.4 Availability of Funds.................................................................18
Section 4.5 Litigation............................................................................18
Section 4.6 Brokers...............................................................................18
ARTICLE V CERTAIN COVENANTS OF SELLER...........................................................18
Section 5.1 Conduct of Business Before the Closing Date...........................................18
</TABLE>
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<TABLE>
<S> <C> <C>
Section 5.2 In General............................................................................18
Section 5.3 Information and Access................................................................19
Section 5.4 Further Assurances....................................................................19
Section 5.5 Reasonable Efforts....................................................................19
Section 5.6 Cure of Defaults......................................................................19
Section 5.7 Audit of Operations at Business Locations.............................................19
Section 5.8 Severance; Vacation and Sick Leave....................................................19
Section 5.9 Worker's Compensation/OSHA............................................................20
Section 5.10 Grievances............................................................................20
Section 5.11 Seller Certification..................................................................20
Section 5.12 Seller Indemnity......................................................................21
Section 5.13 No Solicitation.......................................................................21
ARTICLE VI CERTAIN COVENANTS OF PURCHASER........................................................22
Section 6.1 Reasonable Efforts....................................................................22
Section 6.2 Performance Under Assigned Contracts..................................................22
Section 6.3 Purchaser Financing...................................................................22
Section 6.4 Purchaser Indemnity...................................................................22
ARTICLE VII CONDITIONS TO SELLER'S OBLIGATIONS....................................................23
Section 7.1 Representations and Warranties........................................................23
Section 7.2 Compliance with Agreement.............................................................23
Section 7.3 Consents..............................................................................23
Section 7.4 Purchaser's Closing Deliveries and Obligations........................................23
Section 7.5 Availability of Purchaser Financing...................................................23
Section 7.6 No Adverse Proceeding.................................................................23
Section 7.7 Minimum Inventory to be Purchased Amount..............................................24
Section 7.8 Fairness Opinion......................................................................24
Section 7.9 Shareholder and ESOP Participant Approval.............................................24
ARTICLE VIII CONDITIONS TO PURCHASER'S OBLIGATIONS.................................................24
Section 8.1 Representations and Warranties........................................................24
Section 8.2 Compliance with Agreement.............................................................24
Section 8.3 No Adverse Proceeding.................................................................24
Section 8.4 Consents..............................................................................24
Section 8.5 Seller's Closing Deliveries and Obligations...........................................25
ARTICLE IX THE CLOSING AND TERMINATION...........................................................25
Section 9.1 The Closing...........................................................................25
Section 9.2 Termination...........................................................................26
Section 9.3 Effects of Termination................................................................27
ARTICLE X TAXES.................................................................................28
</TABLE>
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<TABLE>
<S> <C> <C>
Section 10.1 Taxes Related to Purchase of Assets...................................................28
Section 10.2 Proration of Real and Personal Property Taxes.........................................28
Section 10.3 Cooperation on Tax Matters............................................................28
ARTICLE XI EMPLOYEES AND EMPLOYEE BENEFIT PLANS..................................................29
Section 11.1 Current Intent Regarding Business Employees; WARN.....................................29
ARTICLE XII MISCELLANEOUS PROVISIONS..............................................................29
Section 12.1 Representations and Warranties........................................................29
Section 12.2 Notices...............................................................................30
Section 12.3 Notice Regarding Indemnities, Limitation of Indemnity, Etc............................30
Section 12.4 Amendments............................................................................32
Section 12.5 Assignment............................................................................32
Section 12.6 Announcements.........................................................................32
Section 12.7 Expenses..............................................................................32
Section 12.8 Entire Agreement......................................................................33
Section 12.9 Descriptive Headings..................................................................33
Section 12.10 Counterparts..........................................................................33
Section 12.11 Governing Law; Jurisdiction...........................................................33
Section 12.12 Construction..........................................................................33
Section 12.13 Severability..........................................................................33
Section 12.14 Confidentiality.......................................................................33
Section 12.15 Exhibits..............................................................................34
</TABLE>
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SCHEDULES
Schedule A Accounts Payable
Schedule B Accounts Receivable
Schedule C Fixed Assets
Schedule D Intellectual Property
Schedule E Inventory
Schedule F Purchased Inventory
Schedule G Real Estate
Schedule H Shareholder Notes
Schedule I Third Party Notes
Schedule 2.2 Accrued Employee Benefits
Schedule 2.3 Deposits
Schedule 3.3 Consents and Approvals
Schedule 3.4 Noncompliance
Schedule 3.5 Permits
Schedule 3.7 Assigned Contracts
Schedule 3.8 Collective Bargaining Agreements
Schedule 3.9 Litigation
Schedule 3.11 Existing Condition
Schedule 3.12 Condition of Tangible Assets
Schedule 3.13 Tax and Other Returns and Reports
Schedule 3.14 Contracts and Commitments
Schedule 4.4 Committed Financing
EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Bill of Sale and Assumption Agreement
Exhibit C Commitment Letter - December 10, 1998
Exhibit D Form of Real Estate Lease
Exhibit E Form of Employment Agreement
Exhibit F Calculation of Purchase Price
Exhibit G Form of Promissory Note
Exhibit H Form of Shareholder Escrow Agreement
Exhibit I Form of Assignment and Assumption of Leases
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<PAGE> 6
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered
into as of the 26th day of February, 1999 between ALLIED DISTRIBUTING COMPANY
OF HOUSTON, INC., TIN: 74-1491993 ("ALLIED") a Texas corporation, and AUTO
PARTS INVESTMENT GROUP, INC., TIN: 76-0359644 ("APIG"), a Texas corporation
(Allied and APIG, collectively referred to as "SELLER") and RANKIN AUTOMOTIVE
GROUP, INC., (TIN: 72-0838383) a Louisiana corporation ("Purchaser").
RECITALS
WHEREAS, Seller is engaged in the business of selling and distributing
automotive replacement parts, accessories and supplies and operates
distribution and sales centers located on leased premises in Houston, San
Antonio, Austin, Port Lavaca, Palacios, Bacliff, Goliad and Brenham, State of
Texas (the "BUSINESS LOCATIONS");
WHEREAS, Purchaser desires to purchase from Seller and Seller desires
to sell to Purchaser, certain of the assets associated with the Seller's
operations at the Business Locations, subject to certain liabilities, all on
the terms and subject to the conditions set forth herein; and
WHEREAS, in connection with its contemplated purchase of assets,
Purchaser desires to conduct business at the Business Locations and to hire
substantially all of Seller's employees currently employed at the Business
Locations, all on the terms and subject to the conditions set forth herein and
in the Ancillary Agreements.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Unless otherwise defined herein, the terms
defined in the introductory paragraph and the Recitals to this Agreement shall
have the respective meanings specified therein, and the following terms shall
have the meanings specified below:
"ACCOUNTS PAYABLE" means all accounts payable incurred in the
ordinary course of Business as set forth on SCHEDULE A.
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<PAGE> 7
"ACCOUNTS RECEIVABLE" means all accounts receivable allocable
to the Business, as well and all rights to bill customers for products
shipped or services rendered on or prior to the Closing Date, as
described in SCHEDULE B annexed hereto.
"ALLIED" and "APIG" has the meaning set forth in the preamble.
"AFFILIATE" means "affiliate" as defined in Rule 405
promulgated under the Securities Act of 1933, as amended.
"AGREEMENT" has the meaning set forth in the preamble and
shall include all Schedules and Exhibits hereto.
"ANCILLARY AGREEMENTS" means, collectively, the Assignment
and Assumption Agreements, the Bill of Sale and Assumption Agreement,
the Real Estate Lease and the Employment Agreements.
"APPORTIONMENT DATE" has the meaning set forth in SECTION 2.7.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the form of
Assignment and Assumption Agreement to be executed at Closing by
Purchaser and Seller for each of the Assigned Contracts, in
substantially the form attached hereto as EXHIBIT A.
"ASSIGNED CONTRACTS" means the Leases and the contracts to be
assigned by Seller to Purchaser and set forth on SCHEDULE 3.7.
"ASSUMED LIABILITIES" has the meaning set forth in SECTION
2.2.
"BILL OF SALE AND ASSUMPTION AGREEMENT" means the Bill of
Sale and Assumption Agreement to be executed at Closing by Purchaser
and Seller in substantially the form attached hereto as EXHIBIT B.
"BOOK VALUE" with respect to Accounts Receivable, means the
net book value of an Account Receivable, as reflected on Seller's
books and records relating to such Account Receivable, including all
interest or finance charges allocable thereto.
"BUSINESS" means Seller's business operations conducted at
the Business Locations.
"BUSINESS DAY" means a day, other than a Saturday or a
Sunday, on which commercial banks are not required or authorized to
close in Houston, Texas.
"BUSINESS EMPLOYEES" means employees of the Seller whose
duties relate primarily to the Business.
"BUSINESS LOCATIONS" has the meaning set forth in the
Recitals hereto.
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<PAGE> 8
"CLOSING" has the meaning set forth in SECTION 9.1.
"CLOSING DATE" has the meaning set forth in SECTION 9.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTED FINANCING" means funds available pursuant to a
written commitment letter issued by Heller Business Credit, a division
of Heller Financial, Inc. ("Heller") dated December 10, 1998, a copy
of which is attached hereto as EXHIBIT C, or other similar
documentation from a commercial bank or other lending institution,
which lender, commitment letter and other documentation are acceptable
to Seller and Purchaser.
"DIRTY CORE AND WARRANTY INVENTORY" means any and all used
cores and warranty inventory present at the Business Locations as
contemplated by this Agreement.
"EMPLOYEE AGREEMENTS" means those agreements in substantially
the form attached hereto as Exhibit E in connection with the
employment by Purchaser of David, Stephen and Robert Epstein, Neil
Silverman and William Schubert, Sr.
"EXCLUDED ASSETS" means all of Seller's assets other than
those specifically defined as Purchased Assets.
"FIXED ASSETS" means, to the extent used in the Business, (i)
all of the machinery, equipment, furniture, fixtures, signs, vehicles
and leasehold improvements located at the Business Locations on the
Closing Date and which are owned by Seller, a list of which is
attached as SCHEDULE C, which list shall be updated on the Closing
Date, and (ii) to the extent assignable, any rights of Seller to the
warranties, licenses and other similar rights with respect thereto.
"GAAP" means United States generally accepted accounting
principles, applied on a consistent basis and consistent with Seller's
historical practices, as in effect from time to time.
"GOVERNMENTAL AGENCY" means (a) any international, foreign,
federal, state, county, local or municipal governmental or
administrative agency or political subdivision thereof, (b) any
governmental authority, board, bureau, commission, department or
instrumentality, or (c) any court or administrative tribunal.
"INTELLECTUAL PROPERTY" means to the extent used in the
Business the inventions, copyrights, trademarks, trade names, and
applications, any related trademarks or logos and applications,
including any rights to the ownership and use of the names "Allied
Distributing Company of Houston, Inc.," "Cross Allen", and any other
trade name used by any Subsidiary of Seller, trade secrets,
proprietary know-how and use and application know-how, product
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<PAGE> 9
formulae, manufacturing, engineering and other drawings, technology,
technical information, engineering data, design and engineering
specifications, production standards and practices and promotional
literature, goodwill and other intellectual property and rights, in
each case used by the Seller in connection with the business,
including without limitation, such intellectual property as is listed
on SCHEDULE D.
"INVENTORY" means all items of New Inventory and Dirty Core
and Warranty Inventory. Schedule E, which shall be prepared in
accordance with SECTION 2.4 hereof and annexed to this Agreement on
the Closing Date, shall set forth a description of the Inventory.
"INVENTORY VALUE" means the invoice cost to Allied per item
of Inventory or means the invoice cost to Allied plus a maximum of 5%
per item of Inventory to APIG.
"IRS" means the Internal Revenue Service of the United States
Department of the Treasury.
"KNOWLEDGE" as applied to Seller means the actual knowledge
of the President, Chief Executive Officer or the Chief Financial
Officer of Seller and as applied to Purchaser means the actual
knowledge of the President, the Chief Executive Officer, the Chairman
of the Board or the Chief Financial Officer.
"LEASED PROPERTY" means the premises subject to the Leases.
"LEASES" means the real estate leases listed on SCHEDULE 3.7.
"LIEN" means any mortgage, pledge, security interest, charge
or other encumbrance.
"NEW INVENTORY" means all items of new automotive inventory,
including core charges associated with such inventory, if applicable,
owned by Seller and on hand at the Business Locations on various
specified dates as contemplated by this Agreement.
"PERMIT" means any permit, approval, authorization, license,
variance or permission required by a Governmental Agency under any
applicable law.
"PERSON" means any individual, partnership, corporation,
trust, association, limited liability company, Governmental Agency or
other entity.
"PHYSICAL INVENTORY DATE" means the last day of the Physical
Inventory Period.
"PHYSICAL INVENTORY PERIOD" has the meaning set forth in
SECTION 2.4(a).
"PURCHASE PRICE" has the meaning set forth in SECTION 2.3.
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<PAGE> 10
"PURCHASED ASSETS" means all of the Seller's right, title and
interest in and to the following:
(a) the Purchased Inventory;
(b) the Fixed Assets;
(c) the Assigned Contracts;
(d) records relating primarily to the Purchased
Assets, and copies of personnel files for
Business Employees;
(e) to the extent legally assignable, all
Permits required to conduct business at the
Business Locations
(f) independent customer lists and other
information and data relating to the
independent customers of the Business at
the Business Locations;
(g) all deposits (including security deposits)
and prepayments made by Seller under any of
the Assigned Contracts
(h) all of the Accounts Receivable;
(i) all of Seller's Third Party Notes
receivable;
(j) the Real Estate
(k) Intellectual Property
(l) all cash or cash equivalents
(m) all right, title and interest of Seller in
Auto Value;
(n) all bulk office supplies;
provided, however, that notwithstanding any of the foregoing
provisions of this definition, the Purchased Assets shall not include
any Excluded Assets.
"PURCHASED INVENTORY" has the meaning set forth in SECTION
2.4(b), a complete list of which Purchased Inventory shall be annexed
to this Agreement as SCHEDULE F on the Closing Date.
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<PAGE> 11
"REAL ESTATE" means that property described on SCHEDULE G.
"REAL ESTATE LEASE" means a lease agreement to be executed at
Closing in substantially the form attached hereto as Exhibit D between
ADCO Development Partnership and Purchaser and covering the property
located at 3100 Pawnee, Harris County, Houston, Texas 77054.
"SCHEDULES" means the various Schedules referred to in this
Agreement delivered separately to Purchaser on or before the date of
this Agreement, except as otherwise specified in this Agreement.
Purchaser acknowledges that the Schedules provided at execution of the
Agreement have been prepared in good faith but are subject to further
review and correction by Seller and shall not be deemed true and
correct until delivered at Closing.
"SHAREHOLDER NOTES" means each note as set forth on SCHEDULE
H.
"TAX RETURN" means any report, return, information return,
filing, claim for refund or other information, including any schedules
or attachments thereto, and any amendments to any of the foregoing
required to be supplied to a taxing authority in connection with
Taxes.
"TAXES" means all federal, state, local and foreign taxes,
including income, gross receipts, excise, employment, sales, use,
transfer, license, payroll, franchise, severance, stamp, withholding,
Social Security, unemployment, disability, real property, personal
property, registration, alternative or add-on minimum, estimated or
other tax, including any interest, penalties or additions thereto,
whether disputed or not.
"THIRD PARTY NOTES" means each non-Affiliate note that is not
in default or arrears as set forth on SCHEDULE I.
"TRANSACTION TAXES" has the meaning set forth in SECTION
10.1.
"TRUE-UP" means the final reconciliation of all assets
purchased, less liabilities assumed.
"TRUE-UP DATE" means the date ninety (90) days after Closing
when the final reconciliation is completed.
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<PAGE> 12
ARTICLE II
SALE AND PURCHASE OF PURCHASED ASSETS AND ASSUMPTION OF ASSUMED LIABILITIES
SECTION 2.1 PURCHASE AND SALE OF PURCHASED ASSETS. On the terms and
subject to the conditions set forth in this Agreement, at the Closing Purchaser
shall purchase from Seller and Seller shall sell, transfer, assign, convey and
deliver to Purchaser at the Business Locations, all of Seller's right, title
and interest in and to the Purchased Assets provided, however, that Seller
shall be entitled to retain copies of all books and records, in whatever form,
included in the Purchased Assets.
SECTION 2.2 ASSUMPTION OF OBLIGATIONS AND LIABILITIES. On the terms
and subject to the conditions set forth in this Agreement, at the Closing,
Purchaser will assume and pay, perform, discharge and be responsible for all of
the following liabilities of Seller (collectively, the "ASSUMED LIABILITIES"):
(a) all obligations and liabilities of Seller under the
Assigned Contracts which accrue on and after the
Closing Date;
(b) all obligations and liabilities of Seller relating
to the Leased Property which accrue on and after the
Closing Date;
(c) all obligations and liabilities set forth in Article
XI;
(d) Accounts Payable;
(e) all indebtedness incurred in the ordinary course of
the business in connection with Loan #________ with
Frost National Bank;
(f) Shareholder Notes;
(g) Third Party Notes; and
(h) accrued employee benefits set forth on Schedule 2.2.
Purchaser shall not assume or pay, perform, discharge or be
responsible for any of the obligations or liabilities of Seller other than the
Assumed Liabilities. Without limiting any of Purchaser's obligations under
ARTICLE XI hereof with respect to the Business Employees, Purchaser expressly
does not assume any obligations or liabilities of Seller that arise prior to
the Closing Date with respect to the Business Employees. Seller shall not
assume or be responsible for any obligations or liabilities of Purchaser that
arise from and after the Closing Date with respect to the Business Employees.
Notwithstanding the foregoing, at Closing, Seller will supply Purchaser with a
listing of all obligations and liabilities with respect to Business Employees'
accrued vacation leave/pay, sick leave/pay and other compensable benefits due
employees of the business, said listing to be made on Schedule 2.2, and the
Purchase Price to be paid by Purchaser to Seller hereunder shall be reduced by
the total amount shown on said Schedule. Purchaser shall have no liability
whatsoever for any liabilities of Seller, including, without limitation, (i)
any claim, regardless of
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<PAGE> 13
when made or asserted, which arises out of or is based upon any express or
implied representation, warranty, agreement or guarantee made by the Seller, or
alleged to have been made by the Seller, or which is opposed or asserted to be
imposed by operation of law, in connection with any product manufactured,
shipped or installed by or on behalf of the Seller or for any service performed
by or on behalf of the Seller, including, without limitation, any claim
relating to the repair or replacement of any such product and any claim seeking
recovery for property damage, consequential damages, loss, lost revenue or
income or personal injury or (ii) liability or obligation in respect of any
federal, state or local income or other tax payable with respect to the
Business or the Purchased Assets for any period prior to the Closing Date.
SECTION 2.3 INVENTORY LEVELS AND PURCHASE PRICE.
(a) On the terms and subject to the conditions set forth in
this Agreement, the purchase price payable by Purchaser to
Seller for the Purchased Assets shall be an aggregate amount
equal to the sum of the following (the "Purchase Price"),
payable on various dates as described in this SECTION 2.3:
(i) One Hundred percent (100%) of the Inventory
Value for all of the items of New Inventory
to be purchased by Purchaser in accordance
with the terms of this Agreement; plus
(ii) One Hundred percent (100%) of the
depreciated book value for the Fixed
Assets; plus
(iii) deposits, including security deposits (and
prepayments made by Seller under the
Assigned Contracts) as set forth in SECTION
2.3 and as specifically described in
SCHEDULE 2.3; plus
(iv) an amount equal to One Hundred percent
(100%) of the Book Value of any and all of
the Accounts Receivable, less the sum of
$150,000.00; provided however, that on the
True-up Date Purchaser shall assign to
Seller all such Accounts Receivable that
have not been collected by Purchaser
("Uncollected Receivables") on or before
the True-up Date, and on the True-up Date
Purchaser shall pay to Seller the amount by
which $150,000 exceeds the value of the
Uncollected Receivables and, further, if
Purchaser receives any amount in payment of
any portion of the Uncollected Receivables
after the True-up Date, Purchaser shall
forward such amounts to Seller no later
than five days after receipt thereof;
provided, however, that if the value of the
Uncollected Receivables assigned to Seller
exceeds the sum of $150,000, Seller shall
pay to Purchaser on the True-up Date the
amount of such excess; plus
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<PAGE> 14
(v) an amount equal to One Hundred percent
(100%) of the invoice cost to Allied or
APIG, as applicable, of the Dirty Core and
Warranty Inventory to be purchased by
Purchaser in accordance with the terms of
this Agreement; provided, however, that the
invoice cost to APIG of any item shall not
exceed the invoice cost of such item to
Allied by more than five percent; plus
(vi) an amount equal to the most recent
valuation report of the value of the Real
Estate but in no event less than
$293,158.00; plus
(vii) an amount equal to the aggregate principal
balance and accrued but unpaid interest of
the Third Party Notes; plus
(viii) One hundred percent (100%) of the
depreciated book value of Seller's right,
title and interest in Auto Value; plus
(ix) cash or cash equivalents.
(b) On the Closing Date, Purchaser shall pay to Seller an
amount equal to the Purchase Price in cash, by wire transfer
of immediately available funds (pursuant to written
instructions to be provided by Seller to Purchaser), equal to
the sum of those portions of the Purchase Price provided for
in SECTIONS 2.3(a)(i), 2.3(a)(ii), 2.3(a)(iii), 2.3(a)(iv),
2.3(a)(v), 2.3(a)(vi), 2.3(a)(vii), 2.3(a)(viii) AND
2.3(a)(ix) hereof less an amount equal to the sum of SECTIONS
2.2(b), 2.2(d), 2.2(e), 2.2(f), 2.2(g), 2.2(h) AND 2.3(d),
each item being set forth together with the amount of such
item on the form entitled "Preliminary Calculation of
Purchase Price" attached hereto as EXHIBIT F showing the
calculation of the amount of the preliminary purchase price
(such amount, the "Closing Date Payment"), less an escrow
amount of $400,000.00 to be deposited in such form on a pro
rata basis as the consideration is received by Seller (73.12%
in cash and 26.88% in promissory notes in the form attached
as EXHIBIT G) in an interest-bearing escrow account to be
held and distributed by an escrow agent in accord with the
escrow agreement in substantially the form attached hereto as
EXHIBIT H for the purpose of providing the source of payment
of indemnity claims against Seller and any sums which may be
due from Seller as a result of the True-up provided for in
SECTION 2.3(a)(iv) AND SECTION 2.3(e).
(c) On or before 5:00 p.m. on the third business day
preceding the Closing, Purchaser shall be advised in writing
as to each Shareholder Note the following:
(i) the principal balance and accrued interest
payable as of the date of Closing; and
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<PAGE> 15
(ii) whether the Note holder elects to be paid
in full on the date of Closing; or
(iii) the Note holder will assign said Note to
Purchaser with Purchaser assuming same
terms, conditions and obligations as
contained in said Note;
(d) the Closing Date Payment shall be reduced by 26.8800%.
This percentage represents the total percentage ownership of
the following shareholders (the "Beneficiaries"):
<TABLE>
<S> <C> <C>
Dan Silverman 2,928 shares 5.9239%
Jerry Epstein 976 shares 1.9746%
John Rickert 976 shares 1.9746%
Gordon Epstein 704 shares 1.4243%
Debbie Bowers 640 shares 1.2948%
Tommy Jeffcote/Pat Jeffcote 294 shares .5948%
Neil Silverman 2,928 shares 5.9239%
William Schubert, Sr. 1,280 shares 2.5897%
David Epstein 640 shares 1.2948%
Stephen Epstein 640 shares 1.2948%
Robert Epstein 640 shares 1.2948%
Karen Burnley 640 shares 1.2948%
--------
26.8800%
</TABLE>
At Closing, Purchaser shall execute a promissory note in favor of
Seller for the benefit of each of the Beneficiaries in an amount equal
to that percentage of the Closing Date Payment set forth above
opposite such Beneficiary's name less twenty (20%) percent of such
amount. Purchaser shall execute an additional promissory note in favor
of Seller for the benefit of each of the Beneficiaries in an amount
equal to such twenty percent and such note shall be placed in the
escrow described in SECTION 2.3(b) above. Each such note shall bear
interest at Chase Manhattan Prime and shall be payable in 36 monthly
installments to Seller for the benefit of each of the Beneficiaries as
provided by a form of the note attached as EXHIBIT G.
(e) Within 90 days after the Closing Date, Purchaser shall
prepare, on the form attached hereto as EXHIBIT F, and
deliver to Seller a "Final Calculation of Purchase Price"
showing Purchaser's final calculation of the items on such
form as of the close of business on the Closing Date. If
Seller objects to the Final Calculation of
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<PAGE> 16
Purchase Price, Seller shall deliver to Purchaser a detailed
statement describing such objections within fifteen days
after receiving the Final Calculation of Purchase Price.
Seller and Purchaser shall use reasonable efforts to resolve
any such objections. If a final resolution is not obtained
within fifteen days after Purchaser has received the
statement of objections, Seller and Purchaser will select a
mutually acceptable accounting firm to resolve any remaining
objections. If Seller and Purchaser are unable to agree on an
accounting firm, they will select by lot a nationally
recognized accounting firm (which shall not include any
accounting firm that is providing or has provided services to
either Seller or Purchaser or an Affiliate thereof). The
determination of any accounting firm so selected will be set
forth in writing and will be conclusive and binding on Seller
and Purchaser. Purchaser shall revise the Final Calculation
of Purchase Price as appropriate to reflect the resolution of
any objections pursuant hereto. If the Final Calculation of
Purchase Price results in an amount that exceeds the Closing
Date Payment, Purchaser shall pay, on the same basis as the
Closing Date Payment was paid, such amount to Seller within
five days of final resolution. If such calculation results in
an amount that is less than the Closing Date Payment, such
amount shall be released within five days of final resolution
to Purchaser from the escrow in cash and by reduction of the
promissory notes in the same proportions as the Closing Date
Payment was paid. Any expenses relating to the engagement of
the accounting firm shall be allocated between Seller and
Buyer by the accounting firm in the proportion that the
amount in dispute decided in favor of the challenging party
bears to the entire amount in dispute.
SECTION 2.4 PHYSICAL INVENTORY; DETERMINATION OF PURCHASED INVENTORY.
(a) Commencing on or about 5:00 p.m. on the 27th day of
March, 1999, or as the parties may otherwise mutually agree
continuing over the next two days (the "PHYSICAL INVENTORY
PERIOD"), employees or representatives of Seller and
Purchaser will jointly conduct a physical inventory count of
the clean, current and salable inventory, the Dirty Core and
Warranty Inventory and the Fixed Assets at the Business
Locations. A written, itemized list setting forth
specifically all such items of Inventory physically accounted
for which are clean, current and salable and all items of the
Dirty Core and Warranty Inventory shall be prepared by Seller
with the assistance of Purchaser, and shall, on the Closing
Date, be attached hereto as SCHEDULE E, with such revisions
made by Seller with the assistance of Purchaser as are
necessary to reflect any changes in the Inventory that occur
during the period commencing immediately after the Physical
Inventory Date and ending on the Closing Date. Seller and
Purchaser shall each bear their own costs associated with
conducting the physical inventory. Only Inventory in a
current price sheet or still readily available from the
manufacturer will be purchased by Purchaser.
(b) At the completion of the physical inventory conducted
pursuant to SECTION 2.4(a), Purchaser shall prepare a list of
Inventory to be purchased in
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accordance with the provisions of this Agreement, (such items
of inventory, collectively, the "PURCHASED INVENTORY"), which
list shall be: (i) adjusted as of the Closing Date by Seller
with the assistance of Purchaser to reflect changes in the
Purchased Inventory that occur during the period commencing
immediately after the Physical Inventory Date and ending on
the Closing Date; and (ii) attached to this Agreement on the
Closing Date as SCHEDULE F.
SECTION 2.5 ALLOCATION OF PURCHASE PRICE. To the extent required by
law after the Closing Date, Purchaser and Seller shall prepare and file those
statements or forms (including Form 8594) required by Section 1060 of the Code
and the Treasury regulations thereunder and shall file such statements or forms
with their respective federal income Tax Returns. The parties shall prepare
such statements or forms consistently with any agreed allocation of all or a
portion of the Purchase Price to the Purchased Assets. Each party shall provide
the other party with a copy of such statements or forms as filed.
SECTION 2.6 SALE AT CLOSING DATE. The sale, transfer, assignment and
delivery by Seller of the Purchased Assets to Purchaser, and the assumption by
Purchaser of the Assumed Liabilities, as herein provided shall be effected on
the Closing Date by (a) the execution and delivery by Seller and Purchaser of
an Assignment and Assumption Agreement for the Lease and each of the Assigned
Contracts substantially in the form of EXHIBIT A, pursuant to which Assignment
and Assumption Agreements Purchaser shall be subject to all liabilities and
obligations under the Assigned Contracts which accrue after the Closing Date,
and (b) with respect to the other Purchased Assets and Assumed Liabilities, by
the execution and delivery by the Seller and Purchaser of the Bill of Sale and
Assumption Agreement substantially in the form of EXHIBIT B.
SECTION 2.7 APPORTIONMENTS. The following amounts are to be
apportioned as of 12:00 midnight on the day preceding the Closing Date (the
"APPORTIONMENT DATE") (i) water, sewer and utility charges and real estate
taxes, to the extent all or any are payable under the Leases; and (ii) such
other apportionments and adjustments as are customarily apportioned in
transactions of this nature. Except as otherwise provided herein, all
prorations shall be made on the basis of actual bills, to the extent available,
or, in the absence of such actual bills, on good faith estimates of Seller
based on the most recent bill received by Seller. All prorations shall be
adjusted within ten (10) Business Days of Seller's receipt of the final bills.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to SECTION 3.12, the Seller represents and warrants to
Purchaser as follows:
SECTION 3.1 AUTHORITY OF SELLER. Each Seller is a corporation validly
existing and in good standing under the laws of the State of Texas Seller has
full corporate power and authority to execute and deliver this Agreement and
each of the Ancillary Agreements, and the execution and delivery
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<PAGE> 18
by each Seller of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of each
Seller, and this Agreement constitutes, and each of the Ancillary Agreements
upon its execution will constitute, the legal, valid and binding obligation of
each Seller enforceable in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium, or
similar laws from time to time in effect which affect creditors' rights
generally, and by legal and equitable limitations on the enforceability of
specific remedies and subject to receipt of the consents, waivers and approvals
specified on SCHEDULE 3.3.
SECTION 3.2 NO CONFLICT OR VIOLATION. The execution, delivery and
performance by each Seller of this Agreement and the Ancillary Agreements do
not and will not violate or conflict with any provision of the Certificate of
Incorporation or By-laws of each Seller and, assuming that the consents,
waivers, authorizations, approvals, declarations, filings and registrations
referred to in SECTION 3.3 are obtained or made, do not and will not violate or
result in a material breach of or constitute (with due notice or lapse of time
or both) a material default under any Assigned Contract.
SECTION 3.3 CONSENTS AND APPROVALS. SCHEDULE 3.3 sets forth a true and
complete list of each material consent, waiver, authorization or approval of
any Person in connection with any Assigned Contract that is required for the
execution and delivery of this Agreement by each Seller or the performance by
each Seller of its obligations hereunder.
SECTION 3.4 COMPLIANCE WITH LAW. Except as set forth on SCHEDULE 3.4,
to Seller's Knowledge each Seller has not received written notice of any
violation of any law, regulation, order or other legal requirement, and is not
in default in any material respect under any order, writ, judgment, award,
injunction or decree of any Governmental Agency, applicable to the Purchased
Assets.
SECTION 3.5 PERMITS, NOTICES. Attached hereto as SCHEDULE 3.5 is a
complete list of all governmental permits, licenses and authorizations
(collectively, the "Permits") which each Seller has obtained to operate the
business. To Seller's knowledge and belief, no other governmental permits,
licenses or authorizations were necessary to operate and continue the Facility
and the Business. To Seller's knowledge and belief, Seller was not in breach of
the terms of any of the Permits and had paid all necessary fees associated
therewith and there were no other permits necessary for the operation of the
Business. Except as disclosed on SCHEDULE 3.5, Seller had not received and to
Seller's knowledge and belief, there did not exist, any notice, notification or
inquiry from any governmental or quasi-governmental agency to the effect that
the Business or any of the Assets was in violation of any law, ordinance, rule,
regulation, license, permit or authorization as of the date of execution of
this Agreement.
SECTION 3.6 OWNERSHIP OF PURCHASED ASSETS. Other than the real
property subject to the Leases and any items of property subject to the
Assigned Contracts, Seller is the owner of the Purchased Assets. At the Closing
Purchaser will receive, good title to all such Purchased Assets, free and clear
of any Liens, provided however, that Seller makes no representation or warranty
as
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<PAGE> 19
to the existence or absence of any Lien: (i) on the real property subject to
the Leases; (ii) on any items of property subject to the Assigned Contracts.
Seller has good, valid and marketable title to all of the Assets, real,
personal and mixed, including all of the properties and assets used by the
Business (except in each case for Assets sold or otherwise disposed of in the
ordinary course of business consistent with past practice), free and clear of
all mortgages, liens, pledges, security interests, charges, claims,
restrictions and other encumbrances and defects of title of any nature
whatsoever, except liens for current taxes not yet due and payable. To Seller's
knowledge and belief, all leases, licenses, permits and authorizations in any
manner related to the Purchased assets or the Business and all other
instruments, documents and agreements pursuant to which Seller has obtained the
right to use any real or personal property in connection with the Business are
in good standing, valid and effective in accordance with their respective
terms, and there is not under any of such instruments, documents or agreements
any existing default or event which with notice or lapse of time, or both,
would constitute a default and in respect of which Seller has not taken
adequate steps to prevent a default from occurring.
SECTION 3.7 ASSIGNED CONTRACTS. True and complete copies of the
Assigned Contracts listed on SCHEDULE 3.7 have been provided or made available
by Seller to Purchaser. Neither Seller nor, to Seller's Knowledge, any other
party under any of the Assigned Contracts, has commenced any action against the
other or given or received any written notice of any material default or
violation under any Assigned Contract which was not withdrawn or dismissed.
Each of the Lease and the other Assigned Contracts listed on SCHEDULE 3.7 is or
will be at the Closing valid, binding and in full force and effect as against
Seller, except as otherwise set forth on SCHEDULE 3.7.
SECTION 3.8 LABOR RELATIONS. Except as set forth on SCHEDULE 3.8,
Seller is not party to any collective bargaining agreement covering Business
Employees. To Seller's Knowledge, no organizational effort is presently being
made or threatened in writing by or on behalf of any labor union with respect
to Business Employees.
SECTION 3.9 LITIGATION. Except as set forth on SCHEDULE 3.9, there are
no actions, causes of action, claims, suits or proceedings pending or, to
Seller's Knowledge, threatened against Seller which seek to restrain or enjoin
the consummation of the transactions contemplated hereby.
SECTION 3.10 BROKERS. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by Seller without the
intervention of any other Person acting on Seller's behalf in such manner as to
give rise to any valid claim by any such Person against Purchaser for a
finder's fee, brokerage commission or other similar payment based on an
arrangement with Seller.
SECTION 3.11 EXISTING CONDITION. To Seller's knowledge and belief,
except as disclosed on SCHEDULE 3.11 hereto, Seller, in relation to the
Business, has not:
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<PAGE> 20
(a) Sold, assigned or transferred any of the assets or other
interests in the Business except in the ordinary course of
business consistent with past practice;
(b) Mortgaged, pledged or subjected to any lien, pledge,
mortgage, security interest, conditional sales contract or
other encumbrance of any nature whatsoever of any Purchased
Assets, other than the liens, if any, of current taxes not
yet due and payable or liens which will be discharged or
satisfied by the Closing Date
(c) Suffered any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the
Assets
(d) Suffered any material adverse change to the condition of
the Purchased Assets.
SECTION 3.12 CONDITION OF TANGIBLE ASSETS. To Seller's knowledge and
belief, except as disclosed on SCHEDULE 3.12 hereto all buildings, structures,
facilities, automobiles, trucks, other vehicles, machinery, equipment and other
material items of personal property owned or used by Seller in the Business are
in good operating condition and repair, subject to normal wear and maintenance,
are usable in the regular and ordinary course of the Business and conform in
all material respects to all applicable laws, ordinances, codes, rules and
regulations relating to their construction, use and operation. To Seller's
knowledge and belief, no person other than Seller owns any vehicles, equipment
or other tangible assets or properties situated on property subject to the
Leases or necessary to the operation of the Business, except for leased items
disclosed on other Schedules hereto and for items of immaterial value.
SECTION 3.13 TAX AND OTHER RETURNS AND REPORTS. To Seller's knowledge
and belief, except as disclosed on SCHEDULE 3.13 hereto, (a) all federal, state
and local tax returns, reports and statements (including all income tax,
unemployment compensation, social security, payroll, sales and use, excise,
privilege, property, ad valorem, franchise, license, school and any other tax
under laws of the United States or any state or municipal or political
subdivision thereof) required to be filed by Seller in connection with the
Business (the "Tax Returns") have been filed with the appropriate governmental
agencies in all jurisdictions in which such returns, reports and statements are
required to be filed, and all such returns, reports and statements properly
reflect the tax liabilities of Seller in relation to the Business for the
periods, properties or events covered thereby; (b) all federal, state and local
taxes, assessments, interest, penalties, deficiencies, fees and other
governmental charges or impositions, including those enumerated above in
respect of the Tax Returns, which are called for by the Tax Returns, or claimed
to be due by any taxing authority from Seller, or upon or measured by Seller's
properties, assets or income (the "Taxes"), have been properly accrued or paid;
(c) Seller has not received any notice of assessment or proposed assessment by
the Internal Revenue Service or any other taxing authority in connection with
any Tax Returns and there are no pending tax examinations of or tax claims
asserted against Seller or any of its assets or properties; (d) there are no
tax liens (other than any lien for current taxes not yet due and payable) on
any of the Assets; (e) Seller has no knowledge of any basis for any additional
assessment
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of any Taxes in relation to the Business; and (f) Seller has made all deposits
required by law to be made with respect to employees' withholding taxes.
SECTION 3.14 CONTRACTS AND COMMITMENTS. To Seller's knowledge and
belief, except as listed and described on SCHEDULE 3.14 Seller, in relation to
the Business, is not a party to any written or oral:
(a) Agreement, contract or commitment with any present or
former shareholder, director, officer, employee or consultant
or for the employment of any person, including any consultant
(b) Agreement, contract, commitment or arrangement with any
labor union or other representative of employees;
(c) Agreements, contracts or commitments for the future
purchase of, or payment for, supplies or products, or for the
performance of services by a third party, involving the
expenditures of $10,000.00, or more
(d) Agreements, contracts or commitments to sell or supply
products or to perform services, involving $10,000.00 in
value
(e) Agreements, contracts or commitments not otherwise listed
on SCHEDULE 3.14 hereto and continuing over a period of more
than six months from the date hereof or exceeding $10,000.00
in value
(f) Representative or sales agency agreement, contract or
commitment;
(g) Lease under which Seller is either the lessor or lessee
(h) Agreement, contract or commitment for any charitable or
political contribution;
(i) Agreements, contracts or commitments for any capital
expenditure in excess of $10,000.00;
(j) Agreement, contract or commitment limiting or restraining
it from engaging or competing in any lines of business with
any person nor is any officer or employee of the Business
subject to any such agreement, contract or commitment;
(k) License, franchise, distributorship or other agreement,
including those which relate in whole or in part to any
patent, trademark, or copyright or to any ideas, technical
assistance or other know-how of or used by the Business; or
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(l) Material agreement or contract not made in the ordinary
course of business.
To Seller's knowledge and belief, except as may be disclosed on
SCHEDULE 3.14, each of the agreements, contracts, commitments, leases and other
instruments, documents and undertakings listed on SCHEDULE 3.14 is valid and
enforceable in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium, or similar laws from
time to time in effect which affect creditors' rights generally, and by legal
and equitable limitations on the enforceability of specific remedies, the
parties thereto are in compliance with the provisions thereof, no party is in
default in the performance, observance or fulfillment of any material
obligation, covenant or condition contained therein and no event has occurred
which with or without the giving of notice or lapse of time, or both, would
constitute a default thereunder, furthermore, except as may be disclosed on
SCHEDULE 3.14, no such agreement, contract, commitment, lease or other
instrument, document or undertaking, in the reasonable opinion of the Seller,
contains any contractual requirement with which there is a reasonable
likelihood Seller or any other thereto will be unable to comply.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
SECTION 4.1 AUTHORITY OF PURCHASER. Purchaser is a corporation,
validly existing, and in good standing under the laws of the State of
Louisiana. Purchaser has full corporate power and authority to execute and
deliver this Agreement, and the execution and delivery by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of Purchaser, and this Agreement constitutes the legal, valid and binding
obligation of Purchaser enforceable in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, or similar laws from time to time in effect which affect creditors'
rights generally, and by legal and equitable limitations on the enforceability
of specific remedies. Purchaser has full corporate power and authority to own
its properties and to carry on the business presently being conducted by it.
SECTION 4.2 NO CONFLICT OR VIOLATION. The execution, delivery and
performance by Purchaser of this Agreement and the Ancillary Agreements do not
and will not violate or conflict with any provision of the Certificate of
Incorporation or By-laws of Purchaser and do not and will not violate any
provision of law, or any order, judgment or decree of any court or other
Governmental Agency applicable to Purchaser, or violate or result in a material
breach of or constitute (with due notice or lapse of time or both) a default
under any loan agreement, mortgage, security agreement, indenture or other
instrument to which Purchaser is a party or by which it is bound.
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SECTION 4.3 CONSENTS AND APPROVALS. The execution, delivery and
performance by Purchaser of this Agreement do not require the consent or
approval of, or filing with, any Governmental Agency or other entity or person
except: (i) as may be required to effect the transfer of any Permits; or (ii)
such consents, approvals and filings, the failure to obtain or make which would
not, individually or in the aggregate, have a material adverse effect on its
ability to consummate the transactions contemplated hereby.
SECTION 4.4 AVAILABILITY OF FUNDS. Purchaser has obtained Committed
Financing as described on SCHEDULE 4.4 hereto, sufficient to allow it to pay
the Purchase Price at the times and in the manner set forth in this Agreement
and to satisfy all its other obligations under this Agreement, and on the date
of this Agreement Purchaser has provided Seller with all documentation relating
to such Committed Financing.
SECTION 4.5 LITIGATION. There are no actions, causes of action,
claims, suits, proceedings, orders, writs, injunctions, or decrees pending or,
to the knowledge of Purchaser, threatened against Purchaser at law or in equity
or before or by any governmental agency, which seek to restrain or enjoin the
consummation of the transactions contemplated hereby or that could otherwise
adversely affect the ability of Purchaser to perform its obligations hereunder.
SECTION 4.6 BROKERS. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by Purchaser without
the intervention of any other person acting on its behalf in such manner as to
give rise to any valid claim by any such person against the Seller or their
Affiliates for a finder's fee, brokerage commission or other similar payment
based on an arrangement with Purchaser.
ARTICLE V
CERTAIN COVENANTS OF SELLER
Seller covenants with Purchaser that from and after the date hereof
through the Closing Date:
SECTION 5.1 CONDUCT OF BUSINESS BEFORE THE CLOSING DATE. Seller shall
not, except as required or expressly permitted pursuant to the terms hereof,
make any material change in the Fixed Assets or enter into any transaction
respecting the Purchased Assets, other than (a) sales of Inventory in the
ordinary course of the Business, or (b) other transactions in the ordinary
course of the Business, in either case substantially consistent with Seller's
past practices or as otherwise contemplated by this Agreement.
SECTION 5.2 IN GENERAL. Except to the extent expressly provided
otherwise in this Agreement, Seller shall be responsible for any and all wages,
vacations, holidays, union checkoff dues, bereavement pay, jury duty pay,
disability income, supplemental unemployment benefits, personal or sick leave
pay, payroll expenses and, other benefits under any of the Seller's employee
benefit plans, arising out of the employment of employees ("Employees") by
Seller which are earned
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prior to the Closing Date (regardless of when such amounts are payable) and
Purchaser shall be responsible for and assume all liability for any and all
such amounts (or any comparable amounts under Purchaser's plans) to Employees
that are earned on or after the Closing Date.
SECTION 5.3 INFORMATION AND ACCESS. Seller will permit representatives
of Purchaser to have reasonable access during normal business hours after
reasonable notice from Purchaser to Seller, and in a manner so as not to
interfere with the normal operations, to all premises, properties, personnel,
accountants, books, records, contracts and documents of or pertaining to the
Purchased Assets. Purchaser and each of its representatives will treat and hold
such information as confidential. Purchaser shall indemnify, defend and hold
harmless Seller, the lessor under the Lease and their respective Affiliates
from and against any and all claims, demands, causes of action, losses,
damages, liabilities, cost and expenses (including, without limitation,
attorneys' fees and disbursements), suffered or incurred by such Persons in
connection with (i) Purchaser's and/or Purchaser's representatives' entry upon
the Leased Property, or (ii) any and all other activities undertaken by
Purchaser or Purchaser's representatives pursuant to this SECTION 5.3. The
parties hereto agree and acknowledge that the Purchaser's obligations hereunder
shall not be subject to any "due diligence" condition.
SECTION 5.4 FURTHER ASSURANCES. Upon the request of Purchaser at any
time after the Closing Date, to the extent that Seller is able to comply with
the requirements of this section, Seller shall forthwith execute and deliver
such documents as Purchaser or its counsel may reasonably request to effectuate
the purposes of this Agreement.
SECTION 5.5 REASONABLE EFFORTS. Upon the terms and subject to the
conditions of this Agreement, Seller will use commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary or proper consistent with applicable law to consummate and
make effective in the most expeditious manner practicable the transactions
contemplated hereby.
SECTION 5.6 CURE OF DEFAULTS. Seller shall (i) cure any default in
base rental payments arising under the Leases and outstanding as of the Closing
Date; and (ii) use commercially reasonable efforts to cure any and all other
defaults with respect to the Assigned Contracts.
SECTION 5.7 AUDIT OF OPERATIONS AT BUSINESS LOCATIONS. No later than
sixty-five (65) days following the Closing Date Seller shall obtain from its
accounting firm an audit of the business operations relating exclusively to the
Business Locations, and including profit and loss statements and balance sheets
and such other documentation and financial information regarding Seller's
operations related to the Business Locations as of December 31, 1998 and
provide a copy of all such documentation to Purchaser.
SECTION 5.8 SEVERANCE; VACATION AND SICK LEAVE. Seller shall otherwise
indemnify and hold Purchaser harmless, to the extent Purchaser is not otherwise
liable, on account of any claim by
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any Business Employees with respect to any amounts owed to such Business
Employees for severance or unused vacation and sick leave accrued as of the
Closing Date.
SECTION 5.9 WORKER'S COMPENSATION/OSHA
(a) Seller shall retain responsibility for all workers'
compensation claims filed by Employees either prior to or
subsequent to the Closing Date for injuries sustained prior
to the Closing Date. Purchaser shall be responsible for all
workers' compensation claims related to the Business which
are not the responsibility of Seller under the preceding
sentence.
(b) Seller shall retain responsibility for any monetary fines
or penalties assessed under the Occupational Safety and
Health Act ("OSHA") and similar state and local statutes and
ordinances and that are assessed with respect to citations
outstanding at the Closing Date ("Outstanding Citations")
which citations relate to the Business or to the Employees.
Purchaser shall promptly take, and shall assume
responsibility for, all remedial and nonmonetary action
required as a result of any Outstanding Citations but Seller
shall indemnify and hold harmless Purchaser from all costs
incurred as a result of such actions. Purchaser shall be
responsible for all citations relating to the Business or to
the Employees made after the Closing Date.
SECTION 5.10 GRIEVANCES. Seller shall be responsible for (i) the
resolution of all filed grievances attributable to events occurring prior to
the Closing Date and (ii) the payment of any amounts in the nature of back pay
or employee compensation in respect of such grievances for periods before or
after the Closing Date and all other expenses incident thereto.
SECTION 5.11 SELLER CERTIFICATION. Section 1445 of the Internal
Revenue Code provides that a purchaser of a U.S. real property interest must
withhold tax if the Seller is a foreign person. In connection therewith, Seller
warrants that withholding of tax is not required upon disposition of the U.S.
real property interest being sold pursuant to this Agreement, agrees to hold
Purchaser harmless from any liability under Section 1445 or any interest or
penalties imposed in connection therewith, and represents the following:
(a) Seller is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as these terms are defined
in Internal Revenue Code and Income Tax Regulations);
(b) Seller's U.S. Employer Identification No. is 74-1491993;
(c) Seller's office address is _________________; and
(d) Seller shall provide on or before the Closing Date a
certification of nonforeign status as provided in Treas. Reg.
Section 1.4445-T(b))2)(iii)(B).
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Seller consents that the information contained in this SECTION 5.11 may be
disclosed to the Internal Revenue Service by the Purchaser.
SECTION 5.12 SELLER INDEMNITY. To the extent not otherwise provided
herein, Seller agrees to defend, indemnify and hold harmless Purchaser from and
against:
(a) All debts, liabilities and obligations arising out of or
in any way relating to the operation of the Business accruing
prior to the Closing Date or from events occurring prior to
the Closing with respect to the ownership, management,
operation and maintenance of the Business;
(b) Any actual loss, liability or damage suffered or incurred
by Purchaser because any representation or warranty contained
in this Agreement, or in any document furnished to Purchaser
by Seller in connection with the Closing hereunder, shall be
false or misleading in any material respect; and all
reasonable costs and expenses (including reasonable
attorneys' fees) incurred by Purchaser in connection with any
action, suit, proceeding, demand, assessment or judgment
incident to any of the matters indemnified against in this
provision.
SECTION 5.13 NO SOLICITATION. Seller shall not, directly or
indirectly, through any officer, director, employee, representative or agent,
solicit or encourage the initiation or submission of any inquiries, proposals
or offers regarding any acquisition, merger, take-over bid, sale of all or
substantially all of the assets of, or sales of shares of capital stock of
Seller, whether or not in writing and whether or not delivered to the
shareholders of Seller generally (including without limitation by way of a
tender offer), or similar transactions involving Seller (any of the foregoing
inquiries or proposals being referred to herein as an "Acquisition Proposal"),
provided however, that nothing contained in this Agreement shall prevent the
board of directors of Seller from referring any third party to this SECTION
5.13. Nothing contained in this SECTION 5.13 or any other provision of this
Agreement shall prevent the board of directors of Seller from considering or
negotiating an unsolicited bona fide written Acquisition Proposal. If the board
of directors of Seller, after duly considering advice, written or otherwise, of
outside counsel and financial advisors to Seller, determines in good faith that
it would be consistent with its fiduciary responsibilities to approve or
recommend (and in connection therewith withdraw or modify its approval or
recommendation of this Agreement and the transactions contemplated hereby) a
Superior Proposal (as defined below), then notwithstanding any such approval or
recommendation (i) Seller shall not enter into any agreement with respect to
the Superior Proposal and (ii) any other obligation of the Company under this
Agreement shall not be affected, unless this Agreement is terminated pursuant
to SECTION 9.2 hereof before or simultaneously with the grant of such approval
or the making of such recommendation. As used herein, the term "Superior
Proposal" means a bona fide proposal made by a third party to acquire Seller
pursuant to a tender or exchange offer, a merger, a sale of all or
substantially all of its assets or otherwise that the board of directors of
Seller determines in its good faith judgment to be more favorable to Seller
than the transactions contemplated by this Agreement (after considering the
advice, written or otherwise, of the professional advisors of Seller). In
making
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<PAGE> 27
a determination of whether a Superior Proposal is more favorable, the
board of directors of Seller shall consider not only the price offered by the
third party as compared to the total consideration set forth in this Agreement,
but shall also make any other meaningful comparison of the relative benefits
offered to Seller by this Agreement as compared to this transaction proposed by
the third party. Notwithstanding any other provisions to the contrary herein,
in the event this Agreement is terminated pursuant to SECTION 9.2(C) then, in
such an event, Seller shall pay to Purchaser a non-refundable break-up fee of
Four Hundred Thousand ($400,000.00) Dollars.
ARTICLE VI
CERTAIN COVENANTS OF PURCHASER
SECTION 6.1 REASONABLE EFFORTS. Upon the terms and subject to the
conditions of this Agreement, Purchaser will use commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary or proper consistent with applicable law to
consummate and make effective in the most expeditious manner practicable the
transactions contemplated hereby.
SECTION 6.2 PERFORMANCE UNDER ASSIGNED CONTRACTS. Purchaser agrees
that from and after the Closing Date it shall (i) assume all obligations and
liabilities under the Assigned Contracts which accrue after the Closing Date,
(ii) take all actions necessary to satisfy its obligations under the terms and
conditions of each of the Assigned Contracts and (iii) indemnify and hold
harmless Seller for any damages arising out of a breach of this covenant.
SECTION 6.3 PURCHASER FINANCING. Purchaser shall, from the date of
this Agreement until and including the Closing Date, maintain the availability
of funds pursuant to the Committed Financing set forth on SCHEDULE 4.4, and, in
the event that such financing becomes unavailable, shall (i) use commercially
reasonable efforts to obtain alternative Committed Financing and (ii) in the
event that Purchaser is unable to obtain such alternative Committed Financing,
accept such alternative financing as may be arranged by Seller, provided that
such Seller arranged financing is on terms no less favorable to Purchaser than
the Committed Financing set forth on SCHEDULE 4.4 (it being understood that
Seller shall be under no obligation to obtain alternative financing for
Purchaser).
SECTION 6.4 PURCHASER INDEMNITY. To the extent not otherwise provided
herein or not inconsistent with any other provision hereof, Purchaser agrees to
defend, indemnify and hold Seller harmless from and against:
(a) All debts, liabilities and obligations arising out of or
in any way relating to the operation of the Business accruing
subsequent to the Closing or from events occurring subsequent
to the Closing with respect to the ownership, management,
operation, maintenance and repair of the Business;
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(b) Any actual loss, liability, or damage suffered or
incurred by Seller because of any representation or warranty
contained in this Agreement, or in any document furnished to
Seller by Purchaser in connection with the Closing hereunder,
shall be false or misleading in any material respect; and
(C) All reasonable costs and expenses (including reasonable
attorneys' fees) incurred by Seller in connection with any
suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this provision.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions contemplated
by this Agreement are subject to the satisfaction of each of the following
conditions on or prior to the Closing Date:
SECTION 7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser contained in this Agreement shall be true on and as of
the Closing Date in all material respects as though such representations and
warranties were made on and as of the Closing Date.
SECTION 7.2 COMPLIANCE WITH AGREEMENT. Purchaser shall have performed
and complied in all material respects (and in all respects in the case of
Article II hereof) with all covenants and conditions to be performed or
complied with by it on or prior to the Closing Date.
SECTION 7.3 CONSENTS. Any consent required in connection with the
assignment to Purchaser of the Lease, and any consents required in connection
with the assignment of those other Assigned Contracts listed in SCHEDULE 3.3
hereto shall have been duly obtained and shall be in full force and effect on
the Closing Date.
SECTION 7.4 PURCHASER'S CLOSING DELIVERIES AND OBLIGATIONS. Purchaser
shall have delivered all items and satisfied all obligations pursuant to
SECTION 9.1(b).
SECTION 7.5 AVAILABILITY OF PURCHASER FINANCING. The Committed
Financing set forth on Schedule 4.4 shall be available to Purchaser on the
Closing Date, or alternate financing is available to Purchaser to the
satisfaction of Seller.
SECTION 7.6 NO ADVERSE PROCEEDING. As of the Closing Date, there shall
not have been instituted or be pending or threatened any suit, action or other
proceeding by any Governmental Agency or any other Person in which it is sought
to restrain or prohibit the transactions contemplated by this Agreement.
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SECTION 7.7 MINIMUM INVENTORY TO BE PURCHASED AMOUNT. If the result of
Seller's physical inventory conducted pursuant to Section 2.4 varies more than
five (5%) percent from the inventory shown on the report generated by its
inventory control system immediately before such physical inventory is
conducted, either Seller or Purchaser may terminate this Agreement.
Notwithstanding any provision to the contrary herein, if either party
terminates pursuant to this section, no allocation of fees, costs or expenses
provided under SECTION 9.3 shall apply, and each party hereto shall bear its
own expenses.
SECTION 7.8 FAIRNESS OPINION. The trustees of the Employee Stock
Ownership Plan shall have received an opinion of _________________________
relating to fairness of the transaction in substance and form satisfactory to
the trustees.
SECTION 7.9 SHAREHOLDER AND ESOP PARTICIPANT APPROVAL. Seller shall
have obtained the required approval of the shareholders of Seller and the
participants in Seller's Employee Stock Ownership Plan.
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (unless waived in
writing by Purchaser) of each of the following conditions on or prior to the
Closing Date:
SECTION 8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement shall be true on and as of the
Closing Date in all material respects.
SECTION 8.2 COMPLIANCE WITH AGREEMENT. Seller shall have performed and
complied in all material respects with all covenants and conditions to be
performed or complied with by it on or prior to the Closing Date.
SECTION 8.3 NO ADVERSE PROCEEDING. As of the Closing Date, there shall
not have been instituted or be pending or threatened any suit, action or other
proceeding by any Governmental Agency or any other Person in which it is sought
to restrain or prohibit the transactions contemplated by this Agreement.
SECTION 8.4 CONSENTS. The following consents shall have been duly
obtained and shall be in full force and effect on the Closing Date: (i) the
consent, if any, required in connection with the assignment to Purchaser of the
Leases; and (II) the consents, if any, required in connection with the
assignment of those other Assigned Contracts listed in SCHEDULE 3.3 hereto.
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SECTION 8.5 SELLER'S CLOSING DELIVERIES AND OBLIGATIONS. Seller shall
have delivered all items and satisfied all obligations pursuant to SECTION
9.1(a).
ARTICLE IX
THE CLOSING AND TERMINATION
SECTION 9.1 THE CLOSING. The Closing of the transactions contemplated
hereby (the "CLOSING") shall be held on the _____ day of ________, 1999 (the
"CLOSING DATE") The Closing shall be held at the
_________________________________________. At the Closing, all of the
transactions provided for in ARTICLE II hereof shall be consummated on a
substantially concurrent basis.
(a) SELLER'S DELIVERIES AND OBLIGATIONS AT CLOSING. At the
Closing, Seller shall deliver (or cause to be delivered) to
Purchaser the following (in form and substance reasonably
satisfactory to counsel for Purchaser):
(i) a duly executed Assignment and Assumption
Agreement assigning to Purchaser the rights, title,
interest, and obligations in, under, and to each of
the Assigned Contracts being assigned to Purchaser,
substantially in the form attached hereto as EXHIBIT
A;
(ii) a duly executed Bill of Sale and Assumption
Agreement and such other documents or instruments of
transfer necessary to vest in Purchaser full and
complete title to the Purchased Inventory and Fixed
Assets, free and clear of all liens, pledges,
security interests, and encumbrances, on the Closing
Date, substantially in the form attached hereto as
EXHIBIT B;
(iii) A duly executed Assignment and Assumption of
Leases assigning the rights, title, interest, and
obligations in, under, and to the Leases to
Purchaser, substantially in the form attached hereto
as EXHIBIT I;
(iv) the Employment Agreements, each duly executed
by the employee named therein;
(v) the Real Estate Lease, duly executed by ADCO
Development Partnership;
(vi) certified resolutions of the directors of
Seller approving and authorizing the transactions
contemplated by this Agreement;
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(vii) a certificate, executed by a duly authorized
officer of Seller, to the effect that all conditions
to closing set forth in SECTION 8.1 and SECTION 8.2
have been satisfied; and
(viii) such other instruments, documents, and
considerations which may be reasonably required by
Purchaser or Purchaser's counsel to effectuate the
transaction contemplated by this Agreement
(b) PURCHASER'S DELIVERIES AND OBLIGATIONS AT CLOSING. At the
Closing, Purchaser shall deliver (or cause to be delivered)
to Seller the following (in form and substance reasonably
satisfactory to counsel for Seller):
(i) payment of the Purchase Price and other
amounts in accordance with the terms and conditions
set forth in SECTION 2.3 and other applicable
provisions of this Agreement;
(ii) a duly executed Assignment and Assumption
Agreement accepting the assignment of the rights,
title, interest, and obligations in, under, and to
each of the Assigned Contracts being assigned to
Purchaser, substantially in the form attached hereto
as EXHIBIT A;
(iii) a duly executed Assignment and Assumption of
Leases accepting the assignment of the rights,
title, interest, and obligations in, under, and to
the Leases, substantially in the form attached
hereto as EXHIBIT I;
(iv) the Employment Agreements, duly executed by
Purchaser;
(v) the Real Estate Lease, duly executed by
Purchaser;
(vi) certified resolutions of the directors of
Purchaser approving and authorizing the transactions
contemplated by this Agreement;
(vii) a certificate, executed by a duly authorized
officer of Purchaser, to the effect that all the
conditions to closing set forth in SECTION 7.1 and
SECTION 7.2 have been satisfied;
(viii) such other instruments, documents, and
considerations which may be reasonably required by
Purchaser or Purchaser's counsel to effectuate the
transaction contemplated by this Agreement.
SECTION 9.2 TERMINATION. Anything in this Agreement to the contrary
notwithstanding, this Agreement and the transactions contemplated hereby may be
terminated in any of the following ways at any time before the Closing and in
no other manner:
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<PAGE> 32
(a) by mutual written consent of Purchaser and Seller;
(b) by Seller if Purchaser is in breach in any material
respect of any of its representations made in this Agreement,
or is in violation or default of any of its covenants or
agreements in this Agreement if the breach or default is not
cured within ten (10) days after written notice by Seller;
(C) by Seller if Seller receives and accepts a Superior
Proposal pursuant tO SECTION 5.13 and pays to Purchaser a
non-refundable break-up fee of Four Hundred Thousand
($400,000.00) Dollars;
(d) by Purchaser, if Seller is in breach in any material
respect of any of its representations made in this Agreement
or is in violation or default of any of its covenants or
agreements in this Agreement which breach or default is not
cured within ten (10) Business Days after written notice by
Purchaser;
(e) by Purchaser, if at any point up until and including the
Closing Date, Purchaser does not have available Committed
Financing.
SECTION 9.3 EFFECTS OF TERMINATION
(a) In the event this Agreement is terminated pursuant to
SECTION 9.2, except as provided in this SECTION 9.3, all
further obligations of the parties hereunder shall terminate
and such termination shall be without liability of any party
(or any stockholder, director, officer, employee, agent,
consultant or representative of such party) to any other
party to this Agreement; provided, however, that: (i) if such
termination shall result from the willful failure of
Purchaser to perform a covenant of this Agreement or from a
breach of its representations in SECTION 4.4, Purchaser shall
be liable for any and all losses, damages and expenses
incurred or suffered by Seller as a result of such breach or
failure to perform in an amount not to exceed $75,000.00 and
the cost of obtaining the fairness opinion; (ii) if such
termination shall result from the willful failure of Seller
to perform a material covenant of this Agreement, other than
failure to perform through acceptance of a Superior Proposal,
Seller shall be liable for any and all losses, damages and
expenses incurred or suffered by Purchaser as a result of
Seller's failure to perform, in an amount not to exceed
$150,000.00; and (iii) if this Agreement is terminated
pursuant to SECTION 9.2(a) or SECTION 9.2(e) Purchaser shall
reimburse Seller for all expenses, including professional
fees, incurred in obtaining a fairness opinion with respect
to the transaction contemplated hereby. The provisions of
this SECTION 9.3 shall survive any termination hereof
pursuant to SECTION 9.2 except if this Agreement is
terminated pursuant to SECTION 9.2(c). The remedies set forth
in this SECTION 9.3 shall be
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<PAGE> 33
the sole and exclusive remedies for any termination pursuant
to SECTIONS 9.2(a), 9.2(b), 9.2(d) AND 9.2(e).
(b) The foregoing provisions of this SECTION 9.3 shall not
limit the rights of the parties hereto to seek specific
performance of any obligation hereunder of any other party.
ARTICLE X
TAXES
The parties hereto hereby covenant and agree as follows:
SECTION 10.1 TAXES RELATED TO PURCHASE OF ASSETS. The parties
recognize and acknowledge that the sale, transfer, assignment and delivery of
the Purchased Assets may be subject to state and local transfer, recording,
stamp or other similar transfer taxes (collectively, "TRANSACTION TAXES") that
may be imposed by reason of the sale, transfer, assignment and delivery of the
Purchased Assets. If Transaction Taxes are assessed for any reason, then
Purchaser shall pay such Transaction Taxes along with any recording and filing
fees. Purchaser and Seller agree to cooperate to determine the amount of
Transaction Taxes payable in connection with the transactions contemplated
under this Agreement. Transaction Taxes shall not include any Taxes for which
Seller is responsible under SECTION 10.2. At the Closing, Purchaser shall remit
to the Seller such properly completed resale exemption certificates and other
similar certificates or instruments as are applicable to claim available
exemptions from the payment of sales, transfer, use or other similar taxes
under applicable law. Purchaser and Seller shall cooperate in preparing such
forms and will execute and deliver such affidavits and forms as are reasonably
requested by the other party.
SECTION 10.2 PRORATION OF REAL AND PERSONAL PROPERTY TAXES. Personal
and real property taxes and assessments on the Purchased Assets shall be
prorated between Purchaser and Seller as of the Apportionment Date, provided,
however, that Seller shall not be responsible for any increased assessments on
real and personal property resulting from the transactions contemplated hereby.
All such prorations shall be allocated so that items relating to time periods
ending prior to the Closing Date shall be allocated to Seller and items related
to time periods beginning on or after the Closing Date shall be allocated to
Purchaser The amount of all such prorations shall be settled and paid on the
Closing Date.
SECTION 10.3 COOPERATION ON TAX MATTERS. Purchaser and Seller agree to
furnish or cause to be furnished to each other, as promptly as practicable,
such information and assistance relating to the Purchased Assets as is
reasonably necessary for the preparation and filing of any return, claim for
refund or other required or optional filings relating to tax matters, for the
preparation for and proof of facts during any tax audit, for the preparation
for any tax protest, for the prosecution or
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<PAGE> 34
defense of any suit or other proceeding relating to tax matters and for the
answer of any governmental or regulatory inquiry relating to tax matters.
Purchaser agrees to retain possession of all files and records
delivered to Purchaser by Seller for a period of at least six years from the
Closing Date. In addition, from and after the Closing Date, Purchaser agrees
that it will provide access to Seller and its attorneys, accountants and other
representatives (after reasonable notice and during normal business hours and
without charge) to such files and records as Seller may reasonably deem
necessary to properly prepare for, file, prove, answer, prosecute and/or defend
any such return, filing, audit, protest, claim, suit, inquiry or other
proceeding.
ARTICLE XI
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
SECTION 11.1 CURRENT INTENT REGARDING BUSINESS EMPLOYEES; WARN
Without making any other commitment regarding the Business Employees,
Purchaser commits to hire, as of the Closing Date, substantially all of the
current Business Employees and each such employee hired shall, for all purposes
under Purchaser's employee benefit plans, be credited with such employee's
period of service with Seller. Purchaser shall provide each such employee with
employee benefits, other than an ESOP or program of similar nature, that are
substantially similar to the employee benefits currently being provided to such
employee by Seller. Purchaser assumes no obligation, liability, or
responsibility of Seller with respect to the Business Employees. Purchaser's
obligation with respect to the Business Employees who accept employment with
Purchaser shall commence as of the Closing Date. Purchaser shall be responsible
for any obligations or Liabilities to the Business Employees under the Worker
Adjustment and Retraining Notification Act and any similar state or local
"plant closing" law ("WARN") to the extent WARN thresholds are exceeded as a
result of actions taken by the Purchaser on or after the Closing Date with
respect to the Business Employees. Seller shall be responsible for any
obligations or Liabilities to the Business Employees under WARN as a result of
actions taken by Seller prior to the Closing Date.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties to this Agreement made in this Agreement, subject to
the exceptions thereto, will not be affected by any information furnished to,
or any investigation conducted by, any of them or their representatives in
connection with the subject matter of this Agreement. The representations and
warranties contained in this Agreement shall survive the Closing for a period
of eighteen months.
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<PAGE> 35
SECTION 12.2 NOTICES. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered
personally to the recipient, (b) when sent to the recipient by telecopy
(receipt electronically confirmed by sender's telecopy machine) if during
normal business hours of the recipient, otherwise on the next Business Day, (c)
one (1) Business Day after the date when sent to the recipient by reputable
express courier service (charges prepaid) or (d) seven (7) Business Days after
the date when mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications will be sent to the Seller and to Purchaser at the addresses
indicated below:
If to Purchaser: Rankin Automotive Group, Inc.
3709 S. MacArthur Drive
Alexandria, LA 71302
Attention: Randall B. Rankin
Facsimile No. 318-443-9952
With a copy Ricky L. Sooter
(which shall not Daniels & Sooter, L.L.C.
constitute notice) to: 3600 Jackson Street, Suite 106
Alexandria, LA 71306
Facsimile No. 318-448-8528
With a copy Michael Glass, Esq.
(which shall not 1735 White Street
constitute notice) to: Alexandria, Louisiana 71301
Facsimile No. 318-473-4062
If to Seller: Allied Distributing Company of Houston, Inc.
3100 Pawnee
Houston, TX 77054
Attn: David L. Epstein, President
With a copy
(which shall not
constitute notice) to:
or to such other address as any party hereto may, from time to time, designate
in writing delivered pursuant to the terms of this Section.
SECTION 12.3 NOTICE REGARDING INDEMNITIES, LIMITATION OF INDEMNITY,
ETC. Except to the extent expressly provided elsewhere in this Agreement, the
following procedures shall be followed with respect to all claims for
indemnification under this Agreement and all obligations of
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<PAGE> 36
indemnification hereunder shall be subject to compliance by the party to be
indemnified with such procedures.
(a) The indemnitee shall give prompt written notice to the
indemnitor of any claim that might give rise to a claim by
the indemnitee against the indemnitor pursuant to this
Agreement, stating the nature and basis of such claims and
the estimated amounts thereof.
(b) If any action, suit or proceeding is brought against an
indemnitee with respect to which an indemnitor may have a
liability pursuant to this Agreement, the action, suit or
proceeding shall, upon (i) the written acknowledgment by the
indemnitor that it has the obligation to indemnify the
indemnitee under the indemnity agreements contained herein
and (ii) the making of reasonably adequate provisions by the
indemnitor to ensure the indemnitee of the ability of the
indemnitor to satisfy its obligation hereunder, be defended
(including all proceedings on appeal or for review that
counsel for the indemnitor shall deem appropriate) by, and
may be settled or compromised by, the indemnitor. Prior to
receipt by the indemnitee of the indemnitor's written
acknowledgment and provision as required by clauses (i) and
(ii) of the preceding sentence, the indemnitee shall have the
right to contest or defend (and, if the indemnitee has not
received such written acknowledgment and provision within
thirty business days after the indemnitee has provided
written notice as required by SECTION 12.2 above, to settle
or compromise) such action, suit or proceeding at the expense
of the indemnitor. In addition to the foregoing, the
indemnitee may by written notice to the indemnitor require
the indemnitor to assume the defense of any action, suit or
proceeding with respect to which the indemnitor may have
liability pursuant to this Agreement. The indemnitee shall
have the right to employ its own counsel in connection with
any action, suit or proceeding being defended by the
indemnitor pursuant hereto, but the fees and expenses of such
counsel shall be at the indemnitee's own expense unless (i)
the employment of such counsel and the payment of such fees
and expenses shall have been specifically authorized by the
indemnitor in connection with the defense of such action,
suit or proceeding or (ii) the indemnitee shall have
reasonably concluded and notified the indemnitor that there
may be specific defenses available to it that are different
from or in addition to those available to the indemnitor or
that such action, suit or proceeding involves or could have
an effect upon matters beyond the scope of the indemnity
agreements contained herein. In either of which events (A)
the indemnitor, to the extent made necessary by such
defenses, shall not have the right to direct the defense of
such action, suit or proceeding on behalf of the indemnitee
and (B) only that portion of such fees and expenses
reasonably related to matters covered by the indemnity
agreements contained herein shall be borne by the indemnitor.
The indemnitor shall keep the indemnitee fully informed of
such action, suit or proceeding at all stages thereof whether
or not the indemnitee is so represented. The indemnitor shall
make available to the indemnitee and its attorneys
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<PAGE> 37
and accountants all books and records of the indemnitor
relating to such proceedings or litigations, and the parties
hereto agree to render to each other such assistance as they
may reasonably require to ensure the proper and adequate
investigation, and the defense or settlement, of any such
action, suit or proceeding.
(C) The indemnitee shall be entitled to compromise and settle
all actions, suits or proceedings as to which the indemnitor
does not have or does not exercise the right to assume the
defense, without consent of the indemnitor, provided, that it
acts reasonably and in good faith in doing so. The indemnitee
shall keep the indemnitor fully informed of such action, suit
or proceeding at all states thereof.
(d) No claim for indemnification shall be made pursuant to
SECTION 5.12 or SECTION 6.4 unless the amount of such claim
exceeds $1,000 and no claims shall be paid pursuant to such
provisions until the aggregate of such claims exceeds $25,000
and then only to the extent that all claims made exceed
$25,000. Indemnification by Seller shall be limited to and
provided solely from the funds held pursuant to the Escrow
Agreement. In determining the amount of any indemnity, there
shall be taken into account by the party to be indemnified
any tax benefit, insurance proceeds or other similar recovery
or offset realized, directly or indirectly, as a result of
such indemnification.
SECTION 12.4 AMENDMENTS. The terms, provisions and conditions of this
Agreement may not be changed, modified or amended in any manner except by an
instrument in writing duly executed by each of the parties hereto.
SECTION 12.5 ASSIGNMENT. This Agreement is binding upon and inures to
the benefit of the successors and assigns of each party to this Agreement, but
no rights, obligations or liabilities under this Agreement may be assigned by
any party without the prior written consent of the other parties hereto.
SECTION 12.6 ANNOUNCEMENTS. All press releases, notices to customers
and suppliers and other announcements prior to the Closing Date with respect to
this Agreement and the transactions contemplated by this Agreement shall be
approved by both Purchaser and Seller prior to the issuance thereof; provided
that any party may make any public disclosure it believes in good faith is
required by law or regulation (in which case the disclosing party shall advise
the other party (which shall be Seller in the case of disclosure proposed to be
made by Purchaser and Purchaser in the case of disclosure proposed to be made
by Seller) prior to making such disclosure and provide such other party an
opportunity to review the proposed disclosure).
SECTION 12.7 EXPENSES. Except as otherwise set forth in this
Agreement, each party to this Agreement shall bear all of its legal,
accounting, investment banking and other expenses incurred by it or on its
behalf in connection with the transactions contemplated by this Agreement,
whether or not such transactions are consummated.
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SECTION 12.8 ENTIRE AGREEMENT. Other than the obligations set forth in
the Confidentiality Agreements entered in contemplation of this Agreement, this
Agreement and the Ancillary Agreements constitute the entire agreement between
the parties hereto with respect to the subject matter hereof and supersede and
are in full substitution for any and all prior agreements and understandings
between them relating to such subject matter. The Exhibits and Schedules to
this Agreement are hereby incorporated and made a part hereof and are an
integral part of this Agreement.
SECTION 12.9 DESCRIPTIVE HEADINGS. The descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
SECTION 12.10 COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by any one or more
parties hereto, and each such executed counterpart shall be, and shall be
deemed to be, an original, but all of which shall constitute, and shall be
deemed to constitute, in the aggregate but one and the same instrument.
SECTION 12.11 GOVERNING LAW; JURISDICTION. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the laws
of the State of Texas, without giving effect to the conflict of laws principles
thereof.
SECTION 12.12 CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
Any references to any federal, state, local or foreign statute or law will also
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Unless the context otherwise requires: (a) a term has the
meaning assigned to it by this Agreement; (b) an accounting term not otherwise
defined has the meaning assigned to by GAAP; (c) the word "or" is not
exclusive; (d) the words "include", "includes" and "including" shall be deemed
to be followed by the words "without limitation"; (e) words in the singular
include the plural and in the plural include the singular; (f) provisions apply
to successive events and transactions; and (g) "$" means the currency of the
United States of America.
SECTION 12.13 SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument. Furthermore, in lieu of any such
invalid or unenforceable term or provision, the parties hereto intend that
there shall be added as a part of this Agreement a provision as similar in
terms to such invalid or unenforceable provision as may be possible and be
valid and enforceable.
SECTION 12.14 CONFIDENTIALITY. Seller and Purchaser agree to keep, and
to cause each of their affiliates, directors, officers, and employees to keep,
confidential any and all confidential
Daniels & Sooter, L.L.C.
Page 33 of 35
<PAGE> 39
information of the other party that either receives in the course of performing
its obligations hereunder (except that such information may be shared, on a
confidential basis, with the party's attorneys and auditors) and will not,
without the other party's written consent, use any of such confidential
information except as reasonably necessary to perform its duties under this or
another of its agreements with the other party. Upon termination of this
Agreement, each party will return, and will cause its affiliates to return, to
the other party, all original documents and copies of the confidential
information which are in its possession.
SECTION 12.15 EXHIBITS. Notwithstanding anything to the contrary in
this Agreement, the exhibits attached hereto are provided in good faith as a
form of document similar to that which the parties to this Agreement intend to
execute at the closing of this transaction, but the parties to this Agreement
hereby acknowledge and agree that such forms remain subject to further
negotiation by such parties before execution thereof.
IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered
this Agreement as of the day and year first written above.
SELLER:
ALLIED DISTRIBUTING COMPANY OF HOUSTON, INC.
BY: /s/ DAVID L. EPSTEIN
--------------------
Name: David L. Epstein
Title: President
AUTO PARTS INVESTMENT GROUP, INC.
BY: /s/ DAVID L. EPSTEIN
--------------------
Name: David L. Epstein
Title: President
Daniels & Sooter, L.L.C.
Page 34 of 35
<PAGE> 40
PURCHASER:
RANKIN AUTOMOTIVE GROUP, INC.
BY: /s/ RANDALL B. RANKIN
---------------------
Name: Randall B. Rankin
Title: President
Daniels & Sooter, L.L.C.
Page 35 of 35
<PAGE> 1
EXHIBIT 10(t)
LOAN AND SECURITY AGREEMENT
DATED AS OF MARCH 10, 1999
BETWEEN
RANKIN AUTOMOTIVE GROUP, INC.,
AS BORROWER,
AND
THE FINANCIAL INSTITUTIONS
WHICH MAY BECOME PARTIES HERETO,
AND
HELLER FINANCIAL, INC.,
AS AGENT AND AS LENDER
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS..................................1
1.1 Certain Defined Terms..................................................1
SECTION 2. LOANS AND COLLATERAL..............................................1
2.1 Loans..................................................................1
(A)(2) Term Loan A-2...................................................1
(A)(3) Term Loan B.....................................................2
(B) Revolving Loan......................................................2
(1) "Maximum Revolving Loan Amount...................................2
(2) "Borrowing Base..................................................2
(C) Eligible Collateral.................................................3
(D) Borrowing Mechanics.................................................5
(E) Notes...............................................................6
(F) Letters of Credit...................................................6
(1) Maximum Amount...................................................6
(2) Reimbursement....................................................6
(3) Request for Letters of Credit....................................7
(G) Other Letter of Credit Provisions...................................7
(1) Obligations Absolute.............................................7
(2) Nature of Lender's Duties........................................8
(3) Liability........................................................8
(H) Availability of a Lender's Pro Rata Share...........................8
2.2 Interest...............................................................9
(A) Rate of Interest....................................................9
(B) Computation and Payment of Interest................................10
(C) Interest Laws......................................................11
(D) Conversion or Continuation.........................................11
2.3 Fees..................................................................12
(A) Unused Line Fee....................................................12
(B) Letter of Credit Fees..............................................12
(C) Prepayment Fees....................................................12
(D) Audit Fees.........................................................13
(E) Other Fees and Expenses............................................13
2.4 Payments and Prepayments..............................................13
(A) Manner and Time of Payment.........................................13
(B) Mandatory Prepayments..............................................14
</TABLE>
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<TABLE>
<S> <C>
(1) Overadvance.....................................................14
(2) Proceeds of Asset Dispositions..................................14
(3) Prepayments from Excess Cash Flow...............................14
(C) Voluntary Prepayments and Repayments...............................14
(D) Payments on Business Days..........................................15
2.5 Term of this Agreement................................................15
2.6 Statements............................................................15
2.7 Grant of Security Interest............................................16
2.8 Capital Adequacy and Other Adjustments................................16
2.9 Taxes.................................................................17
(A) No Deductions......................................................17
(B) Changes in Tax Laws................................................17
(C) Foreign Lenders....................................................18
2.10 Required Termination and Prepayment..................................19
2.11 Optional Prepayment/Replacement of
Agent or Lenders in Respect of Increased Costs............................19
2.12 Compensation.........................................................20
2.13 Booking of LIBOR Loans...............................................20
2.14 Assumptions Concerning Funding of LIBOR Loans........................20
SECTION 3. CONDITIONS TO LOANS..............................................20
SECTION 4. BORROWER'S REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS.....21
4.1 Organization, Powers, Capitalization..................................21
(A) Organization and Powers............................................21
(B) Capitalization.....................................................21
4.2 Authorization of Borrowing, No Conflict...............................21
4.3 Financial Condition...................................................22
4.4 Indebtedness and Liabilities..........................................22
4.5 Account Warranties and Covenants......................................22
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
4.6 Names and Locations...................................................23
4.7 Title to Properties; Liens............................................23
4.8 Litigation; Adverse Facts.............................................23
4.9 Payment of Taxes......................................................24
4.10 Performance of Agreements............................................24
4.11 Employee Benefit Plans...............................................24
4.12 Intellectual Property................................................25
4.13 Broker's Fees........................................................25
4.14 Environmental Compliance.............................................25
4.15 Solvency.............................................................25
4.16 Disclosure...........................................................25
4.17 Insurance............................................................25
4.18 Compliance with Laws.................................................26
4.19 Bank Accounts........................................................26
4.20 Employee Matters.....................................................26
4.21 Governmental Regulation..............................................27
4.22 Access to Accountants and Management.................................27
4.23 Inspection...........................................................27
4.24 Collateral Records...................................................27
4.25 Account Covenants; Verification......................................27
4.26 Collection of Accounts and Payments..................................28
SECTION 5. REPORTING AND OTHER AFFIRMATIVE COVENANTS........................29
5.1 Financial Statements and Other Reports................................29
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C>
5.2 Endorsement...........................................................29
5.3 Maintenance of Properties.............................................29
5.4 Compliance with Laws..................................................29
5.5 Further Assurances....................................................29
5.6 Mortgages; Title Insurance; Surveys; Additional Leasehold Properties..30
(A) Title Insurance....................................................30
(B) Additional Mortgaged Property......................................30
(C) Surveys............................................................30
(D) Additional Leasehold Properties....................................30
5.7 Use of Proceeds and Margin Security...................................30
5.8 Bailee................................................................31
5.9 Year 2000............................................................31
SECTION 6. FINANCIAL COVENANTS..............................................31
SECTION 7. NEGATIVE COVENANTS...............................................31
7.1 Indebtedness and Liabilities..........................................31
(A) Indebtedness.......................................................32
(B) Liabilities........................................................32
7.2 Guaranties............................................................33
7.3 Transfers, Liens and Related Matters..................................33
(A) Transfers..........................................................33
(B) Liens..............................................................33
(C) No Negative Pledges................................................33
(D) No Restrictions on Subsidiary Distributions to Borrower............33
7.4 Investments and Loans.................................................34
7.5 Restricted Junior Payments............................................34
7.6 Restriction on Fundamental Changes....................................34
7.7 Transactions with Affiliates..........................................35
7.8 Conduct of Business...................................................35
</TABLE>
iv
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<TABLE>
<S> <C>
7.9 Tax Consolidations....................................................35
7.10 Subsidiaries.........................................................35
7.11 Fiscal Year; Tax Designation.........................................35
7.12 Press Release; Public Offering Materials.............................35
7.13 Bank Accounts........................................................35
SECTION 8. DEFAULT, RIGHTS AND REMEDIES.....................................35
8.1 Event of Default......................................................35
(A) Payment............................................................36
(B) Default in Other Agreements........................................36
(C) Breach of Certain Provisions.......................................36
(D) Breach of Warranty.................................................36
(E) Other Defaults Under Loan Documents................................36
(F) Change in Control..................................................36
(G) Involuntary Bankruptcy; Appointment of Receiver, etc...............37
(H) Voluntary Bankruptcy; Appointment of Receiver, etc.................37
(I) Liens..............................................................37
(J) Judgment and Attachments...........................................37
(K) Dissolution........................................................38
(L) Solvency...........................................................38
(M) Injunction.........................................................38
(N) Invalidity of Loan Documents.......................................38
(O) Failure of Security................................................38
(P) Damage, Strike.....................................................38
(Q) Licenses and Permits...............................................39
(R) Forfeiture.........................................................39
8.2 Suspension of Commitments.............................................39
8.3 Acceleration..........................................................39
8.4 Remedies..............................................................39
8.5 Appointment of Attorney-in-Fact.......................................40
8.6 Limitation on Duty of Agent with Respect to Collateral................41
8.7 Application of Proceeds...............................................41
8.8 License of Intellectual Property......................................41
</TABLE>
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<TABLE>
<S> <C>
8.9 Waivers, Non-Exclusive Remedies.......................................42
SECTION 9. AGENT............................................................42
9.1 Agent.................................................................42
(A) Appointment........................................................42
(B) Nature of Duties...................................................42
(C) Rights, Exculpation, Etc...........................................43
(D) Reliance...........................................................43
(E) Indemnification....................................................44
(F) Heller Individually................................................44
(G) Successor Agent....................................................44
(1) Resignation.....................................................44
(2) Appointment of Successor........................................45
(3) Successor Agent.................................................45
(H) Collateral Matters.................................................45
(1) Release of Collateral...........................................45
(2) Execution of Releases...........................................45
(3) Absence of Duty.................................................46
(I) Agency for Perfection..............................................46
(J) Exercise of Remedies...............................................47
9.2 Notice of Default.....................................................47
9.3 Action by Agent.......................................................47
9.4 Amendments, Waivers and Consents......................................48
9.5 Assignments and Participations in Loans...............................48
9.6 Set Off and Sharing of Payments.......................................50
9.7 Disbursement of Funds.................................................50
9.8 Settlements, Payments and Information.................................51
(A) Revolving Advances and Payments; Fee Payments......................51
(B) Return of Payments.................................................52
9.9 Dissemination of Information..........................................52
9.10 Discretionary Advances...............................................52
</TABLE>
iv
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<TABLE>
<S> <C>
SECTION 10. MISCELLANEOUS...................................................52
10.1 Expenses and Attorneys' Fees.........................................52
10.2 Indemnity............................................................53
10.3 Notices..............................................................54
10.4 Survival of Representations and Warranties and Certain Agreements....55
10.5 Indulgence Not Waiver................................................55
10.6 Marshaling; Payments Set Aside.......................................55
10.7 Entire Agreement.....................................................56
10.8 Severability.........................................................56
10.9 Lenders' Obligations Several; Independent Nature of Lenders' Rights..56
10.10 Headings............................................................56
10.11 APPLICABLE LAW......................................................56
10.12 Successors and Assigns..............................................56
10.13 No Fiduciary Relationship; No Duty; Limitation of Liabilities.......57
10.14 CONSENT TO JURISDICTION.............................................57
10.15 WAIVER OF JURY TRIAL................................................58
10.16 Construction........................................................58
10.17 Counterparts; Effectiveness.........................................58
10.18 Confidentiality.....................................................58
SECTION 11. DEFINITIONS AND ACCOUNTING TERMS................................59
11.2 Accounting Terms.....................................................74
11.3 Other Definitional Provisions........................................75
</TABLE>
vii
<PAGE> 9
LOAN AND SECURITY AGREEMENT
This AGREEMENT is dated as of March 10, 1999 and entered into among
RANKIN AUTOMOTIVE GROUP, INC., a Louisiana corporation ("Borrower"), the
financial institution(s) listed on the signature pages hereof, and their
respective successors and Eligible Assignees (each individually a "Lender" and
collectively "Lenders") and HELLER FINANCIAL, INC., a Delaware corporation (in
its individual capacity, "Heller"), for itself as a Lender and as Agent.
WHEREAS, Borrower desires that Lenders extend a secured credit
facility in the aggregate amount not to exceed $45,000,000, to provide working
capital financing and to provide funds for other general corporate purposes;
and
WHEREAS, to secure Borrower's obligations under the Loan Documents
Borrower is granting to Agent, for benefit of Lenders, a security interest in
and lien upon certain of Borrower's property; and
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, Agent and Lenders agree as
follows:
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS
1.1 Certain Defined Terms. The capitalized terms and the
accounting terms used in this Agreement shall have the meanings set forth in
Section 11 of this Agreement:
SECTION 2. LOANS AND COLLATERAL
2.1 Loans.
(A)(1) Term Loan A-1. Each Lender, severally, agrees to lend
to Borrower, on the Closing Date, its Pro Rata Share of the Term Loan A-1 which
is in the aggregate amount of $1,150,000.00. Term Loan A-1 shall be funded in
one drawing. Amounts borrowed under this subsection 2.1(A)(1) and repaid may
not be reborrowed. Borrower shall make principal payments in the amount of
$13,690.48 per month, commencing on the first day of the month immediately
following the date hereof, with the balance due on the Termination Date (the
"Scheduled A-1 Installments").
(A)(2) Term Loan A-2. Each Lender, severally, agrees to lend
to Borrower, on the Term Loan A-2 Closing Date, its Pro Rata Share of the Term
Loan
1
<PAGE> 10
A-2 which is in the aggregate amount of $850,000.00. Term Loan A-2 shall be
funded in one drawing. Amounts borrowed under this subsection 2.1(A)(2) and
repaid may not be reborrowed. Borrower shall make principal payments in the
amount of $10,119.05 per month, commencing on the first day of the month
immediately following the Funding Date for Term Loan A-2, with the balance due
on the Termination Date (the "Scheduled A-2 Installments").
(A)(3) Term Loan B. Each Lender, severally, agrees to lend to
Borrower on the Closing Date its Pro Rata Share of Term Loan B which is in the
aggregate amount of $4,000,000.00. Term Loan B shall be funded in one drawing.
Amounts borrowed under this subsection 2.1(A)(3) and repaid may not be
reborrowed. Borrower shall make principal payments in the amount, of $66,666.67
per month, commencing on the first day of the month immediately following the
date hereof with the balance due on the Termination Date (the "Schedule B
Installment").
(B) Revolving Loan. Each Lender, severally, agrees to lend to
Borrower from time to time its Pro Rata Share of each Revolving Advance. The
aggregate amount of all Revolving Loan Commitments shall not exceed at any time
$39,000,000 as reduced by Section 2.4(B). Amounts borrowed under this
subsection 2.1(B) may be repaid and reborrowed at any time prior to the earlier
of (i) the termination of the Revolving Loan Commitment pursuant to subsection
8.3 or (ii) the Termination Date. Except as otherwise provided herein, no
Lender shall have any obligation to make a Revolving Advance to the extent such
Revolving Advance would cause the Revolving Loan (after giving effect to any
immediate application of the proceeds thereof) to exceed the Maximum Revolving
Loan Amount.
(1) "Maximum Revolving Loan Amount" means, as of any date
of determination, the lesser of (a) the Revolving Loan Commitment(s) of all
Lenders less the Letter of Credit Reserve and (b) the Borrowing Base less the
Letter of Credit Reserve.
(2) "Borrowing Base" means, as of any date of
determination, an amount equal to the sum of (a) 85% of Eligible Accounts plus
(b) the lesser of (i) $30,000,000, and (ii) the Applicable Inventory Advance
Rate and less in each case such reserves as Agent in its reasonable discretion
may elect to establish. As used herein, "Applicable Inventory Advance Rate"
means as of the date hereof 59% of the net amounts of Eligible Inventory. Such
rate of advance shall be reduced by 75 basis points at the expiration of each
successive ninety (90) days thereafter until reduced to 56% of the net amount
of Eligible Inventory.
2
<PAGE> 11
(C) Eligible Collateral.
"Eligible Accounts" means, as at any date of determination,
the aggregate of all Accounts that Agent, in its reasonable credit judgment,
deems to be eligible for borrowing purposes. Without limiting the generality of
the foregoing, the Agent may determine that the following Accounts are not
Eligible Accounts:
(1) Accounts which, at the date of issuance of the
respective invoice therefor, were payable more than 60 days after the date of
issuance;
(2) Accounts which remain unpaid for more than 60
days after the due date specified in the original invoice or for more than 90
days after invoice date if no due date was specified;
(3) Accounts which are otherwise eligible with
respect to which the account debtor is owed a credit by Borrower, but only to
the extent of such credit;
(4) Accounts due from an account debtor whose
principal place of business is located outside the United States of America
unless such Account is backed by a letter of credit, in form and substance
acceptable to Agent and issued or confirmed by a bank that is organized under
the laws of the United States of America or a State thereof, that is acceptable
to Agent; provided that such letter of credit has been delivered to Agent as
additional Collateral;
(5) Accounts due from an account debtor which Agent
has notified Borrower does not have a satisfactory credit standing;
(6) Accounts in excess of an aggregate face amount
of $1,000 with respect to which the account debtor is the United States of
America, any state or any municipality, or any department, agency or
instrumentality thereof unless Borrower has, with respect to such Accounts,
complied with the Federal Assignment of Claims Act of 1940 as amended (31
U.S.C. Section 3727 et seq.) or any applicable statute or municipal ordinance
of similar purpose and effect;
(7) Accounts with respect to which the account
debtor is an Affiliate of Borrower or a director, officer, agent, stockholder
or employee of Borrower or any of its Affiliates;
(8) Accounts due from an account debtor if more than
25% of the aggregate amount of Accounts of such account debtor have at the time
remained
3
<PAGE> 12
unpaid for more than 60 days after due date or 90 days after the invoice date
if no due date was specified;
(9) Accounts with respect to which there is any
unresolved dispute with the respective account debtor (but only to the extent
of such dispute);
(10) Accounts evidenced by an "instrument" or
"chattel paper" (as defined in the UCC) not in the possession of Agent, on
behalf of Lenders;
(11) Accounts with respect to which Agent, on behalf
of Lenders, does not have a valid, first priority and fully perfected security
interest;
(12) Accounts subject to any Lien except those in
favor of Agent, on behalf of Lenders;
(13) Accounts with respect to which the account
debtor is the subject of any bankruptcy or other insolvency proceeding;
(14) Accounts due from an account debtor to the
extent that such Accounts exceed in the aggregate an amount equal to 20% of the
aggregate of all Accounts at said date;
(15) Accounts with respect to which the account
debtor's obligation to pay is conditional or subject to a repurchase obligation
or right to return or with respect to which the goods or services giving rise
to such Account have not been delivered (or performed, as applicable) and
accepted by such account debtor, including progress billings, bill and hold
sales, guarantied sales, sale or return transactions, sales on approval or
consignment sales;
(16) Accounts with respect to which the account
debtor is located in New Jersey, or any other state denying creditors access to
its courts in the absence of a Notice of Business Activities Report or other
similar filing, unless Borrower has either qualified as a foreign corporation
authorized to transact business in such state or has filed a Notice of Business
Activities Report or similar filing with the applicable state agency for the
then current year;
(17) Accounts with respect to which the account
debtor is a creditor of Borrower, provided, however, that any such Account
shall only be ineligible as to that portion of such Account which is less than
or equal to the amount owed by Borrower to such Person.
4
<PAGE> 13
"Eligible Inventory" means, as at any date of determination,
the value (determined at the lower of cost or market on a first-in, first-out
basis) of all Inventory owned by Borrower and located in the United States of
America that Agent, in its reasonable credit judgment, deems to be eligible for
borrowing purposes. Without limiting the generality of the foregoing, the Agent
may determine that the following is not Eligible Inventory: (a) work-in-process
that is not readily marketable in its current form; (b) finished goods which do
not meet the specifications of the purchase order for such goods; (c) Inventory
which Agent determines, is unacceptable for borrowing purposes due to age,
quality, type, category and/or quantity; (d) packaging, shipping materials or
supplies consumed in Borrower's business; (e) Inventory with respect to which
Agent, on behalf of Lenders, does not have a valid, first priority and fully
perfected security interest; (f) Inventory with respect to which there exists
any Lien in favor of any Person other than Agent, on behalf of Lenders; (g)
Inventory produced in violation of the Fair Labor Standards Act and subject to
the so-called "hot goods" provisions contained in Title 29 U.S.C. 215 (a)(i) or
any replacement statute; and (h) Inventory located at any location other than
Borrower's principal location, unless a waiver of interest acceptable in form
and substance is delivered to Agent.
(D) Borrowing Mechanics. (1) LIBOR Loans made on any Funding
Date shall be in an aggregate minimum amount of $500,000 and integral multiples
of $100,000 in excess of such amount. (2) On any day when Borrower desires an
advance under this subsection 2.1, Borrower shall give Agent telephonic notice
of the proposed borrowing by 11:00 a.m. Chicago time on the Funding Date of a
Base Rate Loan and three Business Days in advance of the Funding Date of a
LIBOR Loan, which notice (a "Notice of Borrowing") shall specify the proposed
Funding Date (which shall be a Business Day), whether such Loans shall consist
of Base Rate Loans or LIBOR Loans, and, for LIBOR Loans, the Interest Period
applicable thereto. Any such telephonic notice shall be confirmed in writing on
the same day. Neither Agent nor Lender shall incur any liability to Borrower
for acting upon any telephonic notice Agent believes in good faith to have been
given by a duly authorized officer or other person authorized to borrow on
behalf of Borrower or for otherwise acting in good faith under this subsection
2.1(D). Neither Agent nor Lender will be required to make any advance pursuant
to any telephonic notice unless Agent has also received the most recent
Borrowing Base Certificate and all other documents required under Section 3 and
the Reporting Rider hereof by 11:00 a.m. Chicago time on the Funding Date. Each
Advance shall be deposited by wire transfer in immediately available funds in
such account as Borrower may from time to time designate to Agent in writing.
The becoming due of any amount required to be paid under this Agreement or any
of the other Loan Documents as principal, accrued interest and fees shall be
deemed irrevocably to be on automatic request by Borrower for a Revolving
Advance, which shall be a Base Rate Loan on the due date
5
<PAGE> 14
of, and in the amount required to pay (as set forth on Agent's books and
records), such principal, accrued interest and fees.
(E) Notes. Borrower shall execute and deliver to each Lender
with appropriate insertions Notes to evidence such Lender's Commitments. In the
event of an assignment under subsection 9.5, Borrower shall, upon surrender of
the assigning Lender's Notes, issue new Notes to reflect the interest held by
the assigning Lender and its Eligible Assignee.
(F) Letters of Credit. The Revolving Loan Commitments may, in
addition to Revolving Advances, be utilized, upon the request of Borrower, for
(i) the issuance of letters of credit by Agent; or with Agent's consent any
Lender, or (ii) the issuance by Agent of risk participations to banks to induce
such banks to issue Bank Letters of Credit for the account of Borrower (each of
(i) and (ii) above a "Lender Letter of Credit"). Each Lender shall be deemed to
have purchased a participation in each Lender Letter of Credit issued on behalf
of Borrower in an amount equal to its Pro Rata Share thereof. In no event shall
any Lender Letter of Credit be issued to the extent that the issuance of such
Lender Letter of Credit would cause the sum of the Letter of Credit Reserve
(after giving effect to such issuance) plus the Revolving Loan to exceed the
lesser of (x) the Borrowing Base and (y) the Revolving Loan Commitment.
(1) Maximum Amount. The aggregate amount of Letter of
Credit Liability with respect to all Lender Letters of Credit outstanding at any
time shall not exceed $2,000,000.
(2) Reimbursement. Borrower shall be irrevocably and
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse Agent or the issuer for any amounts
paid with respect to a Lender Letter of Credit including all fees, costs and
expenses paid to any bank that issues a Bank Letter of Credit. Borrower hereby
authorizes and directs Agent, at Agent's option, to debit Borrower's account (by
increasing the Revolving Loan) in the amount of any payment made with respect to
any Lender Letter of Credit. In the event that Agent elects not to debit
Borrower's account and Borrower fails to reimburse Agent in full on the date of
any payment under a Lender Letter of Credit, Agent shall promptly notify each
Lender of the unreimbursed amount of such payment together with accrued interest
thereon and each Lender, on the next Business Day, shall deliver to Agent an
amount equal to its respective participation in same day funds. The obligation
of each Lender to deliver to Agent an amount equal to its respective
participation pursuant to the foregoing sentence shall be absolute and
unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or
6
<PAGE> 15
Default or the failure to satisfy any condition set forth in Section 3. In the
event any Lender fails to make available to Agent the amount of such Lender's
participation in such Lender Letter of Credit, Agent shall be entitled to
recover such amount on demand from such Lender together with interest at the
Base Rate.
(3) Request for Letters of Credit. Borrower shall give
Agent at least three (3) Business Days prior notice specifying the date a Lender
Letter of Credit is to be issued, identifying the beneficiary and describing the
nature of the transactions proposed to be supported thereby. The notice shall be
accompanied by the form of the letter of credit being requested. Any letter of
credit which Borrower requests must be in such form, be for such amount, contain
such terms and support such transactions as are reasonably satisfactory to
Agent. The expiration date of each Lender Letter of Credit shall be on a date
which is at least 30 days prior to the Termination Date, unless otherwise agreed
to by Agent.
(G) Other Letter of Credit Provisions.
(1) Obligations Absolute. The obligation of Borrower to
reimburse Agent or any Lender for payments made under, and other amounts payable
in connection with, any Lender Letter of Credit shall be unconditional and
irrevocable and shall be paid under all circumstances strictly in accordance
with the terms of this Agreement including, without limitation, the following
circumstances:
(a) any lack of validity or enforceability of any
Lender Letter of Credit, or any other agreement;
(b) the existence of any claim, set-off, defense or
other right which Borrower, any of its Affiliates, Agent or any Lender, on the
one hand, may at any time have against any beneficiary or transferee of any
Lender Letter of Credit (or any Persons for whom any such transferee may be
acting), Agent, any Lender or any other Person, on the other hand, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between Borrower or
any of its Affiliates and the beneficiary of the Lender Letter of Credit);
(c) any draft, demand, certificate or any other
document presented under any Lender Letter of Credit is alleged to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; or
(d) payment under any Lender Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
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comply with the terms of such Lender Letter of Credit; provided that, in the
case of any payment by Agent or a Lender under any Lender Letter of Credit,
Agent or such Lender has not acted with gross negligence or willful misconduct
(as determined by a court of competent jurisdiction) in determining that the
demand for payment under such Lender Letter of Credit complies on its face with
any applicable requirements for a demand for payment under such Lender Letter
of Credit.
(2) Nature of Lender's Duties. As between any Lender that
issues a Lender Letter of Credit (an "Issuing Lender"), on the one hand, and all
Lenders on the other hand, all Lenders assume all risks of the acts and
omissions of, or misuse of any Lender Letter of Credit by the beneficiary
thereof. In furtherance and not in limitation of the foregoing, neither Agent
nor any Issuing Lender shall be responsible: (a) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document by any party
in connection with the application for and issuance of any Lender Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (b) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Lender Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (c) for failure of the beneficiary of any
Lender Letter of Credit to comply fully with conditions required in order to
demand payment thereunder; provided that, in the case of any payment under any
such Lender Letter of Credit, any Issuing Lender has not acted with gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction) in determining that the demand for payment under any such Lender
Letter of Credit complies on its face with any applicable requirements for a
demand for payment thereunder; (d) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (e) for errors in
interpretation of technical terms; (f) for any loss or delay in the transmission
or otherwise of any document required in order to make a payment under any such
Lender Letter of Credit; (g) for the credit of the proceeds of any drawing under
any such Lender Letter of Credit; and (h) for any consequences arising from
causes beyond the control of Agent or any Lender as the case may be.
(3) Liability. In furtherance and extension of and not in
limitation of, the specific provisions herein above set forth, any action taken
or omitted by Agent or any Lender under or in connection with any Lender Letter
of Credit, if taken or omitted in good faith, shall not put Agent or any Lender
under any resulting liability to Borrower or any other Lender.
(H) Availability of a Lender's Pro Rata Share.
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(1) Unless Agent receives written notice from a Lender on
or prior to any Funding Date that such Lender will not make available to Agent
as and when required such Lender's Pro Rata Share of any requested Loan or
Advance, Agent may assume that each Lender will make such amount available to
Agent in immediately available funds on the Funding Date and Agent may (but
shall not be so required), in reliance upon such assumption, make available to
Borrower on such date a corresponding amount.
(2) A Defaulting Lender shall pay interest at the Federal
Funds Effective Rate on the Defaulted Amount from the Business Day following the
applicable Funding Date of such Defaulted Amount until the date such Defaulted
Amount is paid to Agent. A notice of Agent submitted to any Lender with respect
to amounts owing under this subsection shall be conclusive, absent manifest
error. If such amount is not paid when due to Agent, Agent, at its option, may
notify Borrower of such failure to fund and, upon demand by Agent, Borrower
shall pay the unpaid amount to Agent for Agent's account, together with interest
thereon for each day elapsed since the date of such borrowing, at a rate per
annum equal to the interest rate applicable at the time to the Loan made by the
other Lenders on such Funding Date. The failure of any Lender to make available
any portion of its Commitment on any Funding Date or to fund its participation
in a Lender Letter of Credit shall not relieve any other Lender of any
obligation hereunder to fund such Lender's Commitment on such Funding Date or to
fund any such participation, but no Lender shall be responsible for the failure
of any other Lender to honor its Commitment on any Funding Date or to fund any
participation to be funded by any other Lender.
(3) Agent shall not be obligated to transfer to a
Defaulting Lender any payment made by Borrower to Agent or any amount otherwise
received by Agent for application to the Obligations nor shall a Defaulting
Lender be entitled to the sharing of any interest, fees or payments hereunder.
(4) For purposes of voting or consenting to matters with
respect to (i) the Loan Documents or (ii) any other matter concerning the Loans,
a Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Commitments and outstanding Loans and Advances shall be deemed to be zero.
2.2 Interest.
(A) Rate of Interest. The Loans and all other Obligations
shall bear interest from the date such Loans are made or such other Obligations
become due to the date paid at a rate per annum equal to (i) in the case of
Base Rate Loans and
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Obligations for which no other interest rate is specified, the Base Rate plus
(a) 0% with respect to the Revolving Loan and other Obligations for which no
other interest rate is specified, (b) 0.50% with respect to Term Loan A-1 and
A-2 and (c) 0.75% with respect to Term Loan B, and (ii) in the case of LIBOR
Loans, LIBOR plus (a) 2.25%) with respect to the Revolving Loan, (b) 2.75% with
respect to Term Loan A-1 and A-2 and (c) 3.00% with respect to Term Loan B
(collectively the "Interest Rate"). Subject to the provisions of subsection
2.1(D), Borrower shall designate to Agent whether a Loan shall be a Base Rate
or LIBOR Rate Loan at the time a Notice of Borrowing is given pursuant to
subsection 2.1(D). Such designation by Borrower may be changed from time to
time pursuant to subsection 2.2(F). If on any day a Loan or a portion of any
Loan is outstanding with respect to which notice has not been delivered to
Agent in accordance with the terms of this Agreement specifying the basis for
determining the rate of interest or if LIBOR has been specified and no LIBOR
quote is available, then for that day that Loan or portion thereof shall bear
interest determined by reference to the Base Rate.
After the occurrence and during the continuance of an Event of Default
(i) the Loans and all other Obligations shall, at the option of Requisite
Lenders, bear interest at a rate per annum equal to 2% plus the applicable
Interest Rate (the "Default Rate"), (ii) each LIBOR Loan shall automatically
convert to a Base Rate Loan at the end of any applicable Interest Period and
(iii) no Loans may be converted to LIBOR Loans.
(B) Computation and Payment of Interest. Interest on the
Loans and all other Obligations shall be computed on the daily principal
balance on the basis of a 360 day year for the actual number of days elapsed.
In computing interest on any Loan, the date of funding of the Loan or the first
day of an Interest Period applicable to such Loan or, with respect to a Base
Rate Loan being converted from a LIBOR Loan, the date of conversion of such
LIBOR Loan to such Base Rate Loan, shall be included; and the date of payment
of such Loan or the expiration date of an Interest Period applicable to such
Loan, or with respect to a Base Rate Loan being converted to a LIBOR Loan, the
date of conversion of such Base Rate Loan to such LIBOR Loan, shall be
excluded; provided that if a Loan is repaid on the same day on which it is
made, one day's interest shall be paid on that Loan. Interest on all Base Rate
Loans and all other Obligations is payable in arrears on the first day of each
month, commencing with April 1, 1999, and on the maturity of such Loans,
whether by acceleration or otherwise. Interest on LIBOR Loans shall be payable
on the last day of the applicable Interest Period, unless the Interest Period
is greater than three (3) months, in which case interest will be payable on the
last day of each three (3) month interval. In addition, interest on LIBOR Loans
is due on the maturity of such Loans, whether by acceleration or otherwise.
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(C) Interest Laws. Notwithstanding any provision to the
contrary contained in this Agreement or any other Loan Document, Borrower shall
not be required to pay, and neither Agent nor any Lender shall be permitted to
collect, any amount of interest in excess of the maximum amount of interest
permitted by applicable law ("Excess Interest"). If any Excess Interest is
provided for or determined by a court of competent jurisdiction to have been
provided for in this Agreement or in any other Loan Document, then in such
event: (1) the provisions of this subsection shall govern and control; (2)
neither Borrower nor any other Loan Party shall be obligated to pay any Excess
Interest; (3) any Excess Interest that Agent or any Lender may have received
hereunder shall be, at such Lender's option, (a) applied as a credit against
the outstanding principal balance of the Obligations or accrued and unpaid
interest (not to exceed the maximum amount permitted by law), (b) refunded to
the payor thereof, or (c) any combination of the foregoing; (4) the interest
rate(s) provided for herein shall be automatically reduced to the maximum
lawful rate allowed from time to time under applicable law (the "Maximum
Rate"), and this Agreement and the other Loan Documents shall be deemed to have
been and shall be, reformed and modified to reflect such reduction; and (5)
neither Borrower nor any Loan Party shall have any action against Agent or any
Lender for any damages arising out of the payment or collection of any Excess
Interest. Notwithstanding the foregoing, if for any period of time interest on
any Obligations is calculated at the Maximum Rate rather than the applicable
rate under this Agreement, and thereafter such applicable rate becomes less
than the Maximum Rate, the rate of interest payable on such Obligations shall
remain at the Maximum Rate until each Lender shall have received the amount of
interest which such Lender would have received during such period on such
Obligations had the rate of interest not been limited to the Maximum Rate
during such period.
(D) Conversion or Continuation. Subject to the provisions of
this subsection 2.2(D), Borrower shall have the option to (1) convert at any
time all or any part of outstanding Loans equal to $500,000 and integral
multiples of $100,000 in excess of that amount from Base Rate Loans to LIBOR
Loans or (2) upon the expiration of any Interest Period applicable to a LIBOR
Loan, to (a) continue all or any portion of such LIBOR Loan equal to $500,000
and integral multiplies of $100,000 in excess of that amount as a LIBOR Loan or
(b) convert all or any portion of such LIBOR Loan to a Base Rate Loan. The
succeeding Interest Period(s) of such continued or converted Loan commence on
the last day of the Interest Period of the Loan to be continued or converted;
provided that no outstanding Loan may be continued as, or be converted into, a
LIBOR Loan, when any Event of Default or Default has occurred and is
continuing.
Borrower shall deliver a notice of conversion/continuation to
Agent no later than 11:00 a.m. Chicago standard time at least 3 Business Days
in advance of
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the proposed conversion/continuation date ("Notice of Conversion/Contin-
uation"). A Notice of Conversion/Continuation shall certify: (1) the proposed
conversion/continuation date (which shall be a Business Day); (2) the amount of
the Loan to be converted/continued; (3) the nature of the proposed
conversion/continuation; (4) in the case of conversion to, or a continuation of,
a LIBOR Loan, the requested Interest Period; and (5) that no Default or Event of
Default has occurred and is continuing or would result from the proposed
conversion/continuation.
In lieu of delivering the Notice of Conversion/Continuation,
Borrower may give Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2(D); provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Agent on or before the proposed
conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to
Borrower in acting upon any telephonic notice referred to above that Agent
believes in good faith to have been given by an officer or other person
authorized to act on behalf of Borrower or for otherwise acting in good faith
under this subsection 2.2(D).
2.3 Fees.
(A) Unused Line Fee. Borrower shall pay to Agent, for the
benefit of Lenders, a fee in an amount equal to the Revolving Loan Commitment
less the sum of (i) the average daily balance of each of the Revolving Loan
plus, (ii) the average daily face amount of the Letter of Credit Reserve during
the preceding month, multiplied by .441% per annum, such fee to be calculated
on the basis of a 360 day year for the actual number of days elapsed and to be
payable monthly in arrears on the first day of each month following the Closing
Date.
(B) Letter of Credit Fees. Borrower shall pay to Agent a fee
with respect to the Lender Letters of Credit for the benefit of Lenders in the
amount of the average daily amount of Letter of Credit Liability outstanding
during such month multiplied by 2.00% per annum. Such fee will be calculated on
the basis of a 360 day year for the actual number of days elapsed and will be
payable monthly in arrears on the first day of each month. Borrower shall also
reimburse Agent for any and all fees and expenses, if any, paid by Agent or any
Lender to the issuer of any Bank Letter of Credit.
(C) Prepayment Fees. If Borrower voluntarily prepays the
Obligations in full or, in the case of any voluntary prepayment of the Term
Loans,
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in part (other than voluntary prepayments of the Revolving Loan which do not
terminate the Revolving Loan Commitment), Borrower, at the time of prepayment,
shall pay to Agent for the benefit of Lenders, as compensation for the costs of
being prepared to make funds available to Borrower under this Agreement, and not
as a penalty, an amount determined by multiplying the percentage set forth below
by (1) in the case of a prepayment in full of the Obligations, the sum of the
Term Loans at the date of such prepayment plus the amount of the Revolving Loan
Commitment, or (2) in the case of a prepayment of the Term Loans only, in whole
or in part, the amount of such prepayment: 1% upon a prepayment during any Loan
Year, provided, however, that no such amount shall be payable with respect to a
prepayment made during the fourth or fifth Loan Years, if and only if such
prepayment is made from the proceeds of a secondary public offering of the
capital stock of Borrower.
(D) Audit Fees. Borrower agrees to pay to Agent for its own
account an audit fee for each inspection equal to $750 per internal auditor per
day or any portion thereof, excluding all full days spent by such auditors
traveling to or from Borrower's locations together with all out of pocket
expenses. Notwithstanding the foregoing, in the event Agent uses a firm or
individual(s) who are not employees of Agent to perform audits of Borrower's
operations Borrower shall pay all fees and expenses of such firms or
individual(s) performing such services.
(E) Other Fees and Expenses. Borrower shall pay to Agent, for
its own account, all charges for returned items and all other bank charges
incurred by Agent, as well as Agent's standard wire transfer charges for each
wire transfer made under this Agreement.
2.4 Payments and Prepayments.
(A) Manner and Time of Payment. In its sole discretion, Agent
may elect to honor the automatic requests by Borrower for Revolving Advances
for all principal, interest, fees and any other amounts due hereunder on their
applicable due dates pursuant to subsection 2.1 (D), and the proceeds of each
such Advance, if made, shall be applied as a direct payment of the relevant
Obligation. If Agent elects to bill Borrower for any amount due hereunder, such
amount shall be immediately due and payable with interest thereon as provided
herein. All payments made by Borrower with respect to the Obligations shall be
made without deduction, defense, setoff or counterclaim. All payments to Agent
hereunder shall, unless otherwise directed by Agent, be made to Agent's Account
or in accordance with subsection 4.26. For the purpose of calculating interest
on the Obligations, funds shall be deemed received on the first Business Day
following the day such proceeds were received.
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(B) Mandatory Prepayments.
(1) Overadvance. At any time that the Revolving Loan
exceeds the Maximum Revolving Loan Amount, Borrower shall, immediately repay the
Revolving Loan to the extent necessary to reduce the aggregate principal balance
to an amount equal to or less than the Maximum Revolving Loan Amount.
(2) Proceeds of Asset Dispositions. Immediately upon
receipt by Borrower or any of its Subsidiaries of proceeds of any Asset
Disposition (in one or a series of related transactions), which proceeds exceed
$10,000 (it being understood that if the proceeds exceed $10,000, the entire
amount and not just the portion above $10,000 shall be subject to this
subsection 2.4(B)(2)), Borrower shall prepay the Obligations in an amount equal
to such proceeds. All such prepayments shall first be applied in payment of
Scheduled Installments of Term Loan A-1 and A-2, and shall then be applied in
payment of Scheduled Installments of Term Loan B, each in inverse order of
maturity. If Borrower reasonably expects the proceeds of any Asset Disposition
to be reinvested within 180 days to repair or replace such assets with like
assets, Borrower shall deliver the proceeds to Agent to be applied to the
Revolving Loan and Agent shall establish a reserve against available funds for
borrowing purposes under the Revolving Loan for such amount, until such time as
such proceeds have been re-borrowed or applied to other Obligations as set forth
herein. Borrower may, so long as no Default or Event of Default shall have
occurred and be continuing, reborrow such proceeds only for such repair or
replacement. If Borrower fails to reinvest such proceeds within 180 days,
Borrower hereby authorizes Lenders to make a Revolving Advance to repay the
Obligations in the manner set forth in this subsection 2.4(B)(2).
(3) Prepayments from Excess Cash Flow. Within 120 days
after the end of each Fiscal Year, Borrower shall prepay the Obligations in an
amount equal to 50% of Excess Cash Flow for such prior Fiscal Year calculated on
the basis of the audited financial statements for such Fiscal Year delivered to
Agent and Lenders pursuant to the Reporting Rider. All such prepayments from
Excess Cash Flow shall be applied to the scheduled Installments of the Term
Loans in the same manner set forth in subsection 2.4(B) (2). Concurrently with
the making of any such payment, Borrower shall deliver to Agent and Lenders a
certificate of Borrower's chief executive officer or chief financial officer
demonstrating its calculation of the amount required to be paid.
(C) Voluntary Prepayments and Repayments. Except as provided
in subsection 2.4(B), Borrower's Obligations may only be prepaid or repaid in
full and not in part. Borrower may, at any time upon not less than three
Business Days
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prior notice to Agent, prepay the Term Loans or terminate the Revolving Loan
Commitment; provided, however, the Revolving Loan Commitment may not be
terminated by Borrower until all Loans are paid in full. Upon termination of the
Revolving Loan Commitment, Borrower shall cause Agent and each Lender to be
released from all liability under any Lender Letters of Credit or, at Agent's
option, Borrower will deposit cash collateral with Agent in an amount equal to
105% of the Letter of Credit Liability that will remain outstanding after such
termination.
(D) Payments on Business Days. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a Business Day,
the payment may be made on the next succeeding Business Day and such extension
of time shall be included in the computation of the amount of interest or fees
due hereunder.
2.5 Term of this Agreement. This Agreement shall be effective
until the earlier of (a) 5 years from closing date (the "Original Term") and (b)
the acceleration of all Obligations pursuant to subsection 8.3; provided
however, so long as the Obligations have not been accelerated pursuant to
subsection 8.3, the Original Term shall be extended automatically from year to
year by one additional year thereafter (each such year a "Renewal Term"), unless
Borrower gives Agent or any Lender gives Borrower and Agent not less than 60
days prior written notice of its intention to terminate at the end of the
Original Term or the then effective Renewal Term, as appropriate (the
"Termination Date"). The Commitments shall terminate (unless earlier terminated
pursuant to the terms hereunder) upon the Termination Date and all Obligations
shall become immediately due and payable without notice or demand.
Notwithstanding any termination, until all Obligations have been fully paid and
satisfied, Agent, on behalf of Lenders, shall be entitled to retain security
interests in and liens upon all Collateral, and even after payment of all
Obligations hereunder, Borrower's obligation to indemnify Agent and each Lender
in accordance with the terms hereof shall continue.
2.6 Statements. Agent shall render a monthly statement of account
to Borrower within 20 days after the end of each month. Such statement of
account shall constitute an account stated unless Borrower makes written
objection thereto within 30 days from the date such statement is mailed to
Borrower. Agent shall record in its books and records, including computer
records, the principal amount of the Loans owing to each Lender from time to
time. Agent's books and records including computer records, shall constitute
presumptive evidence, absent manifest error, of the accuracy of the information
contained therein. Failure by Agent to make any such notation or record shall
not affect the obligations of Borrower[s] to Lenders with respect to the Loans.
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2.7 Grant of Security Interest. To secure the payment and
performance of the Obligations, including all renewals, extensions,
restructurings and refinancings of any or all of the Obligations, Borrower
hereby grants to Agent, on behalf of Lenders, a continuing security interest,
lien and mortgage in and to all right, title and interest of Borrower in all of
Borrower's personal and real property, whether now owned or existing or
hereafter acquired or arising and regardless of where located (all being
collectively referred to as the "Collateral") including, without limitation, (A)
Accounts, and all guaranties and security therefor, and all goods and rights
represented thereby or arising therefrom including the rights of stoppage in
transit, replevin and reclamation; (B) Inventory, (C) general intangibles (as
defined in the UCC); (D) documents (as defined in the UCC) or other receipts
covering, evidencing or representing goods; (E) instruments (as defined in the
UCC); (F) chattel paper (as defined in the UCC); (G) Equipment; (H) Mortgaged
Property; (I) investment property (as defined in the UCC) including, without
limitation, all securities (certificated and uncertificated) security accounts,
security entitlements, commodity contracts and commodity accounts; (J)
Intellectual Property; (K) all deposit accounts of Borrower maintained with any
bank or financial institution; (L) all cash and other monies and property of
Borrower in the possession or under the control of Agent, any Lender or any
participant; (M) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the property described
above or are otherwise necessary or helpful in the collection thereof or
realization thereon; and (N) proceeds and products of all or any of the property
described above, including, without limitation, the proceeds of any insurance
policies covering any of the above described property.
2.8 Capital Adequacy and Other Adjustments. In the event Agent
or any Lender shall have determined that the adoption after the date hereof of
any law, treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, reserve requirements or similar
requirements or compliance by Agent or such Lender or any corporation
controlling Agent or such Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) from any central bank or governmental agency or body having
jurisdiction does or shall have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by Agent or such Lender or any
corporation controlling Agent or such Lender and thereby reducing the rate of
return on Agent's or such Lender's or such corporation's capital as a
consequence of its obligations hereunder, then Borrower shall within 15 days
after notice and demand from such Lender (with a copy to Agent) or Agent
(together with the certificate referred to in the next sentence) pay to Agent or
such
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Lender additional amounts sufficient to compensate Agent or such Lender for such
reduction. A certificate as to the amount of such cost and showing the basis of
the computation of such cost submitted by Agent or any Lender to Borrower shall,
absent manifest error, be final, conclusive and binding for all purposes.
2.9 Taxes.
(A) No Deductions. Any and all payments or reimbursements
made hereunder shall be made free and clear of and without deduction for any
and all taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto; excluding, however, the following: taxes
imposed on the net income of any Lender or Agent by the jurisdiction under the
laws of which Agent or such Lender is organized or doing business or any
political subdivision thereof and taxes imposed on its net income by the
jurisdiction of Agent's or such Lender's applicable lending office or any
political subdivision thereof (all such taxes, levies, imposts, deductions,
charges or withholdings and all liabilities with respect thereto excluding such
taxes imposed on net income, herein "Tax Liabilities"). If Borrower shall be
required by law to deduct any such Tax Liabilities from or in respect of any
sum payable hereunder to Agent or any Lender, then the sum payable hereunder
shall be increased as may be necessary so that, after making all required
deductions, Agent or such Lender receives an amount equal to the sum it would
have received had no such deductions been made.
(B) Changes in Tax Laws. In the event that, subsequent to the
Closing Date, (i) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (ii) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (iii) compliance by Lender with any request or directive (whether
or not having the force of law) from any governmental authority, agency or
instrumentality:
(1) does or shall subject Agent or any Lender to any tax
of any kind whatsoever with respect to this Agreement, the other Loan Documents
or any Loans made or Lender Letters of Credit issued hereunder, or change the
basis of taxation of payments to Agent or such Lender of principal, fees,
interest or any other amount payable hereunder (except for net income taxes, or
franchise taxes imposed in lieu of net income taxes, imposed generally by
federal, state or local taxing authorities with respect to interest or
commitment or other fees payable hereunder or changes in the rate of tax on the
overall net income of Agent or such Lender); or
(2) does or shall impose on Agent or any Lender any other
condition or increased cost in connection with the transactions contemplated
hereby
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or participations herein; and the result of any of the foregoing is to increase
the cost to Agent or such Lender of issuing any Lender Letter of Credit or
making or continuing any Loan hereunder, as the case may be, or to reduce any
amount receivable hereunder; then, in any such case, Borrower shall promptly pay
to Agent or such Lender, upon its demand, any additional amounts necessary to
compensate Agent or such Lender, on an after-tax basis, for such additional cost
or reduced amount receivable, as determined by Agent or such Lender with respect
to this Agreement or the other Loan Documents. If Agent or any Lender becomes
entitled to claim any additional amounts pursuant to this subsection, it shall
promptly notify Borrower of the event by reason of which Agent or such Lender
has become so entitled (with any such Lender concurrently notifying Agent). A
certificate as to any additional amounts payable pursuant to the foregoing
sentence submitted by Agent or any Lender to Borrower shall, absent manifest
error, be final, conclusive and binding for all purposes.
(C) Foreign Lenders. Each Lender organized under the laws of
a jurisdiction outside the United States (a "Foreign Lender") as to which
payments to be made under this Agreement are exempt from United States
withholding tax or are subject to United States withholding tax at a reduced
rate under an applicable statute or tax treaty shall provide to Borrower and
Agent (i) a properly completed and executed Internal Revenue Service Form 4224
or Form 1001 or other applicable form, certificate or document prescribed by
the Internal Revenue Service of the United States certifying as to such Foreign
Lender's entitlement to such exemption or reduced rate of withholding with
respect to payments to be made to such Foreign Lender under this Agreement, (a
"Certificate of Exemption"), or (ii) a letter from any such Foreign Lender
stating that it is not entitled to any such exemption or reduced rate of
withholding (a "Letter of Non-Exemption"). Prior to becoming a Lender under
this Agreement and within 15 days after a reasonable written request of
Borrower or Agent from time to time thereafter, each Foreign Lender that
becomes a Lender under this Agreement shall provide a Certificate of Exemption
or a Letter of Non-Exemption to Borrower and Agent.
If a Foreign Lender is entitled to an exemption with respect
to payments to be made to such Foreign Lender under this Agreement (or to a
reduced rate of withholding) and does not provide a Certificate of Exemption to
Borrower and Agent within the time periods set forth in the preceding
paragraph, Borrower shall withhold taxes from payments to such Foreign Lender
at the applicable statutory rates and Borrower shall not be required to pay any
additional amounts as a result of such withholding; provided, however, that all
such withholding shall cease upon delivery by such Foreign Lender of a
Certificate of Exemption to Borrower and Agent.
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2.10 Required Termination and Prepayment. If on any date any
Lender shall have reasonably determined (which determination shall be final and
conclusive and binding upon all parties) that the making or continuation of its
LIBOR Loans has become unlawful or impossible by compliance by Lender in good
faith with any law, governmental rule, regulation or order (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful), then, and in any such event, that Lender shall promptly give notice
(by telephone confirmed in writing) to Borrower and Agent of that determination.
Subject to prior withdrawal of a Notice of Borrowing or a Notice of
Conversion/Continuation or prepayment of LIBOR Loans as contemplated by
subsection 2.12, the obligation of Lender to make or maintain its LIBOR Loans
during any such period shall be terminated at the earlier of the termination of
the Interest Period then in effect or when required by law and Borrower shall no
later than the termination of the Interest Period in effect at the time any such
determination pursuant to this subsection 2.10 is made or, earlier when required
by law, repay or prepay LIBOR Loans together with all interest accrued thereon
or convert LIBOR Loans to Base Rate Loans.
2.11 Optional Prepayment/Replacement of Agent or Lenders in
Respect of Increased Costs. Within 15 days after receipt by Borrower of
written notice and demand from Agent or any Lender (an "Affected Lender") for
payment of additional costs as provided in subsection 2.8 or subsection 2.9,
Borrower may, at its option, notify Agent and such Affected Lender of its
intention to do one of the following:
(a) Borrower may obtain, at Borrower's expense, a replacement
Lender ("Replacement Lender") for such Affected Lender, which Replacement
Lender shall be reasonably satisfactory to Agent. In the event Borrower obtains
a Replacement Lender within 90 days following notice of its intention to do so,
the Affected Lender shall sell and assign its Loans and Commitments to such
Replacement Lender provided, that Borrower has reimbursed such Affected Lender
for its increased costs for which it is entitled to reimbursement under this
Agreement through the date of such sale and assignment; or
(b) Borrower may prepay in full all outstanding Obligations
owed to such Affected Lender and terminate such Affected Lender's Commitments.
Borrower shall, within 90 days following notice of its intention to do so,
prepay in full all outstanding Obligations owed to such Affected Lender,
including such Affected Lender's increased costs for which it is entitled to
reimbursement under this Agreement through the date of such prepayment, but
excluding the prepayment fee referenced in subsection 2.3(C) and terminate such
Affected Lender's Commitments.
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2.12 Compensation. Borrower shall compensate Lender, upon written
request by Lender (which request shall set forth in reasonable detail the basis
for requesting such amounts and which shall, absent manifest error, be
conclusive and binding upon all parties hereto), for all reasonable losses,
expenses and liabilities including, without limitation, any loss sustained by
Lender in connection with the re-employment of such funds: (i) if for any
reason (other than a default by Lender) a borrowing of any LIBOR Loan does not
occur on a date specified therefor in a Notice of Borrowing, a Notice of
Conversion/Continuation or a telephonic request for borrowing or
Conversion/Continuation; (ii) if any prepayment of any of its LIBOR Loans
occurs on a date that is not the last day of an Interest Period applicable to
that Loan; (iii) if any prepayment of any of its LIBOR Loans is not made on any
date specified in a notice of prepayment given by Borrower; or (iv) as a
consequence of any other default by Borrower to repay its LIBOR Loans when
required by the terms of this Agreement; provided that during the period while
any such amounts have not been paid, Lender shall reserve an equal amount from
amounts otherwise available to be borrowed under the Revolving Loan.
2.13 Booking of LIBOR Loans. Each Lender may make, carry or
transfer LIBOR Loans at, to, or for the account of, any of its branch offices or
the office of an affiliate of Lender.
2.14 Assumptions Concerning Funding of LIBOR Loans. Calculation
of all amounts payable to Lender under subsection 2.12 shall be made as though
each Lender had actually funded its relevant LIBOR Loan through the purchase of
a LIBOR deposit bearing interest at LIBOR in an amount equal to the amount of
that LIBOR Loan and having maturity comparable to the relevant Interest Period
and through the transfer of such LIBOR deposit from an offshore office to a
domestic office in the United States of America; provided, however, that each
Lender may fund each of its LIBOR Loans in any manner it sees fit and the
foregoing assumption shall be utilized only for the calculation of amounts
payable under subsection 2.12.
SECTION 3. CONDITIONS TO LOANS
The obligations of Agent and each Lender to make Loans and the
obligation of Agent or any Lender to issue Lender Letters of Credit on the
Closing Date and on each Funding Date are subject to satisfaction of all of the
terms and conditions set forth in this Agreement and in the Conditions Rider,
attached hereto and the accuracy of all the representations and warranties of
Borrower and the other Loan Parties set forth herein and in the other Loan
Documents.
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SECTION 4. BORROWER'S REPRESENTATIONS, WARRANTIES AND
CERTAIN COVENANTS
To induce Agent and each Lender to enter into the Loan Documents, to
make and to continue to make Loans and to issue and to continue to issue Lender
Letters of Credit, Borrower represents, warrants and covenants to Agent and
each Lender that the following statements are and will be true, correct and
complete and, unless specifically limited, shall remain so for so long as any
of the Commitments hereunder shall be in effect and until payment in full of
all Obligations:
4.1 Organization, Powers, Capitalization.
(A) Organization and Powers. Each of the Loan Parties is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and qualified to do business in all
states where such qualification is required except where failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect.
Each of the Loan Parties has all requisite corporate power and authority to own
and operate its properties, to carry on its business as now conducted and
proposed to be conducted and to enter into each Loan Document.
(B) Capitalization. The authorized capital stock of each of
the Loan Parties and its respective Subsidiaries is as set forth on Schedule
4.1(B) including, all preemptive or other outstanding rights, options,
warrants, conversion rights or similar agreements or understandings for the
purchase or acquisition from any Loan Party of any shares of capital stock or
other securities of any such entity. All issued and outstanding shares of
capital stock of each of the Loan Parties are duly authorized and validly
issued, fully paid, nonassessable, free and clear of all Liens other than those
in favor of Agent for the benefit of Lenders, and such shares were issued in
compliance with all applicable state and federal laws concerning the issuance
of securities. Each Loan Party will promptly notify Lender of any change in its
ownership or corporate structure.
4.2 Authorization of Borrowing, No Conflict. Borrower has the
corporate power and authority to incur the Obligations and to grant security
interests in the Collateral. On the Closing Date and Term Loan A-2 Closing
Date, the execution, delivery and performance of the Loan Documents by each
Loan Party signatory thereto will have been duly authorized by all necessary
corporate and shareholder action. The execution, delivery and performance by
each Loan Party of each Loan Document to which it is a party and the
consummation of the transactions contemplated by the Loan Documents by each
Loan Party do not contravene any applicable law, the corporate charter or
bylaws of any Loan Party or any agreement
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or order by which any Loan Party or any Loan Party's property is bound. The Loan
Documents are the legally valid and binding obligations of the applicable Loan
Parties respectively, each enforceable against the Loan Parties, as applicable,
in accordance with their respective terms.
4.3 Financial Condition. All financial statements concerning
Borrower and its Subsidiaries furnished by or on behalf of Borrower or its
Subsidiaries to Agent or any Lender pursuant to this Agreement have been
prepared in accordance with GAAP consistently applied throughout the periods
involved (except as disclosed therein) and present fairly the financial
condition of the Persons covered thereby as at the dates thereof and the results
of their operations for the periods then ended. The Pro Forma was prepared by
Borrower based on the unaudited and consolidated balance sheet of Borrower dated
November 30, 1998. The Projections delivered by Borrower will be prepared in
light of the past operations of the business of Borrower and its Subsidiaries,
and such Projections will represent the good faith estimate of Borrower and its
senior management concerning the most probable course of its business as of the
date such Projections are delivered.
4.4 Indebtedness and Liabilities. As of the Closing Date and the
Term Loan A-2 Closing Date, neither Borrower nor any of its Subsidiaries has (a)
any Indebtedness except as reflected on the Pro Forma; or (b) any Liabilities
other than as reflected on the Pro Forma or as incurred in the ordinary course
of business following the date of the Pro Forma. Borrower shall promptly deliver
copies of all notices given or received by Borrower and any of its Subsidiaries
with respect to noncompliance with any term or condition related to any
Indebtedness, and shall promptly notify Agent of any potential or actual Event
of Default with respect to any Indebtedness.
4.5 Account Warranties and Covenants. Except as otherwise
disclosed to Agent in writing, as to each Account that, at the time of its
creation, the Account is a valid, bona fide account, representing an undisputed
indebtedness incurred by the named account debtor for goods actually sold and
delivered or for services completely rendered; there are no setoffs, offsets or
counterclaims, genuine or otherwise, against the Account; the Account does not
represent a sale to an Affiliate or a consignment, sale or return or a bill and
hold transaction; no agreement exists permitting any deduction or discount
(other than the discount stated on the invoice); Borrower is the lawful owner of
the Account and has the right to assign the same to Agent, for the benefit of
Lenders; the Account is free of all security interests, liens and encumbrances
other than those in favor of Agent, on behalf of Lenders, and the Account is due
and payable in accordance with its terms. Borrower shall, at its own expense:
(a) cause all invoices evidencing Accounts and all copies thereof to bear a
notice that such invoices are payable to the lockboxes
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established in accordance with subsection 4.26 and (b) use its best efforts to
assure prompt payment of all amounts due or to become due under the Accounts. No
credits or allowances will be issued, granted or allowed by Borrower to
customers and no returns will be accepted without Agent's prior written consent;
provided, that until Agent notifies Borrower to the contrary, Borrower may
presume consent. Borrower will immediately notify Agent in the event that a
customer alleges any dispute or claim with respect to an Account in an amount in
excess of $10,000.00 or of any other circumstances known to Borrower that may
impair the validity or collectibility of such an Account. Agent shall have the
right, at any time or times hereafter, to verify the validity, amount or any
other matter relating to an Account, by mail, telephone or in person. After the
occurrence of a Default or an Event of Default, Borrower shall not, without the
prior consent of Agent, adjust, settle or compromise the amount or payment of
any Account, or release wholly or partly any customer or obligor thereof, or
allow any credit or discount thereon.
4.6 Names and Locations. Schedule 4.6 sets forth all names, trade
names, fictitious names and business names under which Borrower currently
conducts business or has at any time during the past five years conducted
business and the name of any entity which Borrower has acquired in whole or in
part or from whom Borrower has acquired a significant amount of assets within
the past five years and sets forth the location of Borrower's principal place
of business, the location of Borrower's books and records, the location of all
other offices of Borrower and all Collateral locations, and such locations are
Borrower's sole locations for its business and the Collateral. Borrower and
each of its Subsidiaries will give Agent at least 30 days advance written
notice of: (a) any change of name or of any new trade name or fictitious
business name, (b) change of principal place of business, (c) any change in the
location of such party's books and records or the Collateral, or (d) any new
location for such Person's books and records or the Collateral.
4.7 Title to Properties; Liens. Borrower and each of its
Subsidiaries has good, sufficient and legal title, to all of its respective
material properties and assets, in each case, free and clear of all Liens except
Permitted Encumbrances.
4.8 Litigation; Adverse Facts. There are no judgments outstanding
against any Loan Party or affecting any property of any Loan Party nor is there
any action, charge, claim, demand, suit, proceeding, petition, governmental
investigation or arbitration now pending or, to the best knowledge of Borrower
after due inquiry, threatened against or affecting any Loan Party or any
property of any Loan Party which could reasonably be expected to result in any
Material Adverse Effect. Promptly upon any officer of Borrower or its
Subsidiaries obtaining knowledge of (a) the institution of any action, suit,
proceeding, governmental investigation or arbitration against or affecting any
Loan Party or any property of
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any Loan Party not previously disclosed by Borrower to Agent or (b) any material
development in any action, suit, proceeding, governmental investigation or
arbitration at any time pending against or affecting any Loan Party or any
property of any Loan Party which could reasonably be expected to have a material
Adverse Effect, Borrower will promptly give notice thereof to Agent and provide
such other information as may be reasonably available to them to enable Agent
and its counsel to evaluate such matter.
4.9 Payment of Taxes. All material tax returns and reports of
Borrower and each of its Subsidiaries required to be filed by any of them have
been timely filed and are complete and accurate in all material respects. All
taxes, assessments, fees and other governmental charges which are due and
payable by Borrower and each of its Subsidiaries have been paid when due;
provided that no such tax need be paid if Borrower or one of its Subsidiaries is
contesting same in good faith by appropriate proceedings promptly instituted and
diligently conducted and if Borrower or such Subsidiary has established
appropriate reserves as shall be required in conformity with GAAP. As of the
Closing Date, none of the income tax returns of Borrower or any of its
Subsidiaries are under audit and Borrower shall promptly notify Agent in the
event that any of Borrower's or any of its Subsidiaries' tax returns become the
subject of an audit . No tax liens have been filed against Borrower or any of
its Subsidiaries. The charges, accruals and reserves on the books of Borrower
and each of its Subsidiaries in respect of any taxes or other governmental
charges are in accordance with GAAP. Borrower's federal tax identification
number is 72-0838383.
4.10 Performance of Agreements. None of the Loan Parties and none
of their respective Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
material contractual obligation of any such Person, and no condition exists
that, with the giving of notice or the lapse of time or both, would constitute
such a default.
4.11 Employee Benefit Plans. Borrower, each of its Subsidiaries
and each ERISA Affiliate is in compliance, and will continue to remain in
compliance, in all material respects with all applicable provisions of ERISA,
the IRC and all other applicable laws and the regulations and interpretations
thereof with respect to all Employee Benefit Plans. No material liability has
been incurred by Borrower, any Subsidiaries or any ERISA Affiliate which remains
unsatisfied for any funding obligation, taxes or penalties with respect to any
Employee Benefit Plan. Neither Borrower nor any of its Subsidiaries shall
establish any new Employee Benefit Plan or amend any existing Employee Benefit
Plan if the liability or increased liability resulting from such establishment
or amendment is material.
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4.12 Intellectual Property. Borrower and each of its Subsidiaries
owns, is licensed to use or otherwise has the right to use, all Intellectual
Property used in or necessary for the conduct of its business as currently
conducted, and all such Intellectual Property is identified on Schedule 4.12.
4.13 Broker's Fees. No broker's or finder's fee or commission will
be payable with respect to any of the transactions contemplated hereby.
4.14 Environmental Compliance. Each Loan Party is in compliance
with all applicable Environmental Laws. There are no claims, liabilities, Liens,
investigations, litigation, administrative proceedings, whether pending or
threatened, or judgments or orders relating to any Hazardous Materials asserted
or threatened against any Loan Party or relating to any real property currently
or formerly owned, leased or operated by any Loan Party.
4.15 Solvency. From and after the date of this Agreement, Borrower:
(a) owns assets the fair salable value of which are greater than the total
amount of its liabilities (including contingent liabilities); (b) has capital
that is not unreasonably small in relation to its business as presently
conducted or any contemplated or undertaken transaction; and (c) does not
intend to incur and does not believe that it will incur debts beyond its
ability to pay such debts as they become due.
4.16 Disclosure. No representation or warranty of Borrower, any of
its Subsidiaries or any other Loan Party contained in this Agreement, the
financial statements, the other Loan Documents, or any other document,
certificate or written statement furnished to Agent or any Lender by or on
behalf of any such Person for use in connection with the Loan Documents contains
any untrue statement of a material fact or omitted, omits or will omit to state
a material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the same were
made. There is no material fact known to Borrower that has had or could have a
Material Adverse Effect and that has not been disclosed herein or in such other
documents, certificates and statements furnished to Agent or any Lender for use
in connection with the transactions contemplated hereby.
4.17 Insurance. Borrower and each of its Subsidiaries maintains
adequate insurance policies for public liability, property damage, product
liability, and business interruption with respect to its business and
properties and the business and properties of its Subsidiaries against loss or
damage of the kinds customarily carried or maintained by corporations of
established reputation engaged in similar businesses and in amounts acceptable
to Agent. Borrower shall cause Agent, for
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itself and on behalf of Lenders, to be named as loss payee on all insurance
policies relating to any Collateral and shall cause each Lender to be named as
additional insured under all liability policies, in each case pursuant to
appropriate endorsements in form and substance satisfactory to Agent and shall
collaterally assign to Agent, for itself and on behalf of Lenders, as security
for the payment of the Obligations all business interruption insurance of
Borrowers. No notice of cancellation has been received with respect to such
policies and Borrower and each of its Subsidiaries is in compliance with all
conditions contained in such policies. Borrower shall apply any proceeds
received from any policies of insurance relating to any Collateral to the
Obligations as set forth in subsection 2.4(B). In the event Borrower fails to
provide Agent with evidence of the insurance coverage required by this
Agreement, Agent may, but is not required to, purchase insurance at Borrower's
expense to protect Agent's and the Lender's interests in the Collateral. This
insurance may, but need not, protect Borrower's interests. The coverage
purchased by Agent may not pay any claim made by Borrower or any claim that is
made against Borrower in connection with the Collateral. Borrower may later
cancel any insurance purchased by Agent, but only after providing Agent with
evidence that Borrower has obtained insurance as required by this Agreement. If
Agent purchases insurance for the Collateral, Borrower will be responsible for
the costs of that insurance, including interest thereon and other charges
imposed on Agent in connection with the placement of the insurance, until the
effective date of the cancellation or expiration of the insurance, and such
costs may be added to the Obligations. The costs of the insurance may be more
than the cost of insurance Borrower is able to obtain on its own.
4.18 Compliance with Laws. Neither Borrower nor any of its
Subsidiaries is in violation of any law, ordinance, rule, regulation, order,
policy, guideline or other requirement of any domestic or foreign government or
any instrumentality or agency thereof, having jurisdiction over the conduct of
its business or the ownership of its properties, including, without limitation,
any Environmental Law, which violation would subject Borrower or any of its
Subsidiaries, or any of their respective officers to criminal liability or have
a Material Adverse Effect and no such violation has been alleged.
4.19 Bank Accounts. Schedule 4.19 sets forth the account numbers
and locations of all bank accounts of Borrower and its Subsidiaries. Borrower
shall not establish any new bank accounts, or amend or terminate any Blocked
Account or lockbox agreement without Agent's prior written consent.
4.20 Employee Matters. Except as set forth on Schedule 4.20, (a)
no Loan Party nor any of such Loan Party's employees is subject to any
collective bargaining agreement, (b) no petition for certification or union
election is pending with respect
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to the employees of any Loan Party and no union or collective bargaining unit
has sought such certification or recognition with respect to the employees of
any Loan Party and (c) there are no strikes, slowdowns, work stoppages or
controversies pending or, to the best knowledge of Borrower after due inquiry,
threatened between any Loan Party and its respective employees, other than
employee grievances arising in the ordinary course of business, which could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. Except as set forth on Schedule 4.20, neither Borrower
nor any of its Subsidiaries is subject to an employment contract.
4.21 Governmental Regulation. None of the Loan Parties is subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940 or to any federal or state
statute or regulation limiting its ability to incur indebtedness for borrowed
money.
4.22 Access to Accountants and Management. Borrower authorizes
Agent and Lenders to discuss the financial condition and financial statements of
Borrower and its Subsidiaries with Borrower's Accountants upon reasonable notice
to Borrower of its intention to do so, and authorizes Borrower's Accountants to
respond to all of Agent's inquiries. Agent and each Lender may, with the consent
of Agent, which will not be unreasonably denied, confer with Borrower's
management directly regarding Borrower's business, operations and financial
condition.
4.23 Inspection. Borrower shall permit Agent and any authorized
representatives designated by Agent to visit and inspect any of the properties
of Borrower or any of its Subsidiaries, including their financial and
accounting records, and, in conjunction with such inspection, to make copies
and take extracts therefrom, and to discuss their affairs, finances and
business with their officers and Borrower's Accountants, at such reasonable
times during normal business hours and as often as may be reasonably requested.
Each Lender may with the consent of Agent, which will not be unreasonably
denied, accompany Agent on any such visit or inspection.
4.24 Collateral Records. Borrower shall keep full and accurate
books and records relating to the Collateral and shall mark such books and
records to indicate Agent's security interests in the Collateral, for the
benefit of Lenders.
4.25 Account Covenants; Verification. Borrower shall, at its own
expense: (a) cause all invoices evidencing Accounts and all copies thereof to
bear a notice that such invoices are payable to the lockboxes established in
accordance with subsection 4.26 and (b) use its best efforts to assure prompt
payment of all amounts due or to become due under the Accounts. No discounts,
credits or allowances will be issued,
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granted or allowed by Borrower to customers and no returns will be accepted
without Agent's prior written consent; provided, that until Agent notifies
Borrower to the contrary, Borrower may presume consent. Borrower will promptly
notify Agent in the event that a customer alleges any dispute or claim with
respect to an Account or of any other circumstances known to Borrower that may
impair the validity or collectibility of an Account. Agent shall have the right,
at any time or times hereafter, to verify the validity, amount or any other
matter relating to an Account, by mail, telephone or in person. After the
occurrence of a Default or an Event of Default, Borrower shall not, without the
prior consent of Agent, adjust, settle or compromise the amount or payment of
any Account, or release wholly or partly any customer or obligor thereof, or
allow any credit or discount thereon.
4.26 Collection of Accounts and Payments. Borrower shall establish
lockboxes or blocked accounts (collectively, "Blocked Accounts") in Borrower's
name with such banks ("Collecting Banks") as are acceptable to Agent (subject
to irrevocable instructions acceptable to Agent as hereinafter set forth) to
which all account debtors shall directly remit all payments on Accounts and in
which Borrower will immediately deposit all payments made for Inventory or
other payments constituting proceeds of Collateral in the identical form in
which such payment was made, whether by cash or check. The Collecting Banks
shall acknowledge and agree, in a manner satisfactory to Agent, that all
payments made to the Blocked Accounts are the sole and exclusive property of
Agent, for the benefit of Lenders, and that the Collecting Banks have no right
to setoff against the Blocked Accounts and that all such payments received will
be promptly transferred to Agent's Account. Borrower hereby agrees that all
payments made to such Blocked Accounts or otherwise received by Agent and
whether on the Accounts or as proceeds of other Collateral or otherwise will be
the sole and exclusive property of Agent, for the benefit of Lenders. Borrower
shall irrevocably instruct each Collecting Bank to promptly transfer all
payments or deposits to the Blocked Accounts into Agent's Account. If Borrower,
or any if its Affiliates, employees, agents or other Person acting for or in
concert with Borrower, shall receive any monies, checks, notes, drafts or any
other payments relating to and/or proceeds of Accounts or other Collateral,
Borrower or such Person shall hold such instrument or funds in trust for Agent,
and, immediately upon receipt thereof, shall remit the same or cause the same
to be remitted, in kind, to the Blocked Accounts or to Agent at its address set
forth in subsection 10.3 below.
Borrower may amend any one or more of the Schedules referred in this Section 4
(subject to prior notice to Agent, as applicable) and any representation,
warranty, or covenant contained herein which refers to any such Schedule shall
from and after the date of any such amendment refer to such Schedule as so
amended; provided however, that in no event shall the amendment of any such
Schedule constitute a
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waiver by Agent and Lenders of any Default or Event of Default that exists
notwithstanding the amendment of such Schedule.
SECTION 5. REPORTING AND OTHER AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any of the Commitments
hereunder shall be in effect and until payment in full of all Obligations,
Borrower shall perform, and shall cause each of its Subsidiaries to perform,
all covenants in this Section 5.
5.1 Financial Statements and Other Reports. Borrower will
deliver to Agent and each Lender (unless specified to be delivered solely to
Agent) the financial statements and other reports contained in the Reporting
Rider attached hereto.
5.2 Endorsement. Borrower hereby constitutes and appoints Agent
and all Persons designated by Agent for that purpose as Borrower's true and
lawful attorney-in-fact, with power to endorse Borrower's name to any of the
items of payment or proceeds described in subsection 4.26 above and all proceeds
of Collateral that come into Agent's possession or under Agent's control. Both
the appointment of Agent as Borrower's attorney and Agent's rights and powers
are coupled with an interest and are irrevocable until payment in full and
complete performance of all of the Obligations.
5.3 Maintenance of Properties. Borrower will maintain or cause
to be maintained in good repair, working order and condition all material
properties used in the business of Borrower and its Subsidiaries and will make
or cause to be made all appropriate repairs, renewals and replacements thereof.
5.4 Compliance with Laws. Borrower will, and will cause each of
its Subsidiaries to, comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority as now in effect and which
may be imposed in the future in all jurisdictions in which Borrower or any of
its Subsidiaries is now doing business or may hereafter be doing business, other
than those laws the noncompliance with which would not have a Material Adverse
Effect.
5.5 Further Assurances. Borrower shall, and shall cause each of
its Subsidiaries to, from time to time, execute such guaranties, financing or
continuation statements, documents, security agreements, reports and other
documents or deliver to Agent such instruments, certificates of title,
mortgages, deeds of trust, or other documents as Agent at any time may
reasonably request to
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evidence, perfect or otherwise implement the guaranties and security for
repayment of the Obligations provided for in the Loan Documents.
5.6 Mortgages; Title Insurance; Surveys; Additional Leasehold
Properties.
(A) Title Insurance. On the Closing Date (or within 30 days
following delivery of any Mortgage with respect to Additional Mortgaged
Property), Borrower shall deliver or cause to be delivered to Agent ALTA
lender's title insurance policies issued by title insurers reasonably
satisfactory to Agent (the "Mortgage Policies") in form and substance and in
amounts reasonably satisfactory to Agent assuring Agent that the Mortgages are
valid and enforceable first priority mortgage liens on the respective Mortgaged
Property or Additional Mortgaged Property, free and clear of all defects and
encumbrances except Permitted Encumbrances. The Mortgage Policies shall be in
form and substance reasonably satisfactory to Agent and shall include an
endorsement insuring against the effect of future advances under this
Agreement, for mechanics' liens and for any other matter that Agent may
reasonably request.
(B) Additional Mortgaged Property. Borrower shall as promptly
as possible (and in any event within 60 days after such designation) deliver to
Agent a fully executed Mortgage, in form and substance satisfactory to Agent
together with title insurance policies and surveys on any Additional Mortgaged
Property designated by Agent.
(C) Surveys. On or before the Closing Date (or within 30 days
following delivery of any Mortgage with respect to Additional Mortgaged
Property), Borrower shall deliver or cause to be delivered to Agent current
surveys, certified by a licensed surveyor, for all real property that is the
subject of the Mortgage Policies including Additional Mortgaged Property for
which a Mortgage Policy is issued. All such surveys shall be sufficient to
allow the issuer of the mortgage policy to issue an ALTA lender's policy.
(D) Additional Leasehold Properties. Borrower shall as
promptly as possible (and in any event within 60 days after acquiring such
interest) deliver to Agent for each leasehold interest in real estate Borrower
possesses or hereinafter acquires estoppel letters, consents and waivers from
each landlord, which letters shall be in form and substance satisfactory to
Agent.
5.7 Use of Proceeds and Margin Security. Borrower shall use the
proceeds of all Loans for proper business purposes (as described in the
recitals to this Agreement) consistent with all applicable laws, statutes,
rules and regulations. No portion of the proceeds of any Loan shall be used by
Borrower or any of its
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Subsidiaries for the purpose of purchasing or carrying margin stock within the
meaning of Regulation U, or in any manner that might cause the borrowing or the
application of such proceeds to violate Regulation T or Regulation X or any
other regulation of the Board of Governors of the Federal Reserve System or to
violate the Exchange Act.
5.8 Bailee. If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of Borrower's agents or processors,
Borrower shall, upon the request of Agent, notify such warehouseman, bailee,
agent or processor of the security interests in favor of Agent, for the benefit
of Lenders, created hereby and shall instruct such Person to hold all such
Collateral for Agent's account subject to Agent's instructions.
5.9 Year 2000. Borrower has made an assessment of the microchip
and computer-based systems and the software used in its business and based upon
such assessment believes that it will be "Year 2000 Compliant" by January 1,
2000. For purposes of this paragraph, "Year 2000 Compliant" means that all
software, embedded microchips and other processing capabilities utilized by, and
material to the business operations or financial condition of, Borrower are able
to interpret, store, transmit, receive and manipulate data on and involving all
calendar dates correctly and without causing any abnormal ending scenarios in
relation to dates in and after the Year 2000. From time to time, at the request
of Agent, Borrower shall provide to Agent such updated information as is
requested regarding the status of its efforts to become Year 2000 Compliant.
SECTION 6. FINANCIAL COVENANTS
Borrower covenants and agrees that so long as any of the Commitments
remain in effect and until indefeasible payment in full of all Obligations and
termination of all Lender Letters of Credit, Borrower shall comply with and
shall cause each of its Subsidiaries to comply with all covenants contained in
the Financial Covenant Rider.
SECTION 7. NEGATIVE COVENANTS
Borrower covenants and agrees that so long as any of the Commitments
remain in effect and until indefeasible payment in full of all Obligations and
termination of all Lender Letters of Credit, Borrower shall not and will not
permit any of its SubsidiarieS to:
7.1 Indebtedness and Liabilities.
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(A) Indebtedness. Directly or indirectly create, incur,
assume, guaranty, or otherwise become or remain directly or indirectly liable,
on a fixed or contingent basis, with respect to any Indebtedness except:
(1) the Obligations;
(2) Indebtedness (excluding Capital Leases) not to exceed
$100,000.00 in the aggregate at any time outstanding secured by purchase money
Liens;
(3) Indebtedness under Capital Leases not to exceed
$100,000.00 outstanding at any time in the aggregate;
(4) Indebtedness under a Capital Lease for the acquisition
in the ordinary course of business of a new computer system with accompanying
software and technical support, the amounts payable in respect of which shall
not exceed $550,000.00 in the aggregate per annum;
(5) Borrower may create and incur new Indebtedness in the
form of promissory notes (collectively, the "Allied Note") in the aggregate
principal amount of up to $600,000.00 issued by Borrower pursuant to this
Agreement in connection with the acquisition of a substantial portion of the
assets of Allied Distributing Company of Houston, Inc., a Texas corporation, and
its wholly-owned subsidiary, Auto Parts Investment Group, Inc., a Texas
corporation (collectively, "Allied") (the "Allied Acquisition");
(6) Borrower may create and incur new Indebtedness in the
form of promissory notes in the aggregate principal amount of up to $2,000,000
issued by Borrower in connection with the Allied Acquisition (the "Second Allied
Note"); and
(7) Indebtedness existing on the Closing Date and
identified on Schedule 7.1.
(B) Liabilities. Borrower will not, and will not permit any
of its Subsidiaries to, incur any Liabilities except for Indebtedness permitted
herein and trade payables and normal accruals in the ordinary course of
business not yet due and payable or with respect to which Borrower or any of
its Subsidiaries is contesting in good faith the amount or validity thereof by
appropriate proceedings and then only to the extent that Borrower or any of its
Subsidiaries has established adequate reserves therefor under GAAP.
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7.2 Guaranties. Except for endorsements of instruments or items
of payment for collection in the ordinary course of business, guaranty, endorse,
or otherwise in any way become or be responsible for any obligations of any
other Person, whether directly or indirectly by agreement to purchase the
indebtedness of any other Person or through the purchase of goods, supplies or
services, or maintenance of working capital or other balance sheet covenants or
conditions, or by way of stock purchase, capital contribution, advance or loan
for the purpose of paying or discharging any indebtedness or obligation of such
other Person or otherwise.
7.3 Transfers, Liens and Related Matters.
(A) Transfers. Sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with respect to any of
the Collateral or the assets of such Person, except that Borrower and its
Subsidiaries may (i) sell inventory in the ordinary course of business; and
(ii) make Asset Dispositions if all of the following conditions are met: (1)
the market value of assets sold or otherwise disposed of in any single
transaction or series of related transactions does not exceed $10,000.00 and
the aggregate market value of assets sold or otherwise disposed of in any
Fiscal Year does not exceed $100,000.00; (2) the consideration received is at
least equal to the fair market value of such assets; (3) the sole consideration
received is cash; (4) the net proceeds of such Asset Disposition are applied as
required by subsection 2.4(B); (5) after giving effect to the sale or other
disposition of the assets included within the Asset Disposition and the
repayment of the Obligations with the proceeds thereof, Borrower is in
compliance on a pro forma basis with the covenants set forth in the Financial
Covenant Rider recomputed for the most recently ended month for which
information is available and is in compliance with all other terms and
conditions contained in this Agreement; and (6) no Default or Event of Default
shall then exist or result from such sale or other disposition.
(B) Liens. Except for Permitted Encumbrances, directly or
indirectly create, incur, assume or permit to exist any Lien on or with respect
to any of the Collateral or the assets of such Person or any proceeds, income
or profits therefrom.
(C) No Negative Pledges. Enter into or assume any agreement
(other than the Loan Documents) prohibiting the creation or assumption of any
Lien upon its properties or assets, whether now owned or hereafter acquired.
(D) No Restrictions on Subsidiary Distributions to Borrower.
Except as provided herein, directly or indirectly create or otherwise cause or
suffer
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to exist or become effective any consensual encumbrance or restriction of any
kind on the ability of any such Subsidiary to: (1) pay dividends or make any
other distribution on any of such Subsidiary's capital stock owned by Borrower
or any Subsidiary of Borrower; (2) pay any indebtedness owed to Borrower or any
other Subsidiary; (3) make loans or advances to Borrower or any other
Subsidiary; or (4) transfer any of its property or assets to Borrower or any
other Subsidiary.
7.4 Investments and Loans. Make or permit to exist investments in
or loans to any other Person, except: (a) Cash Equivalents; and (b) loans and
advances to employees for moving, entertainment, travel and other similar
expenses in the ordinary course of business in an aggregate outstanding amount
not in excess of $25,000.00 at any time.
7.5 Restricted Junior Payments. Directly or indirectly declare,
order, pay, make or set apart any sum for any Restricted Junior Payment, except
that:
(A) Subsidiaries of Borrower may make Restricted Junior
Payments with respect to their common stock to the extent necessary to permit
Borrower to pay the Obligations;
(B) Borrower may, provided, that no Default or Event of
Default has occurred or is continuing and such payment or payments will not
result in a Default or Event of Default, (i) pay accrued and unpaid interest on
a monthly basis and (ii) make a payment of principal once each month for
thirty-six (36) months in equal installments in the ordinary course of business
on the Allied Notes; and
(C) Borrower may, provided that no Default or Event of
Default has occurred or is continuing and such payment or payments will not
result in a Default or Event of Default, (i) make payments of interest in the
ordinary course of business on the Second Allied Notes and (ii) after the first
anniversary of the Closing Date, make payments of principal in the ordinary
course of business on the Second Allied Note (singularly, an "Allied Principal
Payment"), if and only if prior to making any Allied Principal Payment: (a)
Agent shall have received audited financial statements for the Fiscal Year
ending February 25, 2000 in form and substance and from auditors satisfactory
to Agent, and (b) Borrower shall have provided evidence satisfactory to Agent
that after giving effect to such Allied Principal Payment, Borrower will
maintain Minimum Availability.
7.6 Restriction on Fundamental Changes. (a) Enter into any
transaction of merger or consolidation; (b) liquidate, wind-up or dissolve
itself (or suffer any liquidation or dissolution); (c) convey, sell, lease,
sublease, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its business or assets, or the
capital stock of any of its Subsidiaries, whether now owned or hereafter
acquired; or (d) acquire by purchase or otherwise all or any substantial part
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of the business or assets of, or stock or other beneficial ownership of, any
Person.
7.7 Transactions with Affiliates. Directly or indirectly, enter
into or permit to exist any transaction (including the purchase, sale or
exchange of property or the rendering of any service) with any Affiliate or with
any officer, director or employee of any Loan Party except for transactions in
the ordinary course of Borrower's business and upon fair and reasonable terms
which are fully disclosed to Agent and Lenders and which are no less favorable
to Borrower than it would obtain in a comparable arm's length transaction with
an unaffiliated Person.
7.8 Conduct of Business. From and after the Closing Date, engage
in any business other than businesses of the type engaged in by Borrower or any
Subsidiary on the Closing Date.
7.9 Tax Consolidations. File or consent to the filing of any
consolidated income tax return with any Person any of Borrower's Subsidiaries;
provided that in the event Borrower files a consolidated return with any such
Person, Borrower's contribution with respect to taxes as a result of the filing
of such consolidated return shall not be greater, nor the receipt of tax
benefits less, than they would have been had Borrower not filed a consolidated
return with such Person.
7.10 Subsidiaries. Establish, create or acquire any new
Subsidiaries.
7.11 Fiscal Year; Tax Designation. Change its Fiscal Year; or
elect to be designated as an entity other than a C corporation as defined in
IRC.
7.12 Press Release; Public Offering Materials. Disclose the name of
Agent or any Lender in any press release or in any prospectus, proxy statement
or other materials filed with any governmental entity relating to a public
offering of the capital stock of any Loan Party except as may be required by
law.
7.13 Bank Accounts. Establish any new bank accounts, or attempt to
amend or terminate any Blocked Account or lockbox agreement without Agent's
prior written consent.
SECTION 8. DEFAULT, RIGHTS AND REMEDIES
8.1 Event of Default. "Event of Default" shall mean the occurrence
or existence of any one or more of the following:
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(A) Payment. Failure to make payment of any of the Obligations
when due; or
(B) Default in Other Agreements. (1) Failure of Borrower or
any of its Subsidiaries to pay when due any principal or interest on any
Indebtedness (other than the Obligations) or (2) breach or default of Borrower
or any of its Subsidiaries with respect to any Indebtedness (other than the
Obligations); if such failure to pay, breach or default entitles the holder to
cause such Indebtedness having an individual principal amount in excess of
$100,000 or having an aggregate principal amount in excess of $250,000 to
become or be declared due prior to its stated maturity; or
(C) Breach of Certain Provisions. Failure of Borrower to
perform or comply with any term or condition contained in paragraphs (A) (B) and
(C) and (N)of the Reporting Rider and subsections, 5.3, 5.5 or 5.6 or contained
in Section 4, Section 6, Section 7 or the Financial Covenants Rider; or
(D) Breach of Warranty. Any representation, warranty,
certification or other statement made by any Loan Party in any Loan Document or
in any statement or certificate at any time given by such Person in writing
pursuant or in connection with any Loan Document is false in any material
respect on the date made; or
(E) Other Defaults Under Loan Documents. Borrower or any other
Loan Party defaults in the performance of or compliance with any term contained
in this Agreement or the other Loan Documents and such default is not remedied
or waived within 10 days after receipt by Borrower of notice from Agent, or
Requisite Lenders, of such default (other than occurrences described in other
provisions of this subsection 8.1 for which a different grace or cure period is
specified or which constitute immediate Events of Default); or
(F) Change in Control. (1) Messrs. Randy Rankin and Ali Attayi
together cease to beneficially own and control, directly or indirectly, at least
51% of the issued and outstanding shares of each class of capital stock of
Borrower entitled (without regard to the occurrence of any contingency) to vote
for the election of a majority of the members of the board of directors of
Borrower; provided, however, such a failure to maintain beneficial ownership and
control shall not constitute an Event of Default if, and only if, it is due
solely to a secondary offering of capital stock of Borrower where (i) the
proceeds of such secondary offering are remitted directly and for the benefit of
Borrower and (ii) such proceeds are used by the Borrower for general corporate
purposes (as described in the recitals to this
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Agreements); (2) Mr. Ali Attayi shall dispose of any shares of Borrower's common
stock owned by Mr. Ali Attayi on the Closing Date during the first two (2) years
following the Closing Date or more than 100,000 shares of such stock annually
thereafter; or (3) the death or incapacity of Messrs. Randy Rankin and/or Ali
Attayi; or
(G) Involuntary Bankruptcy; Appointment of Receiver, etc. (1)
A court enters a decree or order for relief with respect to Borrower or any of
its Subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, which decree or
order is not stayed or other similar relief is not granted under any applicable
federal or state law; or (2) the continuance of any of the following events for
60 days unless dismissed, bonded or discharged: (a) an involuntary case is
commenced against Borrower or any of its Subsidiaries, under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect; or (b) a
receiver, liquidator, sequestrator, trustee, custodian or other fiduciary having
similar powers over Borrower or any of its Subsidiaries, or over all or a
substantial part of their respective property, is appointed; or
(H) Voluntary Bankruptcy; Appointment of Receiver, etc. (1)
Borrower or any of its Subsidiaries commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consents to the entry of an order for relief in an involuntary case
or to the conversion of an involuntary case to a voluntary case under any such
law or consents to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or
(2) Borrower or any of its Subsidiaries makes any assignment for the benefit of
creditors; or (3) the board of directors of Borrower or any of its Subsidiaries
adopts any resolution or otherwise authorizes action to approve any of the
actions referred to in this subsection 8.1(H); or
(I) Liens. Any lien, levy or assessment is filed or recorded
with respect to or otherwise imposed upon all or any part of the Collateral or
the assets of Borrower or any of its Subsidiaries by the United States or any
department or instrumentality thereof or by any state, county, municipality or
other governmental agency (other than Permitted Encumbrances) and such lien,
levy or assessment is not stayed, vacated, paid or discharged within 30 days; or
(J) Judgment and Attachments. Any money judgment, writ or
warrant of attachment, or similar process involving (1) (a) an amount in any
individual case in excess of $100,000 or (b) an amount in the aggregate at any
time in excess of $250,000 (in either case not adequately covered by insurance
as to which the insurance company has acknowledged coverage) is entered or
filed
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against Borrower or any of its Subsidiaries or any of their respective assets
and remains undischarged, unvacated, unbonded or unstayed for a period of 30
days, but in any event not later than 5 days prior to the date of any proposed
sale thereunder or (2) securities fraud, in any way, is entered or filed against
Borrower or any of its Subsidiaries or any of their respective assets; or
(K) Dissolution. Any order, judgment or decree is entered
against Borrower or any of its Subsidiaries decreeing the dissolution or split
up of Borrower or that Subsidiary and such order remains undischarged or
unstayed for a period in excess of 20 days, but in any event not later than 5
days prior to the date of any proposed dissolution or split up; or
(L) Solvency. Borrower ceases to be solvent (as represented
by Borrower in subsection 4.15) or admits in writing its present or prospective
inability to pay its debts as they become due; or
(M) Injunction. Borrower or any of its Subsidiaries is
enjoined, restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business and such order continues for 30 days or more; or
(N) Invalidity of Loan Documents. Any of the Loan Documents
for any reason, other than a partial or full release in accordance with the
terms thereof, ceases to be in full force and effect or is declared to be null
and void, or any Loan Party denies that it has any further liability under any
Loan Documents to which it is party, or gives notice to such effect; or
(O) Failure of Security. Agent, on behalf of Lenders, does
not have or ceases to have a valid and perfected first priority security
interest in the Collateral (subject to Permitted Encumbrances), in each case,
for any reason other than the failure of Agent or any Lender to take any action
within its control; or
(P) Damage, Strike. Any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike, lockout,
labor dispute, embargo, condemnation, act of God or public enemy, or other
casualty which causes, for more than 5 consecutive days beyond the coverage
period of any applicable business interruption insurance, the cessation or
substantial curtailment of revenue producing activities at any facility of
Borrower or any of its Subsidiaries if any such event or circumstance could
reasonably be expected to have a Material Adverse Effect.
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(Q) Licenses and Permits. The loss, suspension or revocation
of, or failure to renew, any license or permit now held or hereafter acquired
by Borrower or any of its Subsidiaries, if such loss, suspension, revocation or
failure to renew could reasonably be expected to have a Material Adverse
Effect, except to the extent being contested or appealed by Borrower in good
faith, pursuant to appropriate and timely proceedings.
(R) Forfeiture. There is filed against Borrower or any
Guarantor any civil or criminal action, suit or proceeding under any federal or
state racketeering statute (including, without limitation, the Racketeer
Influenced and Corrupt Organization Act of 1970), which action, suit or
proceeding (1) is not dismissed within 120 days; and (2) could reasonably be
expected to result in the confiscation or forfeiture of any material portion of
the Collateral.
8.2 Suspension of Commitments. Upon the occurrence of any Default
or Event of Default, notwithstanding any grace period or right to cure, Agent
may or upon demand by Requisite Lenders shall, without notice or demand,
immediately cease making additional Loans and the Commitments shall be
suspended; provided that, in the case of a Default, if the subject condition or
event is waived or cured within any applicable grace or cure period, the
Commitments shall be reinstated.
8.3 Acceleration. Upon the occurrence of any Event of Default
described in the foregoing subsections 8.1(G) or 8.1(H), all Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Borrower, and the Commitments shall thereupon terminate. Upon the
occurrence and during the continuance of any other Event of Default, Agent may,
and upon demand by Requisite Lenders shall, by written notice to Borrower, (a)
declare all or any portion of the Obligations to be, and the same shall
forthwith become, immediately due and payable and the Commitments shall
thereupon terminate and (b) demand that Borrower immediately deposit with Agent
an amount equal to 105% of the Letter of Credit Reserve to enable Agent or any
Lender that has issued any Lender Letter of Credit to make payments under the
Lender Letters of Credit when required and such amount shall become immediately
due and payable.
8.4 Remedies. If any Event of Default shall have occurred and be
continuing, in addition to and not in limitation of any other rights or
remedies available to Agent and Lenders at law or in equity, Agent may and
shall upon the request of Requisite Lenders exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the UCC (whether or not the UCC applies to the affected
Collateral) and may also (a) require Borrower to,
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and Borrower hereby agrees that it will, at its expense and upon request of
Agent forthwith, assemble all or part of the Collateral as directed by Agent and
make it available to Agent at a place to be designated by Agent which is
reasonably convenient to both parties; (b) withdraw all cash in the Blocked
Accounts and apply such monies in payment of the Obligations in the manner
provided in subsection 8.7; and (c) without notice or demand or legal process,
enter upon any premises of Borrower and take possession of the Collateral.
Borrower agrees that, to the extent notice of sale of the Collateral or any part
thereof shall be required by law, at least 10 days notice to Borrower of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. At any sale of the Collateral
(whether public or private), if permitted by law, Agent or any Lender may bid
(which bid may be, in whole or in part, in the form of cancellation of
indebtedness) for the purchase of the Collateral or any portion thereof for the
account of Agent or such Lender. Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. Borrower shall
remain liable for any deficiency. Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned. To the extent permitted by law, Borrower hereby specifically
waives all rights of redemption, stay or appraisal which it has or may have
under any law now existing or hereafter enacted. Agent shall not be required to
proceed against any Collateral but may proceed against Borrower directly.
8.5 Appointment of Attorney-in-Fact. Borrower hereby constitutes
and appoints Agent as Borrower's attorney-in-fact with full authority in the
place and stead of Borrower and in the name of Borrower, Agent or otherwise,
from time to time in Agent's discretion while an Event of Default is continuing
to take any action and to execute any instrument that Agent may deem necessary
or advisable to accomplish the purposes of this Agreement, including: (a) to
ask, demand, collect, sue for, recover, compound, receive and give acquittance
and receipts for moneys due and to become due under or in respect of any of the
Collateral; (b) to adjust, settle or compromise the amount or payment of any
Account, or release wholly or partly any customer or obligor thereunder or
allow any credit or discount thereon; (c) to receive, endorse, and collect any
drafts or other instruments, documents and chattel paper, in connection with
clause (a) above; (d) to file any claims or take any action or institute any
proceedings that Agent may deem necessary or desirable for the collection of or
to preserve the value of any of the Collateral or otherwise to enforce the
rights of Agent and Lenders with respect to any of the Collateral; and (e) to
sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, assignments, verifications and notices in
connection with Accounts and other documents relating to the Collateral. The
appointment of Agent as Borrower's attorney and Agent's rights and powers are
coupled with an interest
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and are irrevocable until indefeasible payment in full and complete performance
of all of the Obligations.
8.6 Limitation on Duty of Agent with Respect to Collateral.
Beyond the safe custody thereof, Agent and each Lender shall have no duty with
respect to any Collateral in its possession or control (or in the possession or
control of any agent or bailee) or with respect to any income thereon or the
preservation of rights against prior parties or any other rights pertaining
thereto. Agent shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which Agent accords its own
property. Neither Agent nor any Lender shall be liable or responsible for any
loss or damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehouseman, carrier,
forwarding agency, consignee, broker or other agent or bailee selected by
Borrower or selected by Agent in good faith.
8.7 Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, (a) Borrower irrevocably waives the right
to direct the application of any and all payments at any time or times
thereafter received by Agent from or on behalf of Borrower, and Borrower hereby
irrevocably agrees that Agent shall have the continuing exclusive right to
apply and to reapply any and all payments received at any time or times after
the occurrence and during the continuance of an Event of Default against the
Obligations in such manner as Agent may deem advisable notwithstanding any
previous entry by Agent upon any books and records and (b) the proceeds of any
sale of, or other realization upon, all or any part of the Collateral shall be
applied: first, to all fees, costs and expenses incurred by or owing to Agent
with respect to this Agreement, the other Loan Documents or the Collateral;
second, to all fees, costs and expenses incurred by or owing to any Lender with
respect to this Agreement, the other Loan Documents or the Collateral; third,
to accrued and unpaid interest on the Obligations; fourth, to the principal
amounts of the Obligations outstanding; and fifth, to any other indebtedness or
obligations of Borrower owing to Agent or any Lender.
8.8 License of Intellectual Property. Borrower hereby assigns,
transfers and conveys to Agent, for the benefit Lenders, effective upon the
occurrence of any Event of Default hereunder, the non-exclusive right and
license to use all Intellectual Property owned or used by Borrower together
with any goodwill associated therewith, all to the extent necessary to enable
Agent to realize on the Collateral and any successor or assign to enjoy the
benefits of the Collateral. This right and license shall inure to the benefit
of all successors, assigns and transferees of Agent and its successors, assigns
and transferees, whether by voluntary conveyance,
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operation of law, assignment, transfer, foreclosure, deed in lieu of foreclosure
or otherwise. Such right and license is granted free of charge.
8.9 Waivers, Non-Exclusive Remedies. No failure on the part of
Agent or any Lender to exercise, and no delay in exercising and no course of
dealing with respect to, any right under this Agreement or the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise by Agent or any Lender of any right under this Agreement or any other
Loan Document preclude any other or further exercise thereof or the exercise of
any other right. The rights in this Agreement and the other Loan Documents are
cumulative and shall in no way limit any other remedies provided by law.
SECTION 9. AGENT
9.1 Agent.
(A) Appointment. Each Lender hereto and, upon obtaining an
interest in any Loan, any participant, transferee or other assignee of any
Lender irrevocably appoints, designates and authorizes Heller as Agent to take
such actions or refrain from taking such action as its agent on its behalf and
to exercise such powers hereunder as are delegated by the terms hereof,
together with such powers as are reasonably incidental thereto. Neither the
Agent nor any of its directors, officers, employees or agents shall be liable
for any action so taken. The provisions of this subsection 9.1 are solely for
the benefit of Agent and Lenders and neither Borrower nor any Loan Party shall
have any rights as a third party beneficiary of any of the provisions hereof.
Agent may perform any of its duties hereunder, or under the Loan Documents, by
or through its agents or employees.
(B) Nature of Duties. Agent shall have no duties, obligations
or responsibilities except those expressly set forth in this Agreement or in
the Loan Documents. The duties of Agent shall be mechanical and administrative
in nature. Agent shall not have by reason of this Agreement a fiduciary, trust
or agency relationship with or in respect of any Lender, Borrower or any Loan
Party. Each Lender shall make its own appraisal of the credit worthiness of
Borrower, and shall have independently taken whatever steps it considers
necessary to evaluate the financial condition and affairs of Borrower, and
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the Closing Date or at any
time or times thereafter. If Agent seeks the consent or approval of any Lenders
to the taking or refraining from taking any action hereunder, then Agent shall
send notice thereof to each Lender. Agent
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shall promptly notify each Lender any time that the applicable percentage of
Lenders have instructed Agent to act or refrain from acting pursuant hereto.
(C) Rights, Exculpation, Etc. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to any Lender for any
action taken or omitted by them hereunder or under any of the Loan Documents,
or in connection herewith or therewith, except that Agent shall be obligated on
the terms set forth herein for performance of its express obligations
hereunder, and except that Agent shall be liable with respect to its own gross
negligence or willful misconduct. Agent shall not be liable for any
apportionment or distribution of payments made by it in good faith and if any
such apportionment or distribution is subsequently determined to have been made
in error, the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of the amount to
which they are determined to be entitled (and such other Lenders hereby agree
to return to such Lender any such erroneous payments received by them). In
performing its functions and duties hereunder, Agent shall exercise the same
care which it would in dealing with loans for its own account, but Agent shall
not be responsible to any Lender for any recitals, statements, representations
or warranties herein or for the execution, effectiveness, genuineness,
validity, enforceability, collectability, or sufficiency of this Agreement or
any of the Loan Documents or the transactions contemplated thereby, or for the
financial condition of any Loan Party. Agent shall not be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any of the Loan Documents or the
financial condition of any Loan Party, or the existence or possible existence
of any Default or Event of Default. Agent may at any time request instructions
from Lenders with respect to any actions or approvals which by the terms of
this Agreement or of any of the Loan Documents Agent is permitted or required
to take or to grant, and Agent shall be entitled to refrain from taking any
action or to withhold any approval and shall not be under any liability
whatsoever to any Person for refraining from any action or withholding any
approval under any of the Loan Documents until it shall have received such
instructions from the applicable percentage of the Lenders. Without limiting
the foregoing, no Lender shall have any right of action whatsoever against
Agent as a result of Agent acting or refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the
instructions of the applicable percentage of the Lenders and notwithstanding
the instructions of Lenders, Agent shall have no obligation to take any action
if it, in good faith, believes that such action exposes Agent to any liability.
(D) Reliance. Agent shall be under no duty to examine,
inquire into, or pass upon the validity, effectiveness or genuineness of this
Agreement, any other
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Loan Document, or any instrument, document or communication furnished pursuant
hereto or in connection herewith. Agent shall be entitled to rely upon and
assume that any written notices, statements, certificates, orders or other
documents or any telephone message or other communication (including any
writing, telex, telecopy or telegram) are genuine, valid, effective and correct
and to have been signed, sent or made by the proper Person, and with respect to
all matters pertaining to this Agreement or any of the Loan Documents and its
duties hereunder or thereunder. Agent shall be entitled to rely upon the advice
of legal counsel, independent accountants, and other experts selected by Agent
in its sole discretion.
(E) Indemnification. Each Lender, in proportion to its Pro
Rata Share, severally, agrees to reimburse and indemnify Agent for and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, advances or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any of the
Loan Documents or any action taken or omitted by Agent under this Agreement or
any of the Loan Documents; provided, however, that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances or disbursements resulting
from Agent's gross negligence or willful misconduct as determined by a court of
competent jurisdiction. The obligations of Lenders under this subsection 9.1(E)
shall survive the payment in full of the Obligations and the termination of
this Agreement.
(F) Heller Individually. With respect to its Commitments and
the Loans made by it, Heller shall have and may exercise the same rights and
powers hereunder and is subject to the same obligations and liabilities as and
to the extent set forth herein for any other Lender. The terms "Lenders" or
"Requisite Lenders" or any similar terms shall, unless the context clearly
otherwise indicates, include Heller in its individual capacity as a Lender.
Heller may lend money to, and generally engage in any or other business with
any Loan Party as if it were not acting as Agent pursuant hereto.
(G) Successor Agent.
(1) Resignation. Agent may resign from the performance of
all its functions and duties hereunder at any time by giving at least 30
Business Days' prior written notice to Borrower and the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment as provided below.
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(2) Appointment of Successor. Upon any such notice of
resignation pursuant to clause (G)(1) above, Requisite Lenders shall, upon
receipt of Borrower's prior consent which shall not unreasonably be withheld,
appoint a successor Agent. If a successor Agent shall not have been so appointed
within said 30 Business Day period, the retiring Agent, upon notice to Borrower,
shall then appoint a successor Agent who shall serve as Agent until such time,
as Requisite Lenders appoint a successor Agent as provided above.
(3) Successor Agent. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Loan
Documents. After any retiring Agent's resignation as Agent under the Loan
Documents, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the Loan
Documents.
(H) Collateral Matters.
(1) Release of Collateral. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent upon any property covered by this Agreement or the
Loan Documents (i) upon termination of the Commitments and upon final and
indefeasible payment in full in cash and satisfaction of all Obligations and
termination of this Agreement; (ii) constituting property being sold or disposed
of in accordance with this Agreement if Borrower certifies to Agent that the
sale or disposition is made in compliance with the provisions of this Agreement
(and Agent may rely in good faith conclusively on any such certificate, without
further inquiry); or (iii) constituting property leased to Borrower under a
lease which has expired or been terminated in a transaction permitted under this
Agreement or is about to expire and which has not been, and is not intended by
Borrower to be, renewed or extended. In addition during any Fiscal Year (x)
Agent may release Collateral having a book value of not more than 20% of the
book value of all Collateral and (y) Agent, with the consent of Lenders having
90% of both the Total Loan Commitments and Loans, may release all or any portion
of the Collateral. Without limiting any of the foregoing, each Lender agrees to
confirm in writing, upon request by Borrower, the authority to release any
property covered by this Agreement or the Loan Documents conferred upon Agent
under this subsection.
(2) Execution of Releases . So long as no Event of Default
is then continuing, upon confirmation from the requisite percentage (as set
forth in subsection 9.1(H)(1) above) of Lenders, of Agent's authority to release
any
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Collateral, and upon at least 10 Business Days prior written request by
Borrower, Agent shall, and is hereby irrevocably authorized by Lenders to,
execute such documents as may be necessary to evidence the release of the Liens
upon such Collateral; provided, however, that (i) Agent shall not be required to
execute any such document on terms which, in Agent's opinion, would expose Agent
to liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect or impair the Obligations or any Liens
granted to Agent on behalf of Lenders upon (or obligations of any Loan Party, in
respect of), all interests retained by any Loan Party, including, without
limitation, the proceeds of any sale, all of which shall continue to constitute
part of the property covered by this Agreement or the Loan Documents, and (iii)
such release is not consistent with the terms of this Agreement.
(3) Absence of Duty. Agent shall have no obligation
whatsoever to any Lender or any other Person to assure that the property covered
by this Agreement or the Loan Documents exists or is owned by Borrower or is
cared for, protected or insured or has been encumbered or that the Liens granted
to Agent on behalf of Lenders herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
Agent in this Agreement or in any of the Loan Documents, it being understood and
agreed that in respect of the property covered by this Agreement or the Loan
Documents or any act, omission or event related thereto, Agent may act in any
manner it may deem appropriate, in its discretion, given Agent's own interest in
property covered by this Agreement or the Loan Documents as one of the Lenders
and that Agent shall have no duty or liability whatsoever to any of the other
Lenders.
(I) Agency for Perfection. Each Lender hereby appoints each
other Lender as agent for the purpose of perfecting Lenders' security interest
in Collateral which, in accordance with Article 9 of the Uniform Commercial
Code in any applicable jurisdiction, can be perfected only by possession.
Should any Lender (other than Agent) obtain possession of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor, shall deliver such Collateral to Agent or in accordance with Agent's
instructions. The Agent may file such proofs of claim or documents as may be
necessary or advisable in order to have the claims of the Agent and the Lenders
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Agent and the Lenders, their respective agents, financial
advisors and counsel), allowed in any judicial proceedings relative to Borrower
and/or its Subsidiaries, or any of their
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respective creditors or property, and shall be entitled and empowered to
collect, receive and distribute any monies, securities or other property payable
or deliverable on any such claims. Any custodian in any judicial proceedings
relative to Borrower and/or its Subsidiaries is hereby authorized by each Lender
to make payments to the Agent and, in the event that the Agent shall consent to
the making of such payments directly to the Lenders, to pay to the Agent any
amount due for the reasonable compensation, expenses, disbursements and advances
of the Agent, its agents, financial advisors and counsel, and any other amounts
due the Agent. Nothing contained in this Agreement or the other Loan Documents
shall be deemed to authorize the Agent to authorize or consent to or accept or
adopt on behalf of any Lender any plan of reorganization, arrangement,
adjustment or composition affecting the Loans, or the rights of any holder
thereof, or to authorize the Agent to vote in respect of the claim of any Lender
in any such proceeding, except as specifically permitted herein.
(J) Exercise of Remedies. Each Lender agrees that it will not
have any right individually to enforce or seek to enforce this Agreement or any
Loan Document or to realize upon any collateral security for the Loans, it
being understood and agreed that such rights and remedies may be exercised only
by Agent.
9.2 Notice of Default.
In the event that the Agent or any Lender shall acquire
actual knowledge, or shall have been notified of any Event of Default, the
Agent or such Lender shall promptly notify the Lenders and the Agent.
9.3 Action by Agent.
The Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, and with respect to, taking or refraining from taking any
action or actions which it may be able to take under or in respect of, this
Agreement, unless the Agent shall have been instructed by either the Requisite
Lenders or all of the Lenders required for an action hereunder (as applicable)
to exercise or refrain from exercising such rights or to make or refrain from
taking such action. The Agent shall incur no liability under or in respect of
this Agreement with respect to anything which it may do or refrain from doing
in the reasonable exercise of its judgment or which may seem to it to be
necessary or desirable in the circumstances, except for its gross negligence or
willful misconduct. Agent shall not be liable to the Lenders or to any Lender
in acting or refraining from acting under this Agreement in accordance with the
instructions of the Requisite Lenders, or all of the Lenders, as the case may
be,
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and any action taken or failure to act pursuant to such instructions shall be
binding on all Lenders.
9.4 Amendments, Waivers and Consents.
(A) Except as otherwise provided herein, no amendment,
modification, termination or waiver of any provision of this Agreement or any
other Loan Document, or consent to any departure by any Loan Party therefrom,
shall in any event be effective unless the same shall be in writing and signed
by Borrower and Requisite Lenders; provided however, no amendment,
modification, termination, waiver or consent shall be effective, unless in
writing and signed by all Lenders, to do any of the following: (i) increase any
of the Commitments; (ii) reduce the rate of interest on or fees payable with
respect to any Loan or Letter of Credit; (iii) extend the scheduled due date
for all or any portion of principal of the Loans or any interest or fees due
hereunder; (iv) amend or waive the definition of the term "Requisite Lenders";
(v) amend or waive this subsection 9.4; or (vi) increase by more than five
percent each the percentages contained in the definition of Borrowing Base;
provided, further, that no amendment, modification, termination, waiver or
consent affecting the rights or duties of Agent under this Section 9 or under
any Loan Document shall in any event be effective, unless in writing and signed
by Agent, in addition to the Lenders required to take such action.
(B) Each amendment, modification, termination, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No amendment, modification, termination, waiver
or consent shall be required for Agent to take additional Collateral;
(C) Each Lender grants Agent the right to purchase all, but
not less than all, of such Lender's Commitment, in the event Agent requests the
consent of a Lender and such consent is denied. In such circumstances, Agent
may, at its option, require such Lender to assign its interest in the Loans to
Agent or Agent's designee for a price equal to the then outstanding principal
amount thereof plus accrued and unpaid interest and fees due such Lender, which
interest and fees will be paid when collected from Borrower;
Notwithstanding anything in this subsection 9.4, Agent and Borrower, without
the consent of either Requisite Lenders or all Lenders, may execute amendments
to this Agreement and the Loan Documents, which consist solely of the making of
typographical corrections.
9.5 Assignments and Participations in Loans.
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(A) Each Lender may assign its rights and delegate its
obligations under this Agreement to an Eligible Assignee; provided, that (a)
such Lender shall first obtain the written consent of Agent, which shall not be
unreasonably withheld, (b) the amount of Commitments and Loans of the assigning
Lender being assigned shall in no event be less than the lesser of (i)
$5,000,000 or (ii) the entire amount of the Commitments and Loans of such
assigning Lender and (c)(i) each such assignment shall be of a pro rata portion
of all such assigning Lender's Loans and Commitments hereunder, and (ii) the
parties to such assignment shall execute and deliver to Agent for acceptance
and recording a Assignment and Assumption Agreement together with (x) a
processing and recording fee of $3,500 payable to Agent and (y) each of the
Notes originally delivered to the assigning Lender. Upon receipt of all of the
foregoing, Agent shall notify Borrower of such assignment and Borrower shall
comply with its obligations under the last sentence of subsection 2.1(G). To
the extent of an assignment authorized under this subsection 9.5, upon Agent's
receipt and acceptance of the Assignment and Acceptance Agreement and Agent's
receipt of the recording fee set forth above, the assignee shall be considered
to be a "Lender" hereunder and Borrower hereby acknowledges and agrees that any
assignment will give rise to a direct obligation of Borrower to the assignee.
The assigning Lender shall be relieved of its obligations hereunder with
respect to the assigned portion of its Commitment.
(B) Each Lender may sell participations in all or any part of
any Loans made by it to another Person; provided, that any such participation
shall be in a minimum amount of $5,000,000, and provided, further, that all
amounts payable by Borrower hereunder shall be determined as if that Lender had
not sold such participation and the holder of any such participation shall not
be entitled to require such Lender to take or omit to take any action hereunder
except action directly effecting (a) any reduction in the principal amount or
an interest rate on any Loan in which such holder participates; (b) any
extension of the Termination Date or the date fixed for any payment of interest
payable with respect to any Loan in which such holder participates; and (c) any
release of substantially all of the Collateral. Borrower hereby acknowledges
and agrees that the participant under each participation shall for purposes of
subsections 2.8, 2.9, 2.10, 9.6 and 10.2 be considered to be a "Lender".
(C) Except as otherwise provided in subsection 9.5(A) no
Lender shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans
or other Obligations owed to such Lender. Each Lender may furnish any
information concerning Borrower and its Subsidiaries in the possession of that
Lender from time to time to Eligible Assignees and participants (including
prospective assignees and participants)
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provided that the Persons obtaining such information agrees to maintain the
confidentiality of such information to the extent required by subsection 10.18.
(D) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement or the other Loan Documents in favor
of any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.
9.6 Set Off and Sharing of Payments. In addition to any rights
now or hereafter granted under applicable law and not by way of limitation of
any such rights, upon the occurrence and during the continuance of any Event of
Default, each Lender is hereby authorized by Borrower at any time or from time
to time, with reasonably prompt subsequent notice to Borrower or to a directly
affected subsidiary (any prior or contemporaneous notice being hereby expressly
waived) to set off and to appropriate and to apply any and all (a) balances held
by such Lender at any of its offices for the account of Borrower or any of its
Subsidiaries (regardless of whether such balances are then due to Borrower or
its Subsidiaries), and (b) other property at any time held or owing by such
Lender to or for the credit or for the account of Borrower or any of its
Subsidiaries, against and on account of any of the Obligations which are not
paid when due; except that no Lender shall exercise any such right without the
prior written consent of Agent. Any Lender which has exercised its right to set
off shall purchase for cash (and the other Lenders shall sell) participations in
each such other Lender's Pro Rata Share of the Obligations as would be necessary
to cause such Lender to share such excess with each other Lender in accordance
with their respective Pro Rata Shares. Borrower agrees, to the fullest extent
permitted by law, that (a) any Lender may exercise its right to set off with
respect to amounts in excess of its Pro Rata Share of the Obligations and may
sell participations in such excess to other Lenders, and (b) any Lender so
purchasing a participation in the Loans made or other Obligations held by other
Lenders may exercise all rights of set-off, bankers' lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans and other Obligations in the amount of such
participation.
9.7 Disbursement of Funds. Agent may, on behalf of Lenders,
disburse funds to Borrower for Loans requested. Each Lender shall reimburse
Agent on demand for all funds disbursed on its behalf by Agent, or if Agent so
requests, each Lender will remit to Agent its Pro Rata Share of any Loan or
Advance before Agent disburses same to Borrower. If Agent elects to require that
funds be made available prior to disbursement to Borrower, Agent shall advise
each Lender by telephone, telex or telecopy of the amount of such Lender's Pro
Rata Share of such requested Loan no later than (a) two Business Days prior to
the Funding Date applicable
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thereto for LIBOR Loans and (b) by 1:00 p.m. Chicago time on the Funding Date
for Base Rate Loans, and each such Lender shall pay Agent such Lender's Pro Rata
Share of such requested Loan, in same day funds, by wire transfer to Agent's
account not later than 10:00 a.m. Chicago time on such Funding Date for LIBOR
Loans and 3:00 p.m. Chicago time for Base Rate Loans.
9.8 Settlements, Payments and Information.
(A) Revolving Advances and Payments; Fee Payments.
(1) Payments of principal in respect of the Term Loans
will be settled on the Business Day received in accordance with the provisions
of Section 2. The Revolving Loan may fluctuate from day to day through Agent's
disbursement of funds to, and receipt of funds from, Borrower. In order to
minimize the frequency of transfers of funds between Agent and each Lender
notwithstanding terms to the contrary set forth in Section 2 and subsection 9.7,
Revolving Advances and repayments (except as set forth in subsection 2.1(E)) may
be settled according to the procedures described in this subsection 9.8.
Notwithstanding these procedures, each Lender's obligation to fund its Pro Rata
Share of Advances made by Agent to Borrower will commence on the date such
Advances are made by Agent. Such payments will be made by such Lender without
set-off, counterclaim or reduction of any kind.
(2) Once each week for the Revolving Loan or more
frequently (including daily), if Agent so elects (each such day being a
"Settlement Date"), Agent will advise each Lender by 1:00 p.m. Chicago time by
telephone, telex, or telecopy of the amount of each such Lender's Pro Rata Share
of the Revolving Loan. In the event payments are necessary to adjust the amount
of such Lender's share of the Revolving Loan to such Lender's Pro Rata Share of
the Revolving Loan, the party from which such payment is due will pay the other,
in same day funds, by wire transfer to the other's account not later than 3:00
p.m. Chicago time on the Settlement Date.
(3) On the first Business Day of each month ("Interest
Settlement Date"), Agent will advise each Lender by telephone, telefax or
telecopy of the amount of interest and fees charged to and collected from
Borrower for the preceding month. Provided that such Lender has made all
payments required to be made by it under this Agreement, Agent will pay to such
Lender, by wire transfer to such Lender's account (as specified by such Lender
on the signature page of this Agreement as amended by such Lender from time to
time after the date hereof or in the applicable Assignment and Assumption
Agreement) not later than 3:00 p.m.
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Chicago time on the Interest Settlement Date such Lender's share of such
interest and such Lender's Pro Rata Share of such fees.
(B) Return of Payments
(1) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrower and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender
without set-off, counterclaim or deduction of any kind.
(2) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to Borrower or paid to
any other Person pursuant to any solvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement, Agent will not be
required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
9.9 Dissemination of Information. Agent will provide Lenders with
any information received by Agent from Borrower which is required to be provided
to a Lender hereunder; provided, however, that Agent shall not be liable to
Lenders for any failure to do so, except to the extent that such failure is
attributable to Agent's gross negligence or willful misconduct.
9.10 Discretionary Advances. Agent may, in its sole discretion,
(i) provided that no Event of Default exists, make Revolving Advances of up to
10% in excess of the limitations set forth in the Borrowing Base, but not in
excess of the aggregate Revolving Loan Commitment for a period of not more than
90 consecutive days and (ii) during the continuance of an Event of Default, make
Revolving Advances in excess of the limitations set forth in the Borrowing Base
for the purpose of preserving or protecting the Collateral or for incurring any
costs associated with collection or enforcing rights or remedies against the
Collateral, or incurred in any action to enforce this Agreement or any other
Loan Document.
SECTION 10. MISCELLANEOUS
10.1 Expenses and Attorneys' Fees. Whether or not the transactions
contemplated hereby shall be consummated, Borrower agrees to promptly pay all
fees, costs and expenses incurred in connection with any matters contemplated by
or arising out of this Agreement or the other Loan Documents including the
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following, and all such fees, costs and expenses shall be part of the
Obligations, payable on demand and secured by the Collateral: (a) fees, costs
and expenses incurred by Agent (including attorneys' fees, allocated costs of
internal counsel and fees of environmental consultants, accountants and other
professionals retained by Agent) incurred in connection with the examination,
review, due diligence investigation, documentation and closing of the financing
arrangements evidenced by the Loan Documents; (b) fees, costs and expenses
incurred by Agent (including attorneys' fees, allocated costs of internal
counsel and fees of environmental consultants, accountants and other
professionals retained by Agent) incurred in connection with the review,
negotiation, preparation, documentation, execution, syndication, and
administration of the Loan Documents, the Loans, and any amendments, waivers,
consents, forbearances and other modifications relating thereto or any
subordination or intercreditor agreements; (c) fees, costs and expenses incurred
by Agent or any Lender in creating, perfecting and maintaining perfection of
Liens in favor of Agent, on behalf of Lenders; (d) fees, costs and expenses
incurred by Agent in connection with forwarding to Borrower the proceeds of
Loans including Agent's or any Lenders' standard wire transfer fee; (e) fees,
costs, expenses and bank charges, including bank charges for returned checks,
incurred by Agent or any Lender in establishing, maintaining and handling lock
box accounts, blocked accounts or other accounts for collection of the
Collateral; (f) fees, costs, expenses (including attorneys' fees and allocated
costs of internal counsel) of Agent or any Lender and costs of settlement
incurred in collecting upon or enforcing rights against the Collateral or
incurred in any action to enforce this Agreement or the other Loan Documents or
to collect any payments due from Borrower or any other Loan Party under this
Agreement or any other Loan Document or incurred in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement, whether in the nature of a "workout" or in connection with any
insolvency or bankruptcy proceedings or otherwise.
10.2 Indemnity. In addition to the payment of expenses pursuant to
subsection 10.1, whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to indemnify, pay and hold Agent and each Lender,
and the officers, directors, employees, agents, consultants, auditors, persons
engaged by Agent or any Lender, to evaluate or monitor the Collateral,
affiliates and attorneys of Agent, Lender and such holders (collectively called
the "Indemnitees") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including
the fees and disbursements of counsel for such Indemnitees in connection with
any investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Indemnitee shall be designated a party thereto)
that may be imposed on, incurred by, or asserted against that Indemnitee, in any
manner relating to or arising out of this
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Agreement or the other Loan Documents, the consummation of the transactions
contemplated by this Agreement, the statements contained in the commitment
letters, if any, delivered by Agent or any Lender, Agent's and each Lender's
agreement to make the Loans hereunder, the use or intended use of the proceeds
of any of the Loans or the exercise of any right or remedy hereunder or under
the other Loan Documents (the "Indemnified Liabilities"); provided that Borrower
shall have no obligation to an Indemnitee hereunder with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of that
Indemnitee as determined by a court of competent jurisdiction.
10.3 Notices. Unless otherwise specifically provided herein, all
notices shall be in writing addressed to the respective party as set forth
below and may be personally served, telecopied or sent by overnight courier
service or United States mail and shall be deemed to have been given: (a) if
delivered in person, when delivered; (b) if delivered by telecopy, on the date
of transmission if transmitted on a Business Day before 4:00 p.m. Chicago time
or, if not, on the next succeeding Business Day; (c) if delivered by overnight
courier, two days after delivery to such courier properly addressed; or (d) if
by U.S. Mail, four Business Days after depositing in the United States mail,
with postage prepaid and properly addressed.
<TABLE>
<S> <C>
If to Borrower: RANKIN AUTOMOTIVE GROUP, INC.
3711 S. MacArthur
Alexandria, Louisiana 71302
Telecopy No.: (318) 443-9952
With a copy to: Ricky Sooter, Esq.
Daniels & Sooter, LLC
3600 Louisiana Street, Suite 102
Alexandria, Louisiana 71303
Telecopy No.: (318) 448-8528
If to Agent or to Heller: HELLER FINANCIAL, INC.
500 West Monroe
Chicago, Illinois, 60661
Attn: Corporate Finance/Account
Executive for Rankin
Automotive
Telecopy No.: (312) 441-6158
</TABLE>
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<TABLE>
<S> <C>
With a copy to: HELLER FINANCIAL, INC.
500 West Monroe
Chicago, Illinois 60661
Attn: Legal Department/Corporate
Finance
Telecopy No.: (312) 441-6876
</TABLE>
If to any Lender: Its address indicated on the signature page
hereto, in an Assignment and Assumption Agreement or in a notice to Agent and
Borrower or to such other address as the party addressed shall have previously
designated by written notice to the serving party, given in accordance with
this subsection 10.3.
10.4 Survival of Representations and Warranties and Certain
Agreements. All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement and the making of the
Loans hereunder. Notwithstanding anything in this Agreement or implied by law
to the contrary, the agreements of Borrower and Lender set forth in subsections
10.1, 10.2, 10.6, 10.11, 10.14, and 10.15 (Borrower's agreement to pay fees,
agreement to indemnify Lender, the reinstatement of Obligations, agreement as
to choice of law and jurisdiction and Borrower's and Lender's waiver of a jury
trial) shall survive the payment of the Loans and the termination of this
Agreement.
10.5 Indulgence Not Waiver. No failure or delay on the part of
Agent, any Lender or any holder of any Note in the exercise of any power, right
or privilege hereunder or under any Note shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege.
10.6 Marshaling; Payments Set Aside. Neither Agent nor any Lender
shall be under any obligation to marshal any assets in favor of any Loan Party
or any other party or against or in payment of any or all of the Obligations.
To the extent that any Loan Party makes a payment or payments to Agent and/or
any Lender or Agent and/or any Lender enforces its security interests or
exercise its rights of setoff, and such payment or payments or the proceeds of
such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then to the extent of such
recovery, the Obligations or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
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10.7 Entire Agreement. This Agreement and the other Loan Documents
embody the entire agreement among the parties hereto and supersede all prior
commitments, agreements, representations, and understandings, whether written
or oral, relating to the subject matter hereof, and may not be contradicted or
varied by evidence of prior, contemporaneous, or subsequent oral agreements or
discussions of the parties hereto.
10.8 Severability. The invalidity, illegality or unenforceability
in any jurisdiction of any provision in or obligation under this Agreement or
the other Loan Documents shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement,
or the other Loan Documents.
10.9 Lenders' Obligations Several; Independent Nature of Lenders'
Rights. The obligation of each Lender hereunder is several and not joint and
neither Agent nor any Lender shall be responsible for the obligation or
Commitment of any other Lender hereunder. In the event that any Lender at any
time should fail to make a Loan as herein provided, the Lenders, or any of
them, at their sole option, may make the Loan that was to have been made by the
Lender so failing to make such Loan. Nothing contained in any Loan Document and
no action taken by Agent or any Lender pursuant hereto or thereto shall be
deemed to constitute Lenders to be a partnership, an association, a joint
venture or any other kind of entity. The amounts payable at any time hereunder
to each Lender shall be a separate and independent debt, and, provided Agent
fails or refuses to exercise any remedies against Borrower after receiving the
direction of the Requisite Lenders, each Lender shall be entitled to protect
and enforce its rights arising out of this Agreement and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
10.10 Headings. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
10.11 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.12 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, provided, however, Borrower may not assign its rights or
obligations hereunder without the written consent of Lenders.
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<PAGE> 65
10.13 No Fiduciary Relationship; No Duty; Limitation of Liabilities.
(A) No provision in this Agreement or in any of the other
Loan Documents and no course of dealing between the parties shall be deemed to
create any fiduciary duty by Agent or any Lender to Borrower.
(B) All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Agent or any Lender shall have
the right to act exclusively in the interest of Agent or such Lender and shall
have no duty of disclosure, duty of loyalty, duty of care, or other duty or
obligation of any type or nature whatsoever to Borrower or any of Borrower's
shareholders or any other Person.
(C) Neither Agent nor any Lender, nor any affiliate, officer,
director, shareholder, employee, attorney, or agent of Agent or any Lender
shall have any liability with respect to, and Borrower hereby waives, releases,
and agrees not to sue any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by Borrower in
connection with, arising out of, or in any way related to, this Agreement or
any of the other Loan Documents, or any of the transactions contemplated by
this Agreement or any of the other Loan Documents; provided that Borrower shall
have no obligation to Agent, any Lender, or any affiliate, officer, director,
shareholder, employee, attorney, or agent of Agent or any Lender hereunder with
respect to claims arising from the gross negligence or willful misconduct of
such entity as determined by a court of competent jurisdiction. Borrower hereby
waives, releases, and agrees not to sue Agent or any Lender or any of Agent's
or any Lender's affiliates, officers, directors, employees, attorneys, or
agents for punitive damages in respect of any claim in connection with, arising
out of, or in any way related to, this Agreement or any of the other Loan
Documents, or any of the transactions contemplated by this Agreement or any of
the transactions contemplated hereby; provided that Borrower shall have no
obligation to Agent, any Lender, or any affiliate, officer, director,
shareholder, employee, attorney, or agent of Agent or any Lender hereunder with
respect to claims arising from the gross negligence or willful misconduct of
such entity as determined by a court of competent jurisdiction.
10.14 CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK,
STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
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<PAGE> 66
BORROWER EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. BORROWER HEREBY WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE UPON BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO BORROWER, AT THE ADDRESS SET FORTH IN THIS
AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE 10 DAYS AFTER THE SAME HAS BEEN
POSTED.
10.15 WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH LENDER HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
BORROWER, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
BORROWER, AGENT AND EACH LENDER WARRANT AND REPRESENT THAT EACH HAS HAD THE
OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
10.16 Construction. Borrower, Agent and each Lender each
acknowledge that it has had the benefit of legal counsel of its own choice and
has been afforded an opportunity to review this Agreement and the other Loan
Documents with its legal counsel and that this Agreement and the other Loan
Documents shall be construed as if jointly drafted by Borrower, Agent and each
Lender.
10.17 Counterparts; Effectiveness. This Agreement and any
amendments, waivers, consents, or supplements may be executed via telecopier or
facsimile transmission in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all of which counterparts together shall
constitute one and the same instrument. This Agreement shall become effective
upon the execution of a counterpart hereof by each of the parties hereto.
10.18 Confidentiality. Agent and Lenders shall hold all nonpublic
information obtained pursuant to the requirements hereof and identified as such
by Borrower in accordance with such Person's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
business practices and in any event may make disclosure to such of its
respective
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affiliates, officers, directors, employees, agents and representatives as need
to know such information in connection with the Loans. If any Lender or its
respective affiliates is otherwise a creditor of a Borrower, such Lender may use
the information in connection with its other credits. Agent and Lenders may also
make disclosure reasonably required by a bona fide offeree or assignee (or
participation), or as required or requested by any Governmental Authority or
representative thereof, or pursuant to legal process, or to its accountants,
lawyers and other advisors, and shall require any such offeree or assignee (or
participant) to agree (and require any of its offerees, assignees or
participants to agree) to comply with this Section 10.18. In no event shall
Agent or any Lender be obligated or required to return any materials furnished
by Borrower provided, however, each offeree shall be required to agree that if
it does not become an assignee (or participant) it shall return all materials
furnished to it by Borrower in connection herewith.
SECTION 11. DEFINITIONS AND ACCOUNTING TERMS
11.1 The following terms used in this Agreement shall have the
following meanings:
"Accounts" means all "accounts" (as defined in the UCC), accounts
receivable, contract rights and general intangibles relating thereto, notes,
drafts and other forms of obligations owed to or owned by Borrower arising or
resulting from the sale of goods or the rendering of services, whether or not
earned by performance.
"Additional Mortgaged Property" means all real property owned by
Borrower or its Subsidiaries in which after the Closing Date Agent requires a
mortgage to secure the Obligations.
"Advance" shall mean an advance under the Revolving Loan.
"Affiliate" means any Person (other than Agent or any Lender): (a)
directly or indirectly controlling, controlled by, or under common control
with, any Loan Party; (b) directly or indirectly owning or holding 5% or more
of any equity interest in Borrower; (c) 5% or more of whose stock or other
equity interest having ordinary voting power for the election of directors or
the power to direct or cause the direction of management, is directly or
indirectly owned or held by Borrower; or (d) which has a senior officer who is
also a senior officer of Borrower. For purposes of this definition, "control"
(including with correlative meanings, the terms "controlling", "controlled by"
and "under common control with") means the possession directly or indirectly of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or other equity
interest, or by contract or otherwise.
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"Agent" means Heller in its capacity as agent for the Lenders under the
Loan Documents and any successor in such capacity appointed pursuant to
subsection 9.1(G).
"Agent's Account" means ABA No. 0710-0001-3, Account No. 52-98695 at
First National Bank of Chicago, One First National Plaza, Chicago, IL 60670,
Reference: Heller Corporate Finance for the benefit of Rankin Automotive Group,
Inc.
"Agreement" means this Loan and Security Agreement as it may be
amended, restated, supplemented or otherwise modified from time to time.
"Allied" has the meaning assigned in subsection 7.1(A)(5) hereof.
"Allied Acquisition" has the meaning assigned in subsection 7.1(A)(5)
hereof.
"Allied Note" has the meaning assigned in subsection 7.1(A)(5) hereof.
"Allied Principal Payment" has the meaning assigned in subsection
7.5(C) hereof.
"Asset Disposition" means the disposition, whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise, of any or all of
the assets of Borrower or any of its Subsidiaries other than sales of Inventory
in the ordinary course of business.
"Assignment and Assumption Agreement" shall mean an Assignment and
Assumption Agreement substantially in the form of Exhibit A.
"Bank Letter of Credit" means each letter of credit issued by a bank
acceptable to and approved by Agent for the account of Borrower and supported by
a risk participation agreement issued by Agent.
"Base Rate" means a variable rate of interest per annum equal to the
higher of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor publication of the Federal Reserve System reporting the Bank Prime
Loan rate or its equivalent, or (b) the Federal Funds Effective Rate. In the
event the Board of Governors of the Federal Reserve System ceases to publish a
Bank Prime Loan rate or its equivalent, the term "Base Rate" shall mean a
variable rate of interest per
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annum equal to the highest of the "prime rate", "reference rate", "base rate",
or other similar rate announced from time to time by any of the three largest
banks located in New York City, New York (with the understanding that any such
rate may merely be a reference rate and may not necessarily represent the lowest
or best rate actually charged to any customer by any such bank).
"Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate.
"Borrower's Accountants" means the independent certified public
accountants selected by Borrower and its Subsidiaries and reasonably acceptable
to Agent, which selection shall not be modified during the term of this
Agreement without Agent's prior written consent.
"Borrowing Base" has the meaning assigned to that term in subsection
2.1(B)(2).
"Borrowing Base Certificate" means a certificate and schedule duly
executed by an officer of Borrower appropriately completed and in substantially
the form of Exhibit B.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the States of Illinois, Pennsylvania
or Texas or is a day on which banking institutions located in any such state
are closed, or for the purposes of LIBOR Loans only, a day on which commercial
banks are open for dealings in Dollar deposits in the London, England (U.K.)
market.
"Capital Expenditures" means all expenditures (including deposits)
for, or contracts for expenditures (excluding contracts for expenditures under
or with respect to Capital Leases, but including cash down payments for assets
acquired under Capital Leases) with respect to any fixed assets or
improvements, or for replacements, substitutions or additions thereto, which
have a useful life of more than one year, including the direct or indirect
acquisition of such assets by way of increased product or service charges,
offset items or otherwise.
"Capital Lease" means any lease of any property (whether real,
personal or mixed) that, in conformity with GAAP, should be accounted for as a
capital lease.
"Cash Equivalents" means: (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within six months from the date of acquisition thereof; (b)
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commercial paper maturing no more than six months from the date issued and, at
the time of acquisition, having a rating of at least A-1 from Standard & Poor's
Corporation or at least P-1 from Moody's Investors Service, Inc.; and (c)
certificates of deposit or bankers' acceptances maturing within six months from
the date of issuance thereof issued by, or overnight reverse repurchase
agreements from any commercial bank organized under the laws of the United
States of America, or any state thereof or the District of Columbia, having
combined capital and surplus of not less than $250,000,000 and not subject to
setoff rights in favor of such bank.
"Closing Date" means March 10, 1999.
"Collateral" has the meaning assigned to that term in subsection 2.7.
"Commitment" or "Commitments" means the commitment or commitments of
Lenders to make Loans as set forth in subsections 2.1(A) and/or 2.1(B) and to
provide Lender Letters of Credit as set forth in subsection 2.1(H).
"Compliance Certificate" means a certificate duly executed by the
chief executive officer or chief financial officer of Borrower appropriately
completed and in substantially the form of Exhibit C.
"Default" means a condition, act or event that, after notice or lapse
of time or both, would constitute an Event of Default if that condition, act or
event were not cured or removed within any applicable grace or cure period.
"Defaulted Amount" means, with respect to any Lender at any time, any
amount required to be paid by such Lender to the Agent or any other Lender
hereunder or under any other Loan Document which has not been so paid.
"Defaulting Lender" means, at any time, any Lender that owes a
Defaulted Amount.
"Default Rate" has the meaning assigned to that term in subsection 2.2.
"EBITDA" means, for any period, without duplication, the total of the
following for Borrower and its Subsidiaries on a consolidated basis, each
calculated for such period: (1) net income determined in accordance with GAAP;
plus, to the extent included in the calculation of net income, (2) the sum of
(a) income and franchise taxes paid or accrued; (b) interest expense, net of
interest income, paid or accrued; (c) amortization and depreciation and (d)
other non-cash charges (including any occurring on an extraordinary or
non-recurring basis, but excluding accruals for cash expenses made in the
ordinary course of business); less, to the
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extent included in the calculation of net income, (3) the sum of (a) the income
of any Person (other than wholly-owned Subsidiaries of Borrower) in which
Borrower or a wholly owned Subsidiary of Borrower has an ownership interest
except to the extent such income is received by Borrower or such wholly-owned
Subsidiary in a cash distribution during such period; (b) gains from sales or
other dispositions of assets (other than Inventory in the normal course of
business); and (c) extraordinary or non-recurring gains.
"Eligible Assignee" shall mean (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000 (or $250,000,000 in the case of an
assignment of a Revolving Loan Commitment); (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision
of any such country, and having a combined capital and surplus of at least
$100,000,000 (or $250,000,000 in the case of an assignment of a Revolving Loan
Commitment), provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is
also a member of the OECD; (c) any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act) which extends
credit or buys loans as one of its businesses, including but not limited to,
insurance companies, mutual funds and lease financing companies, and (d) a
Person that is primarily engaged in the business of lending that is (i) a
Subsidiary of a Lender, (ii) a Subsidiary of a Person of which a Lender is a
Subsidiary, or (iii) a Person of which a Lender is a Subsidiary; provided
however, that no Affiliate of Borrower shall be an Eligible Assignee.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of any
Loan Party or any ERISA Affiliate or (b) has at any time within the preceding 6
years been maintained for the employees of any Loan Party or any current or
former ERISA Affiliate.
"Environmental Claims" means claims, liabilities, investigations,
litigation, administrative proceedings, judgments or orders relating to
Hazardous Materials.
"Environmental Laws" means any present or future federal, state or
local law, rule, regulation or order relating to pollution, waste, disposal or
the protection of human health or safety, plant life or animal life, natural
resources or the environment.
"Equipment" means all "equipment" (as defined in the UCC), all
furniture, furnishings, fixtures, machinery, motor vehicles, trucks, trailers,
vessels, aircraft
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and rolling stock and all parts thereof and all additions and accessions thereto
and replacements therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Loan Party, means any Person who
is a member of a group which is under common control with any Loan Party, who
together with any Loan Party is treated as a single employer within the meaning
of Section 414(b) and (c) of the IRC.
"Excess Cash Flow" means, for any period, the greater of (A) zero (0);
or (B) without duplication, the total of the following for Borrower and its
Subsidiaries on a consolidated basis, each calculated for such period: (1)
EBITDA; plus (2) tax refunds actually received; less (3) Capital Expenditures
(to the extent actually made in cash and/or due to be made in cash within such
period but in no event more than the amount permitted by subsection 6.5
hereof); less (4) income and franchise taxes paid or accrued excluding any
provision for deferred taxes included in the determination of net income; less
(5) decreases in deferred income taxes resulting from payments of deferred
taxes accrued in prior periods; less (6) Cash Interest paid or accrued; less
(7) scheduled amortization of Indebtedness actually paid in cash and/or due to
be paid in cash within such period and permitted under subsection 7.5; less (8)
voluntary prepayments made under subsection 2.4(c); less (9) mandatory
prepayments made under subsection 2.4(B)(2), but only to the extent that the
transaction that precipitated the mandatory prepayment increased net income of
Borrower determined in accordance with GAAP.
"Federal Funds Effective Rate" means, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published on
the immediately following Business Day by the Board of Governors of the Federal
Reserve System as the Federal Funds Rate or Federal Reserve Statistical Release
H.15(519) entitled "Selected Interest Rates" or any successor publication of
the Federal Reserve System reporting the Federal Funds Effective Rate or its
equivalent or, if such rate is not published for any Business Day, the average
of the quotations for the day of the requested Loan received by Agent from
three Federal funds brokers of recognized standing selected by Agent.
"Fiscal Year" means each twelve month period ending on February 25th
in each year.
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"Fixed Charge Coverage" means, for any period, Operating Cash Flow
divided by Fixed Charges.
"Fixed Charges" means, for any period, and each calculated for such
period (without duplication), (a) Interest Expense of Borrower and its
Subsidiaries; plus (b) scheduled payments of principal with respect to all
Indebtedness of Borrower and its Subsidiaries; plus (c) any provision for (to
the extent it is greater than zero) income or franchise taxes included in the
determination of net income, excluding any provision for deferred taxes; plus
(d) payment of deferred taxes accrued in any prior period; plus (e) Restricted
Junior Payments made in cash to the extent permitted under subsection 7.5.
"Funding Date" means the date of each funding of a Loan or issuance of
a Lender Letter of Credit.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable to the
circumstances as of the date of determination.
"Hazardous Material" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
Environmental Laws or regulations as "hazardous substances", "hazardous
materials", "hazardous wastes", "toxic substances" or any other formulation
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity, or
toxicity; (b) oil, petroleum or petroleum derived substances, natural gas,
natural gas liquids or synthetic gas and drilling fluids, produced waters and
other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; and (d) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
polychlorinated biphenyls.
"Indebtedness", as applied to any Person, means without duplication:
(a) all indebtedness for borrowed money; (b) obligations under leases which in
accordance with GAAP constitute Capital Leases; (c) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is
due more than six months from the date the obligation is incurred or is
evidenced by a note or similar written instrument; (e) all indebtedness secured
by any Lien on any property or asset
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owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is non recourse to the credit
of that Person and (f) obligations in respect of letters of credit.
"Intangible Assets" means all intangible assets (determined in
conformity with GAAP) including, without limitation, goodwill, Intellectual
Property, licenses, organizational costs, deferred amounts, covenants not to
compete, unearned income and restricted funds.
"Intellectual Property" means all present and future designs, patents,
patent rights and applications therefor, trademarks and registrations or
applications therefor, trade names, inventions, copyrights and all applications
and registrations therefor, software or computer programs, license rights,
trade secrets, methods, processes, know-how, drawings, specifications,
descriptions, and all memoranda, notes and records with respect to any research
and development, whether now owned or hereafter acquired, all goodwill
associated with any of the foregoing, and proceeds of all of the foregoing,
including, without limitation, proceeds of insurance policies thereon.
"Interest Coverage" means, for any period, Operating Cash Flow divided
by Interest Expense.
"Interest Determination Date" for a LIBOR Loan will be the third
Business Day preceding the beginning of the next Interest Period elected by
Borrower.
"Interest Expense" means, without duplication, for any period, the
following, for Borrower and its Subsidiaries each calculated for such period:
interest expenses deducted in the determination of net income (excluding (i)
the amortization of fees and costs with respect to the transactions
contemplated by this Agreement which have been capitalized as transaction costs
in accordance with the provisions of subsection 11.2; and (ii) interest paid in
kind).
"Interest Period" In connection with each LIBOR Loan, Borrower shall
elect an interest period (each an "Interest Period") to be applicable to such
Loan, which Interest Period shall be either a one, two, three, or six month
period; provided that:
(1) the initial Interest Period for any LIBOR Loan shall commence on
the Funding Date of such Loan;
(2) in the case of successive Interest Periods, each successive
Interest Period shall commence on the day on which the immediately preceding
Interest Period expires;
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(3) if an Interest Period expiration date is not a Business Day, such
Interest Period shall expire on the next succeeding Business Day; provided that
if any Interest Period expiration date is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the immediately preceding Business Day;
(4) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to
part (5) below, end on the last Business Day of a calendar month;
(5) no Interest Period shall extend beyond the Termination Date;
(6) no Interest Period may extend beyond a scheduled principal payment
date unless the sum of (a) the aggregate principal amount of Loans that are
Base Rate Loans or that have Interest Periods expiring on or before such date
and (b) the available, unused Revolving Loan Commitment or Borrowing Base
equals or exceeds the principal amount required to be paid on the Loans on such
date; and
(7) there shall be no more than 5 Interest Periods relating to LIBOR
Loans outstanding at any time.
"Inventory" means all "inventory" (as defined in the UCC), including,
without limitation, finished goods, raw materials, work in process and other
materials and supplies used or consumed in a Person's business, and goods which
are returned or repossessed.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute and all rules and regulations promulgated
thereunder.
"Lender Letter of Credit" has the meaning assigned to that term in
subsection 2.1(F).
"Letter of Credit Liability" means, all reimbursement and other
liabilities of Borrower or any of its Subsidiaries with respect to each Lender
Letter of Credit, whether contingent or otherwise, including: (a) the amount
available to be drawn or which may become available to be drawn; (b) all amounts
which have been paid or made available by any Lender issuing a Lender Letter of
Credit or any bank issuing a Bank Letter of Credit to the extent not reimbursed;
and (c) all unpaid interest, fees and expenses related thereto.
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<PAGE> 76
"Letter of Credit Reserve" means, at any time, an amount equal to (a)
the aggregate amount of Letter of Credit Liability with respect to all Lender
Letters of Credit outstanding at such time plus, without duplication, (b) the
aggregate amount theretofore paid by Agent or any Lender under Lender Letters
of Credit and not debited to the Loan Account pursuant to subsection 2.1(H)(2)
or otherwise reimbursed by Borrower.
"Liabilities" shall have the meaning given that term in accordance
with GAAP and shall include Indebtedness.
"LIBOR" means, for each Interest Period, a rate equal to the rate for
deposits in U.S. Dollars for the relevant Interest Period, commencing on the
second London Banking Day immediately following that Interest Determination
Date, that appears on the Telerate Page 3750 as of 11:00 a.m., London time, on
that Interest Determination Date ("LIBOR Telerate"); provided that if no rate
appears on the Telerate Page 3750, LIBOR in respect of that Interest
Determination Date will be determined on the basis of the rates at which
deposits in Dollars for the relevant Interest Period are offered at
approximately 11:00 a.m. London time, on that Interest Determination Date by
four major banks in the London interbank market selected by Agent ("Reference
Banks") to prime banks in the London interbank market commencing on the second
London Banking Day immediately following that Interest Determination Date and in
a principal amount equal to an amount of not less than $1,000,000 that is
representative for a single transaction in such market at such time. Agent will
request the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, LIBOR in
respect of that Interest Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR in respect of that
Interest Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 a.m. New York City time, on that Interest Determination Date
by three major banks in the City of New York selected by Agent for loans in
Dollars to leading European banks for the relevant Interest Period commencing on
the second London Banking Day immediately following that Interest Determination
Date and in a principal amount equal to an amount of not less than $1,000,000
that is representative for a single transaction in such market at such time;
provided, however, that if the banks selected as aforesaid by Agent are not
quoting as mentioned in this sentence, LIBOR with respect to such Interest
Determination Date will be the rate of LIBOR in effect on the last most recent
date such banks were quoting. "Telerate Page 3750" means the display designated
as page "3750" on the Telerate Services (or such other page as may replace the
3750 page on that service or such other service or services as may be nominated
by the British Bankers' Association for the purpose of displaying London
interbank offered
68
<PAGE> 77
rates for Dollar deposits).
The rate determined pursuant to the foregoing shall be divided by a
number equal to 1.0 minus the aggregate (but without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on the day
which is two (2) Business Days prior to the beginning of such Interest Period
(including, without limitation, basic, supplemental, marginal, special emergency
or other reserves under any regulations of the Board of Governors of the Federal
Reserve System or other governmental authority having jurisdiction with respect
thereto, as now and from time to time in effect) for Eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of such
Board) which are required to be maintained by a member bank of the Federal
Reserve System (such rate to be adjusted to the nearest (1/16 of 1%) or, if
there is not a nearest (1/16 of 1%), to the next higher (1/16 of 1%).
"LIBOR Loans" means at any time that portion of the Loans bearing
interest at rates determined by reference to LIBOR.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Loan" or "Loans" means an advance or advances under the Term Loan
Commitment or the Revolving Loan Commitment.
"Loan Documents" means this Agreement and all other documents,
instruments and agreements executed by or on behalf of Borrower, Borrower's
Subsidiaries and delivered concurrently herewith or at any time hereafter to or
for Agent or any Lender in connection with the Loans, any Lender Letter of
Credit, and any other transaction contemplated by this Agreement, all as
amended, restated, supplemented or modified from time to time.
"Loan Party" means each of Borrower, Borrower's Subsidiaries, and any
other Person (other than Agent or any Lender) which is or becomes a party to
any Loan Document.
"Loan Year" means each period of 12 consecutive months commencing on
the Closing Date and on each anniversary thereof.
"London Banking Day" means any day on which dealings in deposits in
U.S. dollars are transacted in the London Interbank market.
69
<PAGE> 78
"Material Adverse Effect" means a material adverse effect upon (a) the
business, operations, prospects, properties, assets or condition (financial or
otherwise) of any Loan Party on an individual basis or taken as a whole or (b)
the ability of any Loan Party to perform its obligations under any Loan
Document to which it is a party or of Agent or any Lender to enforce or collect
any of the Obligations.
"Maximum Revolving Loan Amount" has the meaning assigned to that term
in subsection 2.1(B)(1).
"Minimum Availability" means that Borrower has, on average, not less
than $3,000,000 in funds available for borrowing under the Revolving Loan
Commitment, as computed by averaging the available funds under the Revolving
Loan Commitment for a 60 Business Day period composed of the 30 Business Days
immediately preceding the proposed Allied Principal Payment, and a reasonable,
good faith projection of such available funds 30 Business Days immediately
following the proposed Allied Principal Payment.
"Mortgage" means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Loan Party to Agent, on behalf
of Lenders, with respect to Mortgaged Property or Additional Mortgaged
Property, all in form and substance satisfactory to Agent.
"Mortgaged Property" means the real property owned by Borrower or its
Subsidiaries as described on Schedule 1.1(A).
"Net Worth" means, as of any date, the sum of the capital stock and
additional paid-in capital plus retained earnings (or less accumulated deficit)
calculated in conformity with GAAP.
"Notes" means the Revolving Notes and the Term Notes.
"Notice of Borrowing" means a Notice duly executed by an authorized
representative of Borrower appropriately completed and in the form of Exhibit
D.
"Obligations" means all obligations, liabilities and indebtedness of
every nature of each Loan Party from time to time owed to Agent or to any
Lender under the Loan Documents (whether incurred before or after the
Termination Date) including the principal amount of all debts, claims and
indebtedness, accrued and unpaid interest and all fees, costs and expenses,
whether primary, secondary,
70
<PAGE> 79
direct, contingent, fixed or otherwise, heretofore, now and/or from time to time
hereafter owing, due or payable including, without limitation, all interest,
fees, cost and expenses accrued or incurred after the filing of any petition
under any bankruptcy or insolvency law.
"Operating Cash Flow" means, for any period, (a) EBITDA; less (b)
unfinanced Capital Expenditures.
"Permitted Encumbrances" means the following types of Liens: (a) Liens
(other than Liens relating to Environmental Claims or ERISA) for taxes,
assessments or other governmental charges not yet due and payable; (b)
statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen
and other similar liens imposed by law, which are incurred in the ordinary
course of business for sums not more than 30 days delinquent; (c) Liens (other
than any Lien imposed by ERISA) incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, trade contracts, performance
and return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money); (d) easements, rights-of-way,
restrictions, and other similar charges or encumbrances not interfering in any
material respect with the ordinary conduct of the business of any Loan Party or
any of its Subsidiaries; (e) Liens for purchase money obligations, provided
that (i) the purchase of the asset subject to any such Lien is permitted under
subsection 6.5, (ii) the Indebtedness secured by any such Lien is permitted
under subsection 7.1, and (iii) such Lien encumbers only the asset so
purchased; (f) Liens in favor of Agent, on behalf of Lenders, and (g) Liens set
forth on Schedule 7.3(B).
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or
other organizations, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
"Pro Forma" means the unaudited, consolidated and consolidating balance
sheet of Borrower and its Subsidiaries as of the Closing Date after giving
effect to the transactions contemplated by this Agreement. The Pro Forma is
attached hereto as Schedule 4.3.
"Pro Rata Share" means (a) with respect to matters relating to a
particular Commitment of a Lender, the percentage obtained by dividing (i) such
Commitment
71
<PAGE> 80
of that Lender by (ii) all such Commitments of all Lenders and (b) with respect
to all other matters, the percentage obtained by dividing (i) the Total Loan
Commitment of a Lender by (ii) the Total Loan Commitments of all Lenders, in
either case as such percentage may be adjusted by assignments permitted pursuant
to subsection 9.5; provided, however, if any Commitment is terminated pursuant
to the terms hereof, then "Pro Rata Share" means the percentage obtained by
dividing (x) the aggregate amount of such Lender's outstanding Loans related to
such Commitment by (y) the aggregate amount of all outstanding Loans related to
such Commitment.
"Projections" means Borrower's forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash
flow statements; and (d) capitalization statements, all prepared on a division
by division and Subsidiary by Subsidiary basis consistent with Borrower's
historical financial statements and based upon good faith estimates and
assumptions by Borrower believed to be reasonable at the time made, together
with appropriate supporting details and a statement of underlying assumptions.
"Requisite Lenders" means Lenders, (other than a Defaulting Lender),
holding or being responsible for 66.67% or more of the sum of (a) outstanding
Loans, (b) outstanding Letter of Credit Liability and (c) unutilized
Commitments of all Lenders which are not Defaulting Lenders.
"Restricted Junior Payment" means: (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of Borrower or any of its Subsidiaries now or hereafter outstanding,
except a dividend payable solely with shares of the class of stock on which
such dividend is declared; (b) any payment or prepayment of principal of,
premium, if any, or interest on, or any redemption, conversion, exchange,
retirement, defeasance, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any Indebtedness or any shares of
any class of stock of Borrower or any of its Subsidiaries now or hereafter
outstanding, or the issuance of a notice of an intention to do any of the
foregoing; (c) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of
stock of Borrower or any of its Subsidiaries now or hereafter outstanding; and
(d) any payment by Borrower or any of its Subsidiaries of any management,
consulting or similar fees to any Affiliate, whether pursuant to a management
agreement or otherwise.
"Revolving Advance" means each advance made by Lender(s) pursuant to
subsection 2.1 (B).
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<PAGE> 81
"Revolving Loan" means the outstanding balance of all Revolving
Advances and any amounts added to the principal balance of the Revolving Loan
pursuant to this Agreement.
"Revolving Loan Commitment" means (a) as to any Lender, the commitment
of such Lender to make Revolving Advances pursuant to subsection 2.1 (B), and
to purchase participations in Lender Letters of Credit pursuant to subsection
2.1(H) in the aggregate amount set forth on the signature page of this
Agreement opposite such Lender's signature or in the most recent Assignment and
Assumption Agreement, if any, executed by such Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make Revolving Advances and
to purchase participations in Lender Letters of Credit.
"Revolving Note" means each promissory note of Borrower in form and
substance reasonably acceptable to Agent, issued to evidence the Revolving Loan
Commitments.
"Scheduled A-1 Installment" has the meaning assigned to that term in
subsection 2.1(A)(1).
"Scheduled A-2 Installment" has the meaning assigned to that term in
subsection 2.1(A)(2).
"Scheduled B Installment" has the meaning assigned to that term in
subsection 2.1(A)(3).
"Second Allied Note Payment" has the meaning assigned to that term in
subsection 7.1(A)(6).
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock (or equivalent ownership or controlling interest)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
subsidiaries of that Person or a combination thereof.
"Tangible Net Worth" of any Person means as of any date, an amount
equal to: (a) Net Worth of such Person; less (b) Intangible Assets of such
Person; less (c) all obligations owed to such Person by any Affiliate of such
Person or any of its Subsidiaries; and less (d) all loans by such Person to its
officers, stockholders, Subsidiaries or employees (determined in each case in
conformity with GAAP).
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<PAGE> 82
"Term Loans" mean(s) the unpaid balance of the term loans made pursuant
to subsection 2.1(A).
"Term Loan A-1" means the advance made pursuant to subsection
2.1(A)(1).
"Term Loan A-2" means the advance made pursuant to subsection
2.1(A)(2).
"Term Loan A-2 Closing Date" means the date the Allied Acquisition is
completed to Agent's satisfaction in accordance with the conditions set forth in
this Agreement and in the other Loan Documents, which shall in no event be later
than April __, 1999.
"Term Loan B" means the advance made pursuant to subsection 2.1(A)(3).
"Term Loan Commitment" means (a) as to any Lender, the commitment of
such Lender to make its Pro Rata share of the Term Loans in the maximum
aggregate amount set forth on the signature page of this Agreement opposite such
Lender's signature or in the most recent Assignment and Assumption Agreements,
if any, executed by such Lender and (b) as to all Lenders, the aggregate
commitment of all Lenders to make the Term Loans.
"Term Note" or "Term Notes" means each promissory note of Borrower in
form and substance acceptable to Agent, issued to evidence the Term Loan
Commitments.
"Termination Date" means the date set forth in subsection 2.5.
"Total Loan Commitment" means as to any Lender the aggregate
commitments of such Lender with respect to its Revolving Loan Commitment and
Term Loan Commitment.
"UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of Illinois, as amended from time to time, and any
successor statute.
"Working Capital" means as to any Person: (a) current assets; less (b)
current liabilities; and less (c) the amount of any obligations owed to such
Person or any of its Subsidiaries by any Affiliate of such Person or any of its
Subsidiaries.
11.2 Accounting Terms. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. Financial statements and other information
furnished to
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<PAGE> 83
Agent or any Lender pursuant to subsection 5.1 shall be prepared in accordance
with GAAP (as in effect at the time of such preparation) on a consistent basis.
In the event any "Accounting Changes" (as defined below) shall occur and such
changes affect financial covenants, standards or terms in this Agreement, then
Borrower and Lenders agree to enter into negotiations in order to amend such
provisions of this Agreement so as to equitably reflect such Accounting Changes
with the desired result that the criteria for evaluating the financial condition
of Borrower shall be the same after such Accounting Changes as if such
Accounting Changes had not been made, and until such time as such an amendment
shall have been executed and delivered by Borrower and Requisite Lenders, (A)
all financial covenants, standards and terms in this Agreement shall be
calculated and/or construed as if such Accounting Changes had not been made, and
(B) Borrower shall prepare footnotes to each Compliance Certificate and the
financial statements required to be delivered hereunder that show the
differences between the financial statements delivered (which reflect such
Accounting Changes) and the basis for calculating financial covenant compliance
(without reflecting such Accounting Changes). "Accounting Changes" means: (a)
changes in accounting principles required by GAAP and implemented by Borrower;
(b) changes in accounting principles recommended by Borrower's Accountants; and
(c) changes in carrying value of Borrower's or any of its Subsidiaries' assets,
liabilities or equity accounts resulting from (i) the application of purchase
accounting principles (A.P.B. 16 and/or 17 and EITF 88-16 and FASB 109) to the
Borrower's acquisition of substantially all assets of (x) U.S. Parts
Corporation, (y) Allied Distributing Co. of Houston, Inc. and its wholly owned
subsidiary Auto Parts Investment Group, Inc. and (z) Automotive & Industrial
Supply Co., Inc. or (ii) any other adjustments that, in each case, were
applicable to, but not included in, the Pro Forma. All such adjustments
resulting from expenditures made subsequent to the Closing Date (including, but
not limited to, capitalization of costs and expenses or payment of pre-Closing
Date liabilities) shall be treated as expenses in the period the expenditures
are made and deducted as part of the calculation of EBITDA in such period.
11.3 Other Definitional Provisions. References to "Sections",
"subsections", "Riders", "Exhibits", "Schedules" and "Addendums" shall be to
Sections, subsections, Riders, Exhibits, Schedules and Addendums, respectively,
of this Agreement unless otherwise specifically provided. Any of the terms
defined in subsection 11.1 may, unless the context otherwise requires, be used
in the singular or the plural depending on the reference. In this Agreement,
words importing any gender include the other genders; the words "including,"
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to agreements and other contractual instruments shall be
deemed to include subsequent amendments, assignments, and other modifications
thereto, but only to the extent
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<PAGE> 84
such amendments, assignments and other modifications are not prohibited by the
terms of this Agreement or any other Loan Document; references to Persons
include their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 85
Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
<TABLE>
<CAPTION>
BORROWER: LENDERS:
<S> <C>
RANKIN AUTOMOTIVE GROUP, INC. HELLER FINANCIAL, INC.
By: By:
------------------------- ----------------------
Name: Randall B. Rankin Name:
Title: Chairman Title:
FEIN: -------------------
---------------------
Revolving Loan Commitment:
$21,666,684.00
Term A-1 Loan Commitment:
$638,889.40
Term A-2 Loan Commitment:
$472,222.60
Term B Loan Commitment:
$2,222,224.00
FINOVA CAPITAL CORPORATION
By:
----------------------
Name: Thomas L. Gibbons
Title: Vice-President
Revolving Loan Commitment:
$4,333,329.00
Term A-1 Loan Commitment:
$127,777.65
Term A-2 Loan Commitment:
$94,444.35
Term B Loan Commitment:
$444,444.00
BANK ONE, TEXAS, N.A.
By:
----------------------
Name: Karen S. Shouse
Title: Vice President
Revolving Loan Commitment:
$12,999,987.00
Term A-1 Loan Commitment:
$383,332.95
Term A-2 Loan Commitment:
$283,333.05
Term B Loan Commitment:
$1,333,332.00
</TABLE>
Loan & Security Agreement
<PAGE> 1
EXHIBIT 10.(u)
EMPLOYMENT AGREEMENT
This employment agreement is made and entered into as of the 10th day
of March, 1999 by and between Rankin Automotive Group, Inc. (the "Employer"), a
Louisiana corporation, and Ali Attayi, a resident of the State of Texas (the
"Employee").
WITNESSETH:
1. Employment. The Employer hereby employs the Employee, and the Employee
hereby accepts such employment, upon the terms and subject to the
conditions set forth in this Agreement.
2. Term. Subject to the provisions of termination as hereinafter
provided, the term of employment under this Agreement shall be for a
five-year term beginning as of the date hereof, unless employment is
terminated as otherwise provided in this Agreement.
3. Compensation, Reimbursement, Etc.
(a.) The basic compensation to the Employee shall be payable in accordance
with company policy, not less than bi-weekly, and shall, during the
first three years of this Agreement, be based upon calendar year
annual compensation of $295,000.00, and thereafter shall be determined
pursuant to clause (h) below.
(b.) The compensation provided for in Section 3 (a) above shall be in
addition to any pension or profit sharing payments set aside or
allocated for the benefit of the Employee.
(c.) The Employee shall be entitled to such other benefits (e.g., health,
life or disability insurance) as may be provided from time to time by
the Employer to other management employees.
(d.) The Employee shall be entitled to (3) weeks of paid vacation per year.
(e.) Employer shall reimburse all reasonable travel, entertainment and
other out-of-pocket expenses incurred by the Employee in connection
with the performance of his duties pursuant to this Agreement,
consistent with the Employer's policies then in effect.
(f.) At the discretion of the Board of Directors of the Employer, the
Employee will be from time to time be awarded a cash bonus or bonuses,
or other incentive compensation, including stock options, for services
rendered or other contributions made to the Employer during the
Employment Term consistent with any such awards to other executive
officers of Employer.
<PAGE> 2
(g.) Simultaneously with the execution hereof, the Employer has Granted to
the Employee an option to purchase 300,000 shares of Employer's common
stock on the terms set forth in the Stock Option Agreement between the
Employer and Employee of even date herewith.
(h.) Prior to December 31, 2001, Employer will engage an independent
compensation consulting firm mutually acceptable to Employer and the
Employee to make a recommendation to Employer's Board of Directors (or
the Compensation Committee thereof) regarding the compensation and
benefits to be payable to Employee during the fourth and fifth years
of this Agreement, such compensation and benefits to be competitive
with compensation and benefits payable to similarly situated
executives in comparable companies. Employee's compensation and
benefits for the fourth and fifth years of this Agreement shall be
determined by the Employer's Board of Directors (or Compensation
Committee) in light of the recommendation of such consulting firm but
in no event shall the aggregate amount thereof be less than 90% of the
aggregate amount recommended by such consulting firm or 115% of the
aggregate amount of Employee's compensation and benefits during the
third year of this Agreement.
(i.) The Employer will provide to Employee during the term of this
Agreement in accordance with Company policy an automobile suitable to
Employee's position with the Company and will reimburse Employee for
the insurance, gasoline, maintenance and other reasonable expenses
associated therewith. Initially, the Company will provide the Employee
with a 1998 Yukon GMC.
4. Duties.
(a.) The Employee shall serve as the President and Chief Operating Officer
of Employer and shall have such duties as may from time to time be
reasonably assigned to him by the Board of Directors and the Chief
Executive Officer of the Employer and as are appropriate to the
Employee's office.
(b.) The principal services for which the Employee is engaged are to manage
the business of the Employer under the reasonable direction of the
Board of Directors and the Chief Executive Officer of Employer.
5. Extent of Service. During the term of his employment under this
Agreement, the Employee shall devote such time and efforts to the
business of the Employer, as may be reasonably necessary in the normal
course of business; provided, however, that the Employee may engage in
personal investment activities and serve as a director of other
corporation(s) so long as such activities do not interfere with the
performance of his duties hereunder. The Employee shall not be
required to perform his services hereunder outside of the Greater
Houston, Texas Metropolitan area, except for services rendered on
business trips on behalf of the Employer in the ordinary course of
Employer's business.
<PAGE> 3
6. Termination.
(a.) All rights of the Employee hereunder, shall terminate upon his death
except that the Employer shall pay to the estate of the Employee such
compensation and benefits, as would otherwise have been payable to the
Employee up to the end of the month in which his death occurs and any
benefits under any benefit plan or arrangement of Employer to which
Employee's estate is otherwise entitled. The Employer shall have no
additional financial obligation under this Agreement to the Employee
or his estate.
(b.) All rights of the Employee hereunder, shall terminate upon his
retirement except that the Employer shall pay to the Employee such
compensation and benefits, as would otherwise have been payable to the
Employee up to the end of the month in which his retirement occurs and
any benefits under any benefit plan or arrangement of Employer to
which Employee's estate is otherwise entitled. The Employer shall have
no additional financial obligation under this Agreement to the
Employee.
(c.) All rights of the Employee hereunder shall terminate upon his
disability, except that the Employer shall pay to the Employee such
compensation and benefits as would otherwise have been payable to the
Employee up to the end of the month in which such disability occurs
and any benefits under any benefit plan or arrangement of Employer to
which employee is otherwise entitled. The Employer shall have no
additional financial obligation under this Agreement to the Employee.
For the purposes hereof, the Employee shall be deemed to be disabled
if the Employee (i) is considered disabled under any individual
disability insurance plan maintained by the Employer for the benefit
of the Employee at that time or under any group disability plan
maintained by the Employer at that time or (ii) is unable for a period
of 180 days out of any consecutive 360 day period to perform his
duties under this Agreement.
(d.) (i) The Employer may terminate the employment of the Employee
hereunder. for "cause" by giving Employee thirty (30) days'
written notice of the termination date, which notice shall
set forth the facts and circumstances claimed to constitute
"cause" hereunder.
(ii) The term "good cause" as used in this Agreement shall mean
(i) any act or omission that constitutes a material breach by
the Employee of his obligations or agreements under this
Agreement (other than by reason of illness, injury or
incapacity), (ii) the Employee's conviction of a felony or
other crime involving moral turpitude, (iii) the Employee's
engaging in willful misconduct or gross neglect with respect
to the Employer's business that has had a material adverse
effect on the Employer, (iv) the Employee's embezzlement or
wrongful diversion of the Employer's funds, (v) employee's
habitual absenteeism (other than by reason of illness, injury
or incapacity) or (vi) Employee's dependence, as determined
by a physician mutually acceptable to Employer and Employee,
on alcohol or drugs. In the case of "cause"
<PAGE> 4
based on a material breach under clause (i) above, the
employee's employment shall not be terminated as of the
proposed termination date if the Employee shall have
corrected the problem prior to that date. If the employment
of the Employee is terminated pursuant to clause (d), the
Employer shall pay to the Employee any compensation and
benefits earned but not paid to the Employee prior to such
termination. Such payment shall be in full and complete
discharge of any and all liabilities or obligations of the
Employer hereunder, and the Employee shall be entitled to no
further benefits under this Agreement, except as otherwise
specifically provided in Section 3 of this Agreement.
(e.) The Employee may terminate his employment hereunder for "good reason"
by giving the Employer 30 days' written notice of the termination
date, which notice shall set forth the facts and circumstances claimed
to constitute good reason hereunder. Upon any such termination, the
Employer shall pay to the Employee such compensation and benefits as
would otherwise have been payable to the Employee through the
remaining term of this Agreement, or the equivalent of three year's
compensation and benefits, whichever is less. For purposes hereof,
"good reason" means the occurrence (without the Employee's written
consent) of any of the following circumstances that shall not have
been remedied prior to the termination date specified in the
Employee's notice: (i) the assignment to the Employee of any duties
that are materially inconsistent with the Employee's position as
President of the Employer, (ii) any material breach of this Agreement
by the Employer,(iii) the Employer's requiring the Employee to be
based anywhere other than the Greater Houston Metropolitan area,
except for required travel on the Employer's business; or (iv) the
decision by Employer's Board of Directors to change Employer's
business in such a manner as to result in no substantial portion of
such business consisting of auto parts business.
(f.) Effect of Termination. Any termination of the Employee's employment
shall not release either the Employee or the Employer from their
respective obligations under this Agreement that are required to be
performed subsequent to the date of such termination; provided,
however, that if the Employee's employment is terminated by the
Employee pursuant to Section 6(e) and Employer fails to promptly pay
to Employee the compensation and benefits contemplated by such
section, or by the Employer in breach of this Agreement and the
Employer fails to promptly pay to Employee the compensation and
benefits that would otherwise have been payable to Employee through
the remaining term of the Agreement, the Employee shall be relieved
from performing his obligations under, and shall no longer be subject
to, Section 10 hereof or, to the extent it applies to the period after
termination of Employee's employment hereunder, Section 9 hereof.
7. Omitted.
8. Disclosure.
(a.) The Employee agrees that he will fully disclose and disclose only
to the Employer all ideas,
<PAGE> 5
methods, plans, developments, improvements or patentable inventions,
of any kind, developed or conceived by him which relate directly or
indirectly to the business of the Employer during the term of this
Agreement. The Employee also agrees that he will fully disclose, and
disclose only to the Employer all ideas, methods, plans, developments,
improvements or patentable inventions which relate directly or
indirectly to the business of the Employer and which are developed or
conceived by the Employee at any time during the term his employment
by the Employer and for a period of twelve (12) months after the
termination of his employment with the Employer. All disclosures are
to be made promptly after conception of the idea, method, plan,
development, improvement or invention. Nothing in this Section 8 shall
be construed as requiring any communication to the Employer of the
idea, method, plan, development, improvement or invention if lawfully
protected by any other lawful prohibition against such communication.
(b.) Any idea, method, plan, development, improvement or invention
which the Employee is obligated to disclose to the Employer under
this Section 8 shall be the property of the Employer, regardless
of whether it is disclosed by the Employee to the Employer. The
Employee agrees that he will provide, at Employer's expense, any
and all reasonable assistance to the Employer in making any patent
applications or other applications for obtaining exclusive rights
in, and will do all other things that may be reasonably necessary
to vest in the Employer or its assigns such ideas, methods, plans,
developments, improvements of inventions.
9. Confidentiality
The Employee agrees to keep in strict secrecy and confidence any
and all information the Employee assimilates or to which he has
access during his employment by the Employer other than any
information that is in the public domain through no act or
omission of the Employee or which Employee is authorized to
disclose. The Employee agrees that both during and, with respect
to information constituting trade secrets, after the term of this
employment by the Employer, he will not, without prior written
consent of the Employer, disclose any such confidential
information to any third person, partnership, joint venture,
company, corporation or other organization.
10. Noncompetition and Nonsolicitation.
(a.) During the term of this Agreement, except as contemplated herein,
and for a period of two (2) years after the termination of his
employment with the Employer, if such termination occurs prior to
the third anniversary hereof and for a period of one (1) year
after termination of his employment if such termination occurs
after the third anniversary hereof, the Employee shall not,
directly or indirectly, within the State of Texas, or within any
other state or foreign country in which the Employer maintains a
branch office or conducts business, enter into, engage in, be
employed by, or consult with any business in competition with the
business of the Employer as it is then carried on; further, the
<PAGE> 6
Employee shall not sell to, market, produce or otherwise deal with
any customer of the Employer, TO THE EXTENT THAT ANY SUCH
ACTIVITIES ARE IN COMPETITION WITH THE BUSINESS OF THE EMPLOYER.
The restrictions of this Section 10 shall extend to any and all
activities of the Employee, whether as an independent contractor,
partner or joint venturer, or as an officer, director,
stockholder, agent, employee or salesman for any person, firm,
partnership, corporation or other entity, or otherwise. The
restrictions of this Section 10 shall not be violated by the
ownership of no more than 2% of the outstanding securities of any
company whose stock is traded on a national securities exchange or
is quoted in the Automated Quotation System of the National
Association of Securities Dealers (NASDAQ). Solicitation or
acceptance of orders outside of any prohibited territory as
described above for shipment to, delivery in or service in any
restricted territory shall also constitute engaging in business
within the restricted territories in violation of this Section 10
to the extent such conduct is otherwise competitive with the
business of Employer.
(b.) During his employment with the Employer, except as contemplated
herein, and for a period of two (2) years after the termination of
his employment with the Employer, if such termination occurs prior
to the third anniversary hereof and for a period of one year after
termination of his employment if such termination occurs after the
third anniversary hereof, the Employee agrees he will refrain from
and will not directly or indirectly, as independent contractor,
employee, consultant, agent, partner, joint venturer, or otherwise
solicit any of the employees of the Employer to terminate their
employment.
(c.) The period of time during which the Employee is prohibited from
engaging in certain business practices pursuant to Sections 10(a)
or (b) shall be extended by any length of time during which the
Employee is in breach of such covenants.
(d.) It is understood by and between the parties hereto that the
Foregoing restrictive covenants set forth in Sections 10(a)
through (c) are essential elements of this Agreement, and that,
but for the agreement of the Employee to comply with such
covenants, the Employer would not have agreed to enter into this
Agreement. Such covenants by the Employee shall be construed as
agreements independent of any other provision in this Agreement.
Except as expressly provided in Section 7 hereof, the existence of
any claim or cause of action of the Employee against the Employer,
whether predicated on this Agreement, or otherwise, shall not
constitute a defense to the enforcement by the Employer of such
covenants.
(e.) It is agreed by the Employer and Employee that if any portion of
the covenants set forth in this Section 10 are held to be invalid,
unreasonable, arbitrary or against public policy, then such
portion of such covenants shall be considered divisible both as to
time and geographical area. The Employer and Employee agree that,
if any court of competent jurisdiction determines the specified
time period or the specified geographical area applicable to this
Section 10 to be invalid, unreasonable, arbitrary or against
public
<PAGE> 7
policy, a lesser time period or geographical area which is
determined to be reasonable, nonarbitrary and not against public
policy may be enforced against the Employee. The Employer and the
Employee agree that the foregoing covenants are appropriate and
reasonable when considered in light of the nature and extent of
the business conducted by the Employer.
11. Specific Performance. The Employee agrees that damages at law will
be an insufficient remedy to the Employer if the Employee violates
the terms of Sections 8, 9, or 10 of this Agreement and that the
Employer would suffer irreparable damage as a result of such
violation. Accordingly, it is agreed that the Employer shall be
entitled, upon application to a court of competent jurisdiction to
obtain injunctive relief to enforce the provisions of such
Sections, which injunctive relief shall be in addition to any
other rights or remedies available to the Employer. If it is
determined that such violation has occurred, the Employee agrees
to pay to the Employer all costs and expenses incurred by the
Employer relating to the enforcement of the terms of Sections 8, 9
or 10 of this Agreement, including reasonable fees and
disbursements of counsel (both at trial and in appellate
proceedings).
12. Compliance with other Agreements. The Employee represents and
warrants that the execution of this Agreement and performance of
the obligations hereunder will not conflict with, result in the
breach of any provisions of or the termination of or constitute a
default under any Agreement to which the Employee is a party or by
which the Employee is or may be bound.
13. Waiver of Breach. The waiver by the Employer of a breach of any of
the provisions of this Agreement by the Employee shall not be
construed as a waiver of any subsequent breach by the Employee.
14. Binding Effect; Assignment. The rights and obligations of the
Employer under this Agreement shall inure to the benefit of and
shall be binding upon the successors and of the Employer. This
Agreement is a personal employment contract and the rights,
obligations and interests of the Employee and Employer hereunder
may not be sold, assigned, transferred, pledged or hypothecated.
15. Entire Agreement. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or
written, with respect to the subject matter hereof. This Agreement
may be amended only by an agreement in writing signed by each of
the parties hereto.
16. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
17. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas.
<PAGE> 8
18. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by
certified or registered mail, first class, return receipt
requested, to the parties at the following addresses:
To the Employer: Rankin Automotive Group, Inc.
3709 S.MacArthur Drive
Alexandria, LA 71302
Attention: Randall B. Rankin
Facsimile No. 318-443-9952
If to Employee: Ali Attayi
2 Lakeview Place
Houston, Texas 77070
Facsimile No. 281-379-6262
In witness whereof the parties hereto have executed this
Agreement as of the year and date set forth above.
EMPLOYER:
RANKIN AUTOMOTIVE GROUP, INC.
ATTEST:
BY:/s/ Nancy Grant /s/ Randall B. Rankin
-------------------------- -------------------------------------
Nancy Grant, Secretary Randall B. Rankin, CEO
Witnesses as to Employee: EMPLOYEE:
/s/Diana M. Hudson Ali A. Attayi
- ----------------------------- --------------------------------------
Ali Attayi
/s/ K.S. Nagesh
- -----------------------------
<PAGE> 1
EXHIBIT 10.(v)
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS REGISTRATION RIGHTS AND LOCK-UP AGREEMENT ("Agreement") is made
and entered into this 10th day of March, 1999, by and between Rankin
Automotive Group, Inc., a Louisiana Corporation (the "Company"), and Ali
Attayi, a resident of the State of Texas ("Attayi").
WITNESSETH:
WHEREAS, Attayi, together with his wife and trusts established for the
benefit of his children (the "Attayi Group"), own all of the outstanding shares
of capital stock of U.S. Parts Corporation, a Texas corporation ("U.S. Parts");
and
WHEREAS, U.S. Parts and the Company have entered into that certain Asset
Purchase Agreement (the "Purchase Agreement") dated as of February 26, 1999,
whereby the Company purchased substantially all of the assets of U.S. Parts in
exchange for $8,000,000 and 600,000 shares of the Company's common stock, par
value $0.01 per share, (the "Common Stock") and Attayi and the Company have
entered into a Stock Option Agreement dated the 10th of March, 1999 providing
for the grant to Attayi of an option to purchase 300,000 shares of Common
Stock (the "Stock Option Agreement"); and
WHEREAS, as a condition of the Purchase Agreement, the Company has
agreed to enter into this Purchase Agreement with Attayi, providing Attayi and
members of his family with certain registration rights on the Common Stock to
be received by them as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and subject to
and on the terms and conditions herein set forth, the parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 Definitions. The following terms, which are capitalized in this
Agreement, shall have the meanings set forth below for the purpose of this
Agreement:
Business Day means any day on which the New York Stock
Exchange is open for trading.
Eligible Securities means all or any portion of the Common
Stock issued pursuant to the Purchase
Agreement, all or any portion of the
Common Stock acquired by Attayi upon
exercise of the option under the Stock
Option Agreement and any Common Stock
issued in respect of any such shares upon
any stock split, stock dividend,
recapitalization or other similar event.
As to any proposed offer or sale of
Eligible Securities, such securities
shall cease to be Eligible Securities
with respect to such proposed offer or
sale when: (i) a registration statement
with respect to the sale of such
securities shall have become effective
under the Securities Act of 1933, as
amended (the "Securities Act"), and such
securities shall have been disposed of in
accordance with such registration
statement; (ii) such securities are
permitted to be distributed pursuant to
Rule 144(k) (or any successor provision
to such Rule) under the Securities Act to
be confirmed in a written opinion of
counsel to the Company; or (iii) such
securities shall have been otherwise
transferred pursuant
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
<PAGE> 2
to an applicable exemption under the
Securities Act, and such securities shall
be freely transferable to the public
without registration under the Securities
Act.
Registration Expenses means all expenses incident to the
Company's performance of or compliance
with the registration requirements set
forth in this Agreement including, without
limitation, the following: (i) the fees,
disbursements and expenses of the
Company's counsel(s), accountants and
experts in connection with the
registration of Eligible Securities to be
disposed of under the Securities Act; (ii)
all expenses in connection with the
preparation, printing and filing of the
registration. statement, any preliminary
prospectus or final prospectus, any other
offering document and amendments and
supplements thereto and the mailing and
delivering of copies thereof to the
underwriters and dealers; (iii) the cost
of printing or producing any agreement(s)
among underwriters, underwriting
agreement(s) and blue sky or legal
investment memoranda, any selling
agreements and any other documents in
connection with the offering, sale or
delivery of Eligible Securities to be
disposed of, (iv) Securities and Exchange
Commission (the "Commission") or blue sky
registration fees attributable to Eligible
Securities; (v) all expenses in connection
with the qualification of Eligible
Securities to be disposed of for offering
and sale under state securities laws,
including the fees and disbursements of
counsel for the underwriters in connection
with such qualification and in connection
with any blue sky and legal investment
surveys; (v) the filing fees incident to
securing any required review by the
National Association of Securities
Dealers, Inc. of the terms of the sale of
Eligible Securities to be disposed of; and
(vi) fees and expenses incurred in
connection with the listing of Eligible
Securities on each securities exchange on
which securities of the same class are
then Listed; provided, however, that
Registration Expenses with respect to any
registration pursuant to this Agreement
shall not include underwriting discounts
or commissions attributable to Eligible
Securities, transfer taxes applicable to
Eligible Securities or any legal fees or
costs incurred by Attayi in connection
with the registration of Eligible
Securities pursuant to this Agreement
(other than legal fees or costs incurred
at the request of the Company).
1.2 Other Defined Terms. Capitalized terms used herein and not
otherwise defined in this Agreement shall have the meanings assigned to them in
the Purchase Agreement being entered into simultaneously herewith.
ARTICLE 2
EFFECTIVENESS OF REGISTRATION RIGHTS
2.1 Registration Rights. The registration rights granted under this
Agreement to holders of Eligible Securities shall become effective two (2)
years from the date of this Agreement. In addition, the registration rights
under this Agreement shall remain effective only so long as holders of Eligible
Securities own in the aggregate of at least twenty (20)% of the Common Stock
being issued pursuant to the Purchase Agreement.
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
2
<PAGE> 3
ARTICLE 3
REGISTRATION REQUEST
3.1 Demand Registration. Subject to Section 3.2 below, upon written
notice from a holder of Eligible Securities requesting that the Company effect
a registration under the Securities Act of all or a portion of the Eligible
Securities held by such holder ("Notice"), which notice shall specify the
number of Eligible Securities intended to be sold and state the intended method
or methods of disposition of such Eligible Securities, the Company will use all
reasonable efforts to effect (at the earliest possible date) the registration
under the Securities Act of such Eligible Securities for disposition in
accordance with the intended method or methods of disposition stated in such
request.
3.2 Registration Provisions. The registration rights granted under
Sections 3.1 are subject to the following provisions:
(a) if the Company shall have previously effected and maintained
effective for at least six months (or such lesser period as shall have been
necessary for the sale of all of the securities proposed to be sold in
connection therewith) a registration with respect to Eligible Securities
pursuant to Article 4 hereof, the Company shall not be required to file a
registration pursuant to this Article 3 until a period of one hundred eighty
(180) days shall have elapsed from the earlier of six months from the effective
date of the most recent previous registration or the sale of all of the
Eligible Securities covered by such registration;
(b) if, upon receipt of a registration request pursuant to this
Article 3, the Company is advised in writing (with a copy to the holders of
Eligible Securities) by a nationally recognized independent investment banking
firm selected by the Company to act as lead underwriter in connection with a
public offering of securities by the Company that, in such firm's opinion, a
registration at the time and on the terms requested would materially adversely
affect another public offering of securities by the Company (other than an
offering in connection with employee benefit and similar plans) (a "Company
Offering") that had been contemplated by the Company prior to the notice by a
holder of Eligible Securities, the Company shall not be required to file a
registration pursuant to this Article 3 until the earliest of (i) 120 days
after the completion of such Company Offering, (ii) the termination of any
"black out" period, if any, required by the underwriters to be applicable to a
holder of Eligible Securities in connection with such Company Offering and
agreed to in writing by such holder, (iii) promptly after abandonment of such
Company Offering;
(c) if, while a registration request is pending pursuant to Article 3,
the Company determines in the good faith judgment of the Board of Directors of
the Company, with the advice of counsel, that the filing of a registration
statement would require the disclosure of non-public material information, the
disclosure of which would have a material adverse effect on the Company or
would otherwise adversely affect a material financing, acquisition,
disposition, merger or other comparable transaction, the Company shall deliver
a certificate to such effect signed by its President or any Vice President to
the holder of Eligible Securities requesting registration and the Company shall
not be required to file a registration pursuant to this Article 3 until the
date upon which such material information is disclosed to the public or ceases
to be material, but in no event shall the filing of a registration statement be
postponed pursuant to this Article 3.2(c) for more than ninety (90) days from
the date of the certificate referenced herein; and
(d) the Company shall not be required to effect more than one
registration pursuant to this Article 3. In order to count as an "effected"
registration, the registration statement with respect thereto shall not have
been withdrawn and shall have remained effective for a period of at least nine
months.
3.3 Selection of Underwriter. The holder of Eligible Securities
requesting registration may select a nationally or regionally recognized,
independent investment banking firm to act as lead underwriter in his request
for registration, provided that the selection of an underwriter shall be
subject to (i) any obligations of the Company pursuant to any underwriting
agreement to which the Company is a party and (ii) approval by the Company,
which approval shall not be unreasonably withheld. If a request for
registration pursuant to this
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
3
<PAGE> 4
Article 3 contemplates an underwritten public offering as one of the methods of
disposition and does not specify an underwriter, the Company shall use
reasonable efforts to obtain an underwriter for such offering; provided,
however, that if the Company is unable to secure an underwriter, the Company
shall notify the holder of Eligible Securities requesting registration of such
unavailability and, if an underwritten public offering is the sole proposed
method of distribution, the request for registration shall be deemed to be
withdrawn, until such time as the holder of Eligible Securities requesting
registration shall present to the Company an underwriter willing to underwrite
the offering, subject to the approval of the Company.
3.4 Registration Expenses. With respect to a registration requested
pursuant to this Article 3 and any registration arising from an exercise of a
Blackout Termination Right (as defined below), the Company shall pay all
Registration Expenses.
ARTICLE 4
INCIDENTAL REGISTRATION
4.1 Notice and Registration. If the Company at any time proposes to
register any of its equity securities under the Securities Act (other than by a
registration on Form S-4, Form S-8 or any successor or similar form, or in
connection with a tender offer, merger, or other acquisition, and other than
pursuant to Section 3.1), whether or not for sale for its own account (the
"Other Securities"), it will each such time give prompt written notice to the
holders of Eligible Securities of its intention to do so and of the Attayi
Group's rights under this Article 4.1. Upon the written request of any holder
of Eligible Securities made within 30 days after the date of any such notice
given in accordance with Article 5 hereof, the Company will use its best
efforts to effect the registration under the Securities Act of all Eligible
Securities which the Company has been so requested to register by a holder
thereof, to the extent requisite to permit the disposition of the Eligible
Securities so to be registered, provided that if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of the Other Securities, the Company may, at its election,
give written notice of such determination to holders of Eligible Securities
and, thereupon, (i) in the case of a determination not to register, shall be
relieved of its obligation to register any Eligible Securities in connection
with such registration (but not from its obligation to pay the Registration
Expenses in connection therewith), without prejudice, however, to the rights of
holders of Eligible Securities to request that such registration be effected as
a registration under Article 3, and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any Eligible
Securities for the same period as the delay in registering such Other
Securities.
4.2 If (i) a registration pursuant to this Article 4 involves an
underwritten offering of the securities being registered, whether or not for
sale for the account of the Company, to be distributed (on a firm commitment
basis) by or through one or more underwriters of recognized national or
regional standing under underwriting terms appropriate for such a transaction,
and (ii) the managing underwriter of such underwritten offering shall inform
the Company and the holders of Eligible Securities requesting such registration
by letter of its good faith belief that the number of securities requested to
be included in such registration exceeds the number which can be sold in (or
during the time of) such offering or that the inclusion would adversely affect
the marketing or the selling price of the securities to be sold by the Company
therein, if applicable, then the Company may include all securities proposed by
the Company to be sold for its own account and may decrease the number of
Eligible Securities and other securities of the Company so proposed to be sold
and so requested to be included in such registration (pro rata on the basis of
the percentage of the securities of the Company sought to be registered that
are held by holders of Eligible Securities and holders of Other Securities) to
the extent necessary to reduce the number of securities to be included in the
registration to the level recommended by the managing underwriter.
Notwithstanding the foregoing, if the registration referred to herein involves
an underwritten offering of securities being registered for sale by holders of
Other Securities pursuant to the exercise by such holders of demand
registration rights (the "Demand Securities"), the Company will include in such
registration the Demand Securities proposed to be sold and may decrease the
number of Eligible Securities proposed to be sold and any Other Securities
proposed to be sold pursuant to
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
4
<PAGE> 5
the exercise of "incidental" or "piggyback" registration rights (pro rata on
the basis of the percentage of the securities sought to be registered that are
held by holders of Eligible Securities and holders exercising "incidental" or
"piggyback" registration rights) to the extent necessary to reduce the number
of securities to be included in the registration to the level recommended by
the managing underwriter. In such case, no securities shall be offered for sale
by the Company.
4.3 No registration of Eligible Securities effected under this Article
4 shall relieve the Company of its obligation (if any) to effect registrations
of Eligible Securities pursuant to Article 3.
4.4 Registration Expenses. The Company (as between the Company and
holders of Eligible Securities) shall be responsible for the payment of all
Registration Expenses incurred in connection with any registration pursuant to
this Article 4.
ARTICLE 5
REGISTRATION PROCEDURES
5.1 If and whenever the Company is required to effect the registration
of any Eligible Securities under the Securities Act as provided in Article 3 or
4, the Company will as promptly as is practicable:
(a) prepare and file with the Commission the requisite registration
statement to effect such registration and thereafter use its best efforts to
cause such registration statement to become and remain effective for a period
of nine months, provided that the Company may discontinue any registration of
its securities which are not Eligible Securities at any time prior to the
effective date of the registration statement relating thereto;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all Eligible Securities until the earlier of such time as
all of such Eligible Securities have been disposed of in accordance with the
intended methods of disposition set forth in such registration statement, or
the expiration of nine months after such Registration Statement becomes
effective (the "Effective Period"), unless such Registration Statement was
filed in reliance upon Rule 415(a), as promulgated by the Commission under the
Securities Act, in connection with a continuous or delayed offering of the
Eligible Securities, in which case the Effective Period shall expire on the
second annual anniversary of the effective date of such Registration Statement.
(c) furnish to holders and to any underwriter of such Eligible
Securities (1) such number of conformed copies of such registration statement
and of each such amendment and supplement thereto (in each case including all
exhibits), (2) such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and any summary
prospectus) in conformity with the requirements of the Securities Act, (3) such
documents incorporated by reference in such registration statement or
prospectus, and (4) such other documents as any such holder or such underwriter
may reasonably request;
(d) use all reasonable efforts to register or qualify all Eligible
Securities covered by such registration statement under such other securities
or blue sky laws of such jurisdictions as holders or any underwriter of such
Eligible Securities shall reasonably request, and do any and all other acts and
things which may be reasonably requested by such holders or any underwriter to
consummate the disposition in such jurisdictions of the Eligible Securities
covered by such registration statement, except the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified, or to subject
itself to taxation in any jurisdiction where it is not then subject to
taxation, or to consent to general service of process in any jurisdiction where
it is not then subject to service of process;
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
5
<PAGE> 6
(e) use all reasonable efforts to list the Eligible Securities on each
national securities exchange on which the Common Stock is then listed, if the
listing of such securities is then permitted under the rules of such exchange;
(f) furnish to holders of Eligible Securities included in such
registration statement, an opinion of counsel for the Company addressed to each
such holder, dated the date of the closing under the underwriting agreement,
and (ii) use all reasonable efforts to furnish to each such holder a "comfort
letter" signed by the independent public accountants who have certified the
Company's financial statements included in such registration statement,
addressed to each such holder, each such document covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered
to underwriters in underwritten public offerings of securities and such other
matters as such holders may reasonably request; and
(g) immediately notify holders of Eligible Securities included in such
registration statement at any time when a prospectus relating to a registration
pursuant to Article 3 or 4 hereof 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 any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
at the request of such holders prepare and furnish to such holders as many
copies of a supplement to or an amendment of such prospectus as such holders
reasonably request so that, as thereafter delivered to such holders, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
The Company may require holders of Eligible Securities included in
such registration statement to furnish the Company such information regarding
each such holder and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by law
or by the Commission in connection with any registration.
Holders of such Eligible Securities agree that upon receipt of any
notice from the Company of the happening of any event of the kind described in
subdivision (g) of this Article 5.1, such holder will forthwith discontinue
such holder's disposition of Shares pursuant to the registration statement
relating to such Eligible Securities until such holder's receipt of the copies
of the supplemented or amended prospectus contemplated by subdivision (g) of
this Section 5.1 and, if so directed by the Company, will deliver to the
Company (at the Company's expense) all copies, other than permanent file
copies, then in such holder's possession, of the prospectus relating to such
Shares.
5.2 (a) If requested by the underwriters for any underwritten offering
of any Eligible Securities pursuant to a registration requested under Article
3, the Company will enter into an underwriting agreement with such underwriters
for such offering, such agreement to be reasonably satisfactory in substance
and form to the Company, the holders of such Eligible Securities and the
underwriters and to contain such representations and warranties by the Company
and such other terms as are generally included in agreements of this type,
including, without limitation, indemnities to the effect and to the extent
provided in Article 7 and the holders of such Eligible Securities will
cooperate with the Company in the negotiation of the underwriting agreement and
will give consideration to the reasonable requests of the Company regarding the
form thereof, provided that nothing herein contained shall diminish the
foregoing obligations of the Company. The holders of such Eligible Securities,
if necessary, shall be a party to such underwriting agreement and may, at their
option, require that any or all of the representations and warranties by, and
the other agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for their benefit, and that any or all
of the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of the
holders of such Eligible
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
6
<PAGE> 7
Securities. The holders of such Eligible Securities, shall not be required to
make any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements typical in an
offering of that type, including those regarding such holders, their shares and
their intended method of distribution, any other information supplied by such
holder for use in the registration statement and any other representation
required by law.
(b) If the Company at any time proposes to register any of its
securities under the Securities Act as contemplated by Article 4 and such
securities are to be distributed by or through one or more underwriters, the
Company will, if requested by a holder of Eligible Securities as provided in
Article 4 and subject to the provisions of Article 5, arrange for such
underwriters to include all the shares to be offered and sold by such holder
among the securities to be distributed by such underwriters. Holders whose
Eligible Securities are to be distributed by such underwriters shall be a party
to the underwriting agreement between the Company and such underwriters and
may, at such holder's option, require that any or all of the representations
and warranties by, and the other agreements on the part of, the Company to and
for the benefit of such underwriters shall also be made to and for the benefit
of such holder and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holder. Holders of such
Eligible Securities shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations, warranties, or agreements typical in an offering of this type,
including those regarding such holders, their Eligible Securities and their
intended method of distribution and any other representation required by law.
5.3 Blackout Periods. (a) At any time when a registration statement
effected pursuant to Article 3 relating to Eligible Securities is effective,
upon written notice from the Company to holders of such Eligible Securities
that the Company determines in the good faith judgment of the Board of
Directors of the Company, with the advice of counsel, that such holders' sale
of Eligible Securities pursuant to the registration statement would require
disclosure of non-public material information the disclosure of which would
have a material adverse effect on the Company (an "Information Blackout"), such
holders shall suspend sales of Eligible Securities pursuant to such
registration statement until the earlier of:
(i) the date upon which such material information is disclosed to the.
public or ceases to be material, and
(ii) such time as the Company notifies such holders that sales
pursuant to such registration statement may be resumed (the number of days from
such suspension of sales by such holders until the day when such sales may be
resumed hereunder is hereinafter called a "Sales Blackout Period").
(b) Any delivery by the Company of notice of an Information Blackout
during the 90 days immediately following effectiveness of any registration
statement effected pursuant to Article 3 hereof shall give the holders of
Eligible Securities included therein the right, by written notice to the
Company within 20 Business Days after the end of such blackout period, to
cancel such registration and obtain one additional registration right under
Article 3 during the twelve month period immediately following such blackout
period (a "Blackout Termination Right").
(c) If there is an Information Blackout and holders of Eligible
Securities do not exercise their cancellation right, if any, pursuant to (b)
above, or, if such cancellation right is not available, the time period set
forth in Article 3 shall be extended for a number of days equal to the number
of days in the Sales Blackout Period.
5.4 Qualification for Rule 144 Sales. The Company will take all actions
reasonably necessary to comply with the filing requirements described in Rule
144(c)(1) so as to enable holders to sell Eligible Securities without
registration under the Securities Act and, upon the written request of any such
holder, the Company will deliver to such holder a written statement as to
whether it has complied with such filing requirements.
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
7
<PAGE> 8
ARTICLE 6
PREPARATION; REASONABLE INVESTIGATION
6.1 Preparation: Reasonable Investigation. In connection with the
preparation and filing of each registration statement registering Eligible
Securities under the Securities Act, the Company will give the holders of
Eligible Securities proposed to be included therein and the underwriters, if
any, and their respective counsel and accountants, drafts of such registration
statement for their review and comment prior to filing and such reasonable and
customary access to its books and records and such opportunities to discuss the
business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary.
ARTICLE 7
INDEMNIFICATION AND CONTRIBUTION
7.1 Indemnification and Contribution. (a) In the event of any
registration of any Eligible Securities hereunder, the Company will enter into
customary indemnification arrangements to indemnify and hold harmless, each
holder of Eligible Securities included therein, each underwriter participating
in the offering or sale of such securities, and each person (as defined in the
Securities Act of 1933, as amended), if any, who controls any such holder or
such underwriter within the meaning of the Securities Act, against any losses,
claims, damages, liabilities and expenses, joint or several, to which such
person may be subject under the Securities Act or otherwise insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities Act,
any preliminary prospectus or final prospectus included therein, or any
amendment or supplement thereto, or any document incorporated by reference
therein, or (ii) 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 the Company will promptly reimburse each such person for
any legal or any other expenses reasonably incurred by such person in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expenses arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus
or final prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by holders of Eligible
Securities included therein or such underwriter expressly for use in the
registration statement. Such indemnity shall remain in, full force and effect
regardless of any investigation made by or on behalf of any such person and
shall survive the transfer of such securities. The Company also shall agree to
provide provision for contribution in circumstances where such indemnity is
held unenforceable.
(b) Each holder of Eligible Securities included therein, by virtue of
exercising registration rights hereunder, agrees and undertake to enter into
customary indemnification arrangements to indemnify and hold harmless (in the
same manner and to the same extent as set forth in clause (a) of this Article
7) the Company, each director of the Company, each officer of the Company who
shall sign such registration statement, each person who participates as an
underwriter in the offering or sale of such securities, each person, if any,
who controls the Company or any such underwriter within the meaning of the
Securities Act, with respect to any statement in or omission from such
registration statement, any preliminary prospectus or final prospectus included
therein, or any amendment or supplement thereto, but only to the extent that
such statement or omission was made in reliance upon and in conformity with
written information furnished by such holder to the Company expressly for use
in the registration statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling person and shall survive the transfer
of the registered securities by such holder and the expiration of this
Agreement.
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
8
<PAGE> 9
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in the
preceding subdivisions of this Article 7, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action, provided that
the failure of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under the preceding
subdivisions of this Article 7, except to the extent that the indemnifying
party is prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified party's
reasonable judgment defenses may be available to the indemnified party that may
not be available to the indemnifying party or a conflict of interest between
such indemnified party and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
ARTICLE 8
MISCELLANEOUS
8.1 Captions. The captions or headings in this Agreement are for
convenience and reference only, and in no way define, describe, extend or limit
the scope or intent of this Agreement.
8.2 Severability. If any clause, provision or section of this
Agreement shall be invalid or unenforceable, the invalidity or unenforceability
of such clause, provision or section shall not affect the enforceability or
validity of any of the remaining clauses, provisions or sections hereof to the
extent permitted by applicable law.
8.3 Governing Law. This Agreement shall be construed and enforced in
accordance with the internal laws of the State of Louisiana, without reference
to its rules as to conflicts or choice of laws.
8.4 Modification and Amendment. This Agreement may not be changed,
modified, discharged or amended, except by an instrument signed by all of the
parties hereto.
8.5 Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
8.6 Entire Agreement. This Agreement constitutes the entire agreement
and understanding among the parties and supersedes any prior understandings
and/or written or oral agreements among them respecting the subject matter
herein.
8.7 Assignment. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the successors and assigns of the Company
and Attayi. Attayi may assign his rights hereunder to one or more members of
the Attayi Group. In addition, any member of the Attayi Group may assign its
rights to any other person so long as such persons agree to act in concert with
respect to all matters under this Agreement. Any such assignee must agree to be
bound by the terms hereof. The members of the Attayi Group shall act by and
through Ali Attayi with respect to the actions contemplated by this Agreement
and, in the event of Ali Attayi's death or disability, through such other
member of the Attayi Group as the other members of the Attayi Group may
designate by notice to the Company.
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
9
<PAGE> 10
8.8 Notices. All notices, requests, demands, consents and other
communications required or permitted to be given pursuant to this Agreement
shall be in writing and delivered by hand, by overnight courier delivery
service or by certified mail, return receipt requested, postage prepaid.
Notices shall be deemed given when actually received, which shall be deemed to
be not later than the next Business Day if sent by overnight courier or after
three (3) Business Days if sent by mail. Notice to Attayi shall be made to the
address specified in the Purchase Agreement, or such other address as
designated, from time to time, by Attayi. Notice to the Company shall be sent
to Rankin Automotive Group, 3711 S. MacArthur Drive, Alexandria, LA 71032,
Attn: Mr. Randall Rankin.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed as of the day and year first above
written.
ATTEST: RANKIN AUTOMOTIVE GROUP, INC.
By: By:
-------------------------- -----------------------------------
Its: Title:
------------------------- --------------------------------
(CORPORATE SEAL)
- ----------------------------- --------------------------------------
Witness Ali Attayi
- -----------------------------
Witness
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
10
<PAGE> 1
EXHIBIT 10.(W)
EMPLOYMENT AGREEMENT
This employment agreement is made and entered into as of the 11th day
of March, 1999 by and between Rankin Automotive Group, Inc. (the "Employer"), a
Louisiana corporation, and Otis A. Cannon Jr., a resident of the State of
Louisiana (the "Employee").
WITNESSETH:
1. Employment. The Employer hereby employs the Employee, and the Employee
hereby accepts such employment, upon the terms and subject to the conditions
set forth in this Agreement.
2. Term. Subject to the provisions of termination as hereinafter provided, the
term of employment under this Agreement shall be for an initial five-year term
beginning the day after all closing documents required for Employer's pending
purchase of certain assets of Automotive & Industrial Supply, Inc. and
terminating five years from such date, unless employment is terminated as
otherwise provided in this Agreement.
3. Compensation, Reimbursement, Etc.
(a) The basic compensation to the Employee shall be payable in
accordance with company policy, not less than monthly, based
upon calendar year annual compensation of one hundred, twenty
thousand dollars ($120,000.00).
(b) The compensation provided for in Section 3 (a) above shall be
in addition to any pension or profit sharing payments set
aside or allocated for the benefit of the Employee.
(c) The Employee will be provided benefits comparable to those of
similarly situated employees of Employer, including, but not
limited to health, life, dental or disability insurance as
well as such other benefits as may be provided from time to
time by the Employer to other management employees.
(d) The Employer will provide to Employee during the term of this
Agreement in accordance with company policy an automobile
suitable to employee's position with the Company. Initially,
the Company will provide employee with a 1998 Toyota Four
Runner.
4. Duties.
(a) The Employee shall have such duties as may from time to time
be reasonably assigned to him by the Board of Directors of
the Employer or the chief executive officer of the Employer.
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<PAGE> 2
(b) The principal services for which the Employee is engaged are
to manage the business of the Employer according to the
direction of the Board of Directors or the chief executive
officer of the Employer.
5. Extent of Service. During the term of his employment under this Agreement,
the Employee shall devote such time and efforts to the business of the
Employer, as may be reasonably necessary in the normal course of business.
6. Death or Retirement. All rights of the Employee hereunder shall terminate
upon his death or retirement except that the Employer shall pay to the estate
of the Employee or to the Employee such compensation as would otherwise have
been payable to the Employee up to the end of the month in which his death or
retirement occurs and further, Employer shall continue to be liable for any
benefits payable upon Employee's death.
7. Other Terminations.
(a) (I) Either the Employee or the Employer may
terminate the employment of the Employee hereunder
upon written notice given ninety (90) days prior to
the end of the term provided for in Section 2 of
this agreement or any extension thereof;
(II) If the Employee gives notice pursuant to Section
7(a)(I) above, the Employer shall have the right to
relieve the Employee, in whole or in part, of his
duties under this Agreement, subject to paying
Employee compensation due for the remaining ninety
(90) days.
(b) (I) The Employer may terminate the employment of the
Employee hereunder without notice: (A) upon the
Employee's breach of any provision of this
Agreement; or (B) for other good cause (as defined
below).
(II) The term "good cause" as used in this Agreement shall
include, but shall not necessarily be limited to,
habitual absenteeism, a pattern of conduct which
tends to hold the Employer up to ridicule in the
community, conduct disloyal to the Employer,
conviction of any felony crime or conviction of any
crime involving moral turpitude or substance
dependence, as determined by the Board of Directors
of the Employer, on any addictive substance,
including but not limited to alcohol, amphetamines,
barbiturates, methadone, cannabis, cocaine, PCP, THC,
LSD or illegal or narcotic drugs. If any
determination of substance dependence by the Board of
Directors is disputed by the Employee, the parties
hereto agree to abide by the decision of a panel of
three physicians, one of which shall be selected by
the Employer, one of which shall be selected by the
Employee and a third selected by the other two
doctors. The Employee agrees to make himself
available for and submit to examinations by such
physicians as may be directed by the Employer.
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<PAGE> 3
Failure to submit to any such examination shall
constitute a breach of a material part of this
Agreement.
(c) If the employment of the Employee is terminated pursuant to
this Section 7(b)(I), the Employer shall pay to the Employee
any compensation earned but not paid to the Employee prior to
such termination. Such payment shall be in full and complete
discharge of any and all liabilities or obligations of the
Employer hereunder, and the Employee shall be entitled to no
further benefits under this Agreement except such benefits as
are customarily available to other terminated employees
similarly situated.
(d) Employee may terminate this Agreement without notice upon
Employer's breach of any provision of this Agreement, and
Employee shall be entitled to one (1) year of compensation
and benefits provided for in this agreement or all remaining
compensation and benefits provided for in this agreement,
whichever is less.
8. Confidentiality . The Employee agrees to keep in strict secrecy and
confidence any and all information the Employee assimilates or to which he has
access during his employment by the Employer and which has not been publicly
disclosed and is not a matter of common knowledge in the fields of work of the
Employer. The Employee agrees that both during and after the term of this
employment by the Employer, he will not, without prior written consent of the
Employer, disclose any such confidential information to any third person,
partnership, joint venture, company, corporation or other organization.
9. Non-Competition and Non-Solicitation.
(a) During the term of this Agreement, except as contemplated
herein, and for a period of two (2) years after the
termination of his employment with the Employer, regardless
of the reason for such termination, the Employee shall not,
directly or indirectly, within the State of Louisiana, the
State of Texas, or within any other state or foreign country
in which the Employer conducts any business, enter into,
engage in, be employed by, or consult with any business in
competition with the business of the Employer as it is then
carried on; further, the Employee shall not sell to, market,
produce or otherwise deal with any customer of the Employer
as long as these actions are in direct competition with the
Employer. The restrictions of this Section 9 shall extend to
any and all activities of the Employee, whether as an
independent contractor, partner or joint venturer, or as an
officer, director, stockholder, agent, employee or salesman
for any person, firm, partnership, corporation or other
entity, or otherwise. The restrictions of this Section 9
shall not be violated by the ownership of no more than 2% of
the outstanding securities of any company whose stock is
traded on a national securities exchange or is quoted in the
Automated Quotation System of the National Association of
Securities Dealers (NASDAQ). Solicitation or acceptance of
orders outside of any prohibited territory as described above
for
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<PAGE> 4
shipment to, delivery in or service in any restricted
territory shall also constitute engaging in business within
the restricted territories in violation of this Section 9 .
(b) During his employment with the Employer, except as
contemplated herein, and for a period of two (2) years after
the termination of his employment with the Employer,
regardless of the reason for such termination, the Employee
agrees he will refrain from and will not directly or
indirectly, as independent contractor, employee, consultant,
agent, partner, joint venturer, or otherwise: (1) solicit any
of the employees of the Employer to terminate their
employment or (2) accept employment with or seek remuneration
by any of the clients or customers of the Employer with whom
the Employer did business during the term of the Employee's
employment.
(c) The period of time during which the Employee is prohibited
from engaging in certain business practices pursuant to
Section 9(a) or (b) shall be extended by any length of time
during which the Employee is in breach of such covenants.
(d) It is understood by and between the parties hereto that the
foregoing restrictive covenants set forth in Sections 9(a)
through (c) are essential elements of this Agreement, and
that, but for the agreement of the Employee to comply with
such covenants, the Employer would not have agreed to enter
into this Agreement. Such covenants by the Employee shall be
construed as agreements independent of any other provision in
this Agreement. The existence of any claim or cause of action
of the Employee against the Employer, whether predicated on
this Agreement, or otherwise, save and except a failure of
Employer to pay sums due under the terms of this agreement,
shall not constitute a defense to the enforcement by the
Employer of such covenants.
(e) It is agreed by the Employer and Employee that if any portion
of the covenants set forth in this Section 9 are held to be
invalid, unreasonable, arbitrary or against public policy,
then such portion of such covenants shall be considered
divisible both as to time and geographical area. The Employer
and Employee agree that, if any court of competent
jurisdiction determines the specified time period or the
specified geographical area applicable to this Section 9 to
be invalid, unreasonable, arbitrary or against public policy,
a lesser time period or geographical area which is determined
to be reasonable, nonarbitrary and not against public policy
may be enforced against the Employee. The Employer and the
Employee agree that the foregoing covenants are appropriate
and reasonable when considered in light of the nature and
extent of the business conducted by the Employer.
10. Specific Performance. The Employee agrees that damages at law will be an
insufficient remedy to the Employer if the Employee violates the terms of
Sections 7, 8, or 9 of this Agreement and that the Employer would suffer
irreparable damage as a result of such
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<PAGE> 5
violation. Likewise, The Employer also agrees that damages at law will be
insufficient remedy to the Employee if the Employer violates the terms of
Sections 7, 8, or 9 of this Agreement and that the Employee would suffer
irreparable damages as a result of such violation. Accordingly, it is agreed
that the Employer and Employee shall be entitled, upon application to a court
of competent jurisdiction to obtain injunctive relief to enforce the provisions
of such Sections, which injunctive relief shall be in addition to any other
rights or remedies available to either parties. Employer. If it is determined
that such violation has occurred, the Employee agrees to pay to the Employer
all costs and expenses incurred by the Employer relating to the enforcement of
the terms of Sections 7, 8, or 9 of this Agreement, including reasonable fees
and disbursements of counsel (both at trial and in appellate proceedings) if
the Employee is found to be at fault. If it is determined that such violation
has occurred and the Employer is at fault, the Employer agrees to pay to the
Employee all costs and expenses incurred by the Employee relating to the
enforcement of the terms of Sections 7, 8, or 9 of this Agreement, including
reasonable fees and disbursements of counsel (both at trial and in appellate
proceedings).
11. Compliance with other Agreements. The Employee and Employer represent and
warrant that the execution of this Agreement and performance of the obligations
hereunder will not conflict with, result in the breach of any provisions of or
the termination of or constitute a default under any Agreement to which the
Employee and Employer are a party to or by which the Employee or Employer are
or may be bound.
12. Waiver or Breach. The waiver by the Employer of a breach of any of the
provisions of this Agreement by the Employee shall not be construed as a waiver
of any subsequent breach by the Employee.
13. Binding Effect; Assignment. The rights and obligations of the Employer
under this Agreement shall inure to the benefit of and shall be binding upon
the successors and assigns of the Employer only with the written permission of
the Employee. This Agreement is a personal employment contract and the rights,
obligations and interests of the Employee hereunder may not be sold, assigned,
transferred, pledged or hypothecated without the written permission of the
Employee.
14. Entire Agreement. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof. This Agreement may be changed only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge is sought.
15. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
16. Governing Law. This Agreement shall be construed and enforced in accordance
with the laws of the State of Louisiana.
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<PAGE> 6
17. Incentives. As an incentive to get this officer to stay with the company at
an executive level, Employer will do the following upon execution of this
Agreement:
(a) Grant the Employee irrevocable stock options on shares with a
total value of two hundred thousand dollars ($200,000.00),
valued at the price of Employer's stock as of the day of the
signing of the definitive asset purchase agreement, said
options to vest as follows: if the Employee remains employed
by Employer, on the first anniversary after closing an option
on shares having a total value of one hundred thousand
dollars ($100,000.00), and, if the employee remains employed
by Employer on the second anniversary date after closing an
option on shares having a total value of one hundred thousand
dollars ($100,000.00). Employee or his Estate shall have five
(5) years from each vesting date to exercise the respective
option. Prior to the exercise of these options, the options
will be automatically deemed adjusted upon the occurrence of
any stock split, stock dividend or recapitalization, in
direct proportion to such stock split, stock dividend or
recapitalization, so that the option will retain the value
originally intended by the parties. For example, if the stock
shall split two for one, Employee's options will double and
the option price will be cut in half.
18. Notices. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by certified or registered mail,
first class, return receipt requested, to the parties at the following
addresses:
To the Employer: Rankin Automotive Group, Inc.
3709 S. MacArthur Drive
Alexandria, LA 71302
Attention: Randall B. Rankin
Facsimile No. 318-443-9952
With a copy Ricky L. Sooter
(which shall not Daniels & Sooter, L.L.C.
constitute notice) to: 3600 Jackson Street, Suite 106
Alexandria, LA 71306
Facsimile No. 318-448-8528
With a copy Michael Glass, Esq.
(which shall not 1735 White Street
constitute notice) to: Alexandria, Louisiana 71301
Facsimile No. 318-473-4062
If to Employee: Otis A. Cannon Jr.
725 Bert Kouns
Shreveport, LA 71118
Facsimile No. 318-683-1235
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<PAGE> 7
With a copy Glenn L. Langley, Esq.
(which shall not Cook, Yancey, King & Galloway
constitute notice) to: 333 Texas Street, Suite 1700
Shreveport, LA 71220
Facsimile No. 318-227-7850
or to such other address as any party hereto may, from time to time, designate
in writing delivered pursuant to the terms of this Section.
In witness whereof the parties hereto have executed this
Agreement as of the year and date set forth above.
EMPLOYER:
RANKIN AUTOMOTIVE GROUP, INC.
ATTEST:
BY:/s/ Nancy J. Grant BY: /s/Randall B. Rankin
--------------------------- -----------------------
Nancy J. Grant, Secretary Randall B. Rankin, CEO
Witnesses as to Employee: EMPLOYEE:
Glenn L. Langley BY: Otis A. Cannon, Jr.
- ------------------ -------------------
Otis A. Cannon, Jr.
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