ASSET PURCHASE AGREEMENT

 

EXECUTION COPY

 

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “ Agreement ”) dated as of December 10, 2004 by and among Wells Fargo Financial America, Inc., a Pennsylvania corporation, Wells Fargo Financial CAR LLC, a Delaware limited liability company, Wells Fargo Financial Kentucky, Inc., a Kentucky corporation, Wells Fargo Financial Nevada, Inc., a Nevada corporation, Wells Fargo Financial North Carolina, Inc., a North Carolina corporation, and Wells Fargo Financial Texas, Inc., a Texas corporation (each individually a “ Seller ” and collectively, the “ Sellers ”) and each a wholly owned subsidiary of Wells Fargo Financial, Inc., an Iowa corporation (“ Sellers’ Parent ”), and CARS Acquisition LLC, a Georgia limited liability company (the “ Buyer ”) and wholly owned subsidiary of CompuCredit Corporation, a Georgia corporation (“ Buyer’s Parent ”).

 

RECITALS

 

WHEREAS, the Sellers are in the business of, among other things, purchasing and servicing motor vehicle retail installment sales contracts secured by new and used motor vehicles and light-duty trucks primarily (but not exclusively) from Buy-Here/Pay-Here Dealers throughout the United States (the “ Business ”); and

 

WHEREAS, the Sellers now desire to sell and assign, and the Buyer desires to buy, substantially all of the assets and assume certain liabilities of the Business.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other good and valuable consideration, the receipt and adequacy of which the parties hereby acknowledge, the parties hereto agree as follows:

 

ARTICLE I.  DEFINITIONS

 

1.1        Defined Terms .  As used in this Agreement, the following terms and variations thereof shall have the following meanings specified or referred to in this Section 1.1 :

 

“ Accounts Receivable ” means (i) all trade accounts receivable and other rights to payment from customers of the Business, including an account with a Seller that represents the unpaid principal balance, late fees and other charges incurred in connection with an Obligor’s Vehicle Contract and the Related Security, (ii) all other accounts or notes receivable of the Business, (iii) the accrued but unpaid interest earned on any of the foregoing, and (iv) any claim, remedy or other right related to any of the foregoing.

 

“ Acquisition Date ” shall mean, with respect to a Vehicle Contract, the date on which a Seller acquired such Vehicle Contract from a Dealer.

 

“ Adverse Claims ” means, for any assets or property of a Person, a claim of ownership or any Lien in, of, or on, such asset or property in favor of any other Person, except those in favor, or for the benefit, of Buyer.

 

“ Affiliate ” of a Person shall mean (i) any Person directly or indirectly owning, controlling or holding, with power to vote, ten percent (10%) or more of the outstanding voting securities of such other Person; (ii) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote, by such other Person; (iii) any Person, directly or indirectly, controlling, controlled by or under common control with, such other Person; or (iv) any officer, director, partner, co-partner, or employee of such other Person.

 

“ Ancillary Agreements ” shall mean the Bill of Sale, Power of Attorney, Assignment and Assumption Agreement, Lease Assignment and Assumption Agreements, Subscriber Agreement, Transition Services Agreement and such other documents or agreements that the parties deliver in connection with the consummation of the transactions contemplated hereby.

 

“ Ancillary Product ” means, with respect to any Vehicle Contract, any extended vehicle service contract, vehicle warranty, guaranteed auto protection policies or waivers, mechanical breakdown contracts or such other products or services sold to an Obligor in connection with his or her financing of a Vehicle.

 

“ Bankruptcy Exception ” shall mean, with respect to the enforceability of any agreement, contract, obligation or commitment, any limitation thereon imposed by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally and (ii) the general principles of equity, regardless of whether asserted in a proceeding in equity or at law.

 

“ Best Efforts ” means the efforts a prudent Person desirous of achieving a result would use in similar circumstances to achieve that result as expeditiously as possible.

 

 

“ Books and Records ” shall mean, to the extent they exist, (i) Records and lists of the Sellers pertaining to (a) the Purchased Assets, (b) the Business, (c) the customers (including former customers), Dealers (including any former Dealers), suppliers or Employees; (ii) all product, business and marketing plans or materials of Sellers relating to the Business, the Purchased Assets or Assumed Liabilities; and (iii) operating Records maintained by the Sellers relating to the Business, the Purchased Assets or the Assumed Liabilities.

 

“ Breach ” means any breach of, or any inaccuracy in, any representation or warranty or any breach of, or failure to perform or comply with, any covenant or obligation, in or of this Agreement or any other contract, or any event which with the passing of time or the giving of notice, or both, would constitute such a breach, inaccuracy or failure.

 

“ Business ” shall have the meaning set forth in the Recitals.

 

“ Business Day ” means any day other than (i) Saturday or Sunday or (ii) any other day on which bank institutions are authorized by law to be closed or any day the New York Stock Exchange is closed.

 

“ Buy-Here/Pay-Here Dealer ” means an independent or non-franchise automobile dealer who provides consumer automobile financing on its own behalf through a captive finance operation or Related Finance Company (as defined under the Code) for the purpose of underwriting and servicing motor vehicle retail installment contracts that were originated directly by such dealer; provided , however , to the extent a Buy-Here/Pay-Here Dealer arranges for the contemporaneous purchase of motor vehicle retail installment contracts through one or more unrelated third parties, for purposes of this Agreement, such dealer shall not be deemed a Buy-Here/Pay-Here Dealer with respect to such third party financing transactions.  As used in this definition, “contemporaneous purchase” shall refer to motor vehicle retail installment contracts which are approved prior to execution, as well as those that are approved for purchase within seven (7) days of the date of execution (i.e., “spot deliveries”), and in each case, purchased or acquired at par or at a premium to par.

 

“ Closing Date ” shall mean the later of (i) March 1, 2005, or (ii) such other date on which the closing conditions set forth in Article VII are satisfied or waived by the parties hereto.

 

“ Closing Date Data ” shall mean (i) the data file containing the electronic Record and Accounts Receivable balance of each of the Vehicle Contracts and (ii) the Excel file containing the electronic Record and balance of each Dealer’s Dealer Reserve, in each case, as transferred as part of the Purchased Assets and prepared as of the Closing Date.

 

“ Closing Purchase Price ” shall mean the Purchase Price as determined based on the Closing Balance Sheet.

 

“ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985.

 

“ Code ” shall mean the Internal Revenue Code of 1986, as amended.

 

“ Collections ” means, with respect to any Vehicle Contract, any and all of the following to the extent received by a Seller or its Affiliate after the Closing Date or on or prior to the Closing Date but not applied to such Vehicle Contract (and reflected on its related Accounts Receivable): (i) all payments; (ii) all Recoveries, (iii) all proceeds received from the liquidation of the related Vehicle; (iv) all insurance proceeds received under any Insurance Policy with respect to such Vehicle Contract or the related Obligor; (v) all rebates of premiums and other amounts relating to an Insurance Policy or Ancillary Product financed under the Vehicle Contract; and (vi) all fees and other receipts.

 

“ Computer Files ” shall mean all computer or other electronic files used in the Business including the archived contact management data used exclusively by the Business (i.e., “Goldmine data”).  Notwithstanding the foregoing, this definition shall not include, to the extent licensed by the Sellers or their Affiliates pursuant to a non-transferable Third-Party license agreement or which is not used exclusively or primarily by the Business, any (i) word processing, spreadsheet, presentation or database programs, (ii) operating systems or system of record (i.e., “Supreme”) used by the Business or (iii) other computer programs or systems used in connection with Business.

 

“ Consent ” means any approval, consent, ratification, waiver or other authorization.

 

“ Contract ” means any agreement, contract, Space Lease, note, loan, evidence of indebtedness, purchase order, letter of credit, indenture, employment agreement, instrument, obligation or commitment to which a Seller is a party or is bound (or otherwise has acquired rights and duties thereunder) and which relates to the Business, whether oral or written.

 

“ Contract Files ” shall mean the Records relating to and evidencing a Contract maintained by a Seller as of the Closing Date.  With respect to the Vehicle Contracts, the Contract Files may include:

 

(a)    the fully executed original Vehicle Contract;

 

(b)    the original certificate of title or evidence of ownership and security interest;

 

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(c)    to the extent they exist, the transaction history for the Vehicle Contract from the Acquisition Date up to and including the Closing Date;

 

(d)    to the extent they exist, electronically stored collection and customer service notes from the Acquisition Date up to and including the Closing Date; and

 

(e)    to the extent that they exist, all other documentation or Records held by or on behalf of a Seller, including vehicle theft registration documents and references.

 

“ Damages ” shall mean any loss, Liability, claim, damage, cost or expense (including reasonable Third-Party costs of investigation and defense and reasonable Third-Party attorneys’ fees and expenses), whether or not involving a Third-Party Claim.

 

“ Dealer ” means, with respect to any Vehicle Contract and the related Vehicle, the automobile dealer or its Affiliate that (i) sold the related Vehicle, (ii) originated the Vehicle Contract, and/or (iii) sold and assigned such Vehicle Contract to a Seller.

 

“ Dealer Agreement ” means the agreement pursuant to which a Dealer has (i) assigned, and a Seller has acquired, a Vehicle Contract, including any short form purchase agreement authorized by such agreement to affect subsequent transactions between the parties thereto or (ii) assigned the right to service and/or collect any payments payable on a Vehicle Contract owned by such Dealer.

 

“ Dealer Reserve ” shall mean the reserve account established for each Dealer pursuant to the related Dealer Agreement and that is used to effect the Dealer’s repurchase of any Vehicle Contract: (i) that is determined by the Sellers to be uncollectible (in a manner consistent with its internal collection and servicing procedures); (ii) as to which a Breach has occurred or to Sellers’ Knowledge, is Threatened; or (iii) for any other reason set forth in such Dealer Agreement.

 

“ Disclosure Schedule ” shall mean the schedule attached hereto and delivered by the Sellers to the Buyer contemporaneously herewith, which sets forth the exceptions to the representations and warranties contained in Article IV hereof and certain other information called for by this Agreement.  Unless otherwise specified, each reference in this Agreement to any numbered schedule is a reference to that numbered schedule which is included in the Disclosure Schedule.

 

“ Effective Time ” shall mean the time at which the parties consummate the transactions contemplated by this Agreement in compliance with the terms and conditions set forth herein.

 

“ Employee ” means all full- and part-time employees of the Sellers employed exclusively in the Business as conducted as of the date hereof.

 

“ Employee Plans ” means (i) all “employee benefit plans,” as defined in Section 3(3) of ERISA, and all other material employee benefit arrangements (including any trusts maintained for such arrangements) relating to the Employees or the Business, including any such arrangements providing for severance pay, sick leave, vacation pay, salary continuation for disability, retirement benefits, deferred compensation, bonus pay, incentive pay, stock options, hospitalization insurance, medical insurance, life insurance, scholarships or tuition reimbursements, maintained by the Sellers or their Affiliates or to which the Sellers or their Affiliates are obligated to contribute thereunder for current or former Employees, and (ii) all “employee pension benefit plans,” as defined in Section 3(2) of ERISA, maintained by the Sellers or any ERISA Affiliate or to which the Sellers or any ERISA Affiliate have contributed or been obligated to contribute thereunder during the last six (6) years.

 

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974 or any successor Law, and regulations and rules issued pursuant to that Act or any successor Law.

 

“ ERISA Affiliate ” shall mean any entity that is (or at any relevant time was) a member of a “controlled group of corporations” with, under “common control” with, or a member of an “affiliated service group” with, the Sellers or the Buyer, as applicable, as defined in Section 414(b), (c), (m) or (o) of the Code or Section 4001(a)(14) or 4001(b) of ERISA.

 

“ Facilities ” shall mean all Leased Real Property (including the Space Leases related thereto) and related facilities (and any improvements thereto) used in the operation of the Business, including the Tangible Personal Property used or operated by the Sellers or their Affiliate.

 

“ GAAP ” means generally accepted accounting principles in the United States as in effect from time to time.

 

“ Governing Documents ” shall mean with respect to any Person: (i) if a corporation, the articles or certificate of incorporation and the bylaws; (ii) if a general partnership, the partnership agreement and any statement of partnership; (iii) if a limited partnership, the limited partnership agreement and the certificate of limited partnership; (iv) if a limited liability company, the articles of organization and operating agreement or (v) any amendment or supplement to any of the foregoing.

 

“ Governmental Authorization ” shall mean any Consent, license, registration or permit issued, granted, given or otherwise made available by or under authority of any Governmental Entity or pursuant to any Law.

 

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“ Governmental Entity ” shall mean any court, administrative agency or commission or other federal, state, provincial, local or foreign governmental authority, instrumentality, agency or commission.

 

 “ Insurance Policy ” means (i) any comprehensive, collision, fire, theft or other insurance policy maintained by an Obligor that also lists a Seller as loss payee with respect to the related Vehicle or (ii) any credit life, involuntary unemployment, or accident and health insurance maintained by an Obligor in connection with any Vehicle Contract.

 

“ Intellectual Property Rights ” shall mean all of the following, owned or used exclusively by the Sellers or their Affiliates, to the extent they exist: (i) trademarks and service marks (registered and unregistered), trade dress, trade names and other names and slogans embodying business goodwill or indications of origin, all applications or registrations in any jurisdiction pertaining to the foregoing and all goodwill associated therewith; (ii) patents, patentable inventions, discoveries, improvements, ideas, know-how, formula methodology, processes, technology and computer programs, software and databases (including source code, object code, development documentation, programming tools, drawings, specifications and data) and all applications or registrations in any jurisdiction pertaining to any of the foregoing including all re-issues, continuations, divisions, continuations-in-part, renewals or extensions thereof; (iii) all trade secrets, including confidential and other non-public information, and the right in any jurisdiction to limit the use or disclosure thereof; (iv) copyrights in writings, designs, mask works or other works, and applications or registrations in any jurisdiction for the foregoing; (v) database rights; (vi) Internet websites, domain names and registrations or applications thereof; (vii) licenses, immunities, covenants not to sue and the like relating to any of the foregoing; (viii) books and records described or used in connection with any of the foregoing; and (ix) claims or causes of action arising out of or related to infringement or misappropriation of any of the foregoing.

 

“ IRS ” means the Internal Revenue Service.

 

“ Knowledge ” for purposes of this Agreement, an individual will be deemed to have Knowledge of a particular fact or other matter if that individual is actually aware of that fact or matter.  A Person (other than an individual or a Seller) will be deemed to have Knowledge of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director or officer of that Person (or in any similar capacity) has, or at any time had, Knowledge of that fact or other matter.  A Seller will be deemed to have Knowledge of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director, officer or Key Employee of that Seller or legal counsel of Sellers’ Parent that provides legal services to the Business (or, in each case, in any similar capacity) has, or at any time had, Knowledge of that fact or other matter.

 

“ Law ” shall mean any statute, rule, regulation or other provision of law, or any order, judgment or other direction of a court or other tribunal, or any other governmental requirement, permit, registration, license or authorization.

 

“ Liability ” means any direct or indirect liability, indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or endorsement of or by any Person, whether accrued, absolute, contingent, liquidated or unliquidated.

 

“ License ” shall mean all Governmental Authorizations necessary or desirable for the past, present or anticipated conduct of, or relating to the operation of the Business.

 

“ Lien ” shall mean any claim, pledge, lien, security interest or other encumbrance of any kind whatsoever.

 

“ Material Adverse Change ” or “ Material Adverse Effect ” shall mean any change, event or effect that is or could reasonably be expected to be materially adverse to the business, assets, condition (financial or other), results of operations or prospects of any party (or the Business, as the case may be) or which otherwise could reasonably be expected to prevent the consummation of the transactions contemplated hereby.

 

“ Obligor ” shall mean, for a Contract, each Person obligated to pay such Contract.

 

“ Order ” means any order, injunction, judgment, decree, ruling, assessment or arbitration award of any Governmental Entity or arbitrator.

 

“ Ordinary Course of Business ” shall mean the ordinary and usual course of the conduct of the Business as currently conducted and consistent with past practices and not knowingly in violation of any Law or Order; provided , however , that a Contract related to the employment of any Active Employee shall not be deemed to have been entered into in the Ordinary Course of Business.

 

“ Person ” shall mean an individual, a partnership, a corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture or other entity or a Governmental Entity.

 

“ Preliminary Purchase Price ” shall mean the Purchase Price as determined based on the Interim Balance Sheet prepared as of the month-end immediately preceding the Closing Date.  For the avoidance of doubt, an example of the application of the foregoing calculation is set forth in Exhibit A using the Initial Balance Sheet.

 

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“ Proceeding ” means any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Entity or arbitrator.

 

“ Purchased Assets ” shall mean substantially all of the assets of the Business, including the following:

 

(i)             all Facilities;

 

(ii)            all Accounts Receivable;

 

(iii)           all Contracts and related Contract Files except the Contracts and related Contract Files set forth on Schedule 2.2(d);

 

(iv)           all Licenses or renewals thereof, in each case to the extent transferable to Buyer, including those listed on Schedule 4.1(d);

 

(v)            to the extent they exist and are in the possession of the Active Employees or located in the Facilities (or otherwise held by the Sellers’ Representatives in connection with the Business), copies of all data and Books and Records related to and used exclusively or primarily in the Business including client customer lists and Records, current and historical operational data and Records, current and historical financial data and Records,  referral sources, operating guides and manuals, all Computer Files, creative materials, advertising materials, sales and promotional materials, studies, reports, correspondence and other similar documents and Records and, subject to applicable Law, copies of personnel Records;

 

(vi)           except as set forth in Section 2.2(g) , all rights of Sellers relating to deposits and prepaid expenses, claims for refunds and rights to offsets in respect thereof, in each case to the extent related to the Business; and

 

(vii)          all insurance benefits, including rights and proceeds, arising from or relating to the Purchased Assets or the Assumed Liabilities prior to the Effective Time, unless expended in accordance with this Agreement.

 

“ Purchase Premium ” shall equal twenty-three million dollars ($23,000,000).

 

“ Purchase Price ” shall mean (i) the Net Assets plus (ii) the Purchase Premium.

 

“ Record ” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

 

“ Recoveries ” means, with respect to any Vehicle Contract that has been charged-off, all monies collected by a Person (from whatever source, including proceeds of a deficiency balance or insurance proceeds recovered after the charge-off) on such Contract.

 

“ Related Person ” means, with respect to (i) a particular individual: (a) each other member of such individual’s Family; (b) any Person that is directly or indirectly controlled by any one or more members of such individual’s Family; (c) any Person in which members of such individual’s Family hold (individually or in the aggregate) a Material Interest; and (d) any Person with respect to which one or more members of such individual’s Family serves as a director, officer, partner, executor or trustee (or in a similar capacity); and (ii) a specified Person other than an individual: (a) any Affiliate and (b) any Person with respect to which such specified Person serves as a general partner or trustee (or in similar capacity).

 

For purposes of this definition: (i) “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and shall be construed as such term is used in the rules promulgated under the Securities Act of 1933, as amended; (ii) the “Family” of an individual includes (a) the individual, (b) the individual’s spouse, (c) any other natural person who is related to the individual or the individual’s spouse within the second degree and (d) any other natural person who resides with such individual; and (iii) “Material Interest” means direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of voting securities or other voting interests representing at least ten percent (10%) of the outstanding voting power of a Person or equity securities or other equity interests representing at least ten percent (10%) of the outstanding equity securities or equity interests in a Person.

 

“ Related Security ” means, for any Vehicle Contract, all of the Sellers’ right, title and interest in, to and under (i) the Vehicle related to such Vehicle Contract; (ii) any Insurance Policies relating to such Vehicle or to the related Obligor, (iii) all Liens and property subject thereto, if any, purporting to secure payment of such Vehicle Contract, together with all financing statements describing any collateral securing such Vehicle Contract, (iv) all guarantees, letters of credit, insurance and other agreements supporting or securing payment of such Vehicle Contract, (v) all Ancillary Products related to such Vehicle Contract, (vi) rights or claims against the applicable Dealer and (vii) all proceeds of the foregoing.

 

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“ Representative ” means, with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, accountant, financial advisor, legal counsel or other person acting on behalf of, or with the consent of, that Person.

 

“ Space Lease ” shall mean any lease or rental agreement pertaining to the occupancy of any improved space on any land.

 

“ Tangible Personal Property ” shall mean all machinery, equipment, tools, furniture, office equipment, computer hardware (except for any email or other mainframe computer servers that are not used exclusively or primarily in the Business), supplies, materials and other items of tangible personal property of every kind owned or leased by the Sellers exclusively or primarily for use in the operation of the Business, together with any express or implied warranty (to the extent such warranty is transferable) by the manufacturers or sellers or lessors of any item or component part thereof and all maintenance records and other documents relating thereto.

 

“ Tax ” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value-added, alternative or add-on minimum, estimated or other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, and any interest, penalty, addition or additional amount thereon imposed, assessed or collected by or under the authority of any Governmental Entity or payable under any tax-sharing agreement or any other contract or agreement, whether disputed or not.

 

“ Tax Return ” means any return (including any information return), report, statement, schedule, notice, form, declaration, claim for refund or other document or information (i) relating to Taxes, or (ii) filed with or submitted to, or required to be filed with or submitted to, any Governmental Entity in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Law relating to any Tax.

 

“ Third Party ” means a Person that is not a party to this Agreement.

 

“ Third-Party Claim ” means any claim against either the Buyer or any of the Sellers by a Third Party whether or not involving a Proceeding.

 

“ Threatened ” shall mean, with respect to an action, Proceeding or other matter, that any demand or statement has been made (in writing or orally, if made to any of the officers or directors of a Person), or that any other event has occurred or any other circumstances exist, that would lead a reasonable person to conclude that such Proceeding or other matter is likely to be asserted, commenced, taken or otherwise pursued in the future.

 

“ Vehicle ” means any new and used motor vehicle, light-duty truck, sports utility vehicle, van or minivan, together with all accessories thereto, the financing of which gave rise to a Vehicle Contract.

 

“ Vehicle Contract ” shall mean a motor vehicle retail installment sale Contract (including any written amendments and assumptions thereto) owned or serviced by a Seller pursuant to a Dealer Agreement pursuant to which the related Obligor has (i) agreed to pay the amount financed set forth therein for the purchase of the related Vehicle and the related finance charge thereon and (ii) granted the Dealer a security interest in the Vehicle to secure the payment of the amount financed and the finance charge.

 

1.2.           Other Defined Terms .  The following terms shall have the meanings defined for such terms in the Sections set forth below:

 

Term		Section
“Active Employees”		9.1(a)
“Adjustment Amount”		2.6
“Assignment and Assumption Agreement”		3.2(a)(ii)
“Assumed Liabilities”		2.3
“Bill of Sale”		3.2(a)(i)
“Buyer Indemnified Parties”		10.2
“Closing”		3.1
“Closing Balance Sheet”		2.7(b)
“Closing Net Assets”		2.7(b)
“Competing Business”		9.6
“Confidential Information”		11.1
“Disclosing Party”		11.1

 

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“Excluded Assets”		2.2
“Excluded Liabilities”		2.4
“Hired Active Employees”		9.1(b)
“Initial Net Assets”		2.7(a)
“Initial Balance Sheet”		4.1(f)
“Interim Balance Sheet”		6.1(j)
“Interim Financial Statements”		6.1(j)
“Key Employee”		7.1(h)(ii)
“Lease and Novation Agreements”		3.2(a)(iii)
“Leased Real Property”		4.1(l)
“Net Assets”		2.7(a)
“Power of Attorney”		3.4
“Receiving Party”		11.1
“Seller Indemnified Parties”		10.3
“Subscriber Agreement”		3.2(a)(iv)
“Termination Fee”		8.2
“WARN Act”		4.1(k)

 

1.3.           Usage .

 

(a)    Interpretation .  In this Agreement, unless a clear contrary interpretation appears:

 

(i)             the singular number includes the plural number and vice versa;

 

(ii)            reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are not prohibited by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually;

 

(iii)           reference to any gender includes each other gender;

 

(iv)           reference to any agreement, document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time with the terms thereof;

 

(v)            reference to any Law means such Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder, and reference to any section or other provision of any Law means that provision of such Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision;

 

(vi)           “hereby,” “hereunder,” “hereof,” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Article, Section or other provision hereof;

 

(vii)          “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term;

 

(viii)         “or” is used in the inclusive sense of “and/or”;

 

(ix)            with respect to the determination of any period of time, “from” means “from and including” and “to” means “to but excluding”; and

 

(x)             references to documents, instruments or agreements shall be deemed to refer as well to all addenda, exhibits, schedules or amendments thereto.

 

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(b)    Legal Representation .  The parties negotiated this Agreement with the benefit of legal representation, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any party shall not apply to any construction or interpretation hereof.

 

ARTICLE II.  SALE AND PURCHASE

 

2.1.           Purchased Assets .  Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date, but effective as of the Effective Time, the Sellers shall sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase and acquire from Sellers, free and clear of any Adverse Claims, all of the Sellers’ rights, title and interest in and to all of the Purchased Assets without recourse, except as otherwise provided herein.

 

2.2.           Excluded Assets .  Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere in this Agreement, the following assets of the Sellers exclusively used in or relating to the Business (collectively, the “ Excluded Assets ”) are not part of the sale and purchase contemplated hereunder, are excluded from the Purchased Assets and shall remain the property of the Sellers after the Closing:

 

(a)    all cash, cash equivalents and short-term investments, including any loan loss allowance related to the Accounts Receivables;

 

(b)    all minute books, stock Records and corporate seals;

 

(c)    all insurance policies of the Sellers and rights thereunder (except to the extent specified in the definition of Purchased Assets);

 

(d)    all of the Contracts set forth in Schedule 2.2(d);

 

(e)    all Intellectual Property Rights;

 

(f)     all personnel Records and other Records that the Sellers are required by Law to retain in their possession; provided , however , subject to obtaining the Consent of any Employee or other Person, that, to the extent necessary to the operation of the Business and not in violation of any Law, the Sellers shall provide copies of such Records to Buyer (at Buyer’s expense);

 

(g)    all claims for refund of Taxes and other governmental charges of whatever nature;

 

(h)    all rights to or in any judgment, Orders or awards relating to any Proceeding commenced by the Sellers against Third Parties prior to the Effective Time;

 

(i)     all Licenses, except to the extent transferred as a Purchased Asset; and

 

(j)     all rights of the Sellers under this Agreement and any of the Ancillary Agreements.

 

2.3.           Assumed Liabilities .  On the Closing Date, but effective as of the Effective Time, Buyer shall assume and agree to discharge only the following Liabilities of the Sellers (collectively, the “ Assumed Liabilities ”):

 

(a)    any trade account payable incurred by a Seller in the Ordinary Course of Business between the date of the Initial Balance Sheet and the Closing Date that remains unpaid as of the Effective Time;

 

(b)    any Liability to the Sellers’ customers incurred by the Sellers in the Ordinary Course of Business outstanding as of the Effective Time (other than any Liability arising out of or relating to an act or omission that occurred prior to the Effective Time);

 

(c)    the aggregate Dealer Reserve balance as set forth on the Closing Balance Sheet;

 

(d)    any Liability arising after the Effective Time under the Contracts assigned pursuant to this Agreement (other than any Liability under such Contracts arising out of or relating to a Breach that occurred prior to the Effective Time);

 

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(e)    any Liability arising out of or relating to acts or omissions occurring after the Effective Time relating to any Vehicle Contract set forth on the Closing Date Data;

 

(f)     any Liability of the Sellers (solely as such Liability relates to the Business) arising after the Effective Time under any Contract included in the Purchased Assets that is entered into by any of the Sellers after the date hereof in the Ordinary Course of Business (other than any Liability under such Contracts arising out of or relating to a Breach that occurred prior to the Effective Time);

 

(g)    any other Liability of the Sellers described in Schedule 2.3(g);

 

(h)    any Liability arising with respect to the Purchased Assets after the Effective Time (other than any Liability related to the Purchased Assets arising out of or relating to an act or omission that occurred prior to the Effective Time);

 

(i)     any Liability arising as a result of the execution and performance of the transactions contemplated under the Subscriber Agreement; and

 

(j)     with respect to any Liability (regardless of whether it is assumed or excluded pursuant to this Section 2.3 or 2.4 , respectively) arising out of any action or omission by the Sellers prior to the Effective Time, if, ninety (90) days after the Closing Date, such act or omission is continued by the Buyer, the proportion of such Liability relating to such acts or omission after the Effective Time.

 

2.4.           Excluded Liabilities .  Notwithstanding Section 2.3 or any other provision of this Agreement to the contrary, all Liabilities of the Sellers (other than the Assumed Liabilities) shall remain the Liabilities of the Sellers and shall not be assumed by Buyer pursuant hereto (collectively, the “ Excluded Liabilities ”).  Without limiting the generality of the foregoing, Excluded Liabilities shall include the following Liabilities:

 

(a)            any Liability for Taxes arising as a result of the Sellers’ operation of the Business or their ownership of the Purchased Assets prior to the Effective Time, including any deferred Taxes of any nature;

 

(b)            any Liability under any Contract not assumed by Buyer under Section 2.3 ;

 

(c)            subject to Article X , any Liability under any Contract assumed by Buyer that arises out of or relates to any Breach that occurred prior to the Effective Time;

 

(d)            any Liability under any Employee Plans or any Liability relating to payroll, bonus, incentive (including sales commissions), vacation, sick leave, workers’ compensation, unemployment benefits, pension benefits, employee stock option or profit-sharing plans, health care plans or benefits or any other employee plans or benefits of any kind applicable to the Employees (or former Employees or both);

 

(e)            any Liability under any employment, severance, retention or termination agreement with any Employee (or former Employee or both) of the Sellers or any of their Affiliates;

 

(f)             any Liability arising out of or relating to any Employee grievance arising out of or relating to events that occurred prior to the Effective Time whether or not the affected Employees are hired by Buyer;

 

(g)            any Liability to indemnify, reimburse or advance amounts to any officer, director, employee or agent of the Sellers arising out of or relating to events occurring prior to the Effective Time;

 

(h)            any Liability arising out of any Proceeding pending as of the Effective Time;

 

(i)             any Liability arising out of any Proceeding commenced after the Effective Time and arising out of or relating to any occurrence or event happening prior to the Effective Time;

 

(j)             subject to Section 2.3(j) , any Liability arising out of or resulting from the Sellers’ compliance or non-compliance with any applicable Law or Order of any Governmental Entity, including non-compliance with any applicable environmental or health Law;

 

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(k)            any Liability of the Sellers arising out of or resulting from the consummation of the transactions contemplated by this Agreement or any of the Ancillary Agreements;

 

(l)             any Liability of the Sellers based upon the Sellers’ actions or omissions occurring after the Effective Time; and

 

(m)           any Liability of the Sellers not related to the Purchased Assets or otherwise unrelated to the Business.

 

2.5.           Consideration .  The consideration for the Purchased Assets shall be (a) the Preliminary Purchase Price plus or minus the Adjustment Amount and (b) the assumption of the Assumed Liabilities.  At the Closing, Buyer shall deliver to the Sellers the Preliminary Purchase Price by wire transfer in immediately available funds in accordance with the wire transfer instructions delivered to Buyer as provided in Section 3.2(b) .  The Adjustment Amount shall be paid in accordance with Section 2.6 .

 

2.6.           Adjustment Amount and Payment .  The “ Adjustment Amount ” (which may be a positive or negative number) will be equal to the amount determined by subtracting the Closing Purchase Price from the Preliminary Purchase Price.  If the Adjustment Amount is positive, the Sellers shall pay the Adjustment Amount by wire transfer an account specified by Buyer.  If the Adjustment is negative, the Buyer shall pay the Adjustment Amount by wire transfer to the account specified in Section 3.2(b)(i) .  Within three (3) Business days after the calculation of the Closing Net Assets becomes binding and conclusive on the parties pursuant to Section 2.7 , the Sellers or Buyer, as the case may be, shall make the wire transfer payment provided for in this Section 2.6 .

 

2.7.           Adjustment Procedure .

 

(a)    “ Net Assets ” as of a given date shall mean the amount calculated by subtracting the book value of Assumed Liabilities as of that date from the book value of the Purchased Assets as of that date.  The Net Assets of the Sellers as of the date of the Initial Balance Sheet (the “ Initial Net Assets ”) was one hundred five million four hundred eighty-eight thousand eight hundred thirty dollars ($105,488,830).

 

(b)    The Sellers shall prepare a balance sheet of the Business as of the Closing Date on the same basis and applying the same accounting principles, policies and practices that were used in preparing the Initial Balance Sheet (“ Closing Balance Sheet ”).  The Sellers shall then determine the Net Assets as of the Closing Date based upon the Closing Balance Sheet and using the same methodology as was used to calculate the Initial Net Assets (“ Closing Net Assets ”).  The Sellers shall deliver the Closing Balance Sheet and its determination of the Closing Net Assets to the Buyer within ten (10) Business Days after the Closing Date.

 

(c)    If within sixty (60) days following delivery of the Closing Balance Sheet and the Closing Net Assets calculation the Buyer has not given the Sellers notice of its objection as to the Closing Net Assets calculation (clearly identifying the basis of such objection), then the Closing Net Assets calculation shall be binding and conclusive on the parties and be used in computing the Adjustment Amount and the Closing Purchase Price; provided that Buyer shall use its Best Efforts to notify the Sellers of any such objection within five (5) Business Days after determining the basis of such objection regardless of whether Buyer has completed its audit of the Closing Balance Sheet as of the date of such determination.

 

(d)    If Buyer timely gives the Sellers such notice of objection, and if Buyer and the Sellers fail to resolve the issues outstanding with respect to the Closing Net Assets calculation within sixty (60) days of the Sellers’ receipt of Buyer’s notice of objection, the parties shall submit any unresolved issues to arbitration before a single member panel administered by and in accordance with the rules of the American Arbitration Association.  The parties shall cooperate with and assist the arbitration panel by providing materials and information relating to the unresolved issues as requested by the arbitration panel.  The arbitration panel’s determination shall be final, binding and conclusive on the parties and shall be used in the Closing Net Assets calculation.  The Sellers (collectively) and Buyer shall each bear fifty percent (50%) of the fees and costs of any such arbitration.

 

2.8            Contracts Not Transferable .  Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall be deemed to constitute an agreement to transfer or assign any Contract if an attempted transfer or assignment, without the Consent of any Person, would constitute a Breach thereof or in any way adversely affect the rights of Buyer or Sellers thereunder.  Each Seller and Buyer shall use its Best Efforts to obtain any Consent or waiver required to assign

 

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to Buyer all rights, benefits and interests under each Contract being assumed by Buyer (or make available to Buyer the practical benefit thereof) in a manner to permit the Business to be conducted in all material respects as currently conducted following the Effective Time.

 

ARTICLE III.  CLOSING

 

3.1.           Closing .  The purchase and sale provided for in this Agreement will take place at Buyer’s offices at 245 Perimeter Center Parkway, Suite 600, Atlanta, GA 30346 commencing at 9:00 a.m. (Eastern Standard Time) on March 1, 2005 or at such other date, time or location as the parties may agree (the “ Closing ”).  Notwithstanding the foregoing, the failure to consummate the transaction contemplated by this Agreement on the date and time and at the place determined pursuant to this Section 3.1 shall not result in the termination of this Agreement and shall not relieve any party of any obligation under this Agreement.  In such situation, the Closing shall occur as soon as practicable, subject to Article VIII of this Agreement.

 

3.2.           Closing Obligations .  In addition to any other documents to be delivered under other provisions of this Agreement, at the Closing:

 

(a)    The Sellers shall deliver to Buyer:

 

(i)     an executed bill of sale for all of the Tangible Personal Property in the form attached hereto as Exhibit B (“ Bill of Sale ”);

 

(ii)    an executed copy of the assignment and assumption agreement relating to the Contracts in the form attached hereto as Exhibit C (“ Assignment and Assumption Agreement ”);

 

(iii)   an executed copy of each lease assignment and assumption agreement in the form attached hereto as Exhibit D (“ Lease Assignment and Assumption Agreements ”) or such other appropriate document or instrument of transfer;

 

a.      an executed copy of the subscriber agreement relating to the Business’ system of record, Supreme, upon terms and conditions mutually acceptable to the parties (the “ Subscriber Agreement ”);

 

b.      an executed copy of the transition services agreement upon terms and conditions mutually acceptable to the parties (the “ Transition Services Agreement ”);

 

(vi)   such other deeds, bills of sale, assignments, certificates of title, documents and other instruments of transfer and conveyance as may be reasonably requested by Buyer, each in form and substance satisfactory to Buyer and its legal counsel and executed by the Sellers;

 

(vii) a certificate executed by an officer of each of the Sellers as to the accuracy of their representations and warranties as of the date of this Agreement and as of the Closing in accordance with Section 7.1(a)  and as to their compliance with and performance of their covenants and obligations to be performed or complied with at or before the Closing in accordance with Section 7.1(b) ; and

 

(viii) a certificate of the secretary of each of the Sellers certifying, as complete and accurate as of the Closing, attached copies of the Governing Documents of each Seller, certifying and attaching all requisite resolutions or actions of each Seller’s board of directors approving (A) the execution and delivery of this Agreement and the Ancillary Agreements to which they are parties, (B) the consummation of the transactions contemplated hereby and (C) certifying to the incumbency and signature of the officer of the Sellers executing this Agreement and the Ancillary Agreements.

 

(b)    Buyer shall deliver to the Sellers:

 

(i)     the Preliminary Purchase Price by wire transfer to an account specified by the Sellers in a writing delivered to Buyer at least three (3) Business Days prior to the Closing Date; and

 

(ii)    an executed Assignment and Assumption Agreement;

 

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(iii)   an executed copy of each Lease Assignment and Assumption Agreement;

 

(iv)   an executed copy of the Subscriber Agreement;

 

(v)    an executed copy of the Transition Services Agreement;

 

(vi)           a certificate executed by an officer of Buyer as to the accuracy of its representations and warranties as of the date of this Agreement and as of the Closing in accordance with Section 7.2(a)  and as to compliance with and performance of its covenants and obligations to be performed or complied with at or before the Closing in accordance with Section 7.2(b) ; and

 

(vii)          a certificate of the secretary of Buyer certifying, as complete and accurate as of the Closing, attached copies of the Governing Documents of Buyer and certifying and attaching all requisite resolutions or actions of Buyer’s board of directors approving (A) the executing and delivery of this Agreement and the Ancillary Agreements to which it is a party, (B) the consummation of the transactions contemplated hereby, and (C) certifying to the incumbency and signature of the officer of the Buyer executing this Agreement and the Ancillary Agreements.

 

3.3.           Closing Costs ; Transfer Taxes and Fees .  The Sellers (collectively) and Buyer shall each be responsible for fifty percent (50%) of any documentary and transfer Taxes imposed because of the transfer of the Purchased Assets provided for hereunder, regardless of the Person on whom applicable Law imposes such Taxes.  Each party shall pay any fees and costs or use Tax they incur as a result of their recording or filing the applicable conveyance instruments described in Section 3.2 .

 

3.4.           Limited Power of Attorney .  The Sellers hereby appoint Buyer, its agents, employees, successors and assigns, as their attorney-in-fact, which such appointment is coupled with an interest, with full power of revocation and substitution by Buyer in the name and stead of each of the Sellers, but on behalf of Buyer or its assignees, to do any and all of the following with respect to the Vehicle Contracts: (a) receive, endorse, and collect all payments, checks, money orders, drafts, or other instruments or documents made payable to or owed to a Seller in connection with the Vehicle Contracts; (b) execute on behalf of a Seller, or enforce, release, modify and transfer the rights, privileges and interests (including security interests) of such Seller with respect to the Vehicle Contracts including rights with respect to Ancillary Products and Insurance Policies, if any, and any claims thereunder, and certificates of title or other title documents or security documents; (c) enforce and exercise any rights and remedies of a Seller with respect to the Vehicle Contracts; and (d) to demand, collect and receive any and all Vehicle Contracts.  On the Closing Date and from time to time thereafter, the Sellers shall execute such limited powers of attorney in the form attached hereto as Exhibit E (“ Power of Attorney ”) and additional instruments and take such other action as Buyer may reasonably request in order to more effectively effectuate any of the foregoing.

 

3.5.           Obligor Notices .  The Sellers consent to permit Buyer to advise each of the Obligors that it has purchased their applicable Vehicle Contract and that all future payments thereon shall be made to Buyer.  No later than five (5) Business Days following the Closing Date, the Sellers shall also have the right to notify each of the Obligors that it has sold their applicable Vehicle Contract to Buyer.

 

ARTICLE IV.  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

 

4.1.           Relating to the Sellers .  Except as set forth on the Disclosure Schedule, the Sellers hereby represent and warrant to Buyer that, solely as it relates to the Business, as of (i) the date hereof and (ii) the Closing Date:

 

(a)    Due Organization and Good Standing .  Each of the Sellers is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its state of incorporation or organization, as the case may be, with the requisite corporate power and corporate authority to own or lease and operate its properties and assets related to the Business, and to carry on the Business as it is now conducted, and to perform its obligations under the Contracts.  Each Seller is duly qualified to do business as a foreign corporation or limited liability company, and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it in the Business, or the nature of the activities conducted by it, requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect on the Business.

 

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(b)    Authority and Capacity .  Each Seller has the full right, power, authority and capacity to execute, deliver, and perform its obligations under this Agreement and each of the Ancillary Agreements to which it is a party, to consummate the transactions contemplated hereby and thereby, and to perform its respective obligations hereunder and thereunder.  The execution, delivery and performance of this Agreement and each of the Ancillary Agreements by each Seller to which it is a party, and the consummation of the transaction