Exhibit 10.6
ASSET PURCHASE AGREEMENT
--------------------------------------------------------------------------------
ELITE AUTOMOTIVE GROUP, LLC, AN OKLAHOMA LIMITED LIABILITY
COMPANY
AS SELLER
AND
ALL NIGHT AUTO OF OKLAHOMA, INC. A MICHIGAN CORPORATION,
AS BUYER
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MARCH 30, 2007
<PAGE>
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS
............................................ 7
1.1 Purchased Assets
................................................ 7
1.2 Excluded Assets
................................................. 8
2. LIABILITIES
............................................................
9
2.1 Assumed Liabilities
............................................. 9
2.2 Excluded Liabilities
............................................ 9
2.3 Future Liabilities
.............................................. 9
3. PURCHASE PRICE
.........................................................
9
3.1 Consideration
................................................... 9
3.2 Closing Payment
................................................. 9
3.3 Allocation of Purchase
Price .................................... 10
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND MEMBERS
................... 10
4.1 Organization and Good
Standing .................................. 10
4.2 Authority and
Enforceability; No Conflict ....................... 10
4.3 Financial Statements
............................................ 11
4.4 Undisclosed
Liabilities ......................................... 11
4.5 Absence of Changes
.............................................. 11
4.6 Tax Matters
..................................................... 12
4.7 Books and Records
............................................... 13
4.8 Sufficiency of Assets
........................................... 13
4.9 Title; Liens
.................................................... 13
4.10
Contracts.
...................................................... 13
4.11
Condition of
Assets ............................................. 14
4.12
Intellectual
Property ........................................... 15
4.13
Licenses
........................................................
15
4.14
Consents
........................................................
15
4.15
Employees
.......................................................
16
4.16
Employee
Benefits ...............................................
17
4.17
Insurance
.......................................................
18
4.18
Fleet and
Commercial Customers ..................................
18
4.19
Suppliers
.......................................................
18
4.20
Relationships
With Related Persons .............................. 18
4.21
Environmental,
Health and Safety Matters ........................ 19
4.22
Proceedings;
Orders ............................................. 20
4.23
Compliance With
Laws ............................................ 20
4.24
Claims for
Faulty Services ...................................... 22
4.25
Brokers' or
Finders' Fees ....................................... 22
4.26
Solvency
........................................................
22
4.27
Disclosure.
..................................................... 22
4.28
Management
Agreements ........................................... 23
4.29
Patriot Act
..................................................... 23
4.30
Restriction of
Access ........................................... 23
5. REPRESENTATIONS AND WARRANTIES OF BUYER AND GUARANTORS
................. 23
5.1 Organization and Good
Standing .................................. 23
5.2 Authority and
Enforceability; No Conflict ....................... 23
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5.3 Brokers' or Finders'
Fees ....................................... 24
5.4 Financial Statements
............................................ 24
5.5 Absence of Changes
.............................................. 24
5.6 Consents
........................................................
24
5.7 Proceedings
..................................................... 24
5.8 Compliance With Laws
............................................ 25
5.9 Solvency
........................................................
25
5.10
Disclosure.
..................................................... 25
6. COVENANTS
..............................................................
26
6.1 Further Assurances
.............................................. 26
6.2 Non-Assignable
Contracts ........................................ 26
6.3 Public Announcements
............................................ 26
6.4 Employee Matters
................................................ 27
6.5 Account Receivable
Collections .................................. 27
6.6 Members Services
................................................ 27
6.7 Non-Competition
Agreement ....................................... 27
6.8 Leases
..........................................................
28
6.9 Seller's Liability
Insurance to remain in Force ................. 28
6.10
Title Policies
.................................................. 28
6.11
Environmental
Surveys ........................................... 28
7. CONDITIONS TO BUYER'S OBLIGATION AT CLOSING
............................ 28
7.1 Accuracy of
Representations and Warranties ...................... 28
7.2 Performance of
Agreement ........................................ 29
7.3 Consents
........................................................
29
7.4 Satisfactory Due
Diligence Investigation ........................ 29
7.5 Documentation
................................................... 29
7.6 Uniform Commercial
Code Searches ................................ 29
7.7 Proceedings and
Litigation Searches ............................. 29
7.8 Tax Lien Searches
............................................... 29
7.9 Unemployment Liability
or Similar Letters ....................... 29
7.10
Seller's
Accounts Payable .......................................
30
7.11
Leases
..........................................................
30
7.12
Opinion of
Counsel .............................................. 30
7.13
Deliveries
...................................................... 30
7.14
Royalties
.......................................................
30
8. CONDITIONS TO SELLER'S OBLIGATIONS AT CLOSING
.......................... 30
8.1 Accuracy of
Representations and Warranties ...................... 30
8.2 Performance of
Agreement ........................................ 30
8.3 Consents
........................................................
30
8.4 Leases
..........................................................
31
8.5 Deliveries
...................................................... 31
8.6 Satisfactory Due
Diligence Investigation ........................ 31
8.7 Documentation
................................................... 31
8.8 Opinion of Counsel
.............................................. 31
8.9 Manager's Approval
.............................................. 31
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9. CLOSING; DELIVERIES
.................................................... 31
9.1 Seller's
Deliveries ............................................
31
9.2 Buyer's
Deliveries .............................................
32
10. INDEMNIFICATION AND SURVIVAL
.......................................... 33
10.1
Indemnification of Buyer .......................................
33
10.2
Indemnification of Seller ......................................
33
10.3
Procedure
for Indemnification and Assumption of Defense ........ 34
10.4
Right of
Offset ................................................
36
10.5
Survival
.......................................................
36
10.6
Remedies
Not Exclusive .........................................
36
11. MISCELLANEOUS
.........................................................
36
11.1 Dispute Resolution
............................................. 36
11.2
Expenses
.......................................................
37
11.3
Notices
........................................................
37
11.4
Headings
.......................................................
37
11.5
Governing
Law; Forum Selection ................................. 37
11.6
No
Assignment; Benefit .........................................
38
11.7
Entire
Agreement ...............................................
38
11.8
Tax
Matters ....................................................
38
11.9
Counterparts ...................................................
38
11.10
Waiver .......................................................
38
11.11
Amendment ....................................................
38
11.12
Number and Gender ............................................
38
11.13
Ambiguity ....................................................
38
11.14
WAIVER OF JURY TRIAL .........................................
38
11.15
Mutual Release ...............................................
39
EXHIBIT AND SCHEDULES
EXHIBITS
A Covenant Not to
Compete
B
Promissory Note
C
Employment Agreement
D
Lease-Norman
E
Lease-Yukon
F
Lease-Warr Acres/Release of Elite and Stearman
G-1 Equipment
Leases
G
Bill of Sale
H
Assignment of Insurance Policies
I
Closing Statement
J
Opinion of Counsel - Seller and Members
K
Opinion of Counsel - Buyer and Guarantors
L
Dispute Resolution Procedures
M
Mutual Release and Satisfaction
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SCHEDULES
1.1(a)
Fixed Assets
1.1(c)
Intellectual Property
1.1(e)
Machinery and Equipment
1.1(f)
Assumed Contracts
1.1(g)
License
1.1(i)
Warranties
1.1(j)
Leasehold Improvements
1.1(k)
Litigation Rights
1.1(l)
Prepaid Expenses
1.2(g)
Other Excluded Assets
2.1
Assumed Liabilities
3.3(d)
Security Agreement
3.4
Allocation of Consideration
4.1
Jurisdictions in which Qualified
4.3
Financial Statements
4.4
Liabilities
4.6 Tax
Matters
4.9
Liens
4.10(a) Material
Contracts
4.10(b) Material
Contracts Exceptions
4.11 Condition
of Assets
4.12 Seller's
Intellectual Property
4.13 Seller's
Licenses
4.14 Seller's
Consents
4.15
Employees
4.16 Employee
Benefits
4.17
Insurance
4.18 Fleet and
Commercial Customers
4.19
Suppliers
4.20
Relationships With Related Persons
4.21
Environmental, Health and Safety Matters
4.22
Proceedings; Orders
4.23 Compliance
with Laws; Licenses
4.24 Warranty
Claims
4.25 Accounts
Receivable
5.0
Buyer's Form 10-K, for the period ending 12/31/06
5.6
Buyer and Guarantor Consents
5.7
Buyer and Guarantor Proceedings
5.8
Buyer and Guarantors Compliance with Law
6.4
Employee
Matters
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<PAGE>
ASSET PURCHASE AGREEMENT
This Asset
Purchase Agreement is entered into on March 30, 2007, by ALL
NIGHT AUTO OF OKLAHOMA, INC., a Michigan corporation ("BUYER"),
ELITE AUTOMOTIVE
GROUP LLC, an Oklahoma limited liability company ("SELLER"), and
STEPHEN J.
STEARMAN ("STEVE"), PAULA L. STEARMAN ("PAULA") AND JAMES C.
BRUNSON ("JAMES")
(Steve, Paula and James are sometimes referred to individually as a
"MEMBER",
and sometimes collectively as the "MEMBERS"). MIDNIGHT HOLDINGS
GROUP, INC.,
MIDNIGHT AUTO FRANCHISE CORPORATION, and ALL NIGHT AUTO STORES,
INC. have joined
in this Agreement as joint and several Guarantors (collectively,
the
"GUARANTORS").
RECITALS:
A.
Seller
owns and operates three automotive service and retail sales
centers as a franchisee of Midnight Auto Franchise Corporation (as
a
whole, the "Business," and individually, the "Businesses").
B.
Seller
operates the Business from three locations:
7311 North MacArthur Blvd., Warr Acres, OK ("Warr Acres" or
"Leased
Premises);
1121 Rambling Oaks Drive, Norman, OK ("Norman"); and
539 South Mustang Road, Yukon, OK ("Yukon").
Seller owns the real estate on which the Norman and Yukon
Businesses
are located, and leases the real estate on which the Warr Acres
store is located from an unaffiliated third party.
C.
Members
own all of the issued and outstanding membership interests
of Seller.
D.
This
Agreement describes the terms under which Buyer is buying the
Business and substantially all of the non-equipment assets of
Seller
and Midnight Auto Franchise Corp. is leasing the equipment and
the
Warr Acres, Norman and Yukon locations.
E.
Certain
capitalized terms are defined in Appendix A.
For good
and valuable consideration, the receipt and sufficiency of
which
are hereby acknowledged, the parties agree to the following:
1.
PURCHASE AND SALE OF ASSETS; LEASE OF EQUIPMENT.
1.1
PURCHASED
ASSETS. The Seller hereby sells and Buyer hereby purchases
all of the Purchased Assets, free and clear of all Liens.
Purchased
Assets means all of the assets, other than Excluded Assets, owned
by
Seller or in which Seller has any interest and which are used
in
connection with the Business, including (but not limited to)
the
following:
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(a)
[intentionally deleted];
(b) all
Goodwill;
(c) all
Intellectual Property, including that listed on
SCHEDULE 1.1(c);
(d) all Business
Records;
(e)
[intentionally deleted];
(f) those
Contracts that will be assumed by Buyer as listed
on SCHEDULE 1.1(f) ("Assumed Contracts");
(g) all
Licenses, including those listed on SCHEDULE 1.1(g),
to the extent they can be transferred;
(h) all
Inventories;
(i) all
Warranties, including those listed on SCHEDULE
1.1(i);
(j) all
Leasehold Improvements, including those listed on
SCHEDULE 1.1(j);
(k) all
Litigation Rights, including those listed on
SCHEDULE 1.1(k);
(l) all Prepaid
Expenses, including those listed on SCHEDULE
1.1(l);
(m) cash, cash
equivalents and securities; and
(n) all other
assets, whether known or unknown, tangible or
intangible, or real or personal, and wherever located.
1.2
Excluded Assets.
Buyer is not buying any of the FOLLOWING ("Excluded
Assets"):
(a) any
Contracts other than the Assumed Contracts;
(b) any Limited
Liability Company Records;
(c)
any claims for
Tax or other tax refunds from any governmental
authority;
(d) any rights
in connection with and assets of any Employee
Benefit Plan;
(e) any rights
in connection with the Accounts Receivable except
as otherwise set forth in this Agreement;
(f) any rights
in connection with the Real Property except as
otherwise set forth in this Agreement;
(g) those assets
listed on SCHEDULE 1.2(g); and,
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(h) the Leased
Assets.
1.3
Leased Assets.
Seller will lease to Midnight Auto Franchise Corp.
and Midnight Auto Franchise Corp. will lease from Seller the
following assets ("Leased Assets") pursuant to the Equipment
Leases
attached as Exhibit G-1:
(a) all Fixed
Assets, including those listed on SCHEDULE 1.1(a);
(b) all
Machinery and Equipment, including that listed on SCHEDULE
1.1(e).
2.
LIABILITIES.
2.1
ASSUMED
LIABILITIES. Buyer hereby assumes and will be liable and
responsible for the following liabilities of Seller
(collectively,
the "Assumed Liabilities"):
(a) Seller's
obligations under the Assumed Contracts, other than
(i) those that should have been performed prior to the date
hereof, (ii) those arising from a breach prior to the date
hereof and (iii) those arising from a warranty claim with
respect to work done prior to the date hereof; and
(b) any other
set liabilities set forth on Schedule 2.1.
2.2
EXCLUDED
LIABILITIES. Buyer will not assume any of the Excluded
Liabilities.
2.3
FUTURE
LIABILITIES. Buyer will be liable and responsible for all
debts and liabilities related to the operation of the Business
arising on or after the date of this Agreement. Seller is and
shall
remain liable for all debts and liabilities, except Assumed
Liabilities, that arise out of the operation of the Business
before
the date of this Agreement.
3.
PURCHASE PRICE.
3.1
CONSIDERATION.
As consideration ("Consideration") for the Purchased
Assets and Members' covenant of Non-Competition set forth in
Section
6.7:
(a) Buyer will
pay [*] Dollars ($[*]) ("Purchase Price"); and
(b) Buyer will
assume the Assumed Liabilities.
3.2
CLOSING PAYMENT.
At Closing, Buyer will deliver the following:
(a) $[*] of the
Purchase Price in immediately available funds; and
(b) $[*], the
balance of the Purchase Price, shall be paid to
Seller in accordance with the terms of a promissory note to be
delivered by Buyer to Seller incurred herewith, in the form of
the attached EXHIBIT B (the "Promissory Note").
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(c) Guarantors
hereby jointly and severally guarantee the Buyer's
prompt performance of its obligations under the Promissory
Note and the Contemplated Transactions.
3.3
ALLOCATION OF
PURCHASE PRICE. Buyer and Seller will allocate the
Purchase Price in the manner set forth on SCHEDULE 3.3, and
will
file all Tax Returns in a manner consistent with such
allocation.
4.
REPRESENTATIONS AND WARRANTIES OF SELLER AND MEMBERS. Seller
and
Members,
jointly and severally, representand warrant the following
to Buyer,
as of the date hereof:
4.1
ORGANIZATION AND
GOOD STANDING. Seller is a limited liability
company, duly organized, validly existing and in good standing
under
the laws of Oklahoma and has all the requisite authority to own
the
Purchased Assets and to conduct the Business as currently owned
and
conducted. Seller is qualified to do business as a foreign
limited
liability company and is in good standing under the laws of
each
state or other jurisdiction in which Seller is required to be
qualified. SCHEDULE 4.1 lists all jurisdictions in which Seller
is
qualified to do business. Seller owns no equity interest in any
other entity or joint venture.
4.2
AUTHORITY AND
ENFORCEABILITY; NO CONFLICT.
(a) Seller has
the power and authority to enter into this
Agreement, to enter into any and all Additional Agreements to
which it is, or will be, a party, and to execute and deliver
all other documents to be executed and delivered by Seller
pursuant to this Agreement (subject to Seller's Required
Statutory Approvals) and to consummate the transactions
contemplated in this Agreement. The execution and delivery of
this Agreement and the Additional Agreements have been
authorized by all necessary action on Seller's part. This
Agreement and all of the Additional Agreements to which Seller
is a party, when fully executed and delivered, will constitute
legal, valid and binding obligations of Seller, enforceable
against it in accordance with their respective terms except
that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights
generally and (ii) general equitable principles.
(b) Seller's
execution and delivery of this Agreement and all of
the Additional Agreements does not violate, conflict with or
result in a breach of or constitute a default under any
provision of (i) Seller's Governing Documents, (ii) any
statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any court or
governmental authority applicable to Seller or any of its
properties or assets, or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or
agreement of any kind to which Seller is now a party or by
which it or
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any of its properties or assets may be bound or affected, or
result in the creation or imposition of any lien or
encumbrance on any of the Purchased Assets or the Business or
any portion thereof.
4.3
FINANCIAL
STATEMENTS.
(a) Set forth on
SCHEDULE 4.3 are:
(i) the reviewed
balance sheet of Seller as of December 31,
2006 (including the notes to such balance sheet) (the
"Most Recent Balance Sheet") and the related reviewed
statements of income and expenses and cash flow, for the
fiscal year then ended (including the notes to such
additional statements); and
(ii) the unaudited
balance sheets of Seller as of the end of
January, 2007 and the related unaudited statements of
income and cash flow for the month then ended.
(b) All of the
financial statements referenced in subparagraphs
(a) and (b) above (the "Financial Statements"), are true,
correct and complete in all material respects; have been
prepared in accordance with GAAP applied consistently with all
corresponding prior fiscal periods of Seller; and present
fairly the financial condition, results of operation, and cash
flows of Seller as of the dates and for the periods indicated.
4.4
UNDISCLOSED
LIABILITIES. Except as set forth on SCHEDULE 4.4, Seller
has no liabilities or obligations of any nature other than those
(a)
reflected in the Financial Statements or the Schedules to this
Agreement, (b) the current liabilities incurred by Seller in
the
ordinary course since the date of the Most Recent Balance Sheet,
or
(c) the Assumed Liabilities.
4.5
ABSENCE OF
CHANGES.
(a) Since the
date of the Most Recent Balance Sheet, there has not
been any material adverse change in the business, operations,
prospects, assets, results of operations or condition
(financial or otherwise) of Seller, and no event has occurred
or circumstance exists that may result in a Material Adverse
Effect on the Business.
(b) Since the
date of the Most Recent Balance Sheet, Seller has
conducted the Business only in the ordinary course consistent
with past practice.
(c) Since the
date of the Most Recent Balance Sheet, Seller has
not, other than in the ordinary course and consistent with
past practice:
(i)
sold, transferred or leased to others any of its
assets;
(ii)
terminated or materially amended any Contract;
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(iii) made any
capital expenditures or capital additions or
improvements in excess of an aggregate of $10,000;
(iv)
incurred or guaranteed any loan or other obligation;
(v)
discharged or satisfied any Lien other than as
required pursuant to this Agreement;
(vi)
cancelled or compromised any debt or claim or waived
or released any right of substantial value;
(vii) subjected
any of the Purchased Assets or Leased Assets
to any Lien;
(viii) other than as
may be consistent with past practice and
in the ordinary course, made any change in the rate of
compensation, commission, bonus or other direct or
indirect remuneration payable or to be come payable to
any employee, agent, or Member of Seller, or agreed to
pay any bonus, extra compensation, pension, severance
or vacation pay to any employee, agent, or Member of
Seller;
(ix)
modified any Employee Benefit Plan;
(x)
entered into any agreement or commitment to do any of
the above.
(d) Seller has
paid its accounts payable in the ordinary course
and in terms no slower than 30 days.
4.6
TAX MATTERS.
Except as set forth on SCHEDULE 4.6:
(a) Seller has
maintained all records relating to Taxes
appropriate to be maintained by it, and have filed timely all
Tax Returns which it is required to file under applicable laws
and regulations, and all such Tax Returns are complete and
correct and have been prepared in compliance with all
applicable laws and regulations;
(b) Seller has
paid timely all Taxes due and owing by it (whether
or not such Taxes are required to be shown on a Tax Return)
and have withheld timely and paid over to the appropriate
taxing authority all Taxes which it is required to withhold
from amounts paid or owing to any employee, member, manager,
investor, creditor, independent contractor or other third
party;
(c) There are no
material unresolved questions or claims
concerning any Tax liability of Seller;
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(d) There are no
liens for Taxes on any of Seller's assets, other
than liens for Taxes not yet due and payable;
(e) Neither the
Seller nor the Members have received any written
notice regarding the audit, examination or delinquency of any
Tax or Tax Return with respect to the Business or any of the
Purchased Assets that have not been resolved or completed; and
(f) Neither the
Seller nor the Members are currently contesting
any Taxes with respect to the Business or any of the Purchased
Assets or Leased Assets.
4.7
BOOKS AND
RECORDS. The Business Records of Seller, all of which have
been made available to Buyer, represent actual, bona fide
transactions and have been maintained in accordance with sound
business practices.
4.8
SUFFICIENCY OF
ASSETS. Other than the Purchased Assets, the Leased
Assets and the Excluded Assets, (i) Seller does not use any
tangible
or intangible assets in connection with its operation of the
Business; and (ii) no tangible or intangible assets are necessary
to
operate the Business in the manner presently operated by
Seller.
4.9
TITLE; LIENS.
Except as set forth on Schedule 4.9, Seller owns good
and marketable title to all of the Purchased Assets and the
Leased
Assets, free and clear of all Liens other than Liens for Taxes
for
the current Tax year that are not yet due and payable.
(a) Schedule
1.1(a) contains a true, correct and complete list of
all material Fixed Assets that Seller used in connection with
the operation of, or that are related to, the Business.
(b) Schedule
1.1(e) contains a true, correct and complete list of
all material Machinery and Equipment that Seller used in
connection with the operation of, or that are related to, the
Business.
(c) Schedule
1.1(i) contains a true, correct and complete list of
all material Warranties relating to the Business or the
Purchased Assets or the Leased Asseets.
(d) Schedule
1.1(k) contains a true, correct and complete list of
all material Litigation Rights relating to the Business or the
Purchased Assets or the Leased Assets
(e) Schedule
1.1(l) contains a true, correct and complete list of
all material Prepaid Expenses relating to the Business or the
Purchased Assets or the Leased Assets.
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4.10
CONTRACTS.
(a) Schedule
4.10(a) identifies each Material Contract to which
either Seller is a party, or by which either Seller or any of
the Purchased Assets is bound or subject. Seller has delivered
or otherwise made available to Buyer a true, correct and
complete copy of each Material Contract that is written.
Schedule 4.10(a) sets forth reasonably complete details
concerning each Material Contract that is oral, including the
parties to the Contract and the amount and nature of either
Seller's remaining commitment under the Contract.
(b)
Except as set
forth on SCHEDULE 4.10(b):
(i)
each Assumed Contract is in full force and effect and
is legal, valid, binding and enforceable in accordance
with its terms;
(ii) each
Assumed Contract is assignable without the
consent of any other Person;
(iii) to
Seller's Knowledge, following the Closing, each
Assumed Contract will continue to be legal, valid,
binding, enforceable and in full force and effect on
identical terms;
(iv) to
Seller's Knowledge, each Person that has or had any
obligation or liability under any Assumed Contract is,
and at all times has been, in full compliance with
such Assumed Contract;
(v)
to Seller's Knowledge, no Assumed Contract will or
could reasonably be expected to, on full completion or
performance, have a material adverse effect on the
Business or the Purchased Assets or the Leased Assets;
(vi) there
are no on-going renegotiations of, attempts to
renegotiate or outstanding rights to renegotiate any
Assumed Contract. No Person has asked to renegotiate
any Assumed Contract;
(vii) there are
no oral agreements or forbearance
arrangements in effect, or known disputes with respect
to any Assumed Contract; and
(viii) Seller entered
into each Assumed Contract in the
ordinary course of business and without the commission
of any act, whether alone or in concert with any other
Person, or any consideration having been paid or
promised, that is or would be in violation of any
Requirement of Law.
4.11
CONDITION OF ASSETS.
Except as set forth on SCHEDULE 4.11:
(a) all of the
Fixed Assets, Machinery and Equipment
(collectively, the "Tangible Assets") are in generally good
repair and operating condition (ordinary wear and tear
excepted), are suitable for immediate use in the
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ordinary course of operating the Business, and, to Seller's
Knowledge, have been operated and maintained in accordance
with all Requirements of Law and any applicable warranties;
and
(b) Seller has
maintained all of the Tangible Assets in the
ordinary course of business; there is no deferred maintenance
of any Tangible Asset; and, none of the Tangible Assets
requires repairs or replacement other than as part of routine
maintenance in the ordinary course of the Business.
4.12
INTELLECTUAL PROPERTY.
The attached SCHEDULE 4.12 contains a true
and complete list of Intellectual Property and any and all
corporate
and assumed names under which Seller has conducted or is
currently
conducting business. Except as set forth on the attached
SCHEDULE
4.12, Seller has the complete and unrestricted right to use and
own,
has good and marketable title to and has the exclusive right to
assign its entire right, title and interest in and to all of
the
Intellectual Property, and each item of the Intellectual Property
is
in full force and effect. The items comprising the Intellectual
Property are the only proprietary property used or necessary in
connection with the Business as presently conducted. Except as
set
forth on the attached SCHEDULE 4.12, there has been no
infringement,
misappropriation or misuse of any of the Intellectual Property
or
any other proprietary information related to the Business. There
is
no claim against Seller that the Intellectual Property infringes
any
patent, trademark, trade name, copyright, domain name or other
proprietary or intellectual property right of any third party
or
that Seller is illegally using the trade secrets or property
rights
of any third party.
4.13
LICENSES. SCHEDULE
4.13 is a list of all Licenses used in connection
with the Business or the Purchased Assets or the Leased Assets.
Seller has provided Buyer with copies of all Licenses. Except as
set
forth on SCHEDULE 4.13, all of the Licenses are in full force
and
effect and are assignable or transferable to Buyer in
connection
with the consummation of the transactions contemplated in this
Agreement. Except as set forth on SCHEDULE 4.13, Seller has
obtained
all Licenses necessary to, or desirable with respect to, and
has
complied with all laws applicable to, its operation of the
Business,
its ownership of the Purchased Assets or the Leased Assets.
Seller
has not engaged in any activity that would cause revocation or
suspension of any of the Licenses. No action or proceeding
looking
to or contemplating the revocation or suspension of any of the
Licenses is pending or, to Seller's Knowledge, threatened.
4.14
CONSENTS. Except as
set forth on SCHEDULE 4.14, Seller does not need
any consent, approval, filing with, or notice to, any
Governmental
Authority or any lender, lessor, creditor, shareholder or other
third-party, in
connection with the execution and delivery of this
Agreement and the Additional Agreements or the consummation of
the
transactions contemplated in this Agreement and the Additional
Agreements. Prior to the Closing, Seller will properly obtain,
perform or give all of the consents, approvals, filings and
notices
set forth on the attached
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SCHEDULE 4.14, and as of the Closing, Seller shall give Buyer's
counsel copies or adequate evidence of all such consents,
approvals,
filings and notices.
4.15
EMPLOYEES.
(a) SCHEDULE
4.15 contains an accurate list of all of the agents
and employees of Seller, and the following information: (i)
each employee's and agent's salary or hourly rate and annual
bonus, if any, for the fiscal year ended December 31, 2006 and
the current fiscal year, (ii) the total value and an
itemization of all fringe benefits or incentive pay received
or to be received by each such individual within such periods,
(iii) each employee's and agent's title and position, and (iv)
whether any such employee or agent is absent from active
employment and, if so, the date such absence commenced, the
reason for such absence and the anticipated date of return to
active employment.
(b) Except as
set forth on SCHEDULE 4.15, there are no, nor have
there ever been, written or verbal collective bargaining or
union contracts, employment agreements or other understandings
with or affecting any of Seller's employees.
(c) Hours worked
by, and payments made to, Seller's employees
(including leased employees) have been in compliance with the
Fair Labor Standards Act and other Requirements of Law.
(d) Except as
set forth on SCHEDULE 4.15, all payments due from
Seller on account of employees' work, including health or
welfare insurance, vacation monies, retirement plan
contributions and severance payments, have been paid in full.
(e) No labor
dispute pertaining to the Business is pending or, to
Seller's Knowledge, threatened. There are no unfair labor
practice complaints pending or, to the Seller's Knowledge,
threatened involving Seller. Seller has not experienced any
strike or work stoppage during the three (3) years prior to
the date of this Agreement. No representation question exists
respecting Seller's employees, and no grievance or internal or
informal complaint exists, no arbitration proceeding arising
out of or under any collective bargaining agreement is pending
and no claim for one has been asserted.
(f) Except as
set forth on SCHEDULE 4.15, no employee or agent of
Seller will become entitled to any payment or benefit under
any contract, plan, understanding, agreement, bonus or
arrangement, whether oral or written, between Seller and such
employee or agent in the event that the employment or
engagement of such employee or agent is terminated following
the consummation of the transactions contemplated by this
Agreement.
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(g) There is no
pending or, to Seller's Knowledge, threatened
Proceeding with respect to the employment (or former
employment or prospective employment, as the case may be) by
Seller of any employee, former employee or prospective
employee (including any leased employee).
(h) To Seller's
Knowledge, no complaint or other document has been
filed with the Oklahoma Commissioner of Labor, alleging a
violation or breach of any provision of Okla. Stat. Title 40,
Section 165.1 ET SEQ. or any regulation or order thereunder,
nor does Seller know of any basis for the filing of any such
complaint or other document.
(i) Seller has
operated the Business in compliance with all Labor
Laws (without limiting the foregoing, Seller has not received
any written notice of any violation of, and to Seller's
Knowledge there is no violation of, any provision of the
Americans with Disabilities Act, the WARN Act, or COBRA).
4.16
EMPLOYEE BENEFITS.
(a) EMPLOYEE
BENEFIT PLANS AND DOCUMENTS. Except as disclosed in
SCHEDULE 4.16, Seller does not (and has not) maintained,
sponsored, participated in or contributed to, any Employee
Benefit Plan.
(b)
REPRESENTATIONS. Except as specifically set forth in SCHEDULE
4.16:
(i)
COMPLIANCE WITH LAWS: Each Employee Benefit Plan has
been administered in full and complete compliance with
ERISA, the Code, the Age Discrimination in Employment
Act (to the extent applicable), COBRA, and any other
applicable Requirements of Law, and each Employee
Benefit Plan is valid and binding, in full force and
effect, and there are no defaults.
(ii) NO
CLAIMS PENDING OR THREATENED: There are no actions,
suits or claims pending (other than routine claims for
benefits) or, to the Seller's Knowledge, threatened
against any Employee Benefit Plan, against the assets
of any Employee Benefit Plan or against Seller for
benefits arising under or pursuant to any Employee
Benefit Plan.
(iii) NO FUNDING
DEFICIENCY: Seller does not have a "funding
deficiency" as that term is used in Section 412 of the
Code, whether or not waived, with regard to any
Employee Benefit Plan.
(iv) NO
RETIREE BENEFITS: No retiree benefits are payable,
either now or in the future, pursuant to any Welfare
Plan.
(v)
SUFFICIENT ASSETS: As of the date hereof: (i) with
regard to funded plans, the assets of each such
Employee Benefit Plan listed in
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<PAGE>
SCHEDULE 4.16 will be equal to or greater than the accrued
benefits of the participants and beneficiaries of such plans.
4.17
INSURANCE. Seller has
maintained and now maintains insurance with
respect to the Purchased Assets and Leased Assets, the Business
and
the Leased Premises covering property damage by fire or other
casualty, general, products and completed operations liability,
auto
and excess liability, workers' compensation, and fidelity bonds,
all
sufficient to protect against any such liabilities, claims and
risks, as is customary in the industry. SCHEDULE 4.17 contains
a
true and correct list of all insurance policies (other than
life
insurance policies) currently maintained by Seller and maintained
by
Seller for the preceding five (5) years stating the name of the
insurer, policy number, type of coverage, limits and
deductibles.
All current insurance policies are in full force and effect.
Seller
has not received any oral or written notice from any insurance
carrier, agent or representative of any defects or inadequacies
in
the Purchased Assets or the Leased Assets, the Business, or the
Leased Premises, which, if uncorrected, would result in a
termination of insurance coverage or a material increase in the
premiums charged therefore. Except as set forth on SCHEDULE
4.17,
there is no state of facts and no event has occurred forming
the
basis for any present property, liability, auto, workers'
compensation or fidelity claim, which is not fully covered by
insurance.
4.18
FLEET AND COMMERCIAL
CUSTOMERS. SCHEDULE 4.18 lists, for the year
ended December 31, 2006, the ten (10) largest fleet and/or
commercial customers (by dollar volume) of Seller during such
year
or partial year, showing the dollar volume of each. To Seller's
Knowledge, Seller has good business relationships with each of
its
customers listed in Scheduled 4.18, and no adverse change has
occurred in the business relationships of Seller with those
customers listed in Schedule 4.18. To Seller's Knowledge, no
customer listed in SCHEDULE 4.18 intends to cease or
substantially
reduce purchasing goods or services from Seller.
4.19
SUPPLIERS. SCHEDULE
4.19 lists, for the year ended December 31,
2006, the twenty (20) largest suppliers (by dollar volume) of
Seller
during such year or partial year, showing the dollar volume of
each.
Except as set forth in SCHEDULE 4.19, to Seller's Knowledge,
Seller
has a good business relationship with each of its suppliers
listed
in Schedule 4.19, and no adverse change has occurred in the
business
relationships of Seller with those suppliers listed in SCHEDULE
4.19. To Seller's Knowledge, no supplier (whether or not listed
in
SCHEDULE 4.19) intends to cease or substantially reduce
supplying
goods or services to Seller.
4.20
RELATIONSHIPS WITH
RELATED PERSONS. Except as disclosed in SCHEDULE
4.20, neither Seller nor the Members nor any affiliate of any
of
them: (i) have had any interest in any property (whether real,
personal or mixed and whether tangible or intangible) used in
or
pertaining to Seller's business; (ii) is a party to any
Contract
with, or has any claim or right against, Seller; or (iii) owns,
has
owned, of record or as a beneficial owner, an equity interest or
any
other financial or profit interest in any Person that has;
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<PAGE>
(a) had business
dealings or a material financial interest in any
transaction with Seller other than business dealings or
transactions disclosed in SCHEDULE 4.20, each of which has
been conducted in the ordinary course of Business with Seller
at substantially prevailing market prices and on substantially
prevailing market terms; or
(b) engaged in
competition with Seller with respect to any line of
the products or services of Seller in any market presently
served by Seller, except for ownership of less than one
percent (1%) of the outstanding capital stock of a competing
business that is publicly traded on any recognized exchange or
in the over-the-counter market.
4.21
ENVIRONMENTAL, HEALTH
AND SAFETY MATTERS. Except as disclosed in
SCHEDULE 4.21:
(a) Seller has
not received notice, and Seller has no information
which indicates that Seller will be receiving notice of
Proceedings or losses relating to alleged violations by Seller
of any Environmental Laws relating to the Business;
(b) Seller has
not received notice or a request for information
(and has no Knowledge of any facts or circumstances) to the
effect that Seller may be a potentially responsible party for
any facility, site or location pursuant to CERCLA or other
similar Environmental Law relating to the Business;
(c)
Seller has been
in compliance with all applicable limitations,
restrictions, conditions, standards, prohibitions,
requirements and obligations established under the
requirements of Environmental Laws relating to the Business,
except where such noncompliance would not have any reasonable
likelihood, singly or in the aggregate, of materially
adversely affecting the financial condition, operations,
assets, business or properties of the Business, taken as a
whole;
(d) Seller has
timely filed all notices, reports and other
submissions required under all Environmental Laws, except for
such notices, reports or other submissions with respect to
which the failure to so file would not have any reasonable
likelihood, singly or in the aggregate, of materially
adversely affecting the financial condition, operations,
assets, business or properties of the Business, taken as a
whole;
(e) Seller has
been issued all permits, certificates, approvals,
licenses and other authorizations required under all
Environmental Laws, have timely applied for them, and are and
continue to be in compliance with them and Seller has had all
such required permits, and other authorizations and has been
in compliance therewith, in each case except for such permits
and other authorizations with respect to which the failure to
obtain or to comply with which would not have any reasonable
likelihood, singly or in the aggregate,
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<PAGE>
of materially adversely affecting the financial condition,
operations, assets, business or properties of the Business,
taken as a whole; and
(f) Seller has
not transported, treated, disposed of or arranged
for the transportation, treatment or disposal of any hazardous
wastes, Hazardous Materials, or any waste that was stored,
disposed of or treated at any site listed on any federal
CERCLA or
state list or other lists of hazardous substance
sites.
(g) Neither
Seller nor its Members have any knowledge of existence
or installation upon the Leased Premises, either presently or
at any previous time, of an underground storage tank.
(h) To Seller's
Knowledge, there have been no releases of
hazardous substances on the property or on any adjacent
property.
4.22
PROCEEDINGS;
ORDERS.
(a) Except as
set forth in SCHEDULE 4.22 there is no pending or,
to Seller's Knowledge, threatened Proceeding:
(i)
by or against Seller or that otherwise relates to or
may affect the Business or any of the Purchased Assets
or any of the Leased Assets; or
(ii) that
challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise
interfering with the Contemplated Transactions.
(b) To Seller's
Knowledge, no event has occurred or circumstance
exists that is reasonably likely to give rise to any such
Proceeding.
(C) Except as
set forth in SCHEDULE 4.22;
(i)
there is no Order to which Seller, the Business or any
of the Purchased Assets or the Leased Assets is
subject; and
(ii) to
Seller's Knowledge, no officer, director, agent or
employee of Seller is subject to any Order that
prohibits such officer, director, agent or employee
from engaging in any conduct relating to the business
of Seller.
4.23
COMPLIANCE WITH
LAWS.
(a) Except as
set forth in SCHEDULE 4.23;
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<PAGE>
(i)
Seller is (and has always been) in full compliance
with each Requirement of Law that is (or was)
applicable to the Business or the ownership or use of
any of its assets;
(ii) no
event has occurred or circumstance exists that (A)
may constitute or result in a violation by Seller of,
or a failure on the part of Seller to comply with, any
Requirement of Law or (B) may give rise to any
obligation on the part of Seller to undertake, or to
bear all or any portion of the cost of, any remedial
action of any nature; and
(iii) Seller has
not received, at any time, any notice or
other
communication (whether oral or written) from any
Governmental Authority or any other Person regarding
(A) any actual, alleged, possible or potential
violation of, or failure to comply with, any
Requirement of Law or (B) any actual, alleged,
possible or potential obligation on the part of Seller
to undertake, or to bear all or any portion of the
cost of, any remedial action of any nature.
(b) SCHEDULE
4.13 contains an accurate list of each License that
is held by Seller or that otherwise relates to the Business or
the Purchased Assets or Leased Assets. Each License listed in
SCHEDULE 4.13 is valid and in full force and effect. Except as
set forth in SCHEDULE 4.13:
(i)
Seller is, and at all times has been, in full
compliance with all of the terms and requirements of
each License identified in SCHEDULE 4.13;
(ii) no
event has occurred or circumstance exists that may
(A) constitute or result directly or indirectly in a
failure to comply with any term or requirement of any
License listed in SCHEDULE 4.13 or (B) result directly
or indirectly in the revocation, withdrawal,
suspension, cancellation or termination of, or any
modification to, any License listed in SCHEDULE 4.13;
(iii) Seller has
not received any notice (whether oral or
written) from any Governmental Authority or any other
Person regarding (A) any actual, alleged, or possible
failure to comply with any term or requirement of any
License or (B) any actual, proposed, possible or
revocation, withdrawal, suspension, cancellation,
termination of or modification to any Governmental
Authorization; and
(iv) all
applications required to have been filed for the
renewal of the Licenses listed in SCHEDULE 4.13 have
been timely filed with the appropriate Governmental
Authority, and all other filings required to have been
made with respect to such Licenses have been timely
made with the appropriate Governmental Authorities.
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<PAGE>
(c) The Licenses
listed in SCHEDULE 4.13 collectively constitute
all of the Licenses necessary to permit Seller to lawfully
operate the Business. Except as set forth in SCHEDULE 4.13,
all of the Licenses are assignable to Buyer.
4.24
CLAIMS FOR FAULTY
SERVICES.
(a) SCHEDULE
4.24 contains an accurate list of all claims made
within the past 24 months by any customer of Seller, where the
customer has claimed that Seller's goods or services were
faulty and the cost to correct any such allegation of faulty
goods or services exceeded $500, including the claimant's
name, the nature of the claim and the amount paid to satisfy
the claim.
(b) Except as
listed on SCHEDULE 4.24, neither Seller nor the
Members are aware of (i) any actual or alleged accident,
failure, condition or defect in any of Seller's products or
services that resulted, or is alleged to have resulted, in
bodily injury or damage to property (including Seller's
product), or (ii) any complaints of defects in, or complaints
of any actual or potential malfunction of, any of Seller's
products and services.
4.25
BROKERS' OR FINDERS'
FEES. Neither Seller nor any of its employees,
agents or representatives have incurred any obligation,
contingent
or otherwise, for brokerage or finders' fees or agents'
commissions
or other similar payments in connection with the sale of the
Purchased Assets or the Leased Assets or the Contemplated
Transactions.
4.26
SOLVENCY.
(a) Seller is
not insolvent and will not be rendered insolvent by
any of the Contemplated Transactions. As used in this section,
"insolvent" means that both: (i) the sum of the debts a
