EXHIBIT 10.10
AGREEMENT AND PLAN OF ORGANIZATION
dated as of April 14, 1998
by and among
TRANSPORTATION COMPONENTS, INC.
GWI ACQUISITION CORPORATION
TOI ACQUISITION CORPORATION
OTP ACQUISITION CORPORATION
(each a subsidiary of Transportation Components, Inc.)
GEAR AND WHEEL, INC.
TRY ONE, INC.
OCALA TRUCK PARTS, INC.
and
the STOCKHOLDERS named herein
TABLE OF CONTENTS
Page
RECITALS.....................................................................1
1. THE MERGER.............................................................5
1.1 DELIVERY AND FILING OF ARTICLES OF MERGER........................5
1.2 EFFECTIVE TIME OF THE MERGER.....................................5
1.3 CERTIFICATE OF INCORPORATION, BY-LAWS; BOARD OF DIRECTORS AND
OFFICERS OF SURVIVING CORPORATION................................6
1.4 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF THE
COMPANY, TCI AND NEWCO...........................................6
1.5 EFFECT OF MERGER.................................................7
2. CONVERSION OF STOCK....................................................7
2.1 MANNER OF CONVERSION.............................................7
3. DELIVERY OF MERGER CONSIDERATION.......................................8
4. CLOSING................................................................9
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.....................9
5.1 DUE ORGANIZATION................................................10
5.2 AUTHORIZATION...................................................10
5.3 CAPITAL STOCK OF THE COMPANY....................................10
5.4 TRANSACTIONS IN CAPITAL STOCK, ORGANIZATION ACCOUNTING..........11
5.5 NO BONUS SHARES.................................................11
5.6 SUBSIDIARIES....................................................11
5.7 PREDECESSOR STATUS; ETC.........................................11
5.8 SPIN-OFF BY THE COMPANY.........................................11
5.9 FINANCIAL STATEMENTS............................................11
5.10 LIABILITIES AND OBLIGATIONS.....................................12
5.11 ACCOUNTS AND NOTES RECEIVABLE...................................12
5.12 PERMITS AND INTANGIBLES.........................................12
5.13 ENVIRONMENTAL MATTERS...........................................13
5.14 PERSONAL PROPERTY...............................................13
5.15 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS.......14
5.16 REAL PROPERTY...................................................14
5.17 INSURANCE.......................................................15
5.18 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS....15
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5.19 EMPLOYEE PLANS..................................................16
5.20 COMPLIANCE WITH ERISA...........................................17
5.21 CONFORMITY WITH LAW; LITIGATION.................................17
5.22 TAXES...........................................................18
5.23 NO VIOLATIONS; NO CONSENTS REQUIRED, ETC.......................19
5.24 ABSENCE OF CHANGES..............................................19
5.25 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY............................21
5.26 VALIDITY OF OBLIGATIONS.........................................21
5.27 RELATIONS WITH GOVERNMENTS......................................21
5.28 DISCLOSURE......................................................21
5.29 NO INTERESTS IN OTHER BUSINESSES................................22
5.30 AUTHORITY; OWNERSHIP............................................22
5.31 PREEMPTIVE RIGHTS...............................................22
5.32 NO INTENTION TO DISPOSE OF TCI STOCK............................22
6. REPRESENTATIONS OF TCI AND NEWCO......................................22
6.1 DUE ORGANIZATION................................................23
6.2 AUTHORIZATION...................................................23
6.3 CAPITAL STOCK OF TCI AND NEWCO..................................23
6.4 TRANSACTIONS IN CAPITAL STOCK, ORGANIZATION ACCOUNTING..........23
6.5 SUBSIDIARIES....................................................23
6.6 FINANCIAL STATEMENTS............................................24
6.7 LIABILITIES AND OBLIGATIONS.....................................24
6.8 CONFORMITY WITH LAW; LITIGATION.................................24
6.9 NO VIOLATIONS...................................................24
6.10 VALIDITY OF OBLIGATIONS.........................................25
6.11 TCI STOCK.......................................................25
6.12 OTHER AGREEMENTS; NO SIDE AGREEMENTS............................25
6.13 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS....................26
6.14 TAXES...........................................................26
6.15 ABSENCE OF CHANGES..............................................26
6.16 DISCLOSURE......................................................27
7. COVENANTS PRIOR TO CLOSING............................................27
7.1 ACCESS AND COOPERATION; DUE DILIGENCE...........................27
7.2 CONDUCT OF BUSINESS PENDING CLOSING.............................28
7.3 PROHIBITED ACTIVITIES...........................................29
7.4 NO SHOP.........................................................30
7.5 NOTICE TO BARGAINING AGENTS.....................................30
7.6 AGREEMENTS......................................................31
7.7 NOTIFICATION OF CERTAIN MATTERS.................................31
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7.8 AMENDMENT OF SCHEDULES..........................................31
7.9 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT............32
7.10 FINAL FINANCIAL STATEMENTS......................................33
7.11 FURTHER ASSURANCES..............................................33
7.12 AUTHORIZED CAPITAL..............................................33
7.13 COMPLIANCE WITH THE ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ANTITRUST IMPROVEMENTS
ACT OF 1976 (THE "▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT").......................33
7.14 STOCKHOLDERS OF TCI.............................................34
7.15 IPO.............................................................34
7.16 INDEMNIFICATION AGREEMENT.......................................34
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND COMPANY.......34
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS......34
8.2 SATISFACTION....................................................34
8.3 NO LITIGATION...................................................35
8.4 OPINION OF COUNSEL..............................................35
8.5 REGISTRATION STATEMENT..........................................35
8.6 CONSENTS AND APPROVALS..........................................35
8.7 GOOD STANDING CERTIFICATES......................................35
8.8 NO MATERIAL ADVERSE CHANGE......................................35
8.9 CLOSING OF IPO..................................................36
8.10 SECRETARY'S CERTIFICATE.........................................36
8.11 EMPLOYMENT AGREEMENTS...........................................36
8.12 TAX MATTERS.....................................................36
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF TCI AND NEWCO..................36
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS......36
9.2 NO LITIGATION...................................................37
9.3 SECRETARY'S CERTIFICATE.........................................37
9.4 NO MATERIAL ADVERSE EFFECT......................................37
9.5 STOCKHOLDERS' RELEASE...........................................37
9.6 SATISFACTION....................................................37
9.7 TERMINATION OF RELATED PARTY AGREEMENTS.........................37
9.8 OPINION OF COUNSEL..............................................38
9.9 CONSENTS AND APPROVALS..........................................38
9.10 GOOD STANDING CERTIFICATES......................................38
9.11 REGISTRATION STATEMENT..........................................38
9.12 EMPLOYMENT AGREEMENTS...........................................38
9.13 CLOSING OF IPO..................................................38
9.14 FIRPTA CERTIFICATE..............................................38
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9.15 ENVIRONMENTAL REVIEWS...........................................38
9.16 INDEMNIFICATION AGREEMENT.......................................38
10. COVENANTS OF TCI AND THE STOCKHOLDERS AFTER CLOSING...................39
10.1 RELEASE FROM GUARANTEES; REPAYMENT OF CERTAIN OBLIGATIONS.......39
10.2 PRESERVATION OF TAX AND ACCOUNTING TREATMENT....................39
10.3 PREPARATION AND FILING OF TAX RETURNS...........................39
10.4 DIRECTORS.......................................................40
11. INDEMNIFICATION.......................................................40
11.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS.....................40
11.2 INDEMNIFICATION BY TCI..........................................41
11.3 THIRD PERSON CLAIMS.............................................42
11.4 EXCLUSIVE REMEDY................................................43
11.5 LIMITATIONS ON INDEMNIFICATION..................................43
12. TERMINATION OF AGREEMENT..............................................44
12.1 TERMINATION.....................................................44
12.2 LIABILITIES IN EVENT OF TERMINATION.............................45
13. NONCOMPETITION........................................................45
13.1 PROHIBITED ACTIVITIES...........................................45
13.2 DAMAGES.........................................................46
13.3 REASONABLE RESTRAINT............................................46
13.4 SEVERABILITY; REFORMATION.......................................46
13.5 INDEPENDENT COVENANT............................................46
13.6 MATERIALITY.....................................................46
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................46
14.1 STOCKHOLDERS....................................................47
14.2 TCI AND NEWCO...................................................47
14.3 DAMAGES.........................................................48
14.4 SURVIVAL........................................................48
15. TRANSFER RESTRICTIONS.................................................48
15.1 TRANSFER RESTRICTIONS...........................................48
16. FEDERAL SECURITIES ACT REPRESENTATIONS................................49
16.1 COMPLIANCE WITH LAW.............................................49
16.2 ECONOMIC RISK; SOPHISTICATION...................................49
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17. REGISTRATION RIGHTS...................................................49
17.1 PIGGYBACK REGISTRATION RIGHTS...................................49
17.2 DEMAND REGISTRATION RIGHTS......................................50
17.3 REGISTRATION PROCEDURES.........................................51
17.4 INDEMNIFICATION.................................................52
17.5 UNDERWRITING AGREEMENT..........................................53
17.6 RULE 144 REPORTING..............................................53
18. GENERAL...............................................................54
18.1 COOPERATION.....................................................54
18.2 SUCCESSORS AND ASSIGNS..........................................54
18.3 ENTIRE AGREEMENT................................................54
18.4 COUNTERPARTS....................................................55
18.5 BROKERS AND AGENTS..............................................55
18.6 EXPENSES........................................................55
18.7 NOTICES.........................................................55
18.8 GOVERNING LAW...................................................56
18.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................56
18.10 EXERCISE OF RIGHTS AND REMEDIES.................................57
18.11 TIME............................................................57
18.12 REFORMATION AND SEVERABILITY....................................57
18.13 REMEDIES CUMULATIVE.............................................57
18.14 CAPTIONS........................................................57
18.15 AMENDMENTS AND WAIVERS..........................................57
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ANNEXES
Annex I - Consideration to Be Paid to Stockholders
Annex II - Stockholders and Stock Ownership of the Company
Annex III - Form of Opinion of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.
Annex IV - Form of Opinion of Counsel to the Company and Stockholders
Annex V - Form of Founder's Employment Agreement
Annex VI - Form of Lease Agreement
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SCHEDULES
5.1 Due Organization
5.2 Authorization
5.3 Capital Stock of the Company
5.4 Transactions in Capital Stock, Organization Accounting
5.5 No Bonus Shares
5.6 Subsidiaries
5.7 Predecessor Status; etc
5.8 Spin-off by the Company
5.9 Financial Statements
5.10 Liabilities and Obligations
5.11 Accounts and Notes Receivable
5.12 Permits and Intangibles
5.13 Environmental Matters
5.14 Personal Property
5.15 Significant Customers; Material Contracts and Commitments
5.16 Real Property
5.18 Compensation; Employment Agreements; Organized Labor Matters
5.19 Employee Plans
5.20 Compliance with ERISA
5.21 Conformity with Law; Litigation
5.22 Taxes
5.23 No Violations, Consents, etc.
5.24 Absence of Changes
5.25 Deposit Accounts; Powers of Attorney
5.29 No Interests in Other Businesses
5.30 Authority; Ownership
6.4 Transactions in Capital Stock, Organization Accounting
6.5 Subsidiaries
6.7 Liabilities and Obligations
6.8 Conformity with Law; Litigation
6.9 No Violations
6.12 Other Agreements; No Side Agreements
6.15 Absence of Changes
7.2 Conduct of Business Pending Closing
7.3 Prohibited Activities
7.5 Notice to Bargaining Agents
7.6 Agreements
9.7 Termination of Related Party Agreements
9.12 Employment Agreements
10.1 Guaranties
13.1 Activities Excluded from Noncompete
18.5 Brokers and Agents
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AGREEMENT AND PLAN OF ORGANIZATION
THIS AGREEMENT AND PLAN OF ORGANIZATION (the "Agreement") is made as
of April 14, 1998, by and among Transportation Components, Inc., a Delaware
corporation ("TCI"), GWI Acquisition Corporation, TOI Acquisition Corporation
and OTP Acquisition Corporation, each of which is a Delaware corporation (herein
collectively referred to as "Newco" except as the contest otherwise indicates),
Gear and Wheel, Inc., Try One, Inc. and Ocala Truck Parts, Inc., each of which
is a Florida corporation (herein collectively referred to as the "Company"
except as the context otherwise indicates), and the Stockholders identified on
the signature pages hereto (the "Stockholders"). The Stockholders are all the
stockholders of the Company.
RECITALS
WHEREAS, each Newco is a corporation duly organized and existing
under the laws of the State of Delaware, having been incorporated on April
9, 1998 solely for the purpose of completing the transactions set forth
herein, and is a wholly-owned subsidiary of TCI, a corporation organized
and existing under the laws of the State of Delaware;
WHEREAS, the respective Boards of Directors of each Newco and the
each Company (which together are hereinafter collectively referred to as
"Constituent Corporations") deem it advisable and in the best interests of
the Constituent Corporations and their respective stockholders that each
Newco merge with and into the Company identified herein pursuant to this
Agreement and the applicable provisions of the laws of the States of
Delaware and the State of Incorporation (as defined below);
WHEREAS, TCI is entering into other separate agreements
substantially similar to this Agreement (the "Other Agreements"), each of
which is entitled "Agreement and Plan of Organization", with each of the
Other Founding Companies (as defined herein) and their respective
stockholders in order to acquire additional transportation components
retailers and related services businesses;
WHEREAS, this Agreement, the Other Agreements and the IPO (as
defined herein) constitute the "TCI Plan of Organization";
WHEREAS, the Stockholders and the Boards of Directors of each
Company, the stockholders and the Board of Directors of each Newco and
TCI, each of the Other Founding Companies and each of the subsidiaries of
TCI that are parties to the Other Agreements have approved and adopted the
TCI Plan of Organization as an integrated plan pursuant to which the
Stockholders and the stockholders of each of the Other Founding Companies
will transfer the capital stock of each of the Founding Companies (as
defined herein) to TCI and the stockholders of each of the Other Founding
Companies will acquire the stock of TCI (but not cash or other property)
as a tax-free transfer of property under Section 351 of the Code;
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WHEREAS, in consideration of the agreements of the Other Founding
Companies pursuant to the Other Agreements, the Board of Directors of each
Company has approved this Agreement (which is subject to the terms and
conditions herein set forth), as part of the TCI Plan of Organization in
order to transfer the capital stock of the Company to TCI;
WHEREAS, unless the context otherwise requires, capitalized terms
used in this Agreement or in any schedule attached hereto and not
otherwise defined shall have the following meanings for all purposes of
this Agreement:
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Acquired Party" means the Company, any Subsidiary of the Company and any
member of a Relevant Group.
"Acquisition Companies" means each Newco and each of the other Delaware
companies created for purposes of effecting the acquisitions of some or all of
the Other Founding Companies and wholly-owned by TCI prior to the Funding and
Consummation Date.
"Affiliate" means, with respect to any Person, any Person that directly,
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person.
"Articles of Merger" shall mean those Articles or Certificates of Merger
with respect to the Merger in such forms as may be required by the laws of the
State of Delaware and the State of Incorporation.
"Balance Sheet Date" shall mean December 31, 1997.
"Charter Document" shall mean the Certificate of Incorporation or
corporate charter and Bylaws or governing document in effect as of the date of
this Agreement.
"Closing" has the meaning set forth in Section 4.
"Closing Date" has the meaning set forth in Section 4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Stock" has the meaning set forth in Section 2.1.
"Confidential Information" has the meaning set forth in Section 14.1.
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"Constituent Corporations" has the meaning set forth in the second recital
of this Agreement.
"Draft Registration Statement" means the proof of the Registration
Statement generated by ▇▇▇▇ ▇. ▇▇▇▇▇ on April 14, 1998, copies of which were
delivered to the Founding Companies and their respective counsel on April 15,
1998, and any corrections thereto and supplemental information delivered by TCI
to the Company for delivery to the Stockholders prior to the time this Agreement
is delivered to TCI.
"Effective Time of the Merger" shall mean the time as of which the Merger
becomes effective, which shall occur on the Funding and Consummation Date.
"Environmental Laws" has the meaning set forth in Section 5.13.
"Expiration Date" has the meaning set forth in Section 5.
"Founding Companies" means, collectively:
(a) Amparts International, Inc., a Texas corporation;
(b) Amparts, Inc., a Texas corporation;
(c) Proveedor Mayorista al Refaccionario, S.A. de C. V., a Mexican
corporation;
(d) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Co. - Los Angeles, a California corporation;
(e) The ▇▇▇▇ Brothers Companies, Inc., a New York corporation;
(f) Plaza Automotive, Inc., a Missouri corporation;
(g) Drive Line, Inc., a Florida corporation;
(h) Gear and Wheel, Inc., a Florida corporation;
(i) Try One, Inc., a Florida corporation;
(j) Ocala Truck Parts, Inc., a Florida corporation;
(k) Perfection Equipment Company, an Oklahoma corporation;
(l) TPE, Inc., an Oklahoma corporation;
(m) Transportation Components Company, a Minnesota corporation;
(n) Power Brake of Wisconsin, Inc., a Wisconsin corporation;
(o) Power Brake Midwest, Inc., a North Dakota corporation;
(p) MSL, Inc., a Minnesota corporation;
(q) L.L.L., Inc., a Minnesota corporation; and
(r) Universal Fleet Supply, Inc., a California corporation.
"Funding and Consummation Date" has the meaning set forth in Section 4.
"IPO" means the initial public offering of TCI Stock pursuant to the
Registration Statement described herein.
"Knowledge of the Stockholders" means the actual knowledge of the
Stockholders.
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"Material Adverse Effect" has the meaning set forth in Section 5.1.
"Material Documents" has the meaning set forth in Section 5.23.
"Merger" means the merger of each Newco with and into the Company
identified herein pursuant to this Agreement and the applicable provisions of
the laws of the State of Delaware and the laws of the State of Incorporation;
GWI Acquisition Corporation shall merge with and into Gear and Wheel, Inc.; TOI
Acquisition Corporation shall merge with and into Try One, Inc.; and OTP
Acquisition Corporation shall merge with and into Ocala Truck Parts, Inc.
"Newco" has the meaning set forth in the first paragraph of this
Agreement.
"Newco Stock" means the common stock, par value $.01 per share, of the
relevant Newco.
"Other Agreements" has the meaning set forth in the third recital of this
Agreement.
"Other Founding Companies" means all of the Founding Companies other than
the Company.
"Person" means an individual or a corporation, limited partnership,
general partnership, limited liability company, trust, unincorporated
association, joint venture, association, or government or any agency,
instrumentality, or political subdivision thereof, or other entity.
"Pricing" means the date of determination by TCI and the Underwriters of
the public offering price of the shares of TCI Stock in the IPO; the parties
hereto contemplate that the Pricing shall take place on the Closing Date.
"Qualified Plans" has the meaning set forth in Section 5.20.
"Registration Statement" means that certain registration statement on Form
S-1 to be filed with the SEC covering the shares of TCI Stock to be issued in
the IPO and all amendments thereto.
"Relevant Group" means the Company and any Affiliated, combined,
consolidated, unitary or similar group of which the Company is or was a member
for Tax reporting purposes.
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Schedule" means each Schedule attached hereto (as the same may from time
to time be amended), which shall reference the relevant sections of this
Agreement, on which parties hereto disclose information as part of their
respective representations, warranties and covenants.
"SEC" means the United States Securities and Exchange Commission.
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"State of Incorporation" means the State of Florida.
"Stockholders" has the meaning set forth in the first paragraph of this
Agreement.
"Subsidiary" means, as to any Person, any corporation or entity, 50% or
more of the shares of voting stock (or in the case of an entity which is not a
corporation, 50% or more of the equity interests that provide the power to
manage or direct the management of such entity) of which is at the time any
determination is being made, owned, directly or indirectly, by such Person and
its wholly owned Subsidiaries.
"Surviving Corporation" shall mean the Company as the surviving party in
the Merger.
"Tax" or "Taxes" means all federal, state, local or foreign net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, withholding, employment, excise, property, deed, stamp, alternative
or add on minimum, or other taxes, assessments, duties, fees, levies or other
governmental charges, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto.
"TCI" has the meaning set forth in the first paragraph of this Agreement.
"TCI Charter Documents" has the meaning set forth in Section 6.1.
"TCI Plan of Organization" has the meaning set forth in the fourth recital
to this Agreement.
"TCI Stock" means the common stock, par value $.01 per share, of TCI.
"Underwriters" means the prospective underwriters identified in the Draft
Registration Statement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
1. THE MERGER
1.1 DELIVERY AND FILING OF ARTICLES OF MERGER. The Constituent
Corporations will cause the Articles of Merger to be signed, verified and
delivered to TCI at the Closing to be held for filing with the Secretary of
State of the State of Delaware and the Secretary of State (or other appropriate
authority) of the State of Incorporation on or effective as of the Funding and
Consummation Date.
1.2 EFFECTIVE TIME OF THE MERGER. At the Effective Time of the Merger,
each Newco shall be merged with and into the respective Company in accordance
with the Articles of Merger, the separate existence of Newco shall cease, and
the respective Company shall be the surviving party
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in the Merger and such Company is sometimes hereinafter referred to as the
Surviving Corporation. The Merger will be effected in a single transaction.
1.3 CERTIFICATE OF INCORPORATION, BY-LAWS; BOARD OF DIRECTORS AND OFFICERS
OF SURVIVING CORPORATION. At the Effective Time of the Merger:
(i) the Certificate of Incorporation of the Company then in effect
shall be the Certificate of Incorporation of the Surviving Corporation until
changed as provided by law;
(ii) the By-laws of the relevant Newco then in effect shall become
the By-laws of the Surviving Corporation; and subsequent to the Effective Time
of the Merger, such By-laws shall be the By-laws of the Surviving Corporation
until they shall thereafter be duly amended (and such By-laws shall be amended
from time to time, if necessary, to comply with applicable state law);
(iii) the Board of Directors of the Surviving Corporation shall
consist of the persons who are on the Board of Directors of respective Company
immediately prior to the Effective Time of the Merger, provided that T. ▇▇▇▇▇▇▇
▇▇▇▇▇ or another officer of TCI shall become an additional director of the
Surviving Corporation effective as of the Effective Time of the Merger, and the
number of directors constituting the entire Board of Directors of each Company
shall be increased, if necessary, to accommodate the addition of such additional
director; the Board of Directors of the Surviving Corporation shall hold office
subject to the provisions of the laws of the State of Incorporation and of the
Certificate of Incorporation and By-laws of the Surviving Corporation; and
(iv) the officers of each Company immediately prior to the Effective
Time of the Merger shall continue as the officers of the Surviving Corporation
in the same capacity or capacities, and effective upon the Effective Time of the
Merger ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ shall each become an
additional Vice President and Assistant Secretary of the Surviving Corporation,
such officers to serve, subject to the provisions of the Certificate of
Incorporation and By-laws of the Surviving Corporation, until their respective
successors are duly elected and qualified.
1.4 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF THE COMPANY,
TCI AND NEWCO. The respective designations and numbers of outstanding shares and
voting rights of each class of outstanding capital stock of each Company, TCI
and each Newco as of the date of this Agreement are as follows:
(i) as of the date of this Agreement, the authorized and outstanding
capital stock of each Company, and the record and beneficial ownership of such
outstanding capital stock, is as set forth on Annex II hereto;
(ii) immediately prior to the Closing Date and the Funding and
Consummation Date, except for changes permitted by Section 7.12 hereof, the
authorized capital stock of TCI will
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consist of 100,000,000 shares of TCI Stock, of which the number of issued and
outstanding shares will be set forth in the Registration Statement, 5,000,000
shares of preferred stock, $.01 par value, of which no shares will be issued and
outstanding, and 2,000,000 shares of Restricted Voting Common Stock, $.01 par
value (the "Restricted Common Stock"), all of which will be issued and
outstanding except as otherwise set forth in the Registration Statement; and
(iii) as of the date of this Agreement, the authorized capital stock
of each Newco consists of 1,000 shares of Newco Stock, of which one hundred
(100) shares are issued and outstanding.
1.5 EFFECT OF MERGER. At the Effective Time of the Merger, the effect of
each Merger shall be as provided in the applicable provisions of the General
Corporation Law of the State of Delaware (the "Delaware GCL") and the law of the
State of Incorporation. Except as herein specifically set forth, the identity,
existence, purposes, powers, franchises, privileges, rights and immunities of
the respective Company shall continue unaffected and unimpaired by the Merger
and the corporate franchises, existence and rights of the relevant Newco shall
be merged with and into the Company as set forth herein, and such Company, as
the Surviving Corporation, shall be fully vested therewith. At the Effective
Time of the Merger, the separate existence of each Newco shall cease and, in
accordance with the terms of this Agreement, the Surviving Corporation shall
possess all the rights, privileges, immunities and franchises, of a public, as
well as of a private, nature, and all property, real, personal and mixed, and
all debts due on whatever account, including subscriptions to shares, and all
taxes, including those due and owing and those accrued, and all other choses in
action, and all and every other interest of or belonging to or due to such
Company and such Newco shall be transferred to, and vested in, the Surviving
Corporation without further act or deed; and all property, rights and
privileges, powers and franchises and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they were
of such Company and such Newco; and the title to any real estate, or interest
therein, whether by deed or otherwise, under the laws of the State of
Incorporation vested in such Company and such Newco, shall not revert or be in
any way impaired by reason of the Merger. Except as otherwise provided herein,
the Surviving Corporation shall thenceforth be responsible and liable for all
the liabilities and obligations of such Company and such Newco and any claim
existing, or action or proceeding pending, by or against such Company or such
Newco may be prosecuted as if the Merger had not taken place, or the Surviving
Corporation may be substituted in their place. Neither the rights of creditors
nor any liens upon the property of any Company or any Newco shall be impaired by
the Merger, and all debts, liabilities and duties of each Company and each Newco
shall attach to the Surviving Corporation, and may be enforced against such
Surviving Corporation to the same extent as if said debts, liabilities and
duties had been incurred or contracted by such Surviving Corporation.
2. CONVERSION OF STOCK
2.1 MANNER OF CONVERSION. The manner of converting the shares of (i)
outstanding capital stock of each Company ("Company Stock") and (ii) Newco
Stock, issued and outstanding
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immediately prior to the Effective Time of the Merger, respectively, into shares
of (x) TCI Stock and cash and (y) common stock of the Surviving Corporation,
respectively, shall be as follows:
As of the Effective Time of the Merger:
(i) the aggregate number of shares of Company Stock issued and
outstanding immediately prior to the Effective Time of the Merger, by virtue of
the Merger and without any action on the part of the holders thereof,
automatically shall be converted into and deemed to represent the right to
receive (1) the aggregate number of shares of TCI Stock set forth on Annex I
hereto and (2) subject to the adjustments described in Annex I hereto, the
aggregate amount of cash set forth on Annex I hereto (the number of shares of
TCI Stock and, subject to the adjustments described on Annex I hereto, the
amount of cash allocable to the holders of the Company Stock being set forth on
Annex I);
(ii) all shares of Company Stock that are held by each Company as
treasury stock shall be canceled and retired and no shares of TCI Stock or other
consideration shall be delivered or paid in exchange therefor; and
(iii) each share of Newco Stock issued and outstanding immediately
prior to the Effective Time of the Merger, shall, by virtue of the Merger and
without any action on the part of TCI, automatically be converted into one fully
paid and non-assessable share of common stock of the Surviving Corporation which
shall constitute all of the issued and outstanding shares of common stock of the
Surviving Corporation immediately after the Effective Time of the Merger, all of
which shall be owned by TCI.
All TCI Stock received by the Stockholders pursuant to this Agreement
shall, except for restrictions on resale or transfer described in Sections 15
and 16 hereof, have the same rights as all the other shares of outstanding TCI
Stock by reason of the provisions of the Certificate of Incorporation of TCI or
as otherwise provided by the Delaware GCL. All TCI Stock received by the
Stockholders shall be issued and delivered to the Stockholders free and clear of
any liens, claims or encumbrances of any kind or nature. All voting rights of
such TCI Stock received by the Stockholders shall be fully exercisable by the
Stockholders and the Stockholders shall not be deprived nor restricted in
exercising those rights. At the Effective Time of the Merger, TCI shall have no
class of capital stock issued and outstanding other than the TCI Stock and the
Restricted Voting Common Stock.
3. DELIVERY OF MERGER CONSIDERATION
3.1 On the Funding and Consummation Date the Stockholders, who are the
holders of all of the outstanding capital stock of each Company, shall, upon
surrender of certificates representing such shares, receive the respective
numbers of shares of TCI Stock and, subject to the adjustments described on
Annex I hereto, the amounts of cash described on Annex I hereto, said cash
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to be payable by certified check or wire transfer as so requested by the
Stockholders at least two business days prior to closing.
3.2 The Stockholders shall deliver to TCI at the Closing the certificates
representing Company Stock, duly endorsed in blank by the Stockholders, or
accompanied by blank stock powers, and with all necessary transfer tax and other
revenue stamps, acquired at the Stockholders' expense, affixed and canceled. The
Stockholders agree promptly to cure any deficiencies with respect to the
endorsement of the stock certificates or other documents of conveyance with
respect to such Company Stock or with respect to the stock powers accompanying
any Company Stock.
4. CLOSING
At or prior to the Pricing, the parties shall take all actions necessary
to prepare to (i) effect the Merger (including the execution of the Articles of
Merger which shall be delivered to TCI for filing with the appropriate
authorities effective on the Funding and Consummation Date) and (ii) effect the
conversion and delivery of shares referred to in Section 3 hereof; provided,
that such actions shall not include the actual completion of the Merger or the
conversion and delivery of the shares and funds referred to in Section 3 hereof,
each of which actions shall only be taken upon the Funding and Consummation Date
as herein provided. In the event that there is no Funding and Consummation Date
and this Agreement automatically terminates as provided in this Section 4, the
Articles of Merger shall not be filed and shall be returned to the Stockholders.
The taking of the actions described in clauses (i) and (ii) above (the
"Closing") shall take place on the closing date (the "Closing Date") at the
offices of Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P., South Tower Pennzoil Place, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. On the Funding and Consummation
Date (x) the Articles of Merger shall be filed with the appropriate state
authorities so that they shall be, as early as practicable on the Funding and
Consummation Date, effective and the Merger shall thereby be effected, (y) all
transactions contemplated by this Agreement, including the conversion and
delivery of shares and the delivery of funds in the amount and in the manner
provided in Section 3 hereof and (z) the closing with respect to the IPO shall
occur and be completed. The date on which the actions described in the preceding
clauses (x), (y) and (z) occurs shall be referred to as the "Funding and
Consummation Date." During the period from the Closing Date to the Funding and
Consummation Date, this Agreement may only be terminated by the parties if the
underwriting agreement in respect of the IPO is terminated pursuant to the terms
of such underwriting agreement. This Agreement shall also in any event
automatically terminate if the Funding and Consummation Date has not occurred
within 15 business days following the Closing Date. Time is of the essence.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders severally represents and warrants that all of the
representations and warranties in this Section 5 are true at the date of this
Agreement and, subject to Section 7.8 hereof, shall be true at the time of
Closing and the Funding and Consummation Date, and agrees that such
representations and warranties shall survive the Funding and Consummation Date
for a period of
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twelve months (the last day of such period being the "Expiration Date"), except
that the representations and warranties set forth in Section 5.22 hereof shall
survive until such time as the limitations period has run for all tax periods
ended on or prior to the Funding and Consummation Date, which shall be deemed to
be the Expiration Date for Section 5.22, and the representations and warranties
set forth in Section 5.30 hereof shall survive perpetually. For purposes of this
Section 5, the term "Company" shall mean and refer to the Company and all of its
Subsidiaries, if any, and shall mean all three Companies, taken as a whole,
unless the context indicates otherwise.
5.1 DUE ORGANIZATION. Each Company is a corporation duly incorporated and
organized, validly existing and in good standing under the laws of the State of
Incorporation, and has the requisite power and authority to carry on its
business as it is now being conducted. Each Company is duly qualified to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary, except (i) as set forth on Schedule 5.1 or (ii) where the failure to
be so authorized or qualified would not have a material adverse effect on the
business, operations, properties, assets or condition (financial or otherwise),
of the Company and its subsidiaries taken as a whole (as used herein with
respect to the Company, or with respect to any other Person, a "Material Adverse
Effect"). Schedule 5.1 sets forth a list of all jurisdictions in which each
Company is authorized or qualified to do business. True, complete and correct
copies of (i) the Certificate of Incorporation and By-laws, each as amended, of
the Company (the "Charter Documents"), and (ii) the stock records of each
Company, are all attached to Schedule 5.1. Each Company has delivered complete
and correct copies of all minutes of meetings, written consents and other
evidence, if any, of deliberations of or actions taken by the Company's Board of
Directors and stockholders during the last five years.
5.2 AUTHORIZATION. (i) The representatives of each Company executing this
Agreement have the authority to enter into and bind such Company to the terms of
this Agreement and (ii) each Company has the full legal right, power and
authority to enter into this Agreement and the Merger. Recent resolutions
adopted by the Board of Directors of each Company and resolutions adopted by the
Stockholders to approve this Agreement and the transactions contemplated hereby
in all respects, and copies of all such resolutions, certified by the Secretary
or an Assistant Secretary of the Company as being in full force and effect on
the date hereof, are attached hereto as Schedule 5.2.
5.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of each
Company is as set forth on Annex II, and all of the issued and outstanding
shares of the capital stock of each Company are owned by the Stockholders in the
amounts set forth in Annex II. Except as set forth on Schedule 5.3, all of the
issued and outstanding shares of the capital stock of each Company have been
duly authorized and validly issued, are fully paid and nonassessable, are owned
of record and beneficially by the Stockholders and further, such shares were
offered, issued, sold and delivered by each Company in compliance with all
applicable state and Federal laws concerning the issuance of securities.
Further, none of such shares were issued in violation of any preemptive rights
of any past or present stockholder.
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5.4 TRANSACTIONS IN CAPITAL STOCK, ORGANIZATION ACCOUNTING. Except as set
forth on Schedule 5.4, the Company has not acquired any Company Stock since
January 1, 1995. Except as set forth on Schedule 5.4, (i) no option, warrant,
call, conversion right or commitment of any kind exists which obligates the
Company to issue any of its authorized but unissued capital stock; (ii) the
Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof; and (iii) neither
the voting stock structure of the Company nor the relative ownership of shares
among any of its respective Stockholders has been altered or changed in
contemplation of the Merger and/or the TCI Plan of Organization.
5.5 NO BONUS SHARES. Except as set forth on Schedule 5.5, none of the
shares of Company Stock was issued pursuant to awards, grants or bonuses in
contemplation of the Merger or the TCI Plan of Organization.
5.6 SUBSIDIARIES. Except as set forth on Schedule 5.6, the Company has no
Subsidiaries. Except as set forth in Schedule 5.6, the Company does not
presently own, of record or beneficially, or control, directly or indirectly,
any capital stock, securities convertible into capital stock or any other equity
interest in any corporation, association or business entity nor is the Company,
directly or indirectly, a participant in any joint venture, partnership or other
non-corporate entity.
5.7 PREDECESSOR STATUS; ETC. Set forth on Schedule 5.7 is a listing of all
names of all predecessor companies of the Company, including the names of any
entities acquired by the Company (by stock purchase, merger or otherwise) or
owned by the Company or from whom the Company previously acquired all or
substantially all of any such entity's assets (or all or substantially all of
the assets used by any such entity in a line of business), in any case, from the
earliest date upon which any Stockholder acquired his or her stock in any
Company. Except as disclosed on Schedule 5.7, the Company has not been, within
such period of time, a subsidiary or division of another corporation or a part
of an acquisition which was later rescinded.
5.8 SPIN-OFF BY THE COMPANY. Except as set forth on Schedule 5.8, there
has not been any sale, spin-off or split-up of material assets of either the
Company or any Affiliate since January 1, 1995.
5.9 FINANCIAL STATEMENTS. Schedule 5.9 sets forth complete and correct
copies of the Company's financial statements as of the dates and for the periods
indicated therein (the "Financial Statements"). The Financial Statements have
been prepared from the books and records of the Company in conformity with
generally accepted accounting principles applied on a consistent basis and
throughout the periods involved ("GAAP") (except as disclosed therein or in the
schedules hereto, and except that any unaudited statements included therein may
omit footnote disclosures), and present fairly, in all material respects, the
financial position and results of operations of the Company as of the dates and
for the periods covered thereby.
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5.10 LIABILITIES AND OBLIGATIONS. Schedule 5.10 sets forth an accurate
list as of the Balance Sheet Date of (i) all material liabilities of the Company
of a nature that they are required in accordance with GAAP to be reflected on a
balance sheet and which are not reflected on the balance sheet of the Company at
the Balance Sheet Date or otherwise reflected in the Company Financial
Statements at the Balance Sheet Date and which are not disclosed on any of the
other Schedules to this Agreement, and (ii) all loan agreements, indemnity or
guaranty agreements, bonds, mortgages, pledges and material security agreements
to which the Company is a party or by which its properties may be bound. To the
knowledge of the Stockholders, except as set forth on Schedule 5.10, since the
Balance Sheet Date the Company has not incurred any material liabilities of any
kind, character or description, whether accrued, absolute, secured or unsecured,
contingent or otherwise, other than liabilities incurred in the ordinary course
of business. The Company has also delivered to TCI on Schedule 5.10, in the case
of those contingent liabilities known to Stockholders and related to pending or
threatened litigation, or other liabilities which are not fixed, a good faith
and reasonable estimate (to the extent the Company can reasonably make such an
estimate) of the maximum amount which the Company reasonably expects will be
payable and the amount, if any, accrued or reserved for each such potential
liability on the Company's Financial Statements; in the case of any such
liability for which no estimate has been provided, the estimate for purposes of
this Agreement shall be deemed to be zero.
5.11 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.11 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the Balance
Sheet Date, including any such amounts which are not reflected in the balance
sheet as of the Balance Sheet Date, and including receivables from and advances
to employees and the Stockholders, which are identified as such. Except to the
extent reflected on Schedule 5.11, such accounts, notes and other receivables
are collectible in the amounts shown on Schedule 5.11, net of reserves reflected
in the balance sheet as of the Balance Sheet Date.
5.12 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations ("Licenses") the absence of any of
which could have a Material Adverse Effect on the Company's business, and the
Company has delivered to TCI an accurate list and summary description (which is
set forth on Schedule 5.12) of all such Licenses, and of any trademarks, trade
names, patents, patent applications and copyrights owned or held by the Company
or by any of its employees if used or held for use by the Company in the conduct
of its business (including interests in software or other technology systems,
programs and intellectual property) (it being understood and agreed that a list
of environmental permits and other environmental approvals is set forth on
Schedule 5.13). At or prior to the Closing, the Company will use commercially
reasonable efforts to ensure that all such trademarks, trade names, patents,
patent applications, copyrights and other intellectual property will be assigned
or licensed to the Company for no additional consideration. To the knowledge of
the Stockholders, the Licenses and other rights listed on Schedules 5.12 and
5.13 are valid, and the Company has not received any notice that any Person
intends to cancel, terminate or not renew any such License or other right. The
Company has conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in the Licenses and
other rights listed on Schedules 5.12 and 5.13 and is not in
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violation of any of the foregoing except where such non-compliance or violation
would not have a Material Adverse Effect on the Company. Except as specifically
provided in Schedule 5.12, the transactions contemplated by this Agreement will
not result in a default under or a breach or violation of, or adversely affect
the rights and benefits afforded to the Company by, any such Licenses or other
rights.
5.13 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 5.13, and
except where any failure to comply, either singly or in the aggregate, has not
had and will not have a Material Adverse Effect on the Company or its business,
(i) the Company has complied with and is in compliance with all Federal, state,
local and foreign statutes (civil and criminal), laws, ordinances, regulations,
rules, permits, judgments, orders and decrees applicable to it or any of its
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws") including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes,
Hazardous Materials and Hazardous Substances (as such terms are defined in any
applicable Environmental Law), as well as petroleum and petroleum products
(collectively "Hazardous Materials"), (ii) the Company has obtained and adhered
to all necessary permits and other approvals necessary to treat, transport,
store, dispose of and otherwise handle Hazardous Materials, a list of all of
which permits and approvals is set forth on Schedule 5.13, and has reported to
the appropriate authorities, to the extent required by all Environmental Laws,
all past and present sites owned and operated by the Company where Hazardous
Materials have been treated, stored, disposed of or otherwise handled, (iii) to
the knowledge of the Stockholders there have been no releases or threats of
releases (as these terms are defined in Environmental Laws) of any Hazardous
Materials at, from, in or on any property owned or operated by the Company
except as permitted by Environmental Laws, and (iv) to the knowledge of the
Stockholders, there is no on-site or off-site location to which the Company has
transported or disposed of Hazardous Materials or arranged for the
transportation of Hazardous Materials which is the subject of any Federal,
state, local or foreign enforcement action or any other investigation which
could lead to any claim against the Company, TCI or Newco for any clean-up cost,
remedial work, damage to natural resources, property damage or personal injury,
including, but not limited to, any claim under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Resource
Conservation and Recovery Act, the Hazardous Materials Transportation Act or
comparable state or local statutes or regulations.
5.14 PERSONAL PROPERTY. The Company has delivered to TCI an accurate list
(which is set forth on Schedule 5.14) of (x) all personal property material to
the operations of the Company included in "plant, property and equipment" on the
balance sheet of the Company as of the Balance Sheet Date, (y) all other
tangible personal property owned by the Company with an individual fair market
value (in the reasonable judgment of the Stockholders; it being understood by
the parties herein that the Stockholders are not obtaining appraisals of any
such property in connection with the preparation of Schedule 5.14) in excess of
$25,000 (i) as of the Balance Sheet Date and (ii) acquired since the Balance
Sheet Date and (z) all material leases and agreements in respect of personal
property, including, in the case of each of (x), (y) and (z), (1) true, complete
and correct copies of all such leases and (2) an indication as to which assets
are currently owned, or were formerly owned,
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by Stockholders, relatives of Stockholders, or Affiliates of the Company. Except
as set forth on Schedule 5.14, (i) all material personal property used by the
Company in its business is either owned by the Company or leased by the Company
pursuant to a lease included on Schedule 5.14, (ii) all of the personal property
listed on Schedule 5.14 is in good working order and condition, ordinary wear
and tear excepted except to the extent such wear and tear would have a Material
Adverse Effect and (iii) to the knowledge of the Stockholders, all leases and
agreements included on Schedule 5.14 are in full force and effect and constitute
valid and binding agreements of the parties (and their successors) thereto in
accordance with their respective terms except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to the enforcement of creditors' rights generally and by
general principles of equity.
5.15 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. The
Company has delivered to TCI an accurate list (which is set forth on Schedule
5.15) of all customers (persons or entities) representing 1% or more of the
Company's annual revenues for the year ended December 31, 1997; provided,
however, that Schedule 5.15 need not set forth more than the Company's 20
largest customers during such period. Except to the extent set forth on Schedule
5.15, none of such customers have canceled or substantially reduced or, to the
knowledge of the Stockholders, are currently attempting or threatening to cancel
a contract or substantially reduce utilization of the services provided by the
Company.
The Company has listed on Schedule 5.15 all Material Contracts (as defined
below) to which the Company is a party or by which it or any of its properties
are bound, other than agreements listed on Schedules 5.10, 5.14 or 5.16, (a) in
existence as of the Balance Sheet Date and (b) entered into since the Balance
Sheet Date, and in each case has delivered true, complete and correct copies of
such agreements to TCI. For purposes of this Agreement, the term "Material
Contracts" includes contracts between the Company and significant customers (as
described above), joint venture or partnership agreements, contracts with any
labor organization, strategic alliances, options to purchase land and other
contracts which are not terminable on sixty days or less notice and involve
payments by the Company in any twelve-month period in excess of $25,000. The
Company has also indicated on Schedule 5.15 a summary description of all plans
or projects involving the opening of new operations, expansion of existing
operations, the acquisition of any personal property, business or assets
requiring, in any event, the payment of more than $25,000 by the Company during
any 12- month period. To the knowledge of the Stockholders, all of the Material
Contracts are in full force and effect and constitute valid and binding
agreements of the parties (and their successors) thereto in accordance with
their respective terms except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to the enforcement of creditors' rights generally and by general
principles of equity.
5.16 REAL PROPERTY. Schedule 5.16 includes a list of all real property
owned or leased by the Company at the date hereof and all other real property,
if any, used by the Company in the conduct of its business. Except as set forth
on Schedule 5.16, any such real property owned by the Company will be sold or
distributed by the Company on the terms set forth on Schedule 5.16 and leased
back by the Company on the terms set forth on Schedule 5.16 pursuant to a lease
in the form
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of Annex VI hereto at or prior to the Closing Date. Except as set forth on
Schedule 5.16, the lease relating to any such real property leased by the
Company from any of the Stockholders or any Affiliate of any of the Stockholders
will be terminated as of the Closing Date and a new lease in the form of Annex
VI hereto will be entered into as of the Closing Date on the terms set forth on
Schedule 5.16. The Company has good title to any real property owned by it that
is not shown on Schedule 5.16 as property intended to be sold or distributed
prior to the Closing Date, subject to no mortgage, pledge, lien, conditional
sales agreement, encumbrance or charge, except for:
(i) liens reflected on Schedules 5.10 or 5.16 as securing specified
liabilities (with respect to which no material default exists);
(ii) liens for current taxes not yet payable and assessments not in
default;
(iii) easements for utilities serving the property only; and
(iv) easements, covenants and restrictions and other exceptions to
title which do not adversely affect the current use of the property.
True, complete and correct copies of all leases and agreements in respect
of such real property leased by the Company are attached to Schedule 5.16, and
an indication as to which such properties, if any, are currently owned, or were
formerly owned, by Stockholders or Affiliates of the Company or Stockholders is
included in Schedule 5.16. Except as set forth on Schedule 5.16, to the
knowledge of the Stockholders, all of such leases included on Schedule 5.16 are
in full force and effect and constitute valid and binding agreements of the
parties (and their successors) thereto in accordance with their respective terms
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to the enforcement of
creditors' rights generally and by general principles of equity.
5.17 INSURANCE. The Company has delivered to TCI (i) an accurate list as
of the Balance Sheet Date of all insurance policies carried by the Company, (ii)
an accurate list of all insurance loss runs or workers compensation claims
received for the past three policy years and (iii) true, complete and correct
copies of all insurance policies currently in effect. Such insurance policies
evidence all of the insurance that the Company is required to carry pursuant to
all of its contracts and other agreements and pursuant to all applicable laws,
and to the knowledge of the Stockholders provide adequate coverage against the
risks involved in the Company's business. All of such insurance policies are
currently in full force and effect. Since January 1, 1995, no insurance carried
by the Company has been canceled by the insurer and the Company has not been
denied coverage.
5.18 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS. The
Company has delivered to TCI an accurate list (which is set forth on Schedule
5.18) showing all officers, directors and key employees of the Company, listing
all employment agreements with such officers, directors and key employees and
the rate of compensation (and the portions thereof attributable to salary, bonus
and other compensation, respectively) of each of such persons as of (i)
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the Balance Sheet Date and (ii) the date hereof. The Company has provided to TCI
true, complete and correct copies of any employment agreements for persons
listed on Schedule 5.18. Since the Balance Sheet Date, there have been no
material increases in the compensation payable or any special bonuses to any
officer, director, key employee or other employee, except ordinary salary
increases implemented and bonuses paid on a basis consistent with past
practices.
Except as set forth on Schedule 5.18, (i) the Company is not bound by or
subject to any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Stockholders, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the knowledge of the Stockholders, threatened labor dispute involving the
Company and any group of its employees nor has the Company experienced any labor
interruptions over the past three years.
The Company believes its relationship with employees to be good.
5.19 EMPLOYEE PLANS. The Stockholders have delivered to TCI an accurate
schedule (Schedule 5.19) (the "Benefit Plans Schedule") showing all employee
benefit plans of the Company, including all employment agreements and other
agreements or arrangements containing "golden parachute" or other similar
provisions, and deferred compensation agreements, together with true, complete
and correct copies of such plans, agreements and any trusts related thereto, and
classifications of employees covered thereby as of the Balance Sheet Date.
Except for the employee benefit plans, if any, described on the Benefit Plans
Schedule, the Company does not sponsor, maintain or contribute to any plan,
program, fund or arrangement that constitutes an "employee pension benefit
plan", and the Company has no obligation to contribute to or accrue or pay any
benefits under any deferred compensation or retirement funding arrangement on
behalf of any employee or employees (such as, for example, and without
limitation, any individual retirement account or annuity, any "excess benefit
plan" (within the meaning of Section 3(36) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) or any non-qualified deferred
compensation arrangement). For the purposes of this Agreement, the term
"employee pension benefit plan" shall have the same meaning as is given that
term in Section 3(2) of ERISA. The Company has not sponsored, maintained or
contributed to any employee pension benefit plan other than the plans set forth
on the Benefit Plans Schedule. Except as set forth on the Benefit Plans
Schedule, the Company is not required to contribute to any retirement plan
pursuant to the provisions of any collective bargaining agreement establishing
the terms and conditions or employment of any of the Company's or any
subsidiary's employees.
Except as set forth on the Benefit Plans Schedule, the Company is not now,
or will not as a result of its past activities become, liable to the Pension
Benefit Guaranty Corporation or to any multiemployer employee pension benefit
plan under the provisions of Title IV of ERISA.
All employee benefit plans listed on the Benefit Plans Schedule and the
administration thereof are in compliance in all material respects with their
terms and all applicable provisions of ERISA and the regulations issued
thereunder, as well as with all other applicable federal, state and
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local statutes, ordinances and regulations except to the extent that any failure
to comply would not have a Material Adverse Effect on the Company.
All accrued contribution obligations of the Company with respect to any
plan listed on the Benefit Plans Schedule have either been fulfilled in their
entirety or are fully reflected on the balance sheet of the Company as of the
Balance Sheet Date.
5.20 COMPLIANCE WITH ERISA. All plans listed on the Benefit Plans Schedule
that are intended to qualify (the "Qualified Plans") under Section 401(a) of the
Code have been determined by the Internal Revenue Service to be so qualified,
and copies of the determination letters relating thereto are attached to the
Benefit Plans Schedule. Except as disclosed on the Benefit Plans Schedule, all
reports and other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not limited
to, actuarial reports, audits or tax returns) have been timely filed or
distributed, and copies thereof for the past two years are included as part of
the Benefit Plans Schedule. None of (i) the Stockholders, (ii) the Company, or
(iii) to the knowledge of the Stockholders, any other person, has engaged in any
transaction with any plan listed in the Benefit Plans Schedule prohibited under
the provisions of Section 4975 of the Code or Section 406 of ERISA. No plan
listed in the Benefit Plans Schedule has incurred an accumulated funding
deficiency, as defined in Section 412(a) of the Code and Section 302(1) of
ERISA; and the Company has not incurred any liability for excise tax or penalty
due to the Internal Revenue Service nor any liability to the Pension Benefit
Guaranty Corporation. Except as set forth on the Benefit Plans Schedule:
(i) there have been no terminations, partial terminations or
discontinuations of contributions to any Qualified Plan without notice to and
approval by the Internal Revenue Service;
(ii) no plan listed in the Benefit Plans Schedule subject to the
provisions of Title IV of ERISA has been terminated;
(iii) there have been no "reportable events" (as that phrase is
defined in Section 4043 of ERISA) with respect to any such plan listed in the
Benefit Plans Schedule; and
(iv) to the knowledge of the Stockholders, no circumstances exist
pursuant to which the Company could have any direct or indirect liability
whatsoever (including, but not limited to, any liability to any multiemployer
plan or the PBGC under Title IV of ERISA or to the Internal Revenue Service for
any excise tax or penalty, or being subject to any statutory lien to secure
payment of any such liability) with respect to any plan now or heretofore
maintained or contributed to by any entity other than the Company that is, or at
any time was, a member of a "controlled group" (as defined in Section
412(n)(6)(B) of the Code) that includes the Company.
5.21 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedule 5.21 or 5.13, and except for violations which, either singly or in the
aggregate, have not had and will not have any Material Adverse Effect, the
Company is not in violation of any law or regulation or any
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order of any court or Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over it; and except to the extent set forth on Schedule 5.10 or
5.13, there are no material claims, actions, suits or proceedings, pending or,
to the knowledge of the Stockholders, threatened against or affecting, the
Company, at law or in equity, or before or by any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over it and no notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received by the
Company, and, to the knowledge of the Stockholders, there is no basis for any
such claim, action, suit or proceeding. The Company has conducted and is now
conducting its business in compliance with the requirements, standards, criteria
and conditions set forth in applicable federal, state and local statutes,
ordinances, orders, approvals, variances, rules and regulations, including all
such orders and other governmental approvals set forth on Schedules 5.12 and
5.13, except where any such noncompliance, individually or in the aggregate,
would not have a Material Adverse Effect.
5.22 TAXES. Except as set forth on Schedule 5.22, the Company has timely
filed all requisite Federal, state and other tax returns or extension requests
for all fiscal periods ended on or before the Balance Sheet Date; and except as
set forth on Schedule 5.22, there are no examinations in progress or claims
pending against it for federal, state and other Taxes (including penalties and
interest) for any period or periods prior to and including the Balance Sheet
Date and no notice of any claim for Taxes, whether pending or threatened, has
been received. All Tax due from the Company for any period ended before the date
hereof, including interest and penalties (whether or not shown on any Return)
has been paid. The amounts shown as accruals for taxes on the Company Financial
Statements are sufficient for the payment of all Taxes (including penalties and
interest) for all periods ended on or before that date. Copies of (i) any tax
examinations, (ii) extensions of statutory limitations and (iii) the federal and
local income tax returns and franchise tax returns of the Company for their last
three (3) fiscal years, or such shorter period of time as any of them shall have
existed, are attached hereto as Schedule 5.22 or have otherwise been delivered
to TCI. The Company has disclosed to TCI when its taxable year ends. The Company
uses the accrual method of accounting for income tax purposes, and the Company's
methods of accounting have not changed in the past five years. The Company is
not an investment Company as defined in Section 351(e)(1) of the Code. The
Company is not and has not during the last five years been a party to any tax
sharing agreement or agreement of similar effect. The Company is not and has not
during the last five years been a member of any consolidated group. Except as
described on Schedule 5.22, the Company has not received, been denied, or
applied for any private letter ruling during the last five years.
The Stockholders of Try One, Inc. and Ocala Truck Parts, Inc. made a valid
election under the provisions of Subchapter S of the Code, and neither Try One,
Inc. nor Ocala Truck Parts, Inc. has, within the past five years, been taxed
under the provisions of Subchapter C of the Code. The Stockholders of Try One,
Inc. shall pay, and they hereby indemnify TCI, Try One, Inc. and TOI Acquisition
Corporation against, all income taxes payable for all periods ending on or
before the Funding and Consummation Date. The Stockholders of Ocala Truck Parts,
Inc. shall pay, and they
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hereby indemnify TCI, Ocala Truck Parts, Inc. and OTP Acquisition Corporation
against, all income taxes payable for all periods ending on or before the
Funding and Consummation Date.
5.23 NO VIOLATIONS; NO CONSENTS REQUIRED, ETC. The Company is not in
violation of any Charter Document. Neither the Company nor, to the knowledge of
the Stockholders, any other party thereto, is in default under any lease,
instrument, agreement, License, or permit set forth on Schedule 5.12, 5.13,
5.14, 5.15 or 5.16 (the "Material Documents") in any manner that could result in
a Material Adverse Effect; and, except as set forth in Schedule 5.23, (a) the
rights and benefits of the Company under the Material Documents will not be
materially adversely affected by the transactions contemplated hereby and (b)
the execution of this Agreement and the performance of the obligations hereunder
and the consummation of the transactions contemplated hereby will not result in
any material violation or breach of or constitute a default under, any of the
terms or provisions of the Material Documents or the Charter Documents. Except
as set forth on Schedule 5.23, none of the Material Documents requires notice
to, or the consent or approval of, any governmental agency or other third party
with respect to any of the transactions contemplated hereby in order to remain
in full force and effect, and consummation of the transactions contemplated
hereby will not give rise to any right to termination, cancellation or
acceleration or loss of any material right or benefit regarding the Material
Documents. Except as set forth on Schedule 5.23, none of the Material Documents
prohibits the use or publication by the Company, TCI or Newco of the name of any
other party to such Material Document, and none of the Material Documents
prohibits or restricts the Company from freely providing services to any other
customer or potential customer of the Company, TCI, Newco or any Other Founding
Company.
5.24 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
on Schedule 5.24 or the other schedules hereto or as otherwise contemplated
hereby, there has not been:
(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise) or business of the Company;
(ii) any damage, destruction or casualty loss (whether or not
covered by insurance) materially adversely affecting the properties or business
of the Company;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any grant by
the Company of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption, purchase or
other acquisition of any of the capital stock of the Company;
(v) any increase in the compensation, bonus, sales commissions or
fee arrangement payable or to become payable by the Company to any of its
officers, directors,
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Stockholders, employees, consultants or agents, except for ordinary and
customary bonuses and salary increases for employees in accordance with past
practice;
(vi) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of Company outside of the ordinary course of
business to any person, including, without limitation, the Stockholders and
their Affiliates;
(vii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company, including without limitation any
indebtedness or obligation of any Stockholders or any Affiliate thereof;
(viii)any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property or
rights of the Company or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
(ix) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside of
the ordinary course of the Company's business;
(x) any waiver of any material rights or claims of the Company;
(xi) any amendment, cancellation or termination of any material
contract, agreement, License, permit or other right to which the Company is a
party;
(xii) any change in the Company's Charter Documents;
(xiii)any contract entered into or commitment incurred involving any
liability or commitment to make any capital expenditures, except in the normal
course of business (consistent with past practice) or involving an amount not in
excess of $25,000;
(xiv) any mortgage, pledge or other lien or encumbrance upon any
assets or properties of the Company (whether now owned or hereafter acquired)
created, assumed or permitted to exist, except (1) purchase money liens incurred
in connection with the acquisition of equipment with an aggregate cost not in
excess of $25,000 necessary or desirable for the conduct of the businesses of
the Company, (2) (A) liens for taxes either not yet due or being contested in
good faith and by appropriate proceedings (and for which contested taxes
adequate reserves have been established and are being maintained) or (B)
materialmen's, mechanics', workers', repairmen's, employees' or other like liens
arising in the ordinary course of business, or (3) liens set forth on Schedule
5.10 and/or 5.15 hereto; or
(xv) any transaction by the Company outside the ordinary course of
its business.
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5.25 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. The Company has delivered to
TCI an accurate schedule (which is set forth on Schedule 5.25) as of the date of
this Agreement of:
(i) the name of each financial institution in which the Company has
accounts or safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account and account number; and
(iv) the name of each person authorized to draw thereon or have
access thereto.
Schedule 5.25 also sets forth the name of each person, corporation, firm or
other entity holding a general or special power of attorney from the Company and
a description of the terms of such power.
5.26 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by the Company and the performance of the transactions contemplated herein have
been duly and validly authorized by the Board of Directors of the Company and
this Agreement has been duly and validly authorized by all necessary corporate
action and is a legal, valid and binding obligation of the Company.
5.27 RELATIONS WITH GOVERNMENTS. Except for political contributions made
in compliance with applicable laws, neither the Company nor any Affiliate of the
Company acting on behalf of the Company has given or offered anything of value
to any governmental official, political party or candidate for government
office. None of such Persons has taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
5.28 DISCLOSURE. (a) The representations and warranties of the
Stockholders set forth in this Agreement, including the relevant Annexes and
Schedules hereto, do not contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements herein and therein, in
light of the circumstances under which they were made, not misleading. If, prior
to the 25th day after the date of the final prospectus of TCI utilized in
connection with the IPO, the Company or the Stockholders become aware of any
fact or circumstance which would affect the accuracy of a representation or
warranty of Company or Stockholders in this Agreement in any material respect,
the Company and the Stockholders shall immediately give notice of such fact or
circumstance to TCI. Subject to the provisions of Section 7.8, such notification
shall not relieve either the Company or the Stockholders of their respective
obligations under this Agreement.
(b) The Company and the Stockholders acknowledge and agree (i) that there
exists no firm commitment, binding agreement, or promise or other assurance of
any kind, whether express or implied, oral or written, that the Registration
Statement will become effective or that the IPO pursuant thereto will occur at a
particular price or within a particular range of prices or occur at all;
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(ii) that neither TCI or any of its officers, directors, agents or
representatives nor any Underwriter shall have any liability to the Company, the
Stockholders or any other person affiliated or associated with the Company for
any failure of the Registration Statement to become effective, the IPO to occur
at a particular price or to occur at all; and (iii) that the decision of
Stockholders to enter into this Agreement, or to vote in favor of or consent to
the proposed Merger, has been or will be made independent of, and without
reliance upon, any statements, opinions or other communications, or due
diligence investigations which have been or will be made or performed by any
prospective Underwriter, relative to TCI or the prospective IPO, except for
statements and representations made herein.
5.29 NO INTERESTS IN OTHER BUSINESSES. Except as disclosed on Schedule
5.29, neither the Company nor any Stockholder, nor any Affiliate of any of them,
has any ownership or similar interest in any business that offers or sells
services or products of any nature whatsoever to the Company or to any customers
of the Company in connection with or as a direct or indirect result of the
Company's provision of services or products to its customers.
5.30 AUTHORITY; OWNERSHIP. Such Stockholder has the full legal right,
power and authority to enter into this Agreement. Such Stockholder owns
beneficially and of record all of the shares of the Company Stock identified on
Annex II as being owned by such Stockholder, and, except as set forth on
Schedule 5.30, such Company Stock is owned free and clear of all liens, security
interests, pledges, voting agreements, voting trusts, contractual restrictions
on transfer, encumbrances and claims of every kind.
5.31 PREEMPTIVE RIGHTS. No Stockholder has, or hereby waives, any
preemptive or other right to acquire shares of Company Stock that such
Stockholder has or may have had.
5.32 NO INTENTION TO DISPOSE OF TCI STOCK. No Stockholder is under any
binding commitment or contract to sell, exchange or otherwise dispose of shares
of TCI Stock to be received as described in Section 3.1 of this Agreement.
TCI and each Newco acknowledge that the representations in Sections 5.30,
5.31 and 5.32 are made by each Stockholder separately, and as to itself only.
6. REPRESENTATIONS OF TCI AND NEWCO
TCI and Newco jointly and severally represent and warrant that all of the
following representations and warranties in this Section 6 are true at the date
of this Agreement and, subject to Section 7.8 hereof, shall be true at the time
of Closing and the Funding and Consummation Date, and that such representations
and warranties shall survive the Funding and Consummation Date for a period of
twelve months (the last day of such period being the "Expiration Date"), except
that the warranties and representations set forth in Section 6.14 hereof shall
survive until such time as the limitations period has run for all tax periods
ended on or prior to the Funding and Consummation Date, which shall be deemed to
be the Expiration Date for Section 6.14.
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6.1 DUE ORGANIZATION. TCI and Newco are each corporations duly
incorporated and organized, validly existing and in good standing under the laws
of the State of Delaware, and each has the requisite power and authority to
carry on its business as it is now being conducted. TCI and Newco are each
qualified to do business and are each in good standing in each jurisdiction in
which the nature of its business makes such qualification necessary, except
where the failure to be so authorized or qualified would not have a Material
Adverse Effect. True, complete and correct copies of the Certificate of
Incorporation and By-laws of TCI (the "TCI Charter Documents") have been or will
be filed as exhibits to the Registration Statement, and copies thereof and
copies of the Certificate of Incorporation and Bylaws of Newco will be provided
to the Stockholders promptly upon request.
6.2 AUTHORIZATION. (i) The respective representatives of TCI and Newco
executing this Agreement have the authority to enter into and bind TCI and Newco
to the terms of this Agreement and (ii) TCI and Newco have the full legal right,
power and authority to enter into this Agreement and consummate the Merger. All
corporate acts and other proceedings required to have been taken by TCI and
Newco to authorize the execution, delivery and performance of this Agreement and
the consummation of the Merger have been duly and properly taken.
6.3 CAPITAL STOCK OF TCI AND NEWCO. The authorized capital stock of TCI
and Newco is as set forth in Sections 1.4(ii) and (iii), respectively. All of
the issued and outstanding shares of the capital stock of Newco are owned by
TCI. All of the issued and outstanding shares of the capital stock of TCI and
Newco have been duly authorized and validly issued, are fully paid and
nonassessable, and further, such shares were offered, issued, sold and delivered
by TCI and Newco in compliance with all applicable state and federal laws
concerning the issuance of securities. Further, none of such shares were issued
in violation of the preemptive rights of any past or present stockholder of TCI
or Newco.
6.4 TRANSACTIONS IN CAPITAL STOCK, ORGANIZATION ACCOUNTING. Except for the
Other Agreements and except as set forth in or contemplated by the Draft
Registration Statement or set forth on Schedule 6.4 hereto, (i) no option,
warrant, call, conversion right or commitment of any kind exists which obligates
TCI or Newco to issue any of their respective authorized but unissued capital
stock; and (ii) neither TCI nor Newco has any obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity securities
or any interests therein or to pay any dividend or make any distribution in
respect thereof. Complete and accurate copies of all stock option or stock
purchase plans and a list of all outstanding options, warrants or other rights
to acquire shares of the stock of TCI will be provided to the Stockholders
promptly upon request.
6.5 SUBSIDIARIES. Newco has no Subsidiaries. TCI has no Subsidiaries
except for Newco and each of the companies identified as "Newco" in each of the
Other Agreements and other newly incorporated Subsidiaries that have conducted
no business and have been created solely to effectuate the business of TCI.
Except as set forth in the preceding sentence or set forth on Schedule 6.5
hereto, neither TCI nor any Subsidiary of TCI presently owns, of record or
beneficially, or controls, directly or indirectly, any capital stock, securities
convertible into capital stock or any other equity
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interest in any corporation, association or business entity, and neither TCI nor
Newco, directly or indirectly, is a participant in any joint venture,
partnership or other non-corporate entity.
6.6 FINANCIAL STATEMENTS. The financial statements of TCI included in the
Draft Registration Statement (the "TCI Financial Statements") have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated (except as noted thereon), and
the balance sheet included therein presents fairly the financial position of TCI
as of its date.
6.7 LIABILITIES AND OBLIGATIONS. Except as set forth in the Draft
Registration Statement or on Schedule 6.7 hereto, neither TCI nor any Subsidiary
of TCI has any material liabilities, contingent or otherwise, except as set
forth in or contemplated by this Agreement and the Other Agreements and except
for fees incurred in connection with the transactions contemplated hereby and
thereby.
6.8 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth in the
Draft Registration Statement or on Schedule 6.8 hereto, (a) neither TCI nor any
Subsidiary of TCI is in violation of any law or regulation or any order of any
court or Federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over any of them
which would have a Material Adverse Effect, (b) there are no material claims,
actions, suits or proceedings, pending or, to the knowledge of TCI or Newco,
threatened against or affecting, TCI or any Subsidiary of TCI, at law or in
equity, or before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over any of them, and (c) no notice of any claim, action, suit or
proceeding, whether pending or threatened, has been received by TCI or Newco.
TCI and its Subsidiaries have conducted and are conducting their respective
businesses in substantial compliance with the requirements, standards, criteria
and conditions set forth in applicable Federal, state and local statutes,
ordinances, permits, licenses, orders, approvals, variances, rules and
regulations and are not in violation of any of the foregoing which would have a
Material Adverse Effect.
6.9 NO VIOLATIONS. TCI is not in violation of any TCI Charter Document,
and no Subsidiary of TCI is in violation of its Certificate of Incorporation or
Bylaws. None of TCI, Newco, or, to the knowledge of TCI and Newco, any other
party thereto, is in default under any lease, instrument, agreement, license, or
permit to which TCI or any Subsidiary of TCI is a party, or by which TCI or any
Subsidiary of TCI, or any of their respective properties, are bound
(collectively, the "TCI Documents"); and (a) the rights and benefits of TCI and
any Subsidiary of TCI under the TCI Documents will not be adversely affected by
the transactions contemplated hereby and (b) the execution and delivery of this
Agreement by TCI and Newco and the performance of their obligations hereunder do
not, and the consummation of the transactions contemplated hereby and compliance
with the terms hereof will not, conflict with, or result in any violation or
default (with or without notice or lapse of time, or both), under or give rise
to a right of termination, cancellation, or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any lien upon any
of the assets of TCI or any Subsidiary of TCI under, any provision of (i) the
Certificate
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of Incorporation or Bylaws of TCI or the comparable governing instruments of any
Subsidiary of TCI, (ii) any note, bond, mortgage, indenture or deed of trust or
any license, lease, contract, commitment, agreement or arrangement to which TCI
and any Subsidiary of TCI is a party or by which any of their respective
properties or assets are bound or (iii) any judgment, order, decree or law,
ordinance, rule or regulation, applicable to TCI or any Subsidiary of TCI or
their respective properties or assets. The execution of this Agreement and the
Other Agreements and the performance of the obligations hereunder and thereunder
and the consummation of the transactions contemplated by the TCI Plan of
Organization will not result in any material violation or breach or constitute a
default under, any of the terms or provisions of the TCI Documents or the TCI
Charter Documents. Except as contemplated hereby or described in the
Registration Statement or on Schedule 6.9 hereto, none of the TCI Documents
requires notice to, or the consent or approval of, any governmental agency or
other third party with respect to any of the transactions contemplated by the
TCI Plan of Organization in order to remain in full force and effect and
consummation of the transactions contemplated thereby will not give rise to any
right to termination, cancellation or acceleration or loss of any right or
benefit.
6.10 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by TCI and Newco and the performance of the transactions contemplated herein
have been duly and validly authorized by the respective Boards of Directors of
TCI and Newco and this Agreement has been duly and validly authorized by all
necessary corporate action and is a legal, valid and binding obligation of TCI
and Newco.
6.11 TCI STOCK. At the time of issuance thereof and delivery to the
Stockholders, the TCI Stock to be delivered to the Stockholders pursuant to this
Agreement will constitute valid and legally issued shares of TCI, fully paid and
nonassessable, and with the exception of restrictions upon resale set forth in
Sections 15 and 16 hereof, will be identical in all substantive respects (which
do not include the form of certificate upon which it is printed or the presence
or absence of a CUSIP number on any such certificate) to the TCI Stock issued
and outstanding as of the date hereof by reason of the provisions of the
Delaware GCL. Except as set forth above, the TCI Stock issued and delivered to
the Stockholders shall at the time of such issuance and delivery be free and
clear of any liens, security interests, claims or encumbrances of any kind or
character. The shares of TCI Stock to be issued to the Stockholders pursuant to
this Agreement will not be registered under the 1933 Act except as provided in
Section 17 hereof.
6.12 OTHER AGREEMENTS; NO SIDE AGREEMENTS. Except for differences in form
or as described on Schedule 6.12 hereto, each of the Other Agreements is
substantially similar to this Agreement. Neither TCI nor Newco has entered or
will enter into any agreement with any of the Other Founding Companies or any of
the stockholders of the Other Founding Companies other than the Other Agreements
and the agreements contemplated by each of the Other Agreements, including the
employment agreements and leases referred to herein or entered into in
connection with the transactions contemplated hereby and thereby.
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6.13 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS. TCI was formed in
October 1997 and has conducted only limited operations since that time. Neither
TCI nor any Subsidiary thereof has conducted any material business since the
date of its inception, except in connection with this Agreement, the Other
Agreements and the IPO. Except as described in the Draft Registration Statement,
neither TCI nor any Subsidiary of TCI owns or has at any time owned any real
property or any material personal property or is a party to any other agreement
other than the Other Agreements and the agreements contemplated thereby and to
such agreements as will be filed as Exhibits to the Registration Statement.
6.14 TAXES. TCI and each Subsidiary thereof have timely filed all
requisite federal, state and other Returns or extension requests for all fiscal
periods ended prior to the date hereof for which such Returns are due; and there
are no examinations in progress or claims against TCI or any Subsidiary thereof
for federal, state and other Taxes (including penalties and interest) for any
such period and no notice of any claim for Taxes, whether pending or threatened,
has been received. All Taxes which TCI or any Subsidiary of TCI has been
required to collect or withhold have been duly and timely collected and withheld
and have been set aside in accounts for such purposes, or have been duly and
timely paid to the proper governmental authority. All Tax, including interest
and penalties (whether or not shown on any tax return) owed by TCI, any member
of an affiliated or consolidated group which includes or included TCI, or with
respect to any payment made or deemed made by TCI herein has been paid. Neither
TCI nor any Subsidiary thereof has entered into any tax sharing agreement or
similar arrangement. Neither TCI nor any Subsidiary thereof is an investment
company as defined in Section 351(e)(1) of the Code.
6.15 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
in the Draft Registration Statement delivered to the Stockholders, and except as
contemplated by this Agreement and the Other Agreements or as set forth on
Schedule 6.15 hereto, there has not been:
(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise) or business of TCI or Newco;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of TCI or
Newco;
(iii) any change in the authorized capital of TCI or Newco or their
outstanding securities or any change in their ownership interests or any grant
of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption, purchase or
other acquisition of any of the capital stock of TCI or Newco;
(v) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of TCI or any Subsidiary thereof to any
person;
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(vi) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to TCI or any Subsidiary thereof;
(vii) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property or
rights of TCI or any Subsidiary thereof or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(viii) any waiver of any material rights or claims of TCI or any
Subsidiary of TCI;
(ix) any amendment or termination of any material contract,
agreement, license, permit or other right to which TCI or any Subsidiary of TCI
is a party;
(x) any transaction by TCI or any Subsidiary of TCI outside the
ordinary course of its business;
(xi) any other distribution of property or assets by TCI or any
Subsidiary of TCI other than in the ordinary course of business.
6.16 DISCLOSURE. (a) The Draft Registration Statement delivered to the
Company and the Stockholders, together with the representations and warranties
of TCI and Newco set forth in this Agreement, does not contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements herein and therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the foregoing does not
apply to statements contained in or omitted from any of such documents made or
omitted in reliance upon information furnished by the Company or the
Stockholders or the Other Founding Companies or the stockholders thereof.
(b) Based on and assuming the accuracy of certain information furnished to
TCI by the Stockholders, the offering and issuance of shares of TCI Stock to the
Stockholders pursuant to this Agreement has been made in compliance with all
applicable federal and state securities laws.
(c) TCI has conducted a reasonable due diligence investigation with
respect to the Other Founding Companies, and to the best knowledge of TCI, the
Draft Registration Statement does not contain an untrue statement of material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; it
being agreed that the term "material" as used in this paragraph (c) means
material with respect to TCI and all of the Founding Companies, taken as a
whole.
7. COVENANTS PRIOR TO CLOSING
7.1 ACCESS AND COOPERATION; DUE DILIGENCE. (a) Between the date of this
Agreement and the Funding and Consummation Date, the Company will afford to the
officers and authorized
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representatives of TCI access to all of the Company's sites, properties, books
and records and will furnish TCI with such additional financial and operating
data and other information as to the business and properties of the Company as
TCI may from time to time reasonably request. The Company will cooperate with
TCI and its representatives, auditors and counsel in the preparation of any
documents or other materials which may be required in connection with any
documents or materials required by this Agreement. TCI, Newco, the Stockholders
and the Company will treat all information obtained in connection with the
negotiation and performance of this Agreement or the due diligence
investigations conducted with respect to the Other Founding Companies as
confidential in accordance with the provisions of Section 14 hereof. In
addition, TCI will cause each of the Other Founding Companies to enter into a
provision similar to this Section 7.1.
(b) Between the date of this Agreement and the Funding and Consummation
Date, TCI will afford to the officers and authorized representatives of the
Company access to all of TCI's and Newco's sites, properties, books and records
and will furnish the Company with such additional financial and operating data
and other information as to the business and properties of TCI and Newco as the
Company may from time to time reasonably request. TCI and Newco will cooperate
with the Company, its representatives, auditors and counsel in the preparation
of any documents or other material which may be required in connection with any
documents or materials required by this Agreement. The Company will cause all
information obtained in connection with the negotiation and performance of this
Agreement to be treated as confidential in accordance with the provisions of
Section 14 hereof.
7.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Funding and Consummation Date, the Company will, except as set
forth on Schedule 7.2:
(i) carry on its business in substantially the same manner as it has
heretofore and not introduce any material new method of management, operation or
accounting;
(ii) use its reasonable efforts to maintain its properties and
facilities, including those held under leases, in as good working order and
condition as at present, ordinary wear and tear excepted;
(iii) perform in all material respects all of its obligations under
agreements relating to or affecting its respective assets, properties or rights;
(iv) use its reasonable efforts to keep in full force and effect
present insurance policies or other comparable insurance coverage;
(v) use its reasonable efforts to maintain and preserve its business
organization intact, retain its respective present key employees and maintain
its relationships with suppliers, customers and others having business relations
with the Company;
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(vi) use its reasonable efforts to maintain compliance with all
Licenses, laws, rules and regulations, consent orders, and all other orders of
applicable courts, regulatory agencies and similar governmental authorities
applicable to it;
(vii) maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments without the knowledge and consent of
TCI (which consent shall not be unreasonably withheld), provided that debt
and/or lease instruments may be replaced without the consent of TCI if such
replacement instruments are on terms at least as favorable to the Company as the
instruments being replaced; and
(viii) maintain or reduce present salaries and commission levels for
all officers, directors, employees and agents except for ordinary and customary
bonus and salary increases for employees in accordance with past practices.
7.3 PROHIBITED ACTIVITIES. Except as disclosed on Schedule 7.3, between
the date hereof and the Funding and Consummation Date, the Company will not,
without prior written consent of TCI, which consent will not be unreasonably
withheld:
(i) make any change in its Articles of Incorporation or By-laws;
(ii) issue any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind other than in
connection with the exercise of options or warrants listed in Schedule 5.4;
(iii) except as provided on Annex I hereto, and except for
distributions approved by TCI in an amount equal to income taxes, if any,
incurred by the Stockholders on any S corporation earnings after June 30, 1998
and prior to the Closing Date, declare or pay any dividend, or make any
distribution in respect of its stock whether now or hereafter outstanding, or
purchase, redeem or otherwise acquire or retire for value any shares of its
stock;
(iv) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures, except in the normal
course of business (consistent with past practice) or involving an amount not in
excess of $25,000;
(v) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or hereafter
acquired, except (1) with respect to purchase money liens incurred in connection
with the acquisition of equipment with an aggregate cost not in excess of
$25,000 necessary or desirable for the conduct of the businesses of the Company,
(2) (A) liens for taxes either not yet due or being contested in good faith and
by appropriate proceedings (and for which contested taxes adequate reserves have
been established and are being maintained) or (B) materialmen's, mechanics',
workers', repairmen's, employees' or other
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like liens arising in the ordinary course of business (the liens set forth in
clause (2) being referred to herein as "Statutory Liens"), or (3) liens set
forth on Schedule 5.10 and/or 5.15 hereto;
(vi) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business and other than
distributions of real estate and other assets as permitted in this Agreement
(including the Schedules hereto);
(vii) negotiate for the acquisition of any business or the start-up
of any new business;
(viii) merge or consolidate or agree to merge or consolidate with or
into any other corporation;
(ix) waive any material rights or claims of the Company, provided
that the Company may negotiate and adjust bills and accounts in the course of
good faith disputes with customers in a manner consistent with past practice,
provided, further, that such adjustments shall not be deemed to be included in
Schedule 5.11 unless specifically listed thereon;
(x) amend or terminate any Material Document, License or other right
of the Company except in the ordinary course of business; or
(xi) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder.
7.4 NO SHOP. None of the Stockholders, the Company, nor any agent,
officer, director, trustee or any representative of any of the foregoing will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Funding and Consummation Date or the termination of this
Agreement in accordance with its terms, directly or indirectly:
(i) solicit or initiate the submission of proposals or offers from
any person for,
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person other than TCI, the
Other Founding Companies (to the extent necessary or appropriate in connection
with the transactions contemplated hereby) or their respective authorized agents
relating to, any acquisition or purchase of all or a material amount of the
assets of, or any equity interest in, the Company or a merger, consolidation or
business combination of the Company.
7.5 NOTICE TO BARGAINING AGENTS. Prior to the Closing Date, the Company
shall satisfy any requirement for notice of the transactions contemplated by
this Agreement under applicable
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collective bargaining agreements, and shall provide TCI on Schedule 7.5 with
proof that any required notice has been sent.
7.6 AGREEMENTS. The Stockholders and the Company shall (except as
otherwise agreed to by TCI or reflected in Schedule 7.6) terminate (i) any
stockholders agreements, voting agreements, voting trusts, options, warrants and
employment agreements between the Company and any employee listed on Schedule
9.12 hereto and (ii) any existing agreement between the Company and any
Stockholder, on or prior to the Funding and Consummation Date provided that
nothing herein shall prohibit or prevent the Company from paying (either prior
to or on the Closing Date) notes or other obligations from the Company to the
Stockholders in accordance with the terms thereof, which terms have been
disclosed to TCI. Such termination agreements are listed on Schedule 7.6 and
copies thereof shall be attached thereto.
7.7 NOTIFICATION OF CERTAIN MATTERS. The Stockholders and the Company
shall give prompt notice to TCI of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty of the Company or the Stockholders contained herein
to be untrue or inaccurate in any material respect at or prior to the Closing
and (ii) any failure of any Stockholder or the Company to comply with or satisfy
in any material respect any material covenant, condition or agreement to be
complied with or satisfied by such person hereunder. TCI and Newco shall give
prompt notice to the Company of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty of TCI or Newco contained herein to be untrue or
inaccurate in any material respect at or prior to the Closing and (ii) any
failure of TCI or Newco to comply with or satisfy in any material respect any
material covenant, condition or agreement to be complied with or satisfied by it
hereunder. The delivery of any notice pursuant to this Section 7.7 shall not be
deemed to (i) modify the representations or warranties hereunder of the party
delivering such notice, which modification may only be made pursuant to Section
7.8, (ii) modify the conditions set forth in Sections 8 and 9, or (iii) limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
7.8 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with respect to
the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until 24 hours prior to the
anticipated effectiveness of the Registration Statement to supplement or amend
promptly the Schedules hereto with respect to any matter hereafter arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or described in the Schedules, provided however,
that supplements and amendments to Schedules 5.10, 5.11, 5.14 and 5.15 shall
only have to be delivered at the Closing Date, unless such Schedule is to be
amended to reflect an event occurring other than in the ordinary course of
business. Notwithstanding the foregoing sentence, no amendment or supplement to
a Schedule prepared by the Company that constitutes or reflects an event or
occurrence that would have a Material Adverse Effect may be made unless TCI and
a majority of the Founding Companies
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other than the Company consent to such amendment or supplement; and provided
further, that no amendment or supplement to a Schedule prepared by TCI or Newco
that constitutes or reflects an event or occurrence that would have a Material
Adverse Effect may be made unless a majority of the Founding Companies consent
to such amendment or supplement. For all purposes of this Agreement, including
without limitation for purposes of determining whether the conditions set forth
in Sections 8.1 and 9.1 have been fulfilled, the Schedules hereto shall be
deemed to be the Schedules as amended or supplemented pursuant to this Section
7.8. In the event that one of the Other Founding Companies seeks to amend or
supplement a Schedule pursuant to Section 7.8 of one of the Other Agreements,
and such amendment or supplement constitutes or reflects an event or occurrence
that would have a Material Adverse Effect on such Other Founding Company, TCI
shall give the Company notice promptly after it has knowledge thereof. If TCI
and a majority of the Founding Companies (other than the Founding Company
seeking to amend or supplement a Schedule) consent to such amendment or
supplement, which consent shall have been deemed given by TCI or any Founding
Company if no response is received within 24 hours following receipt of notice
of such amendment or supplement (or sooner if required by the circumstances
under which such consent is requested), but the Company does not give its
consent, the Company may terminate this Agreement pursuant to Section 12.1(iv)
hereof. In the event that the Company seeks to amend or supplement a Schedule
pursuant to this Section 7.8, and TCI and a majority of the Other Founding
Companies do not consent to such amendment or supplement, this Agreement shall
be deemed terminated by mutual consent as set forth in Section 12.1(i) hereof.
In the event that TCI or Newco seeks to amend or supplement a Schedule pursuant
to this Section 7.8 and a majority of the Founding Companies do not consent to
such amendment or supplement, this Agreement shall be deemed terminated by
mutual consent as set forth in Section 12.1(i) hereof. No party to this
Agreement shall be liable to any other party if this Agreement shall be
terminated pursuant to the provisions of this Section 7.8. No amendment of or
supplement to a Schedule shall be made later than 24 hours prior to the
anticipated effectiveness of the Registration Statement.
7.9 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. The Company and
Stockholders shall furnish or cause to be furnished to TCI and the Underwriters
all of the information concerning the Company and the Stockholders reasonably
requested by TCI or the Underwriters for inclusion in, and will cooperate with
TCI and the Underwriters in the preparation of, the Registration Statement and
the prospectus included therein (including audited and unaudited financial
statements of the Company, prepared in accordance with generally accepted
accounting principles, in form suitable for inclusion in the Registration
Statement). The Company and the Stockholders agree promptly to advise TCI if at
any time during the period in which a prospectus relating to the IPO is required
to be delivered under the 1933 Act, any information contained in the prospectus
concerning the Company or the Stockholders becomes incorrect or incomplete in
any material respect, and to provide the information needed to correct such
inaccuracy. Insofar as the information relates solely to the Company or the
Stockholders, the Company represents and warrants as to such information with
respect to itself, and each Stockholder represents and warrants, as to such
information with respect to the Company and himself or herself, that the
Registration Statement will
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not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
7.10 FINAL FINANCIAL STATEMENTS. The Company shall provide prior to the
Funding and Consummation Date, and TCI shall have had sufficient time to review,
the unaudited consolidated balance sheets of the Company as of the end of all
fiscal quarters following the Balance Sheet Date and ending not later than 15
days prior to the Funding and Consummation Date, and the unaudited consolidated
statement of income, cash flows and retained earnings of the Company for all
fiscal quarters ended after the Balance Sheet Date, disclosing no material
adverse change in the financial condition of the Company or the results of its
operations from the financial statements as of the Balance Sheet Date. Such
financial statements shall have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated (except as noted therein). Except as noted in such financial
statements, all of such financial statements will present fairly the results of
operations of the Company for the periods indicated therein.
7.11 FURTHER ASSURANCES. The parties hereto agree to execute and deliver,
or cause to be executed and delivered, such further instruments or documents or
take such other action as may be reasonably necessary or convenient to carry out
the transactions contemplated hereby.
7.12 AUTHORIZED CAPITAL. Prior to the Funding and Consummation Date, TCI
shall maintain its authorized capital stock as set forth in the Registration
Statement filed with the SEC except for such changes in authorized capital stock
as are made to respond to comments made by the SEC or requirements of any
exchange or automated trading system for which application is made to register
the TCI Stock and any changes necessary or advisable in order to permit the
delivery of the opinion contemplated by Section 8.12 hereof.
7.13 COMPLIANCE WITH THE ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ANTITRUST IMPROVEMENTS ACT OF
1976 (THE "▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT"). All parties to this Agreement hereby
recognize that one or more filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act may be
required in connection with the transactions contemplated herein. If it is
determined by the parties to this Agreement that filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act are required, then: (i) each of the parties hereto agrees
to cooperate and use its best efforts to comply with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act,
and (ii) such compliance by the Stockholders and the Company shall be deemed a
condition precedent in addition to the conditions precedent set forth in Section
9 of this Agreement, and such compliance by TCI and Newco shall be deemed a
condition precedent in addition to the conditions precedent set forth in Section
8 of this Agreement. If filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act are required,
the costs and expenses thereof (including legal fees and costs and filing fees)
shall be borne by TCI. The obligation of each party to consummate the
transactions contemplated by this Agreement is subject to the expiration or
termination of the waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, if
applicable.
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7.14 STOCKHOLDERS OF TCI. Promptly after a request by the Company, TCI
will deliver to the Company a list of the stockholders of TCI as of the date of
this Agreement.
7.15 IPO. TCI agrees to use its reasonable efforts to consummate the TCI
Plan of Organization and IPO as contemplated hereby.
7.16 INDEMNIFICATION AGREEMENT. At the closing, the Stockholders (or such
Stockholders as may be approved by TCI) shall deliver to TCI an environmental
indemnification agreement in such form as may be approved by TCI in its
reasonable discretion.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND COMPANY
The obligations of the Stockholders and the Company with respect to
actions to be taken on the Closing Date are subject to the satisfaction or
waiver on or prior to the Closing Date of all of the following conditions. The
obligations of the Stockholders and the Company with respect to actions to be
taken on the Funding and Consummation Date are subject to the satisfaction or
waiver on or prior to the Funding and Consummation Date of the conditions set
forth in Sections 8.1, 8.5, 8.8, 8.9 and 8.12. As of the Closing Date or, with
respect to the conditions set forth in Sections 8.1, 8.5, 8.8, 8.9 and 8.12, as
of the Funding and Consummation Date, if any such conditions have not been
satisfied, the Company or the Stockholders (acting in unison) shall have the
right to terminate this Agreement, or in the alternative, waive any condition
not so satisfied. Any act or action of the Stockholders in consummating the
Closing or delivering certificates representing Company Stock as of the Funding
and Consummation Date shall constitute a waiver of any conditions not so
satisfied. However, no such waiver shall be deemed to affect the survival of the
representations and warranties of TCI and Newco contained in Section 6 hereof.
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of TCI and Newco contained in Section 6, as
amended or supplemented in accordance with Section 7.8, shall be true and
correct in all material respects as of the Closing Date and the Funding and
Consummation Date as though such representations and warranties had been made as
of that time; all of the terms, covenants and conditions of this Agreement to be
complied with and performed by TCI and Newco on or before the Closing Date and
the Funding and Consummation Date shall have been duly complied with and
performed in all material respects; and certificates to the foregoing effect
dated the Closing Date and the Funding and Consummation Date, respectively, and
signed by the President or any Vice President of TCI shall have been delivered
to the Stockholders.
8.2 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall be reasonably
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satisfactory to the Company and its counsel. The Stockholders and the Company
shall be satisfied that the Registration Statement and the prospectus forming a
part thereof, including any amendments thereof or supplements thereto, shall not
contain any untrue statement of a material fact, or omit to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, provided that the condition contained in this sentence
shall (for purposes of this Section 8.2) be deemed satisfied if the Company or
Stockholders shall have failed to inform TCI in writing prior to the
effectiveness of the Registration Statement of the existence of an untrue
statement of a material fact or the omission of such a statement of a material
fact.
8.3 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger or the IPO and no governmental agency or body shall have
taken any other action or made any request of the Company as a result of which
the management of the Company deems it inadvisable to proceed with the
transactions hereunder.
8.4 OPINION OF COUNSEL. The Company shall have received an opinion from
counsel for TCI, dated the Closing Date, in the form annexed hereto as Annex
III.
8.5 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC and the underwriters named therein shall have
agreed to acquire on a firm commitment basis, subject to the conditions set
forth in the underwriting agreement, on terms such that the aggregate value of
the cash and the number of shares of TCI Stock to be received by the
Stockholders is not less than the Minimum Value set forth on Annex I.
8.6 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made and no action
or proceeding shall have been instituted or threatened to restrain or prohibit
the Merger and no governmental agency or body shall have taken any other action
or made any request of the Company as a result of which the Company deems it
inadvisable to proceed with the transactions hereunder.
8.7 GOOD STANDING CERTIFICATES. TCI and Newco each shall have delivered to
the Company a certificate, dated as of a date no later than ten days prior to
the Closing Date, duly issued by the Delaware Secretary of State and in each
state in which TCI or Newco is authorized to do business, showing that each of
TCI and Newco is in good standing and authorized to do business and that all
state franchise and/or income tax returns and taxes for TCI and Newco,
respectively, for all periods prior to the Closing have been filed and paid.
8.8 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall have
occurred with respect to TCI or Newco which has had or is reasonably likely to
have a Material Adverse Effect.
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8.9 CLOSING OF IPO. The closing of the sale of the TCI Stock to the
Underwriters in the IPO shall have occurred simultaneously with the Funding and
Consummation Date hereunder.
8.10 SECRETARY'S CERTIFICATE. The Company shall have received a
certificate or certificates, dated the Closing Date and signed by the secretary
of TCI and of Newco, certifying the truth and correctness of attached copies of
the TCI's and Newco's respective Certificates of Incorporation (including
amendments thereto), By-Laws (including amendments thereto), and resolutions of
the boards of directors and, if required, the Stockholders of TCI and Newco
approving TCI's and Newco's entering into this Agreement and the consummation of
the transactions contemplated hereby.
8.11 EMPLOYMENT AGREEMENTS. The person(s) identified on Schedule 9.12 as
the Founder of the Company shall have been afforded the opportunity to enter
into a Founder's Employment Agreement substantially in the form of Annex V
hereto; and the other persons, if any, identified by the Company after
consultation with TCI shall be afforded the opportunity to enter into employment
agreements in forms reasonably acceptable to TCI.
8.12 TAX MATTERS. The Stockholders shall have received an opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other tax advisor reasonably acceptable to the
Stockholders that the TCI Plan of Organization will qualify as a tax-free
transfer of property under Section 351 of the Code and that the Stockholders
will not recognize gain to the extent the Stockholders exchange stock of the
Company for TCI Stock (but not cash or other property) pursuant to the TCI Plan
of Organization.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF TCI AND NEWCO
The obligations of TCI and Newco with respect to actions to be taken on
the Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions. The obligations of TCI and
Newco with respect to actions to be taken on the Funding and Consummation Date
are subject to the satisfaction or waiver on or prior to the Funding and
Consummation Date of the conditions set forth in Sections 9.1, 9.4 and 9.13. As
of the Closing Date or, with respect to the conditions set forth in Sections
9.1, 9.4 and 9.13, as of the Funding and Consummation Date, if any such
conditions have not been satisfied, TCI and Newco shall have the right to
terminate this Agreement, or waive any such condition, but no such waiver shall
be deemed to affect the survival of the representations and warranties contained
in Section 5 hereof.
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All the
representations and warranties of the Stockholders and the Company contained in
this Agreement, as amended or supplemented in accordance with Section 7.8, shall
be true and correct in all material respects as of the Closing Date and the
Funding and Consummation Date with the same effect as though such
representations and warranties had been made on and as of such date; all of the
terms, covenants and conditions of this Agreement to be complied with or
performed by the Stockholders
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and the Company on or before the Closing Date or the Funding and Consummation
Date, as the case may be, shall have been duly performed or complied with in all
material respects; and the Stockholders shall have delivered to TCI certificates
dated the Closing Date and the Funding and Consummation Date, respectively, and
signed by them to such effect.
9.2 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger or the IPO and no governmental agency or body shall have
taken any other action or made any request of TCI as a result of which the
management of TCI (acting in good faith) deems it inadvisable to proceed with
the transactions hereunder.
9.3 SECRETARY'S CERTIFICATE. TCI shall have received a certificate, dated
the Closing Date and signed by the secretary of the Company, certifying the
truth and correctness of attached copies of the Company's Certificate of
Incorporation (including amendments thereto), By-Laws (including amendments
thereto), and resolutions of the board of directors and the Stockholders
approving the Company's entering into this Agreement and the consummation of the
transactions contemplated hereby.
9.4 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to the Company which has had or is reasonably likely to
have a Material Adverse Effect.
9.5 STOCKHOLDERS' RELEASE. The Stockholders shall have delivered to TCI an
instrument dated the Closing Date which shall be effective only upon the
occurrence of the Funding and Consummation Date releasing the Company from (i)
any and all claims of the Stockholders against the Company and (ii) obligations
of the Company to the Stockholders, except for (x) items specifically identified
on Schedules 5.10 and 5.15 as being claims of or obligations to the
Stockholders, and (y) continuing obligations to Stockholders relating to their
employment by the Company. In the event that the Funding and Consummation Date
does not occur, then the release instrument referenced herein shall be void and
of no further force or effect.
9.6 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been reasonably
approved by counsel to TCI.
9.7 TERMINATION OF RELATED PARTY AGREEMENTS. Except as set forth on
Schedules 7.6 or 9.7 or otherwise approved by TCI, all existing agreements
between the Company and the Stockholders (and entities controlled by the
Stockholders) other than real property leases shall have been canceled effective
prior to or as of the Closing Date, and all real property leases between the
Company and the Stockholders (and any entity controlled by the Stockholders)
shall have been amended as described in Section 5.16.
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9.8 OPINION OF COUNSEL. TCI shall have received an opinion from Counsel to
the Company and the Stockholders, dated the Closing Date, substantially in the
form annexed hereto as Annex IV.
9.9 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; all consents
and approvals of third parties listed on Schedule 5.23 shall have been obtained.
9.10 GOOD STANDING CERTIFICATES. The Company shall have delivered to TCI a
certificate, dated as of a date no earlier than ten days prior to the Closing
Date, duly issued by the appropriate governmental authority in the Company's
state of incorporation and, unless waived by TCI, in each state in which the
Company is authorized to do business, showing the Company is in good standing
and authorized to do business and that all state franchise and/or income tax
returns and taxes for the Company for all periods prior to the Closing have been
filed and paid.
9.11 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC.
9.12 EMPLOYMENT AGREEMENTS. The person(s) identified on Schedule 9.12 as
the Founder shall enter into an employment agreement substantially in the form
of Annex V hereto.
9.13 CLOSING OF IPO. The closing of the sale of the TCI Stock to the
Underwriters in the IPO shall have occurred simultaneously with the Funding and
Consummation Date hereunder.
9.14 FIRPTA CERTIFICATE. Each Stockholder shall have delivered to TCI a
certificate to the effect that he is not a foreign person pursuant to Section
1.1445-2(b) of the Treasury regulations.
9.15 ENVIRONMENTAL REVIEWS. TCI shall have received a report from an
independent environmental consultant retained by TCI at its expense to conduct
an environmental review of the Company's owned and leased sites, and such report
shall not disclose any environmental condition that, in TCI's judgment, either
(i) could be expected to have a Material Adverse Effect on the Company, or (ii)
or poses any risk of a substantial liability to the Company.
9.16 INDEMNIFICATION AGREEMENT. At the Closing, the Stockholders (or such
Stockholders as may be approved by TCI) shall have delivered to TCI an
environmental indemnification agreement in such form as may be approved by TCI
in its reasonable discretion.
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10. COVENANTS OF TCI AND THE STOCKHOLDERS AFTER CLOSING
10.1 RELEASE FROM GUARANTEES; REPAYMENT OF CERTAIN OBLIGATIONS. TCI shall
use reasonable efforts, including offering its own guarantee, to have the
Stockholders released from any and all guarantees of the Company's indebtedness
identified on Schedule 10.1. In the event that TCI cannot obtain such releases
from the lenders of any such guaranteed indebtedness identified on Schedule 10.1
on or prior to 60 days subsequent to the Funding and Consummation Date, TCI
shall promptly pay off or otherwise refinance or retire such indebtedness. TCI
shall indemnify the Stockholders against, and shall promptly reimburse the
Stockholders for, any amounts which the Stockholders are obligated to pay under
any such guarantees listed on Schedule 10.1, and shall be subrogated to any
rights of the Stockholders accruing as a result of any such payments by the
Stockholders.
10.2 PRESERVATION OF TAX AND ACCOUNTING TREATMENT. Except as contemplated
by this Agreement or the Registration Statement, after the Funding and
Consummation Date, TCI shall not and shall not permit any of its subsidiaries to
undertake any act that would jeopardize the tax-free status of the organization,
including without limitation:
(a) the retirement or reacquisition, directly or indirectly, of all
or part of the TCI Stock issued in connection with the transactions contemplated
hereby; or
(b) the entering into of financial arrangements for the benefit of
the Stockholders.
10.3 PREPARATION AND FILING OF TAX RETURNS.
(i) The Company, if possible, or otherwise the Stockholders shall
file or cause to be filed all income Tax Returns (federal, state, local or
otherwise) of any Acquired Party for all taxable periods that end on or before
the Funding and Consummation Date, and shall permit TCI to review all such Tax
Returns prior to such filings. Unless the Company is a C corporation, the
Stockholders shall pay or cause to be paid all Tax liabilities (in excess of all
amounts already paid with respect thereto or properly accrued or reserved with
respect thereto on the Company Financial Statements) shown by such Returns to be
due.
(ii) TCI shall file or cause to be filed all separate Returns of, or
that include, any Acquired Party for all taxable periods ending after the
Funding and Consummation Date, and shall permit the Stockholders a reasonable
opportunity to review all such Returns for periods including the Funding and
Consummation Date prior to the filing thereof.
(iii) Each party hereto shall, and shall cause its Subsidiaries and
Affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Return, amended
Return or claim for refund, determining a
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liability for Taxes or a right to refund of Taxes or in conducting any audit or
other proceeding in respect of Taxes. Such cooperation and information shall
include providing copies of all relevant portions of relevant Returns, together
with relevant accompanying schedules and relevant work papers, relevant
documents relating to rulings or other determinations by Taxing authorities and
relevant records concerning the ownership and Tax basis of property, which such
party may possess. Each party shall make its employees and independent certified
public accountants reasonably available on a mutually convenient basis at its
cost to provide explanation of any documents or information so provided. Subject
to the preceding sentence, each party required to file Returns pursuant to this
Agreement shall bear all costs of filing such Returns.
(iv) Each of the Company, Newco, TCI and each Stockholder shall
comply with the Tax reporting requirements of Section 1.351-3 of the Treasury
Regulations promulgated under the Code, and treat the transaction as a tax-free
contribution under Section 351(a) of the Code subject to gain, if any,
recognized on the receipt of cash or other property under Section 351(b) of the
Code.
10.4 DIRECTORS. The persons named in the Draft Registration Statement
shall be appointed as directors and elected as officers of TCI, as and to the
extent set forth in the Draft Registration Statement, promptly following the
Funding and Consummation Date.
11. INDEMNIFICATION
The Stockholders, TCI and Newco each make the following covenants that are
applicable to them, respectively:
11.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. Subject to Section 11.5,
the Stockholders covenant and agree that they severally (in accordance with
their percentage ownership interest in the Company) will indemnify, defend,
protect and hold harmless TCI, Newco, and, subsequent to the Funding and
Consummation Date, the Company and the Surviving Corporation at all times, from
and after the date of this Agreement until the Expiration Date (provided that
for purposes of Section 11.1(iii) below, the Expiration Date shall be the date
on which the applicable statute of limitations expires), from and against all
claims, damages, actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by TCI, Newco, the
Company or the Surviving Corporation as a result of or arising from (i) any
breach of the representations and warranties of the Stockholders or the Company
set forth herein or on the schedules or certificates delivered in connection
herewith, (ii) any breach of any agreement on the part of the Stockholders or
the Company under this Agreement, or (iii) any liability under the 1933 Act, the
1934 Act or other Federal or state law or regulation, at common law or
otherwise, arising out of or based upon any untrue statement of a material fact
relating to the Company or the Stockholders, and provided to TCI or its counsel
by the Company or the Stockholders (but in the case of the Stockholders, only if
such statement was provided in writing) which is contained in the
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Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact relating to the
Company or the Stockholders required to be stated therein or necessary to make
the statements therein not misleading, provided, however, that such indemnity
shall not inure to the benefit of TCI, Newco, the Company or the Surviving
Corporation to the extent that such untrue statement (or alleged untrue
statement) was made in, or omission (or alleged omission) occurred in, any
preliminary prospectus and the Company or the Stockholders provided, in writing,
corrected information to TCI for inclusion in the final prospectus, and such
information was not so included or the final prospectus was not properly
delivered, and provided further, that no Stockholder shall be liable for any
indemnification obligation pursuant to this Section 11.1 to the extent
attributable to a breach of any representation, warranty or agreement made
herein individually by any other Stockholder.
TCI and Newco acknowledge and agree that other than the representations
and warranties of the Company or the Stockholders specifically contained in this
Agreement, there are no representations or warranties of the Company or the
Stockholders, either express or implied, with respect to the transactions
contemplated by this Agreement, the Company or its assets, liabilities and
business.
TCI and Newco further acknowledge and agree that, should the Funding and
Consummation Date occur, their sole and exclusive remedy with respect to any and
all claims relating to this Agreement and the transactions contemplated in this
Agreement, shall be pursuant to the indemnification provisions set forth in this
Section 11. TCI and Newco hereby waive, from and after the Funding and
Consummation Date, to the fullest extent permitted under applicable law, any and
all rights, claims and causes of action they or any indemnified person may have
against any Stockholder relating to this Agreement or the transactions arising
under or based upon any federal, state, local or foreign statute, law, rule,
regulation or otherwise except their rights under this Section 11.
11.2 INDEMNIFICATION BY TCI. TCI covenants and agrees that it will
indemnify, defend, protect and hold harmless the Stockholders and, prior to the
Funding and Consummation Date, the Company, at all times from and after the date
of this Agreement until the Expiration Date (provided that for purposes of
Section 11.2(iv) below, the Expiration Date shall be the date on which the
applicable statute of limitations expires), from and against all claims,
damages, actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by the Stockholders or
the Company as a result of or arising from (i) any breach by TCI or Newco of
their representations and warranties set forth herein or on the schedules or
certificates attached hereto, (ii) any breach of any agreement on the part of
TCI or Newco under this Agreement, (iii) any liabilities which the Stockholders
may incur due to TCI's or Newco's failure to be responsible for the liabilities
and obligations of the Company as provided in Section 1 hereof (except to the
extent that TCI or
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Newco has claims against the Stockholders by reason of such liabilities); or
(iv) any liability under the 1933 Act, the 1934 Act or other Federal or state
law or regulation, at common law or otherwise, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact relating to TCI,
Newco or any of the Other Founding Companies contained in any preliminary
prospectus, the Registration Statement or any prospectus forming a part thereof,
or any amendment thereof or supplement thereto, or arising out of or based upon
any omission or alleged omission to state therein a material fact relating to
TCI or Newco or any of the Other Founding Companies required to be stated
therein or necessary to make the statements therein not misleading.
11.3 THIRD PERSON CLAIMS. Promptly after any party hereto (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
Person not a party to this Agreement ("Third Person"), or the commencement of
any action or proceeding by a Third Person, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 11.1 or 11.2 hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party written
notice of such claim or the commencement of such action or proceeding. Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle, at its own expense and by its own counsel, any such matter so
long as the Indemnifying Party pursues the same in good faith and diligently,
provided that the Indemnifying Party shall not settle any proceeding without the
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed. If the Indemnifying Party undertakes to defend
or settle, it shall promptly notify the Indemnified Party of its intention to do
so, and the Indemnified Party shall cooperate with the Indemnifying Party and
its counsel in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, granting the
Indemnifying Party with access any books, records or information reasonably
requested by the Indemnifying Party that are in the Indemnified Party's
possession or control. All Indemnified Parties shall use the same counsel, which
shall be the counsel selected by Indemnifying Party, provided that if counsel to
the Indemnifying Party shall have a conflict of interest that prevents counsel
for the Indemnifying Party from representing the Indemnified Party, the
Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and the Indemnifying Party will reimburse the
Indemnified Party for the reasonable expenses of its counsel. After the
Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability, except (i) as set forth in the preceding sentence and (ii) to the
extent such participation is requested by the Indemnifying Party, in which event
the Indemnified Party shall be reimbursed by the Indemnifying Party for
reasonable additional legal expenses and out-of-pocket expenses. If the
Indemnifying Party desires to accept a final and complete settlement of any such
Third Person claim and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party's liability under this Section with
respect to such Third Person claim shall be limited to the amount so offered in
settlement by
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said Third Person. Upon agreement as to such settlement between said Third
Person and the Indemnifying Party, the Indemnifying Party shall, in exchange for
a complete release from the Indemnified Party, promptly pay to the Indemnified
Party the amount agreed to in such settlement and the Indemnified Party shall,
from that moment on, bear full responsibility for any additional costs of
defense which it subsequently incurs with respect to such claim and all
additional costs of settlement or judgment, and the Indemnifying Party shall
have no further liability or obligation to the Indemnified Party under Sections
11.1 or 11.2 with respect to such claim. If the Indemnifying Party does not
undertake to defend such matter to which the Indemnified Party is entitled to
indemnification hereunder, or fails diligently to pursue such defense, the
Indemnified Party may undertake such defense through counsel of its choice, at
the cost and expense of the Indemnifying Party, and the Indemnified Party may
settle such matter, and the Indemnifying Party shall reimburse the Indemnified
Party for the amount paid in such settlement and any other liabilities or
expenses incurred by the Indemnified Party in connection therewith, provided,
however, that under no circumstances shall the Indemnified Party settle any
Third Person claim without the written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed. All settlements hereunder
shall effect a complete release of the Indemnified Party, unless the Indemnified
Party otherwise agrees in writing. The parties hereto will make appropriate
adjustments for insurance proceeds in determining the amount of any
indemnification obligation under this Section.
11.4 EXCLUSIVE REMEDY. The indemnification provided for in this Section 11
shall be the exclusive remedy in any action seeking damages or any other form of
monetary relief brought by any party to this Agreement against another party
with respect to the matters set forth herein, provided that, nothing herein
shall be construed to limit the right of a party, in a proper case, to seek
injunctive relief for a breach of this Agreement. Any indemnity payment under
this Section 11 shall be treated as an adjustment to the exchange consideration
for tax purposes unless a final determination (which shall include the execution
of a Form 870-AD or successor form) with respect to the indemnified party or any
of its Affiliates causes any such payment not to be treated as an adjustment to
the exchange consideration for U.S. Federal Income Tax purposes.
11.5 LIMITATIONS ON INDEMNIFICATION. TCI, Newco, the Surviving Corporation
and the other persons or entities indemnified pursuant to Section 11.1 or 11.2
shall not assert any claim for indemnification hereunder against the
Stockholders until such time as, and solely to the extent that, the aggregate of
all claims which such persons may have against such the Stockholders shall
exceed the greater of (a) 1.0% of the sum of (i) the cash paid to Stockholders
plus (ii) the value of the TCI Stock delivered to Stockholders (calculated as
provided in this Section 11.5) or (b) $100,000 (the "Indemnification
Threshold"). Except with respect to the right to receive the merger
consideration as set forth on Annex I, the Stockholders shall not assert any
claim for indemnification hereunder against TCI or Newco until such time as, and
solely to the extent that, the aggregate of all claims which the Stockholders
may have against TCI or Newco shall exceed the Indemnification Threshold.
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No person shall be entitled to indemnification under this Section 11 if
and to the extent that such person's claim for indemnification is directly or
indirectly related to a breach by such person of any representation, warranty,
covenant or other agreement set forth in this Agreement.
Notwithstanding any other term of this Agreement, no Stockholder shall be
liable under this Section 11 for an amount which exceeds the amount of proceeds
received by such Stockholder in connection with the Merger. For purposes of
calculating the value of the TCI Stock received by a Stockholder, TCI Stock
shall be valued at its initial public offering price as set forth in the
Registration Statement. It is hereby agreed that a Stockholder shall have the
right to satisfy an indemnification obligation through payment of a combination
of stock and cash in proportion equal to the proportion of stock and cash
received by such Stockholder in connection with the Merger, valued as described
immediately above, but shall also have the right to satisfy any such obligation
in cash.
12. TERMINATION OF AGREEMENT
12.1 TERMINATION.This Agreement may be terminated at any time prior to the
Funding and Consummation Date solely:
(i) by mutual consent of the boards of directors of TCI and the
Company;
(ii) by the Company or by TCI if the transactions contemplated by
this Agreement to take place at the Closing shall not have been consummated by
December 31, 1998, unless the failure of such transactions to be consummated is
due to the willful failure of the party (including, in the case of TCI's right
to terminate, any such failure of the Stockholders) seeking to terminate this
Agreement to perform any of its obligations under this Agreement to the extent
required to be performed by it prior to or on the Closing Date;
(iii) by the Company or by TCI if a material breach or default shall
be made by the other party (including, in the case of TCI's right to terminate,
any such material breach or default by the Stockholders) in the observance or in
the due and timely performance of any of the covenants or agreements contained
herein, and the curing of such default shall not have been made on or before the
Funding and Consummation Date, or by the Company, if the conditions set forth in
Section 8 hereof have not been satisfied or waived as of the Closing Date or the
Funding and Consummation Date, as applicable, or by TCI, if the conditions set
forth in Section 9 hereof have not been satisfied or waived as of the Closing
Date or the Funding and Consummation Date, as applicable;
(iv) pursuant to Section 7.8 hereof; or
(v) pursuant to Section 4 hereof;
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provided, however, that (except as provided in Section 4 hereof) during the
period from the Closing Date to the Funding and Consummation Date, this
Agreement may be terminated only if the underwriting agreement relating to the
IPO is terminated in accordance with its terms.
12.2 LIABILITIES IN EVENT OF TERMINATION. Except as provided in Section
7.8 hereof, the termination of this Agreement will in no way limit any
obligation or liability of any party based on or arising from a breach or
default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement including, but not limited
to, legal and audit costs and out of pocket expenses.
13. NONCOMPETITION
13.1 PROHIBITED ACTIVITIES. Except as and solely to the extent set forth
on Schedule 13.1 hereto, the Stockholders will not, for a period of five (5)
years following the Funding and Consummation Date, for any reason whatsoever,
directly or indirectly, for themselves or on behalf of or in conjunction with
any other Person or Persons:
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee, independent
contractor, consultant or advisor, or as a sales representative, in any
heavy-duty truck, trailer and/or bus components business or operation or related
services business in direct competition with TCI or any of the Subsidiaries
thereof, within 100 miles of where the Company conducted business prior to the
Funding and Consummation Date or within the one-year period prior to the Funding
and Consummation Date (the "Territory");
(ii) call upon any individual who is, at that time, within the
Territory, an employee of TCI or any Subsidiary thereof for the purpose or with
the intent of enticing such employee away from or out of the employ of TCI or
any Subsidiary thereof;
(iii) call upon any Person which is, at that time, or which has
been, within the one-year prior to the Funding and Consummation Date, a customer
of TCI or any Subsidiary thereof, of the Company or of any of the Other Founding
Companies within the Territory for the purpose of soliciting or selling products
or services in direct competition with TCI within the Territory;
(iv) call upon any prospective acquisition candidate, on any
Stockholder's own behalf or on behalf of any competitor in the heavy-duty truck,
trailer or bus components business or operation or any related services
business, which candidate, to the actual knowledge of such Stockholder after due
inquiry, was called upon by TCI or any Subsidiary thereof or for which, to the
actual knowledge of such Stockholder after due inquiry, TCI or any Subsidiary
thereof made an acquisition analysis, for the purpose of acquiring such entity;
or
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(v) except on behalf of TCI or any Subsidiary, disclose customers,
whether in existence or proposed, of the Company to any Person, for any reason
or purpose whatsoever except to the extent that the Company has in the past
disclosed such information to the public for valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit any Stockholder from acquiring as a passive investment not more than
one percent (1%) of the capital stock of a competing business whose stock is
traded on a national securities exchange or over-the-counter.
13.2 DAMAGES. Because of the difficulty of measuring economic losses to
TCI as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to TCI for which it would
have no other adequate remedy, each Stockholder agrees that the foregoing
covenant may be enforced by TCI in the event of breach by such Stockholder, by
injunctions and restraining orders.
13.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Stockholders in light of the activities and business of TCI and the Subsidiaries
thereof on the date of the execution of this Agreement and the current plans of
TCI and its Subsidiaries.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
13.5 INDEPENDENT COVENANT. All of the covenants in this Section 13 shall
be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any Stockholder
against TCI or any subsidiary thereof, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by TCI of such
covenants. The covenants contained in Section 13 shall not be affected by any
breach of any other provision hereof by any party hereto and shall have no
effect if the transactions contemplated by this Agreement are not consummated.
13.6 MATERIALITY. The Company and the Stockholders hereby agree that this
covenant is a material and substantial part of this transaction.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
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14.1 STOCKHOLDERS. The Stockholders recognize and acknowledge that they
had in the past, currently have, and in the future may possibly have, access to
certain confidential information of the Company, the Other Founding Companies,
and/or TCI, such as operational policies, and pricing and cost policies that are
valuable, special and unique assets of the Company's, the Other Founding
Companies' and/or TCI's respective businesses ("Confidential Information"). The
Stockholders agree that they will not disclose such Confidential Information to
any person, firm, corporation, association or other entity for any purpose or
reason whatsoever, except (a) to authorized representatives of TCI, (b)
following the Closing, such Confidential Information may be disclosed by the
Stockholders as is required in the course of performing their duties for TCI or
the Surviving Corporation and (c) to counsel and other advisers, provided that
such advisers (other than counsel) agree to the confidentiality provisions of
this Section 14.1, unless (i) such Confidential Information becomes known to the
public generally through no fault of the Stockholders, (ii) disclosure is
required by law or the order of any governmental authority under color of law,
provided, that prior to disclosing any Confidential Information pursuant to this
clause (ii), the Stockholders shall, if possible, give prior written notice
thereof to TCI and provide TCI with the opportunity to contest such disclosure,
or (iii) the disclosing party reasonably believes that such disclosure is
required in connection with the defense of a lawsuit against the disclosing
party. In the event of a breach or threatened breach by any of the Stockholders
of the provisions of this Section 14.1, TCI shall be entitled to an injunction
restraining such Stockholders from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting TCI
from pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages. In the event the transactions contemplated by
this Agreement are not consummated, Stockholders shall have none of the
above-mentioned restrictions on their ability to disseminate Confidential
Information with respect to the Company. Each Stockholder further agrees that in
the event the transactions contemplated herein are not consummated (i) neither
the Company nor any Stockholder can thereafter use any Confidential Information
of the Other Founding Companies for any purpose and (ii) upon written request of
any Other Founding Company to the Company, the Company and Stockholders will
return all Confidential Information pertaining to such Other Founding Company to
such Other Founding Company.
14.2 TCI AND NEWCO. TCI and Newco recognize and acknowledge that they had
in the past and currently have access to certain Confidential Information of the
Company, such as operational policies, and pricing and cost policies that are
valuable, special and unique assets of the Company's business. TCI and Newco
agree that, prior to the Closing, or if the Transactions contemplated by this
Agreement are not consummated, they will not disclose such Confidential
Information to any Person for any purpose or reason whatsoever, except (a) to
authorized representatives of the Company, (b) to counsel and other advisers,
provided that such advisers (other than counsel) agree to the confidentiality
provisions of this Section 14.2, (c) to the Other Founding Companies and their
representatives pursuant to Section 7.1(a), unless (i) such Confidential
Information is or becomes known to the public generally through no fault of TCI
or Newco, (ii) disclosure is required by law or the order of any governmental
authority under color of law,
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provided, that prior to disclosing any information pursuant to this clause (ii),
TCI and Newco shall, if possible, give prior written notice thereof to the
Company and the Stockholders and provide the Company and the Stockholders with
the opportunity to contest such disclosure, or (iii) the disclosing party
reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party, and (d) to the public to the
extent necessary or advisable in connection with the filing of the Registration
Statement and the IPO and the securities laws applicable thereto and to the
operation of TCI as a publicly held entity after the IPO. In the event of a
breach or threatened breach by TCI or Newco of the provisions of this Section
14.2, the Company and the Stockholders shall be entitled to an injunction
restraining TCI and Newco from disclosing, in whole or in part, such
Confidential Information. Nothing herein shall be construed as prohibiting the
Company and the Stockholders from pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages.
14.3 DAMAGES. Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 14.1 and 14.2, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced by the other parties by injunctions and restraining orders.
14.4 SURVIVAL. The obligations of the parties under this Article 14 shall
survive the termination of this Agreement for a period of five years from the
Funding and Consummation Date.
15. TRANSFER RESTRICTIONS
15.1 TRANSFER RESTRICTIONS. Unless otherwise agreed by TCI, except for
transfers to immediate family members who agree to be bound by the restrictions
set forth in this Section 15.1 (or partnerships or trusts for the benefit of the
Stockholders or family members, the trustees or partners of which so agree), for
a period of two years from the Funding and Consummation Date, except pursuant to
Section 17 hereof, none of the Stockholders shall sell, assign, exchange,
transfer, encumber, pledge, distribute, appoint, or otherwise dispose of any
shares of TCI Stock received by the Stockholders in the Merger. The certificates
evidencing the TCI Stock delivered to the Stockholders pursuant to Section 3 of
this Agreement will bear a legend substantially in the form set forth below and
containing such other information as TCI may deem necessary or appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED,
DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED OF, AND THE ISSUER
SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE,
ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION,
APPOINTMENT OR OTHER DISPOSITION PRIOR TO [SECOND ANNIVERSARY OF
FUNDING AND CONSUMMATION DATE]. UPON THE WRITTEN REQUEST OF THE
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HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS
RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER
AGENT) AFTER THE DATE SPECIFIED ABOVE.
16. FEDERAL SECURITIES ACT REPRESENTATIONS
16.1 COMPLIANCE WITH LAW. The Stockholders acknowledge that the shares of
TCI Stock to be delivered to the Stockholders pursuant to this Agreement have
not been and will not be registered under the 1933 Act (except as provided in
Section 17 hereof) and therefore may not be resold without compliance with the
1933 Act. The TCI Stock to be acquired by such Stockholders pursuant to this
Agreement is being acquired solely for their own respective accounts, for
investment purposes only, and with no present intention of distributing, selling
or otherwise disposing of it in connection with a distribution. The Stockholders
covenant, warrant and represent that none of the shares of TCI Stock issued to
such Stockholders will be offered, sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of except after full compliance with all of
the applicable provisions of the 1933 Act and the rules and regulations of the
SEC. All the TCI Stock shall bear the following legend in addition to the legend
required under Section 15 of this Agreement:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER
HEREOF COMPLIES WITH THE ACT AND APPLICABLE SECURITIES LAW.
16.2 ECONOMIC RISK; SOPHISTICATION. The Stockholders are able to bear the
economic risk of an investment in the TCI Stock to be acquired pursuant to this
Agreement and can afford to sustain a total loss of such investment and have
such knowledge and experience in financial and business matters that they are
capable of evaluating the merits and risks of the proposed investment in the TCI
Stock. The Stockholders party hereto have had an adequate opportunity to ask
questions and receive answers from the officers of TCI concerning any and all
matters relating to the transactions described herein including, without
limitation, the background and experience of the current and proposed officers
and directors of TCI, the plans for the operations of the business of TCI, the
business, operations and financial condition of the Founding Companies other
than the Company, and any plans for additional acquisitions and the like. The
Stockholders have asked any and all questions in the nature described in the
preceding sentence and all questions have been answered to their satisfaction.
17. REGISTRATION RIGHTS
17.1 PIGGYBACK REGISTRATION RIGHTS. At any time following the Funding and
Consummation Date, whenever TCI proposes to register any TCI Stock for its own
or others account
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under the 1933 Act for a public offering, other than (i) any shelf or other
registration of shares to be used as consideration for acquisitions of
additional businesses by TCI (including any registration of resales of such
shares by the holders thereof) and (ii) registrations relating to employee stock
options or other benefit plans, TCI shall give each of the Stockholders prompt
written notice of its intent to do so. Upon the written request of any of the
Stockholders given within 30 days after receipt of such notice, TCI shall cause
to be included in such registration all of the TCI Stock issued to the
Stockholders pursuant to this Agreement (including any stock issued as (or
issuable upon the conversion or exchange of any convertible security, warrant,
right or other security which is issued by TCI as) a dividend or other
distribution with respect to, or in exchange for, or in replacement of such TCI
Stock) which any such Stockholder requests, provided that TCI shall have the
right to reduce the number of shares included in such registration to the extent
that inclusion of such shares could, in the written opinion of tax counsel to
TCI or its independent auditors, jeopardize the status of the transactions
contemplated hereby and by the Registration Statement as a tax-free organization
under Section 351 of the Code. In addition, if TCI is advised in writing in good
faith by any managing underwriter of an underwritten offering of the securities
being offered pursuant to any registration statement under this Section 17.1
that the number of shares to be sold by persons other than TCI is greater than
the number of such shares which can be offered without adversely affecting the
offering, TCI may reduce pro rata the number of shares offered for the accounts
of such persons (based upon the number of shares proposed to be sold by each
such person) to a number deemed satisfactory by such managing underwriter,
provided, that, for each such offering made by TCI after the IPO, such reduction
shall be made first by reducing the number of shares to be sold by persons other
than TCI, the Stockholders and the stockholders of the Other Founding Companies
(collectively, the Stockholders and the stockholders of the other Founding
Companies being referred to herein as the "Founding Stockholders"), and
thereafter, if a further reduction is required, by reducing the number of shares
to be sold by the Founding Stockholders.
17.2 DEMAND REGISTRATION RIGHTS. At any time after the date two years
after the Funding and Consummation Date and prior to the date three years after
the Funding and Consummation Date, the holders of a majority of the shares of
TCI Stock issued to the Founding Stockholders pursuant to this Agreement and the
Other Agreements which have not been previously registered or sold and which are
not entitled to be sold under Rule 144(k) (or any similar or successor
provision) promulgated under the 1933 Act may request in writing that TCI file a
registration statement under the 1933 Act covering the registration of any or
all of the shares of TCI Stock issued to the Stockholders pursuant to this
Agreement and the Other Agreements (including any stock issued as (or issuable
upon the conversion or exchange of any convertible security, warrant, right or
other security which is issued by TCI as) a dividend or other distribution with
respect to, or in exchange for, or in replacement of such TCI Stock) then held
by such Founding Stockholders (a "Demand Registration"). Within ten (10) days of
the receipt of such request, TCI shall give written notice of such request to
all other Founding Stockholders and shall, as soon as practicable but in no
event later than 45 days after notice from any Stockholder, file and use its
best efforts to cause to become effective a registration statement covering all
such shares. TCI shall be obligated to effect only one
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Demand Registration for all Founding Stockholders and will keep the registration
statement relating to such Demand Registration current and effective for not
less than 120 days (or such shorter period as is required to sell all of the
shares registered thereby).
Notwithstanding the foregoing paragraph, following any such a demand, a
majority of TCI's disinterested directors (i.e. directors who have not demanded
or elected to sell shares in any such public offering) may defer the filing of
the registration statement for up to a 30 day period after the date on which TCI
would otherwise be required to make such filing pursuant to the foregoing
paragraph if such directors determine in good faith that the filing of such a
registration statement or the making of any required disclosure in connection
therewith would have an adverse effect on TCI or interfere with a transaction in
which TCI is then engaged or is then pursuing.
If at the time of any request by the Founding Stockholders for a Demand
Registration TCI has fixed plans to file within 60 days after such request a
registration statement covering the sale of any of its securities in a public
offering under the 1933 Act, no registration of the Founding Stockholders' TCI
Stock shall be initiated under this Section 17.2 until 90 days after the
effective date of such registration unless TCI is no longer proceeding
diligently to effect such registration; provided that TCI shall provide the
Founding Stockholders the right to participate in such public offering pursuant
to, and subject to, Section 17.1 hereof.
In the event that the Founding Stockholders make a demand registration
request pursuant to this Section 17.2 and such registration is delayed by TCI as
a consequence of the exercise of its rights under this Section 17.2, then the
period during which such demand registration may be requested by the Founding
Stockholders shall be extended for an equal number of days.
17.3 REGISTRATION PROCEDURES. Whenever TCI is required to register shares
of TCI Stock pursuant to Sections 17.1 and 17.2, TCI will, as expeditiously as
possible:
a. Prepare and file with the SEC a registration statement with respect to
such shares and use its best efforts to cause such registration statement to
become effective (provided that before filing a registration statement or
prospectus or any amendments or supplements or term sheets thereto, TCI will
furnish a representative of the Stockholders with copies of all such documents
proposed to be filed) as promptly as practical;
b. Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than 120 days;
c. Furnish to each Stockholder who so requests such number of copies of
such registration statement, each amendment and supplement thereto and the
prospectus included in such registration statement (including each preliminary
prospectus and any term sheet associated
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therewith), and such other documents as such Stockholder may reasonably request
in order to facilitate the disposition of the relevant shares;
d. Use its best efforts to register or qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Stockholders, and to keep
such registration or qualification effective during the period such registration
statement is to be kept effective, provided that TCI shall not be required to
become subject to taxation, to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions;
e. Cause all such shares of TCI Stock to be listed or included on any
securities exchanges or trading systems on which similar securities issued by
TCI are then listed or included;
f. Notify each Stockholder at any time when a prospectus relating thereto
is required to be delivered under the 1933 Act within the period that TCI is
required to keep the registration statement effective of the happening of any
event as a result of which the prospectus included in such registration
statement, together with any associated term sheet, contains an untrue statement
of a material fact or omits any fact necessary to make the statement therein not
misleading, and, at the request of such Stockholder, TCI will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of the covered shares, such prospectus will not contain an untrue
statement of material fact or omit to state any fact necessary to make the
statements therein not misleading.
All expenses incurred in connection with the registration under this
Article 17 (including all registration, filing, qualification, legal, printer
and accounting fees, but excluding underwriting commissions and discounts),
shall be borne by TCI.
17.4 INDEMNIFICATION.
(a) In connection with any demand or piggyback registration, TCI shall
indemnify, to the extent permitted by law, each Stockholder and each Person who
controls such Stockholder (an "Indemnified Party") against all losses, claims,
damages, liabilities and expenses (including reasonable attorneys' fees and
expenses of investigation) arising out of or resulting from any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or associated term sheet or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading except
insofar as the same are caused by or contained in or omitted from any
information furnished in writing to TCI by such Indemnified Party expressly for
use therein or by such Indemnified Party's failure to deliver a copy of the
registration statement or prospectus or any amendment or supplements thereto
after TCI has furnished such Indemnified Party with a sufficient number of
copies of the same.
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(b) In connection with any demand or piggyback registration, each
Stockholder shall furnish to TCI in writing such information as is reasonably
requested by TCI for use in any such registration statement or prospectus and
will indemnify, to the extent permitted by law, TCI, its directors and officers
and each person who controls TCI (within the meaning of the ▇▇▇▇ ▇▇▇) against
any losses, claims, damages, liabilities and expenses (including reasonable
attorneys' fees and expenses of investigation) resulting from any untrue or
alleged untrue statement of a material fact or any omission or alleged omission
of a material fact required to be stated in the registration statement or
prospectus or any amendment thereof or supplement thereto necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in information so furnished in writing by
such Stockholder specifically for use in preparing the registration statement.
Notwithstanding the foregoing, the liability of a Stockholder under this Section
17.4 shall be limited to an amount equal to the net proceeds actually received
by such Stockholder from the sale of the relevant shares covered by the
registration statement.
(c) Any person entitled to indemnification hereunder will (i) give prompt
notice to the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) unless in such indemnified party's reasonable judgment,
a conflict of interest between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party. Any failure to give prompt notice shall deprive a party of its right to
indemnification hereunder only to the extent that such failure shall have
adversely affected the indemnifying party. If the defense of any claim is
assumed, the indemnified party will not be subject to any liability for any
settlement made without its consent (but such consent shall not be unreasonably
withheld). An indemnifying party who is not entitled or elects not to assume the
defense of a claim will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party, a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim.
17.5 UNDERWRITING AGREEMENT. In connection with each registration pursuant
to Sections 17.1 and 17.2 covering an underwritten registered offering, TCI and
each participating holder agree to enter into a written agreement with the
managing underwriters (which in the case of a Demand Registration under Section
17.2 will be reasonably satisfactory to the holders of a majority of the shares
of the Founding Stockholders participating in the Demand Registration), in such
form and containing such provisions as are customary in the securities business
for such an arrangement between such managing underwriters and companies of
TCI's size and investment stature, including indemnification provisions.
17.6 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the SEC that may permit the sale of TCI stock
to the public without registration, TCI agrees to use its reasonable efforts to:
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(i) make and keep public information regarding TCI available as
those terms are used in Rule 144 under the 1933 Act for a period of four years
beginning 90 days following the effective date of the Registration Statement;
(ii) file with the SEC in a timely manner all reports and other
documents required of TCI under the 1933 Act and the 1934 Act at any time after
it has become subject to such reporting requirements; and
(iii) so long as a Stockholder owns any restricted TCI Common Stock,
furnish to each Stockholder forthwith upon written request a written statement
by TCI as to its compliance with the reporting requirements of Rule 144 (at any
time from and after 90 days following the effective date of the Registration
Statement), and of the 1933 Act and the 1934 Act (any time after it has become
subject to such reporting requirements), a copy of the most recent annual or
quarterly report of TCI, and such other reports and documents so filed as a
Stockholder may reasonably request in availing itself of any rule or regulation
of the SEC allowing a Stockholder to sell any such shares without registration.
18. GENERAL
18.1 COOPERATION. The Company, the Stockholders, TCI and Newco shall each
deliver or cause to be delivered to the other on the Funding and Consummation
Date, and at such other times and places as shall be reasonably agreed to, such
additional instruments as the other may reasonably request for the purpose of
carrying out this Agreement.
18.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
TCI, and the heirs and legal representatives of the Stockholders.
18.3 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Company, Newco and TCI and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms and may be modified or amended only by
a written instrument executed by the Stockholders, the Company, Newco and TCI,
acting through their respective officers or trustees, duly authorized by their
respective Boards of Directors. Any disclosure made on any Schedule delivered
pursuant hereto shall be deemed to have been disclosed for purposes of any other
Schedule required hereby, provided that the Company shall make a good faith
effort to cross reference disclosure, as necessary or advisable, between related
Schedules.
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18.4 COUNTERPARTS. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
18.5 BROKERS AND AGENTS. Except as disclosed on Schedule 18.5, each party
represents and warrants that it employed no broker or agent in connection with
this transaction and agrees to indemnify the other parties hereto against all
loss, cost, damages or expense arising out of claims for fees or commission of
brokers employed or alleged to have been employed by such indemnifying party.
18.6 EXPENSES. (a) Whether or not the transactions herein contemplated
shall be consummated, TCI will pay the fees, expenses and disbursements of TCI
and its agents, representatives, accountants and counsel incurred in connection
with the subject matter of this Agreement and any amendments thereto, including
all costs and expenses incurred in the performance and compliance with all
conditions to be performed by TCI under this Agreement, including the fees and
expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., and any other
person or entity retained by TCI or by Notre Capital Ventures II, L.L.C., and
the costs of preparing and filing the Registration Statement. Each Stockholder
shall pay all sales, use, transfer, real property transfer, recording, gains,
stock transfer and other similar taxes and fees ("Transfer Taxes") imposed in
connection with the Merger, other than Transfer Taxes, if any, imposed by the
State of Delaware. Each Stockholder shall file all necessary documentation and
Returns with respect to such Transfer Taxes. In addition, each Stockholder
acknowledges that he, and not the Company or TCI, will pay all taxes due upon
receipt of the consideration payable pursuant to Section 3 hereof. The
Stockholders acknowledge that the risks of the transactions contemplated hereby
include tax risks, with respect to which the Stockholders are relying solely on
the opinion contemplated by Section 8.12 hereof. TCI hereby agrees to reimburse
an aggregate of up to $75,000 of expenses or fees incurred by the Stockholders
and the stockholders of the Other Founding Companies, as a group, promptly after
the Funding and Consummation Date.
18.7 NOTICES. All notices of communication required or permitted hereunder
shall be in writing and may be given by depositing the same in United States
mail, addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, or by delivering the same in person to
an officer or agent of such party.
(a) If to TCI, or Newco, addressed to them at:
Transportation Components, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
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with copies to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.
South Tower Pennzoil Place
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(b) If to the Stockholders, addressed to them at their addresses set
forth on Annex II, with copies to:
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
4200 Texas Commerce Tower
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
(c) If to Gear and Wheel, Inc., addressed to it at:
▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(d) If to Try One, Inc. or Ocala Truck Parts, Inc., addressed
to it at:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 18.7 from time to time.
18.8 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Texas.
18.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties until the Expiration Date.
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18.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
18.11 TIME. Time is of the essence with respect to this Agreement.
18.12 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
18.13 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
18.14 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
18.15 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived only with the
written consent of TCI, Newco, the Company and Stockholders who hold or who will
hold at least 50% of the TCI Stock issued or to be issued upon consummation of
the Merger. Any amendment or waiver effected in accordance with this Section
18.15 shall be binding upon each of the parties hereto, any other person
receiving TCI Stock in connection with the Merger and each future holder of such
TCI Stock.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
TRANSPORTATION COMPONENTS, INC.
By:
T. ▇▇▇▇▇▇▇ ▇▇▇▇▇
President and Chief Executive Officer
GWI ACQUISITION CORPORATION
By:
Vice President
TOI ACQUISITION CORPORATION
By:
Vice President
OTP ACQUISITION CORPORATION
By:
Vice President
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GEAR AND WHEEL, INC.
By:
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
TRY ONE, INC.
By:
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
OCALA TRUCK PARTS, INC.
By:
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
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Stockholders of Gear and Wheel, Inc.:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as Trustee of the ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ Family Trust dated 4/14/98.
▇▇▇▇▇ ▇. ▇▇▇▇▇ as Trustee of the ▇▇▇▇▇ ▇.
▇▇▇▇▇ Family Trust dated 4/14/98.
▇▇▇▇▇ ▇. ▇▇▇▇▇ as Trustee of The ▇▇▇▇▇ ▇.
▇▇▇▇▇ Revocable Living Trust dated 9/27/94
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as Trustee of The ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ Revocable Living Trust dated 9/27/94
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Stockholders of Try One, Inc.:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
Stockholders of Ocala Truck Parts, Inc.:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
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SCHEDULE 6.4
None.
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SCHEDULE 6.5
None.
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SCHEDULE 6.7
None.
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SCHEDULE 6.8
None.
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SCHEDULE 6.9
None.
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SCHEDULE 6.12
None.
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SCHEDULE 6.15
None.
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