STOCK PURCHASE AGREEMENT
BY AND AMONG
S. ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
REPLACEMENT & EXCHANGE PARTS CO., INC.,
AFTERMARKET TECHNOLOGY CORP.,
AND
REPCO ACQUISITION CORP.
DATED AS OF JANUARY 31, 1997
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS.................................................. 1
1.01. Definitions.................................................. 1
ARTICLE II. PURCHASE AND SALE............................................ 5
2.01. Purchase of Shares from Shareholders......................... 5
2.02. Closing...................................................... 6
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS............... 6
3.01. Representations Regarding the Shares......................... 6
3.02. Shareholder Prohibitions..................................... 6
3.03. Corporate Existence and Power................................ 7
3.04. Authorization................................................ 7
3.05. Subsidiaries................................................. 7
3.06. Capital Stock................................................ 7
3.07. Governmental Authorization................................... 7
3.08. Non-Contravention............................................ 7
3.09. Financial Statements; Undisclosed Liabilities................ 8
3.10. Absence of Certain Changes................................... 8
3.11. Properties; Leases; Tangible Assets.......................... 9
3.12. Affiliates................................................... 10
3.13. Inventories.................................................. 10
3.14. Litigation................................................... 10
3.15. Contracts.................................................... 11
3.16. Permits; Required Consents................................... 12
3.17. Compliance with Applicable Laws.............................. 12
3.18. Employment Agreements; Change in Control; and Employee
Benefits..................................................... 12
3.19. Labor and Employment Matters................................. 13
3.20. Intellectual Property........................................ 14
3.21. Advisory Fees................................................ 14
3.22. Environmental Compliance..................................... 14
3.23. Insurance.................................................... 15
3.24. Tax Matters.................................................. 15
3.25. Material Disclosures......................................... 16
3.26. Sufficiency of and Title to Assets........................... 16
3.27. Long-Term Debt............................................... 16
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF ATC AND BUYER.............. 17
4.01. Organization and Existence................................... 17
4.02. Corporate Authorization...................................... 17
4.03. Governmental Authorization................................... 17
4.04. Non-Contravention............................................ 17
4.05. Advisory Fees................................................ 17
4.06. Litigation................................................... 17
ARTICLE V. COVENANTS OF SHAREHOLDERS AND REPCO.......................... 17
5.01. Conduct of the Business; Distributions....................... 17
5.02. Access to Information........................................ 19
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5.03. Compliance with Terms of Required Governmental Approvals and
Required Contractual Consents................................ 20
5.04. Maintenance of Insurance Policies............................ 20
5.05. Confidentiality.............................................. 20
5.06. Transactions Affecting the Shares............................ 21
ARTICLE VI. COVENANTS OF BUYER........................................... 21
6.01. Confidentiality.............................................. 21
6.02. Access to Information........................................ 22
ARTICLE VII. COVENANTS OF ALL PARTIES..................................... 22
7.01. Further Assurances........................................... 22
7.02. Certain Filings.............................................. 22
7.03. Public Announcements......................................... 23
7.04. Administration of Accounts................................... 23
7.05. Taxes and Section 338(h)(10) Election........................ 23
ARTICLE VIII. CONDITIONS TO CLOSING........................................ 25
8.01. Conditions to Obligation of Buyer............................ 25
8.02. Conditions to Obligation of Shareholders..................... 27
ARTICLE IX. INDEMNIFICATION.............................................. 28
9.01. Agreement to Indemnify....................................... 28
9.02. Survival of Representation and Warranties.................... 29
9.03. Claims for Indemnification................................... 30
9.04. Defense of Claims............................................ 31
ARTICLE X. TERMINATION.................................................. 32
10.01. Grounds for Termination...................................... 32
10.02. Effect of Termination........................................ 33
10.03. Payment of Deposit........................................... 33
ARTICLE XI. MISCELLANEOUS................................................ 33
11.01. Notices...................................................... 33
11.02. Amendments; No Waivers....................................... 35
11.03. Expenses..................................................... 35
11.04. Successors and Assigns....................................... 35
11.05. Governing Law................................................ 35
11.06. Counterparts; Effectiveness.................................. 35
11.07. Entire Agreement............................................. 35
11.08. Captions..................................................... 35
11.09. Severability................................................. 36
11.10. Construction................................................. 36
11.11. Arbitration of Claims........................................ 36
11.12. Cumulative Remedies.......................................... 37
11.13. Third Party Beneficiaries.................................... 37
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DEFINED TERMS
"1996 Balance Sheet"................................Section 3.09...............8
"AAA Rules".....................................Section 11.11(a)..............36
"Allocation Statement"......................Section 7.05(b)(iii)..............24
"Annual Statements".................................Section 3.09...............8
"ATC"...................................................Preamble...............1
"BJW"...................................................Preamble...............1
"Business"..............................................Recitals...............1
"Buyer Indemnitees"..............................Section 9.01(a)..............28
"Buyer".................................................Preamble...............1
"Closing Date"...................................Section 2.02(a)...............6
"Closing"........................................Section 2.02(a)...............6
"CLW"...................................................Preamble...............1
"Common Stock"..........................................Recitals...............1
"Deposit Holder".................................Section 2.02(c)...............6
"Distributions"..................................Section 3.09(h)...............9
"Encumbrances"...................................Section 3.10(a)...............9
"Financial Statements"..............................Section 3.09...............8
"Insurance Policies"................................Section 3.23..............15
"Intellectual Property Rights"...................Section 3.20(a)..............14
"Interim Statements"................................Section 3.09...............8
"Leased Real Property"...........................Section 3.11(a)...............9
"Leases".........................................Section 3.10(b)...............9
"Outside Date"..................................Section 10.01(f)..............33
"Permits"........................................Section 3.15(a)..............12
"Personal Property Leases".......................Section 3.10(b)...............9
"Purchase Price"....................................Section 2.01...............5
"Real Property Leases"...........................Section 3.10(b)...............9
"Repco".................................................Preamble...............1
"Required Consents"..............................Section 3.15(b)..............12
"Required Contractual Consent"...................Section 3.15(b)..............12
"Required Governmental Approval".................Section 3.15(b)..............12
"RJW"...................................................Preamble...............1
"S corporation"..................................Section 3.23(k)..............16
"Scheduled Contracts"............................Section 3.14(a)..............11
"Section 338(h)(10) Elections"................Section 7.05(b)(i)..............23
"Share Encumbrances".............................Section 3.01(a)...............6
"Shareholder Indemnitees"........................Section 9.01(b)..............29
"Shareholders"..........................................Preamble...............1
"Shares"................................................Recitals...............1
"SJW"...................................................Preamble...............1
"Subsequent Material Contract"...............Section 5.01(b)(iv)..............18
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EXHIBITS
Exhibit A...................................Ownership of Shares..1, 6, 7, 24, 34
Exhibit B.....................................Annual Statements................8
Exhibit C..............................Noncompetition Agreement...............27
Exhibit D..........Opinion of Counsel to Repco and Shareholders...............27
Exhibit E.....................................San Antonio Lease...............27
Exhibit F.........................................Houston Lease...............27
Exhibit G.........................................Orlando Lease...............27
Exhibit H..........................................Dallas Lease...............27
Exhibit I................Opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP...............28
SCHEDULES
Schedule 1.01(a)................................Permitted Liens................4
Schedule 3.01(a).............................Share Encumbrances............6, 21
Schedule 3.02........................................Agreements............6, 21
Schedule 3.03......................Qualification to do Business................7
Schedule 3.06(b)........................Shares Held in Treasury................7
Schedule 3.07.......................Governmental Authorizations................7
Schedule 3.10........................Absence of Certain Changes................8
Schedule 3.11(a)...........................Leased Real Property................9
Schedule 3.11(b).......................Personal Property Leases................9
Schedule 3.11(c)............................Land-Use Regulation...............10
Schedule 3.12........................................Affiliates...............10
Schedule 3.13(i)....................................Inventories...............10
Schedule 3.14........................................Litigation...........10, 18
Schedule 3.15(a)............................Scheduled Contracts...............11
Schedule 3.15(b)................Non-Binding Scheduled Contracts...........11, 12
Schedule 3.15(c)................Primary Customers and Suppliers...............11
Schedule 3.16(a)........................................Permits...............12
Schedule 3.16(b)..............................Required Consents...............12
Schedule 3.17...................Compliance with Applicable Laws...........12, 19
Schedule 3.18(a).................Benefit Plans and Arrangements...............12
Schedule 3.18(f)...............................Accrued Benefits...............12
Schedule 3.19......................Labor and Employment Matters...............13
Schedule 3.20(a)..........................Intellectual Property...............14
Schedule 3.20(b).........Proceedings Applicable to Intellectual
Property...............14
Schedule 3.20(c)......Ownership of Intellectual Property Rights...............14
Schedule 3.22(a)..........................Environmental Permits...............14
Schedule 3.22(b).......................Environmental Compliance...............15
Schedule 3.22(c)..Continuing Compliance with Environmental Laws...............15
Schedule 3.23................................Insurance Policies...............15
Schedule 3.24(k)....................S Corporation Election Date...............16
Schedule 3.24.......................................Tax Matters...............15
Schedule 3.27....................................Long-Term Debt...............16
Schedule 5.01(b)(v)........................Capital Expenditures...............19
Schedule 5.01(b)(vii).............................Distributions...............19
Schedule 7.05(b)(iii).......Section 338(b)(10) Election Payable
Amount Calculation Example...............24
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") dated as of
January 31, 1997 is by and among S. ▇▇▇ ▇▇▇▇▇▇▇, an individual ("SJW"), ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, an individual ("RJW"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual ("BJW"),
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual ("CLW" and collectively with SJW, RJW and
BJW, "Shareholders" and individually, each a "Shareholder"), Replacement &
Exchange Parts Co., Inc., a Texas corporation ("Repco"), Aftermarket
Technology Corp., a Delaware corporation ("ATC"), and Repco Acquisition
Corp., a Delaware corporation ("Buyer").
R E C I T A L S
WHEREAS, Repco is engaged in the production, sourcing, distribution
and sale of automotive, light truck and heavy duty truck component parts (the
"Business");
WHEREAS, each Shareholder owns the number of the issued and
outstanding shares (collectively the "Shares") of Repco's Common Stock, $1.00
par value per share (the "Common Stock"), set forth opposite such
Shareholder's name on EXHIBIT A hereto, which Shares in the aggregate
represent all of the issued and outstanding shares of Repco's capital stock;
and
WHEREAS, Buyer, which is a wholly owned subsidiary of ATC, desires
to purchase and Shareholders desire to sell the Shares on the terms and
conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth,
the parties hereto agree as follows.
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. The following terms, as used herein, have the
following meanings:
"AFFILIATE" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such other Person. Without limiting the generality of the
foregoing, after the Closing Date the Affiliates of Buyer shall include Repco.
"APPLICABLE LAW" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule,
administrative interpretation, regulation, policy, guidance, order, writ,
injunction, directive, judgment, decree or other requirement of any
Governmental Authority applicable to such Person or any of its Affiliates or
Plan Affiliates or any of their respective properties, assets, officers,
directors, employees, consultants or agents (in connection with such
officer's, director's, employee's, consultant's or agent's activities on
behalf of such Person or any of its Affiliates or Plan Affiliates).
"ASSOCIATE" or "ASSOCIATED WITH" means, when used to indicate a
relationship with any Person, (a) any other Person of which such Person is an
officer or partner or is, directly or indirectly, the beneficial owner of ten
percent or more of any class of equity securities issued by such other
Person,
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(b) any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a
similar fiduciary capacity, and (c) any relative or spouse of such Person, or
any relative of such spouse who has the same home as such Person or who is a
director or officer of such Person or any Affiliate thereof.
"BENEFIT ARRANGEMENT" means any material benefit arrangement that
is not an Employee Benefit Plan, including, without limitation, (i) each
material employment or consulting agreement, (ii) each arrangement providing
for material insurance coverage for employees or workers' compensation
benefits, (iii) each material incentive bonus or deferred bonus arrangement,
(iv) each arrangement providing material termination allowance, severance or
similar benefits, (v) each material equity compensation plan, (vi) each
material deferred compensation plan and (vii) each material compensation
policy and practice maintained by Repco or any ERISA Affiliate of Repco
covering the employees, former employees, directors and former directors of
Repco and the beneficiaries of any of them.
"BENEFIT PLAN" means an Employee Benefit Plan or Benefit Arrangement.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day
on which commercial banks in Los Angeles, California are authorized or required
by law to close.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTRACTS" means all contracts, agreements, options, leases,
licenses, sales and purchase order, commitments and other instruments of any
kind, whether written or oral, to which Repco is a party on the Closing Date,
including the Scheduled Contracts and the Subsequent Material Contracts.
"DAMAGES" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments,
awards, fines, sanctions, penalties, charges and amounts paid in settlement
net of insurance proceeds actually received, including without limitation (i)
interest on cash disbursements in respect of any of the foregoing at the
Reference Rate in effect from time to time, compounded quarterly, from the
date each such cash disbursement is made until the Person incurring the same
shall have been indemnified in respect thereof and (ii) reasonable costs,
fees and expenses of attorneys, accountants and other agents of such Person.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan, as defined
in Section 3(3) of ERISA, that is sponsored or contributed to by Repco or any
ERISA Affiliate thereof covering employees or former employees of Repco.
"EMPLOYEE PENSION BENEFIT PLAN" means any employee pension benefit
plan, as defined in Section 3(2) of ERISA, that is subject to Title IV of
ERISA, including a Multiemployer Plan.
"ENVIRONMENTAL LAWS" means all Applicable Laws relating to toxic
torts, Hazardous Substances, occupational health and safety, or the
environment including, without limitation, (i) all requirements pertaining to
reporting, licensing, permitting, controlling, investigating or remediating
emissions, discharges, releases or threatened releases of Hazardous
Substances, chemical substances, pollutants, contaminants or toxic
substances, materials or wastes, whether solid, liquid or gaseous in nature,
into the air, surface water, groundwater or land, (ii) all requirements
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances, chemical
substances, pollutants, contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature; and (iii) the Resource
Conservation and Recovery Act ("RCRA"), the
2
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
the Clean Air Act, the Water Pollution Control Act, the Safe Drinking Water Act,
the Toxic Substance Control Act ("TSCA") and all requirements promulgated
pursuant to any of these or analogous state or local statutes.
"ENVIRONMENTAL LIABILITIES" means Liabilities of a Person that arise
under any Environmental Law.
"EQUIPMENT" means all machinery, equipment, furniture, office
equipment, communications equipment, vehicles, storage tanks, spare and
replacement parts, fuel and other tangible property (and interests in any of
the foregoing) of Repco.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" of any Person means any other Person that,
together with such Person as of the relevant measuring date under ERISA, was
or is required to be treated as a single employer under Section 414(b), (c),
(m) or (o) of the Code.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis.
"GOVERNMENTAL AUTHORITY" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory
organization, commission, tribunal or organization or any regulatory,
administrative or other agency, or any political or other subdivision,
department or branch of any of the foregoing.
"GROUP HEALTH PLAN" means any group health plan, as defined in
Section 5000(b)(1) of the Code.
"HAZARDOUS SUBSTANCE" means any substance or material: (i) the
presence of which in, at or about the air, surface water, groundwater, soil,
land, or any facility requires investigation or remediation under any
Environmental Law; or (ii) that is defined as a "hazardous waste" or
"hazardous substance" under any Environmental Law; or (iii) that is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic or
mutagenic or otherwise hazardous and is regulated by any Governmental
Authority having or asserting legal, regulatory, judicial, administrative or
other authority over Repco; or (iv) the presence of which causes a nuisance
or other tortious condition under any Applicable Law or any Environmental Law
to adjacent properties or poses a hazard to the health or safety of Persons;
or (v) the presence of which on adjacent properties constitutes a trespass or
other tortious condition by Repco; or (vi) without limitation, that contains
gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated
biphenols (PCBs) or asbestos.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"INDEMNIFYING PARTY" means: (1) Shareholders when any Buyer
Indemnitee is asserting a claim under Sections 9.01(a) or 11.11 or (2) Buyer
or ATC when any Shareholder Indemnitee is asserting a claim under Sections
9.01(b) or 11.11.
"INDEMNITEE" means: (1) each of ATC, Buyer and their Affiliates
with respect to any claim for which any Shareholder is an Indemnifying Party
under Sections 9.01(a) or 11.11; or
3
(2) Shareholders and their Affiliates with respect to claims for which ATC or
Buyer is an Indemnifying Party under Sections 9.01(b) or 11.11.
"INVENTORY" means all items of inventory notwithstanding how
classified in the financial records of Repco, including all raw materials,
work-in-process, finished goods, supplies, spare parts, samples, cores and
stores of Repco.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" means, with respect to any corporation, all things
known to the executive officers of such corporation.
"LIABILITY" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether
known or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, whether
or not the same is required to be accrued on the financial statements of such
Person and whether or not the same is disclosed on any schedule to this
Agreement.
"LIEN" means, with respect to any asset, any mortgage, title defect
or objection, lien, pledge, charge, security interest, hypothecation,
restriction, encumbrance or charge of any kind in respect of such asset.
"MATERIAL ADVERSE EFFECT" means a change in, or effect on, the
operations, affairs, prospects, financial condition, results of operations,
assets, Liabilities, reserves or any other aspect of Repco or the Business
that results in a material adverse effect on, or a material adverse change
in, Repco or the Business taken as a whole.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
Section 3(37) and 4001(a)(3) of ERISA.
"PERMITTED LIENS" means (i) Liens for Taxes or governmental
assessments, charges or claims the payment of which is not yet due; (ii)
statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and other similar Persons and other Liens imposed by Applicable
Law incurred in the ordinary course of business for sums not yet delinquent;
(iii) Liens relating to deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types
of social security or to secure the performance of leases, trade contracts or
other similar agreements; (iv) Liens securing executory obligations under any
Lease that constitutes an "operating lease" under GAAP; and (v) other Liens
set forth on SCHEDULE 1.01(a) hereto; PROVIDED, HOWEVER, that, with respect
to each of clauses (i) through (v), to the extent that any such Encumbrance
or Lien arose prior to the date of the 1996 Balance Sheet and relates to, or
secures the payment of, a Liability that is required to be accrued under
GAAP, such Encumbrance or Lien shall not be a Permitted Lien unless adequate
accruals for such Liability have been established therefor on such 1996
Balance Sheet in conformity with GAAP. Notwithstanding the foregoing, no
Lien arising under the Code or ERISA with respect to the operation,
termination, restoration or funding of any Benefit Plan sponsored by,
maintained by or contributed to by Repco or any of its ERISA Affiliates or
arising in connection with any excise tax or penalty tax with respect to such
Benefit Plan shall be a Permitted Lien.
4
"PERSON" means an individual, corporation, partnership, association,
trust, estate or other entity or organization, including a Governmental
Authority.
"PLAN AFFILIATE" means, with respect to any Person, any Benefit
Plan sponsored by, maintained by or contributed to by such Person, and with
respect to any Benefit Plan, any Person sponsoring, maintaining or
contributing to such Benefit Plan.
"PROCEEDINGS" means any action, suit, hearing, arbitration,
proceeding (public or private) or governmental investigation that is brought
by or against any Governmental Authority or any other Person.
"PROHIBITED TRANSACTION" means a transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA, respectively.
"REFERENCE RATE" means the per annum rate of interest publicly
announced from time to time by Bank of America, N.T. & S.A. as its prime rate
(or reference rate). Any change in the Reference Rate shall take effect at
the opening of business on the day specified in the public announcement of
such change.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation
as to which more than 10% of the outstanding stock having ordinary voting
rights or power (and excluding stock having voting rights only upon the
occurrence of a contingency unless and until such contingency occurs and such
rights may be exercised) is owned or controlled, directly or indirectly, by
such Person and/or by one or more of such Person's Subsidiaries, and (ii) any
partnership, joint venture or other similar relationship between such Person
(or any Subsidiary thereof) and any other Person (whether pursuant to a
written agreement or otherwise).
"TAX" means all taxes imposed of any nature including federal,
state, local or foreign net income tax, alternative or add-on minimum tax,
profits or excess profits tax, franchise tax, gross income, adjusted gross
income or gross receipts tax, employment related tax (including employee
withholding or employer payroll tax, FICA or FUTA), real or personal property
tax or ad valorem tax, sales or use tax, excise tax, stamp tax or duty, any
withholding or back up withholding tax, value added tax, severance tax,
prohibited transaction tax, premiums tax, occupation tax, together with any
interest or any penalty, addition to tax or additional amount imposed by any
governmental authority (domestic or foreign) responsible for the imposition
of any such tax.
"TAX RETURN" means all returns, reports, forms or other information
required to be filed with respect to any Tax.
ARTICLE II
PURCHASE AND SALE
2.01 PURCHASE OF SHARES FROM SHAREHOLDERS. On the terms and subject
to the conditions set forth herein, at the Closing each Shareholder shall sell,
transfer, convey, assign and deliver to Buyer, free and clear of all Share
Encumbrances, and Buyer shall purchase, acquire and accept from each
Shareholder, all the Shares owned by such Shareholder. At the Closing, each
Shareholder shall deliver to Buyer certificates evidencing the Shares owned by
such Shareholder duly endorsed for transfer and such other instruments as may
be reasonably requested by Buyer to transfer full legal and beneficial
5
ownership of the Shares to Buyer, free and clear of all Share Encumbrances.
Buyer shall pay $9,250,000 (the "Purchase Price") for the Shares in
accordance with the terms of Section 2.02.
2.02 CLOSING.
(a) The closing (the "Closing") of the transactions contemplated
by this Agreement shall take place at the offices of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ on the date on which
the last of the conditions to Closing set forth in Sections 8.01 and 8.02 have
been satisfied or waived by the party or parties entitled to waive the same or
such other date as to which Buyer and Shareholders may agree (the "Closing
Date"); PROVIDED, HOWEVER, that, as provided in Section 10.01(f), Shareholders
or Buyer may terminate this Agreement if the Closing shall not have been
consummated by the Outside Date.
(b) At the Closing, Buyer shall pay the Purchase Price, other
than the portion thereof paid pursuant to Section 2.02(c), to Shareholders in
cash by wire transfer of immediately available funds to a bank account or
bank accounts designated in writing by Shareholders. The payment shall be
allocated among Shareholders as set forth in EXHIBIT A, taking into account
the portion of the Purchase Price paid to SJW pursuant to Section 2.02(c).
(c) Prior to the date hereof, Buyer has deposited with ▇▇▇▇▇,
▇▇▇▇▇▇ & Gross, P.C., counsel to Repco (the "Deposit Holder"), cash in the
amount of $50,000. At the Closing, the parties shall cause Deposit Holder to
pay the $50,000 in cash to SJW by wire transfer. Such payment shall,
together with the payment called for by Section 2.02(b), constitute payment
in full of the Purchase Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, Repco and Shareholders jointly
and severally represent and warrant to Buyer as follows:
3.01 REPRESENTATIONS REGARDING THE SHARES.
(a) Each Shareholder has good and marketable title to the Shares
that are to be transferred to Buyer by such Shareholder pursuant hereto as set
forth in EXHIBIT A free and clear of any and all covenants, conditions,
restrictions, voting trust arrangements, rights of first refusal, options, Liens
and adverse claims or rights whatsoever (collectively, "Share Encumbrances"),
except as set forth in SCHEDULE 3.01(a).
(b) Each Shareholder has the full right, power and authority
to enter into this Agreement and to transfer, convey and sell to Buyer at the
Closing the Shares to be sold to Buyer by such Shareholder hereunder, and
upon consummation of the purchase contemplated hereby, Buyer will acquire
from such Shareholder good and marketable title to the Shares to be sold to
Buyer by such Shareholder, free and clear of all Share Encumbrances
(including without limitation those set forth in SCHEDULE 3.01(a)).
3.02 SHAREHOLDER PROHIBITIONS. No Shareholder is a party to,
subject to or bound by any judgment, order, writ, prohibition, injunction or
decree of any court or other governmental body, or,
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except as set forth on SCHEDULE 3.02, any agreement, that would prevent the
execution or delivery of this Agreement by such Shareholder to Buyer or the
transfer, conveyance and sale of the Shares to be sold by such Shareholder to
Buyer pursuant to the terms hereof.
3.03 CORPORATE EXISTENCE AND POWER. Repco is a corporation duly
organized and validly existing and in good standing under the laws of the
state of its incorporation, and has all corporate power and all governmental
licenses, authorizations, consents and approvals required to carry on the
Business as now conducted and to own and operate its assets as now owned and
operated except where, in the aggregate, the failure to have such licenses,
authorizations, consents and approvals would not have a Material Adverse
Effect. Repco is not required to be qualified to conduct the Business in any
state other than Florida. Except as set forth in SCHEDULE 3.03, Repco is
duly qualified to do business and is in good standing in the state of Florida.
3.04 AUTHORIZATION. The execution, delivery and performance by
Repco and Shareholders of this Agreement and the consummation thereby of the
transactions contemplated hereby are within each of Repco's and Shareholders'
powers and have been duly authorized by all necessary corporate action on the
part of Repco. This Agreement has been duly and validly executed by Repco
and Shareholders and constitutes the legal, valid and binding agreement of
Repco and Shareholders, enforceable against each of them in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and subject to general principles of equity.
3.05 SUBSIDIARIES. Repco does not have any Subsidiaries.
3.06 CAPITAL STOCK.
(a) The authorized capital stock of Repco consists solely of
100,000 shares of Common Stock, 10,520 shares of which are issued and
outstanding on the date hereof.
(b) All such issued and outstanding shares of Common Stock
have been validly authorized and issued and are validly outstanding, fully
paid and nonassessable. The Shares represent all of the issued and
outstanding shares of Repco's capital stock and are held as set forth on
EXHIBIT A. Except as set forth in SCHEDULE 3.06(b), Repco does not hold any
of the issued and outstanding shares of Common Stock in the treasury of
Repco, and there are not, and on the Closing Date there will not be,
outstanding (i) any options, warrants or other rights to purchase from Repco
or any of the Shareholders any capital stock of Repco, (ii) any securities
convertible into or exchangeable for shares of such stock or (iii) any other
commitments of any kind for the issuance of additional shares of capital
stock or options, warrants or other securities of Repco.
3.07 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Repco and Shareholders of this Agreement require no action by,
consent or approval of, or filing with, any Governmental Authority other than
any actions, consents, approvals or filings (i) otherwise expressly referred
to in this Agreement, (ii) set forth on SCHEDULE 3.07 OR 3.16(b) or (iii) the
failure of which to perform, obtain or make would not have a Material Adverse
Effect or make the consummation of the transactions contemplated hereby
unduly burdensome or illegal. To the Knowledge of Repco and Shareholders,
there are no facts relating to the identity or circumstances of Repco or
Shareholders that would prevent or materially delay obtaining any of the
Required Consents.
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3.08 NON-CONTRAVENTION. The execution, delivery and performance by
Repco and Shareholders of this Agreement do not and will not (a) contravene
or conflict with the Articles of Incorporation or Bylaws of Repco, true and
correct copies of which have been delivered to Buyer by Repco, (b) assuming
receipt of the Required Consents, contravene or conflict with or constitute a
violation of any provision of any Applicable Law binding upon or applicable
to Repco, Shareholders, the Business or the Shares, (c) assuming receipt of
the Required Consents, constitute a default under or give rise to any right
of termination, cancellation or acceleration of, or to a loss of any benefit
to which Repco is entitled, under any material Contract or any Permit or
similar authorization relating to Repco, the Business or the Shares by which
Repco, the Business or the Shares may be bound, or (d) result in the creation
or imposition of any Lien on any assets of Repco, other than Permitted Liens,
or any Share Encumbrance.
3.09 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Attached
hereto as EXHIBIT B are true and complete copies of the balance sheet and
related statement of operations and retained earnings for Repco for the
fiscal years ended June 30, 1994, 1995 and 1996 (the "Annual Statements") and
the balance sheets and statements of operations for each of July, August,
September and October of 1996 (collectively, the "Interim Statements" and,
together with the Annual Statements, the "Financial Statements"). The June
30, 1996 balance sheet is referred to herein as the "1996 Balance Sheet."
Each of the Financial Statements (i) has been prepared based on the books and
records of Repco in accordance with GAAP (except for the omission of footnote
disclosure required by GAAP in the case of Interim Financials and except that
the Interim Financials omit and are subject to normal year-end accruals) and
Repco's normal accounting practices, consistent with past practice and with
each other, and present fairly the financial condition and results of
operations of Repco as of the dates or periods indicated.
3.10 ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE
3.10, since the date of the 1996 Balance Sheet, the Business has been
conducted in the ordinary course, and there has not been:
(a) any event, occurrence, development or state of
circumstances or facts or change in Repco or the Business (including any
damage, destruction or other casualty loss (but excluding any event,
occurrence, development or state of circumstances or facts or change
resulting from changes in general economic conditions or the conduct of the
business of any third party)) affecting Repco or the Business that has had or
that may be reasonably expected to have, either alone or together with all
such events, occurrences, developments, states of circumstances or facts or
changes, a Material Adverse Effect;
(b) (i) any incurrence, assumption or guarantee of any
indebtedness for borrowed money by Repco, (ii) any incurrence of any
Liability relating to a documentary or standby letter of credit by Repco or
(iii) any change in any Liability other than in the ordinary course of
business, or (iv) any incurrence of any other Liability by Repco, other than
in the ordinary course of business;
(c) any creation, assumption or sufferance of the existence
of any Lien on any of Repco's assets, other than Permitted Liens;
(d) any transaction or commitment made, or any Contract
entered into, by Repco, or any waiver, amendment, termination or cancellation
of any Contract by Repco, or any relinquishment of any rights thereunder by
Repco, or of any other right or debt owed to Repco, other than in each such
case actions taken in the ordinary course of business consistent with past
practice;
8
(e) except for actions taken in the ordinary course of
business consistent with the past practice of Repco that are not, in the
aggregate, material, any (i) grant of any severance, continuation or
termination pay to any director, officer, stockholder or employee of Repco or
any Associate of any of the foregoing, (ii) entering into of any employment,
deferred compensation or other similar agreement (or any amendment to any
such existing agreement) with any director, officer, stockholder or employee
of Repco or any Associate of any of the foregoing, (iii) increase in benefits
payable or potentially payable under any severance, continuation or
termination pay policies or employment agreements with any director, officer,
stockholder or employee of Repco or any Associate of any of the foregoing,
(iv) increase in compensation, bonus or other benefits payable or potentially
payable to directors, officers, stockholders or employees of Repco or any
Associate of any of the foregoing, (v) change in the terms of any bonus,
pension, insurance, health or other Benefit Plan of Repco, or (vi)
representation of Repco to any employee or former employee of Repco that
Buyer would assume, continue to maintain or implement any Benefit Plan after
the Closing Date;
(f) any loan to or guarantee or assumption of any loan or
obligation on behalf of any stockholder, director, officer or employee of
Repco or to any Associate of any of the foregoing, except travel advances
occurring in the ordinary course of business consistent with past practice;
(g) any material change by Repco in its accounting
principles, methods or practices or in the manner it keeps its books and
records or any material change by Repco of its current practices with regards
to sales, receivables, payables or accrued expenses that would affect the
timing of collection of receivables or the payment of payables;
(h) any distribution, dividend, bonus or other payment by
Repco to any officer, director, stockholder or Affiliate of Repco or any of
their respective Affiliates or Associates, (collectively, "Distributions");
(i) the entering into of any Contract or other arrangement
between Repco and any officer, director, stockholder or Affiliate of Repco of
any of their respective Affiliates or Associates; or
(j) any payment, discharge or satisfaction of any Liabilities
of Repco, other than payments, discharges or satisfactions in the ordinary
course of business.
3.11 PROPERTIES; LEASES; TANGIBLE ASSETS.
(a) Repco does not own any real property and does not have a
leasehold interest in any real property other than the real property
identified on SCHEDULE 3.11(a) (the "Leased Real Property"), which
constitutes all of the real property used in the Business. Repco has a good
and valid leasehold interest in the Leased Real Property and the property
subject to the Personal Property Leases and has good and valid title to its
other tangible assets. Repco holds title to each such property and asset
free and clear of all Liens, adverse claims, easements, rights of way,
servitudes, zoning or building restrictions, or any other rights of others or
other adverse interests of any kind, including chattel mortgages, conditional
sales contracts, collateral security arrangements and other title or interest
retention arrangements (collectively, "Encumbrances"), except the Leases and
Permitted Liens.
(b) SCHEDULE 3.11(b) sets forth a true and complete list of
all personal property leases or licenses (i) to which Repco is a party or by
which Repco is bound and (ii) that provide
9
for annual payments by Repco in excess of $10,000 or that contain other
affirmative material obligations that cannot be terminated by Repco within 30
days (the "Personal Property Leases") and all leases or licenses of Leased
Real Property that provide for annual payments by Repco in excess of $10,000
or that cannot be terminated by Repco within 30 days (the "Real Property
Leases" and collectively with the Personal Property Leases, the "Leases")
entered into in connection with the Business. With respect to the Leases,
except as set forth on SCHEDULE 3.11(b), there exist no defaults by Repco,
or, to the Knowledge of Repco or Shareholders, any default or threatened
default by any lessor or third party thereunder, that has affected or could
reasonably be expected to materially affect the rights and privileges
thereunder of Repco. Assuming the Required Consents are obtained, all Leases
may be assigned, transferred and conveyed to Buyer without default, penalty
or modification thereof.
(c) Except as disclosed in SCHEDULE 3.11(c) or SCHEDULE
3.22(c), Repco has not received notice of any pending zoning or other
land-use regulation proceedings or any proposed change in any Applicable Laws
that could reasonably be expected to detrimentally affect the use or
operation of any Leased Real Property, nor has Repco received notice of any
special assessment proceedings affecting the Leased Real Property, or applied
for any change to the zoning or land use status of the Leased Real Property.
3.12 AFFILIATES. Except as set forth in SCHEDULE 3.12, no
Shareholder, Affiliate of Repco or any officer or director of Repco (or any
immediate family member of any such Shareholder, officer or director):
(a) now has or at any time subsequent to December 31, 1993,
had, either directly or indirectly, an equity or debt interest in any Person
which furnishes or sells or during such period furnished or sold services or
products to Repco or purchases or during such period purchased from Repco any
goods or services, or otherwise does or during such period did business with
Repco of a material nature or amount; PROVIDED, HOWEVER, that no Shareholder
nor any of Repco's officers and directors or other Affiliates shall be deemed
to have such an interest solely by virtue of the ownership of less than five
percent of the outstanding voting stock or debt securities of any publicly
held company, the stock or debt securities of which are traded on a national
stock exchange or quoted on the National Association of Securities Dealers
Automated Quotation System; or
(b) now is or at any time subsequent to December 31, 1993,
was, a party to any contract, commitment or agreement to which Repco is or
during such period was a party or under which Repco is or was obligated or
bound or to which any of its properties may be or may have been subject.
3.13 INVENTORIES. Subject to any reserve therefor that is included
in the 1996 Balance Sheet and except as disclosed in SCHEDULE 3.13(i); all
Inventories of Repco (a) have been acquired or manufactured in the ordinary
course of business, in accordance with Repco's normal inventory practices;
(b) are of a quality usable (including processing into merchantable finished
inventories for sale in the ordinary course of business), free of any
material defect or deficiency; (c) are in merchantable and undamaged
condition and meet customer specifications; and (d) are not obsolete.
3.14 LITIGATION. Except as disclosed on SCHEDULE 3.14, (i) there
are no Proceedings (x) pending against Repco, Shareholders or the Shares, (y)
to the Knowledge of Repco or Shareholders, pending against any Person (other
than Repco or Shareholders) affecting Repco, Shareholders, the Shares or the
Business or which seek to enjoin or rescind the transactions contemplated by
this Agreement or otherwise prevent Repco or Shareholders from complying with
the terms and provisions of this
10
Agreement, or (z) to the Knowledge of Repco or Shareholders, threatened against
any Person (including Repco or Shareholders) affecting Repco, the Business,
Shareholders or the Shares or which seek to enjoin or rescind the transactions
contemplated by this Agreement or otherwise prevent Repco or Shareholders from
complying with the terms and provisions of this Agreement; and (ii) there are
no existing orders, judgments or decrees of any Governmental Authority affecting
any of Repco, the Business, Shareholders or the Shares.
3.15 CONTRACTS.
(a) SCHEDULE 3.15(a) sets forth a complete list of the
following contracts, commitments and obligations (whether written or oral) of
Repco (collectively with the Leases and the Employment Agreements, the
"Scheduled Contracts"):
(i) each Contract between Repco and (A) each present or
former director, officer or other member of management or other personnel of
Repco, (B) any supplier of services or products to Repco whose dollar volume
of sales to Repco exceeded $10,000 in the fiscal year ended June 30, 1996 or
is expected to exceed $10,000 in the fiscal year ending June 30, 1997, and
(C) any Person in which the aggregate payments made to Repco under such
Contract exceeded $10,000 in the fiscal year ended June 30, 1996 or is
expected to exceed $10,000 in the fiscal year ending June 30, 1997;
(ii) each other agreement or arrangement of Repco that (y)
requires the payment or incurrence of Liabilities or the rendering of
services by Repco, subsequent to the date of this Agreement of more than
$10,000 and (z) cannot be terminated by Repco within 30 days;
(iii) all Contracts relating to, and evidences of or
guarantees of, or providing security for, indebtedness for borrowed money or
the deferred purchase price of property (whether incurred, assumed,
guaranteed or secured by any asset);
(iv) all partnership, joint venture or other similar
Contracts, arrangements or agreements;
(v) to the extent that any of the following provide for
annual payments by Repco in excess of $10,000 and cannot be terminated by
Repco within 30 days, all license, distribution, commission, marketing,
agent, franchise, technical assistance or similar agreements relating to or
providing for the marketing and/or sale of the products or services to which
Repco is a party or by which Repco is otherwise bound; and
(vi) all other contracts, commitments and obligations that
are not in the ordinary course of the Business.
(b) Except as disclosed in SCHEDULE 3.15(b), each Scheduled
Contract and Subsequent Material Contract is a legal, valid and binding
obligation of Repco and, to the Knowledge of Repco and Shareholders, each
other party thereto, enforceable (except to the extent such enforceability
may be limited by bankruptcy, equity and creditors' rights generally) against
Repco and, to the Knowledge of Repco and Shareholders, each such other party
in accordance with its terms, and neither Repco nor, to the Knowledge of
Repco and Shareholders, any other party thereto is in material default or has
failed to perform any material obligation thereunder. Complete and correct
copies of each Scheduled Contract have been delivered to Buyer.
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(c) SCHEDULE 3.15(c) shall be delivered to Buyer at the
Closing, and shall set forth a list (by name, address and persons to contact)
of the 10 largest customers of and the five primary vendors providing
services to Repco for each of the fiscal years ended June 30, 1996 and the
three-month period ended December 31, 1996 together with the approximate
dollar amount of sales or services provided to Repco during said periods and
a summary description of the services provided by such vendors.
3.16 PERMITS; REQUIRED CONSENTS.
(a) SCHEDULE 3.16(a) sets forth all material approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of all Governmental Authorities and all other Persons
necessary for the operation of the Business or Repco's assets or affecting or
relating in any way to the Business or such assets (the "Permits").
(b) SCHEDULE 3.16(b) lists (i) each governmental or other
registration, filing, application, notice, transfer, consent, approval,
order, qualification and waiver (each, a "Required Governmental Approval")
required under Applicable Law to be obtained by Repco or Shareholders by
virtue of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby to avoid the loss of any material Permit
or otherwise, and (ii) each Scheduled Contract with respect to which the
consent of the other party or parties thereto must be obtained by Repco or
Shareholders by virtue of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby to avoid the invalidity
of the transfer of such Contract, the termination thereof, a breach or
default thereunder or any other change or modification to the terms thereof
(each, a "Required Contractual Consent" and collectively with the Required
Governmental Approvals, the "Required Consents"). Except as set forth in
SCHEDULE 3.16(a) OR (b), each Permit is valid and in full force and effect in
all material respects and, assuming the related Required Consents have been
obtained prior to the Closing Date, none of the Permits will be terminated or
become terminable or impaired in any material respect as a result of the
transactions contemplated hereby.
3.17 COMPLIANCE WITH APPLICABLE LAWS. Except as set forth in
SCHEDULE 3.17, the operation of the Business has not violated or infringed,
and does not violate or infringe, any material Applicable Law, or any order,
writ, injunction or decree of any Governmental Authority.
3.18 EMPLOYMENT AGREEMENTS; CHANGE IN CONTROL; AND EMPLOYEE BENEFITS.
(a) SCHEDULE 3.18(a) sets forth all Benefit Plans and Benefit
Arrangements of Repco used in connection with the Business. Repco has made
true and correct copies of all governing instruments and related agreements
pertaining to such Benefit Plans and Benefit Arrangements available to Buyer.
Repco has made available to Buyer a copy of the three (3) most recently
filed Federal Form 5500 series and accountant's opinion, if applicable, for
each Employee Benefit Plan.
(b) Neither Repco nor any ERISA Affiliates of Repco sponsors
or has ever sponsored, maintained, contributed to, or incurred an obligation
to contribute to, any Employee Pension Benefit Plan.
(c) Except as set forth in SCHEDULE 3.18(f), no individual
shall accrue or receive additional benefits, service or accelerated rights to
payments of benefits under any Benefit Plan, including the right to receive
any parachute payment, as defined in Section 280G of the Code, or become
12
entitled to severance, termination allowance or similar payments as a direct
result of the transactions contemplated by this Agreement.
(d) No Employee Benefit Plan has participated in, engaged in
or been a party to any non-exempt Prohibited Transaction, and neither Repco
nor any ERISA Affiliates of Repco has had asserted against it any claim for
taxes under Chapter 43 of Subtitle D of the Code and Sections 5000 of the
Code, or for penalties under ERISA Section 502(c), (i) or (l), with respect
to any Employee Benefit Plan nor, to the Knowledge of Repco or Shareholders,
is there a basis for any such claim. No officer, director or employee of
Repco has committed a material breach of any responsibility or obligation
imposed upon fiduciaries by Title I of ERISA with respect to any Employee
Benefit Plan.
(e) Other than routine claims for benefits, there is no claim
pending or to the Knowledge of Repco threatened, involving any Benefit Plan
by any Person against such plan or Repco or any ERISA Affiliate. There is no
pending or to the Knowledge of Repco or Shareholders threatened proceeding
involving any Employee Benefit Plan before the IRS, the United States
Department of Labor or any other Governmental Authority.
(f) Except as set forth on SCHEDULE 3.18(f), each Benefit
Plan has at all times prior hereto been maintained in all material respects,
by its terms and in operation, in accordance with ERISA and the Code
including, but not limited to, all applicable reporting and disclosure
requirements. Repco and each ERISA Affiliate have made full and timely
payment of all amounts required to be contributed under the terms of each
Benefit Plan and Applicable Law or required to be paid as expenses under such
Benefit Plan, and Repco and each ERISA Affiliate shall continue to do so
through the Closing.
(g) With respect to any Group Health Plans maintained by
Repco or its ERISA Affiliate, whether or not for the benefit of Repco and its
ERISA Affiliate, Repco and its ERISA Affiliates have complied in all material
respects with the provisions of Part 6 of Title I of ERISA and Section 4980B
of the Code. Repco is not obligated to provide health care benefits of any
kind to its retired employees pursuant to any Employee Benefit Plan,
including without limitation any Group Health Plan, or pursuant to any
agreement or understanding.
3.19 LABOR AND EMPLOYMENT MATTERS.
(a) Except as set forth on SCHEDULE 3.19, no collective
bargaining agreement exists that is binding on Repco and, except as described
on SCHEDULE 3.19, no petition has been filed or proceedings instituted by an
employee or group of employees with any labor relations board seeking
recognition of a bargaining representative. SCHEDULE 3.19 describes any
organizational effort currently being made or, to the Knowledge of Repco or
Shareholders, threatened by or on behalf of any labor union to organize any
employees of Repco.
(b) Except as set forth on SCHEDULE 3.19, (i) there is no
labor strike, dispute, slow down or stoppage pending or, to the Knowledge of
Repco or Shareholders, threatened against or directly affecting the Business,
(ii) no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is pending, and no claims therefor exist; and
(iii) neither Repco nor Shareholders, nor any of their Affiliates has
received any notice or has any Knowledge of any threatened labor or civil
rights dispute, controversy or grievance or any other unfair labor practice
proceeding or breach of contract claim or action with respect to claims of,
or obligations to, any employee or group of employees of Repco.
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(c) Repco and its Affiliates have complied and are currently
complying, in all material respects, in respect of all employees of Repco,
with all Applicable Laws respecting employment and employment practices and
the protection of the health and safety of employees, from whatever source
such law may be derived, including, without limitation, statutes, ordinances,
laws, rules, regulations, policies, standards, judicial or administrative
precedents, judgments, orders, decrees, awards, citations, licenses, official
interpretations and guidelines.
(d) All individuals who are performing or have performed
services for Repco, or any Affiliate thereof and are or were classified by
Repco or any Affiliate as "independent contractors" qualify for such
classification under Section 530 of the Revenue Act of 1978 or Section 1706
of the Tax Reform Act of 1986, as applicable, except for such instances which
are not, in the aggregate, material.
3.20 INTELLECTUAL PROPERTY.
(a) SCHEDULE 3.20(a) sets forth a complete and correct list
of each patent, patent application and docketed invention, trademark, trade
name, trademark or tradename registration or application, copyright or
copyright registration or application for copyright registration, and each
license or licensing agreement for any of the foregoing relating to the
Business or held by Repco (the "Intellectual Property Rights").
(b) Except as disclosed in SCHEDULE 3.20(b), Repco has not
during the three years preceding the date of this Agreement been a party to
any Proceeding, nor to the Knowledge of Repco or Shareholders is any
Proceeding threatened as to which there is a reasonable possibility of a
determination adverse to Repco that involved or may involve a claim of
infringement by any Person (including any Governmental Authority) of any
Intellectual Property Right. Except as disclosed in SCHEDULE 3.20(b), no
Intellectual Property Right is subject to any outstanding order, judgment,
decree, stipulation or agreement restricting the use thereof by Repco, or
restricting the licensing thereof by Repco to any Person. The use of the
Intellectual Property Rights does not conflict with, infringe upon or violate
any patent, patent license, patent application, trademark, tradename,
trademark or tradename registration, copyright, copyright registration,
service ▇▇▇▇, brand ▇▇▇▇ or brand name or any pending application relating
thereto, or any trade secret, know-how, programs or processes, or any similar
rights, of any Person.
(c) Except as set forth in SCHEDULE 3.20(c), Repco either
owns the entire right, title and interest in, to and under, or has acquired
in connection with the acquisition of Equipment or Inventory an express or
implied license to use, any and all inventions, processes, computer programs,
know-how, formulae, trade secrets, patents, chip designs, mask works,
trademarks, tradenames, brand names and copyrights which are necessary for
the conduct of the Business in the manner that the Business has heretofore
been conducted. No other inventions, processes, computer programs, know-how,
formulae, trade secrets, patents, chip designs, mask works, trademarks,
tradenames, brand names, copyrights, licenses or applications for any of the
foregoing are necessary for the unimpaired continued operation of the
Business in the manner that the Business has heretofore been conducted.
3.21 ADVISORY FEES. There is no investment banker, broker, finder
or other intermediary or advisor that has been retained by or is authorized
to act on behalf of Repco, Shareholders or their Affiliates who might be
entitled to any fee, commission or reimbursement of expenses from Buyer or
any of its Affiliates or any of their respective Associates upon consummation
of the transactions contemplated by this Agreement.
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3.22 ENVIRONMENTAL COMPLIANCE.
(a) Except as disclosed in SCHEDULE 3.22(a), Repco has
obtained all approvals, authorizations, certificates, consents, licenses,
orders and permits or other similar authorizations of all Governmental
Authorities, or from any other Person, that are required under any
Environmental Law. SCHEDULE 3.22(a) sets forth all permits, licenses and
other authorizations issued under any Environmental Law to Repco.
(b) Except as disclosed in SCHEDULE 3.22(b), Repco is in
compliance in all respects with all terms and conditions of all approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of all Governmental Authorities (and all other
Persons) required under all Environmental Laws and is also in compliance in
all respects with all other limitations, restrictions, conditions, standards,
requirements, schedules and timetables required or imposed under all
Environmental Laws.
(c) Except as disclosed in SCHEDULE 3.22(c), Shareholders
know of no past or present events, conditions, circumstances, activities,
practices, incidents, actions, omissions or plans relating to or in any way
affecting Repco or the Business that could reasonably be expected to prevent,
or make more expensive, continued compliance with any Environmental Law by
Buyer or Repco after the Closing, or that may give rise to any Environmental
Liability, or otherwise form the basis of any claim, action, demand, suit,
Proceeding, hearing, study or investigation (i) under any Environmental Law,
(ii) based on or related to the manufacture, processing, distribution, use,
treatment, storage (including without limitation underground storage tanks),
disposal, transport or handling, or the emission, discharge, release or
threatened release of any Hazardous Substance, or (iii) resulting from
exposure to workplace hazards.
3.23 INSURANCE. SCHEDULE 3.23 sets forth a complete and correct
list of all material insurance policies of any kind currently in force with
respect to Repco (the "Insurance Policies"), including all "occurrence based"
liability policies regardless of the periods to which they relate. SCHEDULE
3.23 sets forth for each Insurance Policy the type of coverage, the name of
the insureds, the insurer, the premium, the expiration date, the period to
which it relates, the deductibles and loss retention amounts and the amounts
of coverage. The Insurance Policies insure Repco and the Business in
reasonably sufficient amounts against all risks usually insured against by
Persons operating similar businesses or properties in comparable localities.
3.24 TAX MATTERS. Except as set forth on SCHEDULE 3.24:
(a) Repco has timely filed all Tax Returns required to have
been filed by it, and has paid or accrued all Taxes due to any taxing
authority (whether or not shown on any Tax Return) with respect to all
taxable periods ending on or prior to the Closing Date, or otherwise
attributable to all periods prior to the Closing Date; and all such Tax
Returns are true, correct and complete in all respects. Repco is not
currently the beneficiary of any extension of time within which to file any
Tax Return.
(b) Repco has not received notice that the IRS or any other
taxing authority has asserted against Repco any deficiency in Taxes or claim
for additional Taxes in connection with any tax period. Except for liens
arising from Taxes which are due but not yet payable, there are no liens for
Taxes on any of Repco' assets.
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(c) Repco is not a party to an agreement extending the time
within which to file any Tax Return or extending the statute of limitations
for any period with respect to any Tax to which Repco may be subject. No
claim has ever been made by any Taxing Authority in a jurisdiction in which
Repco does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction.
(d) Repco has withheld and paid over all Taxes required to
have been withheld and paid over in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder, or other third
party;
(e) Repco has not been included in any consolidated, combined
or unitary Tax Return provided for under the laws of the United States, any
state or locality with respect to Taxes for any taxable period for which the
statute of limitations has not expired.
(f) Repco has not made any payments, is not obligated to make
any payments, and is not a party to any agreement that under certain
circumstances could require it to make any payments, that are not deductible
under Section 280G of the Code.
(g) None of the assets of Repco constitutes tax-exempt bond
financed property or tax-exempt use property, with the meaning of Section 168
of the Code. Repco is not a party to any "safe harbor lease" that is subject
to the provisions of Section 168(f)(8) of the Internal Revenue Code as in
effect prior to the Tax Reform Act of 1986.
(h) Repco is not a party to any joint venture, partnership or
other arrangement that is treated as a partnership for federal income Tax
purposes.
(i) Repco does not have any liability for Taxes of any person
(1) under Section 1.1502-6 of the Treasury Regulations (or any similar
provision of state, local or foreign law), (2) as a transferee or successor,
(3) by contract or (4) otherwise.
(j) Repco is not a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during any
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(k) Repco made and continues to have in effect a valid and
timely election to be treated as an "S corporation" under Section 1361 ET.
SEQ. of the Code (and any corresponding provisions of all applicable state
and local income tax laws) for all taxable years since the date set forth in
SCHEDULE 3.24(k) (which is the date Repco elected to be treated as an S
corporation), and Repco will be treated as an S corporation under the Code
and all such state and local tax laws for all taxable years or portions
thereof ending on or prior to the Closing Date.
(l) Repco does not have any unpaid liability for Taxes under
Sections 1363(d), 1374, or 1375 of the Code (or any successor or predecessor
provision) or any similar provision of state or local law for any period on
or prior to or including the Closing Date.
3.25 MATERIAL DISCLOSURES. No statement, representation or
warranty made by Repco or Shareholders in this Agreement or in any
certificate, statement, list, schedule or other document furnished or to be
furnished to Buyer hereunder contains, or when so furnished will contain, any
untrue statement of a material fact, or fails to state, or when so furnished
will fail to state, a material fact necessary to make the statements
contained herein or therein, in light of the circumstances in which they are
made, not misleading.
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3.26 SUFFICIENCY OF AND TITLE TO ASSETS. Repco has, and as of the
Closing Date will have, title to, or the right to use, all assets, whether
tangible or intangible, necessary to operate the Business as a going concern
with all operations of the Business unimpaired in any material respect
immediately after the Closing Date, with the exception of a security interest
owned by Comerica Bank-Texas.
3.27 LONG-TERM DEBT. Except as set forth on SCHEDULE 3.27 or the
1996 Balance Sheet, Repco has, and as of the Closing Date will have, no
long-term debt.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ATC AND BUYER
As an inducement to Shareholders to enter into this Agreement and
to consummate the transactions contemplated herein, ATC and Buyer hereby
jointly and severally represent and warrant to Shareholders that:
4.01 ORGANIZATION AND EXISTENCE. Each of ATC and Buyer is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has all corporate power and authority
to enter into this Agreement and consummate the transactions contemplated
hereby. Each of ATC and Buyer is duly qualified to do business as a foreign
corporation in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification
necessary to carry on its business as now conducted, except for those
jurisdictions where the failure to be so qualified has not been, and may not
reasonably be expected to be, material.
4.02 CORPORATE AUTHORIZATION. The execution, delivery and
performance by each of ATC and Buyer of this Agreement and the consummation
by it of the transactions contemplated hereby are within its corporate powers
and have been duly authorized by all necessary corporate action on its part.
This Agreement constitutes a legal, valid and binding agreement of each of
ATC and Buyer, enforceable in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and subject to general
principles of equity.
4.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by each of ATC and Buyer of this Agreement require no action by,
consent or approval of, or filing with, any Governmental Authority other than
as set forth in this Agreement.
4.04 NON-CONTRAVENTION. The execution, delivery and performance by
each of ATC and Buyer of this Agreement does not (a) contravene or conflict
with its Certificate of Incorporation or Bylaws, or (b) assuming compliance
with the matters referred to in Section 4.03, contravene or conflict with or
constitute a violation of any provision of any Applicable Law binding upon or
applicable to it.
4.05 ADVISORY FEES. Except for Aurora Capital Partners L.P. (whose
fees and expenses will be paid by Buyer), there is no investment banker,
broker, finder or other intermediary or advisor that has been retained by or
is authorized to act on behalf of ATC or Buyer who might be entitled to any
fee, commission or reimbursement of expenses from Repco or any of its
Affiliates upon consummation of the transactions contemplated by this
Agreement.
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4.06 LITIGATION. There is no Proceeding pending against, or to the
Knowledge of ATC or Buyer, threatened against or affecting, ATC or Buyer
before any court or arbitrators or any governmental body, agency or official
that in any matter challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF SHAREHOLDERS AND REPCO
5.01 CONDUCT OF THE BUSINESS; DISTRIBUTIONS. From the date hereof
until the Closing Date, Repco shall, and Shareholders shall cause Repco to,
conduct the Business in the ordinary course and in substantially in the same
manner as it has prior to the date of this Agreement and agrees, with respect
to the Business and other than in the ordinary course of business, not to
enter into any material agreements or take any other significant actions
without the prior written consent of Buyer, which shall not be unreasonably
withheld. Repco shall use its reasonable efforts to preserve intact the
Business and the business organizations and relationships and goodwill of
Repco with third parties and keep available the services of the present
officers, employees, agents and other personnel of Repco. Without limiting
the generality of the foregoing and except as otherwise expressly provided in
this Agreement, from the date hereof until the Closing Date:
(a) Repco will, and Shareholders will cause Repco to:
(i) (A) maintain the assets of Repco in the ordinary
course of business consistent with past practice in good operating order and
condition, reasonable wear and tear excepted, (B) promptly repair, restore or
replace any assets of Repco in the ordinary course of business consistent
with past practice, (C) upon any damage, destruction or loss to any of the
assets of Repco, apply any and all insurance proceeds received with respect
thereto to the prompt repair, replacement and restoration thereof to the
condition of the assets of Repco before such event, (D) use its best efforts
to obtain, prior to the Closing Date, all Required Consents, and (E) take all
actions necessary to be in compliance with, and to maintain the effectiveness
of, all material Permits;
(ii) comply with all material Applicable Laws;
(iii) promptly notify Buyer in writing of (A) any action,
event, condition or circumstance, or group of actions, events, conditions or
circumstances, that results in, or could reasonably be expected to result in,
a Material Adverse Effect, other than changes in general economic conditions,
(B) the commencement of any by or against Repco or Shareholders, or Repco or
Shareholders becoming aware of any threat, claim, action, suit, inquiry,
proceeding, notice of violation, demand letter, subpoena, government audit or
disallowance that could reasonably be expected to result in a Proceeding, and
(C) the occurrence of any breach by Repco or Shareholders of any
representation or warranty, or any covenant or agreement, contained in this
Agreement.
(b) without Buyer's prior consent, Repco will not, and
Shareholders shall not permit Repco to, do or agree to do any of the
following:
(i) purchase or otherwise acquire assets from any other
Person other than in the ordinary course of the Business;
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(ii) sell, assign, lease, license, transfer or otherwise
dispose of, or mortgage, pledge or encumber (other than with Permitted
Liens), any of the assets of Repco, including Leased Real Property, except in
the ordinary course of the Business;
(iii) enter any agreement or arrangement that requires or
allows payment, acceleration of payment or incurrence of Liabilities, or the
rendering of services by Repco outside the ordinary course of the Business;
(iv) amend or modify in any material respect or terminate
any Scheduled Contract or any other Contract entered into by Repco after the
date hereof which, if in existence on the date hereof, would be required to
be set forth in the SCHEDULE 3.14 as a Scheduled Contract (each, a
"Subsequent Material Contract");
(v) make or commit to make any capital expenditure, or
group of related capital expenditures, in excess of $25,000, other than (A)
capital expenditures set forth on SCHEDULE 5.01(b)(v) and (B) capital
expenditures expressly required under any Scheduled Contract;
(vi) enter into or commit or propose to enter into any
Subsequent Material Contract;
(vii) except as set forth on SCHEDULE 5.01(b)(vii), make
any distribution, dividend, bonus or other payment to any officer, director,
stockholder or Affiliate of Repco or any of their respective Affiliates or
Associates except for (A) salary, benefit or lease payments in the ordinary
course and due or to become due under arrangements in existence prior to
January 1, 1996 and (B) distributions to Shareholders in amounts not to
exceed their federal and state income tax liability attributable to the
operations of Repco;
(viii) (A) create, incur, assume, or guarantee any
indebtedness for borrowed money or (B) incur any Liability relating to a
documentary or standby letter of credit, other than in each such case
referred to in this clause (viii) in the ordinary course of the Business
where the aggregate dollar amount of all of the foregoing by Repco does not
exceed $10,000; and
(ix) (A) increase the rate or terms of compensation
payable or to become payable to its employees except in the ordinary course
of business, (B) pay or agree to pay any pension, retirement allowance or
other employee benefit not provided for by any Employee Plan, Benefit
Arrangement or Employment Agreement set forth in the Schedules hereto, (C)
commit itself to any additional pension, profit sharing, bonus, incentive,
deferred compensation, stock purchase, stock option, stock appreciation
right, group insurance, severance pay, continuation pay, termination pay,
retirement or other employee benefit plan, agreement or arrangement, or
increase the rate or terms of any Employee Plan or Benefit Arrangement, (D)
enter into any employment agreement with or for the benefit of any Person, or
(E) increase the rate of compensation under or otherwise change the terms of
any Employment Agreement set forth in SCHEDULE 3.17(a); and
(x) repay any long-term debt other than scheduled
payments that are required to be made during such period so as not to be in
default with respect to such indebtedness.
5.02 ACCESS TO INFORMATION. Subject to compliance with Applicable
Laws, from the date hereof until the Closing Date, Repco will, and
Shareholders will cause Repco to, and Shareholders will, promptly: (a) give
Buyer and its counsel, financial advisors, auditors and other authorized
19
representatives reasonable access to the offices, properties, books and
records relating to Repco or the Business upon reasonable prior notice, (b)
furnish to Buyer and its counsel, financial advisors, auditors and other
authorized representatives such information relating to Repco or the Business
as Buyer may reasonably request and (c) instruct the directors, officers,
employees, counsel, auditors and financial advisors of Repco and Shareholders
to cooperate with Buyer and its counsel, financial advisors, auditors and
other authorized representatives in their investigation of Repco or the
Business. Such investigation shall include, but shall not be limited to:
(i) A business and financial performance review of the
Business;
(ii) A review of the financial statements and tax
returns of Repco;
(iii) An environmental review as to the presence and
nature of any hazardous materials in or on any real property owned
or leased by Repco; and
(iv) A standard legal due diligence examination
relating to Repco and the Business.
5.03 COMPLIANCE WITH TERMS OF REQUIRED GOVERNMENTAL APPROVALS AND
REQUIRED CONTRACTUAL CONSENTS. On and after the Closing Date, Shareholders
shall comply at their own expense with all conditions and requirements
affecting Repco set forth in (a) all Required Governmental Approvals as
necessary to keep the same in full force and effect assuming continued
compliance with the terms thereof by Buyer and Repco and (b) all Required
Contractual Consents as necessary to keep the same effective and enforceable
against the Persons giving such Required Contractual Consents assuming
continued compliance with the terms thereof by Buyer and Repco.
5.04 MAINTENANCE OF INSURANCE POLICIES. Between the date hereof
and the Closing Date, Repco shall not, and Shareholders shall cause Repco to
not, and Shareholders shall not, take or fail to take any action if such
action or inaction, as the case may be, would adversely affect the
applicability of any insurance in effect on the date hereof that covers all
or any part of the assets of Repco or the Business with respect to the period
of time ending on the Closing Date.
5.05 CONFIDENTIALITY.
(a) Repco and Shareholders will, and will cause their
representatives to, treat any data and information obtained with respect to
ATC, Buyer or any of their Affiliates from any representative, officer,
director, or employee of ATC or Buyer, or from any books or records of ATC or
Buyer in connection with this Agreement, confidentially and with commercially
reasonable care and discretion, and will not disclose any such information to
third parties; PROVIDED, HOWEVER, that the foregoing shall not apply to (i)
information in the public domain or that becomes public through disclosure by
any party other than Repco, Shareholders or their Affiliates or
representatives, so long as such other party is not in breach of a
confidentiality obligation, (ii) information that is required to be disclosed
by Applicable Law or (iii) information required to be disclosed to obtain any
Required Consents, or (iv) any disclosure of such information in litigation
between the parties hereto in the course of such litigation.
(b) In the event that the Closing fails to take place and
this Agreement is terminated, Repco and Shareholders, upon the written
request of Buyer, will, and will cause their representatives to, promptly
deliver to Buyer any and all documents or other materials furnished by ATC
20
or Buyer or any of their Affiliates to Repco or Shareholders in connection
with this Agreement without retaining any copy thereof. In the event of such
request, all other documents, whether analyses, compilations or studies, that
contain or otherwise reflect the information furnished by ATC or Buyer to
Repco or Shareholders, shall be destroyed by Repco and Shareholders or shall
be returned to Buyer, and Repco and Shareholders shall confirm to Buyer in
writing that all such materials have been returned or destroyed. No failure
or delay by Buyer in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any right,
power or privilege hereunder.
(c) The parties hereto recognize and agree that in the event
of a breach of this Section 5.05, money damages would not be an adequate
remedy to ATC, Buyer and their Affiliates for such breach and, even if money
damages were adequate, it would be impossible to ascertain or measure with
any degree of accuracy the damages sustained therefrom. Accordingly, if
there should be a breach or threatened breach of provisions of this Section
5.05, ATC, Buyer and their Affiliates shall be entitled to an injunction
restraining Repco and Shareholders from any breach without showing or proving
actual damage sustained by ATC, Buyer or their Affiliates, as the case may
be. Nothing in the preceding sentence shall limit or otherwise affect any
remedies that ATC, Buyer and their Affiliates may otherwise have under
Applicable Law.
5.06 TRANSACTIONS AFFECTING THE SHARES. From the date hereof until
the Closing Date, Shareholders will:
(a) take all action necessary so that the Share
Encumbrances set forth in SCHEDULE 3.01(a) and the agreements set forth in
SCHEDULE 3.02 are eliminated prior to the Closing Date; and
(b) not (whether voluntarily or involuntarily, and whether
currently or prospectively) sell, transfer or otherwise dispose of any of the
Shares, or create (or permit the creation of) any Share Encumbrance on any of
the Shares.
ARTICLE VI
COVENANTS OF ATC AND BUYER
6.01 CONFIDENTIALITY.
(a) ATC and Buyer will, and will cause their representatives
to, treat any data and information obtained with respect to Repco or
Shareholders from any representative, officer, director or employee of Repco
or Shareholders, or from any books or records of Repco or Shareholders in
connection with this Agreement, confidentially and with commercially
reasonable care and discretion, and will not disclose any such information to
third parties; PROVIDED, HOWEVER, that the foregoing shall not apply to (i)
information in the public domain or that becomes public through disclosure by
any party other than ATC, Buyer or their Affiliates or representatives, so
long as such other party is not in breach of a confidentiality obligation,
(ii) information that is required to be disclosed by Applicable Law, (iii)
information required to be disclosed to obtain any Required Consents; (iv)
any information that is disclosed by ATC, Buyer or their Affiliates to any of
their actual or prospective lenders or investors in connection with financing
the transactions contemplated by this Agreement; or (v) any information that
is disclosed by ATC or Buyer after the Closing shall have occurred; PROVIDED,
HOWEVER, that in the event the Closing has occurred, this Section 6.01(a)
shall cease to be effective with respect to any data and information obtained
with respect to Repco.
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(b) In the event that the Closing fails to take place and
this Agreement is terminated, ATC and Buyer, upon the written request of
Repco, will, and will cause their representatives to, promptly deliver to
Repco any and all documents or other materials furnished by Repco or
Shareholders to ATC or Buyer in connection with this Agreement without
retaining any copy thereof. In event of such request, all other documents,
whether analyses, compilations or studies, that contain or otherwise reflect
the information furnished by Repco or Shareholders to ATC or Buyer, shall be
destroyed by ATC or Buyer or shall be returned to Repco, and Buyer shall
confirm to Repco and Shareholders in writing that all such materials have
been returned or destroyed. No failure or delay by Repco and Shareholders in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any right, power or privilege
hereunder.
(c) The parties hereto recognize and agree that in the event
of a breach of this Section 6.01, money damages would not be an adequate
remedy to Repco and Shareholders for such breach and, even if money damages
were adequate, it would be impossible to ascertain or measure with any degree
of accuracy the damages sustained by Repco and Shareholders therefrom.
Accordingly, if there should be a breach or threatened breach of provisions
of this Section 6.01, Repco and Shareholders shall be entitled to an
injunction restraining ATC and Buyer from any breach without showing or
proving actual damage sustained by Repco and Shareholders. Nothing in the
preceding sentence shall limit or otherwise affect any remedies that Repco
and Shareholders may otherwise have under Applicable Law.
6.02 ACCESS TO INFORMATION. Subject to compliance with Applicable
Laws, from the Closing Date until December 31, 2001, Repco will, and ATC and
Buyer will cause Repco to, and Buyer will, promptly: (a) furnish to
Shareholders and their counsel, financial advisors, auditors and other
authorized representatives such information relating to Repco or the Business
as Shareholders may reasonably request in connection with the preparation of
Tax Returns and (b) instruct the directors, officers, employees, counsel,
auditors and financial advisors of Repco, ATC and Buyer to cooperate in all
reasonable respects with Shareholders and their counsel, financial advisors,
auditors and other authorized representatives in connection with the
preparation of Tax Returns. After the Closing Date, in the event that Repco
intends to destroy any documents that contain or otherwise reflect
information in connection with the Business for any period prior to the
Closing Date, Repco will provide written notice to Shareholders of its
intention to destroy such documents and provide Shareholders with the
opportunity to request that such documents instead be delivered to
Shareholders. Any documents delivered to Shareholders pursuant to the
preceding sentence shall be held by Shareholders pursuant to Section 5.05.
ARTICLE VII
COVENANTS OF ALL PARTIES
7.01 FURTHER ASSURANCES. Subject to the terms and conditions of
this Agreement, each party will use all reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary
or desirable under Applicable Law to consummate the transactions contemplated
by this Agreement. ATC, Buyer, Repco and Shareholders agree to execute and
deliver such other documents, certificates, agreements and other writings and
to take such other actions as may be reasonably necessary or desirable in
order to consummate or implement expeditiously the transactions contemplated
by this Agreement. Following the Closing, Buyer shall cause Repco to make
the employees and records of Repco reasonably available to Shareholders, at
no charge to Shareholders other than for out of pocket expenses incurred by
Buyer or Repco for items such as photocopying or travel, for the purposes of
providing accounting information reasonably required by Shareholders,
providing
22
testimony or information in connection with any legal proceeding or for any
other appropriate purpose arising out of Shareholders' ownership of the
Shares.
7.02 CERTAIN FILINGS. The parties hereto shall cooperate with one
another in determining whether any action by or in respect of, or filing
with, any Governmental Authority is required or reasonably appropriate, or
any action, consent, approval or waiver from any party to any Contract is
required or reasonably appropriate, in connection with the consummation of
the transactions contemplated by this Agreement. Subject to the terms and
conditions of this Agreement, in taking such actions or making any such
filings, the parties hereto shall furnish information required in connection
therewith and seek timely to obtain any such actions, consents, approvals or
waivers. Without limiting the foregoing, the parties hereto shall each
promptly complete and file all reports and forms, and respond to all requests
or further requests for additional information, if any, as may be required or
authorized under the HSR Act.
7.03 PUBLIC ANNOUNCEMENTS. The parties hereto agree that they will
not make any disclosures about the existence or contents of this Agreement or
the transactions contemplated hereby or cause to be publicized in any manner
whatsoever, by way of interviews, responses to questions or inquiries, press
releases or otherwise, any aspect of this Agreement or the transactions
contemplated hereby without prior written notice to and approval of the other
parties hereto, unless such party reasonably concludes that such release of
information is required by Applicable Law and the parties hereto cannot reach
agreement upon a mutually acceptable form of release. Notwithstanding the
foregoing, the parties may, on a confidential basis, advise and release
information regarding the existence and content of this Agreement or the
transactions contemplated hereby to their respective Affiliates or any of
their agents, accountants, attorneys and prospective lenders or investors in
connection with or related to the transactions contemplated by this
Agreement, including without limitation the financing of such transactions.
7.04 ADMINISTRATION OF ACCOUNTS. All payments and reimbursements
received by Shareholders after the Closing Date from any third party in the
name of or to Repco shall be held by Shareholders in trust for the benefit of
Repco and, immediately upon receipt by Shareholders of any such payment or
reimbursement, Shareholders shall pay, or cause to be paid, over to Repco the
amount of such payment or reimbursement without right of set off.
7.05 TAXES AND SECTION 338(h)(10) ELECTION.
(a) All sales, value added, use, registration, stamp and
similar Taxes imposed in connection with the sale of the Shares shall be
borne by Buyer and all transfer and similar Taxes imposed in connection with
the sale of the Shares shall be borne by Shareholders.
(b)(i) If Buyer, in Buyer's sole discretion, shall request,
Shareholders shall (A) join Buyer in making the election permitted to be made
under Section 338(h)(10) of the Code and any corresponding or similar
provisions of state or local law (the "Section 338(h)(10) Elections"), (B)
cooperate with Buyer to take all actions necessary to effect and preserve
timely such Section 338(h)(10) Elections in accordance with Treasury
Regulation Section 1.338(h)(10) (and any comparable provisions of state and
local law and any successor provisions thereto) and (C) take no position
inconsistent with treating the purchase of the capital stock of Repco as a
Section 338(h)(10) Election. Shareholders shall assist Buyer in the
preparation of Form 8023-A and any accompanying schedules required under
Section 338(h)(10) of the Code and any corresponding or similar provisions of
state or local law and Shareholders agree that Buyer may make any
determination or election required or
23
permitted to be made in connection with the Section 338(h)(10) Elections.
Shareholders shall execute Form 8023-A and any accompanying schedules and
such other documents or forms at the Closing or at such other time as Buyer
may request or as required by the Code in order to effectuate the Section
338(h)(10) Elections. Buyer and Shareholders shall file all Tax Returns in a
manner consistent with the Section 338(h)(10) Elections, Form 8023-A and any
accompanying schedules and such other documents and forms as are requested by
Buyer to effectuate the Section 338(h)(10) Elections.
(ii) Except as provided in Section 7.05(b)(iii),
Shareholders will severally pay any federal Tax attributable to the making of
the Section 338(h)(10) Elections and will severally indemnify Buyer and Repco
for any Damages arising out of the failure to pay such Tax. Except as
provided in Section 7.05(b)(iii), Shareholders will also pay any state, local
or foreign Tax (and severally indemnify Buyer and Repco against any Damages
arising out of any failure to pay such Tax) attributable to the Section
338(h)(10) Elections or to an election or deemed election under state, local
or foreign law similar to the election under Section 338(g) of the Code which
results from the making of the Section 338(h)(10) Elections. Shareholders
shall severally indemnify and hold harmless Buyer and its Affiliates in
respect of Damages resulting from the Section 338(h)(10) Elections being
finally determined, or agreed by the parties, to be invalid or unavailable
due to Repco not being treated as an S corporation. All payments pursuant to
this Section 7.05(b)(ii) shall be allocated among Shareholders as set forth
in EXHIBIT A.
(iii) Buyer agrees that if the Section 338(h)(10)
Elections are made, Buyer will pay Shareholders an amount equal to the excess
of (i) all federal and state income taxes payable solely as a result of the
transactions contemplated by this Agreement including the making of the
Section 338(h)(10) Elections and an additional amount necessary to make the
Shareholders whole as a result of the taxes created by this Section
7.05(b)(iii) over (ii) the federal and state income taxes that would be
payable by Shareholders solely as a result of the transactions contemplated
by this Agreement, assuming no Section 338(h)(10) Elections are made,
determined in a manner consistent with the Company's prior tax accounting
practice. An example of the additional amount necessary to make the
Shareholders whole is included on Schedule 7.05(b)(iii). The amount payable
pursuant to this Section 7.05(b)(iii) shall be allocated among Shareholders
as set forth in EXHIBIT A.
(iv) Prior to the Closing or as soon thereafter as
practicable, Buyer and Shareholders shall agree upon the allocation of the
purchase price among the assets of Repco for purposes of preparing a properly
completed Form 8023-A and any comparable form required under state or local
law and shall set forth such allocation on a statement (the "Allocation
Statement"). Buyer and Shareholders shall report the tax consequences of the
transactions contemplated by this Agreement in a manner consistent with the
Allocation Statement, and shall not take any position inconsistent therewith.
(v) In the event that there are any adjustments by a
taxing authority with respect to periods ending on or before the Closing Date
that are finally determined or agreed to by Shareholders and Buyer and that
result in an increase in the amount originally computed under Section
7.05(b)(iii), Buyer shall pay to Shareholders the amount of such increase.
In the event that there are any adjustments by a taxing authority with
respect to periods ending on or before the Closing Date that are finally
determined or agreed to by Shareholders and Buyer and such changes result in
a decrease in the amount originally computed under Section 7.05(b)(iii),
Shareholders shall repay to Buyer the amount of such decrease.
(c) (i) Shareholders shall have the exclusive authority and
obligation and shall be responsible for the correct and timely filing of all
Tax Returns of Repco with respect to
24
income taxes imposed by the Federal government or any state or political
subdivision thereof for all periods ending on or prior to the Closing Date,
and, after the Closing Date, Repco shall, and Buyer shall cause Repco to,
provide reasonable access to such books and records of Repco as necessary to
prepare such Tax Returns which may be reviewed and copied at Shareholder's
sole expense. Such authority shall include, but not be limited to, the
determination of the manner in which any items of income, gain, deduction,
loss or credit arising out of the income, properties and operations of Repco
shall be reported or disclosed on such Tax Returns; PROVIDED, HOWEVER, that
Shareholders shall provide Buyers with draft Tax Returns of Repco with
respect to income taxes imposed by the Federal government or any state or any
political subdivision thereof for the short taxable year ending on the
Closing Date at least 20 days prior to the due date including extensions for
filing such Tax Returns. In the event Buyer has any objection to any items
set forth on such draft Tax Returns, Buyer and Shareholders agree to consult
and resolve in good faith any such objections, it being understood and agreed
that in the absence of any such resolution, any and all such objections shall
be resolved in a manner consistent with the past practices with respect to
such items.
(ii) Buyer shall have the exclusive authority and
obligation and shall be responsible for the correct and timely filing of all
Tax Returns of Repco for any taxable period beginning after the Closing Date.
Such authority shall include, but not be limited to, the determination of
the manner in which any items of income, gain, deduction, loss or credit
arising out of the income, properties and operations of Repco shall be
reported or disclosed on such Tax Returns.
(d) (i) After giving effect to all payments in respect
thereof which have been made prior to the Closing Date, Shareholders shall be
responsible and liable for the timely payment of any unpaid Taxes imposed on
or with respect to the properties, income and operations of Repco for all
periods ending on or prior to the Closing Date.
(ii) Buyer shall be responsible and liable for the timely
payment (y) of all Taxes imposed on or with respect to the properties, income
and operations of Repco for all periods beginning after the Closing Date.
(e) (i) Shareholders, at their sole expense, shall have the
exclusive authority to represent Repco before any taxing authority or any
court regarding the Tax consequences of the operations of Repco for all
periods ending on or prior to the Closing Date; PROVIDED, HOWEVER, that
Shareholders shall not enter into any settlement of any contest or otherwise
compromise any issue that affects or may affect the Tax Liability of Repco
for any period beginning after the Closing Date without the prior written
consent of Buyer which shall not be unreasonably withheld. Shareholders
shall keep Buyer fully and timely informed with respect to the commencement,
status and nature of any administrative or judicial proceedings involving any
Tax Liability of Repco for all taxable periods. Repco will, and ATC and
Buyer will cause Repco to, promptly furnish to Shareholders and their
counsel, financial advisors, auditors, and other authorized representatives
such information relating to Repco or the Business as Shareholders may
reasonably request in connection with any notice or examination before any
taxing authority or any court regarding the tax consequences of the
operations of Repco for all periods ending on or prior to the Closing Date.
(ii) Except as provided in Section 7.05(e)(i), Buyer
shall have the sole right to control any audit or examination by any taxing
authority, initial any claim for refund or amend any Tax Return, and contest,
resolve and defend against any assessment for additional Taxes, notice of Tax
deficiency or other adjustment of Taxes of, or relating to, Repco; PROVIDED,
HOWEVER, that with respect to any audit or examination by any taxing
authority regarding the Tax consequences of the
25
operations of Repco for all periods ending on or prior to the Closing Date,
Repco shall, and Buyer shall cause Repco to, notify Shareholders immediately
upon receiving any notice of any type, whether by phone, fax, or mail, that
an audit is pending or will be started for any period prior to the Closing
Date. In addition, Buyer will notify the IRS that Shareholders have
exclusive authority to represent Repco for the periods prior to the Closing
Date. This applies to all notices, notices of examination, or any type of
other assessment or action taken by the IRS or any other taxing authority
that would affect the periods ending on or prior to Closing Date.
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transactions contemplated hereby is subject to the
satisfaction of each of the following conditions:
(a) (i) Repco and Shareholders shall each have performed and
satisfied in all material respects each of its material obligations hereunder
required to be performed and satisfied by any of them on or prior to the
Closing Date, (ii) each of the representations and warranties of Repco and
Shareholders contained in this Agreement shall have been true and correct in
all material respects when made and shall contain no misstatement or omission
that would make any such representation or warranty materially misleading
when made and shall be true and correct in all material respects, and shall
not contain any misstatement or omission that would make any such
representation or warranty materially misleading, at and as of the Closing
Date with the same force and effect as if made as of the Closing Date and
(iii) Buyer shall have received certificates signed by Shareholders and a
duly authorized executive officer of Repco to the foregoing effect and to the
effect that to the Knowledge of such officer the conditions specified within
this Section 8.01 have been satisfied.
(b) All Required Governmental Approvals for the transactions
contemplated by this Agreement shall have been obtained without the
imposition of any conditions that are or would become applicable to Repco,
the Business, the Shares or Buyer (or any of its Affiliates) after the
Closing that Buyer in good faith reasonably determines would be materially
burdensome upon Repco, the Business, the Shares or Buyer (or any of its
Affiliates) or their respective businesses substantially as such businesses
have been conducted prior to the Closing Date or as said businesses, as of
the date hereof, would be reasonably expected to be conducted after the
Closing Date. All such Required Governmental Approvals shall be in effect,
and no Proceedings shall have been instituted or threatened by any
Governmental Authority with respect thereto as to which, in Buyer's good
faith opinion, there is a material risk of a determination that would
terminate the effectiveness of, or otherwise materially and adversely modify
the terms of, any such Required Governmental Approval; all applicable waiting
periods with respect to such Required Governmental Approvals shall have
expired; and all conditions and requirements prescribed by Applicable Law or
by such Required Governmental Approvals to be satisfied on or prior to the
Closing Date shall have been satisfied to the extent necessary such that all
such Required Governmental Approvals are, and will remain, in full force and
effect assuming continued compliance with the terms thereof after the Closing.
(c) All Required Contractual Consents shall have been
obtained without the imposition of any conditions that are or would become
applicable to Repco, the Business, the Shares, Buyer or any of its Affiliates
after the Closing that Buyer in good faith determines would be materially
burdensome upon Repco, the Business, the Shares, Buyer or any of its
Affiliates or their respective businesses substantially as such businesses
have been conducted prior to the Closing Date or as said
26
businesses, as of the date hereof, would be reasonably expected to be
conducted after the Closing Date. All such Required Contractual Consents
(and with respect to the Subsequent Material Contracts, such other consents
as may be required) shall be in effect. All conditions and requirements
prescribed by any Required Contractual Consent (or any such other consent) to
be satisfied on or prior to the Closing Date shall have been satisfied to the
extent necessary such that all such Required Contractual Consents (and all
such other consents) are effective and enforceable, and will remain effective
and enforceable against the Persons giving such Required Contractual Consents
(and such other consents) assuming continued compliance with the terms
thereof.
(d) The transactions contemplated by this Agreement and the
consummation of the Closing shall not violate any Applicable Law. No
temporary restraining order, preliminary or permanent injunction, cease and
desist order or other order issued by any court of competent jurisdiction or
any competent Governmental Authority or any other legal restraint or
prohibition preventing the transfer and exchange contemplated hereby or the
consummation of the Closing, or imposing Damages in respect thereto, shall be
in effect, and there shall be no pending or threatened actions or proceedings
by any Governmental Authority (or determinations by any Governmental
Authority) or by any other Person (i) challenging or in any manner seeking to
restrict or prohibit the transfer and exchange contemplated hereby or the
consummation of the Closing, or to impose conditions that Buyer in good faith
determines would be materially burdensome upon Repco, the Business, the
Shares, Buyer or any of its Affiliates or their respective businesses
substantially as such businesses have been conducted prior to the Closing
Date or as said businesses, as of the date hereof, would be reasonably
expected to be conducted after the Closing Date.
(e) Since the date hereof, there shall not have been any
event, occurrence, development or state of circumstances or facts or change
in Repco or the Business (including any damage, destruction or other casualty
loss (but excluding any event, occurrence, development or state of
circumstances or facts or change resulting from changes in general economic
conditions)) affecting Repco or the Business that has had or that may be
reasonably expected to have, either alone or together with all such events,
occurrences, developments, states of circumstances or facts or changes, a
Material Adverse Effect.
(f) SJW shall have executed and delivered to Buyer a
Noncompetition Agreement in substantially the form attached hereto as EXHIBIT C.
(g) Buyer shall have received an opinion of counsel to Repco
and Shareholders in substantially the form attached hereto as EXHIBIT D.
(h) Buyer shall be reasonably satisfied that there has been
no material degradation of the assets of Repco since the completion by Buyer
of its inspection of the assets of Repco.
(i) ▇▇▇▇▇▇▇ & Enterprises Ltd., as lessor, shall have entered
into operating lease agreements for Repco's facilities in San Antonio,
Houston, Orlando and Dallas in substantially the forms attached hereto as
EXHIBITS E, F, G AND H.
(j) ATC shall have obtained all necessary and appropriate
approvals from its commercial bank lenders so that Buyer may borrow an amount
sufficient to pay the Preliminary Purchase Price.
27
(k) As of the Closing Date, there shall exist no Liens on any
assets of Repco, other than Permitted Liens, nor any Share Encumbrances on
the Shares.
8.02 CONDITIONS TO OBLIGATION OF SHAREHOLDERS. The obligation of
Shareholders to consummate the transactions contemplated hereby is subject to
the satisfaction of each of the following conditions:
(a) (i) Buyer shall have performed and satisfied in all
material respects each of its material obligations hereunder required to be
performed and satisfied by it on or prior to the Closing Date, and the
aggregate effect of all failures to perform or satisfy all obligations of
Buyer on or prior to the Closing Date shall not be materially adverse to
Shareholders; (ii) the representations and warranties of ATC and Buyer
contained in this Agreement shall be true, complete and accurate in all
material respects at and as of the Closing Date, as if made at and as of such
date and (iii) Shareholders shall have received a certificate signed by a
duly authorized executive officer of ATC and Buyer to the foregoing effect
and to the effect that to such officer's Knowledge the conditions specified
within this Section 8.02 have been satisfied.
(b) All material Required Governmental Approvals for the
transactions contemplated by this Agreement shall have been obtained without
the imposition of any conditions that are or would become applicable to
Shareholders or any of their respective Affiliates after the Closing that
Shareholders in good faith reasonably determine would be materially
burdensome upon such Person. All such Required Governmental Approvals that
relate to Shareholders' sale of the Shares shall be in effect, and no
Proceedings shall have been instituted or threatened by any Governmental
Authority with respect thereto as to which, in Shareholders' good faith
opinion, there is a material risk of a determination that would terminate the
effectiveness of, or otherwise materially and adversely modify the terms of,
any such Required Governmental Approval. All applicable waiting periods with
respect to such Required Governmental Approvals shall have expired, and all
conditions and requirements prescribed by Applicable Law or by such Required
Governmental Approvals to be satisfied on or prior to the Closing Date shall
have been satisfied to the extent necessary such that all such Required
Governmental Approvals are, and will remain, in full force and effect
assuming continued compliance with the terms thereof after the Closing.
(c) All Required Contractual Consents shall have been
obtained without the imposition of any conditions that are or would become
applicable to Shareholders or any of their respective Affiliates after the
Closing that would be materially burdensome upon such Person. All such
Required Contractual Consents (and with respect to the Subsequent Material
Contracts, such other consents) shall be in effect to the extent that the
failure thereof to be in effect would impose material liability on
Shareholders or their respective Affiliates, and no Proceeding shall have
been instituted or threatened with respect thereto. All conditions and
requirements prescribed by any Required Contractual Consent (or any such
other consent) to be satisfied on or prior to the Closing Date shall have
been satisfied to the extent necessary such that no material Liability will
be imposed on Shareholders or their respective Affiliates.
(d) The sale and transfer contemplated by this Agreement and
the consummation of the Closing shall not violate any Applicable Law. No
temporary restraining order, preliminary or permanent injunction, cease and
desist order or other order issued by any court of competent jurisdiction or
any competent Governmental Authority or any other legal restraint or
prohibition preventing the transfer and exchange contemplated hereby or the
consummation of the Closing, or imposing Damages in respect thereto, shall be
in effect, and there shall be no pending or
28
threatened actions or proceedings by any Governmental Authority (or
determinations by any Governmental Authority) or by any other Person
challenging or in any manner seeking to restrict or prohibit the transfer and
exchange contemplated hereby or the consummation of the Closing.
(e) Shareholders shall have received an opinion of counsel
from ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP in substantially the form attached hereto as
EXHIBIT I.
(f) Repco shall have executed and delivered to ▇▇▇▇▇▇▇
Enterprises, Inc. the operating leases for Repco's facilities in San Antonio,
Houston, Orlando and Dallas referred to in Section 8.01(i).
ARTICLE IX
INDEMNIFICATION
9.01 AGREEMENT TO INDEMNIFY.
(a) Subject to the limitations provided herein, ATC, Buyer
and their Affiliates (collectively, the "Buyer Indemnitees") shall each be
indemnified and held harmless to the extent set forth in this Article IX on a
joint and several basis by Shareholders in respect of any Damages reasonably
and proximately incurred by any Buyer Indemnitee (i) as a result of any
inaccuracy or misrepresentation in or breach of any representation or
warranty contained in Article III or any certificate delivered pursuant to
Section 8.01, (ii) as a result of any breach of or failure to perform any
covenant, agreement or obligation of Repco or Shareholders in this Agreement,
(iii) in connection with any Environmental Liability that arises from Repco's
operation prior to or on the Closing Date, or from occurrences in or on the
premises occupied, leased, owned or operated by Repco that occurred on or
before the Closing Date or (iv) in connection with any Liability that arises
from the failure by Repco to be duly qualified to do business, and in good
standing, in the state of Florida. The aggregate liability of Shareholders
collectively under this Section 9.01(a) shall not exceed the Purchase Price
and the liability of any Shareholder under this Section 9.01(a) shall not
exceed the portion of the Purchase Price allocated to such Shareholder,
except in the case of Damages due to a Shareholder's fraud or willful
misconduct.
(b) Shareholders and their Affiliates (collectively the
"Shareholder Indemnitees") shall each be indemnified and held harmless to the
extent set forth in this Article IX by ATC and Buyer in respect of any and
all Damages reasonably and proximately incurred by any Shareholder Indemnitee
as a result of (i) any knowing inaccuracy or misrepresentation in or breach
of or failure to perform any representation, warranty, covenant, agreement or
obligation of ATC or Buyer in this Agreement or (ii) Repco's conduct of the
Business after the Closing, including any Environmental Liability that arises
from Repco's operations after the Closing Date, or from occurrences in or on
the premises occupied, leased, owned or operated by Repco that may occur
after the Closing Date and during the period in which Repco conducts the
Business on such premises.
(c) It is not intended by the parties hereto to indemnify or
defend each other from any claim or administrative action which may be
asserted against any or all parties hereto pursuant to any Environmental Law,
unless such claims result from any Environmental Liability caused by, or
originating from, Repco's operation or premises. By way of example and not
limitation, the parties do not intend to indemnify each other against
administrative claims brought by or on behalf of the Environmental Protection
Agency naming as Potentially Responsible Parties all owners and
29
operators of real property in the vicinity of a known or suspected
environmental hazard, unless and until such hazard is shown to have
originated from or caused by Repco's premises or operation.
(d) Notwithstanding the foregoing, Buyer Indemnitees may not
seek indemnification hereunder from Shareholders unless and until the claims
in the aggregate exceed $25,000, PROVIDED that if such threshold is exceeded,
Buyer Indemnitees may seek indemnification hereunder for any and all claims.
This Section 9.01(c) shall not apply to indemnification claims relating to
Sections 3.01, 3.06 or 3.21, which will be fully indemnified by Shareholders.
(e) From and after the Closing Date, Repco shall have no
liability to Shareholders for contribution or reimbursement due to, or other
Damages arising out of, liability incurred by Shareholders pursuant to
Section 9.01(a) notwithstanding the fact that the representations and
warranties of Repco and Shareholders in Article III and the covenants of
Repco and Shareholders in Article V are joint and several.
9.02 SURVIVAL OF REPRESENTATION AND WARRANTIES.
(a) Except as hereinafter provided in this Section 9.02, all
representations and warranties of each Indemnifying Party contained herein
and all claims of any Indemnitee in respect of the breach of any
representation or warranty shall survive the Closing and shall expire on the
third anniversary of the Closing Date.
(b) Notwithstanding Section 9.02(a) the representations and
warranties of Shareholders as Indemnifying Parties shall survive the Closing
Date until the expiration of 60 days following any applicable statute of
limitations, including extensions thereof, with respect to: (i) the
inaccuracy or misrepresentation in or breach of any representation or
warranty made by Repco or Shareholders in this Agreement arising out of fraud
or willful misconduct; and (ii) any inaccuracy or misrepresentation in or
breach of any representation or warranty made in any of Sections 3.01, 3.02,
3.04, 3.06, 3.17, 3.22 and 3.24 regardless of whether such inaccuracy or
misrepresentation or breach arises out of fraud or willful misconduct.
(c) Notwithstanding Section 9.02(a), each of the following
representations and warranties of ATC and Buyer as Indemnifying Parties shall
survive the Closing Date until the expiration of 60 days following the
applicable statute of limitations, including extensions thereof, with respect
to: (i) any inaccuracy or misrepresentation in or breach of any
representation or warranty made by ATC or Buyer in this Agreement arising out
of fraud or willful misconduct; and (ii) any inaccuracy or misrepresentation
in or breach of any representation or warranty in Section 4.02 regardless of
whether such inaccuracy or misrepresentation or breach arises out of fraud or
willful misconduct.
9.03 CLAIMS FOR INDEMNIFICATION.
(a) Buyer or Shareholders, as the case may be, shall notify
the other of any claim, investigation or inquiry regarding any potential
liability that may be subject to indemnification under this Article IX as
soon as practicable after learning of same, and shall afford the other access
to any records or locations as may be reasonably required to evaluate and, if
necessary, respond to or defend any claim, inquiry or investigation. The
failure of Buyer or Shareholders, as the case may be, to provide the
notification required by the preceding sentence shall constitute a waiver of
such party's right to indemnification with respect to the claim,
investigation or inquiry in question if such failure (i) continues for at
least 180 days after such party's first knowledge of such claim,
investigation or
30
inquiry or (ii) such failure materially adversely affects the right of the
other party to assert any reasonable defense against such claim,
investigation or inquiry.
(b) If any Indemnitee shall believe that such Indemnitee is
entitled to indemnification pursuant to this Article IX in respect of any
Damages, such Indemnitee shall give the appropriate Indemnifying Party prompt
written notice thereof (to the extent that the Indemnitee has not already
done so pursuant to Section 9.03(a)). Any such notice shall set forth in
reasonable detail and to the extent then known the basis for such claim for
indemnification. Each such claim for indemnity shall expressly state that
the Indemnifying Party shall have only the 30-day period referred to in the
next sentence to dispute or deny such claim. The Indemnifying Party shall
have 30 days following its receipt of such notice either (i) to acquiesce in
such claim by giving such Indemnitee written notice of such acquiescence or
(ii) to object to the claim by giving such Indemnitee written notice of the
objection. If the Indemnifying Party does not object thereto within such
30-day period, such Indemnitee shall be entitled to be indemnified for all
Damages reasonably and proximately incurred by such Indemnitee in respect of
such claim. If the Indemnifying Party objects to such claim in a timely
manner, and such Indemnitee and the Indemnifying Party are unable to resolve
their dispute within 30 days following such objection (or such additional
period of time as may be mutually agreed to by such Persons), the claim shall
be submitted immediately to arbitration pursuant to Section 11.11.
9.04 DEFENSE OF CLAIMS.
(a) In connection with any claim which may give rise to
indemnity under this Article IX resulting from or arising out of any claim or
Proceeding against an Indemnitee by a Person that is not a party hereto, the
Indemnifying Party may, subject to Section 9.04(b), assume the defense of any
such claim or Proceeding (unless such Indemnitee elects not to seek indemnity
hereunder for such claim), upon written notice to the relevant Indemnitee, if
all Indemnifying Parties with respect to such claim or Proceeding jointly
acknowledge to the Indemnitee its right to indemnity pursuant hereto in
respect of the entirety of such claim (as such claim may have been modified
through written agreement of the parties or arbitration hereunder) and
provides assurances, reasonably satisfactory to such Indemnitee, that the
Indemnifying Parties will be financially able to satisfy such claim in full
if such claim or Proceeding is decided adversely. Prior to the assumption by
an Indemnifying Party of the defense of any claim or Proceeding, the
Indemnitee may make such appearances and filings with respect thereto as the
Indemnitee reasonably determines to be necessary or appropriate. If the
Indemnifying Parties assume the defense of any such claim or Proceeding, the
Indemnifying Parties shall select counsel reasonably acceptable to such
Indemnitee to conduct the defense of such claim or Proceeding, shall take all
steps necessary in the defense or settlement thereof and shall at all times
diligently and promptly pursue the resolution thereof. If the Indemnifying
Parties shall have assumed the defense of any claim or Proceeding in
accordance with this Section 9.04, the Indemnifying Parties shall be
authorized to consent to a settlement of, or the entry of any judgment
arising from, any such claim or Proceeding, without the prior written consent
of such Indemnitee; PROVIDED, HOWEVER, that the Indemnifying Parties shall
pay or cause to be paid all amounts arising out of such settlement or
judgment concurrently with the effectiveness thereof; PROVIDED, FURTHER, that
the Indemnifying Parties shall not be authorized to encumber any of the
assets of any Indemnitee or to agree to any restriction that would apply to
any Indemnitee or to its conduct of business; and PROVIDED, FURTHER, that a
condition to any such settlement shall be a complete release of such
Indemnitee and its Affiliates, officers, employees, consultants and agents
with respect to such claim. Subject to Section 9.04(b), such Indemnitee
shall be entitled to participate in (but not control) the defense of any such
action, with its own counsel and at its own expense. Each Indemnitee shall,
and shall cause each of its Affiliates, officers, employees, consultants and
agents to, cooperate fully with the Indemnifying Parties in the defense of
any claim or Proceeding
31
being defended by the Indemnifying Parties pursuant to this Section 9.04. If
the Indemnifying Parties do not assume the defense of any claim or Proceeding
resulting therefrom in accordance with the terms of this Section 9.04(a),
such Indemnitee may defend against such claim or Proceeding.
(b) Notwithstanding Section 9.04(a), the Indemnifying Parties
may not assume the defense of any claim or Proceeding and the Indemnitee may
assume such defense if, in the reasonable opinion of the Indemnitee, (i) such
claim or Proceeding involves an issue or matter that, if determined adversely
to the Indemnitee, is likely to have a material adverse effect on the
business, operations, assets, properties or prospects of the Indemnitee, or
(ii) there is one or more legal defenses available to the Indemnitee that
conflict with those available to an Indemnifying Party. If the Indemnitee
assumes defense of any such claim or Proceeding, (A) the Indemnifying Parties
may participate in, but not control, the defense of such claim or Proceeding,
and (B) if the Indemnitee receives a settlement proposal from the Person
asserting such claim or instituting such Proceeding and is notified by an
Indemnifying Party that such Indemnifying Party wants to accept such
settlement proposal, the liability of the Indemnifying Parties with respect
to such claim or Proceeding shall equal the lesser of (x) the amount offered
in such settlement proposal, (y) the amount of actual Damages of the
Indemnitee with respect to such claim or Proceeding or (z) the maximum
liability of the Indemnifying Parties pursuant to Section 9.01(a).
(c) If the Indemnitee elects to defend any claim or
Proceeding pursuant to the last sentence of Section 9.04(a) or pursuant to
Section 9.04(b), the Indemnitee shall conduct such defense in such manner as
it shall deem appropriate, including settling such claim or Proceeding after
giving notice of the same to the Indemnifying Parties, on such terms as such
Indemnitee shall deem appropriate. If the Indemnifying Parties seek to
question the manner in which such Indemnitee defended such claim or
Proceeding or the amount of or nature of any such settlement, the
Indemnifying Parties shall have the burden to prove by a preponderance of the
evidence that such Indemnitee did not defend such claim or Proceeding in a
reasonably prudent manner.
ARTICLE X
TERMINATION
10.01 GROUNDS FOR TERMINATION. This Agreement may be terminated
at any time prior to the Closing:
(a) by mutual written agreement of all of the parties hereto;
(b) by Buyer at any time following the expiration of 15 days
from the date that Buyer has given notice to Shareholders of any one or more
inaccuracies or misrepresentations in or breaches of the representations or
warranties made by Repco or Shareholders contained herein that, if not cured
prior to the Closing Date, would give Buyer grounds not to close under
Section 8.01 when taken into account with all other uncured inaccuracies or
misrepresentations in or breaches of such representations or warranties as to
which Buyer shall have given notice to Shareholders as provided in this
clause (b); PROVIDED, HOWEVER, that no termination under this clause (b)
shall take effect if such inaccuracies, misrepresentations or breaches shall
have been cured in all material respects within such 15-day period;
(c) by Buyer at any time following the expiration of 15 days
from the date that Buyer has given written notice to Shareholders of the
failure by Repco or Shareholders to perform and satisfy in any material
respect any of their respective material obligations under this Agreement
32
required to be performed and satisfied by Repco or Shareholders on or prior
to the Closing Date, or the failure to perform and satisfy any other
obligations of Repco or Shareholders under this Agreement if the aggregate of
all such other failures shall be material; PROVIDED, HOWEVER, that no
termination under this clause (c) shall take effect if such breaches or
failures shall have been cured in all material respects within such 15-day
period;
(d) by Shareholders at any time following the expiration of
15 days from the date that Shareholders have given written notice to Buyer of
any one or more material inaccuracies or material misrepresentations in or
material breaches of the representations or warranties made by ATC or Buyer
herein which, if not cured prior to the Closing Date, have had or could be
reasonably expected to give Shareholders grounds not to close under Section
8.02 when taken into account with all other uncured inaccuracies or
misrepresentations in or breaches of such representations or warranties as to
which Shareholders shall have given notice to Buyer as provided in this
clause (d); PROVIDED, HOWEVER, that no termination under this clause (d)
shall take effect if such breaches shall have been cured in all material
respects within such 15-day period;
(e) by Shareholders at any time following the expiration of
15 days from the date that Shareholders have given written notice to Buyer of
Buyer's failure to perform and satisfy in any material respect any of its
material obligations under this Agreement required to be performed and
satisfied by Buyer on or prior to the Closing Date, or the failure to perform
and satisfy any other obligations of Buyer under this Agreement if the
aggregate of all such other failures shall be material; PROVIDED, HOWEVER,
that no termination under this clause (e) shall take effect if Buyer shall
have cured such breaches or failures in all material respects within such
15-day period;
(f) by any party hereto, if the Closing shall not have been
consummated by February 28, 1997 (the "Outside Date"); PROVIDED, HOWEVER,
that no party may terminate this Agreement pursuant to this clause (f) if the
Closing shall not have been consummated within such time period by reason of
such party or any of its Affiliates having made a misrepresentation in this
Agreement or any document delivered pursuant hereto or having failed to
perform any covenants or agreements contained in this Agreement; and
(g) by any party hereto if any Federal, state or foreign law
or regulation thereunder shall hereafter be enacted or become applicable that
makes the transactions contemplated hereby or the consummation of the Closing
illegal or otherwise prohibited, or if any judgment, injunction, order or
decree enjoining either party hereto from consummating the transactions
contemplated hereby is entered, and such judgment, injunction, order or
decree shall become final and nonappealable.
The party desiring to terminate this Agreement pursuant to clauses
(b) through (g) shall give written notice of such termination to the other
party.
10.02 EFFECT OF TERMINATION. If this Agreement is terminated as
permitted by Section 10.01, such termination shall be without liability of
any party to any other party to this Agreement; PROVIDED, HOWEVER, that if
such termination shall result from the breach by any party of its
representations, warranties or covenants contained in this Agreement, such
party shall be fully liable for any and all Damages incurred or suffered by
the other parties as a result of such failure or breach notwithstanding such
termination. The provisions of Sections 5.05, 6.01, 10.02, 11.03, 11.05
11.07, 11.08, 11.09, 11.10, 11.11 and 11.12 shall survive any termination of
this Agreement pursuant to Article X.
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10.03 PAYMENT OF DEPOSIT. If this Agreement is terminated pursuant
to Section 10.01, the parties shall cause the Deposit Holder to immediately
pay all amounts deposited with it on or before the date hereof by Buyer
pursuant to Section 2.02(c) to (i) Buyer if this Agreement is terminated by
Buyer pursuant to Section 10.01(b) or (c) or (ii) Seller if this Agreement is
terminated for any other reason.
ARTICLE XI
MISCELLANEOUS
11.01 NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) if
personally delivered, when so delivered, (ii) if mailed, two Business Days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid and addressed to the intended recipient as set
forth below, (iii) if given by telex or telecopier, once such notice or other
communication is transmitted to the telex or telecopier number specified
below and the appropriate answer back or telephonic confirmation is received,
PROVIDED that such notice or other communication is promptly thereafter
mailed in accordance with the provisions of clause (ii) above or (iv) if sent
through an overnight delivery service in circumstances to which such service
guarantees next day delivery, the day following being so sent:
If to any Shareholder:
The address set forth on EXHIBIT A
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Repco:
REPLACEMENT & EXCHANGE PARTS CO., INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
34
If to ATC or Buyer:
REPCO ACQUISITION CORP.
c/o Aurora Capital Partners L.P.
10th Floor
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may give any notice, request, demand, claim or other communication
hereunder using any other means (including ordinary mail or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is received by
the individual for whom it is intended. Any party may change the address to
which notices, requests, demands, claims and other communications hereunder
are to be delivered by giving the other parties notice in the manner herein
set forth.
11.02 AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the
case of an amendment, by all parties hereto, or in the case of a waiver, by
the party against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent occurrence. No failure or delay
by a party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
11.03 EXPENSES. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the
party incurring such cost or expense. Without limiting the generality of the
foregoing, the Shareholders shall pay all legal, accounting and other fees
and expenses incurred by the Shareholders and/or Repco prior to the Closing
Date in connection with the negotiation, execution, delivery and performance
of this Agreement.
11.04 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party hereto may
35
assign either this Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of each other party, which
approval shall not be unreasonably withheld.
11.05 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the internal laws (without reference to
choice or conflict of laws) of the State of Delaware.
11.06 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have
received a counterpart hereof signed by the other parties hereto.
11.07 ENTIRE AGREEMENT. This Agreement (including the Schedules
and Exhibits referred to herein which are hereby incorporated by reference)
constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement. Neither this Agreement nor any provision
hereof is intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
11.08 CAPTIONS. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof. All references to an Article or Section include all subparts thereof.
11.09 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the
date this Agreement was executed or last amended.
11.10 CONSTRUCTION.
(a) The language used in this Agreement will be deemed to be
the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against either party. Any
reference to any Applicable Law shall be deemed also to refer to all rules
and regulations promulgated thereunder, unless the context requires
otherwise. Whenever required by the context, any gender shall include any
other gender, the singular shall include the plural and the plural shall
include the singular. The words "herein," "hereof," "hereunder," and words
of similar import refer to the Agreement as a whole and not to a particular
section. Whenever the word "including" is used in this Agreement, it shall
be deemed to mean "including, without limitation," "including, but not
limited to" or other words of similar import such that the items following
the word "including" shall be deemed to be a list by way of illustration only
and shall not be deemed to be an exhaustive list of applicable items in the
context thereof.
(b) The parties hereto intend that each representation,
warranty, and covenant contained herein shall have independent significance.
If any party has breached any representation, warranty or covenant contained
herein in any respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of the
relative levels
36
of specificity) that the party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty or covenant.
11.11 ARBITRATION OF CLAIMS.
(a) Except as otherwise specifically provided elsewhere in
this Agreement, any dispute or difference between or among the parties
arising out of this Agreement or the transactions contemplated hereby,
including, without limitation, any dispute between any Indemnitee and any
Indemnifying Party under Article IX which the parties are unable to resolve
themselves, shall be submitted to and resolved by arbitration pursuant to and
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association in effect on the date of the initial request that
gave rise to the dispute to be arbitrated (the "AAA Rules").
(b) Such arbitration shall be conducted by a panel of three
arbitrators, which shall be selected from a list of arbitrators pursuant to
and in accordance with the AAA Rules. Such arbitration proceeding shall be
conducted in Dallas, Texas. The arbitrators shall not have the authority to
modify any term or provision of this Agreement. The arbitration proceeding
shall include an opportunity for the parties to conduct discovery in advance
of the proceeding, which discovery may be limited by rules established by the
arbitrators. Notwithstanding the foregoing, the parties agree that they will
attempt, and they intend that they and the arbitrators should use their best
efforts in that attempt, to conclude such arbitration proceeding and have a
final decision from the arbitrators within 90 days from the date of selection
of the arbitrators; PROVIDED, HOWEVER, that the arbitrators shall be entitled
to extend such 90-day period one or more times to the extent necessary for
such arbitrators to place a dollar value on any claim that may be
unliquidated. The arbitrators shall promptly deliver a written decision with
respect to the dispute to each of the parties, which shall promptly act in
accordance therewith. Each party agrees that any decision of the arbitrators
shall be final, conclusive and binding, absent fraud or manifest error, and
that they will not contest any action by any other party hereto in accordance
with a decision of the arbitrators, except on a basis of fraud or manifest
error. It is specifically understood and agreed that any party may enforce
any award rendered pursuant to the arbitration provisions of this Section
11.11 by bringing suit in any court of competent jurisdiction.
(c) All fees, costs and expenses (including attorneys' fees
and expenses) incurred by the party that prevails in any such arbitration
commenced pursuant to this Section 11.11 or any judicial action or proceeding
seeking to enforce the agreement to arbitrate disputes as set forth in this
Section 11.11 or seeking to enforce any order or award of any arbitration
commenced pursuant to this Section 11.11 may be assessed against the party or
parties that do not prevail in such arbitration in such manner as the
arbitrators or the court in such judicial action, as the case may be, may
determine to be appropriate under the circumstances. All costs and expenses
attributable to the arbitrators shall be allocated among the parties to the
arbitration in such manner as the arbitrators shall determine to be
appropriate under the circumstances.
11.12 CUMULATIVE REMEDIES. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
11.13 THIRD PARTY BENEFICIARIES. No provision of this Agreement
shall create any third party beneficiary rights in any Person, including any
employee of Buyer or employee or former employee of Repco or any Affiliate
thereof (including any beneficiary or dependent thereof).
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
SHAREHOLDERS:
---------------------------------------
S. ▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
REPCO:
REPLACEMENT & EXCHANGE PARTS CO., INC.
By: -----------------------------------
S. ▇▇▇ ▇▇▇▇▇▇▇, President
ATC:
AFTERMARKET TECHNOLOGY CORP.
By: -----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
BUYER:
REPCO ACQUISITION CORP.
By: -----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
38