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EXHIBIT 10.6
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FORM OF STOCK PURCHASE AGREEMENT
DATED AS OF __________________
AMONG
CHIEF AUTO PARTS INC.
TCW SPECIAL CREDITS FUND V -- THE PRINCIPAL FUND
AND
CERTAIN STOCKHOLDERS
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TABLE OF CONTENTS
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RECITALS.................................................................. 1
ARTICLE I
DEFINITIONS
1.1 Definitions........................................................... 2
ARTICLE II
ACQUISITION OF SHARES
2.1 Issuance and Acquisition of Common Stock.............................. 8
2.2 Closings.............................................................. 8
2.3 Conditions to the Stockholders' Obligations........................... 9
2.4 Conditions to the Company's Obligations............................... 10
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY,
THE PARENT AND OF EACH STOCKHOLDER
3.1 Representations, Warranties and Covenants of the Company.............. 11
3.2 Representations, Warranties and Covenants of the Parent............... 12
3.3 Representations, Warranties and Covenants of the Stockholders......... 14
ARTICLE IV
CERTAIN TRANSFER AGREEMENTS
4.1 General Restriction on Transfers of the Common Stock.................. 17
4.2 Call Rights of the Company............................................ 18
4.3 Put Rights of the Stockholders........................................ 19
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4.4 Drag-Along/Tag-Along Rights......................................... 19
4.5 Delivery and Payment Procedures for Shares Subject to the
Call Right, Put Right or the Drag-Along/Tag-Along Rights............ 21
4.6 Registration Rights................................................. 22
ARTICLE V
ADDITIONAL AGREEMENTS AMONG THE STOCKHOLDERS AND THE COMPANY
5.1 Confidentiality..................................................... 29
5.2 No Right to Continued Employment.................................... 30
5.3 Reorganization, etc................................................. 30
5.4 Disclosure.......................................................... 30
ARTICLE VI
MISCELLANEOUS
6.1 Amendment and Modification.......................................... 30
6.2 Survival of Representations and Warranties.......................... 31
6.3 Successors and Assigns; Entire Agreement............................ 31
6.4 Separability........................................................ 31
6.5 Notices............................................................. 32
6.6 Governing Law....................................................... 33
6.7 Headings............................................................ 33
6.8 Counterparts........................................................ 33
6.9 Further Assurances.................................................. 33
6.10 Remedies ........................................................... 33
6.11 Fees and Expenses................................................... 33
6.12 Termination of the Agreement........................................ 34
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SCHEDULES
Schedule I Managers Purchasing Shares of Common Stock
Directors Purchasing Shares of Common Stock
EXHIBITS
Exhibit A Form of Series I Promissory Note
Exhibit B Form of Series II Promissory Note
Exhibit C Form of Stock Pledge Agreement
Exhibit D By-laws of the Company
Exhibit E Fourth Restated Certificate of Incorporation of the Company
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is dated as
of __________, 199__ by and among Chief Auto Parts Inc., a Delaware corporation
(the "Company"), TCW Special Credits Fund V -- The Principal Fund, a California
limited partnership (the "Parent"), and the individuals designated on the
signature pages hereto (individually, a "Stockholder" and collectively, the
"Stockholders," except as such terms are modified under the definition
"Stockholder(s)" in Article I hereof).
RECITALS
A. The Company, General Electric Capital Corporation, a New
York corporation ("GECC"), the Parent and Chief Acquisition Corp., a Delaware
corporation (the "Merger Sub") entered into an Agreement and Plan of Merger
dated as of June 1, 1994, as amended by a certain letter agreement dated June
17, 1994 between the Company, GECC, the Parent and the Merger Sub, (the "Merger
Agreement") pursuant to which, among other things, the Merger Sub was merged on
June 27, 1994 with and into the Company (the "Acquisition"), upon the terms and
subject to the conditions set forth therein.
B. Pursuant to the Merger Agreement, the Company was the
surviving corporation.
C. On the Closing Date, the Parent and certain of its
affiliates will hold an aggregate of 47,210.45 shares of Common Stock of the
Company, constituting 94.4209% of all the issued and outstanding shares of
Common Stock of the Company (calculated as if all shares of Common Stock
issuable to the Stockholders have been issued and outstanding as of the Closing
Date).
D. The Board of Directors of the Company has authorized by
resolution (i) the issuance and sale of the Common Stock to the Stockholders
designated on the signature pages hereto, (ii) the adoption and implementation
of a bonus (the "Bonus") for each Manager equal to one-third of the purchase
price of the Common Stock that such Manager purchases on the Closing Date
(together with additional cash payments to satisfy the maximum potential
federal and state tax liability incurred by each Manager as a result of the
Bonus) (collectively, the "Acquisition Bonus Plan"), (iii) the adoption and
implementation of the 1994 Executive Target Bonus Plan (the "1994 Target Bonus
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Plan") pursuant to which the Company shall grant cash bonuses to key employees
of the Company, and (iv) the adoption and implementation of the 1994 Executive
Option Plan (the "1994 Executive Option Plan") pursuant to which the Company
shall issue options to the Stockholders to purchase the Common Stock (the
"Options").
E. Each of the Managers is presently employed by the Company.
F. The Director presently serves as a member of the Board of
Directors of the Company.
G. The Parent, as the majority stockholder of the Company,
desires to grant the opportunity to the Stockholders to make an investment in
the Company, and thereby to acquire an increased personal and proprietary
interest in the Company's success and progress, through the purchase of the
Common Stock pursuant to this Agreement.
H. The Company desires to sell and each of the Stockholders
desires to purchase the Common Stock set forth on such Stockholder's signature
page hereto.
I. The parties hereto desire to set forth certain agreements
regarding their future relationships and their rights and obligations with
respect to the Common Stock and the Options.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein and intending to be legally
bound hereby, the parties hereto hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Terms used in this Agreement in initial
capital letters shall have the meanings set forth in this Section 1.1, in the
Sections of this Agreement referred to in this Section 1.1, or, if not defined
in this Section 1.1, then as defined in the Merger Agreement.
"Acquisition" shall have the meaning set forth in
Recital A hereof.
"Acquisition Bonus Plan" shall have the meaning set forth
in Recital D hereof.
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"Adjusted EBITDA" shall mean the Company's annual
earnings before interest expense, interest income, provisions for income taxes,
depreciation, amortization, gains or losses relating to the extinguishment of
debt, accruals for bonuses payable in respect of each of the Company's
Acquisition Bonus Plan and the 1994 Executive Target Bonus Plan, accruals in
respect of the Company's 1994 Executive Option Plan, and other items relating
to the Acquisition as determined from the Company's annual financial statements
prepared in accordance with generally accepted accounting principles by the
Company's independent accountants; provided that, at its reasonable discretion,
the Board of Directors shall be entitled to modify the foregoing calculation
where it deems such modification to be appropriate.
"Balance Sheet Date" means the date of the most recently
completed fiscal quarter.
"By-laws" means the By-laws of the Company, as amended
to date, attached as Exhibit D hereto.
"Bonus" shall have the meaning set forth in Recital D
hereof.
"Call Expiration Date" shall have the meaning set forth
in Section 4.2(a) hereof.
"Call Notice" shall have the meaning set forth in
Section 4.2(a) hereof.
"Call Right" shall have the meaning set forth in
Section 4.2(a) hereof.
"Certificate of Incorporation" means the Fourth Restated
Certificate of Incorporation of the Company attached as Exhibit E hereto.
"Closing" shall have the meaning set forth in Section
2.2(a) hereof.
"Closing Date" shall have the meaning set forth in
Section 2.2(a) hereof.
"Common Stock" means the shares of common stock, par
value $.01 per share, of the Company.
"Company" shall have the meaning set forth in the
preamble hereof.
"Demanding Security Holder(s)" shall have the meaning set
forth in Section 4.6(a)(i) hereof.
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"Director" means Xxxxxx X. Xxxxxxx.
"Drag-Along Rights" shall have the meaning set forth in
Section 4.4(b) hereof.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Fair Market Value" means with respect to any specified
date (i) if the Common Stock is publicly traded, the last reported sales price
(or the asking price if the shares of Common Stock is traded on the NASDAQ OTC)
on such date, or (ii) the value as of such date as determined by a nationally
recognized appraiser selected by the Company if there is no public market for
the Common Stock; provided, however, that if the aggregate number of the shares
of Common Stock subject to valuation pursuant to subsection (ii) above shall in
the aggregate represent less than 0.5% of the Company's aggregate Common Stock
(expressed on a fully-diluted basis assuming the exercise of options and
warrants then outstanding), then Fair Market Value shall be computed assuming
that the value of the Company's aggregate Common Stock is equal to the sum of
(A) the product of Adjusted EBITDA for the four fiscal quarters ending on the
Balance Sheet Date multiplied by the Multiple, (B) cash and cash equivalents as
of the Balance Sheet Date, (C) an amount equal to the aggregate exercise price
of all options and warrants then outstanding less amounts that would be payable
under the 1994 Executive Target Bonus Plan had all Options outstanding under
the 1994 Executive Option Plan been exercised less (D) total indebtedness
(including obligations under capitalized leases) outstanding as of the Balance
Sheet Date, all as shall be reasonably adjusted in good faith by the Board of
Directors of the Company for material changes in the Company's balance sheet
after the Balance Sheet Date.
"Fractional Amount" shall have the meaning set forth in
Section 4.4(a) hereof.
"GECC" shall have the meaning set forth in Recital A.
"Initial Public Offering" means the effectiveness of a
registration statement under the Securities Act (other than a registration on
Form S-8 or S-4 or any successor form or any other registration relating to a
special offering to the Company's employees or security holders) covering any
of the Common Stock and the completion of a sale of such Common Stock
thereunder, if as a result of such sale, (i) the Company becomes a reporting
company under Section 12 of the Exchange Act, and (ii) any of the shares of
Common Stock are traded on the New York Stock Exchange or the
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American Stock Exchange, or quoted on the NASDAQ National Market System.
"Issuance Period" shall have the meaning set forth in
Section 2.1(a) hereof.
"Manager(s)" mean the individuals designated on Schedule
I hereto other than the Director.
"Maximum Permitted Issuance Amount" shall have the
meaning set forth in Section 2.1(a) hereof.
"Merger Agreement" shall have the meaning set forth in
Recital A hereof.
"Merger Sub" shall have the meaning set forth in Recital
A hereof.
"Multiple" shall be equal to 5.0 but may be adjusted from
time to time at the reasonable discretion of the Board of Directors of the
Company; provided, however, that the Multiple shall not be less than 5.0 at any
time.
"NASD" means the National Association of Securities
Dealers, Inc.
"NASDAQ OTC" means National Association of Securities
Dealers Automated Quotations Systems Over-the-Counter.
"1994 Executive Option Plan" shall have the meaning set
forth in Recital D hereof.
"1994 Target Bonus Plan" shall have the meaning set forth
in Recital D hereof.
"Options" shall have the meaning set forth in Recital D
hereof.
"Parent" shall have the meaning set forth in the preamble
hereof.
"Permitted Transferee" with respect to a Transfer by an
individual Stockholder, means a Transfer (i) to such Stockholder's spouse or
issue, (ii) to a trust, the beneficiaries of which, a corporation, the
stockholders and directors of which, and a partnership, the limited and general
partners of which, include only the Stockholder or his or her spouse or issue,
or (iii) by reason of a divorce whether in connection with a settlement of
divorce or entry of a decree or judgment of a divorce or restraint, levy,
execution or other such involuntary transfers; provided, however, that as a
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condition precedent to such Transfer, such Permitted Transferee shall execute
and deliver a Transferee Agreement.
"Person" means an individual, corporation, partnership,
trust or unincorporated organization, joint venture, joint stock company or
other entity.
"Pledged Shares" shall have the meaning set forth in
Section 2.1(d) hereof.
"Promissory Notes" means, collectively, the Series I
Promissory Notes and the Series II Promissory Notes.
"Put Notice" shall have the meaning set forth in Section
4.3(b) hereof.
"Put Right" shall have the meaning set forth in Section
4.3(a) hereof.
"Registrable Shares" shall have the meaning set forth in
Section 4.6(b)(i) hereof.
"Registration Rights" means the rights of each of the
Stockholders to have the Common Stock owned by such Stockholder registered
under the Securities Act and registered or qualified under the securities laws
of the various states of the United States as provided in Section 4.6 hereof.
"Sale" shall have the meaning set forth in Section 4.4
hereof.
"Sale Notice" shall have the meaning set forth in Section
4.4(a) hereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Seller" shall have the meaning set forth in Section 4.4
hereof.
"Series I Promissory Notes" shall have the meaning set
forth in Section 2.1(b) hereof.
"Series II Promissory Notes" shall have the meaning set
forth in Section 2.1(c) hereof.
"Stockholder(s)" means the individuals designated on the
signature pages hereto and their respective
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Permitted Transferees. Any Permitted Transferee of a Stockholder shall, for all
purposes of this Agreement, be considered to be such Stockholder and vice
versa, and any Permitted Transferee that acquires any Common Stock of the
Company from any Stockholder or any direct or indirect transferee of any
Stockholder shall be subject to all of the obligations, liabilities or
restrictions applicable to such Stockholder and any event (including without
limitation termination of employment or other relationship with the Company of
such Stockholder) occurring with respect to such Stockholder shall be deemed to
occur with respect to such Permitted Transferee.
"Stock Pledge Agreement" shall have the meaning set forth
in Section 2.1(d) hereof.
"Subsequent Closing" shall have the meaning set forth in
Section 2.2(b) hereof.
"Subsequent Closing Date" shall have the meaning set
forth in Section 2.2(b) hereof.
"Subsequent Issuance" shall have the meaning set forth in
Section 2.2(b) hereof.
"Tag Notice" shall have the meaning set forth in Section
4.4(c) hereof.
"Tag-Along Rights" shall have the meaning set forth in
Section 4.4(c) hereof.
"Term" means the period from the date of this Agreement
until the date of its expiration or termination as provided in Section 6.12
hereof.
"Transfer," with respect to a share of Common Stock,
means the sale, assignment, transfer, pledge, hypothecation, gift or other
disposition whatsoever (other than a redemption by the Company) of such Common
Stock, or the encumbrance or granting of any rights or interests whatsoever in
or in respect of such Common Stock.
"Transfer Notice" shall have the meaning set forth in
Section 4.1(c) hereof.
"Transferee Agreement" means an agreement (i) in writing
in form and substance satisfactory to the Company, (ii) executed by a proposed
transferee of the Common Stock of any Stockholder, (iii) delivered to the
Company and the Stockholders, (iv) pursuant to which such transferee shall (a)
agree to be bound by the terms and conditions of this
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Agreement applicable to the Stockholder transferring such Common Stock, and (b)
be so bound.
"Trigger Event" shall mean the first to occur of (i) the
termination of the Stockholder's employment or other relationship with the
Company for any reason, or (ii) the lawful acceleration and demand by the
Company for payment of principal on a Manager's Promissory Note(s) to the
extent that the Common Stock (or dividends thereon) is pledged to the Company
to secure the payment thereof.
ARTICLE II
ACQUISITION OF SHARES
2.1 Issuance and Acquisition of Common Stock.
(a) Subject to the terms and conditions set forth herein,
at the Closing or within a period beginning on the Closing Date and ending June
27, 1995 (the "Issuance Period") and upon receipt of a written request
therefor, the Company shall issue to the Stockholders and the Stockholders
shall purchase from the Company an aggregate of up to 2,789.55 shares of Common
Stock (the "Maximum Permitted Issuance Amount") (representing an aggregate of
5.5791% of the issued and outstanding shares of Common Stock of the Company as
of the Closing Date assuming that all shares issuable pursuant to this
Agreement have been issued as of the Closing Date), at a purchase price per
share equal to $1,419.71.
(b) If and to the extent desired by each Manager to
finance his or her purchase of the Common Stock, the Company shall lend to each
such Manager, on any date on which the Common Stock is issued to such Manager
pursuant to the terms of this Agreement, an amount which, for any such Manager,
shall not exceed the product of (x) the number of shares of Common Stock
actually issued to such Manager as set forth on each such Manager's respective
signature page hereto, and (y) $630.98. Such loan shall be evidenced by a
promissory note in favor of the Company executed by each such Manager in
substantially the form of Exhibit A attached hereto (collectively, the "Series
I Promissory Notes").
(c) If and to the extent desired by each Manager to
further finance his or her purchase of the Common Stock, the Company shall lend
to each such Manager, on the date on which the Common Stock is issued to each
such Manager pursuant to the terms of this Agreement an amount set forth on
each such Manager's respective signature page hereto (the aggregate amount of
which loans shall not exceed $400,000). Such loan
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shall be evidenced by a promissory note in favor of the Company executed by
each such Manager substantially in the form of Exhibit B attached hereto
(collectively, the "Series II Promissory Notes").
(d) As a condition to the making of any of the loans
described in the foregoing clauses (b) or (c) to any Manager, such Manager will
execute and deliver to the Company a Stock Pledge Agreement substantially in
the form of Exhibit C attached hereto (the "Stock Pledge Agreement"), whereby
such Manager will convey, pledge, assign and transfer to the Company, and
thereby grant to the Company, a valid, first priority security interest in the
Manager's right, title and interest to the Common Stock purchased by such
Manager pursuant to this Agreement (the "Pledged Shares") and any dividends
paid on the Pledged Shares, the certificate representing or evidencing the
Pledged Shares to be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Company.
2.2 Closings.
(a) The Closing of the initial issuance of the Common
Stock to be issued by the Company pursuant to Section 2.1 hereof (the
"Closing") shall take place at the offices of the Company, 00000 Xxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, at 10:00 A.M., local time, on October
31, 1994 or at such other date, time or place as the parties hereto may agree
in writing (such date being referred to herein as the "Closing Date"). At the
Closing, the Company shall deliver to each Stockholder or its designee the
certificate evidencing the number of shares of Common Stock to be issued to
such Stockholder as set forth on each stockholder's respective signature page
hereto, all registered in such Stockholder's name, against delivery of payment
for such shares of Common Stock; provided, however, that with respect to the
Common Stock purchased by any Manager who elects to finance his or her purchase
pursuant to Sections 2.1(b) or 2.1(c) hereof, the certificate(s) evidencing
such Common Stock shall be held by the Company or on behalf of the Company as
provided in Section 2.1(d) hereof and in the Stock Pledge Agreement.
(b) During the Issuance Period, the Company may issue to
the Stockholders additional shares of Common Stock pursuant to the terms of
this Agreement (the "Subsequent Issuances"); provided, however, that the
aggregate number of shares of Common Stock issued pursuant to this Agreement
shall not exceed the Maximum Permitted Issuance Amount. The closing of such
Subsequent Issuances (the "Subsequent Closing") shall take place from time to
time during the Issuance Period as
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reasonably agreed to by the Company and the applicable Stockholder at the
offices of the Company (each such date being a "Subsequent Closing Date").
2.3 Conditions to the Stockholders' Obligations. The obligation
of each Stockholder to purchase the Common Stock to be issued to him or her as
set forth herein on the Closing Date or, as the case may be, on any Subsequent
Closing Date, is subject to the satisfaction on or prior to the Closing Date of
the following conditions:
(a) The representations and warranties of the Company and
the Parent set forth herein shall be true and correct in all material respects
at and as of the Closing Date or, as the case may be, on any Subsequent Closing
Date, as though then made, and all covenants of the Company and the Parent set
forth herein required to be performed by it at or prior to the Closing or any
such Subsequent Closing shall have been performed in all material respects.
(b) The By-laws and Certificate of Incorporation of the Company
in effect on the Closing Date shall be substantially in the form of Exhibit D
and Exhibit E, respectively, attached hereto.
(c) No preliminary or permanent injunction or order, decree or
ruling of any nature shall have been issued by a court or governmental agency
of competent jurisdiction, nor shall any statute, rule, regulation or executive
order promulgated or enacted by any foreign or United States federal, state or
local governmental authority be in effect which would prevent the consummation
of the transactions contemplated by this Agreement.
(d) The execution of this Agreement by the parties hereto and
the consummation of the transactions contemplated hereby shall not be in
violation of any applicable laws or orders, regulations, rulings or
requirements of a court, public body or authority by which such parties or
their respective properties are bound.
2.4 Conditions to the Company's Obligations. The obligations
of the Company to issue the Common Stock to be issued by it to each Stockholder
as set forth herein on the Closing Date or, as the case may be, on any
Subsequent Closing Date, is subject to the satisfaction on or prior to the
Closing Date or, as the case may be, any Subsequent Closing Date, of the
following conditions:
(a) The representations and warranties of such Stockholder set
forth herein shall be true and correct in all material respects at and as of
the Closing Date or, as the
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case may be, on any Subsequent Closing Date, as though then made, and all
covenants of such Stockholder required to be performed by it at or prior to the
Closing or any Subsequent Closing, as the case may be, shall have been
performed in all material respects.
(b) The conditions set forth in subparagraphs (c) and (d)
of Section 2.3 hereof shall have been satisfied.
(c) Such Stockholder shall have delivered to the Company,
pursuant to the terms of Section 2.2 hereof, payment of the purchase price for
the Common Stock purchased by such Stockholder set forth on such Stockholder's
respective signature page hereto, including, if applicable, the delivery by a
Manager of an executed Series I Promissory Note, Series II Promissory Note and
Stock Pledge Agreement, and duly executed instruments of transfer or assignment
in blank for the Pledged Shares, all in form and substance satisfactory to the
Company.
ARTICLE III
WARRANTIES AND COVENANTS OF THE COMPANY, THE
PARENT AND OF EACH STOCKHOLDER
3.1 Representations, Warranties and Covenants of the Company.
The Company represents and warrants to each Stockholder as follows:
(a) Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.
(b) Corporate Power and Authority. The Company has all
requisite corporate power and authority to make, execute and deliver this
Agreement and to carry out all of the transactions required to be carried out
by the Company hereunder.
(c) Due Authorization. The Company has taken such
corporate action as is necessary or appropriate to enable it to perform its
obligations hereunder, including, without limitation, the issuance and sale of
the Common Stock and the issuance of the Options pursuant to the 1994 Executive
Option Plan. This Agreement constitutes a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy,
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insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(d) Validity of Common Stock. The Common Stock to be
issued and sold hereunder has been duly authorized by the Board of Directors of
the Company, and when issued pursuant to this Agreement such shares will be
validly issued, non-assessable, fully paid, free and clear of all pledges,
liens, encumbrances and preemptive rights; provided, however, that if a Manager
has elected to finance his or her purchase of the Common Stock pursuant to
Section 2.1(b) or 2.1(c) hereof, such Manager's Common Stock shall be subject
to the Company's first priority security interest in the Pledged Shares
pursuant to Section 2.1(d) hereof and the Stock Pledge Agreement.
(e) Validity of the 1994 Executive Option Plan. The 1994
Executive Option Plan has been duly authorized and each of the Options to be
issued thereunder has been duly authorized by the Board of Directors of the
Company, and when issued pursuant to the terms of the 1994 Executive Option
Plan will be validly issued, non-assessable, fully paid, free and clear of all
pledges, liens, encumbrances and preemptive rights. Each of the shares of
Common Stock subject to the Options has been duly authorized and, when issued
upon exercise of the Options in accordance with their terms, will be validly
issued, non-assessable, fully paid, free and clear of all pledges, liens,
encumbrances and preemptive rights.
(f) Validity of the 1994 Target Bonus Plan and the
Acquisition Bonus Plan. Each of the 1994 Target Bonus Plan and the Acquisition
Bonus Plan has been duly authorized by the Board of Directors of the Company.
(g) No Violations. Neither the execution, delivery or
performance by the Company of this Agreement nor compliance by the Company with
any of the provisions hereof will (i) violate, conflict with or result in any
breach of any provision of the Certificate of Incorporation or By-laws of the
Company, (ii) result in a violation or breach of, or constitute a default (or
an event which with the giving of notice or lapse of time or both would
constitute an event of default) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract, license,
agreement or other instrument or obligation to which the Company is a party or
by which it or any of its properties or assets is bound or (iii) violate any
statute, rule, regulation, order, writ, injunction or decree of any
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governmental body or authority by which the Company or any of its properties or
assets is bound, excluding from the foregoing clauses (ii) and (iii)
violations, breaches or defaults which, either individually or in the
aggregate, would not have a material adverse effect on the business, prospects,
operations, properties or financial condition of the Company.
(h) Capitalization. The authorized capital stock of the
Company consists of 100,000 shares of Common Stock, par value $.01 per share,
of which 50,000 shares will be issued and outstanding on the Closing Date
(assuming that all of the shares of Common Stock issuable pursuant to this
Agreement are issued as of the Closing Date). The Company has no authorized
preferred stock.
(i) Reliance. The Company acknowledges that the
Stockholders are entering into this Agreement in reliance upon the Company's
representations and warranties and other covenants and agreements contained
herein.
3.2 Representations, Warranties and Covenants of the Parent.
The Parent represents and warrants to, and covenants and agrees with, each
Stockholder as follows:
(a) Organization and Good Standing. The Parent is a
limited partnership duly organized, validly existing and in good standing under
the laws of the State of California and has all requisite partnership power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.
(b) Partnership Power and Authority. The Parent has all
requisite partnership power and authority to make, execute and deliver this
Agreement and to carry out all of the transactions required to be carried out
by the Parent hereunder.
(c) Due Authorization. The Parent has taken such
partnership action as is necessary or appropriate to enable it to perform its
obligations hereunder. This Agreement constitutes a legal, valid and binding
obligation of the Parent enforceable against the Parent in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(d) No Violations. Neither the execution, delivery or
performance by the Parent of this Agreement nor compliance by the Parent with
any of the provisions hereof
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will (i) violate, conflict with or result in any breach of any provision of the
Certificate of Limited Partnership or Partnership Agreement of the Parent, (ii)
result in a violation or breach of, or constitute a default (or an event which
with the giving of notice or lapse of time or both would constitute an event of
default) under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract, license, agreement or other instrument or
obligation to which the Parent is a party or by which it or any of its
properties or assets is bound or (iii) violate any statute, rule, regulation,
order, writ, injunction or decree of any governmental body or authority by
which the Parent or any of its properties or assets is bound, excluding from
the foregoing clauses (ii) and (iii) violations, breaches or defaults which,
either individually or in the aggregate, would not have a material adverse
effect on the business, prospects, operations, properties or financial
condition of the Parent.
(e) Reliance. The Parent acknowledges that the
Stockholders are entering into this Agreement in reliance upon the Parent's
representations and warranties and other covenants and agreements contained
herein.
3.3 Representations, Warranties and Covenants of the
Stockholders. Each of the Stockholders severally represents and warrants to the
Company, the Parent and the other Stockholders (as to herself or himself only)
that:
(a) Power and Authority. Such Stockholder has full legal
right, capacity, power and authority to make, execute and deliver this
Agreement, and if applicable, the Series I Promissory Note, the Series II
Promissory Note and the Stock Pledge Agreement and to carry out all of the
transactions required to be carried out by such Stockholder hereunder and
thereunder. This Agreement, and if applicable, the Series I Promissory Note,
the Series II Promissory Note and the Stock Pledge Agreement constitute legal,
valid and binding obligations of such Stockholder enforceable against such
Stockholder in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject,
as to enforceability, to general principles of good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(b) No Violations. Neither the execution, delivery or
performance by such Stockholder of this Agreement and, if applicable, the
Series I Promissory Note, the Series II Promissory Note and the Stock Pledge
Agreement, nor compliance by such Stockholder with any of the provisions
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hereof or thereof will (i) result in a violation or breach of, or constitute a
default (or an event which with the giving of notice or lapse of time or both
would constitute an event of default) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract, license,
agreement or other instrument or obligation to which such Stockholder is a
party or by which he or she or any of his or her properties or assets is bound
or (ii) violate any statute, rule, regulation, order, writ, injunction or
decree of any governmental body or authority by which such Stockholder or any
of his or her properties or assets is bound, excluding from the foregoing
clause (ii) violations, breaches or defaults which, either individually or in
the aggregate, would not have a material adverse effect on the assets,
properties or financial condition of such Stockholder.
(c) Investment Matters.
(i) Each Stockholder understands that by the terms of
this Agreement he or she is purchasing the Common Stock issued and delivered by
the Company pursuant to, and in reliance on, exemptions from the registration
requirements of the Securities Act and applicable state securities laws, and
without the approval, disapproval, or passing on the merits by any regulatory
authority; that for purposes of such exemptions, the Company will rely upon the
representations, warranties and agreements of such Stockholder contained
herein; and that such non-compliance with registration requirements is not
permissible unless such representations and warranties are correct and such
agreements are performed.
(ii) Each Stockholder is either (A) a member of the
management of the Company who has operated the business of the Company in the
past, or (B) a member of the Company's Board of Directors.
(iii) Each Stockholder is acquiring the Common Stock
issued to him or her pursuant to this Agreement for his or her own account and
not with a view to or for sale in connection with the distribution thereof
within the meaning of the Securities Act and such Stockholder will not
distribute or otherwise dispose of such Common Stock in violation of the
Securities Act, other applicable law or this Agreement. Each Stockholder agrees
that the certificates evidencing the Common Stock issued to him or her will
bear a restrictive legend to the foregoing effect.
(iv) Each Stockholder understands that the Common
Stock has not been registered under the Securities Act or the securities laws
of any state and must be held by such Stockholder indefinitely unless
subsequently registered under the Securities Act and any applicable state
securities laws or
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unless an exemption from such registration becomes or is available.
(v) Each Stockholder confirms that he or she is
familiar with the business of the Company, has knowledge and experience in
financial and business matters and is fully capable of understanding and
evaluating the merits and risks of the type of investment being made by such
Stockholder pursuant to this Agreement and that such Stockholder has had the
opportunity to ask questions of the Company's officers and employees and to
obtain (and that such Stockholder has received to his or her satisfaction) such
information about the business and financial condition of the Company as he or
she has reasonably requested.
(vi) Each Stockholder, or each Stockholder together
with his or her advisors, if any, has adequately analyzed the risks of an
investment in the Common Stock and determined that the Common Stock is a
suitable investment for him or her and that such Stockholder is able at this
time and in the foreseeable future to bear the economic risk of a total loss of
his or her investment in the Company, including a loss of the Common Stock
pursuant to the Stock Pledge Agreement.
(vii) Each Stockholder understands that there is no
established market for the Common Stock and that no public market for the
Common Stock is presently foreseeable.
(viii) Each Manager understands that in conjunction
with the loan(s) made by the Company to purchase the Common Stock pursuant to
Sections 2.2(b) or 2.2(c) hereof, he or she will be required to execute a Stock
Pledge Agreement pursuant to Section 2.2(d) hereof whereby such Manager will
grant a first priority security interest in his or her Common Stock, which such
Manager will pledge to the Company to secure his or her obligations under the
Series I Promissory Note and/or the Series II Promissory Note.
(ix) Each Manager understands that should he or she
default on his or her obligations under the Series I Promissory Note and/or the
Series II Promissory Note, such Manager could lose his or her Common Stock and
thus his or her entire investment in the Company.
(x) Each Manager understands that should he or she
default on his or her obligations to pay interest annually on each anniversary
of the Series I Promissory Note and/or the Series II Promissory Note, such
failure constitutes an Event of Default and such Manager could lose his or her
Common Stock and thus his or her entire investment in the Company.
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(xi) Each Stockholder has not and will not, directly
or indirectly, offer, sell, transfer, assign, exchange, pledge, encumber, or
otherwise dispose of the Common Stock except in accordance with the terms of
this Agreement and the Stock Pledge Agreement as long as such agreements remain
in effect.
(xii) Each Stockholder has adequate means of providing
for his or her current needs and foreseeable personal contingencies and has no
need for his or her investment in the Common Stock to be liquid.
(xiii) Each Stockholder is aware that there are
substantial risks incident to the purchase of the Common Stock.
(d) Certificate and By-laws. Each Stockholder has received
for his or her review the Certificate of Incorporation and By-laws of the
Company as are currently in effect and attached hereto as Exhibits E and D,
respectively.
(e) Reliance. Each Stockholder acknowledges that the
Company, the Parent and each of the other Stockholders are entering into this
Agreement in reliance upon such Stockholder's representations and warranties
and other covenants and agreements contained herein.
ARTICLE IV
CERTAIN TRANSFER AGREEMENTS
4.1 General Restriction on Transfers of the Common Stock.
(a) During the Term of this Agreement, no Stockholder
shall Transfer the Common Stock unless such Transfer complies with the terms
specified in this Agreement, which are intended to, among other things, ensure
compliance with the provisions of the Securities Act, and the Stock Pledge
Agreement, if applicable. Any purported Transfer in violation of this Agreement
or the Stock Pledge Agreement, if applicable, shall be null and void and of no
force and effect and the purported transferees shall have no rights or
privileges in or with respect to the Company or the Common Stock purported to
have been so Transferred. The Company shall refuse to recognize any such
Transfer and shall not reflect on its records any change in record ownership of
such Common Stock purported to have been so transferred.
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(b) Each Stockholder agrees that, except for a Transfer
(i) to a Permitted Transferee, (ii) pursuant to the exercise of the Call
Rights, Put Rights, Drag-Along/Tag-Along Rights or Registration Rights
specified in this Article IV, or (iii) pursuant to Rule 144 or Rule 701 under
the Securities Act following any public offering of the Common Stock, he or she
will not Transfer the Common Stock.
(c) Prior to any such Transfer or attempted Transfer
pursuant to Sections 4.1(b)(i) and 4.1(b)(iii), the holder of the Common Stock
shall give 20 days' written notice to the Company of such holder's intention to
effect such Transfer (the "Transfer Notice"). Each such Transfer Notice shall
describe the manner and circumstances of the proposed Transfer in sufficient
detail and shall be accompanied by either (i) a written opinion of legal
counsel addressed to the Company and reasonably satisfactory in form and
substance to the Company and the Company's counsel, to the effect that the
proposed Transfer may be effected without registration under the Securities Act
and applicable state securities laws, or (ii) a "no action" letter from the SEC
to the effect that the Transfer of such securities without registration under
the Securities Act will not result in a recommendation by the staff of the SEC
that action be taken with respect thereof, or (iii) a combination of (i) and
(ii) above. After receipt of the Transfer Notice and an opinion of legal
counsel or a "no action" letter from the SEC, the Company shall, within 10 days
thereof, notify the Stockholder as to whether such opinion or "no action"
letter is reasonably satisfactory and, if so, such Stockholder shall thereupon
be entitled to Transfer the Common Stock in accordance with the terms of the
Transfer Notice. Each certificate evidencing the Common Stock transferred as
above provided shall bear the appropriate restrictive legend set forth in
Section 4.1(d) hereof. Any purported Transfer in violation of this Section 4.1
shall be null and void and of no force or effect, and the Company shall not
record any such Transfer on its stock transfer books.
(d) The certificates representing the Common Stock,
including certificates issued by the Company upon any Transfer of such Common
Stock, unless such Transfer is pursuant to an Initial Public Offering or a
subsequent registered public offering or sale pursuant to Rule 144 or Rule 701
under the Securities Act of such Common Stock, shall bear the following legend
as well as any other legends required under applicable law:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY BE
REOFFERED AND SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE. THESE SECURITIES ARE
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SUBJECT TO THE TERMS AND CONDITIONS OF A STOCK PURCHASE
AGREEMENT DATED AS OF OCTOBER 31, 1994 BY AND AMONG CHIEF AUTO
PARTS INC., TCW SPECIAL CREDITS FUND V -- THE PRINCIPAL FUND AND
CERTAIN STOCKHOLDERS OF THE COMPANY. A COPY OF THIS STOCK
PURCHASE AGREEMENT IS ON FILE WITH THE SECRETARY OF CHIEF AUTO
PARTS INC.
4.2 Call Rights of the Company.
(a) The Company is hereby granted a right (the "Call
Right"), exercisable in its sole discretion, to purchase upon the occurrence of
a Trigger Event 100% of the Common Stock then owned by a Stockholder and
originally acquired by such Stockholder pursuant to this Agreement. The Company
may exercise its Call Right by notifying the Stockholder in writing (the "Call
Notice") within 30 days of the occurrence of the Trigger Event (the "Call
Expiration Date") of its intention to exercise its Call Right. If such Call
Notice is given, the Company is obligated to repurchase from such Stockholder
and such Stockholder is obligated to sell to the Company, not later than the
60th day following the occurrence of the Trigger Event, all of the Common Stock
then owned by such Stockholder and originally acquired by such stockholder
pursuant to this Agreement for cash consideration equal to the Fair Market
Value of such Stockholder's Common Stock on the date of such Trigger Event;
provided, however, that if the Call Right is exercised against a Manager and
the event which is the subject of a Trigger Event (i) relates to occurrences
other than the death or permanent disability of the Manager, and (ii) occurs
during any of the time periods set forth in Column A below, then the cash
consideration payable to the Manager for his or her Common Stock subject to
this Call Right shall be equal to the Fair Market Value of such Common Stock on
the date of such Trigger Event multiplied by the applicable percentage of fair
market value set forth below in Column B:
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A B
APPLICABLE TIME PERIOD PERCENTAGE OF FAIR
---------------------- MARKET VALUE
------------------
Issuance date through date immediately preceding 70%
first anniversary of issuance date
First anniversary of issuance date through date 80%
immediately preceding second anniversary of issuance
date
Second anniversary of issuance date through date 90%
immediately preceding third anniversary of issuance
date
Third anniversary of issuance date or thereafter 100%
(b) Notwithstanding anything to the contrary contained
herein, the provisions of this Section 4.2 shall terminate upon the
consummation of a public offering by the Company.
4.3 Put Rights of the Stockholders.
(a) If subsequent to the occurrence of a Trigger Event
the Company does not exercise its Call Right on or before the Call Expiration
Date, such Stockholder (or his or her legal representative) shall have the
right (the "Put Right") upon the terms set forth in this Section 4.3 and
Section 4.5 hereof to cause the Company to repurchase from such Stockholder
100% of the Common Stock then owned by such Stockholder and originally acquired
by such Stockholder pursuant to this Agreement. The price for such repurchase
shall be payable in cash in an amount equal to the Fair Market Value of the
Common Stock so owned by such Stockholder on the date of the Trigger Event;
provided, however, that if the Put Right is exercised by a Manager and the
event which is the subject of a Trigger Event (i) relates to occurrences other
than the death or permanent disability of the Manager, and (ii) occurs during
any of the time periods set forth in Column A below, then the cash
consideration payable to the Manager for the Common Stock subject to this Put
Right shall be equal to the Fair Market Value of such Common Stock on the date
of the Trigger Event multiplied by the applicable percentage of fair market
value set forth below in Column B:
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A B
APPLICABLE TIME PERIOD PERCENTAGE OF FAIR
---------------------- MARKET VALUE
------------------
Issuance date through date immediately preceding 70%
first anniversary of issuance date
First anniversary of issuance date through date 80%
immediately preceding second anniversary of issuance
date
Second anniversary of issuance date through date 90%
immediately preceding third anniversary of issuance
date
Third anniversary of issuance date or thereafter 100%
(b) A Stockholder eligible to exercise a Put Right shall
be required to notify the Company in writing (the "Put Notice") within 30 days
of the Call Expiration Date of his or her intention to exercise his or her Put
Right. If such Put Notice is given, then the Company shall be required to
repurchase from such Stockholder, no later than 30 days following the date on
which the Put Notice is given to the Company, all of the Common Stock subject
to the Put Right; provided, however, that the obligation of the Company to
repurchase such Common Stock shall be conditioned upon and subject to (i) the
Company having sufficient funds legally available for such purchase, (ii) the
ability of the Company to effect a repurchase of the Common Stock under
applicable laws, and (iii) any restrictions contained in the Company's credit
facilities or other debt instruments, provided, however, that the Company will
use its best efforts to obtain the consent of banks or other creditors required
to effect any repurchase and shall be obligated to repurchase from such
Stockholder, at his or her election, upon the receipt of the consent required
to effect such repurchase or upon the lapse of the legal restrictions on such
repurchase.
(c) Notwithstanding anything to the contrary contained
herein, the provisions of this Section 4.3 shall terminate upon the
consummation of a public offering by the Company.
4.4 Drag-Along/Tag-Along Rights. If, at any time after
the Closing Date, the Parent or any affiliate to whom the Parent has
transferred the Common Stock (collectively, the
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"Seller") proposes to sell any shares of Common Stock pursuant to a bona fide
offer from an unaffiliated third party (other than in a registered offering to
which the registration rights granted under Section 4.6 apply) (the "Sale"),
then:
(a) The Seller shall give each Stockholder 20 days'
written notice (the "Sale Notice") of such proposed Sale specifying the name of
the proposed purchaser and the terms and conditions of the proposed sale
including, without limitation, the number of shares of Common Stock to be
purchased by the purchaser, the percentage of the total number of shares of
Common Stock owned by the Seller represented by the shares of Common Stock to
be purchased (the "Fractional Amount") and the proposed per share purchase
price. In addition, the Sale Notice shall state whether the Seller is
exercising its Drag-Along Rights.
(b) The Seller shall have the right (the Drag-Along
Rights"), but not the obligation, to require each Stockholder to sell to the
proposed purchaser a number of shares of Common Stock equal to the product of
(i) the number of shares of Common Stock owned by such Stockholder, and (ii)
the Fractional Amount for the same per share purchase price and otherwise on
the same terms and conditions obtained by the Seller in such sale (except that
such Stockholder shall not be required to give any representations, warranties
or indemnities, other than a representation and warranty as to such
Stockholder's title to such Common Stock).
(c) The Seller shall cause the proposed purchaser to
purchase from each Stockholder (the "Tag-Along Rights"), if requested by him or
her as provided below, a number of shares of Common Stock equal to the product
of (i) the number of shares of Common Stock owned by such Stockholder, and (ii)
the Fractional Amount for the same per share purchase price and otherwise on
the same terms and conditions obtained by the Seller in such sale (except that
such Stockholder shall not be required to give any representations, warranties
or indemnities, other than a representation and warranty as to such
Stockholder's title to such Common Stock); provided, however, the Seller shall
cause the proposed purchaser to purchase from each Stockholder, if requested by
such Stockholder, up to 100% of the shares of Common Stock held by such
Stockholder if the Sale results in any Person unaffiliated with the Seller, a
director or employee of the Company holding at least 50.01% of the issued and
outstanding shares of Common Stock. Any Stockholder may exercise the Tag-Along
Rights set forth in this Section 4(c) by written notice (the "Tag Notice") to
the Seller delivered not later than 10 days after receipt of the Sale Notice.
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(d) Notwithstanding anything to the contrary contained
herein, the provisions of this Section 4.4 shall terminate upon the
consummation of a public offering or series of public offerings by the Company
or its stockholders of Common Stock registered pursuant to the Securities Act
representing, after giving effect to such offering or offerings, more than 30%
of the fully diluted outstanding shares of Common Stock.
4.5 Delivery and Payment Procedures for Shares Subject to
the Call Right, Put Right or the Drag-Along/Tag-Along Rights.
(a) A Call Notice, Put Notice, Sale Notice or Tag Notice
shall be effective if delivered in accordance with Sections 4.2(a), 4.3(a),
4.4(a) and 4.4(c) hereof within the applicable time period specified therein,
and shall specify the place, time and date for the delivery of and payment for
the Common Stock which is the subject of such notice, which delivery shall take
place at the principal executive offices of the Company during normal business
hours on a Business Day within the applicable time period. The relevant
Stockholder (or his or her legal representative) shall deliver certificates for
such Common Stock duly endorsed, or accompanied by written instruments of
transfer duly executed by such Stockholder (or his or her legal representative)
at the place, time and date specified in the notice, it being understood that
the Common Stock which is the subject of such notice may be pledged to and held
by the Company pursuant to the Stock Pledge Agreement and therefore subject to
transfer restrictions.
(b) If a Stockholder is obligated to sell his or her
Common Stock because the Company has exercised its Call Right or Drag-Along
Right or a Stockholder has exercised his or her Put Right or Tag-Along Right,
in any case in accordance with the terms of this Article IV, and such
Stockholder fails to deliver the certificates representing such Common Stock in
accordance with the terms of Section 4.5(a) hereof, the Company shall cancel on
its stock transfer records the certificate or certificates representing the
Common Stock required to be sold pursuant to this Article IV (and shall, in the
case of its Drag-Along Rights or the Stockholders' Tag-Along Rights, issue new
certificates in the name of the third party purchaser) and such Common Stock in
the possession of the Stockholder (or his or her legal representative) shall
cease to be outstanding for any purpose, whereupon all of the rights of such
Stockholder (or his or her legal representative) in and to such Common Stock
other than the right to receive consideration otherwise due from the third
party purchaser in connection therewith shall terminate.
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(c) The cash consideration payable to a Stockholder for
any Common Stock purchased by (i) the Company pursuant to the exercise of a Put
Right or a Call Right pursuant to Sections 4.2 or 4.3 hereof, or (ii) a third
party purchaser pursuant to the Seller's Drag-Along Rights or the Stockholders'
Tag-Along Rights pursuant to Section 4.4 hereof, shall be payable by the
Company or such third party purchaser, as relevant, in full in a single payment
on the date of purchase of such Common Stock.
(d) If the Stockholder's certificates of Common Stock are
held by the Company pursuant to the provisions of the Stock Pledge Agreement,
the Company hereby agrees to cooperate with such Stockholder with his delivery
of such certificates under this Section 4.5.
4.6 Registration Rights.
(a) Incidental Registration.
(i) If the Company at any time proposes to file on its
behalf and/or on behalf of any of its security holders (the "Demanding Security
Holder(s)") a Registration Statement under the Securities Act on any form
(other than a Registration Statement on Form S-4 or S-8 or any successor form
for securities to be offered in a transaction of the type referred to in Rule
145 under the Securities Act or to employees of the Company pursuant to any
employee benefit plan, respectively) for the general registration of securities
to be sold for cash with respect to its Common Stock or any other class of
equity security (as defined in Section 3(a) (11) of the Exchange Act) of the
Company, it will give written notice to all Stockholders holding shares of
Common Stock at least 30 days before the initial filing with the SEC of such
Registration Statement, which notice shall set forth the intended method of
disposition of the securities proposed to be registered by the Company. The
notice shall offer to include in such filing the aggregate number of shares of
Common Stock issued pursuant to this Agreement held by each Stockholder, as
such Stockholder may request.
(ii) Each Stockholder desiring to have his or her
Common Stock registered under this Section 4.6 shall advise the Company in
writing within 15 days after the date of receipt of such offer from the
Company, setting forth the amount of such Common Stock for which registration
is requested. The Company shall thereupon include in such filing the number of
shares of Common Stock for which registration is so requested, subject to the
next sentence, and shall use its best efforts to effect registration under the
Securities Act of such Common Stock. If the managing underwriter of a proposed
public offering shall advise the Company in writing
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that, in its opinion, the distribution of the Common Stock requested to be
included by the Stockholders in the registration concurrently with the
securities being registered by the Company or such Demanding Security Holders
would materially and adversely affect the distribution of such securities by
the Company or such Demanding Security Holders, then all selling security
holders (other than such Demanding Security Holders) shall reduce the amount of
securities each intended to distribute through such offering on a pro rata
basis.
(b) Required Registration.
(i) At any time after the earlier to occur of (A) the
consummation by the Company of an Initial Public Offering, or (B) August 1,
2002, and after receipt of a written request from the holders of Common Stock
representing in the aggregate at least 50% of the Common Stock then subject to
this Agreement requesting that the Company effect the registration under the
Securities Act of the Common Stock issued pursuant to this Agreement and
specifying the intended method or methods of disposition thereof, the Company
shall promptly notify all Stockholders holding the Common Stock in writing of
the receipt of such request. Each such Stockholder, in lieu of exercising his
or her rights under Section 4.6(a), may elect (by written notice sent to the
Company within 10 Business Days from the date of such Stockholder's receipt of
the aforementioned Company's notice) to have his or her Common Stock included
in such registration thereof pursuant to this Section 4.6(b). Thereupon the
Company shall, as expeditiously as is possible, use its best efforts to effect
the registration under the Securities Act of all the Common Stock issued
pursuant to this Agreement which the Company has been so requested to register
by such Stockholders for sale (the "Registrable Shares"), all to the extent
required to permit the disposition (in accordance with the intended method or
methods thereof, as aforesaid) of the Common Stock so registered; provided,
however, that (A) the Company shall not be required to effect more than one
registration of any Common Stock pursuant to this Section 4.6(b), (B) the
Company may defer, for a single period not to exceed 180 days, the filing or
the effectiveness of such a registration statement if, in the good faith
judgment of the Board of Directors of the Company, such registration might
reasonably be expected to have an adverse effect on any proposed plan by the
Company or any of its subsidiaries to engage in any underwritten public
offering of securities, acquisition of assets or any merger, consolidation,
tender offer or other material transaction which, in the reasonable judgment of
the Board of Directors of the Company, would be required to be disclosed in a
registration statement of the Company, and (C) if the managing underwriter of a
proposed
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public offering pursuant to this Section 4.6(b)(i) shall advise the Company in
writing that, in its opinion, the distribution of the Common Stock requested to
be included by the holders of warrants (or shares of Common Stock acquired
pursuant to such warrants) originally issued on June 27, 1994 in the
registration concurrently with the securities being registered by the
Stockholders would materially and adversely affect the distribution of such
securities by the selling Stockholders, then all selling security holders shall
reduce the amount of securities each intended to distribute through such
offering on a pro rata basis.
(ii) Those requesting Stockholders holding the number
of shares required to make a demand pursuant to this Section 4.6(b) shall have
the right to withdraw the request for registration prior to the Registration
Statement being declared effective, but such Stockholders shall either pay the
expenses of such registration as contemplated by Section 4.6(e) or forfeit the
right of registration provided above in Section 4.6(b)(i) hereof. If the
Stockholders pay the expenses of such registration, the Stockholders shall
continue to have the right to require one registration pursuant to this Section
4.6(b).
(iii) Notwithstanding the provisions of Section
4.6(b)(i), the Company shall have the option, but not the obligation, with
respect to a request for registration under Section 4.6(b)(i) (other than such
a request made prior to an initial public offering of the Common Stock), to
purchase all (but not any portion) of the shares of Common Stock with respect
to which a request for registration has been made in lieu of effecting the
registration so requested. In the event that the Company elects to exercise its
option under this Section 4.6(b)(iii), it shall promptly notify all
Stockholders in writing of the receipt of a request for registration and of the
Company's intent to exercise its option to repurchase shares in lieu of
effecting a registration thereof, and each Stockholder may elect (by written
notice sent to the Company within ten business days from the date of such
Stockholder's receipt of the aforementioned Company's notice) to have shares of
Common Stock purchased by the Company pursuant to this Section. The per share
purchase price for shares of Common Stock so purchased by the Company in lieu
of registration shall be equal to the Fair Market Value. Payment for shares of
Common Stock purchased hereunder shall be made by the Company in immediately
available funds to the holders of shares of Common Stock being purchased by the
Company pursuant hereto on or before the thirtieth business day following the
date upon which the Company first notified the Stockholders of its election to
exercise its option under this Section
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4.6(b)(iii). If the Company exercises its option under this Section 4.6(b)(iii)
to purchase shares of Common Stock in lieu of effecting a registration of such
shares under Section 4.6(b)(i) as provided herein, then the Company shall not
be required to comply, but for purposes of Section 4.6(b)(i) shall be
considered to have complied, with such request to register shares of Common
Stock.
(c) Registration Procedures. In respect of any
registration contemplated by the provisions of this Section 4.6, the Company
will, as expeditiously as possible:
(i) prepare and file with the SEC a Registration
Statement with respect to such securities and use its best efforts to cause
such Registration Statement to become and remain effective for a period of time
required for the disposition of such securities by the holders thereof, but not
to exceed 180 days;
(ii) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective and to comply with the provisions of the Securities Act with respect
to the sale or other disposition of all securities covered by such Registration
Statement until the earlier of such time as all of such securities have been
disposed of in a public offering or the expiration of 180 days;
(iii) furnish to such selling Stockholders such number
of copies of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents, as such selling Stockholders may reasonably request;
(iv) use its best efforts to register or qualify the
securities covered by such Registration Statement under such other securities
or blue sky laws of such jurisdictions within the United States and Puerto Rico
as each holder of such securities shall request (provided, however, that the
Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it is not then qualified
or to file any general consent to service of process), and do such other
reasonable acts and things as may be required of it to enable such holder to
consummate the disposition in such jurisdiction of the securities covered by
such Registration Statement;
(v) enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to
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expedite or facilitate the disposition of the Common Stock; and
(vi) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, but not later than 18 months after
the effective date of the Registration Statement, an earnings statement
covering the period of at least 12 months beginning with the first full month
after the effective date of such Registration Statement, which earnings
statements shall satisfy the provisions of Section 11(a) of the Securities Act.
It shall be a condition precedent to the obligation of
the Company to take any action pursuant to this Section 4.6(c) in respect of
the Common Stock which is to be registered at the request of any Stockholder
holding the Common Stock that such Stockholder shall furnish to the Company
such information regarding the Common Stock held by such Stockholder and the
intended method of disposition thereof as the Company shall reasonably request
and as shall be required in connection with the action taken by the Company.
If the Stockholder's certificates of Common Stock are
held by the Company pursuant to the provisions of the Stock Pledge Agreement,
the Company hereby agrees to cooperate with such Stockholder with his delivery
of such certificates under this Section 4.5(c).
(d) Rule 144. Following any public offering of the Common
Stock registered under the Securities Act, the Company, for as long as any
Stockholder is required to comply with Rule 144 (or any successor regulation)
under the Securities Act in order to Transfer the Common Stock to the public
without registration thereunder, will make available to each Stockholder the
benefit of certain rules and regulations of the SEC which may permit such
Stockholder to Transfer the Common Stock to the public without registration
under the Securities Act by (i) making and keeping "current public information"
"available" (as both such terms are defined in Rule 144 under the Securities
Act) at all times after such public offering, (ii) timely filing with the SEC,
in accordance with all rules and regulations applicable thereto, all reports
and other documents (x) required of the Company for Rule 144, as it may be
amended from time to time (or any rule, regulation or statute replacing Rule
144), to be available and (y) required to be filed under Section 15d of the
Exchange Act, notwithstanding that the Company's duty to file such reports or
documents may be suspended or otherwise terminated under the express terms of
such provision, and (iii) furnishing such Stockholder a written statement by
the
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Company that it has complied with the reporting requirements of the
Exchange Act and Rule 144, together with a copy of the most recent annual
reports and documents filed by the Company with the SEC as may reasonably be
requested by such Stockholder in order that such Stockholder may avail himself
or herself of any rule or regulation of the SEC allowing Transfers of the
Common Stock without registration under the Securities Act.
(e) Expenses. All expenses incurred in complying with
this Section 4.6, including, without limitation, all registration and filing
fees (including all expenses incident to filing with the NASD), printing
expenses, fees and disbursements of counsel for the Company, the reasonable
fees and expenses of one counsel for all selling security holders (selected by
those holding a majority of the shares being registered), expenses of any
special audits incident to or required by any such registration and expenses of
complying with the securities or blue sky laws of any jurisdictions shall be
paid by the Company; provided, however, that the selling Stockholders shall be
responsible for any and all fees, costs and expenses associated with the
underwriting discounts and commissions in respect of such Common Stock.
(f) Indemnification and Contribution.
(i) In the event of any registration of any of the
Common Stock under the Securities Act pursuant to this Section 4.6, the Company
shall indemnify and hold harmless each Stockholder and each other Person
(including each underwriter) who participated in the offering of such Common
Stock and each other Person, if any, who controls such Stockholder or such
participating Person within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such
Stockholder or participating Person or controlling Person may become subject
under the Securities Act or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon (A) any alleged untrue statement of any material fact
contained, on the effective date thereof, in any Registration Statement under
which such securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereto, or (B) any alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse such Stockholder or participating Person or
controlling Person for any legal or any other expenses reasonably incurred by
such Stockholder or participating Person or controlling Person in connection
with investigating or defending any such loss, claim, damage, liability or
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action; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any alleged untrue statement or alleged omission made in such
Registration Statement, preliminary prospectus, prospectus or amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by such Stockholder specifically for use therein. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Stockholder or participating Person or controlling
Person, and shall survive the transfer of such securities by such Stockholder.
(ii) Each Stockholder holding the Common Stock, by
acceptance thereof, agrees to indemnify and hold harmless the Company, its
directors and officers and each other Person, if any, who controls the Company
within the meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such director or
officer or any such Person may become subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
information in writing provided to the Company by such Stockholder specifically
for use in the following documents and contained, on the effective date
thereof, in any Registration Statement under which securities were registered
under the Securities Act at the request of such Stockholder, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereto.
(iii) If the indemnification provided for in this
Section 4.6(f) from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action.
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The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
(iv) The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 4.6(f) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(g) Lock-Up Agreement. In connection with any public
offering of the Common Stock in which the Common Stock held by a Stockholder is
not being registered, the underwriters for the Company may require that such
Stockholder not sell such Common Stock for a certain period of time after the
effectiveness of the Registration Statement filed in connection with such
public offering. Upon the Company's request in connection with any such public
offering, such Stockholder will not, directly or indirectly, offer, sell,
contract to sell, make subject to any purchase option, or otherwise dispose of
the Common Stock held by such Stockholder not being sold in such public
offering for a period requested by the underwriter or its representative, not
to exceed 180 days from the date of the effectiveness of the Registration
Statement, without the prior written consent of the underwriter or its
representative.
ARTICLE V
ADDITIONAL AGREEMENTS AMONG THE STOCKHOLDERS AND THE COMPANY
5.1 Confidentiality. Each Stockholder recognizes and
acknowledges that this Agreement, the business plans, acquisition prospects,
referral sources, customer and supplier lists, data processing systems and
other trade secrets or know-how of the Company as they may exist from time to
time (collectively, the "Confidential Information") are valuable, special and
unique assets of the Company's business. Such Stockholder agrees that in
consideration of the issuance by the Company of the Common Stock to such
Stockholder, such Stockholder shall not, in whole or in part, disclose any of
such Confidential Information to any Person for any reason or purpose that is
not in furtherance of the best interests of
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the Company, nor shall such Stockholder make use of any such Confidential
Information for its own purposes or for the benefit of any Person other than
the Company under any circumstances; provided, however, that the restrictions
contained in this Section 5.1 shall not apply to Confidential Information which
is or becomes a matter of public knowledge (provided that such Stockholder was
not responsible, directly or indirectly, for such Confidential Information
becoming a matter of public knowledge without the Company's prior written
consent). Nothing contained in this Section 5.1 shall limit in any manner any
additional obligations with respect to Confidential Information which any
Stockholder may have under applicable law or any agreement between such
Stockholder and any member of the Company including, without limitation, any
employment contract or any other employment arrangement.
5.2 No Right to Continued Employment. Nothing herein
contained shall confer upon a Manager or Director the right to remain in the
employ of the Company.
5.3 Reorganization, etc. The provisions of this Agreement
shall apply to any Common Stock or other securities resulting from any stock
split or reverse split, stock dividend, reclassification of the capital stock
of the Company, consolidation or merger of the Company, and any shares or other
securities of the Company or any successor company which may be received by any
of the Stockholders (and/or their respective successors, permitted assigns,
legal representatives and heirs) by virtue of its ownership of the Common
Stock.
5.4 Disclosure. Unless otherwise required by applicable
law, rule, regulation or order of any governmental authority, the Company shall
have no duty or obligation to affirmatively disclose to a Stockholder, and a
Stockholder shall have no right to be advised of, any material information
regarding the Company at any time prior to, upon or in connection with the
Company's repurchase of the Common Stock from a Stockholder at the termination
of a Stockholder's employment or other relationship with the Company.
ARTICLE VI
MISCELLANEOUS
6.1 Amendment and Modification. This Agreement may only
be amended or modified, and any provision hereof may only be waived, with the
written consent of each of the parties hereto. Any party (other than the
Company) may, as to himself, herself or itself, waive in writing performance of
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any provision of this Agreement intended for his, her or its benefit. No course
of dealing between or among any Persons having any interest in this Agreement
will be deemed effective to modify, amend or discharge any part of this
Agreement or any rights or obligations of any person under or by reason of this
Agreement.
6.2 Survival of Representations and Warranties. The
respective representations and warranties of the Company, the Parent and each
of the Stockholders contained herein or in writing in any certificates or other
documents delivered in connection herewith prior to or at the Closing or, as
the case may be, at any Subsequent Closing, shall survive the execution and
delivery of this Agreement and the Closing or any Subsequent Closing and the
consummation of the transactions contemplated hereby for a period of 18 months
following the Closing Date or, as the case may be, any Subsequent Closing Date,
regardless of any investigation made by the Company, the Parent or the
Stockholders or on their respective behalf.
6.3 Successors and Assigns; Entire Agreement. This
Agreement (including the schedules and exhibits hereto) and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns and executors,
administrators and heirs; provided, however, that, except with respect to a
Transfer to a Permitted Transferee, to a transferee that executed a Transferee
Agreement or as otherwise specifically contemplated herein, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned or delegated by any party hereto without the prior written consent of
the other parties; and provided further, that in the event of a merger,
consolidation, recapitalization or similar reorganization of the Company,
nothing contained herein shall prevent the assignment of this Agreement by the
Company to its successor company. The Company may, in its sole discretion, at
any time and from time to time, assign its purchase rights and obligations
under this Agreement; provided, however, that no assignment of the Company's
obligations shall relieve the Company from any liability with respect thereto;
and provided further, that at no time shall the Company be under any obligation
to assign its purchase rights or obligations under this Agreement (including,
without limitation, where such assignment would enable an assignee to purchase
a Stockholder's Common Stock at a time when the Company would not be able to do
so by virtue of the provisions of Section 4.3 hereof). This Agreement sets
forth the entire agreement and understanding between the parties as to the
subject matter hereof and merges and supersedes all prior and contemporaneous
discussions, agreements and understandings of any and every nature among them.
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6.4 Separability. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, such
provision shall be reformed, if possible, to the extent necessary to render it
legal, valid and enforceable, or otherwise deleted, and the remainder of this
Agreement shall not be affected except to the extent necessary to reform or
delete such illegal, invalid or unenforceable provision unless reforming or
deleting the provision held invalid shall substantially impair the benefits of
the remaining portion of this Agreement.
6.5 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered, telexed or telecopied to, or, if mailed,
when received by, the other party at the following addresses (or at such other
address as shall be given in writing by any party to the others):
If to the Company, to:
Chief Auto Parts Inc.
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
With a required copy (which shall not constitute notice
to the principal) to:
Xxxxxx, Xxxx & Xxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
If to the Parent, to:
Trust Company of the West
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
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With a required copy (which shall not constitute notice
to the principal) to:
Xxxxxx, Xxxx & Xxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
If to a Stockholder, to the address set forth under such
Stockholder's name on the signature pages hereto.
6.6 Governing Law. The validity, performance,
construction and effect of this Agreement shall be governed by the internal
laws of the State of Texas, without giving effect to principles of conflicts of
law.
6.7 Headings. The headings preceding the text of the
articles, sections and subsections hereof are inserted solely for convenience
of reference, and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.
6.8 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but which
together shall constitute one and the same instrument.
6.9 Further Assurances. Each party shall cooperate and
take such action as may be reasonably requested by another party in order to
carry out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
6.10 Remedies. In the event of a breach by any party to
this Agreement of its obligations under this Agreement, any party injured by
such breach, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, shall be entitled to specific performance
of its rights under this Agreement. The parties agree that the provisions of
this Agreement shall be specifically enforceable, it being agreed by the
parties that the remedy at law, including monetary damages, for breach of any
such provision will be inadequate compensation for any loss and that any
defense in any action for specific performance that a remedy at law would be
adequate is hereby waived.
6.11 Fees and Expenses. The Company shall pay the
reasonable fees and expenses of itself and the Stockholders in connection with
this Agreement and the agreements and transactions contemplated hereby.
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6.12 Termination of the Agreement. The Agreement shall
expire or terminate upon the earlier to occur of (a) the distribution to the
security holders of the Company of all proceeds (if any) distributable to them
as a result of the cessation of business, bankruptcy, submission to
receivership, or dissolution of the Company, (b) the decision to so terminate
evidenced by a document signed by the Company, the Parent and all of the
security holders, (c) the distribution to the security holders of the Company
of all proceeds (if any) distributable to them as a result of the sale of all
or substantially all of the assets of the Company, or (d) November 1, 2002. No
such expiration or termination shall, however, negate, limit, impair, or
otherwise affect any right, remedy, obligation, or liability of any party
hereto under the Agreement which matured or became applicable before such
termination.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
CHIEF AUTO PARTS INC.
By:
-----------------------------------
Name:
Title:
TCW SPECIAL CREDITS FUND V --
THE PRINCIPAL FUND
By: TCW ASSET MANAGEMENT COMPANY
its managing general partner
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
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