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Exhibit 2.4
MERGER AND ACQUISITION AGREEMENT
This MERGER AGREEMENT (this "Agreement") is entered into as of January
12, 1997 by and among (i) Republic Industries, Inc., a Delaware corporation
("Republic"); (ii) RI/MC Merger Corp., a Florida corporation, RI/MO Merger
Corp., a Florida corporation, RI/MI Merger Corp., a Florida corporation, RI/MD
Merger Corp., a Florida corporation, RI/EWH Merger Corp., a Florida
corporation, RI/ESA Merger Corp., a Florida corporation, RI/MC&TR Merger Corp.,
a Florida corporation, RI/QPF Merger Corp., a Florida corporation, RI/AMF
Merger Corp., a New York corporation (the foregoing "Merger" corporations are
referred to herein as the "Republic Merger Subs" and individually as a Republic
Merger Sub"), RI/MDP Acquisition Corp., a Florida corporation, RI/MCFL
Acquisition Corp., a Florida corporation, and RI/MP Acquisition Corp., a
Florida corporation (the foregoing "Acquisition" corporations are referred to
herein as the "Republic Acquisition Subs" and individually as a "Republic
Acquisition Sub") (the Republic Merger Subs and the Republic Acquisition Subs
are referred to herein collectively as the "Republic Subsidiaries" and
individually as a "Republic Subsidiary"), (iii) Maroone Chevrolet, Inc., a
Florida corporation, Maroone Oldsmobile, Inc., a Florida corporation, Maroone
Isuzu, Inc., a Florida corporation, Maroone Dodge, Inc., a Florida corporation,
Xx Xxxxxxx Ford, Inc., a New York corporation, Maroone Car & Truck Rental
Company, a Florida corporation, Empire Warranty Corporation, a Florida
corporation, Empire Warranty Holding Company, a Florida corporation, Empire
Services Agency, Inc., a Florida corporation, Quantum Premium Finance
Corporation, a Florida corporation, Alkit Enterprises, Inc., a New York
corporation, (each, a "Maroone Corporation" and collectively, the "Maroone
Corporations"), (iv) Maroone Management Services, Limited, a Florida limited
partnership, Maroone Dodge Pompano, Limited, a Florida limited partnership,
Maroone Chevrolet Ft. Lauderdale, Limited, a Florida limited partnership, (each
a "Partnership" and collectively, the "Partnerships") (the Maroone Corporations
and the Partnerships are referred to herein individually as an "Acquired
Entity" and collectively as the "Acquired Entities"), (v) Xxxxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxxxx, Xxxxxxxxx X. Xxxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxxx Xxxxxxxxxx,
and Xxxxxx Xxxxx (each a "Shareholder" and collectively, the "Shareholders"),
and (vi) Xxxxxxx X. Xxxxxxx, Maroone Isuzu, Inc., Xxxxx Xxxxxxxx and Xxxxxx X.
Xxxxxx (each a "Partner" and collectively, the "Partners"). The Shareholders
and Partners are sometimes referred to herein individually as a "Principal" and
collectively, as the "Principals." Xxxxxxx X. Xxxxxxx is sometimes referred to
herein as "Maroone." Republic and the Republic Subsidiaries are sometimes
referred to herein individually as a "Republic Company" and collectively as the
"Republic Companies".
RECITALS
A. Republic and the Acquired Entities
desire to merge the automotive operations of the Maroone Corporations and
Partnerships with Republic's automotive businesses.
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B. Republic and the Republic Merger Subs and the Maroone
Corporations have determined that it is in the best interests of their
respective shareholders for Republic to acquire all of the issued and
outstanding equity interests of the Maroone Corporations as provided herein.
In order to effectuate the acquisition of the new car dealerships and the used
car superstore operations, Republic has organized each Republic Merger Sub as a
wholly-owned subsidiary, and the parties have agreed, subject to the terms and
conditions set forth in this Agreement, to merge the respective Republic Merger
Subs with and into the respective Maroone Corporations so that the Maroone
Corporations continue as surviving corporations of the respective mergers and
as wholly-owned subsidiaries of Republic, and each of the Shareholders will be
issued certain shares of common stock of Republic as provided herein in
exchange for their respective issued and outstanding equity interests in the
Maroone Corporations.
C. The parties also desire to provide for the acquisition by the
Republic Acquisition Subs of certain equity interests of the Partnerships and
certain other assets and securities as provided herein so that Republic
acquires the automotive retailing business and all related businesses of the
Acquired Entities.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
MERGERS; RELATED TRANSACTIONS; CLOSING
1.1 THE CLOSING. Subject to the terms and conditions of this
Agreement, the consummation of the Mergers (as defined below) and the other
transactions contemplated hereby (the "Closing"), shall take place as promptly
as practicable (and in any event within five (5) business days after the
satisfaction or waiver of the conditions set forth in Articles VI and VII
hereof), at the offices of Xxxxxxxxx Xxxxxxx Xxxxxxx Xxxxxx Xxxxx & Xxxxxxx,
P.A. in Miami, Florida, or such other place and time as the parties may
otherwise agree, and the date of the Closing is referred to herein as the
"Closing Date".
1.2 THE MERGERS. The mergers described in this Section are
referred to herein collectively as the "Mergers" and individually as a
"Merger," and the surviving corporations of such Mergers are referred to herein
collectively as the "Surviving Corporations" and individually as a "Surviving
Corporation".
(a) The Maroone Chevrolet, Inc. Merger. Subject to the
terms and conditions of this Agreement, and in accordance with the
Florida Business Corporation Act (the "Florida Act"), at the Effective
Time (as defined below), RI/MC Merger Corp. will be merged with and
into Maroone Chevrolet, Inc., with Maroone Chevrolet, Inc. being the
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surviving corporation in the Merger and becoming a wholly-owned
subsidiary of Republic, and the separate corporate existence of RI/MC
Merger Corp. shall cease.
(b) The Maroone Oldsmobile, Inc. Merger. Subject to the
terms and conditions of this Agreement, and in accordance with the
Florida Act, at the Effective Time, RI/MO Merger Corp. will be merged
with and into Maroone Oldsmobile, Inc. with Maroone Oldsmobile, Inc.
being the surviving corporation in the Merger and becoming a
wholly-owned subsidiary of Republic, and the separate corporate
existence of RI/MO Merger Corp. shall cease.
(c) The Maroone Isuzu, Inc. Merger. Subject to the terms
and conditions of this Agreement, and in accordance with the Florida
Act, at the Effective Time, RI/MI Merger Corp. will be merged with and
into Maroone Isuzu, Inc., with Maroone Isuzu, Inc. being the surviving
corporation in the Merger and becoming a wholly-owned subsidiary of
Republic, and the separate corporate existence of RI/MI Merger Corp.
shall cease.
(d) The Maroone Dodge, Inc. Merger. Subject to the terms
and conditions of this Agreement, and in accordance with the Florida
Act, at the Effective Time, RI/MD Merger Corp. will be merged with and
into Maroone Dodge, Inc., with Maroone Dodge, Inc. being the surviving
corporation in the Merger and becoming a wholly-owned subsidiary of
Republic, and the separate corporate existence of RI/MD Merger Corp.
shall cease.
(e) The Empire Warranty Holding Company Merger. Subject
to the terms and conditions of this Agreement, and in accordance with
the Florida Act, at the Effective Time, RI/EWH Merger Corp. will be
merged with and into Empire Warranty Holding Company, with Empire
Warranty Holding Company being the surviving corporation in the Merger
and becoming a wholly-owned subsidiary of Republic, and the separate
corporate existence of RI/EWH Merger Corp. shall cease.
(f) The Empire Services Agency, Inc. Merger. Subject to
the terms and conditions of this Agreement, and in accordance with the
Florida Act, at the Effective Time, RI/ESA Merger Corp. will be merged
with and into Empire Services Agency, Inc., with Empire Services
Agency, Inc. being the surviving corporation in the Merger and
becoming a wholly-owned subsidiary of Republic, and the separate
corporate existence of RI/ESA Merger Corp. shall cease.
(g) The Maroone Car & Truck Rental Company Merger.
Subject to the terms and conditions of this Agreement, and in
accordance with the Florida Act, at the Effective Time, RI/MC&TR
Merger Corp. will be merged with and into Maroone Car & Truck Rental
Company, with Maroone Car & Truck Rental Company being the surviving
corporation in the Merger and becoming a wholly-owned subsidiary of
Republic, and the separate corporate existence of RI/MC&TR Merger
Corp. shall cease.
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(h) The Quantum Premium Finance Corporation Merger.
Subject to the terms and conditions of this Agreement, and in
accordance with the Florida Act, at the Effective Time, RI/QPF Merger
Corp. will be merged with and into Quantum Premium Finance
Corporation, with Quantum Premium Finance Corporation being the
surviving corporation in the Merger and becoming a wholly-owned
subsidiary of Republic, and the separate corporate existence of RI/QPF
Merger Corp. shall cease.
(i) The Xx Xxxxxxx Ford, Inc. Merger. Subject to the
terms and conditions of this Agreement, and in accordance with the
corporation laws of the State of New York, at the Effective Time,
RI/AMF Merger Corp. will be merged with and into Xx Xxxxxxx Ford,
Inc., with Xx Xxxxxxx Ford, Inc. being the surviving corporation in
the Merger and becoming a wholly-owned subsidiary of Republic, and the
separate corporate existence of RI/AMF Merger Corp. shall cease.
1.3 RELATED TRANSACTIONS.
(a) Upon the Closing Date at the Effective Time
the following transactions shall occur (the "Related
Transactions"):
(i) the Partners of Maroone Management
Services, Limited shall sell, assign, convey and
transfer all of the outstanding partnership interests
in such Partnership to RI/MP Acquisition Corp., and
Maroone Management Services, Limited shall be
liquidated and its real property and other assets
transferred to RI/MP Acquisition Corp. or such other
person as RI/MP Acquisition Corp. may designate;
(ii) the Partners of Maroone Dodge
Pompano, Limited shall sell, assign, convey and
transfer all of the outstanding partnership interests
in such Partnership to RI/MDP Acquisition Corp., and
such Partnership shall be liquidated;
(iii) the Partners of Maroone Chevrolet
Ft. Lauderdale, Limited. shall sell, assign, convey
and transfer all of the outstanding partnership
interests in such Partnership to RI/MCFL Acquisition
Corp., and such Partnership shall be liquidated;
(iv) Alkit Enterprises, Inc. shall sell,
assign, convey and transfer all real property owned
by such Maroone Corporation and used by the Xx
Xxxxxxx Ford dealership in Williamsville, New York,
and all cash and cash equivalents owned by such
Maroone Corporation, to RI/MP Acquisition Corp. (the
"Alkit Purchase"); and
(v) Maroone shall sell, assign, convey
and transfer to RI/MP Acquisition Corp., all of his
partnership interests in, and any and all other
rights and interests in and to and with respect to,
Premier Auto Finance,
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L.P. (including, without limitation, any rights or
options to acquire any general partner's interests in
such partnership or to acquire any other interest in
the partnership from the partnership or any Person);
(b) To the extent that any deed is legally
necessary or reasonably requested by the transferee to
consummate any of the Related Transactions (and a deed shall
be required for the Alkit Purchase), the transferring party
shall execute and deliver to the transferee at Closing a
warranty deed in appropriate form reasonably satisfactory to
Republic, and the Principals shall pay any and all transfer
taxes and fees applicable to the Alkit Purchase, and the other
Related Transactions, if applicable. All transfers pursuant
to the Related Transactions shall be effected pursuant to
instruments of transfer in form reasonably satisfactory to
Republic. All partnership interests and shares of stock and
other assets transferred pursuant to the Related Transactions
shall be transferred free and clear of any liens, security
interests or other encumbrances and shall vest good title
thereto in the transferees. With respect to the Alkit
Purchase, all items of income and expense shall be prorated
between the transferring and transferor parties as of the
Closing Date, including property taxes, rent, etc.
1.4 PURCHASE PRICE; CONVERSION OF SECURITIES.
(a) Aggregate Consideration. For purposes of this
Agreement, "Aggregate Consideration" means the number of shares
(rounded to the nearest whole share) of common stock, par value $.01
per share, of Republic (the "Republic Common Stock") determined by
dividing (a) two hundred million six hundred thousand dollars
($200,600,000.00) (the "Purchase Price"), minus the Transaction Fees
(as defined below), if any, by (b) $32.75 (the "Price per Share").
(b) The parties hereto agree that the Purchase Price
shall be reduced by the amount of the Transaction Fees. "Transaction
Fees" shall mean all legal, accounting, tax, consulting and financial
advisory and other fees and expenses, including any transfer taxes,
fees and expenses and the cost of title insurance, incurred by the
Acquired Entities in connection with the transactions contemplated
hereby.
(c) At the Effective Time, by virtue of the Mergers and
without any action on the part of the Maroone Corporations, Republic,
the Republic Subsidiaries or the Shareholders, the outstanding shares
of capital stock of each of the Maroone Corporations that is party to
a Merger shall be converted into the right to receive a number of
shares of Republic Common Stock determined as provided in Exhibit A
hereto, which Exhibit A is incorporated herein and constitutes part of
this Agreement (the aggregate number of such shares of Republic Common
Stock are referred to herein as the "Merger Shares").
(d) In consideration of the Related Transactions,
Republic shall issue to each of the parties that transfers interests
or other assets pursuant to the Related Transactions, a number of
shares of Republic Common Stock determined as provided in Exhibit B
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hereto, which Exhibit B is incorporated herein and constitutes part of
this Agreement (the aggregate number of such shares of Republic Common
Stock are referred to herein as the "Transaction Shares").
(e) The combined total of the Merger Shares and the
Transaction Shares shall be equal to the Aggregate Consideration. The
total portion of the Aggregate Consideration to be received by each
Person who shall receive Republic Shares pursuant to the foregoing
paragraphs (c) and (d) is set forth on Exhibit C hereto.
(f) Each share of common stock of each Republic Merger
Sub that is party to a Merger, issued and outstanding at the Effective
Time shall be converted into one share of the voting common stock of
the Surviving Corporation into which it is merged.
1.5 [INTENTIONALLY DELETED]
1.6 FILING OF MERGER DOCUMENTS; EFFECTIVE TIME. At the Closing,
the parties shall cause the Mergers to be consummated by executing and filing
duly executed Certificates or Articles of Merger with respect to each of the
Mergers with the Secretary of State or other appropriate governmental authority
of the States of Florida and New York, in such form as Republic determines is
required by and in accordance with the relevant provisions of the Florida Act
and the corporation laws of such other jurisdictions (the date and time of such
filings is referred to herein as the "Effective Date" or "Effective Time").
1.7 EFFECT OF THE MERGER. At the Effective Time, the effect of
the Mergers shall be as provided under the Florida Act and the corporate law of
the State of New York applicable to the Mergers. Without limiting the
generality of the foregoing, at the Effective Time:
(a) all property, rights, privileges, policies and
franchises of each Maroone Corporation and the Republic Subsidiary
with which it is merged shall vest in the Surviving Corporation of
such Merger and all debts, liabilities and duties of such Maroone
Corporation and the Republic Subsidiary with which it is merged shall
become the debts, liabilities and duties of the Surviving Corporation
of such Merger.
(b) the Articles or Certificate of Incorporation and the
Bylaws of each Maroone Corporation that is party to a Merger, as in
effect immediately prior to the Effective Time, shall remain its
Articles or Certificate of Incorporation and Bylaws thereafter, unless
and until amended in accordance with their terms and as provided by
law; and
(c) the directors and officers of each Republic Merger
Sub that is merged in one of the Mergers at the Effective Time shall
be the respective directors and officers of the Maroone Corporation
into which it is merged, each to hold a directorship or office in
accordance with the Articles or Certificate of Incorporation and
Bylaws of the Surviving Corporation of such Merger, until their
respective successors are duly elected and qualified.
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1.8 TAX AND ACCOUNTING TREATMENT. The parties hereto acknowledge
and agree that the Mergers and the Related Transactions contemplated hereby
shall be treated for accounting purposes as a pooling of interests business
combination, and the Mergers and the Alkit Purchase shall be treated for tax
purposes as a tax-free reorganization under Section 368 of the Code.
1.9 PROCEDURE AT THE CLOSING. At the Closing, the parties agree
that the following shall occur:
(a) The Acquired Entities and the Principals shall have
satisfied each of the conditions set forth in Article VI and shall
deliver to Republic the documents, certificates, opinions, consents
and letters required by Article VI.
(b) Republic shall have satisfied each of the conditions
set forth in Article VII and shall deliver the documents,
certificates, consents and letters required by Article VII.
(c) Republic shall issue the shares of Republic Common
Stock issuable pursuant to Section 1.4, registered in the names of the
parties to receive such shares as provided in Section 1.4, and shall
deliver such shares in the following manner: (i) Republic shall set
aside and hold in accordance with Section 9.3 stock certificates
representing shares of Republic Common Stock having a value (based
upon the Price per Share) equal to 10% of the Purchase Price (the
"Held Back Shares"), and (ii) Republic shall deliver stock
certificates representing the balance of the shares of Republic Common
Stock issuable in accordance with Section 1.4 to the parties to
receive such shares as provided in Section 1.4. The shares of
Republic Common Stock issuable pursuant to Section 1.4, including the
Held Back Shares, are referred to herein as the "Republic Shares."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE REPUBLIC COMPANIES
As a material inducement to the Company and the Principals to enter
into this Agreement and to consummate the transactions contemplated hereby, the
Republic Companies make the following representations and warranties to the
Company and the Principals:
2.1 CORPORATE STATUS. Republic is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
authorized to do business in the State of Florida, and has the requisite power
and authority to own or lease its properties and to carry on its business as
presently conducted. Each Republic Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and is a wholly-owned subsidiary of Republic. There is no
pending or, to the knowledge of Republic, threatened proceeding for the
dissolution, liquidation, insolvency or rehabilitation of Republic.
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2.2 CORPORATE POWER AND AUTHORITY. Each of the Republic Companies
has the corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. Each of the Republic Companies has taken all corporate
action necessary to authorize its execution and delivery of this Agreement, the
performance of its obligations hereunder and the consummation of the
transactions contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each of the Republic Companies and constitutes their legal, valid
and binding obligation enforceable against each of the Republic Companies in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
2.4 REPUBLIC COMMON STOCK. Upon consummation of the transactions
contemplated hereby and the issuance and delivery of certificates representing
the Republic Shares as provided in this Agreement, the Republic Shares will be
validly issued, fully paid, non-assessable shares.
2.5 CAPITALIZATION. As of the date hereof, the authorized capital
stock of Republic consists of 500,000,000 shares of Republic Common Stock and
5,000,000 shares of preferred stock. As of November 30, 1996 (i) 232,466,603
shares of Republic Common Stock were validly issued and outstanding, and (ii)
no shares of preferred stock were issued or outstanding.
2.6 NO VIOLATION. The execution and delivery of this Agreement by
Republic, the performance by Republic of its obligations hereunder and the
consummation by Republic of the transactions contemplated by this Agreement
will not (a) contravene any provision of the Certificate of Incorporation or
Bylaws of Republic, (b) violate or conflict with any law, statute, ordinance,
rule, regulation, decree, writ, injunction, judgment, ruling or order of any
Governmental Authority or of any arbitration award which is either applicable
to, binding upon, or enforceable against Republic, (c) conflict with, result in
any breach of, or constitute a default (or an event which would, with the
passage of time or the giving of notice or both, constitute a default) under,
or give rise to a right to terminate, amend, modify, abandon or accelerate, any
material Contract which is applicable to, binding upon or enforceable against
Republic, (d) result in or require the creation or imposition of any Lien upon
or with respect to any of the property or assets of Republic, (e) give to any
individual or entity a right or claim against Republic, which would have a
Material Adverse Effect on Republic or (f) require the consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other Person, except (i) pursuant to
the Exchange Act and the Securities Act and applicable inclusion requirements
of Nasdaq, (ii) filings required under the securities or blue sky laws of the
various states, (iii) filings required under the HSR Act, (iv) any filings or
consents required to be made or obtained by the Acquired Entities or the
Principals or (v) any governmental permits or licenses required to operate the
dealerships and other businesses of the Acquired Entities.
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2.7 REPORTS AND FINANCIAL STATEMENTS. Since January 1, 1996,
except where failure to have done so did not and would not have a Material
Adverse Effect on Republic, Republic has filed all reports, registrations and
statements, together with any required amendments thereto, that it was required
to file with the SEC, including, but not limited to Forms 10-K, Forms 10-Q,
Forms 8-K and proxy statements (collectively, the "Republic Reports").
Republic has previously furnished or made available to the Acquired Entities
and the Principals copies of all Republic Reports filed with the SEC since
January 1, 1996. As of their respective dates (but taking into account any
amendments filed prior to the date of this Agreement), the Republic Reports
complied in all material respects with all the rules and regulations
promulgated by the SEC and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Republic
included in the Republic Reports comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
consistently applied during the periods presented (except, as noted therein,
or, in the case of the unaudited statements, as permitted by Form 10-Q of the
SEC) and fairly present (subject, in the case of the unaudited statements, to
normal audit adjustments) the financial position of Republic and its
consolidated subsidiaries as of the date thereof and the results of their
operations and their cash flows for the periods then ended.
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Republic Reports, since January 1, 1996, there has not been any change in
the financial condition, results of operations or business of Republic that
either individually or in the aggregate would have a Material Adverse Effect on
Republic.
2.9 NO COMMISSIONS. Republic has not incurred any obligation for
any finder's or broker's or agent's fees or commissions or similar compensation
in connection with the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE ACQUIRED ENTITIES AND THE PRINCIPALS
As a material inducement to the Republic Companies to enter into this
Agreement and to consummate the transactions contemplated hereby, the Acquired
Entities and the Principals, jointly and severally, make the following
representations and warranties to the Republic Companies:
3.1 CORPORATE AND PARTNERSHIP STATUS. Each Maroone Corporation is
a corporation, and each Partnership is a limited partnership, duly organized,
validly existing and in good standing under the laws of the state of its
incorporation or partnership formation and has the requisite power and
authority to own or lease its properties and to carry on its business as now
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being conducted. Each Acquired Entity is legally qualified to do business as a
foreign corporation or partnership, as the case may be, in each of the
jurisdictions in which it is required to be so qualified, which represent all
jurisdictions where the nature of its properties and the conduct of its
business require such qualification, and is in good standing in each of the
jurisdictions in which it is so qualified. Each Acquired Entity has fully
complied with all of the requirements of any statute governing the use and
registration of fictitious names, and has the legal right to use the names
under which it operates its businesses. There is no pending or threatened
proceeding for the dissolution, liquidation, insolvency or rehabilitation of
any Acquired Entity.
3.2 POWER AND AUTHORITY. Each Maroone Corporation has the
corporate power and authority, and each Partnership has the partnership power
and authority, to execute and deliver this Agreement, to perform its
obligations hereunder, and to consummate the transactions contemplated hereby.
Each Acquired Entity has taken all corporate or partnership action necessary to
authorize the execution and delivery of this Agreement, the performance of its
obligations hereunder, and the consummation of the transactions contemplated
hereby. Each of the Principals is an individual or other Person residing in
the State of Florida and has the requisite competence and authority to execute
and deliver this Agreement, to perform his or her respective obligations
hereunder and to consummate the transactions contemplated hereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each of the Acquired Entities and each of the Principals, and
constitutes the legal, valid and binding obligation of each of them,
enforceable against each of them in accordance with its terms, except as the
same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
3.4 CAPITALIZATION.
(a) Schedule 3.4 sets forth, as of the date hereof, with
respect to each Maroone Corporation, respectively, (a) the number of
authorized shares of each class of its capital stock, (b) the number
of issued and outstanding shares of each class of its capital stock
and (c) the number of shares of each class of its capital stock which
are held in treasury. All of the issued and outstanding shares of
capital stock of each Maroone Corporation (i) have been duly
authorized and validly issued and are fully paid and non-assessable,
(ii) were issued in compliance with all applicable state and federal
securities laws and (iii) were not issued in violation of any
preemptive rights or rights of first refusal or similar rights. No
preemptive rights or rights of first refusal or similar rights exist
with respect to any shares of capital stock of any Maroone Corporation
and no such rights arise by virtue of or in connection with the
transactions contemplated hereby. Except as set forth on Schedule
3.4, (which items disclosed on Schedule 3.4 are referred to herein as
the "Equity Rights"), (i) there are no outstanding or authorized
rights, options, warrants, convertible securities, subscription
rights, conversion rights, exchange rights or other agreements or
commitments of any kind that could require any Maroone Corporation to
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issue or sell any shares of its capital stock (or securities
convertible into or exchangeable for shares of its capital stock);
(ii) there are no outstanding stock appreciation, phantom stock,
profit participation or other similar rights with respect to any
Maroone Corporation; (iii) there are no proxies, voting rights or
other agreements or understandings with respect to the voting or
transfer of the capital stock of any Maroone Corporation; and (iv) no
Maroone Corporation is obligated to redeem or otherwise acquire any of
its outstanding shares of capital stock.
(b) Schedule 3.4 sets forth, as of the date hereof, with
respect to each Partnership, respectively, (a) the number of
authorized partnership interests of each class of partnership
interests (limited, general, etc.) and (b) the number or amount of
issued and outstanding partnership interests of each class. All of
the issued and outstanding partnership interests of each Partnership
(i) have been duly authorized and validly issued and are fully paid
and non-assessable, (ii) were issued in compliance with all applicable
state and federal securities laws and (iii) were not issued in
violation of any preemptive rights or rights of first refusal or
similar rights. No preemptive rights or rights of first refusal or
similar rights exist with respect to any partnership interests of any
Partnership and no such rights arise by virtue of or in connection
with the transactions contemplated hereby. Except as set forth on
Schedule 3.4, (which items disclosed on Schedule 3.4 are referred to
herein as the "Equity Rights"), (i) there are no outstanding or
authorized rights, options, warrants, convertible securities,
subscription rights, conversion rights, exchange rights or other
agreements or commitments of any kind that could require any
Partnership to issue or sell any partnership interests (or securities
convertible into or exchangeable for its partnership interests); (ii)
there are no proxies, voting rights or other agreements or
understandings with respect to the voting or transfer of the
partnership interests of any Partnership; and (iv) no Partnership is
obligated to redeem or otherwise acquire any of its outstanding
partnership interests.
3.5 SHAREHOLDERS AND PARTNERS OF THE ACQUIRED ENTITIES. Schedule
3.5 sets forth, with respect to each Acquired Entity (i) the name, address and
federal taxpayer identification number of, and the number of outstanding shares
of each class of its capital stock and number or amount and type of partnership
interests owned by, each shareholder of record or partner as of the close of
business on the date of this Agreement; and (ii) the name, address and federal
taxpayer identification number of, and number of shares of each class of its
capital stock and number or amount and type of partnership interests
beneficially owned by, each beneficial owner of outstanding shares of capital
stock or partnership interests (to the extent that record and beneficial
ownership of any such shares or interests are different). The Shareholders
constitute all of the record and beneficial holders of all issued and
outstanding shares of capital stock of the Maroone Corporations, the Partners
constitute all of the holders of any partnership interests in the Partnerships,
and each of the Shareholders and Partners owns such shares and/or partnership
interests as is set forth on Schedule 3.5, free and clear of all Liens,
restrictions and claims of any kind, except as set forth on Schedule 3.5.
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3.6 NO VIOLATION. Except for any approvals or consents required
under the Franchise Agreements (as defined in Section 3.25), the execution and
delivery of this Agreement by the Acquired Entities and the Principals, the
performance by the Acquired Entities and the Principals of their obligations
hereunder and the consummation by them of the transactions contemplated by this
Agreement will not (a) contravene any provision of the Articles or Certificate
of Incorporation or Bylaws or partnership agreement or other organizational or
governing document of any Acquired Entity, (b) violate or conflict with any
law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment
or order of any Governmental Authority or of any arbitration award which is
either applicable to, binding upon or enforceable against any Acquired Entity
or Principal, (c) conflict with, result in any breach of, or constitute a
default (or an event which would, with the passage of time or the giving of
notice or both, constitute a default) under, or give rise to a right of payment
under or the right to terminate, amend, modify, abandon or accelerate, any
Contract which is applicable to, binding upon or enforceable against any
Acquired Entity or Principal, (d) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties or assets
of any Acquired Entity or Principal, (e) give to any individual or entity a
right or claim against any Acquired Entity or Principal or (f) require the
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, any court or tribunal or any other Person,
except any applicable filings required under the HSR Act and any SEC and other
filings required to be made by the Republic Companies.
3.7 RECORDS OF THE ACQUIRED ENTITIES. The copies of the Articles
and Certificates of Incorporation, Bylaws, partnership agreements, and other
documents and agreements of the Acquired Entities which were provided to
Republic are true, accurate, and complete and reflect all amendments made
through the date of this Agreement. The minute books and other records of
corporate and partnership actions for the Acquired Entities made available to
Republic for review were correct and complete as of the date of such review, no
further entries have been made through the date of this Agreement, such minute
books and records contain the true signatures of the persons purporting to have
signed them, and such minute books and records contain an accurate record of
all material corporate and partnership actions of the shareholders, partners
and directors (and any committees thereof) of the Acquired Entities taken by
written consent or at a meeting or otherwise since incorporation or formation.
All corporate and partnership actions taken by the Acquired Entities have been
duly authorized or ratified. All accounts, books, ledgers and official and
other records of the Acquired Entities have been fully, properly and accurately
kept and are complete, and there are no inaccuracies or discrepancies of any
kind contained therein. The stock and partnership ledgers of the Acquired
Entities, as previously made available to Republic, contain accurate and
complete records of all issuances, transfers and cancellations of shares of the
capital stock and partnership interests of the Acquired Entities.
3.8 SUBSIDIARIES. The Acquired Entities do not, directly or
indirectly, own any outstanding voting securities of or other interests in, or
control, any other corporation, partnership, joint venture or other entity,
except that Empire Warranty Corporation (the "Subsidiary") is a wholly owned
subsidiary of Empire Warranty Holding Company (the "Holding Company"), and the
Holding Company owns all outstanding shares of capital stock of the Subsidiary,
free and clear of any Liens or encumbrances of any nature.
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3.9 FINANCIAL STATEMENTS. Each of the Acquired Entities has
delivered to Republic the financial statements of such Acquired Entity for the
fiscal year ended December 31, 1995 and the eleven-month period ended November
30, 1996 (collectively, the "Financial Statements"), copies of which are
attached to Schedule 3.9 hereto. The respective individual balance sheets of
the Acquired Entities dated as of November 30, 1996, included in the Financial
Statements are referred to herein as the "Current Balance Sheets." The
Financial Statements fairly present the financial position of the respective
Acquired Entities at each of the balance sheet dates and the results of
operations for the periods covered thereby, and have been prepared in
accordance with GAAP consistently applied throughout the periods indicated.
The books and records of each of the Acquired Entities fully and fairly reflect
all of its transactions, properties, assets and liabilities. There are no
material special or non-recurring items of income or expense during the periods
covered by the Financial Statements, and the balance sheets included in the
Financial Statements do not reflect any write-up or revaluation increasing the
book value of any assets. The Financial Statements reflect all adjustments
necessary for a fair presentation of the financial information contained
therein.
3.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as
specifically set forth in Schedule 3.10, since the date of its Current Balance
Sheet included in the Financial Statements, no Acquired Entity has (a) issued,
sold, pledged, disposed of, encumbered, or authorized the issuance, sale,
pledge, disposition, grant or encumbrance of any shares of its capital stock or
of any class or any partnership interests, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
such capital stock or partnership interests or any other ownership interest of
such Acquired Entity, (b) declared, set aside, made, or paid any dividend or
other distribution payable in cash, stock, property or otherwise of or with
respect to its capital stock, partnership interests or other securities, or
reclassified, combined, split, subdivided or redeemed, purchased or otherwise
acquired, directly or indirectly, any of its capital stock, partnership
interests or other securities; (c) paid any bonus to or increased the rate of
compensation of any of its officers, partners or salaried employees or amended
any other terms of employment or engagement of such persons; (d) sold, leased
or transferred any of its properties or assets or acquired any properties or
assets other than in the ordinary course of business consistent with past
practice; (e) made or obligated itself to make capital expenditures out of the
ordinary course of business consistent with past practice; (f) made any payment
in respect of its liabilities other than in the ordinary course of business
consistent with past practice; (g) incurred any obligations or liabilities
(including, without limitation, any indebtedness for borrowed money, issuance
of any debt securities, or the assumption, guarantee, or endorsement of the
obligations of any Person) or entered into any transaction or series of
transactions involving in excess of $100,000 in the aggregate out of the
ordinary course of business, except for this Agreement and the transactions
contemplated hereby; (h) suffered any theft, damage, destruction or casualty
loss, whether or not covered by insurance, in excess of $100,000 in the
aggregate; (i) suffered any extraordinary losses (whether or not covered by
insurance); (j) waived, canceled, compromised or released any rights having a
value in excess of $100,000 in the aggregate; (k) made or adopted any change in
its accounting practice or policies; (l) made any adjustment to its books and
records other than in respect of the conduct of its business activities in the
ordinary course consistent with past practice; (m) entered into any transaction
with any Principal or any Affiliate of any of the
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Acquired Entities or any Principal, (n) entered into any employment agreement
not terminable at will; (o) terminated, amended or modified any agreement
involving an amount in excess of $100,000 in the aggregate; (p) imposed any
security interest or other Lien on any of its assets other than in the ordinary
course of business consistent with past practice; (q) delayed paying any
account payable beyond 45 days following the date on which it is due and
payable except to the extent being contested in good faith; (r) made or pledged
any charitable contributions in excess of $100,000 in the aggregate; (s)
acquired (including, without limitation, for cash or shares of stock or
partnership interests, by merger, consolidation, or acquisition of stock or
assets) any interest in any corporation, partnership or other business
organization or division thereof or any assets, or made any investment either
by purchase of stock or securities, contributions or property transfer of
capital other than as permitted or provided in this Agreement; (t) increased or
decreased prices charged to customers, except in the ordinary course of
business consistent with past practice, materially increased or decreased the
average monthly New Parts and Accessories Inventory, Other Parts and
Accessories Inventory, New Vehicle Inventory or Other Vehicle Inventory, other
than in the ordinary course of business consistent with past practice, ordered
any New Vehicle Inventory from the Factory which would be inconsistent with the
prior practices of the Acquired Entity, or taken any actions which might
reasonably result in any material loss of customers; (u) made any dealer trades
other than in the ordinary course of business consistent with past practice, or
(v) entered into any other transaction or been subject to any event which has
or may reasonably be expected to have a Material Adverse Effect on such
Acquired Entity; or (w) agreed to do or authorized any of the foregoing.
3.11 LIABILITIES. No Acquired Entity has any liabilities or
obligations, whether accrued, absolute, contingent or otherwise, except (a) to
the extent reflected on such Acquired Entity's Current Balance Sheet and not
heretofore paid or discharged, (b) liabilities incurred in the ordinary course
of business consistent with past practice since the date of such Acquired
Entity's Current Balance Sheet (none of which relates to breach of contract,
breach of warranty, tort, infringement or violation of law, or which arose out
of any action, suit, claim, governmental investigation or arbitration
proceeding), and (c) liabilities incurred in the ordinary course of business
prior to the date of such Acquired Entity's Current Balance Sheet which, in
accordance with GAAP consistently applied, were not required to be recorded
thereon and which, in the aggregate, are not material (the liabilities and
obligations referenced in (a), (b) and (c) above are referred to as the
"Designated Liabilities"). Schedule 3.11 lists all indebtedness owed by any of
the Acquired Entities, itemized with respect to each Acquired Entity, to a bank
or any other Person, including without limitation, indebtedness for borrowed
money (including principal and accrued but unpaid interest) and capitalized
equipment leases. Schedule 3.11 also lists each account of each Acquired
Entity with any bank, broker or other depository institution, and the names of
all persons authorized to withdraw funds from each such account.
3.12 LITIGATION. There is no action, suit or other legal or
administrative proceeding or governmental investigation pending, or, to the
knowledge of the Acquired Entities and Principals, threatened, anticipated or
contemplated (i) against, by or affecting any Acquired Entity or Principal
(which, in the case of the Principals, relate to or concern any Acquired Entity
or for which any Acquired Entity may be responsible), or any Acquired Entity's
properties or assets,
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except for routine customer claims and complaints arising in the ordinary
course consistent with past practice which involve amounts less than $10,000
individually or $200,000 in the aggregate, or (ii) which question the validity
or enforceability of this Agreement or the transactions contemplated hereby,
and there is no basis for any of the foregoing. There are no outstanding
orders, decrees or stipulations issued by any Governmental Authority in any
proceeding to which any Acquired Entity is or was a party which have not been
complied with in full or which continue to impose any material obligations on
the any Acquired Entity.
3.13 ENVIRONMENTAL MATTERS.
(a) Each of the Acquired Entities and the Principals are
and have at all times been in full compliance with all Environmental
Laws governing its business, operations, properties and assets,
including, without limitation: (i) all requirements relating to the
Discharge and Handling of Hazardous Substances; (ii) all requirements
relating to notice, record keeping and reporting; (iii) all
requirements relating to obtaining and maintaining Licenses (as
defined herein) for the ownership by each of the Acquired Entities of
its properties and assets and the operation of its business as
presently conducted or the ownership by the Acquired Entities and the
Principals and use by the Acquired Entities of the Principal Owned
Properties (as defined in Section 3.14); or (iv) all applicable writs,
orders, judgments, injunctions, governmental communications, decrees,
informational requests or demands issued pursuant to, or arising
under, any Environmental Laws.
(b) There are no (and there is no basis for any)
non-compliance orders, warning letters, notices of violation
(collectively "Notices"), claims, suits, actions, judgments,
penalties, fines, or administrative or judicial investigations of any
nature or proceedings (collectively "Proceedings") pending or
threatened against or involving any of the Acquired Entities, their
businesses, operations, properties or assets or the Principal Owned
Properties, issued by any Governmental Authority or third party with
respect to any Environmental Laws or Licenses issued to any of the
Acquired Entities thereunder in connection with, related to or arising
out of the ownership by any of the Acquired Entities of its properties
or assets or the operation of its businesses or the ownership by the
Principals and use by the Company of the Principal Owned Properties,
which have not been resolved to the satisfaction of the issuing
Governmental Authority or third party in a manner that would not
impose any obligation, burden or continuing liability on Republic or
any Surviving Corporation in the event that the transactions
contemplated by this Agreement are consummated.
(c) None of the Acquired Entities nor any of the
Principals has at any time Handled or Discharged, nor has it at any
time allowed or arranged for any third party to Handle or Discharge,
Hazardous Substances to, at or upon: (i) any location other than a
site lawfully permitted to receive such Hazardous Substances; (ii) any
parcel of real property owned or leased at any time by any of the
Acquired Entities (including, without limitation, the Company Owned
Properties (as defined in Section 3.14)) or any of the Principal Owned
Properties, except in compliance with applicable Environmental Laws;
or
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(iii) any site which, pursuant to CERCLA or any similar state law (x)
has been placed on the National Priorities List or its state
equivalent, or (y) the Environmental Protection Agency or any relevant
state agency has notified any of the Acquired Entities that it has
proposed or is proposing to place on the National Priorities List or
its state equivalent. There has not occurred, nor is there presently
occurring, a Discharge, or threatened Discharge of any Hazardous
Substance on, into or beneath the surface of, or adjacent to, any real
property owned or leased at any time by any of the Acquired Entities
or the Principal Owned Properties.
(d) Except as set forth in a letter to be delivered by
the Acquired Entities to Republic no later than 10 days after the date
hereof, none of the Acquired Entities uses, nor has any of them used,
any Aboveground Storage Tanks or Underground Storage Tanks; there are
not now nor have there ever been any Underground Storage Tanks on any
real property owned or leased at any time by any of the Acquired
Entities, or the Principal Owned Properties; and there has been no
Discharge from or rupture of any Aboveground Storage Tanks or
Underground Storage Tanks.
(e) Except as set forth on Schedule 3.13(e), there have
been no (i) environmental audits, assessments or occupational health
studies undertaken since the date that any of the Acquired Entities
was incorporated by any of the Acquired Entities or its agents or
representatives thereof or, to the knowledge of any of the Acquired
Entities or Principals, undertaken by any Governmental Authority, or
any third party, relating to or affecting any of the Acquired Entities
or any real property owned or leased at any time by any of the
Acquired Entities or the Principal Owned Properties; (ii) ground,
water, soil, air or asbestos monitoring undertaken by any of the
Acquired Entities or its agents or representatives thereof or
undertaken by any Governmental Authority or any third party, relating
to or affecting any of the Acquired Entities or any real property
owned or leased at any time by any of the Acquired Entities or the
Principal Owned Properties; (iii) material written communications
between any of the Acquired Entities and any Governmental Authority
arising under or related to Environmental Laws including but not
limited to, any notices of violation and notices of non-compliance;
and (iv) outstanding citations issued under OSHA, or similar state or
local statutes, laws, ordinances, codes, rules, regulations, orders,
rulings or decrees, relating to or affecting any of the Acquired
Entities or any real property owned or leased at any time by any of
the Acquired Entities or the Principal Owned Properties. The
representations and warranties in this Section 3.13 shall survive for
a period of one year after the Closing Date as provided in Section 9.2
in the same manner as the other representations and warranties herein.
(f) For purposes of this Section, the following terms
shall have the meanings ascribed to them below:
"Aboveground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 et seq., as amended, of RCRA, or any
applicable state or local statute, law,
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ordinance, code, rule, regulation, order ruling, or decree governing
Aboveground Storage Tanks.
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing, migrating or emitting, as any of such terms
may further be defined in any Environmental Law, into or through any
medium including, without limitation, ground water, surface water,
land, soil or air.
"Environmental Laws" means all federal state, regional or
local statutes, laws rules, regulations, codes, ordinances, orders,
plans, injunctions, decrees, rulings, licenses, and changes thereto,
or judicial or administrative interpretations thereof, or similar laws
of business, whether currently in existence or hereafter enacted,
issued, or promulgated, any of which govern, purport to govern, or
relate to pollution, protection of the environment, public health and
safety, air emissions, water discharges, waste disposal, hazardous or
toxic substances, solid or hazardous waste, occupational, health and
safety, as any of these terms are or may be defined in such statutes,
laws, rules, regulations, codes, orders, ordinances, plans,
injunctions, decrees, rulings, licenses, and changes thereto, or
judicial or administrative interpretations thereof, including, without
limitation: the Comprehensive Environmental Responses, Compensation
and Liability Act of 1980, as amended by the Superfund Amendment and
Reauthorization Act of 1986, 42 U.S.C. Section 9601, et seq. (herein,
collectively, "CERCLA"); the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act of 1976 and subsequent
Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Section 6901
et seq. (herein, collectively, "RCRA"); the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Section 1801, et seq., (the
"Hazardous Materials Transportation Act"); the Clean Water Act, as
amended, 33 U.S.C. Section 1311, et seq. (the "Clean Water Act"); the
Clean Air Act, as amended, 42 U.S.C. Section 7401-7642, (the "Clean
Air Act"); the Toxic Substances Control Act, as amended, 15 U.S.C.
Section 2601 et seq., (the "Toxic Substances Control Act"); the
Federal Insecticide, Fungicide, and Rodenticide Act as amended, 7
U.S.C. Section 136-136y ("FIFRA"); the Emergency Planning and
Community Right-to-Know Act of 1986 as amended 42 U.S.C. Section
11001, et seq. (Title III of XXXX) ("EPCRA"); and the Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651, et
seq. ("OSHA").
"Handle" means any manner of generating, accumulating,
storing, treating, disposing of, transporting, transferring, labeling,
handling, manufacturing or using, as any of such terms may further be
defined in any Environmental Law.
"Hazardous Substances" shall be construed broadly to include
any toxic or hazardous substance, material or waste, and any other
contaminant, pollutant or constituent thereof, whether liquid, solid,
semi-solid, sludge and/or gaseous, including without limitation,
chemicals, compounds, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated
biphenyls, the presence of which requires investigation or remediation
under any Environmental laws or which are or become regulated, listed
or controlled by, under or pursuant to any Environmental
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Laws, or which has been or shall be determined or interpreted at any
time by any Governmental Authority to be a hazardous or toxic
substance regulated under any other statute, law, regulation, order,
code, rule, order, or decree.
"Licenses" means all licenses, certificates, permits,
approvals, decrees and registrations.
"Underground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 et seq., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule,
regulation, order, ruling or decree governing Underground Storage
Tanks.
3.14 REAL ESTATE
(a) Schedule 3.14 contains the street addresses of, and
indicates the owner(s) of, any real property or any leasehold or other
interest therein (including without limitation any option or other
right or obligation to purchase any real property or any interest
therein) owned by any of the Acquired Entities as of the date hereof
(the "Company Owned Properties"). There has been no real property (or
any interest therein) owned by any of the Acquired Entities within the
past five years that is not owned as of the date of this Agreement.
Schedule 3.14 contains the legal descriptions and the street addresses
of any real property (or any interest therein) which was owned by any
of the Principals or any of their Affiliates (the 'Principal Owned
Properties," and together with the Company Owned Properties, the
"Owned Properties"), and used in any Acquired Entity's business which
has been conveyed, as additional contributions of capital or otherwise
conveyed, to any Acquired Entity. With respect to each such parcel of
Owned Properties: (i) the Acquired Entity that owns such parcel as
indicated in the Schedules to this Section 3.14 has good and
marketable title, free and clear of any covenants, conditions,
easements and exceptions other than the Permitted Exceptions (as
defined in Section 5.15), and of any Lien other than liens for real
estate taxes not yet due and payable, (ii) there are no pending or
threatened condemnation proceedings, suits or administrative actions
relating to the Owned Properties or other matters affecting adversely
the current use, occupancy or value thereof; (iii) the legal
descriptions for the Owned Properties contained in the deeds thereof
describe such parcels fully and adequately; (iv) the buildings and
improvements are located within the boundary lines of the described
parcels of land and are not in violation of applicable setback
requirements, local comprehensive plan provisions zoning laws and
ordinances (and none of the properties or buildings or improvements
thereon are subject to "permitted non-conforming use" or "permitted
non-conforming structure" classifications), building code
requirements, permits, licenses or other forms of approval, regulation
or restrictions by any Governmental Authority, and do not encroach on
any easement which may burden the land; the land does not serve any
adjoining property for any purpose inconsistent with the use of the
land; and the Owned Properties are not located within any flood plain
or subject to any similar type restriction for which any permits or
licenses necessary to the use thereof have not been obtained; (v) all
facilities
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have received all material approvals of Governmental Authorities
(including licenses and permits) required in connection with the
ownership or operation thereof and have been operated and maintained
in accordance with applicable laws, ordinances, rules and regulations;
(vi) there are no Contracts granting to any party or parties the right
of use or occupancy of any portion of the Owned Properties, and there
are no parties (other than the Acquired Entities) in possession of any
of the Owned Properties; (vii) there are no outstanding options or
rights of first refusal to purchase any of the Owned Properties or any
portion thereof or interest therein, (viii) all facilities located on
the Owned Properties are supplied with utilities and other services
necessary for their operation, all of which services are adequate in
accordance with all applicable laws, ordinances, rules and
regulations, and are provided via public roads or via permanent,
irrevocable, appurtenant easements benefiting the Owned Properties:
(ix) the Owned Properties abut on and have adequate direct vehicular
access to a public road and there is no pending or threatened
termination of such access; (x) all improvements, buildings and
systems on the Owned Properties are in good repair, and safe for
occupancy; and (xi) there are no material Contracts relating to
management or similar matters which affect any of the Owned
Properties.
(b) Schedule 3.14 sets forth a list of all leases,
licenses or similar agreements to which any Acquired Entity is a
party, which are for the use or occupancy of real estate owned by a
third party ("Leases") (copies of which have previously been furnished
to Republic), in each case, setting forth (i) the lessor and lessee
thereof and the commencement date, term and renewal rights under each
of the Leases, and (ii) the street address or legal description of
each property covered thereby (the "Leased Premises"). The Leases are
in full force and effect and have not been amended, and no party
thereto is in default or breach under any such Lease. No event has
occurred which, with the passage of time or the giving of notice or
both, would cause a material breach of or default under any of such
leases. With respect to each such Leased Premises: (i) the Acquired
Entity that is the lessee has a valid leasehold interest in the Leased
Premises, free and clear of any Liens, covenants and easements or
title defects of any nature whatsoever; (ii) the portions of the
buildings located on the Leased Premises that are used in the business
of the Acquired Entity are each in good repair and condition, normal
wear and tear excepted, and are in the aggregate sufficient to satisfy
the Acquired Entity's current and reasonably anticipated normal
business activities as conducted thereat; (iii) each of the Leased
Premises (a) has direct access to public roads or access to public
roads by means of a perpetual access easement, such access being
sufficient to satisfy the current and reasonably anticipated normal
transportation requirements of the business presently conducted at
such parcel; and (b) is served by all utilities in such quantity and
quality as are sufficient to satisfy the current normal business
activities conducted at such parcel; and (iv) no Acquired Entity or
Principal has received notice of (a) any condemnation proceeding with
respect to any portion of the Leased Premises or any access thereto,
and no such proceeding is contemplated by any Governmental Authority;
or (b) any special assessment which may affect any of the Leased
Premises, and no such special assessment is contemplated by any
Governmental Authority.
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3.15 BUSINESS; GOOD TITLE TO AND CONDITION OF ASSETS; INVENTORY
(a) No Principal is engaged in the Auto Business or the
Parts Business (as defined in Section 5.11) or owns an interest in any
Person engaged in the Auto Business or the Parts Business, other than
(A) the Auto Business and Parts Business conducted by the Acquired
Entities or (B) the Principals' ownership interests in the Acquired
Entities. Alkit Enterprises, Inc. has no assets used in the Auto
Business or Parts Business other than real property. The Acquired
Entities own and operate the motor vehicle dealerships (the
"Dealerships") listed on Schedule 3.15 at the locations set forth
thereon, and each Dealership is owned and operated by the Acquired
Entity indicated in Schedule 3.15. Upon the consummation of the
transactions contemplated hereby, the Republic Companies will have
acquired and own all of the Acquired Entities' assets and operations
engaged in the Auto Business or Parts Business and related rights and
interests. Except as disclosed in the Financial Statements, each
Acquired Entity has good and marketable title to all of its Assets
free and clear of any Liens. For purposes of this Agreement, the term
"Assets" means all of the properties and assets of any nature of the
Acquired Entities.
(b) The Fixed Assets currently in use or necessary for
the business and operations of the Acquired Entities are in good
operating condition, normal wear and tear excepted, and, to the
knowledge of the Acquired Entities and the Principals, have been
maintained substantially in accordance with all applicable
manufacturer's specifications and warranties. For purposes of this
Agreement, the term "Fixed Assets" means all vehicles (other than
vehicles held as inventory), machinery, equipment, tools, supplies,
leasehold improvements, furniture and fixtures, owned, used by or
located on the premises of the Acquired Entities or set forth on the
Current Balance Sheets or acquired by the Acquired Entities since the
date of the Current Balance Sheets.
(c) None of the vehicles owned by the Acquired Entities
as of the date hereof has been, or will be on the Closing Date,
salvaged or rebuilt or have any frame, flood or other damage impairing
its salability in the ordinary course of business, and with respect to
each vehicle, the Acquired Entities owning such vehicles has or will
have prior to the Closing Date on file true and correct odometer
statements, none of which indicate that the actual mileage is unknown.
3.16 COMPLIANCE WITH LAWS. Each of the Acquired Entities, the
Principals and their Affiliates is and has been in compliance in all material
respects with all laws, regulations and orders applicable to it, its business
and operations (as conducted by it now and in the past), the Assets, the Owned
Properties and the Leased Premises and any other properties and assets (in each
case owned or used by it now or in the past). No Acquired Entity has been
cited, fined or otherwise notified of any asserted past or present failure to
comply with any laws, regulations or orders and no proceeding with respect to
any such violation is pending or threatened. Except for the Franchise
Agreements, no Acquired Entity is subject to any Contract, decree or injunction
in which it is a party which restricts the continued operation of any business
or the expansion thereof to other geographical areas, customers and suppliers
or lines of business. No Acquired Entity, nor
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any of their employees or agents, has made any payment of funds in connection
with its business which is prohibited by law, and no funds have been set aside
to be used in connection with its business for any payment prohibited by law.
3.17 LABOR AND EMPLOYMENT MATTERS. No Acquired Entity is a party
to or bound by any collective bargaining agreement or any other agreement with
a labor union, and there has been no labor union during the 24 months prior to
the date hereof organizing any employees of the Acquired Entities into one or
more collective bargaining units. There is not now, and there has not been
during the 24 months prior to the date hereof, any actual or threatened labor
dispute, strike or work stoppage which affects or which may affect the business
of the Acquired Entities or which may interfere with their continued
operations. No Acquired Entity, and no employee, agent or representative
thereof has since the date of incorporation or formation of such Acquired
Entity committed any unfair labor practice as defined in the National Labor
Relations Act, as amended, and there is no pending or, to the knowledge of the
Acquired Entities and the Principals, threatened, charge or complaint against
any Acquired Entity by or with the National Labor Relations Board or any
representative thereof. To the knowledge of the Acquired Entities and
Principals, no executive or key employee or group of employees has any plans to
terminate his, her or their employment with any Acquired Entity as a result of
the transactions contemplated hereby or otherwise. Each Acquired Entity has
complied with applicable laws, rules and regulations relating to employment,
civil rights and equal employment opportunities, including but not limited to,
the Civil Rights Act of 1964, the Fair Labor Standards Act, and the Americans
with Disabilities Act, as amended.
3.18 EMPLOYEE BENEFIT PLANS.
(a) Employee Benefit Plans. Schedule 3.18 contains a list
setting forth each employee benefit plan or arrangement of each of the
Acquired Entities, including but not limited to employee pension
benefit plans, as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), multiemployer
plans, as defined in Section 3(37) of ERISA, employee welfare benefit
plans, as defined in Section 3(1) of ERISA, deferred compensation
plans, stock option plans, bonus plans, stock purchase plans,
hospitalization, disability and other insurance plans, severance or
termination pay plans and policies, whether or not described in
Section 3(3) of ERISA, in which employees, their spouses or
dependents, of any of the Acquired Entities participate ("Employee
Benefit Plans") (true and accurate copies of which, together with the
most recent annual reports on Form 5500 and summary plan descriptions
with respect thereto, were furnished to Republic).
(b) Compliance with Law. With respect to each Employee
Benefit Plan (i0 each has been administered in all material respects
in compliance with its terms and with all applicable laws, including,
but not limited to, ERISA and the Internal Revenue Code of 1986, as
amended (the "Code"); (ii) no actions, suits, claims or disputes are
pending, or threatened; (iii) no audits, inquiries, reviews,
proceedings, claims, or demands are pending with any governmental or
regulatory agency; (iv) there are no facts which could give rise
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to any material liability in the event of any such investigation,
claim, action, suit, audit, review, or other proceeding; (v) all
material reports, returns and similar documents required to be filed
with any governmental agency or distributed to any plan participant
have been duly or timely filed or distributed; and (vi) no "prohibited
transaction" has occurred within the meaning of the applicable
provisions of ERISA or the Code.
(c) Qualified Plans. With respect to each Employee
Benefit Plan intended to qualify under Code Section 401(a) or 403(a),
(i) the Internal Revenue Service has issued a favorable determination
letter, true and correct copies of which have been furnished to
Republic, that such plans are qualified and exempt from federal income
taxes; (ii) no such determination letter has been revoked nor has
revocation been threatened, nor has any amendment or other action or
omission occurred with respect to any such plan since the date of its
most recent determination letter or application therefor in any
respect which would adversely affect its qualification or materially
increase its costs; (iii) no such plan has been amended in a manner
that would require security to be provided in accordance with Section
401(a)(29) of the code; (iv) no reportable event (within the meaning
of Section 4043 of ERISA) has occurred, other than one for which the
30-day notice requirement has been waived; (v) as of the Effective
Date, the present value of all liabilities that would be "benefit
liabilities" under Section 4001(a)(16) of ERISA if benefits described
in Code Section 411(d)(6)(B) were included will not exceed the then
current fair market value of the assets of such plan (determined using
the actuarial assumptions used for the most recent actuarial valuation
for such plan); (vi) all contributions to, and payments from and with
respect to such plans, which may have been required to be made in
accordance with such plans and, when applicable, Section 302 of ERISA
or Section 412 of the Code, have been timely made; and (vii) all such
contributions to the plans and all payments under the plans (except
those to be made from a trust qualified under Section 401(a) of the
Code) and all payments with respect to the plans (including without
limitation PBGC (as defined below) and insurance premiums) for any
period ending before the Effective Date that are not yet, but will be,
required to be made are properly accrued and reflected on the Current
Balance Sheet.
(d) Multiemployer Plans. With respect to any
multiemployer plan as described in Section 4001(a)(3) of ERISA ("MPPA
Plan") (i) all contributions required to be made with respect to
employees of the Acquired Entities have been timely paid; (ii) each
Acquired Entity has not incurred and is not expected to incur,
directly or indirectly, any withdrawal liability under ERISA with
respect to any such plan (whether by reason of the transactions
contemplated by the Agreement or otherwise); (iii) Schedule 3.18 sets
forth (A) the withdrawal liability under ERISA to each MPPA Plan, (B)
the date as of which such amount was calculated, and (C) the method
for determining the withdrawal liability; and (iv) no such plan is (or
is expected to be) insolvent or in reorganization and no accumulated
funding deficiency (as defined in Section 302 of ERISA and Section 412
of the Code), whether or not waived, exists or is expected to exist
with respect to any such plan.
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(e) Welfare Plans. (i) No Acquired Entity is obligated
under any employee welfare benefit plan as described in Section 3(1)
of ERISA ("Welfare Plan") to provide medical or death benefits with
respect to any employee or former employee of the Acquired Entities or
their predecessors after termination of employment; (ii) each Acquired
Entity has complied with the notice and continuation coverage
requirements of Section 4980B of the Code and the regulations
thereunder with respect to each Welfare Plan that is, or was during
any taxable year for which the statute of limitations on the
assessment of federal income taxes remains open, by consent or
otherwise, a group health plan within the meaning of Section
5000(b)(1) of the Code; and (iii) there are no reserves, assets,
surplus or prepaid premiums under any Welfare Plan which is an
Employee Benefit Plan. The consummation of the transactions
contemplated by this Agreement will not entitle any individual to
severance pay, and, will not accelerate the time of payment or
vesting, or increase the amount of compensation due to any individual.
(f) Controlled Group Liability. No Acquired Entity nor
any entity that would be aggregated with any Acquired Entity under
Code Section 414(b), (c), (m) or (o): (i) has ever terminated or
withdrawn from an employee benefit plan under circumstances resulting
(or expected to result) in liability to the Pension Benefit Guaranty
Corporation ("PBGC"), the fund by which the employee benefit plan is
funded, or any employee or beneficiary for whose benefit the plan is
or was maintained (other than routine claims for benefits); (ii) has
any assets subject to (or expected to be subject to) a lien for unpaid
contributions to any employee benefit plan; (iii) has failed to pay
premiums to the PBGC when due (iv) is subject to (or expected to be
subject) an excise tax under Code Section 4971; (v) has engaged in any
transaction which would give rise to liability under Section 4069 or
Section 4212(c) of ERISA; or (vi) has violated Code Section 4980B or
Section 601 through 608 of ERISA.
(g) Other Liabilities. (i) None of the Employee Benefit
Plans obligates any Acquired Entity to pay separation, severance,
termination or similar benefits solely as a result of any transaction
contemplated by this Agreement or solely as a result of a "change of
control" (as such term is defined in Section 280G of the Code); (ii)
all required or discretionary (in accordance with historical
practices) payments, premiums, contributions, reimbursements, or
accruals for all periods ending prior to or as of the Effective Date
shall have been made or properly accrued on the Current Balance Sheets
or will be properly accrued on the books and records of the Acquired
Entities as of the Effective Date; and (iii) none of the Employee
Benefit Plans has any unfunded liabilities which are not reflected on
the Current Balance Sheets or the books and records of the Company.
3.19 TAX MATTERS. All Tax Returns required to be filed prior to
the date hereof with respect to any of the Acquired Entities or any of their
respective income, properties, franchises or operations have been timely filed,
each such Tax Return has been prepared in compliance with all applicable laws
and regulations, and all such Tax Returns are true and accurate in all
respects. All Taxes due and payable by or with respect to each Acquired Entity
have been paid or are accrued on the applicable Current Balance Sheet or will
be accrued on the Company's books and records
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as of the Closing. (i) Except as set forth in a letter to be delivered by the
Acquired Entities to Republic no later than 10 days after the date hereof, with
respect to each taxable period of each Acquired Entity, either such taxable
period has been audited by the relevant taxing authority or the time for
assessing or collecting Taxes with respect to each such taxable period has
closed and such taxable period is not subject to review by any relevant taxing
authority; (ii) no deficiency or proposed adjustment which has not been settled
or otherwise resolved for any amount of Taxes has been asserted or assessed by
any taxing authority against any Acquired Entity; (iii) no Acquired Entity has
consented to extend the time in which any Taxes may be assessed or collected by
any taxing authority; (iv) no Acquired Entity has requested or been granted an
extension of the time for filing any Tax Return to a date later than the
Closing; (v) there is no action, suit, taxing authority proceeding, or audit or
claim for refund now in progress, pending or threatened against or with respect
to any Acquired Entity regarding Taxes; (vi) no Acquired Entity has made an
election or filed a consent under Section 341(f) of the Code (or any
corresponding provision of state, local or foreign law) on or prior to the
Effective Date; (vii) there are no Liens for Taxes (other than for current
Taxes not yet due and payable) upon the assets of any Acquired Entity; (viii)
no Acquired Entity will be required (A) as a result of a change in method of
accounting for a taxable period ending on or prior to the Effective Date, to
include any adjustment under Section 481(c) of the Code (or any corresponding
provision of state, local or foreign law) in taxable income for any taxable
period (or portion thereof) beginning after the Effective Date or (B) as a
result of any "closing agreement," as described in Section 7121 of the Code (or
any corresponding provision of state, local or foreign law), to include any
item of income or exclude any item of deduction from any taxable period (or
portion thereof) beginning after the Effective Date; (ix) no Acquired Entity
has been a member of an affiliated group (as defined in Section 1504 of the
Code) or filed or been included in a combined, consolidated or unitary income
Tax Return; (x) no Acquired Entity is a party to or bound by any tax allocation
or tax sharing agreement and has no current or potential contractual obligation
to indemnify any other Person with respect to Taxes; (xi) no Acquired Entity
has made any payments or, is or will become obligated (under any contract
entered into on or before the Closing) to make any payments, that will be
non-deductible under Section 280G of the Code (or any corresponding provision
of state, local or foreign law); and (xii) no Acquired Entity has been a United
States real property holding corporation within the meaning of Section
897(c)(2) of the Code (or any corresponding provision of state, local or
foreign law) during the applicable period specified in Section 897(c)(1)(a)(ii)
of the Code (or any corresponding provision of state, local or foreign law);
(xiii) no claim has ever been made by a taxing authority in a jurisdiction
where any Acquired Entity does not file Tax Returns that an Acquired Entity is
or may be subject to Taxes assessed by such jurisdiction; (xiv) no Acquired
Entity has any permanent establishment in any foreign country, as defined in
the relevant tax treaty between the United States of America and such foreign
country; (xv) true, correct and complete copies of all income and sales Tax
Returns filed by or with respect to any Acquired Entity for the past three
years have been furnished or made available to Republic; (xvi) no Acquired
Entity will be subject to any Taxes for the period ending at the Closing for
any period for which a Tax Return has not been filed imposed pursuant to
Section 1374 or Section 1375 of the Code (or any corresponding provision of
state, local or foreign law); and (xvii) no sales or use tax will be payable by
any Acquired Company or Republic or any Surviving Corporation or transferee
pursuant to the Related Transactions, on the transfer
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of any Assets pursuant to the isolated or occasional sale rule, Fla. Admin.
Code 12A-10.037 and the resale provisions of Fla. Admin. Code 12A-1.038 as a
result of this transaction, and there will be no non-recurring intangible tax,
documentary stamp tax, or other excise (or comparable tax imposed by any
governmental entity) as a result of this transaction. Each Maroone Corporation
that has filed a Tax return as an S corporation timely and properly filed an S
corporation election under the Code and under applicable state and local Tax
law for its first taxable year, and no such S election has been revoked or
terminated and neither the Maroone Corporations nor any Shareholder has taken
any action that would cause a termination of such S election. Each Partnership
for all taxable periods has qualified to be treated as a partnership for
Federal, state, local and foreign income Tax purposes.
3.20 INSURANCE. Each Acquired Entity is covered by valid,
outstanding enforceable policies of insurance issued to it by reputable
insurers covering its properties, assets and businesses against risks of the
nature normally insured against by similar entities in the same or similar
lines of business, and in the Principals' opinion, in coverage amounts
typically and reasonably carried by such entities (the "Insurance Policies").
Such Insurance Policies are in full force and effect, and all premiums due
thereon have been paid. Through the Effective Time, each of the Insurance
Policies will be in full force and effect. Each Acquired Entity has complied
with the provisions of such Insurance Policies applicable to it. A complete
and correct list and copies of all Insurance Policies and all amendments and
riders thereto have been provided to Republic and there is no pending claim or
claims under any of the Insurance Policies for an amount in excess of $50,000
individually or $250,000 in the aggregate, including any claim for loss or
damage to the properties, assets or business of any Acquired Entity. No
Acquired Entity has failed to give, in a timely manner, any notice required
under any of the Insurance policies to preserve its rights thereunder.
3.21 RECEIVABLES. All of the Receivables are valid and legally
binding, represent bona fide transactions and arose in the ordinary course of
business of the Acquired Entities. All of the Receivables are good and
collectible receivables, and will be collected in accordance with past practice
and the terms of such receivables (and in any event within six months following
the Closing Date), without set off or counterclaims, subject to the allowance
for doubtful accounts, if any, set forth on the Current Balance Sheets. For
purposes of this Agreement, the term "Receivables" means all receivables of the
Acquired Entities, including without limitation all manufacturer's warranty
receivables and all trade account receivables arising from the provision of
services, sale of inventory, notes receivable, and insurance proceeds
receivable.
3.22 LICENSES AND PERMITS. Each Acquired Entity possesses all
licenses and required governmental or official approvals, permits or
authorizations (collectively, the "Permits") for its business and operations,
including with respect to the operations of each of the Owned Properties and
Leased Premises, and, within one week after the date hereof, the Acquired
Entities will deliver to Republic a schedule that sets forth a true, complete
and accurate list of all such Permits, itemized for each acquired Entity. All
such Permits are valid and in full force and effect, each Acquired Entity is in
compliance with the respective requirements thereof, and no proceeding is
pending or threatened to revoke or amend any of them. None of such Permits is
or will be
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impaired or in any way affected by the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
3.23 ADEQUACY OF THE ASSETS: RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS; AFFILIATED TRANSACTIONS. The Assets, Owned Properties, and Leased
premises constitute, in the aggregate, all of the assets and properties
necessary for the conduct of each of the businesses of the Acquired Entities in
the manner in which and to the extent to which such business is currently being
conducted. No current supplier to the Acquired Entities of items essential to
the conduct of their businesses has threatened to terminate its business
relationship with any of the Acquired Entities for any reason. Each Acquired
Entity has no direct or indirect interest in any customer, supplier or
competitor of the Acquired Entity or in any person from whom or to whom the
Acquired Entity leases real or personal property. No officer, director,
shareholder, or partner of any Acquired Entity, nor any person related by blood
or marriage to any such person, nor any entity in which any such person owns
any beneficial interest, is a party to any Contract or transaction with the
Acquired Entity or has any interest in any property used by the Acquired
Entity.
3.24 INTELLECTUAL PROPERTY. Each Acquired Entity has full legal
right title and interest in and to all trademarks, service marks, trade names,
copyrights, know-how, patents, trade secrets, licenses (including licenses for
the use of computer software programs), and other intellectual property used in
the conduct of its business (the "Intellectual Property"). The conduct of the
business of the Acquired Entities as presently conducted, and the unrestricted
conduct and the unrestricted use and exploitation of the Intellectual Property,
does not infringe or misappropriate any rights held or asserted by any Person
and to the knowledge of the Acquired Entities and the Principals, no Person is
infringing on any Intellectual Property. No payments are required for the
continued use of the Intellectual Property. None of the Intellectual Property
has ever been declared invalid or unenforceable, or is the subject of any
pending or threatened action for opposition, cancellation, declaration,
infringement, or invalidity, unenforceability or misappropriation or like
claim, action or proceeding.
3.25 CONTRACTS. Schedule 3.25 sets forth a list of each Contract
to which any Acquired Entity is a party or by which any of them or their
properties and assets are bound and which is material to any of their
businesses, assets, properties or prospects (the "Material Contracts"),
including without limitation all franchise, sales and service, dealer and other
agreements or understandings (the "Franchise Agreements") with the Chevrolet
and Oldsmobile Divisions of General Motors, the Ford Division of the Ford Motor
Company, American Isuzu Motors, Inc., and the Dodge Division of the Chrysler
Corporation or any other automobile manufacturer or distributor (collectively,
the "Factories"). As indicated in Schedule 3.25, certain Acquired Entities are
parties to Franchise Agreements for each of the Dealerships, which Franchise
Agreements grant the Acquired Entities full rights and privileges necessary to
operate the Dealerships. The copy of each Material Contract furnished to
Republic is a true and complete copy of the document it purports to represent
and reflects all amendments thereto made through the date of this Agreement.
The Acquired Entities have not violated any of the terms or conditions of any
Material Contract or any term or condition which would permit termination or
material
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modification of any Material Contract, all of the covenants to be performed by
any other party thereto, to the knowledge of the Acquired Entities and the
Principals, have been fully performed, and there are no claims for breach or
indemnification or notice of default or termination under any Material
Contract. No event has occurred which constitutes, or after notice or the
passage of time, or both, would constitute, a default by any Acquired Entity
under any Material Contract, and no such event has occurred which constitutes
or would constitute a default by any other party. Each Acquired Entity is not
subject to any liability or payment resulting from renegotiation of amounts
paid under any Material Contract. As used in this Section 3.25, Material
Contracts shall include, without limitation, formal or informal, written or
oral, (a) loan agreements, indentures, mortgages, pledges, hypothecations,
deeds of trust, conditional sale or title retention agreements, security
agreements, equipment financing obligations or guaranties, or other sources of
contingent liability in respect of any indebtedness or obligations to any other
Person, or letters of intent or commitment letters with respect to same, which
individually or in the aggregate exceed $100,000; (b) contracts obligating any
Acquired Entity to provide products or services for a period of one year or
more, excluding standard warranty contacts entered into in the ordinary course
of its business without material modification from the preprinted forms used by
the Acquired Entities in the ordinary course of business, copies of which have
been supplied to Republic and which individually or in the aggregate exceed
$100,000; (c) leases of real property; (d) leases of personal property which
individually or in the aggregate provide for total payments in excess of
$100,000 (other than those which individually provide for annual payments of
less than $25,000 and which are cancelable without penalty on notice of sixty
(60) days or less); (e) distribution, sales agency or franchise or similar
agreements, or agreements providing for an independent contractor's services,
or letters of intent with respect to same; (f) employment agreements,
management service agreements, consulting agreements, confidentially
agreements, non-competition agreements, employee handbooks, policy statements
and any other agreements relating to any employee, officer, partner or director
of the Acquired Entities; (g) licenses, assignments or transfers of trademarks,
trade names, service marks, patents, copyrights, trade secrets or know how, or
other agreements regarding proprietary rights or intellectual property; (h) any
contract relating to pending capital expenditures by the Acquired Entities; (i)
contracts obligating any Acquired Entity to purchase vehicles, parts,
accessories, supplies, equipment, oil, advertising, media and media related
services of any kind, not cancelable without penalty on notice of thirty (30)
days or less; (j) any non-competition agreements restricting any Acquired
Entity in any manner; and (k) other material Contracts or understandings,
irrespective of subject matter and whether or not in writing, and not otherwise
disclosed on the Schedules.
3.26 ACCURACY OF INFORMATION FURNISHED. No representation,
statement or information contained in this Agreement (including, without
limitation, the various Schedules attached hereto) or any agreement executed in
connection herewith or in any certificate delivered pursuant hereto or thereto
or made or furnished to Republic or its representatives by the Acquired
Entities or the Principals, contains or shall contain any untrue statement of a
material fact or omits or shall omit any material fact necessary to make the
information contained therein not misleading. The Acquired Entities have
provided Republic with true, accurate and complete copies of all documents
listed or described in the various Schedules attached hereto.
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3.27 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES
DOCUMENTS. Each of the Principals has had the opportunity to discuss the
transactions contemplated hereby with Republic and has had the opportunity to
obtain such information pertaining to Republic as has been requested, including
but not limited to filings made by Republic with the SEC under the Exchange
Act. Each of the Principals and the Partnerships is an "accredited investor"
within the meaning of Regulation D promulgated under the Securities Act, and
has such knowledge and experience in business or financial matters that he or
it is capable of evaluating the merits and risks of an investment in the
Republic Shares. Each of the Principals and the Partnerships hereby represents
that he or it can bear the economic risk of losing his or its investment in the
Republic Shares and has adequate means for providing for his current financial
needs and contingencies. The Principals and Partnerships have received copies
of all Republic Reports filed with the SEC since January 1, 1996.
3.28 [INTENTIONALLY OMITTED]
3.29 NO COMMISSIONS. No Acquired Entity nor any Principal has
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
3.30 CERTAIN ACCOUNTING MATTERS. No Acquired Entity nor any of the
Principals, nor any of their Affiliates, has taken or agreed to take any action
that (without regard to any action taken or agreed to be taken by Republic or
any of its Affiliates) would prevent Republic from accounting for the
transactions contemplated hereby as pooling of interests business combinations
in accordance with GAAP and the criteria of Accounting Principles Board Opinion
No. 16 and the regulations of the SEC.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE CLOSING
4.1 CONDUCT OF BUSINESS BY THE ACQUIRED ENTITIES PENDING THE
CLOSING. The Acquired Entities and the Principals, jointly and severally,
covenant and agree that, between the date of this Agreement and the Effective
Time, the business of the Acquired Entities shall be conducted only in, and the
Acquired Entities shall not take any action except in, the ordinary course of
business consistent with past practice. The Acquired Entities and each of the
Principals shall use its or his reasonable best efforts to preserve intact the
Acquired Entities' business organizations, to keep available the services of
their current officers, employees and consultants, and to preserve their
present relationships with customers, suppliers and other persons with which
they have significant business relations. By way of amplification and not
limitation, except as contemplated by this Agreement, the Acquired Entities
shall not, between the date of this Agreement and the Effective Time, directly
or indirectly, do or propose or agree to do any of the following without the
prior written consent of Republic.
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(a) amend or otherwise change its Articles or Certificate
of Incorporation, Bylaws, partnership agreement or equivalent
organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or,
authorize the issuance, sale, pledge, disposition, grant or
encumbrance of (i) any shares of its capital stock of any class or any
partnership interests, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such
capital stock of partnership interests, or any other ownership
interest, of it, or (ii) any of its assets, tangible or intangible,
except, in the case of (ii), in the ordinary course of business
consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock or partnership interests, except
that the Acquired Entities may make cash distributions only to the
extent necessary to pay for the Principals' tax liability for earnings
of the Acquired Entities, consistent with past practice in the
ordinary course.
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock or partnership interests;
(e) (i) acquire (including, without limitation, for cash
or shares of stock or partnership interests, by merger, consolidation
or acquisition of stock or assets) any interest in any corporation,
partnership or other business organization or division thereof or any
assets, or make any investment either by purchase of stock or
securities, contributions of capital or property transfer, or, except
in the ordinary course of business, consistent with past practice,
purchase any property or assets of any other Person, (ii) incur any
indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse or otherwise as an accommodation become
responsible for, the obligations of any Person, or make any loans or
advances, except for its "floor plan" financing of vehicle inventories
in the ordinary course of business consistent with past practice or
(iii) modify, terminate, or enter into any Contract other than as
provided herein or in the ordinary course of business, consistent with
past practice;
(f) increase the compensation payable or to become
payable to its officers or employees or partners, or, except as
presently bound to do, grant any severance or termination pay to, or
enter into any employment or severance agreement with, any of its
directors, officers or other employees or partners, or establish,
adopt, enter into or amend or take any action to accelerate any rights
or benefits which any collective bargaining, bonus, profit sharing,
trust, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any directors, officers or employees or partners;
(g) take any action with respect to accounting policies
or procedures other than in the ordinary course of business and in a
manner consistent with past practices;
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(h) pay, discharge or satisfy any existing claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with
past practice of due and payable liabilities reflected or reserved
against in its financial statements, as appropriate, or liabilities
incurred after the date thereof in the ordinary course of business and
consistent with past practice;
(i) enter into any transaction with any Principal or
Affiliate thereof; or
(j) agree, in writing or otherwise, to take or authorize
any of the foregoing actions or any action which would make any
representation or warranty in Article III untrue or incorrect in any
material respect.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
5.2 COMPLIANCE WITH COVENANTS. The Principals shall cause the
Acquired Entities to comply with all of the covenants of the Acquired Entities
under this Agreement.
5.3 COOPERATION. Each of the parties agrees to cooperate with the
other in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, rule or regulation in connection with the transactions contemplated by
this Agreement and to use their respective best efforts to agree jointly on a
method or overcome any objections by any Governmental Authority to any such
transactions.
5.4 FACTORIES APPLICATIONS AND OTHER ACTIONS. Each of the parties
hereto shall (a) cooperate in the preparation and filing of, and take all
appropriate actions in connection with, the application to the Factories for
approval of the transactions contemplated hereby, and (b) use its reasonable
efforts to take, or cause to be taken, all appropriate actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated herein, including, without limitation, using its best efforts to
obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of any Governmental Authority and parties to
Contracts with the Acquired Entities as are necessary for the consummation of
the transactions contemplated hereby. Each of the parties shall make on a
prompt and timely basis all governmental or regulatory notifications and
filings required to be made by it for the consummation of the transactions
contemplated hereby. The parties also agree to use best efforts to defend all
lawsuits or other
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legal proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby and to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby.
5.5 HSR ACT. Republic and the Acquired Entities and Principals
shall make promptly (unless they have already made) their respective filings,
if any, and thereafter make any other required submissions, under the HSR Act,
with respect to the transactions contemplated hereby, and shall, if requested
by Republic, seek early termination of the applicable waiting period under the
HSR Act. Republic shall pay the HSR Act filing fee.
5.6 ACCESS TO INFORMATION. From the date hereof to the Effective
Time, the Acquired Entities and the Principals shall, and shall cause their
directors, officers, employees, auditors, counsel and agents to, afford
Republic and Republic's officers, employees, auditors, counsel and agents
reasonable access at all reasonable times to its properties, offices and other
facilities, to its officers and employees and to all books and records, and
shall furnish such persons with all financial, operating and other data and
information as may be requested. No information provided to or obtained by
Republic shall affect any representation or warranty in this Agreement.
Following the Effective Time, the Principals shall have reasonable access to
the Acquired Entities' tax records to prepare their own tax return, and shall
have input in the preparation of the Acquired Entities' tax returns for the
first fiscal year ending after the Effective Time.
5.7 NOTIFICATION OF CERTAIN MATTERS. Each of the parties to this
Agreement shall give prompt notice to the other parties of the occurrence or
non-occurrence of any event which would likely cause any representation or
warranty made by such party herein to be untrue or inaccurate or any covenant,
condition or agreement contained herein not to be complied with or satisfied
(provided, however, that, any such disclosure shall not in any way be deemed to
amend, modify or in any way affect the representations, warranties and
covenants made by any party in or pursuant to this Agreement).
5.8 TAX AND ACCOUNTING TREATMENT. Republic and the Acquired
Entities and the Principals will use their respective reasonable best efforts
to cause the Mergers contemplated hereby to qualify as a reorganization under
the provisions of Section 368(a) of the Code and will not take any action after
the Mergers are effected to cause the Mergers to lose their tax-free status.
All parties hereto agree to file the plan of merger for the Mergers with their
respective federal income tax returns for the year in which the Mergers are
effective, and to comply with the reporting requirements of Treasury Regulation
1.368-3. In addition, Republic, the Acquired Entities and the Principals will
not take any action after the date hereof to cause the Mergers or Related
Transactions contemplated hereby not to be accountable as a pooling of
interests business combination.
5.9 CONFIDENTIALITY; PUBLICITY. Except as may be required by law
or as otherwise permitted or expressly contemplated herein, no party hereto or
their respective Affiliates, employees, agents and representatives shall
disclose to any third party this Agreement, the subject matter or terms hereof
or any confidential information or other proprietary knowledge concerning
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the business or affairs of any other party which it may have acquired from such
party in the course of pursuing the transactions contemplated by this Agreement
without the prior consent of the other parties hereto; provided, that any
information that is otherwise publicly available, without breach of this
provision , or has been obtained from a third party, shall not be deemed
confidential information. No press release or other public announcement
related to this Agreement or the transactions contemplated hereby shall be
issued by any party hereto without the prior approval of the other parties,
except that Republic may make such public disclosure which it believes in good
faith to be required by law or by the terms of any listing agreement with or
requirements of Nasdaq (in which case Republic will consult with Maroone prior
to making such disclosure).
5.10 NO OTHER DISCUSSIONS. The Acquired Entities and the
Principals and their Affiliates, employees, agents and representatives will not
(a) initiate, encourage the initiation by others of discussions or negotiations
with third parties or respond to solicitations by third persons relating to any
merger, sale or other disposition of any substantial part of the assets,
capital stock, partnership interests (or derivatives thereof), business or
properties of any Acquired Entities (whether by merger, consolidation, sale of
stock or partnership interests, sale of assets, or otherwise), or (b) enter
into any agreement or commitment (whether or not binding) with respect to any
of the foregoing transactions. The Acquired Entities and the Principals will
immediately notify Republic if any third party attempts to initiate any
solicitation, discussion, or negotiation with respect to any of the foregoing
transactions, and shall provide Republic with the name of such third parties
and the terms of any offers.
5.11 RESTRICTIVE COVENANTS. In order to assure that Republic will
realize the benefits of the transactions contemplated hereby, each of the
Principals agrees with Republic that he will not:
(a) during the Restricted Period, directly or indirectly,
alone or as a partner, joint venturer, officer, director, member,
employee, consultant, agent, independent contractor or stockholder of,
or lender to, any company or business, engage in selling, leasing, or
servicing any new or used vehicles (the "Auto Business") or in the
wholesale or retail supply of parts with respect thereto (the "Parts
Business") anywhere in the Restricted Territory; provided, however,
that, the beneficial ownership of less than five percent (5%) of the
shares of stock of any corporation having a class of equity securities
actively traded on a national securities exchange or over-the-counter
market shall not be deemed, in and of itself, to violate the
prohibitions of this Section;
(b) during the Restricted Period, directly or indirectly
(i) induce any Person which is a customer of any Acquired Entity,
Republic or any Affiliate of the Acquired Entities or Republic to
patronize any business directly or indirectly in competition with the
Auto Business or the Parts Business conducted by the Acquired
Entities, Republic or any Affiliate of the Acquired Entities or
Republic; (ii) canvass, solicit or accept from any Person which is a
customer of the Acquired Entities, Republic or any Affiliate of the
Acquired Entities or Republic, any such competitive business; or (iii)
request or advise any Person which is a customer of the Acquired
Entities, Republic or any Affiliate of the
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Acquired Entities or Republic, or its or their successors, to
withdraw, curtail or cancel any such customer's business with any such
entity;
(c) during the Restricted Period, directly or indirectly
employ, or knowingly permit any company or business directly or
indirectly controlled by him, to employ, any person who was employed
by the Acquired Entities, Republic or any Affiliate of the Acquired
Entities or Republic at or within the prior six months, or in any
manner seek to induce any such person to leave his or her employment;
(d) during the Restricted Period, directly or indirectly,
in any way utilize, disclose, copy, reproduce or retain in his
possession any of the Acquired Entities' proprietary rights or
records, including, but not limited to any customer lists, provided,
however, that the Principals shall be allowed reasonable access to
review and copy such records for purposes of litigation and tax
audits, but with respect to any litigation against or adverse to
Republic or any of its Affiliates such access shall be only to the
extent required under laws and rules of procedure and discovery
applicable to such proceeding.
For purposes of this Section 5.11, (a) the "Restricted Period" shall mean (i)
for the Principals other than Maroone, the period beginning on the Effective
Time and ending on the fifth anniversary of the Effective Time, and (ii) for
Maroone, the longer of (A) the period beginning on the Effective Time and
ending on the fifth anniversary of the Effective Time, or (B) the second
anniversary of the termination of his employment following the Effective Time,
and (b) the "Restricted Territory" shall mean anywhere in the United States.
The Principals agree and acknowledge that the restrictions contained in this
Section 5.11 are reasonable in scope and duration and are necessary to protect
Republic and the Acquired Entities after the Effective Time. If any provision
of this Section 5.11, as applied to any party or to any circumstance, is
adjudged by a court to be invalid or unenforceable, the same will in no way
affect any other circumstance or the validity or enforceability of the
remainder of this Agreement. If any such provision, or any part thereof, is
held to be unenforceable because of the duration of such provision or the area
covered thereby, the parties agree that the court making such determination
shall have the power to reduce the duration and/or area of such provision,
and/or to delete specific words or phrases, and in its reduced form, such
provision shall then be enforceable and shall be enforced. The parties agree
and acknowledge that the breach of this Section 5.11 will cause irreparable
damage to Republic and upon breach of any provision of this Section 5.11,
Republic shall be entitled to injunctive relief, specific performance or other
equitable relief, provided, however, that the foregoing remedies shall in no
way limit any other remedies which Republic may have (including, without
limitation, the right to seek monetary damages).
5.12 TRADING IN REPUBLIC COMMON STOCK. Except as otherwise
expressly consented to by Republic, from the date of this Agreement until the
Effective Time, neither the Acquired Entities, the Principals nor any of their
Affiliates will directly or indirectly purchase or sell (including short sales)
any shares of Republic Common Stock in any transactions effected on Nasdaq or
otherwise.
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5.13 EMPLOYMENT OF SHAREHOLDERS AND OTHER EMPLOYEES. Republic or
its assignee and Maroone shall enter into an employment agreement in the form
attached hereto as Schedule 5.13.
5.14 DUE DILIGENCE REVIEW AND ENVIRONMENTAL ASSESSMENT. Republic
shall be entitled to conduct prior to Closing a due diligence review of the
assets, properties, books and records of the Acquired Entities and an
environmental assessment of the Owned Properties and Leased Premises
(hereinafter referred to as "Environmental Assessment"). The Environmental
Assessment may include, but not be limited to, a physical examination of the
Owned Properties and Leased Premises, and any structures, facilities, or
equipment located thereon, soil samples, ground and surface water samples,
storage tank testing, review of pertinent records (including but not limited
to, off-site disposal records and manifests), documents, and Licenses of the
Acquired Entities. The Acquired Entities shall provide Republic or its
designated agents or consultants with the access to such properties which
Republic, its agents or consultants require to conduct the Environmental
Assessment. If the Environmental Assessment identifies Recognized
Environmental Conditions (as defined by ASTM Standard Practice E-1527) which
require remediation or further evaluation under the Environmental Laws as
defined in Section 3.13(f) of this Agreement, then Republic shall notify the
Acquired Entities and the Principals in writing and the Acquired Entities and
the Principals shall be financially responsible for the remediation of all
Recognized Environmental Conditions which remediation is, may or would be
required by any appropriate governmental agency. Republic's failure or
decision not to conduct any such Environmental Assessment shall not affect any
representation or warranty of the Acquired Entities or the Principals under
this Agreement. Prior to Closing, the parties hereto shall agree on the
appropriate actions (and the cost thereof) to be taken with respect to any such
Recognized Environmental Conditions (provided further that in the event the
parties do not agree prior to Closing on which action is to be taken with
respect to any such Recognized Environmental Conditions, after Closing,
Republic shall at its reasonable discretion, determine the appropriate course
of action (and the cost thereof) with respect thereto). If the cost of
remediation of all Recognized Environmental Conditions exceeds $10,000,000 the
Acquired Entities and the Principals reserve the right to terminate this
Agreement, prior to the Effective Time, upon the delivery of written notice in
accordance with Section 13.1 of this Agreement.
5.15 TITLE INSURANCE AND SURVEYS.
(a) Within 10 business day after the date of this
Agreement, the Acquired Entities and the Principals shall obtain and
deliver to Republic commitments (the "Commitments") issued by a title
insurance company acceptable to Republic (the "Title Company") and
dated not earlier than the date of this Agreement for the issuance of
an ALTA Owners Policy of Title Insurance (10-17-92) (with Florida
Modifications), (the "Title Policy") for each of the Owned Properties
(and such of the Leased Premises as Republic may designate) in an
amount acceptable to Republic, together with legible hard copies of
all title exceptions reflected in the commitments. At Republic's
option, the Acquired Entities and principals shall deliver copies of
previous owner policies or other title evidence sufficient for
Republic to obtain the Commitments directly from the Title
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Company or its agent. In either case, the premium for the Title
Policy shall be paid by the Principals. The Title Policy shall be in
the amount designated by Republic, showing fee simple title to the
Owned Properties vested now or to be vested at or immediately prior to
the Closing in the Acquired Entities subject only to current real
estate Taxes not yet due and payable as of the Effective Time, and
such other covenants, conditions, easements, and exceptions to title
as Republic may approve in writing (collectively, the "Permitted
Exceptions"). The Commitments and the Title Policy to be issued by
the Title Company shall have all Standard and General Exceptions
deleted so as to afford full "extended form coverage" and shall
contain an ALTA Zoning Endorsements 3.1 (if available), contiguity
(where appropriate), survey, and such other endorsements as may be
reasonably requested by Republic, excluding nonimputation and
creditors rights endorsements. At the Closing, the Acquired Entities,
the Principals and their Affiliates shall deliver such affidavits or
other instruments as the Title Company may reasonably require to
delete Standard and General Exceptions and to provide the special
endorsements required hereunder. The Acquired Entities and the
Principals shall cause the Commitments to be later-dated to cover the
Closing and to cause the Title Company to deliver the Title Policy at
the Closing as directed by Republic.
(b) Within 20 days after the date of this Agreement but
before the Closing, the Acquired Entities and the Principals shall
deliver to Republic and the Title Company an as-built plat of survey
of each of the Owned Properties and the Leased Premises (the
"Surveys") prepared by a registered land surveyor or engineer,
licensed in the respective states in which such properties are
located, dated on or after the date hereof, certified to Republic, the
Title Company, and such other entities as Republic may designate in
writing to the Acquired Entities and the Principals prior to the
Closing, and conforming to current ALTA/ACSM Minimum Detail
Requirements for Land Title Surveys, sufficient to cause the Title
Company to delete the standard printed survey exception. Each Survey
shall show access from the land to dedicated roads and shall include a
flood plain certification. Any survey may be a recertification of a
prior survey, provided that it meets the above-described criteria.
(c) If (i) any Commitment discloses a title exception
other than a Permitted Exception (an "Unpermitted Exception") or (ii)
any Survey discloses any encroachment, overlap, boundary dispute, or
gap or any other matter which renders title to any of the Owned
Properties unmarketable or reflects that any utility service to the
improvements or access thereto does not lie wholly within the
applicable parcel of real property, or within an encumbered easement
for the benefit of such parcel of real property, or reflects any other
matter adversely affecting the use or improvements of such parcel of
real property (a "Survey Defect"), then the Acquired Entities and the
Principals, prior to the Closing, shall have the Unpermitted Exception
removed from such Commitment or the Survey Defect corrected or insured
over by an appropriate title insurance endorsement, all in a manner
reasonably satisfactory to Republic.
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5.16 SHAREHOLDER AND DIRECTOR VOTE. Each of the Principals, in
executing this Agreement, consents as a director, shareholder, and/or partner
(as applicable) of the Acquired Entities to the Mergers and other transactions
contemplated hereby, and waives notice of any meeting in connection therewith
and hereby release and waive all rights with respect to the transactions
contemplated hereby under any agreements relating to the sale, purchase or
voting of stock or partnership interests of the Acquired Entities, including
without limitation the Shareholders Agreement, dated July 13, 1989, and
effective November 2, 1988, by and between Xxxxxx X. Xxxxxxx, Xxxxxxx X.
Xxxxxxx and Xxxxxx Xxxxx, the Buy-Sell Agreement, dated June 22, 1992, by and
among Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx, and the Cross Purchase
Agreement by and among Xxxxxxx X. Xxxxxxx, Xxxxxxxx X. Xxxxxx and Xxxxxxxx
Xxxxxxxxxx.
5.17 AUDITED FINANCIAL STATEMENTS OF ACQUIRED ENTITIES. The
Acquired Entities acknowledge and agree that they have already engaged their
certified public accounting firm of Xxxxx, Xxxxxx and Company LLP to complete
an audit and prepare audited financial statements for each of the Acquired
Entities (the "Audited Statements") as soon as practicable, it being
anticipated that it will be completed the 21st day after the date of this
Agreement, and the Acquired Entities shall deliver such Audited Statements
(including signed audit opinions relating thereto) to Republic upon completion.
The Audited Statements shall comply with all laws and regulations of the
Securities and Exchange Commission that require Republic to file audited
financial statements with the SEC with respect to registrations under the
Securities Act and for reporting purposes under the Securities Exchange Act.
5.18 [INTENTIONALLY DELETED]
5.19 [INTENTIONALLY DELETED]
5.20 POSITIVE WORKING CAPITAL. The Acquired Entities and the
Principals hereby covenant, represent and warrant that on and as of the Closing
Date, the total aggregate current assets of the Acquired Entities (other than
any current assets that are not held by the Surviving Corporations upon
consummation of the Mergers and any current assets of the Partnerships that are
not acquired by the Republic Acquisition Subs hereunder) shall exceed the total
aggregate current liabilities of the Acquired Entities, in each case determined
in accordance with GAAP (such condition is referred to herein as "Positive
Working Capital").
5.21 RELEASES. Each of the Acquired Entities and each of the
Principals shall deliver (and shall cause any other Person holding Equity
Rights to deliver) to Republic a release (collectively, the "Releases") in such
form as is reasonably satisfactory to Republic releasing all Equity Rights and
releasing all claims of any nature against the Acquired Entities and any claims
arising out of the Mergers and the Related Transactions and the other
transactions contemplated by this Agreement, except for claims and obligations
set forth in the express terms of this Agreement; provided, however, that if
all such Releases are not delivered as required then, at Republic's election at
its sole discretion, Maroone shall sign an indemnification agreement to
indemnify Republic and its subsidiaries and Affiliates from and against all
such claims, rights and obligations to which the Releases were to relate.
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5.22 APPOINTMENT OF MAROONE REPRESENTATIVE. Each of the Acquired
Entities and the Principals hereby appoints Xxxxxxx X. Xxxxxxx (the "Maroone
Representative") as the attorney-in-fact of such Person, with full power and
authority, including power of substitution, acting in the name of and for and
on behalf of such person to amend or waive any provision of this Agreement, to
terminate this Agreement pursuant to the provisions hereof, and to take all
other action under or related to this Agreement, which in his discretion, he
may consider necessary or proper to effectuate the transactions contemplated
hereunder and to resolve any dispute with the Republic Companies over any
aspect of this Agreement and on behalf of such person to enter into any
agreement to effectuate any of the foregoing which shall have the effect of
binding such person as if such person had personally entered into such an
agreement; provided, however, that all actions taken or decisions made by the
Maroone Representative on behalf of the Principals and the Acquired Entities
shall be taken or made in a manner which is ratable and equitable amongst all
of them. This appointment and power of attorney shall be deemed as coupled
with an interest and all authority conferred hereby shall be irrevocable and
shall not be subject to termination by operation of law, whether by the death
or incapacity or liquidation or dissolution of any Acquired Entity or Principal
or the occurrence of any other event or events. The Maroone Representative may
not terminate this power of attorney with respect to any Acquired Entity or
Principal, or such Person's successors or assigns without the consent of
Republic. Each Acquired Entity and Principal agrees to hold the Maroone
Representative harmless from any and all loss, damage or liability and expenses
(including legal fees) which such person may sustain as a result of any action
taken in good faith by the Maroone Representative.
5.23 DRIVER'S MART. Maroone and Maroone Isuzu, Inc. hereby
represent and warrant that their agreements and relationships with Driver's
Mart Worldwide, Inc. ("Driver's Mart") have been terminated with no further
rights or obligations between Driver's Mart and any Acquired Entity or
Principal, and any proceeds received by the Acquired Entities or Principals in
connection therewith shall be acquired by the Republic Companies pursuant to
this Agreement.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE REPUBLIC COMPANIES
The obligations of the Republic Companies to effect the Mergers and
the other transactions contemplated hereby shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions, any or all of
which may be waived in whole or in part by the Republic Companies:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Acquired Entities and
the Principals contained in this Agreement shall be true and correct at and as
of the Closing Date with the same force and effect as though made at and as of
that time except that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. The Acquired Entities and each of the Principals shall have performed or
complied with all of their obligations required by this Agreement to be
performed or complied with at or
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prior to the Closing Date. The Acquired Entities and each of the Principals
shall have delivered to Republic a certificate, dated as of the Closing Date,
(which in case of the Maroone Corporations shall be duly signed by their
respective Chief Executive Officers and Chief Financial Officers and in case of
the Partnerships shall be signed by their respective general partners)
certifying that such representations and warranties are true and correct and
that all such obligations have been performed and complied with.
6.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY.
Between the date hereof and the Closing Date, (a) there shall have been no
Material Adverse Change to the Acquired Entities, (b) there shall have been no
adverse federal, state or local legislative or regulatory change affecting in
any material respect the services, products or business of the Acquired
Entities and (c) none of the Assets of the Acquired Entities shall have been
damaged by fire, flood, casualty, act of God or the public enemy or other cause
(regardless of insurance coverage for such damage) which damages may have a
Material Adverse Effect thereon, and the Acquired Entities and the Principals
shall have delivered to Republic a certificate, dated as of the Closing Date,
to that effect.
6.3 CORPORATE CERTIFICATE. The Acquired Entities shall have
delivered to the Republic Companies (i) state- certified copies of the articles
or certificate of incorporation or certificate of limited partnership of each
of the Acquired Entities and copies of the bylaws or partnership agreement of
each Acquired Entity as in effect immediately prior to the Effective Time, (ii)
copies of resolutions adopted by the Board of Directors and shareholders of
each Maroone Corporation and the partners of each Partnership authorizing the
transactions contemplated by this Agreement, and (iii) a certificate of good
standing of each of the Acquired Entities issued by the state of its
incorporation or formation and each other state in which it is qualified to do
business as of a date not more than 5 days prior to the Closing Date, and all
of such documents as to each Acquired Entity shall be certified as of the
Closing Date by the Secretary or general partner of such Acquired Entity as
being true, correct and complete.
6.4 OPINION OF COUNSEL. Republic shall have received an opinion
dated as of the Closing Date from counsel for the Acquired Entities and the
Partners in form and substance acceptable to Republic, including but not
limited to, such matters as set forth on Schedule 6.4.
6.5 CONSENTS. The Acquired Entities, the Principals, and Republic
shall have received consents to the Mergers and Related Transactions and other
transactions contemplated hereby and waivers of rights to terminate or modify
any material rights or obligations of the Acquired Entities or Principals, from
any Person from whom such consent or waiver is required under any Material
Contract listed or required to be listed in Schedule 3.25 (including but not
limited to, any Franchise Agreement or any other franchise, dealer or other
agreement with the Factories) or under the HSR Act or other law or regulation
as of a date not more than five days prior to the Closing, or who as a result
of the transactions contemplated hereby, would have such rights to terminate or
modify such Contracts or instruments, either by the terms thereof or as a
matter of law. Republic shall have received all consents required under the
Franchise Agreements between the Acquired Entities and the Factories or shall
have entered into new dealer and franchise
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agreements of the type generally in use at that time to operate a dealership of
each of the Factories at the current locations of the Dealerships, subject only
to such additional terms and conditions as are acceptable to Republic.
Republic shall have obtained any applicable dealer license or other approvals
required under state laws or the applicable state motor vehicle authorities and
all other Governmental Authorities with respect to the transactions
contemplated hereby.
6.6 SECURITIES LAWS. Republic shall have received all necessary
consents and otherwise complied with any state Blue Sky or securities laws
applicable to the issuance of the Republic Shares in connection with the
transactions contemplated hereby.
6.7 POOLING LETTERS. The Acquired Entities shall have received
from Xxxxx, Xxxxxx and Company LLP, a letter, dated the Closing Date,
confirming that to their knowledge after due and diligent inquiry of
management, there have been no transactions or events with respect to the
Acquired Entities which would, and the ownership structure and attributes of
the Acquired Entities and the Principals would not, prohibit the transactions
contemplated hereby, if consummated, from being accounted for as pooling of
interests business combinations. Republic shall have received from Xxxxxx
Xxxxxxxx LLP, a letter, dated the Closing Date, confirming that the
transactions contemplated hereby, if consummated, can properly be accounted for
as pooling of interests combinations in accordance with GAAP and the criteria
of Accounting Principles Board Opinion No. 16 and the regulations of the SEC.
6.8 POOLING UNDERTAKINGS. At or prior to the Closing, the
Shareholders and other appropriate Persons shall have delivered to Republic a
letter agreement relating to "pooling of interests" criteria, in form and
substance satisfactory to Republic.
6.9 AUDITED STATEMENTS. At or prior to the Closing Date, the
Audited Statements shall have been delivered to Republic as required by Section
5.17, or if not so delivered then Republic shall have received assurances
satisfactory to Republic that the Audited Statements will be delivered as
required under Section 5.17.
6.10 STOCK POWERS. At the Closing, the parties to receive the
Republic Shares shall have delivered to Republic, for use in connection with
the Held Back Shares, ten stock powers executed in blank, with signature
guarantees.
6.11 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the Mergers or other transactions hereunder, and which,
in the judgment of Republic, makes it inadvisable to proceed with the
transactions contemplated hereby.
6.12 EMPLOYMENT AGREEMENTS. At or prior to the Closing, as
provided in Section 5.13, Maroone shall have entered into an employment
agreement with one of the Acquired Entities, Republic, or at Republic's option,
one or more of its assignees.
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6.13 LIABILITIES. Prior to the Closing, (a) each Acquired Entity
shall have obtained full satisfactions or releases of all obligations and
liabilities due to or on behalf of any Affiliate of any Acquired Entity or any
Principal.
6.14 POSITIVE WORKING CAPITAL. The Acquired Entities shall have
Positive Working Capital as provided in Section 5.20.
6.15 TERMINATION OF EQUITY RIGHTS. All Releases shall have been
delivered to Republic in form and substance reasonably satisfactory to
Republic.
6.16 BOARD APPROVAL. The transactions contemplated hereby shall
have been approved by the Board of Directors of Republic.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE ACQUIRED ENTITIES AND PRINCIPALS
The obligations of the Acquired Entities and the Principals to effect
the Mergers and the Related Transactions shall be subject to the fulfillment at
or prior to the Closing Date of the following conditions, any or all of which
may be waived in whole or in part by the Acquired Entities and the Principals.
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Republic Companies
contained in this Agreement shall be true and correct at and as of the Closing
Date with the same force and effect as though made at and as of that time
except that those representations and warranties which address matters only as
of a particular date shall remain true and correct as of such date. Republic
shall have performed and complied with all of its obligations required by this
Agreement to be performed or complied with at or prior to the Closing Date.
The Republic Companies shall each have delivered to the Acquired Entities a
certificate, dated as of the Closing Date, and signed by an executive officer,
certifying that such representations and warranties are true and correct and
that all such obligations have been performed and complied with.
7.2 REPUBLIC SHARES. At the Closing, Republic shall have issued
all of the Republic Shares and shall have delivered to the parties to receive
such shares hereunder (a) certificates representing the Republic Shares issued
to them hereunder, other than the Held Back Shares, and (b) copies of
certificates representing the Held Back Shares.
7.3 NO ORDER OR INJUNCTION. There shall not be issued and in
effect by or before any court or other governmental body an order or injunction
restraining or prohibiting the transactions contemplated hereby.
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7.4 HSR ACT WAITING PERIOD. Any applicable waiting period under
the HSR Act shall have expired or been terminated.
7.5 OPINION OF COUNSEL. The Acquired Entities shall have received
an opinion dated as of the Closing Date from Republic's general counsel
substantially in the form attached as Schedule 7.5 hereto.
ARTICLE VIII
REGISTRATION RIGHTS
The parties receiving the Republic Shares hereunder shall have the
following registration rights with respect to the Republic Shares issued to
them hereunder.
8.1 REGISTRATION RIGHTS FOR REPUBLIC SHARES; FILING OF
REGISTRATION STATEMENT. Republic will utilize its reasonable best efforts to
cause, as soon as practicable following the Closing Date, a registration
statement to be filed under the Securities Act or an existing registration
statement to be amended for the purpose of registering the Republic Shares for
resale by a Holder thereof (the "Registration Statement"). For purposes of this
Article VIII, a person is deemed to be a "Holder" of Republic Shares whenever
such person is the record owner of Republic Shares. Republic will use it
reasonable best efforts to have the Registration Statement become effective and
cause the Republic Shares to be registered for resale under the Securities Act,
and registered, qualified or exempted under the state securities laws of such
jurisdictions as any Holder reasonably requests as soon as reasonably
practicable following the Effective Date, provided, however, that Republic
shall not be required to qualify to do business in any state or to consent to
be subject to general service of process in any state where it is not otherwise
required to be so qualified or subject.
8.2 EXPENSES OF REGISTRATION. Republic shall pay all expenses
incurred by Republic in connection with the registration, qualification and/or
exemption of the Republic Shares, including any SEC and state securities law
registration and filing fees, printing expenses, fees and disbursements of
Republic's counsel and accountants, transfer agents' and registrars' fees, fees
and disbursements of experts used by Republic in connection with such
registration, qualification and/or exemption, and expenses incidental to any
amendment or supplement to the Registration Statement or prospectuses contained
therein. Republic shall not, however, be liable for any sales, broker's or
underwriting commissions or discounts upon sale by any Holder of any of the
Republic Shares.
8.3 FURNISHING OF DOCUMENTS. Republic shall furnish to the
Holders such reasonable number of copies of the Registration Statement, such
prospectuses as are contained in the Registration Statement and such other
documents as the Holders may reasonably request in order to facilitate the
offering of the Republic Shares.
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8.4 AMENDMENTS AND SUPPLEMENTS. Republic shall prepare and
promptly file with the SEC and promptly notify the Holders of the filing of
such amendments or supplements to the Registration Statement or prospectuses
contained therein as may be necessary to correct any statements or omissions
if, at the time when a prospectus relating to the Republic Shares is required
to be delivered under the Securities Act, any event shall have occurred as a
result of which any such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made not misleading (and the Holders shall
not use any prospectus to offer or sell Republic Shares until such amendments
or supplements are completed and the Registration Statement is effective),
provided, however, that Republic shall be entitled to delay any such filing and
the Holders' use of the prospectus if Republic determines that such filing
would impede, delay, or interfere with any significant financing, acquisition,
or other transaction involving Republic, or require disclosure of material
information which Republic has a bona fide business purpose for preserving as
confidential. Republic shall also advise the Holders promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order
by the SEC suspending the effectiveness of the Registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its reasonable best efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued.
8.5 DURATION. Republic shall maintain the effectiveness of the
Registration Statement until such time as Republic reasonably determines, based
on an opinion of counsel, that all of the Holders will be eligible to sell all
of the Republic Shares then owned by the Holders without the need for continued
registration of the shares within the three month period immediately following
the termination of the effectiveness of the Registration Statement. Republic's
obligations contained in Sections 8.1, 8.3 and 8.4 shall terminate on the
second anniversary of the Closing Date; provided, however, that if the two-year
holding period under Rule 144 under the Securities Act is reduced to one year,
such terminations shall take effect as of the first anniversary of the Closing
Date.
8.6 FURTHER INFORMATION. If Republic Shares owned by a Holder are
included in any registration, such Holder shall furnish Republic such
information regarding itself as Republic may reasonably request or as required
by applicable law in connection with any registration, qualification or
compliance referred to in this Agreement.
8.7 INDEMNIFICATION.
(a) Republic will indemnify and hold harmless the Holders
and each person, if any, who controls a Holder within the meaning of
the Securities Act, from and against any and all losses, damages,
liabilities, costs and expenses to which the Holders or any such
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities, costs
or expenses are caused by any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement, any prospectus contained therein or any amendment or
supplement thereto, or
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arise out of or based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement therein, in light of the circumstances under which
they were made, not misleading; provided, however, that, Republic will
not be liable in any such case to the extent that any such loss,
claim, damage, liability, cost or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by
or on behalf of any Holder or such controlling person in writing
specifically for use in the preparation thereof.
(b) Each of the Holders will indemnify and hold harmless
Republic and each person, if any, who controls Republic within the
meaning of the Securities Act, from and against any and all losses,
damages, liabilities, costs and expenses to which Republic or any such
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or
expenses are caused by any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, if
such untrue statement or alleged untrue statement or omission or
alleged omission was so made in reliance upon and in conformity with
written information furnished by or on behalf of any Holder
specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (a) or (b) of this Section 8.7
of notice of the commencement of any action involving the subject
matter of the foregoing indemnity provisions, such indemnified party
will, if a claim thereof is to be made against the indemnifying party
pursuant to the provisions of said paragraph (a) or (b), promptly
notify the indemnifying party of the commencement thereof; but the
omission to so notify the indemnifying party will not relieve it from
any liability which it may have hereunder unless the indemnifying
party has been materially prejudiced thereby nor will such failure to
so notify the indemnifying party relieve it from any liability which
it may have to any indemnified party otherwise than hereunder. In
case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party; provided, however,
if the defendants in any action include both the indemnified party and
the indemnifying party and there is a conflict of interest which would
prevent counsel for the indemnifying party from also representing the
indemnified party, the indemnified party or parties shall have the
right to select separate counsel to participate in the defense of such
action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party pursuant to the provisions of said
paragraph (a) or (b) for
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any legal or other expense subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable
costs of investigation, unless (i) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the
notice of the commencement of the action or (ii) the indemnifying
party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party.
(d) In the event that Republic determines in its sole
discretion to allow any of the Republic Shares to be sold by any
Holder or Holders in an underwritten public offering, (i) Republic
shall provide customary indemnification to the underwriters of such
offering and any person controlling any such underwriter on behalf of
the Holder or Holders making the offering; provided, however, that
Republic shall not be required to consent to any such underwriting or
to provide such indemnification in respect of the matters described in
the proviso to the first sentence of Section 8.7(a), and (ii) the
Holders desiring to participate in such offering shall enter into the
underwriting agreement for such offering.
ARTICLE IX
INDEMNIFICATION
9.1 AGREEMENT BY THE PRINCIPALS FOR INDEMNIFICATION. The
Principals other than Maroone Isuzu, Inc. jointly and severally agree to
indemnify and hold Republic and its stockholders, directors, officers,
employees, attorneys, agents and Affiliates harmless from and against, and at
Republic's election in its sole discretion Republic shall be entitled to
recover by set off against the Held Back Shares in accordance with Section 9.3,
the aggregate of all expenses, losses, costs, deficiencies, liabilities and
damages (including, without limitation, related counsel and paralegal fees and
expenses) incurred or suffered by Republic arising out of, relating to, or
resulting, from (i) any breach of a representation or warranty made by the
Acquired Entities or the Principals in or pursuant to this Agreement, (ii) any
breach of the covenants or agreements made by the Acquired Entities or the
Principals in or pursuant to this Agreement, (iii) any inaccuracy in any
certificate, instrument or other document delivered by the Acquired Entities or
the Principals as required by this Agreement or (iv) any Excluded Liabilities
which any Surviving Corporation, Republic or any Affiliate of Republic may pay
or be required to or otherwise pay (collectively, "Indemnifiable Damages").
Without limiting the generality of the foregoing, with respect to the
measurement of Indemnifiable Damages, Republic shall have the right to be put
in the same pre-tax consolidated financial position as it would have been in if
the breach, inaccuracy or Excluded Liability referenced in the foregoing
clauses (i), (ii), (iii) and (iv) that caused such Indemnifiable Damages had
not occurred. Notwithstanding anything to the contrary contained herein,
Republic shall not be entitled to any Indemnifiable Damages unless the
aggregate of all such Indemnifiable Damages exceeds $500,000 ("Indemnification
Threshold"), in which case Republic shall be entitled to the full amount of
Indemnifiable Damages; provided, however, that the Indemnification Threshold
shall be $100,000 for breaches of Section 3.13.
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9.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Acquired Entities and Principals in
this Agreement or pursuant hereto shall survive for a period of one year after
the Closing Date. No claim for the recovery of Indemnifiable Damages may be
asserted by Republic after such representations and warranties shall thus
expire; provided, however, that claims for Indemnifiable Damages first asserted
within such period shall not thereafter be barred. Notwithstanding any
knowledge of facts determined or determinable by any party by investigation,
each party shall have the right to fully rely on the representations,
warranties, covenants and agreements of the other parties contained in this
Agreement or in any other documents or papers delivered in connection herewith.
Each representation, warranty, covenant and agreement of the parties contained
in this Agreement is independent of each other representation, warranty,
covenant and agreement. Each of the representations and warranties of the
Republic Companies shall expire at the Effective Time.
9.3 SECURITY FOR THE INDEMNIFICATION OBLIGATION. As security for
the indemnification obligations contained in this Article IX, at the Closing,
Republic shall set aside and hold certificates representing the Held Back
Shares issued pursuant to this Agreement. Republic may set off against the
Held Back Shares any Indemnifiable Damages, subject, however, to the following
terms and conditions:
(a) Republic shall give written notice to the holders of
Held Back Shares of any claim for Indemnifiable Damages or any other
damages hereunder, which notice shall set forth (i) the amount of
Indemnifiable Damages or other loss, damage, cost or expense which
Republic claims to have sustained by reason thereof, and (ii) the
basis of such claim;
(b) Such set off shall be effected on the later to occur
on the expiration of twenty (20) days from the date of such notice or,
if such claim is contested, the date the dispute is resolved, and such
set off shall be charged proportionally against the shares set aside;
(c) After the Held Back Shares are registered and any
restrictions on sale imposed under the Securities Act or otherwise are
terminated, the Shareholders may instruct Republic to sell some or all
of the Held Back Shares and the net proceeds thereof shall be
substituted for such Held Back Shares in any set off to be made by
Republic pursuant to any claim hereunder subject to continued
compliance with any applicable SEC and other regulations; and
(d) For purposes of any set off against the Held Back
Shares pursuant to this Article IX, the shares of Republic Common
Stock not sold as provided in clause (c) of this Section shall be
valued at the Price per Share.
9.4 VOTING OF AND DIVIDENDS ON THE HELD BACK SHARES. Except with
respect to Held Back Shares sold pursuant to the foregoing Section 9.3(c) (and
in the case of such shares, until the same are transferred), all Held Back
Shares shall be deemed to be owned by the record holders thereof and the record
holders shall be entitled to vote the Held Back Shares; provided, however,
that, there shall also be deposited with Republic subject to the terms of this
Article IX,
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all shares of Republic Common Stock or other assets issued to or paid upon Held
Back Shares as a result of any stock or other dividend or distribution or stock
split with respect to the Held Back Shares. All stock or other distributions
issued or paid upon Held Back Shares shall be delivered to the person or entity
entitled to receive such Held Back Shares together with the delivery of such
Held Back Shares pursuant to Section 9.5.
9.5 DELIVERY OF HELD BACK SHARES. Republic agrees to deliver to
the holders of the Held Back Shares, no later than one year after the Effective
Date any Held Back Shares (and distributions thereon) then held by Republic (or
proceeds from the sale of Held Back Shares) unless there then remains
unresolved any claim for Indemnifiable Damages or other damages hereunder as to
which notice has been given, in which event Republic shall retain such number
of Held Back Shares (and such amount of proceeds therefrom or distributions
thereon) as is sufficient to satisfy any such unresolved claim, as well as the
attorney fees and costs associated therewith, and shall release the remaining
Held Back Shares (and such remaining proceeds and distributions) to the holders
thereof; provided, however, if Republic has made no claim for damages hereunder
during the first six months after the Effective Date, Republic shall deliver
50% of the Held Back Shares (and such proceeds thereon) to the holders thereof
pro rata, promptly after such six-month period. Any Held Back Shares (and
proceeds from the sale of, or distributions on, Held Back Shares) remaining on
deposit after all such claims shall have been satisfied shall be returned to
the holders thereof promptly after the time of satisfaction.
9.6 ADJUSTMENT TO PURCHASE PRICE. All payments for Indemnifiable
Damages made pursuant to this Article IX shall be treated as adjustments to the
Aggregate Consideration provided in Section 1.4.
9.7 NO BAR. If the Held Back Shares are insufficient to set off
any claim for Indemnifiable Damages made hereunder (or have been delivered to
the holders prior to the making or resolution of such claim), then Republic may
take any action or exercise any remedy available to it by appropriate legal
proceedings to collect the Indemnifiable Damages.
9.8 REMEDIES CUMULATIVE. The remedies provided herein shall be
cumulative and shall not preclude Republic from asserting any other right, or
seeking any other remedies against the Principals.
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ARTICLE X
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
deposition after the Closing Date of the Republic Shares:
10.1 DISPOSITION OF SHARES.
(a) The parties to receive the Republic Shares hereunder
acknowledge that (i) they may be deemed to be "affiliates" of the
Acquired Entities for purposes of qualifying the transactions
contemplated hereby as pooling of interests business combinations
under applicable accounting and SEC rules and regulations, and (ii)
the Republic Shares constitute "restricted securities" as defined in
Rule 144 under the Securities Act. Each of the parties to receive
Republic Shares hereunder agrees that prior to Closing they will not
dispose of any shares of capital stock or partnership interests of the
Acquired Entities, and following the Closing he or it will not sell,
transfer or otherwise dispose of any of their Republic Shares until
such time as final results of operations of Republic covering at least
thirty (30) days of combined operations of Republic and the Acquired
Entities have been published.
(b) The parties to receive Republic Shares hereunder
agree that they will not sell, transfer or otherwise dispose of any
Republic Shares, except pursuant to (a) an exemption from the
registration requirements under the Securities Act, which does not
require the filing by Republic with the SEC of any registration
statement, offering circular or other document, in which case, each
such Person shall first supply to Republic an opinion of counsel
(which counsel and opinions shall be satisfactory to Republic) that
such exemption is available, or (b) an effective registration
statement filed by Republic with the SEC under the Securities Act.
10.2 LEGENDS. The certificates representing the Republic Shares
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER THE ACT, AND IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO,
OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE, AND ALSO MAY NOT BE SOLD,
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TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT
COMPLIANCE WITH THE SECURITIES AND EXCHANGE COMMISSION'S
ACCOUNTING SERIES RELEASES 130 AND 135.
Republic may, unless a registration statement is in effect covering such
shares, place stop transfer orders with its transfer agents with respect to
such certificates in accordance with federal securities laws.
ARTICLE XI
DEFINITIONS
11.1 DEFINED TERMS. As used herein, the following terms shall have
the following meanings:
"Accepted Liabilities" shall mean all Designated Liabilities
(as defined in Section 3.11) of the Maroone Corporations, other than
those obligations, duties and liabilities due to or on behalf of any
Principal or Affiliate of any Acquired Entity or any Principal.
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as
in effect on the date hereof.
"Chargebacks" shall mean (a) any amount which an Acquired
Entity may be required to pay back to any party purchasing retail
paper, warranties, insurance or the like from the Acquired Entity, or
(b) any amount which may be set-off or otherwise deducted from any
amount due and owing to the Acquired Entity by any party purchasing
retail paper, warranties, insurance or the like from the Acquired
Entity.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any agreement, contract, lease, note,
mortgage, indenture, loan agreement, franchise agreement, covenant,
employment agreement, license, instrument, purchase and sales order,
commitment, undertaking, obligation, whether written or oral, express
or implied.
"Environmental Costs" shall mean any and all expenses, costs,
damages, liabilities, or obligations (including, without limitation,
fees and expenses of counsel) incurred by, under or pursuant to any
Environmental Laws or related to the Discharge, Handling, presence or
clean up of Hazardous Substances arising as a result of events
occurring or facts or circumstances arising or existing on or prior to
the Closing Date (whether or not in the ordinary course of business).
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Liabilities" shall mean (i) any obligations and
liabilities of any of the Acquired Entities, absolute or contingent,
known or unknown, other than Accepted Liabilities, (ii) any liability
or obligation of any of the Acquired Entities arising under this
Agreement, (iii) any liability or obligation of any of the Acquired
Entities relating to any default under any Accepted Liability to the
extent such default existed prior to the Closing, (iv) any liability
or obligation of any of the Acquired Entities with respect to, or
arising out, of any employee benefit plan, executive deferred
compensation plan, or any other plans or arrangements for the benefit
of any employees or officers of any of the Acquired Entities, (v) any
liability or obligation of any of the Acquired Entities to any of the
Principals or any Affiliate of any of the Acquired Entities or the
Principals or to any party claiming to have a right to acquire any
shares of capital stock or partnership interests or other securities
convertible into or exchangeable for any shares of capital stock or
partnership interests of any of the Acquired Entities and (vi) any
Environmental Costs or Litigation Costs.
"GAAP" means generally accepted accounting principles in
effect in the United States of America from time to time.
"Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and any
entity or official exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"HSR Act" means the Xxxx-Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, but not limited
to, any conditional sale or other title retention agreement, any lease
in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable
law or any jurisdiction in connection with such mortgage, pledge,
security interest, encumbrance, lien or charge).
"Litigation Costs" shall mean any and all expenses, costs,
damages, liabilities, or obligations (including, without limitation,
fees and expenses of counsel) incurred in connection with any action,
suit, or other legal or administrative proceeding or governmental
investigation arising as a result of events occurring or facts or
circumstances arising or existing on or prior to the Closing Date
(whether or not in the ordinary course of business).
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"Material Adverse Change (or Effect)" means a change (or
effect), in the condition (financial or otherwise), properties,
assets, liabilities, rights, obligations, operations, business or
prospects which change (or effect) individually or in the aggregate,
is materially adverse to such condition, properties, assets,
liabilities, rights, obligations, operations, business or prospects.
"New Parts and Accessories Inventory" shall mean new,
non-damaged and non-obsolete parts and accessories inventory that may
be returned to the manufacturer.
"New Vehicle Inventory" shall mean all new vehicle inventory
including all demonstrator vehicles.
"Other Parts and Accessories Inventory" shall mean parts and
accessories inventory other than New Parts and Accessories Inventory.
"Other Vehicle Inventory" shall mean vehicle inventory other
than New Vehicle Inventory.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company,
estate, trust, unincorporated association, joint venture, Governmental
Authority or other entity, of whatever nature.
"Register", "registered" and "registration" refer to a
registration of the offering and sale of securities effected by
preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of
such registration statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect to
any Tax.
"Taxes" means all taxes, fees or other assessments, including,
but not limited to, income, excise, property, sales, use, franchise,
intangible, payroll, withholding, social security and unemployment
taxes imposed by any federal, state, local or foreign governmental
agency, and any interest or penalties related thereto.
11.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the
defined meanings when used in any certificates, reports or other
documents made or delivered pursuant hereto or thereto, unless the
context otherwise requires.
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(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection
with this Agreement and the transactions contemplated hereby shall be
determined in accordance with GAAP applied on a basis consistent with
prior periods, where applicable.
(d) As used herein, the neuter gender shall also denote
the masculine and feminine, and the masculine gender shall also denote
the neuter and feminine, where the context so permits.
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.1 TERMINATION. This Agreement may be terminated at any prior to
the Effective Time.
(a) by mutual written consent of all of the parties
hereto at any time prior to the Closing; or
(b) by Republic upon delivery of written notice to the
Acquired Entities and the Principals in accordance with Section 13.1
of this Agreement in the event of a material breach by any Acquired
Entity or any of the Principals of any provisions of this Agreement;
or
(c) by the Acquired Entities and the Principals upon
delivery of written notice to Republic in accordance with Section 13.1
of this Agreement in the event of a material breach by Republic of any
provision of this Agreement; or
(d) by Republic or the Acquired Entities and the
Principals upon delivery of written notice to the other in accordance
with Section 13.1 of this Agreement, if the Closing shall not have
occurred by June 30, 1997.
12.2 EFFECT OF TERMINATION. Except for the provisions of Article
IX hereof, which shall survive any termination of this Agreement, in the event
of termination of this Agreement pursuant to Section 12.1, this Agreement shall
forthwith become void and of no further force and effect, and the parties shall
be released from any and all obligations hereunder; provided, however, that
nothing herein shall relieve any party from liability for the willful breach of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
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ARTICLES XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be deemed given if
delivered by certified or registered mail (first class postage pre-paid),
guaranteed overnight delivery or facsimile transmission if such transmission is
confirmed by delivery by certified or registered mail (first class postage
pre-paid) or guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers which any
party shall designate in writing to the other parties):
(a) IF TO REPUBLIC TO:
Republic Industries, Inc.
000 Xxxx Xxx Xxxx Xxxx., Xxxxx 0000
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, General Counsel
Telecopy: (000) 000-0000
with a copy to:
Greenberg, Traurig, Hoffman, Lipoff, Xxxxx & Xxxxxxx,
P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
(b) IF TO THE ACQUIRED ENTITIES AND/OR THE PRINCIPALS TO:
Xxxxxxx X. Xxxxxxx
c/o Maroone Auto Plaza
0000 Xxxxx Xxxxxxxxx
Xxxxxxxx Xxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
WITH A COPY TO:
Xxxxx X. Xxxxx, Esq.
0000 Xxxxxxx Xxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
13.2 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits attached hereto) and other documents delivered at the Closing pursuant
hereto, contains the entire
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understanding of the parties in respect of its subject matters and supersedes
all prior agreements and understanding (oral or written) between or among the
parties with respect to such subject matter. The Schedules and Exhibits
constitute a part hereof as though set forth in full above.
13.3 EXPENSES. Except as otherwise provided herein, the parties
shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby.
13.4 AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled, or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising,
any right, power or privilege under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude the exercise of any other right, power or privilege. No
waiver of any breach of any provision shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision, nor shall
any waiver be implied from any course of dealing between the parties. No
extension of time for performance of any obligations or other acts hereunder or
under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts.
13.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall
be construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned by the Acquired Entities or the Principals
without the prior written consent of Republic. Republic may assign all or any
portion of its rights hereunder to one or more of its wholly owned
subsidiaries.
13.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
13.7 INTERPRETATION. When a reference is made in this Agreement to
an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The
headings contained herein and on the schedules are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or the schedules. Whenever, the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Time shall be of the essence in this Agreement.
13.8 GOVERNING LAW; INTERPRETATION. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Florida applicable to contracts executed and to be wholly performed
with such State.
13.9 JURISDICTION. The parties to this Agreement agree that any
suit, action or proceeding arising out of, or with respect to, this Agreement
or any judgment entered by any
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court in respect thereof may be brought only in the courts of the State of
Florida or the federal district courts located within the State of Florida, and
the parties hereto hereby accept the exclusive jurisdiction of those courts for
the purpose of any suit, action or proceeding.
13.10 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions, and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party
has had the opportunity to seek and has obtained the advise of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
REPUBLIC INDUSTRIES, INC., a Delaware corporation
By: /s/ H. Xxxxx Xxxxxxxx
----------------------------------------------
Name: H. Xxxxx Xxxxxxxx
----------------------------------------
Title: Chairman and Co-Chief Executive Officer
----------------------------------------
REPUBLIC SUBSIDIARIES:
RI/MC Merger Corp., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title: Vice President
----------------------------------------
RI/MO Merger Corp., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title: Vice President
----------------------------------------
RI/MI Merger Corp., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title: Vice President
----------------------------------------
RI/MD Merger Corp., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title: Vice President
----------------------------------------
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RI/EWH Merger Corp., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title: Vice President
----------------------------------------
RI/ESA Merger Corp., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title: Vice President
----------------------------------------
RI/MC&TR Merger Corp., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title: Vice President
----------------------------------------
RI/QPF Merger Corp., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title: Vice President
----------------------------------------
RI/AMF Merger Corp., a New York corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title: Vice President
----------------------------------------
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RI/MDP Acquisition Corp., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------------
Title: Vice President
----------------------------------------------
RI/MCFL Acquisition Corp., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------------
Title: Vice President
----------------------------------------------
RI/MP Acquisition Corp., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------------
Title: Vice President
---------------------------------------------
MAROONE CORPORATIONS:
Maroone Chevrolet, Inc., a Florida corporation
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Maroone Oldsmobile, Inc., a Florida corporation
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
58
Maroone Isuzu, Inc., a Florida corporation
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Maroone Dodge, Inc., a Florida corporation
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Xx Xxxxxxx Ford, Inc., a New York corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
---------------------------------------------
Maroone Car & Truck Rental Company, a Florida corporati
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Empire Warranty Corporation, a Florida corporation
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
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Empire Warranty Holding Company, a Florida corporation
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Empire Services Agency, Inc., a Florida corporation
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Quantum Premium Finance Corporation, a Florida corporation
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Alkit Enterprises, Inc., a New York corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
--------------------------------------------
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PARTNERSHIPS:
Maroone Management Services, Limited, a Florida limited
partnership
By: Maroone Isuzu, Inc., general partner
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Maroone Dodge Pompano, Limited, a Florida limited
partnership
By: Maroone Isuzu, Inc., general partner
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Maroone Chevrolet Ft. Lauderdale, Limited, a Florida
limited partnership
By: Maroone Isuzu, Inc., general partner
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
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SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxxx
------------------------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
------------------------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxxxx X. Xxxxxxx
------------------------------------------------------
Xxxxxxxxx X. Xxxxxxx
/s/ Xxxxxxxx Xxxxxx
------------------------------------------------------
Xxxxxxxx Xxxxxx
/s/ Xxxxxxxx Xxxxxxxxxx
------------------------------------------------------
Xxxxxxxx Xxxxxxxxxx
/s/ Xxxxxx Xxxxx
------------------------------------------------------
Xxxxxx Xxxxx
PARTNERS:
/s/ Xxxxxxx X. Xxxxxxx
------------------------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
------------------------------------------------------
Maroone Isuzu, Inc.
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/s/ Xxxxx Xxxxxxxx
-------------------------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxx X. Xxxxxx
-------------------------------------------------------
Xxxxxx X. Xxxxxx
63
