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EXHIBIT 2.2
MERGER AGREEMENT
This Merger Agreement (this "Agreement") is entered into as of
February 4, 1997 by and among Republic Industries, Inc., a Delaware corporation
("Republic"); RI/ADI Merger Corp. ("RI/ADI"), RI/ACI Merger Corp. ("RI/ACI"),
RI/ARI Merger Corp. ("RI/ARI"), RI/AMI Merger Corp. ("RI/AMI"), and RI/ALB
Merger Corp. ("RI/ALB"), each a Virginia corporation and wholly-owned
subsidiary of Republic (sometimes hereinafter collectively referred to as the
"Republic Merger Subs," and together with Republic, the "Republic Companies");
and AAA Disposal Service, Inc. ("Disposal"), AAA Commercial, Inc.
("Commercial"), AAA Recycling, Inc. ("Recycling"), AAA Maintenance, Inc.
("Maintenance"), and AAA Land and Building Co., Inc. ("Land and Building"),
each a Virginia corporation; and Xxxxx X. Xxxxxxx, a resident of the
Commonwealth of Virginia; and Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxx,
Xxxxx X. Xxxxxxx, Esq. and Xxxxxx X. Xxxxx, CPA as Trustees any of which is the
authorized signatory for the Xxxxxxx X. Xxxxxxx Trust U/T/A/D April 3, 1989;
Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxx X. Xxxxxxx, Esq. and Xxxxxx
X. Xxxxx, CPA as Trustees any of which is the authorized signatory for the
Xxxxx X. Xxxxxxx Trust U/T/A/D April 3, 1989; Xxxxxxx Xxxxxx, Xxxx Xxxxxxx,
Xxxxxx Xxxxxxx, Xxxxx X. Xxxxxxx, Esq. and Xxxxxx X. Xxxxx, CPA as Trustees any
of which is the authorized signatory for the Xxxxxxxx X. Xxxxxxx Trust U/T/A/D
April 3, 1989; Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxx X. Xxxxxxx,
Esq. and Xxxxxx X. Xxxxx, CPA as Trustees any of which is the authorized
signatory for the Xxxx X. Xxxxxxx Trust U/T/A/D April 3, 1989; and Xxxxxxx
Xxxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxx X. Xxxxxxx, Esq. and Xxxxxx X.
Xxxxx, CPA as Trustees any of which is the authorized signatory for the
Xxxxxxxx X. Xxxxxxx Trust U/T/A/D April 3, 1989; who together constitute all of
the shareholders of the AAA Companies (together, the "Shareholders"). Certain
other capitalized terms used herein are defined in Article X and throughout
this Agreement.
RECITALS
The Boards of Directors of Republic and the AAA Companies (as such
term is defined in Article X hereof) have determined that it is in the best
interests of their respective shareholders for Republic to acquire the AAA
Companies upon the terms and subject to the conditions set forth in this
Agreement. In order to effectuate the transaction, Republic has organized the
Republic Merger Subs as wholly-owned subsidiaries, and the parties have agreed,
subject to the terms and conditions set forth in this Agreement, to merge the
Republic Merger Subs with and into the AAA Companies so that the AAA Companies
continue as the surviving corporations. As a result, the AAA Companies will
become wholly-owned subsidiaries of Republic, and each of the Shareholders
will be issued certain shares of common stock of Republic.
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TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGERS
1.1 THE MERGERS. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined below), and pursuant to the terms
and conditions set forth in the Plans of Merger and Reorganization annexed
hereto as Exhibits A through E (the "Plans of Merger"), the Republic Merger
Subs will be merged with and into the AAA Companies (the "Mergers") as follows:
(a) RI/ADI will be merged with and into Disposal;
(b) RI/ACI will be merged with and into Commercial;
(c) RI/ARI will be merged with and into Recycling;
(d) RI/AMI will be merged with and into Maintenance; and
(e) RI/ALB will be merged with and into Land and Building.
The terms and conditions of the Plans of Merger are incorporated herein by
reference as if fully set forth herein. As a result of the Mergers, the
separate corporate existence of each of the Republic Merger Subs shall cease
and each of the AAA Companies shall continue as surviving corporations and
wholly-owned subsidiaries of Republic (the "Surviving Corporations").
1.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the consummation of the Mergers (the "Closing") shall take place as
promptly as practicable (and in any event within five (5) business days) after
satisfaction or waiver of the conditions set forth in Articles VI and VII
hereof, at the offices of Akerman, Senterfitt & Xxxxxx, P.A. in Miami, Florida,
or such other time and place as the parties may otherwise agree.
1.3 PLANS OF MERGER. Pursuant to the Plans of Merger, an
aggregate of 2,916,667 shares of common stock, $0.01 par value per share, of
Republic ("Republic Common Stock") (the "Purchase Price") will be issued in the
Mergers in exchange for all of the issued and outstanding
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shares of capital stock of each of the AAA Companies (the "AAA Companies
Capital Stock") as follows:
(a) 2,132,667 shares of Republic Common Stock will be
issued in exchange for all of the issued and outstanding shares of
common stock of Disposal;
(b) 459,375 shares of Republic Common Stock will be
issued in exchange for all of the issued and outstanding shares of
common stock of Commercial;
(c) 187,833 shares of Republic Common Stock will be
issued in exchange for all of the issued and outstanding shares of
common stock of Recycling;
(d) 99,458 shares of Republic Common Stock will be issued
in exchange for all of the issued and outstanding shares of common
stock of Maintenance; and
(e) 37,334 shares of Republic Common Stock will be issued
in exchange for all of the issued and outstanding shares of common
stock of Land and Building.
Notwithstanding the foregoing, if between the date of this Agreement and the
Effective Date, the outstanding shares of Republic Common Stock shall have been
changed into a different number of shares, or a different class, by reason of
any stock dividend, subdivision, reclassification, recapitalization, or split
(the "Change"), the Purchase Price shall be correspondingly adjusted to reflect
such Change. Notwithstanding the foregoing, the Purchase Price shall be reduced
by (i) all Indebtedness (as defined below) of the Company in excess of
$13,500,000.00, and (ii) the amount, if any, by which the Working Capital (as
defined below) of the AAA Companies is less than zero dollars ($0)
(collectively items (i) and (ii) are referred to herein as the "Purchase Price
Adjustment," which amount shall be calculated as of the Effective Date). The
amount of the Purchase Price Adjustment shall be divided by the Closing Sale
Price, and the quotient so calculated shall be deducted from the number of
shares of Republic Common Stock issued hereunder as of the Effective Date. For
purposes of determining the Purchase Price Adjustment, (i) "Indebtedness" shall
mean the aggregate amount of all indebtedness for borrowed money (excluding
interest), whether owed to a bank or any other Person, and remaining payments
on capitalized equipment leases, excluding any indebtedness incurred in the
ordinary course of business consistent with past practice; (ii) "Working
Capital" shall mean the difference, if any, between the Current Assets and the
Current Liabilities of the Company; (iii) "Current Assets" shall mean all
current assets determined in accordance with generally accepted accounting
principles; and (iv) "Current Liabilities" shall mean the current liabilities
(excluding the current portion of long-term indebtedness) determined in
accordance with generally accepted accounting principles.
1.4 FILING OF ARTICLES OF MERGER. At the time of the Closing, the
parties shall cause the Mergers to be consummated by filing duly executed
Articles of Merger (with a completed Plan
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of Merger attached thereto) with the Clerk of the State Corporation Commission
of the Commonwealth of Virginia, in such form as Republic determines is
required by and is in accordance with the relevant provisions of the Virginia
Stock Corporation Act (the date and time of such filing is referred to herein
as the "Effective Date" or "Effective Time").
1.5 ISSUANCE OF REPUBLIC SHARES. At the Effective Time, by virtue
of the Mergers and without any further action on the part of the parties
hereto, Republic shall issue to each Shareholder duly executed certificates, in
valid form registered in such Shareholder's name, evidencing that number of
shares of Republic Common Stock determined, to the nearest whole share,
pursuant to the terms of each of the respective Plans of Merger based on the
number of shares of capital stock of each of the AAA Companies owned of record
by such Shareholder as set forth on Schedule 3.5 hereto.
1.6 DELIVERY OF CERTIFICATES. At the Closing, the Shareholders
shall deliver the certificates representing all of the issued and outstanding
shares of capital stock of each of the AAA Companies to Republic for
cancellation, and Republic shall deliver the certificates representing the
shares of Republic Common Stock issued pursuant to Section 1.5 in the following
manner: (i) Republic shall deliver to each such Shareholder one or more
certificates evidencing an aggregate of 2,625,000 shares of Republic Common
Stock, and (ii) Republic shall set aside and hold in accordance with Article IX
certificates evidencing 291,667 shares of Republic Common Stock (the "Held Back
Shares"). The shares of Republic Common Stock, including the Held Back Shares,
issuable by Republic in the Mergers are sometimes referred to herein as the
"Republic Shares". Any item in this Agreement requiring the withholding of or
release of Held Back Shares shall be read to require such withholding or
release to occur ratably among the Shareholders in proportion to their
ownership interest in the AAA Companies as set forth on Schedule 3.5 hereof.
1.7 PURCHASE PRICE ADJUSTMENT. The parties hereto hereby
acknowledge and agree that the Purchase Price Adjustment as of the Effective
Date is a mutually agreed upon good faith estimate (which estimated amount is
referred to herein as the "Estimated Amount"). Within 30 days after the
Effective Date, Republic shall prepare and deliver to the Shareholders a
determination (the "Determination") of the actual amount of the Purchase Price
Adjustment as of the Effective Date (which actual value is referred to herein
as the "Actual Amount") including the basis for such Determination. If, within
30 days after the date on which a Determination is delivered to the
Shareholders, the Shareholders shall not have given written notice to Republic
setting forth in detail any objection of the Shareholders to such
Determination, then such Determination shall be final and binding on the
parties hereto. In the event the Shareholders give written notice of any
objection to such Determination within the 30-day period, Republic and the
Shareholders shall use all reasonable efforts to resolve the dispute within the
30-day period following the receipt by Republic of the written notice from the
Shareholders. If the parties are unable to reach an agreement within such 30-
day period, the matter shall be submitted to a mutually agreed upon independent
firm of certified public accountants for determination of the
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Actual Amount which shall be final and binding upon Republic and the
Shareholders. Republic and the Shareholders shall contribute equally to all
costs (including fees and expenses charged by the selected independent firm of
certified public accountants) in connection with the resolution of any such
dispute. If the Actual Amount is greater than the Estimated Amount, such
amount shall be deemed to be Indemnifiable Damages under Article IX hereof and
Republic may set off against the Held Back Shares the difference between the
Actual Amount and the Estimated Amount (assuming a value per share for purposes
of such calculation equal to the Closing Sale Price); provided, that any and
all such Indemnifiable Damages shall not be applied against or subject to the
Indemnification Threshold (as such term is defined in Article IX hereof), or
affect the determination thereof with respect to the Indemnifiable Damages.
1.8 ACCOUNTING AND TAX TREATMENT. The parties hereto intend that
the transactions contemplated hereby shall be treated as pooling of interest
business combinations by Republic for accounting purposes and as tax-free
reorganizations under Section 368 of the Code.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE REPUBLIC COMPANIES
As a material inducement to each of the Shareholders to enter into
this Agreement and to consummate the transactions contemplated hereby, each of
the Republic Companies jointly and severally make the following representations
and warranties to the Shareholders:
2.1 CORPORATE STATUS. Republic is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of the Republic Merger Subs is a corporation duly organized, validly
existing and in good standing under the Commonwealth of Virginia. Each
Republic Merger Sub is a controlled subsidiary of Republic within the meaning
of Section 368 of the Code.
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 respective obligations hereunder and to consummate the transactions
contemplated hereby. Each of the Republic Companies has taken all action
necessary to authorize its execution and delivery of this Agreement, the
performance of its respective 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 a legal, valid and
binding obligation of each of the Republic Companies, enforceable against each
of the Republic Companies in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization,
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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; REGISTRATION STATEMENT. Upon
consummation of the Mergers and the issuance and delivery of certificates
representing the Republic Shares to the Shareholders, and except for any Liens
imposed on such Republic Shares by any action or inaction of the Shareholders,
the Shareholders shall have good and marketable title to the Republic Shares
subject to the terms and conditions of Article IX hereof, and the Republic
Shares will be validly issued, fully paid and non-assessable shares of Republic
Common Stock. The Republic Shares will be issued pursuant to the prospectus,
dated December 18, 1996, as filed with the SEC on a registration statement on
Form S-4 (the "Registration Statement"), copies of which have been delivered to
the Shareholders in accordance with the requirements of the Securities Act.
Such Registration Statement has been declared effective and no stop order has
been issued suspending effectiveness of such Registration Statement. The
Republic Shares being issued in connection with the Mergers are less than one
percent of the outstanding shares of Republic Common Stock. Until the earlier
of (i) the date that all of the Republic Shares have been sold by the
Shareholders or (ii) the date that the Republic Shares may be sold under Rule
145(d)(3) under the Securities Act, Republic shall continue to make all filings
required to be made by it under the Exchange Act.
2.5 NO COMMISSIONS. None of the Republic Companies 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.
2.6 TAX MATTERS. Republic does not know of any circumstances
relating to Republic or its Affiliates that would prevent the Mergers from
qualifying as reorganizations within the meaning of Section 368 of the Code,
provided that (except as set forth in this Section 2.6) Republic makes no
affirmative representations or warranties as to any circumstances relating to,
or any actions taken or agreed to be taken prior to the Effective Time by, the
AAA Companies that would prevent the Mergers from qualifying as
reorganizations within the meaning of Section 368 of the Code. Both at
execution and at Closing, Republic presently has no plan or intention (a) to
cause any of the AAA Companies or any permitted transferee therefrom to sell or
dispose of any of the assets or properties of any of the AAA Companies, except
for dispositions in the ordinary course of business or transfers described in
Section 368(a)(2)(C) of the Code, (b) to liquidate any of the AAA Companies,
(c) to merge any of the AAA Companies with or into another corporation or
corporations, (d) to sell or otherwise dispose of the stock of any of the AAA
Companies except for transfers of stock to a corporation or corporations
"controlled" (within the meaning of Section 368 of the Code) by Republic, or
(e) to cause any of the AAA Companies to issue additional shares of stock that
would result in Republic losing "control" (within the meaning of Section 368 of
the Code) of any of the AAA Companies. Both at execution and at Closing,
Republic currently intends to cause each of the AAA Companies to continue its
historic business or use a significant portion of its historic business assets
in a business following the Effective Time, and presently
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does not intend to reacquire any of the Republic Common Stock issued in the
Mergers. Immediately prior to the Mergers, Republic will own all of the
outstanding stock of the Republic Merger Subs. Further, the assets and
liabilities of the Republic Merger Subs as of the time immediately preceding
the Closing will represent all of the assets and liabilities ever held by the
Republic Merger Subs.
2.7 NO VIOLATION. The execution and delivery of this Agreement by
the Republic Companies, the performance by the Republic Companies of their
obligations hereunder and the consummation by the Republic Companies of the
transactions contemplated by this Agreement will not (i) contravene any
provision of the articles of incorporation, as amended, or bylaws of the
Republic Companies or any subsidiary thereof, (ii) violate or conflict with any
law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment,
filing or order of any Governmental Authority or of any arbitration award which
is either applicable to, binding upon or enforceable against the Republic
Companies or any subsidiary thereof, (iii) 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 the Republic
Companies or any subsidiary thereof, (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the property or assets
of the Republic Companies or any subsidiary thereof, (v) give to any individual
or entity a right or claim against the Republic Companies or any subsidiary
thereof, which would have a Material Adverse Effect on the Republic Companies
or any subsidiary thereof, or (vi) 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 (a) pursuant to the Exchange
Act and the Securities Act and applicable NASD inclusion requirements, (b)
filings required under the securities or blue sky laws of the various states,
(c) filings required under the HSR Act, or (d) any filings required to be made
by the AAA Companies or (e) any filings required to be made with respect to the
consummation of the Mergers.
2.8 REPORTS AND FINANCIAL STATEMENTS. Within the last three
years, 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 made available to the Shareholders copies
of all Republic Reports filed with the SEC since January 1, 1996, and with
respect to Republic Reports filed after the date of this Agreement until the
Effective Date, will promptly furnish to the Shareholders copies of each of the
Republic Reports filed with the SEC during such period. As of their respective
dates (but taking into account any amendments filed prior to the date of this
Agreement), the Republic Reports complied, or, with respect to Republic Reports
filed after the date of this Agreement, will comply, in all material respects
with all the rules and regulations promulgated by the SEC and did not contain,
or, with respect to Republic Reports filed after the date of this Agreement,
will not
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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, 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. Except as set
forth in the Republic Reports, Republic has no material liabilities or
obligations of any nature required by GAAP to be set forth on a consolidated
balance sheet of Republic and its consolidated subsidiaries or in the notes
thereto which individually or in the aggregate would have a Material Adverse
Effect on Republic.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Republic Reports filed and publicly available prior to the date of this
Agreement, and except as expressly contemplated by this Agreement, since the
date of the most recently filed Republic Report, Republic has conducted its
business only in the ordinary course, and there has not been: (i) any Material
Adverse Change in Republic's business, results of operation, or business
prospects in the aggregate; (ii) any damage, destruction or loss, whether or
not covered by insurance, that has had or is likely to have a Material Adverse
Effect on Republic in the aggregate; or (iii) any change in accounting methods,
principles or practices by Republic materially affecting its assets,
liabilities or business, except insofar as may have been required by a change
in generally accepted accounting principles.
2.10 LITIGATION. Except as disclosed in the Republic Reports
filed and publicly available prior to the date of this Agreement and except for
any such action which may be commenced by or on behalf of the AAA Companies or
the Shareholders, there is no suit, action or proceeding pending or in good
faith Threatened against Republic or any of its subsidiaries challenging the
acquisition by merger by Republic or the Republic Merger Subs of any shares of
any of the AAA Companies or any provision of this Agreement or seeking to
restrain or prohibit the consummation of the Mergers, or that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect on Republic, nor is there any judgment, decree, injunction, rule or
order of any Governmental Authority or arbitrator outstanding against Republic
or any of its subsidiaries having, or which would reasonably be expected to
have, any such effect.
2.11 COMPLIANCE WITH LAWS. Except as disclosed in the Republic
Reports filed and publicly available prior to the date of this Agreement,
Republic and its subsidiaries are in compliance with all applicable statutes,
laws, ordinances, regulations, rules, judgments, decrees and orders of any
Governmental Authority applicable to its business or operations, except for
instances of possible noncompliance that, individually or in the aggregate,
would not have a Material Adverse Effect on Republic. Each of Republic and its
subsidiaries has in effect all permits
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and licenses, necessary for it to own, lease or operate its properties and
assets and to carry on its business as now conducted, and there has occurred no
default under any such permit or license, except for the lack of permits or
licenses and for defaults under such permits or licenses which, individually
or in the aggregate, would not have a Material Adverse Effect on Republic.
None of such permits or licenses is or will be impaired or in any way affected
by the execution and delivery of this Agreement, or consummation of the
transactions contemplated hereby which would individually or in the aggregate
have a Material Adverse Effect on Republic.
2.12 CAPITALIZATION. 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 January 24, 1997, (i) 299,412,227 shares of Republic
Common Stock were validly issued and outstanding, fully paid and nonassessable
and not issued in violation of any preemptive right of any stockholder of
Republic, and (ii) no shares of preferred stock were issued and outstanding.
The Republic Shares to be issued in the Mergers will be "voting stock" within
the meaning of Section 368 of the Code.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDERS
As a material inducement to each of the Republic Companies to enter
into this Agreement and to consummate the transactions contemplated hereby,
each of the Shareholders jointly and severally makes the following
representations and warranties to Republic:
3.1 CORPORATE STATUS. Each of the AAA Companies is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation and has the requisite power and authority to own or
lease its properties and to carry on its business as now being conducted. Each
of the AAA Companies is legally qualified to transact business as a foreign
corporation in all jurisdictions where the nature of its properties and the
conduct of its business requires such qualification (all of which jurisdictions
are listed on Schedule 3.1) and is in good standing in each of the
jurisdictions in which it is so qualified. Each of the AAA Companies has fully
complied in all material respects 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 business. There is no pending or
in good faith Threatened proceeding for the dissolution, liquidation,
insolvency or rehabilitation of any of the AAA Companies.
3.2 POWER AND AUTHORITY. Each of the AAA Companies has the power
and authority to execute and deliver this Agreement, to perform its respective
obligations hereunder and to consummate the transactions contemplated hereby.
Each of the AAA Companies has taken all action necessary to authorize the
execution and delivery of this Agreement, the performance of
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its respective obligations hereunder and the consummation of the transactions
contemplated hereby. Each of the Shareholders has the requisite competence,
power and authority to execute and deliver this Agreement, to perform his or
its 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 AAA Companies and the Shareholders, and constitutes
the legal, valid and binding obligation of each of them, enforceable against
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. Schedule 3.4 sets forth, with respect to each
of the AAA Companies, (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 of the AAA Companies (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. No preemptive rights exist except those that may exist under Virginia
law, which all the Shareholders hereby waive upon execution of this Agreement.
Except as set forth on Schedule 3.4, there are no other preemptive rights or
rights of first refusal which exist with respect to the shares of capital stock
of any of the AAA Companies and no such rights arise by virtue of or in
connection with the transactions contemplated hereby, and any and all such
rights shall be extinguished prior to the Effective Time. 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 of the AAA Companies to issue or
sell any shares of its capital stock (or securities convertible into or
exchangeable for shares of its capital stock). There are no outstanding stock
appreciation, phantom stock, profit participation or other similar rights with
respect to any of the AAA Companies. Except as set forth on Schedule 3.4,
there are no proxies, voting rights or other agreements or understandings with
respect to the voting or transfer of the capital stock of any of the AAA
Companies. None of the AAA Companies is obligated to redeem or otherwise
acquire any of its outstanding shares of capital stock.
3.5 SHAREHOLDERS OF THE AAA COMPANIES. Schedule 3.5 sets forth,
with respect to each of the AAA Companies, (a) the name, address and federal
taxpayer identification number of, and the number of outstanding shares of each
class of its capital stock owned by, each shareholder of record as of the close
of business on the date of this Agreement; and (b) the name, address and
federal taxpayer identification number of, and number of shares of each class
of its capital stock beneficially owned by, each beneficial owner of
outstanding shares of capital stock (to the extent that record and beneficial
ownership of any such shares are different). The Shareholders constitute
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all of the holders of all issued and outstanding shares of capital stock of
each of the AAA Companies, and each of the Shareholders owns such shares as is
set forth on Schedule 3.5, free and clear of all Liens, restrictions and claims
of any kind.
3.6 NO VIOLATION. Except as set forth on Schedule 3.6, the
execution and delivery of this Agreement by each of the AAA Companies and the
Shareholders, the performance by them of their respective obligations hereunder
and the consummation by them of the transactions contemplated by this Agreement
will not (i) contravene any provision of the articles of incorporation or
bylaws of any of the AAA Companies, (ii) 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 of the AAA Companies or
any of the Shareholders, (iii) 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 any of the AAA Companies
or any of the Shareholders, (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the property or assets of
any of the AAA Companies, (v) 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
Republic, or (vi) any filings required to be made with respect to the
consummation of the Mergers.
3.7 RECORDS OF THE AAA COMPANIES. The copies of the respective
articles of incorporation and bylaws of each of the AAA Companies are true,
accurate and complete and reflect all amendments made through the date of this
Agreement. The minute books for each of the AAA Companies are correct and
complete in all material respects, no further entries have been made through
the date of this Agreement, such minute books contain or as of the Effective
Time will contain the true signatures of the persons purporting to have signed
them, and such minute books contain an accurate record of all material
corporate actions of the shareholders and directors (and any committees
thereof) of each of the AAA Companies taken by written consent or at a meeting
since incorporation. All material corporate actions taken by each of the AAA
Companies have been duly authorized or ratified. All accounts, books, ledgers
and official and other records of each of the AAA Companies have been fully,
properly and accurately kept and completed in all material respects, and there
are no material inaccuracies or discrepancies of any kind contained therein.
The stock ledgers of each of the AAA Companies contain or as of the Effective
Time will contain accurate and complete records of all issuances, transfers and
cancellations of shares of the capital stock of each of the AAA Companies.
3.8 SUBSIDIARIES. Except as set forth on Schedule 3.8, none of
the AAA Companies owns, directly or indirectly, any outstanding voting
securities of or other interests in, or controls, any other corporation,
partnership, joint venture or other business entity.
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3.9 FINANCIAL STATEMENTS. The Shareholders have delivered to
Republic the financial statements of each of the AAA Companies for the period
ended December 31, 1996, internally prepared by the AAA Companies, copies of
which are attached to Schedule 3.9 hereto (the "Financial Statements"). The
balance sheets of each of the AAA Companies dated as of December 31, 1996,
included in the Financial Statements are referred to herein as the "Current
Balance Sheets." The Financial Statements fairly present the financial
position of each of the AAA Companies at each of the balance sheet dates and
the results of operations for the periods covered thereby and have been
prepared consistent with the accounting methods of each of the AAA Companies.
The books and records of each of the AAA Companies fairly reflect its
transactions, properties, assets and liabilities consistent with the accounting
methods of each of the AAA Companies. Except as set forth in the Financial
Statements, 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 writeup or
revaluation increasing the book value of any assets, except as specifically
disclosed in the notes thereto.
3.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Since the date
of the Current Balance Sheets of each of the AAA Companies, none of the AAA
Companies has (i) issued any capital stock or other securities; (ii) made any
distribution of or with respect to its capital stock or other securities or
purchased or redeemed any of its securities except in the ordinary course of
business consistent with past practice and as set forth on Schedule 3.10; (iii)
paid any bonus to or increased the rate of compensation of any of its officers
or salaried employees or amended any other terms of employment of such persons
except in the ordinary course of business consistent with past practice; (iv)
sold, leased or transferred any of its properties or assets other than in the
ordinary course of business consistent with past practice; (v) made or
obligated itself to make capital expenditures out of the ordinary course of
business consistent with past practice; (vi) made any payment in respect of its
liabilities other than in the ordinary course of business consistent with past
practice; (vii) incurred any obligations or liabilities (including any
indebtedness) or entered into any transaction or series of transactions
involving in excess of $25,000 in the aggregate out of the ordinary course of
business, except for this Agreement and the transactions contemplated hereby;
(viii) suffered any theft, damage, destruction or casualty loss, not covered by
insurance and for which a timely claim was filed, in excess of $25,000 in the
aggregate; (ix) suffered any extraordinary losses (whether or not covered by
insurance); (x) waived, canceled, compromised or released any rights having a
value in excess of $25,000 in the aggregate; (xi) made or adopted any change in
its accounting practice or policies; (xii) 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; (xiii) entered into any
transaction with any Affiliate other than intercompany transactions in the
ordinary course of business consistent with past practice; (xiv) entered into
any employment agreement except in the ordinary course of business, consistent
with past practice; (xv) terminated, amended or modified any agreement
involving an amount in excess of $25,000; (xvi) imposed any security interest
or other Lien on any of its assets other than in the ordinary course of
business consistent with past practice; (xvii) delayed paying any accounts
payable which are due and payable except to the extent being contested in good
faith; (xviii) made
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or pledged any charitable contribution other than in the ordinary course of
business consistent with past practice; (xix) entered into any other
transaction or been subject to any event which has or may have a Material
Adverse Effect on any of the AAA Companies; or (xx) agreed to do or authorized
any of the foregoing.
3.11 LIABILITIES OF THE AAA COMPANIES. None of the AAA Companies
has any liabilities or obligations, whether accrued, absolute, contingent or
otherwise, except (a) to the extent reflected or taken into account in the
Current Balance Sheets and not heretofore paid or discharged, (b) to the extent
specifically set forth in or incorporated by express reference in any of the
Schedules attached hereto, (c) liabilities incurred in the ordinary course of
business consistent with past practice since the date of the Current Balance
Sheets (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), (d) normal
accruals, reclassifications, and audit adjustments which would be reflected on
an audited financial statement and which would not be material in the
aggregate, and (e) liabilities incurred in the ordinary course of business
prior to the date of the Current Balance Sheets which, were not recorded
thereon. The consolidated net worth of the AAA Companies determined in
accordance with the accounting practices of each of the AAA Companies will be
no less than $8,400,000, as of the Effective Time.
3.12 LITIGATION. Except as set forth in Schedule 3.12, there is no
action, suit, or other legal or administrative proceeding or governmental
investigation pending, in good faith Threatened against or affecting any of the
AAA Companies, or any of their properties or assets, or the Shareholders, or
which questions the validity or enforceability of this Agreement or the
transactions contemplated hereby. The Shareholders are not aware of any facts
that would give rise to any such actions not set forth on Schedule 3.12.
There are no outstanding orders, decrees or stipulations issued by any
Governmental Authority in any proceeding to which any of the AAA Companies is
or was a party which have not been complied with in full or which continue to
impose any material obligations on any of the AAA Companies.
3.13 ENVIRONMENTAL MATTERS.
(a) Each of the AAA Companies is and has at all
times been in full compliance with all Environmental Laws (as defined in clause
(h) below) governing its business, operations, properties and assets,
including, without limitation: (i) all requirements relating to the Discharge
(as defined in clause (h) below) and Handling (as defined in clause (h) below)
of Hazardous Substances (as defined in clause (h) below) or other Waste (as
defined in clause (h) below); (ii) all requirements relating to notice, record
keeping and reporting; (iii) all requirements relating to obtaining and
maintaining Licenses (as defined in clause (h) below) for the ownership of its
properties and assets and the operation of its business as presently conducted,
including Licenses relating to the Handling and Discharge of Hazardous
Substances and other Waste; and (iv) all applicable writs, orders, judgements,
injunctions, governmental communications, decrees,
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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 or proceedings (collectively
"Proceedings") pending or in good faith Threatened against or involving any of
the AAA Companies, or its business, operations, properties, or assets, issued
by any Governmental Authority or third party with respect to any Environmental
Laws or Licenses issued to any of the AAA Companies thereunder in connection
with, related to or arising out of the ownership by any of the AAA Companies of
its properties or assets or the operation of its business, 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 of the Surviving Corporations in the event that
the transactions contemplated by this Agreement are consummated, or which could
have a Material Adverse Effect on any of the AAA Companies, including, without
limitation: (i) Notices or Proceedings related to any of the AAA Companies
being a potentially responsible party for a federal or state environmental
cleanup site or for corrective action under any applicable Environmental Laws;
(ii) Notices or Proceedings in connection with any federal or state
environmental cleanup site, or in connection with any real property or premises
where any of the AAA Companies has transported, transferred or disposed of
other Waste; (iii) Notices or Proceedings relating to any of the AAA Companies
being responsible to undertake any response or remedial actions or clean-up
actions of any kind; or (iv) Notices or Proceedings related to any of the AAA
Companies being liable under any Environmental Laws for personal injury,
property damage, natural resource damage, or clean up obligations.
(c) None of the AAA Companies has Handled or Discharged,
nor has any of them allowed or arranged for any third party to Handle or
Discharge, Hazardous Substances or other Waste to, at or upon: (i) any location
other than a site lawfully permitted to receive such Hazardous Substances or
other Waste; (ii) any real property currently or previously owned or leased by
any of the AAA Companies; or (iii) any site which, pursuant to any
Environmental Laws, (x) has been placed on the National Priorities List or its
state equivalent; or (y) the Environmental Protection Agency or the relevant
state agency or other Governmental Authority has notified any of the AAA
Companies that such Governmental Authority 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 in good faith
Threatened Discharge, of any Hazardous Substance on, into or beneath the
surface of, or adjacent to, any real property currently or previously owned or
leased by any of the AAA Companies in an amount requiring a notice or report to
be made to a Governmental Authority or in violation of any applicable
Environmental Laws.
(d) Schedule 3.13 identifies the operations and
activities, and locations thereof, which have been conducted or are being
conducted by any of the AAA Companies on any real
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property currently or previously owned or leased by any of the AAA Companies
which have involved the Handling or Discharge of Hazardous Substances.
(e) Schedule 3.13 identifies the locations to which any
of the AAA Companies has ever transferred, transported, hauled, moved, or
disposed of Waste and the types and volumes of Waste transferred, transported,
hauled, moved, or disposed of to each such location.
(f) Except as set forth on Schedule 3.13, none of the AAA
Companies uses, nor has any of them used, any Aboveground Storage Tanks (as
defined in clause (h) below) or Underground Storage Tanks (as defined in clause
(h) below), and there are not now nor have there ever been any Underground
Storage Tanks beneath any real property currently or previously owned or leased
by any of the AAA Companies that are required to be registered under applicable
Environmental Laws.
(g) Schedule 3.13 identifies (i) all environmental
audits, assessments or occupational health studies undertaken by any of the AAA
Companies or any of their agents or, to the knowledge of any of the AAA
Companies, undertaken by any Governmental Authority, or any third party,
relating to or affecting the AAA Companies or any real property currently or
previously owned or leased by any of the AAA Companies; (ii) the results of any
ground, water, soil, air or asbestos monitoring undertaken by any of the AAA
Companies or any of their agents or, to the knowledge of any of the AAA
Companies, undertaken by any Governmental Authority or any third party,
relating to or affecting any of the AAA Companies or any real property
currently or previously owned or leased by any of the AAA Companies which
indicate the presence of Hazardous Substances at levels requiring a notice or
report to be made to a Governmental Authority or in violation of any applicable
Environmental Laws; (iii) all material written communications between any of
the AAA Companies and any Governmental Authority arising under or related to
Environmental Laws; and (iv) all outstanding citations issued under OSHA, or
similar state or local statutes, laws, ordinances, codes, rules, regulations,
orders, rulings, or decrees, relating to or affecting either any of the AAA
Companies or any real property currently or previously owned or leased by any
of the AAA Companies.
(h) For purposes of this Section 3.13, 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, ordinance, code, rule,
regulation, order ruling, or decree governing Aboveground Storage
Tanks.
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing or emitting, as any of such terms may further
be defined in any Environmental Law, into any medium including,
without limitation, ground water, surface water, soil or
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air.
"Environmental Laws" means all federal, state, regional or
local statutes, laws, rules, regulations, codes, orders, plans,
injunctions, decrees, rulings, and changes or ordinances or judicial
or administrative interpretations thereof, or similar laws of foreign
jurisdictions where any of the AAA Companies conducts business,
whether currently in existence or hereafter enacted or promulgated,
any of which govern (or purport to govern) or relate to pollution,
protection of the environment, public health and safety, air
emissions, water discharges, hazardous or toxic substances, solid or
hazardous waste or occupational health and safety, as any of these
regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations
thereof, including, without limitation: the Comprehensive
Environmental Response, 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. (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. (collectively "RCRA"); the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. Section 1801, et
seq.; the Clean Water Act, as amended, 33 U.S.C. Section 1311, et
seq.; the Clean Air Act, as amended (42 U.S.C. Section 7401-7642);
the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601
et seq.; 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, of any Hazardous Substances or
Waste.
"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 Laws,
including, without limitation, RCRA, CERCLA, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Clean Air
Act, the Clean Water Act, FIFRA, EPCRA and OSHA, or any similar state
statute, or any future amendments to, or regulations implementing such
statutes, laws, ordinances, codes, rules, regulations,
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orders, rulings, or decrees, 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 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.
"Waste" shall be construed broadly to include agricultural
wastes, biomedical wastes, biological wastes, bulky wastes,
construction and demolition debris, garbage, household wastes,
industrial solid wastes, liquid wastes, recyclable materials, sludge,
solid wastes, special wastes, used oils, white goods, and yard trash
as those terms are defined under any applicable Environmental Laws.
3.14 REAL ESTATE
(a) None of the AAA Companies owns any real property or
any interest therein except as set forth on Schedule 3.14(a) (the "Owned
Properties"), which Schedule sets forth the location and size of, and principal
improvements and buildings on, the Owned Properties, together with a list of
all title insurance policies relating to such properties, all of which policies
have previously been delivered or made available to Republic by the AAA
Companies. With respect to each such parcel of Owned Property except as set
forth on Schedule 3.14(a):
(i) One of the AAA Companies has good and
marketable title to each parcel of Owned Property, free and clear of
any Lien other than (x) liens for real estate taxes not yet due and
payable; (y) recorded easements, covenants, and other restrictions
which do not impair the current use, occupancy or value of the
property subject thereto, and (z) encumbrances and restrictions
described in the title insurance policies listed on Schedule 3.14(a);
(ii) There are no pending or in good faith
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 parcels of
Owned Property contained in the deeds thereof describe such parcels
fully and adequately; the buildings and improvements are located
within the boundary lines of the described parcels of land, are not in
violation of applicable setback requirements, local
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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 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 (such that a mortgagee would require a mortgagor to obtain flood
insurance) or subject to restriction for which any permits or licenses
necessary to the use thereof have not been obtained;
(iv) All facilities have received all 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;
(v) There are no Contracts granting to any party
or parties ,other than the AAA Companies, the right of use or
occupancy of any portion of the parcels of Owned Property;
(vi) There are no outstanding options or rights of
first refusal to purchase the parcels of Owned Property, or any
portion thereof or interest therein;
(vii) There are no parties (other than the AAA
Companies) in possession of the parcels of Owned Property;
(viii) All facilities located on the parcels of
Owned Property are supplied with utilities and other services
necessary for the operation of such facilities, including gas,
electricity, water, telephone, sanitary sewer and storm sewer, 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 benefitting the
parcels of Owned Property;
(ix) Each parcel of Owned Property abuts on and
has direct vehicular access to a public road, or has access to a
public road via a permanent, irrevocable, appurtenant easement
benefitting the parcel of Owned Property; access to the property is
provided by paved public right-of- way with adequate curb cuts
available; and there is no pending or in good faith Threatened
termination of the foregoing access rights;
(x) All improvements and buildings on the Owned
Property are
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in good repair and are safe for occupancy and use, free from termites
or other wood-destroying organisms; the roofs thereof are watertight;
and the structural components and systems (including plumbing,
electrical, air conditioning/heating, and sprinklers) are in good
working order and adequate for the use of such Owned Property in the
manner in which presently used; and
(xi) Except as between or among the AAA Companies,
there are no service contracts, management agreements or similar
agreements which affect the parcels of Owned Property.
(b) Schedule 3.14(b) sets forth a list of all leases,
licenses or similar agreements concerning real property ("Leases") to which any
of the AAA Companies is a party (copies of which have previously been furnished
to Republic), in each case, setting forth (A) the lessor and lessee thereof and
the date and term of each of the Leases, (B) the legal description, including
street address, of each property covered thereby, and (C) a brief description
(including size and function) of the principal improvements and buildings
thereon (the "Leased Premises"), all of which are within the property set-back
and building lines of the respective property. 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. There is no breach or anticipated breach by
any other party to such Leases. With respect to each such Leased Premises,
except as set forth on Schedule 3.14(b):
(i) The AAA Companies have valid leasehold
interests in the Leased Premises, free and clear of any Liens, or
title defects, not inured by the title policy regarding the subject
property, of any nature whatsoever;
(ii) The portions of the buildings located on the
Leased Premises that are used in the business of the AAA Companies are
each in good repair and condition, normal wear and tear excepted, and
are in the aggregate sufficient to satisfy the AAA Companies' 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 AAA Companies' business as 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 as
conducted at such parcel; and
(iv) None of the AAA Companies has received notice
of (a) any
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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.
3.15 GOOD TITLE TO AND CONDITION OF ASSETS
(a) Except as set forth on Schedule 3.15(a), each
of the AAA Companies has good and marketable title to all of its
Assets (as hereinafter defined), free and clear of any Liens or
restrictions on use. For purposes of this Agreement, the term
"Assets" means all of the properties and assets of each of the AAA
Companies, other than the Owned Properties and the Leased Premises,
whether personal or mixed, tangible or intangible, wherever located.
(b) The Fixed Assets (as hereinafter defined)
currently in use or necessary for the business and operations of each
of the AAA Companies are in good operating condition, normal wear and
tear excepted, and 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, machinery, equipment, tools, supplies, leasehold
improvements, furniture and fixtures used by or located on the
premises of each of the AAA Companies or set forth on the Current
Balance Sheets or acquired by any of the AAA Companies since the date
of the Current Balance Sheets. Schedule 3.15(b) lists the vehicles
owned, leased or used by any of the AAA Companies, setting forth the
make, model, description of body and chassis, vehicle identification
number, and year of manufacture, and for each vehicle, whether it is
owned or leased, and if owned, the name of any lienholder and the
amount of the lien, and if leased, the name of the lessor and the
general terms of the lease, and, whether owned or leased, if it is
used to transport, transfer, handle, dispose or haul Waste materials.
3.16 COMPLIANCE WITH LAWS.
(a) Each of the AAA Companies is and has been in
compliance 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). Except as set forth on Schedule 3.16(a), none of the AAA
Companies 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 in
good faith Threatened.
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(b) None of the AAA Companies, nor any of their
employees or agents, has made any payment of funds in connection with
the business of any of the AAA Companies which is prohibited by law,
and no funds have been set aside to be used in connection with the
business of any of the AAA Companies for any payment prohibited by
law.
(c) Each of the AAA Companies is and at all times
since 1994 has been in full compliance with the terms and provisions
of the Immigration Reform and Control Act of 1986, as amended (the
"Immigration Act"). With respect to each Employee (as defined in 8
C.F.R. 274a.1(f)) of any of the AAA Companies for whom compliance with
the Immigration Act is required, each of the AAA Companies has on file
a true, accurate and complete copy of (i) each Employee's Form I-9
(Employment Eligibility Verification Form) and (ii) all other records,
documents or other papers prepared, procured and/or retained by the
AAA Companies pursuant to the Immigration Act. None of the AAA
Companies has been cited, fined, served with a Notice of Intent to
Fine or with a Cease and Desist Order, nor has any action or
administrative proceeding been initiated or in good faith Threatened
against any of the AAA Companies, by the Immigration and
Naturalization Service by reason of any actual or alleged failure to
comply with the Immigration Act.
(d) None of the AAA Companies is subject to any
Contract, decree or injunction in which any of the AAA Companies is a
party which restricts the continued operation of any business of any
of the AAA Companies or the expansion thereof to other geographical
areas, customers and suppliers or lines of business.
3.17 LABOR AND EMPLOYMENT MATTERS. Schedule 3.17 sets forth the
name, address, social security number and current rate of compensation of the
employees of each of the AAA Companies. None of the AAA Companies is a party
to or bound by any collective bargaining agreement or any other agreement with
a labor union, and there has been no effort by any labor union during the 24
months prior to the date hereof to organize any employees of any of the AAA
Companies into one or more collective bargaining units. There is no pending or
in good faith Threatened labor dispute, strike or work stoppage which affects
or which may affect the business of any of the AAA Companies or which may
interfere with its continued operations. None of the AAA Companies nor any
agent, representative or employee thereof has within the last 24 months
committed any unfair labor practice as defined in the National Labor Relations
Act, as amended, and there is no pending or in good faith Threatened charge or
complaint against any of the AAA Companies by or with the National Labor
Relations Board or any representative thereof. There has been no strike,
walkout or work stoppage involving any of the employees of any of the AAA
Companies during the 24 months prior to the date hereof. None of the
Shareholders is aware that
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any executive or key employee or group of employees has any plans to terminate
his, her or their employment with any of the AAA Companies as a result of the
Mergers or otherwise. Schedule 3.17 contains detailed information about each
contract, agreement or plan of the following nature, whether formal or
informal, and whether or not in writing, to which any of the AAA Companies is a
party or under which it has an obligation: (i) employment agreements, (ii)
employee handbooks, policy statements and similar plans, (iii) noncompetition
agreements and (iv) consulting agreements. Each of the AAA Companies since
1994 has complied with all 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 AAA
Companies, 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 the AAA Companies
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 (i) 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 in good
faith 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 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
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plans are qualified and exempt from federal income taxes; (ii) no such
determination letter has been revoked nor has revocation been in good faith
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 any of
the AAA Companies have been timely paid; (ii) none of the AAA Companies has
incurred or 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.
(e) Welfare Plans. (i) None of the AAA Companies 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 any of the AAA Companies or any of their
predecessors after termination of employment; (ii) each of the AAA Companies
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
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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. None of the AAA
Companies, nor any entity that would be aggregated with any of them under Code
Section 414(b), (c), (m) or (o): (i) has ever terminated or withdrawn from any
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
to) 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 of the AAA Companies 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
each of the AAA Companies 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 each of the AAA
Companies.
3.19 TAX MATTERS. All Tax Returns required to be filed prior to
the date hereof with respect to each of the AAA Companies or any of their
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 of the AAA Companies have
been paid or are accrued on the Current Balance Sheets or will be accrued on
each of their books and records as of the Closing. Except as set forth in
Schedule 3.19 hereto: (i) with respect to each taxable period of each of the
AAA Companies, 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 of the
AAA Companies; (iii) none of the AAA Companies has consented to extend the time
in which any Taxes may be assessed or collected by any taxing authority; (iv)
none of the AAA Companies has requested or been granted an extension of the
time for filing any Tax Return to a date later than
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the Effective Time; (v) there is no action, suit, taxing authority proceeding,
or audit or claim for refund now in progress, pending or in good faith
Threatened against or with respect to any of the AAA Companies regarding Taxes;
(vi) none of the AAA Companies 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 Time; (vii) there are no Liens for
Taxes (other than for current Taxes not yet due and payable) upon any of the
assets of any of the AAA Companies; (viii) none of the AAA Companies 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 Time 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 Time; (ix) none of the AAA Companies 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)
none of the AAA Companies is a party to or bound by any tax allocation or tax
sharing agreement or has any current or potential contractual obligation to
indemnify any other Person with respect to Taxes; (xi) no taxing authority will
claim or assess any additional Taxes against any of the AAA Companies for any
period for which Tax Returns have been filed; (xii) none of the AAA Companies
has made any payments, and as of or after Closing will not be obligated (under
any contract entered into on or before the Effective Date) 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); (xiii) none of the AAA
Companies 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); (xiv) no claim has ever been made by a taxing authority in a
jurisdiction where any of the AAA Companies does not file Tax Returns that such
company is or may be subject to Taxes assessed by such jurisdiction; and (xv)
none of the AAA Companies 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; (xvi) true, correct and complete copies of
all income and sales Tax Returns filed by or with respect to each of the AAA
Companies for the past three years have been furnished or made available to
Republic; (xvii) none of the AAA Companies will be subject to any Taxes for the
period ending at the Effective Time 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); (xviii) no sales
or use tax, non-recurring intangibles tax, documentary stamp tax or other
excise tax (or comparable tax imposed by any governmental entity) will be
payable by Republic or any of the AAA Companies by virtue of the transactions
completed in this Agreement; and (xix) each of the AAA Companies has duly and
validly filed an election for "S" corporation status under the Code, and such
"S" election has not been revoked or terminated and none of the AAA Companies
nor the Shareholders have taken any action which would cause a termination of
such "S" election (excluding the transactions contemplated by this
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Agreement).
3.20 INSURANCE. Each of the AAA Companies is covered by valid,
outstanding and enforceable policies of insurance covering each of their
respective properties, assets and businesses against risks of the nature
normally insured against by corporations in the same or similar lines of
business and in coverage amounts typically and reasonably carried by such
corporations (the "Insurance Policies"). Such Insurance Policies are in full
force and effect, and all premiums due thereon have been paid. As of the
Effective Time, each of the Insurance Policies will be in full force and
effect. None of the Insurance Policies will lapse or terminate as a result of
the transactions contemplated by this Agreement. Each of the AAA Companies has
complied with the provisions of such Insurance Policies. Schedule 3.20
contains (i) a complete and correct list of all Insurance Policies and all
amendments and riders thereto (copies of which have been provided to Republic)
and (ii) a detailed description of each pending claim under any of the
Insurance Policies for an amount in excess of $50,000 that relates to loss or
damage to the properties, assets or businesses of any of the AAA Companies.
None of the AAA Companies has failed to give, in a timely manner, any notice
required under any of the Insurance Policies to preserve its rights thereunder.
3.21 LICENSES AND PERMITS. Each of the AAA Companies possesses all
licenses and required governmental or official approvals, permits or
authorizations (collectively, the "Permits") for each of their respective
businesses and operations, including with respect to the operation of each of
the Owned Properties and Leased Premises. All such Permits are valid and in
full force and effect, each of the AAA Companies is in full compliance with the
respective requirements thereof, and no proceeding is pending or in good faith
Threatened to revoke or amend any of them. None of such Permits is or will be
impaired or in any way affected by the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
3.22 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 the business of each of the AAA Companies in the
manner in which and to the extent to which such business is currently being
conducted. The AAA Companies does not have any direct or indirect interest in
any customer, supplier or competitor of the AAA Companies, or in any person
from whom or to whom the AAA Companies leases real or personal property.
Except as set forth on Schedule 3.22, no officer, director or shareholder of
the AAA Companies, 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 AAA Companies or has any
interest in any property used by the AAA Companies.
3.23 INTELLECTUAL PROPERTY. Each of the AAA Companies 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
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intellectual property used in the conduct of its business (the "Intellectual
Property"). The conduct of the business of each of the AAA Companies 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 no Person is infringing on the
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 in good
faith Threatened action for opposition, cancellation, declaration,
infringement, or invalidity, unenforceability or misappropriation or like
claim, action or proceeding.
3.24 CUSTOMER LISTS, CONTRACTS AND RECURRING REVENUE. All of the
customers listed on Schedule 3.24 are subject to valid and enforceable customer
contracts. True, correct and complete copies of such contracts have been made
available by the Shareholders to Republic. None of the AAA Companies has
violated any of the material terms or conditions of any of the Contracts, and
all of the covenants to be performed by any other party thereto have been fully
performed and there are no claims for breach or indemnification or notice of
default or termination thereunder. Schedule 3.24 lists all customers of the
AAA Companies that account for more than 1% of the AAA Companies' consolidated
annual revenue. The average gross monthly revenue determined in accordance
with the accounting methods of each of the AAA Companies collected by the AAA
Companies from all of the customers of the AAA Companies during the twelve (12)
month period ending December 31, 1996 (the "Test Period") was not less than
$2,600,000.00 net of any intercompany eliminations (the "Minimum Revenue").
The Shareholders agree that if the actual average gross monthly revenue
collected by the AAA Companies determined in accordance with the accounting
methods of each of the AAA Companies was less than the Minimum Revenue, then
Republic shall be given and allowed an offset to the Purchase Price (the
"Purchase Price Offset") equal to the difference between the Minimum Revenue
and the actual average gross monthly revenue collected during the Test Period,
multiplied by 41.4. The Purchase Price Offset shall be deemed to be
Indemnifiable Damages (as defined below) and may be set-off against the Held
Back Shares in the manner described in Article VIII. Such determination shall
be made within six months following the Effective Date. This multiplier will
be utilized for remedy purposes with respect to this Section 3.24 only.
3.25 ACCURACY OF INFORMATION FURNISHED BY THE SHAREHOLDERS. No
written representation, statement or information made or furnished by the
Shareholders to Republic or any of Republic's representatives, including those
contained in this Agreement and the various Schedules attached hereto and the
other information and statements referred to herein and previously furnished by
the AAA Companies and the Shareholders, 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 Shareholders
have provided Republic with access to true, accurate and complete copies of all
documents listed or described in the various Schedules attached hereto.
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3.26 INVESTMENT INTENT; SECURITIES DOCUMENTS. Each of the
Shareholders is acquiring the Republic Shares hereunder for his or its own
account for investment and not with a view to, or for the sale in connection
with, any distribution of any of the Republic Shares, except in compliance with
applicable state and federal securities laws. Each of the Shareholders has had
the opportunity to discuss the transactions contemplated hereby with Republic
and has had the opportunity to obtain such information pertaining to the
Republic Companies as has been requested, including but not limited to filings
made by Republic with the SEC under the Exchange Act. Each of the Shareholders
acknowledge receiving a prospectus of Republic in accordance with the
requirements of the Securities Act.
3.27 BANK ACCOUNTS; BUSINESS LOCATIONS. Schedule 3.27 sets forth
all accounts of the AAA Companies with any bank, broker or other depository
institution, and the names of all persons authorized to withdraw funds from
each such account. As of the date hereof, none of the AAA Companies has any
office or place of business other than as identified on Schedules 3.14(a) and
3.14(b) and the AAA Companies' principal places of business and chief executive
offices are indicated on Schedule 3.14(a) or 3.14(b), and, except for equipment
leased to customers in the ordinary course of business, all locations where the
equipment, inventory, chattel paper and books and records of the AAA Companies
are located as of the date hereof are fully identified on Schedules 3.14(a) and
3.14(b).
3.28 NAMES; PRIOR ACQUISITIONS. All names under which the AAA
Companies do business as of the date hereof are specified on Schedule 3.28.
Except as set forth in Schedule 3.28, none of the AAA Companies has changed its
name or used any assumed or fictitious name, or been the surviving entity in a
merger, acquired any business or changed its principal place of business or
chief executive office, within the past three years.
3.29 NO COMMISSIONS. Except as set forth on Schedule 3.29, neither
the AAA Companies nor the Shareholders 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 RECEIVABLES. All of the Receivables (as hereinafter defined)
are valid and legally binding, represent bona fide transactions and arose in the
ordinary course of business of each of the AAA Companies. All of the
Receivables are good and collectible receivables, and will be collected in full
in accordance with the terms of such receivables (and in any event within six
months following the Closing), without setoff or counterclaims, subject to the
allowance for doubtful accounts of an amount not to exceed 1% of revenue
collected by the AAA Companies from its customers. For purposes of this
Agreement, the term "Receivables" means all receivables of each of the AAA
Companies, including all trade account receivables arising from the provision
of services, sale of inventory, notes receivable, and insurance proceeds
receivable.
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGERS
4.1 CONDUCT OF BUSINESS BY THE AAA COMPANIES PENDING THE MERGERS.
The AAA Companies covenant and agree that, between the date of this Agreement
and the Effective Time, the business of each of the AAA Companies shall be
conducted only in, and each of the AAA Companies shall not take any action
except in, the ordinary course of business, consistent with past practice.
Each of the AAA Companies shall use all reasonable efforts to preserve intact
its business organization, to keep available the services of its current
officers, employees and consultants, and to preserve its present relationships
with customers, suppliers and other persons with which it has significant
business relations. By way of amplification and not limitation, except as
contemplated by this Agreement, none of the AAA Companies shall, 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 notice to
Republic:
(a) amend or otherwise change any of their articles of
incorporation or bylaws 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
their capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such capital
stock, or any other ownership interest, of any of them or (ii) any of their
assets, tangible or intangible, except 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 their capital stock (except for distributions to any of the Shareholders
consistent with past practices of any of the AAA Companies);
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of their capital stock;
(e) (i) acquire (including, without limitation, for cash or shares
of stock, 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, or (iii) enter into any Contract other
than in the ordinary course of business, consistent with past practice;
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(f) except in the ordinary course of business consistent with past
practice, increase the compensation payable or to become payable to any of
their officers or employees, 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 their directors, officers or other employees, 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;
(g) take any action other than in the ordinary course of business
and in a manner consistent with past practice with respect to accounting
policies or procedures;
(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 any of their financial statements,
as appropriate, or liabilities incurred after the date hereof in the ordinary
course of business and consistent with past practice;
(i) except in the ordinary course of business consistent with past
practice, increase or decrease prices charged to any of their customers, except
for previously announced price changes, or take any other action which might
reasonably result in any material increase in the loss of customers through
non-renewal or termination of service contracts or other causes; 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.
Notwithstanding the foregoing, the parties agree that the agreements or
arrangements set forth in Schedules 3.4 (relating to stock transfer restriction
agreements), 3.17 (relating to Xxxxx X. Xxxxxxx' employment agreement and
salary continuation agreements) will be terminated at or prior to the Effective
Time so long as doing so will not adversely affect the poolability of the
transactions contemplated by this Agreement.
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
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transactions contemplated hereby. Each of the parties hereto shall use all
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 all
reasonable efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of any Governmental Authority and
parties to Contracts with the AAA Companies as are necessary for the
consummation of the transactions contemplated hereby. In the event the
foregoing agreements of the parties shall result in the imposition of any fees,
costs or expenses after the Effective Time, Republic hereby agrees to pay all
such fees, costs and expenses and to indemnify and hold the Shareholder
harmless with respect to such fees, costs and expenses. Each of 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 all reasonable efforts to
defend all lawsuits or other 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.
Notwithstanding anything to the contrary set forth herein, with respect to (i)
the making of any required governmental or regulatory notifications and
filings, (ii) the defense of any lawsuit or other legal proceeding challenging
this Agreement or the consummation of the transactions contemplated hereby, and
(iii) the lifting or rescinding of any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, Republic and the Shareholders shall pay their
own fees and expenses, including their own counsel fees, incurred in
connection with any of the foregoing matters, whether such fees and expenses
arise prior to the consummation of the transactions contemplated hereby or
after the Effective Time. The Republic Companies will be solely responsible
for the defense of any Republic shareholder lawsuits challenging the
transactions contemplated by this Agreement or any governmental action which
challenges the transactions contemplated by this Agreement.
5.2 HSR ACT FILINGS. Each of the parties hereto shall make
promptly (and in no event later than ten (10) business days following the date
hereof) its respective filings, if any, and thereafter make any other required
submissions under the HSR Act, with respect to the transactions contemplated
hereby.
5.3 COMPLIANCE WITH COVENANTS. The Shareholders shall cause the
AAA Companies to comply with all of the respective covenants of the AAA
Companies under this Agreement.
5.4 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 or the rules of any exchange on which the Republic
Common Stock is listed or The Nasdaq Stock Market in connection with the
transactions contemplated by this Agreement and to use their respective Best
Efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such
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transactions.
5.5 ACCESS TO INFORMATION. From the date hereof to the Effective
Date, the Shareholders shall in good faith cooperate with Republic to make
available to Republic and Republic's officers, employees, auditors, counsel and
agents copies of all books and records of the AAA Companies, 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. The Shareholders
shall provide Republic with reasonable access to its offices and other
facilities, provided that all visits and inspections to such offices and
facilities shall be conducted while accompanied by a Shareholder or a
representative of the Shareholders in a manner which does not suggest or
disclose the existence of this Agreement (or any agreement to sell stock or
assets) to employees or officers of the AAA Companies.
5.6 NOTIFICATION OF CERTAIN MATTERS. The parties shall give
prompt notice to the other of the occurrence or non-occurrence of any event
which would likely cause any representation or warranty contained herein to be
untrue or inaccurate, or any covenant, condition, or agreement contained herein
not to be complied with or satisfied.
5.7 TAX TREATMENT. The Republic Companies will use their
respective Best Efforts to cause the Mergers to qualify as reorganizations
under the provisions of Section 368(a) of the Code. The Republic Companies
will not and do not presently intend to take any action after the Mergers are
effected to cause the Mergers to lose their tax-free status, unless the
Shareholders of the AAA Companies take any actions that, individually or in the
aggregate, have the effect of disqualifying this transaction under the
provisions of Section 368 of the Code. All parties hereto agree to file the
Plans of Merger with each of 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. The parties agree to use their
respective reasonable Best Efforts to contest, or to assist any other party
hereto who is contesting, the assertion by any Governmental Authority that any
of the Mergers failed to qualify as reorganization under Section 368 of the
Code.
5.8 CONFIDENTIALITY; PUBLICITY. Except as may be required by law
or as otherwise permitted or expressly contemplated herein, or as required (on
a confidential basis) in either party's due diligence investigation or in the
consummation of this transaction, or as otherwise set forth in those certain
Confidentiality and Non-Disclosure Agreements dated December 2, 1996 as amended
by the addendum dated January 27, 1997 by and between each of the AAA companies
and Republic, the terms of which are specifically incorporated herein by this
reference, no party hereto or their respective Affiliates, employees, agents
and representatives shall disclose to any third party this Agreement or the
subject matter or terms hereof without the prior consent of the other parties
hereto. 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
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of the other parties until the Effective Date, 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 a securities
exchange (in which case Republic will consult with an officer of the AAA
Companies prior to making such disclosure). Any of the provisions of this
Agreement notwithstanding, the provisions of this Section 5.8 shall survive
termination of this Agreement.
5.9 NO OTHER DISCUSSIONS. Unless and until this Agreement is
terminated pursuant to Article XI, the AAA Companies, the Shareholders, and
their respective Affiliates, employees, agents and representatives will not (i)
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,
business or properties of the AAA Companies (whether by merger, consolidation,
sale of stock or otherwise) or (ii) enter into any agreement or commitment
(whether or not binding) with respect to any of the foregoing transactions.
The Shareholders will immediately notify Republic if any third party attempts
to initiate any solicitation, discussion or negotiation with respect to any of
the foregoing transactions.
5.10 RESTRICTIVE COVENANTS. In order to assure that Republic will
realize the benefits of the Mergers, each of the Shareholders jointly and
severally agrees with Republic that he or it will not for a period of three
years from the Effective Time:
(a) directly or indirectly, alone or as a partner, joint
venturer, officer, director, employee, consultant, agent, independent
contractor or stockholder of any company or business, engage in any
business activity in any county of the Commonwealth of Virginia in
which the AAA Companies presently conduct business which is directly
or indirectly in competition with the business conducted by the AAA
Companies at the Effective Time; provided, however, that, (i) 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
and (ii) the ownership or operation of, or other interests in, real
property shall not be deemed, in and of itself, to violate the
prohibitions of this Section;
(b) directly or indirectly (i) induce any Person which is
a customer of the AAA Companies at the Effective Time to patronize any
business directly or indirectly in competition with the business
conducted by the AAA Companies; (ii) canvass,solicit or accept from
any Person which is a customer of the AAA Companies, any such
competitive business; or (iii) request or advise any Person which is a
customer of the AAA Companies at the Effective Time to withdraw,
curtail or cancel any such customer's business with the AAA Companies
or any of their successors;
(c) except with respect to any trustee of any of the
Shareholders,
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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 any of the AAA Companies at or within six
months prior to the Effective Time, or in any manner seek to induce
any such person to leave his or her employment; and
(d) directly or indirectly, at any time following the
Effective Time, in any way utilize, disclose, copy, reproduce or
retain in his possession any of the AAA Companies' proprietary rights
or records, including, but not limited to, any of its customer lists,
except as otherwise provided in Section 5.15.
The Shareholders agree and acknowledge that the restrictions contained in this
Section are reasonable in scope and duration and are necessary to protect
Republic after the Effective Time. If any provision of this Section 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 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 will cause
irreparable damage to Republic and upon breach of any provision of this
Section, Republic shall be entitled to injunctive relief, specific performance
or other equitable relief; provided, however, that, this shall in no way limit
any other remedies which Republic may have (including, without limitation, the
right to seek monetary damages).
5.11 DUE DILIGENCE REVIEW AND ENVIRONMENTAL ASSESSMENT. Republic
shall be entitled to have conducted prior to Closing a due diligence review of
the assets, properties, books and records of each of the AAA Companies 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 Property or Leased Premises, and any structures, facilities, or equipment
located thereon, soil samples, ground and surface water samples, storage tank
testing, review of pertinent records, documents, and Licenses of each of the
AAA Companies. The Shareholders shall provide Republic or its designated
agents or consultants with the access to such property which Republic, its
agents or consultants require to conduct the Environmental Assessment. If the
Environmental Assessment identifies environmental contamination which requires
remediation or further evaluation under the Environmental, Health and Safety
Laws or if the results of the Environmental Assessment are otherwise not
satisfactory to Republic in its sole discretion, then Republic may elect not to
close the transactions contemplated by this Agreement in which case this
Agreement shall be terminated. Republic's failure or decision not to conduct
any such Environmental Assessment shall not affect any representation or
warranty of the Shareholders under this Agreement.
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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, none of the AAA Companies or the Shareholders (nor any
Affiliates thereof) will directly or indirectly purchase or sell (including
short sales) any shares of Republic Common Stock in any transactions effected
on The Nasdaq Stock Market or otherwise.
5.13 RELEASE OF GUARANTIES. After the Effective Date, Republic
hereby covenants and agrees to (i) take promptly any and all actions necessary
to cause any and all personal guaranties by the Shareholders, with respect to
the Guaranteed Liabilities set forth in Schedule 5.13 (the "Guaranteed
Liabilities"), to be released by the holders of such guaranties; and (ii)
indemnify and hold the Shareholders harmless for any Guaranteed Liabilities
outstanding after the Effective Date, and any expenses, losses, deficiencies,
liabilities, and damages (including, without limitation, reasonable related
counsel fees, paralegal fees, and expenses) resulting from Republic's breach of
this Section 5.13.
5.14 DELIVERY OF QUALIFIED CERTIFICATE. Notwithstanding anything
to the contrary set forth herein, if any events shall have occurred which were
beyond the control of the AAA Companies or the Shareholders between the date of
this Agreement and the Effective Time which would prevent the AAA Companies and
the Shareholders from delivering to Republic the certificate(s) referred to in
Section 6.1 and 6.2 hereof without exception or qualification, the AAA
Companies and the Shareholders shall nevertheless deliver to Republic such
certificate with exceptions attached thereto (the "Qualified Certificate"). In
the event Republic shall receive a Qualified Certificate, Republic may in its
sole and absolute discretion (a) terminate this Agreement without penalty or
(b) waive such condition to effect the Mergers and close the transactions
contemplated pursuant to the terms of this Agreement. In the event Republic
elects to effect the Mergers, Republic hereby waives any right to bring a claim
for Indemnifiable Damages arising as a result of the exceptions set forth in
the Qualified Certificate; provided that Republic specifically reserves and may
assert any claim for Indemnifiable Damages (i) arising from any breach of the
representations and warranties of the Shareholders in this Agreement existing
as of the date of this Agreement, (ii) arising from any events which have
occurred between the date of this Agreement and the Effective Time which were
in the control of the AAA Companies or the Shareholders whether or not such
events have been disclosed to Republic in the Qualified Certificate, (iii)
arising from any events not disclosed to Republic, and (iv) arising from any
environmental remediation of the Leased Premises or Owned Properties.
5.15 AVAILABILITY OF RECORDS. After the Effective Date, Republic
hereby covenants and agrees, upon the receipt of written notice from the
Shareholders setting forth with reasonable specificity the basis and purpose of
the request, to provide to the Shareholders any records (i) necessary for
purposes of resolution of any audit of any Tax Return of the AAA Companies,
for, or of the Shareholders with respect to income attributable to any period
of the AAA Companies ending on or before the Effective Time, (ii) with respect
to any claim for Indemnifiable Damages hereunder, and (iii) any claim against
any Shareholder (whether in his or its capacity as a
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shareholder, officer or director), with respect to any period of time ending on
or before the Effective Time.
5.16 TAX AUDIT PRIOR TO THE EFFECTIVE TIME. In the event of any
audit by a taxing authority of any Tax Return of the AAA Companies for, or of
the Shareholders with respect to income attributable to, any period of the AAA
Companies ending on or before the Effective Time, Republic will promptly
provide the Shareholders with copies of all notices issued by the taxing
authority and received by Republic or the AAA Companies in connection
therewith. The Shareholders may, at their sole expense, defend any such audit,
and may assert or agree to accept any reasonable reporting position of
transactions required to be reflected in the Tax Return so audited to achieve
resolution of such audit, provided that in the event such position has an
adverse effect to Republic, Republic shall be fully indemnified and held
harmless by the Shareholders with respect to any damage, loss, cost or expense
(including, without limitation, reasonable attorneys' fees) incurred by
Republic as a result of such adverse position. Republic will have the right to
participate in any such audit at its own non-reimbursable expense and shall
receive from the Shareholders copies of all communications between the taxing
authority and Shareholders relevant to the Tax Returns or Taxes of the AAA
Companies. The provisions of Section 8.11 hereof shall be applicable with
respect to any dispute between the parties with respect to the amount of any
damage, loss, cost or expense incurred by Republic in connection with the terms
of this Section.
5.17 PREPARATION OF FINAL TAX RETURN; ALLOCATION OF INCOME. After
the Effective Date, Republic and the Shareholders hereby covenant and agree
that (i) Beers & Xxxxxx, C.P.A. shall prepare the final Tax Return of the AAA
Companies for the year ending as a result of the Mergers, and (ii) any income
of the AAA Companies for the year ending as a result of the Mergers shall be
allocated on a closing of the books method in accordance with Section
1362(e)(6)(D) of the Code and no election to the contrary shall be made by the
AAA Companies under Treasury Regulations 1.1502- 76(b)(2)(ii)(D) of the Code.
5.18 SATISFACTION OF REAL PROPERTY INDEBTEDNESS. Within five (5)
business days from the Effective Time, Republic shall cause Land and Building
to fully pay and satisfy, in immediately available funds, that certain
indebtedness in the remaining principal amount not to exceed $2,600000.00 owed
by Land and Building to Xxxxx X. Xxxxxxx with respect to that certain parcel of
real property located at 0000 Xxxx Xx Xxxx, Xxxxxxx, Xxxxxxxx 00000.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE REPUBLIC COMPANIES
The obligations of the Republic Companies to effect the Mergers shall
be subject to the fulfillment at or prior to the Effective Time of the
following conditions, any or all of which may be waived in whole or in part by
the Republic Companies:
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6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Shareholders contained
in this Agreement shall be true and correct at and as of the Effective Time
with the same force and effect as though made at and as of that time except (i)
for changes specifically permitted by or disclosed pursuant to this Agreement,
and (ii) that those representations and warranties which address matters only
as of a particular date shall remain true and correct as of such date. Each of
the AAA Companies and the Shareholders shall have performed and complied with
all of their respective obligations required by this Agreement to be performed
or complied with at or prior to the Effective Time. Each of the AAA Companies
and the Shareholders shall have delivered to the Republic Companies a
certificate, dated as of the Effective Date, duly signed (in the case of each
of the AAA Companies, by its President), certifying that such representations
and warranties are true and correct and that all such obligations have been
complied with and performed.
6.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY.
Between the date hereof and the Effective Time, (i) there shall have been no
Material Adverse Change to the AAA Companies, (ii) 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 any of the AAA
Companies, and (iii) none of the properties and assets of the AAA Companies
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 there shall have been
delivered to the Republic Companies a certificate to that effect, dated the
Effective Date and signed by or on behalf of each of the AAA Companies and the
Shareholders.
6.3 CORPORATE CERTIFICATE. The Shareholders shall have delivered
to the Republic Companies (i) copies of the articles of incorporation and
bylaws of each of the AAA Companies as in effect immediately prior to the
Effective Time, (ii) copies of resolutions adopted by the Board of Directors
and Shareholders of each of the AAA Companies authorizing the transactions
contemplated by this Agreement, and (iii) a certificate of good standing each
of the AAA Companies issued by the Secretary of State of the Commonwealth of
Virginia and each other state in which any of the AAA Companies is qualified to
do business as of a date not more than ten days prior to the Effective Date,
certified in the case of subsections (i) and (ii) of this Section as of the
Effective Date by the Secretary of each such company as being true, correct and
complete.
6.4 OPINION OF COUNSEL. The Republic Companies shall have
received an opinion dated as of the Effective Date from counsel for the AAA
Companies and the Shareholders, in form and substance acceptable to the
Republic Companies, with reasonable limitations acceptable to counsel for the
AAA Companies and the Shareholders, to the effect that:
(i) Each of the AAA Companies is a corporation
duly organized, validly existing and in good standing under the laws
of the Commonwealth of Virginia and each is authorized to carry on the
business now conducted by each of
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them and to own or lease the properties now owned or leased by each of
them;
(ii) Each of the AAA Companies has obtained all
necessary authorizations and consents of each of their Board of
Directors and the Shareholders to effect each of the Mergers;
(iii) All issued and outstanding shares of capital
stock of each of the AAA Companies are owned as set forth on Schedule
3.5 hereto;
(iv) Such counsel does not have actual knowledge
that there is any litigation, proceeding or investigation pending or
in good faith Threatened which might result in any Material Adverse
Change in the properties, business or prospects or in the condition of
each of the AAA Companies, or which questions the validity of this
Agreement; and
(v) This Agreement is a valid and binding
obligation of each of the AAA Companies, and the Shareholders, and
enforceable against each of the AAA Companies and the Shareholders in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or general
equitable principles.
6.5 CONSENTS. The AAA Companies shall have received consents to
the transactions contemplated hereby and waivers of rights to terminate or
modify any material rights or obligations of any of the AAA Companies from any
Person from whom such consent or waiver is required as of a date not more than
ten days prior to the Effective Date, or who, as a result of the transactions
contemplated hereby, would have such rights to terminate or modify any such
material rights or obligations, either by the terms thereof or as a matter of
law.
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. Republic shall have received from Beers &
Xxxxxx, independent certified public accountants for each of the AAA Companies,
a letter dated the Effective Date, in form and substance acceptable to
Republic, confirming that, to their knowledge after due and diligent inquiry of
management, there have been no transactions or events with respect to any of
the AAA Companies which would, and the ownership structure and attributes of
any of the AAA Companies and the Shareholders would not, proscribe the
transactions contemplated hereby, if consummated, from being considered as
pooling of interests business combinations. Republic shall have received from
Xxxxxx Xxxxxxxx LLP, a letter dated the Effective Date, confirming that the
transactions contemplated hereby, if consummated, can properly be accounted for
as pooling
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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 ACKNOWLEDGMENT OF POOLING RESTRICTIONS AND RECEIPT OF SEC
FILINGS. At or prior to the Closing, the Shareholders shall have delivered to
Republic a letter agreement acknowledging "pooling of interests" restrictions
and receipt of SEC filings of Republic, in form and substance satisfactory to
the Republic Companies.
6.9 AAA COMPANIES CAPITAL STOCK. At the Closing, each of the
Shareholders shall have delivered to Republic all certificates evidencing the
shares of capital stock of each of the AAA Companies held by them.
6.10 STOCK POWERS. At the Closing, each of the Shareholders shall
have delivered to Republic, for use in connection with the Held Back Shares,
ten stock powers executed in blank, with signatures guaranteed.
6.11 NO ADVERSE LITIGATION. There shall not be pending or in good
faith 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 any other transaction contemplated
hereby, and which, in the judgment of Republic, makes it inadvisable to proceed
with the Mergers and other transactions contemplated hereby.
6.12 BOARD APPROVAL. The Board of Directors of Republic shall have
authorized and approved this Agreement, the Mergers and transactions
contemplated hereby.
6.13 HSR ACT WAITING PERIOD. Any applicable HSR Act waiting period
shall have expired or been terminated.
6.14 DUE DILIGENCE REVIEW. Republic shall be satisfied with the
results of its due diligence review and Environmental Assessment pursuant to
Section 5.11.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE AAA COMPANIES AND THE SHAREHOLDERS
The obligations of the AAA Companies and the Shareholders to effect
the Mergers shall be subject to the fulfillment at or prior to the Effective
Time of the following conditions, any or all of which may be waived in whole or
in part by the AAA Companies and the Shareholders:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS.
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The representations and warranties of each of the Republic Companies contained
in this Agreement shall be true and correct in all material respects at and as
of the Effective Time with the same force and effect as though made at and as
of that time except (i) for changes specifically permitted by or disclosed
pursuant to this Agreement, and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and
correct as of such date. Each of the Republic Companies shall have performed
and complied with all of its obligations required by this Agreement to be
performed or complied in all material respects with at or prior to the
Effective Time. Each of the Republic Companies shall have delivered to the AAA
Companies and the Shareholders a certificate, dated as of the Effective Date,
and signed by an executive officer, certifying that such representations and
warranties are true and correct and that all such obligations have been
complied with and performed.
7.2 REPUBLIC SHARES. At the Closing, Republic shall have issued
all of the Republic Shares and shall have delivered to the Shareholders (i)
certificates representing the Republic Shares issued to them hereunder, other
than the Held Back Shares, and (ii) copies of stock certificates representing
the Held Back Shares issued to them.
7.3 NO ADVERSE LITIGATION. There shall not be pending or in good
faith 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 any other transaction contemplated
hereby, and which in the judgment of the AAA Companies and the Shareholders
makes it inadvisable to proceed with the Mergers and other transactions
contemplated hereby.
7.4 HSR ACT WAITING PERIOD. Any applicable HSR Act waiting period
shall have expired or been terminated.
7.5 OPINION OF REPUBLIC'S COUNSEL. The AAA Companies and the
Shareholders shall have received an opinion dated as of the Effective Date from
counsel for Republic, in form and substance acceptable to the AAA Companies and
the Shareholders, with reasonable limitations acceptable to Republic's counsel,
to the effect that:
(i) Republic is a corporation duly organized and existing
and in good standing under the laws of the State of Delaware and is
authorized to carry on the business now conducted by it and own or
lease the properties now owned or leased by it;
(ii) Republic has obtained all necessary authorizations
and consents of its Board of Directors to effect the transactions
contemplated hereunder;
(iii) Such counsel does not have actual knowledge that
there is any litigation, proceeding or investigation pending or in
good faith Threatened which might result in any Material Adverse
Change in the properties, business or prospects or in the condition of
Republic or which questions the validity of this Agreement;
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(iv) This Agreement is a valid and binding obligation of
Republic and enforceable against Republic in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of
creditors' rights generally; and
(v) Upon consummation of the Mergers and the issuance and
delivery of certificates representing the Republic Shares to the
Shareholders, the Republic shares will be validly issued, fully paid
and non-assessable shares of Republic Common Stock.
7.6 No Material Adverse Change to Republic. Between the date
hereof and the Effective Time, there shall have been no Material Adverse Change
to Republic, taken as a whole.
ARTICLE VIII
INDEMNIFICATION
8.1 AGREEMENT BY THE SHAREHOLDERS TO INDEMNIFY. The Shareholders
jointly and severally agree to indemnify and hold Republic harmless from and
against 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 (collectively, "Indemnifiable
Damages") arising out of or resulting from (i) any breach of a representation
or warranty made by the Shareholders in or pursuant to this Agreement, (ii) any
breach of the covenants or agreements made by the AAA Companies or any
Shareholder in or pursuant to this Agreement, (iii) any inaccuracy in any
certificate delivered by the AAA Companies or any Shareholder pursuant to this
Agreement, (iv) any Claim (as such term is defined in Section 8.5 hereof), or
(v) any matters set forth on Schedules 3.12, 3.29 and 3.19 attached hereto.
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
had each of the representations and warranties of the Shareholders hereunder
been true and correct and had the covenants and agreements of the AAA Companies
and the Shareholders hereunder been performed in full. Notwithstanding the
foregoing, after the Effective Time, the maximum liability of the Shareholders
for Indemnifiable Damages for any breach of the representations, warranties,
covenants and agreements hereunder shall not exceed in the aggregate the
Purchase Price (the "Indemnification Limitation"); provided, however, that any
Indemnifiable Damages resulting from or arising out of (i) any Claim (as
defined in Section 8.5) and (ii) any matters set forth in Schedules 3.12, 3.29
and 3.19, shall not be applied against or subject to the foregoing
Indemnification Limitation. Republic hereby agrees to use its, and cause its
subsidiaries to use their, reasonable efforts to mitigate any claim for
Indemnifiable Damages hereunder, including but not limited to seeking recovery
under applicable insurance policies or from third parties. Republic hereby
agrees to promptly deliver to the Shareholders any insurance proceeds received
by Republic or any of the AAA Companies after the Effective Time,
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pursuant to the provisions of any insurance policy of the AAA Companies in full
force and effect prior to the Effective Time, in connection with any claim for
Indemnifiable Damages for which Republic has received Indemnifiable Damages
with respect to any matters existing prior to the Effective Time.
8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Shareholders in this Agreement or
pursuant hereto shall expire on the first anniversary of the Effective Time,
except that the representations and warranties contained in (i) Section 3.12
and 3.29, shall expire at the time the period of limitations expires for the
bringing of any claim, suit or action by any Person with respect to any matters
set forth in Schedule 3.12 or Schedule 3.29 hereof, and (ii) Section 3.19,
with respect to the audits more fully described in Schedule 3.19, shall expire
at the time the period of limitations (including any extensions thereof
pursuant to the delivery of waivers of the applicable period of limitations)
expires for the assessment or imposition by any Governmental Authority of
additional Taxes with respect to such audits (the "Claims Period"). No claim
for the recovery of Indemnifiable Damages for the breach of any of the
representations and warranties made by the Shareholders hereunder may be
asserted by Republic against the Shareholders after such representations and
warranties shall thus expire, provided, however, that claims for Indemnifiable
Damages first asserted within the Claims Period shall not thereafter be barred;
provided, however, such claims (except any claim for Indemnifiable Damages
arising from or related to any Claim), including, without limitation, claims
with respect to or against the Held Back Shares, shall be barred if arbitration
with respect to such claims is not filed within six (6) months after the
expiration of the Claims Period regardless of any otherwise applicable
limitations period. With respect to any claim for Indemnifiable Damages
hereunder, Republic shall give written notice to the Shareholders which notice
shall set forth (i) the amount of Indemnifiable Damages which Republic claims
to have sustained; and (ii) the basis of such claim with reasonable
specificity. 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 survive for a period of one year
after the Effective Time.
8.3 SECURITY FOR THE SHAREHOLDERS' INDEMNIFICATION OBLIGATION. As
security for the agreement by the Shareholders to indemnify and hold Republic
harmless as described in this Article at the Closing, Republic shall set aside
and hold certificates representing the Held Back Shares issued pursuant to this
Agreement. The Shareholders hereby grant Republic a first priority security
interest in the Held Back Shares. Republic may set off against the Held Back
Shares any Indemnifiable Damages for which the Shareholders may be responsible
pursuant to this Agreement, subject, however, to the following terms and
conditions:
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(a) Republic shall give written notice to the Shareholders
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 with
reasonable specificity;
(b) Such set off shall be effected on the later to occur
on the expiration of 20 days from the date of such notice (the "Notice
of Contest Period") or, if such claim is contested, the date the
dispute is resolved, and such set off shall be charged againstthe Held
Back Shares;
(c) If, prior to the expiration of the Notice of Contest
Period, the Shareholders shall notify Republic in writing of an
intention to dispute the claim and if such dispute is not resolved
within 30 days after expiration of such period (the "Resolution
Period"), then such dispute shall be resolved pursuant to the terms of
Section 8.11 hereof;
(d) After any restrictions on sale imposed under the
Securities Act or otherwise are terminated, the Shareholders may, not
more than once during each twelve (12) month period in which Republic
holds the Held Back shares following the Effective Date, instruct
Republic in writing to sell some or all of the Held Back Shares and
the proceeds thereof shall be substituted for such Held Back Shares
and held in an interest bearing account as directed by the
Shareholders, subject to continued compliance with any applicable SEC
and other regulations. Republic shall not be liable for any loss or
damage incurred by the Shareholders arising from any delay in the sale
of such Held Back Shares following the Shareholders' instruction to
sell the Held Back Shares unless such delay shall be unreasonable in
nature.
(e) For purposes of this Article, the shares of Republic
Common Stock not sold as provided in clause (d) of this Section shall
be valued at the Closing Sale Price.
8.4 VOTING OF AND DIVIDENDS ON THE HELD BACK SHARES . Except with
respect to shares transferred pursuant to the foregoing right of setoff (and in
the case of such shares, until the same are transferred), all Held Back Shares
shall be deemed to be owned by the Shareholders and the Shareholders shall be
entitled to vote the same; provided, however, that, there shall also be
deposited with Republic subject to the terms of this Article, all shares of
Republic Common Stock issued to the Shareholders as a result of any stock
dividend or stock split and all cash issuable to the Shareholders as a result
of any cash dividend, with respect to the Held Back Shares. All stock and cash
issued or paid upon Held Back Shares shall be distributed to the person or
entity entitled to receive such Held Back Shares together with such Held Back
Shares.
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8.5 DELIVERY OF HELD BACK SHARES. Republic agrees to deliver to
the Shareholders no later than the first anniversary of the Effective Date (the
"Release Date") any Held Back Shares then held by it (or proceeds from the sale
of the 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 any Held Back Shares remaining on deposit (or proceeds
from the sale of Held Back Shares) after such claim shall have been satisfied
shall be returned to the Shareholders promptly after the time of satisfaction.
Notwithstanding the foregoing provision, the parties hereto hereby agree that
following the Release Date, Republic shall continue to set aside and hold, in
accordance with this Article, 13,889 of the Held Back Shares (or the proceeds
from the sale of such Held Back Shares), or any remaining Held Back Shares then
held by Republic, (or the proceeds from the sale of any such remaining Held
Back Shares), as continued security (the "Continued Security") for the
Shareholders' obligation to indemnify and hold Republic harmless with respect
to the bringing of any claim, suit, or action (equitable or otherwise) (the
"Claim") in connection with, arising out of or from, or in any manner related
to that certain Property Settlement Agreement dated as of November 12, 1996, by
and between Xxxxx X. Xxxxxxx and Xxxx X. Xxxxxxx, and any amendments thereto.
No later than the second anniversary of the Effective Date, Republic shall
promptly deliver 6,945 of the Continued Security then held by it (or the
proceeds from the sale of such Continued Security) to the Shareholders unless
there then remains unresolved any claim for Indemnifiable Damages with respect
to any Claim as to which notice has been given. No later than the third
anniversary of the Effective Date, Republic shall promptly deliver to the
Shareholders any Continued Security then held by it (or the proceeds from the
sale of such Continued Security) unless there then remains unresolved any claim
for Indemnifiable Damages with respect to any Claim as to which notice has been
given, in which event any Continued Security remaining on deposit (or proceeds
from the sale of such Continued Security), after any such Claim shall have been
satisfied, shall be returned to the Shareholders promptly after the time of
satisfaction.
8.6 ADJUSTMENT TO MERGER CONSIDERATION. All payments for
Indemnifiable Damages made pursuant to this Article shall be treated as
adjustments to the consideration granted in the Merger under Section 1.3
hereof.
8.7 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 Shareholders 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.
8.8 INDEMNIFICATION THRESHOLD. Notwithstanding anything to the
contrary in this Agreement and any documents related thereto, the Shareholders
shall not be liable to Republic with respect to any claim for Indemnifiable
Damages unless the aggregate amount of all Indemnifiable Damages (excluding
claims for Indemnifiable Damages arising from or related to any Claim (as
defined in Section 8.5) or any matters set forth in Schedules 3.12, 3.29 and
3.19) incurred by Republic exceed an aggregate of $1,000,000.00 (the
"Indemnification Threshold"),
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in which case the Shareholders shall be liable for the total amount of such
Indemnifiable Damages in excess of such Indemnification Threshold.
Notwithstanding anything to the contrary set forth herein, the Shareholders
shall be responsible for the full amount of any claim for Indemnifiable Damages
arising from or related to any Claim and any matters set forth in Schedules
3.12, 3.29 and 3.19.
8.9 DEFENSE OF CLAIM. Promptly after receipt by Republic of
notice of the commencement of any Claim (as such term is defined in Section 8.5
hereof), Republic will, if a Claim is to be made against Republic or any of the
Surviving Corporations, promptly notify the Shareholders of the commencement
thereof and the Shareholders shall have the right, at their sole cost and
expense, to participate in, and, to the extent they may wish, assume the
defense of any such Claim, with counsel satisfactory to Republic; provided,
however, if the defendants of any Claim include Republic or any of the
Surviving Corporations and any of the Shareholders and there is a conflict of
interest which would prevent counsel for the Shareholders from also
representing Republic or any of the Surviving Corporations, Republic shall have
the right to select separate counsel to participate in the defense of any such
Claim on behalf of Republic or the Surviving Corporations. After notice from
the Shareholders to Republic of their election to assume the defense of any
Claim, the Shareholders will not be liable to Republic for any legal or other
expenses subsequently incurred by Republic in connection with the defense of
any Claim other than reasonable costs of investigation, unless (i) Republic
shall have employed counsel in accordance with the provisions of the preceding
sentence, (ii) the Shareholders shall not have employed counsel satisfactory to
Republic to represent Republic or the Surviving Corporations within a
reasonable time after the notice of the commencement of any Claim, or (iii) the
Shareholders have authorized the employment of counsel for Republic or the
Surviving Corporations at the expense of the Shareholders.
8.10 AGREEMENT BY REPUBLIC TO INDEMNIFY. Republic agrees to
indemnify and hold the Shareholders harmless from and against the aggregate of
all expenses, losses, costs, deficiencies, liabilities and damages (including,
without limitation, reasonable related counsel and paralegal fees and expenses)
incurred or suffered by the Shareholders (collectively, the "Shareholder
Indemnifiable Damages") resulting from or arising out of (i) any breach of a
representation or warranty made by Republic in or pursuant to this Agreement,
(ii) any breach of the covenants or agreements made by Republic in this
Agreement, or (iii) any inaccuracy in any certificate delivered by Republic
pursuant to this Agreement. Without limiting the generality of the foregoing
with respect to the measurement of Shareholder Indemnifiable Damages, the
Shareholders shall have the right to be put in the same pre-tax consolidated
financial position as they would have been in had each of the representations
and warranties of Republic hereunder been true and correct. No claim for the
recovery of Shareholder Indemnifiable Damages with respect to the breach of the
representations and warranties of the Republic Companies may be asserted by the
Shareholders against Republic after such representations and warranties shall
thus expire.
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8.11 ARBITRATION. Notwithstanding anything to the contrary set
forth herein, any claim for Indemnifiable Damages or Shareholder Indemnifiable
Damages hereunder shall be resolved by arbitration in the city or suburbs of
Wilmington, Delaware in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitrators shall apply the laws of the
state as provided in Section 12.8 hereof in any such arbitration and any
judgment upon the award rendered by such arbitrators may be entered in any
court having jurisdiction over the parties. The arbitrators shall have the
authority to grant any remedies that would be available in any judicial
proceeding instituted to resolve any claim for Indemnifiable Damages or
Shareholder Indemnifiable Damages.
8.12 INDEMNIFICATION PROCEDURES. In the event that any claim for
which the AAA Companies or Shareholders may be liable to the Republic Companies
hereunder is asserted against the Republic Companies by a third party, with
respect to each such claim:
(a) The Republic Companies will with reasonable promptness give
notice to the Shareholders of such claim, specifying the nature of such claim
and the amount or the estimated amount thereof to the extent then feasible
(which estimate will not be conclusive of the final amount of such claim).
(b) The Shareholders will be consulted in good faith on all
material matters concerning the defense or settlement of such claim.
(c) In dealing with such claim, the Republic Companies and their
counsel will have a reasonable good faith duty to assess the merits of the
claim and act reasonably in defending such claim taking into account the
financial exposure of such claim to the Shareholders.
ARTICLE IX
SECURITIES LAW MATTERS
The Shareholders agree as follows with respect to the sale or other
disposition after the Effective Time of the Republic Shares:
9.1 DISPOSITION OF SHARES. The Shareholders represent and
warrant that the shares of Republic Common Stock being acquired by them
thereunder are being acquired and will be acquired for their own respective
accounts and will not be sold or otherwise disposed of, except (a) pursuant to
an exemption from the registration requirements under the Securities Act, (b)
in accordance with Rule 145(d) under the Securities Act, or (c) pursuant to an
effective registration statement filed by Republic with the SEC under the
Securities Act. To the extent the Shareholders comply with the provisions of
Rule 145(d) under the Securities Act in effecting sales of the Republic
Shares, Republic agrees to provide its transfer agent with appropriate
instructions and/or
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opinions of counsel in order for the Shareholders to sell, transfer and/or
dispose of the Republic Shares in accordance with Rule 145(d).
9.2 LEGEND. The certificates representing the Republic Shares
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF BY THE HOLDER EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE ACT AND IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO, (B) IN
ACCORDANCE WITH RULE 145(D) UNDER THE ACT, OR (C) 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, 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
or unless the Shareholders comply with Rule 145(d), place stop transfer orders
with its transfer agent with respect to such certificates in accordance with
federal securities laws.
ARTICLE X
DEFINITIONS
10.1 DEFINED TERMS. As used herein, the following terms
shall have the following meanings:
"AAA Companies" shall mean Disposal, Commercial, Recycling,
Maintenance, and Land and Building and any Affiliates thereof.
"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.
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"Best Efforts" means the efforts that an ordinary, reasonable,
prudent Person would use to achieve a result in similar circumstances;
provided, however, that an obligation to use Best Efforts does not
require a Person to take actions that would result in a Material
Adverse Change to such Person under the terms of this Agreement.
"Closing Sale Price" shall mean $36.00 per share of Republic
Common Stock issued pursuant to the terms hereof; provided, however,
that if between the date of this Agreement and the Effective Date, the
outstanding shares of Republic Common Stock shall have been changed
into a different number of shares, or a different class, by reason of
any Change (as such term is defined in Section 1.3 hereof), the
Closing Sale Price shall be correspondingly adjusted to reflect such
Change.
"Code" shall mean the Internal Revenue Code of 1986, and any
amendments thereto, and the treasury regulations promulgated
thereunder.
"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.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"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-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).
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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.
"Person" means an individual, partnership, corporation,
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 Taxes; and
"Taxes" means all taxes, fees or other assessments, including,
but not limited to, income, excise, property, sales, franchise,
intangible, withholding, social security and unemployment taxes
imposed by any federal, state, local or foreign governmental agency,
and any interest or penalties related thereto.
"Threatened" means with respect to any claim, suit,
proceeding, dispute, or other matter that a demand or statement has
been made (orally or in writing) or any notice has been given (orally
or in writing) that would lead an ordinary, reasonable, prudent Person
to conclude that such a claim, suit, proceeding, dispute, or other
matter may be asserted, commenced, taken, or otherwise pursued in the
future.
10.2 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.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
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(c) All matters of an accounting nature in connection
with this Agreement and the transactions contemplated hereby shall be
determined on a cash basis method of accounting.
(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 XI
TERMINATION
11.1 TERMINATION. This Agreement may be terminated at any
time 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 in the event of a material breach by any
of the AAA Companies or any of the Shareholders of any provision of
this Agreement; or
(c) by the AAA Companies and the Shareholders in the
event of a material breach by Republic of any provision of this
Agreement; or
(d) by either Republic or the AAA Companies if the
Closing shall not have occurred by April 1, 1997.
11.2 EFFECT OF TERMINATION. In the event of termination
of this Agreement pursuant to Section 12.1, this Agreement shall forthwith
become void; provided, however, that nothing herein shall relieve any party
from liability for the willful and intentional breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE XII
GENERAL PROVISIONS
12.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be 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 such party shall
designate in writing to the other party):
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(a) IF TO ANY OF THE REPUBLIC COMPANIES 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:
Akerman, Senterfitt & Xxxxxx, P.A.
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(b) IF TO THE AAA COMPANIES AND/OR THE SHAREHOLDERS TO:
AAA Disposal Service, Inc.
0000 Xxxx Xx Xxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, General Counsel
Telecopy: (000) 000-0000
WITH A COPY TO:
The Xxxxxxx Law Firm A Professional Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Notice shall be deemed given on the date sent if sent by overnight
delivery or facsimile transmission and on the date delivered (or the date of
refusal of delivery) if sent by certified or registered mail.
12.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits
and Schedules attached hereto), the Confidentiality and Non-Disclosure
Agreements dated December 2, 1996 as
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amended by the Addendum dated January 27, 1997, and other documents delivered
at the Closing pursuant hereto, contains the entire understanding of the
parties in respect of its subject matter and supersedes all prior agreements
and understandings (oral or written) between or among the parties with respect
to such subject matter. The Exhibits and Schedules constitute a part hereof as
though set forth in full above.
12.3 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. Republic hereby agrees to pay all applicable filing fees,
and counsel fees of Akin, Gump, et al, with respect to any required HSR Act
filings.
12.4 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. The
rights and remedies of the parties under this Agreement are in addition to all
other rights and remedies, at law or equity, that they may have against each
other.
12.5 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 any of the AAA Companies, or any of the
Shareholders without the prior written consent of Republic.
12.6 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.
12.7 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.
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12.8 GOVERNING LAW; INTERPRETATION. This Agreement shall
be construed in accordance with and governed for all purposes by the laws of
the State of Delaware applicable to contracts executed and to be wholly
performed within such State.
12.9 JURISDICTION.
(a) Any suit, action or proceeding, equitable or otherwise,
against any of the AAA Companies or the Shareholders arising out of, or with
respect to, this Agreement or any judgment entered by any court in respect
thereof shall be brought in the courts of New Castle County, Delaware,
including the Delaware Chancery Courts located therein, or in the U.S. District
Court for the District of Delaware as Republic (in its sole discretion) may
elect, and the AAA Companies and the Shareholder hereby accept the nonexclusive
jurisdiction of those courts for the purpose of any suit, action or proceeding.
(b) In addition, each of the AAA Companies and the
Shareholders hereby irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
judgment entered by any court in respect thereof brought in New Castle County,
Delaware or the U.S. District Court for the District of Delaware, as selected
by Republic, and hereby further irrevocably waives any claim that any suit,
action or proceedings brought in New Castle County, Delaware or in such
District Court has been brought in an inconvenient forum.
12.10 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 advice 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.
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/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Senior Vice President
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RI/ADI MERGER CORP., a Virginia
corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Senior Vice President
RI/ACI MERGER CORP., a Virginia
corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Senior Vice President
RI/ARI MERGER CORP., a Virginia
corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Senior Vice President
RI/AMI MERGER CORP., a Virginia
corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Senior Vice President
(Signatures continued on following page)
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RI/ALB MERGER CORP., a Virginia
corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Senior Vice President
AAA DISPOSAL SERVICE, INC., a Virginia
corporation
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxx, President
AAA COMMERCIAL, INC., a Virginia corporation
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxx, President
AAA RECYCLING, INC., a Virginia corporation
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxx, President
AAA MAINTENANCE, INC., a Virginia
corporation
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxx, President
(Signatures continued on following page)
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AAA LAND & BUILDING CO., INC., a
Virginia corporation
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxx, President
/s/ Xxxxx X. Xxxxxxx
-----------------------------------------
XXXXX X. XXXXXXX, individually
XXXXXXX X. XXXXXXX TRUST U/T/A/D APRIL 3.
1989
By: /s/ Xxxxxxx X. Xxxxx CPA
-----------------------------------------
Xxxxxxx X. Xxxxx, CPA, as Trustee
XXXXX X. XXXXXXX TRUST U/T/A/D APRIL 3, 1989
By: /s/ Xxxxxxx X. Xxxxx CPA
-----------------------------------------
Xxxxxxx X. Xxxxx, CPA, as Trustee
XXXXXXXX X. XXXXXXX TRUST U/T/A/D APRIL 3,
1989
By: /s/ Xxxxxxx X. Xxxxx CPA
-----------------------------------------
Xxxxxxx X. Xxxxx, CPA, as Trustee
XXXX X. XXXXXXX TRUST U/T/A/D APRIL 3, 1989
By: /s/ Xxxxxxx X. Xxxxx CPA
-----------------------------------------
Xxxxxxx X. Xxxxx, CPA, as Trustee
XXXXXXXX X. XXXXXXX TRUST
U/T/A/D APRIL 3, 1989
By: /s/ Xxxxxxx X. Xxxxx CPA
-----------------------------------------
Xxxxxxx X. Xxxxx, CPA, as Trustee
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