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EXHIBIT 2.1
MERGER AGREEMENT
This Merger Agreement (this "Agreement") is entered into as of February
3, 1997 by and among Republic Industries, Inc., a Delaware corporation
("Republic"); and RI/T Merger Corp., a California corporation and wholly-owned
subsidiary of Republic (the "Republic Merger Sub," and together with Republic,
the "Republic Companies"); Xxxxxxxx Industries, Inc., a California corporation
(the "Company"); the Xxxxxxxx Revocable Inter Vivos Trust under Agreement dated
July 26, 1983 and the Xxxxxxx Xxxxx Xxxxxxxx Revocable Inter Vivos Trust under
Agreement dated May 14, 1984 and the X.X. Xxxxxxxx Family Trust under Agreement
dated September 16, 1980 ("X.X. Xxxxxxxx Family Trust"), each a trust formed
under the laws of the State of California, which together constitute all of the
shareholders of the Company as of the date hereof (together, the "Shareholders":
the X.X. Xxxxxxxx Family Trust to become a shareholder as a result of the
transaction contemplated by Section 5.17(b) hereof); and Xxxxxxx X. Xxxxxxxx and
Xxxxxxx X. Xxxxxxxx (together, the "Taorminas"). Certain other capitalized terms
used herein are defined in Article XI and throughout this Agreement.
RECITALS
The Boards of Directors of Republic and the Company have determined
that it is in the best interests of their respective shareholders for Republic
to acquire the Company 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 Sub as a wholly-owned subsidiary, and the parties have
agreed, subject to the terms and conditions set forth in this Agreement, to
merge the Republic Merger Sub with and into the Company so that the Company
continues as the surviving corporation. As a result, the Company will become a
wholly-owned subsidiary of Republic, and each of the Shareholders will be issued
certain shares of common stock of Republic.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement
and in accordance with the General Corporation Law of the State of California
(the "Corporations Code"), at the Effective Time (as defined below) Republic
Merger Sub shall be merged with and into the Company (the "Merger") pursuant to
the terms and conditions set forth in the Agreement of Merger annexed hereto as
Exhibit A (the "Agreement of Merger"). The terms and conditions of the Agreement
of Merger are incorporated herein by reference as if fully set forth herein. As
a result of the Merger, the separate corporate existence of Republic Merger Sub
shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation").
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1.2 The Closing. Subject to the terms and conditions of this Agreement,
the consummation of the Merger (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, at the offices of
Republic's counsel, Akerman, Senterfitt & Xxxxxx, P.A., Miami, Florida, or such
other time and place as the parties may otherwise agree. Each of the parties
shall use best efforts to take all actions necessary to attempt to cause the
Closing to occur on or before March 1, 1997.
1.3 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of the Company, Republic, Republic
Merger Sub, the Taorminas or the Shareholders:
(a) Pursuant to the Agreement of Merger, all of the shares of
common stock, par value $20.00 per share, of the Company (the "Company
Common Stock") issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive the greater
of (i) an aggregate of 6,511,935 shares of common stock, par value $.01
per share (the "Republic Common Stock") of Republic (adjusted, as
appropriate to reflect any stock split, reverse stock split or stock
dividend effected by Republic on or prior to the Effective Time); or
(ii) that number of shares of Republic Common Stock determined by
dividing Two Hundred Fifty-Two Million Four Hundred Thousand Dollars
($252,400,000) by the Average Closing Share Price, rounded off to the
nearest whole share (the greater of such amounts being referred to
herein as the "Merger Consideration"). For purposes of this Agreement,
"Average Closing Share Price" shall mean the average closing price of a
share of Republic Common Stock on the NASDAQ Stock Market for the five
(5) consecutive trading days which precede the second trading day which
is immediately prior to the Effective Date, as reported (absent
manifest error in the printing thereof) by the Wall Street Journal
(Eastern Edition), as thereafter adjusted, as appropriate, to reflect
any stock split, reverse stock split, or stock dividend effected by
Republic after the Effective Time. Notwithstanding anything to the
contrary in the foregoing, if all of the partnership interests in the
Blue Gum Partnership (as defined in Section 5.17) and the Landowner (as
defined therein) have not been acquired by the Company by the time of
Closing, then the Merger Consideration shall be reduced by a number of
shares of Republic Common Stock determined by dividing Five Million
Four Hundred Fifty Thousand Dollars ($5,450,000) by the lesser of (i)
$38.75 or (ii) the Average Closing Share Price.
(b) Each share of common stock of Republic Merger Sub issued
and outstanding at the Effective Time shall be converted into one share
of the common stock of the Surviving Corporation.
1.4 Filing of Agreement of Merger. At the time of the Closing, the
parties shall cause the Merger to be consummated by filing the duly executed
Agreement of Merger with the Secretary of State of the State of California in
accordance with the relevant provisions of the Corporations Code (the date and
time of such filing is referred to herein as the "Effective Date" or "Effective
Time").
1.5 Issuance of Republic Shares; Delivery of Certificates. At the
Effective Time, the Shareholders shall deliver the certificates representing all
issued and outstanding shares of Company Common Stock to Republic for
cancellation; and Republic shall issue to each Shareholder the shares of
Republic Common Stock issuable pursuant to Section 1.3, registered in
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the name of such Shareholder based on the number of shares of Company Common
Stock owned by such Shareholder on the Effective Date and shall deliver such
shares in the following manner: (a) Republic shall set aside and hold in
accordance with Article IX certificates for shares of Republic Common Stock
evidencing ten percent (10%) of the Merger Consideration (rounded to the nearest
whole share) (the "Held Back Shares"); and (b) Republic shall deliver to each
such Shareholder one or more certificates evidencing the balance of such shares
of Republic Common Stock. The shares of Republic Common Stock, including the
Held Back Shares, issuable by Republic in the Merger are sometimes referred to
herein as the "Republic Shares."
1.6 Accounting and Tax Treatment. The parties hereto acknowledge and
agree that the transactions contemplated hereby shall be treated as a pooling of
interest business combination by Republic for accounting purposes and as a
tax-free reorganization under Section 368 of the Code for tax purposes.
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 makes 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. The
Republic Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. The Republic Merger Sub
is a wholly-owned subsidiary of Republic.
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, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
2.4 Republic Common Stock. Upon consummation of the Merger 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. The Republic Shares will be
issued in accordance with all applicable federal and state securities laws and
in compliance with the rules of NASDAQ Stock Market-National Market.
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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 No Violation. The execution and delivery of this Agreement by the
Republic Companies and the performance by them of their respective obligations
hereunder and the consummation by them of the transactions contemplated by this
Agreement will not: (a) contravene any provision of the articles of
incorporation or bylaws of the Republic Companies; (b) violate or conflict with
any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any Governmental Authority or of any arbitration award
which is either applicable to, binding upon or enforceable against the Republic
Companies; (c) conflict with, result in any breach of, or constitute a default
(or an event which would, with the passage of time or the giving of notice or
both, constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Contract which is applicable to, binding upon
or enforceable against the Republic Companies; (d) 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 (e) 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.
2.7 SEC Filings. From January 1, 1996 through the date hereof, Republic
has duly and timely filed with the SEC all reports, proxy statements and other
information required to be filed by it under the Exchange Act (the "SEC
Filings"). The SEC Filings at the time of filing, did not contain any untrue
statement of a material fact or omit to state any material fact which is
necessary to make the information contained therein not misleading. Except as
disclosed in the SEC Filings prior to the date hereof, since September 30, 1996
to the date hereof, there has not been any material adverse change in the
business, financial position or results of operations of Republic.
2.8 California Laws. Republic acknowledges that it is familiar with
California Proposition 218 and with the California Integrated Waste Management
Act of 1989 (A.B. 939), and the impact such laws had or may have on the solid
waste industry in the State of California.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS,
THE TAORMINAS AND THE COMPANY
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, the Taorminas and the Company jointly and severally makes
the following representations and warranties to Republic:
3.1 Corporate Status. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the state of California
and has the requisite power and authority to own or lease its properties and to
carry on its business as now being conducted. The Company is not legally
qualified to transact business as a foreign corporation in any jurisdiction and
the nature of its properties and the conduct of its business does not require
such qualification. All of the fictitious names under which the Company operates
its business are set forth on Schedule 3.1. The Company has fully complied with
all of the requirements of any statute
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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
threatened proceeding for the dissolution, liquidation, insolvency or
rehabilitation of the Company.
3.2 Power and Authority. The Company has the corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The Company
has taken all action necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby. Each of the Taorminas is an individual
residing in the State of California, and has the requisite competence and
authority to execute and deliver this Agreement, to perform his respective
obligations hereunder and to consummate the transactions contemplated hereby.
Each of the Shareholders is a grantor trust formed under the laws of the State
of California by the Taorminas, respectively, and each of the Taorminas, as the
respective trustees of the Shareholders, has the power and authority under his
or her respective trust agreement to execute and deliver this Agreement, to
cause the Shareholders to perform their respective obligations hereunder, and to
consummate the transactions contemplated hereby.
3.3 Enforceability. This Agreement has been duly executed and delivered
by the Company, the Shareholders and the Taorminas and constitutes the legal,
valid and binding obligation of each of them, enforceable against each of them
in accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
3.4 Capitalization. The Company has authorized 5,000 shares of common
stock, $20.00 par value per share, of which 790 shares are issued and
outstanding as of the date hereof, and no shares of which are held in treasury.
All of the issued and outstanding shares of capital stock of the Company (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 or rights of
first refusal exist with respect to the shares of capital stock of the Company
and no such rights arise by virtue of or in connection with the transactions
contemplated hereby. 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 the Company 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 the Company. There are no proxies,
voting rights or other agreements or understandings with respect to the voting
or transfer of the capital stock of the Company. The Company is not obligated to
redeem or otherwise acquire any of its outstanding shares of capital stock.
3.5 Shareholders of the Company. The Shareholders constitute all of
the holders of all issued and outstanding shares of capital stock of the Company
as of the date hereof. Each of the Xxxxxxxx Revocable Inter Vivos Trust under
Agreement dated July 26, 1983 and the Xxxxxxx Xxxxx Xxxxxxxx Revocable Inter
Vivos Trust under Agreement dated May 14, 1984 own 395 shares of Company Common
Stock as of the date hereof, free and clear of all Liens, restrictions and
claims of any kind, except for a pledge of a total of 250 shares of Company
Common Stock to the Xxxxxxxx'x sister Xxxxxx Xxxxxxxx, as Trustee of the Xxxxxx
Xxxxxxxx Separate Property Trust (which will be released prior to the Closing).
As of the Closing, the X.X. Xxxxxxxx Family
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Trust under Agreement dated September 16, 1980 will own less than 5% of the
total outstanding shares of the Company Common Stock, free and clear of all
Liens, restrictions and claims of any kind.
3.6 No Violation. The execution and delivery of this Agreement by the
Company, the Taorminas 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: (a) contravene any
provision of the articles of incorporation or bylaws of the Company; (b) violate
or conflict with any law, statute, ordinance, rule, regulation, decree, writ,
injunction, judgment or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon or enforceable
against the Company, the Taorminas, the Shareholders or any of their respective
Affiliates; (c) conflict with, result in any breach of, or constitute a default
(or an event which would, with the passage of time or the giving of notice or
both, constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Contract which is applicable to, binding upon
or enforceable against the Company, the Taorminas or Shareholders or any of
their respective Affiliates; (d) result in or require the creation or imposition
of any Lien upon or with respect to any of the property or assets of the
Company, the Taorminas, the Shareholders or any of their respective Affiliates;
or (e) 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 as otherwise set forth
on Schedule 3.6. No statute, regulation, rule or other law related to "control
share acquisitions" or similar "antitakeover" legislation is applicable to the
transactions contemplated by this Agreement.
3.7 Records of the Company. The copies of the respective articles of
incorporation and bylaws of the Company which were provided to Republic are
true, accurate and complete and reflect all amendments made through the date of
this Agreement. The minute books for the Company made available to Republic for
review were correct and complete in all material respects as of the date of such
review, no further entries have been made through the date of this Agreement,
such minute books contain the true signatures of the persons purporting to have
signed them. All material corporate actions taken by the Company have been duly
authorized or ratified. The stock ledgers of the Company, as previously made
available to Republic, contain accurate and complete records of all issuances,
transfers and cancellations of shares of the capital stock of the Company.
3.8 Subsidiaries. The Company does not own, directly or indirectly, any
outstanding voting securities of or other interests in, or control, any other
corporation, partnership, joint venture or other business entity.
3.9 Financial Statements. Schedule 3.9 contains a copy of the audited
balance sheet of the Company as of December 31, 1995 and the related audited
statements of income and retained earnings and cash flows, for the fiscal year
ended on December 31, 1995, and the notes and schedules thereto, accompanied by
the unqualified report thereon of McGladrey & Xxxxxx, LLP (the "Audited
Financial Statements"), and a copy of the unaudited balance sheet of the Company
as of December 31, 1996, and the related unaudited statements of income and
retained earnings and cash flows, for the fiscal year ended on December 31,
1996, certified by the chief financial officer of the Company (the "Unaudited
Financial Statements"). The balance sheet of the Company dated as of December
31, 1996, included in the Unaudited Financial Statements is referred to herein
as the "Current Balance Sheet," and the Audited Financial Statements and
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Unaudited Financial Statements are referred to herein as the "Financial
Statements." The Financial Statements fairly present the financial position of
the Company at each of the balance sheet dates and the results of operations and
cash flows for the periods covered thereby, and have been prepared in accordance
with GAAP consistently applied throughout the periods indicated, except as
specifically disclosed therein, and except, in the case of the Unaudited
Financial Statements, for normal year-end audit adjustments (and any adjustments
and reserves other than normal year-end audit adjustments as may be approved by
Republic, the creation of which shall not be deemed a violation of the
representations and warranties contained in Section 3.11) and the absence of
footnotes. The books and records of the Company are sufficient to permit an
audit in accordance with GAAP. There are no extraordinary 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 Sheet of the Company, the Company has not: (a) issued any
capital stock or other securities; (b) except as set forth on Schedule 3.10,
made any distribution of or with respect to its capital stock or other
securities or purchased or redeemed any of its securities; (c) except as set
forth on Schedule 3.10, 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; (d) sold, leased or transferred any of its
properties or assets other than in the ordinary course of business consistent
with past practice; (e) made or obligated itself to make capital expenditures
out of the ordinary course of business consistent with past practice except for
purchases of real property, known as the Xxxxxxx Boat Property, adjacent to the
Company's facilities in Anaheim for not more than $350,000; (f) made any payment
in respect of its liabilities other than in the ordinary course of business
consistent with past practice; (g) incurred any obligations or liabilities
(including any indebtedness) or entered into any transaction involving in excess
of $100,000 individually, or in excess of $250,000 in the aggregate for all such
transactions, out of the ordinary course of business, except for this Agreement
and the transactions contemplated hereby; (h) suffered any theft, damage,
destruction or casualty loss, not covered by insurance and for which a timely
claim was filed, in excess of $100,000 in the aggregate; (i) suffered any
extraordinary losses (whether or not covered by insurance); (j) waived,
canceled, compromised or released any rights having a value in excess of
$100,000 in the aggregate; (k) made or adopted any change in its accounting
practice or policies; (l) made any adjustment to its books and records other
than in respect of the conduct of its business activities in the ordinary course
consistent with past practice; (m) entered into any transaction with any
Affiliate; (n) entered into any written employment agreement; (o) terminated,
amended or modified any agreement involving an amount in excess of $100,000 out
of the ordinary course of business; (p) imposed any security interest or other
Lien on any of its assets other than in the ordinary course of business
consistent with past practice; (q) delayed paying any accounts payable which are
due and payable except to the extent being contested in good faith; (r) made or
pledged any charitable contribution other than in the ordinary course of
business consistent with past practice; (s) entered into any other transaction
or been subject to any event which has or is likely to have a Material Adverse
Effect on the Company; or (t) agreed to do or authorized any of the foregoing.
3.11 Liabilities of the Company. The Company does not have any
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
except: (a) to the extent reflected or taken into account in the Current Balance
Sheet 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
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practice since the date of the Current Balance Sheet (none of which relates to
breach of contract, breach of warranty, tort, infringement or violation of law,
or which arose out of any action, suit, claim, governmental investigation or
arbitration proceeding); (d) normal year-end accruals (including, without
limitation, reasonable accruals for workers' compensation claims), which would
not be material in the aggregate, reclassifications and audit adjustments and
any other reserves and accruals created with the approval of Republic which
would be reflected on an audited financial statement; (e) liabilities incurred
in the ordinary course of business prior to the date of the Current Balance
Sheet which, in accordance with GAAP consistently applied, were not recorded
thereon and (f) leases being treated as operating leases and expenses rather
than being treated as capital leases. The aggregate amount of indebtedness for
borrowed money of the Company, including (i) principal and accrued but unpaid
interest, (ii) the present value of remaining payments on capitalized equipment
leases, and (iii) the debt (not in excess of $2,623,000 in the aggregate)
assumed in connection with the contribution to the Company of the Other Owned
Properties pursuant to Section 5.17 hereof, will not exceed $56,923,000 as of
the Effective Time. The Adjusted Total Stockholders' Equity of the Company will
be no less than $25,600,000, as of the Effective Time. As used herein, Adjusted
Total Stockholders' Equity shall mean the total stockholders' equity of the
Company determined in accordance with GAAP, consistently applied, but adjusted
as follows (except to the extent such adjustments have already been reflected in
total stockholders' equity of the Company):
(a) The legal and accounting fees and costs incurred by the
Company in connection with this Agreement and the transactions contemplated
hereby (up to a maximum of $400,000) shall be added back to the Company's total
stockholders' equity;
(b) Any amounts reserved for in an audit of the Current
Balance Sheet for workers' compensation claims, environmental liabilities or any
other items, in each case which are approved by Republic in its sole discretion
(or in the case of additional workers' compensation accruals, in its reasonable
discretion), shall be added back to the Company's total stockholders' equity;
(c) The title and survey fees incurred by the Company pursuant
to Section 3.14 hereof shall be added back to the Company's total stockholders'
equity; and
(d) Adjusted Total Stockholders' Equity shall be calculated as
though the following transactions had never occurred (i.e., any impact on the
stockholders' equity of such transactions shall be reversed in calculating the
Company's stockholders' equity): (a) the transfer of Other Owned Property to the
Company and the assumption by the Company of up to $2,623,000 of liabilities
related to the Other Owned Property, (b) the transfer to the Company of the
interests in the Blue Gum Partnership (as defined in Section 5.17) and the
Landowner (as defined in Section 5.17), (c) the payment by the Company of up to
$5,450,000 to purchase the interest of Xxxxx Xxxxxxxx, Xx. in the Blue Gum
Partnership (and to pay off all debts owed to Xxxxx Xxxxxxxx, Xx. by Blue Gum
Partnership) and the interest of Xxxxx Xxxxxxxx, Xx. in the Landowner and the
related acquisition of such interests, (d) the assumption and payoff of up to
$377,000 in indebtedness owed by the Blue Gum Partnership to Xxxxx Xxxxxxxx,
Xx., (e) the return by Xxxxxxx Xxxxxxxx of approximately $50,000 to the Company,
and (f) the deferred tax liability created by the termination of the
Corporation's "S" election at Closing.
3.12 Litigation. Except as set forth on Schedule 3.12, there is no
action, suit, or other legal or administrative proceeding or governmental
investigation pending, or to the Company's knowledge or either of the Taorminas'
knowledge, threatened, anticipated or contemplated against,
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by or affecting the Company, or any of its properties or assets, or affecting
the Shareholders or the Taorminas, or which questions the validity or
enforceability of this Agreement or the transactions contemplated hereby, and
there is no basis for any of the foregoing. There are no outstanding orders,
decrees or stipulations issued by any Governmental Authority in any proceeding
to which the Company is or was a party which have not been complied with in full
or which continue to impose any material obligations on the Company.
3.13 Environmental Matters.
(a) Except as set forth on Schedule 3.13, the Company (as
defined in clause (h) below) is and has at all times been in material 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, informational requests or demands issued pursuant to, or arising under,
any Environmental Laws.
(b) There are no (and there is no reasonable 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 threatened against or involving the Company, 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 the Company thereunder in connection with, related to or arising out
of the ownership by the Company 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 the Surviving
Corporation in the event that the transactions contemplated by this Agreement
are consummated, or which could have a Material Adverse Effect on the Company,
including, without limitation: (i) Notices or Proceedings related to the Company
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 the Company has transported, transferred or disposed of other Waste; (iii)
Notices or Proceedings relating to the Company being responsible to undertake
any response or remedial actions or clean-up actions of any kind; or (iv)
Notices or Proceedings related to the Company being liable under any
Environmental Laws for personal injury, property damage, natural resource
damage, or clean up obligations.
(c) Except as set forth on Schedule 3.13, Company has not
Handled or Discharged, nor has it 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 the Company; 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 the
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Company 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 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 the Company 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 the
Company on any real property currently or previously owned or leased by the
Company which have involved the Handling or Discharge of Hazardous Substances.
(e) Schedule 3.13 identifies the locations to which the
Company 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, the Company does not
use, nor has it 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 the Company 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 the Company or its
agents or, to the knowledge of the Company, undertaken by any Governmental
Authority, or any third party, relating to or affecting the Company or any real
property currently or previously owned or leased by the Company; (ii) the
results of any ground, water, soil, air or asbestos monitoring undertaken by the
Company or its agents or, to the knowledge of the Company, undertaken by any
Governmental Authority or any third party, relating to or affecting the Company
or any real property currently or previously owned or leased by the Company
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
the Company 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 the Company or any
real property currently or previously owned or leased by the Company.
(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.
"Company" means the Company and any Affiliates.
"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 air.
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"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 the
Company 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 terms are or may be
defined in such statutes, laws, rules, 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.
ss.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. ss.6901 et seq.
(collectively "RCRA"); the Hazardous Materials Transportation Act, as amended,
49 U.S.C. ss.1801, et seq.; the Clean Water Act, as amended, 33 U.S.C. ss.1311,
et seq.; the Clean Air Act, as amended (42 U.S.C. ss.7401-7642); the Toxic
Substances Control Act, as amended, 15 U.S.C. ss.2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act as amended, 7 U.S.C. ss.136-136y
("FIFRA"); the Emergency Planning and Community Right-to-Know Act of 1986 as
amended, 42 U.S.C. ss.11001, et seq. (Title III of XXXX) ("EPCRA"); and the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. ss.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, 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
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wastes, used oils, white goods, and yard trash as those terms are defined under
any applicable Environmental Laws.
(i) Any matters contained in any reports or studies referenced
in Schedule 3.13 which have not been delivered to Republic's environmental
counsel prior to the date hereof shall not be deemed to be exceptions to the
representations and warranties contained in this Section 3.13. In addition, any
reserves or accruals for environmental liabilities that may have been, or may
be, created by the Company on its financial statements shall not reduce or
affect any indemnification obligation under Section 9.1 of the Shareholders or
the Taorminas with respect to such representations and warranties.
3.14 Real Estate.
(a) Schedule 3.14(a) sets forth the street address and legal
description of (A) each parcel of real estate owned by the Company as of the
date hereof (the "Company Owned Properties"), and (B) each parcel of real estate
owned by any Affiliate of the Company as of the date hereof and used in the
conduct of the business of the Company as of the date hereof, including all
parcels constituting the Blue Gum Property and Anaheim Truck Depot (the "Other
Owned Properties"). Schedule 3.14(a) also sets forth the name of the owner of
record of each of the parcels constituting the Other Owned Properties. With
respect to each parcel of the Company Owned Properties and the Other Owned
Properties (collectively, the "Owned Properties"):
(i) The Company or Affiliates of the Company
have good and marketable title to each parcel of Owned Properties, free and
clear of any Lien other than: (x) liens for real estate taxes not yet
delinquent; (y) recorded easements, covenants, and other restrictions which do
not materially impair the current use or occupancy of the property subject
thereto; and (z) encumbrances and restrictions, none of which materially impair
the current use or occupancy, which are described in the title insurance
policies relating to such properties which have been delivered to Republic, and
are listed on Schedule 3.14(a) or which are otherwise listed on Schedule
3.14(a), or which are otherwise reflected in the Current Balance Sheet and such
other covenants, conditions, easements and exceptions to title as Republic may
approve in writing (collectively, except for Deeds of Trust or Liens encumbering
Other Owned Properties, "Permitted Exceptions");
(ii) There are no pending or threatened
condemnation proceedings, suits or administrative actions relating to any of the
Owned Properties or other matters affecting adversely the current use or
occupancy thereof;
(iii) The legal descriptions for the parcels of
Owned Properties 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 material violation of applicable
setback requirements, local comprehensive plan provisions, zoning laws and
ordinances (and none of the properties or buildings or improvements thereon are
subject to "permitted non-conforming use" or "permitted non-conforming
structure" classifications), building code requirements, permits, licenses or
other forms of approval 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 any similar type
restriction for which any permits or licenses necessary to the use thereof have
not been obtained;
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(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 material compliance with applicable laws, ordinances, rules and
regulations;
(v) There are no Contracts granting to any
party or parties the right of use or occupancy of any portion of the parcels of
Company Owned Properties except leases entered into by the Company as the lessor
and Dartco Transmission Sales and Service Inc., Xxxxxxx Roofing, Inc.,
Medtronics Inc., Universal Alloy Corp. and Metal-Lite Inc., as lessees,
respectively, and there are no Contracts granting to any party other than the
Company the right of use or occupancy of any portion of the parcels of Other
Owned Properties;
(vi) Except as set forth in Schedule 3.14, there
are no outstanding options or rights of first refusal to purchase the parcels of
Owned Properties, or any portion thereof or interest therein;
(vii) There are no parties (other than the
Company) in possession of the parcels of Owned Properties, except as noted in
clause (v) above;
(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 Properties;
(ix) Each parcel of Owned Properties abuts on
and has direct, or indirect through another Owned Properties, vehicular access
to a public road, or has access to a public road via a permanent, irrevocable,
appurtenant easement benefitting the parcel of Owned Properties; access to the
property is provided by paved public right-of-way with adequate curb cuts
available; and there is no pending or threatened termination of the foregoing
access rights; and
(x) No owner of a parcel of Owned Properties
has received notice of: (a) any condemnation proceeding with respect to any
portion of any parcel of Owned Properties or any access thereto; and no such
proceeding is contemplated by any Governmental Authority; or (b) any special
assessment which may affect any parcel of Owned Properties, and no such special
assessment is contemplated by any Governmental Authority.
(b) Schedule 3.14(b) sets forth a list of all leases, licenses
or similar agreements ("Leases") to which the Company 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,
and (B) the legal description, including street address, of each property
covered thereby, and (C) a brief description of the principal use of such
property by the Company (the "Leased Premises"). The Leases are in full force
and effect and have not been amended, and no party thereto is in material
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 material breach or
anticipated breach by any other party to such Leases. With respect to each such
Leased Premises:
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(i) The Company has valid leasehold interests
in the Leased Premises, free and clear of any Liens, covenants and easements or
title defects of any nature whatsoever;
(ii) The Leased Premises that are used in the
business of the Company are in the aggregate sufficient to satisfy the Company's
current 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 Company's 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) The Company has not received notice of:
(a) any condemnation proceeding with respect to any portion of the Leased
Premises or any access thereto, and no such proceeding is contemplated by any
Governmental Authority; or (b) any special assessment which may affect any of
the Leased Premises, and no such special assessment is contemplated by any
Governmental Authority.
3.15 Good Title to and Condition of Assets.
(a) The Company has good and marketable title to all of its
Assets (as hereinafter defined), free and clear of any Liens or restrictions on
use except as set forth on Schedule 3.15. For purposes of this Agreement, the
term "Assets" means all of the properties and assets of the Company, 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) taken as a whole
currently in use or necessary for the business and operations of the Company are
in reasonable working condition for operations of the business. 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 the Company or set forth on the Current Balance
Sheet or acquired by the Company since the date of the Current Balance Sheet.
Schedule 3.15 lists the vehicles owned, leased or used by the Company. Other
than as set forth herein, the Assets are AS IS, WHERE IS, and without
representation as to merchantability or fitness for use.
3.16 Compliance with Laws.
(a) The Company is and has been in material 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 for citations identified on Schedule
3.13, the Company has not been cited, fined or otherwise notified of any
asserted past or present failure to comply with any laws, regulations or orders
(except where such failure to comply has been cured to the satisfaction of the
relevant Governmental Authority), and no proceeding with respect to any such
violation is pending or, to the knowledge of the Company or either of the
Shareholders, threatened.
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(b) Neither the Company, nor any of its employees or agents,
has made any payment of funds in connection with the business of the Company
which is prohibited by law, and no funds have been set aside to be used in
connection with the business of the Company for any payment prohibited by law.
(c) The Company is and at all times has been in material
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 the Company for whom compliance with the
Immigration Act is required, the Company 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 Company pursuant to the Immigration
Act. The Company has not 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, to the knowledge of the Company or either of the
Shareholders, threatened against the Company, by the Immigration and
Naturalization Service by reason of any actual or alleged failure to comply with
the Immigration Act.
(d) The Company is not subject to any Contract, decree or
injunction in which the Company is a party which restricts the continued
operation of any business of the Company 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
and current rate of compensation of the employees of the Company having an
annual base salary in excess of $50,000. Except for Teamsters Local 396, which
represents approximately 300 drivers and other workers employed by the Company,
pursuant to the currently effective Collective Bargaining Agreements between the
Company and Teamsters Local 396 (collectively, the "CBA"), the Company is not a
party to or bound by any collective bargaining agreement or any other agreement
with a labor union. There has been no effort by any labor union during the 24
months prior to the date hereof to organize any employees of the Company into
one or more collective bargaining units, except Teamsters Local 952. Both the
Company and Teamsters Local 396 are currently in material compliance with the
terms and conditions of the CBA, and there is no pending or, to the knowledge of
the Company or either of the Taorminas, threatened grievances, disputes, or
arbitrations arising out of the CBA. The CBA was negotiated in good faith, at
arm's length, and was properly ratified and agreed to by the Company and the
Teamsters Local 396. Nothing in the CBA precludes the transactions contemplated
hereby provided notice is provided to the Teamsters 396, and such transactions
will not affect in any way the Company's rights or the Teamsters Local 396's
obligations as set forth in the CBA. The CBA does not violate any federal or
state law or the rights of any individuals created by federal or state law.
There is no pending or threatened labor dispute, strike or work stoppage which
affects or which may affect the business of the Company or which may interfere
with its continued operations. Neither the Company 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 threatened charge or complaint against the Company 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 the
Company during the 24 months prior to the date hereof. None of the Taorminas is
aware that any executive or key employee or group of employees has any plans to
terminate his, her or their employment with the Company as a result of the
Merger or otherwise. Schedule 3.17 identifies each contract, agreement or plan
of the following nature, whether formal or informal, and whether or not in
writing, to which the Company is a party or under which it has an obligation:
(a) employment agreements; (b) employee handbooks, policy
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statements and similar plans; (c) noncompetition agreements; and (d) consulting
agreements. The Company has complied in all material respects with applicable
federal and state 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 the Company,
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 Company 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) except for routine benefit claims, 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, to the knowledge of the Company or either of the Taorminas, threatened;
(iii) no audits, inquiries, reviews, proceedings, claims, or demands are pending
with any governmental or regulatory agency; (iv) except for routine benefit
claims, 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
non-exempt "prohibited transaction" has occurred within the meaning of the
applicable provisions of ERISA or the Code.
(c) Qualified Plans. With respect to each Employee Benefit
Plan intended to qualify under Code Section 401(a), or 403(a) (i) the Internal
Revenue Service has issued a favorable determination letter, true and correct
copies of which have been furnished to Republic, that such plans are qualified
and exempt from federal income taxes; (ii) no such determination letter has been
revoked nor has revocation been threatened, nor has any amendment or other
action or omission occurred with respect to any such plan since the date of its
most recent determination letter or application therefor in any respect which
would adversely affect its qualification or materially increase its costs; (iii)
no such plan has been amended in a manner that would require security to be
provided in accordance with Section 401(a)(29) of the Code; (iv) no reportable
event (within the meaning of Section 4043 of ERISA) has occurred, other than one
for which the 30-day notice requirement has been waived; (v) as of the Effective
Date, the present value of all liabilities that would be "benefit liabilities"
under Section 4001(a)(16) of ERISA if benefits described in Code Section
411(d)(6)(B) were included will not exceed the then current fair market value of
the assets of such plan (determined using the actuarial assumptions used for the
most recent actuarial valuation for such plan); (vi) all contributions to, and
payments from and with respect to such plans, which may have been required to be
made in accordance with such plans and, when applicable, Section 302 of ERISA or
Section 412 of the Code, have been timely made; and (vii)
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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) insurance premiums) for any period ending before the Effective
Date that are not yet, but will be, required to be made are properly accrued and
reflected on the Current Balance Sheet.
(d) Multiemployer Plans. With respect to any multiemployer
plan, as described in Section 4001(a)(3) of ERISA ("MPPA Plan"): (i) all
contributions required to be made with respect to employees of the Company have
been timely paid; (ii) the Company has not 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) The Company is not obligated under any
employee welfare benefit plan as described in Section 3(1) of ERISA ("Welfare
Plan") to provide medical or death benefits with respect to any employee or
former employee of the Company or its predecessors after termination of
employment; (ii) the Company 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. Except for routine benefit claims, the consummation of the
transactions contemplated by this Agreement will not entitle any individual to
severance pay, and, will not accelerate the time of payment or vesting, or
increase the amount of compensation, due to any individual.
(f) Controlled Group Liability. Neither the Company, nor any
entity that would be aggregated with it 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 the Company 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
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the Current Balance Sheet or will be properly accrued on the books and records
of the Company 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 Sheet or the books and records of the Company.
3.19 Tax Matters. All Tax Returns required to be filed prior to the
date hereof with respect to the Company or any of its 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 material respects. All Taxes due and
payable by or with respect to the Company have been paid and are accrued on the
Current Balance Sheet or will be accrued on its books and records as of the
Closing. Except as set forth in Schedule 3.19 hereto: (i) no Tax Return has been
audited by the relevant taxing authority within the last four years; (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 the Company; (iii) the Company has not consented to extend the
time in which any Taxes may be assessed or collected by any taxing authority;
(iv) the Company has not requested or been granted an extension of the time for
filing any Tax Return to a date later than the Effective Time; (v) there is no
action, suit, taxing authority proceeding, or audit or claim for refund now in
progress, pending or threatened against or with respect to the Company regarding
Taxes; (vi) the Company has not 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 the assets of
the Company; (viii) the Company will not 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) after validly filing
its election in 1990 for "S" corporation status under the Code, the Company has
not 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) the Company is not 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 the Company for any period for
which Tax Returns have been filed; (xii) the Company has not made any payments,
and will not become 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) the Company has not 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 the Company does not file Tax Returns
that such company is or may be subject to Taxes assessed by such jurisdiction;
and (xv) the Company does not have 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 the Company for the
past three years have been furnished or made available to Republic; (xvii) the
Company will not 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
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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 by virtue of the transactions
completed in this Agreement; and (xix) the Company 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 neither the Company nor the Shareholders have
taken any action which would cause a termination of such "S" election.
3.20 Insurance. The Company is covered by valid, outstanding and
enforceable policies of insurance covering its 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 reasonable in
light of the Company's historical claims experience (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. The
Company has complied in all material respects with the provisions of such
Insurance Policies. The Company has not failed to give, in a timely manner, any
notice required under any of the Insurance Policies to preserve its rights
thereunder.
3.21 Receivables. All of the Receivables (as hereinafter defined) are
valid and legally binding, represent bona fide transactions and arose in the
ordinary course of business of the Company. All of the Receivables are good and
collectible receivables, without setoff or counterclaims, subject to the
allowance for doubtful accounts, if any, set forth on the Current Balance Sheet
as reasonably adjusted since the date of the Current Balance Sheet in the
ordinary course of business consistent with past practice. For purposes of this
Agreement, the term "Receivables" means all receivables of the Company,
including, without limitation, all trade account receivables arising from the
provision of services, sale of inventory, notes receivable, and insurance
proceeds receivable.
3.22 Licenses and Permits. The Company possesses all material licenses
and required governmental or official approvals, permits or authorizations
(collectively, the "Permits") for its business 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, the Company is in full
compliance with the respective requirements thereof, and no proceeding is
pending or, to the knowledge of the Company or either of the Taorminas,
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.
3.23 Adequacy of the Assets; Relationships with Customers and
Suppliers; Affiliated Transactions. The Assets, Owned Properties and Leased
Premises constitute, in the aggregate, all of the assets and properties
necessary for the conduct of the business of the Company in the manner in which
and to the extent to which such business is currently being conducted. No
current supplier to the Company of items essential to the conduct of its
business has threatened to terminate its business relationship with it for any
reason. Except for the Blue Gum Partnership and for the leases by the
Shareholders or the Taorminas of certain of the Other Owned Properties to the
Company, the Company does not have any direct or indirect interest in any
customer, supplier or competitor of the Company, or in any person from whom or
to whom the Company leases real or personal property as of the date hereof and
no officer, director or shareholder of the Company, 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
Company or has any interest in any property used by the Company as of the date
hereof.
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3.24 Intellectual Property. The Company has full legal right, title and
interest in and to, or the right to use, all trademarks, service marks, trade
names, copyrights, know-how, patents, trade secrets, licenses (including
licenses for the use of computer software programs), and other intellectual
property used in the conduct of its business including, without limitation, the
"Program" defined below (the "Intellectual Property"). The conduct of the
business of the Company as presently conducted, and such conduct and such use
and exploitation of the Intellectual Property, does not infringe or
misappropriate in any material respect any rights held or asserted by any
Person, and to the Company's and each Shareholder's knowledge, 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, to the knowledge of the Company or either of the Shareholders,
threatened action for opposition, cancellation, declaration, infringement, or
invalidity, unenforceability or misappropriation or like claim, action or
proceeding. The Company owns all right, title and interest in and to the
accounting software program used by it and any copyrighted or copyrightable
source or object code, component, module, and documentation related thereto (the
"Program") free and clear of any liens or claims or right of any other Person
(including those employees and independent contractors who helped in the
development thereof or any upgrades, modifications and other versions thereto)
and has the sole and exclusive right to the use thereof. No payments to third
parties are required for the continued use of the Program.
3.25 Contracts. Schedule 3.25 sets forth a list of each Contract to
which the Company is a party or by which it or its properties and assets are
bound and which is material to its business, assets, properties or prospects
(the "Designated Contracts"), true and correct copies of which have been
provided to Republic. The copy of each Designated Contract furnished to Republic
is a true and complete copy of the document it purports to represent and
reflects all amendments thereto made through the date of this Agreement. The
Company has not violated any of the material terms or conditions of any
Designated Contract or any term or condition which would permit termination or
material modification of any Designated Contract, and all of the material
covenants to be performed by any other party thereto have been performed in all
material respects and there are no claims for breach or indemnification or
notice of default or termination under any Designated Contract. No event has
occurred which constitutes, or after notice or the passage of time, or both,
would constitute, a material default by the Company under any Designated
Contract, and to the knowledge of the Company and the Taorminas, no such event
has occurred which constitutes or would constitute a material default by any
other party. The Company is not subject to any liability or payment resulting
from renegotiation of amounts paid it under any Designated Contract. As used in
this Section, Designated Contracts shall include, without limitation: (a) loan
agreements, indentures, mortgages, pledges, hypothecations, deeds of trust,
conditional sale or title retention agreements, security agreements, equipment
financing obligations or guaranties, or other sources of contingent liability in
respect of any indebtedness or obligations to any other Person, or letters of
intent or commitment letters with respect to same; (b) contracts obligating the
Company to provide products or services for a period of one year or more,
excluding standard waste collection and disposal contracts entered into in the
ordinary course of business without material modification from the preprinted
forms used by the Company in the ordinary course of its business; (c) leases of
real property, and leases of personal property not cancelable without penalty on
notice of sixty (60) days or less or calling for payment of an annual gross
rental exceeding Fifty Thousand Dollars ($50,000.00); (d) distribution, sales
agency or franchise or similar agreements, or agreements providing for an
independent contractor's services, or letters of intent with respect to same;
(e) employment agreements, management service agreements, consulting agreements,
confidentiality agreements, non-competition agreements and
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any other agreements relating to any employee, officer or director of the
Company; (f) licenses, assignments or transfers of trademarks, trade names,
service marks, patents, copyrights, trade secrets or know how, or other
agreements regarding proprietary rights or intellectual property; (g) any
Contract relating to pending capital expenditures by the Company; and (h) other
material Contracts or understandings, irrespective of subject matter and whether
or not in writing, not entered into in the ordinary course of business by the
Company and not otherwise disclosed on the Schedules.
3.26 Customer Lists. Schedule 3.26 is a true, correct and
complete list of all existing customers of the Company who each individually
accounted for more than 1% of the Company's annual revenue in 1996.
3.27 Accuracy of Information Furnished. No representation, statement or
information made or furnished by the Company, the Taorminas, or the Shareholders
to Republic or any of Republic's representatives in this Agreement and the
various Schedules attached hereto and the other information and statements
referred to herein and previously furnished by the Company, the Taorminas, 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 Company, the Taorminas, or the
Shareholders have provided Republic with true, accurate and complete copies of
all documents listed or described in the various Schedules attached hereto
(except for the items set forth on Schedule 3.13).
3.28 Investment Intent; Accredited Investor Status; Securities
Documents. Each of the Shareholders (and the X.X. Xxxxxxxx Family Trust to the
extent it becomes a shareholder of the Company pursuant to Section 5.17(b)) is
acquiring the Republic Shares hereunder for 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 and the Taorminas and Xxxxxx Xxxxxxxx
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 and the Taorminas and Xxxxxx Xxxxxxxx is an "accredited investor"
within the meaning of Regulation D promulgated under the Securities Act, and has
such knowledge and experience in business or financial matters that they are
capable of evaluating the merits and risks of an investment in the Republic
Shares.
3.29 Bank Accounts; Business Locations. Schedule 3.29 sets forth all
accounts of the Company 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, the Company has no office or place of business
other than as identified on Schedules 3.14(a) and 3.14(b) and the Company's
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 Company is located as of the date
hereof are fully identified on Schedules 3.14(a) and 3.14(b).
3.30 Names; Prior Acquisitions. The Company has not changed its name or
used any assumed or fictitious name except as set forth on Schedule 3.1, 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.
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3.31 No Commissions. Neither the Company, the Taorminas 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.
3.32 Certain Accounting Matters. Neither the Company, the Taorminas nor
any of the Shareholders, nor any of their respective Affiliates, has taken or
agreed to take any action that (without regard to any action taken or agreed to
be taken by Republic or any of its Affiliates) would prevent Republic from
accounting for the transactions contemplated hereby as a pooling of interest
business combination.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 Conduct of Business by the Company Pending the Merger. The Company
covenants and agrees that, between the date of this Agreement and the Effective
Time, the business of the Company shall be conducted only in, and the Company
shall not take any action except in, the ordinary course of business, consistent
with past practice. The Company shall use its best 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, the Company shall not, between the date of this
Agreement and the Effective Time, directly or indirectly, do or propose or agree
to do any of the following without the prior written consent of Republic:
(a) amend or otherwise change its articles of incorporation
or bylaws or equivalent organizational documents;
(b) (i) issue, sell, pledge, dispose of, or encumber, or,
authorize the issuance, sale, pledge, disposition, or encumbrance of any shares
of its 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 it (except the Company may issue
additional shares of Company Common Stock to the Shareholders in accordance with
Section 5.17 and 5.18); or (ii) sell, pledge, dispose of, or encumber, or
authorize the sale, pledge, disposition or encumbrance of its 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 its capital stock or pay any bonuses to the Shareholders or the Taorminas;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its 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
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or assets of any other Person (except as provided for in Sections 5.17 and
5.18); (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume (except as provided for in Sections 5.17 and 5.18),
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;
(f) increase the compensation payable or to become payable to
its 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 its 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 its financial statements, as
appropriate, or liabilities incurred after the date hereof in the ordinary
course of business and consistent with past practice;
(i) increase or decrease prices charged to its customers,
except for previously announced or contracted 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;
(j) except in accordance with Section 5.17 and 5.18, enter
into any transaction with an Affiliate, whether or not in the ordinary course
of business; or
(k) 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.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Further Assurances. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
5.2 Compliance with Covenants. The Shareholders and the Taorminas
shall cause the Company to comply with all of the respective covenants of the
Company under this Agreement,
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and the Taorminas, as the respective trustees of the Shareholders, shall cause
the Shareholders to comply with all of their respective covenants under this
Agreement.
5.3 Cooperation. Each of the parties agrees to cooperate with the other
in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, rule or regulation 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 transactions.
5.4 HSR Act and Other Actions. Each of the parties hereto shall: (a)
make promptly (and in no event later than five (5) business days following the
date hereof) its respective filings, and thereafter make any other required
submissions, under the HSR Act, with respect to the transactions contemplated
hereby; and (b) use its reasonable best efforts to take, or cause to be taken,
all appropriate actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated herein, including, without limitation,
using its best efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of any Governmental Authority and
parties to Contracts with the Company as are necessary for the consummation of
the transactions contemplated hereby. 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 best 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.
5.5 Access to Information. From the date hereof to the Effective Time,
the Company shall (and shall cause its directors, officers, employees, auditors,
counsel and agents) to afford Republic and Republic's officers, employees,
auditors, counsel and agents reasonable access at all reasonable times to its
properties, offices, and other facilities, to its officers and employees and to
all books and records, and shall furnish such persons with all financial,
operating and other data and information as may be reasonably requested. No
information provided to or obtained by Republic shall affect any representation
or warranty in this Agreement.
5.6 Notification of Certain Matters. The Taorminas shall give prompt
notice to Republic 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 and Accounting Treatment. Republic, the Company, the Taorminas
and the Shareholders will use their respective best efforts to cause the Merger
to qualify as a reorganization under the provisions of Section 368(a) of the
Code and do not presently intend to take any action after the Merger is effected
to cause the Merger to lose its tax-free status. All parties hereto agree to
file the Agreement of Merger with its respective federal income tax returns for
the year in which the Merger is effective, if applicable, and to comply with the
reporting requirements of Treasury Regulation 1.368-3. In addition, the Company,
the Taorminas and the Shareholders shall not take any action after the date
hereof to cause the Merger contemplated hereby not to be accounted for as a
pooling of interests business combination.
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5.8 Confidentiality; Publicity. Except as may be required by law or as
otherwise permitted or expressly contemplated herein, no party hereto or their
respective Affiliates, employees, agents and representatives shall disclose to
any third party this Agreement or the subject matter or terms hereof, or use or
disclose to any third party any information, documents or materials disclosed or
produced hereunder, 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 of the other parties, except that Republic may make such public
disclosure which it believes in good faith to be required by law or by the terms
of any listing agreement with or requirements of a securities exchange (in which
case Republic will consult with an officer of the Company prior to making such
disclosure). In the event of termination of this Agreement, the parties hereto
shall promptly return all documents, including all copies thereof.
5.9 No Other Discussions. The Company, the Shareholders, the Taorminas
and their respective Affiliates, employees, agents and representatives will not:
(a) initiate, encourage the initiation by others of discussions or negotiations
with third parties or respond to solicitations by third persons relating to any
merger, sale or other disposition of any substantial part of the assets,
business or properties of the Company (whether by merger, consolidation, sale of
stock or otherwise); or (b) enter into any agreement or commitment (whether or
not binding) with respect to any of the foregoing transactions. The Taorminas
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 Merger, each of the Taorminas jointly and severally
agrees with Republic that he will not after the Effective Time:
(a) for a period of six years as to Orange County, California,
and for a period of three years as to all other Counties listed below, 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 Orange, San Bernardino,
Los Angeles, San Diego, Ventura, or Riverside Counties, California, which is
directly or indirectly in competition with the business conducted by the Company
at the Effective Time; provided, however, that, the beneficial ownership of less
than five percent (5%) of the shares of stock of any corporation having a class
of equity securities actively traded on a national securities exchange or
over-the-counter market shall not be deemed, in and of itself, to violate the
prohibitions of this Section;
(b) directly or indirectly: (i) induce any Person which is a
customer of or supplier to the Company at the Effective Time to patronize any
business directly or indirectly in competition with the business conducted by
the Company; (ii) canvass, solicit or accept from any Person which is a customer
of the Company, any such competitive business; or (iii) request or advise any
Person which is a customer of the Company at the Effective Time to withdraw,
curtail or cancel any such customer's or supplier's business with the Company or
its successors;
(c) directly or indirectly employ, or knowingly permit any
company or business directly or indirectly controlled by him, to employ, any
person who was employed by the Company 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 (other than as to the Taorminas or Xxxxx Xxxxxx); and
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(d) except for the benefit of the Company, directly or
indirectly, at any time following the Effective Time, in any way utilize,
disclose, copy, reproduce or retain in his possession the Company's proprietary
rights or records, including, but not limited to, any of its customer lists.
The Taorminas agree and acknowledge that the restrictions
contained in this Section are reasonable in scope of activity, duration of time,
and geographic area, 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).
The provisions of this Section 5.10 are in addition to any
restrictive covenants set forth in any employment agreement entered into by
either of the Taorminas.
5.11 Due Diligence Review and Environmental Assessment. Republic shall
be entitled to conduct prior to Closing a due diligence review of the assets,
properties, books and records of the Company and an environmental assessment of
the Owned Properties and Leased Premises (hereinafter referred to as
"Environmental Assessment"). The Environmental Assessment may include, but not
be limited to, a physical examination of the Owned Properties 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 (including, but not limited to, off-site disposal records and
manifests), documents, and Licenses of the Company. The Company, the Taorminas,
the Shareholders and their Affiliates 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 conditions which requires
remediation, corrective action, or further evaluation under the Environmental
Laws or the modification of operational practices to come into compliance with
Environmental Laws or if the results of the Environmental Assessment or due
diligence review 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 Company, the Taorminas or the
Shareholders under this Agreement.
5.12 Trading in Republic Common Stock. Except as otherwise expressly
consented to by Republic, from the date of this Agreement until the Effective
Time, neither the Company nor the Taorminas (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.
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5.13 Employment Agreements. Republic or its assignee and each of
the Taorminas shall enter into an employment agreement in the form attached
hereto as Schedule 5.13.
5.14 Title Insurance and Surveys.
(a) Within 10 business days after the date of this Agreement,
the Company and the Shareholders shall obtain and deliver to Republic
commitments (the "Commitments") issued by Chicago Title Insurance Company (the
"Title Company") and dated not earlier than the date of this Agreement for the
issuance of an ALTA Owners Policy of Title Insurance (the "Title Policy") for
each of the Owned Properties in an aggregate amount of $20,000,000, together
with legible hard copies of all title exceptions reflected in the Commitments.
At Republic's option, the Company and Shareholders shall deliver copies of
previous owner policies or other title evidence sufficient for Republic to
obtain the Commitments directly from the Title Company. In either case, the
premium for the Title Policy shall be paid by the Company, and in the event the
Agreement contemplated hereby does not close, Republic shall pay up to $25,000
for the cost of obtaining the Commitments and the Surveys (as defined below).
The Title Policy shall be in the amount of $20,000,000, showing fee simple title
to the Owned Properties vested now or to be vested at or immediately prior to
the Closing in the Company subject only to Permitted Exceptions, (it being
agreed that the Shareholders shall cause any indebtedness secured by Deeds of
Trust or any liens encumbering Other Owned Properties in excess of $2,623,000 to
be satisfied or released prior to Closing). Within 3 business days following
delivery of the Commitments to Republic, Republic shall notify the Shareholders
of any exceptions in the Commitments which Republic maintains are not Permitted
Exceptions. The Commitments and the Title Policy to be issued by the Title
Company shall afford full "extended form coverage" and shall contain an ALTA
Zoning Endorsements 3.1 (if available), contiguity (where appropriate), and such
other endorsements as may be reasonably requested by Republic, excluding
nonimputation and creditors rights endorsements. At the Closing, the Company,
the Shareholders, their Affiliates and any other party owning an interest in
Other Owned Properties shall deliver such affidavits or other instruments as the
Title Company may reasonably require to provide the special endorsements
required hereunder. The Company and the Shareholders shall cause the Commitments
to be dated as of the Closing and to cause the Title Company to deliver the
Title Policy dated as of the Closing as directed by Republic as soon as
reasonably possible after the Closing.
(b) Within 20 days after the date of this Agreement but before
the Closing, the Company and the Shareholders shall use their best efforts to
deliver to Republic and the Title Company an as-built plat of survey of each of
the Owned Properties and the Leased Premises (the "Surveys") prepared by a
registered land surveyor or engineer, licensed in the respective states in which
such properties are located, dated on or after the date hereof, certified to
Republic, the Title Company, and such other entities as Republic may designate
in writing to the Company and the Shareholders prior to the Closing, and
conforming to current ALTA/ACSM Minimum Detail Requirements for Land Title
Surveys, sufficient to cause the Title Company to delete the standard printed
survey exception. Each Survey shall show access from the land to dedicated roads
and shall include a flood plain certification. Any survey may be a
recertification of a prior survey, provided that it meets the above-described
criteria. In the event that the necessary surveys cannot be obtained prior to
Closing, the Shareholders shall deliver such surveys to Republic, at the cost
and expense of the Company, as soon as practical thereafter, along with any
insurance coverages contemplated by Section 5.14(a) above which could not be
obtained due to the unavailability of such surveys prior to the Closing.
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(c) If (i) any Commitment discloses a title exception other
than a Permitted Exception (an "Unpermitted Exception") or (ii) any Survey
discloses any encroachment, overlap, boundary dispute, or gap or any other
matter which renders title to any of the Owned Properties unmarketable or
reflects that any utility service to the improvements or access thereto does not
lie wholly within the applicable parcel of real property, or within an
encumbered easement for the benefit of such parcel of real property or another
Owned Property, or reflects any other matter materially adversely affecting the
use or improvements of such parcel of real property or another Owned Property (a
"Survey Defect"), then the Shareholders, prior to the Closing with respect to
Surveys delivered prior to Closing, or to the extent Survey Defects appear on
Surveys delivered after Closing promptly thereafter, shall have the Unpermitted
Exception removed from such Commitment or the Survey Defect corrected or insured
over by an appropriate title insurance endorsement, all in a manner reasonably
satisfactory to Republic.
5.15 Shareholder and Director Vote. Each of the Shareholders, in
executing this Agreement, consents as a shareholder of the Company, and each of
the Taorminas, in executing this Agreement, consents as a director of the
Company, to the Merger and the transactions contemplated hereby, and waives
notice of any meeting in connection therewith and hereby releases and waives all
rights with respect to the transactions contemplated hereby under any agreements
relating to the sale, purchase or voting of stock of the Company.
5.16 Taormina Name. Republic agrees, upon request by the Taorminas, to
phase out as promptly as possible the use of the "Taormina" name in all aspects
of the conduct of the Company's business over a period of one year following the
date of such request, provided that nothing herein stated shall require the
Company or Republic to repaint any vehicles, containers or other equipment or
incur any other large expenditure of money. The Taorminas shall be entitled to
use the "Taormina" name for any business that is totally unrelated to the solid
waste management industry.
5.17 Anaheim Truck Depot. (a) The Taorminas and the Shareholders
represent and warrant that:
(A) Blue Gum Partnership is a California general partnership
("Blue Gum Partnership"), and the general partners of Blue
Gum Partnership are Xxxxxxx X. Xxxxxxxx, Xxxxxxx X.
Xxxxxxxx, and Xxxxx Xxxxxxxx, Xx. Blue Gum Partnership holds
a land lease from Landowner (as defined below) to certain
property known as the "Blue Gum Property" upon which is
situated the business known as "Anaheim Truck Depot," a
paved parking yard, and other improvements. As of the date
hereof, the Blue Gum Partnership subleases the property and
leases the improvements to the Company for a monthly rental
of $77,000 and the business known as Anaheim Truck Depot
sells fuel and provides maintenance services to the Company
and third parties.
(B) A California general partnership (herein referred to as
"Landowner") exists between (i) Xxxxx Xxxxxxxx, Xx. and (ii)
Truck Haven, a California general partnership ("Truck
Haven") existing between Xxxxxxx X. Xxxxxxxx, Xxxxxxx X.
Xxxxxxxx, and the X.X. Xxxxxxxx Family Trust. Each of
Xxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxx, and the X.X.
Xxxxxxxx Family Trust are general partners in Truck Haven,
with a one-third interest therein. Each of Xxxxx Xxxxxxxx,
Xx. and Truck Haven are general partners
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in Landowner. Landowner owns title to the real estate
which is leased to the Blue Gum Partnership for a monthly
rental of $5,000.
(C) The Taorminas have voting control over the Blue Gum
Partnership, and otherwise have the sole and exclusive power
to direct the management, policies and assets of Blue Gum
Partnership.
(D) The Taorminas have voting control over Truck Haven, and have
voting control over Landowner, and otherwise have the sole
and exclusive power to direct the management, policies and
assets of each of Truck Haven and Landowner.
(b) Simultaneous with or prior to the Closing, the Taorminas
shall contribute their respective interests in Blue Gum Partnership to the
Company and the Taorminas and the X.X. Xxxxxxxx Family Trust shall contribute
all of Truck Haven to the Company, in exchange solely for additional shares of
Company Common Stock.
(c) The Taorminas agree to use best efforts to cause the
Company to purchase and acquire (i) from Xxxxx Xxxxxxxx, Xx., his
non-controlling interest in the Blue Gum Partnership, and (ii) from Xxxxx
Xxxxxxxx, Xx., his non-controlling interest in Landowner and to cause the
Company to pay off all debts owed to Xxxxx Xxxxxxxx, Xx. by Blue Gum
Partnership, provided, however, that completion of such purchases shall not be a
condition to Republic's obligations to close the Merger.
(d) The Taorminas, the Shareholders, and the Company agree
that not more than $5,450,000 of the aggregate purchase price paid to Xxxxx
Xxxxxxxx, Xx. (as to his interest in Blue Gum Partnership, including repayment
of all debt owed to him by Blue Gum Partnership), and to Xxxxx Xxxxxxxx, Xx. (as
to his interest in Landowner), shall be paid directly or indirectly by the
Company. Any portion of such aggregate purchase price in excess of $5,450,000
shall be paid by the Taorminas personally out of their own funds, and not by the
Company directly or indirectly.
(e) Upon contribution of all of the Blue Gum Partnership
interests to the Company, the Company shall assume and pay off, prior to
closing, not more than $377,000 of the indebtedness (which indebtedness is not
related to or secured by real estate upon which the Blue Gum Partnership does
business) owed by Blue Gum Partnership to Xxxxx Xxxxxxxx, Xx.
(f) For purposes of this Agreement, the representations and
warranties of Article III of this Agreement shall apply to and shall be deemed
made by the Shareholders with respect to the assets, properties and operations
of Blue Gum Partnership and Landowner as of the date hereof and as of the
Closing pursuant to the Bringdown Certificate delivered pursuant to Section 6.1.
5.18 Other Leased Property. All of the leases of real estate listed on
Schedule 3.14(b) pursuant to which the Shareholders or the Taorminas are leasing
property to the Company shall be terminated prior to Closing, and all of such
leased property shall be contributed by the Shareholders or the Taorminas,
respectively, as the case may be, prior to Closing to the Company for no
consideration other than the issuance of additional shares of Company Common
Stock to the Shareholders. The Company agrees to assume no more than an
aggregate of $2,623,000 of indebtedness related to or encumbering such
contributed property, and the Shareholders and/or
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the Taorminas agree to pay off all indebtedness in excess of such amount and to
satisfy (at their expense) all encumbrances related to any such excess
indebtedness. If the Taorminas or the Shareholders pay off any such excess
indebtedness, then the Company shall issue additional shares of Company Common
Stock to the Shareholders based on the amount of such payoff.
5.19 Intellectual Property. Prior to Closing, the Taorminas shall
contribute to the Company all right, title and interest in and to any
Intellectual Property owned by them individually which is used by or otherwise
relates to the Company and its business and operations, including, without
limitation, any interest Xxxxxxxx'x may have in the patent relating to the
conveyors used in the Company's Materials Recycling Facility in Anaheim,
California, but excluding the "Taormina" name for which Republic has a
royalty-free license to continue to use subject to Section 5.16 (and which the
Taorminas shall be entitled to use in a manner consistent with Section 5.16).
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE REPUBLIC COMPANIES
The obligations of the Republic Companies to effect the Merger 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:
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: (a) for
changes specifically permitted by or disclosed pursuant to this Agreement; and
(b) that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date. The Company 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. The Company and the Shareholders shall have
delivered to the Republic Companies a certificate, dated as of the Effective
Date, duly signed (in the case of the Company, by its President), certifying
that such representations and warranties are true and correct and that all such
obligations have been complied with and performed (the "Bringdown Certificate").
6.2 No Material Adverse Change or Destruction of Property. Between the
date hereof and the Effective Time: (a) there shall have been no Material
Adverse Change to the Company; (b) there shall have been no adverse federal,
state or local legislative or regulatory change affecting in any material
respect the services, products or business of the Company; and (c) none of the
properties and assets of the Company 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 the Company and the Shareholders.
6.3 Corporate Certificate. The Shareholders shall have delivered to
the Republic Companies: (a) copies of the articles of incorporation and bylaws
of the Company as in effect immediately prior to the Effective Time; (b) copies
of resolutions adopted by the Board of Directors and Shareholders of the Company
authorizing the transactions contemplated by this
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Agreement; and (c) a certificate of good standing of the Company issued by the
Secretary of State of the State of California and each other state in which the
Company is qualified to do business as of a date not more than thirty days prior
to the Effective Date, certified in the case of subsections (a) and (b) 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. Republic shall have received an opinion dated
as of the Effective Date from counsel for the Company and the Shareholders, in
its typical format and subject to customary qualifications and assumptions, and
in form and substance reasonably acceptable to Republic, to the effect that:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of California and is authorized
to carry on the business now conducted by it and to own or lease the properties
now owned or leased by it;
(b) The Company has obtained all necessary authorizations and
consents of its Board of Directors and the Shareholders to effect the Merger;
(c) All issued and outstanding shares of capital stock of the
Company are owned by the Shareholders;
(d) This Agreement is a valid and binding obligation of the
Company, the Taorminas, and the Shareholders, and enforceable against the
Company, the Taorminas, and the Shareholders in accordance with its terms
(subject to the assumption that Florida law is identical to California law),
subject to customary limitations, such as bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or general equitable principles and provided that no opinion
shall be rendered as to Section 5.10 or Section 8.7(b), or as to choice of law.
6.5 Consents. The Company shall have received (and delivered copies to
the Republic of) consents to the transactions contemplated hereby and waivers of
rights to terminate or modify any material rights or obligations of the Company
from any Person from whom such consent or waiver is required under any Contract
or instrument as of a date not more than thirty days prior to the Effective
Date, or who, as a result of the transactions contemplated hereby, would have
such rights to terminate or modify such Contracts or instruments, either by the
terms thereof or as a matter of law.
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 McGladrey &
Xxxxxx, LLP, independent certified public accountants for the Company, 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 the
Company which would, and the ownership structure and attributes of the Company
and the Shareholders would not, prescribe the transactions contemplated hereby,
if consummated, from being considered as a pooling of interests business
combination. 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 a pooling of interests
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combination 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 their status as Affiliates of the Company, their
agreement to comply with the "pooling of interests" restrictions, and their
receipt of SEC filings of Republic, in form and substance satisfactory to the
Republic Companies.
6.9 Company Common Stock. At the Closing, each of the Shareholders
shall have delivered to Republic all certificates evidencing the shares of
capital stock of the Company issued by them, free and clear of any Liens or
restrictions whatsoever, including, without limitation, any Lien in favor of the
Taorminas' sister Xxxxxx Xxxxxxxx, Trustee of the Xxxxxx Xxxxxxxx Property
Trust, or its or her successors or assigns.
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 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 Merger or any other transaction contemplated hereby, and which, in the
judgment of Republic, makes it inadvisable to proceed with the Merger and other
transactions contemplated hereby.
6.12 Intentionally Omitted.
6.13 HSR Act Waiting Period. Any applicable HSR Act waiting period
shall have expired or been earlier 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.
6.15 Employment Agreements. The Taorminas shall have executed and
delivered the employment agreements referred to in Section 5.13.
6.16 Releases. Each of the Shareholders and Taorminas shall deliver
to Republic a release (collectively, the "Releases") in such form as is
reasonably satisfactory to Republic releasing all claims of any nature against
the Company, Blue Gum Partnership, and Truck Haven, if any, and any claims
arising out of the Merger and the transactions contemplated by this Agreement,
provided that such Release shall not cover (i) any rights of the Shareholders
against Republic under this Agreement, (ii) any employment benefits accrued in
the ordinary course of business consistent with past practice (such as vacation
time) or related rights under law (such as ERISA or COBRA), or (iii) any rights
under law to indemnification against third party claims arising with respect to
the Taorminas' service as officers, directors or agents of the Company.
6.17 Assignments. The Taorminas shall have executed and delivered the
assignments of the Intellectual Property referred to in Section 5.19.
6.18 Anaheim Truck Depot. If Blue Gum Partnership and the Landowner
have not been acquired in their entirety by the Company as of the time of
Closing, then Republic also shall have
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received copies of duly executed amendments to, or new, leases between Blue Gum
Partnership (as lessor) and the Company (as lessee) providing for the Company to
continue to use the real property and improvements owned by the Landowner and
Blue Gum Partnership, respectively, as of the date hereof (as the same may be
subsequently improved) for a term of fifteen (15) years through December 31,
2011, at a fixed monthly rental of One Thousand Dollars ($1,000) per month
payable to each of Blue Gum Partnership and Landowner together with the right to
continue to purchase fuel at a price of $0.05 per gallon over cost to the Blue
Gum Partnership, and the right to continue to purchase parts and maintenance
services from the Anaheim Truck Depot at the same rates being charged as of the
date hereof.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY AND THE SHAREHOLDERS
The obligations of the Company and the Shareholders to effect the
Merger 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 Company and the Shareholders:
7.1 Accuracy of Representations and Warranties and Compliance with
Obligations. The representations and warranties of each of the Republic
Companies 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: (a) for changes specifically permitted by or disclosed pursuant to
this Agreement; and (b) 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 with
at or prior to the Effective Time. Each of the Republic Companies shall have
delivered to the Company 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: (a)
certificates representing the Republic Shares issued to them hereunder, other
than the Held Back Shares; and (b) copies of stock certificates representing the
Held Back Shares issued to them.
7.3 No Adverse Litigation. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the Merger or any other transaction contemplated hereby, and which in the
judgment of the Company and the Shareholders makes it inadvisable to proceed
with the Merger and other transactions contemplated hereby.
7.4 HSR Act Waiting Period. Any applicable HSR Act waiting period
shall have expired or been earlier terminated.
7.5 Opinion of Counsel. The Shareholders and the Taorminas shall have
received an opinion dated the Effective Date from counsel to Republic, in its
typical format, and subject to
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customary qualifications and assumptions, and in form and substance reasonably
acceptable to the Shareholders and the Taorminas, to the effect that:
(a) This Agreement is a valid and binding obligation of
Republic, and enforceable against Republic in accordance with its terms, subject
to customary limitations, such as bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors' rights
generally or general equitable principles, and provided that no opinion shall be
rendered as to Section 5.10 or Section 8.7(a), or as to choice of law.
(b) The Republic Shares have been validly issued, and are
fully paid and non-assessable.
7.6 Employment Agreements. Republic or its assignee shall have
executed and delivered the employment agreements referred to in Section 5.13.
7.7 No Material Adverse Change. Since the date of this Agreement, there
shall not have occurred with respect to Republic and its subsidiaries, taken as
a whole, any material adverse change in their business, financial position, or
results of operations excluding events which affected the solid waste or
automotive industries generally in a like manner or which affected the economy
or stock markets generally.
ARTICLE VIII
REGISTRATION RIGHTS
The Shareholders shall have the following registration rights with
respect to the Republic Shares issued to them hereunder:
8.1 Registration Rights for Republic Shares; Filing of Registration
Statement. Republic will utilize reasonable best efforts to cause, as soon as
practicable following the Effective Time, a registration statement to be filed
under the Securities Act or an existing registration statement to be amended for
the purpose of registering the Republic Shares for resale on a continuous basis
from time to time by a Holder thereof (the "Registration Statement"). For
purposes of this Article, a person is deemed to be a "Holder" of Republic Shares
whenever such person is the record owner of Republic Shares. Thereafter Republic
will use reasonable best efforts to have the Registration Statement become
effective and cause the Republic Shares to be registered under the Securities
Act, and registered, qualified or exempted under the state securities laws of
such jurisdictions as any Holder reasonably requests, as soon as is reasonably
practicable. Notwithstanding the foregoing, Republic may delay filing a
Registration Statement, and may withhold efforts to cause the Registration
Statement to become effective, if Republic determines in good faith that such
registration might interfere with or affect the negotiation or completion of any
transaction that is being contemplated by Republic (whether or not a final
decision has been made to undertake such transaction) at the time the right to
delay is exercised, provided, however, that the maximum cumulative delay in
filing the Registration Statement and in withholding efforts to cause it to
become effective shall be no more than 45 days.
8.2 Expenses of Registration. Republic shall pay all expenses incurred
by Republic in connection with the registration, qualification and/or exemption
of the Republic Shares, including any SEC and state securities law registration
and filing fees, printing expenses, fees and
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disbursements of Republic's counsel and accountants, transfer agents' and
registrars' fees, fees and disbursements of experts used by Republic in
connection with such registration, qualification and/or exemption, and expenses
incidental to any amendment or supplement to the Registration Statement or
prospectuses contained therein. Republic shall not, however, be liable for any
sales, broker's or underwriting commissions upon sale by any Holder of any of
the Republic Shares.
8.3 Furnishing of Documents. Republic shall furnish to the Holders such
reasonable number of copies of the Registration Statement, such prospectuses as
are contained in the Registration Statement and such other documents as the
Holders may reasonably request in order to facilitate the offering of the
Republic Shares.
8.4 Amendments and Supplements. Republic shall prepare and promptly
file with the SEC and promptly notify the Holders of the filing of such
amendments or supplements to the Registration Statement or prospectuses
contained therein as may be necessary to correct any statements or omissions if,
at the time when a prospectus relating to the Republic Shares is required to be
delivered under the Securities Act, any event shall have occurred as a result of
which any such prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Republic shall also advise the
Holders promptly after it shall receive notice or obtain knowledge thereof, of
the issuance of any stop order by the SEC suspending the effectiveness of the
Registration Statement or the initiation or threatening of any proceeding for
that purpose and promptly use its reasonable best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should
be issued. If, after a Registration Statement becomes effective, the Holders
desire that the Registration Statement be amended or Republic advises the
Holders that Republic considers it appropriate that the Registration Statement
(and all other registration statements of Republic then effective and
outstanding) be amended, the Holders shall suspend any further sales of the
Republic Shares until Republic advises the Holders that the Registration
Statement has been amended.
8.5 Duration. Republic shall maintain the effectiveness of the
Registration Statement until such time as Republic reasonably determines, based
on an opinion of counsel, that the Holders will be eligible to sell all of the
Shares then owned by the Holders without the need for continued registration of
the shares, in the three month period immediately preceding the termination of
the effectiveness of the Registration Statement. Republic's obligations
contained in Sections 8.1, 8.3 and 8.4 shall terminate on the second anniversary
of the Effective Date.
8.6 Further Information. If Republic Shares owned by a Holder are
included in any registration, such Holder shall furnish Republic such
information regarding itself as Republic may reasonably request and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
8.7 Indemnification.
(a) Republic will indemnify and hold harmless the Holders and
each person, if any, who controls a Holder within the meaning of the Securities
Act, from and against any and all losses, damages, liabilities, costs and
expenses to which the Holders or any such controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
any prospectus contained
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therein or any amendment or supplement thereto, or arise out of or based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that, Republic will not be liable in any such case to the extent that any such
loss, claim, damage, liability, cost or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by or on behalf of any Holder
or such controlling person in writing specifically for use in the preparation
thereof.
(b) Each of the Holders, jointly and severally, will indemnify
and hold harmless Republic and each person, if any, who controls Republic within
the meaning of the Securities Act, from and against any and all losses, damages,
liabilities, costs and expenses to which Republic or any such controlling person
may become subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, to the extent that such untrue statement
or alleged untrue statement or omission or alleged omission was so made in
reliance upon and in strict conformity with written information furnished by or
on behalf of any Holder specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) or (b) of this Section of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said paragraph
(a) or (b), promptly notify the indemnifying party of the commencement thereof;
but the omission to so notify the indemnifying party will not relieve it from
any liability which it may have hereunder unless the indemnifying party has been
materially prejudiced thereby nor will such failure to so notify the
indemnifying party relieve it from any liability which it may have to any
indemnified party otherwise than hereunder. In case such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, if the defendants in
any action include both the indemnified party and the indemnifying party and
there is a conflict of interest which would prevent counsel for the indemnifying
party from also representing the indemnified party, the indemnified party or
parties shall have the right to select separate counsel to participate in the
defense of such action on behalf of such indemnified party or parties. After
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of said paragraph (a) or (b) for
any legal or other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless: (i) the indemnified party shall have employed counsel in
accordance with the provisions of the preceding sentence; (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the notice of the
commencement of the action; or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party.
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(d) In the event any of the Republic Shares are sold by any
Holder or Holders in an underwritten public offering consented to by Republic,
Republic shall provide indemnification to the underwriters of such offering and
any person controlling any such underwriter on behalf of the Holder or Holders
making the offering; provided, however, that Republic shall not be required to
consent to any such underwriting or to provide such indemnification in respect
of the matters described in the proviso to the first sentence of Section 8.7(a).
ARTICLE IX
INDEMNIFICATION
9.1 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 arising out of or resulting from:
(a) any breach of a representation or warranty made by the Shareholders, the
Taorminas or the Company in or pursuant to this Agreement; (b) any breach of the
covenants or agreements made by the Shareholders, the Taorminas or the Company
in or pursuant to this Agreement; or (c) any inaccuracy in any certificate
delivered by the Shareholders, the Taorminas or the Company pursuant to this
Agreement (collectively, "Indemnifiable Damages"). With respect to the
measurement of Indemnifiable Damages, Republic shall have the right to be put in
the same after-tax consolidated financial position as it would have been in had
each of such representations and warranties been true and correct and had such
covenants and agreements been performed in full. Notwithstanding anything to the
contrary contained herein (other than the proviso at the end of this sentence),
Republic shall not be entitled to any Indemnifiable Damages unless the aggregate
of all Indemnifiable Damages exceeds Two Million Dollars ($2,000,000)
("Indemnification Threshold"), in which case Republic shall be entitled to (i)
the full amount of such Indemnifiable Damages if such Indemnifiable Damages
result from a breach of Section 4.1(c) or the representations as to total
indebtedness and Adjusted Total Stockholders Equity as provided in Section 3.11,
or (ii) the amount of such Indemnifiable Damages in excess of One Million
Dollars ($1,000,000) if the Indemnifiable Damages result from anything other
than a breach of Section 4.1(c) or such representations of Section 3.11;
provided however, that the Indemnification Threshold shall not apply with
respect to, and Republic shall be entitled to the full amount of any
Indemnifiable Damages resulting from any breach of representations set forth in
Section 3.5 hereof or any representations set forth in any factual certificate
delivered to Repulic relating to the share ownership of the Company. In the case
of any claim for Indemnifiable Damages, Republic agrees that it shall satisfy
such claim only out of the following, and in the following order: (i) first, out
of any Held Back Shares (or any Cash Collateral, as defined in Section 9.4
below) still held by Republic, (ii) second, out of any other Republic Shares (or
any shares of Republic Common Stock issued to the Shareholders in connection
with any stock split or stock dividend effected by Republic after the Effective
Time) which are still held by the Shareholders valued at a price equal to the
Average Closing Share Price, and (iii) third, out of any Proceeds received by
the Shareholders or the Taorminas on account of the sale of any of the Republic
Shares (or any shares of Republic Common Stock issued in connection with any
stock split or stock dividend effected by Republic after the Effective Time).
After such amounts have been exhausted, the Shareholders and the Taorminas shall
have no further liability for Indemnifiable Damages. As used in this Section
9.1, "Proceeds" shall mean (i) in the case of the sale at Fair Market Value of
any of the Republic Shares, the net proceeds received on account of such sale,
after deducting any
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commissions or other selling expenses paid in connection with such sale and any
taxes payable on account of such sale (assuming applicability of the maximum
long term capital gains tax rate in effect at the time of such sale, after
offsetting any reduction in the Shareholders' taxable income resulting from the
payment of the Indemnifiable Damages hereunder (assuming applicability of the
maximum marginal federal and state income tax rates)); and (ii) in the case of
the sale or transfer (by gift or otherwise) of any Republic Shares at less than
Fair Market Value, or for no cash proceeds (as in the case of a gift), the Fair
Market Value of such shares. As used in this Section 9.1, "Fair Market Value"
shall mean on any date the closing price of a share of Republic Common Stock on
the NASDAQ Stock Market for that day as reported (absent manifest error in the
printing thereof) by the Wall Street Journal (Eastern Edition). The
Shareholders' obligation to pay Republic all Indemnifiable Damages shall not be
diminished or impaired by the existence of any insurance policies or other right
to recover some or all of the Indemnifiable Damages from third parties. Republic
agrees to use its reasonable efforts to seek recovery under any applicable
insurance policies. The proceeds actually received by Republic, if any, under
such insurance policies, net of all of Republic's unrecovered costs and expenses
(including attorneys' fees and expenses) incurred in pursuing coverage under
such insurance policies, shall be paid by Republic to the Shareholders but only
to the extent that the Shareholders have actually paid to Republic the
Indemnifiable Damages relating to the matter for which such insurance proceeds
were paid to Republic.
9.2 Survival of Representations and Warranties. Each of the
representations and warranties made by the Shareholders and the Taorminas in
this Agreement or pursuant hereto shall survive for a period of one year after
the Effective Time. No claim for the recovery of Indemnifiable Damages may be
asserted by Republic against the Shareholders or the Taorminas after such
representations and warranties shall thus expire, provided, however, that claims
for Indemnifiable Damages first asserted within the applicable period shall not
thereafter be barred. Notwithstanding any knowledge of facts determined or
determinable by any party by investigation, each party shall have the right to
fully rely on the representations, warranties, covenants and agreements of the
other parties contained in this Agreement or in any other documents or papers
delivered in connection herewith. Each representation, warranty, covenant and
agreement of the parties contained in this Agreement is independent of each
other representation, warranty, covenant and agreement. Each of the
representations and warranties of Republic Merger Sub and of the Company shall
expire at the Effective Time. Each of the representations and warranties of
Republic shall survive for a period of one year after the Effective Time.
9.3 Procedures for Defense of Third Party Actions. Promptly after
receipt by Republic of notice of commencement of any action by a third party
(including service of a summons in connection with the serving of a lawsuit)
which could give rise to Indemnifiable Damages in excess of the Indemnification
Threshold (individually or in the aggregate with other claims for Indemnifiable
Damages) set forth in Section 9.1, or to Indemnifiable Damages for which no
Indemnification Threshold applies. Republic shall notify the Shareholders of the
commencement thereof to the extent that either of the Shareholders are otherwise
not in receipt of such notice of commencement themselves. The omission to so
notify the Shareholders will not relieve them from any liability which they may
have hereunder unless the Shareholders have been materially prejudiced thereby,
nor will such failure to so notify the Shareholders relieve them from any other
liability which they may have to Republic otherwise than hereunder. With respect
to any such action commenced by a third party, the Shareholders shall have the
right to participate in, and, to the extent that they may wish, jointly or
individually, to assume the defense thereof with counsel satisfactory to
Republic; provided, however if the defendants in any action include both
Republic (or any of its subsidiaries, including -- after Closing -- the Company)
and either or both of the
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Shareholders and there is a conflict of interest which would prevent counsel for
the Shareholders from also representing Republic (or its subsidiaries), then
Republic shall have the right to select separate counsel to participate in the
defense of such action on behalf of Republic (or its subsidiaries). After notice
from the Shareholders to Republic of their election to so assume the defense
thereof, the Shareholders will not be liable to Republic pursuant to the
provisions of Section 9.1 for the related counsel and paralegal fees and
expenses subsequently incurred by Republic (or its subsidiaries) in connection
with the defense thereof other than reasonable costs of investigation, unless
(i) Republic (or its subsidiaries) 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 its
subsidiaries) within a reasonable time after notice of the commencement of the
action, or (iii) the Shareholders have authorized the employment of counsel for
Republic (or its subsidiaries) at the expense of the Shareholders.
Notwithstanding anything to the contrary in this Section 9.3, the Shareholders
shall have no right to settle or compromise any action for which they have
assumed the defense of to the extent the settlement or compromise involves any
injunctive or other equitable relief or otherwise involves any continuing
obligations of any nature against Republic or loss of rights of Republic (or any
of its subsidiaries or any of their respective directors, officers or
employees), and nothing stated in this Section 9.3 shall otherwise affect the
Shareholders' obligation to pay Republic all Indemnifiable Damages (other than
such related counsel and paralegal fees and expenses) pursuant to Section 9.1.
9.4 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, the Shareholders do hereby
grant a security interest in, pledge and instruct Republic to set aside and hold
certificates representing the Held Back Shares issued pursuant to this
Agreement. Republic may set off against the Held Back Shares (or against any
Cash Collateral (defined below)) any Indemnifiable Damages for which the
Shareholders may be responsible pursuant to this Agreement, subject, however, to
the following terms and conditions:
(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;
(b) Such set off shall be effected on the later to occur on
the expiration of 30 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 proportionally against the shares set aside;
(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 Republic may elect
that such dispute shall be resolved in accordance with Section 13.10 below;
(d) After the Held Back Shares are registered and any
restrictions on sale imposed under the Securities Act or otherwise are
terminated, the Shareholders may, not more than once during the twelve (12)
month period following the Effective Date, instruct Republic in writing to sell
some or all of the Held Back Shares and Republic shall utilize reasonable
efforts to promptly sell the Held Back Shares following such written instruction
and the net proceeds ("Cash Collateral") thereof shall be substituted for such
Held Back Shares in any set off to be
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made by Republic pursuant to any claim hereunder, subject to continued
compliance with any applicable SEC requirements dealing with pooling of
interests and other applicable regulations (any Cash Collateral shall be
deposited with a financial institution in such manner as Republic shall
reasonably determine necessary to retain its rights to the Cash Collateral as
security for any Indemnifiable Damages; provided that any Cash Collateral shall
be deposited in an interest bearing account or invested in United States
Government or Agency obligations reasonably acceptable to the Shareholders); and
e) For purposes of this Article, each share of Republic Common
Stock not sold as provided in clause (d) of this Section shall be valued at a
price equal to the Average Closing Share Price.
9.5 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 (any such cash shall be
deemed "Cash Collateral" hereunder). 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.
9.6 Delivery of Held Back Shares and Cash Collateral. Republic agrees
to deliver to the Shareholders no later than the first anniversary of the
Effective Date any Held Back Shares and Cash Collateral then held by it 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 and Cash Collateral remaining on deposit after such claim shall have
been satisfied shall be returned to the Shareholders promptly after the time of
satisfaction.
9.7 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.
9.8 No Bar. If the Held Back Shares and any Cash Collateral 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
(subject to the limitations set forth in Section 9.1 above).
9.9 Remedies Exclusive; Waiver. The rights of the parties hereto as set
forth in this Agreement shall constitute their sole remedy under this Agreement,
except for all equitable rights and remedies to seek specific performance, or to
enjoin violation of, covenants for which monetary damages may be an inadequate
remedy, and for remedies which any of the parties may have as a result of a
claim for fraud. The Shareholders and the Taorminas hereby waive any rights to
contribution or any other similar rights they may have against the Company as a
result of their Agreement to Indemnify in this Article IX.
9.10 Taorminas Guaranty. The Taorminas hereby jointly and severally
guaranty the payment when due of any and all amounts due and payable by the
Shareholders to Republic
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pursuant to this Article IX, and guaranty the performance by the Shareholders of
their obligations under this Article IX.
ARTICLE X
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after the Effective Time of the Republic Shares:
10.1 Disposition of Shares. The Shareholders represent and warrant that
the shares of Republic Common Stock being acquired by them hereunder are being
acquired and will be acquired for their own respective accounts and will not be
sold or otherwise disposed of, except pursuant to: (a) an exemption from the
registration requirements under the Securities Act, which does not require the
filing by Republic with the SEC of any registration statement, offering circular
or other document, in which case, the Shareholders shall first supply to
Republic an opinion of counsel (which counsel and opinions shall be satisfactory
to Republic) that such exception is available; or (b) an effective registration
statement filed by Republic with the SEC under the Securities Act.
10.2 Legend. The certificates representing the Republic Shares
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER
THE ACT, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF
ANY STATE WITH RESPECT THERETO, OR IN ACCORDANCE WITH AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE,
AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
BY THE HOLDER WITHOUT COMPLIANCE WITH THE SECURITIES AND
EXCHANGE COMMISSION'S ACCOUNTING SERIES RELEASES 130 AND 135.
Republic may, unless a registration statement is in effect covering such shares,
place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws.
ARTICLE XI
DEFINITIONS
11.1 Defined Terms. As used herein, the following terms shall
have the following meanings:
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"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, and with respect to the Company, the Blue
Gum Partnership and Landowner shall be deemed an Affiliate thereof.
"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).
"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.
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"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.
11.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) Unless otherwise expressly indicated herein, all matters
of an accounting nature in connection with this Agreement and the transactions
contemplated hereby shall be determined in accordance with GAAP applied on a
basis consistent with prior periods, where applicable.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the neuter
and feminine, where the context so permits.
ARTICLE XII
TERMINATION
12.1 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 the
Company or any of the Shareholders of any provision of this Agreement; or
(c) by the Company in the event of a material breach by
Republic of any provision of this Agreement;
(d) by either Republic or the Company if the Closing shall
not have occurred by May 31, 1997; or
(e) by Republic if the Merger Consideration shall have been
determined pursuant to Section 1.3(a)(ii) and the Average Closing Share Price
shall be Thirty-Four Dollars ($34.00) or less.
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12.2 Effect of Termination. Except for the provisions of Article IX
hereof, which shall survive any termination of this Agreement, in the event of
termination of this Agreement pursuant to Section 12.1, this Agreement shall
forthwith become void and of no further force and effect and the parties shall
be released from any and all obligations hereunder; provided, however, that the
provisions of Section 5.8 shall survive termination and continue in full force
and effect and that nothing herein shall relieve any party from liability for
damages resulting from the willful breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement. If Republic
shall elect to terminate this Agreement pursuant to Section 12.1(e) above, then
Republic shall reimburse the Company and the Shareholders for all reasonable
legal and accounting costs and expenses incurred by them in connection with the
negotiation, execution and delivery of this Agreement and the preparation for
the Closing of the transactions contemplated by this Agreement, in each case,
upon presentation of reasonably detailed documentation thereof.
ARTICLE XIII
GENERAL PROVISIONS
13.1 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):
(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 Company, the Taorminas, and/or the
Shareholders to:
Xxxxxxxx Industries, Inc.
0000 Xxxxx Xxxx Xxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
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with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxxx 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.
13.2 Entire Agreement. This Agreement (including the Exhibits and
Schedules attached hereto) 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.
13.3 Expenses. Except as otherwise provided herein, the parties shall
pay their own fees and expenses, including their own counsel fees, incurred in
connection with this Agreement or any transaction contemplated hereby. Republic
shall pay all filing fees of any party hereto under the HSR Act. Provided that
the Company remains in compliance with its representations as to total
indebtedness and net worth as set forth in Section 3.11 after accounting for any
such payments, the Company may pay up to an aggregate of $400,000 of the legal
fees of counsel and auditors to the Company and the Shareholders in connection
with the negotiation, execution and closing of the transactions contemplated by
this Agreement, but shall not in any event pay any expenses of the Shareholders
related to their personal tax or estate planning undertaken in connection
herewith or otherwise.
13.4 Amendment; Waiver. This Merger Agreement has been executed prior
to the Closing and is effective as of February 3, 1997, and does hereby amend
and restate that certain Merger Agreement executed and delivered on February 3,
1997 by each of the undersigned (other than the X.X. Xxxxxxxx Family Trust under
Agreement dated September 16, 1980). 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.
13.5 Binding Effect; Assignment. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable
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rights hereunder. Except as expressly provided herein, the rights and
obligations of this Agreement may not be assigned by the Company, or any
Shareholders without the prior written consent of Republic.
13.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
13.7 Interpretation. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
schedules. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Time shall be of the essence in this Agreement.
13.8 Governing Law; Interpretation. This Agreement shall be construed
in accordance with and governed for all purposes by the laws of the State of
Florida applicable to contracts executed and to be wholly performed within such
State.
13.9 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.
13.10 Mandatory Arbitration. Any controversy or claim between or among
the parties hereto including, but not limited to, those arising out of or
relating to this Agreement or any related agreements or instruments, excluding
any claim based on or arising from an alleged intentional tort or fraud, shall
be determined by binding arbitration in Orange County, California in accordance
with the Federal Arbitration Act (of if not applicable, the applicable state
law), the Rules of Practice and Procedure for the Arbitration of Commercial
Disputes of Judicial Arbitration and Mediation Services, Inc. (J.A.M.S.), and
the "Special Rules" set forth below. In the event of any inconsistency, the
Special Rules shall control. Judgment upon any arbitration award may be entered
in any court having jurisdiction. Any party to this Agreement may bring an
action, including a summary or expedited proceeding, to compel arbitration of
any controversy or claim to which this Agreement applies in any court having
jurisdiction over such action.
(a) Special Rules. The arbitration shall be administered by
Endispute, Inc., d/b/a/ J.A.M.S./Endispute, who will appoint an arbitrator; if
J.A.M.S./Endispute is unable or legally precluded from administering the
arbitration, then the American Arbitration Association will serve. All
arbitration hearings will be commenced within ninety (90) days of the demand for
arbitration; further, the arbitrator shall only, upon a showing of cause, be
permitted to extend the commencement of such hearing for up to an additional
sixty (60) days.
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(b) Reservation of Rights. Nothing in this Agreement shall be
deemed to: (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this Agreement; or (ii) limit
the right of Republic or the Shareholders (A) to exercise self-help remedies
such as (but not limited to) setoff, in accordance with Section 9.4 hereof or
(B) to realize upon any security granted hereunder, or (C) to obtain from a
court provisional or ancillary remedies such as (but not limited to) injunctive
relief or the appointment of a receiver. No exercise of self-help remedies or
ancillary remedies shall constitute a waiver of the right of any party,
including the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
[Signatures On Following Page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
REPUBLIC INDUSTRIES, INC., a Delaware
corporation
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Vice Chairman
RI/T MERGER CORP., a California corporation
By:/s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx, President
XXXXXXXX INDUSTRIES, INC., a California
corporation
By:/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx, Chairman
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxxx, individually
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxxx, individually
[Signatures Continued On Following Page]
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TAORMINA REVOCABLE INTER VIVOS
TRUST UNDER AGREEMENT DATED
JULY 26, 1983
By:/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx, Trustee
XXXXXXX XXXXX XXXXXXXX REVOCABLE
INTER VIVOS TRUST UNDER AGREEMENT
DATED MAY 14, 1984
By:/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx, Trustee
X.X. XXXXXXXX FAMILY TRUST UNDER
AGREEMENT DATED
SEPTEMBER 16, 1980
By:/s/ Xxxxxx Xxxxxxxx
--------------------------------
Xxxxxx Xxxxxxxx, Trustee
49
