(a)
Subject
to the adjustments set forth in
Section
2.3
and
Section
2.4
, in full consideration for the transfer of the Preferred Shares,
Buyer shall pay or cause to be paid to, or for the benefit of, the Preferred
Stockholders at the Closing an aggregate amount equal to the Base Purchase Price
plus
the
Estimated Cash
minus
:
(i)
the
aggregate amount of Company Debt outstanding immediately prior to the
Closing;
(ii)
the
Common Stock Amount,
(iii)
the
Option Amount;
(iv)
the
Warrant Amount;
(v)
the
Selling Expenses;
(vi)
the
Management Bonuses;
(vii)
the
Deposit; and
(viii)
the
Representative Fund Amount
(such
amount, the “
Initial Purchase
Price
”),
increased
by
(x) any Working
Capital Overage or
decreased
by
(y) any Working
Capital Underage (the result of such calculation, as adjusted, the “
Purchase
Price
”).
(b)
At the
Closing, Buyer shall (A) on behalf of the Company and the Subsidiaries,
cause the Company Debt outstanding immediately prior to the Closing to be repaid
in full to the party or parties entitled thereto pursuant to instructions
delivered by the Seller Representative to Buyer at least two (2)
Business Days prior to the Closing and Buyer shall receive a payoff letter, in a
form reasonably acceptable to Buyer, from each holder of Company Debt (the
“
Payoff
Letters
”), (B) on behalf of the Sellers, the Company or any
Subsidiary, pay the Selling Expenses to the Persons entitled thereto pursuant to
the invoices and payoff letters delivered to Buyer pursuant to
Section
3.2(d)
, (iii) on behalf of the Company and the Subsidiaries, pay the
Management Bonuses, and Buyer shall receive a general release, in a form
reasonably acceptable to Buyer, from each recipient of a Management Bonus
(“
Bonus
Release
”), (iv) pay the Representative Fund Amount to the Seller
Representative pursuant to instructions delivered by the Seller Representative
to Buyer at least two (2) Business Days prior to the Closing, and (v) pay the
Escrow Amount to the Escrow Agent (collectively with the Common Stock Amount,
the “
Settlement
Amounts
”).
(c)
At the
Closing, in full consideration for the surrender of the Common Stock held by the
Common Stockholders, Buyer shall pay or cause to be paid to each Common
Stockholder an amount equal to One Dollar ($1.00) (such amount, in the
aggregate, the “
Common Stock
Amount
”), payable in cash. Each Common Stockholder that does
not own Preferred Stock acknowledges and understands that the Common Stock
Amount is the only consideration such Common Stockholder is entitled to under
this Agreement. No Common Stockholder (other than those Common
Stockholders who also own Preferred Stock) shall have any liability pursuant to
this Agreement other than for breaches of the representations made by such
Common Stockholder in
Article
V
, pursuant to the limitations set forth in this Agreement.
(d)
In full
consideration for the Preferred Stock held by the Preferred Stockholders, at the
Closing, Buyer shall pay or cause to be paid to each Preferred Stockholder, an
amount equal to such Preferred Stockholder’s pro-rata portion of the Purchase
Price in accordance with the percentages set forth on
Exhibit
A-1
, payable in cash by bank wire transfer of immediately available funds
to an account or accounts designated in writing by the applicable Preferred
Stockholder at least two (2) Business Days prior to the Closing.
(e)
Treatment of Options and
Warrants
.
(i)
At the
Closing, in full consideration for the surrender of the Options held by the
Optionholders
,
Buyer shall pay or cause to be paid to each Optionholder an amount equal to One
Dollar ($1.00) (such amount, in the aggregate, the “
Option
Amount
”), payable in cash
.
Prior
to the Closing the Company shall take all actions required to cancel each
outstanding Option effective immediately prior to the Closing without any right
to receive consideration therefore except as set forth in this
Section
2.2(e)(i)
and the Company shall deliver to Buyer evidence of such
cancellation in a form reasonably acceptable to Buyer.
(ii)
At the
Closing, in full consideration for the surrender of the Warrants held by the
Warrantholders
,
Buyer shall pay or cause to be paid to each Warrantholder an amount equal to One
Dollar ($1.00) (such amount, in the aggregate, the “
Warrant
Amount
”), payable in cash
.
Each
Warrantholder acknowledges and understands that the Warrant Amount is the only
consideration such Warrantholder is entitled to under this
Agreement. Prior to the Closing the Company shall take all actions
required to cancel each outstanding Warrant effective immediately prior to the
Closing without any right to receive consideration therefore except as set forth
in this
Section
2.2(e)(ii)
and the Company shall deliver to Buyer evidence of such
cancellation in a form reasonably acceptable to Buyer.
(f)
Consideration
Spreadsheet
.
(i)
The
Company shall deliver a spreadsheet (the “
Consideration
Spreadsheet
”) to Buyer at least two (2) Business Days prior to Closing
accompanied by a certificate of the Company’s chief financial officer attesting
to the Consideration Spreadsheet’s accuracy. The Consideration
Spreadsheet shall set forth (A) the name and address of, and wire instructions
for, each Preferred Stockholder, (B) the number of Shares held by each Preferred
Stockholder immediately prior to the Closing, (C) the name and address of, and
wire instructions for, each Person that shall receive a Settlement Amount, (D)
the calculation of the Purchase Price and the aggregate portion of
the Purchase Price that each Preferred Stockholder is entitled to receive with
respect to such Shares in accordance with
Section
2.2
, and (F) the percentage of adjustment payments made to, or payable
by, the Preferred Stockholders pursuant to
Sections
2.3
or
2.4
. The
Company shall make the work papers and back-up materials used in preparing the
Consideration Spreadsheet available to Buyer and its
representatives.
(ii)
Buyer
shall be entitled to rely conclusively on the information set forth in the
Consideration Spreadsheet with respect to distribution of the Purchase Price
(including the Settlement Amounts) and any adjustments made in accordance with
Sections
2.3
or
2.4
,
and no Person shall have any cause of action against Buyer, the Company, the
Escrow Agent or any of their respective representatives for any action taken in
accordance with and in reliance upon the Consideration Spreadsheet.
2.3
Cash
Adjustment
.
(a)
Cash
Statement
. Within thirty (30) days after the Closing Date,
Buyer shall cause to be prepared and delivered to the Seller Representative a
statement (the “
Cash
Statement
”), setting forth the Cash and Cash Equivalents as of the close
of business on the day immediately preceding the Closing Date (the “
Final
Cash
”). The Cash Statement is to be prepared in accordance
with GAAP.
(b)
Dispute
. Within
ten (10) days following receipt by the Seller Representative of the Cash
Statement, Seller Representative shall deliver written notice to Buyer of any
dispute it has with respect to the preparation or content of the Cash
Statement. Seller Representative shall not dispute the accounting
principles and adjustments used in preparing the Cash Statement and Final Cash
if such principles and adjustments are consistent with GAAP. If
Seller Representative does not notify Buyer of a dispute with respect to the
Cash Statement within such ten (10)-day period, such Cash Statement will be
final, conclusive and binding on the parties. In the event of such
notification of a dispute, Buyer and the Seller Representative shall negotiate
in good faith to resolve such dispute. If Buyer and the Seller
Representative notwithstanding such good faith effort, fail to resolve such
dispute within thirty (30) days after the Seller Representative advises Buyer of
its objections, then Buyer and the Seller Representative jointly shall engage
PricewaterhouseCoopers
or such other
independent accounting firm mutually acceptable to Buyer and the Seller
Representative (the “
Arbitration
Firm
”) to resolve such dispute. As promptly as practicable
thereafter, Buyer and the Seller Representative shall each prepare and submit a
presentation to the Arbitration Firm. As soon as practicable
thereafter, Buyer and the Seller Representative shall cause the Arbitration Firm
to choose one of the parties positions based solely upon the presentations by
Buyer and the Seller Representative. The party whose position is not
accepted by the Arbitration Firm will be responsible for all of the fees and
expenses of the Arbitration Firm. All determinations made by the
Arbitration Firm will be final, conclusive and binding on the
parties.
(c)
Access
. For
purposes of complying with the terms set forth in
this
Section
2.3
, Buyer and
the Company, on the one hand, and the Seller Representative, on the other hand,
shall cooperate with and make available to each other and their respective
representatives all information, records, data and working papers, and shall
permit access to its facilities and personnel, as may be reasonably required in
connection with the preparation and analysis of the Cash Statement and the
resolution of any disputes thereunder.
(d)
Downward Adjustment
. If the Final Cash (as
determined pursuant to
Section
2.3(b)
) is less than Estimated Cash, then the Purchase
Price will be adjusted downward by the amount of such shortfall, and the
Preferred Stockholders shall pay, or the Seller Representative shall pay, or
cause to be paid on behalf of the Preferred Stockholders, in the percentages set
forth on the Consideration Spreadsheet, to Buyer an amount in cash equal to such
shortfall by wire transfer of immediately available funds to an account
designated in writing by Buyer to the Seller Representative prior to the date
such payment is due hereunder. Such payment is to be made within
three (3) Business Days of the date on which the Final Cash is finally
determined pursuant to
Section
2.3(b)
.
(e)
Upward Adjustment
. If Final Cash (as finally
determined pursuant to
Section
2.3(b)
) is greater
than Estimated Cash, then the Purchase Price will be adjusted upward by the
amount of such excess, and Buyer shall pay or cause to be paid an amount in cash
equal to such excess to the Preferred Stockholders in the percentages set forth
on the Consideration Spreadsheet. Any such amounts shall be paid by
Buyer within three (3) Business Days from the date on which the Final Cash is
finally determined pursuant to
Section
2.3(b)
by wire
t
ransfer of immediately available funds to an account or accounts
designated on the Consideration Spreadsheet (or such other account designated in
writing by the Seller Representative to Buyer prior to the date such payment is
due hereunder).
2.4
Working
Capital Adjustment
.
(a)
Estimated Working
Capital
. Within two (2) Business Days prior to the Closing
Date, the Seller Representative shall prepare and deliver, or cause to be
prepared and delivered, to Buyer a good faith estimate of the Net Working
Capital as of the close of business on the day immediately preceding the Closing
Date prepared in accordance with GAAP (except as set forth on
Schedule
2.4(a)
) and the principles set forth on
Schedule
2.4(a)
(such estimate, the “
Estimated Working
Capital
”). If the Estimated Working
Capital is less than
the bottom of the Target Working Capital Range, the Initial Purchase Price will
be reduced by the amount of such shortfall (the “
Working
Capital Underage
”), subject to further adjustment as provided in this
Section
2.4
. If the Estimated Working Capital is greater than the
top of the Target Working Capital Range, the Initial Purchase Price will be
increased by the amount of such excess (the “
Working Capital Overage
”), subject to further adjustment as
provided in this
Section
2.4
. If the Estimated Working Capital is within the Target
Working Capital Range, the Initial Purchase Price will not be adjusted pursuant
to this
Section 2.4(a)
, but will be subject to adjustment as
otherwise provided in this
Section 2.4
.
(b)
Working Capital Statement
. Within sixty (60) days
after the Closing Date, Buyer shall cause to be prepared and delivered to the
Seller Representative a working capital statement (the “
Working Capital Statement
”), setting forth Net Working
Capital as of the close of business on the day immediately preceding the Closing
Date (the “
Final Working Capital
”). The Working Capital
Statement is to be prepared in accordance with GAAP (except as set forth on
Schedule 2.4(a)
) and the principles set forth on
Schedule 2.4(a)
.
(c)
Dispute
. Within thirty (30) days following receipt
by Buyer of the Working Capital Statement, Seller Representative shall deliver
written notice to Buyer of any dispute it has with respect to the preparation or
content of the Working Capital Statement. Buyer shall not dispute the
accounting principles and adjustments used in preparing the Working Capital
Statement and Final Working Capital if such principles and adjustments are
consistent with GAAP (except as set forth on
Schedule 2.4(a)
) and those set forth on
Schedule 2.4(a)
. If the Seller Representative
does not notify Buyer of a dispute with respect to the Working Capital Statement
within such thirty (30)-day period, such Working Capital Statement will be
final, conclusive and binding on the parties. In the event of such
notification of a dispute, Buyer and the Seller Representative shall negotiate
in good faith to resolve such dispute. If Buyer and the Seller
Representative, notwithstanding such good faith effort, fail to resolve such
dispute within thirty (30) days after the Seller Representative advises Buyer of
its objections, then Buyer and the Seller Representative jointly shall engage
the Arbitration Firm. As promptly as practicable thereafter, Buyer
and the Seller Representative shall each prepare and submit a presentation to
the Arbitration Firm. As soon as practicable thereafter, Buyer and
the Seller Representative will cause the Arbitration Firm to choose one of the
parties positions based solely upon the presentations by Buyer and the Seller
Representative. The party whose position is not accepted by the
Arbitration Firm shall be responsible for all of the fees and expenses of the
Arbitration Firm. All determinations made by the Arbitration Firm
will be final, conclusive and binding on the parties.
(d)
Access
. For purposes of complying with the terms
set forth in this
Section
2.4
, Bu
yer
and the Company, on the one hand, and the Seller Representative, on the other
hand, shall cooperate with and make available to each other and their respective
representatives all information, records, data and working papers, and shall
permit access to its facilities and personnel, as may be reasonably required in
connection with the preparation and analysis of the Working Capital Statement
and the resolution of any disputes thereunder.
(e)
Within
two Business Days after the date on which the Final Working Capital is finally
determined pursuant to
Section
2.4(c)
, the Seller Representative and Buyer shall jointly determine the
amount by which the Initial Purchase Price would have been adjusted pursuant to
Section
2.4(a)
had the Final Working Capital (as finally determined pursuant to
Section
2.4(c)
) been submitted for Estimated Working Capital as of the
Closing.
(i)
If such
substitutions would have resulted in a Purchase Price that is less than the
Purchase Price that was paid on the Closing Date, then the Preferred
Stockholders shall pay, or the Seller Representative shall pay, or cause to be
paid, on behalf of the Preferred Stockholders in the percentages set forth on
the Consideration Spreadsheet, by bank wire transfer of immediately available
funds to an account designated in writing by Buyer, an amount in cash equal to
such shortfall within five (5) Business Days from the date on which Final
Working Capital is finally determined pursuant to
Section
2.4(c)
.
(ii)
If such
substitutions would have resulted in a Purchase Price that is greater than the
Purchase Price that was paid on the Closing Date, then Buyer shall pay, or cause
to be paid, to the Preferred Stockholders in the percentages set forth on the
Consideration Spreadsheet, an amount in cash equal to such
excess. Such amounts shall be paid by Buyer within five (5) Business
Days from the date on which the Final Working Capital is finally determined
pursuant to
Section
2.4(c)
by wire transfer of immediately available funds to an account or
accounts designated on the Consideration Spreadsheet (or such other accounts
designated in writing by the Seller Representative to Buyer prior to the date
such payment is due hereunder).
(iii)
If such
substitutions would have resulted in a Purchase Price that is equal to the
Purchase Price that was paid on the Closing Date, there will be no adjustment to
the Purchase Price pursuant to this
Section
2.4(e)
.
(f)
Each of
Buyer, the Company or any agent thereof shall be entitled to deduct and withhold
from any consideration payable pursuant to this Agreement to any Seller or other
security holder or former security holder of the Company such amounts as are
required to be deducted or withheld therefrom or in connection therewith under
the Code or any provision of state, local or foreign Tax Law. To the
extent such amounts are so deducted or withheld, such amounts shall be treated
for all purposes under this Agreement as having been paid to the Person to whom
such amounts would otherwise have been paid.
ARTICLE
III
CLOSING
AND DELIVERIES
3.1
Closing
. The
closing of the transactions contemplated hereby (the “
Closing
”)
will take place at the offices of Jones Day, 901 Lakeside Avenue, Cleveland,
Ohio in no event later than the second (2
nd
)
Business Day following the satisfaction or waiver of each of the conditions set
forth in
Article
VIII
(other than those conditions that are to be satisfied at the
Closing), or on such other date or at such other time and place as the parties
mutually agree in writing (the “
Closing
Date
”). All proceedings to be taken and all documents to be
executed and delivered by all parties at the Closing will be deemed to have been
taken and executed simultaneously and no proceedings will be deemed to have been
taken nor documents executed or delivered until all have been taken, executed
and delivered. The effective time of the Closing will be on 12:01
a.m. Eastern Time on the Closing Date.
3.2
Deliveries
by the Sellers
. At or prior to the Closing, the Sellers shall
deliver, or cause to be delivered, to Buyer the following items:
(a)
The stock
certificates representing the Shares, with duly executed stock powers, in a form
reasonably acceptable to Buyer, attached in proper form for
transfer;
(b)
Evidence,
reasonably acceptable to Buyer, of the termination and/or cancellation of each
Option and Warrant as of immediately prior to the Closing;
(c)
The
Payoff Letters and any necessary UCC authorizations or other releases as may be
reasonably required to evidence the satisfaction of such Company
Debt;
(d)
Invoices
and payoff letters reflecting the Selling Expenses;
(e)
The Bonus
Releases;
(f)
The
Consideration Spreadsheet and accompanying officer’s certificate;
(g)
The
certificate of incorporation of the Company and each of the Subsidiaries
certified as of a recent practicable date by the Secretary of State of
Delaware;
(h)
A
certificate of the Secretary of State of Delaware (and from the Secretary of
State from each other foreign jurisdiction in which the Company or the
Subsidiaries are qualified) as to the good standing as of the most recent
practicable date of the Company and the Subsidiaries;
(i)
A
certificate of the Secretary of the Company and each Subsidiary, given by him or
her on behalf of the Company and not in his or her individual capacity,
certifying as to the bylaws of the Company and each of the Subsidiaries and the
resolutions of the Board of Directors of the Company authorizing this Agreement
and the transactions contemplated hereby;
(j)
A
certificate from an officer of the Company, given by him or her on behalf of the
Company and not in his or her individual capacity, to the effect that the
conditions set forth in
Sections
8.2(a)
and
8.2(b)
have been satisfied;
(k)
Written
resignations of board membership and elected offices (but not employment), in a
form reasonably acceptable to Buyer, from each of the directors and officers of
the Company and the Subsidiaries, unless otherwise requested in writing by Buyer
prior to the Closing;
(l)
Original
corporate record books and stock record books of the Company and the
Subsidiaries;
(m)
Evidence
of the termination of the Stockholders Agreement, dated as of June 25, 2002 (as
amended October 3, 2003 and December 30, 2008), by and among the Company, the
Seller Representative and the other parties thereto (the
“
Company
Stockholders Agreement
”);
(n)
Evidence
of the termination of the Advisory Agreement, in a form reasonably acceptable to
Buyer;
(o)
A General
Release executed by each of the Sellers and each of the directors and officers
of the Company and the Subsidiaries;
(p)
Bank
signatory cards for each of the Company’s and Subsidiaries’ bank
accounts;
(q)
A
confidentiality agreement, executed by the Seller Representative, in a form
reasonably acceptable to Buyer;
(r)
An
affidavit issued to Buyer by an officer of the Company as required by Treasury
Regulation Section 1.1445-2(c)(3) certifying that the Company has not been a
United States real property holding corporation (as the term is defined in the
Code and the Treasury Regulations promulgated in connection therewith) at any
time during the five (5)-year period ending on the Closing Date in form and
substance reasonably satisfactory to Buyer; and
(s)
Evidence,
reasonably acceptable to Buyer, of the termination of the Company’s 401(k)
plans.
3.3
Deliveries
by Buyer
. At the Closing, Buyer shall deliver, or cause to be
delivered, to the Seller Representative the following items:
(a)
The
Purchase Price and the Settlement Amounts, in each case, paid in accordance with
Section
2.2
to the
Person or Persons entitled thereto;
(b)
The certificate of incorporation of Buyer certified as of a recent
practicable date by the Secretary of State of Delaware;
(c)
A certificate of the Secretary of State of Delaware as to the good
standing as of a recent practicable date of Buyer in such
jurisdiction;
(d)
A certificate of the Secretary of Buyer, given by him or her on
behalf of Buyer and not in his or her individual capacity, certifying as to the
bylaws of Buyer and as to the resolutions of the Board of Directors of Buyer
authorizing this Agreement and the transactions contemplated hereby;
and
(e)
A certificate
of an officer of Buyer, given by him or her on behalf of Buyer and not in his or
her individual capacity, to the effect that the conditions set forth in
Sections
8.1(a)
and
8.1(b)
have b
een satisfied.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES RELATING TO THE COMPANY
The
Company and the Sellers severally represent and warrant to Buyer as
follows:
4.1
Capitalization
and Title
. The authorized capital stock of the Company
consists of 1,200,000 shares, of which (a) 200,000 shares are Preferred Stock,
(b) 1,000,000 shares are Common Stock, (c) 188,647.14730 shares of Preferred
Stock are issued and outstanding and (d) 325,700
shares of Common Stock
are issued and outstanding, and each issued and outstanding share of Preferred
Stock and Common Stock is duly authorized, validly issued, fully paid and
nonassessable. Other than the Warrants and the Options, there are no:
(a) outstanding securities convertible or exchangeable into shares of capital
stock of the Company; (b) options, warrants, calls, subscriptions or other
rights, agreements or commitments obligating the Company to issue, transfer or
sell any shares of its capital stock; or (c) voting trusts or other
agreements or understandings to which the Company is a party or by which the
Company is bound with respect to the voting, transfer or other disposition of
its shares of capital stock other than the Company Stockholders
Agreement. The Consideration Spreadsheet is accurate and complete in
all respects and accurately sets forth the names, addresses and number of shares
of Preferred Stock held by each Seller and the consideration payable to such
Seller.
Exhibit
B
accurately sets forth the number of Options held by each
Optionholder.
Exhibit
C
accurately sets forth the number of Warrants held by each
Warrantholder. To the Company’s Knowledge, there are no conditions or
circumstances that may give rise to or provide a basis for the assertion of a
claim by any Person to the effect that such Person is entitled to acquire or
receive any shares of capital stock of the Company or other securities of the
Company. All outstanding (i) shares of Common Stock, (ii) Preferred
Stock, (iii) Warrants and (iv) Options have been issued and granted in
compliance with the applicable provisions of all applicable
Laws. Immediately following the Closing, Buyer shall have god and
marketable title to all of the issued and outstanding capital stock of the
Company free and clear of any Liens.
4.2
Subsidiaries
.
(a)
Other
than the Subsidiaries, neither the Company nor the Subsidiaries owns
beneficially or otherwise, any shares or securities of, or any direct or
indirect interest of any nature in, any Person.
(b)
The
authorized capital stock of Whitney consists of 1,000 shares of common stock,
par value $.01 per share, of which 100 shares are issued and outstanding and are
duly authorized, validly issued, fully paid and nonassessable (the “
Whitney
Shares
”).
(c)
The
authorized capital stock of Value Solutions consists of 100 shares, par value
$.01 per share, of which 10 shares are issued and outstanding and are duly
authorized, validly issued, fully paid and nonassessable (the “
Value Solutions
Shares
”).
(d)
The
Company directly or indirectly owns all issued and outstanding Subsidiary Shares
free and clear of all Liens other than Liens arising under the Senior Credit
Agreement. There are no authorized or outstanding options, warrants,
calls, subscriptions or other rights relating to the Subsidiary Shares or with
respect to which the Subsidiaries may be obligated to issue or sell any shares
of their capital stock.
4.3
No
Conflict; Required Filings and Consents
.
(a)
Neither
the execution and delivery of this Agreement by the Sellers or the Company, nor
the consummation by the Sellers of the transactions contemplated hereby, nor
compliance by the Sellers with any of the provisions hereof, will (i) conflict
with or result in a breach of any provisions of the certificate of incorporation
or bylaws of the Company or any Subsidiary, (ii) except as set forth on
Schedule
4.3(a)
,
constitute or result in the breach of any term, condition or provision of, or
constitute a default under, require advance notice of, or give rise to any right
of termination, cancellation, acceleration or any payment with respect to, or
result in the creation or imposition of a Lien upon any property or assets of
the Company or any Subsidiary pursuant to any Contract to which any of them is a
party or by which any of them or their respective properties or assets may be
subject or (iii) violate any Order or Law applicable to the Company or any
Subsidiary or any of their respective properties or assets.
(b)
Other
than approval of the Board of Directors of the Company, no Consent is required
to be obtained by the Company or the Sellers for the consummation by the Sellers
of the transactions contemplated by this Agreement.
(c)
This
Agreement and other agreements to which the Company is a party delivered
hereunder have been (or upon execution and delivery will be) duly authorized,
executed and delivered by the Company, and assuming the due and valid
authorization, execution and delivery of this Agreement and the other agreements
to which the Company is a party delivered hereunder constitutes (or upon
execution and delivery will constitute) the legal, valid and binding obligation
of the Company, enforceable against it in accordance with its terms except for
General Enforceability Exceptions.
4.4
Financial
Statements
.
(a)
Copies of
the following financial statements have been delivered to Buyer or have been
made available to Buyer for its review: (i) a draft of the audited consolidated
balance sheet of the Company as of December 31, 2009 and a draft of the related
audited consolidated statements of operations, stockholders’ equity, and cash
flows for the fiscal year ended December 31, 2009, together with the notes
thereto (the “
Audited Financial
Statements
”), and (ii) the unaudited consolidated balance sheet of the
Company as of June 30, 2010, and the related unaudited consolidated statements
of operations, stockholders’ equity, and cash flows for the six (6)-month period
then ended.
4.5
No
Brokers
. Except for Harris Williams & Co., no broker,
finder or similar agent has been employed by or on behalf of the Sellers or the
Company, and no Person with which the Sellers or the Company has had any
dealings or communications of any kind is entitled to any brokerage commission,
finder’s fee or any similar compensation in connection with this Agreement or
the transactions contemplated hereby.
ARTICLE
V
RESENTATIONS
AND WARRANTIES OF THE SELLERS
Each
Seller represents and warrants, solely with respect to itself, himself or
herself, as the case may be, to Buyer as follows:
5.1
Authority,
Validity and Effect
. Such Seller has all requisite power and
authority or capacity to enter into and perform his, her
or
its obligations under this Agreement and to consummate the transactions
contemplated hereby, and this Agreement has been duly executed and delivered by
such Seller pursuant to all necessary authorization and is the legal, valid and
binding obligation of such Seller, enforceable against such Seller in accordance
with its terms, except as limited by the General Enforceability
Exceptions.
5.2
Title
. Such
Seller (a) is the record and beneficial owner of the Shares set forth across
from such Seller’s name on
Exhibit
A-1
and/or
Exhibit
A-2
hereto, (b) has full power, right and authority, and any approval
required by Law, to (i) make and enter into this Agreement and (ii) sell,
assign, transfer and deliver his, her or its respective Shares to Buyer, and (c)
has good and valid title to his, her or its respective Shares free and clear of
all Liens, other than Liens arising under the Company Stockholders
Agreement. Upon the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof, at the Closing, Buyer will
acquire valid title to the Shares, free and clear of all Liens, other than Liens
created by Buyer.
5.3
Absence
of Conflicts
. The execution and delivery of this Agreement,
the performance by such Seller of his, her or its obligations hereunder and the
consummation of the transactions contemplated hereby will not (a) violate, or
constitute a breach or default under, any provisions of such Seller’s
organizational documents, (b) require the consent of any third party (including
any Governmental Authority and, if applicable, such Seller’s spouse), (c) result
in the creation or imposition of any Lien upon the Shares owned by such Seller,
(d) violate any Law or Order to which such Seller or the Shares owned by such
Seller may be subject, or (e) result in the breach of any of the terms or
conditions of, or constitute a default under, or in any manner release any party
thereto from any obligation under, any mortgage, note, bond, indenture,
contract, agreement, license or other instrument or obligation of any kind or
nature by which such Seller or the Shares owned by such Seller may be bound or
affected.
5.4
Litigation
. There
are no pending or, to the knowledge of such Seller, threatened Actions either to
which such Seller is a party or by which the Shares owned by such Seller are
bound or affected or which affect or relate to the transactions contemplated
hereby. To the knowledge of such Seller, there is no reasonable basis
for any such legal action, proceeding or investigation. None of the
Shares owned by such Seller is subject to any Order.
ARTICLE
VI
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer
represents and warrants to the Company and the Sellers as follows:
6.1
Investment
Intent
. The Shares are being purchased for Buyer’s own account
and not with the view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act and the rules
and regulations promulgated thereunder.
6.2
Authority,
Validity and Effect
. Buyer has the requisite power and
authority to execute and deliver this Agreement and all agreements and documents
contemplated hereby to be executed and delivered by it, and to consummate the
transactions contemplated hereby and thereby without obtaining any additional
approvals (whether internal or third party). The execution and
delivery of this Agreement and such other agreements and documents and the
consummation of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary action on the part of
Buyer. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except as limited
by the General Enforceability Exceptions.
6.3
No
Conflict; Required Consents
.
(a)
Neither
the execution and delivery of this Agreement by Buyer, nor the consummation by
Buyer of the transactions contemplated hereby, nor compliance by Buyer with any
of the provisions hereof, will (i) conflict with or result in a breach of any
provisions of the articles or certificate of incorporation or bylaws or
equivalent organizational documents of Buyer, (ii) constitute or result in the
breach of any term, condition or provision of, or constitute a default under,
any material contract to which the Buyer is a party, or (iii) violate any Order
or Law applicable to Buyer or any of its properties or assets.
(b)
Other
than approval of the Board of Directors of each of Buyer and U.S. Auto Part
Network, Inc., no Consent is necessary for the consummation by Buyer of the
transactions contemplated by this Agreement.
6.4
No
Financing
. Buyer has (or will have from its Affiliates)
sufficient funds presently available, and no non-Affiliate third party debt or
equity financing is required, for Buyer to deliver the Purchase Price and to
consummate the transactions contemplated by this Agreement. As of the
date hereof, Buyer has no reason to believe that Buyer will not be able to pay
the Purchase Price.
6.5
No
Brokers
. No broker, finder or similar agent has been employed
by or on behalf of Buyer, and no Person with which Buyer has had any dealings or
communications of any kind is entitled to any brokerage commission, finder’s fee
or any similar compensation in connection with this Agreement or the
transactions contemplated hereby.
ARTICLE
VII
COVENANTS
AND AGREEMENTS
7.1
Interim
Operations of the Company
. Prior to the Closing Date or the
earlier termination of this Agreement pursuant to
Article
IX
(such period, the “
Interim
Period
”), except as set
forth on
Schedule
7.1
or as
expressly contemplated by this Agreement, unless Buyer has previously consented
in writing thereto (which consent will not be unreasonably withheld, conditioned
or delayed), the Company agrees, and agrees to cause the Subsidiaries, to use
commercially reasonable efforts to carry on the businesses of the Company and
the Subsidiaries in accordance with the expense plan delivered to Buyer on the
date hereof and to preserve intact the Company’s and Subsidiaries’ current
business organization, keep available the services of the Company’s and
Subsidiaries’ current officers and employees and to preserve the Company’s and
the Subsidiaries’ relationships with suppliers, distributors, licensors,
licensees and others with which the Company and the Subsidiaries have business
dealings (including, without limitation, shipping products, paying vendors and
continuing marketing efforts, all in accordance with the expense plan delivered
to Buyer on the date hereof). In addition, without limiting the
foregoing, during the Interim Period, except as set forth on
Schedule
7.1
or as
expressly contemplated by this Ag
reement, unless Buyer has previously
consented in writing thereto (which consent will not be unreasonably withheld,
conditioned or delayed), the Company shall not and shall not permit the
Subsidiaries to:
(a)
incur any
indebtedness for borrowed money or issue any long-term debt securities or
assume, guarantee or endorse such obligations of any other Person, except for
indebtedness incurred in the ordinary course of business consistent with past
practice under the Senior Credit Agreement;
provided
, the
additional aggregate amount of such borrowed money under the Senior Credit
Agreement shall not exceed $2,000,000;
(b)
except
for the sale of products in the ordinary course of business consistent with past
practice, (i) acquire, or dispose of, any property or assets, (ii) mortgage
or encumber any property or assets other than Permitted Liens, or (iii) cancel
any debts owed to or claims held by the Company or any Subsidiary;
(c)
(i) enter
into any Contracts that would constitute a material Contract except Contracts
made in the ordinary course of business consistent with past practice,
(ii) terminate any material Contract or (iii) amend any material
Contract;
(d)
enter
into or amend any Contracts with any Affiliates of the Company, except to the
extent required by Law;
(e)
except to
the extent required by Law, enter into, adopt, amend or terminate any Contract
relating to the compensation or severance of any employee of the Company or any
Subsidiary other than in the ordinary course of business consistent with past
practice or establish, adopt, enter into or amend any employee
plan;
(f)
make any
material change to its accounting (including Tax accounting) methods, principles
or practices, except as may be required by GAAP, or make any Tax
election;
(g)
make any
amendment to its certificate of incorporation or bylaws (or equivalent
organizational documents);
(h)
declare
or pay any dividends or distributions (whether in cash, stock or property or any
combination thereof) or repurchase any shares of capital stock or other equity
interests;
(i)
issue or
sell any capital stock or other equity interests or options, warrants, calls,
subscriptions or other rights to purchase any capital stock or other equity
interests of the Company or any Subsidiary or split, combine or subdivide the
capital stock or other equity interests of the Company or any
Subsidiary;
(j)
sell,
transfer, license, sublicense or otherwise dispose of any material company
intellectual property, or amend or modify any existing agreements with respect
to any material intellectual property rights of the Company;
(k)
acquire
(by merger, consolidation, or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof or enter into any
partnership arrangements, joint development agreements or strategic
alliances;
(l)
initiate,
settle or agree to settle any Action (other than any such litigation, action,
suit, proceeding, or arbitration involving a claimed amount of less than
$10,000
and not
involving any equitable relief); or
(m)
take, or
agree to take, any of the actions described in sub-clauses (a) through (l)
above, or any action which would make any of the representations or warranties
of the Company or the Sellers untrue or incorrect.
If the
Company wishes to obtain the consent of Buyer to take actions for which prior
consent is required pursuant to this
Section
7.1
, the Company shall request such consent in a writing delivered to the
attention of the Chief Executive Officer of Buyer. A consent signed
by such officer(s) shall be deemed sufficient for purposes hereof.
7.2
Reasonable
Access; Confidentiality
.
(a)
From the
date hereof until the Closing Date or the earlier termination of this Agreement,
and subject to applicable Law, the Company shall give and shall cause the
Subsidiaries to give Buyer and its representatives, upon reasonable notice to
the Seller Representative or its representatives, reasonable access, during
normal business hours, to the assets, properties, books, records, employees and
agreements of the Company and the Subsidiaries and the Company shall, and shall
cause the Subsidiaries to, permit Buyer to make such inspections (but excluding
sampling or testing of the Environment without the Seller Representative’s prior
written consent (provided such consent shall not be unreasonably withheld or
delayed)) as Buyer may reasonably require and to furnish Buyer during such
period with all such information relating to the Company and the Subsidiaries as
Buyer may from time to time reasonably request. Notwithstanding the
broad scope of the foregoing, the Company shall provide Buyer with access to the
Company’s inventory to conduct an inventory audit from August 6-9,
2010.
(b)
Any
information provided to or obtained by Buyer pursuant to clause (a) above
will be subject to the Confidentiality Agreement, dated June 13, 2010 entered
into by Buyer or its Affiliate for the benefit of the Company (the “
Confidentiality
Agreement
”), and must be held by Buyer in accordance with and be subject
to the terms of the Confidentiality Agreement.
(c)
Prior to
the Closing, Buyer agrees to be bound by and comply with the provisions set
forth in the Confidentiality Agreement as if such provisions were set forth
herein, and such provisions are hereby incorporated herein by reference, the
Confidentiality Agreement shall terminate as to Buyer as of the date of
Closing.
7.3
Publicity
. Except
as may be required to comply with the requirements of any applicable Law or the
rules and regulations of any stock exchange or national market system upon which
the securities of Buyer are listed, no party will issue any press release or
other public announcement prior to the Closing Date relating to the subject
matter of this Agreement or the transactions contemplated hereby without the
prior written approval (which approval will not be unreasonably withheld,
conditioned or delayed) of in the case of a press release or other public
announcement by Buyer, the Seller Representative and in the case of a press
release or other public announcement by the Company or any Seller, Buyer;
provided
,
however
, that after
the Closing, Buyer will be entitled to issue any such press release or make any
such other public announcement without obtaining such prior
approvals. For purposes of clarity, nothing herein shall limit the
Seller Representative’s ability to provide information relating to this
Agreement to its Affiliates on a confidential basis.
7.4
Records
. With
respect to the financial books and records and minute books of the Company and
the Subsidiaries relating to matters on or prior to the Closing
Date: (a) for a period of two (2) years (or such shorter period as
permitted by the Company’s applicable document retention policy) after the
Closing Date, Buyer shall not cause or permit their destruction or disposal
without first offering to surrender them to the Seller Representative; and (b)
where there is legitimate purpose and subject to the delivery of a
confidentiality agreement in a form reasonably acceptable to Buyer, Buyer shall
allow the Seller Representative and its respective representatives access to
such books and records during regular business hours.
7.5
Indemnification
. The
Seller Representative has procured and shall maintain an extended reporting
period endorsement under the Company’s existing directors’ and officers’
liability insurance coverage for the Company’s current and former directors and
officers that provides such directors and officers with coverage for six (6)
years following the Closing.
7.6
Update
and Disclosure
.
(a)
From the
date hereof through the Closing Date or the earlier termination of this
Agreement, Buyer and the Seller Representative shall promptly give written
notice to the other parties of any event, condition or circumstance occurring
from the date hereof through the Closing Date or earlier termination of this
Agreement that would cause any representation or warranty of Buyer, on the one
hand, or the Company or any Seller, on the other hand, respectively, contained
herein to become misleading, inaccurate or false or that would constitute a
violation or breach of this Agreement, or that would make the timely
satisfaction of any of the conditions set forth in
Article
VIII
impossible or unlikely.
(b)
Each of
the Company, the Sellers and Buyer shall give reasonable notice to the other
of: (i) any written or, to the Company’s Knowledge, oral notice from
any person alleging that the Consent of such person is or may be required in
connection with the transactions contemplated by this Agreement; (ii) any
written or, to the Company’s Knowledge, oral notice from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
(iii) any litigation that is filed relating to or involving or otherwise
affecting the Company, the Sellers or Buyer that relates to the transactions
contemplated by this Agreement; and (iv) any change that could reasonably be
expected to impair in any material respect the ability of either the Company,
the Sellers or Buyer to consummate the transactions contemplated by this
Agreement.
7.7
Efforts;
Cooperation
. Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement and to obtain satisfaction or waiver of the conditions precedent to
the consummation of the transactions contemplated hereby, including (a)
obtaining all of the necessary Consents from Governmental Authorities and other
third parties and the making of all filings and the taking of all steps as may
be necessary to obtain Consent from, or to avoid an Action by, any Governmental
Authority, (b) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Authority
vacated or reversed and (c) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement.
7.8
Post
Closing Cooperation
. After the Closing, the Seller
Representative shall (and shall use reasonable efforts to cause each of the
Sellers to) provide Buyer (at Buyer’s reasonable cost and expense) with such
cooperation and information relating to the Company as Buyer reasonably may
request in defending or pursuing any Action.
7.9
No
Negotiation
. During the Interim Period, the Company and the
Sellers shall not, and shall not authorize or permit any of their respective
directors, officers, employees, agents or representatives, to, directly or
indirectly:
(a)
solicit
or encourage the initiation of any inquiry, proposal or offer from any Person
(other than Buyer or its Affiliates) relating to a possible Acquisition
Transaction;
(b)
participate
in any discussions or negotiations or enter into any agreement with, or provide
any non-public information to, any Person (other than Buyer or its Affiliates)
relating to or in connection with a possible Acquisition Transaction;
or
(c)
consider,
entertain or accept any proposal or offer from any Person (other than Buyer or
its Affiliates) relating to a possible Acquisition Transaction.
The
Company shall promptly (and in no event later than two (2) Business Days after
receipt of any inquiry or indication of interest that could reasonably lead to
any Acquisition Transaction or any request for nonpublic information relating to
a potential Acquisition Transaction) advise Buyer orally and in writing of any
such inquiry or indication of interest that could reasonably lead to any
Acquisition Transaction or any request for nonpublic information relating to a
potential Acquisition Transaction (including the terms thereof) that is made or
submitted by any Person during the Interim Period. Company shall keep
Buyer reasonably informed with respect to the status of any such offer,
proposal, inquiry or indication of interest contemplating or otherwise relating
to any Acquisition Transaction and any modification or proposed modification
thereto.
7.10
Contract
Termination
. On or prior to August 6, 2010 the Company shall
deliver to Buyer a proposed contract termination letter as set forth on, and
subject to the provisions of,
Schedule
7.10
.
7.11
Transfer
Taxes
. All transfer, documentary, sales, use, stamp,
registration, value added and other such Taxes and fees (including any penalties
and interest) imposed in connection with this Agreement will be borne and timely
paid one-half by Buyer and one-half by the Sellers and the parties, at their
shared expense, will cause to be timely filed all necessary Tax Returns and
other documentation.
ARTICLE
VIII
CONDITIONS
TO CLOSING
8.1
Conditions
to Obligations of the Sellers
. The obligations of the Sellers
to consummate the transactions contemplated by this Agreement are subject to the
satisfaction or waiver (if permitted by applicable Law) at or prior to the
Closing of each of the following conditions:
(a)
The
representations and warranties of Buyer set forth in this Agreement and in each
of the other agreements, schedules and instruments delivered by Buyer in
connection with the transactions contemplated by this Agreement shall have been
accurate in all material respects as of the date of this Agreement (without
giving effect to any materiality or material adverse effect qualifications
contained therein) and must be true and correct in all material respects
(without giving effect to any materiality or material adverse effect
qualifications contained therein) as of the Closing Date as though made on and
as of the Closing Date (except to the extent expressly made as of an earlier
date, in which case as of such date).
(b)
Buyer
must have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing.
(c)
Buyer
must have delivered to the Sellers the items required by
Section
3.3
.
(d)
None of the parties hereto will be subject to any Order of a court
of competent jurisdiction that prohibits the consummation of the transactions
contemplated by this Agreement.
8.2
Conditions to Obligations of Buyer
. The
obligations of Buyer to consummate the transactions contemplated by this
Agreement are subject to the satisfaction or waiver (if permitted by applicable
Law) at or prior to the Closing of each of the following
conditions:
(a)
The representations and warranties of the Company and the Sellers
set forth in this Agreement and in each of the other agreements, schedules and
instruments delivered by the Company and the Sellers in connection with the
transactions contemplated by this Agreement shall have been accurate in all
material respects as of the date of this Agreement (without giving effect to any
materiality or material adverse effect qualifications contained therein) and
must be true and correct in all material respects (without giving effect to any
materiality or material adverse effect qualifications contained therein) as of
the Closing Date as though made on and as of the Closing Date (except to the
extent expressly made as of an earlier date, in which case as of such
date).
(b)
The Sellers and the Company must have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Closing Date.
(c)
The Sellers must have delivered to Buyer the items required by
Section 3.2
.
(d)
None of the parties hereto will be subject to any Order of a court
of competent jurisdiction that prohibits the consummation of the transactions
contemplated by this Agreement.
(e)
The Company shall have caused, at Buyer’s expense, the Company’s
auditors to commence the procedures necessary to update the Audited Financial
Statements for fiscal year end January 2, 2010 promptly following the date of
this Agreement, but in any event prior to August 6, 2010.
(f)
Since the date of this Agreement, there shall have been no Material
Adverse Effect on the Company.
8.3
Frustration of Closing Conditions
. Neither the
Sellers nor Buyer may rely on the failure of any condition set forth in
Section
8.1
or
Section
8.2
, as the case may be, to be satisfied if such failure
was caused by such party’s failure to comply with its obligations to consummate
the transactions contemplated by this Agreement as required by and subject to
Section 7.7
.
ARTICLE IX
TERMINATION OF AGREEMENT
9.1
Termination
. Notwithstanding any other provision
of this Agreement, this Agreement may be terminated at any time prior to the
Closing:
(a)
by the mutual written consent of Buyer, the Company and the Seller
Representative (on behalf of the Sellers);
(b)
by Buyer, on the one hand, or the Company and the Seller
Representative (on behalf of the Sellers), on the other hand, upon written
notice to the other party, if the transactions contemplated by this Agreement
have not been consummated on or prior to August 31, 2010
or such later date, if any, as Buyer and the Seller
Representative agree upon in writing (the “
Termination Date
”);
provided
,
however
, that the right to terminate this Agreement pursuant
to this
Section
9.1(b)
is not available to any party whose breach of any
provision of this Agreement results in or causes the failure of the transactions
contemplated by this Agreement to be consummated by such time;
(c)
by Buyer, on the one hand, or the Company and the Seller
Representative (on behalf of the Sellers), on the other hand, upon written
notice to the other party, if a Governmental Authority of competent jurisdiction
and residing in a jurisdiction in which the Company or any Subsidiary does
business has issued an Order or any other action permanently enjoining,
restraining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement, and such Order has become final and
non-appealable;
provided
,
however
, that the right to terminate this Agreement pursuant
to this
Section
9.1(c)
is not available to any party whose breach of any
provision of this Agreement results in or causes such Order or other action or
such party is not in compliance with its obligations under
Section
7.7
;
(d)
by the Seller
Representative and the Company, if (i) Buyer has breached or failed to perform
any of its covenants or other agreements contained in this Agreement to be
complied with by Buyer such that the closing condition set forth in
Section
8.1(b)
would
not be satisfied or (ii) there exists a breach of any representation or warranty
of Buyer contained in this Agreement such that the closing condition set forth
in
Section
8.1(a)
would not be satisfied, and in the case of both
(i) and (ii) above, such breach or failure to perform is not cured within thirty
(30) days after receipt of written notice thereof (but in no event later than
the Termination Date) or is incapable of being cured by Buyer by the Termination
Date;
provided
,
however
, that
the right to terminate this Agreement pursuant to this
Section 9.1(d)
is not available to any party who (A) breached any representation or warranty
contained in this Agreement such that the closing condition set forth in
Section
8.2(a)
would not be satisfied or (B) failed to perform any of its
covenants; or
(e)
by Buyer,
if (i) the Sellers or the Company have breached or failed to perform any of
their covenants or other agreements contained in this Agreement to be complied
with by them such that the closing condition set forth in
Section
8.2(b)
would
not be satisfied or (ii) there exists a breach of any representation or warranty
of the Sellers or the Company contained in this Agreement such that the closing
condition set forth in
Section
8.2(a)
would
not be satisfied, and in the case of both (i) and (ii) above, such breach or
failure to perform is not cured within thirty (30) days after receipt of written
notice thereof (but in no event later than the Termination Date) or is incapable
of being cured by the Sellers by the Termination Date;
provided
,
however
, that the right to terminate this Agreement pursuant
to this
Section 9.1(e)
is not available if Buyer (A) breached any
representation or warranty contained in this Agreement such that the closing
condition set forth in
Section 8.1(a)
would not be satisfied or (B) failed to
perform any of its covenants.
9.2
Effect of Termination
. In the event of termination
of this Agreement pursuant to
Section
9.1
by
either Buyer, on the one hand, or the Seller Representative and the Company, on
the other hand, this Agreement will become void and have no effect effective
immediately upon the delivery of written notice of the terminating party to the
other party hereto (or upon expiration of the applicable cure period if this
Agreement is terminated pursuant to
Section 9.1(d) or (e)
), without any liability or
obligation on the part of Buyer or the Sellers, other than the provisions of
Section
7.2(b)
,
Section
7.3
, this
Section
9.2
,
and
Article
XI
which will survive any termination of this Agreement;
provided
,
however
,
that nothing herein will relieve any party from any liability for any breach by
such party of its covenants or agreements set forth in this
Agreement.
9.3
Treatment
of Deposit
.
(a)
In the
event of the termination of this Agreement pursuant to
Section 9.1(d)
,
Buyer and the Seller Representative shall cause the Escrow Agent to immediately
release the Deposit (plus any interest earned on the Deposit) to the Company
pursuant to the terms of the Deposit Escrow Agreement
and Buyer shall have no
claims to the return of the Deposit.
(b)
In the
event of the termination of this Agreement for any reason other than pursuant to
Section
9.1(d)
, Buyer and the Seller Representative shall cause the Escrow Agent
to immediately release the Deposit (plus any interest earned on the Deposit) to
Buyer pursuant to the terms of the Deposit Escrow Agreement
and the Company and the
Sellers shall have no claims to the Deposit.
ARTICLE
X
REMEDIES
10.1
Indemnification
by Buyer
. Buyer will indemnify and hold harmless the Sellers
and their respective successors and permitted assigns, and the officers,
employees, directors, managers, members, partners and stockholders of the
Sellers and their heirs and personal representatives (collectively, the “
Seller
Indemnitees
”) from and against, and will pay to the Seller Indemnitees
the amount of, any and all out-of-pocket losses, liabilities, claims, damages,
penalties, fines, judgments, awards, settlements, Taxes, costs, fees (including
reasonable investigation fees), expenses (including reasonable attorneys’ fees)
and disbursements (collectively, “
Losses
”)
actually incurred by any of the Seller Indemnitees following the Closing Date
based upon any breach of or inaccuracy in the representations and warranties of
Buyer contained in
Section
6.1
(Investment Intent) and
Section
6.2
(Authority, Validity and Effect).
10.2
Indemnification
by the Preferred Stockholders
.
(a)
Each
Preferred Stockholder will severally, on a pro-rata basis based on the
percentages set forth on
Exhibit
A-1
, indemnify and hold harmless Buyer and its Affiliates (including,
after the Closing, the Company) and each of their respective successors and
permitted assigns, officers, employees, directors, members, managers,
stockholders, representatives and agents (collectively, the “
Buyer
Indemnitees
”) from and against, and will pay to the Buyer Indemnitees the
amount of, any Losses actually incurred by any of the Buyer Indemnitees based
upon any breach of or inaccuracy in the representations and warranties of the
Sellers or the Company contained in
Section
4.1
(Capitalization and Title) and
Section
4.3
(Authority).
(b)
Each
Preferred Stockholder will indemnify and hold harmless the Buyer Indemnitees
from and against, and will pay to the Buyer Indemnitees the amount of, any
Losses actually incurred by any of the Buyer Indemnitees based upon any breach
of or inaccuracy in the representations and warranties of such Preferred
Stockholder contained in
Section
5.1
(Authority, Validity and Effect) and
Section
5.2
(Title). No Seller will be liable for any claim with
respect to another Seller's breach of any representation or warranty contained
in
Article
V
.
(c)
Except in
the case of fraud, intentional misrepresentation or willful misconduct committed
by such Seller, notwithstanding anything to the contrary in this Agreement, no
Seller will be liable for any amount under this Agreement in excess of his or
its portion of the Purchase Price actually received by such Seller on the
Closing Date.
10.3
Survival
. The
representations and warranties set forth in
Section
4.1
(Capitalization and Title),
Section
4.3(c)
(Authority),
Section
5.1
(Authority, Validity and Effect),
Section
5.2
(Title),
Section
6.1
(Investment Intent) and
Section
6.2
(Authority, Validity and Effect) will survive the Closing Date for a
period of 90 days, at which point such representations and warranties and any
claim for indemnification on account thereof or otherwise will terminate, except
for pending claims brought prior to the 90-day anniversary of the Closing
Date. Except as explicitly set forth in the prior sentence, none of
the representations and warranties in this Agreement or in any Schedule,
instrument or other document delivered pursuant to this Agreement will survive
the Closing Date.
10.4
Exclusive
Remedy
. Except in the case of fraud, intentional
misrepresentation or willful misconduct, the parties agree that, from and after
the Closing Date, the exclusive remedies of the parties for any Losses based
upon, arising out of or otherwise in respect of the matters set forth in this
Agreement are the indemnification or reimbursement obligations of the parties
set forth in this
Article
X
.
10.5
No
Implied Representations
.
Except
in the case of any claims for fraud, each of Buyer, the Company and the Sellers
acknowledge that, except as expressly provided in this Agreement, no
party hereto, and none of the representatives of any party hereto, has made or
is making any representations or warranties whatsoever, implied or
otherwise.
ARTICLE
XI
MISCELLANEOUS
AND GENERAL
11.1
Seller
Representative
.
(a)
The
Seller Representative is hereby constituted and appointed as exclusive proxy,
representative, agent and attorney-in-fact for and on behalf of the other
Sellers, with full power of substitution, to make all decisions and
determinations and to act and execute, deliver and receive all documents,
instruments and consents on behalf of and as agent for such Sellers at any time
in connection with, and that may be necessary or appropriate to accomplish the
intent and implement the provisions of this Agreement. Without
limiting the generality of the foregoing, the Seller Representative has full
power and authority, on behalf of each Seller and his or her successors and
assigns, to (i) interpret the terms and provisions of this Agreement and
the documents to be executed and delivered by the Sellers in connection
herewith, (ii) execute and deliver and receive deliveries of all agreements,
certificates, statements, notices, approvals, extensions, waivers, undertakings,
amendments and other documents required or permitted to be given in connection
with the consummation of the transactions contemplated by this Agreement, (iii)
receive service of process in connection with any claims under this Agreement,
(iv) agree to, negotiate and enter into settlements and compromises of, assume
the defense of claims and comply with Orders with respect to such claims, and to
take all actions necessary or appropriate in the judgment of the Seller
Representative for the accomplishment of the foregoing, (v) give and receive
notices and communications, (vi) take all actions necessary or appropriate in
the judgment of the Seller Representative on behalf of the Sellers in connection
with this Agreement, (vii) make any determinations and settle any matters in
connection with the adjustments to the Purchase Price in
Section
2.3
and
Section
2.4
, and (viii) use the Representative Fund Amount to pay, or establish a
reserve for, any costs, fees, expenses and other liabilities incurred by the
Seller Representative (in its capacity as such) in connection with this
Agreement and its obligations hereunder. By executing this Agreement,
the Seller Representative accepts the appointment, authority and power
contemplated by this
Section
11.1
.
(b)
Such
agency may be changed by the Seller Representative from time to time upon not
less than five (5) days prior written notice to Buyer (so long as such change is
reasonably acceptable to Buyer). The Seller Representative, or any
successor hereafter appointed, may resign at any time by written notice to
Buyer. Such written notice to the Buyer shall include the Seller
Representative’s appointment of a successor (and such successor shall be
reasonably acceptable to Buyer). All power, authority, rights and
privileges conferred in this Agreement to the Seller Representative will apply
to any successor Seller Representative.
(c)
The
Seller Representative will not be liable for any act done or omitted under this
Agreement as Seller Representative while acting in good faith, and any act taken
or omitted to be taken pursuant to the advice of counsel will be conclusive
evidence of such good faith. Buyer agrees that it will not look to
the personal assets of the Seller Representative, acting in such capacity, for
the satisfaction of any obligations to be performed by the Company (pre-Closing)
or the Sellers and the Seller Representative will not look to Buyer or,
post-Closing, the Company for any of the Sellers’ indemnification obligations
hereunder. In performing any of its duties under this Agreement or
any agreements or documents executed and delivered in connection herewith, the
Seller Representative will not be liable to the Sellers for any losses any that
such Person may incur as a result of any act, or failure to act, by the Seller
Representative under this Agreement or any agreements or documents executed and
delivered in connection herewith, and the Seller Representative will be
indemnified and held harmless by the Sellers for all losses, except to the
extent that the actions or omissions of the Seller Representative were taken or
omitted not in good faith. The limitation of liability and
indemnification provisions of this
Section
11.1(c)
will survive the termination of this Agreement and the
resignation of the Seller Representative.
(d)
The
appointment of the Seller Representative is coupled with an interest and may not
be revoked in whole or in part (including, without limitation, upon the death or
incapacity of any Seller). Such appointment shall be binding upon the heirs,
executors, administrators, estates, personal representatives, officers,
directors, security holders, successors and assigns of each Seller. All
decisions of the Seller Representative shall be final and binding on all of the
Sellers and no securityholder shall have the right to object, dissent, protest
or otherwise contest the same. Buyer shall be entitled to rely upon, without
independent investigation, any act, notice, instruction or communication from
the Seller Representative and any document executed by the Seller Representative
on behalf of any Seller and shall be fully protected in connection with any
action or inaction taken or omitted to be taken in reliance
thereon.
11.2
Expenses
. Except
as set forth in this Agreement, all costs and expenses (including all legal,
accounting, broker, finder or investment banker fees) incurred in connection
with this Agreement and the transactions contemplated hereby are to be paid, in
the case of the Company, by the Company (if the transactions contemplated by
this Agreement are not consummated), or will be treated as Selling Expenses (if
the transactions contemplated by this Agreement are consummated) to the extent
unpaid at the Closing, in the case of Buyer, by Buyer, and in the case of each
Seller, by such Seller.
11.3
Successors
and Assigns
. This Agreement is binding upon and inures to the
benefit of the parties hereto and their respective successors and permitted
assigns, but is not assignable by any party without the prior written consent of
the other parties hereto; provided, however, Buyer may, without consent, assign
all such rights to any Person that controls, is controlled by or under common
control with Buyer or to any entity that acquires substantially all of the
assets of Buyer or survives any merger with Buyer. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns.
11.4
Third
Party Beneficiaries
. Except as set
forth in
Section
7.5
and the rights of the Indemnitees under
Article X
(which is intended to be for the benefit of the
parties indemnified thereby and may be enforced by such parties), each party
hereto intends that this Agreement does not benefit or create any right or cause
of action in or on behalf of any Person other than the parties
hereto.
11.5
Further Assurances
. The parties shall execute such
further instruments and take such further actions as may reasonably be necessary
to carry out the intent of this Agreement. Each party hereto shall
cooperate affirmatively with the other parties, to the extent reasonably
requested by such other parties, to enforce rights and obligations herein
provided.
11.6
Notices
. Any
notice or other communication provided for herein or given hereunder to a party
hereto must be in writing, and (a) sent by facsimile transmission, (b)
electronic mail, (c) delivered in person, (d) mailed by first class registered
or certified mail, postage prepaid, or (e) sent by Federal Express or other
overnight courier of national reputation, addressed as follows:
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If
to the Company (only after Closing) or Buyer:
c/o
U.S. Auto Parts Network, Inc.
17150
South Margay Avenue
Carson,
CA 90746
Attention:
Vice President Legal
Fax: (310)
735-0553
email: akrallman@usautoparts.com
If
to the Company (only prior to Closing) or the Seller
Representative:
The
Riverside Company
45
Rockefeller Center
630
Fifth Avenue, Suite 2400
New
York, New York 10111
Attention: Chief
Financial Officer
Fax:
(212) 265-6478
email: brs@riversidecompany.com
with
a copy to:
Jones
Day
901
Lakeside Ave.
Cleveland,
OH, 44114
Attention:
Lisa S. Lathrop
Fax:
(216) 579-0212
email:
lslathrop@jonesday.com
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or to
such other address with respect to a party as such party notifies the other in
writing as above provided. Each such notice or communication will be
effective (i) if given by facsimile, when the successful sending of such
facsimile is electronically confirmed, (ii) if given by electronic mail, when
electronic evidence of receipt is received, or (iii) if given by any other means
specified in the first sentence
of this
Section
11.6
, upon
delivery or refusal of delivery at the address specified in this
Section
11.6
.
11.7
Complete
Agreement
. This Agreement and exhibits and schedules hereto
and the other documents delivered by the parties in connection herewith,
together with the Confidentiality Agreement, contain the complete agreement
between the parties hereto with respect to the transactions contemplated hereby
and thereby and supersede all prior agreements and understandings between the
parties hereto with respect thereto.
11.8
Captions
. The
captions contained in this Agreement are for convenience of reference only and
do not form a part of this Agreement.
11.9
Amendment
. This
Agreement may be amended or modified only by an instrument in writing duly
executed by the Seller Representative and Buyer.
11.10
Waiver
. The
Seller Representative or Buyer may (a) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (b) waive compliance with any of the covenants, agreements or
conditions contained herein, to the extent permitted by applicable
Law. Any agreement to any such waiver will be valid only if set forth
in a writing signed by the Seller Representative, on behalf of the Sellers if
the Sellers are making the waiver, or Buyer. No failure on the part
of any Person to exercise any power, right, privilege or remedy under this
Agreement, and no delay on the part of any Person in exercising any power,
right, privilege or remedy under this Agreement, shall operate as a waiver of
such power, right, privilege or remedy; and no single or partial exercise of any
such power, right, privilege or remedy shall preclude any other or further
exercise thereof or of any other power, right, privilege or
remedy. Any waiver shall not be applicable or have any effect except
in the specific instance in which it is given.
11.11
Conflict
of Interest
. If the Sellers or the Seller Representative so
desire, and without the need for any consent or waiver by the Company or Buyer,
Jones Day is permitted to represent the Sellers and/or the Seller Representative
after the Closing in connection with any matter, including without limitation
anything related to the transactions contemplated by this Agreement or any
disagreement or dispute relating thereto. Without limiting the
generality of the foregoing, after the Closing, Jones Day is permitted to
represent the Sellers, the Seller Representative, any of their agents and
affiliates, or any one or more of them, in connection with any negotiation,
transaction or dispute (“dispute” includes litigation, arbitration or other
adversary proceeding) with Buyer, the Company or, any Subsidiary any of their
respective agents or affiliates under or relating to this Agreement, any
transaction contemplated by this Agreement, and any related matter, such as
claims for indemnification and disputes involving employment or noncompetition
or other agreements entered into in connection with this
Agreement. Upon and after the Closing, the Company and the
Subsidiaries shall cease to have any attorney-client relationship with Jones
Day, unless and to the extent Jones Day is specifically engaged in writing by
the Company or any Subsidiary to represent the Company or any Subsidiary after
the Closing and either such engagement involves no conflict of interest with
respect to Sellers or the Seller Representative or the Sellers, or the Seller
Representative (as applicable) consent in writing at the time to such
engagement.
11.12
Governing
Law
. This Agreement is to be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without regard
to its rules of conflict of laws. Without limiting the procedures expressly set
forth in
Sections
2.3
or
2.4
,
in any action between any of the parties arising out of or relating to this
Agreement or any of the transactions contemplated by this Agreement:
(a) each of the parties irrevocably and unconditionally consents and
submits to the exclusive jurisdiction and venue of the state and federal courts
located in Delaware; (b) if any such action is commenced in a state court, then,
subject to applicable law, no party shall object to the removal of such action
to any federal court located in Delaware; (c) each of the parties irrevocably
waives the right to trial by jury; and (d) each of the parties irrevocably
consents to service of process by first class certified mail, return receipt
requested, postage prepaid, to the address at which such party is to receive
notice in accordance with
Section
11.6
.
11.13
Severability
. Any
term or provision of this Agreement that is invalid or unenforceable in any
jurisdiction will, as to that jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision will be interpreted to be only so broad as is
enforceable. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties hereto agree that the court making such determination
shall have the power to limit the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified. In the event such
court does not exercise the power granted to it in the prior sentence, the
parties hereto agree to replace such invalid or unenforceable term or provision
with a valid and enforceable term or provision that will achieve, to the extent
possible, the economic, business and other purposes of such invalid or
unenforceable term.
11.14
Counterparts;
Electronic Transmission
. This Agreement may be executed in two
or more counterparts (any of which may be delivered by facsimile or email
transmission), each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
11.15
Attorneys’
Fees
.
If any action or
proceeding relating to this Agreement or the enforcement of any provision of
this Agreement is brought against any party hereto, the prevailing party shall
be entitled to recover reasonable attorneys’ fees, costs and disbursements (in
addition to any other relief to which the prevailing party may be
entitled).
11.16
Construction
.
(a)
For
purposes of this Agreement, whenever the context requires: the singular number
shall include the plural, and vice versa; the masculine gender shall include the
feminine and neuter genders; the feminine gender shall include the masculine and
neuter genders; and the neuter gender shall include the masculine and feminine
genders.
(b)
As used
in this Agreement, the words “include” and “including,” and variations thereof,
shall not be deemed to be terms of limitation, but rather shall be deemed to be
followed by the words “without limitation.”
[Signatures
on Following Pages]
IN WITNESS
WHEREOF, Buyer, the Sellers and the Seller Representative have caused this
Agreement to be executed as of the day and year first above
written.
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COMPANY
:
AUTOMOTIVE
SPECIALTY ACCESSORIES AND PARTS, INC.
By:
/s/
KRISTIN
A. NEWHALL
Name:
Kristin A. Newhall
Title:
President and Assistant Secretary
SELLER
REPRESENTATIVE
:
2000
RIVERSIDE CAPITAL APPRECIATION FUND, L.P.
By:
Riverside Capital Associates
2000, LLC, its general partner
By:
/s/
STEWART A. KOHL
Name:
Stewart A. Kohl
Title:
Co-Chief Executive Officer
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SELLER
:
/s/
JAMES J.
NELSON
NAME:
James J. Nelson
SELLER
:
/s/ THOMAS
WEST
NAME:
Thomas West
SELLER
:
/s/
JEROME
MASCITTI
NAME:
Jerome Mascitti
SELLER
:
/s/
JOHN
MILOS
NAME:
John Milos
SELLER
:
/s/
EUGENE
GEIGER
NAME:
Eugene Geiger
SELLER
:
/s/
WILLIAM BR
HOBBS
NAME:
William BR Hobbs
SELLER
:
/s/
CHRISTOPHER E. KROHN
NAME:
Christopher E. Krohn
SELLER
:
/s/ GEOFFREY ROBERTSON
NAME:
Geoffrey Robertson
SELLER
:
/s/
GREGORY R. HERMAN
NAME:
Gregory R.
Herman
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SELLER
REPRESENTATIVE
:
2000
RIVERSIDE CAPITAL APPRECIATION FUND, L.P.
By:
Riverside Capital Associates 2000, LLC, its
general partner
By:
/s/
STEWART A. KOHL
Name:
Stewart A. Kohl
Title:
Co-Chief Executive Officer
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