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EXHIBIT 2.01
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of September 29, 1996 is by
and among the 16 corporations identified on Schedule I hereto, each a Cayman
Islands corporation (collectively "Purchaser"), The Carmel Trust, a trust
governed by the laws of Canada ("Seller"), CSK Group, Ltd., a Delaware
corporation ("CSK"), and CSK Holdings, Ltd., a Delaware corporation ("Holdings"
and, together with CSK, the "Controlling Stockholders").
RECITALS
A. Seller owns all of the issued and outstanding capital stock of CSK,
CSK owns all the issued and outstanding capital stock of Holdings, and Holdings
owns all the issued and outstanding capital stock of Northern Automotive
Corporation, an Arizona corporation (the "Company").
B. Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser, certain of the issued and outstanding shares of common stock
of CSK on the terms and conditions contained herein which, after the redemption
by CSK of all the additional shares of the issued and outstanding shares of
common stock of CSK and the purchase by Seller of new shares of common stock of
CSK, will result in Purchaser owning stock representing 51% of the voting power
and economic value of the then issued and outstanding shares of capital stock
of CSK.
C. Purchaser desires to purchase or arrange for the purchase from CSK
and CSK desires to sell to Purchaser or its designee up to $50,000,000
aggregate principal amount of 12% Subordinated Series B Notes due October 31,
2008 of CSK (the "Series B CSK Notes").
D. Seller desires to arrange for the purchase from CSK by
Transatlantic Finance, Ltd. ("Transatlantic") and CSK desires to sell to
Transatlantic up to $20,000,000 aggregate principal amount of 12% Subordinated
Series A Notes due October 31, 2008 of CSK (the "Series A CSK Notes").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
SECTION 1.1 PURCHASE AND SALE OF SHARES.
(a) Upon and subject to the terms and conditions contained in this
Agreement, Purchaser agrees to purchase from Seller, and Seller agrees to sell
to Purchaser, equity securities which following the recapitalization of CSK
described in Sections 1.2(d) and 4.14 hereof and the
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sale of Capital Stock to Purchaser (described in Section 1.2(a) below) and
Seller (described in Section 1.2(e) below) will represent 51% of the voting
power and economic value of the equity Securities of CSK (the "Common Shares").
Purchaser shall pay to Seller $105,000,024 (the "Common Shares Purchase Price")
as the purchase price for the Common Shares in cash, by wire transfer of
immediately available funds to the account of Seller as designated by Seller in
accordance with this Agreement or to such other account as Seller may designate
by written notice to Purchaser prior to the Closing Date, as hereinafter
defined ("Seller's Account").
(b) Upon and subject to the terms and conditions contained in this
Agreement, Purchaser agrees to purchase or cause a company designated by it
prior to the Closing (with the Purchaser, in either case, the "Purchaser
Designee") to purchase from CSK, and CSK agrees to sell to the Purchaser
Designee $40,000,000 aggregate principal amount of Series B CSK Notes issued
pursuant to the Indenture attached hereto as Exhibit A. Notwithstanding the
foregoing, Purchaser may elect at the Closing (as defined below) to purchase
and CSK shall sell up to an additional $10,000,000 aggregate principal amount
of Series B CSK Notes (the "Additional Notes Option"). The Purchaser Designee
shall pay to CSK $40,000,000 or, if and to the extent the Additional Notes
Option is exercised, up to $50,000,000 (in either case, the "CSK Purchaser
Notes Purchase Price") as the purchase price for the Series B CSK Notes in
cash, by wire transfer of immediately available funds to the account of CSK as
designated by CSK in accordance with this Agreement or such other account as
CSK may designate by written notice to Purchaser prior to the Closing Date.
(c) Upon and subject to the terms and conditions contained in this
Agreement, Seller agrees to cause Transatlantic to purchase from CSK, and CSK
agrees to sell to Transatlantic $10,000,000 aggregate principal amount of
Series A CSK Notes issued pursuant to the Indenture attached hereto as Exhibit
B. Notwithstanding the foregoing, if and to the extent the Additional Notes
Option is exercised, Transatlantic shall purchase and CSK shall sell up to an
additional $10,000,000 aggregate principal amount of Series A CSK Notes.
Transatlantic shall pay to CSK $10,000,000 or, if and to the extent the
Additional Notes Option is exercised, up to $20,000,000 (in either case, the
"CSK Seller Notes Purchase Price") as the purchase price for the Series A CSK
Notes in case, by wire transfer of immediately available funds to the account
of CSK as designated by CSK in accordance with this Agreement or such other
account as CSK may designate by written notice to Seller prior to the Closing
Date.
(d) Upon and subject to the terms and conditions contained in this
Agreement, and after completion of the redemption described in Sections 1.2(d)
and 4.14 below, Seller agrees to purchase from CSK, and CSK agrees to sell to
Seller shares of CSK capital stock (the "Seller's Common Shares") which shares
will represent 49% of the voting power and economic value of the outstanding
shares of capital stock of CSK. Seller shall pay to CSK $100,882,376 (the
"Seller's Common Shares Purchase Price") as the purchase price for the Seller's
Common Shares in cash, by wire transfer of immediately available funds to the
account of CSK as designated by CSK in accordance with this Agreement or to
such other account as CSK may designate by written notice to the Seller prior
to the Closing Date.
SECTION 1.2 THE CLOSING. The closing of the transactions described in
Section 1.1 above (the "Closing") shall take place at the offices of Gibson,
Dunn & Crutcher LLP, 200 Park
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Avenue, New York, New York 10166, or at such other place as the parties may
agree, at 10 a.m. local time on October 31, 1996. The time and date of the
Closing as provided above is hereafter referred to as the "Closing Date". At
the Closing, the following shall transpire in the order specified: (a) Seller
shall cause CSK to amend its charter to give effect to the recapitalization
described in Section 4.14 hereof; (b) CSK shall cause Holdings to amend its
charter and Holdings shall cause the Company to amend its charter so as to
authorize the Holdings Preferred Shares and the Company Preferred Shares (each
as defined below), respectively; (c) Seller shall deliver to Purchaser
certificates representing the Common Shares, duly endorsed or accompanied by
appropriate stock transfer powers duly executed and Purchaser shall pay the
Common Shares Purchase Price to Seller in immediately available funds as
provided above; (d) CSK shall deliver to the Purchaser Designee the Series B
CSK Notes and the Purchaser Designee shall pay the Purchaser Notes Purchase
Price to CSK in immediately available funds as provided above; (e) CSK shall
deliver to Transatlantic the Series A CSK Notes and Transatlantic shall pay the
Seller Notes Purchase Price to CSK in immediately available funds as provided
above; (f) CSK shall redeem all of the outstanding shares of Capital Stock of
CSK which do not constitute the Common Shares and shall pay to Seller in
payment of such redemption $238,467,700 (the "Redemption Price") in cash, by
wire transfer of immediately available funds to Seller's Account; (g) CSK shall
deliver to Seller certificates representing the Seller's Common Shares, and the
Seller shall pay the Seller's Common Shares Purchase Price (from the proceeds
of the Common Shares Purchase Price received by Seller) to CSK in immediately
available funds as provided above; (h) the proceeds of the Seller's Common
Shares Purchase Price shall be paid by CSK to Holdings and by Holdings to the
Company as a capital contribution; (i) the proceeds of the CSK Purchaser Notes
Purchase Price and the CSK Seller Notes Purchase Price shall be paid by CSK to
Holdings as consideration for the purchase of shares of Holdings Preferred
Stock (the "Holdings Preferred Shares") with substantially the terms set forth
on Exhibit C hereto, and by Holdings to the Company as consideration for the
purchase of shares of the Company's Preferred Stock (the "Company's Preferred
Shares") with substantially the terms set forth on Exhibit C hereto; (j)
Holdings shall deliver to CSK certificates representing the Holdings Preferred
Shares; and the Company shall deliver to Holdings certificates representing the
Company Preferred Shares; (k) Seller and Purchaser shall cause the Company to
amend its charter to change its name to "CSK Auto, Inc."; and (l) Seller shall
execute an Assumption of Liabilities substantially in the form of Exhibit D
hereto (the "Assumption of Liabilities") pursuant to which it will
unconditionally assume any and all liabilities and obligations of the
Controlling Stockholders existing immediately prior to the Closing except for
any guarantees of liabilities or obligations of the Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth on the Disclosure Letter delivered by Seller to
Purchaser in connection with this Agreement (the "Disclosure Letter"), Seller
hereby represents and warrants to Purchaser that the following representations
and warranties are, as of the date hereof, and will be, as of the Closing Date,
true and correct.
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SECTION 2.1 ORGANIZATION AND QUALIFICATION. The Company and each of
the Company's subsidiaries, Kragen Auto Supply Co. and Schucks Distribution
Co., being the only subsidiaries of the Company and being hereinafter
collectively referred to as the "Subsidiaries", is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its businesses as they are now being conducted. The Company and each of the
Subsidiaries is qualified to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the businesses conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing will not, when
taken together with all other such failures, have a Material Adverse Effect.
For purposes of this Agreements, a "Material Adverse Effect" shall be a
material adverse effect on the business, financial condition or results of
operations of the Controlling Stockholders, the Company and its Subsidiaries
taken as a whole.
SECTION 2.2 CAPITALIZATION.
(a) The Company has 20,000 authorized shares of Common Stock, of which
2,000 shares are outstanding as of the date hereof, all of which are validly
issued and are fully paid, nonassessable and free of preemptive rights and
except as set forth on the Disclosure Letter has no other securities authorized
or outstanding. Except as set forth in the Disclosure Letter, on the date
hereof, there are no outstanding subscriptions, options, warrants, rights,
calls, contracts, voting trusts, proxies or other commitments, understandings,
restrictions, or arrangements, including any right of conversion or exchange
under any outstanding security, instrument or other agreement obligating the
Company or any Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of the Company or any
Subsidiary or obligating the Company or any Subsidiary to grant, extend or
enter into any such agreement or commitment.
(b) CSK has 1,500 authorized shares of Common Stock, of which 100
shares are outstanding as of the date hereof, all of which are validly issued
and are fully paid, nonassessable and free of preemptive rights and except as
set forth in the Disclosure Letter has no other securities authorized or
outstanding. Except as set forth in the Disclosure Letter, on the date hereof,
there are no outstanding subscriptions, options, warrants, rights, calls,
contracts, voting trusts, proxies or other commitments, understandings,
restrictions, or arrangements, including any right of conversion or exchange
under any outstanding security, instrument or other agreement obligating CSK to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of the capital stock of CSK or obligating CSK to grant, extend or enter
into any such agreement or commitment. At the Closing, upon completion of each
of the transactions specified in Section 1.2 hereof, Purchaser will acquire the
Common Shares free and clear of all liens, encumbrances, security interests and
claims of any kind.
(c) Holdings has 1,000 authorized shares of Common Stock, of which
1,000 shares are outstanding as of the date hereof, all of which are validly
issued and are fully paid, nonassessable and free of preemptive rights and
50,000 authorized shares of Preferred Stock, all of which are validly issued
and are fully paid, nonassessable and free of preemptive rights and except as
set forth in the Disclosure Letter has no other securities authorized or
outstanding.
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Except as set forth in the Disclosure Letter, on the date hereof,
there are no outstanding subscriptions, options, warrants, rights, calls,
contracts, voting trusts, proxies or other commitments, understandings,
restrictions, or arrangements, including any right of conversion or exchange
under any outstanding security, instrument or other agreement obligating
Holdings to issue, deliver to sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of Holdings or obligating Holdings to
grant, extend or enter into any such agreement or commitment.
SECTION 2.3 PARENTS AND SUBSIDIARIES. Each of the Controlling
Stockholders is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization
and has the requisite power and authority to own, lease and operate its assets
and properties and to carry on its business as it is now being conducted. Each
of the Controlling Stockholders is qualified to do business, and is in good
standing, in each jurisdiction in which the properties owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified and in
good standing will not, when taken together with all such other failures, have
a Material Adverse Effect. Seller represents that (a) it has title to all of
the outstanding shares of capital stock of CSK, (b) CSK has title to all of the
outstanding shares of capital stock of Holdings subject to a pledge of shares
which pledge will be released prior to the Closing Date, (c) Holdings has title
to all of the outstanding shares of capital stock of the Company subject to a
pledge of such shares to Transamerica Business Corporation referred to below,
and (d) the Company has title to all of the outstanding shares of capital stock
of each of the Subsidiaries (the capitalization of each of which is set forth
in the Disclosure Letter) and that all such shares are validly issued, fully
paid, nonassessable and free of preemptive rights, and will on the Closing Date
be owned directly or indirectly by the Seller free and clear of any liens,
claims, encumbrances, security interests, equities, charges and options of any
nature whatsoever other than liens granted to Transamerica Business Corporation
and other commercial lenders (the "Transamerica Liens") under the Credit
Agreement dated February 15, 1995 (the "Transamerica Loan") which will be
released upon payment of the Transamerica Loan on Closing. There are no
outstanding subscriptions, options, warrants, rights, calls, contracts, voting
trusts, proxies or other commitments, understandings, restrictions or
arrangements, including any right of conversion or exchange under any
outstanding security, instrument or agreement, relating to the issuance, sale,
voting, transfer, ownership, or other rights affecting any shares of capital
stock of any Controlling Stockholder. Except as set forth in the Disclosure
Letter, none of the Company, the Controlling Stockholders and the Subsidiaries
(collectively, the "Group Companies") directly or indirectly owns an interest
in any corporation, partnership, joint venture or other business entity. As of
the Closing, Seller shall have assumed all liabilities of the Controlling
Stockholders, except for any guarantees of liabilities or obligations of the
Company, pursuant to the Assumption of Liabilities.
SECTION 2.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS. (a) Each of the
Seller, the Company and each of the Controlling Stockholders has full corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation by the Seller, the Company and each of the
Controlling Stockholders of the transactions contemplated hereby have been duly
authorized, and no other corporate proceedings on the part of the parties are
necessary to authorize the execution and delivery of this Agreement and the
consummation by them of the
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transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller, the Company and each of the Controlling
Stockholders and, assuming the due authorization, execution and delivery hereof
by Purchaser, constitutes a valid and legally binding agreement of such parties
enforceable against it in accordance with its terms except as may be limited by
(a) bankruptcy, insolvency, moratorium, reorganization and other similar laws
affecting creditors' rights generally and (b) the general principles of equity,
regardless of whether asserted in a proceeding in equity or at law. Seller, in
its capacity as the sole shareholder of CSK, has approved the terms of this
Agreement and the transactions contemplated hereby.
(b) The execution of this Agreement by the Seller and the Controlling
Stockholders does not, and the consummation of the transactions contemplated
hereby will not, violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Seller or any
of the Group Companies under any of the terms, conditions or provisions of (i)
the respective charters or By-Laws of the Seller or any of the Group Companies,
(ii) any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunctions, writ, permit or license of any court or governmental authority
applicable to the Seller or any of the Group Companies or of their respective
properties or assets, or (iii) any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the Seller or any of
the Group Companies is now a party or by which the Seller or any of the Group
Companies or any of their respective properties or assets may be bound or
affected, excluding from the foregoing clauses (ii) and (iii) with respect to
the Company, such violations, conflicts, breaches, defaults, termination,
accelerations or creations of liens, security interests, charges or
encumbrances that would not, in the aggregate, have a Material Adverse Effect.
(c) No declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by
Seller except for any filing by Seller required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended and the rules and regulations
thereunder (the "HSR Act") due to the purchase of the Common Shares by
Purchaser, and except, in the case of the Company, for such declarations,
filings, registrations, notices, authorizations, consents or approvals the
failure of which to make or obtain, as the case may be, will not, in the
aggregate, have a Material Adverse Effect.
SECTION 2.5 REPORTS AND FINANCIAL STATEMENTS. The Company has
delivered to Purchaser true and complete copies of its (a) Registration
Statement on Form S-1 and Amendment No. 1 thereto filed with the Securities and
Exchange Commission on June 26, 1996 and August 12, 1996, respectively, and a
draft of Amendment No. 2 thereto which revised Amendment No. 1 to reflect
financial data and financial statements for the fiscal quarter ended July 28,
1996 (collectively, the "Registration Statement") and (b) unaudited
consolidated financial statements for the twenty-six weeks ended July 28, 1996
(the "Six Month Company Financial Statements"). As of its date of filing, the
Registration Statement did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
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necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements of the Company included
in the Registration Statement and the Six Month Company Financial Statements
(collectively, the "Company Financial Statements") fairly present the financial
position of the Company and its Subsidiaries as of the dates thereof and the
results of their operations and cash flows for the periods then ended in
conformity with generally accepted accounting principles applied on a
consistent basis (except as may be indicated therein or in the notes thereto),
subject, in the case of the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described therein.
SECTION 2.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
the Disclosure Letter or in the Registration Statement, neither the Company nor
any of its Subsidiaries had at July 28,1996, or has incurred since that date,
any liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of any nature, except liabilities, obligations or contingencies (a)
which are accrued or reserved against in the Company Financial Statements or
reflected in the notes thereto or (b) which were incurred after July 28, 1996,
and were incurred in the ordinary course of business and consistent with past
practices and, except for any such liabilities, obligations or contingencies
which (i) would not reasonably be likely, in the aggregate, to have a Material
Adverse Effect, or (ii) have been discharged or paid in full prior to the date
hereof.
SECTION 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Disclosure Letter or in the Registration Statement, since July 28, 1996
there has not been any material adverse change in the business, operations,
property, financial condition or the results of operations of the Company and
its Subsidiaries, taken as a whole that would result in a Material Adverse
Effect and the Company and its Subsidiaries have in all material respects
conducted their respective businesses in the ordinary course consistent with
past practice.
SECTION 2.8 LITIGATION. The Disclosure Letter sets forth a description
of all claims, suits, actions and proceedings pending or, to the knowledge of
Seller and the Company, threatened against, relating to or affecting any of the
Group Companies or their securities. Except as disclosed in the Registration
Statement, the Company Financial Statements, or the Disclosure Letter, (a)
there are no claims, suits, actions or proceedings pending or, to the knowledge
of Seller and the Company, threatened, nor to the knowledge of Seller and the
Company are there any investigations or reviews pending or threatened, against,
relating to or affecting the Company or any of its Subsidiaries, which, if
adversely determined, is reasonably likely to have a Material Adverse Effect;
(b) there have not been any developments since July 28, 1996 with respect to
such claims, suits, actions, proceedings, investigations or reviews which,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect; and (c) except as contemplated by the HSR Act filing, neither
the Company nor any of its Subsidiaries is subject to any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or authority or any arbitrator which prohibits or
restricts the consummation of the transactions contemplated hereby or is
reasonably likely to have a Material Adverse Effect.
SECTION 2.9 NO VIOLATION OF LAW. Except as set forth in the Disclosure
Letter or the Registration Statement, neither CSK, Holdings, the Company nor
any of its Subsidiaries is in violation of, or, to the knowledge of the Seller
or the Company, is under investigation with
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respect to or has been given notice or been charged with any violation of, any
law, statute, order, rule, regulation, ordinance, or judgment of any
governmental or regulatory body or authority, except, in the case of the
Company and the Subsidiaries, for violations which in the aggregate are not
reasonably likely to have a Material Adverse Effect. The Company, the
Subsidiaries and the Controlling Stockholders have all governmental permits,
licenses, franchises and other governmental authorizations, consents and
approvals (the "Company Government Approvals") necessary to conduct their
businesses as presently conducted, except for those which the failure to obtain
would not in the aggregate have a Material Adverse Effect.
SECTION 2.10 COMPLIANCE WITH AGREEMENTS. Except as disclosed in the
Registration Statement, the Company Financial Statements or the Disclosure
Letter, the Seller and each of the Group Companies are not in breach or
violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by
a third party (or both), could result in a default under, (i) the respective
charters or by-laws of the Seller or any of the Group Companies or (ii) any
contract, commitment, agreement, indenture, mortgage, loan agreement, note,
lease, bond, license, approval or other instrument to which the Seller or any
of the Group Companies is a party or by which any of them is bound or to which
any of their property is subject, except for such breaches, violations and
defaults which would not reasonably be likely to have, in the aggregate, a
Material Adverse Effect.
SECTION 2.11 BROKERS AND FINDERS. Neither Seller, nor the Controlling
Stockholders or the Company, nor any of their respective officers, directors or
employees has employed any broker or finder or incurred any liability for any
brokerage or finders' fees in connection with the transactions contemplated
hereby.
SECTION 2.12 ACQUISITION FOR INVESTMENT. Seller is acquiring the
Seller's Common Shares and Transatlantic is acquiring the Series A CSK Notes
for investment for their own respective accounts and not with a view to any
resale or distribution thereof.
SECTION 2.13 CONTROLLING STOCKHOLDERS. Except as set forth in the
Disclosure Letter, each of CSK and Holdings (i) conducts no activities other
than, directly or indirectly, holding the shares of Holdings, and the Company
and paying salaries and office expenses (which payment activities will cease
prior to the Closing); (ii) conducts no operations other than holding such
securities and paying such salaries and office expenses; (iii) except as set
forth in clauses (i) and (ii), has no assets, liabilities (whether absolute,
accrued, contingent or otherwise) or obligations of any nature; (iv) is not a
party to any contract, agreement or understanding other than this Agreement and
other agreements executed in connection with the transactions contemplated
hereby. Each of CSK and Holdings is not and has never been a party to or the
subject of any claim, suit, action, proceeding, investigation or review, and is
not and has never been subject to any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency,
instrumentality or authority.
SECTION 2.14 REAL PROPERTY HOLDING CORPORATION. None of the
Controlling Stockholders, the Company nor either of the Subsidiaries is a
United States Real Property Holding Corporation (a "USRPHC") within the meaning
of Section 897 of the Code and was not
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a USRPHC on any "determination date" (as defined in ss.1.897-2(c) of the
Treasury Regulations) that occurred in the five-year period preceding the
Closing Date.
SECTION 2.15 SHAREHOLDER APPROVAL. Appropriate shareholder approval in
form and substance reasonably satisfactory to Purchaser has been obtained by
the Company and any relevant Subsidiary under Internal Revenue Code Section
280G that will exempt the Company and any relevant Subsidiary from any loss of
deduction under Code Section 280G and exempt any recipient from an excise tax
under Code Section 4999 for any excess parachute payments paid or payable to
any employee as a result of the transactions contemplated herein.
SECTION 2.16 DEDUCTIBLE EXPENSES. By the time of the Closing, CSK and
Holdings will have incurred aggregate net deductible expenses in excess of
income for its 1995 and 1996 (through the Closing) fiscal years of not less
than $1,500,000.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that the following
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true and correct:
SECTION 3.1 ORGANIZATION OF PURCHASER. Purchaser is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
SECTION 3.2 AUTHORIZATION; NON CONTRAVENTION; APPROVALS. (a) Purchaser
has full corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized, and no other
corporate proceedings on the part of the Purchaser are necessary to authorize
the execution and delivery of this Agreement and the consummation by the
Purchaser of the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Purchaser and assuming the due
authorization, execution and delivery hereof by Seller, the Company and each of
the Controlling Stockholders, constitutes a valid and legally binding agreement
of Purchaser enforceable against it in accordance with its terms, except as may
be limited by (a) bankruptcy insolvency, moratorium, reorganization and other
similar laws affecting creditors' rights generally and (b) the general
principles of equity, regardless of whether asserted in a proceeding in equity
or at law.
(b) The execution of this Agreement by Purchaser does not, and the
consummation of the transactions contemplated hereby will not, violate,
conflict with or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Purchaser under any of
the terms, conditions or provisions of (i) the charter or By-Laws of the
Purchaser, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunctions,
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writ, permit or license of any court of governmental authority applicable to
the Purchaser or its properties or assets, or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which
Purchaser is now a party or by which Purchaser or any of its properties or
assets may be bound or affected, excluding from the foregoing clauses (ii) and
(iii) such violations, conflicts, breaches, defaults, termination,
accelerations or creations of liens, security interests, charges or
encumbrances that would not, in the aggregate, have a material adverse effect
on Purchaser.
(c) No declaration, filing or registration with, or notice to, or
authorization, consent or approval of, governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by
Purchaser or the consummation by Purchaser of the transactions contemplated
hereby.
SECTION 3.3 BROKERS AND FINDERS. Neither the Purchaser nor any of its
officers, directors or employees has employed any broker or finder or incurred
any brokerage or finders' fees in connection with the transactions contemplated
hereby.
SECTION 3.4 ACQUISITION FOR INVESTMENT. Purchaser is acquiring the
Common Shares and the Purchaser Designee is acquiring the Series B CSK Notes
for investment for their own respective accounts and not with a view to any
resale or distribution thereof.
ARTICLE IV
COVENANTS OF PURCHASER AND SELLER
SECTION 4.1 ACCESS TO INFORMATION; CONFIDENTIALITY. Seller and the
Company shall, upon reasonable notice, (a) give or cause to be given to
Purchaser and its advisors, during regular business hours and in a manner so as
not to disrupt the business of the Company while recognizing the confidential
and sensitive nature of the transaction contemplated hereby, reasonable access
to all of the properties, documents and records of the Group Companies, and (b)
provide or cause to be provided to Purchaser such copies or extracts of the
Group Companies' documents and records as Purchaser may reasonably request. In
the event that this Agreement shall be terminated, Purchaser shall forthwith
return all such copies and extracts to Seller or the Company. All of the terms
and provisions of the letter agreement dated July 19, 1996, with respect to,
among other things, confidential treatment of information provided to Purchase
and/or its affiliates (the "Confidentiality Agreement"), shall survive the
execution, Closing and any termination of this Agreement.
SECTION 4.2 CONDUCT OF BUSINESS. From the date hereof to the Closing
Date, Seller, except as otherwise permitted by this Agreement or consented to
in writing by Purchaser (which consent shall not be unreasonably withheld or
delayed) will cause the Group Companies to continue the operation of their
business in the ordinary course and will use its best efforts to cause the
Group Companies: (a) to preserve the business organization of the Company
substantially intact, to keep available to Purchaser the services of the Vice
Presidents of the Company and to preserve for Purchaser the goodwill of the
customers of the Company; and (b) to maintain its assets and properties in at
least as good order and condition as exists on the date hereof, subject
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to ordinary wear and tear. Without limiting the generality of the foregoing,
except in the ordinary course of business or as otherwise permitted by this
Agreement or consented to in writing by Purchaser (which consent shall not be
unreasonably withheld or delayed), Seller will use its best efforts to cause
the Group Companies to refrain from (i) incurring any obligation or liability
(absolute, accrued, contingent or otherwise), (ii) granting any increase in
compensation payable or to become payable to any employee of the Company
outside of the ordinary course of business, or (iii) making or authorizing any
capital expenditure for addition to plant and equipment of the Company.
SECTION 4.3 NO ORGANIC CHANGE. Seller shall not cause or suffer to
occur any amendment to be made to the Company's or any Controlling
Stockholder's articles of incorporation or by-laws or any change to be made in
their respective authorized or outstanding capital stock other than as
contemplated by Section 4.14.
SECTION 4.4 NO DIVIDENDS, STOCK ISSUANCE, ETC. Except as set forth in
the Disclosure Letter and as contemplated herein, Seller shall not cause or
suffer to occur (a) any declaration or payment of dividends or other
distributions in respect of any shares of the Company's or any of the
Controlling Stockholder's capital stock, or (b) the issuance, sale, other
disposition, redemption, purchase or other acquisition by the Company or any of
the Controlling Stockholders of any of its capital stock or securities
convertible into its capital stock or any commitment so to do.
SECTION 4.5 GOVERNMENT REVIEWS. Seller and Purchaser, within 5
business days after the execution and delivery of this Agreement, (a) will make
(or cause their respective ultimate parent entities to make) required filings
with, prepare applications to and conduct negotiations with each governmental
agency as to which such filings, applications or negotiations are necessary or
appropriate for the consummation of the transactions contemplated hereby, and
(b) will provide such information as each may be required to make such filings,
prepare such applications and conduct such negotiations. Seller and Purchaser
will cooperate with each other and use their best efforts to assist the other
in making and pursuing such filings and applications as expeditiously as
practicable and conducting such negotiations and promptly will respond to all
requests for additional information or documentation.
SECTION 4.6 FINANCING. Purchaser shall arrange for financing for the
Company consisting of an aggregate of $198,000,000 plus an amount equal to the
difference between $70,000,000 and the sum of the CSK Purchaser Notes Purchase
Price plus the CSK Seller Notes Purchase Price, a portion of which may consist
of a bank facility and high-yield subordinated debt substantially on the terms
set forth on Exhibit E hereto, or alternative financing pursuant to a bridge
financing, in either event, the proceeds of such financing being sufficient to
consummate the transactions contemplated hereby.
SECTION 4.7 STOCKHOLDERS' AGREEMENT. Purchaser, Seller, the
Controlling Stockholders and the Company shall, at the Closing, enter into the
Stockholders' Agreement in the form annexed hereto as Exhibit F (the
"Stockholders' Agreement").
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SECTION 4.8 CHANGE OF NAME. Purchaser, Seller, the Company and
each of the Controlling Stockholders shall, at the Closing, take any and all
actions necessary to amend the charter of the Company to change its name to
"CSK Auto, Inc."
SECTION 4.9 REPLACEMENT SALE-LEASEBACKS. Purchaser, Seller and the
Company will use their respective best efforts following the Closing to obtain
replacement financing for existing sale-leasebacks between the Company and
affiliates of the Seller and, in connection therewith, will make such
modifications to the terms of such sale-leaseback arrangements as may be
necessary in order to make such financing competitive with similar financing
being offered in the market; provided, however, that the Company shall not be
required to modify the terms of any such lease so as to require annual rent of
more than 13% of the sale proceeds paid by the Seller's affiliate. [In
addition, prior to Closing, Seller shall cause its affiliate Transatlantic
Realty Ltd. and the Company to enter into amendments of existing leases from
previously concluded sale-leaseback transactions to delete therefrom all
purchase options in favor of the tenant other than those arising as a result of
casualty, condemnation, or environmental contamination.
SECTION 4.10 FULFILLMENT OF CONDITIONS. Subject to the terms of this
Agreement, Purchaser and Seller shall each use its best efforts to perform,
comply with and fulfill all obligations, covenants and conditions required by
this Agreement to be performed, complied with or fulfilled on its part prior to
or at the Closing and to take all action necessary to cause the Closing to
occur on or prior to October 31, 1996.
SECTION 4.11 FURTHER ASSURANCES. Subject to the terms of this
Agreement, Purchaser and Seller shall each use its best efforts at any time and
from time to time prior to, at or after the Closing to execute and deliver to
the other such further documents and instruments and to take all such further
actions as the other reasonably may request in order to consummate the
transactions contemplated by this Agreement.
SECTION 4.12 ACCESS TO INFORMATION. Subsequent to the Closing Date,
Purchaser, upon reasonable notice and not in a manner which is disruptive to
the Company's business, shall (a) give or cause to be given to the individuals
who have been designated by Seller pursuant to the Stockholders' Agreement to
be members of the Company's Board of Directors, and to each consultant or
advisor from time to time selected by such individuals on behalf of and in
their capacity as agent for any persons or entities holding from time to time
at least 10% of the then current voting power of CSK, at reasonable times, full
access to the documents and records of the Company and (b) provide or cause to
be provided to such individuals on behalf of any such stockholders, such copies
of the Company's documents and records as such individuals may reasonably
request.
SECTION 4.13 REPAYMENT OF CSK NOTES. Purchaser and Seller agree to
cause CSK to pay, and CSK agrees to pay, from the proceeds of any public
offerings of equity securities by CSK or any of its direct or indirect
subsidiaries immediately following each such public offering, to the full
extent permitted by the terms of such offerings and the terms of the financing
contemplated by Section 4.6, and subject to the overall best interests of the
stockholders of CSK, all then outstanding principal and unpaid interest on the
Series A CSK Notes and the Series B CSK Notes; provided, however, that if the
offering proceeds of any such public offering are
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insufficient to pay in full the outstanding principal and interest remaining on
the CSK Notes at the time of such offering, (i) up to the first $40,000,000 of
such proceeds will be used to pay all of the then outstanding principal and
unpaid interest on the Series A CSK Notes and an equal amount of the then
outstanding principal and unpaid interest on the Series B CSK Notes on a pro
rata basis, and (ii) any additional proceeds will be used to pay any remaining
outstanding principal and unpaid interest on the Series B CSK Notes. Any
remaining balances due on Series A CSK Notes and the Series B CSK Notes after
application of the proceeds of a public offering will be paid with the proceeds
of subsequent public offerings in the manner provided by this Section 4.13.
SECTION 4.14 RECAPITALIZATION OF CSK. Purchaser, Seller and CSK shall,
at the Closing, take any and all actions necessary to cause CSK to recapitalize
its authorized classes of capital stock in accordance with the Restated
Certificate of Incorporation attached as Exhibit G hereto. Such
recapitalization shall be effected by the filing of such Restated Certificate
of Incorporation substantially in the form so attached.
SECTION 4.15 EQUITY PARTICIPATION AGREEMENTS. The Purchaser and Seller
shall cause the Company to make any payments which shall become due pursuant to
the Equity Participation Agreements listed on Exhibit H hereto (the
"Participation Agreements") in the amounts set forth thereon to the persons
designated thereon (the "Participants"), provided that such payments to each
Participant shall be subject to the execution by such Participant of a waiver
to the effect that such payments represent all payments due such Participant
under his Participation Agreement, and the Seller shall reimburse the Company
for 60% of amounts which, pursuant to the terms of the Participation
Agreements, are payable one year after the Closing Date (excluding any such
amounts payable on account of interest). Such reimbursement will be made, after
such due date, promptly upon notice from Purchaser to Seller that such amounts
have been paid.
SECTION 4.16 MANAGEMENT EQUITY PURCHASERS. Notwithstanding any
provision hereof to the contrary, (a) Purchaser agrees that any shares of
capital stock of CSK to be purchased by John Antioco or any other person
selected as Chief Executive Officer of the Company in connection with the
transactions contemplated hereby, shall be purchased from Purchaser, (b) Seller
agrees that any shares of capital stock of CSK to be purchased by James Bazlen
in connection with the transactions contemplated hereby, shall be purchased
from Seller, and (c) Purchaser and Seller agree that any shares of capital
stock of CSK to be purchased by the Participants other than James Bazlen in
connection with the transactions contemplated hereby, shall be purchased from
CSK and that the relative percentages of voting power and economic value
represented by the Common Shares and the Seller Common Shares shall not be
affected by such sales.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement is subject to the satisfaction at or prior to
the Closing of each of the following conditions:
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SECTION 5.1 NO PROCEEDINGS. No preliminary or permanent injunction or
other binding order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, shall be in effect which shall have the effect of preventing the
consummation of the transactions contemplated by this Agreement; provided,
however, that the Purchaser shall use its best efforts to seek to obtain the
removal of such injunction, order, decree or ruling.
SECTION 5.2 REPRESENTATIONS AND WARRANTIES; COVENANTS. All
representations and warranties of Seller contained in this Agreement shall be
true and correct at and as of the Closing Date as though made at such time;
provided, however, that except with respect to the representations and
warranties contained in Sections 2.1, 2.2, 2.3, and 2.4, such representations
and warranties which are not otherwise qualified as to materiality shall be
true and correct in all material respects at and as of the Closing Date, as
though made at such time. Seller shall have performed and complied in all
material respects with all covenants, obligations and conditions required by
this Agreement to be performed or complied with by Seller prior to or on the
Closing Date.
SECTION 5.3 SALE LEASEBACK FINANCING. A company which is directly or
indirectly owned by Seller shall immediately prior to the Closing enter into an
agreement substantially in the form of Exhibit I hereto, pursuant to which it
shall agree to provide up to $50,000,000 of financing (at any time outstanding)
to the Company.
SECTION 5.4 LEGAL OPINION. Purchaser shall have received the favorable
opinions of counsel to each of Seller, CSK and the Company, with respect to the
matters referred to in Section 2.1, the first three sentences of Section 2.3,
and Sections 2.4 and 2.10. The opinion with respect to Section 2.4 which, as to
the Controlling Stockholders, shall be rendered by Parker Chapin Flattau &
Klimpl, LLP, shall rely, to the extent reasonable, on the opinions of local
counsel and need not address the enforceability or non-contravention of the
Restated Certificates of Incorporation or of the Stockholders' Agreement to the
extent its enforceability is impacted by the Restated Certificate of
Incorporation.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller to consummate the transactions contemplated
by this Agreement is subject to the satisfaction at or prior to Closing of each
of the following conditions:
SECTION 6.1 EXPIRATION OF THE HSR WAITING PERIOD; NO PROCEEDINGS. Any
applicable waiting periods under the HSR Act shall have expired or been
terminated with respect to any filing required as a result of the Purchase of
Common Shares by Purchaser. No preliminary or permanent injunction or other
binding order, decree or ruling issued by a court of competent jurisdiction or
by governmental, regulatory or administrative agency or commission, shall be in
effect which shall have the effect of preventing the consummation of the
transactions
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contemplated by this Agreement; provided, however, that the Seller shall use
its best efforts to seek to obtain the removal of such injunction, order,
decree or ruling.
SECTION 6.2 REPRESENTATIONS AND WARRANTIES; COVENANTS. All
representations and warranties of Purchaser contained in this Agreement shall
be true and correct at and as of the Closing Date as though made at such time,
provided, however, that except with respect to the representations and
warranties contained in Sections 3.1 and 3.2, such representations and
warranties which are not otherwise qualified as to materiality shall be true
and correct in all material respects at and as of the Closing Date, as though
made at such time. Purchaser shall have performed and complied in all material
respects with all covenants, obligations and conditions required by this
Agreement to be performed or complied with by Purchaser prior to or on the
Closing Date.
SECTION 6.3 DIVIDENDS AND REDEMPTION. At the Closing, the Company
shall have declared and paid a dividend to Holdings which shall have declared
and paid a dividend to CSK, each in such amount that when added to the proceeds
from the sale of the CSK Notes shall be sufficient to complete the redemption
contemplated in Section 1.2(d) and to pay the Redemption Price. Purchaser
agrees to take whatever action may be required of it to authorize and permit
the declaration and payment of such dividends and to effect such redemption.
SECTION 6.4 LEGAL OPINION. Seller shall have received the favorable
opinions of counsel to Purchaser, with respect to the matters referred to in
Sections 3.1 and 3.2. The opinion with respect to the third sentence of Section
3.2(a) with respect to enforceability, which shall be rendered by Gibson Dunn &
Crutcher, LLP, shall rely, to the extent reasonable, on the opinions of local
counsel.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 INDEMNIFICATION BY SELLER.
(a) From and after the Closing Date, Seller will indemnify Purchaser
for and hold Purchaser harmless from any and all Purchaser's Damages (as
defined below) in the manner and to the extent set forth in this Section 7.1.
(b) The term "Purchaser's Damages" shall include all losses, costs,
expenses (including attorney's fees and expenses and other costs and expenses
incident to any suit, action, investigation, claim or proceeding), fees,
liabilities and damages sustained by Purchaser arising from any failure of a
representation or warranty of Seller contained in this Agreement to be true and
correct at and as of the Closing Date (ignoring for this purpose all
qualifications as to materiality in such representations or warranties);
provided, however, that Seller shall not be liable for more than $25,000,000 in
the aggregate for all claims (other than claims arising from fraudulent
misrepresentation by Seller which shall be excluded from such limitation) for
Purchaser's Damages under this Section 7.1; and, provided, further however,
that Seller shall not have any obligation to indemnify Purchaser for any of
Purchaser's Damages unless and until, and
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only to the extent, Purchaser has suffered Purchaser's Damages in excess of
$2,000,000. The indemnity and hold harmless provisions set forth in this
Section 7.1 shall cover all Purchaser's Damages and shall be the sole and
exclusive remedy of Purchaser after the Closing for any breach of a
representation or warranty of Seller other than a fraudulent breach or
misrepresentation. The obligation of Seller to indemnify Purchaser for, and
hold Purchaser harmless against Purchaser's Damages under this Section 7.1
shall survive the Closing for a period of six months, except to the extent that
a claim with respect to Purchaser's Damages under this Section 7.1 is asserted
in good faith in writing prior to the expiration of such six-month period,
specifying in reasonable detail the representation or warranty that allegedly
has been breached and furnishing the basis for such allegation.
SECTION 7.2 INDEMNIFICATION BY PURCHASER.
(a) From and after the Closing Date, Purchaser will indemnify Seller
for and hold Seller harmless from any and all Seller's Damages (as defined
below) in the manner and to the extent set forth in this Section 7.2.
(b) The term "Seller's Damages" shall include all losses, costs,
expenses (including attorney's fees and expenses and other costs and expenses
incident to any suit, action, investigation, claim or proceeding), fees,
liabilities and damages sustained by Seller arising from any breach of a
representation or warranty of Purchaser contained in this Agreement. The
indemnity and hold harmless provisions set forth in this Section 7.2 shall
cover all Seller's Damages and shall be the sole and exclusive remedy of Seller
after the Closing for any breach of a representation or warranty of Purchaser
other than a fraudulent breach or misrepresentation. The obligation of
Purchaser to indemnify Seller for, and hold Seller harmless against, Seller's
Damages under this Section 7.2 shall survive the Closing for a period of six
months, except to the extent that a claim with respect to Seller's Damages
shall be valid unless asserted in good faith in writing prior to the expiration
of such six-month period, specifying in reasonable detail the representation or
warranty that allegedly has been breached and furnishing the basis for such
allegation.
SECTION 7.3 LEGAL PROCEEDINGS.
(a) If any legal proceedings shall be instituted, or any claim or
demand made against an indemnified party in respect of which an indemnifying
party may be liable hereunder, the indemnified party shall give prompt written
notice thereof to the indemnifying party. The indemnifying party, at its option
and expense, may participate in and/or assume the control of the defense of any
such legal proceeding and the negotiation and settlement of any such claim or
demand, and the indemnifying party shall have the absolute right, in its sole
discretion and without the consent of the indemnified party, to settle any such
legal proceeding, claim or demand; provided, however, that the indemnifying
party (i) will afford the indemnified party an adequate opportunity to
participate in such defense or negotiation and settlement, at the indemnified
party's expense, and (ii) may not, in defense of any such proceeding, claim or
demand, except with the written consent of the indemnified party, which consent
shall not be unreasonably withheld, consent to the entry of any judgment or
enter into any settlement unless the consented to judgment or settlement
involves only the payment of money damages by the indemnifying party requires,
as a term thereof, the giving by the claimant or plaintiff to the indemnified
party of a
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release from liability in respect thereof and does not impose any injunction or
any other equitable relief upon the indemnified party. After notice to the
indemnified party of the indemnifying party's election to assume the control of
the defense of any such proceeding or the negotiation and settlement of any
such claim or demand, the indemnifying party shall be liable to the indemnified
party in respect of legal or other expenses subsequently incurred by the
indemnified party in connection with any such defense or negotiation or
settlement only to the extent incurred at the request of the indemnifying
party. As to those actions, claims or demands with respect to which the
indemnifying party does not elect to assume the control of the defense or the
negotiation and settlement, the indemnified party will afford the indemnifying
party an adequate opportunity to participate in such defense or negotiation and
settlement, at the indemnifying party's expense.
(b) If the amount of Purchaser's Damages or Seller's Damages paid, at
any time subsequent to such payment, shall be reduced by any recovery,
settlement or otherwise, the amount of such reduction, less any expense
incurred by the party receiving such recovery in connection therewith, shall be
promptly repaid to the indemnifying party.
ARTICLE VIII
TERMINATION OF AGREEMENT
SECTION 8.1 TERMINATION OF AGREEMENT. This Agreement and the
transactions contemplated hereby may be terminated or abandoned at any time
prior to the Closing Date as follows:
(a) by the written consent of Seller and Purchaser;
(b) by Seller, if the Closing Date shall not have occurred on or
before November 15, 1996, for any reason other than the failure of Seller to
perform its obligations hereunder or a failure of a representation or warranty
of Seller to be true and correct at and as of the Closing Date;
(c) by Purchaser, if the Closing Date shall not have occurred on or
before November 15, 1996, for any reason other than the failure of Purchaser to
perform its obligations hereunder or a failure of a representation or warranty
of Purchaser to be true and correct at and as of the Closing Date;
(d) by Seller, if there has been a breach by Purchaser of any covenant
set forth herein or a failure of any condition to which the obligations of
Seller hereunder are subject, and such breach or failure cannot be cured by the
Closing Date and has not been waived; or if there has been a failure of a
representation or warranty in this Agreement of Purchaser to be true and
correct at and as of the Closing Date; provided, however, that except with
respect to the representations and warranties contained in Sections 3.1 and
3.2, if the representation or warranty that shall have failed to be true and
correct is not otherwise qualified as to materiality, it shall have failed to
be true and correct in a material respect; or
(e) by Purchaser, if there has been a breach by Seller of any covenant
set forth herein or a failure of any condition to which the obligations of
Purchaser hereunder are subject, and such
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breach or failure cannot be cured by the Closing Date and has not been waived,
or if there has been a failure of a representation or warranty in this
Agreement of Seller to be true and correct at and as of the Closing Date;
provided, however, that except with respect to the representations and
warranties contained in Sections 2.1, 2.2, 2.3 and 2.4, if the representation
or warranty that shall have failed to be true and correct is not otherwise
qualified as to materiality, it shall have failed to be true and correct in a
material respect. Notwithstanding the foregoing, Purchaser may not terminate
this Agreement and the transactions contemplated hereby if (i) the losses,
costs, expenses, fees, liabilities and damages incurred or likely to be
incurred by the Company due to the existence of the facts or circumstances
which result in such breach or failure (the "Company Damages") are of a type
that reasonably can be adequately remedied by the payment of money to the
Company by Seller, (ii) (A) if the Company Damages arise out of a third-party
claim, at the Closing Seller makes a payment (the "Escrow Funds") in an amount
sufficient, in the good faith joint determination of Purchaser and Seller to
satisfy such claim, to The Chase Manhattan Bank as escrow agent to be held
pursuant to an escrow agreement which shall provide for distribution of the
Escrow Funds only upon and in accordance with (i) the joint written
instructions of Purchaser and Seller or (ii) the determination of a court of
competent jurisdiction with respect to such third party claim, and shall be in
such form as shall be reasonably acceptable to Purchaser and Seller, and (B) if
the Company Damages do not arise out of a third-party claim, at the Closing
Seller makes a payment (the "Cure Payment") to the Company in an amount
sufficient, in the good faith determination of Purchaser, to restore the
Company to the position it would have been in if such representation or
warranty had been true and correct as stated, such condition had been
satisfied, or such covenant had been complied with and (iii) after giving
effect to such Escrow Payment or Cure Payment, such breach or failure is not
reasonably likely to have a material adverse effect on the prospects for the
Company's business. Purchaser shall in all cases provide Seller with an
adequate opportunity to cure such breach or failure and Purchaser shall use its
best efforts to assist Seller in its efforts to cure such breach or failure. In
addition, notwithstanding Seller's delivery of the Cure Payment at the Closing,
if Seller disputes Purchaser's determination as to the amount of the Cure
Payment and the portion of the Cure Payment disputed by Seller is less than
$20,000,000, Seller shall have the right to dispute the amount of the Company
Damages paid by Seller at the Closing, by providing Purchaser with written
notice of such dispute (the "Disputed Damages Amount") within ten calendar days
following the Closing, in which event Purchaser and Seller shall use their best
efforts for a period of 30 calendar days after Seller's delivery of such notice
(or such longer period as they shall agree) to resolve any disagreements over
the Disputed Damages Amount. If, at the end of such period, Purchaser and
Seller are unable to resolve such disagreements, they shall each select one
accounting firm, which firms shall resolve any remaining disagreements.
Purchaser and Seller shall use their best efforts to cause such accounting
firms to make their determinations within 30 calendar days. If, at the end of
such period, such accounting firms are unable to resolve such disagreements,
they shall select a third accounting firm which shall resolve any remaining
disagreements. The determination of such third accounting firm shall be final,
binding and conclusive on all parties. Purchaser and Seller shall use their
best efforts to cause the third firm to make its determination within 30
calendar days. Within five business days of such determination, the amount, if
any, by which it is determined that the amount of the Cure Payment exceeded the
actual amount of the Company Damages shall be paid by the Company to Seller in
the same manner as the Purchase Price is to be paid by Buyer pursuant to
Section 1.1. Seller shall, under all circumstances, maintain the right at any
time prior to or following the
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Closing to contest the breach or failure alleged by Purchaser and, if after the
Closing, to seek a return of all or any portion of the Cure Payment made by
Seller to the Company at the Closing pursuant to this Section.
SECTION 8.2 OBLIGATIONS UPON TERMINATION; CURE. If this Agreement
shall be terminated pursuant to Section 8.1, neither party shall have any
further obligation to the other, except as set forth in the last sentence of
Section 4.1; provided, however, that if Seller or Purchaser shall terminate
this Agreement pursuant to Section 8.1(d) or 8.1(e), it is expressly understood
that remedies for breach of contract and damages also shall survive such
termination unimpaired.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 PUBLICITY. Prior to and following the Closing, Purchaser
and Seller shall consult with each other in issuing any press release or
otherwise making any public statement with respect to the transactions
contemplated hereby, and shall not issue any such press release or make any
such public statement prior to approval by the other party, except as may be
required by law.
SECTION 9.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in Article II and the
representations and warranties of Purchaser contained in Article III shall
survive for a period of six months after the Closing Date, except as to any
alleged inaccuracy or breach thereof of which any party, prior to the
termination of such six-month period, shall have advised the other party in
writing, specifying in reasonable detail the representation or warranty that is
alleged to be inaccurate or that is alleged to have been breached and the basis
for such allegation.
SECTION 9.3 NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received if
personally delivered; the next business day after transmission if transmitted
by telecopy, electronic or digital transmission method; the next business day
after it is sent, if sent for next day delivery to a domestic address by
recognized overnight delivery service (e.g., Federal Express); and upon
receipt, if sent by certified or registered mail, return receipt requested. In
each case notice shall be sent to:
If to Purchaser:
c/o Investcorp Management Services Limited
P.O. Box 1111
West Wind Building
George Town, Grand Cayman
British West Indies
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with a copy to:
Charles K. Marquis, Esq.
Gibson Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
If to Seller:
The Carmel Trust
c/o Mr. Robert Smith
12 Dunbar Road
Toronto, M4W 2X6
Canada
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of Americas
New York, New York 10036
Attention: Mark S. Hirsch, Esq.
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
SECTION 9.4 CHOICE OF LAW; SERVICE OF PROCESS. This Agreement shall be
construed, interpreted and the rights of the parties determined in accordance
with the internal laws of the State of New York without reference to its choice
of law provisions (other than Section 5-1401 of New York's General Obligations
Law), except with respect to matters of law concerning the internal corporate
affairs of any corporate entity which is a party to or the subject of this
Agreement, and as to those matters the law of the jurisdiction under which the
respective entity derives its powers shall govern. Each party to this Agreement
irrevocably consents to the jurisdiction and venue of any state or federal
court situated in the City of New York, waives any objection or defense to any
such jurisdiction or venue as an inconvenient forum, and consents to the
service of any and all process in any action or proceeding arising out of or
relating to this Agreement by the mailing of copies of such process to such
party at its address specified in Section 9.3 hereof.
SECTION 9.5 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement,
together with all exhibits and schedules hereto (including the Disclosure
Letter), and the Confidentiality Agreement constitute the entire agreement
among the parties pertaining to the subject matter hereof and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written of the parties except as otherwise provided herein. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto. No amendment, supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the
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provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
SECTION 9.6 MULTIPLE COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 9.7 SUCCESSORS AND ASSIGNS; ASSIGNMENT. All covenants,
promises and agreements by or on behalf of the parties contained in this
Agreement shall inure to the successors and assigns of the parties; but nothing
in this Agreement, express or implied, is intended to confer on Purchaser or
Seller the right to assign its rights or obligations hereunder (other than to
an affiliate in the case of Purchaser).
SECTION 9.8 AMENDMENTS, SUPPLEMENTS, WAIVERS. No amendment, supplement
or waiver of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by all parties hereto in the case of an
amendment or supplement and by the waiving party in the case of a waiver.
SECTION 9.9 SECTION HEADINGS. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.10 SPECIFIC PERFORMANCE. Inasmuch as the irreparable damage
will result in the event that this Agreement is not specifically enforced and
the parties hereto agree that any damages available at law for a breach of this
Agreement would not be an adequate remedy, the provisions hereof and the
obligations of the parties hereunder shall be enforceable in a court of equity,
or other tribunal having jurisdiction, by a decree of specific performance, and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies and all other remedies provided for in this Agreement
shall, however, be cumulative and not exclusive and shall be in addition to any
other remedies which any party may have under this Agreement or otherwise.
SECTION 9.11 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on their respective behalf, by their respective officers
thereunto duly authorized, all as of the day and year first above written.
TEMPE LIMITED
By:
----------------------------------------
Title: Martonmere Services Ltd., Director
-----------------------------------
SCOTTSDALE LIMITED
By:
----------------------------------------
Title: Martonmere Services Ltd., Director
-----------------------------------
SOUTH MOUNTAIN LIMITED
By:
----------------------------------------
Title: Martonmere Services Ltd., Director
-----------------------------------
CHANDLER LIMITED
By:
----------------------------------------
Title: Martonmere Services Ltd., Director
-----------------------------------
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GILA LIMITED
By:
----------------------------------------
Title: The Director Ltd., Director
-------------------------------------
INVESTCORP INVESTMENT EQUITY
LIMITED
By:
----------------------------------------
Title: The Director Ltd., Director
-------------------------------------
BALLET LIMITED
By:
----------------------------------------
Title:
-------------------------------------
DENARY LIMITED
By:
----------------------------------------
Title:
-------------------------------------
GILA LIMITED
By:
----------------------------------------
Title:
-------------------------------------
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INVESTCORP INVESTMENT EQUITY
LIMITED
By:
----------------------------------------
Title:
-------------------------------------
BALLET LIMITED
By:
----------------------------------------
Title: Authorized Representative
-------------------------------------
DENARY LIMITED
By:
----------------------------------------
Title: Authorized Representative
-------------------------------------
GLEAM LIMITED
By:
----------------------------------------
Title: Authorized Representative
-------------------------------------
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25
HIGHLANDS LIMITED
By:
----------------------------------------
Title: Authorized Representative
-------------------------------------
NOBLE LIMITED
By:
----------------------------------------
Title: Authorized Representative
-------------------------------------
OUTRIGGER LIMITED
By:
----------------------------------------
Title: Authorized Representative
-------------------------------------
QUILL LIMITED
By:
----------------------------------------
Title: Authorized Representative
-------------------------------------
RADIAL LIMITED
By:
----------------------------------------
Title: Authorized Representative
-------------------------------------
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SHORELINE LIMITED
By:
----------------------------------------
Title: Authorized Representative
-------------------------------------
ZINNIA LIMITED
By:
----------------------------------------
Title: Authorized Representative
-------------------------------------
CSK GROUP, LTD.
By:
----------------------------------------
Title: EVP
-------------------------------------
CSK HOLDINGS, LTD.
By:
----------------------------------------
Title: EVP
-------------------------------------
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THE CARMEL TRUST
By:
----------------------------------------
Title:
-------------------------------------
27