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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) February 16, 1999
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THE PARTS SOURCE, INC.
(Exact Name of Registrant as Specified in its Charter)
Florida
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(State or Other Jurisdiction of Incorporation)
0-27864 59-3149403
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(Commission File No.) (IRS Employer Identification No.)
1751 South Missouri Avenue, Clearwater, Florida 34616
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(Address of Principal Executive Offices) (Zip Code)
(727) 588-0377
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS.
On February 16, 1999, The Parts Source, Inc., d/b/a/ Ace Auto Parts (the
"Company"), entered into an agreement with General Parts, Inc., a privately
owned company headquartered in Raleigh, North Carolina, whereby General Parts,
Inc. will acquire all of the outstanding shares of the Common Stock of the
Company for $3.00 per share in cash, subject to adjustment. Consummation of the
acquisition is subject to customary closing conditions.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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c. Exhibits
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10.1 Stock Purchase Agreement, dated February 16, 1999, by
and among Thomas D. Cox and Robert A. Cox
(Stockholders), The Parts Source, Inc., d/b/a Ace Auto
Parts (Seller), and General Parts, Inc. (Purchaser).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereto duly authorized.
THE PARTS SOURCE, INC.
(Registrant)
/s/ Thomas D. Cox
Date: February 22, 1999 -----------------------------
Thomas D. Cox, President and
Chief Executive Officer
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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into this 16th day of February, 1999, by and among THOMAS D. COX and ROBERT
A. COX (referred to collectively as "Stockholders"), THE PARTS SOURCE, INC.
d/b/a Ace Auto Parts, a Florida corporation (hereinafter referred to as "ACE"),
and GENERAL PARTS, INC., a North Carolina corporation (hereinafter referred to
as "GPI").
W I T N E S S E T H T H A T:
WHEREAS, Stockholders own a controlling interest in the issued and
outstanding capital stock of ACE; and
WHEREAS, the parties hereto desire that GPI acquire all of the issued
and outstanding capital stock of ACE (the "Merger"); and
WHEREAS, as a condition to the Merger, each of the Stockholders agree,
among other things, to execute an agreement whereby they covenant not to
compete with GPI, and covenant to maintain the confidentiality of certain
information of GPI.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound adopt this plan of share acquisition and agree as
follows:
1. PLAN OF SHARE ACQUISITION. The parties agree as follows:
(a) GPI shall form a wholly owned subsidiary ("Newco") in the
State of Florida for the sole purpose of effecting the Merger pursuant
to which GPI will acquire all of the outstanding capital stock of ACE.
GPI shall cause Newco and the Stockholders shall cause ACE to enter
into articles of merger (the "Articles of Merger") under the laws of
the State of Florida. The Articles of Merger shall be substantially in
the form attached hereto as EXHIBIT 1(a) and shall provide for the
merger of Newco into ACE. The Merger and the other transactions
contemplated hereby shall become effective on the date the Articles of
Merger become effective with the Secretary of State of Florida (the
"Effective Time"). Upon the terms and subject to the conditions of
this Agreement, ACE shall execute and file the Articles of Merger with
the Secretary of State of Florida in connection with the Closing (as
defined herein).
(b) At the Effective Time, by virtue of the Merger and without any
action of GPI, ACE, Newco or the Stockholders: (i) each share of $.001
par value common stock of ACE ("ACE Common Stock") issued and
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to
receive from GPI a cash payment in the amount of $3.00, subject to
adjustment as set forth below (the "Cash Payment"); and (ii) each
share of Newco common stock issued and
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outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into one share of ACE Common Stock.
In the event ACE shall fail to realize a net profit of at least
$75,000 (as determined under generally accepted accounting principles
("GAAP") applied on a consistent basis with ACE's ordinary past
practices) during the period beginning on January 1, 1999 and ending
on March 31, 1999, then the Cash Payment shall be reduced pro rata by
an amount equal to the difference between $75,000 and the actual net
profit realized through such period up to a maximum reduction of
$75,000. Further, if the book value of the assets of ACE as of the
date of the audited balance sheet to be prepared by Grant Thornton
LLP, ACE's regular accounting firm, in accordance with GAAP, which is
to be delivered to GPI at least 25 days prior to the Effective Time
(the "Final Book Value"), is more than $100,000 less than the Base
Book Value (as defined herein), then the Cash Payment per share shall
be recalculated (in the same manner previously used to arrive at the
Cash Payment per share) using the Final Book Value. Base Book Value
shall equal $9,611,697.
(c) The articles of incorporation and the bylaws of ACE shall not
be changed or affected by the Merger. The existence of ACE shall
continue under the laws of the State of Florida unaffected and
unimpaired by the Merger and ACE shall become a wholly owned
subsidiary of GPI.
(d) At the Effective Time, each option to purchase one share of
ACE Common Stock (an "ACE Option") granted by ACE, which is
outstanding at the Effective Time, whether or not exercisable, shall
be canceled in exchange for the right to receive a cash amount (the
"Net Cash Amount") equal to the difference (if positive) between (i)
the Cash Payment and (ii) the per share exercise price of the ACE
Option. At the Effective Time, each such ACE Option shall no longer
represent the right to purchase shares of ACE Common Stock, but in
lieu thereof shall represent only the nontransferable right to receive
the Net Cash Amount.
(e) Each of the shares of ACE Common Stock held by ACE or by GPI
shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
2. INFORMATION STATEMENT; APPROVAL BY STOCKHOLDERS.
(a) ACE shall call a shareholders' meeting (the "Meeting"), to be
held 20 calendar days after mailing of the Information Statement (as
defined herein) to all shareholders of ACE, for the purpose of voting
upon the approval of the Merger and the other transactions
contemplated hereby. In connection with the Meeting, (i) ACE shall
prepare an information statement (the "Information Statement")
pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as
amended, and ACE and its officers and directors shall use their best
efforts to have such Information Statement approved by the SEC as
promptly as practicable, (ii) ACE shall cause the Information
Statement to be mailed to its shareholders as promptly as practicable,
and (iii) the parties shall furnish to each other all information
concerning them that they may reasonably request in connection with
such Information Statement. GPI, the
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Stockholders and ACE shall make all necessary filings with respect to
the Merger under the securities laws.
(b) The Stockholders by their execution of this Agreement do
hereby irrevocably agree to vote to approve the Merger and the other
transactions contemplated hereby at the Meeting.
3. FURTHER ASSURANCES. At the Closing and from time to time
thereafter, Stockholders and ACE shall execute such additional instruments and
take such other action as GPI may request in order to effect the Merger and the
other transactions contemplated in this Agreement.
4. CLOSING. The closing of the Merger and the other transactions
contemplated by this Agreement (the "Closing") will take place at 9:00 A.M. on
the date that the Effective Time occurs, or at such other time as the parties
may mutually agree. The Closing shall be held at the offices of William J.
Schifino, Schifino & Fleischer, P.A., 1 Tampa City Center, Suite 2700, Tampa,
Florida, or such other location as may be mutually agreed upon by the parties.
Subject to the terms and conditions hereof, unless otherwise mutually agreed
upon in writing by each party, the parties shall use their reasonable efforts
to cause the Closing to occur on the first business day following the
satisfaction of all unwaived conditions precedent to the Closing set forth
herein.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACE AND STOCKHOLDERS.
ACE and the Stockholders make the following representations and warranties to
GPI, each of which shall be true and correct as of the date hereof and as of
the Closing:
(a) ORGANIZATION. ACE is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida
and is qualified to do business in all such other states in which it
is now conducting business with full requisite corporate power to
carry on the business as now being conducted and to own and operate
the properties and assets now owned by it.
(b) AUTHORIZED STOCK. There are 2,000,000 shares of preferred
stock, $.001 par value, of ACE authorized, none of which are issued
and outstanding. There are 10,000,000 shares of ACE Common Stock
authorized, 3,412,273 shares of which are issued and outstanding. The
Board of Directors of ACE has reserved 300,000 shares of ACE Common
Stock for issuance under a non-qualified stock option plan. As of the
date of this Agreement, there are options for ___________shares of ACE
Common Stock issued and outstanding under such stock option plan.
SCHEDULE 5(b) sets forth a list of all option holders, the number of
options held and the respective exercise prices of such options.
Except for such options to purchase ACE Common Stock outstanding under
the stock option plan, there are no outstanding commitments or other
binding obligations of any character whatsoever relating to shares of
the capital stock of ACE. All issued and outstanding shares of ACE
Common Stock have been validly issued, fully paid and are
non-assessable.
(c) SUBSIDIARIES. ACE has no subsidiaries, joint ventures or other
equity interests in any other entities
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(d) AUTHORITY; BINDING AGREEMENT. ACE and the Stockholders have
full power, authority and capacity to execute this Agreement and to
consummate the other transactions contemplated hereby. This Agreement
has been duly executed and delivered by ACE and the Stockholders and
constitutes the valid and binding agreement of ACE and the
Stockholders enforceable in accordance with its terms subject, as to
the enforcement of remedies, to general equitable principles and to
bankruptcy, insolvency and similar laws affecting creditors' rights
generally.
(e) TITLE TO ACE COMMON STOCK. The Stockholders have good and
marketable title to ______ shares of ACE Common Stock, which
constitute ____% of all outstanding shares of ACE Common Stock. The
Stockholders have the absolute right to vote their shares of ACE
Common Stock and to sell, assign and transfer their shares of ACE
Common Stock, free and clear of liens, pledges, encumbrances, claims,
interests and restrictions.
(f) PROCEEDINGS. There are no court proceedings at law or in
equity and no proceedings or investigations before any commission or
administrative authority pending or threatened, or any orders or
judgments in effect against or affecting the ACE Common Stock owned by
the Stockholders, ACE's business or the right to carry on ACE's
business as conducted as of the date of this Agreement or affecting
the ACE Common Stock to be acquired hereunder or seeking to enjoin or
challenge the validity of the Merger or the other transactions
contemplated hereby.
(g) CONTRACTS. ACE is not a party to any written or oral: (1)
contract not made in the ordinary course of business; (2) contract for
special pricing, discounts or customer service, except as set forth on
SCHEDULE 5(g)(2); (3) employment contract which is not terminable by
ACE without cost or other liability to ACE; (4) labor union or
collective bargaining contract, pension or profit sharing agreements
of any kind, except as set forth on SCHEDULE 5(g)(4); (5) leases with
respect to real or personal property (including equipment), whether as
lessee or lessor, except such leases described on SCHEDULE 5(g)(5).
ACE is not in default under any lease or other contract to which it is
a party; and, all such agreements are enforceable in accordance with
their terms and will survive Effective Time.
(h) NO VIOLATION; CONSENTS. Neither the Stockholders nor ACE is,
individually or collectively, subject to, or is a party to any charter
or bylaw, or any mortgage, lien, lease, agreement, contract,
instrument, law, rule, regulation, order, judgment or decree, or any
other restriction of any kind or character, which (i) materially and
adversely affects the business, capital stock, operations or financial
condition of ACE or any of its assets or property, or (ii) would
prevent consummation of the transactions contemplated by this
Agreement or would be violated or breached in any material respects by
consummation of such transactions, or (iii) would prevent the
Stockholders from complying in any material respects with the terms,
conditions and provisions of the Agreement, or (iv) would materially
and adversely affect the ability of GPI to operate ACE's business
after the Effective Time on substantially the same basis as
theretofore operated, or (v) would require the consent of any third
party to the transactions contemplated herein, except as is necessary
to effectuate an assignment of
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the lease of any property or equipment currently leased by ACE, which
consents are set forth on SCHEDULE 5(h) and which shall be obtained
before the Effective Time.
(i) TAXES. ACE has paid all taxes due and/or assessed and owed by
it with respect to its business and assets which are due and payable
as of the date hereof, and will duly file all federal, state, local
and other returns which are required to be filed and which are due
prior to the Closing, and will pay all taxes shown on such returns and
all assessments received by it to the extent that such taxes have
become due. No unexpired waivers executed by ACE of the statute of
limitations for federal or state purposes or extensions of time to
file a return are outstanding and in effect.
ACE is in compliance with, and its records contain all
information and documents (including properly completed IRS Forms W-9)
necessary to comply with, all applicable information reporting and tax
withholding requirements under federal, state and local tax laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except
for such instances of noncompliance and such omissions as are not
reasonably likely to have, individually or in the aggregate, a
material adverse affect on ACE's business, financial condition or
results of operations.
(j) ALIEN STATUS. None of the Stockholders is a "foreign person"
within the meaning of Section 1445 of the Internal Revenue Code of
1986 as amended.
(k) ENVIRONMENTAL. The Stockholders and ACE each warrant and
represent to their best knowledge after due inquiry, that with respect
to the real property used by ACE, including store locations, if any,
(as owner, tenant, lessee or otherwise) throughout the period of ACE's
use and occupancy of such property, ACE has neither done nor caused to
be done any act on or use of such property that would prevent such
property from complying with all applicable environmental statutes,
laws, rules and regulations of all state, federal, local and other
applicable governmental and regulatory authorities, agencies and
bodies, and all such applicable statutes, laws, rules and regulations
having to do with toxic or hazardous wastes or materials, including,
but not limited to, the Federal Clean Air Act, the Federal Water
Pollution Control Act, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, and the regulations
promulgated thereunder. Each of the Stockholders and ACE shall jointly
and severally hold GPI free and harmless from and shall indemnify GPI
against any claim, demand, liability, cost or charge whatsoever,
including reasonable attorneys' fees and costs, which GPI may
otherwise incur by reason of said warranty and representation proving
to be false or untrue in any material respect. For this purpose, a
claim, demand, liability, cost or charge against ACE after Effective
Time arising out of an event, condition, or circumstance prior to
Effective Time shall be deemed a claim, demand, liability, cost or
charge against GPI. The representations, warranties and indemnity
contained in this Section 5(k) shall survive the Effective Time and
the termination of any lease or tenancy of any store locations in
which ACE is lessee or tenant, and shall continue for so long as GPI
may be subject to liability for any matters enumerated in this Section
5(k) arising during ACE's use and occupancy of the real property and
store locations prior to the Effective Time.
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In addition, the Stockholders have disclosed on SCHEDULE 5(k)
all material information of which any of the Stockholders has
knowledge pertaining to the condition or use of the real property or
any store location existing or occurring prior to the use or occupancy
of such property by ACE that could cause such property to be in
violation of the above-referenced laws, statutes and regulations.
(l) CONDITION OF ASSETS. ACE has good and marketable title to all
of its respective properties and assets, tangible and intangible, used
by it in its business, subject to such liens, mortgages and
encumbrances as set forth on SCHEDULE 5(l). All of the equipment and
all other assets owned by ACE in all material respects are in good
operating condition and repair, ordinary wear and tear excepted.
(m) FINANCIAL REPORTS. ACE's annual financial report, the interim
financial reports and other financial information which have been or
prior to the Effective Time will be provided to GPI, or are contained
in any form, proxy statement, registration statement, report, schedule
or any other document filed pursuant to the federal or any state
securities laws, as of their dates, are a fair and accurate
representation of the financial condition and operations of ACE's
business prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved.
(n) INSURANCE. ACE has and the Stockholders shall cause ACE to
continue to maintain in force insurance coverage comparable to
existing coverage with respect to the business and ACE's assets
through the Effective Time. A schedule of all such insurance coverage
is attached hereto as SCHEDULE 5(n).
(o) DISCLOSURE. No statement, certificate, instrument or other
writing furnished or to be furnished by ACE or any affiliate thereof
to GPI pursuant to this Agreement or any other document, agreement or
instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All
documents that ACE or any affiliate thereof is responsible for filing
with any regulatory authority in connection with the transactions
contemplated hereby will comply as to form in all material respects
with the provisions of applicable law.
(p) SALE OF PURCHASED ASSETS. After the date hereof and prior to
the Effective Time, ACE will not, and Stockholders will not permit ACE
to, sell or otherwise dispose of any of its assets, except in the
ordinary course of business as currently conducted, without GPI's
written permission.
(q) ADVERSE CHANGE. Except as set forth on SCHEDULE 5(q), since
December 31, 1997, ACE has made no change in its issued or outstanding
capital stock and has not granted or made any option or other
agreement with respect to its capital stock; and has not paid or
declared any dividend or other distribution in respect to its capital
stock; there has been no material adverse change in the condition,
financial or otherwise, of ACE. Since December 31,
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1997, the compensation paid to all officers, directors, the
Stockholders and key employees as contained in the financial reports
of ACE provided to GPI by the Stockholders are listed on SCHEDULE
5(q), and ACE has not increased the compensation of any of such
officers, directors, Stockholders or key employees, except ordinary
and routine merit increases disclosed on said SCHEDULE 5(q); nor have
any payments been made to any officer, director or employee except for
ordinary salaries and ordinary expense reimbursements; nor has ACE
incurred any additional indebtedness or entered into any written or
oral agreement, contract or commitment other than in the ordinary
course of business.
(r) OFFICERS AND DIRECTORS. Attached hereto and marked SCHEDULE
5(r) is a list of the directors and officers of ACE, and there are no
other officers or directors or persons having power of attorney or
other effective control in any form of ACE.
(s) CUSTOMER RELATIONS. At the date hereof, all of ACE's business
relationships with its respective customers and suppliers are
continuing and satisfactory and neither ACE nor the Stockholders knows
or has any reasonable grounds to know of any matters or conditions
which might have an adverse effect on ACE's continuing and
satisfactory business relationships with any of ACE's material
customers or suppliers.
(t) CUSTOMER LOANS. Neither ACE nor the Stockholders have any
knowledge or any grounds to believe that any customer loan or other
obligation on which ACE is contingently liable as endorser, co-maker
or otherwise is in default or that default is pending or threatened.
(u) UNKNOWN LIABILITIES. All known assets and liabilities
(including but not limited to, stockholder claims, claims for
fraudulent actions or violations of law and regulations and any claim
involving any type of taxes attributable to the time period or
operations of business prior to Effective Time) of ACE are reflected
on the annual financial reports and any interim financial reports of
ACE.
(v) STATE TAKEOVER LAWS. ACE and each of the Stockholders has
taken all necessary action to exempt the transactions contemplated by
this Agreement from, or if necessary to challenge the validity or
applicability of, any applicable "moratorium," "fair price," "business
combination," "control share" or other anti-takeover laws
(collectively, "Takeover Laws") under the Florida Business Corporation
Act or any other applicable law.
(w) APPROVAL BY THE STOCKHOLDERS. The approval by the Stockholders
pursuant to Section 2(b) hereof constitutes the only shareholder
approval required under applicable Florida law, the federal securities
law and the rules of the National Association of Securities Dealers,
Inc. to consummate the Merger and the other transactions contemplated
by this Agreement.
(x) BOARD RECOMMENDATION. The Board of Directors of ACE, at a
meeting duly called and held, has by unanimous vote of those directors
present (who constituted all of the directors then in office) (i)
determined that this Agreement and the transactions contemplated
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hereby, including the Merger, are fair to and in the best interests of
the shareholders and (ii) resolved to recommend that the holders of
the shares of ACE Common Stock approve the Merger and the other
transactions contemplated hereby.
(y) REPORTS. Since January 1, 1993, ACE has timely filed all
reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with
regulatory authorities. As of their respective dates, each of such
reports and documents, including the financial statements, exhibits,
and schedules thereto, complied in all material respects with all
applicable laws. As of its respective date, each such report and
document did not, in all material respects, contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not
misleading.
(z) APS SHAREHOLDERS. In connection with any agreement to
purchase, repurchase, redeem or otherwise acquire or exchange,
directly or indirectly, any shares of ACE Common Stock beneficially
owned by APS, each of the Stockholders and ACE has disclosed to APS
any and all material information regarding ACE's business, financial
condition and results of operations including, but not limited to, all
material information concerning the Merger and the other transactions
contemplated by this Agreement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF GPI. GPI makes the
following representations and warranties to ACE and the Stockholders, each of
which shall be true and correct as of the Effective Time:
(a) ORGANIZATION. GPI is a corporation duly organized and validly
existing and in good standing under the laws of the State of North
Carolina and has the corporate power to own its properties and carry
on its businesses now being conducted.
(b) AUTHORITY. GPI has the corporate power to execute and perform
this Agreement and to consummate the other transactions contemplated
hereby.
(c) BINDING AGREEMENT. Execution and delivery of this Agreement
has been duly authorized by all necessary corporate action and neither
the execution nor delivery of this Agreement, nor the performance,
observation or compliance with the terms and provisions of this
Agreement will violate any provision of law, any order of any court or
other governmental agency, the certificate of incorporation or bylaws
of GPI or any other agreement to which GPI is a party or by which GPI
is bound or by which any of its property is bound.
(d) DISCLOSURE. The representations and warranties set forth in
this Agreement or any exhibit, schedule, list or other document
delivered by GPI to ACE or the Stockholders pursuant hereto, do not
contain any untrue statement of material fact or omit to state any
material fact necessary in light of the circumstances under which they
were made to make the statements contained herein not misleading.
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7. CONDUCT OF BUSINESS PENDING CLOSING. ACE and the Stockholders each
covenant and agree as follows:
(a) Except as otherwise requested by GPI, and without making any
commitments on GPI's behalf, ACE and the Stockholders shall use their
best efforts in the normal course of business to keep available to GPI
the services of the employees and the suppliers of ACE, and to
preserve for GPI the goodwill of the customers of ACE and others
having business relations with it. ACE will conduct its business in
the normal, usual manner, and will use its best efforts to preserve
the assets intact. ACE shall notify GPI of any event or transaction of
which it becomes aware prior to the Effective Time which could
materially affect its business or assets in an adverse manner. In
addition, ACE shall provide GPI with a copy of its monthly financial
statements promptly after the close of each month prior to the
Effective Time.
At all times from the date hereof until the Effective Time,
ACE will, and the Stockholders will cause ACE to,: (i) maintain its
corporate existence in good standing; (ii) carry on its business in
the ordinary and usual manner and use their best efforts to preserve
its business organization; (iii) maintain and keep its property in
good repair, working order and condition; (iv) maintain proper
business and accounting records and maintain presently existing
insurance on its properties; and (v) keep GPI informed of any material
changes or transactions that affect its business, financial condition
or results of operations.
(b) From the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement, unless the prior
written consent of GPI shall have been obtained, and except as
otherwise expressly contemplated herein, each of the Stockholders and
ACE covenants and agrees that ACE will not, and the Stockholders will
cause ACE to not, do or agree or commit to do any of the following:
(i) amend its articles of incorporation, bylaws or other
governing instruments, or
(ii) incur any additional debt obligation or other obligation
for borrowed money in excess of an aggregate of $5,000 except in the
ordinary course of the business consistent with past practices, or
impose, or suffer the imposition, on any of its assets of any lien or
permit any such lien to exist; or
(iii) repurchase, redeem or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of ACE, or declare
or pay any dividend or make any other distribution in respect of ACE's
capital stock; or
(iv) except for this Agreement, issue, sell, pledge,
encumber, authorize the issuance of, enter into any contract to issue,
sell, pledge, encumber or authorize the issuance of, or otherwise
permit to become outstanding, any additional shares of ACE Common
Stock or any other capital stock of ACE, or any stock appreciation
rights, or any option, warrant or other equity right; or
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(v) adjust, split, combine or reclassify any capital stock
of ACE or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of ACE Common Stock, or sell,
lease, mortgage or otherwise dispose of or otherwise encumber any
asset having a book value in excess of $5,000 other than in the
ordinary course of business for reasonable and adequate consideration;
or
(vi) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of
three years or less, purchase any securities or make any material
investment, either by purchase of stock of securities, contributions
to capital, asset transfers, or purchase of any assets, in any person,
or otherwise acquire direct or indirect control over any person, other
than in connection with foreclosures in the ordinary course of
business; or
(vii) grant any increase in compensation or benefits to the
employees or officers, except as required by law; pay any severance or
termination pay or any bonus; enter into or amend any severance
agreements with officers; grant any material increase in fees or other
increases in compensation or other benefits to directors; or
voluntarily accelerate the vesting of any stock options or other
stock-based compensation or employee benefits or other equity rights;
or
(viii) enter into or amend any employment contract (unless
such amendment is required by law) that ACE does not have the
unconditional right to terminate without liability (other than
liability for services already rendered), at any time on or after the
Effective Time; or
(ix) adopt any new employee benefit plan or terminate or
withdraw from, or make any material change in or to, any existing
employee benefit plans other than any such change that is required by
law or that, in the opinion of counsel, is necessary or advisable to
maintain the tax qualified status of any such plan, or make any
distributions from such employee benefit plans, except as required by
law, the terms of such plans or consistent with past practice; or
(x) make any significant change in any tax or accounting
methods or systems of internal accounting controls, except as may be
appropriate to conform to changes in tax laws or regulatory accounting
requirements or GAAP; or
(xi) commence any litigation other than in accordance with
past practice or settle any litigation involving any liability of ACE
for material money damages or restrictions upon the operations of ACE;
or
(xii) except in the ordinary course of business, enter into,
modify, amend or terminate any material contract (including any loan
contract with an unpaid balance exceeding $5,000) or waive, release,
compromise or assign any material rights or claims.
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8. OTHER AGREEMENTS.
(a) PRESS RELEASES. Prior to the Effective Time, ACE and GPI shall
consult with each other as to the form and substance of any press
release or other public disclosure materially related to this
Agreement or any other transaction contemplated hereby; provided, that
nothing in this Section 8(a) shall be deemed to prohibit any party
from making any disclosure which its counsel deems necessary or
advisable in order to satisfy such party's disclosure obligations
imposed by law.
(b) CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, neither ACE nor any Stockholder nor
any affiliate thereof nor any representatives thereof shall directly
or indirectly (i) solicit, initiate or knowingly encourage the
submission of any Takeover Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding, or furnish
to any person any nonpublic information with respect to, or take any
other action designed or reasonably likely to facilitate any inquiries
or the making of any proposal that constitutes any Takeover Proposal,
provided, however, that if, at any time prior to the Meeting the Board
of Directors of ACE determines in good faith, after consultation with
outside counsel, that it is reasonably advisable to do so in order to
comply with its fiduciary duties to stockholders under applicable law,
ACE may, in response to a Takeover Proposal which was not solicited
subsequent to the date hereof, (x) furnish information with respect to
such party to any person pursuant to a customary confidentiality
agreement and (y) participate in discussions and negotiations
regarding such Takeover Proposal. For purposes of this Agreement,
"Takeover Proposal" means any inquiry, proposal or offer from any
person other than GPI relating to any direct or indirect acquisition
or purchase of a substantial amount of assets of ACE and/or its
subsidiaries, taken as a whole (other than the purchase of products in
the ordinary course of business), or more than a 20% interest in the
total voting securities of ACE or any of its subsidiaries or any
tender offer or exchange offer that if consummated would result in any
person beneficially owning 20% or more of any class of equity
securities of ACE or any of its subsidiaries or any merger,
consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction
involving ACE or any of its subsidiaries.
(c) STOCKHOLDER RELEASES. Each Stockholder hereby releases,
remises and forever discharges ACE and its representatives, affiliates
and insurers, and their respective successors and assigns, and each of
them (hereinafter individually and collectively, the "Releasees") of
and from any and all claims, demands, debts, accounts, covenants,
agreements, obligations, costs, expenses, actions or causes of action
of every nature, character or description, now accrued or which may
hereafter accrue, without limitation of law, equity or otherwise,
based in whole or in part on any facts, conduct, activities,
transactions, events or occurrences known or unknown, which have or
allegedly have existed, occurred, happened, arisen or transpired from
the beginning of time to the Effective Time (the "Released Claims").
Each Stockholder represents and warrants that no Released Claim
released herein has been assigned, expressly, impliedly or by
operation of law, and that all Released Claims of such Stockholder
released herein are owned by such Stockholder, who
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has the sole authority to release them. Each Stockholder agrees that
such holder shall forever refrain and forebear from commencing,
instituting or prosecuting any lawsuit action or proceeding, judicial,
administrative or otherwise, or otherwise attempting to collect or
enforce any Released Claims which are released and discharged herein.
(d) STATE TAKEOVER LAWS. ACE and each Stockholder shall take all
necessary steps to exempt the transactions contemplated by this
Agreement from, or if necessary to challenge the validity or
applicability of, any applicable Takeover Law.
(e) CHARTER PROVISIONS. ACE and each Stockholder shall take all
necessary action to ensure that the entering into of this Agreement
and the consummation of the Merger and the other transactions
contemplated hereby do not and will not result in the grant of any
rights to any person under its articles of incorporation, bylaws or
other governing instruments or restrict or impair the ability of GPI
or any of its subsidiaries to vote, or otherwise to exercise the
rights of a shareholder with respect to, shares of ACE Common Stock
that may be directly or indirectly acquired or controlled by them.
(f) INVESTIGATION AND CONFIDENTIALITY. Prior to the Effective
Time, ACE shall keep GPI advised of all material developments relevant
to its business and to consummation of the Merger and shall permit GPI
to make or cause to be made such investigation of the business and
properties of ACE and of its respective financial and legal conditions
as GPI reasonably requests, provided that such investigation shall be
reasonably related to the transactions contemplated hereby and shall
not interfere unnecessarily with normal operations. No investigation
by a party shall affect the representations and warranties of the
other party.
In addition to GPI's obligations under the confidentiality
agreement dated as of January 19, 1999 entered into between ACE and
GPI, which is hereby reaffirmed, extended and incorporated by
reference herein, GPI shall, and shall cause its advisers and agents
to, maintain the confidentiality of all confidential information
furnished to it by ACE concerning ACE and its businesses, operations,
and financial positions and shall not use such information for any
purpose except in furtherance of the transactions contemplated by this
Agreement. If this Agreement is terminated prior to the Effective
Time, GPI shall promptly return or certify the destruction of all
documents and copies thereof, and all work papers containing
confidential information received from ACE.
Each party agrees to give the other party notice as soon as
practicable after any determination by it of any fact or occurrence
relating to the other party which it has discovered through the course
of its investigation and which represents, or is reasonably likely to
represent, either a material breach of any representation, warranty,
covenant or agreement of the other party or which has had or is
reasonably likely to have a material adverse affect on the business,
financial condition and results of operations of a party, as
applicable.
(g) APPLICATIONS; ANTITRUST NOTIFICATION. GPI shall promptly
prepare and file, and ACE shall cooperate in the preparation and, where
appropriate, filing of, applications with all regulatory authorities
having jurisdiction over the transactions contemplated by this
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Agreement seeking the requisite consents necessary to consummate the
transactions contemplated by this Agreement. To the extent required by
the HSR Act, each of the parties will promptly within five business
days of the date hereof file with the United States Federal Trade
Commission and the United States Department of Justice the
notification and report form required for the transactions
contemplated hereby and any supplemental or additional information
which may reasonably be requested in connection therewith pursuant to
the HSR Act and will comply in all material respects with the
requirements of the HSR Act. The parties shall deliver to each other
copies of all filings, correspondence and orders to and from all
regulatory authorities in connection with the transactions
contemplated hereby.
(h) RELEASE OF PERSONAL GUARANTEES. GPI shall use commercially
reasonable efforts to have the Stockholders released from the personal
guaranties listed on SCHEDULE 8(h); provided, however, that in the
event GPI is unable to have such guaranties released, GPI hereby
agrees to indemnify the Stockholders from any loss or claim made
pursuant to such guaranties.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF GPI. The obligations of GPI
to consummate the transactions provided for under this Agreement are subject to
the satisfaction of the following conditions, unless waived by GPI pursuant to
Section 21:
(a) Prior to or simultaneous with the Closing, Stockholders and
ACE shall have performed all acts required of them under the terms of
this Agreement which are to be performed prior to the Closing.
(b) At the Meeting, the Stockholders shall have approved this
Agreement and the other transactions contemplated hereby; and such
approval solely by the Stockholders shall constitute all of the
shareholder approval required under applicable law and by the
provisions of any governing instruments to effect the Merger and the
other transactions contemplated hereby.
(c) The Stockholders shall have delivered to GPI an opinion of
Schifino & Fleischer, P.A., Attorneys at Law, Tampa, Florida, Attorney
for ACE, dated as of the Closing, to the effect that ACE's existence,
good standing and authorized and issued and outstanding capital stock
are as set forth above; that ACE has full authority to consummate the
transactions provided for herein; that the ACE Common Stock owned by
the Stockholders constitutes greater than fifty-one percent (51%) of
all of the issued and outstanding shares of the capital stock of ACE;
that approval of the Merger and the other transactions contemplated
hereby solely by the Stockholders constitutes all of the shareholder
approval required under applicable law and by the provisions of any
governing instruments to effect the Merger and the other transactions
contemplated hereby; that all necessary corporate action under the
laws and rules of the State of Florida, the National Association of
Securities Dealers, Inc. Automated Quotation System ("Nasdaq"), and
any other applicable rule or law has been completed in a favorable
manner; and, that they do not know or have reasonable grounds to know
of any litigation, proceeding or governmental investigation pending or
threatened against or relating to ACE or its properties or businesses,
or the ability
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of the Stockholders and ACE to enter into and perform the terms of the
Agreement, except for those noted in the opinion.
(d) The Stockholders and ACE, in all instances where necessary,
shall have secured and delivered to GPI the written consent of any
person, natural or corporate, from whom consent or approval is
required, to any or all of the transactions contemplated by this
Agreement.
(e) Each of the Stockholders shall have entered into a
Non-competition and Confidentiality Agreement with GPI for a period of
three (3) years substantially in the form of EXHIBIT 9(e)(1) and shall
have entered into a Consulting Agreement with GPI in the form of
EXHIBIT 9(e)(2).
(f) GPI may obtain prior to the Closing a Phase I Environmental
Audit Report conducted by one or more environmental engineering firms
selected by GPI indicating in a manner acceptable to GPI that the Real
Property owned, used or occupied by ACE ("Real Property") complies
with all applicable environmental statutes, laws, rules and
regulations of all state, federal, local and other applicable
governmental and regulatory authorities, agencies and bodies, and all
applicable statutes, rules, laws and regulations having to do with
toxic or hazardous wastes or materials, including, but not limited to,
the Federal Clean Air Act, the Federal Water Pollution Control Act,
and the Comprehensive Environmental Response, Compensation and
Liability Act of 1980. In the event any violation or potential
violations are indicated in the aforesaid Phase I Environmental Audit
Report, ACE shall conduct a Phase II Environmental Audit Report on the
Real Property. The cost of all Phase I Environmental Audit Reports
shall be paid equally by ACE and GPI, and the cost of all Phase II
Environmental Audit Reports shall be paid solely by ACE. If the Phase
II Environmental Audit Report discloses circumstances that in the sole
judgment of GPI require remediation, the cost of any such remediation
shall be at the sole expense of ACE. Such costs shall be paid and the
remediation shall be completed prior to the Closing or otherwise
adequately provided for to the satisfaction of the GPI. The parties
agree and understand that the obligations of GPI under this Agreement
are expressly conditioned upon there being no adverse environmental
conditions on any such Real Property, or that any adverse
environmental conditions have been remedied to the sole satisfaction
of the GPI.
(g) All consents of, filings and registrations with, and
notifications to, all regulatory authorities required for consummation
of the Merger shall have been obtained or made and shall be in full
force and effect and all waiting periods required by law shall have
expired. No consent obtained from any regulatory authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including requirements relating
to the raising of additional capital or the disposition of assets)
which in the reasonable judgment of the Board of Directors of GPI
would so materially adversely impact the economic or business benefits
assumptions of the transactions contemplated by this Agreement that,
had such condition or requirement been known, GPI would not, in its
reasonable judgment, have entered into this Agreement. No court or
governmental or regulatory authority of competent jurisdiction shall
have enacted, issued,
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promulgated, enforced or entered any law or order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions
contemplated by this Agreement.
(h) The accuracy of the representations and warranties of ACE and
the Stockholders set forth in this Agreement shall be assessed as of
the date of this Agreement and as of the Closing with the same effect
as though all such representations and warranties had been made on and
as of the Closing.
(i) Each of the Stockholders and ACE shall have delivered to GPI
(i) a certificate, dated as of the Closing and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 9(h) have been
satisfied, and (ii) certified copies of resolutions duly adopted by
ACE's Board of Directors and shareholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the
transactions contemplated hereby, all in such reasonable detail as GPI
and its counsel shall request.
(j) Each of the persons identified in SCHEDULE 9(j) shall have
executed and delivered to GPI an employment agreement in substantially
the form of EXHIBIT 9(j).
(k) The shareholders of ACE shall have approved the Merger and the
other transactions contemplated hereby, as and to the extent required
by applicable law and by the provisions of any governing instruments.
(l) As of the date of the Meeting, holders of no more than 10,000
shares of ACE Common Stock shall have filed with ACE a notice that
such holder intends to perfect his dissenters' rights with respect to
such ACE Common Stock (except for such shareholders who have withdrawn
such notice and voted in favor of the Merger and the other
transactions contemplated hereby); provided, however, if GPI in its
sole and absolute discretion waives such condition pursuant to Section
21, any holder of shares of ACE Common Stock who perfects his
dissenters' rights in accordance with and as contemplated by Section
607.1302 of the Florida Statutes shall be entitled to receive the
value of such shares in cash as determined pursuant to such provision
of law; provided, that no such payment shall be made to any dissenting
shareholder unless and until such dissenting shareholder has complied
with the applicable provisions of the Florida Statutes and surrendered
to ACE the certificate or certificates representing the shares for
which payment is being made. In the event that after the Effective
Time a dissenting shareholder of ACE fails to perfect, or effectively
withdraws or loses, his right to appraisal and of payment for his
shares, GPI shall issue and deliver the Cash Payment per share to
which such holder of shares of ACE Common Stock is entitled under
Section 1(b) (without interest thereon) (less any required withholding
of taxes) upon surrender by such holder of the certificate or
certificates representing shares of ACE Common Stock held by him. If
and to the extent required by applicable law, GPI will establish (or
cause to be established) an escrow account with an amount sufficient
to satisfy the maximum aggregate payment that may be required to be
paid to dissenting shareholders. Upon
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satisfaction of all claims of dissenting shareholders, the remaining
escrowed amount, reduced by payment of the fees and expenses of the
escrow agent, will be returned to GPI.
(m) Raymond & James, Inc. shall have delivered to ACE its opinion
that the consideration to be received by the shareholders of ACE in
connection with the Merger is fair, from a financial point of view, to
such shareholders and that such opinion shall not have been withdrawn.
(n) It is acknowledged by the parties hereto, that as of the date
of execution of this Agreement, certain schedules and exhibits to this
Agreement to be furnished by ACE and the Stockholders have not been
furnished. All such schedules and exhibits shall be provided by ACE or
the Stockholders to GPI within 15 calendar days of the date of
execution hereof. GPI shall have five business days after receipt to
raise objections to such schedules and exhibits. If such objections
cannot be resolved to the reasonable, good faith satisfaction of GPI,
this condition precedent shall be deemed not to have been met.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACE AND THE STOCKHOLDERS.
The obligations of ACE and the Stockholders to consummate the transactions
provided for under this Agreement are subject to the following actions,
performances and deliveries of certain documents to the reasonable satisfaction
of ACE and the Stockholders, at or prior to the Effective Time as herein
provided, unless waived pursuant to Section 21:
(a) GPI shall have delivered to ACE and the Stockholders
resolutions of the Board of Directors of GPI authorizing GPI to enter
into this Agreement, establish Newco as its wholly owned subsidiary,
and perform all other acts contemplated by this Agreement.
(b) GPI shall deliver to ACE and the Stockholders an opinion of W.
Gerald Thornton, Attorney at Law, Raleigh, North Carolina, Attorney
for GPI, dated as of the Closing, to the effect that GPI is duly
organized and in good standing under the laws of the State of North
Carolina; that GPI has full authority to consummate the transactions
contemplated herein; and that he does not know or have reasonable
grounds to know of any litigation, agreement, proceeding or
governmental investigation pending or threatened against or relating
to GPI that would make this Agreement unenforceable against GPI in
accordance with its terms.
(c) The Exchange Agent shall have delivered to ACE and the
Stockholders a certificate, dated as of the Closing, to the effect
that the Exchange Agent has received from GPI sufficient funds to pay
the consideration required by Section 1(b).
(d) Raymond & James, Inc. shall have delivered to ACE its opinion
that the consideration to be received by the shareholders of ACE in
connection with the Merger is fair, from a financial point of view, to
such shareholders and that such opinion shall not have been withdrawn.
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11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements
contained in this Agreement including exhibits and documents incorporated
herein by reference, in any certificate or other instrument delivered by or on
behalf of GPI, ACE and the Stockholders or in connection with the transactions
contemplated hereby, shall be deemed representations and warranties by the
party making the same. The representations and warranties herein made shall
terminate immediately subsequent to the Closing, except for those
representations and warranties made in (a) Sections 5(i), 5(k) or 5(z) of this
Agreement, which representations and warranties shall survive until expiration
of the applicable statutory period of limitations, and (b) Section 5(e), which
representations and warranties shall have no time limit. The representations
and warranties made herein shall survive any investigation made at any time by
or on behalf of any party hereto or any knowledge acquired as to the accuracy
or inaccuracy of any such representation or warranty. This Agreement shall be
binding upon and shall inure to the benefit of and be enforceable by the
parties hereto and their successors, personal representatives, and permitted
assigns.
12. INDEMNIFICATION.
(a) AGREEMENT OF INDEMNITORS TO INDEMNIFY. Subject to the terms
and conditions of this Section 12, each of the Stockholders and ACE
(the "Indemnitors") jointly and severally agree to indemnify, defend
and hold harmless GPI and any of its affiliates ("Indemnitees"), and
each of them, from, against, for and in respect of any and all losses
asserted against, or paid, suffered or incurred by, an Indemnitee and
resulting from, based upon or arising out of the inaccuracy, untruth,
incompleteness or breach of any representation or warranty of any
Indemnitor contained in or made pursuant to Sections 5(e), 5(i), 5(k)
or 5(z) of this Agreement.
(b) PROCEDURES FOR INDEMNIFICATION.
(i) An indemnification claim made pursuant to Section 12(a)
(an "Indemnification Claim") shall be made by an Indemnitee by
delivery of a written notice to a designated representative of the
Indemnitor(s) (the "Indemnitor Representative") requesting
indemnification and specifying the basis on which indemnification is
sought and the amount of asserted losses and, in the case of any claim
made by a third party (a "Third Party Claim"), containing (by
attachment or otherwise) such other information as such Indemnitee
shall have concerning such Third Party Claim.
(ii) The Indemnitor Representative shall have 30 days to
object to such Indemnification Claim by delivery of a written notice
of such objection to such Indemnitee specifying in reasonable detail
the basis for such objection. Failure to timely so object shall
constitute a final and binding acceptance of the Indemnification Claim
by the Indemnitor Representative on behalf of all Indemnitors, and the
Indemnification Claim shall be paid in accordance with Section
12(b)(iii). If an objection is timely interposed by the Indemnitor
Representative and the dispute is not resolved by such Indemnitee and
the Indemnitor Representative within 15 days from the date the
Indemnitee receives such objection, such dispute shall be resolved by
arbitration as provided in Section 12(e).
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(iii) Upon determination of the amount of an Indemnification
Claim, whether by agreement between the Indemnitor Representative and
the Indemnitee or by an arbitration award or by any other final
adjudication, the Indemnitors shall pay the amount of such
Indemnification Claim within ten days of the date such amount is
determined.
(c) SURVIVAL. All representations, warranties and agreements
referred to in Section 11 of this Agreement or in any certificate
delivered pursuant to this Agreement shall survive for the periods
indicated therein. All other provisions of this Agreement (including
the respective covenants and obligations of each of the parties) shall
survive the Closing.
(d) SUBROGATION. Upon payment in full of any Indemnification
Claim, whether such payment is effected by set-off or otherwise, or
the payment of any judgment or settlement with respect to a Third
Party Claim, the Indemnitors shall be subrogated to the extent of such
payment to the rights of the Indemnitee against any person or entity
with respect to the subject matter of such Indemnification Claim or
Third Party Claim.
(e) ARBITRATION. All disputes arising under this Section 12 (other
than claims in equity) shall be resolved by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association. Arbitration shall be by a single arbitrator experienced
in the matters at issue and selected by the Indemnitor Representative
and GPI in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitration shall be held in
such place as may be specified by the arbitrator (or any place agreed
to by the Indemnitor Representative, Parent and the arbitrator). The
decision of the arbitrator shall be final and binding as to any
matters submitted under this Section 12; provided, however, if
necessary, such decision and satisfaction procedure may be enforced by
either the Indemnitor Representative or GPI in any court of record
having jurisdiction over the subject matter or over any of the parties
to this Agreement. All costs and expenses incurred in connection with
any such arbitration proceeding (including reasonable attorneys fees)
shall be borne by the party against which the decision is rendered,
or, if no decision is rendered, such costs and expenses shall be borne
equally by the Indemnitors as one party and the Indemnitees as the
other party. If the arbitrator's decision is a compromise, the
determination of which party or parties bears the costs and expenses
incurred in connection with any such arbitration proceeding shall be
made by the arbitrator on the basis of the arbitrator's assessment of
the relative merits of the parties' positions.
13. TERMINATION.
(a) Notwithstanding any other provision of this Agreement, and
notwithstanding the approval of this Agreement by the shareholders of
ACE, this Agreement may be terminated and the Merger abandoned at any
time prior to the Effective Time:
(i) By mutual consent of GPI and ACE; or
(ii) By either party (provided that the terminating party is
not then in
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material breach of any representation, warranty, covenant or other
agreement contained in this Agreement) in the event of a material
breach by the other party of any representation or warranty contained
in this Agreement which cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such
breach and which breach is reasonably likely, in the opinion of the
non-breaching party, to have, individually or in the aggregate, a
material adverse effect on the business, operations or financial
condition of the breaching party; or
(iii) By either party (provided that the terminating party is
not then in material breach of any representation, warranty, covenant
or other agreement contained in this Agreement) in the event of a
material breach by the other party of any covenant or agreement
contained in this Agreement which cannot be or has not been cured
within 30 days after the giving of written notice to the breaching
party of such breach; or
(iv) By either party (provided that the terminating party is
not then in material breach of any representation, warranty, covenant
or other agreement contained in this Agreement) in the event any
consent of any regulatory authority required for consummation of the
Merger and the other transactions contemplated hereby shall have been
denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit
for appeal; or
(v) By either party in the event that the Merger shall not
have been consummated by September 1, 1999, if the failure to
consummate the transactions contemplated hereby on or before such date
is not caused by any breach of this Agreement or the intentional or
deliberate delay or other intentional or wrongful conduct by the party
electing to terminate pursuant to this Section 13(a)(v); or
(vi) By either party (provided that the terminating party is
not then in material breach of any representation, warranty, covenant
or other agreement contained in this Agreement) in the event that any
of the conditions precedent to the obligations of such party to
consummate the Merger cannot be satisfied or fulfilled by the date
specified in Section 13(a)(v); or
(vii) By GPI, in the event that the Board of Directors of ACE
shall have failed to reaffirm its approval of the Merger and the
transactions contemplated by this Agreement (to the exclusion of any
other Acquisition Proposal), or shall have resolved not to reaffirm
the Merger, or shall have affirmed, recommended or authorized entering
into any other Acquisition Proposal or other transaction involving a
merger, share exchange, consolidation or transfer of substantially all
of the assets of ACE; or
(viii) By GPI, in the event (1) the Stockholders fail to vote
their approval of the Merger and the other transactions contemplated
hereby at the Meeting; (2) the shareholders of ACE fail to vote their
approval of the Merger and the other transactions contemplated hereby
at the Meeting, as and to the extent required by applicable law and by
the provisions of any governing instruments; or (3) one or more
holders of ACE Common
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Stock shall have notified ACE of his intent to perfect his dissenters'
rights with respect to such ACE Common Stock.
(b) In the event of the termination and abandonment of this
Agreement pursuant to Section 13(a), this Agreement shall become void
and have no effect, except that (i) the provisions of this Section
13(b), Section 17, Section 8(f) and Section 12 shall survive any such
termination and abandonment.
14. BROKERAGE. Each of the parties hereto shall indemnify the other
and hold it or them harmless against and in respect of any claim, for brokerage
or other commissions relative to this Agreement or to the transactions
contemplated hereby, from any broker or similar person which said party hereto
shall have retained relative to this Agreement or the transactions contemplated
hereby, it being understood and agreed that any such broker or similar person
shall be paid his brokerage or other commission by the party retaining him or
it, as the case may be.
15. NOTICES. All notices and communications pertaining to this
Agreement or the transactions contemplated hereby shall be made in writing and
shall be deemed sufficiently given if delivered in person to Stockholders or to
GPI or mailed by first class registered mail, postage prepaid, addressed as
follows:
To GPI: General Parts, Inc.
P. O. Box 26006
Raleigh, North Carolina 27611
ATTN: Bill Kuykendall
With a copy to: W. Gerald Thornton
Manning, Fulton & Skinner, P.A.
P. O. Box 20389
Raleigh, North Carolina 27619
To ACE: ACE Auto Parts
1751 South Missouri Avenue
Clearwater, Florida 34616
ATTN: Thomas D. Cox
With a copy to: William J. Schifino
Schifino & Fleischer, P.A.
One Tampa City Center, Suite 2700
201 North Franklin Street
Tampa, Florida 33602
To Stockholders: 1751 South Missouri Avenue
Clearwater, Florida 34616
ATTN: Thomas D. Cox
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With a copy to: William J. Schifino
Schifino & Fleischer, P.A.
One Tampa City Center, Suite 2700
201 North Franklin Street
Tampa, Florida 33602
or to such other address or person with respect to any party as such party
shall notify the others in writing as above provided.
16. COMPLETE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto) contains the entire agreement among the parties hereto with
respect to the exchange and transfer and other transactions contemplated hereby
and supercedes all prior agreements and undertakings between the parties with
respect to such exchange and transfer and such transactions.
17. EXPENSES.
(a) Each party hereto shall pay its or his own expenses incident
to the negotiation of and the preparation of this Agreement and the
consummation of the transactions contemplated hereby, whether or not
such transactions contemplated hereby are consummated. ACE shall pay
all direct costs and expenses incurred in connection with the
preparation and mailing of the Information Statement, including
filing, registration and application fees, mailing fees, printing
fees, and fees and expenses of its own financial or other consultants,
investment bankers, accountants and counsel.
(b) Notwithstanding the foregoing,
(i) if this Agreement is terminated by GPI pursuant to any
of Sections 13(a)(ii), 13(a)(iii), 13(a)(vi), 13(a)(vii) or
13(a)(viii), or
(ii) if this Agreement is terminated by GPI pursuant to
Section 13(a)(v) and the failure to close the Merger by September 1,
1999 is the result of either ACE's or the Stockholders' intentional or
deliberate delay or other intentional or deliberate wrongful conduct,
or
(iii) if the Merger is not consummated as a result of the
failure of ACE or the Stockholders to satisfy any of the conditions
set forth in Section 9, other than Section 9(c) or 9(m),
then ACE and the Stockholders shall jointly, severally and
promptly pay GPI the sum of (x) $486,667, which amount represents the
parties' best estimate of the value of the management time, overhead,
opportunity costs and other unallocated costs of GPI incurred by or on
behalf of GPI in connection with the transactions contemplated by this
Agreement which cannot be calculated with certainty, plus (y) all the
out-of-pocket costs and expenses of GPI, including costs of counsel,
investment bankers, actuaries and accountants up to but not exceeding
an additional $100,000.
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(c) Notwithstanding the foregoing,
(i) if this Agreement is terminated by ACE pursuant to any
of Sections 13(a)(ii), 13(a)(iii) or 13(a)(vi), or
(ii) if this Agreement is terminated by ACE pursuant to
Section 13(a)(v) and the failure to close the Merger by September 1,
1999 is the result of GPI's intentional or deliberate delay or other
intentional or deliberate wrongful conduct, or
(iii) if the Merger is not consummated as a result of the
failure of GPI to satisfy any of the conditions set forth in Section
10, other than Section 10(b) or 10(d),
then GPI shall promptly pay ACE the sum of (x) $292,000, which
amount represents the parties' best estimate of the value of the
management time, overhead, opportunity costs and other unallocated
costs of ACE incurred by or on behalf of ACE in connection with the
transactions contemplated by this Agreement which cannot be calculated
with certainty, plus (y) all the out-of-pocket costs and expenses of
ACE including costs of counsel, investment bankers, actuaries and
accountants up to but not exceeding an additional $100,000.
(d) In addition to the foregoing, if, after the date of this
Agreement and within twelve (12) months following
(i) any termination of this Agreement by GPI pursuant to
Sections 13(a)(ii), 13(a)(iii), 13(a)(vi), 13(a)(vii) or 13(a)(viii),
or
(ii) any termination of this Agreement by GPI pursuant to
Section 13(a)(v) and the failure to close the Merger by September 1,
1999 is the result of either of ACE's or the Stockholders' intentional
or deliberate delay or intentional or deliberate wrongful conduct, or
(iii) failure to consummate the Merger by reason of any
failure of ACE to satisfy the conditions enumerated in Section 9,
other than Section 9(c) or 9(m),
any third-party shall acquire, merge with, combine with,
purchase a significant amount of assets of, or engage in any other
business combination with, or purchase any equity securities involving
an acquisition of 20% or more of the voting stock of, ACE, or enter
into any binding agreement to do any of the foregoing (collectively, a
"Business Combination"), such third-party that is a party to the
Business Combination shall pay to GPI, prior to the earlier of
consummation of the Business Combination or execution of any letter of
intent or definitive agreement with ACE relating to such Business
Combination, an amount in cash equal to the sum of
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(x) the direct costs and expenses or portion thereof referred
to in subsection (b) above incurred by or on behalf of GPI in
connection with the transactions contemplated by this Agreement, plus
(y) 5% of the aggregate fair market value of the consideration
received by the shareholders of ACE in such Business Combination, less
(z) any amounts previously paid by ACE and the Stockholders to
GPI pursuant to subsection (b)(iii)(x) of this Section 17,
which sum represents additional compensation for GPI's loss as the
result of the transactions contemplated by this Agreement not being
consummated. In the event such third-party shall refuse to pay such
amounts within ten days of demand therefor by GPI, the amounts shall
be a joint and several obligation of ACE and the Stockholders and
shall be paid by ACE or the Stockholders promptly upon notice to ACE
by GPI.
(e) In the event of a Business Combination as referred to in
Section 17(d), above, in addition to the amounts owed GPI therein, the
Stockholders shall pay to GPI 100% of the aggregate fair market value
of the consideration received by the Stockholders as a result of such
Business Combination in excess of the Cash Payment per share.
(f) Nothing contained in this Section 17 shall constitute or shall
be deemed to constitute liquidated damages for the willful breach by a
party of the terms of this Agreement or otherwise limit the rights of
the non-breaching party.
18. AMENDMENT OR TERMINATION. Neither this Agreement nor any term or
provision hereof may be changed, waived, discharged or terminated in any manner
other than by an instrument in writing, signed by the party against which the
enforcement of the change, waiver, discharge or termination is sought.
19. CHOICE OF LAWS. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Florida, disregarding
conflicts of laws and the parties agree, notwithstanding the principles of
conflicts of law, that the internal laws of the State of Florida shall govern
and control the validity, interpretation, performance and enforcement of this
Agreement.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one Agreement. Manual or facsimile signatures shall be fully
binding on all parties hereto.
21. WAIVERS.
(a) Prior to or at the Effective Time, GPI, acting through its
Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any default in the performance
of any term of this Agreement by ACE or the Stockholders, to waive or
extend the time for the compliance or fulfillment by ACE or the
Stockholders of any and
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all of its obligations under this Agreement, and to waive any or all of
the conditions precedent to the obligations of GPI under this
Agreement, except any condition which, if not satisfied, would result
in the violation of any law. No such waiver shall be effective unless
in writing signed by a duly authorized officer of GPI.
(b) Prior to or at the Effective Time, ACE, acting through its
Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any default in the performance
of any term of this Agreement by GPI, to waive or extend the time for
the compliance or fulfillment by GPI of any and all of its obligations
under this Agreement, and to waive any or all of the conditions
precedent to the obligations of ACE and the Stockholders under this
Agreement, except any condition which, if not satisfied, would result
in the violation of any law. No such waiver shall be effective unless
in writing signed by a duly authorized officer of ACE.
(c) The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the
right of such party at a later time to enforce the same or any other
provision of this Agreement. No waiver of any condition or of the
breach of any term contained in this Agreement in one or more
instances shall be deemed to be or construed as a further or
continuing waiver of such condition or breach or a waiver of any other
condition or of the breach of any other term of this Agreement.
22. ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any party hereto (whether by operation of law or otherwise) without
the prior written consent of the other party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
Notwithstanding anything herein to the contrary, GPI may assign any or all of
its rights, interest or obligations hereunder to a wholly owned subsidiary of
GPI without the consent of ACE.
23. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, 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 shall be
interpreted to be only so broad as is enforceable.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
GPI
GENERAL PARTS, INC.
By:
----------------------------------
Vice-President
(Corporate Seal)
ATTEST:
- ----------------------------------
Secretary
ACE
THE PARTS SOURCE, INC.
By:
----------------------------------
President
(Corporate Seal)
ATTEST:
- ----------------------------------
Secretary
STOCKHOLDERS:
-------------------------------------
THOMAS D. COX
-------------------------------------
ROBERT A. COX
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