STOCK OPTION AGREEMENT
EXHIBIT A
STOCK OPTION AGREEMENT, dated as of the 17th day of
February, 1998 (this "Agreement"), between Republic Automotive
Parts, Inc., a Delaware corporation ("Issuer"), and Keystone
Automotive Industries, Inc., a California corporation
("Grantee").
RECITALS
(a) The Merger Agreement. Prior to the entry into
this Agreement and prior to the grant of the Option (as defined
in Section 1(a)), Grantee, KAI Merger, Inc., a wholly-owned
subsidiary of Grantee ("Merger Sub"), and Issuer have entered
into an Agreement and Plan of Merger, dated as of the date hereof
(the "Merger Agreement"), pursuant to which Grantee and Issuer
intend to effect a merger of Merger Sub with and into Issuer (the
"Merger").
(b) The Option Agreement. As an inducement and
condition to Grantee's and Merger Sub's willingness to enter into
the Merger Agreement, and in consideration thereof, the board of
directors of Issuer has approved the grant to Grantee of the
Option pursuant to this Agreement; provided, that such grant was
expressly conditioned upon, and made of no effect until after,
execution and delivery by Issuer, Grantee and Merger Sub of the
Merger Agreement.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements set forth herein and in the
Merger Agreement, the parties hereto agree as follows:
1. The Option. (a) Issuer hereby grants tp Grantee an
unconditional, irrevocable option (the "Option") to purchase,
subject to the terms hereof, up to 676,961 fully paid and
nonassessable shares of common stock, having a par value of $0.50
per share ("Common Stock"), of Issuer at a price per share in
cash equal to $17.00 (the "Option Price"); provided, however,
that in no event shall the number of shares for which the Option
is exercisable exceed 19.9% of the shares of Common Stock issued
and outstanding at the time of exercise (without giving effect to
the shares of Common Stock issued or issuable under the Option)
(the "Maximum Applicable Percentage"). The number of shares of
Common Stock purchasable upon exercise of the Option and the
Option Price are subject to adjustment as set forth herein.
(b) In the event that any additional shares of Common
Stock are issued or otherwise become outstanding after the date
of this Agreement and prior to the exercise in full of the Option
(other than pursuant to this Agreement), the aggregate number of
shares of Common Stock purchasable upon exercise of the Option
(inclusive of shares, if any, previously purchased upon exercise
of the Option) shall automatically be increased (without any
further action on the part of Issuer or Grantee being necessary)
so that, after such issuance, it equals the Maximum Applicable
Percentage. Any such increase shall not affect the Option Price.
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2. Exercise; Closing. (a) Conditions to Exercise;
Termination. Grantee or any other person that shall become a
holder of all or a part of the Option in accordance with the
terms of this Agreement (each such person being referred to
herein as the "Holder") may exercise the Option, in whole or in
part, by delivering a written notice thereof as provided in
Section 2(d) within 90 days of the occurrence of a Triggering
Event (as defined in Section 2(b)), unless prior to such
Triggering Event, the Effective Time (as defined in the Merger
Agreement) shall have occurred. The Option shall terminate upon
either (i) the occurrence of the Effective Time, or (ii) the
close of business Nashville, Tennessee time on the earlier of (x)
the day 90 days after the date that Grantee becomes entitled to
receive the Termination Fee (as defined in the Merger Agreement);
and (y) the date that Grantee is no longer potentially entitled
to receive the Termination Fee, in each case under Section 8.5(b)
of the Merger Agreement (each an "Exercise Termination Event").
(b) Triggering Event. A "Triggering Event" shall have
occurred if the Merger Agreement is terminated and Grantee then
or thereafter becomes entitled to receive the Termination Fee
pursuant to Section 8.5(b) of the Merger Agreement.
(c) Notice of Trigger Event by Issuer. Issuer shall
notify Grantee promptly in writing of the occurrence of any
Triggering Event, it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the
Holder to exercise the Option.
(d) Notice of Exercise by Grantee. If a Holder shall
be entitled to and wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which is referred to
herein as the "Notice Date") specifying (i) the total number of
shares that the Holder will purchase pursuant to such exercise,
and (ii) a date (a "Closing Date") not earlier than three
business days, nor later than 60 business days from the Notice
Date for the closing of such purchase (a "Closing"); provided,
that if a filing is required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
the Holder or Issuer, as required, promptly after the giving and
receipt of such notice shall file the required notice and shall
request early termination of the required waiting period, and the
period of time following the Notice Date referred to in clause
(ii) shall commence on the date on which the Holder furnishes to
Issuer a supplemental written notice setting forth the Closing
Date, which notice shall be furnished as promptly as practicable
after all required waiting periods shall have expired or been
terminated. Each of the Holder and the Issuer agrees to use all
reasonable efforts to cooperate with and provide information to
Issuer or Holder, as the case may be, for the purpose of any
required notice. The Closing shall take place at the principal
business office of the Issuer.
(e) Payment of Purchase Price. At each Closing, the
Holder shall pay to Issuer the aggregate purchase price for the
shares of Common Stock purchased pursuant to the exercise of the
Option in immediately available funds by a wire transfer to a
bank account designated by Issuer; provided, that failure or
refusal of Issuer to designate such a bank account shall not
preclude the Holder from exercising the Option, in whole or in
part.
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(f) Delivery of Common Stock. At such Closing,
simultaneously with the payment of the purchase price by the
Holder, Issuer shall deliver to the Holder a certificate or
certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option shall be exercised in
part only, a new Option evidencing the rights of the Holder to
purchase the balance (as adjusted pursuant to Section 1(b)) of
the shares then purchasable hereunder.
(g) Restrictive Legend. Certificates for Common Stock
delivered at a Closing may be endorsed with a restrictive legend
that shall read substantially as follows:
"The shares represented by the certificate have not
been registered under the Securities Act of 1933, as
amended, and may not be sold or transferred unless they are
subsequently registered or an exemption from such
registration requirement is available The transfer of the
shares represented by this certificate is subject to certain
provisions of an agreement between the registered holder
hereof and Issuer, a copy of which agreement is on file at
the principal office of Issuer. A copy of the
aforementioned agreement will be mailed to the holder hereof
without charge promptly after receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the
"Securities Act"), in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if
the Holder shall have delivered to Issuer a copy of a letter from
the staff of the Securities and Exchange Commission, or a written
opinion of counsel, in form and substance reasonably satisfactory
to Issuer, in each case to the effect that such legend is not
required for purposes of the Securities Act; (ii) the reference
to the provisions of this Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such
reference if the shares have been sold or transferred in
compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety
if the conditions in the preceding clauses (i) and (ii) both are
satisfied. In addition, such certificates shall bear any other
legend as may be required by applicable law.
(h) Ownership of Record; Tender of Purchase Price;
Expenses. Upon the giving by the Holder to Issuer of a written
notice of exercise referred to in Section 2(d) and the tender of
the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares
of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of Issuer shall then be closed or that
certificates representing such shares of Common Stock shall not
have been delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state and local
taxes and other charges that may be payable in connection with
the preparation, issue and delivery of stock certificates under
this Section 2 in the name of the Holder or its assignee,
transferee or designee.
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3. Covenants of Issuer. In addition to its other
agreements and covenants herein, Issuer agrees:
(a) Shares Reserved for Issuance. To maintain, free
from preemptive rights, sufficient authorized but unissued or
treasury shares of Common Stock so that the Option may be fully
exercised without additional authorization after giving effect to
all other options, warrants, convertible securities and other
rights of third parties to purchase shares of Common Stock from
Issuer, or to issue the appropriate number of shares of Common
Stock pursuant to the terms of this Agreement;
(b) No Avoidance. Not to avoid or seek to avoid
(whether by charter amendment or through reorganization,
consolidation, merger, issuance of rights, dissolution or sale of
assets, or by any other voluntary act) the observance or
performance of any of the covenants, agreements or conditions to
be observed or performed hereunder by Issuer; and
(c) Further Assurances. Promptly after the date
hereof to take all actions as may from time to time be required
(including (i) complying with all applicable premerger
notification, reporting and waiting period requirements under the
HSR Act and (ii) in the event that prior approval of or notice to
any other regulatory authority is necessary under any applicable
federal, state or local law before the Option may be exercised,
cooperating in good faith with the Holder in preparing and
processing the required applications or notices) in order to
permit each Holder to exercise the Option and purchase shares of
Common Stock pursuant to such exercise and to take all action
necessary to protect the rights of the Holder against dilution.
4. Representations and Warranties of Issuer. Issuer
hereby makes each of the representations and warranties contained
in Sections 5.1(b)(ii), 5.2(a) and 5.2(b) of the Merger Agreement
as they relate to this Agreement as if such representations and
warranties were set forth herein. Issuer hereby further
represents and warrants to Grantee that all shares of Common
Stock, upon issuance pursuant to the Option, will be delivered
free and clear of all claims, liens, encumbrances, and security
interests (other than those created by this Agreement and the
Securities Act) and not subject to any preemptive rights.
5. Representations and Warranties of Grantee. Grantee
hereby represents and warrants to Issuer that Grantee has all
requisite corporate power and authority and has taken all
corporate action necessary in order to execute, deliver and
perform its obligations under this Agreement and to consummate
the transactions contemplated hereby; this Agreement has been
duly and validly executed and delivered by Grantee and
constitutes a valid and binding agreement of Grantee enforceable
against Grantee in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to
or affecting creditors, rights and to general equity principles.
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6. Exchange; Replacement. This Agreement and the Option
granted hereby are exchangeable, without expense, at the option
of the Holder, upon presentation and surrender of this Agreement
at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable at such time hereunder, subject to
corresponding adjustments in the number of shares of Common Stock
purchasable upon exercise so that the aggregate number of such
shares under all Stock Option Agreements issued in respect of
this Agreement shall not exceed the Maximum Applicable
Percentage. Unless the context shall require otherwise, the
terms "Agreement" and "Option" as used herein include any Stock
Option Agreements and related Options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon
(i) receipt by Issuer of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Agreement,
(ii) receipt by Issuer of reasonably satisfactory indemnification
from the Holder in the case of loss, theft or destruction and
(iii) surrender and cancellation of this Agreement in the case of
mutilation, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual obligation
on the part of Issuer, whether or not the Agreement so lost,
stolen, destroyed or mutilated shall at any time be enforceable
by any person other than the holder of the new Agreement.
7. Adjustments. In addition to the adjustment to the
total number of shares of Common Stock purchasable upon exercise
of the Option pursuant to Section 1(b), the total number of
shares of Common Stock purchasable upon the exercise hereof and
the Option Price shall be subject to adjustment from time to time
as follows:
(a) In the event of any change in the outstanding
shares of Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number
of shares of Common Stock purchasable upon exercise of the Option
shall be appropriately adjusted, and proper provision shall be
made in the agreements governing any such transaction, so that
(i) any Holder shall receive upon exercise of the Option the
number and class of shares, other securities, property or cash
that such Holder would have received in respect of the shares of
Common Stock purchasable upon exercise of the Option if the
Option had been exercised and such shares of Common Stock had
been issued to such Holder immediately prior to such event or the
record date therefor, as applicable; and (ii) in the event any
additional shares of Common Stock are to be issued or otherwise
become outstanding as a result of any such change (other than
pursuant to an exercise of the Option), the number of shares of
Common Stock purchasable upon exercise of the Option shall be
increased so that, after such issuance and together with shares
of Common Stock previously issued pursuant to the exercise of the
Option (as adjusted on account of any of the foregoing changes in
the Common Stock), the number of shares so purchasable equals the
Maximum Applicable Percentage of the number of shares of Common
Stock issued and outstanding immediately after the consummation
of such change; and
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(b) Whenever the number of shares of Common Stock
purchasable upon exercise hereof is adjusted as provided in this
Section 7, the Option Price shall be adjusted by multiplying the
Option Price by a fraction, the numerator of which is equal to
the number of shares of Common Stock purchasable upon exercise
hereof immediately prior to the adjustment and the denominator of
which is equal to the number of shares of Common Stock
purchasable upon exercise hereof immediately after the
adjustment.
8. Registration. (a) Upon the occurrence of a Triggering
Event prior to an Exercise Termination Event, Issuer shall, at
the request of Grantee delivered in the written notice of
exercise of the Option provided for in Section 2(d), as promptly
as practicable prepare, file and keep current a shelf
registration statement under the Securities Act covering any or
all shares issued and issuable pursuant to the Option and shall
use its best efforts to cause such registration statement to
become effective and remain current in order to permit the sale
or other disposition of any shares of Common Stock issued upon
total or partial exercise of the Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee;
provided, however, that Issuer may postpone filing a registration
statement relating to a registration request by Grantee under
this Section 8 for a period of time (not in excess of 30 days) if
in its judgment such filing would require the disclosure of
material information that Issuer has a bona fide business purpose
for preserving as confidential. Issuer will use its best efforts
to cause such registration statement first to become effective
and then to remain effective for 270 days from the day such
registration statement first becomes effective or until such
earlier date as all shares registered shall have been sold by
Grantee. In connection with any such registration, Issuer and
Grantee shall provide each other with representations,
warranties, indemnities and other agreements customarily given in
connection with such registrations. If requested by Grantee in
connection with such registration, Issuer shall become a party to
any underwriting agreement relating to the sale of such shares,
but only to the extent of obligating Issuer in respect of
representations, warranties, indemnities, contribution and other
agreements customarily made by issuers in such underwriting
agreements.
(b) In the event that Grantee so requests, the closing
of the sale or other disposition of the Common Stock or other
securities pursuant to a registration statement filed pursuant to
Section 8(a) shall occur substantially simultaneously with the
exercise of the Option.
9. Repurchase of Option and/or Shares. (a) Repurchase;
Repurchase Price. Upon the occurrence of a Triggering Event
prior to an Exercise Termination Event, (i) at the request of a
Holder, delivered in writing within 180 days of such occurrence
(or such later period as provided in Section 2(d) with respect to
any required notice or application or in Section 10), but in any
event prior to the termination of the Option held by the Holder
pursuant to Section 2(a), Issuer shall repurchase the Option from
the Holder, in whole or in part, at a price (the "Option
Repurchase Price") equal to the number of shares of Common Stock
then purchasable upon exercise of the Option (or such lesser
number of shares as may be designated in the Repurchase Notice
(as defined below)) multiplied by the amount by which the
market/offer price (as defined below) exceeds the Option Price
and (ii) at the request of a Holder or any person who has been a
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Holder (for purposes of this Section only, each such person being
referred to as a "Holder"), delivered in writing within 180 days
of such occurrence (or such later period as provided in Section
2(d) with respect to any required notice or application or in
Section 10), but in any event prior to the termination of the
Option held by the Holder pursuant to Section 2(a), Issuer shall
repurchase such number of Option Shares from such Holder as such
Holder shall designate in the Repurchase Notice at a price (the
"Option Shares Repurchase Price") equal to the number of shares
designated multiplied by the market/offer price. The term
"market/offer price" shall mean the highest of (x) the price per
share of Common Stock at which a tender or exchange offer for
Common Stock has been made, (y) the price per share of Common
Stock to be paid by any third party pursuant to an agreement with
Issuer and (z) the highest closing price for shares of Common
Stock on the NASDAQ National Market (or, if the Common Stock is
not then listed on the National Market, any national securities
exchange or automated quotation system on which the Common Stock
is then listed or quoted) in each case within the six-month
period immediately preceding the delivery of the Repurchase
Notice. In the event that a tender or exchange offer is made for
the Common Stock or an agreement is entered into for a merger,
share exchange, consolidation or reorganization involving
consideration other than cash, the value of the securities or
other property issuable or deliverable in exchange for the Common
Stock shall be determined in good faith by a nationally
recognized investment banking firm selected by Issuer.
(b) Method of Repurchase. A Holder may exercise its
right to require Issuer to repurchase the Option, in whole or in
part, and/or any Option Shares then owned by such Holder pursuant
to this Section 9 by surrendering for such purpose to Issuer, at
its principal office, this Agreement or certificates for Option
Shares, as applicable, accompanied by a written notice or notices
stating that the Holder elects to require Issuer to repurchase
the Option and/or such Option Shares in accordance with the
provisions of this Section 9 (each such notice, a "Repurchase
Notice"). Within five business days after the surrender of the
Option and/or certificates representing Option Shares and the
receipt of the Repurchase Notice relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the applicable
Option Repurchase Price and/or the Option Share Repurchase Price
or, in either case, the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so
delivering. In the event that the Repurchase Notice shall
request the repurchase of the Option in part, Issuer shall
deliver with the Option Repurchase Price a new Stock Option
Agreement evidencing the right of the Holder to purchase that
number of shares of Common Stock purchasable pursuant to the
Option at the time of delivery of the Repurchase Notice minus the
number of shares of Common Stock represented by that portion of
the Option then being repurchased.
(c) Effect of Statutory or Regulatory Restraints on
Repurchase. To the extent that, upon or following the delivery
of a Repurchase Notice, Issuer is prohibited under applicable law
from repurchasing the Option (or portion thereof) and/or any
Option Shares subject to such Repurchase Notice, Issuer shall
immediately so notify the Holder in writing and thereafter
deliver or cause to be delivered, from time to time, to the
Holder the portion of the Option Repurchase Price and the Option
Share Repurchase Price that Issuer is no longer prohibited from
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delivering, within five business days after the date on which it
is no longer so prohibited; provided, however, that upon
notification by Issuer in writing of such prohibition, the Holder
may, within five days of receipt of such notification from
Issuer, revoke in writing its Repurchase Notice, whether in whole
or to the extent, of the prohibition, whereupon, in the latter
case, Issuer shall promptly (i) deliver to the Holder that
portion of the Option Repurchase Price and/or the Option Share
Repurchase Price that Issuer is not prohibited from delivering;
and (ii) deliver to the Holder, as appropriate, (A) with respect
to the Option, a new Stock Option Agreement evidencing the right
of the Holder to purchase that number of shares of Common Stock
for which the surrendered Stock Option Agreement was exercisable
at the time of delivery of the Repurchase Notice less the number
of shares as to which the Option Repurchase Price has theretofore
been delivered to the Holder, and/or (B) with respect to Option
Shares, a certificate for the Option Shares as to which the
Option Share Repurchase Price has not theretofore been delivered
to the Holder. Notwithstanding anything to the contrary in this
Agreement, including, without limitation, the time limitations on
the exercise of the Option, the Holder may exercise the Option
for 90 days after a notice of revocation has been issued pursuant
to this Section 9(c).
(d) Acquisition Transactions. In addition to any
other restrictions or covenants, Issuer hereby agrees that, in
the event that a Holder delivers a Repurchase Notice, it shall
not enter or agree to enter into any Acquisition Transaction
unless the other party or parties thereto agree to assume in
writing Issuer's obligations under Section 9(a) and,
notwithstanding any notice of revocation delivered pursuant to
the proviso to Section 9(c), a Holder may require such other
party or parties to perform Issuer's obligations under
Section 9(a) unless such party or parties are prohibited by law
or regulation from such performance, in which case such party or
parties shall be subject to the obligations of the Issuer under
Section 9(c).
10. Extension of Exercise Periods. The 180-day period for
exercise of certain rights under Section 9 shall be extended in
each such case at the request of the Holder to the extent
necessary to avoid liability by the Holder under Section 16(b) of
the Exchange Act by reason of such exercise.
11. Assignment. Neither party hereto may assign any of its
rights or obligations under this Agreement or the Option to any
other person without the express written consent of the other
party except that, in the event that a Triggering Event shall
have occurred, Grantee may assign the Option, in whole or in
part. Any attempted assignment in contravention of the preceding
sentence shall be null and void.
12. Filings; Other Actions. Each of Grantee and Issuer
will use its reasonable best efforts, subject to the provisions
of applicable law, to make all filings with, and to take all
other action necessary for the consummation of the transactions
contemplated by this Agreement.
13. Specific Performance. The parties hereto acknowledge
that damages would be an inadequate remedy for a breach of this
Agreement by either party hereto and that the obligations of the
parties hereto shall be specifically enforceable through
injunctive or other equitable relief.
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14. Severability; Etc. If any term, provision, covenant,
or restriction contained in this Agreement is held by a court or
a federal or state regulatory agency of competent jurisdiction to
be invalid, void, or unenforceable, the remainder of the terms,
provisions, covenants, and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no
way be affected, impaired, or invalidated. If for any reason
such court determines that the Holder is not permitted to
acquire, or Issuer is not permitted to repurchase pursuant to
Section 9, the full number of shares of Common Stock provided in
Section 1(a) hereof (as adjusted pursuant to Sections 1(b) and 7
hereof), it is the express intention of Issuer to allow the
Holder to acquire or to require Issuer to repurchase such lesser
number of shares as may be permissible, without any amendment or
modification hereof.
15. Notices. All notices, requests, instructions, or other
documents to be given hereunder shall be in writing and shall be
deemed given (i) three business days following sending by
registered or certified mail, postage prepaid, (ii) when sent if
sent by facsimile, provided that the fax is promptly confirmed by
telephone confirmation thereof, (iii) when delivered, if
delivered personally to the intended recipient, and (iv) one
business day later, if sent by overnight delivery via a national
courier service, in each case at the respective addresses of the
parties set forth in the Merger Agreement.
16. Governing Law. This Agreement shall be deemed to be
made in and in all respects shall be interpreted, construed and
governed by and in accordance with the law of the State of
Delaware, without regard to the conflict of law principles
thereof.
17. Expenses. Except as otherwise expressly provided
herein or in the Merger Agreement, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party
incurring such expense, including fees and expenses of its own
financial consultants, investment bankers, accountants, and
counsel.
18. Entire Agreement, Etc. This Agreement and the Merger
Agreement constitute the entire agreement, and supersede all
other prior agreements, understandings, representations and
warranties, both written and oral, between the parties, with
respect to the subject matter hereof. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement, except as expressly provided
herein.
19. Limitation on Profit. (a) Notwithstanding any other
provision of this Agreement, in no event shall the Grantee's
Total Profit (as hereinafter defined) plus any Termination Fee
paid to Grantee pursuant to Section 8.5(b) of the Merger
Agreement exceed in the aggregate $3.0 million and, if it
otherwise would exceed such amount, the Grantee, at its sole
election, shall either (i) reduce the number of shares of Common
Stock subject to this Option, (ii) deliver to the
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Issuer for cancellation Option Shares previously purchased by
Grantee, (iii) pay cash to the Issuer, or (iv) any combination
thereof, so that Grantee's realized Total Profit, when aggregated
with such Termination Fee so paid to Grantee shall not exceed $3.0
million after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this
Agreement, if the Option is assigned in no event shall the Total
Profit realized by all Holders exceed in the aggregate $1.1
million and, if it otherwise would exceed such amount, the
affected Holder or Holders, at its or their sole discretion,
shall either (i) reduce the number of shares of Common Stock
subject to this Option, (ii) deliver to the Issuer for
cancellation Option Shares previously purchased by such Holder or
Holders, (iii) pay cash to the Issuer, or (iv) any combination
thereof so that the Total Profit realized by all Holders shall
not exceed $1.1 million after taking into account the foregoing
actions.
(c) Notwithstanding any other provision of this
Agreement, this Option may not be exercised for a number of
shares as would, as of the date of exercise, result in a Notional
Total Profit (as defined below) which, together with any
Termination Fee theretofore paid to Grantee would exceed
$3.0 million; provided, however, that if the Option is assigned
the maximum Notional Total Profit shall be $1.1 million. Nothing
in the preceding sentence shall restrict any exercise of the
Option permitted hereby on any subsequent date.
(d) As used herein, the term "Total Profit" shall mean
the aggregate amount (before taxes) of the following: (i) (x) the
amounts received by Grantee (or all Holders if the Option is
assigned) pursuant to Issuer's repurchase of the Option (or any
portion thereof) or any Option Shares pursuant to Section 9,
less, in the case of any repurchase of Option Shares, (y) the
Grantee's purchase price for such Option Shares, as the case may
be, (ii) (x) the amounts received by Grantee pursuant to the sale
of Option Shares (or any other securities into which such Option
Shares are converted or exchanged) to any unaffiliated party,
less (y) the Grantee's purchase price of such Option Shares, and
(iii) the amounts received by Grantee on the transfer of the
Option (or any portion thereof) to any unaffiliated party.
(e) As used herein, the term "Notional Total Profit"
with respect to any number of shares as to which Grantee (or any
other Holder if the Option is assigned) may propose to exercise
this Option shall be the Total Profit determined as of the date
of such proposal assuming that this Option were exercised on such
date for such number of shares and assuming that such shares,
together with all other Option Shares held by all Holders as of
such date, were sold for cash at the closing market price for the
Common Stock as of the close of business on the preceding trading
day (less customary brokerage commissions).
20. Captions. The Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute
part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof.
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IN WITNESS WHEREOF, this Agreement has been duly
executed and delivered by the duly authorized officers of the
parties hereto as of the date first written above.
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
By:________________________________
Name:
Title:
REPUBLIC AUTOMOTIVE PARTS, INC.
By:________________________________
Name:
Title:
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