STOCK REPURCHASE AGREEMENT
This STOCK REPURCHASE AGREEMENT (this
“Agreement”) is made as of May 8, 2007, by
and among ASSET ACCEPTANCE CAPITAL CORP., a Delaware corporation
(the “Company”), AAC QUAD-C INVESTORS LLC, a
Virginia limited liability company (“Quad-C”),
XXXXXXXXX X. XXXXXXX XX, individually and with respect to
the shares beneficially owned by him and listed in
Schedule I attached hereto
(“Xxxxxxx”), and XXXX X. XXXXXX, individually
and with respect to the shares beneficially owned by him and
listed in Schedule I attached hereto
(“Xxxxxx” and, together with Quad-C and the
Xxxxxxx, each a “Seller” and collectively, the
”Sellers”).
WHEREAS, the Company announced plans on April 24, 2007 to
recapitalize its balance sheet and return $150 million to
stockholders of the Company to be accomplished (i) subject
to final approval of the Company’s board of directors,
through the repurchase of up to 1,858,000 shares of the
Company’s common stock, par value $0.01 per share
(“Common Stock”), to be accomplished by a
combination of a “Dutch auction” tender offer at
prices and on terms not finalized as of the date hereof (the
“Tender Offer”) and by the repurchases
described herein from the Sellers following the Tender Offer so
that each of the Sellers maintains its Pro Rata Ownership
Percentage (as defined in Section 1(b) below) in the
Company, and (ii) with the remaining balance of that
$150 million to be paid in the form of a special one-time
cash dividend to the holders of the Common Stock;
WHEREAS, each of the Sellers currently beneficially owns the
number of shares of Common Stock set forth opposite such
Seller’s name on Schedule I hereto and the
Sellers collectively beneficially own 17,503,393 shares,
which constitutes approximately 50.4% of the
34,698,625 shares of Common Stock issued and outstanding as
of the date hereof;
WHEREAS, the Sellers have informed the Company that they do not
intend to tender any of their shares of Common Stock pursuant to
the Tender Offer; and
WHEREAS, each Seller wishes to transfer to the Company, and the
Company wishes to repurchase from each Seller, in compliance
with applicable law, such Seller’s Pro Rata Shares (as
hereinafter defined), if and only if required to maintain each
Seller’s Pro Rata Ownership Percentage (as hereinafter
defined) following the completion of the Tender Offer, on the
terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein set forth, and for good and valuable
consideration, the parties hereto agree as follows:
1. Purchase and Sale of Shares
(a) Purchase and Sale of Common Stock. At the
Closing (as defined in Section 1(c) below), and
subject to the terms and conditions hereof, the Sellers will
transfer to the Company, and the Company will repurchase from
each of the Sellers a number of shares of Common Stock required
to maintain such Seller’s Pro Rata Ownership Percentage in
the Company after giving effect to the Tender Offer and the
repurchases under this Agreement (as determined for each Seller,
the “Pro Rata Shares” and, collectively for all
of the Sellers, the “Shares”). For example,
based upon the current Pro Rata Ownership Percentage, if the
Company purchases 1,858,000 shares in the Tender Offer,
then the Company shall repurchase a total of
1,892,000 shares from the Sellers under this Agreement,
with 1,335,000 shares, 459,000 shares and 98,000 to be
purchased from Quad-C, Xxxxxxx and Xxxxxx, respectively, and if
the Company purchases 1,500,000 shares in the Tender Offer,
then the Company shall repurchase a total of
1,527,449 shares from the Sellers under this Agreement,
with 1,077,768 shares,
370,559 shares and 79,122 to be purchased from Quad-C,
Xxxxxxx and Xxxxxx, respectively. Each Seller agrees to transfer
such Seller’s Pro Rata Shares. In connection with such
transfer, each Seller will deliver the stock certificates
evidencing the Pro Rata Shares to be sold by such Seller to the
Transfer Agent (as provided in Section 2(a), below).
In exchange for the transfer of the Shares, the Company will pay
each Seller the Purchase Price (as defined in
Section 1(b) below) as calculated for such Seller.
(b) Definitions.
”Current Shares” shall mean the shares
beneficially owned by each Seller as of the date hereof and
reflected in Schedule I under the column captioned
“Current Shares”; provided that
Schedule I may be amended by the Sellers in
accordance with the terms of this Agreement.
”Per Share Purchase Price” for the Shares shall
be equal to the price per share of Common Stock paid by the
Company for the shares of Common Stock tendered by the holders
of Common Stock in the Tender Offer.
”Pro Rata Ownership Percentage” for each Seller
shall be the quotient, in percentage form, of (i) the
number of shares of Common Stock beneficially owned by such
Seller as of the date hereof (which sum is set forth on
Schedule I), divided by (ii) the total
number of Shares of Common Stock issued and outstanding
immediately prior to the closing of the Tender Offer;
provided that Schedule I may be amended by
the Sellers in accordance with the terms of this Agreement.
”Purchase Price” for each Seller shall be equal
to the product of (i) the Per Share Purchase Price
multiplied by (ii) such Seller’s Pro Rata Shares.
”Transfer Agent” means the Company’s
transfer agent, LaSalle Bank National Association.
”Triggering Completion” shall mean (i) the
Tender Offer has expired, (ii) the Company has received
financing sufficient to acquire the shares of Common Stock
tendered pursuant to the Tender Offer, and (iii) the
Company has purchased shares of Common Stock in the Tender Offer
in accordance with the terms thereof.
(c) The Closing. Subject to the terms and
conditions hereof, the closing of the purchase and sale of the
Shares (the “Closing”) will take place at the
offices of the Company on the eleventh
(11th)
business day following the expiration date of the Tender Offer,
or at such other place and manner or at such later date or place
as the parties shall mutually agree.
2. Deliveries at Closing.
(a) Sellers’ Deliveries. Each Seller shall
transfer or cause to be transferred to the Transfer Agent on
behalf of the Company the stock certificates representing the
Shares, duly endorsed in blank for transfer (or together with a
stock power duly endorsed in blank for such stock certificate).
(b) Company’s Deliveries. The Company
shall deliver or cause to be delivered to each Seller:
(i) the Purchase Price for such Seller by check or wire
transfer to an account designated by such Seller;
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(ii) a copy, certified by the corporate secretary of the
Company, of the Board resolution of the Company approving this
Agreement and the repurchase of the Shares;
(iii) a certificate executed by the Chief Financial Officer
of the Company pursuant to Section 6(d) hereof; and
(iv) if applicable, a stock certificate of the Company
issued in the name of each Seller representing a number of
shares of Common Stock equal to the difference between the
number of shares of Common Stock represented by the stock
certificate or certificates delivered by such Seller in
accordance with Section 2(a) above and the
Seller’s Pro Rata Shares.
3. Company Representations. In repurchasing the
Shares, the Company acknowledges, represents and warrants to the
Sellers that:
(a) Organization. The Company is a corporation
duly incorporated, validly existing and in good standing under
the laws of the State of Delaware. The Company has full and
adequate right, power, capacity and authority to enter into,
execute, deliver and perform this Agreement.
(b) Authorization. This Agreement has been duly
authorized by the Company by vote of the Company’s
independent directors, has been duly executed and delivered by
the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms.
(c) Brokerage. The Company has not engaged any
investment banker, broker, or finder in connection with the
repurchase of the Shares hereunder and no broker’s or
similar fee is payable by the Company or any of its affiliates
in connection with the repurchase of the Shares hereunder.
(d) No Violation. The repurchase of the Shares
by the Company and the Tender Offer will not conflict with,
result in a breach or violation of, or constitute a default
under, any law applicable to the Company or any of its
subsidiaries or the charter documents of the Company or any of
its subsidiaries or the terms of any indenture or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or bound, or any judgment, order or
decree applicable to the Company or any of its subsidiaries of
any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over the Company or such
subsidiary.
(e) No Consent. No consent, approval,
authorization or order of any court or governmental agency or
body is required for the consummation by the Company of the
repurchase of the Shares hereunder.
(f) No Other Representations or
Warranties. Except for the express representations and
warranties of such Seller contained in this Agreement, neither
any Seller, nor any of its affiliates, attorneys, accountants or
financial and other advisors, has made any representations or
warranties to the Company.
4. Seller Representations. Each Seller
acknowledges, represents and warrants to the Company, severally
as to itself and not jointly or as to any other Seller, that:
(a) Organization. Such Seller is a limited
company, trust or individual, as applicable, validly existing
under the laws of its jurisdiction of organization. Such Seller
has full and adequate
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right, power, capacity and authority to enter into, execute,
deliver and perform this Agreement.
(b) Authorization. This Agreement has been duly
authorized, executed and delivered by such Seller and
constitutes the legal, valid and binding obligation of such
Seller, enforceable against such Seller in accordance with its
terms.
(c) Ownership of Shares. Such Seller is the
beneficial owner of the shares of the Company’s Common
Stock set forth opposite such Seller’s name on
Schedule I, and upon the Closing will transfer to
the Company, good and marketable title to the Pro Rata Shares
owned by such Seller, free and clear of any liens, claims,
security interests, restrictions, options or other encumbrances
of any kind. Such Seller has not granted any option of any sort
with respect to the Pro Rata Shares owned by such Seller or any
right to acquire the Pro Rata Shares owned by such Seller or any
interest therein other than to the Company under this Agreement.
(d) No Violation. The transfer of the Pro Rata
Shares owned by such Seller will not conflict with, result in a
breach or violation of, or constitute a default under, any law
applicable to such Seller or the limited partnership agreement,
general partnership agreement or other organizational document,
as applicable, of such Seller or the terms of any indenture or
other agreement or instrument to which such Seller is a party or
bound, or any judgment, order or decree applicable to such
Seller of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such
Seller.
(e) No Consent. No consent, approval,
authorization or order of any court or governmental agency or
body is required for the consummation by such Seller of the sale
of the Pro Rata Shares owned by such Seller hereunder.
(f) Investigation. The Seller has independently
investigated and evaluated the value of the Pro Rata Shares
owned by such Seller and the financial condition and affairs of
the Company without reliance upon any information from the
Company or its affiliates other than what is available publicly.
Based upon its independent analysis, together with information
obtained from sources other than the Company and its affiliates,
such Seller has reached its own business decision to effect the
sale of the Pro Rata Shares owned by such Seller contemplated
hereby.
(g) Investment Experience. Such Seller is
sophisticated and capable of understanding and appreciating, and
does understand and appreciate, that future events may occur
that will increase the price of the Pro Rata Shares owned by
such Seller, and that such Seller will be deprived of the
opportunity to participate in any gain that might have resulted
if such Seller had not transferred the Pro Rata Shares owned by
such Seller to the Company hereunder.
(h) Brokerage. Such Seller has not engaged any
investment banker, broker, or finder in connection with the
repurchase of the Pro Rata Shares hereunder and no broker’s
or similar fee is payable by such Seller or any of its
affiliates in connection with the transfer of the Pro Rata
Shares owned by such Seller hereunder.
(i) No Manipulation. Such Seller has not taken,
directly or indirectly, any action designed to or that would
constitute or that might reasonably be expected to cause or
result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company in
connection with the transfer of the Pro Rata Shares owned by
such Seller hereunder.
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(j) No Other Representations or
Warranties. Except for the express representations and
warranties contained in this Agreement, neither the Company, nor
any of its affiliates, attorneys, accountants or financial and
other advisors, has made any representations or warranties to
such Seller.
5. Conditions to the Company’s
Obligations. The obligations of the Company under
Section 1 to purchase the Shares at the Closing from
the Sellers are subject to the fulfillment as of the Closing of
each of the following conditions unless waived by the Company in
accordance with Section 9(g):
(a) Representations and Warranties. The
representations and warranties of the Sellers contained in
Section 4 shall be true and correct on and as of the
date of the Closing with the same effect as though such
representations and warranties had been made on and as of the
date of the Closing.
(b) Performance. The Sellers shall have
performed and complied in all material respects with all
agreements, obligations, and conditions contained in this
Agreement that are required to be performed or complied with by
them on or before the Closing.
(c) Delivery of Certificates. The Sellers shall
have delivered all of the stock certificates representing the
Shares to be sold at the Closing (or in lieu thereof an
affidavit of lost certificate), free and clear of any liens,
claims or encumbrances, along with all stock powers, assignments
or any other documents, instruments or certificates necessary
for a valid transfer of the Shares.
(d) Tender Offer. A Triggering Completion of
the Tender Offer shall have occurred.
(e) Further Assurances. No governmental
authority shall have advised or notified the Company that the
consummation of the transactions contemplated hereunder would
constitute a material violation of any applicable laws or
regulations, which notification or advice shall not have been
withdrawn after the exhaustion of the Company’s good faith
efforts to cause such withdrawal.
6. Conditions to the Sellers’
Obligations. The obligations of the Sellers under
Section 1 to sell the Shares at the Closing are
subject to the fulfillment as of the Closing of each of the
following conditions unless waived by the Sellers in accordance
with Section 8(h):
(a) Representations and Warranties. The
representations and warranties of the Company contained in
Section 3 shall be true and correct as of the date
of the Closing with the same effect as though such
representations and warranties had been made on and as of the
date of the Closing.
(b) Performance. The Company shall have
performed and complied in all material respects with all
agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by
it on or before the Closing.
(c) Tender Offer. A Triggering Completion of
the Tender Offer shall have occurred.
(d) Certificate of the Chief Financial
Officer. The Company shall have delivered a certificate
of the Chief Financial Officer of the Company as to the solvency
of the Company in form and substance mutually agreeable to the
parties and to the effect that the Company has sufficient
“surplus” as defined and computed in accordance with
Section 154 and Section 244 of the General Corporation
Law of the State of Delaware, so as to meet the requirements of
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Section 160(a) of the General Corporation Law of the State
of Delaware in effecting the Tender Offer and purchase of the
Shares hereunder.
(e) Further Assurances. No governmental
authority shall have advised or notified the Sellers that the
consummation of the transactions contemplated hereunder would
constitute a material violation of any applicable laws or
regulations, which notification or advice shall not have been
withdrawn after the exhaustion of the Sellers’ good faith
efforts to cause such withdrawal.
7. Covenants.
(a) Proportional Voting of Shares. Each Seller
hereby agrees (severally with respect to itself and not jointly)
that from the date of the expiration of the Tender Offer until
the Closing, subject to earlier termination of this Agreement
pursuant to Section 8 hereof, at any meeting of the
shareholders of the Company, however called, or at any
adjournment thereof or in any other circumstances upon which a
vote or other approval is sought, such Seller shall vote (or
cause to be voted) in person or by proxy such Seller’s Pro
Rata Shares in proportion to the shares of stock of Common Stock
owned by persons other than the Sellers. For example, if holders
of 35% of the shares of Common Stock owned by persons other than
the Sellers vote in favor of a particular resolution, each
Seller will vote 35% of its Pro Rata Shares in favor of
that resolution.
(b) No Participation in Tender Offer. Each
Seller agrees that it will not tender any of its shares of
Common Stock pursuant to the Tender Offer.
(c) No Purchase of Common Stock. From the date
of the expiration of the Tender Offer until the Closing, subject
to earlier termination of this Agreement pursuant to
Section 8 hereof, each Seller agrees that it will
not, directly or indirectly, purchase any shares of Common Stock.
(d) No Sale of Common Stock. Except as
contemplated hereunder, from the date of the expiration of the
Tender Offer until the Closing, subject to earlier termination
of this Agreement pursuant to Section 8 hereof, each
Seller agrees that it will not, directly or indirectly, sell any
shares of Common Stock.
(e) Withholding. The Purchase Price shall be
paid free and clear of any and all U.S. federal, state,
local or foreign income or withholding taxes.
8. Termination. This Agreement shall terminate
if the purchase of shares of Common Stock by the Company
pursuant to the Tender Offer is not consummated by July 31,
2007 (unless the Company has extended the Tender Offer beyond
July 31, 2007, in which case this Agreement shall terminate
on the
16th business
day after the last extension thereof) or upon a termination of
the Tender Offer pursuant to which the Company did not purchase
any shares. Upon termination of this Agreement pursuant to this
Xxxxxxx 0, xxxx of the parties hereto shall have any
liability hereunder.
9. Miscellaneous.
(a) Adjustments. Wherever a particular number
is specified herein, including, without limitation, number of
shares or price per share, such number shall be adjusted to
reflect any stock dividends, stock-splits, reverse stock-splits,
combinations or other reclassifications of stock or any similar
transactions and appropriate adjustments shall be made with
respect to the relevant provisions of this Agreement so as to
fairly and equitably preserve, as far as
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practicable, the original rights and obligations of the Company
and the Sellers under this Agreement.
(b) Confidentiality. Each party agrees to keep
the contents and terms of this Agreement confidential and shall
not disclose any such contents or terms to any third party,
except to the extent the party is required by applicable law,
regulation or legal process to make such disclosure, including
such disclosure as the Company or a Seller may reasonably
determine to be required to comply with its Exchange Act
reporting obligations.
(c) Entire Agreement. This Agreement contains
the entire agreement between the parties hereto and their
affiliates with respect to the subject matter of this Agreement
and supersedes any and all prior or contemporaneous agreements
related to the subject matter hereof. This Agreement is executed
without reliance upon any promise, warranty or representation by
any party or any of its affiliates or any representative of any
party or any of its affiliates other than those expressly
contained herein. The respective agreements, representations,
warranties and other statements of the Company and the Sellers,
as set forth in this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to
the results thereof) made by or on behalf of the Company or any
Seller or any of their respective officers, directors or
affiliates, and shall survive delivery of and payment for the
Shares. This Agreement may not be assigned by a Seller without
the written consent of the Company or by the Company without the
written consent of the Sellers, and any such assignment without
such written consent shall be void.
(d) Amendment. This Agreement may be amended
only by written agreement of a subsequent date between the
parties hereto; provided, however, that the Sellers may
amend Schedule I as necessary to account for any
changes in ownership of the shares of Common Stock held by such
Sellers or any changes in the total number of shares of Common
Stock issued and outstanding as of the date hereof as compared
to immediately prior to the closing of the Tender Offer.
(e) Further Assurances. Each party agrees to
execute any additional documents and to take any further action
as may be necessary or desirable in order to implement the
transactions contemplated by this Agreement. Without limiting
the foregoing, in the event that the Company does not receive
debt financing sufficient to pay each Seller the Purchase Price
for such Seller’s Pro Rata Shares, the parties agree to
take such further action, on terms and conditions mutually
acceptable to the parties, to implement the transactions
contemplated by this Agreement.
(f) Governing Law. This Agreement and any
related disputes shall be governed by the laws of the State of
Michigan.
(g) Delays or Omissions. It is agreed that no
delay or omission to exercise any right, power or remedy
accruing to any party upon any breach or default of any other
party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein, or of any
similar breach or default thereafter occurring; nor shall any
waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. It
is further agreed that any waiver, permit, consent or approval
of any kind or character of any breach or default under this
Agreement, or any waiver of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the
extent specifically set
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forth in writing, and that all remedies, either under this
Agreement, by law or otherwise, shall be cumulative and not
alternative.
(h) Counterparts. This Agreement may be
executed in one or more counterparts, each of which constitutes
an original and is admissible in evidence, and all of which
constitute one and the same agreement.
(i) Expenses. Each party shall bear its own
expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby.
[Signatures on next page]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
By: |
/s/ E.
L. Xxxxxxx
|
Its: | Vice President — General Counsel |
AAC QUAD-C INVESTORS LLC
By: |
/s/ Xxxx
X. Xxxxx
|
Its: | Vice President |
/s/ Xxxxxxxxx
X. Xxxxxxx XX
XXXXXXXXX X. XXXXXXX XX, individually and with respect to the
shares beneficially owned by him and listed in
Schedule I attached hereto.
/s/ Xxxx
X. Xxxxxx
XXXX X. XXXXXX, individually and with respect to the shares
beneficially owned by him and listed in Schedule I
attached hereto.
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SCHEDULE I
Share Ownership
Pro Rata |
||||||||||
Ownership |
||||||||||
Stockholder | Class | Current Shares | Percentage(a) | |||||||
AAC Quad-C Investors LLC
|
Common Stock | 12,356,476 | (b) | 35.611% | ||||||
Xxxxxxxxx X. Xxxxxxx XX
|
Common Stock | 4,243,884 | (c) | 12.223% | ||||||
Xxxx X. Xxxxxx
|
Common Stock | 903,033 | 2.603% | |||||||
Total
|
17,503,393 | 50.444% | ||||||||
(a) | The respective Pro Rata Ownership Percentages of the Sellers is based upon 34,698,625 shares of Common Stock issued and outstanding as of May 8, 2007. | |
(b) | Includes 12,356,476 shares held of record by AAC Quad-C Investors LLC. Does not include 43,996 shares subject to options which are presently exercisable by Xxxxxxxx X. Xxxxxxx or 43,996 shares subject to options which are presently exercisable by Xxxxxxx X. Xxxxxxxx, each of whom serves as a manager of AAC Quad-C Investors LLC and as a director of AACC. | |
(c) | Includes 1,207,340 shares held by trusts of which Xx. Xxxxxxx is co-trustee with his spouse, and 186,520 shares held by a trust of which Xx. Xxxxxxx’x spouse is sole trustee. Includes 15,000 shares subject to an option, which is presently exercisable. |
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