Stock Purchase Agreement

EXHIBIT 10.1


STOCK PURCHASE AGREEMENT


This Stock Purchase Agreement (this "Agreement") is entered into as of September 1, 2000, by and between ATCDG Acquisition Corp., Inc., a Delaware corporation ("Buyer") and Aftermarket Technology Corp., a Delaware corporation ("Seller").


R E C I T A L S


A. ATC Distribution Group, Inc., a Delaware corporation (the "Company") is engaged in the business of sourcing and remanufacturing transmission and related drive train components and products for distribution to independent aftermarket customers for use in the repair of automobiles and light trucks principally following expiration of the new vehicle warranty (the "Business"); and


B. Seller owns all of the issued and outstanding shares (collectively the "Shares") of the capital stock of the Company and Buyer desires to purchase and Seller desires to sell the Shares on the terms and conditions set forth herein.


A G R E E M E N T


NOW, THEREFORE, in consideration of the foregoing premises, and the mutual representations, warranties, covenants and agreements hereinafter set forth, the parties hereto agree as follows.


ARTICLE I
DEFINITIONS


1.01 DEFINITIONS. The following terms, as used herein, have the following meanings:


"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Act of 1934, as amended. Without limiting the generality of the foregoing, from and after the Closing, the Affiliates of Buyer shall include the Company and the Company Subsidiaries and the Affiliates of Seller shall exclude the Company and the Company Subsidiaries.


"APPLICABLE LAW" means, with respect to any Person, any statute, law, ordinance or regulation (including any Environmental Law) applicable to such Person or any of its Affiliates or Plan Affiliates or any of their respective properties, assets, officers, directors, employees, consultants or agents (in connection with such officer's, director's, employee's, consultant's or agent's activities on behalf of such Person or any of its Affiliates or Plan Affiliates).


"APPLICABLE RATE" means, with respect to any day, the 90-day LIBOR per annum rate of interest published in the daily edition of the Wall Street Journal on the most recently preceding first Business Day of a month (the "First Business Day"). If the LIBOR rate so published on the First Business Day is different from the LIBOR rate so published on the prior month's first Business Day, the new then applicable First Business Day's rate shall apply on the First Business Day.


"ASSOCIATE" or "ASSOCIATED WITH" means, when used to indicate a relationship with any Person, (a) any other Person of which such Person is an officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities issued by such other Person, (b) any trust or other estate in which such Person has a beneficial interest of more than 10% or as to which such Person serves as trustee or in a similar fiduciary capacity, and (c) the spouse of such Person and, to the extent the Seller has Knowledge of such relationship, (i) any parent, grandparent, aunt, uncle, sibling or


child of such Person, or (ii) any relative of such spouse who has the same home as such Person or who is a director or officer of such Person or any Affiliate thereof.


"BENEFIT ARRANGEMENT" means any material benefit arrangement, other than an Employee Benefit Plan, maintained by the Company or any ERISA Affiliate of the Company covering the employees, former employees, directors and former directors of the Company and the beneficiaries of any of them, including, without limitation, (i) each material employment or consulting agreement, (ii) each arrangement providing for material insurance coverage for employees or workers' compensation benefits, (iii) each material incentive bonus or deferred bonus arrangement, (iv) each arrangement providing material termination allowance, severance or similar benefits, (v) each material equity compensation plan, (vi) each material deferred compensation plan and (vii) each material compensation policy and practice.


"BENEFIT PLAN" means an Employee Benefit Plan or Benefit Arrangement.


"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on which commercial banks in Chicago, Illinois are authorized or required by law to close.


"CLOSING DATE CUTOFF TIME" means 11:59 p.m., Chicago time, on the Closing Date.


"CODE" means the Internal Revenue Code of 1986, as amended.


"COMPANY SUBSIDIARY" means any direct or indirect Subsidiary of the Company.


"CONTRACTS" means all contracts, agreements, options, leases, licenses, sales and purchase order, commitments and other instruments of any kind, whether written or oral, to which the Company or any Company Subsidiary is a party on the Closing Date, including the Scheduled Contracts and the Subsequent Material Contracts.


"DAMAGES" means all demands, claims, actions or causes of action, assessments, losses, damages, costs, expenses, liabilities, judgments, awards, fines, sanctions, penalties, charges and amounts paid in settlement, net of insurance proceeds actually received, including without limitation (i) interest on cash disbursements in respect of any of the foregoing, at the Applicable Rate, from the date each such cash disbursement is made until the Person incurring the same shall have been indemnified in respect thereof and (ii) reasonable costs, fees and expenses of attorneys, accountants and other agents of such Person. The amount of any Damages shall be net of any Tax benefit if and when actually realized (as offset by any Tax burden resulting from the matter for which a claim is asserted or from the indemnification) that accrues to an Indemnitee in respect of the matter for which a claim is asserted; provided, that no Indemnitee shall be required solely for the purpose of realizing a benefit to take any Tax position that could have an adverse effect on such Indemnitee if taken; provided, further, that the Indemnitee shall not be required to disclose its (or its affiliates) Tax returns, work papers or other information with respect to the preparation of such returns, but shall be required to disclose the foregoing only to the Tax Arbitrator and provided further, that in the event that such Tax benefit is reduced or eliminated as a result of an examination, audit or similar proceeding, the Indemnifying Party shall pay to the Indemnitee the amount of any attendant increase in Damages.


"EMPLOYEE BENEFIT PLAN" means any employee benefit plan, as defined in Section 3(3) of ERISA, that the Company or any ERISA Affiliate currently sponsors or contributes and that covers employees or former employees of the Company or any Company Subsidiary.


"EMPLOYEE PENSION BENEFIT PLAN" means any employee pension benefit plan, as defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA, including a Multiemployer Plan.


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"ENCUMBRANCES" means easements, rights of way, servitudes, zoning or building restrictions, or any other material rights of others or other material adverse interests of any kind, including chattel mortgages, conditional sales contracts, collateral security arrangements and other material title or interest retention arrangements.


"ENVIRONMENTAL LIABILITIES" means, regardless of whether any of the following are contained in any disclosure schedule to this Agreement or otherwise disclosed to Buyer prior to the Closing, any and all loss, liability, claim, obligation, damage, deficiency, costs and expenses, fines or penalties (including fines, penalties and defense costs incurred for such reasonable time after the Closing as it takes the Company or any Company Subsidiary to come into compliance with Environmental Laws with respect to conditions in existence on or prior to the Closing Date) and including without limitation reasonable attorney fees and other defense costs, costs of investigation, remediation or other response actions (any of the foregoing, "Environmental Damages") known or unknown, foreseen or unforeseen, whether contingent or otherwise, fixed or absolute, present or arising in the future, asserted against or reasonably incurred by a Buyer Indemnitee arising out of or related to: (1) environmental conditions, including the presence, Release, threat of Release, Management of or exposure to Hazardous Substances at on, in or under any property now or previously owned, operated or leased by the Company, any Company Subsidiary or any of their respective predecessors in interest, whether into the air, soil, ground or surface waters on-site or off-site, to the extent that such environmental conditions occurred prior to the Closing Date and to the extent that any such pre-existing presence, Release or exposure migrates or continues (other than through the act or negligent omission of any Person not the Seller) after the Closing Date; or (2) the off-site transportation, storage, treatment, recycling or disposal of Hazardous Substances Managed or Released, prior to the Closing Date, by or on behalf of the Company, any Company Subsidiary or any of their respective predecessors in interest or at or from any property now or previously owned, operated or leased by the Company, any Company Subsidiary or any of their respective predecessors in interest; or (3) any violation of any Environmental Law by the Company, any Company Subsidiary or any of their respective predecessors in interest to the extent that such violation occurred prior to the Closing Date.


"EQUIPMENT" means all machinery, equipment, furniture, office equipment, communications equipment, vehicles, storage tanks, spare and replacement parts and other tangible property (and interests in any of the foregoing) of the Company or any of the Company Subsidiaries.


"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.


"ERISA AFFILIATE" of any Person means any other Person that, together with such Person as of the relevant measuring date under ERISA, was or is required to be treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.


"GAAP" means generally accepted accounting principles applied in the United States as in effect at the time the relevant financial statement is prepared, applied on a consistent basis utilizing the Company's practices, which are in accordance with generally accepted accounting principles.


"GOVERNMENTAL AUTHORITY" means any foreign, domestic, federal, territorial, state or local governmental authority, quasi-governmental authority, instrumentality, court, government or self-regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing.


"GROUP HEALTH PLAN" means any group health plan, as defined in Section 5000(b)(1) of the Code.


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"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.


"INCOME TAX" means any tax based on, measured by or determined by reference to net income.


"INDEBTEDNESS" means all liabilities and obligations, contingent or otherwise, of the Company or any of the Company Subsidiaries (i) in respect of borrowed money, (ii) evidenced by bonds, notes, debentures or similar instruments, (iii) representing the balance deferred and unpaid of the purchase price of any property or services, other than those incurred in the ordinary course of its business that constitute trade payables to trade creditors, (iv) evidenced by a bankers' acceptance or similar instrument issued or accepted by banks, (v) for the capitalized amount of a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP utilizing the interest rate and other factors historically assigned to such leases by Seller, (vi) evidenced by a letter of credit or a reimbursement obligation of the Company or any of the Company Subsidiaries with respect to any letter of credit, except for letter of credit or reimbursement obligations for purchases of goods and services in the ordinary course of business and (vii) any of the foregoing of another Person as to which the Company or any of the Company Subsidiaries is a guarantor or otherwise liable (except endorsements of customer checks in the ordinary course of business).


"INDEMNIFYING PARTY" means: (i) Seller when any Buyer Indemnitee is asserting a claim under Sections 9.01(a) or (ii) Buyer and the Company when any Seller Indemnitee is asserting a claim under Sections 9.01(b).


"INDEMNITEE" means: (i) each of Buyer and its Affiliates (including, without limitation, after the Closing, the Company) with respect to any claim for which Seller is the Indemnifying Party under Section 9.01(a); or (ii) Seller and its Affiliates with respect to claims for which Buyer and the Company are Indemnifying Parties under Section 9.01(d).


"INTERCOMPANY INDEBTEDNESS" means Indebtedness of the Company or any of the Company Subsidiaries to Seller or any of its Subsidiaries (other than the Company and the Company Subsidiaries) and Indebtedness of Seller or any of its Subsidiaries (other than the Company and the Company Subsidiaries) to the Company or any of the Company Subsidiaries.


"INVENTORY" means all items of inventory notwithstanding how classified in the financial records of the Company, including all raw materials, work-in-process, finished goods, supplies, spare parts, samples, cores and stores of the Company and the Company Subsidiaries.


"IRS" means the Internal Revenue Service.


"KNOWLEDGE" means, with respect to any entity, all things either actually known by any of the executive officers of such entity or that it would be reasonable to expect would be known by one or more of the executive officers of such entity in the ordinary course of their duties; PROVIDED, HOWEVER, that solely with respect to determining Knowledge of Seller as of the date hereof, the following persons shall be deemed to be executive officers of Seller: Michael Du Bose, Barry Kohn, Joseph Salamunovich, Mary Ryan, John Machota, Daniel Scopetti, Anthony Ten-Barge, John Pinkerton, Frank Papa and Greg Bashur (collectively, the "Seller Executive Officers"); and PROVIDED, FURTHER, that solely with respect to determining Knowledge of Seller on and after September 8, 2000, the following persons shall be deemed to be executive officers of Seller: the Seller Executive Officers, Tom Conroy, Tom DeMille, Gordon King, Steven Parrish, Roger Schepman and Corby Wilemon.


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"LIABILITY" means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, whether or not the same is required to be accrued on the financial statements of such Person and whether or not the same is disclosed on any schedule to this Agreement.


"LIEN" means, with respect to any asset, any mortgage, title defect or objection, lien, pledge, charge, security interest, hypothecation, restriction, encumbrance or charge of any kind in respect of such asset.


"MANAGEMENT SERVICES AGREEMENT" means that certain Amended and Restated Management Services Agreement, dated as of December 18, 1996, among Seller, the Subsidiaries of Seller and Aurora Capital Partners, L.P.


"MATERIAL ADVERSE EFFECT" means a change in, or effect on, the business, financial condition or results of operations of the Company and the Company Subsidiaries that results in or is reasonably likely to result in a material adverse effect on, or a material adverse change in, the Company and the Company Subsidiaries taken as a whole or the condition (financial or otherwise) or the results of operation of the Business, except for any change or effect relating to or resulting from (i) general economic, financial or market conditions or conditions generally affecting the industries in which the Company and the Company Subsidiaries operate, (ii) actions taken by Buyer or any of its Affiliates, or (iii) the public announcement of the transactions contemplated by this Agreement.


"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in Section 3(37) and 4001(a)(3) of ERISA.


"NET CASH" means, with respect to the Company and the Company Subsidiaries at any specified time, the amount, at such time, of: (i) cash on hand; plus (ii) checks that have been received but not yet converted to cash but as to which accounts receivable have been commensurately reduced in recognition of such receipt; minus (iii) checks that have been issued but not yet converted to cash but as to which accounts payable have been commensurately reduced in recognition of such issuance. Exhibit A hereto sets forth a calculation of Net Cash as of May 31, 2000.


"NET WORKING CAPITAL" means, with respect to the Company and the Company Subsidiaries at any specified time, the difference between:


(i) total current assets of the Company and the Company Subsidiaries at such time, excluding the assets set forth in SCHEDULE 1.01 and with the adjustments set forth in SCHEDULE 1.01; and


(ii) total current liabilities of the Company and the Company Subsidiaries at such time, excluding the liabilities set forth in SCHEDULE 1.02 and with the adjustments set forth in SCHEDULE 1.02.


Net Working Capital shall be determined in accordance with GAAP, applied on a basis consistent with the preparation of the 2000 Balance Sheet, on a going concern basis, and without giving effect to any purchase accounting adjustments arising out of the transactions contemplated by this Agreement. An example of a Net Working Capital calculation is attached hereto as Exhibit A.


"OUTSIDE DATE" means the later of (i) October 20, 2000 and (ii) the date that is five days after the expiration or termination of the waiting period provided for in the HSR Act; PROVIDED, HOWEVER,


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that the Outside Date shall be October 31, 2000 if such expiration or termination has not occurred prior to October 31, 2000.


"PERMITTED LIENS" means (i) Liens for Taxes or governmental assessments or similar obligations the payment of which is not yet due, or for Taxes the validity of which are being contested in good faith by appropriate proceedings; (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other similar Persons imposed by Applicable Law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith; (iii) Liens relating to deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security; (iv) until the Closing Date, Liens and Encumbrances specifically identified on SCHEDULE 1.03, which such scheduled Liens and Encumbrances shall be terminated on or prior to the Closing Date and shall not be considered Permitted Liens for purposes of Section 8.01(g); and (v) Liens securing executory obligations under any Lease that constitutes an "operating lease" under GAAP.


"PERSON" means an individual, corporation, partnership, limited liability company, association, trust, estate or other entity or organization, including a Governmental Authority.


"PLAN AFFILIATE" means, with respect to any Person, any Benefit Plan sponsored by, maintained by or contributed to by such Person, and with respect to any Benefit Plan, any Person sponsoring, maintaining or contributing to such Benefit Plan.


"PROHIBITED TRANSACTION" means a transaction that is prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt under Section 4975 of the Code or Section 408 of ERISA, respectively.


"SUBSIDIARY" or "SUBSIDIARIES" of any Person means any corporation, partnership, limited liability company, association, trust, unincorporated association or other legal entity of which such Person (either alone or through or together with any other subsidiary), (1) owns, directly or indirectly, fifty percent (50%) or more of the capital stock or other equity interest that are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity, or (2) has the contractual or other power to designate a majority of the board of directors or other governing body (and, where the context permits, includes any predecessor of such an entity).


"TAX" means all taxes imposed of any nature including federal, state, local or foreign net income tax, alternative or add-on minimum tax, profits or excess profits tax, franchise tax, gross income, adjusted gross income or gross receipts tax, employment related tax (including employee withholding or employer payroll tax, FICA or FUTA), real or personal property tax or ad valorem tax, sales or use tax, excise tax, stamp tax or duty, any withholding or back up withholding tax, value added tax, severance tax, prohibited transaction tax, premiums tax, occupation tax, together with any interest or any penalty, addition to tax or additional amount imposed by any governmental authority (domestic or foreign) responsible for the imposition of any such tax.


"TAX RETURN" means all returns, reports, forms or other information required to be filed with respect to any Tax.


"TAX SHARING AGREEMENT" means that certain Amended and Restated Tax Sharing Agreement, dated as of December 20, 1996 among Seller and its Subsidiaries.


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1.02 ADDITIONAL DEFINED TERMS. The following terms are defined in the Sections referred to below:


"338 Allocation".......................................................Section 7.05(m) "401(k) Transfer"......................................................Section 6.03(c) "2000 Balance Sheet"......................................................Section 3.09 "AAA Rules"...........................................................Section 11.11(a) "Accountant"...........................................................Section 2.03(a) "Affected Employees"...................................................Section 6.03(a) "Agent"...............................................................Section 10.01(g) "Agreement"...................................................................Preamble "Aggregate Basket".....................................................Section 9.01(b) "Aggregate Deemed Sale Price"..........................................Section 7.05(l) "Amended LaSalle Master Lease Agreement"..................................Section 5.19 "ATC Savings Plan".....................................................Section 6.03(c) "Back-end Lease Payments"..............................................Section 7.11(b) "Banks"...............................................................Section 10.01(g) "Business"...................................................................Recital A "Buyer".......................................................................Preamble "Buyer Indemnitees"....................................................Section 9.01(a) "Buyer Representatives"................................................Section 6.01(a) "Buyer's 401(k) Plan"..................................................Section 6.03(c) "Cash Cap".............................................................Section 9.01(a) "Closing Date".........................................................Section 2.02(a) "Closing"..............................................................Section 2.02(a) "Closing Inventory"....................................................Section 2.03(c) "Company"....................................................................Recital A "Company Master Lease Agreement"..........................................Section 5.19 "Consent".............................................................Section 10.01(g) "Credit Facility".....................................................Section 10.01(g) "Debt Commitment Letters".............................................Section 10.01(g) "Environmental Laws"...................................................Section 3.17(a) "Environmental Permits"................................................Section 3.17(a) "Equity Commitment Letter"................................................Section 4.08 "Escrow Agent"............................................................Section 5.11 "Escrow Agreement"........................................................Section 5.11 "Estimated Net Cash"...................................................Section 2.03(b) "Estimated Net Working Capital"........................................Section 2.03(a) "Final Amount"......................................................Section 9.04(d)(y) "Final Net Cash".......................................................Section 2.03(b) "Final Net Working Capital"............................................Section 2.03(a) "Final Section 338 Schedule"...........................................Section 7.05(l) "Financial Statements"....................................................Section 3.09 "Half Amount"......................................................Section 9.04(d)(iv) "Hazardous Substance"..................................................Section 3.17(c) "Holdings"................................................................Section 5.05 "Indemnification Ending Date"..........................................Section 9.02(d) "Indemnified Amount"...............................................Section 9.04(d)(iv) "Insurance Policies"...................................................Section 3.16(a) "Intellectual Property Rights".........................................Section 3.20(a) "Intercompany Accounts"...................................................Section 5.13


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"King-O-Matic"............................................................Section 2.06 "King-O-Matic Note".......................................................Section 2.06 "LaSalle".................................................................Section 5.19 "LaSalle Master Lease Agreement"..........................................Section 5.19 "Leased Real Property".................................................Section 3.11(a) "Leases"...............................................................Section 3.11(b) "Letter of Credit"........................................................Section 5.11 "Licensee Indemnitor".....................................................Section 7.14 "Management"...........................................................Section 3.17(c) "Mini-Basket"..........................................................Section 9.01(b) "Newfoundland"............................................................Section 2.06 "Non-Compete Period"...................................................Section 5.10(a) "OEMs".................................................................Section 5.10(a) "Other Leases".........................................................Section 7.11(b) "Permits"..............................................................Section 3.14(a) "Personal Property Leases".............................................Section 3.11(b) "Predecessor Company"..................................................Section 3.17(c) "Preferred Shares......................................................Section 2.02(c) "Preliminary Section 338 Schedule".....................................Section 7.05(l) "Proceedings".............................................................Section 3.12 "Proposed Net Cash"....................................................Section 2.03(b) "Proposed Net Working Capital".........................................Section 2.03(a) "Prop ...