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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 4, 1998
BY AND AMONG
BUDGET GROUP, INC.,
BDG CORPORATION,
RYDER TRS, INC.,
AND
CERTAIN OTHER PARTIES
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TABLE OF CONTENTS
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ARTICLE I. The Transactions................................................
Section 1.1. The Transactions............................................
Section 1.2. The Merger..................................................
Section 1.3. Effects of Merger...........................................
ARTICLE II. The Surviving Corporation......................................
Section 2.1. Certificate of Incorporation................................
Section 2.2. By-Laws.....................................................
Section 2.3. Officers and Directors......................................
ARTICLE III. Determination of Merger Consideration; Conversion of Shares;
Etc...........................................................
Section 3.1. Determination of Merger Consideration.......................
Section 3.2. Conversion of Shares in the Merger..........................
Section 3.3. Adjustment to Merger Shares.................................
Section 3.4. Contingent Additional Consideration.........................
Section 3.5. Warrants....................................................
Section 3.6. Escrow Holdback Shares......................................
Section 3.7. Stock Options...............................................
Section 3.8. Appraisal Rights............................................
Section 3.9. Buyer to Make Certificates Available........................
Section 3.10. Dividends; Transfer Taxes...................................
Section 3.11. No Fractional Securities....................................
Section 3.12. Closing of Company Transfer Books...........................
Section 3.13. Legends and Transfer Restrictions...........................
Section 3.14. Exemptions from Registration and Qualification..............
Section 3.15. Registration Rights.........................................
Section 3.16. Business Combinations.......................................
ARTICLE IV. Representations and Warranties of the Company..................
Section 4.1. Corporate Organization and Authorization....................
Section 4.2. Capitalization..............................................
Section 4.3. Noncontravention............................................
Section 4.4. SEC Filings.................................................
Section 4.5. Financial Statements........................................
Section 4.6. Legal Proceedings...........................................
Section 4.7. Employee Plans..............................................
Section 4.8. Intellectual Property.......................................
Section 4.9. Events Subsequent to September 30, 1997.....................
Section 4.10. Compliance with Laws........................................
Section 4.11. Registration Statement......................................
Section 4.12. Properties; Leases..........................................
Section 4.13. Tax Matters.................................................
Section 4.14. Brokerage...................................................
Section 4.15. Insurance; Protection Products..............................
Section 4.16. Contracts...................................................
Section 4.17. Transactions with Affiliates................................
Section 4.18. Voting Requirements; Dissenters' Rights.....................
Section 4.19. Labor Matters...............................................
Section 4.20. Quantity and Maintenance of Trucks..........................
Section 4.21. Accounts Receivable.........................................
Section 4.22. Licenses, Permits, etc. ....................................
Section 4.23. Disclosure..................................................
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ARTICLE V. Representations and Warranties of Buyer.........................
Section 5.1. Corporate Organization and Authorization....................
Section 5.2. Capitalization..............................................
Section 5.3. Noncontravention............................................
Section 5.4. SEC Filings.................................................
Section 5.5. Financial Statements........................................
Section 5.6. Legal Proceedings...........................................
Section 5.7. Events Subsequent to September 30, 1997.....................
Section 5.8. Compliance with Laws........................................
Section 5.9. Registration Statement......................................
Section 5.10. Properties; Insurance.......................................
Section 5.11. Financing...................................................
Section 5.12. Brokerage...................................................
ARTICLE VI. Covenants and Agreements.......................................
Section 6.1. Conduct of the Company Prior to the Effective Time..........
Section 6.2. Conduct of Buyer Prior to the Effective Time................
Section 6.3. Other Offers for the Company; Sale of Common Stock by
Significant Stockholders....................................
Section 6.4. Continued Effectiveness of Representations and Warranties of
the Parties.................................................
Section 6.5. Corporate Examinations and Investigations...................
Section 6.6. Buyer Approvals.............................................
Section 6.7. Company Approvals...........................................
Section 6.8. Letter of Credit............................................
Section 6.9. Further Assurances..........................................
Section 6.10. Buyer Board of Directors....................................
Section 6.11. Indemnification of Company Officers and Directors;
Insurance...................................................
Section 6.12. Confidentiality.............................................
Section 6.13. Certificates, Opinions, Etc. ...............................
Section 6.14. Interim Financials..........................................
Section 6.15. Communications..............................................
Section 6.16. Releases....................................................
Section 6.17. Transfer Taxes..............................................
Section 6.18. Standstill..................................................
Section 6.19. Buyer's Stockholders' Meeting...............................
Section 6.20. Stock Purchases, Repurchases and Sales; Registration
Rights......................................................
Section 6.21. Listing.....................................................
Section 6.22. Registration Rights.........................................
Section 6.23. Buyer Review of Disclosure Schedules........................
ARTICLE VII. Conditions Precedent To Merger................................
ARTICLE VIII. Closing......................................................
ARTICLE IX. Representations and Warranties as of the Closing Date;
Survival; Material Breaches....................................
Section 9.1. Representations and Warranties as of the Closing Date.......
Section 9.2. Survival....................................................
Section 9.3. Certain Material Breaches...................................
ARTICLE X. Termination of Agreement........................................
Section 10.1. Termination.................................................
Section 10.2. Effect of Termination.......................................
Section 10.3. Amounts Payable in Connection with Termination..............
ARTICLE XI. Definitions....................................................
Section 11.1. Definitions.................................................
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ARTICLE XII. Miscellaneous.................................................
Section 12.1. Publicity...................................................
Section 12.2. Notices.....................................................
Section 12.3. Entire Agreement............................................
Section 12.4. Waivers and Amendments; Non Contractual Remedies;
Preservation of Remedies; Liability.........................
Section 12.5. Governing Law...............................................
Section 12.6. Binding Effect; No Assignment...............................
Section 12.7. Third Party Beneficiaries...................................
Section 12.8. Counterparts................................................
Section 12.9. Exhibits, Schedules and Annexes.............................
Section 12.10. Headings....................................................
Section 12.11. Submission to Jurisdiction; Venue...........................
Section 12.12. Severability................................................
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ANNEX
Annex I Restricted Persons
Annex II Buyer Opinion Matters
Annex III Company Opinion Matters
EXHIBIT INDEX
Exhibit A Warrant Assumptions
Exhibit B Form of Holdback Escrow Agreement
Exhibit C Letter of Credit
Exhibit D Press Release
Exhibit E Rights and Obligations with respect to Registrable
Securities
SCHEDULES
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of March 4,
1998, is made by and among Budget Group, Inc., a Delaware corporation ("Buyer"),
BDG Corporation, a Delaware corporation and a direct or indirect wholly owned
subsidiary of Buyer ("Sub"), Ryder TRS, Inc., a Delaware corporation (the
"Company"), and Questor Partners Fund, L.P., a Delaware limited partnership,
Questor Side-by-Side Partners, L.P., a Delaware limited partnership, and Madison
Dearborn Capital Partners, L.P., a Delaware limited partnership (each a
"Significant Stockholder" and collectively, the "Significant Stockholders").
Certain terms used in this Agreement are defined in Article XI.
WITNESSETH:
WHEREAS, Buyer, Sub and the Company desire to effect a business combination
by means of the merger of Sub with and into the Company;
WHEREAS, the Board of Directors of Buyer and the Board of Directors and
stockholder of Sub and the Board of Directors and the Significant Stockholders
of the Company have approved the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth herein; and
WHEREAS, the parties hereto also desire to agree on certain other terms and
conditions.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, the parties hereto agree
as follows:
ARTICLE I.
THE TRANSACTIONS
Section 1.1. The Transactions. On the terms and subject to the conditions
set forth in this Agreement, Buyer shall acquire all the Outstanding Company
Shares by means of the Merger. Subject to Article III, the total consideration
to be received by the holders of the Outstanding Company Shares shall consist of
a combination of the following:
(a) an aggregate amount payable in cash to all such holders equal to a
minimum of $125,000,000 (less any cash payable with respect to the Options
pursuant to Section 3.7) and a maximum of $200,000,000 (less any cash
payable with respect to the Options pursuant to Section 3.7), with the
precise amount thereof determined as set forth in Section 3.1;
(b) an aggregate number of shares of Buyer Class A Common Stock
issuable to all such holders equal to a minimum of 1,363,822 shares (the
"Minimum Merger Shares") and a maximum of 3,636,860 shares (the "Maximum
Merger Shares") (in each case less any shares of Buyer Class A Common Stock
issued to the holders of Options pursuant to Section 3.7), with the precise
number thereof determined as set forth in Section 3.1 and subject to
adjustment as provided in Article III;
(c) Warrants to purchase initially an aggregate of 1,000,000 shares of
Buyer Class A Common Stock as provided in Section 3.5; and
(d) the right to receive the Contingent Additional Consideration, if
any, as provided in Section 3.4.
Section 1.2. The Merger. (a) Merger. Upon the terms and subject to the
conditions of this Agreement and in accordance with the applicable provisions of
the Delaware General Corporation Law (the "Delaware Corporation Law"), Sub shall
be merged with and into the Company and the separate existence of Sub shall
thereupon cease. The Company shall be the surviving corporation in the Merger
(the "Surviving Corporation") and shall continue to be governed by the laws of
the State of Delaware, and the separate corporate existence of the Company with
all its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger.
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(b) Effective Time of the Merger. The Merger shall become effective at
such time as a properly executed Certificate of Merger is duly filed with the
Secretary of State of Delaware, which filing shall be made as soon as
practicable following fulfillment or waiver of the conditions set forth in
Article VII hereof or such later time as is specified in such filing (the
"Effective Time").
Section 1.3. Effects of Merger. The Merger shall have the effects set
forth in Section 259 of the Delaware Corporation Law.
ARTICLE II.
THE SURVIVING CORPORATION
Section 2.1. Certificate of Incorporation. Subject to Section 6.11, at
the Effective Time the Certificate of Incorporation of the Surviving Corporation
shall be amended so as to be identical to the Certificate of Incorporation of
Sub, other than such Article relating to the company name of Sub and such
Article relating to the identity of the incorporator of Sub, and thereafter may
be amended in accordance with its terms and as provided by the Delaware
Corporation Law.
Section 2.2. By-Laws. Subject to Section 6.11, at the Effective Time the
by-laws of the Surviving Corporation shall be amended so as to be identical to
the by-laws of Sub, and thereafter may be amended in accordance with their terms
and as provided by the Delaware Corporation Law.
Section 2.3. Officers and Directors. The officers of Sub and the
directors of Sub immediately prior to the Effective Time shall be the officers
and directors, respectively, of the Surviving Corporation after the Effective
Time, in each case until their respective successors are duly elected and
qualified.
ARTICLE III.
DETERMINATION OF MERGER CONSIDERATION;
CONVERSION OF SHARES; ETC.
Section 3.1. Determination of Merger Consideration. (a) Buyer shall issue
shares of Buyer Class A Common Stock in the Merger to the holders of the
Outstanding Company Shares and the holders of Options as follows:
(i) (x) if the approval by the stockholders of Buyer contemplated in
Section 6.19 hereof for the authorization of the increase in the capital
stock of Buyer to permit Buyer to issue the Maximum Merger Shares is
obtained, then at the time of the Closing Buyer shall issue a number of
shares of Buyer Class A Common Stock equal to the number of Maximum Merger
Shares or (y) if such approval by the stockholders of Buyer is not
obtained, then at the time of the Closing Buyer shall issue a number of
shares of Buyer Class A Common Stock equal to the number of Minimum Merger
Shares; and
(ii) within one (1) Business Day after the date of the meeting
contemplated in Section 6.19 hereof, Buyer shall notify the Company in
writing of the outcome of such stockholders' vote.
As used herein, the "Aggregate Merger Shares" shall be the Maximum Merger
Shares, if issued, or the Minimum Merger Shares, if issued.
(b) The total amount of cash to be paid in the Merger to the holders of the
Outstanding Company Shares under Section 3.2(a) (the "Aggregate Cash
Consideration") shall be (i) if the Maximum Merger Shares are issued,
$125,000,000 minus any cash payable with respect to the Options pursuant to
Section 3.7, or (ii) if the Minimum Merger Shares are issued, $200,000,000 minus
any cash payable with respect to the Options pursuant to Section 3.7.
Section 3.2. Conversion of Shares in the Merger. (a) Company Common
Stock. Subject to Article III hereof, at the Effective Time, by virtue of the
Merger and without any action on the part of any holder of any capital stock of
the Company (each, a "Company Stockholder" or collectively, the "Company
Stockholders"), each Outstanding Company Share shall be converted into (A) that
number of fully paid and
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nonassessable shares of Buyer Class A Common Stock equal to the quotient
obtained by dividing the Aggregate Merger Shares (less any shares of Buyer Class
A Common Stock issued to the holders of Options pursuant to Section 3.7) by the
Outstanding Company Shares, plus (B) an amount in cash equal to the quotient
obtained by dividing the Aggregate Cash Consideration by the Outstanding Company
Shares, plus (C) Warrants to purchase initially the number of shares of Buyer
Class A Common Stock determined by dividing 1,000,000 by the number of
Outstanding Company Shares, plus (D) the right to receive a portion of the
Contingent Additional Consideration provided in Section 3.4, determined by
dividing such aggregate Contingent Additional Consideration by the number of
Outstanding Company Shares (the consideration per share of Company Common Stock
as determined herein, the "Merger Consideration"). If between the date hereof
and the Effective Time, the outstanding shares of Buyer Class A Common Stock
shall be changed into a different number of shares or a different class by
reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or if a stock dividend thereon shall be
declared with a record date within such period, the calculations of Minimum
Merger Shares, Maximum Merger Shares and Aggregate Merger Shares shall be
correspondingly adjusted.
(b) Cancellation of Company Treasury Stock. At the Effective Time by
virtue of the Merger, all shares of Company Common Stock which are held in the
treasury of the Company or which are owned by any wholly owned Subsidiary of the
Company shall be canceled and shall cease to exist.
(c) Sub Shares. At the Effective Time by virtue of the Merger, each issued
and outstanding share of capital stock of Sub shall be converted into one
validly issued, fully paid and nonassessable share of common stock, par value
$.01 per share, of the Surviving Corporation.
Section 3.3. Adjustment to Merger Shares. (a) Adjustment Events. The
number of Aggregate Merger Shares shall be adjusted downwards if (i) it shall
have been determined that (A) one or more of the representations and warranties
of the Company contained herein (without giving effect to any qualifications
contained in any representation and warranty set forth in Article IV hereof with
respect to any Material Adverse Effect on the Company) fails to be true and
correct (i) as of the date hereof or, if any representation and warranty speaks
as of a specified date, then as of such date or (ii) in the case of
representations and warranties that do not speak of a specified date, then as of
the Closing Date, or (B) one or more of the covenants of the Company or any
Significant Stockholder set forth in this Agreement hereof fails to be performed
on or prior to the Closing Date, but only to the extent the aggregate value
reduction to Buyer as a result of all the foregoing (as determined under Section
9.3) exceeds $5,000,000 (the "Materiality Threshold"), or (ii) the Fees are in
excess of $10,000,000, which downward adjustment, in the case of this clause
(ii), shall be made only to the extent of the amount by which the Fees exceed
$10,000,000, as provided in Section 3.3(b), and which adjustment shall be made
without giving effect to the Materiality Threshold. The value reduction
associated with the failure of representations and warranties of the Company to
be true and correct or the failure of covenants of the Company or the
Significant Stockholders to be performed shall mean the actual damages (without
duplication) sustained as a result thereof (without giving effect to any
qualifications contained in any representation and warranty set forth in Article
IV hereof with respect to any Material Adverse Effect on the Company), taking
into account any insurance recovery that is available to Buyer or Sub (exclusive
of any self insurance), any insurance proceeds received by the Company and the
present economic value of any tax benefits to be realized by Buyer, the Company
or any of their respective controlled Affiliates as a result of such damages.
(b) Share Reduction. The number of Aggregate Merger Shares shall be
reduced by an amount equal to the sum of (i) the amount, if any, of the value
reduction in excess of the Materiality Threshold resulting from the failure of
any representation and warranty made by the Company to be true and correct or
the failure of the Company or any Significant Stockholder to perform its
respective covenants plus (ii) the amount by which the Fees exceed $10,000,000
(such sum, the "Reduction Amount"), in each case as determined in accordance
with Section 3.3(a) (with each share of Buyer Class A Common Stock for purposes
of calculating such deduction, being deemed to have a value equal to the
Transaction Price). Upon a final determination that any such reduction is
required, the number of shares of Buyer Class A Common Stock issued in the
Merger to each Original Holder shall be reduced by an amount representing such
holder's pro rata share of the Reduction Amount based on the percentage of the
Aggregate Merger Shares received by such holder.
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Section 3.4. Contingent Additional Consideration. (a) Determination as to
Whether Contingent Additional Consideration is Payable. In addition to the
Merger Consideration payable pursuant to Sections 3.2 and 3.5 and the
consideration payable to holders of Options pursuant to Section 3.7, each holder
of shares of Company Common Stock and Options immediately prior to the Effective
Time which receives shares of Buyer Class A Common Stock in the Merger (any such
holder and its Permitted Transferees, an "Original Holder", and any such shares,
the "Original Shares") shall be entitled to receive from Buyer an additional
amount of cash or shares of Buyer Class A Common Stock as, but only to the
extent, provided herein (the "Contingent Additional Consideration").
(b) Annual Measurement Date. As promptly as possible following the date
which is the first year anniversary of the Closing Date (the "Annual Measurement
Date"), and subject to receipt by Buyer from the applicable Original Holder of a
certificate certifying as to whether such person or any of its Permitted
Transferees has disposed of any Original Shares and containing all other
information regarding such holder necessary to make the computations referred to
in this Section 3.4(b) (the delivery of which certificate shall be a condition
of such person's ability to receive payment under this Section 3.4(b)), Buyer
shall compute, with respect to each Original Holder, (i) the "Total Value" of
50% of the aggregate number of Original Shares acquired by such Original Holder
(or its Permitted Transferees) in the Merger (such 50% being referred to as the
"Annual Shares") and (ii) the "Annual Make-Whole Amount" (as defined below). For
purposes of this paragraph, the "Total Value" of the Annual Shares of an
Original Holder (and its Permitted Transferees) shall be (A) with respect to any
Annual Shares held by such holder as of the Annual Measurement Date (the
"Remaining Annual Shares"), an amount equal to the Market Value per share of
Buyer Class A Common Stock as of the Annual Measurement Date multiplied by the
number of Remaining Annual Shares (it being agreed that sales by such holder or
any of its Permitted Transferees prior to the Annual Measurement Date of any
Original Shares, up to the total of Annual Shares, shall be deemed to be sales
of Annual Shares) (the "Total Remaining Annual Value") and (B) if such holder or
any of its Permitted Transferees shall have sold Annual Shares after the Closing
Date and prior to the Annual Measurement Date (it being agreed that sales of any
Original Shares by such holder, up to the total number of Annual Shares, shall
be deemed to be sales of Annual Shares) (each a "Disposed Annual Share" and
collectively, the "Disposed Annual Shares"), an amount equal to the sum of each
"Disposed Annual Value" (such sum, the "Total Disposed Annual Value"). With
respect to each sale of Disposed Annual Shares, the "Disposed Annual Value"
shall be determined on the Annual Measurement Date and shall be an amount equal
to the Transaction Price minus the higher of the Market Value per share of the
Buyer Class A Common Stock on the Annual Measurement Date and the price at which
such Disposed Annual Shares were sold (such higher value, the "Annual
Disposition Price") multiplied by the number of Disposed Annual Shares so sold;
provided, however, that if the Annual Disposition Price is higher than the
Transaction Price, the Disposed Annual Value shall be deemed to be zero. The
"Annual Make-Whole Amount" with respect to an Original Holder (and its Permitted
Transferees) shall mean the sum of (1) the amount, but only if positive, equal
to (a) the Transaction Price multiplied by the number of Remaining Annual Shares
owned by such Original Holder or its Permitted Transferees on the Annual
Measurement Date minus (b) the Total Remaining Annual Value as of the Annual
Measurement Date of the Remaining Annual Shares held by such Original Holder or
its Permitted Transferees and (2) the Total Disposed Annual Value as of the
Annual Measurement Date of the Disposed Annual Shares of such Original Holder or
its Permitted Transferees.
(c) Final Measurement Date. As promptly as possible following the date
which is the twentieth monthly anniversary of the Closing Date (the "Final
Measurement Date"), and subject to receipt by Buyer from the applicable Original
Holder of a certificate certifying as to whether such person or any of its
Permitted Transferees has disposed of any Original Shares and containing all
information regarding such holder necessary to make the computations referred to
in this Section 3.4(c) (the delivery of which certificate shall be a condition
of such person's ability to receive payment under this Section 3.4(c)), Buyer
shall compute, with respect to each Original Holder, (i) the "Total Value" of
the Original Shares acquired by such Original Holder (and its Permitted
Transferees) in the Merger which are not Annual Shares (the "Final Shares") and
(ii) the "Final Make-Whole Amount" (as defined below). For purposes of this
paragraph, the "Total Value" of the Final Shares of an Original Holder (and its
Permitted Transferees) shall be (A) with respect to any Final Shares held by
such holder as of the Final Measurement Date (the "Remaining Final Shares"), an
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amount equal to the Market Value per share of Buyer Class A Common Stock as of
the Final Measurement Date multiplied by the number of Remaining Final Shares
(the "Total Remaining Final Value") and (B) if such holder or its Permitted
Transferees shall have sold Final Shares after the Closing Date and prior to the
Final Measurement Date (each a "Disposed Final Share" and collectively, the
"Disposed Final Shares", an amount equal to the sum of each "Disposed Final
Value" (such sum, the "Total Disposed Final Value"). With respect to each sale
of Disposed Final Shares, the "Disposed Final Value" shall be determined on the
Final Measurement Date and shall be an amount equal to the Transaction Price
minus the higher of the Market Value per share of the Buyer Class A Common Stock
on the Final Measurement Date and the price at which such Disposed Final Shares
were sold (such higher value, the "Final Disposition Price") multiplied by the
number of Disposed Final Shares so sold; provided, however, that if the Final
Disposition Price is higher than the Transaction Price, the Disposed Final Value
shall be deemed to be zero. The "Final Make-Whole Amount" with respect to an
Original Holder (and its Permitted Transferees) shall mean the sum of (1) the
amount, but only if positive, equal to (a) the sum of the Transaction Price
multiplied by the number of Remaining Final Shares held by such Original Holder
or its Permitted Transferees on the Final Measurement Date minus (b) the Total
Remaining Final Value as of the Final Measurement Date of the Remaining Final
Shares of such Original Holder or its Permitted Transferees and (2) the Total
Disposed Final Value as of the Final Measurement Date of the Disposed Final
Shares of such Original Holder or its Permitted Transferees.
(d) Payment of Make-Whole Amount. If the Annual Make-Whole Amount or the
Final Make-Whole Amount is more than zero with respect to any Original Holder,
then, within 20 calendar days after the determination of the applicable
Make-Whole Amount, Buyer shall pay in immediately available funds to each such
Original Holder an amount equal to the applicable Make-Whole Amount; provided,
however, that except as provided below, Buyer may, in its sole discretion, make
all or any portion of any such payment by delivering to any such Original Holder
fully paid and non-assessable shares of Buyer Class A Common Stock with a Market
Value as of the Annual Measurement Date or the Final Measurement Date, as the
case may be, equal to the applicable Make-Whole Amount (any such shares being
referred to as "Make-Whole Shares"); and provided, further, that Buyer shall not
have the option set forth in the preceding proviso if Buyer Class A Common Stock
is no longer listed on the NYSE or another national securities exchange or
automated quotation system.
(e) Separate Agreements with Holders. At the request of any holder of
shares of Company Common Stock (or, after the Effective Time, any Original
Holder), Buyer will enter into a separate agreement with such holder to evidence
the obligations of Buyer under this Section 3.4.
(f) Adjustments for Reclassifications, Etc. If after the date hereof and
before the determination set forth in this Section 3.4, the outstanding shares
of Buyer Class A Common Stock shall be changed into a different number of shares
or a different class by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, or if a stock
dividend thereon shall be declared with a record date within such period, the
calculations set forth in this Section 3.4 shall be correspondingly adjusted.
Section 3.5. Warrants. (a) Issuance and Exercise of Warrants. Buyer
shall issue to the Original Holders at the Effective Time warrants to purchase
initially an aggregate of 1,000,000 shares of Buyer Class A Common Stock, such
Warrants to be substantially in the form to be negotiated between the Buyer and
the Company as promptly as practicable following the date hereof (herein called
the "Warrants" and individually called a "Warrant") and containing terms
consistent with this Section 3.5 and the Warrant Assumptions set forth in
Exhibit A attached hereto (it being understood that upon negotiation of such
form of Warrants, the agreed upon form shall be deemed to become Exhibit A
attached hereto). Within five (5) Business Days following the Final Measurement
Date, and subject to receipt by Buyer from the applicable Original Holder of a
certificate certifying as to whether such person or any of its Permitted
Transferees has disposed of any Original Shares and containing all other
information regarding such holder reasonably necessary to make the computations
referred to in this Section 3.5(a) (the delivery of which certificate shall be a
condition of such person's ability to receive amounts under this Section
3.5(a)), Buyer shall compute, with respect to each Original Holder and each
Permitted Transferee of such Original Holder, the "Total Warrant Value" for such
Original Holder and its Permitted Transferees. The "Total Warrant Value" for any
Original Holder and its Permitted Transferees shall be (i) the Warrant Value
Amount (as defined below) multiplied by (ii)(x) the
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number of Original Shares issued to such Original Holder in the Merger and held
by such Original Holder and its Permitted Transferees on the Final Measurement
Date divided by (y) the number of Original Shares issued to all Original Holders
in the Merger. The "Warrant Value Amount" shall be the lesser of (i) $20 million
or (ii)(x)(A) the Transaction Price multiplied by the aggregate number of
Original Shares issued in the Merger plus (B) $20 million minus (y) the Market
Value of a share of Buyer Class A Common Stock on the Final Measurement Date
multiplied by the aggregate number of Original Shares issued in the Merger.
If the Total Warrant Value for any Original Holder and its Permitted
Transferees is positive, then such Original Holder and its Permitted Transferees
shall be entitled, for a period of five years beginning on the thirtieth day
after the Final Measurement Date (the "Warrant Measurement Date"), to exercise
their Warrants to purchase shares of Buyer Class A Common Stock. Buyer shall
have the right to buy the Warrant held by each Warrant holder, in whole and not
in part, by paying the Warrant Value Amount on the Warrant Measurement Date to
the holder thereof either in immediately available funds or, except as provided
below, in shares of Buyer Class A Common Stock valued at the Market Value per
share of Buyer Class A Common Stock as of the Warrant Measurement Date (but not
in a combination of both); provided, however, that Buyer shall not have the
option set forth above and Buyer shall pay the Warrant Value Amount in
immediately available funds to each Warrant holder, if Buyer Class A Common
Stock is no longer listed on the NYSE or another national securities exchange or
automated quotation system.
(b) Determination of Exercise Price. Prior to the Final Measurement Date,
a majority in interest of the Original Holders shall retain, at Buyer's expense,
a nationally recognized investment banking firm with significant experience in
the equity derivatives market (reasonably acceptable to Buyer) to determine the
revised aggregate number of shares issuable upon exercise of the Warrants such
that, in the written opinion of such investment banking firm rendered within 15
days after the Final Measurement Date, on the Final Measurement Date, the
Warrants issued to the Original Holders and their Permitted Transferees would
have an aggregate value, based upon the assumptions set forth on Exhibit A,
equal to the Warrant Value Amount. Within two (2) Business Days after the
determination of the Warrant Value Amount, Buyer shall notify each Warrant
holder of the Warrant Value Amount and such holder of its Total Warrant Value
and contemporaneously, such investment bank shall provide to Buyer and holder a
copy of its opinion and of its standing bid, each as described in Exhibit A.
(c) Separate Agreements with Holders. At the request of any holder of
shares of Company Common Stock (or, after the Effective Time, any Original
Holder), Buyer will enter into a separate agreement with such holder to evidence
the obligations of Buyer under this Section 3.5.
(d) Adjustments for Reclassifications, Etc. If after the date hereof the
outstanding shares of Buyer Class A Common Stock shall be changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or if a stock dividend thereon shall be declared with a record
date within such period, the aggregate number of Warrants and calculations set
forth in this Section 3.5 shall be correspondingly adjusted.
Section 3.6. Escrow Holdback Shares. (a) At the Effective Time, 1,818,430
shares of Buyer Class A Common Stock (if the Maximum Merger Shares are issued),
or 1,363,822 shares of Buyer Class A Common Stock (if the Minimum Merger Shares
are issued) (as the case may be, the "Escrow Holdback Shares") shall be
deposited in escrow with an escrow agent mutually agreed upon by Buyer and the
Company prior to the Closing (the "Holdback Escrow Agent"), to be held and
administered in accordance with the terms and conditions of a Holdback Escrow
Agreement, substantially in the form attached hereto as Exhibit B (the "Holdback
Escrow Agreement"), against which Escrow Holdback Shares Buyer shall be
entitled, in accordance with the terms of the Holdback Escrow Agreement, to
recover Damages (as defined in the Holdback Escrow Agreement) that may be
suffered by Buyer and that are indemnifiable in accordance with the terms of the
Holdback Escrow Agreement (an "Escrow Claim Event").
(b) Claims in respect of Escrow Claim Events shall be made, and may be
disputed, in accordance with the terms and conditions of the Holdback Escrow
Agreement. Upon the occurrence of certain events, the number of Escrow Holdback
Shares shall be released to Buyer to satisfy such claims as determined in
accordance with the terms of the Holdback Escrow Agreement. Upon termination of
the escrow, all shares of
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Buyer Class A Common Stock remaining in escrow shall be released in accordance
with the terms of the Holdback Escrow Agreement.
(c) The holder of any shares of Buyer Class A Common Stock received in the
Merger, by acceptance thereof, agrees to the terms set forth in Section 3.6 of
this Agreement and in Exhibit E and to the appointment of the Indemnification
Representative named in the notice and transmittal form provided by the Exchange
Agent pursuant to Section 3.9 of this Agreement.
Section 3.7. Stock Options. (a) The Company shall take all actions
necessary to provide that all outstanding options to acquire shares of Company
Common Stock ("Options") granted under any stock option plan, program or similar
arrangement of the Company or any of its Subsidiaries, each as amended (the
"Stock Option Plans"), shall become fully exercisable and vested immediately
prior to the Effective Time whether or not otherwise exercisable and vested. The
Company shall comply with the terms of the Stock Option Plans, as applicable,
and, to the extent required thereunder, provide written notice to the holders of
Options that such Options shall be treated as set forth herein. All Options
which are outstanding immediately prior to the Effective Time shall be canceled
and become null and void and the holders thereof shall be entitled to elect (1)
to receive from the Company at the same times and in the same manner as the
Company Stockholders pursuant to this Article III, for each Option to acquire
one share of Company Common Stock, (A) an amount in cash equal to (x) the cash
payable to the holder of one share of Company Common Stock pursuant to Section
3.2 assuming all Options had been exercised prior to the Effective Time minus
(y) the exercise price per share of such Option (the "Exercise Difference"),
plus (B) certificates representing that number of shares of Buyer Class A Common
Stock which the holder of one share of Company Common Stock would have the right
to receive pursuant to Sections 3.1 and 3.2 as adjusted as set forth in Section
3.3 hereof assuming all Options had been exercised prior to the Effective Time,
plus (C) Warrants in an amount issued to the holder of one share of Company
Common Stock pursuant to Section 3.5, plus (D) the right to receive the
Contingent Additional Consideration that may be payable to the holder of one
share of Company Common Stock pursuant to Section 3.4, or (2) if the Exercise
Difference is negative, as a condition for receiving the Buyer Class A Common
Stock, the Warrants and the right to receive the Contingent Additional
Consideration under clause (1) above, to pay such difference in cash to the
Company on or before the Closing Date. All applicable withholding taxes
attributable to the payments made hereunder or to distributions contemplated
hereby shall be deducted from the amounts payable under clause (A) above or by
payment of cash by the Option holder if amounts payable under clause (A) are
insufficient.
(b) The Stock Option Plans shall terminate immediately prior to the
Effective Time.
Section 3.8. Appraisal Rights. (a) Notwithstanding anything in this
Agreement to the contrary, but only in the circumstances and to the extent
provided by the Delaware Corporation Law, shares of Company Common Stock that
are outstanding immediately prior to the Effective Time and that are held by
Company Stockholders who were entitled to but did not vote such shares in favor
of the Merger (or who did not provide written consent to the Merger if approval
was effected through written consent) and who shall have properly and timely
delivered to the Company a written demand for appraisal of their shares of
Company Common Stock in accordance with Section 262 of the Delaware Corporation
Law ("Dissenting Shares") shall not be converted into the right to receive, or
be exchangeable for, the Merger Consideration. Instead, the holders thereof
shall be entitled to payment of the fair value of such shares in accordance with
the provisions of Section 262 of the Delaware Corporation Law; provided,
however, that (i) if any holder of Dissenting Shares shall subsequently withdraw
its demand for payment of the fair value of such Dissenting Shares or (ii) if
any holder fails to establish and perfect its entitlement to the relief provided
in Section 262 of the Delaware Corporation Law, the rights and obligations of
such holder to receive such fair value shall terminate, and such Dissenting
Shares shall thereupon be deemed to have been converted into the right to
receive, and to have become exchangeable for, as of the Effective Time, the
Merger Consideration in accordance with Section 3.2(a) hereof.
(b) Within three (3) days prior to the Effective Time, the Company shall
give Buyer written notice of any demands received by the Company for appraisal
of Dissenting Shares. Prior to the Closing, the Company shall control all
negotiations and proceedings with respect to such demands and on and after the
Closing,
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Questor shall exercise such control. The Surviving Corporation shall promptly
pay to any holder of Dissenting Shares any and all amounts due and owing to such
holder as a result of any settlement or determination by the Court of Chancery
of the State of Delaware with respect to such demands. If, as a result of any
such settlement or determination (i) any Company Stockholder is entitled to
receive as payment for its Dissenting Shares an amount per share that exceeds
the amount of the Merger Consideration (such excess over the amount of the
Merger Consideration, the "Appraisal Reduction Amount"), then the number of
Aggregate Merger Shares shall be reduced by an amount equal to such Appraisal
Reduction Amount (with each share of Buyer Class A Common Stock having a value
equal to the amount of the Merger Consideration for purposes of this Section
3.8), and each Original Holder shall surrender to Buyer shares of Buyer Class A
Common Stock for cancellation, in each case representing such holder's pro rata
share of the Appraisal Reduction Amount based on the percentage of the Aggregate
Merger Shares received by such holder, or if such Original Holder has
transferred any of its Original Shares, then such Original Holder shall pay in
immediately available funds an amount equal to such holder's pro rata share of
the Appraisal Reduction Amount, or (ii) any Company Stockholder is entitled to
receive an amount per share that is less than the amount of the Merger
Consideration (such decrease under the amount of the Merger Consideration, the
"Appraisal Addition Amount"), then Buyer shall promptly pay to the Original
Holders pro rata in cash an amount equal to the Appraisal Addition Amount
multiplied by the aggregate number of Dissenting Shares subject to such
Appraisal Addition Amount. The Company shall comply with the notice provisions
of Section 262 of the Delaware Corporation Law.
Section 3.9. Buyer to Make Certificates Available. (a) Prior to the
Closing, Buyer shall select a person or persons to act as exchange agent for the
Merger (the "Exchange Agent"), which person or persons shall be reasonably
acceptable to the Company. On the Closing Date, Buyer shall deliver to the
Exchange Agent, in trust for the benefit of the Company Stockholders (other than
Company Stockholders who hold Dissenting Shares), cash in the amount sufficient
to pay the aggregate cash portion of the Merger Consideration, certificates
representing Buyer Class A Common Stock sufficient to pay the aggregate stock
portion of the Merger Consideration (less the Escrow Holdback Shares delivered
to the Holdback Escrow Agent in accordance with Section 3.6) and Warrants
sufficient to pay the aggregate warrant portion of the Merger Consideration. As
soon as reasonably practicable after the Effective Time but in no event more
than ten (10) Business Days after the Effective Time, Buyer shall cause the
Exchange Agent to send a notice and a transmittal form to each Company
Stockholder advising such holder of the effectiveness of the Merger and the
procedure for surrendering to the Exchange Agent for cancellation such holder's
certificates representing Company Common Stock ("Certificates") in exchange for
the Merger Consideration. Each Company Stockholder will be entitled to receive,
upon surrender to the Exchange Agent for cancellation of one or more
Certificates and compliance with this Article III, a certified or bank cashier's
check in the amount equal to the cash which such holder has the right to receive
pursuant to the provisions of this Article III (including any cash in lieu of
fractional shares of Buyer Class A Common Stock), shares of Buyer Class A Common
Stock and Warrants which such holder has the right to receive pursuant to the
provisions of this Article III, and the Certificates so surrendered shall
forthwith be canceled; provided, however, that any Company Stockholder in
attendance or represented at the Closing which surrenders for cancellation
Certificates at such time will receive such cash, shares and Warrants as set
forth above at the Closing with respect to the shares of Company Common Stock
represented by such Certificates. The cash paid, the shares of Buyer Class A
Common Stock and the Warrants issued upon the surrender of Certificates in
accordance with the terms hereof shall be deemed to have been paid and issued in
full satisfaction of all rights pertaining to such shares of Company Common
Stock (except with respect to the right to receive the Contingent Additional
Consideration, if any, as provided in Section 3.4).
(b) Any Company Stockholder who has not exchanged its Certificates for the
Merger Consideration in accordance with subsection (a) within six months after
the Effective Time shall have no further claim upon the Exchange Agent, and
shall thereafter look only to Buyer and the Surviving Corporation for payment in
respect of its shares of Company Common Stock. Until so surrendered,
Certificates shall represent solely the right to receive the Merger
Consideration, subject to the holdback contemplated by Section 3.6 of this
Agreement. If any Certificates entitled to payment pursuant to Section 3.2 shall
not have been surrendered for such payment prior to such date on which any
payment in respect thereof would otherwise escheat to or
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become the property of any Governmental Entity, the shares of Company Common
Stock represented thereby shall, to the extent permitted by applicable law, be
deemed to be canceled and no money or other property will be due to the holder
thereof.
Section 3.10. Dividends; Transfer Taxes. No Distributions that are
declared or made with respect to Buyer Class A Common Stock will be paid to
persons entitled to receive certificates representing Buyer Class A Common Stock
pursuant to this Agreement until such persons properly surrender their
Certificates. Upon such surrender, there shall be paid to the person in whose
name the certificates representing such Buyer Class A Common Stock shall be
issued any Distributions which shall have become payable with respect to such
Buyer Class A Common Stock in respect of a record date after the Effective Time
and before the time of surrender. In no event shall the person entitled to
receive such Distributions be entitled to receive interest on such
Distributions. In the event that any certificates for any shares of Buyer Class
A Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it shall be a
condition of such exchange that the Certificate or Certificates so surrendered
shall be properly endorsed or be otherwise in proper form for transfer and that
the person requesting such exchange shall pay to the Exchange Agent any transfer
or other taxes required by reason of the issuance of certificates for such
shares of Buyer Class A Common Stock in a name other than that of the registered
holder of the Certificate surrendered, or shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of shares of Company Common Stock for any shares of
Buyer Class A Common Stock or dividends thereon delivered to a public official
pursuant to any applicable escheat, abandoned property or similar laws.
Section 3.11. No Fractional Securities. Notwithstanding any other
provision of this Agreement, no certificates or scrip for shares of common stock
representing less than one share of Buyer Class A Common Stock shall be issued
upon the surrender for exchange of Certificates pursuant to this Article III and
no Distribution that is declared or made with respect to Buyer Class A Common
Stock, stock split or interest shall relate to any fractional security, and such
fractional interests shall not entitle the owner thereof to vote or to any
rights of a security holder. Each holder of shares of Company Common Stock
exchanged pursuant to the Merger who would otherwise have been entitled to
receive a fraction of a share of Buyer Class A Common Stock (after taking into
account all Certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to such fractional part of a
share of Buyer Class A Common Stock multiplied by the Transaction Price.
Section 3.12. Closing of Company Transfer Books. Immediately prior to the
Effective Time, the Company Common Stock transfer books shall be closed and no
transfer of Company Common Stock shall thereafter be made.
Section 3.13. Legends and Transfer Restrictions. (a) Unless the shares of
Buyer Class A Common Stock issued in the Merger or pursuant to Section 3.4 or
pursuant to the exercise of the Warrants issued pursuant to Section 3.5 or
pursuant to Section 3.7 shall have been registered prior to their respective
issuance dates under the provisions of the Securities Act, each certificate
representing such shares of Buyer Class A Common Stock may contain one or more
of the following legends:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be offered, sold,
pledged, hypothecated, exchanged, transferred or otherwise disposed of
unless (A) registered under such Act and any applicable state securities
and "blue sky" laws or (B) an opinion of counsel satisfactory to Buyer and
its counsel that such registration is not necessary has been delivered to
Buyer"; and
any legend required by the securities or blue sky laws of any state where a
holder of Buyer Class A Common Stock resides, including any legend necessitated
by any other agreement to which such holder is or may become a party arising out
of this Agreement.
(b) The holder of any shares of Buyer Class A Common Stock, by acceptance
thereof, agrees, so long as the legend described in this Section 3.13 shall
remain on the certificate evidencing such shares, prior to any transfer
(including any pledge, sale, assignment, hypothecation, gift or other transfer)
of any of the same, to
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comply in all respects with the legend requirements of this Section 3.13. Each
certificate evidencing the shares issued upon any such transfer shall bear the
same legends as set forth in this Section 3.13 unless, immediately following
such transfer, such shares are no longer subject to any restriction on transfer
under any applicable agreement or under applicable federal or state securities
laws.
Section 3.14. Exemptions from Registration and Qualification. At Buyer's
option, the shares of Buyer Class A Common Stock to be issued in connection with
the Merger will be issued either (a) in a transaction exempt from registration
under the Securities Act by reason of Section 4(2) thereof and Rule 506 of
Regulation D promulgated thereunder, and will be exempt from registration or
qualification under state securities and "blue sky" laws or (b) pursuant to a
Registration Statement on Form S-4 (the "S-4").
Section 3.15. Registration Rights. The holders of shares of Buyer Class A
Common Stock issued pursuant to Section 3.2, 3.4 or 3.7 or issuable upon
exercise of, or issued in exchange for, the Warrants issued pursuant to Section
3.5 shall have, subject to compliance with the obligations contained therein,
the registration rights set forth in Exhibit E hereto, and Buyer shall take such
actions to register shares of Buyer Class A Common Stock issuable thereunder as
provided therein.
Section 3.16. Business Combinations. If, on or prior to the later of (i)
the Final Measurement Date, (ii) the Warrant Measurement Date, or (iii) the date
on which no Warrants are outstanding, Buyer shall consolidate or merge in a
transaction in which Buyer is not the Surviving Person (as defined below), merge
into any other person or convey, transfer or lease its properties and assets
substantially as an entirety to any person in one or a series of transactions (a
"Business Combination"), the provisions of Section 3.16(b) are applicable
unless:
(a)(1) the person formed by such consolidation or into which Buyer is
merged or the person which acquires by conveyance or transfer, or which
leases, the properties and assets of Buyer substantially as an entirety
(the "Surviving Person") is a corporation, partnership or limited liability
company, (2) the consideration payable to holders of Buyer Class A Common
Stock consists solely of stock of the Surviving Person or its parent that
is listed on a national securities exchange or automated quotation system
(other than cash paid in lieu of fractional shares and cash paid for
Dissenting Shares), and (3) the Surviving Person or, if the Surviving
Person is a wholly-owned subsidiary and the consideration payable consists
of stock of the parent of such Surviving Person, such Surviving Person's
parent, expressly assumes payment of all amounts due as Contingent
Additional Consideration and delivery of shares upon exercise of the
Warrants (in each case appropriately adjusting such payment or delivery
obligation to reflect the exchange ratio and the other terms of the
Business Combination) and the performance of every covenant of this
Agreement on the part of Buyer to be performed or observed;
(2) Buyer shall deliver to each holder of Company Common Stock
immediately prior to the Effective Time or each Original Holder at or after
the Effective Time, as the case may be, an officer's certificate, stating
that such Business Combination complies with this Section 3.16 and that all
conditions precedent herein provided relating to such transaction have been
complied with; and
(3) The Surviving Person shall succeed to, and be substituted for, and
may exercise every right and power of, Buyer under this Agreement with the
same effect as if the Surviving Person had been named as Buyer herein, and
thereafter.
(b) In case of a Business Combination in which all of the criteria
contained in clause (a)(1) herein are not met with respect to the Surviving
Person or its parent, as applicable, or at Buyer's option in the case of
any Business Combination, the Annual Measurement Date, the Final
Measurement Date and the Warrant Measurement Date shall be deemed to be the
date of consummation of the Business Combination unless such date has
already occurred and Buyer shall pay on or prior to the date of such
Business Combination to each person entitled thereto in immediately
available funds (i) all amounts remaining to be payable pursuant to Section
3.4(d) and (ii) the Warrant Value Amount, assuming the applicable payment
dates therein are the dates of such Business Combination.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer that:
Section 4.1. Corporate Organization and Authorization. (a) The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to enter into this Agreement and to carry out
the transactions contemplated hereby.
(b) The Company has all requisite corporate power and authority to
carry on its business as presently conducted. The Company is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or
the nature of the activities conducted by it makes such qualification
necessary, except where the failure to so qualify or to maintain such good
standing (either in one jurisdiction or in the aggregate) would not have a
Material Adverse Effect on the Company. As used in this Agreement, the term
"Material Adverse Effect" means with respect to any person, any change or
effect that is (i) materially adverse to the condition (financial or
otherwise), business operations, assets or results of operations of such
person and its Subsidiaries, taken as a whole or (ii) has a material
adverse effect on the ability of such person to enter into this Agreement
or consummate the transactions contemplated hereby.
(c) As of the date hereof, each Subsidiary of the Company is
identified in the Company's quarterly report on Form 10-Q for the quarter
ended June 30, 1997. Except for the Subsidiaries of the Company listed in
such quarterly report, there is no corporation, association, subsidiary,
partnership, limited liability company or other entity of which the Company
owns or controls, directly or indirectly, more than 10% of the outstanding
equity interests.
(d) Each Subsidiary of the Company is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority and,
except as set forth on Schedule 4.1(d), all governmental authorizations,
certificates, permits, licenses, consents and approvals required to carry
on its business as presently conducted, except where the failure to possess
such authorizations, certificates, licenses, consents and approvals (either
individually or in the aggregate) would not have, individually or in the
aggregate, a Material Adverse Effect on the Company. Each Subsidiary of the
Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of the activities conducted by it makes
such qualification necessary, except where the failure to so qualify or to
maintain such good standing (either in one jurisdiction or in the
aggregate) would not have, individually or in the aggregate, a Material
Adverse Effect on the Company. Except as set forth on Schedule 4.1(d),
there are no voting trusts or other agreements or understandings with
respect to the voting of capital stock or other equity interests of the
Company or any Subsidiary of the Company to which the Company or any
Subsidiary of the Company is a party.
(e) Except as set forth on Schedule 4.1(e), all of the outstanding
capital stock of each Subsidiary of the Company (i) has been validly
issued, is fully paid and nonassessable and is not subject to preemptive or
similar rights and (ii) is owned by the Company, directly or indirectly,
free and clear of any lien or other encumbrance. There are no outstanding
(i) securities of any Subsidiary of the Company convertible into or
exchangeable for shares of capital stock or other voting securities or
ownership interests in any Subsidiary of the Company or (ii) options or
other rights to acquire from the Company or any Subsidiary of the Company,
and no other obligation of the Company or any Subsidiary of the Company to
issue, any capital stock, voting securities or other ownership interests
in, or any securities convertible into or exchangeable for, any capital
stock, voting securities or ownership interests in such Subsidiary (items
in clauses (i) and (ii) being referred to collectively as the "Company
Subsidiary Securities"). There are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any outstanding Company Subsidiary Securities.
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(f) This Agreement has been duly executed and delivered by the Company
and, except for obtaining the approval to the Merger of (i) a majority of
holders of the Company Common Stock and (ii) the Board of Directors of the
Company, each of which approval has been obtained prior to the execution
hereof, no corporate authorization on the part of the Company is necessary
to consummate the transactions contemplated by this Agreement.
(g) This Agreement constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with its
terms, except to the extent enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law).
(h) The copies of the respective Certificates of Incorporation and
By-Laws, and all amendments thereto to the date of this Agreement, of the
Company and its Subsidiaries heretofore delivered to Buyer are complete and
true copies of such documents as in effect on the date hereof.
Section 4.2. Capitalization. (a) As of the date hereof, the authorized
stock of the Company consists of Two Hundred Seventy Five Thousand (275,000)
shares of Common Stock, par value $0.01 per share ("Company Common Stock"), of
which (i) Two Hundred Twenty Five Thousand (225,000) shares have been designated
Class A Common Stock, (ii) Twenty Five Thousand (25,000) shares have been
designated Class B Common Stock and (iii) Twenty Five Thousand (25,000) shares
have been designated Class C Common Stock.
(b) As of the date hereof, (i) One Hundred Nine Thousand Ninety (109,090)
shares of Class A Common Stock are outstanding, (ii) Thirteen Thousand Nine
Hundred Ten (13,910) shares of Class B Common Stock are outstanding and (iii) no
more than Eighteen Hundred (1,800) shares of Class C Common Stock are
outstanding. All of such issued and outstanding shares of Company Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable and, except as set forth on Schedule 4.2(b) hereto, not subject to
preemptive or similar rights. All holders of Class A and B Company Common Stock
are Accredited Investors. Schedule 4.2(b) hereto sets forth the name of each
holder of Class A, Class B and Class C Company Common Stock as of March 2, 1998
and the number of shares owned by each such holder on such date.
(c) Schedule 4.2(c) hereto sets forth, as of the date hereof, the name of
each holder of Options, together with the number of options to purchase Company
Common Stock held by each such holder. Except as set forth in this Section
4.2(c) and on Schedule 4.2(c), there are (i) as of the date hereof, no
outstanding shares of capital stock or other equity securities of the Company
and no outstanding options, warrants or rights to purchase or acquire from the
Company any capital stock of the Company or other equity securities, (ii) no
existing registration covenants with the Company with respect to Outstanding
Company Shares, and (iii) as of the date hereof, no convertible securities or
other contracts, commitments, agreements, understandings, arrangements or
restrictions by which the Company is bound to issue any additional shares of its
capital stock or other equity securities. Except as set forth in Schedule
4.2(c), there are no outstanding obligations of the Company to repurchase,
redeem or otherwise acquire any outstanding shares of capital stock or other
equity securities of the Company.
Section 4.3. Noncontravention. Subject to the expiration or termination
of the applicable waiting period required by the H-S-R Act, except as disclosed
in Schedule 4.3 hereto, neither the execution, delivery or performance of this
Agreement nor the consummation of the transactions contemplated hereby:
(i) violates, or conflicts with, or constitutes a default under, the
certificate or articles of incorporation or by-laws, as amended, of any of
the Company or any of its Subsidiaries, or
(ii) violates or will violate any statute or law or any rule,
regulation, order, judgment or decree of any court or governmental
authority to which the Company or any of its Subsidiaries or any of their
properties or assets is subject, except where the existence of such
violation would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, or
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(iii) (with or without notice or lapse of time or both), constitutes a
default under any contract or agreement of any kind to which the Company or
any of its Subsidiaries is a party or by which any of them is bound, except
where the existence of such defaults would not, individually or in the
aggregate, be material to the Company and its Subsidiaries, taken as a
whole, or
(iv) requires that the Company obtain any consents or approvals of
third parties, except where the failure to obtain such consents or
approvals would not, individually or in the aggregate, be material to the
Company and its Subsidiaries, taken as a whole.
Section 4.4. SEC Filings. The Company has timely made all filings with
the SEC that it has been required to make under the Securities Act or the
Exchange Act (collectively, the "Company Public Reports"). Each of the Company
Public Reports has complied with the Securities Act and the Exchange Act in all
material respects. None of the Company Public Reports, as of its respective
date, contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. Included in
such Company Public Reports are (i) the unaudited consolidated statements of
operations (x) for the Company, for the three months ended September 30, 1997
and the nine months ended September 30, 1997 and (y) for the Company's
predecessor, the three months ended September 30, 1996 and the nine months ended
September 30, 1996, (ii) the audited consolidated balance sheets of the Company
and its Subsidiaries at December 31, 1996 and the notes thereto, (iii) for the
period from September 5, 1996 to December 31, 1996 the audited consolidated
statement of operations, changes in shareholders' equity and cash flows of the
Company and the notes thereto, (iv) the unaudited consolidated balance sheet of
the Company and its Subsidiaries at September 30, 1997 (the "Interim Balance
Sheet"), (v) the unaudited consolidated statements of cash flows (x) for the
Company's predecessor, for the nine months ended September 30, 1996 and (y) for
the Company, for the nine months ended September 30, 1997 and the notes thereto
and (vi) for the Company's predecessor the other financial statements contained
in the Company Public Reports (collectively, the "Interim Financial
Statements").
Section 4.5. Financial Statements; Stockholders' Equity. (a) Except as
set forth in Schedule 4.5, all of the financial statements included in the
Company Public Reports, and the audited financial statements of the Company for
the year ended December 31, 1997 to be delivered prior to the Closing complied
(or will comply) as to form in all material respects with the published rules
and regulations of the SEC with respect thereto, were prepared (or will be
prepared) in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Rule 10-01 of Regulation S-X of
the SEC) and fairly present (or will fairly present) in accordance with
applicable requirements of GAAP (subject, in the case of unaudited statements,
to normal recurring adjustments, none of which were or are expected,
individually or in the aggregate, to be material in amount) the consolidated
financial position of the Company and its consolidated Subsidiaries as of their
respective dates and the consolidated results of operations and the consolidated
cash flows of the Company and its consolidated Subsidiaries for the periods
presented therein. Except as set forth in the Company Public Reports and except
as incurred or accrued in the ordinary course of business consistent with prior
practice subsequent to September 30, 1997, neither the Company nor any
Subsidiary of the Company has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP to be set
forth on a consolidated balance sheet of the Company and its consolidated
Subsidiaries or in the notes thereto, other than liabilities or obligations
which individually or in the aggregate, do not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
(b) The total stockholders' equity of the Company, on a consolidated basis,
as of December 31, 1997, determined in accordance with GAAP, is at least
$101,500,000.
Section 4.6. Legal Proceedings. Except as disclosed in the Company Public
Reports or as set forth on Schedule 4.6 hereto, as of the date hereof there are
no (and, except as arising in the normal course of business from the date hereof
through the Closing Date or relating to breaches or liabilities disclosed in the
Disclosure Schedules as of the date hereof, as of the Closing Date there will be
no) claims, actions, suits, proceedings or
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investigations pending or, to the Company's Knowledge, threatened by or against
or involving, the Company or any of its Subsidiaries (a) seeking to enjoin,
prohibit, restrain or otherwise prevent the transactions contemplated hereby or
(b) which, if determined adversely to the Company, would, individually or in the
aggregate, result in a Material Adverse Effect on the Company. Except as
disclosed in the Company Public Reports, as of the date hereof there are no
(and, except as arising in the normal course of business from the date hereof
through the Closing Date or relating to breaches or liabilities disclosed in the
Disclosure Schedule as of the date hereof, as of the Closing Date there will be
no) judgments, decrees or orders issued by any court, board or other
governmental or administrative agency presently outstanding and unsatisfied
against the Company or any Subsidiary of the Company or any of their respective
assets, except where the existence of such judgment, decree or order would not
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
Section 4.7. Employee Plans. (a) None of the Employee Benefit Plans is a
"multiemployer plan", as defined in Section 4001(a)(3) of ERISA ("Multiemployer
Plan"). Neither the Company nor any Subsidiary of the Company has withdrawn in a
complete or partial withdrawal from any Multiemployer Plan, nor has any of them
incurred any liability due to the termination or reorganization of a
Multiemployer Plan. "Employee Benefit Plans" means "employee benefit plans", as
defined in Section 3(3) of ERISA, and all other employee benefit arrangements,
employment agreements, or payroll practices, including, without limitation, any
such arrangements or payroll practices providing severance pay, sick leave,
vacation pay, salary continuation for disability, retirement benefits, deferred
compensation, bonus pay, incentive pay, stock options (including those held by
directors, employees, and consultants), hospitalization insurance, medical
insurance, life insurance, scholarships or tuition reimbursements, that are
maintained by the Company or any of its Subsidiaries or to which the Company or
any of its Subsidiaries is obligated to contribute thereunder for current or
former employees of the Company or any Subsidiary of the Company.
(b) None of the Employee Benefit Plans is a "single employer plan", as
defined in Section 4001(a)(15) of ERISA, that is subject to Title IV of ERISA.
Neither the Company nor any Subsidiary of the Company has incurred any
outstanding material liability under Section 4062 of ERISA to the PBGC or to a
trustee appointed under Section 4042 of ERISA. Neither the Company nor any ERISA
Affiliate has engaged in any transaction described in Section 4069 of ERISA.
(c) To the Company's Knowledge, each Employee Benefit Plan that is intended
to qualify under Section 401 of the Code, and each trust maintained pursuant
thereto, has been determined to be exempt from federal income taxation under
Section 501 of the Code by the IRS, and, to the Company's Knowledge, nothing has
occurred with respect to the operation of any such Employee Benefit Plan that
would cause the loss of such qualification or exemption or the imposition of any
material liability, penalty or tax under ERISA or the Code.
(d) There has been no material violation of ERISA or the Code with respect
to the filing of applicable reports, documents and notices regarding the
Employee Benefit Plans with the Secretary of the Department of Labor or the
Secretary of the Department of Treasury or the furnishing of required reports,
documents or notices to the participants or beneficiaries of the Employee
Benefit Plans.
(e) To the Company's Knowledge, there are no pending audits,
investigations, actions, claims or lawsuits which have been asserted, instituted
or, to the Company's Knowledge, threatened, against the Employee Benefit Plans,
the assets of any of the trusts under such plans or the plan sponsor or the plan
administrator, or against any fiduciary of the Employee Benefit Plans with
respect to the operation of such plans (other than routine benefit claims).
(f) To the Company's Knowledge, the Employee Benefit Plans have been
maintained, in all material respects, in accordance with their terms and with
all provisions of ERISA and the Code (including rules and regulations
thereunder) and other applicable federal and state laws and regulations.
(g) Except as set forth on Schedule 4.7(g), no payment required to be made
to any employee associated with the Company or any Subsidiary of the Company as
a result of the transactions contemplated hereby
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under any contract or otherwise will, if made, constitute an "excess parachute
payment" within the meaning of Section 280G of the Code.
(h) To the Company's Knowledge, except as provided in Section 4.7 or set
forth on Schedule 4.7(h), the consummation of the transactions contemplated
hereby will not accelerate the vesting or payment of any benefit under any
Employee Benefit Plan.
(i) For purposes of this Section 4.7, the term "Subsidiaries" (or
"Subsidiary" as the context may require) means any entity treated as a single
employer with the Company under Section 414(b), (c), (m) or (o) of the Code.
Section 4.8. Intellectual Property. Except as set forth on Schedule 4.8,
the Company and its Subsidiaries own, free and clear of any liens, or are
licensed or otherwise have the right to use all (i) Transferred Intellectual
Property as set forth on Schedule 4.8 and (ii) the intellectual property
licensed to the Company under the Copyright License Agreement, the Software
License Agreement and the Trademark License Agreement (such agreements, together
with the Transferred Intellectual Property, the "Company Intellectual
Property"). Except as set forth on Schedule 4.8, the Company Intellectual
Property includes all the intellectual property which is material to the
business, financial condition or results of operations of the Company and its
Subsidiaries taken as a whole. Except for any of the following that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company, and except as set forth on Schedule 4.8:
(a) no proceedings have been instituted or are pending or, to the
Company's Knowledge, are threatened, which challenge any rights in respect
of the validity of the Company Intellectual Property;
(b) to the Company's Knowledge, none of the Company Intellectual
Property infringes upon or otherwise violates the rights of others or is
being infringed upon by others, and none is subject to any outstanding
order, decree, judgment, stipulation or charge;
(c) with the exception of the Patent License Agreement, no licenses,
sublicenses or agreements granting rights in any of the Company
Intellectual Property have been granted or entered into by the Company,
which in each case remain in effect; and
(d) the Company has not received any notice of interference or
infringement of any of the Company Intellectual Property.
Neither the Company nor any of its Subsidiaries is obligated to pay any
royalties or make similar payments in respect of the Company Intellectual
Property.
Section 4.9. Events Subsequent to September 30, 1997. Except as set forth
on Schedule 4.9 hereto or as disclosed in the Company Public Reports, since
September 30, 1997, the Company has conducted its business in the ordinary
course and there has not been (a) any material adverse change in the condition
(financial or otherwise), business, operations, assets or results of operations
of the Company and its Subsidiaries, (b) any declaration, setting aside or
payment of any dividend or any other distribution with respect to any of the
capital stock or other equity interests of the Company, or (c) any material
change by the Company in accounting principles.
Section 4.10. Compliance with Laws. (a) Except for such non-compliance as
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company and, except as disclosed on Schedule 4.10(a), the conduct of the
Company and its Subsidiaries complies in all material respects with all
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto, except for violations or failures to so comply, if any, that
are consistent with the relevant industry standard. No action or proceeding
relating to any such statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees is pending or, to the Company's Knowledge, threatened, except
for such actions and proceedings as would not, individually or in the aggregate,
have a Material Adverse Effect on the Company.
(b) Schedule 4.10(b) sets forth information as to any violation or alleged
violation, with respect to any real property leased by the Company or any of its
Subsidiaries, of any existing federal, state, local or foreign
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21
law or regulation (or order, permit, plan or compliance schedule) pertaining to
environmental protection, including without limitation the discharge or disposal
of air or water pollutants, poisoned waste ▇▇▇▇▇, or the storage, treatment or
disposal of solid or hazardous or toxic substances (collectively, "Environmental
Law") of which the Company or any of its Subsidiaries has received notice which
would have, individually or in the aggregate, a Material Adverse Effect on the
Company. Except as disclosed in Schedule 4.10(b), neither the Company nor any of
its Subsidiaries is currently, and to the Company's Knowledge has not been, in
material violation of any such Environmental Law, and, except as set forth in
Schedule 4.10(b), neither the Company nor any of its Subsidiaries is currently
required to incur any material expenditures for purposes of compliance
therewith, except for such violations, expenditures, or noncompliance, as would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. The Company has furnished Buyer with copies of all internally prepared
or commissioned environmental studies, assessments or reports in the Company's
possession or control that are specific to the properties subject to the
Disclosed Leases.
(c) Except as disclosed in Schedule 4.10(c), to the Company's Knowledge,
there are no underground storage tanks or regulated above ground storage tanks
located at any real property subject to the Leases, nor has the Company used any
such property or permitted any such property to be used for the maintenance and
servicing of vehicles.
(d) Except as disclosed in Schedule 4.10(d), to the Company's Knowledge, no
asbestos or asbestos containing material is present at any real property subject
to the Leases.
(e) Except as disclosed in Schedule 4.10(e), to the Company's Knowledge, no
hazardous substance, pollutant or contaminant, as defined in any Environmental
Law, and no oil, as defined in the Oil Pollution Act of 1990, 33 U.S.C. 2730,
was released at any real property subject to the Leases at any time when the
Company used or occupied such property except for such presence which would not
now or with the passage of time require any remediation, removal, corrective
action, investigation or monitoring under any Environmental Law.
Section 4.11. Registration Statement. The information with respect to the
Company or any Subsidiary of the Company that the Company furnishes to Buyer in
writing specifically for use in (a) the S-4 and the Registration Statement on
Form S-3 (the "S-3") will not contain at the time any such Registration
Statement becomes effective, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein not misleading and (b) the Proxy Statement
relating to the stockholders' meeting referred to in Section 6.19 (the "Proxy
Statement") will not contain at the time such Proxy Statement is mailed and the
date of the stockholders' meeting, any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein not misleading.
Section 4.12. Properties; Leases. Except as disclosed in the Company
Public Reports or as set forth on Schedule 4.12 and except for Permitted Liens,
(a) the Company or one of its Subsidiaries has good and marketable title,
free and clear of all liens and encumbrances, to the trucks and the other assets
of the Company and its Subsidiaries that are reflected in the financial
statements included in the Company's Form 10-Q for the quarter ended September
30, 1997, except where such failure to hold such title would not, individually
or in the aggregate, have a Material Adverse Effect on the Company. The Company
owns or holds under valid and existing lease or license each piece of real or
personal property included in or capitalized on the Interim Financial
Statements;
(b) neither the Company nor any of its Subsidiaries owns any real property.
Schedule 4.12 sets forth a complete and correct list of the leases (i) for the
Company's headquarters and (ii) for the locations in which the Company has
significant office operations (the "Disclosed Leases"). Except for any of the
following that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company, (i) to the Company's
Knowledge, neither the whole nor any portion of any property on which the
Company or any of its Subsidiaries has a leasehold interest (the "Leases") has
been condemned, requisitioned or otherwise taken by any public authority, and no
notice of any such condemnation, requisition or taking has been received or is
threatened, (ii) to the Company's Knowledge, the Leases are in full force and
effect and
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are valid, binding and enforceable in accordance with their respective terms
against the parties thereto, except to the extent such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting creditors' rights generally or by general equitable
principles, (iii) no amount payable under any Lease is past due, (iv) the
Company, and to the Company's Knowledge each other party thereto, has complied
with all material commitments and obligations on its part to be performed or
observed under each Lease, and (v) the Company has not received any notice of a
default (which has not been cured), offset or counterclaim under any Lease, or
any other communication calling upon the Company to comply with any provision of
any Lease or asserting non-compliance (which has not been cured), and no event
or condition has happened or presently exists which constitutes a material
default or, after notice or lapse of time or both, would constitute a material
default under any Lease; and
(c) the Company has not mortgaged, pledged or otherwise encumbered its
interest in any premises covered by the Leases, nor has it assigned its interest
under any Lease or sublet all or any portion of any real property which it
leases nor has it granted to any person any rights to any of the premises
covered by any Lease or in and to any Lease, other than the right of any dealer
to occupy any part of the premises covered by the Leases for the purpose of
operating a store for the business of the Company or any of its Subsidiaries.
Section 4.13. Tax Matters. (a) Except as otherwise disclosed in Schedule
4.13(a): (i) all Tax returns required to be filed by each of the Company and its
Subsidiaries have been filed and each has paid (or the Company has paid on its
Subsidiary's behalf), or has set up an adequate reserve for the payment of, all
material Taxes required to be paid in respect of the periods covered by such
returns; (ii) neither the Company nor any of its Subsidiaries is delinquent in
the payment of any material tax, assessment or governmental charge; (iii) except
for Permitted Liens, there are no Tax liens upon the assets of the Company or
any of its Subsidiaries except liens for Taxes not yet due or being contested in
good faith through appropriate proceedings; and (iv) no material deficiency for
any Taxes has been proposed, asserted or assessed against the Company or any of
its Subsidiaries that has not been resolved, reserved against or paid in full.
(b) Except as otherwise disclosed in Schedule 4.13(b): (i) all Taxes,
deposits or other payments for which the Company or any of its Subsidiaries is
liable through the date hereof either have been paid or accrued in full on the
books and records of the Company or its Subsidiaries, as applicable, except for
such Taxes as are not required by GAAP to be accrued or are immaterial in
amount; (ii) there are not now any extensions of time in effect with respect to
the dates on which any returns or reports with respect to any Taxes were or are
due to be filed; (iii) no audit or investigation of any return or report of
Taxes is currently underway, pending or, to the Company's knowledge, threatened;
and (iv) there are no outstanding waivers or agreements by the Company or any
Subsidiary of the Company for the extension of time for the assessment of any
material Taxes or deficiency thereof, nor are there any requests for rulings,
outstanding subpoenas or requests for information or any other matter pending
between the Company or any of its Subsidiaries and any taxing authority.
(c) The Company has delivered to Buyer true and complete copies of all
federal and state income tax returns (together with any Revenue Agent's Reports)
relating to the operations of the Company and the Subsidiaries of the Company
for the taxable years ended since 1996.
(d) None of the Company or any of its Subsidiaries has filed a consent
pursuant to Section 341(f) of the Code. None of the Company, any of its
Subsidiaries or any predecessor in interest of such party, has filed, or may be
deemed to have filed, any election under Section 338 of the Code.
(e) Except as set forth on Schedule 4.13(e), neither the Company nor any of
its Subsidiaries has made any payment which constitutes an "excess parachute
payment" within the meaning of Section 280G of the Code, and no payment by the
Company or any of its Subsidiaries required to be made under any contract will,
if made, constitute an "excess parachute payment" within the meaning of Section
280G of the Code.
(f) Except as set forth in Schedule 4.13(f), neither the Company nor any of
its Subsidiaries is a party to any tax allocation or tax sharing agreement.
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(g) None of the Company or any of its Subsidiaries has been a member of an
affiliated group (within the meaning of Section 1504(a) of the Code) filing a
consolidated federal income tax return (other than a group the common parent of
which was the Company).
Section 4.14. Brokerage. Except for Questor Management Company, no
broker, agent, finder or financial advisor has acted, directly or indirectly,
for the Company, and with such exception, the Company has not incurred any
obligation to pay any brokerage fee, agent's commission, finder's fee, financial
advisory fee or other commission in connection with the transactions
contemplated by this Agreement.
Section 4.15. Insurance; Protection Products. (a) Schedule 4.15(a) lists
insurance policies owned or held by the Company or any of its Subsidiaries as of
February 28, 1998, which may cover the Company or any of its assets. As of the
date hereof, all such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date hereof have
been paid to the extent due, and no notice of cancellation or termination has
been received with respect to any such policy. To the best of the Company's
Knowledge, the insurance maintained by the Company and its Subsidiaries is
customary in the industry and complies with applicable material governmental
regulations.
(b) Schedule 4.15(b) lists all protection products offered as of the date
hereof by the Company and its Subsidiaries in connection with the rental of
trucks by the Company.
Section 4.16. Contracts. Schedule 4.16 sets forth a complete and correct
list of (i) all material contracts between Ryder Truck Rental, Inc. and/or Ryder
System Inc. and the Company or any of its Subsidiaries and (ii) all contracts
entered into by the Company or any of its Subsidiaries since September 30, 1997
and on or prior to the date hereof that would be required to be filed as an
exhibit to any Form 10-K or 10-Q filed by the Company. The Company has delivered
to the Buyer or its representatives true and complete originals or copies of all
contracts set forth in clauses (i) and (ii). Except as disclosed in Schedule
4.16, to the Company's Knowledge, all material contracts entered into by the
Company or any of its Subsidiaries by which such parties are bound including the
contracts disclosed in clauses (i) and (ii) above and the contracts filed as
exhibits to the Company Public Reports (the "Contracts") are valid and binding
and enforceable against the Company or its Subsidiaries, as the case may be, and
against the other parties thereto, except to the extent such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting creditors' rights generally or by general equitable
principles, the Company is not, and to the Company's knowledge, the other
parties thereto are not, as of the date hereof, in material breach of any
Contract or material default thereunder, and there does not exist under any
provision thereof, to the Company's Knowledge, as of the date hereof, any event
that, with the giving of notice or the lapse of time or both, would constitute
such a breach or default, except for such failures to be valid and binding and
such breaches, defaults and events as to which requisite waivers or consents
have been or are obtained or which would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. Except as disclosed on Schedule
4.16, as of the date hereof no indemnification claim has been made by Ryder
Truck Rental, Inc. and/or Ryder System Inc. with respect to any contracts
between Ryder Truck Rental, Inc. and/or Ryder System Inc. and the Company or its
Subsidiaries, as the case may be. To the Company's Knowledge, no material
indemnification claims exist under any of the Contracts set forth in clause (i)
above. Except as set forth in Schedule 4.16, no contract to which the Company or
any of its Subsidiaries, contains any provision which creates, or purports to
create, or subjects the Company or any of its Affiliates to, any material
restriction on any business activity that may be conducted by the Company or any
of its Affiliates through non-competes.
Section 4.17. Transactions with Affiliates. (a) Except as set forth in
Schedule 4.17(a), no director, no shareholder and no persons controlled by any
director or shareholder of the Company or any of its Subsidiaries or any entity
in which any such director or other affiliate or associate, owns any beneficial
interest (other than a publicly held corporation whose stock is traded on a
national securities exchange or in the over-the-counter market and less than 1%
of the stock of which is beneficially owned by any such person) has any interest
in: (i) any contract, arrangement or understanding with, or relating to, the
business or operations of the Company or any of its Subsidiaries; (ii) any loan,
arrangement, understanding, agreement or contract for or relating to
indebtedness of the Company or any of its Subsidiaries; or (iii) any property
(real, personal or
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mixed), tangible, or intangible, used or currently intended to be used in, the
business or operations of the Company or any of its Subsidiaries.
(b) Except as set forth on Schedule 4.17(b), no officer of the Company or
any of its Subsidiaries has sold or transferred any property or assets to or
purchased or acquired any property or assets from, or otherwise engaged in any
other transactions with the Company or any of its Subsidiaries, except that the
Company and any of its Subsidiaries may have engaged in any of the foregoing
transactions in the ordinary course of business at prices and on terms and
conditions no less favorable to the Company or such Subsidiary than could have
been obtained in an arm's-length basis from unrelated third parties.
Section 4.18. Voting Requirements; Dissenters' Rights. The affirmative
vote of the holders of a majority of the Outstanding Company Shares with respect
to this Agreement and the Merger was the only vote of the holders of any class
or series of the Company's capital stock necessary to approve this Agreement,
the Merger and the transactions contemplated by this Agreement and the Merger.
Section 4.19. Labor Matters. As of the date hereof, there are no
collective bargaining agreements with labor unions or associations representing
employees of the Company or any Subsidiary of the Company. Since October 17,
1996, there has been no material work stoppage against the Company or any of its
Subsidiaries by any employees of the Company or any of its Subsidiaries nor, to
the Company's Knowledge, is any such stoppage threatened. Neither the Company
nor any of its Subsidiaries has been involved in or, to the Company's Knowledge,
threatened with, any collective bargaining dispute, arbitration, lawsuit or
administrative proceeding relating to a collective bargaining matter involving
the employees of the Company or any of its Subsidiaries (excluding routine
workers' compensation claims) that would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Section 4.20. Quantity and Maintenance of Trucks. As of January 31, 1998,
the Company owned at least 29,000 trucks. Since such date, the Company has
maintained the trucks in accordance with its ordinary course of business
consistent with past practice, unless and until sold to third parties in the
ordinary course of business.
Section 4.21. Accounts Receivable. All accounts receivable of the Company
and its Subsidiaries which are reflected on the Interim Balance Sheet are fairly
presented thereon in accordance with GAAP.
Section 4.22. Licenses, Permits, etc. Except as disclosed on Schedule
4.22, each of the Company and its Subsidiaries have all material licenses,
permits, certificates, franchises, consents, approvals and other authorizations
of any Governmental Entity required to carry on their business as presently
conducted (the "Licenses"). All Licenses have been validly obtained and are in
full force and effect except for those whose failure to be in full force and
effect would not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect on the Company. Except as disclosed on Schedule
4.22, as of the date hereof, no proceeding is pending or, to the Company's
Knowledge, threatened seeking the revocation or limitation of any such License
that, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company. The businesses of the Company and its
Subsidiaries are presently being conducted in a manner that does not violate in
any material respect any of the terms or conditions under which any License was
granted.
Section 4.23. Disclosure. None of the representations and warranties by
the Company in this Agreement and no statement on the part of the Company
contained in any of the Schedules hereto contains or will contain as to the
applicable representation and warranty any untrue statement of a material fact
or omits or will at the Closing omit to state any material fact necessary in
order to make any of the statements herein or therein, in light of the
circumstances under which it was made, not misleading.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
Section 5.1. Corporate Organization and Authorization. (a) Each of
Buyer and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to enter into this Agreement and to carry out
the transactions contemplated hereby.
(b) Buyer has all requisite corporate power and authority and, except
as set forth on Schedule 5.1(b), all governmental authorizations, permits,
certificates, licenses, consents and approvals required to carry on its
business as presently conducted, except where the failure to possess such
authorizations, permits, certificates, licenses, consents and approvals
(either individually or in the aggregate) would not have a Material Adverse
Effect on Buyer. Buyer is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of the
activities conducted by it makes such qualification necessary, except where
the failure to so qualify or to maintain such good standing (either in one
jurisdiction or in the aggregate) would not have, individually or in the
aggregate, a Material Adverse Effect on Buyer.
(c) This Agreement has been duly executed and delivered by Buyer and
Sub and, except for approval of this Agreement by Buyer's and Sub's Board
of Directors and by a majority of holders of Sub's common stock, which
approval has been obtained prior to the execution hereof, no corporate
authorization on the part of Buyer or Sub is necessary to consummate the
transactions contemplated by this Agreement. No approval by the
shareholders of Buyer is required by law, charter or by-laws of Buyer,
listing agreement with, or policy of the NYSE or otherwise for the
consummation of this Agreement, it being understood, however, that in order
for Buyer to issue a number of shares in excess of the Minimum Merger
Shares, it must obtain shareholder approval to amend its Certificate of
Incorporation to increase the number of shares of authorized common stock
(and the failure of Buyer to obtain such approval shall give rise to
Buyer's obligation to issue the Minimum Merger Shares and the Aggregate
Cash Consideration deliverable pursuant to Section 3.1(b) hereof when the
Minimum Merger Shares are issued pursuant to Section 3.1(a) hereof).
(d) This Agreement constitutes a valid and binding agreement of Buyer
and Sub and is enforceable against Buyer and Sub in accordance with its
terms, except to the extent enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law).
(e) The copies of the Certificate of Incorporation and By-Laws, and
all amendments thereto to the date of this Agreement, of Buyer and Sub
heretofore delivered to the Company are complete and true copies of such
documents as in effect on the date hereof.
Section 5.2. Capitalization. (a) As of the date hereof, the authorized
capital stock of Buyer consists of: (i) Thirty Seven Million Five Hundred
Thousand (37,500,000) shares of Common Stock, par value $0.01 per share ("Buyer
Common Stock"), of which (x) Thirty Five Million (35,000,000) shares of Common
Stock have been designated Class A Common Stock, par value $0.01 per share
("Buyer Class A Common Stock") and (y) Two Million Five Hundred Thousand
(2,500,000) shares of Common Stock have been designated Class B Common Stock,
par value $.01 per share ("Buyer Class B Common Stock"), and (ii) Two Hundred
Fifty Thousand (250,000) shares of Preferred Stock, par value $0.01 per share.
(b) As of March 3, 1998, (i) Twenty Five Million Six Hundred Sixty Two
Thousand Eight Hundred Fifty Seven (25,662,857) shares of Buyer Class A Common
Stock, and (ii) One Million Nine Hundred Thirty Six Thousand Six Hundred
(1,936,600) shares of Buyer Class B Common Stock are issued and outstanding. All
of such issued and outstanding shares of Buyer Common Stock are validly issued,
fully paid and nonassessable. Except as set forth in Schedule 5.2(b) hereto, as
of March 3, 1998, Buyer has no other outstanding capital securities or
securities convertible into or exchangeable for any shares of its capital stock
or
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any preemptive or other rights to subscribe for or to purchase, or any options
for the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, any calls, commitments or claims of any character relating to,
any shares of its capital stock or any securities convertible into or
exchangeable for any shares of its capital stock.
(c) Buyer has a sufficient number of shares of Buyer Class A Common Stock
authorized and reserved for issuance to the holders of the Outstanding Company
Shares and holders of Options to issue the Minimum Merger Shares in accordance
with Section 3.1(a)(i)(y) of this Agreement.
Section 5.3. Noncontravention. Subject to the expiration or termination
of the applicable waiting period required by the H-S-R Act, except as disclosed
in Schedule 5.3 hereto, neither the execution, delivery or performance of this
Agreement nor the consummation of the transactions contemplated hereby:
(i) violates, or conflicts with, or constitutes a default under, the
certificate or articles of incorporation or by-laws, as amended, of any of
Buyer or any of its Subsidiaries, or
(ii) violates or will violate any statute or law or any rule,
regulation, order, judgment or decree of any court or governmental
authority to which Buyer or any of its Subsidiaries or any of their
properties or assets are subject, except where the existence of such
violation would not, individually or in the aggregate, have a Material
Adverse Effect on Buyer, or
(iii) (with or without notice or lapse of time or both), constitutes a
default under any contract or agreement of any kind to which Buyer or any
of its Subsidiaries is a party or by which either of them is bound, except
where the existence of such default would not, individually or in the
aggregate, have a Material Adverse Effect on Buyer, or
(iv) except as disclosed on Schedule 5.3, requires that Buyer obtain
any consents or approvals of third parties, except where the failure to
obtain such consent or approval would not, individually or in the
aggregate, have a Material Adverse Effect on Buyer.
Section 5.4. SEC Filings. Since January 1, 1995, Buyer has made all
filings with the SEC that it has been required to make under the Securities Act
or the Exchange Act (collectively, the "Buyer Public Reports"). Each of the
Buyer Public Reports has complied with the Securities Act and the Exchange Act
in all material respects. None of the Buyer Public Reports, as of their
respective dates, contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
Section 5.5. Financial Statements. All of the financial statements
included in the Buyer Public Reports complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with GAAP applied on a consistent basis
during the period involved (except as may be indicated in the notes thereto or,
in the case of unaudited statements, as permitted by Rule 10-01 of Regulation
S-X of the SEC) and fairly present in accordance with applicable requirements of
GAAP (subject, in the case of unaudited statements, to normal recurring
adjustments, none of which were or are expected, individually or in the
aggregate, to be material in amount) the consolidated financial position of
Buyer and its consolidated Subsidiaries as of their respective dates and the
consolidated results of operations and the consolidated cash flows of Buyer and
its consolidated Subsidiaries for the periods presented therein. Except as set
forth in the Buyer Public Reports, neither the Buyer nor any of its Subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of the Company and its consolidated Subsidiaries or in the notes
thereto, other than liabilities or obligations which, individually or in the
aggregate, do not have and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Buyer.
Section 5.6. Legal Proceedings. Except as disclosed in the Buyer Public
Reports or as set forth on Schedule 5.6 hereto, there are no claims, actions,
suits, proceedings or investigations pending or, to Buyer's knowledge,
threatened by or against or involving, Buyer or any Subsidiary of Buyer (a)
seeking to enjoin, prohibit, restrain or otherwise prevent the transactions
contemplated hereby or (b) which, if determined adversely to Buyer would,
individually or in the aggregate, result in a Material Adverse Effect on Buyer.
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Except as disclosed in Buyer Public Reports, there are no judgments, decrees or
orders issued by any court, board or other governmental or administrative agency
presently outstanding and unsatisfied against Buyer or any Subsidiary of Buyer,
except where the existence of such judgment, decree or order would not,
individually or in the aggregate, have a Material Adverse Effect on Buyer.
Section 5.7. Events Subsequent to September 30, 1997. Except as set forth
on Schedule 5.7 hereto or as disclosed in the Buyer Public Reports, since
September 30, 1997, there has not been (a) any effect or change which would
have, individually or in the aggregate, a Material Adverse Effect on Buyer, (b)
any declaration, setting aside or payment of any dividend or any other
distribution with respect to any of the capital stock or other equity interests
of Buyer, or (c) any material change by Buyer in accounting principles.
Section 5.8. Compliance with Laws. Except for such non-compliance as
would not, individually or in the aggregate, have a Material Adverse Effect on
Buyer and, except as disclosed in the Buyer Public Reports, to the best of
Buyer's knowledge, the conduct of Buyer complies in all material respects with
all environmental and other statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto, except for violations or
failures so to comply, if any, that are consistent with the relevant industry
standard. To the best of Buyer's knowledge, no action or proceeding relating to
any such statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees is pending or threatened, except for such actions and proceedings as
would not, individually or in the aggregate, have a Material Adverse Effect on
Buyer.
Section 5.9. Registration Statement. The information with respect to
Buyer or any Subsidiary of Buyer included in (a) the S-4 and the S-3 will not
contain at the time any such Registration Statement becomes effective, any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein not
misleading and (b) the Proxy Statement will not contain at the time such Proxy
Statement is mailed and the date of the stockholders' meeting referred to in
Section 6.19, any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein not misleading.
Section 5.10. Properties; Insurance. Except as disclosed in Schedule 5.10
and except for Permitted Liens, Buyer or a Subsidiary of Buyer has good and
marketable title to its material assets and the material assets of its
Subsidiaries, free and clear of all liens and encumbrances, except where such
failure to hold such title would not, individually or in the aggregate, have a
Material Adverse Effect on Buyer.
Section 5.11. Financing. Buyer has previously delivered to the Company a
complete and correct copy of a "highly confident" letter from Credit Suisse
First Boston in form and substance satisfactory to the Company, and such letter
is in full force and effect and has not been amended or otherwise modified.
Section 5.12. Brokerage. Except for Credit Suisse First Boston, no
broker, agent, finder or financial advisor has acted, directly or indirectly,
for Buyer, nor has Buyer incurred any obligation to pay any brokerage fee,
agent's commission, finder's fee, financial advisory fee or other commission in
connection with the transactions contemplated by this Agreement.
ARTICLE VI.
COVENANTS AND AGREEMENTS
Section 6.1. Conduct of the Company Prior to the Effective Time. (a) The
Company shall, and shall cause its Subsidiaries (and Questor shall cause the
Company and its Subsidiaries) (i) to carry on their respective businesses in the
usual, regular and ordinary course of business in substantially the same manner
as heretofore conducted, (ii) not to engage at any time in any business or
business activity other than the business currently conducted by them and
business activities reasonably incidental thereto and (iii) use commercially
reasonable efforts to preserve intact their present business organizations, keep
available the services of their present officers and employees and preserve
their relationships with customers, suppliers, dealers, agents and others having
business dealings with them to the end that their goodwill and on-going
businesses shall be unimpaired at the Effective Time, except such impairment as
would not have a Material Adverse Effect on the Company. The Company shall, and
shall cause its Subsidiaries to (i) maintain
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insurance coverages in the usual manner consistent with prior practices, (ii)
maintain its books, accounts and records in the usual manner consistent with
prior practices, (iii) comply in all material respects with all laws, ordinances
and regulations of governmental entities applicable to the Company and its
Subsidiaries, (iv) maintain and keep its properties and equipment in good
repair, working order and condition, ordinary wear and tear excepted, and (v)
perform in all material respects its obligations under all contracts and
commitments to which it is a party or by which it is bound, in each case, except
for clauses (i) and (v), other than where the failure to so maintain, comply or
perform, would, individually or in the aggregate, not result in a Material
Adverse Effect on the Company;
(b) Except as required or permitted by this Agreement, neither the Company
nor any of its Subsidiaries shall nor shall they propose to (and Questor shall
not permit the Company or any of its Subsidiaries to) (i) sell or agree to sell
any capital stock owned by it in any of its Subsidiaries, (ii) amend its
Certificate of Incorporation or By-laws, (iii) split, combine or reclassify its
outstanding capital stock or declare, set aside or pay any dividend or other
distribution payable in cash, stock or property, or (iv) directly or indirectly
redeem, purchase or otherwise acquire or agree to redeem, purchase or otherwise
acquire any Company Class C Common Stock except for repurchases of Company
Common Class C Stock from employees, officers, consultants or directors in the
ordinary course of business;
(c) Except as set forth on Schedule 6.1(c), the Company shall not, nor
shall it permit any of its Subsidiaries (and Questor shall not permit the
Company or any of its Subsidiaries) to:
(i) except for the issuance of shares pursuant to Options outstanding
as of the date hereof and except as required or permitted by this
Agreement, issue, deliver or sell or agree to issue, deliver or sell any
additional shares of, or rights of any kind to acquire any shares of, its
capital stock of any class, except for issuances, deliveries or sales to
employees, officers, consultants or directors of not more than 2,000 shares
of Class C Common Stock;
(ii) acquire, lease or dispose or agree to acquire, lease or dispose
of any capital assets or any other assets other than in the ordinary course
of business and consistent with past practice;
(iii) incur additional indebtedness in excess, in the aggregate, of
$25,000,000, or encumber or grant a security interest in any asset to
secure indebtedness, in the aggregate, in excess of $25,000,000 or enter
into any other material transaction other than, in each case, in the
ordinary course of business, it being understood that it is within the
ordinary course of business of the Company and its Subsidiaries to issue
indebtedness within the limits of existing credit facilities;
(iv) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial equity interest in, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, in each case in this clause (iv) which
are material, individually or in the aggregate, to the Company and its
Subsidiaries taken as a whole, except that the Company may create new
wholly owned subsidiaries in the ordinary course of business;
(v) fail to comply in all material respects with the applicable
provisions of ERISA, the Code and the regulations and published
interpretations thereunder with respect to Employee Benefit Plans;
(vi) sell or transfer any material properties or assets to, or
purchase or acquire any material property or assets from, or otherwise
engage in any other transactions with, any of its Affiliates, except that
the Company or any of its Subsidiaries may engage in any of the foregoing
transactions (A) pursuant to existing arrangements disclosed on Schedule
4.17, or (B) except for transactions with Significant Stockholders, in the
ordinary course of business at prices and on terms and conditions no less
favorable to the Company or any of its Subsidiaries than could be obtained
on an arm's-length basis from unrelated third parties;
(vii) without Buyer's consent, which consent shall not be unreasonably
withheld or delayed, make any material tax election under the Code (other
than in the ordinary course of business consistent with past practice) or
settle or compromise any tax liability involving amounts in excess of
$1,000,000 in the aggregate;
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(viii) pay, discharge, settle or satisfy any claims, litigation,
liabilities or obligations (whether absolute, accrued, asserted or
unasserted, contingent or otherwise) involving amounts in excess of
$1,000,000 in the aggregate, other than the payment, discharge or
satisfaction of liabilities (x) reflected or reserved against in, or
contemplated by, the financial statements (or the notes thereto) of the
Company included in the Company Public Reports or (y) in the ordinary
course of business consistent with past practice;
(ix) fail to use all commercially reasonable efforts to keep its
insurable properties adequately insured at all times by financially sound
and reputable insurers, maintain such other insurance, to such extent and
against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies in the same or similar
businesses operating in the same or similar locations, including public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by it, fail to maintain such other
insurance as may be required by law, provided, however, that
notwithstanding anything to the contrary contained herein, the Company may
continue its current insurance practices;
(x) fail to maintain in full force and effect insurance that, to the
best of the Company's Knowledge, is customary in the industry and complies
with applicable material governmental regulations, provided, however, that
notwithstanding anything to the contrary contained herein, the Company may
continue its current insurance practices;
(xi) with respect to its fleet of trucks, fail to perform maintenance
(routine or unscheduled) and repairs, fail to keep its fleet, in all
material respects, in good working order and condition, or fail to maintain
its fleet as required in order to keep the manufacturer's warranty, in all
material respects, if any, in force;
(xii) fail to use all commercially reasonable efforts to continue to
collect its accounts receivable in the ordinary course of business and
consistent with past practice;
(xiii) fail to prepare and file all material federal, state, local and
foreign returns for Taxes and other material Tax reports, filings and
amendments thereto required to be filed by it, or fail to allow Buyer, at
its request, to review all such returns, reports, filings and amendments
prior to the filing thereof, which review shall not interfere with the
timely filing of such returns;
(xiv) increase by more than 10% the base salary of any of its
employees whose base salary is in excess of $100,000 as of the date hereof,
except consistent with past practice or enter into a new material Employee
Benefit Plan;
(xv) except as may be required by applicable law (in which case Buyer
shall have the option to participate in such negotiation), enter into any
negotiation with respect to any collective bargaining agreement;
(xvi) make any loans to any third party in excess of $1,000,000 in the
aggregate except in the ordinary course of business;
(xvii) without Buyer's consent which may not be unreasonably withheld
or delayed amend or cancel or agree to the material amendment or
cancellation of any contract filed as an exhibit to the Company Public
Reports or enter into any new contract required to be filed as such an
exhibit;
(xviii) without Buyer's consent which may not be unreasonably withheld
or delayed make any change in any accounting methods, except as may be
required by GAAP or as appropriate to conform to changes in GAAP; or
(xix) enter into any contract, agreement commitment or arrangement to
take any of the actions described in Section 6.1(b) or elsewhere in this
Section 6.1(c).
Section 6.2. Conduct of Buyer Prior to the Effective Time. Buyer shall
not, and shall cause its Subsidiaries not to, engage in any transaction which
has the effect of, individually or in the aggregate, materially restricting, or
in any way materially delaying, preventing or prohibiting the Merger or the
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consummation of the transactions contemplated by this Agreement; provided,
however, that Buyer shall comply with Section 3.16. Buyer shall not reserve for
any other purpose or issue to any person or persons (other than the Company
Stockholders pursuant to Article III of this Agreement) any shares of Buyer
Class A Common Stock that it has reserved for issuance of the Minimum Merger
Shares in accordance with Section 3.1(a) of this Agreement.
Section 6.3. Other Offers for the Company; Sale of Common Stock by
Significant Stockholders. (a) From the date hereof until the termination of this
Agreement or the Effective Time, whichever first occurs, the Company shall not,
nor shall it permit any of its Subsidiaries to, nor shall it authorize or permit
any officer, director or employee of, or any investment banker, attorney or
other advisor or representative or agent of, the Company or any of its
Subsidiaries (and Questor shall not permit the Company or any of its
Subsidiaries) to, directly or indirectly, (i) solicit, initiate or encourage the
submission of any Acquisition Proposal (as hereinafter defined) or (ii) enter
into or encourage any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to encourage or
facilitate any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal. Notwithstanding
anything in this Agreement to the contrary, the Company shall promptly advise
Buyer in writing of (i) the receipt by it (or any of the other entities or
persons referred to above) after the date hereof of any Acquisition Proposal, or
any inquiry which could reasonably be expected to lead to any Acquisition
Proposal, (ii) the identity of the person making any such Acquisition Proposal
or inquiry and (iii) the terms and conditions of such Acquisition Proposal or
inquiry. For purposes of this Agreement, "Acquisition Proposal" means any bona
fide proposal with respect to a merger, consolidation, share exchange, business
combination or similar transaction involving the Company or any Subsidiary of
the Company, or any purchase of all or any significant portion of the assets or
stock of the Company or any Subsidiary of the Company.
(b) From the date hereof until the termination of this Agreement or the
Effective Time, whichever first occurs, in addition to being bound by the terms
of Section 6.3(a), the Significant Stockholders shall not offer for sale, sell,
distribute or otherwise dispose of any of their Company Common Stock.
Section 6.4. Continued Effectiveness of Representations and Warranties of
the Parties. From the date hereof through the Effective Time,
(a) the Company shall use (and Questor shall cause the Company to use) all
commercially reasonable efforts to conduct its affairs in such a manner so that,
except as otherwise contemplated or permitted by this Agreement, the
representations and warranties of the Company contained in Article IV shall
continue to be true and correct in all material respects on and as of the
Closing Date as if made on and as of the Closing Date, (i) except that any such
representations and warranties that are given as of a particular date shall be
true and correct in all material respects as of such date, and (ii) in the case
of Section 4.9 (Events Subsequent to September 30, 1997) only, except for such
changes with respect thereto (x) which are contemplated by this Agreement or (y)
which are attributable to the execution of this Agreement, or the announcement
or contemplation of the transactions proposed herein;
(b) Buyer shall use its reasonable efforts to conduct its affairs in such a
manner so that, except as otherwise contemplated or permitted by this Agreement,
the representations and warranties contained in Article V shall continue to be
true and correct in all material respects on and as of the Closing Date as if
made on and as of the Closing Date, (i) except that any such representations and
warranties that are given as of a particular date shall be true and correct in
all material respects as of such date, and (ii) in the case of Section 5.7
(Events Subsequent to September 30, 1997) only, except for such changes with
respect thereto (x) which are contemplated by this Agreement or (y) which are
attributable to the execution of this Agreement, or the announcement or
contemplation of the transactions proposed herein;
(c) the Company shall promptly notify Buyer of any event, condition or
circumstance occurring from the date hereof through the Closing Date of which
the Company becomes aware that would cause any material revisions to any
Schedule provided by the Company pursuant to this Agreement, or that would
constitute a violation or breach of this Agreement by the Company; and
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(d) Buyer and Sub shall promptly notify the Company of any event, condition
or circumstance occurring from the date hereof through the Closing Date of which
they become aware that would cause any material revisions to any Schedule
provided by Buyer pursuant to this Agreement, or that would constitute a
violation or breach of this Agreement by Buyer. No such notification shall be
deemed an amendment to any Schedule to this Agreement.
Section 6.5. Corporate Examinations and Investigations. Prior to the
Closing Date, each of Buyer and the Company, as the case may be, shall be
entitled, at its cost and expense, through its employees and representatives, to
make such investigation of the assets, liabilities, business and operations of
the other party, and such examination of the books, records and financial
condition of the other party, upon prior notice and during normal business
hours. Any such investigation and examination shall be conducted at reasonable
times and under reasonable circumstances and the applicable party and its
respective employees and representatives, including, without limitation, its
counsel and independent public accountants, shall cooperate with such
representatives in connection with such review and examination. In furtherance
of the foregoing, the Company will provide Buyer with regular updates concerning
the preparation of the Audited Financial Statements and will cause its
accountants to give reasonable access to Buyer's accountants during the course
of the audit of the Audited Financial Statements and to discuss such draft
Audited Financial Statements with Buyer's accountants.
Section 6.6. Buyer Approvals. Buyer shall use all reasonable efforts to
obtain as promptly as practicable all necessary approvals, authorizations and
consents of any person or Governmental Entity required to be obtained by Buyer
to consummate the transactions contemplated hereby ("Buyer Approvals"), and will
cooperate with the Company in seeking to obtain all such approvals,
authorizations and consents; provided, however, that neither Buyer nor any of
its Subsidiaries shall be required to take any action to obtain such approvals,
authorizations and consents if such action, either alone or together with
another action, would result in the divestiture of assets by Buyer or the
Company that would directly result in the loss of more than 30% of the Company's
revenues (as of the date hereof). Buyer shall use all reasonable efforts to
provide such information to such persons, bodies and authorities as such
persons, bodies or authorities or the Company may reasonably request.
Section 6.7. Company Approvals. The Company shall use all reasonable
efforts to obtain as promptly as practicable all necessary approvals,
authorizations and consents of any person or Governmental Entity required to be
obtained by the Company to consummate the transactions contemplated hereby
("Company Approvals"), and will cooperate with the Buyer in seeking to obtain
all such approvals, authorizations and consents. The Company shall use all
reasonable efforts to provide such information to such persons, bodies and
authorities as such persons, bodies and authorities or Buyer may reasonably
request.
Section 6.8. Letter of Credit. Buyer has obtained and delivered to the
Company on or before the date hereof a Letter of Credit naming the Company as
beneficiary thereof in the amount of $20,000,000 and in substantially the form
attached hereto as Exhibit C (the "Letter of Credit") which will remain in full
force and effect until December 15, 1998 or as otherwise provided therein;
provided, however, that if the Company exercises its option to extend the
Termination Date pursuant to the proviso of Section 10.1(a), Buyer shall cause
the Letter of Credit to remain in full force and effect or a substitute letter
of credit containing substantially identical terms to remain in full force and
effect until March 15, 1999 or as otherwise provided therein; and provided,
further, that if the Closing Date is extended beyond November 30, 1998, solely
as a result of clause (a)(v) of the definition of Closing Date, Buyer shall
cause the Letter of Credit to remain in full force and effect or a substitute
letter of credit containing substantially identical terms to remain in full
force and effect until March 15, 1999 or as otherwise provided therein. The
Company agrees with Buyer that it shall not draw upon, or exercise any rights
with respect to, the Letter of Credit unless and only to the extent the Company
is permitted to do so under Article X of this Agreement. In addition, the
Company agrees with Buyer that within one (1) Business Day following the earlier
of (x) the Closing Date, and (y) the date on which this Agreement is terminated
in a manner which does not give rise to a right on the part of the Company to
draw on the Letter of Credit pursuant to Section 10.3, the Company shall
instruct the bank issuing the Letter of Credit to terminate the Letter of Credit
by giving the notice described in clause (ii) of paragraph 5 of the Letter of
Credit and shall surrender the Letter of Credit to such bank for cancellation.
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Section 6.9. Further Assurances. (a) Each of Buyer, Sub and the Company
shall execute such documents and other papers and take such further actions as
may be reasonably required or desirable to carry out the provisions hereof and
the transactions contemplated hereby. Each of Buyer, Sub and the Company shall
use all reasonable efforts to cause all actions to effectuate the Merger for
which such party is responsible under this Agreement to be taken as promptly as
practicable, including using all reasonable efforts to obtain all necessary
waivers, consents and approvals (including, but not limited to, filings under
the H-S-R Act) and to lift any injunction or other legal bar to the Merger (and,
in each case, to proceed with the Merger as expeditiously as possible).
Notwithstanding the foregoing, there shall be no action required to be taken and
no action will be taken in order to consummate and make effective the
transactions contemplated by this Agreement if such action, either alone or
together with another action, would result in the divestiture of assets by Buyer
or the Company that would directly result in the loss of more than 30% of the
Company's revenues (as of the date hereof).
(b) In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of Buyer, the Company, Questor and the Surviving
Corporation shall take all such necessary action.
Section 6.10. Buyer Board of Directors. As of the Effective Time, Buyer's
Board of Directors shall cause at least one person designated on Schedule 6.10
(the "Designee") to be nominated to Buyer's Board of Directors and shall use its
commercially reasonable efforts to cause such Designee to be elected to Buyer's
Board of Directors until the earliest to occur of (a) the third anniversary of
the Closing Date, (b) the disposition by Questor of 75% of the shares of Buyer
Class A Common Stock acquired by Questor pursuant to Article III hereof, or (c)
the acquisition by Questor of a Controlling Interest in any person listed on
Annex I attached hereto. In furtherance of its obligations under this Section
6.10, Buyer, among other things, shall no later than the Effective Time increase
the number of directors on its Board of Directors by one and elect the initial
Designee set forth on Schedule 6.10 to the Buyer's Board of Directors.
Section 6.11. Indemnification of Company Officers and Directors;
Insurance. (a) Buyer agrees, for a period of six years following the Effective
Time, not to amend the indemnification provisions set forth in the Certificate
of Incorporation or By-laws of the Surviving Corporation in a manner that would
adversely affect the rights of the Company's officers, directors and employees
to indemnification and advancement of expenses thereunder and agrees to cause
the Surviving Corporation to fulfill and honor such obligations to the maximum
extent permitted by law; provided, however, that nothing in this Section 6.11
shall prevent Buyer from effecting any merger, reorganization or consolidation
of the Surviving Corporation.
(b) Buyer shall cause to be maintained in effect for a period of six years
after the Effective Time the current policies of directors' and officers'
liability insurance and fiduciary liability insurance maintained by the Company
with respect to matters occurring prior to the Effective Time; provided,
however, that (i) Buyer may substitute therefor policies of substantially the
same coverage containing terms and conditions that are substantially the same
for the indemnified parties to the extent reasonably available and (ii) Buyer
shall not be required to pay an annual premium for such insurance in excess of
one hundred and fifty percent (150%) of the last annual premium paid prior to
the date of this Agreement, but in such case shall purchase the maximum amount
of coverage possible for such premium.
(c) This Section 6.11 is intended to be for the benefit of, and shall be
enforceable by, the indemnified parties referred to herein, their heirs and
personal representatives and shall be binding on Buyer, Sub and the Surviving
Corporation and their respective successors and assigns.
Section 6.12. Confidentiality. Questor and Buyer reaffirm their
obligations to comply with the provisions set forth in the Confidentiality
Agreement and agree that such obligations shall survive the termination of this
Agreement. The Significant Stockholders and the Company agree to keep
confidential all nonpublic information relating to Buyer received in connection
with the transactions contemplated by this Agreement.
Section 6.13. Certificates, Opinions, Etc. At the Closing, each of Buyer,
Sub and the Company shall deliver such opinions (covering the matters listed on
Annexes II and III hereto) and certificates as are reasonably required by the
other parties.
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Section 6.14. Interim Financials. As promptly as practicable after each
monthly accounting period subsequent to the date of this Agreement and prior to
the Effective Time, the Company will cause to be delivered to Buyer periodic
financial reports relating to the Company and its Subsidiaries in the form in
which the Company customarily prepares such reports for its internal purposes,
including, without limitation, a monthly interim unaudited balance sheet and
income statement. The Company covenants that such interim statements will be
prepared on a basis consistent with prior interim periods.
Section 6.15. Communications. In connection with the continued operation
of the business of the Company and its Subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, the Company shall promptly
respond in good faith to any reasonable inquiries from representatives of Buyer
with respect to the ongoing operations of the Company and its Subsidiaries. The
Company acknowledges that Buyer does not and will not waive any rights it may
have under this Agreement as a result of such communications.
Section 6.16. Releases. If the Closing occurs, then the Company hereby
unconditionally, absolutely and irrevocably releases each Significant
Stockholder and each Significant Stockholder hereby unconditionally, absolutely
and irrevocably releases the Company from any and all claims, rights and causes
of action which such releasing person may have or may have had against the
released party, prior to, or arising with respect to any acts or omissions
occurring or facts or circumstances existing prior to, the Closing; provided,
however, that nothing in this Section 6.16 shall release any rights which any of
these parties may have under this Agreement.
Section 6.17. Transfer Taxes. Buyer and the Company shall cooperate in
the preparation, execution and filing of all returns, applications or other
documents regarding any real property transfer, stamp, recording, documentary of
other taxes (including, without limitation, any New York State Real Estate
Transfer Tax) and any other fees and similar taxes which become payable in
connection with the Merger (collectively, "Transfer Taxes"). From and after the
Effective Date, Buyer shall pay or cause to be paid, without deduction or
withholding from any amounts payable to the holders of the Outstanding Company
Shares, all Transfer Taxes.
Section 6.18. Standstill. If the Closing occurs, each of Questor and
Madison Dearborn agrees that thereafter, unless it shall have been specifically
invited in writing by the Board of Directors of Buyer, it will not, directly or
indirectly (a) acquire any securities that would result in the beneficial
ownership of Buyer Class A Common Stock by it in an amount equal to the sum of
(x) the amount of Buyer Class A Common Stock received by it under the terms of
this Agreement, multiplied by (y) 2 (two) (subject to a corresponding adjustment
in the event the outstanding shares of Buyer Class A Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, stock dividend, etc.), or (b) cause or participate
in the making directly or indirectly of any proxy contest or any tender or
exchange offer for securities of Buyer, or (c) take any actions to seek to
obtain control of the Board of Directors of Buyer. This Section 6.18, and the
obligations of Questor and Madison Dearborn hereunder, shall terminate upon the
earliest to occur of (a) the twenty-fourth monthly anniversary of the date
hereof, (b) a Buyer Change of Control Event or (c) the date upon which ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ceases to be, or gives or receives notice with respect to terminating his
role as, Chief Executive Officer of Buyer.
Section 6.19. Buyer's Stockholders' Meeting. Buyer shall use all
commercially reasonable efforts to have occur as promptly as practicable a
meeting of Buyer's stockholders to vote upon a proposed increase in the
authorized capital stock of Buyer to permit Buyer to issue the Maximum Merger
Shares. Each party hereto shall promptly furnish all information concerning it
as any other party hereto may reasonably request in connection with the Proxy
Statement, the Registration Statement on Form S-3, or the Registration Statement
on Form S-4 or in connection with compliance with any state blue sky or
securities laws.
Section 6.20. Stock Purchases, Repurchases and Sales; Registration
Rights. If the Closing occurs:
(a) Buyer will not, and will not permit any of its Subsidiaries or
controlled Affiliates to, purchase any shares of Buyer Common Stock in open
market, privately negotiated transactions or otherwise, on any day during
the period commencing 30 trading days before the Annual Measurement Date,
Final
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Measurement Date and Warrant Measurement Date, as the case may be, and
ending on the Annual Measurement Date, Final Measurement Date and Warrant
Measurement Date, as the case may be (the "Blackout Period"). In addition,
Buyer will not, and will not permit any of its Subsidiaries or controlled
Affiliates to, make any announcement with respect to any upcoming or future
purchase, repurchase, buy-back or similar transaction involving any shares
of Buyer Common Stock during the Blackout Period or within thirty (30) days
prior thereto.
(b) Each of Questor and Madison Dearborn will not, and will not permit
any of their Subsidiaries or controlled Affiliates to, sell any shares of
Buyer Common Stock in open market, privately negotiated transactions or
otherwise, on any day during the Blackout Period. In addition, Questor and
Madison Dearborn will not, and will not permit any of their Subsidiaries or
controlled Affiliates to, make any announcement with respect to any
upcoming or future sale or similar transaction involving any shares of
Buyer Common Stock during the Blackout Period or within thirty (30) days
prior thereto.
(c) Sections 6.20(a) and 6.20(b) shall terminate upon the Warrant
Measurement Date.
(d) Each Significant Stockholder agrees to comply with its obligations
as a Holder under the registration rights provisions set forth in Exhibit E
hereto.
Section 6.21. Listing. Prior to issuance, Buyer shall use its
commercially reasonable efforts to cause to be approved for listing on the NYSE,
subject to official notice of issuance, all shares of Buyer Class A Common Stock
to be issued pursuant to Sections 3.2, 3.4 and 3.7 hereof and to be issued upon
exercise of, or in exchange for, the Warrants granted pursuant to Section 3.5
hereof on the NYSE.
Section 6.22. Registration Rights. Buyer shall take such actions as are
necessary to provide the registration rights set forth in Exhibit E hereto to
the holders of shares of Buyer Class A Common Stock issued pursuant to Section
3.2, 3.4 or 3.7 or issuable upon exercise of, or issued in exchange for, the
Warrants granted pursuant to Section 3.5, and Buyer shall take such actions to
register shares of Buyer Class A Common Stock issuable thereunder as provided
therein. This Section 6.22 shall survive and be in full force and effect until
the Termination Date (as defined in Exhibit E hereto).
Section 6.23. Buyer Review of Disclosure Schedules. Simultaneously with
the execution and delivery of this Agreement, the Company shall deliver to Buyer
all Schedules required to be provided by the Company under this Agreement (the
"Disclosure Schedules"). The Company shall afford such access to management as
Buyer and its representatives may reasonably require in their review of such
Disclosure Schedules. The Company shall have the right to supplement the
Disclosure Schedules prior to 5 P.M., E.S.T., Friday, March 6, 1998; provided,
however, that the Buyer shall have a reasonable opportunity to review such
supplemented schedules prior to 5 P.M., E.S.T., Friday, March 6, 1998. If Buyer
notifies the Company in writing prior to 5 P.M., E.S.T., Friday, March 6, 1998,
that such Disclosure Schedules are not reasonably satisfactory to it, Buyer
shall have the right to terminate this Agreement. Such Disclosure Schedules so
supplemented shall be deemed delivered on the date hereof.
ARTICLE VII.
CONDITIONS PRECEDENT TO MERGER
The respective obligations of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) All consents, authorizations, orders and approvals of (or filings
or registrations with) any governmental authority or other regulatory body,
as may be required to be obtained by the Company or Buyer in connection
with the performance of this Agreement have been received; provided,
however, that such condition shall not be deemed satisfied if such
consents, authorizations, orders or approvals are conditioned upon the
divestiture of assets by the Buyer or the Company that would directly
result in the loss of more than 30% of the Company's revenues (as of the
date hereof).
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(b) Early termination shall have been granted or applicable waiting
periods shall have expired under the H-S-R Act in connection with the
transactions contemplated hereby.
(c) No governmental authority or other regulatory body (including any
court of competent jurisdiction) shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making illegal, or in any way
prohibiting the Merger (the Company and Buyer agreeing to use their
commercially reasonable efforts to have any such injunction lifted).
(d) No governmental authority or other regulatory body shall have
commenced any action, suit or proceeding seeking to enjoin or otherwise
prohibit the transactions contemplated hereby, nor shall there be a
substantial likelihood that any governmental authority or other regulatory
body will seek to commence any such action, suit or proceeding.
ARTICLE VIII.
CLOSING
The closing (the "Closing") of the transactions contemplated by this
Agreement shall take place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m. local time on the Closing Date or
at such other time and place as the parties may mutually agree.
ARTICLE IX.
REPRESENTATIONS AND WARRANTIES AS OF THE CLOSING DATE;
SURVIVAL; MATERIAL BREACHES
Section 9.1. Representations and Warranties as of the Closing
Date. (a) The representations and warranties of Buyer and the Company shall be
deemed to be reaffirmed in all material respects at and as of Closing Date as
though made at and as of the Closing Date, except to the extent contemplated by
this Agreement, and except to the extent such representations and warranties (i)
speak as of the date hereof or a specified date (which representations and
warranties shall be deemed to be reaffirmed in all material respects solely as
of such date) or (ii) are already qualified by materiality, in which event such
representations and warranties shall be deemed to be reaffirmed as of the
appropriate date in all respects.
(b) On the Closing Date, each of the Company and the Buyer shall deliver a
certificate of an appropriate senior officer as to compliance with Section
9.1(a).
(c) Not later than five (5) Business Days prior to the Closing, the Company
and Buyer will each supplement or amend the Schedules relating to their
respective representations and warranties in this Agreement in order to make
such representations true and correct as of the Closing Date. Such supplemented
or updated schedules shall not be deemed to cure (or affect the rights of any
party with respect to) any breach of any representation or warranty made on the
date hereof.
Section 9.2. Survival. The representations and warranties made by Buyer,
Sub or the Company and the covenants made by the Company or the Significant
Stockholders shall survive the execution and delivery of this Agreement for a
period ending 120 days after the Closing Date, and shall terminate and have no
further force or effect thereafter, except that the covenants made by the
Significant Stockholders in Sections 6.16, 6.18 and 6.20 shall survive until
their expiration or termination in accordance with the terms thereof, and except
as set forth in Section 9.3 hereof. The covenants made by Buyer and Sub shall
survive the Closing except in accordance with the terms thereof.
Section 9.3. Certain Material Breaches. (a) If the Closing occurs, the
sole and exclusive remedy of Buyer and Sub in the event that any of the
representations and warranties of the Company (without giving effect to any
qualifications contained in any representation and warranty set forth in Article
IV hereof with respect to any Material Adverse Effect on the Company) fails to
be true and correct (i) as of the date hereof or, if any representation and
warranty speaks as of a specified date, then as of such date or (ii) in the case
of
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representations and warranties that do not speak of a specified date then as of
the Closing Date or one or more of the covenants of the Company or the
Significant Stockholders set forth in this Agreement hereof fails to be
performed on or prior to the Closing Date is to cause the Aggregate Merger
Shares to be adjusted to the extent provided in Section 3.3. Each of Buyer and
Sub, on the one hand, and the Company and each Significant Stockholder, on the
other hand, shall notify the other in writing of each event or circumstance
known to it that it discovers after the date hereof constituting or causing a
failure of any representation or warranty to be true and correct as of the
applicable date or a covenant made or agreed to by the Company or any
Significant Stockholder promptly after such event or circumstance becomes known
to it, but in any event no later than five (5) Business Days prior to the
Closing Date, or if Buyer or Sub obtains such knowledge thereafter, Buyer shall
notify the Indemnified Representative (as defined in the Holdback Escrow
Agreement)) in writing promptly after obtaining such knowledge; provided,
however, that in no event shall any notice given after the Cut-off Date (as
defined in the Holdback Escrow Agreement) result in Buyer or Sub having any
right to any adjustment in accordance with Section 3.3 or any other remedy.
Within two (2) Business Days after receiving any such notice from the Company or
a Significant Stockholder, Buyer shall inform the Company and the Significant
Stockholders in writing of Buyer's good faith estimate of the value of any such
failures of the representations and warranties (without giving effect to any
qualifiers as to Material Adverse Effect on the Company) to be true and correct
or such failures of covenants to be performed. If prior to the Closing Date
Buyer notifies the Company and the Significant Stockholders in writing that (i)
Buyer estimates that the value (determined in accordance with Section 3.3(a)) of
any such failures, individually or in the aggregate, exceeds $75,000,000, (ii)
such value is in excess of $75,000,000 and (iii) as a result of such failures,
Buyer is unable, after having used its good faith efforts, to obtain the
financing necessary to pay the Aggregate Cash Consideration, then Buyer shall
have the right to terminate this Agreement pursuant to Section 10.1(d) if there
is a determination in accordance with the procedures set forth below that the
value reduction of such failures, individually or in the aggregate, as
calculated pursuant to Section 3.3(a) exceeds $75,000,000. Buyer shall provide
the Company and each Significant Stockholder with all information reasonably
requested in order to make a determination with respect to the value reduction
associated with any such failure or alleged failure. The parties hereto shall
negotiate in good faith to agree upon any such value reduction. If such an
agreement cannot be reached, then such value reduction shall be determined
pursuant to the dispute mechanisms set forth in Section 2.2(f) of the Holdback
Escrow Agreement (the date of final resolution shall be the "Determination
Date").
(b) Breaches of the representations, warranties and covenants of Buyer or
Sub contained in this Agreement shall not give the Company a right to terminate
this Agreement, but shall instead entitle the holders of Outstanding Company
Shares immediately prior to the Effective Time to seek damages in respect
thereof. Each of Buyer and Sub, on the one hand, and the Company, on the other
hand, shall notify the other in writing of each event or circumstance known to
it that it discovers after the date hereof constituting or causing a breach of
any of the representations, warranties and covenants made by Buyer or Sub
promptly after such event or circumstance becomes known to it, but in any event
no later than five (5) Business Days prior to the Closing Date, or if
thereafter, then promptly after obtaining such knowledge.
ARTICLE X.
TERMINATION OF AGREEMENT
Section 10.1. Termination. This Agreement may be terminated prior to the
Closing as follows:
(a) by either Buyer or the Company if the conditions specified in
Article VII have not been satisfied by November 30, 1998 (the "Termination
Date"); provided, however, that if the condition described in paragraph (d)
of Article VII is not satisfied prior to the Termination Date, no later
than such Termination Date, the Company may at its option given in writing
to Buyer extend the Termination Date to February 28, 1999;
(b) by either Buyer or the Company if a final and no longer appealable
permanent injunction (but not any temporary restraining order or
preliminary injunction) has been issued by final order of any federal or
state court in the United States which prevents the consummation of the
Merger;
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(c) by the Company if Buyer or Sub shall have breached any of their
respective obligations under Article VI of this Agreement in any material
respect and such breach continues for a period of ten days after the
receipt of notice of the breach from the Company;
(d) by Buyer pursuant to Section 6.23 or if the Company or any
Significant Stockholder shall have breached any of its representations,
warranties or covenants under the circumstances set forth in the fourth
sentence of Section 9.3(a) that give rise to Buyer's right to terminate
this Agreement; or
(e) at any time on or prior to the Closing Date, by mutual written
consent of Buyer and the Company.
Section 10.2. Effect of Termination. If this Agreement is terminated and
the transactions contemplated hereby are not consummated as described above,
this Agreement shall become void and be of no further force and effect, except
for the provisions of this Agreement relating to the obligations of parties
under Sections 6.8 (Letter of Credit), 6.12 (Confidentiality), 10.2 (Effect of
Termination) and 10.3 (Amounts Payable in Connection with Termination). None of
the parties hereto shall have any liability in respect of a termination of this
Agreement prior to Closing, except to the extent set forth in Section 10.3 and
except to the extent that termination results from the intentional, willful or
knowing violation of the representations, warranties, covenants or agreements of
such party under this Agreement; provided, however, that notwithstanding
anything to the contrary contained herein, in the event of any such termination,
Questor shall have no liability for breach of any covenant contained herein.
Section 10.3. Amounts Payable in Connection with Termination.
(a) If this Agreement is terminated pursuant to Section 10.1(a) or
Section 10.1(b) (but only with respect to such Section 10.1(b) if such permanent
injunction relates to antitrust matters), the Company, upon providing or
receiving notice of such termination, shall have the right to immediately draw
the Letter of Credit in an amount equal to $7,500,000 as agreed liquidated
damages.
(b) If this Agreement is terminated for any reason, except pursuant to
Section 10.1(a), 10.1(b) (under the circumstances described in Section 10.3(a))
or 10.1(d), the Company, upon providing or receiving notice of such termination,
shall have the right to immediately draw the Letter of Credit in the full amount
of $20,000,000 as agreed partial liquidated damages; provided, however, that the
Company shall be entitled to recovery from Buyer for any damages suffered by it
as a result of such termination up to an amount equal to $75,000,000 (including
the amount drawn under the Letter of Credit); and provided, further, that the
Company shall have no obligation to accept liquidated damages and at its option
shall have the right to seek specific performance.
ARTICLE XI.
DEFINITIONS
Section 11.1. Definitions. The following terms when used in this
Agreement shall have the following meanings:
"Accredited Investor" shall have the meaning specified in Regulation D
promulgated under the Securities Act.
"Acquisition Proposal" has the meaning set forth in Section 6.3(a).
"Affiliate" (or "affiliates" as the context may require), with respect
to any person, means any other person controlling, controlled by or under
common control with such person.
"Aggregate Cash Consideration" has the meaning set forth in Section
3.1(b).
"Aggregate Merger Shares" has the meaning set forth in Section 3.1(a).
"Agreement" has the meaning set forth in the preamble hereof.
"Annual Disposition Price" has the meaning set forth in Section
3.4(b).
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"Annual Make-Whole Amount" has the meaning set forth in Section
3.4(b).
"Annual Measurement Date" has the meaning set forth in Section 3.4(b).
"Annual Shares" has the meaning set forth in Section 3.4(b).
"Appraisal Addition Amount" has the meaning set forth in Section
3.8(b).
"Appraisal Reduction Amount" has the meaning set forth in Section
3.8(b).
"Audited Financial Statements" means the consolidated statements of
income, changes in stockholders' equity and cash flow of the Company and
its Subsidiaries for the fiscal year ended December 31, 1997, and a
consolidated balance sheet of the Company and its Subsidiaries as at the
end of such year, in each case audited by Coopers & ▇▇▇▇▇▇▇.
"Blackout Period" has the meaning set forth in Section 6.20.
"Business Combination" has the meaning set forth in Section 3.16.
"Business Day" means any day other than a Saturday or a Sunday, or a
day on which banking institutions in the State of New York are obligated by
law or executive order to close.
"Buyer" has the meaning set forth in the preamble hereof.
"Buyer Approvals" has the meaning set forth in Section 6.6.
"Buyer Change of Control Event" shall mean a transaction or series of
related transactions in which (i) a person or group acquires shares of
Buyer which represent a majority of the outstanding voting shares after
giving effect to such transaction or (ii) the members of the Board of
Directors of Buyer immediately prior to such transaction(s) no longer
constitute a majority of the Board of Directors of Buyer or any successor
thereto immediately following such transaction(s).
"Buyer Class A Common Stock" has the meaning set forth in Section
5.2(a).
"Buyer Class B Common Stock" has the meaning set forth in Section
5.2(a).
"Buyer Common Stock" has the meaning set forth in Section 5.2(a).
"Buyer Public Reports" has the meaning set forth in Section 5.4.
"Certificates" has the meaning set forth in Section 3.9(a).
"Closing" has the meaning set forth in Article VIII.
"Closing Date" means (a) the later of (i) the second Business Day
following the day on which the conditions to the consummation of the Merger
specified in Article VII have been satisfied or waived, (ii) ▇▇▇▇▇ ▇▇,
▇▇▇▇, (▇▇▇) the date that is thirty (30) days after the meeting of Buyer's
stockholders contemplated in Section 6.19 hereof, (iv) the date that is
thirty (30) days after the earliest to occur of receipt of (A) a grant of
early termination, and (B) the expiration of all applicable waiting periods
(including extensions thereof), in each case under the H-S-R Act, in
connection with the transactions contemplated hereby, and (v) if a notice
has been given by Buyer under the fourth sentence of Section 9.3(a), the
date that is fifteen (15) days after the Determination Date or (b) such
other date as the parties hereto agree in writing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preamble hereof.
"Company Approvals" has the meaning set forth in Section 6.7.
"Company Common Stock" has the meaning set forth in Section 4.2(a).
"Company Intellectual Property" has the meaning set forth in Section
4.8.
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"Company's Knowledge" or similar language means the actual knowledge
of the Company's Chief Executive Officer, President, Chief Financial
Officer and General Counsel and such knowledge which each such person
should be reasonably expected to have in such capacity.
"Company Public Reports" has the meaning set forth in Section 4.4.
"Company Stockholders" (or "Company Stockholder" as the context may
require) has the meaning set forth in Section 3.2(a).
"Company Subsidiary Securities" has the meaning set forth in Section
4.1(e).
"Confidentiality Agreement" has the meaning set forth in Section 12.3.
"Contingent Additional Consideration" has the meaning set forth in
Section 3.4(a).
"Contracts" has the meaning set forth in Section 4.16.
"Controlling Interest", with respect to any person, shall mean the
ownership of shares which represent 40% of the outstanding voting stock of
such person.
"Copyright License Agreement" shall mean the copyright agreement,
dated October 17, 1996, by and between Ryder Truck Rental, Inc., a Florida
corporation and the Company.
"Delaware Corporation Law" has the meaning set forth in Section
1.2(a).
"Designee" has the meaning set forth in Section 6.10.
"Determination Date" has the meaning set forth in Section 9.3(b).
"Disclosed Leases" has the meaning set forth in Section 4.12(b).
"Disclosure Schedule" has the meaning set forth in Section 6.23.
"Disposed Annual Share" (or "Disposed Annual Shares" as the context
may require) has the meaning set forth in Section 3.4(b).
"Disposed Annual Value" has the meaning set forth in Section 3.4(b).
"Disposed Final Shares" has the meaning set forth in Section 3.4(c).
"Disposed Final Value" has the meaning set forth in Section 3.4(c).
"Dissenting Shares" has the meaning set forth in Section 3.8.
"Distribution" (or "Distributions" as the context may require) means
any distribution of cash, securities or property on or in respect of the
Company Common Stock or Buyer Common Stock, as the case may be, whether as
a dividend or otherwise.
"Effective Time" has the meaning set forth in Section 1.2(b).
"Employee Benefit Plans" has the meaning set forth in Section 4.7(a).
"Environmental Law" has the meaning set forth in Section 4.10(b).
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single
employer under Section 414(b) or (c) of the Code, or solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Claim Event" has the meaning set forth in Section 3.6(a).
"Escrow Holdback Shares" has the meaning set forth in Section 3.6(a).
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the regulations and rulings issued thereunder.
"Exchange Agent" has the meaning set forth in Section 3.9(a).
"Exercise Difference" has the meaning set forth in Section 3.7(a).
"Fees" means the fees of Questor Management Company and ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ incurred in connection with this Agreement and other fees payable
by the Company to third parties as a result of the execution, delivery and
performance of this Agreement.
"Final Disposition Price" has the meaning set forth in Section 3.4(c).
"Final Make-Whole Amount" has the meaning set forth in Section 3.4(c).
"Final Measurement Date" has the meaning set forth in Section 3.4(c).
"Final Shares" has the meaning set forth in Section 3.4(c).
"GAAP" means generally accepted accounting principles in the United
States of America from time to time in effect.
"Governmental Entity" (or "Governmental Entities" as the context may
require) means (a) any international, foreign, federal, state, county,
local or municipal government or administrative agency or political
subdivision thereof, (b) any governmental agency, authority, board, bureau,
commission, department or instrumentality, (c) any court or administrative
tribunal, (d) any non-governmental agency, tribunal or entity that is
vested by a governmental agency with applicable jurisdiction, or (e) any
arbitration tribunal or other non-governmental authority with applicable
jurisdiction.
"H-S-R Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Holdback Escrow Agent" has the meaning set forth in Section 3.6(a).
"Holdback Escrow Agreement" has the meaning set forth in Section
3.6(a).
"Interim Balance Sheet" has the meaning set forth in Section 4.4.
"Interim Financial Statements" has the meaning set forth in Section
4.4.
"IRS" means the Internal Revenue Service or any successor agency or
department.
"Lease" (or "Leases" as the context may require) has the meaning set
forth in Section 4.12(b).
"Letter of Credit" has the meaning set forth in Section 6.8.
"License" has the meaning set forth in Section 4.22.
"lien or other encumbrance" (or "liens or other encumbrances" or
"liens or other encumbrance" or "lien or other encumbrances" or similar
language as the context may require or any similar formulation) means any
lien, claim, pledge, mortgage, assessment, security interest, charge,
option, right of first refusal, easement, servitude, adverse claim,
transfer restriction under any stockholder or similar agreement or other
encumbrance of any kind.
"Madison Dearborn" means Madison Dearborn Capital Partners, L.P., a
Delaware limited partnership.
"Make-Whole Shares" has the meaning set forth in Section 3.4(d).
"Market Value" of any share of capital stock as of a specific date
means the volume-weighted average closing prices on the NYSE (or, if such
security is not listed on the NYSE, such other principal exchange or
over-the-counter market on which such security is listed) for the 30
consecutive days on which trading of such security occurs ending at the
close of trading on such date (or the last trading day prior to such date).
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"Material Adverse Effect" has the meaning set forth in Section 4.1(b).
"Materiality Threshold" has the meaning set forth in Section 3.3(a).
"Maximum Merger Shares" has the meaning set forth in Section 1.1(b).
"Merger" has the meaning set forth in the recitals.
"Merger Consideration" has the meaning set forth in Section 3.2(a).
"Minimum Merger Shares" has the meaning set forth in Section 1.1(b)
"Multiemployer Plan" has the meaning set forth in Section 4.7(a).
"NYSE" means the New York Stock Exchange, Inc.
"Options" has the meaning set forth in Section 3.7(a).
"Original Holder" has the meaning set forth in Section 3.4(a).
"Original Shares" has the meaning set forth in Section 3.4(a).
"Outstanding Company Shares" means the total number of shares of
Company Common Stock outstanding immediately prior to the Effective Time,
excluding any treasury shares.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency or department.
"Permitted Liens" means (1) statutory liens for Taxes not yet due and
payable, (2) imperfections of title with respect to any Company asset, and
statutory liens or other similar liens arising in the ordinary course of
business with respect to any Company asset, in each case, that do not have
a material adverse effect on the value or use of such asset, (3) mechanics
liens for work performed on any Company asset for which payment therefor is
not in default and (4) those liens or other encumbrances disclosed in
Schedule 4.12.
"Permitted Transferee", with respect to any person, means a transferee
(i) that controls, is controlled by, or is under common control with the
transferor, (ii) who is a spouse, child, parent or sibling of the
transferor, or (iii) with respect to a partnership, that is a limited or
general partner of such partnership. For purposes of this definition the
word "control" means with respect to any person, ownership of equity
interests representing 50% or more of the voting interest of such person
and the words "controlling" and "controlled" have correlative meanings.
"person" (or "persons" as the context may require) means any
individual, corporation, partnership, firm, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization, Governmental Entity or other entity.
"property" (or "properties" as the context may require) means real,
personal or mixed property, tangible or intangible.
"Proxy Statement" has the meaning set forth in Section 4.11.
"Questor" means, collectively, Questor Partners Fund, L.P., a Delaware
limited partnership and Questor Side-by-Side Partners, L.P., a Delaware
limited partnership.
"Receiving Party" has the meaning set forth in Section 12.1.
"Reduction Amount" has the meaning set forth in Section 3.3(b).
"Releasing Party" has the meaning set forth in Section 12.1.
"Remaining Annual Shares" has the meaning set forth in Section 3.4(b).
"Remaining Final Shares" has the meaning set forth in Section 3.4(c).
"S-3" has the meaning set forth in Section 4.11.
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"S-4" has the meaning set forth in Section 3.14.
"SEC" means the Securities and Exchange Commission or any successor
agency or department.
"Securities Act" means the Securities Act of 1933, as amended, and the
regulations and rulings issued thereunder.
"Significant Stockholders" (or "Significant Stockholder" as the
context may require) has the meaning set forth in the preamble hereof.
"Software License Agreement" means the software license agreement,
dated October 17, 1996, by and between Ryder Truck Rental, Inc., a Florida
corporation, and the Company.
"Special Covenants" has the meaning set forth in Section 12.7.
"Stock Option Plans" has the meaning set forth in Section 3.7(a).
"Sub" has the meaning set forth in the preamble hereof.
"Subsidiaries" (or "Subsidiary" as the context may require), means
each entity as to which a person, directly or indirectly, owns or has the
power to vote, or to exercise a controlling influence with respect to, 50%
or more of the securities of any class of such entity, the holders of which
are ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
entity.
"Surviving Corporation" has the meaning set forth in Section 1.2(a).
"Surviving Person" has the meaning set forth in Section 3.16.
"Taxes" means all taxes, assessments, charges, duties, fees, levies or
other governmental charges (including interest, penalties or additions
associated therewith) including federal, state, city, county, foreign or
other income, franchise, capital stock, real property, personal property,
tangible, withholding, FICA, unemployment compensation, disability,
transfer, sales, use, excise, gross receipts and all other taxes of any
kind for which the Company or any Subsidiary of the Company is liable
imposed by the United States or any state, county, city, country or foreign
government or subdivision or agency thereof.
"Tax Return" means a report, return or other information required to
be supplied to a governmental entity with respect to Taxes including, where
permitted or required, combined or consolidated returns for a group of
entities.
"Termination Date" has the meaning set forth in Section 10.1(a).
"Total Disposed Annual Value" has the meaning set forth in Section
3.4(b).
"Total Disposed Final Value" has the meaning set forth in Section
3.4(c).
"Total Remaining Annual Value" has the meaning set forth in Section
3.4(b).
"Total Remaining Final Value" has the meaning set forth in Section
3.4(c).
"Total Warrant Value" has the meaning set forth in Section 3.5(a).
"Trademark License Agreement" means the trademark license agreement,
dated as of October 17, 1996, between Ryder System, Inc., a Florida
corporation and the Company.
"Transaction Price" means $32.9955 per share of Buyer Class A Common
Stock.
"Transfer Tax" (or "Transfer Taxes" as the context may require) has
the meaning set forth in Section 6.17.
"Transferred Intellectual Property" means transferred patents,
transferred software and transferred trademarks as set forth on Schedule
4.8.
"Warrants" (or "Warrant" as the context may require) has the meaning
set forth in Section 3.5(a).
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"Warrant Measurement Date" has the meaning set forth in Section
3.5(a).
"Warrant Value Amount" has the meaning set forth in Section 3.5(a).
ARTICLE XII.
MISCELLANEOUS
Section 12.1. Publicity. So long as this Agreement is in effect, except
as may otherwise be required by law or stock exchange regulations, prior to
making a press release that any party (a "Releasing Party") may determine to
issue in connection with the transactions contemplated by this Agreement, the
Releasing Party will, to the extent possible, promptly notify the other party of
such conclusion and provide to the other party (the "Receiving Party") a draft
of such press release. If the Receiving Party disagrees with any statement made
by the Releasing Party in such press release, as issued, the Receiving Party
shall be entitled to issue its own press release regarding the matters covered
in the press release issued by the Releasing Party. Buyer and the Company shall
jointly distribute a press release in the form attached hereto as Exhibit D
announcing the Merger and related transactions.
Section 12.2. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered, express mail or nationally recognized courier service, postage
prepaid. Any such notice shall be deemed given when so delivered personally or
by courier or successfully telegraphed, telexed or sent by facsimile
transmission or, if mailed, five days after the date of deposit in the United
States mails, as follows:
(i) if to Buyer or Sub to:
Budget Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a concurrent copy to:
Budget Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and an additional concurrent copy to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy No.: 404-572-5100
(ii) if to the Company to:
Ryder TRS, Inc.
One Civic Center
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a concurrent copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
One Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and an additional concurrent copy to:
Questor Management Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may by notice given in accordance with this Section 12.2 to the
other parties designate another address or person for receipt of notices
hereunder.
Section 12.3. Entire Agreement. This Agreement (including the Exhibits,
Annexes and Schedules hereto) and the agreements contemplated hereby contain the
entire agreement among the parties with respect to the subject matter hereof,
and supersede all prior agreements, written or oral, with respect thereto.
Notwithstanding the execution of this Agreement, the confidentiality letter by
and between Buyer and Questor, as the same may be amended, modified or
supplemented from time to time (the "Confidentiality Agreement"), shall remain
in full force and effect and shall not be superseded by this Agreement.
Section 12.4. Waivers and Amendments; Non Contractual Remedies;
Preservation of Remedies; Liability. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by each of the parties or, in the case of waiver, by
the party waiving compliance. After the Closing Date, no amendment or
modification may be made (i) to the definition of Special Covenants or to any
other provision of this Agreement that affects any of the rights of the Original
Holders with respect to the Special Covenants without the written consent of 51%
of the Original Holders or (ii) to Section 6.11 that adversely affects the
rights of the indemnified parties referred to thereunder. No delay on the part
of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof. Nor shall any waiver on the part of any party of any such
right, power or privilege, nor any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies of any party based
upon, arising out of or otherwise in respect of any inaccuracy in or breach of
any representation, warranty, covenant or agreement contained in this Agreement
shall in no way be limited by the fact that the act, omission, occurrence or
other state of facts upon which any claim of any such inaccuracy or breach is
based may also be the subject matter of any other representation, warranty,
covenant or agreement contained in this Agreement (or in any other agreement
between the parties) as to which there is no inaccuracy or breach. The
limitations on claims set forth in this Section 12.4 and elsewhere in this
Agreement (including Article X) shall not apply in the case of fraud on the part
of the Company, the Significant Stockholders or Buyer, as the case may be.
Section 12.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
Section 12.6. Binding Effect; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns and heirs and legal representatives. Neither this
Agreement, nor any right hereunder, may be assigned by any party without the
prior written consent of the other party hereto, provided however, that Buyer
may assign this Agreement or any of its rights hereunder to one or more of its
Subsidiaries so long as Buyer remains obligated hereunder, and provided further,
that
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notwithstanding anything in this Section 12.6, Buyer shall not be released from
its obligations under Article III of this Agreement.
Section 12.7. Third Party Beneficiaries. Except for Article III, Sections
6.10 (Buyer Board of Directors), 6.17 (Transfer Taxes), 6.20 (Buyer Stock
Purchases and Repurchases), 6.21 (Listing), 6.22 (Registration Rights), 9.3
(Certain Material Breaches) and 10.3 (Fees and Expenses), this Section 12.7 and
Exhibit E (collectively, the "Special Covenants"), nothing in this Agreement is
intended or shall be construed to give any person, other than the parties
hereto, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein. On and after the Closing Date,
each of the holders of Original Shares shall be deemed to be third party
beneficiaries with respect to the Special Covenants, and each shall be entitled
to enforce such provisions directly against Buyer or the Surviving Corporation,
as applicable, to the same extent as if such person were a party hereto. In
addition, each of the indemnified parties referred to in Section 6.11 shall be
entitled to enforce the provisions thereof directly against Buyer or the
Surviving Corporation, as applicable, to the same extent as if such indemnified
person were a party hereto.
Section 12.8. Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
Section 12.9. Exhibits, Schedules and Annexes. The Exhibits, Schedules
and Annexes are a part of this Agreement as if fully set forth herein. All
references herein to Articles, Sections, subsections, clauses, Exhibits, Annexes
and Schedules shall be deemed references to such parts of this Agreement, unless
the context shall otherwise require.
Section 12.10. Headings. The headings in this Agreement are for reference
only, and shall not affect the interpretation of this Agreement.
Section 12.11. Submission to Jurisdiction; Venue. Any action or
proceeding against any party hereto with respect to this Agreement, except for
(a) any action, proceeding or other dispute with respect to any calculations
made under Section 3.5 (which shall be resolved in the manner set forth in
Section 3.5(c)), and (b) any action, proceeding or dispute with respect to any
adjustment to the Aggregate Merger Shares (which shall be resolved in accordance
with Sections 3.3 and 9.3 of this Agreement and in accordance with Section 2.1
of the Holdback Escrow Agreement), shall be brought in the Court of Chancery of
the State of Delaware or if (but only if) such court does not have subject
matter jurisdiction over such action or proceedings, in the courts of the state
of Delaware and, by execution and delivery of this Agreement, each party hereto
hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. Each party hereto
irrevocably consents to the service of process at any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such party at its address set
forth in Section 12.2, such service to become effective thirty days after such
mailing. Nothing herein shall affect the right of any party hereto to serve
process on any other party hereto in any other manner permitted by law. Each
party hereto irrevocably waives any objection which it may now have or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement brought in the courts
referred to above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
Section 12.12. Severability. If any court of competent jurisdiction
determines that any provision of this Agreement is not enforceable in accordance
with its terms, then such provision shall be deemed to be modified so as to
apply such provision, as modified, to the protection of the legitimate interests
of the parties hereto to the fullest extent legally permissible and shall not
affect the validity or enforceability of the remaining provisions of this
Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
BUDGET GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief Executive Officer
BDG CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
President
RYDER TRS, INC.
By: /s/ ▇▇▇ ▇▇▇▇
------------------------------------
▇▇▇ ▇▇▇▇
Chairman of the Board
and Chief Executive Officer
With respect to Sections 3.4(g), 6.1, 6.3, 6.4(a), 6.9(b), 6.12, 6.18 and
6.20 hereof
QUESTOR PARTNERS FUND, L.P.,
By: Questor General Partner, L.P.,
its General Partner
By: Questor Principals, Inc.,
its General Partner
By: /s/ ▇▇▇ ▇▇▇▇
------------------------------------
▇▇▇ ▇▇▇▇
Managing Principal
QUESTOR SIDE-BY-SIDE PARTNERS, L.P.,
By: Questor Principals, Inc.,
its General Partner
By: /s/ ▇▇▇ ▇▇▇▇
------------------------------------
▇▇▇ ▇▇▇▇
Managing Principal
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With respect to Sections 6.3(b), 6.18 and 6.20 hereof
MADISON DEARBORN CAPITAL PARTNERS, L.P.
By: Madison Dearborn Partners, L.P.,
its General Partner
By: Madison Dearborn Partners, Inc.
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
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EXHIBIT A
WARRANT ASSUMPTIONS
A nationally recognized investment banking firm with significant experience
in the equity derivatives market selected by a majority in interest of the
Original Holders and reasonably satisfactory to Buyer shall determine the
aggregate number of shares issuable upon exercise of the Warrants.
The term of the Warrants will be fixed at five years after the Warrant
Measurement Date.
The exercise price will be 25% above the Market Value as of the Final
Measurement Date.
The valuation methodology for the Warrant will be the then applicable
valuation methodology employed in the dealer market. Concurrently with
delivering its opinion on the determination to the holders and Buyer, the dealer
will also deliver to Buyer and to holders a standing bid at a value price equal
to the Warrant Value Amount for 30 days.
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EXHIBIT B
HOLDBACK ESCROW AGREEMENT
THIS AGREEMENT is made and entered into on this day of
1998 by and among Budget Group, Inc., a Delaware corporation ("Buyer"), Ryder
TRS, Inc., a Delaware corporation (the "Company"), [ ], as Escrow
Holdback Agent (the "Escrow Holdback Agent"), and [ ], as
representative (the "Indemnification Representative") of each of the Company's
stockholders listed on Schedule I hereto (the "Original Holders"). Unless
otherwise indicated, all capitalized terms herein shall have the meaning
ascribed to such terms in the Merger Agreement (as defined below). This
Agreement shall become effective at the Effective Time.
RECITALS
WHEREAS, Buyer and its wholly-owned subsidiary, BDG Corporation, a Delaware
corporation ("Sub"), have entered into an Agreement and Plan of Merger with the
Company (the "Merger Agreement"), dated as of March 4, 1998, providing for the
merger of Sub with and into the Company (the "Merger");
WHEREAS, the Merger Agreement provides that, at the Effective Time, certain
shares of Buyer Class A Common Stock to be issued pursuant to the Merger
Agreement to the Original Holders will be deposited in escrow pursuant to this
Agreement; and
WHEREAS, pursuant to the terms of the Merger Agreement, the Original
Holders have appointed the Indemnification Representative to act on their behalf
in connection with their rights and obligations hereunder.
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants contained in the Merger Agreement and herein, the parties agree as
follows:
ARTICLE I
ESCROW AND ESCROW HOLDBACK SHARES
1.1 Deposit of Escrow Holdback Shares. At the Effective Time, Buyer shall
deposit into an escrow account (the "Escrow Account") with the Escrow Holdback
Agent stock certificates representing that number of shares of Buyer Class A
Common Stock (the "Escrow Holdback Shares") equal to [ ].
Certificates representing the Escrow Holdback Shares shall be registered in the
name of [ ], as Escrow Holdback Agent. The Escrow Holdback Shares
shall be available to satisfy claims for Damages (as defined below) and shall be
held and distributed by the Escrow Holdback Agent in accordance with the terms
and conditions of this Agreement and the Merger Agreement.
1.2 Pro Rata Portion. For purposes of this Agreement, "Pro Rata Portion",
with respect to any Original Holder, shall mean that Original Holder's pro rata
portion of the total number of Escrow Holdback Shares based on the total number
of shares of Buyer Class A Common Stock issued to such Original Holder at the
Effective Time pursuant to Sections 3.1 and 3.7 of the Merger Agreement and the
total number of shares of Buyer Class A Common Stock issuable to all Original
Holders at the Effective Time pursuant to Sections 3.1 and 3.7 of the Merger
Agreement.
ARTICLE II
APPLICATION OF ESCROW
2.1 Indemnification Obligations. (a) From and after the Effective Time and
subject to the other provisions of this Agreement and the Merger Agreement,
pursuant to and in accordance with Section 3.3 and Article IX of the Merger
Agreement if Buyer becomes entitled upon the occurrence of certain adjustment
events set forth in Section 3.3 that result in a value reduction to Buyer in
accordance with Section 3.3 (the
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"Damages"), to an adjustment pursuant to Section 3.3, it shall be entitled to
receive Escrow Holdback Shares from each Original Holder based upon such
Original Holder's Pro Rata Portion; provided, however, that such return of the
Escrow Holdback Shares shall be made only to the extent provided in Section 3.3
of the Merger Agreement; and provided, further, that the foregoing deduction
shall not apply to Damages with respect to which Buyer failed to notify the
Indemnification Representative within 120 days after the Closing Date (the
"Cut-off Date").
(b) The obligations of the Original Holders under this Section 2.1 with
respect to Damages under the Merger Agreement shall not continue beyond the
Cut-off Date unless, prior to such date, Buyer shall have given to the
Indemnification Representative, with a copy to the Escrow Holdback Agent, a
notice of its claim (a "Notice of Claim") for indemnification hereunder, which
Notice of Claim shall be in writing, shall specify in reasonable detail the
basis for such claim, shall be based upon Buyer's good faith belief and shall
specify the amount of Damages (the "Claimed Amount").
(c) Notwithstanding the foregoing, if the Closing occurs, Buyer's sole
remedy with respect to any Damages shall be to make claims against the Escrow
Holdback Shares under this Agreement, except that any failure of any Significant
Stockholder to perform any covenant on or prior to the date hereof contained in
Sections 6.16, 6.18 and 6.20 of the Merger Agreement shall entitle the party or
parties to whom such covenant runs to seek damages from the breaching party
thereto.
(d) For all purposes of this Agreement, the deemed value per Escrow
Holdback Share for purposes of determining the amount of any compensation
payable hereunder shall be the Transaction Price.
(e) The amount of any Damages incurred by Buyer shall be reduced by the net
amount that Buyer, the Company or any of their affiliates actually recovers in
respect of insurance recoveries and insurance proceeds (exclusive of self
insurance), and shall be adjusted to reflect the present economic value of any
tax benefits recognized by Buyer, the Company or any of their controlled
affiliates as a result of such Damages.
2.2 Indemnification Procedures. (a) Upon the commencement of any action,
suit or proceeding relating to a third party claim for which indemnification may
be sought hereunder, Buyer shall promptly give the Indemnification
Representative a Notice of Claim; provided, however, that such action, suit or
proceeding is instituted prior to the Cut-off Date. Within 20 calendar days
after delivery of a Notice of Claim, the Indemnification Representative may,
upon written notice thereof to Buyer, assume control of the defense of such
action, suit or proceeding with counsel reasonably satisfactory to Buyer. If the
Indemnification Representative does not so assume control of such defense, Buyer
shall control such defense. The party not controlling such defense may
participate therein at its own expense; provided that, if the Indemnification
Representative assumes control of such defense and Buyer reasonably believes it
is advisable for it to be represented by separate counsel because there exists a
conflict of interest between its interests and those of the Indemnification
Representative with respect to such claim, or there exist defenses available to
Buyer which may not be available to the Indemnification Representative, or if
the Indemnification Representative shall fail to assume responsibility for such
defense, Buyer may retain counsel satisfactory to it and the reasonable fees and
expenses of counsel to Buyer shall be considered "Damages" for purposes of this
Agreement. The party controlling such defense shall keep the other party advised
of the status of such action, suit or proceeding and the defense thereof and
shall consider in good faith recommendations made by the other party with
respect thereto.
(b) Buyer shall not agree to any settlement of any action, suit or
proceeding without the prior written consent of the Indemnification
Representative, which consent shall not be unreasonably withheld or delayed. The
Indemnification Representative shall not, without the consent of Buyer, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to Buyer
of a full and unconditional release from all liability in respect to such claim
or litigation or which requires action other than the payment of money by the
Indemnification Representative. Upon the settlement or the entry of a judgment
with respect to a third party claim, Buyer and the Indemnification
Representative shall notify the Escrow Holdback Agent of the amount of Damages
with respect thereto and the number of Escrow Holdback Shares that are payable
hereunder.
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(c) For indemnification claims not involving any claim or legal proceeding
by a third party, the procedures in this subsection (c) shall apply. Within 30
calendar days after delivery of a Notice of Claim, provided that the Notice of
Claim was received prior to the Cut-off Date, the Indemnification Representative
shall provide to Buyer, with a copy to the Escrow Holdback Agent, a written
response (the "Response Notice") in which the Indemnification Representative
shall: (i) agree that some or all of the Escrow Holdback Shares having a value
(as computed pursuant to Section 2.1(d)) equal to the full Claimed Amount may be
released to Buyer, (ii) agree that some of the Escrow Holdback Shares having a
value equal to part, but not all, of the Claimed Amount (the "Agreed Amount")
may be released to Buyer, or (iii) contest that any of the Escrow Holdback
Shares may be released to Buyer or Sub. The Indemnification Representative may
contest the release of the Escrow Holdback Shares having a value equal to all or
a portion of the Claimed Amount only based upon a good faith belief that all or
such portion of the Claimed Amount does not constitute Damages for which Buyer
or Sub is entitled to indemnification hereunder. If no Response Notice is
delivered by the Indemnification Representative within such 30-day period, the
Indemnification Representative shall be deemed to have agreed that some or all
of the Escrow Holdback Shares having a value equal to all of the Claimed Amount
may be released to Buyer, and the Escrow Holdback Agent shall not be required to
obtain the consent of the Indemnification Representative prior to the
distribution of such Escrow Holdback Shares.
(d) If the Indemnification Representative in the Response Notice agrees (or
is deemed to have agreed) that some or all of the Escrow Holdback Shares having
a value (as computed pursuant to Section 2.1(d)) equal to some or all of the
Claimed Amount may be released to Buyer, the Escrow Holdback Agent shall,
promptly following the earlier of the required delivery date for the Response
Notice or the delivery of the Response Notice, transfer, deliver and assign to
Buyer such amount of Escrow Holdback Shares which have a value equal to the
portion of the Claimed Amount not contested by the Indemnification
Representative (or such lesser amount of Escrow Holdback Shares as is then
held).
(e) If the Indemnification Representative in the Response Notice contests
the release of Escrow Holdback Shares having a value equal to all or part of the
Claimed Amount (the "Contested Amount"), the Indemnification Representative and
Buyer shall attempt promptly and in good faith to agree upon the rights of the
parties with respect to the Contested Amount. If the Indemnification
Representative and Buyer should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties and, if such agreement
provides that all or a portion of the Contested Amount is to be paid to Buyer,
the Escrow Holdback Agent shall transfer, assign and deliver to Buyer a number
of Escrow Holdback Shares which have a value (as computed pursuant to Section
2.1(d)) equal to the amount so agreed. If no such agreement can be reached after
good faith negotiation within 30 calendar days of the delivery of the
Indemnification Representative's Response Notice (or such longer period as Buyer
and the Indemnification Representative may mutually agree), the matter shall be
settled by binding arbitration in Wilmington, Delaware.
(f) All claims shall be settled by a single arbitrator mutually agreeable
to Buyer and the Indemnification Representative, or if they cannot agree on a
single arbitrator within ten calendar days after commencement of the
arbitration, by three arbitrators, in accordance with the Commercial Arbitration
Rules then in effect of the American Arbitration Association (the "AAA Rules").
If a single arbitrator has not been mutually agreed upon, the Indemnification
Representative and Buyer shall each designate one arbitrator within five (5)
calendar days of the commencement of the arbitration. The Indemnification
Representative and Buyer shall cause such designated arbitrators mutually to
agree upon and designate a third arbitrator; provided, however, that (i) failing
such agreement within ten (10) calendar days of the commencement of the
arbitration, the third arbitrator shall be appointed in accordance with the AAA
Rules, and (ii) if either the Indemnification Representative or Buyer fails to
timely designate an arbitrator, the dispute shall be resolved by the one
arbitrator timely designated. The Original Holders and Buyer shall pay the fees
and expenses of their respectively designated arbitrators and shall bear equally
the fees and expenses of the third arbitrator (or of the sole arbitrator, in the
event a single arbitrator decides the matter). The arbitrators' decision shall
relate solely to whether Buyer is entitled to receive the Contested Amount (or a
portion thereof) pursuant to the applicable terms of the Merger Agreement and
this Agreement. The final decision of the arbitrator, or the majority of the
arbitrators in the case of three arbitrators, shall be furnished to the
Indemnification
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Representative, Buyer or Sub and the Escrow Holdback Agent in writing no later
than 30 calendar days after appointment of the sole arbitrator (or third
arbitrator in cases where there are three arbitrators) and shall constitute a
conclusive determination of the issue in question, binding upon the
Indemnification Representative, the Original Holders or Buyer and the Escrow
Holdback Agent, and shall not be contested by any of them. Such decision may be
used in a court of law only for the purpose of seeking enforcement of the
arbitrators' award. The Escrow Holdback Shares will be distributed in accordance
with the final decision of the arbitrator.
(g) In the event the arbitrator, or the majority of arbitrators, decide
Buyer is entitled to receive the Contested Amount (or a portion thereof)
pursuant to the applicable terms of the Merger Agreement and this Agreement,
within 10 days upon receipt of written notification of such decision from the
arbitrator(s), the Escrow Holdback Agent shall release to Buyer some or all of
the Escrow Holdback Shares having a value (as computed pursuant to Section
2.1(d)) equal to the Claimed Amount (or portion thereof) as set forth in the
notice from the arbitrator(s).
(h) Any and all claims for indemnification shall be asserted in writing
before the Cut-off Date.
2.3 Distribution of Escrow Holdback Shares. (a) The Escrow Holdback
Shares not returned to Buyer shall be held by the Escrow Holdback Agent until
the 120th day after the Closing Date (such date, the "Termination Date"), at
which time the Escrow Holdback Agent shall distribute to Original Holders the
Escrow Holdback Shares set forth opposite such Original Holder's name on
Schedule I hereto, less (i) a number of Escrow Holdback Shares sufficient to
satisfy any pending claims, and (ii) the number of shares retained by the
Indemnification Representative to cover the reasonable expenses incurred by the
Indemnification Representative hereunder.
(b) Buyer and the Indemnification Representative shall jointly notify the
Escrow Holdback Agent of the number of Escrow Holdback Shares to be distributed
to each Original Holder no later than six Business Days after the Termination
Date. In the event either Buyer or the Indemnification Representative fails to
so notify the Escrow Holdback Agent within six (6) Business Days after the
Termination Date, the Escrow Holdback Agent may act on the instruction of the
more diligent party giving notice to the Escrow Holdback Agent. The Escrow
Holdback Shares in the Escrow Account not so distributed shall be retained by
the Escrow Holdback Agent until all pending claims are resolved.
2.4 Ownership of Escrow Holdback Shares; Voting Rights. Each Original
Holder shall have all indicia of ownership of the Escrow Holdback Shares while
they are held in escrow, including, without limitation, the rights to vote such
shares and receive distributions thereon and the obligations to pay all taxes,
assessments and charges with respect thereto; provided, however, that any
distribution (other than ordinary distributions of cash paid as a dividend by
Buyer), on or with respect to such Escrow Holdback Shares, and any other shares
or securities into which such Escrow Holdback Shares may be changed or for which
they may be exchanged pursuant to corporate action of Buyer affecting holders of
Buyer's capital stock generally, shall be delivered to and held by the Escrow
Holdback Agent in escrow and shall be subject to the provisions of this
Agreement. Any distribution with respect to an Escrow Holdback Share which is
delivered to and held in Escrow hereunder shall be either distributed to the
Original Holders or returned to Buyer in the same manner as the Escrow Holdback
Shares to which such distribution relates.
ARTICLE III
MISCELLANEOUS
3.1 Notices. Any notice or other communication required or permitted to be
given by one of the parties hereto to the other under this Agreement shall be
considered as properly given if duly reduced to writing and (i) delivered in
person, or (ii) mailed by first class mail, registered or certified, with return
receipt requested and postage prepaid, or (iii) transported by official carrier
(with notice of receipt requested and postage prepaid) to the party entitled
thereto and if mailed or transported, addressed to the respective addresses set
forth below (or such other address as may have been prior thereto specified by
notice given as contemplated
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by this section) and, if to the Original Holders, to the address of such
stockholder as set forth in the stock record books of the Company, and:
(a) If to the Indemnification Representative:
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Buyer:
Budget Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Escrow Holdback Agent:
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
3.2 Termination. This Agreement will terminate when all of the Escrow
Holdback Shares in the Escrow Account have been distributed according to its
terms, except Section 3.9, which shall remain in full force and effect for so
long as the Escrow Holdback Agent may have any liability hereunder.
3.3 Entire Agreement. This Agreement represents the entire agreement by
and among Buyer, the Company, the Original Holders, the Indemnification
Representative and the Escrow Holdback Agent with respect to the subject matter
hereof and supersedes any prior written or oral agreements concerning the same.
This Agreement does not affect the Merger Agreement or any agreement entered
into contemporaneously therewith and herewith.
3.4 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Delaware without giving effect to conflicts of laws
principles.
3.5 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provisions shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
3.6 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties and their respective
successors and permitted assigns.
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3.7 Amendment. This Agreement may not be amended, and no terms of this
Agreement may be waived, without the specific written consent of the parties
that are signatories to this Agreement, and no waiver shall constitute a waiver
of any subsequent events.
3.8 Counterparts. This Agreement may be signed in counterparts, each of
which shall be deemed an original and all of which shall constitute one
agreement.
3.9 Escrow Holdback Agent. (a) The Escrow Holdback Agent shall have no
responsibility or obligation of any kind in connection with the Escrow Holdback
Shares, and shall not be required to deliver the same or any part thereof or
take any action with respect to any matters that might arise in connection
therewith, other than to receive, hold and make delivery of the Escrow Holdback
Shares as herein provided or by reason of a judgment or order of a court of
competent jurisdiction or arbitrator's award.
(b) The Escrow Holdback Agent shall not be bound by any agreement between
any of the other parties hereto, irrespective of whether the Escrow Holdback
Agent has knowledge of the existence of any such agreement or terms and
provisions thereof, the Escrow Holdback Agent's only duty, liability and
responsibility being to receive, hold and deliver the Escrow Holdback Shares as
herein provided. The Escrow Holdback Agent shall not be required in any way to
determine the validity or sufficiency, whether in form or substance, of the
Escrow Holdback Shares or of any instrument, document, certificate, statement or
notice referred to in this Agreement or contemplated hereby, or the identity or
authority of the persons executing the same, and it shall be sufficient if any
writing purporting to be such instrument, document, certificate, statement or
notice that is delivered to the Escrow Holdback Agent purports on its face to be
correct in form and signed or otherwise executed by the party or parties
required to sign or execute the same under this Agreement.
(c) Should any controversy arise between Buyer and the Indemnification
Representative, or any other person, firm or entity, with respect to this
Agreement, the Escrow Holdback Shares, or any part thereof, or the right of any
party or other person to receive the Escrow Holdback Shares, or should Buyer or
the Indemnification Representative fail to designate another Escrow Holdback
Agent as provided below in paragraph (i), or if the Escrow Holdback Agent should
be in doubt as to what action to take, the Escrow Holdback Agent shall have the
right (but not the obligation) to (i) withhold delivery of the Escrow Holdback
Shares until the controversy is resolved, the conflicting demands are withdrawn
or its doubt is resolved, and/or (ii) institute a ▇▇▇▇ of interpleader in any
court of competent jurisdiction to determine the rights of the parties hereto
(the right of the Escrow Holdback Agent to institute such ▇▇▇▇ of interpleader
shall not, however, be deemed to modify the manner in which the Escrow Holdback
Agent is entitled to make disbursements of the Escrow Holdback Shares as
hereinabove set forth other than to tender the Escrow Holdback Shares into the
registry of such court). Should a ▇▇▇▇ of interpleader be instituted, or should
the Escrow Holdback Agent be threatened with litigation or become involved in
litigation in any manner whatsoever on account of this Agreement or the Escrow
Holdback Shares, then as between themselves and the Escrow Holdback Agent, Buyer
hereby binds itself and its successors and assigns to pay the Escrow Holdback
Agent its attorney's fees and any and all other disbursements, expenses, losses,
costs and damages of the Escrow Holdback Agent in connection with or resulting
from such threatened or actual litigation, provided that the Escrow Holdback
Agent has given Buyer prompt notice of any such litigation.
(d) Without in any way limiting any other provisions of this Agreement, it
is expressly understood and agreed that the Escrow Holdback Agent shall be under
no duty or obligations to give any notice, or to do or to omit the doing of any
action or anything with respect to the Escrow Holdback Shares, except to make
disbursements in accordance with the terms of this Agreement. The Escrow
Holdback Agent shall not be liable for any error in judgment or any act or steps
taken or permitted to be taken in good faith, or for any mistake of law or fact,
or for anything it may do or refrain from doing in connection herewith, except
for its own willful misconduct or gross negligence.
(e) Buyer agrees to indemnify the Escrow Holdback Agent against and hold
the Escrow Holdback Agent harmless from any and all losses, costs, damages,
expenses, claims and attorney's fees suffered or incurred by the Escrow Holdback
Agent as a result of, in connection with or arising from or out of the acts or
omissions of Escrow Holdback Agent in the performance of or pursuant to this
Agreement, except such acts or omission as may result from the Escrow Holdback
Agent's willful misconduct or gross negligence.
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(f) The Escrow Holdback Agent may consult with its counsel or other counsel
satisfactory to it in respect to any question relating to its duties or
responsibilities hereunder or otherwise in connection herewith and shall not be
liable for any action taken, suffered or omitted by it in good faith upon the
advice of such counsel. The Escrow Holdback Agent may act through its officers,
employees, agents and attorneys.
(g) All of the Escrow Holdback Agent's rights hereunder are cumulative of
any other rights it may have by law or otherwise.
(h) The Escrow Holdback Agent shall be entitled to reimbursement from Buyer
for one-half, and from the Original Holders for one-half, of its aggregate costs
and expenses, including fees and expenses of legal counsel, incurred by it in
connection with the preparation, operation, administration and enforcement of
this Agreement.
(i) The Escrow Holdback Agent may resign upon 10 days prior written notice
to Buyer and the Indemnification Representative and, upon joint instructions of
Buyer and the Indemnification Representative, shall deliver the Escrow Holdback
Shares to any designated substitute Escrow Holdback Agent selected by Buyer and
the Indemnification Representative. If such parties fail to designate a
substitute Escrow Holdback Agent within 10 days, the Escrow Holdback Agent may,
in its sole discretion and its sole option, institute a ▇▇▇▇ of interpleader as
contemplated by paragraph (c) above.
(j) Each of Buyer and the Original Holders agree to pay one-half of the
aggregate the amounts payable to the Escrow Holdback Agent as set forth in the
fee schedule in Schedule II hereto in connection with the services rendered
hereunder.
(k) In the event of a dispute between the Escrow Holdback Agent and Buyer
hereunder, such dispute shall be resolved by the parties pursuant to binding
arbitration, in the manner set forth in Section 2.2(f) hereto.
3.10 Indemnification Representative. The Indemnification Representative is
acting as the agent of the Original Holders. In the event the Indemnification
Representative incurs any expenses in exercising his and the Original Holders'
rights hereunder, he shall be entitled to receive from time to time (prior to
any distribution of Escrow Holdback Shares to the Original Holders) Escrow
Holdback Shares from the Escrow Account to pay any expenses incurred by him
hereunder or to contribution from each Original Holder based upon such Original
Holder's Pro Rata Portion.
3.11 Fractional Shares. Buyer shall not be obligated to deliver any
fractional shares of stock under this Escrow Agreement. In the event that at any
time the number of shares to be delivered would otherwise include a fraction,
Buyer shall redeem such fractional share at a price equal to such fraction
multiplied by the Transaction Price.
3.12 Incapacity of Indemnification Representative. In the event of the
incapacity of the Indemnification Representative, a new Indemnification
Representative shall be appointed by the holders of a majority of the Escrow
Holdback Shares which remain subject to this Agreement, which appointment shall
be promptly notified to the Escrow Holdback Agent and Buyer.
50
56
IN WITNESS WHEREOF, the parties to this Agreement have duly executed the
same on the day and year first above written.
BUYER
By:
------------------------------------
Name:
Title:
INDEMNIFICATION REPRESENTATIVE:
--------------------------------------
-------------------------------------,
as Escrow Holdback Agent
By:
------------------------------------
Institutional Trust Officer
51
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EXHIBIT C
LETTER OF CREDIT
[LETTERHEAD]
IRREVOCABLE STANDBY
LETTER OF CREDIT NO. March 4, 1998
Ryder TRS, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sir or Madam:
1. We hereby establish in your favor our Irrevocable Letter of Credit No.
(this "Letter of Credit"), which shall be effective immediately and
expire as set forth herein, wherein you are hereby irrevocably authorized to
draw on this Letter of Credit for the account of our customer Budget Rent A Car
Corporation (the "Account Party"), in an aggregate amount not exceeding TWENTY
MILLION UNITED STATES DOLLARS (US$20,000,000) (the "Stated Amount"), available
by your sight drafts upon the terms and conditions hereinafter set forth. This
Letter of Credit is delivered pursuant to Section 6.8 of that certain Agreement
and Plan of Merger, dated as of March 4, 1998 (such Agreement and Plan of
Merger, as amended or otherwise modified from time to time, being hereinafter
referred to as the "Merger Agreement"), among Budget Group, Inc., BDG
Corporation, Ryder TRS, Inc. and certain other parties named therein.
2. We hereby irrevocably authorize you to draw on us in an aggregate amount
not to exceed the Stated Amount or such lesser amount in accordance with and
subject to the terms and conditions hereinafter set forth (i) in a single
drawing by your draft referring thereon to the number of this Letter of Credit,
payable at sight on a Business Day (as hereinafter defined) and accompanied by
your written and completed certificate signed by you in substantially the form
of Attachment I attached hereto (such draft, together with such certificate,
being your "Non-Regulatory Termination Draft"), an amount not exceeding the
Stated Amount of this Letter of Credit or (ii) in a single drawing by your draft
referring thereon to the number of this Letter of Credit, payable at sight on a
Business Day and accompanied by your written and completed certificate signed by
you in substantially the form of Attachment II attached hereto (such draft,
together with such certificate, being your "Regulatory Termination Draft", and
together with the Non-Regulatory Termination Draft, the "Drafts") an amount not
exceeding $7,500,000. Drafts presented hereunder shall be dated the date of
presentation and shall be presented with this Letter of Credit at our office at
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, (212-322-0046), or at such other office as we may designate by
written notice to you. Presentation of the Drafts shall be made by physical
presentation of the Drafts. As used herein, "Business Day" shall mean a day on
which banks in New York City are not required or authorized by law or executive
order to remain closed.
3. We hereby agree that a Draft drawn under and in compliance with the
terms of this Letter of Credit will be duly honored by us if presented as
specified on or before the Termination Date (as defined below). We will honor
such Draft without any inquiry or question whatsoever, including inquiry or
question as to the rights between you and the Account Party. If a presentation
in respect of payment is made by you hereunder at or prior to 11:00 A.M. (New
York City time) on a Business Day on or prior to the Termination Date in strict
conformity with the terms and conditions hereof, payment shall be made to you or
your designee of the amount specified, in immediately available funds, not later
than 5:00 P.M. (New York City time) on such Business Day. If a presentation in
respect of payment is made by you hereunder after 11:00 A.M. (New York City
time) on a Business Day on or prior to the Termination Date in strict conformity
with the terms and conditions hereof, payment shall be made to you or your
designee of the amount specified, in immediately available funds, not later than
5:00 P.M. (New York City time) on the next succeeding Business Day
(notwithstanding that such Business Day may be after the Termination Date).
52
58
4. Upon the payment to you or to your designee of the amount specified in a
Draft drawn hereunder, we shall be fully discharged of our obligation under this
Letter of Credit, and we will not thereafter be obligated to make any further
payments under this Letter of Credit to you or any other person.
5. Unless extended in writing by us, this Letter of Credit shall expire on
the date earliest to occur (such earliest date being the "Termination Date") of
(i) December 15, 1998 (such date, as it may be extended in writing by us, the
"Stated Termination Date"), (ii) the date we shall have received notice from the
Account Party and you that the Merger Agreement has terminated in a manner not
permitting the Beneficiary to make a drawing pursuant to the terms of the Merger
Agreement or that the Merger (as defined in the Merger Agreement) has been
consummated, (iii) the date you surrender this Letter of Credit for
cancellation, and (iv) the date we have made payment to you or your designee of
the amount specified in a Draft drawn hereunder. In no event shall any drawing
hereunder be presented after the then-effective Stated Termination Date.
Promptly following the Termination Date, you shall surrender this Letter of
Credit to us for cancellation, if you have not previously done so.
6. This Letter of Credit is subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce,
Publication No. 500 (as the same may be amended and supplemented from time to
time, the "Uniform Customs"), and, to the extent not inconsistent therewith, the
laws of the State of New York, United States of America. All actions arising out
of this Letter of Credit or the enforcement thereof shall be decided by any
court of the State of New York or any U.S. Federal court sitting in the State of
New York.
7. This Letter of Credit, or any right hereunder, may not be transferred.
8. Communications (other than drawings) with respect to this Letter of
Credit shall be in writing and shall be addressed to us at 5 World Trade Center,
8(th) Floor, Trade Services Department, New York, New York 10048-0928,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ((▇▇▇) ▇▇▇-▇▇▇▇) or at such other office as we may
designate by written notice to you, or by facsimile transmission received by us
at: (▇▇▇) ▇▇▇-▇▇▇▇ or at such other number as we may designate by written notice
to you, in each case specifically referring to the number of this Letter of
Credit.
9. This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein, except
only a Draft presented hereunder; and any such reference shall not be deemed to
incorporate herein by reference any document, instrument or agreement except as
set forth above.
Very truly yours
CREDIT SUISSE FIRST BOSTON
NEW YORK BRANCH
By:
--------------------------------------
Name
Title: Vice President
By:
--------------------------------------
Name
Title: Assistant Vice President
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ATTACHMENT I
THIS ATTACHMENT IS AN INTEGRAL PART OF
CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH'S
LETTER OF CREDIT NO.
DATED MARCH 4, 1998.
[DATE]
Credit Suisse First Boston, New York Branch
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Re: Certificate for Payment under Letter of Credit/
Non-Regulatory Termination Draft
Gentlemen:
We refer to Irrevocable Letter of Credit No. of Credit
Suisse First Boston, New York Branch (the "Letter of Credit"). Any term that is
defined in the Letter of Credit shall have the same meaning when used herein as
in the Letter of Credit. The undersigned, being a duly authorized officer of
Ryder TRS, Inc. (the "Beneficiary"), does hereby certify to you that:
1. I am the of the Beneficiary, for whose benefit the
Letter of Credit was issued and I am authorized to make this certification
to you.
2. The Merger Agreement has terminated in a manner giving rise to the
payment contemplated by Section 10.3(b) thereof.
3. We demand payment in the amount of Twenty Million United States
Dollars (US$20,000,000).
IN WITNESS WHEREOF, this Certificate has been executed and delivered by the
Beneficiary on the day of 199 .
Ryder TRS, Inc.
By:
------------------------------------
Name
Title
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ATTACHMENT II
THIS ATTACHMENT IS AN INTEGRAL PART OF
CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH'S
LETTER OF CREDIT NO.
DATED MARCH 4, 1998
[DATE]
Credit Suisse First Boston, New York Branch
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Re: Certificate for Payment under Letter of Credit/
Regulatory Termination Draft
Gentlemen:
We refer to Irrevocable Letter of Credit No. of Credit
Suisse First Boston, New York Branch (the "Letter of Credit"). Any term that is
defined in the Letter of Credit shall have the same meaning when used herein as
in the Letter of Credit. The undersigned, being a duly authorized officer of
Ryder TRS, Inc. (the "Beneficiary"), does hereby certify to you that:
1. I am the of the Beneficiary, for whose benefit the Letter
of Credit was issued and I am authorized to make this certification to you.
2. The Merger Agreement has terminated in a manner giving rise to the
payment contemplated by Section 10.3(a) thereof.
3. We demand payment in the amount of Seven Million Five Hundred
Thousand United States Dollars (US$7,500,000).
IN WITNESS WHEREOF, this Certificate has been executed and delivered by the
Beneficiary on the day of , 199 .
Ryder TRS, Inc.
By:
--------------------------------------
Name
Title
55
61
EXHIBIT D
PRESS RELEASE
Contact:
▇▇▇▇▇ ▇▇▇▇▇
Executive Vice President
Corporate Development &
Investor Relations
Budget Group, Inc.
630-955-7600
▇▇▇▇▇ ▇▇▇▇▇
Director, Public Relations
Budget Group, Inc.
▇▇▇-▇▇▇-▇▇▇▇
BUDGET GROUP TO ACQUIRE RYDER TRS THROUGH MERGER AGREEMENT
WITH QUESTOR PARTNERS
--Nation's #2 Consumer Truck Rental Company to Strengthen Budget Group's
Growing Transportation-Related Companies Network--
Daytona Beach, FL, March 4, 1998 -- Budget Group, Inc. (NYSE:BD) today
announced the signing of a merger agreement to acquire Ryder TRS, Inc. from an
investment group led by Questor Partners Fund, ▇.▇. ▇▇▇▇▇ TRS is the nation's
second-largest consumer truck rental company. Budget Group, through subsidiary
companies and their franchisees, operates Budget Car and Truck Rental, the third
largest car and truck rental system in the world.
Under the terms of the agreement, Ryder TRS will continue to operate from
its Denver headquarters as a wholly owned subsidiary of Budget Group. Ryder TRS
shareholders will receive up to $265 million comprised of $125 million in cash,
$120 million in Budget Group Class A common stock and up to $20 million of
contingent additional consideration in return for 100 percent of the outstanding
Ryder TRS stock. The stock portion of the agreement represents about 10 percent
of Budget Group's outstanding common stock, or approximately 3.6 million shares.
Budget Group will assume the Ryder TRS fleet debt of $266 million as well as
public notes of $175 million.
Budget Group expects the transaction to be slightly accretive to 1998
earnings and further accretive thereafter.
Ryder TRS has annual revenues of $545 million and a fleet of approximately
30,000 trucks and vans available for local and one-way rentals from 4,000
locations across the U.S. "The Ryder TRS transaction is consistent with our
strategy to build a synergistic network of transportation-related companies,"
said ▇▇▇▇▇ ▇▇▇▇▇▇, chairman and CEO of Budget Group. "Budget and Ryder TRS are
two of the most distinguished and trusted brand names in the vehicle rental
industry. Ryder TRS fits well with Budget Group's portfolio of car, truck, van
and recreational vehicle rental and sales holdings," ▇▇▇▇▇▇ noted.
Budget Group will align its current Budget Truck Rental operations,
recently acquired Cruise America (a leading RV rental and sales company in North
America), and the Ryder TRS company under a newly established truck rental
division.
Commenting on the benefits of the merger, ▇▇▇▇▇▇ stated, "With these three
separate entities under the same division, we will gain significant economics of
scale in fleet purchasing and management, vehicle maintenance, and in the costs
of parts, supplies and equipment. In addition, this union creates opportunities
to consolidate key administrative functions, such as fleet and yield management
systems. Ryder TRS' strong, effective dealer network combined with the
continuing successful performance of the Budget truck rental business, which has
recently experienced record growth in revenue and earnings, creates extensive
opportuni-
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ties to strengthen and grow the one-way and local truck rental operations
throughout North America and internationally."
"In the 17 months since its separation from Ryder Systems Inc., we have
transformed Ryder TRS into an aggressive stand-alone company with excellent
financial, marketing and general management expertise. Our dealer network is the
envy of the industry," said ▇▇▇ ▇▇▇▇, managing principal of Questor and chairman
of Ryder TRS. "Ryder TRS is becoming stronger than ever in the truck rental
business, but the global trend toward consolidation in the vehicle rental
industry is inevitable, with strategic mergers providing the most cost
efficiencies and greater access to the capital markets needed to build stronger
operating and financial performance. The shareholders of Ryder TRS look forward
to being shareholders of Budget Group."
The transaction has Ryder TRS shareholder approval and the approval of the
Budget Group board of directors. No further board or shareholder approvals are
required. Closing is expected to occur in the second quarter of 1998 following a
vote by Budget Group's shareholders to increase the number of authorized Class A
common shares. As a result of the merger, ▇▇▇ ▇▇▇▇ will be elected to the board
of directors of Budget Group. Alix was a past CEO and president of National Car
Rental, a former unit of General Motors now owned by Republic Industries. In
addition, the transaction is subject to the receipt of any necessary government
approvals.
Shareholders of Ryder TRS are an investment group headed by Questor
Partners Fund, L.P. The group, which also includes Madison Dearborn Capital
Partners and Societe General, purchased the consumer truck rental business of
Ryder Systems Inc. in October 1996 in a $575 million transaction comprised of
$125 million in equity and the balance financed with debt. These operations were
then renamed Ryder TRS.
Questor Management Company, Southfield, MI, manages Questor Partners Fund,
which was established to acquire "special situation" companies, including the
non-core divisions or subsidiaries of Fortune 1000 corporations. Its principals
include Alix, who is the founding partner of ▇▇▇ ▇▇▇▇ & Associates, a corporate
restructuring and turnaround consulting firm; ▇▇▇ ▇▇▇▇▇▇, co-founder of
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, former president of Transamerica
Corporation; and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, an attorney and a former executive at
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇. In addition to Ryder TRS, Questor Partners Fund's
portfolio includes Schwinn Cycling & Fitness, Boulder, CO, AP Automotive
Systems, Toledo, OH, and Channel Master, Smithfield, NC.
Budget Group, Inc., through subsidiary companies and their franchisees,
operates Budget Car and Truck Rental, the third largest worldwide car and truck
rental system, with over 3,200 airport and local market locations in more than
120 countries and territories. In addition, the Company owns Premier Car Rental,
which serves the insurance replacement market through a network of 150 locations
in 17 major U.S. markets. Budget Car Sales is one of the largest independent
retailers of late model vehicles in the United States, operating 26 retail car
sales facilities. The Company also operates airport parking facilities at
certain locations and through Van Pool Services leases 3,500 vans for van
pooling operations in 60 urban areas. On January 28, 1998, Budget Group acquired
Cruise America, one of North America's largest recreational vehicle rental and
sales companies, with a network of 91 locations and a fleet of more than 4,300
recreational vehicles, including motorhomes, truck campers and motorcycles.
Certain items in this press release may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 and as such may involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of
Budget or Ryder TRS to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such forward-looking statements speak only as of the date of this
press release. Budget and Ryder TRS expressly disclaim any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in Budget's or Ryder TRS'
expectations with regard thereto or any change in events, conditions or
circumstances on which any statement is based.
This press release does not constitute "proxy solicitation material" within
the meaning of Regulation 14A and Schedule 14A of the Securities Exchange Act of
1934, as amended. In addition, this press release shall
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not constitute an offer to sell or the solicitation of an offer to buy Budget
Class A common stock nor shall there be any sale of these securities in any
state in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
Note to Editors: FPS digital photo available via the Newscom bulletin
board system (BBS) and website (▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇.▇▇▇). Publications that are
not NewsCom subscribers can receive a free account for either delivery service.
Media can call for a temporary password at (800) 601-NEWS. Outside U.S., call
(▇▇▇) ▇▇▇-▇▇▇▇ or send an e-mail request to: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
For queries directly related to Questor Partners Fund, contact:
▇▇▇▇▇ ▇▇▇▇▇▇ at ▇▇▇ ▇▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
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EXHIBIT E
RIGHTS AND OBLIGATIONS WITH RESPECT TO
REGISTRABLE SECURITIES
The holders of Warrants granted pursuant to Section 3.5 of the Agreement
and Plan of Merger (the "Merger Agreement") and the Buyer Class A Common Stock
issued pursuant to Sections 3.2, 3.4 and 3.7 of the Merger Agreement and issued
upon exercise of, or in exchange for, any Warrants shall have the following
rights and obligations with respect to such shares:
1. Definitions. Capitalized terms used herein without definition shall
have the respective meanings set forth in the Merger Agreement. As used in this
Exhibit E, unless the context otherwise requires, the following terms have the
following respective meanings:
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange Act shall include a
reference to the comparable section, if any, of any such successor federal
statute.
"Majority Holders" means stockholders owning a majority of the
Registrable Securities outstanding at the time of determination.
"Registrable Securities" means (i) shares of Buyer Class A Common
Stock received in the Merger by the Original Holders (such Original Holders
and their transferees, the "Holders", and each such Original Holder and any
transferee a "Holder") at the Effective Time by virtue of the Merger, (ii)
Make-Whole Shares received by the Holders pursuant to Section 3.4 of the
Merger Agreement and their transferees, (iii) shares of Buyer Class A
Common Stock received by the Holders upon exercise of any Warrants issued
pursuant to Section 3.5 of the Merger Agreement and their transferees, (iv)
shares of Buyer Class A Common Stock received upon exercise of any Options
pursuant to Section 3.7 of the Merger Agreement and their transferees and
(v) any Related Registrable Securities and their transferees. As to any
particular Registrable Securities, such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to
the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (b) they shall have been
otherwise transferred, and new certificates for them not bearing a legend
restricting further transfer shall have been delivered by Buyer and
subsequent public distribution of them shall not, in the opinion of counsel
to the holders, which counsel shall be reasonably acceptable to Buyer,
require registration of them under the Securities Act, or (c) they shall
have ceased to be outstanding.
"Registration Expenses" means all costs, fees and expenses incident to
Buyer's performance of or compliance with Section 2, including, without
limitation, all registration, filing and NASD fees, all fees and expenses
of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses and the
fees and disbursements of counsel for Buyer and of its independent public
accountants and of a single counsel for the Holders, but excluding any
underwriting fees, expenses, discounts or other costs payable to any
underwriter, broker or dealer.
"Registration Statement" has the meaning set forth in Section 2.1.
"Related Registrable Securities" means any securities of Buyer issued
or issuable with respect to the shares of Buyer Class A Common Stock
received by the Holders in connection with the Transactions by way of a
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise.
"Representative" has the meaning set forth in Section 2.3.
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"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such successor federal statute.
"Seller Indemnified Parties" has the meaning set forth in Section
2.4(a).
"Shares" means the shares of Buyer Class A Common Stock to be received
by the Holders in the Transactions.
"Target Date" means 60 days after the Effective Time, 1998.
"Termination Date" means the first date on which all of the
Registrable Securities (including all shares of Buyer Class A Common Stock
issuable upon exercise of the Warrants) may be distributed to the public by
each Holder pursuant to Rule 144(k) (or any similar successor provision)
under the Securities Act.
"Transactions" means the transactions described in clauses (i) through
(iv) of the definition of "Registrable Securities".
2. Registration Under Securities Act, etc.
2.1 Filing of Registration Statement. (a) As soon as practicable, but in
any event no later than 15 days after the Effective Time, Buyer shall file a
"shelf" registration statement pursuant to Rule 415 under the Securities Act
(the "Registration Statement") with respect to the Registrable Securities to be
issued to the Holders pursuant to the Merger Agreement. Buyer agrees that the
Registration Statement will cover, in the event the Minimum Merger Shares are
issued in the Merger, 1,363,822 shares of Buyer Class A Common Stock or, in the
event the Maximum Merger Shares are issued in the Merger, 3,636,860 shares of
Buyer Class A Common Stock. In the event that the number of shares of Buyer
Class A Common Stock that are covered by the Registration Statement is less than
the number of Registrable Securities, Buyer shall, as promptly as practicable
after the issuance of Registrable Securities not covered by the Registration
Statement, file an additional "shelf" registration statement and Buyer shall
comply with all of its obligations set forth in this Exhibit E with respect to
such additional registration statement to the same extent as if such
registration statement were the Registration Statement. Buyer shall use its
commercially reasonable efforts to (i) have the Registration Statement declared
effective on or before the Target Date, and (ii) keep the Registration Statement
continuously effective from the date such Registration Statement is declared
effective until the Termination Date.
(b) Subject to Section 9 hereof, Buyer shall promptly supplement or amend,
if necessary, the Registration Statement as required by the registration form
utilized by Buyer or by the instructions applicable to such registration form or
by the Securities Act and, in each case, Buyer shall furnish to the holders of
the Registrable Securities to which the Registration Statement relates and the
managing underwriters, if any, copies of any such supplement or amendment prior
to its being used and/or filed with the Commission. Buyer shall pay all
Registration Expenses incurred in connection with the Registration Statement and
any supplements or amendments thereto, whether or not it becomes effective, and
whether all, none or some of the Registrable Securities are sold pursuant to the
Registration Statement.
2.2 Registration Procedures. (a) In connection with any registration
statement filed pursuant to Section 2.1, Buyer will, as expeditiously as
possible:
(i) subject to Section 9 hereof, prepare and file with the Commission
such registration statement and such amendments and supplements to such
registration statement and the prospectus used in connection therewith
continuously as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
registration statement or as may be reasonably requested by the Majority
Holders, until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition
(including methods described in any amendment or supplement referred to in
(ii) below) by the seller or sellers thereof set forth in such registration
statement (without
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limiting the generality of the foregoing, Buyer will prepare and file such
amendments and supplements as may be required to permit the distributees of
any Registrable Securities held by a partnership or other entity or the
donees of any Registrable Securities held by any stockholder to sell such
shares pursuant to the registration statement);
(ii) if requested by the managing underwriter or underwriters or the
Majority Holders of the Registrable Securities being sold in connection
with an underwritten offering, promptly incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriters or such holders request should be included therein relating to
the plan of distribution with respect to such Registrable Securities being
sold to such underwriters, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the underwritten (or
best efforts underwritten) offering of the Registrable Securities to be
sold in such offering; and make all required filings of such prospectus
supplement or post-effective amendment as soon as practicable after
receiving notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment;
(iii) furnish to each seller of Registrable Securities covered by such
registration statement and the managing underwriters, if any, without
charge, one original and as many conformed copies of such registration
statement and of each such amendment thereto as reasonably requested by
such seller or underwriter (including, in the case of the original copy,
all exhibits) and such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller or underwriter may reasonably request;
(iv) use its commercially reasonable efforts (x) to register or
qualify all Registrable Securities and other securities covered by such
registration statement and the managing underwriters, if any, under such
other securities or blue sky laws of such States of the United States of
America where an exemption is not available and as the sellers of
Registrable Securities covered by such registration statement and the
managing underwriter, if any, shall reasonably request, (y) to keep such
registrations and qualifications, in effect for so long as such
registration statement remains in effect, and (z) to take any other action
which may be necessary or advisable to enable such sellers or managing
underwriters to consummate the disposition in such jurisdictions of the
securities to be sold by such sellers or managing underwriters, provided
that in connection therewith Buyer shall not be required to qualify as a
foreign corporation or as a dealer in securities or to file a general
consent to service of process or to subject itself to taxation in any
jurisdiction;
(v) use its commercially reasonable efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or
authorities or self regulatory organizations as may be necessary, in the
opinion of counsel to Buyer or to the managing underwriters, to enable the
seller or sellers thereof or the managing underwriters, if any, to
consummate the disposition of such Registrable Securities;
(vi) promptly notify each seller of Registrable Securities covered by
such registration statement and the managing underwriters, if any, at any
time when a prospectus relating thereto is required to be delivered under
the Securities Act, upon discovery that, or upon the happening of any event
as a result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, in the light of
the circumstances under which they were made, and, subject to Section 9
hereof, at the request of any such seller, and the managing underwriters,
if any, promptly prepare and furnish to each prospective seller a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made;
(vii) in connection with any underwritten offering of Registrable
Securities pursuant to the Registration Statement, enter into an
underwriting agreement in form, scope and substance as is
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customary in underwritten offerings and take all such other actions as are
reasonably requested by the managing underwriter in order to expedite or
facilitate the disposition of such Registrable Securities and in connection
therewith (a) make such representations and warranties to the underwriters
in form, substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings with respect to the business
of Buyer and the Registration Statement; (b) obtain opinions of counsel to
Buyer and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters,
shall be addressed to the underwriters and shall cover the matters
customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by underwriters); (c)
obtain "cold comfort" letters and updates thereof from Buyer's independent
certified public accountants addressed to the underwriters, such letters to
be in customary form and covering matters of the type customarily covered
in "cold comfort" letters by underwriters in connection with primary
underwritten offerings; (d) if any underwriting agreement is entered into,
the same shall set forth in full the indemnification provisions and
procedures of Section 2.4 hereof with respect to all parties to be
indemnified pursuant to said Section; and (e) Buyer shall deliver such
documents and certificates as may be requested by the managing underwriters
to evidence compliance with clause (iv) above and with any customary
conditions contained in the underwriting agreement or other agreement
entered into by Buyer. The above shall be done at each closing under such
underwriting or similar agreement as and to the extent required thereunder,
and if at any time the representations and warranties of Buyer contemplated
in clause (vii)(a) above cease to be true and correct, Buyer shall so
advise the underwriter(s), if any, and each seller promptly and, if
requested by such seller, shall confirm such advice in writing;
(viii) make appropriate representatives of its management available,
upon the reasonable request of the Majority Holders of Registrable
Securities, but in no event upon less than 15 days' notice, for a
reasonable period for a road show in connection with the underwritten
offering of the Registrable Securities by an underwriter. Buyer will also
make representatives of management reasonably available for conference
calls in connection with any public offering upon reasonable advance
notice; and
(ix) to maintain on file with the NYSE and each other exchange on
which Buyer Class A Common Stock is listed a copy of the most recent
prospectus and otherwise use its commercially reasonable efforts to allow
the sellers to satisfy the prospectus delivery requirements of the
Securities Act in a manner not requiring physical delivery of a prospectus.
(b) Buyer may require each holder of Registrable Securities as to which any
registration is being effected to (i) furnish Buyer such information regarding
such holder and the distribution of such securities as Buyer may from time to
time reasonably request in writing and (ii) otherwise agree to comply with the
Securities Act and the Exchange Act in connection with the registration and
distribution of the Registrable Securities.
(c) As a condition to including shares in any registration statement, Buyer
may require any holder of Registrable Securities to agree that, upon receipt of
any notice from Buyer of the happening of any event of the kind described in (i)
subdivision (vi) of Section 2.2(a) or (ii) Section 9, such holder will forthwith
discontinue such holder's disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until (x) in the
case of a notice under clause (i) above, such holder's receipt of the copies of
the supplemented or amended prospectus contemplated by subdivision (vi) of
Section 2.2(a), or until it is advised in writing by Buyer that the use of the
applicable prospectus may be resumed, and, if so directed by Buyer, such holder
will promptly deliver to Buyer (at Buyer's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice or (y) in the case of a notice under clause (ii) above, until expiration
of the 30th day following the date of such notice or of any subsequent notice
given in accordance with Section 8 hereof.
(d) If Buyer suspends a registration statement or requires stockholders to
cease sales of Registrable Securities pursuant to this section, Buyer shall, as
promptly as practicable following the termination of the circumstances which
entitled Buyer to do so, take such actions as may be necessary to reinstate the
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effectiveness of such registration statement and/or give written notice to all
sellers of Registrable Securities authorizing them to resume sales pursuant to
such registration statement.
2.3 Preparation; Reasonable Investigation. In connection with the
preparation and filing of the registration statement under the Securities Act
pursuant to this Exhibit E, Buyer (i) shall give a representative holder
designated in writing to Buyer by the Majority Holders (the "Representative"),
any underwriter participating in any disposition of Registrable Securities, and
counsel and accountants designated by the Representative and such underwriters
the opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto, (ii) shall give each of them such
reasonable access to its books and records and such opportunities to discuss the
business of Buyer with its officers and the independent public accountants who
have certified its financial statements as shall be necessary, in the opinion of
the Representative and any underwriter participating in any disposition of
Registrable Securities, and such counsel or accountants, to conduct a reasonable
investigation within the meaning of the Securities Act, subject to each such
person agreeing to treat confidentially any non-public information disclosed to
them as a result of such investigation and (iii) shall promptly notify the
Representative and any underwriter participating in any disposition of
Registrable Securities, and their counsel of any stop order issued or threatened
by the Commission and promptly take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered.
2.4 Indemnification. (a) Indemnification by Buyer. Buyer shall indemnify
and hold harmless, in the case of any registration statement filed pursuant to
Section 2.1, each seller of any Registrable Securities covered by such
registration statement, each other Person, if any, who controls such seller
within the meaning of the Securities Act, each broker, dealer or underwriter
acting on behalf of such seller and their respective directors, officers,
partners, shareholders, employees and affiliates ("Seller Indemnified Parties")
against any losses, claims, expenses, damages or liabilities (or actions or
proceedings, whether commenced or threatened, or inquiries or investigations, in
respect thereof), joint or several, to which such Seller Indemnified Parties may
become subject under the Securities Act or otherwise, including, without
limitation, the reasonable fees and expenses of legal counsel, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, or inquiries or investigations, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
or any violation by Buyer of the Securities Act, and Buyer will reimburse each
such Seller Indemnified Parties for any reasonable legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, expense, damage, liability, action or proceeding, inquiry or
investigation; provided, that Buyer shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action, proceeding,
inquiry or investigation in respect thereof) or expense arises out of or is
based upon (i) an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to Buyer
through an instrument duly executed by or on behalf of such seller specifically
stating that it is for use in the preparation thereof or (ii) the sale of
Registrable Securities pursuant to the registration statement to any person, if
such seller (x) failed to send or give a copy of the prospectus, as the same may
be then supplemented or amended, to such person within the time required by the
Securities Act and the untrue statement or alleged untrue statement or omission
or alleged omission of a material fact contained in such prospectus was
corrected in the prospectus, as amended or (y) engaged in such sale in breach of
its agreements pursuant to Section 2.2(c). Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of any
such Seller Indemnified Parties and shall survive the transfer of such
securities by such seller.
(b) Indemnification by the Sellers. As a condition to including any
Registrable Securities in any registration statement, each prospective seller
shall agree to indemnify and hold harmless severally and not jointly (in the
same manner and to the same extent as set forth in Section 2.4(a)) Buyer, and
each director,
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officer, employee and shareholder of Buyer and each other Person, if any, who
participates or may be considered as an underwriter in the offering or sale of
such securities and each other Person who controls Buyer within the meaning of
the Securities Act ("Buyer Indemnified Parties") with respect to (i) any untrue
statement or alleged untrue statement of a material fact contained in or any
omission or alleged omission to state therein a material fact in any such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
Buyer through an instrument duly executed by or on behalf of such seller
specifically stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement (provided that the liability of such indemnifying party
under this clause (i) shall be limited to the amount of net proceeds received by
such indemnifying party in the offering giving rise to such liability), or (ii)
any sale of any Registrable Securities by such seller under the circumstances
described in clause (ii) of the proviso to Section 2.4(a). Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of Buyer Indemnified Parties and shall survive the transfer of such
securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified party
of notice of the commencement of any action, proceeding, investigation or
inquiry involving a claim referred to in the preceding subparagraphs of this
Section 2.4, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of such
commencement; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subparagraphs of this Section 2.4, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action, proceeding, claim, liability,
investigation or inquiry is brought against an indemnified party, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that if the indemnified party reasonably believes it is advisable for it to be
represented by separate counsel because there exists a conflict of interest
between its interests and those of the indemnifying party with respect to such
claim, or there exist defenses available to such indemnified party which may not
be available to the indemnifying party, or if the indemnifying party shall fail
to assume responsibility for such defense, the indemnified party may retain
counsel satisfactory to it and the indemnifying party shall pay all fees and
expenses of one such counsel, provided that in no event shall Buyer be required
to pay the expenses of more than one such counsel. No indemnifying party shall
be liable for any settlement of any action or proceeding effected without its
written consent, which consent shall not be unreasonably withheld or delayed. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim,
proceeding, inquiry, investigation or litigation or which requires action other
than the payment of money by the indemnifying party. Each indemnified party
shall furnish such information regarding itself or the claim in question as an
indemnifying party may reasonably request in writing and as shall be reasonably
requested in connection with the defense of such claim and litigation resulting
therefrom.
(d) Contribution. If the indemnification provided for in this Section 2.4
shall for any reason be held by a court of competent jurisdiction to be
unavailable to an indemnified party under subparagraph (a) or (b) hereof in
respect of any loss, claim, damage, liability, inquiry or investigation or any
action or proceeding in respect thereof, then, in lieu of the amount paid or
payable under subparagraph (a) or (b) hereof, the indemnified party and the
indemnifying party under subparagraph (a) or (b) hereof shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to reflect the relative fault of Buyer and the
sellers of Registrable Securities covered by the registration statement in
connection with the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as
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well as any other relevant equitable considerations (the relative fault of Buyer
and such sellers to be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
Buyer or such sellers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission) or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as shall be appropriate to reflect the
relative benefits received by Buyer and such sellers from the offering of the
securities covered by such registration statement. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Such sellers' obligations to
contribute as provided in this subparagraph (d) are several in proportion to the
relative value of their respective Registrable Securities covered by such
registration statement and not joint and no seller shall be liable under this
subparagraph (d) for any amount in excess of the proceeds received by the seller
in the offering giving rise to the liability hereunder. In addition, no Person
shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld or delayed.
(e) Other Indemnification. Indemnification and contribution similar to
that specified in the preceding subparagraphs of this Section 2.4 (with
appropriate modifications) shall be given by Buyer and each seller of
Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law, rule or regulation
of any governmental authority other than the Securities Act.
(f) Indemnification Payments. The indemnification and contribution
required by this Section 2.4 shall be made by prompt periodic payments of the
amount thereof during the course of the investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred.
3. Rule 144 and Rule 144A. Buyer shall take all actions reasonably
necessary to enable holders of Registrable Securities to sell such securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time or (b) Rule 144A under the Securities Act, as such
Rule may be amended from time to time, including, without limiting the
generality of the foregoing, filing on a timely basis all reports required to be
filed by the Exchange Act. Upon the request of any holder of Registrable
Securities or holder of rights to acquire Registrable Securities, Buyer will
deliver to such holder a written statement as to whether it has complied with
such requirements.
4. Participation in Underwritten Registrations. (a) If any of the
Registrable Securities covered by the Registration Statement are to be sold in
an underwritten offering, the investment bank or investment bankers and manager
or managers that will administer the offering will be selected by the Buyer and
shall be reasonably satisfactory to the Majority Holders of the Registrable
Securities included in such offering.
(b) In the event any holder proposes to sell Registrable Securities covered
by the Registration Statement in an underwritten offering, it will so notify
Buyer and provide Buyer with the information to be included in the notice to be
given by Buyer hereinafter set forth. Promptly (and in any event within ten (10)
Business Days) after receipt of such notice, Buyer will give written notice to
each other holder of Registrable Securities of (i) the name of the proposing
holder, (ii) the number of Registrable Securities proposed to be sold by such
proposing holder, and (iii) the right of each other holder to elect to have all
or a portion of the Registrable Securities owned by such holder included in such
underwritten offering by notifying Buyer and the proposing holder of such
election (and specifying the number of Registrable Securities to be so included)
within ten (10) Business Days after receipt of such notice from Buyer. A holder
making such an election on a timely basis shall be entitled to have the number
of Registrable Securities specified in such election included in the
underwritten offering; provided, however, that, if the managing underwriter
advises the participating holders in writing that marketing factors require a
limitation of the number of Registrable Securities to be underwritten, the
amount of Registrable Securities that may be included in the underwriting shall
be so limited and shall be allocated among the participating holders pro rata in
accordance with the number of Registrable Securities proposed to be included in
the underwritten offering by the participating holders.
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(c) No holder may participate in any underwritten registration hereunder
unless such holder (x) agrees to sell such holder's securities on the basis
provided in any underwriting arrangements approved by the holders entitled
hereunder to approve such arrangements and (y) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
Nothing in this Section 4 shall be construed to create any additional rights
regarding the registration of Registrable Securities in any holder otherwise
than as set forth herein.
5. Amendments. This Exhibit E may be amended only upon the prior written
consent of Buyer and the Majority Holders. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any consent
authorized by this Section 5, whether or not such Registrable Securities shall
have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to Buyer, be
treated as the holder of such Registrable Securities for purposes of any
request, consent, waiver or other action by any holder or holders of Registrable
Securities pursuant to this Exhibit E or any determination of any number or
percentage of shares of Registrable Securities held by any holder or holders of
Registrable Securities contemplated by this Exhibit E. If the beneficial owner
of any Registrable Securities so elects, Buyer may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
7. Notices. All notices, demands and other communications provided for or
permitted hereunder shall be made in the manner provided in the Merger
Agreement, and, in the case of the Holders, shall be addressed in the manner set
forth in the stock record books of Buyer.
8. Assignment. This Exhibit E shall be binding upon and inure to the
benefit of and shall be enforceable by the Original Holders, by virtue of the
approval of the Merger and such stockholder's receipt of Buyer Class A Common
Stock pursuant to the Merger Agreement, and by Buyer and its respective
successors and assigns and, with respect to any Company Stockholder, any
Original Holder of any Registrable Securities and their transferees and assigns,
provided that, with respect to a transferee or assignee of shares of Registrable
Securities, (i) such transfer is effected in accordance with applicable
securities law, (ii) Buyer is given written notice of such assignment
contemporaneous with such assignment or promptly thereafter, and (iii) the
transferee or assignee by written agreement acknowledges that he is bound by the
terms of this Exhibit E.
9. Holdback Agreements. Notwithstanding anything in this Exhibit E to the
contrary, if (a)(i) Buyer is in possession of material non-public information,
(ii) the Board of Directors of Buyer determines that disclosure of such material
non-public information would not be in the best interests of Buyer and its
stockholders and (iii) the Board of Directors or Chief Executive Officer of
Buyer determines that suspension of the rights of the Holders to make sales
pursuant to the Registration Statement is necessary in order to avoid a
requirement to disclose such material, non-public information, (b) the Buyer has
made a public announcement relating to an acquisition or business combination
including Buyer or a subsidiary of Buyer, or (c) the Board of Directors of Buyer
determines in good faith that it is in the best interests of Buyer and its
stockholders not to disclose the existence of facts surrounding any proposed or
pending corporate transaction involving Buyer, then Buyer may notify the Holders
that it elects to suspend the rights of the Holders to make sales pursuant to
the Registration Statement for a period of time not to exceed 30 days from the
date of such notice, provided that, Buyer may exercise its rights under this
Section 9 no more than one time during any period of 180 consecutive days.
10. No Inconsistent Agreements. Buyer will not hereafter enter into any
agreement with respect to its securities which is inconsistent with the rights
granted to the holders of Registrable Securities in this Exhibit E.
11. Remedies. Each holder of Registrable Securities, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights hereunder. Buyer agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a
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breach by it of the provisions of this Exhibit E and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
12. Separate Agreements with Holders. As promptly as practicable after the
execution of the Merger Agreement, Buyer will enter into a separate agreement
with each Company Stockholder (and, after the Effective Time, each Holder) to
evidence the obligations of Buyer and each Company Stockholder, or, if after the
Effective Time, each Holder under this Exhibit E.
13. Dispositions by Holders. Each Holder agrees not to sell or offer to
sell less than 100,000 shares of Registrable Securities in any single offering
pursuant to the Registration Statement, except that, if such Holder is an
Original Holder and immediately after the Effective Time beneficially owns an
aggregate of less than 100,000 shares of Registrable Securities, such Holder may
sell or offer to sell such shares of Buyer Class A Common Stock in an offering
being made with one or more Holders covering an aggregate of at least 100,000
shares of Registrable Securities.
14. Lockup. Each Significant Stockholder and any transferee of a
Significant Stockholder represents, warrants, covenants and agrees that from the
Effective Time until the expiration of ninety (90) days following the Effective
Time, such Significant Stockholder or transferee will not, without the prior
written consent of Buyer, offer, sell, contract to sell, or otherwise dispose
of, directly or indirectly, any shares of Buyer Class A Common Stock or other
instrument which by its terms is convertible into, exercisable or exchangeable
for, any shares of Buyer Class A Common Stock of which such Significant
Stockholder or transferee is at the Effective Time, or may in the future become,
the beneficial owner (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended).
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