1
EXHIBIT 10.16
PUT/CALL OPTION AGREEMENT
PUT/CALL OPTION AGREEMENT, dated as of April 14, 1989 between AP
Holdings, Inc., a Delaware corporation ("AP") and Delaware North Companies,
Incorporated, a Delaware corporation ("DNC").
Pursuant to the Stock Purchase Agreement, (i) DNC is transferring
its shares of the Company to AP and APA Acquisition, Inc., a wholly-owned
subsidiary of AP, and (ii) AP is transferring to DNC 880 shares of common stock
of AP (the "Shares") which at the time of purchase will represent 10% of the
outstanding common stock, and Warrants to purchase an additional 200 shares of
common stock of AP. As additional consideration for the transfer by DNC of its
shares to AP, AP has agreed to conduct the Business through AP and its
Subsidiaries, to deal with Affiliates only on commercially reasonable arms
length terms and conditions, and to grant to DNC the right to "put" to AP the
Shares and the Warrants, all upon the terms and conditions set forth herein. As
additional consideration for the transfer by AP to DNC of the Shares and the
Warrants, DNC has agreed to grant to AP the option to purchase the Shares and
Warrants, all upon the terms and conditions set forth herein.
1. Definitions. The terms defined in this Section, whenever used in
this Agreement, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified.
"Affiliate" shall mean (i) ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇
Incorporated, or any Person who or which now or hereafter has Control of, or is
now or hereafter under common Control with, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇ Incorporated, individually or
2
-2-
in the aggregate, or over whom or over which ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇ Incorporated, individually or in the aggregate, now or hereafter has
Control, (ii) any Person who is now or hereafter related by blood, by adoption
or by marriage to any Person referred to in clause (i) of this sentence or who
now or hereafter resides in the same home as any such Person.
"Affiliate Bad Debts" shall mean any bad debts as determined in
accordance with generally accepted accounting principles, incurred by AP and
Subsidiaries in connection with loans to Affiliates.
"Affiliate Equity Interests" shall mean Equity Interests issued to
Affiliates only upon commercially reasonable arms length terms and conditions,
only after DNC has been offered the opportunity to participate in such offering
on the most favorable terms and conditions given to any other equity investor,
to the extent of its Percentage Interest and only (i) after the occurrence of a
material adverse change in the Business of AP and Subsidiaries requiring in the
reasonable judgment of the Board of Directors of AP an equity infusion into AP
and Subsidiaries, or (ii) in connection with an acquisition by AP or a
subsidiary of (1) stock of a Person whose principal activity is the Business or
(2) assets employed in the Business for, in either case, total consideration
(exclusive of assumed liabilities) of $10,000,000 or more; provided, however,
that the amount of all Equity Interests issued in connection with such
acquisition shall not exceed 23% of the total consideration (exclusive of
assumed liabilities) paid for such Person.
"Affiliate Payments" shall mean all amounts paid to any Affiliate in
violation of the covenants set forth in Section 6(a) of this Agreement plus
interest on such amounts computed
3
-3-
at the average interest rate on the Bank Debt and computed from the date of any
payments of such amounts to the date of determination.
"AP Call Option" shall have the meaning set forth in Section 3
hereof.
"Appraisal" shall mean the determination of the Option Price in
accordance with the procedures set forth in 4a.
"Bank" shall mean Citicorp North America, Inc., having its chief
executive office at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
"Bank Debt" shall mean the indebtedness incurred as of the date
hereof by AP and the Company to the Bank or financial institution which becomes
the primary lender to AP and the Company after the date hereof.
"Business" shall mean the management and operation of parking lots,
garages and other parking and storage facilities for automobiles in North
America and in the territories of the United States, other than Guam, and
consulting activities relating thereto performed by employees of AP and its
Subsidiaries.
"Change of Control" shall mean the occurrence of any transaction or
series of transactions within a twelve month period where:
(a) At least fifty-one percent (51%) of the then outstanding common
shares of AP are purchased, redeemed or otherwise acquired by any person,
firm, corporation or other entity, or are exchanged for shares in any
other corporation not affiliated with AP, or any combination of such
redemption, purchase, exchange or acquisition; or
4
-4-
(b) At least fifty-one percent (51%) of the tangible and intangible
assets utilized in the Business of AP and the Subsidiaries are purchased
or otherwise acquired by any person, firm, corporation or other entity not
affiliated with AP; or
(c) AP, the Company, or any successor of either, is merged into or
consolidated with another corporation not owned 80% or more by AP or its
shareholders regardless of whether AP is the survivor;
(d) Shares of AP, the Company, or any successor of either, are sold
pursuant to a registered public offering; or
(e) Any substantial equivalent of any such redemption, purchase,
exchange, sale, merger, acquisition or consolidation or any combination of
the foregoing.
"Company" shall mean APCOA, Inc., a Delaware corporation, and any
successor corporation by merger, consolidation or otherwise.
"Control" or "Controlled" shall mean, with respect to any Person,
whether direct or indirect, (i) if such Person is a corporation, the power to
vote 25% or more of the outstanding shares of any class of stock of such Person
ordinarily having the power to vote for the election of directors of such Person
or the beneficial ownership of 25% or more of the outstanding shares of common
stock of such Person or (ii) if such person is not a corporation, the beneficial
ownership of 25% or more of any ownership interest in such Person or (iii) the
power to direct or cause the direction of the management and policies of such
Person, whether by ownership of any stock or other ownership interest, by
agreement or otherwise.
5
-5-
"DNC Put Option" shall have the meaning set forth in Section 2
hereof.
"Disposition" shall mean any transaction or series of transactions
whether related or unrelated which, in the aggregate, result in assets
comprising 50% or more by value of the Business of AP (whether such assets are
owned by AP directly or indirectly through its direct or indirect subsidiaries)
having been directly or indirectly acquired by any Person(s), whether or not by
an Affiliate (but excluding the Subsidiaries), for cash, property (including,
without limitation, stock in any corporation) or indebtedness or any combination
thereof, regardless of whether such purchase occurs as an acquisition of stock
or assets.
"Equity Interests" shall mean common shares and instruments
convertible into common shares of AP and the Subsidiaries which are issued after
the date of this Agreement.
"Excess Management Fees" shall mean the sum of (i) the excess in any
year over $300,000 of all amounts paid by AP or its Subsidiaries, to Affiliates
for services performed (including amounts paid to reimburse such Affiliates for
expenses incurred in connection with the performance of services), plus (ii)
interest on such amounts computed from the date of any payment of such amounts
to the date of determination at the average rate of interest applicable to the
Bank Debt during such period; provided, however, that investment banking fees
and expenses payable to Affiliates in connection with acquisition, disposition
or financing transactions shall not be counted against the $300,000 limitation
set forth above.
"Financing Equity Interests" shall mean Equity Interest issued to
persons other than Affiliates in connection with a borrowing if the value of the
Equity Interest at the time of its
6
-6-
issuance does not exceed 45% of the value of the debt and/or preferred stock
rights received in connection with the same transaction.
"Loan Agreement" shall mean the agreement dated April 14, 1989,
between AP, the Company and the Bank or any other loan document executed by AP
or its Subsidiaries after the date of this Agreement for the benefit of a bank
or financing institution that acts as AP's or the Company's primary lender.
"Management Equity Interests" shall mean Equity Interests issued to
members of the Company's management as incentive compensation.
"Maximum Price" shall mean the portion of the aggregate
consideration paid or received directly or indirectly by or on behalf of AP or
its shareholders in connection with a Change of Control or a Disposition which
Change of Control or Disposition occurs at any time within twelve (12) months
after the notification to DNC by AP of AP's exercise of the AP Call Option which
would have been received by DNC for the Shares and Warrants on the exercise of
the DNC Put Option hereunder if the fair market value of the Shares and Warrants
determined in accordance with Section 4c. were based upon the consideration
received pursuant to the Change of Control or Disposition.
"Non-Affiliate Equity Interest" shall mean Equity Interests other
than Management Equity Interests and Financing Equity Interests issued to
Persons other than Affiliates only after DNC has been offered the opportunity to
participate in such offering on the most favorable terms and conditions given to
any other investor to the extent of its Percentage Interest.
7
-7-
"Option Price" shall mean as of any date (i) the fair market value
of the Shares and the Warrants determined either in accordance with the
provisions of Section 4 or by mutual agreement of AP and DNC, plus (ii) the
Percentage Interest times Excess Management Fees, Affiliate Bad Debts and
Affiliate Payments.
"Payment Date" shall mean either (i) the 30th day following the
receipt by DNC and AP of the Appraisal, or (ii) if the event giving rise to the
right of exercise by DNC of the DNC Put Option is a Change of Control or a
Disposition and DNC exercises the DNC Put Option more than 45 days in advance of
such event, the later of the date of such Change of Control or Disposition or
the receipt by DNC and AP of the Appraisal.
"Percentage Interest" shall mean, at any time, the portion of the
common shares of AP outstanding which DNC owns, counting for this purpose only
shares outstanding on the date hereof and shares issued hereafter which are
Affiliate Equity Interests, Non-Affiliate Equity Interests, Management Equity
Interests and Financing Equity Interests provided, however, that in the event
DNC exercises the DNC Put Option provided pursuant to Section 2a.(iv), the
Non-Affiliate Equity Interests giving rise to the Put shall not be considered as
outstanding. The shares which are subject to the Warrant shall be considered
owned for this purpose at any time when the fair market value of the shares
subject to the Warrant exceeded the exercise price.
"Person" shall mean (i) any individual, corporation, partnership,
joint venture, trust, unincorporated association, government or political
subdivision or (ii) any other entity, body, organization or group.
8
-8-
"Preferred Stock" shall mean the preferred stock of AP issued on the
date hereof to ▇▇▇▇▇▇▇ Industries, Inc. or any preferred stock of AP or any
Subsidiary issued to an Affiliate after the date hereof.
"Stock Purchase Agreement" shall mean the agreement dated as of
January 27, 1989 between DNC, AP and others.
"Subsidiary" shall mean any corporation Controlled by AP.
"Warrants" shall mean the warrants issued pursuant to the Stock
Purchase Agreement by AP to DNC to purchase additional Shares, in the form
attached as Schedule 1.02 to the Stock Purchase Agreement.
2. The DNC Put Option.
a. DNC Put Option. At the option of DNC, AP shall purchase from DNC
the Shares and Warrants (the "DNC Put Option"). DNC may exercise the DNC Put
Option (i) effective any time on or after March 1, 1994 and on or before
December 31, 1999, or (ii) effective on or after the date of any Disposition,
(iii) effective on or after the date of any Change of Control, or (iv) effective
upon the date of issuance of any Non-Affiliate Equity Interests unless DNC shall
have elected to participate in such issuance on the most favorable terms and
conditions given to any other investor, or (v) on or after the date when AP or
its Subsidiaries or Affiliates materially violate or default under any of the
affirmative or negative covenants contained in Sections 5 or 6 of this Agreement
which remains uncured twenty (20) days after written notice thereof is provided
to AP.
9
-9-
b. Manner of Exercise of the DNC Put Option. The DNC Put Option may
be exercised, in full only, at any time on or after an event giving rise to the
DNC Put Option, on any day which is not a Saturday, Sunday or public holiday
under the laws of the State of Delaware. In order to exercise the DNC Put
Option, DNC shall deliver to AP at its office to which notices are to be given
in accordance with Section 11 of this Agreement, a written notice of DNC's
election to exercise the DNC Put Option. Upon receipt thereof, an Appraisal
shall be commenced. Upon the Payment Date, AP shall pay to DNC an amount equal
to the Option Price in accordance with the terms set forth in Section 4d. of
this Agreement.
c. Anticipatory Exercise. If AP intends to engage in a Change of
Control or Disposition, it will use all reasonable efforts to give DNC at least
60 days advance written notice of the Change of Control or Disposition
specifying the terms and conditions of the anticipated Change of Control or
Disposition. DNC shall have the right to exercise the DNC Put Option in advance
of such Change of Control or Disposition effective on the date of consummation
of the Change of Control or Disposition, provided, however, that if such Change
of Control or Disposition is not consummated, such exercise shall be void and
have no further effect under this Agreement. Upon receipt thereof, an Appraisal
shall be commenced. Upon the Payment Date, AP shall pay to DNC an amount equal
to the Option Price in accordance with the terms set forth in Section 4d. of
this Agreement.
3. AP Call Option.
a. AP Call Option. DNC hereby grants to AP and AP shall have the
option to purchase the Shares and Warrants (the "AP Call Option") at any time
(i) on or after March 1, 1994, or (ii) on or after a Change of Control, or (iii)
on or after a Disposition.
10
-10-
b. Manner of Exercise of AP Call Option. The AP Call Option may be
exercised, in full only, on any day which is not a Saturday, Sunday or public
holiday under the laws of the State of Delaware. In order to exercise the AP
Call Option, AP shall deliver to DNC at its office to which notices are to be
given in accordance with Section 11 of this Agreement, a written notice of AP's
election to exercise the AP Call Option. Upon receipt thereof, an Appraisal
shall be commenced. Upon the Payment Date, AP shall pay to DNC an amount equal
to the Option Price in accordance with the terms set forth in Section 4d. of
this Agreement.
c. Anticipatory Exercise. If AP intends to engage in a Change of
Control or Disposition, it will use all reasonable efforts to give DNC at least
60 days advance written notice of the Change of Control or Disposition
specifying the terms and conditions of the anticipated Change of Control or
Disposition. AP shall have the right to exercise the AP Call Option up to 45
days in advance of such Change of Control or Disposition effective on the date
of consummation of the Change of Control or Disposition, provided, however, that
if such Change of Control or Disposition is not consummated, such exercise shall
be void and have no further effect under this Agreement. Upon giving of notice
of exercise, an Appraisal shall be commenced upon DNC's request. Upon the
Payment Date, AP shall pay to DNC an amount equal to the Option Price in
accordance with the terms set forth in Section 4d. of this Agreement.
d. Maximum Price. In the event AP exercises the AP Call Option and a
Change in Control or Disposition occurs within twelve (12) months after the
notification by AP to DNC of AP's exercise of the AP Call Option, and the
Maximum Price is greater than the Option Price, then AP shall pay to DNC the
difference between the Option Price and the Maximum Price. Such payment shall be
made on the date of such Change of Control or
11
-11-
Disposition and shall be paid in immediately available funds. If DNC has
exercised the DNC Put Option in advance of the Change of Control or Disposition
pursuant to Section 3c. above and requested an Appraisal, DNC shall reimburse AP
for all costs incurred by AP in obtaining the Appraisal if the Maximum Price
exceeds the Option Price as determined pursuant to such Appraisal.
4. Selection of Appraiser; Closing of Purchase and Sale; Terms of
Payment.
a. Selection of Appraiser. Within seven (7) days after delivery of
written notice of an election to exercise the DNC Put Option or the AP Call
Option, AP shall select one of the following investment banking firms: ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated or Salomon Brothers Inc. to
conduct an Appraisal of AP. If AP shall fail to so select, DNC shall select one
of such firms and the selection of DNC shall be final. If AP selects a firm
acceptable to DNC, DNC shall notify AP that the firm is acceptable and AP shall
cause the firm to commence and complete the appraisal as soon as possible. If AP
selects a firm unacceptable to DNC, DNC shall select one of the remaining firms
by delivery of a notice to AP within seven (7) days of the delivery of AP's
notice of selection to DNC. If DNC shall fail to so select, AP's selection shall
be final and AP shall cause the firm so selected to commence and complete the
appraisal as soon as possible. If DNC selects a firm acceptable to AP, AP shall
cause the firm to commence and complete the appraisal as soon as possible. If
DNC selects a firm unacceptable to AP, AP shall notify DNC and cause the
remaining firm to commence and complete the appraisal as soon as possible.
b. Fair Market Value Determination. The fair market value of the
Shares and Warrants shall be the amount obtainable for such Shares and Warrants
in the event of an arms
12
-12-
length sale of AP and Subsidiaries as an ongoing business and determined without
giving effect to any discount for (i) minority interest, (ii) any lack of
liquidity of the Shares or Warrant; (iii) any lack of marketability of the
Shares or Warrant, (iv) any past failure to pay dividends with respect to the
Shares, or (v) the right of AP to purchase such Shares and Warrants under this
Agreement. The fair market value of the Business shall be determined without
regard to any reduction in the earnings of AP and Subsidiaries caused by Excess
Management Fees, Affiliate Bad Debts or Affiliate Payments, by valuing the
Preferred Stock at its issue price, by considering as outstanding only Affiliate
Equity Interests, Non-Affiliate Equity Interests, Management Equity Interests
and Financing Equity Interests and, to the extent necessary to avoid
duplication, by ignoring the adjustment contained in Section 3.A.2. of the
Warrant Certificate.
c. Closing. The closing of the transfer of Shares and Warrants
pursuant to this agreement shall occur on the date (the "Closing Date") mutually
agreed to by the parties which shall not be more than five (5) business days
after the delivery of the Appraisal. The closing shall be held at 11:00 a.m.
local time, at the offices of AP, or at such other time and place as the parties
may agree. On the Closing Date, DNC shall deliver certificates with appropriate
transfer tax stamps fixed and with stock powers endorsed in blank, representing
the shares and the warrant certificate, against payment of the Option Price in
accordance with the terms set forth in Section 4d. below. In addition, if the
person holding the shares and warrants is a successor or assign of DNC and is
the personal representative of the deceased stockholder, the personal
representative shall also deliver to the purchaser a purchasers (i) copies of
letters testimentary or letters of administration evidencing his appointment and
qualification, (ii) certificate issued by the Internal Revenue Service pursuant
to Section 6325 of the Internal Revenue Code of 1986, as
13
-13-
amended, discharging the shares being sold from liens imposed by the Code and
(iii) an estate tax waiver issued by the state at the decedents domicile.
d. Terms of Payment. Subject to applicable law and any covenants
with the Bank or such other institution which becomes the primary lender to the
Company, upon the Payment Date the amount payable by AP to DNC under Sections 2
or 3 of this Agreement shall be paid by AP to DNC (a) entirely in immediately
available funds or (b) at the sole discretion of AP, $5,000,000 in immediately
available funds and the remaining balance in the form of a promissory note to be
executed and delivered on the Payment Date by AP to DNC. Any promissory note
delivered in payment of the remaining balance due DNC shall be payable in
semi-annual installments equal to $5,000,000 of principal plus all accrued but
unpaid interest, such installments to commence six (6) months after the Payment
Date (the "Note"). The Note shall bear interest at a rate per annum which shall
be equal to the prime rate designated by the Bank from time to time and shall be
substantially in the form of Exhibit A attached hereto and made a part hereof.
The Note shall be subject to prepayment, without penalty, in whole or in part;
provided, however, that all partial prepayments shall be applied first to the
payment of all accrued but unpaid interest and the balance against the
outstanding installments of principal in the inverse order of their maturity.
The Note shall be subject to mandatory prepayment upon (a) the date of any
Change of Control, (b) the date of any Disposition or (c) the date when AP or
its Subsidiaries or Affiliates materially violate or default under any of the
affirmative or negative covenants contained in Sections 5 or 6 of this Agreement
which remains uncured thirty (30) days after written notice thereof is provided
to AP.
14
-14-
5. Affirmative Covenants. As long as the AP Call Option, the DNC Put
Option, or the Note are outstanding, AP shall do the following unless the prior
written consent of DNC to not doing so shall have been obtained by AP:
a. Financial and Other Information; Certificates of No Default.
Provide to DNC, in form satisfactory to DNC, (i) within sixty days after the end
of each fiscal quarter of each fiscal year of AP, consolidating and consolidated
statements of income and of changes in financial position of AP for such fiscal
quarter and for the period from the beginning of such fiscal year to the end of
such fiscal quarter and a consolidating and consolidated balance sheet of AP as
of the end of such fiscal quarter, each to be in reasonable detail, to set forth
comparative consolidated figures for the corresponding period in the preceding
fiscal year of AP and to be certificated by the chief financial officer of AP to
be correct and complete, to be in accordance with the records of AP and of each
Subsidiary and to present fairly, subject to normal and nonmaterial year-end
adjustments, the results of the operations, and the changes in financial
position, of AP for such fiscal quarter and for the period from the beginning of
such fiscal year to the end of such fiscal quarter, and the financial position
of AP as of the end of such fiscal quarter, in conformity with generally
accepted accounting principles applied consistently with the application of such
principles with respect to the preceding fiscal quarter of AP, (ii) within
ninety days after the end of each fiscal year of AP, consolidating and
consolidated statements of income and of changes in financial position of AP for
such fiscal year and a consolidating and consolidated balance sheet of AP as of
the end of such fiscal year, each to be in reasonable detail, to set forth
comparative consolidated figures for the preceding fiscal year of AP and to be
certified by an independent certified public accountant acceptable to DNC to
present fairly the
15
-15-
results of the operations, and the changes in financial position, of AP for such
fiscal year, and the financial position of AP as of the end of such fiscal year,
in conformity with generally accepted accounting principles applied consistently
with the application of such principles with respect to the preceding fiscal
year of AP and to have been based upon an audit by such accountant that was made
in accordance with generally accepted auditing standards, and (iii) promptly
upon the request of DNC, all additional information relating to AP, to any
Subsidiary or to the Business, that is reasonably requested by DNC (1) relevant
to its decision to exercise the Put Option hereunder or (2) relating to the
determination of the Option Price.
b. Bank Information. AP shall provide promptly to DNC true and
correct copies of the Loan Agreement and all documents evidencing the Loan
Agreement, as such Loan Agreement and such other documents may be amended,
modified, replaced or altered from time to time.
c. Maximum Price. AP shall deliver promptly to DNC all notices,
documents, agreements and other information in AP's possession or control,
necessary or desirable to determine whether a Change of Control or a Disposition
has taken or shall take place within twelve (12) months of notification by AP or
DNC of the exercise of the DNC Put Option or the AP Call Option and the Maximum
Price in connection therewith.
d. Issuance of Equity Interests. AP shall use all reasonable efforts
to deliver to DNC at least thirty (30) days in advance thereof, all relevant
information regarding any proposed issuance of Equity Interests. Whenever under
this Agreement, DNC shall have the right to participate in such Equity Interest
issuance, AP shall afford DNC at least twenty (20) days in which to make its
decision as to whether or not to participate.
16
-16-
6. Negative Covenants. As long as the AP Call Option, the DNC Put
Option or the Note are outstanding, AP shall not, without the prior written
consent of DNC, do, or agree or otherwise incur, assume or have any obligation
to do, and AP shall assure that, without the prior written consent of DNC, no
Subsidiary does, or agrees or otherwise incurs, assumes or has any obligation to
do, any of the following:
a. Transactions with Affiliates. In the ordinary course of its
business or otherwise, enter into, assume or permit to exist any agreement or
transaction (including, but not limited to, the purchase, sale, lease, exchange
or other acquisition or disposition of any asset, the making of any loan or
guarantee, and the rendering of any service) between it and any Affiliate or
otherwise deal with any Affiliate or engage in any transaction that directly or
indirectly involves any Affiliate, except for (i) reasonable compensation for
services actually performed, (ii) advances made in the ordinary course of its
business to any Affiliate who is one of its officers and employees for
reasonable out-of-pocket expenses incurred by such Affiliate on its behalf in
the conduct of its business or operations, (iii) agreements, transactions and
other dealings in the ordinary course of business upon fair and reasonable terms
no less favorable to it than would apply in a comparable arm's-length agreement,
transaction or other dealing with a Person who or which is not an Affiliate and
(iv) loans made to Affiliates upon fair and reasonable terms no less favorable
to it than would apply in a comparable arm's-length agreement, transaction or
other dealing with a Person who or which is not an Affiliate.
b. Conduct of the Business by AP and its Subsidiaries. Conduct,
operate, carry out, perform or otherwise participate in the Business, whether
directly or indirectly, except by or through AP or its Subsidiaries. No
Affiliate shall own any interest in any Person that shall
17
-17-
conduct, operate, carry out, perform or otherwise directly or indirectly
participate in the Business, other than an interest in AP and through AP an
interest in the Subsidiaries. Notwithstanding the foregoing, Affiliates shall
not be prohibited from owning an interest in any parking business which AP and
its Subsidiaries are prohibited from operating by law, rule or regulation or
pursuant to a commercially reasonable restriction or prohibition imposed on or
agreed to by AP or its Subsidiaries in connection with transactions by it with
Persons other than Affiliates. Nothing in this Section 6b. shall be construed to
prevent Affiliates from owning interests in parking lots, garages and other
parking and storage facilities for automobiles which are managed or operated or
leased by (i) AP, (ii) the Subsidiaries, or (iii) Persons who are not
Affiliates.
c. Notice of Change of Control or Disposition. Enter into or
participate in any Change of Control or Disposition within twelve (12) months
after the date of notification of AP or DNC of the exercise of the AP Call
Option or the DNC Put Option, as the case may be, without providing to DNC the
information required pursuant to Section 5c. hereof.
d. Affiliate Operation of Existing Parking Contracts. Suffer or
permit any Affiliate other than AP or its Subsidiaries to manage, lease or
operate any of the existing parking locations currently managed, leased or
operated by Company, unless AP or its Subsidiaries becomes prohibited from
operating such locations by law, rule or regulation or pursuant to a
commercially reasonable restriction or prohibition imposed on or agreed to by AP
or its Subsidiaries in connection with transactions by it with Persons other
than Affiliates.
e. Affiliate Operation of New Parking Contracts. Suffer or permit
any Affiliate other than AP or its Subsidiaries to manage, lease, as leasee, or
operate any parking
18
-18-
location not managed, leased or operated by such Affiliate prior to the date
hereof; provided, however, that nothing herein shall be construed to prevent an
Affiliate from acquiring an ownership, management, lease or operating interest
in any parking lot (1) which is ancillary to a non-parking business acquired by
such Affiliate or (2) which AP and its Subsidiaries are prohibited from
managing, leasing or operating by law, rule or regulation or pursuant to a
commercially reasonable restriction or prohibition imposed on or agreed to by AP
or its Subsidiaries in connection with transactions by it with Persons other
than Affiliates.
7. Rights and Remedies. All rights and remedies of DNC pursuant to
this Agreement or otherwise shall be cumulative, and no such right or remedy
shall be exclusive of any other such right or remedy. No single or partial
exercise by DNC of any such right or remedy shall preclude any other or further
exercise thereof, or any exercise of any other such right or remedy, by DNC. The
parties hereto agree that money damages are insufficient to compensate DNC for a
violation or default under the affirmative and negative covenants contained in
Articles 5 or 6 of this Agreement and, therefore, that DNC shall be entitled, in
addition to any other remedies it may have under this Agreement or otherwise, to
preliminary and permanent injunctive and other equitable relief to prevent or
curtail any breach of this Agreement; provided, however, that no specification
in this Agreement of a specific legal or equitable remedy shall be construed as
a waiver or prohibition against the pursuing of other legal or equitable
remedies in the event of such a breach.
8. Severability. If any provision of this Agreement shall be
prohibited by or invalid under applicable law, it shall be deemed modified to
conform to the minimum requirements of such law, and if for any reason it is not
deemed so modified, it shall be
19
-19-
prohibited or invalid only to the extent of such prohibition or invalidity
without the remainder thereof or any other such provision being prohibited or
invalid.
9. Binding. This Agreement shall be binding upon AP and upon each
successor and assignee of AP, and shall inure to the benefit of, and be
enforceable by, DNC and each successor and assignee of DNC provided, however, in
the event DNC assigns its rights under this Agreement to a competitor of AP or
its Subsidiaries in the Business, AP's obligation to provide financial
information under Paragraphs 5a. and 5b. shall be suspended for the period
during which the shares and Put/Call Option Agreement are held by such assignee.
AP shall, however, provide to such assignee such information as is necessary for
it to determine whether or not to exercise the Put Option and such information
as is necessary to determine the Option Price.
10. Entire Agreement. This Agreement (a) contains the entire
agreement between DNC and AP with respect to the subject matter of this
Agreement and (b) supersedes each course of conduct previously pursued, and each
oral agreement and representation previously made, by DNC and AP with respect to
such subject matter. No course of performance or other conduct pursued in the
future, and no oral agreement or representation made in the future, by DNC and
no usage of trade shall modify or terminate this Agreement or waive, impair or
otherwise affect any obligation of AP pursuant to this Agreement or any right or
remedy of DNC pursuant to this Agreement or otherwise. No modification of this
Agreement and no waiver of any such right or remedy shall be effective unless
made in a writing duly executed by DNC and AP.
20
-20-
11. Notice Generally. Any notice, demand or delivery pursuant to the
provisions hereof shall be sufficiently given or made if sent by first class
mail, postage prepaid, addressed to Delaware North Companies, Incorporated at
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, with a
copy to ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Goodyear, ▇▇▇▇ ▇▇▇ ▇ & ▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.,
or to the Company or AP at c/▇ ▇▇▇▇▇▇▇ Incorporated, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇; with a copy to Wachtell, Lipton,
▇▇▇▇▇ & ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Esq., or such other address as shall have been furnished to the party giving or
making such notice, demand or delivery.
12. Governing Law. This Agreement shall be governed by and shall be
construed and enforced in accordance with the laws of the State of Delaware
without regard to its conflict of law rules.
13. Guarantee. At the Closing as defined in the Stock Purchase
Agreement, the obligations of AP to make payment hereunder shall be guaranteed
by ▇▇▇▇▇▇▇ Industries, Inc. by execution of the form of guarantee annexed hereto
and made a part hereof as Exhibit B.
14. Costs. All costs, expenses, liabilities or other amounts,
including reasonable legal fees and court costs, paid or incurred by DNC in
enforcing the terms and conditions of this Agreement, whether at law or in
equity, shall be paid and reimbursed by AP on demand if DNC is successful in
such enforcement action.
21
-21-
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
AP HOLDINGS, INC.
By: /s/
--------------------------------------
DELAWARE NORTH COMPANIES, INCORPORATED
By: /s/
--------------------------------------
