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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of report (Date of earliest event reported) April 8, 1999
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RENTAL SERVICE CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 000-21237 33-0569350
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(State or Other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification No.)
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6929 East Greenway Parkway, Suite 200, Scottsdale, Arizona 85254
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(Address of Principal Executive Offices) (Zip Code)
(602) 905-3300
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(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
The documents listed in Item 7(c) of this Report are furnished herewith and
incorporated herein by reference in their entirety.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired
None
(b) Pro Forma Financial Information
None
(c) Exhibits
Exhibit Number Description
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2.1 Agreement and Plan of Merger, dated as of
January 20, 1999, between NationsRent, Inc.
and Rental Service Corporation
2.2 Stock Option Agreement, dated as of January
20, 1999, between NationsRent, Inc. and Rental
Service Corporation
2.3 Stock Option Agreement, dated as of January
20, 1999, between Rental Service Corporation
and NationsRent, Inc.
2.4 Voting Agreement, dated as of January 20,
1999, between Kirk Holdings Limited
Partnership, H. Family Investments, Inc. and
Huizenga Investments Limited Partnership, as
shareholders, and Rental Service Corporation
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RENTAL SERVICE CORPORATION
--------------------------
(Registrant)
Date: April 8, 1999 By: /s/ Robert M. Wilson
------------------------------------
Robert M. Wilson
Executive Vice President and
Chief Financial Officer
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of January 20, 1999 (this
"Agreement"), between NATIONSRENT, INC., a Delaware corporation
("NationsRent"), and RENTAL SERVICE CORPORATION, a Delaware corporation ("RSC"
and, together with NationsRent, the "Constituent Corporations");
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of NationsRent and RSC (each, a
"Party" and, together, the "Parties") have each approved this Agreement and
the merger (the "Merger") of NationsRent with and into RSC upon the terms and
subject to the conditions set forth herein;
WHEREAS, it is intended that, for U.S. federal income tax purposes, the
Merger shall qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code");
WHEREAS, it is intended that, for financial accounting purposes, the Merger
shall be accounted for as a "pooling of interests" under generally accepted
accounting principles in the United States ("GAAP");
WHEREAS, as an inducement to the willingness of NationsRent to enter into
this Agreement, the board of directors of RSC has approved the grant to
NationsRent of an option to purchase shares of common stock, par value $.01
per share ("RSC Common Stock"), of RSC, pursuant to a stock option agreement,
dated as of the date of this Agreement, between NationsRent and RSC (the "RSC
Stock Option Agreement") and, as an inducement to the willingness of RSC to
enter into this Agreement, the board of directors of NationsRent has approved
the grant to RSC of an option to purchase shares of common stock, par value
$.01 per share ("NationsRent Common Stock"), of NationsRent pursuant to a
stock option agreement, dated as of the date of this Agreement, between RSC
and NationsRent (the "NationsRent Stock Option Agreement" and, together with
the RSC Stock Option Agreement, the "Stock Option Agreements"), and each of
NationsRent and RSC has duly authorized, executed and delivered each of the
Stock Option Agreements as of the date hereof; and
WHEREAS, NationsRent and RSC desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1. The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as defined in Section 1.3) NationsRent
shall be merged with and into RSC and the separate corporate existence of
NationsRent shall thereupon cease. RSC shall be the surviving corporation in
the Merger (sometimes hereinafter referred to as the "Surviving Corporation")
and shall continue to be governed by the laws of the State of Delaware, and
the separate corporate existence of RSC, with all its rights, privileges,
immunities, powers and franchises, shall continue unaffected by the Merger
except as set forth in Article III hereof. The Merger shall have the effects
specified in the Delaware General Corporation Law, as amended (the "DGCL").
1.2. Closing. The closing of the Merger (the "Closing") shall take place (i)
at the offices of Latham & Watkins, 885 Third Avenue, Suite 1000, New York,
New York 10022 at 9:00 A.M., local time, on the third business day after the
date on which the last to be fulfilled or waived of the conditions set forth
in Article VII
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(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions) shall
be satisfied or waived in accordance with this Agreement or (ii) at such other
place and time and/or on such other date as NationsRent and RSC may agree in
writing (the "Closing Date").
1.3. Effective Time. Immediately following the Closing, NationsRent and RSC
will cause a Certificate of Merger (the "Certificate of Merger") to be
executed, acknowledged and filed with the Secretary of State of Delaware as
provided in Section 251 of the DGCL. The Merger shall become effective at the
time when the Certificate of Merger has been duly filed with the Secretary of
State of Delaware or such other time as shall be agreed upon by the parties
and set forth in the Certificate of Merger in accordance with the DGCL (the
"Effective Time").
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING CORPORATION
2.1. The Certificate of Incorporation. The certificate of incorporation of
RSC as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation (the "Charter"),
until duly amended as provided therein or by applicable law, except that the
Charter shall be amended as set forth in Exhibit A (the "Charter Amendments").
2.2. The By-Laws. The by-laws of RSC, as amended in accordance with Section
5.1.15 and in effect at the Effective Time, shall be the by-laws of the
Surviving Corporation (the "By-Laws"), until thereafter amended as provided
therein or by applicable law.
ARTICLE III
OFFICERS AND DIRECTORS
3.1. Directors of Surviving Corporation. At the Effective Time, the board of
directors of the Surviving Corporation shall be increased by one member and
shall consist of nine directors, four of which shall be directors designated
by NationsRent from among NationsRent's present directors (the "NationsRent
Directors"), four of which shall be directors designated by RSC from among
RSC's present directors (the "RSC Directors"), and one of which (the "Agreed
Director") shall be designated by NationsRent with the consent of RSC (such
consent not to be unreasonably withheld), provided, however, that such Agreed
Director may not be related to H. Wayne Huizenga, or be an Affiliate (as
defined herein) of or serve as a director or executive officer of, any entity
of which H. Wayne Huizenga, any person related to him or any trust or entity
for the benefit of any such persons, owns, directly or indirectly, an equity
interest or interests having more than 15 percent of the ordinary voting power
in such entity. Each of such designations shall occur prior to the date that
the Form S-4 (as defined in Section 6.3.3) is declared effective. All of such
directors designated for the board of directors of RSC shall be the "New
Directors," each to serve until his successor has been duly elected or
appointed and qualified or until his earlier death, resignation or removal in
accordance with the Charter and the By-Laws. If, prior to the Effective Time,
any New Director shall decline or be unable to serve, the Party entitled to
designate such New Director shall designate another individual (a "New
Director Successor") to serve in such New Director's stead. Martin R. Reid and
James L. Kirk shall be designated as the initial and only members of the
nominating committee of the RSC board of directors.
3.2. Officers of Surviving Corporation. From and after the Effective Time,
the following persons shall be the officers of the Surviving Corporation and
hold the indicated offices: (A) Martin R. Reid, Chairman, (B) James L. Kirk,
Vice-Chairman, President and Chief Executive Officer and (C) Robert Wilson,
Senior Executive Vice President and Chief Financial Officer (each, a "New
Officer"), each to serve until his successor has been duly appointed or until
his earlier death, resignation or removal in accordance with the By-Laws. If,
prior to the Effective Time, any New Officer shall decline or be unable to
serve, a person to fill such position shall be designated by the New
Directors.
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ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
4.1. Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any capital stock
of NationsRent:
4.1.1. Merger Consideration. Each share of NationsRent Common Stock (each,
a "NationsRent Common Share" and, together, the "NationsRent Common Shares")
issued and outstanding immediately prior to the Effective Time (other than
NationsRent Common Shares that are owned by RSC or any direct or indirect
subsidiary of RSC or NationsRent Common Shares that are owned or held in
treasury by NationsRent, or owned by any direct or indirect subsidiary of
NationsRent (collectively, "Excluded NationsRent Shares")) shall be converted
into and become exchangeable for 0.355 (the "Exchange Ratio") of a share of
RSC Common Stock, subject to adjustment as provided in Section 4.5 (the
"Merger Consideration"). At the Effective Time, all NationsRent Common Shares
shall no longer be outstanding, shall be cancelled and retired and shall cease
to exist, and each certificate (a "Certificate") formerly representing any of
such NationsRent Common Shares (other than Excluded NationsRent Shares) shall
thereafter represent only the right to receive the Merger Consideration and
the right, if any, to receive pursuant to Section 4.2.4 cash in lieu of
fractional shares of RSC Common Stock into which such NationsRent Common
Shares have been converted pursuant to this Section 4.1.1 and any distribution
or dividend pursuant to Section 4.2.2, in each case without interest.
4.1.2. Cancellation of Shares. Each Excluded NationsRent Share issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, no longer be
outstanding, shall be cancelled and retired without payment of any
consideration therefor and shall cease to exist.
4.1.3. Effect on RSC Common Stock. Each share of RSC Common Stock issued
and outstanding immediately prior to the Effective Time shall remain unchanged
by the Merger and shall remain issued and outstanding after the Effective
Time.
4.2. Exchange of Certificates for Shares.
4.2.1. Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause an exchange agent selected by RSC with
NationsRent's prior approval, which shall not be unreasonably withheld (the
"Exchange Agent"), to mail to each holder of record as of the Effective Time
of a Certificate (other than holders of a Certificate in respect of Excluded
NationsRent Shares) (i) a letter of transmittal specifying that delivery shall
be effected, and that risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates (or affidavits of loss and
indemnification in lieu thereof as provided in Section 4.2.6) to the Exchange
Agent (the "Letter of Transmittal"), such letter of transmittal to be in such
form and have such other provisions as RSC and NationsRent may reasonably
agree, and (ii) instructions for exchanging Certificates for (A) certificates
representing shares of RSC Common Stock and (B) any unpaid dividends and other
distributions and cash in lieu of fractional shares. Subject to Section 4.2.7,
upon surrender of a Certificate (or affidavit of loss and indemnification in
lieu thereof as provided in Section 4.2.6) for cancellation to the Exchange
Agent together with a duly executed Letter of Transmittal, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of RSC Common Stock that such holder
is entitled to receive pursuant to this Article IV and a check in the amount
(after giving effect to any required tax withholdings) of (A) any cash in lieu
of fractional shares determined in accordance with Section 4.2.4 hereof plus
(B) any cash dividends and any other dividends or other distributions that
such holder has the right to receive pursuant to the provisions of this
Article IV, and any Certificate so surrendered shall forthwith be cancelled.
No interest will be paid or accrued on any amount payable upon due surrender
of any Certificate. In the event of a transfer of ownership of NationsRent
Common Shares that is not registered in the transfer records of NationsRent, a
certificate representing the proper number of shares of RSC Common Stock,
together with a check for any cash in lieu of fractional shares to be paid
upon due surrender of the Certificate and any other dividends or distributions
in respect thereof, may be issued and/or paid to such a transferee if the
Certificate
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formerly representing such NationsRent Common Shares is presented to the
Exchange Agent accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have
been paid. If any certificate for shares of RSC Common Stock is to be issued
in a name other than that in which the Certificate surrendered in exchange
therefor is registered, it shall be a condition of such exchange that the
Person (as defined below) requesting such exchange shall pay any transfer or
other taxes required by reason of the issuance of a certificate for shares of
RSC Common Stock in a name other than that of the registered holder of the
Certificate surrendered or shall establish to the satisfaction of RSC or the
Exchange Agent that such tax has been paid or is not applicable.
For the purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1.4)
or other entity of any kind or nature.
4.2.2. Distributions with Respect to Unexchanged Shares; Voting.
4.2.2.1. Whenever a dividend or other distribution is declared by RSC in
respect of RSC Common Stock, the record date for which is at or after the
Effective Time, that declaration shall include dividends or other
distributions in respect of all shares of RSC Common Stock issuable pursuant
to this Agreement. No dividends or other distributions in respect of such RSC
Common Stock shall be paid to any holder of any unsurrendered Certificate
until such Certificate is surrendered for exchange in accordance with this
Article IV. Subject to the effect of applicable laws, following surrender of
any such Certificate there shall be issued and/or paid to the holder of the
certificates representing whole shares of RSC Common Stock issued in exchange
therefor, without interest, (A) at the time of such surrender, the dividends
or other distributions with a record date after the Effective Time and a
payment date on or prior to the date of issuance of such whole shares of RSC
Common Stock and not previously paid and (B) at the appropriate payment date,
the dividends or other distributions payable with respect to such whole shares
of RSC Common Stock with a record date after the Effective Time but with a
payment date subsequent to surrender. For purposes of dividends or other
distributions in respect of shares of RSC Common Stock, all shares of RSC
Common Stock to be issued pursuant to the Merger shall be deemed issued and
outstanding as of the Effective Time.
4.2.2.2. Registered holders of unsurrendered Certificates shall be
entitled to vote after the Effective Time at any meeting of RSC stockholders
with a record date at or after the Effective Time the number of whole shares
of RSC Common Stock represented by such Certificates, as the case may be,
regardless of whether such holders have surrendered their Certificates.
4.2.3. Transfers. After the Effective Time, there shall be no transfers on
the stock transfer books of NationsRent of NationsRent Common Shares that were
outstanding immediately prior to the Effective Time.
4.2.4. Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of RSC Common Stock will be issued and any
holder of NationsRent Common Shares entitled to receive a fractional share of
RSC Common Stock but for this Section 4.2.4 shall be entitled to receive an
amount in cash (without interest) determined by multiplying such fraction
(rounded to the nearest one-hundredth of a share) by the closing price of a
share of RSC Common Stock, as reported in The Wall Street Journal, New York
City edition, on the trading day immediately prior to the Effective Time.
4.2.5. Termination of Exchange Period; Unclaimed Stock. Any shares of RSC
Common Stock and any portion of the cash, dividends or other distributions
with respect to the RSC Common Stock deposited by RSC with the Exchange Agent
(and the proceeds of any investments thereof) that remain unclaimed by the
stockholders of NationsRent 180 days after the Effective Time shall be paid to
RSC. Any stockholders of NationsRent who have not theretofore complied with
this Article IV shall thereafter look only to RSC for payment of their shares
of RSC Common Stock and any cash, dividends and other distributions in respect
thereof issuable and/or payable pursuant to Section 4.1.1, Section 4.2.2 and
Section 4.2.4 upon due surrender of their Certificates (or affidavits of loss
and indemnification in lieu thereof as provided in Section 4.2.6), without any
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interest thereon. Notwithstanding the foregoing, none of RSC, the Surviving
Corporation, the Exchange Agent nor any other Person shall be liable to any
former holder of NationsRent Common Shares for any amount properly delivered
to a public official pursuant to applicable abandoned property, escheat or
similar laws.
4.2.6. Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and the posting by such Person of a bond in the form
customarily required by RSC as indemnity against any claim that may be made
against it with respect to such Certificate, RSC will issue the shares of RSC
Common Stock and the Exchange Agent will deliver any cash, dividends and other
distributions in respect thereof issuable and/or payable in exchange for such
lost, stolen or destroyed Certificate pursuant to Section 4.1.1, Section 4.2.2
and Section 4.2.4 upon due surrender of and deliverable in respect of
NationsRent Common Shares represented by such Certificate pursuant to this
Agreement, in each case, without interest.
4.2.7. Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any "affiliate" (as determined
pursuant to Section 6.12) of NationsRent shall not be exchanged until RSC has
received a written agreement from such Person as provided in Section 6.12
hereof.
4.3. Dissenters' Rights. In accordance with Section 262 of the DGCL, no
appraisal rights shall be available to holders of NationsRent Common Stock or
RSC Common Stock in connection with the Merger.
4.4. NationsRent Stock Options. At the Effective Time, each outstanding
option to purchase NationsRent Common Shares (each, a "NationsRent Stock
Option"), whether vested or unvested, issued under the NationsRent Stock Plans
(as defined in Section 5.1.2.1), shall cease to represent a right to acquire
shares of NationsRent Common Stock and shall be converted automatically into
an option to purchase shares of RSC Common Stock, and RSC shall assume each
such NationsRent Stock Option subject to the terms of any of the NationsRent
Stock Plans, and the agreements evidencing grants thereunder; provided,
however, that from and after the Effective Time, (i) the number of shares of
RSC Common Stock purchasable upon exercise shall be equal to the number of
shares of NationsRent Common Stock that were purchasable under such
NationsRent Stock Option immediately prior to the Effective Time multiplied by
the Exchange Ratio, subject to adjustment as provided in Section 4.5, and
rounding down to the nearest whole share of RSC Common Stock, and (ii) the per
share exercise price shall be equal to the result of dividing the per share
exercise price of such NationsRent Stock Option by the Exchange Ratio, subject
to adjustment as provided in Section 4.5, and rounding down to the nearest
cent. Notwithstanding the foregoing, the number of and the per share exercise
price of each NationsRent Stock Option which is an "incentive stock option"
(as defined in Section 422 of the Code) shall be adjusted in accordance with
the requirements of Section 424 of the Code, as necessary in order for such
NationsRent Stock Option to be an "incentive stock option." Accordingly, with
respect to any incentive stock options, fractional shares of RSC Common Stock
shall be rounded down to the nearest whole number of shares and, where
necessary, the per share exercise price shall be rounded up to the nearest
cent. After the Effective Time, the board of directors of RSC shall keep
reserved for issuance a number of shares of RSC Common Stock sufficient for
issuance upon exercise of all NationsRent Stock Options outstanding after the
Effective Time. At the Effective Time, RSC shall send a notice to each holder
of a NationsRent Stock Option informing such holder of the number of shares of
RSC Common Stock that are subject to, and the exercise price of, such holder's
NationsRent Stock Options assumed by RSC and as soon as practicable after the
Effective Time, RSC shall file with the Securities and Exchange Commission
(the "SEC") a registration statement on an appropriate form or a post-
effective amendment to a previously filed registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
shares of RSC Common Stock subject to NationsRent Stock Options assumed
pursuant to this Section, and shall use its best reasonable efforts to
maintain the current status of the prospectus contained therein, as well as
comply with any applicable state securities or "blue sky" laws while such
NationsRent Stock Options remain outstanding.
4.5. Adjustments to Prevent Dilution. In the event that prior to the
Effective Time there is a change in the number of NationsRent Common Shares or
shares of RSC Common Stock or securities convertible or exchangeable into or
exercisable for shares of NationsRent Common Stock or shares of RSC Common
Stock
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issued and outstanding as a result of a distribution, reclassification, stock
split (including a reverse split), stock dividend or distribution, or other
similar transaction, the Exchange Ratio shall be equitably adjusted to
eliminate the effects of such event.
4.6. Treatment of Other Equity Rights. The Other NationsRent Equity Rights
(as defined in paragraph 5.1.2.1) outstanding at the Effective Time shall be
treated as set forth in Section 6.17.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of NationsRent and RSC. Except as set
forth in the corresponding sections or subsections of the disclosure letter,
dated the date hereof, delivered by NationsRent to RSC or by RSC to
NationsRent (each a "Disclosure Letter", and the "NationsRent Disclosure
Letter" and the "RSC Disclosure Letter", respectively), as the case may be,
NationsRent (except for subparagraphs 5.1.2.2, 5.1.3.2, 5.1.14(ii), 5.1.15 and
5.1.16.1 below and references in paragraphs 5.1.1 and 5.1.8.1 below to
documents made available by RSC to NationsRent) hereby represents and warrants
to RSC, and RSC (except for paragraphs 5.1.2.1, 5.1.3.1, 5.1.14(i) and
5.1.16.2 below and references in paragraphs 5.1.1 and 5.1.8.1 below to
documents made available by NationsRent to RSC) hereby represents and warrants
to NationsRent, that:
5.1.1. Organization, Good Standing and Qualification. Each of it and its
Subsidiaries (as defined below) is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority,
and has been duly authorized by all necessary approvals and orders, to own and
operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except
where the failure to be so authorized, qualified or in good standing is not,
when taken together with all other such failures, reasonably likely to have a
Material Adverse Effect (as defined below) on it. It has made available to
RSC, in the case of NationsRent, and to NationsRent, in the case of RSC, a
complete and correct copy of its certificate of incorporation and by-laws,
each as amended to the date hereof. Such certificates of incorporation and by-
laws as so made available are in full force and effect.
As used in this Agreement, (i) the term "Subsidiary" means, with respect
to NationsRent or RSC, as the case may be, any entity, whether incorporated or
unincorporated, of which at least fifty percent of the securities or ownership
interests having by their terms ordinary voting or other power (including by
contract) (A) to elect directors having at least fifty percent of the voting
power of the entire board of directors or other persons performing similar
functions or (B) to directly perform such functions is directly or indirectly
owned by such Party or by one or more of its respective Subsidiaries or by
such Party and any one or more of its respective Subsidiaries, (ii) the term
"Material Adverse Effect" means, with respect to either RSC or NationsRent, as
the case may be, a material adverse effect on the financial condition,
properties, business or results of operations of such Person and its
Subsidiaries, taken as a whole, other than any change or effect arising out of
general economic conditions or conditions generally affecting the equipment
rental industry and (iii) unless otherwise specified, "Affiliate" shall have
the meaning specified in Rule 12b-2 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
5.1.2. Capital Structure.
5.1.2.1. The authorized capital stock of NationsRent consists of
250,000,000 shares of NationsRent Common Stock, of which 55,618,024 shares of
NationsRent Common Stock were issued and outstanding and no shares of
NationsRent Common Stock were held in treasury as of the close of business on
January 19, 1999, 5,000,000 shares of Preferred Stock, $0.01 par value per
share (the "NationsRent Preferred Shares"), none of which was outstanding as
of the date hereof. All of the outstanding shares of NationsRent Common Stock
have been duly authorized and are validly issued, fully paid and
nonassessable. Other than shares
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of NationsRent Common Stock subject to issuance under the NationsRent Stock
Option Agreement or subject to issuance as set forth below, NationsRent has no
shares of NationsRent Common Stock or NationsRent Preferred Shares reserved
for or otherwise subject to issuance. As of the date hereof, there were not
more than 4,055,780 shares of NationsRent Common Stock that were subject to
outstanding options, whether vested or unvested, issued by NationsRent, or
that NationsRent was obligated to issue, pursuant to NationsRent Compensation
and Benefit Plans identified in Section 5.1.8 of the NationsRent Disclosure
Letter as being the only NationsRent Compensation and Benefit Plans pursuant
to which NationsRent Common Stock (or options to purchase NationsRent Common
Stock) may be issued (collectively the "NationsRent Stock Plans"). As of the
date hereof, there were not more than 8,911,337 shares of NationsRent Common
Stock that were subject to warrants, convertible notes or other securities of
NationsRent convertible into or exercisable or exchangeable for, or
obligations of NationsRent (whether subject to condition or not) to issue,
shares of NationsRent Common Stock (excluding the NationsRent Stock Options)
("Other NationsRent Equity Rights") outstanding on the date hereof. All
agreements and instruments creating or giving rise to any Other NationsRent
Equity Rights as of the date hereof are set forth in the NationsRent
Disclosure Letter. Each of the outstanding shares of capital stock or other
securities of each of NationsRent's Subsidiaries is duly authorized and
validly issued, fully paid and nonassessable and owned by NationsRent or a
direct or indirect wholly-owned Subsidiary of NationsRent, free and clear of
any lien, pledge, security interest, claim or other encumbrance. Except as set
forth above, for the NationsRent Stock Option Agreement and for options to
purchase shares of NationsRent Common Stock and Other NationsRent Equity
Rights which are permitted to be issued in accordance with Section 6.1, there
are no agreements or instruments creating or giving rise to preemptive or
other outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or sell any shares of capital stock or
other securities of NationsRent or any of its Subsidiaries or any securities
or obligations convertible or exchangeable into or exercisable for, or giving
any Person a right to subscribe for or acquire, any securities of NationsRent
or any of its Subsidiaries, and no securities or obligations evidencing such
rights are authorized, issued or outstanding. The shares of NationsRent Common
Stock issuable pursuant to the NationsRent Stock Option Agreement have been
duly reserved for issuance by NationsRent, and upon any issuance of such
NationsRent Common Shares in accordance with the terms of the NationsRent
Stock Option Agreement, such shares of NationsRent Common Stock will be duly
authorized and validly issued, fully paid and nonassessable. NationsRent does
not have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or, except for obligations referred
to above, convertible into or exercisable for securities having the right to
vote) with the stockholders of NationsRent on any matter. NationsRent does
not, directly or indirectly, hold any equity interests (or securities
convertible into equity interests) in any entity, whether or not incorporated,
other than its Subsidiaries. NationsRent has no contingent payment, earnout or
other similar payment obligations which have arisen in connection with
acquisitions currently outstanding.
5.1.2.2. The authorized capital stock of RSC consists of 40,000,000
shares of RSC Common Stock, of which 24,097,648 shares were issued and
outstanding and no shares were held in treasury as of the close of business on
January 19, 1999, and 500,000 shares of Preferred Stock, par value $0.01 per
share (the "RSC Preferred Shares"), none of which shares was outstanding as of
the close of business on the date hereof. All of the outstanding shares of RSC
Common Stock have been duly authorized and are validly issued, fully paid and
nonassessable. Other than shares of RSC Common Stock subject to issuance under
the RSC Stock Option Agreement or subject to issuance as set forth below, RSC
has no shares of RSC Common Stock or RSC Preferred Shares reserved for or
subject to issuance. As of the date hereof, there were not more than 1,995,091
shares of RSC Common Stock that were subject to outstanding options, whether
vested or unvested, issued by RSC, or that RSC was obligated to issue,
pursuant to the RSC Compensation and Benefit Plans identified in Section 5.1.8
of the RSC Disclosure Letter as being the only RSC Compensation and Benefit
Plans pursuant to which shares of RSC Common Stock (or options to purchase RSC
Common Stock) may be issued (collectively, the "RSC Stock Plans"). As of the
date hereof, no shares of RSC Common Stock were subject to warrants,
convertible notes or other securities of RSC convertible into or exercisable
or exchangeable for, or obligations of RSC (whether subject to condition or
not) to issue, shares of RSC Common Stock (excluding the RSC Stock Options)
("Other RSC Equity Rights") outstanding on the date hereof. All agreements and
instruments creating
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or giving rise to any Other RSC Equity Rights as of the date hereof are set
forth in the RSC Disclosure Letter. Each of the outstanding shares of capital
stock of each of RSC's Subsidiaries is duly authorized and validly issued,
fully paid and nonassessable and owned by RSC or a direct or indirect wholly-
owned subsidiary of RSC, free and clear of any lien, pledge, security
interest, claim or other encumbrance. Except as set forth above, for the RSC
Stock Option Agreement and for options to purchase shares of RSC Common Stock
and Other RSC Equity Rights which are permitted to be issued in accordance
with Section 6.1, there are no agreements or instruments creating or giving
rise to preemptive or other outstanding rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements or commitments to issue or to sell any shares of
capital stock or other securities of RSC or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire, any securities of
RSC or any of its Subsidiaries, and no securities or obligations evidencing
such rights are authorized, issued or outstanding. The shares of RSC Common
Stock issuable pursuant to the RSC Stock Option Agreement have been duly
reserved for issuance by RSC, and upon any issuance of such shares in
accordance with the terms of the RSC Stock Option Agreement, such RSC Common
Shares will be duly authorized and validly issued, fully paid and
nonassessable. RSC does not have outstanding any bonds, debentures, notes or
other obligations the holders of which have the right to vote (or, except for
obligations referred to above, convertible into or exercisable for securities
having the right to vote) with the stockholders of RSC on any matter. RSC does
not, directly or indirectly, hold any equity interests (or securities
convertible into equity interests) in any entity, whether or not incorporated,
other than its Subsidiaries. RSC has no contingent payment, earnout or other
similar payment obligations currently outstanding.
5.1.3. Corporate Authority; Approval and Fairness.
5.1.3.1. NationsRent has all requisite corporate power and authority and
has taken all corporate action necessary in order to execute, deliver and
perform its obligations under this Agreement and the NationsRent Stock Option
Agreement to consummate the Merger and the other transactions contemplated
hereby and thereby, subject only to approval and adoption of this Agreement by
the holders of a majority of the outstanding shares of NationsRent Common
Stock (the "NationsRent Requisite Vote"). Each of this Agreement and the
NationsRent Stock Option Agreement has been duly executed and delivered by
NationsRent and is a valid and binding agreement of NationsRent enforceable
against NationsRent in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights and to
general equity principles (the "Bankruptcy and Equity Exception"). On or prior
to the date hereof, the board of directors of NationsRent (i) has unanimously
approved and declared advisable this Agreement and approved each of the Stock
Option Agreements and the Merger and the other transactions contemplated
hereby and thereby and has resolved to recommend that the holders of
NationsRent Common Stock approve and adopt the Merger Agreement and the
transactions contemplated hereby, and (ii) has received the opinion of its
financial advisors, Bear, Stearns & Co. Inc., in a customary form and to the
effect that the Exchange Ratio is fair, from a financial point of view, to
such holders.
5.1.3.2. RSC has all requisite corporate power and authority and has
taken all corporate action necessary in order to execute, deliver and perform
its obligations under this Agreement and the RSC Stock Option Agreement and to
consummate the Merger and the other transactions contemplated hereby and
thereby, subject only to approval and adoption of this Agreement by the
holders of a majority of the outstanding shares of RSC Common Stock and the
approval of the Charter Amendments by the holders of a majority of the
outstanding shares of RSC Common Stock (together, the "RSC Requisite Vote").
Each of this Agreement and the RSC Stock Option Agreement has been duly
executed and delivered by RSC and is a valid and binding agreement of RSC,
enforceable against RSC in accordance with its terms, subject to the
Bankruptcy and Equity Exception. On or prior to the date hereof, the board of
directors of RSC (i) has unanimously approved and declared advisable this
Agreement, and approved each of the Stock Option Agreements and the Merger and
the other transactions contemplated hereby and thereby and has resolved to
recommend that the holders of RSC Common Stock approve and adopt the Merger
Agreement and the transactions contemplated hereby, and (ii) has received the
opinion of its financial advisors, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, in a customary form and to the effect that the Exchange Ratio is
fair to RSC from a financial point of view. The shares of RSC
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Common Stock, when issued pursuant to this Agreement, will be duly authorized
and validly issued, fully paid and nonassessable and no stockholder of RSC
will have any preemptive right of subscription or purchase in respect thereof.
5.1.4. Governmental Filings; No Violations.
5.1.4.1. Other than the necessary filings, notices, approvals and/or
consents (i) pursuant to Sections 1.3 and 7.1.5, (ii) under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the
Exchange Act and the Securities Act of 1933, as amended (the "Securities Act")
and (iii) to comply with state securities or "blue-sky" laws (such filings,
notices and/or approvals of NationsRent being the "NationsRent Required
Consents" and of RSC being the "RSC Required Consents"), no filings, notices
and/or reports are required to be made by it with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
it from, any governmental or regulatory authority, court, agency, commission,
body or other governmental entity ("Governmental Entity"), in connection with
the execution and delivery of this Agreement or the Stock Option Agreements by
it and the consummation by it of the Merger and the other transactions
contemplated hereby and thereby, except those that the failure to make or
obtain are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on it or prevent, materially delay or materially
impair its ability to consummate the Merger and the other transactions
contemplated by this Agreement or the Stock Option Agreements.
5.1.4.2. The execution, delivery and performance of this Agreement and
each Stock Option Agreement by it do not, and the consummation by it of the
Merger and the other transactions contemplated hereby and thereby will not,
constitute or result in (i) a breach or violation of, or a default under, its
certificate of incorporation or by-laws or the comparable governing
instruments of any of its Significant Subsidiaries, (ii) a breach or violation
of, or a default under, the acceleration of any rights or obligations or the
creation of a lien, pledge, security interest or other encumbrance on its
assets or the assets of any of its Subsidiaries (with or without notice, lapse
of time or both) pursuant to, any agreement, lease, contract, note, mortgage,
indenture, arrangement or other obligation ("Contracts") binding upon it or
any of its Subsidiaries or, assuming the filings, notices and/or approvals
referred to in Section 5.1.4.1 are made or obtained, any Law (as defined in
Section 5.1.9) or governmental or non-governmental permit or license to which
it or any of its Subsidiaries is subject or (iii) any change in the rights or
obligations of any party under any of its Contracts, including any
acceleration thereof, except, in the case of clause (ii) or (iii) above, for
any breach, violation, default, acceleration, creation or change that is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on it or prevent, materially delay or materially impair its ability to
consummate the Merger and the other transactions contemplated by this
Agreement or the Stock Option Agreements. The NationsRent Disclosure Letter,
with respect to NationsRent, and the RSC Disclosure Letter, with respect to
RSC, sets forth a correct and complete list of Contracts of it and its
Subsidiaries pursuant to which consents or waivers are or may be required
prior to consummation of the transactions contemplated by this Agreement other
than those where the failure to obtain such consents or waivers is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on it or prevent or materially impair its ability to consummate the
Merger and the other transactions contemplated by this Agreement or the Stock
Option Agreements.
5.1.5. Reports; Financial Statements. It has made available to the other
Party, each registration statement, report, proxy statement or information
statement prepared by it since December 31, 1997 (the "Audit Date"), in the
form (including exhibits, annexes and any amendments thereto) filed with the
SEC (collectively, including any such reports filed subsequent to the date
hereof, its "Reports") and unaudited historical financial statements for the
quarter to date, ended November 30, 1998 (the "Fourth Quarter Reports"). As of
their respective dates, its Reports did not, and any Report filed with the SEC
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into its
Reports (including the related notes and schedules) fairly presents, or will
fairly present, in all material respects, the consolidated financial position
of it and its Subsidiaries as of its date and each of the consolidated
statements of
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income, of stockholders' equity and of cash flows included in or incorporated
by reference into its Reports (including any related notes and schedules)
fairly presents, or will fairly present, in all material respects, the
consolidated results of operations, retained earnings and cash flows, as the
case may be, of it and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to the absence of complete
notes and normal year-end audit adjustments that will not be material in the
aggregate in amount or effect), in each case in accordance with GAAP
consistently applied during the periods involved, except as may be noted
therein. The consolidated balance sheet included in the Fourth Quarter Reports
fairly presents, in all material respects, the consolidated financial position
of it and its Subsidiaries as of its date and the consolidated statements of
income included in the Fourth Quarter Reports (including any related notes and
schedules) fairly presents, in all material respects, the consolidated results
of operations of it and its Subsidiaries for the periods set forth therein
(subject to the absence of complete notes and normal year-end audit
adjustments that will not be material in the aggregate in amount or effect),
in each case in accordance with GAAP consistently applied during the periods
involved, except as may be noted therein. When NationsRent's audited financial
statements for the one-year period ended December 31, 1998 (the "Audited
Statements") are available and delivered to RSC, the consolidated fully
diluted earnings per share of NationsRent for the three months ended December
31, 1998, as reflected in its Audited Statements, will not be materially and
adversely inconsistent with $.11 per share, fully diluted.
As used herein, "Fourth Quarter Reports" means (i) in the case of RSC, its
unaudited historical financial statements for the quarter ended December 31,
1998, and (ii) in the case of NationsRent, its unaudited financial statements
for the quarter to date ended November 30, 1998.
5.1.6. Absence of Certain Changes. Except as disclosed in its Reports
filed prior to the date hereof or as expressly contemplated or permitted by
this Agreement, since the Audit Date it and its Subsidiaries have conducted
their respective businesses only in, and have not engaged in any material
transaction other than according to, the ordinary and usual course of such
businesses and there has not been (i) any change in the financial condition,
properties, business or results of operations of it and its Subsidiaries,
except those changes that, individually or in the aggregate, have not had and
are not reasonably likely to have, a Material Adverse Effect on it; (ii) any
declaration, setting aside or payment of any dividend or other distribution in
respect of its capital stock; (iii) any split in its capital stock,
combination, subdivision or reclassification of any of its capital stock; or
(iv) any change by it in accounting principles, practices or methods, except
as required by changes in GAAP. Since the Audit Date, except as provided for
herein, in its respective Disclosure Letter or as disclosed in the Reports
filed prior to the date hereof, there has not been any increase in the salary,
wage, bonus or other compensation payable or that could become payable by it
or any of its Subsidiaries to directors or executive officers, other than
increases in the ordinary course.
5.1.7. Litigation and Liabilities. Except as disclosed in its Reports
filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of its executive officers, threatened against it
or any of its Affiliates or (ii) obligations or liabilities, whether or not
accrued, contingent or otherwise and whether or not required to be disclosed,
or any other facts or circumstances, in either such case, of which its
executive officers have knowledge that would reasonably be expected to result
in any claims against or obligations or liabilities of it or any of its
Affiliates, except for those that are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it or prevent,
materially delay or materially impair its ability to consummate the Merger and
the transactions contemplated by this Agreement.
5.1.8. Employee Benefits; Labor Matters.
5.1.8.1. A copy of each "employee benefit plan", within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and each bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, change of control,
termination, severance, compensation, medical, health or other plan,
agreement, policy or arrangement that covers one or more employees, directors,
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former employees or former directors of it and its Subsidiaries (in the case
of NationsRent, the "NationsRent Compensation and Benefit Plans" and, in the
case of RSC, the "RSC Compensation and Benefit Plans," and, in the case of
NationsRent or RSC, respectively, the "Compensation and Benefit Plans") and
any trust agreements or insurance contracts forming a part of such
Compensation and Benefit Plans has been made available by NationsRent to RSC
or by RSC to NationsRent, as the case may be, prior to the date hereof and
each such applicable Compensation and Benefit Plan is listed in Section 5.1.8
of its respective Disclosure Letter.
5.1.8.2. Each of its respective Compensation and Benefit Plans is in
substantial compliance with all applicable Law, including the Code and ERISA.
Each of its Compensation and Benefit Plans that is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA (a "Pension Plan")
and that is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service
(the "IRS") with respect to "TRA" (as such term is defined in Section 1 of
Rev. Proc 93-39), and it is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. There is no pending or,
to the knowledge of its executive officers, threatened in writing material
litigation or claim relating to its Compensation and Benefit Plans. Neither it
nor any Subsidiary has engaged in a transaction with respect to any of its
Compensation and Benefit Plans that, assuming the taxable period of such
transaction expired as of the date hereof, would subject it or any of its
Subsidiaries to a material tax or penalty imposed by either Section 4975 of
the Code or Section 502 of ERISA.
5.1.8.3. As of the date hereof, no liability under Subtitle C or D of
Title IV of ERISA (other than the payment of premiums to the Pension Benefit
Guaranty Corporation) has been or is expected to be incurred by it or any
Subsidiary with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any of them, or the single-employer plan of any entity
which (i) is considered one employer with it under Section 4001 of ERISA or
Section 414 of the Code (its "ERISA Affiliate") (each such single-employer
plan, its "ERISA Affiliate Plan") or (ii) at any relevant time was considered
one employer with it under Section 4001 of ERISA or Section 414 of the Code.
It and its Subsidiaries and ERISA Affiliates have not contributed, or been
obligated to contribute, to a "multiemployer plan", within the meaning of
Section 4001(a)(3) of ERISA, and have not incurred, and are not expected to
incur, any liability under Subtitle E of Title IV of ERISA. No "reportable
event", within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has occurred for any of its Pension
Plans or any of its ERISA Affiliate Plans within the 12-month period ending on
the date hereof or will occur in connection with the consummation of the
Merger or the other transactions contemplated by this Agreement.
5.1.8.4. All contributions required to be made under the terms of any of
its Compensation and Benefit Plans as of the date hereof have been timely made
or have been reflected on the most recent consolidated balance sheet filed or
incorporated by reference in its Reports prior to the date hereof. Neither any
of its Pension Plans nor any of any of its ERISA Affiliate Plans has an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA. Neither it nor its
Subsidiaries has provided, or is required to provide, security to any of its
Pension Plans or to any other single-employer plan pursuant to Section
401(a)(29) of the Code, or is subject to any lien pursuant to Section 412 of
the Code or Section 302 of ERISA.
5.1.8.5. Under each of its Pension Plans which is a single-employer plan
and each of its ERISA Affiliate Plans, as of the last day of the most recent
plan year ended prior to the date hereof, the actuarially determined present
value of all "benefit liabilities", within the meaning of Section 4001(a)(16)
of ERISA (as determined on the basis of the actuarial assumptions contained in
such Pension Plan's or ERISA Affiliate Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such
Pension Plan or ERISA Affiliate Plan, and there has been no material change in
the financial condition of such Pension Plan or ERISA Affiliate Plan since the
last day of the most recent plan year.
5.1.8.6. Neither it nor its Subsidiaries have any obligations for
retiree health, life or other welfare benefits under any of its Compensation
and Benefit Plans, except as set forth in its Reports filed prior to the date
hereof or as required by applicable Law.
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5.1.8.7. Except as may be provided in agreements, plans and instruments
identified in its Disclosure Letter, none of the consummation of the Merger
and the other transactions contemplated by this Agreement, the performance of
its obligations under the Stock Option Agreements or the adoption of this
Agreement by its stockholders, shall (x) except as may be provided in this
Agreement, entitle any of its or its Subsidiaries' employees, consultants or
directors, or former employees, consultants or directors, to compensation and
benefits, directly or indirectly, upon termination of employment, (y)
accelerate the time of funding (whether through a grantor trust or otherwise),
payment or vesting or cause any payment of compensation or benefits under,
increase the amount payable or cause any other material obligation pursuant
to, any of its respective Compensation and Benefit Plans or (z) result in any
payments under any of its Compensation and Benefit Plans the deduction for
which would be disallowed under Section 162(m) or Section 280G of the Code.
5.1.8.8. To the knowledge of its executive officers, it has no material
labor relations disputes pending and its labor relations are satisfactory in
all material respects. Except as disclosed in the applicable Disclosure
Letter, it is not a party to any labor agreement and its employees are not
members of any union or similar organization or the subject of any union
organizing efforts. It has complied with any applicable labor or union
agreement, and all laws relating to the employment of labor, including
provisions relating to wages, hours, equal opportunity and collective
bargaining.
5.1.8.9. Notwithstanding anything to the contrary contained in this
Section 5.1.8, the representations and warranties contained in this Section
5.1.8 shall be deemed to be true and correct with respect to it unless such
failures to be true and correct (without giving effect to the individual
materiality qualifications and thresholds otherwise contained in this Section
5.1.8) are, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on it.
5.1.9. Compliance with Laws. Except as set forth in its Reports filed
prior to the date hereof, the businesses of each of it and its Subsidiaries
have not been, and are not being, conducted in violation of any law, statute,
ordinance, regulation, judgment, order, decree, injunction, arbitration award,
license, authorization, opinion, agency requirement or permit of any
Governmental Entity or common law (collectively, "Laws"), except for
violations that are not, individually or in the aggregate, reasonably likely
to have a Material Adverse Effect on it or to prevent, materially delay or
materially impair its ability to consummate the Merger and the transactions
contemplated by this Agreement or the Stock Option Agreements. Each of it and
its Subsidiaries has all permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, consents and approvals
(collectively, "Permits") necessary to conduct their business as presently
conducted, except for those the absence of which are not, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect on it.
5.1.10. Environmental Protection.
Except as set forth in its respective Disclosure Letter or in its Reports
filed prior to the date hereof:
5.1.10.1. it and each of its subsidiaries is in compliance with all
applicable Environmental Laws (as defined below), and neither it nor any of
its Subsidiaries has received any communication from any person or
Governmental Authority that alleges that it or any of its Subsidiaries is not
in compliance with applicable Environmental Laws, except where any failure or
alleged failure to be in such compliance would not individually or in the
aggregate have a Material Adverse Effect.
5.1.10.2. it and each of its Subsidiaries has obtained or has applied
for all environmental, health and safety permits and governmental
authorizations (collectively, the "Environmental Permits") necessary for the
construction of their facilities or the conduct of their operations except
where the failure to so obtain would not individually or in the aggregate have
a Material Adverse Effect, and all such Environmental Permits are in good
standing or, where applicable, a renewal application has been timely filed and
is pending agency approval, and it and its subsidiaries are in compliance with
all terms and conditions of the Environmental Permits except as would not
individually or in the aggregate have a Material Adverse Effect.
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5.1.10.3. there is no Environmental Claim (as defined below) pending or,
to the knowledge of its executive officers, threatened (A) against it or any
of its Subsidiaries, (B) against any person or entity whose liability for such
Environmental Claim it or any of its Subsidiaries has retained or assumed
either contractually or by operation of law, or (C) against any real or
personal property or operations which it or any of its subsidiaries owns,
leases or manages, in whole or in part, which, in any such case described in
this paragraph 5.1.10.3, would individually or in the aggregate have a
Material Adverse Effect.
5.1.10.4. it has no knowledge of any Releases (as defined below) of any
Hazardous Materials (as defined below) that would be reasonably likely to
result in any Environmental Claim against it or any of its Subsidiaries, or
against any person or entity whose liability for such Environmental Claim it
or any of its Subsidiaries has retained or assumed either contractually or by
operation of law or which would result in it incurring liability under any
Environmental Law, except for any Environmental Claim or liability which would
not individually or in the aggregate have a Material Adverse Effect.
5.1.10.5. it has no knowledge, with respect to any predecessor of it or
any of its Subsidiaries or any real property formerly owned, leased or
operated by it or any of its Subsidiaries, of any pending or threatened
Environmental Claim which would have a Material Adverse Effect, or of any
Release of Hazardous Materials that would be reasonably likely to result in
any Environmental Claim which would have a Material Adverse Effect.
5.1.10.6. Each of NationsRent and RSC has made available to RSC and
NationsRent, respectively, true and complete copies of all material
environmental audits, surveys, reports and assessments relating to real
property owned, leased or operated by it or any of its subsidiaries.
5.1.10.7. As used in this Agreement:
(i) "Environmental Claim" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, directives, claims,
liens, investigations, proceedings or notices of noncompliance or violation
(written or oral) by any person or entity (including any Governmental
Authority) alleging potential liability (including potential responsibility
for or liability for enforcement, investigatory costs, cleanup costs,
governmental response costs, removal costs, remedial costs, natural resources
damages, property damages, personal injuries or penalties) relating to a
Release or threatened Release into the environment of any Hazardous Materials
at any location, whether or not owned, operated, leased or managed by it or
any of its subsidiaries any and all claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive
relief resulting from the presence or Release of any Hazardous Materials.
(ii) "Environmental Laws" means all applicable federal, state and local
laws, rules and regulations relating to pollution, the environment (including
ambient air, surface water, groundwater, land surface or subsurface strata),
natural resources or protection of human health as it relates to the
environment including laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.
(iii) "Hazardous Materials" means (A) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation and transformers or other equipment
that contain dielectric fluid containing regulated levels of polychlorinated
biphenyls ("PCBs"); (B) any chemicals, materials or substances which are now
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," or words of similar
import under any Environmental Law and (C) any other chemical, material,
substance or waste, exposure to which is now prohibited, limited or regulated
under any Environmental Law in a jurisdiction in which it or any of its
subsidiaries operates.
(iv) "Release" means any release, spill, emission, leaking, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
atmosphere, soil, surface water, groundwater or property.
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5.1.11. Takeover Statutes. Its board of directors has taken all
appropriate and necessary actions such that it will not be prohibited from
entering into a "business combination" with NationsRent or RSC, as the case
may be, as an "interested stockholder" (in each case as such term is used in
Section 203 of the DGCL) as a result of the execution and delivery of this
Agreement and each Stock Option Agreement or the consummation of the
transactions contemplated hereby or thereby. No other "fair price,"
"moratorium," "control share acquisition" or other similar anti-takeover
statute or regulation (each a "Takeover Statute") as in effect on the date
hereof is applicable to the NationsRent Common Stock, the Merger or the other
transactions contemplated by this Agreement or the Stock Option Agreements. No
anti-takeover provision contained in its certificate of incorporation or its
by-laws is, or at the Effective Time will be, applicable to the NationsRent
Common Stock, the Merger or the other transactions contemplated by this
Agreement or the Stock Option Agreements.
5.1.12. Tax Matters. As of the date hereof, neither it nor any of its
affiliates (as determined in accordance with Section 6.12) has taken or agreed
to take any action, nor do its executive officers have any knowledge of any
fact or circumstance, that, to their knowledge, would prevent the Merger and
the other transactions contemplated by this Agreement from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
5.1.13. Taxes. It and each of its Subsidiaries have prepared in good faith
and duly and timely filed (taking into account any extension of time within
which to file) all material Tax Returns (as defined below) required to be
filed by any of them and all such filed tax returns are complete and accurate
in all material respects and: (i) it and each of its Subsidiaries have paid
all Taxes (as defined below) that are shown as due on such filed Tax Returns
or that it or any of its Subsidiaries is obligated to withhold from amounts
owing to any employee, creditor or third party, except with respect to matters
contested in good faith or for such amounts that, alone or in the aggregate,
are not reasonably likely to have a Material Adverse Effect on it; (ii) as of
the date hereof, there are not pending or threatened any audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters; and
(iii) there are not any unresolved questions or claims concerning its or any
of its Subsidiaries' Tax liability that are reasonably likely to have a
Material Adverse Effect on it. Neither it nor any of its Subsidiaries has any
liability with respect to income, franchise or similar Taxes in excess of the
amounts accrued in respect thereof that are reflected in the financial
statements included in its Reports, except such excess liabilities as are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on it.
As used in this Agreement, (i) the term "Tax" (including, with correlative
meaning, the terms "Taxes", and "Taxable") includes all federal, state, local
and foreign income, profits, franchise, gross receipts, environmental, customs
duty, capital stock, severance, stamp, payroll, sales, employment,
unemployment, disability, use, property, withholding, excise, production,
value added, occupancy and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such penalties and
additions, and (ii) the term "Tax Return" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
5.1.14. Brokers and Finders. Neither it nor any of its officers, directors
or employees has employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finders, fees in connection with the Merger
or the other transactions contemplated in this Agreement except that (i)
NationsRent has employed Bear, Stearns & Co. Inc. as its financial advisors,
the arrangements with which have been disclosed to RSC prior to the date
hereof, and (ii) RSC has employed Merrill Lynch, Pierce, Fenner & Smith
Incorporated as its financial advisors, the arrangements with which have been
disclosed to NationsRent prior to the date hereof.
5.1.15. Amended By-Laws. Effective simultaneously with the execution of
this Agreement, RSC has adopted the amendments to its by-laws set forth in
Exhibit C.
5.1.16. Ownership of Other Party's Common Stock
5.1.16.1. Neither RSC nor any of its Subsidiaries "beneficially owns"
(as such term is defined in Rule 13d-3 under the Exchange Act) any shares of
NationsRent Common Stock.
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5.1.16.2. Neither NationsRent nor any of its Subsidiaries "beneficially
owns" (as such term is defined in Rule 13d-3 under the Exchange Act) any
shares of RSC Common Stock.
5.1.17. Material Contracts. It has filed as an exhibit to an Annual Report
on Form 10-K or another Report, or has delivered or otherwise made available
to the other Party, true, correct and complete copies of all contracts and
agreements to which it or any of its Subsidiaries is a party (a) that are or
would be required to be filed in an exhibit to an Annual Report on Form 10-K
filed by it with the SEC as of the date of this Agreement or (b) that purport
to limit, curtail or restrict the ability of it or any of its Subsidiaries to
operate or compete in any geographic area or line of business as of the date
hereof (collectively, its "Material Contracts"). Each of the Material
Contracts is valid and enforceable against it or its Subsidiaries, as
applicable, in accordance with its terms (subject to the Bankruptcy and Equity
Exception), and neither it nor any such Subsidiary, as the case may be, nor,
to the knowledge of its executive officers, any other party, is in breach of
or in default under any Material Contract, and no event has occurred that with
the lapse of time or the giving of notice or both would constitute a default
thereunder by it or any such Subsidiary or, to the knowledge of its executive
officers, any other party, except for any such unenforceability, default or
event which, individually or in the aggregate, is not reasonably likely to
have a Material Adverse Effect on it. No party to any Material Contract has
given notice to it of or made a claim against it with respect to any breach or
default thereunder, in any such case in which such breach or default,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on it.
5.1.18. Intellectual Property. It owns or possesses adequate licenses or
other valid rights to use all material patents and applications therefore,
trademarks, trade names, service marks and copyrights (collectively,
"Proprietary Rights") necessary to the conduct of its business in the manner
in which it is presently being conducted, except for such lack of or defects
in ownership or possession as is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it. As of the date of
this Agreement, neither it nor any of its Subsidiaries has received any
written notice that any of its Proprietary Rights have been declared
unenforceable or otherwise invalid by any court or governmental agency other
than notices relating to Proprietary Rights whose loss would not, individually
or in the aggregate, be reasonably likely to have a Material Adverse Effect on
it. There is no existing infringement, misuse, or misappropriation of any
Proprietary Rights by others that is, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it. Neither it nor any
of its Subsidiaries has received any written notice alleging that the
operation of its business or that of any of its Subsidiaries infringes in any
material respect upon the intellectual property rights of others other than
allegations that are not, individually or in the aggregate, reasonably likely
to have a Material Adverse Effect on it. There is no license or any other
right to use any Proprietary Rights whose loss is, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on it and that
is scheduled to expire on or before January 1, 2001.
5.1.19. Rental Fleet. Its rental fleet is "rental ready" except where the
failure to be rental ready is not reasonably likely to have a Material Adverse
Effect. "Rental ready" means that each item of rental equipment is fully
operable and available for rental to customers, excluding items which are
undergoing maintenance and repairs in the ordinary course of business.
5.1.20. Affiliated Transactions and Certain Other Agreements. Set forth in
the NationsRent Disclosure Letter or RSC Disclosure Letter, as applicable, is
a list of (a) all contracts, arrangements, agreements or understandings that
it would be required to describe pursuant to Item 404 of Regulation S-K of the
Securities Act if disclosure thereunder was made on the date hereof, except
for those contracts, arrangements, agreements or understandings disclosed (or
incorporated by reference), in the case of NationsRent, in NationsRent's
Registration Statement on Form S-1, filed on December 31, 1998, and, in the
case of RSC, in RSC's 1998 Annual Report on Form 10-K for the year ended
December 31, 1997 or any RSC Report filed as of the date hereof and (b) all
arrangements or understandings, whether written or oral, giving any Person the
right to require it to register shares of its capital stock or securities
convertible into or exercisable for capital stock or to participate in any
such registration.
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ARTICLE VI
COVENANTS
6.1. Interim Operations. Each of NationsRent and RSC covenants and agrees as
to itself and its Subsidiaries that, after the date hereof and prior to the
Effective Time (unless the other party shall otherwise approve in writing, and
except as otherwise expressly contemplated by this Agreement, disclosed in its
respective Disclosure Letter or required by applicable Law):
6.1.1. the business of it and its Subsidiaries shall be conducted in the
ordinary and usual course and, to the extent consistent therewith, it and its
Subsidiaries shall use its best reasonable efforts to preserve its business
organization intact and maintain its existing relations and goodwill with
customers, suppliers, regulators, distributors, lessors, employees and
business associates;
6.1.2. it shall not (A) amend its certificate of incorporation or by-laws,
except that the certificate of incorporation and by-laws of RSC shall be
amended as contemplated by the Charter Amendments and Section 5.1.15,
respectively; (B) split, combine, subdivide or reclassify its outstanding
shares of capital stock; (C) declare, set aside or pay any dividend or
distribution payable in cash, stock or property in respect of any capital
stock (other than pursuant to the terms of any Rights Plan (as defined in
Section 6.1.3)); or (D) repurchase, redeem or otherwise acquire (other than
Rights (as defined in Section 6.1.3) pursuant to any Rights Plan), or permit
any of its Subsidiaries to purchase or otherwise acquire, any shares of its
capital stock or any securities convertible into or exchangeable or
exercisable for any shares of its capital stock;
6.1.3. neither it nor any of its Subsidiaries shall (i) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible into
or exchangeable or exercisable for, or rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements, calls, commitments or rights of any kind to acquire,
its capital stock of any class (other than (w) shares of capital stock
issuable pursuant to options outstanding on the date hereof under the
NationsRent Stock Plans or RSC Stock Plans, pursuant to the applicable Stock
Option Agreement, or pursuant to outstanding options or rights to acquire
shares of capital stock described in Section 5.1.2.1 or 5.1.2.2, (x)
additional options or rights to acquire shares of capital stock granted under
the terms of any NationsRent Stock Plan or RSC Stock Plan, as the case may be,
as in effect on the date hereof in the ordinary course of the operation of
such Stock Plan, (y) shares of capital stock issuable pursuant to the options
or rights described in clause (x) and (z) pursuant to the terms of any
stockholder rights protection plan adopted by NationsRent or RSC, as the case
may be, after consultation with the other party (with respect to either party,
a "Rights Plan"); provided that (A) the terms of any Rights Plan shall provide
that none of (I) the acquisition by NationsRent or RSC, as the case may be, of
shares of RSC Common Stock or NationsRent Common Stock, respectively, pursuant
to, or the exercise or performance by either Party of its rights or
obligations under, the RSC Stock Option Agreement or the NationsRent Stock
Option Agreement, (II) in the case of any such Rights Plan of RSC, the receipt
or ownership by any Person of the shares of RSC Common Stock to be issued in
the Merger, (III) the consummation of any of the other transactions
contemplated hereby or by the Stock Option Agreements or (IV) the acquisition
by any director or officer or any Person who may be deemed to be an
"affiliate" of NationsRent or RSC (as determined under Section 6.12) of any
shares of capital stock of NationsRent or RSC, as the case may be, issuable
pursuant to any NationsRent Stock Options or RSC Stock Options, as the case
may be, shall be deemed to cause or give rise to any distribution of the
rights to purchase capital stock of a Party to be issued pursuant to the
applicable Rights Plan (in either case, the "Rights") or to cause such Rights
to become void, separable, distributable, unredeemable or exercisable; (B)
neither RSC or NationsRent nor any officer, director, affiliate or associate
of NationsRent or RSC (or any group comprised of such persons) shall be deemed
to become an "acquiring person" or to meet any other similar definition of a
Person which would (whether upon notice or lapse of time or both) cause any
such Rights to become void, separable, distributable, unredeemable or
exercisable as a result of the transactions contemplated hereby, by the Stock
Option Agreements or by any acquisition referred to in clause (A) above,
individually or in the aggregate; (C) any such Rights Plan (and any Rights
issued thereunder) adopted by RSC shall, by its own terms and without any
further action on the part of the board of directors of the Surviving
Corporation, terminate (without payment) 60 days after the earlier of the
termination of this Agreement or the
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Effective Time unless the New Directors shall elect, by affirmative vote of
not less than two-thirds of the entire board of directors of the Surviving
Corporation, to have such Rights Plan continue in full force and effect); and
(D) any such Rights Plan adopted by NationsRent shall, by its own terms and
without any further action on the part of the board of directors of the
Surviving Corporation terminate on the earlier of immediately before the
Effective Time and 60 days after the termination of this Agreement; (ii)
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any assets or incur or modify any indebtedness or other liability
except in the ordinary and usual course of business, pursuant to its budget
plan previously delivered to the other Party, pursuant to financial plans
previously disclosed in its Disclosure Letter, for long-term indebtedness
incurred in connection with the refinancing of existing indebtedness, or
pursuant to any transaction permitted by clause (iii) of this Section 6.1.3,
in each case without the consent of the other Party; or (iii) enter into any
agreement concerning, or make, any acquisition or series of acquisitions or
capital expenditures unless, in the case of RSC, such transaction or series of
transactions is pursuant to letters of intent pending as of the date hereof
and, in the case of either NationsRent or RSC, such transaction or such
transaction or series of transactions (A) is in the ordinary and usual course
of business, (B) does not, individually or in the aggregate with all other
transactions relying on this clause (B), involve consideration that (x) has a
value in excess of $10 million plus, in the case of NationsRent, the amount of
consideration actually paid by RSC for acquisitions by RSC or its Subsidiaries
pursuant to letters of intent pending as of the date hereof or (y) is
consideration other than cash or obligations that are not convertible into
shares of its capital stock, (C) is not reasonably likely to prevent or
materially delay the mailing of the Prospectus/Proxy Statement or the Closing,
and (D) is not violative of Section 6.1.6;
6.1.4. except as contemplated by this Agreement, neither it nor any of its
Subsidiaries shall grant any severance or termination pay to, or enter into
any employment or severance agreement with, any director or executive officer
or establish any plan or program of severance or termination pay for other
employees generally or any group of employees of it or its Subsidiaries, in
each case without the consent of the other Party; and neither it nor any of
its Subsidiaries shall terminate, establish, adopt, enter into, make any new
grants or awards of stock-based compensation or other benefits under, amend or
otherwise modify any compensation or benefit plan or agreement or increase the
salary, wage, bonus or other compensation of any directors, officers or
employees except for grants or awards to directors, officers and employees of
it or its Subsidiaries under existing compensation or benefit plans or
agreements (including agreements to be offered to new employees) entered into
in the normal and usual course of business and related compensation and
benefit increases, and except for actions necessary to satisfy existing
contractual obligations under compensation or benefit plans or agreements
existing as of the date hereof or to comply with applicable Law;
6.1.5. neither it nor any of its Subsidiaries shall settle or compromise
any material claims or litigation or, except in the ordinary and usual course
of business, modify, amend or terminate any of its Material Contracts or
waive, release or assign any material rights or claims;
6.1.6. neither it nor any of its Subsidiaries shall take any action or
omit to take any action for the purpose or with the reasonably foreseeable
consequence of preventing, delaying or impeding the consummation of the Merger
or the other transactions contemplated by this Agreement or the Stock Option
Agreements including any action or omission that would cause (i) the Merger to
(A) fail to qualify as a "pooling of interests" under GAAP (and each Party
agrees to use its best reasonable efforts to remove any impediment that would
cause the Merger to fail to qualify as a "pooling of interests" under GAAP) or
(B) fail to qualify as a reorganization under Section 368(a) of the Code or
(ii) the exchange of shares of RSC Common Stock for NationsRent Common Shares
in the Merger to fail to qualify for nonrecognition of gain (except with
respect to cash received in lieu of fractional shares of RSC Common Stock);
6.1.7. notwithstanding anything contained in the foregoing Sections 6.1.1
to 6.1.6, neither it nor any of its Subsidiaries shall take any action that
would cause the number of authorized but unissued shares of NationsRent Common
Stock or RSC Common Stock, as the case may be, that (i) are not reserved for
issuance or otherwise contemplated to be issued under any Contract, plan or
understanding (other than a Stock Option Agreement) and (ii) are available for
issuance under the Stock Option Agreement under which it is the issuer to
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be less than 19.9% of the outstanding shares of NationsRent Common Stock or
RSC Common Stock, as the case may be; and
6.1.8. neither it nor any of its Subsidiaries shall authorize or enter
into an agreement to do any of the foregoing.
6.2. Acquisition Proposals.
6.2.1. Each of NationsRent and RSC agrees that, subject to paragraph 6.2.3
and except as expressly contemplated by this Agreement, neither it nor any of
its Subsidiaries nor any of the officers or directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' officers, directors, employees, investment bankers,
attorneys, accountants, financial advisors, agents or other representatives
(collectively, with respect to each of NationsRent and RSC, such Person's
"Representatives") not to, directly or indirectly, initiate, solicit,
encourage or otherwise facilitate any inquiries or the making of any proposal
or offer with respect to a merger, reorganization, share exchange,
consolidation or similar transaction involving NationsRent or RSC or any of
its respective Significant Subsidiaries, or any purchase of, or offer to
purchase, all or substantially all of the equity securities of NationsRent or
RSC, as the case may be, or any of its respective Significant Subsidiaries, or
all or substantially all of the assets of it or of any of its Significant
Subsidiaries (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal"). Each of NationsRent and RSC further agrees that
neither it nor any of its Subsidiaries nor any of its or its Subsidiaries'
officers or directors shall, and that it shall direct and use its best efforts
to cause its Representatives not to, directly or indirectly, have any
discussions with or provide any confidential information or data to any Person
relating to an Acquisition Proposal or engage in any negotiations concerning
an Acquisition Proposal, or otherwise facilitate any effort or attempt to make
or implement an Acquisition Proposal; provided, however, that nothing
contained in this Agreement shall prevent either NationsRent or RSC or its
board of directors from (i) making any disclosure to its shareholders if, in
the good faith judgment of its board of directors (after consultation with its
outside counsel), failure so to disclose would be inconsistent with its
obligations under applicable Law; (ii) negotiating with or furnishing
information to any Person who has made a bona fide written Acquisition
Proposal received after the date hereof which did not result from a breach of
this Section 6.2.1; or (iii) recommending (and in connection therewith,
withdrawing or modifying its approval or recommendation of this Agreement, the
Merger or the other transactions contemplated hereby) such an Acquisition
Proposal to its shareholders, if and only to the extent that, in the case of
actions referred to in clause (ii) or clause (iii), such Acquisition Proposal
is a Superior Proposal (as defined below). For purposes of this Agreement, a
"Superior Proposal" means in respect of NationsRent or RSC, as applicable, any
Acquisition Proposal by a third party (y) on terms which the board of
directors of such Party determines in its good faith judgment after
consultation with its financial advisors (whose advice shall be communicated
to the other Party), (i) to be more favorable from a financial point of view
to its shareholders than the Merger and the other transactions contemplated
hereby and (ii) to be more favorable to such Party than the Merger and the
other transactions contemplated hereby after taking into account any other
relevant factors permitted under applicable Law, and after giving the other
Party at least ten business days to respond to such third party Acquisition
Proposal and (z) which the board of directors of such Party determines in its
good faith judgment to constitute a transaction that is reasonably likely to
be consummated on the terms set forth, taking into account all legal,
financial (including the financing terms of any such proposal), regulatory,
and other aspects of such proposal. Each of NationsRent and RSC agrees that it
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Person conducted heretofore with respect
to any Acquisition Proposal. Each of NationsRent and RSC also agrees that if
it has not already done so, it will promptly request each Person, if any, that
has heretofore executed a confidentiality agreement within the 12 months prior
to the date hereof in connection with its consideration of any Acquisition
Proposal to return or destroy all confidential information heretofore
furnished to such Person by or on behalf of it or any of its Subsidiaries.
6.2.2. Each of NationsRent and RSC agrees that it will take the necessary
steps promptly to inform its Subsidiaries and its and its Subsidiaries'
Representatives of the obligations undertaken in this Section 6.2. Each of
NationsRent and RSC agrees that it will notify the other promptly if any such
inquiries, proposals or
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offers relating to or constituting an Acquisition Proposal are received by,
any such information is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, any of its or its
Subsidiaries' Representatives indicating, in connection with such notice, the
name of such Person and the material terms and conditions of any proposals or
offers.
6.2.3. Nothing contained herein shall prohibit a Party from taking and
disclosing to its shareholders a position contemplated by Rules 14d-9 and 14e-
2(a) under the Exchange Act with respect to an Acquisition Proposal by means
of a tender or exchange offer or prohibit either Party's directors or officers
from voting or tendering any securities beneficially owned by them as they may
determine.
6.3. Information Supplied.
6.3.1. Each of NationsRent and RSC shall cooperate and promptly prepare,
and RSC shall file with the SEC, as soon as practicable a Registration
Statement on Form S-4, including the joint prospectus/proxy statement
constituting a part thereof (the "Prospectus/Proxy Statement") (the "Form S-
4"), under the Securities Act with respect to the issuance of RSC Common Stock
in the Merger. The Parties will cause the Form S-4 to comply as to form in all
material respects with the applicable provisions of the Securities Act and the
rules and regulations thereunder. Each of NationsRent and RSC shall use its
respective best reasonable efforts to have the Form S-4 declared effective by
the SEC as promptly as practicable after such filing. RSC shall use its best
reasonable efforts to obtain, prior to the effective date of the Form S-4, all
necessary state securities law or "Blue Sky" permits or approvals required to
carry out the transactions contemplated by this Agreement. RSC will advise
NationsRent, promptly after it receives notice thereof, of the time when the
Form S-4 has become effective or any supplement or amendment has been filed,
the issuance of any stop order, the suspension of the qualification of the
shares of RSC Common Stock issuable in connection with the Merger for offering
or sale in any jurisdiction, or any request by the SEC for amendment of the
Prospectus/Proxy Statement or the Form S-4 or comments thereon and responses
thereto or requests by the SEC for additional information.
6.3.2. NationsRent and RSC each agrees, as to itself and its Subsidiaries,
that none of the information supplied or to be supplied by it or its
Subsidiaries for inclusion or incorporation by reference in the Form S-4,
including, without limitation the Prospectus/Proxy Statement, and any
amendment or supplement thereto will, at the time the Form S-4 becomes
effective under the Securities Act, at the date of mailing to shareholders and
at the time or times of each Shareholders Meeting (as defined below), contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time prior to the date of each Shareholders Meeting any
information relating to NationsRent or RSC, or any of their respective
Affiliates, officers or directors, should be discovered by NationsRent or RSC,
respectively, which should be set forth in an amendment to the Form S-4 or a
supplement to the Prospectus/Proxy Statement, so that such document would not
include any misstatement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, the Party which discovers such information shall promptly notify
the other Party and, to the extent required by Law, an appropriate amendment
or supplement describing such information shall be promptly filed with the SEC
and, to the extent required by law, disseminated to the shareholders of the
appropriate Party.
6.3.3. Shareholders Meetings. NationsRent will take, in accordance with
applicable law and its certificate of incorporation and by-laws, all action
necessary to convene a special meeting of the holders of shares of NationsRent
Common Stock at which such holders shall consider approval and adoption of the
Merger Agreement and the other transactions contemplated hereby (the
"NationsRent Shareholders Meeting") as promptly as practicable after the Form
S-4 has been declared effective by the SEC and, if practicable, prior to the
next NationsRent annual meeting. RSC will take, in accordance with applicable
Law and its certificate of incorporation and by-laws, all action necessary to
convene a special meeting of the holders of RSC Common Stock at which such
holders shall consider approval and adoption of the Merger Agreement and the
other transactions contemplated hereby and the other matters specified in the
second succeeding sentence (the "RSC
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Shareholders Meeting", and each of the NationsRent Shareholders Meeting and
the RSC Shareholders Meeting, a "Shareholders Meeting") as promptly as
practicable after the Form S-4 has been declared effective by the SEC and, if
practicable, prior to the next RSC annual meeting. NationsRent and RSC shall
each use its best reasonable efforts to schedule and hold their respective
Shareholders Meetings at the same date and time. RSC shall include in the
notice of meeting referred to above resolutions to approve, inter alia: (i)
approval and adoption of this Agreement and the transactions contemplated
hereby; (ii) amendments to the certificate of incorporation of RSC to (A)
increase the number of authorized shares of RSC Common Stock to 150,000,000
and (B) change the name of RSC to "RSC NationsRent", each of such amendments
to become effective as of the Effective Time; and (iii) an increase in the
number of shares of RSC Common Stock available for issuance under the RSC
Stock Plans to such number as the Parties may agree. The board of directors of
each of RSC and NationsRent shall recommend to its respective shareholders the
approval and adoption of this Agreement and the other transactions
contemplated hereby and shall use its respective best reasonable efforts to
solicit such approval; provided that, notwithstanding any other provision of
this Agreement, including, without limitation, the provisions of Section 6.2,
either Party's board of directors may withdraw or modify its recommendation if
it concludes such action is advisable in the discharge of is fiduciary duties.
6.4. Filings; Other Actions; Notification.
6.4.1. NationsRent and RSC shall each cooperate with the other and (i) use
(and shall use its best reasonable efforts to cause their respective
Subsidiaries to use) all their respective best reasonable efforts promptly to
take or cause to be taken all actions, and do or cause to be done all things,
necessary, proper or advisable under this Agreement, the Stock Option
Agreements and applicable Laws to consummate and make effective the Merger and
the other transactions contemplated by this Agreement and the Stock Option
Agreements as soon as practicable, including preparing and filing as promptly
as practicable all documentation to effect all necessary filings, notices,
petitions, statements, registrations, submissions of information, applications
and other documents, and (ii) use (and shall use its best reasonable efforts
to cause their respective Subsidiaries to use) all their respective best
reasonable efforts to obtain as promptly as practicable all approvals,
consents, registrations, permits, authorizations and other confirmations
required to be obtained from any third party necessary, proper or advisable to
consummate the Merger and the other transactions contemplated by this
Agreement and the Stock Option Agreements, including with respect to obtaining
consents or waivers under their respective senior credit facilities or the
replacement thereof. Subject to applicable Laws relating to the exchange of
information, NationsRent and RSC shall have the right to review in advance,
and to the extent practicable each will consult the other on, all the
information relating to NationsRent and its Subsidiaries or RSC and its
Subsidiaries, as the case may be, that appears in any filing made with, or
written materials submitted to, any third party and/or any Governmental Entity
in connection with the Merger and the other transactions contemplated by this
Agreement and the Stock Option Agreements. In exercising the foregoing right,
each of NationsRent and RSC shall act reasonably and as promptly as
practicable. Notwithstanding anything to the contrary in this Section 6.4.1,
neither RSC nor any of its Subsidiaries shall be required to sell, otherwise
dispose of or hold separate (through the establishment of a trust or
otherwise) assets or Subsidiaries of RSC that are material to it and its
Subsidiaries taken as a whole or to restrict, require changes in or limit, the
operation of any assets or businesses of RSC or any of its Subsidiaries or to
take any other action that is, in any such case, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on RSC after
the Effective Time (it being understood that, for this purpose, materiality
shall be considered with reference to the combined companies following the
Merger).
6.4.2. NationsRent and RSC each shall, upon request by the other, furnish
the other with all information concerning itself, its Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably
necessary or advisable in connection with the Form S-4, the Prospectus/Proxy
Statement or any other necessary or appropriate filing, notice, petition,
statement, registration, submission of information or application made by or
on behalf of NationsRent or RSC or any of their respective Subsidiaries to any
third party and/or any Governmental Entity in connection with the Merger and
the other transactions contemplated by this Agreement and the Stock Option
Agreements.
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6.4.3. NationsRent and RSC each shall keep the other apprised of the
status of matters relating to completion of the Merger and the other
transactions contemplated by this Agreement and the Stock Option Agreements,
including promptly furnishing the other with copies of notices or other
communications received by NationsRent or RSC, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Merger and the other transactions contemplated by this
Agreement and the Stock Option Agreements. NationsRent and RSC each shall give
prompt notice to the other of any change that is reasonably likely to result
in a Material Adverse Effect on it or of any failure of any condition set
forth in Article VII to the other Party's obligations to effect the Merger.
6.4.4. In the event any claim, action, suit, investigation or other
proceeding by any Governmental Entity or other Person or other legal or
administrative proceeding is commenced that questions the validity or legality
of this Agreement, either Stock Option Agreement, or the Merger or the other
transactions contemplated by this Agreement and the Stock Option Agreements or
claims damages in connection therewith, the Parties agree to cooperate and use
their respective best reasonable efforts to defend against and respond
thereto.
6.5. Access; Confidentiality.
6.5.1. In order to facilitate consummation of the Merger and the other
transactions contemplated by this Agreement, the Parties hereby agree that
upon reasonable notice, and except as may otherwise be required by applicable
Law, NationsRent and RSC each shall (and shall cause its Subsidiaries to)
afford the other's Representatives reasonable access, during normal business
hours throughout the period prior to the Effective Time, to its properties,
books, contracts and records and, during such period, each shall (and shall
cause its Subsidiaries to) furnish promptly to the other all information
concerning its business, properties and personnel as may reasonably be
requested, provided that no receipt of information pursuant to this Section
shall affect or be deemed to modify any representation or warranty made by
NationsRent or RSC hereunder, and provided, further, that the foregoing shall
not require NationsRent or RSC to permit any inquiry, or to disclose any
information, that in the reasonable judgment of NationsRent or RSC, as the
case may be, would (i) violate any antitrust or competition Law or (ii) result
in the disclosure of any trade secrets of third parties or violate any of its
obligations with respect to confidentiality to third parties if NationsRent or
RSC, as the case may be, shall have used its best reasonable efforts to obtain
the consent of such third party to such inquiry or disclosure. All requests
for information pursuant to this Section 6.5. shall be directed to an
executive officer of NationsRent or RSC, as the case may be, or such Person as
may be designated by any such executive officer, as the case may be.
6.5.2. NationsRent and RSC each acknowledges and confirms that it has
entered into a Confidentiality Agreement, dated January 12, 1999 (the
"Confidentiality Agreement"), and that the Confidentiality Agreement shall
remain in full force and effect in accordance with its terms, whether or not
the Merger is consummated.
6.6. Publicity. The initial press release concerning this Agreement, the
Merger and the other transactions contemplated by this Agreement and the Stock
Option Agreements shall be a joint press release, and thereafter NationsRent
and RSC shall consult with each other prior to issuing any press release or
otherwise making public announcements with respect to the Merger and the other
transactions contemplated by this Agreement and the Stock Option Agreements.
6.7. Benefits and Other Matters.
6.7.1. Employee Benefits.
6.7.1.1. Following the Effective Time, RSC shall, and shall cause its
Subsidiaries to, recognize service with NationsRent and its Subsidiaries and
any predecessor entities (to the same extent such service was credited by
NationsRent under similar benefit plans) prior to the Effective Time for all
purposes under any benefit plans of RSC or its Subsidiaries in which the
employees or former employee of NationsRent (or its respective Subsidiaries)
shall participate; provided, however, that the foregoing shall not limit the
rights of the RSC board of directors, subject to applicable laws and
contractual obligations to amend, modify or terminate any such
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benefit plans. During the portion of the applicable period for each of the
plans in which the Effective Time occurs, RSC shall, and shall cause its
Subsidiaries to, recognize under its applicable medical, dental and health
plans all appropriate expenses of each employee or former employee of
NationsRent and its Subsidiaries (including their beneficiaries and
dependents) for purposes of satisfying applicable deductible, co-insurance and
maximum out-of-pocket expenses.
6.7.1.2. From and after the Effective Time, RSC shall honor, and shall
cause its Subsidiaries to comply, in accordance with its terms, with each (i)
existing employment, change of control, severance and termination agreement
between RSC or NationsRent or any of their respective Subsidiaries, and any
officer, director or employee of such company and (ii) obligation pursuant to
outstanding employee benefit compensation plans and arrangements which had
accrued as of the Effective Time. NationsRent acknowledges that it has been
advised by RSC that the Merger constitutes a change of control for purposes of
certain RSC Compensation and Benefit Plans specifically identified in Section
5.1.8 of the RSC Disclosure Letter.
6.7.1.3. After the Effective Time, RSC shall use its best efforts to
cause the compensation and benefits available upon any termination of
employment to officers who were formerly executive officers, and Senior
executives previously identified, of NationsRent immediately prior to the
Effective Time to be no less favorable than the compensation and benefit
arrangements to which the current executive officers of RSC (other than Martin
Reid) are entitled immediately upon any termination of employment after the
Effective Time.
6.7.1.4. Prior to the Effective Time, NationsRent shall and shall cause
its Subsidiaries to terminate each NationsRent Compensation and Benefit Plan
that is intended to qualify under Section 401(k) of the Code. RSC shall make
available to the participants in any such plan, as soon as practicable
following the Effective Time, the plan that is intended to be qualified under
Section 401(k) of the Code in which other employees of RSC participate.
6.7.2. Indemnification; Director and Officer Liability.
6.7.2.1. From and after the Effective Time, RSC agrees that it will
indemnify and hold harmless each individual who on or prior to the Effective
Time was an officer or director at NationsRent or any of its Subsidiaries
(each, an "Indemnitee") against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring
at or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent permitted under the DGCL and
its certificate of incorporation or by-laws in effect on the date hereof to
indemnify such Person (and RSC shall also advance expenses as incurred to the
fullest extent permitted under applicable Law, provided the Person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such Person is not entitled to indemnification).
6.7.2.2. For six years after the Effective Time, RSC shall procure the
provision of officers' and directors' liability insurance in respect of acts
or omissions occurring prior to the Effective Time covering each such Person
currently covered by NationsRent's officers' and directors' liability
insurance policy on terms with respect to coverage and in amounts no less
favorable than those of such policy in effect on the date hereof (provided
that the Surviving Corporation may substitute therefor policies (which may be
"tail" policies) with an insurer of equal claims paying ratings, of at least
the same coverage and amounts containing terms and conditions which are no
less advantageous in any material respect to the insured parties thereunder);
provided, however, that during such period, RSC shall not be required to
procure any amount of coverage in excess of that which may be obtained for the
remainder of such period for an annual premium of 250% of the current annual
premium paid by NationsRent for its existing coverage.
6.7.2.3. The obligations of RSC under this Section 6.7.2 shall not be
terminated or modified in such a manner as to adversely affect any Indemnitee
to whom this Section 6.7.2 applies without the consent of
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such affected Indemnitee (it being expressly agreed that the Indemnitees to
whom this Section 6.7.2 applies shall be third party beneficiaries of this
Section 6.7.2).
6.7.2.4. If RSC or the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or
entity and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) shall transfer all or substantially all
of its properties and assets to any Person then and in each such case, proper
provisions shall be made so that the successors and assigns of RSC or the
Surviving Corporation, as the case may be, shall assume all of the obligations
set forth in this Section 6.7.2.
6.7.3. Directors of RSC. RSC agrees to take all such actions as may be
required to implement the provisions of Section 3.1, including, without
limitation, (i) increasing the size of its board of directors, (ii) procuring
such resignations of its current directors as may be necessary and (iii)
causing the election to its board of directors of such new directors, so that
at the Effective Time the New Directors are the only directors of RSC.
6.7.4. 1999 RSC Annual Meeting. If the RSC 1999 Annual Meeting of
Stockholders (the "1999 Annual Meeting") occurs after the Effective Time, each
of the New Directors or New Director Successors shall be nominated to serve on
the RSC board of directors at the 1999 Annual Meeting. If any New Director or
New Director Successor is no longer serving on the RSC board of directors at
the time of the 1999 Annual Meeting or is unable to or declines to stand for
election, the remaining RSC Directors shall be entitled to designate a
candidate to fill such position if such position was previously designated a
RSC Director, and the remaining NationsRent Directors shall be entitled to
designate a director to fill such position if the position was previously
designated as a position to be held by a NationsRent Director. If the Agreed
Director position is vacant at the time of the 1999 Annual Meeting, the
successor to the Agreed Director shall be designated by the NationsRent
Directors, subject to the consent of the RSC Directors (which consent shall
not be unreasonably withheld) and subject to the limitation set forth in the
proviso to Section 3.1.
6.8. Expenses. Except as otherwise provided in Section 8.5 (Effect of
Termination and Abandonment), whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement, the Stock
Option Agreements, the Merger and the other transactions contemplated by this
Agreement and the Stock Option Agreements shall be paid by the Party incurring
such expense, except that the Parties shall share equally the costs and
expenses of filing, printing and distributing the Form S-4, the
Prospectus/Proxy Statement and related documents.
6.9. Takeover Statutes. If any Takeover Statute is or may become applicable
to the Merger or the other transactions contemplated by this Agreement and the
Stock Option Agreements, each of NationsRent and RSC and its board of
directors shall, subject to applicable Law, grant such approvals and take such
actions as are necessary so that the Merger and the other transactions
contemplated by this Agreement and the Stock Option Agreements may be
consummated as promptly as practicable on the terms contemplated by this
Agreement or the Stock Option Agreements, as the case may be, and otherwise
act to eliminate or minimize the effects of such Takeover Statute on such
transactions. Without limiting the foregoing, the boards of directors of each
of RSC and NationsRent have approved the terms of this Agreement and the Stock
Option Agreements and the consummation of the transactions contemplated by
this Agreement and by such Stock Option Agreements, and such approval is
sufficient, in the case of RSC, to render the restrictions of Section 203 of
the DGCL inapplicable to the Merger and to the other transactions contemplated
by this Agreement and by the Stock Option Agreements.
6.10. Listing Application. RSC shall promptly prepare and submit to the NYSE
a listing application in respect of the shares of RSC Common Stock issuable in
the Merger, and shall use its best efforts to obtain, prior to the Effective
Time, approval for the listing of such shares, on the NYSE, subject to
official notice of issuance, under the symbol "RSV". The Surviving Corporation
shall use its best efforts to cause the NationsRent Common Stock to be
delisted from the NYSE and deregistered under the Exchange Act as soon as
practicable following the Effective Time.
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6.11. Letters of Accountants.
6.11.1. NationsRent shall use its best reasonable efforts to cause to be
delivered to RSC "comfort" letters of Arthur Andersen LLP, NationsRent's
independent public accountants, dated the effective date of the Form S-4 and
the Closing Date, respectively, and addressed to RSC and its directors, in
form reasonably satisfactory to RSC and customary in scope and substance for
"comfort" letters delivered by independent public accountants in connection
with registration statements similar to the Form S-4.
6.11.2. RSC shall use its best reasonable efforts to cause to be delivered
to NationsRent "comfort" letters of Ernst & Young LLP, RSC's independent
public accountants, dated the effective date of the Form S-4 and the Closing
Date, respectively, and addressed to NationsRent and its directors, in form
reasonably satisfactory to NationsRent and customary in scope and substance
for "comfort" letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
6.12. Affiliates. Each of NationsRent and RSC shall deliver to the other a
letter identifying all Persons whom such party believes to be, at the date of
the NationsRent Shareholders Meeting or RSC Shareholders Meeting, as the case
may be, "affiliates" of such party for purposes of applicable interpretations
regarding use of the "pooling of interests" accounting method and, in the case
of "affiliates" of NationsRent, for purposes of Rule 145 under the Securities
Act. Each of NationsRent and RSC shall use its best reasonable efforts to
cause each Person who is identified as an "affiliate" in the letter referred
to above to deliver to RSC prior to the date of the NationsRent Shareholders
Meeting a written agreement, in the form attached hereto as Exhibit B-1, in
the case of affiliates of NationsRent (the "NationsRent Affiliate's Letter"),
and Exhibit B-2, in the case of affiliates of RSC (the "RSC Affiliate's
Letter"). Prior to the Effective Time, each of NationsRent and RSC shall use
its best reasonable efforts to cause each additional Person who is identified
as an "affiliate" to execute the applicable written agreement as set forth in
this Section 6.12. If the Merger would otherwise qualify for "pooling of
interests" accounting treatment, shares of RSC Common Stock issued to such
affiliates of NationsRent in exchange for NationsRent Common Shares shall not
be transferable until such time as financial results covering at least 30 days
of combined operations of RSC and NationsRent shall have been published within
the meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies, regardless of whether each such affiliate has provided the written
agreement referred to in this Section, except to the extent permitted by, and
in accordance with, SEC Accounting Series Release 135 and SEC Staff Accounting
Bulletins 65 and 76. If the Merger would otherwise qualify for "pooling of
interests" accounting treatment, any shares of NationsRent Common Stock held
by any such affiliate shall not be transferable, regardless of whether such
affiliate has provided the applicable written agreement referred to in this
Section, if such transfer, either alone or in the aggregate with other
transfers by affiliates, would preclude RSC's ability to account for the
Merger as a "pooling of interests." NationsRent shall not register the
transfer of any Certificate, unless such transfer is made in compliance with
the foregoing.
6.13. Registration Rights.
6.13.1. At or prior to the Effective Time, RSC shall enter into a
registration rights agreement with NationsRent's "affiliates" (as determined
in accordance with Section 6.12), substantially in the form of Exhibit D, with
respect to the shares of RSC Common Stock to be issued to such affiliates in
the Merger.
6.13.2. At and after the Effective Time, RSC shall comply with and assume
all outstanding obligations of NationsRent under agreements or arrangements
granting registration rights in accordance with their terms.
6.14. Tax Representation Letters. For purposes of the tax opinions described
in Sections 7.2.4 and 7.3.4, each of NationsRent and RSC shall provide
representation letters, in form and substance reasonably satisfactory to RSC
and NationsRent, respectively, each dated as of the date that is two business
days prior to the date the Prospectus/Proxy Statement is first mailed to
shareholders of NationsRent and RSC and reissued as of the Closing Date.
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6.15. Transfer Taxes. Except as provided in Section 4.2.1., all state,
local, foreign or provincial sales, use, real property transfer, stock
transfer or similar Taxes (including any interest or penalties with respect
thereto) attributable to the Merger (collectively, the "Transfer Taxes") shall
be timely paid by RSC.
6.16. Assumption of Indebtedness. At the Effective Time the Surviving
Corporation shall execute such agreements and instruments, and take all other
actions, that may be necessary to comply with the terms of the Indenture,
including Section 5.01 thereof, relating to NationsRent's 10 3/8% Senior
Subordinated Notes due 2008.
6.17. Other Equity Rights. At the Effective Time, RSC shall comply with and
assume NationsRent's obligations under each Other NationsRent Equity Right,
including any terms of such Other NationsRent Equity Right requiring such
Other NationsRent Equity Right be converted into a right to acquire RSC Common
Stock.
6.18. Use of Name. Unless the board of directors of the Surviving
Corporation otherwise determines, the parties agree and acknowledge that at or
prior to the first anniversary of the Effective Date, RSC shall amend the
Charter to change the name of the Surviving Corporation to "NationsRent".
6.19. Voting Agreement. NationsRent shall cause to be delivered as promptly
as practicable, but in no event later than ten days, after the date hereof to
RSC in the form previously agreed between the Parties, a voting agreement
executed by H. Wayne Huizenga Sr., H. Family Investments and James L. Kirk.
ARTICLE VII
CONDITIONS
7.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
7.1.1. Shareholder Approvals. This Agreement and the transactions
contemplated by this Agreement shall have been duly approved and adopted by
holders of NationsRent Common Stock constituting the NationsRent Requisite
Vote and this Agreement and the other transactions contemplated by this
Agreement, and the matters specified in clause (ii) of Section 6.3.3 and
proposed for adoption at the RSC Shareholders Meeting shall have been duly
approved and adopted by holders of RSC Common Stock constituting the RSC
Requisite Vote.
7.1.2. Regulatory Consents. All NationsRent Required Consents and RSC
Required Consents from or with any Governmental Entity (collectively,
"Governmental Consents") in connection with the consummation of the Merger and
the other transactions contemplated hereby shall have been made or obtained,
and such Governmental Consents shall not contain any terms or impose any
condition or restriction relating or applying to, or requiring changes in or
limitations on, the operation of any asset or businesses of NationsRent, RSC
or any of their respective Subsidiaries which term, condition or restriction
that is, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on RSC after the Effective Time (it being understood
that, for this purpose, materiality shall be considered with reference to the
combined companies following the Merger).
7.1.3. Laws and Orders. No Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law (whether
temporary, preliminary or permanent) that is in effect and restrains, enjoins
or otherwise prohibits the consummation of the Merger or the other
transactions contemplated by this Agreement or that, individually or in the
aggregate with all other such Laws, is reasonably likely to have a Material
Adverse Effect on RSC after the Effective Time (it being understood that, for
this purpose, materiality shall be considered with reference to the combined
companies following the Merger) or that would materially frustrate the intent
and purposes of this Agreement (collectively, an "Order"), and no Governmental
Entity shall have instituted or threatened in writing any proceeding seeking
any such Order.
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7.1.4. Effectiveness of Form S-4. The Form S-4 shall have become effective
and no stop order with respect thereto shall be in effect.
7.1.5. Exchange Listing. The shares of RSC Common Stock to be issued
pursuant to the Merger shall have been authorized for listing on the NYSE,
subject to official notice of issuance.
7.1.6. Blue Sky Approvals. RSC shall have received all state securities
and "blue sky" permits and approvals, if any, necessary to consummate the
transactions contemplated hereby.
7.2. Conditions to Obligations of RSC. The obligation of RSC to effect the
Merger is also subject to the satisfaction or waiver by RSC prior to the
Effective Time of the following conditions:
7.2.1. Representations and Warranties of NationsRent. The representations
and warranties of NationsRent set forth in this Agreement (i) to the extent
qualified by Material Adverse Effect or any other materiality qualification
shall be true and correct and (ii) to the extent not qualified by Material
Adverse Effect or any other materiality qualification shall be true and
correct (provided that this clause (ii) shall be deemed satisfied so long as
any failures of such representations and warranties to be true and correct,
taken together, do not have a Material Adverse Effect on NationsRent) as of
the Closing Date as though made on and as of the Closing Date (except to the
extent any such representation or warranty expressly speaks as of an earlier
date), and RSC shall have received a certificate signed on behalf of
NationsRent by an executive officer of NationsRent to such effect.
7.2.2. Performance of Obligations of NationsRent. NationsRent shall have
performed all material obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and RSC shall have received a
certificate signed on behalf of NationsRent by an executive officer of
NationsRent to such effect.
7.2.3. Consents Under Agreements. NationsRent shall have obtained the
consent or approval of each Person whose consent or approval shall be required
in order to consummate the Merger and the other transactions contemplated by
this Agreement under any Contract to which NationsRent or any of its
Subsidiaries is a party, except those for which the failure to obtain such
consent or approval, individually or in the aggregate, is not reasonably
likely to have a Material Adverse Effect on the Surviving Corporation and its
Subsidiaries (is being understood that, for this purpose, materiality shall be
considered with reference to the combined companies following the Merger), or
is not reasonably likely to prevent or materially impair the ability of
NationsRent to consummate the Merger and the other transactions contemplated
by this Agreement.
7.2.4. Tax Opinion. RSC shall have received an opinion from Latham &
Watkins, dated as of the Closing Date, substantially to the effect that the
Merger will be treated for U.S. federal income tax purposes as a
"reorganization" within the meaning of Section 368(a) of the Code and that
each of NationsRent and RSC will be a party to that reorganization within the
meaning of Section 368(b) of the Code; it being understood that in rendering
such opinion, such counsel may require and rely upon the representations by
the Parties in the representation letters referred to in Section 6.14.
7.3. Conditions to Obligations of NationsRent. The obligation of NationsRent
to effect the Merger is also subject to the satisfaction or waiver by
NationsRent prior to the Effective Time of the following conditions:
7.3.1. Representations and Warranties. The representations and warranties
of RSC set forth in this Agreement (i) to the extent qualified by Material
Adverse Effect or any other materiality qualification shall be true and
correct and (ii) to the extent not qualified by Material Adverse Effect or any
other materiality qualification shall be true and correct (provided that this
clause (ii) shall be deemed satisfied so long as any failures of such
representations and warranties to be true and correct, taken together, do not
have a Material Adverse Effect on RSC) as of the Closing Date as though made
on and as of the Closing Date (except to the extent any such representation
and warranty expressly speaks as of an earlier date), and NationsRent shall
have received a certificate signed on behalf of RSC by an executive officer of
RSC to such effect.
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7.3.2. Performance of Obligations of RSC. RSC shall have performed all
material obligations required to be performed by it under this Agreement at or
prior to the Closing Date, and NationsRent shall have received a certificate
signed on behalf of RSC by an executive officer of RSC to such effect.
7.3.3. Consents Under Agreements. RSC shall have obtained the consent or
approval of each Person whose consent or approval shall be required in order
to consummate the Merger and the other transactions contemplated by this
Agreement under any Contract to which RSC or any of its Subsidiaries is a
party, except those for which the failure to obtain such consent or approval,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on the Surviving Corporation and its Subsidiaries, (it being
understood that, for such purpose, materiality shall be considered with
reference to the combined companies following the Merger), or is not
reasonably likely to prevent or materially impair the ability of RSC to
consummate the Merger and the other transactions contemplated by this
Agreement.
7.3.4. Tax Opinion. NationsRent shall have received an opinion from
Sullivan & Cromwell, dated as of the Closing Date, substantially to the effect
that the Merger will be treated for U.S. federal income tax purposes as a
"reorganization" within the meaning of Section 368(a) of the Code and that
each of NationsRent and RSC will be a party to that reorganization within the
meaning of Section 368(b) of the Code; it being understood that in rendering
such opinion, such counsel may require and rely upon the representations by
the Parties in the representation letters referred to in Section 6.14.
ARTICLE VIII
TERMINATION
8.1. Termination by Mutual Consent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approvals by shareholders of NationsRent and RSC referred
to in paragraph 7.1.1, by mutual written consent of NationsRent and RSC, by
action of their respective boards of directors.
8.2. Termination by Either RSC or NationsRent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the board of directors of either RSC or NationsRent if (i)
the Merger shall not have been consummated by August 31, 1999, whether such
date is before or after the date of approval by the shareholders of
NationsRent or RSC (the "Termination Date"), (ii) any Order permanently
restraining, enjoining or otherwise prohibiting the consummation of the Merger
shall have become final and non-appealable, whether before or after the
approval by the shareholders of NationsRent or RSC, (iii) the NationsRent
Requisite Vote shall not have been obtained at the duly held NationsRent
Shareholders Meeting, including any adjournments or postponements thereof, or
(iv) the RSC Requisite Vote shall not have been obtained at the duly held RSC
Shareholders Meeting, including any adjournments or postponements thereof;
provided that the right to terminate this Agreement shall not be available to
a Party that has breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to the failure
of the Merger to be consummated.
8.3. Termination by NationsRent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by shareholders of NationsRent referred to in
Section 7.1.1, by action of the board of directors of NationsRent, if (i) the
board of directors of RSC shall have withdrawn or adversely modified its
approval or recommendation to shareholders of the Merger or, following the
public announcement or disclosure of an Acquisition Proposal or the intention
of any Person to make an Acquisition Proposal with respect to RSC, failed to
reconfirm such recommendation within ten business days after a written request
by NationsRent to do so; or (ii) RSC or its board of directors shall take any
of the actions described in clause (ii) (but only if RSC and its
Representatives shall fail to terminate all such actions within five business
days of the commencement thereof) or clause (iii) of the proviso to Section
6.2.1; (iii) any Person or "group" (within the meaning of Rule 13d-5 under the
Exchange Act) shall acquire 40% or more of the outstanding shares of RSC
Common Stock; or (iv) there shall be a breach by RSC of any representation,
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warranty, covenant or agreement contained in this Agreement which would result
in a failure of a condition set forth in Section 7.3.1 or 7.3.2 and cannot be
or is not cured prior to the Termination Date.
8.4. Termination by RSC. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
the approval by the shareholders of RSC referred to in Section 7.1.1, by
action of the board of directors of RSC, if (i) the board of directors of
NationsRent shall have withdrawn or adversely modified its approval or
recommendation to shareholders of the Merger, following the public
announcement or disclosure of an Acquisition Proposal or the intention of any
Person to make an Acquisition Proposal with respect to NationsRent, or failed
to reconfirm such recommendation within ten business days after a written
request by RSC to do so; or (ii) NationsRent or its board of directors shall
take any of the actions described in clause (ii) (but only if NationsRent and
its Representatives shall fail to terminate all such actions within five
business days of the commencement thereof) or clause (iii) of the proviso to
Section 6.2.1; (iii) any Person or "group" (within the meaning of Rule 13d-5
under the Exchange Act) (excluding for this purpose (A) any shares of
NationsRent Common Stock beneficially owned by, or issuable pursuant to
securities beneficially owned by, H. Wayne Huizenga or James L. Kirk or
affiliates or associates of either of them, considered separately or together
as a group, as of the date hereof and (B) an additional number of shares of
NationsRent Common Stock, or securities exercisable for or convertible into
such shares, that may be acquired after the date hereof by any of such
Persons, considered separately or as a group, not in excess of 5% of the
number of shares specified in clause (A), in the aggregate) shall acquire 40%
or more of the outstanding shares of NationsRent Common Stock; or (iv) there
shall be a breach by NationsRent of any representation, warranty, covenant or
agreement contained in this Agreement which would result in a failure of a
condition set forth in Section 7.2.1 or 7.2.2 and cannot be or is not cured
prior to the Termination Date
8.5. Effect of Termination and Abandonment.
8.5.1. In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article VIII, this Agreement (other than as set
forth in Section 9.1) shall become void and of no effect with no liability on
the part of either Party (or of any of its Representatives) whether under
contract, equity or Law; provided, however, that no such termination shall
relieve either Party of any liability for damages resulting from any willful
and intentional breach of this Agreement or from any obligation to pay, if
applicable, the amounts payable pursuant to Section 8.5.2 or 8.5.3.
8.5.2. In the event that (i) this Agreement is terminated by either
NationsRent or RSC pursuant to Section 8.2(iii) or (ii) this Agreement is
terminated by RSC pursuant to Section 8.4(i), 8.4(ii) (solely with respect to
clause (iii) of the proviso to Section 6.2.1), 8.4(iii) or 8.4(iv) (solely
with respect to a willful and intentional breach of Section 6.2), then
NationsRent shall pay to RSC promptly, but in no event later than two days
after the date of such termination, (A) the amount of $5,000,000 for RSC's
expenses in connection with the negotiation and execution of, and its
performance of its obligations under this Agreement and (B) as liquidated
damages and not as a penalty, an additional termination payment equal to
$35,000,000 (the "NationsRent Termination Amount"). Any payments to be made
pursuant to this Section shall be made by wire transfer of same day funds.
NationsRent acknowledges that the agreements contained in this Section 8.5.2
are an integral part of the transactions contemplated by this Agreement, and
that, without these agreements, RSC would not enter into this Agreement;
accordingly, if NationsRent fails promptly to pay any amount due pursuant to
this Section 8.5.2, and, in order to obtain such payment, RSC commences a suit
which results in a judgment against NationsRent for the payment set forth in
this Section 8.5.2, NationsRent shall pay to RSC its costs and expenses
(including attorneys' fees) in connection with such suit, together with
interest on the amount of expense reimbursement and the NationsRent
Termination Amount from each date for payment until the date of such payment
at the prime rate of Citibank N.A. in effect on the date such payment was
required to be made plus 2 percent.
8.5.3. In the event that (i) this Agreement is terminated by either
NationsRent or RSC pursuant to Section 8.2(iv) or (ii) this Agreement is
terminated by NationsRent pursuant to Section 8.3(i), 8.3(ii) (solely with
respect to clause (iii) of the proviso to Section 6.2.1), 8.3(iii) or 8.3(iv)
(solely with respect to a willful and intentional breach of Section 6.2), then
RSC shall pay to NationsRent promptly, but in no event later than two
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<PAGE>
days, after the date of such termination, (A) the amount of $5,000,000 for
NationsRent's expenses in connection with the negotiation and execution of,
and its performance of its obligations under, this Agreement and (B) as
liquidated damages and not as a penalty, an additional termination payment
equal to $35,000,000 (the "RSC Termination Amount"). Any payments to be made
pursuant to this Section shall be made by wire transfer of same day funds. RSC
acknowledges that the agreements contained in this Section 8.5.3 are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, NationsRent would not enter into this Agreement;
accordingly, if RSC fails promptly to pay any amount due pursuant to this
Section 8.5.3, and, in order to obtain such payment, NationsRent commences a
suit which results in a judgment against RSC for the payment set forth in this
Section 8.5.3, RSC shall pay to NationsRent its costs and expenses (including
attorneys' fees) in connection with such suit, together with interest on the
amount of expense reimbursement and the RSC Termination Amount from each date
for payment until the date of such payment at the prime rate of Citibank N.A.
in effect on the date such payment was required to be made plus 2 percent.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. Survival. This Article IX and the agreements of NationsRent and RSC
contained in Sections 4.4 (NationsRent Stock Options), 6.7.1 (Benefits and
Other Matters), 6.7.2 (Indemnification; Director and Officer Liability), 6.7.4
(1999 RSC Annual Meeting), 6.8 (Expenses), 6.9 (Takeover Statutes), 6.13
(Registration Statements), 6.15 (Transfer Taxes), 6.16 (Assumption of
Indebtedness), 6.17 (Other Equity Rights) and 6.18 (Use of Name) shall survive
the Effective Time. This Article IX (other than Section 9.2 (Modification or
Amendment), Section 9.3 (Waiver of Conditions) and Section 9.12 (Assignment)),
the representations and warranties contained in Section 5.1.3 (Corporate
Authority; Approval and Fairness), the agreements of NationsRent and RSC
contained in Section 4.4.2 (NationsRent Stock Options), Section 6.5.2 (Access;
Confidentiality), Section 6.8 (Expenses) and Section 8.5 (Effect of
Termination and Abandonment) shall survive the termination of this Agreement.
All other representations, warranties, agreements and covenants in this
Agreement shall not survive the Effective Time or the termination of this
Agreement.
9.2. Modification or Amendment. This Agreement may be modified or amended by
agreement of the Parties, by action taken or authorized by their respective
boards of directors, at any time prior to the Effective Time; provided,
however, that, after approval by shareholders of the matters presented at the
NationsRent Shareholders Meeting or the RSC Shareholders Meeting, no
modification or amendment shall be made which under applicable Law requires
further approval by such shareholders without such further approval. This
Agreement may not be modified or amended except by an instrument in writing
executed and delivered by duly authorized officers of each of the Parties.
9.3. Waiver of Conditions. Any provision of this Agreement may be waived
prior to the Effective Time if, and only if, such waiver is in writing and
signed by the Party against whom the waiver is to be effective.
9.4. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay by any Party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. Except as otherwise herein provided, the rights and
remedies herein provided shall be cumulative and not exclusive of any rights
or remedies provided by Law.
9.5. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.6. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
9.6.1. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN, AND IN ALL RESPECTS
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN
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<PAGE>
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS TO
BE PERFORMED WHOLLY IN SUCH STATE. The parties hereby (i) irrevocably submit
to the jurisdiction of the Chancery Court of the State of Delaware and the
federal courts of the United States of America located in the State of
Delaware solely in respect of the interpretation and enforcement of the
provisions of this Agreement and the Stock Option Agreements and in respect of
the transactions contemplated hereby and thereby and (ii) waive, and agree not
to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof, that it is not subject to such
jurisdiction or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or the Stock Option Agreements may not be
enforced in or by such courts, and the Parties irrevocably agree that all
claims with respect to such action or proceeding shall be heard and determined
in such courts. The parties hereby consent to and grant any such court's
jurisdiction over the person of such Parties and over the subject matter of
such dispute and agree that mailing of process or other papers in connection
with any such action or proceeding in the manner provided in Section 9.7
(Notices), or in such other manner as may be permitted by Law, shall be valid
and sufficient service thereof.
9.6.2. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE STOCK OPTION AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR THE STOCK OPTION AGREEMENTS. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF SUCH PARTY HAS
BEEN AUTHORIZED BY SUCH PARTY TO REPRESENT OR, TO THE KNOWLEDGE OR SUCH PARTY,
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.6.
9.7. Notices. Notices, requests, instructions or other documents to be given
under this Agreement shall be in writing and shall be deemed given, (i) when
sent if sent by facsimile, provided that the facsimile is promptly confirmed
by telephone confirmation thereof, (ii) when delivered, if delivered
personally to the intended recipient, and (iii) one business day later, if
sent by overnight delivery via a national courier service, and in each case,
addressed to a Party at the following address for such Party:
if to NationsRent:
NationsRent, Inc.
450 East Las Olas Blvd.
14th Floor
Ft. Lauderdale, FL 33301
Attention: Joseph H. Izhakoff, Esq.
Telecopier: (954) 760-6585
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Joseph B. Frumkin, Esq.
Telecopier: (212) 558-3588
A-30
<PAGE>
if to RSC:
Rental Service Corporation
6929 East Greenway Parkway
Suite 200
Scottsdale, AZ 85254
Attention: Robert Wilson
Telecopier: (602) 905-3300
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, California 90071
Attention: Elizabeth A. Blendell, Esq.
Telecopier: (213) 891-8763
or to such other Persons or addresses as may be designated in writing by the
Party to receive such notice as provided above.
9.8. Entire Agreement. This Agreement (including any exhibits hereto), the
NationsRent Disclosure Letter, the RSC Disclosure Letter, the Stock Option
Agreements and the Confidentiality Agreement constitute the entire agreement,
and supersede all other prior agreements, understandings, representations and
warranties both written and oral, between the Parties with respect to the
subject matter hereof. References herein to this Agreement shall for all
purposes be deemed to include references to the NationsRent Disclosure Letter
and the RSC Disclosure Letter. Except as set forth in Section 6.7.2
(Indemnification; Director and Officer Liability), this Agreement is not
intended to confer upon any Person other than the Parties any rights or
remedies hereunder. No employee or former employee of NationsRent or RSC who
is not a director of NationsRent or RSC shall be deemed a third party
beneficiary with respect to any provision of this Agreement. EACH PARTY HERETO
AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS
AGREEMENT OR THE STOCK OPTION AGREEMENTS, NEITHER NATIONSRENT NOR RSC MAKES
ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER
REPRESENTATIVES WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
THE STOCK OPTION AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE
OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT
TO ANY ONE OR MORE OF THE FOREGOING.
9.9. Obligations of NationsRent and of RSC. Whenever this Agreement requires
a Subsidiary of RSC to take any action, such requirement shall be deemed to
include an undertaking on the part of RSC to use best reasonable efforts to
cause such Subsidiary to take such action. Whenever this Agreement requires a
Subsidiary of NationsRent to take any action, such requirement shall be deemed
to include an undertaking on the part of NationsRent to use best reasonable
efforts to cause such Subsidiary to take such action.
9.10. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (i) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may
be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision unless the substitution of such provision would
materially frustrate the express intent and purposes of this Agreement and
(ii) the remainder of this Agreement and the application of such provision to
other Persons or circumstances
A-31
<PAGE>
shall not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
9.11. Interpretation. The headings herein are for convenience of reference
only, do not constitute part of this Agreement and shall not be deemed to
limit or otherwise affect any of the provisions hereof. Where a reference in
this Agreement is made to a Section, paragraph of or Exhibit, such reference
shall be to a Section or paragraph of or Exhibit to this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
9.12. Assignment. This Agreement shall not be assignable by operation of law
or otherwise, and any purported assignment in violation of this provision
shall be void.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of NationsRent and RSC as of the date hereof.
NATIONSRENT, INC.
/s/ James L. Kirk
By: _________________________________
Name: James L. Kirk
Title:
RENTAL SERVICE CORPORATION
/s/ Martin R. Reid
By: _________________________________
Name: Martin R. Reid
Title:
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<PAGE>
EXHIBIT 2.2
CONFORMED COPY
STOCK OPTION AGREEMENT, dated as of the 20th day of January, 1999
(this "Agreement"), between NATIONSRENT, INC., a Delaware corporation
---------
("Issuer"), and RENTAL SERVICE CORPORATION, a Delaware corporation (including
------
any assigns permitted under Section 12 hereof, "Grantee").
-------
RECITALS
A. The Merger Agreement. Prior to the entry into this Agreement and
--------------------
prior to the grant of the Option (as defined in Section 1(a)), Issuer and
Grantee have entered into an Agreement and Plan of Merger, dated as of the date
hereof (the "Merger Agreement"), pursuant to which Grantee and Issuer intend to
----------------
effect the Merger (as defined in the Merger Agreement).
B. The Stock Option Agreement. As an inducement and condition to
--------------------------
Grantee's willingness to enter into the Merger Agreement, and in consideration
thereof, the board of directors of Issuer has approved the grant to Grantee of
the Option pursuant to this Agreement and the acquisition of Common Stock (as
defined below) by Grantee pursuant to this Agreement; provided, that such grant
--------
was expressly conditioned upon, and made to have no effect until after,
execution and delivery by Issuer and Grantee of the Merger Agreement.
C. Capitalized Terms. Capitalized terms used herein but not defined
-----------------
herein shall have the meanings ascribed to such terms in the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. The Option. (a) Issuer hereby grants to Grantee an
----------
unconditional, irrevocable option (the "Option") to purchase, subject to the
------
terms hereof, up to 11,067,986 fully paid and nonassessable shares ("Option
------
Shares") of common stock, par value $.01 per share ("Common Stock"), of Issuer
- ------ ------------
at a price per share in cash equal to $6.5625 (subject to adjustment in
accordance with this Agreement, the "Option Price"); provided, however, that in
------------ -------- -------
no event shall the number of Option Shares exceed 19.9% of the capital stock
entitled to vote generally for the election of directors of Issuer that is
issued and outstanding at the
<PAGE>
time of exercise (without giving effect to the Option Shares issued or issuable
under the Option) (the "Maximum Applicable Percentage"). The number of Option
-----------------------------
Shares purchasable upon exercise of the Option and the Option Price are subject
to adjustment as set forth herein and subject to Section 20(b).
(b) In the event that any additional shares of Common Stock are
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement), the aggregate number of Option Shares
purchasable upon exercise of the Option shall automatically be increased
(without any further action on the part of Issuer or Grantee being necessary) so
that, taking into consideration any such issuance, such aggregate number equals
the Maximum Applicable Percentage.
(c) The Option Price with respect to the Option Shares as to which
Grantee may propose to exercise this Option pursuant to Section 2, or to request
the repurchase of this Option by Issuer pursuant to Section 9 (in either case,
the "Proposed Exercise Shares"), shall not be greater than, and shall be
------------------------
adjusted downward (but not to less than the par value of the Common Stock) to
the extent necessary to be, the Maximum Option Share Price (as defined below).
The "Maximum Option Share Price" with respect to any Proposed Exercise Shares
--------------------------
shall be that price per share in cash at which the Option must be exercisable in
order to result in a Total Profit (as defined in Section 20) to Grantee,
determined as of the date of such proposal, of $5,000,000, assuming for such
purpose that this Option were exercised on such date for all of the Option
Shares subject to this Option and assuming that all of such Option Shares were
sold for cash at the closing market price on the New York Stock Exchange, Inc.
(the "NYSE") for the Common Stock as of the close of business on the preceding
----
trading day (less customary brokerage commissions).
2. Exercise; Closing. (a) Conditions to Exercise; Termination.
----------------- -----------------------------------
Grantee may exercise the Option, in whole but not in part (subject to the rights
of Grantee under Section 20(a)), by giving a written notice thereof as provided
in Section 2(d) within 180 days following the occurrence of a Triggering Event
(as defined in Section 2(b)) unless prior to the giving of such notice the
Effective Time (as defined in the Merger Agreement) shall have occurred. The
Option shall terminate upon the earliest
2
<PAGE>
of (i) the occurrence of the Effective Time,(ii) the termination of the Merger
Agreement other than under circumstances which constitute (or upon satisfaction
of the conditions to the obligation of Issuer to pay the NationsRent Termination
Amount set forth in Section 8.5.2 would constitute) a Triggering Event under
this Agreement, (iii) the occurrence of the date which is 180 days after
termination of the Merger Agreement under circumstances which, if the conditions
to the obligation of Issuer to pay the NationsRent Termination Amount set forth
in Section 8.5.2 were satisfied, would constitute a Triggering Event under this
Agreement, provided that no such Triggering Event resulting from the
satisfaction of such conditions shall have occurred prior to or upon the
occurrence of such date or (iv) an Option Order (as defined herein) with respect
to all of the Option Shares becomes final and non-appealable.
(b) Triggering Event. A "Triggering Event" shall have occurred if
---------------- ----------------
the Merger Agreement is terminated and Grantee becomes entitled to receive the
NationsRent Termination Amount pursuant to Section 8.5.2 of the Merger
Agreement.
(c) Notice of Triggering Event by Issuer. Issuer shall notify
------------------------------------
Grantee promptly in writing of the occurrence of any Triggering Event and the
number of shares of Common Stock issued and outstanding as of the date of such
notice, it being understood that the giving of such notice by Issuer shall not
be a condition to the right of Grantee to exercise the Option.
(d) Notice of Exercise by Grantee. If Grantee shall be entitled to
-----------------------------
and wishes to exercise the Option, it shall send to Issuer a written notice (an
"Exercise Notice" and the date of which is referred to herein as the "Notice
--------------- ------
Date") specifying (i) the total amount payable to Issuer on the exercise of the
- ----
Option in respect of the Option Shares and (ii) a place and date (the "Closing
-------
Date") not earlier than three business days nor later than 10 business days from
- ----
the Notice Date for the closing of such purchase (the "Closing"); provided, that
------- --------
if a filing is required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), or prior notification to or approval of any
-------
other regulatory authority in the U.S. or elsewhere is required in connection
with such purchase, Grantee and Issuer, as required, promptly after the giving
of the Exercise Notice, shall file any and all required
3
<PAGE>
notices, applications or other documents necessary for approval and shall
expeditiously process the same and in such event the period of time referred to
in clause (ii) shall commence on the date on which Grantee furnishes to Issuer a
supplemental written notice setting forth the Closing Date, which notice shall
be furnished as promptly as practicable after all required notification periods
shall have expired or been terminated and all required approvals shall have been
obtained and all requisite waiting periods shall have passed; and provided,
--------
further, that if a preliminary or permanent injunction or other order by a court
- -------
of competent jurisdiction prohibiting or otherwise restraining the issuance of
the Option Shares hereunder (an "Option Order") shall be in effect, the period
------------
of time referred to in clause (ii) shall commence on the date on which Grantee
furnishes to Issuer a supplemental written notice setting forth the Closing
Date, which notice shall be furnished as promptly as practicable after such
injunction or order shall have ceased to be in effect. Each of Grantee and the
Issuer agree to use its best reasonable efforts to cooperate with and provide
information to Issuer or Grantee, as the case may be, with respect to any
required notice or application for approval to such regulatory authority.
(e) Payment of Purchase Price. At the Closing, Grantee shall pay to
-------------------------
Issuer the aggregate Option Price for the Option Shares in immediately available
funds by a wire transfer to a bank account designated by Issuer; provided, that
--------
failure or refusal of Issuer to designate such a bank account shall not preclude
Grantee from exercising the Option.
(f) Delivery of Common Stock. At the Closing, simultaneously with
------------------------
the payment of the purchase price by Grantee, Issuer shall deliver to Grantee or
such other person as Grantee may nominate in writing, a certificate or
certificates representing the number of Option Shares purchased by Grantee. If
at the time of issuance of the Option Shares hereunder, the Issuer shall have
issued any rights or other securities which are attached to or otherwise
associated with the Common Stock, then each Option Share shall also represent
such rights or other securities with terms substantially the same as, and at
least as favorable to the Grantee as, are provided under any shareholder rights
agreement or similar agreement of the Issuer then in effect.
4
<PAGE>
(g) Restrictive Legend. Certificates for Common Stock delivered at
------------------
the Closing may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such reference if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission, or a written opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act of 1933, as amended. In addition,
such certificates shall bear any other legend as may be required by applicable
law.
(h) Ownership of Record; Tender of Purchase Price; Expenses. Upon
-------------------------------------------------------
the tender of the applicable purchase price in immediately available funds
(following the giving of the Exercise Notice) at the Closing, Grantee shall be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of Issuer may then
be closed or that certificates representing such shares of Common Stock may not
have been delivered to Grantee. Issuer shall pay all expenses, and any and all
federal, national, state, provincial and local taxes and other charges worldwide
that may be payable in connection with the preparation, issuance and delivery of
stock certificates under this Section 2 in the name of Grantee or its permitted
assignee.
3. Covenants of Issuer. In addition to its other agreements and
-------------------
covenants herein, Issuer agrees:
(a) Shares Reserved for Issuance. To maintain, free from preemptive
----------------------------
rights, sufficient authorized but unissued or treasury shares of Common
Stock so that the Option may be fully exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights of third parties to
purchase shares of Common Stock from Issuer, and to issue the appropriate
5
<PAGE>
number of shares of Common Stock pursuant to the terms of this Agreement;
(b) No Avoidance. Not to avoid or seek to avoid (whether by charter
------------
amendment or through reorganization, consolidation, merger, issuance of
rights, dissolution or sale of assets, or by any other voluntary act) the
observance or performance of any of the covenants, agreements or conditions
to be observed or performed hereunder by Issuer; and
(c) Further Assurances. Promptly after the date hereof to take all
------------------
actions as may from time to time be required (including (i) complying with
all applicable premerger notification, reporting and waiting period
requirements under the HSR Act and (ii) in the event that prior
notification to or approval of any other regulatory authority in the U.S.
or elsewhere is necessary before the Option may be exercised, to use its
best reasonable efforts to cooperate with Grantee in preparing and
processing the required notices or applications) in order to permit Grantee
to exercise the Option and purchase Option Shares pursuant to such exercise
and to take all action necessary to protect the rights of Grantee
hereunder, including any adjustments equitably required to give effect to
the intentions of the parties set forth in Section 1(b) and Section 7.
4. Representations and Warranties of Issuer. Issuer hereby represents
----------------------------------------
and warrants to Grantee as follows:
(a) Merger Agreement. Issuer hereby makes each of the
----------------
representations and warranties contained in Sections 5.1.2.1 and 5.1.4 of
the Merger Agreement as they relate to Issuer and this Agreement, as if
such representations and warranties were set forth herein.
(b) Corporate Authority. Issuer hereby represents and warrants to
-------------------
Grantee that Issuer has all requisite corporate power and authority and has
taken all corporate action necessary in order to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this
Agreement have been duly authorized by all necessary corporate action on
the part of Issuer, and, assuming
6
<PAGE>
the due authorization, execution and delivery of this Agreement by Grantee,
constitutes a valid and binding agreement of Issuer enforceable against
Issuer in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(c) Shares Reserved for Issuance; Capital Stock. The Option Shares
-------------------------------------------
issuable in accordance with the terms of this Agreement have been duly
reserved for issuance by Issuer and upon any issuance of such shares in
accordance with the terms hereof, such Option Shares will be duly
authorized, validly issued, fully paid and nonassessable, and will be
delivered free and clear of any lien, pledge, security interest, claim or
other encumbrance (other than those created by this Agreement) and not
subject to any preemptive rights.
(d) Takeover Statutes. Issuer's board of directors has taken all
-----------------
appropriate and necessary actions such that Section 203 of the DGCL is
inapplicable to the execution and delivery of this Agreement and to the
consummation of the transactions contemplated hereby. No other "fair
price," "moratorium," "control share acquisition" or other similar anti-
takeover statute or regulation (each a "Takeover Statute") as in effect on
----------------
the date hereof is applicable to the execution and delivery of this
Agreement, the Common Stock issuable hereunder or to the other transactions
contemplated by this Agreement. No anti-takeover provision contained in
Issuer's certificate of incorporation or its by-laws is applicable to the
execution and delivery of this Agreement, the Common Stock issuable
hereunder or to the other transactions contemplated by this Agreement.
5. Representations and Warranties of Grantee. Grantee hereby
-----------------------------------------
represents and warrants to Issuer that: (a) Grantee has all requisite corporate
power and authority and has taken all corporate action necessary in order to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby; (b) the execution and delivery
of this Agreement have been duly authorized by all necessary corporate action on
the part of Grantee, and, assuming the due authorization,
7
<PAGE>
execution and delivery of this Agreement by Issuer, constitutes a valid and
binding agreement of Grantee enforceable against Grantee in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and (c) Grantee is acquiring
the Option after Grantee has been afforded the opportunity to obtain, and has
obtained, sufficient information regarding Issuer to make an informed investment
decision with respect to Grantee's purchase of the Option Shares issuable upon
the exercise thereof, and, if and when Grantee exercises the Option, it will be
acquiring the Option Shares for its own account and not with a view to
distribution or resale in any manner which would be in violation of the
Securities Act.
6. Replacement. Upon (i) receipt by Issuer of evidence reasonably
-----------
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, (ii) receipt by Issuer of reasonably satisfactory indemnification in
the case of loss, theft or destruction and (iii) surrender and cancellation of
this Agreement in the case of mutilation, Issuer will execute and deliver a new
Agreement of like tenor and date. Any such new Agreement executed and delivered
shall constitute an additional contractual obligation on the part of Issuer,
whether or not the Agreement so lost, stolen, destroyed or mutilated shall at
any time be enforceable by any person other than the holder of the new
Agreement.
7. Adjustments. In addition to (but without duplication of) the
-----------
adjustment to the total number of Option Shares pursuant to Section 1(b) and the
adjustment to the Option Price pursuant to Section 1(c), the total number of
Option Shares purchasable upon the exercise of the Option hereof and the Option
Price shall be subject to adjustment from time to time as follows:
(a) In the event of any change in the outstanding shares of Common
Stock by reason of stock dividends, split-ups, mergers, recapitalizations,
combinations, subdivisions, conversions, extraordinary dividends or
distributions, exchanges of shares or the like, the type and number of
Option Shares purchasable upon exercise of the Option shall be
appropriately adjusted, and proper provision shall be made in the
agreements
8
<PAGE>
governing any such transaction, so that (i) Grantee shall receive upon
exercise of the Option the number and class of shares, other securities,
property or cash that Grantee would have received in respect of the Option
Shares purchasable upon exercise of the Option if the Option had been
exercised and such Option Shares had been issued to Grantee immediately
prior to such event or the record date therefor, as applicable; and (ii) in
the event any additional shares of Common Stock are to be issued or
otherwise become outstanding as a result of any such change (other than
pursuant to an exercise of the Option), the number of Option Shares
purchasable upon exercise of the Option shall be increased so that, after
such issuance the number of Option Shares so purchasable equals the Maximum
Applicable Percentage of the number of shares of Common Stock issued and
outstanding immediately after the consummation of such change; and
(b) Whenever the number of Option Shares purchasable upon exercise
hereof is adjusted as provided in this Section 7, the Option Price shall
be adjusted by multiplying the Option Price by a fraction, the numerator of
which is equal to the number of Option Shares purchasable prior to the
adjustment and the denominator of which is equal to the number of Option
Shares purchasable after the adjustment.
8. Registration. (a) Upon the occurrence of a Triggering Event,
------------
Issuer shall, at the request of Grantee included in the Exercise Notice, as
promptly as practicable prepare, file and keep current a shelf registration
statement under the Securities Act covering all Option Shares issued and
issuable pursuant to the Option and shall use its best reasonable efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any Option Shares issued upon
exercise of the Option in accordance with any plan of disposition requested by
Grantee; provided, however, that Issuer may postpone or suspend the filing or
-------- -------
effectiveness of a registration statement relating to a registration request by
Grantee under this Section 8 for a period of time (not in excess of 30 days) if
such filing or effectiveness would require the disclosure of material
information that Issuer has a bona fide business purpose for preserving as
---- ----
confidential or would cause Issuer, at a time when Issuer is otherwise in
compliance with all its obligations under this
9
<PAGE>
Section 8, to be in violation of the federal securities laws or the rules and
regulations thereunder. Issuer will use its best reasonable efforts to cause
such registration statement first to become effective and then to remain
effective for 270 days or until such earlier date as all shares registered shall
have been sold by Grantee. In connection with any such registration, Issuer and
Grantee shall provide each other with representations, warranties, indemnities,
contribution and other agreements customarily given in connection with such
registrations. If requested by Grantee in connection with such registration,
Issuer shall become a party to one underwriting agreement (the managing
underwriter(s) thereunder being approved by Issuer, such approval not to be
unreasonably withheld or delayed) relating to the sale of such shares, but only
to the extent of obligating Issuer in respect of representations, warranties,
indemnities, contribution and other agreements customarily made by issuers in
such underwriting agreements.
(b) In the event that Grantee so requests, the closing of the sale or
other disposition of the Option Shares or other securities pursuant to a
registration statement filed pursuant to Section 8(a) shall occur substantially
simultaneously with the exercise of the Option.
9. Repurchase of Option and/or Option Shares. (a) Repurchase;
----------------------------------------- -----------
Repurchase Price. Following the occurrence of a Triggering Event, (i) at the
- ----------------
request of Grantee, given in writing within 180 days of such occurrence (or such
later period as provided in Section 2(d) with respect to any required
notification, application or approval or pursuant to a request by Grantee in
accordance with Section 11), Issuer shall repurchase the Option from Grantee, in
whole but not in part (except as provided in Section 9(c)), at a price (the
"Option Repurchase Price") equal to the number of Option Shares then purchasable
-----------------------
upon exercise of the Option multiplied by the amount by which the market/offer
price (as defined below) exceeds the applicable Option Price (giving effect to
the Maximum Option Share Price) and (ii) at the request of Grantee, given in
writing within 180 days of the occurrence of a Triggering Event (or such later
period as provided in Section 2(d) with respect to any required notification,
application or approval or pursuant to a request by Grantee in accordance with
Section 11), Issuer shall repurchase all Option Shares then owned by Grantee at
a price (the "Option Share Repurchase Price") equal to the
-----------------------------
10
<PAGE>
number of such Option Shares multiplied by the market/offer price. The term
"market/offer price" shall mean the highest of (x) the price per share of Common
------------------
Stock at which a tender or exchange offer for Common Stock either has been
consummated or at which a Person has publicly announced its intention to
commence a tender or exchange offer, after the date of this Agreement and prior
to the delivery of the Repurchase Notice (as defined below), and which offer
either has been consummated and not withdrawn or terminated as of the date
payment of the Option Repurchase Price or the Option Share Repurchase Price, as
the case may be, is made, or has been publicly announced and the intention to
make a tender or exchange offer has not been withdrawn as of the date payment of
the Option Repurchase Price or the Option Share Repurchase Price, as the case
may be, is made, (y) the price per share of Common Stock to be paid by any third
party pursuant to a valid agreement with Issuer for a merger, share exchange,
consolidation or reorganization entered into after the date hereof and on or
prior to the delivery of the Repurchase Notice (as defined below) and (z) the
average closing price for shares of Common Stock on the NYSE (or, if the Common
Stock is not then listed on the NYSE, any other national securities exchange or
automated quotation system on which the Common Stock is then listed or quoted)
for the twenty consecutive trading days immediately preceding the delivery of
the Repurchase Notice. In the event that a tender or exchange offer is made for
the Common Stock or an agreement is entered into for a merger, share exchange,
consolidation, recapitalization, reorganization or similar transaction involving
consideration other than cash, the value of the securities or other property
issuable or deliverable in exchange for the Common Stock shall (I) if such
consideration is in securities and such securities are listed on a national
securities exchange, be determined to be the average closing price for such
securities on such national securities exchange for the twenty consecutive
trading days immediately preceding the delivery of the Repurchase Notice or (II)
if such consideration is not securities, or if in securities and such securities
are not traded on a national securities exchange, be determined in good faith by
a nationally recognized investment banking firm selected by Issuer.
(b) Method of Repurchase. Grantee may exercise its right to require
--------------------
Issuer to repurchase the Option, in whole but not in part, or all Option Shares
then owned by Grantee pursuant to this Section 9 by surrendering for such
11
<PAGE>
purpose to Issuer, at its principal office, this Agreement or certificates for
such Option Shares, as applicable, accompanied by a written notice or notices
stating that Grantee elects to require Issuer to repurchase the Option or such
Option Shares in accordance with the provisions of this Section 9 (such notice,
a "Repurchase Notice"). As promptly as practicable, and in any event within 2
-----------------
business days after the surrender of this Agreement or certificates representing
Option Shares, as applicable, and the receipt of the Repurchase Notice relating
thereto, Issuer shall deliver or cause to be delivered to Grantee the applicable
Option Repurchase Price or the Option Share Repurchase Price.
(c) Effect of Statutory or Regulatory Restraints on Repurchase. To
----------------------------------------------------------
the extent that, upon or following the giving of a Repurchase Notice, Issuer is
prohibited under applicable law or regulation from repurchasing the Option or
any Option Shares subject to such Repurchase Notice (and Issuer hereby
undertakes to use its best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to accomplish such repurchase), Issuer shall immediately so notify Grantee in
writing and thereafter deliver or cause to be delivered, from time to time, to
Grantee the portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is no longer prohibited from delivering, within 2
business days after the date on which it is no longer so prohibited; provided,
--------
however, that upon notification by Issuer in writing of such prohibition,
- -------
Grantee may, within 5 days of receipt of such notification from Issuer, revoke
in writing its Repurchase Notice, whether in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly (i) deliver to
Grantee that portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and (ii) deliver
to Grantee, as appropriate, (A) with respect to the Option, a new stock option
agreement evidencing the right of Grantee to purchase that number of Option
Shares for which the surrendered stock option agreement was exercisable at the
time of delivery of the Repurchase Notice less the number of shares as to which
the Option Repurchase Price has theretofore been delivered to Grantee, or (B)
with respect to Option Shares, a certificate for the Option Shares as to which
the Option Share Repurchase Price has not theretofore been delivered to Grantee.
Notwithstanding anything to the contrary in this
12
<PAGE>
Agreement, including, without limitation, the time limitations on the exercise
of the Option, Grantee may give notice of exercise of the Option for 180 days
after a notice of revocation has been issued pursuant to this Section 9(c) and
thereafter exercise the Option in accordance with the applicable provisions of
this Agreement.
(d) Acquisition Transactions. In addition to any other restrictions
------------------------
or covenants, Issuer hereby agrees that, in the event that Grantee delivers a
Repurchase Notice, it shall not enter or agree to enter into an agreement or
series of agreements relating to a merger with or into or the consolidation with
any other person or entity, the sale of all or substantially all of the assets
of Issuer or any similar transaction or disposition unless the other party or
parties to such agreement or agreements agree to assume in writing Issuer's
obligations under Section 9(a) and, notwithstanding any notice of revocation
delivered pursuant to the proviso to Section 9(c), Grantee may require such
other party or parties to perform Issuer's obligations under Section 9(a) unless
such party or parties are prohibited by law or regulation from such performance,
in which case such party or parties shall be subject to the obligations of the
Issuer under Section 9(c).
10. Right of First Refusal. If the Grantee, at any time prior to the
----------------------
earlier of (a) the occurrence of a Change in Control Event (as defined below) or
(b) the second anniversary of the termination of the Merger Agreement, seeks to
sell all or any part of the Option Shares (i) in a transaction registered under
the Securities Act (other than in a registered public offering in which the
underwriters are instructed to make a broad public distribution) or (ii) in a
transaction not required to be registered under the Securities Act (other than
in a transfer (a) by operation of law upon consummation of a merger or (b) as a
result of which the proposed transferee would own beneficially not more than 2%
of the outstanding voting power of the Issuer), it shall give the Issuer (or a
designee of the Issuer) the opportunity, in the following manner, to purchase
such Option Shares:
(a) The Grantee shall give notice to the Issuer in writing of its
intent to sell Option Shares (a "Disposition Notice"), specifying the
------------------
maximum number of Option Shares to be sold, the price and, if applicable,
the material terms of any agreement relating thereto.
13
<PAGE>
For purposes of this Section 10, if the Disposition Notice is given with
respect to the sale of the Option Shares pursuant to a tender or exchange
offer, it shall be assumed that all Option Shares tendered will be accepted
for payment. The Disposition Notice may be given at any time, including
prior to the giving of any Exercise Notice.
(b) The Issuer or its designee shall have the right, exercisable by
written notice given to the Grantee within five business days after receipt
of a Disposition Notice (or, if applicable, in the case of a proposed sale
pursuant to a tender or exchange offer for shares of Common Stock, by
written notice given to the Grantee at least two business days prior to the
then announced expiration date of such tender or exchange offer (the
"Expiration Date")if such Disposition Notice was given at least four
----------------
business days prior to such Expiration Date), to purchase all, but not less
than all, of the Option Shares specified in the Disposition Notice at the
price set forth in the Disposition Notice. If the purchase price specified
in the Disposition Notice includes any property other than cash, the
purchase price to be paid by the Issuer shall be an amount of cash equal to
the sum of (i) the cash included in the purchase price plus (ii) the fair
market value of such other property at the date of the Disposition Notice.
If such other property consists of securities with an existing public
trading market, the average closing price (or the average closing bid and
asked price if closing prices are unavailable) for such securities on their
principal public trading market for the five trading days ending five days
prior to the date of the Disposition Notice shall be deemed to equal the
fair market value of such property. If such other property consists of
something other than cash or securities with an existing public trading
market and at the time of the closing referred to in paragraph (c) below,
agreement on the value of such other property has not been reached, the
higher of (i) the cash included in the purchase price and (ii) the average
closing price of the Common Stock on the NYSE for the five trading days
ending five days prior to the date of the Disposition Notice shall be used
as the per share purchase price, provided, however, that promptly after the
-------- -------
closing, the Grantee and the Issuer or its designee, as the case may be,
shall settle any
14
<PAGE>
additional amounts to be paid or returned as a result of the determination
of fair market value of such other property made by a nationally recognized
investment banking firm selected by the Issuer and approved by the Grantee
within thirty (30) days of the closing. Such determination shall be final
and binding on all parties hereto. If, at the time of the purchase of any
Option Shares by the Grantee (or its designee) pursuant to this Section 10,
a tender or exchange offer is outstanding, then the Issuer (or its
designee) shall agree at the time of such purchase to promptly pay to
Grantee from time to time such additional amounts, if any, so that the
consideration received by Grantee with respect to each Option Share shall
be equal to the highest price paid for a share of Common Stock pursuant to
such tender or exchange offer, or pursuant to any other tender or exchange
offer outstanding at any time such tender or exchange offer is outstanding.
(c) If the Issuer exercises its right of first refusal hereunder, the
closing of the purchase of the Option Shares with respect to which such
right has been exercised shall take place within five business days after
the notice of such exercise (or, if applicable, in the case of a tender or
exchange offer, no later than one business day prior to the expiration date
of the offer if written notice was given within the time set forth in the
parenthetical in the first sentence of paragraph (b) above); provided,
--------
however, that at any time prior to the closing of the purchase of Option
-------
Shares hereunder, the Grantee may determine not to sell the Option Shares
and revoke the Disposition Notice and, by so doing, cancel the Issuer's
right of first refusal with respect to the disposition in question. The
Issuer (or its designee) shall pay for the Option Shares in immediately
available funds.
(d) If the Issuer does not exercise its right of first refusal
hereunder within the time specified for such exercise, the Grantee shall be
free for ninety (90) days following the expiration of such time for
exercise to sell up to the maximum number of Option Shares specified in the
Disposition Notice, at the price specified in the Disposition Notice or any
price in excess thereof and otherwise on substantially the same terms set
forth in the Disposition Notice; provided, that if such sale is not
--------
consummated within
15
<PAGE>
such 90-day period, then the provisions of this Section 10 will again apply
to the sale of such shares.
(e) For purposes of the Agreement, a "Change in Control Event" shall
-----------------------
be deemed to have occurred if (i) any person has acquired beneficial
ownership of more than 50% (excluding the Option Shares) of the outstanding
shares of Common Stock or (ii) the Issuer shall have entered into an
agreement, including, without limitation, an agreement in principle,
providing for a merger or other business combination involving the Issuer
or the acquisition of 30% or more of the assets of the Issuer and its
subsidiaries, taken as a whole.
11. Extension of Exercise Periods. The 180-day periods for exercise
-----------------------------
of certain rights under Sections 2 and 9 (including Section 9(c)) shall be
extended in each such case at the request of Grantee to the extent necessary to
avoid liability by Grantee under Section 16(b) of the Exchange Act by reason of
such exercise.
12. Assignment. Neither party hereto may assign or delegate any of
----------
its rights or obligations under this Agreement or the Option to any other person
without the express written consent of the other party, except that this
Agreement or the Option may be assigned to any direct or indirect wholly owned
Subsidiary of Grantee. Any attempted assignment or delegation in contravention
of the preceding sentence shall be null and void.
13. Filings; Other Actions. Each of Grantee and Issuer will use its
----------------------
best efforts to make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary for the consummation of the
transactions contemplated by this Agreement. Subject to applicable law and the
rules and regulations of the NYSE, the Issuer will promptly file an application
to have the Option Shares listed on the NYSE and will use its best reasonable
efforts to obtain approval of such application; provided, that if the Issuer is
--------
unable to effect such listing on the NYSE by the Closing Date, the Issuer will
nevertheless be obligated to deliver the Option Shares upon the Closing Date.
14. Specific Performance. The parties hereto acknowledge that
--------------------
damages would be an inadequate remedy for a
16
<PAGE>
breach of this Agreement by either party hereto and that the obligations of the
parties hereto shall be specifically enforceable through injunctive or other
equitable relief.
15. Severability; Etc. If any term, provision, covenant, or
------------------
restriction contained in this Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms, provisions, covenants, and
restrictions contained in this Agreement shall remain in full force and effect,
and shall in no way be affected, impaired, or invalidated. If for any reason
such court or regulatory agency determines that Grantee is not permitted to
acquire pursuant to Section 2, or Issuer is not permitted to repurchase pursuant
to Section 9, the full number of Option Shares provided in Section 1(a) hereof
(as adjusted pursuant to Sections 1(b) and 7 hereof), it is the express
intention of Issuer to allow Grantee to acquire such lesser number of shares as
may be permissible, without any amendment or modification hereof.
16. Notices. Notices, requests, instructions or other documents to
-------
be given under this Agreement shall be in writing and shall be deemed given (i)
when sent if sent by facsimile, provided that the facsimile is promptly
confirmed by telephone confirmation thereof, (ii) when delivered, if delivered
personally to the intended recipient, and (iii) one business day later, if sent
by overnight delivery via a national courier service, and in each case addressed
to a party at the respective addresses of the parties set forth in the Merger
Agreement.
17. GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL
------------------------------------------
BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND
GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE
TO CONTRACTS TO BE PERFORMED WHOLLY IN SUCH STATE. The parties hereby
irrevocably submit to the jurisdiction of the Chancery Court of the State of
Delaware and the Federal courts of the United States of America located in the
State of Delaware solely in respect of the interpretation and enforcement of the
provisions of this Agreement and in respect of the transactions contemplated
hereby and hereby waive, and agree not to assert, as a defense in any action,
suit or proceeding for the interpretation or enforcement hereof, that it is
not subject thereto or that such action, suit or proceeding may not be brought
17
<PAGE>
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement may not be enforced in or by such courts, and
the parties irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such courts. The parties hereby
consent to and grant any such court jurisdiction over the person of such parties
and over the subject matter of such dispute and agree that mailing of process or
other papers in connection with any such action or proceeding in the manner
provided in Section 16, or in such other manner as may be permitted by Law,
shall be valid and sufficient service thereof. EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF SUCH PARTY HAS BEEN AUTHORIZED BY SUCH PARTY TO REPRESENT, OR, TO
THE KNOWLEDGE OF SUCH PARTY, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH
SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 17.
18. Expenses. Except as otherwise expressly provided herein or in
--------
the Merger Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expense, except that Issuer shall be responsible for
all fees and expenses (other than underwriting discounts or commissions and the
fees of counsel to Grantee) relating to the registration of securities pursuant
to Section 8.
19. Entire Agreement, Etc. This Agreement, the RSC Stock Option
---------------------
Agreement, the Confidentiality Agreement and the Merger Agreement (including any
exhibits thereto, the NationsRent Disclosure Letter and the RSC Disclosure
Letter) constitute the entire agreement, and supersede all other prior
agreements, understandings, representations and
18
<PAGE>
warranties, both written and oral, between the parties, with respect to the
subject matter hereof. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. This Agreement is not intended to confer upon any person or entity,
other than the parties hereto, and their respective successors and permitted
assigns, any rights or remedies hereunder.
20. Limitation on Profit. (a) Notwithstanding any other provision
--------------------
of this Agreement, in no event shall Grantee's Total Profit (as hereinafter
defined) plus any NationsRent Termination Amount paid to Grantee pursuant to
Section 8.5.2 of the Merger Agreement exceed in the aggregate $35,000,000 (the
"Maximum Amount") and, if it otherwise would exceed such amount, Grantee, at its
- ---------------
sole election, shall either (i) reduce the number of Option Shares subject to
this Option, (ii) deliver to the Issuer for cancellation Option Shares
previously purchased by Grantee, (iii) pay cash to the Issuer, or (iv) any
combination thereof, so that Grantee's actually realized Total Profit, when
aggregated with such NationsRent Termination Amount so paid to Grantee shall not
exceed the Maximum Amount, taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this
Option may not be exercised for a number of Option Shares as would, as of the
date of exercise, result in a Notional Total Profit (as defined below) which,
together with any NationsRent Termination Amount theretofore paid to Grantee,
and after giving effect to any election made by Grantee under Section 20(a),
would exceed the Maximum Amount; provided, that nothing in this sentence shall
--------
restrict any exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate
------------
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuer's repurchase of the Option or any Option Shares pursuant to
Section 9, less, in the case of any repurchase of Option Shares, Grantee's
purchase price for such Option Shares, and (ii) (x) the net cash amounts or the
fair market value of any property received by Grantee pursuant to the sale of
Option Shares (or (A) any other securities into which such Option Shares are
converted or exchanged or (B) any property, cash or other securities received
pursuant to
19
<PAGE>
adjustments made under Section 7 or delivered pursuant to Section 2(f)
("Additional Property")), but in no case less than the fair market value of such
-------------------
Option Shares, less (y) Grantee's purchase price for such Option Shares.
(d) As used herein, the term "Notional Total Profit" with respect to
---------------------
the Option Shares as to which Grantee may propose to exercise this Option shall
be the Total Profit determined as of the date of such proposal assuming that
this Option were exercised on such date for such number of Option Shares and
assuming that (i) such Option Shares (or any other securities into which such
Option Shares are converted or exchanged) were sold for cash at the closing
market price on the NYSE for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions) and (ii) the
Additional Property is disposed of for fair market value.
21. Captions. The Section and paragraph captions herein are for
--------
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
20
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by duly authorized officers of the parties hereto as of the day and
year first hereinabove written.
NATIONSRENT, INC.
By: /s/ James L. Kirk
---------------------------
Name: James L. Kirk
Title:
RENTAL SERVICE CORPORATION
By: /s/ Martin R. Reid
----------------------------
Name: Martin R. Reid
Title:
21
<PAGE>
EXHIBIT 2.3
CONFORMED COPY
STOCK OPTION AGREEMENT, dated as of the 20th day of January, 1999
(this "Agreement"), between RENTAL SERVICE CORPORATION, a Delaware corporation
---------
("Issuer"), and NATIONSRENT, INC., a Delaware corporation (including any assigns
------
permitted under Section 12 hereof, "Grantee").
-------
RECITALS
A. The Merger Agreement. Prior to the entry into this Agreement and
--------------------
prior to the grant of the Option (as defined in Section 1(a)), Issuer and
Grantee have entered into an Agreement and Plan of Merger, dated as of the date
hereof (the "Merger Agreement"), pursuant to which Grantee and Issuer intend to
----------------
effect the Merger (as defined in the Merger Agreement).
B. The Stock Option Agreement. As an inducement and condition to
--------------------------
Grantee's willingness to enter into the Merger Agreement, and in consideration
thereof, the board of directors of Issuer has approved the grant to Grantee of
the Option pursuant to this Agreement and the acquisition of Common Stock (as
defined below) by Grantee pursuant to this Agreement; provided, that such grant
--------
was expressly conditioned upon, and made to have no effect until after,
execution and delivery by Issuer and Grantee of the Merger Agreement.
C. Capitalized Terms. Capitalized terms used herein but not defined
-----------------
herein shall have the meanings ascribed to such terms in the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. The Option. (a) Issuer hereby grants to Grantee an
----------
unconditional, irrevocable option (the "Option") to purchase, subject to the
------
terms hereof, up to 4,795,431 fully paid and nonassessable shares ("Option
------
Shares") of common stock, par value $.01 per share ("Common Stock"), of Issuer
- ------ ------------
at a price per share in cash equal to $23.25 (subject to adjustment in
accordance with this Agreement, the "Option Price"); provided, however, that in
------------ -------- -------
no event shall the number of Option Shares exceed 19.9% of the capital stock
entitled to vote generally for the election of directors of Issuer that is
issued and outstanding at the time of
<PAGE>
exercise (without giving effect to the Option Shares issued or issuable under
the Option) (the "Maximum Applicable Percentage"). The number of Option Shares
-----------------------------
purchasable upon exercise of the Option and the Option Price are subject to
adjustment as set forth herein and subject to Section 20(b).
(b) In the event that any additional shares of Common Stock are
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement), the aggregate number of Option Shares
purchasable upon exercise of the Option shall automatically be increased
(without any further action on the part of Issuer or Grantee being necessary) so
that, taking into consideration any such issuance, such aggregate number equals
the Maximum Applicable Percentage.
(c) The Option Price with respect to the Option Shares as to which
Grantee may propose to exercise this Option pursuant to Section 2, or to request
the repurchase of this Option by Issuer pursuant to Section 9 (in either case,
the "Proposed Exercise Shares"), shall not be greater than, and shall be
------------------------
adjusted downward (but not to less than the par value of the Common Stock) to
the extent necessary to be, the Maximum Option Share Price (as defined below).
The "Maximum Option Share Price" with respect to any Proposed Exercise Shares
--------------------------
shall be that price per share in cash at which the Option must be exercisable in
order to result in a Total Profit (as defined in Section 20) to Grantee,
determined as of the date of such proposal, of $5,000,000, assuming for such
purpose that this Option were exercised on such date for all of the Option
Shares subject to this Option and assuming that all of such Option Shares were
sold for cash at the closing market price on the New York Stock Exchange, Inc.
(the "NYSE") for the Common Stock as of the close of business on the preceding
----
trading day (less customary brokerage commissions).
2. Exercise; Closing. (a) Conditions to Exercise; Termination.
----------------- -----------------------------------
Grantee may exercise the Option, in whole but not in part (subject to the rights
of Grantee under Section 20(a)), by giving a written notice thereof as provided
in Section 2(d) within 180 days following the occurrence of a Triggering Event
(as defined in Section 2(b)) unless prior to the giving of such notice the
Effective Time (as defined in the Merger Agreement) shall have occurred. The
Option shall terminate upon the earliest of (i) the occurrence of the Effective
Time,(ii) the
2
<PAGE>
termination of the Merger Agreement other than under circum stances which
constitute (or upon satisfaction of the conditions to the obligation of Issuer
to pay the RSC Termination Amount set forth in Section 8.5.3 would constitute) a
Triggering Event under this Agreement, (iii) the occurrence of the date which is
180 days after termination of the Merger Agreement under circumstances which, if
the conditions to the obligation of Issuer to pay the RSC Termination Amount set
forth in Section 8.5.3 were satisfied, would constitute a Triggering Event under
this Agreement, provided that no such Triggering Event resulting from the
satisfaction of such conditions shall have occurred prior to or upon the
occurrence of such date or (iv) an Option Order (as defined herein) with respect
to all of the Option Shares becomes final and non-appealable.
(b) Triggering Event. A "Triggering Event" shall have occurred if
---------------- ----------------
the Merger Agreement is terminated and Grantee becomes entitled to receive the
RSC Termination Amount pursuant to Section 8.5.3 of the Merger Agreement.
(c) Notice of Triggering Event by Issuer. Issuer shall notify
------------------------------------
Grantee promptly in writing of the occurrence of any Triggering Event and the
number of shares of Common Stock issued and outstanding as of the date of such
notice, it being understood that the giving of such notice by Issuer shall not
be a condition to the right of Grantee to exercise the Option.
(d) Notice of Exercise by Grantee. If Grantee shall be entitled to
-----------------------------
and wishes to exercise the Option, it shall send to Issuer a written notice (an
"Exercise Notice" and the date of which is referred to herein as the "Notice
--------------- ------
Date") specifying (i) the total amount payable to Issuer on the exercise of the
- ----
Option in respect of the Option Shares and (ii) a place and date (the "Closing
-------
Date") not earlier than three business days nor later than 10 business days from
- ----
the Notice Date for the closing of such purchase (the "Closing"); provided, that
------- --------
if a filing is required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), or prior notification to or approval of any
-------
other regulatory authority in the U.S. or elsewhere is required in connection
with such purchase, Grantee and Issuer, as required, promptly after the giving
of the Exercise Notice, shall file any and all required notices, applications or
other documents necessary for approval and shall expeditiously process the same
and in
3
<PAGE>
such event the period of time referred to in clause (ii) shall commence on the
date on which Grantee furnishes to Issuer a supplemental written notice setting
forth the Closing Date, which notice shall be furnished as promptly as
practicable after all required notification periods shall have expired or been
terminated and all required approvals shall have been obtained and all requisite
waiting periods shall have passed; and provided, further, that if a preliminary
-------- -------
or permanent injunction or other order by a court of competent jurisdiction
prohibiting or otherwise restraining the issuance of the Option Shares hereunder
(an "Option Order") shall be in effect, the period of time referred to in clause
------------
(ii) shall commence on the date on which Grantee furnishes to Issuer a
supplemental written notice setting forth the Closing Date, which notice shall
be furnished as promptly as practicable after such injunction or order shall
have ceased to be in effect. Each of Grantee and the Issuer agree to use its
best reasonable efforts to cooperate with and provide information to Issuer or
Grantee, as the case may be, with respect to any required notice or application
for approval to such regulatory authority.
(e) Payment of Purchase Price. At the Closing, Grantee shall pay to
-------------------------
Issuer the aggregate Option Price for the Option Shares in immediately available
funds by a wire transfer to a bank account designated by Issuer; provided, that
--------
failure or refusal of Issuer to designate such a bank account shall not preclude
Grantee from exercising the Option.
(f) Delivery of Common Stock. At the Closing, simultaneously with
------------------------
the payment of the purchase price by Grantee, Issuer shall deliver to Grantee or
such other person as Grantee may nominate in writing, a certificate or
certificates representing the number of Option Shares purchased by Grantee. If
at the time of issuance of the Option Shares hereunder, the Issuer shall have
issued any rights or other securities which are attached to or otherwise
associated with the Common Stock, then each Option Share shall also represent
such rights or other securities with terms substantially the same as, and at
least as favorable to the Grantee as, are provided under any shareholder rights
agreement or similar agreement of the Issuer then in effect.
4
<PAGE>
(g) Restrictive Legend. Certificates for Common Stock delivered at
------------------
the Closing may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such reference if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission, or a written opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act of 1933, as amended. In addition,
such certificates shall bear any other legend as may be required by applicable
law.
(h) Ownership of Record; Tender of Purchase Price; Expenses. Upon
-------------------------------------------------------
the tender of the applicable purchase price in immediately available funds
(following the giving of the Exercise Notice) at the Closing, Grantee shall be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of Issuer may then
be closed or that certificates representing such shares of Common Stock may not
have been delivered to Grantee. Issuer shall pay all expenses, and any and all
federal, national, state, provincial and local taxes and other charges worldwide
that may be payable in connection with the preparation, issuance and delivery of
stock certificates under this Section 2 in the name of Grantee or its permitted
assignee.
3. Covenants of Issuer. In addition to its other agreements and
-------------------
covenants herein, Issuer agrees:
(a) Shares Reserved for Issuance. To maintain, free from preemptive
----------------------------
rights, sufficient authorized but unissued or treasury shares of Common
Stock so that the Option may be fully exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights of third parties to
purchase shares of Common Stock from Issuer, and to issue the appropriate
5
<PAGE>
number of shares of Common Stock pursuant to the terms of this Agreement;
(b) No Avoidance. Not to avoid or seek to avoid (whether by charter
------------
amendment or through reorganiza tion, consolidation, merger, issuance of
rights, dissolution or sale of assets, or by any other volun tary act) the
observance or performance of any of the covenants, agreements or conditions
to be observed or performed hereunder by Issuer; and
(c) Further Assurances. Promptly after the date hereof to take all
------------------
actions as may from time to time be required (including (i) complying with
all applicable premerger notification, reporting and waiting period
requirements under the HSR Act and (ii) in the event that prior
notification to or approval of any other regulatory authority in the U.S.
or elsewhere is necessary before the Option may be exercised, to use its
best reasonable efforts to cooperate with Grantee in preparing and
processing the required notices or applications) in order to permit Grantee
to exercise the Option and purchase Option Shares pursuant to such exercise
and to take all action necessary to protect the rights of Grantee
hereunder, including any adjustments equitably required to give effect to
the intentions of the parties set forth in Section 1(b) and Section 7.
4. Representations and Warranties of Issuer. Issuer hereby represents
----------------------------------------
and warrants to Grantee as follows:
(a) Merger Agreement. Issuer hereby makes each of the
----------------
representations and warranties contained in Sections 5.1.2.2 and 5.1.4 of
the Merger Agreement as they relate to Issuer and this Agreement, as if
such representations and warranties were set forth herein.
(b) Corporate Authority. Issuer hereby represents and warrants to
-------------------
Grantee that Issuer has all requisite corporate power and authority and has
taken all corporate action necessary in order to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this
Agreement have been duly authorized by all necessary corporate action on
the part of Issuer, and, assuming
6
<PAGE>
the due authorization, execution and delivery of this Agreement by Grantee,
constitutes a valid and binding agreement of Issuer enforceable against
Issuer in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(c) Shares Reserved for Issuance; Capital Stock. The Option Shares
-------------------------------------------
issuable in accordance with the terms of this Agreement have been duly
reserved for issuance by Issuer and upon any issuance of such shares in
accordance with the terms hereof, such Option Shares will be duly
authorized, validly issued, fully paid and nonassessable, and will be
delivered free and clear of any lien, pledge, security interest, claim or
other encumbrance (other than those created by this Agreement) and not
subject to any preemptive rights.
(d) Takeover Statutes. Issuer's board of directors has taken all
-----------------
appropriate and necessary actions such that Section 203 of the DGCL is
inapplicable to the execution and delivery of this Agreement and to the
consummation of the transactions contemplated hereby. No other "fair
price," "moratorium," "control share acquisition" or other similar anti-
takeover statute or regulation (each a "Takeover Statute") as in effect on
----------------
the date hereof is applicable to the execution and delivery of this
Agreement, the Common Stock issuable hereunder or to the other transactions
contemplated by this Agreement. No anti-takeover provision contained in
Issuer's certificate of incorporation or its by-laws is applicable to the
execution and delivery of this Agreement, the Common Stock issuable
hereunder or to the other transactions contemplated by this Agreement.
5. Representations and Warranties of Grantee. Grantee hereby
-----------------------------------------
represents and warrants to Issuer that: (a) Grantee has all requisite corporate
power and authority and has taken all corporate action necessary in order to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby; (b) the execution and delivery
of this Agreement have been duly authorized by all necessary corporate action on
the part of Grantee, and, assuming the due authorization,
7
<PAGE>
execution and delivery of this Agreement by Issuer, constitutes a valid and
binding agreement of Grantee enforceable against Grantee in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and (c) Grantee is acquiring
the Option after Grantee has been afforded the opportunity to obtain, and has
obtained, sufficient information regarding Issuer to make an informed investment
decision with respect to Grantee's purchase of the Option Shares issuable upon
the exercise thereof, and, if and when Grantee exercises the Option, it will be
acquiring the Option Shares for its own account and not with a view to
distribution or resale in any manner which would be in violation of the
Securities Act.
6. Replacement. Upon (i) receipt by Issuer of evidence reasonably
-----------
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, (ii) receipt by Issuer of reasonably satisfactory indemnification in
the case of loss, theft or destruction and (iii) surrender and cancellation of
this Agreement in the case of mutilation, Issuer will execute and deliver a new
Agreement of like tenor and date. Any such new Agreement executed and delivered
shall constitute an additional contractual obligation on the part of Issuer,
whether or not the Agreement so lost, stolen, destroyed or mutilated shall at
any time be enforceable by any person other than the holder of the new
Agreement.
7. Adjustments. In addition to (but without duplication of) the
-----------
adjustment to the total number of Option Shares pursuant to Section 1(b) and the
adjustment to the Option Price pursuant to Section 1(c), the total number of
Option Shares purchasable upon the exercise of the Option hereof and the Option
Price shall be subject to adjustment from time to time as follows:
(a) In the event of any change in the outstanding shares of Common
Stock by reason of stock dividends, split-ups, mergers, recapitalizations,
combinations, subdivisions, conversions, extraordinary dividends or
distributions, exchanges of shares or the like, the type and number of
Option Shares purchasable upon exercise of the Option shall be
appropriately adjusted, and proper provision shall be made in the
agreements
8
<PAGE>
governing any such transaction, so that (i) Grantee shall receive upon
exercise of the Option the number and class of shares, other securities,
property or cash that Grantee would have received in respect of the Option
Shares purchasable upon exercise of the Option if the Option had been
exercised and such Option Shares had been issued to Grantee immediately
prior to such event or the record date therefor, as applicable; and (ii) in
the event any additional shares of Common Stock are to be issued or
otherwise become outstanding as a result of any such change (other than
pursuant to an exercise of the Option), the number of Option Shares
purchasable upon exercise of the Option shall be increased so that, after
such issuance the number of Option Shares so purchasable equals the Maximum
Applicable Percentage of the number of shares of Common Stock issued and
outstanding immediately after the consummation of such change; and
(b) Whenever the number of Option Shares purchasable upon exercise
hereof is adjusted as pro vided in this Section 7, the Option Price shall
be adjusted by multiplying the Option Price by a fraction, the numerator of
which is equal to the number of Option Shares purchasable prior to the
adjustment and the denominator of which is equal to the number of Option
Shares purchasable after the adjustment.
8. Registration. (a) Upon the occurrence of a Triggering Event,
------------
Issuer shall, at the request of Grantee included in the Exercise Notice, as
promptly as practicable prepare, file and keep current a shelf registration
state ment under the Securities Act covering all Option Shares issued and
issuable pursuant to the Option and shall use its best reasonable efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any Option Shares issued upon
exercise of the Option in accordance with any plan of disposition requested by
Grantee; provided, however, that Issuer may postpone or suspend the filing or
-------- -------
effectiveness of a registration statement relating to a registration request by
Grantee under this Section 8 for a period of time (not in excess of 30 days) if
such filing or effectiveness would require the disclosure of material
information that Issuer has a bona fide business purpose for preserving as
---- ----
confidential or would cause Issuer, at a time when Issuer is otherwise in
compliance with all its obligations under this
9
<PAGE>
Section 8, to be in violation of the federal securities laws or the rules and
regulations thereunder. Issuer will use its best reasonable efforts to cause
such registration statement first to become effective and then to remain
effective for 270 days or until such earlier date as all shares registered shall
have been sold by Grantee. In connection with any such registration, Issuer and
Grantee shall provide each other with representations, warranties, indemnities,
contribution and other agreements customarily given in connection with such
registrations. If requested by Grantee in connection with such registration,
Issuer shall become a party to one underwriting agreement (the managing
underwriter(s) thereunder being approved by Issuer, such approval not to be
unreasonably withheld or delayed) relating to the sale of such shares, but only
to the extent of obligating Issuer in respect of representations, warranties,
indemnities, contribution and other agreements customarily made by issuers in
such underwriting agreements.
(b) In the event that Grantee so requests, the closing of the sale or
other disposition of the Option Shares or other securities pursuant to a
registration statement filed pursuant to Section 8(a) shall occur substantially
simultaneously with the exercise of the Option.
9. Repurchase of Option and/or Option Shares. (a) Repurchase;
----------------------------------------- -----------
Repurchase Price. Following the occurrence of a Triggering Event, (i) at the
- ----------------
request of Grantee, given in writing within 180 days of such occurrence (or such
later period as provided in Section 2(d) with respect to any required
notification, application or approval or pursuant to a request by Grantee in
accordance with Section 11), Issuer shall repurchase the Option from Grantee, in
whole but not in part (except as provided in Section 9(c)), at a price (the
"Option Repurchase Price") equal to the number of Option Shares then purchasable
- ------------------------
upon exercise of the Option multiplied by the amount by which the market/offer
price (as defined below) exceeds the applicable Option Price (giving effect to
the Maximum Option Share Price) and (ii) at the request of Grantee, given in
writing within 180 days of the occurrence of a Triggering Event (or such later
period as provided in Section 2(d) with respect to any required notification,
application or approval or pursuant to a request by Grantee in accordance with
Section 11), Issuer shall repurchase all Option Shares then owned by Grantee at
a price (the "Option Share Repurchase Price") equal to the
-----------------------------
10
<PAGE>
number of such Option Shares multiplied by the market/offer price. The term
"market/offer price" shall mean the highest of (x) the price per share of Common
------------------
Stock at which a tender or exchange offer for Common Stock either has been
consummated or at which a Person has publicly announced its intention to
commence a tender or exchange offer, after the date of this Agreement and prior
to the delivery of the Repurchase Notice (as defined below), and which offer
either has been consummated and net withdrawn or terminated as of the date
payment of the Option Repurchase Price or the Option Share Repurchase Price, as
the case may be, is made, or has been publicly announced and the intention to
make a tender or exchange offer has not been withdrawn as of the date payment of
the Option Repurchase Price or the Option Share Repurchase Price, as the case
may be, is made, (y) the price per share of Common Stock to be paid by any third
party pursuant to a valid agreement with Issuer for a merger, share exchange,
consolidation or reorganization entered into after the date hereof and on or
prior to the delivery of the Repurchase Notice (as defined below) and (z) the
average closing price for shares of Common Stock on the NYSE (or, if the Common
Stock is not then listed on the NYSE, any other national securities exchange or
automated quotation system on which the Common Stock is then listed or quoted)
for the twenty consecutive trading days immediately preceding the delivery of
the Repurchase Notice. In the event that a tender or exchange offer is made for
the Common Stock or an agreement is entered into for a merger, share exchange,
consolidation, recapitalization, reorganization or similar transaction involving
consideration other than cash, the value of the securities or other property
issuable or deliverable in exchange for the Common Stock shall (I) if such
consideration is in securities and such securities are listed on a national
securities exchange, be determined to be the average closing price for such
securities on such national securities exchange for the twenty consecutive
trading days immediately preceding the delivery of the Repurchase Notice or (II)
if such consideration is not securities, or if in securities and such securities
are not traded on a national securities exchange, be determined in good faith by
a nationally recognized investment banking firm selected by Issuer.
(b) Method of Repurchase. Grantee may exercise its right to require
--------------------
Issuer to repurchase the Option, in whole but not in part, or all Option Shares
then owned by Grantee pursuant to this Section 9 by surrendering for such
11
<PAGE>
purpose to Issuer, at its principal office, this Agreement or certificates for
such Option Shares, as applicable, accompanied by a written notice or notices
stating that Grantee elects to require Issuer to repurchase the Option or such
Option Shares in accordance with the provisions of this Section 9 (such notice,
a "Repurchase Notice"). As promptly as practicable, and in any event within 2
-----------------
business days after the surrender of this Agreement or certificates representing
Option Shares, as applicable, and the receipt of the Repurchase Notice relating
thereto, Issuer shall deliver or cause to be delivered to Grantee the applicable
Option Repurchase Price or the Option Share Repurchase Price.
(c) Effect of Statutory or Regulatory Restraints on Repurchase. To
----------------------------------------------------------
the extent that, upon or following the giving of a Repurchase Notice, Issuer is
prohibited under applicable law or regulation from repurchasing the Option or
any Option Shares subject to such Repurchase Notice (and Issuer hereby
undertakes to use its best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to accomplish such repurchase), Issuer shall immediately so notify Grantee in
writing and thereafter deliver or cause to be delivered, from time to time, to
Grantee the portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is no longer prohibited from delivering, within 2
business days after the date on which it is no longer so prohibited; provided,
--------
however, that upon notification by Issuer in writing of such prohibition,
- -------
Grantee may, within 5 days of receipt of such notification from Issuer, revoke
in writing its Repurchase Notice, whether in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly (i) deliver to
Grantee that portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and (ii) deliver
to Grantee, as appropriate, (A) with respect to the Option, a new stock option
agreement evidencing the right of Grantee to purchase that number of Option
Shares for which the surrendered stock option agreement was exercisable at the
time of delivery of the Repurchase Notice less the number of shares as to which
the Option Repurchase Price has theretofore been delivered to Grantee, or (B)
with respect to Option Shares, a certificate for the Option Shares as to which
the Option Share Repurchase Price has not theretofore been delivered to Grantee.
Notwithstanding anything to the contrary in this
12
<PAGE>
Agreement, including, without limitation, the time limitations on the exercise
of the Option, Grantee may give notice of exercise of the Option for 180 days
after a notice of revocation has been issued pursuant to this Section 9(c) and
thereafter exercise the Option in accordance with the applicable provisions of
this Agreement.
(d) Acquisition Transactions. In addition to any other restrictions
------------------------
or covenants, Issuer hereby agrees that, in the event that Grantee delivers a
Repurchase Notice, it shall not enter or agree to enter into an agreement or
series of agreements relating to a merger with or into or the consolidation with
any other person or entity, the sale of all or substantially all of the assets
of Issuer or any similar transaction or disposition unless the other party or
parties to such agreement or agreements agree to assume in writing Issuer's
obligations under Section 9(a) and, notwithstanding any notice of revocation
delivered pursuant to the proviso to Section 9(c), Grantee may require such
other party or parties to perform Issuer's obligations under Section 9(a) unless
such party or parties are prohibited by law or regulation from such performance,
in which case such party or parties shall be subject to the obligations of the
Issuer under Section 9(c).
10. Right of First Refusal. If the Grantee, at any time prior to the
----------------------
earlier of (a) the occurrence of a Change in Control Event (as defined below) or
(b) the second anniversary of the termination of the Merger Agreement, seeks to
sell all or any part of the Option Shares (i) in a transaction registered under
the Securities Act (other than in a registered public offering in which the
underwriters are instructed to make a broad public distribution) or (ii) in a
transaction not required to be registered under the Securities Act (other than
in a transfer (a) by operation of law upon consummation of a merger or (b) as a
result of which the proposed transferee would own beneficially not more than 2%
of the outstanding voting power of the Issuer), it shall give the Issuer (or a
designee of the Issuer) the opportunity, in the following manner, to purchase
such Option Shares:
(a) The Grantee shall give notice to the Issuer in writing of its
intent to sell Option Shares (a "Disposition Notice"), specifying the
------------------
maximum number of Option Shares to be sold, the price and, if applicable,
the material terms of any agreement relating thereto.
13
<PAGE>
For purposes of this Section 10, if the Disposition Notice is given with
respect to the sale of the Option Shares pursuant to a tender or exchange
offer, it shall be assumed that all Option Shares tendered will be accepted
for payment. The Disposition Notice may be given at any time, including
prior to the giving of any Exercise Notice.
(b) The Issuer or its designee shall have the right, exercisable by
written notice given to the Grantee within five business days after receipt
of a Disposition Notice (or, if applicable, in the case of a proposed sale
pursuant to a tender or exchange offer for shares of Common Stock, by
written notice given to the Grantee at least two business days prior to the
then announced expiration date of such tender or exchange offer (the
"Expiration Date")if such Disposition Notice was given at least four
----------------
business days prior to such Expiration Date), to purchase all, but not less
than all, of the Option Shares specified in the Disposition Notice at the
price set forth in the Disposition Notice. If the purchase price specified
in the Disposition Notice includes any property other than cash, the
purchase price to be paid by the Issuer shall be an amount of cash equal to
the sum of (i) the cash included in the purchase price plus (ii) the fair
market value of such other property at the date of the Disposition Notice.
If such other property consists of securities with an existing public
trading market, the average closing price (or the average closing bid and
asked price if closing prices are unavailable) for such securities on their
principal public trading market for the five trading days ending five days
prior to the date of the Disposition Notice shall be deemed to equal the
fair market value of such property. If such other property consists of
something other than cash or securities with an existing public trading
market and at the time of the closing referred to in paragraph (c) below,
agreement on the value of such other property has not been reached, the
higher of (i) the cash included in the purchase price and (ii) the average
closing price of the Common Stock on the NYSE for the five trading days
ending five days prior to the date of the Disposition Notice shall be used
as the per share purchase price, provided, however, that promptly after the
-------- -------
closing, the Grantee and the Issuer or its designee, as the case may be,
shall settle any
14
<PAGE>
additional amounts to be paid or returned as a result of the determination
of fair market value of such other property made by a nationally recognized
investment banking firm selected by the Issuer and approved by the Grantee
within thirty (30) days of the closing. Such determination shall be final
and binding on all parties hereto. If, at the time of the purchase of any
Option Shares by the Grantee (or its designee) pursuant to this Section 10,
a tender or exchange offer is outstanding, then the Issuer (or its
designee) shall agree at the time of such purchase to promptly pay to
Grantee from time to time such additional amounts, if any, so that the
consideration received by Grantee with respect to each Option Share shall
be equal to the highest price paid for a share of Common Stock pursuant to
such tender or exchange offer, or pursuant to any other tender or exchange
offer outstanding at any time such tender or exchange offer is outstanding.
(c) If the Issuer exercises its right of first refusal hereunder, the
closing of the purchase of the Option Shares with respect to which such
right has been exercised shall take place within five business days after
the notice of such exercise (or, if applicable, in the case of a tender or
exchange offer, no later than one business day prior to the expiration date
of the offer if written notice was given within the time set forth in the
parenthetical in the first sentence of paragraph (b) above); provided,
--------
however, that at any time prior to the closing of the purchase of Option
-------
Shares hereunder, the Grantee may determine not to sell the Option Shares
and revoke the Disposition Notice and, by so doing, cancel the Issuer's
right of first refusal with respect to the disposition in question. The
Issuer (or its designee) shall pay for the Option Shares in immediately
available funds.
(d) If the Issuer does not exercise its right of first refusal
hereunder within the time specified for such exercise, the Grantee shall be
free for ninety (90) days following the expiration of such time for
exercise to sell up to the maximum number of Option Shares specified in the
Disposition Notice, at the price specified in the Disposition Notice or any
price in excess thereof and otherwise on substantially the same terms set
forth in the Disposition Notice; provided, that if such sale is not
--------
consummated within
15
<PAGE>
such 90-day period, then the provisions of this Section 10 will again apply
to the sale of such shares.
(e) For purposes of the Agreement, a "Change in Control Event" shall
-----------------------
be deemed to have occurred if (i) any person has acquired beneficial
ownership of more than 50% (excluding the Option Shares) of the outstanding
shares of Common Stock or (ii) the Issuer shall have entered into an
agreement, including, without limitation, an agreement in principle,
providing for a merger or other business combination involving the Issuer
or the acquisition of 30% or more of the assets of the Issuer and its
subsidiaries, taken as a whole.
11. Extension of Exercise Periods. The 180-day periods for exercise
-----------------------------
of certain rights under Sections 2 and 9 (including Section 9(c)) shall be
extended in each such case at the request of Grantee to the extent necessary to
avoid liability by Grantee under Section 16(b) of the Exchange Act by reason of
such exercise.
12. Assignment. Neither party hereto may assign or delegate any of
----------
its rights or obligations under this Agreement or the Option to any other person
without the express written consent of the other party, except that this
Agreement or the Option may be assigned to any direct or indirect wholly owned
Subsidiary of Grantee. Any attempted assignment or delegation in contravention
of the preceding sentence shall be null and void.
13. Filings; Other Actions. Each of Grantee and Issuer will use its
----------------------
best efforts to make all filings with, and to obtain consents of, all third
parties and govern mental authorities necessary for the consummation of the
transactions contemplated by this Agreement. Subject to applicable law and the
rules and regulations of the NYSE, the Issuer will promptly file an application
to have the Option Shares listed on the NYSE and will use its best reasonable
efforts to obtain approval of such application; provided, that if the Issuer is
--------
unable to effect such listing on the NYSE by the Closing Date, the Issuer will
nevertheless be obligated to deliver the Option Shares upon the Closing Date.
14. Specific Performance. The parties hereto acknowledge that
--------------------
damages would be an inadequate remedy for a
16
<PAGE>
breach of this Agreement by either party hereto and that the obligations of the
parties hereto shall be specifically enforceable through injunctive or other
equitable relief.
15. Severability; Etc. If any term, provision, covenant, or
------------------
restriction contained in this Agreement is held by a court or a federal or state
regulatory agency of compe tent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms, provisions, covenants, and restric
tions contained in this Agreement shall remain in full force and effect, and
shall in no way be affected, impaired, or invalidated. If for any reason such
court or regulatory agency determines that Grantee is not permitted to acquire
pursuant to Section 2, or Issuer is not permitted to repurchase pursuant to
Section 9, the full number of Option Shares provided in Section 1(a) hereof (as
adjusted pursuant to Sections 1(b) and 7 hereof), it is the express intention of
Issuer to allow Grantee to acquire such lesser number of shares as may be
permissible, without any amendment or modification hereof.
16. Notices. Notices, requests, instructions or other documents to
-------
be given under this Agreement shall be in writing and shall be deemed given (i)
when sent if sent by facsimile, provided that the facsimile is promptly
confirmed by telephone confirmation thereof, (ii) when delivered, if delivered
personally to the intended recipient, and (iii) one business day later, if sent
by overnight delivery via a national courier service, and in each case addressed
to a party at the respective addresses of the parties set forth in the Merger
Agreement.
17. GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL
------------------------------------------
BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND
GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE
TO CONTRACTS TO BE PERFORMED WHOLLY IN SUCH STATE. The parties hereby
irrevocably submit to the jurisdiction of the Chancery Court of the State of
Delaware and the Federal courts of the United States of America located in the
State of Delaware solely in respect of the interpretation and enforcement of the
provisions of this Agreement and in respect of the transactions contemplated
hereby and hereby waive, and agree not to assert, as a defense in any action,
suit or proceeding for the interpre tation or enforcement hereof, that it is
not subject thereto or that such action, suit or proceeding may not be brought
17
<PAGE>
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement may not be enforced in or by such courts, and
the parties irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such courts. The parties hereby
consent to and grant any such court jurisdiction over the person of such parties
and over the subject matter of such dispute and agree that mailing of process or
other papers in connection with any such action or proceeding in the manner
provided in Section 16, or in such other manner as may be permitted by Law,
shall be valid and sufficient service thereof. EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF SUCH PARTY HAS BEEN AUTHORIZED BY SUCH PARTY TO REPRESENT, OR, TO
THE KNOWLEDGE OF SUCH PARTY, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH
SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 17.
18. Expenses. Except as otherwise expressly pro vided herein or in
--------
the Merger Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expense, except that Issuer shall be responsible for
all fees and expenses (other than underwriting discounts or commissions and the
fees of counsel to Grantee) relating to the registration of securities pursuant
to Section 8.
19. Entire Agreement, Etc. This Agreement, the NationsRent Stock
---------------------
Option Agreement, the Confidentiality Agreement and the Merger Agreement
(including any exhibits thereto, the NationsRent Disclosure Letter and the RSC
Disclosure Letter) constitute the entire agreement, and supersede all other
prior agreements, understandings, repre-
18
<PAGE>
sentations and warranties, both written and oral, between the parties, with
respect to the subject matter hereof. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. This Agreement is not intended to confer upon any person or
entity, other than the parties hereto, and their respective successors and
permitted assigns, any rights or remedies hereunder.
20. Limitation on Profit. (a) Notwithstanding any other provision
--------------------
of this Agreement, in no event shall Grantee's Total Profit (as hereinafter
defined) plus any RSC Termination Amount paid to Grantee pursuant to Section
8.5.3 of the Merger Agreement exceed in the aggregate $35,000,000 (the "Maximum
-------
Amount") and, if it otherwise would exceed such amount, Grantee, at its sole
- ------
election, shall either (i) reduce the number of Option Shares subject to this
Option, (ii) deliver to the Issuer for cancellation Option Shares previously
purchased by Grantee, (iii) pay cash to the Issuer, or (iv) any combination
thereof, so that Grantee's actually realized Total Profit, when aggregated with
such RSC Termination Amount so paid to Grantee shall not exceed the Maximum
Amount, taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this
Option may not be exercised for a number of Option Shares as would, as of the
date of exercise, result in a Notional Total Profit (as defined below) which,
together with any RSC Termination Amount theretofore paid to Grantee, and after
giving effect to any election made by Grantee under Section 20(a), would exceed
the Maximum Amount; provided, that nothing in this sentence shall restrict any
--------
exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate
------------
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuer's repurchase of the Option or any Option Shares pursuant to
Section 9, less, in the case of any repurchase of Option Shares, Grantee's
purchase price for such Option Shares, and (ii) (x) the net cash amounts or the
fair market value of any property received by Grantee pursuant to the sale of
Option Shares (or (A) any other securities into which such Option Shares are
converted or exchanged or (B) any property, cash or other securities received
pursuant to
19
<PAGE>
adjustments made under Section 7 or delivered pursuant to Section 2(f)
("Additional Property")), but in no case less than the fair market value of such
-------------------
Option Shares, less (y) Grantee's purchase price for such Option Shares.
(d) As used herein, the term "Notional Total Profit" with respect to
---------------------
the Option Shares as to which Grantee may propose to exercise this Option shall
be the Total Profit determined as of the date of such proposal assuming that
this Option were exercised on such date for such number of Option Shares and
assuming that (i) such Option Shares (or any other securities into which such
Option Shares are converted or exchanged) were sold for cash at the closing
market price on the NYSE for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions) and (ii) the
Additional Property is disposed of for fair market value.
21. Captions. The Section and paragraph captions herein are for
--------
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
20
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by duly authorized officers of the parties hereto as of the day and
year first hereinabove written.
NATIONSRENT, INC.
By: /s/ James L. Kirk
---------------------------
Name: James L. Kirk
Title:
RENTAL SERVICE CORPORATION
By: /s/ Martin R. Reid
----------------------------
Name: Martin R. Reid
Title:
21
<PAGE>
EXHIBIT 2.4
EXECUTION COPY
VOTING AGREEMENT
VOTING AGREEMENT, dated as of January 20, 1999 (the "Agreement"),
between the undersigned holders (collectively the "Holders" and each a "Holder")
of shares of the common stock, $.01 par value (the "NationsRent Common Stock"),
of NATIONSRENT, INC., a Delaware corporation ("NationsRent"), and RENTAL
SERVICES CORPORATION, a Delaware corporation ("RSC").
RECITALS
NationsRent and RSC propose to enter into an Agreement and Plan of
Merger dated the date hereof (the "Merger Agreement"; capitalized terms not
otherwise defined herein being used herein as therein defined), pursuant to
which NationsRent would be merged (the "Merger") with and into RSC, and each
outstanding share of NationsRent Common Stock would be converted into the right
to receive 0.355 of a share (collectively, "RSC Shares") of RSC Common Stock;
As a condition of its entering into the Merger Agreement, RSC has
requested each Holder to agree, and each Holder has agreed, to enter into this
Agreement;
Prior to the date hereof, RSC and the Holders had no agreement,
arrangement or understanding (as such terms are used in Section 203 of the
Delaware General Corporation Law (the "DGCL")) for the purpose of acquiring,
holding, voting or disposing of shares of NationsRent Common Stock; and
In consideration for the agreements contained herein, prior to the
execution hereof, and prior to RSC becoming an "interested stockholder" for
purposes of Section 203 of the DGCL, the board of the directors of NationsRent
has approved this Agreement, the Merger Agreement and the transactions
contemplated hereby and thereby, including the agreement of the Holders to vote
as provided in Section 2 of this Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
1. Representations and Warranties of the Holders. Each Holder, with
---------------------------------------------
respect to itself and its Subject Securities, represents and warrants, severally
and not jointly, to RSC as follows:
<PAGE>
A. Ownership of Securities. Each Holder is, as of the date hereof,
-----------------------
the record and/or beneficial owner of the number of shares of NationsRent
Common Stock (the "Existing Securities") (together with any shares of
NationsRent Common Stock or other securities of NationsRent hereafter
acquired by the Holder and reduced by and such shares or other securities
hereafter disposed of by Holder, the "Subject Securities") set forth on the
signature page to this Agreement. Such Holder does not beneficially or of
record own any securities of NationsRent on the date hereof other than the
Existing Securities. The Holder has sole voting power and sole power to
issue instructions with respect to the voting of the Existing Securities,
sole power of disposition, sole power of exercise and the sole power to
demand appraisal rights, except as described on Schedule 1.A, in each case
with respect to all of the Existing Securities, except as indicated on said
Schedule and, on the date of the NationsRent Stockholders Meeting (as
defined in the Merger Agreement), will have the sole voting power and power
to issue instructions with respect to the voting of all of such Holder's
Subject Securities, the sole powers of disposition, exercise and the sole
power to demand appraisal rights, in each case with respect to all of such
Holder's Subject Securities, except as described on Schedule 1.A.
B. Power; Binding Agreement. Each Holder has the legal capacity,
------------------------
power and authority to enter into and perform all of such Holder's
obligations under this Agreement. The execution, delivery and performance
of this Agreement by each Holder will not violate any other agreement
relating to the Subject Securities to which the Holder is a party,
including, without limitation, any voting agreement, shareholder's
agreement, partnership agreement or voting trust. This Agreement has been
duly and validly executed and delivered by such Holder and constitutes a
valid and binding agreement of such Holder, enforceable against such Holder
in accordance with its terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
2. Agreement to Vote Shares. At every meeting of the stockholders of
------------------------
NationsRent called with respect to any of the following, and at every
adjournment thereof, each Holder, severally and not jointly, agrees that, so
long as the NationsRent Board of Directors has not withdrawn its recommendation
to NationsRent shareholders to vote in favor of the Merger, it shall vote all
the Subject Securities as to which it has power to vote in any such vote in
favor of the Merger, the adoption of the Merger Agreement and each of the other
transactions contemplated by the Merger Agreement. Each Holder agrees that
during the term of this Agreement it shall not dispose of its
-2-
<PAGE>
voting power with respect to any shares of NationsRent Common Stock for which it
retains dispositive power.
3. Representations and Warranties of RSC. RSC has full corporate power
-------------------------------------
and authority to enter into and perform all of RSC's obligations under this
Agreement. This Agreement has been duly and validly executed and delivered by
RSC and constitutes a valid and binding agreement of RSC, enforceable against
RSC in accordance with its terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
4. Fiduciary Duties. Notwithstanding anything in this Agreement to the
----------------
contrary, the covenants and agreements set forth herein shall not prevent any
Holders serving on NationsRent's Board of Directors from taking any action,
subject to applicable provisions of the Merger Agreement, which such director
shall deem to be required by his fiduciary duties to NationsRent or its
stockholders while acting in such person's capacity as a director of
NationsRent.
5. Assignment; Benefits. This Agreement may not be assigned by any party
--------------------
hereto without the prior written consent of the other party and any purported
assignment thereof shall be void. This Agreement shall be binding upon, and
shall inure to the benefit of, the Holders, RSC and their respective successors
and permitted assigns, including, without limitation, any transferee of the
Subject Securities (i) which is an affiliate of or related to, or is an entity
for the benefit of any such affiliate or relative of, any Holder or (ii) for
nominal consideration.
6. Notices. All notices and other communications given or made pursuant
-------
hereto shall be in writing and shall be deemed to have been duly given or made
if and when delivered personally or by overnight courier or sent by electronic
transmission, with confirmation received, as specified below:
If to each Holder:
AT THE ADDRESSES SET FORTH ON THE SIGNATURE PAGES HERETO
-3-
<PAGE>
If to Rental Service Corporation:
6929 East Greenway Parkway
Suite 200
Scottsdale, Arizona 85254
Attention: Robert Wilson
Telecopier: (602) 905-3300
With a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
Telecopier No.: (213) 891-8763
Telephone No.: (213) 485-1234
Attention: Zan Blendell
or to such other address or telecopy number as any party may have furnished to
the other parties in writing in accordance herewith.
7. Specific Performance. The parties hereto agree that irreparable harm
--------------------
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
they are entitled at law or in equity.
8. Amendment. This Agreement may not be amended or modified, except by
---------
an instrument in writing signed by or on behalf of each of the parties hereto.
This Agreement may not be waived by either party hereto, except by an instrument
in writing signed by or on behalf of the party granting such waiver.
9. Governing Law and Venue; Waiver of Jury Trial.
---------------------------------------------
(a) This Agreement shall be deemed to be made in, and in all respects shall
be interpreted, construed and governed by and in accordance with the laws of the
State of Delaware applicable to contracts to be performed wholly in such State.
The parties hereby (i) irrevocably submit to the jurisdiction of the Chancery
Court of the State of Delaware and federal courts of the United States of
America located in the State of Delaware solely in respect of the interpretation
and enforcement of the provisions of this Agreement and in respect of the
transactions contemplated hereby and (ii) waive, and agree not to assert, as a
defense in any action, suit or proceeding for the interpretation or
-4-
<PAGE>
enforcement hereof, that it is not subject to such jurisdiction or that such
action, suit or proceeding may not be brought or is not maintainable in said
courts or that the venue thereof may not be appropriate or that this Agreement
may not be enforced in or by such courts, and the Parties irrevocably agree that
all claims with respect to such action or proceeding shall be heard and
determined in such a federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such Parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in
Paragraph 6 (Notices), or in such other manner as may be permitted by law, shall
be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF SUCH
PARTY HAS BEEN AUTHORIZED BY SUCH PARTY TO REPRESENT OR, TO THE KNOWLEDGE OR
SUCH PARTY, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 9(b).
10. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
11. Defined Terms. Terms used herein but not otherwise defined shall have
-------------
the meanings set forth in the Merger Agreement.
12. Termination. This Agreement shall terminate upon the earliest to
-----------
occur of (i) the Effective Time of the Merger; (ii) the date that the
NationsRent board of directors withdraws or adversely modifies its approval or
recommendation to shareholders of the Merger; and (iii) the date of termination
of the Merger Agreement. The date and time at which this Agreement is
terminated in accordance with this Section 12 is referred to herein as the
"Termination Date." Upon any termination of this Agreement, this Agreement
shall thereupon become void and of no further force and effect, and there shall
-5-
<PAGE>
be no liability in respect of this Agreement or of any transactions contemplated
hereby or by the Merger Agreement on the part of any party hereto or any of its
directors, officers, partners, stockholders, employees, agents, advisors,
representatives or affiliates; provided, however, that nothing herein shall
relieve any party from any liability for such party's willful breach of this
Agreement; and provided further that nothing herein shall limit, restrict,
impair, amend or otherwise modify the rights, remedies, obligations or
liabilities of any person under any other contract or agreement, including,
without limitation, the Merger Agreement.
-6-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf
of each of the parties hereto, all as of the date first above written.
RENTAL SERVICES CORPORATION
By: /s/ Martin R. Reid
------------------------------------
Name: Martin R. Reid
Title: Chairman of the Board and
Chief Executive Officer
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-7-
<PAGE>
HOLDER: KIRK HOLDINGS LIMITED PARTNERSHIP
By: Kirk's Holding's Inc.
By: /s/ James L. Kirk
-------------------------------------
Title/Authority: Notarized Officer
Address:
--------------------------
--------------------------
--------------------------
Facsimile:
-----------------------
with a copy to:
----------------------------------
----------------------------------
----------------------------------
Facsimile:
----------------------
Shares of Common Stock: 12,000,000
----------
-8-
<PAGE>
HOLDER:
By:
-----------------------------------
Title/Authority:
Address:
------------------------
Facsimile:
with a copy to:
---------------------------------
---------------------------------
---------------------------------
Facsimile:
----------------------
Shares of Common Stock:
--------
-9-
