SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
OCTOBER 1, 1998
Date of Report (Date of Earliest Event Reported)
STRATFORD AMERICAN CORPORATION
(Exact Name of Registrant as Specified in Charter)
ARIZONA
(State or Other Jurisdiction of Incorporation)
000-17078 86-0608035
(Commission File Number) (I.R.S. Employer
Identification No.)
2400 E. ARIZONA BILTMORE CIRCLE, BUILDING 2, SUITE 1270,
PHOENIX, ARIZONA 85064
(Address of Principal Executive Offices) (Zip Code)
(602) 956-7809
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 1, 1998 (the "Closing Date"), Stratford American Car Rental
Systems, Inc. (the "Subsidiary"), a subsidiary of Stratford American Corporation
(the "Company"), sold the personal property, equipment, improvements, fixtures,
gasoline inventory, goodwill and general intangibles used in or related to the
Subsidiary's business to Dollar Rent A Car Systems, Inc., an Oklahoma
corporation ("Dollar"), pursuant to the terms of the Acquisition Agreement (the
"Acquisition Agreement") between the Subsidiary and Dollar. Additionally,
pursuant to the Acquisition Agreement, the Subsidiary terminated the Master
Lease Agreement by and between Subsidiary and Dollar dated June 1, 1994, under
which Subsidiary leased vehicles for use in its business, as well as other
agreements related to the Master Lease Agreement. The assets sold and agreements
terminated pursuant to the Acquisition Agreement accounted for over 99% of the
Company's total revenues in the first six months of 1998 and, as of the Closing
Date, were the most significant revenue source for the Company. The Company
continues to aggressively seek potential acquisitions in establishing its future
direction. There can be no assurance that it will be able to locate suitable
acquisition candidates or make any such acquisitions.
The Acquisition Agreement provides for the payment by Dollar to the
Subsidiary of the sum of $3,835,000 as the purchase price. The purchase price
consisted of the sum of $3,635,000 paid to the Subsidiary on the Closing Date
net of any obligations, actual or estimated, owed to and by Dollar under the
normal course of operations of the Subsidiary, and a holdback amount of $200,000
related to any obligations or indemnities of Subsidiary under the Acquisition
Agreement. The sale proceeds are based on negotiations between the Company, the
Subsidiary and Dollar.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
2.1 -- Acquisition Agreement dated as of September 24, 1998 by and
between Stratford American Car Rental Systems, Inc. and Dollar
Rent A Car Systems, Inc.
99.1 -- Press Release dated October 1, 1998
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.
Date: October 28, 1998.
STRATFORD AMERICAN CORPORATION
By: /s/ Timothy A. Laos
--------------------------------------
Timothy A. Laos, Vice President,
Chief Financial Officer and Secretary
<PAGE>
EXHIBITS
2.1 -- Acquisition Agreement dated as of September 24, 1998 by and between
Stratford American Car Rental Systems, Inc. and Dollar Rent A Car
Systems, Inc.
99.1 -- Press Release dated October 1, 1998
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "AGREEMENT") is entered into by and
between STRATFORD AMERICAN CAR RENTAL SYSTEMS, INC., an Arizona corporation
("STRATFORD") and DOLLAR RENT A CAR SYSTEMS, INC., an Oklahoma corporation
("DOLLAR"), effective the 24th day of September, 1998.
R E C I T A L S:
A. Stratford owns and operates a vehicle rental business (the
"Business") under that certain License Agreement by and between Dollar and
Stratford dated effective June 1, 1994, as amended, covering certain territory
described as "The State of Arizona, except the Counties of Coconino, Navajo and
Pima" (the "License Agreement"); and
B. Stratford desires to sell and Dollar desires to purchase certain
assets of Stratford and to assume certain liabilities, pursuant to the terms and
conditions of this Agreement.
NOW THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. CLOSING OF TRANSACTIONS
1.1 Closing. Subject to the terms and conditions of this Agreement, the
closing of the transaction contemplated herein shall be effective as of
12:01 a.m. on October 1, 1998 but shall take place at the offices of
Dollar, 5330 East 31st Street, Tulsa, Oklahoma, at 10:00 a.m. on
October 1, 1998 or such other time or location as to which the parties
hereto may agree (the "Closing"). In the event certain conditions
precedent to either party's obligations, as set forth in Sections 5.1
and 5.2 are not satisfied by the dates set forth therein, then the
Closing shall be automatically extended from October 1st until November
1, 1998, unless otherwise agreed in writing by the parties.
1.2 Sale and Purchase of Assets. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties
contained herein, at the Closing, Stratford shall sell, transfer,
convey and assign to Dollar all of Stratford's interest in and to the
following assets of Stratford (the "Assets"):
1.2.1 Personal Property, Equipment and Fixtures. The tangible
personal property, equipment, improvements and fixtures owned
by Stratford and used in connection with the Business,
including but not limited to the personal property, equipment,
improvements and fixtures set forth on Exhibit 1.2.1 attached
hereto (the "Personal Property, Equipment and
1
<PAGE>
Fixtures"), plus the Maintenance and Other Inventory, as
defined below. The form of the Bill of Sale to convey the
Personal Property, Equipment and Fixtures from Stratford to
Dollar is substantially set forth in Form 1.2.1. The parties
agree to execute and deliver, if necessary, instruments or
schedules to more accurately and fully reflect the Personal
Property, Equipment and Fixtures.
1.2.2 Gasoline. Any and all gasoline inventory contained in the
tanks of Accepted Vehicles, as defined herein below, as of the
Transfer Date, as defined herein below (the "Gasoline
Inventory").
1.2.3 Goodwill and General Intangibles. All of the goodwill and
general intangibles used in or related to the Business.
1.3 Assumption of Non-Fleet Liabilities. At Closing, Stratford shall assign
and Dollar shall accept such assignment and assume all of the rights,
obligations and liabilities of Stratford arising directly or indirectly
under the terms of those certain contracts, leases, agreements or
detailed liabilities as set forth on Exhibit 1.3 attached hereto, to
the extent the obligations thereunder arise and become due after the
Closing (the "Contracts"). The form of Assignment and Assumption
Agreement pursuant to which Stratford shall assign and Dollar shall
assume the Contracts is substantially set forth in Form 1.3. Except for
the Contracts, Stratford shall retain, and Dollar shall not assume, and
nothing contained in this Agreement shall be construed as an assumption
by Dollar of any other liabilities, obligations, debts or undertakings
of Stratford of any nature whatsoever, whether accrued, absolute, fixed
or contingent, known or unknown, due or to become due, liquidated or
unliquidated, or otherwise. Stratford agrees to pay any additional
license fees, if any, required to be paid by Orion Systems, Inc. in
connection with the transfer of Sales and License Agreement dated
November 4, 1996, and software licensed thereunder, from Stratford to
Dollar or its licensees. Dollar shall pay or cause its licensee to pay
any training and installation costs or fees imposed by Orion Systems,
Inc. in connection with the aforementioned transfer and subsequent
installation of the software.
1.4 Excluded Assets and Retained Liabilities. The following assets of
Stratford shall not be sold or transferred to Dollar and shall remain
the property of Stratford: (i) cash or cash equivalents in banks or in
the cash drawers at the Location; (ii) trade accounts or notes
receivable; (iii) three (3) risk vehicles (Two (2) Lincoln Towncars and
one (1) Ford pick-up) used in the conduct of the Business; and (iv) all
assets other than Assets set forth above in Section 1.2 and the
Contracts (collectively, the "Excluded Assets"). Other than the
Contracts assumed by Dollar pursuant to Section 1.3 above, any other
liabilities, obligations, debts or undertakings of Stratford of any
nature whatsoever, whether accrued, absolute, fixed or contingent,
known or unknown, due or to become due, liquidated or unliquidated, or
otherwise, shall be retained liabilities of Stratford.
2
<PAGE>
1.5 Termination of License Agreements and Related Agreements. Upon Closing,
Stratford and Dollar agree that: (i) the License Agreement; (ii) that
certain Master Lease Agreement by and between Stratford and Dollar
dated June 1, 1994 (the "Master Lease Agreement"); (iii) the Sublease
Agreement dated effective June 1, 1994 by and between Dollar, its
successors or predecessors in interest, as sublandlord, and Stratford,
as subtenant (the "Sublease"); and (iv) any and all other related
agreements or documents by and among Dollar, Stratford and the
Shareholder, as defined below in Section 1.6 (collectively, all of the
foregoing documents set forth in subsections (i) through (iv) referred
to herein as the "License Documents"), shall be terminated and of no
further force and effect except: (a) for this Agreement and the
agreements executed pursuant hereto, (b) with regard to any settlement
of remaining accounts specified herein, (c) Sections 18.5 and 24.6 of
the License Agreement, (d) Section 15 of the Sublease, excluding,
however, the obligation on the part of Stratford to perform an
environmental site assessment as set forth in Subsection 15(i) and (d)
Section 16 of the Sublease.
1.6 Mutual Release. At Closing, Stratford shall execute and deliver, and
shall cause Stratford American Corporation, the parent corporation of
Stratford and majority owner of all of the issued and outstanding
capital stock of Stratford (the "Shareholder"), to execute and deliver,
a General Release in substantially the form attached hereto as Form
1.6(a), in favor of Dollar, its parent, subsidiaries and affiliates and
their respective officers, directors, shareholders, employees and
agents (the "Stratford Release" ). Likewise, at Closing, Dollar shall
execute and deliver a General Release in substantially the form
attached hereto as Form 1.6(b), in favor of Stratford, its parent,
subsidiaries and affiliates and their respective officers, directors,
shareholders, employees and agents (the "Dollar Release"). The
aforementioned releases shall not release any rights, benefits or
claims, or obligations as to any future performance, under: (i) this
Agreement, or any other agreement or document executed in connection
herewith, (ii) Sections 18.5 and 24.6 of the License Agreement, (iii)
Section 15 of the Sublease, excluding, however, the obligation on the
part of Stratford to perform an environmental site assessment as set
forth in Subsection 15(i) and (iv) of Section 16 of the Sublease.
1.7 Service Facility Lease. At Closing, Stratford and Dollar shall execute
and deliver a lease with Dollar, as lessee, pursuant to which Dollar
shall lease that certain Business location presently used by Stratford
as an administrative and service facility and commonly known as 50 S.
24th Street, Phoenix, Arizona (the "Service Facility"). The form of the
lease agreement is set forth in Form 1.7 attached hereto ("Lease
Agreement").
2. PURCHASE PRICE, HOLDBACK AND ADJUSTMENTS
2.1 Purchase Price for Assets. The purchase price ("Purchase Price") for
the Assets shall be the aggregate amount of the following: (i)
$3,500,000 for the goodwill
3
<PAGE>
and general intangibles used in or related to the Business; (ii)
$335,000 for the Personal Property, Fixtures and Equipment, (iii) an
amount for the Gasoline Inventory, calculated pursuant to Section 2.2
below; and (iv) an amount for new tires, unused motor oils, oil filters
and other new parts to be used for maintenance of Accepted Vehicles, as
defined in Section 3.1, plus all counter supplies, office supplies and
uniforms, at a price equal to the invoice cost to Stratford
("Maintenance and Other Inventory").
2.2 Purchase Price for Gasoline Inventory. At the time of Reconciliation,
as defined in Section 7.1.1, Dollar shall pay Stratford for the
Gasoline Inventory, calculated by: (i) reading the fuel level indicated
on the fuel gauge at the time the vehicle is inspected as provided
herein and multiplying this amount by the manufacturer's stated
capacity, and then (ii) multiplying the measured gallons of gasoline in
the vehicle tank by the invoice cost to Stratford per gallon for
unleaded regular gasoline on the day of Closing.
2.3 Prorations and Security Deposits. At Closing, Dollar shall pay
Stratford an amount equal to any security deposits as to Contracts, if
applicable, and provided Stratford is entitled to the return of any
security deposits as to the Contracts. In addition at Closing, Dollar
shall also pay Stratford the prorated amount of any rents or lease
payments paid by Stratford prior to the Closing. Stratford shall retain
all accounts receivable.
2.4 Payment Obligations. At Closing, Stratford shall pay any and all
outstanding and estimated amounts due and payable to Dollar under the
License Agreement and related and collateral documents executed in
connection therewith, including but not limited to system fees,
concessions, reservation fees, travel agent commissions, goodwill
certificates, fleet, airport rents and other such or related charges.
Likewise, Dollar shall pay Stratford any and all outstanding amounts
due and payable to Stratford under the License Agreement and related
and collateral documents executed in connection therewith, consisting
of tour voucher payments, credits or payments for inter-city rentals,
v.i.p. rentals and other such or related credits, plus pay reasonable
estimates of PPA and ISRB, as such terms are defined below and all
other items due Stratford under the Master Lease Agreement.
2.5 Holdback Amount. At Closing, Dollar shall have the right to hold back
$200,000 from the Purchase Price at Closing, in addition to the amount
withheld for tax liabilities in accordance with Section 2.6.2 (the
"Holdback Amount"), to secure or otherwise satisfy or pay any
obligations or indemnities of Stratford under this Agreement and the
agreements executed in connection with the transaction contemplated
herein, including but not limited to any amount or claim as to
underpaid concessions as discussed in Section 4.4 below, and any
post-termination covenants or indemnities under the License Agreement
or related or collateral agreements, for a period of one (1) year from
the date of Closing. In the event that Stratford fails to satisfy or
pay any obligations or indemnities of
4
<PAGE>
Stratford, as provided in this Section, following written demand or
claim by Dollar, as herein provided, Dollar may satisfy the amount of
such claim from the Holdback Amount. Provided, however, that the
extinguishment of the Holdback Amount shall not limit or otherwise
negate Dollar's indemnity rights, as herein provided, with regard to
claims in excess of the Holdback Amount. Dollar shall immediately
release and wire transfer $70,000 of the Holdback Amount to Stratford
at such time that all but five (5) Leased Vehicles, as defined below,
proposed by Stratford to be accepted by Dollar, have been presented for
inspection as provided below. Further provided, Dollar shall
immediately release and wire transfer an additional $30,000 of the
Holdback Amount to Stratford at such time that all Leased Vehicles
proposed by Stratford to be accepted by Dollar, have been presented for
inspection.
2.6 Taxes.
2.6.1 Income Taxes. Stratford shall be responsible for its state and
federal income taxes, arising out of and payable in connection
with the transaction contemplated under this Agreement.
2.6.2 Certificate of No Taxes Due/Payment of Sales and Use Taxes. At
Closing, Dollar shall have the right to withhold an amount
from the Purchase Price (equal to 125% of the estimated sales
tax liability for the revenues generated for the month of
March 1998), sufficient to satisfy any sales and use tax
obligations owing pursuant to applicable state law until such
time that Stratford delivers a certificate issued by the
appropriate tax collecting authority stating that no sales and
use taxes with regard to Stratford's vehicle rental operations
and the sale of the Assets are due (the "Clearance
Certificate"). Provided Stratford provides a Clearance
Certificate through September 15, 1998, Dollar may only
withhold one half of the amount to be withheld as set forth in
the immediately proceeding sentence. Upon receipt of written
confirmation by the tax collecting authority that sales taxes
payable for tax periods through Closing have been paid by
Stratford, Dollar shall immediately wire transfer to Stratford
an amount equal to the tax payment made by Stratford, up to an
amount equal to the funds withheld. Upon the delivery of the
Clearance Certificate subsequent to Closing, Dollar shall
remit the balance of the funds withheld and not previously
paid to the tax collecting authority or wire transferred to
Stratford.
2.6.3 Property Taxes. Real and personal property or ad valorem taxes
to the extent applicable with respect to the Assets, the
Contracts and the Subleases transferred or terminated will be
prorated to each party based on the date of Closing. If the
amount of such taxes is not ascertainable as of the Closing,
then such reimbursement shall be estimated and based upon the
prior year's taxes with no further adjustments.
5
<PAGE>
2.7 Utilities and Operating Expenses. All utilities in the name of
Stratford shall be terminated as of the Closing. Stratford will obtain
a final reading of all utilities pertaining to the Location as of the
Closing and will make final payment for utilities through the Closing.
Dollar shall have no obligation or liability to pay any utility charges
for utility services or other operating expenses whatsoever, including
parking tickets or fines, arising or attributable to the period prior
to the Closing. All other operating expenses of Stratford attributable
to the period prior to the Closing, including parking tickets or fines,
shall be sole responsibility of and paid by Stratford.
2.8 Open Rental Agreements. At Closing, the parties shall determine the
number of open rental agreements as of the date of Closing ("Open
Rental Contracts"). In connection with the prepayment of estimated
amounts due and payable to Dollar as set forth in Section 2.4 above,
Stratford shall prepay Dollar the estimated concessions payable upon
the revenues to be generated from the Open Rental Contracts. Stratford
shall be entitled to retain one hundred percent (100%) of the revenues
generated under the Open Rental Contracts. Dollar agrees to (a) collect
the revenues paid by rental customers under the Open Rental Contracts
as vehicles are returned subsequent to the Closing and (b) to remit
and/or otherwise process such revenues to Stratford as the same are
received by Dollar. The final amount of concessions payable upon the
revenues generated from the Open Rental Contracts shall be reconciled
with the prepayment of estimated concessions, at the time of
Reconciliation, as defined herein. In the event that the prepayment of
estimated concessions is less than the actual amount of concessions
payable, the Holdback Amount shall secure the under paid amount.
3. FLEET AND FLEET LIABILITIES
3.1 Fleet Vehicles. Stratford and Dollar shall jointly inspect all vehicles
leased by Dollar to Stratford under the Master Lease Agreement (the
"Leased Vehicles"), as of the Closing, for damages and ineligibility of
return under Dollar's applicable fleet lease program ("Fleet Lease
Program"). Dollar shall prepare a written report at the time of mutual
inspection which shall identify each of the Leased Vehicles by Vehicle
Identification Number, make and model, manufacturer's fuel tank
capacity and fuel level as of the date of inspection and shall provide
a detailed description of any damage and the estimated cost to repair
such damage (the "Vehicle Condition Report"). Dollar shall have: (i)
two (2) days after the Closing with respect to Leased Vehicles not in
the possession of rental customers as of the Closing, or (ii) two (2)
days after the date of return with respect to Leased Vehicles under
open rental agreements as of the Closing, but no later than fourteen
(14) days after Closing with respect to such Leased Vehicles, to
provide to Stratford: (i) a Vehicle Condition Report as to each such
Leased Vehicle and (ii) a written list of such Leased Vehicles that
Dollar rejects as being ineligible for return, which list shall specify
the Vehicle Identification Number, make and model of all rejected
Leased Vehicles and the specific nature
6
<PAGE>
of the reason for ineligibility. Failure to deliver a timely notice for
a Leased Vehicles shall be deemed an acceptance of such Leased Vehicle
in the condition delivered to Dollar (collectively, Leased Vehicles
which are not rejected by Dollar, either in writing or by failure to
deliver timely notice, shall be referred to as "Accepted Vehicles") .
The date upon which a Leased Vehicle is inspected and accepted by
Dollar shall be the "Transfer Date". If an Accepted Vehicle has not
undergone a recent oil change in compliance with the preventive
maintenance obligations of the Fleet Lease Program, then Stratford
shall pay Dollar, in addition to the Damage Cost defined in Section 3.3
below, the amount of $13.00 per Accepted Vehicle without such oil
change.
3.2 Turnback Expenses. Dollar shall pay all turnback expenses charged for
all Accepted Vehicles regardless of when the vehicles were in-fleeted,
including, without limitation, any damage costs as provided below.
Dollar shall be entitled to receive the prorated portion of the Return
Allowance, as defined below, for the period subsequent to the Transfer
Date, with respect to Accepted Vehicles.
3.3 Vehicle Damage. The vehicle manufacture return allowance or credit in
the amount of $100 (the "Return Allowance") shall be prorated on a per
diem basis, as of the Transfer Date, using a term of ten (10) months.
Stratford shall pay to Dollar the dollar amount of the estimated damage
cost indicated in the Vehicle Condition Report in excess of the
prorated amount of the Return Allowance for the period prior to the
Transfer Date (the "Damage Cost"). Stratford shall not have any further
obligations or liabilities to Dollar with respect to damage to such
Accepted Vehicles unless Dollar is notified at the time of turnback
that the Chrysler Corporation rejects an Accepted Vehicle for repairs
undertaken prior to the date of Closing and not accurately reflected or
omitted in the repair orders delivered by Stratford pursuant to Section
3.10 below or otherwise disclosed in writing by Stratford prior to
Closing. In the event of such a rejection by the Chrysler Corporation,
Stratford shall be required to purchase said rejected Accepted Vehicle
pursuant to the terms and conditions of the Dollar Fleet Lease Program
under which such Accepted Vehicle was previously leased to Stratford.
In the event that Stratford fails to pay the purchase price for such
rejected Accepted Vehicles upon fifteen (15) days' prior written demand
by Dollar, Dollar may offset the purchase price against the Holdback
Amount. Dollar shall execute any document, agreement or instrument to
evidence conveyance of title to such rejected Accepted Vehicle, from
Dollar to Stratford, upon the return of such rejected Accepted Vehicle
to a location designated by Stratford within the County of Maricopa.
Provided further, that in the event an audit by the Chrysler
Corporation of the preventive maintenance records of an Accepted
Vehicle, performed subsequent to the Transfer Date for an Assigned
Vehicle, results in the Chrysler Corporation rejecting such Accepted
Vehicle by reason of deficiencies existing prior to Closing, Stratford
shall be obligated to purchase such rejected Accepted Vehicle as set
forth above.
3.4 Vehicle Mileage. Stratford shall turn back all Leased Vehicles with
mileage in excess of 29,950 miles as of the date of Closing.
7
<PAGE>
3.5 Arbitration. In the event that the parties dispute a Vehicle Condition
Report, and fail to agree as to any such damages, then the amount of
damage to a Vehicle shall be determined by ITS Fleet Damage Appraisal
(ITS). Should a ITS inspection be necessary, Dollar and Stratford shall
each pay one-half (1/2) of the inspection fee.
3.6 Product Promotion Allowance ("PPA") and In Service Retention Bonus
("ISRB"). Stratford shall be paid the ISRB for each Accepted Vehicle
which is eligible for ISRB in accordance with Dollar's 1998 Fleet Lease
Program. ISRB shall not be paid for any Accepted Vehicle which is not
eligible. Remaining PPA funds for all Accepted Vehicles shall also be
paid to Stratford without limitation as to eligibility.
3.7 Vehicle Sales Taxes and Tag Costs. Dollar shall be responsible for and
shall pay to Stratford its prorated portion of the tag expenses and
taxes for each Accepted Vehicle. The proration shall calculated on a
per diem basis and based on ten (10) months for each Accepted Vehicle
(the "Tag Proration Lease Term"), with Dollar being responsible for
expenses associated with the portion of the Tag Proration Lease Term
that follows the Closing.
3.8 Post-Closing Return of Vehicles Not Assumed or Not Accepted by Dollar.
Stratford shall take delivery of any Leased Vehicle not assumed or
accepted by Dollar within seventy-two (72) hours of notice by Dollar.
Dollar shall have no responsibility for damage or loss to any such
returned vehicle except in the event of gross negligence or willful
misconduct on the part of Dollar.
3.9 Removal of Fleet. Vehicles not under the Master Lease Agreement and
Leased Vehicles not accepted by Dollar as provided above in Section 3.1
shall be immediately removed from the Service Facility.
3.10 Leased Vehicles Under Repair. Notwithstanding any other provision
herein to the contrary, including but not limited to section 3.1 above,
if a Leased Vehicle is in the body shop or undergoing other repairs or
maintenance at the time of Closing, then the inspection as to such
Leased Vehicle shall be deferred until the repair work is completed.
Stratford shall remain solely liable and responsible for any bills
owing to the vehicle repairer. Stratford shall make such Leased
Vehicles available for inspection not later than 30 days after Closing
or such Leased Vehicles shall be deemed as rejected. Provided further,
at the time of inspection, Stratford shall provide written evidence to
Dollar that such bills have been paid in full and otherwise released.
3.11 Vehicle Records. Stratford shall deliver all repairs orders as to
Accepted Vehicles to Dollar at the time the Accepted Vehicles are
delivered to Dollar.
8
<PAGE>
4. PROCEDURES AND COVENANTS PENDING CLOSING;
ENVIRONMENTAL MATTERS
4.1 Due Diligence. Dollar acknowledges that Stratford provided Dollar with
a copy of that certain Phase I and Phase II Assessment dated September
11, 1998 as prepared by Dominion Environmental Consultants, Inc.,
including as an attachment thereto, a copy of a letter from the Arizona
Department of Environmental Quality ("ADEQ") dated March 2, 1998 and
addressed to Mr. Douglas Mitchell, advising that the ADEQ was requiring
no further action in connection with a reported release of hydrocarbons
that occurred on or about April 24, 1993 prior to the execution of this
Agreement. Subsequent to the execution of this Agreement, Dollar shall
be allowed to continue to perform environmental due diligence
procedures it considers necessary to determine the extent of any
hydrocarbons or other contaminants which may, as of the Closing, exist
in the soil and/or the groundwater at the Service Facility, and the
properties under the Contracts and the Sublease, which procedures may
include, without limitation, Phase I and Phase II assessments; tank and
line tightness tests; soil and/or groundwater sampling for hydrocarbons
and other contaminants. Such sampling may include, but only with the
prior written consent of Stratford, the drilling of boreholes around
the tank pit or other locations, to groundwater or impenetrable strata,
or the sampling of existing groundwater wells, if any, or both. Any
testing undertaken by Dollar shall be conducted at the sole expense of
Dollar. The results of all such testing and inspections by Dollar shall
be kept confidential by Dollar unless otherwise required to be reported
in accordance with applicable laws, and rules and regulations
promulgated thereunder.
4.2 Affirmative Covenants of Stratford. Stratford covenants and agrees that
so long as this Agreement remains in full force and effect, from the
date hereof to the Closing, Stratford will: (i) carry on the Business
in the ordinary course and observe good and acceptable business
practices and maintain books, accounts and records in the usual,
regular and ordinary manner; (ii) maintain the Assets in good operating
condition and repair, ordinary wear and tear excepted; (iii) maintain
and preserve its business organization and its relationships with
employees, customers, lessors, lenders, vendors, concession grantors,
suppliers and others having business relationships with Stratford the
failure of which would materially, adversely affect the Assets, the
Contracts, Airport Agreement No. 55632, as amended , the Sublease or
the Business; (iv) perform and timely pay all of its obligations under
the Contracts, the Sublease, the Airport Agreement No. 55632, as
amended, and with respect to any Leased Vehicle under repair as set
forth in Section 3.10 above; (v) maintain in full force and effect all
insurance now in effect covering the Assets or the Business; (vi)
promptly give notice to Dollar of any claim or litigation, threatened
or instituted, or any other adverse event or occurrence involving or
affecting any of the Assets, the Contracts, the Sublease or the
Business; (vii) comply with or cause to be complied with all applicable
laws, rules, regulations and orders of all federal, state and local
governments or governmental agencies materially affecting or relating
to the
9
<PAGE>
Assets, the Contracts, the Sublease or the Business, including without
limitation, compliance with all applicable bulk sales laws, if any
apply, and subject to Section 10.2, the timely giving of all required
WARN or similar notices related to the cessation of Stratford's
operation of the Business or closure of such business to Stratford's
employees; and (viii) promptly advise Dollar in writing of any material
adverse change or the occurrence of any event which involves any
substantial possibility of a material adverse change, in the condition
(financial or other) of the Assets, the Contracts, the Sublease or the
Business.
4.3 Negative Covenants of Stratford. Stratford covenants and agrees that so
long as this Agreement remains in full force and effect, from and after
the date hereof until the Closing, without Dollar's prior written
consent, which may be given or withheld in Dollar's sole determination,
Stratford will not: (i) take or permit any action that would materially
and adversely affect the Business, Assets, the Contracts, the Sublease,
taken as a whole; (ii) sell or transfer any of the Assets, other than
in the ordinary course of business, or permit or allow any of its
Assets or leasehold interests under the Contracts and the concession
rights under the Sublease to become subject to any lien (except by
operation of law where the amount is not due), mortgage, option,
pledge, security interest or other claim or encumbrance of any kind or
character; (iii) modify the Contracts or any existing lease, contract,
commitment or other agreement relating to the Assets or Business,
except as provided herein; (iv) conduct negotiations with other parties
for a sale of the Assets or the Business except for transactions
contemplated by this Agreement; (v) grant any increase in compensation
other than normal merit increases consistent with Stratford's general
prevailing practices to any officer or employee who may foreseeably
become an employee of Dollar following the Closing or enter into or
amend or alter any collective bargaining agreement; (vi) amend,
terminate or waive any material right with regard to the Assets or the
Contracts Lease; (vii) make or commit to make any capital expenditure,
capital addition or capital improvement involving the Assets; (viii)
make any loans to, or enter into any business transaction, agreement,
arrangement or understanding of any other nature with any officer,
director, shareholder, an affiliate under common control with Stratford
or any entity in which any of the foregoing has an interest and which
would materially, adversely affect the Assets, the Contracts, the
Sublease or the Business, except for transactions contemplated by this
Agreement; or (ix) do or omit to do any act, or permit any act or
omission to act, which would cause a material breach of any
representation, warranty, agreement or covenant made by Stratford
herein or would materially, adversely affect the Assets, the Contracts,
the Sublease or the Business.
4.4 Audit by City of Phoenix. Upon the execution of this Agreement,
Stratford shall contact the City of Phoenix ("Airport") to request that
the Airport either: (i) conduct an audit as to Stratford's operations
for any un-audited period prior to the date of Closing or (ii) issue a
letter of estoppel in form and substance reasonably acceptable to
Dollar and without limitations or qualifications, in the favor of
Dollar. In the event that the Airport does not conclude the audit or
issue
10
<PAGE>
the letter of estoppel prior to Closing, the Holdback Amount shall, for
a period of one (I) year pursuant to Section 2.5 above or until any
prior delivery of such audit or estoppel letter to Dollar, additionally
secure any claims for underpaid concessions which the audit by the
Airport may disclose subsequent to the Closing. Dollar agrees to
provide reasonable assistance to Stratford in connection with dealing
with the Airport. Stratford shall also: (i) provide the September
monthly statement of gross receipts due twenty (20) days after the
Closing and (ii) within thirty (30) of Closing, provided a certified
statement of gross receipts through the date of closing as required by
Section IIIJ of Airport Agreement No. 56632, as amended.
4.5 Closing Statement. Three (3) days prior to the Closing, Dollar shall
prepare and forward to Stratford a draft closing statement showing the
Purchase Price, the Holdback Amount, the sales tax holdback set forth
in Sections 2.6.2, outstanding and estimated amounts payable to Dollar
(including amounts payable to the Airport) or Stratford through the
date of Closing under the License Documents and other adjustments or
offsets as herein permitted.
5. CONDITIONS TO CLOSING
5.1 Conditions Precedent to Dollar's Obligations. All of the obligations of
Dollar under this Agreement are subject to the fulfillment of each of
the following conditions by Closing, unless otherwise shown below, any
one or more of which may be waived by Dollar as a condition to Closing:
5.1.1 Representations, Warranties and Covenants. Each and every
representation and warranty of Stratford contained in this
Agreement or in any certificate, exhibit, schedule or other
document executed and delivered by a Stratford in connection
herewith, shall be true and correct when made and shall be
true and correct at Closing as though such representation and
warranty had been made on the Closing date, and Stratford
shall have performed all covenants and agreements on its part
required to be performed and shall not be in default under any
of the provisions of this Agreement at Closing.
5.1.2 No Material Adverse Change. Between the date hereof and the
Closing: (i) no damage to or destruction of the Assets which
would constitute a materially adverse change in the condition
of the Assets shall have occurred; (ii) no event shall have
occurred or failed to occur as a result of which performance
by Dollar of the Contracts would be materially more
burdensome; and (iii) no materially adverse change in any
Business shall have occurred.
5.1.3 Third Party Consents. Stratford shall have provided Dollar
with all necessary consents or waivers by the lessors under
those of the Contracts which are material, in a form
reasonably satisfactory to Dollar, to the transaction
contemplated by this Agreement.
11
<PAGE>
5.1.4 No Actions or Proceedings. No action, proceeding,
investigation, regulation or litigation shall have been
instituted or threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain,
prohibit or obtain damages in respect of, or which is related
to, or arises out of, this Agreement or the consummation of
the transactions contemplated hereby, or which, in the
reasonable judgment of Dollar, would have a materially adverse
effect on the Assets, the Contracts, the Sublease, taken as a
whole, in the hands of Dollar following the Closing.
5.1.5 Approvals. All authorizations, consents, permits and approvals
of any governmental or public unit, agency, body, authority or
other person or entity necessary for the valid consummation of
the transactions contemplated by (and other compliance with or
performance under) this Agreement of Dollar shall have been
obtained by Dollar.
5.1.6 Board of Directors and Shareholder Approval. No later than
5:00 p.m. (Phoenix time) on September 30, 1998, the directors
and shareholders of Stratford shall have approved, in
accordance with the charter documents and bylaws of Stratford
and applicable law, without exercise of any appraisal or
dissenter's rights, the transactions contemplated by this
Agreement. Further, the Shareholder shall have approved the
disposition of its ownership interest in Stratford by all
appropriate corporate action, including any applicable
compliance with the Securities Exchange Act of 1934. No later
than 5:00 p.m. (Tulsa time) on September 25, 1998 the
directors of Dollar shall have approved, in accordance with
the charter documents and bylaws of Dollar and applicable law,
the transactions contemplated by this Agreement.
5.1.7 No Liens. All of the Assets shall be free and clear of any
liens, mortgages, security interests or other encumbrances.
Any Contracts which have been pledged or otherwise used as
collateral by Stratford for any financing have been released
and are not subject to any security interest by any lender of
Stratford or an affiliate of Stratford. The conditions of this
Section 5.1.7 may be satisfied as specified in Section 6.1.2
below.
5.1.8 Payment Obligations. Stratford shall have paid Dollar all
monies then due and owing by Stratford to Dollar through the
date of Closing under the License Documents. If the amounts
due and owing cannot be ascertained at Closing, Stratford
shall pay Dollar an amount estimated by Dollar to be due. Such
estimated amount paid shall be reconciled by the parties at
such time as the actual amounts can be determined.
12
<PAGE>
5.1.9 Performance. Stratford shall have performed and complied with
all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
5.2 Conditions Precedent to Stratford's Obligation. All of the obligations
of Stratford under this Agreement are subject to the fulfillment of
each of the following conditions by Closing, unless otherwise shown
below, any one or more of which may be waived by Stratford as a
condition to Closing:
5.2.1 Representations and Warranties. Each and every representation
and warranty of Dollar contained in this Agreement shall be
true and correct when made and shall be true and correct at
Closing as though such representation and warranty had been
made on the Closing date, and Dollar shall have performed all
covenants and agreements on its part required to be performed
and shall not be in default under any of the provisions of
this Agreement at Closing
5.2.2 Performance. Dollar shall have performed and complied with all
agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
5.2.3 No Actions or Proceedings. No action, proceeding,
investigation, regulation or litigation shall have been
instituted or threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain,
prohibit or obtain damages in respect of, or which is related
to, or arises out of, this Agreement or the consummation of
the transactions contemplated hereby, or which, in the
reasonable judgment of Stratford, would have a materially
adverse effect on Dollar's ability to consummate the
transaction contemplated by this Agreement.
5.2.4 Approvals. All authorizations, consents and approvals of any
governmental or public unit, agency, body, authority or other
person or entity necessary for the valid consummation of the
transactions contemplated by (and other compliance with or
performance under) this Agreement shall have been obtained.
6. PROCEDURES AT CLOSING
6.1 Closing Deliveries by Stratford. At the Closing, Stratford shall
deliver or cause to be delivered to Dollar the following:
6.1.1 Documents. The Bill of Sale, the Assignment and Assumption
Agreement, the Lease Agreement, the Stratford Release, the
termination of the License Documents.
13
<PAGE>
6.1.2 Assurances, Consents and Releases. Appropriate assurances as
to the Assets and the material Contracts relating to
substitution of parties, consents to assignment and transfer,
for the Contracts, from the other parties thereto, releases or
termination statements of all mortgages, deeds to secure debt,
deeds of trust, security interests, pledges, liens and other
charges, encumbrances or adverse claims against or secured by
the Assets or the Contracts, from the holders of such liens,
sufficient in the reasonable determination of Dollar to
release all such liens, encumbrances and adverse claims, and
(ii) any Clearance Certificate, subject to Section 2.6.3
above. It shall be sufficient for purposes of Closing for
Dollar to have received a pay-off letter, at least two (2)
days prior to the Closing, from the holder of any lien on any
of the Assets setting forth the agreement of such holder to
release such lien upon receipt of the amount specified in
letter. Stratford agrees that Dollar may deduct the pay-off
amount contained in any such letters from amounts payable at
Closing to Stratford and Dollar shall pay such pay-off amounts
directly to the holder of such liens pursuant to the terms of
the pay-off letters, if any.
6.1.3 Certificates. Certificates dated as of the Closing and
executed by the President of Stratford, in such capacity and
on behalf of Stratford (i) stating that the representations of
Stratford in the Agreement are true and correct on and as of
the Closing with the same effect as though such
representations and warranties had been made on and as of such
date and that the covenants and agreements to be performed or
complied with Stratford prior to or at the Closing have been
performed and complied with; (ii) certifying the corporate
action of Stratford as represented and warranted herein and
certifying that all such action is still in full force and
effect and that it is all the action adopted in connection
with the transactions contemplated by this Agreement,
including a certification as to the text of such corporate
action; and (iii) setting forth the names and titles of the
officers of Stratford executing this Agreement and the other
agreements, instruments and documents executed and delivered
by Stratford pursuant to this Agreement, the signatures of
such officers and the seal of Stratford; and with the
signature and title of the president certified by another
officer of Stratford.
6.1.4 Governmental Certificates. Certificates of corporate and tax
good standing for Stratford from the Secretary of State or
other appropriate official of the State of Arizona, dated no
earlier than thirty (30) days before the Closing, together
with a certificate of no taxes due issued by Arizona taxing
authorities, subject to Section 2.6.2 above.
6.1.5 Telephone Agreements. Assignment of Stratford's rights to
published telephone numbers (not including DID phone numbers
224-2300 through 224-3898) and directory advertising for the
Business, and compliance with licensee cessation of business
requirements as reflected in the License Documents.
14
<PAGE>
6.1.6 Foreign Person Affidavit. An affidavit from Stratford and any
other party or parties required pursuant to Section 1445 of
the Internal Revenue Code of 1986, as amended, and any
regulations relating thereto, stating under penalty of perjury
(i) that Stratford is not a "Foreign Person," (ii) the U.S.
taxpayer identification number of Stratford and any other
party, and (iii) such other information as may be required by
any regulations promulgated in connection with said Section
1445.
6.1.7 Documents Requested by Dollar. Such other documents as shall
be reasonably required or necessary to consummate the
transactions contemplated by this Agreement and the exhibits
as may be reasonably requested by Dollar.
6.1.8 Certain Records of Business. Any customer lists, vehicle
rental agreements, surveys, as-built drawings and blueprints
and other documents of the Business. If the actual documents
cannot be transferred, Stratford shall permit Dollar access to
the same.
6.1.9 Repair Records. Stratford shall deliver all repairs orders as
to Accepted Vehicles at Closing, to Dollar, pursuant to
Section 3.9.
6.2 Closing Deliveries by Dollar. On the Closing Date, Dollar will deliver
to Stratford the following:
6.2.1 Purchase Price. Payment of the Purchase Price, by wire
transfer, subject to any holdbacks, outstanding or estimated
amounts payable to Dollar through the date of Closing under
the License Documents and other adjustments or offsets as
herein permitted, plus all other amounts owed to Stratford
under this Agreement at Closing.
6.2.2 Documents. The Assignment and Assumption Agreement, the Lease
Agreement, the termination of the License Documents and the
Dollar Release.
6.2.3 Certificates. Certificates dated as of the Closing and
executed by the President or a Vice President of Dollar (i)
stating that the representations of Dollar in the Agreement
are true and correct on and as of the Closing with the same
effect as though such representations and warranties had been
made on and as of such date and that the covenants and
agreements to be performed and complied with by Dollar prior
to or at the Closing have been performed and complied with;
(ii) certifying the corporate action of Dollar as represented
and warranted herein and certifying that all such action is
still in full force and effect and that it is all the action
adopted in connection with the transactions contemplated by
15
<PAGE>
this Agreement, including a certification as to the text of
such corporate action; and (iii) setting forth the names and
titles of the officers of Dollar executing this Agreement and
the other agreements, instruments and documents executed and
delivered by Dollar pursuant to this Agreement, the signatures
of such officers and the seal of Dollar; and with the
signature and title of the president certified by another
officer of Dollar.
6.2.4 Documents Requested by Stratford. Such other documents as
shall be reasonably required or necessary to consummate the
transactions contemplated by this Agreement and the exhibits
as may be reasonably requested by Stratford.
6.2.5 Return of Letter of Credit. At Closing, Dollar shall return
that certain Irrevocable Standby Letter of Credit No.
SB10011264 issued by Imperial Bank, to and in favor of Dollar,
as amended June 30, 1998.
7. POST-CLOSING EVENTS
7.1 Post-Closing Events. Following Closing, the parties will continue to
comply with the terms of this Agreement, and all exhibits hereto and
will cause the following events, among others, to occur:
7.1.1 Post-Closing Reconciliation. Ninety (90) days following the
Closing, the parties shall reconcile all post-Closing
obligations or liabilities arising hereunder or under the
License Agreement and related and collateral documents
executed in connection therewith, including but not limited
to: (i) the purchase price for the Gasoline Inventory and
Maintenance Inventory; (ii) estimated prepayments, including
concessions and airport rent, paid in accordance with Sections
2.4 and 2.8 and reconciled to actual amounts due and payable;
(iii) unpaid revenues payable to Stratford on Open Rental
Contracts; (iv) fleet liabilities, including but not limited
to the Damage Costs for Accepted Vehicles, prorated vehicle
sales taxes and tag costs, ISRB and PPA, and all other amounts
due Stratford unfer the Master Lease Agreement but excluding
the purchase price of Accepted Vehicles rejected by the
Chrysler Corporation pursuant to Section 3.3; (v) system fees;
(vi) tour vouchers; (vii) travel agent commissions; (viii)
reservation fees; (ix) inter-city credits or payments; (x)
v.i.p. rates; and (xi) goodwill certificates (collectively,
the "Reconciliation"). The Reconciliation shall be in writing
and signed by each of the parties hereto. Any charges listed
in subsection (i) through (xi) above that become due and
payable subsequent to the Reconciliation and were unknown or
not discovered until subsequent to the Reconciliation shall be
forever barred for presentment and payment.
7.1.2 Post-Closing Efforts. In the event Dollar waives the
requirement for any consent, estoppel or other assurances to
be provided by a Stratford
16
<PAGE>
hereunder and permits the Closing to occur, Stratford shall
use diligent good faith efforts to obtain same after the
Closing and will deliver any such consents obtained to Dollar.
7.1.3 Examination of Books. For a period of two (2) years after the
Closing, Stratford shall retain its books and records relating
to the Business prior to Closing. Upon the reasonable request
of Dollar, Stratford shall make such books and records
available to Dollar for examination, review and copying,
during regular business hours and without interfering with the
business of Stratford.
7.1.4 Cooperation. Stratford shall reasonably cooperate and assist
Dollar with the transition of the Assets and the Business.
Dollar agrees that it shall continue to maintain at least one
computer terminal at each rental location, including the
Service Facility, utilizing the Orion software, subsequent to
the Closing and, at Dollar's cost, to process Open Rental
Agreements and the check-in of vehicles subsequent to Closing.
For a reasonable period of time not to exceed thirty (30) days
from Closing, unless otherwise agreed by representatives of
Dollar and Stratford, Dollar shall provide adequate space and
access to representatives of Stratford at the Service Facility
to process DBRs, the coding for payment of pre-Closing
payables and other post-Closing processes. Should such
representatives be employees of Stratford, Dollar will discuss
employment opportunities with such employees, provided such
opportunities exist subsequent to Closing. Dollar makes no
promise or agreement to offer employment to such Stratford
employees. Stratford shall, for a period of fifteen (15) days
subsequent to the Closing, provide continuing phone service,
including voice mail, auto-attendant and other functions now
provided to the Business through the Legend phone system, as
enhanced, to Dollar, at no cost or charge to Dollar.
7.1.5 Mail. Dollar may open mail addressed to Stratford strictly for
the purpose of determining whether such mail relates to the
Assets or the Business. Any other such mail will be promptly
delivered to Stratford or arrangements for periodic pick-up by
Stratford or its designated representative. Dollar shall
promptly transfer any cash or other property which Dollar may
receive with respect to the Excluded Assets or liabilities not
assumed by Dollar hereunder at Closing. For the purposes of
opening mail, Stratford will be deemed at Closing to appoint
Dollar its attorney-in-fact with authority to open mail
addressed to Stratford.
7.1.6 Clearance Certificate. Upon Closing, Stratford shall contact
the appropriate Arizona tax collecting agency to request that
the agency either: (i) conduct an audit as to Stratford's
sales tax returns for any unaudited period prior to and
including the date of Closing or (ii) take whatever action is
necessary in order to issue a Clearance Certificate. Stratford
shall diligently pursue the
17
<PAGE>
issuance of a Clearance Certificate. Upon issuance and
presentation to Dollar, Dollar shall immediately release the
balance of those monies held in accordance with Section 2.6.2
and not otherwise paid to the tax collecting agency or wire
transferred to Stratford pursuant to Section 2.6.2 above.
7.1.7 Post-Closing Consents. Any consents or waivers by the lessors
or other third parties under non-material Contracts (and thus
not required as conditions of Closing) shall be obtained by
Stratford, at its sole cost, and provided to Dollar, within
ninety (90) days after Closing (or any prior time when such
lessor or other party declares a default under such Contract
by reason of the assignment thereof to Dollar or otherwise
seeks to enforce any remedies thereunder for such reason). If
any such consent is not obtained within such time, Dollar, at
its option, may revoke its assumption of the applicable
Contract, in which event the machinery or equipment covered
thereby shall be immediately removed by Stratford and
Stratford shall indemnify and hold Dollar harmless from any
liability under such Contract.
8. REPRESENTATIONS AND WARRANTIES OF STRATFORD
8.1 Representations and Warranties of Stratford. Stratford represents and
warrants to Dollar on the date of this Agreement and again on and as of
the Closing, as follows:
8.1.1 Status. Stratford is a corporation, duly organized, validly
existing and in good standing under the laws of the State of
Arizona.
8.1.2 Powers, Authorization; Binding Nature. With respect to this
Agreement and any other agreements, certificates, instruments
and documents executed and delivered (or to be executed and
delivered) by Stratford or its officers pursuant to this
Agreement (such agreements, certificates, instruments and
documents being the "Stratford Delivered Agreements"): (i)
Stratford has the power and authority to execute and deliver
this Agreement and Stratford Delivered Agreements and to
consummate the transactions contemplated by them and otherwise
to comply with or perform its obligations under this Agreement
and Stratford Delivered Agreements; (ii) the execution and
delivery by Stratford of this Agreement and Stratford
Delivered Agreements and the consummation by Stratford of the
transactions contemplated by them have been duly authorized by
all necessary action on the part of Stratford in compliance
with Stratford's articles or certificate of incorporation, as
amended, if applicable, its bylaws, as amended, if applicable,
and applicable law; (iii) this Agreement and Stratford
Delivered Agreements constitute valid and binding agreements
of Stratford that are enforceable against Stratford in
accordance with their terms, except as enforceability may be
limited by applicable bankruptcy, insolvency and other laws
affecting creditors' rights
18
<PAGE>
generally and the discretion of the courts in granting
equitable remedies; and (iv) the other transfer and assumption
instruments included in Stratford Delivered Agreements
effectively convey to, and vest in, Dollar the Assets and the
Contracts.
8.1.3 Absence of Violations or Conflicts. The execution and delivery
by a Stratford of this Agreement and the consummation by
Stratford of the transactions contemplated herein and therein,
including all Stratford Delivered Agreements (i) will not
constitute a violation of, be in conflict with, constitute a
default under or result in the creation or imposition of any
security interest, lien or other encumbrance or adverse claim
in, upon or with respect to the Assets or the Contracts under
(a) any term or provision of the articles or certificate of
incorporation, as amended, or bylaws, as amended, of
Stratford, (c) any agreement, commitment or understanding to
which Stratford is a party or to which Stratford, the Assets
or the Contracts are subject or bound, (d) any judgment,
decree or order of any court or governmental agency or (e) any
statute, law, rule, regulation, release or other official
pronouncement binding on Stratford or the Assets; and (ii)
will not create or cause the acceleration of the maturity of
any liability of Stratford.
8.1.4 Taxes. Stratford has filed all income tax returns, all real
and personal property tax returns required to have been filed,
all sales tax returns or reports required to have been filed
and has paid all taxes as shown on said returns, all
assessments received by it and all amounts due any
governmental authority to the extent that such taxes,
assessments and amounts have become due, including but not
limited to sales and excise taxes, where the failure to so
file or to pay any such taxes would have an adverse effect on
Dollar as purchaser of the Assets.
8.1.5 No Governmental Consents Required. Except for any consent
required for the transfer of the City of Phoenix Airport
Agreement No. 55632, no consent, approval, order or
authorization of, or registration, declaration or filing with,
any governmental or public unit, agency, body or authority on
the part of Stratford is required in connection with the
execution and delivery of, consummation of any transaction
contemplated by, or performance of or compliance with its
obligations under this Agreement or Stratford Delivered
Agreements.
8.1.6 Absence of Material Change. Stratford has operated in the
ordinary course of business and without limiting the
foregoing, since the same date there has not been: (i) any
change in the Assets of Stratford other than changes in the
ordinary course of business, none of which has been materially
adverse; (ii) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the
Assets; (iii) any sale, transfer, lease, removal or other
disposition of any of the Assets, except for
19
<PAGE>
transactions in the ordinary course of business; (iv) any
waiver, compromise or other settlement by Stratford of any its
rights under the Contracts; (v) any strike or other work
stoppage or slow down or threat thereof, or any loss of
employees or any event or condition of any character relating
to the employees of Stratford that materially and adversely
affects the Assets or Business; or (vi) any other material
contract or commitment entered into by Stratford other than
contracts or commitments entered into in the ordinary course
of business.
8.1.7 Owned Properties. Exhibit 1.2.1 sets forth a complete and
accurate list of all material items of Personal Property,
Equipment and Fixtures used in the Business.
8.1.8 Leased Properties. Except for the Contracts and the Sublease,
there are no other agreements, written or oral leases,
subleases or rental agreements (and any related contract,
agreement, commitment, undertaking or understanding and all
amendments, modifications and supplements thereof) pursuant to
which Stratford leases, subleases or rents any real or
personal property that is used in the operation of the
Business.
8.1.9 Title. Stratford has good and marketable and fee simple title
to its Assets, free and clear of any contract of sale,
mortgage, deed to secure debt, deed of trust, pledge, lien,
security interest, restriction, encumbrance, easement,
covenant, lease, rental, or charge or claim whatsoever.
8.1.10 Condition of Properties. THE REPRESENTATIONS AND WARRANTIES OF
STRATFORD IN THIS AGREEMENT RELATING TO THE ASSETS ARE IN LIEU
OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESSED OR
IMPLIED, OF STRATFORD PERTAINING THERETO. EXCEPT AS PROVIDED
IN THIS AGREEMENT, THE PERSONAL PROPERTY, EQUIPMENT AND
FIXTURES COMPRISING THE ASSETS WILL BE CONVEYED BY STRATFORD
TO DOLLAR "AS IS, WHERE IS", WITHOUT RECOURSE AND WITHOUT
REPRESENTATION OR WARRANTY EXCEPT AS TO TITLE, EXPRESSED OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, STRATFORD MAKES NO
REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS OF
SAME. Except as set forth on Exhibit 8.1.10 attached hereto,
the leasehold interests under the Contracts to be transferred
to Dollar or which will revert to Dollar upon termination
shall include all rights of ingress and egress over public
rights-of-way; (ii) all necessary surface water drainage,
sewer and other utility services are available to all such
locations through facilities located in public rights-of-way
or valid and existing private easements, (iii) Stratford has
not received notice of and has no knowledge of, and to the
knowledge of Stratford there is no basis for, any dispute with
any real lessor of the Contracts or the owner of any property
subject to a Contract, nor are there pending lease rental
renegotiations; (iv) Stratford has not
20
<PAGE>
received notice of and has no knowledge of, and to the
knowledge of Stratford, there is no basis for any dispute with
the Airport, nor are there pending any renegotiations with the
Airport; (v) Stratford is not (a) to Stratford's knowledge, in
violation of any applicable building, zoning, anti-pollution,
environmental, health, safety or other law, ordinance or
regulation in respect of any of the Assets or the real
property covered by the Contracts (i) in any respect that
involves a hazardous substance (as such term is defined in 42
U.S.C. ss.9601 (14)), or a "recognized hazard" (as such term
is used under the Occupational Safety and Health Act of 1970),
or (ii) in any other material respect, or (b) in receipt of
any current notice alleging such a violation; (vi) there has
been no "release" (as such term is defined in 42 U.S.C.ss.9601
(22)) by Stratford or, to the knowledge of Stratford, by any
predecessor in title to Stratford, of any "hazardous
substance", or any petroleum or petroleum derived product from
or upon any Assets or any Business location, whether owned,
operated or leased by Stratford; (vii) there are no
non-conforming uses, zoning or building code variances, or any
other use restrictions or special permits not set forth in the
local zoning laws and building codes with respect to any of
the real property and improvements included in the Assets or
any Business locations; and (viii) Stratford has not received
notice of and has no knowledge of, and to the knowledge of
Stratford, there is no basis for (a) any pending or
contemplated condemnation, eminent domain or re-zoning
proceeding affecting any of the Assets or Business location
under the Contracts, (b) any outstanding requirements or
recommendations by fire underwriters or rating boards or any
insurance companies or holders of any mortgages or other
security interests requiring or recommending any repairs or
work be done with reference to any of the Assets or Business.
8.1.11 Third Party Use. None of the Assets is in the possession of,
owned by or otherwise entitled to be used by any person other
than Stratford.
8.1.12 General. Stratford has delivered to Dollar, true and accurate
copies of the Contracts.
8.1.13 Status of the Contracts and the Sublease. (i) Stratford nor,
to the knowledge of Stratford, any other party, is in default
in connection with the Contracts or the Sublease; (ii) no act
or event has occurred which, with notice or lapse of time or
both, constitutes a default under the Contracts or the
Sublease with respect to Stratford or, to the knowledge of
Stratford, any other parties; (iii) subject to obtaining the
consents to the transfer to Dollar contemplated by this
Agreement, there is no basis for any claim or default under
the Contracts or the Sublease with respect to Stratford or, to
the knowledge of Stratford, any other party; (iv) to the
knowledge of Stratford, there is no outstanding notice of
cancellation or termination in connection with the Contracts
or the Sublease; (v) the Contracts and Sublease are valid,
binding and enforceable agreements of Stratford obligated
thereto and, to the knowledge of Stratford, of the other party
21
<PAGE>
thereto (except as enforceability may be limited by applicable
bankruptcy and other laws affecting creditors' rights and
principles of equity), which is in full force and effect in
accordance with its terms and will not be affected by, or
require the consent of any other party to, the transactions
contemplated by this Agreement; (vi) Stratford has not
received any prepayments for services to be rendered or
products to be delivered after the Closing with respect to
which Dollar would be obligated to perform; (vii) there is no
existing dispute involving the Contracts or the Sublease;
(viii) no party has any existing right of offset with respect
to the Contract or the Sublease, nor is there any condition or
state of facts in existence which with the passing of time or
giving of notice or both would result in any such right of
offset; and (ix) there are no security deposits posted in
connection with the Contracts or the Sublease not otherwise
previously disclosed to Dollar.
8.1.14 Labor Relations. Stratford is in compliance in all material
respects with all federal, state and other governmental laws
respecting employment and employment practices, terms and
conditions of employment, wages and hours, accommodating
disabilities, occupational safety and health, and has not
engaged in any unfair labor practice. There is no collective
bargaining agreement which is binding on Stratford.
8.1.15 Employee Benefit Plans. At no time has Stratford been required
to contribute to any "employee benefit plan" or a
"multi-employer plan," as such terms are defined in the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or incurred any withdrawal liability within the
meaning of Section 4201 of ERISA.
8.1.16 Litigation and Proceedings. No action, violation, proceeding,
investigation, regulation or litigation shall has been
instituted or threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain,
prohibit or obtain damages in respect of, or which is related
to, or arises out of, this Agreement or the consummation of
the transactions contemplated hereby, or which would have a
materially adverse effect on the Assets, the Contracts or the
Business, taken as a whole.
8.1.17 Compliance with Laws. Stratford is in compliance with all
applicable laws, ordinances, statutes, rules, regulations,
judgments, consent decrees and orders promulgated by any
federal, state or local governmental body or agency relating
to the operation of the Assets and the Business.
8.1.18 Permits. Exhibit 8.1.18 attached hereto sets forth a complete
and accurate list of all required or necessary occupancy
certificates, licenses and permits in connection with the
ownership, possession, use or occupancy of any of the Assets,
Contracts or operation of the Business. All such certificates,
licenses and permits are in full force and effect, and
22
<PAGE>
Stratford is in full compliance with the terms respectable
thereof. Except as set forth on Exhibit 8.1.18, such
certificates, licenses and permits are the only ones required
for such ownership, possession, use or occupancy of the
Assets, Contracts, Sublease or such operation of the Business.
8.1.19 Brokers and Finders Fees. Neither Stratford nor anyone acting
on Stratford's behalf will claim or be owed any commission,
broker's fee, finder's fee or investment banking fee based
upon the sale of the Assets or Business or other similar
compensation in connection with the transactions contemplated
by this Agreement for which Dollar will have any obligation.
8.1.20 Full Disclosure. No representation or warranty by Stratford in
this Agreement or other statement in writing or exhibit,
schedule or certificate furnished or to be furnished to Dollar
by or on behalf of Stratford in connection with the
transactions thereby contemplated contains or will contain any
untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements
contained therein not misleading in light of the circumstances
in which they are made. There is no fact known to Stratford
that materially adversely affects the Assets, the Contracts,
the Subleases or Business which has not been disclosed in the
Agreement or in the exhibits, schedules or certificates
furnished or to be furnished to Dollar by or on behalf of
Stratford in connection with the transactions thereby
contemplated.
9. REPRESENTATIONS AND WARRANTIES OF DOLLAR
9.1 Representations and Warranties of Dollar. Dollar hereby represents and
warrants to Stratford on the date of this Agreement and again on and as
of the Closing, as follows:
9.1.1 Status. Dollar is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Oklahoma, and is qualified and in good standing in the State
of Arizona.
9.1.2 Powers; Authorization; Binding Nature. With respect to this
Agreement and any other agreements, certificates, instruments
and documents executed and delivered (or to be executed and
delivered) by Dollar or its officers pursuant to this
Agreement (such agreements, certificates, instruments and
documents being the "Dollar Delivered Agreements"): (i) Dollar
has the power and authority to execute and deliver this
Agreement and Dollar Delivered Agreements and to consummate
the transactions contemplated by them and otherwise to comply
with or perform its obligations under this Agreement and
Dollar Delivered Agreements; (ii) the execution and delivery
by Dollar of this Agreement and Dollar Delivered Agreements
and the consummation by Dollar of the transactions
contemplated by them have been duly authorized by all
23
<PAGE>
necessary action on the part of Dollar in compliance with
Dollar's articles or certificate of incorporation, as amended,
its bylaws, as amended, and applicable law; (iii) this
Agreement and Dollar Delivered Agreements constitute valid and
binding agreements of Dollar that are enforceable against
Dollar in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency and other laws affecting creditors' rights
generally and the discretion of the courts in granting
equitable remedies; and (iv) the assumption instruments
included in Dollar Delivered Agreements effectively obligate
Dollar to perform the Contracts.
9.1.3 Absence of Violations or Conflicts. The execution and delivery
by Dollar of this Agreement and Dollar Delivered Agreements
and the consummation by Dollar of the transactions
contemplated herein and therein will not constitute a
violation of or be in conflict with any agreement to which
Dollar is a party or to which Dollar is subject or bound,
under (i) any judgment, decree or order of any court or
governmental agency or (ii) any statute, law, rule,
regulation, release or other official pronouncement.
9.1.4 No Governmental Consents Required. Except for customary
qualification and obtaining permits and licenses necessary to
conduct the Business, no consent, approval, order or
authorization of, or registration, declaration or filing with,
any governmental or public unit, agency, body or authority on
the part of Dollar is required in connection with the
execution and delivery of, consummation of any transaction
contemplated by, or performance of or compliance with its
obligations under this Agreement or Dollar Delivered
Agreements.
9.1.5 Brokers and Finders Fees. Neither Dollar nor anyone acting on
Dollar's behalf will claim or be owed any commission, broker's
fee, finder's fee or investment banking fee based upon the
sale of the Assets or Business or other similar compensation
in connection with the transactions contemplated by this
Agreement.
10. OTHER AGREEMENTS
10.1 Telephone Listing. Stratford agrees that on the date of Closing,
Stratford's interest in and rights to use all published telephone
numbers and all published listings applicable to the Business shall be
transferred to Dollar and Dollar shall thereupon have full and
exclusive right to use such numbers and listings.
10.2 Employees. Subject to Dollar's obligation to hire certain Stratford
employees as discussed below, on the date of Closing, Stratford shall
terminate the employment of all employees employed by Stratford in the
conduct of the Business. Stratford shall be solely responsible to pay
all salaries, wages, bonuses, additional compensation and like benefits
including any termination, vacation, sick pay or other severance
compensation and all taxes owed or
24
<PAGE>
obligated to be withheld by Stratford prior to Closing. Dollar shall
offer employment to a minimum of ninety percent (90%) of Seller's
existing workforce as of the day before Closing, each such employee
subject to satisfying Dollar's internal employment criteria and
qualifications, including drug testing. The parties acknowledge it is
their mutual intent that Dollar hire a sufficient number of terminated
Startford employees in connection with Dollar's business operations on
or after the Closing and to avoid an employment loss or shutdown as
defined in the Worker Adjustment and Retraining Notification Act
("WARN"). Dollar intends to discuss employment opportunities with all
of Stratford's employees and Stratford agrees to make such employees
available to Dollar for interviews upon Dollar's request. Dollar makes
no promise or agreement to offer employment to any specific Stratford
employee. Under no circumstances shall Dollar be deemed to have assumed
any employment or benefit related liability to any of Stratford's
employees by virtue of entering into this Agreement or conducting the
Closing. Any Stratford employee who is hired by Dollar in connection
with the transaction contemplated by this Agreement shall be afforded
the opportunity to roll-over such employee's then existing account
balance in Stratford's 401-K plan to Dollar's 401-K plan.
11. INDEMNIFICATIONS
11.1 Indemnification by Stratford. Without limiting any indemnities set
forth in the License Documents from Stratford in favor of Dollar,
Stratford shall be responsible for and shall indemnify and hold
harmless Dollar, its parent, subsidiaries and affiliates, and their
directors, officers, shareholders, employees and representatives, from
and against any and all claims, losses, demands, costs, damage,
penalties, fines, actions or causes of action, lawsuits, proceedings,
damages or liabilities, whether known or unknown, and expenses,
including all attorneys' fees and costs (collectively, the "Claims"),
arising from: (i) the incorrectness or breach of any of the
representations, warranties, covenants and agreements of Stratford
contained in this Agreement or any Stratford Delivered Agreement: (ii)
the assertion against Dollar of any liability (including parking
tickets), claim, tax claim, obligation, or agreement of Stratford which
is not expressly assumed by Dollar herein; (iii) the operation of the
Business and use of the Assets prior to the Closing, including any
conditions, incidents, circumstances or occurrences with respect to the
Assets, exclusive of environmental conditions separately addressed in
subsection (iv) as follows; (iv) environmental conditions, incidents,
circumstances or occurrences arising or occurring prior to or on the
Closing as to the property subject to: (a) the Contracts, (b) the
Sublease, or (c) the Lease Agreement, from or related to any and all
spills, leaks, releases and discharges of motor fuels, hydrocarbons,
Hazardous Substances, as defined herein below or other contaminants, in
connection with the use and operation of underground storage tanks,
associated transfer lines, pumps, dispensers, tanks, other motor fuels
equipment by Stratford, or unrelated operations conducted by Stratford,
occurring above, on and/or below the surface (collectively, the
"Environmental Conditions"); provided,
25
<PAGE>
however, that as to the property subject to the Lease Agreement, such
property is subject to a recorded, restrictive covenant prohibiting the
use of such property for residential uses (arising from prior
hydrocarbon remedial measures undertaken by Stratford as directed by
the governmental agency responsible to enforce applicable laws, rules
and regulations governing the use and operation of underground storage
tanks) and any Claims asserting that ownership or the right to use such
property for residential uses is impaired or otherwise restricted in
the future due to such recorded instrument shall be excepted from this
indemnity; (v) the payment of any commission, brokerage or other fee
arising from or based upon the transactions contemplated herein; (vi)
with respect to any successor liability or similar theory, which would
impose liability on Dollar for any aspects of Stratford's operations
prior to Closing, but only to the extent that Dollar has not expressly
assumed the same. As used herein the term "Hazardous Substances" shall
mean and include all hazardous and toxic substances, wastes or
materials, any pollutants or contaminants (including, without
limitation, asbestos and raw materials which include hazardous
constituents), or any other similar substances, or materials which are
included under, defined by or regulated by any local, state or Federal
laws, rules or regulations pertaining to environmental regulation,
contamination or clean-up, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 7401, et
seq.; and the publications, rules and regulations adopted and/or
promulgated pursuant to said laws.
11.2 Indemnification by Dollar. Without limiting any indemnities set forth
in the License Documents from Dollar in favor of Stratford, Dollar
shall be responsible for and shall indemnify and hold harmless
Stratford, its subsidiaries and affiliates, and their directors,
officers, shareholders, employees and representatives, from and against
any and all Claims arising from: (i) the incorrectness or breach of any
of the representations, warranties, covenants and agreements of Dollar
contained in this Agreement or any Dollar Delivered Agreement; (ii) the
assertion against Stratford of any Claims occurring subsequent to the
Closing as to the Contracts; or (iii) the operation of the Assets on or
after the Closing, including any Environmental Conditions arising on or
after the Closing.
11.3 Notice of Claim. The obligation of indemnity shall be extinguished
unless the party claiming the right to be indemnified notifies the
indemnitor, in writing, of facts which it believes are the basis for
indemnification hereunder on or before the two (2) years' anniversary
of the Closing; provided however, that notwithstanding the foregoing,
no time deadline shall apply to any willful or intentional breach of or
failure to comply with any representation, warranty, covenant or
agreement in this Agreement. With respect to any Claim asserted by a
third party against a party hereto, the party receiving such Claim
shall deliver written notice and tender to the indemnifying party the
right to defend against such Claim in the name of the indemnified
party, within twenty (20) days
26
<PAGE>
of the assertion of such Claim by a third party, unless the time
required to file a responsive pleading is sooner. The indemnified party
shall reserve the right to participate in the defense of the Claim, at
its own cost and expense, but under the direction of the indemnifying
party.
12. TERMINATION
12.1 Termination Rights. The obligations of Stratford and Dollar under this
Agreement can be terminated and the transactions contemplated by it
abandoned upon the following conditions, or when authorized under
applicable law, with notice of termination to be furnished in writing:
12.1.1 Pursuant to the mutual written agreement of Stratford and
Dollar;
12.1.2 By Dollar, if any of the conditions to its obligation to
consummate the Closing are not satisfied, or waived by Dollar,
as of November 1, 1998;
12.1.3 By Stratford, if any of the conditions to its obligation to
consummate the Closing are not satisfied, or waived by
Stratford, as of November 1, 1998; or
12.1.4 The failure of the Closing to have occurred for whatever
reason by December 1, 1998 (unless extended by mutual written
agreement of the parties), in which event the Agreement shall
automatically terminate.
13. REMEDIES
13.1 Remedies. In addition to the indemnity rights of Dollar and Stratford
under Section 11 of this Agreement and remedies available under
applicable law, Dollar and Stratford shall each have the following
rights and remedies:
13.1.1 Either party may recover money damages for breach of
representations, warranties, covenants, agreements and
indemnities after the Closing or for failure or refusal to
close after satisfaction (or waiver by the party entitled to
the satisfaction) of all conditions precedent to the
obligation of both parties to the Closing.
13.1.2 For failure or refusal to close after fulfillment by both
parties of all their respective conditions to Closing, the
enforcing party may seek specific performance of this
Agreement. A party may also seek specific performance for
breach of a covenant or agreement hereunder. The parties
irrevocably agree in the circumstances where specific
performance is authorized hereunder that there is no adequate
remedy available at law.
13.1.3 Upon the breach of any representation, warranty, covenant or
agreement by Stratford under this Agreement, Dollar may
terminate this Agreement
27
<PAGE>
whereupon the respective rights and liabilities of the parties
with respect to the License Documents shall be subject to the
terms of such agreements.
13.2 Non Exclusive. None of the foregoing rights or remedies shall be
exclusive or in duplication of any other right or remedy under this
Agreement, those available under applicable law, or the indemnity
rights and remedies of Dollar and Stratford under Sections 11.1 and
11.2.
14. GENERAL PROVISIONS
14.1 Further Assurances. At any time and from time to time after the
Closing, at the request of Dollar and without payment of any further
consideration, Stratford agrees to execute, acknowledge and deliver all
such further assignments, conveyances and transfer documents, in form
and substance reasonably acceptable to Stratford, as reasonably may be
requested by Dollar for the purpose of better assigning, conveying and
transferring to Dollar, or reducing to Dollar's possession, any or all
of the Assets or to enable Dollar to exercise and enjoy the rights and
benefits with respect thereto. At any time and from time to time after
the Closing, at the request of Stratford and without payment of any
further consideration, Dollar agrees to execute, acknowledge and
deliver all such further assumptions and documents, in form and
substance reasonably acceptable to Dollar, and other assurances as
reasonably may be requested by Stratford for the purpose of better
evidencing the assumption by Dollar of the Assumed Liabilities.
14.2 Survival. The representations, warranties, covenants and agreements, as
well as covenants and agreements to be performed after Closing, made by
the parties in this Agreement or in any certificate, exhibit, schedule
or other document executed and delivered by a party pursuant to, or in
connection with, this Agreement shall expressly survive the Closing for
a period of two (2) years, except as otherwise provided herein. No
investigation made by Dollar or Stratford nor any disclosure made after
the date of this Agreement shall affect the enforceability of, or the
remedies available under this Agreement with respect to the breaches
of, such representations, warranties, covenants, agreements and
undertakings or their survival.
14.3 Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be deemed to have been
duly given on the date of receipt, if served personally on the party to
whom notice is to be given by actual in person delivery, including
overnight courier delivery, or if sent by facsimile (confirmed by
transmission receipt), telegraph or similar means of communication, or
on receipt, refusal, or as of the first attempted date of delivery if
unclaimed after mailing, when mailed to the party to whom notice is to
be given, by certified U.S. mail, return receipt requested, postage
prepaid and properly addressed as follows:
28
<PAGE>
To Stratford: Stratford American Car Rental Systems, Inc.
2400 East Arizona Biltmore Circle
Building 2, Suite 1270
Phoenix, Arizona 85016
Attention: Mel L. Shultz, President
Facsimile: 602.955.3441
With a copy to: Ronald L. Ballard, Esq.
Fennemore Craig
3003 N. Central Ave., Suite 2600
Phoenix, Arizona 85012-2913
Facsimile: 602.916.5512
To Dollar: Dollar Rent A Car Systems, Inc.
5330 East 31st Street
Tulsa, Oklahoma 74135
Attention: Gary L. Paxton, President and
Chief Executive Officer
Facsimile: 918.669.3001
Each party shall be entitled to specify a different person or address
by giving notice as aforesaid to the other.
14.4 Entire Agreement. This Agreement, together with the other agreements
contemplated hereby and the exhibits and schedules attached hereto, and
as the exhibits and schedules may be amended or supplemented from time
to time, constitute the entire agreement between the parties with
respect to the subject matters hereof and supersede all prior and
contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, and may not be altered or amended
except in writing signed by the parties hereto. No provision hereof is
intended to confer upon any person or entity other than the parties
hereto any right, benefit or privilege of the parties described
hereunder.
14.5 Time of Essence; Computation of Time. In all matters under this
Agreement, time is of the essence. Whenever the last day for the
exercise of any privilege or the discharge of any duty under this
Agreement shall fall upon Saturday, Sunday or any federal holiday, the
party exercising or discharging shall have until 5:00 p.m. its local
time on the next succeeding regular business day to exercise such
privilege or to discharge such duty.
14.6 Binding Effect; Assignment. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective permitted transferees, successors
and assigns; provided, however, that neither party hereto may assign
its rights or obligations hereunder without the prior written consent
of the other, except Dollar may assign its rights and obligations to a
subsidiary or lower tier subsidiary.
29
<PAGE>
14.7 Applicable Law; Venue. This Agreement shall be governed, construed and
enforced in accordance with the laws of the State of Oklahoma. Each
party hereto agrees that any legal action or proceeding against it and
arising out of or relating to this Agreement, or any of the agreements
contemplated hereby, shall be instituted in the United States District
Court for the Northern District of Oklahoma. By execution and delivery
of this Agreement, each party irrevocably submits to the jurisdiction
of such courts in any such action or proceeding as to the Agreement or
any of the agreements contemplated hereby and waives any objections it
may have with respect to such jurisdiction and venue therein. The
foregoing shall not limit the rights of any party hereto to bring any
legal action or proceeding or to obtain execution of judgment against
any party in any appropriate jurisdiction.
14.8 Amendments. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the parties. No waiver
of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof, nor shall such
waiver constitute a continuing waiver unless otherwise expressly
provided.
14.9 Severability. Wherever possible, each provision of this Agreement shall
be interpreted or modified in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalidated under applicable law or a court
of competent jurisdiction, such provision shall be ineffective and
severed from this Agreement and the remaining provisions of this
Agreement shall remain in full force and effect.
14.10 Expenses. Each party shall bear its own cost and expenses in connection
with the negotiation, preparation and execution of this Agreement.
14.11 Confidentiality. Stratford and Dollar agree that the terms and
conditions of this Agreement and of the transactions contemplated by it
are to remain confidential, except to the extent that either party
determines it is necessary under applicable law, including disclosures
or public filings required under applicable Federal and state
securities laws, to disclose such terms and conditions including,
without limitation, conveyancing and instruments relating to liens and
encumbrances recorded in the public records. Any press release or other
public communication (other than WARN Act Notices) relating to this
transaction shall require the prior written approval of Stratford and
Dollar, provided that Stratford shall not unreasonably withhold its
approval of a press release to be issued at the time of Closing by
Dollar with regard to the transaction contemplated herein.
14.12 Construction. Headings provided herein are for the reference of the
parties only, and shall not be used as an aid to construction of this
Agreement. For purposes of enforcement hereof, this Agreement shall be
construed as if having been prepared jointly by the parties hereto, and
not by one party to the exclusion of the other, to avoid any
construction against the party drafting the Agreement.
30
<PAGE>
14.13 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be considered an original, and all of which shall
constitute one and the same instrument.
14.14 Risk of Loss. Stratford shall bear the risk of loss or damage to the
Assets to be transferred hereunder to Dollar until the actual time of
Closing.
14.15 Alternative Dispute Resolution. In the event of a dispute that is not
settled between the parties, then the parties shall select a third
party mediator, mutually agreed upon by the parties, to mediate a
dispute. If the dispute is not resolved after mediation, both parties
agree to submit to binding arbitration. In such case, both parties
shall select one arbitrator. The two arbitrators (each selected by a
party hereto) shall select a third arbitrator. The arbitration shall be
conducted in Tulsa, Oklahoma in accordance with the rules, regulations
and procedures of the American Arbitration Association. The decision of
the arbitrator shall be final and binding on both parties. The parties
shall equally share the fees of the arbitrator.
14.16 Attorneys' Fees. In the event any legal proceeding, including
arbitration proceeding, is commenced to enforce the obligations of the
parties hereto, or to interpret the provisions contained herein, the
prevailing party shall be entitled to recover its reasonable attorneys'
fees, costs and expenses of litigation from the non-prevailing party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
the day and year first above written.
"STRATFORD"
STRATFORD AMERICAN CAR RENTAL
SYSTEMS, INC.
By: _____________________________________
Mel L. Shultz
President
"DOLLAR"
DOLLAR RENT A CAR SYSTEMS, INC.
By: _____________________________________
Gary L. Paxton
President and Chief Executive Officer
31
<PAGE>
SCHEDULE OF EXHIBITS AND FORMS
to
Acquistion Agreement
SECTION EXHIBITS
1.2.1 Personal Property, Equipment and Fixtures
1.3 Contracts
8.1.10 Conditions of Properties
8.1.18 Certificates, Licenses and Permits
SECTION FORMS
1.2.1 Bill of Sale
1.3 Assignment and Assumption Agreement
1.6(a) Stratford Release
1.6(b) Dollar Release
1.7 Lease Agreement
(Pursuant to Regulation S-B, Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of the exhibits and forms to this agreement to the
Securities and Exchange Commission upon request.)
FOR IMMEDIATE RELEASE
STRATFORD AMERICAN CORPORATION ANNOUNCES CLOSE OF DOLLAR RENT A CAR SALE
PHOENIX, Ariz. -- (BUSINESS WIRE) -- October 1, 1998 -- Stratford American
Corporation ("Stratford") (OTC Bulletin Board: STFA) has announced that its
subsidiary, Stratford American Car Rental Systems, Inc. ("SCRS") today closed on
the sale of its Phoenix Dollar Rent A Car operations to Dollar Rent A Car
Systems, Inc. of Tulsa, Oklahoma for an undisclosed price, in accordance with a
definitive agreement announced last month. The sale includes the franchise
rights and the fixed assets of SCRS. As part of the agreement, Dollar Rent A Car
Systems, Inc. has entered into a long-term lease with SCRS to utilize the base
operation facilities located near Phoenix Sky Harbor International Airport.
While Stratford has sold its major business, the Company continues to
aggressively seek potential acquisitions in establishing its future direction.
CONTACT: Stratford American Corp., Phoenix
Mel L. Shultz, 602/224-2312
