SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
(Amendment No. 1)
MATLACK SYSTEMS, INC.
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(Name of Issuer)
$1.00 Par Value Common Stock
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(Title of Class of Securities)
576901 10 2
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(CUSIP Number)
Michael B. Kinnard, Vice President-General Counsel
Matlack Systems, Inc.
2200 Concord Pike
Wilmington, Delaware 19803
(302) 426-2812
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
February 25, 1998
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this Schedule because of Rule 13-d-(b)(3) or (4), check the following box
|_|.
Note: Six copies of this statement, including all
exhibits, should be filed with the Commission. See Rule
13d-1(a) for other parties to whom copies are to be sent.
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CUSIP No. 576901 10 2 13D Page 2 of 5 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Rollins Properties, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
(b) X
3 SEC USE ONLY
4 SOURCE OF FUNDS
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES 600,000
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 600,000
PERSON 10 SHARED DISPOSITIVE POWER
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
600,000 shares
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.8%
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14 TYPE OF REPORTING PERSON
CO
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Item 1. Security and Issuer.
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This Amendment Number 1 to the Schedule 13D filed on January
8, 1990 by Rollins Properties, Inc., a Delaware corporation
and a wholly-owned subsidiary of Rollins Truck Leasing, Inc.,
a Delaware corporation ("Rollins Properties"), relates to
Rollins Properties' ownership of shares of common stock, par
value $1.00 per share (the "Common Stock") of Matlack Systems,
Inc., a Delaware corporation ("Matlack").
Except as otherwise noted herein, there have been no material
changes to the disclosure in the Schedule 13D, as originally
filed. The Schedule 13D is hereby amended as follows:
Item 4. Purpose of Transaction.
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On January 8, 1990 Rollins Properties acquired 427,826 shares
of Common Stock from Matlack. In March, 1993, Rollins
Properties sold 27,826 shares of Common Stock, leaving the
company holding 400,000 shares of Common Stock. Effective
September 15, 1994, Matlack split its Common Stock on a three
share for two share basis. As a result, Rollins Properties
became the holder of 600,000 shares of Common Stock.
On February 25, 1998, pursuant to a Letter of Intent ("Letter
of Intent"), between Apollo Management, L.P. ("Apollo") and
Matlack, Matlack and Apollo confirmed the terms pursuant to
which Palestra Acquisition Corp., a Delaware corporation
formed by Apollo ("Palestra") would purchase all of the issued
and outstanding Common Stock of Matlack, a copy of such Letter
of Intent is attached hereto as Exhibit A and is incorporated
herein by reference. In connection with the proposed merger
and simultaneously with the Letter of Intent, on February 25,
1998 Rollins Properties entered into an Option Agreement (the
"Option Agreement"), a copy of which is attached hereto as
Exhibit B and is incorporated herein by reference, with Apollo
and Palestra. Under the terms of the Option Agreement, upon
written notice by Palestra, Rollins Properties will sell to
Palestra all of its Common Stock at a price per share equal to
$12.00, provided that certain conditions are fulfilled. As a
result, pursuant to Rule 13d-5(b)(1) under the Exchange Act,
as of the date of the Option Agreement, Palestra may be deemed
to have acquired beneficial ownership of all of the Common
Stock beneficially held by Rollins Properties.
Palestra and Apollo seek to acquire all of the Common Stock
beneficially owned by Rollins Properties so as to effect the
merger of Matlack into Palestra.
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Item 5. Interest in Securities of the Issuer.
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According to the proposed terms of the merger, Palestra would
merge with and into Matlack and Matlack would be the surviving
entity. Upon consummation of the proposed merger, all of
Matlack's outstanding Common Stock will be owned by Apollo.
Item 6. Contracts, Arrangements, Understandings or
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Relationships With Respect to Securities of the Issuer.
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The response to Item 4 is incorporated herein by reference. In
addition to the Option Agreement, in anticipation of the
proposed merger of Palestra into Matlack, other of Matlack's
shareholders, specifically John W. Rollins, Sr., John W.
Rollins, Jr., and Henry B. Tippie (such shareholders
collectively, the "Selling Shareholders") have entered into an
agreement with Apollo and Palestra (the "Support Agreement
#1"), pursuant to which (i) Palestra may, upon written notice
to Selling Shareholders and the occurrence of certain
conditions, purchase all of such Selling Shareholders' Common
Stock at a price per share equal to $12.00 and (ii) Selling
Shareholders appoint an individual designated by Palestra as
such Shareholders' proxy and attorney-in-fact (with full power
of substitution) to vote the Selling Shareholders' Common
Stock at any meeting of Matlack's shareholders in favor of the
transaction contemplated by the Letter of Intent.
Item 7. Exhibits.
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Exhibit A Letter of Intent, dated February
25, 1998, by and among Matlack,
Apollo and Palestra.
Exhibit B Option Agreement, dated February
25, 1998, by and among Rollins
Properties, Apollo and Palestra.
Exhibit C Support Agreement #1, dated
February 25, 1998, by and among
Selling Shareholders, Apollo and
Palestra.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
March 11, 1998
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(Date)
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(Signature)
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(Name/Title)
PERSONAL AND CONFIDENTIAL
February 25, 1998
Matlack Systems, Inc.
2200 Concorde Pike
Wilmington, Delaware 19803
Attn: John W. Rollins, Jr.
Chairman of the Board
Dear Mr. Rollins:
This letter (this "Letter") will confirm the offer (subject to the
terms and conditions below) by Apollo Management L.P. ("Apollo") to Matlack
Systems, Inc. ("Matlack" or the "Company") with respect to the proposed
acquisition (the "Acquisition") by an entity to be formed by Apollo (the
"Purchaser") of all of the issued and outstanding common stock (the "Stock") of
Matlack. The Acquisition shall be made upon the following terms and subject to
the following conditions:
1. Price and Structure of the Acquisition. Subject to the terms and
conditions set forth herein, the Acquisition will be structured as a public
merger and on the Closing Date (as defined below), Purchaser shall purchase all
of the outstanding Stock and each outstanding employee stock option. The
purchase price (the "Purchase Price") shall be paid in cash and shall be $12 per
share of Stock and $12 less the relevant exercise price per option.
2. Closing. The closing of the Acquisition shall be held as soon as
practicable following the execution and delivery of a definitive merger
agreement (the "Definitive Agreement"), at a time and place to be mutually
agreed upon by Matlack and Apollo (the "Closing Date"). The parties agree to use
all reasonable efforts and to work diligently and in good faith to execute and
deliver the Definitive Agreement and to consummate the Acquisition as soon as
practicable.
3. Definitive Agreement. The obligations of the Purchaser and Matlack
are expressly subject to the negotiation and execution of the Definitive
Agreement in form and substance satisfactory to each of Apollo, Matlack and
their respective counsel. Such agreement shall contain representations,
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warranties, covenants (including a termination fee in the amount set forth in
paragraph 12 below and a related expense reimbursement) and conditions which are
customary in merger agreements of this type.
4. Conditions to Closing. The consummation of the Acquisition shall be
subject to and conditioned upon, among other things, the execution by Purchaser
and Matlack of a mutually acceptable Definitive Agreement and the compliance
with or satisfaction or waiver of the terms and conditions thereof on or before
the Closing Date and completion to Apollo's satisfaction in its sole discretion
of Apollo's due diligence investigation of the Company, as described further in
paragraph 5 below.
5. Access to Facilities; Due Diligence. Subject to the terms of the
Definitive Agreement, from the date hereof until the Closing Date, Matlack
shall, and shall cause management of Matlack to, afford Apollo and its
attorneys, consultants, accountants and authorized representatives reasonable
access, upon reasonable notice during normal business hours and at other
reasonable times, to properties, books, contracts, commitments, records,
personnel, lenders and advisors of Matlack in order to permit Apollo to conduct
its due diligence investigation of Matlack. Such investigation shall include,
among other things, the receipt of relevant financial information, the review of
any relevant contractual obligations of Matlack, the conducting of discussions
with Matlack's management, employees and customers (as reasonably agreed by
Matlack), environmental review, review of all pension, health or retiree related
liabilities and such other investigations as may be deemed necessary by Apollo.
6. Conduct of Business Pending Closing. From the date hereof until the
Closing Date, Matlack shall continue to operate the Company and its subsidiaries
in the usual and ordinary course, shall refrain from any material capital
expenditures or significant organizational or personnel changes with respect
thereto and shall use its best efforts to preserve the goodwill of their
respective customers, employees, independent contractors, suppliers, and others
with whom Matlack and its subsidiaries have business relations.
7. Publicity. Except as otherwise required by law, court process or the
rules of the New York Stock Exchange, for so long as this Letter is in effect,
no party hereto shall issue or cause the publication of any press release or
other public announcement with respect to the transactions contemplated by this
Letter without the consent of the other parties, which consent shall not be
unreasonably withheld; provided, that, in any case, Matlack will not use the
name of Apollo or any affiliate thereof without Apollo's written permission and
will discuss the term and contents of any such release with Apollo prior to
dissemination.
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8. Exclusivity. The parties hereto confirm that the letter agreement,
dated February 12, 1998 (the "February 12 Letter Agreement"), between Apollo and
Matlack, attached hereto as Exhibit A, shall remain in full force and effect in
accordance with its terms.
9. Brokerage Fees; Expenses. Each of (i) Apollo and (ii) Matlack shall
indemnify and hold the other harmless from any claim for brokerage or finders'
fees arising out of the Acquisition contemplated hereby by any person claiming
to have been engaged by the indemnifying party. Subject to the terms of the
Definitive Agreement, each party hereto agrees to pay its own fees and expenses
incurred in connection with this Letter.
10. No Binding Effect. This Letter is only an expression of the mutual
intent of Apollo, the Purchaser and Matlack concerning certain aspects of the
Acquisition and it is understood that all of the material terms of the
Acquisition are not yet agreed upon and still must be agreed upon to the
parties' mutual satisfaction. It is understood that except for paragraphs 7, 8
and 9, above and paragraphs 11, 12 and 13 below (which are intended to be
legally binding on the parties hereto), this Letter is neither a binding
contract between us nor an agreement to enter into a Definitive Agreement, and,
except as aforesaid with respect to the paragraphs that are intended to be
legally binding on the parties hereto, (i) the parties will be jointly bound
only in accordance with the terms and conditions contained in the executed
Definitive Agreement, and (ii) no liability or obligation of any nature is
intended to be created by or among the parties hereto.
11. Expiration. This Letter (other than the provisions of paragraphs 9
above and 12 below) shall expire upon the expiration of the February 12 Letter
Agreement contemplated by paragraph 8 above unless extended as agreed by the
parties hereto.
12. Termination Fee. As further inducement to Apollo and Purchaser to
enter into this Letter, in the event a Definitive Agreement is not executed and
delivered on or before the expiration date of this Letter (the "Expiration
Date") and within six months of the Expiration Date (the "Tail Period") Matlack
enters into a definitive agreement with a third party with respect to an
Alternative Proposal (as defined below) with a purchase price per share of Stock
equal to or greater than the Purchase Price, Matlack will immediately pay to
Apollo by wire transfer a termination fee of $5.75 million; provided, that the
Tail Period shall be (i) increased to one year in the event (A) an Alternative
Proposal is publicly announced by a third party on or before the Expiration Date
or (B) Matlack shall have violated the terms of the February 12 Letter Agreement
or (ii) reduced to three months in the event a Definitive Agreement is not
entered into as a result of Apollo having either (A) determined not to proceed
with the Acquisition or (B) reduced
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the Purchase Price offered hereby. For the purposes of this Letter an
"Alternative Proposal" shall mean any proposal or offer (including, without
limitation, any proposal or offer to Matlack's stockholders) with respect to a
merger, acquisition, consolidation, share exchange or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any securities of, Matlack or any of its subsidiaries taken as a whole (it being
understood Matlack will not divest itself of any significant subsidiary during
the term of this Letter). Following the payment of the Termination Fee Matlack
will have no further obligation to Apollo under this Letter and Apollo will have
no further obligation to Matlack under this Letter.
13. Miscellaneous. This Letter may be executed in counterparts, each of
which shall be deemed to be an original but all or which shall constitute one
and the same document. This Letter shall be governed by the laws of the State of
Delaware without regard to conflicts of law principles thereof.
14. Support Agreements/Voting Agreement. Simultaneously herewith
Matlack and certain of its shareholders (the "Shareholders") are entering into a
Support Agreement #1 and Support Agreement #2 with Apollo and the Purchaser (the
"Support Agreements") with respect to the voting and transfer of their shares of
Stock and Apollo and Purchaser are entering into a Voting and Option Agreement
with another Shareholder (the "Voting Agreement").
15. Board Approval; No Trigger of Pill. The Board of Directors of the
Company has duly and validly taken all necessary corporate action, so that by
the execution and delivery hereof no restrictive provision of any "fair price,"
"moratorium," "control-share acquisition," "interested shareholders" or other
similar anti-takeover statute or regulation (including, without limitation,
Section 203 of the Delaware General Corporation Law) or restrictive provision of
any applicable anti-takeover provision in the Articles of Incorporation or
by-laws of the Company is, or at the closing of the transactions contemplated by
Section 1 hereof will be, applicable to the Company, Apollo or the Purchaser,
the Shares, the Merger or any other transaction contemplated by this Agreement,
the Support Agreements or the Voting Agreement. The Company shall have taken all
action necessary to render the Rights Agreement (the "Rights Agreement") by and
between the Company and Registrar and Transfer Company, dated as of June 14,
1989 and the rights issued pursuant to the Rights Agreement inapplicable to the
transactions contemplated hereby.
16. Stop Transfer. The Company agrees with, and covenants to, Apollo
and the Purchaser that the Company shall not register the transfer of any
certificate representing any Shareholder's Stock unless such transfer is made in
accordance with the terms of the Support Agreements and the Voting Agreement.
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If the foregoing proposal is acceptable to you, please indicate your
agreement by executing and returning to us one fully executed copy of this
Letter no later than 12:00 noon New York time, on February 25, 1998.
We look forward to working with you.
Very truly yours,
APOLLO MANAGEMENT, L.P.,
on behalf of itself and the Purchaser
By:__________________________________
Name:
Title:
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<PAGE>
Agreed to and accepted this
25th day of February, 1998
MATLACK SYSTEMS, INC.
By:________________________
Name:
Title:
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OPTION AGREEMENT
OPTION AGREEMENT, dated as of February 25, 1998, among Apollo Management,
L.P. ("Apollo"), Merger Co. (as defined below) and Rollins Properties, Inc.
("Stockholder").
WHEREAS, Apollo and Matlack Systems, Inc., a Delaware corporation (the
"Company") have, on the date hereof, entered into a letter of intent (the "LOI")
with respect to the acquisition of the Company by Palestra Acquisition Corp., a
Delaware corporation formed by Apollo ("Merger Co.");
WHEREAS, Apollo, Merger Co. and the Company, propose to enter into an
Agreement and Plan of Merger (as the same may be amended or supplemented, the
"Merger Agreement") providing for the merger of Merger Co. with the Company (the
"Merger");
WHEREAS, Stockholder is the record and beneficial owner of the number of
shares of Common Stock, par value $1.00 per share, of the Company (the "Company
Common Stock") set forth below such Stockholder's name on the signature page
hereto; such shares of the Company Common Stock, as such shares may be adjusted
by stock dividend, stock split, recapitalization, combination or exchange of
shares, merger, consolidation, reorganization or other change or transaction of
or by the Company, together with shares of the Company Common Stock that may be
acquired after the date hereof by such Stockholder, including shares of the
Company Common Stock issuable upon the exercise of options to purchase the
Company Common Stock (as the same may be adjusted as aforesaid), being
collectively referred to herein as the "Shares"; and
WHEREAS, as a condition to their willingness to enter into the LOI and the
Merger Agreement, Apollo and Merger Co. have requested that the Stockholder
enter into this Agreement;
NOW, THEREFORE, to induce Apollo and Merger Co. to enter into, and in
consideration of it entering into, the LOI and the Merger Agreement (as
applicable), and in consideration of the premises and the representations,
warranties and agreements contained herein, the parties agree as follows:
1. Purchase and Sale of Shares.
(a) Sale. The Stockholder hereby agrees to sell to Merger Co., upon
written notice from Merger Co. (the "Notice"), all such Stockholder's Shares at
a price per Share equal to $12.00; provided, that (i) one of the following shall
have occurred (A) a third party shall have
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made an Alternative Proposal (as defined in the LOI), (B) the Company materially
breaches its obligations under the LOI or the Merger Agreement or (C) the
approval of the Merger by the Company's stockholders shall not have been
obtained at a meeting duly convened therefor or at any adjournment thereof and
(ii) any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") shall have expired or been terminated.
(b) Closing. Subject to Section 1(a) hereof, the closing of the
purchase and sale of the Stockholder's Shares shall take place at the place,
time and date for the closing of the purchase by Merger Co. specified in the
Notice. At the closing, Stockholder shall deliver certificates representing such
Stockholder's Shares, in proper form for transfer, accompanied by stock powers
duly executed in blank against delivery of the Purchase Price of $12.00 per
share. Such delivery shall vest in Merger Co., and Stockholder will take any
additional actions reasonably requested by Merger Co. to perfect in Merger Co.,
good and marketable title to the Shares, free and clear of any lien, encumbrance
or voting agreement of any kind other than as may be created by this Agreement.
(c) Subsequent Sale. (i) In the event Merger Co. purchases the
Stockholder's Shares as contemplated by Section 1(b) above and subsequently
consummates the sale of such Shares pursuant to (i) an Alternative Proposal or
(ii) the Merger Agreement, in the event the transactions contemplated by the
Merger Agreement are consummated and the consideration per Share paid by Merger
Co. is increased to in excess of $12.00 per Share (a "Merger Co. Increase"),
then Merger Co. agrees to pay to Stockholder, on demand, an amount equal to all
Excess Consideration (determined in accordance with paragraphs (ii) and (iii)
below) of Merger Co. from the consummation of any Alternative Proposal for which
a definitive agreement is entered into within the time periods contemplated by
Section 7 below or a Merger Co. Increase.
(ii) For purposes of this Section 1(c), the "Excess Consideration" of
any Stockholder from any Alternative Proposal or Merger Co. Increase shall equal
the sum of (A)(1) the aggregate consideration received by such Stockholder
pursuant to such (x) Alternative Proposal or (y) Merger Co. Increase, valuing
any non-cash consideration (including any residual interest in the Company) at
its fair market value on the date of such consummation plus (2) the fair market
value (which shall not be less than the purchase price per share of Company
Common Stock set forth in the Alternative Proposal or a Merger Co. Increase) of
all Shares of such Stockholder disposed of after the termination of the LOI or
the Merger Agreement and prior to the date of such consummation, less (B) the
product of (x) the number of Shares held by such Stockholder on the date of
termination of the LOI or the Merger Agreement and (y) $12.00. An equivalent
calculation shall be made with respect to any options sold and included as part
of the calculation of Excess Consideration.
(iii) For purposes of this Section 1(c), the fair market value of any
non-cash consideration consisting of:
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(A) securities listed on a national securities exchange or
traded on the New York Stock Exchange shall be equal to the average closing
price per share of such security as reported on such exchange or New York Stock
Exchange for the five trading days after the date of determination; and
(B) consideration which is other than securities of the form
specified in clause (A) of this Section 1(c)(iii) shall be determined by a
nationally recognized independent investment banking firm mutually agreed upon
by the parties within 10 business days of the event requiring selection of such
banking firm; provided, however, that if the parties are unable to agree within
10 business days after the date of such event as to the investment banking firm,
then the parties shall each select one firm, and those firms shall select a
third investment banking firm, which third firm shall make such determination;
provided further, that the fees and expenses of such investment banking firm
shall be borne equally by Merger Co., on the one hand, and the Stockholder, on
the other hand. The determination of the investment banking firm shall be
binding upon the parties.
(d) Dividends and Split-Ups. In event of any change in the number of
issued and outstanding Shares by reason of any stock dividend, split-up,
recapitalization, merger, combination, conversion, exchange of shares, rights
plan or other change in the corporate or capital structure of the Company which
would have the effect of diluting the rights of Merger Co. hereunder or of
reducing the aggregate Purchase Price (as defined in the LOI) payable with
respect to the Shares hereunder, the number and kind of Shares subject to this
Agreement and the Purchase Price shall be appropriately adjusted.
2. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Merger Co. as follows:
(a) Authority. The Stockholder has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Stockholder. This Agreement has been duly executed and
delivered by the Stockholder and, assuming this Agreement constitutes a valid
and binding obligation of Merger Co., constitutes a valid and binding obligation
of the Stockholder enforceable against the Stockholder in accordance with its
terms. Except for the expiration or termination of the waiting periods under the
HSR Act and informational filings with the Securities and Exchange Commission,
neither the execution, delivery or performance of this Agreement by the
Stockholder nor the consummation by the Stockholder of the transactions
contemplated hereby will (i) require any filing with, or permit, authorization,
consent or approval of, any federal, state, local or municipal foreign or other
government or subdivision, branch, department or agency thereof or any
governmental or quasi-governmental authority of any nature, including any court
or other tribunal, (a "Governmental Entity"), (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default under, or give rise to any right of termination,
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amendment, cancellation or acceleration under, or result in the creation of any
Lien upon any of the properties or assets of the Stockholder under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
license, permit, concession, franchise, contract, agreement or other instrument
or obligation (a "Contract") to which the Stockholder is a party or by which the
Stockholder or any of the Stockholder's properties or assets, including the
Stockholder's Shares, may be bound or (iii) violate any judgment, order, writ,
preliminary or permanent injunction or decree (an "Order") or any statute, law,
ordinance, rule or regulation of any Governmental Entity (a "Law") applicable to
the Stockholder or any of the Stockholder's properties or assets, including the
Stockholder's Shares.
(b) The Shares. The Stockholder's Shares and the certificates
representing such Shares are now, and at all times during the term hereof will
be, held by such Stockholder, or by a nominee or custodian for the benefit of
such Stockholder, and the Stockholder has good and marketable title to such
Shares, free and clear of any Liens, proxies, voting trusts or agreements,
understandings or arrangements, except for any such Liens or proxies arising
hereunder. The Stockholder owns of record or beneficially no shares of the
Company Common Stock other than such Stockholder's Shares, as set forth on the
signature page of Stockholder hereto.
(c) Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of such Stockholder.
(d) Merger Agreement. The Stockholder understands and acknowledges that
Merger Co.is entering into the LOI and the Merger Agreement in reliance upon the
Stockholder's execution and delivery of this Agreement.
3. Representations and Warranties of Merger Co. Merger Co. hereby
represents and warrants to the Stockholder as follows:
(a) Authority. Merger Co. has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Merger Co. and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Merger Co. This Agreement has been duly executed and delivered by
Merger Co. and, assuming this Agreement constitutes a valid and binding
obligation of the Stockholder, constitutes a valid and binding obligation of
Merger Co. enforceable in accordance with its terms.
(b) Securities Act. The Shares will be acquired in compliance with, and
Merger Co. will not offer to sell or otherwise dispose of any Shares so acquired
by it in violation of the registration requirements of the Securities Act of
1933, as amended.
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(c) Financing. Merger Co. has, or will have at the time that any
payment is required to be made to the Stockholder hereunder, the funds necessary
to make such payment to the Stockholder.
4. Covenants of the Stockholder. Unless and until the occurrence of a
public announcement of an Alternative Proposal or a Merger Co. Increase in which
case the covenants set forth in this Section 4 shall terminate, the Stockholder
agrees as follows:
(a) The Stockholder shall not (i) sell, transfer, pledge, assign or
otherwise dispose of, or enter into any Contract, option or other arrangement
(including any profit sharing arrangement) or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of the Shares to any
person other than Merger Co. or Merger Co.'s designee, (ii) enter into any
voting arrangement, whether by proxy, voting agreement, voting trust, power-
of-attorney or otherwise, with respect to the Shares or (iii) take any other
action that would in any way restrict, limit or interfere with the performance
of its obligations hereunder or the transactions contemplated hereby.
(b) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval (including by
written consent) with respect to the Merger and the Merger Agreement is sought,
the Stockholder shall, including by initiating a written consent solicitation if
requested by Merger Co., vote (or cause to be voted) the Stockholder's Shares in
favor of the Merger, the adoption by the Company of the Merger Agreement and the
approval of the other transactions contemplated by the Merger Agreement. At any
meeting of stockholders of the Company or at any adjournment thereof or in any
other circumstances upon which the Stockholder's vote, consent or other approval
is sought, the Stockholder shall vote (or cause to be voted) the Stockholder's
Shares against (i) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of substantial
assets, reorganization, recapitalization, dissolution, liquidation or winding up
of or by the Company or any other Alternative Proposal (collectively,
"Alternative Transactions") or (ii) any amendment of the Company's Articles of
Incorporation or by-laws or other proposal or transaction involving the Company
or any of its subsidiaries, which amendment or other proposal or transaction
would in any manner impede, frustrate, prevent or nullify, the Merger, the
Merger Agreement or any of the other transactions contemplated by the Merger
Agreement (collectively, "Frustrating Transactions").
5. Further Assurances. The Stockholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as Merger
Co. may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement and to vest the power to vote the
Stockholder's Shares as contemplated by Section 4. Merger Co. agrees to use
reasonable efforts to take, or cause to be taken, all actions necessary to
comply promptly with all legal requirements that may be imposed with respect to
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the transactions contemplated by this Agreement (including legal requirements of
the HSR Act).
6. Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and assigns. Notwithstanding
the foregoing, each of Apollo and Merger Co. shall have the right to assign its
rights, interests and obligations hereunder to Apollo Investment Fund III,
Apollo Investment Fund IV (or any funds under direct or indirect common control)
or MTL Inc. and any of their respective affiliates at its sole option and
without the prior written consent of the other parties hereto; provided that no
such assignment shall relieve Apollo of its obligations hereunder.
Notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
7. Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the date that is 10 business days after
the later of (i) the date which is (x) six months from the date hereof or (y) if
the Merger Agreement is executed, nine months from the date of the Merger
Agreement, (ii) the consummation of an Alternative Proposal as contemplated by
Section 1(c)(i) above if a definitive agreement is in place on or before the
expiration of the time period contemplated by clause (i) immediately above and
(iii) the date on which all waiting periods under the HSR Act applicable to the
purchase of Shares pursuant to Section 1 shall have expired or been terminated.
Nothing in this Section 7 shall relieve any party from liability for willful
breach of this Agreement. Notwithstanding the foregoing, if Merger Co. shall
purchases Shares pursuant to Section 1 hereof, Sections 2, 3 and 6-10 shall
survive any termination of this Agreement.
8. General Provisions.
(a) Payments. All payments required to be made to any party to this
Agreement shall be made by Wire Transfer to an account designated by such party
at least one trading day prior to such payment.
(b) Expenses. Subject to the terms of the Merger Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
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(d) Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given upon receipt to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) if to Merger Co., to
Joshua Harris
c/o Apollo Management, L.P.
1301 Avenue of the Americas
New York, New York 10019
Facsimile: (212) 261-4102
with a copy to:
Morton A. Pierce, Esq.
Douglas L. Getter, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Facsimile: (212) 259-6333
and
(ii) if to the Stockholder, to the address set forth under the name of the
Stockholder on the signature page hereto.
with a copy to:
Michael B. Kinnard, Esq.
Vice President, General Counsel and Secretary
Rollins Truck Leasing, Inc.
2200 Concord Pike
Wilmington, DE 19803
Facsimile: (302) 426-3555
(e) Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(f) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
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(g) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
(h) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
(i) Publicity. Except as otherwise required by law, court process or
the rules of a national securities exchange or the Nasdaq National Market or as
contemplated or provided in the Merger Agreement, for so long as this Agreement
is in effect, neither the Stockholder nor Merger Co. shall issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement or the Merger Agreement without
the consent of the other parties, which consent shall not be unreasonably
withheld; provided, that in any case, the Stockholder will not use the name of
Apollo or any affiliate thereof without Apollo's written permission and will
discuss the term and contents of any such release with Apollo prior to
dissemination.
9. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer. The Stockholder signs solely in his or her capacity as the record
holder and beneficial owner of, or the trustee of a trust whose beneficiaries
are the beneficial owners of, the Stockholder's Shares and nothing herein shall
limit or affect any actions taken by the Stockholder in its capacity as an
officer or director of the Company to the extent specifically permitted by the
Merger Agreement.
10. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in a court of the United States. This
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto waives any right to trial by
jury with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby.
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11. Apollo Agreements.
(a) Further Action. Apollo, on behalf of Merger Co., covenants and
agrees for the benefit of the Stockholders that, in the event the Merger
Agreement is executed, it shall use reasonable efforts, subject to the
fulfillment of each of the conditions of performance set forth therein, to
perform such acts and execute such documents as may be reasonably required to
effect the Merger. Further in the event the Merger Agreement is consummated, the
parties acknowledge that the Shareholders will be entitled to the consideration
payable thereunder.
(b) Guarantee. Apollo, on behalf of certain investment funds under
management, hereby guaranties the obligations created by the covenants of Merger
Co. set forth in Sections 1(c)(v) and 3(c) above, it being understood that any
such guaranties and related obligations shall be non-recourse to the partners,
whether past, present or future, of Apollo and/or its investment funds under
management.
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<PAGE>
IN WITNESS WHEREOF, each of Apollo and Merger Co. has caused this
Agreement to be signed by its officer thereunto duly authorized and the
appropriate officer of the Stockholder has signed this Agreement, all as of the
date first written above.
APOLLO MANAGEMENT, L.P.
By:____________________________
Joshua Harris
Title:
PALESTRA ACQUISITION CORP.
By:____________________________
Joshua Harris
President
ROLLINS PROPERTIES, INC.
By:____________________________
Name:
Title:
Address:_______________________
_______________________________
Number of shares of
Company Common Stock: 600,000
10
SUPPORT AGREEMENT #1
SUPPORT AGREEMENT #1, dated as of February 25, 1998, among Apollo
Management, L.P. ("Apollo"), Merger Co. (as defined below) and the persons
listed on Schedule A hereto (each a "Stockholder", and, collectively, the
"Stockholders").
WHEREAS, Apollo and Matlack Systems, Inc., a Delaware corporation (the
"Company") have, on the date hereof, entered into a letter of intent (the "LOI")
with respect to the acquisition of the Company by Palestra Acquisition Corp., a
Delaware corporation formed by Apollo ("Merger Co.");
WHEREAS, subject to the terms and conditions of the LOI, Apollo, Merger
Co. and the Company, propose to enter into an Agreement and Plan of Merger (as
the same may be amended or supplemented, the "Merger Agreement") providing for
the merger of Merger Co. with the Company (the "Merger");
WHEREAS, each Stockholder is the record and beneficial owner of the
number of shares of Common Stock, par value $1.00 per share, of the Company (the
"Company Common Stock") set forth opposite such Stockholder's name on Schedule A
hereto; such shares of the Company Common Stock, as such shares may be adjusted
by stock dividend, stock split, recapitalization, combination or exchange of
shares, merger, consolidation, reorganization or other change or transaction of
or by the Company, together with shares of the Company Common Stock that may be
acquired after the date hereof by such Stockholder, including shares of the
Company Common Stock issuable upon the exercise of options to purchase the
Company Common Stock (as the same may be adjusted as aforesaid), being
collectively referred to herein as the "Shares"; and
WHEREAS, as a condition to their willingness to enter into the LOI and
the Merger Agreement, Apollo and Merger Co. have requested that the Stockholders
enter into this Agreement;
NOW, THEREFORE, to induce Apollo and Merger Co. to enter into, and in
consideration of it entering into, the LOI and the Merger Agreement (as
applicable), and in consideration of the premises and the representations,
warranties and agreements contained herein, the parties agree as follows:
1. Purchase and Sale of Shares.
(a) Sale. Each Stockholder hereby severally and not jointly agrees to
sell to Merger Co., upon written notice from Merger Co. (the "Notice"), all such
Stockholder's Shares at a price per Share equal to $12.00; provided, that (i)
one of the following shall have occurred: (A) a third party shall have made an
Alternative Proposal (as defined in the LOI), (B) the Company materially
breaches its obligations under the LOI or the Merger Agreement or (C)
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the approval of the Merger by the Company's Stockholders shall not have been
obtained at a meeting duly convened therefor or at any adjournment thereof and
(ii) any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") shall have expired or been terminated.
(b) Closing. Subject to Section 1(a) hereof, the closing of the
purchase and sale of the Stockholder's Shares shall take place at the place,
time and date for the closing of the purchase by Merger Co. specified in the
Notice. At the closing, each Stockholder shall deliver certificates representing
such Stockholder's Shares, in proper form for transfer, accompanied by stock
powers duly executed in blank against delivery of $12.00 per Share. Such
delivery shall vest in Merger Co., and each Stockholder will take any additional
actions reasonably requested by Merger Co. to perfect in Merger Co., good and
marketable title to the Shares, free and clear of any lien, encumbrance or
voting agreement of any kind, other than as created by this Agreement.
(c) Excess Consideration. (i) Following an Alternative Proposal or in
the event the transactions contemplated by the Merger Agreement are consummated
and the consideration per Share paid by Merger Co. is increased to in excess of
$12.00 per Share (a "Merger Co. Increase"), Merger Co. may elect, by notice to
the Stockholders, in lieu of purchasing such Stockholder's Shares, to receive
from such Stockholder, and each Stockholder hereby agrees to pay to Merger Co.
on demand, an amount equal to one-half of all Excess Consideration (determined
in accordance with Section 1(c)(ii) below) of such Stockholder from the
consummation of any Alternative Proposal for which a definitive agreement is
entered into within the time periods contemplated by Section 8 below or pursuant
to a Merger Co. Increase.
(ii) For purposes of this Section 1(c), the "Excess Consideration" of
any Stockholder from any Alternative Proposal or a Merger Co. Increase shall
equal the sum of (A)(1) the aggregate consideration received by such Stockholder
pursuant to such (x) Alternative Proposal or (y) Merger Co. Increase valuing any
non-cash consideration (including any residual interest in the Company) at its
fair market value on the date of such consummation plus (2) the fair market
value (which shall not be less than the purchase price per share of Company
Common Stock set forth in the Alternative Proposal or a Merger Co. Increase) of
all Shares of such Stockholder disposed of after the termination of the LOI or
the Merger Agreement and prior to the date of such consummation, less (B) the
product of (x) the number of Shares held by such Stockholder on the date of
termination of the LOI or the Merger Agreement and (y) $12.00. An equivalent
calculation shall be made with respect to any options sold and included as part
of the calculation of Excess Consideration.
(iii) For purposes of this Section 1(c), the fair market value of any
non-cash consideration consisting of:
(A) securities listed on a national securities exchange or
traded on the New York Stock Exchange shall be equal to the average closing
price per share of such security as
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<PAGE>
reported on such exchange or New York Stock Exchange for the five trading days
after the date of determination; and
(B) consideration which is other than securities of the form
specified in clause (A) of this Section 1(c)(iii) shall be determined by a
nationally recognized independent investment banking firm mutually agreed upon
by the parties within 10 business days of the event requiring selection of such
banking firm; provided, however, that if the parties are unable to agree within
10 business days after the date of such event as to the investment banking firm,
then the parties shall each select one firm, and those firms shall select a
third investment banking firm, which third firm shall make such determination;
provided further, that the fees and expenses of such investment banking firm
shall be borne equally by Merger Co., on the one hand, and the Stockholders, on
the other hand. The determination of the investment banking firm shall be
binding upon the parties.
(iv) Any payment of Excess Consideration under this Section 1(c) shall
be paid by wire transfer of same day funds to an account designated by Merger
Co. ("Wire Transfer"). If all or a portion of the consideration received for the
Shares by the Stockholder is in the form of non-cash consideration, the
Stockholder shall pay to Merger Co. the Excess Consideration on such portion by
either, at the Stockholder's election, (i) transferring to Merger Co. Merger
Co.'s pro rata share of such non-cash consideration (which transfer shall be
made immediately following the determination of the value of such non-cash
consideration) or (ii) selling such non-cash consideration (which sale shall be
effected as soon as practicable and the allocable portion of the proceeds of
which shall be paid to Merger Co. immediately following the settlement of such
sale) and remitting the cash proceeds to Merger Co. by Wire Transfer.
(v) In the event Merger Co. purchases the Stockholder's Shares as
contemplated by Section 1(b) above and consummates the sale of such Shares
pursuant to an Alternative Proposal or a Merger Co. Increase, then Merger Co.
shall pay to the Stockholders pro rata, on demand, an amount equal to one half
the Consideration of Merger Co. from the consummation of the Alternative
Proposal for which a definitive agreement is entered into within the time
periods contemplated by Section 8 below or pursuant to a Merger Co. Increase.
Excess Consideration shall be calculated and payment shall be made in the same
manner (appropriately adjusted) as provided in paragraphs (ii), (iii) and (iv)
immediately preceding (it being understood the election set forth in paragraph
(iv) preceding shall be at Merger Co.'s election).
(d) Dividends and Split-Ups. In event of any change in the number of
issued and outstanding Shares by reason of any stock dividend, split-up,
recapitalization, merger, combination, conversion, exchange of shares, rights
plan or other change in the corporate or capital structure of the Company which
would have the effect of diluting the rights of Merger Co. hereunder or of
reducing the aggregate Purchase Price (as defined in the LOI) payable with
respect to the Shares hereunder, the number and kind of Shares subject to this
Agreement and the Purchase Price shall be appropriately adjusted.
3
<PAGE>
2. Representations and Warranties of the Stockholders. Each Stockholder
hereby, severally and not jointly, represents and warrants to Merger Co. as
follows:
(a) Authority. The Stockholder has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Stockholder. This Agreement has been duly executed and
delivered by the Stockholder and, assuming this Agreement constitutes a valid
and binding obligation of Merger Co., constitutes a valid and binding obligation
of the Stockholder enforceable against the Stockholder in accordance with its
terms. Except for the expiration or termination of the waiting periods under the
HSR Act and informational filings with the Securities and Exchange Commission,
neither the execution, delivery or performance of this Agreement by the
Stockholder nor the consummation by the Stockholder of the transactions
contemplated hereby will (i) require any filing with, or permit, authorization,
consent or approval of, any federal, state, local, municipal or foreign or other
government or subdivision, branch, department or agency thereof or any
governmental or quasi-governmental authority of any nature, including any court
or other tribunal, (a "Governmental Entity"), (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default under, or give rise to any right of termination, amendment, cancellation
or acceleration under, or result in the creation of any Lien upon any of the
properties or assets of the Stockholder under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, permit,
concession, franchise, contract, agreement or other instrument or obligation (a
"Contract") to which the Stockholder is a party or by which the Stockholder or
any of the Stockholder's properties or assets, including the Stockholder's
Shares, may be bound or (iii) violate any judgment, order, writ, preliminary or
permanent injunction or decree (an "Order") or any statute, law, ordinance, rule
or regulation of any Governmental Entity (a "Law") applicable to the Stockholder
or any of the Stockholder's properties or assets, including the Stockholder's
Shares.
(b) The Shares. The Stockholder's Shares and the certificates
representing such Shares are now, and at all times during the term hereof will
be, held by such Stockholder, or by a nominee or custodian for the benefit of
such Stockholder, and the Stockholder has good and marketable title to such
Shares, free and clear of any Liens, proxies, voting trusts or agreements,
understandings or arrangements, except for any such Liens or proxies arising
hereunder. Except as set forth on Schedule B, the Stockholder owns of record or
beneficially no shares of the Company Common Stock other than such Stockholder's
Shares and shares of the Company Common Stock issuable upon the exercise of
Company stock options, as set forth on Schedule A hereto.
(c) Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of such Stockholder.
4
<PAGE>
(d) Merger Agreement. The Stockholder understands and acknowledges that
Merger Co. is entering into the LOI and the Merger Agreement in reliance upon
the Stockholder's execution and delivery of this Agreement.
3. Representations and Warranties of Merger Co. Merger Co. hereby
represents and warrants to the Stockholders as follows:
(a) Authority. Merger Co. has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Merger Co. and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Merger Co. This Agreement has been duly executed and delivered by
Merger Co. and, assuming this Agreement constitutes a valid and binding
obligation of the Stockholders, constitutes a valid and binding obligation of
Merger Co. enforceable in accordance with its terms.
(b) Securities Act. The Shares will be acquired in compliance with, and
Merger Co. will not offer to sell or otherwise dispose of any Shares so acquired
by it in violation of the registration requirements of the Securities Act of
1933, as amended.
(c) Financing. Merger Co. has, or will have at the time that any
payment is required to be made to any Stockholder hereunder, the funds necessary
to make such payment to such Stockholder.
4. Covenants of the Stockholders. Each Stockholder, severally and not
jointly, agrees as follows:
(a) The Stockholder shall not, except as contemplated by the terms of
this Agreement, (i) sell, transfer, pledge, assign or otherwise dispose of, or
enter into any Contract, option or other arrangement (including any profit
sharing arrangement) or understanding with respect to the sale, transfer,
pledge, assignment or other disposition of the Shares to any person other than
Merger Co. or Merger Co.'s designee, (ii) enter into any voting arrangement,
whether by proxy, voting agreement, voting trust, power-of-attorney or
otherwise, with respect to the Shares or (iii) take any other action that would
in any way restrict, limit or interfere with the performance of its obligations
hereunder or the transactions contemplated hereby.
(b) At any meeting of Stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval (including by
written consent) with respect to the Merger and the Merger Agreement is sought,
each Stockholder shall as requested by Merger Co. (including, without
limitation, by cooperating with Merger Co. with respect to the irrevocable proxy
granted to Merger Co. pursuant to Section 5 below), vote (or cause to be voted)
such Stockholder's Shares in favor of the Merger, the adoption by the Company of
the Merger Agreement and the approval of the other transactions contemplated by
the Merger
5
<PAGE>
Agreement. At any meeting of Stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which the Stockholder's vote, consent
or other approval is sought, such Stockholder shall as requested by Merger Co.
as provided above vote (or cause to be voted) such Stockholder's Shares against
(i) any merger agreement or merger (other than the Merger Agreement and the
Merger), consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the Company or
any other Alternative Proposal (collectively, "Alternative Transactions") or
(ii) any amendment of the Company's Articles of Incorporation or by-laws or
other proposal or transaction involving the Company or any of its subsidiaries,
which amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify, the Merger, the Merger Agreement or any of the
other transactions contemplated by the Merger Agreement (collectively,
"Frustrating Transactions").
5. Grant of Irrevocable Proxy Coupled with an Interest; Appointment of
Proxy.
(a) Each Stockholder hereby irrevocably grants to, and appoints, Joshua
Harris, and any other individual who shall hereafter be designated by Merger
Co., such Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Stockholder, to vote
such Stockholder's Shares, or grant a consent or approval in respect of such
Shares, at any meeting of Stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which their vote, consent or other
approval is sought, (i) in favor of the Merger, the adoption by the Company of
the Merger Agreement and the approval of the other transactions contemplated by
the Merger Agreement and (ii) against any Alternative Transaction or Frustrating
Transaction.
(b) Each Stockholder represents that any proxies heretofore given in
respect of such Stockholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) Each Stockholder hereby affirms that the proxy set forth in this
Section 6 is coupled with an interest and is irrevocable until such time as this
Agreement terminates in accordance with its terms. Such Stockholder hereby
further affirms that the irrevocable proxy is given in connection with the
execution of the Merger Agreement, and that such irrevocable proxy is given to
secure the performance of the duties of such Stockholder under this Agreement.
Such Stockholder hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 212 of the Delaware General Corporation Law. Such irrevocable proxy
shall be valid until the termination of this Agreement pursuant to Section 8.
6. Further Assurances. Each Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Merger Co. may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement and to vest the power to vote
such Stockholder's Shares as contemplated by Section 5. Merger Co. agrees to use
reasonable efforts to take, or cause to be taken, all
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<PAGE>
actions necessary to comply promptly with all legal requirements that may be
imposed with respect to the transactions contemplated by this Agreement
(including legal requirements of the HSR Act).
7. Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and assigns. Notwithstanding
the foregoing, each of Apollo and Merger Co. shall have the right to assign its
rights, interests and obligations hereunder to Apollo Investment Fund III,
Apollo Investment Fund IV (or any funds under direct or indirect common control)
or MTL Inc. and any of their respective affiliates at its sole option and
without the prior written consent of the other parties hereto; provided that no
such assignment shall relieve Apollo of its obligations hereunder.
Notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
8. Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the date that is 10 business days after
the later of (i) the date which is (x) six months from the date hereof or (y) if
the Merger Agreement is executed nine months from the date of the Merger
Agreement, (ii) the consummation of an Alternative Proposal as contemplated by
Section 1(c)(i) above if a definitive agreement is in place on or before the
expiration of the time period contemplated by clause (i) immediately above and
(iii) the date on which all waiting periods under the HSR Act applicable to the
purchase of Shares pursuant to Section 1 shall have expired or been terminated.
Nothing in this Section 8 shall relieve any party from liability for willful
breach of this Agreement. Notwithstanding the foregoing, if Merger Co. shall
purchases Shares pursuant to Section 1 hereof, Sections 2,3 and 7-11 shall
survive any termination of this Agreement.
9. General Provisions.
(a) Payments. All payments required to be made to any party to this
Agreement shall be made by Wire Transfer to an account designated by such party
at least one trading day prior to such payment.
(b) Expenses. Subject to the terms of the Merger Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
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(d) Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given upon receipt to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) if to Merger Co., to
Joshua Harris
c/o Apollo Management, L.P.
1301 Avenue of the Americas
New York, New York 10019
Facsimile: (212) 261-4102
with a copy to:
Morton A. Pierce, Esq.
Douglas L. Getter, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Facsimile: (212) 259-6333
and
(ii) if to a Stockholder, to the address set forth under the name of such
Stockholder on Schedule A hereto
with a copy to:
Michael B. Kinnard, Esq.
Vice President, General Counsel and Secretary
Matlack Systems, Inc.
2000 Concord Pike
Wilmington, DE 19803
Facsimile: (302) 426-3555
(e) Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(f) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when
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two or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
(g) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
(h) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
(i) Publicity. Except as otherwise required by law, court process or
the rules of a national securities exchange or the Nasdaq National Market or as
contemplated or provided in the Merger Agreement, for so long as this Agreement
is in effect, neither any Stockholder nor Merger Co. shall issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement or the Merger Agreement without
the consent of the other parties, which consent shall not be unreasonably
withheld.
10. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer. Each Stockholder signs solely in his or her capacity as the record
holder and beneficial owner of, or the trustee of a trust whose beneficiaries
are the beneficial owners of, such Stockholder's Shares and nothing herein shall
limit or affect any actions taken by a Stockholder in its capacity as an officer
or director of the Company to the extent specifically permitted by the Merger
Agreement.
11. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in a court of the United States. This
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto waives any right to trial by
jury with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby.
12. Apollo Agreements.
(a) Further Action. Apollo, on behalf of Merger Co., covenants and
agrees for the benefit of the Stockholders that, in the event the Merger
Agreement is executed, it shall use reasonable efforts, subject to the
fulfillment of each of the conditions of performance set forth therein, to
perform such acts and execute such documents as may be reasonably required to
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effect the Merger. Further in the event the Merger Agreement is consummated, the
parties acknowledge that the Shareholders will be entitled to the consideration
payable thereunder.
(b) Guarantee. Apollo, on behalf of certain investment Funds under
management, hereby guaranties the obligations created by the covenants of Merger
Co. set forth in Sections 1(c)(v) and 3(c) above, it being understood that any
such guaranties and relating obligations shall be non-recourse to the partners,
whether past, present or future, of Apollo and/or its investment funds under
management.
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IN WITNESS WHEREOF, each of Apollo and Merger Co. has caused this
Agreement to be signed by its officer thereunto duly authorized and each
Stockholder (or the appropriate officer of a Stockholder) has signed this
Agreement, all as of the date first written above.
APOLLO MANAGEMENT, L.P.
By:____________________________
Joshua Harris
Title:
PALESTRA ACQUISITION CORP.
By:____________________________
Joshua Harris
President
STOCKHOLDERS:
_______________________________
John W. Rollins, Sr.
_______________________________
John W. Rollins, Jr.
_______________________________
Henry B. Tippie
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SCHEDULE A
Number of shares of Number of options to
the Company Common purchase the Company
Stockholder and Address Stock Common Stock
----------------------- ------------------- --------------------
John W. Rollins, Sr. 1,003,684 -0-
The Rollins Plaza
Wilmington, DE 19803
John W. Rollins, Jr. 119,825* -0-
The Rollins Plaza
Wilmington, DE 19803
Henry B. Tippie 300,000 -0-
The Rollins Plaza
Wilmington, DE 19803
- --------
* Mr. Rollins, Jr. will use reasonably efforts to cause an additional
61,500 shares of Company Common Stock to be subject to this Agreement as
promptly as practical after the date hereof.
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