SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 17, 1999
Rollins Truck Leasing Corp.
(Exact name of registrant as specified in its charter)
Delaware 1-5728 51-0074022
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File number) Identification No.)
One Rollins Plaza, Wilmington, Delaware 19803
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (302) 426-2700
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2.
(a) Acquisition of Assets
On January 3, 2000, the Company, through its wholly owned and principal
operating subsidiary Rollins Leasing Corp., acquired all of the issued and
outstanding shares of capital stock of UPS Truck Leasing from the UPS
Logistics Group, a unit of United Parcel Service, Inc., UPS Truck Leasing
provides full-service lease and rental services on more than 10,000 vehicles
to 4,000 customers throughout the United States. The Company intends to
continue the business of UPS Truck Leasing.
The purchase price of $208,016,323 consisted of a cash payment of
$188,016,323 and the issuance of 2,000,000 shares of the Company's $1.00 par
value common stock, which were valued pursuant to the terms of the stock
purchase agreement at $20,000,000. The 2,000,000 shares of stock will
represent approximately 3.5% of the Company's outstanding shares and UPS
Logistics has agreed to vote its shares either (a) in accordance with the
recommendations of the Company's Board of Directors or (b) on the same
percentage basis as all other shareholders of the Company. The Company has
agreed to provide UPS Logistics customary demand and piggy-back registration
rights in connection with the issuance of these shares. The voting and
registration obligations will continue for two years following the
termination of the strategic alliance agreement, referred to below in Item
5(a). The Company's obligation to allow the UPS Logistics' board nominee to
serve on its Board, should they exercise their right to a board seat pursuant
to the strategic alliance agreement, will terminate if UPS Logistics ceases
to own at lease 1,000,000 shares of the Company's Common Stock.
Financing for the cash portion of the transaction was provided from
borrowings under the Company's revolving credit facilities and the proceeds
from the sale of the assets and business of Rollins Logistics Inc., as more
fully described in Item 2.(b) below.
The acquisition is being accounted for under the purchase method of
accounting.
(b) Disposition of Assets
On January 3, 2000, Rollins Logistics Inc., the Company's dedicated
carriage and logistics subsidiary, sold its assets and business to Worldwide
Dedicated Services, Inc., a UPS Logistics Group company, for cash of
$67,220,000.
ITEM 5. OTHER EVENTS.
(a) In connection with the acquisition and disposition of assets as
more fully described in Item 2.(a) and Item 2.(b), above, on January 1, 2000
the Company and Rollins Leasing Corp., its principal operating subsidiary,
entered into a strategic alliance agreement with Worldwide Dedicated
Services, Inc. and UPS Logistics Group, Inc. The alliance is for an initial
term of five years and during this term, UPS Logistics reserves the right to
appoint a nominee of UPS Logistics to serve on the Company's Board. UPS
Logistics has not yet indicated whether it will seek to exercise this right
or the identity of any prospective nominee.
Under the terms of the agreement, Rollins Leasing Corp. becomes the
preferred provider of lease and rental vehicles and other ancillary services
to Worldwide Dedicated Services, Inc. In turn, Worldwide Dedicated Services,
Inc. becomes the preferred provider of logistics management and dedicated
logistics services to Rollins Leasing Corp. and its customers.
(b) On December 17, 1999, Rollins Leasing Corp. amended its credit
agreement with First Union National Bank and BankBoston, N.A. to increase its
commitment amount to $170,000,000 in the aggregate and $85,000,000 with
respect to each lender.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statement of business acquired
The business acquisition described in Item 2.(a), above does not
constitute a significant subsidiary. Consequently, financial statements
are not required to be presented.
(b) Pro-forma financial information
The business acquisition described in Item 2.(a), above, does not
constitute a significant subsidiary. Consequently, pro forma financial
information required pursuant to Article 11 of Regulation S-X has not
been presented.
(c) Exhibits.
Exhibit index
Exhibit
Number
4(a) Stock Purchase Agreement by and between UPS Logistics Group,
Inc., UPS Truck Leasing, Inc., Rollins Truck Leasing Corp. and
Rollins Leasing Corp. as of November 12, 1999.
4(b) Investor Rights Agreement by and between Rollins Truck Leasing
Corp., United Parcel Service of America, Inc. and UPS
Logistics Group, Inc. as of January 1, 2000.
4(c) Asset Purchase Agreement by and among Worldwide Dedicated
Services, Inc., Rollins Truck Leasing Corp., Rollins Logistics
Inc., Rollins Dedicated Carriage Services, Inc. and Rollins
Transportation Systems, Inc., as of November 12, 1999.
4(d) Strategic Alliance Agreement dated as of January 1, 2000 in
connection with the closing under the Stock Purchase Agreement
filed as Exhibit 4(a), above.
4(e) Bank Credit Agreement by and between Rollins Leasing Corp.,
First Union National Bank and BankBoston, N.A., dated as of
December 11, 1998.
4(f) Amendment No. 1, dated as of February 4, 1999, to the Bank
Credit Agreement by and between Rollins Leasing Corp., First
Union National Bank and BankBoston, N.A.
4(g) Amendment No. 2, dated as of June 15, 1999, to the Bank Credit
Agreement by and between Rollins Leasing Corp., First Union
National Bank and BankBoston, N.A.
4(h) Amendment No. 3 to the Bank Credit Agreement dated December
11, 1998 (as previously amended by Amendment No. 1 dated
February 4, 1999 and Amendment No. 2 dated June 15, 1999),
dated as of October 28, 1999, by and between Rollins Leasing
Corp., First Union National Bank and BankBoston, N.A.
4(i) Amendment No. 4, to the Bank Credit Agreement dated December
11, 1998 (as previously amended by Amendment No. 1, dated
February 4, 1999, Amendment No. 2, dated June 15, 1999 and
Amendment No. 3 dated, October 28, 1999), dated as of December
17, 1999, by and between Rollins Leasing Corp., First Union
National Bank and BankBoston, N.A.
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 thereunto duly authorized.
Rollins Truck Leasing Corp.
DATE: January 18, 2000 BY: /s/ Patrick J. Bagley
Patrick J. Bagley
Vice President-Finance and Treasurer
STOCK PURCHASE AGREEMENT
by and between
UPS LOGISTICS GROUP, INC.,
UPS TRUCK LEASING, INC.
ROLLINS TRUCK LEASING CORP.
and
ROLLINS LEASING CORP.
As of November 12, 1999
<PAGE>
TABLE OF CONTENTS
ARTICLE I TRANSFER OF COMPANY SHARES; PURCHASE PRICE 2
Section 1.1 Purchase and Sale 2
Section 1.2 Purchase Price 3
Section 1.3 Payment of Purchase Price 3
Section 1.4 Target Working Capital 4
Section 1.5 Adjustment of Purchase Price 4
Section 1.6 Closing 7
Section 1.7 Deliveries by Seller 7
Section 1.8 Deliveries by Buyer 8
ARTICLE II RELATED MATTERS 9
Section 2.1 Use of Seller's Name and Logos 9
Section 2.2 No Ongoing or Transition Services 9
Section 2.3 Distributions 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELL 10
Section 3.1 Organization 10
Section 3.2 Authorization 11
Section 3.3 Capital Stock 12
Section 3.4 Ownership of the Common Stock 12
Section 3.5 Consents and Approvals; No Violations 12
Section 3.6 Financial Statements 13
Section 3.7 Absence of Material Adverse Effect 14
Section 3.8 Title, Ownership and Related Matters 15
Section 3.9 Intellectual Property 17
Section 3.10 Computer Software 17
Section 3.11 Year 2000 Compliance 17
Section 3.12 Litigation 18
Section 3.13 Compliance with Applicable Law 18
Section 3.14 Certain Contracts and Arrangements 18
Section 3.15 Employee Benefit Plans; ERISA 19
Section 3.16 Labor Matters 20
Section 3.17 Taxes 21
Section 3.18 Environmental 22
Section 3.19 Officers; Bank Accounts 23
Section 3.20 Certain Fees 23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER 23
Section 4.1 Organization and Authority of Buyer 24
Section 4.2 Consents and Approvals; No Violations 24
Section 4.3 Litigation 25
Section 4.4 Certain Fees 25
Section 4.5 Certain Filings 26
ARTICLE V COVENANTS 27
Section 5.1 Conduct of the Company's Business 27
Section 5.2 Access to Information 28
Section 5.3 Consents 29
Section 5.4 Reasonable Best Efforts 29
Section 5.5 Public Announcements 29
Section 5.6 Covenant to Satisfy Conditions 30
Section 5.7 Employees; Employee Benefits 30
Section 5.8 Certain Tax Matters 32
Section 5.9 Supplemental Disclosure 40
Section 5.10 Guarantees 41
Section 5.11 Investigation by Buyer 41
Section 5.12 UPS Owned Facilities 42
Section 5.13 Rental Fleet Sales 42
Section 5.14 Outstanding Debt 44
Section 5.15 Reimbursement Program 44
Section 5.16 Additional Actions 44
Section 5.17 Off-Balance Sheet Financing 45
ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE PARTIES 45
Section 6.1 Conditions to Each Party's Obligation 45
Section 6.2 Conditions to Obligations of Seller 46
Section 6.3 Conditions to Obligations of Buyer 48
ARTICLE VII TERMINATION 49
Section 7.1 Termination 49
Section 7.2 Procedure and Effect of Termination 50
ARTICLE VIII SURVIVAL OF REPRESENTATIONS 51
Section 8.1 Survival of Representations, Warranties
and Agreements 52
ARTICLE IX INDEMNIFICATION 52
Section 9.1 Indemnification Obligations of Seller 52
Section 9.2 Indemnification Procedure 54
Section 9.3 Orlando North VOH Plume
Indemnification 56
Section 9.4 Liability Limits 57
Section 9.5 Claims Period 57
Section 9.6 Exclusive Remedies 58
ARTICLE X MISCELLANEOUS 58
Section 10.1 Fees and Expenses 58
Section 10.2 Further Assurances 59
Section 10.3 Notices 59
Section 10.4 Severability 60
Section 10.5 Binding Effect; Assignment 61
Section 10.6 No Third Party Beneficiaries 61
Section 10.7 Interpretation 61
Section 10.8 Jurisdiction and Consent to Service 62
Section 10.9 Entire Agreement 62
Section 10.10 Governing Law 62
Section 10.11 Specific Performance 63
Section 10.12 Counterparts 63
Section 10.13 Amendment, Modification and Waiver 63
Section 10.14 Knowledge 63
Section 10.15 Schedules and Exhibits 64
Section 10.16 Arbitration 64
DEFINED TERMS
Term Section
Acceptance Notice. . . . . . . . . . . . . . . . . . . . . . 1.5(c)
Access Agreement . . . .. . . . . . . . . . . . . . . . . . . 9.3(c)
Adjustment Event . . . .. . . . . . . . . . . . . . . . . . . 1.3(a)
Affiliate. . . . . . . .. . . . . . . . . . . . . . . . . . .10.7(c)
Agreement. . . . . . . .. . . . . . . . . . . . . . . . . . Preamble
Alliance Agreement . . .. . . . . . . . . . . . . . . . . . . 6.2(d)
Allocation . .. . . . . . . . . . . . . . . . . . . . . . . . 5.8(b)
Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Buyer Auditor. . . . . . . . . . . . . . . . . . . . . . . . 1.5(b)
Buyer Basket . . . . . . . . . . . . . . . . . . . . . . . . .9.4
Buyer Indemnified Parties. . . . . . . . . . . . . . . . . . .9.1
Buyer Losses . . . . . . . . . . . . . . . . . . . . . . . .9.1
Buyer Tax Group. . . . . . . . . . . . . . . . . . . . . . . .5.8(a)(i)
Cap Amount . . . . . . . . . . . . . . . . . . . . . . . . . .9.4
Claims Period. . . . . . . . . . . . . . . . . . . . . . . . .9.5
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 1.6(a)
Closing Date Working Capital . . . . . . . . . . . . . . . . 1.5(a)
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.9
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 1.3(a)
Company. . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Material Adverse Effect. . . . . . . . . . . . . . . 3.1(b)
Company Shares . . . . . .. . . . . . . . . . . . . . . . . Preamble
Confidentiality Agreement . . . . . . . . . . . . . . . . . . 5.2(b)
Consultant . . . . . . .. . . . . . . . . . . . . . . . . . . 9.3(a)
Contracts. . . . . . . .. . . . . . . . . . . . . . . . . . . 3.14
Corrective Action. . . . . . . . . . . . . . . . . . . . . . 9.3(a)
Employee . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7(a)
employee benefit plans . . . . . . . . . . . . . . . . . . . 5.7(a)
employee welfare benefit plan. . . . . . . . . . . . . . . . 5.7(a)
Environmental Claims . . . . . . . . . . . . . . . . . . . . .3.18(b)
Environmental Laws . . . . . . . . . . . . . . . . . . . . . .3.18(b)
Environmental Liabilities. . . . . . . . . . . . . . . . . . .9.1
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.15(a)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . .4.5
FDEP . . . . . . . . . . . . . . . . .. . . . . . . . . . . . 9.3(a)
Final Balance Sheet. . . . . . . . . .. . . . . . . . . . . . 1.5(c)
Final Working Capital Statement. . . .. . . . . . . . . . . . 1.5(c)
Financial Statements . . . . . . . . . . . . . . . . . . . . .3.6
GAAP . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 1.5(b)
Guarantors . . . . . . .. . . . . . . . . . . . . . . . . . . 5.10
Hazardous Materials. . . . . . . . . . . . . . . . . . . . . .3.18(b)
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . .3.5
Indemnified Claims . . . . . . . . . . . . . . . . . .. . . . .9.1
Indemnification Statement . . . . . . . . . . . . . .. . . . .5.8(b)(iii)
Independent Accountants. . . . . . . . . . . . . . . . . . . . 5.8(a)(ii)
Intellectual Property. . . . . . . . . . . . . . . . . . . . . 3.9(a)
Interim Balance Sheet. . . . . . . . . . . . . . . . . . . . 1.5(b)
Investor Rights Agreement. . . . . . . . . . . . . . . . . . . 6.2(e)
Investor Rights Agreement Term Sheet . . . . . . . . . . . . . 6.2(e)
IRS. . . . . . . . . . . . . . . . . . . . . . . . .. . . . . .3.15(b)
Leased Real Property . . . . . . . . . .. . . . . . . . . . . .3.8(a)(i)
Litigation Claims. . . . . . . . . . . . . . . . . . . . . . . 3.12
MADSP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8(b)
Objection Notice . . . . . . . . . . . . . . . . . . . . . . . 1.5(c)
Orlando North VOH Plume. . . . . . . . . . . . . . . . . . . . 9.3(a)
Outstanding Debt . . . . . . . . . . .. . . . . . . . . . . . .1.2
Owned Real Property. . . . . . . . . . . . . . . . . . . . . .3.8(a)(i)
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . 3.8(a)(ii)
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.7(b)
Plans. . . . . . . . . . . . . . . . . . . . .. . . . . . . . .3.15(a)
Pre-Closing Period . . . . . . . . . . . . . . . . . . . . . .5.8(a)(iii)
Preliminary Balance Sheet. . . . . . . . . . . . . . . . . . . 1.5(b)
Preliminary Working Capital Statement. . . . . . . . . . . . . 1.5(b)
Pre-Closing Period Returns . . . . . . . . . . . . . . . . . .5.8(b)(i)
Prior Operations Liability . . . . . . . .. . . . . . . . . . .9.1
Purchase Price . . . . . . . . . .. . . . . . . . . . . . . . .1.2
Real Property. . . . . . . . . . . . . . . . .. . . . . . . . .3.8(a)(i)
Realization Amount. . . . . . . . . . . . . . . . . . . . . .5.13(c)
Sale Vehicles. . . . . . . . . . . . . . . . . . . . . . . . .5.13(a)
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.5
SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . .4.5
Section 338(h)(10) . . . . . . . . . .. . . . . . . . . . . . . 5.8(a)(iv)
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . .4.5
Seller or Sellers. . . . . . . . . .. . . . . . . . . . . . . Preamble
Seller Auditor . . . . . . . . . . . . .. . . . . . . . . . . . 1.5(b)
Seller Benefit Plans . . . . . . . . . . . . . . . . . . . . . .3.15(c)
Seller Tradenames and Logos. . . . . . . . . . . . . . . . . . .2.1
Straddle Period. . . . . . . . . . . . . . . . . . . . . . . . 5.8(a)(iv)
Straddle Period Returns. . . . . . . . . . . . . . . . . . . . 5.8(c)(ii)
Target Working Capital . . . . . . . . . . . . . . . . . . . . .1.4
Tax Claim. . . . . . . . . .. . . . . . . . . . . . . . . . . . 5.8(d)(iv)
Tax Indemnified Party. . . . . . . . . . . . . . . . . . . . . 5.8(d)(iv)
Tax Indemnifying Party . . . . . . . . . . . . . . . . . . . . .5.8(d)(iv)
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.17(c)(i)
Tax Return . . . . . . . . . . . . . . . . . . . .. . . . . . .3.17(c)(ii)
To the Knowledge of Buyer. . . . . . . . . . . . . . . . . .10.14
To the Knowledge of Seller . . . . . . . . . . . . . . . . . .10.14
Transition Services Agreement. . . . . . . . . . . . . . . . . 6.2(f)
Unrelated Accounting Firm. . . . . . . . . . . . . . . . . . . 1.5(c)
UPS. . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . 5.10
UPS Owned Facilities . . . . . . . . . . . . . . . . . . . . . 5.12
SCHEDULES
Schedule 3.1 Foreign Qualifications
Schedule 3.3 Capital Stock
Schedule 3.5 Consents
Schedule 3.7 Absence of Change
Schedule 3.8 Title to Real Property
Schedule 3.8(b) Necessary Assets
Schedule 3.9 Intellectual Property
Schedule 3.12 Litigation
Schedule 3.14 Contracts
Schedule 3.15 Employee Benefits
Schedule 3.16 Labor Matters
Schedule 3.17 Taxes
Schedule 3.18 Environmental
Schedule 3.19 Officers; Bank Accounts
Schedule 5.15 Reimbursement for Environ
mental
Remediation Activities
EXHIBITS
Exhibit Number
Current Assets and Liabilities 1.5(a)
Accounting Principles 1.5(b)
Strategic Alliance Agreement 6.2(d)
Investor Rights Agreement Term Sheet 6.2(e)
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of November 12,
1999 (this "Agreement"), is made and entered into by and between UPS
Logistics Group, Inc., a Delaware corporation ("Seller"), UPS Truck
Leasing, Inc., a Delaware corporation (the "Company"), Rollins
Leasing Corp., a Delaware corporation ("Buyer"), and Rollins Truck
Leasing Corp., a Delaware corporation ("Parent").
W I T N E S S E T H:
WHEREAS, Seller owns all of the issued and outstanding
shares of capital stock (the "Company Shares") of the Company; and
WHEREAS, pursuant to the terms and conditions of this
Agreement, Seller desires to sell, and Buyer desires to purchase, the
Company Shares.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and
conditions hereinafter set forth, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
TRANSFER OF COMPANY SHARES; PURCHASE PRICE
Section 1.1 Purchase and Sale. Subject to the terms and
conditions set forth in this Agreement, at the closing provided for in
Section 1.6 hereof (the "Closing"), Seller agrees to sell, transfer and
deliver to Buyer, and Buyer agrees to purchase, acquire and accept from
Seller, the Company Shares.
Section 1.2 Purchase Price. Subject to adjustment as provided
in Section 1.3(b), the Purchase Price will be an amount equal to
$171,506,000 minus the amount of Outstanding Debt (as defined below)
(the "Purchase Price"). The Purchase Price shall be payable as
provided in Section 1.3. "Outstanding Debt" shall mean, as of the
Closing Date, any indebtedness of the Company owed to Seller or any of
its Affiliates (as hereinafter defined), as adjusted in accordance with
Section 5.17. Seller shall advise Buyer of the amount of Outstanding
Debt on the day prior to the Closing Date.
Section 1.3 Payment of Purchase Price.
(a) At the Closing, Buyer shall pay to Seller (subject to
adjustment as provided in Section 1.3(b)) the Purchase Price, which
shall be paid in the form of (i) a certificate representing 2,000,000
shares of Parent Common Stock (the "Common Stock"), (which solely for
the purposes of this Section 1.3(a) shall be deemed to have an
aggregate value of $20,000,000) and (ii) the balance in cash. In the
event of any change in the Common Stock between the date of this
Agreement and the Closing by reason of any stock dividend, stock split,
subdivision, reclassification, recapitalization, combination, exchange
of shares or the like (an "Adjustment Event"), the number of shares of
Common Stock referenced in Section 1.3(a)(i) shall be appropriately
adjusted so that Seller will receive the same proportionate amount of
the Common Stock Seller was entitled to receive immediately prior to
such Adjustment Event.
(b) Within five business days after the determination of the
Final Working Capital Statement (as hereinafter defined) in accordance
with Section 1.5 hereof, (i) if the amount of the Closing Date Working
Capital (as hereinafter defined) calculated in accordance with Section
1.5 is less than 97% of the Target Working Capital (as hereinafter
defined), then Seller shall pay to Buyer an amount equal to the
difference between 97% of the Target Working Capital and the Closing
Date Working Capital plus interest or (ii) if the amount of the Closing
Date Working Capital calculated in accordance with Section 1.5 is
greater than 103% of the Target Working Capital, Buyer shall pay to
Seller an amount equal to the difference between 103% of the Target
Working Capital and the Closing Date Working Capital plus interest.
Any payment under this Section 1.3(b) shall include interest on the
amount of that payment at the prime rate of interest (as published in
the "Money Rates" table of The Wall Street Journal on the Closing Date)
beginning on the Closing Date (as hereinafter defined) and ending on
the date of any such payment. Any payments required under this Section
1.3(b) shall be paid in cash.
(c) All cash payments required under this Section 1.3 shall
be made by wire transfer of immediately available federal funds to such
bank account(s) as shall be designated in writing by the recipient at
least three days prior to the Closing or promptly upon the
determination of the Final Balance Sheet (as hereinafter defined), as
the case may be.
Section 1.4 Target Working Capital. "Target Working
Capital" shall equal $15,289,000.
Section 1.5 Adjustment of Purchase Price.
(a) For purposes of this Agreement, the "Closing Date
Working Capital" shall mean the book value of those categories of
current assets of the Company listed on Exhibit 1.5(a) less the book
value of those categories of current liabilities of the Company
listed on Exhibit 1.5(a), in each case as reflected on the Final
Balance Sheet.
(b) Promptly following the Closing, Seller shall prepare
(i) a balance sheet of the Company as of the Effective Time (the
"Preliminary Balance Sheet"), in accordance with generally accepted
accounting principles ("GAAP") on a basis consistent with the
unaudited interim balance sheet of the Company as of September 30,
1999 (the "Interim Balance Sheet"), which principles are set forth on
Exhibit 1.5(b), and (ii) a calculation of the Closing Date Working
Capital based on the Preliminary Balance Sheet (the "Preliminary
Working Capital Statement"). Seller shall engage, and be responsible
for the fees and expenses of, Deloitte & Touche LLP (the "Seller
Auditor") to audit the Preliminary Balance Sheet and the Preliminary
Working Capital Statement and shall use all commercially reasonable
efforts to deliver to Buyer a final draft of the Preliminary Balance
Sheet and the Preliminary Working Capital Statement within 60 days
after the Closing Date, together with a final report of the Seller
Auditor thereon stating that the audit of the Preliminary Balance
Sheet has been made in accordance with GAAP on a basis consistent
with the Interim Balance Sheet. Representatives of Buyer shall have
the opportunity to observe the taking of the inventory of the Company
in connection with the preparation of the Preliminary Balance Sheet,
and to examine the work papers, schedules and other documents
prepared by Seller in connection with the preparation of the
Preliminary Balance Sheet and the Preliminary Working Capital
Statement. Seller shall use all commercially reasonable efforts to
cause the Seller Auditor to permit Buyer and its accounting firm (the
"Buyer Auditor") to examine the Seller Auditor's work papers used in
connection with its audit of the Preliminary Balance Sheet and the
Preliminary Working Capital Statement. Buyer shall be responsible
for the fees and expenses of the Buyer Auditor.
(c) If Buyer objects to the Preliminary Balance Sheet and
the Preliminary Working Capital Statement, Buyer shall deliver to
Seller a written notice of objection (an "Objection Notice") within
15 days following the delivery thereof. If Buyer has no objection to
the Preliminary Balance Sheet and the Preliminary Working Capital
Statement, Buyer shall promptly deliver to Seller a written notice of
acceptance (an "Acceptance Notice"). The Preliminary Balance Sheet
and the Preliminary Working Capital Statement shall be final and
binding on the parties if an Acceptance Notice is delivered or if no
Objection Notice is delivered to Seller within such 15-day period.
Any payment or portion of any payment required under Section 1.3 not
subject to an Objection Notice, shall be paid within five business
days following the delivery of an Objection Notice. Any Objection
Notice shall specify in reasonable detail the items on the
Preliminary Balance Sheet and the Preliminary Working Capital
Statement disputed and shall describe in reasonable detail the basis
for the objection and all information in the possession of Buyer
which forms the basis thereof, as well as the amount in dispute. If
an Objection Notice is given, the parties shall consult with each
other with respect to the objection. If the parties are unable to
reach agreement within 15 days after an Objection Notice has been
given, any unresolved disputed items shall be promptly referred to an
independent accounting firm designated by agreement of Seller and
Buyer (the "Unrelated Accounting Firm"). The Unrelated Accounting
Firm shall be directed to resolve disputed issues in accordance with
the terms of this Agreement and render a written report on the
unresolved disputed issues with respect to the Preliminary Balance
Sheet and the Preliminary Working Capital Statement as promptly as
practicable and to resolve only those issues of dispute set forth in
the Objection Notice. The resolution of the dispute by the Unrelated
Accounting Firm shall be final and binding on the parties. The fees
and expenses of the Unrelated Accounting Firm shall be borne equally
by Seller, on the one hand, and Buyer, on the other hand. The
Preliminary Balance Sheet and the Preliminary Working Capital
Statement as finally determined pursuant to this Section 1.5(c) are
referred to herein respectively as the "Final Balance Sheet" and the
"Final Working Capital Statement".
Section 1.6 Closing. (a) The Closing of the
transactions contemplated by this Agreement shall take place at the
offices of King & Spalding, 191 Peachtree Street, Atlanta, Georgia.
If all of the conditions to Closing set forth in Article VI hereof
have been satisfied or waived prior to such time, the Closing shall
take place at 12:01 a.m. Eastern Time on January 1, 2000. If the
Closing does not occur at such time, the Closing shall take place
(assuming satisfaction or waiver of all conditions to Closing) at
11:59 p.m. Eastern Time on January 31, 2000, or at such other time as
the parties mutually agree. The date of the Closing is sometimes
referred to herein as the "Closing Date."
(b) Notwithstanding any other provision of Section
1.3, if the Closing occurs on January 1, 2000, the cash portion of
the Purchase Price payable at Closing shall be paid by Buyer on the
first business day following the Closing Date.
Section 1.7 Deliveries by Seller. At the Closing, Seller
will deliver or cause to be delivered to Buyer (unless delivered
previously) the following:
(a) The stock certificate or certificates representing all of
the Company Shares, duly endorsed in blank or accompanied by stock
powers duly executed in blank;
(b) The Transition Agreement (as hereinafter defined), executed
by Seller or its Affiliate;
(c) The Alliance Agreement (as hereinafter defined),
executed by Seller or its Affiliate;
(d) The Investor Rights Agreement (as hereinafter
defined), executed by Seller or its Affiliate; and
(e) All other documents, instruments and writings required
by Buyer to be delivered by Seller at or prior to the Closing
pursuant to this Agreement or otherwise reasonably required in
connection herewith.
Section 1.8 Deliveries by Buyer. At the Closing, Parent and
Buyer will deliver or cause to be delivered to Seller (unless
previously delivered) the following:
(a) The Purchase Price in accordance with Section 1.2 hereof
(including a certificate representing the Common Stock);
(b) The Transition Agreement, executed by Buyer or its
Affiliate;
(c) The Alliance Agreement, executed by Buyer or its
Affiliate;
(d) The Investor Rights Agreement, executed by Buyer or
its Affiliate; and
(e) All other documents, instruments and writings required
by Seller to be delivered by the Buyer at or prior to the Closing
pursuant to this Agreement or otherwise reasonably required in
connection herewith.
ARTICLE II
RELATED MATTERS
Section 2.1 Use of Seller's Name and Logos. It is expressly
agreed that Buyer is not purchasing, acquiring or otherwise obtaining
any right, title or interest in the names "UPS" or "UPS Truck
Leasing", or any tradenames, trademarks, identifying logos or service
marks related thereto or employing any part or variation of any of
the foregoing or any confusingly similar tradename, trademark or logo
(collectively, the "Seller Tradenames and Logos"). Buyer agrees that
neither it nor any of its Affiliates shall make any use of the Seller
Tradenames and Logos from and after the Closing Date; provided,
however, that Seller (or its Affiliate) shall grant Buyer a ninety
(90) day license for use of the UPS Truck Leasing logo as it
currently appears on the trucks of the Company in order for Buyer to
undertake the deletion or removal of the UPS Truck Leasing logo from
such trucks in a practical manner.
Section 2.2 No Ongoing or Transition Services. Except
as provided in the Transition Agreement, at the Closing, all data
processing, accounting, insurance, banking, personnel, legal,
communications, fuel procurement and other services provided to the
Company by Seller or any Affiliate of Seller, including any
agreements or understandings (written or oral) with respect thereto,
will terminate.
Section 2.3 Distributions. The parties agree that
Seller shall have the right, at or prior to the Closing, to cause the
Company to distribute all cash held by the Company to Seller or its
Affiliates, by one or more cash dividends, repurchase of existing
stock and/or other distributions. Except as provided in Section
1.3(b), no adjustment shall be made to the Purchase Price as a result
of any such dividends, repurchases or other distributions paid to
Seller or its Affiliates.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
Section 3.1 Organization.
(a) The Company is a corporation validly existing and in
good standing under the laws of the State of Delaware, and has all
requisite power and authority to own, lease and operate its
properties and assets and to carry on its operations as now being
conducted. The Company is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property or
assets owned, leased or operated by the Company or the nature of the
business conducted by the Company makes such qualification necessary,
except where the failure to be so duly qualified or licensed and in
good standing would not individually or in the aggregate have a
Company Material Adverse Effect (as hereinafter defined). Schedule
3.1 sets forth a list of all jurisdictions where the Company is
qualified to do business. Seller has heretofore made available to
Buyer complete and correct copies of the certificate of incorporation
and by-laws of the Company, as currently in effect.
(b) As used herein, a "Company Material Adverse Effect"
shall mean any event, change or effect that has occurred which has a
material adverse effect upon the financial condition, operating
results or business of the Company; provided, however, that a Company
Material Adverse Effect shall not include any event, change in or
effect upon the financial condition or business of the Company,
directly or indirectly, arising out of, attributable to or as a
consequence of: (a) conditions, events or circumstances generally
affecting the vehicle leasing industry or the overall economy; or (b)
the public announcement of either the execution of this Agreement or
the transactions contemplated hereunder.
Section 3.2 Authorization. Seller is a corporation
validly existing and in good standing under the laws of the State of
Delaware. Each of Seller and the Company has the corporate power and
authority to execute and deliver this Agreement and perform its
obligations hereunder. The execution and delivery of this Agreement
and the performance by Seller and the Company of its respective
covenants and agreements hereunder has been duly and validly
authorized by the Boards of Directors of Seller, the Company and
United Parcel Service of America, Inc., and the shareholder of the
Company, and no other corporate proceedings on the part of Seller or
the Company is necessary to authorize the execution, delivery and
performance of this Agreement or the consummation of the transactions
so contemplated. This Agreement has been duly executed and delivered
by Seller and the Company and constitutes a valid and binding
agreement of Seller and the Company, enforceable against Seller and
the Company in accordance with its terms, except that (a) such
enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now or
hereafter in effect, relating to or limiting creditors' rights
generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section 3.3 Capital Stock. Schedule 3.3 sets forth the
authorized, issued and outstanding capital stock of the Company. The
Company Shares constitute all of the issued and outstanding shares of
capital stock of the Company. The Company Shares have been validly
issued and are fully paid and non-assessable. There are no shares of
capital stock of the Company held as treasury shares. There are no
preemptive rights existing with respect to the capital stock of the
Company. There are not any outstanding securities convertible into,
exchangeable for, or carrying the right to acquire, equity securities
of the Company, nor are there any subscriptions, warrants, options,
rights or other arrangements or commitments which could obligate the
Company to issue any shares of its capital stock or equity interests.
The Company does not own, directly or indirectly, any capital stock
or any other equity or debt securities of any corporation, firm,
partnership, joint venture, association or other entity.
Section 3.4 Ownership of the Common Stock. Seller is
the sole owner of the Company Shares. Seller has good title to the
Company Shares, free and clear of all liens, claims, options,
security interests or other encumbrances.
Section 3.5 Consents and Approvals; No Violations.
Except as set forth on Schedule 3.5 and for applicable requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will (a) conflict with or result in any breach of any
provision of the certificate of incorporation or by-laws of the
Company or Seller; (b) require any filing with, or the obtaining of
any permit, authorization, consent or approval of, any governmental
or regulatory authority; (c) violate, conflict with or result in a
default (or any event which, with notice or lapse of time or both,
would constitute a default) under, or give rise to any right of
termination, cancellation or acceleration under, any of the terms,
conditions or provisions of any note, mortgage, other evidence of
indebtedness, guarantee, license, agreement, lease or other contract,
instrument or obligation to which the Company or Seller is a party or
by which the Company or Seller or any of their respective assets may
be bound; or (d) violate any order, injunction, decree, statute, rule
or regulation applicable to the Company or Seller, excluding from the
foregoing clauses (b), (c) and (d) such requirements, violations,
conflicts, defaults or rights (i) which would not have a Company
Material Adverse Effect and would not adversely affect the ability of
Seller to consummate the transactions contemplated by this Agreement,
or (ii) which become applicable as a result of the business or
activities in which Buyer is or proposes to be engaged or as a result
of any acts or omissions by, or the status of or any facts pertaining
to, Buyer.
Section 3.6 Financial Statements. Seller has made
available to Buyer: (i) the unaudited balance sheets of the Company
as of December 31, 1997 and 1998 and the unaudited statements of
income and cash flows thereof for the respective fiscal years then
ended, including the notes thereto; and (ii) the unaudited balance
sheet of the Company as of September 30, 1999 and the unaudited
statements of income and cash flows thereof for the six month period
then ended, including the notes thereto. All of the foregoing
financial statements are hereinafter collectively referred to as the
"Financial Statements". Except as disclosed in the Financial
Statements, the Financial Statements have been prepared from, and are
in accordance with, the books and records of the Company and present
fairly, in all material respects, the financial position and results
of operations of the Company as of the dates and for the applicable
periods indicated, in each case in conformity with GAAP.
Section 3.7 Absence of Material Adverse Effect. Except
as set forth on Schedule 3.7, since September 30, 1999, the Company
has:
(a) conducted the Company's business in the ordinary
course;
(b) not sold any asset of the Company at a price of more
than $100,000 other than in the ordinary course of business;
(c) maintained accounts receivable, inventory, accounts
payable and other working capital accounts in a manner consistent
with normal business practices;
(d) not written up or down the value of any inventory or
determined as collectible any notes or accounts receivable that were
previously considered to be uncollectible, except for write-ups or
write-downs and other determinations in accordance with GAAP and in
the ordinary course of business and consistent with past practice;
(e) not pledged or permitted the imposition of any lien on
any of its assets;
(f) not suffered any change in its financial condition,
operating results or business or suffered any other event or
condition of any character which individually or in the aggregate has
had a Company Material Adverse Effect;
(g) not suffered any damage, destruction or loss of
tangible assets, whether or not covered by insurance, in excess of
$250,000, in the aggregate;
(h) not paid, discharged or satisfied any claims,
liabilities or obligations (absolute, accrued, contingent or
otherwise), except in each case in the ordinary course of business;
(i) not canceled any debts or waived any claims or rights
of substantial value, except in each case in the ordinary course of
business; and
(j) not granted any general increase in the compensation
payable or to become payable to its officers, directors, consultants
or employees (including any such increase pursuant to any bonus,
severance, termination, pension, profit-sharing or other plan or
commitment) or any special increase in the compensation payable or to
become payable to any officer, director, consultant or employee,
except for (i) normal merit and cost of living increases in the
ordinary course of business and in accordance with past practice and
(ii) severance commitments that are (and shall remain after Closing)
the sole responsibility of Seller and its Affiliates (other than the
Company).
Section 3.8 Title, Ownership and Related Matters.
(a) Real Property.
(i) To the Knowledge of Seller, Schedule 3.8(a)(i)
sets forth a list of the parcels of real property owned by the
Company (together with the fixtures and improvements thereon, the
"Owned Real Property") and the UPS Owned Facilities (as hereinafter
defined). Schedule 3.8(a)(i) also sets forth a list of the parcels
of real property currently leased by the Company (together with all
fixtures and improvements thereon, the "Leased Real Property" and
collectively with the Owned Real Property and the UPS Owned
Facilities, the "Real Property").
(ii) To the Knowledge of Seller, except as set forth
on Schedule 3.8(a)(ii) the Company has good and marketable title to
the Owned Real Property, and an Affiliate of the Company has good and
marketable title to the UPS Owned Facilities, in each case free and
clear of all liens, pledges, security interests, charges, claims,
leasehold interests, tenancies, restrictions and encumbrances of any
nature whatsoever other than (i) liens for taxes not yet due and
payable, (ii) statutory liens of landlords and liens of carriers,
warehousemen, mechanics, materialmen and repairmen incurred in the
ordinary course of business and not yet delinquent, and (iii) matters
of record, zoning, building or other restrictions, variances,
covenants, rights of way, encumbrances, easements and other minor
irregularities in title, none of which, individually or in the
aggregate, interfere with the present use of or occupancy of any of
the Owned Real Property or the UPS Owned Facilities by the Company
(collectively, "Permitted Liens").
(iii) To the Knowledge of Seller, the Seller has a
valid leasehold interest in the Leased Real Property, free and clear
of any mortgages, pledges, liens, security interests or other
encumbrances of any nature, except for Permitted Liens.
(iv) To the Knowledge of Seller, the improvements on
the Real Property are free from any material structural defects.
Except as set forth on Schedule 3.8(a)(iv), to the Knowledge of
Seller, there are no condemnation or appropriation or similar
proceedings pending or threatened against any of the Real Property or
the improvements thereon.
(b) Necessary Assets. To the Knowledge of Seller, except
as set forth in Schedule 3.8(b), the Company has good and marketable
title to its material assets, free and clear of all liens, pledges,
security interests, charges, claims, restrictions and encumbrances of
any nature whatsoever (except, with respect to the Real Property,
Permitted Liens).
Section 3.9 Intellectual Property.
(a) To the Knowledge of Seller (as herein defined), the
conduct of the business of the Company does not infringe upon any
intellectual property right of any third party. There are no
pending, or to the Knowledge of Seller threatened, proceedings or
litigation or other adverse claims by any Person (as hereinafter
defined) against the use by the Company of any trademarks, trade
names, service marks, service names, logos, assumed names,
copyrights, patents or registrations and applications therefor which
are owned by the Company and are necessary for the operation of the
Company's business as currently conducted (collectively, the
"Intellectual Property"). Schedule 3.9 sets forth a list of all
Intellectual Property owned by the Company.
(b) The Company has valid licenses or other rights to use
the Intellectual Property necessary to permit the Company to conduct
its operations as currently conducted, except (i) for the Seller
Tradenames and Logos and (ii) where the failure to have such
ownership, licenses or rights would not have a Company Material
Adverse Effect.
Section 3.10 Computer Software. The Company has valid
licenses or other rights to use all material computer software
programs to permit it to conduct its operations as currently
conducted, except where the failure to have such ownership, licenses
or rights would not have a Company Material Adverse Effect.
Section 3.11 Year 2000 Compliance. Seller has provided
Buyer true and complete copies of all material reports and analyses
obtained by the Company or Seller with respect to Year 2000
compliance issues concerning the Company. The Company's major
systems have been modified, tested and certified.
Section 3.12 Litigation. Schedule 3.12 identifies all
claims, actions, suits, proceedings and governmental investigations
pending or, to the Knowledge of Seller, threatened against the
Company by or before any court, governmental or regulatory authority
or by any third party (other than claims, actions, suits, proceedings
and governmental investigation set forth on Schedule 3.18(b)) (the
"Litigation Claims").
Section 3.13 Compliance with Applicable Law. To the
Knowledge of Seller, the Company is in compliance in all material
respects with all applicable laws, ordinances, rules and regulations
of any federal, state, local or foreign governmental authority
applicable to the Company or its operations and necessary to carry on
its business as it is currently being conducted, to own or hold under
lease the properties and assets it owns or holds under lease and to
perform all of its obligations under the agreements to which it is a
party.
Section 3.14 Certain Contracts and Arrangements.
Schedule 3.14 sets forth a list of the following contracts to which
the Company is a party: (a) employment agreements; (b) indentures,
mortgages, notes, installment obligations, agreements or other
instruments relating to the borrowing of money or the guaranty by the
Company of any obligation for the borrowing of money; (c) real
property leases; (d) contracts with Affiliates; or (e) other
agreements, including without limitation, customer contracts, which
individually involve the receipt or payment by the Company after the
date hereof of more than $100,000 and are not terminable without
liability to the Company upon 30 days or less prior written notice
(together with those contracts, agreements and understandings
described in clauses (a), (b), (c) and (d) the "Contracts"). Seller
has made available to Buyer copies of all Contracts. To the
Knowledge of Seller, all such Contracts are valid, binding and
enforceable in accordance with their terms and, to the Knowledge of
Seller, neither the Company nor any other party thereto is in
material default under any of the aforesaid Contracts. Schedule 3.14
sets forth a list of all unresolved material default notices received
from or given to third parties pertaining to the Contracts and
identifies all Contracts containing fuel pricing guarantees.
Section 3.15 Employee Benefit Plans; ERISA. Except as
set forth on Schedule 3.15:
(a) There are no "employee benefit plans" (as defined in
Section 3.(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) maintained for the benefit of employees of the
Company or other employee benefit, bonus or fringe benefit plans
maintained for the benefit of the employees of the Company to which,
or with respect to which, the Company has a material liability for
the payment of benefits or makes material contributions annually (the
"Plans").
(b) Each of the Plans that is subject to ERISA has been
administered in compliance in all material respects with ERISA. Each
of the Plans intended to be "qualified" within the meaning of Section
401(a) of the Code has a favorable determination letter from the
Internal Revenue Service (the "IRS") to the effect that it is so
qualified. Except as set forth on Schedule 3.15, none of the Plans
is subject to Title IV of ERISA. There are no pending or, to the
Knowledge of Seller, threatened material claims (other than routine
claims for benefits) by, on behalf of or against any of the Plans or
any trusts which are a part of such Plans.
(c) Seller has furnished to Buyer a correct, complete and
correct copy of each plan, program, policy or arrangement which is
set forth in writing and which provides cash or property or other
compensation related benefits of any kind or description whatsoever
to or on behalf of any current of former employee or director of
Seller or any of their dependents and a complete description of any
such plain, program, policy or arrangement which is not set forth in
writing (collectively, the "Seller Benefit Plans"). A list of each
Seller Benefit Plan is set forth on Schedule 3.15.
Section 3.16 Labor Matters. The Company is in compliance
with all federal and state laws respecting employment and employment
practices, terms and conditions of employment, wages and hours, and
is not engaged in any unfair labor or unlawful employment practice,
the violation of or engagement in which would have a Company Material
Adverse Effect. Except as set forth on Schedule 3.16, there are no
controversies pending or, to the Knowledge of the Seller, threatened,
between the Company and any of its employees, which controversies
have had or are reasonably likely to have a Company Material Adverse
Effect. The Company is not a party to any collective bargaining
agreement or other labor union contract applicable to Persons
employed by the Company. There are no unfair labor practice
complaints pending against the Company before the National Labor
Relations Board. To the Knowledge of Seller, there are no strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with
respect to any employees of the Company.
Section 3.17 Taxes.
(a) Either Seller or the Company (i) has timely filed or
caused to be filed on a timely basis with the appropriate taxing
authorities all material Tax Returns (as hereinafter defined)
required to be filed by or with respect to the Company (including the
consolidated federal income Tax Returns and any consolidated,
combined or unitary state Tax Returns in which the Company is
included), and (ii) has paid or made adequate provision for the
payment of all Taxes (as hereinafter defined) shown to be due on such
Tax Returns or otherwise due and payable by the Company. All such
Tax Returns are true, correct and complete in all material respects.
(b) Except as set forth on Schedule 3.17, (i) there are no
liens for Taxes with respect to the assets of the Company (except for
statutory liens for current taxes not yet delinquent) and no material
claims with respect to Taxes are being asserted by any taxing
authority in writing; (ii) none of the Tax Returns applicable to the
Company are currently being audited or examined by any taxing
authority and there is no other action or proceedings currently
pending concerning Taxes relating to the Company; (iii) there is no
material unpaid tax deficiency, determination or proposed assessment
currently outstanding against the Company or for which the Company
could be jointly or severally liable; (iv) there are no outstanding
agreements or waivers extending the statute of limitations relating
to the assessment of Taxes applicable to the Company; (v) neither the
Company nor Seller on behalf of the Company has filed a consent
pursuant to Section 341(f) of the Code; (vi) the Company is not a
party to any agreement that would result, separately or in the
aggregate, in the payment of an excess parachute payment pursuant to
Section 280G of the Code; (vii) the Company is not a member of any
partnership or joint venture or the holder of a beneficial interest
in any trust (other than a trust that is treated as a grantor trust
or otherwise is disregarded as a separate taxable entity for federal
income tax purposes); and (viii) to the Company's knowledge, there
are no proposed reassessments of any property owned by the Company
that will result in a material increase in the amount of Tax to which
such property will be subject for periods after the Closing Date.
(c) As used in this Agreement:
(i) "Taxes" shall mean all taxes, levies, charges or
fees including income, corporation, advance corporation, gross
receipts, transfer, excise, property, sales, use, value-added,
license, payroll, pay-as-you-earn, withholding, social security and
franchise or other governmental taxes or charges, imposed by the
United States or any state, county, local or foreign government, and
such term shall include any interest, penalties or additions to tax
attributable to such taxes.
(ii) "Tax Return" shall mean any report, return or
statement required to be supplied to a taxing authority in connection
with Taxes.
Section 3.18 Environmental.
(a) To the Knowledge of Seller, except as set forth on
Schedule 3.18(a), the Company possesses, and is in compliance with,
all material permits, licenses and government authorizations relating
to protection of the environment, pollution control and hazardous
materials applicable to the Company;
(b) To the Knowledge of Seller, except as set forth on
Schedule 3.18(b), neither the Company nor any of its Affiliates has
received notice from a state or federal governmental authority that
the Company is responsible under any applicable federal, state, or
local law, regulation or ordinance relating to the protection of the
environment in effect at the time of this Agreement (the
"Environmental Laws") to investigate and/or remediate Hazardous
Materials (as hereinafter defined) on property the Company owns or on
which it operates (collectively, the "Environmental Claims"). For
purposes of this Agreement, "Hazardous Materials" shall mean any
waste, pollutant, hazardous substance, toxic, ignitable, reactive or
corrosive substance, hazardous waste, special waste, industrial
substance, by-product, process intermediate product or waste,
petroleum or petroleum-derived substance or waste, chemical liquids
or solids, liquid or gaseous products regulated under Environmental
Laws; and
(c) Except as set forth in Schedule 3.18(c), the
underground storage tank systems for which the Company is responsible
under applicable laws or existing agreements have been upgraded or
removed in compliance with 40 CFR Part 280 and any other applicable
laws.
Section 3.19 Officers; Bank Accounts. Schedule 3.19
lists each of the officers of the Company and all of the accounts
(and signatures thereto) of the Company with any bank, brokerage firm
or other financial institution or depository.
Section 3.20 Certain Fees. The Company will not have
any liability for any financial advisory or finders' fees in connection
with this Agreement or the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
Section 4.1 Organization and Authority of Buyer. Each
of the Parent and Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. Parent owns all of the issued and outstanding stock of
Buyer. Each of Parent and Buyer has the corporate power and
authority to execute and deliver this Agreement and perform its
obligations hereunder. The execution and delivery of this Agreement
and the performance by Parent and Buyer of its respective covenants
and agreements hereunder have been duly and validly authorized by the
Board of Directors of Parent and Buyer and the sole shareholder of
Buyer, and no other corporate proceedings on the part of Parent or
Buyer are necessary to authorize the execution, delivery and
performance of this Agreement or the consummation of the transactions
so contemplated. This Agreement has been duly executed and delivered
by Parent and Buyer and constitutes a valid and binding agreement of
Parent and Buyer, enforceable against Parent and Buyer in accordance
with its terms, except that (i) such enforcement may be subject to
any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws, now or hereafter in effect, relating to or
limiting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
Section 4.2 Consents and Approvals; No Violations.
Except for applicable requirements of the HSR Act, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (a) conflict with or result in
any breach of any provision of the incorporation documents or by-laws
of Parent or Buyer; (b) require any filing with, or the obtaining of
any permit, authorization, consent or approval of, any governmental
or regulatory authority; (c) violate, conflict with or result in a
default (or any event which, with notice or lapse of time or both,
would constitute a default) under, or give rise to any right of
termination, cancellation or acceleration under, any of the terms,
conditions or provisions of any note, mortgage, other evidence of
indebtedness, guarantee, license, agreement, lease or other contract,
instrument or obligation to which Parent or Buyer is a party or by
which Parent or Buyer or any of its assets may be bound; or (d)
violate any order, injunction, decree, statute, rule or regulation
applicable to Parent or Buyer, excluding from the foregoing clauses
(b), (c) and (d) such requirements, violations, conflicts, defaults
or rights (i) which would not adversely affect the ability of Parent
or Buyer to consummate the transactions contemplated by this
Agreement or (ii) which become applicable as a result of any acts or
omissions by, or the status of or any facts pertaining to, Parent or
Buyer.
Section 4.3 Litigation. There is no claim, action,
suit, proceeding or governmental investigation pending or, to the
Knowledge of Buyer (as hereinafter defined), threatened against
Parent or Buyer, by or before any court, governmental or regulatory
authority or by any third party which challenges the validity of this
Agreement or which would be reasonably likely to adversely affect or
restrict Parent's or Buyer's ability to consummate the transactions
contemplated hereby.
Section 4.4 Certain Fees. Except for the engagement of
Merrill Lynch neither Buyer nor any of its Affiliates has employed
any financial advisor or finder or incurred any liability for any
financial advisory or finders' fees in connection with this Agreement
or the transactions contemplated hereby.
Section 4.5 Certain Filings. Parent has filed all
forms, reports, statements and documents required to be filed with
the Securities and Exchange Commission (the "SEC") since January 1,
1997 (collectively, the "SEC Reports"), each of which has complied in
all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations promulgated thereunder, or the Securities
Exchange Act of 1934 (the "Exchange Act"), and the rules and
regulations promulgated thereunder, each as in effect on the date so
filed. None of the SEC Reports (including, but not limited to, any
financial statements or schedules included or incorporated by
reference therein) contained when filed any untrue statement of a
material fact or omitted or omits to state a material fact required
to be stated or incorporated by reference therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE V
COVENANTS
Section 5.1 Conduct of the Company's Business. Seller
agrees that, during the period from the date of this Agreement to the
Closing, except as otherwise contemplated by this Agreement, the
Schedules or consented to by Buyer in writing, Seller shall cause the
Company:
(a) to use its reasonable best efforts to conduct its
business operations in the ordinary course consistent with past
practice;
(b) to use its reasonable best efforts to (i) maintain and
preserve its business operations, (ii) retain the services of its
employees, except for attrition of such employees in the ordinary
course of business, and (iii) maintain, preserve and retain
relationships with its suppliers and customers;
(c) not to sell or dispose of any material business
assets, except in the ordinary course of business;
(d) not to amend its certificate of incorporation or
bylaws;
(e) not to incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, other than
borrowings in the ordinary course of business consistent with past
practice;
(f) not to change its accounting policies except as
required by generally accepted accounting principles; and
(g) not to make any change in employment terms for any of
its employees other than terminations for cause or customary salary
increases and adjustments in benefits in the ordinary course of
business consistent with past practice, other than severance
commitments that are (and still remain) the sole responsibility of
Seller and its Affiliates (other than the Company).
Section 5.2 Access to Information.
(a) Between the date of this Agreement and the Closing,
Seller shall (i) give Buyer and its authorized representatives
reasonable access to all books, records, offices and other facilities
and properties of the Company, including Phase I and/or Phase II
environmental audits, and to the Company Executives (as hereinafter
defined); (ii) permit Buyer to make such inspections thereof as Buyer
may reasonably request; and (iii) cause the officers of the Company
to furnish Buyer with such financial and operating data and other
information with respect to the business and properties of the
Company as Buyer may from time to time reasonably request; provided,
however, that any such investigation shall be conducted during normal
business hours under the supervision of Seller's personnel and in
such a manner as to maintain the confidentiality of this Agreement
and the transactions contemplated hereby and not interfere
unreasonably with the business operations of Seller or the Company.
(b) All information concerning Seller or the Company
furnished or provided by Seller or their Affiliates to Buyer or its
representatives (whether furnished before or after the date of this
Agreement) shall be held subject to a confidentiality agreement by
and between Seller and Buyer, dated as of August 24, 1999 (the
"Confidentiality Agreement").
Section 5.3 Consents. (a) Each of Seller and Buyer
shall cooperate, and use its reasonable best efforts, to make all
filings (including without limitation all filings required under the
HSR Act) and obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities
and other third parties necessary to consummate the transactions
contemplated by this Agreement. In addition to the foregoing, Buyer
agrees to provide such assurances as to financial capability,
resources and creditworthiness as may be reasonably requested by any
third party whose consent or approval is sought in connection with
the transactions contemplated hereby.
(b) With respect to any agreements for which any required
consent or approval is not obtained prior to the Closing, Seller and
Buyer shall each use their reasonable best efforts to obtain any such
consent or approval after the Closing Date until such consent or
approval has been obtained.
Section 5.4 Reasonable Best Efforts. Each of Seller
and Buyer shall cooperate, and use its reasonable best efforts to take,
or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this
Agreement.
Section 5.5 Public Announcements. Except as otherwise
agreed to by the parties, the parties shall not issue any report,
statement or press release or otherwise make any public statements
with respect to this Agreement and the transactions contemplated
hereby, except as in the reasonable judgment of the party may be
required by law. Upon the execution of this Agreement and the
Closing, Seller and Buyer will consult with each other with respect
to the issuance of a joint report, statement or press release with
respect to this Agreement and the transactions contemplated hereby.
Section 5.6 Covenant to Satisfy Conditions. Seller will
use its reasonable best efforts to ensure that the conditions set
forth in Article VI hereof are satisfied, insofar as such matters are
within the control of Seller, and Buyer will use its reasonable best
efforts to ensure that the conditions set forth in Article VI hereof
are satisfied, insofar as such matters are within the control of
Buyer. Seller and Buyer further covenant and agree, with respect to
a threatened or pending preliminary or permanent injunction or other
order, decree or ruling or statute, rule, regulation or executive
order that would adversely affect the ability of the parties hereto
to consummate the transactions contemplated hereby, to use all
reasonable efforts to prevent or lift the entry, enactment or
promulgation thereof, as the case may be.
Section 5.7 Employees; Employee Benefits. (a) Buyer
shall treat all service completed by an Employee (as hereinafter
defined) with the Company or any Affiliate thereof, and any
predecessor thereto, the same as service completed with Buyer for all
purposes, including waiting periods relating to preexisting
conditions under medical plans, vacations, severance pay, eligibility
to participate in, vesting or payment of benefits under, and
eligibility for early retirement or any subsidized benefit provided
for under any employee benefit plan (including, but not limited to,
any "employee benefit plan" as defined in Section 3(3) of ERISA)
maintained by Buyer on or after the Closing Date except for purposes
of computing benefits under the actual benefit formula in a pension
plan (as defined in Section 3(2) of ERISA). Prior to the Closing,
Seller shall furnish Buyer with a list of the length of service with
the Company or its Affiliates for each of the Employees. For
purposes of computing deductible amounts (or like adjustments or
limitations on coverage) under any employee welfare benefit plan
(including, without limitation, any "employee welfare benefit plan"
as defined in Section 3(l) of ERISA), expenses and claims previously
recognized for similar purposes under the applicable welfare benefit
plan of the Company or any Affiliate shall be credited or recognized
under the comparable plan maintained after the Closing Date by Buyer.
For purposes of this Agreement, "Employee" shall mean each person
employed by the Company as of the Closing.
(b) After the Closing Date, Buyer shall be responsible
for, and shall indemnify and hold harmless Seller and their
Affiliates and their officers, directors, employees, Affiliates and
agents and the fiduciaries (including plan administrators) of the
Plans, from and against, any and all claims, losses, damages, costs
and expenses (including, without limitation, attorneys' fees and
expenses) and other liabilities and obligations relating to or
arising out of (i) all salaries, bonuses, commissions, vacation
entitlements and other benefits accrued by the Company but unpaid as
of the Closing, and (ii) any claims of, or damages or penalties
sought by, any Employee, or any governmental entity on behalf of or
concerning any Employee, with respect to any act or failure to act by
Buyer to the extent arising from the employment, discharge, layoff or
termination of any Employee after the Closing.
(c) At least 30 days prior to the Closing, Buyer shall
provide Seller with a list of those employees of the Company that
Buyer desires to employ immediately following the Closing. Seller
will take necessary actions to assure that as of the Closing only
those persons (and other persons approved by Buyer) are employed by
the Company and shall assume all costs associated therewith.
(d) Any Employee that is terminated by Buyer during
2000 will be paid for accrued vacation in accordance with the
Company's prior practice; provided that the aggregate liability of
Buyer for such payments will not exceed the vacation accrual on the
Final Balance Sheet.
Section 5.8 Certain Tax Matters.
(a) Certain Definitions. As used in this Agreement:
(i) "Buyer Tax Group" means the affiliated group,
within the meaning of Section 1504(a) of the Code, of which Buyer is
the common parent.
(ii) "Independent Accountants" means Arthur Andersen &
Co.
(iii) "Pre-Closing Period" means any taxable
period, including that portion of any Straddle Period, which ends on
or before the Effective Time.
(iv) "Section 338(h)(10) Election" means the election
to be made by Buyer and Seller pursuant to Section 338(h)(10) of the
Code, as described in Section 5.8(b) hereof.
(v) "Straddle Period" means any taxable period that
includes (but does not end on) the Closing Date.
(b) Section 338(h)(10) Election. Seller will join with
Buyer in making the Section 338(h)(10) Election to treat the
transaction hereunder as the deemed sale of the assets of the Company
for federal and state income tax purposes. Seller and Buyer will use
their reasonable best efforts to agree on the allocation of the
"MADSP" among the assets of the Company pursuant to the applicable
Treasury Regulations under Section 338 of the Code (the "Allocation")
and will use the Allocation in reporting the deemed purchase and sale
of the assets of the Company for federal and state income tax
purposes. If the parties are unable to agree upon the Allocation
within 90 days before the due date of filing any Tax Return for which
the Allocation is relevant, the Allocation shall be made by the
Independent Accountants.
(c) Return Filing, Refunds, Credits and Transfer Taxes.
(i) Except with regard to Tax Returns for Straddle
Periods, Seller shall prepare, or cause to be prepared, and file, or
cause to be filed, on a timely basis all Tax Returns of or including
the Company for all Pre-Closing Periods (the "Pre-Closing Period
Returns"). Seller shall pay, or cause to be paid, all Taxes with
respect to the Company shown to be due on the Pre-Closing Period
Returns.
(ii) Buyer shall prepare, or cause to be prepared, and
shall file, or cause to be filed, on a timely basis all Tax Returns
other than the Pre-Closing Period Returns with respect to the
Company, including Tax Returns, if any, for the Straddle Period (the
"Straddle Period Returns"). Buyer shall pay, or cause to be paid,
all Taxes shown to be due on such Tax Returns.
(iii) Buyer shall provide Seller with copies of
any Straddle Period Returns at least thirty business days prior to
the due date thereof (giving effect to any extensions thereto),
accompanied by a statement calculating in reasonable detail Seller's
indemnification obligation pursuant to Section 5.8(e) hereof (the
"Indemnification Statement"). Seller shall have the right to review
such Straddle Period Returns and Indemnification Statement prior to
the filing of such Straddle Period Returns. If Seller disputes any
amounts shown to be due on such Tax Returns or the amount calculated
in the Indemnification Statement, Seller and Buyer shall consult and
resolve in good faith any issues arising as a result of the review of
such Straddle Period Return and Indemnification Statement. If Seller
agrees to the Indemnification Statement amount, Seller shall pay to
Buyer an amount equal to the Taxes shown on the Indemnification
Statement less any amounts paid by Seller or Company on or before the
Effective Time with respect to estimated taxes (which have not been
taken into account in determining the Indemnification Statement
amount) not later than three business days before the due date
(including any extensions thereof) for payment of Taxes with respect
to such Straddle Period Return. If the parties are unable to resolve
any dispute within fifteen business days after Seller's receipt of
such Straddle Period Return and Indemnification Statement, such
dispute shall be resolved by the Independent Accountants, which shall
resolve any issue in dispute as promptly as practicable. If the
Independent Accountants are unable to make a final determination with
respect to any disputed issue prior to the due date (including any
extensions) for the filing of the Straddle Period Return in question,
(A) Buyer shall file, or shall cause to be filed, such Straddle
Period Return without such final determination having been made and
(B) Seller shall pay to Buyer, not later than three days before the
due date (including any extensions thereof) for the payment of Taxes
with respect to such Straddle Period Return, an amount tentatively
determined by the Independent Accountants as the proper amount
chargeable to Sellers pursuant to this Section 5.8. Upon delivery to
Seller and Buyer by the Independent Accountants of its final
determination, appropriate adjustments shall be made to the amount
paid by Seller in accordance with the immediately preceding sentence
in order to reflect the final decision of the Independent
Accountants. The determination by the Independent Accountants shall
be final, conclusive and binding on the parties.
(iv) Seller and Buyer shall reasonably cooperate, and
shall cause their respective Affiliates, officers, employees, agents,
auditors and representatives reasonably to cooperate, in preparing
and filing all Tax Returns (including amended returns and claims for
refund), including maintaining and making available to each other all
records necessary in connection with Taxes and in resolving all
disputes and audits with respect to all taxable periods relating to
Taxes. Buyer recognizes that Seller will need access, from time to
time, after the Effective Time, to certain accounting and tax records
and information held by the Company to the extent such records and
information pertain to events occurring prior to the Effective Time;
therefore, Buyer agrees that from and after the Effective Time Buyer
shall, and shall cause the Company to, (A) retain and maintain such
records until such time as Seller determines that such retention and
maintenance is no longer necessary and (B) allow Seller and their
agents and representatives (and agents and representatives of its
Affiliates) to inspect, review and make copies of such records as
Seller reasonably may deem necessary or appropriate from time to
time. Buyer shall indemnify Seller from and against any penalties,
additions to tax or interest imposed on Seller as a result of any
failure of Buyer to provide tax records or other information to
Seller in a timely manner.
(v) Buyer shall not, and shall cause the Company not
to, dispose of or destroy any of the business records and files of
the Company relating to Taxes in existence at the Effective Time
without first offering to turn over possession thereof to Seller by
written notice to Seller at least thirty days prior to the proposed
date of such disposition or destruction.
(vi) Any refunds and credits of Taxes of the Company
or similar benefit (including any interest or similar benefit) which
are not included as assets or as a reduction of a liability or
reserve on the Interim Balance Sheet but which are received by the
Company or Buyer or for which the Company is entitled to a credit
with respect to (A) Taxes paid for any taxable period ending on or
before the Effective Time or (B) Taxes for which Seller has
indemnified the Buyer under the Agreement, shall be for the account
of Seller, and if received or utilized by Buyer or the Company, shall
be paid to Seller within five business days after Buyer or Company
receives such refund or utilizes such credit. Except as provided in
the next sentence, any refunds or credits of the Company with respect
to any Straddle Period shall be apportioned between Seller, on the
one hand, and Buyer, on the other hand, on the basis of an interim
closing of the books. In the case of a refund or credit attributable
to any Taxes that are imposed on a periodic basis and are
attributable to the Straddle Period, other than Taxes based upon or
related to gross or net income or receipts, the refund or credit of
such Taxes of the Company for the Pre-Closing Period shall be deemed
to be the amount of such refund or credit for the Straddle Period
multiplied by a fraction the numerator of which is the number of days
in the Straddle Period ending on the Closing Date and the denominator
of which is the number of days in the Straddle Period.
(vii) otwithstanding any other provisions of this
Agreement to the contrary, all sales, use, transfer, gains, stamp,
duties, recording and similar Taxes incurred in connection with the
transactions contemplated by this Agreement shall be paid by Buyer
and Buyer shall, at its own expense, accurately file or cause to be
filed all necessary Tax Returns and other documentation with respect
to such Taxes and timely pay all such Taxes. If required by
applicable law, Seller will join in the execution of any such Tax
Returns or such other documentation.
(d) Elections. Except as may be required by law, Buyer
shall not, and shall cause the Company not to, make, amend, or revoke
any Tax election if such action would adversely affect Seller or any
Person (other than the Company) as to whom or with whom Seller has
filed a consolidated return with respect to any taxable period ending
on or before the Effective Time or for the Pre-Closing Period or any
Tax refund with respect thereto.
(e) Tax Indemnification.
(i) Buyer shall indemnify, defend and hold harmless
Seller and its Affiliates, at any time after the Closing, from and
against any liability for Taxes of the Company for any taxable period
ending after the Effective Time except for Straddle Periods, in which
case Buyer's indemnity will cover only that portion of any such Taxes
that is not attributable to the Pre-Closing Period.
(ii) Seller shall indemnify, defend and hold harmless
Buyer and its Affiliates, at any time after the Closing, from and
against any liability for Taxes of the Company (including any joint
or several liability imposed under Treasury Regulation Section
1.1502-6 or any similar provision of state, local or foreign Tax law
as a result of the inclusion of the Company in any consolidated,
combined or unitary Tax Return), except as provided in Section
5.8(c)(vii) hereof, for the Pre-Closing Period (including the portion
of any Straddle Period ending on the Closing Date).
(iii) In determining the responsibility of Seller
and Buyer for Taxes attributable to any Straddle Period, Taxes based
upon or related to gross or net income or receipts shall be
apportioned on the basis of an interim closing of the books as of the
Effective Time, and all other Taxes shall be prorated on a daily
basis.
(iv) If a claim for Taxes shall be made by any taxing
authority in writing, which, if successful, might result in an
indemnity payment pursuant to this Section 5.8, the party seeking
indemnification (the "Tax Indemnified Party") shall promptly notify
the other party (the "Tax Indemnifying Party") in writing of such
claim (a "Tax Claim") within a reasonably sufficient period of time
to allow the Tax Indemnifying Party effectively to contest such Tax
Claim, and in reasonable detail to apprise the Tax Indemnifying Party
of the nature of the Tax Claim, and provide copies of all
correspondence and documents received by it from the relevant taxing
authority. Failure to give prompt notice of a Tax Claim hereunder
shall affect the Tax Indemnifying Party's obligation under this
Section to the extent that the Tax Indemnifying Party is prejudiced
by such failure to give prompt notice.
(v) With respect to any Tax Claim which might result
in an indemnity payment to Buyer pursuant to this Section 5.8(e)
(including, without limitation, Taxes of the Company for a Straddle
Period), Seller shall control all proceedings taken solely in
connection with such Tax Claim, provided that Seller acknowledges in
writing its liability to indemnify Buyer hereunder with respect to
such Tax Claim. Without limiting the foregoing, Seller may in its
reasonable discretion and at its sole expense pursue or forego any
and all administrative appeals, proceedings, hearings and conferences
with any taxing authority with respect to any Tax Claim for which
Seller may have an Indemnification obligation hereunder, and may, in
its reasonable discretion, either pay the Tax claimed and sue for a
refund where applicable law permits such refund suits or contest such
Tax Claim. Neither Buyer nor Seller shall under any circumstances
settle or otherwise compromise any Tax Claim without first obtaining
the other parties prior written consent, which consent shall not be
unreasonably withheld. In connection with any proceeding taken in
connection with such Tax Claim, (A) Seller shall keep Buyer informed
of all material developments and events relating to such Tax Claim if
involving a material liability for Taxes and (B) Buyer shall have the
right, at its sole expense, to participate in any such proceedings.
Buyer shall cooperate with Seller in contesting such Tax Claim
(without charge to Seller), which cooperation shall include, without
limitation, the retention and the provision to Seller of records and
information which are reasonably relevant to such Tax Claim, and
making employees available to Seller to provide additional
information or explanation of any material provided hereunder or to
testify at proceedings relating to such Tax Claim, provided that no
charges shall be incurred by Seller for the services of such
employees. In the event that an audit or proceeding involving a Tax
Claim contested by Seller also involves a potential adjustment for
which Buyer would be liable, Buyer shall have the right, at its
expense, to control the audit or proceeding with respect to the
latter potential adjustment. With respect to any issue arising in
connection with a Tax claim for which both of the Seller and Buyer
could be liable, or which recurs for any period ending after the
Closing Date (whether or not the subject of audit at such time), each
party may participate in the audit or proceeding and the audit or
proceeding shall be controlled by that party which would bear the
burden of the greater portion of the sum of the Tax Claim and any
corresponding adjustments that may reasonably be anticipated in
future Tax periods. The principle set forth in the preceding
sentence shall govern also for purposes of deciding any issue that
must be decided jointly (in particular, choice of judicial forum) in
situations in which separate issues are otherwise controlled
hereunder by Buyer and Seller.
(vi) With respect to any Tax Claim not described in
Section 5.8(e)(v) hereof which might result in an indemnity payment
to Seller pursuant hereto, all proceedings shall be conducted in
accordance with provisions that are parallel to those in Section
5.8(e)(v) hereof.
(f) Miscellaneous.
(i) Seller and Buyer agree to treat all payments made
by either to or for the benefit of the other (including any payments
to the Company) under Article V or Article IX as adjustments to the
purchase price or as capital contributions for Tax purposes and that
such treatment shall govern for purposes hereto except to the extent
that the laws of a particular jurisdiction provide otherwise, in
which case such payment shall be made in an amount sufficient in
indemnify the relevant party on an after-Tax basis.
(ii) Notwithstanding any provision herein to the
contrary, the obligations of Seller to indemnify and hold harmless
Buyer and the Company pursuant to this Section 5.8 shall terminate at
the close of business on the 120th day following the expiration of
the applicable statute of limitations with respect to the Tax
liabilities in question (giving effect to any waiver, mitigation or
extension thereof).
(iii) Buyer or Seller shall be entitled to recover
professional fees and related costs that it may reasonably incur to
enforce the provisions of this Section 5.8 in the event of a breach
of the obligations under this Section 5.8.
Section 5.9 Supplemental Disclosure. If any event or
matter arises or comes to the attention of Seller or the Company
after the date of this Agreement which, if existing or occurring or
known to Seller or the Company at the date of this Agreement, would
have been required to be set forth or described in the Schedules or
which is necessary to correct any information in the Schedules which
has been rendered inaccurate thereby in any material respect, then
the Company shall promptly supplement or amend and deliver to Buyer
the Schedules which it has delivered pursuant to this Agreement, and
Buyer shall have the right, within five business days of receipt by
Buyer of such supplement or amendment, to terminate the Agreement
pursuant to Section 7.1(e).
Section 5.10 Guarantees. Prior to the Closing, Buyer
shall use commercially reasonable efforts (which efforts shall
include, if necessary, a replacement guaranty by Parent) to have
United Parcel Service of America, Inc. ("UPS") and its Affiliates
(collectively, the "Guarantors") released as guarantor from all off-
balance sheet financing related to leased equipment utilized by the
Company and from all real property leases to which the Company is a
party, provided that if any such guarantee cannot be removed prior to
Closing Buyer agrees to fully and unconditionally indemnify the
Guarantors for any costs associated with such guarantees. If
requested by Seller, Buyer shall execute and deliver at Closing a
specific indemnification instrument relating to any such continuing
guarantee obligations.
Section 5.11 Investigation by Buyer. Buyer has conducted
its own independent review and analysis of the business, operations,
technology, assets, liabilities, results of operations, financial
condition and prospects of the Company and acknowledges that Seller
has provided Buyer with access to the personnel, properties, premises
and records of the Company for this purpose. In entering into this
Agreement, Buyer has relied solely upon its own investigation and
analysis, and Buyer (a) acknowledges that neither Seller, the Company
nor any of their respective directors, officers, employees,
Affiliates, controlling Persons, agents or representatives makes or
has made any representation or warranty, either express or implied,
as to the accuracy or completeness of any of the information provided
or made available to Buyer or its directors, officers, employees,
Affiliates, controlling Persons, agents or representatives, and (b)
agrees, to the fullest extent permitted by law, that neither Seller,
Company nor any of their respective directors, officers, employees,
Affiliates, controlling Persons, agents or representatives shall have
any liability or responsibility whatsoever to Buyer or its directors,
officers, employees, Affiliates, controlling Persons, agents or
representatives on any basis (including, without limitation, in
contract or tort, under federal or state securities laws or
otherwise) based upon any information provided or made available, or
statements made, to Buyer or its directors, officers, employees,
Affiliates, controlling Persons, agents or representatives (or any
omissions therefrom), except as and only to the extent expressly set
forth herein with respect to the representations and warranties of
Seller in Article III and subject to the limitations and restrictions
contained herein. Buyer's sole rights and remedies relative to
transactions contemplated herein are limited to those set forth
herein.
Section 5.12 UPS Owned Facilities. Buyer and Seller will
use their good faith efforts to enter into an agreement with terms
and conditions mutually acceptable to both parties prior to the
Closing relating to certain UPS owned facilities that are currently
utilized in the business of the Company (the "UPS Owned Facilities").
All current agreements and arrangements between UPS or any of its
Affiliates and the Company regarding any of the UPS Owned Facilities
will be terminated simultaneously with the Closing.
Section 5.13 Rental Fleet Sales.
(a) Following the Closing, Buyer will continue
to utilize the Company's historic depreciation schedule with respect
to those vehicles in the Company's rental fleet with model years 1996
and earlier (the "Sale Vehicles").
(b) Buyer anticipates that it will sell each
Sale Vehicle following the 54-month anniversary of the date such Sale
Vehicle was put in service. All such sales will be for cash, and
Buyer will use its reasonable best efforts to maximize the sales
price for each Sale Vehicle in accordance with its customary
practices for sales out of Buyer's rental fleet (including, without
limitation, obtaining at least two bona fide bids for each Sale
Vehicle), and Buyer will not give priority to sales out of its
existing fleet. Buyer will consult with Seller at Seller's request
regarding the process for sale of the Sale Vehicles and will provide
Seller and its representatives with full access to all records
regarding the sale of the Sale Vehicles.
(c) Within five (5) business days following each
sale of a Sale Vehicle, Buyer will provide to Seller a detailed
written calculation of the Realization Amount (as defined below) with
respect to such Sale Vehicle. The "Realization Amount" shall equal
(i) the sales price of the applicable Sale Vehicle minus (ii) the sum
of (A) the net book value of such Sale Vehicle reflected on the
Company's books as of the date of sale and (B) Buyer's standard
preparation for sale charges for such type of Sale Vehicle (which
maximum charges currently range from $250-600 per vehicle). If the
Realization Amount is a positive number, the written calculation of
the Realization Amount shall be accompanied by payment to Seller (by
wire transfer of immediately available funds to an account designated
by Buyer) in an amount equal to 75% of the Realization Amount. If
the Realization Amount is a negative number, Seller shall pay to
Buyer (by wire transfer of immediately available funds to an account
designated by Buyer) within two business days following notification
of such calculation an amount equal to the Realization Amount
(expressed as a positive number). Neither party shall have any
obligation under this Section 5.13 with respect to any sale of a Sale
Vehicle that occurs (i) prior to the 54-month anniversary of the date
such vehicle was placed in service or (ii) more than 24 months
following the Closing Date.
(d) Seller may give notice to Buyer at any time
that Seller desires to assume responsibility for the sale of the Sale
Vehicles. If Seller gives such notice, the provisions of Section
5.13(c) above shall no longer be applicable. Instead, following such
notice, Seller will purchase each Sale Vehicle from Buyer on the
fifty-four month anniversary of the date such Sale Vehicle was placed
in service for a cash price equal to such Sale Vehicle's net book
value. Thereafter, Seller will have no further obligation to Buyer
with respect to such Sale Vehicle or any proceeds thereof.
Section 5.14 Outstanding Debt. At the Closing (or, if
the Closing occurs on January 1, 2000, on the first business day
thereafter), Buyer shall repay in full the Outstanding Debt with
funds provided by Buyer.
Section 5.15 Reimbursement Program. Following the
Closing, Buyer agrees to remit to Seller within five days following
receipt by Buyer any amounts received from a governmental entity as
reimbursement to the Company for environmental remediation
activities taken by the Company prior to the Closing and set forth on
Schedule 5.15.
Section 5.16 Additional Actions. After the execution of
this Agreement, upon Buyer's request and solely at Buyer's expense,
Seller will cause Deloitte & Touche LLP to audit the balance sheets
of the Company as of December 31, 1997 and 1998 and statements of
income and cash flows thereof for the respective fiscal years then
ended.
Section 5.17 Off-Balance Sheet Financing. For the
purpose of this Agreement, from October 31, 1999, the Outstanding
Debt will be increased solely by capital expenditures and decreased
solely by the net proceeds from asset sales. The Company will make a
good faith effort to monetize certain fleet assets through outside
financing generating $39.2 million in net proceeds (structured on the
same basis as similar transactions previously undertaken by the
Company or on such other basis as is mutually agreeable to Buyer and
Seller), which the parties anticipate will reduce the Outstanding
Debt to approximately $101 million at the Closing Date. To the
extent Outstanding Debt at Closing is more than $101 million, Buyer
will pay the difference to Seller in cash at Closing. To the extent
Outstanding Debt at Closing is less than $101 million, Seller will
pay the difference to Buyer in cash at Closing.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES
Section 6.1 Conditions to Each Party's Obligation. The
respective obligation of each party to consummate the transactions
contemplated herein is subject to the satisfaction at or prior to the
Closing of the following conditions:
(a) No statute, rule or regulation shall have been
enacted, promulgated or enforced by any court or governmental
authority which prohibits or restricts the consummation of the
transactions contemplated hereby;
(b) There shall not be in effect any judgment, order,
injunction or decree of any court of competent jurisdiction enjoining
the consummation of the transactions contemplated hereby;
(c) Any waiting periods applicable to the transactions
contemplated by this Agreement under the HSR Act shall have expired
or early termination shall have been granted;
(d) All consents, authorizations, waivers and approvals of
any governmental authority or other regulatory body or from parties
to contracts or other agreements to which the Company is a party as
may be required to be obtained in connection with the performance of
this Agreement, the failure to obtain which would prevent the
consummation of the transactions contemplated hereby or have a
Company Material Adverse Effect, shall have been obtained; and
the transactions contemplated by that certain Asset Purchase
Agreement, dated the date hereof, by and among Worldwide Dedicated
Services, Inc., Rollins Logistics, Inc., Rollins Dedicated Carriages,
Inc. and Rollins Transportation Systems, Inc. shall have been
consummated simultaneously with the Closing.
Section 6.2 Conditions to Obligations of Seller. The
obligations of Seller to consummate the transactions contemplated
hereby are further subject to the satisfaction (or waiver) at or
prior to the Closing of the following conditions:
(a) The representations and warranties of Buyer contained
in Article IV of this Agreement shall be true and correct in all
material respects at the date hereof and as of the Closing as if made
at and as of such time, except for changes permitted or contemplated
hereby and except for representations and warranties which are as of
a specific date;
(b) Buyer shall have performed in all material respects
its obligations under this Agreement required to be performed by it
at or prior to the Closing pursuant to the terms hereof;
(c) Buyer shall have delivered to Seller or its Affiliates
those items set forth in Section 1.8 hereof;
(d) Buyer or its Affiliate shall have executed and
delivered an alliance agreement substantially in the form attached
hereto as Exhibit 6.2(d) (the "Alliance Agreement");
(e) Buyer or its Affiliate shall have executed and
delivered an investor rights agreement (the "Investor Rights
Agreement") substantially in accordance with the terms and conditions
set forth on the Investor Rights Agreement Term Sheet attached hereto
as Exhibit 6.2(e) (the "Investor Rights Agreement Term Sheet");
(f) Buyer or its Affiliate shall have executed and
delivered a transition services agreement in form and substance
reasonably satisfactory to Buyer and Seller (the "Transition Services
Agreement") and shall have reached agreement with Seller on certain
other material transitional issues; and
(g) Buyer or its Affiliate shall have executed and
delivered the Access Agreement (as hereinafter defined).
Section 6.3 Conditions to Obligations of Buyer. The
obligations of Buyer to consummate the transactions contemplated
hereby are further subject to the satisfaction (or waiver) at or
prior to the Closing of the following conditions:
(a) The representations and warranties of Seller contained
in Article III of this Agreement shall be true and correct in all
material respects at the date hereof and as of the Closing as if made
at and as of such time, except for changes permitted or contemplated
hereby and except for representations and warranties which are as of
a specific date;
(b) Seller shall have performed in all material respects
its obligations under this Agreement required to be performed by it
at or prior to the Closing pursuant to the terms hereof;
(c) The officers and directors of the Company shall have
tendered letters of resignation to Buyer, effective as of the Closing
Date;
(d) Seller shall have delivered to Buyer those items set
forth in Section 1.7 hereof;
(e) Seller or its Affiliate shall have executed and
delivered the Alliance Agreement;
(f) Seller or its Affiliate shall have executed and
delivered the Investor Rights Agreement;
(g) Seller or its Affiliate shall have executed and
delivered the Transition Services Agreement and shall have reached
agreement with Buyer on certain other material transition issues; and
(h) Seller or its Affiliate shall have executed and
delivered the Access Agreement.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned:
(a) at any time, by mutual written consent of Seller and
Buyer;
(b) by either party if the transactions contemplated
hereby shall have been permanently enjoined by a court of competent
jurisdiction, provided that no party hereto who brought or is
affiliated with the party who brought the action seeking the
permanent enjoinment of the transactions contemplated hereby may seek
termination of this Agreement pursuant to this Section 7.1(b);
(c) by Buyer if (i) any of the conditions set forth in
Sections 6.1 and 6.3 shall have become incapable of fulfillment and
shall not have been waived by Buyer or (ii) Seller shall breach in
any material respect any of its representations, warranties,
covenants or other obligations hereunder and, within twenty (20) days
after written notice of such breach to Seller from Buyer, such breach
shall not have been cured in all material respects or waived by
Buyer, or Seller shall not have provided reasonable assurance to
Buyer that such breach will be cured in all material respects on or
before the Closing Date; or
(d) by Seller if (i) any of the conditions set forth in
Sections 6.1 or 6.2 shall have become incapable of fulfillment and
shall not have been waived by Seller or (ii) Buyer shall breach in
any material respect any of its representations, warranties,
covenants or other obligations hereunder and, within twenty (20) days
after written notice of such breach to Buyer from Seller, such breach
shall not have been cured in all material respects or waived by
Seller or Buyer shall not have provided reasonable assurance to
Seller that such breach will be cured in all material respects on or
before the Closing Date;
(e) by Buyer, within five (5) business days following
receipt of any supplement or amendment to the Schedules, by written
notice to Seller if the matter which gives rise to such supplement or
amendment individually, or together with any other such matters, in
the aggregate has caused any of the representations and warranties of
Seller set forth in Article III (without giving effect to such
supplement or amendment) to be inaccurate in any material respect; or
(f) by Buyer or Seller, at any time on or after February
1, 2000, if the Closing shall not have occurred on or prior to such
date; provided, however, that the right to terminate this Agreement
under this Section 7.1(f) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
primary cause of, or resulted in, the failure of the Closing to have
occurred on or before such date.
Section 7.2 Procedure and Effect of Termination. In the
event of the termination of this Agreement and the abandonment of the
transactions contemplated hereby pursuant to Section 7.1 hereof,
written notice thereof shall forthwith be given by Seller, on the one
hand, or Buyer, on the other hand, so terminating to the other party
and this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned, without further action by Seller, or
Buyer. If this Agreement is terminated pursuant to Section 7.1
hereof:
(a) each party shall redeliver all documents, work papers
and other materials of the other parties relating to the transactions
contemplated hereby, whether so obtained before or after the
execution hereof, to the party furnishing the same or, upon prior
written notice to such party, shall destroy all such documents, work
papers and other materials and deliver notice to the parties seeking
destruction of such documents that such destruction has been
completed, and all confidential information received by any party
hereto with respect to the other party shall be treated in accordance
with the Confidentiality Agreement and Section 5.2(b) hereof;
(b) all filings, applications and other submissions made
pursuant hereto shall, at the option of Seller, and to the extent
practicable, be withdrawn from the agency or other Person to which
made; and
(c) there shall be no liability or obligation hereunder on
the part of Seller, the Company or Buyer or any of their respective
directors, officers, employees, Affiliates, controlling Persons,
agents or representatives, except that Seller or Buyer, as the case
may be, shall have liability to the other party if the basis of
termination is a willful, material breach by Seller or Buyer, as the
case may be, of one or more of the provisions of this Agreement, and
except that the obligations provided for in this Section, in
Section 10.1 hereof, in the Confidentiality Agreement and the non-
compete obligations in the Alliance Agreement shall survive any such
termination.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS
Section 8.1 Survival of Representations, Warranties and
Agreements. The representations and warranties of Seller and Buyer
made in Articles III and IV hereof, respectively, shall not survive
the Closing and, except as provided in Section 7.2(c) hereof, shall
not survive any termination of this Agreement; provided that any
covenant or agreement of any party contained herein which by its
terms shall survive the Closing shall survive until fully performed,
and provided, further, that this Section 8.1 is not intended in any
way to limit any covenant or agreement of the parties which
contemplates performance after the Closing, including, without
limitation, the covenants and agreements set forth in Sections 5.7
and 5.8 hereof.
ARTICLE IX
INDEMNIFICATION
Section 9.1 Indemnification Obligations of Seller.
Subject to the limitations set forth in this Article IX, Seller shall
defend and hold harmless Buyer and its Affiliates, each of their
respective officers, directors, employees, agents and representatives
and each of the heirs, executors, successors and assigns of any of
the foregoing (collectively, the "Buyer Indemnified Parties") from,
against and in respect of any and all claims, liabilities,
obligations, losses, costs, expenses, penalties, fines and judgments
(at equity or at law) and damages whenever arising or incurred
(including, without limitation, amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses) arising
out of or relating to: (i) the Indemnified Claims (as hereinafter
defined); (ii) the Orlando North VOH Plume (as hereinafter defined);
(iii) the Environmental Claims (excluding the Orlando North VOH
Plume) and any other claim or enforcement action of any governmental
authority or any third party (other than the Orlando North VOH Plume)
and any remediation activities of Buyer, in each case to the extent
arising out of the generation, discharge, release, treatment,
transportation, storage or disposal by the Company of any Hazardous
Materials at any time prior to the Closing (collectively,
"Environmental Liabilities") to the extent not constituting a Prior
Operations Liability (as defined below), (iv) any Environmental
Liability arising with respect to real property that was previously
owned or leased by the Company but is no longer owned or leased by
the Company as of the Closing Date (a "Prior Operations Liability");
and (v) any accounts receivable of the Company reflected in the
Closing Date Working Capital that Buyer is unable to collect within
90 days following the Closing Date; provided, (A) Buyer has used its
reasonable best efforts to collect such receivable, (B) in the event
Buyer seeks indemnity under this Section 9.1(iv), Buyer shall assign
such receivable and all proceeds thereof to Seller and (C) the
indemnification to which Buyer is entitled will be limited to the
face amount of any uncollected receivables.
For purposes of this Agreement, the "Indemnified Claims" shall
mean those Litigation Claims marked with an asterisk on Schedule 3.12
and any claim of the type described below brought against the Company
(or Buyer as the successor to the Company) after the date hereof to
the extent based on an occurrence in connection with the Company's
operations prior to the Closing Date: workers' compensation, vehicle
accident or other personal injury or property damage claims normally
covered under a general liability insurance policy and employee
compensation and benefits (other than employee compensation and
benefits accrued as a liability on the Final Closing Balance Sheet
and reflected in the calculation of the Closing Date Working
Capital).
The claims, liabilities, obligations, losses, costs, expenses,
penalties, fines and damages of the Buyer Indemnified Parties
described in this Section 9.1 as to which the Buyer Indemnified
Parties are entitled to indemnification are hereinafter collectively
referred to as "Buyer Losses."
Section 9.2 Indemnification Procedure.
(a) Promptly after receipt by a Buyer Indemnified Party of
notice by a third party of threatened or filed claim or of the
threatened or actual commencement of any action or proceeding with
respect to which such Buyer Indemnified Party may be entitled to
receive payment from the other party for any Buyer Losses, such Buyer
Indemnified Party shall notify Seller, within 30 days of the notice
of threatening or filing of such claim or of the threatened or actual
commencement of such action or proceeding; provided, however, that
the failure to so notify Seller shall relieve Buyer from liability
under this Agreement with respect to such claim only if, and only to
the extent that, such failure to notify Seller results in the
forfeiture by Seller of rights and defenses otherwise available to
Seller with respect to such claim. Seller shall have the right, upon
written notice delivered to the Buyer Indemnified Party within 30
days thereafter, to assume the defense of such action or proceeding,
including the employment of counsel reasonably satisfactory to the
Buyer Indemnified Party and the payment of the fees and disbursements
of such counsel. In any action or proceeding with respect to which
indemnification is being sought hereunder, the Buyer Indemnified
Party or Seller, whichever is not assuming the defense of such
action, shall have the right to participate in such litigation and to
retain its own counsel at such party's own expense. Seller or the
Buyer Indemnified Party, as the case may be, shall at all times use
reasonable efforts to keep Seller or the Buyer Indemnified Party, as
the case may be, reasonably apprised of the status of the defense of
any action the defense of which they are maintaining and to cooperate
in good faith with each other with respect to the defense of any such
action.
(b) The Buyer Indemnified Party may not settle or
compromise any claim or consent to the entry of any judgment with
respect to which indemnification is being sought hereunder without
the prior written consent of Seller. Seller may not, without the
prior written consent of the Buyer Indemnified Party, settle or
compromise any claim or consent to the entry of any judgment with
respect to which indemnification is being sought hereunder unless (i)
simultaneously with the effectiveness of such settlement, compromise
or consent, Seller pays in full any obligation imposed on the Buyer
Indemnified Party by such settlement, compromise or consent and (ii)
such settlement, compromise or consent does not contain any equitable
order, judgment or term which in any manner affects, restrains or
interferes with the business of the Buyer Indemnified Party or any of
the Buyer Indemnified Party's affiliates.
(c) In the event the Buyer Indemnified Party shall claim a
right to payment pursuant to this Agreement not involving a third
party claim covered by Section 9.2(a), the Buyer Indemnified Party
shall send written notice of such claim to Seller. Such notice shall
specify the basis for such claim. As promptly as possible after the
Buyer Indemnified Party has given such notice, such Buyer Indemnified
Party and Seller shall establish the merits and amount of such claim
(by mutual agreement, litigation, arbitration or otherwise) and,
within five business days of the final determination of the merits
and amount of such claim, Seller shall pay to the Buyer Indemnified
Party immediately available funds in an amount equal to such claim as
determined hereunder.
Section 9.3 Orlando North VOH Plume Indemnification.
(a) Seller has retained an environmental consultant (the
"Consultant"), who is assessing the extent of the dissolved volatile
organic hydrocarbon plume as identified in the Groundwater Quality
Monitoring Report dated September 1999 prepared by Blasand, Bouck &
Lee, Inc. ("Orlando North VOH Plume"). Seller is currently
negotiating with the Florida Department of Environmental Protection
("FDEP") to formalize any assessment, remediation, monitoring, risk
evaluation and reporting (as hereinafter referred to as "Corrective
Action") that is required by FDEP. Pursuant to its Section 9.1
indemnification obligation, Seller shall undertake the Corrective
Action agreed to with FDEP (which could include either long-term
groundwater monitoring or risk-based corrective action or
remediation) until the earlier of: (A) FDEP issues a letter
indicating that the Company (or Buyer as the successor to the
Company) is not required to perform any further action with respect
to the Orlando North VOH Plume; or (B) the Consultant has issued a
letter or report to FDEP indicating that the Corrective Action (as
approved by FDEP) has been satisfactorily performed, and FDEP has not
objected to the letter or report.
(b) Seller shall manage and control the Corrective Action
of the Orlando North VOH Plume, including, without limitation, the
right to retain consultants and counsel, to manage any
investigations, clean-up, response, remediation and associated
activities, and to negotiate, litigate, otherwise contest or settle
any claim relating thereto.
(c) Buyer agrees to reasonably cooperate with Seller to
ensure that the obligations and commitments with respect to the
Orlando North VOH Plume are carried out. Buyer agrees to provide to
Seller such information as may be reasonably requested regarding the
Orlando North VOH Plume and to provide Seller reasonable access to
Buyer's employees on a mutually convenient basis. Buyer also agrees
to provide access to the Orlando North property for the purpose of
allowing Seller to perform activities to fulfill Seller's obligations
hereunder in accordance with the terms of an access agreement to be
mutually agreed upon by the parties hereto ("Access Agreement");
provided that Seller shall conduct such activities so as to not
unreasonably interfere with Buyer's operations.
(d) Buyer shall operate after the Closing Date so as not
to compound or exacerbate the Orlando North VOH Plume. Seller shall
not be required to indemnify Buyer with respect to any compounding or
exacerbation of the Orlando North VOH Plume arising from post-Closing
operations of Buyer.
Section 9.4 Liability Limits. Notwithstanding anything
to the contrary set forth herein, Buyer Indemnified Parties shall not
make a claim against Seller for indemnification under Section
9.1(iii) for Buyer Losses unless and until the aggregate amount of
such Buyer Losses exceeds $1,000,000 (the "Buyer Basket"), in which
event the Buyer Indemnified Parties may claim indemnification only
for fifty percent of the Buyer Losses that exceed the Buyer Basket
and that arise under or pursuant to Section 9.1(iii). Seller's
indemnification obligations under Section 9.1(iii) shall not exceed
in the aggregate an amount equal to $10,000,000 (the "Cap Amount").
Section 9.5 Claims Period. For purposes of this
Agreement, a "Claims Period" is the period during which a Buyer
Indemnified Party may initiate a claim for indemnification pursuant
to Section 9.1. The Claims Period under this Agreement shall
commence on the Closing Date and shall terminate as follows:
(a) with respect to Buyer Losses arising under Section
9.1(ii), the Claims Period shall terminate on the fifth anniversary
of the earlier to occur of the actions (or lack of actions) by FDEP
described in the last sentence of Section 9.3(a).
(b) with respect to Buyer Losses arising under Section
9.1(iii), the Claims Period shall terminate on the fifth anniversary
of the Closing Date; and
(c) with respect to Buyer Losses arising under Sections
9.1(i),(iv) and (v), the Claims Period shall continue indefinitely,
except as limited by law (including by applicable statutes of
limitations).
Section 9.6 Exclusive Remedies. Following the Closing,
neither Buyer nor Seller shall make any claim nor have any remedy
against the other party arising out of or relating to the
transactions contemplated hereby other than any claim arising out of
or related to (a) indemnification pursuant to Section 5.7(b), 5.8(d)
or 9.1 or (b) a breach of any covenant set forth in this Agreement or
any agreement contemplated hereby required to be performed after the
Closing.
ARTICLE X
MISCELLANEOUS
Section 10.1 Fees and Expenses. Except as set forth in
this Section 10.1, whether or not the transactions contemplated
herein are consummated pursuant hereto, each of Seller and Buyer
shall pay all fees and expenses incurred by, or on behalf of, Seller
or Buyer, respectively, in connection with, or in anticipation of,
this Agreement and the consummation of the transactions contemplated
hereby.
Section 10.2 Further Assurances. From time to time after
the Closing Date, at the reasonable request of the other party hereto
and at the expense of the party so requesting, each of the parties
hereto shall execute and deliver to such requesting party such
documents and take such other action as such requesting party may
reasonably request in order to consummate more effectively the
transactions contemplated hereby.
Section 10.3 Notices. All notices, requests, demands,
waivers and other communications required or permitted to be given
under this Agreement shall be in writing and may be given by any of
the following methods: (a) personal delivery; (b) facsimile
transmission; (c) registered or certified mail, postage prepaid,
return receipt requested; or (d) UPS next day air or document
exchange. Notices shall be sent to the appropriate party at its
address or facsimile number given below (or at such other address or
facsimile number for such party as shall be specified by notice given
hereunder):
If to Buyer or Parent, to:
Rollins Leasing Corp.
2200 Concord Pike
One Rollins Plaza
Wilmington, DE 19803
Fax No. (302) 426-3815
Attention: Patrick J. Bagley
with a copy to:
Rollins Leasing Corp.
2200 Concord Pike
One Rollins Plaza
Wilmington, DE 19803
Fax No. (302) 426-3555
Attention: Klaus M. Belohoubek
If to Seller or the Company, to:
United Parcel Service, Inc.
55 Glenlake Parkway
Atlanta, GA 30328
Fax No. (404) 828-6440
Attention: Legal Department
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Fax No. (404) 572-5145
Attention: Michael J. Egan III
All such notices, requests, demands, waivers and communications
shall be deemed received upon (i) actual receipt thereof by the
addressee, (ii) actual delivery thereof to the appropriate address
or (iii) in the case of a facsimile transmissions, upon
transmission thereof by the sender and issuance by the transmitting
machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In
the case of notices sent by facsimile transmission, the sender
shall contemporaneously mail a copy of the notice to the addressee
at the address provided for above. However, such mailing shall in
no way alter the time at which the facsimile notice is deemed
received.
Section 10.4 Severability. Should any provision of this
Agreement for any reason be declared invalid or unenforceable, such
decision shall not affect the validity or enforceability of any of
the other provisions of this Agreement, which remaining provisions
shall remain in full force and effect and the application of such
invalid or unenforceable provision to Persons or circumstances other
than those as to which it is held invalid or unenforceable shall be
valid and enforced to the fullest extent permitted by law.
Section 10.5 Binding Effect; Assignment. This Agreement
and all of the provisions hereof shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned,
directly or indirectly, including, without limitation, by operation
of law, by any party hereto without the prior written consent of the
other parties hereto.
Section 10.6 No Third Party Beneficiaries. This
Agreement is solely for the benefit of Seller, and its successors and
permitted assigns, with respect to the obligations of Buyer under
this Agreement, and for the benefit of Buyer, and its respective
successors and permitted assigns, with respect to the obligations of
Seller, under this Agreement, and this Agreement shall not be deemed
to confer upon or give to any other third party any remedy, claim,
liability, reimbursement, cause of action or other right.
Section 10.7 Interpretation.
(a) The Article and Section headings contained in this
Agreement are solely for the purpose of reference, are not part of
the agreement of the parties and shall not in any way affect the
meaning or interpretation of this Agreement.
(b) As used in this Agreement, the term "Person" shall
mean and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
(c) As used in this Agreement, the term "Affiliate" shall
mean a person that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common
control with the person specified.
Section 10.8 Jurisdiction and Consent to Service.
Without limiting the jurisdiction or venue of any other court, each
of Seller and Buyer (a) agrees that any suit, action or proceeding
arising out of or relating to this Agreement may be brought solely in
the state or federal courts of Georgia; (b) consents to the exclusive
jurisdiction of each such court in any suit, action or proceeding
relating to or arising out of this Agreement; (c) waives any
objection which it may have to the laying of venue in any such suit,
action or proceeding in any such court; and (d) agrees that service
of any court paper may be made in such manner as may be provided
under applicable laws or court rules governing service of process.
Section 10.9 Entire Agreement. This Agreement, the
Confidentiality Agreement, the Schedules and other documents
referred to herein or delivered pursuant hereto which form a part
hereof constitute the entire agreement among the parties with respect
to the subject matter hereof and supersede all other prior agreements
and understandings, both written and oral, between the parties or any
of them with respect to the subject matter hereof.
Section 10.10 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Georgia (regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof) as to all
matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
Section 10.11 Specific Performance. The parties
acknowledge and agree that any breach of the terms of this Agreement
would give rise to irreparable harm for which money damages would not
be an adequate remedy and accordingly the parties agree that, in
addition to any other remedies, each shall be entitled to enforce the
terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy.
Section 10.12 Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same
agreement.
Section 10.13 Amendment, Modification and Waiver. This
Agreement may be amended, modified or supplemented at any time by
written agreement of Seller and Buyer. Any failure of Seller or
Buyer to comply with any term or provision of this Agreement may be
waived, with respect to Buyer, by Seller and, with respect to Seller,
by Buyer, by an instrument in writing signed by or on behalf of the
appropriate party, but such waiver or failure to insist upon strict
compliance with such term or provision shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure to
comply.
Section 10.14 Knowledge. "To the Knowledge of Seller" or
any similar phrase contained in this Agreement shall mean the actual
knowledge of the officers of Seller and the Company. "To the
knowledge of Buyer" or any similar phrase contained in this Agreement
shall mean the actual knowledge of the officers of Buyer and Parent.
Solely for the purposes of this Section 10.14, the officers of Buyer,
Parent, Seller and the Company shall be deemed to have actual
knowledge of any written notice previously delivered to Buyer,
Parent, Seller, or the Company, respectively.
Section 10.15 Schedules and Exhibits. The Schedules and
all exhibits hereto are hereby incorporated into this Agreement and
are hereby made a party hereof as if set out in full in this
Agreement.
Section 10.16 Arbitration.
(a) Any controversy, claim or question or
interpretation arising out of or relating to this Agreement or the
breach thereof shall be finally settled by arbitration in the State
of Georgia under the then-effective Commercial Arbitration Rules of
the American Arbitration Association as modified by this Agreement,
and judgment on the award rendered by the arbitrators may be entered
in any court having jurisdiction. The award rendered by the
arbitrators shall be final and binding on the parties and not subject
to further appeal. Such arbitration can be initiated by written
notice by either party to the other party, which notice shall
identify the claimant's selected arbitrator. The party receiving
such notice shall identify its arbitrator within five (5) business
days following its receipt of such notice. The arbitrator selected
by the claimant and the arbitrator selected by the respondent shall,
within five (5) business days of their appointment, select a third
neutral arbitrator. In the event that they are unable to do so,
either party may request the American Arbitration Association to
appoint the third neutral arbitrator. The arbitrators shall have the
authority to award any remedy or relief that a court in Georgia could
order or grant, including, without limitation, specific performance
of any obligation created under this agreement, the awarding of
punitive damages, the issuance of injunctive or other provisional
relief, or the imposition of sanctions for abuse or frustration of
the arbitration process. The arbitration awards will be in writing
and specify the factual and legal basis for the award.
(b) It is the intent of the parties that any
arbitration shall be concluded as quickly as practicable (but,
barring extraordinary circumstances, in any event not more than
twenty (20) days after the date the third arbitrator is selected).
Unless the parties otherwise agree, once commenced, the hearing on
the disputed matters shall be held four days a week until concluded
with each hearing date to begin at 9:00 a.m. and to conclude at 5:00
p.m. The arbitrators shall use their best efforts to issue the final
award or awards within a period of five (5) business days after
closure of the proceedings. Failure of the arbitrators to meet the
time limits of this Section 10.16 shall not be a basis for
challenging the award.
(c) The arbitrators shall instruct the non-
prevailing party to pay all costs of the proceedings, including the
fees and expenses of the arbitrators and the reasonable attorneys'
fees and expenses of the prevailing party. If the arbitrators
determine that there is not a prevailing party, each party shall be
instructed to bear its own costs and to pay one-half of the fees and
expenses of the arbitrators.
(d) Notwithstanding the foregoing, nothing
contained herein shall prevent either party from seeking injunctive
relief in any court.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
UPS LOGISTICS GROUP, INC.
By: /s/ Daniel P. DiMaggio
Name: Daniel P. DiMaggio
Title: Chief Executive Officer and President
UPS TRUCK LEASING, INC.
By: /s/ Daniel P. DiMaggio
Name: Daniel P. DiMaggio
Title: Chief Executive Officer and President
ROLLINS TRUCK LEASING CORP.
By: /s/ Patrick J. Bagley
Name: Patrick J. Bagley
Title: Vice President Finance and Treasurer
ROLLINS LEASING CORP.
By: /s/ I. Larry Brown
Name: I. Larry Brown
Title: Chief Executive Officer and President
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (the "Agreement"), dated as of
January 1, 2000, is entered into by and between ROLLINS TRUCK LEASING
CORP., a Delaware corporation (the "Company"), UNITED PARCEL SERVICE
OF AMERICA, INC., a Delaware corporation ("UPS") and UPS LOGISTICS
GROUP, INC., a Delaware corporation and a wholly owned subsidiary of
UPS (together with its successors and assigns, the "Investor").
WHEREAS, in connection with the consummation of the
transactions contemplated by the Stock Purchase Agreement, dated as
of November 12, 1999 (the "Stock Purchase Agreement"), by and among
the Company, the Investor, UPS Truck Leasing, Inc., and Rollins
Leasing Corp., the Investor will receive shares of Common Stock (as
hereinafter defined) of the Company; and
WHEREAS, the Investor and the Company desire to enter into
this Agreement to set forth (i) certain mutual rights with respect to
representation on the other party's board of directors and (ii)
certain voting and liquidity matters with respect to the shares of
Common Stock owned by the Investor.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements and covenants hereinafter set forth and other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Certain Definitions.
Affiliate: When used with respect to a specified Person,
another Person that directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with the Person specified. For purposes of the foregoing, the
term "controls" (including the correlative meanings "controlled by or
under "common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
Alliance Agreement: As defined in Section 8(c).
Asset Purchase Agreement: As defined in the Preamble.
Business Day: Any day other than a Saturday, Sunday or
other day on which commercial banking institutions in New York, New
York are required or authorized by law to remain closed.
Closing: As defined in the Stock Purchase Agreement.
Closing Price: As to any security, on any Trading Day
means (i) the last reported sales price, regular way, for such
Trading Day as reported on the principal national securities exchange
on which such security is listed or admitted for trading or (ii) if
such security is not listed or admitted for trading on any national
securities exchange, the last reported sales price, regular way, for
such Trading Day as reported on the National Market tier of The
Nasdaq Stock Market or, if such security is not quoted on such
National Market tier, the average of the highest bid and lowest asked
prices on such Trading Day as reported on The Nasdaq Stock Market, or
(iii) if such security is not listed or admitted to trading on any
national securities exchange or The Nasdaq Stock Market, the average
of the highest bid and lowest asked prices on such Trading Day in the
domestic over-the-counter market as reported by the National
Quotation Bureau Incorporated, or any similar successor organization.
Commission: The Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act or
the Exchange Act.
Common Stock: The Common Stock of the Company, par value
$1.00 per share.
Company Indemnified Parties: The Company, its officers,
directors, employees and agents, and each Person, if any, who
controls the Company within the meaning of either the Securities Act
or the Exchange Act, and the officers, directors, employees and
agents of the foregoing parties.
Company Nominated Director: As defined in Section 8(a).
Demand Notice: As defined in Section 2(b)(i).
Demand Registration: As defined in Section 2(a).
Derivative Security: As defined in the definition of
Registrable Securities.
Exchange Act: The Securities Exchange Act of 1934, or any
successor federal statute, and the rules and regulations of the
Commission promulgated thereunder, in each case as amended from time
to time.
Indemnified Party: A Person claiming a right to
indemnification pursuant to Section 6 of this Agreement.
Indemnifying Party: A Person required to provide
indemnification pursuant to Section 6 of this Agreement.
Investor Indemnified Parties: The Investor, its officers,
directors, employees and agents, each Person (if any) who controls
the Investor within the meaning of either the Securities Act or the
Exchange Act, and the officers, directors, employees and agents of
the foregoing parties.
Investor Nominated Director: As defined in Section 8(b).
Losses: Any losses, claims, damages or liabilities, and any
related legal or other fees and expenses.
Maximum Number: As defined in Section 3(a).
Other Holders: Holders of Common Stock of the Company other
than the Investor.
Person: Any individual, corporation, partnership, limited
partnership, limited liability partnership, limited liability
company, trust, association, organization or other entity.
Piggyback Registration: As defined in Section 3(a).
Piggyback Registration Right: As defined in Section 3(a).
Prospectus: The prospectus included in a Registration
Statement as of the date it becomes effective under the Securities
Act and, in the case of references to the Prospectus as of a date
subsequent to the effective date of the Registration Statement, as
amended or supplemented as of such date, including all documents
incorporated by reference therein, each as amended, and each
prospectus supplement relating to the offering and sale of any of the
Registrable Securities pursuant to such Registration Statement.
Registrable Securities: All of (A) the shares of Common
Stock now owned on the date hereof by the Investor and (B) any
securities of the Company or its successors issued or issuable with
respect to any shares referred to in clause (A) whether by way of
conversion, exchange, dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or
other reorganization or otherwise.
Registration Expenses: As defined in Section 5(a).
Registration Statement: A registration statement (including
the related Prospectus) of the Company under the Securities Act on
any form selected by the Company for which the Company then qualifies
and which permits the sale thereunder of the number and type of
Registrable Securities (and any other securities of the Company) to
be included therein in accordance with this Agreement by the
applicable sellers in the manner described therein. The term
"Registration Statement" shall also include all exhibits and
financial statements and schedules and documents incorporated by
reference in such Registration Statement when it becomes effective
under the Securities Act, and in the case of the references to the
Registration Statement as of a date subsequent to the effective date,
as amended or supplemented as of such date.
Rollins Family: John W. Rollins, Sr. ("Rollins Sr."), John
W. Rollins, Jr. ("Rollins Jr."), Gary Rollins ("G. Rollins"), Henry
B. Tippie ("Tippie and together with Rollins Sr., Rollins Jr. and G.
Rollins collectively referred to as "Rollins") or their Rollins
Affiliates.
(a) Rollins Affiliates shall mean:
(i) one or more members of the immediate family of a
Rollins;
(ii) a corporation the majority of the shares of which
are owned, directly or indirectly, by one or more Rollins (or one or
more members of the immediate family of a Rollins);
(iii) a trust the majority of the beneficial
interests of which are owned, directly or indirectly, by one or more
Rollins (or one or more members of the immediate family of Rollins);
or
(iv) a general or limited partnership the majority of
the partnership interests in which are owned, directly or indirectly,
by one or more Rollins (or one or more members of the immediate
family of a Rollins).
(b) For purposes of clause (a) above, "members of the
immediate family shall be limited to any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-
in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
or sister-in-law, and shall include adoptive relationships."
Securities Act: The Securities Act of 1933, or any
successor federal statute, and the rules and regulations of the
Commission promulgated thereunder, in each case as amended from time
to time.
Stockholder Expenses: As defined in Section 5(b).
Term: The two (2) year period following the termination of
the Alliance Agreement.
Trading Day: Means a day on which the principal national
securities exchange on which the Common Stock is listed or admitted
to trading, or The Nasdaq Stock Market, as applicable, if the Common
Stock is not listed or admitted to trading on any national securities
exchange, is open for the transaction of business (unless such
trading shall have been suspended for the entire day) or, if the
Common Stock is not listed or admitted to trading on any national
securities exchange or The Nasdaq Stock Market, any Business Day.
2. Demand Registration.
(a) Demand Registration Rights. The Investor shall from
the date hereof, and during the Term, have the right to require that
the Company register under the Securities Act the offer or sale of
all or a portion of the Registrable Securities, including the offer
or sale of Registrable Securities upon issuance or settlement of any
Derivative Security (any such registration is referred to as a
"Demand Registration"). The Investor shall be entitled to two (2)
Demand Registrations.
(b) Procedures for Demand Registrations.
(i) The Investor shall exercise its right to a Demand
Registration pursuant to this Section 2 by furnishing the Company
with written notice of such request (a "Demand Notice") which sets
forth the number of Registrable Securities requested to be so
registered and the Investor's intended method or methods of
distribution of such Registrable Securities.
(ii) The Company shall be entitled in its sole
discretion to delay undertaking efforts to register the Registrable
Securities pursuant to this Section 2 in order to cause the
effectiveness of the Registration Statement covering such Registrable
Securities to coincide with the next open trading window for
directors and executive officers of the Company following the release
by the Company of quarterly or annual summary statements of revenues
and earnings; provided, however, that in no event shall the Company
be permitted hereunder to delay undertaking such efforts for a period
of more than seventy-five (75) days from the date of receipt of a
Demand Notice. Subject to the foregoing sentence, the Company shall
use its best efforts to promptly file with the Commission (but in any
case within 75 days from the date of the receipt of a Demand Notice a
Registration Statement which shall cover all Registrable Securities
requested to be registered as set forth above; provided, however,
that in the event a Registration Statement is not filed within thirty
(30) days of the receipt of a Demand Notice, then the Investor may,
by prompt written notice to the Company, withdraw its Demand Notice
and thereafter the Investor shall not be deemed to have exercise its
right to a Demand Registration. Subject to the provisions of Section
2(c) below, each Registration Statement may also include securities
to be sold for the account of the Company or for any other
stockholder of the Company not holding Registrable Securities.
(c) Underwriters; Priorities.
(i) The Company shall have the right to select the
lead managing underwriter for any underwritten public offering in
connection with a Demand Registration and the Investor shall have the
right to consent to such selection, which consent shall not be
unreasonably withheld.
(ii) If the lead managing underwriter of any
underwritten public offering in connection with a Demand Registration
determines that the aggregate number of Registrable Securities to be
offered exceeds the number of shares that could be sold without
having an adverse effect on the Company or such offering (including
the price at which the Registrable Securities may be sold), then:
(A) where only the Investor is offering shares, the number
of Registrable Securities to be offered shall be reduced from the
Investor's Registrable Securities, in the amount recommended by the
lead managing underwriters; and
(B) in other cases, such reduction shall be made first,
from securities proposed to be offered by the Company and Other
Holders; and second, from the Registrable Securities requested to be
included in such offering by the Investor.
(d) No Demand Used Under Certain Circumstances;
Withdrawal.
(i) The Investor shall not be obligated to proceed
with any Demand Registration if less than 75% of the Registrable
Securities requested to be registered by the Investor are included in
such registration. If the Investor so elects not to proceed, the
Investor shall not be deemed to have requested a Demand Registration
in respect thereof.
(ii) A Demand Registration shall not be deemed to have
been effected for purposes of this Agreement until the applicable
Registration Statement shall have been declared effective under the
Securities Act by the Commission (and is not then subject to any stop
order, injunction or other order or requirement of the Commission or
other governmental agency or court for any reason) for the period
specified in Section 2(e).
(iii) The Investor may, by prompt written notice
to the Company, withdraw its Registrable Securities from inclusion in
a Registration Statement if (A) the Registration Statement does not
remain effective under the Securities Act for the period specified in
Section 2(e) due to a stop order, injunction or other order of the
Commission or other governmental agency or (B) the Investor has sold
less than sixty percent (60%) of the Registrable Securities. If such
withdrawal occurs, such registration shall not be deemed to have been
a Demand Registration by the Investor and the Company shall pay all
Stockholder Expenses in connection with such registration.
(e) Effectiveness of Registration Statement. In
connection with any Demand Registration pursuant to this Section 2,
the Company will use its best efforts to promptly prepare and file
with the Commission any amendments and supplements to the
Registration Statement and the Prospectus used in connection
therewith, and to take any other actions as may be necessary to keep
the Registration Statement and the Prospectus effective, current and
in compliance with the provisions of the Securities Act, until the
sooner to occur of (i) the sale of all of the Registrable Securities
covered by such Registration Statement in accordance with the
intended methods of distribution thereof or (ii) the 60th day
following the effective date of such Registration Statement.
3. Piggyback Registration.
(a) Notice of Piggyback Registration. If at any time
during the Term the Company proposes to register under the Securities
Act any of its securities (whether for an underwritten public
offering or otherwise and whether for the Company or any stockholder
of the Company) (other than a registration statement on Form S-4 or
Form S-8 or any successor or comparable forms, or a registration
statement filed in connection with an exchange offer or any offering
of securities solely to the Company's existing stockholders or
otherwise pursuant to a dividend reinvestment plan, stock purchase
plan or other employee benefit plan), the Company shall give written
notice to the Investor not later than twenty (20) days prior to the
anticipated filing date of the applicable Registration Statement.
The Investor shall have the right (a "Piggyback Registration Right")
to participate in such registration on the same basis as the planned
method of distribution contemplated by the proposed registration by
giving the Company a written request to register any or all of the
Investor's Registrable Securities of such same class or series in
connection with the registration described in such written notice
from the Company within five (5) days after such notice has been
given by the Company (with such request stating (i) the amount of
Registrable Securities to be included by the Investor in such
registration and (ii) any other information that the Company
reasonably requests be included in such Registration Statement) (such
registration, a "Piggyback Registration"; provided, however, that the
number of Registrable Securities the Investor may include in any
single Piggyback Registration (the "Maximum Number" shall not exceed
the greater of (i) 400,000 Registrable Securities or (ii) fifty
percent (50%) of the number of shares of Common Stock to be sold in
such offering by the Company and the Rollins Family and their
Affiliates; and provided further that the Maximum Number shall never
exceed 1,000,000 Registrable Securities. Upon receipt of such
request, the Company will, subject to the provisions of Section 3(b)
below, use its best efforts to cause all such Registrable Securities
of such same class or series requested to be included in such
Piggyback Registration to be so included.
(b) Limitation on Inclusion of Registrable Securities;
Priorities. If the proposed method of distribution in connection
with a Piggyback Registration is an underwritten public offering and
the lead managing underwriter thereof determines in good faith that
the number of such Registrable Securities to be included in such
offering would adversely affect the Company or such offering
(including an adverse effect on the price at which the securities
proposed to be registered may be sold), the number of Registrable
Securities to be offered for the account of the Investor, the Company
and any Other Holders may be reduced to the extent necessary to
reduce the total number of shares to be included in such offering to
the amount recommended by such lead managing underwriter as follows:
(A) in connection with an offering initiated by the
Company, such reduction shall be made:first, from the securities
intended to be offered by Other Holders;
(B) second, from the securities requested to be
included in such offering by the Investor and Rollins Family pro
rata based on the number of shares of Common Stock each proposes
to sell; and
(C) last, from the securities to be offered for the
account of the Company.
(ii) in connection with an offering initiated by the
Investor pursuant to Section 2, in accordance with Section
2(c)(ii)(B).
(c) Withdrawal by Investor. The Investor may elect to
withdraw its respective shares of Common Stock from inclusion in a
Piggyback Registration at any time prior to five (5) Business Days
prior to the then anticipated effective date of the applicable
Registration Statement.
(d) Underwriting Agreement. In connection with any
Piggyback Registration involving an underwritten public offering, the
Investor shall, as a condition to the Company's obligation hereunder
with respect to the Investor's Registrable Securities, enter into an
underwriting agreement or other similar arrangement in customary form
with the managing underwriters of such offering.
4. Obligations with Respect to Registration.
(a) Obligations of the Company. Whenever the Company is
obligated by the provisions of this Agreement to effect the
registration of any Registrable Securities under the Securities Act,
the Company shall:
(i) Use its best efforts to cause the applicable
Registration Statement to become effective as soon as possible (but
in no event prior to any date specified in writing to the Company by
the Investor in a Demand Notice), and to prepare and file with the
Commission any amendments and supplements to the Registration
Statement and to the Prospectus used in connection therewith as may
be necessary to keep the Registration Statement and the Prospectus
effective, current and in compliance with the provisions of the
Securities Act, during the periods when the Company is required by
this Agreement to keep the Registration Statement effective and
current.
(ii) Within a reasonable time not to exceed ten (10)
Business Days prior to filing a Registration Statement or Prospectus
or any amendment or supplement thereto (other than any amendment or
supplement in the form of a filing which the Company makes pursuant
to the Exchange Act), furnish to the Investor and each underwriter,
if any, of the Registrable Securities and other shares of Common
Stock covered by such Registration Statement copies of such
Registration Statement or Prospectus as proposed to be filed, which
documents will be subject to the reasonable review and comments of
the Investor's (and its counsel) during such period, and the Company
will not file any Registration Statement or any Prospectus or any
amendment or supplement thereto containing any statements with
respect to the Investor or the distribution of the Registrable
Securities or other shares of Common Stock to be included in such
Registration Statement for sale by the Investor if the Investor shall
object in writing at least two (2) Business Days prior to the filing.
Thereafter, the Company will furnish to the Investor and each
underwriter, if any, such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the Prospectus included in such
Registration Statement (including each preliminary Prospectus), and
such other documents as the Investor or underwriter may reasonably
request in order to facilitate the disposition of the Registrable
Securities owned by the Investor.
(iii) After the filing of the Registration
Statement, promptly notify the Investor of the effectiveness thereof
and of any stop order issued or threatened by the Commission and take
all reasonable actions required to prevent the entry of such stop
order or to remove it if entered and promptly notify the Investor of
such lifting or withdrawal of such order.
(iv) Immediately notify the Investor at any time when
a Prospectus is required to be delivered under the Securities Act, of
the occurrence of an event requiring the preparation of a supplement
or amendment to such Prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities and other shares of
Common Stock, such Prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading and
promptly make available to the Investor any such supplement or
amendment, and the Company will promptly prepare and furnish to the
Investor a supplement to or an amendment of such Prospectus so that,
as thereafter delivered to the purchasers of such Registrable
Securities and other shares of Common Stock, such Prospectus will not
contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading.
(v) Enter into customary agreements (including an
underwriting agreement in customary form including customary
indemnification provisions) and perform its obligations under any
such agreement(s) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such
Registrable Securities and other shares of Common Stock.
(vi) Make available for inspection by the Investor
participating in any disposition pursuant to such Registration
Statement and any attorney, accountant or other professional retained
by the Investor or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company as shall
be reasonably necessary to enable them to exercise their due
diligence responsibility in connection therewith, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any of such persons in connection with such
Registration Statement. Information which the Company determines, in
good faith, to be confidential and notifies such Persons is
confidential shall not be disclosed by such Persons unless (i) the
release of such information is ordered pursuant to a subpoena or
other order from a court, or other governmental agency or tribunal,
of competent jurisdiction or (ii) such information becomes public
other than through a breach by any such Person of the confidentiality
obligations of such Persons.
(vii) Provide, in the case of an underwritten
public offering of Registrable Securities or other shares of Common
Stock, pursuant to a request for a Demand Registration, for
participation and cooperation by officers and employees of the
Company for a maximum period of three (3) days per Demand
Registration (including travel) in customary "road show
presentations. The Company and its senior management shall use their
good faith efforts to assist the Investor in the sale of the
Registrable Securities.
(viii) Furnish, in the case of an underwritten
public offering, to the Investor and to each underwriter a signed
counterpart of (A) an opinion or opinions of outside counsel to the
Company addressed to the Investor and underwriters (on which opinion
the Investor and each such underwriter shall be entitled to rely) and
(B) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering
such matters of the type customarily covered by opinions or comfort
letters, as the case may be, as the holders of a majority of the
shares of Common Stock included in such Registration Statement or the
managing underwriter therefor reasonably requests.
(ix) Register or qualify the Registrable Securities
and other shares of Common Stock covered by a Registration Statement
under the securities or blue sky laws of such United States
jurisdictions as the Investor shall reasonably request, and do any
and all other acts and things which may be necessary to enable the
Investor to consummate the disposition in such jurisdictions of such
Registrable Securities and other shares of Common Stock,
respectively, in accordance with the method of distribution described
in such Registration Statement; provided, that the Company shall in
no event be required (A) to qualify to do business as a foreign
corporation in any jurisdiction where it is not otherwise required to
be so qualified, (B) to conform its capitalization or the composition
of its assets at the time to the securities or blue sky laws of such
jurisdiction, (C) to execute or file any general consent to service
of process under the laws of any jurisdiction or (D) to subject
itself to taxation in any jurisdiction where it has not theretofore
done so.
(x) Use its best efforts to cause such Registrable
Securities and other shares of Common Stock covered by a Registration
Statement to be listed on the principal exchange or exchanges or
qualified for trading on the principal over the counter market on
which securities of the same class and series as the Registrable
Securities (or into which such Registrable Securities will be or have
been converted) and other shares of Common Stock are then listed or
traded upon the sale of such Registrable Securities and/or shares of
Common Stock pursuant to such Registration Statement.
(xi) Make and keep information publicly available
relating to the Company so as to satisfy the requirements of Rule 144
under the Securities Act (or any successor or corresponding rule) and
file with the Commission all reports and other documents required of
the Company under the Securities Act and the Exchange Act in a timely
manner.
(xii) Make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than eighteen months,
which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement
to such Registration Statement or Prospectus to which any of the
Investor or other selling stockholders shall have reasonably objected
on the grounds that such amendment or supplement does not comply in
all material respects with the requirements of the Securities Act.
(b) Selling Stockholders' Obligations. The Company's
obligations under this Agreement to the Investor shall be conditioned
upon the Investor's compliance with the following:
(i) The Investor shall cooperate with the Company in
connection with the preparation of the Registration Statement, and
for so long as the Company is obligated to keep the Registration
Statement effective, the Investor will provide to the Company, in
writing, for use in the Registration Statement, all information
regarding the Investor, its intended method of disposition of the
applicable Registrable Securities and other shares of Common Stock,
and such other information as the Company may reasonably request to
prepare the Registration Statement and Prospectus covering the
Registrable Securities and other shares of Common Stock and to
maintain the currency and effectiveness thereof.
(c) The Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described
in Section 4(a)(iv), the Investor will forthwith discontinue its
offering and sale of Registrable Securities or other shares of Common
Stock pursuant to the applicable Registration Statement until the
Investor's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 4(a)(iv), and, in either case, if
so directed by the Company, the Investor will deliver to the Company
all copies in its possession of the most recent Prospectus covering
such Registrable Securities and other shares of Common Stock at the
time of receipt of such notice.
(d) Underwriting Agreement. Neither the Company nor any
other Person may participate in any underwritten public offering in
connection with a Demand Registration or a Piggyback Registration
unless such Person (i) agrees to sell its securities on the basis
provided in any underwriting arrangements approved by the Person or
Persons selecting the lead managing underwriter(s) for such offering
and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements
and this Agreement.
(e) Holdback. The Company agrees not to engage in any
public sale or distribution of any securities of the same class or
series as the Registrable Securities or securities convertible into,
or exchangeable or exercisable for, or the value of which relates to
or is based upon, such securities (other than on Forms S-4, S-8 or
any successor or comparable forms, or any registrations pursuant to a
dividend reinvestment plan, stock purchase plan or other employee
benefit plan) during the ten days prior to and during the 90-day
period (or such longer period as is requested by the underwriter)
beginning on the effective date of any Registration Statement filed
pursuant to any Demand Registration, but not including the delivery
of Registrable Securities, except as part of such registration. The
Company agrees to cause each holder of privately placed equity
securities purchased after the date of this agreement and each
stockholder with which it enters into registration rights or similar
arrangements to agree to the restriction contained in the first
sentence of this subsection (e).
5. Expenses of Registration.
(a) Registration Expenses. Except as provided in
paragraphs (b) and (c) below, all Registration Expenses incurred in
connection with any Demand Registration or Piggyback Registration and
the distribution of any Registrable Securities or other shares of
Common Stock in connection therewith shall be borne by the Company.
For purposes of this Agreement, the term "Registration Expenses"
shall mean all (i) registration, qualification and filing fees, (ii)
fees and expenses of compliance with securities or blue sky laws,
(iii) printing expenses (or comparable duplication expenses),
delivery charges and escrow fees, (iv) fees and disbursements of
counsel for the Company, (v) fees and expenses for independent
certified public accountants retained by the Company (including the
expenses of any comfort letters or costs associated with the delivery
by independent certified public accountants of a comfort letter or
comfort letters, and fees and expenses relating to the preparation of
any related review of Company matters pursuant to Statement of
Accounting Standards 71, "Interim Financial Information"in connection
therewith), (vi) fees and expenses of any special experts retained by
the Company in connection with such registration, (vii) fees and
expenses of listing the Registrable Securities or other shares of
Common Stock covered by the Registration Statement on a securities
exchange or over the counter market, and (viii) expenses associated
with compliance with any other provision of this Agreement, including
Section 4(a)(vii).
(b) Stockholder Expenses. The Investor shall pay all
stock transfer fees or expenses (including the cost of all transfer
tax stamps), if any, all underwriting or brokerage discounts and
commissions and all fees and disbursements of counsel for the
Investor attributable to the distribution of the Registrable
Securities.
(c) Internal Expenses of the Company. Notwithstanding any
other provision of this Agreement, the Company shall be obligated to
bear all internal expenses of the Company in connection with any
Demand Registration or Piggyback Registration (including, without
limitation, all salaries and expenses of its officers and employees
performing accounting and legal functions and related expenses).
6. Indemnification.
(a) By the Company. The Company agrees to indemnify and
hold harmless each Investor Indemnified Party from and against any
Losses to which such Investor Indemnified Party may become subject
under the Securities Act, the Exchange Act, state securities or blue
sky laws, common law or otherwise, insofar as such Losses (or actions
in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the applicable Registration Statement or Prospectus, or any omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and
the Company will reimburse each such Investor Indemnified Party for
any reasonable fees and expenses of outside legal counsel for such
Investor Indemnified Parties, or other expenses reasonably incurred
by them, as incurred, in connection with investigating or defending
any such claims; provided, that the Company will not indemnify or
hold harmless any Investor Indemnified Party from or against any such
Losses (including any related expenses) to the extent such Losses
(including any related expenses) result from an untrue statement,
omission or allegation thereof which were made in reliance upon and
in conformity with written information provided by or on behalf of
the Investor specifically for use or inclusion in the applicable
Registration Statement or Prospectus; provided, further, that if an
Indemnified Party is an Investor Nominated Director (as defined in
Section 8(b)), such Indemnified Party shall be indemnified hereunder
only for Losses incurred as a result of such Person's relationship to
the Investor and not for Losses incurred as a result of services as a
director. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Investor
Indemnified Parties and shall survive the transfer of such securities
by the Investor.
(b) By Investor. The Investor agrees to indemnify and
hold harmless each Company Indemnified Party from and against any
Losses to which such Company Indemnified Party may become subject,
insofar as such Losses (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of
a material fact contained in the applicable Registration Statement or
the Prospectus, or any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading, if the statement or omission was made
in reliance upon and in conformity with written information provided
by or on behalf of the Investor or any person who controls the
Investor specifically for use or inclusion in the applicable
Registration Statement or Prospectus; provided, that the Investor
will not indemnify or hold harmless any Company Indemnified Party
from or against any such Losses (including any related expenses) (i)
to the extent the untrue statement, omission or allegation thereof
upon which such Losses (including any related expenses) are based was
made in any Prospectus used after such time as the Investor advised
the Company that the filing of a post-effective amendment or
supplement thereto was required, except the Prospectus as so amended
or supplemented, or (ii) in an amount that exceeds the net proceeds
received by the Investor from the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain
in full force and effect regardless of any investigation by or on
behalf of the Company Indemnified Parties, and shall survive the
transfer of such securities by the Investor.
(c) Procedures. Each Indemnified Party shall give notice
to each Indemnifying Party promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be sought,
and the Indemnifying Party may participate at its own expense in the
defense, or if it so elects, assume the defense of any such claim and
any action or proceeding resulting therefrom, including the
employment of counsel and the payment of all expenses. The failure
of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party from its obligations to indemnify such
Indemnified Party, except to the extent the Indemnified Party's
failure to so notify actually prejudices the Indemnifying Party's
ability to defend against such claim, action or proceeding. In the
event that the Indemnifying Party elects to assume the defense in any
action or proceeding, an Indemnified Party shall have the right to
employ separate counsel in any such action or proceeding and to
participate in the defense thereof, but such Indemnified Party shall
pay the fees and expenses of such separate counsel unless (i) the
Indemnifying Party has agreed to pay such fees and expenses or (ii)
the named parties to any such action or proceeding (including any
impleaded parties) include such Indemnified Party and the
Indemnifying Party, and such Indemnified Party shall have been
advised by counsel in a written opinion that there is or would be a
conflict of interest between such Indemnified Party and the
Indemnifying Party in the conduct of the defense of such action (in
which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense
of the Indemnifying Party, the Indemnifying Party shall not assume
the defense of such action or proceeding on such Indemnified Party's
behalf, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings
arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate
firm of attorneys for all Indemnified Parties, which firm shall be
designated in writing by the applicable Indemnified Parties;
provided, however, that the Indemnifying Party shall be liable for up
to two separate firms of attorneys for the Indemnified Parties as are
required if, as to any Indemnified Party, such Indemnified Party
shall have been advised by counsel in a written opinion that there is
or would be a conflict of interest between such Indemnified Party and
any other Indemnified Party in the conduct of the defense of such
action). No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of the Indemnified Party
(which consent will not be unreasonably withheld), consent to entry
of any judgment or enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for
under this Section 6 is unavailable to or insufficient to hold the
Indemnified Party harmless under subparagraphs (a), (b) or (c) above
in respect of any Losses referred to therein for any reason other
than as specified therein, then the Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party as
a result of such Losses in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party, on the one
hand, and such Indemnified Party, on the other, in connection with
the statements or omissions which resulted in such Losses. The
relative fault of each Indemnifying Party or Indemnified Party, as
the case may be, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by (or which was failed to be
supplied by) such Indemnifying Party or Indemnified Party, such
party's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. If
contribution based upon the relative fault of the Indemnifying Party,
on the one hand, and the Indemnified Party, on the other hand, is not
available, then the Indemnifying Party shall contribute to the amount
paid or payable by Indemnified Party as a result of Losses in such
proportion as is appropriate to reflect the relative benefits
received by the Indemnifying Party, on the one hand, and such
Indemnified Party, on the other, from the subject offering or
distribution. The relative benefits received by the Indemnifying
Party, on the one hand, and the Indemnified Party, on the other,
shall be deemed to be in the same proportion as the net proceeds of
the offering or other distribution received by the Indemnifying Party
bears to the net proceeds of the offering or other distribution
received by the Indemnified Party. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
7. Limitation on Other Registration Rights. Notwithstanding
any other provision of this Agreement, without the prior written
consent of the Investor, the Company shall not grant to any person
any registration rights that have provisions that conflict with any
of the rights granted to the Investor herein or that would cause the
Investor's rights to be subordinated.
8. Board Representation.
(a) The Company reserves the right to require that UPS
elect an individual nominated by the Company ("Company Nominated
Director" to the Board of Directors of the Investor (the "Investor
Board" and shall reelect a Company Nominated Director at each annual
meeting thereafter during the Board Term (as hereinafter defined).
Any change in the structure or classification of the Investor Board
shall not affect the Company's right to have its nominee nominated
for election to the Investor Board. Upon the termination, removal or
resignation of a Company Nominated Director for any reason, the
Company shall have the right to nominate a new Company Nominated
Director to fill such vacancy, and the Investor shall use its best
efforts to cause the election of such new Company Nominated Director
to the Investor Board through action of the Investor Board or UPS, in
either case at the discretion of the Investor Board or UPS,
respectively. Further, if a Company Nominated Director shall not be
elected as a director at any election, then the Investor shall use
its best efforts to ensure that the Company Nominated Director
obtains a seat on the Investor Board as soon as reasonably possible,
whether by appointment of the Company Nominated Director to fill an
existing or newly created vacancy on the Investor Board, by
nomination at the next election of directors of the Investor or
otherwise, provided that this provision shall not restrict the
discretion of the Investor Board or UPS, respectively.
(b) Investor reserves the right to require that the Board
of Directors of Company (the "Company Board" appoint a nominee of the
Investor ("Investor Nominated Director" to the Company Board and in
connection therewith, the Company shall use its best efforts to amend
its certificate of incorporation at the January 28, 2000 annual
meeting in order to create the vacancy necessary to effect such an
appointment. Thereafter, the Company Board shall elect and recommend
to its stockholders an Investor Nominated Director for re-election to
the Company Board at each annual meeting thereafter during the Board
Term. The Company Board shall elect the Investor Nominated Director
to serve on the Audit Committee of the Company Board to the extent
permitted under applicable rules of the Commission and the New York
Stock Exchange. Any change in the structure or classification of the
Company Board shall not affect the Investor's right to have its
nominee nominated for election to the Company Board. Upon the
termination, removal or resignation of an Investor Nominated Director
for any reason, the Investor shall have the right to nominate a new
Investor Nominated Director to fill such vacancy, and the Company
shall use its best efforts to cause the election of such new Investor
Nominated Director to the Company Board through action of the Company
Board or stockholders, in either case at the discretion of the
Company Board or stockholders, respectively. Further, if an Investor
Nominated Director shall not be elected as a director at any
election, then the Company shall use its best efforts to ensure that
the Investor Nominated Director obtains a seat on the Company Board
as soon as reasonably possible, whether by appointment of the
Investor Nominated Director to fill an existing or newly created
vacancy on the Company Board, by nomination at the next election of
directors of the Company or otherwise, in either case at the
discretion of the Company Board or stockholders, respectively.
(c) Upon the earlier to occur of (i) the termination of
the Strategic Alliance Agreement by and between the Company, the
Investor, Worldwide Dedicated Services, Inc. and Rollins Leasing
Corp., dated as of the date hereof (the "Alliance Agreement") or (ii)
the Investor and its Affiliates ceasing to own at least 1,000,000
shares of Common Stock of Company (the "Board Term"), the Company
will cause the Company Nominated Director, and the Investor will
cause the Investor Nominated Director, to resign immediately from
his/her respective Board positions, and the obligations of the
Investor and Company in Sections 8(a) and (b) shall cease.
(d) Notwithstanding anything set forth in this Agreement,
the Company agrees that the right to require UPS to elect a Company
Nominated Director to the Investor Board, as outlined in Section
8(a), shall not be exercised unless and until Investor requires the
Company Board to appoint an Investor Nominated Director, as set forth
in Section 8(b).
9. Voting Agreement. On each matter presented for a vote of
the stockholders of the Company, the Investor shall vote its shares
of Common Stock either (i) in accordance with the recommendation of
the Company Board or (ii) in the same percentages for and against
such matter as the votes, cast by stockholders of the Company other
than the Investor. Such obligation shall continue for two years
following the termination of the Alliance Agreement.
10. Miscellaneous.
(a) Notices. All notice, requests, demands, waivers and
other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, mailed,
certified or registered mail with postage prepaid, or sent by UPS
next day air or document exchange, or facsimile transmission, as
follows:
(i) if to the Company:
Rollins Truck Leasing Corp.
2200 Concord Pike
One Rollins Plaza
Wilmington, DE 19803
Fax No: (302) 426-3815
Attn: Patrick J. Bagley
with a copy to :
Rollins Leasing Corp.
2200 Concord Pike
One Rollins Plaza
Wilmington, DE 19803
Fax No: (302) 426-3555
Attn: Klaus M. Belohoubek
(ii) if to the Investor:
UPS Logistics Group, Inc.
c/o United Parcel Service, Inc.
55 Glenlake Parkway
Atlanta, Georgia 30328
Fax No.: (404) 828-6440
Attn: Legal Department
with a copy to:
United Parcel Service, Inc.
55 Glenlake Parkway
Atlanta, Georgia 30328
Fax No.: (404) 828-6400
Attn: Legal Department
and to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Fax No.: (404) 572-5145
Attn: Michael J. Egan III
or to such other person or address as any party shall specify by
notice in writing to the other party. All notices and other
communications given to a party in accordance with the provisions of
this Agreement shall be deemed to have been given (i) three (3)
Business Days after the same are sent by certified or registered
mail, postage prepaid, return receipt requested, (ii) upon receipt
when delivered by hand or transmitted by facsimile (confirmation
received) or (iii) one (1) Business Day after the same are sent by a
reliable overnight courier service, with acknowledgment of receipt
requested. Notwithstanding the preceding sentence, notice of change
of address shall be effective only upon actual receipt thereof.
(b) Amendment. Any provision of this Agreement may be
amended or modified in whole or in part at any time by an agreement
in writing among the parties hereto, executed in the same manner as
this Agreement. No consent, waiver or similar act shall be effective
unless in writing.
(c) Entire Agreement. This Agreement constitutes the
entire agreement among the parties hereto and supersedes all prior
agreements and understandings, oral and written, among the parties
hereto with respect to the subject matter hereof.
(d) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
(e) Governing Law. This Agreement shall be governed by
and interpreted in accordance with the internal laws of the State of
New York, without giving effect to principles of conflicts of laws.
(f) Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns. Any holder of Registrable Securities may
transfer any of its rights hereunder to all of the Registrable
Securities then held by such holder, without the consent of the
Company, to any Affiliate that is a direct or indirect subsidiary of
United Parcel Service, Inc. ("UPS, Inc.") or to any entity in which
UPS, Inc. has or one of its subsidiaries has a majority ownership
interest, whether such transfer is by sale, gift, assignment, pledge
or otherwise. The Company shall be given written notice by the
assigning party at the time of such assignment stating the name and
address of the assignee, identifying the securities of the Company as
to which the rights in question are being assigned and providing a
description of the nature and extent of the rights that are being
assigned. Any assignee hereunder shall receive such assigned rights
subject to all the terms and conditions of this Agreement, including,
without limitation, the provisions of this Section.
(g) Binding Agreement; No Third Party Beneficiaries.
This Agreement will be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns.
(h) Changes in Rollins Common Stock. To the extent that
there are any changes in the Common Stock by way of stock split,
stock dividend, combination or reclassification, or through merger,
consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof,
as may be required, so that the rights and privileges granted to the
Investor hereunder shall continue with respect to the Registrable
Securities as so changed.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ROLLINS TRUCK LEASING CORP.
By:___________________________________
Name:
Title:
UPS LOGISTICS GROUP, INC.
By:___________________________________
Name:
Title:
UNITED PARCEL SERVICE OF AMERICA, INC.
By:___________________________________
Name:
Title:
ASSET PURCHASE AGREEMENT
by and among
WORLDWIDE DEDICATED SERVICES, INC.,
ROLLINS TRUCK LEASING CORP.,
ROLLINS LOGISTICS INC.,
ROLLINS DEDICATED CARRIAGE SERVICES, INC.,
AND
ROLLINS TRANSPORTATION SYSTEMS, INC.
As of November 12, 1999
<PAGE>
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE 2
Section 1.1 Purchase and Sale 2
Section 1.2 Assets 3
Section 1.3 Excluded Assets 5
Section 1.4 Assumption of Assumed Liabilities 5
Section 1.5 Excluded Liabilities 6
Section 1.6 Purchase Price 7
Section 1.7 Payment of Purchase Price 7
Section 1.8 Target Working Capital 8
Section 1.9 Adjustment of Purchase Price 8
Section 1.10 Closing 10
Section 1.11 Deliveries by Seller 11
Section 1.12 Deliveries by Buyer 11
ARTICLE II RELATED MATTERS 12
Section 2.1 Use of Seller's Name and Logos 12
Section 2.2 No Ongoing or Transition Services 13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER 13
Section 3.1 Organization 13
Section 3.2 Authorization 14
Section 3.3 Consents and Approvals; No Violations 15
Section 3.4 Financial Statements 16
Section 3.5 Absence of Material Adverse Effect 16
Section 3.6 Title, Ownership and Related Matters 18
Section 3.7 Intellectual Property 19
Section 3.8 Computer Software 19
Section 3.9 Year 2000 Compliance 19
Section 3.10 Litigation 20
Section 3.11 Compliance with Applicable Law 20
Section 3.12 Certain Contracts and Arrangements 20
Section 3.13 Employee Benefit Plans; ERISA 21
Section 3.14 Labor Matters 22
Section 3.15 Taxes 22
Section 3.16 Environmental 24
Section 3.17 Officers; Bank Accounts 25
Section 3.18 Certain Fees 25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER 25
Section 4.1 Organization and Authority of Buyer 25
Section 4.2 Consents and Approvals; No Violations 26
Section 4.3 Litigation 26
Section 4.4 Certain Fees 27
ARTICLE V COVENANTS 27
Section 5.1 Conduct of Seller's Business 27
Section 5.2 Access to Information 28
Section 5.3 Consents 29
Section 5.4 Reasonable Best Efforts 29
Section 5.5 Public Announcements 29
Section 5.6 Covenant to Satisfy Conditions 30
Section 5.7 Employees; Employee Benefits 30
Section 5.8 Supplemental Disclosure 31
Section 5.9 Investigation by Buyer 32
Section 5.10 Additional Actions 32
Section 5.11 Parent Guarantee 33
ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE PARTIES 33
Section 6.1 Conditions to Each Party's Obligation 33
Section 6.2 Conditions to Obligations of Seller 34
Section 6.3 Conditions to Obligations of Buyer 35
ARTICLE VII TERMINATION 35
Section 7.1 Termination 35
Section 7.2 Procedure and Effect of Termination 37
ARTICLE VIII SURVIVAL OF REPRESENTATIONS 38
Section 8.1 Survival of Representations, Warranties and
Agreements 38
ARTICLE IX INDEMNIFICATION 39
Section 9.1 Indemnification Obligations of Seller 39
Section 9.2 Indemnification Procedure 39
ARTICLE X MISCELLANEOUS 41
Section 10.1 Fees and Expenses 42
Section 10.2 Further Assurances 42
Section 10.3 Notices 42
Section 10.4 Severability 44
Section 10.5 Binding Effect; Assignment 45
Section 10.6 No Third Party Beneficiaries 45
Section 10.7 Interpretation 46
Section 10.8 Jurisdiction and Consent to Service 46
Section 10.9 Entire Agreement 46
Section 10.10 Governing Law 47
Section 10.11 Specific Performance 47
Section 10.12 Counterparts 47
Section 10.13 Amendment, Modification and Waiver 47
Section 10.14 Knowledge 48
Section 10.15 Schedules and Exhibits 48
Section 10.16 Arbitration 48
DEFINED TERMS
Term Section
Acceptance Notice . . . . . . . . . . . . . . . . . . . . . . . . .1.9(c)
Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.7(c)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Allocation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.13
Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Assumed Contracts . . . . . . . . . . . . . . . . . . . . . . . . .1.2(e)
Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Buyer Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . .1.9(b)
Buyer Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . 9.1
Buyer Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.10
Closing Date Working Capital. . . . . . . . . . . . . . . . . . . .1.9(a)
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . .5.2(b)
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.12
Dedicated . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
employee benefit plan . . . . . . . . . . . . . . . . . . . . . . .5.7(a)
employee welfare benefit plan . . . . . . . . . . . . . . . . . . .5.7(a)
Environmental Claims. . . . . . . . . . . . . . . . . . . . . . . 3.16(b)
Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . 3.16(b)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13(a)
Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Excluded Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 1.5
Final Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . .1.9(c)
Final Working Capital Statement . . . . . . . . . . . . . . . . . .1.9(c)
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 3.4
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.9(b)
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . 3.16(b)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3
Indemnified Claims . . . . . . . . . . . . . . . . . . . . . . . . . 1.5
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . .3.7(a)
Interim Balance Sheet . . . . . . . . . . . . . . . . . . . . . . .1.9(b)
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13(b)
Leased Real Property. . . . . . . . . . . . . . . . . . . . . . 3.6(a)(i)
Litigation Claims . . . . . . . . . . . . . . . . . . . . . . . . . .3.10
Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Money Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.7(b)
Objection Notice. . . . . . . . . . . . . . . . . . . . . . . . . .1.9(c)
Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.7(b)
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13(a)
Preliminary Balance Sheet . . . . . . . . . . . . . . . . . . . . .1.9(b)
Preliminary Working Capital Statement . . . . . . . . . . . . . . .1.9(b)
Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
Retained Employees. . . . . . . . . . . . . . . . . . . . . . . . .1.3(g)
Rollins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.3(c)
Seller or Sellers . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Seller Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . .1.9(b)
Seller Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . 3.13(c)
Seller Material Adverse Effect. . . . . . . . . . . . . . . . . . .3.1(b)
Seller Tradenames and Logos . . . . . . . . . . . . . . . . . . . . . 2.1
Staffing Services Agreement . . . . . . . . . . . . . . . . . . . .6.2(d)
Target Working Capital. . . . . . . . . . . . . . . . . . . . . . . . 1.8
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.15(c)(i)
Tax Return. . . . . . . . . . . . . . . . . . . . . . . . . . 3.15(c)(ii)
To the Knowledge of Buyer. . . . . . . . . . . . . . . . . . . . . 10.14
To the Knowledge of Sellers . . . . . . . . . . . . . . . . . . . . 10.14
Transferred Employees . . . . . . . . . . . . . . . . . . . . . . .1.2(l)
Transition Agreement. . . . . . . . . . . . . . . . . . . . . . . .6.2(e)
Transportation. . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Unrelated Accounting Firm . . . . . . . . . . . . . . . . . . . . .1.9(c)
VEBA Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.5(b)
SCHEDULES
Schedule 1.2(f) Leases
Schedule 1.2(l) Transferred Employees
Schedule 1.3(a) Permits/Licenses
Schedule 3.1 Foreign Qualifications
Schedule 3.3 Consents
Schedule 3.5 Absence of Change
Schedule 3.6(a)(i) Leased Real Property
Schedule 3.6(a)(iii) Condemnation/Appropriation
Proceedings
Schedule 3.6(b) Necessary Assets
Schedule 3.7 Intellectual Property
Schedule 3.10 Litigation
Schedule 3.12 Contracts
Schedule 3.12(i) Material Default Notices
Schedule 3.13 Employee Benefits
Schedule 3.14 Labor Matters
Schedule 3.15 Taxes
Schedule 3.16(a) Environmental Permits/Licenses
Schedule 3.16(b) Environmental Notices
Schedule 3.17 Officers; Bank Accounts
Schedule 3.20 Bank Accounts
Schedule 5.10 Additional Actions
EXHIBITS
Exhibit Number
Current Assets and Liabilities 1.9(a)
Accounting Principles 1.9(b)
Staffing Services Agreement 6.2(d)
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of November 12, 1999 (this
"Agreement"), is made and entered into by and between Worldwide
Dedicated Services, Inc., a Delaware corporation ("Buyer"); Rollins
Truck Leasing Corp., a Delaware corporation ("Parent"); Rollins
Logistics, Inc., a Delaware corporation ("Logistics"), Rollins
Dedicated Carriage Services, Inc., a Delaware corporation ("Dedicated")
and Rollins Transportation Systems, Inc., ("Transportation" and
together with Logistics and Dedicated hereinafter, individually
occasionally referred to as the "Sellers" and collectively referred to
as "Seller").
W I T N E S S E T H:
WHEREAS, Buyer and Seller desire to enter into this
Agreement pursuant to which Seller proposes to sell to Buyer, and Buyer
proposes to purchase from Seller, the assets used or held for use by
Seller in the conduct of its business, and Buyer proposes to assume
certain of the liabilities and obligations of Seller (the
"Acquisition"); and
WHEREAS, Seller and Buyer desire to make certain representations,
warranties and agreements in connection with the Acquisition.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the
parties hereto agree as follows:
PURCHASE AND SALE
Purchase and Sale. Subject to the terms and conditions set
forth in this Agreement, at the closing provided for in Section 1.10
hereof (the "Closing") and except as otherwise specifically provided
in this Article 1, Seller shall grant, convey, sell, assign, transfer
and deliver to Buyer, and Buyer will purchase and acquire from
Seller, all right, title and interest of Seller in and to (a) the
business of Seller as a going concern and (b) except for the Excluded
Assets (as hereinafter defined), all of the assets, properties and
rights of Seller of every kind and description, tangible and
intangible, wherever situated (which business, assets, properties and
rights are hereinafter collectively referred to as the "Assets"),
free and clear of all mortgages, liens, pledges, security interests,
charges, claims, restrictions and encumbrances of any nature
whatsoever, except Assumed Liabilities (as hereinafter defined).
Assets. Except as otherwise expressly set forth in Section 1.3
hereof, the Assets shall include, without limitation, the following
assets, properties and rights of Seller as of the Closing Date (as
hereinafter defined):
all accounts receivable and notes receivable;
all deposits, advances, prepaid expenses and credits;
all inventories, including finished products, work-in-process,
raw materials, spare parts, stores and supplies, office supplies and
other inventory items;
all machinery, equipment, business machines, computer hardware,
vehicles, furniture, fixtures, tools, parts and other tangible
property not normally included in the inventory used in Seller's
business, whether or not carried on the books of Seller;
except as otherwise set forth in Section 1.3(d), all right,
title and interest of Seller in all contracts (written or oral),
agreements or other instruments, including, without limitation,
contracts with customers and suppliers and all leases of personal
property (the "Assumed Contracts");
except as otherwise set forth on Schedule 1.2(f), all
leaseholds, leasehold improvements and other rights relating thereto;
all goodwill, patents, copyrights, methods, know-how, software,
technical documentation, trade secrets, trademarks, trade names and
general intangible (and all rights thereto and applications
therefor);
except for the Indemnified Claims (as hereinafter defined), all
rights to causes of action, lawsuits, judgments, claims and demands
of any nature available to or being pursued by Seller, whether
arising by way of counterclaim or otherwise;
all guarantees, warranties, indemnities and similar rights in
favor of Seller;
all governmental permits, licenses or similar rights relating to
the business of Seller, other than those set forth on Schedule
1.3(a);
all information, files, correspondence, records, data, plans,
contracts and recorded knowledge, including customer and supplier
lists and all accounting or other books and records of Seller;
those employees of Seller listed on Schedule 1.2(l) who will be
offered employment by Buyer on the Closing Date (the "Transferred
Employees");
all other tangible and intangible assets of any kind or
description, wherever located, that are carried on the books of
Seller or which are owned by Seller; and
all cash, cash equivalents, marketable securities and bank
accounts.
Excluded Assets. Notwithstanding anything to the contrary set
forth herein, the Assets shall not include the following assets,
properties and rights of Seller (collectively, the "Excluded
Assets"):
any governmental permit, license or similar right that by its
terms is not transferable to Buyer, which permits, licenses and
similar rights are set forth on Schedule 1.3(a);
minute books and stock ledger records of Seller;
all rights to the use of the name "Rollins" and all derivatives
thereof;
the rights that accrue to Seller under this Agreement;
the rights to any federal, state, local or foreign income tax
refunds;
all insurance policies of Seller or acquired or assumed by
Seller prior to the Closing Date pertaining to Seller's business and
all rights of Seller of every nature and description under or arising
out of such insurance policies; and
those employees of Seller other than those listed on Schedule
1.2(l) (the "Retained Employees").
Assumption of Assumed Liabilities. Except to the extent
specified in Section 1.5, Buyer shall, in connection with the
transactions contemplated hereby, assume and agree to pay, discharge
or perform, as appropriate, all liabilities and obligations of Seller
accrued as of the Closing Date and all liabilities and obligations
arising from Seller's operations prior to the Closing Date (the
"Assumed Liabilities").
Excluded Liabilities. The Assumed Liabilities shall not
include, and in no event shall Buyer assume, agree to pay, discharge
or perform or incur any liability or obligation under this Agreement
or otherwise become responsible in respect of, the following (the
"Excluded Liabilities"):
the Indemnified Claims (as hereinafter defined);
the items identified on Schedule 1.5(b) ;
any liability or obligation for Taxes (as hereinafter defined);
any liability or obligation under any collective bargaining
agreement or otherwise relating to the Retained Employees;
any liability or obligation to Parent or any of its Affiliates
(as hereinafter defined), including intercompany debt for borrowed
money, other than those obligations specified on Schedule 1.5(e); and
any debt for borrowed money to a third party. For purposes
of this Agreement, the "Indemnified Claims" shall mean those
Litigation Claims marked with an asterisk on Schedule 3.10 and any
claim of the type described below brought against Seller (or Buyer as
the successor to Seller) after the date hereof to the extent based on
an occurrence in connection with Seller's operations prior to the
Closing Date: workers' compensation, vehicle accident or other
personal injury or property damage claims normally covered under a
general liability insurance policy, and employee compensation and
benefits (other than employee compensation and benefits accrued as a
liability on the Final Closing Balance Sheet
and reflected in the calculation of the Closing Date Working
Capital).
Purchase Price. Subject to adjustment as provided in Section
1.7(b), the Purchase Price for the Assets will be an amount equal to
$67,220,000 plus the assumption by Buyer of the Assumed Liabilities
(such amount as adjusted is hereafter referred to as the "Purchase
Price"). The Purchase Price shall be payable as provided in Section
1.7(a) and (c), together with any necessary post-closing adjustments
as provided in Section 1.7(b).
Payment of Purchase Price.
At the Closing, Buyer shall deliver or cause to be delivered to
Seller the Purchase Price (prior to the adjustment contemplated by
Section 1.7(b) hereof).
Within five business days after the determination of the Final
Working Capital Statement (as hereinafter defined) in accordance with
Section 1.9 hereof, (i) if the amount of the Closing Date Working
Capital (as hereinafter defined) calculated in accordance with
Section 1.9 is less than 97% of the Target Working Capital (as
hereinafter defined), then Seller shall pay to Buyer an amount equal
to the difference between 97% of the Target Working Capital and the
Closing Date Working Capital plus interest or (ii) if the amount of
the Closing Date Working Capital calculated in accordance with
Section 1.9 is greater than 103% of the Target Working Capital, Buyer
shall pay to Seller an amount equal to the difference between 103% of
the Target Working Capital and the Closing Date Working Capital plus
interest. Any payment required under this Section 1.7(b) shall
include interest on the amount of that payment at the prime rate of
interest (as published in the "Money Rates" table of The Wall Street
Journal on the Closing Date) beginning on the Closing Date (as
hereinafter defined) and ending on the date of any such payment.
All payments required under this Section 1.7 shall be made in
cash by wire transfer of immediately available federal funds to such
bank account(s) as shall be designated in writing by the recipient at
least three days prior to the Closing or promptly upon the
determination of the Final Balance Sheet (as hereinafter defined), as
the case may be.
Target Working Capital. "Target Working Capital" shall equal
$7,031,594.
Adjustment of Purchase Price.
For purposes of this Agreement, the "Closing Date Working
Capital" shall mean the consolidated book value of those categories
of current assets of Seller listed on Exhibit 1.9(a) less the
consolidated book value of those categories of current liabilities of
Seller listed on Exhibit 1.9(a), in each case as reflected on the
Final Balance Sheet.
Promptly following the Closing, Seller shall prepare (i) a
balance sheet reflecting the Assets and the Assumed Liabilities as of
the close of business on the Closing Date (the "Preliminary Balance
Sheet"), in accordance with generally accepted accounting principles
("GAAP") on a basis consistent with the unaudited consolidated
balance sheet of Seller as of September 30, 1999 (the "Interim
Balance Sheet"), which principles are set forth on Exhibit 1.9(b),
and (ii) a calculation of the Closing Date Working Capital based on
the Preliminary Balance Sheet (the "Preliminary Working Capital
Statement"). Seller shall engage, and be responsible for the fees
and expenses of, KPMG Peat Marwick LLP (the "Seller Auditor") to
audit the Preliminary Balance Sheet and the Preliminary Working
Capital Statement and shall use all commercially reasonable efforts
to deliver to Buyer a final draft of the Preliminary Balance Sheet
and the Preliminary Working Capital Statement within 60 days after
the Closing Date, together with a final report of the Seller Auditor
thereon stating that the audit of the Preliminary Working Capital
Statement has been made in accordance with GAAP on a basis consistent
with the Interim Balance Sheet. Representatives of Buyer shall have
the opportunity to observe the taking of the inventory of Seller in
connection with the preparation of the Preliminary Balance Sheet, and
to examine the work papers, schedules and other documents prepared by
Seller in connection with the preparation of the Preliminary Balance
Sheet and the Preliminary Working Capital Statement. Seller shall
use all commercially reasonable efforts to cause the Seller Auditor
to permit Buyer and its accounting firm (the "Buyer Auditor") to
examine the Seller Auditor's work papers used in connection with its
audit of the Preliminary Balance Sheet and the Preliminary Working
Capital Statement. Buyer shall be responsible for the fees and
expenses of the Buyer Auditor.
If Buyer objects to the Preliminary Balance Sheet and the
Preliminary Working Capital Statement, Buyer shall deliver to Seller
a written notice of objection (an "Objection Notice") within 15 days
following the delivery thereof. If Buyer has no objection to the
Preliminary Balance Sheet and the Preliminary Working Capital
Statement, Buyer shall promptly deliver to Seller a written notice of
acceptance (an "Acceptance Notice"). The Preliminary Balance Sheet
and the Preliminary Working Capital Statement shall be final and
binding on the parties if an Acceptance Notice is delivered or if no
Objection Notice is delivered to Seller within such 15-day period.
Any payment or portion of any payment required under Section 1.7 not
subject to an Objection Notice, shall be paid within five business
days following the delivery of an Objection Notice. Any Objection
Notice shall specify in reasonable detail the items on the
Preliminary Balance Sheet and the Preliminary Working Capital
Statement disputed and shall describe in reasonable detail the basis
for the objection and all information in the possession of Buyer
which forms the basis thereof, as well as the amount in dispute. If
an Objection Notice is given, the parties shall consult with each
other with respect to the objection. If the parties are unable to
reach agreement within 15 days after an Objection Notice has been
given, any unresolved disputed items shall be promptly referred to an
independent accounting firm designated by agreement of Seller and
Buyer (the "Unrelated Accounting Firm"). The Unrelated Accounting
Firm shall be directed to resolve disputed issues in accordance with
the terms of this Agreement and render a written report on the
unresolved disputed issues with respect to the Preliminary Balance
Sheet and the Preliminary Working Capital Statement as promptly as
practicable and to resolve only those issues of dispute set forth in
the Objection Notice. The resolution of the dispute by the Unrelated
Accounting Firm shall be final and binding on the parties. The fees
and expenses of the Unrelated Accounting Firm shall be borne equally
by Seller, on the one hand, and Buyer, on the other hand. The
Preliminary Balance Sheet and the Preliminary Working Capital
Statement as finally determined pursuant to this Section 1.9(c) is
referred to herein, respectively, as the "Final Balance Sheet" and
the "Final Working Capital Statement".
Closing. (a) The Closing of the transactions contemplated by
this Agreement shall take place at the offices of King & Spalding,
191 Peachtree Street, Atlanta, Georgia. If all of the conditions to
Closing set forth in Article VI hereof have been satisfied or waived
prior to such time, the Closing shall take place at 12:01 a.m.
Eastern Time on January 1, 2000. If the Closing does not occur at
such time, the Closing shall take place (assuming satisfaction or
waiver of all conditions to Closing) at 11:59 p.m. Eastern Time on
January 31, 2000, or at such other time as the parties mutually
agree. The date of the Closing is sometimes referred to herein as
the "Closing Date".
Deliveries by Seller. At the Closing, Seller will deliver or
cause to be delivered to Buyer (unless delivered previously) the
following:
The Transition Agreement (as hereinafter defined), executed by
Seller or its Affiliate;
The Staffing Services Agreement executed by Seller or its
Affiliate;
Bills of sale, instruments of assignment, certificates of title
and other conveyance documents, dated the Closing Date, transferring
to Buyer all of Seller's right, title and interest in and to the
Assets together with possession of the Assets;
Documents evidencing the assignment and assumption of the
Assumed Contracts and the Assumed Liabilities and the assignment of
any assignable permits and licenses; and
All other documents, instruments and writings required by Buyer
to be delivered by Seller at or prior to the Closing pursuant to this
Agreement or otherwise reasonably required in connection herewith.
Deliveries by Buyer. At the Closing, Buyer will deliver or
cause to be delivered to Seller (unless previously delivered) the
following:
The Purchase Pric'e in accordance with Section 1.7 hereof;
The Transition Agreement, executed by Buyer or its Affiliate;
The Staffing Services Agreement, executed by Buyer or its
Affiliate;
Documents evidencing the assignment and assumption of the
Assumed Contracts and the Assumed Liabilities and the assignment of
any assignable permits and licenses; and
All other documents, instruments and writings required by Seller
to be delivered by the buyer at or prior to the Closing pursuant to
this Agreement or otherwise reasonably required in connection
herewith.
Allocation of Purchase Price. Seller and Buyer will use their
reasonable best efforts to agree on the allocation of the Assets (the
"Allocation") and will use the Allocation in reporting the deemed
purchase and sale of the Assets for federal and state income tax
purposes. If the parties are unable to agree upon the Allocation
within 90 days before the due date of filing any Tax Return (as
hereinafter defined) for which the Allocation is relevant, the
Allocation shall be made by an independent accountant selected by the
parties.
RELATED MATTERS
Use of Seller
''s Name and Logos. It is expressly agreed that
Buyer is not purchasing, acquiring or otherwise obtaining any right,
title or interest in the names "Rollins" or "Rollins Logistics", or
any tradenames, trademarks, identifying logos or service marks
related thereto or employing any part or variation of any of the
foregoing or any confusingly similar tradename, trademark or logo
(collectively, the "Seller Tradenames and Logos"). Buyer agrees that
neither it nor any of its Affiliates (as hereinafter defined) shall
make any use of the Seller Tradenames and Logos from and after the
Closing Date; provided, however, that Seller (or its Affiliate) shall
grant Buyer a ninety (90) day license for use of the Rollins
Logistics logo in order for Buyer to undertake the deletion or
removal of the Rollins Logistics logo in a practical manner.
No Ongoing or Transition Services. Except as provided in the
Transition Agreement, at the Closing, all data processing,
accounting, insurance, banking, personnel, legal, communications,
fuel procurement and other services provided to Seller by any
Affiliate of Seller, including any agreements or understandings
(written or oral) with respect thereto, will terminate.
Distributions. The parties agree that Seller shall have
the right, at or prior to the Closing, to cause Seller to distribute
all cash held by Seller to its Affiliates, by one or more cash
dividends, repurchase of existing stock and/or other distributions.
Except as provided in Section 1.9(b), no adjustment shall be made to
the Purchase Price as a result of any such dividends, repurchases or
other distributions paid to Seller or its Affiliates.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
Organization.
Each of the Sellers is a corporation validly existing and in
good standing under the laws of the State of Delaware, and has all
requisite power and authority to own, lease and operate its
properties and assets and to carry on its operations as now being
conducted. Each of the Sellers is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the
property or assets owned, leased or operated by each of the Sellers
or the nature of the business conducted by each of the Sellers makes
such qualification necessary, except where the failure to be so duly
qualified or licensed and in good standing would not individually or
in the aggregate have a Seller Material Adverse Effect (as
hereinafter defined). Schedule 3.1 sets forth a list of all
jurisdictions where each of the Sellers is qualified to do business.
Seller has heretofore made available to Buyer complete and correct
copies of the certificate of incorporation and by-laws of each of the
Sellers, as currently in effect.
As used herein, a "Seller Material Adverse Effect" shall mean
any event, change or effect that has occurred which has a material
adverse effect upon the financial condition, operating results or
business of Seller; provided, however, that Seller Material Adverse
Effect shall not include any event, change in or effect upon the
financial condition or business of Seller, directly or indirectly,
arising out of, attributable to or as a consequence of: (a)
conditions, events or circumstances generally affecting the vehicle
leasing industry or the overall economy; or (b) the public
announcement of either the execution of this Agreement or the
transactions contemplated hereunder.
Authorization. Each of the Sellers has the corporate power and
authority to execute and deliver this Agreement and perform its
respective obligations hereunder. The execution and delivery of this
Agreement and the performance by each of the Sellers of its
respective covenants and agreements hereunder has been duly and
validly authorized by the Boards of Directors and shareholders of
each Seller and the Board of Directors of Rollins Truck Leasing
Corp., and no other corporate proceedings on the part of Seller or
its Affiliates is necessary to authorize the execution, delivery and
performance of this Agreement or the consummation of the transactions
so contemplated. This Agreement has been duly executed and delivered
by each of the Sellers and constitutes a valid and binding agreement
of each of the Sellers, enforceable against each of the Sellers in
accordance with its terms, except that (a) such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other laws, now or hereafter in effect,
relating to or limiting creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
Consents and Approvals; No Violations. Except as set forth on
Schedule 3.3 and for applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (a)
conflict with or result in any breach of any provision of the
certificate of incorporation or by-laws of any of the Sellers; (b)
require any filing with, or the obtaining of any permit,
authorization, consent or approval of, any governmental or regulatory
authority; (c) violate, conflict with or result in a default (or any
event which, with notice or lapse of time or both, would constitute a
default) under, or give rise to any right of termination,
cancellation or acceleration under, any of the terms, conditions or
provisions of any note, mortgage, other evidence of indebtedness,
guarantee, license, agreement, lease or other contract, instrument or
obligation to which any of the Sellers is a party or by which any of
the Sellers or any of their respective assets may be bound; or (d)
violate any order, injunction, decree, statute, rule or regulation
applicable to any of the Sellers, excluding from the foregoing
clauses (b), (c) and (d) such requirements, violations, conflicts,
defaults or rights (i) which would not have Seller Material Adverse
Effect and would not adversely affect the ability of any of the
Sellers to consummate the transactions contemplated by this
Agreement, or (ii) which become applicable as a result of the
business or activities in which Buyer is or proposes to be engaged or
as a result of any acts or omissions by, or the status of or any
facts pertaining to, Buyer.
Financial Statements. Seller has made available to Buyer: (i)
the unaudited consolidated balance sheets of Seller as of September
30, 1997 and 1998 and the unaudited consolidated statements of income
and cash flows thereof for the respective fiscal years then ended,
including the notes thereto; and (ii) the unaudited consolidated
balance sheet of Seller as of September 30, 1999 and the unaudited
consolidated statements of income and cash flows thereof for the six
month period then ended, including the notes thereto. All of the
foregoing financial statements are hereinafter collectively referred
to as the "Financial Statements." Except as disclosed in the
Financial Statements, the Financial Statements have been prepared
from, and are in accordance with, the books and records of Seller and
present fairly, in all material respects, the financial position and
results of operations of Seller as of the dates and for the
applicable periods indicated, in each case in conformity with GAAP.
Absence of Material Adverse Effect. Except as set forth on
Schedule 3.5, since September 30, 1999, Seller has:
conducted its business in the ordinary course;
not sold any asset at a price of more than $100,000 other than
in the ordinary course of business;
maintained accounts receivable, inventory, accounts payable and
other working capital accounts in a manner consistent with normal
business practices;
not written up or down the value of any inventory or determined
as collectible any notes or accounts receivable that were previously
considered to be uncollectible, except for write-ups or write-downs
and other determinations in accordance with GAAP and in the ordinary
course of business and consistent with past practice;
not pledged or permitted the imposition of any lien on any of
its assets;
not suffered any change in its financial condition, operating
results or business or suffered any other event or condition of any
character which individually or in the aggregate has had a Seller
Material Adverse Effect;
not suffered any damage, destruction or loss of tangible assets,
whether or not covered by insurance, in excess of $250,000, in the
aggregate;
not paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), except in
each case in the ordinary course of business;
not canceled any debts or waived any claims or rights of
substantial value, except in each case in the ordinary course of
business; and
not granted any general increase in the compensation payable or
to become payable to its officers, directors, consultants or
employees (including any such increase pursuant to any bonus,
severance, termination, pension, profit-sharing or other plan or
commitment) or any special increase in the compensation payable or to
become payable to any officer, director, consultant or employee,
except for (i) normal merit and cost of living increases in the
ordinary course of business and in accordance with past practice and
(ii) severance commitments that are (and shall remain after Closing)
the sole responsibility of Seller and its Affiliates.
Title, Ownership and Related Matters.
Real Property.
Seller does not own any real property. Schedule 3.6(a)(i) sets
forth a list of the parcels of real property currently leased by
Seller or from which Seller conducts any of its operations (together
with all fixtures and improvements thereon, the "Leased Real
Property").
To the Knowledge of Seller, it has a valid leasehold interest in
the Leased Real Property, free and clear of any mortgage, liens,
pledges, security interests, claims, restrictions or other
encumbrances.
To the Knowledge of Seller, the improvements on the Leased Real
Property are free from any material structural defects. Except as
set forth on Schedule 3.6(a)(iii), to the Knowledge of Seller, there
are no condemnation or appropriation or similar proceedings pending
or threatened against any of the Leased Real Property or the
improvements thereon.
Necessary Assets. To the Knowledge of Seller, except as set
forth in Schedule 3.6(b), it has good and marketable title to its
material assets, free and clear of all liens, pledges, security
interests, charges, claims, restrictions and encumbrances of any
nature whatsoever.
Intellectual Property.
To the Knowledge of Seller (as herein defined), the conduct of
its business does not infringe upon any intellectual property right
of any third party. There are no pending, or to the Knowledge of
Seller threatened, proceedings or litigation or other adverse claims
by any Person (as hereinafter defined) against the use by Seller of
any trademarks, trade names, service marks, service names, logos,
assumed names, copyrights, patents or registrations and applications
therefor which are owned by Seller and are necessary for the
operation of the Seller's business as currently conducted
(collectively, the "Intellectual Property"). Schedule 3.7 sets forth
a list of all Intellectual Property owned by Seller.
Seller has valid licenses or other rights to use the
Intellectual Property necessary to permit Seller to conduct its
operations as currently conducted, except (i) for the Seller
Tradenames and Logos and (ii) where the failure to have such
ownership, licenses or rights would not have a Seller Material
Adverse Effect.
Computer Software. Seller has valid licenses or other rights to
use all material computer software programs to permit it to conduct
its operations as currently conducted, except where the failure to
have such ownership, licenses or rights would not have a Seller
Material Adverse Effect.
Year 2000 Compliance. Seller has provided Buyer true and
complete copies of all material reports and analyses obtained by
Seller with respect to Year 2000 compliance issues concerning its
businesses. Seller's major systems have been modified, tested and
certified.
Litigation. Schedule 3.10 identifies all claims, actions,
suits, proceedings and governmental investigations pending or, to the
Knowledge of Seller, threatened against Seller by or before any
court, governmental or regulatory authority or by any third party
(other than claims, actions, suits, proceedings, and governmental
investigations set forth on Schedule 3.16(b) (the "Litigation
Claims").
Compliance with Applicable Law. To the Knowledge of Seller, it
is in compliance in all material respects with all applicable laws,
ordinances, rules and regulations of any federal, state, local or
foreign governmental authority applicable to Seller or its operations
and necessary to carry on its business as it is currently being
conducted, to own or hold under lease the properties and assets it
owns or holds under lease and to perform all of its obligations under
the agreements to which it is a party.
Certain Contracts and Arrangements. Schedule 3.12 sets forth a
list of the following contracts to which each of the Sellers is a
party: (a) employment agreements; (b) indentures, mortgages, notes,
installment obligations, agreements or other instruments relating to
the borrowing of money or the guaranty by each of the Sellers of any
obligation for the borrowing of money; (c) real property leases; or
(d) contracts with Affiliates; or (e) other agreements, including
without limitation, customer contracts, which individually involve
the receipt or payment by each of the Sellers after the date hereof
of more than $100,000 and are not terminable without liability to
each of the Sellers upon 30 days or less prior written notice
(together with those contracts, agreements and understandings
described in clauses (a), (b), (c) and (d), the "Contracts"). Seller
has made available to Buyer copies of all Contracts. To the
Knowledge of Seller, all such Contracts are valid, binding and
enforceable in accordance with their terms and, to the Knowledge of
Seller, neither Seller nor any other party thereto is in material
default under any of the aforesaid Contracts. Schedule 3.12(i) sets
forth a list of all unresolved material default notices received from
or given to third parties pertaining to the Contracts.
Employee Benefit Plans; ERISA. Except as set forth on Schedule
3.13:
There are no "employee benefit plans" (as defined in Section
3.(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) maintained for the benefit of employees of Seller
or other employee benefit, bonus or fringe benefit plans maintained
for the benefit of the employees of Seller to which, or with respect
to which, Seller has a material liability for the payment of benefits
or makes material contributions annually (the "Plans").
Each of the Plans that is subject to ERISA has been administered
in compliance in all material respects with ERISA. Each of the Plans
intended to be "qualified" within the meaning of Section 401(a) of
the Code has a favorable determination letter from the Internal
Revenue Service (the "IRS") to the effect that it is so qualified.
Except as set forth on Schedule 3.13, none of the Plans is subject to
Title IV of ERISA. There are no pending or, to the Knowledge of
Seller, threatened material claims (other than routine claims for
benefits) by, on behalf of or against any of the Plans or any trusts
which are a part of such Plans.
Seller has furnished to Buyer a correct, complete and correct
copy of each plan, program, policy or arrangement which is set forth
in writing and which provides cash or property or other compensation
related benefits of any kind or description whatsoever to or on
behalf of any current of former employee or director of Seller or any
of their dependents and a complete description of any such plain,
program, policy or arrangement which is not set forth in writing
(collectively, the "Seller Benefit Plans"). A list of each Seller
Benefit Plan is set forth on Schedule 3.13.
Labor Matters. Seller is in compliance with all federal and
state laws respecting employment and employment practices, terms and
conditions of employment, wages and hours, and is not engaged in any
unfair labor or unlawful employment practice, the violation of or
engagement in which would have a Seller Material Adverse Effect.
Except as set forth on Schedule 3.14, there are no controversies
pending or, to the Knowledge of the Seller, threatened, between it
and any of its employees, which controversies have had or are
reasonably likely to have a Seller Material Adverse Effect. Except
as set forth on Schedule 3.14, Seller is not a party to any
collective bargaining agreement or other labor union contract
applicable to Persons employed by Seller. There are no unfair labor
practice complaints pending against Seller before the National Labor
Relations Board. To the Knowledge of Seller, there are no strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with
respect to any of its employees.
Taxes.
Seller (i) has timely filed or caused to be filed on a timely
basis with the appropriate taxing authorities all material Tax
Returns (as hereinafter defined) required to be filed by or with
respect to Seller (including the consolidated federal income Tax
Returns and any consolidated, combined or unitary state Tax Returns
in which the Seller is included), and (ii) has paid or made adequate
provision for the payment of all Taxes (as hereinafter defined) shown
to be due on such Tax Returns or otherwise due and payable by the
Seller. All such Tax Returns are true, correct and complete in all
material respects.
Except as set forth on Schedule 3.15, (i) there are no liens for
Taxes with respect to the assets of Seller (except for statutory
liens for current taxes not yet delinquent) and no material claims
with respect to Taxes are being asserted by any taxing authority in
writing; (ii) none of the Tax Returns applicable to Seller are
currently being audited or examined by any taxing authority and there
is no other action or proceeding currently pending concerning Taxes
relating to the Seller; (iii) there is no material unpaid tax
deficiency, determination or proposed assessment currently
outstanding against Seller or for which the Seller could be jointly
or severally liable; (iv) there are no outstanding agreements or
waivers extending the statute of limitations relating to the
assessment of Taxes applicable to Seller; (v) the Seller is not a
party to any agreement that would result, separately or in the
aggregate, in the payment of an excess parachute payment pursuant to
Section 280G of the Code; (vi) the Seller is not a member of any
partnership or joint venture or the holder of a beneficial interest
in any trust (other than a trust that is treated as a grantor trust
or otherwise is disregarded as a separate taxable entity for federal
income tax purposes); and (vii) to the Seller's Knowledge, there are
no proposed reassessments of any of the Assets that will result in a
material increase in the amount of Tax to which such Assets will be
subject for periods after the Closing Date.
As used in this Agreement:
"Taxes" shall mean all taxes, levies, charges or fees including
income, corporation, advance corporation, gross receipts, transfer,
excise, property, sales, use, value-added, license, payroll, pay-as-
you-earn, withholding, social security and franchise or other
governmental taxes or charges, imposed by the United States or any
state, county, local or foreign government, and such term shall
include any interest, penalties or additions to tax attributable to
such taxes.
"Tax Return" shall mean any report, return or statement required
to be supplied to a taxing authority in connection with Taxes.
Environmental. (a) To the Knowledge of Seller, except as set
forth on Schedule 3.16(a), Seller possesses, and is in compliance
with, all material permits, licenses and government authorizations
relating to protection of the environment, pollution control and
hazardous materials applicable to Seller;
(b) To the Knowledge of Seller, except as set
forth on Schedule 3.16(b), neither Seller nor any of its Affiliates
has received notice from a state or federal governmental authority
that Seller is responsible under any applicable federal, state or
local law, regulation or ordinance relating to the protection of the
environment in effect at the time of this Agreement (the
"Environmental Laws") to investigate and/or remediate Hazardous
Materials (as hereinafter defined) on property Seller leases or
operates on (collectively, the "Environmental Claims"). For purposes
of this Agreement, "Hazardous Materials" shall mean any waste,
pollutant, hazardous substance, toxic, ignitable, reactive or
corrosive substance, hazardous waste, special waste, industrial
substance, by-product, process intermediate product or waste,
petroleum or petroleum-derived substance or waste, chemical liquids
or solids, liquid or gaseous products regulated under Environmental
Laws; and
(c) There are no underground storage tank systems
for which Seller is responsible under applicable laws or existing
agreements which have not been upgraded or removed in compliance with
40 CFR Part 280 and any other applicable laws.
Officers; Bank Accounts. Schedule 3.17 lists each of the
officers of Seller and all of the accounts (and signatures thereto)
of Seller with any bank, brokerage firm or other financial
institution or depository.
Certain Fees. Seller will not have any liability for any
financial advisory or finders' fees in connection with this Agreement
or the transactions contemplated hereby.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
Organization and Authority of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Buyer has the corporate power and authority to
execute and deliver this Agreement and perform its obligations
hereunder. The execution and delivery of this Agreement and the
performance by Buyer of its covenants and agreements hereunder have
been duly and validly authorized by the Board of Directors of Buyer,
and no other corporate proceedings on the part of Buyer are necessary
to authorize the execution, delivery and performance of this Agreement
or the consummation of the transactions so contemplated. This
Agreement has been duly executed and delivered by Buyer and constitutes
a valid and binding agreement of Buyer, enforceable against Buyer in
accordance with its terms, except that (i) such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other laws, now or hereafter in effect, relating
to or limiting creditors' rights generally, and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
Consents and Approvals; No Violations. Except for applicable
requirements of the HSR Act, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (a) conflict with or result in any breach of any provision of the
incorporation documents or by-laws of Buyer; (b) require any filing
with, or the obtaining of any permit, authorization, consent or
approval of, any governmental or regulatory authority; (c) violate,
conflict with or result in a default (or any event which, with notice
or lapse of time or both, would constitute a default) under, or give
rise to any right of termination, cancellation or acceleration under,
any of the terms, conditions or provisions of any note, mortgage, other
evidence of indebtedness, guarantee, license, agreement, lease or other
contract, instrument or obligation to which Buyer is a party or by
which Buyer or any of its assets may be bound; or (d) violate any
order, injunction, decree, statute, rule or regulation applicable to
Buyer, excluding from the foregoing clauses (b), (c) and (d) such
requirements, violations, conflicts, defaults or rights (i) which would
not adversely affect the ability of Buyer to consummate the
transactions contemplated by this Agreement or (ii) which become
applicable as a result of any acts or omissions by, or the status of or
any facts pertaining to, Seller.
Litigation. There is no claim, action, suit, proceeding or
governmental investigation pending or, to the Knowledge of Buyer (as
hereinafter defined), threatened against Buyer, by or before any court,
governmental or regulatory authority or by any third party which
challenges the validity of this Agreement or which would be reasonably
likely to adversely affect or restrict Buyer's ability to consummate
the transactions contemplated hereby.
Certain Fees. Except for the engagement of Warburg Dillon Read,
neither Buyer nor any of its Affiliates has employed any financial
advisor or finder or incurred any liability for any financial advisory
or finders' fees in connection with this Agreement or the transactions
contemplated hereby.
COVENANTS
Conduct of Seller's Business. Seller agrees that, during the
period from the date of this Agreement to the Closing, except as
otherwise contemplated by this Agreement, the Schedules or consented to
by Buyer in writing, Seller shall:
to use its reasonable best efforts to conduct its business
operations in the ordinary course consistent with past practice;
to use its reasonable best efforts to (i) maintain and preserve
its business operations, (ii) retain the services of its employees,
except for attrition of such employees in the ordinary course of
business, and (iii) maintain, preserve and retain relationships with
its suppliers and customers;
not to sell or dispose of any material business assets, except in
the ordinary course of business;
not to amend its certificate of incorporation or bylaws;
not to incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, other than borrowings in the
ordinary course of business consistent with past practice;
not to change its accounting policies except as required by
generally accepted accounting principles; and
not to make any change in employment terms for any of its
employees other than terminations for cause or customary salary
increases and adjustments in benefits in the ordinary course of
business consistent with past practice, other than severance
commitments that are (and still remain) the sole responsibility of
Seller and its Affiliates.
Access to Information.
Between the date of this Agreement and the Closing, Seller shall
(i) give Buyer and its authorized representatives reasonable access to
all its books, records, offices and other facilities and properties and
to the Seller Executives (as hereinafter defined); (ii) permit Buyer to
make such inspections thereof as Buyer may reasonably request; and
(iii) cause its officers to furnish Buyer with such financial and
operating data and other information with respect to its business and
properties as Buyer may from time to time reasonably request; provided,
however, that any such investigation shall be conducted during normal
business hours under the supervision of Seller's personnel and in such
a manner as to maintain the confidentiality of this Agreement and the
transactions contemplated hereby and not interfere unreasonably with
the business operations of Seller.
All information concerning Seller furnished or provided by Seller
or their Affiliates to Buyer or its representatives (whether furnished
before or after the date of this Agreement) shall be held subject to a
confidentiality agreement by and between United Parcel Service of
America, Inc. and Rollins Leasing Corporation, dated as of August 24,
1999 (the "Confidentiality Agreement").
Consents. (a) Each of Seller and Buyer shall cooperate, and use
its reasonable best efforts, to make all filings (including without
limitation all filings required under the HSR Act) and obtain all
licenses, permits, consents, approvals, authorizations, qualifications
and orders of governmental authorities and other third parties
necessary to consummate the transactions contemplated by this
Agreement. In addition to the foregoing, Buyer agrees to provide such
assurances as to financial capability, resources and creditworthiness
as may be reasonably requested by any third party whose consent or
approval is sought in connection with the transactions contemplated
hereby.
(b) With respect to any agreements for which any required
consent or approval is not obtained prior to the Closing, Seller and
Buyer shall each use their reasonable best efforts to obtain any such
consent or approval after the Closing Date until such consent or
approval has been obtained.
Reasonable Best Efforts. Each of Seller and Buyer shall
cooperate, and use its reasonable best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
Public Announcements. Except as otherwise agreed to by the
parties, the parties shall not issue any report, statement or press
release or otherwise make any public statements with respect to this
Agreement and the transactions contemplated hereby, except as in the
reasonable judgment of the party may be required by law. Upon the
execution of this Agreement and the Closing, Seller and Buyer will
consult with each other with respect to the issuance of a joint report,
statement or press release with respect to this Agreement and the
transactions contemplated hereby.
Covenant to Satisfy Conditions. Seller will use its reasonable
best efforts to ensure that the conditions set forth in Article VI
hereof are satisfied, insofar as such matters are within the control of
Seller, and Buyer will use its reasonable best efforts to ensure that
the conditions set forth in Article VI hereof are satisfied, insofar as
such matters are within the control of Buyer. Seller and Buyer further
covenant and agree, with respect to a threatened or pending preliminary
or permanent injunction or other order, decree or ruling or statute,
rule, regulation or executive order that would adversely affect the
ability of the parties hereto to consummate the transactions
contemplated hereby, to use all reasonable efforts to prevent or lift
the entry, enactment or promulgation thereof, as the case may be.
Employees; Employee Benefits. (a) Buyer shall treat all service
completed by a Transferred Employee with Seller or any Affiliate
thereof, and any predecessor thereto, the same as service completed
with Buyer for all purposes, including waiting periods relating to
preexisting conditions under medical plans, vacations, severance pay,
eligibility to participate in, vesting or payment of benefits under,
and eligibility for early retirement or any subsidized benefit provided
for under any employee benefit plan (including, but not limited to, any
"employee benefit plan" as defined in Section 3(3) of ERISA) maintained
by Buyer on or after the Closing Date except for purposes of computing
benefits under the actual benefit formula in a pension plan (as defined
in Section 3(2) of ERISA). Prior to the Closing, Seller shall furnish
Buyer with a list of the length of service with it or its Affiliates
for each of the Transferred Employees. For purposes of computing
deductible amounts (or like adjustments or limitations on coverage)
under any employee welfare benefit plan (including, without limitation,
any "employee welfare benefit plan" as defined in Section 3(l) of
ERISA), expenses and claims previously recognized for similar purposes
under the applicable welfare benefit plan of Seller or any Affiliate
shall be credited or recognized under the comparable plan maintained
after the Closing Date by Buyer.
(b) After the Closing Date, Buyer shall be responsible for,
and shall indemnify and hold harmless Seller and their Affiliates and
their officers, directors, employees, Affiliates and agents and the
fiduciaries (including plan administrators) of the Plans, from and
against, any and all claims, losses, damages, costs and expenses
(including, without limitation, attorneys' fees and expenses) and other
liabilities and obligations relating to or arising out of (i) all
salaries, bonuses, commissions, vacation entitlements and other
benefits accrued by Seller but unpaid as of the Closing, and (ii) any
claims of, or damages or penalties sought by, any Transferred Employee,
or any governmental entity on behalf of or concerning any Transferred
Employee, with respect to any act or failure to act by Buyer to the
extent arising from the employment, discharge, layoff or termination of
any Transferred Employee after the Closing.
Supplemental Disclosure. If any event or matter arises or comes
to the attention of Seller or Parent after the date of this Agreement
which, if existing or occurring or known to Seller or Parent at the
date of this Agreement, would have been required to be set forth or
described in the Schedules or which is necessary to correct any
information in the Schedules which has been rendered inaccurate thereby
in any material respect, then Seller shall promptly supplement or amend
and deliver to Buyer the Schedules which it has delivered pursuant to
this Agreement, and Buyer shall have the right, within five business
days of receipt by Buyer of such supplement or amendment, to terminate
the Agreement pursuant to Section 7.1(e).
Investigation by Buyer. Buyer has conducted its own independent
review and analysis of the business, operations, technology, assets,
liabilities, results of operations, financial condition and prospects
of Seller and acknowledges that Seller has provided Buyer with access
to its personnel, properties, premises and records for this purpose.
In entering into this Agreement, Buyer has relied solely upon its own
investigation and analysis, and Buyer (a) acknowledges that neither
Seller nor any of its respective directors, officers, employees,
Affiliates, controlling Persons, agents or representatives makes or has
made any representation or warranty, either express or implied, as to
the accuracy or completeness of any of the information provided or made
available to Buyer or its directors, officers, employees, Affiliates,
controlling Persons, agents or representatives, and (b) agrees, to the
fullest extent permitted by law, that neither Seller nor any of its
respective directors, officers, employees, Affiliates, controlling
Persons, agents or representatives shall have any liability or
responsibility whatsoever to Buyer or its directors, officers,
employees, Affiliates, controlling Persons, agents or representatives
on any basis (including, without limitation, in contract or tort, under
federal or state securities laws or otherwise) based upon any
information provided or made available, or statements made, to Buyer or
its directors, officers, employees, Affiliates, controlling Persons,
agents or representatives (or any omissions therefrom), except as and
only to the extent expressly set forth herein with respect to the
representations and warranties of Seller in Article III and subject to
the limitations and restrictions contained herein. Buyer's sole rights
and remedies relative to transactions contemplated herein are limited
to those set forth herein.
Additional Actions. Following the Closing, Buyer, Parent and
Seller agree to take such actions with regard to Seller as are
specified on Schedule 5.10.
Parent Guarantee. Parent hereby unconditionally and irrevocably
guarantees to Buyer the full payment and performance of all of the
obligations of Seller (and each Seller individually) under this
Agreement, including without limitation under Article IX hereof.
CONDITIONS TO OBLIGATIONS OF THE PARTIES
Conditions to Each Party's Obligation. The respective obligation
of each party to consummate the transactions contemplated herein is
subject to the satisfaction at or prior to the Closing of the following
conditions:
No statute, rule or regulation shall have been enacted,
promulgated or enforced by any court or governmental authority which
prohibits or restricts the consummation of the transactions
contemplated hereby;
There shall not be in effect any judgment, order, injunction or
decree of any court of competent jurisdiction enjoining the
consummation of the transactions contemplated hereby;
Any waiting periods applicable to the transactions contemplated by
this Agreement under the HSR Act shall have expired or early
termination shall have been granted;
All consents, authorizations, waivers and approvals of any
governmental authority or other regulatory body or from parties to
contracts or other agreements to which Seller is a party as may be
required to be obtained in connection with the performance of this
Agreement, the failure to obtain which would prevent the consummation
of the transactions contemplated hereby or have a Seller Material
Adverse Effect, shall have been obtained; or
The transactions contemplated by that Stock Purchase Agreement,
dated the date hereof, between Buyer, Seller, UPS Truck Leasing, Inc.
and Rollins Leasing Corp. shall have been consummated simultaneously
with the Closing.
Conditions to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated hereby are further subject to
the satisfaction (or waiver) at or prior to the Closing of the
following conditions:
The representations and warranties of Buyer contained in Article
IV of this Agreement shall be true and correct in all material respects
at the date hereof and as of the Closing as if made at and as of such
time, except for changes permitted or contemplated hereby and except
for representations and warranties which are as of a specific date;
Buyer shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or
prior to the Closing pursuant to the terms hereof;
Buyer shall have delivered to Seller or its Affiliates those items
set forth in Section 1.12 hereof;
Buyer or its Affiliate shall have executed and delivered a
staffing services agreement in the form of Exhibit 6.2(d) hereto (the
"Staffing Services Agreement"); and
Buyer or its Affiliate shall have executed and delivered a
transition services agreement ("the Transition Agreement") in form and
substance reasonably satisfactory to Buyer and Seller.
Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated hereby are further subject to
the satisfaction (or waiver) at or prior to the Closing of the
following conditions:
The representations and warranties of Seller contained in Article
III of this Agreement shall be true and correct in all material
respects at the date hereof and as of the Closing as if made at and as
of such time, except for changes permitted or contemplated hereby and
except for representations and warranties which are as of a specific
date;
Seller shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or
prior to the Closing pursuant to the terms hereof;
Seller shall have delivered to Buyer those items set forth in
Section 1.11 hereof;
Seller or its Affiliate shall have executed and delivered the
Staffing Services Agreement; and
Seller or its Affiliate shall have executed and delivered the
Transition Agreement.
TERMINATION
Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
at any time, by mutual written consent of Seller and Buyer;
by either party if the transactions contemplated hereby shall have
been permanently enjoined by a court of competent jurisdiction,
provided that no party hereto who brought or is affiliated with the
party who brought the action seeking the permanent enjoinment of the
transactions contemplated hereby may seek termination of this Agreement
pursuant to this Section 7.1(b);
by Buyer if (i) any of the conditions set forth in Sections 6.1
or 6.3 shall have become incapable of fulfillment and shall not have
been waived by Buyer or (ii) Seller shall breach in any material
respect any of its representations, warranties, covenants or other
obligations hereunder and, within twenty (20) days after written notice
of such breach to Seller from Buyer, such breach shall not have been
cured in all material respects or waived by Buyer, or Seller shall not
have provided reasonable assurance to Buyer that such breach will be
cured in all material respects on or before the Closing Date; or
by Seller if (i) any of the conditions set forth in Sections 6.1
or 6.2 shall have become incapable of fulfillment and shall not have
been waived by Seller or (ii) Buyer shall breach in any material
respect any of its representations, warranties, covenants or other
obligations hereunder and, within twenty (20) days after written notice
of such breach to Buyer from Seller, such breach shall not have been
cured in all material respects or waived by Seller or Buyer shall not
have provided reasonable assurance to Seller that such breach will be
cured in all material respects on or before the Closing Date;
by Buyer, within five (5) days following receipt of any supplement
or amendment to the Schedules, by written notice to Seller if the
matter which gives rise to such supplement or amendment individually,
or together with any other such matters, in the aggregate has caused
any of the representations and warranties of Seller set forth in
Article III (without giving effect to such supplement or amendment) to
be inaccurate in any material respect; or
by Buyer or Seller, at any time on or after February 1, 2000, if
the Closing shall not have occurred on or prior to such date; provided,
however, that the right to terminate this Agreement under this Section
7.1(f) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the primary cause of, or
resulted in, the failure of the Closing to have occurred on or before
such date.
Procedure and Effect of Termination. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to Section 7.1 hereof, written notice
thereof shall forthwith be given by Seller, on the one hand, or Buyer,
on the other hand, so terminating to the other party and this Agreement
shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by Seller, or Buyer. If this
Agreement is terminated pursuant to Section 7.1 hereof:
each party shall redeliver all documents, work papers and other
materials of the other parties relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof, to the party furnishing the same or, upon prior written notice
to such party, shall destroy all such documents, work papers and other
materials and deliver notice to the parties seeking destruction of such
documents that such destruction has been completed, and all
confidential information received by any party hereto with respect to
the other party shall be treated in accordance with the Confidentiality
Agreement and Section 5.2(b) hereof;
all filings, applications and other submissions made pursuant
hereto shall, at the option of Seller, and to the extent practicable,
be withdrawn from the agency or other Person to which made; and
there shall be no liability or obligation hereunder on the part of
Seller or Buyer or any of their respective directors, officers,
employees, Affiliates, controlling Persons, agents or representatives,
except that Seller or Buyer, as the case may be, shall have liability
to the other party if the basis of termination is a willful, material
breach by Seller or Buyer, as the case may be, of one or more of the
provisions of this Agreement, and except that the obligations provided
for in this Section in Section 10.1 hereof and in the Confidentiality
Agreement and the non-compete obligations of the Alliance Agreement
shall survive any such termination.
SURVIVAL OF REPRESENTATIONS
Survival of Representations, Warranties and Agreements. The
representations and warranties of Seller and Buyer made in Articles III
and IV hereof, respectively, shall not survive the Closing and, except
as provided in Section 7.2(c) hereof, shall not survive any termination
of this Agreement; provided that any covenant or agreement of any party
contained herein which by its terms shall survive the Closing shall
survive until fully performed, and provided, further, that this Section
8.1 is not intended in any way to limit any covenant or agreement of
the parties which contemplates performance after the Closing,
including, without limitation, the covenants and agreements set forth
in Section 5.7 hereof.
INDEMNIFICATION
Indemnification Obligations of Seller. Seller shall defend and
hold harmless Buyer and its Affiliates, each of their respective
officers, directors, employees, agents and representatives and each of
the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Buyer Indemnified Parties") from, against and in
respect of any and all claims, liabilities, obligations, losses, costs,
expenses, penalties, fines and judgments (at equity or at law) and
damages whenever arising or incurred (including, without limitation,
amounts paid in settlement, costs of investigation and reasonable
attorneys' fees and expenses) arising out of or relating to the (i)
Excluded Liabilities and (ii) any accounts receivable of Seller
reflected in the Closing Date Working Capital that Buyer is unable to
collect within 90 days following the Closing Date; provided (A) Buyer
has used its reasonable best efforts to collect such receivable, (B) in
the event Buyer seeks indemnity under Section 9.1(ii) of this
Agreement, Buyer shall assign such receivable and all proceeds thereof
to Seller and (C) the indemnification to which Seller is entitled will
be limited to the face amount of any uncollected receivables. The
claims, liabilities, obligations, losses, costs, expenses, penalties,
fines and damages of the Buyer Indemnified Parties described in this
Section 9.1 as to which the Buyer Indemnified Parties are entitled to
indemnification are hereinafter collectively referred to as "Buyer
Losses."
Indemnification Procedure.
Promptly after receipt by a Buyer Indemnified Party of notice by
a third party of threatened or filed claim or of the threatened or
actual commencement of any action or proceeding with respect to which
such Buyer Indemnified Party may be entitled to receive payment from
the other party for any Buyer Losses, such Buyer Indemnified Party
shall notify Seller, within 30 days of the notice of threatening or
filing of such claim or of the threatened or actual commencement of
such action or proceeding; provided, however, that the failure to so
notify Seller shall relieve Buyer from liability under this Agreement
with respect to such claim only if, and only to the extent that, such
failure to notify Seller results in the forfeiture by Seller of rights
and defenses otherwise available to Seller with respect to such claim.
Seller shall have the right, upon written notice delivered to the Buyer
Indemnified Party within 30 days thereafter, to assume the defense of
such action or proceeding, including the employment of counsel
reasonably satisfactory to the Buyer Indemnified Party and the payment
of the fees and disbursements of such counsel. In any action or
proceeding with respect to which indemnification is being sought
hereunder, the Buyer Indemnified Party or Seller, whichever is not
assuming the defense of such action, shall have the right to
participate in such litigation and to retain its own counsel at such
party's own expense. Seller or the Buyer Indemnified Party, as the
case may be, shall at all times use reasonable efforts to keep Seller
or the Buyer Indemnified Party, as the case may be, reasonably apprised
of the status of the defense of any action the defense of which they
are maintaining and to cooperate in good faith with each other with
respect to the defense of any such action.
The Buyer Indemnified Party may not settle or compromise any claim
or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder without the prior written
consent of Seller. Seller may not, without the prior written consent
of the Buyer Indemnified Party, settle or compromise any claim or
consent to the entry of any judgment with respect to which
indemnification is being sought hereunder unless (i) simultaneously
with the effectiveness of such settlement, compromise or consent,
Seller pays in full any obligation imposed on the Buyer Indemnified
Party by such settlement, compromise or consent and (ii) such
settlement, compromise or consent does not contain any equitable order,
judgment or term which in any manner affects, restrains or interferes
with the business of the Buyer Indemnified Party or any of the Buyer
Indemnified Party's affiliates.
In the event the Buyer Indemnified Party shall claim a right to
payment pursuant to this Agreement not involving a third party claim
covered by Section 9.2(a), the Buyer Indemnified shall send written
notice of such claim to Seller. Such notice shall specify the basis
for such claim. As promptly as possible after the Buyer Indemnified
Party has given such notice, such Buyer Indemnified Party and Seller
shall establish the merits and amount of such claim (by mutual
agreement, litigation, arbitration or otherwise) and, within five
business days of the final determination of the merits and amount of
such claim, Seller shall pay to the Buyer Indemnified Party immediately
available funds in an amount equal to such claim as determined
hereunder.
Exclusive Remedies. Following the Closing, neither Buyer nor
Seller shall make any claim nor have any remedy against the other party
arising out of or relating to the transactions contemplated hereby
other than any claim arising out of or related to (a) indemnification
pursuant to Section 5.7(b) or 9.1 or (b) a breach of any covenant set
forth in this Agreement or any agreement contemplated hereby required
to be performed after the Closing.
MISCELLANEOUS
Fees and Expenses. Except as set forth in this Section 10.1,
whether or not the transactions contemplated herein are consummated
pursuant hereto, each of Seller and Buyer shall pay all fees and
expenses incurred by, or on behalf of, Seller or Buyer, respectively,
in connection with, or in anticipation of, this Agreement and the
consummation of the transactions contemplated hereby.
Further Assurances. From time to time after the Closing Date, at
the reasonable request of the other party hereto and at the expense of
the party so requesting, each of the parties hereto shall execute and
deliver to such requesting party such documents and take such other
action as such requesting party may reasonably request in order to
consummate more effectively the transactions contemplated hereby.
Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement
shall be in writing and may be given by any of the following methods:
(a) personal delivery; (b) facsimile transmission; (c) registered or
certified mail, postage prepaid, return receipt requested; or (d) UPS
next day air or document exchange. Notices shall be sent to the
appropriate party at its address or facsimile number given below (or at
such other address or facsimile number for such party as shall be
specified by notice given hereunder):
If to Seller, to:
Rollins Leasing Corp.
2200 Concord Pike
One Rollins Plaza
Wilmington, DE 19803
Fax No. (302) 426-3815
Attention: Patrick J. Bagley
with a copy to:
Rollins Leasing Corp.
2200 Concord Pike
One Rollins Plaza
Wilmington, DE 19803
Fax No. (302) 426-3555
Attention: Klaus M. Belohoubek
If to Buyer, to:
United Parcel Service, Inc.
55 Glenlake Parkway
Atlanta, GA 30328
Fax No. (404) 828-6440
Attention: Legal Department
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Fax No. (404) 572-5145
Attention: Michael J. Egan III
All such notices, requests, demands, waivers and communications shall
be deemed received upon (i) actual receipt thereof by the addressee,
(ii) actual delivery thereof to the appropriate address or (iii) in the
case of a facsimile transmissions, upon transmission thereof by the
sender and issuance by the transmitting machine of a confirmation slip
that the number of pages constituting the notice have been transmitted
without error. In the case of notices sent by facsimile transmission,
the sender shall contemporaneously mail a copy of the notice to the
addressee at the address provided for above. However, such mailing
shall in no way alter the time at which the facsimile notice is deemed
received.
Severability. Should any provision of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not
affect the validity or enforceability of any of the other provisions of
this Agreement, which remaining provisions shall remain in full force
and effect and the application of such invalid or unenforceable
provision to Persons or circumstances other than those as to which it
is held invalid or unenforceable shall be valid and enforced to the
fullest extent permitted by law.
Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted
assigns. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned, directly or indirectly,
including, without limitation, by operation of law, by any party hereto
without the prior written consent of the other parties hereto.
No Third Party Beneficiaries. This Agreement is solely for the
benefit of Seller, and its successors and permitted assigns, with
respect to the obligations of Buyer under this Agreement, and for the
benefit of Buyer, and its respective successors and permitted assigns,
with respect to the obligations of Seller, under this Agreement, and
for the benefit of the Employees with respect to the obligations of
Buyer under Section 5.7 of this Agreement, and this Agreement shall not
be deemed to confer upon or give to any other third party any remedy,
claim, liability, reimbursement, cause of action or other right.
Interpretation.
The Article and Section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of
the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
As used in this Agreement, the term "Person" shall mean and
include an individual, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization and a government or any
department or agency thereof.
As used in this Agreement, the term "Affiliate" shall mean a
person that directly or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with the
person specified.
Jurisdiction and Consent to Service. Without limiting the
jurisdiction or venue of any other court, each of Seller and Buyer (a)
agrees that any suit, action or proceeding arising out of or relating
to this Agreement may be brought solely in the state or federal courts
of Delaware; (b) consents to the exclusive jurisdiction of each such
court in any suit, action or proceeding relating to or arising out of
this Agreement; (c) waives any objection which it may have to the
laying of venue in any such suit, action or proceeding in any such
court; and (d) agrees that service of any court paper may be made in
such manner as may be provided under applicable laws or court rules
governing service of process.
Entire Agreement. This Agreement, the Confidentiality Agreement,
the Alliance Agreement, the Schedules and other documents referred to
herein or delivered pursuant hereto which form a part hereof constitute
the entire agreement among the parties with respect to the subject
matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties or any of
them with respect to the subject matter hereof.
Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware (regardless of the
laws that might otherwise govern under applicable principles of
conflicts of laws thereof) as to all matters, including but not limited
to matters of validity, construction, effect, performance and remedies.
Specific Performance. The parties acknowledge and agree that any
breach of the terms of this Agreement would give rise to irreparable
harm for which money damages would not be an adequate remedy and
accordingly the parties agree that, in addition to any other remedies,
each shall be entitled to enforce the terms of this Agreement by a
decree of specific performance without the necessity of proving the
inadequacy of money damages as a remedy.
Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
Amendment, Modification and Waiver. This Agreement may be
amended, modified or supplemented at any time by written agreement of
Seller and Buyer. Any failure of Seller or Buyer to comply with any
term or provision of this Agreement may be waived, with respect to
Buyer, by Seller and, with respect to Seller, by Buyer, by an
instrument in writing signed by or on behalf of the appropriate party,
but such waiver or failure to insist upon strict compliance with such
term or provision shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure to comply.
Knowledge. "To the Knowledge of Seller" or any similar phrase
contained in this Agreement shall mean the actual knowledge of the
officers of Seller and Parent. "To the Knowledge of Buyer" or any
similar phrase contained in this Agreement shall mean the actual
knowledge of the officers of Buyer. Solely for the purposes of this
Section 10.14, the officers of Buyer and Seller shall be deemed to have
actual knowledge of any written notice previously delivered to Buyer or
Seller, respectively.
Schedules and Exhibits. The Schedules and all exhibits hereto are
hereby incorporated into this Agreement and are hereby made a party
hereof as if set out in full in this Agreement.
Arbitration.
Any controversy, claim or question or interpretation arising out
of or relating to this Agreement or the breach thereof shall be finally
settled by arbitration in the State of Delaware under the then-
effective Commercial Arbitration Rules of the American Arbitration
Association as modified by this Agreement, and judgment on the award
rendered by the arbitrators may be entered in any court having
jurisdiction. The award rendered by the arbitrators shall be final and
binding on the parties and not subject to further appeal. Such
arbitration can be initiated by written notice by either party to the
other party, which notice shall identify the claimant's selected
arbitrator. The party receiving such notice shall identify its
arbitrator within five (5) business days following its receipt of such
notice. The arbitrator selected by the claimant and the arbitrator
selected by the respondent shall, within five (5) business days of
their appointment, select a third neutral arbitrator. In the event
that they are unable to do so, either party may request the American
Arbitration Association to appoint the third neutral arbitrator. The
arbitrators shall have the authority to award any remedy or relief that
a court in Delaware could order or grant, including, without
limitation, specific performance of any obligation created under this
agreement, the awarding of punitive damages, the issuance of injunctive
or other provisional relief, or the imposition of sanctions for abuse
or frustration of the arbitration process. The arbitration awards will
be in writing and specify the factual and legal basis for the award.
It is the intent of the parties that any arbitration shall be
concluded as quickly as practicable (but, barring extraordinary
circumstances, in any event not more than twenty (20) days after the
date the third arbitrator is selected). Unless the parties otherwise
agree, once commenced, the hearing on the disputed matters shall be
held four days a week until concluded with each hearing date to begin
at 9:00 a.m. and to conclude at 5:00 p.m. The arbitrators shall use
their best efforts to issue the final award or awards within a period
of five (5) business days after closure of the proceedings. Failure of
the arbitrators to meet the time limits of this Section 10.16 shall not
be a basis for challenging the award.
The arbitrators shall instruct the non-prevailing party to pay all
costs of the proceedings, including the fees and expenses of the
arbitrators and the reasonable attorneys' fees and expenses of the
prevailing party. If the arbitrators determine that there is not a
prevailing party, each party shall be instructed to bear its own costs
and to pay one-half of the fees and expenses of the arbitrators.
Notwithstanding the foregoing, nothing contained herein shall
prevent either party from seeking injunctive relief in any court.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
WORLDWIDE DEDICATED SERVICES, INC.
By: /s/ Daniel P. DiMaggio
Name: Daniel P. DiMaggio
Title: Chief Executive Officer and President
ROLLINS TRUCK LEASING CORP.
By: /s/ Patrick J. Bagley
Name: Patrick J. Bagley
Title: Vice President Finance and Treasurer
ROLLINS LOGISTICS, INC.
By: /s/ Neil L. Vonnahme
Name: Neil L. Vonnahme
Title: Executive Vice President
ROLLINS DEDICATED CARRIAGE SERVICES, INC.
By: /s/ Neil L. Vonnahme
Name: Neil L. Vonnahme
Title: Executive Vice President
ROLLINS TRANSPORTATION SYSTEMS, INC.
By: /s/ James W. McCaughan
Name: James W. McCaughan
Title: President
STRATEGIC ALLIANCE AGREEMENT
THIS STRATEGIC ALLIANCE AGREEMENT, is made and entered into this
_____ day of January, 2000 (the "Alliance Agreement"), by and between
WORLDWIDE DEDICATED SERVICES, INC., a Delaware corporation ("WDS") ,
UPS LOGISTICS GROUP, INC., a Delaware corporation ("Logistics"), which
is a wholly owned subsidiary of United Parcel Service of America, Inc.
("United Parcel") which is a wholly owned subsidiary of United Parcel
Service, Inc., a Delaware corporation ("UPS"), ROLLINS LEASING CORP.,
a Delaware corporation ("Rollins"), and ROLLINS TRUCK LEASING CORP.,
a Delaware corporation ("RTL, and together with WDS, Logistics and
Rollins sometimes referred to herein individually as a "Party" and
collectively as the "Parties").
W I T N E S S E T H:
WHEREAS, WDS is engaged in the business of providing vehicles,
drivers, dispatch services and route planning for customers;
WHEREAS, prior to the execution and delivery of this Alliance
Agreement, UPS Truck Leasing, Inc. ("UPS Truck Leasing"), a wholly
owned subsidiary of Logistics, had supplied WDS with vehicles and
certain maintenance services used in connection with its business;
WHEREAS, simultaneously with the execution and delivery of this
Alliance Agreement, Rollins and UPS have consummated the transactions
under a Stock Purchase Agreement (the "Stock Purchase Agreement"),
pursuant to which UPS Truck Leasing has been transferred to Rollins;
WHEREAS, prior to the execution and delivery of this Alliance
Agreement, Rollins had been engaged in a logistics management and
dedicated logistics business through Rollins Logistics, Inc. ("Rollins
Logistics");
WHEREAS, simultaneously with the execution and delivery of this
Alliance Agreement, certain Affiliates of Rollins and Logistics have
consummated an Asset Purchase Agreement (the "Logistics Agreement"),
pursuant to which an Affiliate of Logistics has purchased
substantially all of the assets of Rollins Logistics;
WHEREAS, WDS and Rollins have agreed to form a strategic alliance
(the "Alliance") that, based on the terms of this Alliance Agreement,
will promote the Logistics Group as the preferred provider of
logistics management and dedicated logistics services to customers of
Rollins' truck leasing services and will promote Rollins as the
preferred provider of truck leasing and related services to customers
of WDS' dedicated logistics services; and
WHEREAS, WDS and Rollins are entering into this Alliance
Agreement in order to provide a flexible and effective framework to
govern the Alliance, and Logistics and RTL are entering into this
Agreement for the purpose of extending the brand licenses referred to
in Sections 4.5 and 4.6.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending
to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The following defined terms used in this
Alliance Agreement will have the meanings specified below.
"Affiliate" shall mean, with respect to any Person, (i) any
Person directly or indirectly controlling, controlled by or under
common control with such Person, (ii) any officer, director, general
partner, managing member or trustee of such Person, or (iii) any
Person who is an officer, director, general partner, managing member
or trustee of any Person described in clauses (i) or (ii) of this
sentence. For purposes of this definition, the term "control,"
(including, with correlative meanings, the terms "controlling,"
"controlled by" or "under common control with") means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership
of voting securities, by contract or otherwise. Notwithstanding any
implication to the contrary contained in this definition, for purposes
of this Agreement, the following entities will not be deemed to be
Affiliates of Rollins: Matlack Systems, Inc.; Dover Downs
Entertainment, Inc.; Rollins, Inc.; and RPC, Inc.
"Alliance" shall have the meaning set forth in the recitals to
this Alliance Agreement.
"Business Day" shall mean any day other than a Saturday, Sunday
or day on which banks are authorized to be closed under the laws of
the State of Georgia.
"Business Plan" shall mean the annual initial Business Plan and
each subsequent business plan, substantially in the form of Exhibit A
hereto, as revised from time to time during the Term in accordance
with Article 4.
"Change in Control" shall mean (a) the consolidation or merger of
the subject corporation with or into any organization (other than a
consolidation or merger in which the subject corporation is the
surviving corporation in such consolidation or merger unless such
consolidation or merger has the effect of an acquisition of ownership
referred to in (c) hereof), (b) the direct or indirect sale, transfer
or other disposition of all or substantially all of the subject
corporation's assets, in a single transaction or a series of related
transactions, (c) the direct or indirect acquisition by an entity, or
group of entities acting in concert, of beneficial ownership of more
than 25% of the outstanding voting securities of the subject
corporation in a single transaction or a series of related
transactions, excluding acquisitions by Rollins family members,
existing officers or directors of Rollins, or trusts established by
any of them.
"Committee Member" shall have the meaning set forth in Section
3.1 hereof.
"Joint Planning Committee" shall have the meaning set forth in
Section 3.1 hereof.
"Logistics Group" shall mean Logistics and any directly or
indirectly held wholly-owned subsidiary of Logistics that provides
Logistics Services as of the date hereof.
"Logistics Services" shall mean and include the following
services:
(i) Warehousing, building and/or leasing facilities,
labeling, receiving, inspection, sorting, parts kitting, order,
returns and repairs management, service parts management, supply chain
engineering, inventory management, and billing and receivables
management;
(ii) Domestic and international intermodal or multimodal
surface, air, and sea transport management, pick-up and delivery of
consignments, track and trace inventory systems management, and
export/ import customs clearance; and
(iii) Software systems planning, development,
management, application, maintenance, upgrade, systems integration,
and systems procedure related to warehousing and transportation.
"Person" shall mean an individual, partnership, association,
limited liability company, corporation, joint venture, sole
proprietorship, trust or other entity.
"Rollins Group" shall mean Rollins and any directly or indirectly
held wholly-owned subsidiary of Rollins that provides Truck Leasing
Services as of the date hereof.
"Term" shall have the meaning set forth in Section 5.1 hereof.
"Territory" shall mean North America.
"Truck Leasing Services" shall mean and include long and short
term vehicle leasing, vehicle rental, vehicle maintenance, washing,
emergency road services, and ancillary services such as permitting,
licensing and may include fueling and fuel tax reporting (based on
mutual agreement of the Parties), but shall not include the provision
of drivers for the vehicles.
ARTICLE 2
ALLIANCE SERVICES
2.1 Purpose. WDS and Rollins desire to enter into and create
the Alliance in order to achieve the following goals:
(a) To provide Rollins with a stream of revenues from the
provision of Truck Leasing Services to WDS and its customers of
Logistics Services.
(b) To promote the Logistics Group as the preferred
provider of Logistics Services to the Rollins Group and their
respective customers of Truck Leasing Services.
(c) To promote Rollins as the preferred provider of Truck
Leasing Services to customers of WDS' dedicated Logistics
Services.
(d) To work together to achieve growth in the Logistics
Group's Logistics Services business and Rollins' Truck Leasing
Services business.
(e) To provide the customers of each of WDS and Rollins
with the best services and solutions to meet their truck leasing
and logistics needs at competitive rates.
2.2 Provision of the Truck Leasing Services.
(a) During the Term, Rollins will be the preferred provider
of Truck Leasing Services to WDS, and to the customers of WDS to
whom WDS provides Logistics Services, to the extent necessary to
meet their respective requirements for Truck Leasing Services.
In connection with the foregoing, and except as provided in
Section 2.2(b) below, WDS will cause the members of the Logistics
Group to refer to Rollins all inquiries they receive from
logistics customers seeking Truck Leasing Services. Whenever
reasonably practicable, WDS shall promote the Alliance by
referring to its "alliance" or "partnership" with Rollins as the
"preferred provider of Truck Leasing Services" to the customers
of WDS. Without limiting the generality of the foregoing, unless
otherwise agreed upon by the Rollins Committee Member, proposals
by WDS to customers seeking Logistics Services will include
references to Rollins as the preferred provider of Truck Leasing
Services.
(b) Notwithstanding the provisions of Section 2.2(a) above,
WDS shall not be obligated under Section 2.2(a):
(i) to the extent a WDS customer has an existing
obligation to a provider of Truck Leasing Services other than
Rollins that it is unwilling to cancel or the cancellation of which
would not be cost effective;
(ii) where a provider of Truck Leasing Services other
than Rollins brings the customer to WDS;
(iii) where Rollins (or other member of the Rollins
Group) is unable or unwilling to provide the Truck Leasing
Services;
(iv) where a significant benefit may be derived by a
customer of WDS from an alternative truck leasing solution,
and Rollins has chosen not to (or is unable to) deliver the
customer's desired solution; or
(v) where a WDS customer insists on an alternative truck
leasing solution, whether prior to or following discussions with
Rollins.
With regard to Section 2.2(b)(iii) above, whether Rollins has
an existing facility in close enough proximity to properly service
a WDS customer at the time negotiations begin with such customer
shall not be determinative with respect to Rollins' ability to
provide Truck Leasing Services. If WDS offers a new business
opportunity to Rollins (whether in an area where Rollins does not
have a facility in close enough proximity to properly service the
customer (as determined by WDS and Rollins or the relevant
customer) or otherwise), Rollins shall have seven Business Days to
(x) if applicable, determine whether it will commit to providing
the necessary facilities, and (y) notify WDS in writing of its
determination to provide such additional facilities and/or pursue
negotiations with such customer (it being understood that any
failure of Rollins to so deliver such written notice shall be
deemed a decision by Rollins not to provide Truck Leasing Services
to such customer). Failure of Rollins to respond within such seven
Business Day period shall excuse WDS from its preferred provider
obligations with respect to such opportunity. For purposes of the
foregoing, the seven Business Day period shall begin once Rollins
has been given (or otherwise obtained) the following information
concerning the scope of the business opportunity in question: (A)
the term of the relevant commitment, (B) the number and type of
vehicles involved, (C) the type of cargo involved, (D) the
frequency and duration of trips required to service the business,
(E) the expected mileage per vehicle and (F) if applicable,
notification that Rollins' existing facilities are not adequate.
(c) The Truck Leasing Services will be provided by Rollins to
WDS and its customers substantially in accordance with the terms of
the contract attached hereto as Exhibit B, with such changes as the
Parties (or Rollins and the customer, if applicable) shall mutually
agree upon prior to the execution of each contract to provide the
Truck Leasing Services during the Term. If the relevant parties
cannot agree on changes requested by either party with respect to a
particular arrangement, the contract set forth as Exhibit B shall
govern the arrangement in question. All such contracts shall be
with WDS, and not with the customer, unless otherwise requested by
the relevant customer.
(d) The pricing for the provision of the Truck Leasing
Services by Rollins to WDS for the initial year of the Term shall
be in accordance with the pricing schedule attached hereto as
Exhibit C. Following the initial year, the Joint Planning
Committee will oversee annual negotiation to determine any
adjustments to the pricing schedule for the subsequent years during
the Term, which adjustments will be based on changes in individual
cost components in accordance with the methodology set forth on
Exhibit D attached hereto. Notwithstanding the foregoing, in no
event will the price charged to WDS for Truck Leasing Services
exceed the most favorable price that Rollins charges to any third
party for similar services. WDS and Rollins will consider in good
faith and discuss with each other from time to time alternative
pricing for Truck Leasing Services and Logistics Services for the
Parties to be competitive in bidding for certain projects.
2.3 Dedicated Logistics.
(a) During the Term, WDS (directly or through its Affiliates)
will be the preferred provider of Logistics Services to members of
the Rollins Group, and to customers of the Rollins Group to whom
members of the Rollins Group provide Truck Leasing Services, to the
extent necessary to meet their respective requirements for
Logistics Services. In connection with the foregoing, and except
as provided in Section 2.3(b) below, Rollins will cause the members
of the Rollins Group to refer to WDS all inquiries it receives from
its customers seeking Logistics Services. Whenever reasonably
practicable, members of the Rollins Group shall promote the
Alliance by referring to its "alliance" or "partnership" with the
Logistics Group as the "preferred provider of Logistics Services"
to customers of the Rollins Group.
(b) Notwithstanding the provisions of Section 2.3(a), no
member of the Rollins Group shall be obligated to comply with
Section 2.3(a):
(i) to the extent the customer has an existing
obligation to a provider of Logistics Services other than WDS that
it is unwilling to cancel or the cancellation of which would not be
cost effective;
(ii) where a provider of Logistics Services other than
WDS brings the customer to the Rollins Group;
(iii) where WDS (or other member of the Logistics
Group) is unable or unwilling to provide the Logistics Services;
(iv) where a significant benefit may be derived by a
Rollins Group customer from an alternative logistics solution, and
WDS has chosen not to (or is unable to) deliver the customer's
desired solution; or
(v) where a Rollins Group customer insists on an
alternative logistics solution (whether prior to or following
discussions with WDS).
When Rollins offers a new business opportunity to WDS, WDS
shall have seven Business Days to (x) determine whether it wishes
to pursue negotiations with the customer, (y) notify Rollins in
writing of such determination (it being understood that any failure
of WDS to so notify Rollins shall be deemed a determination not to
pursue such negotiations, and (z) if requested by the relevant
customer, make appropriate personnel available to begin
negotiations). Failure of WDS to respond within such seven
Business Day period shall excuse Rollins from its preferred
provider obligations with respect to such opportunity. For
purposes of this Section 2.3(b), the seven Business Day period
shall begin once WDS has been given (or otherwise obtained)
reasonably sufficient information concerning the scope of the
business opportunity in question.
ARTICLE 3
ORGANIZATION
3.1. Joint Planning Committee.
(a) WDS and Rollins hereby establish a committee to oversee
the Alliance (the "Joint Planning Committee"), the initial members
of which (the "Committee Members") shall be the individuals
identified on Exhibit E hereto. The Joint Planning Committee will
at all times be composed of four designees from WDS and four
designees from Rollins. WDS shall designate one WDS Committee
Member to act as chairman of the Joint Planning Committee (the
"Chairman"). Any vacancy in the Joint Planning Committee created
by a Committee Member designated by WDS shall be filled as soon as
is reasonably practicable by WDS, and any vacancy created by a
Committee Member designated by Rollins shall be filled as soon as
is reasonably practicable by Rollins. Either such Party may
change its representatives on the Joint Planning Committee upon 30
days prior written notice to the other Party.
(b) Initially, the Joint Planning Committee will meet monthly
to:
(i) discuss and resolve any issues relating to the
provision of Truck Leasing Services by Rollins to WDS and its
customers;
(ii) discuss and resolve any issues relating to the
provision of Logistics Services by WDS to the Rollins Group and its
customers;
(iii) develop and implement a Business Plan and
approve any changes thereto;
(iv) discuss and monitor the performance of WDS and
Rollins against the Business Plan;
(v) evaluate and plan joint marketing activities between
WDS and Rollins; and
(vi) design a cross-selling incentive plan and review
revenues generated by each such Party against the targets set forth
in the Business Plan.
(c) Initially, the Joint Planning Committee shall meet at
least monthly, or more frequently as WDS and Rollins agree, to
review the status of the Alliance's operations and strategies (as
described above). Such meetings are to be held alternately at
WDS' principal place of business, and at Rollins principal place
of business, or at such other place as the Joint Planning Committee
may establish. Meetings may be held by telephone conference call
or similar equipment if all Committee Members participating in the
meeting can hear each other, and be heard by each other, at the
same time. The Chairman shall be responsible for giving written
notices of such regular meetings (including descriptions of the
matters to be considered at such meetings) to all Committee Members
at least seven days before each meeting. Any Committee Member may
call a special meeting of the Joint Planning Committee at any time
by giving at least seven days prior written notice of the meeting
to all other Committee Members. Such notice of meeting shall
describe the matters to be considered by the Joint Planning
Committee in reasonable detail. A Committee Member may waive the
right to receive notice of a particular meeting at any time before,
during or after that meeting. No meeting of the Joint Planning
Committee will be effective to conduct business or to take any
action unless (i) there is present at least one WDS Committee
Member and one Rollins Committee Member, and (ii) a majority of the
Committee Members are present. The Chairman (or in his absence,
his designee) shall chair all meetings of the Joint Planning
Committee. The Joint Planning Committee may adopt such procedural
rules as they deem appropriate for the conduct of the Joint
Planning Committee's business.
(d) Unless otherwise required or permitted by this Alliance
Agreement, the Joint Planning Committee shall act by resolutions
passed unanimously by the Committee Members present and voting at
duly constituted meetings of the Joint Planning Committee at which
at least a majority of all Committee Members are present and at
which at least one WDS Committee Member and one Rollins Committee
Member are present. Rollins shall cause each Rollins Committee
Member to grant a revocable proxy to each other Rollins Committee
Member to vote at any meeting of the Joint Planning Committee at
which such Rollins Committee Member is not present or is present
but cannot vote with respect to such matter. WDS shall cause each
WDS Committee Member to grant a revocable proxy to each other WDS
Committee Member to vote at any meeting of the Joint Planning
Committee at which such WDS Committee Member is not present or is
present but cannot vote with respect to such matter.
3.2 Access to Books and Records. Each of Rollins and WDS will
create and maintain accurate books and records regarding the provision
of Truck Leasing Services and Logistics Services, respectively, and of
its respective obligations under this Alliance Agreement. For
purposes of ensuring compliance with this Alliance Agreement, and for
such other reasonable purposes in connection with the consummation of
the transactions contemplated by this Alliance Agreement, WDS and
Rollins shall each have the right, upon reasonable notice and during
normal business hours, to inspect, examine, and take extracts from or
make copies of such books and records maintained by the other Party.
WDS and Rollins shall each permit representatives of the other access
to its place of business upon reasonable notice and during normal
business hours for the purpose of such examinations.
ARTICLE 4
JOINT BUSINESS PLANNING
4.1. Purpose of Business Plan. The Business Plan will serve as a
blueprint for the business, activities and development of the
Alliance and the targeted financial impact of such business,
activities and development on WDS and Rollins. The Business Plan will
focus on developing a joint marketing plan driven by customers and
market research to promote cross-selling of Rollins' and the
Logistics Group's services and will outline quarterly projections for
revenue generated by cross-sales. In addition, it will outline a
training program by each of WDS and Rollins for the other Party's
sales personnel. WDS and Rollins agree that the Business Plan is not
intended to be, nor will it be construed as, an enforceable contract
or legal agreement between the Parties, except as provided in Section
5.2(a).
4.2. Business Plan Review. The Joint Planning Committee will have
the primary responsibility for formulating a mutually agreeable
Business Plan each year and then implementing it. Each Business Plan
will encompass a one year period.
4.3. Marketing Materials. The Joint Planning Committee (or a
relevant subcommittee formed thereby) will develop joint marketing
materials to promote the Alliance and the services of Rollins and the
Logistics Group (including (a) promotional and sales materials,
brochures and advertising materials and (b) press releases, speeches
and other publicity attempts) to customers. Drafts of any such
materials may also be submitted by WDS or Rollins to the Joint
Planning Committee for its consideration and review. Copies of all
such materials will be approved by the Joint Planning Committee in
advance of the distribution thereof or of publication activities
conducted or made with respect thereto.
4.4 Cross Selling. WDS and Rollins will design a cross-selling
incentive plan in which their respective sales forces will
participate. Sales personnel of each such Party will receive training
from the other Party and will be encouraged to promote the Truck
Leasing Services provided by Rollins and the Logistics Services
provided by WDS, as applicable. To that end, each of WDS and Rollins
will provide the other Party with direct access to its customers for
the purpose of promoting their Logistics Services and Truck Leasing
Services, respectively; provided, however, that all inquiries to
Rollins from its customers regarding Logistics Services will be
directed to WDS, and all inquires to WDS (or members of the Logistics
Group) from its customers regarding stand alone Truck Leasing Services
will be directed to Rollins.
4.5. Use of the Logistics Group Marks.
(a) Logistics hereby grants to Rollins a non-exclusive,
royalty free, nontransferable license to use the Logistics Group
Marks described on Exhibit F hereto (the "UPS Marks") in the
Territory (directly or through a sublicense to the members of the
Rollins Group, as necessary) during the Term for the purpose of
marketing, promoting and selling the Alliance and the Logistics
Services promoted to the customers of the Rollins Group in
accordance with the terms of this Alliance Agreement. Rollins
shall cause each member of the Rollins Group to properly display
and use the UPS Marks in accordance with this Alliance Agreement.
(b) (i) Logistics has the right, at all reasonable times, to
inspect the Rollins Group's relevant facilities and review the
manner in which the Rollins Group uses the UPS Marks so that
Logistics may satisfy itself that the UPS Marks are used in
accordance with this Alliance Agreement; provided, however, that
Logistics will not exercise such right in a manner which
unreasonably interferes with the Rollins Group's normal business
operations.
(ii) The Rollins Group shall adhere to the trademark
usage guidelines furnished by Logistics for the depiction of
the UPS Marks ("Trademark Usage Guidelines") and any
reasonable modifications or amendments thereto. The
guidelines set forth on Exhibit G hereto will function as the
current version of the Trademark Usage Guidelines. The
Rollins Group shall also adhere to the marketing
communications guidelines furnished by Logistics and any
reasonable modifications or amendments thereto (the "Marketing
Communications Guidelines"), the current version of which is
attached hereto as Exhibit H. In the event of a conflict
between this Alliance Agreement on the one part and either of
the Trademark Usage Guidelines or Marketing Communications
Guidelines on the other part, this Alliance Agreement shall
govern.
(iii) The Rollins Group shall include on all
advertising and promotional materials, packaging and labels
bearing the UPS Marks the following notice:
"[UPS Marks] is a registered trademark of United Parcel
Service, Inc. and its subsidiaries. Used under license."
[With respect to electronic presentations of the UPS Marks,
this notice may be contained on Rollins' web-site under "Legal
Information" or, if software, in the "About" box or where the
Rollins' own proprietary notices appear.]
(iv) Prior to any first use of the UPS Marks on
advertising or promotional materials by the Rollins Group,
Rollins agrees to furnish Logistics with samples of such
advertising and promotional materials, packaging and labels
bearing any of the UPS Marks for trademark usage approval
(which approval shall not be unreasonably withheld).
The Rollins Group shall amend the future use of the UPS Marks
in any such advertising and promotional materials, packaging
and labels if the use of the UPS Marks are not approved by
Logistics. Logistics will have ten Business Days from the
date of receipt to approve or object to materials submitted
for trademark usage approval. If no objection is received by
Rollins within such ten Business Days, such materials will be
deemed approved. Use of the UPS Marks by the Rollins Group
that is substantially identical to uses of the UPS Marks that
have previously been approved or that is being used for the
same program (with substantially similar presentation of the
UPS Marks) as has previously been approved do not require
submission for approval.
(v) The Rollins Group must immediately cease using any
previously approved material from which Logistics withdraws
its approval. Logistics will not unreasonably rescind
approval of any materials previously approved.
(c) (i) The Rollins Group acquires and will acquire no
rights, title or interest in the UPS Marks or the goodwill
associated with them, other than the right to use the UPS Marks in
accordance with this Alliance Agreement. In accepting this
Alliance Agreement, Rollins acknowledges (on behalf of the Rollins
Group) UPS' ownership of the UPS Marks, its validity and the
goodwill connected with it. The Rollins Group will not attack the
UPS Marks, nor assist anyone in attacking it. Rollins further
agrees that the Rollins Group will not make any application to
register the UPS Marks, nor will they use any confusingly similar
trademark, service mark, trade name, or derivation, during the term
of this Alliance Agreement or thereafter. This paragraph will
survive the termination of this Agreement.
(ii) At the request and sole expense of Logistics,
Rollins will execute and will cause any relevant member of the
Rollins Group to execute, any papers or documents reasonably
necessary to protect the rights of UPS in the UPS Marks and
execute and deliver such other documents as may be reasonably
requested by Logistics.
(iii) Logistics represents and warrants that as of
the date hereof the UPS Marks do not infringe upon any
trademarks and are not involved in any opposition,
invalidation, cancellation or litigation that would threaten
the Rollins Group's use of the UPS Marks in connection with
the transactions contemplated by this Alliance Agreement and,
to Logistics' knowledge, no such action is threatened with
respect to the UPS Marks. In the event that such action
occurs, Logistics will cause UPS to vigorously protect the UPS
Marks.
(d) Rollins shall promptly notify Logistics of any
unauthorized use of the UPS Marks that comes to the Rollins Group's
attention. Logistics in its reasonable discretion may take such
action as may be required to prosecute the infringement. In the
event that Logistics decides that action should be taken against
such third parties, Logistics may take such action either in its
own name (or in the name of UPS or any subsidiary thereof), or
alternatively, Logistics may authorize Rollins to initiate such
action in Rollins' name but Rollins shall have no obligation to do
so. In either event, Rollins agrees and agrees to cause the
relevant members of the Rollins Group to cooperate fully with
Logistics (or UPS or relevant subsidiary thereof), at Logistics'
expense, to whatever extent it is necessary to prosecute such
action, all expenses being borne by Logistics and all damages that
may be recovered being solely for the account of Logistics.
(e) In the event the Rollins Group violates the UPS Trademark
Usage Guidelines or the UPS Marketing Communications Guidelines and
continues to do so for a continuous 45 day period or for three
periods of 30 days each during a calendar year following written
notice from Logistics, such violation shall constitute a material
breach of this Agreement and Logistics may terminate this Agreement
in accordance with Section 5.2 hereof.
(f) The Parties agree that a breach of this Section 4.5 may
give rise to irreparable injury to the non-breaching Party and its
Group that cannot be compensated for adequately by damages.
Consequently, the Parties agree that each Party shall be entitled,
in addition to all other remedies available, to injunctive and
other equitable relief to prevent a breach of this Section 4.5 and
to secure the enforcement of the provisions of this Section 4.5 in
any court of competent jurisdiction in the United States or any
state thereof (and the Parties agree to waive any requirement for
the posting of bond in connection with such remedy).
4.6. Use of the RTL Marks.
(a) RTL hereby grants to WDS a non-exclusive, royalty free,
nontransferable license to use the RTL Marks described on Exhibit I
hereto (the "RTL Marks") in the Territory (directly or through a
sublicense to the other members of the Logistics Group, as
necessary) during the Term for the purpose of marketing, promoting
and selling the Alliance and the Truck Leasing Services to the
customers of WDS in accordance with the terms of this Alliance
Agreement. WDS shall properly display and use the RTL Marks in
accordance with this Alliance Agreement.
(b) (i) RTL has the right, at all reasonable times, to
inspect WDS' relevant facilities and review the manner in which
WDS uses the RTL Marks so that RTL may satisfy itself that the RTL
Marks are used in accordance with this Alliance Agreement;
provided, however, that RTL will not exercise such right in a
manner which unreasonably interferes with WDS' normal business
operations.
(ii) WDS shall adhere to the trademark usage guidelines
furnished by RTL for the depiction of the RTL Marks
("Trademark Usage Guidelines") and any reasonable
modifications or amendments thereto. The guidelines set forth
on Exhibit J hereto will function as the current version of
the Trademark Usage Guidelines. WDS shall also adhere to the
marketing communications guidelines furnished by RTL and any
reasonable modifications or amendments thereto (the "Marketing
Communications Guidelines"), the current version of which is
attached hereto as Exhibit K. In the event of a conflict
between this Alliance Agreement on the one part and either of
the Trademark Usage Guidelines or Marketing Communications
Guidelines on the other part, this Alliance Agreement shall
govern.
(iii) WDS shall include on all advertising and
promotional materials, packaging and labels bearing the RTL
Marks the following notice:
"[RTL Marks] is a registered trademark of Rollins Truck
Leasing Corp. Used under license."
[With respect to electronic presentations of the RTL Marks,
this notice may be contained on WDS' web-site under "Legal
Information" or, if software, in the "About" box or where
WDS' own proprietary notices appear.]
(iv) Prior to any first use of the RTL Marks on
advertising or promotional materials by WDS, WDS agrees to
furnish RTL with samples of such advertising and promotional
materials, packaging and labels bearing any of the RTL Marks
for trademark usage approval (which approval shall not be
unreasonably withheld).
WDS shall amend the future use of the RTL Marks in any such
advertising and promotional materials, packaging and labels if
the use of the RTL Marks are not approved by RTL. RTL will
have ten Business Days from the date of receipt to approve or
object to materials submitted for trademark usage approval.
If no objection is received by WDS within such ten Business
Days, such materials will be deemed approved. Use of the RTL
Marks by WDS that is substantially identical to uses of the
RTL Marks that have previously been approved or that is being
used for the same program (with substantially similar
presentation of the RTL Marks) as has previously been approved
do not require submission for approval.
(v) WDS must immediately cease using any previously
approved material from which RTL withdraws its approval. RTL
will not unreasonably rescind approval of any materials
previously approved.
(c) (i) WDS acquires and will acquire no rights, title or
interest in the RTL Marks or the goodwill associated with them,
other than the right to use the RTL Marks in accordance with this
Alliance Agreement. In accepting this Alliance Agreement, WDS
acknowledges RTL's ownership of the RTL Marks, its validity and the
goodwill connected with it. WDS will not attack the RTL Marks, nor
assist anyone in attacking it. WDS further agrees that WDS will
not make any application to register the RTL Marks, nor will they
use any confusingly similar trademark, service mark, trade name, or
derivation, during the term of this Alliance Agreement or
thereafter. This paragraph will survive the termination of this
Agreement.
(ii) At the request and sole expense of RTL, WDS will
execute any papers or documents reasonably necessary to
protect the rights of RTL in the RTL Marks and execute and
deliver such other documents as may be reasonably requested by
RTL.
(iii) RTL represents and warrants that as of the date
hereof the RTL Marks do not infringe upon any trademarks and
are not involved in any opposition, invalidation, cancellation
or litigation that would threaten WDS' use of the RTL Marks
in connection with the transactions contemplated by this
Alliance Agreement and, to RTL's knowledge, no such action is
threatened with respect to the RTL Marks. In the event that
such action occurs, RTL will vigorously protect the RTL Marks.
(d) WDS shall promptly notify RTL of any unauthorized use of
the RTL Marks that comes to WDS' attention. RTL in its reasonable
discretion may take such action as may be required to prosecute the
infringement. In the event that RTL decides that action should be
taken against such third parties, RTL may take such action either
in its own name, or alternatively, RTL may authorize WDS to
initiate such action in WDS' name but WDS shall have no obligation
to do so. In either event, WDS agrees to cooperate fully with RTL,
at RTL's expense, to whatever extent it is necessary to prosecute
such action, all expenses being borne by RTL and all damages that
may be recovered being solely for the account of RTL.
In the event WDS violates the RTL Trademark Usage Guidelines
or the RTL Marketing Communications Guidelines and continues to do
so for a continuous 45 day period or for three periods of 30 days
each during a calendar year following written notice from RTL, such
violation shall constitute a material breach of this Agreement and
RTL may terminate this Agreement in accordance with Section 5.2
hereof.
The Parties agree that a breach of this Section 4.6 may give
rise to irreparable injury to the non-breaching Party and its Group
that cannot be compensated for adequately by damages.
Consequently, the Parties agree that each Party shall be entitled,
in addition to all other remedies available, to injunctive and
other equitable relief to prevent a breach of this Section 4.6 and
to secure the enforcement of the provisions of this Section 4.6 in
any court of competent jurisdiction in the United States or any
state thereof (and the Parties agree to waive any requirement for
the posting of bond in connection with such remedy).
WDS shall have the right to extend the rights to use the RTL
Marks under this Section 4.6 to any members of the Logistics
Group, in which event WDS will assure compliance by such members
with the terms of this Section.
ARTICLE 5
TERM AND TERMINATION; REMEDIES
5.1 Term. This Alliance Agreement will commence on the date
hereof and shall remain in full force and effect for a period of five
years (such period together with any extensions as provided herein,
the "Term"), unless terminated earlier pursuant to Section 5.2 below.
This Alliance Agreement will renew for such additional terms as will
be agreed upon by WDS and Rollins.
5.2 Termination. This Alliance Agreement may be terminated at any
time during the Term:
(a) by either WDS or Rollins in the event of a material
breach by the other Party of the terms of this Alliance Agreement
or the Staffing Services Agreement that is not cured within 30 days
following written notice of such breach (or as otherwise provided
under Sections 4.5 and 4.6 hereof);
(b) by either WDS or Rollins in the event of a Change of
Control of the other Party;
(c) by either WDS or Rollins in the event of the bankruptcy
of the other Party;
(d) by either WDS or Rollins if any of the performance goals
set forth on Exhibit L hereto are not met; or
by either WDS or Rollins by notice to the other Party given
within 30 days following the first anniversary of this Agreement,
which termination shall be effective 90 days following the giving
of such notice (but not earlier than 90 days following the first
anniversary).
Termination under this Section 5.2 will not be deemed a waiver of
any right or remedy either Party may have for breach hereunder.
5.3 Specific Performance. In the event of a breach of this
Alliance Agreement, the aggrieved Party shall be entitled to seek
specific performance or other equitable relief in addition to any
other remedies that may be available to such Party.
ARTICLE 6
CONFIDENTIALITY/NON-COMPETITION
6.1 Confidential Information. In the performance of their
respective obligations under this Alliance Agreement, WDS, other
members of the Logistics Group and Rollins may disclose to each
other certain confidential and proprietary information relating
to their respective businesses ("Confidential Information").
All information exchanged by the Parties (including, for purposes
of this Article 6, any member of the Logistics Group that is not
a Party hereto) under this Alliance Agreement shall be considered
Confidential Information unless it is subject to any of the
exceptions in Section 6.3.
6.2 Non-Disclosure. Each recipient of Confidential
Information agrees that it shall (and shall cause its respective
officers, directors, employees, agents and Affiliates to):
(a) make no use of any Confidential Information
belonging to the other Party except as necessary for the
performance of its obligations under this Alliance
Agreement;
(b) not disclose to third parties any of the
Confidential Information belonging to the other Party
without the prior written consent of such Party;
(c) take such precautions as it normally takes with
its own confidential and proprietary information to prevent
disclosure of Confidential Information to third parties, and
(d) upon the expiration of the Term or earlier
termination of this Alliance Agreement, promptly return any
Confidential Information and all copies thereof (in whatever
format) in its possession to the other Party (or, upon the
written request of the other Party, to destroy all such
materials).
6.3 Exceptions. Notwithstanding any of the foregoing, the
obligations under Section 6.2 shall not apply to:
(a) any information which at the time of disclosure is
publicly available or public knowledge;
any information which the receiving Party possesses at
the time of disclosure of the Confidential Information and
which was not acquired, directly or indirectly from the
other Party;
any information required by applicable law or court
order to be disclosed, but then only (i) to the extent such
disclosure is so required; and (ii) following written notice
of such obligation to the affected Party; and
(d) any information acquired from a third party who
has a right to disclose such information.
6.4 Non-Competition.
(a) Except as permitted in Section 6.4(c) below,
during the Term and for a period of two years following the
end of the Term, (i) none of the members of the Logistics
Group and none of their respective Affiliates will engage in
the provision of Truck Leasing Services to any third party
that is not an Affiliate of such member in the Territory and
(ii) none of the members of the Rollins Group and none of
their respective Affiliates will engage in the provision of
Logistics Services in the Territory to any third party that
not an Affiliate of such member.
(b) If either Party or its Affiliate (the "Bidding
Party") anticipates making an offer to a potential seller to
acquire a business that has a division or subsidiary, or
certain customer contracts, the ownership of which would
violate Section 6.4(a) (a "Prohibited Business"), the
Bidding Party shall notify the other Party (the "Non-Bidding
Party") sufficiently in advance of the making of such offer
to permit the Parties to discuss in good faith a joint offer
pursuant to which the Non-Bidding Party would acquire the
Prohibited Business. The Bidding Party will share with the
Non-Bidding Party all information in its possession
regarding the Prohibited Business, and the Bidding Party
will assure that any confidentiality agreement entered into
by it in connection with such transaction permits such
sharing of information.
(c) In the event either Party or its Affiliate
acquires a Prohibited Business following the consultation
required by Section 6.4(b) above, such Party (the "Selling
Party") agrees (i) to notify the other Party (the "Non-
Selling Party") in writing of such acquisition, including a
reasonable description of the Prohibited Business, (ii) to
make the personnel, facilities and books and records of the
Prohibited Business fully available to the Non-Selling Party
and its representatives to the extent requested by the Non-
Selling Party, and (iii) to use commercially reasonable
efforts to sell or otherwise dispose of the Prohibited
Business within one year from the date of acquisition.
Within 30 days of the delivery of the notice described in
clause (i) above, the Non-Selling Party shall have the right
to provide a written offer (the "Offer") to purchase the
Prohibited Business. For a period of 30 days following the
delivery of the Offer, the Selling Party will negotiate in
good faith with the Non-Selling Party regarding the Offer,
and shall make such modifications to the Offer as are agreed
upon in such negotiations. If the Selling Party declines to
accept the Offer (as so modified), the Selling Party shall
be free to sell the Prohibited Business to any Person that
is not an Affiliate of the Selling Party (a "Bona Fide
Purchaser"), subject to the remaining provisions of this
Section 6.4(c). Thereafter, the Selling Party shall
promptly notify the Non-Selling Party in writing (the "Third
Party Notice") if the Selling Party receives an offer to
purchase the Prohibited Business that it wishes to accept
from any Bona Fide Purchaser (a "Third Party Offer"), which
such Third Party Notice shall include a reasonable
description of the terms of the Third Party Offer. If the
purchase price (taking into account timing of payment and
form of consideration) under the terms of the Third Party
Offer is less than the purchase price under the terms of the
Offer (as modified), then, for a period of 20 days after
receipt of the Third Party Notice by the Non-Selling Party,
the Non-Selling Party shall have the right to accept the
Third Party Offer. Thereafter, the Parties shall work as
promptly as is reasonably practicable to complete the
acquisition of the Prohibited Business on the terms and
conditions of the Third Party Offer. Notwithstanding the
foregoing provisions of this Section 6.4, no sale or
disposition of a Prohibited Business shall be required if
(x) the annual revenues from such the Prohibited Business do
not exceed $5,000,000, or (b) the Selling Party is not able
to obtain an acceptable Third Party Offer using commercially
reasonable efforts, in which event the Selling Party may
operate the Prohibited Business through the normal
termination dates contained in any relevant contracts,
without extensions or renewals and without soliciting new
business that would violate the terms of Section 6.4(a).
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
Each Party hereby represents and warrants that it has all
necessary corporate power and authority to execute and deliver
this Alliance Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The
execution, delivery and performance by such Party of this
Alliance Agreement, and the consummation by such Party of the
transactions contemplated hereby, have been duly authorized by
all necessary corporate action, and no other corporate
proceedings on the part of such Party are necessary to authorize
this Alliance Agreement or to consummate the transactions
contemplated hereby. This Alliance Agreement has been duly
executed and delivered by such Party and, assuming the due
authorization, execution and delivery by the other Party,
constitutes a legal, valid and binding obligation of such Party
enforceable against it in accordance with its terms.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification. Each Party hereto agrees to
indemnify, defend and hold harmless the other Party and their
respective Affiliates, subsidiaries, officers, directors,
employees and agents (any such Person, an "Indemnitee") from and
against any and all claims, losses, damages, fines, penalties,
costs and expenses (including reasonable legal and accounting
fees) (collectively, "Losses") which may be imposed upon or
incurred by or asserted against the Indemnitee as a result of or
arising out of (a) the breach by such Party (the "Indemnifying
Party") of any representation or warranty contained in this
Alliance Agreement, (b) the failure of the Indemnifying Party to
perform any covenant or agreement required to be performed by
such Party under the terms of this Alliance Agreement, or (c)
caused by the gross negligence or willful misconduct of the
Indemnifying Party, any members of its Group, or the agents or
employees of any thereof.
8.2 Procedures.
(a) Subject to Section 8.2(b) below, if an Indemnified
Party shall claim a right to payment pursuant to this Article
8, such Indemnified Party shall send written notice of such
claim to the Indemnifying Party. Such notice shall specify
the basis for such claim. As promptly as possible after the
Indemnified Party has given such notice, such Indemnified
Party and the Indemnifying Party shall establish the merits
and amount of such claim (by mutual agreement, litigation,
arbitration or otherwise) and, within five business days of
the final determination of the merits and amount of such
claim, the Indemnifying Party shall pay to the Indemnified
Party immediately available funds in an amount equal to such
claim as determined hereunder.
(b) Promptly after receipt by an Indemnified Party of
notice by a third party of any complaint or the commencement
of any action or proceeding with respect to which such
Indemnified Party may be entitled to receive payment from
the other party for any Losses, such Indemnified Party shall
notify the Indemnifying Party within 20 days of such
complaint or of the commencement of such action or
proceeding; provided, however, that the failure to so notify
the Indemnifying Party shall relieve the Indemnifying Party
from liability under this Alliance Agreement with respect to
such claim only if, and only to the extent that, such
failure results in the forfeiture by the Indemnifying Party
of rights and defenses otherwise available to the
Indemnifying Party with respect to such claim. The
Indemnifying Party shall have the right, upon written notice
delivered to the Indemnified Party within 30 days thereafter
(which written notice must include a binding acknowledgment
of the Indemnifying Party that such claim constitutes an
indemnifiable Loss hereunder), to assume the defense of such
action, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of the
fees and disbursements of such counsel. If the Indemnifying
Party declines to assume the defense of the action within
such 30-day period, then such Indemnified Party may employ
counsel to represent or defend it in any such action and the
Indemnifying Party shall pay the reasonable fees and
disbursements of such counsel as incurred; provided,
however, that the Indemnifying Party shall not be required
to pay the fees and disbursements of more than one counsel
for all Indemnified Parties in any jurisdiction in any
single action or proceeding. In any action with respect to
which indemnification is being sought hereunder, the
Indemnified Party or the Indemnifying Party, whichever is
not assuming the defense of such action, shall have the
right to participate in such litigation and to retain its
own counsel at such party's own expense. The Indemnifying
Party or the Indemnified Party, as the case may be, shall at
all times use reasonable efforts to keep the Indemnifying
Party or the Indemnified Party, as the case may be,
reasonably apprised of the status of the defense of any
action the defense of which they are maintaining and to
cooperate in good faith with each other with respect to the
defense of any such action.
ARTICLE 9
MISCELLANEOUS
9.1 No Individual Authority. Neither Party shall, without
the express, prior written consent of the other Party, take any
action for or on behalf of or in the name of the other Party,
assume, undertake or enter into any commitment, debt, duty or
obligation binding upon any other Party, except for actions
expressly provided for in this Alliance Agreement or pursuant to
agreements entered into between the Parties.
9.2 Force Majeure. No Party shall be responsible or liable
to the others for failure or delay in its performance of this
Alliance Agreement due to war, fire, accident or other casualty,
or any labor disturbance or act of God or the public enemy, or
any other contingency beyond such Party's reasonable control
("Force Majeure Event"). In addition, in the event of the
applicability of this Section 9.2, the Party affected by such
Force Majeure Event shall use all commercially reasonable efforts
to eliminate, cure and overcome any of such causes and resume
performance of its obligations.
9.3 Governing Law. This Alliance Agreement shall be
construed in accordance with, and governed by, the laws of the
State of New York.
9.4 Severability. Should any part of this Alliance
Agreement or any of the provisions hereof for any reason be
declared to be invalid, such decision or determination shall not
in any way affect the validity of the remaining portions of this
Alliance Agreement, all of which shall remain in full force and
effect as if the portion declared to be invalid had not been
contained herein at the time of the execution of this Alliance
Agreement.
9.5 Headings; Number. The subject headings of this
Alliance Agreement are included for purposes of convenience only,
and shall not affect the construction or interpretation of any of
its provisions. Whenever the context so requires, the singular
shall include the plural and the plural shall include the
singular.
9.6 Assignment. This Alliance Agreement shall be binding
on, and shall inure to the benefit of, each of the Parties and
their respective successors and permitted assigns. No Party
shall be permitted to assign its rights or obligations under this
Alliance Agreement (whether by merger, operation of law or
otherwise) without the express written consent of the other
Parties, except that (a) Rollins may assign its interest to a
wholly-owned subsidiary of Rollins and (b) WDS may assign its
interest to UPS or any wholly-owned subsidiary of UPS, so long as
in the case of any such assignment under clause (a) or (b), the
assignee agrees in writing to be bound by the terms of this
Alliance Agreement, the assignee retains its wholly-owned status
during the Term and the assignor remains primarily liable for all
obligations hereunder.
9.7 Entire Agreement. This Alliance Agreement constitutes
the entire agreement among the Parties regarding the subject
matter hereof, and supersedes all prior agreements, negotiations
or understandings between them concerning the subject matter
hereof.
9.8 Amendments. This Alliance Agreement may not be
amended, supplemented or modified except in a writing signed by
the Parties hereto.
9.9 Waiver. No waiver of any default hereunder by either
Party or any failure to enforce any rights hereunder shall be
deemed to constitute a waiver of any subsequent default with
respect to the same or any other provisions hereof.
9.10 Notices. Any notice required or permitted to be given
hereunder shall be made in writing and shall be given to the
Party to receive such notice by (i) hand delivery, (ii) first-
class registered or certified mail, postage prepaid, return
receipt requested, (iii) overnight courier service, postage
prepaid or (iv) telecopy with evidence of confirmation of
transmission, in each case at the address or telecopy number set
forth below:
To WDS or Logistics: UPS Logistics Group, Inc.
990 Hammond Drive
Atlanta, Georgia 30328
Attention: Legal Manager
Telefax No.: (770) 206-4444
With copies to: UPS Legal Department
55 Glenlake Parkway
Atlanta, Georgia 30328
Attention: Chief Legal
Counsel
Telefax No.: (404) 828-6440
and to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Michael J. Egan III
Telefax No.: (404) 572-5100
To Rollins or RTL: Rollins Leasing Corp.
2200 Concord Pike
One Rollins Plaza
Wilmington, DE 19803
Attention: Patrick J. Bagley
Telefax No.: (302) 426-3815
With a copy to: Rollins Leasing Corp.
2200 Concord Pike
One Rollins Plaza
Wilmington, DE 19803
Attention: Klaus M. Belohoubek
Telefax No.: (302) 426-3555
Either Party may change the information specified herein for the
receipt of notices by giving written notice to the other Party in
accordance with the provisions of this Section 9.10.
9.11 Counterparts. This Alliance Agreement may be executed
in any number of counterparts, each of which will be deemed an
original, but all of which taken together will constitute one and
the same instrument.
9.12 Third Party Beneficiaries. This Alliance Agreement is
for the sole benefit of the Parties hereto and no third party may
claim any right, or enforce any obligation of the Parties,
hereunder.
9.13 Relationship. The Parties intend to create an
independent contractor relationship and nothing contained in this
Alliance Agreement will be construed to make either (i) WDS or
any member of the Logistics Group, or any Affiliates of any of
the foregoing, on the one hand, or (ii) Rollins or any Affiliates
of Rollins on the other hand, partners, principals, agents or
employees of the other. Neither WDS and Logistics nor Rollins
and RTL will have any right, power or authority, express or
implied, to bind the other.
9.14 Dispute Resolution. Any controversy, claim or question
of interpretation arising out of or relating to this Alliance
Agreement (including without limitation a claimed breach of any
of the provisions hereof) that is not resolved by the Parties (a
"Dispute"), shall be resolved in accordance with the provisions
of this Section 9.14:
(a) Initially, any such Dispute may be submitted by
either Party to the Joint Planning Committee for resolution,
by delivering written notice of such Dispute, including a
brief description thereof, to the Chairman of the Joint
Planning Committee, with a copy to the other Party. The
Joint Planning Committee shall work in good faith to resolve
such Dispute (including by calling a meeting or meetings of
the Joint Planning Committee, as reasonably necessary);
provided, however, that if the Joint Planning Committee
cannot resolve such Dispute within 30 days of its receipt of
the notice described in this subsection (a), such Dispute
shall be resolved in accordance with subsection (b) below.
(b) If the Dispute is not resolved in accordance with
subsection (a) above, the Chief Financial Officer of Rollins
(the "Rollins CFO") and the Chief Financial Officer of the
Transportation Management Group of Logistics (the "Logistics
CFO") shall meet in good faith to resolve such Dispute. If
the Rollins CFO and the Logistics CFO are unable to resolve
such Dispute within 60 days following the notice described
in subsection (a) above, such Dispute may be submitted by
either Party to binding arbitration in accordance with the
remaining provisions of this Section 9.14.
(c) If the Dispute is not resolved in accordance with
subsection (b) above, the Dispute shall be finally settled
by arbitration in the City of Washington, D.C. under the
then-effective Commercial Arbitration Rules of the American
Arbitration Association as modified by this Alliance
Agreement, and judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction.
The award rendered by the arbitrators shall be final and
binding on the Parties and not subject to further appeal.
Such arbitration can be initiated by written notice by
either Party (after compliance with the escalation
provisions of subsections (a) and (b) above) to the other
Party, which notice shall identify the claimant's selected
arbitrator. The Party receiving such notice shall identify
its arbitrator within five Business Days following its
receipt of such notice. The arbitrator selected by the
claimant and the arbitrator selected by the respondent
shall, within five Business Days of their appointment,
select a third neutral arbitrator. In the event that they
are unable to do so, either Party may request the American
Arbitration Association to appoint the third neutral
arbitrator. The arbitrators shall have the authority to
award any remedy or relief that a court in New York could
order or grant, including, without limitation, specific
performance of any obligation created under this Alliance
Agreement, the awarding of punitive damages, the issuance of
injunctive or other provisional relief, or the imposition of
sanctions for abuse or frustration of the arbitration
process. The arbitration awards will be in writing and
specify the factual and legal basis for the award.
(d) It is the intent of the Parties that any
arbitration shall be concluded as quickly as practicable
(but, barring extraordinary circumstances, in any event not
more than 20 days after the date the third arbitrator is
selected). Unless the Parties otherwise agree, once
commenced, the hearing on the disputed matters shall be held
four days a week until concluded with each hearing date to
begin at 9:00 a.m. and to conclude at 5:00 p.m. The
arbitrators shall use their best efforts to issue the final
award or awards within a period of five Business Days after
closure of the proceedings. Failure of the arbitrators to
meet the time limits of this Section 9.14 shall not be a
basis for challenging the award.
(e) The arbitrators shall instruct the non-prevailing
party to pay all costs of the proceedings, including the
fees and expenses of the arbitrators and the reasonable
attorneys' fees and expenses of the prevailing party. If
the arbitrators determine that there is not a prevailing
party, each party shall be instructed to bear its own costs
and to pay one-half of the fees and expenses of the
arbitrators.
(f) Notwithstanding the foregoing, nothing contained
herein shall prevent either Party from seeking injunctive
relief in any court.
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Alliance
Agreement to be signed as of the date first above written.
WORLDWIDE DEDICATED SERVICES, INC.
By: _____________________________________
Name:
Title:
UPS LOGISTICS GROUP, INC.
By: _____________________________________
Name:
Title:
ROLLINS LEASING CORP.
By: _____________________________________
Name:
Title:
ROLLINS TRUCK LEASING CORP.
By: _____________________________________
Name:
Title:
BANK CREDIT AGREEMENT
BY AND BETWEEN
ROLLINS LEASING CORP.
FIRST UNION NATIONAL BANK
AS ADMINISTRATIVE AGENT
AND
BANKBOSTON, N.A.
AS DOCUMENTATION AGENT
DATED AS OF DECEMBER 11, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE ONE
AMOUNT AND TERMS OF CREDIT 1
Section 1.1 Amount and Terms of Credit
Section 1.2 Place of Loans
Section 1.3 Loan Request
Section 1.4 Interest
Section 1.5 Loan Account
Section 1.6 Statement of Loan Account
ARTICLE TWO
LOAN PAYMENTS 3
Section 2.1 Repayment of Principal/Schedule Amortization
Section 2.2 Interest Periods and Payments
Section 2.3 Optional Prepayment
Section 2.4 Mandatory Prepayment
Section 2.5 Place and Form of Payments
Section 2.6 Repayment Restrictions
Section 2.7 Additional Compensation
ARTICLE THREE
DEFAULT 5
Section 3.1 Default by Lenders
ARTICLE FOUR
COLLATERAL SECURITY 5
Section 4.1 Agreement to Secure
Section 4.2 Agent for Lenders
Section 4.3 Instruments of Security; Perfection of Security
Interests;
Further Assurance
Section 4.4 Provisions of Collateral Security
Section 4.4.1 Assigned Eligible Equipment Information
Section 4.4.2 Eligible Equipment Insurance
Section 4.4.3 Procedural Changes
Section 4.4.4 Releases
Section 4.4.5 Termination of Security Interest
Section 4.4.6 Waivers of Demands, Notices, Etc.
Section 4.5 Lenders' Rights in Deposits and Other Property;
Set-Off
Section 4.6 Pro Rata Payments
Section 4.7 Administrative Expenses
ARTICLE FIVE
APPOINTMENT OF FIRST UNION AS ATTORNEY 8
Section 5.1 Appointment of First Union as Attorney
ARTICLE SIX
REPRESENTATIONS AND WARRANTIES OF ROLLINS 9
Section 6.1 Valid Organization, Good Standing and
Qualifications
Section 6.2 Business of Rollins
Section 6.3 No Pending Material Litigation or Proceedings
Section 6.4 No Adverse Contracts or Restrictions
Section 6.5 No Legal Restrictions on Performance
Section 6.6 No Default under Other Obligations
Section 6.7 Government Consents
Section 6.8 Tax Status
Section 6.9 ERISA
Section 6.10 Financial Condition
Section 6.11 Environmental Matters
Section 6.12 Title to Properties
Section 6.13 Regulation U
Section 6.14 Investment Company, Public Utility and Holding
Company
Section 6.15 Accurate and Complete Disclosure
Section 6.16 Year 2000 Program
ARTICLE SEVEN
AFFIRMATIVE COVENANTS OF ROLLINS 11
Section 7.1 Payment of Principal and Interest
Section 7.2 Payment of Taxes
Section 7.3 Corporate Existence
Section 7.4 Maintenance of Properties
Section 7.5 Insurance
Section 7.6 Accounts and Financial Statements
Section 7.7 Default Under Other Indebtedness
Section 7.8 Inspection
Section 7.9 Liens
Section 7.10 Borrowing Base Certificate
Section 7.11 Performance of Lease Obligations; Collections
Section 7.12 Certification of Independent Public Accountants
Section 7.13 Certificate of Rollins as to Title Certificates
Section 7.14 Commitment Fee
Section 7.15 Maintenance of Working Capital
Section 7.16 Maintenance of Net Worth
Section 7.17 Current Ratio
Section 7.18 Further Assurance
ARTICLE EIGHT
NEGATIVE COVENANTS OF ROLLINS 15
Section 8.1 Indebtedness to Net Worth Ratio
Section 8.2 Disposition of Properties or Assets
Section 8.3 Merger, Consolidation
Section 8.4 Business Acquisitions
Section 8.5 Business of Rollins
Section 8.6 Limitation on Payments to Stockholder
Section 8.7 Leases to Affiliates
Section 8.8 Restricted Payments
Section 8.9 Negative Pledge
Section 8.10 Limitation on Liens
ARTICLE NINE
CONDITIONS OF CLOSING 16
Section 9.1 First Loan
Section 9.2 First and Subsequent Loans
Section 9.3 Facility B Loans
ARTICLE TEN
DEFAULTS AND REMEDIES 17
Section 10.1 Events of Default
Section 10.2 Effect of Event of Default
Section 10.3 Uniform Commercial Code
Section 10.4 Delay or Omission Not Waiver
Section 10.5 Remedies Cumulative
ARTICLE ELEVEN
TERMINATION 19
Section 11.1 Termination by Rollins
ARTICLE TWELVE
PAYMENTS OF CERTAIN EXPENSES BY ROLLINS 19
Section 12.1 Expenses in Connection with Enforcement
ARTICLE THIRTEEN
SURVIVAL OF COVENANTS; SUCCESSORS AND ASSIGNS 20
Section 13.1 Survival of Covenants, Etc.
Section 13.2 No Assignment by Rollins
ARTICLE FOURTEEN
MODIFICATIONS; WAIVER 20
Section 14.1 Modification of this Agreement
ARTICLE FIFTEEN
COMMUNICATIONS AND NOTICES 20
Section 15.1 Form, Address, Etc.
ARTICLE SIXTEEN
DEFINITIONS 21
Section 16.1 Acquisition Cost
Section 16.2 Affiliate
Section 16.3 Aggregate Amortization
Section 16.4 Amortized Value
Section 16.5 Amortization Period
Section 16.6 Assigned Eligible Equipment
Section 16.7 Borrowing Base
Section 16.8 Combined Debt
Section 16.9 Commitment Amount
Section 16.10 Corporation
Section 16.11 Current Assets
Section 16.12 Current Liabilities
Section 16.13 Default
Section 16.14 Commercial Rental Fleet
Section 16.15 Eligible Equipment
Section 16.16 Event of Default
Section 16.17 Indebtedness
Section 16.18 Lease
Section 16.19 Lease in Good Standing
Section 16.20 Lenders
Section 16.21 LIBOR
Section 16.22 Loan
Section 16.23 Loan Account
Section 16.24 Loan Date
Section 16.25 Loan Request
Section 16.26 Maturity Date
Section 16.27 Monthly Amortization Figure
Section 16.28 Mortgage
Section 16.29 Motor Vehicle
Section 16.30 Net Book Value
Section 16.31 Net Worth
Section 16.32 Person
Section 16.33 Prime Rate
Section 16.34 Revolving Expiration Date
Section 16.35 Senior Indebtedness
Section 16.36 Subordinated Indebtedness
Section 16.37 Subsidiary
Section 16.38 Working Capital
Section 16.39 Year 2000 Problem
Section 16.40 Agent for the Lenders
Section 16.41 Facility A
Section 16.42 Facility B
ARTICLE SEVENTEEN
HOLIDAYS 25
Section 17.1 Holidays
ARTICLE EIGHTEEN
LAW GOVERNING 25
Section 18.1 Pennsylvania Law
ARTICLE NINETEEN
WAIVER 25
Section 19.1 Waiver of Jury Trial
ARTICLE TWENTY
HEADINGS 25
Section 20.1 Headings Not Part of Agreement
ARTICLE TWENTY-ONE
COUNTERPARTS 25
Section 21.1 Counterparts
<PAGE>
BANK CREDIT AGREEMENT
THIS BANK CREDIT AGREEMENT dated as of December 11, 1998, by and
between ROLLINS LEASING CORP., a Delaware corporation ("Rollins") and
FIRST UNION NATIONAL BANK, a national banking association ("First
Union") and BANKBOSTON, N.A., a national banking association
("BankBoston"), (each such financial institution being hereinafter
called a "Lender" and collectively called the "Lenders").
Capitalized terms used herein without definition shall have the
meanings specified in Article 16 hereof.
1. AMOUNT AND TERMS OF CREDIT.
1.1 Amount of Credit. Subject to and upon the terms and
conditions hereof, the Lenders will lend to Rollins, at any time and
from time to time before the Revolving Expiration Date, sums which
shall not exceed
(a) Committed Loans ("Facility A") in an aggregate
outstanding principal amount of up to the lesser of (i) the
Commitment Amount; and (ii) the Borrowing Base in effect from time to
time (the "Borrowing Base Amount") less the amount of the Loans
outstanding under Facility B, if any (hereinafter the "Commitment").
The Facility A Commitment shall be divided equally between the
Lenders such that each Lender's commitment under Facility A shall be
an amount equal to the lesser of (x) $25,000,000 less such Lender's
Loans outstanding under Facility A or (y) one half of the Borrowing
Base Amount less the amount of Loans outstanding or that Lender under
Facility A and B,
(b) uncommitted lines of credit up to $50,000,000 in the
aggregate ("Facility B"). The Facility B Commitment shall be divided
equally among the Lenders such that each Lender's availability under
Facility B shall be an amount equal to the lesser of (x) $25,000,000,
less such Lender's outstandings under Facility B or (y) one half of
the Borrowing Base, less the amount of Loans of the Lender under
Facility A and B, if any, to be offered separately by each Lender;
provided, however, that under no circumstances shall the aggregate
outstanding principal amount of Facility A Loans and Facility B
Loans, if any, at any time exceed the Borrowing Base Amount.
Notwithstanding any other provision of this Agreement or any course
of dealing which may now or hereafter arise, it is acknowledged and
agreed that (i) Facility B is an uncommitted line of credit; (ii)
each request for a Loan under Facility B is subject to the prior
approval of each Lender; and (iii) each Lender may, in its sole and
absolute discretion and without notice of any kind, decline to permit
any borrowing under Facility B notwithstanding the approval or denial
of any other Lender under Facility B. To the extent that any Loan is
made pursuant to Facility B the interest rate and term thereof shall
be as mutually agreed at the time such Loan is made.
(c) Notwithstanding any other provision hereof, the
obligation of each Lender to make any Facility A Loan pursuant hereto
shall be several, and not joint or joint and several.
(d) Rollins may, by written notice to the Lenders, not more
than 60 days or less than 45 days prior to the then effective
Revolving Expiration Date, request an extension of the Revolving
Expiration Date for an additional period of 364 days from the then
current Revolving Expiration Date. Each Lender shall notify Rollins
of its approval or denial of such extension request (which approval
or denial shall be in the sole and absolute discretion of such
Lender) no later than 30 days prior to the then effective Revolving
Expiration Date. The extension of the Revolving Expiration Date
shall be effective only if approved by both Lenders. Any extension
so approved shall become effective beginning on the date next
following the then effective Revolving Expiration Date.
1.2 Place of Loans. Each Loan will be made to Rollins at the
office of First Union at 1339 Chestnut Street, Philadelphia, PA 19107
or the office of BankBoston, 100 Federal Street, Boston, MA 02110, as
the case may be, in such principal amount as Rollins may request by
notice (in the form and subject to the limitations herein provided)
received by the Lenders at least one (1) business day prior to the
Loan Date therefor.
1.3 Loan Request. Each Loan Request will be substantially in
the form of Exhibit "A" attached hereto, signed on Rollins' behalf by
a person thereunto duly authorized by it, setting forth (each a "Loan
Request"):
(a) The amount of the Loan requested;
(b) The requested interest rate option to apply thereto;
(c) The Loan Date therefor;
(d) The principal amount of Loans outstanding hereunder at
the date of such Loan Request;
(e) Such other matters as are called for by the form of
Exhibit "A" or as may be reasonably requested by the Lenders;
(f) Interest Period;
(g) reference to whether it is under Facility A or Facility
B.
Absent a contrary Loan Request by Rollins prior to the last
day of the Interest Period applicable to any As-Offered Rate Loan,
Rollins shall be deemed to have requested a Prime Rate Loan equal to
such As-Offered Rate Loan effective as of the last day of such
Interest Period.
1.4 Interest. Outstanding amounts under Facility A shall
accrue interest according to the following options, as selected by
the Borrower and Facility B Loans, if any, shall accrue interest at
the option described in (b) below:
(a) Prime Rate Option
A rate per annum (computed on the basis of the actual number
of days elapsed in a year of 365 or 366 days) for each day equal to
the Prime Rate.
(b) As-Offered Rate Option
A per annum rate of interest fixed in reference to LIBOR as
quoted separately by each Lender and acceptable to the Borrower as of
the date of each Loan. Interest at the As-Offered Rate Option quoted
by each Lender shall accrue on each Lender's portion of the entire
outstanding principal balance of each As-Offered Rate Loan and shall
be calculated on the actual number of days elapsed in a year of 360
days.
1.5 Loan Account. Each Lender will maintain on its books a Loan
Account for Rollins in which will be recorded the Loans made by such
Lender pursuant hereto, interest accrued thereon, payments made on
account of the principal of and interest on such Loans and other
appropriate debits and credits as provided by this Agreement which
records of each Lender shall be conclusive absent manifest error.
All Facility A indebtedness incurred by Rollins hereunder will be
governed exclusively by the terms hereof, including the additional
documents and instruments provided herein to be executed and
delivered to each Lender, and the Facility A Loans made hereunder may
at the request of a Lender be evidenced by notes or other evidences
of indebtedness. The debit balance of the Loan Account maintained by
each Lender will reflect the amount of Rollins' indebtedness to such
Lender from time to time by reason of transactions occurring pursuant
hereto.
1.6 Statement of Loan Account. On or before the 10th day of
each month each Lender will use its best efforts to render to Rollins
a statement of the Loan Account maintained by such Lender, as of the
close of business on the last day of the preceding month, showing
separately the unpaid balance of principal of the Loans and the
interest accrued thereon. Such statement will be deemed to be
correct and accepted by Rollins and conclusively binding upon it
unless Rollins notifies the Lenders to the contrary, specifying in
detail the nature of any claimed error or discrepancy, within twenty
(20) days after Rollins' receipt thereof.
2. LOAN PAYMENTS
2.1 Repayment of Principal/Scheduled Amortization. (a) The
aggregate outstanding principal amount of all Facility A Loans as of
the Revolving Expiration Date shall be due and payable in sixteen
(16) equal quarterly installments (each an "Installment") commencing
the last business day of the calendar quarter following the Revolving
Expiration Date and continuing on the last business day of each
consecutive September, December, March and June thereafter to and
including the Maturity Date (each an "Installment Payment Date"). To
the extent not due and payable earlier, the outstanding principal
balance of the Facility A Loans, together with all interest accrued
thereon, shall be due and payable on the Maturity Date. All
prepayments, if any, made by the Borrower during the Amortization
Period, shall be applied against Installments in the inverse order of
their maturity.
(b) The outstanding principal balance of each Facility B
Loan shall be due and payable at such time or times as is specified
by each Lender and agreed upon by Rollins at the time such Facility B
Loans, if any, are made.
2.2 Interest Periods. (a) Loans bearing interest at the Prime
Rate Option shall have an interest period of up to 90 days as
selected by Rollins. Loans bearing interest at the As-Offered Rate
Option shall have such interest period as may be prescribed by each
Lender and agreed to by Rollins at the time such Loan is made (each
hereinafter an "Interest Period").
(b) Interest Payments. Interest accrued on each Facility A
Loan made pursuant hereto shall be due and payable on the last
business day of each calendar quarter during which any such Loan is
outstanding, on each Installment Payment Date, on the last day of the
Interest Period applicable thereto and on the date of repayment,
prepayment or conversion thereof and on the Maturity Date. After the
principal amount of any Loan shall have become due and payable on any
Installment Payment Date, the Maturity Date, by acceleration or
otherwise, interest shall accrue on all outstanding principal amounts
at a per annum rate equal to the Prime Rate plus 2%, and shall be due
and payable on demand.
2.3 Optional Prepayment. Prime Rate Loans may be prepaid
at any time on one business day's notice. As-Offered Rate Loans may
be prepaid prior to the last day of the Interest Period applicable
thereto on not less than 3 days prior written notice thereof to the
Lenders and subject to Section 2.7(b) hereof.
2.4 Mandatory Prepayment. If at any time the aggregate
outstanding principal amount of Facility A Loans and Facility B Loans
exceeds the Borrowing Base Amount, Borrower shall, within one
business day, prepay such amount as is necessary to cause the
aggregate outstanding principal balance of all such Loans, after
giving effect to such prepayment, to be less than the Borrowing Base
Amount as of such date. Prepayment shall be first of Facility B
Loans and then Facility A Loans.
2.5 Place and Form of Payments. All payments to be made by
Rollins pursuant hereto will be paid in lawful money of the United
States of America, in immediately available funds, at the office of
First Union, 1339 Chestnut Street, Philadelphia, PA, or BankBoston,
100 Federal Street, Boston, MA, as the case may be, or at such other
place as either Lender may designate in written notice to Rollins.
2.6 Repayment Restrictions. Amounts repaid in respect of
Facility A Loans from and after the Revolving Expiration Date,
whether as scheduled Installments, by prepayment or otherwise, may
not be reborrowed hereunder.
2.7 Additional Compensation in Certain Circumstances.
(a) Increased Costs or Reduced Return Resulting from Taxes,
Reserves, Capital Adequacy Requirements, Expenses, etc. If (i) the
introduction of or any change in any law or regulation or in the
interpretation or application thereof by any governmental or
regulatory authority ("Official Body") charged with the
interpretation or administration thereof, or (ii) compliance with any
guideline or request or directive of any Official Body (whether or
not having the force of law) hereafter:
(i) subjects any Lender to any tax or changes the
basis of taxation with respect to this Agreement, any Loan made
pursuant hereto or payments by Rollins of principal, interest or
other amounts due from Rollins hereunder or under any note made in
connection herewith (except for taxes on the overall net income of
any Lender imposed by the jurisdiction in which such Lender's
principal office is located),
(ii) imposes, modifies or deems applicable any
reserve, special deposit or similar requirement against assets held
by, credit extended by, deposits with or for the account of, or other
acquisition of funds by, any Lender,
(iii) imposes, modifies or deems applicable any
capital adequacy or similar requirement (A) against assets (funded or
contingent) of, or credits by, any Lender or (B) otherwise applicable
to the obligations of any Lender under this Agreement, or
(iv) imposes upon any Lender any other condition
or expense with respect to this Agreement, any note held by any
Lender pursuant hereto or its making, maintenance or funding of any
Loan
and the result of any of the foregoing is to increase the cost to,
reduce the income receivable by, or impose any expense, including
loss of margin, upon the Lender with respect to this Agreement, or
the making, maintenance or funding of any part of any Loan(s) or, in
the case of any capital adequacy or similar requirement, has the
effect of increasing the amount of capital required or expected to be
maintained by any Lender or any Corporation controlling any such
Lender as a result of such Lender's commitment to lend hereunder or
the Loan(s) made by such Lender pursuant hereto (taking into account
the Lender's policies with respect to capital adequacy) by an amount
which the Lender deems to be material such Lender shall from time to
time notify Rollins of the amount determined (using any averaging and
attribution methods) by such Lender in good faith (which
determination shall be conclusive) to be necessary to compensate such
Lender for such increase in cost, reduction in income or additional
expense reasonably allocable to the making, maintenance or funding of
the Loan or any portion thereof hereunder provided, however, that no
Lender shall be entitled to demand such compensation more than 180
days following the last day of the Interest Period in respect of
which such demand is made; provided further, however, that the
foregoing proviso shall in no way limit the right of any Lender to
demand or receive such compensation to the extent that such
compensation relates to the retroactive application of any law,
regulation, guideline or request described in (i) or (ii) above if
such demand is made within 180 days after the implementation or
application of such retroactive law, interpretation, guideline or
request. Such amount shall be due and payable by Rollins to the
applicable Lender ten (10) Business Days after such notice is given.
(b) Indemnity. In addition to the compensation required by
subsection (a) of this Section 2.7, Rollins shall indemnify each
Lender against any loss or expense (including loss of margin) which
any Lender has sustained or incurred as a consequence of any
(i) payment, prepayment or conversion of any Loan, if
maintained at the As-Offered Rate Option, on a day other than the
last day of the corresponding Interest Period (whether or not such
payment, prepayment or conversion is mandatory and whether or not
such payment, prepayment or conversion is then due),
(ii) attempt by Rollins to revoke (expressly, by
later inconsistent notices or otherwise) in whole or part any notice
stated herein to be irrevocable (each Lender having in its discretion
the options (A) to give effect to any such attempted revocation and
obtain indemnity under this Section 2.7(b) or (B) to treat such
attempted revocation as having no force or effect, as if never made),
or
(iii) claims, demands, losses or expenses incurred
by or asserted against any Lender in connection with Rollins' use of
the proceeds of any Loan and/or any Lender's role as a lender
hereunder except to the extent caused by the Lender's gross
negligence or willful misconduct.
If any Lender sustains or incurs any such loss or expense, it shall
from time to time notify Rollins of the amount determined by such
Lender in good faith (which determination shall be conclusive) to be
necessary to indemnify such Lender for such loss or expense (such
Lender being deemed for this purpose to have made, maintained or
funded the Loan to the extent maintained at the As-Offered Rate
Option from a corresponding source of funds). Such amount shall be
due and payable by Rollins to the Lender ten Business Days after such
notice is given.
3. Intentionally Left Blank
4. COLLATERAL SECURITY.
4.1 Agreement to Secure. At any time after the date of this
Agreement any of the Lenders may, by written notice to Rollins,
require that all of Rollins' liability and obligations hereunder be
fully secured by Rollins. Upon delivery of such notice by any Lender
to Rollins, the Lenders shall have, and Rollins shall and does hereby
(effective upon the delivery of such notice), assign, transfer and
grant to the Lenders, jointly, a security interest and first priority
lien in and to the following and all proceeds thereof, to secure the
payment of the principal of and interest on the Loans which at any
time may be outstanding hereunder or pursuant hereto and the
performance of all other obligations of Rollins hereunder; (i) all
Eligible Equipment which is at any time described, referred to or
reflected in any Loan Request or Borrowing Base Certificate, or
otherwise identified in any manner on the books or records of Rollins
as an item of Eligible Equipment included in Rollins' Borrowing Base,
and all parts, fittings, accessories, accessions, substitutions and
replacements therefor or thereof, and all proceeds of any therefor,
and (ii) all Leases now or hereafter in effect with respect to such
Eligible Equipment (and such other property as may be subject to any
such Lease) and all rentals and other moneys, including all proceeds
of insurance, condemnation and requisition proceedings and sales or
other dispositions of any such Eligible Equipment (and such other
property) payable to or receivable by Rollins under or in connection
with any such Lease and all instruments, accounts, general
intangibles and/or chattel paper relating thereto or forming a part
thereof, and all Rollins' rights and powers therein and thereunder,
including all rights of Rollins to give and receive any notice,
consent, waiver, demand or approval under or in respect of any such
Lease, to exercise any election or option thereunder or in respect
thereof, to accept any surrender of such Eligible Equipment (and such
other property), to execute and deliver any bill of sale for any such
Eligible Equipment (and such other property), and to do all other
things which Rollins is entitled to do under any such Lease, Rollins
hereby irrevocably constituting and appointing each of the Lenders as
its attorney-in-fact for such purposes, with full power of
substitution, together with full power and authority, in the name of
Rollins, the Lenders or otherwise, to do, enforce, collect, receive
and receipt for any and all of the foregoing.
4.2 Agent for Lenders. At the request of the Lenders, Rollins
will execute, acknowledge and deliver to such agent for the Lenders
as the Lenders may designate such instruments of assignment,
conveyance, mortgage and appointment, as the Lenders may request, to
grant, perfect and confirm the grant, to such agent of such rights
and powers referred to in Section 4.1 as the Lenders may request.
4.3 Instruments of Security; Perfection of Security Interests;
Further Assurance. Within 7 days after the delivery to Rollins of
the notice of any Lender provided for in Section 4.1, Rollins will
execute, acknowledge, deliver, file and record all such documents,
including mortgages, instruments of assignment and transfer,
financing statements, certificates of title (with encumbrances noted
thereon) as the Lenders or the agent for the Lenders may request to
effect, grant and convey, perfect and continue perfected under
applicable law, the security interests provided for in Section 4.1 as
first lien security interests in the property subject, or to be
subject, thereto.
4.4 Provisions of Collateral Security. The provisions of
Section 4.4.1 through 4.4.6, inclusive, shall be applicable only if
any of the Lenders shall exercise its rights to require security
pursuant to Section 4.1.
4.4.1 Assigned Eligible Equipment Information. Rollins shall
furnish at monthly intervals, such information concerning Assigned
Eligible Equipment and Leases assigned as security hereunder as any
Lender may request and will show with respect to the period for which
such report is made all net proceeds received from the sale,
destruction, commandeering, conversion, loss of or damage to,
prevention or use of, attachment of, or insurance on or with respect
to Assigned Eligible Equipment or other property and assets
encumbered hereunder and a schedule of all changes of principal
garaging of Eligible Equipment made during the period.
4.4.2 Eligible Equipment Insurance. The insurance
arrangements required by Section 7.5 shall be for the benefit of
Rollins and Lenders as their interests may appear and all insurance
policies shall provide for a ten (10) day written minimum
cancellation notice to Rollins and Lenders; and in the event of any
such cancellation and failure on the part of Rollins to provide
adequate insurance arrangements satisfactory to Lenders, Lenders may,
at their option, provide such insurance and charge the cost thereof
to Rollins as security administration charges hereunder.
4.4.3 Procedural Changes. If, in the opinion of the Lenders
or its counsel, changes or modifications in the procedures governing
titling, registration, mortgaging of, the recording of Mortgages on,
or other action with respect to Assigned Eligible Equipment are
necessary or desirable to better perfect or otherwise protect the
Lenders' security interest, Rollins, upon request of such Lenders
will exert its best efforts to cause such changes or modifications to
be made or adopted.
4.4.4 Releases. If Rollins is not in default under Section
10.1 hereof, the Lenders shall release from the lien of any Mortgage
or other security instrument held by them any Assigned Eligible
Equipment or other encumbered property and assets which Rollins
wishes to sell upon payment to the Lenders of the Net Book Value of
such Eligible Equipment or book value of such other property. If and
when this Agreement has been terminated and all indebtedness and
liabilities of Rollins hereunder shall have been paid in full, the
Lenders shall discharge all Mortgages and release to Rollins all
other security, if any, then held by it.
4.4.5 Termination of Security Interest. When and only when
(i) Rollins shall have paid in full the principal of all outstanding
Loans hereunder, interest thereon and all other amounts to be paid by
Rollins hereunder, pursuant hereto or to any transaction contemplated
hereby, and all other obligations of Rollins secured by the security
interest provided for in Section 4.1 shall have been fully performed,
and (ii) the obligation of the Lenders to make Loans hereunder shall
have terminated pursuant to Section 11.1, then the security interest
of the Lenders provided for in Section 4 hereof shall terminate, and
at the request and expense of Rollins, the Lenders will execute and
deliver to Rollins such written evidence thereof, including
termination statements, and take such other action as Rollins may
reasonably request.
4.4.6 Waivers of Demands, Notices, Etc. Rollins waives any
requirement of law for the making or giving of any demand or notice
of any default hereunder or under any Lease and, in general, for all
other notices and formalities relating to this Agreement or any
security therefor, other than notices specifically required hereby.
Rollins consents to, and waives notice of, the granting by the
Lenders or the Agent for the Lenders of indulgences or extensions of
time of payment under any Lease, the taking or releasing of any
security for the obligations of any lessee under any Lease, the
addition or release of persons primarily or secondarily liable on or
with respect to liabilities of any lessee under any Lease, the
acceptance of partial payments under any Lease or the settlement,
compromising or compounding of any thereof, all in such manner and at
such time as the Lenders or the Agent for the Lenders may deem
advisable. The Lenders and the Agent for the Lenders shall not be
required to prosecute collection or other remedies against any person
primarily or secondarily liable on or with respect to the obligations
of any lessee under any Lease assigned to the Lenders or the Agent
for the Lenders pursuant hereto, or to enforce or resort to any
security, liens, collateral or other remedies appertaining to
obligations of any such person before calling Rollins for payment or
otherwise, nor shall any act or omission of any Lender or the Agent
for the Lenders in any way impair or affect any of the indebtedness
of liabilities of Rollins to any Lender hereunder or the rights of
the Lenders and the Agent for the Lenders in any security.
4.5 Lenders' Rights in Deposits and Other Property; Set-Off.
Upon the occurrence of any Event of Default the Lenders, or any of
them, may without notice or further action (i) set-off against and
apply and appropriate to the liabilities of Rollins hereunder,
whether or not due, any amounts of money and all property which may
now or at any time hereafter be held by such Lender or owing or due
by such Lender in any capacity, to Rollins, including, but not
limited to any balance or share belonging to Rollins of any deposit
or other account with such Lender or sums or property in transit to
such Lender or securities or other properties of Rollins which at any
time are in the possession of such Lender ("Liened Property"), and
the Lenders, and each of them, shall be deemed to have exercised such
right and to have set-off, applied and appropriated any such Liened
Property immediately upon any Event of Default occurring,
irrespective of when any record of the same may thereafter be entered
on the books of any such Lender, and (ii) the Lenders, and each of
them, shall at all times have, with respect to the Liened Property
all the rights of a secured party under the Uniform Commercial Code
and other applicable law.
4.6 Pro Rata Payments. If, after an Event of Default shall have
occurred and while it shall be continuing, any Lender receives any
payment in respect of the obligations of Rollins hereunder (whether
by set-off, exercise of rights under any security interest, or
otherwise) in an amount which is greater than the proportionate share
(determined on the basis of the respective outstanding balances of
principal of Loans made by the Lenders) of all payments made to the
Lenders at such time, the Lender so receiving such greater
proportionate payment (the "Receiving Lender") will purchase a
portion of the obligations of Rollins hereunder held by each other
Lender so that after such purchase there shall be held by each Lender
an unpaid balance of principal of such obligations bearing the same
proportion to the outstanding balance of principal of the Combined
Debt as existed immediately prior to the Receiving Lender's receipt
of such payment.
4.7 Administrative Expenses. If any Lender shall exercise its
rights to acquire security pursuant to Section 4.1, Rollins will pay
to each of the Lenders and the Agent for the Lenders such reasonable
fees, charges and expenses, as any such Lender or the Agent for the
Lenders may request as compensation for the administration of
collateral pursuant hereto; provided only that such fees and charges
shall be consistent with fees and charges imposed by such Lender or
the Agent for the Lenders for similar services provided by it in
other transactions in the ordinary course of its business.
5. APPOINTMENT OF FIRST UNION AS ATTORNEY.
5.1 Rollins hereby irrevocably appoints First Union its true and
lawful attorney with power of substitution, for it and in its name,
or in the name of First Union or otherwise, for the use and benefit
of Lenders, but at the cost and expense of Rollins: (a) to do all
acts and things which First Union may deem necessary to perfect and
continue perfected the security interest which Rollins hereby agrees
to grant to the Lenders pursuant to Article 4, including the
execution on behalf of Rollins of Mortgages, security agreements,
instruments of assignment or transfer, financing statements and
documents for the notation of encumbrances on certificates of title
for Eligible Equipment; (b) to commence and prosecute in the name of
First Union as agent for the Lenders or in the name of Rollins any
suits, actions or proceedings at law or in equity, in any court of
competent jurisdiction, but only to enforce any of the rights granted
or agreed to be granted to the Lenders pursuant to Article 4; (c)
collect any sums assigned to the Lenders or to enforce any rights in
respect thereof; and (d) generally to sell, assign, transfer, pledge,
make any agreement with respect to or otherwise deal with any claims,
all Eligible Equipment subject to any Mortgage, grant or security
interest as fully and completely as though First Union were the
absolute owner thereof for all purposes, but only to enforce any of
the rights granted or agreed to be granted to the Lenders pursuant to
Article 4; and for the purpose of realizing its rights therein, First
Union may, in the name of Rollins, endorse and deliver checks and
other instruments for the payment of money, and endorse and deliver
certificates of title and any and all instruments of title for any
Eligible Equipment owned by Rollins. The powers conferred on First
Union by this Section are solely to protect the interests of the
Lenders and shall not impose duties upon First Union to exercise any
such powers.
6. REPRESENTATIONS AND WARRANTIES OF ROLLINS.
6.1 Rollins represents and warrants that: (a) Valid
Organization, Good Standing and Qualifications. Rollins is duly and
validly organized and an existing corporation in good standing under
the laws of Delaware, the state of its incorporation. Rollins is
duly licensed or qualified and in good standing as a foreign
corporation in each jurisdiction where the ownership or leasing of
property or the nature of the business transacted by it makes such
qualification necessary. Rollins is entitled to own its properties
and assets, and to carry on its business, all as, and in the places
where, such properties and assets are now owned or operated or such
business is now conducted or presently proposed to be conducted.
Rollins has made payment of all franchise and similar taxes in the
jurisdictions of its incorporation, and in all of the jurisdictions
in which it is qualified as a foreign corporation, insofar as such
taxes are due and payable at the date of this Agreement, except for
any such taxes the validity of which is being contested in good faith
and for which proper reserves have been set aside on the books of
Rollins.
(b) Rollins has all necessary corporate power and authority
to make and carry out this Agreement, to make the borrowings provided
for herein, to take all action contemplated hereby or required
hereunder, to execute and deliver this Agreement and any other
documents delivered or to be delivered in connection herewith and to
perform its obligations hereunder; and all such action has been duly
authorized by all necessary corporate proceedings on its part.
6.2 Business of Rollins. Rollins is engaged in the businesses
of leasing transportation equipment and providing logistics services.
6.3 No Pending Material Litigation or Proceedings. Except as
set forth in Exhibit B, there are no actions, suits or proceedings
pending or, to the knowledge and belief of Rollins, threatened
against or affecting Rollins or any of its Subsidiaries at law or in
equity or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which involve the possibility
of any judgment or liability, not fully covered by insurance or by
reserves maintained pursuant to a self-insurance program, in excess
of $500,000 per occurrence, or which may materially or adversely
affect the business, properties or assets or the condition, financial
or otherwise, of Rollins or any of its Subsidiaries or the right of
any of them to carry on its business as now conducted. None of
Rollins or any of its Subsidiaries is, to the knowledge and belief of
Rollins, (i) in default with respect to any order, writ, injunction
or decree of any court or (ii) in default in any material respect
under any order, regulation or demand of any federal, state,
municipal or other government or agency thereof, default under which
might have consequences which would materially and adversely affect
the business, properties or assets or the condition, financial or
otherwise, of Rollins or any of its Subsidiaries.
6.4 No Adverse Contracts or Restrictions. Rollins is not a
party to, or bound by, any contract or agreement or instrument, or
subject to any charter or other corporate restriction, materially and
adversely affecting its business, property, assets, operations or
conditions, financial or otherwise.
6.5 No Legal Restrictions on Performance. The execution and
delivery of this Agreement, the consummation of the transactions
contemplated hereby, the fulfillment of the terms hereof, and the
compliance with the respective terms, conditions and provisions of
this Agreement by Rollins will not conflict with or result in a
breach of, or constitute a default (or might, upon the passage of
time or the giving of notice or both, constitute a default) under,
any of the terms, conditions or provisions of any corporate
restriction or of any indenture, mortgage, deed of trust, pledge,
Loan or credit agreement, corporate charter, by-laws or any other
agreement or instrument to which Rollins is a party or by which it or
its properties may be bound or affected, or any judgment or order,
writ, injunction, decree or demand of any court or federal, state,
municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or result in
the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the property or assets of Rollins under
the terms or provisions of any such agreement or instrument.
6.6 No Default under Other Obligations. Rollins is not in
violation of any term of its charter or by-laws or in default in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any indenture or other agreement
creating, evidencing or securing Indebtedness of Rollins or pursuant
to which any such Indebtedness is issued, or other agreement or
instrument to which Rollins is a party or by which it or its
properties may be bound or affected.
6.7 Governmental Consents. No consent, approval or
authorization of or designation, declaration or filing with any
governmental authority on the part of Rollins, is required in
connection with the execution, delivery or performance of this
Agreement by it or the consummation by it of the transactions
contemplated hereby.
6.8 Tax Status. Rollins has filed all United States income tax
returns and all state and municipal tax returns which are required to
be filed by it, and has paid, or made provision for the payment of,
all taxes which have or may have become due pursuant to said returns
or pursuant to any assessment received by Rollins, except such taxes,
if any, as are being contested in good faith and as to which adequate
reserves have been provided.
6.9 ERISA. Each pension, profit sharing and other employee
benefit plan maintained for the benefit of Rollins or for any
Subsidiary is in compliance with the Employee Retirement Income
Security Act ("ERISA") and all applicable rules and regulations
adopted by regulatory authorities pursuant thereto, and all reports
required to be filed by ERISA and such rules and regulations have
been filed.
6.10 Financial Condition.
The audited consolidated financial statements of Rollins
dated September 30, 1997, and the related consolidated statements of
operations, shareholders' equity and cash flows for the fiscal year
ended on that date:
(a) Were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise
expressly noted therein, subject to ordinary, good faith year-end
audit adjustments;
(b) Fairly present the financial condition of Rollins as of
the date thereof and results of operations for the period covered
thereby, and since September 30, 1997, there has been no material
adverse change in the business, performance, operations or condition
(financial or otherwise) of Rollins.
6.11 Environmental Matters. Rollins conducts in the
ordinary course of business a review of the effect of existing
environmental laws and existing environmental claims on its business,
operations and properties, and as a result thereof Rollins has
reasonably concluded, such Environmental Laws and environmental
claims could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on its financial
condition.
6.12 Title to Properties. Rollins has good record and
marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of its
businesses. As of the Closing Date, the property of Rollins that is
subject to Liens does not exceed $1,000,000 in the aggregate.
6.13 Regulation U. Neither Rollins nor any Subsidiary of
Rollins is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock, within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve
System ("Margin Stock"), and no proceeds of the Loans will be used to
purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock.
6.14 Investment Company, Public Utility Holding Company.
Neither Rollins nor any Subsidiary of Rollins (i) is subject to
regulation under the provisions of the Public Utility Holding Company
Act of 1935, as amended, or (ii) is an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
6.15 Accurate and Complete Disclosure. Rollins has
disclosed to the Lenders in writing every fact which materially and
adversely affects, or which so far as Rollins can reasonably foresee
would materially and adversely affect, the business, operations or
financial condition of Rollins or its Subsidiaries or the ability of
Rollins to perform its obligations under this Agreement.
6.16 Year 2000 Program. Rollins will use its best efforts
to monitor the potential impact of the Year 2000 problem and, if any
problem is determined to exist, to develop and implement a
comprehensive detailed program to address on a timely basis such
problem.
7. AFFIRMATIVE COVENANTS OF ROLLINS. Rollins covenants and agrees
that until the obligation of Lenders to make Loans pursuant hereto
shall have terminated and thereafter so long as any Loan made
pursuant hereto shall be outstanding or any amount shall be payable
hereunder by Rollins, except as Lenders may otherwise consent or
agree in writing:
7.1 Payment of Principal and Interest. Rollins will duly and
punctually pay all amounts of principal of and interest on Loans made
hereunder and all other amounts payable by it hereunder when such
payments are due in accordance with the terms hereof.
7.2 Payment of Taxes. Rollins will promptly pay and discharge
or cause to be paid and discharged all taxes, assessments,
governmental charges or levies imposed upon it, or upon its income
and profits, or upon any property belonging to it, or upon any part
thereof, before the same shall become in default, as well as all
claims for labor, materials and supplies which, if unpaid, might
become a lien or charge upon such properties or any part thereof;
provided, however, that Rollins shall not be required to pay and
discharge any such tax, assessment, charge, levy or claim so long as
the validity thereof shall be contested in good faith by appropriate
proceedings promptly initiated and diligently conducted by Rollins,
no foreclosure, sale or similar proceeding shall have been commenced
in respect thereof (or such proceeding shall have been stayed pending
the disposition of such contest of validity), and Rollins shall have
set aside on its books adequate reserves with respect thereto.
7.3 Corporate Existence. Rollins will do or cause to be done
all things necessary to preserve and keep in full force and effect
its corporate existence, rights and franchises and comply with the
requirements of all applicable laws and all lawful rules, regulations
and orders of regulatory agencies and authorities having jurisdiction
over it.
7.4 Maintenance of Properties. Rollins will at all times
maintain, preserve, protect and keep or cause to be maintained,
preserved, protected and kept, its property and every part thereof
used or useful in the conduct of its business (including without
limitation the Eligible Equipment) in good repair, working order and
condition, and from time to time make, or cause to be made, all
necessary and proper repairs, renewals, replacements, betterments and
improvements thereto, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
7.5 Insurance. Rollins will keep adequately insured by
financially sound and reputable insurers, all property of a character
usually insured by corporations engaged in the same or a similar
business similarly situated against loss or damage of the kinds
customarily insured against by such corporation, and carry such
liability and other insurance as is usually carried by corporations
engaged in a similar business. Rollins will maintain or cause to be
maintained the insurance in respect of each unit of Eligible
Equipment required by the related Lease, and will deliver to the
Lenders such evidence thereof as they may from time to time request;
provided, however, that (i) the self-insurance program of Rollins,
shall, to the extent of the coverage of such program and so long as
it shall be maintained, be an adequate substitute for such insurance
and (ii) Rollins may enter into other self-insurance programs if any
such program is first approved by the Lenders in writing.
7.6 Accounts and Financial Statements. Rollins will keep proper
books of record and account in which full, true and correct entries
will be made of all its dealings, business and affairs in accordance
with generally accepted accounting principles, and deliver to Lenders
as soon as available, and in any event:
(a) within sixty (60) days after the end of each of the
first three quarterly accounting periods in each fiscal year of
Rollins, (i) the consolidating and the consolidated income and
retained earnings statements of Rollins and its Subsidiaries, for
such quarterly period and for the expired portion of the fiscal year
ending with the end of such period, setting forth in comparative form
the corresponding figures for the corresponding period of the
previous fiscal year, and (ii) the consolidating and consolidated
balance sheets of Rollins and its Subsidiaries as at the end of such
quarterly period, setting forth in comparative form the corresponding
figures as at the end of the corresponding period of the previous
fiscal year, (iii) consolidating and consolidated statement of cash
flows for such quarterly period and for the expired portion of the
fiscal year ending with the end of such period, setting forth in
comparative form the corresponding figures for the corresponding
period of the previous fiscal year, all in reasonable detail, subject
to audited year-end adjustments, and certified by a principal
financial officer of Rollins to have been prepared in accordance with
generally accepted accounting principles consistently maintained by
Rollins and its Subsidiaries since the beginning of the fiscal year
immediately preceding the period covered by each quarterly statement
except for inconsistencies explained in such certificate.
(b) within ninety (90) days after the end of each fiscal
year of Rollins (i) the consolidating and the consolidated income and
retained earnings statements of Rollins and its Subsidiaries for such
year, setting forth in comparative form the corresponding figures for
the previous fiscal year and (ii) the consolidating and the
consolidated balance sheets of Rollins and its Subsidiaries as at the
end of such fiscal year, setting forth in comparative form the
corresponding figures as at the end of the previous fiscal year,
(iii) consolidating and consolidated statement of cash flows of
Rollins and its Subsidiaries for such year, setting forth in
comparative form the corresponding figures for the previous fiscal
year all such statements referred to in subsections (i), (ii) and
(iii) to be in reasonable detail, including all supporting schedules
and comments, and in the case of all such consolidated statements,
certified by independent public accountants of recognized standing
satisfactory to the Lenders, to have been prepared in accordance with
generally accepted accounting principles consistently maintained by
Rollins and its Subsidiaries since the beginning of the fiscal year
preceding that for which such statement is furnished and such
independent public accountants shall also certify that they have
reviewed the terms of this Agreement and that in making the
examinations necessary to their certification they have reviewed the
accounts and condition of Rollins and its Subsidiaries during the
accounting period covered by their certificate and that such review
did not disclose the existence of any condition or event which
constitutes a Default or would, upon giving notice or the passage of
time, or both, constitute such a Default (or if such conditions or
events existed, describing them);
(c) within ninety (90) days after the end of each fiscal
year of Rollins and within 60 days after the end of each of the first
three quarters of each fiscal year (and in any event not later than
simultaneously with the delivery of the financial statements required
pursuant to Sections 7.6(a) and (b) hereof), a certificate dated as
of the end of such fiscal year or quarter, signed on behalf of
Rollins by its chief financial officer, (i) stating that as of the
date thereof no Event of Default or Default has occurred and is
continuing or exists, specifying in detail the nature and period of
existence thereof, if any, and any action with respect thereto taken
or contemplated to be taken by Rollins; (ii) stating in reasonable
detail the information and calculations necessary to establish
compliance with the provisions of Section 7.15, 7.16, 7.17, and 8.1
hereof; and (iii) stating that the signer has reviewed this Agreement
and that such certificate is based on an examination made by or under
the supervision of the signer sufficient to assure that such
certificate is accurate.
(d) all such other data and information in respect of the
conditions, operations and affairs of Rollins and its Subsidiaries as
any Lender may reasonably request from time to time. Such
information shall also be furnished to the other Lenders.
7.7 Default Under Other Indebtedness. If any Indebtedness of
Rollins is declared or becomes due and payable before its expressed
maturity by reason of default, or the holder of any such Indebtedness
shall have the right (or upon the giving of notice, shall have the
right) to declare such Indebtedness to be so due and payable by
reason of default, Rollins will immediately give the Lenders written
notice of such declaration, acceleration or right of declaration.
7.8 Inspection. Any Lender or such persons as it may designate,
may visit and inspect any of the properties of Rollins, examine
(either by its employees or by independent accountants employed by
it) the books of account and other records, including without
limitation, title certificates and Lease(s) of Rollins and discuss
the affairs, finances and accounts of Rollins with its officers and
with its independent accountants, all at such reasonable times and as
often as such Lender may desire.
7.9 Liens. Except for the security interests which may be
granted to the Lenders hereby or pursuant hereto, Rollins will keep
the Eligible Equipment reflected in the latest Borrowing Base
Certificate delivered to the Lenders and all Leases thereof free and
clear of all liens, security interests and encumbrances.
7.10 Borrowing Base Certificate. Rollins will deliver to
each Lender, on or before the 25th day of each calendar quarter, a
Borrowing Base Certificate in substantially the form of Exhibit B
attached hereto setting forth the information as to its Borrowing
Base and other matters called for thereby as of the last day of the
preceding calendar quarter accompanied by a schedule describing in
reasonable detail each item of Eligible Equipment. Each Borrowing
Base Certificate shall be accompanied by (i) a schedule, describing
in such detail, as any Lender may reasonable require, each item of
Eligible Equipment reflected in the Borrowing Base Certificate, (ii)
a schedule describing in reasonable detail, each item of Eligible
Equipment described in a previously delivered Borrowing Base
Certificate since disposed of by Rollins; (iii) a schedule describing
in reasonable detail (x) each existing Lease of Eligible Equipment
not described in a previously delivered schedule to the Lenders and
(y) each previously described Lease which has since terminated and
which termination has not been previously reported to any Lender.
7.11 Performance of Lease Obligations; Collections. Rollins
will perform, or cause to be performed, all the obligations to be
performed by the lessor under the terms of all leases which may be
assigned to the Lenders pursuant hereto (or intended so to be).
7.12 Certification by Independent Public Accountants. On or
before December 31 of each year, Rollins will deliver to the Lenders
the certificate of independent public accountants of recognized
standing, selected by Rollins and satisfactory to the Lenders to the
effect (a) that such accountants have, as of September 30 of such
year, (i) physically examined title certificates (or copies of filed
financing statements with respect to non title states) for Eligible
Equipment on a statistical sampling basis, identifying them in
reasonable detail including a description of the Motor Vehicle
described thereon, the registered owner thereof and all liens, if
any, noted thereon, and setting forth in reasonable detail such
information as the books and records of Rollins may disclose
(including any reports to such accountants by Rollins' employees) as
to the whereabouts of all such title certificates of Rollins and (ii)
compared Rollins' detailed vehicle listing of Motor Vehicles which
are Eligible Equipment with summaries of revenue by vehicle on a test
basis and (b) that the Borrowing Base Certificate as of September 30
of such year, delivered by Rollins to the Lenders, presents fairly
the status of the Net Book Value of Eligible Equipment reflected
thereon as of such date as evidenced by the books and records of
Rollins.
7.13 Certificate of Rollins as to Title Certificates. On or
before May 15 of each year, Rollins will deliver to the Lenders its
certificate, signed by its President or any Vice President,
identifying all title certificates for Eligible Equipment on March 31
of such year and the whereabouts of all such title certificates which
should, pursuant hereto, have been in the possession of Rollins on
such date but were not so held, all in the same detail as is required
for the certificate referred to in clause (a) of Section 7.12.
7.14 Commitment Fee. On or before the last business day of
each calendar quarter, Rollins will pay to each Lender for Facility
A, a commitment fee in the amount of 12.5 basis points (1/8 of 1%)
per annum of the excess, if any, of such Lender's Facility A
Commitment Amount over the daily average aggregate principal amount
of Facility A Prime Rate Loans of each such Lender outstanding
hereunder.
7.15 Maintenance of Working Capital. Rollins will at all
times maintain Working Capital in an amount greater than $7,000,000.
Together with the financial statements which Rollins is required to
deliver to the Lenders pursuant to Section 7.6, Rollins shall deliver
to the Lenders a certificate, certified to be correct by the
principal financial officer of Rollins, which shall set forth the
amount of Working Capital required to be maintained by this Section,
the calculations upon which such determination is based and the
amount of Working Capital actually maintained by Rollins as of the
date of the financial statements upon which such determination is
based.
7.16 Maintenance of Net Worth. Rollins will at all times
maintain a Net Worth greater than the sum of $200,000,000 plus 50%
cumulative quarterly positive net income subsequent to September 30,
1997.
7.17 Current Ratio. Rollins will at all times maintain
Current Assets of no less than 150% of Current Liabilities.
7.18 Further Assurance. Rollins will execute and deliver
all such instruments and take all such other action as the Lenders
may reasonably require to effectuate the purposes of this Agreement
and to secure the rights and remedies conferred upon the Lenders
hereunder.
8. NEGATIVE COVENANTS OF ROLLINS. Rollins covenants and agrees
that until the obligation of Lenders to make Loans pursuant hereto
shall have terminated pursuant to Section 11.1 and thereafter so long
as any Loan made pursuant hereto shall be outstanding or any amount
shall be payable hereunder by Rollins, except as the Lenders may
otherwise consent or agree in writing:
8.1 Indebtedness to Net Worth Ratio. Rollins will not have
outstanding at any time Senior Indebtedness which in the aggregate
exceeds 375% of Net Worth of Rollins. For purposes of this Section
8.1, Net Worth, as defined in Section 16.29, shall include 50% of
Rollins' Deferred Income Taxes.
8.2 Disposition of Properties or Assets. Rollins will not sell,
lease, transfer or otherwise dispose of all or any substantial part
of its property or assets otherwise than in the ordinary course of
business, to any Person.
8.3 Merger, Consolidation. Rollins will not merge into or,
except as provided in Section 8.4, consolidate with any Corporation.
8.4 Business Acquisitions. Rollins will not acquire any of the
voting stock or any of the substantial assets or business of any
Person, or permit any Corporation to merge into or consolidate with
Rollins, if the consideration payable by Rollins therefor or in
connection therewith exceeds or may exceed an amount equal to fifteen
percent (15%) of the Net Worth of Rollins as set forth in the latest
report furnished pursuant to Section 7.6 herein. If such
consideration shall be payable in securities or property other than
cash, the value thereof shall be determined in any reasonable manner
approved by the Lenders; provided that if such consideration shall be
payable in securities of an issuer of a class which is listed on a
national securities exchange, the value thereof, for the purpose of
this Agreement, will be the last sale price thereof on the principal
securities exchange on which such securities are listed on the day as
of which the amount of such consideration is fixed, or if no such
sale takes place on such day, the closing bid price therefor on such
exchange. If the amount of such consideration is not fixed on or
before the time for the first payment of any thereof, then, for the
purposes of this Section 8.4 such amount will be deemed to be the
maximum amount payable pursuant to the agreement therefor and shall
be deemed to have been "fixed" as of the date of such agreement.
8.5 Business of Rollins. Rollins will not engage directly or
indirectly through any Subsidiary in any business other than set
forth in Section 6.2.
8.6 Limitation on Payments to Stockholder. Rollins will not,
directly or indirectly, after the date hereof, make any distribution,
advance, investment or other payment to any Person who is, either
directly or through any Subsidiary thereof, a stockholder of Rollins,
or to any Subsidiary of any such Person (other than Subsidiaries of
Rollins) including any payment by way of any Loan, acquisition of any
security, dividend, redemption or other acquisition of shares of its
capital stock, consulting or management fees, or otherwise which
would, in the aggregate, exceed the sum of the amount of advances by
such Person to Rollins made after September 30, 1976, plus interest
thereon at a rate not in excess of the rate provided for in the first
sentence of Section 1.4. However, the foregoing will not preclude
the declaration and payment of any dividend or distribution on the
capital stock of Rollins, provided that such dividend or distribution
will not cause Rollins to be in non-compliance with any provision of
Article Seven or Article Eight of this Agreement immediately after
such distribution.
8.7 Leases to Affiliates. Rollins will not, directly or
indirectly, lease to Affiliates Motor Vehicles having a Net Book
Value in the aggregate of more than five percent (5%) of the Net Book
Value of all Motor Vehicles owned by Rollins.
8.8 Use of Proceeds. Rollins will not use, or permit the use
of, the proceeds of any Loan hereunder for the purpose of buying or
carrying any "margin stock" as such term is used in Regulation U of
the Board of Governors of the Federal Reserve System.
8.9 Double Negative Pledge. Rollins will not, directly or
indirectly, incur or assume any obligations to any third party which
would prohibit or restrict the ability of Rollins to grant any lien
in favor of the Lenders.
8.10 Restriction on Liens. Rollins shall not, create,
incur, assume or suffer to exist, or permit any of its Subsidiaries
to create, incur, assume or suffer to exist, any lien on its
respective property, revenues or assets, whether now owned or
hereafter acquired except:
(a) liens upon or in any property acquired by Rollins or
any of its Subsidiaries in the ordinary course of business to secure
the purchase price of such property or to secure any obligation
incurred solely for the purpose of financing the acquisition of such
property;
(b) easements, right-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in
the aggregate, are not substantial in amount, and which do not in any
case materially detract from the value of the property subject
thereto or interfere with the conduct of the businesses of Rollins
and its Subsidiaries.
9. CONDITIONS OF CLOSING.
9.1 First Loan. The obligation of the Lenders to make the first
Loan requested by Rollins hereunder shall be subject to the
following:
(a) With respect to Facility A Loans, the Lenders shall
have received counterparts of this Agreement, each duly executed by
Rollins and with respect to Facility B Loans, if any, each Lender
shall have received such documentation relating thereto as each such
Lender may, in its discretion, require in connection therewith.
(b) Resolutions. The Board of Directors of Rollins shall
have adopted appropriate resolutions authorizing the execution and
delivery of this Agreement and the taking of all actions called for
herein and certified copies of same shall have been furnished to the
Lenders.
(c) Opinion Letter. Counsel for Rollins shall have
furnished opinions in form and substance satisfactory to the Lenders
covering the following matters:
(i) Rollins is duly incorporated and in good standing
and validly existing under the laws of the State of Delaware and has
corporate power to carry on its business as described in Section 6.2
herein.
(ii) This Agreement has been duly authorized,
executed and delivered by Rollins and is a valid instrument legally
binding upon Rollins and enforceable in accordance with its terms.
(iii) The execution and performance of this
Agreement does not violate the articles of incorporation or by-laws
of Rollins or, to the knowledge of counsel, any agreement to which
Rollins is a party.
(iv) The representations and warranties contained
in Sections 6.1, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8 and 6.9 are true and
correct in all material respects. In this regard, Counsel may rely
upon the certificates of the President and Chief Financial Officer of
Rollins with respect to that portion of Section 6.1 dealing with
franchise and similar taxes and Section 6.8.
(d) Prior Loans. On the date of the execution of this
Agreement, the existing indebtedness of Rollins pursuant to the Bank
Credit Agreement dated as of April 1, 1995, as amended shall be
repaid in full from the proceeds of the credit available under this
Agreement.
9.2 First and Subsequent Loans. The obligation of the Lenders
to make any Facility A Loan requested by Rollins hereunder (including
the first such Loan) shall be subject to the fulfillment at or prior
to the Loan Date thereof of the following conditions:
(a) Representations Correct. All the representations and
warranties of Rollins set forth herein or made hereunder shall be
correct as of such Loan Date except for such changes therein as may
be satisfactory to Lenders (and the making by Rollins of a Loan
Request therefor shall be deemed a certificate by it to the foregoing
effect).
(b) No Default. No condition or event shall exist (before
or after giving effect to any such Loan Request) or have occurred
which constitutes an Event of Default or a Default, and the making by
Rollins of a Loan Request for such Loan shall be deemed a certificate
by it to the foregoing effect).
(c) Principal Place of Business. The principal place of
business of Rollins shall be located in the State of Delaware.
9.3 Facility B Loans. The Lenders shall have no obligation to
make any Facility B Loan notwithstanding the satisfaction of the
conditions set forth in Sections 9.1 and 9.2 hereof but may do so or
decline to do so in their sole individual discretion and may, in
agreeing to make any Facility B Loans, if at all, impose conditions
to such Loan or Loans in addition to those set forth in Sections 9.1
and 9.2.
10. DEFAULTS AND REMEDIES.
10.1 Events of Default. The occurrence of any one or more
of the following events shall constitute an Event of Default
hereunder:
(a) The failure of Rollins to pay any amount of principal
of any Loan as and when due or any interest on any Loan made
hereunder or any other amount payable pursuant hereto within 3 days
after such payment may be due, whether at the maturity thereof or by
reason of any requirement for the prepayment thereof, by acceleration
or otherwise;
(b) Rollins shall default in the performance, observance or
fulfillment of any covenant contained in Sections 7.1, 7.15, 7.16,
7.17 or Section 8.1 through 8.10 hereof, or Rollins shall default in
the performance, observance or fulfillment of any other covenant
contained herein and such later default shall continue for ten days
unremedied;
(c) The adjudication of Rollins or any of its Subsidiaries
as a bankrupt or insolvent, or the entry of an order appointing a
receiver or trustee for any such Person or any of its property or
approving a petition seeking reorganization or other similar relief
under the bankruptcy or other similar laws of the United States or
any state or any other competent jurisdiction, or the filing by any
such Person of a petition, answer or other document seeking or
consenting to any of the foregoing, or the filing by any such Person
of a petition to take advantage of any debtor's act, or the making by
any such Person of a general assignment for the benefit of creditors
or admitting in writing its inability to pay its debts as they
mature;
(d) The entry of a final judgment for the payment of money
against Rollins or any of its Subsidiaries, which, to the extent not
covered by insurance or cash reserved therefor pursuant to a self-
insurance program exceeds $500,000 in any one case or in the
aggregate for all such judgments and, within 60 days after such
entry, shall not have been discharged or execution thereof stayed
pending appeal or which shall not have been discharged within 60 days
after the expiration of any such stay;
(e) The issue of attachment, garnishment or any execution
process or the making of any levy against, any property of Rollins or
any of its Subsidiaries which, except in the case of such property
held by, or owed to such Person by, any of the Lenders, within 60
days (but prior to any sale or other disposition pursuant to such
process) thereafter shall not have been discharged;
(f) The occurrence of any event in respect of any
Indebtedness, having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all
creditors under any combined or syndicated credit arrangement) of
$10,000,000 or more which causes or permits the holder thereof to
cause such Indebtedness to become due prior to its stated maturity.
(g) Any representation or warranty by Rollins herein is
discovered to be untrue as of the date of this Agreement, or any
statement, certificate or data furnished by Rollins pursuant hereto
is discovered to be untrue as of the date as of which the facts
therein set forth are stated or certified (or deemed so to be);
(h) Rollins Truck Leasing Corp. shall cease to be the
owner, of record and beneficially, of at least 80% of the outstanding
shares of capital stock of Rollins, which shall represent at least
80% of the combined voting power of all classes of capital stock of
Rollins entitled to vote; and
(i) The voluntary termination of any pension, profit
sharing and other employee benefit plan maintained for the benefit of
Rollins or any Subsidiary and at such termination, there exists a
funding deficiency.
10.2 Effect of Event of Default. Upon the occurrence of any
Event of Default described in subsections (a), (b) or (d) through (i)
of Section 10.1, the Lenders shall be under no further obligation to
make Loans hereunder, and each Lender may declare the unpaid
principal balance of all Loans made by such Lender then outstanding
and interest accrued thereon and all other liabilities of Rollins to
such Lender hereunder to be forthwith due and payable, and the same
shall thereupon become and be immediately due and payable without
presentment, demand, protest or notice of any kind, all of which are
expressly waived. Upon the occurrence of an Event of Default
specified in subsection (c) of Section 10.1, the Lenders shall be
under no further obligation to make Loans hereunder and the unpaid
principal balance of all Loans outstanding hereunder and interest
accrued thereon, and all other liabilities of Rollins hereunder shall
be immediately due and payable, without presentment, demand, protest
or notice of any kind, all of which are hereby expressly waived.
10.3 Uniform Commercial Code. The Lenders and the Agent for
the Lenders shall have and may exercise the rights and remedies of a
secured party under the Pennsylvania Uniform Commercial Code.
10.4 Delay or Omission Not Waiver. No delay or omission on
the part of any of the Lenders to exercise any right upon the
occurrence of any Event of Default shall impair any such right or
shall be construed to be a waiver of any such Default or any
acquiescence therein. No waiver of any Default hereunder shall
affect any later Default or shall impair any of the Lenders' rights
hereunder. No single, partial or full exercise of any right by the
Lenders shall preclude further or other exercise thereof.
10.5 Remedies Cumulative. The remedies provided for herein
shall not be deemed exclusive, but shall be cumulative and shall be
in addition to all other remedies existing, in the Lenders' favor, at
law or in equity.
11. TERMINATION.
11.1 Termination by Rollins. Rollins may at any time
terminate all of the Lenders' obligations to make Loans pursuant to
this Agreement by giving notice thereof to the Lenders, stating the
date not less than ten (10) days thereafter when such termination
shall become effective. On the date specified for termination in
said notice, Rollins shall pay in full the Loans, together with
interest thereon through said date, and all other obligations
outstanding under this Agreement.
12. PAYMENTS OF CERTAIN EXPENSES BY ROLLINS.
12.1 Expenses in Connection with Enforcement. Rollins will
pay all reasonable expenses of the Lenders, including attorneys fees,
incurred by Lenders in enforcing their rights and remedies hereunder
or under any Lease assigned to the Lenders pursuant hereto. In the
event that Lenders shall bring suit (or file any claim in any
bankruptcy, reorganization, insolvency or other proceeding) to
enforce any of their rights hereunder or under any such Lease and
shall be entitled to judgment (or other recovery) in such action (or
other proceeding) the Lenders may recover, in addition to all other
amounts payable hereunder or under such Lease, their respective
expenses in connection therewith, including attorneys fees, and the
amount of such expenses shall be included in such judgment (or other
form of award).
13. SURVIVAL OF COVENANTS: SUCCESSORS AND ASSIGNS.
13.1 Survival of Covenants, Etc. All covenants, agreements,
representations and warranties made by Rollins in this Agreement or
made in writing by or on behalf of Rollins in connection with any
transaction contemplated hereby shall survive the execution and
delivery of this Agreement, any investigation at any time made by the
Lenders or on its behalf and the making by the Lenders of the Loans
contemplated hereby, and shall continue in full force and effect
until all amounts payable by Rollins pursuant hereto have been paid
in full. All statements contained in any certificate, statement or
other document delivered by or on behalf of Rollins pursuant hereto
or in connection with the transactions contemplated hereby shall be
deemed representations and warranties by Rollins hereunder. All such
covenants, agreements, representations and warranties shall be
binding upon any successors and assigns of Rollins.
13.2 No Assignment by Rollins. Rollins may not assign any
of its rights hereunder without the consent of all Lenders.
14. MODIFICATION: WAIVER.
14.1 Modification of this Agreement. This Agreement may not
be changed orally, but only by an agreement in writing and signed by
the party against whom enforcement of any waiver, change,
modification or discharge is sought. This Agreement may be modified
or any provision hereunder may be waived by the agreement of the
Lenders and Rollins.
15. COMMUNICATIONS AND NOTICES.
15.1 Form, Addresses, Etc. All notices, requests and other
communications given or made in connection with this Agreement or any
transaction contemplated hereby shall be in writing and, unless
actual receipt is stated herein to be required, shall be deemed to
have been validly given if mailed, first class, postage prepaid,
addressed as follows, or delivered to the individual to whose
attention notices to any party are to be addressed, until some other
address (or individual for attention) shall have been designated by
notice given by a party to the others:
To Rollins:
Rollins Leasing Corp.
One Rollins Plaza, P. O. Box 1791
Wilmington, DE 19899
Attention: President
To Lenders:
First Union National Bank
1339 Chestnut Street
Philadelphia, PA 19107
Attn: Grainne Pergolini
BankBoston, N.A.
100 Federal Street
Boston, MA 02110
Attn: Tony Zhang
16. DEFINITIONS. The following words and phrases as used in
capitalized form in this Agreement and in any amendments hereof,
whether in the singular or plural, shall have the meanings indicated:
16.1 "Acquisition Cost" of any item of Eligible Equipment
means an amount equal to the sum of the factory delivered price,
delivery and handling charges and the cost of any original items
which may be added thereto (including but not limited to tires and
tubes), the cost of labor, materials, parts, accessories in respect
thereto, any excise tax on Eligible Equipment and any sales and use
taxes payable in respect of Rollins' purchase thereof, and other
similar charges and expenses required to make such Eligible Equipment
ready for use by and to complete delivery thereof to Rollins.
16.2 "Affiliate", as applied to any Person, means any other
Person which is not a Subsidiary of Rollins and which directly, or
indirectly through one or more intermediaries, is controlled by
Rollins Truck Leasing Corp.
16.3 "Aggregate Amortization" of any item of Eligible
Equipment means an amount equal to the product of the Monthly
Amortization Figure of such Eligible Equipment multiplied by the
number of months elapsed since the date of acquisition thereof by
Rollins.
16.4 "Amortized Value" of any item of Eligible Equipment at
any time means the
Acquisition Cost of such item less the Aggregate Amortization thereof
at such time.
16.5 "Amortization Period" means the period beginning on the
Revolving Expiration Date and ending on the Maturity Date.
16.6 "Assigned Eligible Equipment" is a Vehicle as to which
Rollins shall have executed and delivered a Mortgage in form and
substance as required by Section 4.
16.7 "Borrowing Base Amount" of Rollins at any time means an
amount equal to ninety percent (90%) of the aggregate Net Book Value
of all items of Eligible Equipment or Assigned Eligible Equipment, as
the case may be, owned by Rollins at such time, which are:
(A) Free and clear of all liens, security interests and
encumbrances, except for security interests which may be granted to
Lenders hereby or pursuant hereto;
(B) In reasonably good working order and condition or, if
not in such condition, are repairable to such state within a
reasonable period of time and Rollins has caused or arranged for such
repairs to be commenced and completed within such time; and
(C) Subject to Leases in Good Standing, except that
"Borrowing Base" may include the Net Book Value of Motor Vehicles in
Rollins' Commercial Rental Fleet which, in the aggregate, does not
exceed 40% of the aggregate Net Book Value of all Motor Vehicles
included in such "Borrowing Base;" provided that not more than
$5,000,000 aggregate Net Book Value of Eligible Equipment or Assigned
Eligible Equipment as the case may be, of the kind referred to in
clause (iii) of Section 16.15 shall be included in such Borrowing
Base at any time; and provided further that the lessee or other
obligor under any such Lease is not an Affiliate of Rollins.
16.8 "Combined Debt" means the maximum aggregate principal
amount of the Loans outstanding at any time hereunder.
16.9 "Commitment Amount" means $50,000,000 in the aggregate
and $25,000,000 with respect to each Lender as the same may be
reduced from time to time.
16.10 "Corporation" means a corporation, partnership, trust,
unincorporated organization, association, or joint stock company.
16.11 "Current Assets" of any Person means the current assets
properly appearing as such on a consolidated balance sheet of such
Person and its Subsidiaries prepared in accordance with generally
accepted accounting principles except that Current Assets shall not
include investments in securities other than direct obligations of,
or obligations guaranteed by, the United States of America and
securities which are readily marketable and, in any event, only at
the market value thereof.
16.12 "Current Liabilities" of any Person means the current
liabilities properly appearing as such on a consolidated balance
sheet of such Person and its Subsidiaries prepared in accordance with
generally accepted accounting principles except that in the case of
Rollins and its Subsidiaries, current liabilities shall not include
indebtedness of Rollins hereunder, Indebtedness of Rollins incurred
to a banking institution or to a vendor of equipment (or its finance
affiliate) to finance the acquisition cost of equipment acquired for
leasing and secured by such equipment.
16.13 "Default" means an event specified in Section 10.1
which, but for the lapse of time or the giving of notice or both
would be an Event of Default.
16.14 "Commercial Rental Fleet" means the Motor Vehicles
which are Equipment but are not subject to Leases in Good Standing.
6 16.15 "Eligible Equipment" means (i) Motor Vehicles, (ii)
other equipment used or useful in the transportation of property or
persons by land, sea or air (iii) other commercial and industrial
equipment provided the aggregate Net Book Value of such equipment
leased pursuant to one or more Leases with one lessee and its
affiliates shall not exceed $250,000; and (iv) such other commercial
and industrial equipment as may be agreed upon by Rollins and Lenders
from time to time; provided that the amortization period for any
equipment referred to in (iii) and (iv) above has been established by
or pursuant to Section 16.25.
16.16 "Event of Default" means each of the events specified
in Section 10.1.
16.17 "Indebtedness", as applied to a Person, means (a) all
items, except items of capital stock or of surplus, which in
accordance with generally accepted accounting principles would be
included in determining total liabilities as shown on the liability
side of a balance sheet of such Person as at the date as of which
Indebtedness is to be determined, excluding all current liabilities
of such Person (except current liabilities which represent
liabilities for borrowed funds), liabilities or reserves for deferred
income tax and reserves for liabilities pursuant to a self-insurance
program of such Person, (b) to the extent not included in the
foregoing, all indebtedness, obligations, and liabilities secured by
any mortgage, pledge, lien, conditional sale or other title retention
agreement or mortgage, pledge, lien, conditional sale or other title
retention agreement or other security interest to which any property
or asset owned or held by such Person is subject, whether or not the
indebtedness, obligations or liabilities secured thereby shall have
been assumed, (c) to the extent not included in the foregoing, all
indebtedness, obligations and liabilities of others which such Person
has directly or indirectly guaranteed, endorsed (other than for
collection or deposit in the ordinary course of business),
discounted, sold with recourse or for less than face value or agreed
(contingently or otherwise) to purchase or repurchase or otherwise
acquire or in respect of which such Person has agreed to supply or
advance funds (whether by way of Loan, stock purchase, capital
contribution or otherwise) or otherwise to become directly or
indirectly liable, and (d) to the extent not included in the
foregoing, lease obligations capitalized according to FASB 13.
16.18 "Lease" means a lease of Equipment, of which Rollins is
lessor and a responsible commercial user is lessee, pursuant to which
such lessee is obligated to make periodic rent payments to Rollins
during a fixed minimum term which payments, together with any lump
sum payments which such lessee is obligated to make within such term
on account of a purchase obligation or otherwise, will be (i) each in
an amount no less than the sum of the Monthly Amortization figures of
such Eligible Equipment during each period covered thereby plus an
interest factor at the rate of 7% per annum thereon for such period
and (ii) in the aggregate not less than the Acquisition Cost thereof
plus an interest factor of 7% per annum on the Amortized Value
thereof during such term.
16.19 "Lease in Good Standing" means a Lease under which no
default has occurred which remains uncured for a period of more than
90 days except for defaults or alleged defaults which are subject to
a bona fide dispute by the lessee.
16.20 "Lenders" means First Union National Bank and
BankBoston, N.A.
16.21 "LIBOR" is the rate for U. S. dollar deposits of 1
month as reported by Telerate page 3750 as of 11:00 a.m., London
time, on the second London business day before the relevant interest
period begins (or if not so reported, then as determined by Lender
from another bank or interbank quotation).
16.22 "Loan" means any loan by a Lender to Rollins under this
Agreement and "Loans" means all loans made by the Lenders or either
of them, as the context may require, under this Agreement.
16.23 "Loan Account" means the account maintained on the
books of each Lender pursuant to Section 1.5.
16.24 "Loan Date" means the date fixed for the making of any
Loan by notice from Rollins pursuant to Section 1.2.
16.25 "Loan Request" means a request by Rollins for a Loan
given pursuant to Section 1.3 in the form prescribed by Section 1.3.
16.26 "Maturity Date" means the date which is four (4) years
from the Revolving Expiration Date.
16.27 Monthly Amortization Figure for 90% of Eligible
Equipment means an amount equal to the Acquisition Cost thereof, less
salvage value applicable thereto, divided by the number of months of
the period in which the Acquisition Cost is to be amortized. Unless
otherwise agreed in writing by the Lenders with respect to any item
or type of Eligible Equipment, Acquisition Cost (without any
provision for salvage value) of the following types of Equipment
acquired new and unused by Rollins will be amortized in a period
which shall be the same period as used in computing depreciation in
its books of record and account provided that such period will not
exceed:
(i) 120 months (10 years) for tractors and straight trucks,
(ii)168 months (14 years) for trailers and bodies,
(iii)180 months (15 years) for standard specification
refrigerated trailers, and
(iv) 96 months (8 years) for pick-up trucks and panel
trucks.
The amortization period and salvage value for any other item of
Eligible Equipment will be such period and percentage of Acquisition
Cost as may be agreed upon in writing by Rollins and the Lenders from
time to time. If at any time improvements are made to any such item
of Eligible Equipment which are capitalized in accordance with
generally accepted accounting principles, the Monthly Amortization
Figure for such item of Eligible Equipment shall be increased by an
amount equal to the cost of such improvements divided by the number
of months remaining in the amortization period for such item at the
time such improvement is made.
16.28 "Mortgage" shall mean a chattel mortgage of or other
appropriate security agreement confirming the grant of a security
interest in one or more Vehicles to First Union, as collateral
security in accordance with Section 4.
16.29 "Motor Vehicle" means (i) a new and unused automobile,
van, truck, tractor, trailer, bus, or other similar unit, and all
related equipment and accessories, now or hereafter owned by Rollins
and (ii) a used automobile, van, truck, tractor, trailer, bus, or
other similar unit, and all related equipment and accessories
acquired by Rollins from one of its customers for the purpose of
leasing such item back to such customer pursuant to a Lease.
16.30 "Net Book Value" of Eligible Equipment or Assigned
Eligible Equipment, as the case may be, at any time means the
Acquisition Cost of such Eligible Equipment plus (i) the cost of
improvements thereto capitalizable in accordance with generally
accepted accounting principles less (ii) the Aggregate Amortization
thereof at such time.
16.31 "Net Worth" of any Person means the excess of all
assets over all liabilities properly appearing on a consolidated
balance sheet of such Person and its Subsidiaries prepared in
accordance with generally accepted accounting principles.
16.32 "Person" means an individual, a corporation or a
government or political subdivision or agency thereof.
16.33 "Prime Rate" means the rate per annum announced from
time to time by each Lender as its Prime Rate, and as to BankBoston,
its "Reference Rate", such rate to change automatically from time to
time effective as of the effective date of any changes in such Prime
Rate or Reference Rate as the case may be.
16.34 "Revolving Expiration Date" shall mean December 10,
1999 or such later date as may be agreed upon pursuant to Section
1.1(d).
16.35 "Senior Indebtedness", as applied to any Person, means
all Indebtedness of such Person other than Subordinated Indebtedness.
16.36 "Subordinated Indebtedness", as applied to any Person,
means any Promissory Note, debenture or other evidence of
indebtedness of such Person for money borrowed which contains
subordination provisions satisfactory in form and substance to the
Lenders (such satisfaction to be evidenced only by the Lenders
consent in writing to such terms).
16.37 "Subsidiary" means, with respect to any Person, (i) a
corporation incorporated within the United States of America or
Canada, (ii) the major portion of whose operations are carried on,
and the major portion of whose property is located, within the United
States of America or Canada, or both, and (iii) all of whose
outstanding shares of capital stock (other than directors' qualifying
shares) are owned by one or more of such Person and corporations
which meet the qualifications of clauses (i) and (ii) of this
sentence and all of whose outstanding shares of capital stock (other
than directors' qualifying shares) are owned by such Person, either
directly or through any corporation or series of corporations.
16.38 "Working Capital", as applied to any Person, means the
excess of Current Assets over Current Liabilities of such Person.
16.39 "Year 2000 Problem" shall mean the risk that computer
applications may be unable to recognize, and perform properly, date-
sensitive functions involving certain dates prior to and after
December 31, 1999.
16.40 "Agent for the Lenders" means the agent for the Lenders
appointed pursuant to Section 4.2.
16.41 "Facility A" means a 364-day revolving credit facility
converting to a four-year, fully amortizing term Loan as defined in
Section 1.
16.42 "Facility B" means uncommitted, as offered line of
credit, subject in all respects to each Lender's respective
discretion. Advances, if any, made under or pursuant to Facility B
shall be subject to the terms and provisions of (i) a Note to be
executed by Borrower evidencing such advance, (ii) this Bank Credit
Agreement; and (iii) such other conditions or provisions as either
Lender may require, in its sole discretion as defined in Section
1.1(b).
17. HOLIDAYS
17.1 Holidays. If the date provided herein for the payment
of any amount or the taking of any action falls on a Saturday, Sunday
or public holiday at the place for such payment or action, then the
due date for such payment or action will be the next preceding
business day.
18. LAW GOVERNING
18.1 Pennsylvania Law. This Agreement shall be construed in
accordance with and governed by the laws of the Commonwealth of
Pennsylvania.
19. WAIVER OF JURY TRIAL
19.1 Waiver of Jury Trial. Each undersigned party hereby
waives, and Lessor by its acceptance hereof thereby waives, trial by
jury in any legal proceeding involving, directly or indirectly, any
matter (whether sounding in tort, contract or otherwise) in any way
arising out of or related to this Agreement or the relationship
established hereunder. This provision is a material inducement for
Lessor to enter into, accept or rely upon this Agreement.
20. HEADINGS.
20.1 Headings Not Part of Agreement. The headings of the
Articles, Sections and paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part of this
Agreement.
21. COUNTERPARTS.
21.1 Counterparts. This Agreement may be executed in three
or more counterparts, and all such counterparts shall constitute one
and the same instrument.
EXECUTED as of the date first above written.
CORPORATE SEAL ROLLINS LEASING CORP.
Attest:___________________________
BY:_______________________________
FIRST UNION NATIONAL BANK
BY:_______________________________
BANKBOSTON, N.A.
BY:_______________________________
<PAGE>
EXHIBIT A
LOAN REQUEST
________________________
[Date]
To: First Union National Bank /__/
(Check one)
BankBoston, N.A. /__/
To Whom It May Concern:
The undersigned, ________________________________, refers to the
Bank Credit Agreement, dated as of ________________ (the "Credit
Agreement"; the terms defined therein being used herein as therein
defined), between the undersigned and BankBoston, N.A. or First Union
National Bank and hereby gives you notice pursuant to Section 1.3 of
the Credit Agreement that the undersigned hereby requests a Loan
under the Credit Agreement and, in that connection, sets forth below
the information relating to such Loan, as required by Section 1.3 of
the Credit Agreement. The undersigned also represents that the
requested borrowings will not exceed the Borrowing Base Amount at any
time.
Amount of the Loan requested ________________________
Interest rate option ________________________
________________________
Loan date ________________________
Principal amount of Loans outstanding
at the date of this Loan Request ________________________
Other information requested by Lender ________________________
Interest period ________________________
Reference Facility A /__/
(Check one)
B /__/
Very truly yours,
________________________________
By:_____________________________
Title:
<PAGE>
EXHIBIT B
PENDING MATERIAL LITIGATION
None.
AMENDMENT NO. 1
AMENDMENT NO. 1 (this "Amendment"), dated as of February 4, 1999, to the
Bank Credit Agreement (as amended and in effect from time to time, the "Credit
Agreement"), by and between Rollins Leasing Corp., a Delaware corporation (the
"Borrower"), First Union National Bank, a national banking association
("First Union") and BankBoston, N.A., a national banking association
("BankBoston") (each of First Union and BankBoston being referred to
hereinafter as a "Lender" and collectively as the "Lenders").
WHEREAS, the Borrower has requested that the Lenders agree to amend
certain of the terms and conditions of the Credit Agreement; and
WHEREAS, the Lenders have agreed, subject to the satisfaction of the
conditions set forth herein, to amend certain of the provisions of the Credit
Agreement; and
WHEREAS, capitalized terms used and not defined herein shall have the
meanings ascribed thereto in the Credit Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. AMENDMENTS TO THE CREDIT AGREEMENT.
Section 1.1. Interest. The Credit Agreement is hereby amended by
deleting Section 1.4 thereof in its entirety and substituting in lieu thereof
the following new Section 1.4:
1.4 Interest. (a) Outstanding amounts under Facility A
shall accrue interest according to the following options, as selected by the
Borrower, and Facility B Loans, if any,
shall accrue interest at the option described in paragraph (iv) below:
(i) Prime Rate Option. A rate per annum (computed on the
basis of the actual number of days elapsed in a year of 365 or 366 days) for
each day equal to the Prime Rate.
(ii) Federal Funds Rate Option. A rate per annum
(calculated on the basis of the actual number of days elapsed in a year of
365 or 366 days) equal to the Federal Funds Rate plus an additional spread as
quoted separately by each Lender as of the date of each Loan.
(iii) Money Market Rate Option. A rate per annum (calculated
on the basis of the actual number of days elapsed in a year of 365 or
366 days) equal to the Money Market Rate plus an additional spread as quoted
separately by each Lender as of the date of each Loan.
(iv) As-Offered Rate Option. A rate per annum (calculated
on the basis of the actual number of days elapsed in a year of 360 days)
equal to LIBOR plus an additional spread as quoted separately by each Lender
as of the date of each Loan.
(b) The additional spread applicable to any Loan bearing
interest at the Federal Funds Rate Option, the Money Market Rate Option or
the As-Offered Rate Option shall be subject to adjustment by each Lender upon
three (3) business days prior notice to the Borrower.
Section 1.2. Definitions.
(a) The definition of "Prime Rate" set forth in Section 16 of
the Credit Agreement is hereby amended by deleting the words "Reference Rate"
occurring in the second line thereof and substituting in lieu thereof the
words "Base Rate."
(b) Section 16 of the Credit Agreement is hereby further
amended by inserting the following new Sections therein:
16.43 "Base Rate" means the higher of (i) the annual rate of
interest for commercial loans established and publicly announced by
First Union and BankBoston, as their "base rate" and (ii) one-half of one
percent (1/2%) above the Federal Funds Rate.
16.44 "Federal Funds Rate" means, for each Lender and with
respect to any Loan for any day, the rate per annum equal to the weighted
average of the rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers, as published
for such day (or, if such day is not a business day, for the next preceding
business day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day that is a business day, the average of the
quotations for such day on such transactions received by such Lender from
three funds brokers of recognized standing selected by such Lender.
16.45 "Money Market Rate" means, for each Lender and with
respect to any Loan for any day, the rate of interest quoted by the money
market desk of such Lender for overnight loans in an amount equal to such Loan.
Section 2. CONDITIONS TO EFFECTIVENESS. This Amendment shall
become effective upon receipt by each of the Lenders of a duly executed
signature page hereto from the Borrower and each of the Lenders.
Section 3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants to the Lenders as follows:
Section 3.1. Representations and Warranties in Credit Agreement.
The representations and warranties of the Borrower contained in the Credit
Agreement, as amended hereby, were true and correct in all material respects
when made and continue to be true and correct in all material respects
on the date hereof, except as such representations and warranties are
affected by the transactions contemplated or permitted by the Credit
Agreement, as amended hereby, or are expressly made as of a prior date.
Section 3.2. Authority, No Conflicts, etc. The execution, delivery
and performance by the Borrower of this Amendment and the consummation of the
transactions contemplated hereby, (i) are within the corporate powers of the
Borrower and have been duly authorized by all necessary corporate action on
the part of the Borrower, (ii) do not require any approval or consent of,
or notice to or filing with, any governmental agency or authority, any court
or other tribunal, or any other Person which has not been given or obtained,
(iii) do not violate any provisions of any law, rule, or regulation or
any provision of any order, judgment, injunction, or decree presently in
effect, or any provision of the charter documents or by-laws of the Borrower,
(iv) do not result in any breach of or constitute a default under any other
agreement or instrument to which the Borrower is a party or by which it or
any of its properties are bound, and (v) do not result in or require the
creation or imposition of any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance of any nature upon any of the assets
or properties of the Borrower.
Section 4. NO OTHER AMENDMENTS OR WAIVERS. Except as expressly
provided in this Amendment, all of the terms and conditions of the Credit
Agreement shall remain in full force and effect. This Amendment does not,
and shall not, constitute a waiver of any present or future Default
or Event of Default. Nothing in this Amendment shall be construed to imply any
willingness on the part of the Lenders to grant any similar or other future
amendment of any of the terms and conditions of the Credit Agreement.
Section 5. EXECUTION IN COUNTERPARTS. This Amendment may be
executed in any number of counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an original,
but all of which together shall constitute one instrument. In proving
this Amendment, it shall not be necessary to produce or account for more than
one such counterpart signed by the party against whom enforcement is sought.
Section 6. EFFECTIVE DATE. Subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, this Amendment shall be
deemed to be effective as of the date first above written.
Section 7. GOVERNING LAW. This Amendment shall be deemed to be a
contract under the laws of the Commonwealth of Pennsylvania and shall for all
purposes be construed in accordance with and governed by the internal laws of
said Commonwealth, without reference to principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
ROLLINS LEASING CORP.
Attest:_____________________ By: ______________________
Title: ______________________
Name: _______________________
FIRST UNION NATIONAL BANK
By: ____________________________
Title: _________________________
Name: ___________________________
BANKBOSTON, N.A.
By: _____________________________
Title: __________________________
Name: ____________________________
AMENDMENT NO. 2
AMENDMENT NO. 2 (this "Amendment"), dated as of June 15, 1999, to the Bank
Credit Agreement (as amended and in effect from time to time, the "Credit
Agreement"), by and between Rollins Leasing Corp., a Delaware corporation
(the "Borrower"), First Union National Bank, a national banking association
("First Union") and BankBoston, N.A., a national banking association
("BankBoston") (each of First Union and BankBoston being referred to
hereinafter as a "Lender" and collectively as the "Lenders").
WHEREAS, the Borrower has requested that the Lenders agree to
amend certain of the terms and conditions of the Credit Agreement; and
WHEREAS, the Lenders have agreed, subject to the satisfaction of the
conditions set forth herein, to amend certain of the provisions of the Credit
Agreement; and
WHEREAS, capitalized terms used and not defined herein shall have the
meanings ascribed thereto in the Credit Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. AMENDMENT TO THE CREDIT AGREEMENT.
Section 1.1 The Credit Agreement is hereby amended by deleting the
words "at all times" and substituting the words "at the end of each quarter"
in Section 7.15.
Section 1.2 The Credit Agreement is hereby amended by deleting the
words "at all times" and substituting the words "at the end of each quarter"
in Section 7.16.
Section 1.3 Current Ratio. The Credit Agreement is hereby amended by
deleting Section 7.17 thereof in its entirety.
Section 2. CONDITIONS TO EFFECTIVENESS. This Amendment shall become
effective upon receipt by each of the Lenders of a duly executed signature
page hereto from the Borrower and each of the Lenders.
Section 3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants to the Lenders as follows:
Section 3.1. Representations and Warranties in Credit Agreement.
The representations and warranties of the Borrower contained in the
Credit Agreement, as amended hereby, were true and correct in all material
respects when made and continue to be true and correct in all material
respects on the date hereof, except as such representations and warranties
are affected by the transactions contemplated or permitted by the Credit
Agreement, as amended hereby, or are expressly made as of a prior date.
Section 3.2. Authority, No Conflicts, etc. The execution, delivery
and performance by the Borrower of this Amendment and the consummation of the
transactions contemplated hereby, (i) are within the corporate powers of the
Borrower and have been duly authorized by all necessary corporate action on
the part of the Borrower, (ii) do not require any approval or consent of, or
notice to or filing with, any governmental agency or authority, any court or
other tribunal, or any other Person which has not been given or obtained,
(iii) do not violate any provisions of any law, rule, or regulation or any
provision of any order, judgment, injunction, or decree presently in effect,
or any provision of the charter documents or by-laws of the Borrower, (iv) do
not result in any breach of or constitute a default under any other agreement
or instrument to which the Borrower is a party or by which it or any of its
properties are bound, and (v) do not result in or require the creation or
imposition of any mortgage, deed of trust, pledge, lien, security interest
or other charge or encumbrance of any nature upon any of the assets or
properties of the Borrower.
Section 4. NO OTHER AMENDMENTS OR WAIVERS. Except as expressly
provided in this Amendment, all of the terms and conditions of the Credit
Agreement shall remain in full force and effect. This Amendment does not,
and shall not, constitute a waiver of any present or future Default or Event
of Default. Nothing in this Amendment shall be construed to imply any
willingness on the part of the Lenders to grant any similar or other future
amendment of any of the terms and conditions of the Credit Agreement.
Section 5. EXECUTION IN COUNTERPARTS. This Amendment may be executed
in any number of counterparts and by each party on a separate counterpart,
each of which when so executed and delivered shall be an original, but all
of which together shall constitute one instrument. In proving this
Amendment, it shall not be necessary to produce or account for more than one
such counterpart signed by the party against whom enforcement is sought.
Section 6. EFFECTIVE DATE. Subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, this Amendment shall
be deemed to be effective as of the date first above written.
Section 7. GOVERNING LAW. This Amendment shall be deemed to be a
contract under the laws of the Commonwealth of Pennsylvania and shall for all
purposes be construed in accordance with and governed by the internal laws
of said Commonwealth, without reference to principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
ROLLINS LEASING CORP.
Attest: _______________ By: __________________________
Title: __________________________
Name: ____________________________
FIRST UNION NATIONAL BANK
By: __________________________
Title: __________________________
Name: ____________________________
BANKBOSTON, N.A.
By: __________________________
Title: __________________________
Name: ____________________________
AMENDMENT NO. 3
This AMENDMENT NO. 3 (this "Amendment") to the Bank Credit Agreement
dated December 11, 1998 (as previously amended by Amendment No. 1 dated
February 4, 1999 and Amendment No. 2 dated June 15, 1999, collectively, the
"Credit Agreement"), is entered into as of October 28, 1999, by and between
Rollins Leasing Corp., a Delaware corporation (the "Rollins"), First Union
National Bank, a national banking association ("First Union") and
BankBoston, N.A., a national banking association ("BankBoston") (each of
First Union and BankBoston being referred to hereinafter as a "Lender" and
collectively as the "Lenders").
WHEREAS, the Lenders have requested that Rollins agree to amend certain
of the terms and conditions of the Credit Agreement, and Rollins has agreed
to such amendments in consideration of certain other extensions of credit;
and
WHEREAS, capitalized terms used and not defined herein shall have the
meanings ascribed thereto in the Credit Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. AMENDMENT TO THE CREDIT AGREEMENT.
Section 1.1 Section 1.1(a) of the Credit Agreement is hereby
amended by deleting the section in its entirety and replacing it with the
following:
Committed Loans ("Facility A") in an aggregate outstanding principal
amount of up to the lesser of:
(i) the Commitment Amount; and
(ii) the Borrowing Base in effect from time to time (the "Borrowing
Base Amount") less the sum of (x) the amount of the Loans outstanding
under Facility B, if any, and (y) all other indebtedness of Rollins
including but not limited to (a) guaranties by Rollins of Indebtedness
of others ("Guaranties"), (b) promissory notes payable by Rollins to
Rollins Truck Leasing Corporation (also referred to as "Rollins Notes
Securing Collateral Trust Debentures"), (c) the amount of Loans
outstanding under Facility A, and (d) the Stated Amount of outstanding
letters of credit and other similar instruments issued for the account
of Rollins pursuant to which Rollins is obligated to reimburse a bank
or other Person in respect of amounts paid or to be paid under the
letter of credit or similar instrument ("Letters of Credit") (the net
foregoing amount is referred to as the "Net Borrowing Base"). For the
purpose of the foregoing calculation of the amount of Indebtedness,
contingent obligations of Rollins, including but not limited to
Guaranties, will be deemed to be the full amount of the potential
liability, and liabilities under Letters of Credit shall be the Stated
Amount of the Letters of Credit.
Advances under Facility A will be divided equally between the Lenders
such that each Lender's commitment under Facility A will be equal to
half of the lesser of the foregoing subpart (i) and subpart (ii).
The availability of advances of Facility A shall be limited to the
lesser of (i) the Commitment Amount less the Stated Amount of
outstanding letters of credit issued by any other Lenders for the
account of Rollins less outstanding Loans under Facility A, and (ii)
the Net Borrowing Base.
Section 1.2 Section 4.1 of the Credit Agreement is hereby amended
by deleting the first eight lines of the Section and replacing it with the
following:
At any time after the date of this Agreement, any of the Lenders may,
by written notice to Rollins, require that all of Rollins'
Indebtedness to Lenders, be fully secured by Rollins. Upon delivery of
such notice by any Lender to Rollins, the Lenders shall have, and
Rollins shall and does hereby (effective upon the delivery of such
notice), assign, transfer and grant to the Lenders, jointly, a
security interest and first priority lien in and to the following and
all proceeds thereof, to secure the payment of all Indebtedness of
Rollins to the Lenders, now existing or arising in the future, (i) all
Eligible Equipment.
Section 1.3 The term "Exhibit B" appearing in Section 7.10 of
the Credit Agreement is replaced with the term "Exhibit C". A copy of Exhibit
C is attached to this Amendment and incorporated in the Credit Agreement by
reference.
Section 1.4 Line 13 of Section 7.10 of the Credit Agreement is
replaced in its entirety with the following:
Previously reported to any Lender; (iv) a schedule describing in
reasonable detail all Indebtedness of Rollins; and (v) a calculation
of the remaining Facility A availability under Section 1.1 of the
Credit Agreement.
Section 1.5 Section 16.17 of the Credit Agreement is replaced
in its entirety with the following:
16.17 "Indebtedness", as applied to a Person, means (a) all items,
except items of capital stock or of surplus, which in accordance
with generally accepted accounting principles would be included
in determining total liabilities as shown on the liability side
of a balance sheet of such person as at the date as of which
Indebtedness is to be determined, excluding all current
liabilities of such Person (except current liabilities which
represent liabilities for borrowed funds), liabilities or
reserves for deferred income tax and reserves for liabilities
pursuant to a self-insurance program of such person, (b) to the
extent not included into he foregoing, all indebtedness,
obligations, and liabilities secured by any mortgage, pledge,
lien, conditional sale or other title retention agreement, or
other security interest to which any property or asset owned or
held by such Person is subject, whether or not the indebtedness,
obligations or liabilities secured thereby shall have been,
assumed, (c) to the extent not included in the foregoing, all
indebtedness, obligations and liabilities of others which such
Person has directly or indirectly guaranteed, endorsed (other
than for collection or deposit in the ordinary course of
business), discounted, sold with recourse or for less than face
value or agreed (contingently or otherwise) to purchase or
repurchase or otherwise acquire or in respect of which such
Person has agreed to supply or advance funds (whether by way of
Loan, stock purchase, capital contribution or otherwise) or
otherwise to become directly or indirectly liable, (d) all
obligations to reimburse any bank or other Person in respect of
amounts paid or to be paid under a letter of credit or similar
instrument, and (e) to the extent not included in the foregoing,
lease obligations capitalized according to FASB 13.
Section 1.5 A new Section 16.46 is added to the credit Agreement
which provides as follows:
16.46 Stated Amount of each Letter of Credit shall, at any time
mean the maximum amount available to be drawn thereunder, in each case
determined without regard to whether the conditions to drawing could then
be met, but after giving effect to all previous drawings made thereunder.
Section 2. CONDITIONS TO EFFECTIVENESS. This Amendment shall
become effective upon receipt by each of the Lenders of a duly executed
signature page hereto from Rollins and each of the Lenders.
Section 3. REPRESENTATIONS AND WARRANTIES. Rollins hereby
represents and warrants to the Lenders as follows:
Section 3.1 Representations and Warranties in Credit Agreement.
The representations and warranties of Rollins contained in the Credit Agreement,
as amended hereby, are true and correct in all material respects when made
and continue to be true and correct in all material respects on the date
hereof, except as such representations and warranties are affected by the
transactions contemplated or permitted by the Credit Agreement, as amended
hereby, or are expressly made as of a prior date.
Section 3.2 Authority, No Conflicts, etc. The execution,
delivery and performance by Rollins of this Amendment and the consummation
of the transactions contemplated hereby, (i) are within the corporate powers
of Rollins and have been duly authorized by all necessary corporate action on
the part of Rollins, (ii) do not require any approval or consent of, or
notice to or filing with, any governmental agency or authority, any court
or other tribunal, or any other Person which has not been given or obtained,
(iii) do not violate any provisions of any law, rule, or regulation or any
provision of any order, judgment, injunction, or decree presently in effect,
or any provision of the charter documents or by-laws of Rollins, (iv) do not
result in any breach of or constitute a default under any other agreement
or instrument to which Rollins is a party or by which it or any of its
properties are bound, and (v) do not result in or require the creation or
imposition of any mortgage, deed of trust, pledge, lien, security interest
or other charge or encumbrance of any nature upon any of the assets or
properties of Rollins.
Section 4. NO OTHER AMENDMENTS OR WAIVERS. Rollins acknowledges
that except as expressly provided in this Amendment, all of the terms and
conditions of the Credit Agreement shall remain in full force and effect
without any defense, counterclaim, or right or claim of setoff. This
Amendment does not, and shall not, constitute a waiver of any present or
future Default or Event of Default. Nothing in this Amendment shall be
construed to imply any willingness on the part of the Lenders to grant any
similar or other future amendment of any of the terms and conditions of the
Credit Agreement.
Section 5. EXECUTION COUNTERPARTS. This Amendment may be executed
in any number of counterparts and by each party on a separate counterpart,
each of which when so executed and delivered shall be an original, but all
of which together shall constitute one instrument. In proving this
Amendment, it shall not be necessary to produce or account for more than one
such counterpart signed by the party against whom enforcement is sought.
Section 6. EFFECTIVE DATE. Subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, this Amendment shall be
deemed to be effective as of the date first above written.
Section 7. GOVERNING LAW. This Amendment shall be deemed to be a
contract under the laws of the Commonwealth of Pennsylvania and shall for
all purposes be construed in accordance with and governed by the internal
laws of said Commonwealth without reference to principles of conflicts of
law.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
ROLLINS LEASING CORP.
Attest: /s/ P. J. Bagley By: /s/ I. Larry Brown
Title: President
Name: I. Larry Brown
FIRST UNION NATIONAL BANK
By: /s/ Jane W. Workman
Title: Senior Vice President
Name: Jane W. Workman
BANKBOSTON, N.A.
By: /s/ Tony Zhang
Title: Vice President
Name: Tony Zhang
<TABLE>
EXHIBIT C
Consolidated Borrowing Base Certificate
For______ Quarter, _________
<CAPTION> HEADER HEADER HEADER
LEASES IN COMMERCIAL TOTAL
GOOD STANDING RENTAL FLEET
<S> <C> <C> <C>
A. Net Book Value of Motor Vehicles
Maximum Commercial Rental Fleet permitted (40%
of Total of Line A per Section 16.7(c)). If Net Book
value of Commercial Rental Fleet exceeds this amount,
the Net Book Value of Commercial Rental Fleet in
Line A must be reduced to 2/3 of Net Book Value of
Eligible Equipment subject to Leases in Good Standing
in order to comply with Section 16.7(c).
B. Total Net Book Value of Eligible Equipment other than
Motor Vehicles (Not to exceed $5 Million)
C. Net book Value of Eligible Equipment (A+B)
D. Borrowing Base Amount (90% of C)
Less Total Exclusions:
E. Facility B Loans
F. Other Indebtedness of Rollins
1. Rollins notes securing RTLC collateral Trust Debentures
2. Obligations guaranteed by Rollins
3. Outstanding Letters of Credit for the account of Rollins
4. Outstanding Facility A Loans from Lenders
5. All other Indebtedness of Rollins
G. Total Exclusions
H. Net Borrowing Base (D-G)
Lesser of:
I. $50,000,000
Less:
1. Outstanding Facility A Loans
2. Outstanding Letters of Credit issued by Lenders
J. Net Borrowing Base (H)
Remaining Facility A Availability
THE FOREGOING INFORMATION IS CERTIFIED TO BE CORRECT:
ROLLINS LEASING CORP.
BY:_________________________________
NAME:______________________________
TITLE:______________________________
DATED:_____________________________
</TABLE>
UNCONDITIONAL GUARANTY
October 28, 1999
Rollins Truck Leasing Corp.
One Rollins Plaza
Wilmington, Delaware 19803
(Individually and collectively "Borrower")
Rollins Leasing Corp.
One Rollins Plaza
Wilmington, Delaware 19803
(Individually and collectively "Guarantor")
First Union National Bank
301 South Tryon Street
Charlotte, North Carolina 28202
(Hereinafter referred to as "Bank")
To induce Bank to make, extend or renew loans, advances, credit, or other
financial accommodations to or for the benefit of Borrower, and in
consideration of loans, advances, credit, or other financial accommodations
made, extended or renewed to or for the benefit of Borrower, Guarantor
hereby absolutely, irrevocably and unconditionally guarantees to Bank and
its successors, assigns and affiliates the timely payment and performance
of all liabilities and obligations of Borrower to Bank under letters of
credit issued by Bank for account of Borrower and associated reimbursement
agreements, the Loan Documents as defined herein, and all extensions,
modifications and renewals thereof, including without limitation all
principal, interest, charges, and costs and expenses incurred thereunder
(including attorneys' fees and other costs of collection incurred,
regardless of whether suit is commenced) (collectively, the "Guaranteed
Obligations").
Guarantor further covenants and agrees:
GUARANTOR'S LIABILITY. This Guaranty is a continuing and unconditional
guaranty of payment and performance and not of collection. The parties to
this Guaranty are jointly and severally obligated hereunder. This Guaranty
does not impose any obligation on Bank to extend or continue to extend
credit or otherwise deal with Borrower at any subsequent time. This
Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of the Guaranteed Obligations is rescinded,
avoided or for any other reason must be returned by Bank, and the returned
payment shall remain payable as part of the Guaranteed Obligations, all as
though such payment had not been made. Except to the extent the provisions
of this Guaranty give Bank additional rights, this Guaranty shall not be
deemed to supersede or replace any other guaranties given to Bank by
Guarantor; and the obligations guaranteed hereby shall be in addition to any
other obligations guaranteed by Guarantor pursuant to any other agreement
of guaranty given to Bank and other guaranties of the Guaranteed
Obligations.
TERMINATION OF GUARANTY. Guarantor may terminate this Guaranty only by
written notice, delivered personally to or received by certified or
registered United States Mail by an authorized officer of Bank at the
address for notices provided herein. Such termination shall be effective
with respect to Guaranteed Obligations arising more than 15 days after the
date such written notice is received by said Bank officer. Guarantor may
not terminate this Guaranty as to Guaranteed Obligations (including any
subsequent extensions, modifications or compromises of the Guaranteed
Obligations) then existing, or to Guaranteed Obligations arising subsequent
to receipt by Bank of said notice if such Guaranteed Obligations are a
result of Bank's obligation to make advances pursuant to a commitment
entered into prior to expiration of the 15 day notice period, or are a
result of advances which are necessary for Bank to protect its collateral
or otherwise preserve its interests. Termination of this Guaranty by any
single Guarantor will not affect the existing and continuing obligations of
any other Guarantor hereunder.
CONSENT TO MODIFICATIONS. Guarantor consents and agrees that Bank may from
time to time, in its sole discretion, without affecting, impairing,
lessening or releasing the obligations of Guarantor hereunder: (a) extend
or modify the time, manner, place or terms of payment or performance and/or
otherwise change or modify the credit terms of the Guaranteed Obligations;
(b) increase, renew, or enter into a novation of the Guaranteed Obligations;
(c) waive or consent to the departure from terms of the Guaranteed
Obligations; (d) permit any change in the business or other dealings and
relations of Borrower or any other guarantor with Bank; (e) proceed against,
exchange, release, realize upon, or otherwise deal with in any manner any
collateral that is or may be held by Bank in connection with the Guaranteed
Obligations or any liabilities or obligations of Guarantor; and (f) proceed
against, settle, release, or compromise with Borrower, any insurance
carrier, or any other person or entity liable as to any part of the
Guaranteed Obligations, and/or subordinate the payment of any part of the
Guaranteed Obligations to the payment of any other obligations, which may
at any time be due or owing to Bank; all in such manner and upon such terms
as Bank may deem appropriate, and without notice to or further consent from
Guarantor. No invalidity, irregularity, discharge or unenforceability of,
or action or omission by Bank relating to any part of the Guaranteed
Obligations or any security therefore shall affect or impair this Guaranty.
WAIVERS AND ACKNOWLEDGMENTS. Guarantor waives and releases the following
rights, demands, and defenses Guarantor may have with respect to Bank and
collection of the Guaranteed Obligations: (a) promptness and diligence in
collection of any of the Guaranteed Obligations from Borrower or any other
person liable thereon, and in foreclosure of any security interest and sale
of any property serving as collateral for the guaranteed Obligations: (b)
any law or statute that requires that Bank make demand upon, assert claims
against, or collect from Borrower or other persons or entities, foreclose
any security interest, sell collateral, exhaust any remedies, or take any
other action against Borrower or other persons or entities prior to making
demand upon, collecting from or taking action against Guarantor with respect
to the Guaranteed Obligations, including any such rights Guarantor might
otherwise have had under Va. Code Sub-Sections 49-25 and 49-26, et seq.,
N.C.G.S. Sub-Section 26-7, et seq., Tenn. Code Ann. Section 47-12-101,
O.C.G.A. Section 10-7-24 and any successor statute and any other applicable
law; (c) any law or statute that requires that Borrower or any other person
be joined in, notified of or made part of any action against Guarantor; (d)
that Bank preserve, insure or perfect any security interest in collateral
or sell or dispose of collateral in a particular manner or at a particular
time; (e) notice of extensions, modifications, renewals, or novations of the
Guaranteed Obligations, or any new transactions or other relationships
between Bank, Borrower and/or any guarantor, and of changes in the financial
condition of, ownership of, or business structure of Borrower or any other
guarantor; (f) presentment, protest, notice of dishonor, notice of default,
demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, notice of sale, and all other notices of any kind
whatsoever; (g) the right to assert against Bank any defense (legal or
equitable), set-off, counterclaim, or claim that Guarantor may have at any
time against Borrower or any other party liable to Bank; (h) all defenses
relating to invalidity, insufficiency, unenforceability, enforcement,
release or impairment of Bank's lien on any collateral, of the Loan
Documents, or of any other guaranties held by Bank; (i) any claim or defense
that acceleration of maturity of the Guaranteed Obligations is stayed
against Guarantor because of the stay of assertion or of acceleration of
claims against any other person or entity for any reason including the
bankruptcy or insolvency of that person or entity; and (j) the benefit of
any exemption claimed by Guarantor. Guarantor acknowledges and represents
that Guarantor has relied upon Guarantor's own due diligence in making an
independent appraisal of Borrower, Borrower's business affairs and financial
condition, and any collateral; Guarantor will continue to be responsible for
making an independent appraisal of such matters; and Guarantor has not
relied upon and will not hereafter rely upon Bank for information regarding
Borrower or any collateral.
FINANCIAL CONDITION. Guarantor warrants, represents and covenants to Bank
that on and after the date hereof; (a) the fair saleable value of
Guarantor's assets exceeds its liabilities, Guarantor is meeting its current
liabilities as they mature, and Guarantor is and shall remain solvent; (b)
all financial statements of Guarantor furnished to Bank are correct and
accurately reflect the financial condition of Guarantor as of the respective
dates thereof; (c) since the date of such financial statements, there has
not occurred a material adverse change in the financial condition of
Guarantor; (d) there are not now pending any court or administrative
proceedings or undischarged judgments against Guarantor, no federal or state
tax liens have been filed or threatened against Guarantor, and Guarantor is
not in default or claimed default under any agreement; and (e) at such
reasonable times as Bank requests, Guarantor will furnish Bank with such
other financial information as Bank may reasonably request.
INTEREST AND APPLICATION OF PAYMENTS. Regardless of any other provision of
this Guaranty or other Loan Documents, if for any reason the effective
interest on any of the Guaranteed Obligations should exceed the maximum
lawful interest, the effective interest shall be deemed reduced to and shall
be such maximum lawful interest, and any sums of interest which have been
collected in excess of such maximum lawful interest shall be applied as a
credit against the unpaid principal balance of the Guaranteed Obligations.
Monies received from any source by Bank for applications toward payment of
the Guaranteed Obligations may be applied to such Guaranteed Obligations in
any manner or order deemed appropriate by Bank.
DEFAULT. If any of the following events occur, a default ("Default") under
this Guaranty shall exist: (a) failure of timely payment or performance of
the Guaranteed Obligations or a default under any Loan Document; (b) a
breach of any agreement or representation contained or referred to in the
Guaranty, or any of the Loan Documents, or contained in any other contract
or agreement of Guarantor with Bank or its affiliates, whether now existing
or hereafter arising; and/or (c) the death of, appointment of a guardian
for, dissolution of, termination of existence of, loss of good standing
status by, appointment of a receiver for, assignment for the benefit of
creditors of, or the commencement of any insolvency or bankruptcy proceeding
by or against Guarantor or any general partner of or the holder(s) of the
majority ownership interests of Guarantor.
If a Default occurs, the Guaranteed Obligations shall be due immediately and
payable without notice, and, Bank may exercise any rights and remedies as
provided in this Guaranty and other Loan Documents, or as provided at law
or equity. Guarantor shall pay interest on the Guaranteed Obligations from
such Default at the highest rate of interest charged on any of the
Guaranteed Obligations.
ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all of
Bank's reasonable expenses incurred to enforce or collect any of the
Guaranteed Obligations, including, without limitation, reasonable
arbitration, paralegals', attorneys' and experts' fees and expenses, whether
incurred without the commencement of a suit, in any suit, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.
SUBORDINATION OF OTHER DEBTS. Guarantor agrees: (a) to subordinate the
obligations now or hereafter owed by Borrower to Guarantor ("Subordinated
Debt") to any and all obligations of Borrower to Bank now or hereafter
existing while this Guaranty is in effect, provided however that Guarantor
may receive regularly scheduled principal and interest payments on the
Subordinated Debt so long as (i) all sums due and payable by Borrower to
Bank have been paid in full on or prior to such date, and (ii) no event or
condition which constitutes or which with notice or the lapse of time would
constitute an event of default with respect to the Guaranteed Obligations
shall be continuing on or as of the payment date; (b) Guarantor will either
place a legend indicating such subordination on every note, ledger page or
other document evidencing any part of the Subordinated Debt or deliver such
documents to Bank; and (c) except as permitted by this paragraph, Guarantor
will not request or accept payment of or any security for any part of the
Subordinated Debt, and any proceeds of the Subordinated Debt paid to
Guarantor, through error or otherwise, shall immediately be forwarded to
Bank by Guarantor, properly endorsed to the order of Bank, to apply to the
Guaranteed Obligations.
MISCELLANEOUS. Assignment. This Guaranty and other Loan Documents shall
inure to the benefit of and be binding upon the parties and their respective
heirs, legal representatives, successors and assigns. Bank's interest in
and rights under this Guaranty and other Loan Documents are freely
assignable, in whole or in part, by Bank. Any assignment shall not release
Guarantor from the Guaranteed Obligations. Applicable Law; Conflict Between
Documents. This Guaranty and other Loan Documents shall be governed by and
construed under the laws of the state named in Bank's address shown above
without regard to that state's conflict of laws principles. If the terms
of this Guaranty should conflict with the terms of any commitment letter
that survives closing, the terms of this Guaranty shall control.
Guarantor's Accounts. Except as prohibited by law, Guarantor grants Bank
a security interest in all of Guarantor's accounts with Bank and its
affiliates. Jurisdiction. Guarantor irrevocably agrees to non-exclusive
personal jurisdiction in the state named in Bank's address shown above.
Severability. If any provision of this Guaranty or of the other Loan
Documents shall be prohibited or invalid under applicable law, such
provision shall be ineffective but only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty or other Loan Documents. Notices.
Any notices to Guarantor shall be sufficiently given if in writing and
mailed or delivered to Guarantor's address shown above or such other address
as provided hereunder, and to Bank, if in writing and mailed or delivered
to Bank's office address shown above or such other address as Bank may
specify in writing from time to time. In the event that Guarantor changes
Guarantor's address at any time prior to the date the Guaranteed Obligations
are paid in full, Guarantor agrees to promptly give written notice of said
change of address to Bank by registered or certified mail, return receipt
requested, all charges prepaid. Plural; Captions. All references in the
Loan Documents to borrower, guarantor, person, document or other nouns of
reference mean both the singular and plural form, as the case may be, and
the term "person" shall mean any individual person or entity. The captions
contained in the Loan Documents are inserted for convenience only and shall
not affect the meaning or interpretation of the Loan Documents. Binding
Contract. Guarantor by execution of and Bank by acceptance of this Guaranty
agree that each party is bound to all terms and provisions of this Guaranty.
Amendments, Waivers and Remedies. No waivers, amendments or modifications
of this Guaranty and other Loan Documents shall be valid unless in writing
and signed by an officer of Bank. No waiver by Bank of any Default shall
operate as a waiver of any other Default or the same Default on a future
occasion. Neither the failure nor any delay on the part of Bank in
exercising any right, power, or privilege granted pursuant to this Guaranty
and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
or the exercise of any other right, power or privilege. All remedies
available to Bank with respect to this Guaranty and other Loan Documents and
remedies available at law or in equity shall be cumulative and may be
pursued concurrently or successively. Partnerships. If Guarantor is a
partnership, the obligations, liabilities and agreements on the part of
Guarantor shall remain in full force and effect and fully applicable
notwithstanding any changes in the individuals comprising the partnership.
The term "Guarantor" includes any altered or successive partnerships, and
predecessor partnership(s) and the partners shall not be released from any
obligations or liabilities hereunder. Loan Documents. The term "Loan
Documents" refers to all documents executed in connection with the
Guaranteed Obligations and may include, without limitation, commitment
letters that survive closing, loan agreements, other guaranty agreements,
security agreements, instruments, financing statements, mortgages, deeds of
trust, deeds to secure debt, letters of credit and any amendments or
supplements (excluding swap agreements as defined in 11 U.S. Code Section
101).
FINANCIAL AND OTHER INFORMATION. Guarantor shall deliver to Bank such
information as Bank may reasonably request from time to time, including
without limitation, financial statements and information pertaining to
Guarantor's financial condition. Such information shall be true, complete,
and accurate.
ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy arising out
of or relating to the Loan Documents between parties hereto (a "Dispute")
shall be resolved by binding arbitration conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules")
of the American Arbitration Association (the "AAA") and the Federal
Arbitration Act. Disputes may include, without limitation, tort claims,
counterclaims, a dispute as to whether a matter is subject to arbitration,
claims brought as class actions, or claims arising from documents executed
in the future. A judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration provision
does not apply to disputes under or related to swap agreements. Special
Rules. All arbitration hearings shall be conducted in the city named in the
address of Bank first stated above. A hearing shall begin within 90 days
of demand for arbitration and all hearings shall conclude within 120 days
of demand for arbitration. These time limitations may not be extended
unless a party shows cause for extension and then for no more than a total
of 60 days. The expedited procedures set forth in Rule 51 et. Seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000.00.
Arbitrators shall be licensed attorneys selected from the Commercial
Financial Dispute Arbitration Panel of the AAA. The parties do not waive
applicable Federal or state substantive law except as provided herein.
Preservation and Limitation of Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties agree to preserve, without
diminution, certain remedies that any party may exercise before or after an
arbitration proceeding is brought. The parties shall have the right to
proceed in any court of proper jurisdiction or by self-help to exercise or
prosecute the following remedies, as applicable: (i) all rights to foreclose
against any real or personal property or other security by exercising a
power of sale or under applicable law by judicial foreclosure including a
proceeding to confirm the sale; (ii) all rights of self-help including
peaceful occupation of real property and collection of rents, set-off, and
peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment.
Any claim or controversy with regard to any party's entitlement to such
remedies is a Dispute. Waiver of Exemplary Damages. The parties agree that
they shall not have a remedy of punitive or exemplary damages against other
parties in any Dispute and hereby waive any right or claim to punitive or
exemplary damages they have now or which may arise in the future in
connection with any Dispute whether the Dispute is resolved by arbitration
or judicially. Waiver of Jury Trial. THE PARTIES ACKNOWLEDGE THAT BY
AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT THEY
MAY HAVE TO JURY TRIAL WITH REGARD TO A DISPUTE.
IN WITNESS WHEREOF, Guarantor, on the day and year first written above, has
caused this Unconditional Guaranty to be executed under seal.
Rollins Leasing Corp.
Taxpayer Identification Number: 23-1736091
CORPORATE By: /s/ I. Larry Brown
SEAL Name: I. Larry Brown
Title: President
AMENDMENT NO. 4
This AMENDMENT NO. 4 (this "Amendment") to the Bank Credit
Agreement, dated as of December 11,1998 (as previously amended by
Amendment No. 1, dated February 4, 1999, Amendment No. 2, dated June
15, 1999, and Amendment No. 3, dated October 28, 1999, collectively,
the "Credit Agreement"), is entered into as of December 17, 1999, by
and between Rollins Leasing Corp., a Delaware corporation ("Rollins"),
First Union National Bank, a national banking association ("First
Union") and BankBoston, N.A., a national banking association
("BankBoston") (each of First Union and BankBoston being referred to
hereinafter as a "Lender" and collectively as the "Lenders").
WHEREAS, the Lenders and Rollins have agreed to amend certain of
the terms and conditions of the Credit Agreement, to increase the
amount available hereunder and to extend the term of the Credit
Agreement; and
WHEREAS, capitalized terms used and not defined herein shall have
the meanings ascribed thereto in the Credit Agreement.
NOW, THEREFORE, Rollins and the Lenders hereby agree as follows:
Section 1. AMENDMENT TO THE CREDIT AGREEMENT.
Section 1.1 Section 1.1(a) is hereby amended by deleting
subsection 1.1(a)(ii)(x) and by deleting the words "(y) all other
Indebtedness" from the first sentence of Section 1.1(a)(ii) and
replacing them with the words "unsecured indebtedness."
Section 1.2 Section 1.1(b) of the Credit Agreement is hereby
amended by deleting the Section in its entirety and replacing it with
the following: 1.1(b) [RESERVED]
Section 1.3. Section 1.3 of the Credit Agreement is hereby
amended by deleting subsection (g) in its entirety. Section 1.3 is
hereby further amended by replacing the Exhibit A referenced therein
with Exhibit A attached hereto and made a part hereof.
Section 1.4 Section 1.4 of the Credit Agreement is amended by
deleting the section in its entirety and replacing it with the
following:
1.4 Interest. (a) Prior to the Revolving Expiration Date,
outstanding amounts under Facility A shall accrue interest at the
LIBOR Market Index Rate plus 95 basis points.
(b) After the Revolving Expiration Date, outstanding
amounts under Facility A shall accrue interest at LIBOR Market
Index Rate plus 150 basis points.
Section 1.5 The Credit Agreement is hereby amended by adding
the following as new Section 1.7:
1.7 Notes. Each Lender's Facility A Loans and the
obligation of Rollins to repay such Facility A Loans shall be evidenced
by a separate Note executed by Rollins and payable to the order of such
Lender.
Section 1.6 Section 2.1 of the Credit Agreement is amended by
deleting subsection (b) in its entirety, by re-lettering subsection (a)
as new subsection (b) and by adding the following as new subsection
(a):
(a) On the Revolving Expiration Date, and notwithstanding
anything else to the contrary in the Credit Agreement, the
Borrower shall pay to the Lenders all accrued and unpaid interest,
all fees which are due and owing hereunder and all outstanding
principal amounts of Facility A Loans in excess of $50,000,000.
Section 1.7 Section 2.2(a) of the Credit Agreement is hereby
deleted and replaced in its entirety with the following:
(a) Interest Periods. (i) Loans bearing interest at the LIBOR
Market Index Rate shall have an Interest Period of 90 days,
provided that, prior to the Revolving Expiration Date, the
Interest Period may be the number of days between the date of the
Facility A Loan and the Revolving Expiration Date. If any
Interest Period shall expire on a date on which Banks are required
or permitted by law in Charlotte, North Carolina, Boston,
Massachusetts or London, England to close (all days other than
such days are hereafter called "Business Days"), such Interest
Period shall expire on the next succeeding Business Day; provided
that if any Interest Period would otherwise expire on a day that
is not a Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest Period
shall expire on the next preceding Business Day; and provided
further any Interest Period that begins on the last day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the
relevant calendar month at the end of such Interest Period. (ii)
No Interest Period shall extend beyond the Maturity Date.
Section 1.8 Section 2.2(b) is amended by deleting the first
sentence thereof, and replacing it with the following:
(b) Interest on each LIBOR Market Index Rate based loan shall be
payable at the expiration of each Interest Period as defined in
subsection 2.2(a)(ii). After the Revolving Expiration Date,
interest on the balance outstanding from time to time shall be
payable on the Installment Payment Date.
Section 1.9 Section 2.3 is amended by deleting the section in
its entirety and replacing it with the following:
2.3 Optional Prepayment. Facility A Loans bearing interest
at the LIBOR Market Index Rate may be prepaid without penalty at
any time on one day's notice.
Section 1.10 Section 2.4 is hereby amended by deleting each
reference to a Facility B Loan.
Section 1.11 The Credit Agreement is hereby amended by adding a
new Section 7.19 as follows:
7.19 Upfront Fee. Rollins agrees to pay to each Lender a
fee at the time of execution of Amendment No. 4 in an amount equal
to $52,500 (for an aggregate total of $105,000).
Section 1.12 The Credit Agreement is hereby amended by deleting
Section 9.3 in its entirety.
Section 1.13 Section 8.1 of the Credit Agreement is hereby
amended by deleting the reference to "Section 16.29" and replacing it
with "Section 16.31."
Section 1.14 Section 10.1 of the Credit Agreement is hereby
amended by adding the following as new Section 10(j):
10(j) The consummation of a merger with UPS Truck
Leasing, Inc. by any affiliate (as the term is defined in 11
U.S.C. Section 101) of Rollins other than Rollins Leasing Corp.
Section 1.15 Section 11.1 of the Credit Agreement is hereby
amended by re-lettering the existing paragraph therein as Section
11.1(a) and adding the following as new Section 11.1(b):
11.1(b) Unless otherwise earlier terminated pursuant to the
terms of this Credit Agreement, the Lenders' obligation to make
Facility A Loans shall terminate on the Revolving Expiration Date.
Section 1.16 Section 16.9 of the Credit Agreement is amended by
deleting that section in its entirety and replacing it with the
following:
16.9 "Commitment Amount" means $170,000,000 in the aggregate
and $85,000,000 with respect to each Lender as the same may be
reduced from time to time.
Section 1.17 Section 16.31 of the Credit Agreement is hereby
amended by adding the following at the end of the sentence: "less any
intangible assets, including without limitation, goodwill."
Section 1.18 Section 16.34 of the Credit Agreement is amended by
deleting "December 10, 1999" and replacing it with "March 31, 2000."
Section 1.19 The Credit Agreement is hereby amended to delete
Sections 16.42, 16.43, 16.44 and 16.45 in their entirety.
Section 1.20 The Credit Agreement is hereby amended by deleting
Section 16.21 in its entirety and by replacing it with the following
new Section 16.21:
16.21 "LIBOR Market Index Rate", for any day, is the rate
for 1 month U.S. dollar deposits as reported on Telerate page 3750
as of 11:00 a.m., London time, on such day, or if such day is not
a London business day, then the immediately preceding London
business day (or if not so reported, then as determined by Bank
from another recognized source or interbank quotation).
Section 1.21 Exhibit C to the Credit Agreement is deleted in its
entirety and replaced with Exhibit C hereto, which is incorporated
herein by reference.
Section 2. CONSENT TO ACQUISITION. Section 2.1 Consent and
Waiver Pertaining to Acquisition. The Lenders hereby consent to
Rollins' acquisition of UPS Truck Leasing, Inc. (the "Acquisition") and
waive any default which such Acquisition may trigger pursuant to
Section 8.4 of the Credit Agreement, provided however that this waiver
and consent shall only be effective provided the terms of such
acquisition conform in all material respects to the description of the
acquisition and pro formas concerning the acquisition previously
provided to the Lenders.
Section 2.2 Delivery of Amended Borrowing Base Certificate.
Rollins hereby agrees that it shall deliver to Lenders a Borrowing Base
Certificate in the form of exhibit C attached hereto on the closing
date of the Acquisition, which Borrowing Base Certificate shall set
forth the information as to its Borrowing Base and the other matters
called for thereby as of such date. The Borrowing Base Certificate
required to be delivered herein shall calculate all information
contained therein taking into account the effect of the Acquisition.
The Borrowing Base Certificate required to be delivered herein shall be
in lieu of the requirement in Section 7.10 of the Credit Agreement that
Rollins deliver a Borrowing Base Certificate on January 25, 2000.
Section 3. CONDITIONS TO EFFECTIVENESS. This Amendment shall
become effective upon receipt by each of the Lenders of (i) a duly
executed signature page hereto from Rollins and each of the Lenders;
(ii) a resolution of Rollins' Board of Directors authorizing this
Amendment No. 4; (iii) an incumbency certificate; (iv) promissory notes
in favor of each of the Lenders in the form of Exhibit D annexed
hereto; (v) an enforceability opinion of counsel; (vi) provision of a
certificate of good standing of Rollins; and (vii) payment of the
upfront fee.
Section 4. REPRESENTATIONS AND WARRANTIES. Rollins hereby
represents and warrants to the Lenders as follows:
Section 4.1 Representations and Warranties in Credit Agreement.
The representations and warranties of Rollins contained in the Credit
Agreement, as amended hereby, are true and correct in all material
respects when made and continue to be true and correct in all material
respects on the date hereof, except as such representations and
warranties are affected by the transactions contemplated or permitted
by the credit Agreement, as amended hereby, or are expressly made as of
a prior date.
Section 4.2 Authority, No Conflicts, etc. The execution,
delivery and performance by Rollins of this Amendment and the
consummation of the transactions contemplated hereby, (i) are within
the corporate powers of Rollins and have been duly authorized by all
necessary corporate action on the part of Rollins, (ii) do not require
any approval or consent of, or notice to or filing with, any
governmental agency or authority, any court or other tribunal, or any
other Person which has not been given or obtained, (iii) do not violate
any provisions of any law, rule, or regulation or any provision of any
order, judgment, injunction, or decree presently in effect, or any
provision of the charter documents or by-laws of Rollins, (iv) do not
result in any breach of or constitute a default under any other
agreement or instrument to which Rollins is a party or by which it or
any of its properties are bound, and (v) do not result in or require
the creation or imposition of any mortgage, deed of trust, pledge,
lien, security interest or other charge or encumbrance of any nature
upon any of the assets or properties of Rollins.
Section 5. NO OTHER AMENDMENTS OR WAIVERS. Rollins
acknowledges that except as expressly provided in this Amendment, all
of the terms and conditions of the credit Agreement shall remain in
full force and effect without any defense, counterclaim, or right or
claim of set-off. This Amendment does not, and shall not, constitute
a waiver of any present or future Default or Event of Default. Nothing
in this Amendment shall be construed to imply any willingness on the
part of the Lenders to grant any similar or other future amendment of
any of the terms and conditions of the Credit Agreement.
Section 6. EXECUTION COUNTERPARTS. This Amendment may be
executed in any number of counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one instrument.
In proving this Amendment, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against
whom enforcement is sought.
Section 7. EFFECTIVE DATE. Subject to the satisfaction of the
conditions precedent set forth in Section 3 hereof, this Amendment
shall be deemed to be effective as of the date first above written.
Section 8. GOVERNING LAW. This Amendment shall be deemed to
be a contract under the laws of the Commonwealth of Pennsylvania and
shall for all purposes be construed in accordance with and governed by
the internal laws of said Commonwealth without reference to principles
of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date first above written.
ROLLINS LEASING CORP.
Attest: /s/ J. W. McCaughan By: /s/ I. Larry Brown
Title: President
Name: I. Larry Brown
FIRST UNION NATIONAL BANK
By: /s/ Jane W. Workman
Title: Senior Vice President
Name: Jane W. Workman
BANKBOSTON, N.A.
By: /s/ Robert L. Wallace
Title: Director
Name: Robert L. Wallace
<PAGE>
EXHIBIT A
LOAN REQUEST
____________________________
[Date]
To: First Union National Bank
and
BankBoston, N.A.
To Whom It May Concern:
The undersigned, ____________________________, refers to the Bank
Credit Agreement, dated as of _______________________ (the "Credit
Agreement"; the terms defined therein being used herein as therein
defined), between the undersigned and BankBoston, N.A. or First Union
National Bank and hereby gives you notice pursuant to Section 1.3 of
the Credit Agreement that the undersigned hereby requests a Loan under
the Credit Agreement and, in that connection, sets forth below the
information relating to such Loan, as required by Section 1.3 of the
Credit Agreement. The undersigned also represents that the requested
borrowings will not exceed the Borrowing Base Amount at any time.
Amount of the Loan requested _________________
Loan date _________________
Principal amount of loans outstanding
at the date of this request by Lender _________________
Other information requested by Lender _________________
Very truly yours,
______________________
By: ___________________
Title:
EXHIBIT C
<TABLE>
Consolidated Borrowing Base Certificate
For______ Quarter, _________
<CAPTION> HEADER HEADER HEADER
LEASES IN COMMERCIAL TOTAL
GOOD STANDING RENTAL FLEET
<S> <C> <C> <C>
A. Net Book Value of Motor Vehicles
Maximum Commercial Rental Fleet permitted (40%
of Total of Line A per Section 16.7(c)). If Net Book
value of Commercial Rental Fleet exceeds this amount,
the Net Book Value of Commercial Rental Fleet in
Line A must be reduced to 2/3 of Net Book Value of
Eligible Equipment subject to Leases in Good Standing
in order to comply with Section 16.7(c).
B. Total Net Book Value of Eligible Equipment other than
Motor Vehicles (Not to exceed $5 Million).
C. Net Book Value of Eligible Equipment (A+B)
D. Borrowing Base Amount (90% of C)
Less Total Exclusions:
E. Other Indebtedness of Rollins
1. Rollins notes securing RTLC Collateral Trust Debentures
2. Obligations guaranteed by Rollins
3. Outstanding Letters of Credit for the account of Rollins
4. Outstanding Facility A Loans from Lenders
5. All other unsecured indebtedness of Rollins
F. Total Exclusions
G. Net Borrowing Base (D-F)
Lesser of:
H. $170,000,000
Less:
1. Outstanding Facility A Loans
2. Outstanding Letters of Credit issued by Lenders
I. Net Borrowing Base (G)
Remaining Facility A Availability
THE FOREGOING INFORMATION IS CERTIFIED TO BE CORRECT:
ROLLINS LEASING CORP.
BY:_________________________________
NAME:______________________________
TITLE:______________________________
DATED:_____________________________
</TABLE>
EXHIBIT D
BORROWER NOTE
December 17,1999
Rollins Leasing Corp., a Delaware corporation (the "Borrower"),
promises to pay to the order of First Union National Bank (the
"Lender") the aggregate unpaid principal amount of all Loans made by
the Lender to the Borrower pursuant to Section 1.1 of the Bank Credit
Agreement hereinafter referred to (as the same has been amended,
modified, supplemented and/or restated from time to time, the
"Agreement"), in immediately available funds at the main office (or
such other place as may be required under the Agreement) of the Lender
in Charlotte, North Carolina together with interest on the unpaid
principal amount hereof at the rates and on the dates set forth in the
Agreement. The Borrower shall pay the principal of an accrued and
unpaid interest on the Loans in accordance with the Agreement.
The Lender shall, and is hereby authorized to, record on the
schedule attached hereto, or to otherwise record in accordance with its
usual practice, the date and amount of each Loan and the date and
amount of each principal payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled
to the benefits of, the Bank Credit Agreement, dated as of December 11,
1998, as amended, among the Borrower, Bank of the Lender and
BankBoston, N.A. to which Agreement reference is hereby made for a
statement of the terms and conditions governing this Note, including
the terms and conditions under which this Note may be prepaid or its
maturity date accelerated. Capitalized terms used herein and not
otherwise defined herein are used with the meanings attributed to them
in the Agreement.
This Note shall be governed by the internal laws (and not the law
of conflicts) of the Commonwealth of Pennsylvania, United States of
America.
ROLLINS LEASING CORP.
By: /s/ I. Larry Brown
Print Name: I. Larry Brown
Print Title: President
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF ROLLINS LEASING CORP.
DATED DECEMBER 17, 1999
Principal Maturity Principal
Borrowing Amount of of Interest Amount Unpaid
Date Loan Period Paid Balance
<PAGE>
EXHIBIT D
BORROWER NOTE
December 17, 1999
Rollins Leasing Corp., a Delaware corporation (the "Borrower"),
promises to pay to the order of BankBoston, N.A. (the "Lender") the
aggregate unpaid principal amount of all Loans made by the Lender to
the Borrower pursuant to Section 1.1 of the Bank Credit Agreement
hereinafter referred to (as the same has been amended, modified,
supplemented and/or restated from time to time, the "Agreement"), in
immediately available funds at the main office (or such other place as
may be required under the Agreement) of the Lender in Boston,
Massachusetts together with interest on the unpaid principal amount
hereof at the rates and on the dates set forth in the Agreement. The
Borrower shall pay the principal of an accrued and unpaid interest on
the Loans in accordance with the Agreement.
The Lender shall, and is hereby authorized to, record on the
schedule attached hereto, or to otherwise record in accordance with its
usual practice, the date and amount of each Loan and the date and
amount of each principal payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled
to the benefits of, the Bank Credit Agreement, dated as of December 11,
1998, as amended, among the Borrower, Bank of the Lender and First
Union National Bank to which Agreement reference is hereby made for a
statement of the terms and conditions governing this Note, including
the terms and conditions under which this Note may be prepaid or its
maturity date accelerated. Capitalized terms used herein and not
otherwise defined herein are used with the meanings attributed to them
in the Agreement.
This Note shall be governed by the internal laws (and not the law
of conflicts) of the Commonwealth of Pennsylvania, United States of
America.
ROLLINS LEASING CORP.
By: /s/ I. Larry Brown
Print Name: I. Larry Brown
Print Title: President
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF ROLLINS LEASING CORP.
DATED DECEMBER 17, 1999
Principal Maturity Principal
Borrowing Amount of of Interest Amount Unpaid
Date Loan Period Paid Balance
