<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-Q
(Mark one)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1996 OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO
___________
COMMISSION FILE NUMBER 33-74198
TRANS OCEAN CONTAINER CORPORATION
(Exact name of registrant as specified in the charter)
DELAWARE 94-3155379
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
851 TRAEGER AVENUE, SAN BRUNO, CALIFORNIA 94066
(Address of principal executive offices) (Zip Code)
(415) 871-6600
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. /X/ Yes / / No
As of August 13, 1996, 100 shares of common stock, $.001 par value, were
outstanding.
<PAGE>
TRANS OCEAN CONTAINER CORPORATION
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Introduction to Financial Statements .................................... 3
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995 ................................ 4
Consolidated Statements of Operations
For the Three Month and Six Month Periods Ended June 30, 1996 and
1995 ............................................................... 5
Consolidated Statements of Cash Flows
For the Six Month Periods Ended June 30, 1996 and 1995 ............. 6
Consolidated Statement of Changes in Common Stockholder's Equity
For the Six Month Period Ended June 30, 1996 ....................... 7
Notes to Unaudited Interim Consolidated Financial Statements ............ 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .....................12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ...................................14
SIGNATURES ...................................................................15
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRANS OCEAN CONTAINER CORPORATION AND SUBSIDIARIES
UNAUDITED INTERIM FINANCIAL STATEMENTS
INTRODUCTION TO FINANCIAL STATEMENTS
The following unaudited financial statements of Trans Ocean Container
Corporation and Subsidiaries (collectively, the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, said financial statements do not include all of the
information and footnotes required by generally accepted accounting principles
for annual financial statements. In the opinion of management of the Company,
all adjustments necessary for a fair statement of the results for the interim
periods presented have been included. All such adjustments are of a normal
recurring nature. The following financial statements should be read in
conjunction with the financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
Operating results for the first six months of 1996 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996.
-3-
<PAGE>
TRANS OCEAN CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Cash and cash equivalents............................. $ 15,138,000 $ 23,055,000
Receivables, net of allowance for doubtful accounts of
$1,474,000 and $1,405,000 as of June 30, 1996 and
December 31, 1995, respectively...................... 41,468,000 38,946,000
Property and equipment, net of accumulated
depreciation and amortization........................ 331,077,000 319,875,000
Intangible assets, net of accumulated amortization of
$12,269,000 and $11,766,000 as of June 30, 1996 and
December 31, 1995, respectively...................... 6,874,000 7,377,000
Other assets.......................................... 9,665,000 11,262,000
------------ ------------
Total assets....................................... $404,222,000 $400,515,000
------------ ------------
------------ ------------
LIABILITIES, REDEEMABLE SENIOR PREFERRED STOCK
AND COMMON STOCKHOLDER'S EQUITY
Accounts payable and accrued liabilities............. $ 44,693,000 $ 47,861,000
Managed equipment program liabilities................ 15,553,000 20,175,000
Due to parent and affiliates......................... 1,569,000 1,288,000
Senior debt obligations, including current maturities
of $20,555,000 and $18,373,000 as of June 30, 1996
and December 31, 1995, respectively................. 202,558,000 193,670,000
Senior subordinated notes............................ 75,000,000 75,000,000
Deferred revenue..................................... 4,442,000 4,810,000
Deferred income taxes................................ 22,676,000 21,639,000
------------ ------------
Total liabilities................................. 366,491,000 364,443,000
------------ ------------
Redeemable senior preferred stock.................... 3,603,000 3,590,000
------------ ------------
Common stockholder's equity:
Common stock........................................ 1,000 1,000
Contributed capital................................. 2,501,000 2,501,000
Retained earnings................................... 31,626,000 29,980,000
------------ ------------
Total common stockholder's equity................. 34,128,000 32,482,000
------------ ------------
Total liabilities, redeemable senior preferred
stock and common stockholder's equity $404,222,000 $400,515,000
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these statements.
-4-
<PAGE>
TRANS OCEAN CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Lease revenue $43,625,000 $40,874,000 $87,417,000 $79,921,000
----------- ----------- ----------- -----------
Costs and expenses:
Managed equipment program
distributions....................... 13,194,000 13,068,000 26,373,000 26,519,000
Direct operating.................... 11,175,000 8,861,000 22,101,000 17,723,000
Depreciation and amortization....... 6,034,000 5,151,000 11,932,000 9,700,000
Marketing and administrative........ 5,901,000 6,208,000 12,211,000 12,288,000
Interest............................ 5,757,000 5,261,000 11,807,000 9,809,000
----------- ----------- ----------- -----------
Total costs and expenses.......... 42,061,000 38,549,000 84,424,000 76,039,000
----------- ----------- ----------- -----------
Income before provision for
income taxes..................... 1,564,000 2,325,000 2,993,000 3,882,000
Provision for income taxes........... 576,000 833,000 1,137,000 1,434,000
----------- ----------- ----------- -----------
Net income $ 988,000 $ 1,492,000 $ 1,856,000 $ 2,448,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE>
TRANS OCEAN CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1996 1995
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income.................................... $ 1,856,000 $ 2,448,000
------------- -------------
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization............... 11,932,000 9,700,000
Gain on sale of property and equipment...... (1,057,000) (521,000)
Provision for doubtful accounts............. 265,000 245,000
Amortization of deferred revenue............ (642,000) (900,000)
Provision for deferred income taxes......... 1,048,000 1,360,000
Other changes in assets and liabilities-
Receivables................................ (2,787,000) (2,186,000)
Accounts payable and accrued liabilities... (3,180,000) 4,977,000
Managed equipment program liabilities...... (4,622,000) (748,000)
Due to parent and affiliates............... 282,000 (559,000)
Other, net................................. 1,598,000 46,000
------------- -------------
Net cash provided by operating activities. 4,693,000 13,862,000
------------- -------------
Cash flows from investing activities:
Purchase of property and equipment........... (65,401,000) (112,907,000)
Proceeds from sale of property and equipment. 44,100,000 44,581,000
------------- -------------
Net cash used in investing activities..... (21,301,000) (68,326,000)
------------- -------------
Cash flows from financing activities:
Revolving credit repayments.................. (116,500,000) (62,500,000)
Revolving credit borrowings.................. 104,000,000 91,000,000
Senior debt repayments....................... (8,612,000) (9,688,000)
Senior debt borrowings....................... 30,000,000 34,906,000
Dividend on preferred stock.................. (197,000) (197,000)
------------- -------------
Net cash provided by financing activities. 8,691,000 53,521,000
------------- -------------
Net decrease in cash and cash equivalents. (7,917,000) (943,000)
Cash and cash equivalents, beginning of
period....................................... 23,055,000 18,451,000
------------- -------------
Cash and cash equivalents, end of period...... $ 15,138,000 $ 17,508,000
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE>
TRANS OCEAN CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDER'S EQUITY
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON CAPITAL RETAINED
STOCK SURPLUS EARNINGS
--------- ---------- -----------
<S> <C> <C> <C>
Balance, December 31, 1995........ $1,000 $2,501,000 $29,980,000
Net income....................... 1,856,000
Dividend on preferred stock...... (197,000)
Preferred stock accretion........ (13,000)
-------- ---------- -----------
Balance, June 30, 1996............ $ 1,000 $2,501,000 $31,626,000
-------- ---------- -----------
-------- ---------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
-7-
<PAGE>
TRANS OCEAN CONTAINER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. - GENERAL:
The foregoing unaudited consolidated financial statements of the Company have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Article 10 of
Regulation S-X as promulgated by the Securities and Exchange Commission.
Accordingly, these financial statements do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements and should therefore be read in conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995. In the opinion of
management, all adjustments necessary for a fair statement of the results for
the interim periods presented have been included. Operating results for the
first six months of 1996 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1996.
Beginning 1996, the Company has adopted SFAS No.121, "Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
The statement requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. An impairment loss is recognized when
expected undiscounted future cash flows to be generated by the asset are less
than the carrying value of the asset. Measurement of impairment is based upon
the fair value of the asset. The Company believes that the adoption of this
statement will not have a material impact upon its consolidated financial
statements.
Cash payments for interest were $12,207,000 and $9,494,000 for the six months
ended June 30, 1996 and 1995, respectively. Cash payments for income taxes were
$100,000 and $81,000 for the six months ended June 30, 1996 and 1995,
respectively.
NOTE 2. - MERGER OF AFFILIATES:
On March 31, 1995, the Company's parent, Trans Ocean Ltd. ("TOL") ,
transferred its ownership in two wholly-owned subsidiaries, Trans Ocean Chassis
Corporation ("TOC") and Trans Ocean Refrigerated Container Corporation I
("TOR"), to the Company. The transfer was effected by the merger of TOC with and
into TOR, followed by the merger of TOR with and into the Company.
The mergers have been accounted for in a manner similar to that of a
pooling-of-interests with the net assets of TOC and TOR being recorded in the
stockholder's equity accounts of the Company as of March 31, 1995. Prior period
financial statements have not been restated as the results of operations of TOC
and TOR were not material in relation to the consolidated financial statements
of the Company.
The net assets of the transaction as of March 31, 1995, were $393,000.
-8-
<PAGE>
TRANS OCEAN CONTAINER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
Accounts payable and accrued liabilities as of June 30, 1996, consist of the
following:
Equipment purchases payable..............................$18,504,000
Trade payables........................................... 2,763,000
Customer damage accrual.................................. 4,370,000
Accrued operating expenses............................... 9,236,000
Accrued interest......................................... 6,546,000
Other.................................................... 3,274,000
-----------
Total....................................................$44,693,000
-----------
-----------
NOTE 4. - SENIOR DEBT OBLIGATIONS:
As of June 30, 1996, the Company has $172,558,000 of equipment debt
outstanding with a weighted average interest rate of 7.31%.
As of June 30, 1996, the borrowing capacity under the Company's revolving
credit agreement was $100,000,000, with $30,000,000 outstanding.
NOTE 5. - PROPERTY AND EQUIPMENT:
Property and equipment at June 30, 1996, consists of the following:
Leasehold improvements.................................... $ 1,564,000
Rental equipment.......................................... 374,921,000
Furniture, fixtures and equipment......................... 13,170,000
------------
Total.................................................... 389,655,000
Less: Accumulated depreciation and amortization............ 58,578,000
------------
Net property and equipment.............................. $331,077,000
------------
------------
NOTE 6. - COMMITMENTS AND CONTINGENCIES:
Equipment Purchases
As of June 30, 1996, the Company had commitments of $32,324,000 to purchase
additional rental equipment, of which approximately $7,162,000 were denominated
in foreign currency. The Company has entered into foreign exchange contracts to
hedge these commitments.
-9-
<PAGE>
TRANS OCEAN CONTAINER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Financial Instruments
The Company from time to time utilizes various types of interest rate
contracts to manage its interest rate risk and to reduce the impact of changes
in interest rates on its variable rate indebtedness. Interest rate cap
agreements are used to protect the Company in the event of significant increases
in interest rates. As of June 30, 1996, the Company had interest rate cap
agreements which protect the Company from increases in LIBOR above 9.00% through
August 1996 with respect to $82,400,000 of variable rate indebtedness. The
Company also enters into interest rate swap agreements which effectively convert
the interest rate on $85,000,000 of variable rate debt into fixed rate debt.
These agreements provide for the Company to exchange variable rate interest
payments based on LIBOR for a fixed rate of 5.77% on $30,000,000 through July
1996, 5.705% on $30,000,000 through August 1996 and 4.963% on $25,000,000
through February 1998. Net interest settlements under the interest rate swap
agreements are recorded as an adjustment to interest expense.
Other Matters
The Company is party to various legal proceedings, claims and other
liabilities which arise in the ordinary course of business. In the opinion of
management, the amount of ultimate liability resulting from these actions will
not have a material impact upon the Company's financial condition, results of
operations, liquidity or equity.
NOTE 7. - GEOGRAPHICAL AREA AND CUSTOMER INFORMATION:
The Company operates on a worldwide basis through its headquarters in the
United States and sales offices in other locations. The Company's customer base
is diversified geographically, with most customers based outside of the United
States. Virtually all of the Company's customers are billed and pay in United
States dollars. For the six months ended June 30, 1996, no customer accounted
for more than 10% of lease revenue.
NOTE 8. - SUBSEQUENT EVENT
On July 24, 1996, TOL entered into an Agreement and Plan of Merger among
Transamerica Corporation ("TA"), Citation Sub Corp., a wholly owned subsidiary
of TA ("Sub Corp"), TOL, Greer M. Arthur, Marvin D. Dennis and Nancy A. Dennis
(the "Merger Agreement"). Pursuant to the Merger Agreement, Sub Corp. would be
merged with and into TOL, with TOL surviving as a wholly owned subsidiary of
TA (the "Merger"). As a result of the Merger, each share of TOL Common Stock
and Series B Preferred Stock will be converted into the right to receive shares
of TA Common Stock.
The Merger will be submitted to TOL's stockholders for approval by written
consent, and stockholders will be receiving proxy materials describing the
Merger and related matters. If the Merger Ageement is approved and adopted by a
majority of TOL's stockholders, and subject to the terms and conditions of the
Merger Agreement, a Certificate of Merger will be filed with the Secretary of
State of Delaware and the Merger will become effective upon such filing (the
"Effective Time"). It is currently anticipated that the Effective Time would
occur early in the fourth quarter of 1996.
-10-
<PAGE>
TRANS OCEAN CONTAINER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consummation of the Merger is subject to the satisfaction of several
conditions, including but not limited to (i) the adoption of the Merger
Agreement by the requisite vote of TOL stockholders and (ii) the approval by
regulatory authorities. If the above conditions, as well as the other conditions
contained in the Merger Agreement, have not been satisfied or waived on or prior
to the Effective Time, the Merger may not be consummated, even if it has been
approved by TOL stockholders.
The terms of the proposed Merger will be more fully described in a
Registration Statement on Form S-4 and accompanying Proxy Statement/Prospectus
to be filed with the Securities and Exchange Commission in connection with the
proposed Merger.
-11-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed here. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in this section, as well as
those discussed in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1995
RESULTS OF OPERATIONS
Lease revenue. Lease revenue increased $2.8 million or 6.7% in the second
quarter of 1996 as compared with the second quarter of 1995, and increased $7.5
million or 9.4% in the first six months of 1996 as compared with the first six
months of 1995. In each period, the increase resulted primarily from increased
fleet size, which was partially offset by declines in overall fleet utilization
and per diem lease rates.
Direct operating expenses. Direct operating expenses in the second quarter of
1996 increased $2.3 million or 26.1% as compared with the second quarter of 1995
and increased $4.4 million or 24.7% in the six month period ended June 30, 1996
as compared with the six month period ended June 30, 1995. In each period, the
increases resulted from increases in lease expense, as a result of additional
equipment operating leases, together with increases in repair and maintenance,
storage and positioning expenses, which were partially offset by decreases in
depot expense.
Managed equipment program distributions. Managed equipment program
distributions increased $0.1 million or 1.0% in the second quarter of 1996 as
compared with the second quarter of 1995, and decreased $0.1 million or 0.6% in
the first six months of 1996 as compared with the first six months of 1995. In
each period, these costs remained constant as an increase in the number of
managed containers was partially offset by a decrease in net operating revenue.
Depreciation and amortization expense. Depreciation and amortization expense
increased $.9 million or 17.1% in the second quarter of 1996 as compared with
the second quarter of 1995 and increased $2.2 million or 23.0% in the first six
months of 1996 as compared with the first six months of 1995. In each period,
the increase was primarily attributable to an increase in depreciation expense
resulting from a larger number of owned containers.
Marketing and administrative expenses. Marketing and administrative expenses
decreased $0.3 million or 4.9% in the second quarter of 1996 as compared with
the second quarter of 1995, and decreased $0.1 million or 0.6% in the first six
months of 1996 as compared with the first six months of 1995. In each period,
the decrease was primarily due to reductions in costs associated with personnel
and professional services .
Interest expense. Interest expense increased $0.5 million or 9.4% in the
second quarter of 1996 as compared with the second quarter of 1995, and
increased $2.0 million or 20.4% in the first six months of 1996 as compared with
the first six months of 1995. In each period, the increase was the result of
interest costs associated with the incurrence of additional debt to finance
equipment purchases, which was partially offset by a decrease in the interest
rates underlying most of the Company's debt obligations.
-12-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities were $4.7 million and $13.9
million in the first six months of 1996 and 1995, respectively. During both
1996 and 1995, the principal source of cash flow from operating activities was
net income, after adjustment for non-cash components of revenue and expense,
principally depreciation and amortization expense, the provisions for doubtful
accounts, and the provision for deferred income taxes, offset by gains on the
sale of property and equipment and the amortization of deferred revenues. In
1996, decreases in managed container equipment program liabilities and in
accounts payable and accrued liabilities and an increase in receivables, offset
cash provided by operating activities in the period. In 1995, an increase in
accounts payable and accrued liabilities offset by an increase in receivables
and a decrease in managed container equipment program liabilities, contributed
to the cash provided by operating activities in the period.
Cash flows used in investing activities were $21.3 million and $68.3 million
in the first six months of 1996 and 1995, respectively. These cash flows
include the proceeds from the sale of containers to managed equipment owners and
lessors, which constitute part of the Company's financing activities, as well as
proceeds from the disposal of used containers. The principal use of cash flows
from investing activities in these periods was for the purchase of new container
equipment. Additional equipment purchases are made directly by third parties
and affiliates under the Company's managed equipment programs. Because these
purchases are made by third parties, they are not included as a portion of the
Company's cash flows from investing activities. Such third-party equipment
purchases totaled $1.8 million and $4.4 million for the six months ended June
30, 1996 and 1995, respectively. Such direct equipment purchases made by
affiliates totaled $0.5 million and $2.7 million for the six months ended June
30, 1996 and 1995, respectively.
Cash flows provided by financing activities were $8.7 million and $53.5
million during the first six months of 1996 and 1995, respectively. The primary
source of cash flows from financing activities during these periods was
borrowing of long term indebtedness for the purchase of container equipment and
refinancing of existing indebtedness. The reduction in cash flows provided by
financing activities, from the first six months of 1995 to the first six months
of 1996, corresponds to a reduction in the level of new container equipment
purchases.
The Company believes that its balances of cash and cash equivalents, the
$70.0 million of availability under its revolving credit agreement, together
with cash expected to be generated from its operations, managed equipment
programs, and other borrowing commitments and capacity, will be sufficient to
meet its operating cash requirements, planned capital expenditures and expected
debt repayments over the next twelve months. The Company expects that debt
financing together with managed equipment programs will continue to be available
for the purchase of container equipment to provide for the growth of its
business in the future.
-13-
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
10.30 Agreement and Plan of Merger dated July 24, 1996, among Transamerica
Corporation, Citation Sub Corp., Trans Ocean Ltd., Greer M. Arthur,
Marvin D. Dennis and Nancy A. Dennis.
27.0 Financial Data Schedule
b) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter ended June 30, 1996
-14-
<PAGE>
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.
TRANS OCEAN CONTAINER CORPORATION
Date: August 13 ,1996 /s/ Marvin D. Dennis
-----------------------------------------
Marvin D. Dennis
Senior Vice President and Chief Financial
Officer (Principal Financial and
Accounting Officer, Duly Authorized
Officer)
-15-
<PAGE>
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
TRANSAMERICA CORPORATION,
CITATION SUB CORP.,
a wholly owned direct subsidiary of Transamerica Corporation,
TRANS OCEAN LTD.,
GREER M. ARTHUR,
MARVIN D. DENNIS,
in his individual capacity and as trustee
and
NANCY A. DENNIS, as trustee
July 24, 1996
<PAGE>
TABLE OF CONTENTS
Page
AGREEMENT AND PLAN OF MERGER............................................ 1
PRELIMINARY STATEMENTS.................................................. 1
AGREEMENT............................................................... 1
ARTICLE I: THE MERGER.................................................. 2
1.1 The Merger.................................................. 2
1.2 Effective Time.............................................. 2
1.3 Effects of the Merger....................................... 2
1.4 Certificate of Incorporation and Bylaws..................... 3
1.5 Directors and Officers...................................... 3
1.6 Additional Actions.......................................... 3
ARTICLE II: CONVERSION OF SECURITIES................................... 3
2.1 Conversion of Capital Stock................................. 3
2.2 Exchange of Certificates.................................... 7
(a) Exchange Agent...................................... 7
(b) Exchange Procedures................................. 7
(c) Distributions with Respect to Unexchanged Shares.... 8
(d) No Further Ownership Rights in TOL Common Stock and
TOL Series B Preferred Stock....................... 9
(e) Termination of Exchange Fund........................ 9
(f) No Liability........................................ 9
(g) Investment of Exchange Fund......................... 10
2.3 Escrow Funds................................................ 10
2.4 Treatment of Stock Options and Restricted Stock............. 16
2.5 Delivery of Preliminary Report, Pre-Closing Report, Closing
Date Report and Closing Report............................. 17
2.6 Purchase Price Adjustment and Post-Closing Adjustment for
Number of Units and Type of Equipment...................... 20
2.7 Purchase Price Adjustment and Post-Closing Adjustment for
Age of Equipment........................................... 23
2.8 Disagreements with Respect to Closing Report................ 26
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF
TRANSAMERICA AND SUBCORP................................. 27
3.1 Organization and Standing................................... 27
3.2 Corporate Power and Authority............................... 28
3.3 Capitalization of Transamerica.............................. 28
3.4 Disclosure.................................................. 29
3.5 Conflicts, Consents and Approval............................ 29
3.6 Registration Statement...................................... 30
-i-
<PAGE>
3.7 Brokerage and Finder's Fees................................. 30
3.8 Litigation.................................................. 30
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF
TOL, ARTHUR AND DENNIS................................... 31
4.1 Organization and Standing.................................. 31
4.2 Subsidiaries............................................... 31
4.3 Corporate Power and Authority.............................. 32
4.4 Capitalization of TOL...................................... 32
4.5 Conflicts; Consents and Approvals.......................... 33
4.6 No Material Adverse Change................................. 34
4.7 SEC Documents; Financial Statements Indebtedness........... 35
4.8 Taxes...................................................... 37
4.9 Compliance with Law........................................ 38
4.10 Proprietary Rights......................................... 38
4.11 Containers................................................. 39
4.12 Title to and Condition and Sufficiency of Properties....... 40
4.13 Title...................................................... 44
4.14 Operating Leases; Sales of Containers and Chassis in
Connection with Management Arrangements................... 45
4.15 Operations Manuals......................................... 46
4.16 Depot Agreements; Purchase Options......................... 46
4.17 Registration Statement..................................... 47
4.18 Litigation................................................. 47
4.19 Brokerage and Finder's Fees; Merger Fees................... 48
4.20 Employee Benefit Plans..................................... 48
4.21 Contracts.................................................. 52
4.22 Accounts Receivable........................................ 55
4.23 Officers and Employees..................................... 55
4.24 Labor Relations............................................ 56
4.25 Undisclosed Liabilities.................................... 56
4.26 Customer and Supplier Relationships........................ 57
4.27 Operation of TOL's Business................................ 58
4.28 Permits; Compliance........................................ 62
4.29 Environmental Matters...................................... 62
4.30 OSHA Matters............................................... 64
4.31 Insurance.................................................. 65
4.32 Board Recommendation....................................... 65
4.33 State Takeover Laws........................................ 65
4.34 Disclosure................................................. 66
4.35 Powers of Attorney, Guarantees, Sureties................... 66
4.36 Accuracy of Preliminary Report and Pre-Closing Report;
Certain Payments.......................................... 66
ARTICLE V: COVENANTS OF THE PARTIES................................... 66
5.1 Mutual Covenants........................................... 66
(a) General............................................... 66
(b) HSR Act............................................... 67
(c) Other Governmental Matters............................ 67
(d) Tax-Free Treatment.................................... 67
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(e) Public Announcements................................... 68
5.2 Covenants of Transamerica................................... 68
(a) Preparation of Transamerica Registration Statement..... 68
(b) Conduct of Transamerica's Operations................... 68
(c) Notification of Certain Matters........................ 69
(d) Indemnification........................................ 69
(e) Appraisal Rights....................................... 69
5.3 Covenants of TOL, Arthur and Dennis......................... 70
(a) TOL Stockholders Meeting............................... 70
(b) Information for the Registration Statement and
Preparation of TOL Proxy Statement.................... 70
(c) Conduct of TOL's Operations............................ 70
(d) No Solicitation........................................ 75
(e) Pre-Closing Report..................................... 75
(f) Inspection and Repair of Containers.................... 76
(g) Affiliate Agreements................................... 76
(h) Merger Fees............................................ 76
(i) Notification of Certain Matters........................ 77
(j) Consulting and Non-Competition Agreements.............. 77
(k) Access................................................. 77
(l) Repayment of Notes..................................... 77
ARTICLE VI: CONDITIONS................................................. 78
6.1 Mutual Conditions........................................... 78
6.2 Conditions to Obligations of TOL............................ 78
6.3 Conditions to Obligations of Transamerica and Subcorp....... 78
ARTICLE VII: TERMINATION AND AMENDMENT................................. 83
7.1 Termination................................................. 83
7.2 Effect of Termination....................................... 84
7.3 Amendment................................................... 84
7.4 Extension; Waiver........................................... 84
ARTICLE VIII: MISCELLANEOUS............................................ 85
8.1 Survival of Representations and Warranties.................. 85
8.2 Notices..................................................... 85
8.3 Interpretation.............................................. 87
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8.4 Counterparts................................................ 87
8.5 Entire Agreement............................................ 88
8.6 Third Party Beneficiaries................................... 88
8.7 Governing Law; Jurisdiction................................. 88
8.8 Specific Performance........................................ 88
8.9 Assignment.................................................. 88
8.10 Indemnification............................................. 89
8.11 CAVN Indemnification........................................ 96
8.12 Use of Any Remaining Proceeds in Escrow Fund................ 97
8.13 Expenses.................................................... 98
Exhibit A - Form of Escrow Agreement
Exhibit B - Form of Support/Voting Agreement
Exhibit C - Form of Opinion of Counsel to Transamerica
Re: Corporate Matters
Exhibit D - Form of Opinion of Counsel to TOL
Re: Corporate Matters
Exhibit E - Detail Support for Exhibit F [to be delivered 5
to 10 business days after the date hereof]
Exhibit F - Preliminary Report
Exhibit G - Form of Opinion of Counsel to TOL
Re: Tax Matters
Exhibit H - Representations to be provided to Counsel
for TOL
Exhibit I - Representations to be provided to Counsel for
Transamerica
Exhibit J - Certificate of Incorporation of the Surviving
Corporation
Exhibit K - TOL Container Condition Standards for Tank
Containers
Exhibit L - Consent of Spouse
Exhibit M - Form of Purchase Order
Exhibit N - Form of Opinion of Counsel to Transamerica
Re: Tax Matters
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INDEX OF DEFINED TERMS
Defined Term Section Reference
- ------------ -----------------
Action................................................... 4.18
Adjustment Escrow Fund................................. 2.3(a)
Agreed Amount......................................... 8.10(d)
Agreement............................................ Preamble
Applicable Laws........................................... 4.9
Arthur............................................... Preamble
Average Share Price.................................... 2.3(e)
Bankrupt.............................................. 4.12(g)
Bankruptcy Code....................................... 4.12(g)
CAVN Equipment........................................ 8.11(a)
CAVN Receivables...................................... 8.11(a)
CAVN Recovery......................................... 8.11(a)
Certificate of Merger..................................... 1.2
Certificates........................................... 2.2(b)
Chassis............................................... 4.11(a)
Claim.................................................. 2.3(b)
Claimed Amount........................................ 8.10(d)
Claims Notice.......................................... 2.3(b)
Closing................................................... 1.2
Closing Date.............................................. 1.2
Closing Date Report.................................... 2.5(c)
Closing Report......................................... 2.5(d)
Code.................................. Preliminary Statement B
Commission................................................ 3.6
Common Exchange Ratio.................................. 2.1(b)
Competing Transaction.................................. 5.3(d)
Confidentiality Agreement.............................. 5.3(k)
Consulting Agreements.................................. 5.3(j)
Container Operations.................................. 4.12(d)
Containers............................................ 4.11(a)
Contract.............................................. 4.21(a)
Controlled Group Liability............................ 4.20(a)
Deemed Average Share Price............................ 2.3(e)
Delaware Secretary of State............................... 1.2
Dennis............................................... Preamble
Depot Agreements...................................... 4.21(a)
DGCL................................................... 1.1(a)
Disputed Amount........................................ 2.5(e)
Dissenting Shares...................................... 2.1(e)
DOJ.................................................... 5.1(b)
DPP................................................... 4.11(a)
Effective Time............................................ 1.2
Environmental Laws.................................... 4.29(a)
Environmental Permits................................. 4.29(e)
ERISA................................................. 4.20(a)
ERISA Affiliate....................................... 4.20(a)
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Esrow Agent............................................ 2.3(a)
Escrow Agreement....................................... 2.3(a)
Escrow Fund A.......................................... 2.3(a)
Escrow Fund B.......................................... 2.3(a)
Escrow Fund C.......................................... 2.3(a)
Escrow Funds........................................... 2.3(a)
Exchange Act.............................................. 4.7
Exchange Agent......................................... 2.2(a)
Exchange Fund.......................................... 2.2(a)
Financed Equipment.................................... 4.12(a)
Financial Advisors....................................... 4.19
FTC.................................................... 5.1(b)
FTEUs................................................. 4.26(b)
Governmental Authority................................. 3.5(d)
Hazardous Materials................................... 4.29(a)
HSR Act................................................ 3.5(d)
Indebtedness Agreements................................... 4.7
Indemnified Parties................................... 8.10(a)
Indemnity Claim Notice................................ 8.10(d)
Invalid Claim Amount................................... 2.6(g)
IRS....................................................... 4.8
Kantz Approval......................................... 5.3(a)
Leased-In Equipment................................... 4.12(a)
Leased-Out Equipment.................................. 4.12(a)
Loss and Expenses..................................... 8.10(a)
Management Agreements................................. 4.12(h)
Material adverse effect................................... 8.3
Merger ................................Preliminary Statement A
Merger Fees.............................................. 4.19
Mr. Dennis........................................... Preamble
Multiemployer Plan.................................... 4.20(g)
Multiple Employer Plan................................ 4.20(g)
Non-Competition Agreements............................. 5.3(j)
NYSE................................................... 2.3(e)
NYSE Composite Tape.................................... 2.3(e)
Objecting Notice....................................... 2.3(d)
Operating Leases...................................... 4.12(a)
OSHA..................................................... 4.30
Owned Equipment....................................... 4.12(a)
Payment Shortfall....................................... 26(g)
PCBs.................................................. 4.29(c)
Per Share Amount....................................... 2.1(b)
Plans................................................. 4.20(a)
Pre-Closing Report..................................... 2.5(b)
Preferred Exchange Ratio............................... 2.1(c)
Preliminary Objecting Notice........................... 2.3(d)
Preliminary Report..................................... 2.5(a)
Preliminary Response Notice........................... 8.10(d)
Proprietary Rights....................................... 4.10
Prospectus................................................ 3.6
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Proxy Statement........................................... 3.6
Purchase Commitments.................................. 4.21(a)
Qualified Plan........................................ 4.20(d)
Receivables.............................................. 4.22
Registration Statement.................................... 3.6
Response Notice....................................... 8.10(d)
Restriction Period.................................... 8.10(h)
Revolving Credit Agreement............................ 4.12(a)
SEC Documents............................................. 4.7
Second Request......................................... 5.1(b)
Section 8.10(b) Claim................................. 8.10(b)
Secured Financing Agreements.......................... 4.12(a)
Securities Act............................................ 3.3
Security Interest..................................... 4.12(a)
Shortfall Amount....................................... 5.2(e)
Standard IICL Guide................................... 4.11(a)
Status................................................. 2.5(a)
Subcorp.............................................. Preamble
Subcorp Shares......................................... 2.1(a)
subsidiary............................................. 4.2(c)
Support/Voting Agreement................................. 4.33
Surviving Corporation.................................. 1.1(b)
tax....................................................... 4.8
TEUs.................................................. 4.26(b)
Third Party Claim..................................... 8.10(e)
TOL.................................................. Preamble
TOL Agents............................................. 2.3(d)
TOL Chassis Leases....................................... 4.13
TOL Common Stock....................................... 4.4(a)
TOL Disclosure Schedule................................... 4.1
TOL Operating Subsidiary.................................. 4.7
TOL Option............................................. 2.4(a)
TOL Permits.............................................. 4.28
TOL Series B Preferred Stock........................... 4.4(a)
TOL Stock................................................. 4.4
TOL Stockholders....................................... 2.1(b)
Transamerica......................................... Preamble
Transamerica Common Shares............................. 3.3(a)
Valid Claim Amount..................................... 2.6(g)
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of the 24th day of July, 1996, by and among Transamerica
Corporation, a Delaware corporation "Transamerica"), Citation Sub Corp., a
Delaware corporation and a wholly owned direct subsidiary of Transamerica
("Subcorp"), Trans Ocean Ltd., a Delaware corporation ("TOL"), Greer M. Arthur
("Arthur"), Marvin D. Dennis, in his individual capacity ("Mr. Dennis") and as
trustee of The Dennis Family Living Trust, and Nancy A. Dennis, as trustee of
The Dennis Family Living Trust (Mr. Dennis and Ms. Dennis being collectively
referred to herein as "Dennis").
PRELIMINARY STATEMENTS
A. Transamerica desires to acquire the container business and other
businesses operated by TOL through the merger (the "Merger") of Subcorp with and
into TOL, with TOL as the surviving corporation, pursuant to which each share of
TOL Stock (as defined in Section 4.4) outstanding at the Effective Time (as
defined in Section 1.2) will be converted into the right to receive Transamerica
Common Shares (as defined in Section 3.3) as more fully provided herein.
B. The parties intend that the Merger constitute a tax-free
"reorganization" within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code"), by reason of Section 368(a)
thereof.
C. The respective Boards of Directors of Transamerica, Subcorp and
TOL have determined the Merger in the manner contemplated herein to be desirable
and in the best interests of their respective stockholders and, by resolutions
duly adopted, have approved and adopted this Agreement.
AGREEMENT
Now, therefore, in consideration of these premises and the mutual and
dependent promises hereinafter set forth, the parties hereto agree as follows:
<PAGE>
ARTICLE I
THE MERGER
1.1 THE MERGER. (a) Upon the terms and subject to the conditions
hereof, and in accordance with the provisions of the Delaware General
Corporation Law (the "DGCL"), Subcorp shall be merged with and into TOL as soon
as practicable following the satisfaction or waiver of the conditions set forth
in Article VI. Following the Merger, the separate corporate existence of
Subcorp shall cease and TOL shall continue its existence under the laws of the
State of Delaware. TOL, in its capacity as the corporation surviving the
Merger, is hereinafter sometimes referred to as the "Surviving Corporation."
(b) In the event that the holders of more than 16% of the shares of
TOL Common Stock demand appraisal rights in accordance with the requirements of
Section 262(d) of the DGCL, TOL shall, upon the terms and subject to the
conditions hereof, and in accordance with the provisions of the DGCL, be merged
with and into Subcorp as soon as practicable following the satisfaction or
waiver of the conditions set forth in Article VI. Following this merger, the
separate corporate existence of TOL shall cease and Subcorp shall continue its
existence under the laws of the State of Delaware. In such case, references
herein to the "Surviving Corporation" shall be deemed to be references to
Subcorp, in its capacity as the corporation surviving the merger and references
herein to the "Merger" shall be deemed to be references to the merger of TOL
with and into Subcorp.
1.2 EFFECTIVE TIME. The Merger shall be consummated by filing with
the Secretary of State of the State of Delaware (the "Delaware Secretary of
State") a certificate of merger (the "Certificate of Merger") in such form as is
required by and executed in accordance with Section 252(c) of the DGCL. The
Merger shall become effective at the time (the "Effective Time") when the
Certificate of Merger has been filed with the Delaware Secretary of State or at
such later time as shall be specified in the Certificate of Merger. Prior to
the filing referred to in this Section 1.2, a closing (the "Closing") shall be
held at the offices of Transamerica, 600 Montgomery Street, San Francisco,
California 94111, or such other place as the parties may agree, on the date (the
"Closing Date") set by Transamerica, which date shall be within ten business
days following the date upon which all conditions set forth in Article VI hereof
have been satisfied or waived.
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 259 of the DGCL.
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1.4 CERTIFICATE OF INCORPORATION AND BYLAWS. At the Effective Time,
(i) the Certificate of Incorporation of the Surviving Corporation shall be
amended to read in its entirety as Exhibit J hereto, and (ii) the By-laws of
Subcorp in effect immediately prior to the Effective Time shall be the By-laws
of the Surviving Corporation, in each case until amended in accordance with
Applicable Law (as defined in Section 4.9).
1.5 DIRECTORS AND OFFICERS. From and after the Effective Time, the
officers of Subcorp shall be the officers of the Surviving Corporation and the
directors of Subcorp shall be the directors of the Surviving Corporation, in
each case until their respective successors are duly elected and qualified.
1.6 ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable to
(a) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of TOL, or (b) otherwise carry out the provisions of this
Agreement, TOL and its officers and directors shall be deemed to have granted to
the Surviving Corporation an irrevocable power of attorney to execute and
deliver all such deeds, assignments or assurances in law and to take all acts
necessary, proper or desirable to vest, perfect or confirm title to and
possession of such rights, properties or assets in the Surviving Corporation and
otherwise to carry out the provisions of this Agreement, and the officers and
directors of the Surviving Corporation are authorized in the name of TOL or
otherwise to take any and all such action.
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of Transamerica, Subcorp or TOL:
(a) Each share of common stock, $1.00 par value per share, of Subcorp
issued and outstanding immediately prior to the Effective Time (the
"Subcorp Shares") shall be converted into one share of common stock, $1.00
par value per share, of the Surviving Corporation, and such shares shall
thereafter constitute all of the issued and outstanding capital stock of
the Surviving Corporation; provided, however, that if Section 1.1(b) shall
apply to the form of the Merger, each Subcorp Share shall remain
outstanding
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and shall thereafter be one share of common stock of the Surviving
Corporation of the Merger as effected in accordance with said Section
1.1(b) and such shares shall thereafter constitute all of the issued and
outstanding capital stock of the Surviving Corporation.
(b) Subject to the provisions of Sections 2.3, 2.6 and 2.7, each
share of TOL Common Stock (as defined in Section 4.4) issued and
outstanding immediately prior to the Effective Time shall be converted into
and represent the right to receive a number of Transamerica Common Shares
(rounded to the nearest ten-thousandth of a share) (the "Common Exchange
Ratio") in an amount equal to the quotient obtained by dividing (x) the Per
Share Amount (as hereinafter defined) by (y) the Deemed Average Share Price
(as defined in Section 2.3(e)(i) below); provided, further, that no
Transamerica Common Shares shall be issued to a TOL Stockholder (as defined
below) who demands appraisal rights in accordance with the requirements of
Section 262(d) of the DGCL and such TOL Stockholder shall not be entitled
to payment of any amounts pursuant to this Section 2.1(b) or Sections 2.3,
2.5, 2.6 or 2.7. The "Per Share Amount" shall equal the quotient obtained
by dividing (x) $110,700,000 (or, if Section 1.1(b) shall apply to the form
of the Merger, $107,700,000), increased by the total amount of cash paid to
TOL between the execution of this Agreement and the Closing in order to
exercise TOL Options (as defined in Section 2.4) and decreased by the
product of the Preferred Exchange Ratio (as defined in Section 2.1(c))
multiplied by the Deemed Average Share Price, and further multiplied by the
number of shares of TOL Series B Preferred Stock (as defined in Section
4.4) which are issued and outstanding immediately prior to the Effective
Time, by (y) the number of shares of TOL Common Stock which are issued and
outstanding immediately prior to the Effective Time. Promptly following
the Effective Time, certificates representing (i) $11,000,000 of the
Transamerica Common Shares issued pursuant to the first sentence of this
Section 2.1(b) shall be paid into Escrow Fund A, (ii) $2,500,000 of such
Transamerica Common Shares shall be paid into Escrow Fund B, (iii)
$1,000,000 of such Transamerica Common Shares shall be paid into Escrow
Fund C, and (iv) $9,000,000 of such Transamerica Common Shares shall be
paid into the Adjustment Escrow Fund (each as defined in Section 2.3(a))
with each of the foregoing dollar amounts to be calculated using the Deemed
Average Share Price, in accordance with the provisions of Section 2.3
hereof. Any such Transamerica Common Shares (together with any dividends
or distributions thereon, if any), to
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be released from the aforementioned Escrow Funds to holders of TOL
Common Stock (the "TOL Stockholders") in accordance with the terms of
the Escrow Agreement shall be released to each TOL Stockholder whose
shares of TOL Common Stock are converted into Transamerica Common Shares
pursuant to the first sentence of this Section 2.1(b) in amounts which
constitute the same proportion of the Transamerica Common Shares to be
released from the applicable Escrow Fund that the Transamerica Common
Shares that each such TOL Stockholder was entitled to receive pursuant
to the first sentence of this Section 2.1(b) bear to the Transamerica
Common Shares which all TOL Stockholders whose shares of TOL Common
Stock are converted into Transamerica Common Shares pursuant to the
first sentence hereof were entitled to so receive; provided, however,
except for the right of Arthur and Dennis pursuant to Section 2.3(e)(ii)
to cause the Escrow Agent to sell Transamerica Common Shares and invest
the proceeds under the circumstances set forth therein, no TOL
Stockholder shall have a right to sell, transfer, pledge, encumber or
otherwise dispose of (or to cause any of the foregoing to occur), or to
receive any certificates representing, any such Transamerica Common
Shares prior to the release of such shares to TOL Stockholders from the
applicable Escrow Fund pursuant to the terms of this Agreement and the
Escrow Agreement (as defined in Section 2.3). No certificates for
fractional Transamerica Common Shares shall be issued as a result of the
conversion provided for in this Section 2.1(b). To the extent that an
outstanding share of TOL Common Stock would otherwise have become a
fractional Transamerica Common Share, the holder thereof, upon
presentation of such fractional interest represented by an appropriate
certificate for TOL Common Stock to the Exchange Agent pursuant to
Section 2.2, shall be entitled to receive a cash payment therefor in an
amount equal to the value (determined with reference to the closing
price of Transamerica Common Shares on the NYSE Composite Tape on the
last full trading day immediately prior to the Effective Time) of such
fractional interest. Such payment with respect to fractional shares is
merely intended to provide a mechanical rounding off of, and is not a
separately bargained for, consideration. If more than one certificate
representing shares of TOL Common Stock shall be surrendered for the
account of the same holder, the number of Transamerica Common Shares for
which certificates have been surrendered shall be computed on the basis
of the aggregate number of shares represented by the certificates so
surrendered.
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(c) Each share of TOL Series B Preferred Stock (as defined in
Section 4.4) issued and outstanding immediately prior to the Effective
Time shall be converted into and represent the right to receive a number
of Transamerica Common Shares (rounded to the nearest ten-thousandth of
a share) (the "Preferred Exchange Ratio") in an amount equal to the
quotient obtained by dividing (x) $12.50, plus any accrued but unpaid
dividends on such share of TOL Series B Preferred Stock (which dividends
shall not, with respect to all outstanding shares of TOL Series B
Preferred Stock, in the aggregate, exceed $98,475 as of the Closing
Date), by (y) the Deemed Average Share Price. To the extent that an
outstanding share of TOL Series B Preferred Stock would otherwise have
become a fractional Transamerica Common Share, the holder thereof, upon
presentation of such fractional interest represented by an appropriate
certificate for TOL Series B Preferred Stock to the Exchange Agent
pursuant to Section 2.2, shall be entitled to receive a cash payment
therefor in an amount equal to the value (determined with reference to
the closing price of Transamerica Common Shares on the NYSE Composite
Tape on the last full trading day immediately prior to the Effective
Time) of such fractional interest. Such payment with respect to
fractional shares is merely intended to provide a mechanical rounding
off of, and is not a separately bargained for, consideration. If more
than one certificate representing shares of TOL Series B Preferred Stock
shall be surrendered for the account of the same holder, the number of
Transamerica Common Shares for which certificates have been surrendered
shall be computed on the basis of the aggregate number of shares
represented by the certificates so surrendered.
(d) Each share of capital stock of TOL held in the treasury of TOL
shall be cancelled and retired and no payment shall be made in respect
thereof.
(e) Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, each share of TOL Common Stock and each share of TOL Series B
Preferred Stock which is issued and outstanding immediately prior to the
Effective Time and which is held by a TOL Stockholder who has not voted
such shares in favor of adoption of the Agreement and who has demanded
appraisal rights with respect thereto in the manner provided in Section 262
of the DGCL (collectively, the "Dissenting Shares") shall not be converted
into or represent the right to receive the merger consideration provided
for in paragraph (b) or (c) of this Section 2.1, as the case may be, but,
instead, the holders
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thereof shall be entitled to receive payment of the appraised value of
such shares in accordance with the provisions in Section 262 of the
DGCL; provided, however, that if any holder of Dissenting Shares shall
subsequently withdraw such demand for appraisal of such shares, or lose
the right to appraisal as provided in Section 262 of the DGCL, such
holder or holders, as the case may be, shall forfeit the right to
appraisal of such shares and such shares shall thereupon be deemed to
have been automatically converted into the right to receive, as of the
Effective Time, the merger consideration provided for in paragraph (b)
or (c) of this Section 2.1, as the case may be, without any interest
thereon.
2.2 Exchange Of Certificates.
(a) Exchange Agent. Promptly following the Effective Time,
Transamerica shall deposit with The Bank of New York or such other exchange
agent as may be designated by Transamerica (the "Exchange Agent"), for the
benefit of the TOL Stockholders, for exchange in accordance with this Section
2.2, certificates representing Transamerica Common Shares issuable pursuant to
the first sentence of Section 2.1(b), excluding the Transamerica Common Shares
to be paid into the Escrow Funds, and pursuant to Section 2.1(c) in exchange for
outstanding shares of TOL Common Stock and shares of TOL Series B Preferred
Stock and shall from time to time deposit cash in an amount reasonably expected
to be paid pursuant to Sections 2.1(b) and 2.1(c) (such Transamerica Common
Shares and cash, together with any dividends or distributions with respect
thereto, the "Exchange Fund").
(b) Exchange Procedures. As soon as practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate or
certificates (the "Certificates") which immediately prior to the Effective Time
represented outstanding shares of TOL Common Stock or TOL Series B Preferred
Stock whose shares were converted into the right to receive Transamerica Common
Shares pursuant to the first sentence of Section 2.1(b) or pursuant to Section
2.1(c), as the case may be, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Transamerica may
reasonably specify) and (ii) instructions for effecting the surrender of the
Certificates in exchange for certificates representing Transamerica Common
Shares. Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with a duly executed letter of transmittal, the holder of such
Certificate
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shall be entitled to receive in exchange therefor (x) a certificate
representing that number of Transamerica Common Shares which such holder has
the right to receive pursuant to the first sentence of Section 2.1(b),
excluding the Transamerica Common Shares to be paid into the Escrow Funds, or
pursuant to Section 2.1(c), as the case may be, and (y) a check representing
the amount of cash in lieu of fractional shares, if any, and unpaid dividends
and distributions if any, which such holder has the right to receive pursuant
to the provisions of this Article II, after giving effect to any required
withholding tax, and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the cash in lieu of
fractional shares, unpaid dividends and distributions, if any, payable to
holders of shares of TOL Common Stock or TOL Series B Preferred Stock. In
the event of a transfer of ownership of shares of TOL Common Stock or TOL
Series B Preferred Stock which is not registered on the transfer records of
TOL, a certificate representing the proper number of Transamerica Common
Shares, together with a check for the cash to be paid in lieu of fractional
shares, if any, and unpaid dividends and distributions, if any, may be issued
to such transferee if the Certificate representing such shares of TOL Common
Stock or TOL Series B Preferred Stock, as the case may be, held by such
transferee is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon
surrender a certificate representing Transamerica Common Shares and cash in
lieu of fractional shares thereof as provided in Section 2.1(b) or 2.1(c), as
the case may be.
(c) Distributions With Respect to Unexchanged Shares. Notwithstanding
any other provisions of this Agreement, no dividends or other distributions
declared or made after the Effective Time with respect to Transamerica Common
Shares having a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate, and no cash payment in lieu of
fractional shares shall be paid to any such holder, until the holder shall
surrender such Certificate as provided in this Section 2.2. Subject to the
effect of Applicable Laws (as defined in Section 4.9), following surrender of
any such Certificate, there shall be paid to the holder of the certificates
representing whole Transamerica Common Shares issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends
or other distributions with a record date after the Effective Time
theretofore payable with respect to such whole Transamerica Common Shares and
not paid, less the amount of any withholding taxes which
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may be required thereon, and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective
Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole Transamerica Common Shares, less the
amount of any withholding taxes which may be required thereon.
(d) No Further Ownership Rights In TOL Common Stock and TOL Series B
Preferred Stock. All Transamerica Common Shares issued upon surrender of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 2.1(b) or 2.1(c)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of TOL Common Stock or
TOL Series B Preferred Stock represented thereby (other than the right to
receive any portion of the Escrow Funds pursuant to the terms of this Agreement
and the Escrow Agreement), and there shall be no further registration of
transfers on the stock transfer books of TOL of shares of TOL Common Stock or
TOL Series B Preferred Stock outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided in
this Section 2.2.
(e) Termination Of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to TOL stockholders for twelve months after the
Effective Time shall be delivered to Transamerica, upon demand thereby, and
holders of shares of TOL Common Stock or TOL Series B Preferred Stock who have
not theretofore complied with this Section 2.2 shall thereafter look only to
Transamerica for payment of any claim to Transamerica Common Shares, cash in
lieu of fractional shares thereof, or dividends or distributions, if any, in
respect thereof. If necessary in connection with the orderly distribution of
Transamerica Common Shares to TOL Stockholders pursuant to Sections 2.6(c) and
2.7(c), the termination of the Exchange Fund shall be extended until the 180th
day following the date that any additional Transamerica Common Shares are paid
into the Exchange Fund.
(f) No Liability. None of Transamerica, the Surviving Corporation or
the Exchange Agent shall be liable to any person in respect of any shares of TOL
Common Stock or TOL Series B Preferred Stock (or dividends or distributions with
respect thereto) or cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to seven years after the
Effective Time (or immediately prior to such earlier date on which any cash, any
cash in lieu of fractional shares of retained TOL Common
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Stock or TOL Series B Preferred Stock or any dividends or distributions with
respect to whole shares of TOL Common Stock or TOL Series B Preferred Stock
in respect of such Certificate would otherwise escheat to or become the
property of any Governmental Authority (as defined in Section 3.4)), any
cash, dividends or distributions in respect of such Certificate shall, to the
extent permitted by Applicable Law, become the property of Transamerica, free
and clear of all claims or interest of any person previously entitled thereto.
(g) Investment Of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Transamerica, on a daily
basis. Any interest and other income resulting from such investments shall be
paid to Transamerica upon termination of the Exchange Fund pursuant to Section
2.2(e).
2.3 Escrow Funds. (a) Promptly following the Effective Time,
certificates representing a portion of the Transamerica Common Shares into which
shares of TOL Common Stock are converted pursuant to Section 2.1(b) shall be
delivered to a mutually satisfactory escrow agent (the "Escrow Agent"), as
follows:
(i) certificates representing Transamerica Common Shares with an
aggregate value of $11,000,000 shall be delivered to the Escrow Agent (such
Transamerica Common Shares to be so delivered, together with any dividends
or distributions with respect thereto and any proceeds thereof, "Escrow
Fund A"),
(ii) certificates representing Transamerica Common Shares with an
aggregate value of $2,500,000 shall be delivered to the Escrow Agent (such
Transamerica Common Shares to be so delivered, together with any dividends
or distributions with respect thereto and any proceeds thereof, "Escrow
Fund B"),
(iii) certificates representing Transamerica Common Shares
with an aggregate value of $1,000,000 shall be delivered to the Escrow
Agent (such Transamerica Common Shares to be so delivered, together with
any dividends, or distributions with respect thereto and any proceeds
thereof, "Escrow Fund C"), and
(iv) certificates representing Transamerica Common Shares with an
aggregate value of $9,000,000 shall be delivered to the Escrow Agent (such
Transamerica Common Shares to be so delivered, together
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with any dividends or distributions with respect thereto, the "Adjustment
Escrow Fund")
with each of the foregoing dollar amounts in clauses (i), (ii), (iii) and (iv)
to be calculated using the Deemed Average Share Price.
Escrow Fund A, Escrow Fund B, Escrow Fund C and the Adjustment Escrow
Fund are sometimes referred to collectively as the "Escrow Funds." Each of
Escrow Fund A, Escrow Fund B, Escrow Fund C and the Adjustment Escrow Fund shall
be held pursuant to an escrow agreement (the "Escrow Agreement") among
Transamerica, Subcorp, TOL, Arthur, Dennis and the Escrow Agent, substantially
in the form of Exhibit A attached hereto. Except for the right of Arthur and
Dennis pursuant to Section 2.3(e)(ii) to cause the Escrow Agent to sell
Transamerica Common Shares and invest the proceeds under the circumstances set
forth therein, no TOL Stockholder shall have a right to sell, transfer, pledge,
encumber or otherwise dispose of (or to cause any of the foregoing to occur), or
to receive any certificates representing, any Transamerica Common Shares paid
into the Escrow Funds unless and until such shares shall have been released to
TOL Stockholders pursuant to the provisions of this Agreement and the Escrow
Agreement. The Escrow Agent shall cause to be voted all of the Transamerica
Common Shares in the Escrow Funds as to which it receives instructions from TOL
Stockholders whose shares of TOL Common Stock are converted into Transamerica
Common Shares pursuant to the first sentence of Section 2.1(b), in accordance
with such instructions.
(b) The Escrow Funds may be claimed by Transamerica pursuant to the
following provisions and the provisions of the Escrow Agreement:
(i) Transamerica shall be entitled to make a claim (a "Claim")
against Escrow Fund A
(A) if Transamerica shall make any claim for
indemnification pursuant to Section 8.10 (other than Section
8.10(a)(C)) of this Agreement; and
(B) for the cost of repairs to the Containers and
Chassis (as defined in Section 4.11(a)) owned, managed or
leased-in by TOL which in any case are off-lease as of the
Closing Date to the extent in excess of $200,000; provided,
however, that any amounts recovered by TOL or Transamerica from
third parties (including, without limitation, payments by
third party insurers, manufacturers, depots and managed
container owners) with respect to such repairs
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shall be offset against the cost of repairs in determining
whether the cost thereof exceeds $200,000;
(ii) Transamerica shall be entitled to make a Claim against
Escrow Fund B if it shall make any claim for indemnification pursuant to
Section 8.11 of this Agreement;
(iii) Transamerica shall be entitled to make a Claim against
Escrow Fund C if it shall make any claim for indemnification pursuant to
Section 8.10(a)(C) of this Agreement; and
(iv) Transamerica shall be entitled to assets which are held in
the Adjustment Escrow Fund pursuant to Sections 2.5(e), 2.6(d) and 2.7(d)
of this Agreement.
Unless Transamerica shall have theretofore delivered to the Escrow
Agent a written notice or notices (individually, a "Claims Notice") stating
that Transamerica has a Claim or Claims against the applicable Escrow Fund
pursuant to this Section 2.3, the amounts then remaining in such Escrow Fund
together with interest earned and distributions actually made on such amounts
(after deduction for any applicable taxes) shall, in the case of Escrow Funds
A, B and C, be delivered to the TOL Stockholders whose shares of TOL Common
Stock are converted into Transamerica Common Shares pursuant to the first
sentence of Section 2.1(b) as promptly as practicable after the second
anniversary of the Closing Date; provided, however, that to the extent that
on such second anniversary there continues to exist an unresolved dispute
regarding a Claim by Transamerica under this Section 2.3(b), the portion of
the applicable Escrow Fund that represents the amount of Transamerica's Claim
shall be retained in such Escrow Fund until any dispute with respect to such
Claim is finally resolved. If amounts are remaining in Escrow Funds A, B
and/or C and, in accordance with this Agreement, are available at the
expiration of such Escrow Fund to be delivered to the TOL Stockholders whose
shares of TOL Common Stock are converted into Transamerica Common Shares
pursuant to Section 2.1(b), Dennis and Arthur shall be reimbursed from the
amounts then remaining in such Escrow Funds and which are so available (but
only to the extent thereof) for the share of the fees and expenses of the
Escrow Agent which each shall have paid and for the accounting and legal fees
and expenses which each shall have paid on behalf of the TOL Stockholders in
connection with claims for indemnification pursuant to Section 8.10(a) and
any dispute relating to the Closing Report. Notwithstanding the second
preceding sentence, Arthur and Dennis shall be entitled, in their sole
discretion, to extend the period of Escrow Funds A, B and/or C and/or to
cause Transamerica
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Common Shares to be retained in such Escrow Funds for purposes of satisfying
certain of the indemnification obligations under Section 8.10(b) or Section
8.11, in each case in the circumstances specified in Section 8.12. In the
case of the Adjustment Escrow Fund, the amounts then remaining in such Fund,
together with interest earned and distributions actually made on such amounts
(after deduction for any applicable taxes) shall be delivered to Transamerica
and/or distributed by the Escrow Agent to the TOL Stockholders whose shares
of TOL Common Stock are converted into Transamerica Common Shares pursuant to
the first sentence of Section 2.1(b), in accordance with Sections 2.5(e),
2.6(d) and 2.7(d).
(c) All dividends payable and distributions made in respect of
Transamerica Common Shares constituting the Escrow Funds, any portion of the
$2,000,000 allocated to Merger Fees under Section 4.19 hereof which has not been
paid out or spent in accordance with the first or second sentence of Section
5.3(h) within six months of the Effective Time, and all interest on any cash
portion of the Escrow Funds, shall be paid, in the case of the Merger Fees, into
Escrow Fund A and, in the case of any such dividends, distributions or interest,
into the applicable Escrow Fund and, if not used to satisfy expenses and Claims
of Transamerica thereunder or otherwise distributed thereunder pursuant to the
procedures relating to the Adjustment Escrow Fund, shall be distributed to
Transamerica or proportionately to the TOL Stockholders whose shares of TOL
Common Stock are converted into Transamerica Common Shares pursuant to the first
sentence of Section 2.1(b), as the case may be, as and when the portion of the
applicable Escrow Fund to which such dividends, distribution or interest relate
is transferred to any such party; provided, however, that the Escrow Agent shall
send a report to each TOL Stockholder whose shares of TOL Stock are converted
into Transamerica Common Shares pursuant to the first sentence of Section 2.1(b)
within 45 days of the end of each calendar year during the period prior to the
expiration of the Escrow Funds and promptly following their expiration
estimating the taxable income of the applicable Escrow Funds during such period
and transmitting a pro rata distribution equal to 45% of the taxable income
allocable to each such TOL Stockholder.
(d) Transamerica shall not be entitled to receive any of the
assets held in Escrow Funds A, B or C unless it has delivered a notice (the
"Claims Notice") to (i) the Escrow Agent, (ii) to Arthur and Dennis, on
behalf of the holders of TOL Common Stock, and (iii) to the agents of Arthur
and Dennis, whose names and addresses are set forth in Section 2.3(d) of the
TOL Disclosure Schedule (and who Arthur and Dennis may change by providing
notice to Transamerica and the Escrow Agent
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in accordance with Section 8.2 hereof) (the "TOL Agents") stating that
Transamerica has a Claim or Claims for all or part of the relevant Escrow
Fund and, to the extent reasonably ascertainable, the estimated amount
thereof.
With respect to any Claim against any of Escrow Funds A, B or C
delivered pursuant to this Section 2.3, Arthur, Dennis or any TOL Agent shall
have fifteen business days from receipt of a Claims Notice to serve on the
Escrow Agent, with a copy to Transamerica, a notice (the "Preliminary
Objecting Notice") that the TOL Stockholders object to all or part of such
Claims against the applicable Escrow Fund. The Preliminary Objecting Notice
may, but need not, specify the reasons for objection to the Claims Notice.
Beginning five business days after its receipt of a Preliminary Objecting
Notice, Transamerica shall provide Arthur, Dennis, any TOL Agent and their
respective counsel, accountants and other advisors full access to books,
records and personnel of the Surviving Corporation which are reasonably
requested to determine, understand and defend against the Claim of
Transamerica. Arthur and Dennis shall, within 20 business days following
delivery of the Preliminary Objecting Notice, deliver a notice (the
"Objecting Notice") to Transamerica setting forth in reasonable detail the
reasons for the objection at issue. If an Objecting Notice or a Preliminary
Objecting Notice containing the reasons for the objection at issue shall be
delivered, Transamerica, Arthur and Dennis shall, during the 15 business days
following such delivery, use reasonable efforts to reach agreement on the
disputed Claims. If, during such period, Transamerica, Arthur and Dennis are
unable to reach such agreement, then they shall promptly thereafter pursue
non-binding mediation by an independent mediator reasonably satisfactory to
Transamerica, Arthur and Dennis (who shall not have any material relationship
with Transamerica, TOL, Arthur or Dennis). Such mediation shall not be
final, conclusive or binding upon Transamerica or the TOL Stockholders. The
cost of such mediation shall be borne equally by Transamerica, on the one
hand, and Arthur and Dennis, on the other. Transamerica, on the one hand, or
Arthur and Dennis, on the other hand, shall have the right to commence legal
proceedings in the Superior Court of the State of California in and for the
City and County of San Francisco or the federal district court in the
Northern District of California, as applicable, for the purpose of having a
dispute regarding a Claim by Transamerica adjudicated if such party shall
conclude that the mediation provided for in this Section 2.3(d) has not
produced a negotiated resolution of the dispute. To the extent that neither
Arthur nor Dennis nor any TOL Agent shall deliver a Preliminary Objecting
Notice within fifteen business days following receipt of the Claims Notice
(or, if the Claims Notice does not specify the estimated amount thereof, as
soon
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thereafter as the amount of the Claim is ascertainable), or, if the
Preliminary Objecting Notice is delivered within the appropriate period, to
the extent that neither Arthur nor Dennis shall deliver an Objecting Notice
within twenty business days following receipt by Transamerica of the
Preliminary Objecting Notice, the Escrow Agent shall deliver to Transamerica
the portion of the applicable Escrow Fund which it claimed in the Claims
Notice in respect of which no Preliminary Objecting Notice or Objecting
Notice, as the case may be, has been received together with all interest
actually earned and distributions made on it (after deduction or provision
for any applicable taxes).
The assets held in the Adjustment Escrow Fund shall be delivered to
Transamerica and/or distributed by the Escrow Agent to the TOL Stockholders
whose shares of TOL Common Stock are converted into Transamerica Common Shares
pursuant to the first sentence of Section 2.1(b), in accordance with Sections
2.5(e), 2.6(d) and 2.7(d).
(e) (i) For purposes of all Claims against any of the Escrow Funds
by Transamerica, the value of each Transamerica Common Share with respect to
which a Claim has been made by Transamerica, or which Transamerica or the TOL
Stockholders whose shares were converted into Transamerica Common Shares
pursuant to the first sentence of Section 2.1(b) were otherwise entitled to
receive, shall be deemed to be the Deemed Average Share Price (as defined
below), regardless of whether the actual trading price for the Transamerica
Common Shares is greater than or lower than the Deemed Average Share Price,
which shall be adjusted to account for any split, combination or
recapitalization of Transamerica Common Shares. As used in this Agreement, the
term "Average Share Price" shall mean the average of the closing prices of
Transamerica Common Shares as reported on the New York Stock Exchange ("NYSE")
Composite Tape ("NYSE Composite Tape") on each of the last fifteen trading days
ending on and including the second trading day prior to the Closing Date and the
term "Deemed Average Share Price" shall mean (i) the Average Share Price if the
Average Share Price is more than $61.40 or less than $92.10; (ii) $61.40 if the
Average Share Price is equal to or less than $61.40; or (iii) $92.10 if the
Average Share Price is equal to or more than $92.10.
(ii) At any time after the first anniversary of the Closing Date,
Arthur and Dennis shall be entitled to cause the Escrow Agent to sell up to 50%
of the Transamerica Common Shares then remaining in any or all of Escrow Funds
A, B and/or
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C and to cause the Escrow Agent to invest and reinvest the proceeds
as they from time to time deem advisable, with such investment and reinvestment
being subject to obtaining the consent of Transamerica, which consent shall not
be unreasonably withheld. Arthur and Dennis shall be entitled to cause the
Escrow Agent to invest and reinvest the proceeds without the consent of
Transamerica in (i) direct obligations of, or obligations guaranteed by, the
United States government or any agency or instrumentality thereof or (ii)
savings certificates or certificates of deposit issued by an incorporated bank
organized and doing business under the laws of the United States or any state
having combined capital and surplus of not less than $100,000,000.
For purposes of all Claims against any of the Escrow Funds, any proceeds of
the sale of Transamerica Common Shares and the investment and reinvestment
thereof shall be valued at the Deemed Average Share Price of the Transamerica
Common Shares which are so sold, and Arthur and Dennis shall cause records to
be maintained, on a Share-by-Share basis for the Transamerica Common Shares
which are so sold, and which track the investment and reinvestment of the
proceeds thereof, which are sufficient to effect the valuation mechanism set
forth in this clause (ii). After any Transamerica Common Shares are sold in
accordance with the provisions of this clause (ii), any Claim for
indemnification by Transamerica or other request for assets which are held in
any of the Escrow Funds shall first be satisfied with the Transamerica Common
Shares remaining in the applicable Escrow Fund and thereafter with the
proceeds of the sale of Transamerica Common Shares (including the investment
and reinvestment of the proceeds thereof).
(f) There shall be no registration of transfers on the stock transfer
books of TOL or Transamerica of the right to receive any portion of the Escrow
Funds.
2.4 Treatment of Stock Options and Restricted Stock. (a) Prior to
the Effective Time, TOL shall use reasonable efforts to cause each TOL Option
which has been granted to be exercised by the holder thereof immediately prior
to the Closing. "TOL Option" shall mean each of the unexpired and unexercised
options to purchase shares of capital stock of TOL. Any TOL Option that remains
unexercised as of the Closing shall be terminated as of the Closing and shall be
of no further force and effect.
(b) TOL agrees to issue treasury shares of TOL, to the extent
available, upon the exercise of TOL Options prior to the Effective Time.
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2.5 Delivery Of Preliminary Report, Pre-Closing Report, Closing
Date Report And Closing Report. (a) The Common Exchange Ratio has been
determined by reference to the report in the form attached hereto as Exhibit
F (the "Preliminary Report") which TOL has caused to be prepared and
delivered to Transamerica upon the execution of this Agreement and which
contains information as of December 31, 1995. The Preliminary Report sets
forth, in each case as of December 31, 1995, (i) the number of the Containers
and Chassis owned, managed and leased-in by TOL at December 31, 1995,
categorized by whether they are owned, managed or leased-in by TOL (each of
the foregoing categories being referred to herein as a "Status"), and further
listed by type and age of equipment; (ii) the average value per Container and
Chassis listed by type, Status and age of equipment with such valuation being
as shall have been mutually agreed among Transamerica, Arthur and Dennis;
(iii) the monthly depreciation/amortization amount per unit for such
Containers and Chassis, categorized by Status and further listed by type of
equipment; and (iv) the average age of the Containers and Chassis, listed by
type and Status. TOL shall use its best efforts to deliver to Transamerica
within 5 business days of the date hereof, and in any event shall deliver
within 10 business days of the date hereof a schedule (which schedule shall
become Exhibit E hereto) accurately setting forth with respect to the
Containers and Chassis owned, managed and leased-in by TOL at December 31,
1995, (i) the container number and chassis number by prefix sequence of each
Container and Chassis; (ii) the year and month of manufacture of each
Container and Chassis; and (iii) whether each Container and Chassis was, as
of December 31, 1995, off-lease or on-lease, and, if on-lease, the customer
to which such Container or Chassis was leased and, if off-lease, the location
of the Container and Chassis. Exhibit E shall be accompanied by the data on
which it was based.
(b) TOL and Transamerica shall jointly prepare and deliver a report
(the "Pre-Closing Report") containing the information set forth in the
Preliminary Report with respect to the Containers and Chassis owned, managed and
leased-in by TOL as of the month end immediately preceding the Closing Date,
except that (i) the information concerning average age of equipment shall not be
adjusted for the passage of time since December 31, 1995 and shall set forth the
age of such equipment as of December 31, 1995, (ii) the average value per
Container and Chassis shall be the amount set forth in the Preliminary Report
for each Container or Chassis within a particular Status, type and age, and
(iii) the monthly depreciation/amortization amount per unit for Containers and
Chassis within a particular Status and type, shall be the amount agreed in the
Preliminary Report. In addition, the Pre-Closing Report shall
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set forth, with respect to the Containers and Chassis owned, managed and
leased-in by TOL as of the month end immediately preceding the Closing Date
(1) the container number and chassis number by prefix sequence of each
Container and Chassis; (2) the year and month of manufacture of each Container
and Chassis; and (3) whether each Container and Chassis was, as of the month
end immediately preceding the Closing, off-lease or on-lease and, if on-lease,
the customer to which such Container or Chassis was leased and, if off-lease,
the location of the Container or Chassis. The Pre-Closing Report shall be
delivered within five days following the month end immediately preceding the
Closing and shall be accompanied by the data on which such Pre-Closing Report
was based. In the event TOL and Transamerica shall be unable to agree on any
item in the Pre-Closing Report, TOL's determination shall be dispositive for
purposes of such Report. During the period from the date of this Agreement
to Closing, Arthur, Dennis and TOL shall (i) provide Transamerica and
Transamerica's accountants and other representatives with full access to TOL's
books and records and the facilities and employees of TOL and to TOL's
accountants (including their working papers), and (ii) cooperate fully with
Transamerica and Transamerica's accountants, including, without limitation,
the provision on a timely basis of all information reasonably requested in
connection with the Pre-Closing Report.
(c) During the period preceding the Effective Time, TOL, Arthur
and Dennis shall take such actions as shall be reasonably requested by
Transamerica to permit the preparation and delivery by Transamerica, within
five days after the Closing Date, of a report (the "Closing Date Report")
containing the information set forth in the Pre-Closing Report with respect
to the Containers and Chassis owned, managed and leased-in by TOL as of the
Closing Date, including the exceptions set forth in clauses (i), (ii) and
(iii) of the first sentence of Section 2.5(b), and the information, as of the
Closing Date, required by the second sentence of Section 2.5(b), which shall
be accompanied by the data on which such Closing Date Report was based.
(d) As promptly as practicable, but in no event more than 30 business
days after the Closing Date, Transamerica shall cause to be prepared and
delivered to Arthur, Dennis and each TOL Agent a report (the "Closing Report")
setting forth the information that had been contained in the Pre-Closing Report
with respect to the Containers and Chassis owned, managed and leased-in by TOL
as of the Closing Date, except that (i) the information concerning average age
of equipment shall not be adjusted for the passage of time since December 31,
1995 and shall set forth the age of such equipment as of December 31, 1995, (ii)
the average value per Container or Chassis shall be
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the amount set forth in the Preliminary Report for each Container or Chassis
within a particular Status, type and age and (iii) the monthly
depreciation/amortization amount per unit for Containers and Chassis within a
particular Status and type shall be the amount set forth in the Preliminary
Report. The Closing Report so delivered to Arthur, Dennis and each TOL Agent
shall be accompanied by the data on which such Closing Report was based.
(e) During the 20 days following delivery by Transamerica of the
Closing Report, Arthur and Dennis shall be free to dispute any item reflected
in the Closing Report and Arthur and Dennis, on the one hand, and
Transamerica, on the other, shall be free to make adjustments to their views
as to the items to be reflected in the Closing Report. Beginning three
business days after its delivery of the Closing Report, Transamerica shall
provide Arthur, Dennis, any TOL Agent and their respective counsel,
accountants and other advisors full access to books, records and personnel of
the Surviving Corporation which relate to TOL's operations prior to Closing
as reasonably requested by Arthur or Dennis or a TOL Agent in order to
understand and verify the accuracy of the Closing Report. At the end of the
20-day period provided by this Section 2.5(e), the parties shall jointly
prepare a report listing the matters in dispute by item and valuing each
disputed item based on the average value per Container or Chassis applicable
to equipment within a particular Status, type and age and the monthly
depreciation/amortization amounts per unit applicable to equipment within a
particular Status and type, in each case in the relevant amounts agreed in
the Preliminary Report, and setting forth the aggregate amount of all
disputed items, as so valued (such aggregate amount, the "Disputed Amount").
Promptly following the conclusion of such 20-day period and completion of the
report referred to in the preceding sentence, Transamerica Common Shares
shall be distributed to Transamerica and/or TOL Stockholders whose shares are
converted into Transamerica Common Shares pursuant to the first sentence of
Section 2.1(b), as appropriate, from the Adjustment Escrow Fund to the extent
the adjustments to be made pursuant to Sections 2.6(c), 2.6(d), 2.7(c) and
2.7(d) shall have been mutually resolved during such period, so long as
thereafter there shall remain in the Adjustment Escrow Fund Transamerica
Common Shares having a value, calculated by reference to the Deemed Average
Share Price, sufficient to resolve any adjustments which are proposed to be
made by either Transamerica or by Arthur and Dennis pursuant to Sections
2.6(c), 2.6(d), 2.7(c) and 2.7(d) and which have not yet been mutually
resolved, and any further adjustments to be made pursuant to Section 2.6(g).
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2.6 Purchase Price Adjustment And Post-Closing Adjustment For Number
Of Units And Type Of Equipment. (a) If the number of any type of Containers or
Chassis within a particular age and Status shown on the Pre-Closing Report shall
be greater than the number of such Containers or Chassis within that age and
Status shown on the Preliminary Report, in each such instance the Common
Exchange Ratio shall, subject to Section 2.6(f), be increased by a percentage
equal to (i) (x) the number of Containers and Chassis shown on the Pre-Closing
Report within the particular age and Status which were not also reflected in the
Preliminary Report times (y) the relevant average values shown on the
Preliminary Report for each relevant type of Containers and Chassis within that
age and Status divided by (ii) an amount equal to the product of (x) the number
of shares of TOL Common Stock outstanding immediately prior to the Effective
Time times (y) the Common Exchange Ratio times (z) the Deemed Average Share
Price.
(b) If the number of any type of Containers or Chassis within a
particular age and Status shown on the Pre-Closing Report shall be less than the
number of such Containers or Chassis within that age and Status shown on the
Preliminary Report, in each such instance the Common Exchange Ratio shall,
subject to Section 2.6(f), be decreased by a percentage equal to (i) (x) the
number of Containers and Chassis shown on the Preliminary Report within the
particular age and Status which were not also reflected in the Pre-Closing
Report times (y) the relevant average values shown on the Preliminary Report for
each relevant type of Containers and Chassis within that age and Status divided
by (ii) an amount equal to the product of (x) the number of shares of TOL Common
Stock outstanding immediately prior to the Effective Time times (y) the Common
Exchange Ratio times (z) the Deemed Average Share Price.
(c) If the number of any type of Containers or Chassis within a
particular age and Status shown on the Closing Report, as definitively
determined pursuant to Section 2.8, shall be greater than the number of such
Containers and Chassis within that age and Status shown on the Pre-Closing
Report, in each such instance the Common Exchange Ratio shall, subject to
Section 2.6(f), be deemed increased by a percentage equal to (i) (x) the
number of Containers and Chassis shown on the Closing Report within the
particular age and Status which were not also reflected in the Pre-Closing
Report times (y) the relevant average values shown on the Preliminary Report
for each relevant type of Containers and Chassis within that age and Status
divided by (ii) an amount equal to the product of (x) the number of shares of
TOL Common Stock outstanding immediately prior to the Effective Time times
(y) the Common Exchange Ratio times (z) the Deemed Average Share Price.
Subject to Section 2.6(f),
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in such case, the Escrow Agent shall pay the amount remaining in the
Adjustment Escrow Fund to the TOL Stockholders whose shares were converted
into Transamerica Common Shares pursuant to the first sentence of Section
2.1(b) and Transamerica shall cause to be paid into the Exchange Fund the
increased consideration that would have been payable by Transamerica had the
number of Containers and Chassis within a particular age and Status shown on
the Pre-Closing Report been equal to the number of such units shown on the
Closing Report. The additional Transamerica Common Shares, if any, to be
paid hereunder shall be valued at the Deemed Average Share Price.
(d) If the number of any type of Containers or Chassis within a
particular age and Status shown on the Closing Report, as definitively
determined pursuant to Section 2.8, shall be less than the number of such
Containers or Chassis within that age and Status shown on the Pre-Closing
Report, in each such instance the Common Exchange Ratio shall, subject to
Section 2.6(f), be deemed to be decreased by a percentage equal to (i) (x) the
number of Containers and Chassis within the particular age and Status shown on
the Pre-Closing Report which were not also reflected in the Closing Report times
(y) the relevant average values shown on the Preliminary Report for each
relevant type of Containers and Chassis within that age and Status divided by
(ii) an amount equal to the product of (x) the number of shares of TOL Common
Stock outstanding immediately prior to the Effective Time times (y) the Common
Exchange Ratio times (z) the Deemed Average Share Price. Subject to Sections
2.6(f) and 2.6(g), in such case, Transamerica shall be entitled to retain out of
the Transamerica Common Shares deposited in the Adjustment Escrow Fund, a number
of Transamerica Common Shares with an aggregate value (determined by reference
to the Deemed Average Share Price) equal to the product resulting from the
calculation set forth in clause (i) of this subsection 2.6(d) and, subject to
said Sections 2.6(f) and 2.6(g), the Escrow Agent shall pay the balance, if any,
of the Adjustment Escrow Fund to the TOL Stockholders whose shares were
converted into Transamerica Common Shares pursuant to the first sentence of
Section 2.1(b); PROVIDED that any mutually agreed adjustment previously made
pursuant to Section 2.5(e) shall be taken into account in determining the
Transamerica Common Shares to be retained by Transamerica and to be paid to such
TOL Stockholders. If the assets in the Adjustment Escrow Fund shall not be
sufficient to provide Transamerica the quantity of Transamerica Common Shares to
which it shall be entitled pursuant to this Section 2.6(d) and/or Section
2.6(g), Arthur and Dennis shall, within two business days of the definitive
resolution of the Closing Report, be jointly and severally obligated to return
to Transamerica a number of Transamerica Common Shares having a value,
calculated by reference to the
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Deemed Average Share Price, equal to the amount by which the assets in the
Adjustment Escrow Fund shall be insufficient.
(e) Notwithstanding anything to the contrary herein, no adjustments
pursuant to this Section 2.6 shall be made in order to give effect to any change
in the number of Containers or Chassis which arises as result of purchases,
disposals or sales by TOL of equipment made in the ordinary course of business
during the period commencing on January 1, 1996 and ending on the Closing Date.
(f) To the extent that (i) the Common Exchange Ratio shall be
increased and decreased by a percentage pursuant to subsections (a) and (b),
respectively, of this Section 2.6 or (ii) the Common Exchange Ratio shall be
deemed increased and deemed decreased by a percentage pursuant to subsections
(c) and (d), respectively, of this Section 2.6, then the percentage adjustments
referred to in clause (i) of this subsection (f) shall be netted against one
another and then netted against the percentage adjustments derived from clause
(i) of Section 2.7(f), to produce a percentage by which the Common Exchange
Ratio shall be adjusted, and the percentage adjustments referred to in clause
(ii) of this subsection (f) shall be netted against one another, and then netted
against the percentage adjustment derived from clause (ii) of Section 2.7(f), to
produce a percentage by which the Common Exchange Ratio shall be deemed
adjusted, and in each case the payments of Transamerica Common Shares resulting
therefrom shall be made after giving effect to the netting required hereby. All
adjustments pursuant to this Section 2.6 shall be rounded to the nearest one-
ten-thousandth of one percent.
(g) Notwithstanding the foregoing, if there is a Disputed Amount (as
defined in Section 2.5(e)), then the following shall modify the payments to be
made pursuant to Sections 2.6(d) and 2.7(d):
(i) if the part of the Disputed Amount in respect of which it is
definitively resolved pursuant to Section 2.8 that TOL's position was
correct (by reference to the facts as derived from the Closing Report, as
definitively determined) (the "Valid Claim Amount") is less than the part
of the Disputed Amount in respect of which is definitively resolved (on the
same basis) that TOL's position was not correct (the "Invalid Claim
Amount"), the amount to be paid to Transamerica pursuant to Section 2.6(d)
and/or Section 2.7(d) shall be increased by having the Escrow Agent and, if
necessary, Arthur and/or Dennis, within two business days of the definitive
resolution of
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the Closing Report, pay to Transamerica a number of Transamerica Common
Shares having a value, calculated by reference to the Deemed Average
Share Price, equal to 35% of the excess of the Invalid Claim Amount over
the Valid Claim Amount, and the amount, if any, which the Escrow Agent
pays to the TOL Stockholders whose shares were converted into
Transamerica Common Shares pursuant to the first sentence of Section
2.1(b) shall be correspondingly reduced;
(ii) if the Valid Claim Amount is greater than the Invalid Claim
Amount, the amount to be paid to Transamerica pursuant to Section 2.6(d)
and/or Section 2.7(d) shall be decreased by 35% of the excess of the Valid
Claim Amount over the Invalid Claim Amount and the amount which the Escrow
Agent pays to the TOL Stockholders whose shares were converted into
Transamerica Common Shares pursuant to the first sentence of Section 2.1(b)
shall be correspondingly increased; provided, that if this Section
2.6(g)(ii) shall apply and (A) the aggregate amount to be paid to
Transamerica pursuant to Sections 2.6(d) and 2.7(d) from the Adjustment
Escrow Fund (before giving effect to this Section 2.6(g)(ii)) is less than
(B) 35% of the excess of the Valid Claim Amount over the Invalid Claim
Amount (the excess of the amount determined pursuant to sub-clause (B) over
the amount determined pursuant to sub-clause (A) being hereinafter referred
to as the "Payment Shortfall"), Transamerica shall deliver a number of
Transamerica Common Shares having a value, calculated by reference to the
Deemed Average Share Price, equal to the amount of the Payment Shortfall to
the Escrow Agent for payment to the TOL Stockholders whose shares were
converted into Transamerica Common Shares pursuant to the first sentence of
Section 2.1(b).
(h) If any adjustment or deemed adjustment to the Common Exchange
Ratio is required to be made pursuant to subparagraphs (b) or (d) of this
Section 2.6, any (i) third party insurance proceeds received by TOL, (ii) cash
payments made to TOL by customers and depots, and (iii) other cash payments
received by TOL (in each case, which shall directly relate to reimbursement of
TOL for any lost, stolen, destroyed or otherwise missing equipment for which an
adjustment or deemed adjustment is required to be made pursuant to subparagraphs
(b) or (d) of this Section 2.6) shall be given effect as an offsetting amount to
the otherwise applicable adjustment, but only to the extent of such proceeds or
cash.
2.7 Purchase Price Adjustment And Post-Closing Adjustment For Age Of
Equipment. (a) If the average age of any
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type of Containers or Chassis within a particular Status shown on the
Pre-Closing Report shall be less than the average age of such type of
Containers or Chassis within that Status shown on the Preliminary Report, in
each such instance the Common Exchange Ratio shall, subject to Section
2.7(f), be increased by a percentage equal to (i) (x) the monthly
depreciation/amortization for the type of Containers or Chassis within the
particular Status at issue shown on the Preliminary Report times (y) the
number of months by which the average age of the type of Containers or
Chassis within the particular Status shown on the Preliminary Report exceeded
the average age of such type of Containers or Chassis within such Status
shown on the Pre-Closing Report divided by (ii) an amount equal to the
product of (x) the number of shares of TOL Common Stock outstanding
immediately prior to the Effective Time times (y) the Common Exchange Ratio
times (z) the Deemed Average Share Price.
(b) If the average age of any type of Containers or Chassis within a
particular Status shown on the Pre-Closing Report shall be greater than the
average age of such type of Containers or Chassis within that Status shown on
the Preliminary Report, in each such instance the Common Exchange Ratio shall,
subject to Section 2.7(f), be decreased by a percentage equal to (i) (x) the
monthly depreciation/amortization for the type of Containers or Chassis within
the particular Status at issue shown on the Preliminary Report times (y) the
number of months by which the average age of the type of Containers or Chassis
within the particular Status shown on the Pre-Closing Report exceeded the
average age of such type of Container or Chassis within such Status shown on the
Preliminary Report divided by (ii) an amount equal to the product of (x) the
number of shares of TOL Common Stock immediately prior to the Effective Time
times (y) the Common Exchange Ratio times (z) the Deemed Average Share Price.
(c) If the average age of any type of Containers or Chassis within a
particular Status shown on the Closing Report, as definitively determined
pursuant to Section 2.8, shall be less than the average age of such type of
Containers or Chassis within that Status shown on the Pre-Closing Report, in
each such instance the Common Exchange Ratio shall, subject to Section 2.7(f),
be deemed to be increased by a percentage equal to (i) (x) the monthly
depreciation/amortization for the type of Containers or Chassis within the
particular Status at issue shown on the Preliminary Report times (y) the number
of months by which the average age of the type of Containers or Chassis within
the particular Status shown on the Pre-Closing Report exceeded the average age
of such type of Containers or Chassis within such Status shown on the Closing
Report divided by (ii) an amount equal to the product of (x) the number of
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shares of TOL Common Stock outstanding immediately prior to the Effective Time
times (y) the Common Exchange Ratio times (z) the Deemed Average Share Price.
Subject to Section 2.7(f), in such case, the Escrow Agent shall pay the amount
remaining in the Adjustment Escrow Fund to the TOL Stockholders whose shares
were converted into Transamerica Common Shares pursuant to the first sentence of
Section 2.1(b) and Transamerica shall cause to be paid into the Exchange Fund
the increased consideration that would have been payable by Transamerica had the
average age of the type of Containers or Chassis within the particular Status
shown on the Pre-Closing Report been equal to the average age of such units
shown on the Closing Report. The additional Transamerica Common Shares, if any,
to be paid hereunder shall be valued at the Deemed Average Share Price.
(d) If the average age of any type of Containers or Chassis within
a particular Status shown on the Closing Report, as definitively determined
pursuant to Section 2.8, shall be greater than the average age of such type
of Containers or Chassis within that Status shown on the Pre-Closing Report,
in each such instance the Common Exchange Ratio shall, subject to Section
2.7(f), be deemed to be decreased by a percentage equal to (i) (x) the
monthly depreciation/amortization for the type of Containers or Chassis
within the particular Status at issue shown on the Preliminary Report times
(y) the number of months by which the average age of the type of Containers
or Chassis within the particular Status shown on the Closing Report exceeded
the average age of such type of Containers or Chassis within such Status
shown on the Pre-Closing Report divided by (ii) an amount equal to the
product of (x) the number of shares of TOL Common Stock outstanding
immediately prior to the Effective Time times (y) the Common Exchange Ratio
times (z) the Deemed Average Share Price. Subject to Section 2.7(f) and
2.6(g), in such case, Transamerica shall be entitled to retain out of the
Transamerica Common Shares deposited in the Adjustment Escrow Fund, a number
of Transamerica Common Shares with an aggregate value (determined by
reference to the Deemed Average Share Price) equal to the product resulting
from the calculation set forth in clause (i) of this subsection 2.7(d) and,
subject to said Sections 2.7(f) and 2.6(g), the Escrow Agent shall pay the
balance, if any, of the Adjustment Escrow Fund to the TOL Stockholders whose
shares were converted into Transamerica Common Shares pursuant to the first
sentence of Section 2.1(b); provided that any mutually agreed adjustment
previously made pursuant to Section 2.5(e) shall be taken into account in
determining the Transamerica Common Shares to be retained by Transamerica and
to be paid to such TOL Stockholders. If the assets in the Adjustment Escrow
Fund shall not be sufficient to provide Transamerica the quantity of
Transamerica Common Shares to which it shall be entitled pursuant to this
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Section 2.7(d) and/or Section 2.6(g), Arthur and Dennis shall, within two
business days of the definitive resolution of the Closing Report, be jointly
and severally obligated to return to Transamerica a number of Transamerica
Common Shares having a value, calculated by reference to the Deemed Average
Share Price, equal to the amount by which the assets in the Adjustment Escrow
Fund shall be insufficient.
(e) Notwithstanding anything to the contrary herein, no adjustments
pursuant to this Section 2.7 shall be made in order to give effect to any change
in the average age of Containers or Chassis which arises as result of purchases,
disposals or sales by TOL of equipment made in the ordinary course of business
during the period commencing on January 1, 1996 and ending on the Closing Date.
(f) To the extent that (i) the Common Exchange Ratio shall be
increased and decreased by a percentage pursuant to subsections (a) and (b),
respectively, of this Section 2.7 or (ii) the Common Exchange Ratio shall be
deemed increased or deemed decreased by a percentage pursuant to subsections
(c) and (d), respectively, of this Section 2.7, then the percentage
adjustments referred to in clause (i) of this subsection (f) shall be netted
against one another, and then netted against the percentage adjustment
derived from clause (i) of Section 2.6(d), to produce a percentage by which
the Common Exchange Ratio shall be adjusted, and the percentage adjustments
referred to in clause (ii) of this subsection (f) shall be netted against one
another, and then netted against the percentage adjustment derived from
clause (ii) of Section 2.6(f), to produce a percentage by which the Common
Exchange Ratio shall be deemed adjusted, and in each case the payments of
Transamerica Common Shares resulting therefrom shall be made after giving
effect to the netting required hereby. All adjustments pursuant to this
Section 2.7 shall be rounded to the nearest one-ten-thousandth of one percent.
2.8 Disagreements With Respect To Closing Report. (a) If after the
20-day period provided in Section 2.5(e) there shall be a Disputed Amount,
Arthur and Dennis shall, within 20 business days following delivery of the
report contemplated by Section 2.5(e) with respect to disputed items and the
Disputed Amount, deliver a notice to Transamerica setting forth in reasonable
detail Arthur's and Dennis' calculation of and narrative explanation or
rationale supporting their disagreement with the Closing Report.
(b) If a notice of disagreement shall be delivered pursuant to
Section 2.8(a), the parties hereto shall, during the fifteen business days
following delivery of the notice that
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sets forth Arthur's and Dennis' calculation of and narrative explanation or
rationale supporting such disagreement, use reasonable efforts to reach
agreement on the disputed items or amounts. If, during such period, the
parties are unable to reach such agreement, then they shall promptly
thereafter pursue non-binding mediation by an independent mediator reasonably
satisfactory to Transamerica and to Arthur and Dennis (who shall not have any
material relationship with Transamerica, TOL, Arthur or Dennis). Such
mediation shall not be final, conclusive or binding upon the parties hereto.
The cost of such mediation shall be borne equally by Transamerica, on the one
hand, and Arthur and Dennis, on the other hand. Transamerica, on the one
hand, and Arthur and Dennis on the other hand shall have the right to
commence legal proceedings in the Superior Court of the State of California
in and for the City and County of San Francisco or the federal district court
in the Northern District of California for the purpose of having a dispute
regarding the Closing Report adjudicated if such party concludes that the
mediation provided for in this Section 2.8(b) has not produced a negotiated
resolution of the parties' disagreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TRANSAMERICA AND SUBCORP
In order to induce TOL, Arthur and Dennis to enter into this
Agreement, Transamerica and Subcorp hereby represent and warrant to TOL that the
statements contained in this Article III are true, correct and complete.
3.1 Organization and Standing. Each of Transamerica and Subcorp
is a corporation duly organized, validly existing and in good standing under
the laws of its state of incorporation with full power and authority
(corporate and other) to own, lease, use and operate its properties and to
conduct its business as and where now owned, leased, used, operated and
conducted. Each of Transamerica and Subcorp is duly qualified to do business
and in good standing in each jurisdiction in which the nature of the business
conducted by it or the property it owns, leases or operates, makes such
qualification necessary, except where the failure to be so qualified or in
good standing in such jurisdiction would not have a material adverse effect
on Transamerica. Neither Transamerica nor Subcorp is in default in the
performance, observance or fulfillment of any provision of its respective
Certificate of Incorporation, as amended, or Bylaws.
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3.2 Corporate Power And Authority. Each of Transamerica and Subcorp
has all requisite corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated by this Agreement. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of each of Transamerica and Subcorp. This Agreement has been duly
executed and delivered by each of Transamerica and Subcorp, and constitutes the
legal, valid and binding obligation of each of Subcorp and Transamerica
enforceable against each of them in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights or general principles of equity.
3.3 Capitalization Of Transamerica. As of March 31, 1996,
Transamerica's authorized capital stock consisted solely of (a) 150,000,000
shares of common stock, $1.00 par value per share ("Transamerica Common
Shares"), of which (i) 67,678,057 shares were issued and outstanding, (ii)
12,060,405 shares were issued and held in treasury (which does not include
the shares reserved for issuance as set forth in clause (a)(iii) below) and
(iii) 15,040,300 shares were reserved for issuance upon the exercise or
conversion of options, warrants or convertible securities granted or issuable
by Transamerica, (b) 1,200,000 shares of preferred stock, $100 par value per
share, of which (i) 2,250 shares of Dutch Auction Rate Transferable
Securities were issued and outstanding, (ii) 180,091 shares of Series D
Preferred Stock were issued and outstanding, (iii) none was issued and held
in treasury (which does not include the shares reserved for issuance set
forth in clause (b)(iv) below) and (iv) none was reserved for issuance upon
exercise or conversion of options, warrants or convertible securities granted
or issuable by Transamerica and (c) 5,000,000 shares of preference stock,
without par value, none of which was issued and outstanding or reserved for
issuance. Each outstanding share of capital stock of Transamerica is, and
all Transamerica Common Shares to be issued in connection with the Merger
will be, duly authorized and validly issued, fully paid and nonassessable,
will be issued in compliance with applicable federal and state securities
laws and will be free and clear of all liens, encumbrances and adverse claims
and may be resold by affiliates (as defined in Rule 145 under the Securities
Act of 1933, as amended (the "Securities Act")) in accordance with paragraph
(d) of such Rule 145. Each outstanding share of capital stock of
Transamerica has not been, and all Transamerica Common Shares to be issued in
connection with the Merger will not be, issued in violation of any preemptive
or similar rights.
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3.4 Disclosure. No representations or warranties made by
Transamerica or Subcorp in this Agreement or exhibits, schedules or annexes
hereto contain or will contain any untrue statement of material fact or omit or
will omit to state any material fact necessary to make the statements herein, in
light of the circumstances under which they were made, not misleading.
3.5 Conflicts, Consents And Approval. Neither the execution and
delivery of this Agreement by Transamerica or Subcorp nor the consummation of
the transactions contemplated hereby will:
(a) conflict with, or result in a breach of any provision of the
respective Certificates of Incorporation or Bylaws of Transamerica and
Subcorp;
(b) violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice,
the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate or call a default under, or result in
the creation of any lien, security interest, charge or encumbrance upon any
of the properties or assets of Transamerica or any of its subsidiaries
under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, contract, undertaking,
agreement, lease or other instrument or obligation to which Transamerica or
any of its subsidiaries is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation, applicable to Transamerica or any of its subsidiaries or their
respective properties or assets; or
(d) require any action or consent or approval of, or review by, or
registration or filing with any third party or any court, arbitral
tribunal, administrative agency or commission or other governmental or
regulatory body, agency, instrumentality or authority, whether federal,
state, local, foreign or multinational (a "Governmental Authority"), other
than (i) actions required by the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"), and (ii) registrations or other actions
required under federal and state securities laws as are contemplated by
this Agreement;
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except in the case of (b), (c) and (d) for any of the foregoing that would not
have a material adverse effect on Transamerica.
3.6 Registration Statement. None of the information provided by
Transamerica for inclusion (i) in the registration statement on Form S-4 to be
filed with the Securities and Exchange Commission (the "Commission") by
Transamerica under the Securities Act, including the prospectus (as amended,
supplemented or modified, the "Prospectus") relating to Transamerica Common
Shares to be issued in the Merger or (ii) in the proxy statement and form of
proxy relating to the vote of the TOL stockholders with respect to the Merger or
any other document required to be sent to the TOL stockholders if the Merger is
approved by written consent without a meeting of the TOL stockholders
(collectively and as amended, supplemented or modified, the "Proxy Statement")
which is contained therein (such registration statement as amended, supplemented
or modified, the "Registration Statement"), at the time the Registration
Statement becomes effective or, in the case of the Proxy Statement, at the date
of mailing, in each case will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Registration Statement will comply as to
form in all material respects with the provisions of the Securities Act.
3.7 Brokerage And Finder's Fees. Neither Transamerica nor Subcorp
has incurred or will incur on behalf of Transamerica or Subcorp, any brokerage,
finder's or similar fee in connection with the transactions contemplated by this
Agreement, and each of Transamerica and Subcorp shall indemnify and hold TOL,
Arthur and Dennis harmless from any such fees, commissions or similar payments.
3.8 Litigation. There is (a) no suit, action or claim, (b) no
investigation or inquiry by any administrative agency or governmental body and
(c) no legal, administrative or arbitration proceeding pending, or to
Transamerica's or Subcorp's knowledge, threatened against Transamerica or
Subcorp, in each case, which could reasonably be expected to have a material
adverse effect on the ability of Transamerica or Subcorp to consummate the
transactions contemplated herein.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TOL, ARTHUR AND DENNIS
In order to induce Subcorp and Transamerica to enter into this
Agreement, each of TOL, Arthur and Dennis hereby jointly and severally
represents and warrants to Transamerica and Subcorp that the statements
contained in this Article IV are true, correct and complete; provided,
however, that the portions of the representations in Sections 4.5(b) and
4.5(c) which relate to Arthur and Dennis shall be deemed to be made only by
Arthur and Dennis, respectively. Except for Sections 4.1, 4.2, 4.3 and 4.4,
all references to TOL in this Article IV include each of TOL's direct and
indirect subsidiaries (as defined in Section 4.2).
4.1 Organization and Standing. TOL is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware with full power and authority (corporate and other) to own,
lease, use and operate its properties and to conduct its business as and
where now owned, leased, used, operated and conducted. TOL is duly qualified
to do business and in good standing in each jurisdiction listed in Section
4.1 to the disclosure schedule (the "TOL Disclosure Schedule") delivered by
TOL to Transamerica and dated the date hereof, is not qualified to do
business in any other jurisdiction and neither the nature of the business
conducted by it nor the property it owns, leases or operates requires it to
qualify to do business as a foreign corporation in any other jurisdiction,
except where the failure to be so qualified or in good standing in such
jurisdiction would not have a material adverse effect on TOL. TOL is not in
default in the performance, observance or fulfillment of any provision of its
Certificate of Incorporation, as amended, or Bylaws.
4.2 Subsidiaries. (a) TOL does not own, directly or indirectly,
any equity or other ownership interest in any corporation, partnership, joint
venture or other entity or enterprise, except as set forth in Section 4.2 of
the TOL Disclosure Schedule.
(b) TOL is not subject to any obligation or requirement to provide
funds to or make any investment (in the form of a loan, capital contribution
or otherwise) in any such entity.
(c) Set forth in Section 4.2 of the TOL Disclosure Schedule is a
true, complete and correct list of all of TOL's, direct and indirect,
subsidiaries. TOL owns directly or indirectly each of the outstanding shares
of capital stock (or other ownership interests having by their terms ordinary
voting
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power to elect a majority of directors or others performing similar functions
with respect to such subsidiary) of each of TOL's subsidiaries. The term
"subsidiary", as used in this Agreement, shall mean with respect to any
person, any corporation or other legal entity of which such person controls
or owns, directly or indirectly, more than 50% of the stock or other equity
interest, or more than 50% of the voting power entitled to vote on the
election of members to the board of directors or similar governing body.
Each of the outstanding shares of capital stock of each of TOL's subsidiaries
is duly authorized, validly issued, fully paid and nonassessable, and is
owned, directly or indirectly, by TOL free and clear of all liens, pledges,
security interests, claims or other encumbrances. The following information
for each subsidiary of TOL is set forth in Section 4.2 to the TOL Disclosure
Schedule, as applicable: (i) its name and jurisdiction of incorporation or
organization; (ii) its authorized capital stock or share capital; and (iii)
the percentage of issued and outstanding shares of capital stock or share
capital owned by each record owner and the name of each such record owner.
There are no outstanding subscriptions, options, warrants, puts, calls,
agreements, understandings, claims or other commitments or rights of any type
relating to the issuance, sale or transfer of any securities of any
subsidiary of TOL, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital stock of any
subsidiary of TOL; and no subsidiary of TOL has any obligation of any kind to
issue any additional securities or to pay for securities of any subsidiary of
TOL or any predecessor thereof.
4.3 Corporate Power And Authority. TOL has all requisite corporate
power and authority to enter into this Agreement and, subject to authorization
of the Merger and the transactions contemplated hereby by the TOL stockholders,
to consummate the transactions contemplated by this Agreement. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of TOL, subject to authorization of the Merger and the transactions
contemplated hereby by the TOL stockholders. This Agreement has been duly
executed and delivered by each of TOL, Arthur and Dennis and constitutes the
legal, valid and binding obligation of each of TOL, Arthur and Dennis
enforceable against each in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights or general principles of equity.
4.4 Capitalization Of TOL. As of the date hereof, TOL's authorized
capital stock consisted solely of (a) 200,000 shares of common stock, $.001 par
value per share ("TOL Common Stock"),
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of which (i) 74,303 shares were issued and outstanding, (ii) none were issued
and held in treasury (which does not include the shares reserved for issuance
set forth in clause (a)(iii) below) and (iii) 4,700 shares were reserved for
issuance upon the exercise or conversion of options, warrants or convertible
securities granted or issued by TOL and (b) 1,000,000 shares of preferred
stock, $.001 par value per share, of which (i) 640,000 have been designated
Series A Preferred Stock, none of which was issued and outstanding or
reserved for issuance, (ii) 300,107 shares have been designated Series B
Preferred Stock (the "TOL Series B Preferred Stock," and together with the
TOL Common Stock, the "TOL Stock"), of which all were issued and outstanding,
(iii) none was issued and held in treasury and (iv) none was reserved for
issuance upon the exercise or conversion of options, warrants or convertible
securities granted or issued by TOL. Each outstanding share of capital stock
of TOL is duly authorized and validly issued, fully paid and nonassessable,
and has not been issued in violation of any preemptive or similar rights.
Other than as set forth in the first sentence hereof or in Section 4.4 to the
TOL Disclosure Schedule, there are no outstanding subscriptions, options,
warrants, puts, calls, agreements, understandings, claims or other
commitments or rights of any type relating to the issuance, sale or transfer
of any securities of TOL, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital stock of TOL; and
TOL has no obligation of any kind to issue any additional securities or to
pay for securities of TOL or any predecessor. The issuance and sale of all
of the shares of capital stock described in this Section 4.4 have been in
compliance with federal and state securities laws. As of the Closing Date,
all TOL Options shall have been properly exercised or cancelled. The TOL
Disclosure Schedule accurately sets forth the names of, and the number of
shares of each class held by, all holders of shares of capital stock of TOL
and all holders of options or warrants to purchase TOL capital stock. TOL
has not agreed to register any securities under the Securities Act or under
any state securities law or granted registration rights to any person or
entity.
4.5 Conflicts; Consents And Approvals. Except as set forth in
Section 4.5 of the TOL Disclosure Schedule, neither the execution and delivery
of this Agreement by TOL, nor the consummation of the transactions contemplated
hereby will:
(a) conflict with, or result in a breach of any provision of the
Certificate of Incorporation, as amended, or Bylaws of TOL;
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(b) violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice,
the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate or call a default under, or result in
the creation of any lien, security interest, charge or encumbrance upon any
of the properties or assets of any of TOL, any of its subsidiaries, Arthur
or Dennis under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, contract, undertaking,
agreement, lease (including, without limitation, any Operating Lease (as
defined in Section 4.12(a))) or other instrument or obligation to which
TOL, any of its subsidiaries, Arthur or Dennis, as applicable, is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to TOL, any of its subsidiaries, Arthur or Dennis or
any of their respective properties or assets; or
(d) require any action or consent or approval of, or review by, or
registration or filing with any third party or any Governmental Authority,
other than (i) authorization of the Merger and the transactions
contemplated hereby by the TOL stockholders, (ii) actions required by the
HSR Act, (iii) registrations or other actions required under federal and
state securities laws as are contemplated by this Agreement and (iv)
consents or approvals of any third party or Governmental Authority set
forth in Section 4.5 to the TOL Disclosure Schedule;
except in the case of (b), (c) and (d) for any of the foregoing that would not
have a material adverse effect on TOL. Other than pursuant to this Agreement,
there are no rights of first refusal with respect to, options or rights to
acquire all or any of the assets of TOL. Except as set forth in Section 4.7 of
the TOL Disclosure Schedule, there are no Secured Financing Agreements to which
TOL is a party that cannot be prepaid without penalty.
4.6 No Material Adverse Change. Since December 31, 1995, TOL has
conducted its business in the ordinary course, consistent with past practice,
and there has been no material adverse change in the assets, liabilities,
results of operations, prospects, business or financial condition of TOL or any
event, occurrence or development which may reasonably be expected to have such a
change or a material adverse effect on the ability of TOL to consummate the
transactions contemplated
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hereby, except for (i) such changes, events, occurrences or developments
prevailing throughout the container leasing industry which affect the
persons, firms, corporations or other legal entities which directly compete
in such industry, (ii) departures or reactions of officers, directors,
consultants, employees or agents of TOL resulting from the announcement or
expectation of the Merger or (iii) deterioration of relationships between TOL
and its customers, vendors, managed container owners or lenders resulting
from the announcement or expectation of the Merger.
4.7 SEC Documents; Financial Statements; Indebtedness. Trans
Ocean Container Corporation, a Delaware corporation and wholly owned
subsidiary of TOL ("TOL Operating Subsidiary") has timely filed with the
Commission and has heretofore made available to Transamerica (or Transamerica
has otherwise obtained) true, correct and complete copies of all forms,
reports, schedules, statements and other documents required to be filed by it
under the Securities Exchange Act of 1934, as amended (together with the
rules and regulations thereunder, the "Exchange Act") or the Securities Act
(such documents, as amended since the time of filing, collectively, the "SEC
Documents"). The SEC Documents, including, without limitation, any financial
statements or schedules included therein, at the time filed (and, in the case
of registration statements, on the dates of effectiveness) (a) did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be.
The financial statements of TOL Operating Subsidiary included in the SEC
Documents at the time filed (and, in the case of registration statements, on
the date of effectiveness) complied as to form in all material respects with
applicable accounting requirements and with the published rules and
regulations of the Commission with respect thereto, were prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q of the Commission), and fairly present (subject in the case of
unaudited statements to normal, recurring audit adjustments) the financial
position of TOL as at the dates thereof and the results of its operations and
cash flows for the periods then ended. The audited financial statements of
TOL for the year ended December 31, 1995 were prepared in accordance with
generally accepted accounting principles applied on a consistent basis and
fairly present the financial position of TOL as of December 31, 1995 and the
results of its
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operations and cash flows for the period ended December 31, 1995. The
unaudited financial statements of TOL for the five months ended May 31, 1996,
were prepared (except for the absence of notes thereto) in accordance with
generally accepted accounting principles applied on a consistent basis and
fairly present, subject to normal recurring audit adjustments, the financial
position of TOL as of May 31, 1996 and the results of its operations and cash
flows for the five months ended May 31, 1996. TOL has in place and utilizes
adequate control procedures and practices in accordance with generally
accepted accounting principles, Regulation S-X promulgated by the Securities
and Exchange Commission, and the Statement on Auditing Standards promulgated
by the American Institute of Certified Public Accountants which produce on a
timely basis accurate accounting, financial and other reports needed in the
conduct of TOL's business.
Section 4.7 of the TOL Disclosure Schedule accurately sets forth a
true, complete and correct list of all agreements and other documents
evidencing indebtedness and obligations related to Leased-In Equipment (as
defined in Section 4.12(a)) and Secured Financing Agreements, of TOL
(collectively, the "Indebtedness Agreements") as of July 2, 1996 and includes
the following: (i) with respect to agreements and other documents evidencing
indebtedness, by agreement, the lender, the original principal amount,
interest rate, outstanding balance as of December 31, 1995, issue date and
maturity date and (ii) with respect to obligations for Leased-In Equipment,
by lease, the lessor, the type of equipment, the total number of units of
each type of equipment, and the quarterly payment obligation from and after
December 31, 1995. Except as set forth in Section 4.7(i) of the TOL
Disclosure Schedule, from and after December 31, 1995, all amounts due and
payable pursuant to the terms of the Indebtedness Agreements have been paid
in accordance with the terms of the applicable Indebtedness Agreement
(without giving effect to any grace periods therein). Section 4.7 of the TOL
Disclosure Schedule also accurately describes (i) any prepayment
restrictions, the amount of prepayment penalty, the calculation thereof, the
date, if any, after which prepayment is permitted and the notice provisions
with respect thereof, with respect to each Indebtedness Agreement that cannot
be prepaid without penalty and (ii) any restrictions on, and the consents
required in connection with, any assignment of any of the Indebtedness
Agreements. Since May 31, 1996 TOL has not renewed, or entered into, any
Indebtedness Agreement which contains any restrictions on the prepayment of
the obligations thereunder. TOL shall use its best efforts to deliver to
Transamerica within 5 business days of the date hereof, and in any event
shall deliver to Transamerica within 10 business days of the date hereof, a
schedule which
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accurately sets forth (i) with respect to each Indebtedness Agreement entered
into by TOL on or after June 30, 1996, the information described in the first
sentence of this paragraph and (ii) for each Indebtedness Agreement which is
secured by any Containers or Chassis a true, correct and complete list of
such Containers or Chassis by container number and chassis number.
4.8 Taxes. Except as set forth in Section 4.8 of the TOL
Disclosure Schedule, TOL has duly filed all federal, state, local and foreign
income, franchise, excise, real and personal property and other tax returns
and reports (including, but not limited to, those filed on a consolidated,
combined or unitary basis) required to have been filed by TOL prior to the
date hereof. All of the foregoing returns and reports are true and correct
in all material respects, and TOL has paid or, prior to the Effective Time,
will pay all taxes, interest and penalties required to be paid in respect of
the periods covered by such returns or reports to any federal, state,
foreign, local or other taxing authority. TOL has paid or made adequate
provision in the financial statements of TOL included in the SEC Documents
for all taxes payable in respect of all periods ending on or prior to
December 31, 1995. Except as set forth in Section 4.8 of the TOL Disclosure
Schedule, neither TOL nor any of its subsidiaries will have any material
liability for any taxes in excess of the amounts so paid or reserves so
established and neither TOL nor any of its subsidiaries is delinquent in the
payment of any material tax, assessment or governmental charge and none of
them has requested any extension of time within which to file any returns in
respect of any fiscal year which have not since been filed. No deficiencies
for any tax, assessment or governmental charge have been proposed in writing,
asserted or assessed (tentatively or definitely), in each case, by any taxing
authority, against TOL or any of its subsidiaries for which there are not
adequate reserves. There are no pending requests for waivers of the time to
assess any such tax, other than those made in the ordinary course and for
which payment has been made or there are adequate reserves. The federal
income tax returns of TOL and its subsidiaries have not been audited by the
Internal Revenue Service ("IRS"). For the purposes of this Agreement, the
term "tax" shall include all federal, state, local and foreign taxes
including interest and penalties thereon and any obligations under any
agreements or arrangements with respect to any such taxes. TOL has not filed
an election under Section 341(f) of the Code to be treated as a consenting
corporation. TOL Operating Subsidiary and, if applicable, its affiliates
have caused to be filed all tax returns required to be filed by each of the
partnerships listed in Section 4.21 of the TOL Disclosure Schedule. TOL is
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and has since its incorporation been a closely held C corporation within the
meaning of Section 469(j)(1) of the Code and is not and has not been at any
time a personal service corporation within the meaning of Section 469(j)(2)
of the Code. TOL has suspended passive activity loss carryforwards within
the meaning of Section 469 of the Code of not less than $46.2 million at
December 31, 1995, as computed under existing laws and regulations on
December 31, 1995. Except as set forth in Section 4.8 of the TOL Disclosure
Schedule, TOL has complied with all domestic and foreign requirements as to
withholding of taxes. In conjunction with its stated election under Revenue
Procedure 90-10, TOL for all tax years prior to 1996 has identified those
assets not on hire to persons or entities not subject to United States tax
and has claimed tax depreciation expense on such assets in accordance with
the provisions of Section 168(g) of the Code.
4.9 Compliance With Law. TOL is in compliance with, and at all times
since December 31, 1992 has been in compliance with, all applicable laws,
statutes, orders, rules, regulations, policies or guidelines promulgated, or
judgments, decisions or orders entered by any Governmental Authority
(collectively, "Applicable Laws") relating to TOL or its business or properties,
except for failures to be in compliance therewith which would not have a
material adverse effect on TOL or on TOL's ability to consummate the
transactions contemplated hereby.
4.10 Proprietary Rights. None of the Proprietary Rights (as
defined below) of TOL infringes upon or violates the rights of any person,
firm, corporation, or other legal entity, except for any such immaterial
infringement or violation which, to the extent known, has been remedied. For
purposes of this Agreement, the term "Proprietary Rights" shall mean with
respect to any person or entity: (a) all material names, patents,
inventions, trade secrets, proprietary rights, computer software, trademarks,
trade names, service marks, logos, copyrights and franchises and all
applications therefor, registrations thereof and licenses, sublicenses or
agreements in respect thereof which such person or entity owns or has the
right to use or to which such person or entity is a party; and (b) all
filings, registrations or issuances of any of the foregoing with or by any
Governmental Authority. To the knowledge of TOL, no person, firm,
corporation or other legal entity has infringed, misappropriated or otherwise
used without proper authority any Proprietary Rights. Other than the
Proprietary Rights set forth in Section 4.10 of the Disclosure Schedule, no
material name, patent, invention, trade secret, proprietary right, computer
software, trademark, trade name, service mark, logo, copyright, franchise,
license, sublicense, or other such
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right is necessary for the operation of the business of TOL in substantially
the same manner as such business is presently conducted. TOL owns all
Proprietary Rights necessary for the operation of the business of TOL as
currently conducted. The business of TOL has not been since December 31,
1990 and is not conducted in contravention of any Proprietary Right of any
third party except such contravention which could not reasonably be expected
to have a material adverse effect on TOL. No person, firm, corporation, or
other legal entity has a right to receive from TOL a royalty or similar
payment in respect of any Proprietary Right, whether or not pursuant to any
contractual arrangement entered into by TOL. TOL has not licensed any of its
Proprietary Rights.
4.11 Containers. (a) Section 4.11(a) of the TOL Disclosure Schedule
sets forth a true, complete and correct list of all dry cargo containers, tank
containers, refrigerated containers, open top containers and collapsible
containers, flat racks and all other equipment of the types listed in Exhibit F
(other than chassis) (collectively, the "Containers") and all chassis
(collectively, the "Chassis") owned, managed, and leased-in by TOL that in each
case are off-lease as of July 10, 1996. Each of TOL's off-lease Containers and
Chassis (i) is in conformity with IICL-4 repair standards, if a Container other
than a tank Container, (ii) is in conformity with TOL container condition
standards (a true, complete and correct copy of which is attached as Exhibit K),
if a tank Container, (iii) is in conformity with the standard for Chassis set
out in the Institute of International Container Lessors Ltd. "Guide for
Container Chassis Inspection Second Edition" (the "Standard IICL Guide"), if a
Chassis, or (iv) is being or will be repaired to IICL-4 standards, if a
Container other than a tank Container, TOL container condition standards, if a
tank Container or Standard IICL Guide, if a Chassis, with the cost of repair
paid either (x) by the customer who last redelivered the Container or Chassis,
(y) all or in part by TOL as to Containers or Chassis leased with a damage
protection plan ("DPP") to the extent covered by DPP or (z) by TOL in amounts
aggregating not more than $200,000; provided, however, that any third party
insurance and any other third party payments (including without limitation
payments by manufacturers, depots and managed container owners) with respect to
such damage shall be offset against the costs paid by TOL pursuant to this
clause (z) in determining whether such aggregate costs exceed $200,000.
(b) Except as specified in Section 4.11(b) to the TOL Disclosure
Schedule, each Container and each Chassis which is leased by TOL to a
customer is being leased to a person, firm, corporation or other legal entity
which is subject to a
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valid and binding contractual obligation to redeliver such Container or
Chassis to TOL in IICL-4 condition, if a Container other than a tank
Container, TOL container condition standards, if a tank Container, or
Standard IICL Guide, if a Chassis.
(c) TOL has not agreed to or made any arrangements with any lessee of
any Container or Chassis not covered by DPP permitting such lessee to return
such Container or Chassis to TOL in a condition other than as specified in
Section 4.11(b) above or waiving or modifying any of TOL's rights against any
such lessee if such Container or Chassis is returned by such lessee other than
in such condition.
(d) All Containers and Chassis owned, managed or leased-in by TOL are
usable for their respective originally intended purposes, normal wear and tear
excepted.
(e) TOL shall use its best efforts to deliver to Transamerica within
5 business days of the date hereof, and in any event shall deliver to
Transamerica within 10 business days of the date hereof, a schedule which
accurately sets forth, with respect to each Container and Chassis owned,
managed, or leased-in by TOL, as of the date hereof (i) the container number and
chassis number of each Container and Chassis owned, managed or leased-in by TOL,
(ii) the type of such Container or Chassis, (iii) the owner code and name of the
owner related thereto, (iv) the on-lease or off-lease status thereof, (v) if
off-lease, the location and the repair status thereof, (vi) if on-lease, the
identity of the customer, the related contract number, whether an option to
purchase such Container or Chassis has been granted and the timing of and amount
for which any such purchase option may be exercised. Such schedule shall
accurately list such Containers and Chassis in order by container number and
chassis number and shall accurately identify each Container or Chassis covered
by DPP, noting the type of DPP coverage, if any.
4.12 Title To And Condition And Sufficiency Of Properties. (a)
TOL has, as of the date hereof, legal and beneficial title to all of the
Containers and Chassis owned by TOL (collectively, the "Owned Equipment")
(subject, in the case of Containers and Chassis leased out by TOL, as finance
lessors, to lessees pursuant to leases or agreements which provide for the
acquisition of such Containers or Chassis subject thereto by the lessees (the
"Leased-Out Equipment"), to the rights of the applicable lessee), has valid
and binding interests as bailee in the Containers and Chassis leased by TOL,
as lessee, pursuant to finance leases and hire purchase arrangements and loan
agreements under which certain Containers and Chassis to be owned by TOL are
collateral (such Containers and Chassis,
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the "Financed Equipment" and such finance leases, agreements and
arrangements, the "Secured Financing Agreements"), pursuant to valid and
binding Secured Financing Agreements, and has valid and binding leasehold
interests in the Chassis and Containers which TOL leases, as lessee, the
"Leased-In Equipment"), pursuant to the applicable leases. TOL is, and has
been, in compliance with any and all provisions relating to collateral in
each of the Secured Financing Agreements and each agreement pursuant to which
TOL leases Leased-In Equipment. Section 4.12 of the TOL Disclosure Schedule
includes a true, complete and correct list of (i) all Secured Financing
Agreements and (ii) by lease, the Leased-In Equipment and the total number of
Containers and Chassis covered by each such lease. TOL shall use its best
efforts to deliver to Transamerica within 5 business days of the date hereof,
and in any event shall deliver to Transamerica within 10 business days of the
date hereof a schedule which accurately sets forth, (A) a true, complete and
correct list as of the date hereof of all leases, agreements and arrangements
by Container or Chassis type by container number and chassis number and (i)
by lender with a security interest in the Owned Equipment and (ii) by lessor
with respect to the Financed Equipment and the Leased-In Equipment and (B)
for each such lease, agreement or arrangement, a reference to the section of
the lease, agreement or other document which establishes ownership of or
security interest in the applicable Container or Chassis. Subject to
disposals that occur in the ordinary course of business and sales carried out
in a manner consistent with the plan set forth in Section 4.14(c) of the TOL
Disclosure Schedule, TOL will have, as of the Closing Date, legal and
beneficial title to all the Owned Equipment (subject, in the case of
Leased-Out Equipment, to the rights of the applicable lessee), valid and
binding interests as bailee in all Financed Equipment pursuant to valid and
enforceable Secured Financing Agreements, and valid and binding leasehold
interests in the Leased-In Equipment pursuant to the applicable leases. All
assets of TOL are free and clear of all title defects, liens, claims,
charges, security interests, pledges, or other encumbrances of any nature
whatsoever including, without limitation, options, leases, chattel mortgages,
conditional sales contracts, collateral security arrangements and other title
or interest retention arrangements, except (i) the Revolving Credit Agreement
among TOL and the lenders named therein (the "Revolving Credit Agreement");
(ii) materialmen's, mechanics', carriers', workmen's, repairmen's or other
like liens arising in the ordinary course of business and not yet subject to
foreclosure which do not impair Transamerica's ability to hold, own, utilize
or sell any Container or any Chassis; (iii) liens for current taxes not yet
due; (iv) interests of lenders and other financiers in assets of TOL (each, a
"Security Interest") under Secured Financing Agreements; and (v) the
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leases pursuant to which TOL leases Containers or Chassis to its customers
(the "Operating Leases").
(b) The Preliminary Report attached hereto as Exhibit F accurately
sets forth the information to be provided pursuant to Section 2.5(a) as of the
date specified therein.
(c) The Pre-Closing Report will accurately set forth the information
to be provided therein pursuant to Section 2.5(b) as of the last day of the
month immediately preceding the Closing Date.
(d) All of the tangible real or personal property owned or leased
by TOL which is used in the ownership and leasing of Containers and Chassis
by TOL and the activities related or incident thereto (the "Container
Operations") is presently utilized by TOL in the ordinary course of its
business.
(e) No third party environmental or other reports have been prepared
by or for TOL with respect to the real property owned, leased or used by TOL.
(f) All of the assets used by TOL in its business as of December 31,
1995 that are required to be reflected on TOL's financial statements are
reflected on the audited financial statements of TOL dated December 31, 1995.
(g) (i) To the extent that Containers and/or Chassis are or prior to
the Closing Date become on lease to customers who as of May 31, 1996 are
Bankrupt (as defined below) or prior to Closing Date become Bankrupt,
reserves on the unaudited balance sheet of TOL for the five months ended
May 31, 1996 for the Containers and Chassis not recovered from Bankrupt
customers and for any monies due and owing from Bankrupt customers to TOL
are adequate to cover the Loss and Expenses (as defined in Section 8.10(a)
from all Bankrupt customers including those arising after May 31, 1996,
after considering TOL's receipt of any amounts due from third party
insurers or pursuant to Management Agreements. Any adjustments made since
December 31, 1995 to TOL's reserves for Containers and Chassis not
recovered from Bankrupt customers and for monies due and owing from
Bankrupt customers were made in the ordinary course of business in
accordance with TOL's past practices and in accordance with generally
accepted accounting principles consistently applied.
(ii) The net book value of any accounts receivable due from, and
Containers or Chassis on lease to, a Bankrupt customer (which Containers or
Chassis have not
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been returned to TOL) that are reflected on the unaudited balance sheet
of TOL dated May 31, 1996, net of reserves, were carried at such date in
amounts that were not in excess of their realizable values.
(iii) A customer shall be deemed "Bankrupt" if it commences a
voluntary case concerning it under Title 11 of the United States Code as
now or hereafter in effect, or any successor thereto (the "Bankruptcy
Code") or any similar foreign law; or an involuntary case is commenced
against the customer under the Bankruptcy Code or any similar foreign law
and relief is ordered against such customer or the petition is controverted
but is not dismissed within 90 days after the commencement of the case;
such customer becomes insolvent or is unable to pay its debts within the
meaning of Applicable Law or stops making payments generally or declares a
moratorium or suspension of payments with respect to all or a substantial
part of its debts or ceases to conduct its business or enters into any
composition or other arrangement with its creditors generally (or any class
of them); or a custodian (as defined
in the Bankruptcy Code or any similar foreign law) is appointed for, or
takes charge of, all or substantially all of the property of the customer;
or the customer commences any other proceeding under any reorganization,
arrangement, readjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now
or hereafter in effect relating to such customer or there is commenced
against the customer any such proceeding which remains undismissed for a
period of 90 days or the customer is adjudicated insolvent or bankrupt; or
the customer fails to controvert in a timely manner any petition or action
filed against it under the Bankruptcy Code or any similar foreign law or
any such proceeding or any order of relief or other order approving any
such case or proceeding or the appointment of any custodian or the like of
or for it or any substantial part of its property or suffers any such
appointment to continue undischarged or unstayed for a period of 90 days;
or the customer makes a general assignment for the benefit of creditors;
or any action is taken by such customer for the purpose of effecting any of
the foregoing.
(h) All agreements of TOL relating to the management of Containers
and/or Chassis owned by third parties (the "Management Agreements") as of
December 31, 1995 which provided for compensation of $100,000 or more in 1995
are set forth in Section 4.21(a) of the TOL Disclosure Schedule and all such
Management Agreements and all Management Agreements set forth on any schedule
delivered after the date hereof in accordance with
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this Section 4.12(h) (i) are valid and binding obligations of TOL and the
valid and binding obligations of each other party thereto; (ii) have not
been amended, modified or terminated orally or in writing except as disclosed
in writing to Transamerica prior to the execution of this Agreement; and (iii)
permit TOL to use and operate the Containers and/or Chassis subject thereto.
Section 4.12(h) of the TOL Disclosure Schedule accurately sets forth the
original date of each Management Agreement set forth in Section 4.21(a) of the
TOL Disclosure Schedule and FTEUs for each managed container investor pool.
TOL shall use its best efforts to deliver to Transamerica within 5 business
days of the date hereof, and in any event shall deliver to Transamerica within
10 business days of the date hereof, a schedule which accurately sets forth (i)
all Management Agreements in effect as of the date hereof, the original date
of each such Management Agreement, and the total number of Containers or
Chassis covered thereby at December 31, 1995 and (ii) with respect to both the
Management Agreements set forth on such schedule and the Management Agreements
set forth in Section 4.21 of the TOL Disclosure Schedule, the total number of
Containers and Chassis by Container or Chassis type and by owner thereof, the
container number and chassis number of each Container or Chassis covered by
each such Management Agreement and the designation of the owner of each such
Container or Chassis. The Management Agreements which have not been furnished
to Transamerica prior to the date hereof do not contain terms or provisions
which are more burdensome, uneconomic or materially different from those that
have been received by Transamerica.
(i) Notwithstanding any other provision of this Agreement, no
representation or warranty is made with respect to the presentation on the
audited balance sheet of TOL for the year ended December 31, 1995 of the items
referred to in Section 4.12(i) of the TOL Disclosure Schedule.
4.13 Title. At the Closing, TOL shall have (i) complete and
unrestricted power and the unqualified right to use in the business, sell,
assign, transfer and deliver the Owned Equipment (subject, in the case of
Leased-Out Equipment, to rights of the applicable lessee) and the other assets
(excluding Management Agreements and Leases relating to Leased Equipment, which
by their terms are not assignable or transferrable without the consent of the
other party thereto) of TOL which are owned by TOL or any of its affiliates, and
upon consummation of the transactions contemplated hereby, TOL will continue to
have legal and marketable title to all of such Owned Equipment (subject, in the
case of Leased-Out Equipment, to rights of the applicable lessee) and such other
assets of TOL which are owned by TOL or any of its affiliates, free and clear of
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all title defects, claims, charges, options (except as aforesaid), conditional
sales contracts, collateral security arrangements, mortgages, pledges, liens,
security interests or encumbrances of any kind, as contemplated by Section 4.12
hereof (other than (a) the Revolving Credit Agreement, (b) materialmen's,
mechanics', carriers', workmen's, repairmen's or other like liens arising in the
ordinary course of business and not yet subject to foreclosure and which do not
impair Transamerica's ability to directly or indirectly hold, own, utilize or
sell any Container or Chassis, (c) liens for current taxes not yet due, (d) the
Security Interests, each of which, shall have been released and discharged or
with respect to which enforceable and irrevocable arrangements shall have been
entered into to effect such release and discharge, in each case, at TOL's
expense and (e) the Operating Leases) and (ii) legal and valid leasehold
interests in the leases pursuant to which TOL or its affiliates lease Chassis
(collectively, the "TOL Chassis Leases") and the other assets of TOL which are
leased by TOL or its affiliates.
4.14 Operating Leases; Sales of Containers and Chassis in Connection
With Management Arrangements.
(a) Set forth in Section 4.14(a) of the TOL Disclosure Schedule is
a true, complete and correct list of all customers who as of the date hereof
have Containers or Chassis which are owned, managed or leased-in by TOL or
who as of the date hereof have accounts receivable owing to TOL, and who in
each case have ceased operations or are in default under their Operating
Lease. Except as set forth in Section 4.14(a) of the TOL Disclosure
Schedule, no Operating Lease has been terminated before its expiration (other
than in accordance with its terms), repudiated or rescinded by TOL, or
terminated before its expiration (other than in accordance with its terms),
or, to the knowledge of TOL, repudiated or rescinded by the applicable lessee
under an Operating Lease and no written notice or, to the knowledge of TOL,
oral notice, has been received by TOL of any intention or threat by the
applicable lessee to do any of the above.
(b) TOL has not consented to any sublease by any lessee to a third
party not controlled by such lessee of Containers or Chassis under any Operating
Lease in effect as of the date of this Agreement, and no written notice or, to
the knowledge of TOL, oral notice, has been received by TOL of any intention by
a relevant lessee to grant any such sublease.
(c) Section 4.14(c) of the TOL Disclosure Schedule sets forth a true
and complete copy of the plan of TOL for calendar year 1996 with respect to
purchases by TOL of Containers and Chassis and disposals by TOL of Containers
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and Chassis in connection with any Containers or Chassis that have been, or may
become, subject to management arrangements, as the case may be, between TOL and
a third party. All such purchases and disposals since January 1, 1996 have been
made in the ordinary course of business and in amounts not in excess of those
provided for in the plan. Section 4.14(c) of the TOL Disclosure Schedule sets
forth a summary of such purchases and disposals from January 1, 1996 through May
31, 1996. Notwithstanding the foregoing, projections or other predictions
contained in the plan are not and shall not be deemed to be representations or
warranties of TOL, Arthur or Dennis.
4.15 Operations Manuals. The operations manuals, technical manuals
and summaries of repair history records delivered to Transamerica by TOL prior
to the date hereof are true, complete and correct. TOL shall use its best
efforts to deliver to Transamerica within 5 business days of the date hereof,
and in any event shall deliver to Transamerica within 10 business days of the
date hereof true, complete and correct copies of all of TOL's operations
manuals, technical manuals and repair history records. The practices adopted
and/or applied by TOL in the Container Operations and the repair history of the
Container Operations have not materially departed from the provisions of the
manuals or records delivered to Transamerica prior to the date hereof.
4.16 Depot Agreements; Purchase Options. (a) Section 4.16 of the
TOL Disclosure Schedule sets forth the form of Depot Agreement (as defined in
Section 4.21(a)) used by TOL in the ordinary course of business and the terms of
such Depot Agreements provide for (i) free assignability and transferability
without the consent of the counterparty thereto and (ii) cancellability without
penalty to TOL upon not more than 60 days' notice in the case of Depot
Agreements with respect to dry cargo Containers and 90 days' notice in the case
of Depot Agreements with respect to tank Containers. No Depot Agreement differs
in any material respect from the form set forth in Section 4.16(a) to the TOL
Disclosure Schedule.
(b) Section 4.16(b) of the TOL Disclosure Schedule accurately sets
forth a true, complete and correct list with respect to the Containers or
Chassis on which as of June 30, 1996 an option to purchase has been granted, the
customer to which such purchase option has been granted, the contract pursuant
to which such purchase option has been granted, the date on which such purchase
option expires, and the dollar amount at which such purchase option may be
exercised and the per diem rate thereon. Except as set forth in Section 4.16(b)
of the TOL Disclosure Schedule, no options to purchase have been
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granted to third parties with respect to any Container or Chassis through
June 30, 1996 and none will be granted after the execution hereof without the
prior written consent of Transamerica. TOL shall use its best efforts to
deliver to Transamerica within 5 business days of the date hereof, and in any
event shall deliver to Transamerica within 10 business days of the date
hereof, a schedule which accurately sets forth a true, complete and correct
list of the Containers or Chassis on which between June 30, 1996 and the date
hereof (including the date hereof) an option to purchase has been granted,
the customer to which such purchase option has been granted, the contract
pursuant to which such purchase option has been granted, the time period, if
any, during which such purchase option may be exercised, and the dollar
amount at which such purchase option may be exercised and the per diem rate
thereon.
4.17 Registration Statement. None of the information provided by TOL
for inclusion in the Registration Statement at the time it becomes effective or,
in the case of the Proxy Statement, at the date of mailing, will contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The Proxy
Statement will comply as to form in all material respects with the provisions of
the Securities Act and the Exchange Act.
4.18 Litigation. Except as set forth in Section 4.18 of the TOL
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation (an "Action") pending or, to the knowledge of TOL, threatened
against TOL which, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on the ability of TOL to
consummate the transactions contemplated hereby or, if adversely determined,
could reasonably be expected to have a material adverse effect on TOL. There
is no Action pending or, to the knowledge of TOL, threatened against TOL by
any of TOL's securityholders, in their capacity as securityholders,
including, without limitation, any holders or former holders of capital stock
of TOL or any holders or former holders of notes or bonds of TOL. TOL is not
subject to any outstanding order, writ, injunction or decree which,
individually or in the aggregate could reasonably be expected to have a
material adverse effect on TOL or a material adverse effect on the ability of
TOL to consummate the transactions contemplated hereby. Except as set forth
in Section 4.18 to the TOL Disclosure Schedule, (i) there has not been any
Action asserted or, to the knowledge of TOL, threatened against TOL relating
to TOL's method of doing business or its relationship with past, existing or
future users, purchasers or licensees of any Proprietary Rights, goods or
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services of TOL and (ii) TOL has not been subject to any outstanding order,
writ, injunction or decree relating to TOL's method of doing business or its
relationship with past, existing or future users, purchasers or licensees of
any Proprietary Rights, goods or services of TOL.
4.19 Brokerage And Finder's Fees; Merger Fees. Except for TOL's
obligations to (i) Bear, Stearns & Co. Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated (collectively, the "Financial Advisors") (a copy of the
written agreement relating to such obligations having previously been provided
to Transamerica) and (ii) one other individual who has been identified to the
Vice President Corporate Development of Transamerica, neither TOL nor any
stockholder, director, officer or employee thereof, has incurred or will incur
on behalf of TOL, any brokerage, finder's or similar fee in connection with the
transactions contemplated by this Agreement. The aggregate Merger Fees owed or
which will be owing by TOL to investment bankers, financial advisors, attorneys
or accountants will not exceed $2,000,000. "Merger Fees" means, with respect to
any party hereto, all fees and expenses paid or payable by such party to all
attorneys, accountants, investment bankers, financial advisors and other experts
and advisors incident to negotiation, preparation, execution and consummation of
this Agreement and related documentation and stockholders' meeting and consents;
provided, however, that TOL's accountants' Merger Fees shall not include audit
fees of $222,000 which fees are pursuant to the audit engagement letter dated
June 19, 1995 for the issuance of TOL's Form 10-K and for the audit of TOL's
financial statements in each case for the year ended December 31, 1995 and
Merger Fees shall include all fees paid or payable for services rendered with
respect to the transactions contemplated by this Agreement (including without
limitation, with respect to the negotiation, preparation, execution and
consummation of this Agreement and related documentation and stockholders'
meeting and consents) from January 1, 1996 through the Closing Date to the
Financial Advisors and to Cooley Godward Castro Huddleson & Tatum. TOL is not
subject to any other Contract to pay remuneration to any person, firm,
corporation or other legal entity, including any officer, director or employee
of TOL, in connection with the negotiation, preparation, execution and
consummation of this Agreement or otherwise relating to the Merger.
4.20 Employee Benefit Plans.
(a) For purposes of this Section 4.20, the following terms have the
definitions given below:
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"Controlled Group Liability" means any and all liabilities
under (i) Title IV of ERISA, (ii) section 302 of ERISA, (iii) sections
412 and 4971 of the Code, (iv) the continuation coverage requirements of
section 601 et seq. of ERISA and section 4980B of the Code, and (v)
corresponding or similar provisions of foreign laws or regulations.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or
that is a member of the same "controlled group" as the first entity, trade
or business pursuant to Section 4001(a)(14) of ERISA.
"Plans" means all employee benefit plans, programs, policies,
practices, and other arrangements providing benefits to any employee or
former employee or beneficiary or dependent thereof, whether or not
written, and whether covering one person or more than one person, sponsored
or maintained by TOL or any of its subsidiaries or to which TOL or any of
its subsidiaries contributes or is obligated to contribute. Without
limiting the generality of the foregoing, the term "Plans" includes all
employee welfare benefit plans within the meaning of Section 3(1) of ERISA
and all employee pension benefit plans within the meaning of Section 3(2)
of ERISA.
(b) Section 4.20(b) of the TOL Disclosure Schedule accurately sets
forth a true, correct and complete list as of the date hereof (i) of the 20 most
highly compensated employees of TOL by name and their respective rate of pay and
target bonus percentage, if any as of the date hereof and (ii) by department,
with respect to U.S. employees, and by title, with respect to employees outside
the U.S., and by location and by name (or, if the data requested pursuant to
this Section 4.20(b) is not available by name of particular employees, the
number of such employees and the aggregate for such employees), the estimated
number of years of service and the estimated annual compensation. TOL shall use
its best efforts to deliver to Transamerica within 5 business days of the date
hereof, and in any event shall deliver to Transamerica within 10 business days
of the date hereof, a true, complete and correct schedule
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accurately setting forth as of the date hereof the name of each employee of
TOL and, with respect to each employee, their title, their rate of pay, their
target bonus, if any, all other entitlements under Plans, the terms of any
agreements with respect to termination of employment and separation or
severance benefits, the length of notice required to terminate employment,
the date on which employment commenced (or is deemed to have commenced for
statutory purposes), the date of birth and the location of such employee and
the information set forth in such schedule shall not vary from the
information set forth in Section 4.20(b) of the TOL Disclosure Schedule
except for matters which individually and in the aggregate are immaterial.
(c) Section 4.20(c) of the TOL Disclosure Schedule lists all Plans
which cover United States based employees of TOL. There are no Plans other than
those required by local laws which cover employees of TOL based outside the
United States. With respect to each Plan, TOL has made available to
Transamerica a true, correct and complete copy of: (i) each writing
constituting a part of such Plan, including without limitation all plan
documents, benefit schedules, trust agreements, and insurance contracts and
other funding vehicles; (ii) the most recent Annual Report (Form 5500 Series)
and accompanying schedule, if any; (iii) the current summary plan description,
if any; (iv) the most recent annual financial report, if any; and (v) the most
recent determination letter from the IRS, if any.
(d) The Internal Revenue Service has issued a favorable determination
letter with respect to each Plan that is intended to be a "qualified plan"
within the meaning of Section 401(a) of the Code (a "Qualified Plan"), and there
are no existing circumstances nor any events that have occurred that could
adversely affect the qualified status of any Qualified Plan or the related
trust.
(e) All contributions required to be made to any Plan by Applicable
Laws or by any plan document or other contractual undertaking, and all premiums
due or payable with respect to insurance policies funding any Plan, for any
period through the date hereof have been timely made or paid in full and through
the Closing Date will be timely made or paid in full or, to the extent not
required to be made or paid on or before the date hereof or the Closing Date, as
applicable, have been or will be fully reflected in the SEC Documents filed or
to be filed with the Commission.
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(f) TOL and its subsidiaries have complied, and are now in
compliance, in all material respects, with all provisions of ERISA, the Code and
all laws and regulations applicable to the Plans and all of the provisions of
the Plans. There is not now, and there are no existing, circumstances that
could give rise to, any requirement for the posting of security with respect to
a Plan, other than the fiduciary bonding requirements of ERISA, or the
imposition of any lien on the assets of TOL or any of its subsidiaries under
ERISA or the Code with respect to actual or potential liabilities under a Plan.
(g) No Plan is subject to Title IV or Section 302 of ERISA or Section
412 or 4971 of the Code. No Plan is a "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two
or more contributing sponsors at least two of whom are not under common control,
within the meaning of Section 4063 of ERISA (a "Multiple Employer Plan"), nor
has TOL or any of its subsidiaries or any of their respective ERISA Affiliates,
at any time within five years before the date hereof, contributed to or been
obligated to contribute to any Multiemployer Plan or Multiple Employer Plan.
(h) There does not now exist, and there are no existing,
circumstances that could result in, any Controlled Group Liability that would be
a liability of TOL or any of its subsidiaries following the Closing. Without
limiting the generality of the foregoing, neither TOL nor any of its
subsidiaries nor any of their respective ERISA Affiliates has engaged in any
transaction described in Section 4069 or Section 4204 of ERISA.
(i) Except for health continuation coverage as required by Section
4980B of the Code or Part 6 of Title I of ERISA, neither TOL nor any of its
subsidiaries has any liability for life, health, medical or other welfare
benefits to former employees or beneficiaries or dependents thereof, except for
death benefits payable under the normal course of a pension benefit plan with
respect to deceased participants.
(j) Except as set forth in Section 4.20(j) of the TOL Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will result in, cause the
accelerated vesting or delivery of, or increase the amount or value of, any
payment or benefit to any employee of TOL or any of its subsidiaries. Without
limiting the generality of the foregoing, no amount paid or payable by TOL or
any of its subsidiaries in connection with the transactions contemplated hereby
either solely as a
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result thereof or as a result of such transactions in conjunction with any
other events will be an "excess parachute payment" within the meaning of
Section 280G of the Code.
(k) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted against the Plans, any fiduciaries thereof with respect
to their duties to the Plans or the assets of any of the trusts under any of the
Plans which could reasonably be expected to result in any material liability of
TOL or any of its subsidiaries to the Pension Benefit Guaranty Corporation, the
Department of Treasury, the Department of Labor or any multiemployer plan.
4.21 Contracts. (a) Section 4.21 of the TOL Disclosure Schedule
lists all written or oral contracts, agreements, guarantees, leases (which,
with respect to Operating Leases, is to the knowledge of TOL) and executory
commitments (each a "Contract") to which TOL is a party and which fall within
any of the following categories: (i) as of December 31, 1995, all Management
Agreements which provided for compensation of $100,000 or more during 1995,
and, as of June 30, 1996, all Operating Leases, all TOL Chassis Leases, all
Purchase Commitments (as defined below), all Indebtedness Agreements,
including all Secured Financing Agreements, agreements between TOL and depot
owners relating to the use of depots in connection with Container Operations
(the "Depot Agreements") and all other contracts, commitments, leases,
agreements or understandings, whether written or oral, relating to the
Container Operations or the assets of TOL involving the payment of $100,000
or more, (ii) Contracts not entered into in the ordinary course of business
of TOL, (iii) joint venture, partnership and like agreements, (iv) Contracts
which are service contracts (excluding contracts for delivery services
entered into in the ordinary course of business) or equipment leases
involving payments by TOL of more than $100,000 per year, (v) Contracts
containing covenants purporting to limit the freedom of TOL to compete in any
line of business in any geographic area or to hire or solicit any individual
or group of individuals, (vi) Contracts which after the Effective Time would
have the effect of limiting the freedom of Transamerica or its subsidiaries
(other than TOL and its subsidiaries) to compete in any line of business in
any geographic area or to hire any individual or group of individuals, (vii)
Contracts which contain minimum purchase conditions or requirements or other
terms that restrict or limit the purchasing relationships of TOL, (viii)
Contracts relating to any outstanding commitment for capital expenditures in
excess of $100,000, (ix) Contracts relating to the lease or sublease of or
sale or purchase of real or personal property involving any price or annual
expense in
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excess of $100,000 and not cancellable by TOL (without premium or penalty)
within one month, (x) Contracts with any labor organization, (xi) any
confidentiality agreements to which TOL is party and pursuant to which the
disclosure of such confidentiality agreement is not precluded, with TOL
hereby representing that the only confidentiality agreement it has entered
into whose disclosure is precluded by the terms thereof do not relate to or
otherwise affect the conduct or operations of TOL's business, (xii)
indentures, mortgages, promissory notes, loan agreements, guarantees of
amounts in excess of $100,000, letters of credit or other agreements or
instruments of TOL or commitments for the borrowing or the lending of amounts
in excess of $100,000 by TOL or providing for the creation of any charge,
security interest, encumbrance or lien upon any of the assets of TOL, (xiii)
Contracts involving annual revenues or expenditures to the business of TOL in
excess of .5% of TOL's annual revenues and (xiv) Contracts with or for the
benefit of any affiliate of TOL (other than subsidiaries of TOL). "Purchase
Commitments" means purchase orders of TOL and its affiliates for Containers
and Chassis. All of the Contracts required to be disclosed by this Section
4.21(a) are valid and binding obligations of TOL and the valid and binding
obligation of each other party thereto, except such Contracts which if not so
valid and binding would not, individually or in the aggregate, have a
material adverse effect on TOL. Neither TOL nor, to the knowledge of TOL,
any other party thereto is in violation of or in default in respect of, nor
has there occurred an event or condition which with the passage of time or
giving of notice (or both) would constitute a default under, any such
Contract except such violations or defaults under such Contracts which,
individually or in the aggregate, would not have a material adverse effect on
TOL. TOL shall use its best efforts to deliver to Transamerica within 5
business days of the date hereof, and in any event shall deliver within 10
business days of the date hereof, a schedule which accurately sets forth as
of the month end immediately preceding the date hereof a true, complete, and
correct list of all Operating Leases, by customer and by container number and
chassis number and by type, the start date, end date and per diem for each
such Operating Lease. The information set forth on such schedule will be
consistent with the information contained in TOL's consolidated monthly
financial reports, including fleet on hire, average per diem, and average
utilization, which information is in turn consistent with the operating data
provided by TOL to Transamerica prior to the date hereof.
(b) Section 4.21(b) of the TOL Disclosure Schedule accurately sets
forth a true, complete and correct list with respect to the Purchase Commitments
as of July 16, 1996, which
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list sets forth (A) with respect to each such Purchase Commitment, the
related purchase order number(s), the purchase order date(s), the equipment
type, the number of units, the delivery date(s), the number of units
delivered by type of equipment, the price per type of equipment, the extended
total of the purchase orders and manufacturer designation and (B) the grand
total of the number of units ordered, the number of units delivered and the
extended total of the purchase orders. Each Purchase Commitment listed in
Sections 4.21(b) and 4.21(b2) of the TOL Disclosure Schedule has been made in
the ordinary course of TOL's business and, in each case, to the extent
carried out, is in compliance with the terms of the relevant purchase order.
The terms of each purchase order listed in Sections 4.21(b) and 4.21(b2) of
the TOL Disclosure Schedule are consistent with the terms of the form of
purchase order attached hereto as Exhibit M. The Purchase Commitments set
forth in Sections 4.21(b) and 4.21(b2) of the TOL Disclosure Schedule
constitute all Purchase Commitments of TOL and its affiliates for Containers
and Chassis as of July 16, 1996. Except as set forth in Sections 4.21(b) and
4.21(b2) to the TOL Disclosure Schedule, neither TOL nor any of its
affiliates have entered into additional purchase commitments for Containers
or Chassis between December 31, 1995 and July 16, 1996. TOL shall use its
best efforts to deliver to Transamerica within 5 business days of the date
hereof, and in any event shall deliver to Transamerica within 10 business
days of the date hereof, a schedule which accurately sets forth a true,
complete and correct list of all Purchase Commitments of Containers and
Chassis entered into by TOL between July 16, 1996 and the date hereof
(including the date hereof), and with respect to each such Purchase
Commitment the information set forth in the first sentence of this Section
4.21(b). Except as set forth in Section 4.21(b3) of the TOL Disclosure
Schedule, the purchase orders set forth on such schedule will be consistent
with the terms of the form of purchase order attached hereto as Exhibit M.
Without the prior written consent of Transamerica, not to be unreasonably
withheld, TOL will not enter into any Purchase Commitments between the date
hereof and the Closing Date.
(c) Except as set forth in Section 4.21(c) of the TOL Disclosure
Schedule, so far as TOL is aware, none of the Operating Leases are held by
persons (or their agents) who have ceased operations or are Bankrupt.
(d) (i) Section 4.21(d)(i) of the TOL Disclosure Schedule sets out
each claim made or resolved by TOL or its affiliates in respect of any
manufacturer's warranty relating to any Containers owned or leased by TOL or
Chassis owned or leased by TOL in excess of $50,000 since December 31, 1990.
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(ii) Except as set forth in Section 4.21(d)(ii) of the TOL
Disclosure Schedule, (A) TOL has not waived any warranty claims since December
31, 1990 and (B) there are no manufacturing defects in any Container or Chassis.
(iii) TOL shall use its best efforts to deliver to
Transamerica within 5 business days of the date hereof, and in any event shall
deliver to Transamerica within 10 business days of the date hereof, a true,
complete and correct list, by container number and chassis number of all
Containers and Chassis which are subject to any claims set forth in Section
4.21(d) of the TOL Disclosure Schedule.
4.22 Accounts Receivable.
Except as set forth in Section 4.22 of the TOL Disclosure Schedule,
all accounts and notes receivable (including finance notes receivable) and
accrued interest receivable of TOL (together with accounts and notes receivable,
the "Receivables") have arisen in the ordinary course of business and the
accounts receivable reserves reflected on the balance sheet as of May 31, 1996
are as of such date established in accordance with generally accepted accounting
principles consistently applied and will be collectible in an amount not less
than the amounts thereof carried on the balance sheet as of such date, net of
any reserves included thereon, as applicable, and any adjustments made since
December 31, 1995 to TOL's accounts receivable reserves were made in the
ordinary course of business in accordance with TOL's past practices and in
accordance with generally accepted accounting principles consistently applied.
The Receivables are valid, binding and enforceable in accordance with their
terms, arise from bona fide transactions, and are not subject to counterclaims,
refusals to pay or other rights of set-off. To the extent that the
representations and warranties in this Section and in Section 4.12(g) shall both
prove to be inaccurate due to the same circumstances relating to a Bankrupt
Customer, the parties agree that nothing herein shall permit Transamerica to
recover more than its Loss and Expenses (as defined in Section 8.10(a))
attributable to such circumstances.
4.23 Officers and Employees. The information delivered to
Transamerica by TOL (receipt of which was specifically acknowledged in
writing by Transamerica) as to the names of all directors and officers of
TOL, the total salary, bonus, fringe benefits and perquisites received by all
directors, officers and employees whose total salary exceeded $75,000 in the
fiscal year ended December 31, 1995 is true, accurate and complete as of
December 31, 1995, and no material changes to the foregoing compensation
arrangements have occurred subsequent to December 31, 1995.
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Except as previously disclosed to Transamerica in writing (receipt of which
was specifically acknowledged in writing by Transamerica), there are no other
material forms of compensation paid to any such director, officer or employee
of TOL. Except as previously disclosed to Transamerica in writing (receipt
of which was specifically acknowledged in writing by Transamerica), no
officer, director or employee of TOL or any other affiliate of TOL provides
or causes to be provided to TOL any material assets, services or facilities
and TOL does not provide or cause to be provided to any such officer,
director, employee or affiliate any material assets, services or facilities.
Except as set forth in Section 4.23 to the TOL Disclosure Schedule, no
officer, director or other person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, TOL has any
material interest in the assets of TOL. Except as set forth in Section 4.23
of the TOL Disclosure Schedule, there are no compensation plans of TOL that
are not in writing, and copies of all compensation plans, including any
severance plans, of TOL have heretofore been given to Transamerica.
4.24 Labor Relations. There is no unfair labor practice complaint
against TOL pending before the National Labor Relations Board, and there is no
labor strike, dispute, slowdown or stoppage, or any union organizing campaign,
actually pending or, to the knowledge of TOL, threatened against or involving
TOL. TOL has not employed since December 31, 1992 and does not employ any
individual who is a member of a collective bargaining unit with respect to such
individual's employment by TOL. TOL is in compliance with, and at all times
since December 31, 1992 has been in compliance with, all Applicable Laws
relating to employment, except for failures to be in compliance therewith which
would not have a material adverse effect on TOL or on the ability of TOL to
consummate the transactions contemplated hereby.
4.25 Undisclosed Liabilities. Except (i) as and to the extent
disclosed or reserved against on the balance sheet of TOL as of December 31,
1995 included in the SEC Documents or (ii) as incurred after December 31, 1995
in the ordinary course of business consistent with prior practice and not
prohibited by this Agreement and disclosed in Section 4.25 to the TOL Disclosure
Schedule, (iii) the Merger Fees or (iv) except as set forth in Section 4.12(i)
of the TOL Disclosure Schedule, TOL does not have any liabilities or obligations
of any nature, whether known or unknown, absolute, accrued, contingent or
otherwise and whether due or to become due, that, individually or in the
aggregate, have or could have a material adverse effect on TOL.
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4.26 Customer and Supplier Relationships.
(a) To TOL's knowledge, except as set forth in Section 4.26(a) of the
TOL Disclosure Schedule, its relationships with its customers and suppliers are
satisfactory, except for such relationships which cease to be satisfactory as
a result of the announcement of the Merger.
(b) (i) Section 4.26(b) to the TOL Disclosure Schedule lists, as of
July 7, 1996, the 10 largest customer relationships (in financial twenty-foot
equivalent units based on the definition thereof which TOL has supplied to
Transamerica ("FTEUs")) of TOL with respect to each of dry cargo containers,
tank containers, open top containers, refrigerated containers, collapsible
containers, chassis and each other type of equipment listed on Exhibit F
attached hereto, and (ii) TOL shall use its best efforts to deliver to
Transamerica within 5 business days of the date hereof, and in any event shall
deliver to Transamerica within 10 business days of the date hereof, a true,
complete and correct list of the 10 largest customer relationships (in twenty-
foot equivalent units ("TEUs")) of TOL with respect to dry cargo containers, the
10 largest customer relationships (in units) of TOL with respect to tank
containers, the 10 largest customer relationships (in FTEUs) of TOL with respect
to open top containers, the 10 largest customer relationships (in FTEUs) of TOL
with respect to refrigerated containers, the 10 largest customer relationships
(in FTEUs) of TOL with respect to collapsible containers, the 10 largest
customer relationships (in units) of TOL with respect to Chassis in each case
referred to in this clause (ii) determined by reference to billing to customers
during the month of June 1996. As soon as practicable following the date
hereof, TOL shall deliver to Transamerica a true, complete and correct list of
the 10 largest customer relationships (in US$ volume) of TOL with respect to
each other type of equipment listed on Exhibit F attached hereto, in each case
determined by reference to billing to customers during the month of June 1996.
Except as set forth in Section 4.26 of the TOL Disclosure Schedule or on the
list referred to in the immediately preceding sentence or as a result of the
announcement of the Merger, no such customer has cancelled, terminated or
otherwise modified in any respect adverse to the business of TOL, or, to the
knowledge of TOL, made any written threat to TOL to cancel, terminate or
otherwise modify in any respect adverse to the business of TOL, its relationship
with TOL or the business of TOL, or has at any time since January 1, 1994
decreased materially, or made any written threat to decrease materially, its
business with TOL or the business of TOL. TOL has no knowledge that any such
customer intends to cancel, terminate or otherwise modify in any respect adverse
to the business of TOL, its relationship with
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TOL or the business of TOL, or to materially decrease its business with TOL
or the business of TOL, provided that the representation and warranty in this
sentence shall not be deemed to be inaccurate at the Closing if it is
accurate as of the date hereof and a customer shall take any of the foregoing
actions as the result of the announcement of the Merger.
4.27 Operation of TOL'S Business. (a) Since December 31, 1995,
TOL has (i) operated its business in the ordinary course and (ii) except as
set forth in Section 4.27 of the TOL Disclosure Schedule, TOL has not:
(i) done or effected any of the following actions with respect to its
securities: (A) adjusted, split, combined or reclassified its capital
stock, (B) made, declared or paid any dividend or distribution on, or
directly or indirectly redeemed, purchased or otherwise acquired, any
shares of its capital stock or any securities or obligations convertible
into or exchangeable for any shares of its capital stock, other than the
regular quarterly dividend on the TOL Series B Preferred Stock, which shall
not, in the aggregate, exceed $98,475 per quarter as of the Closing Date,
(C) granted any person any right to acquire any shares of its capital
stock, (D) issued, delivered or sold or agreed to issue, deliver or sell
any additional shares of its capital stock or any securities or obligations
convertible into or exchangeable or exercisable for any shares of its
capital stock or such securities (except pursuant to the exercise of
outstanding options to purchase TOL Common Stock), or (E) entered into any
agreement, understanding or arrangement with respect to the sale or voting
of its capital stock;
(ii) sold, transferred, pledged, mortgaged, encumbered or otherwise
disposed of any of its property or assets other than sales and disposals of
Containers or Chassis or licensing of Proprietary Rights made in the
ordinary course of business consistent with past practice and sales of
Containers and Chassis not in excess of the quantities contemplated by the
plan set forth in Section 4.14 of the TOL Disclosure Schedule;
(iii) made or proposed any changes in its Certificate of
Incorporation, as amended, or Bylaws;
(iv) merged or consolidated with any other person or acquire a
material amount of assets or capital stock of any other person or entered
into any confidentiality agreement with any person;
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(v) incurred, created, assumed or otherwise become liable for any
indebtedness for borrowed money or assumed, guaranteed, endorsed or
otherwise as an accommodation become responsible or liable for the
obligations of any other individual, corporation or other entity other than
in the ordinary course of business consistent with past practice and not in
excess of the net amounts specified in the plan set forth in Section 4.14
of the TOL Disclosure Schedule;
(vi) created any subsidiaries;
(vii) entered into or modified any employment, severance,
termination or similar agreements or arrangements with, or grant any
bonuses, salary increases, severance or termination pay to, any officer,
director, consultant or employee other than salary increases granted in
the ordinary course of business consistent with past practice to
employees who are not officers or directors of TOL, or otherwise
increased the compensation or benefits provided to any officer,
director, consultant or employee except (i) in the ordinary course of
business, (ii) as may be required by Applicable Law or (iii) for
arrangements relating to Merger Fees;
(viii) changed its method of doing business or changed any method
or principle of accounting, including, without limitation, adequate
provisions or reserves described in Sections 4.8, 4.11(a), 4.12(g), 4.22,
4.25, 5.3(f) and 8.10, in a manner that is inconsistent with past practice;
(ix) settled any Actions, whether now pending or hereafter made or
brought involving an amount in excess of $50,000;
(x) settled, compromised or cancelled any debts owed to, or claims
of, TOL, except in the ordinary course of business;
(xi) waived, surrendered or released, or caused or permitted a waiver,
surrender or release on its behalf of, any rights of TOL which have any
material value;
(xii) modified, amended or terminated, or waived, released or
assigned any material rights or claims with respect to, any Contract set
forth in Section 4.21 to the TOL Disclosure Schedule, any other material
Contract to which TOL is a party or any confidentiality agreement to which
TOL is a party;
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(xiii) incurred or committed to any capital expenditures (other
than purchases of Containers or Chassis), obligations or liabilities in
respect thereof which in the aggregate exceed or would exceed $100,000;
(xiv) made any material changes to the policies or practices of
TOL relating to (A) extensions of credit to any person or to the sale of
any assets held by TOL, (B) collection of accounts receivable or the
payment of accounts payable, (C) maintenance and repair or (D) pricing or
investment;
(xv) made any change in the course of dealing with any of its
suppliers, customers, employees or labor unions, or any change in its
method of doing business which has had or could reasonably be expected to
have a material adverse effect on TOL;
(xvi) entered into (A) any new Operating Lease or series of
Operating Leases with the same party, in respect of its Containers
(other than tank containers and refrigerated containers) whether owned,
leased or managed by TOL, that carries, or is likely to carry, 1,000 or
more FTEUs; (B) any new Operating Lease or series of Operating Leases
with the same party, in respect of its tank containers whether owned,
leased or managed by TOL, that carries, or is likely to carry, 100 or
more units; or (C) any new Operating Lease or series of Operating Leases
with the same party in respect of its refrigerated containers whether
owned, leased or managed by TOL, that carries, or is likely to carry,
100 or more units;
(xvii) entered into any Contract not in the ordinary course of
business on commercially reasonable terms or entered into any Operating
Lease except on commercially reasonable terms;
(xviii) amended, modified or changed the material terms of (A) any
Operating Lease or series of Operating Leases with the same party, in
respect of its Containers (other than tank containers and refrigerated
containers) whether owned or leased by TOL, that carried, or would carry
(after such amendment, modification or change), 1,000 or more FTEUs, (B)
any Operating Lease or series of related Operating Leases with the same
party, in respect of its tank containers whether owned or leased by TOL,
that carried, or would carry (after such amendment, modification or
change), 100 or more units or (C) any Operating Lease or series of related
Operating Leases with the same party, in respect of its refrigerated
containers whether owned or
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leased by TOL, that carried, or would carry (after such amendment,
modification or change), 100 or more units;
(xix) engaged in any transaction or arrangement with any affiliate
of TOL (other than its wholly owned subsidiaries);
(xx) amended, modified or changed a Management Agreement existing as
of the date hereof;
(xxi) deviated in any material respect from the direction and
business philosophy reflected in the plan, a copy of which is set forth in
Section 4.14 to the TOL Disclosure Schedule, or from the type of equipment
purchases, the targeted proportion of TOL's Containers and Chassis to
consist of Owned Equipment, and the targeted composition of TOL's
Containers and Chassis;
(xxii) incurred any Merger Fees in excess of the amounts set forth
in Section 4.19;
(xxiii) taken any action to exempt or made inapplicable under any
state takeover law or state law that purports to limit or restrict business
combinations or the ability to acquire or vote shares, any person or entity
(other than Transamerica or its subsidiaries) or any action taken thereby,
which person, entity or action would have otherwise been subject to the
restrictive provisions thereof and not exempt therefrom;
(xxiv) entered into or carried out any other transaction other than
in the ordinary and usual course of business;
(xxv) permitted or caused any subsidiary to do any of the
foregoing or agree or commit to do any of the foregoing; or
(xxvi) agreed in writing or otherwise to take any of the foregoing
actions.
(b) Section 4.27 of the TOL Disclosure Schedule sets forth a true,
complete and correct list by type of Container or Chassis of the total number of
all acquisitions, sales and dispositions of Containers or Chassis during the
period commencing on January 1, 1996 and ending on May 31, 1996. TOL shall use
its best efforts to deliver to Transamerica within 5 business days of the date
hereof, and in any event shall deliver to Transamerica within 10 business days
of the date hereof, a
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schedule which accurately sets forth a true, complete and correct list by
container number and chassis number of all acquisitions, sales and
dispositions of Containers and Chassis during the period commencing on
January 1, 1996 and ending on the date hereof.
(c) Since December 31, 1994, the assets of TOL have not been
materially affected in any way as a result of flood, fire, explosion or other
casualty (whether or not covered by insurance).
4.28 Permits; Compliance. Section 4.28 to the TOL Disclosure
Schedule sets forth a true and correct list of all franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted
(collectively, the "TOL Permits"), except for such franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders which are immaterial. TOL is in possession
of all TOL Permits, except for such franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders the failure of which to possess could not have a material
adverse effect on TOL. There is no Action pending or, to the knowledge of TOL,
threatened regarding suspension or cancellation of any of the TOL Permits,
except for any such Action which, if determined adversely, could not reasonably
be expected, individually or in the aggregate, to have a material adverse effect
on TOL. TOL is not in conflict with, or in default or violation of, (a) any
Applicable Law or (b) any of the TOL Permits, except in the case of clauses (a)
and (b) for any such conflicts, defaults or violations which, individually or in
the aggregate, could not reasonably be expected to have a material adverse
effect on TOL. Since December 31, 1992, TOL has not received any notification
with respect to possible conflicts, defaults or violations of (a) Applicable
Laws or (b) any of the TOL Permits, except for notices relating to possible
conflicts, defaults or violations, which conflicts, defaults or violations could
not reasonably be expected to have a material adverse effect on TOL.
4.29 Environmental Matters.
(a) As used herein, the term "Environmental Laws" means all federal,
state, local, foreign or multinational laws relating to pollution or protection
of human health or the environment (including, without limitation, ambient air,
water (including, without limitation, surface, ground, and coastal waters), land
surface, subsurface strata or living organisms),
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including, without limitation, laws relating to emissions, discharges,
generations, releases or threatened releases of chemicals, pollutants,
contaminants, petroleum or petroleum products or industrial, toxic or
hazardous substances or wastes (collectively, "Hazardous Materials") into the
environment, or otherwise relating to the ownership, possession, manufacture,
processing, distribution, use, treatment, refinement, recycling, storage,
disposal, transfer, displacement, spillage, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands
or demand letters, injunctions, judgments, licenses, notices or notice
letters, orders, permits, plans or regulations issued, entered, promulgated
or approved thereunder.
(b) There are, with respect to TOL, its subsidiaries or any
predecessor of the foregoing, no past or present violations of Environmental
Laws, releases of any Hazardous Materials into the environment, actions,
activities, circumstances, conditions, events, incidents, Contracts or
contractual obligations which may give or which have given rise to any common
law environmental liability or any liability or other obligation under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 or
similar federal, state, local, foreign or multinational laws or any other
Environmental Law and TOL has not received any notice with respect to any of the
foregoing, nor is any Action pending or threatened in connection with any of the
foregoing, other than such violations, releases, actions, activities,
circumstances, conditions, events, incidents, commitments, contractual
obligations, notices or Actions which could not have a material adverse effect
on TOL.
(c) During TOL's or any of its subsidiaries' or its or their
predecessors' occupation of any real property, no Hazardous Materials,
including, without limitation, asbestos, asbestos-containing materials,
polychlorinated biphenyls (PCBs) or PCB compounds, were or are contained on or
about any such real property currently or previously owned, leased or operated
by TOL or any of its subsidiaries or its or their predecessors, nor during TOL's
or any of its subsidiaries' or its or their predecessors' occupation of any real
property, have such substances been used in the construction, repair or
alteration of any portion of any of such real property.
(d) TOL does not and has not, and has not arranged for any Hazardous
Materials to be, held, transported, stored, disposed of, treated or procured any
Hazardous Materials except in accordance with applicable Environmental Laws.
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(e) TOL is in possession of TOL Permits required by applicable
Environmental Laws to be obtained by it to own, lease and operate its properties
and to carry on its business as it is now being conducted (the "Environmental
Permits") and has complied with such Environmental Permits in all material
respects. TOL has received no written notice or threat of variation,
revocation, modification, refusal to renew or enforcement action with respect to
such Environmental Permits.
(f) By virtue of the Merger and the transactions contemplated hereby,
TOL is not and (based on Environmental Laws as in effect on the date hereof)
will not become subject to any applicable Environmental Law requiring the
performance of assessments, the removal or remediation of Hazardous Materials,
the giving of notice to any Governmental Authority or the recording or delivery
of an environmental disclosure document or statement.
(g) During TOL's or any of its subsidiaries' or its or their
predecessors' ownership, leasehold or operation of any real property, there were
and are no underground storage tanks on or under any such real property
currently or previously owned, leased or operated by TOL or any of its
subsidiaries or its or their predecessors, other than underground storage tanks
which could not have a material adverse effect on TOL.
(h) Under each lease pursuant to which TOL leases one or more
Containers or Chassis to its customers, the lessee has agreed not to use the
Containers or Chassis, as the case may be, for any purpose for which they are
not designed or suitable and will ensure that such Containers or Chassis will be
used in compliance with all Applicable Laws.
(i) For purpose of this Section 4.29, the term "predecessor" shall
mean corporate predecessor or other similar predecessor to the entity in
question, and the term shall not mean or be deemed to include an entity whose
relationship is based solely on prior relationship to such real property, such
as a prior owner, lessor, lessee or operator of such real property.
4.30 OSHA Matters. TOL is in compliance with the requirements of the
Occupational Safety and Health Act and the regulations promulgated thereunder
and any similar laws or regulations of any state, local, foreign or
multinational jurisdiction ("OSHA") applicable to any facilities of TOL, except
for any non-compliance which could not reasonably be expected to have,
individually or in the aggregate, a material adverse
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effect on TOL. TOL has not received any citation from the Occupational
Safety and Health Administration or any other Governmental Authority or any
inspector setting forth any respect in which the facilities or operations of
TOL are not in compliance with OSHA, or the regulations under such act, which
noncompliance has not been corrected or remedied to the satisfaction of such
Governmental Authority or inspector, except in all such cases for any
noncompliance that could not reasonably be expected to have, individually or
in the aggregate, a material adverse effect on TOL. TOL has heretofore
provided Transamerica with copies of all citations heretofore issued to TOL
under OSHA and copies of all material correspondence from and to the
Occupational Safety and Health Administration, any other Governmental
Authority and any inspectors during the past three (3) years.
4.31 Insurance. Section 4.31 to the TOL Disclosure Schedule lists
all material insurance policies and binders and programs of self-insurance
owned, held or maintained by TOL on the date hereof and which afford coverage to
TOL, its assets or business and the coverage provided thereunder and the
applicable deductibles and exclusions. As of the date hereof, all such
policies, binders and programs are in full force and effect, and, as of the
Effective Time, all such policies, binders and programs (or renewals or
replacements thereof, as applicable) will be in full force and effect. All
premiums with respect thereto covering all periods up to and including the date
hereof have been paid to the extent due, and, as of the Effective Time, all
premiums with respect thereto (or with respect to renewals or replacements
thereof, as applicable) will be paid to the extent due. As of the date hereof,
no notice of cancellation or termination has been received with respect to any
such policy or binder (or the renewals or replacements thereof, as applicable)
and, as of the Effective Time, no notice of cancellation or termination will
have been received with respect to any such policy or binder (or the renewals or
replacements thereof, as applicable).
4.32 Board Recommendation. The Board of Directors of TOL, at a
meeting duly called and held, has by a majority vote of those directors present
(who constituted 100% of the directors then in office) (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger, taken
together, are fair to and in the best interests of the TOL stockholders, and
(ii) resolved to recommend that the holders of the shares of TOL Stock approve
this Agreement and the transactions contemplated herein, including the Merger.
4.33 State Takeover Laws. (i) The execution of this Agreement and
each Support/Voting Agreement, a form of which is
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attached hereto as Exhibit B, dated as of the date hereof (the
"Support/Voting Agreement") between Transamerica and Arthur or Dennis, as the
case may be, (ii) the Merger and (iii) the transactions contemplated hereby
and by the Support/Voting Agreement are exempt from or inapplicable under any
state takeover law or state law that purports to limit or restrict business
combinations or the ability to acquire or vote shares.
4.34 Disclosure. No representations or warranties made by TOL,
Arthur or Dennis in this Agreement or exhibits, schedules, or annexes hereto
contain or will contain any untrue statement of material fact or omit or will
omit to state any material fact necessary to make the statements herein, in
light of the circumstances under which they were made, not misleading.
4.35 Powers of Attorney, Guarantees, Sureties. Except as set forth
in Section 4.35 of the TOL Disclosure Schedule, TOL has not granted any
currently effective powers of attorney, is not a guarantor of any third party
obligations, and is not a surety with respect to any third party obligations.
4.36 Accuracy of Preliminary Report and Pre-Closing Report; Certain
Psyments. The information contained in each of the Preliminary Report and the
Pre-Closing Report as to the matters included therein is or will be true and
correct in all respects, respectively, as of the date or dates specified
therein. Arthur Andersen LLP shall pay not less than $1,000,000 to TOL pursuant
to the settlement agreement entered into in July 1996, a true, complete and
correct copy of which has been provided to Transamerica by TOL prior to the date
hereof.
ARTICLE V
COVENANTS OF THE PARTIES
The parties hereto agree as follows with respect to the period from
and after the execution of this Agreement.
5.1 Mutual Covenants.
(a) General. Each of the parties shall use its reasonable efforts to
take all action and to do all things necessary, proper or advisable to
consummate the Merger and the transactions contemplated by this Agreement
(including, without limitation, using its reasonable efforts to cause the
conditions set forth in Article VI for which they are responsible to be
satisfied as soon as reasonably practicable and to prepare,
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execute and deliver such further instruments and take or cause to be taken
such other and further action as any other party hereto shall reasonably
request).
(b) HSR Act. As soon as practicable, and in any event no later
than ten (10) business days after the date hereof, each of the parties
hereto, after consultation with the other parties (i) will file any
Notification and Report Forms and related material required to be filed by it
with the Federal Trade Commission ("FTC") and the Antitrust Division of the
United States Department of Justice ("DOJ") under the HSR Act with respect to
the Merger, (ii) will use its reasonable efforts to obtain an expiration or
termination of the applicable waiting period, and (iii) will support in good
faith any HSR filing made by the parties in connection with the Merger,
including, but not limited to, by promptly seeking to place itself in
substantial compliance with any Request for Additional Information and
Documentary Materials made under the HSR Act ("Second Request") by the FTC or
DOJ, and by promptly providing all other information and documents reasonably
requested by any Governmental Entity in connection with said HSR filing. In
addition to the foregoing covenants set forth in this Section 5.1(b),
Transamerica hereby covenants and agrees that it shall use all reasonable
efforts to resolve such objections, if any, as may be asserted with respect
to the Merger in connection with such HSR filings; PROVIDED, HOWEVER, that
neither Transamerica nor any of its subsidiaries shall be required hereunder
to agree to divest or hold separate any portion of the business or assets of
Transamerica or TOL. Each of the parties, after consultation with the other
parties, shall use all reasonable efforts to vigorously defend against any
action instituted by any Governmental Entity regarding the Merger.
(c) Other Governmental Matters. Each of the parties shall use its
reasonable efforts to take any additional action that may be necessary, proper
or advisable in connection with any other notices to, filings with, and
authorizations, consents and approvals of any Governmental Authority that it may
be required to give, make or obtain (including, without limitation,
registrations or other actions required under federal and states securities laws
in connection with the transactions contemplated by this Agreement).
(d) Tax-Free Treatment. Each of the parties shall use its reasonable
efforts (including, without limitation, furnishing the representations set forth
in Exhibit H hereto) to cause the Merger to constitute a tax-free
"reorganization" under Section 368(a) of the Code and to permit Cooley Godward
Castro Huddleson & Tatum to issue its opinion provided for in Section 6.2(g)
and, if Section 1.1(b) shall apply to the form
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of the Merger, each of the parties shall use its reasonable efforts
(including, without limitation, furnishing the representations set forth in
Exhibit I hereto) to cause the Merger to constitute a tax-free
"reorganization" under Section 368(a) of the Code and to permit Wachtell,
Lipton, Rosen & Katz to issue its opinion provided for in Section 6.3(o).
(e) Public Announcements. Unless otherwise required by Applicable
Laws or requirements of the National Association of Securities Dealers or any
national securities exchange (and in that event only if time does not permit),
at all times prior to the earlier of the Effective Time or termination of this
Agreement pursuant to Section 7.1, Transamerica and TOL shall consult with each
other before issuing any press release with respect to the Merger and shall not
issue any such press release prior to such consultation or prior to receiving
from the other party approval of the timing and content of such press release.
5.2 Covenants Of Transamerica.
(a) Preparation Of Transamerica Registration Statement.
Transamerica shall prepare and file the Registration Statement with the
Commission as soon as is reasonably practicable and shall use all reasonable
efforts to have the Registration Statement declared effective by the
Commission as promptly as practicable and to maintain the effectiveness of
the Registration Statement through the Effective Time. Such Registration
Statement shall include the Transamerica Common Shares to be issued pursuant
to Section 2.1(b) hereof and shall include any additional Transamerica Common
Shares which in the judgment of Transamerica may be required to be issued
pursuant to Section 2.6(a) or 2.6(c) or Section 2.7(a) or 2.7(c) hereof.
Transamerica also shall take such other action (other than qualifying to do
business in any jurisdiction in which it is not so qualified) required to be
taken under any applicable state securities laws in connection with the
issuance of Transamerica Common Shares in the Merger.
(b) Conduct of Transamerica's Operations. During the period from the
date hereof to the Effective Time, Transamerica shall use its reasonable efforts
to maintain and preserve its business organization and to retain the services of
its officers and key employees and maintain relationships with customers,
suppliers and other third parties to the end that their goodwill and ongoing
business shall not be impaired in any material respect. Following the Effective
Time, Transamerica shall use and shall cause Surviving Corporation to use
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commercially reasonable efforts to collect the Receivables (including, without
limitation, pursuant to any insurance maintained by TOL with respect to the
Receivables) which remain unpaid and to obtain recoveries from third parties
with respect to Containers and Chassis where the cost of repairs would be
subject to indemnification pursuant to Section 8.10(a)(E) hereof and with
respect to lost, stolen, destroyed or otherwise missing equipment.
(c) Notification of Certain Matters. Transamerica shall give prompt
notice to TOL of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Effective Time and (ii) any material failure of Transamerica
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery of any
notice pursuant to this Section 5.2(c) shall not limit or otherwise affect the
remedies available hereunder to TOL.
(d) Indemnification. Transamerica shall use its reasonable best
efforts to pursue any claims for indemnification pursuant to Section 8.10(b)
or 8.11 against both of Arthur and Dennis; provided, however, that if
Transamerica cannot pursue or successfully prosecute such claims against one
of Arthur or Dennis, it may pursue the full claim against the other;
provided, further, that, notwithstanding anything to the contrary contained
herein, in no event shall either of Arthur or Dennis be liable pursuant to
Sections 8.10(b) and 8.11 hereof for any amount that, in the aggregate,
exceeds the consideration actually received by such person, or member(s) of
such person's family (including trusts for the benefit of such person or any
family members or entities which are owned or established by such person or
any family members).
(e) Appraisal Rights. In the event that any stockholder of TOL who
demands appraisal rights in accordance with the requirements of Section 262(d)
of DGCL and obtains payment, either as a result of an award by a court of
competent jurisdiction or a settlement of such proceeding, in an amount per
share of TOL Common Stock which is less than the Per Share Amount (as adjusted
pursuant to Sections 2.6 and 2.7) (the amount obtained by subtracting (i) such
payment, as increased by costs (other than costs reimbursed by Arthur and Dennis
in accordance with Section 8.10(b)(iii)) incurred by Transamerica and TOL with
respect to the demand for such appraisal rights from (ii) the Per Share Amount
(as adjusted) and multiplying such remainder if positive by the number of shares
of TOL Common Stock subject to such appraisal rights (the resulting
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amount being referred to as the "Shortfall Amount"), Transamerica shall
deliver to the Escrow Agent the Shortfall Amount, but not more than
$3,000,000, for distribution to the TOL Stockholders whose shares were
converted into Transamerica Common Stock pursuant to the first sentence of
Section 2.1(b).
5.3 Covenants of TOL, Arthur and Dennis. For purposes of this
Agreement, the covenants of TOL contained herein shall also be deemed covenants
of each direct and indirect subsidiary of TOL and of each of Arthur and Dennis.
(a) TOL Stockholders Meeting. TOL shall take all action in
accordance with the federal securities laws, the DGCL and its Certificate of
Incorporation, as amended, and Bylaws necessary to obtain the consent and
approval of the TOL stockholders with respect to the Merger, this Agreement and
the transactions contemplated hereby at the earliest practicable date and also
to obtain, in a manner reasonably satisfactory to Transamerica, the approval of
TOL stockholders necessary to permit the acceleration in connection with the
Merger of TOL Options held by Philip C. Kantz not to result in an excess
parachute payment within the meaning of Section 280G of the Code (the "Kantz
Approval").
(b) Information for the Registration Statement and Preparation of
TOL Proxy Statement. TOL shall furnish Transamerica with all information
concerning it as may be required for inclusion in the Registration Statement.
TOL shall cooperate with Transamerica in the preparation of the Registration
Statement in a timely fashion and shall use all reasonable efforts to have
the Registration Statement declared effective by the Commission as promptly
as practicable. If at any time prior to the Effective Time, any information
pertaining to TOL contained in or omitted from the Registration Statement
makes such statements contained in the Registration Statement false or
misleading, TOL shall promptly so inform Transamerica and provide
Transamerica with the information necessary to make statements contained
therein not false and misleading. TOL shall use all reasonable efforts to
mail at the earliest practicable date to the TOL stockholders the Proxy
Statement, which shall include all information required under Applicable Law
to be furnished to TOL stockholders in connection with the Merger and the
transactions contemplated hereby, including the Kantz Approval, and shall
include the recommendation of TOL's Board of Directors in favor of the Merger
and the Kantz Approval.
(c) Conduct of TOL'S Operations. During the period from the date
hereof to the Effective Time, TOL shall conduct its operations in the ordinary
course of business consistent with past practice except as expressly
contemplated by this
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Agreement and shall use its reasonable efforts to maintain and preserve its
business organization and its material rights and to retain the services of
its officers and key employees and maintain relationships with customers,
suppliers, licensees and other third parties to the end that their goodwill
and ongoing business shall not be impaired in any material respect. Without
limiting the generality of the foregoing, during the period from the date
hereof to the Effective Time, TOL shall not, except as otherwise expressly
contemplated by this Agreement or as set forth in Section 5.3(c) to the TOL
Disclosure Schedule, without the prior written consent of Transamerica (which
shall have available to TOL during the period preceding the Effective Time
executives who can, or who can expeditiously obtain authorization sufficient
to, respond expeditiously to requests by TOL for waivers of the provisions
set forth in this Section 5.3(c)):
(i) do or effect any of the following actions with respect to its
securities: (A) adjust, split, combine or reclassify its capital stock,
(B) make, declare or pay any dividend or distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for
any shares of its capital stock, other than the regular quarterly dividend
on the TOL Series B Preferred Stock, which shall not, in the aggregate,
exceed $98,475 as of the Closing Date, (C) grant any person any right to
acquire any shares of its capital stock, (D) issue, deliver or sell or
agree to issue, deliver or sell any additional shares of its capital stock
or any securities or obligations convertible into or exchangeable or
exercisable for any shares of its capital stock or such securities (except
pursuant to the exercise of outstanding options to purchase TOL Common
Stock), or (E) enter into any agreement, understanding or arrangement with
respect to the sale or voting of its capital stock;
(ii) sell, transfer, pledge, mortgage, encumber or otherwise
dispose of any of its property or assets other than sales and disposals
of Containers or Chassis or licensing of Proprietary Rights made in the
ordinary course of business consistent with past practice and sales of
Containers and Chassis not in excess of the quantities contemplated by
the plan set forth in Section 4.14 of the TOL Disclosure Schedule;
(iii) make or propose any changes in its Certificate of
Incorporation, as amended, or Bylaws;
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(iv) merge or consolidate with any other person or acquire a material
amount of assets or capital stock of any other person or enter into any
confidentiality agreement with any person;
(v) incur, create, assume or otherwise become liable for any
indebtedness for borrowed money or assume, guarantee, endorse or otherwise
as an accommodation become responsible or liable for the obligations of any
other individual, corporation or other entity other than in the ordinary
course of business consistent with past practice;
(vi) create any subsidiaries;
(vii) except with respect to the verbal agreements set forth in
Section 4.20(j) of the TOL Disclosure Schedule, enter into or modify any
employment, severance, termination or similar agreements or arrangements
with, or grant any bonuses, salary increases, severance or termination pay
to, any officer, director, consultant or employee other than salary
increases granted in the ordinary course of business consistent with past
practice to employees who are not officers or directors of TOL, or
otherwise increase the compensation or benefits provided to any officer,
director, consultant or employee except (i) as may be required by
Applicable Law or a binding written contract in effect on the date of this
Agreement or (ii) for arrangements relating to Merger Fees;
(viii) change its method of doing business or change any method or
principle of accounting, including, without limitation, adequate provisions
or reserves described in Sections 4.8, 4.11(a), 4.12(g), 4.22, 4.25, 5.3(e)
and 8.10, in a manner that is inconsistent with past practice;
(ix) settle any Actions, whether now pending or hereafter made or
brought involving an amount in excess of $50,000 or commence any such
Action;
(x) settle, compromise or cancel any debts owed to, or claims of,
TOL, except in the ordinary course of business;
(xi) waive, surrender or release, or cause or permit a waiver,
surrender or release on its behalf of, any rights of TOL which have any
material value;
(xii) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to, any Contract set forth in
Section 4.21 to the TOL Disclosure
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Schedule, any other material Contract to which TOL is a party or any
confidentiality agreement to which TOL is a party;
(xiii) incur or commit to any capital expenditures, obligations or
liabilities in respect thereof which in the aggregate exceed or would
exceed $100,000, or otherwise commit or agree to purchase any Containers or
Chassis except in any such case for capital expenditures or commitments to
purchase Containers or Chassis authorized by TOL prior to the date hereof
and disclosed to Transamerica in writing;
(xiv) make any material changes to the policies or practices of
TOL relating to (A) extensions of credit to any person or to the sale of
any assets held by TOL, (B) collection of accounts receivable or the
payment of accounts payable, (C) maintenance and repair or (D) pricing or
investment;
(xv) make any change in the course of dealing with any of its
suppliers, customers, employees or labor unions, or any change in its
method of doing business which has had or could reasonably be expected to
have a material adverse effect on TOL;
(xvi) enter into (A) any new Operating Lease or series of
Operating Leases with the same party, in respect of its Containers (other
than tank containers and refrigerated containers) whether owned, leased or
managed by TOL, that carries or is likely to carry, 1,000 or more FTEUs,
(B) any new Operating Lease or series of Operating Leases with the same
party, in respect of its tank containers whether owned, leased or managed
by TOL, that carries, or is likely to carry, 100 or more units or (C) any
new Operating Lease or series of Operating Leases with the same party, in
respect of its refrigerated containers whether owned, leased or managed by
TOL, that carries or is likely to carry, 100 or more units;
(xvii) enter into any Contract not in the ordinary course of
business on commercially reasonable terms or enter into any Operating Lease
except on commercially reasonable terms;
(xviii) amend, modify or change the material terms of (A) any
Operating Lease or series of Operating Leases with the same party, in
respect of its Containers (other than tank containers and refrigerated
containers) whether owned, leased or managed by TOL, that carries, or would
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carry (after such amendment, modification or change), 1,000 or more FTEUs,
(B) any Operating Lease or series of related Operating Leases with the same
party, in respect of its tank containers whether owned, leased or managed
by TOL, that carries, or would carry (after such amendment, modification or
change), 100 or more units or (C) any Operating Lease or series of related
Operating Leases with the same party, in respect of its refrigerated
containers whether owned, leased or managed by TOL, that carries, or
would carry (after such amendment, modification or change), 100 or more
units;
(xix) other than the payment of Merger Fees, engage in any
transaction or arrangement with any affiliate of TOL (other than its wholly
owned subsidiaries);
(xx) amend, modify or change a Management Agreement existing as of
the date hereof;
(xxi) deviate in any material respect from the direction and
business philosophy reflected in the plan, a copy of which is set forth in
Section 4.14 to the TOL Disclosure Schedule, or from the type of equipment
purchases, the targeted proportion of TOL's Containers and Chassis to
consist of Owned Equipment and the targeted composition of TOL's Containers
and Chassis; provided, however, that projections or other predictions
contained in the plan are not and shall not be deemed to be representations
or warranties of TOL, Arthur or Dennis;
(xxii) incur any Merger Fees in excess of the amount set forth in
the second sentence of Section 4.19;
(xxiii) take any action to exempt or make inapplicable under any
state takeover law or state law that purports to limit or restrict business
combinations or the ability to acquire or vote shares, any person or entity
(other than Transamerica or its subsidiaries) or any action taken thereby,
which person, entity or action would have otherwise been subject to the
restrictive provisions thereof and not exempt therefrom;
(xxiv) other than the transactions contemplated hereby, enter into
or carry out any other transaction other than in the ordinary and usual
course of business;
(xxv) permit or cause any subsidiary to do any of the foregoing or
agree or commit to do any of the foregoing; or
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(xxvi) agree in writing or otherwise to take any of the foregoing
actions.
(d) No Solicitation. TOL agrees that, prior to the Effective
Time, it shall not, and shall not authorize or permit any of its subsidiaries
or any of its or its subsidiaries' directors, officers, employees, agents or
representatives, directly or indirectly, to solicit, initiate, encourage or
facilitate, or furnish or disclose non-public information in furtherance of,
any inquiries or the making of any proposal with respect to any
recapitalization, merger, consolidation or other business combination
involving TOL, or acquisition of any capital stock or any material portion of
the assets (except for acquisition of assets in the ordinary course of
business consistent with past practice) of TOL, or any combination of the
foregoing (a "Competing Transaction"), or negotiate, explore or otherwise
engage in discussions with any person (other than Transamerica, Subcorp or
their respective directors, officers, employees, agents and representatives)
with respect to any Competing Transaction or enter into any agreement,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by this
Agreement. From and after the execution of this Agreement, TOL shall
immediately advise Transamerica in writing of the receipt, directly or
indirectly, of any inquiries or proposals relating to a Competing Transaction
and promptly furnish to Transamerica a copy of any such proposal in addition
to any information provided to or by any third party relating thereto.
(e) Pre-Closing Report. The Pre-Closing Report will accurately set
forth the information to be provided pursuant to Section 2.5(b) as of the date
specified therein.
(f) Inspection and Repair of Containers.
(i) From and after the date hereof, Transamerica may survey TOL's
off-lease Containers and Chassis to (A) confirm that there will be no costs
to Transamerica in excess of $200,000, to repair to IICL-4 standards, if a
Container other than a tank Container, TOL container condition standards,
if a tank Container or Standard IICL Guide, if a Chassis, and TOL hereby
represents, warrants and agrees that its off-lease Containers and Chassis
either (1) meet IICL-4 repair standards, if a Container other than a tank
Container, TOL container condition standards, if a tank Container or
Standard IICL Guide, if a Chassis or (2) are being or will be repaired by
TOL or at TOL's direction to IICL-4 standards, if a Container other than a
tank Container, TOL container condition standards, if a tank Container or
Standard IICL Guide, if a Chassis,
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with the cost of repair paid by the customer who last redelivered the
Container or Chassis or all or in part by TOL as to Containers or
Chassis leased with DPP, and (B) determine the cost (to the extent such
costs exceed $200,000; provided, however, that any amounts recovered by
Transamerica from third parties, including, without limitation, payments
by third party insurers and other third party payments (including
without limitation by manufacturers, depots and managed container
owners) with respect to such repairs shall be offset against the cost of
repairs in determining whether such cost of repairs exceeds $200,000) to
repair to IICL-4 repair standards, if a Container other than a tank
Container, TOL container condition standards, if a tank Container, or
Standard IICL Guide, if a Chassis, for all off-lease Containers and
Chassis; and
(ii) The cost of repairs to the Containers and Chassis owned, managed
or leased-in by TOL which in any case are off-lease, to the extent in
excess of $200,000 shall be paid out of Escrow Fund A in accordance with
the terms of Section 8.10 hereof; provided, however, that any amounts
recovered by Transamerica from third parties, including, without
limitation, payments by third party insurers and other third party
payments (including without limitation by manufacturers, depots and
managed container owners) shall be offset against the cost of repairs in
determining whether such cost of repairs exceeds $200,000).
(g) Affiliate Agreements. TOL shall deliver to Transamerica a letter
identifying all persons who in TOL's reasonable determination are, at the time
the Merger is submitted to a vote of the TOL stockholders, "affiliates" of TOL
for purposes of Rule 145 under the Securities Act. TOL shall cause each person
who is identified as an "affiliate" in the letter referred to above to deliver
to Transamerica prior to the Effective Time a written agreement in the form
agreed to by the parties hereto prior to the execution of this Agreement
providing that each such person will agree not to sell, pledge, transfer or
otherwise dispose of the Transamerica Common Shares to be received by such
person in the Merger except in compliance with the applicable provisions of the
Securities Act and the applicable rules and regulations thereunder.
(h) Merger Fees. At the Closing, TOL shall deliver to the Vice
President, Corporate Development of Transamerica a schedule setting forth, by
payee, all Merger Fees theretofore paid and all Merger Fees owing. Following
the Closing, Transamerica shall, until the remaining amount allocated to Merger
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Fees under Section 4.19 shall be paid into Escrow Fund A in accordance with
Section 2.3(c), pay any remaining Merger Fees owing which shall have not been
paid theretofore, and then reimburse the TOL Stockholders, to the extent of the
amount by which $2,000,000 exceeds the amount of Merger Fees, if any, for (i)
out-of-pocket, documented costs incurred by TOL Stockholders relating to price
adjustments pursuant to Sections 2.6 and 2.7 and (ii) documented costs incurred
by TOL Stockholders of administering the Escrow Fund, it being understood that
such administrative costs shall not include the cost of defending, disputing or
settling claims or disputing the Closing Report.
(i) Notification of Certain Matters. TOL shall give prompt notice to
Transamerica of (i) the occurrence or non-occurrence of any event the occurrence
or non-occurrence of which would cause any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect at or prior
to the Effective Time and (ii) any material failure of TOL to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.3(i) shall not limit or otherwise affect the remedies available
hereunder to Transamerica, including without limitation the right to
indemnification after the Effective Time with respect to items as to which TOL
provides notice hereunder.
(j) Consulting and Non-Competition Agreements. Prior to the
Effective Time, each of Arthur and Mr. Dennis shall execute and deliver to
Transamerica a consulting agreement (collectively, the "Consulting Agreements")
and a non-competition agreement (collectively, the "Non-Competition Agreements")
each with Transamerica, each of which agreements shall be in the form mutually
agreed to by the parties hereto on the date hereof, and each of which shall
cover the period from the Closing Date to the fifth anniversary thereof.
(k) Access. From and after the date hereof until the Effective Time
(or the termination of this Agreement), TOL shall permit representatives of
Transamerica to have full access at all reasonable times to TOL's premises,
properties, books, records, contracts, tax records, documents, customers and
suppliers. Information obtained by Transamerica pursuant to this Section 5.3(k)
shall be subject to the provisions of the confidentiality agreement between
Transamerica and TOL, dated January 5, 1996, (the "Confidentiality Agreement"),
which agreement remains in full force and effect.
(l) Repayment of Notes. Prior to or at the Effective Time, (i)
Arthur and Mr. Dennis shall repay the principal and
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any accrued and unpaid interest thereon of any notes outstanding pursuant to
which Arthur or Mr. Dennis are indebted to TOL and (ii) Arthur, Mr. Dennis
and TOL shall cause TOL Distribution Limited to repay the principal and any
accrued and unpaid interest thereon of any notes outstanding pursuant to
which TOL Distribution Limited is indebted to TOL.
ARTICLE VI
CONDITIONS
6.1 Mutual Conditions. The obligations of the parties hereto to
consummate the Merger shall be subject to fulfillment of the following
conditions:
(a) No temporary restraining order, preliminary or permanent
injunction or other order or decree which prevents the consummation of the
Merger shall have been issued and remain in effect, and no statute, rule or
regulation shall have been enacted by any Governmental Authority which
prevents the consummation of the Merger.
(b) All waiting periods applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
(c) The Merger and the transactions contemplated hereby shall have
been approved by the TOL stockholders in the manner required by any
Applicable Law.
(d) The Commission shall have declared the Transamerica Registration
Statement effective. On the Closing Date and at the Effective Time, no
stop order or similar restraining order shall be threatened by the
Commission or entered by the Commission or any state securities
administrator with respect to the transactions contemplated by this
Agreement.
6.2 Conditions to Obligations of TOL. The obligations of TOL to
consummate the Merger and the transactions contemplated hereby shall be subject
to the fulfillment of the following conditions unless waived by TOL:
(a) The representations and warranties of each of Transamerica and
Subcorp set forth in Article III shall be true and correct in all material
respects on the date hereof and on and as of the Closing Date as though
made on and as of the Closing Date (except for representations and
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warranties made as of a specified date, which need be true and correct only
as of the specified date).
(b) Each of Transamerica and Subcorp shall have performed in all
material respects each obligation and agreement and shall have complied in
all material respects with each covenant to be performed and complied with
by it hereunder at or prior to the Effective Time.
(c) Each of Transamerica and Subcorp shall have furnished TOL with a
certificate dated the Closing Date signed on behalf of it by the Chairman,
President or any Vice President to the effect that the conditions set forth
in Sections 6.2(a) and (b) have been satisfied.
(d) The Transamerica Common Shares to be issued in the Merger shall
have been authorized for inclusion on the NYSE, subject to official notice
of issuance.
(e) TOL shall have received the legal opinion, dated the Closing
Date, of Wachtell, Lipton, Rosen & Katz, special counsel to Transamerica,
in substantially the form attached hereto as Exhibit C.
(f) TOL shall have received fully executed counterparts of the Escrow
Agreement.
(g) (i) TOL shall have received an opinion of Cooley Godward
Castro Huddleson & Tatum, substantially in the form attached hereto as
Exhibit G and substantially to the effect that, under applicable law,
for Federal income tax purposes, the Merger will constitute a
reorganization under Section 368(a) of the Code and (ii) each party
hereto shall have provided to such counsel the representations and
certifications set forth in Exhibit H hereto, and each party hereto will
use its reasonable efforts to provide such representations and
certifications to such counsel in a timely manner.
6.3 Conditions to Obligations of Transamerica and Subcorp. The
obligations of Transamerica to consummate the Merger and the other transactions
contemplated hereby shall be subject to the fulfillment of the following
conditions unless waived by each of Transamerica and Subcorp:
(a) The representations and warranties of TOL, Arthur and Dennis set
forth in this Agreement shall be true and correct in all material respects
on the date hereof and on and as of the Closing Date as though made on and
as of the Closing Date (except for representations and
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warranties made as of a specified date, which need be true and correct
only as of the specified date).
(b) TOL, Arthur and Dennis shall have performed in all material
respects each obligation and agreement and shall have complied in all
material respects with each covenant to be performed and complied with by
it hereunder at or prior to the Effective Time.
(c) (i) TOL shall have furnished Transamerica with a certificate
dated the Closing Date signed on its behalf by its Chairman, President or
any Vice President and (ii) each of Arthur and Dennis shall have furnished
Transamerica with a certificate dated the Closing Date, in the case of both
clauses (i) and (ii) of this subparagraph (c) to the effect that the
conditions set forth in Sections 6.3(a) and (b) have been satisfied.
(d) Transamerica shall have received the legal opinion, dated the
Closing Date, of Cooley Godward Castro Huddleson & Tatum, substantially in
the form attached hereto as Exhibit D.
(e) Transamerica shall have received fully executed counterparts of
the Consulting Agreements and of the Non-Competition Agreements.
(f) Transamerica shall have received fully executed counterparts of
the Escrow Agreement.
(g) Transamerica shall have received the Pre-Closing Report and all
other information which in accordance with this Agreement is to be
delivered to Transamerica after the date hereof, and containing the
information to be set forth therein; provided that in no event shall
Transamerica be required to consummate the Merger and the other
transactions contemplated by this Agreement within less than 60 days
following the receipt of any such information (other than the Pre-Closing
Report) which is not delivered at the time set forth herein.
(h) No Action shall be instituted by any Governmental Authority and
continuing which (i) seeks to prevent consummation of the transactions
contemplated hereby including the Merger, (ii) challenges the validity or
legality of the transactions contemplated hereby, including the Merger,
(iii) seeks material damages in connection with the transactions
contemplated hereby which continues to be
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outstanding or (iv) seeks to impose any material limitations on the
operations, businesses or assets of TOL, Transamerica or Subcorp.
(i) No event shall have occurred which has resulted in or could
result in a material adverse effect on the assets, liabilities, results of
operations, prospects, business or financial condition of TOL, except for
(x) changes, events, occurrences or developments prevailing throughout the
container leasing industry which affect the persons, firms, corporations or
other legal entities which directly compete in such industry, (y)
departures or reactions of employees of TOL resulting from the announcement
or expectation of the Merger and (z) deterioration of relationships between
TOL and its customers, vendors, managed container owners or lenders
resulting from the announcement or expectation of the Merger, provided,
however, that the exceptions set forth in this subparagraph (i) shall not
be of any force and effect to the extent any of the circumstances
contemplated in such exceptions resulted from a violation by any of TOL,
Arthur or Dennis of the covenant set forth in Section 5.3(c)(xv) hereof.
(j) (i) TOL shall have obtained the consents or approvals of the
third parties which are set forth in Section 4.5(d) to the TOL Disclosure
Schedule; provided, however, that the receipt of the consents or approvals
of third parties to Contracts which by their terms permit prepayment of the
obligations of TOL or a subsidiary thereof, as the case may be, created
thereunder (other than the Contract specified in Section 4.5(d)(iv)(a)(3)
to the TOL Disclosure Schedule, which TOL has been authorized by
Transamerica to repay at or prior to the Closing with funds drawn under the
revolving credit agreement entered into with National Westminster Bank, so
long as TOL is in compliance with such agreement at the time of and after
giving effect to such transactions) shall not be a condition to the
obligations of Transamerica and Subcorp to consummate the Merger and the
other transactions contemplated hereby, and (ii) the Transamerica Common
Shares to be issued in the Merger shall have been qualified for offering
and sale under the applicable securities laws of each such state and other
jurisdiction as may be required by applicable securities laws and other
"blue sky" laws.
(k) There shall not have been a breach of any obligation, agreement
or covenant of Dennis or Arthur contained in this Agreement or the
Support/Voting Agreement, which breach has not been cured or which is
immaterial.
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(l) Each and every unexpired and unexercised TOL Option outstanding
immediately prior to the Closing shall have been exercised by the holder
thereof or shall have been terminated and cancelled effective upon the
Effective Time and the Kantz Approval shall have been given by the TOL
stockholders.
(m) The Closing Agreement on Final Determination Covering Specific
Matters between TOL and the Commissioner of Internal Revenue relating to
withholding taxes with respect to foreign rentals paid by TOL during the
period 1977-1995, the failure to file U.S. Forms 1099 during the period
1976-1994 in respect of U.S. rentals paid and in respect to foreign
interest paid during the period 1978-1995 in the form provided to
Transamerica prior to the date hereof shall be in full force and effect,
and the Commissioner of Internal Revenue shall not be challenging, and
shall not be threatening to challenge, such Closing Agreement.
(n) In the event that TOL is merged with and into Subcorp pursuant to
Section 1.1(b) hereof, (i) Transamerica shall have received an opinion of
Wachtell, Lipton, Rosen & Katz, substantially in the form attached hereto
as Exhibit N and substantially to the effect that, under applicable law,
for Federal income tax purposes, the Merger will constitute a
reorganization under Section 368(a) of the Code and (ii) each party hereto
shall have provided to such counsel the representations and certifications
set forth in Exhibit I hereto, and each party hereto will use its
reasonable efforts to provide such representations and certifications to
such counsel in a timely manner.
(o) Each of Mrs. Greer M. Arthur and Mrs. Marvin D. Dennis shall have
executed a consent in the form of Exhibit L attached hereto.
Notwithstanding any waiver by Transamerica of any of the conditions set forth in
subparagraphs (a), (b), (c), (d), (e), (f), (k), (l), or (m) of this Section
6.3, Transamerica shall nonetheless have the right following the Closing Date to
seek indemnification for any Loss and Expenses (as defined in Section 8.10(a))
resulting from the failure of any such condition to be satisfied.
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ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval and adoption of this
Agreement by the TOL stockholders:
(a) by mutual consent of Transamerica and TOL;
(b) by either Transamerica or TOL if any permanent injunction or
other order of a court or other competent Governmental Authority preventing
the consummation of the Merger shall have become final and nonappealable;
(c) by either Transamerica or TOL if the Merger shall not have been
consummated before December 31, 1996, unless extended by the Boards of
Directors of both Transamerica and TOL (provided that the right to
terminate this Agreement under this Section 7.1(c) shall not be available
to any party whose failure or whose affiliate's failure to perform any
material covenant or obligation under this Agreement has been the cause of
or resulted in the failure of the Merger to occur on or before such date);
(d) by either Transamerica or TOL (i) upon, in the case of
Transamerica, TOL's, Arthur's, or Dennis', or, in the case of TOL,
Transamerica's or Subcorp's material violation of this Agreement or the
failure of such other party to perform any material obligation or satisfy
any material condition, (ii) if any representation or warranty of, in the
case of Transamerica, TOL, Arthur or Dennis or, in the case of TOL,
Transamerica or Subcorp is false or inaccurate such that the condition set
forth in Section 6.3(a) or Section 6.2(a), as the case may be, is not
reasonably expected to be satisfied or (iii) upon a breach by the other
party of Section 5.1(b);
(e) by Transamerica if the Board of Directors of TOL shall withdraw,
modify or change its recommendation of this Agreement or the Merger in a
manner adverse to Transamerica, or if the Board of Directors of TOL shall
have refused to affirm its recommendation within two days of any written
request from Transamerica;
(f) by Transamerica if the meeting of the TOL stockholders (including
any adjournment or postponement thereof) shall have been concluded and the
requisite vote
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of the TOL stockholders to approve the Merger and the transactions
contemplated hereby shall not have been obtained; or
(g) by Transamerica if Arthur or Dennis shall have breached this
Agreement or the Support/Voting Agreement and such breach shall not have
been cured or shall be immaterial.
7.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement, except for the provisions of
the second sentence of Section 5.3(k), shall become void and have no effect,
without any liability on the part of any party or its directors, officers or
stockholders. Notwithstanding the foregoing, nothing in this Section 7.2 shall
relieve any party to this Agreement of liability for a material breach of any
provision of this Agreement and no such liability shall in any way be limited by
the provisions of Section 8.10.
7.3 Amendment. This Agreement may be amended by the parties hereto,
by action taken or authorized by their respective Boards of Directors, at any
time before or after adoption of this Agreement by the TOL stockholders, but
after any such approval, no amendment shall be made which by law requires
further approval by the TOL stockholders without such further approval.
Notwithstanding the foregoing, this Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time,
Transamerica (with respect to TOL, Arthur and Dennis) and TOL (with respect to
Transamerica and Subcorp) by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (a) extend the time for
the performance of any of the obligations or other acts of such party, (b) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party.
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ARTICLE VIII
MISCELLANEOUS
8.1 Survival of Representations And Warranties. Subject to the
second, third, and fourth sentences of this Section 8.1, the representations
and warranties made in this Agreement shall survive until the date which is
24 months following the Effective Time except that any representation or
warranty made in any such Sections as to which notice of a breach giving rise
to a right of indemnification has been given prior to the date which is 24
months following the Effective Time shall survive until any such right of
indemnification has been finally resolved. The representations and
warranties made in Article III and in Sections 4.11(a), 4.19, 4.22, 4.23,
4.24, 4.26, 4.32, and 4.33 shall survive until the date which is 12 months
following the Effective Time except that any representation or warranty made
in any such Article or Sections and as to which notice of a breach giving
rise to a right of indemnification has been given prior to the date which is
12 months following the Effective Time shall survive until any such right of
indemnification has been finally resolved. The representations and
warranties made in Section 4.8 shall survive for the applicable statute of
limitations. Any matters for which Transamerica may be entitled to
indemnification pursuant to Section 8.10(b) shall survive forever. The
representations and warranties and the survival periods set forth above shall
apply regardless of any investigation made by or on behalf of any person,
corporation, firm or other legal entity and the right of indemnification
shall be available even if a breach of the representations and warranties is
discovered prior to the Effective Time. This Section 8.1 shall not limit any
covenant or agreement of the parties hereto, which by its terms contemplates
performance after the Effective Time or the termination of this Agreement.
8.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or dispatched by a nationally recognized overnight courier service
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Transamerica or Subcorp:
Transamerica Corporation
600 Montgomery Street
San Francisco, California 94111
Attention: Richard H. Fearon
Telecopy No.: (415) 983-4165
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with copies to
Transamerica Leasing Inc.
100 Manhattanville Road
Purchase, New York 10577
Attention: Dennis J. Kenny, Esq.
Telecopy No.: (914) 697-2526
Daniel A. Neff
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy No.: (212) 403-2000
(b) if to TOL:
Trans Ocean Ltd.
851 Traeger Avenue
San Bruno, California 94066
Attention: Marvin D. Dennis
Telecopy No.: (415) 873-6764
with a copy to
James C. Gaither
Cooley Godward Castro Huddleson & Tatum
One Maritime Plaza
20th Floor
San Francisco, California 94111
Telecopy No.: (415) 951-3699
(c) if to Arthur:
Greer M. Arthur
352 Atherton Avenue
Atherton, California 94025
with a copy to:
James C. Gaither
Cooley Godward Castro Huddleson & Tatum
One Maritime Plaza
20th Floor
San Francisco, California 94111
Telecopy No.: (415) 951-3699
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(d) if to Dennis:
c/o Marvin D. Dennis
372 Poett Road
Hillsborough, California 94010
with a copy to:
James C. Gaither
Cooley Godward Castro Huddleson & Tatum
One Maritime Plaza
20th Floor
San Francisco, California 94111
Telecopy No.: (415) 951-3699
(e) if to the Escrow Agent:
As will be provided in the Escrow Agreement.
8.3 Interpretation. When a reference is made in this Agreement to an
Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. When a reference is made in this Agreement to
TOL, such reference shall be deemed to include any and all subsidiaries of TOL,
individually and in the aggregate, except for Sections 4.1, 4.2, 4.3 and 4.4.
For the purposes of any provision of this Agreement, a "material adverse effect"
with respect to any party shall be deemed to occur if the aggregate consequences
of all breaches and inaccuracies of covenants and representations of such party
under this Agreement, when read without any exception or qualification for a
material adverse effect, are reasonably likely to have a material adverse effect
on the assets, liabilities, results of operations, prospects, business or
financial condition of such party and its subsidiaries taken as a whole. As
used in this Agreement "including" shall mean "including without limitation".
8.4 Counterparts. This Agreement may be executed in counterparts,
which together shall constitute one and the same Agreement. The parties may
execute more than one copy of the Agreement, each of which shall constitute an
original.
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8.5 Entire Agreement. This Agreement (including the documents and
the instruments referred to herein), the Support/Voting Agreements, the
Consulting Agreements, the Non-Competition Agreements and the Confidentiality
Agreement constitute the entire agreement among the parties and supersede all
prior agreements and understandings, agreements or representations by or among
the parties, written and oral, with respect to the subject matter hereof and
thereof.
8.6 Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended or shall be construed to create any third party
beneficiaries except for the Indemnified Parties (as defined in Section
8.10(a)).
8.7 Governing Law; Jurisdiction. This Agreement shall be governed
and construed in accordance with the laws of the State of Delaware without
regard to principles of conflicts of law. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the Superior Court of the State of California in and for the
City and County of San Francisco or the federal district court in Northern
District of California for any Actions, suits or proceedings arising out of
or relating to this Agreement and the transactions contemplated hereby (and
each party agrees not to commence any such Action, suit or proceeding except
in such courts), and further agrees that service of any process or summons by
U.S. registered mail to its address set forth above shall be effective
service of process for any Action, suit or proceeding brought against such
party in any such court. Each of the parties hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Action,
suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby in the Superior Court of the State of
California in and for the City and County of San Francisco or the federal
district court in Northern District of California, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in
any such court that any such Action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
8.8 Specific Performance. The transactions contemplated by this
Agreement are unique. Accordingly, each of the parties acknowledges and agrees
that, in addition to all other remedies to which it may be entitled, each of the
parties hereto is entitled to a decree of specific performance, provided such
party is not in material default hereunder.
8.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations (except as set forth in
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Section 8.10(h)) hereunder shall be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written consent
of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
8.10 Indemnification.
(a) Subject to the provisions of Sections 2.3, 2.6(d), 2.6(g),
2.7(d), 8.10(b) and 8.11, Transamerica, its affiliates, and their respective
officers, directors, agents, employees, subsidiaries (including after the
Effective Time, TOL), partners and controlling persons (the "Indemnified
Parties") may seek indemnification to the fullest extent permitted by law,
solely from the Escrow Funds for any and all damages (excluding, other than with
respect to Third Party Claims (as defined in Section 8.10(e), special and
consequential damages), claims, losses, expenses, costs, obligations and
liabilities, including attorneys' fees and expenses (collectively, "Loss and
Expenses") suffered, directly or indirectly, by any Indemnified Party by reason
of, or arising out of,
(A) any breach of any representation or warranty made by or on behalf of
TOL, Arthur or Dennis under this Agreement or in any Schedule hereto or any
certificate, document or other instrument delivered in connection herewith,
by virtue of its failure to be true and correct (x) on and as of the
Closing Date with the same effect as though made as of such Date (other
than any such representation or warranty that speaks as of a specific date
or time other than the Closing Date) or (y) on and as of the date or
time when made, in the case of any representation or warranty that
speaks as of a specific date or time other than the Closing Date,
(B) any breach of any covenant or agreement made by or on behalf of TOL,
Arthur or Dennis under this Agreement or in any Schedule hereto or any
certificate, document or other instrument delivered in connection herewith,
(C) obligations arising out of the operation of TOL prior to the Closing
for sales and use taxes,
(D) the failure to obtain, and any Loss and Expenses incurred in
obtaining, any consents of third parties, other than those set forth in
Section 8.10(a)(D) of the TOL Disclosure Schedule, or
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(E) the cost of repair of Containers and Chassis owned, managed or leased-
in by TOL which are off-lease as of the Closing Date to the extent such
costs exceed $200,000; provided, however, that any amounts recovered by TOL
or Transamerica from third parties (including, without limitation, payments
by third party insurers, manufacturers, depots and managed container
owners) with respect to such repairs shall be offset against the cost of
repairs in determining whether the cost of such repairs exceeds $200,000,
provided, that if and to the extent that such indemnification is unenforceable
for any reason, the Indemnified Party shall be entitled to the payment and
satisfaction of such indemnified liability that shall be permissible under
Applicable Law. Each Indemnified Party shall be entitled to reimbursement for
all such expenses (including fees and disbursements of counsel) as they are
incurred by such Indemnified Party, to the extent that such claims are not
disputed in good faith, in which event such expenses shall be reimbursed, if at
all, when the claims are resolved.
(b) In addition to and notwithstanding the provisions of Section
8.10(a), Arthur and Dennis agree to jointly and severally indemnify and hold
harmless each Indemnified Party (except that each of Arthur and Dennis agree
to severally and not jointly indemnify and hold harmless each Indemnified
Party with respect to any breach by Arthur or Dennis, as the case may be, of
any provision of the Support/Voting Agreement or the Non-competition
Agreement described in subclause (v) of this Section 8.10(b) which such party
enters into), from and against any and all Loss and Expenses suffered,
directly or indirectly, by any Indemnified Party by reason of or arising out
of, (i) tax obligations arising out of the operation of TOL prior to the
Closing, or the loss of tax benefits arising from any inaccuracy in the
representation and warranty in Section 4.8 regarding passive activity loss
carryforwards, (ii) any Action by or on behalf of a TOL Stockholder which
seeks to prevent consummation of the Merger or relates to the Escrow Funds,
(iii) the demand by a TOL Stockholder of appraisal rights under the DGCL
(provided, however, that Arthur and Dennis shall have the right to conduct
the defense in any Action in which a TOL Stockholder seeks appraisal rights
under the DGCL), to the extent that the Loss and Expenses therefrom,
including without limitation the amount of any award by a court of competent
jurisdiction or any settlement entered into in connection with any such
demand, exceed the amount such TOL Stockholder would have been entitled to
receive, valued at the Per Share Amount (as adjusted pursuant to Section 2.6
and 2.7), had such TOL Stockholder not exercised appraisal rights, (iv) any
breach of
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any provision of this Agreement arising out of fraud on the part of TOL,
Arthur or Dennis, (v) any breach by Arthur or Dennis of any provision of the
Support/Voting Agreement, the Non-competition Agreement or the undertakings
referred to in Sections 2.3(e)(ii), 2.6(d), 2.6(g) and 2.7(d) hereof or (vi)
intentional breaches of the covenants set forth in this Agreement. If any
Claim for indemnification pursuant to clause (i), (ii), (iii) or (vi) (if, in
the case of clause (vi), the relevant action was not done or permitted by
Arthur or Dennis) of the previous sentence of this Section 8.10(b) (a
"Section 8.10(b) Claim") is satisfied in whole or in part out of Escrow Fund
A and there are no more assets contained in Escrow Fund A, Arthur and Dennis
shall jointly and severally indemnify the Indemnified Parties against any
Claims which would be indemnifiable from Escrow Fund A were there assets
remaining therein, up to the amount of the Section 8.10(b) Claims which shall
have been satisfied in whole or in part out of Escrow Fund A.
If and to the extent that such indemnification is unenforceable for
any reason, the Indemnified Parties shall be entitled to payment and
satisfaction of such indemnified liability that shall be permissible under
Applicable Laws. Each Indemnified Party shall be entitled to reimbursement for
all such expenses (including fees and disbursements of counsel) as they are
incurred by such Indemnified Party, to the extent that such claims are not
disputed in good faith, in which event such expenses shall be reimbursed, if at
all, when the claims are resolved. With respect to any Losses and Expenses for
which indemnification may be sought by an Indemnified Party pursuant to this
Section 8.10(b), such Indemnified Party's remedies shall not be limited to the
Escrow Funds (or otherwise limited in any manner) and shall instead be unlimited
except as provided in Section 5.2(d).
(c) Notwithstanding any provision to the contrary contained in
this Agreement, Transamerica shall be entitled to indemnification pursuant to
Section 8.10(a)(A) only if the aggregate Loss and Expenses for which
Transamerica would be entitled to indemnification pursuant to such Section
8.10(a)(A) exceeds $250,000, in which case Transamerica shall be entitled to
indemnification for the aggregate of its Loss and Expenses only to the extent
such amounts in the aggregate exceed the $250,000 amount, provided, however,
that the $250,000 deductible shall not apply to breaches of the
representations and warranties set forth in Sections 4.4, the last paragraph
of Section 4.7, 4.11, 4.12, 4.13 and 4.36, for which Transamerica shall be
entitled to be indemnified from the first dollar thereof for the amount of
Loss and Expense suffered by the Indemnified Party. For purposes of Section
4.12(g), Transamerica shall, notwithstanding the termination of the survival
period
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for such representation, be entitled to be indemnified in accordance with the
terms of this Agreement from and after the second anniversary of the Closing
Date for the amount, calculated as of such second anniversary, by which the
sum of (a) the book value of any accounts receivable due from a Bankrupt
customer and (b) the average value of the Containers and Chassis on lease to
such customer based on their type, Status and age and derived from the
relevant amounts set forth in the Preliminary Report for Containers and
Chassis meeting such description shall exceed the sum of (i) the portion of
such receivables collected since May 31, 1996 which TOL is entitled to
retain, (ii) bad debt reserves allocated to such customer's receivables as of
May 31, 1996, (iii) insurance proceeds actually recovered after May 31, 1996
with respect to such customer, (iv) the average value of the Containers and
Chassis on lease to such customer (determined as provided in clause (b)
hereof) which are recovered after May 31, 1996 and (v) the amount of any of
Transamerica's losses with respect to such customer for which it is
compensated by managed container owners, if applicable. For the avoidance of
doubt, no amounts due to Transamerica pursuant to the post-closing adjustment
described in Sections 2.6 and 2.7 shall be subject to the $250,000 deductible
set forth in this Section 8.10(c).
(d) Indemnification Procedure.
(i) If an Indemnified Party has incurred or suffered Loss and
Expenses for which it is or may be entitled to indemnification pursuant to
Section 8.10, such Indemnified Party shall, within the survival period
pursuant to Section 8.1, if applicable, give written notice of such claim
for indemnification (the "Indemnity Claim Notice") to Arthur, Dennis and
each TOL Agent. Such Indemnity Claim Notice shall state the amount of
claimed damages (the "Claimed Amount") and the basis for such claim.
Within fifteen business days after delivery of an Indemnity Claim Notice,
Arthur, Dennis or any TOL Agent shall provide to such Indemnified Party a
written response (the "Preliminary Response Notice") in which Arthur,
Dennis or such TOL Agent shall (A) agree that part but not all of the
Claimed Amount (the "Agreed Amount") is due to the Indemnified Party or (B)
dispute that any of the Claimed Amount is due to the Indemnified Party.
The Preliminary Response Notice may, but need not, specify the reasons for
objecting to all or part, as the case may be, of the Claimed Amount.
Beginning five business days after its receipt of the Preliminary Response
Notice, Transamerica shall provide Arthur and Dennis and their respective
counsel, accountants and other advisors full access
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to books, records and personnel of the Surviving Corporation which are
reasonably requested to determine and understand the Claimed Amount.
Arthur and Dennis shall, within 20 business days following delivery of
the Preliminary Response Notice, deliver a notice (the "Response
Notice") to the Indemnified Party setting forth the reasons for
objecting to all or part, as the case may be, of the Claimed Amount. If
a Response Notice or a Preliminary Response Notice containing the
reasons for objection shall be delivered, the Indemnified Party, on the
one hand, and Arthur and Dennis, on the other hand, shall, during the 15
days following such delivery, use reasonable efforts to reach agreement
as to the disputed part of the Claimed Amount. If during such period,
Transamerica, Arthur, Dennis and the Indemnified Party are unable to
reach such agreement, then they shall promptly thereafter pursue
non-binding mediation by an independent mediator reasonably satisfactory
to Arthur, Dennis and the Indemnified Party (who shall not have any
material relationship with Transamerica, TOL, Arthur or Dennis). Such
mediation shall not be final, conclusive or binding upon Arthur, Dennis
or the Indemnified Party. The cost of such mediation shall be borne
equally by Transamerica, on the one hand, and Arthur and Dennis, on the
other. The Indemnified Party, on the one hand, or Arthur and Dennis, on
the other hand, shall have the right to commence legal proceedings in
the Superior Court of the State of California in and for the City and
County of San Francisco or the federal district court in the Northern
District of California, as applicable, for the purpose of having a
dispute regarding a claim by the Indemnified Party adjudicated if such
person concludes that the mediation provided for in this Section 8.10(d)
has not produced a negotiated resolution of the dispute at issue. To
the extent that Arthur, Dennis or any TOL Agent shall fail to deliver a
Preliminary Response Notice within fifteen business days following
receipt of the Indemnity Claims Notice, or, if the Preliminary Response
Notice is delivered within the appropriate period, to the extent that
Arthur and Dennis shall fail to deliver a Response Notice within twenty
business days following delivery of the Preliminary Response Notice,
Arthur and Dennis shall promptly pay, or cause to be paid, to the
Indemnified Party the Claimed Amount, provided that the Indemnified
Party shall be free to commence litigation immediately if prompt payment
shall not be made. Any Claimed Amount that is an Agreed Amount shall be
paid to the Indemnified Party promptly following delivery of the
Indemnity Claims Notice to Arthur and Dennis.
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(e) Indemnification of Third-Party Claims. The obligations and
liabilities of Arthur and Dennis to indemnify any Indemnified Party under this
Section 8.10 with respect to Loss and Expenses relating to third parties shall
be subject to the following terms and conditions:
(i) Transamerica, either on behalf of itself or of any other
Indemnified Party, shall give Arthur, Dennis and each TOL Agent written
notice of any claim for a Loss and Expense relating to a third party (a
"Third Party Claim") within 15 days of Transamerica's receipt of written
notice thereof; provided, however, that if Arthur, Dennis and each TOL Agent
are not given timely notice of such Third Party Claim by Transamerica or an
Indemnified Party, or Transamerica otherwise defaults in its obligations
under this Agreement, the Indemnified Party shall retain its rights to
indemnification under this Agreement and the sole remedy of Arthur and Dennis
for such default by Transamerica shall be to offset against the
indemnification liability otherwise payable by Arthur and Dennis to the
Indemnified Party the amount of damages actually suffered by Arthur and
Dennis as a result of such late notice or other default by Transamerica
hereunder.
(ii) Except as provided in clause (iii) of the first sentence of
Section 8.10(b) and except for the rights of participation described in the
penultimate sentence of this subsection (e)(ii), Arthur and Dennis shall have no
right to defend or control the settlement of any Third Party Claim unless each
of the following conditions are satisfied:
(A) the Third Party Claim seeks only monetary damages and does not
seek any injunction or other equitable relief against the Indemnified
Party; (B) Arthur and Dennis unconditionally acknowledge in writing, in a
notice of election to contest or defend the Third Party Claim given to
Transamerica within 15 days after Transamerica gives Arthur, Dennis and
each TOL Agent notice of the Third Party Claim, that Arthur and Dennis are
jointly and severally obligated to indemnify the Indemnified Party (in
accordance with Section 5.2(d)) with respect to the Third Party Claim,
irrespective of any limitation of liability which may be contained
elsewhere in this Agreement; (C) Arthur and Dennis are not then in material
default in any of their other obligations under this Agreement; (D) the
counsel chosen by Arthur and Dennis to defend the Third Party Claim is
reasonably satisfactory to the Indemnified Party; and (E) in the case of
any such settlement, the terms of such settlement require no more than the
payment of money, such amount will be paid by Arthur and Dennis (in
accordance with Section 5.2(d)) and the Indemnified
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Party receives as part of such settlement a legally binding and
enforceable unconditional satisfaction and/or release, in form and
substance reasonably satisfactory to the Indemnified Party.
In the event Arthur and Dennis elect to defend a Third Party Claim, Transamerica
shall, at its own expense, be entitled to participate in (but not control) the
defense thereof and receive copies of all pleadings and other papers in
connection therewith.
Unless Arthur and Dennis deny their indemnification obligation, they
shall be entitled at their own expense to participate in (but not control) the
defense thereof through counsel whom they choose and to receive copies of all
pleadings and other papers in connection therewith; provided that the
reservation of rights by Arthur or Dennis to later assert that they have no
indemnification obligations with respect to such Third Party Claim shall not for
purposes of this Section 8.10(e) constitute a denial of such indemnification
obligations.
The Indemnified Party cannot settle a Third Party Claim as to which
Arthur and Dennis unconditionally acknowledge their indemnification obligation
but are not entitled to elect to defend, without the consent of Arthur and
Dennis, such consent not to be unreasonably withheld.
(f) For purposes of determining if an Indemnified Party is entitled
to indemnification hereunder, all representations and warranties contained
herein shall be considered without reference to materiality, material adverse
effect or knowledge qualifiers and, in addition, with respect to the
representations and warranties contained in Section 4.8, without reference to
the information set forth in the section of the TOL Disclosure Schedule related
thereto. Information provided by TOL pursuant to provisions of this Agreement
requiring its delivery after the date hereof shall not be deemed to modify the
information provided prior to the execution of this Agreement for purposes of
determining if an Indemnified Party is entitled to indemnification hereunder or
if a representation or warranty herein is true and correct.
(g) No Indemnified Party shall be entitled to indemnification
pursuant to this Section 8.10 (i) to the extent compensated by adjustments to
the purchase price as set forth in Sections 2.6 and 2.7 made or (ii) to the
extent the Losses and Expenses suffered by such Indemnified Party have been
indemnified out of the Escrow Funds in accordance with the provisions of this
Agreement and the Escrow Agreement.
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(h) During the Restriction Period (as defined in the second
following sentence) neither Arthur nor Dennis may transfer in excess of fifty
percent of the Transamerica Common Shares received in connection with the
consummation of the Merger (excluding any Transamerica Common Shares
delivered to any of the Escrow Funds) (or the proceeds of sale of such amount
of Transamerica Common Shares) without fair consideration to a person, trust
or other entity for the benefit of a spouse or immediate family member which
would restrict the access of an Indemnified Party to such assets unless such
person, trust or other entity agrees in writing to assume its pro rata share
of the indemnification obligations under this Agreement. A pro rata share
shall be determined based on the value of a transfer covered by this Section
8.10(h) divided by the total value of the Transamerica Common Shares received
by the transferor at the Closing calculated on the basis of the Deemed
Average Share Price. The "Restriction Period" shall mean the period ending
on the second anniversary of the Closing Date, provided, however, that if on
such second anniversary there continues to exist one or more unresolved
claims by Transamerica or another Indemnified Party as to which Arthur and/or
Dennis may be obligated to provide indemnification pursuant to this Section
8.10 or pursuant to Sections 2.3, 2.6(d), 2.6(g) or 2.7(d) and the Escrow
Funds shall be unavailable or insufficient to satisfy the full amount so
claimed, then the Restriction Period shall continue until all such unresolved
claims are finally resolved and any indemnification payments to be made as a
result shall have been made. Nothing contained in this Section 8.10(h) shall
restrict Arthur's or Dennis' right to sell in an arm's length transaction any
of the Transamerica Common Shares received pursuant to this Agreement.
(i) Any payment made to an Indemnified Party pursuant to this Section
8.10 shall be treated by the parties hereto as an adjustment to the purchase
price for tax purposes.
8.11 CAVN Indemnification. (a) Transamerica agrees that, following
the Effective Time, it shall direct and shall use reasonable efforts to pursue
recovery (the "CAVN Recovery") of (i) all accounts receivable from CAVN on TOL's
balance sheet as of December 31, 1995 (the "CAVN Receivables") and (ii) the
Containers and Chassis on lease to CAVN on such date (the "CAVN Equipment") to
the extent not theretofore recovered. Transamerica shall be indemnified for its
reasonable costs and expenses actually incurred in pursuing and/or effectuating
the CAVN Recovery out of the Transamerica Common Shares and other assets
constituting Escrow Fund B.
(b) Upon the second anniversary of the Closing Date, Transamerica
shall be indemnified out of Escrow Fund B for the
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amount by which the sum of (x) the CAVN Receivables as reflected on TOL's
balance sheet as of December 31, 1995 and (y) the average value as of
December 31, 1995 of the CAVN Equipment, based on its type, Status and age
and derived from the relevant amounts set forth in the Preliminary Report for
Containers and Chassis meeting such description, exceeds the sum of (i) the
portion of collections of CAVN Receivables since December 31, 1995 which TOL
is entitled to retain, (ii) bad debt reserves in the amount of $748,000
allocated to the CAVN Receivables, (iii) insurance proceeds actually
recovered by Transamerica with respect to CAVN, (iv) the average value of
CAVN Containers and Chassis recovered by TOL or Transamerica after December
31, 1995, based on its type, Status and age and derived from the relevant
amounts set forth in the Preliminary Report for Containers and Chassis
meeting such description, and (v) the amount of any of Transamerica's losses
with respect to CAVN for which it is compensated by managed container owners.
In order to attain the indemnification described in this Section 8.11(b),
Transamerica shall submit a Claim for such indemnification to Arthur, Dennis
and each TOL Agent, and the procedures set forth in Section 8.10(d) shall
govern. Notwithstanding the foregoing, Transamerica shall not be entitled to
further indemnification pursuant to this Section 8.11(b), and the amounts
remaining in Escrow Fund B shall be distributed to the TOL Stockholders whose
shares of TOL Common Stock are converted into Transamerica Common Shares
pursuant to Section 2.1(b) prior to the second anniversary of the Closing
Date, if the sum of the amounts from clauses (i)-(v) of the first sentence
equals or exceeds the sum of the amounts derived from clauses (x) and (y)
thereof and Transamerica's costs and expenses incurred in pursuing and/or
effectuating the CAVN Recovery.
8.12 Use of Remaining Proceeds in Escrow Funds. From and after the
second anniversary of the Closing Date, Arthur and Dennis shall be entitled to
use the proceeds remaining in any of Escrow Funds A, B or C to satisfy some or
all of any of the indemnification obligations they may have pursuant to Section
8.10(b)(i), (ii), (iii) or (vi) (if, in the case of clause (vi), the relevant
action was not done or permitted by Arthur or Dennis) or Section 8.11 if and
only to the extent that, at the second anniversary of the Closing Date, the
value of the assets remaining in the applicable Escrow Fund, calculated in
accordance with Section 2.3(e), exceeds the amount of all Claims made by
Transamerica and all other Indemnified Parties which may be payable out of the
applicable Escrow Fund and which have not been finally resolved; provided,
however that in the event that at any time following the second anniversary of
the Closing Date any such Claim is finally resolved for an amount which is less
than the amount of the related Claim, an amount of the applicable Escrow Fund
which is equal to the
-97-
<PAGE>
amount by which such Claim exceeded the related final resolution amount shall
also be available to satisfy the indemnification obligations of Arthur and
Dennis described in the first part of this sentence. Arthur and Dennis shall
be entitled, in their sole discretion, to extend the period of such Escrow
Fund for purposes of satisfying their aforesaid indemnification obligations
only under the circumstances described in the immediately preceding sentence.
8.13 Expenses. Each of the parties hereto shall bear its own
expenses in connection with the negotiation, preparation, execution and
consummation of this Agreement and related documentation and stockholders'
meeting and consents whether or not the Merger is consummated, it being
understood that the Merger Fees will be paid by TOL on or within 30 days of the
Closing Date.
-98-
<PAGE>
IN WITNESS WHEREOF, Transamerica, Subcorp, TOL, Arthur and Dennis have
signed this Agreement as of the date first written above.
TRANSAMERICA CORPORATION
By: /s/ Transamerica Corporation
----------------------------------
CITATION SUB CORP.
By: /s/ Citation Sub Corp.
----------------------------------
TRANS OCEAN LTD.
By: /s/ Trans Ocean Ltd
----------------------------------
/s/ Greer M. Arthur
----------------------------------
Greer M. Arthur
/s/ Marvin D. Dennis
----------------------------------
Marvin D. Dennis, in his
individual capacity
/s/ Marvin D. Dennis
----------------------------------
Marvin D. Dennis, as trustee of
The Dennis Family Living Trust
/s/ Nancy A. Dennis
----------------------------------
Nancy A. Dennis, as trustee of
The Dennis Family Living Trust
-99-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANICAL STATEMENTS OF TRANS OCEAN CONTAINER CORPORATION FOR THE
PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 15,138,000
<SECURITIES> 0
<RECEIVABLES> 42,942,000
<ALLOWANCES> 1,474,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 389,655,000
<DEPRECIATION> 58,578,000
<TOTAL-ASSETS> 404,222,000
<CURRENT-LIABILITIES> 0
<BONDS> 75,000,000
3,603,000
0
<COMMON> 1,000
<OTHER-SE> 34,127,000
<TOTAL-LIABILITY-AND-EQUITY> 404,222,000
<SALES> 0
<TOTAL-REVENUES> 87,417,000
<CGS> 0
<TOTAL-COSTS> 84,424,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 265,000
<INTEREST-EXPENSE> 11,807,000
<INCOME-PRETAX> 2,993,000
<INCOME-TAX> 1,137,000
<INCOME-CONTINUING> 1,856,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,856,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
