<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
BUDGET GROUP, INC.
-------------------------------------------------
(Name of Issuer)
Class A Common Stock, par value $0.01
-------------------------------------------------
(Title of Class of Securities)
1190032101
-------------------------------------------------
(CUSIP Number of Class of Securities)
Questor Partners Fund, L.P.
Questor Side-By-Side Partners, L.P.
103 Springer Building
3411 Silverside Road
Wilmington, DE 19810
(Name, Address and Telephone Number of Person
-------------------------------------------------
Authorized to Receive Notices and Communications)
Copies to:
Robert E. Shields
Questor Management Company
4000 Town Center, Suite 530
Southfield, MI 48705
(248) 213-2200
Serge Benchetrit
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
(212) 728-8000
June 19, 1998
-------------------------------------------------
(Date of Event which Requires
Filing of this Schedule)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3)
or (4), check the following: [_]
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SCHEDULE 13D
- ---------------------------- ----------------------
CUSIP No. 1190032101 Page 2 of 12 Pages
- ---------------------------- ----------------------
- ---- ---------------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Questor Partners Fund, L.P.
- ---- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[x]
(b)[_]
- ---- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- ---- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [_]
- ---- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------- --------- -------------------------------------------------------
7 SOLE VOTING POWER
1,660,749
--------- -------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH
REPORTING
PERSON WITH
--------- -------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,660,749
--------- -------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ---- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
1,660,749
- ---- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
- ---- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.7%
- ---- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ---- ---------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
- ---------------------------- ----------------------
CUSIP No. 1190032101 Page 2 of 12 Pages
- ---------------------------- ----------------------
- ---- ---------------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Questor Side-By-Side Partners, L.P.
- ---- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[x]
(b)[_]
- ---- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- ---- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [_]
- ---- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------- --------- -------------------------------------------------------
7 SOLE VOTING POWER
119,143
--------- -------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH
REPORTING
PERSON WITH
--------- -------------------------------------------------------
9 SOLE DISPOSITIVE POWER
119,143
--------- -------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ---- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
119,143
- ---- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
- ---- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.4%
- ---- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ---- ---------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
3
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Item 1. Security and Issuer.
This statement on Schedule 13D relates to the Class A Common Stock, par
value $0.01 per share (the "Budget Common Stock"), of Budget Group, Inc., a
Delaware corporation ("Budget"), and is being filed pursuant to Rule 13d-1 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
address of the principal executive offices of Budget is 125 Basin Street, Suite
210, Daytona Beach, Florida, 32114.
Item 2. Identity and Background.
(a) This statement is being filed by Questor Partners Fund, L.P., a
Delaware limited partnership ("Questor Partners") and Questor Side-by-Side
Partners, L.P., a Delaware limited partnership ("Questor SBS", and collectively
with Questor Partners, the "Reporting Persons"). The general partner of Questor
Partners is Questor General Partner, L.P., a limited partnership organized under
the laws of Delaware ("QGP"). The general partner of each of QGP and Questor SBS
is Questor Principals, Inc., a Delaware corporation ("QP"). The day-to-day
management of Questor Partners and Questor SBS is conducted by Questor
Management Company, a Delaware corporation ("QMC") pursuant to the terms of a
certain management agreement. The foregoing entities will be collectively
referred to hereinafter as the "Questor Entities".
The sole directors and shareholders of QP and QMC are Jay Alix, Melvyn
N. Klein, Dan W. Lufkin and Edward L. Scarff. Mr. Alix, who also serves as
President and Chief Executive Officer of QP and QMC, is the founder, and for the
past five years has been a
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principal, of Jay Alix & Associates, a nationally-recognized turnaround and
crisis management firm based in Southfield, Michigan, with additional offices in
New York and Chicago. Mr. Klein is a merchant banker and attorney who currently
acts, and for the past five years has acted, as the managing general partner of
GKH Investments, L.P., a $550 million equity investment partnership. Mr. Lufkin
was a co-founder of Donaldson, Lufkin & Jenrette and is currently, and for the
past five years has been, a private investor. Mr. Scarff is a former president
of Transamerica Corporation and is currently, and for the past five years has
been, a private investor. The executive officers of the Questor Entities are Mr.
Alix and Robert E. Shields. Before joining the Questor Entities in late 1994,
Mr. Shields was a partner in the Philadelphia-based law firm of Drinker Biddle &
Reath LLP, where at various time during his last five years at the firm he
served as chief financial officer, a managing partner and head of the firm's
business and finance group. As described in Item 4 below, each of Mr. Alix and
Mr. Shields is one of the persons that could be elected to the Board of
Directors of Budget at Questor Partners' and Questor SBS' request.
(b) The address of the principal business and principal office of
Questor Partners, Questor SBS, QGP and QP is 103 Springer Building, 3411
Silverside Road, Wilmington, Delaware 19810. The principal offices of QMC are
located at 4000 Town Center, Suite 530, Southfield, Michigan 48705.
(c) Questor Partners and Questor SBS were formed to acquire interests
in, among others, non-core business units,
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underperforming companies and other special situations. Thus, they acquired a
controlling portion in Ryder TRS, Inc., a Delaware corporation ("Ryder"). The
securities of Budget were acquired upon disposition of the Ryder investment. The
sole business of QGP is to act as the general partner of Questor Partners. The
sole business of QP is to act as the general partner of QGP and Questor SBS.
(d) None of the Reporting Persons, nor, to the best of their knowledge, any
of the directors, executive officers, general partners, shareholders or members
referred to in paragraph (a) has, during the last five years, been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) None of the Reporting Persons nor, to the best of their knowledge, any
of the directors, executive officers, general partners, shareholders or members
referred to in paragraph (a) above has, during the last five years, been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) Each of the individuals referred to in paragraph (a) above is a United
States citizen.
Item 3. Source and Amount of Funds or Other Consideration.
On June 19, 1998, Questor Partners acquired 1,660,749 shares of Budget
Common Stock and Questor SBS acquired 119,143 shares of
6
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Budget Common Stock pursuant to the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of March 4, 1998, as amended on March 16, 1998 and June
19, 1998, among Ryder, Budget, BDG Corporation ("BDG"), a Delaware corporation
and a wholly-owned subsidiary of Budget, Questor Partners, Questor SBS and
Madison Dearborn Capital Partners, L.P., a copy of which is filed as Exhibit 1
hereto and incorporated by reference herein.
Questor Partners and Questor SBS acquired such shares of Budget Common
Stock and received cash consideration from Budget in exchange for Questor
Partners' 62,433 shares of common stock, par value $0.01 per share, of Ryder
("Ryder Common Stock") and Questor SBS' 4,479 shares of Ryder Common Stock.
Item 4. Purpose of Transaction.
On March 4, 1998, Ryder entered into the Merger Agreement with Budget
and BDG pursuant to which the shareholders of Ryder received approximately
$125,000,000 in cash, 3,455,219 shares of Budget Common Stock, and warrants (the
"Warrants") to purchase initially 1,000,000 shares of Budget Common Stock
following the 20-month anniversary of the closing date ("Closing Date") of the
merger of Ryder with and into BDG (the "Merger") in exchange for the delivery
and surrender of the shares of Ryder Common Stock. Since the exercise price of
the Warrants and the number of shares of Budget Common Stock to be received upon
exercise will be determined on the 20-month anniversary of the Closing Date, the
Warrants are not exercisable prior to such 20-month anniversary. In addition,
the shareholders of Ryder received the right to participate in contingent
additional consideration upon satisfaction of certain
7
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conditions if the market price of the shares of Budget Common Stock declines
below $32.9955 per share following the Closing Date. The contingent additional
consideration will be calculated on the 12-month anniversary of the Closing Date
and on the 20-month anniversary of the Closing Date and will be payable by
Budget, at its option, either in cash or in additional shares of Budget Common
Stock. The Closing Date occurred and the Merger was consummated on June 19,
1998.
Pursuant to the Merger Agreement, Questor Partners and Questor SBS have
the right to name one person (the "Director") to be nominated to the Board of
Directors of Budget (the "Budget Board"). Should such right be exercised, such
Director will be selected by Questor Partners and Questor SBS and will be Mr.
Alix, Mr. Shields or Henry L. Drucker, a Managing Director of the Questor
Entities. If Questor Partners and Questor SBS exercise their right to have a
Director on the Budget Board, the Budget Board would be required to use its
commercially reasonable efforts to continue to cause such Director to be elected
to the Budget Board until the earliest to occur of (a) the third anniversary of
the Closing Date, (b) the disposition by Questor Partners and Questor SBS of 75%
of the shares of Budget Common Stock acquired by them in the Merger, or (c) the
acquisition by Questor Partners and Questor SBS of a controlling interest in
certain entities.
Notwithstanding the foregoing, the Reporting Persons intend to hold the
shares of Budget Common Stock received in the Merger for investment purposes
only. Questor Partners and Questor SBS from time to time intend to review their
investment in Budget on the
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basis of various factors, including Budget's business, financial condition,
results of operations and prospects, general economic and industry conditions,
the securities markets in general and those for Budget's securities in
particular, as well as other developments and other investment opportunities.
Except as set forth above, the Reporting Persons do not have any
present plans or proposals that relate to or would result in any of the actions
required to be described in Item 4 of Schedule 13D.
Each of the Reporting Persons reserves the right to acquire, or cause
to be acquired, additional securities of Budget, to dispose of, or cause to be
disposed, such securities at any time or to formulate other purposes, plans or
proposals regarding Budget or any of its securities, to the extent deemed
advisable in light of general investment and trading policies of the Reporting
Persons, market conditions or other factors.
All foregoing descriptions of the Merger Agreement is qualified in its
entirety by reference to the Merger Agreement which is incorporated by reference
to Exhibit 1 attached hereto.
Item 5. Interest in Securities of the Issuer.
(a) On the date of this Statement, (i) Questor Partners beneficially
owns and has sole voting and dispositive power of 1,660,749 shares of Budget
Common Stock, representing 5.7% of the issued and outstanding shares of Budget
Common Stock, and (ii) Questor SBS beneficially owns and has sole voting and
dispositive power of 119,143 shares of Budget Common Stock, representing 0.4% of
the issued and outstanding shares of Budget Common Stock. The
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foregoing percentage calculations are based on 29,201,080 shares of Budget
Common Stock being outstanding equal to the sum of (i) 25,745,861 shares of
Budget Common Stock being outstanding as of May 11, 1998 as reported in Budget's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 and (ii)
3,455,219 shares of Budget Common Stock issued in the Merger on June 19, 1998.
Except for Questor Partners and Questor SBS, to the best of the Reporting
Persons' knowledge, none of the other persons named in Item 2 above own any
interests in the shares of Budget Common Stock.
(b) The number of shares of Budget Common Stock with respect to which
Questor Partners and Questor SBS (i) have sole voting power, (ii) share voting
power, (iii) have sole dispositive power, (iv) share dispositive power, are
listed in the responses to Items 7, 8, 9, and 10, respectively, on the cover
pages filed herewith, and such responses are incorporated by reference herein.
(c) Except as described in this Statement on Schedule 13D, none of
Questor Partners, Questor SBS or any party referred to above, has acquired or
disposed of, or entered into any other transaction with respect to, any shares
of Budget Common Stock during the past 60 days.
(d) None.
(e) Not applicable.
10
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Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
Pursuant to Rule 13d-1(f) promulgated under the Exchange Act, the
Reporting Persons have entered into an agreement with respect to the joint
filing of this statement, and any amendment or amendments hereto, which
agreement is attached hereto as Exhibit 2.
The information set forth in Item 4 above is incorporated herein by
reference.
Except as described herein and by reference to Item 4 above, there are
no contracts, arrangements, understandings or relationships among the persons
named in Item 2 or between such persons and any other person with respect to any
securities of Budget.
By virtue of the relationships among the Reporting Persons described in
Item 2, the Reporting Persons may be deemed to be a "group" under the Federal
securities laws.
Item 7. Material to be Filed as Exhibits.
1. The Agreement and Plan of Merger, dated as of March 4, 1998, as
amended on March 16, 1998 and June 19, 1998, among Ryder TRS, Inc., Budget
Group, Inc., BDG Corporation and certain other parties.
2. Joint Filing Agreement, dated as of June 29, 1998, by and between
the Reporting Persons.
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SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
Dated: June 29, 1998 QUESTOR PARTNERS FUND, L.P.
By: Questor General Partner, L.P.,
its General Partner
By: Questor Principals, Inc.
its General Partner
By: /s/ Robert E. Shields
------------------------------------
Robert E. Shields
Managing Director
Dated: June 29, 1998 QUESTOR SIDE-BY-SIDE PARTNERS, L.P.
By: Questor Principals, Inc.
its General Partner
By: /s/ Robert E. Shields
------------------------------------
Robert E. Shields
Managing Director
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INDEX TO EXHIBITS
-----------------
Document Exhibit No.
- -------- -----------
The Agreement and Plan of Merger, dated as of March 4, 1998, 1
as amended on March 16, 1998 and June 19, 1998, among Ryder
TRS, Inc., Budget Group, Inc., BDG Corporation and certain
other parties.
Joint Filing Agreement, dated as of June 29, 1998, by and 2
between the Reporting Persons.
<PAGE>
================================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 4, 1998
BY AND AMONG
BUDGET GROUP, INC.,
BDG CORPORATION,
RYDER TRS, INC.,
AND
CERTAIN OTHER PARTIES
================================================================================
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TABLE OF CONTENTS
Page
ARTICLE I. The Transactions.................................................2
Section 1.1. The Transactions..............................................2
Section 1.2. The Merger....................................................2
Section 1.3. Effects of Merger.............................................2
ARTICLE II. The Surviving Corporation........................................2
Section 2.1. Certificate of Incorporation..................................2
Section 2.2. By-Laws.......................................................3
Section 2.3. Officers and Directors........................................3
ARTICLE III. Determination of Merger Consideration;
Conversion of Shares; Etc......................................3
Section 3.1. Determination of Merger Consideration.........................3
Section 3.2. Conversion of Shares in the Merger............................4
Section 3.3. Adjustment to Merger Shares...................................5
Section 3.4. Contingent Additional Consideration...........................6
Section 3.5. Warrants......................................................9
Section 3.6. Escrow Holdback Shares.......................................10
Section 3.7. Stock Options................................................11
Section 3.8. Appraisal Rights.............................................12
Section 3.9. Buyer to Make Certificates Available.........................13
Section 3.10. Dividends; Transfer Taxes....................................14
Section 3.11. No Fractional Securities.....................................15
Section 3.12. Closing of Company Transfer Books............................15
Section 3.13. Legends and Transfer Restrictions............................15
Section 3.14. Exemptions from Registration and Qualification...............16
Section 3.15. Registration Rights..........................................16
Section 3.16. Business Combinations........................................17
ARTICLE IV. Representations and Warranties of the Company...................18
Section 4.1. Corporate Organization and Authorization.....................18
Section 4.2. Capitalization...............................................20
Section 4.3. Noncontravention.............................................21
Section 4.4. SEC Filings..................................................21
Section 4.5. Financial Statements.........................................22
Section 4.6. Legal Proceedings............................................23
Section 4.7. Employee Plans...............................................23
Section 4.8. Intellectual Property........................................25
Section 4.9. Events Subsequent to September 30, 1997......................26
Section 4.10. Compliance with Laws.........................................26
Section 4.11. Registration Statement.......................................27
Section 4.12. Properties; Leases...........................................27
Section 4.13. Tax Matters..................................................28
Section 4.14. Brokerage 30
Section 4.15. Insurance; Protection Products...............................30
Section 4.16. Contracts 30
Section 4.17. Transactions with Affiliates.................................31
(i)
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Section 4.18. Voting Requirements; Dissenters' Rights......................32
Section 4.19. Labor Matters................................................32
Section 4.20. Quantity and Maintenance of Trucks...........................32
Section 4.21. Accounts Receivable..........................................32
Section 4.22. Licenses, Permits, etc.......................................32
Section 4.23. Disclosure...................................................33
ARTICLE V. Representations and Warranties of Buyer.........................33
Section 5.1. Corporate Organization and Authorization.....................33
Section 5.2. Capitalization...............................................34
Section 5.3. Noncontravention.............................................35
Section 5.4. SEC Filings..................................................35
Section 5.5. Financial Statements.........................................36
Section 5.6. Legal Proceedings............................................36
Section 5.7. Events Subsequent to September 30, 1997......................36
Section 5.8. Compliance with Laws.........................................37
Section 5.9. Registration Statement.......................................37
Section 5.10. Properties; Insurance........................................37
Section 5.11. Financing....................................................37
Section 5.12. Brokerage....................................................38
Article VI. Covenants and Agreements........................................38
Section 6.1. Conduct of the Company Prior to the Effective Time...........38
Section 6.2. Conduct of Buyer Prior to the Effective Time.................41
Section 6.3. Other Offers for the Company; Sale of Common Stock by
Significant Stockholders...................................42
Section 6.4. Continued Effectiveness of Representations and Warranties of
the Parties................................................43
Section 6.5. Corporate Examinations and Investigations....................44
Section 6.6. Buyer Approvals..............................................44
Section 6.7. Company Approvals............................................44
Section 6.8. Letter of Credit.............................................44
Section 6.9. Further Assurances...........................................45
Section 6.10. Buyer Board of Directors.....................................46
Section 6.11. Indemnification of Company Officers and
Directors; Insurance.......................................46
Section 6.12. Confidentiality..............................................47
Section 6.13. Certificates, Opinions, Etc..................................47
Section 6.14. Interim Financials...........................................47
Section 6.15. Communications...............................................47
Section 6.16. Releases.....................................................47
Section 6.17. Transfer Taxes...............................................48
Section 6.18. Standstill...................................................48
Section 6.19. Buyer's Stockholders' Meeting................................48
Section 6.20. Stock Purchases, Repurchases and Sales; Registration Rights..49
Section 6.21. Listing......................................................49
(ii)
<PAGE>
Section 6.22. Registration Rights..........................................49
Section 6.23. Buyer Review of Disclosure Schedules.........................50
ARTICLE VII. Conditions Precedent To Merger..................................50
ARTICLE VIII. Closing.........................................................51
ARTICLE IX. Representations and Warranties as of the Closing Date;
Survival; Material Breaches.....................................51
Section 9.1. Representations and Warranties as of the Closing Date........51
Section 9.2. Survival.....................................................52
Section 9.3. Certain Material Breaches....................................52
ARTICLE X. Termination of Agreement........................................53
Section 10.1. Termination..................................................53
Section 10.2. Effect of Termination........................................54
Section 10.3. Amounts Payable in Connection with Termination...............54
ARTICLE XI. Definitions.....................................................55
Section 11.1. Definitions..................................................55
ARTICLE XII. Miscellaneous...................................................64
Section 12.1. Publicity....................................................64
Section 12.2. Notices......................................................64
Section 12.3. Entire Agreement.............................................66
Section 12.4. Waivers and Amendments; Non Contractual Remedies;
Preservation of Remedies; Liability........................66
Section 12.5. Governing Law................................................67
Section 12.6. Binding Effect; No Assignment................................67
Section 12.7. Third Party Beneficiaries....................................67
Section 12.8. Counterparts.................................................67
Section 12.9. Exhibits, Schedules and Annexes..............................68
Section 12.10. Headings 68
Section 12.11. Submission to Jurisdiction; Venue............................68
Section 12.12. Severability.................................................68
(iii)
<PAGE>
ANNEX
Annex I Restricted Persons
Annex II Buyer Opinion Matters
Annex III Company Opinion Matters
EXHIBIT INDEX
Exhibit A Warrant Assumptions
Exhibit B Form of Holdback Escrow Agreement
Exhibit C Letter of Credit
Exhibit D Press Release
Exhibit E Rights and Obligations with respect to Registrable Securities
SCHEDULES
(iv)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
March 4, 1998, is made by and among Budget Group, Inc., a Delaware corporation
("Buyer"), BDG Corporation, a Delaware corporation and a direct or indirect
wholly owned subsidiary of Buyer ("Sub"), Ryder TRS, Inc., a Delaware
corporation (the "Company"), and Questor Partners Fund, L.P., a Delaware limited
partnership, Questor Side-by-Side Partners, L.P., a Delaware limited
partnership, and Madison Dearborn Capital Partners, L.P., a Delaware limited
partnership (each a "Significant Stockholder" and collectively, the "Significant
Stockholders"). Certain terms used in this Agreement are defined in Article XI.
W I T N E S S E T H:
WHEREAS, Buyer, Sub and the Company desire to effect a business
combination by means of the merger of Sub with and into the Company;
WHEREAS, the Board of Directors of Buyer and the Board of
Directors and stockholder of Sub and the Board of Directors and the Significant
Stockholders of the Company have approved the merger of Sub with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
herein; and
WHEREAS, the parties hereto also desire to agree on certain other
terms and conditions.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I.
The Transactions
----------------
Section 1.1. The Transactions.
On the terms and subject to the conditions set forth in this
Agreement, Buyer shall acquire all the Outstanding Company Shares by means of
the Merger. Subject to Article III, the total consideration to be received by
the holders of the Outstanding Company Shares shall consist of a combination of
the following:
(a) an aggregate amount payable in cash to all such holders equal
to a minimum of $125,000,000 (less any cash payable with respect to the Options
pursuant to Section 3.7) and a maximum of $200,000,000 (less any cash payable
with respect to the Options pursuant to Section 3.7), with the precise amount
thereof determined as set forth in Section 3.1;
<PAGE>
(b) an aggregate number of shares of Buyer Class A Common Stock
issuable to all such holders equal to a minimum of 1,363,822 shares (the
"Minimum Merger Shares") and a maximum of 3,636,860 shares (the "Maximum Merger
Shares") (in each case less any shares of Buyer Class A Common Stock issued to
the holders of Options pursuant to Section 3.7), with the precise number thereof
determined as set forth in Section 3.1 and subject to adjustment as provided in
Article III;
(c) Warrants to purchase initially an aggregate of 1,000,000
shares of Buyer Class A Common Stock as provided in Section 3.5; and
(d) the right to receive the Contingent Additional Consideration,
if any, as provided in Section 3.4.
Section 1.2. The Merger.
(a) Merger. Upon the terms and subject to the conditions of this
Agreement and in accordance with the applicable provisions of the Delaware
General Corporation Law (the "Delaware Corporation Law"), Sub shall be merged
with and into the Company and the separate existence of Sub shall thereupon
cease. The Company shall be the surviving corporation in the Merger (the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware, and the separate corporate existence of the Company with all
its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger.
(b) Effective Time of the Merger. The Merger shall become
effective at such time as a properly executed Certificate of Merger is duly
filed with the Secretary of State of Delaware, which filing shall be made as
soon as practicable following fulfillment or waiver of the conditions set forth
in Article VII hereof or such later time as is specified in such filing (the
"Effective Time").
Section 1.3. Effects of Merger. The Merger shall have the effects
set forth in Section 259 of the Delaware Corporation Law.
ARTICLE II.
The Surviving Corporation
-------------------------
Section 2.1. Certificate of Incorporation.
Subject to Section 6.11, at the Effective Time the Certificate of
Incorporation of the Surviving Corporation shall be amended so as to be
identical to the Certificate of Incorporation of Sub, other than such Article
relating to the company name of Sub and such Article relating to the identity of
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the incorporator of Sub, and thereafter may be amended in accordance with its
terms and as provided by the Delaware Corporation Law.
Section 2.2. By-Laws.
Subject to Section 6.11, at the Effective Time the by-laws of the
Surviving Corporation shall be amended so as to be identical to the by-laws of
Sub, and thereafter may be amended in accordance with their terms and as
provided by the Delaware Corporation Law.
Section 2.3. Officers and Directors.
The officers of Sub and the directors of Sub immediately prior to
the Effective Time shall be the officers and directors, respectively, of the
Surviving Corporation after the Effective Time, in each case until their
respective successors are duly elected and qualified.
ARTICLE III.
Determination of Merger Consideration;
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Conversion of Shares; Etc.
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Section 3.1. Determination of Merger Consideration.
(a) Buyer shall issue shares of Buyer Class A Common Stock in the
Merger to the holders of the Outstanding Company Shares and the holders of
Options as follows:
(i) (x) if the approval by the stockholders of Buyer
contemplated in Section 6.19 hereof for the authorization of the
increase in the capital stock of Buyer to permit Buyer to issue the
Maximum Merger Shares is obtained, then at the time of the Closing Buyer
shall issue a number of shares of Buyer Class A Common Stock equal to
the number of Maximum Merger Shares or (y) if such approval by the
stockholders of Buyer is not obtained, then at the time of the Closing
Buyer shall issue a number of shares of Buyer Class A Common Stock equal
to the number of Minimum Merger Shares; and
(ii) within one (1) Business Day after the date of the
meeting contemplated in Section 6.19 hereof, Buyer shall notify the
Company in writing of the outcome of such stockholders' vote.
As used herein, the "Aggregate Merger Shares" shall be the
Maximum Merger Shares, if issued, or the Minimum Merger Shares, if issued.
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(b) The total amount of cash to be paid in the Merger to the
holders of the Outstanding Company Shares under Section 3.2(a) (the "Aggregate
Cash Consideration") shall be (i) if the Maximum Merger Shares are issued,
$125,000,000 minus any cash payable with respect to the Options pursuant to
Section 3.7, or (ii) if the Minimum Merger Shares are issued, $200,000,000 minus
any cash payable with respect to the Options pursuant to Section
3.7.
Section 3.2. Conversion of Shares in the Merger.
(a) Company Common Stock. Subject to Article III hereof, at the
Effective Time, by virtue of the Merger and without any action on the part of
any holder of any capital stock of the Company (each, a "Company Stockholder" or
collectively, the "Company Stockholders"), each Outstanding Company Share shall
be converted into (A) that number of fully paid and nonassessable shares of
Buyer Class A Common Stock equal to the quotient obtained by dividing the
Aggregate Merger Shares (less any shares of Buyer Class A Common Stock issued to
the holders of Options pursuant to Section 3.7) by the Outstanding Company
Shares, plus (B) an amount in cash equal to the quotient obtained by dividing
the Aggregate Cash Consideration by the Outstanding Company Shares, plus (C)
Warrants to purchase initially the number of shares of Buyer Class A Common
Stock determined by dividing 1,000,000 by the number of Outstanding Company
Shares, plus (D) the right to receive a portion of the Contingent Additional
Consideration provided in Section 3.4, determined by dividing such aggregate
Contingent Additional Consideration by the number of Outstanding Company Shares
(the consideration per share of Company Common Stock as determined herein, the
"Merger Consideration"). If between the date hereof and the Effective Time, the
outstanding shares of Buyer Class A Common Stock shall be changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or if a stock dividend thereon shall be declared with a record
date within such period, the calculations of Minimum Merger Shares, Maximum
Merger Shares and Aggregate Merger Shares shall be correspondingly adjusted.
(b) Cancellation of Company Treasury Stock. At the Effective
Time by virtue of the Merger, all shares of Company Common Stock which are held
in the treasury of the Company or which are owned by any wholly owned Subsidiary
of the Company shall be canceled and shall cease to exist.
(c) Sub Shares. At the Effective Time by virtue of the Merger,
each issued and outstanding share of capital stock of Sub shall be converted
into one validly issued, fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
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Section 3.3. Adjustment to Merger Shares.
(a) Adjustment Events. The number of Aggregate Merger Shares
shall be adjusted downwards if (i) it shall have been determined that (A) one or
more of the representations and warranties of the Company contained herein
(without giving effect to any qualifications contained in any representation and
warranty set forth in Article IV hereof with respect to any Material Adverse
Effect on the Company) fails to be true and correct (i) as of the date hereof
or, if any representation and warranty speaks as of a specified date, then as of
such date or (ii) in the case of representations and warranties that do not
speak of a specified date, then as of the Closing Date, or (B) one or more of
the covenants of the Company or any Significant Stockholder set forth in this
Agreement hereof fails to be performed on or prior to the Closing Date, but only
to the extent the aggregate value reduction to Buyer as a result of all the
foregoing (as determined under Section 9.3) exceeds $5,000,000 (the "Materiality
Threshold"), or (ii) the Fees are in excess of $10,000,000, which downward
adjustment, in the case of this clause (ii), shall be made only to the extent of
the amount by which the Fees exceed $10,000,000, as provided in Section 3.3(b),
and which adjustment shall be made without giving effect to the Materiality
Threshold. The value reduction associated with the failure of representations
and warranties of the Company to be true and correct or the failure of covenants
of the Company or the Significant Stockholders to be performed shall mean the
actual damages (without duplication) sustained as a result thereof (without
giving effect to any qualifications contained in any representation and warranty
set forth in Article IV hereof with respect to any Material Adverse Effect on
the Company), taking into account any insurance recovery that is available to
Buyer or Sub (exclusive of any self insurance), any insurance proceeds received
by the Company and the present economic value of any tax benefits to be realized
by Buyer, the Company or any of their respective controlled Affiliates as a
result of such damages.
(b Share Reduction. The number of Aggregate Merger Shares
shall be reduced by an amount equal to the sum of (i) the amount, if any, of the
value reduction in excess of the Materiality Threshold resulting from the
failure of any representation and warranty made by the Company to be true and
correct or the failure of the Company or any Significant Stockholder to perform
its respective covenants plus (ii) the amount by which the Fees exceed
$10,000,000 (such sum, the "Reduction Amount"), in each case as determined in
accordance with Section 3.3(a) (with each share of Buyer Class A Common Stock
for purposes of calculating such deduction, being deemed to have a value equal
to the Transaction Price). Upon a final determination that any such reduction is
required, the number of shares of Buyer Class A Common Stock issued in the
Merger to each Original Holder shall be reduced by an amount representing such
holder's pro rata share of the Reduction Amount based on the
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percentage of the Aggregate Merger Shares received by such holder.
Section 3.4. Contingent Additional Consideration.
(a) Determination as to Whether Contingent Additional
Consideration is Payable. In addition to the Merger Consideration payable
pursuant to Sections 3.2 and 3.5 and the consideration payable to holders of
Options pursuant to Section 3.7, each holder of shares of Company Common Stock
and Options immediately prior to the Effective Time which receives shares of
Buyer Class A Common Stock in the Merger (any such holder and its Permitted
Transferees, an "Original Holder", and any such shares, the "Original Shares")
shall be entitled to receive from Buyer an additional amount of cash or shares
of Buyer Class A Common Stock as, but only to the extent, provided herein (the
"Contingent Additional Consideration").
(b) Annual Measurement Date. As promptly as possible following
the date which is the first year anniversary of the Closing Date (the "Annual
Measurement Date"), and subject to receipt by Buyer from the applicable Original
Holder of a certificate certifying as to whether such person or any of its
Permitted Transferees has disposed of any Original Shares and containing all
other information regarding such holder necessary to make the computations
referred to in this Section 3.4(b) (the delivery of which certificate shall be a
condition of such person's ability to receive payment under this Section
3.4(b)), Buyer shall compute, with respect to each Original Holder, (i) the
"Total Value" of 50% of the aggregate number of Original Shares acquired by such
Original Holder (or its Permitted Transferees) in the Merger (such 50% being
referred to as the "Annual Shares") and (ii) the "Annual Make-Whole Amount" (as
defined below). For purposes of this paragraph, the "Total Value" of the Annual
Shares of an Original Holder (and its Permitted Transferees) shall be (A) with
respect to any Annual Shares held by such holder as of the Annual Measurement
Date (the "Remaining Annual Shares"), an amount equal to the Market Value per
share of Buyer Class A Common Stock as of the Annual Measurement Date multiplied
by the number of Remaining Annual Shares (it being agreed that sales by such
holder or any of its Permitted Transferees prior to the Annual Measurement Date
of any Original Shares, up to the total of Annual Shares, shall be deemed to be
sales of Annual Shares) (the "Total Remaining Annual Value") and (B) if such
holder or any of its Permitted Transferees shall have sold Annual Shares after
the Closing Date and prior to the Annual Measurement Date (it being agreed that
sales of any Original Shares by such holder, up to the total number of Annual
Shares, shall be deemed to be sales of Annual Shares) (each a "Disposed Annual
Share" and collectively, the "Disposed Annual Shares"), an amount equal to the
sum of each "Disposed Annual Value" (such sum, the "Total Disposed Annual
Value"). With respect to each sale of Disposed Annual Shares, the
"Disposed Annual Value" shall be determined on the Annual
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Measurement Date and shall be an amount equal to the Transaction Price minus the
higher of the Market Value per share of the Buyer Class A Common Stock on the
Annual Measurement Date and the price at which such Disposed Annual Shares were
sold (such higher value, the "Annual Disposition Price") multiplied by the
number of Disposed Annual Shares so sold; provided, however, that if the Annual
Disposition Price is higher than the Transaction Price, the Disposed Annual
Value shall be deemed to be zero. The "Annual Make-Whole Amount" with respect to
an Original Holder (and its Permitted Transferees) shall mean the sum of (1) the
amount, but only if positive, equal to (a) the Transaction Price multiplied by
the number of Remaining Annual Shares owned by such Original Holder or its
Permitted Transferees on the Annual Measurement Date minus (b) the Total
Remaining Annual Value as of the Annual Measurement Date of the Remaining Annual
Shares held by such Original Holder or its Permitted Transferees and (2) the
Total Disposed Annual Value as of the Annual Measurement Date of the Disposed
Annual Shares of such Original Holder or its Permitted Transferees.
(c) Final Measurement Date. As promptly as possible following the
date which is the twentieth monthly anniversary of the Closing Date (the "Final
Measurement Date"), and subject to receipt by Buyer from the applicable Original
Holder of a certificate certifying as to whether such person or any of its
Permitted Transferees has disposed of any Original Shares and containing all
information regarding such holder necessary to make the computations referred to
in this Section 3.4(c) (the delivery of which certificate shall be a condition
of such person's ability to receive payment under this Section 3.4(c)), Buyer
shall compute, with respect to each Original Holder, (i) the "Total Value" of
the Original Shares acquired by such Original Holder (and its Permitted
Transferees) in the Merger which are not Annual Shares (the "Final Shares") and
(ii) the "Final Make-Whole Amount" (as defined below). For purposes of this
paragraph, the "Total Value" of the Final Shares of an Original Holder (and its
Permitted Transferees) shall be (A) with respect to any Final Shares held by
such holder as of the Final Measurement Date (the "Remaining Final Shares"), an
amount equal to the Market Value per share of Buyer Class A Common Stock as of
the Final Measurement Date multiplied by the number of Remaining Final Shares
(the "Total Remaining Final Value") and (B) if such holder or its Permitted
Transferees shall have sold Final Shares after the Closing Date and prior to the
Final Measurement Date (each a "Disposed Final Share" and collectively, the
"Disposed Final Shares"), an amount equal to the sum of each "Disposed Final
Value" (such sum, the "Total Disposed Final Value"). With respect to each sale
of Disposed Final Shares, the "Disposed Final Value" shall be determined on the
Final Measurement Date and shall be an amount equal to the Transaction Price
minus the higher of the Market Value per share of the Buyer Class A Common Stock
on the Final Measurement Date and the price at which such Disposed Final
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Shares were sold (such higher value, the "Final Disposition Price") multiplied
by the number of Disposed Final Shares so sold; provided, however, that if the
Final Disposition Price is higher than the Transaction Price, the Disposed Final
Value shall be deemed to be zero. The "Final Make-Whole Amount" with respect to
an Original Holder (and its Permitted Transferees) shall mean the sum of (1) the
amount, but only if positive, equal to (a) the sum of the Transaction Price
multiplied by the number of Remaining Final Shares held by such Original Holder
or its Permitted Transferees on the Final Measurement Date minus (b) the Total
Remaining Final Value as of the Final Measurement Date of the Remaining Final
Shares of such Original Holder or its Permitted Transferees and (2) the Total
Disposed Final Value as of the Final Measurement Date of the Disposed Final
Shares of such Original Holder or its Permitted Transferees.
(d) Payment of Make-Whole Amount. If the Annual Make-Whole Amount
or the Final Make-Whole Amount is more than zero with respect to any Original
Holder, then, within 20 calendar days after the determination of the applicable
Make-Whole Amount, Buyer shall pay in immediately available funds to each such
Original Holder an amount equal to the applicable Make-Whole Amount; provided,
however, that except as provided below, Buyer may, in its sole discretion, make
all or any portion of any such payment by delivering to any such Original Holder
fully paid and non-assessable shares of Buyer Class A Common Stock with a Market
Value as of the Annual Measurement Date or the Final Measurement Date, as the
case may be, equal to the applicable Make-Whole Amount (any such shares being
referred to as "Make-Whole Shares"); and provided, further, that Buyer shall not
have the option set forth in the preceding proviso if Buyer Class A Common Stock
is no longer listed on the NYSE or another national securities exchange or
automated quotation system.
(e) Separate Agreements with Holders. At the request of any
holder of shares of Company Common Stock (or, after the Effective Time, any
Original Holder), Buyer will enter into a separate agreement with such holder to
evidence the obligations of Buyer under this Section 3.4.
(f) Adjustments for Reclassifications, Etc. If after the date
hereof and before the determination set forth in this Section 3.4, the
outstanding shares of Buyer Class A Common Stock shall be changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or if a stock dividend thereon shall be declared with a record
date within such period, the calculations set forth in this Section 3.4 shall be
correspondingly adjusted.
Section 3.5. Warrants.
(a) Issuance and Exercise of Warrants. Buyer shall issue to the
Original Holders at the Effective Time warrants to purchase initially an
aggregate of 1,000,000 shares of Buyer
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Class A Common Stock, such Warrants to be substantially in the form to be
negotiated between the Buyer and the Company as promptly as practicable
following the date hereof (herein called the "Warrants" and individually called
a "Warrant") and containing terms consistent with this Section 3.5 and the
Warrant Assumptions set forth in Exhibit A attached hereto (it being understood
that upon negotiation of such form of Warrants, the agreed upon form shall be
deemed to become Exhibit A attached hereto). Within five (5) Business Days
following the Final Measurement Date, and subject to receipt by Buyer from the
applicable Original Holder of a certificate certifying as to whether such person
or any of its Permitted Transferees has disposed of any Original Shares and
containing all other information regarding such holder reasonably necessary to
make the computations referred to in this Section 3.5(a) (the delivery of which
certificate shall be a condition of such person's ability to receive amounts
under this Section 3.5(a)), Buyer shall compute, with respect to each Original
Holder and each Permitted Transferee of such Original Holder, the "Total Warrant
Value" for such Original Holder and its Permitted Transferees. The "Total
Warrant Value" for any Original Holder and its Permitted Transferees shall be
(i) the Warrant Value Amount (as defined below) multiplied by (ii)(x) the number
of Original Shares issued to such Original Holder in the Merger and held by such
Original Holder and its Permitted Transferees on the Final Measurement Date
divided by (y) the number of Original Shares issued to all Original Holders in
the Merger. The "Warrant Value Amount" shall be the lesser of (i) $20 million or
(ii)(x)(A) the Transaction Price multiplied by the aggregate number of Original
Shares issued in the Merger plus (B) $20 million minus (y) the Market Value of a
share of Buyer Class A Common Stock on the Final Measurement Date multiplied by
the aggregate number of Original Shares issued in the Merger.
If the Total Warrant Value for any Original Holder and its
Permitted Transferees is positive, then such Original Holder and its Permitted
Transferees shall be entitled, for a period of five years beginning on the
thirtieth day after the Final Measurement Date (the "Warrant Measurement Date"),
to exercise their Warrants to purchase shares of Buyer Class A Common Stock.
Buyer shall have the right to buy the Warrant held by each Warrant holder, in
whole and not in part, by paying the Warrant Value Amount on the Warrant
Measurement Date to the holder thereof either in immediately available funds or,
except as provided below, in shares of Buyer Class A Common Stock valued at the
Market Value per share of Buyer Class A Common Stock as of the Warrant
Measurement Date (but not in a combination of both); provided, however, that
Buyer shall not have the option set forth above and Buyer shall pay the Warrant
Value Amount in immediately available funds to each Warrant holder, if Buyer
Class A Common Stock is no longer listed on the NYSE or another national
securities exchange or automated quotation system.
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(b) Determination of Exercise Price. Prior to the Final
Measurement Date, a majority in interest of the Original Holders shall retain,
at Buyer's expense, a nationally recognized investment banking firm with
significant experience in the equity derivatives market (reasonably acceptable
to Buyer) to determine the revised aggregate number of shares issuable upon
exercise of the Warrants such that, in the written opinion of such investment
banking firm rendered within 15 days after the Final Measurement Date, on the
Final Measurement Date, the Warrants issued to the Original Holders and their
Permitted Transferees would have an aggregate value, based upon the assumptions
set forth on Exhibit A, equal to the Warrant Value Amount. Within two (2)
Business Days after the determination of the Warrant Value Amount, Buyer shall
notify each Warrant holder of the Warrant Value Amount and such holder of its
Total Warrant Value and contemporaneously, such investment bank shall provide to
Buyer and holder a copy of its opinion and of its standing bid, each as
described in Exhibit A.
(c) Separate Agreements with Holders. At the request of any
holder of shares of Company Common Stock (or, after the Effective Time, any
Original Holder), Buyer will enter into a separate agreement with such holder to
evidence the obligations of Buyer under this Section 3.5.
(d) Adjustments for Reclassifications, Etc. If after the date
hereof the outstanding shares of Buyer Class A Common Stock shall be changed
into a different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or if a stock dividend thereon shall be declared with a record
date within such period, the aggregate number of Warrants and calculations set
forth in this Section 3.5 shall be correspondingly adjusted.
Section 3.6. Escrow Holdback Shares.
(a) At the Effective Time, 1,818,430 shares of Buyer Class A
Common Stock (if the Maximum Merger Shares are issued), or 1,363,822 shares of
Buyer Class A Common Stock (if the Minimum Merger Shares are issued) (as the
case may be, the "Escrow Holdback Shares") shall be deposited in escrow with an
escrow agent mutually agreed upon by Buyer and the Company prior to the Closing
(the "Holdback Escrow Agent"), to be held and administered in accordance with
the terms and conditions of a Holdback Escrow Agreement, substantially in the
form attached hereto as Exhibit B (the "Holdback Escrow Agreement"), against
which Escrow Holdback Shares Buyer shall be entitled, in accordance with the
terms of the Holdback Escrow Agreement, to recover Damages (as defined in the
Holdback Escrow Agreement) that may be suffered by Buyer and that are
indemnifiable in accordance with the terms of the Holdback Escrow Agreement (an
"Escrow Claim Event").
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(b) Claims in respect of Escrow Claim Events shall be made, and
may be disputed, in accordance with the terms and conditions of the Holdback
Escrow Agreement. Upon the occurrence of certain events, the number of Escrow
Holdback Shares shall be released to Buyer to satisfy such claims as determined
in accordance with the terms of the Holdback Escrow Agreement. Upon termination
of the escrow, all shares of Buyer Class A Common Stock remaining in escrow
shall be released in accordance with the terms of the Holdback Escrow Agreement.
(c) The holder of any shares of Buyer Class A Common Stock
received in the Merger, by acceptance thereof, agrees to the terms set forth in
Section 3.6 of this Agreement and in Exhibit E and to the appointment of the
Indemnification Representative named in the notice and transmittal form provided
by the Exchange Agent pursuant to Section 3.9 of this Agreement.
Section 3.7. Stock Options.
(a) The Company shall take all actions necessary to provide
that all outstanding options to acquire shares of Company Common Stock
("Options") granted under any stock option plan, program or similar arrangement
of the Company or any of its Subsidiaries, each as amended (the "Stock Option
Plans"), shall become fully exercisable and vested immediately prior to the
Effective Time whether or not otherwise exercisable and vested. The Company
shall comply with the terms of the Stock Option Plans, as applicable, and, to
the extent required thereunder, provide written notice to the holders of Options
that such Options shall be treated as set forth herein. All Options which are
outstanding immediately prior to the Effective Time shall be canceled and become
null and void and the holders thereof shall be entitled to elect (1) to receive
from the Company at the same times and in the same manner as the Company
Stockholders pursuant to this Article III, for each Option to acquire one share
of Company Common Stock, (A) an amount in cash equal to (x) the cash payable to
the holder of one share of Company Common Stock pursuant to Section 3.2 assuming
all Options had been exercised prior to the Effective Time minus (y) the
exercise price per share of such Option (the "Exercise Difference"), plus (B)
certificates representing that number of shares of Buyer Class A Common Stock
which the holder of one share of Company Common Stock would have the right to
receive pursuant to Sections 3.1 and 3.2 as adjusted as set forth in Section 3.3
hereof assuming all Options had been exercised prior to the Effective Time, plus
(C) Warrants in an amount issued to the holder of one share of Company Common
Stock pursuant to Section 3.5, plus (D) the right to receive the Contingent
Additional Consideration that may be payable to the holder of one share of
Company Common Stock pursuant to Section 3.4, or (2) if the Exercise Difference
is negative, as a condition for receiving the Buyer Class A Common Stock, the
Warrants and the right to receive the Contingent Additional Consideration under
clause (1) above, to pay such difference in cash to the Company on or before the
Closing Date.
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All applicable withholding taxes attributable to the payments made hereunder or
to distributions contemplated hereby shall be deducted from the amounts payable
under clause (A) above or by payment of cash by the Option holder if amounts
payable under clause (A) are insufficient.
(b) The Stock Option Plans shall terminate immediately prior
to the Effective Time.
Section 3.8. Appraisal Rights.
(a) Notwithstanding anything in this Agreement to the contrary,
but only in the circumstances and to the extent provided by the Delaware
Corporation Law, shares of Company Common Stock that are outstanding immediately
prior to the Effective Time and that are held by Company Stockholders who were
entitled to but did not vote such shares in favor of the Merger (or who did not
provide written consent to the Merger if approval was effected through written
consent) and who shall have properly and timely delivered to the Company a
written demand for appraisal of their shares of Company Common Stock in
accordance with Section 262 of the Delaware Corporation Law ("Dissenting
Shares") shall not be converted into the right to receive, or be exchangeable
for, the Merger Consideration. Instead, the holders thereof shall be entitled to
payment of the fair value of such shares in accordance with the provisions of
Section 262 of the Delaware Corporation Law; provided, however, that (i) if any
holder of Dissenting Shares shall subsequently withdraw its demand for payment
of the fair value of such Dissenting Shares or (ii) if any holder fails to
establish and perfect its entitlement to the relief provided in Section 262 of
the Delaware Corporation Law, the rights and obligations of such holder to
receive such fair value shall terminate, and such Dissenting Shares shall
thereupon be deemed to have been converted into the right to receive, and to
have become exchangeable for, as of the Effective Time, the Merger Consideration
in accordance with Section 3.2(a) hereof.
(b) Within three (3) days prior to the Effective Time, the
Company shall give Buyer written notice of any demands received by the Company
for appraisal of Dissenting Shares. Prior to the Closing, the Company shall
control all negotiations and proceedings with respect to such demands and on and
after the Closing, Questor shall exercise such control. The Surviving
Corporation shall promptly pay to any holder of Dissenting Shares any and all
amounts due and owing to such holder as a result of any settlement or
determination by the Court of Chancery of the State of Delaware with respect to
such demands. If, as a result of any such settlement or determination (i) any
Company Stockholder is entitled to receive as payment for its Dissenting Shares
an amount per share that exceeds the amount of the Merger Consideration (such
excess over the amount of the Merger Consideration, the "Appraisal Reduction
Amount"), then the number of Aggregate Merger Shares shall be reduced by an
amount equal to
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such Appraisal Reduction Amount (with each share of Buyer Class A Common Stock
having a value equal to the amount of the Merger Consideration for purposes of
this Section 3.8), and each Original Holder shall surrender to Buyer shares of
Buyer Class A Common Stock for cancellation, in each case representing such
holder's pro rata share of the Appraisal Reduction Amount based on the
percentage of the Aggregate Merger Shares received by such holder, or if such
Original Holder has transferred any of its Original Shares, then such Original
Holder shall pay in immediately available funds an amount equal to such holder's
pro rata share of the Appraisal Reduction Amount, or (ii) any Company
Stockholder is entitled to receive an amount per share that is less than the
amount of the Merger Consideration (such decrease under the amount of the Merger
Consideration, the "Appraisal Addition Amount"), then Buyer shall promptly pay
to the Original Holders pro rata in cash an amount equal to the Appraisal
Addition Amount multiplied by the aggregate number of Dissenting Shares subject
to such Appraisal Addition Amount. The Company shall comply with the notice
provisions of Section 262 of the Delaware Corporation Law.
Section 3.9. Buyer to Make Certificates Available.
(a) Prior to the Closing, Buyer shall select a person or persons
to act as exchange agent for the Merger (the "Exchange Agent"), which person or
persons shall be reasonably acceptable to the Company. On the Closing Date,
Buyer shall deliver to the Exchange Agent, in trust for the benefit of the
Company Stockholders (other than Company Stockholders who hold Dissenting
Shares), cash in the amount sufficient to pay the aggregate cash portion of the
Merger Consideration, certificates representing Buyer Class A Common Stock
sufficient to pay the aggregate stock portion of the Merger Consideration (less
the Escrow Holdback Shares delivered to the Holdback Escrow Agent in accordance
with Section 3.6) and Warrants sufficient to pay the aggregate warrant portion
of the Merger Consideration. As soon as reasonably practicable after the
Effective Time but in no event more than ten (10) Business Days after the
Effective Time, Buyer shall cause the Exchange Agent to send a notice and a
transmittal form to each Company Stockholder advising such holder of the
effectiveness of the Merger and the procedure for surrendering to the Exchange
Agent for cancellation such holder's certificates representing Company Common
Stock ("Certificates") in exchange for the Merger Consideration. Each Company
Stockholder will be entitled to receive, upon surrender to the Exchange Agent
for cancellation of one or more Certificates and compliance with this Article
III, a certified or bank cashier's check in the amount equal to the cash which
such holder has the right to receive pursuant to the provisions of this Article
III (including any cash in lieu of fractional shares of Buyer Class A Common
Stock), shares of Buyer Class A Common Stock and Warrants which such holder has
the right to receive pursuant to the provisions of this Article III, and the
Certificates so surrendered shall forthwith be canceled; provided, however, that
any Company
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Stockholder in attendance or represented at the Closing which surrenders for
cancellation Certificates at such time will receive such cash, shares and
Warrants as set forth above at the Closing with respect to the shares of Company
Common Stock represented by such Certificates. The cash paid, the shares of
Buyer Class A Common Stock and the Warrants issued upon the surrender of
Certificates in accordance with the terms hereof shall be deemed to have been
paid and issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock (except with respect to the right to receive the Contingent
Additional Consideration, if any, as provided in Section 3.4).
(b) Any Company Stockholder who has not exchanged its
Certificates for the Merger Consideration in accordance with subsection (a)
within six months after the Effective Time shall have no further claim upon the
Exchange Agent, and shall thereafter look only to Buyer and the Surviving
Corporation for payment in respect of its shares of Company Common Stock. Until
so surrendered, Certificates shall represent solely the right to receive the
Merger Consideration, subject to the holdback contemplated by Section 3.6 of
this Agreement. If any Certificates entitled to payment pursuant to Section 3.2
shall not have been surrendered for such payment prior to such date on which any
payment in respect thereof would otherwise escheat to or become the property of
any Governmental Entity, the shares of Company Common Stock represented thereby
shall, to the extent permitted by applicable law, be deemed to be canceled and
no money or other property will be due to the holder thereof.
Section 3.10. Dividends; Transfer Taxes.
No Distributions that are declared or made with respect to Buyer
Class A Common Stock will be paid to persons entitled to receive certificates
representing Buyer Class A Common Stock pursuant to this Agreement until such
persons properly surrender their Certificates. Upon such surrender, there shall
be paid to the person in whose name the certificates representing such Buyer
Class A Common Stock shall be issued any Distributions which shall have become
payable with respect to such Buyer Class A Common Stock in respect of a record
date after the Effective Time and before the time of surrender. In no event
shall the person entitled to receive such Distributions be entitled to receive
interest on such Distributions. In the event that any certificates for any
shares of Buyer Class A Common Stock are to be issued in a name other than that
in which the Certificates surrendered in exchange therefor are registered, it
shall be a condition of such exchange that the Certificate or Certificates so
surrendered shall be properly endorsed or be otherwise in proper form for
transfer and that the person requesting such exchange shall pay to the Exchange
Agent any transfer or other taxes required by reason of the issuance of
certificates for such shares of Buyer Class A Common Stock in a name other than
that of the registered holder of the Certificate surrendered, or shall establish
to the satisfaction of the Exchange Agent that such tax
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has been paid or is not applicable. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to a holder of shares of
Company Common Stock for any shares of Buyer Class A Common Stock or dividends
thereon delivered to a public official pursuant to any applicable escheat,
abandoned property or similar laws.
Section 3.11. No Fractional Securities.
Notwithstanding any other provision of this Agreement, no
certificates or scrip for shares of common stock representing less than one
share of Buyer Class A Common Stock shall be issued upon the surrender for
exchange of Certificates pursuant to this Article III and no Distribution that
is declared or made with respect to Buyer Class A Common Stock, stock split or
interest shall relate to any fractional security, and such fractional interests
shall not entitle the owner thereof to vote or to any rights of a security
holder. Each holder of shares of Company Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of Buyer Class A Common Stock (after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Buyer Class A
Common Stock multiplied by the Transaction Price.
Section 3.12. Closing of Company Transfer Books.
Immediately prior to the Effective Time, the Company Common Stock
transfer books shall be closed and no transfer of Company Common Stock shall
thereafter be made.
Section 3.13. Legends and Transfer Restrictions.
(a) Unless the shares of Buyer Class A Common Stock issued in the
Merger or pursuant to Section 3.4 or pursuant to the exercise of the Warrants
issued pursuant to Section 3.5 or pursuant to Section 3.7 shall have been
registered prior to their respective issuance dates under the provisions of the
Securities Act, each certificate representing such shares of Buyer Class A
Common Stock may contain one or more of the following legends:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be offered, sold, pledged, hypothecated, exchanged,
transferred or otherwise disposed of unless (A) registered
under such Act and any applicable state securities and "blue
sky" laws or (B) an opinion of counsel satisfactory to Buyer
and its counsel that such registration is not necessary has
been delivered to Buyer"; and
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any legend required by the securities or blue sky laws of any state where a
holder of Buyer Class A Common Stock resides, including any legend necessitated
by any other agreement to which such holder is or may become a party arising out
of this Agreement.
(b) The holder of any shares of Buyer Class A Common Stock, by
acceptance thereof, agrees, so long as the legend described in this Section 3.13
shall remain on the certificate evidencing such shares, prior to any transfer
(including any pledge, sale, assignment, hypothecation, gift or other transfer)
of any of the same, to comply in all respects with the legend requirements of
this Section 3.13. Each certificate evidencing the shares issued upon any such
transfer shall bear the same legends as set forth in this Section 3.13 unless,
immediately following such transfer, such shares are no longer subject to any
restriction on transfer under any applicable agreement or under applicable
federal or state securities laws.
Section 3.14. Exemptions from Registration and Qualification.
At Buyer's option, the shares of Buyer Class A Common Stock to be
issued in connection with the Merger will be issued either (a) in a transaction
exempt from registration under the Securities Act by reason of Section 4(2)
thereof and Rule 506 of Regulation D promulgated thereunder, and will be exempt
from registration or qualification under state securities and "blue sky" laws or
(b) pursuant to a Registration Statement on Form S-4 (the "S-4").
Section 3.15. Registration Rights.
The holders of shares of Buyer Class A Common Stock issued
pursuant to Section 3.2, 3.4 or 3.7 or issuable upon exercise of, or issued in
exchange for, the Warrants issued pursuant to Section 3.5 shall have, subject to
compliance with the obligations contained therein, the registration rights set
forth in Exhibit E hereto, and Buyer shall take such actions to register shares
of Buyer Class A Common Stock issuable thereunder as provided therein.
Section 3.16. Business Combinations.
----------------------
If, on or prior to the later of (i) the Final Measurement Date,
(ii) the Warrant Measurement Date, or (iii) the date on which no Warrants are
outstanding, Buyer shall consolidate or merge in a transaction in which Buyer is
not the Surviving Person (as defined below), merge into any other person or
convey, transfer or lease its properties and assets substantially as an entirety
to any person in one or a series of transactions (a "Business Combination"), the
provisions of Section 3.16(b) are applicable unless:
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(a)(1) the person formed by such consolidation or into which
Buyer is merged or the person which acquires by conveyance or transfer, or which
leases, the properties and assets of Buyer substantially as an entirety (the
"Surviving Person") is a corporation, partnership or limited liability company,
(2) the consideration payable to holders of Buyer Class A Common Stock consists
solely of stock of the Surviving Person or its parent that is listed on a
national securities exchange or automated quotation system (other than cash paid
in lieu of fractional shares and cash paid for Dissenting Shares), and (3) the
Surviving Person or, if the Surviving Person is a wholly-owned subsidiary and
the consideration payable consists of stock of the parent of such Surviving
Person, such Surviving Person's parent, expressly assumes payment of all amounts
due as Contingent Additional Consideration and delivery of shares upon exercise
of the Warrants (in each case appropriately adjusting such payment or delivery
obligation to reflect the exchange ratio and the other terms of the Business
Combination) and the performance of every covenant of this Agreement on the part
of Buyer to be performed or observed;
(2) Buyer shall deliver to each holder of Company Common Stock
immediately prior to the Effective Time or each Original Holder at or after the
Effective Time, as the case may be, an officer's certificate, stating that such
Business Combination complies with this Section 3.16 and that all conditions
precedent herein provided relating to such transaction have been complied with;
and
(3) The Surviving Person shall succeed to, and be substituted
for, and may exercise every right and power of, Buyer under this Agreement with
the same effect as if the Surviving Person had been named as Buyer herein, and
thereafter.
(b) In case of a Business Combination in which all of the
criteria contained in clause (a)(1) herein are not met with respect to the
Surviving Person or its parent, as applicable, or at Buyer's option in the case
of any Business Combination, the Annual Measurement Date, the Final Measurement
Date and the Warrant Measurement Date shall be deemed to be the date of
consummation of the Business Combination unless such date has already occurred
and Buyer shall pay on or prior to the date of such Business Combination to each
person entitled thereto in immediately available funds (i) all amounts remaining
to be payable pursuant to Section 3.4(d) and (ii) the Warrant Value Amount,
assuming the applicable payment dates therein are the dates of such Business
Combination.
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ARTICLE IV.
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to Buyer that:
Section 4.1. Corporate Organization and Authorization.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby.
(b) The Company has all requisite corporate power and authority
to carry on its business as presently conducted. The Company is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of the activities conducted by it makes such qualification necessary,
except where the failure to so qualify or to maintain such good standing (either
in one jurisdiction or in the aggregate) would not have a Material Adverse
Effect on the Company. As used in this Agreement, the term "Material Adverse
Effect" means with respect to any person, any change or effect that is (i)
materially adverse to the condition (financial or otherwise), business
operations, assets or results of operations of such person and its Subsidiaries,
taken as a whole or (ii) has a material adverse effect on the ability of such
person to enter into this Agreement or consummate the transactions contemplated
hereby.
(c) As of the date hereof, each Subsidiary of the Company is
identified in the Company's quarterly report on Form 10-Q for the quarter ended
June 30, 1997. Except for the Subsidiaries of the Company listed in such
quarterly report, there is no corporation, association, subsidiary, partnership,
limited liability company or other entity of which the Company owns or controls,
directly or indirectly, more than 10% of the outstanding equity interests.
(d) Each Subsidiary of the Company is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority and, except as set forth on Schedule 4.1(d), all governmental
authorizations, certificates, permits, licenses, consents and approvals required
to carry on its business as presently conducted, except where the failure to
possess such authorizations, certificates, licenses, consents and approvals
(either individually or in the aggregate) would not have, individually or in the
aggregate, a Material Adverse Effect on the Company. Each Subsidiary of the
Company is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property owned or
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leased by it or the nature of the activities conducted by it makes such
qualification necessary, except where the failure to so qualify or to maintain
such good standing (either in one jurisdiction or in the aggregate) would not
have, individually or in the aggregate, a Material Adverse Effect on the
Company. Except as set forth on Schedule 4.1(d), there are no voting trusts or
other agreements or understandings with respect to the voting of capital stock
or other equity interests of the Company or any Subsidiary of the Company to
which the Company or any Subsidiary of the Company is a party.
(e) Except as set forth on Schedule 4.1(e), all of the
outstanding capital stock of each Subsidiary of the Company (i) has been validly
issued, is fully paid and nonassessable and is not subject to preemptive or
similar rights and (ii) is owned by the Company, directly or indirectly, free
and clear of any lien or other encumbrance. There are no outstanding (i)
securities of any Subsidiary of the Company convertible into or exchangeable for
shares of capital stock or other voting securities or ownership interests in any
Subsidiary of the Company or (ii) options or other rights to acquire from the
Company or any Subsidiary of the Company, and no other obligation of the Company
or any Subsidiary of the Company to issue, any capital stock, voting securities
or other ownership interests in, or any securities convertible into or
exchangeable for, any capital stock, voting securities or ownership interests in
such Subsidiary (items in clauses (i) and (ii) being referred to collectively as
the "Company Subsidiary Securities"). There are no outstanding obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any outstanding Company Subsidiary Securities.
(f) This Agreement has been duly executed and delivered by the
Company and, except for obtaining the approval to the Merger of (i) a majority
of holders of the Company Common Stock and (ii) the Board of Directors of the
Company, each of which approval has been obtained prior to the execution hereof,
no corporate authorization on the part of the Company is necessary to consummate
the transactions contemplated by this Agreement.
(g) This Agreement constitutes a valid and binding agreement of
the Company and is enforceable against the Company in accordance with its terms,
except to the extent enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether considered
in a proceeding in equity or at law).
(h) The copies of the respective Certificates of Incorporation
and By-Laws, and all amendments thereto to the date of this Agreement, of the
Company and its Subsidiaries heretofore delivered to Buyer are complete and true
copies of such documents as in effect on the date hereof.
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Section 4.2. Capitalization.
(a) As of the date hereof, the authorized stock of the Company
consists of Two Hundred Seventy Five Thousand (275,000) shares of Common Stock,
par value $0.01 per share ("Company Common Stock"), of which (i) Two Hundred
Twenty Five Thousand (225,000) shares have been designated Class A Common Stock,
(ii) Twenty Five Thousand (25,000) shares have been designated Class B Common
Stock and (iii) Twenty Five Thousand (25,000) shares have been designated Class
C Common Stock.
(b) As of the date hereof, (i) One Hundred Nine Thousand Ninety
(109,090) shares of Class A Common Stock are outstanding, (ii) Thirteen Thousand
Nine Hundred Ten (13,910) shares of Class B Common Stock are outstanding and
(iii) no more than Eighteen Hundred (1,800) shares of Class C Common Stock are
outstanding. All of such issued and outstanding shares of Company Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable and, except as set forth on Schedule 4.2(b) hereto, not subject to
preemptive or similar rights. All holders of Class A and B Company Common Stock
are Accredited Investors. Schedule 4.2(b) hereto sets forth the name of each
holder of Class A, Class B and Class C Company Common Stock as of March 2, 1998
and the number of shares owned by each such holder on such date.
(c) Schedule 4.2(c) hereto sets forth, as of the date hereof, the
name of each holder of Options, together with the number of options to purchase
Company Common Stock held by each such holder. Except as set forth in this
Section 4.2(c) and on Schedule 4.2(c), there are (i) as of the date hereof, no
outstanding shares of capital stock or other equity securities of the Company
and no outstanding options, warrants or rights to purchase or acquire from the
Company any capital stock of the Company or other equity securities, (ii) no
existing registration covenants with the Company with respect to Outstanding
Company Shares, and (iii) as of the date hereof, no convertible securities or
other contracts, commitments, agreements, understandings, arrangements or
restrictions by which the Company is bound to issue any additional shares of its
capital stock or other equity securities. Except as set forth in Schedule
4.2(c), there are no outstanding obligations of the Company to repurchase,
redeem or otherwise acquire any outstanding shares of capital stock or other
equity securities of the Company.
Section 4.3. Noncontravention.
Subject to the expiration or termination of the applicable
waiting period required by the H-S-R Act, except as disclosed in Schedule 4.3
hereto, neither the execution, delivery or performance of this Agreement nor the
consummation of the transactions contemplated hereby:
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(i) violates, or conflicts with, or constitutes a default
under, the certificate or articles of incorporation or by-laws, as
amended, of any of the Company or any of its Subsidiaries, or
(ii) violates or will violate any statute or law or any
rule, regulation, order, judgment or decree of any court or governmental
authority to which the Company or any of its Subsidiaries or any of
their properties or assets is subject, except where the existence of
such violation would not, individually or in the aggregate, have a
Material Adverse Effect on the Company, or
(iii) (with or without notice or lapse of time or both),
constitutes a default under any contract or agreement of any kind to
which the Company or any of its Subsidiaries is a party or by which any
of them is bound, except where the existence of such defaults would not,
individually or in the aggregate, be material to the Company and its
Subsidiaries, taken as a whole, or
(iv) requires that the Company obtain any consents or
approvals of third parties, except where the failure to obtain such
consents or approvals would not, individually or in the aggregate, be
material to the Company and its Subsidiaries, taken as a whole.
Section 4.4. SEC Filings. The Company has timely made all filings
with the SEC that it has been required to make under the Securities Act or the
Exchange Act (collectively, the "Company Public Reports"). Each of the Company
Public Reports has complied with the Securities Act and the Exchange Act in all
material respects. None of the Company Public Reports, as of its respective
date, contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. Included in
such Company Public Reports are (i) the unaudited consolidated statements of
operations (x) for the Company, for the three months ended September 30, 1997
and the nine months ended September 30, 1997 and (y) for the Company's
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predecessor, the three months ended September 30, 1996 and the nine months ended
September 30, 1996, (ii) the audited consolidated balance sheets of the Company
and its Subsidiaries at December 31, 1996 and the notes thereto, (iii) for the
period from September 5, 1996 to December 31, 1996 the audited consolidated
statement of operations, changes in shareholders' equity and cash flows of the
Company and the notes thereto, (iv) the unaudited consolidated balance sheet of
the Company and its Subsidiaries at September 30, 1997 (the "Interim Balance
Sheet"), (v) the unaudited consolidated statements of cash flows (x) for the
Company's predecessor, for the nine months ended September 30, 1996 and (y) for
the Company, for the nine months ended September 30, 1997 and the notes thereto
and (vi) for the Company's predecessor the other financial statements contained
in the Company Public Reports (collectively, the "Interim Financial
Statements").
Section 4.5. Financial Statements; Stockholders' Equity.
(a) Except as set forth in Schedule 4.5, all of the financial
statements included in the Company Public Reports, and the audited financial
statements of the Company for the year ended December 31, 1997 to be delivered
prior to the Closing complied (or will comply) as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared (or will be prepared) in accordance with GAAP 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 Rule
10-01 of Regulation S-X of the SEC) and fairly present (or will fairly present)
in accordance with applicable requirements of GAAP (subject, in the case of
unaudited statements, to normal recurring adjustments, none of which were or are
expected, individually or in the aggregate, to be material in amount) the
consolidated financial position of the Company and its consolidated Subsidiaries
as of their respective dates and the consolidated results of operations and the
consolidated cash flows of the Company and its consolidated Subsidiaries for the
periods presented therein. Except as set forth in the Company Public Reports and
except as incurred or accrued in the ordinary course of business consistent with
prior practice subsequent to September 30, 1997, neither the Company nor any
Subsidiary of the Company has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP to be set
forth on a consolidated balance sheet of the Company and its consolidated
Subsidiaries or in the notes thereto, other than liabilities or obligations
which individually or in the aggregate, do not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
(b) The total stockholders' equity of the Company, on a
consolidated basis, as of December 31, 1997, determined in accordance with GAAP,
is at least $101,500,000.
Section 4.6. Legal Proceedings. Except as disclosed in the
Company Public Reports or as set forth on Schedule 4.6 hereto, as of the date
hereof there are no (and, except as arising in the normal course of business
from the date hereof through the Closing Date or relating to breaches or
liabilities disclosed in the Disclosure Schedules as of the date hereof, as of
the Closing Date there will be no) claims, actions, suits, proceedings or
investigations pending or, to the Company's Knowledge, threatened by or against
or involving, the Company or any of its Subsidiaries (a) seeking to enjoin,
prohibit, restrain or otherwise prevent the transactions contemplated hereby or
(b) which, if determined adversely to the Company, would,
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individually or in the aggregate, result in a Material Adverse Effect on the
Company. Except as disclosed in the Company Public Reports, as of the date
hereof there are no (and, except as arising in the normal course of business
from the date hereof through the Closing Date or relating to breaches or
liabilities disclosed in the Disclosure Schedule as of the date hereof, as of
the Closing Date there will be no) judgments, decrees or orders issued by any
court, board or other governmental or administrative agency presently
outstanding and unsatisfied against the Company or any Subsidiary of the Company
or any of their respective assets, except where the existence of such judgment,
decree or order would not have, individually or in the aggregate, a Material
Adverse Effect on the Company.
Section 4.7. Employee Plans.
(a) None of the Employee Benefit Plans is a "multiemployer plan",
as defined in Section 4001(a)(3) of ERISA ("Multiemployer Plan"). Neither the
Company nor any Subsidiary of the Company has withdrawn in a complete or partial
withdrawal from any Multiemployer Plan, nor has any of them incurred any
liability due to the termination or reorganization of a Multiemployer Plan.
"Employee Benefit Plans" means "employee benefit plans", as defined in Section
3(3) of ERISA, and all other employee benefit arrangements, employment
agreements, or payroll practices, including, without limitation, any such
arrangements or payroll practices providing severance pay, sick leave, vacation
pay, salary continuation for disability, retirement benefits, deferred
compensation, bonus pay, incentive pay, stock options (including those held by
directors, employees, and consultants), hospitalization insurance, medical
insurance, life insurance, scholarships or tuition reimbursements, that are
maintained by the Company or any of its Subsidiaries or to which the Company or
any of its Subsidiaries is obligated to contribute thereunder for current or
former employees of the Company or any Subsidiary of the Company.
(b) None of the Employee Benefit Plans is a "single employer
plan", as defined in Section 4001(a)(15) of ERISA, that is subject to Title IV
of ERISA. Neither the Company nor any Subsidiary of the Company has incurred any
outstanding material liability under Section 4062 of ERISA to the PBGC or to a
trustee appointed under Section 4042 of ERISA. Neither the Company nor any ERISA
Affiliate has engaged in any transaction described in Section 4069 of ERISA.
(c) To the Company's Knowledge, each Employee Benefit Plan that
is intended to qualify under Section 401 of the Code, and each trust maintained
pursuant thereto, has been determined to be exempt from federal income taxation
under Section 501 of the Code by the IRS, and, to the Company's Knowledge,
nothing has occurred with respect to the operation of any such Employee Benefit
Plan that would cause the loss of such qualification or
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exemption or the imposition of any material liability, penalty or tax under
ERISA or the Code.
(d) There has been no material violation of ERISA or the Code
with respect to the filing of applicable reports, documents and notices
regarding the Employee Benefit Plans with the Secretary of the Department of
Labor or the Secretary of the Department of Treasury or the furnishing of
required reports, documents or notices to the participants or beneficiaries of
the Employee Benefit Plans.
(e) To the Company's Knowledge, there are no pending audits,
investigations, actions, claims or lawsuits which have been asserted, instituted
or, to the Company's Knowledge, threatened, against the Employee Benefit Plans,
the assets of any of the trusts under such plans or the plan sponsor or the plan
administrator, or against any fiduciary of the Employee Benefit Plans with
respect to the operation of such plans (other than routine benefit claims).
(f) To the Company's Knowledge, the Employee Benefit Plans have
been maintained, in all material respects, in accordance with their terms and
with all provisions of ERISA and the Code (including rules and regulations
thereunder) and other applicable federal and state laws and regulations.
(g) Except as set forth on Schedule 4.7(g), no payment required
to be made to any employee associated with the Company or any Subsidiary of the
Company as a result of the transactions contemplated hereby under any contract
or otherwise will, if made, constitute an "excess parachute payment" within the
meaning of Section 280G of the Code.
(h) To the Company's Knowledge, except as provided in Section 4.7
or set forth on Schedule 4.7(h), the consummation of the transactions
contemplated hereby will not accelerate the vesting or payment of any benefit
under any Employee Benefit Plan.
(i) For purposes of this Section 4.7, the term "Subsidiaries" (or
"Subsidiary" as the context may require) means any entity treated as a single
employer with the Company under Section 414(b), (c), (m) or (o) of the Code.
Section 4.8. Intellectual Property. Except as set forth on
Schedule 4.8, the Company and its Subsidiaries own, free and clear of any liens,
or are licensed or otherwise have the right to use all (i) Transferred
Intellectual Property as set forth on Schedule 4.8 and (ii) the intellectual
property licensed to the Company under the Copyright License Agreement, the
Software License Agreement and the Trademark License Agreement (such agreements,
together with the Transferred Intellectual Property, the "Company Intellectual
Property"). Except as set forth on Schedule 4.8, the Company Intellectual
Property
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includes all the intellectual property which is material to the business,
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole. Except for any of the following that would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company, and except as set forth on Schedule 4.8:
(a) no proceedings have been instituted or are pending or, to the
Company's Knowledge, are threatened, which challenge any rights in respect of
the validity of the Company Intellectual Property;
(b) to the Company's Knowledge, none of the Company Intellectual
Property infringes upon or otherwise violates the rights of others or is being
infringed upon by others, and none is subject to any outstanding order, decree,
judgment, stipulation or charge;
(c) with the exception of the Patent License Agreement, no
licenses, sublicenses or agreements granting rights in any of the Company
Intellectual Property have been granted or entered into by the Company, which in
each case remain in effect; and
(d) the Company has not received any notice of interference or
infringement of any of the Company Intellectual Property.
Neither the Company nor any of its Subsidiaries is obligated to pay any
royalties or make similar payments in respect of the Company Intellectual
Property.
Section 4.9. Events Subsequent to September 30, 1997. Except as
set forth on Schedule 4.9 hereto or as disclosed in the Company Public Reports,
since September 30, 1997, the Company has conducted its business in the ordinary
course and there has not been (a) any material adverse change in the condition
(financial or otherwise), business, operations, assets or results of operations
of the Company and its Subsidiaries, (b) any declaration, setting aside or
payment of any dividend or any other distribution with respect to any of the
capital stock or other equity interests of the Company, or (c) any material
change by the Company in accounting principles.
Section 4.10. Compliance with Laws.
(a) Except for such non-compliance as would not, individually or
in the aggregate, have a Material Adverse Effect on the Company and, except as
disclosed on Schedule 4.10(a), the conduct of the Company and its Subsidiaries
complies in all material respects with all statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto, except for
violations or failures to so comply, if any, that are consistent with the
relevant industry standard. No
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<PAGE>
action or proceeding relating to any such statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees is pending or, to the Company's
Knowledge, threatened, except for such actions and proceedings as would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(b) Schedule 4.10(b) sets forth information as to any violation
or alleged violation, with respect to any real property leased by the Company or
any of its Subsidiaries, of any existing federal, state, local or foreign law or
regulation (or order, permit, plan or compliance schedule) pertaining to
environmental protection, including without limitation the discharge or disposal
of air or water pollutants, poisoned waste wells, or the storage, treatment or
disposal of solid or hazardous or toxic substances (collectively, "Environmental
Law") of which the Company or any of its Subsidiaries has received notice which
would have, individually or in the aggregate, a Material Adverse Effect on the
Company. Except as disclosed in Schedule 4.10(b), neither the Company nor any of
its Subsidiaries is currently, and to the Company's Knowledge has not been, in
material violation of any such Environmental Law, and, except as set forth in
Schedule 4.10(b), neither the Company nor any of its Subsidiaries is currently
required to incur any material expenditures for purposes of compliance
therewith, except for such violations, expenditures, or noncompliance, as would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. The Company has furnished Buyer with copies of all internally prepared
or commissioned environmental studies, assessments or reports in the Company's
possession or control that are specific to the properties subject to the
Disclosed Leases.
(c) Except as disclosed in Schedule 4.10(c), to the Company's
Knowledge, there are no underground storage tanks or regulated above ground
storage tanks located at any real property subject to the Leases, nor has the
Company used any such property or permitted any such property to be used for the
maintenance and servicing of vehicles.
(d) Except as disclosed in Schedule 4.10(d), to the Company's
Knowledge, no asbestos or asbestos containing material is present at any real
property subject to the Leases.
(e) Except as disclosed in Schedule 4.10(e), to the Company's
Knowledge, no hazardous substance, pollutant or contaminant, as defined in any
Environmental Law, and no oil, as defined in the Oil Pollution Act of 1990, 33
U.S.C. ss.2730, was released at any real property subject to the Leases at any
time when the Company used or occupied such property except for such presence
which would not now or with the passage of time require any remediation,
removal, corrective action, investigation or monitoring under any Environmental
Law.
Section 4.11. Registration Statement. The information with
respect to the Company or any Subsidiary of the Company that
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the Company furnishes to Buyer in writing specifically for use in (a) the S-4
and the Registration Statement on Form S-3 (the "S-3") will not contain at the
time any such Registration Statement becomes effective, 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 made therein not misleading and (b)
the Proxy Statement relating to the stockholders' meeting referred to in Section
6.19 (the "Proxy Statement") will not contain at the time such Proxy Statement
is mailed and the date of the stockholders' meeting, 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 made therein not misleading.
Section 4.12. Properties; Leases. Except as disclosed in the
Company Public Reports or as set forth on Schedule 4.12 and except for Permitted
Liens,
(a) the Company or one of its Subsidiaries has good and
marketable title, free and clear of all liens and encumbrances, to the trucks
and the other assets of the Company and its Subsidiaries that are reflected in
the financial statements included in the Company's Form 10-Q for the quarter
ended September 30, 1997, except where such failure to hold such title would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. The Company owns or holds under valid and existing lease or license
each piece of real or personal property included in or capitalized on the
Interim Financial Statements;
(b) neither the Company nor any of its Subsidiaries owns any real
property. Schedule 4.12 sets forth a complete and correct list of the leases (i)
for the Company's headquarters and (ii) for the locations in which the Company
has significant office operations (the "Disclosed Leases"). Except for any of
the following that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company, (i) to the Company's
Knowledge, neither the whole nor any portion of any property on which the
Company or any of its Subsidiaries has a leasehold interest (the "Leases") has
been condemned, requisitioned or otherwise taken by any public authority, and no
notice of any such condemnation, requisition or taking has been received or is
threatened, (ii) to the Company's Knowledge, the Leases are in full force and
effect and are valid, binding and enforceable in accordance with their
respective terms against the parties thereto, except to the extent such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting creditors' rights generally or by general
equitable principles, (iii) no amount payable under any Lease is past due, (iv)
the Company, and to the Company's Knowledge each other party thereto, has
complied with all material commitments and obligations on its part to be
performed or observed under each Lease, and (v) the Company has not received any
notice of a default (which has not
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been cured), offset or counterclaim under any Lease, or any other communication
calling upon the Company to comply with any provision of any Lease or asserting
non-compliance (which has not been cured), and no event or condition has
happened or presently exists which constitutes a material default or, after
notice or lapse of time or both, would constitute a material default under any
Lease; and
(c) the Company has not mortgaged, pledged or otherwise
encumbered its interest in any premises covered by the Leases, nor has it
assigned its interest under any Lease or sublet all or any portion of any real
property which it leases nor has it granted to any person any rights to any of
the premises covered by any Lease or in and to any Lease, other than the right
of any dealer to occupy any part of the premises covered by the Leases for the
purpose of operating a store for the business of the Company or any of its
Subsidiaries.
Section 4.13. Tax Matters.
(a) Except as otherwise disclosed in Schedule 4.13(a): (i) all
Tax returns required to be filed by each of the Company and its Subsidiaries
have been filed and each has paid (or the Company has paid on its Subsidiary's
behalf), or has set up an adequate reserve for the payment of, all material
Taxes required to be paid in respect of the periods covered by such returns;
(ii) neither the Company nor any of its Subsidiaries is delinquent in the
payment of any material tax, assessment or governmental charge; (iii) except for
Permitted Liens, there are no Tax liens upon the assets of the Company or any of
its Subsidiaries except liens for Taxes not yet due or being contested in good
faith through appropriate proceedings; and (iv) no material deficiency for any
Taxes has been proposed, asserted or assessed against the Company or any of its
Subsidiaries that has not been resolved, reserved against or paid in full.
(b) Except as otherwise disclosed in Schedule 4.13(b): (i) all
Taxes, deposits or other payments for which the Company or any of its
Subsidiaries is liable through the date hereof either have been paid or accrued
in full on the books and records of the Company or its Subsidiaries, as
applicable, except for such Taxes as are not required by GAAP to be accrued or
are immaterial in amount; (ii) there are not now any extensions of time in
effect with respect to the dates on which any returns or reports with respect to
any Taxes were or are due to be filed; (iii) no audit or investigation of any
return or report of Taxes is currently underway, pending or, to the Company's
knowledge, threatened; and (iv) there are no outstanding waivers or agreements
by the Company or any Subsidiary of the Company for the extension of time for
the assessment of any material Taxes or deficiency thereof, nor are there any
requests for rulings, outstanding subpoenas or requests for information or any
other matter pending between the Company or any of its Subsidiaries and any
taxing authority.
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(c) The Company has delivered to Buyer true and complete copies
of all federal and state income tax returns (together with any Revenue Agent's
Reports) relating to the operations of the Company and the Subsidiaries of the
Company for the taxable years ended since 1996.
(d) None of the Company or any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code. None of the Company, any of its
Subsidiaries or any predecessor in interest of such party, has filed, or may be
deemed to have filed, any election under Section 338 of the Code.
(e) Except as set forth on Schedule 4.13(e), neither the Company
nor any of its Subsidiaries has made any payment which constitutes an "excess
parachute payment" within the meaning of Section 280G of the Code, and no
payment by the Company or any of its Subsidiaries required to be made under any
contract will, if made, constitute an "excess parachute payment" within the
meaning of Section 280G of the Code.
(f) Except as set forth in Schedule 4.13(f), neither the Company
nor any of its Subsidiaries is a party to any tax allocation or tax sharing
agreement.
(g) None of the Company or any of its Subsidiaries has been a
member of an affiliated group (within the meaning of Section 1504(a) of the
Code) filing a consolidated federal income tax return (other than a group the
common parent of which was the Company).
Section 4.14. Brokerage. Except for Questor Management Company,
no broker, agent, finder or financial advisor has acted, directly or indirectly,
for the Company, and with such exception, the Company has not incurred any
obligation to pay any brokerage fee, agent's commission, finder's fee, financial
advisory fee or other commission in connection with the transactions
contemplated by this Agreement.
Section 4.15. Insurance; Protection Products.
(a) Schedule 4.15(a) lists insurance policies owned or held by
the Company or any of its Subsidiaries as of February 28, 1998, which may cover
the Company or any of its assets. As of the date hereof, all such policies are
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 no
notice of cancellation or termination has been received with respect to any such
policy. To the best of the Company's Knowledge, the insurance maintained by the
Company and its Subsidiaries is customary in the industry and complies with
applicable material governmental regulations.
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(b) Schedule 4.15(b) lists all protection products offered as of
the date hereof by the Company and its Subsidiaries in connection with the
rental of trucks by the Company.
Section 4.16. Contracts. Schedule 4.16 sets forth a complete and
correct list of (i) all material contracts between Ryder Truck Rental, Inc.
and/or Ryder System Inc. and the Company or any of its Subsidiaries and (ii) all
contracts entered into by the Company or any of its Subsidiaries since September
30, 1997 and on or prior to the date hereof that would be required to be filed
as an exhibit to any Form 10-K or 10-Q filed by the Company. The Company has
delivered to the Buyer or its representatives true and complete originals or
copies of all contracts set forth in clauses (i) and (ii). Except as disclosed
in Schedule 4.16, to the Company's Knowledge, all material contracts entered
into by the Company or any of its Subsidiaries by which such parties are bound
including the contracts disclosed in clauses (i) and (ii) above and the
contracts filed as exhibits to the Company Public Reports (the "Contracts") are
valid and binding and enforceable against the Company or its Subsidiaries, as
the case may be, and against the other parties thereto, except to the extent
such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors' rights generally or
by general equitable principles, the Company is not, and to the Company's
knowledge, the other parties thereto are not, as of the date hereof, in material
breach of any Contract or material default thereunder, and there does not exist
under any provision thereof, to the Company's Knowledge, as of the date hereof,
any event that, with the giving of notice or the lapse of time or both, would
constitute such a breach or default, except for such failures to be valid and
binding and such breaches, defaults and events as to which requisite waivers or
consents have been or are obtained or which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. Except as disclosed on
Schedule 4.16, as of the date hereof no indemnification claim has been made by
Ryder Truck Rental, Inc. and/or Ryder System Inc. with respect to any contracts
between Ryder Truck Rental, Inc. and/or Ryder System Inc. and the Company or its
Subsidiaries, as the case may be. To the Company's Knowledge, no material
indemnification claims exist under any of the Contracts set forth in clause (i)
above. Except as set forth in Schedule 4.16, no contract to which the Company or
any of its Subsidiaries, contains any provision which creates, or purports to
create, or subjects the Company or any of its Affiliates to, any material
restriction on any business activity that may be conducted by the Company or any
of its Affiliates through non-competes.
Section 4.17. Transactions with Affiliates.
(a) Except as set forth in Schedule 4.17(a), no director, no
shareholder and no persons controlled by any director or shareholder of the
Company or any of its Subsidiaries or any entity in which any such director or
other affiliate or
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associate, owns any beneficial interest (other than a publicly held corporation
whose stock is traded on a national securities exchange or in the
over-the-counter market and less than 1% of the stock of which is beneficially
owned by any such person) has any interest in: (i) any contract, arrangement or
understanding with, or relating to, the business or operations of the Company or
any of its Subsidiaries; (ii) any loan, arrangement, understanding, agreement or
contract for or relating to indebtedness of the Company or any of its
Subsidiaries; or (iii) any property (real, personal or mixed), tangible, or
intangible, used or currently intended to be used in, the business or operations
of the Company or any of its Subsidiaries.
(b) Except as set forth on Schedule 4.17(b), no officer of the
Company or any of its Subsidiaries has sold or transferred any property or
assets to or purchased or acquired any property or assets from, or otherwise
engaged in any other transactions with the Company or any of its Subsidiaries,
except that the Company and any of its Subsidiaries may have engaged in any of
the foregoing transactions in the ordinary course of business at prices and on
terms and conditions no less favorable to the Company or such Subsidiary than
could have been obtained in an arm's-length basis from unrelated third parties.
Section 4.18. Voting Requirements; Dissenters' Rights. The
affirmative vote of the holders of a majority of the Outstanding Company Shares
with respect to this Agreement and the Merger was the only vote of the holders
of any class or series of the Company's capital stock necessary to approve this
Agreement, the Merger and the transactions contemplated by this Agreement and
the Merger.
Section 4.19. Labor Matters. As of the date hereof, there are no
collective bargaining agreements with labor unions or associations representing
employees of the Company or any Subsidiary of the Company. Since October 17,
1996, there has been no material work stoppage against the Company or any of its
Subsidiaries by any employees of the Company or any of its Subsidiaries nor, to
the Company's Knowledge, is any such stoppage threatened. Neither the Company
nor any of its Subsidiaries has been involved in or, to the Company's Knowledge,
threatened with, any collective bargaining dispute, arbitration, lawsuit or
administrative proceeding relating to a collective bargaining matter involving
the employees of the Company or any of its Subsidiaries (excluding routine
workers' compensation claims) that would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Section 4.20. Quantity and Maintenance of Trucks. As of January
31, 1998, the Company owned at least 29,000 trucks. Since such date, the Company
has maintained the trucks in accordance with its ordinary course of business
consistent with past practice, unless and until sold to third parties in the
ordinary course of business.
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Section 4.21. Accounts Receivable. All accounts receivable of the
Company and its Subsidiaries which are reflected on the Interim Balance Sheet
are fairly presented thereon in accordance with GAAP.
Section 4.22. Licenses, Permits, etc. Except as disclosed on
Schedule 4.22, each of the Company and its Subsidiaries have all material
licenses, permits, certificates, franchises, consents, approvals and other
authorizations of any Governmental Entity required to carry on their business as
presently conducted (the "Licenses"). All Licenses have been validly obtained
and are in full force and effect except for those whose failure to be in full
force and effect would not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect on the Company. Except as disclosed on
Schedule 4.22, as of the date hereof, no proceeding is pending or, to the
Company's Knowledge, threatened seeking the revocation or limitation of any such
License that, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect on the Company. The businesses of the Company and
its Subsidiaries are presently being conducted in a manner that does not violate
in any material respect any of the terms or conditions under which any License
was granted.
Section 4.23. Disclosure. None of the representations and
warranties by the Company in this Agreement and no statement on the part of the
Company contained in any of the Schedules hereto contains or will contain as to
the applicable representation and warranty any untrue statement of a material
fact or omits or will at the Closing omit to state any material fact necessary
in order to make any of the statements herein or therein, in light of the
circumstances under which it was made, not misleading.
ARTICLE V.
Representations and Warranties of Buyer
---------------------------------------
Buyer represents and warrants to the Company that:
Section 5.1. Corporate Organization and Authorization.
(a) Each of Buyer and Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to enter into this Agreement
and to carry out the transactions contemplated hereby.
(b) Buyer has all requisite corporate power and authority and,
except as set forth on Schedule 5.1(b), all governmental authorizations,
permits, certificates, licenses, consents and approvals required to carry on its
business as presently conducted, except where the failure to possess such
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authorizations, permits, certificates, licenses, consents and approvals (either
individually or in the aggregate) would not have a Material Adverse Effect on
Buyer. Buyer is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the character of the property owned or
leased by it or the nature of the activities conducted by it makes such
qualification necessary, except where the failure to so qualify or to maintain
such good standing (either in one jurisdiction or in the aggregate) would not
have, individually or in the aggregate, a Material Adverse Effect on Buyer.
(c) This Agreement has been duly executed and delivered by Buyer
and Sub and, except for approval of this Agreement by Buyer's and Sub's Board of
Directors and by a majority of holders of Sub's common stock, which approval has
been obtained prior to the execution hereof, no corporate authorization on the
part of Buyer or Sub is necessary to consummate the transactions contemplated by
this Agreement. No approval by the shareholders of Buyer is required by law,
charter or by-laws of Buyer, listing agreement with, or policy of the NYSE or
otherwise for the consummation of this Agreement, it being understood, however,
that in order for Buyer to issue a number of shares in excess of the Minimum
Merger Shares, it must obtain shareholder approval to amend its Certificate of
Incorporation to increase the number of shares of authorized common stock (and
the failure of Buyer to obtain such approval shall give rise to Buyer's
obligation to issue the Minimum Merger Shares and the Aggregate Cash
Consideration deliverable pursuant to Section 3.1(b) hereof when the Minimum
Merger Shares are issued pursuant to Section 3.1(a) hereof).
(d) This Agreement constitutes a valid and binding agreement of
Buyer and Sub and is enforceable against Buyer and Sub in accordance with its
terms, except to the extent enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and general equitable principles (whether
considered in a proceeding in equity or at law).
(e) The copies of the Certificate of Incorporation and By-Laws,
and all amendments thereto to the date of this Agreement, of Buyer and Sub
heretofore delivered to the Company are complete and true copies of such
documents as in effect on the date hereof.
Section 5.2. Capitalization.
(a) As of the date hereof, the authorized capital stock of Buyer
consists of: (i) Thirty Seven Million Five Hundred Thousand (37,500,000) shares
of Common Stock, par value $0.01 per share ("Buyer Common
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Stock"), of which (x) Thirty Five Million (35,000,000) shares of Common Stock
have been designated Class A Common Stock, par value $0.01 per share ("Buyer
Class A Common Stock") and (y) Two Million Five Hundred Thousand (2,500,000)
shares of Common Stock have been designated Class B Common Stock, par value $.01
per share ("Buyer Class B Common Stock"), and (ii) Two Hundred Fifty Thousand
(250,000) shares of Preferred Stock, par value $0.01 per share.
(b) As of March 3, 1998, (i) Twenty Five Million Six Hundred
Sixty Two Thousand Eight Hundred Fifty Seven (25,662,857) shares of Buyer Class
A Common Stock, and (ii) One Million Nine Hundred Thirty Six Thousand Six
Hundred (1,936,600) shares of Buyer Class B Common Stock are issued and
outstanding. All of such issued and outstanding shares of Buyer Common Stock are
validly issued, fully paid and nonassessable. Except as set forth in Schedule
5.2(b) hereto, as of March 3, 1998, Buyer has no other outstanding capital
securities or securities convertible into or exchangeable for any shares of its
capital stock or any preemptive or other rights to subscribe for or to purchase,
or any options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, any calls, commitments or claims of any character
relating to, any shares of its capital stock or any securities convertible into
or exchangeable for any shares of its capital stock.
(c) Buyer has a sufficient number of shares of Buyer Class A
Common Stock authorized and reserved for issuance to the holders of the
Outstanding Company Shares and holders of Options to issue the Minimum Merger
Shares in accordance with Section 3.1(a)(i)(y) of this Agreement.
Section 5.3. Noncontravention.
Subject to the expiration or termination of the applicable
waiting period required by the H-S-R Act, except as disclosed in Schedule 5.3
hereto, neither the execution, delivery or performance of this Agreement nor the
consummation of the transactions contemplated hereby:
(i) violates, or conflicts with, or constitutes a default
under, the certificate or articles of incorporation or by-laws, as
amended, of any of Buyer or any of its Subsidiaries, or
(ii) violates or will violate any statute or law or any
rule, regulation, order, judgment or decree of any court or governmental
authority to which Buyer or any of its Subsidiaries or any of their
properties or assets are subject, except where the existence of such
violation would not, individually or in the aggregate, have a Material
Adverse Effect on Buyer, or
(iii) (with or without notice or lapse of time or both),
constitutes a default under any contract or agreement of any kind to
which Buyer or any of its Subsidiaries is a party or by which either of
them is bound, except where the
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existence of such default would not, individually or in the aggregate,
have a Material Adverse Effect on Buyer, or
(iv) except as disclosed on Schedule 5.3, requires that
Buyer obtain any consents or approvals of third parties, except where
the failure to obtain such consent or approval would not, individually
or in the aggregate, have a Material Adverse Effect on Buyer.
Section 5.4. SEC Filings. Since January 1, 1995, Buyer has made
all filings with the SEC that it has been required to make under the Securities
Act or the Exchange Act (collectively, the "Buyer Public Reports"). Each of the
Buyer Public Reports has complied with the Securities Act and the Exchange Act
in all material respects. None of the Buyer Public Reports, as of their
respective dates, contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
Section 5.5. Financial Statements. All of the financial statements included
in the Buyer Public Reports complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with GAAP applied on a consistent basis during the period
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC)
and fairly present in accordance with applicable requirements of GAAP (subject,
in the case of unaudited statements, to normal recurring adjustments, none of
which were or are expected, individually or in the aggregate, to be material in
amount) the consolidated financial position of Buyer and its consolidated
Subsidiaries as of their respective dates and the consolidated results of
operations and the consolidated cash flows of Buyer and its consolidated
Subsidiaries for the periods presented therein. Except as set forth in the Buyer
Public Reports, neither the Buyer nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a consolidated balance sheet
of the Company and its consolidated Subsidiaries or in the notes thereto, other
than liabilities or obligations which, individually or in the aggregate, do not
have and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Buyer.
Section 5.6. Legal Proceedings. Except as disclosed in the Buyer
Public Reports or as set forth on Schedule 5.6 hereto, there are no claims,
actions, suits, proceedings or investigations pending or, to Buyer's knowledge,
threatened by or against or involving, Buyer or any Subsidiary of Buyer (a)
seeking to enjoin, prohibit, restrain or otherwise prevent the transactions
contemplated hereby or (b) which, if determined adversely to Buyer would,
individually or in the aggregate,
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result in a Material Adverse Effect on Buyer. Except as disclosed in Buyer
Public Reports, there are no judgments, decrees or orders issued by any court,
board or other governmental or administrative agency presently outstanding and
unsatisfied against Buyer or any Subsidiary of Buyer, except where the existence
of such judgment, decree or order would not, individually or in the aggregate,
have a Material Adverse Effect on Buyer.
Section 5.7. Events Subsequent to September 30, 1997. Except as
set forth on Schedule 5.7 hereto or as disclosed in the Buyer Public Reports,
since September 30, 1997, there has not been (a) any effect or change which
would have, individually or in the aggregate, a Material Adverse Effect on
Buyer, (b) any declaration, setting aside or payment of any dividend or any
other distribution with respect to any of the capital stock or other equity
interests of Buyer, or (c) any material change by Buyer in accounting
principles.
Section 5.8. Compliance with Laws. Except for such non-compliance
as would not, individually or in the aggregate, have a Material Adverse Effect
on Buyer and, except as disclosed in the Buyer Public Reports, to the best of
Buyer's knowledge, the conduct of Buyer complies in all material respects with
all environmental and other statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto, except for violations or
failures so to comply, if any, that are consistent with the relevant industry
standard. To the best of Buyer's knowledge, no action or proceeding relating to
any such statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees is pending or threatened, except for such actions and proceedings as
would not, individually or in the aggregate, have a Material Adverse Effect on
Buyer.
Section 5.9. Registration Statement. The information with respect
to Buyer or any Subsidiary of Buyer included in (a) the S-4 and the S-3 will not
contain at the time any such Registration Statement becomes effective, 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 made therein not
misleading and (b) the Proxy Statement will not contain at the time such Proxy
Statement is mailed and the date of the stockholders' meeting referred to in
Section 6.19, 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 made therein not misleading.
Section 5.10. Properties; Insurance. Except as disclosed in
Schedule 5.10 and except for Permitted Liens, Buyer or a Subsidiary of Buyer has
good and marketable title to its material assets and the material assets of its
Subsidiaries, free and clear of all liens and encumbrances, except where such
failure to hold such title would not, individually or in the aggregate, have a
Material Adverse Effect on Buyer.
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Section 5.11. Financing. Buyer has previously delivered to the
Company a complete and correct copy of a "highly confident" letter from Credit
Suisse First Boston in form and substance satisfactory to the Company, and such
letter is in full force and effect and has not been amended or otherwise
modified.
Section 5.12. Brokerage. Except for Credit Suisse First Boston,
no broker, agent, finder or financial advisor has acted, directly or indirectly,
for Buyer, nor has Buyer incurred any obligation to pay any brokerage fee,
agent's commission, finder's fee, financial advisory fee or other commission in
connection with the transactions contemplated by this Agreement.
Article VI.
Covenants and Agreements
------------------------
Section 6.1. Conduct of the Company Prior to the Effective Time.
(a) The Company shall, and shall cause its Subsidiaries (and
Questor shall cause the Company and its Subsidiaries) (i) to carry on their
respective businesses in the usual, regular and ordinary course of business in
substantially the same manner as heretofore conducted, (ii) not to engage at any
time in any business or business activity other than the business currently
conducted by them and business activities reasonably incidental thereto and
(iii) use commercially reasonable efforts to preserve intact their present
business organizations, keep available the services of their present officers
and employees and preserve their relationships with customers, suppliers,
dealers, agents and others having business dealings with them to the end that
their goodwill and on-going businesses shall be unimpaired at the Effective
Time, except such impairment as would not have a Material Adverse Effect on the
Company. The Company shall, and shall cause its Subsidiaries to (i) maintain
insurance coverages in the usual manner consistent with prior practices, (ii)
maintain its books, accounts and records in the usual manner consistent with
prior practices, (iii) comply in all material respects with all laws, ordinances
and regulations of governmental entities applicable to the Company and its
Subsidiaries, (iv) maintain and keep its properties and equipment in good
repair, working order and condition, ordinary wear and tear excepted, and (v)
perform in all material respects its obligations under all contracts and
commitments to which it is a party or by which it is bound, in each case, except
for clauses (i) and (v), other than where the failure to so maintain, comply or
perform, would, individually or in the aggregate, not result in a Material
Adverse Effect on the Company;
(b) Except as required or permitted by this Agreement, neither
the Company nor any of its Subsidiaries shall nor shall
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they propose to (and Questor shall not permit the Company or any of its
Subsidiaries to) (i) sell or agree to sell any capital stock owned by it in any
of its Subsidiaries, (ii) amend its Certificate of Incorporation or By-laws,
(iii) split, combine or reclassify its outstanding capital stock or declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property, or (iv) directly or indirectly redeem, purchase or otherwise acquire
or agree to redeem, purchase or otherwise acquire any Company Class C Common
Stock except for repurchases of Company Common Class C Stock from employees,
officers, consultants or directors in the ordinary course of business;
(c) Except as set forth on Schedule 6.1(c), the Company shall
not, nor shall it permit any of its Subsidiaries (and Questor shall not permit
the Company or any of its Subsidiaries) to:
(i) except for the issuance of shares pursuant to Options
outstanding as of the date hereof and except as required or permitted by
this Agreement, issue, deliver or sell or agree to issue, deliver or
sell any additional shares of, or rights of any kind to acquire any
shares of, its capital stock of any class, except for issuances,
deliveries or sales to employees, officers, consultants or directors of
not more than 2,000 shares of Class C Common Stock;
(ii) acquire, lease or dispose or agree to acquire, lease
or dispose of any capital assets or any other assets other than in the
ordinary course of business and consistent with past practice;
(iii) incur additional indebtedness in excess, in the
aggregate, of $25,000,000, or encumber or grant a security interest in
any asset to secure indebtedness, in the aggregate, in excess of
$25,000,000 or enter into any other material transaction other than, in
each case, in the ordinary course of business, it being understood that
it is within the ordinary course of business of the Company and its
Subsidiaries to issue indebtedness within the limits of existing credit
facilities;
(iv) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in,
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, in each
case in this clause (iv) which are material, individually or in the
aggregate, to the Company and its Subsidiaries taken as a whole, except
that the Company may create new wholly owned subsidiaries in the
ordinary course of business;
(v) fail to comply in all material respects with the
applicable provisions of ERISA, the Code and the
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regulations and published interpretations thereunder with respect to
Employee Benefit Plans;
(vi) sell or transfer any material properties or assets
to, or purchase or acquire any material property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates,
except that the Company or any of its Subsidiaries may engage in any of
the foregoing transactions (A) pursuant to existing arrangements
disclosed on Schedule 4.17, or (B) except for transactions with
Significant Stockholders, in the ordinary course of business at prices
and on terms and conditions no less favorable to the Company or any of
its Subsidiaries than could be obtained on an arm's-length basis from
unrelated third parties;
(vii) without Buyer's consent, which consent shall not be
unreasonably withheld or delayed, make any material tax election under
the Code (other than in the ordinary course of business consistent with
past practice) or settle or compromise any tax liability involving
amounts in excess of $1,000,000 in the aggregate;
(viii) pay, discharge, settle or satisfy any claims,
litigation, liabilities or obligations (whether absolute, accrued,
asserted or unasserted, contingent or otherwise) involving amounts in
excess of $1,000,000 in the aggregate, other than the payment, discharge
or satisfaction of liabilities (x) reflected or reserved against in, or
contemplated by, the financial statements (or the notes thereto) of the
Company included in the Company Public Reports or (y) in the ordinary
course of business consistent with past practice;
(ix) fail to use all commercially reasonable efforts to
keep its insurable properties adequately insured at all times by
financially sound and reputable insurers, maintain such other insurance,
to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies in
the same or similar businesses operating in the same or similar
locations, including public liability insurance against claims for
personal injury or death or property damage occurring upon, in, about or
in connection with the use of any properties owned, occupied or
controlled by it, fail to maintain such other insurance as may be
required by law, provided, however, that notwithstanding anything to the
contrary contained herein, the Company may continue its current
insurance practices;
(x) fail to maintain in full force and effect insurance
that, to the best of the Company's Knowledge, is customary in the
industry and complies with applicable material governmental regulations,
provided, however, that
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notwithstanding anything to the contrary contained herein, the Company
may continue its current insurance practices;
(xi) with respect to its fleet of trucks, fail to perform
maintenance (routine or unscheduled) and repairs, fail to keep its
fleet, in all material respects, in good working order and condition, or
fail to maintain its fleet as required in order to keep the
manufacturer's warranty, in all material respects, if any, in force;
(xii) fail to use all commercially reasonable efforts to
continue to collect its accounts receivable in the ordinary course of
business and consistent with past practice;
(xiii) fail to prepare and file all material federal,
state, local and foreign returns for Taxes and other material Tax
reports, filings and amendments thereto required to be filed by it, or
fail to allow Buyer, at its request, to review all such returns,
reports, filings and amendments prior to the filing thereof, which
review shall not interfere with the timely filing of such returns;
(xiv) increase by more than 10% the base salary of any of
its employees whose base salary is in excess of $100,000 as of the date
hereof, except consistent with past practice or enter into a new
material Employee Benefit Plan;
(xv) except as may be required by applicable law (in which
case Buyer shall have the option to participate in such negotiation),
enter into any negotiation with respect to any collective bargaining
agreement;
(xvi) make any loans to any third party in excess of
$1,000,000 in the aggregate except in the ordinary course of business;
(xvii) without Buyer's consent which may not be
unreasonably withheld or delayed amend or cancel or agree to the
material amendment or cancellation of any contract filed as an exhibit
to the Company Public Reports or enter into any new contract required to
be filed as such an exhibit;
(xviii) without Buyer's consent which may not be
unreasonably withheld or delayed make any change in any accounting
methods, except as may be required by GAAP or as appropriate to conform
to changes in GAAP; or
(xix) enter into any contract, agreement commitment or
arrangement to take any of the actions described in Section 6.1(b) or
elsewhere in this Section 6.1(c).
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Section 6.2. Conduct of Buyer Prior to the Effective Time. Buyer
shall not, and shall cause its Subsidiaries not to, engage in any transaction
which has the effect of, individually or in the aggregate, materially
restricting, or in any way materially delaying, preventing or prohibiting the
Merger or the consummation of the transactions contemplated by this Agreement;
provided, however, that Buyer shall comply with Section 3.16. Buyer shall not
reserve for any other purpose or issue to any person or persons (other than the
Company Stockholders pursuant to Article III of this Agreement) any shares of
Buyer Class A Common Stock that it has reserved for issuance of the Minimum
Merger Shares in accordance with Section 3.1(a) of this Agreement.
Section 6.3. Other Offers for the Company; Sale of Common Stock
by Significant Stockholders.
(a) From the date hereof until the termination of this Agreement
or the Effective Time, whichever first occurs, the Company shall not, nor shall
it permit any of its Subsidiaries to, nor shall it authorize or permit any
officer, director or employee of, or any investment banker, attorney or other
advisor or representative or agent of, the Company or any of its Subsidiaries
(and Questor shall not permit the Company or any of its Subsidiaries) to,
directly or indirectly, (i) solicit, initiate or encourage the submission of any
Acquisition Proposal (as hereinafter defined) or (ii) enter into or encourage
any discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to encourage or facilitate
any inquiries or the making of any proposal that constitutes or may reasonably
be expected to lead to, any Acquisition Proposal. Notwithstanding anything in
this Agreement to the contrary, the Company shall promptly advise Buyer in
writing of (i) the receipt by it (or any of the other entities or persons
referred to above) after the date hereof of any Acquisition Proposal, or any
inquiry which could reasonably be expected to lead to any Acquisition Proposal,
(ii) the identity of the person making any such Acquisition Proposal or inquiry
and (iii) the terms and conditions of such Acquisition Proposal or inquiry. For
purposes of this Agreement, "Acquisition Proposal" means any bona fide proposal
with respect to a merger, consolidation, share exchange, business combination or
similar transaction involving the Company or any Subsidiary of the Company, or
any purchase of all or any significant portion of the assets or stock of the
Company or any Subsidiary of the Company.
(b) From the date hereof until the termination of this Agreement
or the Effective Time, whichever first occurs, in addition to being bound by the
terms of Section 6.3(a), the Significant Stockholders shall not offer for sale,
sell, distribute or otherwise dispose of any of their Company Common Stock.
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Section 6.4. Continued Effectiveness of Representations and
Warranties of the Parties. From the date hereof through the Effective Time,
(a) the Company shall use (and Questor shall cause the Company to
use) all commercially reasonable efforts to conduct its affairs in such a manner
so that, except as otherwise contemplated or permitted by this Agreement, the
representations and warranties of the Company contained in Article IV shall
continue to be true and correct in all material respects on and as of the
Closing Date as if made on and as of the Closing Date, (i) except that any such
representations and warranties that are given as of a particular date shall be
true and correct in all material respects as of such date, and (ii) in the case
of Section 4.9 (Events Subsequent to September 30, 1997) only, except for such
changes with respect thereto (x) which are contemplated by this Agreement or (y)
which are attributable to the execution of this Agreement, or the announcement
or contemplation of the transactions proposed herein;
(b) Buyer shall use its reasonable efforts to conduct its affairs
in such a manner so that, except as otherwise contemplated or permitted by this
Agreement, the representations and warranties contained in Article V shall
continue to be true and correct in all material respects on and as of the
Closing Date as if made on and as of the Closing Date, (i) except that any such
representations and warranties that are given as of a particular date shall be
true and correct in all material respects as of such date, and (ii) in the case
of Section 5.7 (Events Subsequent to September 30, 1997) only, except for such
changes with respect thereto (x) which are contemplated by this Agreement or (y)
which are attributable to the execution of this Agreement, or the announcement
or contemplation of the transactions proposed herein;
(c) the Company shall promptly notify Buyer of any event,
condition or circumstance occurring from the date hereof through the Closing
Date of which the Company becomes aware that would cause any material revisions
to any Schedule provided by the Company pursuant to this Agreement, or that
would constitute a violation or breach of this Agreement by the Company; and
(d) Buyer and Sub shall promptly notify the Company of any event,
condition or circumstance occurring from the date hereof through the Closing
Date of which they become aware that would cause any material revisions to any
Schedule provided by Buyer pursuant to this Agreement, or that would constitute
a violation or breach of this Agreement by Buyer. No such notification shall be
deemed an amendment to any Schedule to this Agreement.
Section 6.5. Corporate Examinations and Investigations. Prior to
the Closing Date, each of Buyer and the Company, as the case may be, shall be
entitled, at its cost and
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expense, through its employees and representatives, to make such investigation
of the assets, liabilities, business and operations of the other party, and such
examination of the books, records and financial condition of the other party,
upon prior notice and during normal business hours. Any such investigation and
examination shall be conducted at reasonable times and under reasonable
circumstances and the applicable party and its respective employees and
representatives, including, without limitation, its counsel and independent
public accountants, shall cooperate with such representatives in connection with
such review and examination. In furtherance of the foregoing, the Company will
provide Buyer with regular updates concerning the preparation of the Audited
Financial Statements and will cause its accountants to give reasonable access to
Buyer's accountants during the course of the audit of the Audited Financial
Statements and to discuss such draft Audited Financial Statements with Buyer's
accountants.
Section 6.6. Buyer Approvals. Buyer shall use all reasonable
efforts to obtain as promptly as practicable all necessary approvals,
authorizations and consents of any person or Governmental Entity required to be
obtained by Buyer to consummate the transactions contemplated hereby ("Buyer
Approvals"), and will cooperate with the Company in seeking to obtain all such
approvals, authorizations and consents; provided, however, that neither Buyer
nor any of its Subsidiaries shall be required to take any action to obtain such
approvals, authorizations and consents if such action, either alone or together
with another action, would result in the divestiture of assets by Buyer or the
Company that would directly result in the loss of more than 30% of the Company's
revenues (as of the date hereof). Buyer shall use all reasonable efforts to
provide such information to such persons, bodies and authorities as such
persons, bodies or authorities or the Company may reasonably request.
Section 6.7. Company Approvals. The Company shall use all
reasonable efforts to obtain as promptly as practicable all necessary approvals,
authorizations and consents of any person or Governmental Entity required to be
obtained by the Company to consummate the transactions contemplated hereby
("Company Approvals"), and will cooperate with the Buyer in seeking to obtain
all such approvals, authorizations and consents. The Company shall use all
reasonable efforts to provide such information to such persons, bodies and
authorities as such persons, bodies and authorities or Buyer may reasonably
request.
Section 6.8. Letter of Credit. Buyer has obtained and delivered
to the Company on or before the date hereof a Letter of Credit naming the
Company as beneficiary thereof in the amount of $20,000,000 and in substantially
the form attached hereto as Exhibit C (the "Letter of Credit") which will remain
in full force and effect until December 15, 1998 or as otherwise provided
therein; provided, however, that if the Company exercises its
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option to extend the Termination Date pursuant to the proviso of Section
10.1(a), Buyer shall cause the Letter of Credit to remain in full force and
effect or a substitute letter of credit containing substantially identical terms
to remain in full force and effect until March 15, 1999 or as otherwise provided
therein; and provided, further, that if the Closing Date is extended beyond
November 30, 1998, solely as a result of clause (a)(v) of the definition of
Closing Date, Buyer shall cause the Letter of Credit to remain in full force and
effect or a substitute letter of credit containing substantially identical terms
to remain in full force and effect until March 15, 1999 or as otherwise provided
therein. The Company agrees with Buyer that it shall not draw upon, or exercise
any rights with respect to, the Letter of Credit unless and only to the extent
the Company is permitted to do so under Article X of this Agreement. In
addition, the Company agrees with Buyer that within one (1) Business Day
following the earlier of (x) the Closing Date, and (y) the date on which this
Agreement is terminated in a manner which does not give rise to a right on the
part of the Company to draw on the Letter of Credit pursuant to Section 10.3,
the Company shall instruct the bank issuing the Letter of Credit to terminate
the Letter of Credit by giving the notice described in clause (ii) of paragraph
5 of the Letter of Credit and shall surrender the Letter of Credit to such bank
for cancellation.
Section 6.9. Further Assurances.
(a) Each of Buyer, Sub and the Company shall execute such
documents and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby. Each of Buyer, Sub and the Company shall use all reasonable
efforts to cause all actions to effectuate the Merger for which such party is
responsible under this Agreement to be taken as promptly as practicable,
including using all reasonable efforts to obtain all necessary waivers, consents
and approvals (including, but not limited to, filings under the H-S-R Act) and
to lift any injunction or other legal bar to the Merger (and, in each case, to
proceed with the Merger as expeditiously as possible). Notwithstanding the
foregoing, there shall be no action required to be taken and no action will be
taken in order to consummate and make effective the transactions contemplated by
this Agreement if such action, either alone or together with another action,
would result in the divestiture of assets by Buyer or the Company that would
directly result in the loss of more than 30% of the Company's revenues (as of
the date hereof).
(b) In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and/or directors of Buyer, the Company, Questor and the
Surviving Corporation shall take all such necessary action.
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Section 6.10. Buyer Board of Directors. As of the Effective Time,
Buyer's Board of Directors shall cause at least one person designated on
Schedule 6.10 (the "Designee") to be nominated to Buyer's Board of Directors and
shall use its commercially reasonable efforts to cause such Designee to be
elected to Buyer's Board of Directors until the earliest to occur of (a) the
third anniversary of the Closing Date, (b) the disposition by Questor of 75% of
the shares of Buyer Class A Common Stock acquired by Questor pursuant to Article
III hereof, or (c) the acquisition by Questor of a Controlling Interest in any
person listed on Annex I attached hereto. In furtherance of its obligations
under this Section 6.10, Buyer, among other things, shall no later than the
Effective Time increase the number of directors on its Board of Directors by one
and elect the initial Designee set forth on Schedule 6.10 to the Buyer's Board
of Directors.
Section 6.11. Indemnification of Company Officers and Directors;
Insurance.
(a) Buyer agrees, for a period of six years following the
Effective Time, not to amend the indemnification provisions set forth in the
Certificate of Incorporation or By-laws of the Surviving Corporation in a manner
that would adversely affect the rights of the Company's officers, directors and
employees to indemnification and advancement of expenses thereunder and agrees
to cause the Surviving Corporation to fulfill and honor such obligations to the
maximum extent permitted by law; provided, however, that nothing in this Section
6.11 shall prevent Buyer from effecting any merger, reorganization or
consolidation of the Surviving Corporation.
(b) Buyer shall cause to be maintained in effect for a period of
six years after the Effective Time the current policies of directors' and
officers' liability insurance and fiduciary liability insurance maintained by
the Company with respect to matters occurring prior to the Effective Time;
provided, however, that (i) Buyer may substitute therefor policies of
substantially the same coverage containing terms and conditions that are
substantially the same for the indemnified parties to the extent reasonably
available and (ii) Buyer shall not be required to pay an annual premium for such
insurance in excess of one hundred and fifty percent (150%) of the last annual
premium paid prior to the date of this Agreement, but in such case shall
purchase the maximum amount of coverage possible for such premium.
(c) This Section 6.11 is intended to be for the benefit of, and
shall be enforceable by, the indemnified parties referred to herein, their heirs
and personal representatives and shall be binding on Buyer, Sub and the
Surviving Corporation and their respective successors and assigns.
Section 6.12. Confidentiality. Questor and Buyer reaffirm their
obligations to comply with the provisions set
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forth in the Confidentiality Agreement and agree that such obligations shall
survive the termination of this Agreement. The Significant Stockholders and the
Company agree to keep confidential all nonpublic information relating to Buyer
received in connection with the transactions contemplated by this Agreement.
Section 6.13. Certificates, Opinions, Etc. At the Closing, each
of Buyer, Sub and the Company shall deliver such opinions (covering the matters
listed on Annexes II and III hereto) and certificates as are reasonably required
by the other parties.
Section 6.14. Interim Financials. As promptly as practicable
after each monthly accounting period subsequent to the date of this Agreement
and prior to the Effective Time, the Company will cause to be delivered to Buyer
periodic financial reports relating to the Company and its Subsidiaries in the
form in which the Company customarily prepares such reports for its internal
purposes, including, without limitation, a monthly interim unaudited balance
sheet and income statement. The Company covenants that such interim statements
will be prepared on a basis consistent with prior interim periods.
Section 6.15. Communications. In connection with the continued
operation of the business of the Company and its Subsidiaries subsequent to the
date of this Agreement and prior to the Effective Time, the Company shall
promptly respond in good faith to any reasonable inquiries from representatives
of Buyer with respect to the ongoing operations of the Company and its
Subsidiaries. The Company acknowledges that Buyer does not and will not waive
any rights it may have under this Agreement as a result of such communications.
Section 6.16. Releases. If the Closing occurs, then the Company
hereby unconditionally, absolutely and irrevocably releases each Significant
Stockholder and each Significant Stockholder hereby unconditionally, absolutely
and irrevocably releases the Company from any and all claims, rights and causes
of action which such releasing person may have or may have had against the
released party, prior to, or arising with respect to any acts or omissions
occurring or facts or circumstances existing prior to, the Closing; provided,
however, that nothing in this Section 6.16 shall release any rights which any of
these parties may have under this Agreement.
Section 6.17. Transfer Taxes. Buyer and the Company shall
cooperate in the preparation, execution and filing of all returns, applications
or other documents regarding any real property transfer, stamp, recording,
documentary of other taxes (including, without limitation, any New York State
Real Estate Transfer Tax) and any other fees and similar taxes which become
payable in connection with the Merger (collectively, "Transfer Taxes"). From and
after the Effective Date, Buyer shall pay or
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cause to be paid, without deduction or withholding from any amounts payable to
the holders of the Outstanding Company Shares, all Transfer Taxes.
Section 6.18. Standstill. If the Closing occurs, each of Questor
and Madison Dearborn agrees that thereafter, unless it shall have been
specifically invited in writing by the Board of Directors of Buyer, it will not,
directly or indirectly (a) acquire any securities that would result in the
beneficial ownership of Buyer Class A Common Stock by it in an amount equal to
the sum of (x) the amount of Buyer Class A Common Stock received by it under the
terms of this Agreement, multiplied by (y) 2 (two) (subject to a corresponding
adjustment in the event the outstanding shares of Buyer Class A Common Stock
shall be changed into a different number of shares by reason of any
reclassification, recapitalization, split-up, stock dividend, etc.), or (b)
cause or participate in the making directly or indirectly of any proxy contest
or any tender or exchange offer for securities of Buyer, or (c) take any actions
to seek to obtain control of the Board of Directors of Buyer. This Section 6.18,
and the obligations of Questor and Madison Dearborn hereunder, shall terminate
upon the earliest to occur of (a) the twenty-fourth monthly anniversary of the
date hereof, (b) a Buyer Change of Control Event or (c) the date upon which
Sanford Miller ceases to be, or gives or receives notice with respect to
terminating his role as, Chief Executive Officer of Buyer.
Section 6.19. Buyer's Stockholders' Meeting. Buyer shall use all
commercially reasonable efforts to have occur as promptly as practicable a
meeting of Buyer's stockholders to vote upon a proposed increase in the
authorized capital stock of Buyer to permit Buyer to issue the Maximum Merger
Shares. Each party hereto shall promptly furnish all information concerning it
as any other party hereto may reasonably request in connection with the Proxy
Statement, the Registration Statement on Form S-3, or the Registration Statement
on Form S-4 or in connection with compliance with any state blue sky or
securities laws.
Section 6.20. Stock Purchases, Repurchases and Sales;
Registration Rights.
If the Closing occurs:
(a) Buyer will not, and will not permit any of its Subsidiaries
or controlled Affiliates to, purchase any shares of Buyer Common Stock in open
market, privately negotiated transactions or otherwise, on any day during the
period commencing 30 trading days before the Annual Measurement Date, Final
Measurement Date and Warrant Measurement Date, as the case may be, and ending on
the Annual Measurement Date, Final Measurement Date and Warrant Measurement
Date, as the case may be (the "Blackout Period"). In addition, Buyer will not,
and will not permit any of its Subsidiaries or controlled Affiliates to, make
any announcement with respect to any upcoming or future
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purchase, repurchase, buy-back or similar transaction involving any shares of
Buyer Common Stock during the Blackout Period or within thirty (30) days prior
thereto.
(b) Each of Questor and Madison Dearborn will not, and will not
permit any of their Subsidiaries or controlled Affiliates to, sell any shares of
Buyer Common Stock in open market, privately negotiated transactions or
otherwise, on any day during the Blackout Period. In addition, Questor and
Madison Dearborn will not, and will not permit any of their Subsidiaries or
controlled Affiliates to, make any announcement with respect to any upcoming or
future sale or similar transaction involving any shares of Buyer Common Stock
during the Blackout Period or within thirty (30) days prior thereto.
(c) Sections 6.20(a) and 6.20(b) shall terminate upon the Warrant
Measurement Date.
(d) Each Significant Stockholder agrees to comply with its
obligations as a Holder under the registration rights provisions set forth in
Exhibit E hereto.
Section 6.21. Listing. Prior to issuance, Buyer shall use its
commercially reasonable efforts to cause to be approved for listing on the NYSE,
subject to official notice of issuance, all shares of Buyer Class A Common Stock
to be issued pursuant to Sections 3.2, 3.4 and 3.7 hereof and to be issued upon
exercise of, or in exchange for, the Warrants granted pursuant to Section 3.5
hereof on the NYSE.
Section 6.22. Registration Rights. Buyer shall take such actions
as are necessary to provide the registration rights set forth in Exhibit E
hereto to the holders of shares of Buyer Class A Common Stock issued pursuant to
Section 3.2, 3.4 or 3.7 or issuable upon exercise of, or issued in exchange for,
the Warrants granted pursuant to Section 3.5, and Buyer shall take such actions
to register shares of Buyer Class A Common Stock issuable thereunder as provided
therein. This Section 6.22 shall survive and be in full force and effect until
the Termination Date (as defined in Exhibit E hereto).
Section 6.23. Buyer Review of Disclosure Schedules.
Simultaneously with the execution and delivery of this Agreement, the Company
shall deliver to Buyer all Schedules required to be provided by the Company
under this Agreement (the "Disclosure Schedules"). The Company shall afford such
access to management as Buyer and its representatives may reasonably require in
their review of such Disclosure Schedules. The Company shall have the right to
supplement the Disclosure Schedules prior to 5 P.M., E.S.T., Friday, March 6,
1998; provided, however, that the Buyer shall have a reasonable opportunity to
review such supplemented schedules prior to 5 P.M., E.S.T., Friday, March 6,
1998. If Buyer notifies the Company in writing prior to 5 P.M., E.S.T., Friday,
March 6, 1998, that such Disclosure Schedules are not
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reasonably satisfactory to it, Buyer shall have the right to terminate this
Agreement. Such Disclosure Schedules so supplemented shall be deemed delivered
on the date hereof.
ARTICLE VII.
Conditions Precedent To Merger
------------------------------
The respective obligations of each party to effect the Merger
shall be subject to the satisfaction on or prior to the Closing Date of each of
the following conditions:
(a) All consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental authority or other regulatory
body, as may be required to be obtained by the Company or Buyer in connection
with the performance of this Agreement have been received; provided, however,
that such condition shall not be deemed satisfied if such consents,
authorizations, orders or approvals are conditioned upon the divestiture of
assets by the Buyer or the Company that would directly result in the loss of
more than 30% of the Company's revenues (as of the date hereof).
(b) Early termination shall have been granted or applicable
waiting periods shall have expired under the H-S-R Act in connection with the
transactions contemplated hereby.
(c) No governmental authority or other regulatory body (including
any court of competent jurisdiction ) shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent) which is
then in effect and has the effect of making illegal, or in any way prohibiting
the Merger (the Company and Buyer agreeing to use their commercially reasonable
efforts to have any such injunction lifted).
(d) No governmental authority or other regulatory body shall have
commenced any action, suit or proceeding seeking to enjoin or otherwise prohibit
the transactions contemplated hereby, nor shall there be a substantial
likelihood that any governmental authority or other regulatory body will seek to
commence any such action, suit or proceeding.
ARTICLE VIII.
Closing
-------
The closing (the "Closing") of the transactions contemplated by
this Agreement shall take place at the offices of Willkie Farr & Gallagher, 153
East 53rd Street, New York, New York, at 10:00 a.m. local time on the Closing
Date or at such other time and place as the parties may mutually agree.
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ARTICLE IX.
Representations and Warranties as of the Closing Date; Survival;
----------------------------------------------------------------
Material Breaches
-----------------
Section 9.1. Representations and Warranties as of the Closing
Date.
(a) The representations and warranties of Buyer and the Company
shall be deemed to be reaffirmed in all material respects at and as of Closing
Date as though made at and as of the Closing Date, except to the extent
contemplated by this Agreement, and except to the extent such representations
and warranties (i) speak as of the date hereof or a specified date (which
representations and warranties shall be deemed to be reaffirmed in all material
respects solely as of such date) or (ii) are already qualified by materiality,
in which event such representations and warranties shall be deemed to be
reaffirmed as of the appropriate date in all respects.
(b) On the Closing Date, each of the Company and the Buyer shall
deliver a certificate of an appropriate senior officer as to compliance with
Section 9.1(a).
(c) Not later than five (5) Business Days prior to the Closing,
the Company and Buyer will each supplement or amend the Schedules relating to
their respective representations and warranties in this Agreement in order to
make such representations true and correct as of the Closing Date. Such
supplemented or updated schedules shall not be deemed to cure (or affect the
rights of any party with respect to) any breach of any representation or
warranty made on the date hereof.
Section 9.2. Survival. The representations and warranties made by
Buyer, Sub or the Company and the covenants made by the Company or the
Significant Stockholders shall survive the execution and delivery of this
Agreement for a period ending 120 days after the Closing Date, and shall
terminate and have no further force or effect thereafter, except that the
covenants made by the Significant Stockholders in Sections 6.16, 6.18 and 6.20
shall survive until their expiration or termination in accordance with the terms
thereof, and except as set forth in Section 9.3 hereof. The covenants made by
Buyer and Sub shall survive the Closing except in accordance with the terms
thereof.
Section 9.3. Certain Material Breaches.
(a) If the Closing occurs, the sole and exclusive remedy of Buyer and
Sub in the event that any of the representations and warranties of the Company
(without giving effect to any qualifications contained in any representation and
warranty set forth in Article IV hereof with respect to any Material Adverse
Effect on the Company) fails to be true and correct (i) as of the date hereof
or, if any representation and warranty speaks as of a
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specified date, then as of such date or (ii) in the case of representations and
warranties that do not speak of a specified date then as of the Closing Date or
one or more of the covenants of the Company or the Significant Stockholders set
forth in this Agreement hereof fails to be performed on or prior to the Closing
Date is to cause the Aggregate Merger Shares to be adjusted to the extent
provided in Section 3.3. Each of Buyer and Sub, on the one hand, and the Company
and each Significant Stockholder, on the other hand, shall notify the other in
writing of each event or circumstance known to it that it discovers after the
date hereof constituting or causing a failure of any representation or warranty
to be true and correct as of the applicable date or a covenant made or agreed to
by the Company or any Significant Stockholder promptly after such event or
circumstance becomes known to it, but in any event no later than five (5)
Business Days prior to the Closing Date, or if Buyer or Sub obtains such
knowledge thereafter, Buyer shall notify the Indemnified Representative (as
defined in the Holdback Escrow Agreement)) in writing promptly after obtaining
such knowledge; provided, however, that in no event shall any notice given after
the Cut-off Date (as defined in the Holdback Escrow Agreement) result in Buyer
or Sub having any right to any adjustment in accordance with Section 3.3 or any
other remedy. Within two (2) Business Days after receiving any such notice from
the Company or a Significant Stockholder, Buyer shall inform the Company and the
Significant Stockholders in writing of Buyer's good faith estimate of the value
of any such failures of the representations and warranties (without giving
effect to any qualifiers as to Material Adverse Effect on the Company) to be
true and correct or such failures of covenants to be performed. If prior to the
Closing Date Buyer notifies the Company and the Significant Stockholders in
writing that (i) Buyer estimates that the value (determined in accordance with
Section 3.3(a)) of any such failures, individually or in the aggregate, exceeds
$75,000,000, (ii) such value is in excess of $75,000,000 and (iii) as a result
of such failures, Buyer is unable, after having used its good faith efforts, to
obtain the financing necessary to pay the Aggregate Cash Consideration, then
Buyer shall have the right to terminate this Agreement pursuant to Section
10.1(d) if there is a determination in accordance with the procedures set forth
below that the value reduction of such failures, individually or in the
aggregate, as calculated pursuant to Section 3.3(a) exceeds $75,000,000. Buyer
shall provide the Company and each Significant Stockholder with all information
reasonably requested in order to make a determination with respect to the value
reduction associated with any such failure or alleged failure. The parties
hereto shall negotiate in good faith to agree upon any such value reduction. If
such an agreement cannot be reached, then such value reduction shall be
determined pursuant to the dispute mechanisms set forth in Section 2.2(f) of the
Holdback Escrow Agreement (the date of final resolution shall be the
"Determination Date").
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(b) Breaches of the representations, warranties and covenants of
Buyer or Sub contained in this Agreement shall not give the Company a right to
terminate this Agreement, but shall instead entitle the holders of Outstanding
Company Shares immediately prior to the Effective Time to seek damages in
respect thereof. Each of Buyer and Sub, on the one hand, and the Company, on the
other hand, shall notify the other in writing of each event or circumstance
known to it that it discovers after the date hereof constituting or causing a
breach of any of the representations, warranties and covenants made by Buyer or
Sub promptly after such event or circumstance becomes known to it, but in any
event no later than five (5) Business Days prior to the Closing Date, or if
thereafter, then promptly after obtaining such knowledge.
ARTICLE X.
Termination of Agreement
Section 10.1. Termination. This Agreement may be terminated prior
to the Closing as follows:
(a) by either Buyer or the Company if the conditions specified in
Article VII have not been satisfied by November 30, 1998 (the "Termination
Date"); provided, however, that if the condition described in paragraph (d) of
Article VII is not satisfied prior to the Termination Date, no later than such
Termination Date, the Company may at its option given in writing to Buyer extend
the Termination Date to February 28, 1999;
(b) by either Buyer or the Company if a final and no longer
appealable permanent injunction (but not any temporary restraining order or
preliminary injunction) has been issued by final order of any federal or state
court in the United States which prevents the consummation of the Merger;
(c) by the Company if Buyer or Sub shall have breached any of
their respective obligations under Article VI of this Agreement in any material
respect and such breach continues for a period of ten days after the receipt of
notice of the breach from the Company;
(d) by Buyer pursuant to Section 6.23 or if the Company or any
Significant Stockholder shall have breached any of its representations,
warranties or covenants under the circumstances set forth in the fourth sentence
of Section 9.3(a) that give rise to Buyer's right to terminate this Agreement;
or
(e) at any time on or prior to the Closing Date, by mutual
written consent of Buyer and the Company.
Section 10.2. Effect of Termination. If this Agreement is
terminated and the transactions contemplated hereby are not consummated as
described above, this Agreement shall
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become void and be of no further force and effect, except for the provisions of
this Agreement relating to the obligations of parties under Sections 6.8 (Letter
of Credit), 6.12 (Confidentiality), 10.2 (Effect of Termination) and 10.3
(Amounts Payable in Connection with Termination). None of the parties hereto
shall have any liability in respect of a termination of this Agreement prior to
Closing, except to the extent set forth in Section 10.3 and except to the extent
that termination results from the intentional, willful or knowing violation of
the representations, warranties, covenants or agreements of such party under
this Agreement; provided, however, that notwithstanding anything to the contrary
contained herein, in the event of any such termination, Questor shall have no
liability for breach of any covenant contained herein.
Section 10.3. Amounts Payable in Connection with Termination.
(a) If this Agreement is terminated pursuant to Section 10.1(a)
or Section 10.1(b) (but only with respect to such Section 10.1(b) if such
permanent injunction relates to antitrust matters), the Company, upon providing
or receiving notice of such termination, shall have the right to immediately
draw the Letter of Credit in an amount equal to $7,500,000 as agreed liquidated
damages.
(b) If this Agreement is terminated for any reason, except
pursuant to Section 10.1(a), 10.1(b) (under the circumstances described in
Section 10.3(a)) or 10.1(d), the Company, upon providing or receiving notice of
such termination, shall have the right to immediately draw the Letter of Credit
in the full amount of $20,000,000 as agreed partial liquidated damages;
provided, however, that the Company shall be entitled to recovery from Buyer for
any damages suffered by it as a result of such termination up to an amount equal
to $75,000,000 (including the amount drawn under the Letter of Credit); and
provided, further, that the Company shall have no obligation to accept
liquidated damages and at its option shall have the right to seek specific
performance.
ARTICLE XI.
Definitions
Section 11.1. Definitions. The following terms when used in this
Agreement shall have the following meanings:
"Accredited Investor" shall have the meaning specified in
Regulation D promulgated under the Securities Act.
"Acquisition Proposal" has the meaning set forth in Section
6.3(a).
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"Affiliate" (or "affiliates" as the context may require), with
respect to any person, means any other person controlling, controlled by or
under common control with such person.
"Aggregate Cash Consideration" has the meaning set forth in
Section 3.1(b).
"Aggregate Merger Shares" has the meaning set forth in Section
3.1(a).
"Agreement" has the meaning set forth in the preamble hereof.
"Annual Disposition Price" has the meaning set forth in Section
3.4(b).
"Annual Make-Whole Amount" has the meaning set forth in Section
3.4(b).
"Annual Measurement Date" has the meaning set forth in Section
3.4(b).
"Annual Shares" has the meaning set forth in Section 3.4(b).
"Appraisal Addition Amount" has the meaning set forth in Section
3.8(b).
"Appraisal Reduction Amount" has the meaning set forth in Section
3.8(b).
"Audited Financial Statements" means the consolidated statements
of income, changes in stockholders' equity and cash flow of the Company and its
Subsidiaries for the fiscal year ended December 31, 1997, and a consolidated
balance sheet of the Company and its Subsidiaries as at the end of such year, in
each case audited by Coopers & Lybrand.
"Blackout Period" has the meaning set forth in Section 6.20.
"Business Combination" has the meaning set forth in Section 3.16.
"Business Day" means any day other than a Saturday or a Sunday,
or a day on which banking institutions in the State of New York are obligated by
law or executive order to close.
"Buyer" has the meaning set forth in the preamble hereof.
"Buyer Approvals" has the meaning set forth in Section 6.6.
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"Buyer Change of Control Event" shall mean a transaction or
series of related transactions in which (i) a person or group acquires shares of
Buyer which represent a majority of the outstanding voting shares after giving
effect to such transaction or (ii) the members of the Board of Directors of
Buyer immediately prior to such transaction(s) no longer constitute a majority
of the Board of Directors of Buyer or any successor thereto immediately
following such transaction(s).
"Buyer Class A Common Stock" has the meaning set forth in Section
5.2(a).
"Buyer Class B Common Stock" has the meaning set forth in Section
5.2(a).
"Buyer Common Stock" has the meaning set forth in Section 5.2(a).
"Buyer Public Reports" has the meaning set forth in Section 5.4.
"Certificates" has the meaning set forth in Section 3.9(a).
"Closing" has the meaning set forth in Article VIII.
"Closing Date" means (a) the later of (i) the second Business Day
following the day on which the conditions to the consummation of the Merger
specified in Article VII have been satisfied or waived, (ii) April 20, 1998,
(iii) the date that is thirty (30) days after the meeting of Buyer's
stockholders contemplated in Section 6.19 hereof, (iv) the date that is thirty
(30) days after the earliest to occur of receipt of (A) a grant of early
termination, and (B) the expiration of all applicable waiting periods (including
extensions thereof), in each case under the H-S-R Act, in connection with the
transactions contemplated hereby, and (v) if a notice has been given by Buyer
under the fourth sentence of Section 9.3(a), the date that is fifteen (15) days
after the Determination Date or (b) such other date as the parties hereto agree
in writing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preamble hereof.
"Company Approvals" has the meaning set forth in Section 6.7.
"Company Common Stock" has the meaning set forth in Section
4.2(a).
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"Company Intellectual Property" has the meaning set forth in
Section 4.8.
"Company's Knowledge" or similar language means the actual
knowledge of the Company's Chief Executive Officer, President, Chief Financial
Officer and General Counsel and such knowledge which each such person should be
reasonably expected to have in such capacity.
"Company Public Reports" has the meaning set forth in Section
4.4.
"Company Stockholders" (or "Company Stockholder" as the context
may require) has the meaning set forth in Section 3.2(a).
"Company Subsidiary Securities" has the meaning set forth in
Section 4.1(e).
"Confidentiality Agreement" has the meaning set forth in Section
12.3.
"Contingent Additional Consideration" has the meaning set forth
in Section 3.4(a).
"Contracts" has the meaning set forth in Section 4.16.
"Controlling Interest", with respect to any person, shall mean
the ownership of shares which represent 40% of the outstanding voting stock of
such person.
"Copyright License Agreement" shall mean the copyright agreement,
dated October 17, 1996, by and between Ryder Truck Rental, Inc., a Florida
corporation and the Company.
"Delaware Corporation Law" has the meaning set forth in Section
1.2(a).
"Designee" has the meaning set forth in Section 6.10.
"Determination Date" has the meaning set forth in Section 9.3(b).
"Disclosed Leases" has the meaning set forth in Section 4.12(b).
"Disclosure Schedule" has the meaning set forth in Section 6.23.
"Disposed Annual Share" (or "Disposed Annual Shares" as the
context may require) has the meaning set forth in Section 3.4(b).
"Disposed Annual Value" has the meaning set forth in Section
3.4(b).
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"Disposed Final Shares" has the meaning set forth in Section
3.4(c).
"Disposed Final Value" has the meaning set forth in Section
3.4(c).
"Dissenting Shares" has the meaning set forth in Section 3.8.
"Distribution" (or "Distributions" as the context may require)
means any distribution of cash, securities or property on or in respect of the
Company Common Stock or Buyer Common Stock, as the case may be, whether as a
dividend or otherwise.
"Effective Time" has the meaning set forth in Section 1.2(b).
"Employee Benefit Plans" has the meaning set forth in Section
4.7(a).
"Environmental Law" has the meaning set forth in Section 4.10(b).
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Claim Event" has the meaning set forth in Section 3.6(a).
"Escrow Holdback Shares" has the meaning set forth in Section
3.6(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations and rulings issued thereunder.
"Exchange Agent" has the meaning set forth in Section 3.9(a).
"Exercise Difference" has the meaning set forth in Section
3.7(a).
"Fees" means the fees of Questor Management Company and Willkie
Farr & Gallagher incurred in connection with this Agreement and other fees
payable by the Company to third parties as a result of the execution, delivery
and performance of this Agreement.
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"Final Disposition Price" has the meaning set forth in Section
3.4(c).
"Final Make-Whole Amount" has the meaning set forth in Section
3.4(c).
"Final Measurement Date" has the meaning set forth in Section
3.4(c).
"Final Shares" has the meaning set forth in Section 3.4(c).
"GAAP" means generally accepted accounting principles in the
United States of America from time to time in effect.
"Governmental Entity" (or "Governmental Entities" as the context
may require) means (a) any international, foreign, federal, state, county, local
or municipal government or administrative agency or political subdivision
thereof, (b) any governmental agency, authority, board, bureau, commission,
department or instrumentality, (c) any court or administrative tribunal, (d) any
non-governmental agency, tribunal or entity that is vested by a governmental
agency with applicable jurisdiction, or (e) any arbitration tribunal or other
non-governmental authority with applicable jurisdiction.
"H-S-R Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Holdback Escrow Agent" has the meaning set forth in Section
3.6(a).
"Holdback Escrow Agreement" has the meaning set forth in Section
3.6(a).
"Interim Balance Sheet" has the meaning set forth in Section 4.4.
"Interim Financial Statements" has the meaning set forth in
Section 4.4.
"IRS" means the Internal Revenue Service or any successor agency
or department.
"Lease" (or "Leases" as the context may require) has the meaning
set forth in Section 4.12(b).
"Letter of Credit" has the meaning set forth in Section 6.8.
"License" has the meaning set forth in Section 4.22.
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"lien or other encumbrance" (or "liens or other encumbrances" or
"liens or other encumbrance" or "lien or other encumbrances" or similar language
as the context may require or any similar formulation) means any lien, claim,
pledge, mortgage, assessment, security interest, charge, option, right of first
refusal, easement, servitude, adverse claim, transfer restriction under any
stockholder or similar agreement or other encumbrance of any kind.
"Madison Dearborn" means Madison Dearborn Capital Partners, L.P.,
a Delaware limited partnership.
"Make-Whole Shares" has the meaning set forth in Section 3.4(d).
"Market Value" of any share of capital stock as of a specific
date means the volume-weighted average closing prices on the NYSE (or, if such
security is not listed on the NYSE, such other principal exchange or
over-the-counter market on which such security is listed) for the 30 consecutive
days on which trading of such security occurs ending at the close of trading on
such date (or the last trading day prior to such date).
"Material Adverse Effect" has the meaning set forth in Section
4.1(b).
"Materiality Threshold" has the meaning set forth in Section
3.3(a).
"Maximum Merger Shares" has the meaning set forth in Section
1.1(b).
"Merger" has the meaning set forth in the recitals.
"Merger Consideration" has the meaning set forth in Section
3.2(a).
"Minimum Merger Shares" has the meaning set forth in Section
1.1(b)
"Multiemployer Plan" has the meaning set forth in Section 4.7(a).
"NYSE" means the New York Stock Exchange, Inc.
"Options" has the meaning set forth in Section 3.7(a).
"Original Holder" has the meaning set forth in Section 3.4(a).
"Original Shares" has the meaning set forth in Section 3.4(a).
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"Outstanding Company Shares" means the total number of shares of
Company Common Stock outstanding immediately prior to the Effective Time,
excluding any treasury shares.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency or department.
"Permitted Liens" means (1) statutory liens for Taxes not yet due
and payable, (2) imperfections of title with respect to any Company asset, and
statutory liens or other similar liens arising in the ordinary course of
business with respect to any Company asset, in each case, that do not have a
material adverse effect on the value or use of such asset, (3) mechanics liens
for work performed on any Company asset for which payment therefor is not in
default and (4) those liens or other encumbrances disclosed in Schedule 4.12.
"Permitted Transferee", with respect to any person, means a
transferee (i) that controls, is controlled by, or is under common control with
the transferor, (ii) who is a spouse, child, parent or sibling of the
transferor, or (iii) with respect to a partnership, that is a limited or general
partner of such partnership. For purposes of this definition the word "control"
means with respect to any person, ownership of equity interests representing 50%
or more of the voting interest of such person and the words "controlling" and
"controlled" have correlative meanings.
"person" (or "persons" as the context may require) means any
individual, corporation, partnership, firm, joint venture, limited liability
company, association, joint-stock company, trust, unincorporated organization,
Governmental Entity or other entity.
"property" (or "properties" as the context may require) means
real, personal or mixed property, tangible or intangible.
"Proxy Statement" has the meaning set forth in Section 4.11.
"Questor" means, collectively, Questor Partners Fund, L.P., a
Delaware limited partnership and Questor Side-by-Side Partners, L.P., a Delaware
limited partnership.
"Receiving Party" has the meaning set forth in Section 12.1.
"Reduction Amount" has the meaning set forth in Section 3.3(b).
"Releasing Party" has the meaning set forth in Section 12.1.
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"Remaining Annual Shares" has the meaning set forth in Section
3.4(b).
"Remaining Final Shares" has the meaning set forth in Section
3.4(c).
"S-3" has the meaning set forth in Section 4.11.
"S-4" has the meaning set forth in Section 3.14.
"SEC" means the Securities and Exchange Commission or any
successor agency or department.
"Securities Act" means the Securities Act of 1933, as amended,
and the regulations and rulings issued thereunder.
"Significant Stockholders" (or "Significant Stockholder" as the
context may require) has the meaning set forth in the preamble hereof.
"Software License Agreement" means the software license
agreement, dated October 17, 1996, by and between Ryder Truck Rental, Inc., a
Florida corporation, and the Company.
"Special Covenants" has the meaning set forth in Section 12.7.
"Stock Option Plans" has the meaning set forth in Section 3.7(a).
"Sub" has the meaning set forth in the preamble hereof.
"Subsidiaries" (or "Subsidiary" as the context may require),
means each entity as to which a person, directly or indirectly, owns or has the
power to vote, or to exercise a controlling influence with respect to, 50% or
more of the securities of any class of such entity, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the election
of directors (or persons performing similar functions) of such entity.
"Surviving Corporation" has the meaning set forth in Section
1.2(a).
"Surviving Person" has the meaning set forth in Section 3.16.
"Taxes" means all taxes, assessments, charges, duties, fees,
levies or other governmental charges (including interest, penalties or additions
associated therewith) including federal, state, city, county, foreign or other
income, franchise, capital stock, real property, personal property, tangible,
withholding, FICA, unemployment compensation, disability, transfer, sales, use,
excise, gross receipts and all other taxes of any kind for
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which the Company or any Subsidiary of the Company is liable imposed by the
United States or any state, county, city, country or foreign government or
subdivision or agency thereof.
"Tax Return" means a report, return or other information required
to be supplied to a governmental entity with respect to Taxes including, where
permitted or required, combined or consolidated returns for a group of entities.
"Termination Date" has the meaning set forth in Section 10.1(a).
"Total Disposed Annual Value" has the meaning set forth in
Section 3.4(b).
"Total Disposed Final Value" has the meaning set forth in Section
3.4(c).
"Total Remaining Annual Value" has the meaning set forth in
Section 3.4(b).
"Total Remaining Final Value" has the meaning set forth in
Section 3.4(c).
"Total Warrant Value" has the meaning set forth in Section
3.5(a).
"Trademark License Agreement" means the trademark license
agreement, dated as of October 17, 1996, between Ryder System, Inc., a Florida
corporation and the Company.
"Transaction Price" means $32.9955 per share of Buyer Class A
Common Stock.
"Transfer Tax" (or "Transfer Taxes" as the context may require)
has the meaning set forth in Section 6.17.
"Transferred Intellectual Property" means transferred patents,
transferred software and transferred trademarks as set forth on Schedule 4.8.
"Warrants" (or "Warrant" as the context may require) has the
meaning set forth in Section 3.5(a).
"Warrant Measurement Date" has the meaning set forth in Section
3.5(a).
"Warrant Value Amount" has the meaning set forth in Section
3.5(a).
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ARTICLE XII.
Miscellaneous
-------------
Section 12.1. Publicity. So long as this Agreement is in effect,
except as may otherwise be required by law or stock exchange regulations, prior
to making a press release that any party (a "Releasing Party") may determine to
issue in connection with the transactions contemplated by this Agreement, the
Releasing Party will, to the extent possible, promptly notify the other party of
such conclusion and provide to the other party (the "Receiving Party") a draft
of such press release. If the Receiving Party disagrees with any statement made
by the Releasing Party in such press release, as issued, the Receiving Party
shall be entitled to issue its own press release regarding the matters covered
in the press release issued by the Releasing Party. Buyer and the Company shall
jointly distribute a press release in the form attached hereto as Exhibit D
announcing the Merger and related transactions.
Section 12.2. Notices. Any notice or other communication required
or permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered, express mail or nationally recognized courier service, postage
prepaid. Any such notice shall be deemed given when so delivered personally or
by courier or successfully telegraphed, telexed or sent by facsimile
transmission or, if mailed, five days after the date of deposit in the United
States mails, as follows:
(i) if to Buyer or Sub to:
----------------------
Budget Group, Inc.
125 Basin Street
Suite 210
Daytona Beach, Florida 32114
Attn: Chief Executive Officer
Telecopy No.: (904) 226-8380
with a concurrent copy to:
--------------------------
Budget Group, Inc.
4225 Naperville Road
Lisle, Illinois 60532-3662
Attn: General Counsel
Telecopy No.: (630) 955-7810
and an additional concurrent copy to:
-------------------------------------
King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: C. William Baxley, Esq.
Telecopy No.: 404-572-5100
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(ii) if to the Company to:
---------------------
Ryder TRS, Inc.
One Civic Center
1560 Broadway, Suite 1800
Denver, Colorado 80202
Attn: Michael Zawalski
Telecopy No.: (303) 376-0783
with a concurrent copy to:
--------------------------
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Thomas M. Cerabino, Esq.
Telecopy No.: (212) 821-8111
and an additional concurrent copy to:
Questor Management Company
4000 Town Center
Suite 530
Southfield, Michigan 48075
Attn: Robert E. Shields, Esq.
Telecopy No.: (248) 213-2215
Any party may by notice given in accordance with this Section
12.2 to the other parties designate another address or person for receipt of
notices hereunder.
Section 12.3. Entire Agreement. This Agreement (including the
Exhibits, Annexes and Schedules hereto) and the agreements contemplated hereby
contain the entire agreement among the parties with respect to the subject
matter hereof, and supersede all prior agreements, written or oral, with respect
thereto. Notwithstanding the execution of this Agreement, the confidentiality
letter by and between Buyer and Questor, as the same may be amended, modified or
supplemented from time to time (the "Confidentiality Agreement"), shall remain
in full force and effect and shall not be superseded by this Agreement.
Section 12.4. Waivers and Amendments; Non Contractual Remedies;
Preservation of Remedies; Liability. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by each of the parties or, in the case of waiver, by
the party waiving compliance. After the Closing Date, no amendment or
modification may be made (i) to the definition of Special Covenants or to any
other provision of this Agreement that affects any of the rights of the Original
Holders with respect to the Special Covenants without the written consent of 51%
of the
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Original Holders or (ii) to Section 6.11 that adversely affects the rights of
the indemnified parties referred to thereunder. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof. Nor shall any waiver on the part of any party of any such right,
power or privilege, nor any single or partial exercise of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies of any party based upon,
arising out of or otherwise in respect of any inaccuracy in or breach of any
representation, warranty, covenant or agreement contained in this Agreement
shall in no way be limited by the fact that the act, omission, occurrence or
other state of facts upon which any claim of any such inaccuracy or breach is
based may also be the subject matter of any other representation, warranty,
covenant or agreement contained in this Agreement (or in any other agreement
between the parties) as to which there is no inaccuracy or breach. The
limitations on claims set forth in this Section 12.4 and elsewhere in this
Agreement (including Article X) shall not apply in the case of fraud on the part
of the Company, the Significant Stockholders or Buyer, as the case may be.
Section 12.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Section 12.6. Binding Effect; No Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and assigns and heirs and legal representatives. Neither this
Agreement, nor any right hereunder, may be assigned by any party without the
prior written consent of the other party hereto, provided however, that Buyer
may assign this Agreement or any of its rights hereunder to one or more of its
Subsidiaries so long as Buyer remains obligated hereunder, and provided further,
that notwithstanding anything in this Section 12.6, Buyer shall not be released
from its obligations under Article III of this Agreement.
Section 12.7. Third Party Beneficiaries. Except for Article III,
Sections 6.10 (Buyer Board of Directors), 6.17 (Transfer Taxes), 6.20 (Buyer
Stock Purchases and Repurchases), 6.21 (Listing), 6.22 (Registration Rights),
9.3 (Certain Material Breaches) and 10.3 (Fees and Expenses), this Section 12.7
and Exhibit E (collectively, the "Special Covenants"), nothing in this Agreement
is intended or shall be construed to give any person, other than the parties
hereto, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein. On and after the Closing Date,
each of the holders of Original Shares shall be deemed to be third party
beneficiaries with respect to the Special Covenants, and each shall be entitled
to enforce such provisions directly against Buyer or the Surviving Corporation,
as applicable, to the same extent as if such person were a party hereto. In
addition,
65
<PAGE>
each of the indemnified parties referred to in Section 6.11 shall be entitled to
enforce the provisions thereof directly against Buyer or the Surviving
Corporation, as applicable, to the same extent as if such indemnified person
were a party hereto.
Section 12.8. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
Section 12.9. Exhibits, Schedules and Annexes. The Exhibits,
Schedules and Annexes are a part of this Agreement as if fully set forth herein.
All references herein to Articles, Sections, subsections, clauses, Exhibits,
Annexes and Schedules shall be deemed references to such parts of this
Agreement, unless the context shall otherwise require.
Section 12.10. Headings. The headings in this Agreement are for
reference only, and shall not affect the interpretation of this Agreement.
Section 12.11. Submission to Jurisdiction; Venue. Any action or
proceeding against any party hereto with respect to this Agreement, except for
(a) any action, proceeding or other dispute with respect to any calculations
made under Section 3.5 (which shall be resolved in the manner set forth in
Section 3.5(c)), and (b) any action, proceeding or dispute with respect to any
adjustment to the Aggregate Merger Shares (which shall be resolved in accordance
with Sections 3.3 and 9.3 of this Agreement and in accordance with Section 2.1
of the Holdback Escrow Agreement), shall be brought in the Court of Chancery of
the State of Delaware or if (but only if) such court does not have subject
matter jurisdiction over such action or proceedings, in the courts of the state
of Delaware and, by execution and delivery of this Agreement, each party hereto
hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. Each party hereto
irrevocably consents to the service of process at any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such party at its address set
forth in Section 12.2, such service to become effective thirty days after such
mailing. Nothing herein shall affect the right of any party hereto to serve
process on any other party hereto in any other manner permitted by law. Each
party hereto irrevocably waives any objection which it may now have or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement brought in the courts
referred to above and hereby further irrevocably waives and agrees not to plead
or claim in
66
<PAGE>
any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
Section 12.12. Severability. If any court of competent
jurisdiction determines that any provision of this Agreement is not enforceable
in accordance with its terms, then such provision shall be deemed to be modified
so as to apply such provision, as modified, to the protection of the legitimate
interests of the parties hereto to the fullest extent legally permissible and
shall not affect the validity or enforceability of the remaining provisions of
this Agreement.
67
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
BUDGET GROUP, INC.
By: /s/ SANFORD MILLER
--------------------------------
Sanford Miller
Chief Executive Officer
BDG CORPORATION
By: /s/ SCOTT WHITE
--------------------------------
Scott White
President
RYDER TRS, INC.
By: /s/ JAY ALIX
--------------------------------
Jay Alix
Chairman of the Board and
Chief Executive Officer
68
<PAGE>
With respect to Sections 3.4(g),
6.1, 6.3, 6.4(a), 6.9(b), 6.12, 6.18
and 6.20 hereof
QUESTOR PARTNERS FUND, L.P.,
By: Questor General Partner, L.P.,
its general partner
By: Questor Principals, Inc.,
its general partner
By: /s/ JAY ALIX
--------------------------------
Jay Alix
Managing Principal
QUESTOR SIDE-BY-SIDE PARTNERS, L.P.,
By: Questor Principals, Inc.,
its general partner
By: /s/ JAY ALIX
-------------------------------
Jay Alix
Managing Principal
69
<PAGE>
With respect to Sections 6.3(b),
6.18 and 6.20 hereof
MADISON DEARBORN CAPITAL PARTNERS, L.P.
By: Madison Dearborn Partners, L.P.,
its general partner
By: Madison Dearborn Partners, Inc.,
its general partner
By: /s/ THOMAS R. REUSCHE
-------------------------------
Thomas R. Reusche
Vice President
70
<PAGE>
AMENDMENT NO. 1
TO AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 1 dated as of March 16, 1998 to the Agreement and
Plan of Merger, dated as of March 4, 1998, by and among Budget Group, Inc.
("Buyer"), BDG Corporation ("Sub"), Ryder TRS, Inc. (the "Company"), and
certain other parties (the "Merger Agreement"). Capitalized terms not otherwise
defined herein have the meanings given to them in the Merger Agreement.
WHEREAS, the parties to the Merger Agreement agreed to merge Sub
with and into the Company in accordance with the terms and conditions of the
Merger Agreement and Section 251 of the General Corporation Law of the State of
Delaware;
WHEREAS, the parties desire to amend certain provisions of the
Merger Agreement as more fully set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and in consideration of the
agreements herein, the parties hereto agree as follows:
Section 1.1(b) of the Merger Agreement is amended and restated in
its entirety to read as follows:
"(b) an aggregate number of shares of Buyer Class A Common
Stock issuable to all such holders equal to a minimum of 1,332,909
shares (the "Minimum Merger Shares") and a maximum of 3,605,946 shares
(the "Maximum Merger Shares") (in each case less any shares of Buyer
Class A Common Stock issued to the holders of Options pursuant to
Section 3.7), with the precise number thereof determined as set forth in
Section 3.1 and subject to adjustment as provided in Article III;"
Section 3.6(a) of the Merger Agreement is amended and restated in
its entirety to read as follows:
"(a) At the Effective Time, 1,818,430 shares of Buyer
Class A Common Stock (if the Maximum Merger Shares are issued), or
1,332,909 shares of Buyer Class A Common Stock (if the Minimum Merger
Shares are issued) (as the case may be, the "Escrow Holdback Shares")
shall be deposited in escrow with an escrow agent mutually agreed upon
by Buyer and the Company prior to the Closing (the "Holdback Escrow
Agent"), to be held and administered in accordance with the terms and
conditions of a Holdback Escrow Agreement, substantially in the form
attached hereto as Exhibit B (the "Holdback Escrow Agreement"), against
which Escrow Holdback Shares Buyer shall be entitled, in accordance with
the terms
<PAGE>
of the Holdback Escrow Agreement, to recover Damages (as defined in the
Holdback Escrow Agreement) that may be suffered by Buyer and that are
indemnifiable in accordance with the terms of the Holdback Escrow
Agreement (an "Escrow Claim Event")."
Section 3.5(b) (with respect to the heading thereto only) of the
Merger Agreement is amended to read as follows:
"(b) Determination of Warrant Shares."
The text contained in Section 3.5(b) shall not be modified hereby
and shall remain in full force and effect as written in the Merger Agreement.
Section 2.1(a) of Exhibit E to the Merger Agreement is amended
and restated in its entirety to read as follows:
"(a) As soon as practicable, but in any event no later
than 15 days after the Effective Time, Buyer shall file a "shelf"
registration statement pursuant to Rule 415 under the Securities Act
(the "Registration Statement") with respect to the Registrable
Securities to be issued to the Holders pursuant to the Merger Agreement.
Buyer agrees that the Registration Statement will cover, in the event
the Minimum Merger Shares are issued in the Merger, 1,332,909 shares of
Buyer Class A Common Stock or, in the event the Maximum Merger Shares
are issued in the Merger, 3,605,946 shares of Buyer Class A Common
Stock. In the event that the number of shares of Buyer Class A Common
Stock that are covered by the Registration Statement is less than the
number of Registrable Securities, Buyer shall, as promptly as
practicable after the issuance of Registrable Securities not covered by
the Registration Statement, file an additional "shelf" registration
statement and Buyer shall comply with all of its obligations set forth
in this Exhibit E with respect to such additional registration statement
to the same extent as if such registration statement were the
Registration Statement. Buyer shall use its commercially reasonable
efforts to (i) have the Registration Statement declared effective on or
before the Target Date, and (ii) keep the Registration Statement
continuously effective from the date such Registration Statement is
declared effective until the Termination Date."
###
The Company represents and warrants to Buyer that this Amendment
has been duly executed and delivered by the Company, the form of this Amendment
has been approved by the Board of Directors of the Company and a majority of the
holders of Company Common Stock and no further corporate authorization on the
part of the Company is necessary to consummate the transactions contemplated by
this Amendment.
-2-
<PAGE>
This Amendment constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with its terms,
except to the extent enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether considered
in a proceeding in equity or at law).
Buyer represents and warrants to the Company that this Amendment
has been duly executed and delivered by Buyer and Sub and, this Amendment has
been approved by Buyer's and Sub's Board of Directors and by a majority of
holders of Sub's common stock, and no further corporate authorization on the
part of Buyer or Sub is necessary to consummate the transactions contemplated by
this Amendment.
This Amendment constitutes a valid and binding agreement of Buyer
and Sub and is enforceable against Buyer and Sub in accordance with its terms,
except to the extent enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether considered
in a proceeding in equity or at law).
The Merger Agreement is hereby reaffirmed in all respects and
shall remain in full force and effect in accordance with its terms except as
amended or modified by this Amendment.
This Amendment may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
-3-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment
as of the date first written above.
BUDGET GROUP, INC.
By: /s/ SANFORD MILLER
-------------------------------------
Sanford Miller
Chief Executive Officer
BDG CORPORATION
By: /s/ SCOTT WHITE
-------------------------------------
Scott White
President
RYDER TRS, INC.
By: /s/ JAY ALIX
-------------------------------------
Jay Alix
Chairman of the Board and Chief
Executive Officer
-4-
<PAGE>
QUESTOR PARTNERS FUND, L.P.,
By: Questor General Partner, L.P.
its general partner
By: Questor Principals, Inc.,
its general partner
By: /s/ JAY ALIX
-------------------------------------
Jay Alix
Managing Principal
QUESTOR SIDE-BY-SIDE PARTNERS, L.P.,
By: Questor Principals, Inc.,
its general partner
By: /s/ JAY ALIX
-------------------------------------
Jay Alix
Managing Principal
MADISON DEARBORN CAPITAL PARTNERS, L.P.
By: Madison Dearborn Partners, L.P.
its general partner
By: Madison Dearborn Partners, Inc.,
its general partner
By: /s/ THOMAS R. REUSCHE
------------------------------------
Thomas R. REUSCHE
Vice President
-5-
<PAGE>
AMENDMENT NO. 2
TO AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 2 dated as of June 19, 1998 to the Agreement and
Plan of Merger, dated as of March 4, 1998, by and among Budget Group, Inc.
("Buyer"), BDG Corporation ("Sub"), Ryder TRS, Inc. (the "Company"), and certain
other parties, as amended on March 16, 1998 (as so amended, the "Merger
Agreement"). Capitalized terms not otherwise defined herein have the meanings
given to them in the Merger Agreement.
WHEREAS, the parties to the Merger Agreement agreed to merge Sub
with and into the Company in accordance with the terms and conditions of the
Merger Agreement and Section 251 of the General Corporation Law of the State of
Delaware;
WHEREAS, the parties desire to amend certain provisions of the
Merger Agreement as more fully set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and in consideration of the
agreements herein, the parties hereto agree as follows:
A. Section 1.1(b) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"(b) an aggregate number of shares of Buyer Class
A Common Stock issuable to all such holders equal to a minimum of
1,182,182 shares (the "Minimum Merger Shares") and a maximum of
3,455,219 shares (the "Maximum Merger Shares") (in each case less
any shares of Buyer Class A Common Stock issued to the holders of
Options pursuant to Section 3.7), with the precise number thereof
determined as set forth in Section 3.1 and subject to adjustment
as provided in Article III;"
B. Section 3.1(b) of the Merger Agreement is amended and restated
in its entirety to read as follows:
"(a) The total amount of cash to be paid in the
Merger to the holders of the Outstanding Company Shares under
Section 3.2(a) (the "Aggregate Cash Consideration") shall be (i)
if the Maximum Merger Shares are issued, $125,000,000, or (ii) if
the Minimum Merger Shares are issued, $200,000,000."
C. Section 3.3 of the Merger Agreement is hereby amended by
adding (i) at the beginning of each sentence in clause (a) the words "Subject to
the terms and conditions set forth in Section 3.3(c) below," (ii) in clause (b)
on the fourth line
<PAGE>
thereof after the word "resulting", the words ", subject to the terms and
conditions set forth in Section 3.3(c) below," and (iii) by adding a new clause
(c) after clause (b) thereof to read as follows:
"(c) Notwithstanding anything to the contrary
contained herein, the parties hereto agree that (i) any item or
claim set forth on Schedule X attached hereto shall not, and
shall not be deemed to, constitute a breach as of any date of any
representation, warranty or covenant of the Company or, if
applicable, of any Significant Stockholder ("Excluded Alleged
Breaches"), and (ii) no Excluded Alleged Breach shall give rise
to any adjustment under Section 3.3 and all Excluded Alleged
Breaches shall be excluded from the calculation of the
Materiality Threshold. For the avoidance of doubt, the parties
hereto agree that the following items are Excluded Alleged
Breaches: (i) any impairment, write-off or decrease in value of
(1) the current and long-term deferred income taxes recorded on
the Company's consolidated financial statements and (2)
capitalized software costs of RyderFirst, Yield Management and
Transfer Optimization Model and computer hardware related to
these three items recorded on the Company's consolidated
financial statements, (ii) any cost associated with upgrading,
enhancing, replacing, substituting or modifying existing software
or applications used in operating the business of the Company and
its Subsidiaries and (iii) any cost associated with transferring
existing software, software in development, hardware and related
support equipment, and information system support services."
D. Section 3.5(a) of the Merger Agreement is hereby amended by
replacing (i) the words "$20 million" twice in the last sentence of the first
paragraph with the words "$19 million" in each case, and (ii) the second
sentence of the second paragraph with the following sentence: "Buyer shall have
the right to buy all the Warrants, in whole and not in part, by paying the Total
Warrant Value for each Original Holder and its Permitted Transferee to the
holder of such Warrant either in immediately available funds or, except as
provided below, in shares of Buyer Class A Common Stock valued at the Market
Value per share of Buyer Class A Common Stock as of the Warrant Measurement Date
(but not in a combination of both); provided, however, that Buyer shall not have
the option set forth above and Buyer shall pay the Total Warrant Value in
immediately available funds to each Warrant holder, if Buyer Class A Common
Stock is no longer listed on the NYSE or another national securities exchange or
automated quotation system."
E. Section 4.14 of the Merger Agreement is hereby amended by
inserting on the second line thereof after the words "Management Company" the
words "and Madison Dearborn Partners, L.P.".
-2-
<PAGE>
F. A new Section 5.13 of the Merger Agreement is inserted after
Section 5.12 of the Merger Agreement to read as follows:
"Section 5.13. Closing Date Representation. Buyer
represents and warrants that as of the Closing Date and other
than any Excluded Alleged Breach, neither Buyer nor any of its
officers, directors, employees, agents, Affiliates, financial
advisers, investment bankers, accountants, auditors or other
advisers, has knowledge of any event or circumstance constituting
or causing a failure of any representation or warranty of the
Company or any Significant Stockholder contained in this
Agreement to be true and correct as of any date or a failure of
any covenant made or agreed to by the Company or any Significant
Stockholder contained in this Agreement to be performed on or
prior to the Closing Date."
G. Section 9.1 of the Merger Agreement is hereby amended by
adding the following sentence at the end of clause (a): "Notwithstanding
anything to the contrary contained herein, no representations and warranties of
the Company shall be deemed reaffirmed with respect to any Excluded Alleged
Breach".
H. Section 9.2 of the Merger Agreement is hereby amended by
adding on the third line thereof after the words "Significant Stockholders" the
following words, "except, in each case, with respect to any Excluded Alleged
Breach."
I. Section 9.3(a) of the Merger Agreement is hereby amended by
(i) inserting in the first sentence thereof after the words "Section 3.3" the
following words: ", it being understood that as provided in Section 3.3, there
is no breach or any adjustment with respect to any Excluded Alleged Breach,"
(ii) inserting in the second sentence thereof after the words "Escrow
Agreement)" the following words: "or with respect to any Excluded Alleged
Breach," and (iii) replacing the phrase "Indemnified Representative" with the
phrase "Indemnification Representative".
J. Pursuant to Section 3.5(a) of the Merger Agreement, the
parties hereto acknowledge that the form of Warrant attached hereto as Schedule
Y shall be deemed, together with the Warrant Assumptions (as such term is
defined in Section 3.5(a) of the Merger Agreement), to become a part of Exhibit
A to the Merger Agreement.
K. Exhibit B of the Merger Agreement is hereby amended by adding
the following sentence at the end of Section 2.1(a) of the Holdback Escrow
Agreement: "For the avoidance of doubt, the parties hereto agree that the
Excluded Alleged Breaches (as such term is defined in the Merger Agreement)
shall not give rise to any Damages."
-3-
<PAGE>
L. Section 2.1(a) of Exhibit E to the Merger Agreement is amended
and restated in its entirety to read as follows:
"(a) As soon as practicable, but in any event no later
than 15 days after the Effective Time, Buyer shall file a "shelf"
registration statement pursuant to Rule 415 under the Securities Act
(the "Registration Statement") with respect to the Registrable
Securities to be issued to the Holders pursuant to the Merger Agreement.
Buyer agrees that the Registration Statement will cover, in the event
the Minimum Merger Shares are issued in the Merger, 1,182,182 shares of
Buyer Class A Common Stock or, in the event the Maximum Merger Shares
are issued in the Merger, 3,455,219 shares of Buyer Class A Common
Stock. In the event that the number of shares of Buyer Class A Common
Stock that are covered by the Registration Statement is less than the
number of Registrable Securities, Buyer shall, as promptly as
practicable after the issuance of Registrable Securities not covered by
the Registration Statement, file an additional "shelf" registration
statement and Buyer shall comply with all of its obligations set forth
in this Exhibit E with respect to such additional registration statement
to the same extent as if such registration statement were the
Registration Statement. Buyer shall use its commercially reasonable
efforts to (i) have the Registration Statement declared effective on or
before the Target Date, and (ii) keep the Registration Statement
continuously effective from the date such Registration Statement is
declared effective until the Termination Date."
###
Each Significant Stockholder agrees to comply with its
obligations as an "Original Holder" under Section 3.8(b) of the Merger
Agreement. Notwithstanding anything to the contrary in this Amendment or in the
Merger Agreement, this paragraph shall survive the Closing without limitation as
to time.
The Company represents and warrants to Buyer that this Amendment
has been duly executed and delivered by the Company, the form of this Amendment
has been approved by the Board of Directors of the Company and a majority of the
holders of Company Common Stock and no further corporate authorization on the
part of the Company is necessary to consummate the transactions contemplated by
this Amendment.
The Company and each Significant Stockholder represents and
warrants that this Amendment constitutes a valid and binding agreement of the
Company and each Significant Stockholder and is enforceable against the Company
and each Significant Stockholder in accordance with its terms, except to the
extent enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting
-4-
<PAGE>
creditors' rights generally and general equitable principles (whether considered
in a proceeding in equity or at law).
Buyer represents and warrants to the Company that this Amendment
has been duly executed and delivered by Buyer and Sub, this Amendment has been
approved by Buyer's and Sub's Board of Directors and by a majority of holders of
Sub's common stock, and no further corporate authorization on the part of Buyer
or Sub is necessary to consummate the transactions contemplated by this
Amendment.
This Amendment constitutes a valid and binding agreement of Buyer
and Sub and is enforceable against Buyer and Sub in accordance with its terms,
except to the extent enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether considered
in a proceeding in equity or at law).
The Merger Agreement is hereby reaffirmed in all respects and
shall remain in full force and effect in accordance with its terms except as
amended or modified by this Amendment.
This Amendment may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
-5-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment
as of the date first written above.
BUDGET GROUP, INC.
By: /s/ SCOTT WHITE
--------------------------------------
Scott White
Executive Vice President
BDG CORPORATION
By: /s/ SCOTT WHITE
--------------------------------------
Scott White
President
RYDER TRS, INC.
By: /s/ JAY ALIX
--------------------------------------
Jay Alix
Chairman of the Board and Chief
Executive Officer
-6-
<PAGE>
QUESTOR PARTNERS FUND, L.P.,
By: Questor General Partner, L.P.
its general partner
By: Questor Principals, Inc.,
its general partner
By: /s/ JAY ALIX
--------------------------------------
Jay Alix
Managing Principal
QUESTOR SIDE-BY-SIDE PARTNERS, L.P.,
By: Questor Principals, Inc.,
its general partner
By: /s/ JAY ALIX
--------------------------------------
Jay Alix
Managing Principal
MADISON DEARBORN CAPITAL PARTNERS, L.P.
By: Madison Dearborn Partners, L.P.
its general partner
By: Madison Dearborn Partners, Inc.,
its general partner
By: /s/ THOMAS R. REUSCHE
--------------------------------------
Thomas R. REUSCHE
Vice President
-7-
<PAGE>
EXHIBIT 2
---------
JOINT FILING AGREEMENT
----------------------
The undersigned hereby agree that the statement on Schedule 13D with
respect to the Class A common stock of Budget Group, Inc. dated June 29, 1998
is, and any amendments thereto signed by each of the undersigned shall be, filed
on behalf of each of us pursuant to and in accordance with the provisions of
Rule 13d-1(f) under the Securities Exchange Act of 1934.
Dated: June 29, 1998 QUESTOR PARTNERS FUND, L.P.
By: Questor General Partner, L.P.,
its General Partner
By: Questor Principals, Inc.
its General Partner
By: /s/ Robert E. Shields
---------------------------
Robert E. Shields
Managing Director
Dated: June 29, 1998 QUESTOR SIDE-BY-SIDE PARTNERS, L.P.
By: Questor Principals, Inc.
its General Partner
By: /s/ Robert E. Shields
--------------------------
Robert E. Shields
Managing Director
