<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934
---------------------
SQUARE INDUSTRIES, INC.
(Name of Subject Company)
CENTRAL PARKING SYSTEM - - EMPIRE STATE, INC.
AND
CENTRAL PARKING CORPORATION
(Bidder)
---------------------
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
---------------------
8522351
(CUSIP Number of Class of Securities)
---------------------
MONROE J. CARELL, JR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CENTRAL PARKING CORPORATION
2401 21ST AVENUE SOUTH, SUITE 200
NASHVILLE, TENNESSEE 37212
(615) 297-4255
(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications on Behalf of the Bidder)
---------------------
COPY TO
MARK MANNER
HARWELL HOWARD HYNE GABBERT & MANNER, P.C.
1800 FIRST AMERICAN CENTER
NASHVILLE, TENNESSEE 37238
(615) 256-0500
CALCULATION OF FILING FEE
<TABLE>
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
- --------------------------------------------------------------------------------------------
<S> <C>
$51,465,715 $10,294
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* Determined solely for the purpose of calculating the filing fee. This amount is the sum
of (i) $37,226,536, which was calculated by multiplying $31.00, the per share tender
offer price, by 1,200,856, the number of outstanding shares of Common Stock, and (ii)
$14,239,179, which was calculated by multiplying the amount of the excess, if any, of
$31.00 over the exercise price per share of outstanding options and warrants to purchase
shares of Common Stock by the number of shares of Common Stock subject to such options
and warrants.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify
the filing with which the offsetting fee was previously paid. Identify the previous
filing by registration statement number, or the form or schedule and the date of its
filing.
Amount Previously Paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of above Person
CENTRAL PARKING CORPORATION
62-1052916
2 Check the appropriate Box if a Member of a Group (a) [ ]
(See Instructions) (b) [ ]
3 SEC Use Only
4 Source of Funds (See Instructions)
BK
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item 2(e) [ ]
or 2(f)
6 Citizenship or Place of Organization
TENNESSEE
7 Aggregate Amount Beneficially Owned by Each Reporting Person
0
8 Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See [ ]
Instructions)
9 Percent of Class Represented by Amount in Row (7)
0.0%
10 Type of Reporting Person (See Instructions)
CO
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of above Person
CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC.
62-1662458
2 Check the appropriate Box if a Member of a Group (a) [ ]
(See Instructions) (b) [ ]
3 SEC Use Only
4 Source of Funds (See Instructions)
BK
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item 2(e) [ ]
or 2(f)
6 Citizenship or Place of Organization
NEW YORK
7 Aggregate Amount Beneficially Owned by Each Reporting Person
0
8 Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See [ ]
Instructions)
9 Percent of Class Represented by Amount in Row (7)
0.0%
10 Type of Reporting Person (See Instructions)
CO
</TABLE>
2
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This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Central Parking System -- Empire State, Inc., a New York
corporation ("Purchaser"), and an indirect wholly-owned subsidiary of Central
Parking Corporation, a Tennessee corporation ("Parent"), to purchase all of the
outstanding shares of common stock, par value $.01 per share (the "Shares"), of
Square Industries, Inc., a New York corporation (the "Company"), at a price of
$31.00 per Share, payable $28.50 per Share net to the seller in cash promptly
following completion of the Offer, without interest thereon, and an additional
$2.50 per Share to be deposited by Parent in escrow as contingent consideration
for distribution, in whole or in part, either to the seller or Parent based upon
the resolution of two specific matters, subject to adjustment as provided in the
escrow agreement, upon the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase dated December 13, 1996 (the "Offer to Purchase")
and in the related Letter of Transmittal (which together constitute the
"Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Square Industries, Inc., a New York
corporation, which has its principal executive offices at 921 Bergen Avenue,
Jersey City, New Jersey 07306.
(b) The class of equity securities being sought is all the outstanding
shares of common stock, par value $.01 per share, of the Company. The
information set forth in the Introduction and Section 1 ("Terms of the Offer;
Expiration Date; Treatment of Stock Options; Contingency of Payment of Certain
Amounts of the Offer Price, Merger Consideration and Option Consideration;
Escrow Agreement") of the Offer to Purchase is incorporated herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market is set forth in Section 6 ("Price Range of Shares; Dividends") of the
Offer to Purchase and is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by Purchaser and Parent. The
information concerning the name, state or other place of organization, principal
business and address of the principal office of Purchaser and Parent, and the
information concerning the name, business address, present principal occupation
or employment and the name, principal business and address of any corporation or
other organization in which such employment or occupation is conducted, material
occupations, positions, offices or employment during the last five years and
citizenship of each of the executive officers and directors of Purchaser and
Parent are set forth in the Introduction, Section 8 ("Certain Information
Concerning Purchaser and Parent") and Exhibit I of the Offer to Purchase and are
incorporated herein by reference.
(e) and (f) During the last five years, none of Purchaser or Parent, and,
to the best knowledge of Purchaser and Parent, none of the persons listed in
Exhibit I of the Offer to Purchase, has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) 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 activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3. PAST CONTRACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent") and Section 10 ("Background of the Offer; Contacts with
the Company; the Merger Agreement; Employment, Consultancy and Confidentiality
and Noncompete Agreements; Agreement to Support the Transaction") of the Offer
to Purchase is incorporated herein by reference.
(b) The information set forth in the Introduction, Section 7 ("Certain
Information Concerning the Company"), Section 8 ("Certain Information Concerning
Purchaser and Parent"), Section 10 ("Background of the Offer; Contacts with the
Company; The Merger Agreement; Employment, Consultancy and Confidentiality and
Noncompete Agreements; Agreement to Support the Transaction") and Section 11
("Purpose of the
3
<PAGE> 4
Offer; Plans for the Company After the Offer and the Merger") of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 9 ("Financing of the Offer and
the Merger") of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company; The Merger Agreement;
Employment Consultancy and Confidentiality and Noncompete Agreements; Agreement
to Support the Transaction") and Section 11 ("Purpose of the Offer; Plans for
the Company After the Offer and the Merger") of the Offer to Purchase is
incorporated herein by reference.
(f) and (g) The information set forth in Section 13 ("Effect of the Offer
on the Market for the Shares, Exchange Listing and Exchange Act Registration")
of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 8 ("Certain Information
Concerning Purchaser and Parent") of the Offer to Purchase is incorporated
herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent"), Section 10 ("Background of the
Offer; Contacts with the Company; The Merger Agreement; Employment Consultancy
and Confidentiality and Noncompete Agreements; Agreement to Support the
Transaction") and Section 11 ("Purpose of the Offer; Plans for the Company After
the Offer and the Merger") of the Offer to Purchase is incorporated herein by
reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) and (e) The information set forth in Section 15 ("Certain Legal
Matters and Regulatory Approvals") of the Offer to Purchase is incorporated
herein by reference.
(d) The information set forth in Section 13 ("Effect of the Offer on the
Market for the Shares, Exchange Listing and Exchange Act Registration") of the
Offer to Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and the Agreement and Plan of Merger, dated as of December 6, 1996,
among Parent, Purchaser and the Company, copies of which are attached hereto as
Exhibits (a)(1), (a)(2) and (c)(1), respectively, is incorporated herein by
reference.
4
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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
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<S> <C> <C>
(a)(1) -- Form of Offer to Purchase dated December 13, 1996.
(a)(2) -- Form of Letter of Transmittal.
(a)(3) -- Form of Notice of Guaranteed Delivery.
(a)(4) -- Form of Letter from J.C. Bradford & Co. to Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees.
(a)(5) -- Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
Nominees to Clients.
(a)(6) -- Form of Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) -- Summary Advertisement as published in The Wall Street Journal on December 13, 1996.
(a)(8) -- Press Release issued by Parent on December 9, 1996.
(b)(1) -- Form of $150,000,000 Credit Agreement dated December 12, 1996 by and among various
banks with SunTrust Bank, Nashville, N.A. as Agent and Parent and certain of its
subsidiaries.
(c)(1) -- Agreement and Plan of Merger, dated as of December 6, 1996, by and among Parent,
Purchaser and the Company.
(c)(2) -- Form of Employment Agreement between Parent and Brett Harwood.
(c)(3) -- Form of Noncompetition Agreements between Parent and each of Lowell Harwood,
Sanford Harwood, and Leslie Harwood Ehrlich.
(c)(4) -- Form of Consultancy Agreement with each of Lowell Harwood and Sanford Harwood.
(c)(5) -- Escrow Agreement dated December 6, 1996 by and among Parent, Purchaser, Lowell
Harwood, Sanford Harwood and First American National Bank as Escrow Agent.
(c)(6) -- Agreement to Support the Transaction, dated December 6, 1996 by and among Parent,
Purchaser, Lowell Harwood, Mrs. Lowell Harwood, Sanford Harwood, Brett Harwood,
Mrs. Brett Harwood, Brett Harwood as custodian for his minor children, Leslie
Harwood Ehrlich, Craig Harwood, Scott Harwood and Scott Harwood as custodian for
his minor children.
(c)(7) -- Confidentiality Agreement dated July 10, 1996 between Parent and the Company.
(d) -- None.
(e) -- Not applicable.
(f) -- None.
</TABLE>
5
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After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
CENTRAL PARKING SYSTEM -- EMPIRE
STATE, INC.
By:
------------------------------------
Name: Monroe J. Carell, Jr.
Title: Chairman and Chief
Executive Officer
December 13, 1996
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
CENTRAL PARKING CORPORATION
By:
------------------------------------
Name: Monroe J. Carell, Jr.
Title: Chairman and Chief
Executive Officer
December 13, 1996
6
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE IN
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION OF EXHIBITS SYSTEM
- ------- ----------------------------------------------------------------------- ----------
<S> <C> <C> <C>
(a)(1) -- Form of Offer to Purchase dated December 13, 1996......................
(a)(2) -- Form of Letter of Transmittal..........................................
(a)(3) -- Form of Notice of Guaranteed Delivery..................................
(a)(4) -- Form of Letter from J.C. Bradford & Co. to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees....................................
(a)(5) -- Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies
and Nominees to Clients................................................
(a)(6) -- Form of Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.................................................
(a)(7) -- Summary Advertisement as published in The Wall Street Journal on
December 13, 1996......................................................
(a)(8) -- Press Release issued by Parent on December 9, 1996.....................
(b)(1) -- Form of $150,000,000 Credit Agreement dated December 12, 1996 by and
among various banks with SunTrust Bank, Nashville, N.A. as Agent and
Parent and certain of its subsidiaries.................................
(c)(1) -- Agreement and Plan of Merger, dated as of December 6, 1996, by and
among Parent, Purchaser and the Company................................
(c)(2) -- Form of Employment Agreement between Parent and Brett Harwood..........
(c)(3) -- Form of Noncompetition Agreements between Parent and each of Lowell
Harwood, Sanford Harwood, and Leslie Harwood Ehrlich...................
(c)(4) -- Form of Consultancy Agreement with each of Lowell Harwood and Sanford
Harwood................................................................
(c)(5) -- Escrow Agreement dated December 6, 1996 by and among Parent, Purchaser,
Lowell Harwood, Sanford Harwood and First American National Bank as
Escrow Agent...........................................................
(c)(6) -- Agreement to Support the Transaction, dated December 6, 1996 by and
among Parent, Purchaser, Lowell Harwood, Mrs. Lowell Harwood, Sanford
Harwood, Brett Harwood, Mrs. Brett Harwood, Brett Harwood as custodian
for his minor children, Leslie Harwood Ehrlich, Craig Harwood, Scott
Harwood and Scott Harwood as custodian for his minor children.
(c)(7) -- Confidentiality Agreement dated July 10, 1996 between Parent and the
Company.
(d) -- None.
(e) -- Not applicable.
(f) -- None.
</TABLE>
<PAGE> 1
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
SQUARE INDUSTRIES, INC.
at
$31.00 Per Share
(payable $28.50 per Share net in cash, without interest thereon, and an
additional
$2.50 per Share to be deposited by Parent in escrow as contingent
consideration for distribution, in whole or in part, either to the seller or to
Parent upon the resolution of two specific matters, and subject to
adjustment as provided in the escrow agreement)
by
CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC.
an indirect wholly-owned subsidiary of
CENTRAL PARKING CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JANUARY 14, 1997, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES WHICH, TOGETHER WITH ANY SHARES THEN OWNED BY CENTRAL PARKING CORPORATION
OR CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC., REPRESENTS AT LEAST SIXTY-SIX
AND TWO-THIRDS PERCENT (66 2/3%) OF THE SHARES ON A FULLY DILUTED BASIS (FULLY
DILUTED SHALL INCLUDE, WITHOUT LIMITATION, ALL SHARES ISSUABLE UPON THE
CONVERSION OF ANY CONVERTIBLE SECURITIES OR UPON THE EXERCISE OF ANY OPTIONS,
WARRANTS OR RIGHTS, UNLESS THE HOLDER THEREOF SHALL HAVE ENTERED INTO AN
AGREEMENT TO CASH OUT SUCH OPTIONS, WARRANTS OR RIGHTS IN CONJUNCTION WITH THE
AGREEMENT AND PLAN OF MERGER). THE OFFER IS ALSO CONDITIONED UPON, AMONG OTHER
THINGS, THE EXPIRATION OR TERMINATION OF ANY APPLICABLE ANTITRUST WAITING
PERIODS.
---------------------
THE BOARD OF DIRECTORS OF SQUARE INDUSTRIES, INC. (THE "COMPANY") HAS
UNANIMOUSLY APPROVED EACH OF THE OFFER AND THE MERGER AND DETERMINED THAT EACH
OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE
SHAREHOLDERS OF THE COMPANY (OTHER THAN CENTRAL PARKING CORPORATION AND ITS
SUBSIDIARIES), AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
---------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
shares of common stock, par value $.01 per share (the "Shares"), of the Company
should either (1) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
(a) mail or deliver it together with the certificate(s) evidencing tendered
Shares, and any other required documents, to the Depositary or (b) tender such
Shares pursuant to the procedure for book-entry transfer set forth in Section 3,
or (2) request such shareholder's broker, dealer, commercial bank, trust company
or other nominee to effect the transaction for such shareholder. Any shareholder
whose Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if such shareholder desires to tender such
Shares.
A shareholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply with
the procedure for book-entry transfer on a timely basis, may tender such Shares
by following the procedure for guaranteed delivery set forth in Section 3.
Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional copies
of this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
---------------------
THE DEALER MANAGER FOR THE OFFER IS:
J.C. BRADFORD LOGO
---------------------
December 13, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
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<C> <S> <C>
Introduction...................................................................... 1
1. Terms of the Offer; Expiration Date; Treatment of Stock Options; Contingency of
Payment of Certain Amounts of The Offer Price, Merger Consideration and Option
Consideration; Escrow Agreement................................................... 3
2. Acceptance for Payment and Payment for Shares..................................... 6
3. Procedures for Tendering Shares................................................... 7
4. Withdrawal Rights................................................................. 9
5. Certain Federal Income Tax Consequences........................................... 10
6. Price Range of Shares; Dividends.................................................. 10
7. Certain Information Concerning the Company........................................ 11
8. Certain Information Concerning Purchaser and Parent............................... 15
9. Financing of the Offer and the Merger............................................. 17
10. Background of the Offer; Contacts with the Company; The Merger Agreement;
Employment, Consultancy and Confidentiality and Noncompete Agreements; Agreement
to Support the Transaction........................................................ 18
11. Purpose of the Offer; Plans for the Company After the Offer and the Merger........ 28
12. Dividends and Distributions....................................................... 30
13. Effect of the Offer on the Market for the Shares, Exchange Listing and Exchange
Act Registration.................................................................. 30
14. Certain Conditions of the Offer................................................... 31
15. Certain Legal Matters and Regulatory Approvals.................................... 33
16. Fees and Expenses................................................................. 35
17. Miscellaneous..................................................................... 35
Exhibit I. Directors and Executive Officers of Parent and Purchaser
</TABLE>
i
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To the Holders of Common Stock of
SQUARE INDUSTRIES, INC.:
INTRODUCTION
Central Parking System -- Empire State, Inc., a New York corporation
("Purchaser") and an indirect wholly-owned subsidiary of Central Parking
Corporation, a Tennessee corporation ("Parent"), hereby offers to purchase all
outstanding shares of common stock, par value $.01 per share (the "Shares"), of
Square Industries, Inc., a New York corporation (the "Company"), at a price of
$31.00 per Share, payable $28.50 per Share net to the seller in cash at the
closing (the "Closing") of the Offer, without interest, and an additional $2.50
per Share to be deposited by Parent in escrow as contingent consideration for
distribution, in whole or in part, to either the seller or Parent based upon the
resolution of two specific matters, subject to adjustment as provided in the
Escrow Agreement (as described in Section 1) (the "Offer Price"), upon the terms
and subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which together constitute the "Offer"). The Offer
is being made pursuant to an Agreement and Plan of Merger dated as of December
6, 1996 (the "Merger Agreement") among Parent, Purchaser and the Company.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes, with respect to the purchase of Shares by
Purchaser pursuant to the Offer. Purchaser will pay all charges and expenses of
J.C. Bradford & Co., which is acting as Dealer Manager for the Offer (in such
capacity, the "Dealer Manager"), SunTrust Bank, Atlanta (the "Depositary") and
Kissel-Blake Inc., (the "Information Agent") incurred in connection with the
Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") UNANIMOUSLY APPROVED
EACH OF THE OFFER AND THE MERGER (AS DEFINED BELOW) AND HAS DETERMINED THAT EACH
OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE
SHAREHOLDERS OF THE COMPANY (OTHER THAN PARENT AND ITS SUBSIDIARIES), AND
RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
TO THE OFFER.
The Blackstone Group L.P. ("Blackstone"), the Company's financial advisor,
has delivered to the Board its written opinion dated December 6, 1996, to the
effect that, as of such date and based upon and subject to certain matters
stated in such opinion, the Offer Price and Merger Consideration to be received
by the holders of Shares (other than Parent and its subsidiaries) in the Offer
and the Merger is fair to such holders from a financial point of view. A copy of
the opinion of Blackstone is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to shareholders concurrently herewith and shareholders of
the Company are urged to read the opinion in its entirety for a description of
the assumptions made, factors considered and procedures followed by Blackstone.
In addition, certain affiliates of the Company owning 650,540 Shares and options
and warrants to purchase 387,500 Shares have entered into an Agreement to
Support the Transaction pursuant to which such affiliates agree to tender their
shares and enter into agreements to cash out their options and warrants, subject
to certain exceptions. See Section 10.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES WHICH, TOGETHER WITH ANY SHARES THEN OWNED BY PARENT OR PURCHASER,
REPRESENTS AT LEAST SIXTY-SIX AND TWO-THIRDS PERCENT (66 2/3%) OF THE SHARES ON
A FULLY DILUTED BASIS (FULLY DILUTED SHALL INCLUDE, WITHOUT LIMITATION, ALL
SHARES ISSUABLE UPON THE CONVERSION OF ANY CONVERTIBLE SECURITIES OR UPON THE
EXERCISE OF ANY OPTIONS, WARRANTS OR RIGHTS, UNLESS THE HOLDER THEREOF SHALL
HAVE ENTERED INTO AN AGREEMENT TO CASH OUT SUCH OPTIONS, WARRANTS OR RIGHTS IN
CONJUNCTION WITH THE MERGER AGREEMENT)(THE "MINIMUM CONDITION"). THE OFFER IS
ALSO CONDITIONED UPON, AMONG OTHER THINGS, THE EXPIRATION OR TERMINATION OF ANY
APPLICABLE ANTITRUST WAITING PERIODS. SEE SECTION 14, WHICH SETS FORTH IN FULL
THE CONDITIONS TO THE OFFER.
1
<PAGE> 4
The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the New York Business Corporation Law
(the "NYBCL"), Purchaser will be merged with and into the Company (the
"Merger"). Following consummation of the Merger, the Company will continue as
the surviving corporation (the "Surviving Corporation") as an indirect
wholly-owned subsidiary of Parent. At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than (i) Shares held in the treasury of the Company,
Shares owned by Parent or any direct or indirect subsidiary of Parent or of the
Company (which shall be canceled at the Effective Time) and (ii) Shares which
are held by shareholders validly exercising appraisal rights pursuant to Section
910 of the NYBCL) will be converted into the right to receive $28.50 net in cash
at the closing of the Merger, without interest thereon, and an additional $2.50
per Share to be deposited by Parent in escrow as contingent consideration for
distribution, in whole or in part, to either the shareholders, optionholders or
warrant holders of the Company or to Parent upon the resolution of two specific
matters, subject to adjustment as provided in the escrow agreement (as described
further in Section 1) or any higher price that may be paid per Share in the
Offer (the "Merger Consideration"). The Merger Agreement is more fully described
in Section 10.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of at least a majority of outstanding Shares pursuant to the Offer, Purchaser
shall be entitled to designate up to such number of directors, rounded up to the
next whole number, to the Board as will give Purchaser representation on the
Board equal to the product of the total number of directors on the Board
multiplied by the percentage that the aggregate number of Shares beneficially
owned by Purchaser and its affiliates at such time bears to the total number of
Shares then outstanding. In the Merger Agreement, the Company has agreed to take
all actions necessary to cause Purchaser's designees to be designated as
directors of the Company, including increasing the size of the Board or securing
the resignations of incumbent directors or both.
The Offer is the first step and the Merger is the second step in
Purchaser's proposed acquisition of the entire equity interest in the Company.
Following completion of the Offer, if required by applicable law, the Merger
Agreement will be submitted for adoption by the shareholders of the Company.
Under the NYBCL, the affirmative vote or written consent of holders of
two-thirds of all of the outstanding shares of the Company entitled to vote on
the Merger, including any Shares owned by Purchaser or Parent, would be required
to adopt the Merger Agreement. However, if Purchaser owns at least 90% of each
class and series of outstanding voting shares of the Company, no vote or consent
of the shareholders of the Company will be required to consummate the Merger.
The Company has advised Purchaser that as of December 6, 1996, 1,200,856
Shares were issued and outstanding and that (i) no Shares were held in the
treasury of the Company, (ii) no Shares were held by the subsidiaries of the
Company, and (iii) 555,400 Shares were subject to issuance upon the exercise of
outstanding options and warrants. The Company has advised Purchaser that since
December 6, 1996, the date of the Merger Agreement, the Company has not issued
any Shares or any options to purchase Shares. As a result, as of the date of
this Offer to Purchase, Purchaser believes the Minimum Condition would be
satisfied (i) if the holders of all outstanding options and warrants agree to
cash out such options and warrants pursuant to written agreements, as provided
in the Merger Agreement, when there shall have been validly tendered in
accordance with the terms of the Offer and not withdrawn prior to the expiration
of the Offer at least 800,571 Shares and (ii) if the holders of none of the
outstanding options and warrants agree to cash out such options and warrants
pursuant to written agreements (whether or not such options or warrants are
exercised), as provided in the Merger Agreement, when there shall have been
validly tendered in accordance with the terms of the Offer and not withdrawn
prior to the expiration of the Offer at least 1,170,837 Shares. The actual
number of Shares which must be validly tendered and not withdrawn in order to
satisfy the Minimum Condition will be between the foregoing numbers depending
upon the actual number of options and warrants as to which the optionholders and
warrant holders shall have entered into cash out agreements as described above.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
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<PAGE> 5
1. TERMS OF THE OFFER; EXPIRATION DATE; TREATMENT OF STOCK OPTIONS; CONTINGENCY
OF PAYMENT OF CERTAIN AMOUNTS OF THE OFFER PRICE, MERGER CONSIDERATION AND
OPTION CONSIDERATION; ESCROW AGREEMENT.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares (and
deposit the amounts required to be placed in escrow as contingent consideration
as discussed below) validly tendered on or prior to the Expiration Date (as
hereinafter defined) and not withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 midnight, New York City time, on Tuesday, January
14, 1997, unless and until Purchaser shall have extended the period during which
the Offer is open, in which event the term "Expiration Date" shall mean the
latest time and date at which the Offer, as so extended by Purchaser, shall
expire.
The Company and Purchaser have agreed that the Offer shall expire 21
business days after it is commenced and shall not be extended without the prior
written consent of the Company, provided Purchaser may extend the Offer one time
for no more than 10 days and only if at least 80% of all of the outstanding
Shares have been tendered prior to such extension. During any such extension,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the right of a tendering shareholder to withdraw such
shareholder's Shares. See Section 4.
Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), Purchaser also expressly reserves the right, in
its sole discretion (but subject to the terms and conditions of the Merger
Agreement), at any time and from time to time, (i) to terminate the Offer and
not accept for payment any Shares upon the occurrence of any of the conditions
specified in Section 14, and (ii) to waive any condition or otherwise amend the
Offer in any respect, by oral or written notice of such delay, termination,
waiver or amendment to the Depositary and by a public announcement thereof. The
Merger Agreement provides that, unless previously approved by the Company in
writing, Purchaser will not (i) decrease the price per Share payable in the
Offer, (ii) change the form of the consideration to be paid in the Offer, or
(iii) modify the conditions to the Offer or impose conditions to the Offer in
addition to those set forth in Section 14. Purchaser acknowledges that (i) Rule
14e-l(c) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires Purchaser to pay the consideration offered or return the Shares
tendered promptly after the termination or withdrawal of the Offer, and (ii)
Purchaser may not delay acceptance for payment of, or payment for, any Shares
upon the occurrence of any of the conditions specified in Section 14 without
extending the period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c) and
14d-6(d) under the Exchange Act, which require that material changes be promptly
disseminated to shareholders in a manner reasonably designed to inform them of
such changes) and without limiting the manner in which Purchaser may choose to
make any public announcement, Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules 14d-4(c)
and 14d-6(d) under the Exchange Act.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to increase the consideration being offered in the
Offer, such increase in the consideration being offered will be applicable to
all shareholders whose Shares are accepted for payment pursuant to the Offer
and, if, at the time notice of any such increase in the consideration being
offered is first published, sent or given to holders of such Shares, the Offer
is scheduled to expire at any time earlier than the period ending on the tenth
business day from and including the date that such notice is first so published,
sent or given, the Offer will be extended at least until the expiration of such
ten-business-day period. For purposes of the Offer, a "business day" means any
day other than a Saturday, Sunday or federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.
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<PAGE> 6
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
shareholder list and will be furnished for subsequent transmittal to beneficial
owners of Shares, to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing.
Treatment of Stock Options. Promptly following the completion of the
Offer, each holder of a then outstanding option under the Company's 1992 Stock
Option Plan or warrant to purchase Shares heretofore granted, will, upon the
delivery of an executed agreement by such holder thereof, receive (whether such
option or warrants are immediately exercisable or not) in settlement thereof, a
cash payment from the Company in an amount equal to the product of (i) the
difference between $28.50 and the per share exercise price of such options or
warrants (the "Option Consideration") and (ii) the total number of Shares which
the holder of each such option or warrant is entitled to purchase under such
option or warrant, as provided above (the "Option Shares"). In addition, $2.50
per Option Share will be deposited by Purchaser in escrow as contingent
consideration for distribution, in whole or in part, to the optionholders and
warrant holders of the Company or to Purchaser upon the resolution of two
specific matters discussed below, subject to adjustment as provided in the
Escrow Agreement (as defined below).
Contingency of Payment of Certain Amounts of the Offer Price, Merger
Consideration and Option Consideration; Escrow Agreement. The Merger Agreement
provides that, of the Offer Price and Merger Consideration, $28.50 net per
Share, without interest thereon, will be paid to the shareholder in cash
promptly following the completion of the Offer or the closing of the Merger and
the Option Consideration will be paid to the optionholders and warrant holders
entering into cash out agreements (in each case, the "Initial Cash Portion") and
an additional $2.50 per Share or Option Share will be deposited by Parent into
an escrow account (the "Escrowed Funds") held by First American National Bank
(the "Escrow Agent") as contingent consideration to be distributed, in whole or
in part, to the shareholders, optionholders and warrant holders or Parent upon
the resolution of two specific matters, subject to adjustment (the "Offer
Contingent Consideration") pursuant to an Escrow Agreement dated December 6,
1996 (the "Escrow Agreement") by and among Company, Parent, the Escrow Agent and
the Escrow Committee (as hereinafter defined). The Escrowed Funds are to be held
by the Escrow Agent for certain periods (the "Escrow Period") and are being held
solely because of certain contingent matters, which, if favorably resolved,
could result in additional value to the Company.
(a) Of the Escrowed Funds, $1.99 per Share shall be held by the Escrow
Agent (the "Wooster Escrow") for up to 12 months unless extended as discussed
below, with respect to the Company's property at 75 Wooster, New York, New York
(the "Wooster Property"). If during the Escrow Period, the Wooster Property is
leased under a commercially reasonable lease agreement under the terms set forth
in the Escrow Agreement, which include an annual rental rate of at least
$900,000 (a "Conforming Lease"), or the Wooster Property is sold on commercially
reasonable terms at a purchase price of at least $9,000,000 (a "Conforming
Sale"), then the entire Wooster Escrow shall be promptly distributed on a pro
rata basis to the shareholders, optionholders and warrant holders of the Company
entitled thereto by reason of their entitlement to the Offer Price, Merger
Consideration and Option Consideration. If a Conforming Lease is being
negotiated but has not been executed or a contract for a Conforming Sale
executed by the potential purchaser is presented to Parent during the Escrow
Period, but such Conforming Lease is not presented or such Conforming Sale is
not closed during the Escrow Period, the Escrow Period may be extended for 90
days. In the event that a Conforming Lease (or Conforming Sale) is not so
presented during the Escrow Period, Parent shall be entitled to receive the
entire Wooster Escrow without any further claim by the shareholders,
optionholders and warrant holders of the Company. In the event that during the
Escrow Period, the Wooster Property is leased on commercially reasonable terms,
including the terms included in the Escrow Agreement, but with a rental of less
than $900,000 per annum, Parent shall be entitled to receive from the Wooster
Escrow a sum in the aggregate equal to 10 times the difference between $900,000
and the actual annual rental, up to the maximum amount of the Wooster Escrow and
the balance of the Wooster Escrow, if any, shall be distributed to the
shareholders, optionholders and warrant holders of the Company pro rata based
upon the proportions set forth in the Escrow
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<PAGE> 7
Agreement. In the event that during the Escrow Period, the Wooster Property is
sold at a purchase price of less than $9,000,000, payable in cash at closing,
Parent shall be entitled to receive from the Wooster Escrow a sum in the
aggregate equal to the difference between $9,000,000 and the actual sales price,
up to the maximum amount of the Wooster Escrow, and the balance of the Wooster
Escrow, if any, shall be distributed to the shareholders, optionholders and
warrant holders of the Company pro rata based upon the proportions set forth in
the Escrow Agreement. In the event that during the Escrow Period (i) the Wooster
Property is leased for a sum in excess of $900,000 per year on commercially
reasonable terms, including the terms included in the Escrow Agreement, Parent
shall pay over to the Escrow Agent an additional sum of five times the
difference between $900,000 and the actual annual rental; or (ii) the Wooster
Property is sold for a sum in excess of $9,000,000, payable in cash at closing,
Parent shall pay over to the Escrow Agent an additional sum of 50% of the
difference between $9,000,000 and the actual sales price, for distribution to
the shareholders, optionholders and warrant holders of the Company together with
the entire Wooster Escrow on a pro rata basis as additional Offer Price, Merger
Consideration or Option Consideration. In the event of any variation of the
other terms set forth in the Escrow Agreement, Parent, Purchaser and the Escrow
Committee agree to use their reasonable efforts to negotiate an equitable
distribution of the Wooster Escrow.
(b) $0.51 per Share of the Escrowed Funds shall be held in escrow by the
Escrow Agent (the "Occupancy Tax Escrow") for up to 12 months, unless extended
as discussed below. In the event the total commercial rent occupancy tax
liability of the Company or the Surviving Corporation for all tax periods from
June 1, 1984 through May 31, 1991, in the aggregate (including all interest,
penalties and principal) (the "Occupancy Tax Liability") is less than or equal
to $800,000, the Escrow Agent shall promptly distribute the entire Occupancy Tax
Escrow to the shareholders, optionholders and warrant holders of the Company on
a pro rata basis based upon the proportions set forth in the Escrow Agreement.
If the Occupancy Tax Liability is more than $800,000 but less than or equal to
$900,000, the Escrow Agent shall pay to Parent the Occupancy Tax Escrow funds
equal to the difference between the amount of the Occupancy Tax Liability and
$800,000, and any remaining Occupancy Tax Escrow funds shall be distributed to
the shareholders, optionholders and warrant of the Company holders on a pro rata
basis based upon the proportions set forth in the Escrow Agreement. If the
Occupancy Tax Liability is more than $900,000 but less than or equal to
$1,000,000, the Escrow Agent shall pay to Parent the Occupancy Tax Escrow funds
equal to 110% of the difference between the amount of the Occupancy Tax
Liability and $800,000, and any remaining Occupancy Tax Escrow funds shall be
distributed to the shareholders, optionholders and warrant holders of the
Company on a pro rata basis based upon the proportions set forth in the Escrow
Agreement. If the Occupancy Tax Liability is more than $1,000,000, the Escrow
Agent shall pay to Parent the Occupancy Tax Escrow funds equal to 120% of the
difference between the amount of the Occupancy Tax Liability and $800,000, and
any remaining Occupancy Tax Escrow funds shall be distributed to the
shareholders, optionholders and warrant holders of the Company on a pro rata
basis based upon the proportions set forth in the Escrow Agreement. In the
determination of the Occupancy Tax Liability, funds received from certain
lessors or owners of property for payment of the commercial rent occupancy tax
required by such lease or management agreement for any tax periods from June 1,
1984 through May 31, 1991, will be credited against the Occupancy Tax Liability.
Parent shall be required to make reasonable commercial efforts to exercise its
rights to recover such funds under the terms of the Company's or the Surviving
Corporation's agreements with respect thereto. The Escrow Period may be extended
by either the Escrow Committee or the Parent if the tax liability for all tax
periods from June 1, 1984 through May 31, 1991 is not finally resolved as of 12
months after the Effective Time provided in no event may the Escrow Period
extend beyond three years after the Effective Time.
The Escrowed Funds shall be invested by the Escrow Agent only in short-term
government securities. Any interest on the Escrowed Funds shall accrue on a pro
rata basis to the party receiving such funds. The expenses of the Escrow
Agreement will be paid out of the Escrowed Funds. The shareholders,
optionholders and warrant holders of the Company may not transfer their
contingent rights with respect to the Escrow except by will, intestate
succession or operation of law. The interests of the shareholders, optionholders
and warrant holders of the Company with respect to the Escrowed Funds shall be
represented by a committee comprised of Lowell Harwood and Sanford Harwood
(collectively the "Escrow Committee"). The Escrow Committee shall have the right
to object to or agree to, on behalf of the shareholders, optionholders and
warrant holders of the Company any proposed resolution of the contingencies
described above. In the event that the Escrow
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<PAGE> 8
Committee and Parent are unable to resolve any matters concerning the
contingencies described above, the matter shall be determined by binding
arbitration and the Escrow Committee shall represent the interests of the
shareholders, optionholders and warrant holders of the Company in such
arbitration. The rights to receive the Escrowed Funds shall not be evidenced by
a certificate or any document other than the Escrow Agreement and the Merger
Agreement, and do not represent an interest in Purchaser, Parent or the
Surviving Corporation. Because of the contingent nature of the matters
comprising the Wooster Escrow and the Occupancy Tax Escrow, which are beyond the
control of Purchaser, Parent and the Company, it is uncertain whether any
Escrowed Funds will ever be distributed to the shareholders, optionholders and
warrant holders of the Company. The foregoing is a summary of the Escrow
Agreement and is qualified in its entity by reference to the text of the Escrow
Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1 and
which may be obtained from the offices of the Commission.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment, and will pay for, all Shares
(subject to the amounts placed in escrow as described in Section 1) validly
tendered prior to the Expiration Date and not withdrawn promptly after the later
to occur of (i) the Expiration Date, (ii) the expiration or termination of any
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and (iii) the satisfaction or waiver of
the conditions to the Offer set forth in Section 14. Subject to applicable rules
of the Commission, Purchaser expressly reserves the right to delay acceptance
for payment of, or delay payment for, Shares pending receipt of any regulatory
approvals specified in Section 15 or in order to comply in whole or in part with
any other applicable law.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company, or
Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility"
and, collectively, the "Book-Entry Transfer Facilities") pursuant to the
procedures set forth in Section 3, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer, and (iii) any other documents required under the
Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.
On or promptly after the date of this Offer to Purchase, Parent anticipates
filing with the Federal Trade Commission (the "FTC") and the Antitrust Division
of the Department of Justice (the "Antitrust Division") a Premerger Notification
and Report Form under the HSR Act in connection with the purchase of Shares
pursuant to the Offer. Accordingly, it is anticipated that the waiting period
under the HSR Act applicable to the Offer will expire at 11:59 p.m., New York
City time, on December 30, 1996. Prior to the expiration or termination of such
waiting period, the FTC or the Antitrust Division may extend such waiting period
by requesting additional information or documentary material from Parent. If
such a request is made with respect to the purchase of Shares in the Offer, the
waiting period will expire at 11:59 p.m., New York City time, on the tenth
calendar day after substantial compliance by Parent with such a request.
Thereafter, the waiting period may be extended only by court order. The waiting
period under the HSR Act may be terminated prior to its expiration by the FTC
and the Antitrust Division. Parent will request early termination of the waiting
period, although there can be no assurance that this request will be granted.
Pursuant to the Merger Agreement, Purchaser may postpone the acceptance for
payment for Shares tendered if the applicable waiting period under the HSR Act
shall not have expired or been terminated. See Section 15 for additional
information regarding the HSR Act.
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<PAGE> 9
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary of Purchaser's
acceptance for payment of such Shares pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary (less the amounts comprising contingent consideration to be
deposited in escrow as described in Section 1) which will act as agent for
tendering shareholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering shareholders whose Shares have been
accepted for payment. Under no circumstances will interest on the Initial Cash
Portion of the purchase price for Shares be paid, regardless of any delay in
making such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
shareholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth in Section 3, such Shares will be credited to an account maintained at
such Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
3. PROCEDURES FOR TENDERING SHARES.
In order for a shareholder validly to tender Shares pursuant to the Offer,
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry delivery of Shares, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase and
either (i) the Share Certificates evidencing tendered Shares must be received by
the Depositary at such address or such Shares must be tendered pursuant to the
procedure for book-entry transfer described below and a Book-Entry Confirmation
must be received by the Depositary, in each case prior to the Expiration Date,
or (ii) the tendering shareholder must comply with the guaranteed delivery
procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will establish accounts with respect
to the Shares at the Book-Entry Transfer Facilities for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of any Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at a Book-Entry Transfer Facility,
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and any other required documents,
must, in any case, be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering shareholder must comply with the guaranteed delivery procedure
described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Medallion Signature Guarantee
Program, or by any other "eligible guarantor institution," as
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<PAGE> 10
such term is defined in Rule 17Ad-15 under the Exchange Act (each of the
foregoing being referred to as an "Eligible Institution"), except in cases where
Shares are tendered (i) by a registered holder of Shares who has not completed
either the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. If a Share Certificate is registered in the
name of a person other than the person who or which signs the Letter of
Transmittal, or if payment is to be made or a Share Certificate not accepted for
payment or not tendered is to be returned to a person other than the registered
holder(s), then the Share Certificate must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear on the Share Certificate, with the signature(s) on
such Share Certificate or stock powers guaranteed by an Eligible Institution.
See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates evidencing such Shares are
not immediately available or such shareholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such shareholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received by the Depositary prior to the Expiration Date as provided below;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message), and any other documents
required by the Letter of Transmittal, are received by the Depositary
within five New York Stock Exchange, Inc. trading days after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram, telex or facsimile transmission to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in the
form of Notice of Guaranteed Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer (less amounts comprising contingent consideration to be placed in
escrow as described in Section 1) will be made only after timely receipt by the
Depositary of the Share Certificates evidencing such Shares, or a Book-Entry
Confirmation of the delivery of such Shares, and the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message), and any other documents required by the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Purchaser also reserves the absolute right to waive any
condition of the Offer or any defect or irregularity in the tender of any Shares
of any particular shareholder, whether or not similar defects or irregularities
are waived in the case of other shareholders. No tender of Shares will be deemed
to have been validly made until all defects and irregularities have been cured
or waived. None of Purchaser, Parent, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of Purchaser as
such shareholder's proxies, each with full power of substitution
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<PAGE> 11
and resubstitution, in the manner set forth in the Letter of Transmittal, to the
full extent of such shareholder's rights with respect to the Shares tendered by
such shareholder and accepted for payment by Purchaser (and with respect to any
and all other Shares or other securities issued or issuable in respect of such
Shares on or after December 6, 1996. All such proxies shall be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective when, and only to the extent that, Purchaser accepts such Shares for
payment. Upon such acceptance for payment, all prior proxies given by such
shareholder with respect to such Shares (and such other Shares and securities)
will be revoked without further action, and no subsequent proxies may be given
nor any subsequent written consent executed by such shareholder (and, if given
or executed, will be deemed not to be effective) with respect thereto. The
designees of Purchaser will, with respect to the Shares for which the
appointment is effective, be empowered to exercise all voting and other rights
of such shareholder as they, in their sole discretion, may deem proper, at any
annual or special meeting of the Company's shareholders or any adjournment or
postponement thereof, by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares (and such other Shares and securities).
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above constitutes a binding agreement between the tendering
shareholder and Purchaser upon the terms and subject to the conditions of the
Offer.
UNDER THE FEDERAL INCOME TAX LAWS, THE DEPOSITARY WILL BE REQUIRED TO
WITHHOLD 31% OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN SHAREHOLDERS PURSUANT
TO THE OFFER. TO PREVENT SUCH BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT
TO PAYMENT TO CERTAIN SHAREHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED
PURSUANT TO THE OFFER, EACH SHAREHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH
SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH
SHAREHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY
COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL.
4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer may be withdrawn by the
tendering shareholder at any time prior to the Expiration Date. Thereafter, such
tenders are irrevocable, except that they may be withdrawn by such shareholder
at any time after February 11, 1997, unless theretofore accepted for payment by
Purchaser pursuant to the Offer. If Purchaser extends the Offer, is delayed in
accepting for payment or paying for Shares, or is unable to accept for payment
or pay for Shares pursuant to the Offer for any reason, then, without prejudice
to Purchaser's rights under the Offer, the Depositary may on behalf of Purchaser
retain tendered Shares, and such Shares may not be withdrawn except to the
extent that tendering shareholders are entitled to withdrawal rights as
described in this Section 4. Any such delay will be an extension of the Offer to
the extent required by law.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover page of this
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered such Shares. If certificates evidencing
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares, in which case a notice of withdrawal
will be effective if delivered to the Depositary by any method of delivery
described in the first sentence of this paragraph. Withdrawals may not be
rescinded, and any Shares properly withdrawn will thereafter be deemed not to
have been validly tendered for purposes of the Offer. However, withdrawn Shares
may be retendered at any time prior to the Expiration Date by following one of
the procedures described in Section 3.
9
<PAGE> 12
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding. None of Purchaser,
Parent, the Dealer Manager, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer or in the Merger will
be a taxable transaction for federal income tax purposes and may also be a
taxable transaction under applicable state, local or foreign tax laws. Because
(i) the Expiration Date falls in 1997, (ii) Purchaser does not intend to
purchase any Shares until such date, and (iii) tendering shareholders may
withdraw their tender of Shares prior to such date, the taxable event should
occur in 1997 with respect to the Initial Cash Portion and in the year of
receipt with respect to the Escrowed Funds, if any, regardless of the date a
shareholder submits his or her Shares to the Depositary. In general, a
shareholder will recognize gain or loss for federal income tax purposes equal to
the difference between the amount of cash received in exchange for the Shares
sold (including amounts, if any, distributed from the Escrowed Funds) and such
shareholder's adjusted tax basis in such Shares. For federal income tax
purposes, such gain or loss will be capital gain or loss if the Shares are
capital assets in the hands of such shareholder, and will be long-term capital
gain or loss if such Shares have been held for more than one year. A
shareholder's ability to deduct capital losses may be limited.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
SHAREHOLDERS, INCLUDING FINANCIAL INSTITUTIONS, BROKER-DEALERS, SHAREHOLDERS WHO
ACQUIRED SHARES PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE
AS COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED
STATES AND FOREIGN CORPORATIONS.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. SHAREHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are traded principally on the Nasdaq Stock Market's National
Market ("Nasdaq/NMS"). The following table sets forth, for the quarters
indicated, the high and low sales prices per Share on Nasdaq/NMS as reported in
published financial sources.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1994:
First Quarter................................................................ $ 6.00 $ 4.25
Second Quarter............................................................... 4.00 2.75
Third Quarter................................................................ 3.375 2.50
Fourth Quarter............................................................... 3.00 2.375
1995:
First Quarter................................................................ $5.125 $2.625
Second Quarter............................................................... 6.75 5.00
Third Quarter................................................................ 6.75 5.50
Fourth Quarter............................................................... 8.625 5.50
1996:
First Quarter................................................................ $ 9.25 $7.875
Second Quarter............................................................... 12.50 9.00
Third Quarter................................................................ 24.25 9.50
Fourth Quarter (through December 11)......................................... 31.75 20.50
</TABLE>
10
<PAGE> 13
The Company has never declared or paid a cash dividend on its Common Stock
and does not anticipate paying any cash dividends in the foreseeable future.
On December 6, 1996, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the closing price per Share as reported on Nasdaq/NMS was $28.25. On
December 11, 1996, the last full trading day prior to the commencement of the
Offer, the closing price per Share as reported on Nasdaq/NMS was $28.438.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise set forth herein, the information concerning the
Company contained in this Offer to Purchase, including financial information,
has been furnished by the Company or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. Neither Purchaser, Parent nor the Dealer Manager assumes any
responsibility for the accuracy or completeness of the information concerning
the Company furnished by the Company or contained in such documents and records
or for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to Purchaser and Parent.
General. The Company is a New York corporation with its principal
executive offices located at 921 Bergen Avenue, Jersey City, New Jersey 07306.
The Company has been engaged since its organization in 1968 in the parking
industry, principally in the operation and management of parking lots and
garages and, since May 1980, in the operation of a self-service gasoline station
in New York. In connection with its parking operations, the Company from time to
time acquires, holds, develops, operates and sells real properties which were
originally acquired or leased with the view to conducting a parking operation
thereon or therein. As of November 30, 1996, the Company operated or managed 117
locations with an aggregate parking capacity of over 61,000 cars. As of such
date, it was conducting parking operations in New York, New Jersey,
Pennsylvania, Maryland, Massachusetts, Delaware, Indiana, Georgia and the
Province of Ontario, with more than 60% of the facilities being operated through
ownership or lease, and the balance being operated under management agreements.
Financial Information. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, as amended (the "Form 10-K") and the unaudited financial statements
contained in the Company's Quarterly Report on Form 10-Q for the interim period
ended September 30, 1996 (the "Form 10-Q"). More comprehensive information is
included in the Form 10-K, the Form 10-Q and other documents filed by the
Company with the Commission. The financial information that follows is qualified
in its entirety by reference to such reports and other documents, including the
financial statements and related notes contained therein. Such reports and other
documents may be examined and copies may be obtained from the offices of the
Commission in the manner set forth below.
11
<PAGE> 14
SQUARE INDUSTRIES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28 OR
29, TEN MONTHS ENDED YEAR ENDED NINE MONTHS ENDED
--------------------------- DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1992 1993 1994 1994 1995 1996
------- ------- ------- ---------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Parking service
revenue.............. $61,800 $62,855 $59,775 $ 50,936 $ 61,772 $45,668
Service station
revenue.............. 5,382 4,923 4,295 3,494 4,159 3,280
Costs and expenses..... 71,883 67,278 65,283 53,714 64,227 47,852
Elimination of
provision for
increased labor
costs................ -- -- -- -- (410) --
Earnings (loss) before
extraordinary item... (4,701) 500 (1,213) 716 2,114 1,096
Provision (benefit) for
income taxes......... 28 646 (398) 196 (125) 432
Extraordinary item --
income tax benefit
from utilization of
net operating loss
carry forwards....... 133 100 -- -- -- --
Net earnings (loss).... (4,596) (46) (815) 520 2,239 1,315
Earnings (loss) per
share:
Before extraordinary
item.............. (3.88) (.12) (.61) .42 1.55 .84
Extraordinary item... .11 .08 -- -- -- --
Net earnings
(loss)............ (3.77) (.04) (.61) .42 1.55 .84
Total assets........... 35,824 34,854 35,012 32,789 37,222 42,637
Long-term debt,
including current
portion.............. 23,347 22,123 30,986 18,268 19,259 22,327
Cash dividends paid.... -- -- -- -- -- --
</TABLE>
12
<PAGE> 15
In connection with Parent's review of the Company and in the course of the
negotiations between the Company and Parent described in Section 10, the Company
provided Parent with certain projected results of operations of the Company,
which Parent and Purchaser believe is not publicly available, the most recently
updated of which is included in the information summarized below. The projected
results of operations do not take into account any of the potential effects of
the transactions contemplated by the Offer and the Merger.
SQUARE INDUSTRIES, INC.
PROJECTED RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PROJECTED FINANCIAL STATEMENTS
PRO FORMA CONSOLIDATED COMPANY FINANCIAL SUMMARY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1996P 1997P
------- -------
<S> <C> <C>
STATEMENTS OF OPERATIONS
Revenues
Parking Service Revenue............................................ $64,878 $70,243
Service Station Revenue............................................ 4,338 4,512
------- -------
Total......................................................... 69,216 74,755
Costs and Expenses
Cost of Parking Services(1)........................................ 50,575 56,316
Operating Costs -- Service Station................................. 4,352 4,526
General and Administrative Expenses................................ 9,074 9,114
------- -------
Total......................................................... 64,001 69,956
Pre-tax Operating Income.............................................. 5,215 4,799
Write-off of Assets................................................ 0 0
Write-off of Bank Re-financing Costs(2)............................ 311 308
Litigation Gain.................................................... (651) 0
Interest Expense, net.............................................. 1,342 1,364
------- -------
Pre-tax Income (Loss).............................................. 4,213 3,127
EBITDA before G&A Expense(3).......................................... 16,606 16,390
EBITDA after G&A Expense(3)........................................... 7,532 7,276
Cash Flow Items:
Depreciation and Amortization...................................... 1,451 1,627
Deferred Rent(4)................................................... 806 790
Accruals(5)........................................................ 60 60
Capital Expenditures............................................... $ 5,798(6) $ 2,025
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
DECEMBER 31,
1996P
------------
<S> <C>
BALANCE SHEET:
Cash.......................................................................... $ 2,457
Current Assets................................................................ 3,555
Net Property, Plant and Equipment............................................. 29,917
Other Assets.................................................................. 6,193
------
Total Assets.......................................................... 42,122
Current Liabilities........................................................... 6,859
Current Portion of Long Term Debt............................................. 1,115
Long Term Debt................................................................ 19,809
Customer Security Deposits.................................................... 317
------
Total Liabilities..................................................... 28,100
Shareholders' Equity(7)....................................................... 14,022
------
Total Liabilities and Equity.......................................... $ 42,122
</TABLE>
- ---------------
(1) Includes $60,000 in provision for commercial rent taxes and in 1996 a
reduction for a $1.0 million portion of a litigation gain.
(2) Non-cash expense for a corporate line of credit, reclassified from G&A
Expenses and represents amortization of $992,000 of refinancing costs over
a 4 year period. Amount to be amortized in 1998 is $309,000 and in 1999 is
$64,000.
(3) EBITDA is pre-tax operating income before interest, depreciation and
amortization, rent averaging and accruals. 1996 EBITDA includes the $1.651
million litigation gain.
(4) Rent Expense, classified under Cost of Parking Services, is computed by
taking an average of all lease payments over the life of the lease.
Deferred Rent arises due to the difference between rent expense and the
actual lease payment.
(5) $60,000 provision for rent taxes.
(6) Includes $3.2 million for 75 Wooster Street acquisition/improvements.
(7) Includes deferred rent of $4,053,000 in 1996P.
TO THE KNOWLEDGE OF PARENT AND PURCHASER, THE COMPANY DOES NOT AS A MATTER
OF COURSE PUBLICLY DISCLOSE PROJECTIONS OR ESTIMATES AS TO FUTURE REVENUES,
EARNINGS, FINANCIAL CONDITION OR OPERATING PERFORMANCE. WHILE PRESENTED WITH
NUMERICAL SPECIFICITY, PROJECTED INFORMATION OF THE TYPE FURNISHED ABOVE IS
BASED ON ESTIMATES AND ASSUMPTIONS THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT
ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE
DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL.
ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT SUCH ESTIMATES AND ASSUMPTIONS WILL
BE ACCURATE, AND THE ACTUAL RESULTS MAY BE SIGNIFICANTLY HIGHER OR LOWER THAN
THOSE SET FORTH ABOVE. IN ADDITION, THESE PROJECTIONS WERE NOT PREPARED WITH A
VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE
COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED
PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND FORECASTS AND ARE INCLUDED IN THIS
OFFER TO PURCHASE ONLY BECAUSE SUCH INFORMATION WAS MADE AVAILABLE TO PARENT BY
THE COMPANY. NONE OF PARENT, PURCHASER OR THE COMPANY INTENDS TO UPDATE OR
OTHERWISE REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE
DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT
THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE SHOWN TO BE IN
ERROR. NONE OF PARENT, PURCHASER, THE COMPANY OR ANY OTHER ENTITY OR PERSON
ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OR VALIDITY OF THE FOREGOING
PROJECTIONS.
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Information as to particular
dates concerning the Company's directors and officers, their remuneration, stock
options granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
shareholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the
14
<PAGE> 17
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and also should be available for
inspection at the following regional offices: New York Regional Office, 75 Park
Place, 14th Floor, New York, New York 10007; and Chicago Regional Office,
Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such materials may be obtained by mail, upon payment of the
Commission's customary fees, by writing to its principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other reports regarding issuers that file electronically with the Commission.
The Shares are traded on Nasdaq/NMS, and reports, proxy material and other
information concerning the Company may be inspected at the offices of Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT.
Purchaser is a newly incorporated New York corporation organized for the
purpose of acquiring the Company and has not carried on any activities other
than in connection with the Offer and the Merger. The principal offices of
Purchaser are located at 2401 21st Avenue South, Suite 200, Nashville, Tennessee
37212. Purchaser is an indirect wholly-owned subsidiary of Parent.
Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available.
Parent's predecessor corporation, Central Parking System, Inc., was founded
in 1968. Parent, a Tennessee corporation, is a leading provider of parking
services in the United States. Parent operates over 1,360 parking facilities
containing over 546,000 spaces, including 109 international facilities, located
in 32 states, the District of Columbia, Puerto Rico, the United Kingdom, Mexico
and Germany. Parent provides parking consulting services in Malaysia and Spain
and has a business development office in Amsterdam. From its inception, Parent
has sought to increase the level of integrity and professionalism in the parking
industry. Parent's leadership position in the parking industry is a result of
applying professional management strategies to a consolidating industry
historically managed by small local operators, understanding the needs of the
parking public, applying technology to parking services, retaining employees
through proprietary training programs, and utilizing an incentive compensation
system that rewards performance.
The name, citizenship, business address, principal occupation or
employment, and five-year employment history for each of the directors and
executive officers of Purchaser and Parent and certain other information are set
forth in Exhibit I hereto.
The common stock of Parent, par value $.01 per share, is listed and traded
on the NYSE under the symbol "PK." Parent has no other class of stock and has no
long-term debt other than the Acquisition Facility described in Section 10.
The following selected financial and operating data relating to Parent and
its subsidiaries has been derived from the consolidated financial statements
contained in Parent's Annual Report on Form 10-K for the year ended September
30, 1995 and the unaudited consolidated financial information contained in
Parent's Quarterly Report on Form 10-Q for the nine months ended June 30, 1996.
More comprehensive financial information is included in such Annual Report and
the other documents filed by Parent with the Commission, and the consolidated
financial data set forth below is qualified in its entirety by reference to such
reports and other documents, including the consolidated financial statements
contained therein. Parent is also subject to the informational requirements of
the Exchange Act and in accordance therewith files periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Parent is required to disclose in such
proxy statements certain information, as of particular dates, concerning its
directors and officers, their remuneration, stock options granted to them, the
principal holders of its securities and material interests of such persons in
transactions with Parent. Such reports, proxy statements and other information
should also be available for inspection and copying at the offices of the
Commission in the same manner as set forth with respect to the Company in
Section 7.
15
<PAGE> 18
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, NINE MONTHS ENDED
--------------------------------------- JUNE 30,
1992 1993 1994 1995 1996
------- ------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Revenues:
Parking............................ $26,940 $69,589 $ 82,890 $ 94,383 $ 81,568
Management contract................ 19,054 25,829 29,278 31,772 24,867
------- ------- -------- -------- --------
Total revenues................ 45,994 95,418 112,168 126,155 106,435
Cost and expenses:
Cost of parking.................... 24,391 66,168 76,952 87,192 73,169
Cost of management contracts....... 6,232 9,087 9,812 9,650 7,642
General and administrative......... 9,113 12,374 14,196 15,711 13,024
------- ------- -------- -------- --------
Total costs and expenses...... 39,736 87,629 100,960 112,553 93,835
Operating earnings............ 6,258 7,789 11,208 13,602 12,600
Net gains on sales of property and
equipment.......................... 2,424 1,122 2,214 81 1,182
Earnings before income taxes.......... 8,430 8,650 14,143 15,507 15,929
Income taxes.......................... 3,045 3,416 5,179 5,563 5,529
Net earnings.......................... 5,385 5,234 8,964 9,944 10,400
PER SHARE DATA:
Net earnings.......................... $ 0.35 $ 0.34 $ 0.58 $ 0.65 $ 0.60
Weighted average common shares(1)..... 15,372 15,372 15,372 15,372 17,446
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------------------- JUNE 30,
1992 1993 1994 1995 1996
------- ------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............. $ 2,542 $ 3,193 $ 12,026 10,218 $ 28,614
Working capital....................... (3,873) (4,466) 1,987 2,676 17,703
Total assets.......................... 45,097 46,950 60,029 70,440 102,210
Long-term debt, less current
portion............................ 7,594 -- -- -- --
Shareholders' equity.................. 18,315 23,249 31,861 41,360 73,153
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, NINE MONTHS ENDED
------------------------------------- JUNE 30,
1992 1993 1994 1995 1996
------- ------- ------- ------- -----------------
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Depreciation and amortization........... $ 1,384 $ 2,274 $ 2,594 $ 2,882 $ 2,517
</TABLE>
- ---------------
(1) Reflects the recapitalization, initial public offering of shares, and
subsequent three-for-two stock split of Parent.
Parent declared an initial quarterly cash dividend of $0.02 per share,
adjusted for the stock split, on December 18, 1995 and has paid a similar
dividend following the end of each subsequent quarter. The Board of Directors'
intent is to continue declaring a cash dividend each quarter depending on
Parent's profitability and capital necessary to finance operations and
expansion.
Except as described in this offer to Purchase, (i) none of Purchaser,
Parent nor, to the best knowledge of Purchaser and Parent, any of the persons
listed in Exhibit I to this Offer to Purchase or any affiliate or majority-owned
subsidiary of Purchaser, Parent or any of the persons so listed beneficially
owns or has any right to acquire, directly or indirectly, any Shares, and (ii)
neither Purchaser nor Parent nor, to the best
16
<PAGE> 19
knowledge of Purchaser and Parent, any of the persons or entities referred to
above nor any director, executive officer or subsidiary of any of the foregoing
has effected any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement and as otherwise described in
this Offer to Purchase, none of Purchaser, Parent nor, to the best knowledge of
Purchaser and Parent, any of the persons listed in Exhibit I to this Offer to
Purchase, has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or voting of such securities, finder's fees, joint ventures, loan
or option arrangements, puts or calls, guaranties of loans, guaranties against
loss, guarantees of profits, division of profits or loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, since
January 1, 1993, neither Purchaser nor Parent nor, to the best knowledge of
Purchaser and Parent, any of the persons listed on Exhibit I hereto, has had any
business relationship or transaction with the Company or any of its executive
officers, directors or affiliates that is required to be reported under the
rules and regulations of the Commission applicable to the Offer. Except as set
forth in this Offer to Purchase, since January 1, 1993, there have been no
contacts, negotiations or transactions between any of Purchaser, Parent or any
of their respective subsidiaries or, to the best knowledge of Purchaser and
Parent, any of the persons listed in Exhibit I to this Offer to Purchase, on the
one hand, and the Company or its affiliates, on the other hand, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets or any other transaction.
Certain Additional Information Required to be Disclosed by the NYBCL.
Parent has a profit-sharing plan for domestic employees to which employer
contributions are made at the discretion of Parent's Board of Directors.
Voluntary after-tax contributions not in excess of 10% of compensation may be
made by non-highly compensated employees. Eligible employees who work more than
1,000 hours during the plan year and are 20 years or older may become
participants in the plan after one year of continuous service, if the employee
was employed prior to reaching age 65 and if the employee is not a member of a
collective bargaining unit. An employee's interest in the plan vests after two
years at the rate of 20% each year, so that an employee is fully vested at the
end of seven continuous years of service.
Parent has a tuition reimbursement program which provides financial
assistance to certain full-time employees with at least one year of service
prior to enrollment. Reimbursement for tuition is contingent on, among other
things, Parent's approval, attendance outside normal working hours and
completion of the course with a passing grade. Parent also has a policy of
reimbursing certain relocation expenses to eligible employees associated with
the transfer of such employee in the interest of Parent. Eligibility is
determined on a case-by-case basis. Certain travel, food and lodging expenses
may be reimbursed to such employee by Parent.
Parent has historically participated in a number of charitable activities,
including activities benefiting a local children's hospital, a local elementary
school and the Juvenile Diabetes Foundation.
Parent is from time-to-time subject to claims and suits arising in the
ordinary course of business. Parent has not been a party to any proceeding
finally adjudicated within the previous five years involving any violation by
Parent of the Federal National Labor Relations Act, Occupational Safety and
Health Act of 1970, Fair Labor Standards Act, or Employee, Retirement and Income
Security Act, as amended. Over the past five years, Parent has settled a small
number of proceedings by posting additional informational and compliance notices
pursuant to requests by the National Labor Relations Board.
9. FINANCING OF THE OFFER AND THE MERGER.
The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay related fees and expenses is estimated to be approximately
$53 million. Purchaser will obtain all of such funds from Parent or its
affiliates. Parent and its affiliates currently intend to provide such funds
from the revolving credit provisions of a $150,000,000 loan agreement (the
"Acquisition Facility") with SunTrust Bank, Nashville, N.A. ("STB") and certain
other lenders (the "Lenders") dated December 12, 1996. The Acquisition Facility,
which is unsecured, expires January 31, 2000, provided that the Lenders may
extend the term until January 31, 2001, upon the request of Parent.
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Revolving loans under the Acquisition Facility bear interest at one of two
rates chosen by Parent, either (i) STB's "base rate" (defined as the higher of
STB's prime lending rate or the Federal Funds Rate plus 1/2%), or (ii) the
LIBOR rate plus a margin ranging from .25% to 1.50%, which margin depends on (x)
the occurrence of certain dates or events, (y) Parent's ratio of funded debt to
EBITDA (earnings before interest, tax, depreciation and amortization), and (z)
the rating from Standard and Poor's or Moody's for Parent's senior unsecured
debt rating. Parent must permanently reduce the amount available for borrowing
under the Acquisition Facility to $120,000,000 by February 28, 1997, provided
that the Lenders may extend such date to April 30, 1997 upon the payment of a
certain commitment fee by Parent. Parent must also permanently reduce the amount
available for borrowing under the Acquisition Facility to $85,000,000 by
September 30, 1997 or upon the occurrence of certain earlier events, provided
that the Lenders may extend the September 30 date to December 31, 1997 and again
to March 31, 1998, in each case upon the payment of a certain extension fee by
Parent. Parent anticipates that borrowings under the Acquisition Facility will
be repaid out of cash flow, a refinancing, or the proceeds of a debt or equity
offering, although Parent currently has no plans with respect to any such
refinancing or offering.
The Acquisition Facility contains customary representation, warranties and
covenant of Parent and its subsidiaries, including financial covenants relating
to maintenance of ratios and restrictions on further indebtedness. The
description of the Acquisition Facility contained herein is qualified in its
entirety by reference to the text of the Acquisition Facility filed as an
exhibit to the Schedule 14D-1, a copy of which may be obtained from the offices
of the Commission.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE MERGER AGREEMENT;
EMPLOYMENT, CONSULTANCY AND CONFIDENTIALITY AND NONCOMPETE AGREEMENTS.
Background of the Offer; Contacts with the Company
Monroe J. Carell, Jr., the Chairman of the Board of Parent, and Lowell
Harwood, the Chairman of the Board of the Company, became acquainted through
industry meetings, and at such meetings and in other conversations from time to
time have discussed trends and general strategic opportunities in the parking
industry. As part of its strategy, Parent has from time to time evaluated
possible acquisition candidates. In late 1989, representatives of Parent had
informal and tentative contacts with representatives of the Company concerning
strategic alternatives of both parties which led to the execution of a
confidentiality agreement which remained in effect from January 1990 until
December 1995. No substantive discussions regarding a transaction between the
Company and Parent were held during this period although in late 1995, the
Company supplied limited financial information concerning the Company to Parent
pursuant to such confidentiality agreement. In connection with its acquisition
strategy, in April 1996, Parent requested that its financial advisor, Bradford,
prepare a list of issues with respect to the operations and financial condition
of the Company based upon publicly available information.
On May 7, 1996, representatives of Parent contacted and engaged in general
discussions with representatives of the Company regarding the possible
acquisition of the Company by Parent. The Company has advised Parent that on May
10, 1996, the Company engaged Blackstone to serve as its financial advisor in
connection with the evaluation of various business options, including the sale
of the Company. The Company has also advised Parent that beginning in July 1996
and continuing until December 1, 1996, a number of parties, including Parent,
were contacted by Blackstone to ascertain their interest concerning an
acquisition of the Company and were requested to submit proposals concerning the
terms of such an acquisition. Pursuant to such contacts between Blackstone and
Parent, on July 10, 1996, the Company and Parent executed a Confidentiality
Agreement, a copy of which is attached as an exhibit to the Schedule 14D-1 (the
"Confidentiality Agreement"). Pursuant to the Confidentiality Agreement, Parent
was provided with certain nonpublic financial and other information concerning
the business and operations of the Company and agreed to refrain from disclosing
such information.
On August 1, 1996, Blackstone provided Parent with the procedures to be
followed by parties interested in an acquisition of the Company. On August 12,
1996, Parent and Bradford executed an engagement letter whereby Bradford was
retained to serve as Parent's financial advisor with respect to a possible
acquisition of
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the Company. In August and September 1996, Parent and its representatives
conducted their own preliminary due diligence review of the Company based on
publicly available information and the Offering Memorandum provided to Parent by
Blackstone and prepared analyses concerning the operational and financial impact
of an acquisition of the Company by Parent. On August 19, 1996, Parent submitted
to the Company an initial indication of interest in the acquisition of the
Company at a price of $21.00 per Share payable in cash or $24.00 per Share
payable in the common stock of Parent, subject to completion of due diligence
and other contingencies. On August 29, 1996, Blackstone informed Parent that the
Company considered Parent's initial proposal as inadequate. Throughout August
and September, Parent requested and was provided additional information
concerning the operations and financial condition of the Company and continued
its evaluation of the financial and operational impact of an acquisition of the
Company by Parent.
On September 5, 1996, Blackstone informed Parent that the Board of
Directors of the Company desired to continue discussions with Parent concerning
an acquisition of the Company by Parent. On September 23-25, 1996,
representatives of Parent, including Bradford and Parent's counsel and
accountants, traveled to New York and conducted further due diligence of the
Company and its operations. During this visit, senior management of the Company
and the Parent engaged in discussions of the financial condition and current
operations of the Company and strategic alternatives in the event of an
acquisition of the Company by Parent. The Company has informed Parent that other
parties were invited to conduct due diligence and engaged in similar discussions
with the Company during this general time period.
On October 1, 1996, representatives of Parent and Bradford and counsel for
Parent traveled to New York to attend a presentation by management of the
Company. Shortly thereafter, Blackstone submitted to Parent a draft of a
proposed acquisition agreement and requested Parent's comments as well as a
proposal setting forth the terms upon which Parent would acquire the Company. On
October 22, 1996, Parent submitted an offer to acquire all of the Shares at a
price of $30.00 per Share payable in cash or, alternatively, a price of $34.00
per Share payable in the common stock of Parent, and delivered to the Company a
proposed acquisition agreement. The Company has advised Parent that two other
parties submitted acquisition proposals. On November 4, 1996, management of
Parent and the Company met in New York to discuss Parent's proposal and the
Company informed Parent that it was unwilling to consummate a transaction at the
submitted price, but desired to continue negotiations with Parent.
On November 7, 1996 Parent submitted an offer to acquire all of the Shares
at a price of $31.00 per Share payable in cash or, alternatively, a price of
$40.00 per Share payable in the common stock of Parent, and delivered to the
Company a revised acquisition agreement. The Company has advised Parent that one
other party had submitted another proposal to acquire the Company in early
November. On November 15, 1996, the Company informed Parent that it wished to
continue negotiations with Parent with respect to Parent's $31.00 all cash
offer. During the period from November 15, 1996 to December 5, 1996, the Company
and Parent negotiated the terms of the Merger Agreement.
On the evening of December 6, 1996, following meetings of the respective
Boards of Directors earlier that afternoon approving the transaction, Parent,
Purchaser and the Company entered into the Merger Agreement and the parties
announced the execution thereof prior to the opening of business on December 9,
1996.
The Merger Agreement
The following is a summary of the Merger Agreement, a copy of which has
been filed as an exhibit to the Schedule 14D-1 and which may be obtained from
the Commission. Such summary is qualified in its entirety by reference to the
Merger Agreement.
The Offer. The Merger Agreement provides for the commencement of the Offer
as soon as practicable, but in any event within five business days of the
initial public announcement of Purchaser's intention to commence the Offer. The
obligation of Purchaser to commence the Offer and to accept for payment and to
pay for any Shares tendered pursuant to the Offer is subject to the satisfaction
of the Minimum Condition and
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certain other conditions that are described in Section 14 hereof and in the
Merger Agreement. Purchaser and Parent have agreed that no change in the Offer
may be made which (i) decreases the price per Share payable in the Offer, (ii)
changes the form of consideration to be paid in the Offer, or (iii) modifies the
conditions to the Offer or imposes conditions to the Offer in addition to those
set forth in Section 14 hereof and in the Merger Agreement, unless previously
approved by the Company in writing. Purchaser and Parent have agreed that the
Offer shall expire 21 business days after it is commenced and shall not be
extended without the prior written consent of the Company; provided Purchaser
may extend the Offer one time for no more than 10 days and only if at least 80%
of all of the outstanding Shares have been tendered prior to such extension.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions set forth therein, and in accordance with the NYBCL, at the
Effective Time, Purchaser will be merged with and into the Company. As a result
of the Merger, the separate corporate existence of the Company will cease, and
the Company will continue as the Surviving Corporation and an indirect
wholly-owned subsidiary of Parent. Upon consummation of the Merger, each issued
and outstanding Share (other than (i) any Shares held in the treasury of the
Company, Shares owned by Parent or any direct or indirect subsidiary of Parent
or the Company (which shall be canceled at the Effective Time), and (ii) Shares
as to which the holder thereof shall have validly exercised such holder's
appraisal rights, if any, under Section 910 of the NYBCL) will be converted into
the right to receive the Merger Consideration.
Pursuant to the Merger Agreement, each share of common stock, par value
$.01 per share, of Purchaser issued and outstanding immediately prior to the
Effective Time will be converted into one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Purchaser immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation. The
Merger Agreement also provides that, at the Effective Time, the Certificate of
Incorporation and Bylaws of the Purchaser, as in effect immediately prior to the
Effective Time, will be the Certificate of Incorporation and Bylaws of the
Surviving Corporation until thereafter amended as provided therein and in the
NYBCL.
Agreements of Parent, Purchaser and the Company. Pursuant to the Merger
Agreement, the Company, acting through the Board, will, subject to its fiduciary
duties under applicable law based on an opinion of outside legal counsel, if
applicable, duly call, give notice of, convene and hold an annual or special
meeting of its shareholders as soon as practicable following consummation of the
Offer for the purpose of considering and taking action on the Merger Agreement
and the transactions contemplated thereby (the "Shareholders' Meeting"). In the
event Purchaser purchases ninety percent (90%) or more of the outstanding Shares
in the Offer, the Merger will be consummated without a Shareholders' Meeting.
Proxy Statement. The Merger Agreement provides that, if shareholder
approval of the Merger is required, the Company will, as soon as practicable,
(i) file with the Commission under the Exchange Act, and use its reasonable best
efforts to have cleared by the Commission, a proxy statement and related proxy
materials (the "Proxy Statement") with respect to the Shareholders' Meeting;
(ii) will cause the Proxy Statement to be mailed to shareholders of the Company
at the earliest practicable time; and (iii) will otherwise comply in all
material respects in respect of all applicable legal requirements in respect of
any shareholder's meeting. The Company has also agreed, subject to its fiduciary
duties under applicable law based on an opinion of outside legal counsel, to
include in the Proxy Statement the recommendation of the Board that the
shareholders of the Company approve and adopt the Merger Agreement and the
transactions contemplated thereby, including, without limitation, the Merger. To
the extent permitted by applicable law, Parent and Purchaser have each agreed to
vote all shares beneficially owned by them in favor of the Merger.
Conduct of Business. Pursuant to the Merger Agreement, the Company has
agreed, among other things, that the Company will use its commercially
reasonable efforts to preserve the business organization of the Company intact
and to maintain its existing relations with its suppliers, customers, employees
and business associates. In addition, the Company will conduct its business only
in the ordinary and usual course consistent with certain information provided to
Parent. During the period from the date of the Merger Agreement until the
earlier to occur of the Effective Time or the termination of the Merger
Agreement, the Company has also
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agreed that, except as required under or permitted by the Merger Agreement or as
disclosed in the Disclosure Schedule to the Merger Agreement, or as otherwise
consented to in writing by Parent, each of the Company and its subsidiaries will
not, among other things: (A) declare, set aside or pay any dividends or other
distributions payable in cash, stock or property with respect to the Shares, or
split, combine or reclassify the outstanding Shares; (B) issue, sell, pledge,
dispose of or encumber any additional shares of, or securities convertible or
exchangeable for, or any warrants, options, calls, commitments or rights of any
kind to acquire any shares of its capital stock of any class other than Shares
issuable pursuant to warrants or options outstanding as of the date of the
Merger Agreement under the Stock Option Plan; (C) amend its respective
certificate of incorporation, bylaws or other governing documents; (D) settle or
compromise any material debt, encumbrance, claims or litigation in excess of
$100,000 in the aggregate or, except in the ordinary and usual course of
business, modify, amend or terminate any of its contracts or waive, release or
assign any material rights or claims; (E) transfer, lease, license, guarantee,
sell, mortgage, pledge, dispose of or encumber any of its assets or incur or
modify any indebtedness or other liability other than in the ordinary and usual
course of business and as provided in the Merger Agreement; (F) acquire directly
or indirectly by redemption or otherwise any shares of capital stock of the
Company; (G) enter into, amend or terminate any lease of real property other
than in the ordinary and usual course of business as provided in the Merger
Agreement; (H) except in the ordinary and usual course of business, authorize
capital expenditures in excess of $100,000 or make any significant acquisition
of, or investment in, assets or stock of any other person or entity; (I) except
in the ordinary and usual course of business as disclosed to Parent, (i) grant
any severance or termination pay to, or enter into any employment or severance
agreement with any director, officer or other employee of the Company, except as
set forth in the Merger Agreement, or (ii) establish, adopt, enter into, make
any new grants or awards under or amend, any bonus, profit sharing, thrift,
savings, compensation, stock purchase, stock bonus, stock option, restricted
stock, pension, retirement, employee stock ownership, deferred compensation,
employment, collective bargaining, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any current or
former directors, officers or employees; (J) make any tax election or permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated without notice to the Parent, except in the ordinary and
usual course of business, and shall maintain insurance upon all of its
properties and operations in such amounts and of such kinds comparable to that
in effect on the date of the Merger Agreement on such properties and with
respect to such operations; (K) in any material respect fail to (i) maintain its
books, accounts and records in the usual, regular and ordinary manner, on a
basis consistent with prior years, (ii) comply with all contractual and other
obligations of the Company and its subsidiaries, and (iii) comply with all
applicable laws to which it is subject; or (L) authorize or enter into an
agreement to do any of the foregoing.
Company Board Representation. The Merger Agreement provides that, promptly
upon the purchase by Purchaser of a majority of the outstanding Shares pursuant
to the Offer, Purchaser will be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as will give Purchaser representation on the Board equal to the product
of the total number of directors on the Board (giving effect to the directors
elected pursuant to this sentence and including current directors serving as
officers of the Company), multiplied by the percentage that the aggregate number
of Shares beneficially owned by Purchaser or any affiliate of Purchaser at such
time bears to the total number of Shares then outstanding, and the Company will,
at such time, promptly take all actions necessary to cause Purchaser's designees
to be elected as directors of the Company, including increasing the size of the
Board or securing the resignations of incumbent directors or both. The Merger
Agreement also provides that, at such times, the Company will cause persons
designated by Purchaser to constitute the same percentage of (i) each committee
of the Board (some of the members of which may be required to be independent
under applicable law), (ii) each board of directors of each subsidiary of the
Company, and (iii) each committee of each such board, in each case only to the
extent permitted by applicable law, as Purchaser's designees are of the Board of
Directors of the Company.
Amendment and Waiver. Subject to certain restrictions, the Merger
Agreement may be amended by the mutual agreement of the parties thereto, by
action taken or authorized by their respective Boards of Directors, at any time
prior to the Effective Time provided, however, that, after approval of the
Merger by the shareholders of the Company, no amendment may be made which by law
requires further approval by such
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shareholders without such further approval; provided further, that after the
completion of the Offer and the purchase of the Shares thereunder, the Merger
Agreement will not be amended by the Company without the approval of a majority
of the persons who are directors of the Company on the date of the Merger
Agreement; and provided further, however, that certain provisions in the Merger
Agreement governing indemnification of officers and directors and employment
matters may not be amended subsequent to the Effective Time.
Access to Information; Confidentiality. Pursuant to the Merger Agreement,
upon reasonable notice and subject to certain restrictions contained in the
Merger Agreement from the date of the Merger Agreement until the Effective Time,
the Company will afford to Parent and to the officers, employees, counsel,
accountants and other authorized representatives of Parent access during normal
business hours prior to the Effective Time to its properties, books, records and
contracts, and shall furnish Parent with all information concerning its business
properties and personnel as Parent may reasonably request. Parent and Purchaser
have agreed to keep such information confidential in accordance with the
Confidentiality Agreement.
No Solicitation of Transactions. The Merger Agreement provides that
neither the Company nor any of the officers and directors of the Company shall,
and the Company shall direct and use its reasonable best efforts to cause the
employees, agents and representatives of the Company or any of its subsidiaries
(including, without limitation, any investment banker, attorney or accountant
retained by the Company) not to, initiate, solicit or encourage, directly or
indirectly, any proposal or offer to acquire all or any substantial part of the
business and properties of the Company and its subsidiaries or any capital stock
of the Company and its subsidiaries, whether by merger, purchase of assets,
tender offer or otherwise, whether for cash, securities or any other
consideration or combination thereof; provided, however, that the Company may
respond to certain unsolicited requests for information and participate in
negotiations with such parties as required by its fiduciary obligations under
applicable state law or the exercise of its duties under Rule 14e-2 under the
Exchange Act, subject to the terms and conditions described in the Merger
Agreement. The Merger Agreement requires that the Company immediately cease and
cause to be terminated any solicitation, initiation, encouragement, activity,
discussion or negotiation existing as of the date of the Merger Agreement with
any parties concerning an acquisition proposal. The Company has also agreed to
notify Parent promptly if any such proposal or offer, or any inquiry or contact
with any person or entity with respect thereto, is made. Subject to the Board's
fiduciary duties, the Company has further agreed not to enter into any
definitive agreement with any other person or entity unless it has delivered to
Parent at least two business days prior to execution by the Company a copy of
the definitive agreement and Parent shall have failed, within such two day
period, to amend the terms of the Merger Agreement so that the Merger would be,
in the good faith determination of the Board, at least as favorable to the
Company's shareholders as the proposed acquisition.
Affiliate Agreements. The Company shall cause certain of the affiliates of
the Company who own Shares or options or warrants to purchase Shares which equal
in the aggregate 1,038,040 Shares to tender such Shares or enter into agreements
to cash out such options and warrants and to enter into an Agreement to Support
the Transaction (the "Support Agreement") as described below. The Company has
also agreed to cause (i) Lowell Harwood, Sanford Harwood and Leslie Harwood
Ehrlich to enter into Non-Competition Agreements described below, (ii) Brett
Harwood to enter into an Employment Agreement described below, (iii) Lowell
Harwood and Sanford Harwood to enter into a Consultancy Agreement described
below, and (iv) the nonunion manager level and above employees granted severance
payments as disclosed in the Merger Agreement to enter into Non-Competition
Agreements equal to the duration of the severance granted.
Treatment of Stock Options. At or prior to the Effective Time, the Company
shall cause pursuant to agreements as provided in the Merger Agreement, each
outstanding option and each outstanding warrant, whether or not then
exercisable, to be either canceled or modified to entitle the holder thereof, to
receive in settlement thereof an amount in cash (after giving effect to any
required tax withholdings) equal to the difference between $28.50, and the
exercise price per Share of such option or warrant multiplied by the number of
Shares previously subject to such option or warrant, such, that, on and as of
the Effective Time, there shall be no outstanding stock options or warrants of
the Company. In addition, $2.50 per Option Share will be deposited by Purchaser
into escrow as contingent consideration for distribution, in whole or in part,
to
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the optionholders and warrant holders upon resolution of two specific matters,
subject to adjustment as provided in the Escrow Agreement.
Escrow. The Merger Agreement provides that, of the Offer Price and Merger
Consideration, $2.50 per Share and per Option Share will be placed into an
escrow account held by the Escrow Agent pursuant to the Escrow Agreement. The
Escrowed Funds are to be held by the Escrow Agent for certain periods and are
being held solely because of certain contingent matters, which, if favorably
resolved, would result in additional value to the Company. See Section 1 for a
description of the Escrow Agreement.
Loan Arrangements. The Merger Agreement provides that promptly after the
purchase by Purchaser of the Shares upon the expiration of the Offer, Purchaser
shall (i) either repay or refinance the obligations of the Company and its
subsidiaries pursuant to the Credit Agreement among National Westminster Bank
USA (Fleet Bank), the Company and 808 Square Corp. dated July 5, 1988 as amended
to date (the "Natwest Debt"), and (ii) simultaneously therewith repay in full
certain loans made to the Company by Lowell Harwood and Sanford Harwood in June,
1995 in the original principal amount of $500,000, plus interest.
Indemnification and Insurance. The Merger Agreement provides that, for a
period of six years from and after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify, defend
and hold harmless each present and former officer, director or employee of the
Company from and against all losses, claims, damages, costs, expenses,
liabilities or judgments or amounts that are paid in settlement with the
approval of the indemnifying party (which approval shall not be unreasonably
withheld) of or in connection with any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director, officer or employee of the
Company, pertaining to any matter existing or occurring at or prior to the
Effective Time, including liabilities arising as a result of the Merger
Agreement and the transactions contemplated thereby, to the fullest extent
permitted under the NYBCL, and the Surviving Corporation will pay all expenses
in advance of the final disposition of any such action or proceeding. The Merger
Agreement provides that for a period of six years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company (provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims or matters
existing or occurring before the Effective Time; provided, that Surviving
Corporation shall not be required to pay an annual premium for such insurance in
excess of two times the last annual premium paid by the Company prior to the
date of the Merger Agreement, but in such case shall purchase as much coverage
as possible for such amount.
Employee Benefits. The Merger Agreement provides that the Parent agrees to
cause the Surviving Corporation and its subsidiaries, immediately after the
Effective Time, shall honor the employment agreements, arrangements and programs
between the Company or its subsidiaries and their respective employees in
accordance with their terms as in effect on the date of the Merger Agreement
(collectively, the "Employee Arrangements"), to the same extent that the Company
and its subsidiaries would be required to perform them in the event that the
Merger were not consummated. The Merger Agreement provides that for a period of
one year following the Effective Time, Parent shall cause the Surviving
Corporation to provide the garage manager employees and other employees senior
thereto of the Company and its subsidiaries (excluding employees covered by
collective bargaining agreements whose benefits shall be governed by the
collective bargaining agreements in accordance with their terms as in effect on
the date of the Merger Agreement) who are not covered by spousal insurance
arrangements with retirement, pension, medical insurance, life insurance and
other similar benefits following the Effective Time which are, in the aggregate,
substantially comparable to such benefits under the plans and arrangements
maintained for its employees by the Parent as of the date of the Merger
Agreement, provided nothing shall require the Surviving Corporation to continue
the employment of the Company's employees beyond that required by any applicable
existing employment agreement. Parent further agrees to cause the Surviving
Corporation to honor, comply with and perform all obligations of the Company and
the subsidiaries under certain severance arrangements as set forth in the Merger
Agreement for a period of one year following the Effective Time.
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Further Action. The Merger Agreement provides that, subject to its terms
and conditions, each of Parent and the Company will make promptly its respective
filing, and thereafter make any other required submissions under the HSR Act and
all other required regulatory approvals and authorizations with respect to the
Offer, the Merger and the other transactions contemplated by the Merger
Agreement (collectively, the "Transactions"), and, except as contemplated by the
Merger Agreement, each of the parties to the Merger Agreement will use its
commercially reasonable best efforts to take or cause to be done, all other
things necessary or advisable to consummate and make effective as promptly as
practicable the Transactions, to obtain in a timely manner all necessary
waivers, consents, and approvals and to effect all necessary registrations and
filings, and to otherwise satisfy or cause to be satisfied all conditions
precedent to its obligations under the Merger Agreement or to vest the Surviving
Corporation with full title to all properties, assets, rights, approvals and
franchises of either Purchaser or the Company.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto, including
representations by the Company as to the absence of certain change or events
concerning the Company's business, compliance with law, regulatory approvals,
litigation, employee benefit plans, labor matters, leases and contracts,
intellectual property, environmental matters, brokers and taxes.
Conditions to the Merger. The respective obligations of Parent, Purchaser
and the Company to effect the Merger are subject to the satisfaction of the
following conditions at or prior to the Effective Time: (i) if required by
applicable law, the Merger Agreement and the Merger will have been approved by
the holders of at least two thirds of the outstanding Shares at the
Shareholders' Meeting; (ii) any applicable waiting period under the HSR Act will
have expired or be terminated; (iii) there shall not be threatened, instituted
or pending any action, proceeding or other application before any court or
governmental authority or other regulatory or administrative agency or
commission, by any government or governmental authority or by any other person,
which challenges or seeks to restrain or prohibit consummation of the Offer and
the Merger, or which seeks to impose any material restriction on the Parent or
the Company in connection with consummation of the Merger, and no court or
governmental or regulatory authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order (whether preliminary or permanent)
which is in effect and prohibits consummation of the transactions contemplated
by the Merger Agreement or imposes material restrictions on the Parent or the
Company in connection with consummation of the Merger; and (iv) the Offer shall
have been made and Purchaser shall have purchased Shares pursuant to the Offer.
The obligation of the Company to effect the Merger is also subject to the
conditions that (i) each of Parent and Purchaser shall have performed in all
material respects all material obligations and complied with all material
covenants and conditions required by the Merger Agreement to be performed or
complied by it at or prior to the Effective Time, and (ii) the representations
and warranties of the Parent and Purchaser contained in the Merger Agreement
shall be true at the Effective Time, except for (a) changes contemplated under
the Merger Agreement, (b) those representations and warranties which address
matters only as of a particular date (which shall remain true and correct as of
such date), and (c) where the failure to be true and correct would not have a
material adverse effect on the financial condition, properties, business or
results of operations of the Parent.
The obligations of Parent and Purchaser to effect the Merger are also
subject to the conditions that: (i) the Company shall have performed in all
material respects each agreement or covenant to be performed by it at or prior
to the Effective Time; (ii) the representations and warranties of the Company
contained in the Merger Agreement shall be true at the Effective Time, except
for (a) changes contemplated under the Merger Agreement, (b) those
representations and warranties which address matters only as of a particular
date (which shall remain true and correct as of such date), and (c) where the
failure of the representations and warranties to be true and correct in the
aggregate would not have a Material Adverse Effect on the Company (Material
Adverse Effect as used in the preceding clause shall mean items which in the
aggregate would have (1) a recurring annual pre-tax income effect of $400,000 or
more or (2) a non-recurring income, balance sheet or financial condition effect
of $4,000,000 or more); (iii) Parent and Purchaser shall have received evidence
that the Natwest Debt can be satisfied without incurring payment for accrued
deferred interest
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(which evidence has been received); (iv) all consents, authorizations, orders
and approvals of (or filings or registration with) any governmental commission,
board or other regulatory body required in connection with the execution,
delivery and performance of the Merger, the Merger Agreement and the
Transactions shall have been obtained or made, except for filings in connection
with the Merger and any other documents required to be filed after the Effective
Time; and (v) since the date of Merger Agreement, there shall not have occurred
a Material Adverse Change with respect to the Company (for purposes of the
preceding clause, Material Adverse Change shall mean changes or events which in
the aggregate would have (a) a recurring annual pre-tax income effect of
$400,000 or more or (b) a non-recurring income, balance sheet or financial
condition effect of $4,000,000 or more).
Termination. The Merger Agreement provides that it may be terminated and
the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval of the Merger Agreement by the
shareholders of the Company: (a) by mutual written consent duly authorized by
the respective Boards of Directors of Parent, Purchaser and the Company; (b) by
Parent or the Company if (i) any court of competent jurisdiction or other
governmental authority or entity shall have issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger or holding that any law applicable to the Merger declares
the Merger to be illegal and such order, decree, ruling or other action shall
have become final and nonappealable, (ii) the requisite approval of shareholders
shall not have been obtained at a meeting duly convened therefor, or (iii) the
Effective Time shall not have occurred on or before May 31, 1997, unless the
absence of such occurrence is due to the failure of the party seeking to
terminate to perform in all material respects any obligation under the Merger
Agreement required to be performed by it at or prior to the Effective Time; (c)
by Parent following the purchase of the Shares in the Offer, if (i) the Company
shall have breached in any material respect any of its representations,
warranties, covenants or agreements contained in the Merger Agreement other than
as a direct result of any action or inaction by Parent to the extent such breach
would constitute a Material Adverse Effect as previously defined, (ii) the Board
shall fail to make or shall have withdrawn or modified in a manner adverse to
Parent or Purchaser its approval or recommendation of the Offer, the Merger
Agreement or the Merger or the Board, upon reasonable request by the Parent,
shall fail to reaffirm such approval or recommendation, or shall have resolved
to do any of the foregoing or (iii) (a) all of the conditions to the obligations
of the Company to effect the Merger shall have been satisfied, and (b) other
than as a direct result of any action or inaction by Parent any condition to the
obligations of Parent to effect the Merger is not capable of being satisfied
prior to May 31, 1997; (d) by the Company, upon approval of the Board, if (i)
the Parent or Purchaser shall have breached in any material respect any of their
representations, warranties, covenants or agreements contained in the Merger
Agreement, (ii) prior to the purchase of Shares in the Offer, the Board receives
an unsolicited written offer with respect to a merger, consolidation or sale of
all or substantially all of the Company's assets or if an unsolicited tender or
exchange offer for the Shares is commenced, and the Board determines in the
reasonable exercise of its duties under applicable law, that such transaction is
more favorable from a financial point of view to the shareholders of the Company
than the Offer and the Merger and that approval, acceptance or recommendation of
such transaction is consistent with the fiduciary obligation of the Board of
Directors under applicable law as determined in good faith by the Board of
Directors based upon an opinion of outside legal counsel (a "Third Party
Acquisition"), (iii) the Offer shall be terminated in accordance with its terms
or shall expire without the purchase of any of the Shares pursuant thereto; or
(iv) (a) all of the conditions to the obligations of Parent to effect the Merger
shall have been satisfied, and (b) any condition to the obligations of the
Company to effect the Merger is not capable of being satisfied prior to May 31,
1997.
Fees and Expenses. Except as set forth below, the Merger Agreement
provides that all expenses incurred in connection with the Merger Agreement and
the transactions contemplated thereby will be paid by the party incurring such
expenses.
The Merger Agreement provides for the payment by the Company to Parent of a
termination fee in the amount of $2,500,000, including all of Parent's expenses
and fees, within five business days of the occurrence of any of the following
events: (i) if the Merger Agreement is terminated (a) by Parent because the
Board shall have failed to make or shall have withdrawn or modified, in a manner
adverse to Parent or Purchaser, its
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approval or recommendation of the Offer, the Merger Agreement or the Merger or
the Board, upon reasonable request by the Parent, shall fail to reaffirm such
approval or recommendation, or shall have resolved to do any of the foregoing;
(b) by the Company if, prior to the purchase of Shares in the Offer, the Board
approves a Third Party Acquisition; or (ii) as a result of the failure of
certain affiliates of the Company to tender their Shares in the Offer or support
the Merger, based upon a claim that such action is required in the exercise of
their fiduciary duties, and the purchase of Shares in the Offer or the Merger is
not consummated.
Employment and Consultancy Agreements
Brett Harwood Employment Agreement. Pursuant to the Merger Agreement, the
Company will cause Brett Harwood, currently the President and Chief Operating
Officer and a Director of the Company, to enter into an Employment Agreement
with Parent and a subsidiary of Parent ("Employer") to serve as Executive Vice
President of Employer in New Jersey within the New York City metropolitan area,
with a base salary of $200,000 per year, customary employee benefits, stock
options and certain incentive compensation (the "Incentive Compensation"). The
term of the Employment Agreement is three years, subject to earlier termination
by Employer for cause. The Incentive Compensation comprises 10% of all Gross
Operating Income (NOI less 5% of operating expenses G&A burden) derived from new
leases or 10% of pre-tax operating profit from newly-acquired companies where
Mr. Harwood was primarily responsible for such new lease or acquisition, and 10%
of all Gross Operating Income (NOI less 5% of operating expenses G&A burden)
derived from new management agreements for which Mr. Harwood was primarily
responsible.
Mr. Harwood is entitled to receive stock options, which vest over a period
of five years, under Parent's stock option plan for 10,000 shares of Parent's
common stock on each of the commencement of his employment with Parent and the
first anniversary thereof.
The Employment Agreement also entitles Mr. Harwood, his immediate family or
certain of his affiliates to purchase up to a 25% interest in any real estate or
real estate venture acquired by Employer or any affiliate of Employer, including
Parent, primarily as a result of Mr. Harwood's efforts. For all opportunities
generated by Mr. Harwood in the form of the fee acquisition of Employer
leasehold interests and the subsequent realization of value above the value of
such asset operated as a parking facility, Mr. Harwood or his affiliates will be
entitled to participate in realization of such property value maximization. Mr.
Harwood may borrow up to $10,000,000 at a minimum interest rate of 10% from
Employer, with payment terms to be determined by Mr. Harwood and Employer, to
enable him to invest in such real estate or real estate venture described above.
If Mr. Harwood leaves the employ of Employer during the initial three-year
employment term, he shall be entitled to the Incentive Compensation for the
period during which he was employed, and for up to two and one-half years from
the commencement of operations generating such Incentive Compensation, provided
that during such period, Mr. Harwood complies with the noncompetition provisions
of the Employment Agreement (described below) without geographic limitation. If
Mr. Harwood is not offered renewal of the Employment Agreement at the end of
three years, or is offered such renewal and does not elect to continue his
employment, he shall be entitled to receive the Incentive Compensation for five
years from the commencement of operations generating such Incentive
Compensation, provided that he abides by the noncompetition provisions, without
geographical limitation, during the payment of Incentive Compensation following
termination of his employment.
Mr. Harwood has agreed generally to refrain from engaging in the same or
similar business as Parent during the term of the Employment Agreement and for a
period of one year after the expiration of his employment thereunder (subject to
extension in connection with the Incentive Compensation described above),
without geographic limitation and for a period of five years from the expiration
of the Employment Agreement with any parking property of Parent or the Company.
The foregoing is a summary of the Employment Agreement and is qualified in its
entirety by reference to the text of the Employment Agreement, a copy of which
is filed as an exhibit to the Schedule 14D-1 and may be obtained from the
Commission.
Lowell Harwood Consultancy Agreement. Pursuant to the Merger Agreement,
the Company will cause Lowell Harwood, currently the Chairman of the Board
Directors and Chief Executive Officer of the Company, to enter into a
Consultancy Agreement with Central Parking System, Inc., a subsidiary of Parent,
with
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compensation of $120,000 per year and incentive compensation based upon a
percentage of income derived from new acquisitions or business opportunities
generated by Mr. Harwood. The term of the Consultancy Agreement will be one
year. In addition, Parent has agreed to cause Lowell Harwood to be elected to
its Board of Directors. The Consultancy Agreement will be subject and
subordinate to the Confidentiality and Noncompete Agreement between Parent and
Mr. Harwood as discussed below. The foregoing is a summary of the Consultancy
Agreement and is qualified in its entirety by reference to the text of the
Consultancy Agreement, a copy of which is attached as an Exhibit to the Schedule
14D-1 and which may be obtained from the Commission.
Sanford Harwood Consultancy Agreement. Pursuant to the Merger Agreement,
the Company will cause Sanford Harwood to enter into a Consultancy Agreement
with Central Parking System, Inc., a subsidiary of Parent, with compensation of
$10,000.00 per month for a six month period. The Consultancy Agreement will be
subject and subordinate to the Confidentiality and Noncompete Agreement between
Parent and Sanford Harwood as discussed below. The foregoing is a summary of the
Consultancy Agreement and is qualified in its entirety by reference to the text
of the Consultancy Agreement, a copy of which is attached as an Exhibit to the
Schedule 14D-1 and which may be obtained from the Commission.
Confidentiality and Noncompete Agreements. The Company has agreed to cause
Lowell Harwood, Sanford Harwood and Leslie Harwood Ehrlich each to enter into a
Confidentiality and Noncompete Agreement with Parent and Surviving Corporation.
Pursuant to the Noncompete Agreement, each of the above agrees as follows: (i)
not to give to any person, firm, association, or governmental agency any
confidential information concerning the affairs, business, clients, customers or
other relationships of Parent, Company or Surviving Corporation except as
required by law or to use such information for its own purposes or for the
benefit of any person or organization other than Surviving Corporation and to
use its best efforts to prevent the disclosure of such information by others,
(ii) that during the Noncompete Period and with in the Noncompete Area, subject
to certain exceptions, such person will not directly or indirectly (A) acquire,
lease, manage, consult for, serve as agent or subcontractor for, finance, invest
in, own any part of or exercise management control over any parking business or
business that provides any services competitive with the services provided by
the Company or Parent; (B) solicit for employment or employ any nonclerical
person who at the Effective Time or thereafter became an employee of Parent or
Surviving Corporation unless such person is no longer employed by Parent or
Surviving Corporation for at least six (6) months; or (C) with respect to any
customer, supplier or property owner with whom Parent or Surviving Corporation
contracts in connection with its business, either solicit the same in a manner
that could adversely affect Parent or Surviving Corporation, or make statements
to the same that disparage Parent or Surviving Corporation or its operations in
any way, and (iii) to furnish such information as may be in its possession and
cooperate with Surviving Corporation as may be requested in connection with any
claims or legal actions in which surviving Corporation is or may become a party.
The Noncompete Area shall mean a fifty mile radius of each location from which
the business of the Company or Parent is operating at Closing; provided,
however, that certain activities are expressly permitted pursuant to the
agreements. The Noncompete Period for Lowell Harwood and Sanford Harwood will be
five years and for Leslie Harwood Ehrlich will be one year. The foregoing is a
summary of the Confidentiality and Noncompete Agreements and is qualified in its
entirety by reference to the text of the Confidentiality and Noncompete
Agreements, a form of which is filed as an exhibit to the Schedule 14D-1 and
which may be obtained from the Commission.
Agreement to Support the Transaction. Certain of the affiliates of the
Company who own Shares and options or warrants to purchase Shares which equal,
in the aggregate 1,038,040 Shares have entered into an Agreement to Support the
Transaction (the "Support Agreement"). Pursuant to the Support Agreement, these
affiliates have agreed to (i) tender all of their Shares in the Offer and enter
into agreements to cash out all of their options and warrants as provided in the
Merger Agreement and use their reasonable best efforts to recommend the Offer to
and seek approval of the Merger from the other shareholders of the Company,
unless the Board shall conclude, in good faith, in compliance with the Merger
Agreement, not to recommend, or to withdraw or modify its recommendation of, the
Offer or the Merger to the shareholders of the Company in a situation which
would permit the termination of the Merger Agreement, (ii) not seek
indemnification, contribution, recourse or redress of any kind against the
Company in their capacities as shareholders in
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connection with negotiating and approving the Merger and related transactions
and any transaction with the Company in which such person has a direct or
indirect conflict of interest, and (iii) to maintain the confidentiality of
certain proprietary and confidential information regarding the Company. The
foregoing is a summary of the Support Agreement and is qualified in its entirety
by reference to the text of the Support Agreement, a copy of which is filed as
an exhibit to the Schedule 14D-1 and which may be obtained from the Commission.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE MERGER.
Purpose of the Offer. The purpose of the Offer and the Merger is for
Parent to acquire control of, and the entire equity interest in, the Company.
The purpose of the Merger is for Parent to acquire all Shares not purchased
pursuant to the Offer. Upon consummation of the Merger, Company will become an
indirect wholly-owned subsidiary of Parent. The Offer is being made pursuant to
the Merger Agreement.
In the Merger Agreement, the Company has agreed to take all action
necessary to convene, if necessary a meeting of its shareholders as soon as
practicable after the consummation of the Offer for the purpose of considering
and taking action on the Merger Agreement and the transactions contemplated
thereby. Parent and Purchaser have agreed that all Shares owned by them and
their subsidiaries will be voted in favor of the Merger Agreement and the
transactions contemplated thereby.
If Purchaser purchases Shares pursuant to the Offer, the Merger Agreement
provides that Purchaser will be entitled to designate representatives to serve
on the Board in proportion to Purchaser's ownership of Shares following such
purchase. See Section 10. Purchaser expects that such representation would
permit Purchaser to exert substantial influence over the Company's conduct of
its business and operations.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, shareholders may have certain
rights under the NYBCL to dissent and demand appraisal of, and to receive
payment in cash for, their Shares. Pursuant to Section 910 of the NYBCL, any
shareholder entitled to vote who does not assent to the Merger has the right to
receive fair market value for his Shares if he files with the Company written
objection to the Merger. As outlined in Section 623 of the NYBCL, the dissenting
shareholder must file his objection before the meeting of shareholders at which
the Merger is submitted to vote or at such meeting but before the vote. Such
objection is not required from any shareholder to whom the Company did not give
notice of the meeting or where the proposed action is to be authorized by
written consent of the shareholders without a meeting. Within 10 days after the
shareholder authorization of the Merger, the Company must given written notice
of the Merger to the dissenting shareholders and to those from whom objection
was not required. Those shareholders from whom objection was not earlier
required but who wish to dissent to the Merger may file a written notice of
election to dissent with the Company. A dissenting shareholder cannot dissent as
to less than all the Shares held of record that he owns beneficially and for
which he has the right to dissent.
Within 15 days after the expiration of the period within which shareholders
may file their notices of election to dissent, or within 15 days after the
Merger, whichever is later (but in no case later than ninety days from the date
the shareholders approved the Merger), the Company or the Surviving Corporation,
as the case may be, must make a written offer by registered mail to each
shareholder who has filed such notice of election to pay for his Shares at a
specified price which the Company, or the Surviving Corporation, as the case may
be, considers to be their fair value. Such offer shall be made at the same price
per Share to all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet for the
Company as of the latest available date, which shall not be earlier than 12
months before the making of such offer, and a profit and loss statement or
statements for not less than a twelve month period ended on the date of such
balance sheet. If within 30 days after the making of such offer, the Company, or
the Surviving Corporation, as the case may be, and any shareholder agree upon
the price to be paid for his Shares, payment therefor shall be made within 60
days after the making of the offer or the consummation of the Merger, whichever
is later, upon the surrender of the certificates for any such Shares represented
by certificates.
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The following procedure shall apply if the Company or the Surviving
Corporation, as the case may be, fails to make the offer within such period of
15 days, or if it makes the offer and any dissenting shareholder or shareholders
fail to agree with it within the period of 30 days thereafter upon the price to
be paid for their Shares:
(1) The Company, or the Surviving Corporation, as the case may be,
shall, within 20 days after the expiration of whichever is applicable of
the two periods last mentioned, institute a special proceeding in the
Supreme Court of New York sitting in the judicial district in which the
principal office of the Company is located to determine the rights of
dissenting shareholders and to fix the fair value of their Shares.
(2) If the Company, or the Surviving Corporation, as the case may be,
fails to institute such proceeding within such period of 20 days, any
dissenting shareholder may institute such proceeding for the same purpose
not later than 30 days after the expiration of such 20 day period. If such
proceeding is not instituted within such 30 day period, all dissenter's
rights shall be lost unless the Supreme Court of New York, for good cause
shown, otherwise directs.
(3) The Supreme Court of New York shall determine whether each
dissenting shareholder, as to whom the Company, or the Surviving
Corporation, as the case may be, requests the Court to make such
determination, is entitled to receive payment for his Shares. If the
Company, or the Surviving Corporation, as the case may be, does not request
any such determination or if the Court finds that any dissenting
shareholder is so entitled, it shall proceed to fix the value of the
Shares, which, for the purposes of this section, shall be the fair value as
of the close of business on the day prior to the date the shareholders
approved the Merger.
(4) Within 60 days after final determination of the proceeding, the
corporation shall pay to each dissenting shareholder the amount found to be
due him, upon surrender of the certificate for any such Shares represented
by certificates.
The Commission has adopted Rule 13e-3 under the Exchange Act, which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which Purchaser seeks
to acquire the remaining Shares not held by it. Purchaser believes, however,
that if the Merger is consummated within one year of the purchase of Shares
pursuant to the Offer, Rule 13e-3 will not be applicable to the Merger.
Purchaser believes that if the Merger is not consummated within one year of its
purchase of Shares pursuant to the Offer, Rule 13e-3 may be applicable to the
Merger. Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
shareholders in such transaction be filed with the Commission and disclosed to
shareholders prior to consummation of the transaction.
Plans for the Company. It is currently expected that, following
consummation of the Offer, initially the business and operations of the Company
will, except as set forth in this Offer to Purchase, be continued by the Company
substantially as they are currently being conducted. Parent will continue to
evaluate the business and operations of the Company during the pendency of the
Offer and after the consummation of the Offer and the Merger, and will take such
actions as it deems appropriate under the circumstances then existing. Parent
intends to seek additional information about the Company during this period.
Thereafter, Parent intends to review such information as part of a comprehensive
review of the Company's business, operations, capitalization and management with
a view to maximizing the Company's potential in conjunction with Parent's
businesses. It is expected that the business and operations of the Company would
form an important part of Parent's future business plans.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals that relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries or any
material change in the Company's capitalization or dividend policy or any other
material changes in the Company's corporate structure or business. After the
Effective Time, the Board of Directors of the Surviving Corporation shall be
comprised solely of Monroe J. Carell, Jr.
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and the Surviving Corporation shall be managed by the officers of Parent,
provided that Brett Harwood shall enter into an Employment Agreement with Parent
and its subsidiary and each of Lowell Harwood and Sanford Harwood shall enter
into a Consultancy Agreement with a subsidiary of Parent, as discussed in
Section 10.
12. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that the Company shall not, prior to the
Effective Time, without the prior written consent of Parent, (i) split, combine
or reclassify the outstanding Shares; (ii) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property with respect
to the Shares; or (iii) issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire any shares of its
capital stock of any class other than Shares issuable pursuant to warrants or
options outstanding on the date hereof under the Stock Option Plan.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION.
The purchase of Shares by Purchaser pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and will reduce the number
of holders of Shares, which could adversely affect the liquidity and market
value of the remaining Shares held by the public.
Depending upon the number of shares of Common Stock purchased pursuant to
the Offer, the Common Stock may no longer meet the standards for continued
inclusion in the Nasdaq/NMS. If, as a result of the purchase of Common Stock
pursuant to the Offer, the Common Stock no longer meets the criteria for
continuing inclusion in the Nasdaq/NMS, the market for the Common Stock could be
adversely affected. According to the published guidelines of the Nasdaq/NMS, the
Common Stock would not meet the criteria for continued inclusion in the
Nasdaq/NMS if, among other things, the number of publicly-held shares of Common
Stock were less than 200,000, the aggregate market value of the publicly-held
shares of Common Stock were less than $1,000,000, there were fewer than 400
total shareholders or 300 shareholders of round lots or there were fewer than
two market makers for the shares of Common Stock. If these standards were not
met, quotations might continue to be published in the over-the-counter
"additional list" or one of the "local lists" unless, as set forth in the
published guidelines of the Nasdaq Stock Market, the number of publicly-held
shares of Common Stock (excluding shares of Common Stock held by officers,
directors and beneficial owners of more than 10% of the shares of Common Stock)
were less than 100,000, there were fewer than 300 holders in total, or there
were not at least two active market makers for the Common Stock (one of which
may be a market maker entering a stabilizing bid). If the Common Stock is no
longer eligible for Nasdaq Stock Market quotation, quotations might still be
available from other sources. Parent intends to de-list the Shares from
Nasdaq/NMS as soon as possible after the Expiration Date.
The extent of the public market for the Common Stock and availability of
such quotations would, however, depend upon such factors as the number of
holders and/or the aggregate market value of the publicly-held shares of Common
Stock at such time, the interest in maintaining a market in the Common Stock on
the part of securities firms, the possible termination of registration of the
Common Stock under the Exchange Act and other factors.
The Shares are currently "margin securities," as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of the Shares. Depending upon factors similar
to those described above regarding listing and market quotations, following the
Offer it is possible that the Shares might no longer constitute "margin
securities" for purposes of the margin regulations of the Federal Reserve Board,
and, therefore, could no longer be used as collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if the Shares are not listed on a national securities exchange and there are
fewer than 300 record holders. The termination of the registration of the Shares
under the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of Shares and to the Commission and would
make certain provisions of the Exchange Act, such as the short-
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swing profit recovery provisions of Section 16(b), the requirement of furnishing
a proxy statement in connection with shareholders' meetings and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions, among others, no longer applicable to the Shares. In addition,
"affiliates" of the Company and persons holding "restricted securities" (as such
terms are defined in Rule 144 promulgated under the Securities Act of 1933, as
amended ("Rule 144")) of the Company may be deprived of the ability to dispose
of such securities pursuant to Rule 144. If registration of the Shares under the
Exchange Act were terminated, the Shares would no longer be "margin securities"
or be eligible for listing on a securities exchange or Nasdaq/NMS reporting.
Purchaser currently intends to cause the Company to terminate the registration
of the Shares under the Exchange Act as soon after consummation of the Offer as
the requirements for termination of registration are met and to have the Shares
de-listed from Nasdaq/NMS as soon as the requirements for delisting are met.
14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, subject to the terms of
the Merger Agreement, Purchaser shall not be required to accept for payment or
pay for any Shares tendered pursuant to the Offer, and may terminate or amend
the Offer and may postpone the acceptance for payment of and payment for Shares
tendered, if (i) the Minimum Condition is not satisfied; (ii) any applicable
waiting period under the HSR Act shall not have expired or been terminated prior
to the expiration of the Offer, or (iii) at any time on or after the date of the
Merger Agreement, and prior to the acceptance for payment of Shares, any of the
following conditions shall exist:
a. there shall have been instituted or be pending any action or
proceeding by any governmental or quasi-governmental authority or agency,
domestic or foreign, before any court or governmental, administrative or
regulatory authority or agency, of competent jurisdiction, domestic or
foreign, (i) challenging or seeking to make illegal, materially delay or
otherwise directly or indirectly restrain or prohibit the making of the
Offer, the acceptance for payment of, or payment for, any Shares by the
Parent, Purchaser or any other affiliate of the Parent, or the consummation
of any other transaction contemplated by the Merger Agreement, including
the Offer and the Merger, or seeking to obtain material damages in
connection with any transaction; (ii) seeking to prohibit or limit
materially the ownership or operation by the Company, the Parent or any of
their subsidiaries of all or any material portion of the business or assets
of the Company, the Parent and their respective subsidiaries taken as a
whole, or to compel the Company, the Parent or any of their subsidiaries to
dispose of or hold separate all or any material portion of the business or
assets of the Company, the Parent and their respective subsidiaries taken
as a whole, as a result of the transactions contemplated by the Merger
Agreement, including the Offer and the Merger; (iii) seeking to impose or
confirm material limitations on the ability of the Parent, Purchaser or any
other affiliate of the Parent to exercise effectively full rights of
ownership of any Shares, including, without limitation, the right to vote
any Shares acquired by Purchaser pursuant to the Offer or otherwise on all
matters properly presented to the Company's shareholders, including,
without limitation, the approval and adoption of the Merger Agreement and
the transactions contemplated hereby; (iv) seeking to require divestiture
by the Parent, Purchaser or any other affiliate of the Parent of any
Shares; or (v) which otherwise has a material adverse effect on the
financial condition, business, properties or results of operations of the
Company and its subsidiaries taken as a whole or the Parent and its
subsidiaries taken as a whole.
b. there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to (i) the Parent, the Company or any subsidiary or affiliate of
the Parent or the Company or (ii) any transaction contemplated by the
Merger Agreement, including the Offer and the Merger, by any legislative
body, court, government or governmental, administrative or regulatory
authority or agency, domestic or foreign, other than the routine
application of the waiting period provisions of the HSR Act to the Offer or
the Merger, which is reasonably likely in the good faith judgment of the
Parent to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above;
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<PAGE> 34
c. there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange or the Nasdaq/NMS, (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States, (iii)
a commencement of a war or armed hostilities or other national or
international crisis directly or indirectly involving the United States or
(iv) in the case of any of the foregoing existing on the date hereof, in
the good faith judgment of the Parent a material acceleration or worsening
thereof;
d. (i) it shall have been publicly disclosed or the Parent shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of the outstanding Shares has been acquired by any
person, other than the Parent or any of its affiliates or any affiliates of
the Harwood Family or (ii) (A) the Board or any committee thereof shall
have failed to make, shall have withdrawn or modified in a manner adverse
to the Parent or Purchaser the approval or recommendation of the Offer, the
Merger or the Merger Agreement, or approved or recommended any Third Party
Acquisition, takeover proposal or any other acquisition of Shares other
than the Offer and the Merger or (B) the Board or any committee thereof
shall have resolved to do any of the foregoing;
e. any representation or warranty of the Company in the Merger
Agreement shall not be true and correct on or after the date of the Merger
Agreement, except for (i) changes contemplated by the Merger Agreement,
(ii) those representations and warranties which address matters only as of
a particular date (which shall remain true and correct as of such date) and
(iii) where the failure to be true and correct would not have a Material
Adverse Effect on the Company; for purposes of this provision, (A)
representations and warranties of the Company in the Merger Agreement which
are qualified by materiality shall be determined without regard to the
materiality limitation, except as provided in (iii) above and (B) Material
Adverse Effect shall mean items which in the aggregate would have (x) a
recurring annual pre-tax income effect of $400,000 or more or (y) a
non-recurring income, balance sheet or financial condition effect of
$4,000,000 or more;
f. the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement prior to the expiration of the Offer;
g. the Company shall have failed to deliver executed (i)
Confidentiality and Noncompete Agreements from each of Lowell Harwood,
Sanford Harwood, and Leslie Harwood Ehrlich, (ii) Employment Agreement from
Brett Harwood, and (iii) Consultancy Agreement from Lowell Harwood and
Sanford Harwood, each as described in Section 10;
h. any change shall have occurred in the business, operations, assets,
financial condition or results of operations of the Company or any of its
subsidiaries that, in the reasonable judgment of Parent, is or is
reasonably likely to constitute a Material Adverse Change with respect to
the Company; for purposes of this provision, Material Adverse Change shall
mean changes or events which in the aggregate would have (i) a recurring
annual pre-tax income effect of $400,000 or more or (ii) a non-recurring
income, balance sheet or financial condition effect of $4,000,000 or more;
i. the Company shall have failed to take any steps reasonably required
to be taken under the NYBCL (including, without limitation, the
requirements of Section 912 of the NYBCL) to allow Parent and Purchaser to
promptly consummate the Merger and exercise full ownership rights over the
Shares without violating any provision of the NYBCL; or
j. the Merger Agreement shall have been terminated in accordance with
its terms; or
k. Purchaser and the Company may mutually agree that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment
for Shares thereunder;
which, in the reasonable good faith judgment of Purchaser in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
any of its affiliates) giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment.
32
<PAGE> 35
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or the Parent regardless of the circumstances
giving rise to any such condition or may be waived by Purchaser or Parent in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. The business of the Company and its subsidiaries is subject to
certain federal, state and local regulations. Based upon its examination of
publicly available information with respect to the Company and the review of
certain information furnished by the Company to Parent and discussions of
representatives of Parent with representatives of the Company during Parent's
investigation of the Company (see Section 10), neither Purchaser nor Parent is
aware of any certification, license or other regulatory permit that appears to
be material to the business of the Company and its subsidiaries, taken as a
whole, which might be adversely affected by the acquisition of Shares by
Purchaser pursuant to the Offer, or of any approval or other action by any
domestic (federal, state, or local) or foreign governmental, administrative or
regulatory authority or agency which would be required prior to the acquisition
of Shares by Purchaser pursuant to the Offer and which would have a material
effect on the business of the Company and its subsidiaries, taken as a whole.
Should any such approval or other action be required, it is Purchaser's present
intention to seek such approval or action. Purchaser does not currently intend,
however, to delay the purchase of Shares tendered pursuant to the Offer pending
the outcome of any such action or the receipt of any such approval (subject to
Purchaser's right to decline to purchase Shares if any of the conditions in
Section 14 shall have occurred). There can be no assurance that any such
approval or other action, if needed, would be obtained without substantial
conditions or that adverse consequences might not result to the business of the
Company, Purchaser or Parent or that certain parts of the business of the
Company, Purchaser or Parent might not have to be disposed of or held separate
or other substantial conditions complied with in order to obtain such approval
or other action or in the event that such approval were not obtained or such
other action were not taken. Purchaser's obligation under the Offer to accept
for payment and pay for Shares is subject to certain conditions, including
conditions relating to the legal matters discussed in this Section 15. See
Section 14.
State Takeover Statutes. The Company is incorporated under the laws of the
State of New York. Section 912 of the NYBCL provides that any corporation to
which the NYBCL applies, including the Company, shall not engage in any
"business combination" (defined to include mergers and consolidations) with an
"interested shareholder" (defined generally as a person who is the beneficial
owner of 20% or more of the outstanding voting stock of such New York
corporation) for a period of five years following the date that such shareholder
became an interested shareholder unless prior to such date the board of
directors of the corporation approved either the business combination or the
transaction that resulted in the shareholder's becoming an interested
shareholder. The Merger Agreement provides that the Company's Board has made all
determinations and taken all such other actions as are necessary or appropriate
under the NYBCL to ensure that it does not apply to the Offer, the Merger or the
other transactions contemplated by the Merger Agreement. At a meeting on
December 6, 1996, the Company's Board of Directors approved the Merger
Agreement, the Merger, the Offer and Purchaser's purchase of the Shares pursuant
to the Offer. Accordingly, the provisions of Section 912 of the NYBCL have been
satisfied with respect to the Offer and the Merger.
Article 16 of the NYBCL requires a bidder for the shares of a New York
corporation to file a registration statement with the attorney general and
satisfy certain disclosure requirements. The Company and Purchaser have filed
such a registration statement and this Offer to Purchase sets forth the
information required to be disclosed pursuant to Article 16 of the NYBCL.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, shareholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds
33
<PAGE> 36
the Illinois Business Takeover Statute, which, as a matter of state securities
law, made takeovers of corporations meeting certain requirements more difficult.
However, in 1987 in CTS Corp. v. Dynamics Corp. of America, the Supreme Court
held that the State of Indiana could, as a matter of corporate law and, in
particular, with respect to those aspects of corporate law concerning corporate
governance, constitutionally disqualify a potential acquiror from voting on the
affairs of a target corporation without the prior approval of the remaining
shareholders. The state law before the Supreme Court was by its terms applicable
only to corporations that had a substantial number of shareholders in the state
and were incorporated there. Subsequently, in TLX Acquisition Corp. v. Telex
Corp., a federal district court in Oklahoma ruled that certain Oklahoma
corporate governance statutes were unconstitutional insofar as they applied to
corporations incorporated outside of Oklahoma because they could subject such
corporations to inconsistent regulations. In December 1988, a federal district
court in Florida held in Grand Metropolitan PLC v. Butterworth that the
provisions of the Florida Affiliated Transactions Act and the Florida Control
Share Acquisition Act were unconstitutional as applied to corporations
incorporated outside of Florida.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws such as those described above. Purchaser does not know whether any
of these laws will, by their terms, apply to the Offer or the Merger and has not
necessarily complied with any such laws. Should any person seek to apply any
state takeover law, Purchaser will take such action as then appears desirable,
which may include challenging the validity or applicability of any such statute
in appropriate court proceedings. In the event it is asserted that one or more
state takeover laws are applicable to the Offer or the Merger, and an
appropriate court does not determine that they are inapplicable or invalid as
applied to the Offer, Purchaser might be required to file certain information
with, or receive approvals from, the relevant state authorities. In addition, if
enjoined, Purchaser might be unable to accept for payment any Shares ordered
pursuant to the Offer, or be delayed in continuing or consummating the Offer and
the Merger. In such case, Purchaser may not be obligated to accept for payment
any Shares tendered. See Section 14.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares by Purchaser pursuant to the Offer is subject to such requirements.
See Section 2. In addition, New York and other states may have antitrust laws
which could impact the ability of Parent and Purchaser to consummate the
Transactions.
Pursuant to the HSR Act, on or promptly after the date of this Offer to
Purchase, Parent anticipates filing a Premerger Notification and Report Form in
connection with the purchase of Shares pursuant to the Offer with the Antitrust
Division and the FTC. Under the provisions of the HSR Act applicable to the
Offer, the purchase of Shares pursuant to the Offer may not be consummated until
the expiration of a 15 calendar day waiting period following the filing by
Parent. Accordingly, it is anticipated that the waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer will expire at 11:59
p.m., New York City time, on December 30, 1996, unless such waiting period is
earlier terminated by the FTC and the Antitrust Division or extended by a
request from the FTC or the Antitrust Division for additional information or
documentary material prior to the expiration of the waiting period. Pursuant to
the HSR Act, Parent will request early termination of the waiting period
applicable to the Offer. There can be no assurance, however, that the 15-day HSR
Act waiting period will be terminated early. If either the FTC or the Antitrust
Division were to request additional information or documentary material from
Parent with respect to the Offer, the waiting period with respect to the Offer
would expire at 11:59 p.m., New York City time, on the 10th calendar day after
the date of substantial compliance by Parent with such request. Thereafter, the
waiting period could be extended only by court order. If the acquisition of
Shares is delayed pursuant to a request by the FTC or the Antitrust Division for
additional information or documentary material pursuant to the HSR Act, the
Offer may, but need not, be extended and, in any event, the purchase of and
payment for Shares will be deferred until 10 days after the request is
substantially complied with, unless the extended period expires on or before the
date when the initial 15-day period would otherwise have expired, or unless the
waiting period is sooner terminated by the FTC and the Antitrust Division. Only
one extension of such waiting period pursuant to a
34
<PAGE> 37
request for additional information is authorized by the HSR Act and the rules
promulgated thereunder, except by court order. Any such extension of the waiting
period will not give rise to any withdrawal rights not otherwise provided for by
applicable law. See Section 4. It is a condition to the Offer that the waiting
period applicable under the HSR Act to the Offer expire or be terminated. See
Section 2 and Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, the Company or
their respective subsidiaries. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to Parent
relating to the businesses in which Parent, the Company and their respective
subsidiaries are engaged, Parent and Purchaser believe that the Offer will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, what the result would be. See Section 14 for certain
conditions to the Offer, including conditions with respect to litigation.
16. FEES AND EXPENSES.
Except as set forth below, neither Parent nor Purchaser will pay any fees
or commissions to any broker, dealer or other person for soliciting tenders of
Shares pursuant to the Offer.
Bradford is acting as Dealer Manager in connection with the Offer and has
provided certain financial advisory services to Parent in connection with the
acquisition of the Company. Parent has agreed to pay Bradford a fee of up to
$100,000 for any fairness opinion rendered in connection with the transactions
contemplated by the Merger Agreement. Furthermore, if Purchaser consummates a
business combination with the Company pursuant to which the business of the
Company is combined with that of Purchaser, or if Purchaser acquires, directly
or indirectly, a majority of the outstanding capital stock, or a majority of the
assets of the Company, then Bradford will be entitled to receive a fee of 1.25%
of the aggregate value of the transaction subject to an agreed upon maximum fee.
Based on the valuation of the Offer and the Merger, Parent anticipates paying
Bradford a fee of approximately $775,000. Fees paid by Purchaser for any
fairness opinion will be credited against fees paid in the event the business of
the Company is acquired by Purchaser. Parent has also agreed to reimburse
Bradford for all reasonable out-of-pocket expenses incurred by it, including the
reasonable fees and expenses of legal counsel, and to indemnify it against
certain liabilities and expenses in connection with its engagement, including
certain liabilities under the federal securities laws.
Purchaser and Parent have retained Kissel-Blake, Inc., as the Information
Agent, and SunTrust Bank, Atlanta, as the Depositary, in connection with the
Offer. The Information Agent may contact holders of Shares by mail, telephone,
telex, telecopy, telegraph and personal interview and may request banks,
brokers, dealers and other nominee shareholders to forward materials relating to
the Offer to beneficial owners.
The Information Agent and the Depositary each will receive reasonable and
customary compensation for their services in connection with the Offer, will be
reimbursed for out-of-pocket expenses, and will be indemnified against certain
liabilities and expenses in connection therewith, including under federal
securities laws. Brokers, dealers, commercial banks and trust companies will be
reimbursed by Purchaser for customary handling and mailing expenses incurred by
them in forwarding material to their customers.
17. MISCELLANEOUS.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. Purchaser is
not aware of any jurisdiction where the making of the Offer is prohibited by any
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with any such state statute. If, after such good faith
effort, Purchaser cannot comply with any such state statute, the Offer will not
be made to (nor will tenders be
35
<PAGE> 38
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by the Dealer Manager or by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER, PARENT OR THE COMPANY NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 7 (except that they will not be
available at the regional offices of the Commission).
CENTRAL PARKING CORPORATION
December 13, 1996
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates evidencing Shares and any other required documents
should be sent or delivered by each shareholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depository at one of its
addresses set forth below.
36
<PAGE> 39
The Depositary for the Offer is:
SUNTRUST BANK, ATLANTA
By Facsimile Transmission:
(FOR ELIGIBLE
INSTITUTIONS ONLY)
(404) 865-5371
Confirm Receipt of Guaranteed
Delivery by Telephone:
(800) 568-3476
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Carrier:
SunTrust Bank, Atlanta SunTrust Bank, Atlanta SunTrust Bank, Atlanta
P.O. Box 4625 58 Edgewood Ave. 58 Edgewood Ave.
Atlanta, GA 30302 Room 225 Room 225
Atlanta, GA 30303 Atlanta, GA 30303
</TABLE>
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of the Guaranteed Delivery may be obtained from the
Information Agent. A shareholder may also contact brokers, dealers, commercial
banks or trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
KISSEL-BLAKE INC.
110 Wall Street
New York, New York 10005
CALL TOLL FREE
1-800-554-7733
Banks and Brokerage Firms please call:
(212) 344-6733
The Dealer Manager for the Offer is:
J.C. Bradford & Co.
330 Commerce Street
Nashville, Tennessee 37201
(615) 315-1750
Attention: Tina Redding
<PAGE> 40
TENDER OFFER
EXHIBIT I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
1. Directors and Executive Officers of Parent. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years of each
director and executive officer of Parent. Unless otherwise indicated, (i) the
current business address of each person is Central Parking Corporation, 2401
21st Avenue South, Suite 200, Nashville, Tennessee 37212, (ii) all other
addresses are within the United States, (iii) each such person is a citizen of
the United States and has held his or her present position as set forth below
for the past five years, and (iv) each occupation set forth opposite an
individual's name refers to employment with Parent.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL POSITIONS
NAME HELD DURING THE PAST FIVE YEARS AND BUSINESS ADDRESSES THEREOF
- ------------------------- ------------------------------------------------------------------
<S> <C>
Monroe J. Carell, Jr..... Chief Executive Officer and Chairman of the Board of Directors of
Parent since 1979; trustee of Vanderbilt University in Nashville,
Tennessee, since 1991; member of the Board of Trust of the Urban
Land Institute; member of the Board of Directors of Vanderbilt
University Medical Center.
James H. Bond............ President, Chief Operating Officer, and a member of the Board of
Directors of Parent since October 1990; with Parent since 1971 in
various positions including regional manager and Senior Vice
President.
Stephen A. Tisdell....... Chief Financial Officer of Parent since February 1993; from May
1992 to February 1993, President and owner of Tisdell Consulting,
whose principal business activity was a financial consulting
company and whose principal business address was 805 Foxboro
Court, Brentwood, Tennessee 37027; from June 1991 until May 1992;
Executive Vice President, Treasurer, and Secretary of Maison
Blanche, Inc., whose principal business activity was the operation
of retail clothing stores and whose principal business address is
1500 Main Street, Baton Rouge, Louisiana 70802; from February 1987
until June 1991, Group Vice President -- Finance and Chief
Accounting Officer of Service Merchandise Corporation, whose
principal business activity is the operation of retail catalog
showrooms and whose principal business address is 7100 Service
Merchandise Drive, Brentwood, Tennessee 37027.
Emanuel J. Eads.......... Senior Vice President of the Parent since 1985; with Parent since
1974 in various positions including general manager and regional
manager.
Jeffrey L. Wolfe......... Senior Vice President of Parent since May 1994; with Parent from
June 1990 until May 1994 as a regional manager and from September
1988 until May 1990 as a general manager.
Henry J. Abbott.......... Vice President -- General Counsel of Parent since 1986 and
Secretary since 1980; with Parent since 1977.
Alan J. Kahn............. Senior Vice President -- European Operations of Parent since April
1996; with Parent in various positions including general manager
and regional manager since 1982.
Greg Susick.............. Senior Vice President of Parent since 1996; with Parent in various
positions including general manager and regional manager since
1989.
Chris Callas............. Corporate Controller of Parent since November 1996. From 1990 to
1996, Vice President-Controller of Worldspan, L.P., whose
principal business activity is travel agency automation and
airline reservation processing and whose principal business
address is 300 Galleria Parkway, Atlanta, GA 30339.
</TABLE>
<PAGE> 41
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL POSITIONS
NAME HELD DURING THE PAST FIVE YEARS AND BUSINESS ADDRESSES THEREOF
- ------------------------- ------------------------------------------------------------------
<S> <C>
William R. Porter........ Senior Vice President -- Acquisitions, of Parent since November
1996. From 1991 to October 1996, Executive Vice
President -- Marketing, Ace Parking, whose principal business
activity is parking management and whose principal business
address is 645 Ash Street, San Diego, CA 92101.
John W. Eakin............ Director of Parent since August 1993. Since April 1996, President
of Highwood/Eakin & Smith Region whose principal business activity
is real estate development and management and whose principal
business address is 2100 West End Avenue, Nashville, Tennessee
37203. From September 1987 to April 1996, President of Eakin &
Smith, Inc. which in April 1996 mergered with Highwoods
Properties, Inc. Director of Highwoods Properties Inc. Since 1994,
member of the advisory board of First American National Bank.
Edward G. Nelson......... Director of Parent since August 1993. Since 1985, President and
Chairman of the Board of Nelson Capital Corp., whose principal
business activity is merchant banking and whose principal business
address is 3401 West End Avenue, Suite 300, Nashville, Tennessee
37203. Director of Advocat Inc., a long-term care facility owner
and operator; Osborn Communications Company, an owner and operator
research organization; and Berlitz International, Inc., a language
services company. Trustee of Vanderbilt University.
Cecil Conlee............. Director of Parent since February 1996. Since 1989, Chairman and
Chief Executive Officer of CGR Advisors, whose principal business
activity is real estate investment advice and portfolio management
services and whose principal business address is 950 East Paces
Ferry Road, Suite 2275, Atlanta, Georgia 30326. Director of Oxford
Industries, Inc. and Rodamco N.V.; trustee of Corporate Property
Investors, International Council of Shopping Centers and
Vanderbilt University; member and past trustee of the Urban Land
Institute; director of Central Atlanta Progress, The Corporation
for Olympic Development Atlanta, and the Southern Center for
International Studies.
William C. O'Neil, Jr.... Director of Parent since August 1993. Since September 1989,
Chairman of the Board, President, and Chief Executive Officer of
ClinTrials Research Inc., whose principal business activity is a
clinical research organization and whose principal business
address is One Burton Hills Boulevard, Suite 210, Nashville,
Tennessee 37215. Director of Advocat Inc., ATRIX Laboratories,
Inc., a drug delivery company, Sigma Aldrich Chemical Company, a
manufacturer of research chemicals and American HealthCorp., a
specialty healthcare services company.
P.E. Sadler.............. Director of Parent since February 1996. Since 1992, Chairman and
Chief Executive Officer of ActaMed Corporation, whose principal
business activity is health care technology and whose principal
business address is 7000 Central Parkway, Suite 600, Atlanta,
Georgia 30328. From 1979 to 1991, Chairman and Chief Executive
Officer of MicroBilt Corporation. Former Director of Endata
Corporation, First Financial Management Corporation and
Knowledgeware; Chairman of ActaVest Corporation and CareerOps,
Inc.
</TABLE>
2
<PAGE> 42
2. Directors and Executive Officers of Purchaser. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employment and business addresses thereof for the past five years of each
director and executive officer of Purchaser. Unless otherwise indicated, the
current business address of each person is c/o Central Parking Corporation, 2401
21st Avenue South, Suite 200, Nashville, Tennessee 37212. Unless otherwise
indicated, all other addresses are within the United States. Unless otherwise
indicated, each such person is a citizen of the United States and has held his
or her present position as set forth below for the past five years. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with Parent.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL POSITIONS
NAME HELD DURING THE PAST FIVE YEARS AND BUSINESS ADDRESSES THEREOF
- ------------------------- ------------------------------------------------------------------
<S> <C>
Monroe J. Carell, Jr..... Chairman, Chief Executive Officer and sole Director of Purchaser;
Chief Executive Officer and Chairman of the Board of Directors of
Parent since 1979; trustee of Vanderbilt University in Nashville,
Tennessee, since 1991; member of the Board of Trust of the Urban
Land Institute; member of the Board of Directors of Vanderbilt
University Medical Center.
James H. Bond............ President and Chief Operating Officer of the Purchaser; President,
Chief Operating Officer, and a member of the Board of Directors of
Parent since October 1990; with Parent since 1971 in various
positions including regional manager and Senior Vice President.
Henry J. Abbott.......... Secretary of the Purchaser; Vice President -- General Counsel of
the Parent since 1986 and Secretary since 1980; with Parent since
1977.
</TABLE>
3
<PAGE> 1
LETTER OF TRANSMITTAL
To Tender Shares of
Common Stock
of
SQUARE INDUSTRIES, INC.
Pursuant to the Offer to Purchase
Dated December 13, 1996
of
CENTRAL PARKING SYSTEM--EMPIRE STATE, INC.
an indirect wholly-owned subsidiary of
CENTRAL PARKING CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JANUARY 14, 1997,
UNLESS THE OFFER IS EXTENDED
The Depositary for the Offer is:
SUNTRUST BANK, ATLANTA
By Facsimile Transmission:
(FOR ELIGIBLE
INSTITUTIONS ONLY)
(404) 865-5371
Confirm Receipt of Guaranteed
Delivery by Telephone:
(800) 568-3476
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Carrier:
SunTrust Bank, Atlanta SunTrust Bank, Atlanta SunTrust Bank, Atlanta
P.O. Box 4625 58 Edgewood Ave. 58 Edgewood Ave.
Atlanta, GA 30302 Room 225 Room 225
Atlanta, GA 30303 Atlanta, GA 30303
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in Section 2 of the Offer to Purchase
(as defined below)) is utilized, if delivery of Shares is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
or Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility"
and collectively, the "Book-Entry Transfer Facilities") pursuant to the
book-entry transfer procedure described in Section 3 of the Offer to Purchase.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
<PAGE> 2
Shareholders whose certificates evidencing Shares ("Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) or who cannot complete
the procedure for delivery by book-entry transfer on a timely basis and who wish
to tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase. See Instruction 2.
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
------------------------------------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
(check one) [ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
------------------------------------------------------------------------------
Transaction Code Number
------------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
-----------------------------------------------------------------------------
Window Ticket No. (if any)
-----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
-----------------------------------------------------------------------------
Name of Institution that Guaranteed Delivery
-----------------------------------------------------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S)
APPEAR(S) SHARES CERTIFICATE(S) AND SHARE(S) TENDERED
ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
SHARES
SHARE EVIDENCED NUMBER OF
CERTIFICATE BY SHARE SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL SHARES
- ------------------------------------------------------------------------------------------------
* Need not be completed by stockholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share
Certificate delivered to the Depositary are being tendered hereby. See Instruction 4.
- ------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
NOTE: SIGNATURE MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH
IN THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Central Parking System--Empire State,
Inc. ("Purchaser"), a New York corporation and an indirect wholly-owned
subsidiary of Central Parking Corporation, a Tennessee corporation ("Parent"),
the above-described shares of common stock, par value $.01 per share (the
"Shares"), of Square Industries, Inc. (the "Company"), pursuant to Purchaser's
offer to purchase all the outstanding Shares for $31.00 per share, payable
$28.50 net to the seller in cash promptly following the completion of the Offer
for each outstanding Share, without interest thereon, and an additional $2.50
per Share to be deposited by Parent in escrow as contingent consideration for
distribution, in whole or in part, to either the seller or Parent based upon the
resolution of two specific matters, subject to adjustment as provided in the
escrow agreement, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated December 13, 1996 (the "Offer to Purchase"), receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which together
constitute the "Offer").
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (or orders the registration of such Shares delivered by book-entry
transfer) and all dividends, distributions (including, without limitation,
distributions of additional Shares) and rights declared, paid or distributed in
respect of such Shares on or after December 6, 1996 (collectively,
"Distributions"), and irrevocably appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares and
all Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Share Certificates evidencing such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company, and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Monroe J. Carell, Jr. and
Stephen A. Tisdell, and each of them, as the attorneys and proxies of the
undersigned, each with full power of substitution, to vote in such manner as
each such attorney and proxy or his or her substitute shall, in his or her sole
discretion, deem proper and otherwise act (by written consent or otherwise) with
respect to all the Shares tendered hereby that have been accepted for payment by
Purchaser prior to the time of any vote or other action and all Shares and other
securities issued in Distributions in respect of such Shares, which the
undersigned is entitled to vote at any meeting of shareholders of the Company
(whether annual or special and whether or not an adjourned or postponed meeting)
or consent in lieu of any such meeting or otherwise. This proxy and power of
attorney is coupled with an interest in the Shares tendered hereby, is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by Purchaser in accordance with the terms
of the Offer. Such acceptance for payment shall revoke all other proxies and
powers of attorney granted by the undersigned at any time with respect to such
Shares (and all Shares and other securities issued in Distributions in respect
of such Shares), and no subsequent proxy or power of attorney shall be given or
written consent executed (and, if given or executed, shall not be effective) by
the undersigned with respect thereto. The undersigned understands that, in order
for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance of such Shares for payment, Purchaser must be able to exercise full
voting and other rights with respect to such Shares and all Distributions,
including, without limitation, voting at any meeting of the Company's
shareholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, and that when such Shares are accepted
for payment by Purchaser, Purchaser will acquire good, marketable and
unencumbered title
3
<PAGE> 4
thereto and to all Distributions, free and clear of all liens, restrictions,
charges and encumbrances, and that none of such Shares and Distributions will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver all additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase price
the amount or value of such Distribution as determined by Purchaser in its sole
discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. The undersigned recognizes that Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
from the name of the registered holder(s) thereof if Purchaser does not purchase
any of the Shares tendered hereby.
4
<PAGE> 5
---------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not
purchased are to be issued in the name of someone other than the
undersigned.
Issue check and/or certificate(s) to:
Name
--------------------------------------------------------------------
(PLEASE PRINT)
Address
------------------------------------------------------------------
------------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 ON INSIDE BACK COVER)
Check appropriate box:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
---------------------------------------------------
(ACCOUNT NUMBER)
---------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not
purchased are to be mailed to someone other than the undersigned, or to
the undersigned at an address other than that shown under "Description of
Shares Tendered."
Mail check and/or certificate(s) to:
Name
--------------------------------------------------------------------
(PLEASE PRINT)
Address
------------------------------------------------------------------
------------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------------
5
<PAGE> 6
IMPORTANT
SHAREHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON INSIDE BACK COVER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF HOLDER(S)
Dated:__________, 1997
(Must be signed by registered holder(s) exactly as such registered
holder(s) appear(s) on Share Certificates or on a security position listing or
by a person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, please provide the
following information and see Instruction 5.)
Name(s):
------------------------------------------------------------------------
------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
----------------------------------------------------
Taxpayer Identification or Social Security No.:
---------------------------------
(SEE SUBSTITUTE FORM W-9 ON INSIDE BACK COVER)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
SPACE BELOW IS FOR USE BY FINANCIAL INSTITUTIONS ONLY.
FINANCIAL INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE BELOW
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. All signatures on this Letter of Transmittal
must be medallion guaranteed by a firm that is a member of the Medallion
Signature Guarantee Program, or by any other "eligible guarantor institution,"
as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended (each of the foregoing being referred to as an "Eligible
Institution"), unless (i) this Letter of Transmittal is signed by the registered
holder(s) of the Shares (which term, for purposes of this document, shall
include any participant in a Book-Entry Transfer Facility whose name appears on
a security position listing as the owner of Shares) tendered hereby and such
holder(s) has (have) completed neither the box entitled "Special Payment
Instructions" nor the box entitled "Special Delivery Instructions" on the
reverse hereof or (ii) such Shares are tendered for the account of an Eligible
Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Share Certificates. This Letter
of Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if Shares are to be
delivered by book-entry transfer pursuant to the procedure set forth in Section
3 of the Offer to Purchase. Share Certificates evidencing all physically
tendered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer as well as a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature guarantees,
or an Agent's Message in the case of a book-entry delivery, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the reverse hereof prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). If Share
Certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Shareholders whose Share Certificates are not immediately available,
who cannot deliver their Share Certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or a confirmation of a book-entry transfer
into the Depositary's account at a Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry delivery, an
Agent's Message), and any other documents required by this Letter of
Transmittal, must be received by the Depositary within five New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, all as described in Section 3 of the Offer to Purchase.
The method of delivery of this Letter of Transmittal, Share Certificates
and all other required documents, including delivery through any Book-Entry
Transfer Facility, is at the option and risk of the tendering shareholder, and
the delivery will be deemed made only when actually received by the Depositary.
If delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering shareholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. Partial Tenders (not applicable to shareholders who tender by book-entry
transfer). If fewer than all of the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered
7
<PAGE> 8
hereby, fill in the number of Shares that are to be tendered in the box entitled
"Number of Shares Tendered." In such cases, new Share Certificate(s) evidencing
the remainder of the Shares that were evidenced by the Share Certificates
delivered to the Depositary herewith will be sent to the person(s) signing this
Letter of Transmittal, unless otherwise provided in the box entitled "Special
Delivery Instructions" on the reverse hereof, as soon as practicable after the
expiration or termination of the Offer. All Shares evidenced by Share
Certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or
Shares Certificate(s) evidencing Shares not tendered or not purchased are to be
issued in the name of, a person other than the registered holder(s), the amount
of any stock transfer taxes (whether imposed on the registered holder(s), such
other person or otherwise) payable on account of the transfer to such other
person will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Share Certificates
evidencing the Shares tendered hereby.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
8
<PAGE> 9
8. Questions and Requests for Assistance or Additional Copies. Questions
and requests for assistance may be directed to the Information Agent or the
Dealer Manager at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information Agent
or from brokers, dealers, commercial banks or trust companies.
9. Substitute Form W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such shareholder is not subject to backup withholding of federal income tax. If
a tendering shareholder has been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding, such shareholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
shareholder has since been notified by the Internal Revenue Service that such
shareholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering shareholder to
31% federal income tax withholding on the payment of the purchase price of all
Shares purchased from such shareholder. If the tendering shareholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such shareholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price to such shareholder until a TIN is provided to
the Depositary.
Important: This Letter of Transmittal (or facsimile hereof), properly
completed and duly executed, or an Agent's Message in the case of a book-entry
delivery (together with any required signature guarantees and Share Certificates
or confirmation of book-entry transfer and all other required documents), or a
properly completed and duly executed Notice of Guaranteed Delivery must be
received by the Depositary prior to the Expiration Date (as defined in the Offer
to Purchase).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
shareholder's correct TIN on Substitute Form W-9 below. If such shareholder is
an individual, the TIN is such shareholder's social security number. If the
Depositary is not provided with the correct TIN, the shareholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such shareholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding of 31% (as described below).
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit an Internal Revenue Service Form W-8,
signed under penalties of perjury, attesting to such individual's exempt status.
A Form W-8 may be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN), and (b) that
(i) such shareholder has not been notified
9
<PAGE> 10
by the Internal Revenue Service that such shareholder is subject to backup
withholding as a result of failure to report all interest or dividends or (ii)
the Internal Revenue Service has notified such shareholder that such shareholder
is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering shareholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the shareholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
shareholder until a TIN is provided to the Depositary.
10
<PAGE> 11
PAYER'S NAME:
------------------------------------------------------
<TABLE>
<C> <S> <C>
SUBSTITUTE PART 1 - Taxpayer Identification ----------------------------
FORM W-9 Number SOCIAL SECURITY NUMBER
OR-------------------------
Department of the For all accounts, enter taxpayer EMPLOYER IDENTIFICATION
Treasury Internal identification number in the box NUMBER
Revenue Service at right. (For most individuals,
this is your social security (If awaiting TIN,
number. If you do not have a write "Applied For")
number, OR see "Obtaining a
Number" in the enclosed
Guidelines.) Certify by signing
and dating Number below. Note: If
the account is in more than one
name, see the chart in the
enclosed Guidelines to determine
which number to give the payer.
Payer's Request for PART II -- For Payees Exempt from Backup Withholding, see the
Taxpayer Identification enclosed Guidelines and complete as instructed therein.
Number (TIN)
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been notified by the
Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result
of failure to report all interest or dividends, or the IRS has notified me that I am no
longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by
the IRS that you are subject to backup withholding because of under reporting interest or
dividends on your tax return. However, if after being notified by the IRS that you were
subject to backup withholding, you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out item (2). (See also instructions in
the enclosed Guidelines.)
SIGNATURE DATE , 199
---------------------------------------------------------- ------------ ---
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE OFFER. FOR ADDITIONAL
DETAILS, PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9.
---------------------
The Information Agent for the Offer is:
KISSEL-BLAKE INC.
110 Wall Street
New York, New York 10005
(212) 344-6733
Toll-Free: 1-800-554-7733
---------------------
The Dealer Manager for the Offer Is:
J.C. Bradford Logo
330 Commerce Street
Nashville, TN 37201
(615) 315-1750
---------------------
December 13, 1996
11
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
for
Tender of Shares of Common Stock
of
SQUARE INDUSTRIES, INC.
(Not To Be Used For Signature Guarantees)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("Shares Certificates") evidencing shares of common stock, par value $.01 per
share (the "Shares") of Square Industries, Inc., are not immediately available,
(ii) if Share Certificates and all other required documents cannot be delivered
to SunTrust Bank, Atlanta, as Depositary (the "Depositary"), prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase (as defined
below)), or (iii) if the procedure for delivery by book-entry transfer cannot be
completed on a timely basis. This Notice of Guaranteed Delivery may be delivered
by hand or mail or transmitted by telegram or facsimile transmission (for
eligible institutions only) to the Depositary. See Section 3 of the Offer to
Purchase.
The Depositary for the Offer is:
SUNTRUST BANK, ATLANTA
By Facsimile Transmission:
(FOR ELIGIBLE
INSTITUTIONS ONLY)
(404) 865-5371
Confirm Receipt of Guaranteed
Delivery by Telephone:
(800) 568-3476
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Carrier
SunTrust Bank, Atlanta SunTrust Bank, Atlanta SunTrust Bank, Atlanta
P.O. Box 4625 58 Edgewood Avenue 58 Edgewood Avenue
Atlanta, GA 30302 Room 225 Room 225
Atlanta, GA 30303 Atlanta, GA 30303
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Central Parking System -- Empire State,
Inc., a New York corporation and an indirect wholly-owned subsidiary of Central
Parking Corporation, a Tennessee corporation, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated December 13, 1996 (the
"Offer to Purchase"), and the related Letter of Transmittal (which together
constitute the "Offer"), receipt of each of which is hereby acknowledged, the
number of Shares specified below pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase.
Number of Shares:
-------------------------------------
Certificate Nos. (If Available):
- ------------------------------------------------------
Check one box if Shares will be delivered by
book-entry transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
- ------------------------------------------------------
NAME OF TENDERING INSTITUTION
Account No.
-------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated: , 199
----------------------------------------- --
Name(s) of Holders:
- ------------------------------------------------------
- ------------------------------------------------------
PLEASE TYPE OR PRINT
- ------------------------------------------------------
ADDRESS
- ------------------------------------------------------
ZIP CODE
- ------------------------------------------------------
AREA CODE AND TELEPHONE NO.
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or which is a commercial bank or trust company having an office or correspondent
in the United States, guarantees to deliver to the Depositary, at one of its
addresses set forth above, Share Certificates evidencing the Shares tendered
hereby, in proper form for transfer, or confirmation of book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company or
Philadelphia Depository Trust Company, in each case with delivery of a Letter of
Transmittal (or facsimile thereof) properly completed and duly executed, with
any required signature guarantees or an Agent's Message (as defined in the Offer
to Purchase) in the case of a book-entry delivery, and any other required
documents, all within five New York Stock Exchange trading days of the date
hereof.
<TABLE>
<S> <C>
- -------------------------------------------- --------------------------------------------
NAME OF FIRM AUTHORIZED SIGNATURE
- -------------------------------------------- --------------------------------------------
ADDRESS TITLE
Name
- -------------------------------------------- -------------------------------------------
ZIP CODE PLEASE TYPE OR PRINT
Date , 199
- -------------------------------------------- ------------------------------- ---
AREA CODE AND TELEPHONE NO.
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
J.C. BRADFORD & CO.
330 Commerce Street
Nashville, Tennessee 37201
(615) 315-1750
---------------------
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
SQUARE INDUSTRIES, INC.
at
$31.00 Per Share
(payable $28.50 per Share net in cash, without interest thereon, and an
additional $2.50 per Share, to be deposited by Parent in escrow as contingent
consideration, for distribution in whole or in part, either to the seller or to
Parent upon the resolution of two specific matters, subject to adjustment as
provided in the escrow agreement)
by
CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC.
an indirect wholly-owned subsidiary of
CENTRAL PARKING CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 14, 1997, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Central Parking System -- Empire State, Inc., a
New York corporation ("Purchaser") and an indirect wholly-owned subsidiary of
Central Parking Corporation, a Tennessee corporation ("Parent"), to act as
Dealer Manager in connection with Purchaser's offer to purchase all outstanding
shares of common stock, par value $.01 per share (the "Shares"), of Square
Industries, Inc. (the "Company"), at a price of $31.00 per Share, payable $28.50
net to the seller in cash at closing, without interest thereon and an additional
$2.50 per Share to be deposited by Parent in escrow as contingent consideration
for distribution, in whole or in part as provided in the escrow agreement, to
either the seller or to Parent upon the resolution of two specific matters,
subject to adjustment, upon the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase, dated December 13, 1996 (the "Offer to
Purchase"), and the related Letter of Transmittal (which together constitute the
"Offer") enclosed herewith. Please furnish copies of the enclosed materials to
those of your clients for whose accounts you hold Shares registered in your name
or in the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THE NUMBER OF
SHARES WHICH, TOGETHER WITH ANY SHARES THEN OWNED BY PARENT OR PURCHASER,
REPRESENTS AT LEAST SIXTY-SIX AND TWO THIRDS PERCENT (66 2/3%) OF THE SHARES ON
A FULLY DILUTED BASIS (FULLY DILUTED SHALL INCLUDE, WITHOUT LIMITATION, ALL
SHARES ISSUABLE UPON THE CONVERSION OF ANY CONVERTIBLE SECURITIES OR UPON THE
EXERCISE OF ANY OPTIONS, WARRANTS OR RIGHTS, UNLESS THE HOLDER THEREOF SHALL
HAVE ENTERED INTO AN AGREEMENT TO CASH OUT SUCH OPTIONS, WARRANTS OR RIGHTS IN
CONJUNCTION WITHIN THE MERGER AGREEMENT). THE OFFER IS ALSO CONDITIONED UPON,
AMONG OTHER THINGS, THE EXPIRATION OR TERMINATION OF ANY APPLICABLE ANTITRUST
WAITING PERIODS.
<PAGE> 2
Enclosed for your information and use are copies of the following
documents:
1. Offer to Purchase, dated December 13, 1996;
2. Letter of Transmittal to be used by holders of Shares in accepting
the Offer and tendering Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available or
cannot be delivered to SunTrust Bank, Atlanta (the "Depositary") by the
Expiration Date (as defined in the Offer to Purchaser) or if the procedure
for book-entry transfer cannot be completed by the Expiration Date;
4. A letter to shareholders of the Company from Lowell Harwood,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 14, 1997, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase)), (ii) a Letter of Transmittal
(or facsimile thereof) properly completed and duly executed or an Agent's
Message (as defined in the Offer to Purchase) in the case of a book-entry
delivery and (iii) any other required documents in accordance with the
instructions contained in the Letter of Transmittal.
If a holder of Shares wishes to tender Shares, but cannot deliver such
holder's certificates or other required documents, or cannot comply with the
procedure for book-entry transfer, prior to the expiration of the Offer, a
tender of Shares may be effected by following the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and the Information
Agent as described in the Offer) in connection with the solicitation of tenders
of Shares pursuant to the Offer. However, Purchaser will reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients. Purchaser will pay or cause to be paid any
stock transfer taxes payable with respect to the transfer of Shares to it,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquires you may have the respect to the Offer should be addressed to
J.C. Bradford & Co., or Kissel-Blake Inc. (the "Information Agent") at their
respective addresses and telephone numbers set forth on the back cover page of
the Offer to Purchase.
<PAGE> 3
Additional copies of the enclosed material may be obtained from the
Information Agent, at the address and telephone numbers set forth on the back of
the Offer to Purchase.
Very truly yours,
J. C. BRADFORD & CO.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU
OR ANY OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF PARENT, PURCHASER,
THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF
ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
<PAGE> 1
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
SQUARE INDUSTRIES, INC.
at
$31.00 Per Share
(payable $28.50 net per Share in cash, without interest thereon, and an
additional $2.50 per Share to be deposited by Parent in escrow as contingent
consideration for distribution, in whole or in part, to either seller or Parent
upon the resolution of two specific matters, subject to adjustment as provided
in the escrow agreement)
by
CENTRAL PARKING SYSTEM - - EMPIRE STATE, INC.
an indirect wholly-owned subsidiary of
CENTRAL PARKING CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JANUARY 14, 1997,
UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated December
13, 1996 (the "Offer to Purchase"), and a related Letter of Transmittal (which
together constitute the "Offer") in connection with the offer by Central Parking
System -- Empire State, Inc., a New York corporation ("Purchaser") and an
indirect wholly-owned subsidiary of Central Parking Corporation, a Tennessee
corporation ("Parent"), to purchase all outstanding shares of common stock, par
value $.01 per share (the "Shares"), of Square Industries, Inc. (the "Company"),
at a price of $31.00 per share, payable $28.50 net per Share in cash, without
interest thereon, and an additional $2.50 per Share to be deposited by Parent in
escrow as contingent consideration for distribution, in whole or in part, to
either seller or Parent based upon the resolution of two specific matters,
subject to adjustment as provided in the escrow agreement, upon the terms and
subject to the conditions set forth in the Offer.
We are (or our nominee is) the holder of record of Shares held by us for
your account. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $31.00 per Share, payable $28.50 net per Share
in cash, without interest thereon, and an additional $2.50 per Share to be
deposited by Parent in escrow as contingent
<PAGE> 2
consideration for distribution, in whole or in part, to either seller or
Parent based upon the resolution of two specific matters, subject to
adjustment as provided in the escrow agreement.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has determined that each of
the Offer and the Merger (as defined in the Offer to Purchase) is fair to,
and in the best interests of, the stockholders of the Company (other than
Parent and its subsidiaries), and recommends that stockholders accept the
Offer and tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, January 14, 1997, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer a
number of Shares which, together with any Shares then owned by Parent or
Purchaser, represents at least sixty-six and two thirds percent (66 2/3%)
of the Shares on a fully diluted basis. Fully diluted shall include,
without limitation, all Shares issuable upon the conversion of any
convertible securities or upon the exercise of any options, warrants or
rights, unless the holder thereof shall have entered into an agreement to
cash out such options, warrants or rights in conjunction with the Merger
Agreement. The Offer is also conditioned upon, among other things, the
expiration or termination of applicable antitrust waiting periods.
6. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes with respect to the purchase of
Shares by Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If Purchaser becomes aware
of any valid state statute prohibiting the making of the Offer or the acceptance
of Shares pursuant thereto, Purchaser will make a good faith effort to comply
with any such state statute. If, after such good faith effort, Purchaser cannot
comply with such state statute, the Offer will not be made to (nor will tenders
be accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by J. C. Bradford & Co. or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
of
SQUARE INDUSTRIES, INC.
by
CENTRAL PARKING SYSTEM - - EMPIRE STATE, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated December 13, 1996, and the related Letter of
Transmittal (which together constitute the "Offer"), in connection with the
offer by Central Parking System -- Empire State, Inc., a New York corporation
and an indirect wholly-owned subsidiary of Central Parking Corporation, a
Tennessee corporation, to purchase all outstanding shares of common stock, par
value $.01 per share (the "Shares"), of Square Industries, Inc., a New York
corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
<TABLE>
<S> <C>
Dated: ____________, 199_ SIGN HERE
---------------------------------------------
- -------------------------------------------- ---------------------------------------------
SIGNATURE(S)
Number of Shares to be Tendered __________
__________
_______________ Shares* PLEASE TYPE OR PRINT NAME(S)
__________
- -------------------------------------------- __________
PLEASE TYPE OR PRINT ADDRESS
__________
__________
AREA CODE AND TELEPHONE NUMBER
__________
TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the Payer.
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
=========================================================
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ---------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, the
first individual on
the account(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult, or if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian The ward, minor, or
or committee for a designated incompetent
ward, minor, or incompetent person(3)
person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or Legal entity (Do
pension trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district or prison) that
receives agricultural program
payments
</TABLE>
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on interest, dividends, and
broker transactions payments include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under Section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
political subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT
YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated December 13, 1996, and the related Letter of
Transmittal, and is being made to all holders of Shares. Purchaser (as
defined below) is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid
state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares
pursuant thereto, Purchaser will make a good faith effort to comply
with any such state statute. If, after such good faith effort,
Purchaser cannot comply with any such state statute, the Offer
will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of Purchaser
by J.C. Bradford & Co. or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
SQUARE INDUSTRIES, INC.
at
$31.00 Per Share
(payable $28.50 per Share net in cash, without interest thereon and an
additional $2.50 per Share to be deposited by Purchaser in escrow as contingent
consideration for distribution, in whole or in part, to either the seller or
Purchaser upon the resolution of two specific matters, subject to
adjustment as provided in the escrow agreement)
by
CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC.
an indirect wholly-owned subsidiary of
CENTRAL PARKING CORPORATION
Central Parking System -- Empire State, Inc., a New York corporation
("Purchaser") and an indirect wholly-owned subsidiary of Central Parking
Corporation, a Tennessee corporation ("Parent"), is offering to purchase all
outstanding shares of common stock, par value $.01 per share (the "Shares"), of
Square Industries, Inc., a New York corporation (the "Company"), at a price of
$28.50 per Share, net to the seller in cash, without interest thereon and an
additional $2.50 per Share to be deposited by Purchaser in escrow as contingent
consideration for distribution, in whole or in part, to either the seller or
Purchaser upon the resolution of two specific matters, subject to adjustment as
provided in the escrow agreement (the "Escrowed Funds"), upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated December 13,
1996 (the "Offer to Purchase"), and in the related Letter of Transmittal (which
together constitute the "Offer"). Following the Offer, Purchaser intends to
effect the Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JANUARY 14, 1997, UNLESS THE OFFER IS EXTENDED
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which, together with any Shares then owned by Parent or Purchaser,
represents at least sixty-six and two-thirds percent (66 2/3%) of the Shares on
a fully diluted basis (fully diluted shall include, without limitation, all
Shares issuable upon the conversion of any convertible securities or upon the
exercise of any options, warrants or rights, unless the holder thereof shall
have entered into an agreement to cash out such options, warrants or rights in
conjunction with the Merger Agreement). The Offer is also conditioned upon,
among other things, the expiration or termination of any applicable antitrust
waiting periods.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of December 6, 1996 (the "Merger Agreement") among Parent, Purchaser and the
Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with relevant provisions of the New York Business Corporation Law
(the "NYBCL"), the Purchaser will be merged with and into the Company (the
"Merger"). Following consummation of the Merger, the Company will continue as
the surviving corporation (the "Surviving Corporation"). At the effective time
of the Merger (the "Effective Time"), each Share issued and outstanding
immediately prior to the Effective Time (other than Shares held in the treasury
of the Company, Shares owned by Parent or any direct or indirect subsidiary of
Parent or of the Company and Shares which are held by shareholders validly
exercising appraisal rights pursuant to Section 910 of the NYBCL) will be
converted into the right to receive $28.50 per Share net in cash, and an
additional $2.50 per Share to be deposited by Purchaser in escrow as contingent
consideration for distribution, in whole or in part, to either the shareholder
or Purchaser based upon the resolution of two specific matters, subject to
adjustment pursuant to the escrow agreement, or any higher price that may be
paid per Share in the Offer, without interest except as provided in the escrow
agreement (the "Merger Consideration").
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
DETERMINED THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY (OTHER THAN PARENT AND ITS
SUBSIDIARIES) AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to SunTrust Bank, Atlanta (the
"Depositary") of the Purchaser's acceptance for payment of such Shares pursuant
to the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor (less the Escrowed Funds) with the Depositary, which
will act as agent for the tendering shareholders for the purpose of receiving
payments from the Purchaser and transmitting such payments to the tendering
shareholders whose Shares have been accepted for payment. Under no circumstances
will interest on the purchase price for Shares be paid, regardless of any delay
in making such payment except as provided in the escrow agreement. In all cases,
payment for Shares tendered and accepted for payment pursuant to the Offer (less
the Escrowed Funds) will be made only after timely receipt by the Depositary of
(i) the certificates evidencing such Shares (the "Share Certificates") or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities (as defined in Section 2 of
the Offer to Purchase) pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (ii) the Letter of
<PAGE> 2
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message (as defined in Section
2 of the Offer to Purchase) in connection with a book-entry transfer, and (iii)
any other documents required by the Letter of Transmittal.
The term "Expiration Date" shall mean 12:00 midnight New York City time, on
Tuesday, January 14, 1997, unless and until Purchaser, shall have extended the
period of time for the Offer, in which event the term "Expiration Date" shall
mean the latest time and date at which the Offer, as so extended by Purchaser,
shall expire. Purchaser expressly reserves the right, in its sole discretion
(but subject to the terms and conditions of the Merger Agreement including
consent by the Company), at any time and from time to time, to extend for any
reason the period of time during which the Offer is open, including upon the
occurrence of any of the conditions specified in Section 14 of the Offer to
Purchase, by giving oral or written notice of such extension to the Depositary.
Any such extension will be followed as promptly as practicable by public
announcement thereof, such announcement to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date of the Offer. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
rights of a tendering shareholder to withdraw such shareholder's Shares.
Tenders of Shares made pursuant to the Offer may be withdrawn by the
tendering shareholder at any time prior to the Expiration Date, thereafter such
tenders are irrevocable, except that they may also be withdrawn by such
shareholder at any time after February 11, 1997 unless thereafter accepted for
payment by Purchaser pursuant to the Offer. For the withdrawal to be effective,
a written, telegraphic, telex or facsimile transmission notice of withdrawal
must be timely received by the Depositary at one of its addresses set forth on
the back cover page of the Offer to Purchase. Any such notice of withdrawal must
be timely received by the Depositary at one of its addresses set forth on the
back cover page of the Offer to Purchase. Any such notice of withdrawal must
specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of such
Shares, if different from that of the person who tendered such Shares. If Share
Certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in Section 3 of the
Offer to Purchase), unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry-Transfer Facility to be credited with the withdrawn Shares, in which
case a notice of withdrawal will be effective if delivered to the Depositary as
set forth in Section 4 of the Offer to Purchase. Withdrawals may not be
rescinded, and any Shares properly withdrawn will thereafter be deemed not to
have been validly tendered for purposes of the Offer. However, withdrawn Shares
may be retendered at any time prior to the Expiration Date by following one of
the procedures described in Section 3 of the Offer to Purchase. All questions as
to the form and validity (including the time of receipt) of any notice of
withdrawal will be determined by Purchaser, in its sole discretion, whose
determination will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
shareholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance or for additional copies of the Offer
to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent or the Dealer Manager as set
forth below, and copies will be furnished promptly at Purchaser's expense. No
fees or commissions will be paid to brokers, dealer or other person (other than
the Information Agent and the Dealer Manager) for soliciting tenders of Shares
pursuant to the Offer.
The Information Agent for the Offer is:
KISSEL-BLAKE INC.
110 Wall Street
New York, New York
Banks and Brokerage Firms please call:
(212) 344-6733
OR CALL TOLL FREE
1-800-554-7733
The Dealer Manager for the Offer is:
J.C. Bradford & Co.
330 Commerce Street
Nashville, Tennessee 37201
(615) 315-1750
Attention: Tina Redding
December 13, 1996
<PAGE> 1
FOR IMMEDIATE RELEASE
Contact: Stephen Tisdell
Chief Financial Officer
(615) 297-4255 X265
[email protected]
CENTRAL PARKING CORPORATION AGREES TO ACQUIRE SQUARE INDUSTRIES
--------------------
ACQUISITION EXPECTED TO ADD TO FISCAL 1997 EARNINGS
NASHVILLE, Tennessee (December 9, 1996) - Central Parking Corporation (NYSE:PK)
today announced that it has signed a definitive purchase agreement to acquire
all the outstanding shares of Square Industries, Inc. (Nasdaq/NM: SQAI)
("Square Industries"). Pursuant to the agreement, Central Parking Corporation
will pay an aggregate of $31.00 per share for each outstanding share of Square
Industries common stock. Of that amount, $28.50 will be paid net to the seller
in cash; and an additional $2.50 per share will be deposited by Central Parking
Corporation in escrow as contingent consideration for distribution to either
the shareholders of Square Industries or Central Parking Corporation based upon
the resolution of two specific matters, subject to adjustment as provided in
the escrow agreement. Square Industries currently has approximately 1.2 million
shares of common stock outstanding.
The transaction will be a cash tender offer followed by a cash merger
to acquire any shares not previously tendered. As a result of the transaction,
Square Industries will become a wholly-owned subsidiary of Central Parking
Corporation. The transaction has been recommended by the Boards of Directors of
Central Parking Corporation and Square Industries. Central Parking Corporation
expects to file its notice of cash tender offer with the Securities and
Exchange Commission on December 13, 1996 and to launch the offer immediately
thereafter. J.C. Bradford & Co. will be the Dealer Manager for the Tender Offer
and advised Central Parking Corporation in the transaction. The cash tender
offer is subject to Central Parking Corporation receiving at least 66 2/3%
(sixty-six and two-thirds percent) of the outstanding stock of Square
Industries. The cash required for the transaction will be provided to Central
Parking Corporation pursuant to a combination of current cash and a new $150
million credit arrangement.
-MORE-
<PAGE> 2
Central Parking Agrees to Purchase Square Industries
Page 2
December 9, 1996
- --------------------------------------------------------------------------------
Of the escrowed funds, $1.99 per share is consideration which is
contingent on the execution of a lease meeting certain criteria with respect to
one specific property, and may be held in escrow for up to 12 months. $0.51 per
share is consideration which is contingent on the resolution of certain tax
issues, and may be held for up to three years. The escrow agreement provides
that any interest earned on the escrowed funds will be distributed to the party
receiving the funds and that certain expenses will be paid out of the escrowed
funds.
Monroe J. Carell, Jr., Chairman and Chief Executive Officer of Central
Parking Corporation, remarked, "We are confident that this proposed acquisition
will contribute positively to our continued growth in earnings, starting in our
1997 fiscal year. The majority of parking facilities which Square Industries
controls and manages are in geographic areas where we already have established
operations. Since most of Square's facilities are in cities where Central
Parking Corporation currently operates, we will be able to achieve significant
cost savings as we integrate the acquired properties. We have successfully
complemented our internal growth in the past through other strategic
acquisitions, and we believe this transaction represents another logical and
profitable way of enhancing our overall competitive position."
Lowell Harwood, Chairman and Chief Executive Officer of Square
Industries, added, "We look forward to joining forces with Central Parking
Corporation. We believe that Square Industries' leadership in the Northeast
will complement and strengthen Central Parking Corporation's overall
competitive position in the parking industry."
Square Industries, headquartered in Jersey City, New Jersey, currently
operates approximately 117 parking facilities containing over 61,000 spaces
located primarily in the Northeast (New York City, 49; Philadelphia, 30;
Newark, 17; Pittsburgh, 11 and other cities, 10). Square's facilities include
Rockefeller Center and One Penn Plaza as well as sports complexes such as Shea
Stadium, home of the New York Mets, and Corel Centre/Palladium in Ottawa,
Canada. Square Industries reported revenue of $65.9 million for the year ended
December 31, 1995. Square Industries was advised by The Blackstone Group in
connection with the transaction.
Central Parking Corporation reported revenue of $143.3 million for its
fiscal year ended September 30, 1996. Headquartered in Nashville, Tennessee,
Central Parking Corporation is a leading provider of parking services in the
United States. The Company currently operates in excess of 1,360 parking
facilities containing over 546,000 parking spaces located in 32 states, the
District of Columbia, the United Kingdom, Mexico, Puerto Rico and Germany. The
Company provides parking consulting services in Malaysia and Spain and has a
business development office in Amsterdam.
- END -
<PAGE> 1
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into as of this 12th day of
December, 1996, by and between CENTRAL PARKING CORPORATION, a Tennessee
corporation ("CPC"), CENTRAL PARKING SYSTEM, INC., a Tennessee corporation
("CPS"), and CENTRAL PARKING SYSTEM REALTY, INC. a Tennessee corporation
("CPSR") (CPC, CPS, and CPSR are jointly and severally referred to herein as
"Borrowers"), SUNTRUST BANK, NASHVILLE, N.A. ("STB"), and the other banks and
lending institutions who become Lenders pursuant to Section 12.12 herein (STB
and such other banks and lending institutions are referred to collectively as
the "Lenders"), and SUNTRUST BANK, NASHVILLE, N.A., Agent in its capacity as
agent for the Lenders and each successive agent for such Lenders as may be
appointed from time to time pursuant to Article XII herein (the "Agent").
RECITALS
1. The Borrowers desire that the Lenders extend the Borrowers credit
pursuant to the terms of this Credit Agreement.
2. The Lenders are willing to extend the Borrowers credit pursuant to
the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties hereto agree as follows:
Article I. Definitions.
<PAGE> 2
As used in this Agreement, the following terms shall have the following
meanings, unless the context expressly otherwise requires:
The terms defined in this article have the meanings attributed to them
in this article. Singular terms shall include the plural as well as the
singular, and vice versa. Words of masculine, feminine or neuter gender shall
mean and include the correlative words of other genders.
All references herein to a separate instrument are to such separate
instrument as the same may be amended or supplemented from time to time pursuant
to the applicable provisions thereof.
All accounting terms not otherwise defined herein have the meanings
assigned to them, and all computations herein provided for shall be made, in
accordance with generally accepted accounting principles applied on a consistent
basis. All references herein to "generally accepted accounting principles" refer
to such principles as they exist at the date of application thereof.
All references herein to designated "Articles", "Sections" and other
subdivisions or to lettered Exhibits are to the designated Articles, Sections
and other subdivisions hereof and the Exhibits annexed hereto unless the context
otherwise clearly indicates. All Article, Section, other subdivision and Exhibit
captions herein are used for reference only and in no way limit or describe the
scope or intent of, or in any way affect, this Agreement.
"Advance" or "Advances" shall mean any and all amounts
advanced by Lenders to or for the account of Borrowers hereunder or
under the Revolving Credit Loan and all amounts advanced by the Swing
Line Lender under the Swing Line Loan, including, without limitation,
advances of loan proceeds, payments in overdraft, and amounts
-2-
<PAGE> 3
evidenced by Letters of Credit. The terms "Advance" and "Loan" are used
interchangeably in this Agreement.
"Affiliate" of any specified Person means any other Person
which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with such
specified Person. For purposes of this definition, "control" when used
with respect to any specified Person means the power to direct or cause
the direction of the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controls" and "controlled" have
meanings correlative to the foregoing.
"Agent" means SunTrust Bank, Nashville, N.A. or its successor
as appointed pursuant to the provisions of Article XII herein.
"Agreement" means this Credit Agreement (including all
exhibits hereto) as the same may be modified, amended, or supplemented
from time to time.
"Applicable Margin" means:
(i) From the Closing Date through that date which is
the earlier of the St. Louis JV Sale or April 30, 1997: 1.50%
per annum;
(ii) From the earlier of the St. Louis JV Sale or
April 30, 1997 through that date which is five (5) Business Days from
Agent's receipt of CPC's quarterly consolidated Financial Statements
for the period ending March 31, 1997: 1.25% per annum.
(iii) From that date which is five (5) Business Days
from Agent's receipt of CPC's quarterly consolidated Financial
Statements for the period ending
-3-
<PAGE> 4
March 31, 1997 through that date which is five (5) Business
Days from Agent's receipt of a senior unsecured debt rating
from Standard and Poor's Corporation or Moody's Investors
Services, Inc. for CPC (on a consolidated basis), the
Applicable Margin shall be determined in accordance with the
following table:
CPC's Ratio of
Funded Debt/EBITDA
<TABLE>
<CAPTION>
CPC's Ratio of
Funded Debt/
Total Capitalization >3.0 <3.0/>2.0 <2.0>1.0 <1.0
<S> <C> <C> <C> <C>
>0.50 1.25% 1.0% .75% .625%
- -
<0.50/>040 1.0% .75% .625% .50%
-
<0.40/>0.30 .75% .625% .50% .375%
-
<0.30 .625% .50% .375% .25%
</TABLE>
For purposes of determining the Applicable Margin in
the table set forth above, CPC's ratios (as determined on a
consolidated basis) of Funded Debt to EBITDA and Funded Debt
to Total Capitalization will be measured quarterly on the
Determination Date; and
(iv) From that date which is five (5) Business Days
from Agent's receipt of the senior unsecured debt rating from
Standard and Poor's Corporation or Moody's Investors Services,
Inc. for CPC (on a consolidated basis) until the Maturity
Date, the Applicable Margin shall be based on the most
recently published rating as follows:
-4-
<PAGE> 5
<TABLE>
<CAPTION>
Standard & Poor's Applicable
and Moody's Rating Margin
<S> <C>
Lower than BB+ or Bal 1.25% per annum
BB+ or Bal 1.00% per annum
BBB- or Baa3 .75% per annum
BBB or Baa2 .50% per annum
BBB+ or Baal .375% per annum
A- or A3 or above .25% per annum
</TABLE>
"Applicable Rate" means either the Base Rate Option or the
LIBOR Rate Option, except in the case of an Advance under the Swing
Line Loan, the Applicable Rate shall mean the Swing Line Rate.
"Assignment and Acceptance" means an Assignment and Acceptance
form executed by a Lender assigning its interest in the Revolving
Credit Loan, or any portion therein (other than as participation), to
an Eligible Assignee in a form reasonably satisfactory to Agent.
"Base Rate" means the rate of interest equal to the higher of
(i) the rate of interest most recently announced by Agent as its
reference, base, or prime lending rate, as the case may be, for Dollar
loans in the United States; or (ii) the Federal Funds Rate (as in
effect from time to time) plus one-half of one percent (1/2%) per
annum. The Base Rate is determined daily.
"Base Rate Option" shall mean that rate of interest equal to
the Base Rate.
"Borrowers" shall have the same meaning attributed to that
term in the preamble to this Agreement.
-5-
<PAGE> 6
"Borrowing Request" means a request in the form of Exhibit A
hereto submitted by CPC on behalf of Borrowers for an Advance as
described in Section 2.05 of this Agreement.
"Business Day" means any day other than a Saturday, Sunday or
day on which commercial banks are authorized to close for business in
New York City or the State of Tennessee and if the applicable Business
Day relates to any Advances made under the LIBOR Rate Option, any day
on which dealings are carried out in the London interbank market.
"Closing Date" means the 12th day of December, 1996.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute.
"Conditions Precedent" means those matters or events that must
be completed or must occur or exist prior to Lenders' being obligated
to fund any Advance, including, but not limited to, those matters
described in Article V hereof.
"Consolidated Entity" or "Consolidated Entities" means: (a)
the Borrowers, (b) all present and future Guarantors, (c) all present
and future Subsidiaries, Controlled Partnerships, and Controlled LLC's
of any of the Borrowers or Guarantors, and (d) any Person the financial
statements of which are consolidated with any other Consolidated Entity
identified in subparts (a), (b), and (c) hereof.
"Consolidated Net Income" shall mean for any fiscal period the
consolidated net income before extraordinary items of CPC and all
Persons whose financial statements are consolidated with those of CPC,
as calculated in accordance with GAAP.
-6-
<PAGE> 7
"Consolidated Net Worth" means the excess of (A) total assets
over (B) total liabilities, for CPC and all Persons whose financial
statements are consolidated with those of CPC, as determined in
accordance with GAAP.
"Controlled LLC" means a limited liability company, the
ownership and management of which is held by and/or controlled by any
of the Borrowers or any Consolidated Entity.
"Controlled Partnership" means a general partnership or joint
venture of which any of the Borrowers or any other Consolidated Entity
is a general partner or joint venturer, or a limited partnership which
has one of the Borrowers or any other Consolidated Entity as a general
partner and with respect to which general partnership, joint venture,
or limited partnership, the Borrowers or any other Consolidated Entity
serving as general partner or joint venturer is entitled to receive not
less than 51% of any distributions of cash or other Property made to
the partners or joint venturers thereof.
"Debt" means, with respect to any Person, all obligations of
such Person, contingent or otherwise, which in accordance with GAAP
would be classified on a balance sheet of such Person as liabilities of
such Person, but in any event including (a) liabilities secured by any
mortgage, pledge or lien existing on Property owned by such Person and
subject to such mortgage, pledge or lien, whether or not the liability
secured thereby shall have been assumed by such Person, (b) all
indebtedness and other similar monetary obligations of such Person, (c)
all guaranties, obligations in respect of letters of credit,
endorsements (other than endorsements of negotiable instruments for
purposes of collection in the ordinary course of business), obligations
to purchase goods or services for the purpose of supplying funds for
the purchase or payment of Debt of
-7-
<PAGE> 8
others and other contingent obligations in respect of, or to purchase,
or otherwise acquire, or advance funds for the purchase of, Debt of
others, (d) all obligations of such Person to indemnify another Person
to the extent of the amount of indemnity, if any, which would be
payable by such Person at the time of determination of Debt and (e) all
obligations of such Person under capital leases.
"Default Rate" means interest rate equal to two percent (2%)
per annum above the Base Rate.
"Default" or "Event of Default" means the occurrence of any of
the events specified in Section 8.01 hereof, whether or not any
requirement for notice or lapse of time or other condition precedent
has been satisfied.
"Default Conditions" or "Default Condition" means the
occurrence of any of the events specified in Section 8.03 hereof.
"Determination Date" shall be that date which is five (5)
Business Days subsequent to Agent's receipt of CPC's most recent
Financial Statements and most recent quarterly consolidated
calculations of the Funded Debt to EBITDA Ratio and the Funded Debt to
Total Capitalization Ratio.
"EBITDA" (Earnings Before Interest, Taxes, Depreciation and
Amortization) means for CPC as determined on a consolidated basis, for
any period, an amount equal to the sum of: (A) all pre-tax income, plus
(B) depreciation, plus (C) amortization, plus (D) total interest
expense (net of interest income).
"Eligible Assignee" means: (i) a commercial bank organized
under the laws of the United States or any state thereof having total
assets in excess of $1,000,000,000 or
-8-
<PAGE> 9
any commercial finance or asset based lending Affiliate of any such
commercial bank which has complied with Section 12.12 herein, or (ii)
any Lender.
"Environmental Law" means any federal, state, or local law,
statute, ordinance, or regulation applicable or pertaining to health,
industrial hygiene, waste materials, removal of waste materials, oil,
gas, underground storage tanks, Hazardous Substances, other
environmental conditions on, under, or affecting any of the Borrowers'
Property.
"Equity Proceeds" means the net proceeds obtained by any
Consolidated Entity through the public or private placement of shares
of stock of any Consolidated Entity or the issuance of subordinated
debt of any Consolidated Entity (the form, substance, and terms of
which subordinated debt shall first be determined to be acceptable to
Lenders).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, including (unless the context
otherwise requires) any rules or regulations promulgated thereunder.
"Facing Fee" means the product of (a) .125% multiplied by (b)
the face amount of any Letter of Credit.
"Federal Funds Rate" means for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with member banks of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of Atlanta, or, if such rate is not so published for any
day that is a Business Day, the average of the
-9-
<PAGE> 10
quotations for such day on such transactions received by the Agent from
three (3) Federal funds brokers of recognized standing selected by the
Agent.
"Financial Statements" means (i) the consolidated financial
statement or statements of Borrowers and Consolidated Entities,
described or referenced in Section 4.06 hereof and delivered with this
Agreement to Agent for distribution to Lenders, and (ii) subsequent
financial statements required to be provided pursuant to this
Agreement.
"Fiscal Quarter" means each of the quarters of the Fiscal Year
ending on the last day of each March, June, September, and December.
"Fiscal Year" or "Annually" means the twelve-month accounting
period ending September 30th of each year and presently used by the
Borrowers respectively as their fiscal year for accounting purposes.
"Funded Debt" shall mean, without duplication, all
indebtedness for money borrowed, purchase money mortgages, capitalized
leases, amounts evidenced by the aggregate face amount of all
outstanding letters of credit, conditional sales contracts and similar
title retention debt instruments, all Debt guaranteed by CPC and all
Persons whose financial statements are consolidated with the financial
statement of CPC, and all other direct and contingent Debt. The
calculation of Funded Debt shall include all Funded Debt of CPC and all
Persons whose financial statements are consolidated with the financial
statements of CPC, plus all Funded Debt of other Persons, which has
been guaranteed by CPC and any Person whose financial statements are
consolidated with the financial statements of CPC or which is supported
by a letter of credit issued for the account of CPC and any Person
whose financial statements are consolidated with the
-10-
<PAGE> 11
financial statements of CPC, or as to which and to the extent which CPC
and any other Person whose financial statements are consolidated with
the financial statements of CPC or their assets have become liable for
payment thereof.
"Funding Account" shall mean that certain account maintained
by CPC with Agent, bearing account no. ________.
"GAAP" means generally accepted accounting principles in the
United States.
"Guarantor" and "Guarantors" mean each and all of Central
Parking Systems of the U.K. and all other Person described on Exhibit G
herein.
"Guaranty" and "Guarantees" mean the guaranty agreements
executed by each of the Guarantors in form and substance approved by
Lenders.
"Hazardous Substances" means those substances included within
the definition of hazardous substances, hazardous materials, toxic
substances, or solid waste under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.
ss. 9601, et seq.; the Resource Conservation and Recovery Act of 1976,
42 U.S.C. ss. 6901, et seq.; the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801, et seq.; any applicable state law and in the
regulations promulgated pursuant to such acts and laws, and such other
substances, materials, and waste which are or become regulated under
any Environmental Law.
"Interest Expense" shall mean the aggregate interest expense
and amortization of deferred loan costs of CPC and all Persons whose
financial statements are consolidated with the financial statement of
CPC, on a consolidated basis for such period (calculated without regard
to any limitations on the payment thereof), imputed interest on
capitalized
-11-
<PAGE> 12
lease obligations of CPC and all Persons whose financial statements are
consolidated with the financial statement of CPC, and net costs under
interest rate protection agreements for CPC and all Persons whose
financial statements are consolidated with the financial statements of
CPC, all as determined in conformity with GAAP.
"Interest Rate Period" shall be applicable only to Advances
calculated using the LIBOR Rate Option, and shall mean a one month, two
month, three month, or six month time period selected by Borrowers
pursuant to Section 2.04 herein. No Interest Rate Period may end on a
date beyond the Maturity Date.
"Lender" or "Lenders" means STB, the other banks and lending
institutions listed on the signature pages hereof and each permitted
assignee thereof, if any, pursuant to Section 12.12, but shall not
include any participant.
"Letter of Credit Application Agreement" means that certain
Application and Agreement for Issuance of a Letter of Credit in the
form of Exhibit B hereto or any other similar form required by the
Agent appropriately completed by any one of the Borrowers pursuant to
Section 2.02(a) herein.
"Letter of Credit Fee" means an amount equal to the product
of: (a) the Applicable Margin effective as of the date the Letter of
Credit is issued, multiplied by (b) the face amount of the Letter of
Credit.
"Letters of Credit" has the same meaning as set forth in
Section 2.02 herein.
"LIBOR Rate" means the offered rates for deposits in U.S.
Dollars for, as applicable, either one (1) month periods, two (2) month
periods, three (3) month periods, or six (6) month periods, as selected
by Borrowers in accordance with the terms of
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<PAGE> 13
Section 2.04, as quoted on the Telerate System subscribed to by Agent,
and which appears on Telerate Page 3750 as of 11:00 a.m., London time,
two (2) Business Days prior to the beginning of any applicable Interest
Rate Period. If any of such one-month or two-month or three-month or
six-month rate, as the case may be, is unavailable on the Telerate
System, then such rate shall be determined by and based on any other
interest rate reporting service of generally recognized standing
designated in advance in writing by the Agent to the Borrowers.
"LIBOR Rate Option" means that rate of interest equal to the
LIBOR Rate, plus the Applicable Margin.
"Lien" means any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on the common law, statute, or contract,
and including, but not limited to, the lien or security interest
arising from a mortgage, encumbrance, pledge, security agreement,
conditional sale, or trust receipt or a lease, consignment, or bailment
for security purposes. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and
encumbrances affecting the Property. For the purposes of this
Agreement, Borrowers shall be deemed to be the owner of any Property
that any of Borrowers has acquired or holds subject to a conditional
sale agreement, financing lease, or other arrangement pursuant to which
title to the Property has been retained by or vested in some other
Person for security purposes.
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"Loan" or "Loans" means any borrowing by Borrowers under this
Agreement, and/or any extension of credit by Lenders or Swing Line
Lender to or for Borrowers pursuant to this Agreement, the Revolving
Credit Loan, the Swing Line Loan, or any other Loan Document, including
any renewal, amendment, extension, or modification thereof.
"Loan Documents" means, collectively, each document, paper or
certificate executed, furnished or delivered in connection with this
Agreement (whether before, at, or after the Closing Date), including,
without limitation, this Agreement, the Revolving Credit Notes, the
Swing Line Note, the Guarantees, and all other documents, certificates,
reports, and instruments that this Agreement requires or that were
executed or delivered (or both) at Agent's request.
"Majority Lenders" means those Lenders with an aggregate Pro
Rata Share equal to 66 2/3%.
"Material Subsidiary" means any Consolidated Entity, now owned
or hereafter existing or acquired, which has become a Guarantor and
which comprises ten percent (10%) or more of CPC's EBITDA in any Fiscal
Quarter.
"Maturity Date" for the Revolving Credit Loan and the Swing
Line Loan shall mean the earlier of (i) January 31, 2000, or (ii) the
date the repayment of either or both of the Revolving Credit Loan or
Swing Line Loan is accelerated pursuant to Article VIII herein.
"Maximum Total Amount" means the principal amount of
$150,000,000, as reduced to $120,000,000 pursuant to Section 2.01(b)
herein and as further reduced to
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$85,000,000 pursuant to Section 2.01(c) herein, less the aggregate face
amounts of all outstanding Letters of Credit, less the aggregate
outstanding principal amount of the Swing Line Note.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means: (i) taxes, assessments, and
other governmental charges that are not delinquent or that are being
contested in good faith by appropriate proceedings duly pursued; (ii)
mechanic's, materialmen's, contractors', landlords', or other similar
Liens arising in the ordinary course of business, securing obligations
that are not delinquent or that are being contested in good faith by
appropriate proceedings duly pursued; and (iii) restrictions,
exceptions, reservations, easements, and restrictive covenants
affecting any of Borrowers' real property and that do not materially
and adversely affect such real property.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization, government, or any agency or political subdivision
thereof, or any other form of entity.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrowers
or any Consolidated Entity and covered by Title IV of ERISA or to which
Section 412 of the Code applies.
"Principal Office" means the principal office of the Agent
located at 201 Fourth Avenue North, Nashville, Tennessee 37219.
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"Pro Rata Share" means the percentage of interest held by each
of the Lenders as set forth opposite their respective signature hereto,
as such percentage may be adjusted from time to time as a result of
assignments or amendments made pursuant to this Agreement.
"Property" or "Properties" means any interest in any kind of
property or asset, whether real, personal, or mixed, or tangible or
intangible.
"Revolving Credit Loan" means the aggregate amount of all
Advances under the Revolving Credit Notes.
"Revolving Credit Loan Commitment" means, relative to any
Lender, such Lender's obligation to make Advances pursuant to Section
2.01(a) of this Agreement.
"Revolving Credit Note" and "Revolving Credit Notes" means, as
the context may require: (a) any of the revolving credit notes executed
by the Borrowers, jointly and severally, payable to the order of any
Lender, substantially in the form of Exhibit C hereto, originally in
the principal amounts each such Lender's Pro Rata Share bears to the
Maximum Total Amount, evidencing the aggregate indebtedness of the
Borrowers to such Lender resulting from the outstanding Revolving
Credit Loan, as each such Revolving Credit Note may from time to time
be amended, increased, decreased, extended, renewed, restated, and/or
changed in any way, and all other promissory notes accepted from time
to time in amendment, renewal, payment and/or substitution thereof
and/or therefor, and/or (b) collectively, all of the foregoing.
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"Square Industries, Inc. Acquisition" means the acquisition by
CPC of a controlling interest in Square Industries, Inc., a New York
corporation, all as described on Exhibit D hereto.
"St. Louis JV Sale" has the meaning set forth on Exhibit D-1
hereto.
"Subsidiary" means any corporation of which more than fifty
percent (50%) of the issued and outstanding Voting Stock is owned or
controlled at the time as of which any determination is being made
directly or indirectly by any Person.
"Swing Line Lender" shall mean the Agent and its successors
and assigns.
"Swing Line Loan" means all Advances made under the Swing Line
Note up to the Swing Line Subcommitment.
"Swing Line Note" means the revolving credit note of the
Borrowers, jointly and severally, payable to the order of the Swing
Line Lender, in substantially the form of Exhibit E hereto, in the
principal amount of up to $5,000,000 issued pursuant to Section 2.03
herein, as such may be from time to time supplemented, modified,
amended, renewed or extended.
"Swing Line Rate" shall be a rate of interest equal to the
LIBOR Rate Option for one-month periods plus one-half of one percent
(.50%) per annum.
"Swing Line Subcommitment" shall mean $5,000,000.
"Total Capitalization" means an amount equal to the sum of
Funded Debt plus Consolidated Net Worth.
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"Voting Stock" means securities of any class of a corporation,
the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors (or persons
performing similar functions).
Article II. The Credit.
Section 2.01 The Revolving Credit Loan. (a) Subject to the conditions
and pursuant to the terms of the Loan Documents and in reliance upon the
representations, warranties, and covenants set forth in the Loan Documents, in
the aggregate for all Lenders up to the Maximum Total Amount and on any Business
Day occurring prior to the Maturity Date, each Lender severally agrees to make
Advances (relative to such Lender) to the Borrowers under the Revolving Credit
Loan equal to such Lender's Pro Rata Share of the aggregate amount of the
borrowing of total Advances requested by the Borrowers to be made on such day
(that are not requested by the Borrowers to be made under the Swing Line Loan).
(b) On or prior to February 28, 1997, the Borrowers shall cause the
Maximum Total Amount to be permanently reduced to a principal amount of no
greater than $120,000,000; provided that if the Borrowers fail to permanently
reduce the Maximum Total Amount to an amount no greater than $120,000,000 on or
before February 28, 1997, the Borrowers shall pay to Agent no later than March
1, 1997 for distribution to Lenders based on their Pro Rata Share a one-time
commitment fee equal to $225,000. Should the Borrowers fail to permanently
reduce the Maximum Total Amount to an amount no greater than $120,000,000 on or
before February 28, 1997 and should the Borrowers pay to Agent the commitment
fee of $225,000 no later than March 1, 1997, then the Maximum Total Amount may
remain at $150,000,000 until the earlier of the St. Louis JV Sale or April 30,
1997, at which time the Maximum Total Amount shall be reduced
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to $120,000,000. Should the Borrowers comply with the terms of the immediately
preceding sentence, but should the Borrowers fail to reduce the Maximum Total
Amount to $120,000,000 on or before the earlier of the St. Louis JV Sale or
April 30, 1997, then the Borrowers shall be deemed to have breached their
agreements contained herein and an Event of Default shall be deemed to exist.
Should the Borrowers fail to permanently reduce the Maximum Total Amount to an
amount no greater than $120,000,000 on or before February 28, 1997 and should
the Borrowers fail to pay to Agent the commitment fee of $225,000 by March 1,
1997, then the Borrowers shall be deemed to have breached their agreements
contained herein and an Event of Default shall be deemed to exist.
(c) Notwithstanding any provision contained herein or in any Revolving
Credit Note to the contrary, the Borrowers shall cause the Maximum Total Amount
to be permanently reduced to a principal amount of no greater than $85,000,000
upon the earlier to occur of: (i) September 30, 1997, or (ii) notification by
Borrowers to Agent that the Square Industries, Inc. Acquisition will not occur,
or (iii) notification by Borrowers to agent that the Square Industries, Inc.
Acquisition will occur only as a transaction in which the Borrowers exchange
shares of stock for a controlling interest in Square Industries, Inc., or (d)
CPC raises Equity Proceeds of at least $35,000,000.
At any time not more than ten (10) Business Days prior to September 30,
1997 and not less than five (5) Business Days prior to September 30, 1997, the
Borrowers may request that the Lenders extend the date set forth in subpart (i)
of the preceding paragraph from September 30, 1997 to December 31, 1997. The
Borrowers shall submit such a request in writing delivered to Agent and
accompanied by a $50,000 extension fee. The Lenders have no
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obligation to extend the date, but in the event that the Lenders, in the
exercise of their sole discretion, agree to extend the date set forth in subpart
(i) above, the Agent shall so notify the Borrowers in writing prior to September
30, 1997 and the Agent shall distribute the $50,000 extension fee to the Lenders
based on their Pro Rata Share. In the event that the Lenders elect not to extend
the date set forth in subpart (i) above, the Agent shall so notify the Borrowers
in writing prior to September 30, 1997 and the Agent shall return the extension
fee to the Borrowers together with such notice.
In the event that the Lenders extend the date in subpart (i) above to
December 31, 1997, then at any time not more than ten (10) Business Days prior
to December 31, 1997 and not less than five (5) Business Days prior to December
31, 1997, the Borrowers may request that the Lenders extend the date set forth
in subpart (i), as previously extended, from December 31, 1997 to March 31,
1998. The Borrowers shall submit such a request in writing delivered to Agent
and accompanied by a $50,000 extension fee. The Lenders have no obligation to
extend the date, but in the event that the Lenders, in the exercise of their
sole discretion, agree to extend the date, the Agent shall so notify the
Borrowers in writing prior to December 31, 1997 and the Agent shall distribute
the $50,000 extension fee to the Lenders based on their Pro Rata Share. In the
event that the Lenders elect not to extend the date to March 31, 1998, the Agent
shall so notify the Borrowers in writing prior to December 31, 1997 and the
Agent shall return the extension fee to the Borrowers together with such notice.
(d) The Maximum Total Amount available to be advanced under the
Revolving Credit Loan shall be reduced dollar-for-dollar by the sum of: (i) the
face amount of any outstanding Letter of Credit, and (ii) the principal amount
outstanding from time to time under the Swing
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Line Note. In no event shall the Borrowers permit the sum of (x) the face amount
of outstanding Letters of Credit; plus (y) the outstanding principal amount of
the Swing Line Note, plus (z) the outstanding principal amount of the Revolving
Credit Loan to exceed the Maximum Total Amount.
(e) On the terms and subject to the conditions hereof and the Revolving
Credit Notes, and provided no Event of Default or Default Condition shall have
occurred, the Borrowers, jointly and severally, may borrow, repay, and reborrow
under the Revolving Credit Loan.
(f) The failure of any Lender to make an Advance under its Revolving
Credit Loan Commitment shall not relieve any other Lender of its obligations, if
any, hereunder to make Advances under such Lender's Revolving Credit Loan
Commitment, but no Lender shall be responsible for the failure of any other
Lender to make an Advance to be made by such other Lender on the date of any
requested borrowing.
Section 2.02 Letters of Credit. (a) Provided no Event of Default or
Default Condition exists, and subject to the terms and conditions of the Loan
Documents, the Lenders have agreed that the Agent on behalf of the Lenders will
issue to third party beneficiaries on Borrowers' account (or on the account of
any one of the entities comprising the Borrowers), standby letters of credit
("Letters of Credit") in the face amount of up to $40,000,000 in the aggregate;
provided and except, the Borrowers agree that subsequent to January 31, 1997,
Borrowers shall cause the aggregate amount of all outstanding Letters of Credit
to be reduced to a cumulative, aggregate face amount equal to no more than
$15,000,000. Subsequent to January 31, 1997, Agent on behalf of the Lenders
shall not be required to issue Letters of Credit in an aggregate face amount
exceeding $15,000,000. In connection with the issuance of each Letter of Credit,
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the Borrowers shall complete a Letter of Credit Application Agreement, and such
other documentation in form and substance as required by Agent, and the
Borrowers shall cause the Guarantors to guarantee the Borrowers' performance of
such agreements pursuant to a guaranty in form and substance as required by
Agent.
(b) In connection with the issuance of any Letter of Credit, the
Borrowers shall pay to Agent a Letter of Credit Fee calculated on a twelve (12)
month basis and to be apportioned and paid by Agent to each of the Lenders
pursuant to the Pro Rata Share of each Lender; provided that if the term of any
Letter of Credit is in excess of twelve (12) months, the Letter of Credit Fee
shall be increased to include the time period in excess of twelve (12) months;
provided that the Letter of Credit Fee for the $36,400,000 Letter of Credit
issued in connection with the St. Louis JV Sale shall not be annualized but
shall be based on the time period measured from the date of issuance to the
expiration date.
(c) In connection with the issuance of any Letter of Credit, the
Borrowers shall pay to Agent a Facing Fee calculated on a twelve (12) month
basis and to be retained by Agent; provided that if the term of any Letter of
Credit is in excess of twelve (12) months, the Facing Fee shall be increased to
include the time period in excess of twelve (12) months; provided that the
Facing Fee for the $36,400,000 Letter of Credit issued in connection with the
St. Louis JV Sale shall not be annualized but shall be based on the time period
measured from date of issuance to the expiration date.
(d) The Borrowers hereby authorize CPC to act as their agent to request
from Agent the issuance of any Letter of Credit. Any request for the issuance of
a Letter of Credit shall be accompanied by a Letter of Credit Application
Agreement. The Agent agrees to use its best efforts to issue and deliver to CPC
on behalf of the Borrowers (or any one of them) each requested Letter of Credit
within three (3) Business Days following submission by CPC of a properly
completed Letter of Credit Application Agreement.
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(e) No Letter of Credit shall be issued for a term that extends beyond
the Maturity Date. The language of each Letter of Credit, including the
requirements for a draw thereunder, shall be subject to the reasonable approval
of the Agent.
(f) The issuance of any Letter of Credit shall reduce the Borrowers'
ability to receive Advances under the Revolving Credit Loan. Additionally, any
payment by Agent under a Letter of Credit shall be treated as an Advance under
the Revolving Credit Loan, and the terms and provisions of repayment shall be
treated as an Advance under the Revolving Credit Loan.
(g) The Lenders shall participate in all Letters of Credit requested by
CPC on behalf of the Borrowers. Each Lender, upon issuance of a Letter of Credit
by the Agent, shall be deemed to have purchased without recourse a risk
participation from the Agent in such Letter of Credit and the obligations
arising thereunder, in each case in an amount equal to its Pro Rata Share of all
obligations under such Letter of Credit and shall absolutely, unconditionally,
and irrevocably assume, as primary obligor and not as surety, and be obligated
to pay to the Agent therefor and discharge when due, its Pro Rata Share of all
obligations arising under such Letter of Credit. Without limiting the scope and
nature of each Lender's participation in any Letter of Credit, to the extent
that the Agent has not been reimbursed as required hereunder or under any such
Letter of Credit, each such Lender shall pay to the Agent its Pro Rata Share of
such unreimbursed drawing in same day funds on the day of notification by the
Agent of an unreimbursed drawing. The obligation of each Lender to so reimburse
the Agent shall be absolute and unconditional and shall not be affected by the
occurrence of a Default Condition or an Event of Default or any other occurrence
or event.
Section 2.03 Swing Line Loan.
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(a) Swing Line Subcommitment. Subject to and upon the terms
and conditions herein set forth, the Swing Line Lender severally
establishes in favor of the Borrowers, its Swing Line Subcommitment.
The Swing Line Lender, subject to and upon the terms and conditions set
forth herein, from time to time, agrees to make to the Borrowers
Advances under the Swing Line Loan in an aggregate principal amount
outstanding at any time not to exceed the Swing Line Subcommitment.
Borrowers, jointly and severally, shall be entitled to repay and
reborrow Advances under the Swing Line Loan in accordance with the
provisions hereof and the Swing Line Note.
(b) Amount and Terms of Swing Line Loan. Each Advance under
the Swing Line Loan shall be made from the Swing Line Lender at the
Swing Line Rate in accordance with the borrowing procedure specified in
Section 2.05(c). Each Advance under the Swing Line Loan shall be in a
principal amount of not less than $100,000 and shall be in multiples of
$100,000. The Borrowers, jointly and severally, shall be required to
repay any Advance made under the Swing Line Loan in full within thirty
(30) days after the Advance is made.
(c) Repayment of Swing Line Loan by Revolving Credit Loan. If
(i) after giving effect to any request for an Advance, the aggregate
principal amount of the Revolving Credit Loan (including the face
amount of all outstanding Letters of Credit), plus Advances under the
Swing Line Loan would exceed the maximum amount of the respective
Revolving Credit Note held by the Swing Line Lender, or (ii) there are
any outstanding Advances under the Swing Line Loan upon the occurrence
of an Event of Default, then each Lender hereby agrees, upon the
request of the Swing Line Lender,
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to make an Advance under the Revolving Credit Loan in an amount equal
to such Lender's Pro Rata Share of the outstanding principal amount of
the Swing Line Loan (the "Refundable Swing Line Loan") outstanding on
the date such notice is given. On or before 11:00 a.m. (Nashville,
Tennessee time) on the first Business Day following receipt by each
Lender of a request to make the Advances referenced in the preceding
sentence, each such Lender (other than the Swing Line Lender) shall
deposit in an account specified by the Agent to the Lenders from time
to time the amount as requested in same day funds, whereupon such funds
shall be immediately delivered to the Swing Line Lender (and not the
Borrowers) and applied to repay the Refundable Swing Line Loan. On the
day such Advances are made by the Lenders, the Swing Line Lender's Pro
Rata Share of the Refundable Swing Line Loan shall be deemed to be paid
with the proceeds of the Advance made by the Swing Line Lender. Upon
the making of any Advance under the Revolving Credit Loan pursuant to
this subpart (c), the amount so funded shall become due under each
Lender's Revolving Credit Note and shall no longer be owed under the
Swing Line Note. Additionally, the Applicable Rate on such Refundable
Swing Line Loan shall be the LIBOR Rate Option, calculated on a one
month Interest Rate Period. Each Lender's obligation to make Advances
under its Revolving Credit Note referred to in this subpart (c) shall
be absolute and unconditional and shall not be affected by any
circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing.
(d) Purchasing of Participations. In the event that (i) the
Borrowers or any Guarantor is subject to any bankruptcy or insolvency
proceedings, or (ii) if the Swing
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Line Lender otherwise requests, each Lender shall acquire without
recourse or warranty an undivided participation interest in the Swing
Line Loan equal to such Lender's Pro Rata Share by paying to the Swing
Line Lender, in same day funds, an amount equal to such Lender's Pro
Rata Share of the Swing Line Loan. From and after the date on which any
Lender purchases an undivided participation interest in the Swing Line
Loan pursuant to this clause, the Swing Line Lender shall distribute to
such Lender (appropriately adjusted, in the case of interest payments,
to reflect the period of time during which such Lender's participation
interest is outstanding and funded) its ratable amount of all payments
of principal and interest in respect of the Swing Line Loan in like
funds as received; provided, however, that in the event such payment
received by the Swing Line Lender is required to be returned to the
Borrower, such Lender shall return to the Swing Line Lender the portion
of any amounts which such Lender had received from the Swing Line
Lender in like funds. Section 2.04 Interest Rate.
(a) The Applicable Rate for Advances under the Revolving
Credit Loan shall either be the Base Rate Option or the LIBOR Rate
Option, as selected by Borrowers pursuant to the procedure specified in
parts (b) and (c) below. The applicable Rate for the Swing Line Loan
shall be the Swing Line Rate.
(b) So long as the Borrowers comply with Section 2.05 herein,
the Borrowers may elect that any Advance under the Revolving Credit
Loan shall bear interest at either the Base Rate Option or the LIBOR
Rate Option. In the event that the Borrowers fail to designate an
Applicable Rate, or in the event the Borrowers fails to make an
interest rate
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election in strict compliance herewith, then it shall be conclusively
presumed that the Borrowers have selected the LIBOR Rate Option with a
one (1) month Interest Rate Period.
(c) Within two (2) Business Days prior to the expiration of
any applicable Interest Rate Period, the Borrowers shall designate a
new Applicable Rate. In the event that the Borrowers fails to designate
a new Applicable Rate within two (2) Business Days prior to the
expiration of any applicable Interest Rate Period, then it shall be
conclusively presumed that the Borrowers have selected the LIBOR Rate
Option with a one (1) month Interest Rate Period as the Applicable Rate
to be effective on the expiration of such Interest Rate Period.
(d) In the event that the Borrowers select the Base Rate
Option as the Applicable Rate, then the Base Rate Option shall remain
effective until two (2) Business days subsequent to the date Agent
receives notice that Borrowers have elected to change the Applicable
Rate to a LIBOR Rate Option.
(e) Upon the occurrence of an Event of Default, the
indebtedness described herein and all obligations hereunder shall bear
interest at the Default Rate.
(f) All interest shall be calculated on the basis of a 360-day
year and actual days elapsed.
Section 2.05 Borrowing Procedure. (a) In General. The Borrowers hereby
authorize CPC to act as their agent to request from Agent all Advances, and the
Borrowers authorize the Agent to cause all Advances to be deposited into the
Funding Account. Neither the Agent nor the Lenders shall have any obligation to
ensure that CPC distributes Advances in any particular
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manner. Neither the Agent nor the Lenders shall have any liability to any of the
Borrowers or to any Person arising out of or in connection with the manner in
which CPC distributes or disburses monies from the Funding Account. Any one of
the Persons who hold the following titles at CPC is authorized to request an
Advance: Chairman of the Board of Directors, President, or Chief Financial
Officer.
(b) Revolving Credit Loan. CPC shall give the Agent at least three (3)
Business Day's prior written notice of a proposed Advance under the Revolving
Credit Loan by presentation of a Borrowing Request. With regard to requests for
Advances under the Revolving Credit Loan, the following shall apply: (a) in the
event that the Borrowers designate the Base Rate Option as the Applicable Rate,
the requested Advance must be in a minimum amount of $500,000 and in increments
of $100,000; and (b) in the event the Borrowers designate the LIBOR Rate Option
as the requested Applicable Rate, the requested Advance must be in a minimum
amount of $5,000,000 and in increments of $500,000.
(c) Swing Line Note. CPC may give the Agent oral notice of a request
for an Advance under the Swing Line Note no later than 11:00 A.M. (Nashville,
Tennessee time) followed by facsimile transmission sent to Agent. Borrowers
shall specify that such request is a request under the Swing Line Note, and
subject to availability under the Swing Line Note and provided the request is
made no later than 11:00 A.M. (Nashville, Tennessee time), the Agent shall make
the Advance by crediting the Funding Account no later than the close of business
on the day of the borrowing. With regard to requests for Advances under the
Swing Line Loan, the following shall apply: Advances shall be in a minimum
amount of $100,000 and in increments of $100,000.
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(d) No Liability. The Agent and the Lenders shall have no liability to
Borrowers (or to any of them) arising out of their compliance with the borrowing
procedure specified in this Section 2.05, except for acts of gross negligence or
willful misconduct.
(e) Warranty. The giving of notice on behalf of CPC that the Borrowers
are requesting an Advance shall constitute a warranty by the Borrowers that as
of the date of the request and as of the date the Advance is made: (i) no Event
of Default or Default Condition has occurred; and (ii) the representations and
warranties contained in Article IV of this Agreement remain true, correct, and
accurate, except that the representation contained in Section 4.13 herein shall
not be deemed to be a continuing representation.
Section 2.06 Use of Proceeds. Proceeds of the Revolving Credit Loan and
the Swing Line Loan shall be used to finance the acquisition of four (4) parking
garages in the St. Louis, Missouri area, to finance the Square Industries, Inc.
Acquisition, to fund Borrowers' working capital and capital expenditures needs,
for Borrowers' general corporate purposes, and to repay and to cancel all
outstanding amounts owed to STB under a $20,000,000 credit facility.
Section 2.07 Participation. Any Lender shall have the right to enter
into one or more participation agreements with one or more Affiliates, banks, or
financial institutions on such terms and conditions as such Lender shall deem
advisable. Borrowers shall furnish a sufficient number of copies of reports and
certificates to Lenders so that Lenders and each participating lender shall
receive a copy of each such document.
Section 2.08 Term of This Agreement. This Agreement shall be binding on
the Borrowers so long as any portion of the indebtedness described herein
remains outstanding,
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provided and except, Borrowers' representations, warranties, and indemnity
agreements shall survive the payment in full of such indebtedness.
Section 2.09 Payments to Principal Office; Debit Authority. Each
payment under the Revolving Credit Loan shall be made without defense, setoff,
or counterclaim to Agent at its Principal Office in U.S. Dollars for the account
of Lenders and in immediately available funds before 1:00 p.m. (Nashville,
Tennessee time) on the date such payment is due. The Agent may, but shall not be
obligated to, debit the amount of any such payment which is not made by such
time to any deposit account of any of the Borrowers with the Agent. Each payment
under the Swing Line Loan shall be made to Agent at its Principal Office in U.S.
Dollars and in immediately available funds before 1:00 p.m. (Nashville,
Tennessee time) on the date such payment is due.
Section 2.10
(a) Required Prepayment. Whenever the aggregate amount
outstanding under the Revolving Credit Loan exceeds the Maximum Total
Amount, the Borrowers shall immediately pay to Lenders such amounts as
may be necessary to cause the aggregate principal amount outstanding
under the Revolving Credit Loan to be equal to or less than the Maximum
Total Amount. Whenever the amount outstanding under any individual
Revolving Credit Note exceeds the maximum amount permitted to be
outstanding under such Revolving Credit Note, the Borrowers shall
immediately pay to the respective Lender such amounts as may be
necessary to cause the principal amount outstanding under such
Revolving Credit Note to be equal to or less than such Revolving Credit
Note's maximum permitted amount; and whenever the amount outstanding
under the
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Swing Line Note exceeds the maximum amount permitted to be outstanding
under the Swing Line Loan, Borrowers shall immediately pay to Agent
such amounts as may be necessary to cause the principal amount
outstanding under the Swing Line Note to be equal to or less than the
maximum amount permitted to be outstanding under the Swing Line Loan;
(b) Optional Prepayment.
(i) Upon ten (10) days prior written notice delivered
from Borrowers to Agent, the Borrowers may prepay the
Revolving Credit Notes and/or the Swing Line Note in whole or
in part with accrued interest to the date of such prepayment
or the amount prepaid, provided that each partial prepayment
shall be in a principal amount of not less than $5,000,000 in
the case of the Revolving Credit Notes and $10,000 in the case
of the Swing Line Note. Any such prepayments shall be subject
to payment of the amounts described in Section 2.11, in the
manner set forth therein, but not to any other prepayment
charge, fee or premium. All prepayments will be applied first
to unpaid expenses (if any), then to breakage costs (if any),
then to accrued interest, then to principal in the inverse
order of maturity, allocated, in the case of the Revolving
Credit Notes, pro-rata among the Revolving Credit Notes.
(ii) Upon ten (10) days prior written notice
delivered from Borrowers to Agent, the Borrowers may
permanently reduce the maximum principal amount that may be
borrowed under the Revolving Credit Loan; provided that such
reduction shall be in a principal amount of at least
$5,000,000 and in integrals of
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$1,000,000 and provided that such reduction shall also be
subject to the amounts described in Section 2.11 herein. In
the event that a permanent reduction is made by the Borrowers
in the amount that may be borrowed under the Revolving Credit
Loan, the Maximum Total Amount and the Revolving Credit Loan
Commitment shall be reduced accordingly.
Section 2.11 Funding Losses. The Borrowers shall compensate each
Lender, upon such Lender's written request to the Borrowers (which request shall
set forth the basis for requesting such amounts in reasonable detail and which
request shall be made in good faith and which request, in the event of a
prepayment under Section 2.10(b), shall be delivered no later than five (5) days
prior to the date of prepayment), for all losses, expenses and liabilities
(including, without limitation, any interest paid by such Lender to lenders of
funds borrowed by it to make or carry its Loans to which a LIBOR Rate applies in
either case to the extent not recovered by such Lender in connection with the
reemployment of such funds and including loss of anticipated profits), which
such Lender may sustain if (a) any repayment (including mandatory prepayments)
of any amounts to which the LIBOR Rate Option applies occurs on a date that is
not the last Business Day of a month (in the case of Advances to which the
one-month LIBOR Rate applies) or on the last Business Day of the second month
after the beginning of a two-month term (in the case of Advances to which the
two-month LIBOR Rate applies) or the last Business Day of the third month after
the beginning of a three-month term (in the case of Advances to which the
three-month LIBOR Rate applies), or on the last Business Day of the sixth month
after the beginning of a six-month term (in the case of Advances to which the
six-month LIBOR Rate applies), and/or (b) Borrowers fail to borrow any Advance
requested to be borrowed in a
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Borrowing Request after submitting such Borrowing Request, it being understood
that Borrowers shall not be liable for consequential or incidental losses,
expenses or liabilities.
Section 2.12 Apportionment of Payments. Aggregate principal and
interest payments in respect of Advances under the Revolving Credit Loan shall
be apportioned among all outstanding Revolving Credit Loan Commitments to which
such payments relate proportionately to the Lenders' respective Pro Rata Share
of such Revolving Credit Loan Commitments. In the event the Agent receives
payment under the Revolving Credit Loan prior to 1:00 P.M. (Nashville, Tennessee
time), then the Agent shall distribute to each Lender its share of all such
payments received by the Agent no later than the end of the Business Day
following the Business Day of Agent's receipt of such payments. Payments
received subsequent to 1:00 P.M. (Nashville, Tennessee time) shall be treated as
received on the next succeeding Business Day.
Payments received by Agent for the Swing Line Loan shall not be
apportioned, but shall be delivered to the Swing Line Lender.
Section 2.13 Sharing of Payments, Etc. If any Lender shall obtain any
payment or reduction (including, without limitation, any amounts received as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code) of the indebtedness relating to Advances under the Revolving Credit Loan
(whether voluntary, involuntary, through the exercise of any right of set-off or
otherwise) in excess of its Pro Rata Share of payments or reductions of the
Revolving Credit Loan, such Lender shall forthwith (a) notify each of the other
Lenders and Agent of such receipt, and (b) purchase from the other Lenders such
participations in the Revolving Credit Loan as shall be necessary to cause such
purchasing Lender to share the excess payment or reduction, net of costs
incurred in connection therewith, ratably with each of them,
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provided that if all or any portion of such excess payment or reduction is
thereafter recovered from such purchasing Lender or additional costs are
incurred, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery or such additional costs, but without interest unless
the Lender obligated to return such funds is required to pay interest on such
funds. Borrowers agree that any Lender so purchasing a participation from
another Lender pursuant to this Section 2.13 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrowers in the amount of such participation.
Section 2.14 Right of Offset, Etc. Each of the Borrowers hereby agree
that, in addition to (and without limitation of) any right of set-off, banker's
lien or counterclaim the Lenders may otherwise have, the Lenders shall be
entitled, at their option, to offset balances held by any of them at any of
their offices against any principal of or interest on the indebtedness described
herein which is not paid when due by reason of a failure by the Borrowers to
make any payment when due to such Lender (regardless whether such balances are
then due to the Borrowers), in which case such offsetting Lender shall promptly
notify the Borrowers, provided that its failure to give such notice shall not
affect the validity thereof.
Section 2.15 Commitment Fee. Commencing on March 31, 1997 and on the
last day of each Fiscal Quarter thereafter and on the Maturity Date, the
Borrowers shall pay to the Agent for distribution to the Lenders based on their
Pro Rata Share a commitment fee equal to one quarter of one percent (.25%) per
annum calculated on the average unused portion of the Revolving Credit Loan for
the preceding Fiscal Quarter (or portion thereof); provided that the
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payment made on March 31, 1997 shall be for a time period from the Closing Date
to March 31, 1997. The commitment fee shall be calculated based on a year of 360
days.
Section 2.16 Usury. The parties to this Agreement intend to conform
strictly to applicable usury laws as presently in effect. Accordingly, if the
transactions contemplated hereby would be usurious under applicable law
(including the laws of the United States of America and the State of Tennessee),
then, in that event, notwithstanding anything to the contrary in any Loan
Document or agreement executed in connection with the indebtedness described
herein, Borrowers, Agent, and Lenders agree as follows: (i) the aggregate of all
consideration that constitutes interest under applicable law which is contracted
for, charged, or received under any of the Loan Documents or agreements, or
otherwise in connection with the indebtedness described herein, shall under no
circumstance exceed the maximum lawful rate of interest permitted by applicable
law, and any excess shall be credited on the indebtedness by the holder thereof
(or, if the indebtedness described herein shall have been paid in full, refunded
to Borrowers); and (ii) in the event that the maturity of the indebtedness
described herein is accelerated as a result of any Event of Default or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest may never include more than the maximum
amount of interest permitted by applicable law, and excess interest, if any, for
which this Agreement provides, or otherwise, shall be cancelled automatically as
of the date of such acceleration or prepayment and, if previously paid, shall be
credited on the indebtedness described herein (or, if the indebtedness shall
have been paid in full, refunded to Borrowers).
Section 2.17 Interest Rate Not Ascertainable, Etc. In the event that
the Agent shall in good faith have determined that on any date for determining
the LIBOR Rate, by reason of any
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changes arising after the date of this Agreement affecting the London interbank
market or the Agent's position in such market, adequate and fair means do not
exist for ascertaining the applicable interest rate on the basis provided for in
the definition of LIBOR Rate, then, and in any such event, the Agent shall
forthwith give notice (by telephone confirmed in writing) to the Borrowers of
such determination and a summary of the basis for such determination. At the
expiration of any Interest Rate Period then in effect and until the Agent
notifies the Borrowers that the circumstances giving rise to the suspension
described herein no longer exist (which notice shall be given forthwith after
such determination is made by the Agent), all Loans shall bear interest at the
Base Rate Option.
Section 2.18 Illegality. (a) In the event that the Agent shall have
determined any time that the making or continuance of any Advance bearing
interest at the LIBOR Rate Option has become unlawful by compliance by any of
the Lenders in good faith with any applicable law, governmental rule,
regulation, guideline or order (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful), then, in any such
event, the Agent shall give prompt notice (by telephone confirmed in writing) to
the Borrowers of such determination and a summary of the basis for such
determination.
(b) Upon the giving of the notice to the Borrower referred to in
Section 2.18(a), the Borrowers' right to elect a LIBOR Rate Option shall be
immediately suspended, and all Advances shall bear interest at the Base Rate
Option.
Section 2.19 Increased Costs. (a) If by reason of (i) after the date
hereof, the introduction of or any change (including, without limitation, any
change by way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation, or (ii) the
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compliance with any guideline or request from any central bank or other
governmental authority or quasi-governmental authority exercising control over
banks or financial institutions generally (whether or not having the force of
law):
(A) the Agent or any Lender shall be subject to any tax, duty
or other charge with respect to any Advances bearing interest at the
LIBOR Rate Option (all such Advances being collectively referred to as
the "LIBOR Loans") or its obligation to make LIBOR Loans, or the basis
of taxation of payments to the Agent or any Lender of the principal of
or interest on its LIBOR Loans or its obligation to make LIBOR Loans
shall have changed (except for changes in the tax on the overall net
income of the Agent or such Lender, or similar taxes, pursuant to the
laws of jurisdictions with taxing authority over the Agent or such
Lender); or
(B) any reserve (including, without limitation, any reserve
imposed by the Board of Governors of the Federal Reserve System),
special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, the Agent or any Lender
shall be imposed or deemed applicable or any other condition affecting
its LIBOR Loans or its obligation to make LIBOR Loans shall be imposed
on the Agent or any Lender or the London interbank market;
and as a result thereof there shall be any increase in the cost to the Agent or
any Lender of agreeing to make or making, funding or maintaining LIBOR Loans
(except to the extent already included in the determination of the interest rate
for LIBOR Loans), or there shall be a reduction in the amount received or
receivable by the Agent or any Lender, then the Borrowers shall from time to
time, upon written notice from and demand in good faith by the Agent on the
Borrowers,
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pay to the Agent for the account of the Lenders (or any Lender) within five (5)
Business Days after the date of such notice and demand, additional amounts
sufficient to indemnify the Agent or such Lender against such increased cost;
provided, however, that nothing in this section shall require Borrowers to
indemnify the Agent or any Lender for withholding taxes.
(b) If the Agent shall in good faith determine that at any time,
because of the circumstances described in Section 2.19(a)(i) or (ii) arising
after the date of this Agreement affecting the Agent or any Lender or the London
interbank market or the Agent or any Lender's position in such market, the
calculations for the interest rates for LIBOR Loans as determined by the Agent
or any Lender will not adequately and fairly reflect the cost to the Agent or
any Lender of funding such LIBOR Loans, the Agent shall forthwith give notice
(by telephone confirmed in writing) to the Borrowers of such advice, and a
summary of the basis for such determination, and then, and in any such event and
until Agent notifies the Borrowers that such circumstances no longer exist
(which notice shall be given forthwith after such determination is made by the
Agent):
(i) The Borrowers' right to request, and the Agent's and any
Lender's obligation to make or permit portions of the indebtedness
described herein to remain outstanding past the last day of the then
current Interest Rate Period as LIBOR Loans shall be immediately
suspended; and
(ii) After the last day of the then-current Interest Rate
Period, all indebtedness described herein shall bear interest at the
Base Rate Option.
Section 2.20 Extension. Upon the written request of Borrowers given at
any time between December 1st through December 31st, 1999, the Lenders, with the
written consent of all other
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Lenders, may agree to extend the term of this Agreement until January 31, 2001.
Agent shall provide Borrowers with notice of Lenders' decision prior to January
31, 2000.
Article III. Guarantors.
Section 3.01 Guarantors. The joint and several obligations of the
Borrowers under the Loan Documents shall be guaranteed jointly and severally by
each of the Guarantors pursuant to the Guarantees.
Article IV. Representations and Warranties.
To induce Lenders to enter this Agreement and extend credit under this
Agreement, the Borrowers covenant, represent and warrant to Lenders that as of
the date hereof:
Section 4.01 Corporate Existence. Each of the Borrowers is a
corporation duly organized, legally existing, and in good standing under the
laws of the state of its incorporation, and each of the Borrowers is duly
qualified as a foreign corporation in all jurisdictions in which the Property
owned or the business transacted by it makes such qualification necessary,
except where failure to so qualify does not have a material adverse effect on
any of the Borrowers, their respective business, or their respective Properties.
The Borrowers will not commence doing business in any state unless and until the
Borrowers shall have qualified to do business in such state.
Section 4.02 Power and Authorization. Each of the Borrowers is duly
authorized and empowered to execute, deliver, and perform under all Loan
Documents; the respective board of directors of the Borrowers has authorized the
Borrowers to execute and perform under the Loan Documents; and all other
corporate and shareholder action on Borrowers' part required
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for the due execution, delivery, and performance of the Loan Documents has been
duly and effectively taken.
Section 4.03 Binding Obligations. This Agreement is, and the Loan
Documents when executed and delivered in accordance with this Agreement will be,
legal, valid and binding upon and against the Borrowers and their respective
Properties enforceable in accordance with their respective terms, subject to no
defense, counterclaim, set-off, or objection of any kind.
Section 4.04 No Legal Bar or Resultant Lien. The Borrowers' execution,
delivery and performance of the Loan Documents do not constitute a default
under, and will not violate any provisions of the articles of incorporation (or
charter), bylaws, articles of organization, and/or operating agreement of the
respective Borrowers, any contract, agreement, law, regulation, order,
injunction, judgment, decree, or writ to which any of the Borrowers is subject,
or result in the creation or imposition of any Lien upon any Properties of any
of the Borrowers.
Section 4.05 No Consent. The Borrowers' execution, delivery, and
performance of the Loan Documents do not require the consent or approval of any
other Person.
Section 4.06 Financial Condition. The Financial Statements which have
been delivered to Lenders for each of the Borrowers dated September 30, 1995
have been prepared in accordance with GAAP consistently applied, and the
Financial Statements present fairly the financial condition of Borrowers as of
the date or dates and for the period or periods stated therein. No material
adverse change in the financial condition of any of the Borrowers has occurred
since the date of the most recent Financial Statements.
Section 4.07 Investments, Advances, and Guarantees. None of the
Borrowers nor any of the Consolidated Entities has made investments in, advances
to, or guaranties of the obligations
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of any Person, or committed or agreed to undertake any of these actions or
obligations, except as referred to or reflected in the Financial Statements.
Section 4.08 Liabilities and Litigation. None of the Borrowers nor any
of the Consolidated Entities has any material liabilities (individually or in
the aggregate) direct or contingent, except as referred to or reflected in the
Financial Statements. There is no litigation, legal or administrative
proceeding, investigation, or other action of any nature pending or, to the
knowledge of Borrowers threatened against or affecting the Borrowers or any of
the Consolidated Entities that involves the possibility of any judgment or
liability not fully covered by insurance and that may materially and adversely
affect the business or the Properties of any of the Borrowers or the
Consolidated Entities or their respective ability to carry on their business as
now conducted.
Section 4.09 Taxes; Governmental Charges. The Borrowers and each of the
Consolidated Entities have filed or caused to be filed all tax returns and
reports required to be filed and have paid all taxes, assessments, fees, and
other governmental charges levied upon each of them or upon any of their
respective Properties or income, which are due and payable, including interest
and penalties. The Borrowers and each of the Consolidated Entities have made all
required withholding deposits.
Section 4.10 No Default. None of the Borrowers nor any of the
Consolidated Entities is in default in any respect that materially and adversely
affects its business, Properties, operations, or condition, financial or
otherwise, under any indenture, mortgage, deed of trust, credit agreement, note,
agreement, or other instrument to which any of the Borrowers or any of the
Consolidated Entities is a party or by which any of them or their Properties are
bound. None
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of the Borrowers nor any of the Consolidated Entities is in violation of their
respective Articles of Incorporation (or Charter), Bylaws, Articles of
Organization, or operating agreements. No Default Conditions hereunder have
occurred or are continuing as of the date hereof.
Section 4.11 Compliance with Laws, Etc. The Borrowers and the
Consolidated Entities are not in violation of any law, judgment, decree, order,
ordinance, or governmental rule or regulation to which any of the Borrowers or
any of their respective Properties is subject in any respect that materially and
adversely affects their respective business, Properties, or financial condition.
The Borrowers and the Consolidated Entities have not failed to obtain any
license, permit, franchise, or other governmental authorization necessary to the
ownership of any of their respective Properties or to the conduct of their
business, which if not obtained would have or has a material, adverse effect on
any of the Borrowers or Consolidated Entities. All improvements on the real
estate owned by, leased to, or used by Borrowers and the Consolidated Entities
conform in all material respects to all applicable state and local laws, zoning
and building ordinances and health and safety ordinances, and such real estate
is zoned for the various purposes for which such real estate and improvements
thereon are presently being used.
Section 4.12 ERISA. Each of the Borrowers and each of the Consolidated
Entities is in compliance in all material respects with the applicable
provisions of ERISA. None of the Borrowers nor any of the Consolidated Entities
has incurred any "accumulated funding deficiency" within the meaning of ERISA
which is material, and none of the Borrowers nor any of the Consolidated
Entities has incurred any material liability to PBGC in connection with any
Plan.
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Section 4.13 Consolidated Entities. The current Consolidated Entities
are depicted on Exhibit H hereto. Each of the Consolidated Entities is duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation or formation, has all requisite power and
authority, licenses, permits, and authorizations necessary to own Property and
to carry on its business as now being conducted, and is qualified to do business
in every jurisdiction required by law, except in those instances where the
failure to be so qualified or to obtain such licenses, permits, and
authorizations does not have a material adverse effect on such Consolidated
Entity.
Section 4.14 No Material Misstatements. No information, exhibit, or
report furnished or to be furnished by Borrowers to Lender in connection with
this Agreement, contain any material misstatement of fact or fail to state any
material fact, the omission of which would render the statements therein
materially false or misleading.
Section 4.15 Solvency. Each of the Borrowers is solvent. Each of the
Borrowers is generally paying its debts as they mature and the fair value of
Borrowers' assets substantially exceeds the sum total of their respective
liabilities.
Section 4.16 Regulation U. None of the Borrowers is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock within the meaning
of Regulation U of the Board of Governors of the Federal Reserve System. No part
of the indebtedness described herein shall be used at any time to purchase or to
carry margin stock within the meaning of Regulation U or to extend credit to
others for the purpose of purchasing or carrying any margin stock if to do so
would cause the Lenders to violate the provisions of Regulation U.
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Section 4.17 Filings. To the date hereof, CPC has filed all reports and
statements required to be filed with the Securities and Exchange Commission. As
of their respective dates, the reports and statements referred to above complied
in all material respects with all rules and regulations promulgated by the
Securities and Exchange Commission and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Section 4.18 Title, Etc. Each of the Borrowers and each of the
Consolidated Entities has good title to its Properties, free and clear of all
Liens except those referenced or reflected in the Financial Statements, and
except for any defects in title which would not have a material adverse effect
on the business, Properties, financial condition or operations of the Borrowers
and the Consolidated Entities or on the ability of the Borrowers to perform
their respective obligations under this Agreement or any of the other Loan
Documents. Borrowers and the Consolidated Entities possess all trademarks,
copyrights, trade names, patents, licenses, and rights therein, adequate for the
conduct of its business as now conducted and presently proposed to be conducted,
except for such that would not have a material adverse effect on the business,
Properties, financial condition or operations of the Borrowers or the
Consolidated Entities or on the ability of the Borrowers to perform their
respective obligations under this Agreement or any of the other Loan Documents.
Section 4.19 Investment Company Act. None of the Borrowers nor any of
the Consolidated Entities is an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
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Section 4.20 Personal Holding Company; Subchapter S. None of the
Borrowers are a "personal holding company" as defined in Section 542 of the
Code, and none of the Borrowers are a "Subchapter S" corporation within the
meaning of the Code.
Article V. Conditions Precedent.
Section 5.01 Initial Conditions. Lenders' obligation to extend credit
and to issue any Letter of Credit and Swing Line Lender's obligation to make an
Advance under the Swing Line Loan hereunder is subject to the Conditions
Precedent that Agent shall have received (or agreed in writing to waive or defer
receipt of) all of the following, each duly executed, dated and delivered as of
the date hereof, in form and substance satisfactory to Agent and its counsel:
(a) Notes and Loan Documents. This Agreement, the Revolving
Credit Notes, the Swing Line Note, the Guarantees of each of the
Guarantors, any Letter of Credit Application Agreements, and other
documents executed in connection with this Agreement (the "Loan
Documents").
(b) Resolutions. Certified copies of resolutions of the Board
of Directors of each of the corporate Borrowers and each of the
Guarantors authorizing or ratifying the execution, delivery, and
performance, respectively, of Loan Documents to which each is a party.
(c) Certificate of Existence. A certificate of existence of
each of the Borrowers and each of the Guarantors from the state or
commonwealth in which each of the Borrowers and Guarantors is
incorporated or organized, which certificate shall contain no facts
objectionable to Agent.
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(d) Consents, Etc. Certified copies of all documents
evidencing any necessary corporate action, consents, and governmental
approvals (if any) with respect to this Agreement and the Loan
Documents.
(e) Officer's Certificate. A certificate of the secretary or
any assistant secretary of each of the Borrowers and each of the
Guarantors certifying: (i) the names of the officer or officers of each
of the Borrowers and each of the Guarantors authorized to sign the
respective Loan Documents, together with a sample of the true signature
of such officer(s), and (ii) as to representations and warranties of,
and litigation involving, each of the Borrowers and each of the
Guarantors.
(f) Charter and By-Laws and Organizational Documents. A copy
of each of the Borrowers' and the Guarantors' respective by-laws and
charter or articles of incorporation and/or articles of organization
and operating agreement, if applicable, (including all amendments
thereto) certified by the secretary or any assistant secretary of each
of the Borrowers and Guarantors, as applicable, and in the case of the
charter or articles of incorporation, by the Secretary of State of the
state or commonwealth in which each of the Borrowers and the Guarantors
is incorporated, as being true and complete copies of the current
charter or articles of incorporation and by-laws of each of the
Borrowers.
(g) Attorneys Opinion Letter. An opinion letter from counsel
to the Borrowers and the Guarantors opining as to such matters as
required by Agent.
(h) Payment of Fees, Etc. Payment of all outstanding fees and
expenses to Agent, Swing Line Lender, or any Lender, including all of
Agent's reasonable legal fees.
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(i) Other. Such other documents as Agent may reasonably
request.
Section 5.02 All Borrowings. The Lenders' obligation to extend credit
pursuant to this Agreement and to issue any Letter of Credit and Swing Line
Lender's obligation to make an Advance under the Swing Line Loan is subject to
the following additional Conditions Precedent which shall be met each time an
Advance under the Revolving Credit Loan (including the request for the issuance
of a Letter of Credit) or the Swing Line Note is requested and an Advance is
made:
(a) The representations of each of the Borrowers contained in
Article IV are true and correct as of the date of the requested
Advance, with the same effect as though made on the date additional
funds are advanced; (b) There has been no material adverse change in
any of the Borrowers' consolidated financial condition or other
condition since the date of the last borrowing hereunder; (c) No
Default Conditions and no Event of Default have occurred and continue
to exist; (d) No material litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental
proceedings not disclosed in writing by any of the Borrowers to the
Agent prior to the date of the execution and delivery of this Agreement
is pending or known to be threatened against any of the Borrowers or
the Consolidated Entities and no material development not so disclosed
has occurred in any litigation, arbitration proceedings or governmental
proceedings so disclosed, which could reasonably be expected to
adversely affect the financial position or business of any of the
Borrowers or the Consolidated Entities or impair the ability of any of
the Borrowers to perform their respective obligations under this
Agreement or any other Loan Documents.
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Article VI. Affirmative Covenants.
Each of the Borrowers covenants that, during the term of this Agreement
(including any extensions hereof) and until all indebtedness described herein
shall have been finally paid in full, unless Agent shall otherwise first consent
in writing, each of the Borrowers shall:
Section 6.01 Financial Statements and Reports. Promptly furnish to
Agent and to each Lender:
(a) Annual Reports. As soon as available, and in any event
within ninety (90) days after the close of each Fiscal Year of each of
the Borrowers, the audited consolidated Financial Statements of CPC
setting forth the audited consolidated balance sheets of CPC as at the
end of such year, and the audited consolidated statements of income,
statements of cash flows, and statements of retained earnings of CPC
for such year, setting forth in each case in comparative form
(beginning when comparative data are available) the corresponding
figures for the preceding Fiscal Year accompanied by the report of
CPC's certified public accountants, and by an unaudited consolidating
balance sheet and unaudited consolidating statements of income, and
statements of retained earnings of CPC and of each of the Borrowers
duly certified by CPC's chief financial officer as being correct
reflections of the information used for the audited consolidated
Financial Statements. The audit opinion in respect of the Financial
Statements of Borrowers shall be the opinion of a firm of independent
certified public accountants acceptable to Agent and shall be
accompanied by such certificates as reasonably required by Agent;
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(b) Quarterly and Year-to-Date Reports. As soon as available
and in any event within forty-five (45) days after the end of each
Fiscal Quarter, the consolidated balance sheets of CPC and of each of
the Borrowers as of the end of such Fiscal Quarter, and the
consolidated and consolidating statements of income of CPC and of each
of the Borrowers for such quarter and for a period from the beginning
of the Fiscal Year to the close of such Fiscal Quarter, all certified
by the chief financial officer or chief accounting officer of CPC and
of each of the Borrowers as being true and correct to the best of his
or her knowledge;
(c) Compliance Reports. As soon as available and in any event
within forty-five (45) days after the end of each Fiscal Quarter, the
calculations by Borrowers of the financial covenants contained in
Article VII A herein, all in a format similar to that described on
Exhibit F hereto, along with a certificate of compliance certified by
the president or chief financial officer of CPC stating that such
officer has no knowledge of any Event of Default or Default Condition,
or if such officer has obtained such knowledge, disclosing the nature,
details, and period of existence of such event;
(d) SEC Filings and Public Information. At the same time as
they are filed with the Securities and Exchange Commission, copies of
CPC's 10-Q and 10-K reports; and
(e) Other Information. Promptly upon its becoming available,
such other material information about Borrowers, Guarantors, or the
indebtedness described herein as Agent may reasonably request from time
to time.
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All such balance sheets and other Financial Statements referred to in Sections
6.01(a) and (b) hereof shall conform to GAAP on a basis consistent with those of
previous Financial Statements.
Section 6.02 Annual Certificates of Compliance. Concurrently with the
furnishing of the annual Financial Statements pursuant to Section 6.01(a)
hereof, furnish or cause to be furnished to Agent and each Lender a certificate
of compliance in a form reasonably satisfactory to Agent prepared by one of the
nationally recognized "Big Six" accounting firms stating that in making the
examination necessary for their audit they have obtained no knowledge of any
Default Condition or Event of Default, or event which, after notice or lapse of
time (or both), would constitute a Default Condition or Event of Default or, if
they have obtained such knowledge, disclosing the nature, details, and period of
existence of such event.
Section 6.03 Taxes and Other Liens. Pay and discharge promptly all
taxes, assessments, and governmental charges or levies imposed upon any of the
Borrowers or the Consolidated Entities or upon any of their respective income or
Property as well as all claims of any kind (including claims for labor,
materials, supplies, and rent) which, if unpaid, might become a Lien upon any or
all of any of the Borrowers' Property; provided, however, that neither the
Borrowers nor any of the Consolidated Entities shall be required to pay any such
tax, assessment, charge, levy, or claim if the amount, applicability, or
validity thereof shall currently be contested in good faith by appropriate
proceedings diligently conducted and if the Borrowers or the Consolidated
Entities, as applicable, shall establish reserves therefor adequate under GAAP.
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Section 6.04 Maintenance.
(a) Maintain and cause each Consolidated Entity to maintain
its corporate, partnership, joint venture, limited partnership, and/or
limited liability company existence, name, rights, and franchises;
(b) observe and comply and cause each Consolidated Entity to
observe and comply (to the extent necessary so that any failure will
not materially and adversely affect the business or Property of the
Borrowers or the Consolidated Entities) with all applicable laws,
statutes, codes, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, certificates, franchises, permits,
licenses, authorizations, and requirements of all federal, state,
county, municipal, and other governments; and
(c) maintain and cause each Consolidated Entity to maintain
its Property (and any Property leased by or consigned to it or held
under title retention or conditional sales contracts) in good and
workable condition at all times and make all repairs, replacements,
additions, and improvements to its Property reasonably necessary and
proper to ensure that the business carried on in connection with its
Property may be conducted properly and efficiently at all times.
Section 6.05 Further Assurances. Promptly cure any defects in the
creation, issuance, and delivery of the Loan Documents. Borrowers at their
expense promptly will execute and deliver to Agent upon request all such other
and further documents, agreements, and instruments in compliance with or
accomplishment of the covenants and agreements of Borrowers in the Loan
Documents, or to correct any omissions in the Loan Documents, all as may be
reasonably necessary or appropriate in connection therewith.
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Section 6.06 Performance of Obligations.
(a) Pay the indebtedness described herein according to the
terms of the Loan Documents; and
(b) do and perform, and cause to be done and to be performed,
every act and discharge all of the obligations provided to be performed
and discharged by Borrowers under the Loan Documents, at the time or
times and in the manner specified.
Section 6.07 Insurance. Maintain and continue to maintain, and cause
each Consolidated Entity to maintain and continue to maintain, with financially
sound and reputable insurers, insurance satisfactory in type, coverage and
amount to Agent against such liabilities, casualties, risks, and contingencies
and in such types and amounts as is customary in the case of corporations
engaged in the same or similar businesses and similarly situated. Upon request
of Agent, Borrowers will furnish or cause to be furnished to Agent from time to
time a summary of the insurance coverage of Borrowers and the Consolidated
Entities in form and substance satisfactory to Agent and if requested will
furnish Agent copies of the applicable policies.
Section 6.08 Accounts and Records. Keep books of record and account, in
which full, true, and correct entries will be made of all dealings or
transactions in accordance with GAAP, except only for changes in accounting
principles or practices with which Borrowers' certified public accountants
concur and which changes have been reported to Agent in writing and with an
explanation thereof.
Section 6.09 Right of Inspection. Permit and cause each Consolidated
Entity to permit any officer, employee, or agent of Agent or any Lender as may
be designated by Agent to visit and inspect any of the Property of Borrowers or
the Consolidated Entities, to examine
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Borrowers' and the Consolidated Entities' books of record and accounts, to take
copies and extracts from such books of record and accounts, and to discuss the
affairs, finances, and accounts of Borrowers and the Consolidated Entities with
the respective officers, accountants, and auditors of Borrowers and the
Consolidated Entities, all at such reasonable times and as often as Agent may
reasonably desire.
Section 6.10 Notice of Certain Events. Promptly notify Agent if any of
the Borrowers learns of the occurrence of (i) any event that constitutes a
Default Condition or Event of Default together with a detailed statement by a
responsible officer of the steps being taken as a result thereof; or (ii) the
receipt of any notice from, or the taking of any other action by, the holder of
any promissory note, debenture, or other evidence of Debt of any of the
Borrowers or any of the Consolidated Entities with respect to a claimed default,
together with a detailed statement by a responsible officer of the respective
Borrowers or Consolidated Entities specifying the notice given or other action
taken by such holder and the nature of the claimed default and what action the
affected Borrowers or Consolidated Entities are taking or proposes to take with
respect thereto; or (iii) any legal, judicial, or regulatory proceedings
affecting Borrowers or Consolidated Entities in which the amount involved is
material and is not covered by insurance or which, if adversely determined,
would have a material and adverse effect on the business or the financial
condition of any of the Borrowers or any of the Consolidated Entities; or (iv)
any dispute between any of the Borrowers or Consolidated Entities and any
governmental or regulatory authority or any other Person, entity, or agency
which, if adversely determined, might interfere with the normal business
operations of the Borrowers or the Consolidated Entities; or (v) any material
adverse changes, either individually or in the aggregate, in the
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assets, liabilities, financial condition, business, operations, affairs, or
circumstances of any of the Borrowers or the Consolidated Entities from those
reflected in the Financial Statements or from the facts warranted or represented
in any Loan Document.
Section 6.11 ERISA Information and Compliance. Comply and cause each of
the Consolidated Entities to comply with ERISA and all other applicable laws
governing any pension or profit sharing plan or arrangement to which any of the
Borrowers or any of the Consolidated Entities is a party. The Borrowers shall
provide and shall cause each of the Consolidated Entities to provide Agent with
notice of any "reportable event" or "prohibited transaction" or the imposition
of a "withdrawal liability" within the meaning of ERISA.
Section 6.12 Management. Give immediate notice to Agent of any material
change in the management of any of the Borrowers.
Section 6.13 Additional Guarantees. Within thirty (30) days after any
of the Borrowers or any of the Consolidated Entities acquires any Person that is
or becomes a Consolidated Entity; Borrowers shall cause such new Consolidated
Entity to execute a Guaranty in the form of the Guarantees executed by the
Guarantors, and to deliver to Agent such Guarantees and other documents,
instruments and items with respect thereto that are similar to those documents,
instruments and items delivered by the Guarantors with regard to their
Guarantees. Additionally, in such case Agent shall, should Lender so request, be
entitled to receive a counsel's opinion letter issued by counsel acceptable to
Agent regarding such matters involving such Consolidated Entity as may be
required by Agent. Immediately upon any Person becoming a Consolidated Entity,
Borrowers shall give notice thereof to Agent. Borrowers shall pay the costs and
expenses, including without limitation Agent's legal fees and expenses, in
connection with the
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preparation, negotiation, execution and review of the Guaranty of such
Consolidated Entity and the other items described in this Section.
Section 6.14 Permitted Acquisitions, Investments, Loans and Advances.
Provided that no breach, default, Default Condition or Event of Default has
occurred under this Agreement or any of the other Loan Documents, and provided
that no "Event of Default" has occurred under any Guaranty, Borrowers may make
the following acquisitions, investments, loans and advances without the
necessity of obtaining the consent of Agent or any Lender (but Borrowers agree
to deliver prompt notice thereof to Agent and to each Lender, with such
information relative thereto as Agent may request):
(a) Acquisitions for a value of $10,000,000 or less per
acquisition, of Property to be wholly-owned by any of the Borrowers, or
of a Person that will be a wholly-owned Subsidiary of any of the
Borrowers;
(b) Investments, loans, and advances made to Borrowers and to
any Guarantors; and
(c) Prior to December 31, 1997, investments, loans and
advances to any Consolidated Entity that is not a Borrower or a
Guarantor in an aggregate, outstanding cumulative amounts and/or an
aggregate, outstanding cumulative value equal to $20,000,000.00 or
less; provided that subsequent to December 31, 1997, investments,
loans, and advances to Consolidated Entities that are not a Borrower or
a Guarantor shall not exceed an aggregate, outstanding cumulative
amount and/or an aggregate, outstanding cumulative value equal to
$15,000,000, or less.
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Borrowers agree that if any loan, acquisition, advance or
investment is made or paid for by the transfer or exchange of Property
other than cash, the amount of such loan, acquisition, advance or
investment shall be deemed to have been made in an original principal
or capital amount equal to the lesser of (i) the book value or (ii) the
fair market value of such Property as determined by Agent.
Section 6.15 Equity Proceeds. Give to Agent five (5) Business Days
prior notice of any proposed transaction intended to raise Equity Proceeds.
Article VII. Negative Covenants.
Each of the Borrowers covenants and agrees that, during the term of
this Agreement and any extensions hereof and until the indebtedness described
herein has been paid and satisfied in full, unless Agent shall otherwise first
consent in writing, the Borrowers will not, either directly or indirectly, and
will not allow any of the Consolidated Entities to:
Section 7.01 Debts, Guarantees, and Other Obligations. Incur, create,
assume, or in any manner become or be liable with respect to any Debt; provided
that subject to all other provisions of this Article VII, the foregoing
prohibitions shall not apply to:
(a) Any indebtedness to Swing Line Lender or to Lenders as set
forth in this Credit Agreement;
(b) liabilities, direct or contingent, of any of the Borrowers
and Consolidated Entities existing on the date of this Agreement that
are referenced or reflected in the Financial Statements;
(c) endorsements of negotiable or similar instruments for
collection or deposit in the ordinary course of business;
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(d) trade payables or similar obligations (other than for
borrowed money or purchase money obligations) from time to time
incurred in the ordinary course of business not to exceed amounts
historically and customarily incurred by the Borrowers;
(e) taxes, assessments, or other governmental charges that are
not assessed or are being contested in good faith by appropriate action
promptly initiated and diligently conducted, if Borrowers shall have
made any reserve therefor required by GAAP;
(f) unsecured indebtedness (direct or contingent) to others in
excess of $15,000,000 in the aggregate; provided that subsequent to
December 31, 1997, unsecured indebtedness (direct or contingent) to
others shall not exceed $10,000,000 in the aggregate; and
(g) indebtedness owed by one of the Borrowers to another of
the Borrowers or owed by any of the Guarantor to one of the Borrowers
or to another Guarantor.
Section 7.02 Liens. Create, incur, assume, or permit to exist any Lien
on any of their respective Property (real, personal, or mixed now owned or
hereafter acquired) except, subject to all other provisions of this Article, the
foregoing restrictions shall not apply to:
(a) Liens securing the payment of any of the indebtedness
described in this Credit Agreement; and
(b) Permitted Encumbrances.
Section 7.03 Investments, Loans, and Advances Make or permit to remain
outstanding any loans or advances to or investments in any Person, except that,
subject to all other provisions of this Article, the foregoing restriction shall
not apply to:
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(a) investments in direct obligations of the United States of
America or any agency thereof;
(b) investments in direct obligations of any political
subdivisions of the United States of America or any State of the United
States of America having a senior unsecured senior debt rating from
Standard and Poor's Corporation or Moody's Investors Services, Inc. of
AA or better;
(c) investments in commercial paper of the highest credit
rating of Standard and Poor's Corporation or Moody's Investors
Services, Inc., or upon the discontinuance or either or both of such
services, any other nationally recognized rating service,
(d) investments in certificates of deposit having maturities
of less than one year, or repurchase agreements issued by commercial
banks in the United States of America having capital and surplus in
excess of $50,000,000, or commercial paper of the highest quality;
(e) investments in money market funds so long as the entire
investment therein is fully insured or so long as the fund is a fund
operated by a commercial bank of the type specified in (d) above; and
(f) investments and loans permitted by Section 6.14 herein.
Section 7.04 Distributions, and Redemptions; Issuance of Stock.
Purchase, redeem, or otherwise acquire for value any of its stock now or
hereafter outstanding, or return any capital to its stockholders, or make any
distribution of its assets to its stockholders as such.
Section 7.05 Sales and Leasebacks. Enter into any arrangement, directly
or indirectly, with any Person by which any of the Borrowers shall sell or
transfer any Property, whether now
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owned or hereafter acquired, and by which such of the Borrowers shall then or
thereafter rent or lease as lessee such Property or any part thereof or other
Property that Borrowers intend to use for substantially the same purpose or
purposes as the Property sold or transferred.
Section 7.06 Nature of Business. Suffer or permit any material change
to be made in the character of the business of any of the Borrowers or the
Consolidated Entities, as carried on as of the date hereof.
Section 7.07 Mergers, Consolidations, Etc. Merge, consolidate or
reorganize with or into, or sell, assign, lease, or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its Property (whether now owned or hereafter acquired) to, or become an
Affiliate of, any Person; provided, however, that with Agent's express prior
written consent and provided that no Event of Default and no Default Condition
has occurred, Borrowers may merge, reorganize or consolidate with any Person as
long as, immediately after and giving effect to any such merger, reorganization
or consolidation no event shall occur or would reasonably be expected to occur
which constitutes a Default Condition or an Event of Default and, in the case of
any such merger or consolidation to which Borrowers are a party, such of the
Borrowers is the surviving corporation; provided, however, this section shall
not be read to require the consent of Agent to an acquisition merger that
complies with Section 6.14(a) in which CPC is either the survivor or the parent
of a wholly-owned survivor.
Section 7.08 Proceeds of Loan. Permit the proceeds of the Advances to
be used for any purpose other than those permitted under this Agreement.
Section 7.09 Disposition of Assets. Dispose of any of the assets of any
of the Borrowers or the Consolidated Entities other than in the ordinary course
of Borrowers' or such of the Consolidated Entities' (as applicable) present
business upon terms standard in Borrowers' or such of the Consolidated Entities'
(as applicable) industry.
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Section 7.10 Limitation on Business. Engage in any business other than
the business in which the Borrowers or the Consolidated Entities are currently
engaged.
Section 7.11 Inconsistent Agreements. Enter into any agreement
containing any provision which would be violated or breached by the performance
by Borrowers of their obligations.
Section 7.12 Fiscal Year. Change their respective Fiscal Year.
Article VII A Financial Covenants.
CPC covenants and agrees that, during the term of this Agreement and
any extensions hereof and until the indebtedness described herein has been paid
and satisfied in full, unless Agent shall otherwise first consent in written,
CPC will not:
Section 7A.01 Financial Covenants.
(a) Minimum Net Worth. Permit its Consolidated Net Worth to be less
than a minimum amount equal to: (a) $70,000,000, plus (b) on an annual basis for
each Fiscal Year beginning with the 1997 Fiscal Year, a cumulative amount equal
to 50% of annual Consolidated Net Income, plus (c) 100% of the net proceeds of
any Equity Proceeds up to $35,000,000 raised by CPC subsequent to December 12,
1996, plus (d) 50% of the net proceeds of any Equity Proceeds in excess of
$35,000,000 raised by CPC subsequent to December 12, 1996.
(b) Funded Debt to EBITDA. Permit the ratio of CPC's Funded Debt
(determined on a consolidated basis) divided by CPC's EBITDA (determined on a
consolidated basis) to exceed a ratio of 4.0 to 1.0. as calculated on the Fiscal
Quarter ending March 31, 1997 and as calculated on the Fiscal Quarter ending
June 30, 1997, or permit the ratio of CPC's Funded Debt (determined on a
consolidated basis) divided by CPC's EBITDA (determined on a
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consolidated basis) to exceed a ratio of 3.0 to 1.0 as calculated on September
30, 1997 and on each succeeding Fiscal Quarter thereafter. The calculation made
as of the Fiscal Quarter ended June 30, 1997 shall be an annualized calculation
of EBITDA using only the results of the Fiscal Quarters ended March 31, 1997 and
June 30, 1997. The calculation made as of the Fiscal Quarter ended September 30,
1997 shall be an annualized calculation of EBITDA using only the results of the
Fiscal Quarters ended March 31, 1997, June 30, 1997, and September 30, 1997.
Commencing with the Fiscal Quarter ended on December 31, 1997, the calculations
made herein shall be made on a trailing four (4) Fiscal Quarter basis.
(c) EBITDA, Plus Leases to Interest Expense, Plus Leases Ratio.
Commencing on March 31, 1997 and at the conclusion of each succeeding Fiscal
Quarter, permit CPC's ratio of EBITDA, Plus Leases (determined on a consolidated
basis) to CPC's Interest Expense, Plus Leases (determined on a consolidated
basis) to be less than 1.15 to 1.0. The calculation made as of the Fiscal
Quarter ended March 31, 1997 shall be an annualized calculation of EBITDA, Plus
Leases and an annualized calculations of Interest Expense Plus Leases using only
the results of the Fiscal Quarter ended March 31, 1997. The calculation made as
of the Fiscal Quarter ended June 30, 1997 shall be an annualized calculation of
EBITDA, Plus Leases and an annualized calculation of Interest Expense Plus
Leases using only the results of the Fiscal Quarters ended March 31, 1997 and
June 30, 1997. The calculation made as of the Fiscal Quarter ended September 30,
1997 shall be an annualized calculation of EBITDA, Plus Leases and an annualized
calculation of Interest Expense Plus Leases using only the results of the Fiscal
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Quarters ended March 31, 1997, June 30, 1997, and September 30, 1997. Commencing
with the Fiscal Quarter ended on December 31, 1997, the calculations made herein
shall be made on a trailing four (4) Fiscal Quarter basis.
As used herein, "EBITDA, Plus Leases" for any period shall mean an
amount equal to the sum of: (a) EBITDA, plus (b) an amount equal to lease
payments made on CPC's consolidated capitalized and/or operating leases.
As used herein "Interest Expense, Plus Leases" for any period shall
mean an amount equal to the sum of: (a) Interest Expense, plus (b) an amount
equal to CPC's consolidated capitalized an/or operating leases.
(d) Funded Debt to Total Capitalization. Permit CPC's ratio of Funded
Debt (determined on a consolidated basis) to CPC's Total Capitalization
(determined on a consolidated basis) to exceed .70 to 1.0 at any time from the
date hereof up to but not including June 30, 1997, and permit CPC's ratio of
Funded Debt (determined on a consolidated basis) to CPC's Total Capitalization
(determined on a consolidated basis) to exceed .60 to 1.0 as calculated as of
June 30, 1997 and at any time thereafter prior to September 30, 1997, and permit
CPC's ratio of Funded Debt (determined on a consolidated basis) to CPC's ratio
of Total Capitalization (determined on a consolidated basis) to exceed .50 to
1.0 as calculated as of September 30, 1997 or at any time thereafter.
Article VIII. Events of Default.
Section 8.01 Events of Default. Any of the following events shall be
considered an Event of Default as those terms are used in this Agreement:
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(a) Principal and Interest Payments. The Borrowers fail to
make payment by 1:00 P.M. (Nashville, Tennessee time) within five (5)
days when due of any installment of principal or interest on the
Revolving Credit Notes or Swing Line Note or the Borrowers fail to pay
within five (5) days when due any payment due hereunder or under any of
the Loan Documents; or the indebtedness described herein exceeds the
Maximum Total Amount, and the Borrowers fail within five (5) days
thereafter to make any payments required herein to reduce the
indebtedness described herein to an amount equal to or less than the
Maximum Total Amount; or
(b) Representations and Warranties. Any representation or
warranty made by any of the Borrowers in any Loan Document is incorrect
in any material respect as of the date thereof; or any representation,
statement (including financial statements), certificate, or data
furnished or made by Borrowers in any Loan Document with respect to any
indebtedness is untrue in any material respect, as of the date as of
which the facts therein set forth were stated or certified; or
(c) Obligations. Any of the Borrowers fail to perform any of
their respective obligations as required by and contained in any Loan
Document; or
(d) Involuntary Bankruptcy or Receivership Proceedings. A
receiver, custodian, liquidator, or trustee of any of the Borrowers or
Guarantors, or of any of their respective property, is appointed by the
order or decree of any court or agency or supervisory authority having
jurisdiction; or any of the Borrowers or the Guarantors is adjudicated
bankrupt or insolvent; or any of the Property of any of the Borrowers
or the Guarantors is sequestered by court order or a petition is filed
against any of the
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Borrowers or the Guarantors under any state or federal bankruptcy,
reorganization, debt arrangement, insolvency, readjustment of debt,
dissolution, liquidation, or receivership law of any jurisdiction,
whether now or hereafter in effect; or
(e) Voluntary Petitions. Any of the Borrowers or any of the
Guarantors takes affirmative steps to prepare to file, or any of the
Borrowers or any of the Guarantors files a petition in voluntary
bankruptcy or to seek relief under any provision of any bankruptcy,
reorganization, debt arrangement, insolvency, readjustment of debt,
dissolution, or liquidation law of any jurisdiction, whether now or
hereafter in effect, or consents to the filing of any petition against
it under any such law; or
(f) Assignments for Benefit of Creditors, Etc. Any of the
Borrowers or any of the Guarantors makes an assignment for the benefit
of its creditors, or admits in writing its inability to pay its debts
generally as they become due, or consents to the appointment of a
receiver, trustee, or liquidator of any of the Borrowers or any of the
Guarantors or of all or any part of its respective Properties; or
(g) Discontinuance of Business, Etc. Any of the Borrowers or
any of the Guarantors discontinues its usual business, or any of the
Borrowers or any of the Guarantors becomes an Affiliate of any Person,
or any Person who is not presently an owner of a controlling interest
in such of the Borrowers or any of the Guarantors becomes a controlling
person; or
(h) Undischarged Judgments. If a final, non-appealable
judgment for the payment of money in excess of $250,000 is rendered
by any court or other governmental
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authority against any of the Borrowers or any of the Guarantors which
is not fully covered by valid collectible insurance; or
(i) Violation of Laws, Etc. Any of the Borrowers violates or
otherwise fails to comply with any law, rule, regulation, decree,
order, or judgment under the laws of the United States of America, or
of any state or jurisdiction thereof the effect of which has a material
and adverse impact on any of the Borrowers; or any of the Borrowers
fails or refuses at any and all times to remain current in its or their
financial reporting requirements pursuant to such laws, rules, and
regulations or pursuant to the rules and regulations of any exchange
upon which the shares of any of the Borrowers are traded; or
(j) Execution of Guaranty by a Consolidated Entity. Should any
Consolidated Entity not execute and deliver to Agent the guaranty and
other items required by Section 6.13 herein.
Section 8.02 Remedies. Upon the happening of any Event of Default set
forth above, with the exception of those events set forth in Section 8.01(d) and
8.01(e): (i) Agent, acting pursuant to Lenders' direction as set forth in
Article XII, may declare the entire principal amount of all indebtedness then
outstanding, including interest accrued thereon, to be immediately due and
payable without presentment, demand, protest, notice of protest, or dishonor or
other notice of default of any kind, all of which Borrowers hereby expressly
waive, (ii) at Lenders' sole discretion and option, all obligations of any of
the Lenders under this Agreement shall immediately cease and terminate unless
and until each of the Lenders shall reinstate such obligations in writing; or
(iii) Lenders may bring an action to protect or enforce
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their rights under the Loan Documents or seek to collect the indebtedness
described herein by any lawful means.
Upon the happening of any event specified in Section 8.01(d) and
Section 8.01(e) above: (i) all indebtedness described herein, including all
principal, accrued interest, and other charges or monies due in connection
therewith shall be immediately and automatically due and payable in full,
without presentment, demand, protest, or dishonor or other notice of any kind,
all of which Borrowers hereby expressly waive, (ii) all obligations of Lenders
under this Agreement shall immediately cease and terminate unless and until each
of the Lenders shall reinstate such obligations in writing; or (iii) Lenders may
bring an action to protect or enforce their rights under the Loan Documents or
seek to collect the indebtedness described herein and/or enforce the obligations
evidenced herein by any lawful means.
Section 8.03 Default Conditions. Any of the following events shall be
considered a Default Condition:
(a) Any of the Borrowers suffer a material adverse change in
its financial condition; and
(b) Should any event occur that except for the giving of
notice and/or the passage of time would be an Event of Default.
Upon the occurrence of a Default Condition or at any time thereafter
until such Default Condition no longer exists, the Borrowers agree that the
Lenders, in their sole discretion, and without notice to Borrowers, may
immediately cease making any Advances, all without liability whatsoever to
Borrowers or any other Person whomsoever, all of which is expressly waived
hereby. Borrowers release the Lenders and the Agent from any and all liability
whatsoever,
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whether direct, indirect, or consequential, and whether seen or unforeseen,
resulting from or arising out of or in connection with Lenders' determination to
cease making Advances pursuant to this Section.
Article IX. General Provisions.
Section 9.01 Notices. All communications under or in connection with
this Agreement or any of the other Loan Documents shall be in writing and shall
be mailed by first class certified mail, postage prepaid, or otherwise sent by
telex, telegram, telecopy, or other similar form of rapid transmission confirmed
by mailing (in the manner stated above) a written confirmation at substantially
the same time as such rapid transmission, or personally delivered to an officer
of the receiving party. All such communications shall be mailed, sent, or
delivered as follows:
(a) if to Borrowers, to its address shown below, or to such
other address as Borrowers may have furnished to Agent in writing:
2401 21st Avenue South
Suite 200
Nashville, Tennessee 37212
Attn: Monroe J. Carell, Jr.
(b) if to Agent, to its address shown below, or to such other
address or to such individual's or department's attention as it may
have furnished Borrowers in writing:
SunTrust Bank, Nashville, N.A., Agent
201 Fourth Avenue, North
Nashville, Tennessee 37244
Attention: Allen Oakley
(c) if to Lenders, to the address of each of the Lenders as
shown beside the respective signature of each of the Lenders.
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Any communication so addressed and mailed by certified mail shall be deemed to
be given when so mailed.
Section 9.02 Invalidity. In the event that any one or more of the
provisions contained in any Loan Document for any reason shall be held invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision of any Loan Document.
Section 9.03 Survival of Agreements. All representations and warranties
of Borrowers in this Agreement and all covenants and agreements in this
Agreement not fully performed before the Closing Date of this Agreement shall
survive the Closing Date.
Section 9.04 Successors and Assigns. Borrowers may not assign their
respective rights or delegate duties under this Agreement or any other Loan
Document. All covenants and agreements contained by or on behalf of Borrowers in
any Loan Document shall bind the Borrowers' successors and assigns and shall
inure to the benefit of the Agent, each Lender, the Swing Line Lender, and their
respective successors and assigns.
Section 9.05 Waivers. Pursuant to T.C.A. Section 47-50-112, no action
or course of dealing on the part of Agent, the Swing Line Lender, or any Lender,
its officers, employees, consultants, or agents, nor any failure or delay by
Agent, Swing Line Lender, or any Lender with respect to exercising any right,
power, or privilege of Agent, Swing Line Lender, or any Lender under any of the
Loan Documents shall operate as a waiver thereof, except as otherwise provided
in this Agreement. Acting pursuant to the requirements of Article XII herein,
Agent may from time to time waive any requirement hereof, including any of the
Conditions Precedent; however no waiver shall be effective unless in writing and
signed by the Agent. The execution
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by Agent of any waiver shall not obligate Agent, Swing Line Lender, or any
Lender to grant any further, similar, or other waivers.
Section 9.06 Cumulative Rights. Rights and remedies of Agent, Swing
Line Lender, or any Lender under each Loan Document shall be cumulative, and the
exercise or partial exercise of any such right or remedy shall not preclude the
exercise of any other right or remedy.
Section 9.07 Construction. This Agreement and the other Loan Documents
constitute a contract made under and shall be construed in accordance with and
governed by the laws of the State of Tennessee.
Section 9.08 Time of Essence. Time is of the essence with regard to
each and every provision of this Agreement.
Section 9.09 Costs, Expenses, and Taxes. Borrowers agree to pay on
demand all reasonable out-of-pocket costs and expenses of Agent and Swing Line
Lender (including the reasonable fees and out-of-pocket expenses of counsel for
Agent and Swing Line Lender) incurred by Agent and Swing Line Lender in
connection with the preparation, execution, delivery, administration,
enforcement, or protection of Agent's, Swing Line Lender's, or Lenders' rights
under the Loan Documents (including any suit for declaratory judgment or
interpretation of the provisions hereof).
Section 9.10 Entire Agreement; No Oral Representations Limiting
Enforcement. This Agreement represents the entire agreement between the parties
hereto except for such other agreements set forth in the Loan Documents, and any
and all oral statements heretofore made regarding the matters set forth herein
are merged herein.
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Section 9.11 Amendments. The parties hereto agree that this Agreement
may not be modified or amended except in writing signed by the parties hereto.
Section 9.12 Joint and Several Liability. Each of the Borrowers are
jointly and severally liable for all representations, warranties, covenants,
promises, and agreements of the Borrowers hereunder and under any of the Loan
Documents. All references to the Borrowers shall be to each of the Borrowers on
a joint and several basis.
Section 9.13 Distribution of Information. The Borrowers hereby
authorize the Agent, the Swing Line Lender, and each Lender, as the Agent, the
Swing Line Lender, and each Lender may elect in its sole discretion, to discuss
with and furnish to any Affiliate, to any government or self-regulatory agency
with jurisdiction over the Agent, the Swing Line Lender, and each Lender, or to
any participant or prospective participant, all financial statements, audit
reports and other information pertaining to the Borrowers, the Guarantors and/or
the Consolidated Entities whether such information was provided by Borrowers or
prepared or obtained by the Agent or third parties. Neither the Agent nor any of
its employees, officers, directors or agents make any representation or warranty
regarding any audit reports or other analyses of Borrowers which the Agent may
elect to distribute, whether such information was provided by Borrowers or
prepared or obtained by the Agent or third parties, nor shall the Agent or any
of its employees, officers, directors or agents be liable to any Person
receiving a copy of such reports or analyses for any inaccuracy or omission
contained in such reports or analyses or relating thereto.
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Article X. Jury Waiver.
Section 10.01 Jury Waiver. IF ANY ACTION OR PROCEEDING INVOLVING THIS
LOAN AGREEMENT OR ANY LOAN DOCUMENT IS COMMENCED IN ANY COURT OF COMPETENT
JURISDICTION, BORROWERS, AGENT, SWING LINE LENDER, AND EACH LENDER HEREBY WAIVE
THEIR RIGHTS TO DEMAND A JURY TRIAL.
Article XI. Hazardous Substances.
Section 11.01 Representation and Indemnity Regarding Hazardous
Substances.
(a) Borrowers have no knowledge of any spills, releases,
discharges, or disposal of Hazardous Substances that have occurred or
are presently occurring on or onto any of its Property or on any of the
Property of any Consolidated Entity; or of any spills or disposal of
Hazardous Substances that have occurred or are occurring off any of its
Property (or the property of any Consolidated Entity) as a result of
any construction on or operation and use of such Property; in each case
under this paragraph (a) so as to violate any Environmental Law in a
manner that would have a material adverse effect on the business,
Properties or financial condition of any of the Borrowers on the
Consolidated Entities or on the ability of any of the Borrowers or the
Guarantors to perform their respective obligations under this Agreement
or any of the other Loan Documents.
(b) The Borrowers represent that its Property and any current
operation concerning its Property (and the Property of any of the
Consolidated Entities) and its business operations are not in violation
of any applicable Environmental Law, and the Borrowers have no actual
knowledge or any notice from any governmental body claiming
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that such Property or such business operations or operations or uses of
the Property have or may result in any violation of any Environmental
Law or requiring or calling attention to the need for any work,
repairs, corrective actions, construction alterations or installation
on or in connection with the Property or any of the Borrowers' business
in order to comply with any Environmental Law with which Borrowers have
not complied, in each case under this paragraph (b) wherein such
violation would have a material adverse effect on the business,
Properties, or financial condition of the Borrowers and/or any of the
Consolidated Entities. If there are any such notices which would have
such effect with which Borrowers have not complied, Borrowers shall
provide Agent with copies thereof. If Borrowers receive any such notice
which would have such effect, Borrowers will immediately provide a copy
to Agent.
(c) Borrowers, jointly and severally, agree to indemnify and
hold Agent, Swing Line Lender, and Lenders harmless from and against
any and all claims, demands, damages, losses, liens, liabilities,
penalties, fines, lawsuits, and other proceedings, costs and expenses
(including, without limitation, reasonable attorneys' fees), arising
directly or indirectly from or out of, or in any way connected with (i)
the presence of any Hazardous Substances on any of its Property or the
Property of any Consolidated Entity in violation of any Environmental
Law; (ii) any violation or alleged violation of any Environmental Law
relating to Hazardous Substances on any of its Property or the Property
of any Consolidated Entity, whether attributable to events occurring
before or after Borrowers' acquisition of any of its Property or the
acquisition of such property by any Consolidated Entity; (iii) any
violation of any Environmental Law by any of the
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Borrowers or any of the Consolidated Entities resulting from the
conduct of its business, use of its Property, or otherwise; or (iv) any
inaccuracy in the certifications contained in Section 11.01(a).
Article XII. The Agent.
Section 12.01 Appointment of Agent. Each Lender hereby designates STB
as Agent to administer all matters concerning the Loans and to act as herein
specified. Each Lender hereby irrevocably authorizes, and each holder of any
Revolving Credit Note by the acceptance of a Revolving Credit Note shall be
deemed irrevocably to authorize, the Agent to take such actions on its behalf
under the provisions of this Agreement, the other Loan Documents and all other
instruments and agreements referred to herein or therein, and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Agent may perform any of
its duties hereunder by or through its agents or employees. The Lenders agree
that neither the Agent nor any of its directors, officers, employees or agents
shall be liable for any action taken or omitted to be taken by it or them
hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct. The Lenders agree that the Agent shall not
have any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any of the Lenders, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or otherwise be imposed upon or exist against the Agent.
Section 12.02 Authorization of Agent with Respect to the Loan
Documents. (a) Each Lender hereby authorizes the Agent to enter into each of the
Loan Documents and to take all
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action contemplated thereby, all in its capacity as Agent for the ratable
benefit of the Lenders. All rights and remedies under the Loan Documents may be
exercised by the Agent for the benefit of the Agent and the Lenders upon the
terms thereof. The Lenders further agree that the Agent may assign its rights
and obligations under any of the Loan Documents to any Affiliate of the Agent,
if necessary or appropriate under applicable law, which assignee in each such
case shall (subject to compliance with any requirements of applicable law
governing the assignment of such Loan Documents) be entitled to all the rights
of the Agent under and with respect to the applicable Loan Document.
(b) The Agent shall administer the Loans described herein and the Loan
Documents on behalf of and for the benefit of the Lenders in all respects as if
the Agent were the sole Lender under the Loan Documents, except that:
(i) The Agent shall administer the Loans and the Loan
Documents with a degree of care at least equal to that customarily
employed by the Agent in the administration of similar credit
facilities for its own account.
(ii) The Agent shall not, without the consent of the Majority
Lenders, take any of the following actions:
(A) agree to a waiver of any material requirements,
covenants, or obligations of any of the Borrowers or
Guarantors contained herein;
(B) agree to any amendment to or modification of any
of the terms of any of the Loan Documents;
(C) waive any Event of Default or Default Condition
as set forth in the Credit Agreement;
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(D) accelerate the indebtedness described in the
Credit Agreement following an Event of Default; or
(E) initiate litigation or pursue other remedies to
enforce the obligations contained in any Loan Document or to
collect the indebtedness described herein.
(iii) The Agent shall not, without the consent of all of the
Lenders, take any of the following actions:
(A) extend the maturity of any payment of principal
of or interest on the indebtedness described herein;
(B) reduce any fees paid to or for the benefit of
Lenders under the Credit Agreement;
(C) reduce the rate of interest charged on the
indebtedness described herein;
(D) release any Guaranty of any Material Subsidiary;
(E) waive, amend, modify or change the Conditions
Precedent;
(F) postpone any date fixed for the payment in
respect of principal of, or interest on the indebtedness
described herein, or any fees hereunder;
(G) modify the definition of Majority Lenders; or
(H) modify this Section 12.02(b)(iii).
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(c) The Agent, upon its receipt of actual notice thereof,
shall notify the Lenders of: (i) each proposed action that would
require the consent of the Lenders as set forth herein, or (ii) any
action proposed to be taken by the Agent in the administration of the
Loans and Loan Documents not in the ordinary course of business;
provided that any failure of the Agent to give the Lenders any such
notice shall not alone be the basis for any liability of the Agent to
the Lenders except for the Agent's gross negligence or willful
misconduct.
(d) The Lenders agree that the Agent shall incur no liability
under or in respect of this Agreement with respect to anything which it
may do or refrain from doing in the reasonable exercise of its judgment
or which may seem to it to be necessary or desirable in the
circumstances, except for its gross negligence or willful misconduct.
Agent shall incur no liability to any of the Lenders for giving consent
on behalf of the Lenders when under the terms of this Agreement consent
may not be unreasonably withheld.
(e) The Agent shall not be liable to the Lenders or to any
Lender in acting or refraining from acting under this Agreement or any
other Loan Document in accordance with the instructions of the Majority
Lenders or all of the Lenders, where expressly required by this
Agreement, and any action taken or failure to act pursuant to such
instructions shall be binding on all Lenders. In each circumstance
where any consent of or direction from the Majority Lenders or all of
the Lenders is required or requested by Agent, the Agent shall send to
the Lenders a notice setting forth a description in reasonable detail
of the matter as to which consent or direction is requested and the
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Agent's proposed course of action with respect thereto. In the event
the Agent shall not have received a response from any Lender within
five (5) Business Days after Agent sends such notice, such Lender shall
be deemed to have agreed to the course of action proposed by the Agent.
Section 12.03 Agent's Duties Limited; No Fiduciary Duty. The Lenders
agree that the Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and the other Loan Documents. The Lenders
agree that none of the Agent nor any of its respective officers, directors,
employees or agents shall be liable for any action taken or omitted by it as
such hereunder or in connection herewith, unless caused by its or their gross
negligence or willful misconduct. The Agent shall not have by reason of this
Agreement a fiduciary relationship to or in respect of any Lender, and nothing
in this Agreement, express or implied, is intended to or shall be so construed
as to impose upon the Agent any obligations in respect of this Agreement or the
other Loan Documents except as expressly set forth herein.
SECTION 12.04 NO RELIANCE ON THE AGENT. (A) EACH LENDER REPRESENTS AND
WARRANTS TO THE AGENT AND THE OTHER LENDERS THAT INDEPENDENTLY AND WITHOUT
RELIANCE UPON THE AGENT, EACH LENDER, TO THE EXTENT IT DEEMS APPROPRIATE, HAS
MADE AND SHALL CONTINUE TO MAKE (I) ITS OWN INDEPENDENT INVESTIGATION OF THE
FINANCIAL CONDITION AND AFFAIRS OF THE BORROWERS, THE GUARANTORS, AND THE
CONSOLIDATED ENTITIES IN CONNECTION WITH THE TAKING OR NOT TAKING OF ANY ACTION
IN CONNECTION HEREWITH, AND (II) ITS OWN APPRAISAL OF THE CREDIT WORTHINESS OF
THE BORROWERS, THE GUARANTORS, AND THE CONSOLIDATED
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ENTITIES, AND, EACH LENDER FURTHER AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED IN
THIS AGREEMENT, THE AGENT SHALL HAVE NO DUTY OR RESPONSIBILITY, EITHER INITIALLY
OR ON A CONTINUING BASIS, TO PROVIDE ANY LENDER WITH ANY CREDIT OR OTHER
INFORMATION WITH RESPECT THERETO, WHETHER COMING INTO ITS POSSESSION BEFORE THE
MAKING OF THE LOANS OR AT ANY TIME OR TIMES THEREAFTER. AS LONG AS ANY OF THE
LOANS ARE OUTSTANDING AND/OR ANY AMOUNT IS AVAILABLE TO BE REQUESTED OR BORROWED
HEREUNDER, OR THIS AGREEMENT AND THE LOAN DOCUMENTS HAVE NOT BEEN CANCELLED AND
TERMINATED, EACH LENDER SHALL CONTINUE TO MAKE ITS OWN INDEPENDENT EVALUATION OF
THE FINANCIAL CONDITION AND AFFAIRS OF THE BORROWERS, THE GUARANTORS, AND THE
CONSOLIDATED ENTITIES.
(b) The Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability,
collectability, priority or sufficiency of this Agreement, the Revolving Credit
Notes, the Swing Line Note, the Guarantees, the other Loan Documents, or any
other documents contemplated hereby or thereby, or the financial condition of
the Borrowers, the Guarantors, or any of the Consolidated Entities, or be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement, the Revolving
Credit Notes, the Swing Line Note, the Guarantees, the other Loan Documents or
the other documents contemplated hereby or thereby, or the financial condition
of the Borrowers,
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the Guarantors, or any of the Consolidated Entities or the existence or possible
existence of any Default Condition or Event of Default.
Section 12.05 Certain Rights of Agent. The Lenders agree that if the
Agent shall request instructions from the Majority Lenders (or all of the
Lenders where unanimity is expressly required under the terms of this Agreement)
with respect to any action or actions (including the failure to act) in
connection with this Agreement, the Agent shall be entitled to refrain from such
act or taking such act, unless and until the Agent shall have received
instructions from the Majority Lenders (or all of the Lenders where unanimity is
expressly required under the terms of this Agreement); and the Agent shall not
incur liability to any Person by reason of so refraining. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the Agent
as a result of the Agent acting or refraining from acting hereunder in
accordance with the instructions of the Majority Lenders (or, with regard to
acts for which the consent of all of the Lenders is expressly required under the
terms of this Agreement, in accordance with the instructions of all of the
Lenders).
Section 12.06 Reliance by Agent. The Lenders agree that the Agent shall
be entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other documentary,
teletransmission or telephone message reasonably believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person. The
Lenders agree that the Agent may consult with legal counsel (including counsel
for any Lender), independent public accountants and other experts selected by it
and shall not be liable for any action taken or
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omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
Section 12.07 Indemnification of Agent. To the extent the Agent is not
reimbursed and indemnified by the Borrowers, each Lender will reimburse and
indemnify the Agent, ratably according to their respective Pro Rata Share, for,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including fees of
experts, consultants and counsel and disbursements) or disbursements of any kind
or nature whatsoever that may be imposed on, incurred by or asserted against the
Agent in performing its duties hereunder, in any way relating to or arising out
of this Agreement or the other Loan Documents; provided that no Lender shall be
liable to the Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. The
obligations and indemnifications arising under this Section 12.07 shall survive
termination of this Agreement, repayment of the Loans and indebtedness arising
in connection with the Letters of Credit and expiration of the Letters of
Credit.
Section 12.08 The Agent in its Individual Capacity. With respect to its
obligation to lend under this Agreement, the Loan made by it and the Revolving
Credit Note issued to it, the Agent shall have the same rights and powers
hereunder as any other Lender or holder of a Revolving Credit Note and may
exercise the same as though it were not performing the duties of Agent specified
herein; and the terms "Lenders," "Majority Lenders," "holders of Revolving
Credit Notes," or any similar terms shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity. The Agent also may
exercise the rights and remedies of the
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Swing Line Lender. The Agent and its Affiliates may accept deposits from, lend
money to, and generally engage in any kind of banking, trust, financial advisory
or other business with the Borrowers, the Guarantors, the Consolidated Entities,
or any Affiliate of the Borrowers as if it were not performing the duties
specified herein as Agent, and may accept fees and other consideration from the
Borrowers for services in connection with this Agreement and otherwise without
having to account for the same to the Lenders.
Section 12.09 Holders of Notes. The Agent and the Borrowers may deem
and treat the payee of any Revolving Credit Note as the owner thereof for all
purposes hereof unless and until a written notice of the assignment or transfer
thereof shall have been filed with the Agent and the Borrowers. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Revolving Credit Note
shall be conclusive and binding on any subsequent holder, transferee or assignee
of such Revolving Credit Note.
Section 12.10 Successor Agent. (a) The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrowers and may be
removed at any time with cause by the Majority Lenders; provided, however, the
Agent may not resign or be removed until (i) a successor Agent has been
appointed and shall have accepted such appointment, (ii) the successor Agent has
assumed all responsibility for issuance of the Letters of Credit and the
successor Agent has assumed in the place and stead of the Agent all existing
liability under outstanding Letters of Credit, and (iii) the successor Agent has
assumed in the place and stead of the Agent all liability and responsibility of
the Swing Line Lender, including the purchase by the successor Agent from the
Agent of the Swing Line Lender's position in the Swing Line Note. The
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transactions described in the immediately preceding sentence shall be
accomplished pursuant to written agreements reasonably satisfactory to the Agent
and the successor Agent. Upon any such resignation or removal, the Majority
Lenders shall have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Majority Lenders, and shall have accepted
such appointment, within thirty (30) days after the retiring Agent's giving of
notice of resignation or the Majority Lenders' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a bank that maintains an office in the United States, or a
commercial bank organized under the laws of the United States of America or any
State thereof, or any Affiliate of such bank, having a combined capital and
surplus of at least $100,000,000.
(b) Upon the acceptance of any appointment as the Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article XII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was an Agent under this
Agreement.
Section 12.11 Notice of Default or Event of Default. In the event that
the Agent or any Lender shall acquire actual knowledge, or shall have been
notified, of any Default Condition or Event of Default (other than through a
notice by one party hereto to all other parties), the Agent or such Lender shall
promptly notify the Agent, and the Agent shall take such action and assert such
rights under this Agreement as the Majority Lenders shall request in writing,
and the Agent shall not be subject to any liability by reason of its acting
pursuant to any such request. If,
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following notification by Agent to Lenders, the Majority Lenders (or all of the
Lenders if required hereunder) shall fail to request the Agent to take action or
to assert rights under this Agreement in respect of any Default Condition or
Event of Default within five (5) Business Days after their receipt of the notice
of any Default Condition or Event of Default from the Agent or any Lender, or
shall request inconsistent action with respect to such Default Condition or
Event of Default, the Agent may, but shall not be required to, take such action
and assert such rights (other than rights under Article VIII hereof) as it deems
in its discretion to be advisable for the protection of the Lenders.
Section 12.12 Benefit of Agreement.
(a) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of such
Lender, provided that no such action shall increase the cost of the Loans to the
Borrowers.
(b) Each Lender may assign a portion of its interests, rights and
obligations under this Agreement, including all or a portion of any of its
Revolving Credit Loan Commitment (including without limitation its commitment to
participate in Letters of Credit) to any Eligible Assignee; provided, however,
that (i) the amount of the Revolving Credit Loan Commitment of the assigning
Lender subject to each assignment (determined as of the date the assignment and
acceptance with respect to such assignment is delivered to the Agent) shall not
be less than an amount equal to $5,000,000 or greater integral multiples
thereof, and (ii) the parties to each such assignment shall execute and deliver
to the Agent and the Borrowers an Assignment and Acceptance, together with a
Revolving Credit Note or Revolving Credit Notes subject to such assignment and,
unless such assignment is to an Affiliate of such Lender, a processing and
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recordation fee of $3,000. Borrowers shall not be responsible for such
processing and recordation fee or any costs or expenses incurred by any Lender
or the Agent in connection with such assignment. From and after the effective
date specified in each Assignment and Acceptance, which effective date shall be
at least five (5) Business Days after the execution thereof, the assignee
thereunder shall be a party hereto and to the extent of the interest assigned by
such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement. Notwithstanding the foregoing, the assigning Lender must
retain after the consummation of such Assignment and Acceptance, a minimum
aggregate amount of Revolving Credit Loan Commitment of $10,000,000; provided,
however, no such minimum amount shall be required with respect to any such
assignment made at any time there exists an Event of Default hereunder. Within
five (5) Business Days after receipt of the notice and the Assignment and
Acceptance, Borrowers, at their own expense, shall execute and deliver to the
Agent, in exchange for the surrendered Revolving Credit Note or Revolving Credit
Notes, a new Revolving Credit Note or Revolving Credit Notes to the order of the
Eligible Assignee in a principal amount equal to the applicable Revolving Credit
Loan Commitment assumed by it pursuant to such Assignment and Acceptance, as
well as a and new Revolving Credit Note or Revolving Credit Notes to the
assigning Lender in the amount of its retained Revolving Credit Loan Commitment.
Such new Revolving Credit Notes to the Eligible Assignee and to the assigning
Lender shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Revolving Credit Note or Revolving Credit
Notes, shall be dated the date of the surrendered Revolving Credit Note or
Revolving Credit Notes that they replace, and shall otherwise be in
substantially the form attached hereto as Exhibit C.
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(c) No assignment of all or any portion of this Agreement by any Lender
shall be permitted without compliance with the provisions of Section 2.12(b)
hereof, or if such assignment would violate any applicable securities law. In
connection with its execution and delivery hereof each Lender represents that it
is acquiring its interest herein for its own account for investment purposes and
not with a view to further distribution thereof, and shall require any proposed
assignee to furnish similar representations to the Agent and the Borrowers.
(d) Each Lender may, without the consent of Borrowers or the Agent but
subject to the provisions of Section 2.07, sell participations in its respective
Revolving Credit Loan Commitment and Letter of Credit commitments to such
Lender's Affiliate(s), but sales of participations to Persons other than such
Lender's Affiliates shall be made only with the prior consent of the Agent and
in all events subject to said section. Provided, however, that (i) no Lender may
sell a participation in its aggregate Revolving Credit Loan Commitment and
Letter of Credit commitments (after giving effect to any permitted assignment
hereof) unless it retains an aggregate exposure of at least $10,000,000 (except
that no such limitation shall be applicable to any such participation sold at
any time there exists an Event of Default hereunder), (ii) such Lender's
obligations under this Agreement shall remain unchanged, (iii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, and (v) Borrowers and the Agent and other Lenders shall
continue to deal solely and directly with each Lender in connection with such
Lender's rights and obligations as provided in this Agreement and the other Loan
Documents. Each Lender shall promptly notify in writing the Agent of any sale of
a participation hereunder.
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(e) Any Lender or participant may, in connection with the assignment or
participation or proposed assignment or participation, pursuant to this Section
12.12, disclose to the assignee or participant or proposed assignee or
participant any information relating to Borrowers, Guarantors, or the
Consolidated Entities furnished to such Lender by or on behalf of Borrowers,
Guarantors, or any of the Consolidated Entities. With respect to any disclosure
of confidential, non-public, proprietary information, such proposed assignee or
participant shall agree to use the information only for the purpose of making
any necessary credit judgments with respect to this credit facility and not to
use the information in any manner prohibited by any law, including without
limitation, the securities laws of the United States. The proposed participant
or assignee shall agree in writing not to disclose any of such information
except (i) to directors, employees, auditors or counsel to whom it is necessary
to show such information, each of whom shall be informed of the confidential
nature of the information and agree to maintain the confidentiality thereof as
described herein, (ii) in any statement or testimony pursuant to a subpoena or
order by any court, governmental body or other agency asserting jurisdiction
over such entity, or as otherwise required by law (provided prior notice is
given to Borrowers and the Agent unless otherwise prohibited by the subpoena,
order or law), and (iii) upon the request or demand of any regulatory agency or
authority with proper jurisdiction. The proposed participant or assignee, and
such representatives, shall further agree to return to Borrowers all documents
or other written material and copies thereof received from any Lender, the Agent
or Borrowers relating to such confidential information.
-86-
<PAGE> 87
(f) Any Lender may at any time assign all or any portion of its rights
in this Agreement and the Revolving Credit Notes issued to it to a Federal
Reserve Bank; provided that no such assignment shall release the assigning
Lender from any of its obligations hereunder.
ENTERED INTO the date first above written.
BORROWERS:
CENTRAL PARKING CORPORATION
By:
--------------------------------
Title:
-----------------------------
CENTRAL PARKING SYSTEM, INC.
By:
--------------------------------
Title:
-----------------------------
CENTRAL PARKING SYSTEM REALTY, INC.
By:
--------------------------------
Title:
-----------------------------
AGENT:
SUNTRUST BANK, NASHVILLE, N.A., Agent
By:
--------------------------------
Title:
-----------------------------
-87-
<PAGE> 88
LENDERS:
SUNTRUST BANK, NASHVILLE, N.A.
By:
--------------------------------
Title:
-----------------------------
Address: 201 Fourth Avenue North
Nashville, Tennessee 37219
Pro Rata Share: 100%
-88-
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
AMONG
CENTRAL PARKING CORPORATION,
CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC.
AND
SQUARE INDUSTRIES, INC.
DATED AS OF DECEMBER 6, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I THE OFFER ........................................................................................... 1
1.1 The Tender Offer ..................................................................................... 1
1.2 Consent by the Company ............................................................................... 2
1.3 Shareholder Lists ................................................................................... 3
1.4 Directors ........................................................................................... 4
1.5 Loan Arrangements ................................................................................... 4
ARTICLE II THE MERGER; CLOSING; EFFECTIVE TIME ................................................................. 5
2.1 The Merger. ......................................................................................... 5
2.2 Closing ............................................................................................. 5
2.3 Effective Time ....................................................................................... 5
2.4 The Certificate of Incorporation ..................................................................... 5
2.5 The By-Laws ......................................................................................... 5
2.6 Directors ........................................................................................... 5
2.7 Officers ............................................................................................. 6
2.8 Effect of Merger ..................................................................................... 6
ARTICLE III CONVERSION OR CANCELLATION OF SHARES IN THE MERGER ................................................... 6
3.1 Conversion or Cancellation of Shares. ............................................................... 6
3.2 Payment for Shares. ................................................................................. 7
3.3 Transfer of Shares After the Effective Time ......................................................... 8
3.4 Dissenting Shares..................................................................................... 8
3.5 Treatment of Stock Options and Warrants ............................................................. 8
3.6 Investment of Exchange Fund ......................................................................... 9
ARTICLE IV REPRESENTATIONS AND WARRANTIES ....................................................................... 9
4.1 Representations and Warranties of the Company ....................................................... 9
4.2 Representations and Warranties of the Purchaser and Merger Sub ..................................... 17
ARTICLE V COVENANTS ......................................................................................... 20
5.1 Interim Operations of the Company ................................................................. 20
5.2 Acquisition Proposals ............................................................................. 22
5.3 Stock Options and Warrants ......................................................................... 23
5.4 Shareholder Approval ............................................................................... 23
5.5 Filings; Other Action ............................................................................. 24
5.6 Access; Confidentiality ........................................................................... 24
5.7 Notification of Certain Matters ................................................................... 25
5.8 Publicity ......................................................................................... 26
5.9 Consents; Approvals ............................................................................... 26
5.10 HSR Act Compliance; Other Filings................................................................... 26
5.11 Indemnification; Directors' and Officers' Insurance ............................................... 26
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
5.12 Employment Matters ................................................................................. 28
5.13 Affiliate Agreements ............................................................................... 28
5.14 Further Actions ................................................................................... 29
ARTICLE VI CONDITIONS TO THE MERGER ........................................................................... 29
6.1 Conditions to Obligations of the Purchaser and Merger Sub to
Effect the Merger ............................................................................... 29
6.2 Conditions to Obligations of the Company to Effect the Merger ..................................... 30
ARTICLE VII TERMINATION ....................................................................................... 31
7.1 Termination by Mutual Consent ..................................................................... 31
7.2 Termination by either the Purchaser or the Company ................................................. 31
7.3 Termination by the Purchaser ....................................................................... 32
7.4 Termination by the Company ......................................................................... 32
7.5 Effect of Termination and Abandonment ............................................................. 33
7.6 Break-up Fee. ..................................................................................... 33
ARTICLE VIII ESCROW ............................................................................................. 34
8.1 Escrow Agreement. ................................................................................. 34
8.2 Escrow Committee ................................................................................... 34
8.3 Non Transferability of Escrowed Funds............................................................... 35
ARTICLE IX MISCELLANEOUS AND GENERAL ......................................................................... 35
9.1 Payment of Expenses ............................................................................... 35
9.2 Survival ........................................................................................... 35
9.3 Modification or Amendment ......................................................................... 35
9.4 Waiver of Conditions ............................................................................... 36
9.5 Counterparts ....................................................................................... 36
9.6 Governing Law ..................................................................................... 36
9.7 Notices ........................................................................................... 36
9.8 Entire Agreement, etc............................................................................... 37
9.9 Assignment; Merger Sub ............................................................................. 37
9.10 Parties in Interest ............................................................................... 37
9.11 Obligation of the Purchaser ....................................................................... 37
9.12 Captions ........................................................................................... 38
9.13 Integration of Disclosure Schedule. ............................................................... 38
9.14 Arbitration......................................................................................... 38
</TABLE>
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of December
6, 1996, among Square Industries, Inc., a New York corporation (the "Company"),
Central Parking Corporation, a Tennessee corporation (the "Purchaser"), and
Central Parking System -- Empire State, Inc., a New York corporation and an
indirect wholly-owned subsidiary of the Purchaser ("Merger Sub"), the Company
and Merger Sub sometimes being hereinafter collectively referred to as the
"Constituent Corporations."
RECITALS
WHEREAS, the Boards of Directors of the Purchaser and the Company each
have determined that it is in the best interests of their respective
shareholders for the Purchaser to acquire the Company upon the terms and
subject to the conditions set forth herein; and
WHEREAS, the Company, the Purchaser and Merger Sub desire to make
certain representations, warranties, covenants and agreements in connection
with this Agreement;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
THE OFFER
1.1 The Tender Offer. Provided that this Agreement shall not have
been terminated in accordance with Article VII, as promptly as practicable, but
in no event later than the fifth business day after the initial public
announcement of this Agreement (which announcement shall occur as promptly as
practicable but in no event later than the first business day following the
execution hereof, Merger Sub shall commence a cash tender offer (the "Offer")
to acquire all of the shares of the Company's common stock, par value $.01 per
share (the "Shares"), at a price of $28.50 per Share net to the seller in cash
at the closing of the Offer, without interest thereon and an additional $2.50
per Share to be deposited by Purchaser and held in escrow as contingent
consideration for distribution in whole or in part to either the shareholders
of the Company or Purchaser based upon resolution of certain matters, subject
to adjustment pursuant to the Escrow Agreement (the "Offer Contingent
Consideration") as provided in Article VIII, (the $28.50 and the Offer
Contingent Consideration collectively the "Offer Price") and shall consummate
the Offer in accordance with its terms. The obligation of Merger Sub to
commence the Offer and to accept for payment and to pay for Shares tendered
pursuant to the Offer shall be subject only to (i) the condition that there
shall be validly tendered in accordance with the terms of the Offer and not
withdrawn prior to the expiration of the Offer a number of Shares which,
together with any Shares then owned by Purchaser or Merger Sub represents at
least sixty-six and two-thirds percent (66 2/3%) of the Shares on a fully
diluted basis (fully diluted
1
<PAGE> 5
shall include, without limitation, all Shares issuable upon the conversion of
any convertible securities or upon the exercise of any options, warrants or
rights, unless the holder of such options, warrants or rights shall have
entered into a binding agreement to cash out such options, warrants or rights
in accordance with Section 3.5) (the "Minimum Condition") and (ii) the
satisfaction of the conditions set forth in Annex A (the "Conditions"). The
Offer shall expire 21 business days after it is commenced and shall not be
extended without the prior written consent of the Company; provided Purchaser
may extend the Offer one time for no more than ten (10) days and only if at
least 80% of all of the outstanding Shares have been tendered prior to such
extension. The Purchaser and Merger Sub expressly reserve the right to waive
any such condition, to increase the price per Share payable in the Offer and to
make any other changes in the terms and conditions of the Offer; provided,
however, that unless the Purchaser and the Merger Sub shall have obtained the
prior written approval of the Company, no change may be made in the Offer which
(i) decreases the price per share payable in the Offer, (ii) changes the form
of the consideration to be paid in the Offer, or (iii) modifies the Conditions
to the Offer or imposes conditions to the Offer in addition to the Minimum
Condition and those set forth in Annex A. As soon as practicable on the date of
the commencement of the Offer, Merger Sub shall file with the Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, the "Schedule 14D-1")
with respect to the Offer. The Schedule 14D-1 shall contain or shall
incorporate by reference an offer to purchase (the "Offer to Purchase") and
forms of the related letter of transmittal and any related summary
advertisement (the Schedule 14D-1, the Offer to Purchase and such other
documents, together with all supplements and amendments thereto, being referred
to herein collectively as the "Offer Documents"). The Offer Documents will
comply in all material respects with the provisions of applicable federal
securities laws. The Purchaser, Merger Sub and the Company agree to correct
promptly any information provided by any of them for use in the Offer Documents
which shall have become materially false or misleading, and the Purchaser and
Merger Sub further agree to take all steps necessary to cause the Schedule
14D-1 as so corrected to be filed with the SEC and the other Offer Documents as
so corrected to be disseminated to holders of Shares, in each case as and to
the extent required by applicable federal securities laws. The Company and its
counsel shall be given the opportunity to review and comment upon the Schedule
14D-1 prior to its filing with, or being sent to, the SEC. Merger Sub shall,
and the Purchaser shall cause Merger Sub to, accept for payment all Shares
validly tendered and not withdrawn pursuant to the Offer as promptly as
practicable after the satisfaction or waiver by Merger Sub or the Purchaser of
the Conditions (including without limitation the Minimum Condition) and shall
pay for such Shares as promptly as practicable following the expiration of the
Offer. The Purchaser hereby guarantees the obligation of Merger Sub to
consummate the Offer, subject to the Minimum Condition and the Conditions.
1.2 Consent by the Company. The Company hereby approves of and
consents to the Offer and represents and warrants that the Board of Directors
of the Company (i) has unanimously approved and adopted this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, (ii) has
determined that this Agreement and the transactions contemplated hereby,
including without limitation, each of the Offer and the
2
<PAGE> 6
Merger are fair to and in the best interests of the holders of Shares (other
than Purchaser and Merger Sub), (iii) has resolved to recommend that the
shareholders of the Company accept the Offer and approve and adopt this
Agreement and the transaction contemplated hereby, and (iv) has approved the
transactions contemplated hereby and has made all such determinations and taken
all such other actions as are necessary or appropriate under Section 912 of the
New York Business Corporation Law (the "NYBCL") to ensure that such Section 912
does not apply to any of the transactions contemplated hereunder. The
Blackstone Group L.P. has advised the Company on December 6, 1996 that the
Offer Price and Merger Consideration (as defined in Section 3.1) to be received
by the holders of the Shares pursuant to this Agreement, subject to the escrow
provided in Article VIII, is fair to such holders from a financial point of
view (the "Fairness Opinion") and has authorized the Company to include such
Fairness Opinion (or references thereto) in the Offer Documents and in the
Schedule 14D-9 and the Proxy Statement referred to in Section 4.1(j). As soon
as practicable on the date of the commencement of the Offer, the Company shall
file with the SEC and mail to the holders of Shares, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing the
recommendation of the Company's Board of Directors. The Schedule 14D-9 will
comply in all material respects with the provisions of applicable federal
securities laws. The Company, the Purchaser and Merger Sub agree to correct
promptly any information provided by any of them for use in the Schedule 14D-9
which shall have become materially false or misleading, and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws. The
Purchaser, Merger Sub and their counsel shall be given the opportunity to
review and comment upon the Schedule 14D-9 prior to its filing with, or being
sent to, the SEC.
1.3 Shareholder Lists. In connection with the Offer, the Company
shall promptly furnish Merger Sub with a list of the record holders of Shares
and mailing labels containing the names and addresses of all record holders of
Shares and lists of securities positions of Shares held in stock depositories,
each as of the most recent date practicable, together with all other available
listings and computer files containing names, addresses and security positions
of record holders and non-objecting beneficial owners of Shares as of the most
recent date practicable and shall promptly furnish Merger Sub with such
additional information, including updated lists of the holders of Shares,
mailing labels and lists of securities positions, to the extent available, and
such other assistance as Merger Sub or its agents may reasonably request in
connection with the Offer and communicating the Offer to the record and
beneficial holders of Shares. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Offer or the Merger, the
Purchaser and Merger Sub shall and each of the Purchaser and Merger Sub shall
cause its affiliates to (i) hold in confidence all such information, (ii) use
such information only in connection with the Offer and Merger and (iii) if this
Agreement shall be terminated pursuant to Article VII, return all such
information to the Company.
3
<PAGE> 7
1.4 Directors. (a) Promptly upon the purchase by Merger Sub of
at least a majority of the outstanding Shares pursuant to the Offer, Merger Sub
shall be entitled, subject to compliance with Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to designate such number
of directors, rounded up to the next greatest whole number, on the Board of
Directors of the Company as will give Merger Sub representation on the Board of
Directors of the Company equal to that number of directors which equals the
product of the total number of directors on the Board of Directors of the
Company (giving effect to the directors appointed or elected pursuant to this
sentence and including current directors serving as officers of the Company)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by Merger Sub or any affiliate of Merger Sub (including for the purposes
of this Section 1.4 such Shares as are accepted for payment pursuant to the
Offer, but excluding Shares held by the Company or its affiliates) bears to the
number of Shares outstanding. At such times, the Company will also cause (i)
each committee of the Board of Directors of the Company, (ii) if requested by
Merger Sub, the Board of Directors of each of the Company's subsidiaries and
(iii) if requested by Merger Sub, each committee of such board to include such
persons designated by Merger Sub constituting the same percentage of each such
committee or board as Merger Sub's designees are of the Board of Directors of
the Company. The Company shall, upon request by Merger Sub, promptly increase
the size of the Board of Directors of the Company or exercise its best efforts
to secure the resignations of such number of directors as is necessary to
enable Merger Sub designees to be elected to the Board of Directors of the
Company and shall cause Merger Sub's designees to be so elected.
(b) Subject to applicable law, the Company shall promptly
take all action necessary pursuant to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder in order to fulfill its obligations under
this Section 1.4 and shall include in the Schedule 14D-9 mailed to shareholders
promptly upon the commencement of the Offer (or an amendment thereof or an
information statement pursuant to Rule 14f-1 if Merger Sub has not theretofore
designated directors) such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 1.4. The Purchaser and
Merger Sub will supply the Company and be solely responsible for any
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
1.5 Loan Arrangements. Promptly after the purchase by Merger Sub
of the Shares upon the expiration of the Offer, Merger Sub shall (i) either
repay or refinance the obligations of the Company and its subsidiaries pursuant
to the Credit Agreement among National Westminster Bank USA (Fleet Bank), the
Company and 808 Square Corp. dated July 5, 1988 as amended to date (the
"Natwest Debt") and (ii) simultaneously therewith repay in full certain loans
made by Lowell and Sanford Harwood in June, 1995 in the original principal
amount of $500,000, plus interest.
4
<PAGE> 8
ARTICLE II
THE MERGER; CLOSING; EFFECTIVE TIME
2.1 The Merger. Upon the terms and conditions set forth in this
Agreement, at the Effective Time (as defined in Section 2.3) in accordance with
the NYBCL Merger Sub shall be merged with and into the Company and the separate
corporate existence of Merger Sub shall thereupon cease (the "Merger"). The
Company shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation") and shall continue to be governed
by the laws of the State of New York, and the separate corporate existence of
the Company with all its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger, except as set forth in Section 2.4 and
2.5.
2.2 Closing. The closing of the Merger (the "Closing") shall take
place at the offices of Harwell Howard Hyne Gabbert & Manner, P.C., 1800 First
American Center, Nashville, Tennessee at 11:00 A.M. on the first business day
after the latest to occur of: (i) the date the Merger is approved and adopted
by the shareholders of the Company pursuant to Section 5.4, if such approval
and adoption is required by applicable law; or (ii) the date on which the last
to be fulfilled or waived of the conditions set forth in Article VI hereof
shall be fulfilled or waived in accordance with this Agreement; or at such
other place and time and/or on such other date as the Company and the Purchaser
may agree.
2.3 Effective Time. Simultaneous with or as soon as practicable
following the Closing, the Company and the Purchaser will cause a Certificate
of Merger (the "Certificate of Merger") to be executed and filed with the
Secretary of State of New York in accordance with the NYBCL. The Certificate of
Merger will become effective on the date of filing of the Certificate of Merger
with the Secretary of State of New York, or as promptly as practicable as the
Company and Purchaser shall agree should be specified in the Certificate of
Merger and such time is hereinafter referred to as the "Effective Time."
2.4 The Certificate of Incorporation. The Certificate of
Incorporation of Merger Sub ("Certificate") in effect at the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation, until
duly amended in accordance with the terms thereof and the NYBCL.
2.5 The By-Laws. The By-Laws of Merger Sub in effect at the
Effective Time shall be the By-Laws of the Surviving Corporation, until duly
amended in accordance with the terms thereof and the NYBCL.
2.6 Directors. The directors of Merger Sub at the Effective Time
shall, from and after the Effective Time, be the initial directors of the
Surviving Corporation until their respective successors have been duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Certificate and By-Laws.
5
<PAGE> 9
2.7 Officers. The officers of Merger Sub at the Effective Time
shall, from and after the Effective Time, be the initial officers of the
Surviving Corporation until their respective successors have been duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Certificate of Incorporation and
By-Laws.
2.8 Effect of Merger. The Merger shall have the effects of a
Merger set forth in Section 906 of the NYBCL.
ARTICLE III
CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
3.1 Conversion or Cancellation of Shares. The manner of converting
or canceling shares of the Company and Merger Sub in the Merger shall be as
follows:
(a) At the Effective Time, each Share of the Company
issued and outstanding immediately prior to the Effective Time (other than
Dissenting Shares as defined in Section 3.4 and Shares canceled in accordance
with Section 3.1(b)) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into the right to receive, without
interest, an amount net in cash equal to $28.50 per Shareholder and an
additional $2.50 per Share to be deposited by Purchaser and held by the Escrow
Agent in escrow as contingent consideration for distribution in whole or in
part to either the Shareholders of the Company or Purchaser based upon
resolution of certain matters subject to adjustment pursuant to the Escrow
Agreement as described in Article VIII (the "Merger Contingent Consideration"
and together with the Offer Contingent Consideration and the Option Contingent
Consideration as defined in Section 3.5 the "Contingent Consideration") (the
$28.50 and the Merger Contingent Consideration collectively the "Merger
Consideration"). All such Shares, by virtue of the Merger and without any
action on the part of the holders thereof (other than Dissenting Shares), shall
no longer be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such Shares shall
thereafter cease to have any rights with respect to such Shares, except the
right to receive the Merger Consideration subject to escrowed amounts for such
Shares upon the surrender of such certificate in accordance with Section 3.2.
(b) At the Effective Time, each Share issued and held in
the Company's treasury and each Share owned by the Purchaser, Merger Sub or any
direct or indirect wholly-owned subsidiary of the Purchaser or the Company at
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding, shall be canceled and
retired without payment of any consideration therefor and shall cease to exist.
(c) At the Effective Time, each share of common stock,
par value $.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of Merger Sub or the holder(s)
6
<PAGE> 10
of such shares, be converted into one share of common stock, par value $.01 per
share of the Surviving Corporation.
3.2 Payment for Shares. At or prior to the Effective Time, the
Purchaser shall make available or cause to be made available to the paying
agent appointed by the Purchaser with the Company's prior approval (the "Paying
Agent") amounts sufficient in the aggregate to provide all funds necessary for
the Paying Agent to make payments pursuant to Section 3.1(a) hereof (other than
the Contingent Consideration which is to be deposited with the Escrow Agent
pursuant to Article VIII) to holders of Shares issued and outstanding
immediately prior to the Effective Time (other than Shares canceled pursuant to
Section 3.1(b)). In addition, at or prior to the Effective Time, the Purchaser
shall deposit the Merger Contingent Consideration with the Escrow Agent as
provided in Article VIII. Promptly after the Effective Time, Paying Agent shall
cause to be mailed to each person who was, at the Effective Time, a holder of
record of issued and outstanding Shares (other than Dissenting Shares) a form
(mutually agreed to by the Purchaser and the Company) of letter of transmittal
and instructions for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented any of such Shares in
exchange for payment therefor. Upon surrender to the Paying Agent of such
certificates, together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, the Paying Agent shall
promptly cause to be paid to the persons entitled thereto a check in the amount
to which such persons are entitled, after giving effect to any required tax
withholdings and the escrow described in Article VIII. No interest will be paid
or will accrue on the amount payable upon the surrender of any such
certificate, except to the extent provided in the Escrow Agreement as defined
in Article VIII. If payment is to be made to a person other than the
registered holder of the certificate surrendered, it shall be a condition of
such payment that the certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of the payment
to a person other than the registered holder of the certificate surrendered or
establish to the satisfaction of the Surviving Corporation or the Paying Agent
that such tax has been paid or is not applicable. One year following the
Effective Time, the Surviving Corporation shall be entitled to cause the Paying
Agent to deliver to it any funds (including any interest received with respect
thereto) made available to the Paying Agent which have not been disbursed to
holders of certificates formerly representing Shares outstanding on the
Effective Time, and thereafter such holders shall be entitled to look to the
Surviving Corporation with respect to the cash payable upon due surrender of
their certificates. The Surviving Corporation shall pay all charges and
expenses, including those of the Paying Agent, in connection with the exchange
of cash for Shares and the Purchaser shall reimburse the Surviving Corporation
for such charges and expenses. In the event any certificates shall have been
lost, stolen or destroyed, the Paying Agent shall issue in exchange for such
lost, stolen or destroyed certificates, upon the making of an affidavit of that
fact by the holder thereof, such Merger Consideration as may be required
pursuant to Section 3.1; provided, however that the Purchaser may, in its
discretion and as a condition precedent to the issuance and delivery thereof,
require the owner of such lost, stolen or destroyed certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim
that may be made against the Purchaser or the Paying Agent with respect to the
certificates alleged to have been lost, stolen or destroyed.
7
<PAGE> 11
3.3 Transfer of Shares After the Effective Time. No transfers of
Shares which were outstanding immediately prior to the Effective Time shall be
made on the stock transfer books of the Surviving Corporation at or after the
Effective Time. If, after the Effective Time, certificates are presented as
provided in this Agreement to the Surviving Corporation, they shall be canceled
and exchanged for cash as provided in this Article III.
3.4 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to
the contrary, Shares which are outstanding immediately prior to the Effective
Time and which are held by shareholders who have not voted such Shares in favor
of the Merger or consented thereto in writing and who shall have available to
them and who shall have demanded properly in writing appraisal for such Shares
in accordance with Sections 623 and 910 of the NYBCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration, but such shareholders shall be entitled only
to such rights as are granted by Section 910 of the NYBCL. Such shareholders
shall be entitled to receive payment of the appraised value of such Shares held
by them in accordance with the provisions of Section 910 of the NYBCL, except
that all Dissenting Shares held by shareholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights of
appraisal of such Shares under Section 910 of the NYBCL shall thereupon be
deemed to have converted into and to have been exchangeable for, as of the
Effective Time, the right to receive the Merger Consideration, without any
interest thereon, upon surrender, in the manner provided in Section 3.2, of the
certificate or certificates that formerly evidenced such Shares.
(b) The Company shall give the Purchaser (i) prompt
notice of any demands for appraisal received by the Company, withdrawals of any
such demands and any other instruments served pursuant to the NYBCL and
received by the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the NYBCL. The Company
shall not, except with the prior written consent of the Purchaser, make any
payment with respect to any demands for appraisal or offer to settle or settle
any such demands unless otherwise required by law.
3.5 Treatment of Stock Options and Warrants. Promptly after the
closing of the Offer, each holder of a then outstanding option or warrant to
purchase Shares heretofore granted, all as more particularly described in the
Disclosure Schedule, will, upon the consent of each such holder thereof,
receive (whether such option or warrants are immediately exercisable or not) in
settlement thereof, (a) a cash payment from the Company in an amount equal to
the product of (i) the difference between the Offer Price less the Option
Contingent Consideration (as defined below), and the per share exercise price
of such options or warrants (the "Option Consideration") and (ii) the total
number of Shares which the holder of each such option or warrant is entitled to
purchase under such option or warrant, as provided above (the "Option Shares")
and (b) a deposit by Purchaser of $2.50 per Option Share to be held in escrow
as contingent consideration for distribution to the optionholders and warrant
holders of the Company or to be disbursed in whole or in part
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to Purchaser based upon the resolution of certain matters, subject to
adjustment pursuant to the Escrow Agreement (the "Option Contingent
Consideration").
3.6 Investment of Exchange Fund. The Paying Agent shall invest
all funds received by Paying Agent, as reasonably directed by Purchaser on a
daily basis. Any interest and other income resulting from such investments
shall be paid to Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. The Company
hereby represents and warrants to the Purchaser and Merger Sub that:
(a) Corporation Organization and Qualification. Except as
disclosed in the Disclosure Schedule, each of the Company and the Subsidiaries
(as defined below) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority to carry on its business as it is
now being conducted. Each of the Company and the Subsidiaries is in good
standing as a foreign corporation in each jurisdiction where the properties
owned, leased or operated, or the business conducted, by it require such
qualification, except where the failure to be so qualified or in such good
standing will not have a material adverse effect on the financial condition,
properties, business or results of operations of the Company and the
Subsidiaries taken as a whole. A true and complete list of the Company's
subsidiaries, (individually, a "Subsidiary", and collectively, the
"Subsidiaries") together with the jurisdiction of incorporation of each
Subsidiary and the percentage of each Subsidiaries' outstanding capital stock
owned by the Company or another Subsidiary, is set forth in the disclosure
schedule delivered to the Purchaser and dated the date hereof (the "Disclosure
Schedule"). The Company has heretofore furnished to the Purchaser a complete
and correct copy of its and each of the Subsidiaries' Certificate of
Incorporation (or other applicable organizational documents) and By-laws as
currently in effect. Neither the Company nor any of the Subsidiaries is in
violation of any of the provisions of their respective Certificate of
Incorporation (or other applicable organizational documents) and By-laws,
except for any such violations as would not have a material adverse effect on
the financial condition, properties, business or results of operations of the
Company and the Subsidiaries taken as a whole. Except as set forth on the
Disclosure Schedule, the Company does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation,
partnership, joint venture or other entity.
(b) Authorized Capital. The authorized capital stock of
the Company consists of 2,000,000 Shares, of which 1,199,156 Shares were issued
and outstanding on November 4, 1996. All of the issued and outstanding Shares
have been duly authorized and are validly issued, fully paid and nonassessable,
subject to Section 630 of the NYBCL. The Company has no Shares reserved for
issuance, except that, as of November 4, 1996, there were an aggregate of
407,100 Shares reserved for issuance in connection with options
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granted under the Company's 1992 Stock Option Plan, all as more particularly
described in the Disclosure Schedule and 150,000 Shares were reserved for
issuance pursuant to five year Common Stock Purchase Warrants issued on October
30, 1995 to Lowell and Sanford Harwood, as more particularly described in the
Disclosure Schedule (the "Stock Option Plan"). Except as set forth above,
there are no shares of capital stock of the Company authorized, issued or
outstanding and except as set forth above, there are no preemptive rights nor
any outstanding subscriptions, options, warrants, rights, convertible
securities or other agreements or commitments of any character obligating the
Company to issue, transfer or sell any of its issued or unissued capital stock
or other securities. Except as set forth in the Disclosure Schedule and except
for the Voting Agreement dated May 30, 1991 between Lowell and Sanford Harwood,
the Collateral Pledge Agreement to Regent National Bank and the Pledge
Agreements between the Subsidiaries and National Westminster Bank USA (Fleet
Bank) relating to the capital stock of the Subsidiaries, each as more
particularly described in the Disclosure Schedule, there are no voting rights
or other agreements or understandings to which the Company or any of the
Subsidiaries is a party with respect to the voting or transfer of the capital
stock of the Company or the Subsidiaries.
(c) Corporate Authority. (i) The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and, subject to obtaining any necessary approval of its shareholders, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Company's Board of Directors and,
except for the adoption of this Agreement and the approval of the Merger by its
shareholders, no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the consummation by the Company of
the transactions contemplated hereby. This Agreement is a valid and binding
agreement of the Company, and assuming this Agreement constitutes a legal,
valid and binding agreement of each of Merger Sub and the Purchaser, this
Agreement is enforceable against the Company in accordance with its terms,
except that (A) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (B) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(ii) Except as set forth in the Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not,
and the consummation by the Company of the transactions contemplated by this
Agreement will not, constitute or result in (A) a breach or violation of, or a
default under, the Certificate of Incorporation (or applicable organizational
documents) or By-Laws of the Company or the Subsidiaries, or (B) a breach or
violation of, or a default under, termination of, or the acceleration or the
creation of a lien, pledge, security interest or other encumbrance on the
assets of the Company or the Subsidiaries or the Shares held by affiliates of
the Company (with or without the giving of notice or the lapse of time)
pursuant to, any provision of any material agreement, lease, contract, note,
mortgage, indenture, or other material obligation ("Contracts") of the Company
or any law, rule, ordinance or regulation or judgment, decree, order, award or
governmental or non-governmental permit or license to which the Shares held by
affiliates
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of the Company, the Company or the Subsidiaries, or their assets are subject,
except, in the case of clause (B) above, for such breaches, violations,
defaults, terminations, accelerations or charges that, in the aggregate, are
not reasonably likely to have a material adverse effect on the financial
condition, properties, business or results of operations of the Company and the
Subsidiaries taken as a whole or that could not prevent, materially delay or
materially burden the transactions contemplated by this Agreement.
(d) Governmental Filings. Except for (i) the filings by
the Purchaser and the Company required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing of the
Schedule 14D-9 and the Proxy Statement with the SEC pursuant to the Exchange
Act, (iii) making of the Merger filing with the Secretary of State of the State
of New York in connection with the Merger, and (iv) the other consents and
filings described in the Disclosure Schedule (collectively, the "Regulatory
Filings"), no declaration, filing or negotiation with or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions contemplated
hereby, other than such declarations, filings, registrations, notices,
authorizations, consents or approvals, which if not made or obtained, would
not, in the aggregate, have a material adverse effect on the financial
condition, properties, business or results of operations of the Company and the
Subsidiaries taken as a whole or materially delay or restrict the Company's
ability to consummate the Merger.
(e) Compliance; Permits. (i) Except as disclosed in the
Disclosure Schedule, neither the Company nor any of the Subsidiaries is in
conflict with, or in default or violation of, any law, rule, regulation, order,
judgment or decree applicable to the Company or any of the Subsidiaries or by
which the Company or any of the Subsidiaries or any of their respective
properties is bound or affected, except where such conflicts, defaults and
violations would not, in the aggregate, have a material adverse effect on the
financial condition, properties, business or results of operation of the
Company and the Subsidiaries taken as a whole.
(ii) The Company and the Subsidiaries hold all
permits, licenses, easements, variances, exceptions, consents, certificates,
orders and approvals from governmental authorities which are material to the
operation of the business of the Company and the Subsidiaries taken as a whole
(collectively, the "Company Permits") except where the failure to hold or
maintain any of the foregoing would not, in the aggregate, have a material
adverse effect on the financial condition, properties, business or results of
operations of the Company and the Subsidiaries taken as a whole. The Company
and the Subsidiaries are in compliance with the terms of the Company Permits,
except where the failure to so comply would not, in the aggregate, have a
material adverse effect on the financial condition, properties, business or
results of operation of the Company and the Subsidiaries taken as a whole.
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(f) Company Reports; Financial Statements. The Company
has delivered to the Purchaser true and complete copies of (i) each
registration statement, report on Form 8-K, and proxy statement or information
statement filed by it since December 31, 1995, (ii) the Company's Annual Report
on Form 10-K for the year ended December 31, 1995, (iii) the Company's
Registration Statement on Form S-8 (Commission Number 333-05746); and (iv) the
Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 1996,
June 30, 1996 and September 30, 1996, each in the form (including exhibits and
any amendments thereto) filed with the SEC (collectively, the "Company
Reports"). As of their respective dates, the Company Reports were prepared in
all material respects in accordance with the requirements of the Securities Act
of 1933, as amended, (the "Securities Act") and the Exchange Act, as
applicable, and the rules and regulations of the SEC applicable thereto and the
Company Reports did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading. Other than the Company Reports, the Company has not filed any
other definitive reports or statements with the SEC since December 31, 1995.
(g) Absence of Certain Changes. Except as disclosed in
the Company Reports or otherwise disclosed in the Disclosure Schedule, since
December 31, 1995, the Company has conducted its business only in, and has not
engaged in any material transaction other than according to, the ordinary and
usual course of such business, and (i) there has not been any material adverse
change in the financial condition, properties, business or results of
operations of the Company and the Subsidiaries taken as a whole, (ii) the
Company has not made any declaration, setting aside or payment of any dividend
or other distribution with respect to the capital stock of the Company or in
discharge or cancellation of any indebtedness owing to its shareholders and
(iii) the Company has not made any change in accounting methods, principles, or
practices except as required by generally accepted accounting principles and
there has not been any revaluation by the Company or any of the Subsidiaries or
any of their respective assets.
(h) No Undisclosed Liabilities. Except as disclosed in
the Company Reports or the Disclosure Schedule, neither the Company nor any of
the Subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) which are, in the aggregate, material to the business, operations or
financial condition of the Company and the Subsidiaries taken as a whole,
except liabilities (i) adequately provided for in the Company's balance sheet
(including the related notes thereto) as of September 30, 1996, (ii) incurred
in the ordinary course of business and not required under generally accepted
accounting principles to be reflected on the Company's balance sheet (including
the related notes thereto) as of September 30, 1996, (iii) incurred since
September 30, 1996 in the ordinary course of business and consistent with past
practice, or (iv) liabilities incurred in connection with this Agreement.
(i) Litigation. Except as disclosed in the Company
Reports or the Disclosure Schedule, there are no actions, suits, government
investigations or proceedings pending or, to the knowledge of the management of
the Company threatened against or involving the Shares of the Company or the
Subsidiaries or their assets involving, in the
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aggregate, potential liability on the part of the Company or the Subsidiaries
in excess of any applicable insurance coverage with respect thereto and
excluding deductible amounts. There is no order, injunction or decree, in each
case of continuing effect, outstanding against the Company or any of the
Subsidiaries. Since September 30, 1991, neither the Company nor any of the
Subsidiaries has received notice of any material violation of any law, rule,
regulation, ordinance or order of any court or federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality (including, without limitation, legislation and regulations
applicable to civil rights, public health and safety and occupational health).
(j) Proxy Statement. All of the information relating to
the Company and its subsidiaries supplied by the Company for inclusion in the
Proxy Statement (as defined below), if any such Proxy Statement is required,
will not, at the time the Proxy Statement is mailed, contain any statement
which, at the time and in the light of the circumstances under which it is
made, be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
false or misleading or, at the time of the Special Meeting (as defined in
Section 5.4) or at the Effective Time, as then amended or supplemented to
correct any statement which has become false or misleading in any material
respect in any earlier communication with respect to the solicitation of any
proxy for such meeting. The Proxy Statement will comply in all material
respects, both as to form and otherwise, with the requirements of the Exchange
Act and the rules and regulations thereunder. Neither the Schedule 14D-9 nor
any of the information relating to the Company and its subsidiaries supplied by
the Company for inclusion in the Offer Documents will, at the respective times
filed with the SEC or first sent or given to the shareholders of the Company,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Schedule 14D-9 will comply in all material respects with the
Exchange Act. Notwithstanding the foregoing, the Company makes no
representation or warranty pursuant to this Section 4.1(j) with respect to any
information supplied by Purchaser or Merger Sub or any of their affiliates
which is contained in any of the foregoing documents. The letter to
shareholders, Notice of Meeting, Proxy Statement and form of proxy, or the
information statement, as the case may be, to be distributed to shareholders in
connection with the Merger, or any schedules required to be filed with the SEC
in connection therewith are collectively referred to herein as the "Proxy
Statement."
(k) Employee Benefits. The Company Reports and
Disclosure Schedule together contain a list of all "employee benefit plans,"
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), currently maintained, sponsored, or
contributed to by the Company on behalf any employee of the Company or the
Subsidiaries or such employees' beneficiaries (each a "Plan" and, collectively,
the "Plans"), including, without limitation, any multiemployer plan within the
meaning of Sections 3(37) and 4001(a)(3) of ERISA ("Multiemployer Plan"). With
respect to each Plan (other than each Multiemployer Plan), true and correct
copies of the documents embodying the Plans have been delivered or made
available to the Purchaser. Except as set forth in the Disclosure Schedule or
the Company Reports, and except to the extent that
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any inaccuracy in the following statements, in the aggregate, would not have a
material adverse effect upon the financial condition, properties, business or
results of operations of the Company and the Subsidiaries taken as a whole: (i)
each Plan (other than a Multiemployer Plan) intended to be qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
has received a favorable determination letter from the Internal Revenue Service
("IRS") that the Plan is qualified and that its related trust has been
determined to be exempt from taxation under Section 501(a) of the Code and the
IRS has taken no action to revoke such determination or qualification; (ii) the
Company is in material compliance with the terms of each Plan and the
requirements applicable to each Plan prescribed by ERISA and the Code; (iii) to
the Company's knowledge, there are no material actions, lawsuits or claims
pending or instituted against any Plan or its fiduciaries (other than routine
claims for benefits, and appeals of such claims); and (iv) to the Company's
knowledge, no Plan is under audit by the IRS or the Department of Labor.
(l) Properties. Except as set forth in the Disclosure
Schedule and except for Permitted Encumbrances (as defined below), the Company
and the Subsidiaries own free and clear of any liens, charges, claims, or
encumbrances (collectively, "Encumbrances") all of their material properties
and assets reflected on the consolidated balance sheet for the period ended
September 30, 1996, included in the most recent Company Report, which they
purport to own, and all properties and assets acquired by them after September
30, 1996, except such properties and assets as have been disposed of in the
ordinary course of business since such date. As used herein, "Permitted
Encumbrances" means (i) those Encumbrances disclosed on, or reflected in the
September 30, 1996 consolidated balance sheets included in the Company Reports,
(ii) statutory Encumbrances for current taxes or assessments not yet due or
delinquent or which are being contested in good faith, (iii) statutory
mechanics', carriers', workers', repairmens', and other similar statutory
Encumbrances arising or incurred in the ordinary course of business with
respect to charges not yet due and payable, and (iv) such other Encumbrances,
if any, which do not materially detract from the value of, or interfere with
the present use of, the property subject thereto or affected thereby. The
Disclosure Schedule contains a complete list of all of the real property owned,
leased or managed by the Company and the Subsidiaries.
(m) Labor Matters. Except as set forth in the Disclosure
Schedule, (i) there are no controversies pending or, to the knowledge of the
Company threatened, between the Company and any of the Subsidiaries and any of
their respective employees, which controversies are reasonably likely to have a
material adverse effect upon the financial condition, properties, business or
results of operations of the Company and the Subsidiaries taken as a whole,
(ii) neither the Company nor any of the Subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or the Subsidiaries nor does the Company know
of any activities or proceedings of any labor union to organize any such
employees, and (iii) neither the Company nor any of the Subsidiaries has any
knowledge of any strikes, slowdowns, work stoppages, or lockouts, by or with
respect to any employees of the Company or any of the Subsidiaries which are
reasonably likely to have a material adverse effect upon the financial
condition, properties, business or results of operations of the Company and the
Subsidiaries taken as a whole.
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(n) Taxes. Except as set forth in the Disclosure Schedule
or the Company Reports, the Company and each of the Subsidiaries has filed, or
caused to be filed, all federal, state, local and foreign income, sales, use,
property, payroll, franchise, withholding, employment, social security, excise,
occupancy, real estate, parking, transfer, gains and other tax returns required
to be filed by it, and has paid or withheld, or caused to be paid or withheld,
all taxes of any nature whatsoever, with any related penalties and interest
(any of the foregoing referred to herein as a "Tax"), that are shown on such
tax returns as due and payable, other than (i) such Taxes as are being
contested in good faith and for which adequate reserves have been established
or (ii) where the failure to so file, pay or withhold, in the aggregate, is not
reasonably likely to have a material adverse effect upon the financial
condition, properties, business or results of operations of the Company and the
Subsidiaries taken as a whole. As of September 30, 1996, the Company's
liability for New York City commercial rent occupancy Taxes does not exceed
$1,247,160.00 and the Company has adequately accrued for such liabilities on
its balance sheet as of September 30, 1996; provided, to the extent the
Company's liability exceeds such amount but the Company receives money from
certain of its lessors or owners of the property leased or managed by the
Company to satisfy such tax liability as provided in certain leases or
management agreements, then such amounts actually received will be deducted
from the liability of the Company.
(o) Environmental Matters. Except as set forth in the
Disclosure Schedule and except in all cases as, in the aggregate, are not
reasonably likely to have a material adverse effect upon the financial
condition, properties, business or results of operations of the Company and the
Subsidiaries taken as a whole, the Company and each of the Subsidiaries (i)
have obtained all applicable permits, licenses and other authorizations which
are required under federal, state and local laws relating to pollution or
protection of the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants or
hazardous substances, materials or wastes into the ambient air, surface water,
ground water or land or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or hazardous substances, materials or wastes by the
Company or the Subsidiaries ("Environmental Laws") with respect to all real
property owned by the Company; (ii) to the Company's knowledge, are in
compliance with all terms and conditions of any such required permits, licenses
and authorization, and all applicable requirements of the Environmental Laws
with respect to all real property owned by the Company and (iii) as of the date
hereof have not
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received any written notice of any violation of, noncompliance with, or
liability imposed under, any Environmental Laws which is reasonably likely to
result in a claim against the Company or any of the Subsidiaries. This Section
4.1(o) shall be the exclusive representation and warranty section covering
environmental matters and no other representations with respect thereto are
made or shall be deemed to have been made under any other section of this
Agreement.
(p) Brokers and Finders. Neither the Company nor any of
its officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated hereby, except that the Company
has employed The Blackstone Group L.P. as its financial advisors, the
arrangements with which have been disclosed in writing to the Purchaser prior
to the date hereof.
(q) Shareholder Approval. The affirmative vote of
shareholders of the Company required for approval and adoption of this
Agreement and the Merger is two-thirds of the outstanding shares of the
Company's common stock.
(r) Transactions with Related Parties. Except as set
forth in the Company Reports or the Disclosure Schedule, (a) there have been no
transactions by the Company or the Subsidiaries with any officer or director of
the Company or beneficial owner of more than five percent of the Company's
common stock or their affiliates ("Related Parties") since December 31, 1995,
which are required to be disclosed pursuant to the Exchange Act and (b) there
are no material agreements or understandings now in effect between the Company
or the Subsidiaries and any Related Party.
(s) Leases and Contracts.
(i) The Disclosure Schedule attached hereto sets
forth a complete and accurate list of all contracts, including, agreements,
leases, subleases, options and commitments, oral or written, and all
assignments or amendments thereof, affecting or relating to the business of the
Company and its subsidiaries, the Shares held by affiliates of the Company or
any asset or any interest therein, to which either the Company and/or the
Subsidiaries are a party or by which Company, the Subsidiaries, their assets or
the business of the Company and its subsidiaries is bound or affected,
including, without limitation, service contracts, management agreements,
equipment leases and building leases pertaining to any part of the Real Estate,
and which involve annual payments in excess of $100,000 (collectively, the
"Leases and Contracts"). The Company has previously provided or made available
to Purchaser accurate and complete copies of all written Leases and Contracts
including all schedules, exhibits and appendices thereof, and written summaries
of key terms of all oral Leases and Contracts.
(ii) Each of the Leases and Contracts is in full
force and effect and is valid, binding and enforceable in accordance with its
respective terms, except as
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enforcement may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally and by general principles of equity.
(iii) No event or condition has happened or
presently exists which constitutes a material default or breach or, after
notice or lapse of time or both, would constitute a material default or breach
by the Company, or to the knowledge of the Company, any other party under any
of the Leases and Contracts. In addition, no event of default constituting a
payment default has happened or presently exists under the Natwest Debt and no
such event of default will occur prior to the closing of the Offer. There are
no material counterclaims or offsets under any of the Leases and Contracts.
(iv) Except as set forth in the Disclosure
Schedule, there does not exist any security interest, lien, encumbrance or
claim of others created or suffered to exist on any interest created under any
of the Leases and Contracts (except for those that result from or relate to
leased assets).
(t) Intellectual Property. All trademarks, service
marks, trade names, patents, inventions, processes, copyrights and applications
therefor, whether registered or at common law (collectively, the "Intellectual
Property"), owned by the Company or the Subsidiaries are listed and described
in Disclosure Schedule attached hereto. No proceedings have been instituted or
are pending or, to the best knowledge of Company, threatened which challenge
the validity of the ownership by the Company or the Subsidiaries of any such
Intellectual Property. Neither the Company nor the Subsidiaries have licensed
anyone to use any such Intellectual Property, and the neither the Company nor
the Subsidiaries have any knowledge of the use or the infringement of any of
such Intellectual Property by any other person. The Company and the
Subsidiaries own or possess adequate and enforceable licenses or other rights
to use all Intellectual Property now used in the conduct of its business.
(u) No Misrepresentations or Omissions. To the
knowledge of the Company, there is no fact which would have a material adverse
effect on the Shares, assets, liabilities, business, conduct, prospects,
operations or financial condition of the Company and the Subsidiaries which has
not been set forth or described in this Agreement, in the Disclosure Schedule
hereto, or in the Company Reports. None of the information included in this
Agreement, the Annexes hereto and Disclosure Schedule hereto, contains any
untrue statement of a material fact or is misleading in any material respect or
omits to state any material fact necessary in order to make any of the
statements herein or therein not misleading in light of the circumstances in
which they were made.
4.2 Representations and Warranties of the Purchaser and Merger
Sub. The Purchaser and Merger Sub represent and warrant to the Company that:
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(a) Corporation Organization and Qualification. Each of
the Purchaser and Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation and is in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the business
conducted, by it require such qualification, except where the failure to be so
qualified or in such good standing would not have a material adverse effect on
the financial condition, properties, business or results of operations of the
Purchaser and Merger Sub, taken as a whole.
(b) Corporate Authority. (i) The Purchaser and Merger
Sub each have all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Purchaser and Merger Sub have been duly
and validly authorized by the respective Board of Directors of the Purchaser
and Merger Sub and by the Purchaser as the sole shareholder of Merger Sub, and
no other corporate actions on the part of the Purchaser or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Purchaser and Merger Sub, and, assuming this Agreement
constitutes a valid and binding obligation of the Company, this Agreement
constitutes a valid and binding agreement of the Purchaser and Merger Sub,
enforceable against the Purchaser and Merger Sub in accordance with its terms,
except that (A) such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors' rights and (B) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
(ii) The execution and delivery of this Agreement
by the Purchaser and Merger Sub do not, and the consummation of the
transactions contemplated hereby by the Purchaser and Merger Sub (including,
without limitation, the Offer and the Merger) will not, constitute or result in
(A) a breach or violation of, or a default under the Amended and Restated
Charter of the Purchaser or the Certificate of Incorporation of Merger Sub or
By-Laws of the Purchaser or Merger Sub or (B) a breach or violation of, a
default under, the acceleration of or the creation of a lien, pledge, security
interest or other encumbrance on assets (with or without the giving of notice
or the lapse of time) pursuant to, any provision of any Contract of the
Purchaser or Merger Sub or any law, ordinance, rule or regulation or judgment,
decree, order, award or governmental or non-governmental permit or license to
which the Purchaser or Merger Sub is subject, except in the case of clause (B)
above, for such breaches, violations, defaults or accelerations that, in the
aggregate, could not prevent or materially delay the transactions contemplated
by this Agreement.
(c) Governmental Filings; No Violations. Except for (i)
the filings by the Purchaser and the Company required by the HSR, (ii) the
making of the Merger filings with the Secretary of State of New York in
connection with the Merger, (iii) the approval of, and issuance of appropriate
licenses by, the New Jersey Casino Control Commission with respect
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to operations of certain properties in Atlantic City, New Jersey on and after
the consummation of the Offer and (iv) the other consents and filings described
on Annex B (the filings and approvals referred to in clauses (i) through (iv)
above are collectively referred to as the "Purchaser Statutory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by the Purchaser or
Merger Sub of the transactions contemplated hereby, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, would not have a material adverse
effect on the financial condition, properties, business or results of operation
of the Purchaser and the Subsidiaries taken as a whole or affect Merger Sub's
ability to consummate the Merger.
(d) Accuracy of Information. All of the information
relating to the Purchaser and Merger Sub supplied by Purchaser or Merger Sub
for inclusion in (i) the Proxy Statement, (ii) the Offer Documents, and (iii)
any amendments or supplements to the foregoing, will not, on the date the Proxy
Statement is first mailed to shareholders, at the time of the Special Meeting
or at the Effective Time, or, with respect to the Offer Documents at the time
the Offer Documents are filed with the SEC or are first published, sent or
given to shareholders of the Company, at the time of the Special Meeting or at
the Effective Time, contain any statement which, at such time and in light of
the circumstances under which it will be made, be false or misleading with
respect to any material fact, or omit to state a material fact necessary in
order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Special Meeting which has become false or
misleading. Notwithstanding the foregoing, Purchaser and Merger Sub make no
representation or warranty pursuant to this Section 4.2(d) with respect to any
information supplied by the Company or its affiliates other than Purchaser or
Merger Sub which is contained in any of the foregoing documents.
(e) Brokers and Finders. Neither the Purchaser nor Merger
Sub nor any of their respective officers, directors or employees has employed
any broker or finder or incurred any liability for brokerage fees, commissions
or finder's fees as to which the Company will have any liability in connection
with the transactions contemplated hereby.
(f) Funds. The Purchaser and Merger Sub have available
sufficient funds to enable them to acquire the Shares pursuant to the Offer and
the Merger and to pay all fees and expenses related thereto and to carry out
all of their other obligations under this Agreement. Purchaser has delivered
to the Company true and complete
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copies of all agreements and commitments relating to the financing by Purchaser
and Merger Sub of the transactions contemplated by this Agreement and such
agreements and commitments are in full force and effect. Except for the
satisfaction of the conditions to the Offer set forth in Annex A, all
conditions to obtaining such financing have been satisfied as of the date
hereof.
(g) Capitalization and Net Worth. The authorized capital
stock of Merger Sub consists of 1,000 shares of Common Stock, par value $0.01
per share, of which 1,000 shares were issued and outstanding on the date
hereof. As of the date hereof, all of the issued and outstanding shares of
capital stock of Merger Sub are owned indirectly by Purchaser. The Purchaser
and/or Merger Sub have, and shall maintain until the Effective Time, an
aggregate minimum "Tangible Net Worth" (as hereinafter defined) of at least $15
million. For purposes hereof, "Tangible Net Worth" shall mean the excess of
total assets over total liabilities determined in accordance with generally
accepted accounting principles, excluding from the determination of total
assets all assets which would be classified as intangible assets under
generally accepted accounting principles and treating as liabilities the face
amount of all indebtedness as to which Purchaser and/or Merger Sub is the
guarantor.
ARTICLE V
COVENANTS
5.1 Interim Operations of the Company. The Company and each of the
Subsidiaries covenants and agrees that, prior to the earlier of the Effective
Time or the termination of this Agreement (unless the Purchaser shall otherwise
consent in writing and except as otherwise contemplated by this Agreement):
(a) the business of the Company and the Subsidiaries
shall be conducted only in the ordinary and usual course consistent with (i)
the information contained in Annex C (the "Annex C Information") and (ii) the
capital expenditures budget provided to Purchaser for the remainder of the 1996
calendar year which total approximately $220,000 (the "Budget"), and, to the
extent consistent therewith, the Company and the Subsidiaries shall use its and
their commercially reasonable efforts to preserve its business organization
intact and maintain its existing relations with customers, suppliers, employees
and business associates;
(b) the Company and each of the Subsidiaries shall not
(i) amend its Certificate of Incorporation (or applicable organizational
documents) or By-Laws; (ii) split, combine or reclassify the outstanding
Shares; or (iii) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to the Shares;
(c) except as set forth in the Disclosure Schedule, the
Company and the Subsidiaries shall not (i) issue, sell, pledge, dispose of or
encumber any additional shares
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of, or securities convertible or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire any shares of its capital stock of
any class other than Shares issuable pursuant to warrants or options
outstanding on the date hereof under the Stock Option Plan; (ii) transfer,
lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any
assets or incur or modify any indebtedness or other liability other than in the
ordinary and usual course of business consistent with the Annex C Information
and the Budget; (iii) enter into, amend or terminate any lease of real property
other than in the ordinary course of business consistent with the Annex C
Information and the Budget; (iv) acquire directly or indirectly by redemption
or otherwise any shares of the capital stock of the Company or (v) except in
the ordinary course of business consistent with the Budget, authorize capital
expenditures in excess of $100,000 or make any significant acquisition of, or
investment in, assets or stock of any other person or entity;
(d) except in the ordinary and usual course of business
as disclosed in the Company Reports, Disclosure Schedule, Annex C Information
and the Budget, the Company shall not grant any severance or termination pay
to, or enter into any employment or severance agreement with, any director,
officer or other employee of the Company other than pursuant to contractual
obligations existing on the date hereof and set forth in the Disclosure
Schedule or as contemplated by Annex D of this Agreement; and except in the
ordinary and usual course of business as disclosed in the Company Reports,
Disclosure Schedule, Annex C Information and the Budget, or pursuant to
contractual obligations existing on the date hereof or contemplated by Annex D
of this Agreement or as may be required or desirable under applicable law or by
any governmental agency, the Company shall not establish, adopt, enter into,
make any new grants or awards under or amend, any bonus, profit sharing,
thrift, savings, compensation, stock purchase, stock bonus, stock option,
restricted stock, pension, retirement, employee stock ownership, deferred
compensation, employment, collective bargaining, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit of
any current or former directors, officers or employees;
(e) except as disclosed in the Annex C Information and
the Budget, the Company shall not settle or compromise any material debt,
encumbrance, claims or litigation in excess of $100,000 in the aggregate or,
except in the ordinary and usual course of business, modify, amend or terminate
any of its contracts or waive, release or assign any material rights or claims;
(f) the Company shall not make any tax election or permit
any insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated without notice to the Purchaser, except in the ordinary
and usual course of business and shall maintain insurance upon all of its
properties and operations in such amounts and of such kinds comparable to that
in effect on the date hereof on such properties and with respect to such
operations;
(g) the Company shall not in any material respect fail to
(i) maintain its books, accounts and records in the usual, regular and ordinary
manner, on a basis consistent
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with prior years, (ii) comply with all contractual and other obligations of the
Company and the Subsidiaries, and (iii) comply with all applicable laws to
which it is subject; and
(h) the Company shall not authorize or enter into an
agreement to do any of the foregoing.
5.2 Acquisition Proposals. (a) Neither the Company nor any of the
officers and directors of the Company shall, and the Company shall direct and
use its reasonable best efforts to cause the employees, agents and
representatives of the Company or any Subsidiary (including, without
limitation, any investment banker, attorney or accountant retained by the
Company) not to, initiate, solicit or encourage, directly or indirectly, any
proposal or offer to acquire all or any substantial part of the business and
properties of the Company and the Subsidiaries or any capital stock of the
Company and the Subsidiaries, whether by merger, purchase of assets, tender
offer or otherwise, whether for cash, securities or any other consideration or
combination thereof (any such transaction being referred to herein as an
"Acquisition Transaction"). The Company shall immediately cease and cause to
be terminated any existing solicitation, initiation, encouragement, activity,
discussion or negotiation with any parties conducted heretofore by the Company
or any Company representatives with respect to any Acquisition Transaction
existing on the date hereof.
(b) Notwithstanding any other provisions of this
Agreement, in response to an unsolicited proposal or inquiry with respect to an
Acquisition Transaction, (i) the Company may engage in discussions or
negotiations regarding such proposal or inquiry with a third party who (without
solicitation or initiation, directly or indirectly, by or with the Company or
any Company representative after the date of this Agreement) seeks to initiate
such discussions or negotiations and may negotiate with and furnish to such
third party information concerning the Company and its business, properties and
assets, and (ii) if such Acquisition Transaction is a tender offer subject to
the provisions of Section 14(d) under the Exchange Act, the Company's Board of
Directors may take and disclose to the Company's shareholders a position
contemplated by Rule 14e-2(a) under the Exchange Act, in each case, if, but
only if, the Board of Directors of the Company determines in good faith, based
upon an opinion of outside legal counsel, that a failure to furnish the
information or participate in the discussions or negotiations could reasonably
conflict with the proper discharge of the fiduciary duties of the Company's
directors.
(c) In the event the Company shall determine to provide
any information or negotiate as described in paragraph (b) above, or shall
receive any offer of the type referred to in paragraph (b) above, it shall (i)
immediately provide the Purchaser a copy of all information provided to the
third party, (ii) inform the Purchaser that information is to be provided, that
negotiations are to take place or that an offer has been received, as the case
may be, and (iii) furnish to the Purchaser the identity of the person receiving
such information or the proponent of such offer, if applicable, and, if an
offer has been received, unless the Board of Directors of the Company concludes
that such disclosure could reasonably conflict with its fiduciary duties under
applicable law based on an opinion of outside legal counsel, a description of
the material terms thereof.
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(d) The Company may terminate this Agreement, withdraw,
modify or not make its recommendation referred to in Section 5.4 and enter into
a definitive agreement for an Acquisition Transaction if, but only if, (i) the
Company shall have determined in good faith after consultation with its
independent financial advisors that such Acquisition Transaction would be more
favorable to the Company's shareholders from a financial point of view than the
Merger, (ii) the Company is advised by its financial advisor that such third
party has the financial wherewithal to consummate the Acquisition Transaction,
(iii) the Board of Directors of the Company shall conclude in good faith based
upon an opinion of outside legal counsel that such action is necessary in order
for the Board of Directors of the Company to act in a manner that could not
reasonably conflict with the proper discharge of its fiduciary obligations
under applicable law and (iv) the Company shall have furnished the Purchaser
with a copy of the definitive agreement at least two business days prior to its
execution and the Purchaser shall have failed within such two business days to
offer to amend the terms of this Agreement so that the Merger would be, in the
good faith determination of the Board of Directors of the Company, at least as
favorable to the Company's shareholders from a financial point of view as the
Acquisition Transaction.
5.3 Stock Options and Warrants. At or prior to the Effective
Time, the Company shall cause, pursuant to the agreements referred to pursuant
to Section 3.5, each stock option outstanding pursuant to the Stock Option Plan
("Option") and each outstanding warrant, whether or not then exercisable, to be
either canceled or modified to entitle the holder thereof, to receive an amount
in cash (after giving effect to any required tax withholdings) equal to the
difference between the Merger Consideration, subject to the escrow in Article
VIII, and the exercise price per Share of such Option or warrant multiplied by
the number of Shares previously subject to such Option or warrant, such that,
on and as of the Effective Time, there shall be no outstanding stock options or
warrants of the Company.
5.4 Shareholder Approval. (a) If approval of all or a portion of
this Agreement or one or more of the transactions contemplated hereby is
required by the shareholders of the Company by the NYBCL, as soon as
practicable, the Company will take all steps necessary duly to call, give
notice of, convene and hold a meeting of its shareholders (the "Special
Meeting") as soon as practicable for the purpose of adopting and approving this
Agreement (to the extent required by applicable law) and the transactions
contemplated hereby and for such other purposes as may be necessary or
desirable.
(b) The Purchaser and Merger Sub agree that, at the
Special Meeting, all of the Shares then owned by them and their affiliates will
be voted in favor of this Agreement, the Merger and the transactions
contemplated hereby.
(c) Except to the extent necessary so as not to
reasonably conflict with the proper discharge of the fiduciary obligation of
the Board of Directors under applicable law determined in good faith by the
Board of Directors of the Company based upon an opinion of outside legal
counsel, the Company will prepare and file with the SEC the Proxy Statement
with respect to the Special Meeting containing all information required by the
Exchange Act. The Company (i) will use its best efforts to have the Proxy
Statement cleared
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by the SEC as promptly as practicable, (ii) will promptly thereafter mail the
Proxy Statement to shareholders of the Company and (iii) will otherwise comply
in all material respects with all applicable legal requirements in respect of
the aforesaid Special Meeting. Except to the extent otherwise required by the
fiduciary duties of the Board of Directors under applicable law determined in
good faith by the Board of Directors of the Company based upon an opinion of
outside legal counsel, the Proxy Statement shall contain the recommendation of
the Board of Directors in favor of the Merger and the recommendation that the
shareholders vote for and adopt the Merger and this Agreement.
(d) The Company covenants that with respect to
information regarding the Company, supplied by Company for inclusion in Proxy
Statement the Proxy Statement shall not, at the time the Proxy Statement is
filed with the SEC, at the time the Proxy Statement is first mailed to the
Company's stockholders, at the time of the Special Meeting and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. If at any time prior to the Effective Time any event or
circumstance relating to the Company or any of the Subsidiaries, or its or
their respective officers or directors, should be discovered by the Company
which should be set forth in an amendment to the Proxy Statement or a
supplement thereto, the Company shall promptly inform Purchaser and shall
promptly file such amendment or supplement to the Proxy Statement.
5.5 Filings; Other Action. Subject to the terms and conditions
herein provided and the fiduciary duties of the Board of Directors under
applicable law, the Company, the Purchaser and Merger Sub shall: (a) promptly
make their respective filings and thereafter make any other required
submissions under the Regulatory Filings with respect to the Offer and the
Merger; and (b) use their reasonable efforts to promptly take, or cause to be
taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
as soon as reasonably practicable. The Purchaser shall cause Merger Sub to
perform all of its obligations under this Agreement.
5.6 Access; Confidentiality. 1. Upon reasonable notice and subject
to the restrictions contained within this Section 5.6, the Company shall afford
the Purchaser's officers, employees, counsel, accountants and other authorized
representatives ("Representatives") access, during normal business hours
throughout the period prior to the Effective Time, to its properties, books,
contracts and records and, during such period, the Company shall furnish
promptly to the Purchaser all information concerning its business, properties
and personnel as the Purchaser or its Representatives may reasonably request.
(b) The Purchaser will not, and will cause its Representatives not
to, use any information obtained pursuant to this Section 5.6 for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement. Each of the Merger Sub and the Purchaser will hold and will cause
its Representatives, as well as the authorized representatives of the financial
institutions considering providing any financing, to hold in strict confidence,
unless compelled to disclose by judicial or administrative process or
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otherwise as may be required by law, all documents and information concerning
the Company furnished to the Merger Sub or the Purchaser in connection with the
transactions contemplated by this Agreement (except to the extent that (i) such
information is or becomes readily ascertainable from public or published
information or trade sources or (ii) such information is obtained from third
parties without violation of any other confidentiality agreements with the
Company) and will not release or disclose such information to any other person,
except its Representatives and other financial institutions considering
providing financing in connection with this Agreement (it being understood that
such persons shall be informed by the Merger Sub or the Purchaser, as the case
may be, of the confidential nature of such information and shall be directed by
such parties to treat such information confidentially). If the transactions
contemplated by this Agreement are not consummated, such confidence shall be
maintained except to the extent such information becomes readily ascertainable
from public or published information or trade sources and, if requested by the
Company, Merger Sub and the Purchaser will return to the Company all copies of
written information furnished by the Company to the Merger Sub or the Purchaser
or their Representatives. In addition, if requested by the Company, the Merger
Sub or the Purchaser will and will cause its Representatives to destroy all
documents, memoranda, notes and other writings prepared based on the
confidential information of the Company. Purchaser, Merger Sub and Company
agree that the foregoing is not intended to supersede the Confidentiality
Agreement dated July 10, 1996 between Purchaser and the Company, which shall
remain in full force and effect.
5.7 Notification of Certain Matters. Each of the Company, the
Purchaser and Merger Sub shall give prompt notice to each other of: (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which would be likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate and (ii) any failure of the Company,
the Purchaser or Merger Sub, as the case may be, materially to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder, provided, however, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice. Each of the Company, the
Purchaser and Merger Sub shall give prompt notice to the other parties of any
notice or other communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement.
5.8 Publicity. The parties (i) shall consult with each other
prior to issuing any press release or any written public statement with respect
to this Agreement or the transactions contemplated hereby, and (ii) shall not
issue any such press release or written public statement without the prior
written consent of the other parties hereto unless required by law.
Notwithstanding anything herein to the contrary, the parties agree to jointly
issue a press release, in form and substance satisfactory to both parties,
promptly upon the execution and delivery of this Agreement.
5.9 Consents; Approvals. The Company at the request of Purchaser,
shall use its reasonable best efforts to assist Purchaser in its efforts to
obtain all consents, waivers, approvals, authorizations or orders (including,
without limitation, all United States and
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foreign governmental and regulatory agencies) required in connection with the
authorization, execution and delivery of this Agreement by the Company and the
Purchaser and consummation by them of the transactions contemplated hereby.
The Company shall not be obligated to deliver any such consent and obtaining
such consents shall not be a condition to the consummation of the Offer or the
Merger.
5.10 HSR Act Compliance; Other Filings. As soon as practicable
after the execution of this Agreement, Purchaser and the Company shall prepare
and file all other filings, applications, and registrations required under the
HSR Act, the Exchange Act, or other applicable law with respect to the
transactions contemplated by this Agreement. Purchaser shall furnish to the
Company and its representatives and professional advisors all information
concerning Purchaser, Merger Sub, and their respective officers, directors,
affiliates, and stockholders that is reasonably necessary for the Company (A)
to prepare, ascertain the accuracy and completeness of, and file a Pre-Merger
Notification and Report pursuant to the HSR Act, and (B) to respond to any
request from the Federal Trade Commission or the United States Department of
Justice for additional information or documentary materials in connection with
the filing of a Pre-Merger Notification and Report under the HSR Act. The
Company shall keep, and shall cause each of its officers, directors,
affiliates, representatives, and professional advisors to keep, all such
information confidential to the same extent that Purchaser is required to keep
information confidential pursuant to the Confidentiality Agreement. The
Company shall furnish to Purchaser and Merger Sub and the representatives and
professional advisors all information concerning the Company and its officers,
directors, affiliates, and shareholders that is reasonably necessary for
Purchaser and Merger Sub to take the actions specified in clauses (A) and (B)
of the preceding sentence.
5.11 Indemnification; Directors' and Officers' Insurance. (a) The
Company shall, to the fullest extent permitted under applicable law, and for
six years from and after the Effective Time, the Surviving Corporation shall,
to the fullest extent permitted under applicable law, indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, an officer, director or
employee of the Company (the "Indemnified Parties") from and against all
losses, claims, damages, costs, expenses, liabilities or judgments or amounts
that are paid in settlement with the approval of the indemnifying party (which
approval shall not be unreasonably withheld) of or in connection with any
claim, action, suit, proceeding or investigation based in whole or in part on
or arising in whole or in part out of the fact that such person is or was a
director, officer or employee of the Company, pertaining to any matter existing
or occurring at or prior to the Effective Time ("Indemnified Liabilities"),
including liabilities arising as a result of this Agreement and the
transactions contemplated hereby, to the full extent permitted under the NYBCL,
and the Surviving Corporation will pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
full extent permitted by law. Without limiting the foregoing, in the event any
such claim, action, suit, proceeding or investigation is brought against any
Indemnified Party, (i) the Company (or the Surviving Corporation after the
Effective Time) shall retain counsel on behalf of the Indemnified Party,
subject to approval of the Indemnified Party; (ii) the Company (or after the
Effective Time, the Surviving Corporation)
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shall pay all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; (iii) the Company (or
after the Effective Time, the Surviving Corporation) will use all reasonable
efforts to assist in the vigorous defense of any such matter, provided that
neither the Company nor the Surviving Corporation shall be liable for any
settlement of any claim effected without its written consent, which consent,
however, shall not be unreasonably withheld. Any Indemnified Party wishing to
claim indemnification under this Section 5.11, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Company or the
Surviving Corporation (but the failure so to notify an indemnifying party shall
not relieve it from any liability which it may have under this Section 5.11
except to the extent such failure prejudices such party). The indemnifying
party is required to retain only one law firm to represent the Indemnified
Parties with respect to such matter (in addition to local counsel) unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
(b) For a period of six years after the Effective Time,
the Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company (provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims or matters
existing or occurring before the Effective Time; provided, that Surviving
Corporation shall not be required to pay an annual premium for such insurance
in excess of two times the last annual premium paid by the Company prior to the
date hereof, but in such case shall purchase as much coverage as possible for
such amount.
(c) For purposes of this Section 5.11, Purchaser and
Surviving Corporation agree that they will not transfer a material portion of
the Surviving Corporation's assets unless such transferee agrees to be bound by
this Section 5.11 and such transferee has a tangible net worth at least equal
to the tangible net worth of the Surviving Corporation. This Section 5.11
shall survive the consummation of the Merger.
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The provisions of this Section 5.11 are intended to be for the benefit of, and
shall be enforceable by, each Indemnified Party, his heirs and his
representatives. The rights provided Indemnified Parties shall be in addition
to, and not in lieu of, any rights to indemnity which such parties may have
under the Certificate or By-Laws of the Company or the Surviving Corporation or
any other agreements or otherwise.
5.12 Employment Matters. (a) The Purchaser hereby agrees to cause
the Surviving Corporation and the Subsidiaries, immediately after the Effective
Time, to honor the employment agreements, arrangements and programs between the
Company or the Subsidiaries and their respective employees in accordance with
their terms as in effect on the date hereof as set forth in the Disclosure
Schedule (collectively, the "Employee Arrangements"), to the same extent that
the Company and the Subsidiaries would be required to perform them in the event
that the Merger contemplated by this Agreement were not consummated.
(b) For a period of one year following the Effective
Time, the Purchaser shall cause the Surviving Corporation to provide the garage
manager and other employees senior thereto of the Company and the Subsidiaries
(excluding for purposes of this paragraph (b) employees covered by collective
bargaining agreements whose benefits shall be governed by the collective
bargaining agreements in accordance with their terms as in effect on the date
hereof) who are not covered by spousal insurance arrangements with retirement,
pension, medical insurance, life insurance and other similar benefits following
the Effective Time which are, in the aggregate, substantially comparable to
such benefits under the plans and arrangements maintained for its employees by
the Purchaser as of the date hereof, provided nothing in this Section 5.12
shall require the Surviving Corporation to continue the employment of the
Company's employees beyond that required by any applicable existing employment
agreement. Purchaser further agrees to cause the Surviving Corporation to
honor, comply with and perform all obligations of the Company and the
Subsidiaries under the severance arrangements set forth on Annex D for a period
of one year following the Effective Time.
5.13 Affiliate Agreements. The Company shall cause the persons
listed in Annex E hereto to (i) tender in the Offer or enter into the agreement
to "cash-out" their options and warrants as provided in Section 3.5 which
represent the number of Shares set forth opposite their respective names and
which in the aggregate constitutes 1,038,040 Shares as of the date hereof and
(ii) to enter into the Agreement to Support the Transaction attached as Annex F
hereto. The Company shall cause (i) Lowell Harwood and Sanford Harwood to
enter into the Non-Competition Agreements attached as Annex G hereto, (ii)
Brett Harwood to enter into an Employment Agreement attached as Annex H hereto,
(iii) Lowell Harwood and Sanford Harwood to enter into a Consulting Agreement
with terms agreed upon between the parties and (iv) Leslie Harwood Ehrlich to
enter into a Non-Competition Agreement similar to the Non-Competition Agreement
attached hereto as Annex G, but with a one (1) year term. The Company will
cause the nonunion manager level and above employees granted severance payments
as disclosed on Annex D to enter into Non-Competition Agreements equal to the
duration of the severance granted.
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5.14 Further Actions. Upon the terms and subject to the conditions
hereof, each of the parties hereto in good faith shall use all commercially
reasonable efforts to take, or cause to be done, all other things necessary or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, to obtain in a timely manner all
necessary waivers, consents, and approvals and to effect all necessary
registrations and filings, and to otherwise satisfy or cause to be satisfied
all conditions precedent to its obligations under this Agreement or to vest the
Surviving Corporation with full title to all properties, assets, rights,
approvals and franchises of either constituent corporation.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of the Purchaser and Merger Sub to
Effect the Merger. The respective obligations of the Purchaser and Merger Sub
to consummate the Merger are subject to the fulfillment of each of the
following conditions, any or all of which may be waived in whole or in part by
the Purchaser or Merger Sub, as the case may be, to the extent permitted by
applicable law:
(a) Shareholder Approval. This Agreement shall have been
duly approved by the holders of two-thirds of the Shares, in accordance with
the NYBCL and the Certificate and By-Laws of the Company.
(b) Legal Proceeding; Order. There shall not be
threatened, instituted or pending any action, proceeding or other application
before any court or governmental authority or other regulatory or
administrative agency or commission, by any government or governmental
authority or by any other person, which challenges or seeks to restrain or
prohibit consummation of the transactions contemplated by this Agreement, or
which seeks to impose any material restriction on the Purchaser or the Company
in connection with consummation of the Merger. No court or governmental or
regulatory authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order (whether preliminary or permanent) which is
in effect and prohibits consummation of the transactions contemplated by this
Agreement or imposes material restrictions on the Purchaser or the Company in
connection with consummation of the Merger.
(c) HSR Act. The waiting period (and any extension
thereof) applicable to the consummation of the Merger under HSR Act shall have
expired or been terminated.
(d) Offer. The Purchaser shall have made, or caused to be
made, the Offer and shall have purchased, or caused to be purchased, Shares
pursuant to the Offer.
(e) Covenants. Each of the agreements or covenants of
the Company to be performed at or prior to the Closing Date pursuant to the
terms hereof shall have been duly performed in all material respects and the
Company shall have performed in all
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material respects all of the acts required to be performed by it at or prior to
the Closing Date by the terms hereof.
(f) Compliance. The representations and warranties of the
Company herein contained shall be true at the Effective Time with the same
effect as though made at such time, except for (i) changes contemplated
hereunder, (ii) those representations and warranties which address matters only
as of a particular date (which shall remain true and correct as of such date),
and (iii) where the failure of the representations and warranties to be true
and correct in the aggregate would not have a Material Adverse Effect on the
Company. For purposes of this provision, representations and warranties of the
Company in this Agreement which are qualified by materiality shall be true
without regard to the materiality limitation, except as provided in (iii)
above. Material Adverse Effect as used in this provision shall mean items
which in the aggregate would have (i) a recurring annual pre-tax income effect
of $400,000 or more or (ii) a non-recurring income, balance sheet or financial
condition effect of $4,000,000 or more.
(g) Natwest Debt. Purchaser and Merger Sub shall have
received evidence that the Natwest Debt can be satisfied without incurring
payment for accrued deferred interest.
(h) Regulatory Consents. All consents, authorizations,
orders and approvals of (or filings or registration with) any governmental
commission, board or other regulatory body required in connection with the
execution, delivery and performance of the Merger, this Agreement and the
transactions contemplated thereby shall have been obtained or made, except for
filings in connection with the Merger and any other documents required to be
filed after the Effective Time.
(i) No Material Adverse Change. Since the date of this
Agreement, there shall not have occurred a Material Adverse Change with respect
to the Company. For purposes of this provision, Material Adverse Change shall
mean changes or events which in the aggregate would have (i) a recurring annual
pre-tax income effect of $400,000 or more or (ii) a non-recurring income,
balance sheet or financial condition effect of $4,000,000 or more.
6.2 Conditions to Obligations of the Company to Effect the Merger.
The obligations of the Company to consummate the Merger are subject to the
fulfillment of each of the following conditions, any or all of which may be
waived in whole or in part by the Company to the extent permitted by applicable
law:
(a) Shareholder Approval. This Agreement shall have been
duly approved by the holders of two-thirds of the Shares, in accordance with
the NYBCL and the Certificate and By-Laws of the Company.
(b) Legal Proceeding; Order. There shall not be
threatened, instituted or pending any action, proceeding or other application
before any court or governmental authority or other regulatory or
administrative agency or commission, by any government
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<PAGE> 34
or governmental authority or by any other person, which challenges or seeks to
restrain or prohibit consummation of the transactions contemplated by this
Agreement, or which seeks to impose any material restriction on the Purchaser
or the Company in connection with the consummation of the Merger. No court or
governmental or regulatory authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any order (whether
preliminary or permanent) which is in effect and prohibits the consummation of
the transactions contemplated by this Agreement or imposes material
restrictions on the Purchaser or the Company in connection with the
consummation of the Merger.
(c) HSR Act. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
(d) Offer. The Purchaser shall have made, or caused to be
made, the Offer and shall have purchased, or caused to be purchased, Shares
pursuant to the Offer.
(e) Compliance. The representations and warranties of the
Purchaser and Merger Sub herein contained shall be true at the Effective Time
with the same effect as though made at such time, except for (i) changes
contemplated hereunder, (ii) those representations and warranties which address
matters only as of a particular date (which shall remain true and correct as of
such date), and (iii) where the failure to be true and correct would not have a
material adverse effect on the financial condition, properties, business or
results of operations of the Purchaser. The Purchaser and Merger Sub shall
have in all material respects performed all material obligations and complied
with all material covenants and conditions required by this Agreement to be
performed or complied with by them at or prior to the Effective Time.
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by holders of Shares, by the mutual written
consent of Merger Sub, the Purchaser and the Company duly authorized by their
respective Boards of Directors.
7.2 Termination by either the Purchaser or the Company. This
Agreement may be terminated and the Merger may be abandoned by action of the
Board of Directors of either Merger Sub or the Purchaser on the one hand or the
Company on the other hand if (i) the Merger shall not have been consummated by
May 31, 1997, (ii) the requisite approval of shareholders required by Sections
6.1(a) and 6.2(a) shall not have been obtained at a meeting duly convened
therefor, or (iii) if any state or federal court of competent jurisdiction or
other governmental authority or entity shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Merger or holding that any law applicable to the
Merger declares the Merger to be illegal, and such order, decree, ruling or
other action shall have become final and nonappealable;
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<PAGE> 35
provided, however, that neither the Merger Sub nor the Purchaser on the one
hand, and the Company, on the other hand, may terminate this Agreement if the
absence of such occurrence is due to the failure by Merger Sub or the Purchaser
on the one hand, and the Company on the other hand, to perform in all material
respects each of its or their obligations under this Agreement required to be
performed prior to the Effective Time.
7.3 Termination by the Purchaser. This Agreement may be terminated
following the purchase of the Shares in the Offer and the Merger may be
abandoned at any time thereafter and prior to the Effective Time, before or
after the approval by holders of Shares, by action of the Board of Directors of
the Purchaser, if (i) other than as a direct result of any action or inaction
by Purchaser, the Company shall have breached any of its representations,
warranties, covenants or agreements contained in this Agreement and such breach
would constitute a Material Adverse Effect as defined in Section 6.1(f) (for
purposes of this provision, representations, warranties, covenants and
agreements which are qualified by materiality shall be true without regard to
the materiality limitation, except as provided in 6.1(f)(iii), (ii) the Board
of Directors of the Company shall fail to make or shall have withdrawn or
modified in a manner adverse to the Purchaser or Merger Sub its approval or
recommendation of the Offer, this Agreement or the Merger or the Board of
Directors of the Company, upon reasonable request by the Purchaser, shall fail
to reaffirm such approval or recommendation, or shall have resolved to do any
of the foregoing or (iii) (A) all of the conditions to the obligations of the
Company to effect the Merger set forth in Section 6.2 shall have been
satisfied, and (B) other than as a direct result of any action or inaction by
Purchaser, any condition to the obligations of Purchaser to effect the Merger
set forth in Section 6.1 is not capable of being satisfied prior to the end of
the period referred to in Section 7.2.
7.4 Termination by the Company. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, before
or after the approval by holders of Shares, by action of the Board of Directors
of the Company, if (i) the Purchaser or Merger Sub shall have breached in any
material respect any of their representations, warranties, covenants or
agreements contained in this Agreement, (ii) prior to the purchase of Shares in
the Offer, the Board of Directors of the Company receives an unsolicited
written offer with respect to a merger, consolidation or sale of all or
substantially all of the Company's assets or if an unsolicited tender or
exchange offer for the Shares is commenced, and the Board of Directors of the
Company determines in the reasonable exercise of its duties under applicable
law (based upon such factors and in reliance upon such third party advisors as
the Board of Directors deems reasonable, including, to the extent deemed
necessary by the Board of Directors, receipt of an opinion to such effect from
The Blackstone Group L.P. or other nationally recognized investment banking
firm), that such transaction is more favorable from a financial point of view
to the shareholders of the Company than the Offer and the Merger and that
approval, acceptance or recommendation of such transaction is consistent with
the fiduciary obligation of the Board of Directors under applicable law as
determined in good faith by the Board of Directors based upon an opinion of
outside legal counsel, (iii) if the Offer shall be terminated in accordance
with its terms or shall expire without the purchase of any of the Shares
pursuant thereto or (iv) (A) all of the conditions to the obligations of
Purchaser to effect the Merger set forth in Section 6.1
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<PAGE> 36
shall have been satisfied, and (B) any condition to the obligations of the
Company to effect the Merger set forth in Section 6.2 is not capable of being
satisfied prior to the end of the period referred to in Section 7.2.
7.5 Effect of Termination and Abandonment. In the event of
termination of this Agreement and abandonment of the Merger pursuant to this
Article VII, no party hereto (or any of its directors or officers) shall have
any liability or further obligation to any other party to this Agreement,
except (i) as provided in Section 9.2 and 7.6 and (ii) nothing herein shall
relieve any party from liability for any willful or intentional breach hereof.
7.6 Break-up Fee. If this Agreement is terminated in accordance
with the provisions of Section 7.3(ii), or 7.4(ii) or as a result of the
failure of the Affiliates to tender their Shares in the Offer or support the
Merger, based upon a claim that such action is required in the exercise of
their fiduciary duties and the purchase of Shares in the Offer or the Merger
shall not be consummated, then in such case the Company shall promptly (but in
no event later than five business days after such termination) pay to Purchaser
a termination fee in cash of $2,500,000, including all of Purchaser's expenses
and fees. The provision for the payment of these costs and compensatory
expenses in this Section 7.6 are an integral part of the transactions
contemplated by this Agreement and without these provisions Purchaser would not
have entered into this Agreement. Accordingly, if payment shall become due and
payable pursuant to this Section 7.6, and, in order to obtain such payment,
suit is commenced which results in a judgment against Company, the Company
shall pay to Purchaser, Purchaser's reasonable costs and expenses, including
attorneys' fees, in connection with such suit, together with court costs and
prejudgment interest.
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ARTICLE VIII
ESCROW
8.1 Escrow Agreement. Purchaser, Company and First American
National Bank (the "Escrow Agent") will as soon as reasonably practicable after
the execution of this Agreement enter into an Escrow Agreement (the "Escrow
Agreement") in the form attached as Annex I. References in this Agreement to
this Article or the escrow obligations created hereby, shall be references to
the Escrow Agreement. The provisions of the Escrow Agreement are incorporated
as if fully stated herein.
A portion of the Offer Price and the Merger Consideration including
the Option Merger Consideration equal to approximately $4.4 Million in the
aggregate shall be deposited by the Purchaser and held in escrow as Contingent
Consideration for the shareholders, optionholders and warrantholders of the
Company by the Escrow Agent in compliance with the terms and conditions of the
Escrow Agreement. The funds held in escrow pursuant to this Article VIII will
be invested by the Escrow Agent provided the funds may only be invested in
short-term government securities. The escrowed funds are subject to and held
solely for the purpose of providing for the following contingencies:
(a) Wooster Property. $1.99 per Share of the Offer Price
or Merger Consideration or Option Merger Consideration (as the case
may be) shall be held in escrow by the Escrow Agent (the "Wooster
Escrow") as described in the Escrow Agreement.
(b) Occupancy Tax Escrow. $.51 per Share of the Offer
Price, Merger Consideration or Option Merger Consideration, as the
case may be, shall be held in escrow by the Escrow Agent (the
"Occupancy Tax Escrow") as described in the Escrow Agreement.
8.2 Escrow Committee. In all matters respecting the Escrow
Agreement the Escrow Committee (as defined in the Escrow Agreement) shall
represent the former shareholders, optionholders and warrantholders of the
Company. The Escrow Committee will agree to serve as such. The Escrow
Committee shall act by majority (if more than 1 person) and may act upon
written consent or telephonic or personal meetings. If one or more of the
members of the Escrow Committee resign or become unable to serve: (1) the
remaining member or members shall comprise the Escrow Committee, (2) the
remaining member or members are empowered to appoint a replacement for such
terminated member and they shall give notice to Purchaser thereof, and (3) if
there are no members of the Escrow Committee, the former shareholders,
optionholders and warrantholders of the Company shall promptly elect a member
or members of the Escrow Committee based on their proportional contingent right
to the Escrowed Funds, but if after three months of there not being members of
the Escrow Committee and during this period they fail to make such appointments
and give notice thereof to Purchaser within such three months then Purchaser
will appoint an independent third party to the Escrow Committee to represent
the former shareholders, optionholders and warrantholders under the Escrow
Agreement. Purchaser,
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<PAGE> 38
Surviving Corporation and the Escrow Agent shall be entitled to rely upon any
statements or other communications by or purported to be on behalf of the
Escrow Committee without the necessity of determining the validity of the
actions taken. Actions taken by the Escrow Committee (or failures to act)
shall be deemed binding and conclusive on all former shareholders,
optionholders or warrantholders of the Company.
8.3 Non Transferability of Escrowed Funds. The funds held in
escrow shall be held for the benefit of the shareholders of Company and
Purchaser only and shall not be transferrable by any potential recipient
thereof, except by will, intestate succession or operation of law.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Payment of Expenses. Whether or not the Offer and/or the
Merger shall be consummated (but subject to Section 7.5(ii) above), each party
hereto shall pay its own expenses incident to preparing for, entering into and
carrying out this Agreement and the consummation of the Offer and the Merger.
9.2 Survival. The agreements of the Company, the Purchaser and
Merger Sub contained in Sections 3.2 (but only to the extent that such Section
expressly relates to actions to be taken after the Effective Time), 3.3, 3.4,
3.5, 5.11, 5.12, 5.13, 8.1, 8.2, 8.3 and 9.1 shall survive the consummation of
the Merger. The agreements of the Company, the Purchaser and Merger Sub
contained in Sections 7.5, 7.6 and 9.1 shall survive the termination of this
Agreement. All other representations, warranties, agreements and covenants in
this Agreement shall not survive the consummation of the Merger or the
termination of this Agreement.
9.3 Modification or Amendment. Subject to the applicable
provisions of the NYBCL, this Agreement may be amended by the parties hereto by
action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after approval of
the Merger by the shareholders of the Company, no amendment may be made which
by law requires further approval by such shareholders without such further
approval; provided further, however, that after the closing of the Offer and
the purchase of the Shares thereunder by Purchaser or Merger Sub, this
Agreement will not be amended by the Company without the approval of a majority
of the persons who are directors of the Company on the date hereof; and
provided further, however, that Section 5.11 and 5.12 may not be amended
subsequent to the Effective Time. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
9.4 Waiver of Conditions. The conditions to each of the parties'
obligations (other than the conditions set forth in Section 6.1(c) and 6.2(c))
to consummate the Merger are for the sole benefit of such party and may be
waived by such party in whole or in part to the extent permitted by applicable
law.
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9.5 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
9.7 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given: (a) if delivered
personally or sent by facsimile, on the date received if received prior to 5:00
p.m., (b) if delivered by overnight courier, on the day after mailing, and (c)
if mailed, five (5) days after mailing with postage prepaid. Any such notice
shall be sent as follows:
TO PURCHASER OR MERGER SUB:
Central Parking Corporation
2401 21st Avenue South
Suite 200
Nashville, Tennessee 37212
Attention: Chairman
WITH COPIES TO:
Mark Manner, Esq.
Harwell Howard Hyne Gabbert & Manner, P.C.
315 Deaderick Street
Suite 1800
Nashville, Tennessee 37238
TO COMPANY:
Square Industries, Inc.
921 Bergen Avenue
Jersey City, New Jersey 07306
Attention: Chairman of the Board
WITH COPIES TO:
Daniel R. Kaplan, Esq.
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
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<PAGE> 40
New York, New York 10036
and
Leo Silverstein, Esq.
Brock, Fensterstock, Silverstein, McAuliffe & Wade, LLP
One Citicorp Center
153 East 53rd Street
56th Floor
New York, New York 10022
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
9.8 Entire Agreement, etc. This Agreement (including the
Disclosure Schedule and any exhibits or schedules hereto) constitutes the
entire agreement, and supersedes all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof, and, except as otherwise expressly
provided herein, are not intended to confer upon any other person any rights or
remedies hereunder except for the provisions of Sections 5.11 and 5.12.
9.9 Assignment; Merger Sub. This Agreement shall not be assignable
by operation of law or otherwise; provided, however, that the Purchaser may
designate, by written notice to the Company, another wholly-owned direct or
indirect subsidiary to be a Constituent Corporation in lieu of Merger Sub, in
the event of which, all references herein to Merger Sub shall be deemed
references to such other subsidiary except that all representations and
warranties made herein with respect to Merger Sub as of the date of this
Agreement shall be deemed representations and warranties made with respect to
such other subsidiary as of the date of such designation.
9.10 Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, except for Section 5.11 (which is intended to be for the benefit of
the Indemnified Parties and may be enforced by such Indemnified Parties) and
Section 5.12 (which is intended to be for the benefit of certain employees and
may be enforced by such employees).
9.11 Obligation of the Purchaser. Whenever this Agreement requires
Merger Sub to take any action, such requirement shall be deemed to include an
undertaking on the part of the Purchaser to cause Merger Sub to take such
action.
9.12 Captions. The Article, Section and paragraph captions herein
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
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9.13 Integration of Disclosure Schedule. The Disclosure Schedule
is an integral part of this Agreement and is considered a part of this
Agreement as if fully set forth herein.
9.14 Arbitration. Any dispute among the parties hereto shall be
settled by final and binding arbitration in New York, New York in accordance
with the then effective rules of the American Arbitration Association, and
judgment upon the award rendered may be entered in any court having
jurisdiction thereof. In any action or proceeding brought to enforce any
provision of this Agreement, the prevailing party shall be entitled to recover
its costs from the opposing party, including reasonable legal fees and expenses
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<PAGE> 42
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first above written.
Square Industries, Inc.
By:
-----------------------------------
Its:
-----------------------------------
Central Parking Corporation
By:
-----------------------------------
Its:
-----------------------------------
Central Parking System -- Empire State, Inc.
By:
-----------------------------------
Its:
-----------------------------------
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ANNEX A
Conditions to the Offer
The capitalized terms used in this Annex shall have the meaning set
forth in the attached Agreement.
Notwithstanding any other provision of the Offer, subject to the terms
of this Agreement, Merger Sub shall not be required to accept for payment or
pay for any Shares tendered pursuant to the Offer, and may terminate or amend
the Offer and may postpone the acceptance for payment of and payment for Shares
tendered, if (i) the Minimum Condition is not satisfied; (ii) any applicable
waiting period under the HSR Act shall not have expired or been terminated
prior to the expiration of the Offer, or (iii) at any time on or after the date
of this Agreement, and prior to the acceptance for payment of Shares, any of
the following conditions shall exist:
(a) there shall have been instituted or be pending any
action or proceeding by any governmental or quasi-governmental
authority or agency, domestic or foreign, before any court or
governmental, administrative or regulatory authority or agency, of
competent jurisdiction, domestic or foreign, (i) challenging or
seeking to make illegal, materially delay or otherwise directly or
indirectly restrain or prohibit the making of the Offer, the
acceptance for payment of, or payment for, any Shares by the
Purchaser, Merger Sub or any other affiliate of the Purchaser, or the
consummation of any other transaction contemplated by this Agreement,
including the Offer and the Merger, or seeking to obtain material
damages in connection therewith; (ii) seeking to prohibit or limit
materially the ownership or operation by the Company, the Purchaser or
any of their subsidiaries of all or any material portion of the
business or assets of the Company, the Purchaser and their respective
subsidiaries taken as a whole, or to compel the Company, the Purchaser
or any of their respective subsidiaries to dispose of or hold separate
all or any material portion of the business or assets of the Company,
the Purchaser and any of their respective subsidiaries taken as a
whole, as a result of the transactions contemplated by this Agreement,
including the Offer and the Merger; (iii) seeking to impose or confirm
material limitations on the ability of the Purchaser, Merger Sub or
any other affiliate of the Purchaser to exercise effectively full
rights of ownership of any Shares, including, without limitation, the
right to vote any Shares acquired by Merger Sub pursuant to the Offer
or otherwise on all matters properly presented to the Company's
shareholders, including, without limitation, the approval and adoption
of this Agreement and the transactions contemplated hereby; (iv)
seeking to require divestiture by the Purchaser, Merger Sub or any
other affiliate of the Purchaser of any Shares; or (v) which otherwise
has a material adverse effect on the financial condition, business,
properties or results of operations of the Company and the
Subsidiaries taken as a whole or the Purchaser and its subsidiaries
taken as a whole.
(b) there shall have been any action taken, or any
statute, rule, regulation, legislation, interpretation, judgment,
order or injunction enacted, entered, enforced, promulgated, amended,
issued or deemed applicable to (i) the Purchaser, the
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<PAGE> 44
Company or any subsidiary or affiliate of the Purchaser or the Company
or (ii) any transaction contemplated by this Agreement, including the
Offer and the Merger, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency,
domestic or foreign, other than the routine application of the waiting
period provisions of the HSR Act to the Offer or the Merger, which is
reasonably likely in the good faith judgment of the Purchaser to
result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension
of, or limitation on prices for, trading in securities on the New York
Stock Exchange or the Nasdaq national market system, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) a commencement of a war
or armed hostilities or other national or international crisis
directly or indirectly involving the United States or (iv) in the case
of any of the foregoing existing on the date hereof, in the good faith
judgment of the Purchaser a material acceleration or worsening thereof;
(d) (i) it shall have been publicly disclosed or the
Purchaser shall have otherwise learned that beneficial ownership
(determined for the purposes of this paragraph as set forth in Rule
13d-3 promulgated under the Exchange Act) of 20% or more of the
outstanding Shares has been acquired by any person, other than the
Purchaser or any of its affiliates or any affiliates of the Harwood
family or (ii) (A) the Board of Directors of the Company or any
committee thereof shall have failed to make, shall have withdrawn or
modified in a manner adverse to the Purchaser or Merger Sub the
approval or recommendation of the Offer, the Merger or this Agreement,
or approved or recommended any Acquisition Transaction, takeover
proposal or any other acquisition of Shares other than the Offer and
the Merger or (B) the Board of Directors of the Company or any
committee thereof shall have resolved to do any of the foregoing;
(e) any representation or warranty of the Company in this
Agreement shall not be true and correct as if such representation or
warranty was made as of such time on or after the date of this
Agreement, except for (i) changes contemplated by this Agreement, (ii)
those representations and warranties which address matters only as of
a particular date (which shall remain true and correct as of such
date) and (iii) where the failure to be true and correct would not
have a Material Adverse Effect on the Company; for purposes of this
provision, (A) representations and warranties of the Company in this
Agreement which are qualified by materiality shall be determined
without regard to the materiality limitation, except as provided in
(iii) above and (B) Material Adverse Effect shall mean items which in
the aggregate would have (x) a recurring annual pre-tax income effect
of $400,000 or more or (y) a non-recurring income, balance sheet or
financial condition effect of $4,000,000 or more;
(f) the Company shall have failed to perform in any
material respect any obligation or to comply in any material respect
with any agreement or covenant of
A-2
<PAGE> 45
the Company to be performed or complied with by it under this
Agreement prior to the expiration of the Offer;
(g) the Company shall have failed to deliver prior to the
expiration of the offer executed (i) Noncompetition Agreements in
substantially the form included in Annex G attached hereto from each
of Lowell and Sanford Harwood, (ii) Employment Agreement from Brett
Harwood in substantially the form included in Annex H attached hereto,
(iii) Consulting Agreement from Lowell Harwood and Sanford Harwood and
(iv) Noncompetition Agreement from Leslie Harwood Ehrlich as
contemplated in Section 5.13 of this Agreement;
(h) any change shall have occurred since the date hereof
in the business, operations, assets, financial condition or results of
operations of the Company or any of the Subsidiaries that, in the
reasonable good faith judgment of Purchaser, is or is reasonably
likely to constitute a Material Adverse Change with respect to the
Company; for purposes of this provision, Material Adverse Change shall
mean changes or events which in the aggregate would have (i) a
recurring annual pre-tax income effect of $400,000 or more or (ii) a
non-recurring income, balance sheet or financial condition effect of
$4,000,000 or more;
(i) the Company shall have failed to take any steps
reasonably required to be taken under the NYBCL (including, without
limitation, the requirements of Section 912 of the NYBCL) to allow
Purchaser and Merger Sub to promptly consummate the Merger and
exercise full ownership rights over the Shares without violating any
provision of the NYBCL; or
(j) this Agreement shall have been terminated in
accordance with its terms;
(k) Merger Sub and the Company may mutually agree that
Merger Sub shall terminate the Offer or postpone the acceptance for
payment of or payment for Shares thereunder;
which, in the reasonable good faith judgment of Merger Sub in any such case,
and regardless of the circumstances (including any action or inaction by the
Purchaser or any of its affiliates) giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment.
The foregoing conditions are for the sole benefit of Merger Sub and
the Purchaser and may be asserted by Merger Sub or the Purchaser regardless of
the circumstances giving rise to any such condition or may be waived by Merger
Sub or the Purchaser in whole or in part at any time and from time to time in
their sole discretion. The failure by the Purchaser or Merger Sub at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
such right; the waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other facts
A-3
<PAGE> 46
and circumstances; and each such right shall be deemed an ongoing right that
may be asserted at any time and from time to time.
A-4
<PAGE> 47
ANNEX B
Purchaser Statutory Approvals
A-5
<PAGE> 48
ANNEX C
Additional Information
A-6
<PAGE> 49
ANNEX D
Severance Arrangements to be adopted after consultation with final bidders
A-7
<PAGE> 50
ANNEX E
<TABLE>
<CAPTION>
Employee
Shares Stock
Owned Options Warrants Total
------- ------- ------- ---------
<S> <C> <C> <C> <C>
Lowell Harwood ...................... 268,796(a) 100,000 75,000 443,796
Sanford Harwood ...................... 218,651 50,000 75,000 343,651
Brett Harwood ........................ 57,720(b) 80,000 ---- 137,720
Leslie Harwood Ehrlich .............. 33,879 ---- ---- 33,879
Craig Harwood ........................ 33,880 ---- ---- 33,880
Scott Harwood ........................ 37,614(c) 7,500 ---- 45,114
------- ------- ------- ---------
Total 650,540 237,500 150,000 1,038,040
</TABLE>
(a) Includes 18,674 Shares owned by Mrs. Lowell Harwood and 60,000 Shares
owned by certain foundations over which he has the power of
disposition.
(b) Includes 12 Shares owned by Mrs. Brett Harwood and 13,000 Shares
owned as custodian or trustee for his minor children.
(c) Includes 9,500 Shares owned as custodian for his minor children.
A-8
<PAGE> 51
ANNEX F
Agreement to Support the Transaction
A-9
<PAGE> 52
ANNEX G
Confidentiality and Non Competition Agreement
A-10
<PAGE> 53
ANNEX H
Employment Agreement for Brett Harwood
A-11
<PAGE> 54
Annex I
Form of Escrow Agreement
A-12
<PAGE> 1
EMPLOYMENT AGREEMENT
THIS AGREEMENT made and entered into effective this ____ day of
__________, 1997, by and among CENTRAL PARKING CORPORATION, INC., a Tennessee
corporation ("Parent"), CENTRAL PARKING SYSTEM, INC., a Tennessee corporation
wholly owned by Parent, with its principal place of business in Nashville,
Tennessee, ("EMPLOYER"), and BRETT HARWOOD, ("EMPLOYEE").
W I T N E S S E T H
WHEREAS, the parties hereto have reached an understanding as to their
contract of employment, and desire to reduce same to writing.
NOW, THEREFORE, in consideration of the premises, the parties hereto
have agreed as follows:
1. EMPLOYER does hereby employ EMPLOYEE as Executive Vice
President of EMPLOYER. EMPLOYER agrees to make available an office to EMPLOYEE
at one of its locations in New Jersey within the New York metropolitan area
in connection with the performance by EMPLOYEE of the duties set forth in
Section 2.
2. EMPLOYEE agrees to serve in the capacity referenced in
paragraph 1 to perform all the duties required thereof, including but not
limited to, marketing, acquisition of new parking opportunities (whether in the
form of acquisition of fee, leases or management agreements), supervising
personnel reasonably necessary to perform his duties hereunder, maintaining
true and correct records, reporting same to EMPLOYER as required, and to devote
substantial time and best efforts thereto necessary to perform such services.
3. EMPLOYER agrees to pay commencing with the date hereof
EMPLOYEE for said services the sum of Two Hundred Thousand Dollars
($200,000.00) gross per annum (Base), plus incentive compensation (the
"Incentive Compensation") as set forth below:
- 10% of all Gross Operating Income (NOI less 5% of
operating expenses G&A burden) derived from new
leases or 10% of pre tax operating profit from newly
acquired companies, in each case where EMPLOYEE was
primarily responsible for such lease or acquisition.
- 10% of all Gross Operating Income (NOI less 5% of
operating expenses G&A burden) derived from new
management agreements where EMPLOYEE was primarily
responsible for securing the management agreement.
<PAGE> 2
- Incentive compensation will be paid to EMPLOYEE for
the greater of the period during which EMPLOYEE is
employed by EMPLOYER or any of its affiliates, or for
five years from the date of commencement of operation
pursuant to the lease or management agreement (the
"Incentive Compensation Period"), provided, however,
(a) In the event that Employee leaves the employ of
the Company during the Term of Employment as defined
in Section 5, the Employee shall be entitled to the
Incentive Compensation for the period during which he
was employed, and for an additional period following
the termination of his employment up to an aggregate
duration not to exceed two and one half (2 1/2) years
from the date of commencement of operation pursuant to
the lease or management agreement, provided that
during such period of time after termination of
employment, the Employee complies with the
noncompetition provisions of subsection (i) of Section
6 of this Agreement for the period during which
Employee is paid Incentive Compensation (the "General
Noncompete"); and (b) In the event that Employee is
not offered renewal of the Term of Employment at the
end of three (3) years, or in the event that Employee
is offered such renewal and does not elect to continue
his employment, the Employee shall be entitled to
continue to receive the Incentive Compensation for the
full Incentive Compensation Period, provided that
Employee abides by the provisions of the General
Noncompete during the payment of Incentive
Compensation following termination of his employment.
- Incentive Compensation will be paid to EMPLOYEE
annually within forty-five days after the EMPLOYER'S
fiscal year end.
4. EMPLOYER agrees that with respect to the acquisition of any
real estate or the equity interest in a corporation, partnership or joint
venture substantially all of its assets of which are real estate or real estate
interests (a "Real Estate Company") by EMPLOYER or any affiliate of EMPLOYER
including Parent (collectively the "EMPLOYER AFFILIATED GROUP") resulting
primarily from the efforts of EMPLOYEE, EMPLOYER shall provide or cause to be
provided the opportunity for EMPLOYEE or at his direction his immediately
family or an entity of which at least 75% of its equity interests is
beneficially owned by EMPLOYEE and his family (collectively the "EMPLOYEE
AFFILIATED GROUP") to acquire 25% (or such lesser amount as the EMPLOYEE
determines) of the equity interest in such real estate or Real Estate Company
on the same terms and conditions as the EMPLOYER AFFILIATED GROUP.
For all opportunities generated by EMPLOYEE in the form of the fee
acquisition of EMPLOYER leasehold interests and the subsequent realization of
value above the value of such asset operated as a parking facility, EMPLOYEE
or EMPLOYEE'S affiliates will be entitled to participate in realization of such
property value maximization.
EMPLOYER agrees to lend EMPLOYEE up to an aggregate of $10 million in
order to assist EMPLOYEE in making the necessary investments related to the
opportunities described hereinabove. Such loans shall bear interest at
NationsBank Prime plus 2% (provided, however, that the minimum interest rate
shall be 10%), shall only be secured by EMPLOYEE AFFILIATED GROUP interest in
the properties and shall be payable at such times as EMPLOYER and EMPLOYEE may
agree. In the event the EMPLOYER AFFILIATED GROUP sells part or all of its
interest in the real estate or the Real Estate Company, EMPLOYER shall provide
the EMPLOYEE AFFILIATED GROUP through EMPLOYEE the opportunity to participate
in the sale pro rata based on their respective interests on the same terms and
conditions.
5. This contract shall have a term of three (3) years, but may be
terminated immediately by EMPLOYER upon the commission by EMPLOYEE of an act
involving theft, embezzlement, fraud, intentional mishandling of Company funds
or any other material act or
2
<PAGE> 3
omission which is materially injurious to the financial condition or business
reputation of EMPLOYER.
6. It is understood and agreed that in the course of employment,
EMPLOYEE will become familiar with EMPLOYER'S clientele, contracts, and methods
of operation. In consideration thereof, and as part of the consideration for
this agreement, EMPLOYEE agrees that except as provided in Annex A, during the
term hereof he will not, directly or indirectly, as an individual or through any
other person or entity, participate as an employee, director, consultant, owner,
advisor or in any other capacity in the same or similar business as the EMPLOYER
during the term hereof and (i) for a period of one (1) year from the expiration
of his employment hereunder without geographical limitation and (ii) for a
period of five (5) years following expiration of the Term of Employment
hereunder with Parent or Square Industries, Inc. ("Square") with respect to
parking locations owned, leased or managed by Parent or Square during said five
year period.
7. A. EMPLOYER shall provide health, disability and life
insurance, automobile allowance, and profit sharing and other benefits on terms
no less favorable than EMPLOYER'S Senior Vice Presidents, in accordance with
the ordinary policies of EMPLOYER, as the same may be modified from time to
time. The automobile allowance to be provided to EMPLOYEE shall at his option
be either (i) $600 per month or the provision of an automobile of the same
model and type as made available as the other Senior Vice Presidents of
EMPLOYER. In addition, EMPLOYEE shall be entitled to receive options under the
Parent's Stock Option Plan to purchase 10,000 shares of the Company's Common
Stock on each of (i) the date of the commencement of employment and (ii) the
first anniversary date of such date. Each option shall be exercisable in five
equal installments with the installments of the first option to vest on
September 30 of each of 1997, 1998, 1999, 2000 and 2001 and the installments
of the second option to vest on September 30 of each of 1998, 1999, 2000, 2001
and 2002.
B. In the event of a disability resulting in the termination
of EMPLOYEE's employment, EMPLOYEE shall be entitled to the disability payments
provided under the disability policy provided in Section 7 in lieu of the
compensation provided in Section 3 hereunder. In the event of the death of
EMPLOYEE during the term of his employment, the Incentive Compensation provided
in Section 3 shall continue to be paid to his heirs under the terms hereof for
the period provided therein.
C. EMPLOYER and Parent agree that EMPLOYEE during the term of
this Agreement shall be the representative of the Parent to the National
Parking Association and EMPLOYER or Parent shall bear all related fees and
expenses with respect to such representation.
8. In the event of a Change of Control of EMPLOYER or PARENT and
the failure thereafter of EMPLOYER to continue to offer EMPLOYER employment on
the same terms and conditions set forth herein, EMPLOYEE shall be entitled to a
lump sum payment at the time of termination of three (3) years of the latest
year's annual compensation immediately prior to the Change of Control, provided
EMPLOYEE agrees to abide by the non-compete provisions of paragraph 6 of this
Agreement. A Change of Control shall mean the acquisition
3
<PAGE> 4
within a 12 month period by a person or persons not affiliated with EMPLOYER or
Parent of all the outstanding shares of capital stock of EMPLOYER or PARENT.
9. Any dispute among the parties hereto shall be settled by
binding arbitration in Newark, New Jersey in accordance with the then effective
rules of the American Arbitration Association, and judgment upon the award
rendered may be entered in any court having jurisdiction thereof. In any
action or proceeding brought to enforce any provision of this Agreement, the
prevailing party shall be entitled to recover its costs from the opposing
party, including reasonable legal fees and expenses.
10. This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of New Jersey.
11. PARENT agrees to cause EMPLOYER to perform the terms and
conditions of this Agreement.
WITNESS our hands the day and date first above written.
CENTRAL PARKING SYSTEM
By:
-------------------------------------
ATTEST Title:
----------------------------------
CENTRAL PARKING CORPORATION
By:
- ----------------------------------- -------------------------------------
APPROVED
Title:
----------------------------------
- ----------------------------------- ----------------------------------------
APPROVED BRETT HARWOOD
4
<PAGE> 5
ANNEX A
EXCLUSIONS FROM NONCOMPLETE AGREEMENT
1. EMPLOYEE may acquire, own and lease real estate used in the
Business in the Noncompete Area, provided that Central Parking
Corporation is offered right to first refusal to operate or manage
parking located thereon unless the real estate subject to an
existing agreement at the time of the acquisition, in which case,
Central Parking Corporation's right of first refusal will be
delayed until the termination of such existing agreement.
2. EMPLOYEE may continue to own and lease real estate currently owned
or leased by corporations of which EMPLOYEE is a shareholder
and Director within the Noncompete Area with parking operations,
provided that Central Parking Corporation is offered right of
first refusal to operate or manage parking located thereon. The
parties acknowledge that the currently owned properties consist of
the following:
Location City/State
-------- ----------
206 E. 59th Street New York/NY
135 Sip Avenue Jersey City/NJ
801 Pavonia Jersey City/NJ
275 Washington Street Boston/MA
421 North Seventh Street Philadelphia/PA
1919 Market Street Philadelphia/PA
For purposes of this Confidentiality and Noncompete Agreement, Central Parking
shall notify EMPLOYEE of its intention to exercise its right to first refusal
as provided in paragraphs 1 or 2 above within fifteen (15) business days of its
receipt of notice of such right.
3. EMPLOYEE will be permitted to practice law and have clients and if
such clients include parking service providers or parking
owners, EMPLOYEE will seek EMPLOYER's consent, where such consent
will not be unreasonably withheld.
<PAGE> 1
CONFIDENTIALITY AND NONCOMPETE AGREEMENT
This Confidentiality and Noncompete Agreement is entered into as of
the ______ day of ____________, 199__, between ___________________
("Shareholder"), and Central Parking Corporation, a Tennessee corporation
("Purchaser") and ________________, a New York corporation (the "Surviving
Corporation").
WHEREAS, Purchaser, Square Industries, Inc., a New York corporation
(the "Company"), and Central Parking System -- Empire State, Inc., a New York
corporation and a wholly-owned subsidiary of the Purchaser ("Merger Sub")
entered into an Agreement and Plan of Merger (the "Merger Agreement"), dated
as of December 6, 1996 pursuant to which Company will merge with and into
Merger Sub with Company surviving as a wholly owned subsidiary of Purchaser;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements made herein and in the Merger Agreement, the Offer Price, the Merger
Consideration and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound thereby, agree as follows:
1. Non-Compete.
(a) Shareholder recognizes and acknowledges that all
information pertaining to the parking ownership and management business of the
Company, Purchaser and Surviving Corporation (the "Business") and the related
affairs, clients, customers or other relationships of Company, Purchaser and
Surviving Corporation that is not generally known to the real estate or parking
industries or to the public generally is confidential and is a unique and
valuable asset of Purchaser and Surviving Corporation. Access to and knowledge
of this information were and are essential to the performance of Surviving
Corporation's operation. Shareholder will not give to any person, firm,
association, or governmental agency any information concerning the affairs,
business, clients, customers or other relationships of Purchaser, Company or
Surviving Corporation except as required by law. Shareholder will not make use
of this type of information for its own purposes or for the benefit of any
person or organization other than Surviving Corporation. Shareholder shall use
its best efforts to prevent the disclosure of this information by others. All
records, memoranda, etc. relating to the Business which is deemed confidential
hereunder whether made by Company, Shareholder or otherwise coming into its
possession will remain the property of Surviving Corporation.
<PAGE> 2
(b) Shareholder hereby covenants and agrees with
Purchaser and Surviving Corporation that, during the "NONCOMPETE PERIOD" and
within the "NONCOMPETE AREA," it shall not directly or indirectly: (i) acquire,
lease, manage, consult for, serve as agent or subcontractor for, finance,
invest in, own any part of or exercise management control over any parking
business or business that provides any services competitive with the services
provided by the Business; (ii) solicit for employment or employ any nonclerical
person who at Closing or thereafter became an employee of Purchaser or
Surviving Corporation unless such person is no longer employed by Purchaser or
Surviving Corporation for at least six (6) months; or (iii) with respect to any
customer, supplier or property owner with whom Purchaser or Surviving
Corporation contracts in connection with the Business, either solicit the same
in a manner that reasonably could adversely affect Purchaser or Surviving
Corporation, or make statements to the same that disparage Purchaser or
Surviving Corporation or its operations in any way. The "NONCOMPETE PERIOD"
shall commence at Closing and terminate on the fifth anniversary thereof. The
"NONCOMPETE AREA" shall mean a fifty (50) mile radius of each location from
which the Business of Company is operated as of Closing. Ownership of less
than five percent (5%) of the stock of a publicly-held company shall not be
deemed a breach of this covenant. Provided; however, nothing in the Agreement
shall prohibit Shareholder from engaging in the activities disclosed on Exhibit
1 attached hereto.
(c) In the event Purchaser or Surviving Corporation
materially breaches that certain Consultancy Agreement dated ____________,
199__, between Purchaser and Shareholder, then paragraph 1(b) of this Agreement
shall terminate and be of no further force and effect. [THIS PROVISION WOULD BE
IN LOWELL'S AND SANFORD'S AGREEMENTS ONLY]
2. Enforcement.
(a) Shareholder acknowledges that its breach or
threatened or attempted breach of any provision of Section 1 would cause
irreparable harm to Purchaser or Surviving Corporation not compensable in
monetary damages and that Purchaser and Surviving Corporation shall be
entitled, in addition to all other applicable remedies, to a temporary and
permanent injunction and a decree for specific performance of the terms of
Section 1. Nothing herein contained shall be construed as prohibiting
Purchaser or Surviving Corporation from pursuing any other remedy available to
it for such breach or threatened breach.
(b) All parties hereto acknowledge the necessity of
protection against the competition of Shareholder and that the nature and scope
of such protection as been carefully considered by the parties. The period
provided and area covered are expressly acknowledged and agreed to be fair,
reasonable and necessary. In the event any covenant contained in Section 1 is
held to be invalid, illegal or unenforceable because of the duration of such
covenant, the geographic area covered thereby or otherwise, the parties agree
that the court making such determination shall have the power to reduce the
duration, the area and/or other provision(s) of any such covenant to the
maximum permissible and to include
2
<PAGE> 3
as much of its nature and scope as will render it enforceable, and, in its
reduced form said covenant shall be valid, legal and enforceable.
3. No Agency. Shareholder shall have no right, authority or
power to act for or on behalf of Surviving Corporation.
4. General Assistance. Shareholders will furnish information as
may be in its possession and cooperate with Surviving Corporation as may be
requested in connection with any claims or legal actions in which Surviving
Corporation is or may become a party.
5. Assignment; Successors and Assigns. The obligations of
Shareholder hereunder are personal in nature and are not assignable or
delegable by it. Any prohibited assignment or delegation will be null and
void. Purchaser or Surviving Corporation may assign and delegate this
Agreement to a successor of substantially all of its business assets or to a
party involved in the parking industry. The provisions hereof shall inure to
the benefit of and be binding upon the permitted successors and assigns of the
parties hereto.
6. Governing Law. This Agreement shall be interpreted under,
subject to and governed by the substantive laws of the State of Tennessee, and
all questions concerning its validity, construction, and administration shall
be determined in accordance thereby.
7. Counterparts. This Agreement may be executed simultaneously
in any number of counterparts, each of which shall be deemed an original but
all of which shall together constitute one and the same instrument.
8. Invalidity. The invalidity or unenforceability of any
provision of this Agreement shall not affect any other provision hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision was omitted. Furthermore, in lieu of such illegal,
invalid, or unenforceable provision there shall be added automatically as a
part of this Agreement a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible and be legal, valid and
enforceable.
9. Exclusiveness. [SUBJECT TO PROVISION OF SECTION 1(C),] this
Agreement constitutes the entire understanding and agreement between the
parties with respect to the subject matter hereof and supersedes any and all
other agreements, oral or written, between the parties. [BOLD LANGUAGE FOR
LOWELL'S AND SANFORD'S AGREEMENTS ONLY]
10. Modification; Waiver. This Agreement may not be modified or
amended except in writing signed by the parties. No term or condition of this
Agreement will be deemed to have been waived except in writing by the party
charged with waiver. A waiver
3
<PAGE> 4
shall operate only as to the specific term or condition waived and will not
constitute a waiver for the future or act on anything other than that which is
specifically waived.
11. Arbitration. Any dispute among the parties hereto shall be
settled by binding arbitration in Nashville, Tennessee in accordance with the
then effective rules of the American Arbitration Association, and judgment upon
the award rendered may be entered in any court having jurisdiction thereof. In
any action or proceeding brought to enforce any provision of this Agreement,
the prevailing party shall be entitled to recover its costs from the opposing
party, including reasonable legal fees and expenses.
12. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first-class postage prepaid by registered mail,
return receipt requested, or when delivered if by hand, overnight delivery
service or confirmed facsimile transmission, to the following:
(a) If to Purchaser or Surviving Corporation, c/o Central
Parking, Central Parking Corporation at 2401 21st Avenue South, Suite 200,
Nashville, TN 37212, Attention: Chairman, or at such other address as may
have been furnished to Shareholder by Purchaser or Surviving Corporation in
writing; or
(b) If to Shareholder, at ______________________________
or such other address as may have been furnished to Purchaser or Surviving
Corporation by Shareholder in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
CENTRAL PARKING CORPORATION
--------------------------------
By:
---------------------------
Title:
---------------------------
4
<PAGE> 5
EXHIBIT 1
EXCLUSIONS FROM NONCOMPETE AGREEMENT
1. Shareholder may acquire, own and lease real estate
used in the Business in the Noncompete Area, provided that
Central Parking Corporation is offered right of first refusal
to operate or manage parking located thereon unless the real
estate is subject to an existing agreement at the time of the
acquisition, in which case, Central Parking Corporation's
right of first refusal will be delayed until the termination
of such existing agreement
2. Shareholder may broker real estate located in the
Noncompete Area, provided Central Parking Corporation is
offered right of first refusal to manage parking located
thereon unless the real estate is subject to an existing
agreement at the time of the acquisition, in which case,
Central Parking Corporation's right of first refusal will be
delayed until the termination of such existing agreement
3. Shareholder may continue to own and lease real estate
currently owned or leased by Shareholder within the Noncompete
Area with parking operations, provided that Central Parking
Corporation is offered right of first refusal to operate or
manage parking located thereon. The parties acknowledge that
the currently owned properties consist of the following:
Location City/State
206 E. 59th Street New York/NY
135 Sip Avenue Jersey City/NJ
801 Pavonia Jersey City,/NJ
275 Washington Street Boston/ MA
421 North Seventh Street Philadelphia/PA
20th and Market Street Philadelphia/PA
For purposes of this Confidentiality and Noncompete Agreement, Central Parking
shall notify Shareholder of its intention to exercise its right of first
refusal as provided in paragraphs 1, 2 or 3 above within fifteen (15) business
days of its receipt of notice of such right.
5
<PAGE> 1
CONSULTANCY AGREEMENT
This Agreement made and entered into as of this 1st day of January, 1997
between Central Parking Systems, Inc., a Tennessee corporation ("CPS") and
Lowell Harwood, an individual who presently resides in New York City
(hereinafter "Harwood").
W I T N E S S E T H
WHEREAS, Harwood is knowledgeable of real estate opportunities for
parking facilities in the United States; and
WHEREAS, CPS has need for the experience and expertise of Harwood.
NOW, THEREFORE, the parties hereto agree as follows:
1. Term. The term of the Consultancy Agreement will be for one
year running from January 1, 1997 through December 31, 1997.
2. Compensation. In consideration of the duties to be performed
by Harwood pursuant hereto, CPS will pay to Harwood the sum of
One Hundred Twenty Thousand Dollars ($120,000) payable at the
rate of Ten Thousand Dollars ($10,000) per month on or before
the last day of each calendar month during the term hereof.
In addition, Harwood will be entitled incentive compensation
as provided in Exhibit 2.
3. Duties. Harwood will advise and consult CPS in connection
with the acquisition, ownership, leasing, operation and/or
management of storage and parking facilities for automobiles
and motor vehicles throughout the United States.
Harwood will be reimbursed the reasonable out-of pocket
expenses he incurs in connection with the performance of
services set forth herein provided that he first obtains CPS'
written approval of such expenses in advance.
4. This Agreement is subject and subordinate to that certain
Confidentiality and Noncompete Agreement dated ______________,
1997 between Central Parking Corporation and Harwood. Harwood
agrees that all services rendered by him in connection with
this Agreement will be for the sole benefit of CPS and Harwood
agrees that this Consultancy Agreement is not to be
<PAGE> 2
construed or interpreted as in any way derogating the effect
of the Confidentiality and Noncompete Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
January 1, 1997.
CENTRAL PARKING SYSTEM, INC.
ATTEST: By:
---------------------------- ------------------------------------
Monroe J. Carell, Jr., Chairman
ATTEST: By:
---------------------------- ------------------------------------
Lowell Harwood
<PAGE> 3
EXHIBIT 2
TO
CONSULTING AGREEMENT FOR LOWELL HARWOOD
- - Lowell Harwood would be offered a seat on the Board of Directors of
Central Parking Corporation as proposed in the Letter from Monroe
Carell dated October 22, 1996.
- - In addition, Lowell Harwood would be eligible for incentive payments
for every acquisition or business opportunity realized by Central
Parking Corporation that he originates or identifies, after
consummation of the transaction.
- 10% of all Gross Operating Income (NOI less 5% of operating
expenses G&A burden) derived from new leases or 10% of pretax
operating profit from newly acquired companies, in each case
where Lowell Harwood was primarily responsible for such lease
or acquisition.
- 10% of all Gross Operating Income (NOI less 5% of operating
expenses G&A burden) derived from new management agreements
where Lowell Harwood was primarily responsible for securing
the management agreement.
- Incentive compensation will be paid to Lowell Harwood for
seven one-half years from the date of commencement of
operation pursuant to the lease on management agreement or
company acquisition.
- Incentive compensation will be paid to Lowell Harwood annually
within forty-five (45) days after the fiscal year end.
- Incentive compensation will be in addition to reimbursement of
any expenses incurred in acquiring new leases, management
contracts and properties, provided Harwood complies with the
provisions of Section 3 of the Consulting Agreement.
<PAGE> 4
CONSULTANCY AGREEMENT
This Agreement made and entered into as of this 1st day of January, 1997
between Central Parking Systems, Inc., a Tennessee corporation ("CPS") and
Sanford Harwood, an individual who presently resides in New York City
(hereinafter "Harwood").
W I T N E S S E T H
WHEREAS, Harwood is knowledgeable of real estate opportunities for
parking facilities in the United States; and
WHEREAS, CPS has need for the experience and expertise of Harwood.
NOW, THEREFORE, the parties hereto agree as follows:
1. Term. The term of the Consultancy Agreement will be for six
months running from January 1, 1997 through June 30, 1997.
2. Compensation. In consideration of the duties to be performed
by Harwood pursuant hereto, CPS will pay to Harwood the sum of
Sixty Thousand Dollars ($60,000) payable at the rate of Ten
Thousand Dollars ($10,000) per month on or before the last day
of each calendar month during the term hereof.
3. Duties. Harwood will advise and consult CPS in connection
with the acquisition, ownership, leasing, operation and/or
management of storage and parking facilities for automobiles
and motor vehicles throughout the United States.
Harwood will be reimbursed the reasonable out-of pocket
expenses he incurs in connection with the performance of
services set forth herein provided that he first obtains CPS'
written approval of such expenses in advance.
4. This Agreement is subject and subordinate to that certain
Confidentiality and Noncompete Agreement dated ______________,
1997 between Central Parking Corporation and Harwood. Harwood
agrees that all services rendered by him in connection with
this Agreement will be for the sole benefit of CPS and Harwood
agrees that this Consultancy Agreement is not to be construed
or interpreted as in any way derogating the effect of the
Confidentiality and Noncompete Agreement.
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement as of
January 1, 1997.
CENTRAL PARKING SYSTEM, INC.
ATTEST: By:
---------------------------- ------------------------------------
Monroe J. Carell, Jr., Chairman
ATTEST: By:
---------------------------- ------------------------------------
Sanford Harwood
<PAGE> 1
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is entered into this 6th day of
December, 1996 by and among Central Parking Corporation, a Tennessee corporation
("Purchaser"), Square Industries, Inc., a New York corporation (the "Company"),
First American National Bank ("Escrow Agent"), and Lowell Harwood and Sanford
Harwood (such individuals, collectively, the "Escrow Committee").
RECITALS
WHEREAS, Purchaser, the Company, and Central Parking System -- Empire
State, Inc., a New York corporation and a wholly-owned subsidiary of the
Purchaser ("Merger Sub"), have entered into an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of December 6, 1996, pursuant to which Company
will merge with Merger Sub with the Company surviving as a wholly-owned
subsidiary of Purchaser ("Surviving Corporation"); and
WHEREAS, Pursuant to the Merger Agreement, Purchaser will commence a cash
tender offer (the "Offer") to acquire all the outstanding stock of the Company;
and
WHEREAS, Pursuant to the Merger Agreement, a portion of the Offer Price,
the Merger Consideration and the Option Consideration (collectively the
"Consideration"), shall be deposited by Purchaser and held in escrow as
contingent consideration for distribution to the shareholders, optionholders and
warrantholders of the Company (collectively the "Shareholders") or to be
disbursed in whole or in part to Purchaser based upon resolution of the matters
described in Section 1.2 hereof; and
WHEREAS, the parties believe that there may be significant value that will
result from the resolution of certain contingent events which should accrue to
the benefit of the Shareholders but which can not currently be determined; and
WHEREAS, the resolution of such matters is dependent upon contingent events
beyond the control of the parties; and
WHEREAS, the Merger Agreement authorizes the Escrow Committee to represent
the interests of the Shareholders with respect to the Contingencies (as
hereinafter defined); and
WHEREAS, capitalized terms not otherwise defined in this Agreement shall
have the respective definitions assigned to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the premises of the Merger Agreement
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties have agreed to establish an escrow (the
"Escrow") pursuant to which a portion of the Consideration is to be deposited by
Purchaser to be held as contingent consideration for the Shareholders or
disbursed in whole or in part to Purchaser based upon resolution of the matters
described in Section 1.2 hereof (collectively, the "Contingencies") pursuant to
the terms of this Agreement. Accordingly, the parties hereto agree as follows:
SECTION 1. ESCROW.
1.1. Establishment of Escrow. Simultaneously with the deposit of
sufficient funds with the Depositary as required to consummate the tender offer,
Purchaser is delivering directly to the Escrow Agent a portion of the
Consideration, the payment of which is contingent upon the resolution of the
matters described in Section 1.2 hereof, equaling $2.50 per Share for each Share
tendered in the Offer by the Shareholders and for each Share which the holder of
any option or warrant is entitled to purchase under such option or warrant to
the extent that the holder of such option or warrant has agreed to the
"cash-out" provisions of Section 3.5 of the Merger Agreement. In addition, at
the Effective Time, Purchaser will deliver to the Escrow Agent $2.50 per Share
of the remaining Shares outstanding. The Depositary shall keep a list of (i) all
Shareholders who have tendered Shares which have been accepted for payment by
Purchaser in the Offer and the number of Shares so tendered, (ii) the number of
Shares converted into Option Consideration promptly after the closing of the
Offer and (iii) the Shareholders whose Shares are converted into Merger
Consideration in the Merger
<PAGE> 2
and the number of shares so converted (the "Escrow Certificate"). The Escrow
Agent shall invest such Escrowed Funds, provided the Escrowed Funds may only be
invested in short-term government securities (30 day maximum). Any interest
earned on the Escrowed Funds shall become part of the Escrowed Funds and be
available to be distributed pursuant to this Escrow Agreement. The contingent
rights in the Escrow are an integral part of the Consideration and shall be held
as contingent consideration for the Shareholders in the proportions set forth in
the Escrow Certificate. Such rights shall not be evidenced by a certificate or
any document other than this Escrow Agreement and the Merger Agreement, and do
not represent an interest in Purchaser, Merger Sub or Surviving Corporation.
1.2. Contingent Matters. The Escrowed Funds have been deposited by the
Purchaser with the Escrow Agent because of certain outstanding contingent
matters, which if resolved favorably could result in additional value to the
Company. The parties believe that in the event of a favorable resolution of
either or both of these contingencies the Shareholders should be entitled to the
distribution of the Escrowed Funds in whole or in part in accordance with the
terms hereof. The contingent matters contemplated by this Escrow Agreement are
set forth in Section 1.2.1 and 1.2.2.
1.2.1. The Wooster Escrow. $1.99 per Share of the Escrowed Funds (the
"Wooster Escrow") shall be held by the Escrow Agent for a period of up to
twelve (12) months from the Effective Time unless extended as provided in
this Section 1.2.1 (the "Escrow Period") solely in connection with the
resolution of the matters described in this Section 1.2.1. If during the
Escrow Period, the Company's property at 75 Wooster, New York, New York is
leased under a commercially reasonable lease agreement containing at least
the terms included in Exhibit 1.2(a) attached hereto, which include an
annual rental rate of no less than $900,000.00, (a "Conforming Lease") or
the Wooster property is sold on commercially reasonable terms that contain
at least the terms included in Exhibit 1.2(b) (a "Conforming Sale"), then
the entire Wooster Escrow shall be promptly delivered to the Depositary to
be distributed on a pro rata basis to the Shareholders based upon their
contingent rights thereto (based upon the proportions set forth in the
Escrow Certificate) upon notice from the Escrow Committee or Purchaser to
the Escrow Agent that such lease, executed by the lessee, has been
presented to Purchaser or Surviving Corporation for execution (or a
Conforming Sale has been consummated). If a Conforming Lease is being
negotiated but has not been executed or a contract for a Conforming Sale
executed by the potential purchaser is presented to Purchaser during the
Escrow Period, but such Conforming Lease is not presented or such
Conforming Sale is not closed during the Escrow Period, the Escrow Period
may be extended for ninety (90) days, in which case a Conforming Lease
executed or a Conforming Sale closed during such extension shall qualify as
a Conforming Lease or a Conforming Sale for purposes of the Wooster Escrow.
In the event that a Conforming Lease (or Conforming Sale) is not so
presented during the Escrow Period, as may be extended as provided above,
Purchaser shall be entitled to receive the entire Wooster Escrow without
any further claim by Shareholders. In the event that during the Escrow
Period, the property is leased on commercially reasonable terms, including
the terms included in Exhibit 1.2(a), but with a rental of less than
$900,000.00 per annum, Purchaser shall be entitled to receive from the
Wooster Escrow a sum in the aggregate equal to ten (10) times the
difference between $900,000.00 and the actual annual rental, up to the
maximum amount of the Wooster Escrow, if any, and the balance of the
Wooster Escrow shall be delivered to the Depositary to be distributed to
the Shareholders pro rata based upon the proportions set forth in the
Escrow Certificate. In the event that during the Escrow Period, the
property is sold at a purchase price of less than $9,000,000.00, payable in
cash at closing, Purchaser shall be entitled to receive from the Wooster
Escrow a sum in the aggregate equal to the difference between $9,000,000.00
and the actual sales price, up to the maximum amount of the Wooster Escrow
and the balance of the Wooster Escrow, if any, shall be delivered to the
Depositary to be distributed to the Shareholders pro rata based upon the
proportions set forth in the Escrow Certificate. In the event that during
the Escrow Period (i) the property is leased for a sum in excess of
$900,000.00 per year, on commercially reasonable terms including the terms
included in Exhibit 1.2(a), Purchaser shall pay over to the Escrow Agent an
additional sum of five (5) times the difference between $900,000.00 and the
actual annual rental; or (ii) the property is sold for a sum in excess of
$9,000,000.00, payable in cash at closing, Purchaser shall pay over to the
Escrow Agent an additional sum of fifty percent (50%) of the difference
between $9,000,000.00 and the actual sales price, which shall be delivered
to the Depositary for distribution to the
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<PAGE> 3
Shareholders of the Company together with the entire Wooster Escrow on a
pro-rata basis as additional Consideration. In the event of any variation
of the other terms set forth on Exhibit 1.2, the parties agree to use their
reasonable efforts to negotiate an equitable distribution of the Wooster
Escrow. Any interest on the Wooster Escrow shall accrue on a pro rata basis
to the party receiving such funds. All requests for distribution of the
Wooster Escrow pursuant to this Section 1.2.1 shall be made in accordance
with and shall be subject to Section 2 of this Agreement.
1.2.2. Occupancy Tax Escrow. $.51 per Share of the Escrowed Funds
shall be held in escrow by the Escrow Agent during the Escrow Period solely
in connection with the resolution of the matters described in this Section
1.2.2 (the "Occupancy Tax Escrow"). In the event the total commercial rent
occupancy tax liability of the Company or the Surviving Corporation for all
tax periods from June 1, 1984 through May 31, 1991, in the aggregate
(including all interest, penalties and principal) (the "Occupancy Tax
Liability") is less than or equal to $800,000, the Escrow Agent shall
promptly deliver to the Depositary the entire Occupancy Tax Escrow to be
distributed to the Shareholders on a pro rata basis based upon the
proportions set forth in the Escrow Certificate. If the Occupancy Tax
Liability is more than $800,000 but less than or equal to $900,000, the
Escrow Agent shall pay to Purchaser the Occupancy Tax Escrow funds equal to
the difference between the amount of the Occupancy Tax Liability and
$800,000, and any remaining Occupancy Tax Escrow funds shall be delivered
to the Depositary to be distributed to the Shareholders on a pro rata basis
based upon the proportions set forth in the Escrow Certificate. If the
Occupancy Tax Liability is more than $900,000 but less than or equal to
$1,000,000, the Escrow Agent shall pay to Purchaser the Occupancy Tax
Escrow funds equal to 110% of the difference between the amount of the
Occupancy Tax Liability and $800,000, and any remaining Occupancy Tax
Escrow funds shall be delivered to the Depositary to be distributed to the
Shareholders on a pro rata basis based upon the proportions set forth in
the Escrow Certificate. If the Occupancy Tax Liability is more than
$1,000,000, the Escrow Agent shall pay to Purchaser the Occupancy Tax
Escrow funds equal to 120% of the difference between the amount of the
Occupancy Tax Liability and $800,000, and any remaining Occupancy Tax
Escrow funds shall be delivered to the Depositary to be distributed to the
Shareholders on a pro rata basis based upon the proportions set forth in
the Escrow Certificate. In the determination of the Occupancy Tax
Liability, funds received from certain lessors or owners of property for
payment of the commercial rent occupancy tax required by such lease or
management agreement for any tax periods from June 1, 1984 through May 31,
1991, will be credited against the Occupancy Tax Liability provided that
Purchaser shall be required to make reasonable commercial efforts to
exercise its rights to recover such funds under the terms of the Company's
or the Surviving Corporation's agreements with respect thereto. The Escrow
Period may be extended by either the Escrow Committee or the Purchaser if
the tax liability for all tax periods ending on or prior to May 31, 1991 is
not finally resolved as of 12 months after the Effective Time provided in
no event may the Escrow Period extend beyond three years after the
Effective Time. Any interest on the Occupancy Tax Escrow shall accrue on a
pro rata basis to the party receiving such funds. All requests for
distribution of the Occupancy Tax Escrow pursuant to this Section 1.2.2
shall be made in accordance with and shall be subject to Section 2 of this
Agreement.
1.2.3. No Commingling. There shall be no commingling of the Wooster
Escrow and the Occupancy Tax Escrow, each of which is available solely to
satisfy its respective Contingency. Any expenses or costs of the Escrow
Agent in connection with disputes shall be allocated solely to the escrow
relating to the Contingency which is the subject of the dispute. Any
expenses relating generally to the escrow will be allocated proportionately
to the Wooster Escrow and the Occupancy Tax Escrow.
SECTION 2. DISTRIBUTION OF FUNDS.
2.1. Distributions. The Escrowed Funds will be distributed in accordance
with the procedures described in this Section 2.
2.2. Right to Release of Funds. Subject to any conflicting provisions of
Section 3 below, any time prior to the termination of this Escrow Agreement,
Purchaser may give written notice to the Escrow Committee or the Escrow
Committee may give written notice to Purchaser (in either case, with a copy to
the Escrow Agent)
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<PAGE> 4
of the resolution of either of the Contingencies (the "Notice"). Any Notice
shall briefly set forth the basis of the Notice and a reasonable estimate of the
amount to be distributed to the Depositary for distribution to each of the
Shareholders and Purchaser.
2.3. Holdback by Escrow Agent. Upon receipt by the Escrow Agent of such a
Notice, the Escrow Agent shall hold in escrow such portion of the Escrowed Funds
which will be sufficient to pay such resolution of the Contingencies, until
there has been a determination of the pending Contingencies in accordance with
the provisions of Section 2.4 hereof and such Escrowed Funds are distributable
pursuant to Section 2.5.
2.4. Resolution of Contingencies. If within ten (10) days after Notice as
provided in Section 2.2 Purchaser or Escrow Committee, as applicable, shall not
have received written objection (in the form specified later in this Section
2.4) to the resolution of such Contingency, then the Contingency shall be deemed
to have been resolved as provided in such Notice. If within this ten (10) day
period, written objection to such Notice is received from the other party (which
written objection shall state the nature and basis of the objection to the
Notice or the amount thereof, all in good faith, and a copy of which shall be
sent to the Escrow Agent), then for a period of ten (10) days after receipt of
such objection the parties shall attempt to settle the disputed resolution of
such Contingency. If they are unable to settle the dispute, the unresolved issue
or issues shall be settled in accordance with Section 5 hereof. The Purchaser
and the Escrow Committee, jointly (or, in the event of an arbitration proceeding
pursuant to Section 5, the prevailing party) shall promptly certify the final
determination of any resolution of such Contingency under this Section 2.4 by
written instruction to the Escrow Agent, upon which the Escrow Agent shall be
entitled to rely (provided that any unilateral notice by the prevailing party in
any arbitration proceeding is accompanied by a certified copy of the arbitration
award).
2.5. Distribution of Funds. Contingencies as to which a final
determination has been made pursuant to Section 2.4 shall be distributed in
accordance with this Section 2.5 promptly upon final determination of such
Contingency. The Escrow Agent shall distribute such Escrowed Funds, free and
clear of any interest of the other party as provided in any Notice which is not
contested or as provided in any joint Notice from Purchaser and Escrow Committee
of any contested Notice.
SECTION 3. TERMINATION OF ESCROW.
The Escrow will terminate one (1) year after the Effective Time unless
extended pursuant to Section 1.2 hereof. Immediately prior to such termination,
in the event there is then pending any contested resolution of a Contingency
which has (have) not been finally determined, the Purchaser or Escrow Committee
shall certify to the Escrow Agent in writing (with a copy to the other party)
the continuing validity of its Notice regarding such Contingency and the
Contingency shall be resolved in accordance with Section 2.4.
Upon termination of the Escrow, the Escrow Agent shall release and deliver
to the Depositary for distribution to the Shareholders the Escrowed Funds to be
delivered to the Shareholders pursuant to this Escrow Agreement in proportion to
the Shareholders' respective contingent rights as then reflected in the Escrow
Certificate held by the Depositary, free and clear of any escrow or
contingencies.
SECTION 4. ESCROW AGENT.
4.1 Appointment. Purchaser and the Escrow Committee hereby designate and
appoint First American National Bank, as Escrow Agent to serve in accordance
with the terms and conditions of this Agreement. The Escrow Agent hereby accepts
such appointment and agrees to act as Escrow Agent in accordance with such terms
and conditions.
4.2 Compensation and Expenses. Purchaser and the Escrow Committee agree
that the Escrow Agent shall be compensated for its services hereunder out of the
Escrowed Funds in accordance with Exhibit 4.2 hereto. Escrow Agent shall also be
entitled to reimbursement from the Escrowed Funds for all reasonable expenses
paid or incurred by it in the administration of its duties hereunder, including,
but not limited to, reasonably incurred transactional charges, counsel,
advisors' and agents' fees and disbursements. In the event a portion of the
Escrowed Funds is distributed to the Purchaser and a portion is delivered to the
Depositary to
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<PAGE> 5
be distributed to the Shareholders under the terms of this Escrow Agreement, the
amount paid to the Escrow Agent shall be deducted on a pro rata basis from the
amount distributed to the Purchaser and the Shareholders.
4.3 Resignation and Discharge. The Escrow Agent may resign and be
discharged from its duties or obligations hereunder at any time by giving notice
of such resignation to the Purchaser and the Escrow Committee specifying a date
(not less than 30 days after the giving of such notice) when such resignation
shall take effect. Promptly after such notice, a successor Escrow Agent shall be
appointed at the joint direction of the Purchaser and Escrow Committee, and such
successor Escrow Agent will become Escrow Agent hereunder upon the resignation
date specified in the notice. The Escrow Agent shall continue to serve until its
successor accepts the Escrow and receives the Escrowed Funds. The Purchaser and
the Escrow Committee may agree at any time to substitute a new Escrow Agent by
giving notice thereof to the Escrow Agent then acting, provided that in the
event the Escrow Agent is removed it shall be entitled to receive its
compensation pursuant to Section 4.2 hereof earned prior to the date of removal.
4.4 Liability of Escrow Agent. The Escrow Agent undertakes to perform only
such duties as are specifically set forth in this Agreement, and shall have no
implied duties or obligations and shall not be charged with knowledge or notice
of any fact or circumstance not set forth herein. The Escrow Agent, acting or
refraining from acting in good faith, shall not be liable for any mistake of
fact or error of judgment by it or for any acts or omissions by it of any kind
taken in good faith, unless caused by willful misconduct or gross negligence.
Escrow Agent shall not be bound by any notice or demand, or any waiver,
modification, termination or rescission of this Agreement or any of its terms,
unless evidenced by a writing delivered to Escrow Agent, signed by the proper
party or parties. Escrow Agent shall be entitled to rely on any written document
delivered to it by the Purchaser and the Escrow Committee which the Escrow Agent
in good faith reasonably believes to be genuine, to have been signed or
presented by the person or parties purporting to sign the same and to conform to
the provisions of this Agreement.
4.5 Indemnification of Escrow Agent. From and at all times after the date
of this Agreement, Purchaser shall, to the fullest extent permitted by law and
to the extent provided herein, indemnify and hold harmless Escrow Agent and each
director, officer, employee, attorney, agent and affiliate of Escrow Agent
against any and all actions, claims (whether or not valid), losses, damages,
liabilities, costs and expenses of any kind or nature whatsoever (including
without limitation reasonable attorneys' fees, costs and expenses) incurred by
or asserted against any of the Escrow Agent from and after the date hereof,
whether direct, indirect or consequential, as a result of or arising from or in
any way relating to any claim, demand, suit, action or proceeding (including any
inquiry or investigation) by any person, whether threatened or initiated,
asserting a claim for any legal or equitable remedy against any person under any
statute or regulation, including, but not limited to, any federal or state
securities laws, or under any common law or equitable cause or otherwise,
arising from or in connection with the negotiation, preparation, execution,
performance or failure of performance of this Agreement or any transactions
contemplated herein, whether or not the Escrow Agent is a party to any such
action, proceeding, suit or the target of any such inquiry or investigation;
provided, however, that the Escrow Agent shall not have the right to be
indemnified for any liability determined by a court of competent jurisdiction,
subject to no further appeal, to have resulted from the gross negligence or
willful misconduct of the Escrow Agent. If any such action or claim shall be
brought or asserted against the Escrow Agent, the Escrow Agent shall promptly
notify Purchaser in writing, and Purchaser shall assume the defense thereof,
including the employment of counsel satisfactory to the Escrow Agent and the
payment of all expenses. Escrow Agent shall, in its sole discretion, have the
right to employ separate counsel in any such action and to participate in the
defense thereof, and the fees and expenses of such counsel shall be paid by the
Escrow Agent unless (a) Purchaser agrees to pay such fees and expenses, or (b)
Purchaser shall fail to assume the defense of such action, or (c) the named
parties to any such action or proceeding (including any impleaded parties)
include both Escrow Agent and Purchaser and the Escrow Agent shall have been
advised in writing by counsel that there are one or more legal defenses
available to it which are different from or additional to those available to
Purchaser. The obligations of Purchaser under this Section 4.5 shall survive any
termination of this Agreement and the resignation or removal of Escrow Agent.
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<PAGE> 6
4.6 Further Assurances. Purchaser and the Escrow Committee shall deliver
or cause to be delivered to Escrow Agent such further documents and instruments
and shall do and cause to be done such further acts as Escrow Agent shall
reasonably request (it being understood that Escrow Agent shall have no
obligation to make any such request) to carry out more effectively the
provisions and purposes of this Agreement, to evidence compliance herewith or to
assure itself that it is protected in acting hereunder.
4.7 Reports to Parties. The Escrow Agent shall, at least once during each
twelve-month period of the Escrow, deliver to the Depositary a report showing
the value (in dollars) of the Escrowed Funds and the status of the Escrowed
Funds. The Escrow Agent will request the Depositary to distribute to each
Shareholder a report showing the above plus the value (in dollars) of such
Shareholder's contingent rights in the Escrow.
SECTION 5. DISPUTES.
Any dispute that may arise under this Escrow Agreement with respect to (a)
any Notice by Purchaser or Escrow Committee; (b) the delivery, ownership, or
right to possession of the Escrowed Funds or any portion thereof; (c) the
instructions given to the Escrow Agent; and (d) any other questions arising
under this Agreement, shall be settled by (i) mutual agreement of the parties to
such dispute (evidenced by appropriate instructions in writing to the Escrow
Agent jointly by the Purchaser and the Escrow Committee, upon which the Escrow
Agent may rely) or (ii) by a binding and final arbitration in accordance with
the rules and procedures of the American Arbitration Association, whose
determination shall be final and conclusive. The Purchaser shall cooperate in
the voluntary exchange of information to expedite any such arbitration,
including without limitation, providing access to the Surviving Corporation's
tax and financial information as required to verify occupancy tax matters. The
Arbitration shall be conducted in New York City and shall be submitted to a
panel of three arbitrators who shall be recognized as experts in the New York
City Commercial Real Estate Market and issues related thereto, one of which
shall be selected by Purchaser, one of which shall be selected by the Escrow
Committee and the third of which shall be selected by the first two. The Escrow
Agent shall be under no duty to institute or defend any such proceedings and
none of the costs and expenses of any such proceedings shall be borne by the
Escrow Agent. Prior to the settlement of any dispute as provided in this Section
5, the Escrow Agent is authorized and directed to retain in its possession,
without liability to anyone (but subject to Section 4.4 hereof), the portion of
the Escrowed Funds that is the subject of or involved in the dispute. The Escrow
Agent shall be entitled to rely on a copy of the arbitration award with respect
to any such dispute delivered to it and certified as true and correct by the
prevailing party. If the Purchaser is the prevailing party in any such dispute,
it shall be entitled to recover as an addition to the Escrowed Funds
distributable pursuant to the final resolution of the Contingency in dispute,
Escrowed Funds equal to all reasonable costs and expenses including legal fees,
incurred by Purchaser in connection with the dispute. If the Shareholders are
the prevailing party in any such dispute, they shall be entitled to recover from
the Purchaser, all reasonable costs and expenses, including legal fees and
Escrow Agent fees and expenses incurred by the Shareholders in connection with
the dispute.
SECTION 6. ALLOCATION OF INTEREST.
Any interest earned on the Escrowed Funds during the Escrow Period, but not
distributed to either the Shareholders or the Purchaser at the end of any
taxable period will be deemed interest income of the Escrow pursuant to Section
468B of the Internal Revenue Code of 1986, as amended and will not be treated as
interest income to the Shareholders or Purchaser prior to distribution.
SECTION 7. MISCELLANEOUS.
7.1. No Waiver. No failure to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, provided
that the exercise of the remedies hereunder are exclusive of any other remedies
provided by law or contract.
7.2. Governing Law; Amendments. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Tennessee,
without giving effect to principles of conflict or laws. This
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Agreement may not be changed orally or modified, amended or supplemented without
an express written agreement executed by Escrow Agent and the other parties.
7.3. Assignment. This Agreement, and the terms, covenants and conditions
hereof, shall be binding upon and inure to the benefit of each party's
respective successors and legal representatives. Neither Purchaser nor the
Escrow Committee may assign any right or delegate any obligation under this
Agreement without the
prior written consent of Escrow Committee or Purchaser as the case may be and
any such attempted assignment or delegation will be null and void. A Shareholder
may not transfer its contingent rights with respect to the Escrow except by
will, intestate succession, or operation of law.
7.4. Headings. Section headings used herein are for convenience only and
are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
7.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute one and the same instrument.
7.6. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given: (a) if delivered
personally or sent by facsimile, on the date received, (b) if delivered by
overnight courier, on the day after mailing, and (c) if mailed, five (5) days
after mailing with postage prepaid. Any such notice shall be sent as follows:
if to the Purchaser:
Central Parking Corporation
2401 21st Avenue South, Suite 200
Nashville, TN 37212
Attention: Chairman
(with copies to)
Mark Manner, Esq.
Harwell Howard Hyne Gabbert & Manner, P.C.
1800 First American Center
315 Deaderick Street
Nashville, Tennessee, 37238;
if to the Escrow Committee:
Lowell Harwood
c/o Leo Silverstein
Brock Fensterstock Silverstein McAuliffe & Wade, LLC
153 East 53rd Street, 56th Floor
New York, New York 10022-4611
Sanford Harwood
c/o Leo Silverstein
Brock Fensterstock Silverstein McAuliffe & Wade, LLC
153 East 53rd Street, 56th Floor
New York, New York 10022-4611
(with copies to)
Daniel R. Kaplan, Esq.
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 10036
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<PAGE> 8
and
Leo Silverstein, Esq.
Brock Fensterstock Silverstein McAuliffe & Wade, LLP
One Citicorp Center
153 East 53rd Street
56th Floor
New York, New York 10022
If to the Escrow Agent:
First American National Bank
First American Center, 4th Floor
315 Deaderick Street
Nashville, Tennessee 37237-0404
Attention: Tammy Johnston
or to such other addresses as may be designated in writing by the party to
receive such notice. The Depositary can be notified at SunTrust Bank, Atlanta,
58 Edgewood Avenue, Room 225, Atlanta, Georgia 30303, Attention: Letitia
Radford.
7.7. Entire Agreement, etc. This Agreement constitutes the entire
agreement, and supersedes all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof, and, except as otherwise expressly
provided herein, are not intended to confer upon any other person any rights or
remedies hereunder.
7.8. Parties in Interest. This Agreement shall be binding upon and inure
to the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person, other than the
Shareholders, any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Escrow
Agreement as of the date first above written.
PURCHASER
By:
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Title:
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COMPANY
By:
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Title:
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ESCROW COMMITTEE
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ESCROW AGENT
By:
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Title:
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EXHIBIT 1.2
(a) A Conforming Lease shall include at least the following terms:
1. provide for an annual rental rate of no less than $900,000.00
2. have a non-cancelable term of at least fifteen (15) years
3. contain triple net lease provisions
4. provide for at least a two percent annual rental escalation
5. grant no more than one year free rent and
6. grant no more than a $750,000 build out allowance
(b) A Conforming Sale shall include at least the following terms:
1. a sale price of no less than $9,000,000.00 before deduction for or
the payment of any broker fees payable in cash at closing.
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AGREEMENT TO SUPPORT THE TRANSACTION
This Agreement (the "AGREEMENT") is made and entered into as of the
6th day of December, 1996 in favor of CENTRAL PARKING CORPORATION, a Tennessee
corporation ("PURCHASER"), and CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC., a
New York corporation and wholly-owned indirect subsidiary of Purchaser ("MERGER
SUB"), by Lowell Harwood, Mrs. Lowell Harwood, Sanford Harwood, Brett Harwood,
Mrs. Brett Harwood, Brett Harwood as custodian and trustee for his minor
children, Leslie Harwood Ehrlich, Craig Harwood, Scott Harwood and Scott
Harwood as custodian for his minor children (collectively, the "SIGNIFICANT
SHAREHOLDERS").
W I T N E S S E T H:
WHEREAS, effective simultaneously herewith Purchaser, Merger Sub and
Square Industries, Inc. ( the "Company") have entered into an Agreement and
Plan of Merger dated as of the date hereof (the "Plan of Merger") pursuant to
which the Merger Sub will offer to purchase all of the outstanding common stock
of the Company; and
WHEREAS, under the conditions set forth herein the Significant
Shareholders have agreed to tender all of their shares of common stock, par
value $.01 of the Company (the "Company Common Stock") to Merger Sub in the
Offer.
NOW, THEREFORE, in order to induce Purchaser and Merger Sub to enter
into the Plan of Merger and in consideration of the foregoing and the covenants
and agreements set forth herein, and good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
ARTICLE 1.
1.1 Agreement to Tender Shares. The Significant Shareholders
agree to tender all of their Shares (including any Shares owned by foundations
or trusts over which the Shareholder has the power of disposition) of Company
Common Stock to Merger Sub in the Offer prior to the expiration of the Offer
and to enter into agreements to cash out all of their outstanding options and
warrants as provided in Section 3.5 of the Plan of Merger. In the event the
Board of Directors of the Company shall conclude, in good faith, in compliance
with Section 5.2 of the Plan of Merger, not to recommend, or to withdraw or
modify its recommendation of, the Offer or the Merger to the shareholders of
the Company in a situation which would permit the termination of the Plan of
Merger pursuant to Sections 7.3(ii) or 7.4(ii) of the Plan of Merger, then the
Significant Shareholders shall no longer be required to tender their Shares in
the Offer pursuant to this Section 1.1 and may withdraw any Shares tendered.
1.2 Support of Merger by Significant Shareholders. The Significant
Shareholders
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agree in their capacity as shareholders to support the Offer and the Merger, to
use their reasonable best efforts to recommend the Offer to the Company's other
shareholders, to seek approval of the Merger, and to take all actions and
execute all documents reasonably requested by Purchaser to carry out the
foregoing matters, the Offer and the Plan of Merger, including, but not limited
to the execution of written consent actions. In the event the Board of
Directors of the Company, including the Significant Shareholders in their
capacity as directors, shall conclude, in good faith, in compliance with
Section 5.2 of the Plan of Merger, not to recommend, or to withdraw or modify
its recommendation of, the Offer or the Merger to the shareholders of the
Company in a situation which would permit the termination of the Plan of Merger
pursuant to Sections 7.3(ii) or 7.4(ii) of the Plan of Merger, then the
Significant Shareholders shall no longer be required to support the Offer and
the Merger as provided in this Section 1.2.
1.3 Corporation Not Liable. From and after the Effective Date,
Significant Shareholders will not seek indemnification, contribution, recourse
or redress of any kind against Company or any of its subsidiaries in connection
with any indemnification or similar obligations pursuant to corporate law, or
contractual rights with respect to:
(a) in their positions and capacities as Company
shareholders with respect to any claims they may have as Company shareholders
against the Company and/or any officers or directors or employees of Company
and its subsidiaries with respect to the actions of Company and its
subsidiaries and its officers and directors and employees in connection with
negotiating and approving the Merger and related transactions; and
(b) any transaction with the Company (or any of its
subsidiaries) in which such person has a direct or indirect conflict of
interest.
provided, however, this waiver shall not affect the right of such persons to
indemnification under the Merger Agreement.
Significant Shareholders agree, however, that in the event that they
receive any benefits as shareholders or former shareholders of the Company as a
result of actions taken by shareholders or former shareholders of the Company
against the Company or Purchaser based on wrongdoing of the Company or its
officers or directors (including, but not limited to, fiduciary duty breach)
relating to the Merger then all such benefits shall be promptly returned to the
Company or Purchaser (or the Company and Purchaser can fail to pay such
benefits to the Significant Shareholder).
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1.4 Confidentiality Covenant by Significant Shareholders. Other
than their support of the Offer and the Merger contemplated hereby, Significant
Shareholders covenant and agree that they will not divulge, furnish, publish or
use for any purpose whatsoever, including but not limited to for any of their
personal benefit or for the direct or indirect benefit of any other person or
business entity, whether or not for monetary gain, any information which is not
generally known in the real estate or parking industries, regarding the
Company, the Merger or the transactions contemplated by the Plan of Merger or
of Purchaser or its subsidiaries, including without limitation, any information
relating to any business methods, marketing and business plans, financial
contacts, financial data, systems, customers, suppliers, procedures,
techniques, research, knowledge or processes used or developed by Purchaser or
its subsidiaries, or any other proprietary or confidential information relating
to Purchaser or its subsidiaries and their respective businesses. Each will
inform any of its representatives who receive information relating to the
Merger (the "Representatives") to treat such information confidentially and not
to use it other than for the purpose of analyzing and evaluating the Merger.
Each shall cause it and its Representatives to not trade securities of
Purchaser or Company or tip other persons until there is a public announcement
of the Merger.
1.5 Bankruptcy, etc. Each of the Significant Shareholders
represents that as to himself or herself, he or she is not involved as a debtor
in any proceedings in any court under any bankruptcy law or any other
insolvency or debtor's relief law, whether federal or state, or for the
appointment of a trustee, receiver, liquidator, assignee, sequesteror or other
similar official for a Significant Shareholder or any of their property.
ARTICLE 2.
2.1 Definitions. All terms which are capitalized and not defined
herein shall have the same meanings as given them in the Plan of Merger.
2.2 Several Obligations. The obligations of each of the
Significant Shareholders under this agreement are several and not joint.
2.3 Assignment by Purchaser. Purchaser may freely assign this
Agreement to an affiliate; provided Purchaser remains liable for any of its
obligations hereunder, without the express written consent of Significant
Shareholder(s). No Significant Shareholder(s) may assign any right or
delegate any obligation under this Agreement without the prior written consent
of Purchaser, and any prohibitive assignment or delegation will be null and
void. Purchaser will not unreasonably withhold consent to a transfer of
Company Common Stock from a Significant Shareholder to this Agreement if the
transferee agrees in writing to be bound by the terms of this Agreement.
2.4. Notices. All notices, requests, consents and other
communications hereunder
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shall be in writing and shall be deemed to have been made when delivered or
mailed first-class postage prepaid by registered mail, return receipt
requested, or when delivered if by hand, overnight delivery service or
confirmed facsimile transmission, to the following:
(a) If to Purchaser, Merger Sub or Surviving Corporation,
c/o Central Parking, Central Parking Corporation at 2401 21st Avenue South,
Suite 200, Nashville, TN 37212, Attention: Chairman, or at such other address
as may have been furnished to Significant Shareholders by Purchaser in writing;
or
(b) If to Significant Shareholder(s), at c/o Leo
Silverstein, Brock, Fensterstock, Silverstein, McAuliffe & Wade, LLC, 153 E.
53rd Street, 56th Floo, New York, New York 10022 or such other address as may
have been furnished to Purchaser by Significant Shareholder(s) in writing.
2..5. Controlling Law. This Agreement shall be construed,
interpreted and enforced in accordance with the laws of the State of New York.
2.6. Headings. Any paragraph headings in this Agreement are for
convenience of reference only and shall not be considered or referred to in
resolving questions of interpretation.
2.7 Binding Nature. Subject to Paragraph 2.3, this Agreement
shall be binding upon and shall inure to the exclusive benefit of the parties
hereto and their respective heirs, legal representatives, successors and
assigns.
2.8. Validity of Provisions. If any provision of this Agreement
shall be held to be illegal, invalid or unenforceable under any applicable law,
then such contravention or invalidity shall not invalidate the entire
Agreement. Such provision shall be deemed to be automatically modified to the
extent necessary to render it legal, valid and enforceable, and if no such
modification shall render it legal, valid and enforceable, then this Agreement
shall be construed as if not containing the provision held to be invalid, and
the rights and obligations of the parties shall be construed and enforced
accordingly.
2.9. Waiver. Neither the failure nor any delay on the part of any
party hereto in exercising any rights, power or remedies hereunder shall
operate as a waiver thereof, or of any other right, power or remedy; nor shall
any single or partial exercise of any right, power or remedy preclude any
further or other exercise thereof, or the exercise of any other right, power or
remedy.
2.10. Entire Agreement. This Agreement, those documents expressly
referred to herein, and other documents of even date herewith embody the
complete Agreement and understanding among the parties with respect to the
subject matter hereof, and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.
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2.11. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
ARTICLE 3.
3.1 Effectiveness. This agreement is effective upon the execution
of the Plan of Merger.
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IN WITNESS WHEREOF, this agreement has been duly executed as of the
date first written above.
SIGNIFICANT SHAREHOLDERS:
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Lowell Harwood
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Mrs. Lowell Harwood
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Sanford Harwood
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Brett Harwood
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Mrs. Brett Harwood
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Brett Harwood, as custodian and trustee
for his minor children
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Leslie Harwood Ehrlich
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Craig Harwood
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Scott Harwood
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Scott Harwood, as custodian for
his minor children
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EXHIBIT (c)(7)
July 10, 1996
Square Industries, Inc.
c/o The Blackstone Group L.P.
345 Park Avenue
New York, NY 10154
CONFIDENTIALITY AGREEMENT
Dear Sirs:
In connection with our possible interest in an acquisition of or merger
with Square Industries, Inc. (the "Transaction"), you or your Representatives
(as defined below) are furnishing us or our Representatives with certain
information (written or oral) which is either non-public, confidential or
proprietary in nature. This information shed to us or our Representatives,
together with any notes, analyses, compilations, forecasts, studies, memoranda,
computer-stored data or other documents prepared by us or our Representatives
which contain or otherwise reflect such information, is hereinafter referred to
as the "Information". As used in this agreement, the term "Representative"
means, as to any person, such person's affiliates and its and their respective
directors, officers, employees, partners, shareholders, members, agents,
advisors (including financial advisors, attorneys and accountants) and other
representatives.
In consideration of your furnishing us with the Information, we agree that
the Information will be kept confidential and shall not, without your prior
written consent, be disclosed by us or our Representatives, in any manner
whatsoever, in whole or in part, and shall not be used by us or our
Representatives other than in connection with evaluating a possible
Transaction. For purposes hereof, the term "Information" shall not include
such portion of the information which (i) is or becomes generally available to
the public other than as a result of a disclosure by us or our Representatives
or (ii) is or becomes available to us or our Representatives on a
nonconfidential basis from a source which, to our knowledge, is not prohibited
from disclosing such information to us or our Representatives. With respect to
the latter it shall be assumed that any source which provides us with
information has been prohibited from disclosing the Information to us or our
Representatives unless the Company prior to any disclosure has been advised by
us of the source and the Company has not advised us of the prohibition.
We agree to reveal the Information only to our Representatives who need to
know the Information for the purpose of evaluating the possible Transaction,
who are informed by us of the confidential nature of the Information and who
shall agree to act in accordance with the
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terms and conditions of this agreement. We shall be responsible for any breach
of this agreement by our Representatives.
Without your prior written consent, except as required by law (as advised
by counsel), and in which case prior notice will be given to you, we and our
Representatives will not disclose to any person the fact that the Information
has been made available, that discussions or negotiations are taking place or
have taken place concerning a possible Transaction involving us and Square
Industries, Inc. (the "Company") or any of the terms, conditions or other facts
with respect to any such possible Transaction, including the status thereof.
The term "person" as used in this agreement shall be interpreted broadly to
include the media and any governmental representative or authority, company,
partnership, joint venture group, partner, co-venturer, individual or other
entity.
All copies of the Information, except for that portion of the Information
which consists of notes, analyses, compilations, forecasts, studies, memoranda,
other computer-stored data or other documents prepared by us or our
Representatives ("Internal Materials"), will be returned to you immediately
upon your request. In addition, Internal Materials will be kept confidential
for a period of five (5) years from the date hereof. Notwithstanding such
return, we and our Representatives will continue to be bound by our obligations
of confidentiality (including with respect to oral Information) and our other
obligations as provided hereunder.
It is understood that all (i) communications regarding a possible
Transaction, (ii) requests for additional information, (iii) requests for
facility tours or management meetings and (iv) discussions or questions
regarding procedures, will be submitted or directed to The Blackstone Group
L.P. ("Blackstone").
We acknowledge that none of you, Blackstone or your or their
Representatives, makes any express or implied representation or warranty as to
the accuracy or completeness of the Information, and each of you, Blackstone
and your and their Representatives, expressly disclaims any and all liability
that may be based on the Information, efforts therein or omissions therefrom.
We agree that we are not entitled to rely on the accuracy or completeness of
the Information and that any reliance would be as specifically provided in the
definitive agreement, if any, regarding the Transaction.
In the event that we or any of our Representatives are required to
disclose any of the Information pursuant to any applicable law, regulation or
legal process, we will provide you with prompt notice thereof so that you may
seek a protective order or other appropriate remedy and/or waive compliance
with the provisions of this agreement. In the event that such protective order
or other remedy is not obtained, or that the Company waives compliance with the
provisions of this agreement, we will furnish only that portion of the
Information which we are advised by counsel is legally required and will
exercise our reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded the Information.
We agree that you reserve the right, in your sole and absolute discretion,
to reject any or all proposals, to decline to furnish further information and
to terminate discussions and
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negotiations with us at any time. The exercise by you of these rights shall not
affect the enforceability of any provision of this agreement.
We agree that until the expiration of two (2) years from the date of this
agreement, we shall not, without the prior approval of the Board of Directors
of the Company, (i) in any manner acquire, agree to acquire or make any
proposal to acquire, directly or indirectly, any securities of the Company or
any of its subsidiaries, (ii) propose to enter into, directly or indirectly,
any merger or business combination involving the Company or any of its
subsidiaries or to purchase, directly or indirectly, a material portion of the
assets of the Company or any of its subsidiaries, (iii) make, or in any way
participate, directly or indirectly, in any "solicitation" of "proxies" (as
such terms are defined under Regulation 14A of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) to vote, or seek to advise or influence
any person with respect to the voting of any voting securities of the Company
or any of its subsidiaries, (iv) form, join or in any way participate in a
"group" (within the meaning of Section 13(d) of the Exchange Act and the rules
and regulations thereunder) with respect to any voting securities of the
Company or any of its subsidiaries, (v) otherwise act, alone or in concert with
others, to seek to control or influence the management, Board of Directors or
policies of the Company or any of its subsidiaries, (vi) disclose any
intention, plan or arrangement inconsistent with the foregoing or (vii) advise,
assist or encourage any other persons in connection with any of the foregoing.
We also agree during such period not to (a) request the Company or its
Representatives, directly or indirectly, to amend or waive any provision of
this paragraph (including this sentence) or (b) take any action which might
require the Company to make a public announcement regarding the possibility of
an acquisition, business combination or merger.
Until two (2) years from the date of this agreement, except with the prior
written consent of the Company, we agree not to, and will direct our
Representatives not to, (a) based on the Information hold any discussions with
lessors, property owners, suppliers, customers and/or any other person with
whom the Company or any of its subsidiaries have a relationship regarding the
Company or any of its subsidiaries for the purpose of negotiating or executing
a lease or management contract with respect to any parking facility or property
to include a parking facility which facility or property is included in the
Information or (b) solicit for hire any of the executive officers or
management-level employees of the Company or any of its subsidiaries.
We hereby acknowledge that we are aware, and that we will advise our
Representatives who are furnished Information, that securities laws prohibit
any person who has received from an issuer material, non-public information
concerning the matters which are the subject of this agreement from purchasing
or selling securities of such issuer or from communicating such information to
any other person.
We understand and agree that no failure or delay by you or your
Representatives in exercising any right, power or privilege hereunder shall
operate as a waiver hereof nor shall any single or partial exercise thereof
preclude any other or further exercise of any right, power or privilege
hereunder. We acknowledge that remedies at law may be inadequate to protect
against breach of this agreement, and we hereby in advance agree to the
granting of specific performance and/or injunctive relief in your favor without
proof of actual damage without the
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Company being required to post any bond or any security. Such relief shall not
be deemed to be the exclusive relief for a breach by us or our Representatives
of this agreement but shall be in addition to all other remedies available to
you at law or equity. In addition, in the event that any portion of this
agreement shall be held to be invalid or unenforceable for any reason, it is
hereby agreed that such invalidity or unenforceability shall not affect the
other portions of this agreement.
We hereby confirm that we are not acting as a broker for or a
representative of any person and are considering the Transaction only for our
own account. Any assignment of this agreement by us without your prior written
consent shall be void.
Except as otherwise provided herein, the terms and provisions of this
agreement will terminate three years from the date hereof.
We agree that this agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York. We hereby
irrevocably consent to the exclusive jurisdiction of the federal and state
courts located in the City of New York (and appellate courts therefrom) for any
actions or proceedings arising out of or relating to this agreement,
irrevocably waive any objection to the venue of any such action or proceeding
in any such court and unconditionally waive any objection that such action or
proceeding has been brought in an inconvenient forum and agree not to plead or
claim the same.
Please confirm your agreement with the foregoing, by signing and returning
to the undersigned the duplicate copy of this agreement enclosed herewith.
Very truly yours,
Central Parking Corp.
By:
-----------------------------
Name: Monroe J. Carell, Jr.
Title: Chairman and CEO
Accepted:
Square Industries, Inc.
By:
-----------------------
Name:
Title:
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