1
Exhibit 10(a)
=============================================================
ASSET PURCHASE AGREEMENT
Dated as of August 23, 1995
between
NATIONAL AUTO CREDIT, INC.
and
AGENCY RENT A CAR SYSTEM, INC.
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II SALE OF ASSETS . . . . . . . . . . . . . . . . . . 9
Section 2.1. Sale of Assets . . . . . . . . . . . . . . . . . . . 9
Section 2.2. Purchase Price . . . . . . . . . . . . . . . . . . . 9
Section 2.3. Allocation of Purchase Price . . . . . . . . . . . . 10
Section 2.4. Closing . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.5. Further Assurances . . . . . . . . . . . . . . . . . 10
Section 2.6. Non-Assignable Contracts . . . . . . . . . . . . . . 11
ARTICLE III REPRESENTATIONS OF THE SELLER . . . . . . . . . . . 11
Section 3.1. Existence and Good Standing . . . . . . . . . . . . 11
Section 3.2. Yellow Page Advertising . . . . . . . . . . . . . . 12
Section 3.3. Financial Statements; No Material
Adverse Change . . . . . . . . . . . . . . 13
Section 3.4. Warranties; Warranty Claims . . . . . . . . . . . . 13
Section 3.5. Books and Records . . . . . . . . . . . . . . . . . 13
Section 3.6. Title to Assets; Encumbrances . . . . . . . . . . . 14
Section 3.7. Site Leases . . . . . . . . . . . . . . . . . . . . 14
Section 3.8. Restrictive Documents . . . . . . . . . . . . . . . 15
Section 3.9. Permits . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.10. Litigation . . . . . . . . . . . . . . . . . . . . 15
Section 3.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.12. Liabilities . . . . . . . . . . . . . . . . . . . . 17
Section 3.13. Insurance . . . . . . . . . . . . . . . . . . . . . 17
Section 3.14. Intellectual Properties . . . . . . . . . . . . . . 18
Section 3.15. Compliance with Laws . . . . . . . . . . . . . . . 19
Section 3.16. Employment Relations . . . . . . . . . . . . . . . 19
Section 3.17. Employee Benefit Plans . . . . . . . . . . . . . . 20
Section 3.18. Environmental Laws and
Regulations . . . . . . . . . . . . . 21
Section 3.19. Solvency . . . . . . . . . . . . . . . . . . . . . 21
Section 3.20. Absence of Certain Changes or
Events . . . . . . . . . . . . . . . . 22
Section 3.21. Broker's or Finder's Fees . . . . . . . . . . . . . 23
Section 3.22. Copies of Documents . . . . . . . . . . . . . . . . 23
Section 3.23. Vehicle Condition . . . . . . . . . . . . . . . . . 23
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Page
ARTICLE IV REPRESENTATIONS OF THE PURCHASER . . . . . . . . 24
Section 4.1. Existence and Good Standing; Power
and Authority; Conflicts . . . . . . . . 24
Section 4.2. Broker's or Finder's Fees . . . . . . . . . . . . 25
Section 4.3. Employees . . . . . . . . . . . . . . . . . . . . 25
Section 4.4. Insurance . . . . . . . . . . . . . . . . . . . . 25
Section 4.5. Avis, Inc. Net Worth . . . . . . . . . . . . . . . 25
ARTICLE V CONDUCT OF BUSINESS; EXCLUSIVE DEALING;
REVIEW . . . . . . . . . . . . . . . . . . . . 26
Section 5.1. Conduct of Business of the Seller . . . . . . . . 26
Section 5.2. Exclusive Dealing . . . . . . . . . . . . . . . . 27
Section 5.3. Review of the Seller . . . . . . . . . . . . . . . 27
ARTICLE VI CONDITIONS TO THE PURCHASER'S
OBLIGATIONS . . . . . . . . . . . . . . . . . . 28
Section 6.1. Opinions of Counsel . . . . . . . . . . . . . . . 28
Section 6.2. No Material Adverse Change . . . . . . . . . . . . 28
Section 6.3. Truth of Representations and
Warranties . . . . . . . . . . . . . 28
Section 6.4. Performance of Agreements . . . . . . . . . . . . 29
Section 6.5. No Litigation Threatened . . . . . . . . . . . . . 29
Section 6.6. Governmental Approvals . . . . . . . . . . . . . . 29
Section 6.7. ▇▇▇▇ of Sale . . . . . . . . . . . . . . . . . . . 29
Section 6.8. Other Arrangements . . . . . . . . . . . . . . . . 29
Section 6.9. Employment Agreements . . . . . . . . . . . . . . 29
Section 6.10. Credit Rating/Net Worth . . . . . . . . . . . . . 30
Section 6.11. Estoppel Certificates/Consents,
etc. . . . . . . . . . . . . . . . . . 30
Section 6.12. Rent Expense . . . . . . . . . . . . . . . . . . 30
Section 6.13. Certain Terminations, etc. . . . . . . . . . . . 30
Section 6.14. ▇▇▇▇▇▇▇▇ Non-Compete Agreement . . . . . . . . . 30
Section 6.15. Closing Balance Sheet, etc. . . . . . . . . . . . 31
Section 6.16. Intellectual Property
Infringements . . . . . . . . . . . 31
Section 6.17. Permits . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII CONDITIONS TO THE SELLER'S OBLIGATIONS . . . . . 31
Section 7.1. Opinions of Purchaser's Counsel . . . . . . . . . 32
Section 7.2. Truth of Representations and
Warranties . . . . . . . . . . . . . . . 32
Section 7.3. Performance of Agreements . . . . . . . . . . . . 32
Section 7.4. No Litigation Threatened . . . . . . . . . . . . . 32
Section 7.5. Governmental Approvals . . . . . . . . . . . . . . 32
Section 7.6. Ancillary Agreements. . . . . . . . . . . . . . 32
Section 7.7. Avis, Inc. Guaranty. . . . . . . . . . . . . . . . 32
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Page
Section 7.8. Avis, Inc. Net Worth . . . . . . . . . . . . . . 32
ARTICLE VIII COVENANTS; OTHER AGREEMENTS . . . . . . . . . . 33
Section 8.1. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act . . . . . . . . . . . . . 33
Section 8.2. Licenses and Permits . . . . . . . . . . . . . . 33
Section 8.3. Non-Competition; Confidentiality . . . . . . . . 33
Section 8.4. Information Sharing . . . . . . . . . . . . . . 34
Section 8.5. Cooperation/Record Keeping . . . . . . . . . . . 34
Section 8.6. Transfer Taxes . . . . . . . . . . . . . . . . . 35
Section 8.7. Covenant Not to Use Tradenames,
etc. . . . . . . . . . . . . . . . . . 35
Section 8.8. Estoppel Certificates/Consents . . . . . . . . . 35
Section 8.9. Intellectual Property Infringement
Correspondence . . . . . . . . . . . . 36
Section 8.10. Employee Compensation . . . . . . . . . . . . . 36
Section 8.11. Name Change . . . . . . . . . . . . . . . . . . 36
ARTICLE IX SURVIVAL OF REPRESENTATIONS; INDEMNITY . . . . 36
Section 9.1. Survival of Representations . . . . . . . . . . 36
Section 9.2. Indemnification . . . . . . . . . . . . . . . . 36
Section 9.3. Indemnification Procedure . . . . . . . . . . . 38
ARTICLE X TERMINATION . . . . . . . . . . . . . . . . . . 40
Section 10.1. Termination . . . . . . . . . . . . . . . . . . 40
Section 10.2. Effect of Termination . . . . . . . . . . . . . 41
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . 41
Section 11.1. Expenses . . . . . . . . . . . . . . . . . . . 41
Section 11.2. Bulk Transfer Laws . . . . . . . . . . . . . . 41
Section 11.3. GOVERNING LAW; JURISDICTION . . . . . . . . . . 41
Section 11.4. Captions . . . . . . . . . . . . . . . . . . . 42
Section 11.5. Publicity . . . . . . . . . . . . . . . . . . . 42
Section 11.6. Notices . . . . . . . . . . . . . . . . . . . . 42
Section 11.7. Parties in Interest . . . . . . . . . . . . . . 43
Section 11.8. Counterparts . . . . . . . . . . . . . . . . . 43
Section 11.9. Entire Agreement . . . . . . . . . . . . . . . 43
Section 11.10. Amendments . . . . . . . . . . . . . . . . . . 43
Section 11.11. Severability . . . . . . . . . . . . . . . . . 43
Section 11.12. Third Party Beneficiaries . . . . . . . . . . 43
Section 11.13. Rights Cumulative . . . . . . . . . . . . . . 44
Section 11.14. Interest. . . . . . . . . . . . . . . . . . . 44
Section 11.15. Name Change Acknowledgement. . . . . . . . . . 44
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Page
EXHIBITS
EXHIBIT A Form of Assignment and Assumption Agreement
EXHIBIT B Form of ▇▇▇▇ of Sale
EXHIBIT C Form of Corporate Office Lease
EXHIBIT D Form of ▇▇▇▇▇▇▇▇ Non-Compete Agreement
EXHIBIT E Form of Interim Services Agreement
EXHIBIT F Form of License Agreement
EXHIBIT G Form of Trademark Assignment (Quitclaim)
EXHIBIT H Form of Trademark Assignment (Registered)
EXHIBIT I Form of Trademark Assignment (Unregistered)
EXHIBIT J Form of Vehicle Lease Agreement
EXHIBIT K Form of Hel ▇▇▇ Incorporated Letter Agreement
EXHIBIT L Form of Avis, Inc. Guaranty
SCHEDULES
Schedule 1.1(a) Prepaid Assets
Schedule 1.1(b) Rental Vehicles
Schedule 1.1(c) Support Vehicles
Schedule 3.2 Yellow Pages Advertising
Schedule 3.3 Balance Sheet
Schedule 3.6 Encumbrances
Schedule 3.7 Site Leases
Schedule 3.9 Permits
Schedule 3.10 Litigation
Schedule 3.13 Insurance Policies
Schedule 3.14 Intellectual Properties
Schedule 3.16 Employment Relations
Schedule 3.20 Changes; Events
Schedule 4.3 Employees
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ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT dated as of August 23, 1995 between
NATIONAL AUTO CREDIT, INC., a Delaware corporation (the "Seller") and AGENCY
RENT A CAR SYSTEM, INC. (formerly known as Avis Capital Corporation), a
Delaware corporation (the "Purchaser").
W I T N E S S E T H :
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WHEREAS, the Seller is the owner of the Assets;
WHEREAS, upon the terms and conditions set forth in this
Agreement, the Seller desires to sell and the Purchaser desires to buy the
Assets; and
NOW, THEREFORE, in consideration of the mutual covenants and
conditions set forth herein that the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
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Section 1.1. DEFINITIONS. In addition to the terms defined
elsewhere in this Agreement, the following terms shall have the respective
meanings specified therefor below:
"Agreed Claims" shall have the meaning specified in Section
9.4(d).
"Agreement" shall mean this Agreement as amended, modified or
supplemented from time to time.
"Ancillary Agreements" shall mean the Assignment and
Assumption Agreement, the Trademark Assignment (Registered), the Trademark
Assignment (Unregistered), the Trademark Assignment (Quitclaim), the ▇▇▇▇ of
Sale, the Interim Services Agreement, the Vehicle Lease Agreement, the
Corporate Office Lease, the Employment Agreements and the License Agreement.
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"Assets" shall mean all of Seller's right, title and interest
in and goodwill related to the Replacement Vehicle Intellectual Property
(including the Tradename Rights and all signs, documents, orders, labels and
other materials containing Tradenames), the Support Vehicles, the Permits, the
Telephone Numbers, the F&F and the Prepaid Assets (but shall not include any
Existing Rentals), in each case as in existence on the Closing Date.
"Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement by and between the Seller and the
Purchaser, in the form of Exhibit A hereto pursuant to which, INTER ALIA, the
Seller assigns and or otherwise transfers (including by sublease) to Purchaser
Seller's rights under the Site Leases and the Purchaser assumes Seller's
obligations under the assigned Site Leases arising on or after the Closing
Date.
"Balance Sheet" shall have the meaning specified in Section
3.3.
"Balance Sheet Date" shall have the meaning specified in
Section 3.3.
"▇▇▇▇ of Sale" shall mean the ▇▇▇▇ of Sale to be executed by
the Seller at the Closing, in substantially the form of Exhibit B hereto.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks located in New York, New York or Cleveland, Ohio
shall be authorized or required by law to close.
"Certificate" shall have the meaning specified in Section
9.3(a).
"Closing" shall have the meaning specified in Section 2.4(a)
"Closing Date" shall have the meaning specified in Section
2.4(a).
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidentiality Agreement" shall have the meaning specified
in Section 5.3.
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"Corporate Headquarters" shall mean the real property located
at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇ owned by the Seller and
serving as the Seller's headquarters office.
"Corporate Office Lease" shall mean a lease substantially in
the form of Exhibit C hereto providing for the sublease by the Purchaser of a
portion of the Corporate Headquarters for a period of up to 18 months.
"Critical Site Leases" shall mean the Site Leases designated
on Schedule 3.7 hereto by the Purchaser as critical to the Replacement Vehicle
Business.
"Current Replacement Vehicle Intellectual Property" shall have
the meaning provided in Section 3.14.
"Damages" shall have the meaning specified in Section 9.2(a).
"Employment Agreements" shall have the meaning specified in
Section 6.9.
"Environmental Claims" means administrative, regulatory or
judicial actions, suits, demand letters, claims, liens, notices of
non-compliance or violation or proceedings relating in any way to any
Environmental Law or any permit issued under any such Law (hereafter "Claims"),
including (i) Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to
any applicable Environmental Law, and (ii) Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"Environmental Law" means any applicable federal, state or
local statute, law, rule, regulation, ordinance, code or rule of common law in
effect and in each case as amended as of the Closing Date, relating to the
environment or Hazardous Materials, including the Comprehensive Environmental
Response Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
6901 ET SEQ.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
Section 9601 ET SEQ.; the Federal Water Pollution Control Act, as amended, 33
U.S.C. Section 1251 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C.
Section 2601 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the
Safe Drinking Water Act, 42 U.S.C. Section 300f ET
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SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ.; and their
state and local counterparts and equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated thereunder. All
citations to ERISA or the regulations promulgated thereunder shall include any
amendment, substitute or successor thereto.
"Existing Rentals" shall mean and include all rental and lease
agreements relating to the Rental Vehicles and in effect on the Closing Date,
provided that any renewal or extension of any such agreement shall not
constitute an Existing Rental.
"F&F" shall mean the furniture and fixtures owned by the
Seller on the Closing Date and located at any Seller Property.
"F&F Purchase Price" shall mean $400,000.
"▇▇▇▇▇▇▇▇ Non-Compete Agreement" shall mean the Non-Compete
Agreement, between the Purchaser and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in the form of Exhibit D
hereto.
"GAAP" shall mean generally accepted accounting principles in
the Unites States.
"Hazardous Materials" means (i) any new or used petroleum or
petroleum products, antifreeze, asbestos in a form that is friable and
transformers or other equipment that contain dielectric fluid containing levels
of polychlorinated biphenyls of 50 ppm or greater; and (ii) any chemicals,
materials or substances defined as or included in the definition of "Hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants,"
or words of similar import, under any applicable Environmental Law.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder.
"Indemnified Party" shall have the meaning specified in
Section 9.3(a).
"Indemnifying Party" shall have the meaning specified in
Section 9.3(a).
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"Intellectual Property" shall mean any domestic or foreign
patents, patent applications, registered and common law trademarks and service
marks, trademark and service ▇▇▇▇ registrations and applications therefor,
copyrights, copyright registrations and applications therefor, tradenames
(including all Tradenames), customer lists, trade secrets and proprietary
information.
"Interim Services Agreement" shall mean an agreement
substantially in the form of Exhibit E.
"IRS" shall mean the United States Internal Revenue Service.
"Knowledge" shall mean, with respect to any corporate entity,
the actual or constructive knowledge of any officer of such corporate entity,
after due inquiry.
"License Agreement" shall mean the License Agreement
substantially in the form of Exhibit F hereto related to the licensing of the
tradename "Agency Rent-A-Car" by the Purchaser to the Seller for the purposes
set forth therein.
"Limited Post-Closing Period" shall mean with respect to (i)
information relating to the Replacement Vehicles leased by the Purchaser under
the Vehicle Lease Agreement, the period from the Closing Date until thirty (30)
days after the last Rental Vehicle leased by the Purchaser thereunder is
returned to the Seller, and (ii) all other information relating to the
Replacement Vehicle Business, the period from the Closing Date until six months
after the Closing Date.
"Material Adverse Effect" shall mean a material adverse effect
on (i) the business, operations, results of operations, assets, liabilities,
condition (financial or otherwise) or prospects of the Replacement Vehicle
Business or (ii) the use, title or value of the Assets.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Net Book Value", as to any item or asset, shall mean the net
book value of the same, determined in accordance with GAAP, as of the Closing
Date as recorded on the books and records of Seller, maintained in accordance
with the past practices of Seller.
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"Permit" shall have the meaning specified in Section 3.9.
"Permitted Liens" shall mean (i) liens reflected on the
Balance Sheet, (ii) liens arising by operation of law, and (iii) liens for
current taxes, assessments or governmental charges or levies on property not
yet due and delinquent.
"Person" shall mean any individual, partnership, limited
partnership, joint venture, corporation, limited liability company, limited
liability partnership, trust, unincorporated organization, governmental body or
any subdivision or agency thereof or any other entity.
"Post-Closing Yellow Pages Price" shall mean an amount equal
to the aggregate value of prepaid Yellow Pages advertising expenses relating to
Yellow Pages advertising and listings for future periods as to which the
cut-off date for inclusion will occur between the day after the Closing Date
and thirty (30) days after the Closing Date.
"Pre-Closing Periods" shall have the meaning set forth in
Section 3.11.
"Prepaid Assets" shall mean the assets listed on Schedule
1.1(a) hereto including (i) the Prepaid Registrations and (ii) the prepaid
Yellow Page advertising expenses listed thereon (specifying the periods for
which such advertising is (x) prepaid and (y) in effect).
"Prepaid Registrations" shall mean the licenses,
registrations, license plates and similar prepaid expenses relating to the
Rental Vehicles and the Support Vehicles.
"Prepaid Registrations Price" shall mean an amount equal to
the aggregate value of all Prepaid Registrations as of the Closing Date.
"Purchase Price" shall have the meaning specified in Section
2.2.
"Purchaser" shall have the meaning specified in the first
paragraph hereof.
"Release" or "Released" shall mean disposing, discharging,
injecting, spilling, leaking, leaching, dumping, emitting, escaping, emptying,
seeping, placing and the like
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into or upon any land, or water or air or otherwise entering into the
environment.
"Rental Vehicle" shall mean any vehicle owned by the Seller
(or any subsidiary of the Seller) and rented or leased by the Seller (or any
subsidiary of the Seller) in the Replacement Vehicle Business. Schedule 1.1(b)
lists all Rental Vehicles owned by the Seller on the Closing Date and the
following information with respect to each Rental Vehicle: depreciable basis,
original in-service date, rate of depreciation, accumulated depreciation and
mileage as of last check-in date.
"Replacement Vehicle Business" shall mean the business of
renting and/or leasing Rental Vehicles as conducted by the Seller to and
including the Closing Date.
"Replacement Vehicle Intellectual Property" shall have the
meaning specified in Section 3.14.
"Returns" shall have the meaning specified in Section 3.11.
"S&P" shall mean Standard & Poor's Corporation.
"Seller" shall have the meaning specified in the first
paragraph hereof.
"Seller Property" means any real property leased, used,
operated or occupied by the Seller pursuant to a Site Lease.
"Site Employees" shall mean all employees of the Seller
immediately prior to the Closing Date whose job location is at a Seller
Property.
"Site Lease" shall have the meaning specified in Section 3.7.
"Specified Employees" shall mean (i) those employees listed on
Schedule 4.3 and (ii) the Site Employees.
"Support Vehicles" shall mean all trucks, vans, dollies and
other vehicles listed on Schedule 1.1(c) owned by the Seller on the Closing
Date and not constituting Rental Vehicles but utilized in support of the
Replacement Vehicle Business.
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"Tax Matter" shall have the meaning specified in Section 8.14.
"Taxes" shall mean all taxes, assessments, charges, duties,
fees, levies or other governmental charges, including, without limitation, all
federal, commonwealth, state, local, foreign and other income, franchise,
profits, capital gains, capital stock, transfer, sales, use, occupation,
property, excise, severance, windfall profits, stamp, license, payroll,
withholding, employment occupation, corporation, alternative or add-on minimum
tax and other taxes, assessments, charges, duties, fees, levies or other
governmental charges of any kind whatsoever (whether payable directly or by
withholding and whether or not requiring the filing of a return), and all
estimated taxes, deficiency assessments, additions to tax, penalties, interest
and additional amounts attributable thereto imposed by any federal,
commonwealth, state, local or foreign taxing authority, including any liability
for such amounts as a result either of being a member of a combined,
consolidated, unitary or affiliated group.
"Telephone Numbers" shall mean all operating telephone numbers
for Seller Properties and, except for telephone numbers used by the Seller in
connection with its other businesses, all other telephone numbers relating to
the Replacement Vehicle Business and controlled (by agreement, lease or
otherwise) by the Seller and/or its subsidiaries on the date hereof and which
under existing agreements, regulations and law, may be transferred to the
Purchaser on the Closing Date.
"Trademark Assignment (Quitclaim)" shall mean an assignment of
unregistered trademarks in the form of Exhibit G hereto.
"Trademark Assignment (Registered)" shall mean an assignment
of registered trademarks in the form of Exhibit H hereto.
"Trademark Assignment (Unregistered)" shall mean an assignment
of unregistered trademarks in the form of Exhibit I hereto.
"Tradename Rights" shall mean all of the Seller's right, title
and interest in the Tradenames.
"Tradenames" shall mean all tradenames, trademarks and
servicemarks presently or previously used by the Seller
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(or which it has the right to use) in the Replacement Vehicle Business,
including, without limitation, the servicemarks "Agency Rent-A-Car", "Agency",
"Altra Auto Rental", "Automate Auto Rental", "Agency Auto Sales" and
"Replacement Rent-A-Car."
"Transaction Documents" shall mean and include this Agreement
and each of the Ancillary Agreements.
"Transfer Taxes" shall have the meaning specified in Section
8.6.
"Vehicle Lease Agreement" shall mean a lease substantially in
the form of Exhibit J hereto.
ARTICLE II
SALE OF ASSETS
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Section 2.1. SALE OF ASSETS. On the terms and subject to the
conditions of this Agreement, at the Closing, the Seller will sell, assign,
transfer, convey and deliver to the Purchaser, and the Purchaser will accept
and purchase from the Seller, all of the Seller's right, title and interest to
the Assets.
Section 2.2. PURCHASE PRICE. In consideration of the
transfer and conveyance of the Assets to the Purchaser, at the Closing, the
Purchaser shall pay to the Seller the amount of the sum of (i) $18,000,000 plus
(ii) the Net Book Value of the Support Vehicles plus (iii) the F&F Purchase
Price plus (iv) the Prepaid Registrations Price plus (v) the Post-Closing
Yellow Pages Price (the "Purchase Price"). The Purchase Price shall be paid at
the Closing in immediately available funds by bank wire transfer to an account
of the Seller designated by the Seller in writing to the Purchaser at least two
Business Days prior to the Closing. Notwithstanding anything to the contrary
set forth in this Agreement, the Purchaser will not assume any liabilities of
the Seller, whether relating to the Replacement Vehicle Business, the Assets or
the Site Leases or otherwise, pursuant to this Agreement, it being understood
that the Purchaser's assumption of certain liabilities of the Seller in respect
of the Site Leases shall be solely as set forth in the Assignment and
Assumption Agreement. The parties acknowledge that pursuant to this Agreement
they will enter into the Ancillary Agreements on the Closing Date and will
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incur obligations to each other under such Ancillary Agreements to which they
are a party.
Section 2.3. ALLOCATION OF PURCHASE PRICE. The Seller and
the Purchaser agree to allocate the aggregate purchase price to be paid for the
Assets in accordance with Section 1060 of the Code. In addition, the Seller
and the Purchaser hereby undertake and agree to file timely any information
that may be required to be filed pursuant to Treasury Regulations promulgated
under Section 1060(b) of the Code. Neither the Seller nor the Purchaser shall
file any tax return or other document or otherwise take any position which is
inconsistent with the allocation determined pursuant to this Section 2.3.
Section 2.4. CLOSING. (a) The consummation of sale referred
to in Section 2.1 (the "Closing") shall take place at 10:00 a.m. on the date
which is five Business Days after the satisfaction or waiver of each of the
conditions set forth in Article VI and Article VII of this Agreement (the
"Closing Date") at the offices of Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or on such other date and at
such other time as the parties may mutually agree.
(b) All of the actions taken and documents executed or
delivered at the Closing shall be deemed to be taken, executed or delivered
simultaneously, and no such action, execution or delivery shall be effective
until all such actions to be taken and executions and deliveries to be
accomplished are complete.
Section 2.5. FURTHER ASSURANCES. (a) At any time and from
time to time at and after the Closing, at the request and expense of the
Purchaser, the Seller shall execute and deliver or cause to be executed and
delivered all such deeds, assignments, consents, and other documents, and take
or cause to be taken all such other actions, as the Purchaser reasonably deems
necessary or desirable in order to (i) put the Purchaser in actual possession
or operating control of the Assets, (ii) more fully and effectively vest in the
Purchaser, or to confirm their title to and possession of, the Assets or (iii)
otherwise carry out the terms of this Agreement.
(b) At any time and from time to time at and after the
Closing, at the request and expense of the Seller, the Purchaser shall execute
and deliver or cause to be executed and delivered, all such documents, and take
or cause to be
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taken all such other actions, as the Seller reasonably deems necessary or
desirable in order to more fully and effectively divest the Seller of the
incidents of ownership of the Assets and of the liabilities assumed by the
Purchaser pursuant to the Assignment and Assumption Agreement or otherwise
carry out the terms of this Agreement.
Section 2.6. NON-ASSIGNABLE CONTRACTS. To the extent that
the assignment of any contract, license or other right or asset to be assigned
as provided hereunder shall require the consent of another party thereto, this
Agreement shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof, but, upon request by the
Purchaser, the Seller will use its reasonable efforts to obtain the written
consent of the other parties to the assignment of all such contracts, licenses
or other rights or assets, and if such consent is not obtained, the Seller and
the Purchaser shall cooperate in any arrangement reasonably acceptable to the
Purchaser designed to provide to the Purchaser the benefits, subject to the
assumption by the Purchaser of the obligations and liabilities of the Seller,
under any such agreements.
ARTICLE III
REPRESENTATIONS OF THE SELLER
-----------------------------
The Seller hereby represents, warrants and agrees as follows:
Section 3.1. EXISTENCE AND GOOD STANDING. (a) The Seller is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Seller has the power to own the Assets and
other properties and to carry on the Replacement Vehicle Business as now being
conducted. The Seller is duly qualified to do business and is in good standing
in each jurisdiction in which the character or location of the Assets or other
properties owned or leased by the Seller and used in the Replacement Vehicle
Business or the nature of the Replacement Vehicle Business makes such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect.
(b) The Seller has the corporate power and authority to
execute and deliver the Transaction Documents to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated
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hereby and thereby. The execution, delivery and performance of each of the
Transaction Documents to which it is a party, and the consummation by it of the
transactions contemplated hereby and thereby, has been duly authorized and
approved by its Board of Directors and no other corporate action on the part of
the Seller or its shareholders is necessary to authorize and to consummate the
execution, delivery and performance by the Seller of each of the Transaction
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby. Each of the Transaction Documents to which it
is a party has been duly executed and delivered by the Seller and is a valid
and binding obligation of the Seller enforceable against the Seller in
accordance with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(c) The execution and delivery by the Seller of the
Transaction Documents to which it is a party and the consummation by the Seller
of the transactions contemplated hereby and thereby will not: (i) violate any
provision of its Certificate of Incorporation or of its By-Laws; (ii) violate
any statute, ordinance, rule, regulation, order or decree of any court or of
any governmental or regulatory body, agency or authority applicable to the
Seller or by which any of its properties or assets may be bound; (iii) require
any filing with, or permit, consent or approval of, or the giving of any notice
to, any governmental or regulatory body, agency or authority or other Person
(other than under the HSR Act (it being understood that no representation is
made pursuant to the preceding clause (ii) or this clause (iii) in respect of
any bulk transfers laws); or (iv) result in a violation or breach of, conflict
with, constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the Assets, under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease, franchise agreement or other instrument or
obligation to which the Seller is a party, or by which it or any of its
properties or assets may be bound.
Section 3.2. YELLOW PAGE ADVERTISING. Except as set forth on
Schedule 3.2, as of the Closing Date, Yellow Page advertising and listings are
in effect for all Seller Properties consistent with Seller's past practices and
all
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such advertising and listings have been purchased and prepaid for all future
periods as to which a cut off date for inclusion has occurred or will occur
within thirty (30) days after the Closing Date.
Section 3.3. FINANCIAL STATEMENTS; NO MATERIAL ADVERSE
CHANGE. Attached hereto as Schedule 3.3 is an unaudited balance sheet of the
Replacement Vehicle Business (including the Assets) as at April 30, 1995 (the
"Balance Sheet") and the related unaudited statement of income for the three
month period ended on such date. The Balance Sheet fairly presents, in all
material respects, the financial condition of the Replacement Vehicle Business
at the date thereof, and the related statement of income fairly presents in all
material respects, the results of the operations of the Replacement Vehicle
Business for the period indicated. Since April 30, 1995 (the "Balance Sheet
Date"), except for the effect of Seller's decision and announcement to dispose
of the Replacement Vehicle Business, (i) there has been no event, action or
condition which has had, or could reasonably be expected to have, a Material
Adverse Effect, (ii) there has been no loss of any material Asset and (iii) the
Seller has conducted the Replacement Vehicle Business only in the ordinary
course and in a manner consistent with prior business practices.
Section 3.4. WARRANTIES; WARRANTY CLAIMS. Except for
warranties implied by law, in the conduct of the Replacement Vehicle Business,
the Seller does not make any representation or warranty to any of its customers
with respect to Rental Vehicles or Support Vehicles or services provided by it.
Section 3.5. BOOKS AND RECORDS. The respective minutes books
of the Seller and its subsidiaries, as previously made available to Purchaser
and its representatives, contain accurate records of all meetings of, and
corporate action taken by (including action taken by written consent) the
respective shareholders and Boards of Directors of the Seller and each of its
subsidiaries. Neither the Seller nor any subsidiary has any of its records,
systems, controls, data or information used by, concerning or related to the
Replacement Vehicle Business or the Assets, recorded, stored, maintained,
operated or otherwise wholly or partly dependent upon or held by any means
(including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of the
Seller or one of its subsidiaries.
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Section 3.6. TITLE TO ASSETS; ENCUMBRANCES. Except as set
forth in Schedule 3.6 and Schedule 3.14 hereto, the Seller has good, valid and
marketable title to each of the Assets (tangible and intangible) and Rental
Vehicles existing on the Closing Date, including, without limitation, each of
the Assets reflected in the Balance Sheet, except as indicated in the notes
thereto and except for immaterial Assets sold, transferred or otherwise
disposed of in the ordinary course of business since the Balance Sheet Date,
and (ii) each of the Assets and Rental Vehicles purchased by such Seller since
the Balance Sheet Date; in each case subject to no encumbrance, lien, charge or
other restriction of any kind or character except for Permitted Liens.
Section 3.7. SITE LEASES. Schedule 3.7 hereto contains an
accurate and complete list of all real property leases (other than the
Corporate Office Lease) to which the Seller is a party in connection with the
Replacement Vehicle Business and a description of all such leases (including
the remaining term thereof). Each lease set forth in Schedule 3.7 (or required
to be set forth in Schedule 3.7) (each a "Site Lease") is in full force and
effect; all rents and additional rents due to date on each such Site Lease have
been paid; in each case, except as set forth in Schedule 3.7, the lessee has
been in peaceable possession since the commencement of the original term of
such Site Lease and is not in default thereunder and no waiver, indulgence or
postponement of the lessee's obligations thereunder has been granted by the
lessor; and there exists no default or event of default or event, occurrence,
condition or act (including the purchase of the Assets hereunder) which, with
the giving of notice, the lapse of time or the happening of any further event
or condition, would become a default or event of default by the lessee under
any such Site Lease. The Seller has not violated any of the terms or
conditions of any such Site Lease, and, all of the covenants to be performed by
any other party under any such Site Lease have been fully performed. There are
no rental payments required to be made under or in connection with any of the
Site Leases set forth in Schedule 3.7 (or required to be set forth in Schedule
3.7) other than as set forth in Schedule 3.7. As of the date hereof, except as
set forth in Schedule 3.7, Seller has fulfilled all of its obligations required
under any of the Site Leases set forth in Schedule 3.7 (or required to be set
forth in Schedule 3.7). The property leased by the Seller or any subsidiary
pursuant to each Site Lease is in a state of good maintenance and repair and is
adequate and suitable for the purposes for which it is presently being used.
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Section 3.8. RESTRICTIVE DOCUMENTS. Neither the Seller nor
any of its subsidiaries is subject to, or a party to, any charter, by-law,
mortgage, lien, lease, license, permit, agreement, contract, instrument, law,
rule, ordinance, regulation, order, judgment or decree, or any other
restriction of any kind or character, which (i) has, or could be reasonably
expected to have, a Material Adverse Effect or (ii) would prevent consummation
of the transactions contemplated by the Transaction Documents, compliance with
the terms, conditions and provisions hereof or thereof or the continued
operation of the Replacement Vehicle Business after the date hereof or the
Closing Date on substantially the same basis as theretofore operated.
Section 3.9. PERMITS. The Seller holds all material
governmental and other third party permits (including occupancy permits),
licenses, consents and authorizations (each a "Permit") required in connection
with the use, operation or ownership of the Assets and/or the conduct of the
Replacement Vehicle Business. Except as indicated on Schedule 3.9, the Seller
holds all of the Permits in the name Agency Rent-A-Car, Inc. Any applications
for the renewal of any Permit due prior to the Closing Date have been, or will
be, timely filed by the Seller prior to the Closing Date. No proceeding to
modify, suspend, revoke, withdraw, terminate or otherwise limit any such Permit
is pending or, to Knowledge of the Seller, threatened. No administrative or
governmental action has been taken or to the Knowledge of the Seller is
threatened in connection with the expiration, continuance or renewal of any
such Permit.
Section 3.10. LITIGATION. Except as set forth in Schedule
3.10 hereto, there is no action, suit, proceeding at law or in equity,
arbitration or administrative or other proceeding by or before (or any
investigation by) any governmental or other instrumentality or agency, pending,
or, to the Knowledge of the Seller, threatened, against or affecting, the
Seller, the Replacement Vehicle Business or the Assets which has, or could
reasonably be expected to have, a Material Adverse Effect. There are no such
suits, actions, claims, proceedings or investigations pending or threatened,
seeking to prevent or challenging the transactions contemplated by the
Transaction Documents. The Seller is not subject to any judgment, order or
decree entered in any lawsuit or proceeding (i) which may have an adverse
effect on the ability of the Purchaser to (x) acquire any property which is
material to the conduct of the Replacement Vehicle Business or (y) conduct
business in any area in which
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the Replacement Vehicle Business is currently conducted or (ii) which may have
a Material Adverse Effect.
Section 3.11. TAXES. (a) The Seller has timely filed all
returns and reports required to be filed for Taxes for all taxable years or
periods that end on or before the Closing Date and, with respect to any taxable
year or period beginning before and ending after the Closing Date, the portion
of such taxable year or period ending on and including the Closing Date
("Pre-Closing Periods") (collectively, the "Returns") which, if not timely
filed, could give rise to any claim or lien against the Assets.
(b) The Seller has timely paid all Taxes (whether or not
shown on a Return) when due which, if not timely paid, could give rise to a
claim or lien against the Assets.
(c) There is no action, suit, proceeding, investigation,
audit, or claim now pending or, to the Knowledge of the Seller, threatened by
any authority regarding any Taxes relating to the Seller or the Assets which
could give rise to a claim or lien against the Assets.
(d) To the Knowledge of the Seller, no claim has ever been
made by any taxing authority in a jurisdiction where the Seller does not file
Returns that the Seller, any of the Assets and/or the Replacement Vehicle
Business are or may be subject to taxation by that jurisdiction.
(e) There are no liens or security interests on any of the
Assets that arose in connection with any failure (or alleged failure) to pay
any Taxes.
(f) There are no agreements for the extension or waiver of
the time for assessment of any Taxes relating to the Seller, the Assets and/or
the Replacement Vehicle Business for any Pre-Closing Period and the Seller has
not been requested to enter into any such agreement or waiver which could give
rise to a claim or lien against the Assets.
(g) All Taxes which the Seller is required by law to withhold
or collect have been duly withheld or collected, and have been timely paid over
to the proper authorities to the extent due and payable which, if unpaid, could
give rise to a claim or lien against the Assets.
(h) Except pursuant to this Agreement, Seller is not now nor
has been a party to any Tax allocation or sharing
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agreement that could result in any liability to the Purchaser.
Section 3.12. LIABILITIES. Neither the Seller nor any of its
subsidiaries has any material outstanding claims, liabilities or indebtedness,
contingent or otherwise, relating to or secured by the Assets and/or the
Replacement Vehicle Business, except as set forth in the Balance Sheet or
referred to in the footnotes thereto, other than liabilities incurred
subsequent to the Balance Sheet Date in the ordinary course of business not
involving borrowings by the Seller or any subsidiary. Neither the Seller nor
any of its subsidiaries is in default in respect of the terms or conditions of
any material indebtedness.
Section 3.13. INSURANCE. Set forth in Schedule 3.13 hereto
is (i) a complete list of all insurance policies which the Seller maintains
with respect to the Replacement Vehicle Business or the Assets in each case
indicating coverage, limits and carrier, (ii) a description of the contractual
arrangements relating to motor vehicles leased or rented by the Seller that
provide the Seller with the benefits of insurance coverage(s) held or
maintained by individual motor vehicle lessees or rental customers of such
vehicles, (iii) a complete list of all States and other jurisdictions where the
Seller is currently duly authorized and qualified as a self-insurer and (iv) a
complete list of all increases since December 31, 1994 in the premiums payable
under the insurance policies described in clause (i) above and of insurance
policies maintained by the Seller with respect to the Replacement Vehicle
Business and for the Assets that have been cancelled since December 31, 1994.
All such policies, contractual arrangements and qualifications are in full
force and effect and will not terminate or lapse with respect to the Rental
Vehicles and Support Vehicles as a result of the transactions contemplated
hereby (including the Vehicle Lease Agreement but not including a termination
in any State of qualification as a self-insurer as a result of a reduction in
fleet size below the minimum requirements for such State) and are (A) legal,
valid and binding obligations of the Seller enforceable against it in
accordance with their respective terms and (B) to the Knowledge of the Seller,
legal, valid and binding obligations of the other parties thereto enforceable
against such other parties in accordance with their respective terms (and the
Seller has no Knowledge of any failure by it to perform under any of such
policies or contractual obligations, which failure would excuse performance by
such other parties thereunder) and are sufficient for all applicable
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requirements of law. In addition, the insurance reserve maintained by the
Seller for claims arising out of the Rental Vehicle Business are adequate and
Seller will continue to maintain the adequacy of such reserve for all periods
after the Closing Date as appropriate.
Section 3.14. INTELLECTUAL PROPERTIES. Schedule 3.14, Part A
hereto sets forth all Intellectual Property owned by the Seller and its
subsidiaries which are material to, and are currently used by the Seller or any
of its subsidiaries in the Replacement Vehicle Business (the "Current
Replacement Vehicle Intellectual Property"). The operation of the Replacement
Vehicle Business as conducted by the Seller as of the Closing Date requires no
rights under Intellectual Property other than rights under Intellectual
Property listed on Schedule 3.14, Part A and rights granted to the Seller
pursuant to agreements listed on Schedule 3.14, Part A. Within the six year
period immediately prior to the date of this Agreement, the business of the
Seller and its subsidiaries made use of no material Intellectual Property
rights other than (i) the Current Replacement Vehicle Intellectual Property and
(ii) rights under Intellectual Property listed on Schedule 3.14, Part B and
rights granted to the Seller and its subsidiaries pursuant to agreements listed
on Schedule 3.14, Part B (and together with the Current Replacement Vehicle
Intellectual Property, the "Replacement Vehicle Intellectual Property").
Except as otherwise set forth in Schedule 3.14, Part A, the Seller owns all
right, title and interest in the Current Replacement Vehicle Intellectual
Property including, without limitation, exclusive rights to use and license the
same. Certificates or instruments evidencing the registrations and
applications for registration set forth in Schedule 3.14 are in the possession
of the Seller. None of the Current Replacement Vehicle Intellectual Property
are the subject of any outstanding assignments, grants, mortgages, pledges,
trusts, encumbrances or liens, whether written, or oral or implied, which would
preclude the Seller's complete and unencumbered transfer of such rights to the
Purchaser or which would in any way restrict the Purchaser's use of such
Current Replacement Vehicle Intellectual Property. Each item of Current
Replacement Vehicle Intellectual Property listed in Schedule 3.14, Part A as
being registered has been duly registered with, filed in, or issued by the
appropriate domestic governmental agency, and all annuities or other fees have
been paid, to the extent required by prudent business practices, and each such
registration, filing and issuance is valid, subsisting and remains in full
force and effect. The Seller has not registered Replacement Vehicle
Intellectual
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Property with any foreign governmental agency. Except as set forth on Schedule
3.14, Part A, to the extent that any of the registrations set forth in Schedule
3.14, Part A was obtained by assignment or merger, or is the subject of a
change of name, the records of the appropriate governmental agency issuing the
registration have been updated to reflect the proper and complete chain of
title for the registration in question. No claim adverse to the rights or
interests (including ownership and title) of the Seller in the Intellectual
Property or agreements listed in Schedule 3.14, Part A (including a claim of
invalidity or unenforceability) has been threatened (to the Knowledge of the
Seller) or asserted, no basis (to the Knowledge of the Seller) exists for any
such claim and, except as listed on Schedule 3.14, Part A, no Person has
infringed or otherwise violated the Seller's right in any of the Intellectual
Property or agreements listed in Schedule 3.14, Part A. The Seller agrees that
it will comply with any request by the Purchaser made after the Closing Date to
defend at the Seller's expense and indemnify the Purchaser from any claim by a
third party against the Purchaser for unfair competition or infringement of
such third party's rights, in each case based on the Purchaser's use of any of
the Intellectual Property or agreements listed on Schedule 3.14, Part A
(provided such third party used or claimed rights to any such Intellectual
Property on or prior to the Closing Date). No litigation is pending, or to the
Knowledge of the Seller threatened, wherein the Seller is accused of infringing
or otherwise violating the Intellectual Property right of another, or of
breaching a contract conveying rights under Intellectual Property. No such
claim has been asserted or threatened (to the Knowledge of the Seller) against
the Seller, nor are there any facts that would give rise to such a claim. The
foregoing representations and warranties do not limit or restrict the inclusion
of the Replacement Vehicle Intellectual Property as part of the Assets and do
not limit, and are without prejudice to, the Seller's other representations and
warranties with respect to the Assets.
Section 3.15. COMPLIANCE WITH LAWS. Each of the Seller and
its subsidiaries is in compliance in all material respects with all applicable
laws, regulations, orders, judgments and decrees with respect to the
Replacement Vehicle Business or the Assets.
Section 3.16. EMPLOYMENT RELATIONS. With respect to the
Replacement Vehicle Business, except as set forth in Schedule 3.16: (a) the
Seller is in compliance in all material respects with all material federal,
state or other
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applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours (including equal employment and
employee safety) and has not received written notice of any claim that it is in
violation of any such material laws, and has not and is not engaged in any
unfair labor practice; (b) the Seller is not a party to any collective
bargaining agreement with respect to any Specified Employees or any employees
who will provide services under the Interim Services Agreement; (c) there is no
labor strike, material controversy, dispute, slowdown or stoppage actually
pending or (to the Knowledge of the Seller) threatened against or involving the
Seller and any such employees that could have a Material Adverse Effect; (d) no
representation question exists respecting such employees; (e) no grievance
which might have a material adverse effect upon the Seller or the conduct of
the Replacement Vehicle Business exists, no arbitration proceeding relating to
such employees is pending and no claim therefor has been asserted; (f) no
collective bargaining agreement is currently being negotiated by the Seller;
(g) Seller is not liable for any arrearage of wages or any taxes or penalties
for failure to comply with any of the foregoing; and (h) the Seller has not
experienced any material labor difficulty during the last three years.
Section 3.17. EMPLOYEE BENEFIT PLANS. Neither Seller (nor
any member of Seller's controlled group within the scope of Code Section 414),
has any liability to or in connection with any multiemployer plan (within the
meaning of Section 3(37) of ERISA) or any employee benefit plan (within the
meaning of Section 3(3) of ERISA) which would have an adverse impact upon the
Assets or which would subject the Assets to any lien under ERISA or the Code.
The Agency Rent-A-Car, Inc. 401k Savings and Retirement Plan and Trust (the
"401k Plan") has at all times been maintained and operated in substantial
compliance with its terms and requirements of all applicable laws, including,
without limitation, ERISA and the Code. The 401k Plan has been determined to be
qualified under Section 401(a) of the Code by the IRS. The 401k Plan trust
established in connection with the 401k Plan has been determined to be exempt
from Federal income taxation under Section 501(a) of the Code by the IRS. Since
the date of each most recent determination referred to in this Section 3.17, no
event has occurred and no condition or circumstance has existed that resulted
or is likely to result in the revocation of such determination or that could
adversely affect the qualified status of the 401k Plan or the exempt status of
such trust. The Seller has delivered to the Purchaser true and complete copies
of the most recent IRS determination letter obtained with respect to the 401k
Plan.
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Section 3.18. ENVIRONMENTAL LAWS AND REGULATIONS. The Seller
has not used, installed, leased or otherwise become contractually liable for,
nor are any senior executive officers of Seller aware (without inquiry) of the
existence of (i) any underground or above ground storage tanks on any of the
Seller Properties that would have or do contain gasoline, motor oil (new or
used), anti-freeze or other Hazardous Materials or (ii) any asbestos on any of
the Seller Properties, nor has Seller actually received any notice, claim or
other form of communication from any governmental authority, landlord or any
other third party that any Seller Property is or may be in violation of any
Environmental Law.
Section 3.19. SOLVENCY. The Seller is not entering into this
Agreement with actual intent to hinder, delay or defraud creditors.
Immediately prior to and immediately subsequent to the Closing Date (after
giving effect to the transactions contemplated herein):
(a) the present fair salable value of the assets of the
Seller (on a going concern basis) will exceed the probable liability
of the Seller on its debts (including its contingent obligations);
(b) the Seller has not incurred, nor does it intend to or
believe that it will incur, debts (including contingent obligations)
beyond its ability to pay such debts as such debts mature (taking into
account the timing and amounts of cash to be received from any source,
and of amounts to be payable on or in respect of debts); and the
amount of cash available to the Seller after taking into account all
other anticipated uses of funds is anticipated to be sufficient to pay
all such amounts on or in respect of debts, when such amounts are
required to be paid; and
(c) the Seller will have sufficient capital with which to
conduct its businesses, and the respective property of the Seller does
not constitute unreasonably small capital with which to conduct its
businesses.
For purposes of this Section 3.19, "debt" means any liability
on a (i) right to payment whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable secured, or unsecured; or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such a right to an equitable remedy is reduced to
judgment, fixed, contingent,
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matured, unmatured, disputed, undisputed, secured, or unsecured.
Section 3.20. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except
as disclosed on Schedule 3.20 hereto, since the Balance Sheet Date, the Seller
has not:
(a) entered into any commitment or transaction in respect of
the Replacement Vehicle Business, except in the ordinary course of
business of the Replacement Vehicle Business;
(b) experienced any event which caused or, to the Knowledge
of the Seller, could reasonably be expected to cause a Material
Adverse Effect on the Replacement Vehicle Business;
(c) suffered any destruction, damage or loss suffered by any
material asset, or to assets which, in the aggregate are material,
used in the Replacement Vehicle Business;
(d) experienced any labor unrest or other event or condition
which has or threatens to have a Material Adverse Effect;
(e) amended or terminated any Site Lease, material contract,
agreement or Permit relating to the Replacement Vehicle Business
(other than the renewal of any Site Lease or Permit);
(f) incurred any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise), except in the
ordinary course of business;
(g) experienced any change in the management of the
Replacement Vehicle Business or its relationship with suppliers;
(h) made any change in method of accounting or auditing
practice in respect of the Replacement Vehicle Business (except that
as of the quarter ended on July 31, 1995 the Seller will account for
the Replacement Vehicle Business under "discontinued operations
accounting");
(i) sold, leased, abandoned, mortgaged, pledged or otherwise
disposed of any right, title or interest in any Seller Property or,
other than in the ordinary
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course of business of the Replacement Vehicle Business, of any
property constituting part of the Assets;
(j) except as set forth on Schedule 3.2, reduced or
ceased its purchase and placement in a timely manner of Yellow Pages
advertising with respect to the Replacement Vehicle Business (and to
each Seller Property);
(k) otherwise conducted its business or entered into any
transaction, other than in the ordinary course of business;
(l) experienced any event or condition of any character which
has or could reasonably be expected to have, a Material Adverse
Effect; or
(m) agreed, whether or not in writing, to do any of the
foregoing.
Section 3.21. BROKER'S OR FINDER'S FEES. No agent, broker,
Person or firm acting on behalf of the Seller is, or will be, entitled to any
fee, commission or broker's or finder's fees from any of the parties hereto, or
from any Person controlling, controlled by, or under common control with any of
the parties hereto, in connection with this Agreement or any of the
transactions contemplated hereby, except for ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.,
whose fees and expenses will be paid by the Seller, and the Seller agrees to
hold the Purchaser harmless from any liability it may incur arising from such
Person's services.
Section 3.22. COPIES OF DOCUMENTS. The Seller has caused to
be made available for inspection and copying by Purchaser and its advisers,
true, complete and correct copies of all documents referred to in this Article
III or in any Schedule attached hereto.
Section 3.23. VEHICLE CONDITION. As of the Closing Date, all
Support Vehicles and all Rental Vehicles to be leased under the Vehicle Lease
Agreement are road worthy, in running order and legal for operation on public
roads, with current state inspections.
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ARTICLE IV
REPRESENTATIONS OF THE PURCHASER
--------------------------------
The Purchaser hereby represents, warrants and agrees as
follows:
Section 4.1. EXISTENCE AND GOOD STANDING; POWER AND
AUTHORITY; CONFLICTS. (a) The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
(b) The Purchaser has the corporate power and authority to
execute and deliver the Transaction Documents to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Purchaser of the Transaction Documents to which it is a
party, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized and approved by its Board of Directors and
no other corporate action on the part of the Purchaser is necessary to
authorize and to consummate the execution, delivery and performance by the
Purchaser of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby. Each of the
Transaction Documents to which the Purchaser is a party has been duly executed
and delivered by the Purchaser and is a valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms,
except to the extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
(c) The execution and delivery by the Purchaser of each of
the Transaction Documents to which it is a party and the consummation by the
Purchaser of the transactions contemplated hereby and thereby will not: (i)
violate any provision of its Certificate of Incorporation or of its By-Laws;
(ii) violate any statute, ordinance, rule, regulation, order or decree of any
court or of any governmental or regulatory body, agency or authority applicable
to the Purchaser or by which any its properties or assets may be bound; (iii)
require any filing with, or permit, consent or approval of, or the giving of
any notice to, any governmental or regulatory body, agency or authority or of
any other Person (other than under the HSR Act); or (iv) result in a violation
or breach of, conflict with, or constitute (with or without due
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notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, payment or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease, franchise agreement or other instrument or
obligation to which the Purchaser is party, or by which it or any of its
properties or assets may be bound.
Section 4.2. BROKER'S OR FINDER'S FEES. No agent, broker,
person or firm acting on behalf of the Purchaser is, or will be, entitled to
any commission or broker's or finder's fees from any of the parties hereto, or
from any Person controlling, controlled by or under common control with any of
the parties hereto, in connection with any of the transactions contemplated by
this Agreement except for ▇▇▇▇▇▇ Brothers, whose fees and expenses will be paid
by the Purchaser, and the Purchaser agrees to hold the Seller harmless from any
liability it may incur arising from such Person's services.
Section 4.3. EMPLOYEES. Prior to the Closing Date, the
Purchaser will have made a bona fide offer to (i) substantially all the Site
Employees of at-will employment on substantially the same compensation levels
(or better) as in effect for each such Site Employee from the Seller
immediately prior to the Closing Date, and (ii) each of the management
employees listed on Schedule 4.3 of employment pursuant to the terms of
employment agreements, in form and substance satisfactory to the Purchaser,
which agreements shall provide for substantially the same compensation levels
(or better) as in effect for each such management employee from the Seller
immediately prior to the Closing Date.
Section 4.4. INSURANCE. The Purchaser self-insures for
automobile, bodily injury and property damage liability in an amount of $1
million per occurrence. The Purchaser maintains insurance coverage for such
liabilities incurred in amounts in excess of such $1 million self-insurance up
to and including amounts in excess of $40 million. Such insurance will apply
to the Purchaser's insurance obligations under the Vehicle Lease Agreement. In
addition, the insurance reserve maintained by the Purchaser for claims arising
in respect of any existing liabilities are adequate and the Purchaser will
continue to maintain such insurance and the adequacy of such reserves for all
periods after the Closing Date as are appropriate.
Section 4.5. AVIS, INC. NET WORTH. Avis, Inc. has a net
worth, determined in accordance with GAAP, of at
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least $150 million and there has not occurred since February 28, 1995 any event
or occurrence which is reasonably likely to have a material adverse effect on
the business, operations, results of operations, assets, liabilities, condition
(financial or otherwise) or prospects of Avis, Inc.
ARTICLE V
CONDUCT OF BUSINESS; EXCLUSIVE DEALING; REVIEW
----------------------------------------------
Section 5.1. CONDUCT OF BUSINESS OF THE SELLER. On and after
the date hereof and to and including the Closing Date, except as otherwise
required in this Agreement or any Ancillary Agreement, the Seller will: (i)
operate its Replacement Vehicle Business and utilize the Assets only in the
usual, regular and ordinary manner and will use its reasonable efforts to
preserve its present business organization intact, keep available the services
of its present managers and employees and preserve its present relationships
with third parties having business dealings with it, (ii) confer with the
Purchaser's designated representatives to keep the Purchaser informed with
respect to operational matters of a material nature and report the general
status of ongoing operations of the Replacement Vehicle Business; (iii)
maintain the Assets and all properties relating to the Replacement Vehicle
Business in good repair, order and condition, reasonable wear and tear
excepted, and will maintain insurance upon all of such Assets and properties
relating to the Replacement Vehicle Business and with respect to the conduct of
its Replacement Vehicle Business in amounts and kinds comparable to that in
effect on the date hereof; (iv) not grant any increase in the salary or other
compensation of any of the Specified Employees or any employee to perform
duties under the Interim Services Agreement other than (A) in the ordinary
course of business consistent with past practice as to the amount and nature
thereof or (B) as previously consented to by the Purchaser; (v) not make or
amend any bonus, pension, retirement or insurance plan, payment or arrangement
to or with any such employees except in the ordinary course of business
consistent with past practice; (vi) not permit any of the Rental Vehicles or
Assets to be subjected to any mortgage, pledge, lien, security interest,
encumbrance, restriction or charge of any kind (other than Permitted Liens);
(vii) not sell or dispose of (without the prior consent of the Purchaser and
except in the ordinary course of business) any Support Vehicle or any Rental
Vehicle eligible to be leased under the Vehicle Lease Agreement; (viii) not
make any
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capital expenditure or commitment therefor relating to the Replacement Vehicle
Business except in the ordinary course of business consistent with past
practice; (ix) not cancel or waive any substantial claims or rights relating to
the Replacement Vehicle Business or the Assets (including any right of coverage
under its existing insurance policies, including its current excess coverage
insurance); (x) not terminate or modify, and refrain from doing any act or from
omitting to do any act which will cause a material breach or violation of, any
lease, license, permit, contract or other agreement listed in any Schedule
attached hereto; (xi) not change the character of its Replacement Vehicle
Business in any material manner; (xii) not terminate or cease to control (by
agreement, lease or otherwise) any telephone number (including all Telephone
Numbers) used on the date hereof with respect to any Seller Property and/or the
Replacement Vehicle Business (whether or not used by any operating Site Lease
location); (xiii) not reduce or cease its purchase and placement in a timely
manner of Yellow Pages advertising with respect to the Replacement Vehicle
Business (and to each Seller Property); and (xiv) not agree, whether or not in
writing, to do any of the foregoing.
Section 5.2. EXCLUSIVE DEALING. During the period from the
date of this Agreement to the Closing Date, or until this Agreement is
terminated in accordance with its terms, neither the Seller nor any officer,
director, agent or representative of the Seller shall take any action to,
directly or indirectly, initiate or solicit discussions or negotiations with
any Person, other than the Purchaser, concerning any purchase of the Assets or
any merger, sale of substantial assets or similar transaction involving the
Replacement Vehicle Business. If after execution of this Agreement by the
Seller and the Purchaser, the Seller does not consummate the transactions
contemplated hereby as a result of its having received a higher or more
attractive (to the Seller) offer from another person or entity prior to
terminating this Agreement as provided in Section 10.1, the Seller shall pay to
the Purchaser a fee of $1,000,000 together with all of its substantiated
out-of-pocket expenses incurred in connection with the proposed transaction and
the Transaction Documents.
Section 5.3. REVIEW OF THE SELLER. The Purchaser may, prior
to the Closing Date, directly or through their representatives, review the
properties, books and records of the Replacement Vehicle Business and their
financial and legal condition to the extent they deem necessary or advisable to
familiarize themselves with such properties and other matters; such review
shall not, however, affect the
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representations and warranties made by the Seller in this Agreement or the
remedies of the Purchaser for breaches of those representations and warranties.
The Seller shall permit the Purchaser and its representatives to have, after
the date of execution of this Agreement, reasonable access to the premises and
to the books and records of the Replacement Vehicle Business during normal
working hours and to cause the officers of the Seller to furnish the Purchaser
with such financial and operating data and other information with respect to
the business and properties of the Replacement Vehicle Business as the
Purchaser shall from time to time reasonably request, including, without
limitation, maintenance and repair records for the Rental Vehicles and Support
Vehicles. The parties hereto acknowledge that they have entered into a
Confidentiality Agreement dated March 6, 1995 (the "Confidentiality Agreement")
and each of the Purchaser and the Seller confirm that they and their affiliates
will comply with their respective obligations thereunder and that information
obtained during any such review will be subject to the terms of the
Confidentiality Agreement.
ARTICLE VI
CONDITIONS TO THE PURCHASER'S OBLIGATIONS
-----------------------------------------
The obligations of the Purchaser to consummate the
transactions contemplated by this Agreement is conditioned upon satisfaction,
at or prior to the Closing, of the following conditions:
Section 6.1. OPINIONS OF COUNSEL. The Seller shall have
furnished the Purchaser with an opinion, dated the Closing Date, of its
counsel, Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, and of its General Counsel, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, each in a form reasonably acceptable to the Purchaser.
Section 6.2. NO MATERIAL ADVERSE CHANGE. Since the Balance
Sheet Date, no event shall have occurred and no circumstance shall exist which
has had or could reasonably be expected to have a Material Adverse Effect.
Section 6.3. TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Seller contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date, and the Seller shall have deliv-
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ered to the Purchaser a certificate, signed by the President or a Vice
President of the Seller, dated the Closing Date, to such effect.
Section 6.4. PERFORMANCE OF AGREEMENTS. All of the
agreements of the Seller to be performed prior to the Closing pursuant to the
terms of this Agreement shall have been duly performed in all material
respects, and the Seller shall have delivered to the Purchaser an officer's
certificate of the Seller signed by the President or a Vice President of the
Seller, dated the Closing Date, to such effect.
Section 6.5. NO LITIGATION THREATENED. No action or
proceedings shall have been instituted or threatened before a court or other
government body or by any public authority to restrain or prohibit any of the
transactions contemplated hereby.
Section 6.6. GOVERNMENTAL APPROVALS. All waiting periods
(and any extension thereof) under the HSR Act applicable to the transactions
contemplated by this Agreement shall have expired, by passage of time or by
early termination by the Federal Trade Commission or the Department of Justice.
Section 6.7. ▇▇▇▇ OF SALE. The Seller shall have executed
and delivered to the Purchaser the ▇▇▇▇ of Sale.
Section 6.8. OTHER ARRANGEMENTS. (a) The Seller shall have
executed and delivered to Purchaser the Interim Services Agreement which shall
be in full force and effect.
(b) The Seller shall have executed and delivered to Purchaser
the Vehicle Lease Agreement which shall be in full force and effect.
(c) The Seller shall have executed and delivered to Purchaser
the Corporate Office Lease which shall be in full force and effect.
(d) The Seller shall have executed and delivered to Purchaser
the License Agreement which shall be in full force and effect.
Section 6.9. EMPLOYMENT AGREEMENTS. The Purchaser shall have
entered into employment agreements in form and substance satisfactory to the
Purchaser with each of the
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Seller's management employees listed on Schedule 4.3 hereto (the "Employment
Agreements").
Section 6.10. CREDIT RATING/NET WORTH. The Seller shall have
delivered to the Purchaser either (i) evidence that ▇▇▇▇▇'▇ and S&P will, after
giving effect to the transactions contemplated by this Agreement, respectively
assign a short-term credit rating to the Seller of at least A1 and P1 or (ii) a
certificate of its Chief Financial Officer stating that, after giving effect to
the transactions contemplated by this Agreement the Seller will have a net
worth, determined in accordance with GAAP, of at least $150 million, and
setting forth the calculations used to determine such net worth.
Section 6.11. ESTOPPEL CERTIFICATES/CONSENTS, ETC. The
Seller shall have delivered to the Purchaser (x) estoppel certificates and
consents (satisfactory to the Purchaser) to assignments from its landlords with
respect to at least 75% of the Site Leases, including substantially all of the
Critical Site Leases (all such Site Leases with estoppel certificates, the
"Specified Site Leases") and (y) evidence that 90% of the Seller Properties
subject to the Site Leases are permanently manned on the Closing Date with a
least two employees of Seller, with the manager employee having at least six
months of employment with Seller working in the Replacement Vehicle Business.
Section 6.12. RENT EXPENSE. Aggregate rental expenses for
the Site Leases on the Closing Date shall not exceed 105% of aggregate rental
expense set forth in the print-out dated August 1, 1995 of the Site Leases
prepared by the Seller and heretofore delivered to the Purchaser, and on the
Closing Date no one rent under a Site Lease shall exceed 110% of the rent for
such Site Lease as set forth in such print-out (giving effect to any increase
currently provided for any such Site Lease as described in such print-out).
Section 6.13. CERTAIN TERMINATIONS. Each of the Purchaser
and Hel ▇▇▇ Incorporated shall have executed and delivered to the Purchaser the
letter agreement in the form of Exhibit K hereto.
Section 6.14. ▇▇▇▇▇▇▇▇ NON-COMPETE AGREEMENT. The ▇▇▇▇▇▇▇▇
Non-Compete Agreement shall have been executed and delivered by the parties
thereto and be in full force and effect.
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Section 6.15. CLOSING BALANCE SHEET, ETC. The Seller shall
have delivered to the Purchaser a pro forma balance sheet as of the Closing
Date setting forth the Net Book Value on such date of the Support Vehicles and
the Rental Vehicles owned on such date (which balance sheet shall not be
required to have been prepared in accordance with GAAP but shall be
satisfactory to the Purchaser), together with a computer data base run as of
the Closing Date or the last day of the last month then ended setting forth on
an individual basis the amortized value of each the items included in the
Prepaid Registrations.
Section 6.16. INTELLECTUAL PROPERTY INFRINGEMENTS. The
Seller shall have sent letters, in a form reasonably satisfactory to the
Purchaser, to any Person known to the Seller (including the Persons identified
in writing by the Purchaser and whose names have been provided to the Seller)
to be infringing upon the Seller's right, title or interest in any Intellectual
Property described on Schedule 3.14. Such letters shall inform such Persons
that their use of any such Intellectual Property infringes upon the Seller's
right, title or interest therein and that each such Person must immediately
cease from using such Intellectual Property or prompt legal action will be
taken. The Seller shall have delivered copies of any responses it received to
such letters to the Purchaser.
Section 6.17. PERMITS. No later than ten (10) days after the
date hereof the Seller shall have delivered to the Purchaser true and complete
copies of each Permit related to, or issued or obtained in connection with the
operation of, at least 75% of the Site Leases (including all or substantially
all of the Critical Site Leases). No later than fifteen (15) days after the
date hereof the Seller shall have delivered to the Purchaser true and complete
copies of each Permit related to, or issued or obtained in connection with the
operation of, all or substantially all of the other 25% of the Site Leases.
ARTICLE VII
CONDITIONS TO THE SELLER'S OBLIGATIONS
The transfer and conveyance of the Assets by the Seller is
conditioned upon satisfaction, at or prior to the Closing, of the following
conditions:
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Section 7.1. OPINIONS OF PURCHASER'S COUNSEL. The Purchaser
shall have furnished the Seller an opinion, dated the Closing Date, of its
special counsel, White & Case, and of its General Counsel, ▇▇▇▇ ▇. ▇▇▇▇▇, each
in a form reasonably acceptable to the Seller.
Section 7.2. TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had
been made on and as of such date, and the Purchaser shall have delivered to the
Seller an officer's certificate, signed by the President or a Vice President of
the Purchaser, dated the Closing Date, to such effect.
Section 7.3. PERFORMANCE OF AGREEMENTS. All of the
agreements of the Purchaser to be performed prior to the Closing pursuant to
the terms of this Agreement shall have been duly performed in all material
respects, and the Purchaser shall have delivered to the Seller an officer's
certificate, signed by the President or a Vice President of the Purchaser,
dated the Closing Date, to such effect.
Section 7.4. NO LITIGATION THREATENED. No action or
proceeding shall be instituted or threatened before a court or other government
body or any public authority to restrain or prohibit any of the transactions
contemplated hereby.
Section 7.5. GOVERNMENTAL APPROVALS. All waiting periods
(and any extension thereof) under the HSR Act applicable to the transactions
contemplated by this Agreement shall have expired, by passage of time or by
early termination by the Federal Trade Commission or the Department of Justice.
Section 7.6. ANCILLARY AGREEMENTS. The Purchaser shall have
executed and delivered each of the Ancillary Agreements (other than Employment
Agreements) to which it is a party and the Purchaser shall have executed and
delivered the Letter Agreement in the form of Exhibit L.
Section 7.7. AVIS, INC. GUARANTY. Avis, Inc. shall have
executed and delivered a guaranty, in favor of the Seller, in the form of
Exhibit L.
Section 7.8. AVIS, INC. NET WORTH. The Purchaser shall have
delivered to the Seller a certificate of the Chief
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Financial Officer of Avis, Inc. stating that, after giving effect to the
transactions contemplated by this Agreement, Avis, Inc. will have a net worth,
determined in accordance with GAAP, of at least $150 million.
ARTICLE VIII
COVENANTS; OTHER AGREEMENTS
---------------------------
Section 8.1. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT. As promptly as
practicable after the date of this Agreement, the Seller and the Purchaser
shall file or cause to be filed appropriate Notification and Report Forms under
the HSR Act with respect to this Agreement and the transactions contemplated
hereby. The Purchaser and the Seller shall cooperate to coordinate such
filings, and to make reasonable efforts to respond to any governmental request
or inquiry with respect thereto.
Section 8.2. LICENSES AND PERMITS. As promptly as
practicable after the date hereof, the Purchaser shall prepare and file with
the appropriate licensing and permitting authorities applications for the
issuance to the Purchaser of all federal, state and local licenses and permits
required for the Purchaser to operate the Replacement Vehicle Business after
the Closing under the ownership of the Purchaser, and the Purchaser shall use
all reasonable efforts to secure such licenses and permits. The Seller shall
use reasonable efforts to assist the Purchaser in the preparation of such
applications and the securing of such licenses and permits.
Section 8.3. NON-COMPETITION; CONFIDENTIALITY. (a) The
Seller hereby covenants and agrees, on behalf of itself and on behalf of its
affiliates, that, except as expressly provided in the Transaction Documents,
the Seller and its corporate affiliates will not, directly or indirectly, at
any time prior to the fifth anniversary of the Closing Date, within the United
States (i) own, have an ownership interest in, manage, render services to,
operate, join or control, or participate in, alone or with any Person, the
ownership, management, operation or control of or be connected in any manner
with any business, firm, corporation or other entity which engages in any
business of the same or similar type as the Replacement Vehicle Business or any
other short term leasing or rental of vehicles; PROVIDED, HOWEVER, that the
provisions of this Section 3(a)(i) shall not apply to beneficial ownership (as
such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended) of securities of a corporation traded on a registered national
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securities exchange or on the National Over The Counter Market which shall
constitute in the aggregate 5% or less of the total number of such securities
outstanding, and/or (ii) solicit any of the Specified Employees to accept
employment with Seller or its affiliates.
(b) It is the desire and intent of the parties to this
Agreement that the provisions of this Section 8.3 shall be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. If any particular provisions or
portion of this Section 8.3 shall be adjudicated to be invalid or
unenforceable, this Section 8.3 shall be deemed amended to delete therefrom
such provision or portion adjudicated to be invalid or unenforceable, such
amendment to apply only with respect to the operation of this Section 8.3 in
the particular jurisdiction in which such adjudication is made.
(c) The parties recognize that the performance of the
obligations under this Section 8.3 by the Seller is special, unique and
extraordinary in character, and that in the event of the breach by any such
party of the terms and conditions of this Section 8.3 to be performed, the
other party shall be entitled, if it so elects, to institute and prosecute
proceedings in any court of competent jurisdiction, either at law or in equity,
to obtain damages for any breach of this Section 8.3, or to enforce the
specific performance thereof by such party or to enjoin such party from
violating the provisions of this Section 8.3 by seeking a temporary restraining
order.
Section 8.4. INFORMATION SHARING. After the Closing Date,
the Purchaser and the Seller shall each provide the other, on a continuing
basis, such information regarding former employees of the Seller as the other
shall reasonably request. The requesting party shall pay all reasonable
out-of-pocket expenses incurred by the party receiving such request in
complying with such request.
Section 8.5. COOPERATION/RECORD KEEPING. After the Closing
Date, the Seller and the Purchaser shall furnish or cause to be furnished to
the other party upon reasonable request such information relating to the
Replacement Vehicle Business with respect to any Pre- Closing Period and the
Limited Post-Closing Period (including books and records) as is reasonably
necessary for the preparation of their respective Tax Returns, for the
preparation of any audit, or for the prosecution or defense of any claim, suit,
proceeding, or proposed adjustment. With respect to the
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foregoing, the Purchaser will not allow the destruction or disposition of any
books, records or files relating to the business, properties, assets or
Replacement Vehicle Business to the extent they pertain to the operations of
the Seller with respect to any Pre-Closing Period, without first having offered
in a written notice to the Seller to deliver such books, records and files to
the Seller. The Purchaser and the Seller shall be entitled to dispose of the
books, records and files described in such notice if the Seller shall fail to
request copies of such books, records and files within ninety (90) days after
receipt of the notice described in the preceding sentence.
Section 8.6. TRANSFER TAXES. Except as provided in the
Vehicle Lease Agreement and for sales taxes in respect of the sale of the F&F
hereunder (which shall be the responsibility of the Purchaser), all stamp,
transfer, documentary, sales, use, registration, and other similar taxes and
fees (including any penalties and interest thereon) incurred in connection with
this Agreement and the transactions contemplated hereby (collectively, the
"Transfer Taxes") shall be paid by the Seller, and the Seller shall properly
file, with the cooperation of the Purchaser, on a timely basis all necessary
tax returns, reports, forms, and other documentation with respect to any
Transfer Taxes and provide to the Purchaser evidence of payment of all Transfer
Taxes.
Section 8.7. COVENANT NOT TO USE TRADENAMES, ETC. The Seller
agrees that it will, as of the Closing Date, cease to use all Replacement
Vehicle Intellectual Property for any purpose whatsoever (including, without
limitation, disposing of Rental Vehicles under the "Agency" name), except as
permitted by the License Agreement, and, except as provided in the License
Agreement, deliver to Purchaser (including at any Seller Property where already
located) all signs, purchase orders, invoices, sales orders, packaging stock,
labels, letterheads, shipping documents and other materials containing any
Tradenames.
Section 8.8. ESTOPPEL CERTIFICATES/CONSENTS. Following the
Closing, the Seller shall use its best efforts to obtain the estoppel
certificates and consents to assignments in excess of those referred to in
Section 6.11 (x) so that such certificates and consents are received with
respect to at least 90% of the Site Leases, including all of the Critical Site
Leases.
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Section 8.9. INTELLECTUAL PROPERTY INFRINGEMENT
CORRESPONDENCE. The Seller shall promptly deliver to the Purchaser copies of
any responses the Seller receives following the Closing to the letters sent
pursuant to Section 6.16.
Section 8.10. EMPLOYEE COMPENSATION. The Seller shall pay to
any employee of the Seller who is hired by the Purchaser all salary, bonus or
other compensation which is earned but unpaid as of the Closing Date. The date
when such payment is made shall be in accordance with the Seller's past
practice and be consistent with the date when such compensation is paid to the
Seller's employees.
Section 8.11. NAME CHANGE. No later than thirty (30) days
after the Closing Date, the Seller shall cause each of its subsidiaries or
affiliates having a name which contains any Tradename to change such name to a
name not containing a Tradename or any word similar to a Tradename and shall
take all action, including terminating State qualification filings as to itself
and its subsidiaries required to give effect to the intent of this Section
8.11.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNITY
--------------------------------------
Section 9.1. SURVIVAL OF REPRESENTATIONS. The respective
representations and warranties of the Seller and the Purchaser contained in
this Agreement shall survive for a period of 18 months following the Closing
Date or in the case of the representations and warranties contained in Section
3.11, the date subsequent to the expiry of the applicable statute of
limitations including any extensions.
Section 9.2. INDEMNIFICATION. (a) The Seller hereby agrees
to indemnify and hold the Purchaser and its officers, directors, affiliates and
agents, and any successors thereto, harmless on an after-Tax basis from claims,
damages, losses or expenses (including, without limitation, reasonable
attorneys' fees and expenses) ("Damages") (i) incurred or suffered after the
Closing Date as a result of or arising out of the failure of any representation
or warranty made by the Seller (x) in Section 3.18 or (y) pursuant to any other
provision of this Agreement to be true and correct as of the Closing Date (or
at any time thereafter to the extent the reason therefor exists on or prior to
the Closing Date), (ii) existing as of the Closing Date to the extent not
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disclosed by the Seller to the Purchaser herein or (iii) resulting from the
Seller failing to obtain by the date sixty (60) days after the Closing Date the
estoppel certificates and consents to assignments referred to in Section 8.8,
PROVIDED, HOWEVER, that the Seller shall not be liable under clause (i) (y) or
(ii) of this Section 9.2(a) unless the aggregate amount of Damages with respect
to matters referred to therein exceeds $500,000, but to the extent the
aggregate amount of Damages exceeds such amount, the Seller shall reimburse the
Purchaser for all such Damages, from the first dollar thereof; PROVIDED,
FURTHER, that the Seller shall only be responsible for the Purchaser's
relocation expenses under clause (iii) of this Section 9.2(a).
(b) The Seller, its affiliates and the successors to the
foregoing shall indemnify, defend and hold the Purchaser and its officers,
directors, and affiliates, harmless on an after-Tax basis for (i) all Taxes
relating to the income, operations, or assets of Seller imposed on the
Purchaser and its affiliates for all Pre-Closing Periods; (ii) all Taxes
imposed on the Seller, or any corporation in which the Seller or its affiliates
have a direct or indirect equity interest, for any taxable year or period; and
(iii) all Taxes resulting from, arising out of, or incurred with respect to,
any claims that may be asserted by any party based upon, attributable to, or
resulting from any breach by the Seller of the representations set forth in
this Agreement or the transactions contemplated by this Agreement.
(c) The Purchaser hereby agrees to indemnify and hold
harmless each of the Seller and its officers, directors, affiliates and agents,
and any successors thereto, from any and all Damages incurred or suffered as a
result of or arising out of (i) the failure of any representation or warranty
made by the Purchaser pursuant to this Agreement to be true and correct as of
the Closing Date (or at any time thereafter to the extent the reason therefor
exists on or prior to the Closing Date) and (ii) any claim made as a result of
or arising out of an event occurring after the Closing Date with respect to any
of the Assets or the liabilities assumed by the Purchaser pursuant to the
Assignment and Assumption Agreement; PROVIDED, HOWEVER, that the Purchaser
shall not be liable under clause (i) and/or (ii) of this Section 9.2(c) unless
the aggregate amount of Damages with respect to matters referred to therein
exceeds $500,000, but, to the extent the aggregate amount of Damages exceeds
such amount, the Purchaser shall reimburse the Seller for all such Damages,
from the first dollar thereof.
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Section 9.3. INDEMNIFICATION PROCEDURE. (a) Promptly after
the incurrence of Damages by the party seeking indemnification (the
"Indemnified Party"), including, without limitation, any claim by a third party
described in Section 9.3(c) which might give rise to indemnification hereunder,
the Indemnified Party shall deliver to the party from which indemnification is
sought (the "Indemnifying Party") a certificate (the "Certificate"), which
Certificate shall:
(i) state that the Indemnified Party has paid or properly
accrued Damages or anticipates that it will incur liability for
Damages for which such Indemnified Party is entitled to
indemnification pursuant to this Agreement; and
(ii) specify in reasonable detail each individual item of Damage
included in the amount so stated, the date such item was paid or
properly accrued, the basis for any anticipated liability and the
nature of the misrepresentation, breach of warranty, or other claim to
which each such item is related and the computation of the amount to
which such Indemnified Party claims to be entitled hereunder.
No failure or delay by the Indemnified Party in the performance of the
foregoing shall reduce or effect the obligation of the Indemnifying Party to
indemnify the Indemnified Party, except to the extent that such failure or
delay shall have materially adversely affected the Indemnifying Parties'
ability to defend against, settle or satisfy the Damage for which the
Indemnified Party is entitled to indemnification hereunder.
(b) In case the Indemnifying Party shall object to the
indemnification of an Indemnified Party in respect of any claim or claims
specified in any Certificate, the Indemnifying Party shall, within ten (10)
days after receipt by the Indemnifying Party of such Certificate, deliver to
the Indemnified Party a written notice to such effect specifying the objections
and the Indemnifying Party and the Indemnified Party shall, within the 30 day
period beginning on the date of receipt by the Indemnified Party of such
written objection, attempt in good faith to agree upon the rights of the
respective parties with respect to each of such claims to which the
Indemnifying Party shall have so objected. If the Indemnified Party and the
Indemnifying Party shall succeed in reaching agreement on their respective
rights with respect to any of such claims, the Indemnified Party and the
Indemnifying Party shall promptly prepare and sign a
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memorandum setting forth such agreement. Should the Indemnified Party and the
Indemnifying Party be unable to agree as to any particular item or items or
amount or amounts, then the Indemnified Party and the Indemnifying Party shall
submit such dispute to a court of competent jurisdiction.
(c) Promptly after the assertion by any third party of any
claim against any Indemnified Party that, in the judgment of such Indemnified
Party, may result in the incurrence by such Indemnified Party of Damages for
which such Indemnified Party would be entitled to indemnification pursuant to
this Agreement, such Indemnified Party shall deliver to the Indemnifying Party
a written notice describing in reasonable detail such claim and such
Indemnifying Party may, at its option, assume the defense of the Indemnified
Party against such claim (including the employment of counsel), and the payment
of expenses. Any Indemnified Party shall have the right to employ separate
counsel in any such action or claim and to participate in the defense thereof,
but the fees and expenses of such counsel shall not be at the expense of the
Indemnifying Party unless (i) the Indemnifying Party shall have failed, within
a reasonable time after having been notified by the Indemnified Party of the
existence of such claim as provided in the preceding sentence, to assume the
defense of such claim, (ii) the employment of such counsel has been
specifically authorized in writing by the Indemnifying Party or (iii) such
Indemnified Party shall have been advised in writing by such counsel that there
may be one or more legal defenses available to the Indemnified Party which are
not available to the Indemnifying Party, or available to the Indemnifying
Party, but the assertion of which would be adverse to the interests of the
Indemnified Party. No Indemnifying Party shall be liable to indemnify any
Indemnified Party for any settlement of any such action or claim effected
without the written consent of the Indemnifying Party, but if settled with the
written consent of the Indemnifying Party, or if there be a final judgment for
the plaintiff in any such action, the Indemnifying Party shall indemnify and
hold harmless each Indemnified Party from and against any loss or liability by
reason of such settlement or judgment.
(d) Claims for Damages specified in any Certificate to which
an Indemnifying Party shall not object in writing within thirty (30) days of
receipt of such Certificate, claims for Damages covered by a memorandum of
agreement of the nature described in Section 9.3(b), claims for Damages the
validity and amount of which have been the subject of
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judicial determination and claims for Damages which shall have been settled
with the consent of the Indemnifying Party, as described in Section 9.3(c) are
hereinafter referred to, collectively, as "Agreed Claims." Within ten (10)
business days of the determination of the amount of any Agreed Claims, the
Indemnifying Party shall pay to the Indemnified Party an amount equal to the
Agreed Claim by wire transfer in immediately available funds to the bank
account or accounts designated in writing by the Indemnified Party not less
than one Business Day prior to such payment.
ARTICLE X
TERMINATION
-----------
Section 10.1. TERMINATION. This Agreement may be terminated
at any time prior to the Closing:
(a) by the mutual written consent of the Purchaser and the
Seller;
(b) by the Purchaser, if there has been a material violation
or breach by the Seller of any covenant, representation or warranty
contained in this Agreement which has prevented the satisfaction of
any condition to the obligations of the Purchaser at the Closing and
such violation or breach has not been waived by the Purchaser or, in
the case of a covenant breach, cured by the Seller, within the earlier
of ten (10) days after written notice thereof from the Purchaser or
the Closing Date;
(c) by the Seller, if there has been a material violation or
breach by the Purchaser of any covenant, representation or warranty
contained in this Agreement which has prevented the satisfaction of
any condition to the obligation of the Seller at the Closing and such
violation or breach has not been waived by the Seller or, with respect
to a covenant breach, cured by the Purchaser, within the earlier of
ten (10) days after written notice thereof by the Seller or the
Closing Date; or
(d) by either the Purchaser or the Seller, if the
transactions contemplated hereby have not been consummated by December
31, 1995, provided that neither the Purchaser nor the Seller shall be
entitled to terminate this Agreement pursuant to this Section 10.1(d)
if such
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Person's breach of this Agreement has prevented the consummation of
the transactions contemplated hereby.
Section 10.2. EFFECT OF TERMINATION. In the event of
termination of this Agreement as provided above, the provisions of this
Agreement shall immediately become void and of no further force and effect
(other than Section 5.2 (last sentence thereof), this Section 10.2, Section
11.1, Section 11.5 and the Confidentiality Agreement which shall survive the
termination of this Agreement), and there shall be no liability on the part of
any party to the other, except as expressly provided for herein or for any
breaches of this Agreement prior to the time of such termination; PROVIDED,
HOWEVER, that no party shall be released from liability hereunder if this
Agreement is terminated by reason of (i) the willful failure of such party to
have performed its obligations hereunder or (ii) any knowing misrepresentation
made by such party of any matter set forth herein.
ARTICLE XI
MISCELLANEOUS
-------------
Section 11.1. EXPENSES. Except as set forth in Section 8.6,
the parties hereto shall pay their own expenses relating to the transactions
contemplated by this Agreement, including, without limitation, the fees and
expenses of their respective counsel and financial advisors.
Section 11.2. BULK TRANSFER LAWS. The Purchaser waives the
Seller's taking any action or giving any notice provided for in any bulk
transfer laws in connection with the sale by the Seller of the Assets to the
Purchaser and the other transactions contemplated by the Transaction Documents,
provided that the Seller will give notice to the appropriate credit agencies
(e.g. Dun & Bradstreet) upon consummation thereof, and the Seller hereby agrees
to indemnify and hold the Purchaser harmless on an after-tax basis for any and
all Damages it may incur or suffer as a result of Seller not taking such
actions and for giving such notices.
Section 11.3. GOVERNING LAW; JURISDICTION. (a) THE
INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, AND ALL MATTERS RELATING
HERETO, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS EXECUTED AND TO BE PERFORMED SOLELY WITHIN SUCH STATE.
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(b) Each party agrees that any legal action or proceeding
with respect to this Agreement may be brought in the Courts of the State of New
York (New York County) or the United States District Court for the Southern
District of New York or in the Courts of the State of Ohio (Cuyahoga County) or
the United States District Court for the Northern District of Ohio and, by
execution and delivery of this Agreement, each party hereby irrevocably submits
itself in respect of its property, generally and unconditionally to the
jurisdiction of the aforesaid courts in any legal action or proceeding arising
out of this Agreement.
Section 11.4. CAPTIONS. The Article and Section captions
used herein are for reference purposes only, and shall not in any way affect
the meaning or interpretation of this Agreement.
Section 11.5. PUBLICITY. Except as otherwise required by
law, none of the parties hereto shall issue any press release or make any other
public statement, in each case relating to, connected with or arising out of
this Agreement or the matters contained herein, without obtaining the prior
approval of the other party to the contents and the manner of presentation and
publication thereof.
Section 11.6. NOTICES. All notices required or permitted
under this Agreement shall be in writing and shall be deemed given if delivered
in person or sent by confirmed facsimile (with a copy given by another means
specified in this Section 11.6) or six (6) days after mailing if mailed by
United States mail, registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Seller, to:
National Auto Credit, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
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And if to the Purchaser, to:
Agency Rent a Car System, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or number as shall be furnished in writing by any such
party.
Section 11.7. PARTIES IN INTEREST. This Agreement may not be
transferred, assigned, pledged or hypothecated by any party hereto, other than
by operation of law.
Section 11.8. COUNTERPARTS. This Agreement may be executed
in two or more counterparts, all of which taken together shall constitute one
instrument.
Section 11.9. ENTIRE AGREEMENT. This Agreement, the
Ancillary Agreements and the Confidentiality Agreement, including the other
documents referred to herein and therein which form a part hereof and thereof,
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and therein. This Agreement supersedes all
prior agreements and understandings (other than the Confidentiality Agreement)
between the parties with respect to such subject matter.
Section 11.10. AMENDMENTS. This Agreement may not be changed
orally, but only by an explicit agreement in writing signed by the Purchaser
and the Seller.
Section 11.11. SEVERABILITY. In case any provision in this
Agreement shall be held invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions hereof will not in any
way be affected or impaired thereby.
Section 11.12. THIRD PARTY BENEFICIARIES. Each party hereto
intends that this Agreement shall not benefit or
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create any right or cause of action in or on behalf of any Person other than
the parties hereto.
Section 11.13. RIGHTS CUMULATIVE. Except as expressly
limited by this Agreement, all rights, remedies and powers provided for in this
Agreement shall be cumulative and in addition to and not in lieu of any other
rights or remedies available to the parties at law, in equity or otherwise.
Failure to exercise any power given any party hereunder or to insist upon
strict compliance by any other party shall not constitute a waiver of any
party's right to demand compliance with the terms hereof by the other party.
Section 11.14. INTEREST. If any undisputed payments
hereunder are not paid when due and payable, then interest shall be due on such
late payments at a rate equal to 1 1/2% per month.
Section 11.15. NAME CHANGE ACKNOWLEDGEMENT. The Purchaser
agrees to change its name to "Avis Capital Corporation" and to immediately
terminate all use of any Replacement Vehicle Intellectual Property if this
Agreement is terminated or the transactions contemplated by this Agreement do
not close by December 31, 1995.
* * * *
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IN WITNESS WHEREOF, each of the Seller and the Purchaser has
caused its corporate name to be hereunto subscribed by its officers thereunto
duly authorized, all as of the day and year first above written.
NATIONAL AUTO CREDIT, INC.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman Of The Board
AGENCY RENT A CAR SYSTEM, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
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