1
Exhibit 2.1
-------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
among
CENTRAL PARKING CORPORATION,
CENTRAL MERGER SUB, INC.
and
ALLRIGHT HOLDINGS, INC.
Dated as of September 21, 1998
-------------------------------------------------------------------------------
2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 21, 1998
(this "Agreement"), among Central Parking Corporation ("Central"), a Tennessee
corporation, Central Merger Sub, Inc. ("Central Sub"), a Delaware corporation
and wholly owned subsidiary of Central, Allright Holdings, Inc. ("Holdings"), a
Delaware corporation and the sole shareholder of Allright Corporation
("Allright"), a Delaware corporation, Apollo Real Estate Investment Fund II,
L.P. ("Apollo"), a Delaware limited partnership and AEW Partners, L.P. ("AEW"),
a Delaware limited partnership.
RECITALS
WHEREAS, the respective Boards of Directors of Central,
Central Sub and Holdings have each approved the Merger (as defined below) of
Central Sub and Holdings pursuant to the terms of this Agreement;
WHEREAS, the majority stockholders of Central, Xxxxxx X.
Xxxxxxx, Xx. and The Carell Children's Trust (collectively, the "Central
Stockholders"), have each entered into a transaction support agreement with
Holdings, Apollo and AEW, dated as of the date hereof (collectively, the
"Transaction Support Agreements"), with respect to the Merger wherein the
Central Stockholders have committed to vote the shares of Central capital stock
beneficially owned by the Central Stockholders in connection with the Merger and
the other transactions contemplated by this Agreement, and Apollo and AEW, as
the majority stockholders of Holdings, have committed to vote the shares of
Holdings capital stock beneficially owned by them in favor of the Merger and the
other transactions contemplated by this Agreement, and certain other
stockholders and warrantholders of Holdings have each entered into a transaction
support agreement with respect to the Merger wherein such stockholders and
warrantholders have committed to vote the shares of Holdings capital stock
beneficially owned by them in favor of the Merger and the other transactions
contemplated by this Agreement;
WHEREAS, Central, certain stockholders of Central, Apollo and
AEW have entered into a Registration Rights Agreement, dated as of the date
hereof (the "Registration Rights Agreement"), pursuant to which Central has
agreed to provide certain registration rights for the benefit of such
stockholders of Central, Apollo and AEW;
3
WHEREAS, Central, Central Sub and Holdings desire to make
certain representations, warranties, covenants and agreements in connection with
such merger as set forth in this Agreement; and
WHEREAS, for United States Federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization under the provisions
of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"),
and this Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368 of the Code;
Now, therefore, in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time (as defined in
Section 1.2) and in accordance with the terms of this Agreement and applicable
law, Central Sub shall be merged (the "Merger") with and into Holdings and its
separate legal existence shall cease to exist, and Holdings will be the
surviving corporation (some times referred to herein as the "Surviving
Corporation") and shall continue its corporate existence as "Allright Holdings,
Inc." under the laws of the State of Delaware. The Merger shall have the effects
provided for in Section 251 of the Delaware General Corporation Law (the
"DGCL").
Section 1.2 Effective Time. The merger (the "Merger") shall
become effective at the time of the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware (or at such later time specified as
the effective time in the Certificate of Merger), which Certificate of Merger
shall be so filed at the time of the Closing (as defined in Section 1.3). The
date and time when the Merger becomes effective are herein referred to as the
"Effective Time".
Section 1.3 Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to the provisions of Article VII herein, the closing (the "Closing") of
the transactions contemplated by this Agreement shall take place at a location
to be agreed to by Central and Holdings, on the second business day following
the
2
4
satisfaction or waiver of the conditions set forth in Article VI, or at such
other time and date as the parties may mutually agree. The date and time of such
Closing are herein referred to as the "Closing Date". At the Closing, each of
the parties hereto shall take, or cause to be taken, all such actions and
deliver, or cause to be delivered, all such documents, instruments, certificates
and other items as may be required under this Agreement or otherwise, in order
to perform or fulfill all covenants, conditions and agreements on its part to be
performed at or prior to the Effective Time.
Section 1.4 Certificate of Incorporation. The Certificate of
Incorporation of Holdings, as in effect at the Effective Time, shall continue
in effect as the Certificate of Incorporation of the Surviving Corporation,
until thereafter amended as provided therein.
Section 1.5 By-Laws. The By-Laws of Holdings, as in effect at
the Effective Time, shall be the By-Laws of the Surviving Corporation, until
thereafter amended as provided therein.
Section 1.6 Directors and Officers. The officers and directors
of Central Sub at the Effective Time shall be the officers and directors of the
Surviving Corporation, each to hold office until their respective successors are
duly elected and qualified, or their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of the holders
thereof:
(a) each share of common stock of Central Sub, $0.01
par value per share, issued and outstanding immediately prior to the Effective
Time shall be cancelled and cease to exist and shall be converted into one share
of common stock of the Surviving Corporation, $0.01 par value per share. Such
newly issued shares shall thereafter constitute all of the issued and
outstanding shares of the Surviving Corporation;
3
5
(b) each share of common stock of Holdings, $0.01 par
value per share (the "Holdings Common Stock"), issued and outstanding
immediately prior to the Effective Time, other than shares to be cancelled in
accordance with Section 2.1(c), shall be cancelled and cease to exist and shall
be converted into and represent the number of common shares of Central, $0.01
par value per share (the "Central Common Stock"), equal to the Exchange Ratio
(as defined in Section 2.6);
(c) all share capital held in the treasury of Holdings
or held by any of Holdings' subsidiaries shall be cancelled and cease to exist
and no payment shall be made in respect thereof; and
(d) at the Effective Time, all rights in respect of
outstanding shares of Holdings Common Stock shall cease to exist, other than the
right to receive Central Common Stock as described above.
Section 2.2 Closing of Holdings Transfer Books. At the
Effective Time, the stock transfer books of Holdings shall be closed and no
transfer of Holdings Common Stock shall thereafter be made.
Section 2.3 No Fractional Shares. No fractional shares of
Central Common Stock shall be issued pursuant hereto. In lieu of any such
fractional share of Central Common Stock, Central shall pay to each former
shareholder of Holdings who otherwise would be entitled to receive a fractional
share of Central Common Stock an amount in cash determined by multiplying (i)
$46.00 by (ii) the fractional interest in a share of Central Common Stock to
which such holder would otherwise be entitled.
Section 2.4 Certain Adjustments. If after the date hereof and
on or prior to the Closing Date the outstanding shares of Central Common Stock
shall be changed into a different number of shares by reason of any
reclassification, recapitalization, split-up, combination or exchange of
shares, or any dividend payable in stock or other securities shall be declared
thereon with a record date within such period, or any similar event shall occur,
the amount of shares to which a holder of Holdings Common Stock shall be
entitled to receive shall be adjusted accordingly to provide to such holder the
same economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange or dividend
or similar event.
4
6
Section 2.5 Stock Options; Warrants.
(a) At the Effective Time, each option granted by
Holdings to purchase shares of Holdings Common Stock (each, a "Holdings Option")
which is outstanding and unexercised immediately prior thereto shall cease to
represent a right to acquire shares of Holdings Common Stock and shall be
converted automatically into an option to purchase shares of Central Common
Stock (each, a "Central Option") in an amount and at an exercise price
determined as provided below (and otherwise subject to the terms of the Allright
1998 Employee Stock Option Plan (the "Holdings Option Plan"), if applicable to
such Holdings Options), and the agreements evidencing grants thereunder,
including, but not limited to, the accelerated vesting of such options which
shall occur in connection with and by virtue of the consummation of the Merger
as and to the extent required by the Holdings Option Plan and such agreements:
(i) the number of shares of Central Common
Stock to be subject to the new Central Option shall be equal to the
product of the number of shares of Holdings Common Stock subject to the
original Holdings Option and the Exchange Ratio, provided that any
fractional shares of Central Common Stock resulting from such
multiplication shall be rounded down to the nearest share; and
(ii) the exercise price per share of Central
Common Stock under the new Central Option shall be equal to the
exercise price per share of Holdings Common Stock under the original
Holdings Option divided by the Exchange Ratio, provided that the
resulting exercise price shall be rounded up to the nearest cent.
(b) In the case of any Holdings Options which are
intended to be "incentive stock options" (as defined in Section 422 of the
Code)("ISOs"), the exercise price of, the number of shares purchasable pursuant
to, and the terms and conditions of exercise of, the Central Options issued in
exchange therefor shall be determined in order to comply with Section 424(a) of
the Code.
(c) The duration and other terms of Central Options
shall be the same as the Holdings Options except that all references to Holdings
shall be deemed to be references to Central.
5
7
(d) As of the Effective Time, the Holdings Options
Plan shall be assumed by Central and, following the Effective Time, Central
shall take all steps necessary to provide that shares of Central Common Stock
issuable upon the exercise of all outstanding Central Options shall be covered
by an effective registration statement on Form S-8 (or other appropriate form)
as soon as practicable after the Effective Time.
(e) At the Effective Time, each warrant granted by
Holdings to purchase shares of Holdings Common Stock (each, a "Holdings
Warrant") which is outstanding and unexercised immediately prior thereto shall
cease to represent a right to acquire shares of Holdings Common Stock and shall
be converted automatically into a warrant to purchase shares of Central Common
Stock (each, a "Central Warrant") in an amount equal to the product of the
number of shares of Holdings Common Stock subject to the original Holdings
Warrant and the Exchange Ratio, provided that any fractional shares of Central
Common Stock resulting from such multiplication shall be rounded down to the
nearest share. The exercise price per share of Central Common Stock under the
new Central Warrant shall be equal to the exercise price per share of Holdings
Common Stock under the original Holdings Warrant divided by the Exchange Ratio,
provided that the resulting exercise price shall be rounded up to the nearest
cent.
Section 2.6 Calculation of Exchange Ratio.
(a) The "Exchange Ratio" shall be (i) the Equity
Purchase Price (as defined in Section 2.6(b)), divided by (ii) $46.00, divided
by (iii) the number of shares of Holdings Common Stock outstanding as of the
Effective Time (excluding any shares of Holdings Common Stock issued or issuable
to the seller in exchange for assets in any acquisition permitted under Sections
5.1(d) and 5.1(e)), plus the number of shares of Holdings Common Stock issuable
pursuant to outstanding Holdings Options and Holdings Warrants immediately prior
to the Effective Time.
(b) The "Equity Purchase Price" shall be calculated
as follows and shall be set forth in a closing statement (the "Closing
Statement"), an example of which is set forth on Schedule 2.6(b), that will be
prepared by Holdings based on its good faith estimates of the amounts indicated
and provided to Central for its review and approval (which shall not be
unreasonably withheld), not less than five business days prior to the Closing
Date: (i) $564,390,050, plus (ii) the Acquisition Expenses (as defined in
Section 2.6(c)), plus (iii) the excess, if any, of
6
8
$5,000,000 over the Covered Transaction Expenses (as defined in Section 2.6(d)),
plus (iv) the Working Capital Adjustment (as defined in Section 2.6(e)), plus
(v) the aggregate exercise price of all outstanding and unexercised Holdings
Warrants or Holdings Options which are not ISOs as of the Closing Date, less
(vi) the principal amount of any long-term indebtedness for borrowed money and
capitalized lease obligations of Allright and its consolidated subsidiaries as
of the Closing Date and assumed by Central or Central Sub pursuant to the
Merger, but not including the current portion of either long-term indebtedness
or capitalized lease obligations, less (vii) the excess, if any, of the Covered
Transaction Expenses over $5,000,000, less (viii) any adjustment required
pursuant to paragraph (f) below, plus (ix) any Divesture Gain (as defined
herein), less (x) any Divesture Loss (as defined herein), less (xi) any proceeds
arising from the sale, lease, transfer or disposition of any property or assets
set forth on Schedule 5.1(j), after deduction of all expenses incurred relating
to any such transaction, less (xii) any Excess Severance (as defined in Section
3.12(a)). Holdings shall use its best efforts to deliver to Central as soon as
possible (but no later than fifteen business days prior to the Closing Date),
Allright's and Holdings' audited financial statements for the fiscal year ended
June 30, 1998, Allright's Actual EBITDA (as defined below), the Acquired
Facility EBITDA (as defined below) and the Non-Acquired EBITDA (as defined
below).
(c) The "Acquisition Expenses" shall be the aggregate
amount of cash consideration and transaction expenses paid by Holdings, Allright
or any Subsidiary (as defined below) through the Closing in respect of any and
all acquisitions of parking facilities after April 30, 1998 and any and all
capital expenditures incurred in connection with such acquisitions and leases
entered into after April 30, 1998, all as set forth on Schedule 2.6(c) (as such
Schedule may be supplemented or revised prior to the Closing Date).
(d) "Covered Transaction Expenses" include, without
duplication, any and all out-of-pocket expenses of Holdings, Allright, the
Subsidiaries, Apollo and AEW, incurred in connection with the Merger or the
other transactions contemplated by this Agreement, to the extent that such
expenses have been paid or are accrued on the Closing Statement. AEW and Apollo
shall list all such expenses on the Closing Statement.
(e) The "Working Capital Adjustment" shall be
calculated as follows: (i) the amount of working capital surplus or deficit
(such deficit, if any, to be expressed as a negative number) of Allright and its
consolidated subsidiaries as set forth on its most recent available balance
sheet (which shall not be dated more
7
9
than 50 calendar days prior to the Closing Date), reduced by the amount of any
portion of any acquisitions not financed from additional debt or equity proceeds
subsequent to such balance sheet date and which shall be determined in
accordance with Schedule 2.6(e) and otherwise in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis with
Allright's historical financial statements, plus (ii) $6,000,000. Any items
reflected as Covered Transaction Expenses or as an adjustment pursuant to any
other clause of paragraph (b) above used to calculate the Equity Purchase Price
shall be excluded in calculating the working capital deficit or surplus for the
purposes of determining the Working Capital Adjustment. The Working Capital
Adjustment may only be a negative number or zero.
(f) Notwithstanding anything to the contrary above,
the Equity Purchase Price shall be adjusted as follows:
(i) if Allright's EBITDA (as defined below)
calculated from Allright's audited financial statements for the fiscal
year ended June 30, 1998 ("Allright's Actual EBITDA"), minus the EBITDA
attributable to those parking facilities acquired by Holdings, Allright
or any Subsidiary after April 30, 1998, to the extent the EBITDA
attributable to such parking facilities was included in Allright's
Actual EBITDA (the "Acquired Facility EBITDA", and the difference
between Allright's Actual EBITDA and the Acquired Facility EBITDA, the
"Non-Acquired EBITDA"), is equal to or greater than $34.0 million, the
Equity Purchase Price shall be computed as set forth above and no
further adjustment shall be made under this paragraph (f); and
(ii) if the Non-Acquired EBITDA is less than $34.0
million (the difference between the $34.0 million and the Non-Acquired
EBITDA, the "EBITDA Shortfall"), then the Equity Purchase Price shall
be reduced by the EBITDA Shortfall, multiplied by 16.
"EBITDA" shall mean, for any particular entity, the earnings
before interest, taxes, depreciation and amortization attributable to that
entity. For purposes of computing Allright's Actual EBITDA above, the EBITDA
shall be derived in accordance with GAAP consistently applied from Allright's
audited financial statements for the fiscal year ended June 30, 1998 and shall
not include the following expenses: the Covered Transaction Expenses and
expenses incurred in connection with the Merger, payments made in respect of
retention, employment and management continuity agreement bonuses listed on
Schedules 5.9(a), 5.9(b) and
8
10
5.9(c) and any other charges related to Holdings Options or Holdings Warrants
used to compute the Exchange Ratio pursuant to Section 2.6(a)(iii), charges for
asset impairments and expenses associated with other liabilities mutually agreed
to by Holdings and Central. In addition, Allright's Actual EBITDA shall not
include any gains or losses attributable to the sale of any assets, and any
minority interest expense deducted to calculate EBITDA shall be reinstated when
computing Allright's Actual EBITDA. The calculation used to derive Allright's
Actual EBITDA shall be included as part of the Closing Statement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Holdings and Allright represent and warrant to Central and
Central Sub as follows:
Section 3.1 Organization. Holdings is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Section 3.2 Authority; Enforceability. Holdings has the
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated on its part hereby. The execution and
delivery by Holdings of this Agreement and the consummation by Holdings of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Holdings. No other corporate proceedings on the
part of Holdings are necessary to authorize the execution and delivery of this
Agreement and the consummation by Holdings of the transactions contemplated
hereby or the performance of its obligations hereunder. This Agreement has been
duly executed and delivered by Holdings and is a valid and binding agreement of
Holdings, enforceable against Holdings in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency or other similar
laws relating to or affecting creditors' rights generally and by general equity
principles. AEW and Apollo, as the majority stockholders of Holdings, have
taken, or will prior to the Closing take, all action required to be taken on
their respective parts in order for Holdings to have duly authorized, executed
and delivered this Agreement and to consummate the transactions contemplated
hereby.
9
11
Section 3.3 Subsidiaries. Holdings does not have any
subsidiaries other than Allright. Except as provided in Schedule 3.3, Allright
does not have any equity interest, directly or indirectly, in any other entity
(such subsidiaries in Schedule 3.3, the "Subsidiaries").
Section 3.4 Non-Contravention. Except as set forth on Schedule
3.4, the execution and delivery by Holdings, AEW and Apollo of this Agreement
and by AEW and Apollo of the Registration Rights Agreement, the Noncompetition
Agreement and the Transaction Support Agreements do not, and the consummation
by each of the transactions contemplated hereby and thereby and the performance
by each of the obligations which it is obligated to perform hereunder and
thereunder will not, (a) violate any provision of the Certificate of
Incorporation or By-Laws of Holdings, Allright or any Subsidiary, (b) except as
a result of failing to obtain any third party consents, violate, or result in
the violation of, any provision of, or result in the termination of or the
acceleration of, or entitle any party to accelerate any obligation or
indebtedness under, or result in the imposition of any lien upon or the creation
of a security interest in any of the Holdings Common Stock or upon the assets of
Holdings, Allright or any Subsidiary, pursuant to, any mortgage, lien, lease,
franchise, license, permit, agreement or other instrument to which Holdings,
Allright or any Subsidiary is a party, or by which Holdings, Allright or any
Subsidiary is bound, and that is likely to, in any such event, in the aggregate,
have a material adverse effect on the financial condition of Holdings, Allright
and the Subsidiaries taken as a whole (a "Holdings Material Adverse Effect"), or
(c) subject to the approvals required as set forth in Section 3.5, violate or
conflict with any other restriction of any kind or character to which Holdings,
Allright or any Subsidiary or to which AEW or Apollo is subject which would
prevent or significantly restrict or delay the consummation of the transactions
contemplated hereby.
Section 3.5 Consents. Except for filings under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and as set forth in Schedule 3.5, no consent, authorization, order or
approval of, or filing or registration with, any governmental commission, board
or other regulatory body (collectively, "Consents") which has not been obtained
or made is required (a) for or in connection with the execution and delivery of
this Agreement by Holdings and the consummation by Holdings of the transactions
contemplated hereby and the performance by Holdings of its obligations
hereunder, other than those Consents, the failure of which to obtain, in the
aggregate, would not have a Holdings Material Adverse Effect, or (b) for the
ongoing operations of Allright and the Subsidiaries as
10
12
currently conducted, other than those Consents, the failure of which to obtain,
in the aggregate, would not have a Holdings Material Adverse Effect.
Section 3.6 Capital Stock.
(a) The entire authorized capital stock of Holdings
consists of 500,000 shares of common stock, $0.01 par value, 79,564 of which are
issued and outstanding as of the date hereof and all such shares are validly
issued, fully paid and nonassessable, and 500,000 shares of preferred stock,
with a par value of $0.01 per share, none of which are issued and outstanding.
Except as set forth on Schedule 3.6(a), there are no outstanding obligations,
warrants, options or other rights to subscribe for or purchase, or other plans,
contracts or commitments providing for the issuance of, or the granting of
rights to acquire, shares of stock of any class of Holdings capital stock or any
securities or other instruments convertible into or exchangeable for shares of
stock of any class of Holdings capital stock.
(b) The entire authorized capital stock of Allright
consists of 1,000 shares of common stock, $0.01 par value, all of which are
issued and outstanding as of the date hereof, and all such shares are validly
issued, fully paid and nonassessable. Other than as set forth on Schedule
3.6(b), Holdings owns all such issued and outstanding shares free and clear of
any options, liens, claims, charges or other encumbrances. There are no
outstanding obligations, warrants, options or other rights to subscribe for or
purchase, or other plans, contracts or commitments providing for the issuance
of, or the granting of rights to acquire, shares of stock of any class of
Allright capital stock or any securities or other instruments convertible into
or exchangeable for shares of stock of any class of Allright capital stock.
(c) All of the issued and outstanding shares of
capital stock or securities of the Subsidiaries (the "Subsidiaries Shares") are
validly issued, fully paid and nonassessable. Allright owns, directly or
indirectly, the percentage of such Subsidiary Shares set forth on Schedule
3.6(c), in each case free and clear of any options, liens, claims, charges or
other encumbrances, except as set forth on Schedule 3.6(c). There are no
outstanding obligations, warrants, options or other rights to subscribe for or
purchase, or other plans, contracts or commitments providing for the issuance
of, or the granting of rights to acquire, shares of stock of any class of any
Subsidiary capital stock or any securities or other instruments convertible into
or exchangeable for shares of stock of any class of any Subsidiary capital
stock.
11
13
Section 3.7 Organization and Qualification of Allright and the
Subsidiaries. Except as set forth on Schedule 3.7, each of Allright and the
Subsidiaries is duly incorporated or formed, validly existing and in good
standing under the laws of the jurisdiction of its organization and each has
full corporate or partnership, as the case may be, power and authority to own
all of its properties and assets and to carry on its business as it is now being
conducted, except where such failure would not, in the aggregate, have a
Holdings Material Adverse Effect. Each of Allright and the Subsidiaries is
qualified and in good standing in every jurisdiction where the failure to so
qualify or be in good standing would have, in the aggregate, a Holdings Material
Adverse Effect.
Section 3.8 Financial Statements. Schedule 3.8 contains a true
and correct copy of (a) the audited consolidated balance sheet of Allright as of
June 30, 1997, (b) the audited related statement of income and cash flows for
the three-years then ended, (c) the unaudited consolidated balance sheet of
Allright as of June 30, 1998, (d) the unaudited and consolidated statements of
income and retained earnings and unaudited statements of cash flows of Allright
for the fiscal year ended June 30, 1998, (e) the unaudited balance sheet of
Holdings (parent company only) as of June 30, 1998 and (f) the unaudited
statements of income and retained earnings of Holdings (parent company only)
for the fiscal year ended June 30, 1998 (collectively, the "Financial
Statements"). The Financial Statements (including the notes thereto) present
fairly in all material respects the financial position and results of operations
of Allright and the Subsidiaries as of the date and for the periods specified
therein set forth, and have been prepared in accordance with GAAP consistently
applied, except for any ordinary year-end adjustments and footnote disclosures
with respect to any interim financial statement. The sole remedy for any breach
of this Section 3.8 shall be an adjustment to the Equity Purchase Price as set
forth in Section 2.6(f), except if such breach arises from a fraudulent act or
fraudulent omission committed by AEW, Apollo, Holdings or Allright in connection
with the preparation of such Financial Statements.
Section 3.9 Undisclosed Liabilities. Except as set forth on
Schedule 3.9, Holdings, Allright and the Subsidiaries have no liabilities or
obligations, secured or unsecured (whether absolute, accrued, contingent or
otherwise and whether due or to become due), which are not fully reflected in
the Financial Statements, except (a) those incurred in the ordinary course of
business since June 30, 1998, (b) those that may have arisen as a result of the
execution and delivery of this Agreement by
12
14
Holdings or (c) those that would not have, in the aggregate, a Holdings Material
Adverse Effect.
Section 3.10 Absence of Certain Changes or Events. Except as
contemplated by this Agreement, since the date of the Financial Statements,
Holdings, Allright and the Subsidiaries have conducted their respective
businesses in the ordinary course.
Section 3.11 Legal Proceedings. Except as set forth in
Schedule 3. 11, there are no governmental proceedings seeking over $50,000 or
private litigation proceedings against Holdings, Allright or any Subsidiary
pending or, to the knowledge of Holdings, threatened which, if determined
adversely to Holdings, Allright or any Subsidiary, is likely to have, in the
aggregate, a Holdings Material Adverse Effect, nor are there any judgments,
decrees or orders against or enjoining Holdings, Allright or any Subsidiary in
respect of, or the effect of which is to prohibit, restrict, or affect, any
business practice or the acquisition of any property or the conduct of business
in any area which will have, in the aggregate, a Holdings Material Adverse
Effect.
Section 3.12 Employee Benefits.
(a) Schedule 3.12(a) sets forth a true and complete
list as of the date hereof of each material bonus, retention bonus, deferred
compensation, incentive compensation, severance, stock purchase, stock option,
severance or termination pay, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program, agreement or arrangement sponsored, maintained or
contributed to or required to be contributed to by Holdings, Allright or the
Subsidiaries or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with Holdings, Allright or the Subsidiaries would be
deemed a "single employer" within the meaning of section 4001(a)(15) of ERISA,
for the benefit of any employee or former employee of Allright or an ERISA
Affiliate, whether written or unwritten (the "Plans"). For purposes of the
adjustment to the Equity Purchase Price set forth in Section 2.6(b), "Excess
Severance" shall mean the amount by which the aggregate severance obligations
of Holdings, Allright or the Subsidiaries set forth on Schedule 3.12(a) as
updated or supplemented on the Closing Date (excluding any reasonable and
customary severance obligations contained in provisions of any employment or
severance agreement entered into in connection with any acquisition of a parking
facility or parking-related entity after the date hereof) shall exceed $6.3
million.
13
15
(b) Holdings, Allright and the Subsidiaries have
previously made available to Central or its representatives copies of (i) each
of the Plans or summaries thereof, including all amendments thereto to date;
(ii) the two most recent actuarial statements, if any, prepared for each Plan;
(iii) the two most recent annual reports (Series 5500 and all schedules
thereto), if any, required under ERISA in connection with each Plan or related
trust; (iv) the most recent determination letter received from the IRS, if any,
for each Plan and related trust which is intended to satisfy the requirements of
Section 401(a) of the Code; (v) the most recent summary plan description
together with the most recent summary of material modifications, if any,
required under ERISA with respect to each Plan; and (vi) all material
communications to any employee or employees relating to each Plan.
(c) Except as set forth on Schedule 3.12(c) hereto,
no Plan provides benefits, including without limitation death or medical
benefits (whether or not insured) with respect to current or former employees of
Holdings, Allright, any Subsidiary or any ERISA Affiliate beyond their
retirement or other termination of service (other than (i) coverage mandated by
applicable law, (ii) death benefits or retirement benefits under any "employee
pension plan," as defined in section 3(2) of ERISA, or (iii) benefits the full
cost of which is borne by the current or former employee (or his beneficiary)).
(d) Each of the Plans is in material compliance with
the terms thereof and with the requirements of any and all laws, orders,
decrees, rules and regulations applicable to such plan, including, but not
limited to, ERISA and the Code. Except as set forth on Schedule 3.12 (d), no
Plan is subject to Title IV of ERISA. There are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Plans or any trusts related thereto.
(e) Except as set forth on Schedule 3.12(e), no Plan
is a "multiemployer pension plan" (as defined in section 3(37) of ERISA). With
respect to any Plan that is a "multiemployer pension plan" (as defined in
section 3(37) of ERISA) covering employees of Holdings, Allright, the
Subsidiaries or any ERISA Affiliate, (i) none of Holdings, Allright, any
Subsidiary or any ERISA Affiliate has, since January 1, 1992, made or suffered a
"complete withdrawal" or a "partial withdrawal," as such terms are respectively
defined in sections 4203 and 4205 of ERISA, (ii) no event has occurred that
presents a material risk of a partial withdrawal, (iii) none of Holdings,
Allright, any Subsidiary or any ERISA Affiliate
14
16
has any contingent liability under section 4204 of ERISA and no circumstances
exist that present a material risk that any such plan will go into
reorganization, and (iv) the aggregate withdrawal liability of Holdings,
Allright, the Subsidiaries and the ERISA Affiliates, computed as if a complete
withdrawal by Holdings, Allright, the Subsidiaries and the ERISA Affiliates had
occurred under each such Plan on the date hereof, would not exceed $25,000.
(f) Each Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a determination letter from
the Internal Revenue Service stating that it is so qualified, and, to the
knowledge of Holdings, Allright and the Subsidiaries, no event has occurred
since the date of such determination that would adversely affect such
determination.
(g) The consummation of the Merger will not cause
Holdings, Allright or any Subsidiary to be responsible for any long-term gain
incentive bonus to be paid to any regional or division manager in connection
with the sale of owned property.
Section 3.13 Properties, Contracts and Other Data.
(a) Allright and its Subsidiaries own and have good,
marketable and insurable title to the real property owned of record or
beneficially by Allright or such Subsidiary, as the case may be (the "Owned
Properties"), free and clear of all mortgages, liens (except for ad valorem real
estate taxes not yet delinquent or the validity of which are being contested in
good faith, imperfections and liens that do not materially detract from the
value of or interfere with the present use of such property), claims, pledges,
security interests and other monetary encumbrances, and free of all
restrictions, easements, reservations, covenants and other non-monetary
encumbrances, except for the matters set forth in the title policies related to
the Owned Properties referenced on Schedule 3.13(a)(1) and as set forth on
Schedule 3.13(b)(1). Except as set forth on Schedule 3.13(a)(2), as of the date
hereof, neither Allright nor any Subsidiary has received any written notice of
condemnation or suspension of its right to use with respect to any of the Owned
Properties, none of the Owned Properties is subject to condemnation proceedings
and there is not now pending or threatened, any governmental or regulatory
action or action by a private party adverse to the uses contemplated for the
Owned Properties by Allright and its Subsidiaries.
15
17
(b) Except as set forth on Schedule 3.13(b)(1), as
of the date hereof there are no (i) mortgages, indentures, loan agreements or
other borrowing agreements to which Holdings, Allright or any Subsidiary is a
party as obligor, or to which it or any of their respective owned assets or
properties is subject, which relate to indebtedness of Holdings, Allright or any
Subsidiary for borrowed money or to mortgaging, pledging or otherwise placing a
lien on any of their respective assets; or (ii) guarantees or indemnification
agreements given or entered into by Holdings, Allright or any Subsidiary with
respect to indebtedness for borrowed money or in support of obligations the
principal obligor in respect of which is not Holdings, Allright or any
Subsidiary. Except as set forth on Schedule 3.13(b)(2), neither Allright's chief
executive officer, chief financial officer, chief operating officer, general
counsel nor divisional managers have knowledge (based on reasonable information)
that any party to any contract involving the payment by or to Holdings, Allright
or any Subsidiary of more than $100,000 per annum that such party intends or has
threatened to cancel, terminate or amend such contract.
Section 3.14 Certain Tax Matters.
(a) Except as set forth in Schedule 3.14:
(i) giving effect to all extensions obtained,
each of Holdings, Allright and the Subsidiaries has timely filed (or
there has been timely filed on its behalf) all Tax Returns (as defined
below) required to be filed by it, and all such Tax Returns are
complete in all material respects, has paid (or there has been paid on
its behalf) all Taxes shown thereon to be due, other than such Taxes
as are being contested in good faith, and has established reserves in
accordance with generally accepted accounting principles for the
payment of all Taxes for periods subsequent to the periods covered by
such Tax Returns;
(ii) no material deficiency, assessment or
other formal claim for any material Taxes has been asserted by a Tax
authority against Holdings, Allright or any of the Subsidiaries that
has not been fully paid, accrued or finally settled;
(iii) none of Holdings, Allright or any of the
Subsidiaries has been notified that any Tax Returns are currently the
16
18
subject of any audit or other administrative proceeding or court
proceeding ("Audit") by any Tax authority;
(iv) no extension, waiver or comparable
consent regarding the application of the statute of limitations with
respect to any Taxes or Tax Returns has been given by or on behalf of
Holdings, Allright or any of the Subsidiaries and is currently in
effect; and
(v) the income Tax Returns of Holdings,
Allright and the Subsidiaries for the taxable periods ending on or
before June 30, 1992 have been examined by the appropriate Tax
authority (or the applicable statute of limitations for the assessment
of Taxes for such periods has expired) and a list of Audits commenced
and not yet completed with respect to Holdings, Allright and the
Subsidiaries is set forth on Schedule 3.14.
(b) For purposes of this Agreement, (i) "Taxes"
(including, with correlative meaning, the term "Tax") shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any federal,
state, local or foreign govern mental authority, including, but not limited to,
income, gross receipts, commercial rent and occupancy, excise, property, sales,
transfer, franchise, payroll, withholding, social security or other taxes,
including any interest, penalties or additions attributable thereto and (ii)
"Tax Return" shall mean any return, report, information return or other document
(including any related or supporting information) with respect to Taxes.
(c) To the knowledge of Holdings, the Indemnification
Agreement, dated as of October 31, 1996, by and among Nedinco Delaware
Incorporated, Hang Lung Development Company Ltd., Allright Holdings LLC and
Allright, and the Letter of Credit, made by HSBC Trade Services on October 29,
1996 related thereto, are each valid and binding agreements, enforceable against
each party thereto in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
relating to or affecting creditors' rights generally and by general equity
principles.
Section 3.15 Compliance with Laws. Except as set forth in
Schedule 3.15, to their knowledge, each of Holdings, Allright and the
Subsidiaries;
17
19
(a) is in substantial compliance with all laws,
regulations, reporting and licensing requirements, and orders applicable to its
business or employees conducting its business;
(b) has received no notification or communication
from any agency or department of any federal, state, local or foreign government
or any regulatory authority or the staff thereof (i) asserting that Holdings,
Allright or any Subsidiary is not in compliance with any of the statutes,
regulations or ordinances which such governmental authority or regulatory
authority enforces, or (ii) threatening to revoke any license, franchise,
permit, or governmental authorization; and
(c) is not a party to any written order, decree,
agreement or memorandum of understanding with, or a commitment letter or similar
submission to, or a recipient of any extraordinary supervisory letter from, any
federal, state or local governmental agency or authority which restricts in any
material respect the conduct of business of Holdings, Allright and the
Subsidiaries; nor has Holdings, Allright or any Subsidiary been advised by any
such regulatory authority that such authority is contemplating issuing or
requesting any such order, decree, agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter or similar submission.
Section 3.16 Environmental Laws. Except as set forth on
Schedule 3.16, and to Holdings' knowledge:
(a) the facilities and properties owned, leased or
operated by Allright or any Subsidiary (the "Properties") and all operations at
the Properties are in material compliance with all applicable federal, state,
local and foreign laws and regulations relating to protection of the environment
("Environmental Laws");
(b) neither of Allright nor any Subsidiary has
received any notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the properties or the business operated
by Allright or any Subsidiary (the "Business"), nor does Holdings have knowledge
of facts that could lead to such notice;
(c) no judicial proceeding or governmental or
administrative action is pending or threatened, under any Environmental Law to
which Allright or
18
20
any Subsidiary is or is likely to be named as a party with respect to the
Properties or the Business, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders under any Environmental
Law with respect to the Properties or the Business;
(d) no Phase II Environmental Site Assessments have
been prepared with respect to real property owned of record or beneficially by
Holdings, Allright or any Subsidiary as the date hereof; and
(e) access to all Phase I Environmental Site
Assessments, and any other environmental reports or studies, prepared as of the
date hereof, with respect to real property owned of record or beneficially by
Holdings, Allright or any Subsidiary, has been provided to representatives of
Central. Those properties for which no Phase I Environmental Assessments have
been prepared are set forth on Schedule 3.16.
Holdings' sole representations with respect to environmental matters are set
forth in this Section 3.16. To the extent representations in other sections of
this Agreement could also apply to environmental matters including, but not
limited to, matters related to, arising under or concerning Environmental Laws,
such representations shall be construed to exclude all environmental matters and
to apply to matters other than environmental matters.
Section 3.17 Affiliate Transactions. Except as set forth in
Schedule 3.17 and for the payment by Holdings of transaction expenses of Apollo
and AEW as contemplated by Section 5.9, there is no transaction and no
transaction is now proposed, to which Holdings, Allright or any Subsidiary is or
is to be a party in which any current stockholder, director or officer or other
affiliate of Holdings, Allright or any Subsidiary has a direct or indirect
interest.
Section 3.18 Labor and Employment Matters.
(a) Except as set forth in Schedule 3.18, there is no
collective bargaining agreement, other labor agreement or employment contract
to which Holdings, Allright or any Subsidiary is a party or by which it is bound
and, in the case of employment contracts, involving employees at the city
manager level or higher.
19
21
(b) Except as set forth in Schedule 3.18; (i) no
labor union or organization has been certified or recognized as a representative
of any employees of Holdings, Allright or any Subsidiary, (ii) to the knowledge
of Holdings, there are no current or threatened organizational activities or
demands for recognition by a labor organization seeking to represent employees
of Holdings, Allright or any Subsidiary, labor strikes, material arbitrations or
material labor grievances or difficulties and (iii) to the knowledge of Holdings
no such activities have occurred during the past 12 months.
Section 3.19 Insurance. All properties and operations of
Holdings, Allright and the Subsidiaries are insured for its respective benefit,
in such amounts and against such risks customarily insured against by persons
operating similar properties or conducting similar operations under valid and
enforceable policies issued by insurers of recognized responsibility. Holdings
does not have knowledge of any pending or threatened termination or
cancellation, coverage limitation or reduction, or material premium increase
with respect to any policy.
Section 3.20 Certain Contracts. Except as set forth on
Schedule 3.20, there is no contract to which Holdings, Allright or any
Subsidiary is a party which contains any (i) non-competition or non-solicitation
provision, (ii) any earn-out or lock-out provision, or (iii) any rights to share
proceeds, rights to repurchase, contingent payment or similar provision, other
than those customary revenue sharing arrangements relating to ongoing business
operations contained in ordinary course of business lease and management
agreement participation provisions.
Section 3.21 Accounting Matters. Holdings believes, after
discussions with Xxxxxx Xxxxxxxx, that Holdings qualifies as a "combining
company" in accordance with the criteria set forth in paragraph 46 of Accounting
Principles Board Opinion No. 16 ("APB 16") and has not violated the criteria set
forth in paragraph Nos. 47c, 47d and 48c of APB 16 during the period extending
from two years preceding the initiation date of the Merger and the Closing Date.
Section 3.22 No Implied Representation. Notwithstanding
anything contained in this Article or any other provision of this Agreement, it
is the explicit intent of each party hereto that none of Holdings, Allright, any
Subsidiary, Apollo, AEW or any of their respective affiliates, directors or
officers is making any representation or warranty whatsoever, express or
implied, other than those representations and warranties of Holdings in this
Agreement, and in the case of AEW and Apollo, with respect to the last sentence
of Section 3.2. It is understood
20
22
that any estimates, projections or other predictions contained or referred to in
any Exhibit or Schedule hereto or which otherwise have been or are provided to
Central or its representatives or affiliates are not and shall not be deemed to
be representations or warranties of Holdings, Allright, any Subsidiary, Apollo
or AEW or any of their respective affiliates. Central and Central Sub
acknowledge that there are uncertainties inherent in attempting to make such
estimates, projections and other predictions, that they are familiar with such
uncertainties, that they are taking full responsibility for making their own
evaluation of the adequacy and accuracy of all estimates, projections and other
predictions so furnished to them, and that they shall have no claim against
anyone with respect thereto.
Section 3.23 Intellectual Property. Schedule 3.23 sets forth a
true and complete list of all licenses and other rights to use without payment
of all patents, copyrights, trade secrets, trade names, servicemarks and
trademarks used in its businesses held by Holdings, Allright or any Subsidiary;
and none of Holdings, Allright or any Subsidiary has received any notice of
conflict with respect thereto that asserts the right of others.
Section 3.24 Certain Information. Holdings has delivered to
Central or its representatives, prior to the date hereof, true and complete
copies (other than with respect to names of entities or landlords or locations,
which information has been deleted from such copies) of any and all assignment
provisions contained in any leases for parking facilities with direct lot
operating profits of over $50,000 for the 1998 fiscal year (the "$50,000
Leases").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
CENTRAL AND CENTRAL SUB
Central and Central Sub represent and warrant to Holdings as
follows:
Section 4.1 Organization. Central and Central Sub are duly
organized, validly existing and in good standing under the laws of the
jurisdiction of their respective incorporation and have all requisite power and
authority to own, lease and operate their properties and to carry on their
respective business as now being conducted.
21
23
Section 4.2 Authority; Enforceability.
(a) Central and Central Sub have the corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated on their respective parts hereby, and Central has the
corporate power and authority to execute and deliver the Registration Rights
Agreement and to consummate the transactions contemplated thereby. The execution
and delivery by Central and Central Sub of this Agreement and by Central of the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on their respective parts, subject, in the case of the
issuance of Central Common Stock pursuant to the Merger, to the approval by
Central's shareholders (the "Central Shareholder Approval") of such issuance
required by the shareholder approval policy of the New York Stock Exchange (the
"NYSE"). No other corporate proceedings on the part of Central or Central Sub
other than the Central Shareholder Approval are necessary to authorize the
execution and delivery of this Agreement or the Registration Rights Agreement
and the consummation by each of the transactions contemplated hereby and by
Central of the transactions contemplated thereby or the performance of their
obligations hereunder or by Central thereunder. This Agreement has been duly
executed and delivered by Central and Central Sub and is a valid and binding
agreement of Central and Central Sub, as the case may be, enforceable against
each in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency or other similar laws relating to or affecting
creditors' rights generally and by general equity principles. The Registration
Rights Agreement has been duly executed and delivered by Central and is a valid
and binding agreement of Central, enforceable against Central in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency or other similar laws relating to or affecting creditors' rights
generally and by general equity principles.
(b) The Transaction Support Agreements have each been
duly executed and delivered by the Central Stockholders and are valid and
binding agreements of the Central Stockholders, enforceable against each of the
Central Stockholders in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
relating to or affecting creditors' rights generally and by general equity
principles. Compliance by the Central Stockholders with the Transaction Support
Agreements will ensure that the Central Shareholder Approval is obtained without
the need for approval by any other stock holder of Central.
22
24
Section 4.3 Subsidiaries. Central does not have any
subsidiaries other than those set forth in Schedule 4.3 (such subsidiaries in
Schedule 4.3, "Central Subsidiaries").
Section 4.4 Non-Contravention. Except as set forth in Schedule
4.4, the execution and delivery by Central and Central Sub of this Agreement, by
Central of the Registration Rights Agreement and by the Central Stockholders of
the Transaction Support Agreements do not, and the consummation by each of the
transactions contemplated hereby and thereby, as the case may be, and the
performance by each of the obligations which they are obligated to perform
hereunder and thereunder, as the case may be, will not (a) violate any provision
of the Certificate of Incorporation or By-Laws of Central or any Central
Subsidiary, (b) except as a result of failing to obtain any third party
consents, violate, or result in the violation of, any provision of, or result in
the termination of or the acceleration of, or entitle any party to accelerate
any obligation or indebtedness under, or result in the imposition of any lien
upon or the creation of a security interest in any of the Central Common Stock
or upon the assets of Central or any Central Subsidiary, pursuant to, any
mortgage, lien, lease, franchise, license, permit, agreement or other instrument
to which Central or any Central Subsidiary is a party, or by which Central or
any Central Subsidiary is bound, and that is likely to, in any such event, in
the aggregate, have a material adverse effect on the financial condition of
Central and the Central Subsidiaries taken as a whole (a "Central Material
Adverse Effect"), or (c) subject to the approvals required as set forth in
Section 4.5, violate or conflict with any other restriction of any kind or
character to which Central, any Central Subsidiary or the Central Stockholders
are subject which would prevent or significantly restrict or delay the
consummation of the transactions contemplated hereby.
Section 4.5 Consents. Except for filings under the HSR Act,
and as set forth in Schedule 4.5, no Consent which has not been obtained or made
is required (a) for or in connection with the execution and delivery of this
Agreement by Central and Central Sub and the consummation by Central and Central
Sub of the transactions contemplated hereby and the performance by Central and
Central Sub of their obligations hereunder, other than those Consents, the
failure of which to obtain, in the aggregate, would not have a Central Material
Adverse Effect, or (b) for the ongoing operations of Central and the Central
Subsidiaries as currently conducted, other than those Consents, the failure of
which to obtain, in the aggregate, would not have a Central Material Adverse
Effect.
23
25
Section 4.6 Capital Stock.
(a) The entire authorized capital stock of Central
consists of 50,000,000 shares of Central Common Stock, 29,564,067 of which are
issued and outstanding as of September 17, 1998, and all such shares are validly
issued, fully paid and nonassessable, and 1,000,000 shares of preferred stock,
$0.01 par value per share, none of which are issued and outstanding.
Shareholders of Holdings will own, upon their issuance pursuant to Article II,
validly issued, fully paid and nonassessable shares of Central Common Stock, and
all such shares will be free and clear of any options, liens, claims, charges or
other encumbrances, subject to rights outlined in the Registration Rights
Agreement. Except as set forth on Schedule 4.6(a), there are no outstanding
obligations, warrants, options or other rights to subscribe for or pur chase, or
other plans, contracts or commitments providing for the issuance of, or the
granting of rights to acquire, shares of stock of any class of Central capital
stock or any securities or other instruments convertible into or exchangeable
for shares of stock of any class of Central capital stock.
(b) All of the issued and outstanding shares of
capital stock or securities of the Central Subsidiaries (the "Central
Subsidiaries Shares") are validly issued, fully paid and nonassessable. Central
owns, directly or indirectly, the percent age of such Central Subsidiaries
Shares set forth on Schedule 4.3, in each case free and clear of any options,
liens, claims, charges or other encumbrances. Except as set forth on Schedule
4.6(b), there are no outstanding obligations, warrants, options or other rights
to subscribe for or purchase, or other plans, contracts or commitments providing
for the issuance of, or the granting of rights to acquire, shares of stock of
any class of any Central Subsidiary capital stock or any securities or other
instruments convertible into or exchangeable for shares of stock of any class of
any Central Subsidiary capital stock.
Section 4.7 Organization and Qualification of the Central
Subsidiaries. Except as set forth on Schedule 4.7, each of the Central
Subsidiaries is duly incorporated or formed, validly existing and in good
standing under the laws of the jurisdiction of its organization and each has
full corporate or partnership, as the case may be, power and authority to own
all of its properties and assets and to carry on its business as it is now being
conducted, except where such failure would not, in the aggregate, have a Central
Material Adverse Effect. Each of Central and the Central Subsidiaries is
qualified and in good standing in every jurisdiction where the failure to so
qualify or be in good standing would have, in the aggregate, a Central Material
Adverse Effect.
24
26
Section 4.8 SEC Reports. Since October 10, 1995, Central has
filed with the Securities and Exchange Commission (the "SEC") all reports,
schedules, forms, statements and other documents (including exhibits and all
other information incorporated therein) required to be filed with the SEC (the
"Central SEC Documents"). As of their respective dates, the Central SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
Central SEC Documents, and none of the Central SEC Documents when filed (as
amended and restated and as supplemented by subsequently filed Central SEC
Documents) contained any untrue statement of fact or omitted to state a fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, other than those, in the aggregate, which would not have a Central
Material Adverse Effect. The financial statements of Central included in the
Central SEC Documents complied as to form, as of their respective dates of
filing with the SEC, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of Central
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal recurring year-end audit
adjustments), except when such failure, in the aggregate, would not have a
Central Material Adverse Effect. True, correct and complete copies of Central's
most recent Form 10-K, Form 10-Q and Proxy Statement are set forth on Schedule
4.8.
Section 4.9 Undisclosed Liabilities. Except as set forth on
Schedule 4.9, Central and the Central Subsidiaries have no liabilities or
obligations, secured or unsecured (whether absolute, accrued, contingent or
otherwise and whether due or to become due), which are not fully reflected in
the financial statements contained in the Central SEC Documents, except (a)
those incurred in the ordinary course of business since June 30, 1998, (b) those
that may have arisen as a result of the execution and delivery of this Agreement
by Central and Central Sub, or (c) those that would not have, in the aggregate,
a Central Material Adverse Effect.
25
27
Section 4.10 Absence of Certain Changes or Events. Except as
contemplated by this Agreement, since June 30, 1998, Central and the Central
Subsidiaries have conducted their respective businesses in the ordinary course.
Section 4.11 Legal Proceedings. Except as set forth in
Schedule 4. 11, there are no governmental proceedings seeking over $50,000 or
private litigation proceedings against Central or any Central Subsidiary pending
or, to the knowledge of Central or any Central Subsidiary, threatened which, if
determined adversely to Central or any Central Subsidiary, is likely to have, in
the aggregate, a Central Material Adverse Effect, nor are there any judgments,
decrees or orders against or enjoining Central or any Central Subsidiary in
respect of, or the effect of which is to prohibit, restrict, or affect, any
business practice or the acquisition of any property or the conduct of business
in any area which will have, in the aggregate, a Central Material Adverse
Effect.
Section 4.12 Employee Benefits.
(a) Schedule 4.12(a) sets forth a true and complete
list as of the date hereof of each material bonus, retention bonus, deferred
compensation, incentive compensation, severance, stock purchase, stock option,
severance or termination pay, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program, agreement or arrangement sponsored, maintained or
contributed to or required to be contributed to by Central or the Central
Subsidiaries or by any trade or business, whether or not incorporated (a
"Central ERISA Affiliate"), that together with Central or the Central
Subsidiaries would be deemed a "single employer" within the meaning of section
4001(a)(15) of ERISA, for the benefit of any employee or former employee of
Central or a Central ERISA Affiliate, whether written or unwritten (the "Central
Plans").
(b) Central and the Central Subsidiaries have
previously delivered to Allright or its representatives copies of (i) each of
the Central Plans or summaries thereof, including all amendments thereto to
date; (ii) the two most recent actuarial statements, if any, prepared for each
Central Plan; (iii) the two most recent annual reports (Series 5500 and all
schedules thereto), if any, required under ERISA in connection with each Central
Plan or related trust; (iv) the most recent determination letter received from
the IRS, if any, for each Central Plan and related trust which is intended to
satisfy the requirements of Section 401(a) of the Code; (v) the most recent
summary plan description together with the most recent summary of
26
28
material modifications, if any, required under ERISA with respect to each
Central Plan; and (vi) all material communications to any employee or employees
relating to each Central Plan.
(c) Except as set forth on Schedule 4.12(c) hereto,
no Central Plan provides benefits, including without limitation death or medical
benefits (whether or not insured) with respect to current or former employees of
Central, any Central Subsidiary or any Central ERISA Affiliate beyond their
retirement or other termination of service (other than (i) coverage mandated by
applicable law, (ii) death benefits or retirement benefits under any "employee
pension plan," as defined in section 3(2) of ERISA, or (iii) benefits the full
cost of which is borne by the current or former employee (or his beneficiary)).
(d) Each of the Central Plans is in material
compliance with the terms thereof and with the requirements of any and all laws,
orders, decrees, rules and regulations applicable to such plan, including, but
not limited to, ERISA and the Code. Except as provided in Schedule 4.12(d), no
Central Plan is subject to Title IV of ERISA. There are no pending, threatened
or anticipated claims (other than routine claims for benefits) by, on behalf of
or against any of the Central Plans or any trusts related thereto.
(e) Except as set forth on Schedule 4.12(e) hereto,
no Central Plan is a "multiemployer pension plan" (as defined in section 3(37)
of ERISA). With respect to any Central Plan that is a "multiemployer pension
plan" (as defined in section 3(37) of ERISA) covering employees of Central, the
Central Subsidiaries or any Central ERISA Affiliate, (i) neither Central, any
Central Subsidiary nor any Central ERISA Affiliate has, since January 1, 1992
made or suffered a "complete withdrawal" or a "partial withdrawal," as such
terms are respectively defined in sections 4203 and 4205 of ERISA, (ii) no event
has occurred that presents a material risk of a partial withdrawal, (iii)
neither Central, any Central Subsidiary nor any Central ERISA Affiliate has any
contingent liability under section 4204 of ERISA and no circumstances exist that
present a material risk that any such plan will go into reorganization, and (iv)
the aggregate withdrawal liability of Central, the Central Subsidiaries and the
Central ERISA Affiliates, computed as if a complete withdrawal by Central, the
Central Subsidiaries and the Central ERISA Affiliates had occurred under each
such Central Plan on the date hereof, would not exceed $25,000.
27
29
(f) Except as set forth on Schedule 4.12(f), each
Central Plan intended to be "qualified" within the meaning of Section 401(a) of
the Code has received a determination letter from the Internal Revenue Service
stating that it is so qualified, and, to the knowledge of Central and the
Central Subsidiaries, no event has occurred since the date of such determination
that would adversely affect such determination.
(g) No liability under Title IV or Section 302 of
ERISA has been incurred by Central, the Central Subsidiaries or any Central
ERISA Affiliate that has not been satisfied in full, and no condition exists
that presents a risk to Central, the Central Subsidiaries or any Central ERISA
Affiliate of incurring any such liability, other than liability for premiums due
the Pension Benefit Guaranty Corporation ("PBGC") (which premiums have been paid
when due). Insofar as the representation made in this Section 4.12(h) applies to
sections 4064, 4069 or 4204 of Title IV of ERISA, it is made with respect to any
employee benefit plan, program, agreement or arrangement subject to Title IV of
ERISA to which Central, the Central Subsidiaries or any Central ERISA Affiliate
made, or was required to make, contributions during the five (5)-year period
ending on the last day of the most recent plan year which ended prior to the
Closing Date.
(h) Except as set forth on Schedule 4.12(h), the PBGC
has not instituted proceedings to terminate any Central Plan which is subject to
Title IV of ERISA (each, a "Central Title IV Plan") and no condition exists that
presents a risk that such proceedings will be instituted.
(i) With respect to each Central Title IV Plan, the
present value of accrued benefits under such plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such plan's actuary with respect to such plan did not exceed, as of
its latest valuation date, the then current value of the assets of such plan
allocable to such accrued benefits.
(j) No Central Title IV Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each Central Title IV Plan ended
prior to the Closing Date. All contributions required to be made with respect to
any Central Plan on or prior to the Closing Date have been timely made or are
reflected on Central's most current audited balance sheet.
28
30
Section 4.13 Properties, Contracts and Other Data.
(a) Central and the Central Subsidiaries own and have
good, marketable and insurable title to the real property owned of record or
beneficially by Central or such Central Subsidiary, as the case may be (the
"Central Owned Properties"), free and clear of all mortgages, liens (except for
ad valorem real estate taxes not yet delinquent or the validity of which are
being contested in good faith, imperfections and liens that do not materially
detract from the value of or interfere with the present use of such property),
claims, pledges, security interests and other monetary encumbrances, and free of
all restrictions, easements, reservations, covenants and other non-monetary
encumbrances, except for the matters set forth in the title policies related to
the Central Owned Properties on Schedule 4.13(a)(1) and as set forth on Schedule
4.13(b)(1). Except as set forth on Schedule 4.13(a)(2), as of the date hereof,
neither Central nor any Central Subsidiary has received any written notice of
condemnation or suspension of its right to use with respect to any of the
Central Owned Properties, none of the Central Owned Properties is subject to
condemnation proceedings and there is not now pending or threatened, any
governmental or regulatory action or action by a private party adverse to the
uses contemplated for the Central Owned Properties by Central and the Central
Subsidiaries.
(b) Except as set forth on Schedule 4.13(b)(1), as of
the date hereof there are no (i) mortgages, indentures, loan agreements or other
borrowing agreements to which Central or any Central Subsidiary is a party as
obligor, or to which it or any of their respective owned assets or properties is
subject, which relate to indebtedness of Central or any Central Subsidiary for
borrowed money or to mortgaging, pledging or otherwise placing a lien on any of
their respective assets; (ii) guarantees or indemnification agreements given or
entered into by Central or any Central Subsidiary with respect to indebtedness
for borrowed money or in support of obligations the principal obligor in respect
of which is not Central or any Central Subsidiary; or (iii) obligations of
Holdings, Allright or any Subsidiary outstanding as of the Closing Date and
assumed by Central or any Central Subsidiary pursuant to the Merger that require
refinancing or which Central or any Central Subsidiary will be unable to
refinance. Except as set forth on Schedule 4.13(b)(2), neither Central's chief
executive officer, chief operating officer, chief financial officer, general
counsel nor senior vice presidents have knowledge (based on reasonable
information) that any party to any contract involving the payment by or to
Central or any Central Subsidiary of more than $100,000 per annum that such
party intends or has threatened to cancel, terminate or amend such contract.
29
31
Section 4.14 Certain Tax Matters.
(a) Except as set forth in Schedule 4.14:
(i) giving effect to all extensions obtained,
each of Central and the Central Subsidiaries has timely filed (or
there has been timely filed on its behalf) all Tax Returns required to
be filed by it, and all such Tax Returns are complete in all material
respects, has paid (or there has been paid on its behalf) all Taxes
shown thereon to be due, other than such Taxes as are being contested
in good faith and has established reserves in accordance with
generally accepted ac counting principles for the payment of all Taxes
for periods subsequent to the periods covered by such Tax Returns;
(ii) no material deficiency, assessment or other
formal claim for any material Taxes has been asserted by a Tax author
ity against Central or any of the Central Subsidiaries that has not
been fully paid, accrued or finally settled;
(iii) neither Central nor any of the Central
Subsidiaries has been notified that any Tax Returns are currently the
subject of any Audit by any Tax authority;
(iv) no extension, waiver or comparable consent
regarding the application of the statute of limitations with respect to
any Taxes or Tax Returns has been given by or on behalf of Central or
any of the Central Subsidiaries and is currently in effect; and
(v) the income Tax Returns of Central and the
Central Subsidiaries for the taxable periods ending on or before June
30, 1992 have been examined by the appropriate Tax authority (or the
applicable statute of limitations for the assessment of Taxes for such
periods has expired) and a list of all Audits commenced and not yet
completed with respect to Central and the Central Subsidiaries is set
forth on Schedule 4.14.
Section 4.15 Compliance with Laws. Except as set forth in
Schedule 4.15, to their knowledge, each of Central and the Central Subsidiaries;
30
32
(a) is in substantial compliance with all laws,
regulations, reporting and licensing requirements, and orders applicable to its
business or employees conducting its business;
(b) has received no notification or communication
from any agency or department of any federal, state, local or foreign government
or any regulatory authority or the staff thereof (i) asserting that Central or
any Central Subsidiary is not in compliance with any of the statutes,
regulations or ordinances which such governmental authority or regulatory
authority enforces, or (ii) threatening to revoke any license, franchise,
permit, or governmental authorization; and
(c) is not a party to any written order, decree,
agreement or memorandum of understanding with, or a commitment letter or similar
submission to, or a recipient of any extraordinary supervisory letter from, any
federal, state or local governmental agency or authority which restricts in any
material respect the conduct of business of Central and the Central
Subsidiaries; nor has Central or any Central Subsidiary been advised by any such
regulatory authority that such authority is contemplating issuing or requesting
any such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission.
Section 4.16 Environmental Laws. Except as set forth in
Schedule 4.16 and to Central's knowledge:
(a) the facilities and properties owned, leased or
operated by Central or any Central Subsidiary (the "Central Properties") and all
operations at the Central Properties are in material compliance with all
applicable Environmental Laws;
(b) neither of Central nor any Central Subsidiary has
received any notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the properties or the business operated
by Central or any Central Subsidiary (the "Central Business"), nor does Central
have knowledge of facts that could lead to any such notice;
31
33
(c) no judicial proceeding or governmental or
administrative action is pending or threatened, under any Environmental Law to
which Central or any Central Subsidiary is or is likely to be named as a party
with respect to the Central Properties or the Central Business, nor are there
any consent decrees or other decrees, consent orders, administrative orders or
other orders under any Environmental Law with respect to the Central Properties
or the Central Business;
(d) no Phase II Environmental Site Assessments have
been prepared with respect to real property owned of record or beneficially by
Central or any Central Subsidiary as of the date hereof; and
(e) access to all Phase I and Phase II Environmental
Site Assessments, and any other environmental reports or studies, prepared as of
the date hereof with respect to real property owned of record or beneficially by
Central or any Central subsidiary has been provided to representatives of
Holdings.
Central's and Central Sub's sole representations with respect to environmental
matters are set forth in this Section 4.16. To the extent representations in
other sections of this Agreement could also apply to environmental matters
including, but not limited to, matters related to, arising under or concerning
Environmental Laws, such representations shall be construed to exclude all
environmental matters and to apply to matters other than environmental matters.
Section 4.17 Affiliate Transactions. Except as set forth in
Schedule 4.17, there is no transaction and no transaction is now proposed, to
which Central or any Central Subsidiary is or is to be a party in which any
current shareholder, director or officer or other affiliate of Central or any
Central Subsidiary has a direct or indirect interest.
Section 4.18 Labor and Employment Matters.
(a) Except as set forth in Schedule 4.18, there is no
collective bargaining agreement, other labor agreement or employment contract
to which Central or any Central Subsidiary is a party or by which it is bound
and, in the case of employment contracts, involving employees at the city
manager level or higher.
(b) Except as set forth in Schedule 4.18; (i) no
labor union or organization has been certified or recognized as a representative
of any employees
32
34
of Central or any Central Subsidiary, (ii) to the knowledge of Central, there
are no current or threatened organizational activities or demands for
recognition by a labor organization seeking to represent employees of Central or
any Central Subsidiary, labor strikes, material arbitrations or material labor
grievances or difficulties and (iii) to the knowledge of Central no such
activities have occurred during the past 12 months.
Section 4.19 Insurance. All properties and operations of
Central and the Central Subsidiaries are insured for its respective benefit, in
such amounts and against such risks customarily insured against by persons
operating similar properties or conducting similar operations under valid and
enforceable policies issued by insurers of recognized responsibility. Central
does not have knowledge of any pending or threatened termination or
cancellation, coverage limitation or reduction, or material premium increase
with respect to any policy.
Section 4.20 Certain Contracts. Except as set forth on
Schedule 4.20, there is no contract to which Central or any Central Subsidiary
is a party which contains any (i) non-competition or non-solicitation provision,
(ii) any earn-out or lock-out provision, or (iii) any rights to share proceeds,
rights to repurchase, contingent payment or similar provision other than those
customary revenue sharing arrangements relating to ongoing business operations
contained in ordinary course of business lease and management agreement
participation provisions.
Section 4.21 Accounting Matters. Central believes, after
discussions with KPMG Peat Marwick LLP, that Central qualifies as a "combining
company" in accordance with the criteria set forth in paragraph 46 of Accounting
Principles Board Opinion No. 16 ("APB 16") and has not violated the criteria set
forth in paragraph Nos. 47c, 47d and 48c of APB 16 during the period extending
from two years preceding the initiation date of the Merger and the Closing Date.
Section 4.22 No Implied Representation. Notwithstanding
anything contained in this Article or any other provision of this Agreement, it
is the explicit intent of each party hereto that none of the Central
Stockholders, Central nor any Central Subsidiary, or any of their respective
affiliates, directors or officers is making any representation or warranty
whatsoever, express or implied, other than those representations and warranties
of the Central Stockholders, Central and Central Sub in this Agreement, the
Registration Rights Agreement or the Transaction Support Agreements. It is
understood that any estimates, projections or other predictions contained or
referred to in any Exhibit or Schedule hereto or which
33
35
otherwise have been provided to Holdings or its representatives or affiliates
are not and shall not be deemed to be representations or warranties of Central,
any Central Stockholder or any Central Subsidiary or any of their respective
affiliates. Holdings acknowledges that there are uncertainties inherent in
attempting to make such estimates, projections and other predictions, that it is
familiar with such uncertainties, that it is taking full responsibility for
making its own evaluation of the adequacy and accuracy of all estimates,
projections and other predictions so furnished to it, and that it shall have no
claim against anyone with respect thereto.
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business by Allright. During the period
from the date hereof to the Closing Date, without the prior written consent of
Central or except as contemplated by this Agreement, Holdings agrees to cause:
(a) the business of Allright and the Subsidiaries to
be operated in the ordinary course of business consistent with past practice;
(b) no change to be made in the corporate charter or
by-laws or other constituent documents of Holdings, Allright or any
Subsidiaries;
(c) except as set forth in Schedule 5.1(c) or
otherwise in the ordinary course of business consistent with past practices, (i)
no material increase in the compensation payable or to become payable by
Holdings, Allright or any Subsidiary to any officer, employee, consultant or
agent to be made (provided, that any increase in compensation payable to any
officers of Allright shall be set forth on Schedule 5.1(c), notwithstanding that
such increases were made in the ordinary course of business), and (ii) no bonus
or retirement or similar benefit or arrangement to be made or agreed to by
Holdings, Allright or any Subsidiary;
(d) except as set forth in Schedule 5.1(d), (i) no
capital expenditure or commitment to make a capital expenditure which involves
the payment of consideration having a value in excess of $1,200,000 in the
aggregate per quarter (without duplication with clause (ii) of this paragraph or
Section 5.1(e)) (excluding payments made for key money or fixed or capital
assets in connection with the entering into or renewal of any parking facility
lease), and (ii) no lease to be
34
36
entered into or renewed which involves the payment of consideration having a
value in excess of $500,000 annual rent per year (without duplication with
clause (i) of this paragraph or Section 5.1(e)). For purposes of this paragraph,
"annual rent per year" as to a given lease shall equal (a) the average annual
rent computed in accordance with GAAP on a straight line basis with respect to
any leased facility plus (b)(x) the amount of payments made for key money, fixed
or capital assets in connection with the entering into or renewal of such lease,
divided by (y) the amount of base years with respect to such lease. In the event
that Central refuses to consent to any proposed lease pursuant to this Section
5.1(d), Central and any Central Subsidiary shall refrain from entering into any
transaction concerning the subject matter of such proposed lease;
(e) except as set forth in Schedule 5.1(e), no action
to be taken to by it, Allright or any Subsidiary to acquire any business
(whether by merger, consolidation, purchase of assets or otherwise) or acquire
any equity interest in any person not an affiliate (whether through a purchase
of stock, establishment of a joint venture or otherwise) which involves the
payment of consideration having a value in excess of $100,000 individually or
$1,000,000 in the aggregate (without duplication with Section 5.1(d)) with all
other such acquisitions. In the event that Central refuses to consent to any
proposed transaction pursuant to this Section 5.1(e), Central and any Central
Subsidiary shall refrain from entering into a transaction concerning the subject
matter of such proposed transaction;
(f) except for borrowings under credit facilities or
lines of credit existing on the date hereof or incurred to finance expenditures
or acquisitions permitted pursuant to Section 5.1(d) or 5.1(e), it, Allright or
any Subsidiaries not to incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise become responsible
for the obligations of any person, or make any loans, advances or capital
contributions to, any person other than its wholly owned subsidiaries, except in
the ordinary course of business consistent with past practice;
(g) to the extent reasonably practicable, (i) the
business organization of Allright and the Subsidiaries to remain intact and to
keep available to Central the opportunity to retain the services of the present
employees of Allright and the Subsidiaries and (ii) the goodwill of the
customers of Allright and the Subsidiaries and others having business relations
with Allright and the Subsidiaries to be preserved;
35
37
(h) no action to be taken or failed to be taken that
would, or would be reasonably likely to, result in any of Holdings'
representations and warranties set forth in this Agreement not being true in
all material respects;
(i) Allright and the Subsidiaries to use their
reasonable best efforts to comply with all material legal requirements
applicable to them and to the conduct of their respective businesses;
(j) except as set forth in Schedule 5.1(j) and after
consultation with Xxxxxx Xxxxxxxx, Holdings, Allright and the Subsidiaries not
to sell, lease transfer or dispose of any of their properties not in the
ordinary course of business and provided such sale does not, in the reasonable
opinion of Xxxxxx Xxxxxxxx, jeopardize the Merger from being qualified as a
pooling-of-interests transaction for accounting purposes;
(k) except as set forth on Schedule 5.1(k), (i)
Holdings not to declare any dividend or make any distribution with respect to
its capital stock, and (ii) Allright and the Subsidiaries not to declare any
dividend or make any distribution with respect to their capital stock or
partnership interests, as the case may be, which is not made to minority
interest holders or partners pursuant to existing agreements, or which is not in
the ordinary course of business; and
(l) in the event Central does not provide a written
refusal for Allright or any Subsidiary to enter into any proposed above
transaction within five business days after receiving notification of such
proposal (with data reasonably requested by Central to evaluate such proposal)
from Allright, Holdings or any Subsidiary, Central shall be deemed to have
consented to such proposed transaction, and Allright, Holdings or such
Subsidiary may enter into any such proposed transaction as if Central had
provided its written consent.
Section 5.2 Conduct of Business by Central. During the period
from the date hereof to the Closing Date, without the prior written consent of
Holdings or except as contemplated by this Agreement, Central agrees to cause:
(a) the business of Central and the Central
Subsidiaries to be operated in the ordinary course of business consistent with
past practice;
(b) no change to be made in the corporate charter or
by-laws or other constituent documents of Central or any Central Subsidiaries;
36
38
(c) except as set forth in Schedule 5.2(c), no
expenditure which involves the payment of consideration having a value in excess
of $20,000,000 individually or $75,000,000 in the aggregate (without duplication
with Section 5.2(d)) in respect of the purchase or other acquisition of real
estate or fixed or capital assets to be made, except for any such asset acquired
in connection with normal replacement and maintenance programs properly charged
to current operations or pursuant to or as required by existing contractual
obligations and except as to the renewal of presently existing leases which are
scheduled to expire according to their respective terms;
(d) except as set forth in Schedule 5.2(d), no action
to be taken to by it or any Central Subsidiaries to acquire any business
(whether by merger, consolidation, purchase of assets or otherwise) or acquire
any equity interest in any person not an affiliate (whether through a purchase
of stock, establishment of a joint venture or otherwise) which, involves the
payment of consideration having a value in excess of $20,000,000 individually or
$75,000,000 in the aggregate (without duplication with Section 5.2(c)) with all
other such acquisitions. In the event that Holdings refuses to consent to any
proposed transaction pursuant to this Section 5.1(d), Holdings, Allright and any
Subsidiary shall refrain from entering into a transaction concerning the subject
matter of such proposed transaction;
(e) except for borrowings under credit facilities or
lines of credit existing on the date hereof or incurred to finance an
expenditures or acquisitions permitted pursuant to Section 5.2(d) or 5.2(e), or
pursuant to the transactions contemplated by this Agreement, it, or any Central
Subsidiary not to incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise become responsible for
the obligations of any person, or make any loans, advances or capital
contributions to, any person other than its wholly owned subsidiaries, except in
the ordinary course of business consistent with past practice;
(f) no action to be taken or failed to be taken that
would, or would be reasonably likely to, result in any of Central's and Central
Sub's representations and warranties set forth in this Agreement not being true
in all material respects;
37
39
(g) Central and the Central Subsidiaries to use their
reasonable best efforts to comply with all material legal requirements
applicable to them and to the conduct of their respective businesses;
(h) except as set forth in Schedule 5.2(h) and after
consultation with KPMG Peat Marwick LLP, Central and the Central Subsidiaries
not to sell, lease transfer or dispose of any of their properties to the extent
such sale may, in the reasonable opinion of KPMG Peat Marwick LLP, jeopardize
the Merger from being qualified as a pooling-of-interests transaction for
accounting purposes;
(i) other than regular quarterly dividends distributed
in the normal course of business, Central not to (i) declare, set aside or pay
any dividends on (whether in cash, stock or other securities), make any other
distributions in respect of, or enter into any agreement with respect to the
voting of, any of its capital stock or the capital stock, partnership interests,
membership interests or other equity, as the case may be, of the Central
Subsidiaries, or (ii) split, combine, issue, authorize for issuance, exchange or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities, except for issuances of Central Common Stock to a seller or
sellers for acquisitions permitted under Section 5.2(d), upon the exercise of
any stock options for Central Common Stock that are, in each case, outstanding
as of the date hereof in accordance with their present terms or the issuance of
Central Common Stock or Central Options under any Plans in the ordinary course
of business; and
(j) in the event Holdings does not provide a written
refusal for Central or any Central Subsidiary to enter into any transaction
above within five business days after receiving notification of such proposal
(with data reasonably requested by Holdings to evaluate such proposal) from
Central or any Central Subsidiary, Holdings shall be deemed to have consented to
such proposed transaction (other than transactions pursuant to paragraph (i),
for which affirmative consent is necessary) and Central or such Central
Subsidiary may enter into any such proposed transaction as if Holdings had
provided written consent.
Section 5.3 Preparation of the Form S-4 and the Proxy
Statement; Stockholders Meetings.
(a) As soon as practicable following the date of this
Agreement, Central shall prepare and file with the SEC a proxy
statement/prospectus relating to the meeting of Central's shareholders to be
held in connection with
38
40
obtaining the Central Shareholder Approval (as the same may be amended or
supplemented from time to time, the "Proxy Statement") and Central shall prepare
and file with the SEC a registration statement on Form S-4 in connection with
the issuance of Central Common Stock pursuant to the Merger (as the same may be
amended or supplemented from time to time, the "Form S-4"), in which the Proxy
Statement will be included as a prospectus. Central shall use its reasonable
best efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. Central will use its reasonable best
efforts to cause the Proxy Statement to be mailed to the holders of Central
Common Stock as promptly as practicable after the Form S-4 is declared effective
under the Securities Act. Central shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
of the Central Common Stock in the Merger, and Holdings shall furnish all
information concerning Holdings and the holders of Holdings Common Stock as may
be reasonably requested in connection with any such action. No filing of, or
amendment or supplement to, the Form S-4 or the Proxy Statement will be made by
Central without providing Holdings and counsel to Holdings with the opportunity
to review and comment thereon. Central will advise Holdings, promptly after it
receives notice thereof, of the time when the Form S-4 has become effective or
any supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Central Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement or the Form S-4 or
comments thereon and responses thereto or requests by the SEC for additional
information. If at any time prior to the Effective Time any information relating
to Central or Holdings, or any of their respective affiliates, officers or
directors, should be discovered by Central or Holdings which should be set forth
in an amendment or supplement to any of the Form S-4 or the Proxy Statement, so
that any of such documents would not include any misstatement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other parties hereto
and an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of Central.
(b) Central shall, as promptly as reasonably
practicable after the date hereof give notice of, convene and hold a meeting of
its stockholders (the
39
41
"Central Stockholders Meeting") in accordance with the Tennessee Business
Corporation Act (the "Tennessee Act") and the requirements of the NYSE for the
purpose of obtaining Central's stockholder approval in accordance with the
Tennessee Act and the rules and regulations of the NYSE and shall, through its
Board of Directors, recommend to its shareholders that they provide the Central
Shareholder Approval.
(c) As an integral part of their obligations under
the Registration Rights Agreement, Central will use its reasonable best efforts
to comply with the provisions of Rule 144(c) under the Securities Act in order
that affiliates of Holdings may resell the Central Common Stock they receive
pursuant to the Merger pursuant to Rule 145(d) under the Securities Act, and
agrees that the Form S-4 will include such information as may be requested by
Holdings to permit resales of such Central Common Stock by persons who may be
deemed to be underwriters of Central Common Stock pursuant to Rule 145 under the
Securities Act.
(d) Holdings shall, as promptly as practicable after
the mailing of the Proxy Statement by Central, either (i) give notice of,
convene and hold a meeting of its stockholders in accordance with the Delaware
General Corporation Law (the "Delaware Act") or (ii) obtain an action by written
consent, executed by the requisite percentage of Holdings stockholders and in
accordance with the Delaware Act, for the purpose of obtaining Holdings'
stockholders approval in connection with the Merger in accordance with the
Delaware Act.
Section 5.4 Investigation; Non-Solicitation. Each of Central
and Holdings shall afford to one another's officers, employees, accountants,
counsel and other authorized representatives reasonable access during normal
business hours throughout the period prior to the Effective Time or the date of
termination of this Agreement, to its and its respective subsidiaries'
properties, contracts, commitments, books and records and any report, schedule
or other document filed or received by it during such period pursuant to the
requirements of federal or state securities laws and shall use its reasonable
best efforts to cause its respective representatives to furnish promptly to one
another such additional financial and operating data and other information as to
its and its subsidiaries' respective businesses and properties as the other or
its duly authorized representatives may from time to time reasonably request in
writing; provided, however, that nothing herein shall require either Central or
Holdings or any of their respective subsidiaries to disclose any information to
the other if such disclosure would cause competitive harm to such disclosing
party (in such party's reasonable judgment) or its affiliates if the
transactions contemplated by
40
42
this Agreement are not consummated, or would be in violation of applicable laws
or regulations of any governmental entity; provided further, that
notwithstanding the above, Holdings shall allow Central and its representatives
reasonable access to information concerning, and Holdings agrees to meet with
Central and its representatives in connection with, (i) any $50,000 Leases,
which according to their respective terms are scheduled to expire within six
months from any time prior to the Closing Date, (ii) any $50,000 Lease for which
Allright or any Subsidiary has knowledge (based on reasonable information) that
the respective landlord has asserted or has threatened to assert a breach of any
consent or assignment provision contained in such lease as a result of the
Merger, and (iii) the retention of key management personnel. A representative
appointed by Holdings shall be present at any meeting between Holdings,
Allright, the Subsidiaries or any of their respective employees, directors and
officers, on the one hand, and Central, any of the Central Subsidiaries or any
of their respective employees, directors and officers, on the other hand. Unless
otherwise required by law and until the Effective Time, the parties will hold
any such information which is nonpublic in confidence in accordance with the
provisions of the Confidentiality Agreements between Central and Holdings, dated
as of January 30, 1998 and May 19, 1998 (the "Confidentiality Agreements"). AEW
and Apollo agree to reasonably cooperate, at Central's request and expense, in
connection with the retrieval of records or other documentation which AEW and
Apollo have in their possession regarding Allright's ability to utilize any net
operating loss carry-forwards.
Section 5.5 Approvals and Consents; Cooperation; Notification.
(a) The parties hereto shall use their respective
best efforts, and cooperate with each other, to obtain as promptly as
practicable all governmental and third party authorizations, approvals, consents
or waivers required in order to consummate the transactions contemplated by this
Agreement, including, without limitation, the Merger.
(b) The parties shall take all actions necessary to
file as soon as practicable all notifications, filings and other documents
required to obtain all governmental authorizations, approvals, consents or
waivers, including, without limitation, under the HSR Act, and to respond as
promptly as practicable to any inquiries received from the Federal Trade
Commission, the Antitrust Division of the Department of Justice and any other
governmental entity for additional information or documentation and to respond
as promptly as practicable to all inquiries and
41
43
requests received from any State Attorney General or other governmental entity
in connection therewith.
(c) If any divesture of property or operations at a
particular parking facility is necessary in order to terminate the waiting
period required by the HSR Act in connection with the Merger, Central and
Holdings shall retain a mutually agreeable real estate appraisal firm (the
"Appraiser") for the purpose of appraising those facilities or operations which
must be divested in order to obtain termination of the HSR waiting period. In
connection therewith, the Equity Purchase Price set forth in Section 2.6(b)
shall be adjusted for any Divesture Gain or Divesture Loss. "Divesture Gain"
shall be computed as follows: thirty-five percent multiplied by the difference
between (a) the appraised value of such property or operations, as determined
by the Appraiser, and (b) (i) 16, multiplied by (ii) the EBITDA for such
property or operations at such facility for such property's or facility's prior
fiscal year. If such number shall be a negative number, such amount shall be
deemed a "Divesture Loss" for purposes of Section 2.6(b).
Section 5.6 Central Board of Directors. Promptly after the
Effective Time, the Board of Directors of Central (the "Central Board") shall be
expanded to ten members. At such time, Apollo and AEW shall each be entitled, in
its sole discretion, to designate one individual to the Central Board, who shall
serve in accordance with and for the time period specified by the Certificate of
Incorporation and By-laws of Central. If at any time Apollo or AEW, with their
respective affiliates, individually own, directly or indirectly, less than (i)
$50,000,000 worth of outstanding Central Common Stock, Central shall, at the
next election of the Central Board, have the right to decrease the number of
appointees to the Central Board that may be made by the shareholder failing to
meet such threshold from one to none. For purposes of the foregoing, the value
of the Central Common Stock held by Apollo and AEW, together with their
respective affiliates, shall be determined by multiplying the number of shares
of Central Common Stock then beneficially owned by such holders by the average
of the closing sale prices per share of Central Common Stock on the NYSE for the
prior 20 trading days. This Section 5.6 is intended to be for the benefit of
Apollo and AEW.
Section 5.7 Public Announcements. Other than disclosures
required by federal securities laws, the parties will consult with each other
before issuing any press release or otherwise making any public statement with
respect to this Agreement and the transactions contemplated hereby and shall
not make any such announcement if the other party hereto shall reasonably
object.
42
44
Section 5.8 Tax Treatment of Merger. It is the intent of the
parties to this Agreement that the Merger be treated for federal income tax
purposes as a tax-free reorganization pursuant to Section 368(a) of the Code and
this Agreement shall constitute a "Plan of Reorganization" for purposes of the
Code, and the parties agree (i) not to take any actions which would prevent the
Merger from qualifying as such a reorganization, (ii) to report the transactions
under this Agreement consistent with such treatment and (iii) to take no
positions that are contrary thereto unless otherwise required by law.
Section 5.9 Expenses; Severance. All out-of-pocket transaction
costs and expenses incurred by Central or any Central Subsidiary in connection
with this Agreement and the transactions contemplated hereby, whether or not the
Merger is consummated, shall be paid by Central, and all Covered Transaction
Expenses incurred by Allright, any Subsidiary, Holdings, AEW and Apollo in
connection with this Agreement and the transactions contemplated hereby, if the
Merger is consummated, shall be paid by Holdings, and if the Merger is not
consummated, Allright, the Subsidiaries, Holdings, AEW and Apollo shall be
responsible for their own expenses incurred in connection with this Agreement
and the transactions contemplated hereby. Notwithstanding the foregoing, if the
Merger is not consummated solely by reason of a material breach of this
Agreement by Holdings, Holdings shall pay any and all out-of-pocket transaction
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby of Central and Central Sub up to a maximum of
$5,000,000 and if the Merger is not consummated solely by reason of a material
breach of this Agreement by Central, Central shall pay any and all out-of-pocket
transaction costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby of Allright, any Subsidiary, Holdings, AEW
and Apollo up to a maximum of $5 million. AEW and Apollo shall be solely
responsible for any payments required to be made to Xxxxxxxx, Xxxxxx &
Associates, Inc. ("Xxxxxxxx Xxxxxx"), other than with respect to the exchange of
Holdings Warrants held by Xxxxxxxx Xxxxxx for Central Warrants as provided in
Section 2.5(e). Notwithstanding anything to the contrary herein, if the Merger
is not consummated as a result of the fact that either Section 6.2(g) or Section
6.3(f) shall not have been satisfied, the party whose accountant was unable to
deliver its pooling letter as required therein shall pay to the other party an
amount of $2.5 million for expenses incurred in connection with the execution of
this Agreement; provided, neither party shall be liable for such expenses if it
had not breached a representation, warranty or covenant herein. Nothing in this
Section 5.9 is intended to limit the rights of the parties hereto under Section
7.2. If
43
45
the Merger is consummated, Central shall be solely responsible for any
obligation and payment to be made under any severance agreement, retention
agreement, stay-on bonus, non-compete agreement, compensation plan or severance
or retention provision of any employment, non-compete or retention agreement set
forth on Schedules 3.12(a), 3.20, 5.9(a), 5.9(b) or 5.10 which is incurred as a
result of the entering into of this Agreement, including but not limited to
payments required to be made immediately after the Effective Time pursuant to
the retention bonus agreements set forth on Schedule 5.9(a). Holdings shall use
its reasonable best efforts after the date hereof so that the persons listed on
Schedule 5.9(a) will enter into the retention bonus agreements substantially in
the form set forth on such Schedule 5.9(a) and that immediately after the
Effective Time, the persons listed on Schedules 5.9(b) and 5.9(c) will enter
into employment agreements and management continuity agreements with Allright
substantially in the form set forth on Schedules 5.9(b) and 5.9(c),
respectively, and Central shall cause Allright to enter into such employment
agreements and management continuity agreements at such time. Any material
modifications to the form retention agreement, employment agreement and
management continuity agreement set forth on Schedules 5.9(a), 5.9(b) and
5.9(c), respectively, shall be subject to the prior approval of Central and
Holdings.
Section 5.10 Employment Matters.
(a) Central hereby agrees to honor the Plans in
accordance with their terms as in effect on the date hereof, to the same extent
that Holdings, Allright and the Subsidiaries would be required to perform them
in the event that the Merger were not consummated. This Section 5.10(a) is
intended to be for the benefit of the beneficiaries of the Plans.
(b) Central shall honor, comply with and perform all
of the respective terms and all obligations of Holdings, Allright or the
Subsidiaries under any severance agreement, retention agreement, employment
agreement or any severance or retention provision of any employment agreement
set forth on Schedule 5.10. This Section 5.10(b) is intended to be for the
benefit of the employees party to such agreements. Central agrees to provide
severance to those employees of Allright or any Subsidiary which will be
terminated after the Closing Date and which do not have severance agreements or
severance provisions in any employment agreements in effect with Holdings,
Allright or any Subsidiary as of the Closing Date on terms not less favorable
than it would provide to any of its or the Central Subsidiaries' similarly
situated employees.
44
46
(c) Central agrees that individuals who are employed
by Holdings, Allright or the Subsidiaries immediately prior to the Closing Date
shall remain employees of the Surviving Corporation immediately following the
Closing Date (each such employee, an "Affected Employee"); provided, however,
that nothing in this Section 5.10(c) shall limit or otherwise restrict the
ability of the Surviving Corporation to terminate, lay-off or reduce the work
hours with respect to the employment of any Affected Employees following their
initial continued employment following the Effective Time.
(d) Central shall, or shall cause the Central
Subsidiaries or the Surviving Corporation to, give Affected Employees full
credit, for purposes of eligibility, vesting, benefit accrual and determination
of the level of benefits under any employee benefit plans or arrangements
maintained by Central or the Central Subsidiaries or the Surviving Corporation,
for such Affected Employees' service with Holdings, Allright or the Subsidiaries
to the same extent recognized by the Holdings, Allright and the Subsidiaries
immediately prior to the Closing Date, provided however that the Affected
Employees' eligibility to participate in, and benefits under, such plans and
arrangements shall otherwise be determined under the terms of such plans.
(e) Central shall, or shall cause the Central
Subsidiaries or the Surviving Corporation to, (i) waive all limitations as to
preexisting conditions exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Affected Employees
under any welfare benefit plans that such employees may be eligible to
participate in after the Closing Date, other than limitations or waiting
periods that are already in effect with respect to such employees and that have
not been satisfied as of the Closing Date under any welfare plan maintained for
the Affected Employees immediately prior to the Closing Date and (ii) provide
each Affected Employee with credit for any co-payments and deductibles paid
prior to the Closing Date in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that such employees are
eligible to participate in after the Closing Date.
(f) For a period of two years immediately following
the Closing Date, the coverage and benefits provided to Affected Employees
pursuant to employee benefit plans or arrangements maintained by Central or the
Central Subsidiaries or the Surviving Corporation shall be, in the aggregate,
not less favorable than those provided to similarly situated employees of
Central and the Central Subsidiaries and the Surviving Corporation.
45
47
Section 5.11 Indemnification, Exculpation and Insurance.
(a) Central and Central Sub agree that all rights to
indemnification and exculpation from liabilities for acts or omissions
occurring at or prior to the Effective Time now existing in favor of the current
or former directors, officers, employees or agents of Holdings, Allright and the
Subsidiaries as provided in their respective certificates of incorporation or
by-laws (or comparable organizational documents) and any indemnification
agreements or arrangements of Holdings, Allright or any Subsidiary the existence
of which does not cause a breach of this Agreement shall be assumed by Central,
shall survive the Merger and shall continue in full force and effect, without
amendment, for six years after the Effective Time; provided, however, that all
rights to indemnification in respect of any claim asserted or made within such
period shall continue until the final disposition of such claim. Central shall
cooperate in the defense of any such matter. In addition, from and after the
Effective Time, directors or officers of Holdings, Allright or any Subsidiary
who become directors or officers of Central or any Central Subsidiary will be
entitled to the same indemnity rights and protections as are afforded to other
directors and officers of Central or such Central Subsidiary.
(b) In the event that either of the Surviving
Corporation or Central or any of its successors or assigns (i) consolidates with
or merges into any other person and is not the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision will be made so that the
successors and assigns of Central or the Surviving Corporation, as applicable,
will assume the obligations thereof set forth in this Section 5.11.
(c) The provisions of this Section 5.11 (i) are
intended to be for the benefit of, and will be enforceable by, each indemnified
party, his or her heirs and his or her representatives and (ii) are in addition
to, and not in substitution for, any other rights to indemnification or
contribution that any such person may have by contract or otherwise.
(d) For six years after the Effective Time, Central
or the Surviving Corporation shall maintain in effect Holdings' and Allright's
current directors' and officers' liability insurance covering acts or omissions
occurring prior to the Effective Time with respect to those persons who are
currently covered by such directors' and officers' liability insurance policy on
terms with respect to such
46
48
coverage and amount no less favorable in the aggregate currently covered by such
insurance than those of such policy in effect on the date hereof; provided that
Central may substitute therefor policies of Central or the Central Subsidiaries
containing terms with respect to coverage and amount no less favorable to such
directors or officers or, in the alternative, Central may purchase a "tail" on
Holdings' existing insurance policy for a term of not less than six years.
(e) Central shall cause the Surviving Corporation or
any successor thereto to comply with its obligations under this Section 5.11.
(f) This Section 5.11 is intended to be for the
benefit of such directors and officers.
Section 5.12 NYSE Exchange Listings. Central shall use best
efforts to cause the Central Common Stock issuable under pursuant to the Merger
to be approved for listing on the NYSE, subject to official notice of issuance,
as promptly as practicable after the date hereof, and in any event prior to the
Closing Date.
Section 5.13 Affiliates.
(a) Holdings and Central will use their reasonable
best efforts to cause all persons who, at the time of the Central Stockholders
Meeting, may be deemed to be affiliates of Holdings as that term is used under
Rule 145 under the Securities Act and who will become the beneficial owners of
Central Common Stock pursuant to the Merger, or affiliates of Holdings or
Central for purposes of qualifying the Merger for pooling of interests
accounting treatment under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations, to execute "affiliate letters" in
customary form prior to the Effective Time.
(b) Central shall use its reasonable best efforts to
publish on the earliest possible date after the end of the first month after the
Effective Time in which there are at least 30 days of post-Merger combined
operations (which month may be the month in which the Effective Time occurs),
combined sales and net income figures as contemplated by and in accordance with
the terms of SEC Accounting Series Release No. 135.
(c) This Section 5.13 is intended to be for the
benefit of affiliates of Holdings.
47
49
Section 5.14 Pooling of Interests. Each of Holdings and
Central shall use reasonable best efforts to cause the transactions contemplated
by this Agreement and the Registration Rights Agreement, including the Merger,
to be accounted for as a pooling of interests under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations, and such accounting
treatment to be accepted by Central's accountants and by the SEC, and each of
Holdings and Central agrees that it shall take no action that would cause such
accounting treatment not to be obtained. Central shall, if necessary, take any
action required on its part to permit the Central Stockholders to comply with
their obligations under the Transaction Support Agreements in connection with
obtaining pooling-of-interests accounting treatment for the Merger. Any breach
by the Central Stockholders under the Transaction Support Agreements with
respect to such obligations shall be deemed a breach of this Section 5.14 by
Central.
Section 5.15 Conveyance Taxes. Holdings and Central shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees or any similar taxes
which become payable in connection with the transactions contemplated by this
Agreement that are required or permitted to be filed on or before the Effective
Time. Holdings shall pay any such taxes or fees imposed by any governmental
entity, which become payable in connection with the transactions contemplated by
this Agreement, on behalf of the respective shareholders of Holdings and
Central.
Section 5.16 Registration Rights Agreement. Central shall not
amend the Registration Rights Agreement, or agree to give the Central
Stockholders additional registration rights at any time that AEW or Apollo shall
have registration rights under the Registration Rights Agreement, without the
prior written consent of AEW and Apollo.
Section 5.17 Restructuring Agreement. Central agrees to cause
the parties to the Restructuring Agreement, dated as of the date hereof, by and
among Edison Parking Management, L.P., Allright, AParkco, Inc., Allright Parking
Management, Inc., AParkco Finance, Inc., Allright New York Parking, Inc.,
Edison Parking Corp., Park Fast Parking Management L.P. and Edison Leasing
Management Company, LLC, which it shall directly or indirectly control at or
following the Effective Time, to consummate the transactions contemplated
therein.
48
50
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 Conditions to Each Party's Obligations to Effect
the Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or, where permissible, waiver at or prior to the
Effective Time, of each of the following conditions:
(a) the Central Shareholder Approval shall have been
obtained;
(b) none of Holdings, Allright, Central or Central
Sub shall be subject to any order, decree, ruling or other action of a court of
competent jurisdiction which restrains, delays or otherwise prohibits the
transactions contemplated by this Agreement;
(c) the Form S-4 shall have become effective
(reflecting pooling-of-interests accounting treatment) under the Securities Act
prior to the mailing of the Proxy Statement by Central and no stop order or
proceedings seeking a stop order shall have been entered or be pending by the
SEC;
(d) the shares of Central Common Stock issuable to
the Holdings' stockholders pursuant to the Merger shall have been approved for
listing on the NYSE, subject to official notice of issuance; and
(e) any waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated.
Section 6.2 Conditions to the Obligations of Central to Effect
the Merger. The obligations of Central and Central Sub to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) The representations and warranties of Holdings
set forth in this Agreement (without taking into account any qualifications as
to materiality contained in such representations and warranties) shall be true
and correct when made and as of the Closing Date (except to the extent that any
such representation and warranty had by its terms been made as of a specific
date, in which case such
49
51
representation and warranty shall be true and correct as of such date), and
Holdings, Allright and the Subsidiaries shall have performed the obligations to
be performed by each under this Agreement prior to the Closing Date, except
where the failure to be so true and correct, and all failures to perform and
comply with such obligations (without taking into account any qualifications as
to materiality contained in such representations, warranties, covenants and
agreements), does not and will not have, in the aggregate, a Holdings Material
Adverse Effect. Any information delivered by Holdings to Central prior to the
Effective Time for attachment to the schedules to bring down the representations
and warranties contained herein on the Closing Date which supplements or updates
any schedule previously delivered shall be used for determining if any
representation or warranty set forth in this Agreement is true and correct on
the Closing Date and for determining if Central had knowledge of a particular
fact as of the Closing Date, in each case, for purposes of Central's ability to
seek indemnification under Article VIII, provided that the supplemented or
updated schedule shall not be used for determining if any representation or
warranty set forth in this Agreement shall have been true on the date hereof,
and provided further that the updating or supplementing of any schedule shall
not limit Central's rights under Section 6.2(a) and Section 6.2(b) herein. The
updating of any schedule shall not be deemed an admission by Holdings that it
has breached any representation or warranty contained herein.
(b) There shall not have occurred any Holdings
Material Adverse Effect since the date of this Agreement.
(c) Central shall have received a certificate to the
effect that the conditions set forth in Section 6.2 (a) and 6.2(b) have been
satisfied signed on behalf of Holdings by an officer of Holdings.
(d) Central shall have received an opinion from KPMG
Peat Marwick LLP, tax counsel to Central, in form and substance reasonably
satisfactory to Central, dated as of the Closing Date, substantially to the
effect that, on the basis of facts, representations, and assumptions set forth
in such opinion that are consistent with the state of facts existing at the
Effective Time, the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and that
accordingly:
(i) no gain or loss will be recognized by
Central, Holdings or Central Sub as a result of the Merger;
50
52
(ii) no gain or loss will be recognized by the
stockholders of Holdings on the exchange of their Holdings Common Stock
for Central Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in Central Common
Stock); and
(iii) the tax basis of the Central Common Stock
received by shareholders who exchange their Holdings Common Stock for
Central Common Stock in the Merger will be the same as the tax basis of
Holdings Common Stock surrendered in exchange therefor (reduced by any
amount allocable to a fractional share interest for which cash is
received).
In rendering such opinion, Central's counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of Central, Central Sub, Holdings and others, including certificates
substantially in the form of Exhibits A and B.
(e) Central shall have received an opinion from
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to Holdings, in form and
substance reasonably satisfactory to Central and its counsel.
(f) Holdings shall have delivered to Central
Allright's audited financial statements prepared in accordance with GAAP for the
fiscal year ended June 30, 1998.
(g) Holdings shall have provided to Central a letter
from Xxxxxx Xxxxxxxx, stating their belief that Holdings qualifies as a
"combining company" in accordance with the criteria set forth in paragraph 46
of Accounting Principles Board Opinion No. 16 ("APB 16") and has not violated
the criteria set forth in paragraph Nos. 47c, 47d and 48c of APB 16 during the
period extending from two years preceding the initiation date of the Merger and
the Closing Date, and KPMG Peat Marwick LLP shall have delivered a letter to
Central, stating their belief that there are no conditions which exist which
would preclude Central from accounting for the Merger as a pooling-of-interests
pursuant to APB 16, provided, that if KPMG Peat Marwick LLP does not provide
such letter to Central, KPMG Peat Marwick LLP must deliver a letter to Central
(and Central shall immediately deliver such letter to Holdings) stating its
belief as to what condition exists which would preclude Central from accounting
for the Merger as a pooling-of-interests
51
53
pursuant to APB 16, and in such letter also state what facts, if any, have
changed since the later of the date hereof and the date on which the Proxy
Statement was mailed to Central's shareholders pursuant to Section 5.3 to cause
KPMG Peat Marwick LLP to change its belief with respect to such issues and why,
in its reasonable opinion, Central cannot take actions to cure such pooling
issues.
(h) AEW and Apollo shall have executed and delivered
to Central the Noncompetition Agreement, substantially in the form of Exhibit C.
Section 6.3 Conditions to the Obligations of Holdings to
Effect the Merger. The obligations of Holdings to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of Central and
Central Sub set forth in this Agreement (without taking into account any
qualifications as to materiality contained in such representations and
warranties) shall be true and correct when made and as of the Closing Date
(except to the extent that any such representation and warranty had by its terms
been made as of a specific date, in which case such representation and warranty
shall be true and correct as of such date), and Central, Central Sub and the
Central Subsidiaries shall have performed the obligations to be performed by
each under this Agreement prior to the Closing Date, except where the failure to
be so true and correct, and all failures to perform and comply with such
obligations (without taking into account any qualifications as to materiality
contained in such representations, warranties, covenants and agreements), does
not and will not have, in the aggregate, a Central Material Adverse Effect. Any
information delivered by Central to Holdings prior to the Effective Time for
attachment to the schedules to bring down the representations and warranties
contained herein on the Closing Date which supplements or updates any schedule
previously delivered shall be used for determining if any representation or
warranty set forth in this Agreement is true and correct on the Closing Date and
for determining if Holdings had knowledge of a particular fact as of the Closing
Date, in each case, for purposes of Holdings ability to seek indemnification
under Article VIII, provided that the supplemented or updated schedule shall not
be used for determining if any representation or warranty set forth in this
Agreement shall have been true on the date hereof, and provided further that the
updating or supplementing of any schedule shall not limit Holding's rights under
Section 6.3(a) and Section 6.3(b) herein. The updating of any schedule shall not
be deemed an admission by Central that its has breached any representation or
warranty contained herein.
52
54
(b) There shall not have occurred any Central
Material Adverse Effect since the date of this Agreement.
(c) Holdings shall have received a certificate to the
effect that the conditions set forth in the foregoing clauses (a) and (b) have
been satisfied signed on behalf of Central and Central Sub by an officer of
Central and Central Sub, respectively.
(d) Holdings shall have received an opinion from
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to Holdings, in form and
substance reasonably satisfactory to Holdings, dated as of the Closing Date,
substantially to the effect that, on the basis of facts, representations, and
assumptions set forth in such opinion that are consistent with the state of
facts existing at the Effective Time, the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code and that accordingly:
(i) no gain or loss will be recognized by
Central, Holdings or Central Sub as a result of the Merger;
(ii) no gain or loss will be recognized by the
stockholders of Holdings on the exchange of their Holdings Common Stock
for Central Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in Central Common
Stock); and
(iii) the tax basis of the Central Common Stock
received by shareholders who exchange their Holdings Common Stock for
Central Common Stock in the Merger will be the same as the tax basis of
Holdings Common Stock surrendered in exchange therefor (reduced by any
amount allocable to a fractional share interest for which cash is
received).
In rendering such opinion, Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP may
require and rely upon representations and covenants including those contained in
certificates of officers of Central, Central Sub, Holdings and others, including
certificates substantially in the form of Exhibits A and B.
53
55
(e) Allright shall have received an opinion from
Xxxxxxx, Xxxxxx, Xxxx, Xxxxxxx & Manner, P.C., counsel to Central, in form and
substance reasonably satisfactory to Holdings and its counsel.
(f) Central shall have provided to Holdings a letter
from KPMG Peat Marwick LLP, stating their belief that no condition exists which
would preclude Central from accounting for the Merger as a pooling-of-interests
pursuant to APB 16, and Xxxxxx Xxxxxxxx shall have delivered a letter to
Holdings, stating their belief that Holdings qualifies as a "combining company"
in accordance with the criteria set forth in paragraph 46 of APB 16 and has not
violated the criteria set forth in paragraph Nos. 47c, 47d and 48c of APB 16
during the period extending from two years preceding the initiation date of the
Merger and the Closing Date, provided, that if Xxxxxx Xxxxxxxx does not provide
such letter to Holdings, Xxxxxx Xxxxxxxx must deliver a letter to Holdings (and
Holdings shall immediately deliver such letter to Central) stating its belief as
to why Holdings does not qualify as a "combining company" in accordance with the
criteria set forth in paragraph 46 of APB 16 or its belief as to how Holdings
has violated the criteria set forth in paragraph Nos. 47c, 47d and 48c of APB 16
during the period extending from two years preceding the initiation date of the
Merger and the Closing Date, as the case may be, and in such letter also state
what facts, if any, have changed since the later of the date hereof and the date
on which the Proxy Statement was mailed to Central's shareholders pursuant to
Section 5.3 to cause Xxxxxx Xxxxxxxx to change its belief with respect to such
issues and why, in its reasonable opinion, Holdings cannot take actions to cure
such pooling issues.
ARTICLE VII
TERMINATION; NON-CONSUMMATION
Section 7.1 Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual agreement of all of the parties hereto;
(b) by Holdings or Central upon notice given to the
other in the event that the other shall, contrary to the terms of this
Agreement, fail or refuse to consummate the transactions contemplated hereby or
to take any other action
54
56
referred to herein necessary to consummate the transactions contemplated hereby,
after affording such defaulting party a thirty-day period after notice in which
to cure;
(c) by Holdings or Central upon notice given to the
other if the Closing shall not have taken place on or before 120 days after the
date hereof (or such later date as Holdings and Central shall have agreed);
provided that the failure of the Closing to occur on or before such date is not
the result of the breach of the covenants, agreements, representations or
warranties hereunder of the party seeking such termination, and provided further
that if the Closing has not taken place due solely to the fact that the waiting
period under the HSR Act shall not have expired or been terminated, the 120 days
referred to above may be extended at the option of either Holdings or Central
for an additional 60 days, and, provided further that to the extent the SEC has
not declared the Form S-4 effective on or before 120 days after the date hereof
solely as a result of the fact that Holdings had not delivered to Central
audited financial statements for the fiscal year ended June 30, 1998 prior to
September 30, 1998, the 120 days shall be extended by the number of days after
September 30, 1998 that such financial statements were delivered; or
(d) by Holdings or Central upon written notice to the
other party if any court or governmental authority of competent jurisdiction
shall have issued a final permanent order, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement.
Section 7.2 Effect of Termination, Non-Competition.
(a) In the event of the termination of this Agreement
as provided in Section 7.1, this Agreement shall forthwith become wholly void
and of no further force and effect and, other than in the event of a termination
pursuant to Section 7.1(b), there shall be no liability on the part of any of
the parties hereto (except as set forth in this Section and Sections 5.9 and
9.4), or their respective officers or directors. In the event of the termination
of this Agreement pursuant to Section 7.1(b), the terminating party shall be
indemnified by the other party for any or all damages, costs and expenses
sustained or incurred as a result of such termination. The obligations of the
parties to this Agreement under Sections 5.4, 5.9, 9.4 and this Section shall
survive any such termination. The terms of the Confidentiality Agreements
between Central and Holdings, dated January 30, 1998 and May 19, 1998, shall
survive according to the terms contained therein, notwithstanding the
termination of this Agreement, provided that the terms of the
55
57
Confidentiality Agreement may be enforced on behalf of Holdings and Allright by
AEW and Apollo.
(b) Central shall not use any of the information
obtained with respect to Holdings, Allright or any Subsidiary or any landlord of
a property leased or managed by Holdings, Allright or any Subsidiary to compete,
directly or indirectly, with Holdings, Allright or any Subsidiary, whether with
respect to customers, suppliers, employees or with regard to pricing,
distribution or otherwise at any time after the date hereof until the Closing.
In addition, for a period of time as set forth below in paragraph (c) below,
Central agrees to refrain from, directly and indirectly, making any offer or
proposal, or seeking or soliciting the opportunity, or responding to any
solicitation, or entering into any agreement to, operate, acquire, lease or
manage any parking facility which Allright or any Subsidiary operated, owned,
leased or managed, or is subject to a binding agreement (provided, in the case
of a parking facility subject to a binding agreement, only if such binding
agreement was disclosed to Central) to do any of the foregoing, as of the date
hereof or the date of termination of this Agreement, or encouraging any owner,
lessor, partner or customer (or any of their respective affiliates) with respect
to such parking facility to terminate (whether or not pursuant to an existing
right of termination) or otherwise adversely modify its business relationship
with Allright or any Subsidiary in any matter whatsoever. In addition, for the
time period set forth below, Central will refrain from directly or indirectly
employing, attempting to employ, recruiting or otherwise soliciting, inducing or
influencing any person to leave employment with Allright or any Subsidiary who
was employed by Allright or any Subsidiary either on the date hereof or on the
date of termination of this Agreement.
(c) For purposes of paragraph (b), in the event the
Merger is not consummated as a result of the conditions set forth in Sections
6.2 (a) (with respect to the bring-down of representations and warranties) or
6.2(b), not being satisfied, or upon a material breach of this Agreement by
Central, the restrictions on Central's ability to compete shall be for a period
of three years, and if the Merger is not consummated for any other reason, such
restrictions shall be in effect for a period of eighteen months.
56
58
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 8.1 Survival of Representations, Warranties and
Agreements. The representations, warranties and covenants of each of Holdings,
Central and Central Sub made in this Agreement shall survive the Closing until
the first anniversary of the Closing (the "Indemnity Period"), except for
representations and warranties made in Section 3.8 (other than with respect to
breaches of Section 3.8 arising from a fraudulent act or fraudulent omission
committed by AEW, Apollo Holdings or Allright in connection with the preparation
of the Financial Statements) and Section 3.16 (other than with respect to those
properties not contained in the Law Report (as defined below)), which shall not
survive the Closing. The aforementioned representations, warranties and
covenants shall not, except as provided in Section 7.2 hereof, survive any
termination of this Agreement. The parties intend to shorten the statute of
limitations and agree that no claims or causes of action may be brought against
each of AEW, Apollo, Holdings, Central and Central Sub or any of its directors,
officers, employees, affiliates, controlling persons, agents or representatives
based upon, directly or indirectly, any of the representations, warranties or
agreements contained in this Agreement after the Indemnity Period or, except as
provided in Section 7.2 hereof, any termination of this Agreement. This Section
8.1 shall not limit any covenant or agreement of the parties which contemplates
performance after the Closing, including, without limitation, the covenants and
agreements set forth in Sections 5.6, 5.10, 5.11, 5.13 and 5.15 hereof.
Section 8.2 Agreement to Indemnify by AEW and Apollo.
(a) Subject to the terms and conditions set forth
herein, from and after the Closing, AEW and Apollo shall indemnify and hold
harmless Central, the Surviving Corporation and their respective directors,
officers, employees, affiliates, controlling persons, agents and representatives
and their successors and assigns (collectively, the "Central Indemnitees") from
and against all liability, demands, claims, actions or causes of action,
assessments, losses, damages, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses, but excluding any such claims, losses
or damages related to breaches of representations and warranties contained in
Section 3.8 (other than with respect to breaches of Section 3.8 arising from a
fraudulent act or fraudulent omission committed by AEW, Apollo, Holdings or
Allright in connection with the preparation of the Financial Statements) and
Section 3.16 hereof (other than with respect to properties not
57
59
contained in the Law Report)) (collectively, "Central Damages") asserted against
or incurred by any Central Indemnitee as a result of or arising out of a breach
of any representation, warranty or covenant contained in this Agreement
(excluding representations and warranties contained in Section 3.8 (other than
with respect to breaches of Section 3.8 arising from a fraudulent act or
fraudulent omission committed by AEW, Apollo, Holdings or Allright in connection
with the preparation of the Financial Statements) and Section 3.16 hereof (other
than with respect to properties not contained in the Law Report), and excluding
any breaches of representations and warranties with respect to matters for which
Central or its representatives had knowledge (based on reasonable information)
prior to the date hereof), without consideration of materiality standards
contained in the representations and warranties, when made or at and as of the
Closing as though such representation or warranty was made at and as of the
Closing. Notwithstanding the foregoing, AEW and Apollo shall not be liable for
any breaches of representations and warranties resulting in Central Damages if
Central or its representatives had knowledge of such breaches (based on
reasonable information) at the Closing Date.
(b) The obligations of AEW and Apollo to indemnify
the Central Indemnitees pursuant to Section 8.2(a) hereof with respect to a
breach of a representation, warranty or covenant contained in this Agreement,
excluding representations and warranties contained in Section 3.8 (other than
with respect to breaches of Section 3.8 arising from a fraudulent act or
fraudulent omission committed by AEW, Apollo, Holdings or Allright in
connection with the preparation of the Financial Statements) and Section 3.16
hereof (other than with respect to properties not contained in the Law Report),
are subject to the following limitations:
(i) No indemnification shall be made by AEW
or Apollo unless the aggregate amount of Central Damages exceeds
$4,000,000, and then only for the amount by which the Central Damages
exceed $4,000,000. Each of Apollo and AEW shall be liable for 50% of
all Central Damages in excess of $4,000,000, in the aggregate, and not
exceeding $34,000,000, in the aggregate; provided, however, that AEW or
Apollo shall not be liable for the obligations of the other under this
Section 8.2(b)(i).
(ii) AEW and Apollo shall be obligated to
indemnify the Central Indemnitees only for those claims giving rise to
Central Damages as to which the Central Indemnitees have given each of
AEW and Apollo written notice thereof prior to the end of the
58
60
Indemnity Period. Any written notice delivered by a Central Indemnitee
to AEW and Apollo with respect to Central Damages shall set forth with
as much specificity as is reasonably practicable the basis of the
claim for such Central Damages and, to the extent reasonably
practicable, a reasonable estimate of the amount thereof.
(iii) The sole remedy for any Excess Severance
shall be an adjustment to the Equity Purchase Price as set forth in
Section 2.6(b), and the Central Indemnitees shall not be entitled to
indemnification hereunder for any Central Damages arising from any such
increase in aggregate severance exposure.
Section 8.3 Agreement to Indemnify by Central.
(a) Subject to the terms and conditions set forth
herein, from and after the Closing, Central shall indemnify and hold harmless
the stockholders of Holdings as of the Closing (and, in the case where such
stockholders are not natural persons, their respective directors, officers,
employees, affiliates, controlling persons, agents and representatives) and
their permitted successors and assigns (collectively, the "Holdings
Indemnitees") from and against all liability, demands, claims, actions or causes
of action, assessments, losses, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) (collectively, "Holdings
Damages") asserted against or incurred by any Holdings Indemnitee as a result of
or arising out of a breach of any representation, warranty or covenant contained
in this Agreement (excluding any breaches of representations and warranties with
respect to matters for which Holdings or its representatives had knowledge
(based on reasonable information) prior to the date hereof), without
consideration of materiality standards contained in the representations and
warranties, when made or at and as of the Closing as though such representation
or warranty was made at and as of the Closing. Notwithstanding the foregoing,
Central shall not be liable for any breaches of representations and warranties
resulting in Holdings Damages if Holdings had knowledge of such breaches (based
on reasonable information) at the Closing Date.
(b) The obligations of Central to indemnify the
Holdings Indemnitees pursuant to Section 8.3(a) hereof with respect to a breach
of a representation or warranty contained in this Agreement are subject to the
following limitations:
59
61
(i) No indemnification shall be made by Central
unless the aggregate amount of Holdings Damages exceeds $4,000,000, and
then only for the amount by which the Holdings Damages exceed
$4,000,000 and do not exceed $34,000,000, in the aggregate.
(ii) Central shall be obligated to indemnify the
Holdings Indemnitees only for those claims giving rise to Holdings
Damages as to which the Holdings Indemnitees have given Central written
notice thereof prior to the end of the Indemnity Period. Any written
notice delivered by a Holdings Indemnitee to Central with respect to
Holdings Damages shall set forth with as much specificity as is
reasonably practicable the basis of the claim for such Holdings Damages
and, to the extent reasonably practicable, a reasonable estimate of the
amount thereof.
Section 8.4 Indemnification - Environmental Matters.
(a) Subject to the terms and conditions set forth
herein, from and after the Closing, AEW and Apollo shall indemnify and hold
harmless the Central Indemnitees from and against all liability, demands,
claims, actions or causes of action, assessments, losses, damages, costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, but excluding the Central Damages) (collectively, the "Environmental
Damages" and, together with the Central Damages, the "Damages") asserted against
or incurred by any Central Indemnitee solely with respect to those matters
contained in the report of Law Engineering & Environmental Services, Inc., dated
July 19, 1996 (the "Law Report") previously furnished to Central and set forth
on Schedule 8.4. The obligations of AEW and Apollo under this Section 8.4(a)
shall terminate upon the thirty month anniversary of the Closing (the
"Environmental Indemnity Period").
(b) The obligations of AEW and Apollo to indemnify
the Central Indemnitees pursuant to clause (i) of Section 8.4(a) are subject to
the following limitations:
(i) With respect to each individual property,
each of Apollo and AEW shall be liable up to a maximum of 25% of all
Environmental Damages (the remaining 50% shall be the sole liability
and responsibility of Central) described in the Law Report
60
62
under the column entitled "nominal cost" for that property, and in no
event shall either be liable for over $5,000,000, in the aggregate,
for all properties. In no event shall AEW or Apollo be liable for the
obligations of the other or Central under this Section 8.4(b)(i).
(ii) AEW and Apollo shall be obligated to
indemnify the Central Indemnitees only for those claims giving rise to
Environmental Damages as to which the Central Indemnitees have given
each of AEW and Apollo written notice thereof prior to the end of the
Environmental Indemnity Period. Any written notice delivered by a
Central Indemnitee to AEW and Apollo with respect to Environmental
Damages shall set forth with as much specificity as is reason ably
practicable the basis of the claim for such Environmental Damages and,
to the extent reasonably practicable, a reasonable estimate of the
amount thereof.
(iii) No indemnification shall be made by AEW
or Apollo for environmental clean up costs incurred with respect to a
particular property to the extent such clean up costs are not (i)
required to be incurred by the Central Indemnitees by a federal, state
or local governmental or regulatory agency or (ii) incurred by the
Central Indemnities in connection with the sale or refinancing of such
property to the extent required by the buyer or the lender thereto, as
the case may be.
Section 8.5 Procedures. The obligations of the indemnifying
parties under this Article VIII to indemnify the indemnified parties with
respect to Damages or Holdings Damages, as the case may be, resulting from the
assertion of liability by third parties (a "Claim"), will be subject to the
following terms and conditions:
(a) An indemnitee against whom any Claim is asserted
will give the indemnifying party or parties, as the case may be, written notice
of any such Claim promptly after learning of such Claim, and each indemnifying
party may at its option undertake the defense thereof by representatives of its
own choosing. Failure to give prompt notice of a Claim hereunder shall not
affect the obligations of the indemnifying party or parties, as the case may be,
under this Article VIII except to the extent an indemnifying party is materially
prejudiced by such failure to give prompt notice. If an indemnifying party
within 30 days after notice of any such Claim, or such shorter period as is
reasonably required, fails to assume the defense of
61
63
such Claim, the indemnitee against whom such Claim has been made will (upon
further notice to the indemnifying party) have the right to undertake the
defense, compromise or settlement of such Claim on behalf of and for the account
and risk, and at the expense, of the indemnifying party or parties, as the case
may be, subject to the right of each indemnifying party to assume the defense of
such Claim at any time prior to settlement, compromise or final determination
thereof. In connection with the handling and disposition of any Claim, the
parties agree to use their reasonable best efforts to cooperate and consult with
each other to the extent practicable in order to mitigate any Holdings Damages,
Environmental Damages or Central Damages which may arise from any such Claim.
(b) Anything in this Section 8.5 to the contrary
notwithstanding, no indemnitee shall enter into any settlement or compromise of
any action, suit or proceeding or consent to the entry of any judgment (i) which
does not include as an unconditional term thereof the delivery by the claimant
or plaintiff to the indemnifying party or parties, as the case may be, of a
written release from all liability in respect of such action, suit or proceeding
and (ii) without the prior written consent of the indemnifying party or parties,
as the case may be, which consent shall not be unreasonably withheld or
delayed.
(c) All obligations for indemnification incurred by
each of the indemnifying party or parties, as the case may be, under this
Article VIII may be satisfied, in the sole discretion of the indemnifying party
or parties, as the case may be, by the payment of Central Common Stock in lieu
of cash, provided, however, that Central shall satisfy any such obligation only
through a payment of Central Common Stock to the extent required in order to
qualify the Merger as a pooling of interests transaction under APB 16. For
purposes of this subsection, the value of a share of Central Common Stock
delivered in lieu of cash under this clause shall be deemed to equal the closing
sale price per share of Central Common Stock on the NYSE on the Closing Date.
(d) The amount of Damages and Holdings Damages for
which indemnification is provided under this Article VIII herein shall be net of
(i) any amounts recovered by the appropriate indemnitee under insurance policies
with respect to such Damages or Holdings Damages, (ii) any balance sheet
reserves with respect to such Damages or Holdings Damages to the extent
accounted for on the balance sheet delivered in connection with the Working
Capital Adjustment, and (iii) any amounts recovered by the appropriate
indemnitee pursuant to third party indemnification agreements; provided that in
the case of (i) and (iii) above, the
62
64
indemnitee must first seek recovery from such insurance carrier or third party,
as the case may be, prior to seeking indemnification from an indemnifying party
hereunder; provided, further, that the indemnitee shall not adversely modify,
reduce coverage or terminate any existing insurance policy or third party
indemnification agreement prior to the expiration of the Indemnity Period or,
with respect to environmental insurance policies and third party indemnification
agreements relating to matters set forth in Section 8.4, if any, the
Environmental Indemnity Period.
Section 8.6 Sharing of Purchase Claim Costs. Subject to the
terms and conditions set forth herein, AEW, Apollo and Central agree, with
respect to the partnership listed on Schedule 3.20 numbered "5" (the
"Partnership"), that if the other partners of the Partnership shall assert the
right (the "Purchase Claim") to purchase the entire interest of the Allright
subsidiary which is a partner (the "Allright Partner") in the Partnership, then
Central, AEW and Apollo shall jointly make determinations regarding the defense
or other disposition of the Purchase Claim, including the terms of any
disposition of the Allright Partner pursuant to the Purchase Claim, and shall
share in any Purchase Claim Costs (as defined below) as follows: (i) each of AEW
and Apollo shall be liable for 25% of the first $4,000,000 in Purchase Claim
Costs up to a maximum obligation by each of $1,000,000 and 0% of any Purchase
Claim Costs beyond $4,000,000; and (ii) Central shall be liable for 50% of the
first $4,000,000 in Purchase Claim Costs and 100% of any Purchase Claim Costs
beyond $4,000,000. For purposes of this Section 8.6, "Purchase Claim Costs"
shall include the difference, if any, between (i) $2,288,960, and (ii) the
purchase price paid by such remaining partner for the entire interest of the
Allright Partner, determined in accordance with the provisions of the
Partnership Agreement of the Partnership (the "Partnership Agreement") plus any
documented out-of-pocket costs of Central, AEW and Apollo in responding to the
Purchase Claim. Purchase Claim Costs shall not constitute Central Damages for
any purposes under this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Schedules. All references to Schedules are to the
Disclosure Schedule exchanged among the parties to this Agreement. Disclosures
included in any Schedule shall, to the extent clear from the context, be
considered to be made for purposes of all Schedules, to the extent that such
Schedules are intended
63
65
to contain the same subject matter and be used in the same context. Inclusion of
any matter in any Schedule does not imply that such matter would, under the
provisions of this Agreement, have to be included in such Schedule.
Section 9.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or transmitted by telex or telegram or mailed by registered or certified mail
(returned receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to Holdings, to:
Apollo Real Estate Investment Fund II, L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
AEW Partners, L.P.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxx
with copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxx
and to: Xxxxxxx, Procter & Xxxx
Exchange Place
Boston, Massachusetts 02109
Attn: Xxxxx Xxxxxx Xxxxxx
If to Central or Central Sub, to:
Central Parking Corporation
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Monroe J. Carell, Jr.
64
66
with copy to: Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
1800 First American Center
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxx Manner
Section 9.3 Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 9.4 Brokers and Financial Advisors. Central represents
and warrants that, except for The Blackstone Group, L.P. (for whose fees and
expenses Central is solely responsible and against whose fees and expenses
Central hereby indemnifies Holdings), no person is entitled to any brokerage or
finder's fee, financial advisory fee or other payment from Central or any of its
affiliates based on agreements, arrangements or undertakings made by Central in
connection with the transactions contemplated hereby. Holdings represents and
warrants that, except for Bear, Xxxxxxx & Co. (for whose fees and expenses
Central is responsible for to the extent set forth in Section 5.9 and Central
hereby indemnifies Holdings with respect to such fees to such extent and, if
Central is not responsible for such fees and expenses under Section 5.9,
Holdings hereby indemnifies Central with respect to such fees and expenses), no
person is entitled to any brokerage or finder's fee, financial advisory fee or
other payment from Holdings or any of its affiliates based on agreements,
arrangements or undertakings made by Holdings or any of its affiliates in
connection with the transactions contemplated hereby.
Section 9.5 Amendment. This Agreement and the Schedules hereto
may be amended by the parties hereto, but may not be amended except by an
instrument or instruments in writing signed and delivered on behalf of each
of the parties hereto.
Section 9.6 Extension; Waiver. At any time prior to the
Closing Date, any party hereto which is entitled to the benefits hereof may (a)
extend the time for the performance of any of the obligations or other acts of
any of the other parties hereto, (b) waive any inaccuracy in the representations
and warranties of any of the other parties hereto contained herein or in any
Schedule hereto or in any document delivered pursuant hereto, and (c) waive
compliance with any of the agreements of any of the other parties hereto or
conditions contained herein. Any agreement on the
65
67
part of a party hereto to any such extension or waiver shall be valid if set
forth in an instrument in writing signed and delivered on behalf of such party.
Section 9.7 Entire Agreement. This Agreement (including the
Schedules, documents and instruments referred to herein) and the Confidentiality
Agreements constitute the entire agreement and supersede all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof and thereof.
Section 9.8 Assignment. This Agreement shall not be assigned
by operation of law or otherwise, and any attempted assignment shall be void.
Section 9.9 Governing Law; Jurisdiction. This Agreement shall
be governed in all respects, including validity, interpretation and effect, by
the laws of the State of Delaware. Any dispute arising in connection with this
Agreement and any claim arising hereunder may be brought in the courts of the
State of Delaware, or in any federal court within the State of Delaware, and by
execution of this Agreement, each of the parties accepts the jurisdiction of
such courts, and irrevocably agrees to be bound by any judgment rendered thereby
in connection with this Agreement. The foregoing consents shall not constitute
general consents to the service of process in the State of Delaware for any
purpose except as provided above and shall not be deemed to confer rights to any
person other than the respective parties to this Agreement. Nothing herein shall
affect the right of either party hereto to commence legal proceedings or
otherwise proceed against the other party in any other jurisdiction.
Section 9.10 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but which
together shall constitute a single agreement.
Section 9.11 Joint and Several Liability. Any obligation of
AEW and Apollo arising hereunder shall be considered several, but not joint,
obligations of such parties.
66
68
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the authorized officers of the parties hereto on the date first
above written.
CENTRAL PARKING CORPORATION
By:
---------------------------------------------
Name:
Title:
CENTRAL MERGER SUB, INC.
By:
---------------------------------------------
Name:
Title:
ALLRIGHT HOLDINGS, INC.
By:
---------------------------------------------
Name:
Title:
APOLLO REAL ESTATE INVESTMENT FUND II,
L.P. (with respect to Article VIII, Article IX
and Sections 2.6(d), 3.2 and 3.4 only)
By: Apollo Real Estate Advisors II, L.P., its
managing general partner
By: Apollo Real Estate Capital Advisors II, Inc.,
its general partner
By:
---------------------------------------------
Name:
Title:
67
69
AEW PARTNERS, L.P.
(with respect to Article VIII, Article IX and
Sections 2.6(d), 3.2 and 3.4 only)
By: AEW/L.P., its general partner
By: AEW, Inc., its general partner
By:
--------------------------------------------
Name:
Title:
68
