STOCK PURCHASE AGREEMENT Dated as of September 12, 2005 between CCMG HOLDINGS, INC., FORD HOLDINGS LLC and FORD MOTOR COMPANY (for purposes of Article VI and Sections 3.2(xxiv), 3.2(xxv), 4.2(d), 5.11, 7.15 and 7.16 only)
EXHIBIT 99.1
Dated as of September 12, 2005
between
CCMG HOLDINGS, INC.,
FORD HOLDINGS LLC
and
FORD MOTOR COMPANY
(for purposes of Article VI and Sections 3.2(xxiv), 3.2(xxv), 4.2(d), 5.11, 7.15 and 7.16 only)
(for purposes of Article VI and Sections 3.2(xxiv), 3.2(xxv), 4.2(d), 5.11, 7.15 and 7.16 only)
TABLE OF CONTENTS
Page | ||||||
ARTICLE I SHARE PURCHASE | 1 | |||||
1.1 |
Share Purchase; Funding | 1 | ||||
1.2 |
Closing | 2 | ||||
ARTICLE II REPRESENTATIONS AND WARRANTIES | 3 | |||||
2.1 |
Representations and Warranties of Holdings | 3 | ||||
2.2 |
Representations and Warranties of Buyer | 17 | ||||
2.3 |
Representations and Warranties of the Parties | 20 | ||||
2.4 |
Survival of Representations and Warranties | 20 | ||||
2.5 |
Schedules | 20 | ||||
ARTICLE III COVENANTS | 21 | |||||
3.1 |
Access; Information and Records; Confidentiality | 21 | ||||
3.2 |
Conduct of the Business of the Company Prior to the Closing Date | 22 | ||||
3.3 |
Filings | 27 | ||||
3.4 |
Public Announcements | 28 | ||||
3.5 |
Further Actions | 28 | ||||
3.6 |
Termination of Affiliate Relations | 29 | ||||
3.7 |
Indemnification of Directors and Officers | 29 | ||||
3.8 |
Director Resignations | 30 | ||||
3.9 |
Financing | 30 | ||||
3.10 |
Debt Tender Offer; Repayment of Third-Party Indebtedness | 34 | ||||
3.11 |
Insurance | 36 | ||||
ARTICLE IV CONDITIONS PRECEDENT | 37 | |||||
4.1 |
Conditions Precedent to Obligations of Parties | 37 | ||||
4.2 |
Conditions Precedent to Obligation of Buyer | 37 | ||||
4.3 |
Conditions Precedent to the Obligation of Holdings | 39 | ||||
ARTICLE V EMPLOYEE AND LABOR MATTERS | 39 | |||||
5.1 |
Comparability of Benefits | 39 | ||||
5.2 |
Continuity of Employment | 39 | ||||
5.3 |
Welfare Plans | 40 | ||||
5.4 |
Retirement Plans | 40 | ||||
5.5 |
Vacation and Severance | 40 | ||||
5.6 |
WARN Act | 41 | ||||
5.7 |
Cash Bonus Plans | 41 | ||||
5.8 |
Collective Bargaining Agreements | 41 | ||||
5.9 |
Options on Ford Shares | 41 |
i
Page | ||||||
5.10 |
Cooperation Regarding Pension Plans | 42 | ||||
5.11 |
Employee Discount Program | 42 | ||||
ARTICLE VI TAX MATTERS | 42 | |||||
6.1 |
Liability for Taxes | 42 | ||||
6.2 |
Tax Sharing Agreements | 43 | ||||
6.3 |
Tax Returns, Elections, etc | 44 | ||||
6.4 |
Tax Audits, Assistance and Cooperation | 44 | ||||
6.5 |
Refunds and Tax Credits | 46 | ||||
6.6 |
Carrybacks | 46 | ||||
6.7 |
Transfer Taxes | 47 | ||||
ARTICLE VII MISCELLANEOUS | 47 | |||||
7.1 |
Termination and Abandonment | 47 | ||||
7.2 |
Expenses | 49 | ||||
7.3 |
Notices | 49 | ||||
7.4 |
Entire Agreement | 51 | ||||
7.5 |
Exclusive Remedy | 51 | ||||
7.6 |
No Third Party Beneficiaries | 51 | ||||
7.7 |
Assignability | 52 | ||||
7.8 |
Amendment and Modification; Waiver | 52 | ||||
7.9 |
Severability | 52 | ||||
7.10 |
Section Headings | 52 | ||||
7.11 |
Interpretation | 52 | ||||
7.12 |
Definitions | 52 | ||||
7.13 |
Company Actions | 55 | ||||
7.14 |
Counterparts | 55 | ||||
7.15 |
Enforcement | 55 | ||||
7.16 |
Governing Law | 55 |
ii
INDEX TO DISCLOSURE SCHEDULES
Schedule
2.1(a)(iii)
|
Subsidiary Due Organization and Qualification | |
2.1(c)(ii)
|
Company Capitalization | |
2.1(c)(iii)
|
Subsidiary Capitalization | |
2.1(d)
|
Company Equity Interests | |
2.1(f)
|
No Conflict | |
2.1(g)
|
SEC Filings; Financial Statements | |
2.1(h)(i)
|
Absence of Certain Changes — Material Adverse Effect | |
2.1(h)(ii)
|
Absence of Certain Changes — Ordinary Course | |
2.1(i)
|
Absence of Undisclosed Liabilities | |
2.1(j)(i)-1
|
Real and Personal Properties | |
2.1(j)(i)-2
|
Real and Personal Properties Encumbrances | |
2.1(k)(ii)
|
Returns Filed and Taxes Paid | |
2.1(k)(iii)
|
Tax Deficiencies; Audits; Statutes of Limitations | |
2.1(k)(iv)
|
Affiliated Group — Consolidated Tax Return | |
2.1(k)(v)
|
Tax Sharing | |
2.1(l)
|
Compliance with Laws; Permits | |
2.1(m)
|
Legal Proceedings | |
2.1(n)
|
Environmental Matters | |
2.1(o)(i)
|
Employee Benefit Plans | |
2.1(o)(vii)
|
Events Under Benefits Plans | |
2.1(p)(i)
|
Labor and Employment Matters | |
2.1(p)(ii)
|
Multiemployer Pension Plans | |
2.1(q)
|
Intellectual Property | |
2.1(r)
|
Specified Contracts | |
2.1(s)
|
Relationship with Affiliates of Holdings | |
3.2
|
Conduct of the Business of the Company Prior to the Closing Date | |
3.6(b)
|
Surviving Contracts | |
3.9(b)
|
Restricted Subsidiaries | |
3.10(a)
|
Short-Dated Notes | |
3.10(b)
|
Long-Dated Notes | |
3.10(c)
|
Certain Other Indebtedness | |
3.10(d)
|
Unsecured Credit Facilities | |
4.2(d)
|
Letter of Credit Obligations | |
5.4
|
Retirement Plans | |
5.5
|
Vacation and Severance |
iii
5.7
|
Bonus Plans | |
7.1(d)
|
SEC Investigation | |
7.12(a)
|
Buyer’s Knowledge | |
7.12(b)
|
Holdings’ Knowledge |
The Registrant agrees to furnish to the Securities and Exchange Commission upon request a copy of
any omitted schedule.
iv
INDEX OF DEFINED TERMS
Term | Page | |||
1986 Indenture
|
52 | |||
1994 Indenture
|
53 | |||
2001 Indenture
|
53 | |||
ABL Financing
|
19 | |||
ABS Financing
|
19 | |||
Accounting Arbitrator
|
45 | |||
Acquisitions
|
24 | |||
Affiliate
|
53 | |||
Affiliate Agreements
|
17 | |||
Affiliate Indebtedness
|
29 | |||
Affiliate Indebtedness Repayment Amount
|
1 | |||
Affiliated Group
|
11 | |||
Agreement
|
1 | |||
Alternative Tender Offers
|
35 | |||
Antitrust Division
|
27 | |||
Applicable Insurance Laws
|
6 | |||
Assistance Costs
|
37 | |||
Australian Authority
|
6 | |||
Benefit Plans
|
13 | |||
Bermuda Insurance Laws
|
6 | |||
Board of Directors
|
53 | |||
Bonus Plans
|
41 | |||
Bridge Financing
|
19 | |||
Business Day
|
53 | |||
Buyer
|
1 | |||
Buyer Indemnitees
|
53 | |||
CBC
|
6 | |||
CE
|
24 | |||
Closing
|
2 | |||
Closing Date
|
2 | |||
Closing Debt Amount
|
36 | |||
Code
|
14 | |||
Common Stock
|
1 | |||
Company
|
1 | |||
Company Option Plan
|
41 | |||
Confidentiality Agreement
|
21 | |||
Connecticut DEP
|
7 | |||
Consent
|
6 | |||
Consent Solicitation
|
34 | |||
Consolidated or Combined Return
|
53 | |||
Contracts
|
16 | |||
Coverage Period
|
36 | |||
D&O Tail Coverage
|
30 | |||
Debt Commitment Letter
|
18 | |||
Debt Financing
|
19 | |||
Debt Payment Amount
|
36 | |||
Debt Receipt Failure
|
48 | |||
Debt Tender Offer
|
34 |
v
Term | Page | |||
ECMR
|
6 | |||
Encumbrances
|
9 | |||
Environmental Laws
|
13 | |||
Equity Commitment Letters
|
18 | |||
Equity Financing
|
18 | |||
ERISA
|
13 | |||
Exchange Act
|
7 | |||
Exchange Offeror
|
34 | |||
Exchange Offers
|
35 | |||
Exchange Value
|
35 | |||
Exchanged Notes
|
35 | |||
FASB
|
25 | |||
Federal and Consolidated Income Tax Liabilities
|
53 | |||
Financial Statements
|
7 | |||
Financing
|
19 | |||
Fleet Expenditures
|
24 | |||
Ford
|
1 | |||
Ford Group
|
53 | |||
Ford Insurance
|
36 | |||
Ford Letter of Credit
|
38 | |||
Ford Option Plan
|
41 | |||
Ford Options
|
41 | |||
Foreign Antitrust Laws
|
6 | |||
FTC
|
27 | |||
GAAP
|
7 | |||
Governmental Authority
|
6 | |||
Group
|
3 | |||
Group Employees
|
13 | |||
Group Member
|
3 | |||
Group Relief
|
53 | |||
Guarantees
|
19 | |||
Hazardous Substances
|
13 | |||
High Yield Financing
|
19 | |||
HIRE
|
7 | |||
HIRE (Bermuda)
|
6 | |||
Holdings
|
1 | |||
Holdings Note
|
54 | |||
HSR Act
|
6 | |||
Income Tax
|
54 | |||
Indebtedness
|
54 | |||
Intellectual Property
|
15 | |||
Interim Credit Agreement
|
54 | |||
International ABS Bridge Financing
|
19 | |||
Irish Finance Requirements
|
7 | |||
Irish Insurance Laws
|
6 | |||
IRS
|
14 | |||
Knowledge
|
54 | |||
Law
|
54 | |||
Long Dated Notes
|
34 | |||
Marketing Period
|
31 | |||
Material Adverse Effect
|
3 | |||
Material Proceeding
|
26 | |||
Material Real Property
|
9 | |||
Material Subsidiary
|
4 |
vi
Term | Page | |||
Multiemployer Plan
|
13 | |||
Non-Fleet Expenditures
|
24 | |||
Offering Documents
|
32 | |||
Options
|
42 | |||
Orders
|
6 | |||
Partnership
|
29 | |||
Partnership Agreement
|
29 | |||
Permits
|
12 | |||
Permitted Encumbrances
|
9 | |||
Permitted Extension
|
25 | |||
Person
|
54 | |||
Pre-Closing Claim
|
36 | |||
Pre-Closing Period
|
54 | |||
Prior SEC Filings
|
5 | |||
Probus
|
6 | |||
Purchase Price
|
1 | |||
Requested Bond Consents
|
34 | |||
Requested Indenture Consents
|
34 | |||
Required Financial Information
|
32 | |||
Returns
|
10 | |||
Xxxxxxxx-Xxxxx Act
|
8 | |||
SEC
|
7 | |||
SEC Filings
|
7 | |||
Securities Act
|
7 | |||
Senior Secured Term Loan Financing
|
19 | |||
Shares
|
1 | |||
Short Dated Notes
|
34 | |||
Specified Contract
|
16 | |||
State and Foreign Insurance Laws
|
6 | |||
Subsidiary
|
3 | |||
Surviving Agreements
|
29 | |||
Tax Sharing Agreements
|
54 | |||
Taxes
|
10 | |||
Taxing Authority
|
10 | |||
Tender Amount
|
34 | |||
Tendered Notes
|
34 | |||
Termination Fee
|
48 | |||
Transfer Taxes
|
54 | |||
Undisclosed Material Affiliate Agreement
|
29 | |||
WARN
|
41 | |||
Wholly Owned Subsidiary
|
5 |
vii
STOCK PURCHASE AGREEMENT, dated as of September 12, 2005 (this “Agreement”), between
CCMG Holdings, Inc., a Delaware corporation (“Buyer”), and Ford Holdings LLC, a Delaware
limited liability company (“Holdings”) and, for purposes of only the provisions noted on
the signature page hereto, Ford Motor Company, a Delaware corporation (“Ford”).
WHEREAS, Holdings, an indirect wholly-owned subsidiary of Ford, owns 100 shares (the
“Shares”) of common stock, par value $0.01 per share (the “Common Stock”), of The
Hertz Corporation (the “Company”), representing 100% of the outstanding shares of capital
stock of the Company;
WHEREAS, Buyer desires to purchase from Holdings, and Holdings desires to sell to Buyer, the
Shares pursuant to this Agreement; and
WHEREAS, in connection with the purchase and sale of the Shares, the parties desire to effect
certain other transactions as more fully described herein, including causing the Company to
complete a tender offer with respect to certain series of its outstanding senior notes and
cooperating with an exchange offer by an Affiliate of Ford with respect to certain other series of
the Company’s outstanding senior notes;
NOW, THEREFORE, in consideration of the mutual terms, conditions and other agreements set
forth herein and intending to be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
SHARE PURCHASE
1.1 Share Purchase; Funding.
(a) Purchase and Sale. Upon the terms and subject to the conditions of this
Agreement, at the Closing, Holdings shall sell to Buyer (or to a wholly-owned subsidiary of Buyer),
and Buyer (or a wholly-owned subsidiary of Buyer) shall purchase from Holdings, the Shares.
(b) Purchase Price. In consideration for the sale and transfer of the Shares, and
upon the terms and subject to the conditions of this Agreement, at the Closing, Buyer shall pay, or
cause to be paid, to Holdings (or an Affiliate of Holdings designated by Holdings) an aggregate
amount in cash equal to (x) $5,600,000,000 minus (y) the principal amount of and all accrued and
unpaid interest on the Holdings Note (the “Purchase Price”).
(c) Repayment of Affiliate Indebtedness. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Buyer shall cause the Company to repay all Affiliate
Indebtedness referred to in Section 3.6 (the “Affiliate Indebtedness Repayment Amount”).
2
(d) Repayment of Certain Third Party Indebtedness. At the Closing, and as a
condition thereof, Buyer shall cause the Company to purchase the Tendered Notes and shall purchase
or repay or cause a Group Member to purchase or repay, as applicable, all of the Indebtedness
referred to in Section 3.10(c).
(e) Payment for Exchange Notes. At the Closing, and as a condition thereof, Buyer
shall pay or cause to be paid by the Company to the applicable Exchange Offeror (or to an Affiliate
of the Exchange Offeror designated by the Exchange Offeror in writing), cash in an amount equal to
the aggregate Exchange Value of any Exchange Notes accepted for exchange in any Exchange Offer in
accordance with the terms and conditions hereof on or prior to the Closing, and tendered by the
Exchange Offeror for purchase in accordance with Section 3.10(b).
(f) Source of Funds. At or prior to the Closing, subject to the terms and
conditions of this Agreement, (i) Buyer (or a wholly-owned subsidiary of Buyer) shall incur the
portion of the Financing to be incurred by it, and (ii) a portion of the proceeds of the Financing,
together with (at the option of Buyer) the Company’s cash on hand, together with indebtedness to be
incurred by the Company and other Group Members at the Closing, shall be applied to make the
payments set forth in this Section 1.1.
(g) Payment Terms. At the Closing, upon the terms and subject to the conditions of
this Agreement, (i) Holdings shall deliver to Buyer (or to a wholly-owned subsidiary of Buyer
designated by Buyer at least two Business Days prior to the Closing Date) certificates representing
the Shares owned by Holdings duly endorsed, or accompanied by stock powers duly executed and (ii),
all payments provided for in this Section 1.1 shall be made by wire transfer of immediately
available funds to account(s) designated by the applicable recipients at least two Business Days
prior to the Closing Date.
1.2 Closing. Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to Section 7.1, and subject to the
satisfaction or waiver of the conditions set forth in Article IV, the closing of the transactions
contemplated by this Agreement (the “Closing”) will take place at 10:00 a.m. New York City
time on the first Business Day following the satisfaction or waiver of each of the conditions set
forth in Article IV hereof on the date (the “Closing Date”) that is the earliest of (a) any
Business Day during the Marketing Period as may be specified by Buyer on no less than three
Business Days’ prior notice to Holdings, (b) the final day of the Marketing Period or (c) the date
following commencement of the Marketing Period that is three business days following the date the
Debt Financing is obtained, at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, unless another date, time or place is agreed to in writing by the parties
hereto.
3
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Holdings. Holdings hereby represents and
warrants to Buyer as follows:
(a) Due Organization and Qualification. (i) Holdings is a limited liability
company duly organized, validly existing and in good standing under the laws of Delaware. Holdings
(A) has all requisite corporate power and authority to own and lease its properties and assets and
to carry on its business as it is now being conducted and (B) is in good standing and is duly
qualified to transact business in each jurisdiction in which it is required to be so qualified,
except, in the case of clause (A) or (B), where the failure to have such power and authority or to
be in good standing would not, individually or in the aggregate, reasonably be expected to prevent,
materially delay or materially impede the ability of Holdings to consummate the transactions
contemplated by this Agreement.
(ii) The Company is a corporation duly incorporated, validly existing and in good standing
under the laws of Delaware. The Company (A) has all requisite corporate power and authority to own
and lease its properties and assets and to carry on its business as it is now being conducted and
(B) is in good standing and is duly qualified to transact business in each jurisdiction in which it
is required to be so qualified, except in the case of clause (A) or (B), where the failure to have
such power and authority or to be in good standing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(iii) Each entity listed on Schedule 2.1(a)(iii) (each, a “Subsidiary”; each of the
Subsidiaries and the Company individually, a “Group Member”, and collectively, the
“Group”) (A) is duly incorporated or organized, as the case may be, validly existing and in
good standing under the laws of the jurisdiction of organization appearing opposite its name on
Schedule 2.1(a)(iii) and (B) has all requisite corporate power and authority to own and lease its
properties and assets and to carry on its business as it is now being conducted and (C) is in good
standing and is duly qualified to transact business in each jurisdiction in which it is required to
be so qualified, except in the case of clauses (A), (B) or (C), where the failure to have such
power and authority or to be in good standing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
For purposes of this Agreement, “Material Adverse Effect” shall mean any fact, event,
change, circumstance or effect that is materially adverse to the business, condition (financial or
otherwise) or results of operations of the Group, taken as a whole, or would materially impair the
ability of Holdings or any member of the Group to consummate the transactions contemplated by this
Agreement, other than any fact, event, change, circumstance or effect resulting from (A) general
changes or developments (other than those resulting from acts of terrorism, war or armed
hostilities) in the industries in which the Group operates or in the general economy, financial,
banking, currency or capital markets, (B) normal seasonal changes in the results of operations of
the Group, (C) the solicitation of
offers to enter into this Agreement, the negotiation of the terms of and entering into of this
Agreement, the announcement of this Agreement and the consummation of the transactions contemplated
hereby
4
or any action taken at the request of Buyer, (D) changes in accounting requirements or
principles or any changes in applicable Laws or interpretations thereof or (E) any failure in and
of itself by any Group Member to meet any estimates of revenues or earnings or other financial
performance for any period (it being agreed that the facts and circumstances giving rise to such
failure may be taken into account in determining whether there has been a Material Adverse Effect),
except, in the case of the foregoing clause (A), to the extent such changes referred to therein
have a disproportionate adverse effect on the Group, taken as a whole, relative to other
participants in the industries in which the Group operates; provided, that (i) solely with
respect to the representations and warranties set forth in Section 2.1(f), the exception set forth
in clause (C) above shall not apply and (ii) for purposes of the definition of “Material Adverse
Effect”, the industries in which the Group operates shall be deemed to be the vehicle rental
industry and the construction, industrial and materials handling equipment rental industry.
(iv) Certificate of Incorporation and By-Laws. Holdings has made available to
Buyer a complete and correct copy of the Certificate of Incorporation and the By-Laws (or similar
organizational documents), each as amended to date, of the Company and each of the Subsidiaries
listed on Schedule 2.1(a)(iii) as a “Material Subsidiary” (each such Subsidiary, a “Material
Subsidiary”). Neither the Company nor any Subsidiary is, nor has been, in violation of any of
the provisions of its Certificate of Incorporation or By-Laws (or similar organizational
documents), except in the case of any Subsidiary (other than any Material Subsidiary) for
violations that would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Holdings has made available to Buyer complete and correct copies of the
minutes of all meetings of the Board of Directors of the Company, other than the portion of any
minutes regarding the deliberations of the Board of Directors of the Company in connection with
entering into this Agreement or pursuing other strategic alternatives, and of the stockholders of
the Company, in each case since January 1, 2002.
(b) Authorization and Validity of Agreement. The execution, delivery and
performance by Holdings of this Agreement and the consummation by Holdings of the transactions
contemplated hereby have been duly authorized by the Board of Directors of Holdings, and no other
corporate action on the part of Holdings is necessary for the execution, delivery and performance
by Holdings of this Agreement and the consummation by Holdings of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Holdings and is a legal, valid and
binding obligation of Holdings, enforceable against it in accordance with its terms, except to the
extent that its enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting creditors’ rights generally and by general equity
principles.
(c) Capitalization.
(i) 100 shares of Common Stock are issued and outstanding as of the date hereof and
constitute the Shares. The authorized capital stock of the Company consists of 3,000 shares of
Common Stock. No shares of Common Stock are held in treasury. All of the issued
and outstanding shares of Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable.
5
(ii) Except as disclosed in the SEC Filings filed prior to the date hereof, (such filings,
excluding the “Risk Factors” sections therein, the “Prior SEC Filings”) or on Schedule
2.1(c)(ii), (A) there are no (x) outstanding options, warrants, or other rights, of any kind
relating to the sale, purchase, redemption, issuance or voting of any shares of capital stock of
any class (whether issued or unissued) or other equity or voting securities of the Company, or (y)
securities convertible into, exchangeable for or evidencing the right to purchase from the Company
any shares of capital stock of any class or other equity or voting securities of the Company, or
(z) equity equivalents, stock appreciation rights, phantom stock or other rights similar to or
derived from the economic benefits and rights accruing to holders of any equity interest in the
Company, (B) there are no preemptive or similar rights with respect to the issuance, sale or other
transfer (whether present, past or future) of the issued or unissued capital stock or other equity
interests of the Company and (C) there are no agreements or other obligations (contingent or
otherwise) which may require the Company to vote, dispose of, repurchase, redeem or otherwise
acquire shares of, or other equity interests in, the Company’s capital stock or to make any
investment (in the form of a loan, capital contribution or otherwise) in any Subsidiary or other
Person. Except as disclosed on Schedule 2.1(c)(ii), from June 30, 2005 to the date hereof, (a) (i)
no dividends on or distributions in respect of the Company’s Common Stock have been declared or
paid and (ii) there has been no repurchase of any shares of or options in respect of the Company’s
capital stock and (b) (i) no dividends on or distributions in respect of any of the non-Wholly
Owned Subsidiaries’ capital stock have been declared or paid and (ii) there has been no repurchase
of any shares of or options in respect of the capital stock of any Subsidiary.
(iii) Except as disclosed on Schedule 2.1(c)(iii), with respect to each Subsidiary, (A)
there are no (x) outstanding options, warrants, or other rights of any kind relating to the sale,
purchase, redemption, issuance or voting of any shares of capital stock (whether issued or
unissued) or other equity or voting security, in or of such Subsidiary which are binding on any
Group Member, (y) securities convertible into, exchangeable for or evidencing the right to purchase
from any Group Member any shares of capital stock of any class or other equity or voting securities
of any such Subsidiary, (z) equity equivalents, stock appreciation rights, phantom stock, or other
right similar to or derived from the economic benefits and rights accruing to holders of any equity
interest in, any such Subsidiary, (B) there are no preemptive or similar rights with respect to the
issuance, sale or other transfer (whether present, past or future) of the issued or unissued
capital stock, or other equity interests, of such Subsidiary and (C) there are no agreements or
other obligations (contingent or otherwise) which may require any Group Member to vote, dispose of,
repurchase, redeem or otherwise acquire shares of, or other equity interest in, such Subsidiary’s
capital stock or to make any investment (in the form of a loan, capital contribution or otherwise)
in such Subsidiary or other Person, in each case other than options, warrants and other rights
running in favor of the Company and Subsidiaries in which the Company directly or indirectly owns
at least a 99.0% equity interest (each such Subsidiary, a “Wholly Owned Subsidiary”).
(d) Subsidiaries. Except as disclosed on Schedule 2.1(d), (i) there are no entities
in which the Company directly or indirectly owns or controls more than 50% of the
voting power, other than the Subsidiaries, (ii) there are no entities in which the Company
directly or indirectly owns an equity interest, other than the Subsidiaries and (iii) all capital
stock and equity interests in each Subsidiary are owned beneficially and of record by the Company
and/or
6
Wholly Owned Subsidiaries, free and clear of any Encumbrance other than restrictions imposed
on U.S. Subsidiaries by applicable securities Laws and restrictions on transfer imposed on non-U.S.
Subsidiaries by applicable Laws.
(e) Ownership of the Shares. Holdings is the record and beneficial owner and holder
of the Shares. The Shares are held free and clear of all Encumbrances other than restrictions
imposed by applicable securities Laws. Upon the transfer of the Shares to Buyer on the Closing
Date in accordance with this Agreement, Buyer will receive good and valid title to the Shares, free
and clear of all Encumbrances other than restrictions imposed by applicable securities Laws.
(f) No Conflict. Except as set forth on Schedule 2.1(f), as specifically
contemplated in this Agreement or, in the case of clauses (i), (ii) and (iv) of this Section 2.1(f)
only, as would not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or be expected to prevent, materially delay or materially impede the ability of
Holdings to consummate the transactions contemplated by this Agreement, the execution, delivery and
performance of this Agreement by Holdings and consummation by Holdings of the transactions
contemplated hereby:
(i) will not violate any provision of any Law or order, writ, injunction, judgment or
decree (“Orders”) of the European Union, any federal, state, municipal, foreign or other
governmental department, commission, board, bureau, agency, court or instrumentality, whether
domestic or foreign (“Governmental Authority”) applicable to Holdings or any Group Member;
(ii) will not require any license, consent, clearance, authorization, permit,
qualification, waiver, order or approval of, or filing with or notice to, any Governmental
Authority (each, a “Consent”) under any provision of Law applicable to Holdings or any
Group Member, except for (A) the requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the “HSR Act”), (B) any filing with the European Commission of a
merger notification in accordance with Council Regulation (EC) 139/2004, the E.C. Merger Regulation
(the “ECMR”), (C) the applicable requirements of any competent antitrust or competition
Governmental Authority of any member state of the European Union, (D) the applicable requirements
of the Canadian Bureau of Competition (the “CBC”), (E) the applicable requirements of any
competent Australian antitrust or competition Governmental Authority (the “Australian
Authority”), (F) the applicable requirements of antitrust, competition or other similar Laws,
rules, regulations and judicial doctrines of jurisdictions, other than the United States and the
European Union, or of investment Laws relating to foreign ownership (the Laws and requirements
described in clauses (B) through (F), collectively, the “Foreign Antitrust Laws”), (G) the
applicable requirements of insurance law and regulatory authorities in (x) Bermuda (the
“Bermuda Insurance Laws”) in connection with an indirect transfer of control of HIRE
(Bermuda) Limited, an insurance company domiciled in Bermuda (“HIRE (Bermuda)”), (y)
Ireland (the “Irish Insurance Laws”) in connection with an indirect transfer of control of
Probus Insurance Company Europe Limited, an insurance company domiciled in Ireland
(“Probus”) and (z) any U.S. state or other foreign jurisdiction (the “State and Foreign
Insurance Laws”, and together with Bermuda Insurance Laws, and Irish Insurance Laws, the
“Applicable Insurance Laws”) in connection with an indirect transfer of control of any
Group Member that is
7
licensed as an insurance company or as an insurance agent, insurance broker,
third-party administrator or claims adjustor, (H) the applicable requirements of the Department of
Finance of Ireland in respect of the tax operating certificates of each of Probus and Hertz
International Re Limited (“HIRE”), a reinsurance company domiciled in Ireland (the
“Irish Finance Requirements”), (I) the filing with the Connecticut Department of
Environmental Protection (“Connecticut DEP”), and (J) any other Consent which is applicable
solely as a result of the specific regulatory status of Buyer or its Affiliates or which Buyer or
its Affiliates are otherwise required to obtain;
(iii) will not violate any provision of the limited liability company operating agreement
of Holdings or the Certificate of Incorporation or By-Laws of the Company; and
(iv) will not require any consent, approval or notice under, and will not conflict with, or
result in the breach or termination of, or constitute a default (or an event which, with notice or
lapse of time or both, would become a breach or default or give to others a right of termination)
under, result in the acceleration of the performance or the loss of any benefit by any Group Member
under, or result in the creation of an Encumbrance on any property or asset of any Group Member
pursuant to, any indenture, mortgage, deed of trust, lease, license, franchise, contract (written
or oral), agreement, permit or other binding commitment, instrument or obligation to which any
Group Member is a party or by which any of the assets of the Group are bound or affected.
(g) SEC Filings; Financial Statements. Except as set forth on Schedule 2.1(g):
(i) the Company has timely filed all forms, reports, schedules, declarations, statements,
applications and other documents required to be filed with the United States Securities and
Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) since December 31, 2003. For purposes of this Agreement, all forms,
reports, schedules, declarations, statements, applications and other documents filed with the SEC
since December 31, 2004 under the Exchange Act or the Securities Act of 1933, as amended (the
“Securities Act”), are collectively referred to as the “SEC Filings”. Each SEC
Filing, when filed, complied in all material respects with the applicable requirements of the
Exchange Act, as the case may be, and other applicable federal securities Laws as in effect on the
date so filed, and none of the SEC Filings (including any financial statements or schedules
included or incorporated by reference therein), when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) each of the audited and unaudited financial statements (including any related notes)
included in the SEC Filings (the “Financial Statements”), when filed, complied in all
material respects with all applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, has been prepared in accordance with generally
accepted accounting principles (“GAAP”) (except, in the case of unaudited quarterly
statements, as permitted by Form 10-Q and Regulation S-X) applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and, when filed, fairly
8
presented in all material respects the consolidated financial position of the Group at the
respective dates thereof and the consolidated results of its operations and cash flows for the
periods indicated (subject, in the case of unaudited quarterly statements, to normal year-end audit
adjustments, which were not and are not expected to be material in amount);
(iii) Other than the Holdings Note, as of the date hereof, no Group Member owes any
Indebtedness to Ford or any of its Affiliates (other than the Group);
(iv) Since the enactment of the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx
Act”), the Company has been and is in compliance in all material respects with the applicable
provisions of the Xxxxxxxx-Xxxxx Act and the rules and regulations promulgated thereunder;
(v) The Company has designed disclosure controls and procedures to ensure that material
information relating to the Company, including its subsidiaries, is made known to the chief
executive officer and the chief financial officer of the Company by others within those entities;
(vi) The Company has disclosed, based on its most recent evaluation prior to the date
hereof, to the Company’s auditors and the audit committee of the Company’s board of directors (i)
any significant deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting which are reasonably likely to adversely affect in any material
respect the Company’s ability to record, process, summarize and report financial information and
(ii) any fraud or allegation of fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal controls over financial reporting.
As of the date hereof, to the Knowledge of Holdings, the Company has not received any complaints
since December 31, 2004 regarding accounting, internal accounting controls or auditing matters,
including any such complaint regarding questionable accounting or auditing matters; and
(vii) As of the date hereof, to the Knowledge of Holdings, the Company has not identified
any material weaknesses in the design or operation of internal controls over financial reporting.
To the Knowledge of Holdings, there is no reason to believe that its auditors and its chief
executive officer and chief financial officer will not be able to give the certifications and
attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the
Xxxxxxxx-Xxxxx Act, when first due.
(h) Absence of Certain Changes. Except as disclosed on Schedule 2.1(h)(i) hereto,
since June 30, 2005 there has not been any Material Adverse Effect and there has not
been any fact, event, change or circumstance that would be reasonably likely to have a
Material Adverse Effect. Except as a result of the execution and delivery of this Agreement, as
expressly contemplated hereby or as disclosed in Prior SEC Filings or on Schedule 2.1(h)(ii), from
June 30, 2005 to the date of this Agreement, (i) the business of the Group has been conducted in
all material respects in the ordinary course consistent with past practice and (ii) except for
transactions that would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, no Group Member has taken any action or omitted to take any action
9
that
would, after the date hereof, be prohibited by clause (iv), (v), (vi), (x), (xii), (xiii) and (xv)
through (xix) of Section 3.2.
(i) Absence of Undisclosed Liabilities. Except as disclosed in the Prior SEC
Filings or on Schedule 2.1(i), no Group Member has any obligations or liabilities (whether accrued,
absolute, contingent or otherwise) that are required to be set forth on a balance sheet prepared in
accordance with GAAP, except (A) liabilities reflected on the unaudited condensed consolidated
balance sheet of the Group as of June 30, 2005 or the notes thereto included in the Financial
Statements, (B) liabilities incurred in the ordinary course of business consistent with past
practice since June 30, 2005 that would not be prohibited by this Agreement, (C) liabilities which,
individually or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect, (D) obligations and liabilities otherwise expressly disclosed in this Agreement or the
Schedules hereto and (E) obligations and liabilities incurred at the prior written request or with
the prior written consent of Buyer.
(j) Real and Personal Properties. Real and Personal Properties. (i) Schedule
2.1(j)(i)-1 lists, and Buyer has been furnished true, correct and complete copies of, all
instruments and agreements (A) granting to the Group ownership, leasehold and associated concession
or operating rights with respect to the real property constituting each rental location of the
Group from which net revenues in the year 2004 exceeded $50,000,000 and (B) granting to the Group
ownership of the real property constituting the Hertz World Headquarters, Park Ridge, New Jersey,
and the Hertz Financial, Administrative, Reservation and Data Centers in and about Oklahoma City,
Oklahoma, and the leasehold rights in the real property constituting the Hertz Europe Service
Center, Swords, Ireland, the Saraland, Alabama reservations center and the Hertz Europe Ltd.
headquarters, Uxbridge, U.K. (all such interests in real property and associated concession and
operating rights referred to in clauses (A) and (B), the “Material Real Property”). The
Company or one of its Subsidiaries has good, valid and marketable title to each parcel of Material
Real Property owned in fee, and a good and valid leasehold interest, or interest as a tenant at
sufferance or concession and operating rights, in each parcel of Material Real Property leased or
operated under such concession or operating right by the Group, except as would not, individually
or in the aggregate, have a Material Adverse Effect. The interests of the Group in the Material
Real Property are free and clear of all liens, claims, encumbrances, security interests or other
charges or rights of other Persons (“Encumbrances”), except (A) as set forth on Schedule
2.1(j)(i)-2, (B) as disclosed in the Financial Statements, (C) for liens for taxes, assessments and
other governmental charges not yet due and payable or, if due, not delinquent or being contested in
good faith by appropriate proceedings, during which collection or enforcement against the Material
Real Property is stayed, (D) mechanics’, workmen’s, repairmen’s, warehousemen’s, carriers’ or other
like liens arising or incurred in the ordinary course of business consistent with past practices,
(E) with respect to real property, (1) any conditions, including easements,
licenses, covenants, rights-of-way and other similar restrictions that may be shown by survey
or title report, (2) incurred in the ordinary course of business that, in the aggregate, are not
substantial in amount and, do not materially detract from the value of the property subject thereto
or materially interfere with the ordinary course of business of the Company and (3) zoning,
building and other similar restrictions, and (F) other Encumbrances which would not reasonably be
expected to have a Material Adverse Effect (those Encumbrances described in clauses (A) through
(E), “Permitted Encumbrances”). With respect to any portion of the Material Real Property
that constitutes a leasehold interest or concession or operating
10
right, Holdings has no Knowledge
of the termination of, and no Group Member has received any written notice from the landlord or
grantor of such rights terminating (by reason of a default or otherwise) any such leasehold
interest, concession or operating right. With respect to all real property utilized by the Group
in the conduct of its business, other than the Material Real Property, Group Members have good,
valid and marketable title to, or a good and valid leasehold interest, license or concession rights
in, such property, except as would not reasonably be expected to have a Material Adverse Effect.
(ii) Except as would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, and except for personal property disposed of since June 30, 2005 in the
ordinary course of business consistent with past practice, Group Members have good and valid title
to, or a valid and enforceable leasehold interest in, all of the Group’s personal property (subject
to the effects of bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting creditors’ rights generally) (A) that is used or held for use in connection with the
business of the Group and is reflected on or included in the unaudited condensed consolidated
balance sheet of the Group as of June 30, 2005 included in the Financial Statements or (B) acquired
by Group Members after June 30, 2005 and which would be reflected on or included in such a balance
sheet prepared as of the date this representation is made, in each case free and clear of all
Encumbrances other than Permitted Encumbrances.
(k) Tax Matters.
(i) Certain Defined Terms. For purposes of this Agreement, the following
definitions shall apply:
(A) The term “Taxes” shall mean all taxes, however denominated,
including any interest, penalties or other additions to tax that may become payable
in respect thereof, imposed by any federal, territorial, state, local or foreign
government or any agency or political subdivision of any such government
(collectively, “Taxing Authority”), which taxes shall include, without
limiting the generality of the foregoing, all income or profits taxes (including,
but not limited to, federal income taxes and state income taxes), payroll and
employee withholding taxes, unemployment insurance taxes, social security taxes,
sales and use taxes, ad valorem taxes, value added taxes, excise taxes, franchise
taxes, gross receipts taxes, business license taxes, occupation taxes, real and
personal property taxes, stamp taxes, environmental taxes, transfer taxes, and other
obligations of the same or of a similar nature to any of the foregoing, which any
Group Member is required to pay, withhold, collect or for which it is otherwise
liable.
(B) The term “Returns” shall mean all reports, estimates,
declarations of estimated Tax, information statements, forms and returns relating
to, or required to be filed in connection with, any Taxes.
(ii) Returns Filed and Taxes Paid. Except as set forth on Schedule 2.1(k)(ii) or as
would not reasonably be expected to have a material adverse effect on the business, condition
(financial or otherwise) or results of operations of the Group, taken as a whole, (A) all Returns
required to be filed by or on behalf of Group Members insofar as they relate to any Group
11
Members
have been duly filed on a timely basis and any such filed Returns are true, complete and correct,
(B) all Taxes shown to be payable on the Returns or on subsequent assessments with respect thereto
have been paid in full on a timely basis, (C) each Group Member has withheld and paid over all
Taxes required to have been withheld and paid over, and complied with all information reporting
requirements, including maintenance of required records with respect thereto, in connection with
amounts paid or owing to any employee, creditor, independent contractor or other third party for
all periods for which the statute of limitations has not expired, and (D) there are no liens on any
of the assets of the Group with respect to Taxes, other than liens for Taxes not yet due and
payable or for Taxes that Group Members are contesting in good faith through appropriate
proceedings and for which appropriate reserves in accordance with GAAP have been established by the
appropriate Group Member.
(iii) Tax Deficiencies; Audits, Statutes of Limitations. Except as set forth on
Schedule 2.1(k)(iii) or as would not reasonably be expected to have a material adverse effect on
the business, condition (financial or otherwise) or results of operations of the Group, taken as a
whole, (A) there is no audit, examination, investigation or other proceeding by a governmental or
Taxing Authority in process or pending or, to the Knowledge of Holdings, threatened in writing with
respect to any Returns of any Group Member, (B) no deficiencies exist or have been asserted, in
writing, with respect to any Taxes of the Group Members and no Group Member has received written
notice that it has not filed a Return or paid Taxes required to be filed or paid by it, (C) no
Group Member is a party to any action or proceeding for assessment or collection of any Taxes, nor
has such event been asserted, in writing, against any Group Member or any of its assets and (D) no
Group Member has waived any statute of limitations in respect of a material amount of Taxes or
agreed to any extension of time with respect to an assessment or deficiency for a material amount
of Taxes (other than pursuant to extensions of time to file Returns obtained in the ordinary course
and other than Tax Returns filed on a consolidated, combined or unitary basis with Ford or any of
its affiliates).
(iv) Affiliated Group. The domestic corporate Group Members are members of an
“affiliated group” (the “Affiliated Group”) within the meaning of Section 1504(a) of the
Code and Ford is the “common parent” of the Affiliated Group. Ford and all domestic corporate
Group Members join in filing a consolidated U. S. federal Income Tax Return. For purposes of this
Section 2.1(k) and Article VI, “domestic” has the meaning set forth in Section 7701(a)(4) of the
Code. Except with respect to the Affiliated Group or as set forth on Schedule 2.1(k)(iv) or as
would not reasonably be expected to have a material adverse effect on the business, condition
(financial or otherwise) or results of operations of the Group, taken as a whole, none of the Group
Members has been included in any “consolidated,” “unitary” or “combined” Return provided for under
any Law with respect to Taxes for which any Member may be liable for any taxable period for which
the statute of limitations has not expired.
(v) Tax Sharing. Except as set forth on Schedule 2.1(k)(v) or as would not
reasonably be expected to have a material adverse effect on the business, condition (financial or
otherwise) or results of operations of the Group, taken as a whole, there are no tax sharing,
allocation, indemnification or similar agreements in effect between any of the Group Members and
any other Person (other than solely with other Group Members), except for (i) customary agreements
to indemnify lenders or security holders in respect of Taxes, and (ii) customary tax sharing
obligations under commercial lease agreements.
12
(vi) Classifications. Each of Hertz Fleet Funding LLC, Hertz General Interest LLC,
Hertz Vehicle Financing LLC and Hertz Vehicles LLC is classified as a disregarded entity for U.S.
federal income tax purposes.
(l) Compliance with Laws; Permits and Filings. Except as disclosed in the Prior SEC
Filings or on Schedule 2.1(l), (A) no Group Member has received any written notice from any
Governmental Authority, and Holdings does not have Knowledge, (x) that any Group Member is not in
compliance with any of the Laws applicable to the Group Members, their respective businesses or by
which any property or asset of any Group Member is bound, or (y) that revokes or threatens to
revoke any permits, licenses, certificates, easements, approvals, concessions, leases or other
authorizations or consents of a Governmental Authority necessary to own, lease and operate its
properties, and to conduct their respective businesses as presently conducted (“Permits”),
(B) each Group Member (x) is, and has been since December 31, 2003, in compliance with any Law
applicable to such Group Member, its business or by which any property or asset of such Group
Member is bound, and (y) is in possession of any and all Permits, except in the case of (A) or (B)
above, where such failure to be in compliance or such failure to be in possession of such Permit
would not reasonably be expected to have a Material Adverse Effect. The consummation of the
transactions contemplated by this Agreement will not result in any revocation, cancellation or
suspension of any such Permit, except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Notwithstanding anything herein to the contrary,
Holdings makes no representation or warranty in this Section 2.1(l) with respect to Tax matters,
environmental matters, employee benefit matters or labor and employment matters.
(m) Legal Proceedings. There are no actions, suits or proceedings pending or, to
the Knowledge of Holdings, threatened against the Group, except for proceedings (i) disclosed in
the Prior SEC Filings, (ii) disclosed on Schedule 2.1(m), (iii) seeking damages (including punitive
damages) or other remedies for death, bodily injury or property damage allegedly arising from the
operation of vehicles and construction and industrial equipment in which Group Members have
interests and (iv) as would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(n) Environmental Matters.
(i) Except as disclosed in the Prior SEC Filings or on Schedule 2.1(n) or as would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect:
(A) Each Group Member is and has been in compliance with all applicable Environmental
Laws;
(B) Each Group Member possesses the Permits required under applicable Environmental
Laws for it to operate as it currently operates;
(C) no Group Member has received any written notice or claim against it alleging a
violation of any Environmental Laws, other than such notices or claims that have been
resolved;
13
(D) no Group Member has received any written notice or claim alleging that it is or
may be liable to any Person under any applicable Environmental Law as a result of a release
or threatened release of any Hazardous Substance at any location, other than such notices or
claims that have been resolved; and
(E) no Group Member is a party to any pending judicial or administrative proceedings
or, to the Knowledge of Holdings, the subject of any investigations by any Governmental
Authority, pursuant to any Environmental Laws.
(ii) For purposes of this Agreement, the following terms shall have the meanings assigned
below:
(A) “Environmental Laws” shall mean any and all laws (including common law),
statutes, codes, regulations, ordinances, decrees or orders of the United States, any other
nation, and any state, local, or municipal authority thereof, regulating or imposing
liability or standards of conduct concerning pollution or protection of human health as it
relates to exposure to Hazardous Substances or the environment, including surface water,
groundwater, ambient air, surface or subsurface soil, or wildlife habitat.
(B) “Hazardous Substances” shall mean any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products, polychlorinated biphenyls,
urea-formaldehyde insulation, hazardous wastes, toxic or hazardous substances, asbestos,
pollutants, or contaminants defined as such in or regulated under any applicable
Environmental Law.
(iii) Notwithstanding the generality of any other representations and warranties in this
Agreement, the representations and warranties in this Section 2.1(n) and Section 2.1(i) shall be
deemed the only representations and warranties in this Agreement with respect to matters relating
to Environmental Laws or to Hazardous Substances.
(o) Employee Benefit Plans.
(i) All material “employee benefit plans” (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), but excluding any
plan that is a “multiemployer plan” as defined in Section 3(37) of ERISA (“Multiemployer
Plan”), deferred compensation, change in control or employment, vacation, fringe benefit,
incentive, bonus, stock option, stock purchase, or
restricted stock plans, programs, agreements or policies contributed to or maintained by any
Group Member or with respect to which any Group Member has or is reasonably expected to have any
liability for the benefit of any current or former employee, officer, consultant, independent
contractor or director of any Group Member (such persons, collectively, “Group Employees”,
and such plans, programs, agreements and policies, collectively, the “Benefit Plans”),
other than those Benefit Plans disclosed in the SEC Filings filed prior to the date hereof or
required by the Laws of the applicable jurisdictions to be so maintained, are set forth on Schedule
2.1(o)(i).
(ii) With respect to each Benefit Plan, Holdings has made available to Buyer a true and
complete copy thereof (or, if a plan is not written, a written summary of the material terms
thereof) and, to the extent applicable, (v) any related trust or custodial agreement or other
14
funding instrument, (w) the most recent determination letter, if any, received from the Internal
Revenue Service (the “IRS”), (x) any current summary plan description or employee handbook,
(y) for the most recently completed year (A) the Form 5500 and attached schedules or comparable
foreign filing or report, (B) audited financial statements and (C) actuarial valuation reports and
(z) copies of any material correspondence from the IRS, SEC, Pension Benefit Guaranty Corporation,
Department of Labor or any comparable foreign Governmental Authority relating to the operation of
such Benefit Plan.
(iii) Each Benefit Plan has been established and administered and is in compliance with the
terms of such Benefit Plan and all applicable Laws, except where the failure thereof would not
reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(iv) Each Benefit Plan that is intended to be qualified under section 401(a) of the
Internal Revenue Code of 1986, as amended (the “Code”), has received a favorable
determination letter regarding such qualification from the IRS and, to the Knowledge of Holdings,
nothing has occurred that could reasonably be expected to adversely affect such qualification. The
Hertz (UK) 1972 Pension Plan UK Plan has been registered and has been maintained in good standing
with all applicable United Kingdom Governmental Authorities, and, to the Knowledge of Holdings,
nothing has occurred that could reasonably be expected to adversely affect such status.
(v) There are no pending or, to the Knowledge of Holdings, threatened claims or litigation
with respect to any Benefit Plans, other than ordinary and usual claims for benefits by
participants and beneficiaries or that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(vi) Except as would not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect, (x) no Group Member has incurred any liability under Title IV
of ERISA that has not been satisfied in full and (y) to the knowledge of the Holdings, no condition
exists that is likely to cause any Group Member to incur any such liability (other than liability
for premiums due the Pension Benefit Guaranty Corporation).
(vii) Except as set forth on Schedule 2.1(o)(vii), no Benefit Plan exists that provides
that the execution of this Agreement or the consummation of the transactions
contemplated hereby will (either alone or upon occurrence of any additional or subsequent
events) result in any payment, acceleration, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Group Employee under any Benefit Plan, or will
result in the triggering or imposition of any restrictions or limitations on the right of any Group
Member to amend or terminate any Benefit Plan.
(p) Labor and Employment Matters. (i) Except as disclosed in the Prior SEC
Filings or on Schedule 2.1(p)(i), or as would not reasonably be expected to have a Material Adverse
Effect, there is no strike, slowdown or work stoppage by, or lockout of, or other labor dispute
involving any Group Employees pending or, to the Knowledge of Holdings, threatened as of the date
hereof.
15
(ii) Schedule 2.1(p)(ii) sets forth a true and complete list of each Multiemployer Plan in
which any Group Member participates other than any entered after the date hereof in compliance with
this Agreement.
(q) Intellectual Property. (i) Except as disclosed in the SEC Filings filed prior
to the date hereof or on Schedule 2.1(q) or as would not reasonably be expected to have a Material
Adverse Effect, (A) Group Members own (free and clear of all Encumbrances other than Permitted
Encumbrances), or have obtained a license or other right to use, the Intellectual Property
necessary to the conduct of the Group’s businesses as conducted on the date hereof, and (B) to the
Knowledge of Holdings, (x) no actions or claims have been asserted in writing by any third party
(1) challenging the validity or ownership of any such Intellectual Property or the Group’s right to
use such Intellectual Property, or (2) claiming that any Group Member is infringing any
Intellectual Property owned by third parties, in each case other than actions, proceedings and
claims that have been finally adjudicated with no further right of appeal, (y) the Intellectual
Property that is registered with Governmental Authorities in the name of any Group Member is valid
and enforceable, and (z) no third party is infringing any Intellectual Property owned by any Group
Member (it being understood that third parties may be making authorized uses of certain
Intellectual Property). For purposes of this Agreement, “Intellectual Property” shall mean
all U.S. and foreign patents, inventions, trademarks, service marks, trade names, corporate names,
domain names, logos, trade dress, trade secrets, copyrights and copyrightable works, and all
registrations or applications related thereto, and databases and computer software.
(ii) Holdings has furnished to the Buyer copies of all material Intellectual Property
license agreements pursuant to which (A) any third party grants any Group Member any rights in any
Intellectual Property, or (B) any Group Member grants to any third party any rights in any
Intellectual Property other than such license agreements the absence of possession of which would
not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(iii) Except as would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect, to the Knowledge of Holdings, each Group Member is in compliance with
all applicable contractual and legal requirements pertaining to information privacy and security,
including without limitation any privacy policies concerning the collection and use of personally
identifiable information.
(r) Specified Contracts. (i) Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, each Specified Contract is a legal,
valid and binding obligation of a Group Member (and, to Holdings’ Knowledge, of the counterparty
thereto) and is in full force and effect and enforceable against such Group Member (and, to
Holdings’ Knowledge, against the counterparty thereto) in accordance with its terms (subject to the
effects of bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting creditors’ rights generally). No Group Member is and, to Holdings’ Knowledge, no
counterparty is in breach or violation of, or default under, any Specified Contract, except as
would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect. To the Knowledge of Holdings, no event has occurred which would result in a breach or
violation of, or a default under, any Specified Contract (in each case, with or without notice or
lapse of time or both).
16
(ii) For purposes of this Agreement, the term “Specified Contract” means any of the
following contracts, agreements, commitments or understandings, written or oral, together with all
exhibits and schedules thereto (“Contracts”), if applicable, to which any Group Member is
a party, or by which any Group Member or any of their respective properties or assets are bound or
affected, all of which, as of the date hereof, are listed on Schedule 2.1(r) to the extent not
filed as an exhibit to a Prior SEC Filing:
(A) any Contract filed (or that will be required to be filed) as an exhibit to the
Company’s Annual Report on Form 10-K pursuant to Item 601(b)(10) of Regulation S-K under the
Securities Act or disclosed or required to be disclosed by the Company in a Current Report
on Form 8-K;
(B) any limited liability company agreement, joint venture or other similar agreement
or arrangement relating to the formation, creation, operation, management or control of any
material partnership or joint venture (other than a Subsidiary) other than any such
agreement or arrangement entered into by the Company at the request of any entity operating
an airport at which the Company has rental facilities;
(C) any credit agreement, indenture, note or other instrument (other than among
consolidated Subsidiaries) evidencing Indebtedness having an outstanding principal amount in
excess of $10,000,000;
(D) any Contract that constitutes a leasehold interest or concession or operating
right for any Material Real Property which is required to be listed on Schedule 2.1(j)(i)-1;
and
(E) any Contract relating to the acquisition of a business or the acquisition of any
interest in real property for consideration in excess of $25,000,000 if such acquisition is
still pending or was completed in 2005.
(iii) (A) Each Group Member that is a party to any Contract for the repurchase of motor
vehicles is, and to the Knowledge of Holdings, the counterparty to such Contract is, in compliance
with the terms of such Contract, and (B) each such Contract is in full force and effect
and enforceable against such Group Member (and, to Holdings’ Knowledge, against the
counterparty thereto), in accordance with its terms (subject to the effects of bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting creditors’ rights
generally) except for any failures to be in compliance or to be enforceable as would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect.
(s) Sufficiency of Assets; Relationship with Affiliates of Holdings. (i) Except as
specifically disclosed in the “Certain Relationships and Related Transactions” sections of the
Prior SEC Filings or Schedule 2.1(s), neither Holdings nor any Affiliate of Holdings, other than
the Group, owns or makes available any of the assets, properties or rights that are necessary to
conduct the business of the Group substantially as it is currently conducted. As of the date
hereof, there are no material contracts, agreements or arrangements between Group Members, on the
one hand, and Holdings or any Affiliate of Holdings (other than Group Members), on the other hand
(all such contracts, agreements and arrangements, whether or not
17
material, “Affiliate
Agreements”) that are not disclosed on Schedule 2.1(s). As of the date hereof, all contracts,
agreements or arrangements between Group Members, on the one hand, and Holdings or any Affiliate of
Holdings (other than Group Members), on the other hand, not listed on Schedule 2.1(s), if any,
were, in the judgment of the parties thereto, entered into on an arms-length basis.
(t) Brokers, Finders, etc. Neither Holdings nor any Group Member has engaged, or is
subject to any valid claim of, or is bound by any arrangement or agreement with, any broker,
finder, consultant or other intermediary in connection with the transactions contemplated by this
Agreement who might be or is entitled to a fee or commission from any Group Member in connection
with such transactions. Holdings will be responsible for any fees and commissions payable in
connection with the transactions contemplated by this Agreement to its advisors.
(u) Notification of Certain Matters. As of the Closing, Holdings shall not have
failed to provide notice of the occurrence, or failure to occur, of any event which occurrence or
failure to occur would cause (a) any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect, or (b) any material failure of Holdings to comply
with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under
this Agreement.
(v) Investigation. Except to the extent Holdings has otherwise advised Buyer in
writing, Holdings has no Knowledge (to the actual Knowledge of those persons identified on part
2.1(v) of Schedule 7.12(b)) of any of the representations or warranties contained in Section 2.2
being untrue or incorrect as of the date hereof.
2.2 Representations and Warranties of Buyer. Buyer hereby represents and warrants
to Holdings as follows:
(a) Due Organization and Power. Buyer is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Buyer (A) has all
requisite corporate power and authority to own and lease its properties and assets and to
carry on its business as it is now being conducted and (B) is in good standing and is duly
qualified to transact business in each jurisdiction in which it is required to be so qualified,
except, in the case of clause (A) or (B), where the failure to have such power and authority or to
be in good standing would not reasonably be expected to prevent, materially delay or materially
impede the ability of Buyer to consummate the transactions contemplated by this Agreement.
(b) Authorization and Validity of Agreement. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby have been duly authorized in accordance with the laws and organizational
documents of Buyer, and no other corporate action on the part of Buyer (or any member, partner,
joint venturer, shareholder, board, director or officer of Buyer) is or will be necessary for the
execution, delivery and performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby. This Agreement has been duly executed and
18
delivered by Buyer and
is a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except to the extent that enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting creditors’ rights generally and
by general equity principles.
(c) No Conflict. Except in the case of clauses (i), (ii) and (iv) of this Section
2.2(c) only, for any consent, approval, filing or notice that would not reasonably be expected to
prevent, materially delay or materially impede the ability of Buyer to consummate the transactions
contemplated by this Agreement, the execution, delivery and performance by Buyer of this Agreement
and the consummation by Buyer of the transactions contemplated hereby:
(i) will not violate any provision of Law or Order applicable to Buyer or any of its
Affiliates;
(ii) will not require any Consent or approval of, or filing or notice to, any Governmental
Authority under any provision of Law applicable to Buyer, except for (A) the requirements of the
HSR Act, (B) the applicable requirements of any other Foreign Antitrust Laws, (C) the applicable
requirements of Applicable Insurance Laws, (D) applicable Irish Finance Requirements, (E) any
requirements of the Connecticut DEP and (F) any Consent, which is applicable solely as a result of
the specific regulatory status of Holdings or any Group Member or which Holdings or any Group
Member is otherwise required to obtain;
(iii) will not violate any provision of the certificate of incorporation or by-laws or
other governing documents of Buyer; and
(iv) will not require any consent or approval under, and will not conflict with, or result
in the breach or termination of, or constitute a default under, or result in the acceleration of
the performance by Buyer under, any indenture, mortgage, deed of trust, lease, license, franchise,
contract, agreement or other instrument to which Buyer is a party or by which it or any of its
assets is bound.
(d) Brokers, Finders, etc. Buyer has not employed, and is not subject to, the valid
claim of, any broker, finder, consultant or other intermediary in connection with the transactions
contemplated by this Agreement who might be entitled to a fee or commission from Holdings or any
Group Member in connection with such transactions.
(e) Financing. Concurrently with the execution of this Agreement, Buyer has
delivered correct and complete copies of (i) executed commitment letters, dated the date hereof
(the “Equity Commitment Letters”), from Xxxxxxx, Dubilier & Rice Fund VII, L.P., Carlyle
Partners IV, L.P., ML Global Private Equity Fund, L.P. (collectively, the “Equity Funds”)
and Xxxxxxx Xxxxx Ventures L.P. 2001 to provide equity financing in an aggregate amount of $2.295
billion to fund a portion of the Purchase Price (the “Equity Financing”), and (ii) an
executed commitment letter, dated the date hereof (the “Debt Commitment Letter”), from
Xxxxxx Brothers Inc., Xxxxxx Commercial Paper Inc., Deutsche Bank Securities Inc., Deutsche Bank AG
Cayman Islands Branch, Merrill Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Xxxxxxx Xxxxx Capital
Corporation, Xxxxxxx Sachs Credit Partners L.P., Xxxxxxx, Xxxxx & Co.,
19
JPMorgan Chase Bank, N.A.,
and X.X. Xxxxxx Securities Inc. to provide Buyer or the applicable Group Member with (A) up to $2.1
billion in senior secured term loan financing (the “Senior Secured Term Loan Financing”),
(B) up to $1.5 billion in asset-based senior secured financing (the “ABL Financing”), (C)
up to $3.05 billion in interim financing (the “Bridge Financing”), (D) up to $5.937 billion
in asset-backed securities financing (the “ABS Financing”) and (E) up to $2.4 billion in
international bridge financing (the “International ABS Bridge Financing”, and together with
the Senior Secured Term Loan Financing, the ABL Financing, the Bridge Financing, the ABS Financing
and any high yield debt financing used to fund the acquisition in lieu of the Bridge Financing (the
“High Yield Financing”), being collectively referred to as the “Debt Financing”,
and the Debt Financing together with the Equity Financing being collectively referred to as the
“Financing”). Subject to its terms and conditions, the Financing, when funded in
accordance with the Equity Commitment Letters and the Debt Commitment Letter, will, together with
cash on hand held by the Company or another Group Member, provide financing sufficient to pay the
Purchase Price, all other amounts called for to be paid or repaid under Sections 1.1, 3.6, 3.9 and
3.10 (whether payable on or after the Closing) and all of Buyer’s fees and expenses associated with
the transactions contemplated in this Agreement. As of the date hereof, each of the Equity
Commitment Letters in the form so delivered is, and to the Knowledge of Buyer, the Debt Commitment
Letter in the form so delivered is, valid and in full force and effect and no event has occurred
which, with or without notice, lapse of time or both, would constitute a default or breach on the
part of Buyer under any term or condition of the Equity Commitment Letters or the Debt Commitment
Letter. Except as set forth, described or provided for in the Equity Commitment Letters
and the Debt Commitment Letter, (x) there are (I) no conditions precedent to the respective
obligations of the Equity Funds and Xxxxxxx Xxxxx Ventures L.P. 2001 to fund the Equity Financing,
or (II) material conditions precedent to the respective obligations of the Committing Lenders (as
defined in the Debt Commitment Letter) to fund the Debt Financing, and (y) there are no express
contractual contingencies under any agreement relating to the transactions contemplated by this
Agreement to which the Buyer or any of its Affiliates is a party that would permit any of the
Equity Funds, Xxxxxxx Xxxxx Ventures L.P. 2001 and the Committing Lenders to reduce the total
amount of the
Financing (other than, in the case of the Debt Financing, to provide for “OID” that the
applicable borrower is permitted to finance with revolving borrowings) or impose any additional
condition precedent to the availability of the Equity Financing or any additional material
condition precedent to the availability of the Debt Financing. As of the date hereof, Buyer has no
reason to believe that any of the conditions to the Financing will not be satisfied on a timely
basis. Buyer has fully paid any and all commitment fees or other fees required by the Debt
Commitment Letter to be paid as of the date hereof. If the Debt Financing (or alternative debt
financing as contemplated by Section 3.9) is obtained, or if the conditions to the funding
thereunder are satisfied (other than the availability of funding under the Equity Commitment
Letters and provided that the lenders do not default in their obligations to provide such
financing), Buyer shall have at the Closing proceeds in connection with the Financing in an amount
sufficient to pay the Purchase Price, all amounts called for to be repaid under Sections 1.1, 3.6,
3.9 and 3.10 and all of Buyer’s fees and expenses
associated with the transactions contemplated in
this Agreement.
(f) Guarantee. Concurrently with the execution of this Agreement, Buyer has
delivered to Holdings guarantees, dated the date hereof, of each of the Equity Funds with respect
to certain matters on the terms specified therein (the “Guarantees”).
20
(g) Unregistered Equity. Buyer acknowledges that it has been advised by Holdings
that the Shares have not been and will not be registered under the Securities Act. Buyer is an
“accredited investor” as that term is defined in Regulation D under the Securities Act. The Shares
will be acquired by Buyer for its own account for investment and without a view to resale.
(h) Investigation. Except to the extent Buyer has otherwise advised Holdings in
writing, Buyer has no Knowledge of any of the representations or warranties contained in Section
2.1 being untrue or incorrect as of the date hereof.
(i) Notification of Certain Matters. As of the Closing, Buyer shall not have failed
to provide notice of the occurrence, or failure to occur, of any event which occurrence or failure
to occur would cause (a) any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, or (b) any material failure of Buyer to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it under this Agreement.
2.3 Representations and Warranties of the Parties. Each party hereto represents and
warrants to the other that it is the explicit intent of each party hereto that, except for the
express representations and warranties contained in this Article II, Holdings is making no
representation or warranty whatsoever, whether express or implied, including, but not limited to,
any implied warranty or representation as to condition, merchantability or suitability as to any of
the properties or assets of any Group Member and that Buyer takes the Group “as is” and “where is.”
It is understood that any cost estimates, projections or other predictions, any data, any
financial information or any memoranda or offering materials or presentations provided or addressed
to Buyer, are not and shall not be deemed to be or to include representations or warranties of
Holdings or any of its Affiliates.
2.4 Survival of Representations and Warranties. Except for the first sentence of
each of Sections 2.1(b), 2.1(c)(i), 2.1(e) and of 2.2(b) and the second sentence of Section
2.1(c)(i), the respective representations and warranties made by Holdings and Buyer contained in
this Article II shall expire and be terminated and extinguished at the Closing and shall not
survive the Closing, and no party shall have any liability or obligation in connection with any
such representation or warranty following the Closing.
2.5 Schedules. Disclosure of any fact or item in any Schedule hereto referenced by
a particular paragraph or section in this Agreement shall, should the existence of the fact or item
or its contents be relevant to any other paragraph or section that is qualified by reference to a
Schedule, be deemed to be disclosed with respect to that other paragraph or section only to the
extent that such relevance is reasonably apparent from the face of the Schedule; provided,
however, that no fact or item in any Schedule hereto shall be deemed to be disclosed for
purposes of Schedule 2.1(h)(i) unless such fact or item is set forth on Schedule 2.1(h)(i).
Disclosure of any fact or item in any Schedule hereto shall not necessarily mean that such item or
fact individually is material to the business or financial condition of any of the Company or the
Subsidiaries individually or of the Company and the Subsidiaries taken as a whole.
21
ARTICLE III
COVENANTS
3.1 Access; Information and Records; Confidentiality. (a) During the period
commencing on the date hereof through the Closing Date, Holdings shall, and shall cause the Group
to, upon request and reasonable notice (i) afford to Buyer, its counsel, accountants and other
authorized representatives reasonable access (which access shall be exercised to the extent
practicable during normal business hours) to the offices, properties, senior management, books and
records of the Group Members and to the books and records of Holdings relating to the Group in
order that Buyer may have the opportunity to make such reasonable investigations as it shall desire
to make of the affairs of the Group and (ii) instruct the employees, counsel, accountants and
financial advisors of the Group Members to cooperate with Buyer in its investigation of the Group.
Holdings shall, and shall cause the Group Members, to cause their officers, employees, accountants
and other agents to furnish to Buyer such additional financial and operating data and information
in their possession with respect to the Group as Buyer may from time to time reasonably request.
The Group Member shall not be required to provide access to or to disclose information where such
access or disclosure would jeopardize the attorney-client privilege of the Group Member or
contravene any Law or binding agreement entered into prior to the date of this Agreement (it being
agreed that the parties shall use their reasonable best efforts to cause such information to be
provided in a manner that does not cause such violation or jeopardization).
(b) Prior to the Closing Date and (if the Closing does not occur) after any termination of
this Agreement, Buyer shall hold, and shall cause their respective directors, officers, employees,
accountants, counsel, financial advisors and other representatives and Affiliates to hold, any
information in confidence to the extent required by, and in accordance with, the provisions of the
letters, dated July 1, 2005, July 5, 2005 and July 6, 2005, between Xxxxxxx, Dubilier & Rice, Inc.,
Carlyle Investment Management, L.L.C. and Xxxxxxx Xxxxx Global Partners, Inc., respectively, and
the Company and Ford (collectively, the “Confidentiality Agreement”); provided,
that unless this Agreement is terminated (i) any requirement under the Confidentiality Agreement to
obtain consent for the disclosure of Information (as defined in the Confidentiality Agreement) to
prospective debt financing sources and prospective equity co-investors and (ii) Sections 2 and 7(a)
of the Confidentiality Agreement, shall cease to have further force and effect from and after the
date hereof. Sections 6 and 7(b) (with respect to employees of the Company) of the Confidentiality
Agreement shall cease to have further force and effect upon Closing.
(c) Prior to the Closing Date and (if the Closing does not occur) after any termination of
this Agreement, with respect to any information obtained pursuant to this Section or the
Confidentiality Agreement, Buyer shall not, and shall cause its respective directors, officers,
employees, accountants, counsel, financial advisors and other representatives and Affiliates not
to, take any action that would cause any Group Member to violate its Privacy Policy for Rental
Customers or Privacy Policy for Car Sales Customers, as such policies are in effect on the date
hereof.
22
(d) From the date hereof and until the second anniversary of the Closing Date, Holdings will
hold, and will cause Ford and its Affiliates to hold, and will use their reasonable best efforts to
cause their respective officers, directors, employees, accountants, counsel, consultants, advisors
and agents to hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of Law, all confidential documents and information concerning the
Group Members, except to the extent that such information can be shown to have been (i) in the
public domain through no fault of Holdings or its Affiliates (other than the Group Members) or (ii)
later lawfully acquired by such Person from sources other than those related to Holdings’ ownership
of Shares or the operation of the business of the Group. The obligation of Holdings to hold or
cause to be held any such information in confidence shall be satisfied if they exercise the same
care with respect to such information as they would take to preserve the confidentiality of their
own similar information.
(e) From and after the Closing Date, (i) Holdings will afford promptly to Buyer and its
agents reasonable access to its books of account, financial and other records (including
accountant’s work papers), information, employees and auditors to the extent necessary or
reasonably useful for Buyer in connection with any audit, investigation, dispute or litigation or
any other reasonable business purpose relating to the Group and (ii) Buyer will cause the Company
to afford promptly to Holdings and its agents reasonable access to the Company’s books of account,
financial and other records (including accountant’s work papers), information, employees and
auditors to the extent necessary or reasonably useful for Holdings in connection with any audit,
investigation, dispute or litigation or any other reasonable business purpose relating to the
Group; provided, that any such access by Buyer or Holdings shall not unreasonably interfere
with the conduct of the business of Holdings or the Company, as the case
may be and; provided, further, that this provision shall not be available to
and shall not expand the scope of discovery in the case of a legal proceeding between the parties
(but only to the extent of the matters that are the subject of such proceeding). The party
afforded access shall bear all of the out-of-pocket costs and expenses (including attorneys’ fees,
but excluding reimbursement for general overhead, salaries and employee benefits) reasonably
incurred in connection with the foregoing. No party shall be required to provide access to or to
disclose information where such access or disclosure would jeopardize the attorney-client privilege
of such party or contravene any Law or binding agreement entered into prior to the date of this
Agreement (it being agreed that the parties shall use their reasonable best efforts to cause such
information to be provided in a manner that does not cause such violation or jeopardization).
3.2 Conduct of the Business of the Company Prior to the Closing Date. Holdings and,
solely for purposes of clauses (xxiv) and (xxv) below, Ford agree that, except (x) as expressly
contemplated by this Agreement, including, without limitation, Section 6.2 and those actions
contemplated on Schedule 2.1(h)(ii) or Schedule 3.2, or (y) otherwise requested or consented to in
writing by Buyer, which consent shall not be unreasonably withheld or delayed, during the period
commencing on the date hereof and through the time of the Closing:
(i) Holdings shall not transfer the Shares to any Person or create or suffer to exist any
Encumbrance upon the Shares other than, in each case, restrictions on their transfer under
applicable securities Laws;
23
(ii) the businesses of the Group shall be conducted only in the ordinary course of business
and in a manner consistent with past practice;
(iii) the Company shall not amend its Certificate of Incorporation or By-Laws or take,
agree to take or authorize, any action to wind up its affairs or dissolve or change the corporate
or other organizational form of any Group Member;
(iv) except to the extent required under any Benefit Plan, collective bargaining agreement,
labor agreement or works council agreement, or as required by applicable Law or any Governmental
Authority, no Group Member shall (A) adopt any Benefit Plan (other than with respect to any cash
incentive plan adopted in the ordinary course of business for 2006), (B) amend any Benefit Plan in
any material respect or exercise any discretion to accelerate the vesting or payment of any
compensation or benefit under any Benefit Plan, (C) increase or decrease the compensation or fringe
benefits of any Group Employee, except for routine increases in accordance with past practice or
any such increases made in connection with the promotion of any Group Employee in a manner
consistent with past practice, (D) grant any severance or termination pay not provided for under
any Benefit Plan except for payments made in connection with any settlement with terminating Group
Employees below the level of senior vice presidents in a manner consistent with past practice in
exchange for a release of all claims against the Group Members, (E) enter into any employment or
consulting agreement or arrangement that provides for annual cash compensation in excess of
$400,000, or any amendment thereof, (F) enter into any change in control or severance agreement or
arrangement
with any Group Employee at the level of senior vice president or above or (G) hire or
terminate any executive officer other than a termination for cause;
(v) except to the extent required under any Benefit Plan, collective bargaining agreement,
labor agreement or works council agreement, or as required by Law, applicable accounting standards,
or any Governmental Authority, no Group Member shall (A) materially change any actuarial or other
assumption used to calculate funding obligations with respect to any Benefit Plan or materially
change the manner in which contributions to any Benefit Plan are made or the basis on which such
contributions are determined, (B) commit to or agree with any Governmental Authority to abide by
any funding arrangement or contribution schedule that would purport to be binding on Buyer or its
Affiliates following the Closing with respect to any Benefit Plan that is a pension plan or (C)
make any contribution to any Benefit Plan other than in the ordinary course of business and in a
manner consistent with past practice or as required by Law or any Governmental Authority;
(vi) the Group Members shall use their commercially reasonable efforts to preserve intact
their business organization, to keep available the services of their present officers and key
employees (as determined by the Company, but subject to clause (iv) above), and to preserve the
good will of those having business relationships with them;
(vii) the Group shall not (A) make or commit to make any Acquisitions (other than (x)
Acquisitions of the Group’s licensees or franchisees for consideration, in the aggregate, of less
than $20,000,000 (including assumed Indebtedness) and (y) other Acquisitions for consideration in
the aggregate of less than $5,000,000), (B) incur Fleet Expenditures that, in the aggregate
(including assumed Indebtedness) and on a consolidated basis, (x) for the period from
24
the date
hereof until December 31, 2005, are in excess of 110% of the amount allocated to Fleet Expenditures
in the CE for the period commencing on September 1, 2005, and ending on December 31, 2005, and (y)
for the period from January 1, 2006 until Closing, are in excess of 132% of the amount of
aggregate, consolidated Fleet Expenditures actually incurred by the Group for the period commencing
on January 1, 2005, and ending on February 28, 2005, (C) incur Non-Fleet Expenditures (other than
in connection with Acquisitions) that, in the aggregate and on a consolidated basis, (x) for the
period from the date hereof until December 31, 2005, are in excess of the sum of the amount
allocated to Non-Fleet Expenditures in the CE for the period commencing on September 1, 2005 and
ending on December 31, 2005, and (y) for the period from January 1, 2006 until the Closing, are in
excess of $55 million (provided that in addition to the amounts of Non-Fleet Expenditures
permitted above, Holdings may incur an additional $20 million of Non-Fleet Expenditures during the
period from the date hereof until the Closing), or (D) incur or commit to incur any Fleet
Expenditures or Non-Fleet Expenditures (other than in connection with Acquisitions) other than in
the ordinary course of business consistent with past practice; as used herein,
“Acquisitions” shall mean acquisitions (by merger, consolidation, or acquisition of stock
or assets or any other business combination) of any corporation, partnership, other business
organization or any business or any division thereof, “CE” shall mean the consolidated
August 2005 Current Estimate for the Group, as previously furnished to Buyer, “Fleet
Expenditures” shall mean capital expenditures for the purchase of revenue-earning equipment (as
such term is used in the Group’s consolidated financial statements), and “Non-Fleet
Expenditures” shall mean capital expenditures other than Fleet Expenditures;
(viii) except between Wholly Owned Subsidiaries or between a Wholly Owned Subsidiary and
the Company in connection with cash management, financing of operations and movement of vehicles
and equipment, in each case in the ordinary course of business consistent with past practice, no
Group Member shall redeem or repurchase, directly or indirectly, any shares of the capital stock of
any Group Member or declare or pay any dividends or distributions, with respect to any shares of
its capital stock;
(ix) no Group Member shall issue, sell, transfer or encumber any equity securities of any
Group Member, securities convertible into equity securities of any Group Member or warrants,
options or other rights to acquire any such securities;
(x) no Group Member shall sell, assign, transfer, pledge or encumber, or grant any security
interest (other than Permitted Encumbrances described in clauses (C) and (D) of the definition
thereof) in, any of their tangible or intangible assets, in excess of $10,000,000 in the aggregate,
except (A) in the ordinary course of business consistent with past practice, (B) as contemplated by
the CE or (C) except in connection with the incurrence of Indebtedness or financings permitted by
the terms of this Agreement;
(xi) except between Wholly Owned Subsidiaries or between a Wholly Owned Subsidiary and the
Company in connection with cash management, financing of operations and movement of vehicles and
equipment, in each case in the ordinary course of business consistent with past practice, no Group
Member shall (A) repurchase, repay or prepay any Indebtedness other than at maturity, other than
Indebtedness owed to Affiliates of Holdings and Indebtedness outstanding under the Interim Credit
Agreement that is repurchased, repaid or prepaid in connection with a Permitted Extension, (B)
incur any Indebtedness other than under (i) the
25
Interim Credit Agreement (or any Permitted
Extension), (ii) other lines of credit existing on the date hereof, and existing commercial paper
programs and (iii) loans from Affiliates of Holdings; provided that the consolidated
Indebtedness of the Group outstanding following any such incurrence of Indebtedness would not
exceed (1) during the period from the date hereof until September 30, 2005, the sum of (x) amount
of Indebtedness reflected in the balance sheet of the Group as of June 30, 2005 included in the
Financial Statements and (y) $100 million, and (2) during the period from October 1, 2005 through
the Closing Date, the amount of Indebtedness reflected in the balance sheet of the Group as of June
30, 2005 included in the Financial Statements, (C) no Group Member shall assume, endorse, or
otherwise become responsible for the indebtedness for borrowed money of any Person other than
another Group Member, or make any loan or advance to any Person, except for loans or advances to
non-executive employees of the Group made in the ordinary course of business and consistent with
past practice and (D) no Group Member shall assume, endorse or otherwise become responsible for the
obligations (other than obligations constituting indebtedness for borrowed money) of any Person
other than in the ordinary course of business and consistent with past practice; for purposes
hereof, “Permitted Extension” shall mean an extension, an amendment or a replacement
(whether effected through entry into new agreements and instruments or amendment of existing
agreements and instruments, and whether with the same or different lenders) of the Interim Credit
Agreement through a date not later than November 1, 2006, so long as (i) the aggregate availability
thereunder does not exceed $3.0 billion, (ii) the terms thereof (other than the interest rates and
other fees applicable thereunder) shall be substantially similar to those of the Interim Credit
Agreement, (iii) the loans outstanding
thereunder may be prepaid without premium or penalty, other than customary “breakage” fees
associated with the prepayment of short-term loans on which interest accrues at rates based on the
rates quoted in inter-bank markets and (iv) the facility is unsecured;
(xii) the Company shall not make any change to its methods of accounting, as applied to its
consolidated and consolidating financial statements, in effect at June 30, 2005, except (A) as
required by changes in GAAP (or any interpretation thereof) or Regulation S-X of the Exchange Act,
(B) as may be required by a change in applicable Law or required by a Governmental Authority or
quasi-Governmental Authority (including the Financial Accounting Standards Board (“FASB”)
or any similar organization), or (C) as disclosed in the Prior SEC Filings; or
(xiii) there shall be no Tax election, change in any Tax election or change or adoption of
any method of Tax accounting that could be reasonably expected to have a material adverse effect on
the Group or Buyer;
(xiv) Holdings shall use all reasonable efforts subject to the proviso below to maintain in
full force and effect substantially the same level of insurance coverage for the Group’s respective
businesses, operations, personnel and other risks as the insurance provided under the policies in
force on the date hereof, including any coverage under policies of Ford and its Affiliates;
provided, however, that nothing herein shall prohibit Ford or its Affiliates (other
than members of the Group) from replacing, amending, cancelling or otherwise changing any insurance
policies made available to members of the Group so long as the Company is not disproportionately
and adversely affected relative to Ford’s other Affiliates;
26
(xv) except as required by Law, continue to manage and conduct the business of Probus, HIRE
and HIRE (Bermuda), in the ordinary course consistent with past practices;
(xvi) no Group Member shall write up, write down or write off the book value of any
material assets of the Group, other than (i) in the ordinary course of business and consistent with
past practice or (ii) as may be required by GAAP or FASB;
(xvii) no Group Member shall cancel without reasonable consideration any material debts
owing to or held by Group Members, except for debts cancelled in the ordinary course of the Group’s
business consistent with past practice in connection with routine customer service activities,
collection of accounts receivable and settlement of claims against Group Members;
(xviii) enter into any agreement that restricts the ability of any Group Member to engage
or compete in any line of business in any respect material to the business of the Group, taken as a
whole, other than in the ordinary course of business or that restricts the ability of any
stockholder or Affiliate of such stockholder to engage in such competing line of business;
(xix) no Group Member shall, other than in the ordinary course of business consistent with
past practice, (x) enter into, amend, modify, grant a waiver in respect of, cancel or consent to
the termination of any Specified Contract (or any Contract that would be a Specified Contract if in
effect on the date of this Agreement) or (y) settle or compromise any material action, suit, claim,
litigation, proceeding, arbitration, investigation, audit or controversy
(each, a “Material Proceeding”) or enter into any consent, decree, injunction or
similar restraint or form of equitable relief in settlement of any Material Proceeding;
(xx) no Group Member shall enter into or adversely amend, modify or waive any rights under,
in each case, in any material respect, any Contract (or series of related Contracts) with (A)
Holdings or any Affiliate of Holdings (other than any Group Member), or (B) with any executive
officer or director, or (other than on arm’s length terms in the ordinary course of business) any
Person in which such executive officer or director, or any immediate family member of such
executive officer or director, has over a 10% interest, other than the entry into or amendment,
modification, or waiver of any such Contracts on an arms’ length basis which are not in the
aggregate materially adverse to the business of the Group;
(xxi) notwithstanding clause 3.2(y) above, the Company shall not (A) enter into or amend
any collective bargaining agreement covering more than 100 full-time employees in North America or
(B) settle or otherwise voluntarily resolve any material condemnation proceeding, in either case
without first consulting with, and in good faith considering the recommendations of, Buyer;
(xxii) no Group Member registered as an insurance company shall effect a merger,
consolidation, redomestication, or any other transaction or series of transactions that has the
effect of changing its jurisdiction of incorporation or organization;
(xxiii) except as otherwise required by Law, no Group Member that is not primarily
regulated as an insurance company shall transfer reserves held against its self-insured liabilities
and the assets supporting such reserves to any entity that is so primarily regulated;
27
(xxiv) Ford shall not cause any Group Member to engage in any transactions outside the
ordinary course of business between the date hereof and through the Closing that would materially
increase the Taxes for which Buyer is responsible under this Agreement or that could reasonably be
expected to have a material adverse effect on the Taxes of any Group Member after the date hereof,
other than transactions expressly contemplated or permitted by this Agreement or the Schedules
hereto;
(xxv) Ford shall not cause any Group Member to engage in any transaction between the date
hereof and through the Closing that would result in any change to the entity classification of any
Group Member for U.S federal Income Tax or foreign Tax purposes without the consent of Buyer;
(xxvi) no Group Member shall engage in any transaction that would result in any change in
the ownership or form of organization of any Group Member; and
(xxvii) no Group Member shall announce an intention, enter into any formal or informal
agreement or otherwise make a commitment, to do any of the foregoing.
3.3 Filings. (a) Each party hereto shall (i) make the filings required of it or any of its Affiliates
with the CBC and under the HSR Act, any Foreign Antitrust Laws and the Applicable Insurance Laws in
connection with this Agreement and the transactions contemplated hereby as promptly as practicable
following the date hereof, (ii) comply at the earliest practicable date and after consultation with
the other party hereto with any request for additional information or documentary material received
by it or any of its Affiliates from the Federal Trade Commission (the “FTC”), the Antitrust
Division of the Department of Justice (the “Antitrust Division”), the European Commission,
the CBC or any other Governmental Authority, (iii) cooperate with one another (which, for the
avoidance of doubt will include in the case of Holdings, making reasonably available appropriate
employees and representatives of the Group Members), in connection with any filing or submission
with the CBC and under the HSR Act, any Foreign Antitrust Laws and the Applicable Insurance Laws
and in connection with resolving any investigation or other inquiry concerning the transactions
contemplated by this Agreement initiated by the FTC, the Antitrust Division, the European
Commission, the CBC, any other Governmental Authority or any private party, (iv) take any other
action reasonably necessary to obtain the approvals and consents required for the consummation of
the transactions contemplated by this Agreement at the earliest possible date and (v) take all
necessary actions within its control to cause the waiting periods under the HSR Act to terminate or
expire at the earliest possible date.
(b) For purposes of this Section 3.3, without limiting the foregoing, required actions by
Buyer shall include acceptance by Buyer of any and all divestitures of any subsidiary or assets of
Buyer or its Affiliates or the Group or acceptance of an agreement to hold any assets of Buyer or
its Affiliates or the Group separate in any lawsuit or other legal proceeding, whether judicial or
administrative and whether required by the FTC, the Antitrust Division, the European Commission,
the CBC or any other applicable Governmental Authority in connection with the transactions
contemplated by this Agreement or any other agreement contemplated hereby.
28
(c) Each party hereto shall promptly inform the other parties of any material communication
made to, or received by such party from, the FTC, the Antitrust Division, the European Commission,
the CBC or any other Governmental Authority regarding any of the transactions contemplated hereby.
(d) The filing fee under the HSR Act, the ECMR and, subject to Section 3.3(e) below, any fee
or payment to a Governmental Authority under any other Foreign Antitrust Laws or the Applicable
Insurance Laws and any fees paid in connection with obtaining an advance ruling certificate from
the CBC shall be borne by Buyer.
(e) Holdings agrees that, if any Governmental Authority, in connection with its review of
the transactions contemplated by this Agreement, requests (and such request is not withdrawn within
five days following such request) or requires that any amounts owing from Ford, Transcon Insurance
Limited, or any other direct or indirect subsidiaries of Ford (other than Group Members) to Probus,
HIRE or HIRE (Bermuda), as the case may be, be collateralized, Holdings will cause such amounts to
be collateralized (in an amount not greater than the amount owing from any of the above entities)
at Holdings’ option either by providing a letter of credit or surety bond (in a form acceptable to
the Governmental Authority) or by providing any other form of collateral, in each case acceptable
to such Governmental Authority. In any event, unless
the regulator requires to the contrary, the amount of collateral will be reviewed as of
December 31 of each year (beginning in 2006) and adjusted to reflect the actual amounts then owing.
3.4 Public Announcements. Holdings and Buyer shall agree on the form of a joint
press release with respect to the announcement of the transactions contemplated by this Agreement.
Except as set forth above, unless otherwise required by Law, including the rules and regulations
promulgated by the SEC, prior to the Closing Date, no news release or other public announcement
pertaining to the transactions contemplated by this Agreement shall be made by or on behalf of any
party or their respective Affiliates without the consent of the other party, which shall not be
unreasonably withheld or delayed. Prior to any party or their Affiliates issuing a press release
or other public announcement required by Law, Buyer and Holdings shall consult with each other and
each of them shall have reasonable opportunity to comment on such press release.
3.5 Further Actions. Subject to the terms and conditions of this Agreement, each of
the parties hereto agrees to use its reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement, including using its reasonable best
efforts: (i) to obtain, in addition to the Consents discussed in Section 3.3 hereof, any Consents
of any Governmental Authority and/or similar actions of or with respect to any third party as are
necessary or advisable in connection with the consummation of the transactions contemplated hereby,
(ii) to effect, in addition to the filings discussed in Section 3.3 hereof, all necessary or
advisable registrations and filings, (iii) to defend any lawsuits or other legal proceedings,
whether judicial or administrative, whether brought derivatively or on behalf of third parties
(including Governmental Authorities or officials), challenging this Agreement or the consummation
of the transactions contemplated hereby and (iv) to furnish to each other such information and
assistance and to consult with respect to the terms of any registration, filing, application or
undertaking as reasonably may be requested in connection with the foregoing.
29
3.6 Termination of Affiliate Relations. (a) Except as contemplated by this
Agreement (including, for the avoidance of doubt, the matters addressed in Section 6.2, which are
addressed exclusively in such section, and Schedule 3.10(b)), on or prior to the Closing Date, (i)
the Group Members shall repay Indebtedness under the Holdings Note and under any loan made by
Holdings or its Affiliates to any Group Member after the date hereof in compliance with this
Agreement (collectively, “Affiliate Indebtedness”) and (ii) all other liabilities (other
than payables for goods sold and services rendered in the ordinary course under the Contracts set
forth in Schedule 2.1(s) which shall be paid in the ordinary course of business) owed to Ford or
any of its Affiliates (other than a Group Member) by any Group Member or owed to any Group Member
by Ford or any of its Affiliates (other than a Group Member) shall in each case be settled and
terminated without any payment in respect of such liability. On the Closing Date, Buyer shall
provide the Company with amounts of cash equal to the amounts of cash needed for
the Group to repay all of its outstanding Affiliate Indebtedness owed to Ford or Ford’s
Affiliates (other than a Group Member).
(b) All agreements between Group Members, on the one hand, and Ford and its Affiliates
(other than the Group), on the other hand (the “Affiliate Agreements”) shall be terminated
as of the Closing, and all obligations and liabilities thereunder (other than payables for goods
sold and services rendered in the ordinary course under the Contracts set forth in Schedule 2.1(s)
which shall be paid in the ordinary course of business) shall thereupon be discharged and released,
except that the agreements listed on Schedule 3.6(b) (the “Surviving Agreements”) shall
remain in full force and effect. This covenant is intended to be for the benefit of, and shall be
enforceable by, Ford and its Affiliates as if such Persons were parties hereto.
(c) The Company shall have the right, exercisable by notice to Holdings within 180 days
following the Closing, to require Holdings to cause any Undisclosed Material Affiliate Agreement to
be reinstated as of the date of such notice and to continue in effect until the earlier to occur of
the fifth anniversary of the Closing or the expiration of the term of such Undisclosed Material
Affiliate Agreement. Any such Undisclosed Material Affiliate Agreement that the Company properly
elects to be reinstated shall be reinstated within 10 Business Days of such election by the
Company. “Undisclosed Material Affiliate Agreement” shall mean any material Affiliate
Agreement entered into prior to the Closing and not set forth on Schedule 2.1(s).
(d) Notwithstanding anything to the contrary in this Agreement, on or prior to the Closing
Date, Holdings shall cause the partnership (the “Partnership”) formed pursuant to the
Investment Partnership Agreement of the Ford Investment Partnership, dated May 31, 1992, among the
parties listed on Exhibit A thereto, as amended (the “Partnership Agreement”), to cause all
amounts or securities or other assets payable, owing or distributable to all Group Members by the
Partnership under the Partnership Agreement to be paid or distributed to such Group Member at or
prior to the Closing Date, and upon such payment or distribution in full such Partnership Agreement
shall be terminated without further liability or obligation of the parties thereto.
3.7 Indemnification of Directors and Officers. (a) The certificate of
incorporation and by-laws (or equivalent governing instruments) of each Group Member shall contain
30
provisions no less favorable with respect to indemnification than are set forth in the certificate
of incorporation and by-laws of such Group Member as of the date hereof, which provisions shall not
be amended, repealed or otherwise modified for a period of six years after the Closing Date in any
manner that would adversely affect the rights thereunder of individuals who at or prior to the
Closing Date were directors, officers, agents or employees of such Group Member or who were
otherwise entitled to indemnification pursuant to the certificate of incorporation and by-laws (or
equivalent governing instruments) of such Group Member. After the Closing Date, Buyer shall cause
the Company to indemnify each individual who served as a director or officer of any Group Member
(or any other direct or indirect subsidiary of the Company from time to time) at any time prior to
the Closing Date from and against all actions, suits, proceedings, hearings, investigations and
claims, including all court
costs and reasonable attorney fees and expenses resulting from or arising out of, or caused
by, this Agreement or any of the transactions contemplated hereby. This covenant is intended to be
for the benefit of, and shall be enforceable by, each person who served as a director or officer of
any Group Member prior to the Closing Date and their respective heirs and legal representatives and
shall survive the consummation of the transactions contemplated by this Agreement.
(b) For a period of six years following the Closing Date, to the extent Ford retains
directors’ and officers’ liability insurance, Holdings shall cause Ford to arrange to provide
coverage to the Group directors and officers as of the date hereof for alleged wrongful acts that
occurred prior to the Closing Date on the same terms and conditions as applicable to other covered
directors and officers (the “D&O Tail Coverage”); provided, that nothing herein
shall require Ford or any of its Affiliates to maintain or preserve in effect any items of
directors’ and officers’ liability insurance which it does not otherwise maintain or preserve in
effect for directors and officers other than the directors and officers of the Group; and
provided, further, that Holdings shall use its reasonable best efforts to give the
Company no less than 60 days prior written notice before any lapse in or cancellation or
termination of the D&O Tail Coverage and shall consult with the Company and keep the Company
reasonably informed with respect to any of the foregoing. Buyer shall pay the Company’s allocable
cost for such insurance (based on the amount paid by the Company with respect to coverage for the
period from December 15, 2004 to December 15, 2005) and shall promptly reimburse Holdings or its
designee for all other reasonable costs and expenses whatsoever incurred in providing the coverage
described in this Section 3.7(b).
3.8 Director Resignations. At the Closing, Holdings shall cause to be delivered to
Buyer duly signed resignations of those directors of the Group Members who are also officers of
Ford and, in addition, any other directors of the Group Members designated by Buyer to Holdings in
writing at least 10 Business Days prior to the Closing.
3.9 Financing. (a) Buyer shall use its reasonable best efforts to arrange the Debt
Financing on the terms and conditions described in the Debt Commitment Letter, including using
reasonable best efforts to (i) negotiate definitive agreements with respect thereto on the terms
and conditions contained therein or on other terms not materially less beneficial to Buyer and the
Company, (ii) satisfy on a timely basis all conditions applicable to Buyer in such definitive
agreements that are within its control and (iii) consummate the Financing contemplated by the Debt
Commitment Letter at Closing. Buyer shall obtain the Financing contemplated by the Equity
Commitment Letters upon satisfaction or waiver of (A) the conditions to the Closing set
31
forth in
Section 4.1 and 4.2 (other than those conditions that by their nature will not be satisfied until
the Closing) and (B) the conditions to the funding of the Debt Financing or any alternative debt
financing that is on terms not materially less beneficial to Buyer and the Company (other than
those conditions that by their nature will not be satisfied until the Closing and conditions
related to the funding of the Equity Financing and provided that the lenders do not default in
their obligations to provide such financing). In the event any portion of the Debt Financing
becomes unavailable on the terms and conditions contemplated in the Debt Commitment Letters, Buyer
shall use its
reasonable best efforts to arrange to obtain alternative financing, including from alternative
sources, on terms that are not materially less beneficial to Buyer and the Company as promptly as
practicable following the occurrence of such event. In the event that (x) any portion of the Debt
Financing structured as High Yield Financing has not been consummated, (y) all closing conditions
contained in Article IV shall have been satisfied or waived (other than those conditions contained
in Sections 4.2(c) and 4.3(c) and any other conditions that by their nature will not be satisfied
until the Closing) and (z) the Bridge Financing (or alternative bridge financing obtained in
accordance with this Section 3.9(a)) is available on the terms and conditions described in the Debt
Commitment Letter (or any replacement commitment letter), then Buyer shall borrow under and use the
proceeds of the Bridge Financing (or such alternative bridge financing) to replace such affected
portion of the High Yield Financing no later than the last day of the Marketing Period. For
purposes of this Agreement, the “Marketing Period” shall mean (x) if the conditions set
forth in Section 4.1 (other than the approval under the Irish Insurance Laws and the Bermuda
Insurance Laws so long as Buyer reasonably believes such approvals will be obtained prior to
December 22, 2005) and 4.2(e)(i) are satisfied or waived on or prior to November 27, 2005, the
period from the date such conditions are satisfied or waived until and including December 22, 2005
or (y) if the conditions set forth in Section 4.1 (other than the approval under the Irish
Insurance Laws and the Bermuda Insurance Laws) and 4.2(e)(i) are satisfied or waived on or after
November 28, 2005, the 20 consecutive Business Day period commencing on the later of January 2,
2006 and the date such conditions are satisfied or waived (it being agreed that Buyer shall have
the right in its sole discretion to delay the commencement date described in this clause (y) until
the later of the date on which (i) approval under Irish Insurance Laws is received and (ii)
approval under the Bermuda Insurance Laws is received, but such right to delay shall expire on
January 18, 2006); provided that, in the case of clauses (x) and (y), the Company shall
have timely filed, without extension, a Quarterly Report on Form 10-Q for the quarter ended
September 30, 2005 that complies with Section 2.1(g)(i); and provided further that,
the conditions set forth in (x) and (y) shall not be deemed satisfied and the “Marketing Period”
shall not be deemed to have commenced if, prior to the completion of the Marketing Period,
PricewaterhouseCoopers shall have withdrawn its audit opinion on the Company’s audited financial
statements as of and for the period ended December 31, 2004 or withdrawn as the Company’s
independent auditors in either case as a result of PricewaterhouseCooper’s failure to be
independent with respect to the Company or Ford (if and to the extent relevant to the financial
statements of the Company)
under Rule 2-01 of Regulation S-X. Buyer shall give the Company prompt
notice upon becoming aware of any material breach by any party of the Debt Commitment Letter or any
termination of the Debt Commitment Letter. Buyer shall keep the Company informed on a reasonably
current basis in reasonable detail of the status of its efforts to arrange the Financing and shall
not permit any material amendment or modification to be made to, or any waiver of any material
provision or remedy under, the Debt Commitment Letter without the prior written consent of Holdings
32
(such consent not to be unreasonably withheld or delayed). Buyer shall provide notice to Holdings
promptly upon receiving the Debt Financing. Buyer shall not permit any amendment or modification
to be made to, or any waiver of any material provision or remedy under, the Equity Commitment
Letters without the prior written consent of Holdings.
(b) Holdings shall provide, and shall cause the Group to provide, and shall use reasonable
best efforts to cause the Group’s independent auditors, counsel and other representatives to
provide, all reasonable and timely cooperation in connection with the
arrangement of the Debt Financing as may be reasonably requested by Buyer (provided,
that Holdings shall not be required to provide, or cause any Group Member to provide, cooperation
under this Section 3.9(b) that (A) unreasonably interferes with the ongoing business of the Group
or Holdings, (B) causes any representation or warranty in this Agreement to be breached, (C) causes
any closing condition set forth in Article IV to fail to be satisfied or otherwise causes the
breach of this Agreement or any material agreement to which Holdings is a party or the breach prior
to Closing of any other material agreement to which a Group Member is a party (provided,
the effect of any such breach shall be excluded when determining if the condition set forth in
Section 4.2(a) is satisfied) or (D) involves any binding commitment by any Group Member or Holdings
which commitment is not conditioned on the Closing and does not terminate without liability to
Holdings or the Group upon the termination of this Agreement), including but not limited to (i)
arranging for senior management of the Company and, if requested by Buyer, any other Group Member
(x) to meet at reasonable times and on a reasonable number of occasions with rating agencies,
prospective lenders and investors in presentations, meetings, road shows and due diligence
sessions, (y) to provide reasonable and customary management and legal representations to auditors
and (z) to provide reasonable and timely assistance with the preparation of business projections
and similar materials, (ii) otherwise reasonably cooperating with the marketing efforts of Buyer
and its financing sources for any of the Debt Financing, (iii) upon request, furnishing Buyer and
its financing sources with timely financial and other pertinent information regarding the Company
as shall exist (or if not existing, using reasonable best efforts to prepare such financial or
other pertinent information) that it reasonably believes to be accurate in all material respects
and as may be reasonably requested by Buyer, including the financial statements and financial data
and related material (including appropriate management’s discussion and analysis) consistent with
the requirements of the Securities Act and the rules and regulations promulgated thereunder for a
registered offering of debt securities or, in the case of an offering pursuant to Rule 144A, as
customarily applied to an offering under Rule 144A for a private offering of debt securities, as
the case may be, (and including, with respect to any audited financial statements, the report of
the Company’s auditors thereon) (the “Required Financial Information”), (iv) satisfying
the conditions set forth in paragraphs (k) and (i) of Exhibit F to the Debt Commitment Letter and
clause (y) of the last sentence of numbered paragraph 9 in the Debt Commitment Letter (to the
extent satisfaction of such conditions requires actions by or cooperation of Holdings or any of the
Group and subject to the proviso to clause (v) of this Section 3.9(b)), subject to such provisions
of the Debt Commitment Letter being in the form provided to Holdings prior to the signing of this
Agreement, (v) assisting Buyer and its financing sources (including by participating in drafting
sessions) in the timely preparation (provided that, for the avoidance of doubt, Buyer shall
be responsible for the preparation and finalization of all Offering Documents) of (A) offering,
information or syndication documents for any of the Financing or any alternative to all or any
portion thereof (“Offering Documents”), including but not limited to (x) a
33
prospectus or an
offering memorandum, prepared in accordance with customary practices for any registered offering of
debt securities or an offering under Rule 144A, as the case may be, and consistent with the
Securities Act for a registered offering of debt securities or, in the case of an offering pursuant
to Rule 144A, as customarily applied to an offering under Rule 144A for a private offering of debt
securities, as the case may be, with respect to any High Yield Financing (or any alternative
thereto) that Buyer is seeking to obtain and (y) an offering memorandum or prospectus prepared
in accordance with customary practices for asset-backed facilities of comparable terms and
size with respect to any ABS Financing (or any alternative thereto) that Buyer is seeking to
obtain, including in each case under clauses (x) and (y) above by timely providing the Required
Financial Information and such other financial and pertinent information (such as tabular, compiled
or other financial data), as shall exist (or if not existing, using reasonable best efforts to
prepare such financial or other pertinent information) that Holdings or such Group Member
reasonably believes to be accurate in all material respects and as may be reasonably requested by
Buyer, and (B) materials for rating agency presentations, (vi) facilitating the pledging of
collateral and obtaining surveys and title insurance as reasonably requested by Buyer, (vii) using
reasonable best efforts to obtain comfort letters from the auditors of the Company or any other
Group Member and consent from such auditors for Buyer, the Company and any applicable Group Member
to use any of their audit reports (including but not limited to by including such reports in any
Offering Documents), (viii) taking all necessary actions to cause each Subsidiary (as defined in
each indenture or other agreement in Schedule 3.9(b), respectively) not to be a “Restricted
Subsidiary” (as defined in, and for all purposes under, such indenture or agreement), in each case
no later than September 30, 2005, (x) other than those set forth in Schedule 3.9(b) with respect to
the relevant indenture or other agreement and (y) except as otherwise provided in such Schedule
3.9(b), (ix) taking such corporate actions as shall be reasonably necessary to permit the
consummation of the Debt Financing and to permit the proceeds thereof to be made available to the
Company at the Closing, (x) using reasonable best efforts to obtain legal opinions as may
reasonably be requested by Buyer and (xi) using reasonable best efforts to provide and execute
necessary documents and certificates, including officer’s certificates, as may be reasonably
requested by Buyer. In no event shall any Group Member be required to pay any commitment or
similar fee or (except as otherwise expressly contemplated by this Agreement) incur any liability
in connection with the Debt Financing prior to the Closing. Buyer shall, from and after the Closing
or promptly after the termination of this Agreement pursuant to Section 7.1(a) (other than Section
7.1(a)(iii)), (i) promptly upon request by Holdings reimburse Holdings for all out-of-pocket costs
incurred in good faith by Holdings and, in the event of such termination, the Group in connection
with such cooperation and (ii) indemnify and hold harmless Holdings and the Group Members and their
respective directors, employees and representatives from and against any and all liabilities,
losses, damages, claims, costs, expenses, interest, awards, judgments and penalties suffered or
incurred by them in connection with the arrangement of the Debt Financing and any information
utilized in connection therewith (other than information provided by Holdings or any Group Member).
(c) Holdings shall cause the Company to use reasonable best efforts to enter into any
Permitted Extension no later than October 11, 2005.
34
3.10 Debt Tender Offer; Repayment of Third-Party Indebtedness.
(a) Short-Dated Notes. As soon as practicable after the date of this Agreement,
Holdings shall cause the Company to launch a tender offer and Consent Solicitation (as defined
below) (the “Debt Tender Offer”) for those series of the Company’s debt securities listed
on Schedule 3.10(a) (the “Short-Dated Notes”), on the terms set forth on such schedule and
Buyer shall assist Holdings and the Company in connection therewith. Promptly upon the receipt of
the Requested Bond Consents with respect to any series of Short-Dated Notes or the Requested
Indenture Consents with respect
to the 1986 Indenture, the 1994 Indenture and the 2001 Indenture, the Company will enter into
a supplemental indenture or supplemental indentures reflecting the amendments to such indentures
approved by such Requested Bond Consent or Requested Indenture Consent, as the case may be, and
will use its reasonable best efforts to cause the relevant indenture trustee to promptly enter into
such supplemental indenture or supplemental indentures; provided, that the amendments
contained in such supplemental indentures shall become operative upon the acceptance of the
applicable notes in the Debt Tender Offers, Exchange Offers and/or Alternative Tender Offers (as
defined below), as applicable. The closing of any Debt Tender Offer shall be conditioned on the
occurrence of the Closing, and the parties shall use their reasonable best efforts to cause the
Debt Tender Offer to close on the Closing Date. Upon the closing of the Debt Tender Offer, at
Closing and in accordance with the terms of the Debt Tender Offer, Buyer shall cause the Company to
accept for purchase and purchase the Short-Dated Notes tendered in the Debt Tender Offer (the
“Tendered Notes”) and provide to the Company or cause the Company to obtain (whether
through the Financing or use of cash on hand) cash in an amount sufficient to fund the purchase of
all Tendered Notes, including any applicable premiums, and all related fees and expenses (the
“Tender Amount”). For purposes of the Agreement, “Consent Solicitation” shall mean
a solicitation of the Requested Bond Consents and the Requested Indenture Consents from the holders
of the applicable debt securities; “Requested Bond Consents” shall mean the consents of
holders of a majority in principal amount of the holders of the applicable series of the Company’s
debt securities outstanding under the 1986 Indenture, 1994 Indenture or 2001 Indenture, as the case
may be, to the amendments to such series of debt securities described in Schedule 3.10(a) or
3.10(b) or in the applicable Consent Solicitation materials, as the case may be (but in the case of
the 2001 Indenture, only with the prior written consent of Holdings, which shall not be
unreasonably withheld, taking into account Holdings’ judgment as to the impact on the success of
the related Debt Tender Offer, Exchange Offer and/or Alternative Tender Offer of such amendments),
and “Requested Indenture Consents” shall mean the consents of holders of a majority in
principal amount of all of the debt securities outstanding under the 1986 Indenture, 1994 Indenture
or 2001 Indenture, as the case may be, to the amendments to such indenture described in Schedule
3.10(a) or 3.10(b) or in the applicable Consent Solicitation materials, as the case may be (but in
the case of the 2001 Indenture, only with the prior written consent of Holdings, which shall not be
unreasonably withheld, taking into account Holdings’ judgment as to the impact on the success of
the related Debt Tender Offer, Exchange Offer or Alternative Tender Offer of such amendments).
(b) Long-Dated Notes. As soon as practicable and no later than October 17, 2005,
Holdings shall either (i) through one or more of its Affiliates (other than any Group Member) (any
such Affiliate, an “Exchange Offeror”), launch offer(s) to exchange all of the series of
the Company’s debt securities listed on Schedule 3.10(b) (the “Long-Dated Notes”) in
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exchange for debt securities of the applicable Exchange Offeror in amounts and on terms as
described in Schedule 3.10(b), which offers shall also contain a Consent Solicitation (the
“Exchange Offers”) or (ii) cause the Company to launch tender offer(s) for all of the
Long-Dated Notes, which offers shall also contain a Consent Solicitation (the “Alternative
Tender Offers” ), on the terms set forth on Schedule 3.10(b). Promptly upon the receipt of the
Requested Bond Consents with respect to any series of Long-Dated Notes or the
Requested Indenture Consents with respect to the 1994 Indenture or the 2001 Indenture, the
Company will enter into a supplemental indenture or supplemental indentures reflecting the
amendments to such indentures approved by such Requested Bond Consent or Requested Indenture
Consent, as the case may be, and will use its reasonable best efforts to cause the relevant
indenture trustee to promptly enter into such supplemental indenture or supplemental indentures;
provided, that the amendments contained in such supplemental indentures shall become
operative upon the acceptance of the applicable notes in the Debt Tender Offers, Exchange Offers
and/or Alternative Tender Offers, as applicable. The closing of the Exchange Offers shall be
conditioned on the occurrence of the Closing, and the parties shall use their reasonable best
efforts to cause the Exchange Offers to close on the Closing Date. Upon any closing of the
Exchange Offers, at Closing and in accordance with the terms of the Exchange Offers, Holdings shall
cause the Exchange Offerors to accept for exchange the Long-Dated Notes tendered in the Exchange
Offers (the “Exchanged Notes”). In the event any Exchange Offer is completed with respect
to any one or more series of the Long-Dated Notes, then at Closing, Buyer shall pay to the
applicable Exchange Offeror cash in an amount equal to the face amount plus any accrued and unpaid
interest with respect to all Exchanged Notes (such value, the “Exchange Value”) with
respect to each such series, and as soon as practicable after completion of the Exchange Offer,
Holdings shall deliver to Buyer the Exchanged Notes or evidence of cancellation thereof. This
covenant is intended to be for the benefit of, and shall be enforceable by, each applicable
Exchange Offeror as if such Person were a party hereto. The closing of any Alternative Tender
Offer shall be conditioned on the occurrence of the Closing, and the parties shall use their
reasonable best efforts to cause the Alternative Tender Offers to close on the Closing Date. Upon
any closing of the Alternative Tender Offers, at Closing and in accordance with the terms of the
Alternative Tender Offers, Holdings shall cause the Company to accept for purchase and purchase the
Long-Dated Notes tendered in the Alternative Tender Offers (any Long-Dated Notes so accepted in an
Alternative Tender Offer shall be deemed to be “Tendered Notes” under the Agreement except that the
purchase of such Long-Dated Notes shall be funded by Buyer in accordance with the provisions of
Schedule 3.10(b) instead of the provisions of Section 3.10(a)). Holdings shall indemnify and hold
harmless Buyer and its directors, employees, representatives and Affiliates from and against any
and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and
penalties suffered or incurred by them in connection with the Exchange Offers and any information
utilized in connection therewith (other than information provided by Buyer or its Affiliates other
than Group Members).
(c) Certain Other Indebtedness. Not less than two business days prior to the
Closing Date, Holdings shall deliver to Buyer payoff letters from third-party lenders or trustees,
as applicable, in form and substance reasonably satisfactory to Buyer, with respect to all
Indebtedness of the Company required to be identified on Schedule 3.10(c) or entered into after the
date hereof. Such payoff letters shall correctly specify the amount, including any applicable
premiums or fees and expenses, necessary to repay such Indebtedness and completely discharge the
obligations of the Group with respect thereto. At Closing, Buyer shall provide to the
36
Company or
cause the Company to obtain (whether through the Financing or use of cash on hand) the aggregate
amount necessary to make such repayment and discharge, and shall cause the Company or another Group
Member to discharge such Indebtedness in accordance with the delivery instructions provided in such
payoff letters. The amount of such Indebtedness to be repaid at Closing is referred to as the
“Closing Debt Amount”
and, together with the Tender Amount, the “Debt Payment Amount”.
(d) On the Closing Date, Holdings shall cause each Group Member to permanently terminate the
unsecured credit facilities identified on Schedule 3.10(d), and all related agreements, to which
such Group Member is a party, it being understood and agreed that the Interim Credit Agreement will
be terminated by the applicable Group Member prior to the repayment of the Affiliate Indebtedness.
3.11 Insurance. Except as set forth in Section 3.7 and this Section 3.11, coverage
of any Group Members or any of their respective businesses, operations, personnel and other risks
attributable to them under all insurance policies of Ford and its Affiliates (other than the Group
Members) shall cease as of the Closing Date. To the extent that Ford retains in effect blanket
policies of umbrella liability insurance, then from the Closing Date until the last day of the 2006
policy year (the “Coverage Period”), Holdings shall cause Ford to maintain blanket policies
of umbrella liability insurance coverage (subject to the terms of those policies) for the Group
(the “Ford Insurance”) for liabilities, costs or damages relating to any event occurring
prior to the Closing Date (but not occurring after the Closing Date), and upon the request of
Buyer, Holdings shall use its commercially reasonable efforts to assert any and all claims for
payment made by the Company at the request of Buyer within the Coverage Period under the Ford
Insurance (“Pre-Closing Claim”); provided that nothing herein shall require Ford or
any of its Affiliates to maintain or preserve in effect any policies of insurance which it does not
otherwise maintain or preserve in effect for entities other than the Group Members or for its
business other than the business of the Group. Any Pre-Closing Claim shall be processed by Ford in
the same manner and shall be given the same priority relative to other claims as if such claim had
been made by Ford or one of its Affiliates. Holdings (or its designee) will promptly remit to the
Company any and all amounts recovered pursuant to Ford Insurance for any Pre-Closing Claim. The
Company shall provide, or cause the Group to provide, all assistance and information reasonably
requested by Holdings in connection with processing Pre-Closing Claims and providing information to
its insurance underwriters, in each case in a manner consistent with the practices of Ford and the
Company prior to the date hereof and Holdings shall consult with the Company, and keep the Company
reasonably informed with respect to, any of the foregoing. Holdings shall coordinate with the
Company to provide such information relating to the Ford Insurance as the Company may reasonably
request, in a manner consistent with the practices of Ford and the Company prior to the Closing,
including providing the Company with notice of any cancellation or termination of such Ford
Insurance as promptly as practicable after (i) receiving any notice thereof or (ii) reaching a
decision to provide a notice of cancellation or termination. None of Holdings, Ford or any Ford
Affiliate assumes or intends to incur any liability to Buyer or any Group Member or any of their
respective Affiliates in connection with its obligations under this Section 3.11. The Company
shall pay the Company’s allocable cost for such insurance (based on the amount paid by the Company
with respect to coverage for the period from December 15, 2004 to December 15, 2005) and shall
promptly reimburse Holdings or its designee for all other reasonable out-of-pocket costs and
expenses whatsoever incurred (a) at Buyer’s request or (b) in
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providing the assistance described in
this Section 3.11 (“Assistance Costs”). “Assistance Costs” shall include third party
expenses, including without limitation attorneys’ fees and claims adjustment expenses, paid in
connection with investigating, preparing, or pursuing recoveries from insurance contracts and
retroactive or prospective premium increases to the extent (and only to the extent) attributable to
losses incurred in connection with the Group following the Closing.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions Precedent to Obligations of Parties. The respective obligations of
each of the parties hereto hereunder are subject to the satisfaction, at or prior to the Closing
Date, of each of the following conditions:
(a) No Injunction. At the Closing Date, there shall be no injunction, restraining
order or decree of any nature of any Governmental Authority that is in effect that restrains or
prohibits the consummation of the transactions contemplated by this Agreement; provided,
however, that the party or parties invoking this condition shall have used its or their
reasonable best efforts to have any such injunction, order or decree vacated or denied.
(b) Regulatory Authorizations. The applicable waiting periods specified under the
HSR Act with respect to the transactions contemplated by this Agreement shall have lapsed or been
terminated and those other consents and approvals required to consummate the transactions
contemplated by this Agreement from (i) the CBC, (ii) the European Commission under the ECMR or the
antitrust or competition Governmental Authority of any member state of the European Union, (iii)
the Australian Authority, (iv) the antitrust or competition Governmental Authorities of those other
jurisdictions in which the Group owns a material amount of assets and (v) Governmental Authorities
in Ireland and Bermuda with respect to the Irish Insurance Laws and the Bermuda Insurance Laws,
shall have been obtained or the relevant waiting periods shall have lapsed, as applicable
(provided that the condition set forth in clause (v) shall not apply following February 15,
2006). All other consents and approvals from any other Governmental Authority required to
consummate the transactions contemplated by this Agreement, the failure of which to obtain would
have a material adverse effect on the business, condition (financial or otherwise) or results of
operations of the Group, taken as a whole, shall have been obtained.
4.2 Conditions Precedent to Obligation of Buyer. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the satisfaction at or
prior to the Closing Date of each of the following additional conditions:
(a) Accuracy of Representations and Warranties. Each of the representations and
warranties of Holdings set forth in this Agreement, in each case, made as if none of such
representations and warranties contained any qualifications or limitations as to “materiality” or
Material Adverse Effect, shall be true and accurate, in each case, as of the date
hereof and as of the Closing Date as though made on and as of the Closing Date except (i)
those
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representations and warranties that address matters only as of a particular date or only with
respect to a specific period of time, which need only be true and accurate as of such date or with
respect to such period, and (ii) where the failure of such representations and warranties to be
true and accurate as so made, individually or in the aggregate, would not reasonably be expected to
have or constitute a Material Adverse Effect; provided, that the representations and
warranties of Holdings in (x) the first sentence of Section 2.1(h) and Section 2.1(i) shall be true
in all respects, without disregarding the reference to Material Adverse Effect contained in either
such subsection, (y) the first sentence of Section 2.1(e), the first sentence of Section 2.1(c)(i)
and clause (a) of the last sentence of 2.1(c)(ii) shall be true in all respects (provided
that Holdings shall have an opportunity to repay to the Company prior to Closing any amounts
distributed in a manner that would cause the representation in such clause (a) of the last sentence
of Section 2.1(c)(ii) not to be true and correct), and (z) Section 2.1(b), the second and third
sentences of Section 2.1(c)(i), Section 2.1(c)(ii) (other than clause (a) of the last sentence of
such section) and Section 2.1(e) (other than the first sentence of such section) shall be true in
all material respects.
(b) Performance of Agreement. Holdings shall have performed in all material
respects all obligations and agreements, and complied in all material respects with all covenants
contained in this Agreement to be performed or complied with by it prior to or at the Closing Date;
provided that, Holdings shall have complied in all respects with the covenants contained in
Section 3.2(a)(viii) unless the amounts (or securities or other assets) distributed or paid in
violation of such covenant (if any) shall have been repaid to the Group.
(c) Certificate. Buyer shall have received a certificate of Holdings, dated the
Closing Date, executed on behalf of Holdings by an authorized signatory certifying that the
conditions specified in paragraphs (a) and (b) above have been satisfied.
(d) Letter of Credit. Subject to the requirements, terms and conditions set forth
on Schedule 4.2(d), at the Closing, if the ABS Financing is implemented (whether bridge or
otherwise), Ford shall have caused an Eligible Letter of Credit Provider (as defined on Schedule
4.2(d)) to issue a letter of credit in the stated amount of $200,000,000 for the benefit of BNY
Midwest Trust Company, as trustee under the Base Indenture (as defined on Schedule 4.2(d)), as
supplemented by the LOC Series Supplement (as defined on Schedule 4.2(d)), in the form described on
Schedule 4.2(d) (the “Ford Letter of Credit”), for the account of and at the expense of
Ford or an Affiliate thereof, it being agreed by Ford that it shall use reasonable best efforts to
obtain the letter of credit contemplated by this Section 4.2(d).
(e) Required Consents. (i) Consents of holders of a majority in principal amount of
all the debt securities issued and outstanding under the 2001 Indenture to the amendments to such
indentures described in Schedule 3.10(b) shall have been received and may not be withdrawn, and
(ii) an indenture supplement to the 2001 Indenture implementing the amendments to the 2001
Indenture described in Schedule 3.10(b) has been executed by the Company and the trustee for the
2001 Indenture, is in effect, and the amendments to be effected thereby have become operative.
(f) FIRPTA. Buyer shall have received a certificate complying with the Code and
Treasury Regulations, in form and substance reasonably satisfactory to Buyer, duly
39
executed and acknowledged, certifying that Holdings or its shareholder, as applicable, is not
a “foreign person” for purposes of Section 1445 of the Code.
4.3 Conditions Precedent to the Obligation of Holdings. The obligation of Holdings
to consummate the transactions contemplated by this Agreement is subject to the satisfaction at or
prior to the Closing Date of each of the following additional conditions:
(a) Accuracy of Representations and Warranties. Each of the representations and
warranties of Buyer set forth in this Agreement, in each case, made as if none of such
representations and warranties contained any qualifications or limitations as to “materiality”,
shall be true and accurate, in each case, as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (except those representations and warranties that
address matters only as of a particular date or only with respect to a specific period of time,
which need only be true and accurate as of such date or with respect to such period), except where
the failure of such representations and warranties to be true and accurate as so made, individually
or in the aggregate, would not reasonably be expected to materially impair Buyer’s ability to
perform its obligations under this Agreement; provided, that the representations and
warranties of Buyer in Section 2.2(b) shall be true in all material respects.
(b) Performance of Agreements. Buyer shall have performed in all material respects
all obligations and agreements, and complied in all material respects with all covenants contained
in this Agreement to be performed or complied with by it prior to or at the Closing Date.
(c) Certificate. Holdings shall have received a certificate of Buyer, dated the
Closing Date, executed on behalf of Buyer by an authorized signatory, to the effect that the
conditions specified in paragraphs (a) and (b) above have been satisfied.
ARTICLE V
EMPLOYEE AND LABOR MATTERS
5.1 Comparability of Benefits. For one year following the Closing Date, Buyer
shall, or shall cause its Affiliates to, provide compensation (including rate of annual base salary
or wages and annual and long-term cash incentive opportunities) and employee benefits to each Group
Employee employed by a Group Member on the Closing Date and who is not represented by a labor
organization that are substantially comparable in the aggregate to the compensation and employee
benefits that are in effect for such Group Employee immediately prior to the Closing Date, and for
each Group Employee who is represented by a labor organization, Buyer shall and shall cause its
Affiliates to comply with Section 5.8. Nothing in this Section 5.1 shall limit the right of any
Group Member to terminate the employment of any employee at any time following the Closing Date.
5.2 Continuity of Employment. It is agreed that prior to or in connection with the Closing, Buyer shall take no action to
cause Holdings or any Group Member to terminate the employment of any Group Employee, and neither
Holdings nor any Group Member shall be under any obligation to terminate any Group Employee prior
to the Closing Date.
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5.3 Welfare Plans. To the extent that after the Closing Date Buyer chooses to
satisfy its obligations under Section 5.1 through the substitution of a “welfare benefit plan” (as
defined in section 3(1) of ERISA) maintained by Buyer or any of its Affiliates for the benefit of
Group Employees for such a plan maintained by any Group Member immediately prior to the Closing
Date, Buyer shall (a) cause there to be waived any eligibility requirements or pre-existing
condition limitations under such substitute plan and (b) take into account, in determining any
deductible and maximum out-of-pocket limitations imposed under such substitute plan after the
Closing Date but during the plan year in which the Closing Date occurs, to claims incurred and
amounts paid by, and amounts reimbursed to, covered Group Employees prior to the Closing Date
during the plan year in which the Closing Date occurs with respect to similar plans maintained by
such Group Member immediately prior to the Closing.
5.4 Retirement Plans. For one year following the Closing Date, Buyer shall, or
shall cause its Affiliates to, maintain in full force and effect the retirement plans maintained by
Group Members immediately prior to the Closing Date identified in Schedule 5.4 for Group Employees
who are not represented by a labor organization, including The Hertz Corporation Account Balance
Defined Benefit Pension Plan, The Hertz Corporation Benefit Equalization Plan, The Hertz
Corporation Supplement Retirement and Savings Plan, The Hertz Corporation Supplemental Executive
Retirement Plan and the features of The Hertz Corporation 2005 Executive Long Term Incentive Plan
relating to retirement, in each case without any amendment that is materially adverse to Group
Employees who participate in any such plans immediately prior to the Closing Date (other than any
such amendment necessary to comply with applicable Law or to preserve the customary Tax treatment
of amounts paid thereunder). With respect to the Group Employees who are represented by a labor
organization, Buyer shall, and shall cause its Affiliates to, comply with Section 5.8 with respect
to the treatment of any retirement plans maintained for the benefit of any such Group Employee.
5.5 Vacation and Severance. For a period of one year following the Closing Date,
Buyer shall maintain a vacation, holiday and time off policy, plan, practice, program or
arrangement for the benefit of each Group Employee who is not represented by a labor organization
that is not materially adverse in the aggregate from such policy, plan, practice, program or
arrangement in effect immediately prior to the Closing Date with respect to such Group Employee.
For a period of one year following the Closing Date, Buyer shall maintain a severance pay plan,
practice, program or arrangement for the benefit of each Group Employee who is not represented by a
labor organization that is not materially adverse in the aggregate from such policy, plan, practice
or arrangement in effect immediately prior to the Closing Date with respect to such Group
Employee. For Group Employees who are represented by a labor organization, Buyer shall, and
shall cause its Affiliates to, comply with Section 5.8 with respect to the treatment of any
vacation, holiday, time off and/or severance arrangements maintained for the benefit of any such
Group Employees. Effective as of the Closing, Ford and its Affiliates shall be released from any
liability with respect to the agreements of the Company governing special change-in-control,
employment and severance arrangements with certain Group Employees in effect as of the date of this
Agreement, which agreements are identified in Schedule 5.5, and Buyer shall assume any and all
liability of the Company, Ford and its Affiliates under such agreements and at all times thereafter
maintain such agreements in accordance with their terms and conditions; provided,
however, that Ford shall retain responsibility for Ford Options granted to Group Employees
under the Ford Option Plan and
41
referenced in any such agreements, consistent with the provisions of
Section 5.9 of this Agreement.
5.6 WARN Act. The Buyer and its Affiliates shall not at any time prior to 90 days
after the Closing Date, effectuate a “plant closing” or “mass layoff” as those terms are defined in
the Worker Adjustment and Retraining Notification Act of 1988 (“WARN”) or effectuate any
similar triggering event under any other applicable Law, affecting in whole or in part any site of
employment, facility, operating unit or Group Employee. Buyer agrees to provide any required
notice under WARN and any other applicable Law and to otherwise comply with any such statute with
respect to any “plant closing” or “mass layoff” (as defined in WARN) or any similar triggering
event under any other applicable Law occurring on or after the Closing or arising as a result of
the transactions contemplated hereby.
5.7 Cash Bonus Plans. From the Closing Date through the end of the applicable bonus
year in which the Closing Date occurs, Buyer shall (a) continue to maintain the annual cash bonus
plans, cash management incentive and local cash incentive plans and other cash arrangements
maintained by Group Members and disclosed on Schedule 5.7 as in effect immediately prior to the
Closing Date (the “Bonus Plans”) and (b) pay to the Group Employees who participated in
such plans immediately prior to the Closing Date cash bonus amounts at such level(s) and at such
time(s) as the terms of the Bonus Plans provide; provided, however, that, except as
otherwise provided in any applicable change in control agreement or in any other applicable
severance plan, policy or arrangement, notwithstanding anything to the contrary in any Bonus Plan,
each Group Employee whose employment is terminated by Buyer or any of its Affiliates on or after
the Closing Date, but prior to the end of the applicable bonus year other than for “cause” (as such
term is defined in the employment, change in control, or severance agreement or plan, or employee
manual, that is applicable, respectively, to each Group Employee who participates in any Bonus
Plan) shall be entitled to receive a cash bonus pursuant to the applicable Bonus Plan equal to the
pro rata portion (based on the number of days worked by the Group Employee during the applicable
performance period) of the annual target bonus that such Group Employee would have been entitled
to receive under the applicable Bonus Plan in respect of the bonus year in which such date of
termination occurs (if the Group Employee had remained employed by Buyer and its Affiliates through
the date such bonus would otherwise be payable).
5.8 Collective Bargaining Agreements. Effective as of the Closing, Buyer shall
cause the Group Members to comply fully with the terms of all collective bargaining agreements or
similar contracts with representatives of the Group’s employees.
5.9 Options on Ford Shares. Each of Holdings and Buyer acknowledge the following:
(a) certain Group Employees have been granted options which as of the date hereof, subject to
certain terms and conditions, entitle them to purchase, at specified prices, shares of common stock
of Ford (“Ford Options”) pursuant to Ford’s 1998 Long-Term Incentive Plan (the “Ford
Option Plan”) and/or the Company’s Hertz Long-Term Equity Compensation Plan (the “Company
Option Plan”), as applicable; and (b) pursuant to the terms of the Ford Option Plan and the
Company Option Plan, the Ford Options held thereunder by Group Employees immediately prior to the
Closing may remain outstanding for periods of time following the Closing. In connection with the
exercise or expiration, as applicable, of any such Ford Options following the Closing, each of
Holdings, Buyer and Company shall cooperate with any
42
reasonable request for information or actions
to be taken made by any such party, and shall take such actions as are from time to time reasonably
requested by Holdings or Ford to facilitate the administration of the Ford Option Plan or Company
Option Plan, as applicable, including but not limited to (i) informing Ford promptly of the death
or other change in employment status of any holder of Ford Options granted under the Ford Option
Plan or the Company Option Plan (collectively, the “Options”) that results in the
forfeiture of, or otherwise relates to the exercisability of, any such Options, (ii) providing Ford
with changes in address and contact information of any holder of any Option, to the extent such
changes relate to the exercisability or forfeiture of any Options granted and (iii) providing such
other information to Ford or its designated administrator/recordkeeper as needed to administer such
Options. Such information shall be provided at the same intervals at which it was historically
provided to Ford or its Affiliates or to third party service providers of the Ford Option Plan or
the Company Option Plan, as applicable, prior to the date hereof.
5.10 Cooperation Regarding Pension Plans. From and after the date hereof, each of
Holdings, Buyer and the Company shall cooperate and consult with each other with regard to any
negotiations or communications with, requests to furnish information to or actions to be taken at
the request of any Governmental Authority concerning any pension plan.
5.11 Employee Discount Program. For a period of one year following the Closing
Date, Group Employees may participate in Ford’s “A Plan” employee discount program for vehicles on
the same terms available to Ford employees.
ARTICLE VI
TAX MATTERS
6.1 Liability for Taxes.
(a) Federal and Consolidated Income Tax Liabilities. Ford shall be responsible for
and shall indemnify and hold harmless Buyer Indemnitees from and against, and shall pay, all
Federal and Consolidated Income Tax Liabilities (i) attributable to any Pre-Closing Period, (ii)
pursuant to Treas. Reg. § 1.1502-6 (or comparable provision of state, local or foreign law or
regulation) by virtue of a Group Member’s being or having been a member of a consolidated,
combined, affiliated, unitary or other Tax group on or prior to the Closing Date, to the extent a
Group Member is liable for the Income Taxes of a Person that is not a Group Member (iii) arising by
virtue of any Tax Sharing Agreement entered into on or prior to the Closing that is not cancelled
pursuant to Section 6.2 or (iv) attributable to the transfer of the Shares.
(b) Tax Liabilities Other than Federal and Consolidated Income Tax Liabilities.
Except as otherwise provided in Section 6.1(c) or 6.7, the Company shall be responsible for, and
shall pay or cause to be paid, all Taxes relating to the Group Members, excluding Federal and
Consolidated Income Tax Liabilities for which Ford is responsible under Section 6.1(a).
43
(c) Subpart X. Xxxx shall be responsible for and shall indemnify and hold harmless
Buyer Indemnitees from and against, and shall pay, all Taxes attributable to any inclusion under
Section 951 of the Code by any Group Member at the end of the taxable year of the applicable
controlled foreign corporation (as defined in Section 957 of the Code) that includes the Closing
Date arising out of any transaction not in the ordinary course of business occurring between the
date hereof and through the Closing.
(d) Reimbursement. After the Closing, Ford or Buyer (each a “party”), as the case
may be, shall provide or shall cause to be provided reimbursement for any Taxes paid by one party
or its Affiliates which are the responsibility of the other party or its Affiliates in accordance
with the terms of this Section 6.1 or 6.7. Within a reasonable time prior to the payment of any
such Taxes, the indemnified party paying such Taxes shall give written notice to the indemnifying
party of the Taxes payable and the amount which is the liability of each party, although failure to
do so will not relieve the indemnifying party of its liability hereunder except to the extent the
indemnifying party is actually prejudiced. Subject to the delivery of prior written notice of the
payment of any such Taxes, the party required to provide reimbursement hereunder shall pay such
amount on the later to occur of (i) the date payment is made by the party paying such Taxes and
(ii) five Business Days after receipt of such prior written notice.
(e) Allocation of Closing Date Items. Pursuant to Treas. Reg. §
1.1502-76(b)(1)(ii)(B), Ford and the Buyer agree that deductions arising on the Closing Date in
connection with the Exchange Offer and other transactions the expense of which is economically
borne by Buyer shall be allocated to the U. S. federal (and, if applicable, state and local) Tax
period of the Group beginning the day after the Closing Date.
(f) Expenses. For purposes of this Section 6.1 and 6.7, the terms “Taxes” and
“Transfer Taxes” shall include all liabilities for Taxes and Transfer Taxes, as the case may be,
and any reasonable out of pocket expenses incurred after the Closing Date, including attorney and
professional fees, connected with such liabilities for Taxes or Transfer Taxes, as the case may be.
6.2 Tax Sharing Agreements. On or prior to the Closing Date, Ford shall terminate,
or shall cause to be terminated, all Tax Sharing Agreements between any of the Group Members, on
the one hand, and Ford or its Affiliates, on the other hand (including, but not limited to, the Tax
Sharing Agreement dated March 10, 1997 between Ford and the Company and the Company’s Affiliates
(and all amendments thereto)), such that, after the Closing, neither Ford or its Affiliates nor any
Group Member shall be bound thereby or have any obligation or liability thereunder. Any
intercompany receivables or payables arising out of any such Tax Sharing Agreement shall be
cancelled prior to or at the Closing, including, but not limited to, (i) the receivable of
approximately $249 million, which is related to the use of prior-year net operating losses of the
Group, and associated interest, (ii) any amounts that would otherwise be payable, currently or in
the future, related to the use of the Group’s foreign tax credits, and associated interest and
(iii) any receivable under the Default Tax Sharing Agreement between Ford Motor Company of
Australia Limited and each entity listed in Schedule 1 to the Default Tax Sharing Agreement and the
Tax Funding Agreement between Ford Motor Company of Australia Limited and each entity listed in
Schedule 1 to the Tax Funding Agreement. Notwithstanding anything to the contrary herein, the Ford
Group shall be entitled to retain any amount paid by any Group
44
Member to the Ford Group pursuant to
a Tax Sharing Agreement on or prior to June 30, 2005 and shall, at or prior to the Closing,
reimburse the Company for any amount paid by any Group Member pursuant to any Tax Sharing Agreement
after June 30, 2005. The Ford Group shall not permit any Group Member to pay for any Group Relief
without the written consent of Buyer, and any intercompany payable owed by any Group Member in
respect of Group Relief shall be cancelled on or prior to the Closing Date. The Ford Group shall
not withdraw or withdraw its consent to the surrender of any U.K. Tax losses by way of Group Relief
initiated on or before the date hereof.
6.3 Tax Returns, Elections, etc. (a) Ford and Buyer shall cause each Group Member
to join, to the extent permitted by law for all Pre-Closing Periods, in (i) (A) the consolidated U.
S. federal Income Tax Returns of Ford, and (B) combined, consolidated or unitary Returns for state
and local Taxes including one or more members of the Ford Group with respect to which the relevant
Group Member(s) filed such a Return for the 2003 or 2004 taxable year or (ii) is required by the
applicable Taxing Authority to file such a Return. Ford shall file or cause to be filed all
Returns set forth in the immediately preceding sentence and shall cause the income, gains,
deductions, losses and credits of the relevant Group Members to be included on such Returns (except
to the extent provided in Section 6.1(e)). All Tax items of relevant Group Members shall, to the
extent permitted by applicable Tax law, be reported on Consolidated or Combined Returns on a basis
consistent with the last previous such Returns filed as of the date hereof in respect of such Group
Member(s) to the extent the failure to do so could reasonably be expected to have a material cost
to Buyer or any Group Member. Ford shall not cause any Group Member(s) (i) to fail to file any Return in
respect of any Group Member(s) that is required to be filed on or prior to the Closing Date (taking
into account extensions) or (ii) to file any such Return in a manner inconsistent with the last
previous Return filed as of the date hereof in respect of such Group Member(s) unless (A) filing on
such basis is not permitted by applicable Tax law or (B) failing to file on such basis would not
reasonably be expected to have a material cost to Buyer or any Group Member.
(b) Buyer shall file, or cause to be filed, all Returns relating to the business or assets
of the Group Members other than those Returns described in Section 6.3(a).
(c) Ford shall not, and shall not permit any of its Affiliates, to amend any Returns or make
or change any Tax elections or accounting methods with respect to any Group Member(s), without the
consent of Buyer, relating to a Pre-Closing Period to the extent such amendment could reasonably be
expected to have a material cost to Buyer or any Group Member.
6.4 Tax Audits, Assistance and Cooperation. (a) Ford or Buyer, as the case may be,
shall notify such other party within twenty (20) days, upon receipt by such first party or any of
its Affiliates of notice of any pending or threatened federal, state, local or foreign Tax audits,
examinations, notices of deficiency or other adjustments, assessments or redeterminations (“Tax
Matters”) relating to Taxes for which such other party or its Affiliates may be responsible
under Section 6.1.
(b) Ford shall have the sole right to control, contest, resolve and defend against any Tax
Matters relating to Taxes of any Group Member for which Ford is obligated to
45
indemnify Buyer under
Section 6.1, and to employ counsel of its choice at its own expense; provided,
however, that (i) Ford shall keep Buyer informed with respect to the commencement, status
and nature of any such Tax Matter, notify Buyer of significant developments with respect to such
Tax Matter and consult with Buyer with respect to any issue that could reasonably be expected to
have a material cost to Buyer or any Group Member, and (ii) neither Ford nor any of its respective
Affiliates shall enter into any settlement of, or otherwise compromise, any such Tax Matter to the
extent that any such settlement or compromise could reasonably be expected to have a material cost
to Buyer or any Group Member unless Ford indemnifies and holds harmless Buyer Indemnitees from and
against any such cost.
(c) Buyer shall have the sole right to control all Tax Matters of any Group Member not
controlled by Ford pursuant to Section 6.4(b).
(d) Assistance and Cooperation. After the Closing Date, each of Ford and Buyer shall
(and shall cause their respective Affiliates, including each of the Group Members, to):
(i) assist the other party in preparing any Returns which such other party is responsible
for preparing and/or filing in accordance with Section 6.3;
(ii) maintain and make available to the other party, on such other party’s reasonable
request, copies of any and all information, books and records necessary to prepare
and/or file any Return or to respond to audits by any Taxing Authority, for the full period of
the applicable statute of limitations, including any extensions thereof, with respect to the
relevant Taxes. After the applicable period, Ford or Buyer may dispose of such information, books
and records provided that prior to such disposition, Ford or Buyer shall give the other party the
opportunity to take possession of such information, books and records;
(iii) upon reasonable notice and without undue interruption to the business of such party
or the Group Members, as the case may be, provide access during normal business hours to the books
and records of such party or the Group Members relating to the Taxes of the Group Members prior to
the Closing Date;
(iv) promptly furnish the other party with copies of all correspondence received from any
Taxing Authority in connection with any Tax Matter of any Group Member or information request with
respect to any taxable period for which the other party may have a liability under Section 6.1; and
(v) timely provide to the other party powers of attorney or similar authorizations
reasonably necessary to carry out the purposes of this Section 6.4.
(e) Disputes. If the parties disagree as to the calculation of any amount relating
to Taxes governed by Section 6.1, the parties shall promptly consult with each other and endeavor
in good faith, for a period of 30 days, to resolve any such disagreements (each disagreement not so
resolved, a “Tax Dispute”). Thereafter, either party may submit the resolution of any Tax
Disputes to a mutually agreed upon nationally recognized accounting firm (the “Accounting
Arbitrator”) to resolve the dispute. The Accounting Arbitrator shall only be authorized as
directed by the parties on any one issue to either (i) decide in favor of and choose
46
the position
of either of the parties or (ii) to decide upon a compromise position within the range of positions
presented by the parties to the Accounting Arbitrator. The Accounting Arbitrator shall base its
decision solely upon the presentations of the parties to the Accounting Arbitrator at a hearing
held before the Accounting Arbitrator and upon any materials made available by either party and not
upon independent review. The Accounting Arbitrator shall be instructed to resolve the Tax Disputes
and such resolution shall be (i) set forth in writing and signed by the Accounting Arbitrator, (ii)
delivered to Buyer and Ford as soon as practicable after the Tax Disputes are submitted to the
Accounting Arbitrator but not later than the 30th day after the Accounting Arbitrator is instructed
to resolve the Tax Disputes, (iii) made in accordance with this Agreement, and (iv) final, binding
and conclusive on the parties on the date of delivery of such resolution. Any expenses relating to
the engagement of the Accounting Arbitrator shall be shared equally by the parties.
6.5 Refunds and Tax Credits. Subject to the provisions of Section 6.6, (a) Ford
shall be entitled to retain, or Ford shall be entitled to receive immediate payment from the
relevant Group Member or Buyer of, any refund or credit with respect to Taxes, plus any interest
received with respect thereto (net of any Tax cost arising out of such receipt) from the applicable
Taxing Authorities, relating to any Group Member that are described as being the responsibility of
Ford in Section 6.1(a) and (b) Buyer, the Company or any Group Member shall be entitled to retain,
or shall be entitled to
receive immediate payment from Ford of, any other refund or credit with respect to Taxes, plus
any interest received with respect thereto (net of any Tax cost arising out of such receipt) from
the applicable Taxing Authorities, relating to any Group Member.
Buyer and Ford shall cooperate, and shall cause their respective Affiliates to cooperate, with
respect to claiming any refund or credit with respect to Taxes referred to in this Section 6.5.
Such cooperation shall include providing all relevant information available to Ford or Buyer
(through the Company or otherwise), as the case may be, with respect to any such claim; filing and
diligently pursuing such claim (including by litigation, if appropriate); paying over to Ford or
Buyer, as the case may be, and in accordance with this provision, any amount received by Buyer (or
any Group Member) or Ford (or any member of the Ford Group), as the case may be, with respect to
such claim; and, in the case of the party filing such a claim, consulting with the other party
prior to agreeing to any disposition of such claim, provided that the foregoing shall be done in a
manner so as not to interfere unreasonably with the conduct of the business of the parties. The
party that is to enjoy the economic benefit of a refund under this Section 6.5 shall bear the
reasonable out-of-pocket expenses of the other party incurred in seeking such refund. Any dispute
regarding a party’s entitlement to a payment in respect of a refund shall be resolved pursuant to
the Tax Dispute resolution mechanism in Section 6.4(e).
6.6 Carrybacks. To the extent permitted by law, Buyer shall cause the Group to
elect to relinquish any carryback of net operating losses, net capital losses, unused tax credits
and other deductible or creditable tax attributes arising in a period beginning after the Closing
Date to a consolidated, combined or unitary Return for any Pre-Closing Period. In cases where the
Group is not permitted by law to relinquish the carryback, any net Tax benefit actually realized by
the Ford Group (as reasonably determined by Ford as set forth in reasonably detailed calculations
to be provided by Ford to Buyer) shall be remitted by Ford to Buyer at the time such Tax benefit is
realized.
47
6.7 Transfer Taxes. Notwithstanding any provision of this Agreement to the
contrary, all Transfer Taxes shall be borne 50% by Buyer and 50% by Ford. Buyer shall file, or
shall cause to be filed, to the extent permitted by applicable law, all Returns, as may be required
to comply with the provisions of such Tax laws relating to Transfer Taxes. Ford shall cooperate
with Buyer in connection with all such filings and shall file those Returns Buyer is not permitted
to file.
ARTICLE VII
MISCELLANEOUS
7.1 Termination and Abandonment.
(a) General. This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time, but not later than the Closing Date:
(i) by mutual written consent of Buyer and Holdings;
(ii) by Buyer or Holdings if an injunction, restraining order, decree or other action of
any Governmental Authority of competent jurisdiction is issued, enacted, promulgated, enforced or
entered that prohibits the consummation of the transactions contemplated by this Agreement and such
injunction, restraining order, decree or other action is final and non-appealable;
provided, however, that the party seeking to terminate this Agreement pursuant to
this clause (ii) shall have used its reasonable best efforts to have such injunction, order, decree
or other action vacated, denied, annulled, quashed or lifted;
(iii) by Buyer if there has been a violation or breach by Holdings of any covenant,
representation or warranty contained in this Agreement which has prevented the satisfaction of any
condition to the obligations of Buyer set forth in Section 4.2(a) or 4.2(b) and such violation or
breach has not been waived by Buyer and has not been, or cannot be, cured by Holdings within thirty
days after written notice thereof from Buyer;
(iv) by Holdings if there has been a violation or breach by Buyer of a any covenant,
representation or warranty contained in this Agreement which has prevented the satisfaction of any
condition to the obligations of Holdings set forth in Section 4.3(a) or 4.3(b) and such violation
or breach has not been waived by Holdings and has not been, or cannot be, cured by Buyer within
thirty days after written notice thereof from Holdings (provided that the failure of Buyer
to fund (or cause to be funded) the Purchase Price and the other amounts described in Section 1.1
at the Closing as required hereunder shall not be subject to cure hereunder, and in the event of
such breach, Holdings may terminate this Agreement immediately by delivery of notice in writing as
provided in Section 7.3); or
(v) by either Buyer or Holdings if the Closing shall not have been consummated on or before
February 28, 2006; provided that the right to terminate this Agreement pursuant to this
clause (v) shall not be available to the party (if any) whose failure to fulfill or cause to be
fulfilled any obligation under this Agreement has been the primary cause of the failure of the
Closing to occur on or before such date.
48
(b) Procedure Upon Termination. In the event of the termination and abandonment of
this Agreement, written notice thereof shall promptly be given to the other parties hereto and this
Agreement shall terminate and the transactions contemplated hereby shall be abandoned without
further action by any of the parties hereto.
(c) Survival of Certain Provisions. The respective obligations of the parties
hereto pursuant to Sections 3.1(b) and (c), 3.3(d), the last sentence of Section 3.9(b), the last
sentence of Section 3.10(b) and this Article VII shall survive any termination of this Agreement.
(d) Effect of Termination. In the event of a termination of this Agreement pursuant
to Section 7.1(a), no party shall have any liability to the other party except (i) in connection
with an intentional material breach of this Agreement occurring prior to such termination, (ii) as
provided in Section 7.1(c) and (iii) as provided in the following sentence. In
the event that the conditions to the Closing set forth in Sections 4.1 and 4.2 hereunder
(other than those conditions that by their nature cannot be satisfied until the Closing) are
satisfied or waived and Buyer breaches (whether or not intentional) its obligation to effect the
Closing pursuant to Article I and satisfy its obligations to fund (or cause to be funded) all
payments pursuant to Section 1.1 because of a failure to receive the proceeds of one or more of the
debt financings contemplated by the Debt Commitment Letters or the failure to have received the
proceeds of any alternative debt financing (a “Debt Receipt Failure”), then, except as set
forth on Schedule 7.1(d), upon Holdings’ termination of this Agreement pursuant to Section
7.1(a)(iv) or by either party pursuant to Section 7.1(a)(v), Buyer shall pay $125 million (the
“Termination Fee”) to Holdings or as directed by Holdings as promptly as reasonably
practicable (and, in any event, within two Business Days following such termination).
Notwithstanding anything else in this Agreement to the contrary: (1) if in the circumstances in
which Buyer becomes obligated to pay the Termination Fee (or has been excused from paying such
Termination Fee for the reason set forth on Schedule 7.1(d)), Buyer is not otherwise in breach of
this Agreement such that the conditions set forth in Section 4.3(a) or 4.3(b) would not be
satisfied (excluding Buyer’s failure in and of itself to fund, or cause to be funded, all payments
pursuant to Section 1.1 and otherwise effect the Closing because of a Debt Receipt Failure, but not
excluding any other breach, including for the avoidance of doubt any breach of Section 2.2(e) or
Section 3.9, that would cause the conditions set forth in Section 4.3(a) or 4.3(b) not to be
satisfied), then the right of Holdings to receive payment of the Termination Fee (which shall be
zero if payment thereof has been excused for the reason set forth on Schedule 7.1(d)) in accordance
herewith shall be the sole and exclusive remedy of Holdings against Buyer for any loss or damage
suffered as a result of the breach of any representation, warranty, covenant or agreement contained
in the Agreement by Buyer and the failure of the transactions to be consummated (it being
understood that in any other case Holdings’ right to recover any other or additional damages and
remedies available to it in respect of any intentional material breach of this Agreement by Buyer
shall not be limited in any respect, subject to the limitation set forth in the immediately
following clause (2)); and (2) in no event shall Buyer and the Guarantors, on the one hand, or
Holdings and Ford, on the other hand, be subject to liability in excess of $300 million in the
aggregate (inclusive of the Termination Fee in the case of Buyer or the Guarantors) for all losses
and damages arising from or in connection with breaches by Buyer or Holdings or Ford, as the case
may be, of any of the representations, warranties, covenants and agreements contained in this
Agreement (other than those set forth in Article VI and in addition, following any Closing, other
than the representations and warranties set forth as surviving the Closing in Section 2.4).
49
7.2 Expenses. Except as otherwise provided in this Agreement, Holdings, Buyer and
each Group Member shall each bear its own costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby.
7.3 Notices. All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing and shall be given by
personal delivery or sending by United States Postal Service Express Mail or an overnight courier
service, proof of delivery requested, or sent by telecopy, to the following addresses:
(a) if to Holdings, to it at:
Ford Holdings LLC
c/o Ford Motor Company
Xxx Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Secretary
Telecopy: 000-000-0000
c/o Ford Motor Company
Xxx Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Secretary
Telecopy: 000-000-0000
with a copy to (which shall not constitute notice):
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Telecopy: 000-000-0000
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Telecopy: 000-000-0000
(b) if to the Company, to it at:
The Hertz Corporation
000 Xxxx Xxxxxxxxx
Xxxx Xxxxx, Xxx Xxxxxx 00000-0000
Attention: Senior Vice President, General Counsel & Secretary
Telecopy: 000-000-0000
000 Xxxx Xxxxxxxxx
Xxxx Xxxxx, Xxx Xxxxxx 00000-0000
Attention: Senior Vice President, General Counsel & Secretary
Telecopy: 000-000-0000
with a copy to (which shall not constitute notice):
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Telecopy: 000-000-0000
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Telecopy: 000-000-0000
50
(c) if to Buyer, to it at:
CCMG Holdings, Inc.,
c/o M&C Corporate Services Limited (on behalf of Xxxxxxx, Dubilier & Rice Fund VII, L.P.)
P.O. Box 309GT
Xxxxxx House
South Church Street
Xxxxxx Town, Grand Cayman
Cayman Islands, British West Indies
Telecopy: 000-000-0000
c/o M&C Corporate Services Limited (on behalf of Xxxxxxx, Dubilier & Rice Fund VII, L.P.)
P.O. Box 309GT
Xxxxxx House
South Church Street
Xxxxxx Town, Grand Cayman
Cayman Islands, British West Indies
Telecopy: 000-000-0000
with a copy to (which shall not constitute notice):
Xxxxxxx, Dubilier & Rice, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telecopy: 000-000-0000
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telecopy: 000-000-0000
with a copy to (which shall not constitute notice):
The Carlyle Group
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxx 000 Xxxxx
Xxxxxxxxxx, XX 0000-0000
0 Xxxxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy: 000-000-0000
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxx 000 Xxxxx
Xxxxxxxxxx, XX 0000-0000
0 Xxxxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy: 000-000-0000
with a copy to (which shall not constitute notice):
Xxxxxxx Xxxxx Global Private Equity
0 Xxxxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Xxxxxx End
Telecopy: 000-000-0000
0 Xxxxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Xxxxxx End
Telecopy: 000-000-0000
with a copy to (which shall not constitute notice):
51
Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxx
Telecopy: 000-000-0000
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxx
Telecopy: 000-000-0000
or to such other Person or address as a party shall specify by notice in writing to the other
parties. All such notices, requests, demands, waivers and communications shall be deemed to have
been given on the date of personal receipt or proven delivery or, in the case of notice by
telecopier, when receipt thereof is confirmed by telephone.
7.4 Entire Agreement. This Agreement (including the Schedules and Exhibits hereto)
and the Confidentiality Agreement constitute the entire agreement between the parties hereto and
supersedes all prior agreements and understandings, oral and written, between the parties hereto
with respect to the subject matter hereof.
7.5 Exclusive Remedy. (a) Except as set forth in Section 2.4 and except for
Sections 3.1(d), 3.1(e), 3.3(e), 3.6, 3.7, 3.9(b) (last sentence), 3.10(b) (last sentence), 3.11,
4.2(f), 5.1, 5.3 through 5.7, 5.9 through 5.11, Article VI, and Sections 7.2 through 7.16, and in
the Confidentiality Agreement, from and after the Closing, the parties hereto waive any rights and
claims that a party may have against any other party, whether in law or in equity, relating to the
transactions contemplated hereby or thereby, including claims for contribution or other rights of
recovery arising out of or relating to any Laws (including Environmental Laws), claims for breach
of contract (including, without limitation, claims for breach of any certificate or instrument
delivered hereunder except to the extent expressly referred to in one of the provisions specified
above), breach of representation or warranty or covenant, negligent misrepresentation and all
claims for breach of duty; provided, however, that nothing set forth in this
Agreement shall limit the rights, remedies and claims of any party with respect to any fraud or
willful misconduct.
(b) The parties hereto agree that the current, former and prospective direct or indirect
stockholders of Buyer and its Affiliates (other than Buyer) are not parties to this Agreement and
(i) Holdings, and its Affiliates shall not have any right to cause any monies to be contributed to
Buyer by any current, former or prospective direct or indirect stockholder of Buyer or any of its
Affiliates and (ii) except to the extent provided in the Guarantees and, to the extent in effect,
the Confidentiality Agreement, no current, former or prospective direct or indirect stockholder of
Buyer or any Affiliate thereof (other than Buyer) or any of their partners, directors, officers,
managers, members, agents or representatives shall owe any contractual obligation to Holdings or
its Affiliates in connection with this transaction.
(c) Subject to Section 2.2(h), no investigation by Buyer or other information received by
Buyer shall operate as a waiver or otherwise affect any representation, warranty or agreement given
or made by Holdings or the Company hereunder.
7.6 No Third Party Beneficiaries. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns, and nothing in this
52
Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto,
or their respective successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement other than Sections 1.1 and 3.10; Section 3.6; Article VI; and
Section 3.7, which are intended to be for the benefit of the applicable Exchange Offeror; Ford and
its Affiliates; Ford Group and the Buyer Indemnitees; and the directors and officers of the Group
prior to the Closing Date, respectively, and may be enforced by such Persons.
7.7 Assignability. This Agreement shall not be assigned by any of the parties
hereto whether by operation of law or otherwise without the prior written consent of the other
parties hereto; provided that Buyer may, without the prior written consent of the other
parties, (x) assign this Agreement and all of its rights hereunder to its lenders and debt
providers for collateral security purposes and (y) assign all of its rights (or, as provided in
Article I, certain of its rights) to a direct or indirect wholly owned subsidiary of Buyer
(provided that, notwithstanding any such assignment, Buyer shall remain liable to perform
all of its obligations hereunder); and provided further, that at any time after the
Closing, Holdings may assign this Agreement to Ford or any Affiliate of Ford, subject to the
written assumption by Ford or such Affiliate of all the obligations of Holdings hereunder
(provided that, notwithstanding any such assignment, Holdings shall remain liable to
perform all of its obligations hereunder).
7.8 Amendment and Modification; Waiver. Subject to applicable Law, this Agreement
may be amended, modified and supplemented by a written instrument authorized and executed on behalf
of the parties hereto at any time prior to the Closing with respect to any of the terms contained
herein. No waiver by any party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and executed by the party so waiving. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver
of any other or subsequent breach.
7.9 Severability. If any provision of this Agreement or the application thereof
under certain circumstances is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
7.10 Section Headings. The section headings contained in this Agreement are
inserted for reference purposes only and shall not affect the meaning or interpretation of this
Agreement.
7.11 Interpretation. Unless the context requires otherwise, all words used in this
Agreement in the singular number shall extend to and include the plural; all words in the plural
number shall extend to and include the singular; and all words in any gender shall extend to and
include all genders.
7.12 Definitions. As used in this Agreement:
“1986 Indenture” means the Indenture dated as of April 1, 1986 between the Company and
JPMorgan Chase Bank, N.A., as trustee (as the same may be amended or supplemented).
53
“1994 Indenture” means the Indenture dated as of December 1, 1994 between the Company
and First Fidelity Bank, N.A., as trustee (as the same may be amended or supplemented).
“2001 Indenture” means the Indenture dated as of March 6, 2001 between the Company and
the Bank of New York, as trustee (as the same may be amended or supplemented).
“Affiliate” means, with respect to a specified Person, any other Person who, directly
or indirectly, controls, is controlled by, or is under common control with such specified Person.
As used in this definition, the term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by agreement or otherwise; provided
that each of the Guarantors and their Affiliates shall be considered Affiliates of Buyer.
“Board of Directors” means the board of directors of any specified Person and any
committees thereof.
“Business Day” means any day on which banks are not required or authorized to close in
the City of New York.
“Buyer Indemnitees” means Buyer and its Affiliates and, from and after the Closing,
each Group Member, together with successors, assigns, representatives, employees, officers and
directors of any of them.
“Consolidated or Combined Return” means any Return (whether or not domestic) that is
filed or that is required to be filed, and that includes one or more Group Members or items
therefrom on the one hand and one or more members of the Ford Group or items therefrom on the other
hand.
“Federal and Consolidated Income Tax Liabilities” means any and all Taxes of any Group
Member relating to either (a) any U. S. federal Income Taxes or (b) any Income Taxes with respect
to which (i) any Group Member has or will file, or is required pursuant to Section 6.3(a) to file,
a Consolidated or Combined Return, (ii) one or more Group Members is liable for the Income Taxes
of a Person other than a Group Member under a provision of state, local or foreign law or
regulation comparable to Treas. Reg. §1.1502-6 imposing several liability upon members of a
consolidated, combined, affiliated, unitary or other Tax group by virtue of a Group Member’s being
or having been a member of such a group on or prior to the Closing Date, or (iii) one or more Group
Members is liable (if such Income Taxes are attributable to a consolidated, combined, affiliated,
unitary or other Tax group) under principles of successor or transferee liability relating to an
event or transaction occurring on or prior to the Closing Date.
“Ford Group” means Ford and its present or former Affiliates other than any Group
Member.
“Group Relief” means the group relief for U.K. corporation tax purposes contained in
Chapter IV of Part X of the Taxes Act relating to the surrender of Tax losses between members of
the same group and any equivalent system outside the United Kingdom for the surrender of Tax losses
between members of a group.
54
“Holdings Note” means the $1,185.0 million principal amount subordinated promissory
note issued by the Company to Holdings on June 10, 2005.
“Income Tax” means any Tax on or measured by net income, profits or earnings.
“Indebtedness” means the principal amount of any indebtedness for borrowed money and
any accrued interest, prepayment premiums and penalties related thereto.
“Interim Credit Agreement” means the Credit Facility, dated as of May 26, 2005, among
the Company, Hertz Canada Limited, JPMorgan Chase Bank and the other banks and financial
institutions party thereto.
Buyer has “Knowledge” of a particular fact or other matter if, and only if, any of the
individuals listed on Schedule 7.12(a) has actual knowledge thereof.
Holdings has “Knowledge” of a particular fact or other matter if, and only if, any of
the individuals listed on Schedule 7.12(b) has actual knowledge thereof.
“Law” means any law, statute, order, ordinance, rule or regulation of any Governmental
Authority.
“Person” means an individual, corporation, limited liability company, partnership,
association, joint venture, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a Person under section 13(a)(3) of the Securities
Exchange Act of 1934, as amended.
“Pre-Closing Period” means any Tax year or period (or portion thereof) ending on or
prior to the Closing Date.
“Rule 144A” means Rule 144A promulgated under the Securities Act.
“Tax Sharing Agreements” means the Tax Sharing Agreement dated March 10, 1997 between
Ford and Company and the Company’s Affiliates (and all amendments thereto), the Default Tax Sharing
Agreement between Ford Motor Company of Australia Limited and each entity listed in Schedule 1 to
the Default Tax Sharing Agreement, the Tax Funding Agreement between Ford Motor Company of
Australia Limited and each entity listed in Schedule 1 to the Tax Funding Agreement and all other
Tax sharing, Organschaft profit and loss allocation, indemnification or similar agreements in
effect between any of the Group Members and any other Person (other than solely with other Group
Members), except for (a) customary agreements to indemnify lenders or security holders in respect
of Taxes and (b) customary Tax sharing obligations under commercial lease agreements.
“Transfer Taxes” means all transfer, documentary, sales, use, registration and other
similar Taxes (including all applicable real estate transfer taxes) incurred in connection with the
transfer of the Shares pursuant to this Agreement. Transfer Taxes shall not include Income Taxes.
55
7.13 Company Actions. To the extent that this Agreement calls for any Group Member
to take any action prior to the Closing Date, it is understood and agreed by the parties that
Holdings shall, and to the extent that this Agreement calls for any Group Member to take any action
on or following the Closing Date, Buyer shall, cause such Group Member to take such action (subject
to any limitations or standards of effort contained therein).
7.14 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of which together shall be deemed to be
one and the same instrument.
7.15 Enforcement. The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the United States located
in the State of New York, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of the United States District Court for the Southern District of New York or
any court of the State of New York located in such district in the event any dispute arises out of
this Agreement or any of the transactions contemplated by this Agreement, (ii) agrees that it will
not attempt to deny or defeat such personal jurisdiction or venue by motion or other request for
leave from any such court and (iii) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any court other than such
courts sitting in the State of New York. THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
SUIT, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER IN ANY MATTERS
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.
7.16 Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the
date first above written.
CCMG HOLDINGS, INC. | ||||
By:
|
/s/ Xxxxx X. Xxxxxxxxx | |||
Name: Xxxxx X. Xxxxxxxxx | ||||
Title: |
FORD HOLDINGS LLC | ||||
By:
|
/s/ Xxx Xxxxx Xxxxxx | |||
Name: Xxx Xxxxx Xxxxxx | ||||
Title: Chairman of the Board of Directors | ||||
(solely with respect to Article VI and | ||||
Sections 3.2(xxiv), 3.2(xxv), 4.2(d), | ||||
5.11, 7.15 and 7.16) | ||||
FORD MOTOR COMPANY | ||||
By:
|
/s/ Xxx Xxxxx Xxxxxx | |||
Name: Xxx Xxxxx Xxxxxx |
||||
Title: Vice President and Treasurer |