EXHIBIT 99.2
ACQUISITION AGREEMENT
among
ALLIED HOLDINGS, INC.,
A H ACQUISITION CORP.,
CANADIAN ACQUISITION CORP.,
AND
AXIS NATIONAL INCORPORATED
AND
RYDER SYSTEM, INC.
Dated as of August 20, 1997
TABLE OF CONTENTS
ARTICLE ONE - BUSINESS CONVEYANCE 2
1.1 SALE OF SHARES........................................................................2
1.2 CONVEYANCE OF AFFILIATED RIGHTS.......................................................3
1.3 RETAINED MATTERS......................................................................3
1.4 UNADJUSTED PURCHASE PRICE.............................................................4
1.5 POST-CLOSING PURCHASE PRICE ADJUSTMENTS...............................................4
1.6 ADJUSTMENTS...........................................................................5
ARTICLE TWO - CLOSING
2.1 CLOSING DATE..........................................................................6
2.2 DELIVERIES OF RSI.....................................................................6
2.3 DELIVERIES OF ALLIED PARTIES..........................................................6
ARTICLE THREE - MISCELLANEOUS COVENANTS
3.1 CONFIDENTIALITY.......................................................................7
3.2 ACCESS TO PREMISES, RECORDS, PROPERTIES, SUPPLIERS, CUSTOMERS AND EMPLOYEES;
DELIVERY OF INTERIM FINANCIAL STATEMENTS............................................8
3.3 PUBLICITY.............................................................................9
3.4 ACQUISITION PROPOSALS.................................................................9
3.5 APPROVALS AND CONSENTS................................................................9
3.6 EXPENSES..............................................................................9
3.7 RESTRICTIVE COVENANT AGREEMENT........................................................9
3.8 COSTS OF TERMINATION OF EMPLOYEES....................................................10
3.9 RESIGNATION OF OFFICERS AND DIRECTORS................................................10
3.10 CONVEYANCE, LICENSE AND USE OF INTELLECTUAL PROPERTY RIGHTS..........................10
3.11 MISCELLANEOUS ANCILLARY AGREEMENTS...................................................12
3.12 MISCELLANEOUS TAX RELATED COVENANTS..................................................12
i
3.13 ERISA MATTERS........................................................................15
3.14 COOPERATION OF THE PARTIES...........................................................16
3.15 FURTHER ACTION.......................................................................16
3.16 ADVISE OF CHANGES....................................................................16
3.17 CONSENT OF ACCOUNTANTS...............................................................16
3.18 COPIES OF TITLES.....................................................................17
3.19 *****................................................................................17
3.20 WORKERS' COMPENSATION CLAIMS.........................................................17
3.21 NOTICE OF PROCEEDINGS................................................................17
3.22 MISCELLANEOUS PROPERTY COVENANTS.....................................................17
ARTICLE FOUR - REPRESENTATIONS AND WARRANTIES OF RSI 17
4.1 VALIDITY.............................................................................17
4.2 ENTITY STATUS........................................................................18
4.3 AUTHORITY............................................................................18
4.4 NO RSI CONFLICT......................................................................18
4.5 CAPITAL STRUCTURE....................................................................18
4.6 TITLE TO SHARES......................................................................19
4.7 RECORDS..............................................................................19
4.8 TAXES................................................................................20
4.9 ACCOUNTS AND NOTES RECEIVABLE........................................................23
4.10 FINANCIAL STATEMENTS.................................................................23
4.11 BANK ACCOUNTS........................................................................23
4.12 LIABILITIES..........................................................................23
4.13 ABSENCE OF CHANGES...................................................................24
4.14 LITIGATION AND PROCEEDINGS...........................................................26
4.15 CUSTOMERS AND ACCOUNTS...............................................................26
4.16 BUSINESS ACTIVITIES AND TRANSACTIONS OF ACQUIRED RYDER ENTITIES......................26
4.17 PERMITS..............................................................................27
4.18 ENVIRONMENTAL........................................................................27
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission, requesting confidential treatment.
ii
4.19 INSURANCE............................................................................29
4.20 CONTRACTS AND COMMITMENTS............................................................29
4.21 LICENSES; INTELLECTUAL PROPERTY......................................................30
4.22 TITLE TO PROPERTIES..................................................................30
4.23 REPRESENTATIONS AND COVENANTS REGARDING REAL PROPERTY................................31
4.24 TITLE TO AND CONDITION OF PERSONAL PROPERTY..........................................33
4.25 INVENTORIES..........................................................................34
4.26 DIRECTORS OR OFFICERS................................................................34
4.27 COMPENSATION STRUCTURE...............................................................34
4.28 EMPLOYEE BENEFITS....................................................................34
4.29 LABOR-RELATED MATTERS................................................................37
4.30 TRANSACTIONS WITH MANAGEMENT.........................................................38
4.31 APPROVALS AND CONSENTS...............................................................38
4.32 GUARANTEES; NO DEFAULT...............................................................38
4.33 DUE DILIGENCE RESPONSE...............................................................38
4.34 EMPLOYMENT EQUITY....................................................................38
4.35 OPERATING LICENSES...................................................................39
4.36 TRANSFER OF BUSINESS.................................................................39
4.37 SALE OF THE NLLC MEMBERSHIP INTERESTS................................................39
4.38 XXXXX LITIGATION.....................................................................39
ARTICLE FIVE - REPRESENTATIONS AND WARRANTIES OF THE ALLIED PARTIES
5.1 VALIDITY.............................................................................40
5.2 CORPORATE STATUS AND AUTHORITY.......................................................40
5.3 NO CONFLICT..........................................................................40
5.4 APPROVALS AND CONSENTS...............................................................40
5.5 ASSURANCE............................................................................40
5.6 REPRESENTATIONS AND WARRANTIES.......................................................40
ARTICLE SIX - CONDUCT OF BUSINESS PENDING CLOSING 41
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6.1 CONDUCT OF BUSINESS..................................................................41
6.2 MAINTENANCE OF PROPERTIES, LICENSES AND CONTRACTS....................................41
6.3 INSURANCE............................................................................41
6.4 ISSUANCE OF SECURITIES...............................................................41
6.5 DIVIDENDS............................................................................41
6.6 AMENDMENT OF CHARTER; CORPORATE EXISTENCE............................................42
6.7 NO ACQUISITIONS......................................................................42
6.8 DISPOSITION OR ENCUMBRANCE OF ASSETS.................................................42
6.9 COMPENSATION AND OTHER EMPLOYMENT TERMS..............................................42
6.10 BANKING ARRANGEMENTS.................................................................42
6.11 INDEBTEDNESS.........................................................................42
6.12 PAYMENT OF DEBT......................................................................42
6.13 BENEFIT PLANS........................................................................43
6.14 BOOKS AND RECORDS....................................................................43
6.15 OTHER ACTIONS........................................................................43
6.16 CONTRACTUAL ARRANGEMENTS.............................................................43
6.17 NO INCONSISTENT ACTION...............................................................43
6.18 OBLIGATION TO NOTIFY.................................................................43
6.19 COMPLETION OF SCHEDULES..............................................................43
6.20 ADEQUATE CASH BALANCES...............................................................44
ARTICLE SEVEN - CONDITIONS TO OBLIGATIONS OF THE ALLIED PARTIES 44
7.1 SATISFACTION OF THE ALLIED PARTIES WITH RESULTS OF DUE DILIGENCE.....................44
7.2 REPRESENTATIONS AND WARRANTIES.......................................................44
7.3 PERFORMANCE OF AGREEMENTS............................................................44
7.4 CERTIFICATES, RESOLUTIONS............................................................44
7.5 REGULATORY APPROVALS.................................................................44
7.6 RESTRICTIVE COVENANT AGREEMENT AND OTHER AGREEMENTS..................................45
7.7 NO ACTIONS; PROCEEDINGS OR INJUNCTIONS...............................................45
7.8 CONSENTS AND APPROVALS OF THIRD PARTIES..............................................45
iv
7.9 BOOKS AND RECORDS......................................................................45
7.10 APPROVAL BY RYDER'S BOARDS OF DIRECTORS..............................................45
7.11 TERMINATION OF CONTRACTS.............................................................45
7.12 DELIVERY OF SCHEDULES................................................................45
ARTICLE EIGHT - CONDITIONS TO OBLIGATIONS OF RSI 45
8.1 REPRESENTATIONS AND WARRANTIES.......................................................45
8.2 PERFORMANCE OF AGREEMENTS............................................................46
8.3 CONSENTS AND APPROVALS OF THIRD PARTIES..............................................46
8.4 APPROVAL BY THE ALLIED PARTIES' BOARD OF DIRECTORS...................................46
8.5 APPROVAL BY ALLIED'S LENDERS.........................................................46
8.6 REGULATORY APPROVALS.................................................................46
8.7 NO ACTIONS, PROCEEDINGS OR INJUNCTIONS...............................................46
ARTICLE NINE - INDEMNIFICATION
9.1 INDEMNIFICATION BY RSI...............................................................46
9.2 LIMITATIONS ON RECOVERY..............................................................48
9.3 INDEMNIFICATION BY THE ALLIED PARTIES................................................49
9.4 LIMITATION ON RSI'S RECOVERY.........................................................49
9.5 THIRD PARTY CLAIMS...................................................................49
9.6 *****................................................................................50
ARTICLE TEN - TERMINATION OF OBLIGATION TO CLOSE
10.1 TERMINATION OF THE ALLIED PARTIES' OBLIGATION TO CLOSE...............................50
10.2 TERMINATION OF RSI'S OBLIGATION TO CLOSE.............................................50
ARTICLE ELEVEN - MISCELLANEOUS
11.1 SURVIVAL OF REPRESENTATIONS..........................................................50
11.2 NOTICES..............................................................................51
11.3 ENTIRE AGREEMENT.....................................................................52
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission, requesting confidential treatment.
v
11.4 WAIVER; AMENDMENT....................................................................52
11.5 COUNTERPARTS, HEADINGS, ETC..........................................................52
11.6 SUCCESSORS AND ASSIGNS...............................................................52
11.7 GOVERNING LAW........................................................................52
11.8 SEVERABILITY; PARTIAL ENFORCEMENT....................................................53
11.9 CURRENCY.............................................................................53
11.10 EXHIBITS AND SCHEDULES...............................................................53
11.11 TIME.................................................................................53
11.12 ACCOUNTING PRINCIPLES................................................................53
11.13 THIRD PARTY BENEFICIARIES............................................................53
PARTIAL LIST OF ANCILLARY DOCUMENTS
Exhibit A Restrictive Covenant Agreement
Exhibit B Non-Disclosure and Trade Secret Agreement
Exhibit C Work for Hire/Ownership Assignment Agreement
Exhibit D Confidentiality and No-Hire Agreement
Exhibit E Marketing and Transportation Contract
Exhibit F Transition Services Contract
Exhibit G Transportation Services Agreement
Exhibit H Right of First Refusal and/or Right of First Negotiation Agreement
vi
LIST OF SCHEDULES
----------------------- ------------------------------------------------------------------------
SCHEDULE # TITLE
----------------------- ------------------------------------------------------------------------
1.2 Affiliated Rights
1.3 - Part 1 Retained Assets
1.3 - Part 2 Retained Liabilities, Contracts and Executory Obligations
1.4 - Part 1 March 31, 1997 Balance Sheet
1.4 - Part 2 Unadjusted Purchase Price Allocations
3.8 - Part 1 Ryder Severance Agreements
3.8 - Part 2 Ryder Accrued Bonuses
3.8 - Part 3 Ryder Employees Owned Bonus Payments
3.8 - Part 4 Current Severance or Bonus Contracts
3.10(a) Intellectual Property Matters to be Accomplished by RSI prior to
Closing
3.10(b) Acquired Ryder Entity employees, personnel and contractors to sign
Non-Disclosure and Trade Secret Protection Agreements
3.10(c) Persons and Entities to Deliver a Work for Hire/Ownership Assignment
Agreements
3.10(d) Persons and Entities to deliver a Confidentiality and No Hire
Agreements
4.2 Direct or Indirect Subsidiaries of RACS and RCMC
4.3(j) Service Contracts
4.3(k) Special Assessments
4.5(b) Capital stock or membership interests of the Acquired Ryder Entities
other than RACS and RCMC
4.5(c) Convertible or Exchangeable Securities, Other Equity Interests or
Other Rights
4.5(d) Agreements Restricting Transfer of Shares of Capital Stock or
Membership Interests
4.8(c) Delinquencies, Deficiencies and Audits
4.8(e) Taxes Payable
4.8(f) Tax Returns
4.8(g) Tax Elections
4.8(h) Tax Exemption Jurisdictions
4.8(j) Tax Basis Information
4.8(k) Property Tax Information
4.10 - Part 1 Financial Statements
4.10 - Part 2 March 31, 1997 Adjustments
4.11 Bank Accounts/Certificates of Deposit
4.12 - Part 1 Liabilities - Part 1
4.12 - Part 2 Liabilities - Part 2
4.12 - Part 3 Liabilities - Part 3
4.13 Absence of Changes
4.14 Litigation
4.15 Customers and Accounts
4.16 - Part 1 Business Conveyances
4.16 - Part 2 Affiliated Entities
4.16 - Part 3 Unrelated Business Activities
4.17(a) Permits, Licenses, etc.
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4.18(d) Environmental Agreements with Governmental Authorities
4.18(g) Asbestos Locations
4.19 Insurance
4.20 Material Contracts and Commitments
4.21(a) - Part 1 Owned Intellectual Property
4.21(a) - Part 2 Licensed or Leased Intellectual Property
4.21(b) Agreements regarding Intellectual Property, Trade Secrets, and
Confidential Information
4.22 - Part 1 Owned Real Property
4.22 - Part 2 Agreements Regarding Leased Real Property
4.22 - Part 3 Other Real Property Matters
4.23 - Part 1 Agreements Regarding Real Property
4.23 - Part 2 Other Ryder Lease Related Agreements
4.23 - Part 3 Real Estate Fee Commitments
4.24(a) Title to and Condition of Personal Property
4.24(c)(i) Ryder Leases of Transportation Equipment
4.24(c)(ii) Owners/Operators of Equipment and Related Contracts
4.26 Directors and Officers of Acquired Ryder Entries
4.27 Compensation Structure
4.28(a) Employee Benefit Plans
4.28(b) Benefit Plan Qualification
4.28(c)(i) ERISA Compliance
4.28(c)(ii) ERISA Liability
4.28(c)(iii) Plan Compliance with Laws/Pending or Threatened Claims
4.28(c)(iv) "Multi-Employer" Plans
4.28(c)(v) Plan Contributions
4.28(c)(vii) Defined Benefit Plans/"Single Employer" Plans
4.28(d) Post Employment Benefits
4.28(e) Plan Commitments
4.29 - Part 1 Union Agreements
4.29 - Part 2 Summary of Grievances
4.30 Transactions with Management
4.31 Approvals and Consents
4.32 Guarantees
4.33 Due Diligence Response Materials
4.35 Material Operating Licenses
4.36 Transfer of Business
5.4 Approvals and Consents
6.4 Issuance of Securities
6.13 Benefit Plans
7.11 Termination of Contracts
viii
ACQUISITION AGREEMENT
This Acquisition Agreement (this "Agreement"), dated as of August 20,
1997 (the "Effective Date"), is entered into by and among Ryder System, Inc., a
Florida corporation ("RSI"), Allied Holdings, Inc., a Georgia corporation
("Allied"), A H Acquisition Corp., a Georgia corporation ("AAC"), Canadian
Acquisition Corp., a Georgia corporation ("CAC") and Axis National Incorporated,
a Georgia corporation ("Axis").
APPENDIX A contains a master list of each defined term used in this
Agreement and either the definition of the term or a reference to the Section of
this Agreement where the definition is located. The following terms are
sometimes used to refer to the parties to this Agreement and to their
affiliates:
/bullet/ "ACQUIRED RYDER ENTITIES" refers collectively to Ryder
Automotive Carrier Services, Inc., a Florida corporation
("RACS"), RC Management Corp., a Delaware corporation
("RCMC"), Ryder Automotive Acquisition LLC, a Georgia limited
liability company ("NLLC") and the following entities, which
are the direct and indirect subsidiaries of RACS or NLLC:
Ryder Automotive Operations, Inc., a Florida corporation
("XXX"); Xxxxx Freight Broker, Inc., a Virginia corporation
("RFB"); QAT, Inc., a Florida corporation ("QAT"); OSHCO,
Inc., a Florida corporation ("OSHCO"); XXX Xxxxx Transport
Inc., a Canadian corporation ("MCL"); Terminal Service Co., a
Washington corporation ("TSC"); RMX, Inc., a Delaware
corporation ("RMX"); Transport Support, Inc., a Delaware
corporation ("TSI"); X.X. Xxxxxxx Driveaway Co., Inc., a
Michigan corporation ("FJB"); Commercial Carriers, Inc., a
Michigan corporation ("CCI") and B&C, Inc. a Michigan
corporation ("B&C").
/bullet/ "RYDER AFFILIATES" refers to RSI and all entities that are
Affiliates (as defined in Section 3.1(b)(iii)) of RSI other
than the Acquired Ryder Entities.
/bullet/ "ALLIED ENTITIES" refers collectively to Allied, AAC, CAC,
Axis and all Affiliates of those entities.
/bullet/ "ALLIED PARTIES" refers collectively to Allied, AAC, CAC, and
Axis.
/bullet/ "PARTIES" refers collectively to RSI and the Allied Parties.
/bullet/ "RYDER" refers collectively to RSI and all Affiliates of RSI.
RECITALS
A. Two components of Ryder's business have been (i) the business of
outbound automotive carriage and ancillary services, in each case related to
finished automobiles and light trucks, in the United States and Canada,
conducted primarily though not exclusively through RACS and its direct and
indirect subsidiaries and MCL, and (ii) the business of providing various
carrier management services for the carriage of automobiles and light trucks in
the secondary (primarily used vehicle) market in the United States and Canada,
conducted primarily though not exclusively through RCMC. These two components of
Ryder's business shall be referred to collectively as the "Conveyed Ryder
Business."
B. The Parties have agreed that Ryder will sell and convey all rights,
benefits and assets of the Conveyed Ryder Business to the Allied Parties
pursuant to the terms of this Agreement. This conveyance shall sometimes be
referred to as the "Business Conveyance."
C. RSI is directly the beneficial and registered owner of all of the
issued and outstanding shares of common stock of RACS and RCMC and all the
outstanding membership interests of NLLC (the "NLLC Membership Interests"). RSI
is, indirectly through RACS, the owner of all of the issued and outstanding
shares of common stock of OSHCO. RSI is, indirectly through RACS and RACS'
wholly owned subsidiary XXX, the owner of all the issued and outstanding shares
of common stock of TSC. RSI is, indirectly through NLLC, the owner of all of the
issued and outstanding shares of common stock of MCL. The shares of common stock
of RACS, RCMC, OSHCO and TSC shall be referred to sometimes in this Agreement as
the "RACS Shares," the "RCMC Shares," the "OSHCO Shares" and the "TSC Shares,"
respectively. The RACS Shares, the RCMC Shares, the OSHCO Shares and the TSC
Shares are collectively referred to as the "Shares". The Shares constitute all
of the issued and outstanding shares of capital stock of RACS, RCMC, OSHCO and
TSC.
D. In order to fully effectuate the Business Conveyance, RSI has agreed
(i) to sell to AAC all of the RACS Shares, (ii) to sell all of the RCMC Shares
to Axis, (iii) to sell all of the NLLC Membership Interests to CAC, (iv) to
cause XXX to sell all of the TSC Shares to Axis, (v) to cause RACS to sell all
of the OSHCO Shares to Axis and (vi) to cause all rights, benefits and assets,
tangible and intangible, used in or necessary to conduct the Conveyed Ryder
Business as it has been conducted by Ryder that are held or owned by a Ryder
Affiliate and not by an Acquired Ryder Entity (such rights, benefits and assets
being referred to as "Affiliated Rights") to be conveyed or transferred whether
by sale, license, sub-license or otherwise, to the Allied Parties at the same
time the Allied Parties acquire the Shares and the NLLC Membership Interests.
E. The transactions contemplated by this Agreement and all other
agreements, contracts, certificates, instruments or other documents that this
Agreement contemplates must be executed and/or delivered in conjunction with
this Agreement ("Ancillary Documents") are referred to as the "Transactions."
In consideration of rights and benefits they will each receive in conjunction
with the Transactions, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:
ARTICLE ONE - BUSINESS CONVEYANCE
1.1 SALES OF SHARES. Subject to the terms and conditions set forth in this
Agreement, at the "Closing" (as defined in Section 2.1), in order to facilitate
the Business Conveyance, (a) RSI shall sell, assign, transfer, convey and
deliver to AAC the RACS Shares, (b) RSI shall sell, assign, transfer, convey and
deliver to Axis the RCMC Shares, (c) RSI shall sell, assign, transfer, convey
and deliver to CAC the NLLC Membership Interests, (d) RSI shall cause XXX to
sell, assign, transfer, convey and deliver to Axis the TSC Shares and (e) RSI
shall cause RACS to sell, assign, transfer, convey and deliver to Axis the
2
OSHCO Shares, in the case of each of these conveyances free and clear of all
"Liens" (as defined in APPENDIX A).
1.2 CONVEYANCE OF AFFILIATED RIGHTS. In addition to the sale of the
Shares and the NLLC Membership Interests described in Section 1.1, in order to
facilitate the Business Conveyance, RSI agrees to convey or transfer to the
Allied Parties all Affiliated Rights at the Closing, except for any Affiliated
Rights that are to be retained by Ryder pursuant to Section 1.3. RSI shall cause
any Ryder Affiliate that owns or has rights to an Affiliated Right to convey or
transfer the Affiliated Right to one of the Acquired Ryder Entities. SCHEDULE
1.2 contains a description of all the Affiliated Rights of which RSI has
Knowledge as of the Effective Date (provided that RSI's obligations under this
Section 1.2 extend to Affiliated Rights that are not included on SCHEDULE 1.2).
RSI agrees to give the Allied Parties the opportunity to specify the particular
Acquired Ryder Entity to which each Affiliated Right will be transferred;
provided, however, that if the transfer of the Affiliated Right to an Acquired
Ryder Entity designated by the Allied Parties would result in adverse legal or
tax consequences to RSI, and if there are one or more Acquired Ryder Entities
that could receive the Affiliated Rights without causing the adverse
consequences, then the Allied Parties shall designate the alternative Acquired
Ryder Entity to receive the Affiliate Rights. The term "Business Assets" shall
refer collectively to the Affiliated Rights and all rights, assets and benefits,
tangible and intangible, owned or held by the Acquired Ryder Entities. To the
extent that any Business Assets (for example, contract or lease rights) are also
associated with or used in a material manner in business activities of Ryder
other than the Conveyed Ryder Business, then, unless the Parties mutually agree
to do otherwise (i) if such Business Assets are susceptible of transfer, RSI
shall convey and transfer or cause the conveyance and transfer of such Business
Assets to the Allied Parties and retain a license or lease to use such Business
Assets for non-Conveyed Ryder Business purposes and for purposes that are not in
violation of Ryder's obligations under the Restrictive Covenant Agreement, or
(ii), if the Business Assets are not susceptible of transfer, RSI shall license
or lease the Allied Parties such Business Assets and RSI shall agree, in the
license or lease, not to use such Business Assets for Conveyed Ryder Business
purposes or for purposes that are in violation of Ryder's obligations under the
Restrictive Covenant Agreement. The Business Conveyance shall include, among
other things, warranty obligations of suppliers to refund, pay, repair, replace
or remediate in connection with defects or other warranty claims arising in
connection with the Acquired Ryder Entities, including all pending refunds and
recoveries, however, Ryder shall be entitled to receive and/or retain any
refunds or reimbursements from any state environmental trust fund relating to
properties retained by RSI after the Closing or properties with respect to which
RSI has an indemnity obligation under Article 9.
1.3 RETAINED MATTERS. Notwithstanding the sale of the Shares and the
NLLC Membership Interests and the Business Conveyance, the Parties agree that
the assets set forth on SCHEDULE 1.3 - PART 1 and the liabilities, contracts,
and executory obligations set forth on SCHEDULE 1.3 - PART 2 shall be retained
or assumed by RSI or a Ryder Affiliate and that RSI shall take such actions
prior to Closing as Allied, on behalf of the Allied Parties, shall reasonably
require to ensure that such assets, liabilities, contracts and executory
obligations ***** set forth in SCHEDULE 1.3 PART 1 and SCHEDULE 1.3 - PART 2
(collectively, the "Retained Matters") are diverted from the Acquired Ryder
Entities prior to Closing and are not transferred to the Acquired Ryder
Entities. RSI shall be responsible for and shall bear the costs of such actions
and shall compensate Allied for any adverse tax consequence arising therefrom.
*****
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission, requesting confidential treatment.
3
1.4 UNADJUSTED PURCHASE PRICE. Subject to the Purchase Price Adjustment
provided for in Section 1.5 and Section 7.1, in consideration of the Business
Conveyance, at the Closing, the Allied Parties shall pay to RSI an "Unadjusted
Purchase Price" in immediately available funds in an amount that is equal to
$7,400,000 above RSI's investments in and advances to RCMC, RACS and NLLC ("Net
Worth") as shown on an "Interim Closing Balance Sheet", with both the Net Worth
determination to be made and Interim Closing Balance Sheet to be prepared in
good faith, in accordance with generally accepted accounting principles
applicable to the United States of America, consistently applied ("GAAP") by RSI
and submitted to Allied for review and comment five (5) days prior to the
Closing Date. The Interim Closing Balance Sheet shall be based on the financial
condition of RACS, RCMC and NLLC as of the most recent month-end for which the
RACS, RCMC and NLLC accounting records are closed. If the Unadjusted Purchase
Price were calculated based on the Net Worth of RACS, RCMC and NLLC as shown on
the March 31, 1997 Balance Sheet of RACS (the "March 31 Balance Sheet") which is
attached as SCHEDULE 1.4 - PART 1, the Unadjusted Purchase Price would be
$114,500,000 to be allocated as set forth on SCHEDULE 1.4 - PART 2.
1.5 POST-CLOSING PURCHASE PRICE ADJUSTMENTS.
(a) PREPARATION OF FINAL CLOSING BALANCE SHEET AND CLOSING
STATEMENT. As promptly as practicable after the Closing Date (but in no event
later than sixty (60) days after the Closing Date), RSI and its auditors, in
close consultation with Allied and its auditors and upon completion of a
post-Closing audit of RACS, RCMC and NLLC by RSI's auditors, shall cause a
"Final Closing Balance Sheet" to be prepared as of the Closing Date in
accordance with GAAP and, in addition, shall cause a "Closing Statement" to be
prepared. The Closing Statement will indicate RSI's calculation of the post
Closing "Purchase Price Adjustment" to be paid or received by the Allied
Parties. The Purchase Price Adjustment will be the amount, if any, by which the
"Final Purchase Price" differs from the Unadjusted Purchase Price. The "Final
Purchase Price" shall be equal to the sum of $7,400,000 plus the consolidated
Net Worth of RACS, RCMC and NLLC as shown on the Final Closing Balance Sheet.
Any adjustment to the allocation set forth on SCHEDULE 1.4 as a result of
differences between the Unadjusted Purchase Price and the Final Purchase Price
shall be placed on the allocation ascribed to the purchase of the RACS Shares.
(b) NOTICE OF DISPUTE OR AGREEMENT. Within thirty (30) days after
the Allied Parties' receipt of the Final Closing Balance Sheet, the Closing
Statement and the calculation of the Final Purchase Price, Allied will provide
RSI with written notice indicating whether Allied agrees or disagrees with the
Final Closing Balance Sheet, the Closing Statement and the calculation of the
Final Purchase Price. If Allied disputes any of the above, such notice will
include Allied's calculation of each disputed amount and the basis for Allied's
disagreement with such amount as calculated by RSI. If Allied agrees with the
Final Closing Balance Sheet, the Closing Statement and the calculation of the
Final Purchase Price or if Allied fails to deliver to RSI the written notice
within the thirty day period, the Closing Statement, the Final Closing Balance
Sheet, and the calculation of the Final Purchase Price will be deemed final.
(c) DISPUTE RESOLUTION. Within ten (10) days after RSI's receipt
of any notice of disagreement with the Final Closing Balance Sheet, the Closing
Statement or the calculation of the Final
4
Purchase Price, the Allied Parties and RSI will begin good faith negotiations to
resolve such disagreement. If the Allied Parties and RSI are unable to resolve
such disagreement within ten (10) days after such negotiations begin, then they
will submit such disagreement for resolution to Deloitte & Touche LLP, Coopers &
Xxxxxxx L.L.P., Price Waterhouse LLP or Ernst & Young LLP (the "Settlement
Auditor"), with the choice of the specific Settlement Auditor requiring the
mutual agreement of Allied and RSI. Allied and RSI will cooperate with the
Settlement Auditor and will proceed in good faith to cause the Settlement
Auditor to resolve the disagreement within thirty (30) days after the
disagreement is submitted to the Settlement Auditor. All fees and expenses of
the Settlement Auditor will be paid by the Party whose calculation of the Final
Purchase Price was farthest from the Final Purchase Price determined by the
Settlement Auditor.
(d) DETERMINATION OF SETTLEMENT AUDITOR. The Settlement Auditor,
in its sole discretion, will determine (a) the nature and extent of the
participation by the Allied Parties, RSI, and their respective Representatives
(as defined in Section 3.2(a)) in connection with the resolution of any
disagreement submitted to the Settlement Auditor, (b) the nature and extent of
information that the Allied Parties and RSI may submit to the Settlement Auditor
for consideration in connection with such resolution, and (c) the personnel of
the Settlement Auditor who will review such information and resolve such
disagreement. The Settlement Auditor's resolution of the underlying disagreement
will be reflected in a written report which will be delivered promptly to, and
will be final and binding upon, Allied and RSI. The Closing Balance Sheet, the
Final Closing Statement and the calculation of the Final Purchase Price will be
adjusted to reflect any such resolution by the Settlement Auditor and, as
adjusted, will be deemed final and binding upon and shall not be subject to
appeal by the Parties.
(e) PAYMENT OF PURCHASE PRICE ADJUSTMENT. Within ten (10) business
days after the earlier to occur of (a) the Parties' agreement with respect to
the Final Closing Balance Sheet, the Closing Statement and the calculation of
the Final Purchase Price, or (b) the delivery of the report of the Settlement
Auditor as provided in Section 1.5(d), to the extent that there is a positive
Purchase Price Adjustment, the Allied Parties shall pay the Purchase Price
Adjustment, or, to the extent that the Final Purchase Price is less than the
Unadjusted Purchase Price, RSI shall pay the Allied Parties the difference. Any
such payment will be made by wire transfer of immediately available funds to
such account as the Party entitled to receive such payment specifies in writing
to the Party required to make such payment.
1.6 ADJUSTMENTS. In preparing the Interim Closing Balance Sheet, the
Final Closing Balance Sheet and the Closing Statement and in determining the
Unadjusted Purchase Price and the Final Purchase Price, the values (amounts) of
assets and liabilities accounted for in the March 31 Balance Sheet, including
reserves, shall be based upon the March 31 Balance Sheet, as updated to reflect
the results of operations in subsequent periods in accordance with GAAP
consistently applied, and no adjustment to the value of an asset, liability or
reserve contained or reflected in the March 31 Balance Sheet which has the
direct or indirect effect of increasing the Net Worth of RACS and/or RCMC or
their subsidiaries (except to reflect profits or losses from subsequent
operations, the Transactions, the settlement or final determination of third
party claims, arms-length transactions with unaffiliated third parties or with
respect to non-extraordinary adjustments to reserves for legal expenses,
restructuring costs, operating taxes, cargo damages and non-material
miscellaneous reserves) shall be made nor shall such adjustments, if any, be
included in the determination of the Unadjusted Purchase Price or Final Purchase
Price.
5
ARTICLE TWO - CLOSING
2.1 CLOSING DATE. Subject to the fulfillment of the conditions
precedent specified in Articles Seven and Eight, the Transactions shall be
consummated at a closing (the "Closing") to be held at 10:00 a.m. local time at
the offices of Xxxxxxxx Xxxxxxx LLP in Atlanta, Georgia on the earlier of
December 31, 1997 or on a date mutually agreeable to the Parties, within ten
(10) days (or the next business day if such tenth day is not a business day)
after the date on which the closing of the Allied Parties' financing
arrangements with respect to the Transactions has occurred. The date and time at
which the Transactions are consummated shall be referred to as the "Closing
Date". In the event that, prior to the Closing Date but after the Effective
Date, the Allied Parties become aware of or are advised of facts or events
relating to the Conveyed Ryder Business or the Acquired Ryder Entities that have
had or could reasonably be expected to have a Material Adverse Effect, then the
Allied Parties, in addition to being entitled to exercise any other rights under
this Agreement, in its sole discretion, may elect to reschedule the Closing Date
to a later date in order to address any issues raised by the facts or events. If
the Allied Parties elect to reschedule the Closing Date as provided in the
preceding sentence, then they shall give RSI, prompt written notice setting
forth (a) their election to reschedule the Closing Date, (b) the rescheduled
Closing Date, and (c) the facts or events of which they have become aware of or
which were disclosed to it leading to its decision to reschedule the Closing
Date, PROVIDED, HOWEVER, in no event shall the rescheduled Closing Date be later
than December 31, 1997.
2.2 DELIVERIES OF RSI. At the Closing, RSI shall deliver to the Allied
Parties, in form and substance satisfactory to the Allied Parties, the
following:
(a) Stock certificates representing the Shares, which certificates
shall be duly endorsed in blank for transfer or accompanied by properly executed
stock powers, certificates representing the NLLC Membership Interests, which
certificates shall be duly endorsed in blank for transfer, and any documentation
reasonably requested by the Allied Parties that is necessary or appropriate to
transfer all of the Shares and the NLLC Membership Interests in accordance with
Section 1.1 and to consummate the Transactions.
(b) Evidence of conveyance or transfer to the Allied Parties (for
example, a xxxx of sale, an assignment of rights), effective at the Closing,
free and clear of any Liens, of any Business Assets not already held or owned by
any Acquired Ryder Entity as of the Closing.
(c) All of the documents, instruments, certificates and schedules
required to be delivered under Sections 1.2 and 1.3 and Article Seven of this
Agreement.
2.3 DELIVERIES OF THE ALLIED PARTIES. At the Closing, the Allied
Parties shall pay or deliver or cause to be paid or delivered, as the case may
be, to RSI in form and substance satisfactory to RSI, the following:
(a) The Unadjusted Purchase Price as provided in Section 1.4.
(b) All of the documents, instruments and certificates required
to be delivered under Article Eight of this Agreement and any other
documentation reasonably requested by RSI which is necessary or appropriate to
consummate the Transactions.
6
ARTICLE THREE - MISCELLANEOUS COVENANTS
3.1 CONFIDENTIALITY.
(a) For purposes of this Section 3.1, the Allied Parties shall be
deemed a single Party. The Parties acknowledge that they have been and will
continue to be exposed to or provided with confidential and proprietary
information about the Transactions and the business of Allied and the business
of Ryder. Accordingly, each Party hereby agrees that it will not for any purpose
(other than as expressly contemplated by this Agreement or except as the other
Party may otherwise agree in writing) use or disclose to any person or entity
(i) any "Trade Secret" of the other Party or any Affiliate of the other Party
for as long as the information continues to constitute a Trade Secret, or (ii)
any "Confidential Information" of the other Party or any Affiliate of the other
Party for a period of three (3) years following the Closing Date or the date on
which the obligations to close have terminated, as the case may be. The
confidentiality obligations under this Section shall not apply to information
that is common knowledge within the vehicle transport industry or that is
legally accessible to the public without confidentiality restriction.
(b) The following terms shall have the following meanings when
used in this Agreement:
(i) "TRADE SECRETS" of a person or entity means information
or data of or about that person or entity, including, but not limited to,
technical or non-technical data, formulas, patterns, compilations, programs,
devices, methods, techniques, drawings, processes, financial data, financial
plans, product plans, pricing or operational methodology, or lists of actual or
potential customers, clients, suppliers, distributees, or licensees, that: (i)
derive economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from their disclosure or use; and (ii) are the subject of
efforts that are reasonable under the circumstances to maintain their secrecy.
(ii) "CONFIDENTIAL INFORMATION" of a person or entity means
non-public information or data of or about that person or entity that is not a
Trade Secret for purposes of the definition in (i), but with respect to which
the person or entity has a reasonable expectation that such information or data
shall be maintained in confidence. The Parties agree that the terms and
conditions of this Agreement shall be deemed "Confidential Information" of each
Party except to the extent that those terms and conditions are publicly
accessible as part of a document filed with a Governmental Authority.
(iii) An "AFFILIATE" of a business entity means any
corporation, partnership, limited liability entity or other entity or enterprise
that, directly or indirectly, is controlled by, controls or is under common
control with the entity. For purposes of the preceding sentence, the word
"control" (including the terms "controlling," "controlled by" and "under common
control with") shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of an entity or
enterprise, whether through the ownership of voting securities or partnership
interests, by contract or otherwise.
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3.2 ACCESS TO PREMISES, RECORDS, PROPERTIES, SUPPLIERS, CUSTOMERS,
REPRESENTATIVES AND EMPLOYEES; DELIVERY OF INTERIM FINANCIAL STATEMENTS.
(a) During the period from the Effective Date through the Closing
Date (the "Pre-Closing Period"), RSI agrees to permit, or cause the Acquired
Ryder Entities and shall use reasonable efforts to cause any other relevant
person or entity to permit, the Allied Parties and their "Representatives"
(defined as representatives, agents, advisors, consultants, contractors, counsel
and accountants), to have reasonable access at all reasonable times during
normal business hours to all information, documents, facilities, equipment,
contracts, business records, customers, suppliers, and Representatives of or
pertaining to the Acquired Ryder Entities, other than the Retained Assets, and
the Conveyed Ryder Business, and to furnish to the Allied Parties and their
Representatives such financial and operating data and other information with
respect to the Conveyed Ryder Business, properties, liabilities and assets of
the Acquired Ryder Entities, other than the Retained Assets, and the Conveyed
Ryder Business, as the Allied Parties may reasonably request. RSI agrees to
cause the respective officers and employees of each Acquired Ryder Entity and
any relevant Ryder Affiliate to cooperate with all reasonable requests by the
Allied Parties and their Representatives in order to enable the Allied Parties
to become fully informed about the Conveyed Ryder Business and the earnings,
financial condition, prospects, properties, assets, liabilities and obligations
of the Acquired Ryder Entities, other than the Retained Assets. Any such access
and inquiry shall be conducted in a reasonable manner so as not to disrupt the
conduct of business, and Ryder shall not be required to utilize personnel at
premium or overtime pay in connection with fulfilling their obligations under
this Section 3.2(a).
(b) During the Pre-Closing Period, RSI agrees to permit, and to
cause the Acquired Ryder Entities and shall use reasonable efforts to cause any
other relevant person or entity to permit, the Allied Parties and their
Representatives to talk to and meet with, at reasonable times and after giving
reasonable notice to RSI of their intention to do so, any Governmental Authority
and the suppliers, customers, employees, independent contractors and
Representatives of the Acquired Ryder Entities and any Ryder Affiliate that has
been actively involved in the Conveyed Ryder Business other than the Retained
Assets.
(c) RSI shall prepare and deliver to Allied, no later than
forty-five (45) days after the close of each 1997 calendar quarter until the
Closing occurs, quarterly and year-to-date financial statements, consisting of a
balance sheet and income statement, for RACS, RCMC and NLLC. RSI shall prepare
and deliver to Allied monthly income statements for July for RACS, RCMC and NLLC
no later than September 15, 1997 and shall prepare and deliver to Allied other
monthly income statements, to the extent prepared, for RACS, RCMC and NLLC
within a reasonable time after their preparation.
(d) Ryder covenants that within five (5) business days after
request of Allied that it shall deliver to Allied executed authorizations of
Ryder directed to all Governmental Authorities designated by Allied, including,
but not limited to the building, health and fire departments of the municipality
in which the Real Properties are situated and other relevant government
authorities and bodies having jurisdiction over the Real Properties, allowing
inspections and the release of details of any "Work Orders" to Allied and
further allowing the release of any other currently available information
requested by Allied to Allied and its attorneys.
8
(e) Within ten (10) days of the execution of this Agreement, RSI
shall produce for the Allied Parties' inspection and copying at the offices of
RACS at Troy, Michigan, the original or duplicate certificates of title for all
transportation equipment owned or leased by the Acquired Ryder Entities.
3.3 PUBLICITY. For purposes of this Section 3.3, the Allied Parties are
deemed a single Party. Each Party through the Closing Date agrees to obtain the
approval of the other Party prior to issuing or cooperating in the issuance of
any press release, or written public statement or announcement or disclosure
with respect to the Transactions; provided, however, that announcements or
disclosures required by any federal, state, provincial, local or foreign law,
regulation, statute or ordinance or any ruling, order, judgment or directive of
any "Governmental Authority" (as defined in Section 4.8(a)(vi)) (the foregoing,
being collectively referred to as "Laws") may be made without the approval of
the other Party if the disclosing Party has provided notice to the other Party
within twenty-four (24) hours of the requirement by the Governmental Authority
and a copy of the announcement or disclosure to the other Party at least three
(3) hours prior to publication and has sought to obtain any protective orders or
similar protections available under Law if the other Party has requested that it
do so.
3.4 ACQUISITION PROPOSALS. RSI shall not, directly or indirectly, (and
RSI shall not allow, encourage or authorize any Acquired Ryder Entity, any Ryder
Affiliate or any Representative to): (a) solicit, initiate or encourage (or
authorize any person or entity to solicit, initiate or encourage) any inquiries,
proposals or offers from any person or entity other than the Allied Parties
relating to (i) any acquisition or purchase of all or a material portion of the
Business Assets, or any equity interest in, or any merger, consolidation or
business combination with any Acquired Ryder Entity, or (ii) any transaction
inconsistent, in whole or in part, with the Transactions; or (b) participate in
any discussions or negotiations regarding, furnish to any person or entity other
than the Allied Parties any information with respect to, or further any effort
or attempt by any person to do or seek any of the foregoing. RSI will promptly
notify the Allied Parties if it becomes aware of any such discussions,
inquiries, proposals, or offers. The obligations of RSI in this Section 3.4
shall expire at the earlier to occur of the Closing Date or the date on which
the obligations to close have terminated.
3.5 APPROVALS AND CONSENTS. Each Party agrees with the others that it
will cooperate and use its reasonable best efforts to give all notices and
obtain as soon as is reasonably practicable all "Consents" (as defined in
APPENDIX A) required for consummation of the Transactions.
3.6 EXPENSES. RSI will pay all fees and expenses, including
Representative fees, incurred by it or any Acquired Ryder Entity or Ryder
Affiliate in connection with this Agreement and the Transactions. The Allied
Parties will pay all fees and expenses, including Representative fees, incurred
by them in connection with this Agreement and the Transactions. Notwithstanding
anything to the contrary in this Agreement, from and after the date of this
Agreement, without the express prior written consent of the Allied Parties for
RSI to do otherwise, RSI shall ensure that no Acquired Ryder Entity is billed
for or otherwise rendered responsible for any fees or expenses in connection
with the Transactions.
3.7 RESTRICTIVE COVENANT AGREEMENT. At the Closing, as a material
component of the Transactions, the Allied Parties and RSI shall enter into a
Restrictive Covenant Agreement (the "Restrictive Covenant Agreement") in a form
that has been agreed upon by the Parties.
9
3.8 COSTS OF TERMINATION OF EMPLOYEES. RSI shall be responsible for up
to fifty percent (50%) of the cost arising from termination of any and all
Acquired Ryder Entity employees whose employment is terminated (or caused to be
terminated by an Acquired Ryder Entity) by an Allied Entity (whether expressly
or constructively) within one hundred and eighty (180) days after the Closing
Date provided, however, that the Allied Parties shall provide to RSI within
ninety (90) days of the Closing Date a list of those employees whose employment
it has or anticipates terminating within the one hundred and eighty (180) day
period. Without limiting the generality of the foregoing, "cost" shall include
severance payments, payments in lieu of notice or wages paid during notice,
benefit replacement or continuation payments (including pension), termination
pay, and the like, whether arising from legislation, contract or equity, and,
with respect to Canadian severance payments, "cost" also shall include any legal
fees, interest, penalties, tariffs or the like. Allied shall be entitled to rely
upon its own good faith legal advice regarding Canadian severance package
entitlement and RSI shall be bound by Allied's findings in that regard. The
total amount of cost RSI shall be required to bear under the first sentence of
this Section 3.8 shall not exceed Two Million Five Hundred Thousand
($2,500,000.00) Dollars. The cost sharing arrangement contemplated in this
Section 3.8 shall be predicated upon the direct payment to the terminated
employee of all monetary entitlement arising from termination. The Final Closing
Balance Sheet shall contain reserves reflecting RSI's obligation under this
Section 3.8. In the event such reserves are excessive, RSI shall receive such
excess within sixty (60) days after the expiration of the one hundred eighty
(180) day period. The Allied Parties or an Acquired Ryder Entity shall be
entitled to engage any terminated Acquired Ryder Entity employee in a part-time
or temporary capacity without affecting the cost sharing arrangement
contemplated above, provided that such engagement does not exceed the equivalent
of an additional ninety (90) business days after the one hundred eighty (180)
day period. Attached to this Agreement as SCHEDULE 3.8 are copies of the form
Ryder severance policies and agreements that Allied will be expected to honor
after the Closing, and Allied hereby agrees to comply with the obligations under
such policies and agreements provided that RSI shall have no obligation to
disclose on SCHEDULE 3.8 the amounts of any stay-on bonuses that RSI is
obligated to pay. Notwithstanding anything to the contrary in any "Ryder
Agreement" or "Allied Agreement" (as defined in Section 4.1 and 5.1,
respectively) and other than the severance payment obligations assumed by Allied
in the immediately preceding sentence or the accrued bonuses described on
SCHEDULE 3.8 - PART 2, RSI shall be and remain responsible for any and all
stay-on bonus payments promised to Acquired Ryder Entity employees by RSI, and
all such employees are identified on SCHEDULE 3.8 - PART 3.
SCHEDULE 3.8 - PART 4 lists each currently in effect contract between
an Acquired Ryder Entity and any employee with respect to severance or bonus
matters and also listed are the severance and bonus amounts (except stay-on
bonus amounts) owed to each such employee. RSI agrees that the pro-rata portion
of any bonuses, severance or other employee benefits earned by all RACS, RCMC
and NLLC employees prior to the Closing will be reflected in the Final Closing
Balance Sheet and the Allied Parties agree that they shall pay or cause the
Acquired Ryder Entities to pay such amounts to the affected employees in
accordance with such contracts. Any amount not paid shall be refunded to RSI.
3.9 RESIGNATION OF OFFICERS AND DIRECTORS. At or prior to the Closing
RSI shall cause each corporate officer and member of the Board of Directors of
each Acquired Ryder Entity to tender his or her resignation as a corporate
officer or a member of the Board of Directors, in a written form specified in
advance by Allied and shall deliver the resignations to Allied at the Closing.
3.10 CONVEYANCE, LICENSE AND USE OF INTELLECTUAL PROPERTY RIGHTS.
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(a) The Parties agree that notwithstanding anything to the
contrary in this Agreement, as a result of the Transactions, the Allied Parties
will own, directly or indirectly, all "Intellectual Property" (as defined below)
owned by an Acquired Ryder Entity or otherwise used within the twelve (12)
months prior to the Effective Date exclusively in the Conveyed Ryder Business.
The Allied Parties agree to grant RSI or another Ryder Affiliate designated by
RSI a no cost license (the "License Back"), with source code access, to use such
Intellectual Property for internal business purposes that do not constitute a
violation of the Restrictive Covenant Agreement and that are not in competition
with or inconsistent with the conveyance of the Conveyed Ryder Business, with
such license to be perpetual, assuming no breach by RSI of the terms of the
License Back, and cost free. The terms of the License Back shall be set forth in
a mutually acceptable license agreement. The Allied Parties agree not to use,
other than as reasonably necessary during a transitional period after Closing,
for trade or marketing purposes, the name "Ryder," any service marks or logos
associated with the name "Ryder" or any variant of such name, service marks or
logos; provided, however, that Allied shall have a reasonable period of time
after the Closing to remove or obscure the Ryder name and any associated service
marks or logos from any vehicles or signage and to begin use of business forms,
business cards and similar items not containing the Ryder name or any associated
marks or logos (up to a maximum period of time post-Closing, (i) with respect to
removal or obscuring of service marks or logos from vehicles, of 360 days, and
(ii) with respect to changing of signs, cessation of use of business forms,
business cards and similar items, and all other matters, of 180 days). Allied
will reimburse RSI for any reasonable costs and expenses arising from Allied's
failure for whatever reason to remove or obscure the Ryder name after the
Closing. For purposes of this Agreement, "Intellectual Property" shall mean
collectively (i) copyrights, copyright registrations or applications, trademarks
and service marks, trademark and service xxxx registrations or applications,
moral rights, and any other rights to any form or medium of expression, (ii)
Trade Secrets, privacy rights, and any other protection for confidential
information or ideas, (iii) patents, patent registrations and patent
applications, (iv) any items, information or theories that are protectable or
registrable under any of the copyright, trademark, patent, Trade Secret,
confidentiality or other similar laws, and (v) any other similar rights or
interests, recognized by applicable law. Without limiting the generality of the
matters set forth in this Section 3.10(a), SCHEDULE 3.10(A) sets forth specific
Intellectual Property matters that RSI shall be required to accomplish prior to
the Closing. Notwithstanding anything to the contrary in this Agreement, RSI
shall not convey any trademark, service xxxx, trademark or service xxxx
registration or application or logo bearing or embodying the name "Ryder" or any
Intellectual Property that constitutes a Retained Matter to the Allied Parties
or any goodwill associated with such items (provided that this provision shall
not impair the conveyance to the Allied Parties of goodwill associated with
Business Assets other than the foregoing marks, logos, names or registrations).
(b) Prior to the Closing, RSI shall use reasonable efforts to
cause those Acquired Ryder Entity employees, personnel and contractors specified
by the Allied Parties on SCHEDULE 3.10(B) to execute and deliver to RSI a
standard form "Non-Disclosure and Trade Secret Protection Agreement" in a form
mutually agreeable to the Parties.
(c) Prior to the Closing, RSI shall use reasonable efforts to
cause those persons and entities identified on SCHEDULE 3.10(C) (which include,
among others, persons and entities that have provided Ryder with computer
software and technology development services) to execute and deliver to RSI a
"Work for Hire/Ownership Assignment Agreement" in a form mutually agreeable to
the Parties.
11
(d) Prior to the Closing, RSI shall use reasonable efforts to
cause those entities identified on SCHEDULE 3.10(D) (which include, among
others, third parties providing outsourcing services to Ryder) to execute and
deliver to RSI a "Confidentiality and No Hire Agreement" in a form mutually
agreeable to the Parties.
3.11 MISCELLANEOUS ANCILLARY AGREEMENTS. At the Closing, the following
additional agreements shall be executed and delivered:
(a) a marketing and transportation contract between a Ryder
logistics subsidiary and Allied in a form mutually agreeable to the Parties.
(b) a transition services contract between Ryder and Allied in a
form mutually agreeable to the Parties providing for Ryder to furnish Allied
with certain transitional services not otherwise the subject of specific
agreement between the Parties for a period of up to 360 days with Ryder
providing such services at an agreed upon price or, in the absence of such
written agreement, at its cost plus a 10% premium;
(c) an agreement between Ryder and Allied for Allied to provide
transportation services in a form mutually agreeable to the Parties; and
(d) an agreement between Ryder and Allied giving Allied a right of
first refusal and/or right of first negotiation to handle services previously
provided by RACS to Ryder in a form mutually agreeable to the Parties.
3.12 MISCELLANEOUS TAX RELATED COVENANTS.
(a) GENERAL TAX UNDERSTANDING AND TAX SHARING AGREEMENTS.
(i) The parties agree that RSI will bear the economic
consequences of all foreign, federal and state Taxes for the periods up to and
including the Closing Date, and that the Acquired Ryder Entities owned by the
Allied Parties will bear the economic consequence of all foreign, federal and
state Taxes for all periods subsequent to the Closing Date. The income of the
Acquired Ryder Entities shall be apportioned to the period up to and including
the Closing Date and the period after the Closing Date by closing the books of
the Acquired Ryder Entities as of the end of the Closing Date. Where returns are
required to be filed for Taxes involving periods that begin before and end after
the Closing Date, the parties shall apportion the Taxes for the period up to and
including the Closing Date and the period after the Closing Date. RSI shall have
the right to retain any net operating loss carryovers or capital loss carryovers
of the Acquired Ryder Entities under Treasury Regulation ss. 1.1502-20(g).
(ii) RSI shall cause any and all tax sharing agreements to
which any of the Acquired Ryder Entities is a party to be terminated effective
as of the Closing Date so that none of the Acquired Ryder Entities (or any other
party thereto) shall have any rights or liabilities thereunder except as set
forth herein. On or before the Closing Date, RSI, in consultation with, and with
the concurrence of, Allied, shall prepare an estimate of all federal and state
Taxes owed for all tax years, and portions of tax years attributable to periods,
ending on or before the Closing Date, and RSI will pay to the Acquired
12
Ryder Entities or the Acquired Ryder Entities shall pay to RSI such estimated
amount, as the case may be. Allied shall cooperate with RSI and shall be
entitled to review and approve the compilation, preparation and filing of final
foreign, federal and state Tax Returns for the Acquired Ryder Entities (which
approval shall not be unreasonablly withheld) by RSI, and RSI shall make a final
adjustment for any difference between the estimated amount paid on or before the
Closing Date and the final amount shown on such Tax Returns no later than the
earlier to occur of (i) sixty (60) days after the date RSI provides all
information necessary to verify the amounts contemplated in this Section 3.12(a)
(including, but not limited to, final Tax Returns for the period up to and
including the Closing Date) or (ii) thirty (30) days following the due date, as
extended, for the filing of such returns, and any such payments shall be
consistent with Section 3.12(a)(i) above. In preparing, calculating, and
compiling the estimated amount of federal and state Taxes, the Tax Returns and
the final adjustment, no attribution of income or expense based upon allocations
between commonly controlled entities shall be made except in accordance with
past practice and GAAP. Any dispute arising under this Section 3.12 shall be
submitted to the Settlement Auditor for resolution.
(b) RETURNS AND REPORTS. RSI shall cause each of the Acquired
Ryder Entities to file any and all returns and reports with respect to Taxes
which are required to be filed for tax periods ending on or before the Closing
Date (a "Pre-Closing Tax Return") and pay all amounts shown to be due on such
Pre-Closing Tax Returns to the appropriate taxing authority. Unless otherwise
agreed to by RSI and Allied, RSI shall cause each of the Acquired Ryder Entities
to file any and all Tax Returns and reports with respect to Income and franchise
Taxes which are required to be filed for tax periods ending after the Closing
(to the extent such tax periods commence before the Closing). Allied shall cause
each of the Acquired Ryder Entities to file any and all Tax Returns and reports
with respect to all Taxes other than Income and franchise Taxes which are
required to be filed for tax periods ending after the Closing (to the extent
such tax periods commence before the Closing). For purposes of the preceding
sentence, RSI shall cooperate with Allied in identifying such Tax Returns.
Allied shall be responsible for filing all Tax Returns for periods beginning
after the Closing. Each party hereby warrants that any information provided to
the other party pursuant to this Section 3.12(b) will be accurate in all
respects, and each party shall indemnify the other party for any losses for
Taxes incurred as a result of any inaccurate information provided hereunder,
which obligation shall continue until the expiration of the applicable statute
of limitations for such Taxes.
(c) TAX BOOKS AND RECORDS.
(i) Each Party shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of Tax
Returns pursuant to this Section and any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the retention and (upon
the other party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making
employees available on a timely and mutually convenient basis to provide
additional information and explanation of any material provided hereunder. RSI
and the Allied Parties agree (A) to retain all books and records with respect to
Tax matters pertinent to the Acquired Ryder Entities relating to any taxable
period beginning before the Closing Date until the expiration of any applicable
statute of limitations (and, to the extent notified by the Allied Parties or
RSI, any extensions thereof) of the respective taxable periods, and to abide by
all record retention agreements entered into with any taxing authority, to the
extent timely notification of any such agreements is made, and (B) to give the
other party reasonable written notice prior to transferring, destroying or
discarding
13
any such material books and records and, if the other party so requests, Allied
or RSI, as the case may be, shall allow the other party to take possession of
such books and records.
(ii) The Allied Parties further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
(iii) The Allied Parties and RSI further agree, upon request,
to provide the other party with all information that either party may be
required to report pursuant to Section 6043 of the Code and all Treasury
Department Regulations promulgated thereunder.
(d) TAX AUDITS; LITIGATION. RSI and the Allied Parties shall
cooperate with each other in the conduct of any audit or other proceedings
involving the Acquired Ryder Entities and each shall execute and deliver such
powers of attorney and other documents as are necessary to carry out the intent
of this subsection. RSI shall, at its own expense, control the preparation of
any audit or the prosecution or defense of any claim, suit or proceeding
relating to any proposed adjustment or claim arising out of a pre-closing tax
period for which RSI shall have filed a Return under Section 3.12(b), IT BEING
UNDERSTOOD that RSI shall not settle or otherwise dispose of any Tax issue which
would set a precedent for later tax periods or has or may reasonably be expected
to have a recurring effect on the Tax liability of the Acquired Ryder Entities
without the prior consent of Allied, which consent shall not be unreasonably
withheld. RSI shall be entitled to the benefits of any refunds and credits and
shall be liable for the payment of any assessments (including, but not limited
to, interest and penalties, if any) resulting from or related to a pre-closing
tax period, if, and to the extent, such refunds, credits or assessments
(including, but not limited to, interest and penalties, if any) are not
reflected on the Closing Balance Sheet.
(e) DEFERRED TAXES. Within sixty (60) days after the Closing Date
and in connection with the preparation of the Final Closing Balance Sheet, RSI
shall prepare and deliver to Allied a deferred tax inventory worksheet (the
"Worksheet") setting forth the amount of deferred taxes for the Acquired Ryder
Entities. It is anticipated that the Worksheet will be based on the Final
Closing Balance Sheet of the Acquired Ryder Entities. To the extent there is any
change in the amount of deferred taxes set forth in the Interim Closing Balance
Sheet and the Final Closing Balance Sheet, the Purchase Price shall be adjusted
in accordance with Section 1.5. On or before the dates the Tax Returns are filed
but in no event later than September 30, 1998, RSI shall revise the Worksheet to
take into account any final adjustments in the amount of deferred taxes based
upon completion of all Income Tax Returns covering any pre-closing period for
all Acquired Ryder Entities. RSI shall pay Allied the net amount of any increase
in the net deferred Tax Liability of the Acquired Ryder Entities as reflected on
the revised Worksheet, and Allied shall pay RSI the net amount of any decrease
in the net deferred Tax Liability of the Acquired Ryder Entities as reflected on
the revised Worksheet. If there are any subsequent tax assessments or refunds
for any of the Acquired Ryder Entities relating to a period ending on or before
the Closing Date that result in a change in the amount of deferred taxes as
reflected on the Worksheet, RSI shall pay to Allied the amount of any increase
in net deferred Tax Liability or Allied shall pay to RSI the amount of any
decrease in net deferred Tax Liability, as the case may be. To the extent any
adjustment provided in Section 3.12(a) is duplicative with any adjustment under
this Section 3.12(e) or Section 1.5(a), such adjustment shall be made under this
Section 3.12(e).
14
(f) CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by RSI when
due, and RSI will, at its own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees, and, if required by applicable law,
RSI will, and will cause its affiliates to, join in the execution of any such
Tax Returns and other documentation.
3.13 ERISA MATTERS.
(a) TERMINATION OF PARTICIPATION IN RSI SPONSORED PLANS. RSI
shall, subject to the consummation of the Business Conveyance, take whatever
action is necessary or appropriate to terminate as of the Closing Date (except
as otherwise set forth in this Agreement), the participation of the Acquired
Ryder Entities with respect to those employees of the Acquired Ryder Entities
who are employed by the Allied Parties or any of their subsidiaries or
affiliates as of the Closing Date ("Transferred Employees") in all of the Plans
except those sponsored by the Acquired Ryder Entities.
(b) TRANSFERRED EMPLOYEES BENEFITS UNDER DEFINED BENEFIT PENSION
PLANS SPONSORED BY RSI. RSI shall retain liability for all benefits accrued by
Transferred Employees under the Ryder Automotive Operations, Inc. Pension Plan
prior to its merger into the Ryder System, Inc. Retirement Plan ("RSI Retirement
Plan"), and all benefits accrued under the RSI Retirement Plan thereafter until
the Closing Date. RSI shall fully vest all Transferred Employees in their
accrued benefits under the RSI Retirement Plan as of the Closing Date and
maintain the RSI Retirement Plan on a frozen basis with respect to such
Transferred Employees.
(c) RYDER SYSTEM, INC. EMPLOYEE SAVINGS PLAN A AND RYDER SYSTEM
INC. EMPLOYEE SAVINGS PLAN B. Effective as of the Closing Date, the Transferred
Employees shall no longer make contributions or receive matching contributions
in the Ryder System, Inc. Savings Plan A and Ryder System Inc. Savings Plan B
(collectively the "RSI Savings Plans"), and RSI shall have taken all such action
prior to the Closing Date as may be required to achieve this result. Each
Transferred Employee shall, as of the Closing Date, become fully vested in his
or her account balance under the RSI Savings Plans. RSI shall, to the extent
permissible under applicable Laws, take whatever actions are necessary or
appropriate to effect a trust-to-trust transfer of the accounts of Transferred
Employees in the RSI Savings Plans into a plan designated by the Allied Parties
to accept the transferred accounts, and the Allied Parties shall take whatever
actions are necessary or appropriate in order for such plan to accept the
transferred accounts.
(d) RETIREE WELFARE BENEFITS. From and after the Closing Date, the
Acquired Ryder Entities will administer their obligation to provide, without
change or alteration, retired employees with the benefits currently provided
under the pre-funded Ryder Automotive Carrier Division Retiree Medical Plan for
existing retirees. RSI will, prior to Closing, take appropriate actions to
cancel for non-retired employees the pre-funded Ryder Automotive Carrier
Division Retiree Medical Plan, and RSI will, to the extent required, issue
refunds.
(e) EXECUTIVE COMPENSATION. RSI shall take any and all actions
necessary to discharge its obligations to the Transferred Employees with respect
to each executive compensation arrangement (including but not limited to any
arrangement involving deferred compensation benefits or the funding
15
thereof, severance benefits (subject to Section 3.8) and any other equity-based
or non-equity-based compensation) in effect as of the Closing Date with or for
the benefit of any Transferred Employee, each of which arrangement RSI hereby
represents and warrants, have been disclosed in writing to Allied prior to the
date hereof.
(f) CLAIMS UNDER PLANS. RSI shall be responsible for handling, at
its expense, prior to Closing, any claims under any of the foregoing Ryder plans
or additional plans and, to the extent not reflected in reserves on the Final
Closing Balance Sheet, shall pay to covered employees after Closing for any
benefits arising under such plans or accruing prior to Closing.
3.14 COOPERATION OF THE PARTIES. The Parties shall use their best
efforts to cooperate with each other and with their respective Representatives
in connection with any acts or actions required to be taken as part of or as a
condition to their respective obligations under this Agreement.
3.15 FURTHER ACTION. Each Party agrees to use their 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 under applicable Laws or otherwise, to consummate
and make effective the Transactions, and each Party agrees not to take any
action inconsistent with that Party's obligations under this Agreement. From and
after the Closing Date, RSI agrees to take, and to cause any Ryder Affiliate to
take, such further actions and execute such additional agreement or agreements
as may be reasonably requested by the Allied Parties or as may be reasonably
necessary to fully vest in the Allied Parties all right, title and interest in
and to the Shares and the NLLC Membership Interests, any Business Assets not
owned by an Acquired Ryder Entity, and all benefits of the Conveyed Ryder
Business and to consummate the Transactions.
3.16 ADVISE OF CHANGES. From the date of execution of this Agreement
until the Closing or the date on which the obligations to close terminate, RSI
shall promptly, and no later than three (3) days after becoming aware of such a
fact or event, notify the Allied Parties of any fact or event, of which RSI is
aware and which is not otherwise expressly disclosed in this Agreement, that has
had or could reasonably be expected to have, a Material Adverse Effect. From the
date of execution of this Agreement until the Closing or the date on which the
obligations to close terminate, the Allied Parties shall promptly, and no later
than three (3) days after becoming aware of such a fact or event, notify RSI of
any fact or event, of which the Allied Parties are aware and which is not
otherwise expressly disclosed in this Agreement, that has or could reasonably be
expected to have, a Material Adverse Effect.
3.17 CONSENT OF ACCOUNTANTS. RSI shall, and shall use its most diligent
efforts to require its independent certified public accountants to provide such
information in relation to the Ryder Financial Statements as is deemed necessary
by the Allied Parties in their sole discretion in order to provide assurance as
to the correctness of such statements. RSI shall consent to the inclusion of the
Ryder Financial Statements in any private or public offering of securities in
relation to the financing for the transactions including, but not limited to, a
registration statement filed with the Securities and Exchange Commission by the
Allied Parties, and RSI shall use reasonable efforts to obtain any consents
required of its independent certified public accountants for such purposes.
Allied will pay such accountants or reimburse RSI for the reasonable charges of
such Accountants for such consent and use. This covenant and agreement of Ryder
shall survive the Closing.
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3.18 COPIES OF TITLES. At the Closing, RSI shall deliver to Allied
original copies of all titles to equipment (or if lost or destroyed, replacement
or duplicate copies) owned by the Acquired Ryder Entities or otherwise being
conveyed to the Allied Parties.
3.19 *****
3.20 WORKERS' COMPENSATION CLAIMS. The Parties agree to consult and to
reasonably cooperate in connection with the administration of workers'
compensation claims in those states where RSI is self-insured and unable to
transfer the claims handling outright to Allied.
3.21 NOTICE OF PROCEEDINGS. In the event Ryder receives written notice
of any actual, pending or threatened condemnation or expropriation proceedings
relating to the Real Property, RSI shall give Allied written notice thereof
within fifteen (15) days of receiving such notice.
3.22 MISCELLANEOUS PROPERTY COVENANTS. In the event the Real Property,
or any improvements located thereon, are materially damaged by fire or other
casualty, RSI shall give Allied immediate written notice thereof. RSI shall not
(and shall take action to ensure that no Ryder Affiliate shall) (i) sell,
transfer, lease, license, encumber or convey, or agree to sell, transfer, lease,
license, encumber or convey, any of the Owned Real Property or any interest
therein, or (ii) assign, sublease, sublicense, encumber or convey, or agree to
assign, sublease, sublicense, encumber or convey, any interest in the Leased
Real Property after the Effective Date without the prior written consent of
Allied, which consent shall not be unreasonably withheld or delayed.
ARTICLE FOUR - REPRESENTATIONS AND WARRANTIES OF RSI
As an inducement to the Allied Parties to enter into this Agreement and
to consummate the Transactions, RSI hereby represents and warrants to the Allied
Parties that the following representations and warranties are true and correct
as of the date of this Agreement and shall, except as may be specifically
provided for in this Agreement or otherwise specifically agreed upon or waived,
in each case in writing by the Allied Parties, be true and correct during the
Pre-Closing Period and as of the Closing (the Parties hereby acknowledging and
agreeing that an inadvertent omission from a Schedule to this Agreement by a
Party shall not be deemed to be a breach of that Party's disclosure obligation
if the omitted information is included on another Schedule that requires
disclosure of the same information within the same or substantially similar
subject matter context):
4.1 VALIDITY. This Agreement, with all its schedules, exhibits and
other attachments, together with all Ancillary Agreements to which RSI is a
party and all schedules, exhibits and other attachments (collectively, the
"Ryder Agreements") shall constitute the legal, valid and binding obligation of
RSI, enforceable in accordance with its terms subject, however, to limitations
with respect to enforcement imposed by law in connection with bankruptcy or
similar proceedings.
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission, requesting confidential treatment.
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4.2 ENTITY STATUS. The entities listed on SCHEDULE 4.2 consist of all
direct or indirect subsidiaries of RACS, RCMC and NLLC and neither RACS, RCMC
nor NLLC nor any other Acquired Ryder Entity owns any shares of capital stock of
any other corporation or any interest in the ownership or management of any
other entity. Each of the Acquired Ryder Entities other than NLLC is a
corporation duly incorporated, organized and validly existing under the Laws of
the jurisdiction of its incorporation as set forth on SCHEDULE 4.2. NLLC is a
limited liability company duly organized and validly existing under the Laws of
Georgia. Each of the Acquired Ryder Entities has full power and authority and
possesses all rights, privileges, franchises, licenses, permits, authorizations
and approvals, governmental or otherwise, necessary to entitle it to use its
name and to own or lease its properties and assets and to carry on its business
as and in the places where such properties or assets are now owned, leased or
operated and such business is conducted. The Acquired Ryder Entities are
qualified to transact business in the jurisdictions listed by their names on
SCHEDULE 4.2, and to RSI's Knowledge, no Acquired Ryder Entity is required to be
qualified to do business in any other jurisdiction.
4.3 AUTHORITY. RSI has full power, capacity and authority to execute
and deliver the Ryder Agreements to which it is a party, to perform RSI's
obligations under any such Ryder Agreements and to consummate the Transactions,
and all action necessary on the part of RSI to execute and deliver any such
Ryder Agreements, to perform RSI's obligations thereunder, and to consummate the
Transactions has been taken.
4.4 NO RSI CONFLICT. Provided the Consents described in Section 4.31
are obtained prior to Closing, no performance by RSI of RSI's obligations under
any Ryder Agreements or the consummation of the Transactions will result in any
conflict with, breach of, or default or acceleration under, any mortgage,
agreement, lease, indenture, or other instrument, order, judgment, direction or
decree to which an Acquired Ryder Entity is a party or by which an Acquired
Ryder Entity's or RSI's respective properties or assets or any asset associated
with the Conveyed Ryder Business may be bound or affected or violate any Law.
Provided the Consents described in Section 4.31 are obtained prior to Closing,
consummation of the Transactions will not violate, breach, offend or contravene
any provision of an Acquired Ryder Entity's or RSI's Articles or Certificate of
Incorporation, Bylaws, or any other corporate governance document (or, in the
case of NLLC, its Operating Agreement or other organizational or governance
documents) or result in any conflict with, breach of, or default or acceleration
under, any mortgage, agreement, lease, indenture, or other instrument, order,
judgment, direction or decree to which any Acquired Ryder Entity or RSI is a
party or by which any of the properties or assets of any Acquired Ryder Entity
may be bound or affected or violate any applicable Law.
4.5 CAPITAL STRUCTURE.
(a) The Shares consist of all of the issued and outstanding shares
of capital stock of RACS, RCMC, OSHCO and TSC. The NLLC Membership Interests
consist of all of the issued and outstanding membership interests of NLLC. The
Shares and the NLLC Membership Interests have been duly and validly issued and
are outstanding and fully paid and non-assessable and were offered, issued and
sold in compliance with all applicable securities and other Laws. No person or
entity has any right of rescission or claim for damages under any securities or
other Laws with respect to the issuance of any of the Shares or the NLLC
Membership Interests. None of the Shares or NLLC Membership Interests were
issued in violation of any preemptive or other rights of any shareholder or
member, respectively.
18
(b) RSI alone owns all of the outstanding capital stock of RACS
and RCMC and the NLLC Membership Interests and owns, indirectly through RACS and
its subsidiaries, all of the outstanding capital stock of each Acquired Ryder
Entity other than RACS, RCMC and NLLC. SCHEDULE 4.5(B) describes (i) each series
and class of capital stock or membership interests of the Acquired Ryder
Entities other than RACS and RCMC, and (ii) the number of shares of such capital
stock or membership interests as are authorized, issued and outstanding and
(iii) the registered and beneficial owner of such shares or membership
interests. All shares of such capital stock or membership interests have been
duly and validly issued and are outstanding and fully paid and non-assessable
and were offered, issued and sold in compliance with all applicable securities
and other Laws. No person or entity has any right of rescission or claim for
damages under any securities or other Laws with respect to the issuance of any
of such shares of capital stock or membership interests. None of the shares of
such capital stock or membership interests were issued in violation of any
preemptive or other rights of any shareholder or other equity holder.
(c) Except as disclosed in SCHEDULE 4.5(C), (i) no Acquired Ryder
Entity has outstanding any securities, other equity interests or other rights
which are either by their terms or by contract convertible or exchangeable into
capital stock or other equity interest nor any preemptive or similar rights to
subscribe for or to purchase, or any options or warrants or agreements for the
purchase or the issuance (contingent or otherwise) of, or any calls, commitments
or claims of any character relating to, its capital stock or other equity
interest or securities convertible into its capital stock or other equity
interest, and (ii) no Acquired Ryder Entity is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire or to
register any shares of its capital stock or membership interests.
(d) Except as disclosed in SCHEDULE 4.5(D), there is no agreement
to which RSI is a party restricting the transfer of any of the shares of capital
stock or membership interests of any Acquired Ryder Entity.
4.6 TITLE TO SHARES. RSI has good, valid and marketable title to the
RACS Shares, the RCMC Shares and the NLLC Membership Interests, RACS has good,
valid and marketable title to the OSHCO Shares and XXX has good, valid and
marketable title to the TSC Shares, in each case free and clear of any and all
Liens whatsoever and, except as disclosed in SCHEDULES 4.5(C) or 4.5(D), no
person, firm, corporation or other entity other than the Allied Parties has any
agreement, option or any rights or privileges (whether by Law or through
preemptive or contractual right or otherwise) capable of becoming an agreement
or right to acquire any of the Shares. RSI has full right, power and authority
to sell, transfer and deliver (or cause the sale, transfer and delivery of) the
Shares to the Allied Parties. Upon Closing, RSI will transfer (or cause the
transfer) to the Allied Parties good, valid and marketable title to the Shares,
free and clear of any and all Liens.
4.7 RECORDS. The stock and membership interest records and minute books
of each of the Acquired Ryder Entities have been furnished to or made available
to the Allied Parties by RSI and fully and accurately reflect all issuances,
transfers and redemptions of the capital stock and membership interests of the
Acquired Ryder Entities, correctly show the total number of shares and stated
capital of such capital stock and membership interests issued and outstanding on
the date of this Agreement, correctly reflect the minutes of all meetings or
consent actions of the Acquired Ryder Entities and correctly show all material
corporate action taken by the directors and shareholders of the Acquired
19
Ryder Entities (including actions taken by resolution) contain true and complete
copies or originals of the Acquired Ryder Entities' Articles or Certificates of
Incorporation and all amendments thereto, and Bylaws as amended and currently in
force and/or any other organizational documents. To RSI's Knowledge, no
resolutions, regulations or bylaws have been passed, enacted, consented to or
adopted by such directors or shareholders except those contained in the minute
books.
4.8 TAXES
(a) For purposes of this Agreement, the following terms shall have
the following meanings:
(i) "AFFILIATED GROUP" means any affiliated group within the
meaning of Code ss.1504(a) or any similar group defined under a similar
provision of state, local or foreign law.
(ii) "CODE" means the Internal Revenue Code of 1986, as
amended.
(iii) "DEFERRED INTERCOMPANY TRANSACTION" has the meaning set
forth in Reg. ss.1.1502-13.
(iv) "EMPLOYMENT AND WITHHOLDING TAXES" means any federal,
state, provincial, municipal, local, foreign or other employment, unemployment
insurance, social security, Canada Pension Plan premiums and Quebec Pension Plan
premiums, disability, workers' compensation, payroll, health care or other
similar tax, duty or other governmental charge or assessment or deficiencies
thereof and all Taxes required to be withheld by or on behalf of any Acquired
Ryder Entity in connection with amounts paid, deemed paid, imputed, required to
be imputed or owing to any employee, independent contractor, creditor or other
party, in each case, on or in respect of the Conveyed Ryder Business or assets
thereof (including but not limited to), all interest and penalties thereon and
additions thereto (whether disputed or not).
(v) "EXCESS LOSS ACCOUNT" has the meaning set forth in
Treasury Regulation ss.1.1502-19.
(vi) "GOVERNMENTAL AUTHORITY" means any nation or government,
any state or provincial or other political subdivision thereof, any province,
city or municipality, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, any government authority, agency, department,
board, commission or instrumentality of the United States and Canada, any State
of the United States or Province of Canada, or any political subdivision
thereof, any government authority, agency, department, board, commission or
instrumentality of Canada or Mexico or any political subdivision thereof and any
tribunal or arbitrator(s) of competent jurisdiction, and any self-regulatory
organization.
(vii) "INCOME TAX" means any federal, state, provincial,
local, foreign or other Governmental Authority levy, tax or import imposed upon,
or measured by gross receipts, income, accumulated earnings, franchise, capital
stock, net worth, capital, profits or windfall profits and any other similar
tax, estimated tax, duty or other governmental charge or assessment or
deficiencies thereof (including all interest and penalties thereon and additions
thereto whether disputed or not).
20
(viii) "IRS" means the Internal Revenue Service.
(ix) "LIABILITY" means any liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or to
become due), including any liability for Taxes.
(x) "TAXES" means any federal, state, provincial, local,
foreign or other income, alternative minimum, accumulated earnings, personal
holding company, profits, windfall profits, franchise, capital stock, net worth,
capital, gross receipts, value added, commodities sales, use, excise, custom
duties, transfer, conveyance, mortgage, registration, stamp, fuel, gasoline,
highway use, vehicle, documentary, recording, premium, severance, environmental,
real and personal property, ad valorem, intangibles, rent, occupancy, license,
occupational, employment, unemployment insurance, social security, Goods and
Services Tax and Provincial Sales Tax, Canadian Pension Plan premiums, Quebec
Pension Plan premiums, disability, workers' compensation, payroll, health care,
withholding, estimated or other similar tax, duty or other governmental charge
or assessment or deficiencies thereof (including, but not limited to, all
interest and penalties thereon and additions thereto whether disputed or not).
(xi) "TAX ATTRIBUTE" means any amount or account, notional or
otherwise, computed or maintained to facilitate the calculation of Taxes for
present, future or past taxation years of any Acquired Ryder Entity, including
without limitation, tax costs, paid-up capital of shares, losses available for
utilization and any information disclosed in Tax Returns.
(xii) "TAX RETURN" means any return, declaration, form, claim
for refund or information return or statement related to Taxes, including any
schedule or attachments thereon, and including any amendment thereof, that
relates to the Conveyed Ryder Business or assets of any Acquired Ryder Entity,
whether filed or required to be filed.
(xiii) "TREASURY REGULATIONS" means the regulations
prescribed under the Code.
(b) TAX RETURNS FILED AND TAXES PAID. Each of the Acquired Ryder
Entities has duly and timely filed or will duly and timely file all federal,
state and local, foreign and other tax returns and reports required to be filed
by it and has paid, or has accrued on its books (in accordance with GAAP), all
Taxes required or anticipated to be paid during or with respect to any period
which ends on or before the Closing Date (including, in the case of a taxable
period that includes the Closing Date, the part of such period which ends on the
Closing Date) except for any and all federal, state and local income and/or
franchise tax liabilities assumed by RSI.
(c) DELINQUENCIES, DEFICIENCIES AND AUDITS. Except as set forth on
Schedule 4.8(c) none of the Acquired Ryder Entities is delinquent in the payment
of Taxes, nor has it requested any extension of time within which to file any
Tax Return which return has not since been filed, nor has any statute of
limitations been waived on behalf of any Acquired Ryder Entity with respect to
any such Taxes. No deficiency for any Tax has been proposed or assessed against
any of the Acquired Ryder Entities that has not been adequately provided for on
the books of such Acquired Ryder Entity and there are neither unresolved
questions or claims, nor proceedings or actions pending (including an audit of
any tax return filed by any of the Acquired Ryder Entities with any federal,
state, local or foreign taxing authority)
21
concerning the tax liability of any of the Acquired Ryder Entities for the
collection or assessment of Tax for any period for which returns have been filed
or were due.
(d) Except as otherwise expressly provided in this Agreement, RSI
shall have no liability for any Taxes or tax adjustments arising for periods
beginning after the Closing Date including, but not limited to, any Taxes that
result from tax elections made by Allied, or the Acquired Ryder Entities under
Section 338 of the Code relating to Allied's acquisition of the Acquired Ryder
Entities, and RSI shall have no obligation to prepare any tax returns for
periods after the Closing Date.
(e) Except as disclosed in SCHEDULE 4.8(E), (i) all Taxes that are
or may become payable by an Acquired Ryder Entity or by RSI with respect to an
Acquired Ryder entity or chargeable as a Lien on the assets of an Acquired Ryder
Entity (whether or not shown on any Tax Return) as of the Closing Date have been
duly and timely paid or accrued, (ii) each Acquired Ryder Entity has duly and
timely withheld all Employment and Withholding Taxes, and such withheld Taxes
have been either duly and timely paid or accrued to the proper Governmental
Authorities or properly set aside in accounts for such purpose, and (iii) when
delivered to the Allied Parties, the Final Closing Balance Sheet will reflect an
adequate reserve for all Taxes payable or asserted to be payable by or for each
Acquired Ryder Entity for all taxable periods or portions thereof through the
Closing Date, and (iv) Taxes payable as of the Closing Date will not exceed the
amounts reflected on the Final Closing Balance Sheet, and (v) deferred tax
liabilities will not exceed the amounts reflected on the Final Closing Balance
Sheet.
(f) RSI has (or by the Closing Date will have) delivered to the
Allied Parties complete and accurate copies of all Tax Returns of the Acquired
Ryder Entities with respect to all periods beginning with the calendar year
ended December 31, 1990 that have been filed or will be required to be filed on
or before the Closing Date. Except as disclosed in SCHEDULE 4.8(F), no Tax
Return of an Acquired Ryder Entity is currently under audit by any taxing
authority, and no Taxes are currently under audit by any taxing authority.
(g) SCHEDULE 4.8(G) lists all elections for Income Tax purposes
made by or on behalf of any Acquired Ryder Entity that are currently in force or
to which any Acquired Ryder Entity is bound that relate to any of the following:
depreciation and amortization, leases pursuant to former Section 168(f)(8)
("special rules for finance leases") of the Code, research and experimental
expenditures, repair allowances, capital expenditures, inventory costs, prepaid
income or advance payments, long-term contracts, merchandise returns and
allowances, vacation pay, inventory methods and valuation, tax preferences and
any other Income Tax issues that are the subject of elections.
(h) SCHEDULE 4.8(H) lists (i) all countries, states, provinces,
cities or other jurisdictions in which any Acquired Ryder Entity is the
beneficiary of any real or personal property Tax exemptions or concessions,
reduced rates or Tax credits, (ii) the annual dollar benefit of each such item
and (iii) the terms of expiration or phase-out of each such item.
(i) There is no ruling received from, or closing agreement
executed with, any taxing authority that will be binding upon an Acquired Ryder
Entity after the Closing.
(j) SCHEDULE 4.8(J) sets forth the following information with
respect to each of the Acquired Ryder Entities as of the most recent practicable
date (as well as on an estimated pro forma basis
22
as of the Closing, giving effect to the consummation of the Transactions): (A)
the tax basis of each Acquired Ryder Entity in its assets; (B) the tax basis of
the stockholder of each Acquired Ryder Entity in its stock (or the amount of any
Excess Loss Account); (C) the amount of any net operating loss, net capital
loss, unused investment or other credit, unused foreign tax, or excess
charitable contribution allocable to each Acquired Ryder Entity; (D) the amount
of any deferred gain or loss allocable to each Acquired Ryder Entity arising out
of any Deferred Intercompany Transaction; and (E) the paid-up capital of stock.
(k) Except as specifically provided in any lease or similar
agreement for rental of property as set forth on Schedule 4.8(k), none of the
Acquired Ryder Entities has any liability for the Taxes of any person or entity
other than the Acquired Ryder Entities (A) under Treasury Regulation ss.
1.1502-6 (or any similar provision of state, local or foreign law), (B) as a
transferee or successor, (C) by contract or (D) otherwise.
(l) All manufacturers excise taxes relating to CCI will be paid
prior to Closing or accounted for in the Final Closing Balance Sheet.
4.9 ACCOUNTS AND NOTES RECEIVABLE. All Acquired Ryder Entity notes and
accounts receivable that are reflected on any of the "Ryder Financial
Statements" (as defined in Section 4.10) or incurred in the "Ordinary Course of
Business" (as defined on APPENDIX A) after December 31, 1996 (the "Ryder
Receivables") are valid, existing and are, as of the date of this Agreement, and
will be at the Closing, to the Knowledge of Ryder, fully collectible subject to
reasonable reserves therefor consistent with GAAP and historical experience.
4.10 FINANCIAL STATEMENTS. The audited consolidated financial
statements of RACS for the fiscal years ended December 31, 1994, 1995 and 1996
and unaudited quarterly financial statements, consisting of a balance sheet and
income statement, for 1994, 1995 and 1996 and the unaudited quarterly statements
of the Acquired Ryder Entities for 1994, 1995, 1996 and as of March 31, 1997
(collectively the "Ryder Financial Statements"), copies of which are attached as
SCHEDULE 4.10 - PART 1, were prepared in accordance with RSI's accounting
practices (applied on a consistent basis except as indicated therein), which
practices are consistent with GAAP and the Ryder Financial Statements present
fairly the consolidated financial condition, assets and liabilities of the
Acquired Ryder Entities as of December 31, 1996 and March 31, 1997, the results
of the operations of RSI and the Acquired Ryder Entities on a consolidated basis
for the period covered thereby. Except for the adjustments on the March 31, 1997
Balance Sheet described in SCHEDULE 4.10 - PART 2, the Financial Statements do
not reflect adjustments contemplated by the Transactions.
4.11 BANK ACCOUNTS. SCHEDULE 4.11 contains a list of each and every
bank and other institution in which an Acquired Ryder Entity maintains an
account or safety deposit box, the account numbers, and the names of all persons
who are presently authorized to draw thereon or have access thereto. SCHEDULE
4.11 also contains a description of all certificates of deposit owned or held by
any Acquired Ryder Entity.
4.12 LIABILITIES Except as set forth on SCHEDULE 4.12 - PART 1, no
Acquired Ryder Entity has any material debt, liability, or obligation of any
kind, whether accrued, absolute, known or unknown, contingent or otherwise,
including but not limited to (a) liability arising from or by virtue of the
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production, manufacture, sale, lease, distribution, delivery or other transfer
or disposition of personal property or services of any type, kind or variety, or
(b) unfunded liabilities with respect to any pension, profit sharing or employee
stock ownership plan, whether operated by an Acquired Ryder Entity or any other
entity covering employees of any Acquired Ryder Entity, except (i) those
reflected on the Ryder Financial Statements, including the notes thereto, (ii)
liabilities incurred in the Ordinary Course of Business since December 31, 1996,
none of which individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect, and (iii) those specifically
disclosed in SCHEDULE 4.12-PART 2. None of the Acquired Ryder Entities has any
obligations (absolute or contingent) to provide funds on behalf of, or to
guarantee or assume any debt, liability or obligation of any corporation,
partnership, association, joint venture, individual or other person, except for
endorsements in connection with the deposit of items for collection or as
disclosed in SCHEDULE 4.12 - PART 3.
4.13 ABSENCE OF CHANGES. Except as set forth in SCHEDULE 4.13 and other
than changes resulting directly from the consummation of the Transactions, since
December 31, 1996:
(a) there has been no change in the Conveyed Ryder Business, the
Business Assets or the Liabilities, results of operation or financial condition
of any Acquired Ryder Entity or to RSI's Knowledge, in any of its relationships
with suppliers, customers, employees, lessors or others that individually or in
the aggregate has had or could reasonably be expected to have a Material Adverse
Effect;
(b) there has been no damage, destruction or loss to the Business
Assets, or the Conveyed Ryder Business or to RSI's Knowledge, supplier or
customer relations that individually or in the aggregate has had or could
reasonably be expected to have a Material Adverse Effect;
(c) except for the Transactions provided for in this Agreement,
the Conveyed Ryder Business and any other operations of the Acquired Ryder
Entities have been conducted in the Ordinary Course of Business, and not
otherwise;
(d) the Business Assets and the properties and assets of each of
the Acquired Ryder Entities have been maintained in good order, repair and
condition, consistent with historical practice, in all material respects,
ordinary wear and tear excepted;
(e) the books, accounts and records associated with the Conveyed
Ryder Business and those of each of the Acquired Ryder Entities have been
maintained in the usual, regular and ordinary manner and on a basis consistent
with prior years;
(f) except in a manner consistent with past practices and in order
to effectuate the Transactions, there has been no declaration, setting aside or
payment of any dividend or other distribution on or in respect of the capital
stock of any Acquired Ryder Entity, nor has there been any direct or indirect
redemption, retirement, purchase or other acquisition by any Acquired Ryder
Entity, of any of the capital stock of any such Acquired Ryder Entity;
(g) there has been (i) no increase of more than eight and one-half
percent (8.5%) in the compensation or in the rate of compensation or commissions
payable or to become payable by any of the Acquired Ryder Entities to any
director, officer or salaried employee earning $60,000 (or the equivalent
24
thereof) or more per annum other than in the Ordinary Course of Business; (ii)
except for wage increases provided for in union agreements, copies of which have
been delivered to the Allied Parties, no general increase of more than eight and
one-half percent (8.5%) in the compensation or in the rate of compensation
payable or to become payable to hourly employees or to salaried employees of any
of the Acquired Ryder Entities earning less than $60,000 (or the equivalent
thereof) per annum other than in the Ordinary Course of Business ("general
increase" for the purpose hereof meaning any increase generally applicable to a
class or group of employees, but not including increases granted to individual
employees for merit, length of service, change in position or responsibility or
other reasons applicable to specific employees and not generally to a class or
group thereof); (iii) no director, officer or employee hired at a salary in
excess of $60,000 (or the equivalent thereof) per annum; or (iv) no increase in
any payment of or commitment to pay any bonus, profit sharing or other
extraordinary compensation to any employee other than in the Ordinary Course of
Business;
(h) there has been no change in the Articles or Certificate of
Incorporation or Bylaws or other governance documents of any Acquired Ryder
Entity;
(i) to the Knowledge of Ryder, there has been no labor dispute,
organizational effort by any union that does not currently represent Acquired
Ryder Entity employees or by any existing non-union employees, other than as
described in SCHEDULE 4.14 or SCHEDULE 4.29, any unfair labor practice charge or
employment discrimination charge, nor institution or threatened institution of
any effort, complaint or other proceeding in connection therewith, involving any
Acquired Ryder Entity or affecting the Conveyed Ryder Business or operations of
any Acquired Ryder Entity; nor any material change in any employment matter
described in SCHEDULE 4.14 or SCHEDULE 4.29;
(j) Except as set forth on SCHEDULE 6.4, there has been no
issuance or sale by any Acquired Ryder Entity of any of its authorized capital
stock, bonds, notes or other securities or any modification or amendment of the
rights of the holders of any of its outstanding capital stock, bonds, notes or
other securities;
(k) other than immaterial Liens, to RSI's Knowledge, there has
been no Lien created on or in (including without limitation, any deposit for
security consisting of) any Business Asset or any additional assets of any
Acquired Ryder Entity or assumed by any Acquired Ryder Entity with respect to
any such assets;
(l) there has been no indebtedness or other Liability (whether
absolute, accrued, contingent or otherwise but excluding any unknown liability)
incurred by any Acquired Ryder Entity which would be required to be reflected on
financial statements prepared in accordance with GAAP, except such as have been
incurred in the Ordinary Course of Business of the Acquired Ryder Entity;
(m) no material obligation or liability of any Acquired Ryder
Entity has been discharged or satisfied, other than Retained Liabilities, the
current liabilities reflected on the Ryder Financial Statements and current
liabilities incurred since the date thereof in the Ordinary Course of Business
and debt reflected as long term liabilities on the Ryder Financial Statements
which has, since December 31, 1996, become current;
25
(n) other than the sale of inventory and surplus revenue equipment
in the Ordinary Course of Business, there has been no sale, transfer or other
disposition of any Business Assets or any assets of any Acquired Ryder Entity,
other than assets related to Retained Matters, for a sales price that in the
aggregate exceeds $50,000;
(o) to RSI's Knowledge, there has been no amendment, termination
or waiver of any right of any Acquired Ryder Entity under any contract or
agreement or governmental license, permit or permission which, individually or
in the aggregate, has had or could reasonably be expected to have a Materially
Adverse Effect; and
(p) there has been no sale, transfer, or agreement to sell or
transfer, any terminal property owned or used by an Acquired Ryder Entity or
owned by a Ryder Affiliate and used in the Conveyed Ryder Business, other than
Retained Matters, including the grant or issuance of any option.
4.14 LITIGATION AND PROCEEDINGS. Except as set forth on SCHEDULE 4.14,
there are no (i) actions, decrees, suits, counterclaims, claims, proceedings or
governmental or other investigations (collectively, "Claims") pending or
threatened against, by or affecting the Conveyed Ryder Business or any Acquired
Ryder Entity in any court or before any arbitrator or Governmental Authority,
nor is there a reasonable factual basis for any such Claim, or (ii) judgments,
awards, orders, directions or decrees of any nature rendered against or
affecting the Conveyed Ryder Business or any Acquired Ryder Entity or with
respect to any such party by any agency, arbitrator, board, court, commission or
other Governmental Authority that has not been paid or discharged or otherwise
stayed or secured. Except as described in SCHEDULE 4.14, none of RSI, any
Acquired Ryder Entity or any Ryder Affiliate has been charged with or to the
Knowledge of Ryder, is under investigation with respect to any charge (other
than minor traffic violations) concerning, any provision of any Law with respect
to the Conveyed Ryder Business (or, in the case of the Acquired Ryder Entities,
with respect to any other matter). There are no pending or to the Knowledge of
Ryder, threatened claims against any of the officers or directors of RSI, any
Acquired Ryder Entity or any Ryder Affiliate that has been associated with the
Conveyed Ryder Business in connection with the Conveyed Ryder Business.
4.15 CUSTOMERS AND ACCOUNTS. SCHEDULE 4.15 contains a true, complete
and accurate list of each customer of each Acquired Ryder Entity that
constitutes five percent (5%) or more of the total revenues earned by any such
Acquired Ryder Entity or the Acquired Ryder Entities as a group for the fiscal
year ended December 31, 1996. Except as disclosed on SCHEDULE 4.15, no customer
intends to discontinue the purchase of products or services from an Acquired
Ryder Entity on a basis consistent with past practices, to the Knowledge of
Ryder, and no customer has given written notice to do so.
4.16 BUSINESS ACTIVITIES AND TRANSACTIONS OF ACQUIRED RYDER ENTITIES.
(a) SCHEDULE 4.16-PART 1 identifies (i) any conveyance, sale or
transfer of any material assets, properties or rights used in the Conveyed Ryder
Business during the four (4) years prior to the Closing Date, other than
Retained Matters, and (ii) the date on which the conveyance was effective, a
general description of the nature and terms of the conveyance and the identity
of the person or entity to whom or to which the conveyance was made. RSI has
provided AAC and its Representatives with copies of documentation reflecting any
such conveyances, to the extent such documentation has been requested.
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(b) SCHEDULE 4.16 - PART 2 (i) identifies any entities affiliated,
directly or indirectly, with RSI, other than the Acquired Ryder Entities, that,
during any point within the four (4) years prior to the Effective Date, have
been involved in any material aspect of the Conveyed Ryder Business or that have
owned or used any material Business Asset, (ii) briefly describes the nature of
each such entity's involvement in the Conveyed Ryder Business and the Business
Assets owned or used by each such entity (with such description to be
chronological, so that each entity's role, or its ownership or use of Business
Assets, can be tracked throughout the five year disclosure period, up to the
Closing Date), and (iii) describes the circumstances under which any such
entities were dissolved, liquidated, sold or merged during the four year
disclosure period.
(c) SCHEDULE 4.16 - PART 3 identifies any business activities
engaged in substantial part by any Acquired Ryder Entity that are unrelated to
the Conveyed Ryder Business.
4.17 PERMITS.
(a) To RSI's Knowledge, each Acquired Ryder Entity has all
material certificates, permits, licenses, approvals and authorizations of and
registrations ("Permits") currently required under Law for each such Acquired
Ryder Entity to carry on its respective business activities as now being
conducted (where failure to have such Permits could reasonably be expected to
have a Material Adverse Effect), and all such Permits are listed on SCHEDULE
4.17(A) or SCHEDULE 4.35 and are in full force and effect, and except as is set
forth on SCHEDULE 4.17(A), no suspension or cancellation of any of them is
pending or threatened.
(b) To RSI's Knowledge, each Acquired Ryder Entity has complied in
all material respects with all Laws applicable to it or its business (where
failure to comply with such a Law could reasonably be expected to have a
Material Adverse Effect), and no past violation of any such Law has occurred
which could reasonably be expected to have a Material Adverse Effect.
4.18 ENVIRONMENTAL.
(a) The following terms shall have the following meaning when used
in Section 4.18 and Section 9.1 of this Agreement:
(i) "ENVIRONMENT" shall mean surface water, groundwater,
soil, ambient air and any combination thereof.
(ii) "ENVIRONMENTAL CLAIM" shall mean any and all civil,
criminal and administrative actions, suits, litigation, claims, hearings,
notices of violation, notices of liability, liens, investigations and
proceedings, including, without limitation, all judgments, awards, orders,
decrees, penalties and fines, which arise under any Environmental Law or
otherwise as a result or in connection with any actual or alleged Environmental
Condition and demands, accusations and allegations of third parties asserting or
raising an Environmental Condition representing a material hazard to public
health, occupational health and safety or material Liability to a third party.
(iii) "ENVIRONMENTAL CONDITIONS" shall mean (1) the state of
the Environment involving or due to the presence of Hazardous Substances in the
Environment, as a result of or arising
27
out of the use, handling, storage, treatment, recycling, generation,
transportation, processing, or Release or threatened Release of Hazardous
Substances, and (2) the exposure of persons to Hazardous Substances in the
workplace or in the Environment.
(iv) "ENVIRONMENTAL LAW" shall mean any applicable Law
relating to the protection of the Environment, human health or safety.
(v) "HAZARDOUS SUBSTANCES" shall mean any hazardous chemical,
hazardous or toxic substance, hazardous waste, hazardous material or similar
substance as regulated under any Environmental Law.
(vi) "PREDECESSOR" shall mean any corporation or other entity
for whose obligations and liabilities any Acquired Ryder Entity, as originally
defined, could legally be liable as the result of any merger, stock purchase,
asset purchase, joint venture or other similar business transaction or under any
theory of successor liability.
(vii) "RELEASE" shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing into the Environment of Hazardous Substances.
(viii) "REMEDIATION" shall mean the investigation, removal,
remediation, cleanup or other response to an Environmental Condition.
(b) The Closing Statement and the Final Closing Balance Sheet
contain reserves ("Environmental Reserve Projections/Reimbursement Report")
which (i) adequately and accurately reflect RSI's evaluation and Knowledge of
Environmental Claims and existing or probable Remediation, and (ii) were
established by RSI in good faith, consistent with prudent management and in
accordance with GAAP.
(c) Excluding all Retained Matters, to the Knowledge of RSI, the
Environmental Reserve Projections/Reimbursement Report reflects all current
matters where notice by any third party was received by any Acquired Ryder
Entity that it or any Predecessor is potentially liable for any Remediation
under any Environmental Law.
(d) Excluding all Retained Matters, to the Knowledge of RSI,
Schedule 4.18(d) sets forth all current matters where an agreement, directive or
order of a Governmental Authority, warranty or indemnity is enforceable against,
or binding upon, any Acquired Ryder Entity or any Predecessor with respect to
any Remediation at any property that will be formerly owned or operated
(non-operating or surplus) as of the Closing Date.
(e) Excluding all Retained Matters, to the Knowledge of RSI, the
Environmental Reserve Projections/Reimbursement Report reflects all current
matters where an Environmental Claim has been asserted against an Acquired Ryder
Entity or Predecessor.
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(f) Excluding all Retained Matters, to the Knowledge of RSI, the
Environmental Reserve Projections/Reimbursement Report reflects all current
operating properties where the removal or closure of an underground storage tank
or an above ground storage tank requires Remediation.
(g) Excluding all Retained Matters, to the Knowledge of RSI,
Schedule 4.18(g) identifies facilities currently used by an Acquired Ryder
Entity which may contain asbestos.
(h) Excluding all Retained Matters, to the Knowledge of RSI, there
are no Liens pending or threatened under any Environmental Law against those
properties identified in the Environmental Reserve Projections/Reimbursement
Report.
4.19 INSURANCE. SCHEDULE 4.19 contains a complete list and description
(including the expiration date, premium amount and coverage thereunder) of all
policies of insurance (including, but not limited to, life insurance or
disability insurance policies that will be continued after Closing with respect
to any employees) and bonds presently maintained by, or providing coverage for
each Acquired Ryder Entity or any of its officers, directors, employees, or
shareholders, all of which are, and will be maintained through the Closing Date,
in full force and effect, together with a complete list of all pending claims in
excess of $10,000 under any of such policies or bonds. The disclosures on
SCHEDULE 4.19 may exclude premium rates that apply to RSI and Ryder Affiliates
that have not been engaged in a material manner in the Conveyed Ryder Business.
To RSI's Knowledge, all material terms, obligations and provisions of each of
such policies and bonds have been complied with, all premiums due on such
policies have been paid, and no notice of cancellation with respect to such
policies has been received. To the Knowledge of Ryder, such policies and bonds
provide adequate coverage to insure the properties and business of the Acquired
Ryder Entities as presently conducted and the activities of the Acquired Ryder
Entity's officers and directors against such risks and in such amounts as are
prudent and customary. Prior to the date of this Agreement, Ryder has delivered
to the Allied Parties a true, correct and complete copy of each such insurance
policy and bond or a summary thereof. No Acquired Ryder Entity has any
outstanding liabilities nor is any the subject of any outstanding claims
typically, in the automobile transport industry, covered by public liability
insurance that in the case of Ryder are not covered by such insurance,
consistent with Ryder's historical practices with respect to self-insurance.
Except as set forth in the March 31 Balance Sheet (and as will be set forth on
the Final Closing Balance Sheet), there are no obligations of the Acquired Ryder
Entities to reimburse RSI or its insurers for any claims or premiums. The
reserves in the Ryder Financial Statements (including the notes thereto) do, and
the Final Closing Balance Sheet will reflect the liability for self-insurance
and retroactive premium adjustments.
4.20 CONTRACTS AND COMMITMENTS. SCHEDULE 4.20 contains a list which
identifies all material written, and briefly describes all oral, agreements and
contracts (other than oral employment agreements), guaranties or commitments to
which any Acquired Ryder Entity is a party, by which any Acquired Ryder Entity
is bound or otherwise associated with the Conveyed Ryder Business or the
Business Assets (including, without limitation, written employment agreements,
customer contracts and open purchase and sale orders) (the "Ryder Contracts"). A
contract is "material" for purposes of this Section 4.20 if it involves more
than $100,000 or if it serves an important role in the Conveyed Ryder Business.
Each written Ryder Contract is in full force and effect and is valid and
enforceable in accordance with its terms and constitutes a legal and binding
obligation of the respective parties thereto subject, however, to limitations
with respect to enforcement imposed by law in connection with bankruptcy or
similar proceedings and to the extent that equitable remedies such as specific
performance and injunction are in
29
the discretion of the court from which they are sought and, to the Knowledge of
Ryder, no Ryder Contract is the subject of any notice of default, termination or
partial termination. A true and complete copy of each written Ryder Contract has
been submitted to the Allied Parties for examination.
4.21 LICENSES; INTELLECTUAL PROPERTY.
(a) SCHEDULE 4.21-PART 1 contains a description of all material
Intellectual Property (for example, trade secrets, computer software) that has
been used in the Conveyed Ryder Business during the two (2) years prior to the
Effective Date and that is owned by RSI, an Acquired Ryder Entity or Ryder
Affiliate (with such disclosure indicating the entity owning such Intellectual
Property). SCHEDULE 4.21(A)-PART 2 contains a description of all material
Intellectual Property licensed or leased for use in the Conveyed Ryder Business
as of the Effective Date and, to the Knowledge of Ryder, during the two (2)
years prior to the Effective Date (with such disclosure indicating the owner or
vendor of such licensed or leased Intellectual Property, the Acquired Ryder
Entity or Ryder Affiliate licensing or leasing the Intellectual Property and the
name, date and/or nature of the license agreement or lease), and RSI has
furnished the Allied Parties with copies of all license agreements or leases
governing such Intellectual Property. To the Knowledge of Ryder, the
Intellectual Property described on SCHEDULE 4.21(A) constitutes all material
Intellectual Property reasonably required for conduct of the Conveyed Ryder
Business, as it is currently conducted, and there are no rights of any third
parties relating to the Intellectual Property identified in SCHEDULE
4.21(A)-PART 1 that could impair or preclude the Acquired Entity's use of such
Intellectual Property after the Closing.
(b) SCHEDULE 4.21(B) contains a list of all material agreements,
procedures and policies that the Acquired Ryder Entities have in place to
protect the Intellectual Property, Trade Secrets, and Confidential Information
associated with the Conveyed Ryder Business as Ryder has conducted it,
including, but not limited to, no-compete or non-solicitation covenants or
agreements (whether free standing or embodied in broader agreements, such as
employment or consulting agreements), confidentiality or non-disclosure
agreements, and technology ownership agreements or covenants. To RSI's
Knowledge, such agreements are in full force and effect and no party is in
breach of any such agreements. SCHEDULE 4.21(B) describes all technology
development work (for example, computer software development) performed by third
party contractors or consultants for an Acquired Ryder Entity or in connection
with the Conveyed Ryder Business during the two (2) years prior to the Effective
Date, and SCHEDULE 4.21(B) also identifies all such work that was governed by a
written agreement with the developer and all such written agreements have been
provided to Allied for review prior to the Closing Date.
4.22 TITLE TO PROPERTIES.
Except as otherwise specifically disclosed in the Title Reports
and in SCHEDULE 4.22 - PART 1, each Acquired Ryder Entity has good and
marketable title to the real properties described in SCHEDULE 4.22 - PART 1,
(the "Owned Real Property"). Allied shall obtain title insurance commitments
from title insurance companies selected by Allied (the "Title Reports") for all
of the Owned Real Property and shall provide copies of such Title Reports to
Ryder promptly after Allied's receipt of the same. Within fifteen (15) business
days after receipt of each Title Report, RSI shall give Allied written notice
either (i) warranting that there are no leases, licenses, occupancy agreements,
encumbrances or Liens affecting the Owned Real Property which is the subject of
the Title Report, except as disclosed in
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SCHEDULE B - PART II of the Title Report, or (ii) stating, with specificity,
each lease, license, occupancy agreement, encumbrance or Lien affecting the
subject Owned Real Property in addition to those disclosed in SCHEDULE B - PART
II of the Title Report. SCHEDULE 4.22 - PART 1 also includes the approximate
acreage of each parcel of Owned Real Property. SCHEDULE 4.22 - PART 2 contains a
true, complete and accurate list of all agreements (such agreements being
referred to herein as the "Ryder Leases") granting or demising leasehold
interests or licenses in and to real property held by the applicable Acquired
Ryder Entity as lessee, tenant, grantee or licensee (the property leased or
licensed pursuant to such agreements being referred to as "Leased Real
Property") and, to the Knowledge of Ryder, the Ryder Leases have not been
otherwise amended or modified. No Acquired Ryder Entity has pledged, mortgaged
or hypothecated any of its right, title or interest in and to the Leased Real
Property as security for any debt or otherwise. The Owned Real Property and the
Leased Real Property are sometimes referred to collectively as the "Real
Property". To the Knowledge of Ryder, and except as disclosed in SCHEDULE 4.22 -
PART 3 hereof, no Acquired Ryder Entity is the owner, lessee, tenant, grantee or
licensee of, or has contracted to own, lease or license, any real property other
than the Real Property.
4.23 REPRESENTATIONS AND COVENANTS REGARDING REAL PROPERTY.
(a) To the Knowledge of Ryder, and except as previously disclosed
in writing to Allied, Ryder has not received any written notice of violation or
other communication in writing from any municipality or other governmental
authority, board of insurance underwriters, regulatory authority, tenant,
lessor, lessee, licensor, licensee, mortgagee or any other party requiring that
any work or repairs be made to the Real Property or to any of the improvements
located thereon.
(b) To the Knowledge of Ryder, the Real Property and any
improvements located thereon are reasonably suited for their intended uses.
(c) To the Knowledge of Ryder, the Real Property and any
improvements located thereon, are in substantial compliance with all Laws and
are operated in substantial compliance with all Laws applicable thereto. To the
Knowledge of Ryder, Ryder has not received any notice of any violation of, or
notice to comply with, any Law with respect to the Real Property. During the
period from December 31, 1996 through the Effective Date, each Acquired Ryder
Entity has operated the Real Property in a manner consistent with the operation
and management of such Real Property prior to the Effective Date.
(d) There are no material outstanding liabilities of any Acquired
Ryder ntity relating to the Real Property and to be assumed by any Allied Party
under this Agreement other than as set out in the Ryder Financial Statements.
(e) To the Knowledge of Ryder, and except as previously disclosed
in writing to Allied, Ryder has not received any written notice of condemnation
or expropriation relating to the Real Property other than condemnations and
expropriations for any widening of an existing right-of-way which will not
materially adversely affect the value of the affected Real Property or the
current use thereof.
(f) SCHEDULE 4.23 - PART 1 contains a true, complete and accurate
list of leases, licenses or other agreements of any type, written or oral,
relating to the Real Property pursuant to which any Acquired Ryder Entity is
lessor, licensor, landlord, sublessor, sublicensor or otherwise conveys or
31
grants any interest in or rights to use all or any portion of the Real Property
(the "Ryder Landlord Documents"). Except for parties in possession under the
Ryder Landlord Documents disclosed in SCHEDULE 4.23 - PART 1 or parties that are
entitled to use or possess portions of the Leased Real Property under the terms
of the Ryder Leases, there are no entities, other than Acquired Ryder Entities,
in possession of or using, or claiming the right to possess or use, any portion
of the Real Property. To the Knowledge of Ryder, all conditions and obligations
to be performed by all parties to the Ryder Landlord Documents prior to the
Effective Date have been performed and there is not under any of the Ryder
Landlord Documents any default or any claimed default by any party thereto or
event of default or event which with notice or lapse of time, or both, would
constitute a default by any party thereto and in respect of which commercially
reasonable steps have not been taken to prevent a default on its part from
occurring. A true, complete and accurate list of all subordination,
non-disturbance, attornment, estoppel and other similar agreements relating to
the Ryder Leases or the Ryder Landlord Documents (the "Ryder Lease Related
Agreements") is contained in SCHEDULE 4.23 - PART 2. A complete and accurate
copy of the Ryder Leases, the Ryder Landlord Documents and the Ryder Lease
Related Agreements have been delivered to the Allied Parties.
(g) Except as previously disclosed in SCHEDULE 4.23 - PART 3, no
Acquired Ryder Entity is or will be obligated to pay from or after the Closing,
any real estate commissions or similar type fees to any real estate broker,
finder or agent with respect to any portion of the Real Property other than the
obligations included in the Final Closing Balance Sheet.
(h) To the Knowledge of Ryder, and except as previously disclosed
in writing to Allied, there are no lawsuits or legal actions or proceedings of
any kind pending or threatened against or affecting the Real Property, or
Ryder's interest therein, title thereto or use thereof.
(i) To the Knowledge of Ryder, and except as previously disclosed
in writing to Allied, Ryder has neither given nor received written notice of any
default or any claimed default, with respect to any Real Property.
(j) Except as disclosed on SCHEDULE 4.23(J), there are no service
contracts or other agreements in force with respect to the Real Property which
are not cancelable by the Acquired Ryder Entities upon not more than ninety (90)
days notice without premium or penalty, or which require any financial
commitment in excess of $2,000.00 per contract per month (or $25,000.00 per year
in the aggregate if not paid monthly), and Ryder will not enter into any such
contracts or agreements after the date hereof.
(k) Except as disclosed on SCHEDULE 4.23(K), to the Knowledge of
Ryder, there are no rollback taxes, impact fees, special water or sewer charges,
or other special assessments or taxes affecting or relating to the Owned Real
Property or any Leased Real Property for which any of the Acquired Ryder
Entities will be obligated to pay other than those included in the Final Closing
Balance Sheet.
(l) The Real Property has direct access to public roads through
dedicated rights-of-way or recorded easements, to permit the use thereof for its
intended purpose.
32
(m) To the Knowledge of Ryder, there have been, and are, no
disputes concerning the boundary lines of the Owned Real Property. No
improvements encroach from the Owned Real Property over any set-back lines or
into adjoining property or from adjoining property into the Owned Real Property
that would have a Material Adverse Effect on such Owned Real Property or the
future use thereof.
(n) Except where the lease agreement requires otherwise, no rent
has been paid more than thirty (30) days in advance and no security deposit has
been paid by, nor is any termination or cancellation fee or charge or any
brokerage commission payable by, any Acquired Ryder Entity or any other party
with respect to any Ryder Landlord Document or Ryder Lease.
(o) Except as expressly contemplated elsewhere in this Agreement
or mutually agreed to in writing by the Parties, there are no contractual
obligations or agreements in principle for any Acquired Ryder Entity to enter
into new leases of real property or terminate, renew or amend the Ryder Leases
or the Ryder Landlord Documents prior to the Closing Date.
(p) Except as disclosed in SCHEDULE 4.23 - PART 4, Ryder has
obtained, will obtain prior to Closing, or is not required to obtain, as the
case may be, all consents and approvals from any party to the Ryder Leases and
the Ryder Landlord Documents so that the Transactions contemplated hereunder
shall be permitted under, and shall not violate or contravene any provision in
the Ryder Leases or the Ryder Landlord Documents.
(q) No covenants, easements, restrictions, servitudes, rights of
way or regulations applicable to the Real Property, have had or could reasonably
be expected to have any Material Adverse Effect with respect to the particular
Real Property so encumbered.
4.24 TITLE TO AND CONDITION OF PERSONAL PROPERTY
(a) Except as disclosed in SCHEDULE 4.24(A) and except for leased
chattels, all chattels used in the Conveyed Ryder Business are legally and
beneficially owned by the Acquired Ryder Entities with good and marketable title
thereto free from all Liens.
(b) All of the equipment used in the Conveyed Ryder Business or
owned, leased or licensed by the Acquired Ryder Entities is in good condition
and repair, normal wear and tear excepted, reasonably suited for the use
intended, and, to the extent that an Acquired Ryder Entity is responsible or
liable therefor, operated in substantial conformity with all applicable Laws,
and to the Knowledge of Ryder, there are no proposed changes in such Laws that
would materially affect such equipment or its use. An accurate list of all Ryder
owned or leased tractors, trailers, tractor-trailer combinations, trucks,
service vehicles, lift trucks and motor vehicles that are licensed to be
operated on any public road or highway and all other motor vehicles which are
not licensed to be operated on a public road or highway has been delivered to
the Allied Parties.
33
(c)
(i) SCHEDULE 4.24(C)(I) sets forth a true, complete and
accurate list of all Ryder Leases of office trailers, transportation equipment
without driver, of tractors, trailers and overheads including the number, make,
model, year of manufacture and serial number of each leased tractor (including
overhead) and trailer and a copy of each such Ryder Lease has been delivered to
the Allied Parties.
(ii) SCHEDULE 4.24(C)(II) lists any owner-operators which
have existing contracts with an Acquired Ryder Entity, their equipment, their
method of compensation and the terminal to which each owner-operator is
assigned.
4.25 INVENTORIES. The inventories of each Acquired Ryder Entity consist
in all material respects of items of a quality and quantity usable and useful in
the Ordinary Course of Business, and the values of obsolete materials and
materials below standard quality have been written down on its books of account
to realizable market value, or adequate reserves have been provided therefor.
All goods sold or otherwise distributed by any Acquired Ryder Entity, and all
finished goods in the inventory of any Acquired Ryder Entity conform in all
material respects to customary trade standards for marketable goods, subject to
returns of goods or warranty claims in accordance with the prior history of such
Acquired Ryder Entity.
4.26 DIRECTORS OR OFFICERS. SCHEDULE. 4.26 correctly lists all of the
present officers, directors and any other key management personnel of each
Acquired Ryder Entity.
4.27 COMPENSATION STRUCTURE. SCHEDULE 4.27 contains a true and complete
list of the names, titles, date of hire and salary of each salaried non-union
person whose earned compensation, regardless of whether actually payable in such
year, from any Acquired Ryder Entity for the current fiscal year will equal or
exceed $60,000. No such full-time employee of any Acquired Ryder Entity has
informed or advised any Acquired Ryder Entity or RSI in writing (nor is RSI
otherwise aware) that such employee does not intend to continue his or her
employment with such Acquired Ryder Entity after the date of this Agreement. No
Acquired Ryder Entity has any written agreements, correspondence, memoranda or
other written materials currently in effect that have been provided to such
employees relating to their current compensation except as described on SCHEDULE
4.27, and such materials, if there are any, have all been delivered to the
Allied Parties. Performance evaluations on each of the personnel listed on
SCHEDULE 4.27 will be delivered to Allied at the Closing.
4.28 EMPLOYEE BENEFITS
(a) EMPLOYEE BENEFIT PLANS.
(i) SCHEDULE 4.28(A) sets forth a true and complete list of
each plan for the benefit of employees of any Acquired Ryder Entity, including
without limitation, each "employee benefit plan," as such term is defined in
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), whether or not subject to ERISA which definition shall apply, as
varied by reasonable commercial interpretation, to affected Canadian employees
under pension benefits legislation in Canada, and each bonus, incentive or
deferred compensation, severance, termination, retention, change of control,
stock option or other equity-based, performance or other employee or retiree
benefit or
34
compensation plan, program, agreement, policy or understanding, whether written
or unwritten, that is or has been maintained or established by RSI or any
Acquired Ryder Entity or to which RSI or any Acquired Ryder Entity contributes
or is or has been obligated or required to contribute or with respect to which
RSI or any Acquired Ryder Entity may have any liability at the Closing Date or
at any time within the five (5) year period prior thereto (collectively, the
"Plans").
(ii) Each Plan is in writing and true and complete copies of
the following items relating to each Plan, where applicable, have heretofore
been made available to the Allied Parties: (i) the plan document and any trust,
custodial or other funding agreement, including all amendments thereto; (ii) the
most recent actuarial reports and annual reports (Forms 5500) filed with the
IRS, or where applicable, with Canadian pension or other Governmental
Authorities; (iii) the most recent determination letters issued by the IRS and,
where applicable, Revenue Canada and Canadian pension regulatory authorities;
(iv) the most recent summary plan descriptions, summary of material
modifications to such summary plan descriptions and all material employee
communications relating to such Plans distributed within the last 12 months; and
(v) the most recent custodial or trustee reports or other financial statement
for funded Plans.
(b) QUALIFICATION. SCHEDULE 4.28(B) sets forth a true and complete
list of each Plan intended to be qualified under section 401(a) of the Code and
any other relevant Tax legislation and, where applicable, under Canadian pension
and Tax legislation. Except as disclosed in SCHEDULE 4.28(B), each Plan intended
to be so qualified, and the trust (if any) forming a part thereof, has received
a favorable determination letter that considers the relevant Tax legislation as
to its qualification under the Code and, where applicable, Canadian Tax and
pension authorities and to the effect that each such trust is exempt from
taxation under relevant Tax legislation, and, to the Knowledge of Ryder, nothing
has occurred since the date of such determination letter that could adversely
affect such qualification or tax-exempt status.
(c) COMPLIANCE; LIABILITY.
(i) Except as disclosed in SCHEDULE 4.28(C)(I), no Plan is
subject to Section 412 of the Code or section 302 or Title IV of ERISA and,
where applicable, each Plan complies with Canadian Tax and pension legislation.
(ii) Except as disclosed in SCHEDULE 4.28(C)(II) or reserved
for in the Final Closing Balance Sheet, no liability has been or is reasonably
expected to be incurred by RSI or any Acquired Ryder Entity (either directly or
indirectly, including as a result of an indemnification obligation or any joint
and several liability obligations) under or pursuant to the terms of any Plan or
any Law governing same, including without limitation, Title I or IV of ERISA or
the penalty, excise tax or joint and several liability provisions of the Code
relating to employee benefit plans and, to the Knowledge of Ryder, no event,
transaction or condition has occurred or exists on or prior to the Closing Date
that could reasonably be expected to result in any such liability to RSI or any
Acquired Ryder Entity or, following the Closing, to any Allied Entity or any
employee benefit plan of the Allied Parties or any of their Affiliates. Except
as disclosed in SCHEDULE 4.28(C), no trade or business, whether or not
incorporated, is or would have been at any date of determination occurring
within the preceding six years treated as a single employer under section 414 of
the Code together with RSI or any Acquired Ryder
35
Entity. RSI confirms that the proceeding statements in this Section 4.28(c)(ii)
apply equally, pursuant to the provisions of Canadian Law, to any Canadian
Plans.
(iii) Except as disclosed in SCHEDULE 4.28(C)(III), each of
the Plans has been operated and administered in all material respects in
compliance with all Laws. Except as disclosed in SCHEDULE 4.28(C)(III), there
are no pending or, to the Knowledge of Ryder, threatened claims by or on behalf
of any of the Plans, by any trustee or service provider to any Plan, by any
Governmental Authority, by any employee or consultant to RSI or any Acquired
Ryder Entity or otherwise involving any such Plan or the assets of any Plan
(other than routine claims for benefits).
(iv) MULTI-EMPLOYER PLANS AND MULTIPLE EMPLOYER PLANS.
SCHEDULE 4.28(C)(IV) sets forth a complete and accurate list of each
multi-employer plan (within the meaning of Section 3(37) or 4001(a) of ERISA) (a
"Multi-employer Plan") and each single employer pension plan (within the meaning
of Section 4001(a)(15) of ERISA) that is subject to Sections 4063 and 4064 of
ERISA (a "Multiple Employer Plan") (i) which is maintained, contributed to or
participated in by the Acquired Ryder Entities or (ii) with respect to which any
Acquired Ryder Entity has incurred or could incur any liability under, arising
out of or by operation of Title IV of ERISA or from Canadian pension
legislation. No Acquired Ryder Entity has incurred any liability which has not
been satisfied in full in connection with (a) the withdrawal from or termination
of any Multi-employer Plan or Multiple Employer Plan or (b) the reorganization
of any Multi-employer Plan, and, to RSI's Knowledge, no fact or event exists
which could give rise to any such liability; and such SCHEDULE 4.28(C)(IV) also
sets forth the amount of potential withdrawal liability for each such plan as
communicated by such plan's representative to the applicable Acquired Ryder
Entity and states the date and source of such communicated withdrawal liability
estimate.
(v) Except as disclosed in SCHEDULE 4.28(C)(V), all
contributions required to have been made by RSI or any Acquired Ryder Entity to
any Plan under the terms of any such Plan or pursuant to any applicable
collective bargaining agreement or Law have been made within the time prescribed
by any such Plan, agreement or Law. All contributions, premiums and expenses
payable to or in respect of any Plan or the operation or administration thereof
relating to any period on or prior to the date hereof have been paid, adequately
accrued on the Interim Closing Balance Sheet or incurred and relate to services
rendered after the date of the Interim Closing Balance Sheet in the ordinary
course of business consistent with prior practice and in accordance with the
terms of this Agreement.
(vi) No liability under Subtitle C or D of Title IV of ERISA
has been incurred and not satisfied and no condition exists which presents a
material risk that liability would be incurred by any Acquired Ryder Entity, in
each case with respect to any ongoing, frozen or terminated Plan currently or
formerly maintained or contributed to by any Acquired Ryder Entity or any person
which would be now or at the applicable time considered a member of Ryder's
"controlled group" within the meaning of Section 4001(a)(14) of ERISA (an "ERISA
AFFILIATE"), and (ii) no withdrawal liability has been incurred and not
satisfied under Subtitle E of Title IV of ERISA (regardless of whether based on
contributions of an ERISA Affiliate or any Acquired Ryder Entity) which could
result in a liability to any Acquired Ryder Entity. No Notice of Reportable
Event (within the meaning of Section 4043 of ERISA) has been required to be
filed for any Plan within the three years preceding the Closing Date. No
distribution has been made from a Plan that does not comply with Treasury
Regulation ss. 1.401(a)(4)-5(b). No liability under corresponding Canadian
pension or Tax legislation has been incurred.
36
(vii) Except as set forth in SCHEDULE 4.28(C)(VII), under
each Plan which is a "single employer plan," within the meaning of Section
4001(a)(15) of ERISA, as of the last day of the Plan year ending in December
1996, the "current liability," within the meaning of Section 412(1)(7) of the
Internal Revenue Code (as determined on the basis of the actuarial assumptions
contained in the Plan's most recent actuarial valuation), did not exceed the
then current fair market value of the assets of such Plan and there has been no
material change in the financial condition of such Plan since the last day of
such Plan year. The information provided to the actuaries for use in preparing
any Plan's actuarial valuation was complete and accurate in all respects and
neither RSI nor any Acquired Ryder Entity have any reason to believe that the
conclusions expressed in those valuations are incorrect or incomplete. Except as
set forth in SCHEDULE 4.28(C)(VII), each Plan that is a "defined benefit plan"
(as defined by Section 3(35) of ERISA) could be terminated at the Closing Date
in a standard termination under Section 4041(b) of ERISA without making any
additional contributions to such plan other than any normal contributions with
respect to the 1997 plan year. All Plans subject to Canadian legislation are, as
of the Closing Date, in compliance with legislatively mandated funding and
contribution amounts and levels, except as disclosed on SCHEDULE 4.28(C)(VII).
(viii) Each of the Plans which is a "group health plan"
within the meaning of Section 4980B of the Code has been administered in
material compliance with Title I, Subtitle B, Part 6 of ERISA and Section 4980B
of the Code and the regulations thereunder ("COBRA"), and there has been no
failure to provide continuation coverage under any Plan which is a group health
plan, as required by the foregoing provisions of the Code and ERISA, which could
result in any material liability to any Acquired Ryder Entity.
(d) No employee of RSI or any Acquired Ryder Entity is or may
become entitled to post-employment benefits of any kind by reason of employment
with RSI or any Acquired Ryder Entity on or prior to the Closing Date,
including, without limitation, death or medical benefits (whether or not
insured), other than (a) coverage provided pursuant to the terms of any Plan
specifically identified as providing such coverage in SCHEDULE 4.28(D) or
mandated by section 4980B of the Code, (b) benefits payable under any Plan
qualified under section 401(a) of the Code or (c) deferred compensation to be
accrued as a liability on the Interim Closing Balance Sheet pursuant to the
terms of a Plan. Except as disclosed in SCHEDULE 4.28(D), the consummation of
the Transactions will not result in an increase in the amount of compensation or
benefits or the acceleration of the vesting or timing of payment of any
compensation or benefits payable to or in respect of any Employee. No amount
paid or payable by RSI or any Acquired Ryder Entity has been or will fail to be
deductible by RSI or any Acquired Ryder Entity, as the case may be, under
section 280G of the Code.
(e) Except as set forth in SCHEDULE 4.28(E), neither RSI nor any
Acquired Ryder Entity have any formal plan or express or implied commitment to
create any additional plan, policy, agreement or arrangement that would affect
any Employee, or modify, change or terminate any existing Plan, other than with
respect to a modification or change required by ERISA or the Code or applicable
law.
4.29 LABOR-RELATED MATTERS. Except for the union agreements described
on SCHEDULE 4.29-PART 1, neither RSI nor any Acquired Ryder Entity is a party to
any collective bargaining agreement or agreement of any kind with any union or
labor organization. Except as disclosed in the summary of grievances described
on SCHEDULE 4.29-PART 2 and/or in SCHEDULE 4.14:
37
(a) to the Knowledge of Ryder, neither RSI nor any Acquired Ryder
Entity is (or is alleged to be) in violation of or default under any such
collective bargaining or other agreement;
(b) to the Knowledge of Ryder, each of the Acquired Ryder Entities
and RSI has complied with all obligations under all applicable labor Laws (where
non-compliance with any such Law could be expected to have a Material Adverse
Effect);
(c) there are no unfair labor practice charges pending or, to the
Knowledge of Ryder, threatened against RSI in connection with the Conveyed Ryder
Business or any Acquired Ryder Entity and there are no charges, complaints,
claims, or proceedings pending or which have been threatened against RSI in
connection with the Conveyed Ryder Business or any Acquired Ryder Entity with
respect to any alleged violation of any legal duty (including but not limited to
any wage and hour claims, employment discrimination claims or claims arising out
of any employment, independent contractor and/or owner/operator relationship) by
RSI or any Acquired Ryder Entity as to any of its employees or as to any person
seeking employment therefrom.
4.30 TRANSACTIONS WITH MANAGEMENT. Except as disclosed on SCHEDULE
4.30, there are no contracts with or commitments of any Acquired Ryder Entity or
RSI or to present or former shareholders, directors, officers or employees
thereof or their spouses, for example, loans to shareholders or officers (other
than contracts or commitments relating to services to be performed by an
officer, director, or employee as a currently-employed employee of any Acquired
Ryder Entity, copies of each of which, to the extent in writing, have been
delivered to the Allied Parties.)
4.31 APPROVALS AND CONSENTS. SCHEDULE 4.31 lists all Consents necessary
in order for RSI to consummate the Transactions, including but not limited to
all Governmental Authorities and other regulatory approvals from federal and
provincial authorities.
4.32 GUARANTEES; NO DEFAULT.
(a) Except as set forth on SCHEDULE 4.32, no Acquired Ryder Entity
is a guarantor of the obligation of any other person or entity, and no other
person or entity is the guarantor of any obligations of an Acquired Ryder
Entity.
(b) Except for matters which are waived pursuant to the terms of
this Agreement on or before Closing, no Acquired Ryder Entity is in default
under its Articles or Certificate of Incorporation, Bylaws or other governance
agreement or under any material term or provision of any security deed,
mortgage, indenture or security agreement or of any other material contract or
instrument to which it is a party or by which it or any of its property is
bound.
4.33 DUE DILIGENCE RESPONSE. RSI's response to the Allied Parties' due
diligence inquiries to date are and have been, and any responses to such
inquiries that occur during the Pre-Closing Period will be true and correct in
all material respects, and RSI has delivered to the Allied Parties or given the
Allied Parties access to originals or copies of all the documents and materials
listed on SCHEDULE 4.33.
4.34 EMPLOYMENT EQUITY. None of the Acquired Ryder Entities have
received written notice of any proposed or pending compliance review with
respect to employment equity and no sanctions have
38
been imposed on any of them for failing to honor their commitment to employment
equity by any Governmental Authority of Canada or its provinces.
4.35 OPERATING LICENSES. SCHEDULE 4.35 describes all material operating
authorizations (the "Operating Licenses") issued to each Acquired Ryder Entity
by state, provincial and Canadian governmental agencies, the Surface
Transportation Board, and the Federal Highway Administration and all similar
transport boards in the other jurisdictions in which the Conveyed Ryder Business
of each Acquired Ryder Entity is conducted. The Operating Licenses comprise all
material operating authorizations held by the Acquired Ryder Entities with
respect to the business of the Acquired Ryder Entities as presently conducted
and, to the Knowledge of Ryder, are the only operating authorizations necessary
or desirable for conduct of the Conveyed Ryder Business of each of the Acquired
Ryder Entities as presently conducted. The Operating Licenses are in good
standing, are in full force and effect and are being held and operated by the
Acquired Ryder Entities in accordance with all terms of such Licenses and in
accordance with all Laws. The safety ratings of each of the Acquired Ryder
Entities is satisfactory and all similar safety compliance records (the "Safety
Records") in all jurisdictions in which the business of each Acquired Ryder
Entity is conducted are in good standing and do not exceed any applicable
default of threshold levels. The Operating Licenses and Safety Records are not
subject to review and there is no litigation, arbitration or other proceeding
pending or, to the Knowledge of RSI, threatened which could materially adversely
affect the business of the Acquired Ryder Entities as currently conducted or the
Acquired Ryder Entities' use of the Operating Licenses or status of the Safety
Records or which could result in the revocation, cancellation, suspension or any
adverse modification of any such Operating Licenses.
4.36 TRANSFER OF BUSINESS. Except as set forth on SCHEDULE 4.36, the
Acquired Ryder Entities will have, at Closing, the right to possess, use, and
either own, lease, or own a license or sub-license, to all assets and properties
used or useful in the conduct of the Conveyed Ryder Business, as historically
conducted by Ryder, and, except for any license or sub-license to RSI or a Ryder
Affiliate pursuant to the terms of this Agreement, neither RSI nor any Ryder
Affiliate will retain any interest, direct or indirect, in any such asset and
properties used or useful in the conduct of the Conveyed Ryder Business, as
historically conducted, and neither RSI nor any Ryder Affiliate will retain any
interest, direct or indirect, in any such asset or property after the Closing,
all such interest, if any, to transfer to the Allied Parties at Closing.
4.37 SALE OF THE NLLC MEMBERSHIP INTERESTS.
(a) The indirect sale, assignment and transfer of the MCL Shares to CAC
through the sale, assignment and transfer of the NLLC Membership Interests to
CAC does not require the regulatory approval of any Governmental Authority,
including, without limitation, Industry Canada.
(b) The fair market value of the MCL Shares as of the Effective Date
and at the Closing Date will not exceed the amount allocated on SCHEDULE 1.4 to
the MCL shares.
4.38 XXXXX LITIGATION. The final judgment in EEOC V. COMPLETE AUTO TRANSIT,
Case No. 95-CV-73427DJ does not exceed the reserve established for the case on
the Final Closing Balance Sheet.
39
ARTICLE FIVE - REPRESENTATIONS AND WARRANTIES OF THE ALLIED PARTIES
As an inducement to RSI to enter into this Agreement and to consummate the
Transactions, the Allied Parties represent and warrant that the following
representations and warranties are true and correct as of the date of this
Agreement and shall, except as may be specifically provided for in this
Agreement or otherwise specifically agreed upon or waived, in each case in
writing by RSI, be true and correct during the Pre-Closing Period and as of the
Closing:
5.1 VALIDITY. This Agreement together with each Ancillary Agreements to
which an Allied Party is a party (collectively, the "Allied Agreements") shall
constitute the legal, valid and binding obligation of the Allied Parties,
enforceable in accordance with its terms subject, however, to limitations with
respect to enforcement imposed by law in connection with bankruptcy or similar
proceedings.
5.2 CORPORATE STATUS AND AUTHORITY Each Allied Party is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Georgia. Each Allied Party has full corporate power and authority to execute and
deliver the Allied Agreements, to perform its obligations under and to
consummate the Transactions, and all action necessary on its part to execute and
deliver any Allied Agreement, to perform its obligations thereunder, and to
consummate the Transactions has been taken.
5.3 NO CONFLICT. Provided that the Consents referred to in SCHEDULE 5.4 and
the approvals provided for in Sections 7.11 and 7.12 are obtained on or before
Closing, neither the execution and delivery of this Agreement or any other
Allied Agreements nor the performance and in compliance by either Allied Party
with the terms of this Agreement and any other Allied Agreements will result in
any conflict with, a breach of the terms or conditions of, or constitute a
default under, any mortgage, note, bond, indenture, agreement, license,
instrument, undertaking, judgment, decree, direction, governmental order or
other restriction or obligation to which an Allied Party is a party or by which
it or any of its properties or assets may be bound or affected. Consummation of
the Transactions will not violate, breach, offend or contravene any provision of
either Allied Party's Articles of Incorporation or Bylaws or any Law.
5.4 APPROVALS AND CONSENTS. SCHEDULE 5.4 lists all Consents necessary in
order for the Allied Parties to consummate the Transactions, including but not
limited to all governmental and other regulatory approvals and Consents of
suppliers, lenders, lessors, landlords and governmental entities.
5.5 ASSURANCE. Allied will exercise diligent efforts to assure, and to
cause AAC, CAC and Axis to consummate the Transactions in accordance with this
Agreement and the Ancillary Agreements.
5.6 REPRESENTATIONS AND WARRANTIES.
(a) No representation or warranty contained in any Allied Agreement or
in any written statement delivered to RSI by or at the direction of an Allied
Party, pursuant hereto or in connection with the Transactions, contains or shall
contain any untrue statement, nor shall such representations and warranties
taken as a whole omit any statement necessary in order to make any statement not
misleading.
40
(b) There is no fact known (or that after reasonable investigation
under the circumstances should be known) to an Allied Party (other than facts
relating to general business conditions), which has had or could reasonably be
expected to have a Material Adverse Effect which has not been disclosed in this
Agreement.
ARTICLE SIX - CONDUCT OF BUSINESS PENDING CLOSING
RSI covenants and agrees that, from and after the date of this Agreement
and through the Closing, it shall take the following action or cause the
Acquired Ryder Entities to take the following action:
6.1 CONDUCT OF BUSINESS. Each Acquired Ryder Entity shall carry on the
Conveyed Ryder Business in the usual, regular and ordinary course in
substantially the same manner as conducted prior to the date of this Agreement
and in accordance with all applicable Laws, use reasonable efforts to preserve
intact and not make any materially adverse changes with respect to its present
business organization and keep available the services of its present officers
and employees, preserve its goodwill and its relationships with and not make any
materially adverse changes with respect to customers, suppliers, lenders and
others having business dealings with it and seek to maintain harmonies and
peaceful labor relations.
6.2 MAINTENANCE OF PROPERTIES. LICENSES AND CONTRACTS. Consistent with
historical practice and its Ordinary Course of Business, each Acquired Ryder
Entity will maintain its properties and assets in good operating condition,
ordinary wear and tear excepted and will maintain and, if there is a reasonable
need for repairs, repair all Ryder terminal facilities and Ryder vehicles prior
to the Closing Date at Ryder's expense. Each Acquired Ryder Entity will maintain
all of its existing material licenses, franchises and permits. Each Acquired
Ryder Entity will maintain or cause to be extended all material or advantageous
contracts.
6.3 INSURANCE. Each Acquired Ryder Entity will maintain and keep in full
force and effect all of the insurance referred to in Section 4.21 or other
insurance equivalent thereto in all material respects.
6.4 ISSURANCE OF SECURITIES. Except as set forth on SCHEDULE 6.4, none of
the Acquired Ryder Entities will sell, issue, authorize or propose the sale or
issuance of, or purchase or propose the purchase of, any interest in any shares
of capital stock or other equity interest or any class of securities convertible
into, or rights, warrants or options to acquire, any such shares or other
convertible securities or enter into any agreement with respect to the
foregoing.
6.5 DIVIDENDS. Except in the Ordinary Course of Business and in a manner
consistent with historical practice and except for actions taken to effectuate
the Transactions, no Acquired Ryder Entity shall declare or make any dividend,
distribution or payment with respect to the capital stock of any Acquired Ryder
Entity, and no Acquired Ryder Entity will, directly or indirectly, redeem,
purchase or otherwise acquire any of the capital stock of any Acquired Ryder
Entity.
41
6.6 AMENDMENT OF CHARTER, COPORATE EXISTENCE. No Acquired Ryder Entity will
amend its Articles or Certificate of Incorporation or Bylaws or any other
governance document, and each Acquired Ryder Entity will maintain its corporate
existence, qualifications and powers.
6.7 NO ACQUISTIONS. Other than as contemplated by this Agreement and the
Transactions, no Acquired Ryder Entity will acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets or equity of, or by
any other manner, any business or any corporation, partnership, association or
other entity or division thereof or otherwise acquire or agree to acquire any
assets that are material, individually or in the aggregate, to any of them.
6.8 DISPOSITION OF ENCUMBERANCE OF ASSETS. Except as the Allied Parties may
otherwise approve after being given reasonable prior written notice (with such
approval not to be unreasonably withheld or delayed), none of the Acquired Ryder
Entities will sell, mortgage, pledge, subject to any Lien, lease, buy or
otherwise acquire, transfer or dispose of any material property tangible or
intangible or interest therein, other than Retained Matters.
6.9 COMPENSATION AND OTHER EMPLOYMENT TERMS. Except as the Allied Parties
may otherwise approve after being given reasonable prior written notice (with
such approval not to be unreasonably withheld or delayed), no increase of more
than eight and one-half percent (8.5%) will be made in the base compensation or
rate of compensation payable or to become payable by any Acquired Ryder Entity
to any director, officer, or salaried employee earning $60,000 or more per annum
or any "general increase" (as defined in Section 4.13) in the compensation or
rate of compensation payable or to become payable to hourly or salaried
employees of such Acquired Ryder Entity earning less than $60,000 per annum, or
any director, officer or employee hired at a salary in excess of $60,000 per
annum, or any increase in any payment of or commitment to pay any bonus, profit
sharing or other extraordinary compensation to any employee. In addition, no
Acquired Ryder Entity will make any other material change in the terms or
conditions of employment of any Acquired Ryder Entity employee except for
changes approved by Allied, required by collective bargaining agreements or by
operation of law.
6.10 BANKING ARRANGEMENTS. No change will be made in the banking and safe
deposit arrangements or to any of the deposits referred to in Section 4.11,
except in the Ordinary Course of Business and then only after notifying the
Allied Parties of such change.
6.11 INDEBTNESS. Other than in the Ordinary Course of Business or except
for actions taken to effectuate the Transactions, no Acquired Ryder Entity will
incur any indebtedness for borrowed money or purchase money indebtedness or
guarantee any such indebtedness or issue or sell any of its debt securities or
guarantee any debt securities of others. Repayment of inter-company debt (from
an Acquired Ryder Entity to another Ryder Affiliate) shall be handled in a
manner that Allied approves in writing in advance (which approval Allied will
not unreasonably delay or withhold).
6.12 PAYMENT OF DEBT. Except as contemplated in this Agreement, none of the
Acquired Ryder Entities will pay any claim or discharge or satisfy any Lien or
pay any obligation or liability other than in the Ordinary Course of Business or
as required by the terms of any instrument evidencing or governing the same.
42
6.13 BENEFIT PLANS. Except as disclosed on SCHEDULE 6.13, none of the
Acquired Ryder Entities will enter into or amend any bonus, incentive
compensation, deferred compensation, profit sharing, retirement, pension, group
insurance or other benefit plan, or any union, employment or material consulting
agreement or arrangement, including any employee benefit plan, except as and to
the extent required by law or regulations. RSI will ensure that the Allied
Parties are notified in writing within five (5) business days of any new Claims
involving any Plan of any Acquired Ryder Entity (including but not limited to
labor and employment related Claims) and the settlement or other disposition of
such Claims.
6.14 BOOKS AND RECORDS. The books and records of each Acquired Ryder Entity
will be maintained in the usual, regular and ordinary course of business on a
basis consistent with prior years, and with respect to financial records and
statements, consistent with GAAP.
6.15 OTHER ACTIONS. RSI nor any other Acquired Ryder Entity will take any
action that would or could reasonably be expected to result in any of the
representations and warranties set forth in this Agreement becoming untrue in
any material respect.
6.16 CONTRACTUAL ARRANGEMENTS. No Acquired Ryder Entity, without the
express written consent of the Allied Parties, will enter into any material
contract or agreement (other than customer contracts) which by its terms does
not expire or is not cancelable (without penalty) within thirty (30) days after
the Closing. No Acquired Ryder Entity will enter into any contracts requiring a
new investment of $500,000 or more by an Acquired Ryder Entity. No Acquired
Ryder Entity will enter into any non-compensatory contracts with customers.
6.17 NO INCONSISTENT ACTION. RSI shall not take any action or omit to take
any action, in its capacity as a shareholder of an Acquired Ryder Entity or in
any other capacity, where such action or inaction is inconsistent with the
fulfillment of all matters set forth in this Agreement. RSI shall ensure that
neither RSI nor any Ryder Affiliate that has any material involvement in the
Conveyed Ryder Business takes any action or omits to take any action that is
inconsistent with the fulfillment of all matters set forth in this Article Six.
6.18 OBLIGATION TO NOTIFY. RSI shall as promptly as reasonably practicable
(not to exceed five (5) business days after acquiring knowledge of such matters)
notify the Allied entities of (a) any litigation or claim threatening liability
to an Acquired Ryder Entity of $100,000 or more; (b) the cancellation,
threatened cancellation or loss of any contract with any customers of an
Acquired Ryder Entity; or (c) any actual or threatened event or occurrence that
could reasonably be expected to have a Material Adverse Effect.
6.19 COMPLETION OF SCHEDULES. RSI shall deliver to the Allied Parties a
complete first draft of all of the schedules to this Agreement (which shall be
referred to collectively as the "Schedules" and each individually as a
"Schedule") by September 8, 1997. The Allied Parties shall then have ten (10)
days from the date they receive the Schedules to respond with written comments.
The Parties shall then use reasonable best efforts to finalize all Schedules,
which in their final form must be mutually acceptable to the Parties. When the
Schedules are finalized and approved by the Parties, the Parties shall indicate
their approval by initialing every Schedule.
43
6.20 ADEQUATE CAHS BALANCES. Each of the Acquired Ryder Entities shall
maintain adequate cash balances consistent with historical past practices.
ARTICLE SEVEN - CONDITIONS TO OBLIGATIONS OF THE ALLIED PARTIES
All of the obligations of the Allied Parties under this Agreement are
subject to the fulfillment of each of the following conditions prior to or at
the Closing Date or such earlier date specified in any of the following
conditions, any one or more of which may be waived, in whole or in part, in
writing by the Allied Parties:
7.1 SATISFACTION OF THE ALLIED PARTIES WITH RESULTS OF DUE DILIGENCE. On or
before 5:00 p.m. on the last day of the Pre-Closing Period, the Allied Parties
shall have completed, to their satisfaction, their due diligence investigation
of the Business, the Business Assets, and the Acquired Ryder Entities. An
adjustment to the Unadjusted Purchase Price may be made by Allied as a result of
the Allied Parties' due diligence to the extent that such due diligence reveals
necessary changes which have a dollar value exceeding Three Million Dollars
($3,000,000) or to the extent changes arise from tax liability matters, fraud,
deceit, misrepresentation or failure to abide by a covenant contained in Article
Three.
7.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
RSI contained in any Ryder Agreement shall be true in all material respects as
of the date when made and shall be deemed to be made again at and as of the
Closing Date and shall be true in all material respects at and as of such time,
and the Allied Parties shall have received a certificate from RSI, on behalf of
RSI, confirming the truth and correctness of the representations and warranties
of RSI in the Ryder Agreements dated as of the Closing Date.
7.3 PERFORMANCE OF AGREEMENTS. RSI shall have performed and complied in all
material respects with all agreements and conditions required to be performed or
complied with prior to or on the Closing Date.
7.4 CERTIFICATES, RESOLLUTIONS. RSI shall have delivered to the Allied
Parties:
(a) a certificate of existence and good standing status from
appropriate Governmental Authorities in the jurisdiction of incorporation of
each Acquired Ryder Entity, dated not more than five (5) business days prior to
the Closing Date, to the effect that such Acquired Ryder Entity is validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization;
(b) copies of the current Articles or Certificate of Incorporation,
Bylaws of and other organizational and governance documents of RSI and each of
the Acquired Ryder Entities, certified, in the case of the Articles or
Certificates of Incorporation, by the Governmental Authority of the jurisdiction
of formation, or, in all other cases, by an officer of RSI or the Acquired Ryder
Entities.
7.5 REGULATORY APPROVALS. The Allied Parties shall have received from any
and all Governmental Authorities, the Consents and all applicable waiting or
similar periods required by law shall have expired, and such Consents shall not
contain conditions or restrictions unduly burdensome on the
44
Conveyed Ryder Business of any Acquired Ryder Entity to be conducted following
the Closing Date and shall be in a form and substance reasonably satisfactory to
AAC.
7.6 RESTRICTIVE COVENANT AGREEMENT AND OTHER AGREEMENTS. The Restrictive
Covenant Agreement shall have been executed and delivered by both Parties and
the other agreements described in Section 3.11 shall also have been executed and
delivered.
7.7 NO ACTIONS, PROCEEDINGS OR INJUNCTIONS. No legal or regulatory action
or proceeding shall be pending or threatened by any persons to enjoin, restrict
or prohibit the Transactions. No preliminary or permanent injunction or other
order by any federal, national, provincial or state court which prevents the
consummation of the Transactions shall have been issued and remain in effect.
7.8 CONSENTS AND APPROVALS OF THIRD PARTIES. All Consents referred to in
SCHEDULE 4.31 and SCHEDULE 5.4 shall have been duly obtained, and such Consents
shall be in form and substance satisfactory to the Allied Parties.
7.9 BOOKS AND RECORDS. On the Closing Date, RSI shall have delivered to the
Allied Parties all minute books, stock record books, books of account, bank
books, corporate seals, leases, contracts, agreements, customer lists, files and
other documents, instruments and papers of each Acquired Ryder Entity.
7.10 APPROVAL BY RYDER'S BOARD OF DIRECTOS. On or before 5:00 p.m. on the
last day of the Pre-Closing Period, the Board of Directors of RSI shall have
approved the execution and delivery of this Agreement and the completion of the
Transactions.
7.11 TERMINATION OF CONTRACTS. Except as set forth on SCHEDULE 7.11, all
contracts between RSI and its affiliates (other than the Acquired Ryder
Entities), on the one hand, and, on the other, the Acquired Ryder Entities shall
terminate on the date of Closing. The Acquired Ryder Entities shall not be
responsible or liable for contracts with suppliers or customers relating to
trailer manufacturing or otherwise entered into by the CCI "manufacturing
division" and RSI shall cause such contracts to be assigned to an entity other
than the Acquired Ryder Entities and deliver written releases of CCI from such
contracts, executed by the other parties to such contracts, at Closing.
7.12 DELIVERY OF SCHEDULES. On the Closing Date, RSI shall have delivered
to the Allied Parties all Schedules, in a form mutually acceptable to the
Parties and prepared in accordance with Section 6.19.
ARTICLE EIGHT - CONDITIONS TO OBLIGATIONS OF RSI
All of the obligations of RSI under this Agreement are subject to the
fulfillment of each of the following conditions prior to or at the Closing Date
or such earlier date specified in any of the following conditions, any one or
more of which may be waived, in whole or in part, in writing by RSI:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Allied Parties contained in any Allied Agreement shall be true in all
material respects as of the date when made and shall be deemed to be made again
at and as of the Closing Date and shall be true in all material respects at and
45
as of such time, and RSI shall have received a certificate from a duly
authorized senior officer of the Allied Parties confirming the truth and
correctness of the representations and warranties of the Allied Parties in the
Allied Agreements dated as of the Closing Date.
8.2 PERFORMANCE OF AGREEMENTS. The Allied Parties shall have performed and
complied in all material respects with all agreements and conditions required to
be performed or complied with by them prior to or at the Closing Date.
8.3 CONSENTS AND APPROVALS OF THIRD PARTIES. All consents, authorizations
and approvals referred to in SCHEDULE 4.31 and SCHEDULE 5.4 shall have been duly
obtained, and such consents, authorizations or approvals shall be in form and
substance satisfactory to RSI.
8.4 APPROVAL BT THE ALLIED PARTIES' BOARD OF DIRECTORS. On or before 5:00
p.m. on the last day of the Pre-Closing Period, the Board of Directors of Allied
shall have approved the execution and delivery of this Agreement and the
completion of the Transactions.
8.5 APPROVAL BY ALLIED'S LENDERS. RSI shall have received within two (2)
days after the Effective Date a commitment letter from Allied's investment
banker that it will provide bridge financing for the Transactions which RSI may
call upon Allied to cause to be funded and which would be fundable forty-five
(45) days after the receipt of all required consents, agreements and conditions
to the Closing. Notwithstanding the foregoing, if all conditions to Closing set
forth in this Agreement are satisfied at any point between August 1 and August
31 of 1997, then the foregoing forty-five (45) day period shall begin as of
August 31, 1997.
8.6 REGULATORY APPROVALS. Any and all Governmental Authorities having
jurisdiction over the Transactions shall have granted the Consents as described
in Section 7.5 and all applicable waiting or similar periods required by law
shall have expired and such regulatory consents, authorizations and approvals
shall not contain conditions or restrictions unduly burdensome on the Conveyed
Ryder Business of any Acquired Ryder Entity as presently conducted.
8.7 NO ACTIONS, PROCEEDINGS OR INJUNCTIONS. No legal or regulatory action
or proceeding shall be pending or threatened by any persons to enjoin, restrict
or prohibit the Transactions. No preliminary or permanent injunction or other
order by any federal, national, provincial or state court which prevents the
consummation of the Transactions shall have been issued and remain in effect.
ARTICLE NINE - INDEMNIFICATION
9.1 INDEMNIFICATION BY RSI. Subject to Section 9.2, RSI hereby agrees to
indemnify, hold harmless and defend the Allied Parties against and in respect of
the following (any indemnification claim asserted by the Allied Parties pursuant
to this Agreement (as defined below) shall hereafter be referred to as an
"Allied Indemnification Claim"):
(a) Any loss, claim, liability, expense, damage or other cost incurred
by the Allied Parties (including any loss reflected by, among other things, a
diminution in value of the Shares or an
46
adverse adjustment to a Tax Attribute, except for any accumulated Income Tax
loss carryforward of MCL on the Closing Date) (an "Allied Loss") caused by,
resulting from or arising out of:
(i) any failure on the part of RSI to perform any covenant in any
Ryder Agreement;
(ii) any breach of any warranty or any inaccurate or erroneous
representation made by RSI in any Ryder Agreement;
(iii) *****
(iv) any liability of RSI, any Acquired Ryder Entity or any other
Ryder Affiliate (y) for any Taxes with respect to any Tax Return filed for any
tax year or portion thereof ending on or before the Closing Date (or for any Tax
year beginning before or ending after the Closing Date to the extent allocable
to the portion of such period beginning before and ending on the Closing Date),
to the extent such Taxes are not reflected in the reserve for Tax Liability
(rather than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) shown on the face of the Interim
Closing Balance Sheet (rather than in the notes thereto), and (z) for the unpaid
Taxes relating to any prior consolidated return to which any of the Acquired
Ryder Entities has been a party or member;
(v) Existing Environmental Claims as of the Closing Date (1) with
respect to any property formerly owned or occupied (non-operating or surplus) by
an Acquired Ryder Entity or Predecessor or (2) associated with the operation of
the Conveyed Ryder Business or business of a Predecessor at a property formerly
owned or occupied (non-operating or surplus) by an Acquired Ryder Entity or
Predecessor.
(vi) Environmental Claims asserted by a third party after the
Closing Date but prior to or on December 31, 1999 against (1) an Acquired Ryder
Entity or Predecessor or (2) an Allied Entity, with respect to any property
formerly owned or occupied (non-operating or surplus) by either an Acquired
Ryder Entity or Predecessor; provided that an Allied Entity promptly notifies
RSI, in writing, of such Environmental Claim and fully cooperates with RSI in
any attempt by RSI to resolve such Environmental Claim.
(vii) Environmental Claims asserted by a third party after the
Closing Date but prior to or on December 31, 1999 against (1) an Acquired Ryder
Entity or Predecessor or (2) an Allied Entity, any of which may have arisen from
the operation of the Conveyed Ryder Business or business of a Predecessor at a
property formerly owned or occupied (non-operating or surplus) by either an
Acquired Ryder Entity or Predecessor; provided that an Allied Party promptly
notifies RSI, in writing, of such Environmental Claim and fully cooperates with
RSI in any attempt by RSI to resolve such Environmental Claim.
(viii) any Plan, program or arrangement, sponsored, contributed
to, or maintained by any Acquired Ryder Entity or for the benefit of any
Transferred Employee prior to the Closing Date, (or in the case of any Plan
sponsored by RSI, prior to or after the Closing Date) including, without
limitation, each "employee welfare plan" within the meaning of Section 3(1) of
ERISA, each
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission, requesting confidential treatment.
47
"employee pension plan" within the meaning of Section 3(2) of ERISA and any
other Plan or arrangement sponsored, contributed to or otherwise maintained by
RSI or an affiliate thereof as applicable to Transferred Employees (with such
indemnified parties to include, in addition to the Allied Parties, any plan
"fiduciary" as defined in Section 3(21) of ERISA) to the extent liability
therefore is not reflected on the Final Closing Balance Sheet;
(ix) *****
(x) any reclassification of any employee of an Acquired Ryder
Entity associated with any Acquired Ryder Entity for purposes of retroactive
adjustment of any Tax, levy, impost or premium associated with workers'
compensation or similar arrangements;
(xi) any Liability arising from failure to file any Tax Return or
report required by a Governmental Authority or taxing authority;
(b) Notwithstanding the foregoing, if an Environmental Claim is
asserted against an Acquired Ryder Entity, Predecessor or an Allied Entity where
such Environmental Claim arises from or is related to property formerly or
currently owned or occupied by any Allied Parties or arises from the business
operations of any Allied Parties, the indemnification provisions of this Section
9.1 shall not apply.
(c) No claim by Allied for indemnification with respect to
Environmental Claims under Sections 9.1(a)(vi) or 9.1(a)(vii) may be made after
December 31, 1999, and Allied shall be responsible for all such Environmental
Claims, except to the extent that any such Environmental Claims constitute an
ongoing or continuous process of litigation, remedy or corrective action or
relate to Remediation or corrective action undertaken by RSI or its Affiliates
prior to December 31, 1999 in a manner that did not comply with Environmental
Laws in effect when such Remediation or corrective action was taken.
(d) With respect to this Section 9.1, the Allied Parties agree not to
solicit or in any way encourage any Environmental Claim, provided however, that
nothing contained herein shall prohibit the Allied Parties from conducting
investigations of Environmental Conditions which are (i) required by Law, (ii)
in conjunction with a reasonably prudent program of environmental management, or
(iii) intended to prevent or mitigate actual or threatened injury to third
parties.
(e) Any and all actions, suits, proceedings, demands, assessments,
judgments, costs of investigation and legal, court and other expenses, including
attorneys' fees, incidental to any such Allied Loss.
9.2 LIMITATIONS ON RECOVERY. No Allied Indemnification Claim for failure to
perform any single covenant or for breach or inaccuracy of any single
representation or warranty, other than Allied Indemnification Claims under
Sections 9.1(a)(iv), 9.1(a)(ix) or 9.1(a)(xi), may be enforced against RSI
unless and until the aggregate amount of all Allied Indemnification Claims under
Section 9.1 is at least Two Hundred Fifty Thousand Dollars ($250,000). An Allied
Party must assert any Allied Indemnification Claim (A) under Section 9.1(a)(iv)
or 9.1(a)(xi) within the statute of limitations period applicable to the
particular underlying claim at issue, and (B) under Sections 9.1(a)(i)-(iii),
Sections
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission, requesting confidential treatment.
48
9.1(a)(v)-(viii), and Section 9.1(a)(x), during the three (3) year period
following the Closing Date. Allied Indemnification Claims under Section
9.1(a)(ix) may be asserted at any point after the Closing Date.
9.3 INDEMNIFICATION BY THE ALLIED PARTIES. Subject to the limitations
contained in this Section 9.3 and in Section 9.4, the Allied Parties hereby
agree to indemnify, hold harmless and defend RSI at all times from and after the
date of this Agreement against and in respect of the following (any claim for
indemnification asserted by RSI shall hereafter be referred to as a "RSI
Indemnification Claim"):
(a) Any loss, claim, liability, expense, damage or other cost incurred
by RSI (a "RSI Loss") caused by, resulting from or arising out of:
(i) any failure on an Allied Party's part to perform any covenant
in any Allied Agreement;
(ii) any breach of any warranty or any inaccurate or erroneous
representation made by an Allied Party in any Allied Agreement;
(iii) *****
(iv) except for RSI Losses associated with Retained Matters or an
Allied Indemnification Claim, Allied's conduct of the Conveyed Ryder Business
after the Closing.
(b) Any and all actions, suits, proceedings, demands, assessments,
judgments, costs of investigation and legal, court and other expenses, including
attorneys' fees, incidental to any RSI Loss.
9.4 LIMITATION ON RSI'S RECOVERY. No RSI Indemnification Claim for failure
to perform any single covenant or for breach or inaccuracy of any single
representation or warranty may be enforced against the Allied Parties unless and
until the aggregate amount of all RSI Indemnification Claims under Section 9.3
is at least Two Hundred Fifty Thousand Dollars ($250,000). *****
9.5 THIRD PARTY CLAIMS. If a claim by a third party is made against any of
the indemnified parties, and if such indemnified party intends to seek indemnity
with respect thereto under this Article Nine, such indemnified party shall
promptly notify the indemnifying party of the claim. The indemnifying party
shall have thirty (30) days after receipt of the above-mentioned notice to
undertake, conduct and control, through counsel of its own choosing (subject to
the consent of the indemnified party, such consent not to be unreasonably
withheld or delayed) and at its expense, the settlement or defense therefor, and
the indemnified party shall cooperate with it in connection therewith; provided
that: (i) the indemnifying party shall not thereby permit to exist any Lien upon
any asset of the indemnified party, (ii) the indemnifying party shall permit the
indemnified party to participate in such settlement or defense through counsel
chosen by the indemnified party, provided that the fees and expenses of such
counsel shall be borne by the indemnified party, and (iii) the indemnifying
party shall agree promptly to reimburse the indemnified party for the full
amount of any loss resulting from such claim and all related expense incurred by
the indemnified party. So long as the indemnifying party is reasonably
contesting any such claim in good faith, the indemnified party shall not pay or
settle any such claim. Notwithstanding the foregoing, the indemnified party
shall have the right to pay or settle any such claim, provided that in such
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission, requesting confidential treatment.
49
event the indemnified party shall waive any right to indemnity therefor by the
indemnifying party. If the indemnifying party does not notify the indemnified
party within thirty (30) days after receipt of the indemnified party's notice of
a claim of indemnity hereunder that the indemnifying party elects to undertake
the defense thereof, the indemnified party shall have the right to contest,
settle or compromise the claim in the exercise of its exclusive discretion at
the expense of the indemnifying party. The indemnified party shall, however,
notify the indemnifying party of any compromise or settlement of any such claim.
Notwithstanding anything to the contrary in this Section 9.5, the Allied Parties
shall have the right to elect to undertake, conduct and control, through counsel
of their choosing, the settlement or defense of any claims asserted by a third
party that is a customer of an Allied Party or an Acquired Ryder Entity,
provided that the Allied Parties will consult with RSI prior to settling any
such third party customer claims. Nothing contained in this Section 9.5 shall be
construed as a limitation on the right of any party to indemnification under
Article Nine.
9.6 *****
ARTICLE TEN- TERMINATION OF OBLIGATION TO CLOSE
10.1 TERMINATION OF THE ALLIED PARTIES' OBLIGATION TO CLOSE. The Allied
Parties shall have no obligation to proceed to the Closing in the event that (a)
any of the conditions set forth in Article Seven have not been fulfilled at or
prior to the Closing Date or such other date as may be specified in any such
conditions, or (b) the Closing does not occur on or prior to the date
contemplated by Section 2.1.
10.2 TERMINATION OF RSI'S OBLIGATION TO CLOSE. RSI shall have no obligation
to proceed to the Closing in the event that (a) any of the conditions set forth
in Article Eight have not been fulfilled at or prior to the Closing Date or such
other date as may be specified in any such conditions, or (b) the Closing does
not occur on or prior to the date contemplated by Section 2.1.
ARTICLE ELEVEN - MISCELLANEOUS
11.1 SURVIVAL OF REPRESENTATIONS. All representations and warranties made
by any Party in or pursuant to this Agreement or in any Ancillary Agreement
shall be deemed to have been relied upon by the Party or Parties to which they
were made. No investigations made by or on behalf of an Allied Party at any time
shall have the effect of waiving, diminishing the scope of or otherwise
affecting any representation or warranty made by RSI in or pursuant to this
Agreement or the Transactions; provided,
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission, requesting confidential treatment.
50
however, that the information set forth in any document referred to in this
Agreement and provided to an Allied Party prior to the Parties' execution of
this Agreement or prior to the Closing shall, for the purposes of the
representations and warranties of RSI, be deemed to have been disclosed to the
Allied Parties.
11.2 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or mailed, first class, certified mail, postage
prepaid as to each of the parties hereto or sent by a nationally recognized
overnight courier service to each of the Parties or by facsimile transmission,
during the transmission of which no indication of failure of receipt is
communicated to the sender, at the respective addresses and facsimile numbers
set forth below (or at such other address as to which any such Party may have
theretofore notified the other Party pursuant to the terms hereof):
(a) To the Allied Parties:
Allied Holdings, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: A. Xxxxxxxx Xxxxx, President and Chief Operating Officer
Facsimile Number:(000) 000-0000
With a copy to:
Xxxxxxxx Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxx X. Xxxxx and Xxxxxxxxx X. Xxxxxxxxx
Facsimile Number: (000) 000-0000
(b) To RSI, to:
Ryder System, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Executive Vice President- Development
Facsimile Number: (000) 000-0000
51
With a copy to:
Xxxxx X. X'Xxxxx
Executive Vice President and General Counsel
Ryder System, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Facsimile Number: (000) 000-0000
or at such other address as the Party to whom such notice is to be given shall
have last notified the Party giving the same in the manner provided in this
Section. Any notice delivered to a Party in accordance with this Section shall
be deemed to have been given and received on the day it is so delivered at such
address, provided that if such day is not a business day, then the notice shall
be deemed to have been given and received on the day next following such day.
Any notice transmitted by facsimile or other form of recorded communication to a
Party in accordance with this Section shall be deemed to be given and received
on the day of its transmission if such day is a business day and the
transmission is completed before 4:00 p.m. (local time for the recipient) and,
if not, on the next following such day.
11.3 ENTIRE AGREEMENT. This Agreement, together with the Ancillary
Agreements, supersede all prior discussions and agreements between the Parties
with respect to the matters contained in them, and this Agreement, together with
the Ancillary Agreements, contain the sole and entire agreement among the
Parties hereto with respect to the Transactions.
11.4 WAIVER AMENDMENT. Prior to or on the Closing Date, each Party shall
have the right to waive any default in the performance of any term of this
Agreement by any other Party, to waive or extend the time for the fulfillment by
such other Party of any or all of its obligations under this Agreement, and to
waive any or all of the conditions precedent to such Party's obligations under
this Agreement, except any condition that, if not satisfied, would result in the
violation of any law or applicable governmental regulation. This Agreement may
be amended by a subsequent writing signed by all of the Parties. Notwithstanding
anything to the contrary in this Agreement, no remedy given to any Party under
this Agreement shall be deemed to exclude such Party's access to any other
remedies permitted under this Agreement or under Law.
11.5 COUNTERPARTS, HEADINGS, ETC. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument. The
headings in this Agreement are for convenience of reference only and shall not
be deemed a part of this Agreement. A pronoun in one gender includes and applies
to the other genders as well.
11.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the Allied Parties and RSI and their respective
successors and assigns; and may not be assigned by any Party without the prior
written consent of the other Parties.
11.7 GOVERNING LAW. The validity and effect of this Agreement and the
rights and obligations of the parties hereto shall be governed by and construed
and enforced in accordance with the laws of the State of Georgia.
52
11.8 SEVERABILITY, PARTIAL ENFORCEMENT. All sections, subsections,
paragraphs and subparagraphs, terms and provisions of this Agreement are
severable and the unenforceability or invalidity of any of these parts of the
Agreement shall not affect the validity or enforceability of any other part of
this Agreement. If any court of competent jurisdiction determines that any
provision in this Agreement is invalid or unenforceable (through overbreadth or
otherwise), it is the intention of the Parties that the court either partially
enforce such provision to the extent enforceable or modify such provision so as
to render it valid or enforceable.
11.9 CURRENCY. Unless otherwise expressly provided, all references to
monetary amounts in this Agreement are references to U.S. dollars.
11.10 EXHIBITS AND SCHEDULES. All Exhibits and Schedules attached or to be
attached to this Agreement form an integral part of and are hereby incorporated
by reference into this Agreement and have the same force and effect as if their
contents were included in the body of this Agreement.
11.11 TIME. Time in all respect shall be of the essence of this Agreement
provided that time for doing or completing any matter provided for herein may be
extended or abridged by an agreement in writing executed by RSI and the Allied
Parties or their respective attorneys who are expressly appointed in this
regard. If any Party is prevented from taking any action which is required under
this Agreement on a particular day by reason of the fact that the particular day
is not a business day in the province or state in which such action is required
to be taken, the time for performing that action shall be extended to the next
business day in that province or state, as the case may be.
11.12 ACCOUNTING PRINCIPLES. Except as specifically provided otherwise in
this Agreement, all calculations referred to in this Agreement, shall be made in
accordance with GAAP consistently applied.
11.13 THIRD PARTY BENEFICIARIES. There are no intended third party
beneficiaries of RSI's rights under this Agreement other than the Ryder
Affiliates and there are no intended third party beneficiaries of the Allied
Parties' rights under this Agreement other than the other Allied Entities.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
"ALLIED"
ALLIED HOLDINGS, INC.
By:
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Name:
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Title:
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Place of Execution:
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Date of Execution:
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"AAC"
A H ACQUISITION CORP.
By:
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Name:
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Title:
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Place of Execution:
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Date of Execution:
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"CAC"
CANADIAN ACQUISITION CORP.
By:
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Name:
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Title:
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Place of Execution:
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Date of Execution:
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"AXIS"
AXIS NATIONAL INCORPORATED
By:
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Name:
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Title:
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Place of Execution:
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Date of Execution:
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"RSI"
RYDER SYSTEM, INC.
By:
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Name:
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Title:
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Place of Execution:
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Date of Execution:
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APPENDIX A
DEFINITIONS
1. AAC shall have the meaning given in the Background.
2. ACQUIRED RYDER ENTITIES or ACQUIRED RYDER ENTITY shall have the meaning
given in the Background, Sections 4.18 and 9.1.
3. AFFILIATE shall have the meaning given in Section 3.1(b)(iii).
4. AFFILIATED GROUP shall have the meaning given in Section 4.8(a)(i).
5. AFFILIATED RIGHTS shall have the meaning given in the Recitals.
6. AGREEMENT shall have the meaning given in the Background.
7. ALLIED shall have the meaning given in the Background.
8. ALLIED AGREEMENT or ALLIED AGREEMENTS shall have the meaning given in
Section 5.1.
9. ALLIED ENTITIES or ALLIED PARTIES shall have the meaning given in the
Background.
10. ALLIED INDEMNIFICATION CLAIM shall have the meaning given in Section
9.1.
11. ALLIED LOSS shall have the meaning given in Section 9.1(a).
12. ALLIED PARTIES shall have the meaning give in the Background.
13. ANCILLARY DOCUMENTS shall have the meaning given in the Recitals.
14. AXIS shall have the meaning given in the Background.
15. B&C shall have the meaning given in the Background.
16. BLAZER shall have the meaning given in Section 1.3.
17. BUSINESS ASSETS shall have the meaning given in Sections 1.2 and 4.18.
18. BUSINESS CONVEYANCE shall have the meaning given in the Recitals.
19. CAC shall have the meaning given in the Background.
20. CCI shall have the meaning given in the Background.
21. CERCLA shall have the meaning given in Section 4.18(a)(v).
22. CLAIMS shall have the meaning given in Section 4.14.
23. CLOSING shall have the meaning given in Section 2.1.
24. CLOSING DATE shall have the meaning given in Section 2.1.
25. CLOSING STATEMENT shall have the meaning given in Section 1.5(a).
26. COBRA shall have the meaning given in Section 4.28(c)(viii).
27. CODE shall have the meaning given in Section 4.8(a)(ii).
28. CONFIDENTIAL INFORMATION shall have the meaning given in Section
3.1(b)(ii).
29. CONFIDENTIALITY AND NO HIRE AGREEMENT shall have the meaning given in
Section 3.10(d).
30. CONSENTS shall mean any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license, exemption or
order of, registration, certificate, declaration or filing with, or
report or notice to, any person or entity, including, but not limited
to, any Governmental Authority.
31. CONTROL shall have the meaning given in Section 3.1(b)(iii).
32. CONTROLLED GROUP shall have the meaning given in Section 4.28(c)(vi).
33. COST shall have the meaning given in Section 3.8.
34. CONVEYED RYDER BUSINESS shall have the meaning given in the Recitals.
35. CURRENT LIABILITY shall have the meaning given in Section 4.28(c)(vii).
36. DEFERRED INTERCOMPANY TRANSACTION shall have the meaning given in
Section 4.8(a)(iii).
37. DEFINED BENEFIT PLAN shall have the meaning given in Section
4.28(c)(vii).
38. EFFECTIVE DATE shall have the meaning given in the Background.
39. EMPLOYEE BENEFIT PLAN shall have the meaning given in Section
4.28(a)(i).
40. EMPLOYEE PENSION PLAN shall have the meaning given in Section
9.1(a)(viii).
41. EMPLOYEE WELFARE PLAN shall have the meaning given in Section
9.1(a)(viii).
42. EMPLOYMENT AND WITHHOLDING TAXES shall have the meaning given in
Section 4.8(a)(iv).
43. ENVIRONMENT shall have the meaning given in Section 4.18(a)(i).
44. ENVIRONMENTAL AUTHORIZATIONS shall have the meaning given in Section
4.18(a)(ii).
45. ENVIRONMENTAL CLAIM shall have the meaning given in Section 4.18
(a)(ii).
46. ENVIRONMENTAL CONDITIONS shall have the meaning given in Section
4.18(a)(iii).
47. ENVIRONMENTAL LAW shall have the meaning given in Section 4.18(a)(iv).
48. ENVIRONMENTAL RESERVE PROJECTIONS/REIMBURSEMENT REPORT shall have the
meaning given in Section 4.18(b).
49. ERISA shall have the meaning given in Section 4.28(a)(i).
50. ERISA AFFILIATE shall have the meaning given in Section 4.28)(c)(vi).
51. EXCESS LOSS ACCOUNT shall have the meaning given in Section 4.8(a)(v).
52. FJB shall have the meaning given in the Background.
53. FIDUCIARY shall have the meaning given in Section 9.1(a)(x)
54. FINAL CLOSING BALANCE SHEET shall have the meaning given in Section
1.5(a).
55. FINAL PURCHASE PRICE shall have the meaning given in Section 1.5(a).
56. GAAP shall have the meaning given in Section 1.4.
57. GENERAL INCREASE shall have the meaning given in Section 4.13(g).
58. GOVERNMENTAL AUTHORITY shall have the meaning given in Section
4.8(a)(vi).
59. GROUP HEALTH PLAN shall have the meaning given in Section
4.28(c)(viii).
60. HAZARDOUS SUBSTANCES shall have the meaning given in Section
4.18(a)(v).
61. INCOME TAX shall have the meaning given in Section 4.8(a)(vii).
62. INTELLECTUAL PROPERTY shall have the meaning given in Section 3.10(a).
63. INTERIM CLOSING BALANCE SHEET shall have the meaning given in Section
1.4.
64. IRS shall have the meaning given in Section 4.8(a)(viii).
65. KNOWLEDGE. When used in this Agreement with respect to RSI, the
qualification "to the Knowledge" shall mean with respect to RSI all
matters that RSI, or any officer, director or shareholder of RSI or any
Acquired Ryder Entity, that actually knew or should have known after
diligent inquiry. In making each representation or warranty set forth
in this Agreement or in any document delivered pursuant to this
Agreement which is qualified by any such "Knowledge" expression, RSI
jointly and severally represent and warrant that they have duly and
diligently inquired of all relevant officers and employees of each
Acquired Ryder Entity and RSI and any Ryder Affiliate involved in the
Conveyed Ryder Business and all other relevant personnel as to the
accuracy and completeness of such representation or warranty.
66. LAWS shall have the meaning given in Section 3.3.
67. LEASED REAL PROPERTY shall have the meaning given in Section 4.22.
68. LIABILITY shall have the meaning given in Section 4.8(a)(ix).
69. LICENSE BACK shall have the meaning given in Section 3.10(a).
70. LIENS shall mean any mortgage, pledge, hypothecation, right of others,
claim, security interest, encumbrance, lease, sublease, license,
occupancy agreement, adverse claim or interest, easement,
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covenant, encroachment, burden, title defect, title retention
agreement, voting trust agreement, interest, equity, option, lien,
right of first refusal, charge or other restrictions or limitations of
any nature whatsoever, including but not limited to such as may arise
under any contracts.
71. MCL shall have the meaning given in the Background.
72. MARCH 31 BALANCE SHEET shall have the meaning given in Section 1.4.
73. MATERIAL shall have the meaning given in Section 4.20.
74. MATERIAL ADVERSE EFFECT. As used in this Agreement, "Material Adverse
Effect" shall mean a material adverse effect on (i) the Conveyed Ryder
Business or condition (financial or otherwise), properties,
liabilities, reserves, working capital, earnings, share value,
technology, prospects or relations with customers, suppliers,
distributors or employees or other personnel of any Acquired Ryder
Entity or the Acquired Ryder Entities taken as a whole, (ii) the right
or ability of the Parties to consummate all or any material portion of
the Transactions, or (iii) the right or ability of any single Party to
comply with a material obligation of the Party under this Agreement.
75. MULTI-EMPLOYER PLAN shall have the meaning given in Section
4.28(c)(iv).
76. MULTIPLE EMPLOYER PLAN shall have the meaning given in Section
4.28(c)(iv).
77. NET WORTH shall have the meaning given in Section 1.4.
78. NLLC shall have the meaning given in the Background.
79. NLLC MEMBERSHIP INTERESTS shall have the meaning given in the Recitals.
80. NON-DISCLOSURE AND TRADE SECRET PROTECTION AGREEMENT shall have the
meaning given in Section 3.10(b).
81. OPERATING LICENSES shall have the meaning given in Section 4.35.
82. ORDINARY COURSE OF BUSINESS shall mean the ordinary course of business
consistent with past custom and practice (including with respect to
quantity and frequency).
83. OSHCO shall have the meaning given in the Background.
84. OSHCO SHARES shall have the meaning given in the Recitals.
85. OWNED REAL PROPERTY shall have the meaning given in Section 4.22.
86. PARTIES or PARTY shall have the meaning given in the Background.
87. PERMITS shall have the meaning given in Section 4.17.
88. PRE-CLOSING PERIOD shall have the meaning given in Section 3.2(a).
89. PRE-CLOSING TAX RETURN shall have the meaning given in Section 3.12(b).
90. PREDECESSOR shall have the meaning given in Section 4.18(a)(vi).
91. PLANS shall have the meaning given in Section 4.28(a)(i).
92. PURCHASE PRICE ADJUSTMENT shall have the meaning given in Section
1.5(a).
93. QAT shall have the meaning given in the Background.
94. RACS shall have the meaning given in the Background.
95. RAQ shall have the meaning given in the Background.
96. RACS SHARES shall have the meaning given in the Recitals.
97. RCMC shall have the meaning given in the Background.
98. RCMC SHARES shall have the meaning given in the Recitals.
99. RFB shall have the meaning given in the Background.
100. REAL PROPERTY shall have the meaning given in Section 4.22.
101. RELEASE shall have the meaning given in Section 4.18(a)(vii).
102. REMEDIATION shall have the meaning given in Section 4.18(a)(viii).
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103. REPRESENTATIVES shall have the meaning given in Section 3.2(a).
104. RESTRICTIVE COVENANT AGREEMENT shall have the meaning given in Section
3.7.
105. RETAINED MATTERS shall have the meaning given in Section 1.3.
106. RMX shall have the meaning given in the Background.
107. RSI shall have the meaning given in the Background.
108. RSI INDEMNIFICATION CLAIM shall have the meaning given in Section 9.3.
109. RSI LOSS shall have the meaning given in Section 9.3(a).
110. RSI RETIREMENT PLAN shall have the meaning given in Section 3.13(b).
111. RSI SAVINGS PLANS shall have the meaning given in Section 3.13(c).
112. RYDER shall have the meaning given in the Background.
113. RYDER AFFILIATES shall have the meaning given in the Background.
114. RYDER AGREEMENT or RYDER AGREEMENTS shall have the meaning given in
Section 4.1.
115. RYDER CONTRACTS shall have the meaning given in Section 4.20.
116. RYDER FINANCIAL STATEMENTS shall have the meaning given in Section
4.10.
117. RYDER LANDLORD DOCUMENT shall have the meaning given in Section
4.23(f).
118. RYDER LEASES shall have the meaning given in Section 4.22.
119. RYDER LEASE RELATED AGREEMENTS shall have the meaning given in Section
4.23(f).
120. RYDER RECEIVABLES shall have the meaning given in Section 4.9.
121. SAFETY RECORDS shall have the meaning given in Section 4.35.
122. SCHEDULE or SCHEDULES shall have the meaning given in Section 6.19.
123. SETTLEMENT AUDITOR shall have the meaning given in Section 1.5(c).
124. SHARES shall have the meaning given in the Recitals.
125. SINGLE EMPLOYER PLAN shall have the meaning given in Section
4.28(c)(vii).
126. SPECIAL RULES FOR FINANCE LEASES shall have the meaning given in
Section 4.8(g).
127. TSC shall have the meaning given in the Background.
128. TSC SHARES shall have the meaning given in the Recitals.
129. TSI shall have the meaning given in the Background.
130. TAX ATTRIBUTE shall have the meaning given in Section 4.8(a)(xi).
131. TAX RETURN shall have the meaning given in Section 4.8(a)(xii).
132. TAXES shall have the meaning given in Section 4.8(a)(x).
133. TITLE REPORTS shall have the meaning given in Section 4.22.
134. TRADE SECRET shall have the meaning given in Section 3.1(b)(i).
135. TRAILER CLAIMS shall have the meaning given in Section 9.6(a).
136. TRANSACTIONS shall have the meaning given in the Recitals.
137. TRANSFERRED EMPLOYEES shall have the meaning given in Section 3.13(a).
138. TREASURY REGULATION shall have the meaning given in Section
4.8(a)(xiii).
139. UNADJUSTED PURCHASE PRICE shall have the meaning given in Section 1.4.
140. WORK FOR HIRE/OWNERSHIP ASSIGNMENT AGREEMENT shall have the meaning
given in Section 3.10(c).
141. WORK ORDERS shall mean any work orders, notices, directives, deficiency
notices, active files, orders to comply, violations or other
requirements whatsoever issued with respect to the Real Property by any
municipal or governmental body or authority, fire department, board or
fire underwriters or any other relevant body or agency having
jurisdiction over and in connection with the Real Property.
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142. WORKSHEET shall have the meaning given in Section 3.12(e).
