EXHIBIT 2
EXECUTION COPY
SHARE EXCHANGE AGREEMENT
Dated as of January 5, 1997
Among
REPUBLIC INDUSTRIES, INC.,
NATIONAL CAR RENTAL SYSTEM, INC.
and
THE STOCKHOLDERS OF NATIONAL CAR RENTAL SYSTEM, INC.
TABLE OF CONTENTS
Page
ARTICLE I
EXCHANGE OF COMPANY SHARES
Section 1.1 Exchange of Company Shares.........2
Section 1.2 Conveyance.........................2
Section 1.3 Consideration......................3
Section 1.4 Adjustment of the Aggregate
Consideration....................3
Section 1.5 Transfer Restrictions; Legend......4
ARTICLE II
CLOSING
Section 2.1 Closing............................5
Section 2.2 Delivery of the Shares.............6
Section 2.3 Delivery of Common Stock...........6
Section 2.4 Lost Certificates..................7
Section 2.5 No Fractional Shares...............7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS
Section 3.1 Organization.......................8
Section 3.2 Capitalization.....................9
Section 3.3 Authority.........................11
Section 3.4 Consents and Approvals; No
Violations..................... 12
Section 3.5 Financial Statements..............13
Section 3.6 Legal Proceedings.................14
Section 3.7 Absence of Undisclosed
Liabilities.................... 14
Section 3.8 Absence of Certain Changes or
Events........................ 15
Section 3.9 Contracts.........................18
Section 3.10 Properties........................22
Section 3.11 Intellectual Property.............24
Section 3.12 Employee Benefits; ERISA..........26
Section 3.13 Taxes.............................30
Section 3.14 Environmental Laws................31
Section 3.15 Labor and Employment Matters......33
Section 3.16 Compliance with Laws..............36
Section 3.17 Offering Circulars................37
Section 3.18 Affiliate Transactions............37
Section 3.19 Brokers or Finders................37
Section 3.20 Takeover Statutes.................38
Section 3.21 Insurance.........................38
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Section 4.1 Organization......................38
Section 4.2 Authority.........................38
Section 4.3 Consents and Approvals; No
Violations..................... 39
Section 4.4 Title to Shares...................40
Section 4.5 Investment Intention..............40
Section 4.6 Federal Securities Law Matters....40
Section 4.7 Ability to Bear Risk..............41
Section 4.8 Access to Information.............41
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF REPUBLIC
Section 5.1 Organization......................42
Section 5.2 Capitalization....................42
Section 5.3 Authority.........................43
Section 5.4 Consents and Approvals; No
Violations..................... 44
Section 5.5 SEC Reports and Financial
Statements..................... 44
Section 5.6 Brokers or Finders................46
Section 5.7 Takeover Statutes.................46
Section 5.8 Absence of Certain Changes or
Events......................... 46
Section 5.9 Legal Proceedings.................46
Section 5.10 Compliance with Laws..............46
ARTICLE VI
COVENANTS AND OTHER AGREEMENTS
Section 6.1 Conduct of Business...............47
Section 6.2 No Solicitation...................51
Section 6.3 Other Car Rental Transactions.....51
Section 6.4 Access............................52
Section 6.5 Notification of Certain Matters...52
Section 6.6 Compliance With Nasdaq and SEC
Requirements................... 53
Section 6.7 Reasonable Efforts................53
Section 6.8 Disclosure Supplements............55
Section 6.9 Publicity.........................55
Section 6.10 Pooling-of-Interests..............56
Section 6.11 Tax Treatment and Reporting.......56
Section 6.12 Benefits; Continuing Employees....56
Section 6.13 Takeover Statutes.................58
Section 6.14 Certain Actions...................58
Section 6.15 Indemnification; Insurance........58
Section 6.16 Further Assurances................61
Section 6.17 Employment Agreements.............61
Section 6.18 Escrow Agreement..................61
ARTICLE VII
REGISTRATION RIGHTS
Section 7.1 Registration Rights for Republic
Common Stock; Filing
of Registration Statement...... 61
Section 7.2 Expenses of Registration..........63
Section 7.3 Furnishing of Documents...........63
Section 7.4 Amendments and Supplements........63
Section 7.5 Duration..........................64
Section 7.6 Further Information...............64
Section 7.7 Indemnification...................64
Section 7.8 Due Diligence.....................68
Section 7.9 Listing Application...............68
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's
Obligation to Effect the
Acquisition.................... 68
Section 8.2 Conditions to Obligation of
Republic....................... 70
Section 8.3 Conditions to Obligation of the
Stockholders................... 73
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.1 Termination........................75
Section 9.2 Effect of Termination..............76
Section 9.3 Amendment..........................76
Section 9.4 Extension; Waiver..................77
ARTICLE X
INDEMNIFICATION
Section 10.1 Agreement by Stockholders to
Indemnify........................ 77
Section 10.2 Conditions of Indemnification......79
Section 10.3 Settlement of Disputes.............81
Section 10.4 Delivery of the Escrowed
Consideration................... 82
Section 10.5 Voting of and Dividends on the
Escrowed Consideration.......... 83
Section 10.6 Third-Party Claims................ 83
Section 10.7 Priority of Remedies.............. 85
Section 10.8 Remedies Exclusive................ 85
Section 10.9 Adjustments to Aggregate
Consideration................... 86
Section 10.10 Contribution...................... 86
Section 10.11 Republic Indemnity................ 86
Section 10.12 Santa Xxxx Indemnity.............. 87
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices........................... 87
Section 11.2 Stockholders' Representative...... 89
Section 11.3 Interpretation.................... 89
Section 11.4 Counterparts...................... 90
Section 11.5 Entire Agreement; No Third-Party
Beneficiaries................... 90
Section 11.6 Governing Law..................... 90
Section 11.7 Specific Performance.............. 90
Section 11.8 Assignment........................ 90
Section 11.9 Severability...................... 91
Section 11.10 Company Disclosure Schedule....... 91
Section 11.11 Fees and Expenses................. 91
Section 11.12 Jurisdiction...................... 92
Section 11.13 Dissolution of Santa Xxxx......... 92
SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AGREEMENT, dated as of January 5, 1997,
among REPUBLIC INDUSTRIES, INC., a Delaware corporation ("Republic"),
NATIONAL CAR RENTAL SYSTEM, INC., a Delaware corporation (the "Company"),
and the stockholders of the Company (the "Stockholders") .
W I T N E S S E T H :
WHEREAS, the Stockholders are the record and beneficial
owners of (i) all of the issued and outstanding shares of common stock,
par value $.01 per share, of the Company (the "Company Common Stock") and
(ii) all of the issued and outstanding shares of Series A Preferred
Stock, par value $.01 per share, of the Company (the "Company Preferred
Stock" and, together with the Company Common Stock, the "Company
Shares");
WHEREAS, the Stockholders desire to exchange their Company
Shares for shares of common stock, par value $.01 per share, of Republic
("Republic Common Stock") and Republic desires to acquire all of the
Company Shares through such exchange, each on the terms and subject to
the conditions contained herein (the "Acquisition"); and
WHEREAS, the Board of Directors of the Company and the
Stockholders have determined that the Acquisition is in the best
interests of the Company and the Stockholders, and the Board of Directors
of the Company has approved this Agreement and the transactions
contemplated hereby;
WHEREAS, the Board of Directors of Republic has determined
that the Acquisition is in the best interests of Republic and its
stockholders and has approved this Agreement and the transactions
contemplated hereby;
WHEREAS, for federal income tax purposes, it is intended
that the Acquisition will qualify as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, for accounting purposes, it is intended that the
Acquisition will be accounted for as a pooling-of-interests business
combination.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set
forth in this Agreement, the parties hereto agree as follows:
ARTICLE I
EXCHANGE OF COMPANY SHARES
Section 1.1 Exchange of Company Shares. Upon the terms and
subject to the conditions of this Agreement, at the Closing (as
hereinafter defined), each of the Stockholders will convey, assign,
transfer and deliver to Republic, and Republic will acquire and accept
from each of the Stockholders, all right, title and interest in and to
the Company Shares, free and clear of any lien, encumbrance, security
interest, mortgage, pledge, charge, claim, option, right of first refusal
or call, or restriction of any kind (collectively, "Liens") other than
those, if any, created by Republic.
Section 1.2 Conveyance. Such conveyance, assignment,
transfer and delivery shall be effected by delivery by the Stockholders
to Republic of stock certificates representing the Company Shares, duly
endorsed or accompanied by stock powers duly executed in blank with
appropriate transfer stamps, if any, affixed, and any other documents
that are necessary to transfer title to the Company Shares to Republic,
free and clear of any and all Liens, other than those, if any, created by
Republic.
Section 1.3 Consideration.
(a) Upon the terms and subject to the conditions of this
Agreement, Republic will issue 212.3144 duly authorized, validly issued,
fully paid and nonassessable shares of Republic Common Stock for each
share of Company Common Stock conveyed, assigned, transferred and
delivered to Republic by such Stockholder pursuant to Section 1.1 hereof
(the "Common Stock Per Share Consideration").
(b) Upon the terms and subject to the conditions of this
Agreement, Republic will issue .8734 duly authorized, validly issued,
fully paid and nonassessable shares of Republic Common Stock for each
share of Company Preferred Stock conveyed, assigned, transferred and
delivered by such Stockholder to Republic pursuant to Section 1.1 hereof
(the "Preferred Stock Per Share Consideration"). The aggregate Common
Stock Per Share Consideration and the aggregate Preferred Stock Per Share
Consideration payable to all Stockholders pursuant to this Agreement is
hereinafter referred to as the "Aggregate Consideration."
Section 1.4 Adjustment of the Aggregate Consideration. If
between the date of this Agreement and the Closing Date (as hereinafter
defined), the outstanding shares of Company Common Stock, Company
Preferred Stock or Republic Common Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split,
combination, exchange of shares or similar transaction, the Common Stock
Per Share Consideration and/or the Preferred Stock Per Share
Consideration, as the case may be, shall be correspondingly adjusted to
reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange of shares or similar
transaction. Nothing stated in the immediately preceding sentence shall
be construed as providing the holders of Company Shares any preemptive or
antidilutive rights other than in the case of a stock dividend,
subdivision, reclassification, recapitalization, split, combination,
exchange of shares or similar transaction, and, except in such case,
there shall be no adjustment to the Common Stock Per Share Consideration
and/or the Preferred Stock Per Share Consideration, as the case may be,
in the event that Republic issues or agrees to issue any shares of
Republic Common Stock between the date hereof and the Closing Date,
whether for cash, through option grants, option or warrant exercises, in
acquisitions, or in other transactions.
Section 1.5 Transfer Restrictions; Legend.
(a) The shares of Republic Common Stock to be issued to
the Stockholders pursuant to Section 1.3 hereof will not be registered
under the Securities Act of 1933, as amended (the "Securities Act"), on
the Closing Date and may not be transferred, sold or otherwise disposed
of by any Stockholder except pursuant to an effective registration
statement under the Securities Act or in accordance with an exemption
from the registration requirements of the Securities Act.
(b) Except as contemplated by Section 11.13 of this
Agreement, each Stockholder agrees that it will not transfer, sell or
otherwise dispose of any of the shares of Republic Common Stock received
in accordance with Section 1.3 hereof or reduce its interest in or
relating to such shares of Republic Common Stock until after the
publication of financial results covering at least thirty (30) days of
combined operations of Republic and the Company after the Closing Date.
(c) Each certificate representing shares of Republic
Common Stock issued by Republic to the Stockholders in accordance with
Section 1.3 shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO OR
IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE AND ALSO MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT COMPLIANCE WITH
THE SECURITIES AND EXCHANGE COMMISSION'S ACCOUNTING SERIES
RELEASES 130 AND 135.
Republic agrees to remove such legend (or any relevant portion thereof),
by prompt delivery of substitute certificates upon the request of the
holder if at such time such legend (or portion thereof) is no longer
required for purposes of, or applicable pursuant to, the prior provisions
of this Section 1.5.
ARTICLE II
CLOSING
Section 2.1 Closing. Subject to the satisfaction or waiver
of all the conditions to closing contained in Article VIII hereof, the
closing (the "Closing") of the Acquisition will take place at 10:00 a.m.
on the first business day after satisfaction or waiver of the conditions
to the Closing contained in Article VIII hereof, at the offices of
Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, unless another date, time or place is agreed to by the parties
hereto. The date and time at which the Closing occurs is referred to
herein as the "Closing Date."
Section 2.2 Delivery of the Shares. At the Closing, each
Stockholder will deliver to Republic (a) certificates evidencing the
shares of Company Common Stock owned by such Stockholder (" Common Stock
Certificates"), and (b) certificates evidencing the shares of Company
Preferred Stock owned by such Stockholder ("Preferred Stock Certificates"
and, together with the Common Stock Certificates, the "Certificates"),
each duly endorsed or accompanied by stock powers duly executed in
blank with appropriate transfer stamps, if any, affixed, and any other
documents that are reasonably necessary to transfer title to such shares.
At the Closing, each Stockholder shall also deliver to the Escrow Agent
(as hereinafter defined) stock powers duly executed in blank, to be held
for use in connection with the shares of Republic Common Stock to be
included in the Escrowed Consideration (as hereinafter defined).
Section 2.3 Delivery of Common Stock. At the Closing,
Republic will (a) issue or cause to be issued to each Stockholder (i) in
exchange for Common Stock Certificates, shares of Republic Common Stock
(rounded down to the nearest whole share) in an amount equal to the
Common Stock Per Share Consideration multiplied by the number of shares
of Company Common Stock evidenced by such Common Stock Certificates and
(ii) in exchange for Preferred Stock Certificates, shares of Republic
Common Stock (rounded down to the nearest whole share) in an amount equal
to the Preferred Stock Per Share Consideration multiplied by the number
of shares of Company Preferred Stock evidenced by such Preferred Stock
Certificates and (b) deliver certificates representing such shares of
Republic Common Stock as follows: (i) Republic will deposit in escrow
pursuant to the Escrow Agreement referred to in Section 6.18 hereof
certificates for ten percent (10%) of the total number of shares of
Republic Common Stock included in the Aggregate Consideration (such
shares of Republic Common Stock being hereinafter referred to as the
"Escrowed Consideration"), and (ii) Republic will deliver to each
Stockholder one or more certificates representing the balance of the
shares of Republic Common Stock issuable to such Stockholder pursuant to
this Agreement. The Common Stock Per Share Consideration and the
Preferred Stock Per Share Consideration issuable to each Stockholder at
the Closing shall each be reduced by such Stockholder's pro rata portion
of the Escrowed Consideration. The Escrowed Consideration shall be
deliverable to the Stockholders in accordance with Article X hereof. The
shares of Republic Common Stock issued upon the surrender for exchange of
shares of Company Common Stock in accordance with the terms hereof
(including any cash paid in lieu of fractional shares of Republic Common
Stock pursuant to Section 2.5 hereof) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such shares of Company
Common Stock.
Section 2.4 Lost Certificates. In the event that any
Certificate has been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be
lost, stolen or destroyed and, if required by Republic, the posting by
such person of a bond in such reasonable amount as Republic may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, Republic shall, in respect of such lost, stolen or
destroyed Certificate, issue or cause to be issued the number of shares
of Republic Common Stock and pay or cause to be paid any cash in lieu of
fractional shares deliverable in respect thereof pursuant to this
Agreement.
Section 2.5 No Fractional Shares. Notwithstanding the
foregoing, no certificate or scrip representing fractional shares of
Republic Common Stock shall be issued upon the delivery for exchange of
Certificates, and such fractional share interests shall not entitle the
owner thereof to vote or to any rights as a stockholder of Republic. In
lieu of any such fractional shares, each holder of Company Common Stock
and Company Preferred Stock who would otherwise have been entitled to a
fraction of a share of Republic Common Stock upon delivery of
Certificates for exchange shall be entitled to receive a cash payment in
lieu of such fractional share in an amount equal to such fraction
multiplied by $28.625 (subject to any adjustment required by Section 1.4
hereof).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS
Except as set forth with respect to a specifically
identified representation and warranty on the disclosure schedule
delivered by the Company to Republic prior to the execution of this
Agreement (the "Company Disclosure Schedule"), the Company and the
Stockholders, jointly and severally, represent and warrant to Republic as
follows:
Section 3.1 Organization. Each of the Company and each of
its Subsidiaries (as hereinafter defined) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power
and corporate authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the
failure to be so organized, existing and in good standing or to have such
power and authority would not have a Company Material Adverse Effect (as
hereinafter defined). Each of the Company and each of its Subsidiaries is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not have a Company Material Adverse
Effect. True, accurate and complete copies of the Company's Certificate
of Incorporation and By-laws, as in effect on the date hereof, including
all amendments thereto, have heretofore been made available to Republic.
All such organizational documents are in full force and effect and
neither the Company nor any of its Subsidiaries is in violation of such
organizational documents. As used in this Agreement, any reference to any
event, change or effect having a "Company Material Adverse Effect" means
such event, change or effect is, or is likely to be, materially adverse
to (a) the business, properties, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole, or (b)
the ability of the Company to consummate the transactions contemplated
hereby. As used in this Agreement, "Subsidiary" shall mean, with respect
to any party, any corporation or other organization, whether incorporated
or unincorporated, of which (i) such party or any other Subsidiary of
such party is a general partner (excluding partnerships, the general
partnership interests of which held by such party or any Subsidiary of
such party do not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority
of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
Section 3.2 Capitalization.
(a) Capitalization of the Company. As of the date hereof,
the entire authorized capital stock of the Company consists of: (i)
1,000,000 shares of Company Common Stock, of which 100,000 shares are
validly issued and outstanding, fully paid and nonassessable, and no
shares are held in treasury and (ii) 5,000,000 shares of Company
Preferred Stock, of which 470,000 shares are validly issued and
outstanding, fully paid and nonassessable. All of the outstanding
shares of the Company's capital stock are duly authorized, validly
issued, fully paid and nonassessable and free of any preemptive rights in
respect thereto. Except as set forth in Section 3.2(a) of the Company
Disclosure Schedule, there are no outstanding options, warrants, calls,
rights or commitments, or any other agreements of any character binding
on the Company with respect to the issued or unissued capital stock of
the Company or obligating the Company to issue, transfer or sell, or
cause to be issued, transferred or sold, any shares of capital stock of,
or other equity interests in, the Company or securities convertible into
or exchangeable for such shares, or equity interests, or obligating the
Company to grant, extend or enter into any such option, warrant, call,
right, commitment or other agreement. There are no contractual
obligations of the Company to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company. After the date hereof, no
additional shares of Company Common Stock will have been issued. Except
as set forth in Section 3.2(a) of the Company Disclosure Schedule, there
are no voting trusts, proxies or other agreements or understandings to
which the Company or any Stockholder is a party or is bound with respect
to voting any shares of capital stock of the Company.
(b) Subsidiaries of the Company. Section 3.2(b) of the
Company Disclosure Schedule sets forth the name of each Subsidiary of the
Company and any other corporation, partnership, joint venture or other
entity in which the Company directly or indirectly owns any equity or
other ownership interest (an "Other Entity"), the number of authorized,
issued and outstanding shares of each Subsidiary of the Company and Other
Entity, the name of the record and beneficial owner of such shares and
the jurisdiction of organization for each Subsidiary of the Company and
Other Entity. All the outstanding shares of capital stock of each such
Subsidiary are validly issued, fully paid and nonassessable and free of
any preemptive rights in respect thereto. Except as set forth in Section
3.2(b) of the Company Disclosure Schedule, all outstanding shares of
capital stock of each such Subsidiary and Other Entity are owned
beneficially and of record by the Company or one of its other
Subsidiaries free and clear of all Liens. Except as set forth in Section
3.2(b) of the Company Disclosure Schedule, there are no outstanding
options, warrants, calls, rights or commitments, or any other agreements
of any character relating to the sale, issuance or voting of, or the
granting of rights to acquire, any shares of the capital stock of any
such Subsidiary, or any securities or other instruments convertible into,
exchangeable for or evidencing the right to purchase any shares of
capital stock of any such Subsidiary.
Section 3.3 Authority. The Company has the requisite
corporate power and corporate authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by the Company and
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, and no other
corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Company and,
assuming that this Agreement constitutes a valid and binding obligation
of the other parties hereto, constitutes a valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law).
Section 3.4 Consents and Approvals; No Violations. Except
for filings, permits, authorizations, consents and approvals as may be
required under, and other applicable requirements of, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Securities
Act, The Nasdaq Stock Market-National Market ("Nasdaq"), the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and similar foreign competition laws, and filings under state
securities or "blue sky" laws and except as set forth in Section 3.4 of
the Company Disclosure Schedule, the execution, delivery or performance
of this Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby and compliance by the Company with any
of the provisions hereof shall not (a) conflict with or result in any
breach of any provisions of the organizational documents of the Company
or of any of its Subsidiaries, (b) require any filing by the Company or
any of its Subsidiaries with, or any permit, authorization, consent or
approval to be obtained by the Company or any of its Subsidiaries of, any
court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency (a "Governmental
Entity") (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not
have a Company Material Adverse Effect), (c) result in a material
violation or breach of, or constitute (with or without due notice or
lapse of time, or both) a material default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any material note, bond, mortgage, indenture,
lease, license, contract, agreement, franchise, permit, concession or
other instrument, obligation, understanding, commitment or other
arrangement (collectively, "Contracts") to which the Company or any of
its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or affected or (d) violate any order,
writ, injunction or decree, or any material statute, ordinance, rule or
regulation, applicable to the Company or any of its Subsidiaries, except
for violations of such orders, writs, injunctions or decrees which would
not have a Company Material Adverse Effect.
Section 3.5 Financial Statements. Section 3.5 of the
Company Disclosure Schedule contains a copy of the audited consolidated
balance sheet of the Company as of May 31, 1996 and the related
consolidated statements of income, changes in stockholders' equity, and
cash flows for the fiscal year ended on such date, and the notes and
schedules thereto, accompanied by the unqualified report thereon of
Xxxxxx Xxxxxxxx LLP (the "Annual Financial Statements"), and a copy of
the unaudited consolidated balance sheet of the Company as of November
30, 1996, and the related unaudited consolidated statements of income and
cash flows for the six-month period ended on such date, certified by the
chief financial officer of the Company (the "Interim Financial
Statements"). The Annual Financial Statements and the Interim Financial
Statements fairly present in all material respects the consolidated
financial condition of the Company and its Subsidiaries as of their
respective dates and the consolidated results of their operations and
their consolidated cash flows for the periods then ended, and have all
been prepared in accordance with generally accepted accounting principles
("GAAP") applied consistently throughout the periods involved, except as
disclosed therein and except, in the case of the Interim Financial
Statements, for normal year-end audit adjustments and the absence of
footnotes. The unaudited consolidated balance sheet of the Company as of
November 30, 1996 is hereinafter referred to as the "Balance Sheet."
Reserves are reflected on the Balance Sheet against all liabilities of
the Company and its Subsidiaries in respect of claims of third parties
for personal injury and property damage and worker's compensation claims
in amounts that have been established on a basis consistent with the past
practice of the Company and its Subsidiaries and in accordance with GAAP
and such reserves are adequate in accordance with GAAP.
Section 3.6 Legal Proceedings. Except as described in
Section 3.6 of the Company Disclosure Schedule, no material litigation,
investigation of which the Company has knowledge or proceeding of or
before any arbitrator or Governmental Entity has been commenced and is
pending or, to the knowledge of the Company, is threatened by or against
the Company or any of its Subsidiaries or against any of their respective
properties or assets. Section 3.6 of the Company Disclosure Schedule sets
forth a brief description of each material judgment, injunction, decree,
order or other determination of an arbitrator or Governmental Entity
currently applicable to the Company or any of its Subsidiaries or any of
their respective properties or assets.
Section 3.7 Absence of Undisclosed Liabilities. There are
no liabilities of the Company or any of its Subsidiaries (absolute,
accrued, contingent or otherwise) which are of the type required by GAAP
to be reflected or reserved against on the Balance Sheet, other than (a)
liabilities (i) fully reflected or reserved against on the Balance Sheet
or (ii) incurred since the date of the Balance Sheet in the ordinary
course of business consistent with past practice and (b) liabilities
disclosed in Section 3.7 of the Company Disclosure Schedule.
Section 3.8 Absence of Certain Changes or Events. Except
as expressly permitted by this Agreement or as set forth in Section 3.8
of the Company Disclosure Schedule, since the date of the Balance Sheet
to the date hereof, the Company and each of its Subsidiaries have
conducted their respective businesses only in the ordinary and usual
course consistent with past practice, and there has not been any change
or development, or combination of changes or developments, which has had
a Company Material Adverse Effect. Without limiting the generality of the
foregoing, except as described in Section 3.8 of the Company Disclosure
Schedule, except for those actions after the date of this Agreement
permitted by this Agreement and except as entered into or effected in the
ordinary course consistent with past practice, neither the Company nor
any of its Subsidiaries has since the date of the Balance Sheet:
(i) incurred any material damage, destruction or
loss;
(ii) made any material changes in its customary
methods of operations, including, without limitation, its
marketing practices and its relationships with any person
("Franchisee") who owns or possesses the right to operate a
National Car Rental business or similar franchised business
under a franchise or license agreement entered into with the
Company or any of its Subsidiaries or any person (including a
Subsidiary of the Company) to whom the Company or any of its
Subsidiaries has granted the right to sell or grant a franchise
of the Car Rental Business (as defined in Section 3.16(b)) to a
third party ("Subfranchisor");
(iii) increased the compensation or benefits payable
by it to its employees generally except for increases in
compensation or benefits in the ordinary course of business
consistent with past practice which are not, individually or
in the aggregate, material to the Company or such Subsidiary;
(iv) made any payment or distribution to any
affiliate, including, without limitation, any repayment of any
Indebtedness (as hereinafter defined), except for (A) payments
or distributions by a wholly owned Subsidiary of the Company
(defined to include any Subsidiary all of whose shares are owned
directly or indirectly by the Company other than nominee,
director qualifying or similar shares) to the Company or another
wholly owned Subsidiary of the Company, (B) payments of cash
dividends on the Company Preferred Stock quarterly and
immediately prior to the Closing and otherwise in accordance
with the terms thereof and (C) salary payments to officers,
directors and consultants;
(v) merged or consolidated with, or acquired an
interest having a value in excess of $200,000 in, any person;
(vi) entered into any material joint venture,
partnership or other similar arrangement with any person;
(vii) terminated, discontinued, closed or disposed of
any material facility or any material business operation;
(viii) issued, sold or redeemed any capital stock,
notes, bonds or other securities, or any option, warrant, stock
appreciation right or other right to acquire the same;
(ix) declared or paid any dividends or other
distributions in respect of its capital stock (except for
declarations and payments of dividends or other distributions by
a wholly owned Subsidiary of the Company to the Company or
another wholly owned Subsidiary of the Company and except for
declarations and payments of cash dividends on the Company
Preferred Stock quarterly and immediately prior to the Closing
and otherwise in accordance with the terms thereof);
(x) amended, terminated, cancelled or compromised any
undisputed material claims;
(xi) allowed any of its material Permits (as
hereinafter defined) to lapse or terminate or failed to renew
any of its material Permits;
(xii) amended or modified, in any material respect,
or consented to the early termination of, any material Contract;
(xiii) amended its Certificate of Incorporation or
By-laws;
(xiv) made any change in the financial or accounting
practices or policies customarily followed by it (other than
changes required by GAAP) or made any material election with
respect to Taxes (as hereinafter defined);
(xv) entered into any material Contract or other
material transaction; or
(xvi) agreed in writing or otherwise to do any of the
foregoing.
Section 3.9 Contracts.
(a) Section 3.9(a) of the Company Disclosure Schedule
lists (without duplication) each of the following Contracts to which the
Company or any of its Subsidiaries is a party or by or to which the
Company or any of its Subsidiaries or any of their respective assets or
properties is bound or subject, in each case as of the date hereof:
(i) agreements, other than corporate customer
agreements, involving at least $2,000,000 of obligations or
benefits;
(ii) corporate customer agreements with the ten (10)
largest corporate customers;
(iii) material agreements between the Company or any
of its Subsidiaries, on the one hand, and a Franchisee, on the
other hand;
(iv) agreements (including written settlement
agreements) currently in effect pursuant to which the Company or
any of its Subsidiaries licenses the right to use any
Intellectual Property (as hereinafter defined) to any person or
from any person (indicating which of the Company or its
Subsidiaries is currently party to such agreement);
(v) agreements with any committee or organization of,
or representing, Franchisees;
(vi) employment, severance and consulting agreements
with any current or former director, officer or employee which
provide for continuing obligations on the part of the Company or
any of its Subsidiaries;
(vii) agreements with any labor union or similar
association representing any employee;
(viii) agreements for the sale or lease (as lessor)
by the Company or any of its Subsidiaries of any assets or
properties (other than automobiles) in excess of $1,000,000 per
agreement;
(ix) agreements relating to the acquisition or lease
(as lessee) by the Company or any of its Subsidiaries of any
assets or properties in excess of $1,000,000 per agreement, and
all airport concession agreements;
(x) agreements relating to the disposition or
acquisition of any ownership interest in any person with a book
value of $500,000 or more;
(xi) joint venture, partnership or similar
agreements;
(xii) agreements that materially limit or purport to
materially limit the ability of the Company or any of its
Subsidiaries to compete in any line of business or with any
person or in any geographical area or during any period of time;
(xiii) agreements relating to the incurrence of more
than $250,000 of Indebtedness by the Company or any of its
Subsidiaries or restricting the ability of the Company or any of
its Subsidiaries to incur Indebtedness;
(xiv) agreements relating to any Guarantee
Obligations (as hereinafter defined) of the Company or any of
its Subsidiaries involving more than $250,000 (other than
indemnities made in the ordinary course of business which are
not material to the Company and its Subsidiaries taken as a
whole);
(xv) agreements relating to the making of any loan or
advance by the Company or any of its Subsidiaries other than (x)
intercompany loans among the Company and its wholly owned
Subsidiaries and (y) those made in the ordinary course of
business which are not in excess of $100,000;
(xvi) agreements providing for the indemnification by
the Company or any of its Subsidiaries to any person except
those entered into in the ordinary course of business which are
not material to the Company and its Subsidiaries taken as a
whole;
(xvii) agreements with any Governmental Entity except
those entered into in the ordinary course of business which are
not material to the Company and its Subsidiaries taken as a
whole and other than tax audit agreements; and
(xviii) other material Contracts.
(b) There have been delivered or made available to
Republic true and complete copies of all of the written agreements listed
in Section 3.9 of the Company Disclosure Schedule and a written summary
of all of the oral agreements, if any, listed in Section 3.9 of the
Company Disclosure Schedule. Each material Contract to which the Company
or any of its Subsidiaries is a party or by or to which the Company or
any of its Subsidiaries or any of their respective assets or properties
is bound or subject is in full force and effect and constitutes a legal,
valid and binding obligation of the Company or one of its Subsidiaries,
as the case may be, and, to the knowledge of the Company, of each other
party thereto, enforceable against the Company or one of its
Subsidiaries, as the case may be, in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, and similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether
considered in a proceeding in equity or at law). Neither the Company nor
any of its Subsidiaries has received any written notice (x) that any such
material Contract is not enforceable against any party thereto or (y) of
early termination or intention to early terminate from any other party to
any such material Contract. Except as set forth in Section 3.9(b) of the
Company Disclosure Schedule, neither the Company or any of its
Subsidiaries nor, to the knowledge of the Company, any other party to any
such material Contract is in material breach of or material default under
any such material Contract.
(c) As used in this Agreement, "Indebtedness" means, as to
any person (a) all indebtedness of such person for borrowed money or for
the deferred purchase price of property or services (other than current
trade liabilities incurred in the ordinary course of business and payable
in accordance with customary practices), (b) any other indebtedness of
such person which is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such person in respect of acceptances
issued or created for the account of such person and (d) all liabilities
secured by any Lien on any property owned by such person even though such
person has not assumed or otherwise become liable for the payment
thereof. As used in this Agreement, "Guarantee Obligation" means any
obligation of (a) the guaranteeing person or (b) another person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any debt, leases, dividends or
other obligations (the "primary obligations") of any other third person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (A) for the purchase or payment of any such
primary obligation or (B) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency
of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of securing the owner of any such
primary obligation of the ability of the primary obligor to make payment
of such primary obligation or (iv) otherwise to assure or hold harmless
the owner of such primary obligation against loss in respect thereof,
provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business.
Section 3.10 Properties.
(a) Section 3.10 of the Company Disclosure Schedule
contains a list of all real estate owned, and all material real estate
leased, by the Company or any of its Subsidiaries (except any thereof
first acquired or leased after the date hereof as permitted by Section
6.1 hereof). Each of the Company and its Subsidiaries has good record and
marketable title in fee simple to all material real estate owned by it,
and has valid leasehold interests in all material real estate leased by
it, in each case, free and clear of all Liens except for Permitted Liens
(as hereinafter defined) or as otherwise disclosed in Section 3.10 of the
Company Disclosure Schedule. The current use of such material owned and
leased real estate by the Company or any of its Subsidiaries does not
violate in any material respect the certificate of occupancy thereof or
any material local zoning or similar land use or government regulations.
(b) The Company and its Subsidiaries have good and valid
title to all material assets (other than the real property which is
represented and warranted in paragraph (a) above) shown on the Balance
Sheet or acquired since the date of the Balance Sheet in the ordinary
course of business, in each case free and clear of all Liens except for
Permitted Liens or as otherwise disclosed in Section 3.10 of the Company
Disclosure Schedule. There is no material defect in the normal operating
condition and repair of the equipment owned or leased by the Company and
its Subsidiaries.
(c) As used in this Agreement, "Permitted Liens" means (i)
Liens shown on the Balance Sheet as securing specified liabilities or
obligations as to which no default exists, (ii) mechanics', carriers',
workmen's, repairmen's or other like Liens arising or incurred in the
ordinary course of business with respect to liabilities that are not yet
due or delinquent, or which are being contested in good faith by
appropriate proceedings, (iii) Liens for Taxes, assessments and other
governmental charges which are not due and payable or which may hereafter
be paid without penalty or which are being contested in good faith by
appropriate proceedings (for which adequate reserves have been made in
the Balance Sheet), (iv) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, social security, retirement and other similar legislation for
sums not yet due and payable, (v) Liens permitted to be incurred on and
after the date hereof in accordance with Section 6.1 hereof, (vi) leases
to third parties, and (vii) other imperfections of title or encumbrances,
which, individually or in the aggregate, would not materially detract
from the value of the property or asset to which it relates or materially
impair the ability of Republic or the Company to use the property or
asset to which it relates in substantially the same manner as it was used
by the Company prior to the Closing Date.
Section 3.11 Intellectual Property.
(a) Except as set forth in Section 3.11 of the Company
Disclosure Schedule, the Company or one of its Subsidiaries owns or has
the right to use, sell or license the Intellectual Property (as
hereinafter defined), free and clear of all Liens. Section 3.11 of the
Company Disclosure Schedule sets forth a complete and accurate list of
all material federal, state and foreign patents and patent applications,
trademark or service xxxx applications and registrations and copyright
registrations and applications, each as owned by the Company or one of
its Subsidiaries (indicating which of the Company and its Subsidiaries
owns such rights). Except as set forth in Section 3.11 of the Company
Disclosure Schedule, either the Company or one of its Subsidiaries
currently is listed in the records of the appropriate United States,
state or foreign agency as the sole owner of record for each application
and registration listed on Section 3.11 of the Company Disclosure
Schedule. As used in this Agreement, "Intellectual Property" means all
material intellectual property rights used in the business of the Company
or any of its Subsidiaries as currently conducted, including, without
limitation, all patents and patent applications; trademarks, trademark
registrations and applications; trade names; service marks and service
xxxx registrations and applications; copyrights and copyright
registrations and applications; computer programs; technology, know-how,
trade secrets, proprietary processes and formulae.
(b) The material registrations listed on Section 3.11 of
the Company Disclosure Schedule are valid, subsisting, in proper form and
enforceable, and have been duly maintained, including the submission of
all necessary filings in accordance with the legal and administrative
requirements of the appropriate jurisdictions. Unless otherwise indicated
on Section 3.11 of the Company Disclosure Schedule, the material
registrations and applications listed on Section 3.11 of the Company
Disclosure Schedule have not lapsed, expired or been abandoned, and no
material application or registration therefor is the subject of any
pending, existing or, to the knowledge of the Company, threatened
opposition, interference or cancellation proceeding before any
registration authority in any jurisdiction.
(c) Except as set forth on Section 3.11 of the Company
Disclosure Schedule, (i) the conduct of the businesses of the Company and
its Subsidiaries does not infringe upon any proprietary right owned or
controlled by any third party in a manner likely to result in a material
liability to the Company or any of its Subsidiaries and (ii) there are no
claims or suits pending or, to the knowledge of the Company, threatened,
and neither the Company nor any of its Subsidiaries has received any
notice of a claim or suit (A) alleging that the Company's or any of its
Subsidiaries' activities or the conduct of their business infringes upon
or constitutes the unauthorized use of the proprietary rights of any
third party or (B) challenging the ownership, use, validity or
enforceability of the Intellectual Property.
(d) Except as set forth on Section 3.11 of the Company
Disclosure Schedule, to the knowledge of the Company, no third party is
infringing upon any Intellectual Property owned or controlled by the
Company or any of its Subsidiaries and no such claims have been made by
the Company or any of its Subsidiaries.
(e) Except as set forth on Section 3.11 of the Company
Disclosure Schedule, to the knowledge of the Company, there are no
judgments or orders which restrict the Company's or any of its
Subsidiaries' rights to use any Intellectual Property, and no concurrent
use or other agreements (aside from license and other like agreements)
which restrict the Company's or any of its Subsidiaries' rights to use
any Intellectual Property owned by the Company and its Subsidiaries.
(f) The consummation of the transactions contemplated
hereby will not result in the loss or impairment of the Company's or any
of its Subsidiaries' right to own or use any of the Intellectual Property
nor will it require the consent of any Governmental Entity or third party
in respect of any such Intellectual Property.
Section 3.12 Employee Benefits; ERISA.
(a) Section 3.12(a) of the Company Disclosure Schedule
contains a true and complete list of each material bonus, deferred
compensation, incentive compensation, stock purchase, stock option,
severance, change-in-control, termination pay, hospitalization or other
medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or
arrangement, and each other material employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or
required to be contributed to by the Company, any of its Subsidiaries or
by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be deemed a "single
employer" within the meaning of Section 4001(b)(1) of ERISA, for the
benefit of any employee or former employee of the Company, any of its
Subsidiaries or any ERISA Affiliate (the "Plans"). The Plans that are
"employee welfare benefit plans," or "employee pension benefit plans" as
such terms are defined in Sections 3(1) and 3(2) of ERISA are hereinafter
referred to collectively as the "ERISA Plans". None of the Company, any
of its Subsidiaries, or any ERISA Affiliate has any commitment to create
any additional Plan or, except as contemplated by Section 6.12(b) hereof,
modify or change any existing Plan that would affect any employee or
former employee of the Company, any of its Subsidiaries or any ERISA
Affiliate except to the extent that any such creation, modification or
change is, individually or in the aggregate, not likely to result in a
material liability of the Company or any of its Subsidiaries.
(b) With respect to each of the Plans, the Company has
heretofore delivered or made available to Republic true, correct and
complete copies of each of the following documents:
(i) the Plan documents (including all amendments
thereto) for each written Plan;
(ii) the annual report or Internal Revenue Service
Form 5500 Series, if required under ERISA, with respect to each
such Plan for the last Plan year ending prior to the date of
this Agreement for which such a report was filed; and
(iii) the actuarial report, if required under ERISA,
with respect to each such Plan for the last Plan year ending
prior to the date of this Agreement.
(c) No liability under Title IV of ERISA has been incurred
by the Company, any of its Subsidiaries or any ERISA Affiliate since July
1, 1995 that has not been satisfied in full, and no condition exists that
presents a material risk to the Company, any of its Subsidiaries or any
ERISA Affiliate of incurring a material liability under such Title, other
than liability for contributions to such Plans and premiums due the
Pension Benefit Guaranty Corporation ("PBGC"), which payments have been
made when due. No Plan (other than a Plan which is a "multiemployer
plan," as such term is defined in Section 3(37) of ERISA) is subject to
Title IV of ERISA or Section 412 of the Code.
(d) None of the Company, any of its Subsidiaries, any
ERISA Affiliate, any of the ERISA Plans, any trust created thereunder,
nor, to the knowledge of the Company, any trustee or administrator
thereof, has engaged in a transaction or has taken or failed to take any
action in connection with which the Company, any of its Subsidiaries or
any ERISA Affiliate could reasonably be expected to be subject to any
material liability for either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section
4975(a) or (b), 4976 or 4980B of the Code.
(e) With respect to any ERISA Plan that is a
"multiemployer plan," as such term is defined in Section 3(37) of ERISA,
(i) neither the Company, any of its Subsidiaries nor any ERISA Affiliate
has, since July 1, 1995 made or suffered a "complete withdrawal" or a
"partial withdrawal," as such terms are respectively defined in Sections
4203 and 4205 of ERISA, (ii) no event has occurred that presents a
material risk of a partial withdrawal, (iii) none of the Company, any of
its Subsidiaries, or any ERISA Affiliate has any material contingent
liability under Section 4204 of ERISA, and no circumstances exist that
present a material risk that any such plan will go into reorganization,
and (iv) the aggregate withdrawal liability of the Company, its
Subsidiaries and ERISA Affiliates, computed as if a complete withdrawal
by the Company, any of its Subsidiaries and the ERISA Affiliates had
occurred under each such Plan on the date hereof, would not be material.
(f) Each of the Plans has been operated and administered
in all material respects in accordance with applicable laws, including,
but not limited to, ERISA and the Code.
(g) Each of the ERISA Plans that is intended to be
"qualified" within the meaning of Section 401(a) of the Code has received
a determination letter from the Internal Revenue Service (the "IRS")
stating that it is so qualified or has applied to the IRS for such a
determination and, to the knowledge of the Company, no event has occurred
that will or is likely to give rise to disqualification of any such Plan
or trust created thereunder.
(h) Except as set forth in Section 3.12(h) of the Company
Disclosure Schedule, no amounts payable under the Plans or any other
contract, agreement or arrangement to which the Company, any of its
Subsidiaries or any ERISA Affiliate is likely, as a result of the
transactions contemplated hereby, to fail to be deductible for federal
income tax purposes by virtue of Section 280G of the Code.
(i) Except as set forth in Section 3.12(i) of the Company
Disclosure Schedule, the consummation of the transactions contemplated by
this Agreement will not (i) entitle any current or former employee or
officer of the Company, any of its Subsidiaries or any ERISA Affiliate to
severance pay, unemployment compensation or any other similar termination
payment or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer.
(j) All Plans covering foreign employees of the Company or
the Subsidiaries comply in all material respects with applicable local
law. The Company and the Subsidiaries have no material unfunded
liabilities with respect to any pension plan which covers foreign
employees.
Section 3.13 Taxes. Except as set forth in Section 3.13 of
the Company Disclosure Schedule: (a) Giving effect to all extensions
obtained, each of the Company and its Subsidiaries has (i) duly and
timely filed (or there has been filed on its behalf) with the appropriate
Governmental Entities all Tax Returns (as hereinafter defined) required
to be filed by it, and all such Tax Returns are true, correct and
complete in all respects and (ii) timely paid (or there has been paid on
its behalf) all Taxes, due or claimed to be due from it by any taxing
authority, except for Taxes which are being contested in good faith by
appropriate proceedings (for which adequate reserves determined in
accordance with GAAP have been made in the Balance Sheet);
(b) The reserves for Taxes (determined in accordance with
GAAP) reflected in the Interim Financial Statements are adequate for the
payment of all Taxes incurred or which may be incurred by the Company and
its Subsidiaries through the date thereof. Since the date of the Interim
Financial Statements, none of the Company or any of its Subsidiaries has
incurred any liability for Taxes other than in the ordinary course of
business;
(c) None of the Company or any of its Subsidiaries is a
party to, is bound by, or has any obligation under, any Tax sharing or
allocation agreement, Tax indemnification agreement or similar contract
or arrangement;
(d) No power of attorney has been granted by or with
respect to the Company or any of its Subsidiaries with respect to any
matter relating to Taxes;
(e) None of the Company or any of its Subsidiaries has
filed a consent pursuant to Section 341(f) of the Code (or any
predecessor provision) or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any of
its Subsidiaries;
(f) Since July 1, 1995, none of the Company or any of its
Subsidiaries has been a member of an affiliated group (or similar state
or local filing group) other than any group in which Santa Xxxx Holdings,
Inc. ("Santa Xxxx") or the Company is the common parent; and
(g) For purposes of this Agreement, (i) "Taxes"
(including, with correlative meaning, the term "Tax") means all taxes,
charges, fees, levies, penalties or other assessments imposed by any
federal, state, local or foreign taxing authority, including, but not
limited to, income, gross receipts, excise, property, sales, use,
transfer, franchise, payroll, withholding, social security or other
taxes, including any interest, penalties or additions attributable
thereto, and (ii) "Tax Return" means any return, report, information
return or other document (including any related or supporting
information) with respect to Taxes.
Section 3.14 Environmental Laws.
(a) Except as disclosed in Section 3.14 of the Company
Disclosure Schedule, (i) the Company and its Subsidiaries have complied
with, and are currently in compliance with, all applicable Environmental
Laws (as hereinafter defined); (ii) the properties presently or, to the
knowledge of the Company, formerly owned or operated by the Company or
its Subsidiaries (including, without limitation, soil, groundwater or
surface water on or under the properties, and buildings thereon) (the
"Real Properties") do not contain any Hazardous Substance (as hereinafter
defined), other than, to the knowledge of the Company, as would not
require investigation or remediation under applicable Environmental Law
(provided, however, that with respect to Real Properties formerly owned
or operated by the Company, such representation is limited to the period
prior to the disposition of such Real Properties by the Company or one of
its Subsidiaries); (iii) neither the Company nor any of its Subsidiaries
has received any notices, demand letters or requests for information from
any Governmental Entity or any third party alleging that the Company is
in violation of, or liable under, any Environmental Law and none of the
Company, its Subsidiaries or the Real Properties are subject to any court
order, administrative order or decree arising under any Environmental
Law and (iv) no Hazardous Substance has been disposed of, transferred,
released or transported from any of the Real Properties during the time
such Real Property was owned or operated by the Company or one of its
Subsidiaries in violation of applicable Environmental Law or, to the
knowledge of the Company, to a site that is listed or proposed for
listing on the National Priorities List or the CERCLIS List compiled
pursuant to the federal Comprehensive Environmental Response,
Compensation and Liability Act or to a site that is listed or proposed
for listing pursuant to a state environmental remediation statute or that
otherwise requires remediation under such laws.
(b) As used in this Agreement, "Environmental Law" means
any applicable Federal, state, foreign or local law, statute, ordinance,
rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any
Governmental Entity, (i) relating to the protection, preservation or
restoration of the environment (including, without limitation, air, water
vapor, surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource), or
to human health or safety, or (ii) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, release or disposal of Hazardous Substances, in each case as
now in effect, but excluding in any case the Occupational Safety & Health
Act and any other applicable law regulating workplace health or safety.
As used in this Agreement, "Hazardous Substance" means any substance
presently listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, under any Environmental
Law, whether by type or by quantity, including, without limitation,
petroleum products or fractions or derivatives thereof, or any substance
containing any such substance as a component.
(c) Notwithstanding the generality of any other
representation and warranty in this Agreement, with respect to the
matters covered by this Section 3.14, (i) the representations and
warranties contained in Sections 3.4, 3.6 and 3.7 hereof and this Section
3.14 shall be deemed to be the sole and exclusive representations and
warranties made by the Company concerning Environmental Matters, (ii) no
other representation or warranty contained in this Agreement shall apply
to any Environmental Matters (as hereinafter defined) and (iii) no other
representation or warranty, express or implied, is being made with
respect to Environmental Matters. As used in this Agreement,
"Environmental Matters" shall mean any matter arising out of, relating to
or resulting from contamination, protection of the environment, health or
safety of humans, releases of Hazardous Substances into air, water vapor,
surface water, groundwater, surface land, subsurface land, plant and
animal life and any other natural resources, or resulting from the use,
storage, recycling, treatment, generation, transportation, processing,
handling, labeling, release, or disposal of Hazardous Substances.
Section 3.15 Labor and Employment Matters.
(a) Except to the extent set forth in Section 3.15(a) of
the Company Disclosure Schedule: (i) there is no material labor strike,
dispute, slowdown, stoppage or lockout actually pending, or to the
knowledge of the Company, threatened, against or affecting the Company or
any of its Subsidiaries, and since July 1, 1995 there has not been any
such action; (ii) no union claims to represent the employees of the
Company or any of its Subsidiaries; (iii) neither the Company nor any of
its Subsidiaries is a party to or bound by any collective bargaining or
similar agreement with any labor organization, or work rules or practices
agreed to with any labor organization or employee association applicable
to employees of the Company or any of its Subsidiaries; (iv) none of the
employees of the Company or any of its Subsidiaries is represented by any
labor organization and the Company does not have any knowledge of any
material current union organizing activities among the employees of the
Company or any of its Subsidiaries, nor does any question concerning
representation exist concerning such employees; (v) there are no material
written personnel policies, rules or procedures generally applicable to
the employees of the Company or any of its Subsidiaries, other than those
set forth in Section 3.15(a) of the Company Disclosure Schedule, true and
correct copies of which have heretofore been delivered or made available
to Republic; (vi) the Company and each of its Subsidiaries are, and have
at all times been, in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety
and health, and the Company and each of its Subsidiaries are not engaged
in any unfair labor practices as defined in the National Labor Relations
Act or other applicable law, ordinance or regulation; (vii) there is no
unfair labor practice charge or complaint against the Company or any of
its Subsidiaries pending or, to the knowledge of the Company, threatened
before the National Labor Relations Board or any similar state or foreign
agency; (viii) there is no material grievance arising out of any
collective bargaining agreement or other grievance procedure against the
Company or any of its Subsidiaries pending or, to the knowledge of the
Company, threatened; (ix) to the knowledge of the Company, no material
charges with respect to or relating to the Company or any of its
Subsidiaries are pending before the Equal Employment Opportunity
Commission or any other federal, state, local or foreign agency
responsible for the prevention of unlawful employment practices; (x)
neither the Company nor any of its Subsidiaries has received notice of
the intent of any federal, state, local or foreign agency responsible for
the enforcement of labor or employment laws to conduct an investigation
with respect to or relating to the Company or any of its Subsidiaries
and, to the knowledge of the Company, no such investigation is in
progress; and (xi) there are no material complaints, lawsuits or other
proceedings pending or, to the knowledge of the Company, threatened in
any forum by or on behalf of any present or former employee of the
Company or any of its Subsidiaries, any applicant for employment or
classes of the foregoing alleging breach of any express or implied
contract or employment, any law or regulation governing employment or the
termination thereof or other discriminatory, wrongful or tortious conduct
in connection with the employment relationship.
(b) Since July 1, 1995, neither the Company nor any of its
Subsidiaries has effectuated (i) a "plant closing" (as defined in the
Worker Adjustment and Retraining Notification Act (the "WARN Act"))
affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of the Company or any of
its Subsidiaries; or (ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of the Company or any of its
Subsidiaries; nor has the Company or any of its Subsidiaries been
affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any similar
state or local law. Except as set forth in Section 3.15(b) of the Company
Disclosure Schedule, none of the Company's or any of its Subsidiaries'
employees has suffered an "employment loss" (as defined in the WARN Act)
since six (6) months prior to the date of this Agreement.
Section 3.16 Compliance with Laws.
(a) Each of the Company and its Subsidiaries is in
compliance in all material respects with all material laws, statutes,
orders, rules, regulations, ordinances and judgments of any Governmental
Entity, including, without limitation, the Federal Trade Commission Act,
as amended (the "FTC Act"), and all applicable state and foreign
franchise laws, holds all material Permits (as hereinafter defined) that
are necessary to the conduct of its business or the ownership of its
properties, and is in compliance in all material respects with each such
Permit. As used in this Agreement, "Permits" means, as to any person, all
licenses, permits, franchises, orders, approvals, concessions,
registrations, authorizations and qualifications with and under all
federal, state, local or foreign laws and Governmental Entities and all
industry or other nongovernmental self-regulatory organizations that are
issued to such person.
(b) (i) The sale or grant by the Company or any of its
Subsidiaries of each franchise or subfranchise of the business of
operating a motor vehicle rental business which specializes in the rental
of vehicles without drivers for periods of less than one year ("Car
Rental Business") to any Franchisee, and (ii) the acquisition by the
Company or any of its Subsidiaries of any franchise or subfranchise of
the Car Rental Business from a Franchise or Subfranchisor, was made in
compliance in all material respects with all applicable laws, including,
without limitation, the FTC Act, if applicable, and all applicable state
and foreign franchise laws.
(c) Except as disclosed in Section 3.16 of the Company
Disclosure Schedule, since July 1, 1995, none of the Company or any of
its Subsidiaries has received any written or any other communication from
any Governmental Entity asserting that the Company or any of its
Subsidiaries is not in compliance in any material respect with any
applicable material law or Permit.
Section 3.17 Offering Circulars. The Company has
heretofore delivered or made available to Republic a true and complete
copy of the current uniform franchise offering circular and other
disclosure statements of the Company or of any of its Subsidiaries in
connection with its sale of franchises to Subfranchisors and Franchisees
(the "Offering Circulars").
Section 3.18 Affiliate Transactions. Section 3.18 of the
Company Disclosure Schedule contains a summary of all material
transactions since July 1, 1995 and all currently proposed material
transactions between the Company or any of its Subsidiaries, on the one
hand, and any current or former director or officer of the Company or any
of its Subsidiaries or any such director's or officer's affiliates known
as such to the Company, or any entity known as such to the Company, in
which any such director, officer or affiliate has a direct or indirect
material interest, other than standard employment agreements or
arrangements and employee benefit plans.
Section 3.19 Brokers or Finders. Neither the Company nor
any of its Subsidiaries has any liability to any agent, broker,
investment banker, financial advisor or other firm or person for any
broker's or finder's fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement
except Xxxxxxx, Xxxxx & Co., whose fees and expenses, as previously
disclosed to Republic, shall be paid by the Company in accordance with
the Company's agreement with such firm.
Section 3.20 Takeover Statutes. Section 203 of the General
Corporation Law of the State of Delaware ("DGCL") is inapplicable to the
transactions contemplated by this Agreement. To the knowledge of the
Company, no other "fair price," "moratorium," "control share acquisition"
or other similar antitakeover statute, law, regulation or rule of any
Governmental Entity (each a "Takeover Statute") is applicable to the
transactions contemplated by this Agreement.
Section 3.21 Insurance. National Xxxxxx Operations Inc.
("National Xxxxxx") is adequately insured, based on its historical
experience and general industry practice, for all claims of third parties
for personal injury and property damage and worker's compensation claims.
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders, severally and not jointly,
represents and warrants as to itself to Republic as follows:
Section 4.1 Organization. Each Stockholder is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate or other power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted.
Section 4.2 Authority. The execution, delivery and
performance of this Agreement by each Stockholder and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary action on the part of each Stockholder, and no other
proceedings on the part of each Stockholder are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by each Stockholder
and, assuming that this Agreement constitutes a valid and binding
obligation of the other parties hereto, constitutes a valid and binding
obligation of each Stockholder, enforceable against each Stockholder in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in
equity or at law). Each Stockholder has approved the transactions
contemplated hereby and has determined that such transactions are in the
best interests of the Company and such Stockholder.
Section 4.3 Consents and Approvals; No Violations. Except
for filings, permits, authorizations, consents and approvals as may be
required under, and other applicable requirements of, the HSR Act and
similar foreign competition laws, the execution, delivery or perfor-
xxxxx of this Agreement by each Stockholder, the consummation by each
Stockholder of the transactions contemplated hereby and compliance by
each Stockholder with any of the provisions hereof shall not (a) conflict
with or result in any breach of any provisions of the organizational
documents of such Stockholder, (b) require any filing by such Stockholder
or any of its Subsidiaries with, or any permit, authorization, consent or
approval to be obtained by such Stockholder of any Governmental Entity,
(c) result in a violation or breach of, or constitute (with or without
due notice or lapse of time, or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any Contract to which such Stockholder
is a party or by which any of them or any of their properties or assets
may be bound or affected or (d) violate any order, writ, injunction,
decree, statute, ordinance, rule or regulation applicable to such
Stockholder, except, in the case of clause (c) or (d), for violations,
breaches or defaults which would not have a material adverse effect on
the ability of such Stockholder to consummate the transactions
contemplated hereby.
Section 4.4 Title to Shares. Section 4.4 of the Company
Disclosure Schedule sets forth the number of outstanding shares of
Company Common Stock and Company Preferred Stock owned by each
Stockholder, and each Stockholder (i) owns such shares free and clear of
any Liens and (ii) has full power, right and authority to exchange such
shares pursuant to the terms of this Agreement.
Section 4.5 Investment Intention. Each Stockholder is
acquiring the shares of Republic Common Stock issuable to such
Stockholder pursuant to the terms of this Agreement for investment solely
for such Stockholder's own account and not with a view to or for resale
in connection with the distribution or other disposition thereof except
for such which are permitted hereunder and under the Securities Act.
Section 4.6 Federal Securities Law Matters. Each
Stockholder has been advised that (a) neither the sale nor the offer of
the shares of Republic Common Stock issuable pursuant to the terms of
this Agreement has been registered under the Securities Act, (b) such
shares must be held and each Stockholder must continue to bear the
economic risk of the investment in the shares of Republic Common Stock
issuable to such Stockholder pursuant to the terms of this Agreement
until such shares are subsequently registered under the Securities Act or
an exemption from registration is available, (c) a restrictive legend in
the form set forth in Section 1.5(c) hereof shall be placed on the
certificates representing the shares of Republic Common Stock issuable
pursuant to the terms of this Agreement and (d) appropriate stop-transfer
instructions shall be issued by the Company to its stock transfer agent
with respect to such shares; provided that such legend shall be removed
and such stop-transfer instructions lifted when and as contemplated by
Section 1.5(c) hereof.
Section 4.7 Ability to Bear Risk. (a) The financial
situation of each Stockholder is such that each Stockholder can afford to
bear the economic risk of holding the shares of Republic Common Stock
issuable to it pursuant to the terms of this Agreement for an indefinite
period and (b) each Stockholder can afford to suffer the complete loss of
such Stockholder's investment in such shares of Republic Common Stock.
Section 4.8 Access to Information. (a) Each Stockholder
understands and is aware of all the risk factors related to an investment
in the shares of Republic Common Stock issuable pursuant to the terms of
this Agreement, (b) each Stockholder has carefully reviewed this Agree-
ment and has been granted the opportunity to ask questions of, and
receive answers from, representatives of Republic concerning the terms
and conditions of the investment in the shares of Republic Common Stock
issuable pursuant to the terms of this Agreement and to obtain any
additional information which such Stockholder deems necessary, (c) each
Stockholder's knowledge and experience in financial and business matters
is such that each Stockholder is capable of evaluating the risks of the
investment in the shares of Republic Common Stock issuable pursuant to
the terms of this Agreement and (d) in making its decision to approve the
transactions contemplated hereby and to exchange its shares of Company
Common Stock for shares of Republic Common Stock pursuant to this
Agreement, each Stockholder has relied upon the independent investigation
made by such Stockholder and, to the extent believed by each Stockholder
to be appropriate, such Stockholder's representatives, including such
Stockholder's own professional, tax and other advisors.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF REPUBLIC
Republic represents and warrants to the Company and the
Stockholders as follows:
Section 5.1 Organization. Republic is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power
and corporate authority to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power and
authority would not have a Republic Material Adverse Effect (as
hereinafter defined). As used in this Agreement, any reference to any
event, change or effect having a "Republic Material Adverse Effect" means
such event, change or effect is, or is likely to be, materially adverse
to (a) the business, properties, financial condition or results of
operations of Republic and its Subsidiaries, taken as a whole or (b) the
ability of Republic to consummate the transactions contemplated hereby.
Section 5.2 Capitalization. As of the date hereof, the
entire authorized capital stock of Republic consists of: (a) 500,000,000
shares of Republic Common Stock of which, as of December 31, 1996, (i)
232,732,558 shares were issued and outstanding, (ii) no shares were held
in treasury, (iii) 16,637,037 shares were reserved for issuance upon the
exercise of outstanding stock options granted pursuant to Republic's
various stock option plans (the "Republic Stock Plans") and (iv)
32,153,100 shares were reserved for issuance upon the exercise of
outstanding warrants (the "Republic Warrants") and (b) 5,000,000 shares
of preferred stock, par value $.01 per share, of which, as of December
31, 1996, no shares were issued and outstanding. All the outstanding
shares of Republic's capital stock are, and all shares (a) which may be
issued pursuant to the Republic Stock Plans and the Republic Warrants
shall be, when issued in accordance with the terms of the applicable
Republic Stock Plan or Warrant, as the case may be, and (b) which are to
be issued pursuant to the terms of this Agreement shall be, when issued
in accordance with the terms of this Agreement, duly authorized, validly
issued, fully paid and nonassessable and free of any preemptive rights in
respect thereto.
Section 5.3 Authority. Republic has the requisite
corporate power and corporate authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by Republic and the
consummation by Republic of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
Republic and no other corporate proceedings on the part of Republic are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered
by Republic and, assuming that this Agreement constitutes a valid and
binding obligation of the other parties hereto, constitutes a valid and
binding obligation of Republic, enforceable against Republic in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in
equity or at law).
Section 5.4 Consents and Approvals; No Violations. Except
for filings, permits, authorizations, consents and approvals as may be
required under, and other applicable requirements of, the Securities Act,
the Exchange Act, Nasdaq, the HSR Act and similar foreign competition
laws, and filings under state securities or "blue sky" laws, the
execution, delivery or performance of this Agreement by Republic, the
consummation by Republic of the transactions contemplated hereby and
compliance by Republic with any of the provisions hereof shall not (a)
conflict with or result in any breach of any provision of the
organizational documents of Republic, (b) require any filing by Republic
or any of its Subsidiaries with, or any permit, authorization, consent or
approval to be obtained by Republic or any of its Subsidiaries of, any
Governmental Entity (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not
have a Republic Material Adverse Effect), (c) result in a violation or
breach of, or constitute (with or without due notice or lapse of time, or
both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any
Contract to which Republic or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound or
affected or (d) violate any order, writ, injunction, decree, statute,
ordinance, rule or regulation applicable to Republic or any of its
Subsidiaries, except, in the case of clause (c) or (d), for violations,
breaches, defaults, terminations, cancellations or accelerations which
would not have a Republic Material Adverse Effect.
Section 5.5 SEC Reports and Financial Statements. Republic
has filed with the Securities and Exchange Commission (the "SEC"), and
has heretofore made available to the Stockholders true and complete
copies of, all forms, reports and other documents required to be filed by
it since September 1, 1995 under the Exchange Act or the Securities Act
(as such documents have been amended since the time of their filing,
collectively, the "Republic SEC Documents"). The Republic SEC Documents,
at the time filed, (a) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and (b) complied
in all material respects with the applicable requirements of the
Exchange Act or the Securities Act, as the case may be. The consolidated
financial statements of Republic included in the Republic SEC Documents
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in case of
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly
present (subject, in the case of the unaudited statements, to normal
year-end audit adjustments) in all material respects the consolidated
financial position of Republic and its consolidated Subsidiaries as at
the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended. Except as set forth in the
Republic SEC Documents and except for liabilities and obligations
incurred in the ordinary course of business consistent with past
practice, there are no material liabilities or obligations of any nature
required by GAAP to be set forth on a consolidated balance sheet of
Republic and its Subsidiaries or in the notes thereto which, individually
or in the aggregate, would have a Republic Material Adverse Effect.
Section 5.6 Brokers or Finders. Neither Republic nor any
of its Subsidiaries has any liability to any agent, broker, investment
banker, financial advisor or other firm or person for any broker's or
finder's fee or any other commission or similar fee in connection with
any of the transactions contemplated by this Agreement.
Section 5.7 Takeover Statutes. To the knowledge of
Republic, no Takeover Statute is applicable to the transactions
contemplated by this Agreement.
Section 5.8 Absence of Certain Changes or Events. Except
as disclosed in the Republic SEC Documents prior to the date hereof,
since September 30, 1996 to the date hereof, there has not been any
change or development, or combination of changes or developments, which
has had a Republic Material Adverse Effect.
Section 5.9 Legal Proceedings. Except as disclosed in the
Republic SEC Documents prior to the date hereof, (i) no litigation,
investigation of which Republic has knowledge or proceeding of or before
any arbitrator or Governmental Entity has been commenced and is pending
or, to the knowledge of Republic, is threatened by or against Republic or
any of its Subsidiaries or against any of their respective properties or
assets which would have, individually or in the aggregate, a Republic
Material Adverse Effect; and (ii) there are no judgments, injunctions,
decrees, orders or other determinations of an arbitrator or Governmental
Entity applicable to the Republic or any of its Subsidiaries or any of
their respective properties or assets which would have, individually or
in the aggregate, a Republic Material Adverse Effect.
Section 5.10 Compliance with Laws. Except as disclosed in
the Republic SEC Documents prior to the date hereof, each of Republic and
its Subsidiaries is in compliance in all respects with all laws,
statutes, orders, rules, regulations, ordinances and judgments of any
Governmental Entity, holds all Permits that are necessary to the conduct
of its business or the ownership of its properties, and is in compliance
with each such Permit, except where the failure to so comply with an
applicable law or hold such Permits would not have a Republic Material
Adverse Effect.
ARTICLE VI
COVENANTS AND OTHER AGREEMENTS
Section 6.1 Conduct of Business. Except as contemplated by
this Agreement or with the prior written consent of Republic (which
consent shall not be unreasonably withheld or delayed) during the period
from the date of this Agreement to the Closing Date, the Company shall,
and shall cause each of its Subsidiaries to, conduct its operations only
in the ordinary course of business consistent with past practice and
shall use all reasonable efforts, and shall cause each of its
Subsidiaries to use all reasonable efforts, to preserve intact its
present business organization, keep available the services of its present
officers and employees and preserve its material relationships with
licensors, licensees, Franchisees, Subfranchisors, customers, suppliers,
employees and any others having business dealings with it. Without
limiting the generality of the foregoing, and except as otherwise
expressly provided in this Agreement, or as disclosed in Section 6.1 of
the Company Disclosure Schedule, the Company shall not, and shall not
permit any of its Subsidiaries to, prior to the Closing Date, without the
prior written consent of Republic (which consent shall not be
unreasonably withheld or delayed):
(a) adopt any amendment to its certificate of
incorporation or by-laws or comparable organizational documents;
(b) except for issuances of capital stock of the Company's
Subsidiaries to the Company or a wholly owned Subsidiary of the Company,
issue, reissue, sell, deliver or pledge or authorize or propose the
issuance, reissuance, sale, delivery or pledge of additional shares of
capital stock of any class, or any securities convertible into capital
stock of any class, or any rights, warrants or options to acquire any
convertible securities, or capital stock;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock, except
(i) that any wholly owned Subsidiary of the Company may pay dividends to
the Company or any of the Company's other wholly owned Subsidiaries and
(ii) for the declaration and payment of cash dividends on the Company
Preferred Stock quarterly and immediately prior to the Closing and
otherwise in accordance with the terms thereof;
(d) adjust, split, combine, subdivide, reclassify or
redeem, purchase or otherwise acquire, or propose to redeem or purchase
or otherwise acquire, any shares of its capital stock, or any of its
other securities (other than as permitted by Section 6.1(f) hereof);
(e) (i) sell, lease, transfer or dispose of any material
assets or rights, (ii) permit any asset to suffer any Lien thereupon,
except for any such Liens existing on the date hereof and for Permitted
Liens, or (iii) acquire any material assets or rights, unless in the case
of clauses (i), (ii) and (iii) of this Section 6.1(e), (A) in the
ordinary course of business consistent with past practice or (B) pursuant
to obligations in effect on the date hereof;
(f) (i) incur, assume or refinance any Indebtedness, (ii)
assume, guarantee, endorse or otherwise become liable (whether directly,
contingently or otherwise) for any Guarantee Obligations of any other
person or (iii) make any loans, advances or capital contributions to,
or investments in, any other person, unless in the case of clauses (i),
(ii) and (iii) of this Section 6.1(f), (A) in the ordinary course of
business consistent with past practice or (B) pursuant to obligations in
effect on the date hereof;
(g) pay, discharge or satisfy any liability, obligation,
or Lien (absolute, accrued, asserted or unasserted, contingent or
otherwise) of the Company or any of its Subsidiaries, other than the
payment, discharge or satisfaction in the ordinary course of business
consistent with past practice, or in accordance with their terms, of
claims, liabilities or obligations of the Company or its Subsidiaries (i)
reflected or reserved against the Balance Sheet or (ii) incurred in the
ordinary course of business since the date of the Balance Sheet;
(h) change any of the accounting or tax principles,
practices or methods used by the Company (except as required by GAAP or
applicable law);
(i) make any change in the compensation payable or to
become payable to any of its officers, directors, employees, agents or
consultants (other than normal salary or wage increases in the ordinary
course business and consistent with past practice), enter into or amend
any employment, severance, termination or other agreement or employee
benefit plan or make any loans to any of its officers, directors,
employees, agents or consultants (other than routine advances in the
ordinary course of business and consistent with past practice), whether
contingent on consummation of the transactions contemplated hereby or
otherwise;
(j) pay, agree to pay or make any accrual or arrangement
for payment of any pension, retirement allowance or other employee
benefit pursuant to any existing plan, agreement or arrangement to any
officer, director or employee or pay or agree to pay or make any accrual
or arrangement for payment to any employees of the Company or any of its
Subsidiaries of any amount relating to unused vacation days, except in
the ordinary course of business and consistent with past practice or as
permitted by this Agreement;
(k) make or authorize any capital expenditures except in
the ordinary course consistent with past practice;
(l) settle or compromise any material Tax liability;
(m) (i) enter into, amend or terminate early any material
Contract, except in the ordinary course of business consistent with past
practice, or (ii) knowingly take any action or fail to take any action
that, with or without either notice or lapse of time, would constitute a
material default under any material contract;
(n) make any payments, loans, advances or other
distributions to, or enter into any transaction, agreement or arrangement
with, the Stockholders, their affiliates, associates or family members
(other than (i) compensation payable and routine advances in the ordinary
course of business and consistent with past practice to Stockholders who
are also employees or consultants and (ii) for the payment of cash
dividends on the Company Preferred Stock quarterly and immediately prior
to the Closing and otherwise in accordance with the terms thereof);
(o) make any change in its accounts payable practices
generally;
(p) terminate or amend or fail to perform any of its
obligations or permit any material default to exist or cause any material
breach under, or enter into (except for renewals in the ordinary course
of business consistent with past practice), any material policy of
insurance;
(q) dispose of or permit to lapse any Intellectual
Property;
(r) modify, amend or enter into any collective bargaining
agreement;
(s) file any income Tax Return or pay any income Tax shown
to be due thereon or make any material elections with respect to Taxes
with respect to such Tax Returns; or
(t) take, or agree in writing or otherwise to take, any of
the foregoing actions.
Section 6.2 No Solicitation. Unless and until this
Agreement is terminated in accordance with its terms, neither the Company
nor the Stockholders shall, directly or indirectly, solicit or initiate
discussions with, enter into negotiations or agreements with, or furnish
any information about the Company that is not publicly available to, or
otherwise assist, facilitate or encourage, any entity, person or group
(other than Republic, an affiliate of Republic or their authorized
representatives) concerning any proposal for a merger, sale of
substantial assets, sale of any shares of capital stock or rights to
acquire any shares of capital stock, recapitalization or other business
combination transaction involving the Company or any of its Subsidiaries
(a "Competing Transaction"). The Company and the Stockholders shall
instruct the respective officers, directors, employees, advisors,
affiliates, counsel and agents (collectively, "Representatives") of the
Company and its Subsidiaries not to take any action contrary to the
provisions of the previous sentence. The Company shall notify Republic
immediately in writing if the Company becomes aware that any inquiries or
proposals are received by, any information is requested from, or any
negotiations or discussions are sought to be initiated with, the Company
or its Subsidiaries with respect to a Competing Transaction.
Section 6.3 Other Car Rental Transactions. Unless and
until this Agreement is terminated in accordance with its terms, Republic
shall not enter into any agreement or agreement in principle with any
entity, person or group providing for a merger or other business
combination with, or purchase of any portion of the Car Rental Business
of, or more than 5% of the capital stock of, any person or entity engaged
in the Car Rental Business (each an "Other Car Rental Transaction"), and
shall cease all discussions and negotiations with, and prior to the
Closing Date shall not directly or indirectly, initiate or re-initiate
any discussions with, or enter into any negotiations with, those
companies previously agreed to in writing by Republic and the Company.
Section 6.4 Access. From the date of this Agreement until
the Closing Date (or the termination of this Agreement), the Company
shall (and shall cause each of its Subsidiaries to) afford to Republic
and its Representatives reasonable access, upon reasonable notice during
normal business hours, to all its properties, books, contracts,
commitments, personnel and records and shall (and shall cause each of its
Subsidiaries to) furnish promptly to Republic all information concerning
its business, properties and personnel as may reasonably be requested.
All such information as may be furnished by or on behalf of the Company
or any of its Subsidiaries to Republic or its Representatives pursuant
to this Section 6.4 shall be subject to the terms of the confidentiality
agreement dated November 20, 1996 between the Company and Republic (the
"Confidentiality Agreement"), the terms of which are incorporated herein
by reference. No investigation pursuant to this Section 6.4 shall affect
any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto.
Section 6.5 Notification of Certain Matters. Each of the
Company and Republic shall promptly advise the other party orally and in
writing of (i) any representation or warranty made by it contained in
this Agreement that is qualified as to materiality becoming untrue or
inaccurate in any respect or any such representation or warranty that is
not so qualified becoming untrue or inaccurate in any material respect or
(ii) the failure by it to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement or (iii) any event or change or impending
occurrence of any event or change of which it has knowledge and which has
resulted, or which, insofar as can reasonably be foreseen, is likely to
result, in any of the conditions to the transactions contemplated hereby
set forth in Article VIII hereof not being satisfied; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
Section 6.6 Compliance With Nasdaq and SEC Requirements.
From the date hereof to the Closing Date, Republic shall comply in all
material respects with all applicable requirements of Nasdaq and the SEC
with respect to the filing of information and reports. From the date
hereof through the Closing Date, Republic shall promptly furnish or make
available to the Stockholders, a copy of each report, schedule,
registration statement and other documents filed by it with the SEC
during such period pursuant to the requirements of Section 13(a) or 15(d)
of the Exchange Act, which filings shall satisfy all of the
representations set forth in Section 5.5 as to Republic SEC Documents as
fully as if such filings were deemed to be "Republic SEC Documents."
Section 6.7 Reasonable Efforts.
(a) Subject to the terms and conditions of this Agreement,
each of the parties hereto agrees to use its commercially reasonable
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 and regulations to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, (i) the
preparation and filing of all applicable forms under the HSR Act, (ii)
such actions as may be required to be taken under applicable state
securities or "blue sky" laws in connection with the issuance of shares
of Republic Common Stock and contemplated hereby, (iii) the preparation
and filing of all other forms, registrations and notices required to be
filed to consummate the transactions contemplated by this Agreement and
the taking of such actions as are necessary to obtain any requisite
consents, approvals, authorizations or orders of any Governmental Entity
or third party and (iv) the satisfaction of all conditions to the
Closing.
(b) Each party shall promptly consult with the other with
respect to and provide any necessary information not subject to legal
privilege with respect to and provide the other (or its counsel) copies
of, all filings made by such party with any Governmental Entity or any
other information supplied by such party to a Governmental Entity in
connection with this Agreement and the transactions contemplated by this
Agreement (except personal information with respect to officers and
directors). Each party hereto shall promptly inform the other of any
material communication from any Government Entity regarding any of the
transactions contemplated by this Agreement. If any party or affiliate
thereof receives a request for additional information or documentary
material from any such Government Entity with respect to the transactions
contemplated by this Agreement, then such party will endeavor in good
faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other party, an appropriate response in
compliance with such request.
(c) Notwithstanding the foregoing, nothing in this
Agreement shall be deemed to require Republic to enter into any agreement
with any Governmental Entity or to consent to any order, decree or
judgment requiring Republic to hold separate or divest, or to restrict
the dominion or control of Republic or any of its affiliates over, any
significant portion of the Car Rental Business or any other business of
Republic, its affiliates or the Company and its Subsidiaries. In
addition, no party hereto shall take any action after the date hereof
that could reasonably be expected to materially delay the obtaining of,
or result in not obtaining, any permission, approval or consent from any
Governmental Entity necessary to be obtained prior to the Closing.
Section 6.8 Disclosure Supplements. Prior to the Closing,
the Company shall supplement or amend the Company Disclosure Schedule
with respect to any matter hereafter arising or any information obtained
after the date hereof which, if existing, occurring or known at or prior
to the date of this Agreement, would have been required to be set forth
or described in such schedule or which is necessary to complete or
correct any information in such schedule or in any representation and
warranty which has been rendered inaccurate thereby; provided, however,
that no such supplement or amendment shall affect the representations,
warranties, covenants or agreements of the parties hereto or the
conditions to the obligations of the parties under this Agreement.
Section 6.9 Publicity. The initial press release relating
to this Agreement shall be a joint press release and, thereafter, the
Company and Republic shall consult with each other prior to issuing any
press releases or otherwise making public statements with respect to the
transactions contemplated by this Agreement.
Section 6.10 Pooling-of-Interests. Each of the parties
hereto shall not take, and shall use its reasonable best efforts to cause
its affiliates not to take, any action that would prevent the Acquisition
from qualifying for, and shall use its reasonable best efforts to cause
the Acquisition to qualify for, pooling-of-interests accounting treatment
for financial reporting purposes.
Section 6.11 Tax Treatment and Reporting. Each of the
parties hereto shall not take, and shall use its reasonable best efforts
to cause its affiliates not to take, any action that would prevent the
Acquisition from qualifying as, and shall use its reasonable best efforts
to cause the Acquisition to qualify as, a "reorganization" under Section
368(a)(1)(C) of the Code with respect to Santa Xxxx and a
"reorganization" under Section 368(a)(1)(B) of the Code with respect to
Emerald Investors, L.L.C. Without limiting the generality of the
foregoing, unless otherwise permitted by a pronouncement of the IRS,
Republic shall not, and shall use its reasonable best efforts to cause
its affiliates not to, liquidate or merge the Company into, or transfer
any Company Shares to, any other entity prior to the second anniversary
of the Closing Date. Republic and each of the Stockholders shall, and
Republic shall cause the Company to, treat the Acquisition as a
"reorganization" within the meaning of Section 368(a)(1)(C) of the Code
with respect to Santa Xxxx and a "reorganization" under Section
368(a)(1)(B) of the Code with respect to Emerald Investors, L.L.C. and
shall file such information with their income tax returns as may be
required by Treasury Regulation Section 1.368-3 or other applicable law.
Section 6.12 Benefits; Continuing Employees. For at least
two years following the Closing Date, Republic will cause the Company to
continue to provide each employee of the Company and its Subsidiaries who
remains an employee of the Company and its Subsidiaries (the "Affected
Employees") with such salary, pension and other employee benefits as are
provided by the Company and its Subsidiaries immediately prior to the
Closing Date, except that Republic may substitute benefits under its
bonus plan and the Republic Stock Plans for those currently provided
under the Company's bonus and long-term incentive plans. At any time that
Affected Employees become entitled to participate in a Republic Plan (as
hereinafter defined) Republic shall cause the Affected Employees to
receive the same service credit with Republic and its Subsidiaries as
each such Affected Employee previously earned up to such time for
purposes of determining the Affected Employee's eligibility to
participate in, vesting under, benefit accrual under, eligibility for
early distribution of benefits from and eligibility for early retirement
or any subsidized benefit provided for in any employee benefit plan,
practice or policy established, maintained or contributed to by Republic
(a "Republic Plan") in which such Affected Employee is eligible to
participate and shall where appropriate cause each Republic Plan to
reflect the foregoing requirement; provided, however, that any
determination as to whether an Affected Employee is eligible to
participate in a Republic Plan instead of a Company plan shall be solely
in Republic's discretion. Republic shall, or shall cause the Company to,
use its best efforts to cause the plan provider to, waive any
pre-existing condition exclusions under any Republic Plan under which
Affected Employees become covered on and after the Closing Date, other
than any such exclusions that were not waived under the comparable plan
of the Company prior to the Closing Date. For purposes of computing
deductible amounts (or like adjustments or limitations on coverage) under
any Republic Plan which is an "employee welfare benefit plan," as defined
in Section 3(1) of ERISA (a "Successor Welfare Plan") in which such
Affected Employee is eligible to participate (provided, however, that any
determination as to whether an Affected Employee is eligible to
participate in a Republic Plan instead of a Company plan shall be solely
in Republic's discretion), expenses and claims previously recognized for
similar purposes under plans of the Company or any of its Subsidiaries
providing similar benefits prior to the Closing Date shall be credited or
recognized under the applicable Successor Welfare Plan.
Section 6.13 Takeover Statutes. If any Takeover Statute is
or may become applicable to the transactions contemplated by this
Agreement, each of the Company and Republic and their respective Boards
of Directors shall grant such approvals and take such actions as are
necessary so that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated
thereby and otherwise to act to eliminate or minimize the effects of any
such Takeover Statute on any of the transactions contemplated by this
Agreement.
Section 6.14 Certain Actions. Each of the parties hereto
shall not take any action that would, or that could reasonably be
expected to, result in any of the conditions to their respective
obligations to consummate the transactions contemplated hereby set forth
in Article VIII not being satisfied.
Section 6.15 Indemnification; Insurance.
(a) The Company shall, and, from and after the Closing
Date, Republic and the Company shall, indemnify, defend and hold harmless
each person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Closing Date, an officer or
director of the Company or any of its Subsidiaries (the "Indemnified
Parties") against (i) all losses, claims, damages, costs, expenses,
liabilities or judgments, or amounts that are paid in settlement with the
approval of the indemnifying party (which approval shall not be
unreasonably withheld) of, or in connection with, any claim, action,
suit, proceeding or investigation based in whole or in part on or arising
in whole or in part out of the fact that such person is or was a director
or officer of the Company or any of its Subsidiaries, whether pertaining
to any matter existing or occurring at or prior to the Closing Date and
whether asserted or claimed prior to, or at or after, the Closing Date
("Indemnified Liabilities") and (ii) all Indemnified Liabilities based in
whole or in part on, or arising in whole or in part out of, or pertaining
to this Agreement or the transactions contemplated hereby or thereby, in
each case to the full extent a corporation is permitted under the DGCL
(notwithstanding the By-laws of the Company or Republic) to indemnify its
own directors, officers and employees, as the case may be (and the
Company or Republic, as the case may be, shall pay expenses in advance of
the final disposition of any such action or proceeding to each
Indemnified Party to the full extent permitted by law upon receipt of any
undertaking contemplated by Section 145(e) of the DGCL). Without limiting
the foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Party (whether arising
before or after the Closing Date), (i) the Indemnified Parties may retain
counsel satisfactory to them with the consent of the Company (or the
consent of Republic and the Company after the Closing Date) which consent
of the Company (or, after the Closing Date, Republic and the Company)
with respect to such counsel retained by the Indemnified Parties may not
be unreasonably withheld, (ii) the Company (or, after the Closing Date,
Republic and the Company) shall pay all reasonable fees and expenses of
such counsel for the Indemnified Parties promptly as statements therefor
are received, and (iii) the Company (or, after the Closing Date, Republic
and the Company) shall use all reasonable efforts to assist in the
vigorous defense of any such matter; provided, however, that neither the
Company nor Republic shall be liable for any settlement of any claim
effected without its written consent, which consent, however, shall not
be unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 6.15, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Company and
Republic (but the failure so to notify shall not relieve the Company or
Republic from any liability which it may have under this Section 6.15,
except to the extent such failure materially prejudices such party), and
shall deliver to the Company (or, after the Closing Date, Republic and
the Company) the undertaking contemplated by Section 145(e) of the DGCL.
The Indemnified Parties as a group may retain only one law firm to
represent them with respect to each such matter, unless there is, under
applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified
Parties. The provisions of the Certificate of Incorporation and the
By-laws of the Company with respect to indemnification and exculpation
from liability shall not be amended, repealed or otherwise modified for a
period of six years from the Closing Date in any manner that would
adversely affect the rights thereunder of individuals who on or prior to
the Closing Date were directors or officers of the Company, unless such
modification is required by law. Republic shall cause the Company to keep
and maintain in effect after the Closing Date the indemnification
agreements with the individuals listed in Section 6.15 of the Company
Disclosure Schedule.
(b) The provisions of this Section 6.15 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party
and his or her heirs and representatives.
Section 6.16 Further Assurances. In the event that at any
time after the Closing Date any further action is necessary or desirable
to carry out the purposes of this Agreement, the proper officers and/or
directors of the Company and Republic shall take such necessary action.
Section 6.17 Employment Agreements. At the Closing, the
Company and Republic will (a) offer to enter into employment agreements
in substantially the form of Annex A hereto (the "Employment Agreements")
with the individuals listed in paragraphs (1) and (2) of Section 6.17 of
the Company Disclosure Schedule at the base salary rates and with the
bonus and option grants previously agreed to in writing by Republic and
the Company and (b) offer the base salary rates and bonus and option
grants previously agreed to in writing to the individuals listed in
paragraph (3) of Section 6.17 of the Company Disclosure Schedule.
Section 6.18 Escrow Agreement. For the purpose of securing
the Stockholders' indemnity obligations pursuant to Article X hereof, at
the Closing, Republic and the Stockholders will enter into a mutually
satisfactory escrow agreement (the "Escrow Agreement"), embodying the
terms set forth in Article X hereof, with an escrow agent (the "Escrow
Agent") selected by Republic and reasonably satisfactory to the
Stockholders.
ARTICLE VII
REGISTRATION RIGHTS
The Stockholders shall have the following registration
rights with respect to the Republic Common Stock issued to them
hereunder:
Section 7.1 Registration Rights for Republic Common Stock;
Filing of Registration Statement. Republic shall use reasonable best
efforts to cause, as soon as practicable following the publication of
financial results covering at least thirty (30) days of combined
operations of Republic and the Company after the Closing Date, a
registration statement to be filed under the Securities Act or an
existing registration statement to be amended for the purpose of
registering the shares of Republic Common Stock issued hereunder for
resale by the Stockholders (the "Registration Statement"). Republic shall
use reasonable best efforts to have the Registration Statement become
effective and cause the shares of Republic Common Stock issued hereunder
to be registered under the Securities Act and registered, qualified or
exempted under the state securities laws of such jurisdictions as any
Stockholder reasonably requests, and to do any and all other acts and
things which may be reasonably necessary or desirable to enable the
Stockholders to consummate the disposition of the shares of Republic
Common Stock issued hereunder in such jurisdictions (provided, however,
that Republic shall not be required to qualify to do business or to file
a general consent to service of process in any such jurisdiction), as
soon as practicable following the publication of financial results
covering at least thirty (30) days of combined operations of Republic and
the Company after the Closing Date. Notwithstanding the foregoing,
Republic may delay filing the Registration Statement, and may withhold
efforts to cause the Registration Statement to become effective, if
Republic determines in good faith that such registration is likely to
materially interfere with or adversely affect the negotiation or
completion of any financing, acquisition or other transaction that is
then being pursued by Republic (whether or not a final decision has been
made to undertake such transaction), or is likely to require premature
disclosure thereby, at the time the right to delay is exercised;
provided, however, that the maximum delay in filing the Registration
Statement and in withholding efforts to cause it to become effective
shall be sixty (60) days.
Section 7.2 Expenses of Registration. Republic shall pay
all expenses incurred by Republic in connection with the registration,
qualification and/or exemption of the shares of Republic Common Stock
issued hereunder, including any SEC and state securities law registration
and filing fees, printing expenses, fees and disbursements of Republic's
counsel and accountants, transfer agents' and registrars' fees, fees and
disbursements of experts used by Republic in connection with such
registration, qualification and/or exemption, and expenses incidental to
any amendment or supplement to the Registration Statement or prospectuses
contained therein. Republic shall not, however, be responsible for any
sales, broker's or underwriting commissions upon sale by any Stockholder
of any shares of Republic Common Stock issued pursuant to the terms of
this Agreement.
Section 7.3 Furnishing of Documents. Republic shall
furnish to the Stockholders such reasonable number of copies of the
Registration Statement, such prospectuses as are contained in the
Registration Statement and such other documents as the Stockholders may
reasonably request in order to facilitate the offering of the shares of
Republic Common Stock issued hereunder.
Section 7.4 Amendments and Supplements. Republic shall
prepare and promptly file with the SEC and promptly notify the
Stockholders of the filing of such amendments or supplements to the
Registration Statement or prospectuses contained therein as may be
necessary to correct any statements or omissions, if, at the time when a
prospectus relating to the shares of Republic Common Stock issued
hereunder is required to be delivered under the Securities Act, any event
shall have occurred as a result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Republic shall also advise the Stockholders
promptly after it shall receive notice or obtain knowledge thereof, of
the issuance of any stop order by the SEC suspending the effectiveness of
the Registration Statement or the initiation or threatening of any
proceeding for that purpose and promptly use its reasonable efforts to
prevent the issuance of any stop order or to obtain its withdrawal if
such stop order should be issued. If, after the Registration Statement
becomes effective, Republic advises the Stockholders that Republic
considers it appropriate that the Registration Statement be amended, the
Stockholders shall suspend any further sales of the shares of Republic
Common Stock issued hereunder until Republic advises the Stockholders
that the Registration Statement has been amended.
Section 7.5 Duration. Republic shall maintain the
effectiveness of the Registration Statement until the earlier of (i) the
Stockholders' sale or other disposition pursuant to the Registration
Statement of all of the shares of Republic Common Stock issued hereunder
and (ii) the third anniversary of the Closing Date.
Section 7.6 Further Information. If shares of Republic
Common Stock issued hereunder and owned by a Stockholder are included in
any registration, such Stockholder shall furnish Republic such
information regarding itself as Republic may reasonably request and as
shall be required in connection with any registration, qualification or
compliance referred to in this Agreement.
Section 7.7 Indemnification.
(a) Republic shall indemnify and hold harmless the
Stockholders and each person, if any, who controls a Stockholder within
the meaning of the Securities Act, from and against any and all losses,
damages, liabilities, costs and expenses to which the Stockholders or any
such controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities, costs or
expenses arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that Republic shall not be liable in any such case to the extent
that any such loss, claim, damage, liability, cost or expense arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information
furnished by or on behalf of any Stockholder or such controlling person
in writing specifically for use in the preparation thereof.
(b) Each of the Stockholders, severally but not jointly,
shall indemnify and hold harmless Republic and each person, if any, who
controls Republic within the meaning of the Securities Act, from and
against any and all losses, damages, liabilities, costs and expenses to
which Republic or any such controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
the Registration Statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, to the
extent that such untrue statement or alleged untrue statement or omission
or alleged omission was so made in reliance upon and in conformity with
written information furnished by or on behalf of such Stockholder
specifically for use in the preparation thereof; provided, however, that
the indemnity obligation of any Stockholder will be limited to the net
amount of proceeds received by such Stockholder from the sale of shares
of Republic Common Stock issued hereunder pursuant to the Registration
Statement.
(c) Promptly after receipt by an indemnified party
pursuant to the provisions of this Section 7.7 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party shall, if a claim thereof is
to be made against the indemnifying party pursuant to the provisions of
this Section 7.7, promptly notify the indemnifying party of the
commencement thereof; but the failure to so notify the indemnifying party
shall not relieve it from any liability which it may have hereunder
unless the indemnifying party has been materially prejudiced thereby nor
will such failure to so notify the indemnifying party relieve it from any
liability which it may have to any indemnified party otherwise than
hereunder. In case such action is brought against any indemnified party
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
reasonably acceptable to such indemnified party; provided, however, if
the defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interest which would
prevent counsel for the indemnifying party from also representing the
indemnified party, the indemnified party or parties shall have the right
to select separate counsel to participate in the defense of such action
on behalf of such indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party pursuant to the provisions of this Section 7.7 for any
legal or other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed
counsel in accordance with the provisions of the preceding sentence, (ii)
the indemnifying party shall not have employed counsel reasonably
acceptable to the indemnified party to represent the indemnified party
within a reasonable time after the notice of the commencement of the
action or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying
party.
(d) In the event any of the shares of Republic Common
Stock issued hereunder are sold by any Stockholder in an underwritten
public offering consented to by Republic, Republic shall provide
indemnification to the underwriters of such offering and any person
controlling any such underwriter on behalf of the Stockholder making the
offering; provided, however, that Republic shall not be required to
consent to any such underwriting or to provide such indemnification in
respect of the matters described in the proviso to the first sentence of
Section 7.7(a) hereof.
(e) If the indemnification provided for in this Section
7.7 is not available for any reason, then each indemnifying party shall
contribute in such proportion as is appropriate to reflect the benefit
received by the indemnified party and the indemnifying party, or in the
case when no benefit has been received, each indemnifying party shall
contribute as appropriate to reflect the relative fault of the
indemnified party and indemnifying party; provided, however, that in any
such case no Stockholder will be required to contribute any amount in
excess of the net proceeds received by such Stockholder from the sale of
shares of Republic Common Stock issued hereunder pursuant to the
Registration Statement.
Section 7.8 Due Diligence. If necessary to permit any
Stockholder to be able to avail itself of any defense to a cause of
action which would not otherwise be available to such Stockholder, and
provided that the Stockholder first enters into a confidentiality
agreement reasonably acceptable to Republic, Republic will give such
Stockholder such reasonable access to its books and records and such
reasonable opportunities to discuss the business of Republic with its
officers and the independent accountants who have certified its financial
statements as shall be necessary, in the reasonable opinion of any such
Stockholder's counsel, to conduct a reasonable investigation within the
meaning of the Securities Act.
Section 7.9 Listing Application. Republic shall use its
reasonable best efforts to cause the shares of Republic Common Stock to
be issued hereunder to be authorized for inclusion on the Nasdaq National
Market on or prior to the Closing Date.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to
Effect the Acquisition. The respective obligation of each party hereto to
consummate the transactions contemplated hereby are subject to the
satisfaction or waiver, on or prior to the Closing Date, of each of the
following conditions:
(a) No Injunctions or Restraints. (i) No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing or materially restricting the consummation of the
transactions contemplated hereby shall be in effect (each party agreeing
to use all reasonable efforts to have any such order reversed or
injunction lifted) and (ii) no action by any Governmental Entity shall be
pending seeking to prevent or materially restrict the consummation of the
transactions contemplated hereby; provided, however, that the conditions
set forth in the preceding clause (ii) shall not be a condition to
Republic's obligations unless Republic has complied in all material
respects with the provisions of Section 6.7 hereof.
(b) HSR Approval. Any applicable waiting period under the
HSR Act shall have expired or been terminated.
(c) Regulatory Approvals. (i) All authorizations,
consents, orders or approvals of those Governmental Entities listed in
Section 8.1(c) of the Company Disclosure Schedule shall have been
obtained and (ii) all other authorizations, consents, orders or approvals
of, or declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Entity, the failure of which to be
obtained, made or occurred would have a Company Material Adverse Effect
or a Republic Material Adverse Effect, shall have been obtained, made or
occurred; provided, however, that the condition set forth in the
preceding clause (ii) shall not be a condition to Republic's obligations
unless Republic has complied in all material respects with the provisions
of Section 6.7 hereof. Republic shall have received all state securities
or "blue sky" permits and other authorizations necessary to issue the
Republic Common Stock pursuant to this Agreement.
(d) Third-Party Consents. All consents of those third
parties listed in Section 8.1(d) of the Company Disclosure Schedule shall
have been obtained on terms reasonably acceptable to Republic.
(e) Nasdaq Listing. The shares of Republic Common Stock to
be issued hereunder shall have been authorized for inclusion on the
Nasdaq National Market, subject to official notice of issuance.
Section 8.2 Conditions to Obligation of Republic. The
obligation of Republic to effect the transactions contemplated hereby are
also subject to the satisfaction, on or prior to the Closing Date, of the
following additional conditions unless waived by Republic:
(a) Representations and Warranties. The representations
and warranties of the Company and the Stockholders set forth in this
Agreement (i) that are qualified as to materiality shall be true,
complete and correct in all respects and (ii) that are not so qualified
shall be true, complete and correct in all material respects, in each
case as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except that the accuracy of
the representations and warranties that by their terms speak as of the
date of this Agreement or some other date shall be determined as of such
date) and, in each case except for changes expressly permitted by this
Agreement.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing
Date.
(c) Certificate. Republic shall have received a
certificate, dated the Closing Date, signed on behalf of the Company by
its chief executive officer and its chief financial officer to the
effect that the conditions set forth in Sections 8.2(a), 8.2(b) and
8.2(e) have been satisfied.
(d) Accountants' Letter With Respect to
Pooling-of-Interest Accounting Treatment. Republic shall have received
from Xxxxxx Xxxxxxxx LLP, in its capacity as the Company's independent
accountants, a letter, dated the Closing Date, in form and substance
reasonably acceptable to Republic, confirming that, to their knowledge
after due inquiry of management of the Company, there have been no
transactions or events with respect to the Company and its Subsidiaries
which would, and the ownership structure and attributes of the Company
and its Subsidiaries and their respective stockholders would not,
proscribe the transactions contemplated hereby, if consummated, from
being considered as a pooling-of-interests business combination.
Republic shall have received from Xxxxxx Xxxxxxxx LLP, in its capacity as
Republic's independent accountants, a letter, dated the Closing Date,
confirming that the transactions contemplated hereby, if consummated, can
properly be accounted for as a pooling-of-interests business combination
in accordance with GAAP and the criteria of Accounting Principles Board
Opinion No. 16 and the regulations of the SEC.
(e) No Material Adverse Change. No change or development,
or combination of changes or developments, shall have occurred which
would have a Company Material Adverse Effect.
(f) Corporate Action. Republic shall have received from
the Company (i) copies of resolutions of the Company's Board of Directors
approving this Agreement and the transactions contemplated hereby,
certified on behalf of the Company by its corporate secretary, and (ii) a
certificate of good standing from the Secretary of State of the State of
Delaware for the Company dated as of a date not more than ten (10) days
prior to the Closing Date.
(g) Employment Agreement. The Company and Xxxxxxx X.
Xxxxxx, Xx. shall have executed and delivered an Employment Agreement.
(h) Escrow Agreement. Each of the Stockholders shall have
executed and delivered the Escrow Agreement.
(i) Letang Options. Xxxxx X. Xxxxxx shall have agreed to
the cancellation of his options to purchase up to 125,000 shares of
capital stock of National Xxxxxx on terms reasonably acceptable to
Republic.
(j) Charleston Reservation Center. Republic or one of its
Subsidiaries shall have acquired from 7700 Properties, L.L.C., an
Oklahoma limited liability company, the land and building located in
Charleston, South Carolina, which the Company currently uses as its
Central Reservation Center, for a price equal to 69,869 shares of
Republic Common Stock (subject to any adjustment required by Section 1.4
hereof) and otherwise on terms reasonably acceptable to Republic.
(k) Licensee Litigation. The litigation brought by certain
of the Company's licensees against the Company shall have been settled on
terms reasonably acceptable to Republic.
(l) Noncompetition Agreements. Each of Xxxxxxx X. Xxxxxx,
Xx., Xxxxxx XxXxxxxxx and Xxxxx Xxxxxxx shall have executed and delivered
to Republic noncompetition agreements on terms reasonably acceptable to
Republic.
(m) Management Services. The Company shall have terminated
the Santa Xxxx Management Services Agreement without liability to the
Company and on terms reasonably acceptable to Republic.
(n) Consulting Agreements. The Company shall have entered
into consulting agreements with each of Xxxxxx XxXxxxxxx and Xxxxx
Xxxxxxx on terms reasonably acceptable to Republic.
(o) No Material Judgments or Claims. (i) No judgment shall
have been entered against the Company or any of its Subsidiaries in
respect of a claim for personal injury and/or property damage the
uninsured portion of which exceeds by more than $10 million the amount of
the reserve for personal liability and property damage on the Balance
Sheet (the "Claims Reserve") and (ii) no claim for personal injury and/or
property damage shall have been asserted against the Company or any of
its Subsidiaries which is not frivolous and with respect to which the
uninsured portion of any damages which can reasonably be expected to be
recovered exceeds the Claims Reserve by more than $10 million.
Section 8.3 Conditions to Obligation of the Stockholders.
The obligation of the Stockholders to consummate the transactions
contemplated hereby is also subject to the satisfaction of the following
additional conditions, on or prior to the Closing Date, unless waived by
the Stockholders' Representative (as hereinafter defined):
(a) Representations and Warranties. The representations
and warranties of Republic set forth in this Agreement (i) that are
qualified as to materiality shall be true, complete and correct in all
respects and (ii) that are not so qualified shall be true, complete and
correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of the
Closing Date (except that the accuracy of the representations and
warranties that by their terms speak as of the date of this Agreement or
some other date shall be determined as of such date).
(b) Performance of Obligations of Republic. Republic shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
(c) Certificates. The Stockholders shall have received a
certificate, dated the Closing Date, signed on behalf of Republic by its
co-chief executive officer and its chief financial officer to the effect
that the conditions set forth in Sections 8.3(a), 8.3(b) and 8.3(d) have
been satisfied.
(d) No Material Adverse Change. No change or development,
or combination of changes or developments, shall have occurred which
would have a Republic Material Adverse Effect.
(e) Corporate Action. The Stockholders shall have received
from Republic (i) copies of resolutions of Republic's Board of Directors
approving and adopting this Agreement and the transactions contemplated
hereby, certified on behalf of Republic by its corporate secretary, and
(ii) a certificate of good standing from the Secretary of State of the
State of Delaware for Republic dated as of a date not more than ten (10)
days prior to the Closing Date.
(f) Employment Agreements. Republic shall have executed
and delivered the Employment Agreements.
(g) Escrow Agreement. Republic shall have executed and
delivered the Escrow Agreement.
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.1 Termination. This Agreement may be terminated
at any time prior to the Closing Date:
(a) by mutual consent of Republic and the Stockholders'
Representative (acting on behalf of the Stockholders);
(b) by either Republic or the Stockholders' Representative
(acting on behalf of the Stockholders), if the transactions contemplated
hereby shall not have been consummated before June 30, 1997 (unless the
failure to so consummate the transactions contemplated hereby by such
date shall be due to the action or failure to act of the party seeking to
terminate this Agreement);
(c) by either Republic or the Stockholders' Representative
(acting on behalf of the Stockholders), if any preliminary or permanent
injunction or other order issued by a court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
transactions contemplated hereby is entered and such preliminary or
permanent injunction or other order is final and nonappealable (provided
that Republic shall not be entitled to terminate this Agreement pursuant
to this Section 9.1(c) unless Republic has complied in all material
respects with the provisions of Section 6.7 hereof);
(d) by Republic, if there has been a breach on the part of
the Company or the Stockholders in any of the representations, warranties
or covenants of the Company and/or the Stockholders set forth herein, or
any failure on the part of the Company and/or the Stockholders to
comply with its or their obligations hereunder, or any other events or
circumstances shall have occurred, such that, in any such case, any of
the conditions to the Closing set forth in Section 8.1 or 8.2 hereof
could not be satisfied prior to the termination date contemplated by
Section 9.1(b) hereof; or
(e) by the Stockholders' Representative (acting on behalf
of the Stockholders), if there has been a breach on the part of Republic
in any of the representations, warranties or covenants of Republic set
forth herein, or any failure on the part of Republic to comply with its
obligations hereunder, or any other events or circumstances shall have
occurred, such that, in any such case, any of the conditions to the
Closing set forth in Section 8.1 or 8.3 hereof could not be satisfied
prior to the termination date contemplated by Section 9.1(b) hereof.
Section 9.2 Effect of Termination. In the event of a
termination of this Agreement by either the Stockholders' Representative
or Republic as provided in Section 9.1 hereof, this Agreement shall
forthwith become void and there shall be no liability or obligation on
the part of Republic or the Stockholders or their affiliates or
respective officers or directors, other than the provisions of Section
6.4 hereof; provided, however, that any such termination shall not
relieve any party from liability for willful breach of this Agreement.
Section 9.3 Amendment. This Agreement may be amended by
the parties hereto by action taken or authorized by their respective
Boards of Directors, in the case of Republic and the Company, and,
subject to Section 11.2 hereof, by the Stockholders' Representative, in
the case of the Stockholders. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
Section 9.4 Extension; Waiver. At any time prior to the
Closing Date, the parties hereto, by action taken or authorized by their
respective Boards of Directors, in the case of Republic and the Company,
and by the Stockholders' Representative, in the case of the Stockholders,
may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE X
INDEMNIFICATION
Section 10.1 Agreement by Stockholders to Indemnify.
Subject to the terms and conditions of this Article X, each Stockholder
jointly and severally agrees, from and after the Closing, to indemnify,
defend and hold Republic and its affiliates (including the Company and
its Subsidiaries from and after the Closing Date) (collectively, the
"Republic Group") harmless from and against the Indemnifiable Damages (as
hereinafter defined).
(a) As used in this Agreement, "Indemnifiable Damages"
means, without duplication, the aggregate of all expenses, losses, costs,
deficiencies, fines, penalties, liabilities and damages (including,
without limitation, related counsel and paralegal fees and expenses)
actually incurred or suffered by any member of the Republic Group, on an
after-tax consolidated basis, to the extent resulting from or arising out
of any inaccuracy in any representation or warranty (without regard to
any "Company Material Adverse Effect" qualifications contained therein
other than that set forth in the first sentence of Section 3.8 hereof)
made by the Company or the Stockholders in or pursuant to this Agreement.
Indemnifiable Damages shall not be deemed to have been sustained solely
by reason of the Company's failure to list in any section of the Company
Disclosure Schedule any matter required to be listed therein.
(b) Each of the representations and warranties made by the
Company and each Stockholder in this Agreement or pursuant hereto shall
survive for a period of one year after the Closing Date and, upon
expiration of such one-year period, such representations and warranties
shall expire. No claim for the recovery of Indemnifiable Damages may be
asserted by Republic against the Stockholders after such representations
and warranties shall thus expire; provided, however, that claims for
Indemnifiable Damages first asserted in compliance with the notice
requirements of Section 10.2(a) hereof within such one-year period shall
not thereafter be barred. Notwithstanding any knowledge of facts
determined or determinable by Republic or its Representatives by
investigation, Republic shall have the right to fully rely on the
representations, warranties, covenants and agreements of the other
parties contained in this Agreement or in any other documents or papers
delivered in connection herewith.
(c) Notwithstanding anything to the contrary in this
Section 10.1, (i) the Stockholders shall not be liable to Republic with
respect to any claim for Indemnifiable Damages (other than with respect
to claims relating to Environmental Matters which are covered by clause
(ii) below) ("Non-Environmental Matters") unless and only to the extent
that all Indemnifiable Damages relating to Non-Environmental Matters
incurred by the Republic Group exceed an aggregate of $6,000,000 (it
being the intention of the parties that such amount be a deductible
against the Indemnifiable Damages relating to Non-Environmental Matters
for which the Stockholders otherwise would be liable), (ii) the
Stockholders shall indemnify the Republic Group against all claims for
Indemnifiable Damages relating to Environmental Matters (without regard
to any exceptions set forth in Section 3.14 of the Company Disclosure
Schedule other than those relating to underground storage tank
replacement or retrofitting) and the Stockholders shall not be liable to
Republic with respect to any claim for Indemnifiable Damages relating to
Environmental Matters unless and only to the extent that all
Indemnifiable Damages with respect to Environmental Matters incurred by
the Republic Group exceed an aggregate of $6,000,000 (it being the
intention of the parties that the Stockholders shall have a separate
deductible for claims relating to Environmental Matters in such amount)
and (iii) each Stockholder's obligation to pay Indemnifiable Damages to
Republic with respect to all matters shall be limited in the aggregate to
such Stockholder's pro rata portion of the Escrowed Consideration.
(d) For purposes of satisfying any claim for Indemnifiable
Damages made by Republic or otherwise valuing the Escrowed Consideration
pursuant to this Article X, the shares of Republic Common Stock shall be
valued at $28.625 per share (subject to any adjustment required or that
would have been required by Section 1.4 hereof).
Section 10.2 Conditions of Indemnification. The
Stockholders' obligations to indemnify and hold the Republic Group
harmless against Indemnifiable Damages are subject to the following terms
and conditions:
(a) If Republic has a reasonable good faith basis for
asserting a claim for Indemnifiable Damages, it shall give prompt written
notice to the Escrow Agent, with a copy to the Stockholders'
Representative, of such claim (an "Indemnification Notice"). The
Indemnification Notice shall briefly set forth the basis of the claim
and the amount thereof (or, if not then determinable by Republic, a
reasonable good faith estimate of the amount thereof) in reasonable
detail to permit the Stockholders' Representative to evaluate such claim.
(b) Promptly after any determination of a claim in
accordance with the provisions of paragraph (c) below, and promptly after
any receipt of notice of the determination of a claim in accordance with
the provisions of Section 10.3 hereof (which notice shall be accompanied
by a copy of any agreement, final court order, judgment or decree
evidencing such determination), the Escrow Agent shall deliver to
Republic, free and clear of any interest of the Stockholders therein,
Escrowed Consideration in an amount equal to the amount, if any, of such
claim payable to Republic pursuant to such determination. Such amount
shall be charged against each Stockholder's pro rata portion of the
Escrowed Consideration. If the amount of the Escrowed Consideration then
held by the Escrow Agent is less than the amount, if any, of such claim
so payable, the Escrow Agent shall deliver to Republic all of the
Escrowed Consideration then held by it, free and clear of any interest of
the Stockholders therein.
(c) The determination of a claim asserted hereunder shall
be made as follows:
(i) The claim shall be deemed to have resulted in a
determination in favor of Republic, in an amount equal to the
amount of such claim estimated by Republic pursuant to paragraph
(a) above, on the 30th day after Republic gives the Escrow Agent
and the Stockholders' Representative the Indemnification Notice
with respect to such claim in accordance with paragraph (a)
above, unless prior thereto the Escrow Agent has received notice
from the Stockholders' Representative (with a copy to Republic)
that the Stockholders have a reasonable good faith basis for
disputing the claim (a "Dispute Notice").
(ii) If a claim asserted hereunder is disputed by the
Stockholders' Representative in the manner provided in clause
(i) above, the determination of such claim shall be made in
accordance with the provisions for the settlement of disputes
contained in Section 10.3 hereof and shall be evidenced by the
documentation referred to in such Section.
Section 10.3 Settlement of Disputes. If the Stockholders'
Representative delivers a Dispute Notice in compliance with Section
10.2(c)(i) hereof, the parties shall follow the procedures set forth
below:
(a) Promptly following receipt by Republic of a Dispute
Notice, the parties shall hold a meeting (the "Initial Meeting"),
attended by persons with decision-making authority for each party,
regarding the dispute, to attempt in good faith to negotiate a resolution
of the dispute; provided, however, that no such meeting, or any
statements made or documents exchanged by the parties at such meeting,
shall be deemed to vitiate or reduce the obligations and liabilities of
the parties hereunder or be deemed a waiver by a party hereto of any
remedies to which such party would otherwise be entitled hereunder.
(b) If, within thirty (30) days after the Initial Meeting
or such longer period as the parties may agree, the parties have not
succeeded in negotiating a resolution of the dispute, the parties shall
submit the dispute to mediation in accordance with the then-current CPR
Model Mediation Procedure for Business Disputes published by the CPR
Institute for Dispute Resolution (the "CPR"). In connection with such
mediation, the parties shall jointly appoint a mutually acceptable
mediator, seeking assistance in such regard from the CPR if they have
been unable to agree upon such appointment within twenty (20) days from
the conclusion of the negotiation period. The parties shall bear equally
the out-of-pocket costs payable to third parties of the mediation;
provided, however, that costs payable by a party to its advisors and
other representatives, including its attorneys and any experts or
consultants retained on its behalf, shall be borne solely by such party.
Such mediation shall be held in the State of New York unless the parties
agree otherwise.
(c) The parties shall participate in good faith in the
mediation and negotiations related thereto for a period of no more than
thirty (30) days from the date a mediator is appointed, unless the
parties agree to extend such period. If the parties are not successful in
resolving the dispute through the mediation, then any party may institute
legal proceedings to adjudicate such dispute, subject to the provisions
of Section 11.12 hereof.
(d) The resolution of any dispute shall be evidenced by
appropriate instructions in writing to the Escrow Agent signed by
Republic and the Stockholders' Representative or by a final judgment,
order or decree of the United States District Court for the District of
Delaware or a court of competent jurisdiction of the State of Delaware
(the time for appeal therefrom having expired and no appeal having been
perfected). Prior to the settlement of any dispute as provided in this
Section 10.3, the Escrow Agent shall retain in its possession such
portion of the Escrowed Consideration as may be necessary to satisfy the
claim which is the subject of the dispute.
Section 10.4 Delivery of the Escrowed Consideration. The
Escrow Agent shall deliver to each Stockholder no later than the date
which is one year following the Closing Date any Escrowed Consideration
then held by it to which such Stockholder is entitled unless and to the
extent there then remains unresolved any claim for Indemnifiable Damages
as to which an Indemnification Notice has been given, including any claim
with respect to which the Company has asserted a claim against General
Motors Corporation ("GM") pursuant to Section 10.7 hereof, in which event
any Escrowed Consideration remaining on deposit after each such claim
shall have been resolved and satisfied shall be delivered to the
Stockholders promptly after the time of satisfaction of such claim to the
extent not subject to any other then remaining claims.
Section 10.5 Voting of and Dividends on the Escrowed
Consideration. All shares of Republic Common Stock included in the
Escrowed Consideration shall be deemed to be owned by the Stockholders in
accordance with their pro rata portion of such shares and the
Stockholders shall be entitled to vote the same; provided, however, that
there shall also be deposited in escrow and held by the Escrow Agent as
part of the Escrowed Consideration, subject to the terms of this Article
X, all shares of Republic Common Stock issued to the Stockholders as a
result of any stock dividend or stock split, with respect to the Escrowed
Consideration. Any cash dividends or distributions on the shares of
Republic Common Stock held by the Escrow Agent as part of the Escrowed
Consideration shall be payable to the Stockholders.
Section 10.6 Third-Party Claims. Notwithstanding anything
to the contrary in this Article X, the obligations and liabilities of the
Stockholders to indemnify the Republic Group with respect to claims made
by third parties shall be subject to the following terms and conditions:
(a) Republic will give the Stockholders' Representative
prompt notice of any such claim in compliance with the requirements of
Section 10.2(a) hereof, and the Stockholders shall have the right to
undertake the defense thereof by counsel chosen by them who shall be
reasonably acceptable to Republic, in which event, the expenses incurred
in the defense of such claim shall be charged against the Escrowed
Consideration;
(b) If the Stockholders, within a reasonable time after
notice of any such third-party claim, fail to defend Republic or any
member of the Republic Group against which such claim has been asserted,
Republic shall (upon further notice to the Stockholders' Representative)
have the right to undertake the defense, compromise or settlement of such
claim on behalf of and for the account and risk of the Stockholders
subject to the right of the Stockholders to assume the defense of such
claim at any time prior to settlement, compromise or final determination
thereof;
(c) Anything in this Section 10.6 to the contrary
notwithstanding, (i) if there is a reasonable probability that a
third-party claim may materially and adversely affect Republic or another
member of the Republic Group other than as a result of money damages or
other money payments, Republic shall have the right, at its own cost and
expense, to defend, compromise or settle such claim; provided, however,
that if such claim is settled without the written consent of the
Stockholders' Representative (which consent shall not be unreasonably
withheld) Republic or such member of the Republic Group shall be deemed
to have waived all rights hereunder against the Stockholders for money
damages arising out of such claim, and (ii) the Stockholders shall not,
without the written consent of Republic, settle or compromise any claim
or consent to the entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to
Republic and/or such member of the Republic Group a release from all
liability in respect to such claim; and
(d) Republic and the Stockholders each will use its
reasonable best efforts to keep the other apprised of material
developments with respect to any third-party claim it is handling in
accordance with the provisions of this Section 10.6.
Section 10.7 Priority of Remedies. Notwithstanding
anything to the contrary contained in this Article X, before asserting
any claim for Indemnifiable Damages against the Stockholders and the
Escrowed Consideration, Republic shall have caused the Company to first
assert any such claim against GM and use its reasonable best efforts to
pursue all recoveries from GM in respect thereof, but only if and to the
extent that the Company has a reasonable basis for asserting a claim for
indemnification against GM pursuant to the indemnification provisions of
the Asset Purchase Agreement relating to the acquisition by the Company
of its assets from a subsidiary of GM.
Section 10.8 Remedies Exclusive. The remedies provided
herein shall be exclusive and the liability of the Stockholders to
indemnify the Republic Group for Indemnifiable Damages shall be limited
to the Escrowed Consideration, Republic having agreed to waive (on behalf
of itself and all other members of the Republic Group) any rights it (or
they) may otherwise have had to proceed against the Stockholders or their
successors or assigns or any of their other assets for the satisfaction
of such right to indemnity. In addition, from and after the Closing Date,
the Stockholders will have no liability to Republic or to any other
member of the Republic Group arising out of or relating to any breach of
any of the covenants or agreements made by the Company or the
Stockholders in this Agreement.
Section 10.9 Adjustments to Aggregate Consideration. All
payments for Indemnifiable Damages made pursuant to this Article X shall
be treated as adjustments to the aggregate Common Stock Per Share
Consideration payable pursuant to Section 1.3 hereof.
Section 10.10 Contribution. The Stockholders agree among
themselves that with respect to their indemnity obligations pursuant to
this Article X, each Stockholder shall be responsible for the portion of
such obligation which corresponds to such Stockholder's percentage
ownership of Company Common Stock immediately prior to the Closing Date.
In the event that any Stockholder pays more than its proportionate share,
as described in the preceding sentence, such Stockholder shall be
entitled to contribution from the other Stockholders who have not paid
their proportionate share, so that each Stockholder, in effect, will have
paid such Stockholder's proportionate share hereunder. The foregoing
notwithstanding, each Stockholder shall be solely responsible for any
breach of a representation and warranty relating to such Stockholder or
such Stockholder's ownership of shares of Company Common Stock and shall
indemnify the other Stockholders with respect to any such breach by such
Stockholder.
Section 00.00 Xxxxxxxx Xxxxxxxxx. Xxxxxxxx agrees to
indemnify and hold harmless the Stockholders and the stockholders or
members of a Stockholder, as the case may be, from and against all
expenses, losses, costs, deficiencies, fines, penalties, liabilities and
damages (including, without limitation, any Taxes, related counsel and
paralegal fees and expenses) (collectively "Losses") actually incurred or
suffered by any of the Stockholders and the stockholders or members of a
Stockholder, as the case may be, net of any Tax benefit, to the extent
arising out of or resulting from any breach of the covenant set forth in
the second sentence of Section 6.11 hereof; provided, however, no claim
for the recovery of such Losses may be asserted by any Stockholder or any
stockholder or members of a Stockholder, as the case may be, against
Republic after the expiration of the statute of limitations (after giving
effect to any extensions thereof) for the tax year of such Stockholder or
such other stockholder or member which includes the Closing Date (or, in
the case of Santa Xxxx, which includes the date of dissolution or
liquidation thereof).
Section 10.12 Santa Xxxx Indemnity. Santa Xxxx agrees,
from and after the Closing Date, to indemnify and hold the Republic Group
harmless from and against all Losses related to Taxes of Santa Xxxx, net
of any Tax benefit, actually incurred or suffered by the Republic Group,
on an after-tax consolidated basis, for all taxable periods ending on or
before the Closing Date and, for the taxable period that includes (but
does not end on) the Closing Date (a "Straddle Period") to the extent
attributable to the portion of such Straddle Period ending on and
including the Closing Date. For purposes of this Section 10.12, Losses
include but are not limited to any liability under Treasury Regulation
Section 1.1502-6. No claim for recovery under this Section 10.12 may be
asserted by the Republic Group against Santa Xxxx or any stockholder of
Santa Xxxx after the expiration of the applicable statute of limitations.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given on the date
delivered if delivered personally (including by reputable overnight
courier), on the date transmitted if sent by facsimile (which is
confirmed), or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Republic, to:
Republic Industries, Inc.
000 Xxxx Xxx Xxxx Xxxx.
Xxxxx 0000
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
Facsimile: 000-000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx (DE)
Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile: 000-000-0000
(b) if to the Company or to the Stockholders'
Representative, to:
Xxxxxxx X. Xxxxxx, Xx.
National Car Rental System, Inc.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Facsimile: 000-000-0000
with copies to:
Xxxxxxx X. Xxxxxx
Xxxxx & Xxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000-0000
Facsimile: 000-000-0000
and to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxx
Facsimile: 000-000-0000
Section 11.2 Stockholders' Representative. Each
Stockholder hereby appoints Xxxxxxx X. Xxxxxx, Xx. (or, in the event of
his death or disability, Xxxxx Xxxxxxx or, in the event of his death or
disability, Xxxxxxx X. Xxxxxx) to act on behalf of such Stockholder (in
such capacity, the "Stockholders' Representative") with respect to all
matters under this Agreement, including receiving notices hereunder,
entering into any amendment or modification hereof or resolving any
dispute hereunder, provided that any action which shall affect any
Stockholder other than in proportion to such Stockholder's interest in
the Company shall require the consent of such Stockholder.
Section 11.3 Interpretation. When a reference is made in
this Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used in this
Agreement they shall be deemed to be followed by the words "without
limitation." The phrase "made available" in this Agreement shall mean
that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases
"the date of this Agreement," "the date hereof" and terms of similar
import, unless the context otherwise requires, shall be deemed to refer
to January 5, 1997. The word "knowledge" of or with respect to the
Company shall mean the actual knowledge of Xxxxxxx X. Xxxxxx, Xx., Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxx X. Xxxxx and Xxxxx Xxxxxxxx;
and the words "know", "known" and like terms with respect to the Company
shall have correlative meanings.
Section 11.4 Counterparts. This Agreement may be executed
in counterparts, all of which shall be considered one and the same
agreement and shall become effective when a counterpart has been signed
by each of the parties and delivered to each of the other parties, it
being understood that all parties need not sign the same counterpart.
Section 11.5 Entire Agreement; No Third-Party
Beneficiaries. This Agreement (including the documents and the
instruments referred to herein) and the Confidentiality Agreement (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and thereof, and (b) except as provided in
Section 6.15 hereof, are not intended to confer upon any person other
than the parties hereto and thereto any rights or remedies hereunder or
thereunder.
Section 11.6 Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the State of
Delaware without regard to any applicable conflicts of law principles.
Section 11.7 Specific Performance. The parties hereto
agree that if any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached,
irreparable damage would occur, no adequate remedy at law would exist and
damages would be difficult to determine, and that the parties shall be
entitled to specific performance of the terms hereof (without the
requirement of the posting of any bond or other security), in addition to
any other remedy at law or equity.
Section 11.8 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties, except as expressly
contemplated by Section 11.13 hereof. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
Section 11.9 Severability. If any provision of this
Agreement or the application thereof to any person or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof, or the application of
such provision to persons or circumstances other than those as to which
it has been held invalid or unenforceable, shall remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby,
so long as the economic or legal substance of the transactions
contemplated thereby is not affected in any manner adverse to any party.
Upon any such determination, the parties shall negotiate in good faith in
an effort to agree upon a suitable and equitable substitute provision to
effect original intent of the parties.
Section 11.10 Company Disclosure Schedule. Matters
reflected on the Company Disclosure Schedule are not necessarily limited
to matters required by this Agreement to be reflected therein and the
inclusion of such matters shall not be deemed an admission that such
matters were required to be reflected the Company Disclosure Schedule.
Such additional matters are set forth for informational purposes only and
do not necessarily include other matters of a similar nature. Capitalized
terms used in the Company Disclosure Schedule but not otherwise defined
therein shall have the respective meanings assigned to such terms in this
Agreement.
Section 11.11 Fees and Expenses. Whether or not the
transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by Republic, if incurred by Republic,
or any of its affiliates (other than the Company and its Subsidiaries),
or by the Company, if incurred by the Company, its Subsidiaries, or the
Stockholders.
Section 11.12 Jurisdiction. Subject to Section 10.3
hereof, each of the Stockholders, the Company and Republic hereby (i)
consents to be subject to jurisdiction of the United States District
Court for the District of Delaware and the jurisdiction of the courts of
the State of Delaware in any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby,
(ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court,
(iii) agrees that it will not bring any action relating to this Agreement
or the transactions contemplated hereby in any court other than the
United States District Court for the District of Delaware or the courts
of the State of Delaware, (iv) irrevocably waives (A) any objection that
it may have or hereafter have to the laying of venue of any such suit,
action or proceeding in such court and (B) any claim that any such suit,
action or proceeding in any such court has been brought in an
inconvenient forum and (v) irrevocably consents to the service of any and
all process in any such suit, action or proceeding by the delivery of
such process to such party at the address and in the manner provided in
Section 11.1 hereof.
Section 11.13 Dissolution of Santa Xxxx. Republic
acknowledges that Santa Xxxx intends to liquidate following the Closing
Date and hereby consents to such liquidation, and to the distribution of
the shares of Republic Common Stock to be issued hereunder to Santa Xxxx
to its stockholders and to the assignment of Santa Anna's rights and
obligations hereunder to its stockholders in connection with such
liquidation.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Republic, the Company and each of the
Stockholders have caused this Agreement to be signed by their respective
officers thereunto duly authorized as of the date first written above.
REPUBLIC INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
________________________________
Name: Xxxxxx X. Xxxxxxx
Title: President and Co-Chief
Executive Officer
NATIONAL CAR RENTAL SYSTEM, INC.
By: /s/ Xxxxxxx X. Xxxxxx
________________________________
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief
Executive Officer
THE STOCKHOLDERS
SANTA XXXX HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
________________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
EMERALD INVESTORS, L.L.C.
By: /s/ Emerald Investors, L.L.C
________________________________
Name: Xxxxxx X. Xxxxx
Title: Administrative Partner
