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EXHIBIT 10.71
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EXECUTION COPY
ASSET AND STOCK PURCHASE AGREEMENT
BY AND AMONG
BUDGET GROUP, INC.
AND
CERTAIN OF ITS SUBSIDIARIES,
CENDANT CORPORATION
AND
CHEROKEE ACQUISITION CORPORATION
DATED AS OF AUGUST 22, 2002
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
Section 1.1 Defined Terms................................................................................1
Section 1.2 Other Definitional and Interpretive Matters.................................................19
ARTICLE 2
PURCHASE AND SALE OF THE ACQUIRED ASSETS
Section 2.1 Purchase and Sale of Acquired Assets........................................................20
Section 2.2 Consideration...............................................................................20
Section 2.3 Acquired Assets.............................................................................20
Section 2.4 Excluded Assets.............................................................................25
Section 2.5 Assumed Liabilities.........................................................................26
Section 2.6 Excluded Liabilities........................................................................27
Section 2.7 Closing.....................................................................................29
Section 2.8 Deliveries by Seller Parties................................................................29
Section 2.9 Deliveries by Buyer.........................................................................30
Section 2.10 Cure Costs..................................................................................31
Section 2.11 Transition and Support Arrangements for Retained Business...................................31
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES
Section 3.1 Organization and Qualification..............................................................32
Section 3.2 Capitalization of the Acquired Companies....................................................32
Section 3.3 Corporate Power and Authority...............................................................33
Section 3.4 Conflicts; Consents and Approvals...........................................................33
Section 3.5 Title to Property; Adequacy of Assets.......................................................34
Section 3.6 SEC Filings; Seller Financial Statements....................................................35
Section 3.7 Vehicles, Etc...............................................................................37
Section 3.8 Absence of Changes..........................................................................38
Section 3.9 No Undisclosed Liabilities..................................................................38
Section 3.10 Accounts Receivable; Accounts Payable.......................................................39
Section 3.11 Affiliate Transactions......................................................................40
Section 3.12 Compliance with Laws........................................................................40
Section 3.13 Litigation..................................................................................40
Section 3.14 Corporate Locations; Permits; Etc...........................................................41
Section 3.15 Contracts...................................................................................41
Section 3.16 Real Estate.................................................................................46
Section 3.17 Airport Concessions.........................................................................47
Section 3.18 Employee; Employee Benefit Matters..........................................................48
Section 3.19 Labor Relations and Employment..............................................................51
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Section 3.20 Customers...................................................................................52
Section 3.21 Environmental Matters.......................................................................52
Section 3.22 Intellectual Property.......................................................................53
Section 3.23 Taxes.......................................................................................55
Section 3.24 Compliance with Insurance Laws..............................................................57
Section 3.25 Insurance...................................................................................58
Section 3.26 Books and Records...........................................................................59
Section 3.27 Franchisee Matters..........................................................................59
Section 3.28 Vehicle Return Pursuant to Repurchase Programs; Vehicle Orders..............................60
Section 3.29 Disclosure..................................................................................60
Section 3.30 Brokers.....................................................................................61
Section 3.31 Use of Certain Funds........................................................................61
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Section 4.1 Organization and Qualification..............................................................61
Section 4.2 Corporate Power and Authority; Authorization................................................61
Section 4.3 Conflicts; Consents and Approvals...........................................................62
Section 4.4 Brokers.....................................................................................62
Section 4.5 Sufficiency of Funds........................................................................63
ARTICLE 5
CERTAIN COVENANTS
Section 5.1 Conduct of Business.........................................................................63
Section 5.2 Access and Information......................................................................71
Section 5.3 Efforts to Effect Transaction; Certain Filings..............................................73
Section 5.4 Bankruptcy Filings..........................................................................74
Section 5.5 Bidding Procedures..........................................................................75
Section 5.6 Intercompany Amounts; Other Agreements......................................................76
Section 5.7 Updates of Schedules........................................................................76
Section 5.8 Tax Returns; Tax Sharing Agreements.........................................................77
Section 5.9 Purchase Price Allocation...................................................................77
Section 5.10 Transfer Taxes..............................................................................78
Section 5.11 Vehicle Return Pursuant to Repurchase Programs; Disposition of Vehicles.....................79
Section 5.12 Cooperation in Connection with Refinancing..................................................79
Section 5.13 Confidentiality.............................................................................79
Section 5.14 No Solicitation of Employees................................................................80
Section 5.15 Certain Tax Reporting.......................................................................81
Section 5.16 SEC Reports.................................................................................81
ARTICLE 6
ADDITIONAL POST-CLOSING COVENANTS
Section 6.1 Benefit and Employment Matters..............................................................81
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Section 6.2 Books and Records; Personnel................................................................84
Section 6.3 Section 338(h)(10) Elections................................................................85
Section 6.4 Tax Cooperation.............................................................................86
Section 6.5 Use of Name.................................................................................86
Section 6.6 Remittance of Funds.........................................................................87
Section 6.7 Mail Received After the Closing.............................................................87
Section 6.8 Further Assurances..........................................................................87
ARTICLE 7
CONDITIONS PRECEDENT TO CLOSING
Section 7.1 General Conditions..........................................................................88
Section 7.2 Conditions Precedent to Buyer's Obligations.................................................88
Section 7.3 Conditions Precedent to Seller Parties' Obligations.........................................90
ARTICLE 8
TERMINATION; TERMINATION AMOUNT
Section 8.1 Termination by Mutual Consent...............................................................90
Section 8.2 Termination by Either Buyer or Seller Parties...............................................90
Section 8.3 Termination by Buyer........................................................................91
Section 8.4 Termination by Seller Parties...............................................................93
Section 8.5 Effect of Termination.......................................................................93
Section 8.6 Expenses; Termination Amount................................................................94
ARTICLE 9
MISCELLANEOUS PROVISIONS
Section 9.1 Non-Survival of Representations, Warranties and Certain Covenants...........................96
Section 9.2 Guarantee by Parent.........................................................................96
Section 9.3 Notices.....................................................................................96
Section 9.4 Bulk Sales Laws.............................................................................97
Section 9.5 Amendment of Agreement......................................................................97
Section 9.6 Entire Agreement............................................................................97
Section 9.7 Assignment..................................................................................97
Section 9.8 Parties in Interest; No Third Party Beneficiaries...........................................98
Section 9.9 Severability................................................................................98
Section 9.10 Governing Law; Consent to Jurisdiction......................................................98
Section 9.11 Waiver of Jury Trial........................................................................98
Section 9.12 Execution in Counterparts...................................................................98
Section 9.13 Public Announcement.........................................................................98
Section 9.14 No Strict Construction......................................................................99
Section 9.15 Disclaimer of Warranties....................................................................99
Section 9.16 Effect of Investigation.....................................................................99
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SCHEDULES
Schedule 1.1(a) Seller Parties
Schedule 1.1(b) Acquired Companies
Schedule 1.1(c) Five Months Forecast
Schedule 1.1(d) Assumed Benefit Plans
Schedule 1.1(e) Initial 13-Week Cash Flow Projections
Schedule 1.1(f) Minority Investees
Schedule 1.1(g) Operating Metric Forecast
Schedule 1.2(e) Officers of Seller Parties for Determination of
Knowledge of Seller Parties
Schedule 2.4(a) Excluded Contracts
Schedule 2.4(j) Retained Insurance and Reinsurance Contracts
Schedule 2.5(a)(iii) Assumed Benefit Plans Contracts
Schedule 2.11(i) Support Services to be made Available to Retained
Business
Schedule 2.11(ii) Retained Business Franchise Term Sheet
Schedule 6.1(f) Post-Closing Benefits Matters
Schedule 8.2(j) Form of Ford MV Lease
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EXHIBITS
Exhibit A Form of Assignment and Bill of Sale
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C Form of Lease Assignment
Exhibit D Form of Trademark Assignment
Exhibit E Overbid Procedures Order
Exhibit F Bidding Procedures
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INDEX OF DEFINED TERMS
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Term Section
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13-Week Cash Flow Projections.................................................1.1
96-60 Election............................................................5.15(a)
363 Order.....................................................................1.1
365 Order.....................................................................1.1
A.I. Credit Corporation Premium Finance Arrangement...........................1.1
Accounting Firm...............................................................1.1
Acquired Assets...............................................................2.3
Acquired Business........................................................Preamble
Acquired Companies............................................................1.1
Acquired Company Employees................................................3.18(a)
Acquired Insurance Contracts...............................................2.3(n)
Action....................................................................3.13(a)
Actuarial Valuation Report................................................3.18(d)
Additional DIP Asset-Backed Fleet Financing...................................1.1
Adjusted EBITDAR..............................................................1.1
Affected Employees.........................................................6.1(a)
Affiliate.....................................................................1.1
Agreement................................................................Preamble
Airport Concessions.......................................................3.17(a)
Alternative Procedure.....................................................5.15(a)
Alternative Transaction.......................................................1.1
Amended and Restated Credit Facility..........................................1.1
Ancillary Agreements..........................................................1.1
Applicable Waiting Period..................................................8.2(a)
Assignment and Bill of Sale...................................................1.1
Assumed Amended Benefit Plans..............................................7.2(g)
Assumed Benefit Plans Contracts.......................................2.5(a)(iii)
Assumed Contracts.............................................................1.1
Assumed Indebtedness..........................................................1.1
Assumed Leases................................................................1.1
Assumed Liabilities........................................................2.5(a)
Assumption Agreement..........................................................1.1
Australian Financial Statements............................................3.6(c)
Australian Seller Entities.................................................3.6(c)
Automotive Fleet Utilization Ratio............................................1.1
Automotive Rental Days........................................................1.1
Automotive Rental Fleet.......................................................1.1
Automotive Rental Revenue.....................................................1.1
Automotive Rental Revenue to Automotive Rental Days Ratio.....................1.1
Bankruptcy Code..........................................................Preamble
Bankruptcy Court.........................................................Preamble
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Benefit Plan..................................................................1.1
Bidding Procedures.........................................................5.5(a)
BRACI Administrative Services Agreement.......................................1.1
BRACI License Agreement.......................................................1.1
Budget Australia...........................................................3.6(c)
Budget Pension Plan.......................................................3.18(d)
Bulk Sales Laws...............................................................1.1
Business Acquisition Agreements...............................................1.1
Business Contract.........................................................3.15(o)
Business Day..................................................................1.1
Business Records..............................................................1.1
Buyer....................................................................Preamble
Buyer Closing Deadline.....................................................8.2(a)
Buyer Plans................................................................6.1(b)
Camfox.....................................................................3.6(c)
Canadian Seller Entities...................................................3.6(d)
Cash Purchase Price...........................................................1.1
Chapter 11 Cases.........................................................Preamble
Closing.......................................................................2.7
Closing Date..................................................................2.7
Closing Deadlines..........................................................8.2(a)
Code..........................................................................1.1
Commercial Umbrella Premium Finance Arrangement...............................1.1
Competition Laws..............................................................1.1
Concessionaire............................................................3.17(a)
Confidentiality Agreement.....................................................1.1
Contract......................................................................1.1
control.......................................................................1.1
Cure Costs...................................................................2.10
Dealer........................................................................1.1
Demand Notes..................................................................1.1
Derivative Agreement..........................................................1.1
DIP Asset-Backed Fleet Financing..............................................1.1
DIP Financing.................................................................1.1
DIP L/C Rollover..............................................................1.1
Documents.....................................................................1.1
Domestic Seller Entity...............................................5.1(aa)(iii)
Election...................................................................6.3(a)
Elections..................................................................6.3(a)
Encumbrance...................................................................1.1
Environmental Claim...........................................................1.1
Environmental Law.............................................................1.1
Equity Security...............................................................1.1
ERISA.........................................................................1.1
ERISA Affiliate...............................................................1.1
Exchange Act..................................................................1.1
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Excluded Assets...............................................................2.4
Excluded Companies............................................................1.1
Excluded Liabilities..........................................................2.6
Existing Trucks............................................................3.7(a)
Fair Market Value.............................................................1.1
Final Order...................................................................1.1
Final Order Deadline.......................................................8.3(f)
FIRPTA Certificate.........................................................2.8(e)
Five Months Forecast .........................................................1.1
Fixtures......................................................................1.1
Ford Agreements...............................................................1.1
Ford Line of Credit...........................................................1.1
Ford MV Lease.................................................................1.1
Foreign Benefit Plan..........................................................1.1
Franchisee....................................................................1.1
Full-Time Equivalents.........................................................1.1
GAAP..........................................................................1.1
Governmental Body.............................................................1.1
Governmental Consents......................................................3.4(e)
Hyperion...................................................................5.2(c)
Initial 13-Week Cash Flow Projections.........................................1.1
Insurance Laws............................................................3.24(a)
Insurance Permit..........................................................3.24(b)
Intellectual Property.....................................................3.22(a)
International Seller Entity...........................................5.1(aa)(iv)
Investment....................................................................1.1
IRS...........................................................................1.1
June 30 Balance Sheet......................................................3.6(b)
June 30 Financial Statements...............................................3.6(b)
June 30 Income Statement...................................................3.6(b)
knowledge of Seller Parties................................................1.2(e)
Law...........................................................................1.1
Lease.........................................................................1.1
Lease Assignment..............................................................1.1
Leased Premises...............................................................1.1
Liabilities...................................................................1.1
License Agreements........................................................3.22(c)
March 31 Financial Statements..............................................3.6(b)
Marks and Logos...............................................................6.5
Material Adverse Effect.......................................................1.1
Materials of Environmental Concern............................................1.1
Minority Investees............................................................1.1
Multiemployer Plans........................................................6.1(g)
New Zealand Financial Statements...........................................3.6(e)
New Zealand Seller Entities................................................3.6(e)
Nissan Facility...............................................................1.1
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Offering Circulars........................................................3.27(a)
Operating Metric Forecast.....................................................1.1
Operations Pty. ...........................................................3.6(c)
Overbid Procedures Order...................................................5.5(a)
Owned Real Property...........................................................1.1
Owned Vehicles................................................................1.1
Parent...................................................................Preamble
Pension Plan..................................................................1.1
Permits.......................................................................1.1
Permitted Encumbrances........................................................1.1
Permitted Property Encumbrances...............................................1.1
Person........................................................................1.1
Personal Information......................................................3.22(e)
Petitions................................................................Preamble
Premises......................................................................1.1
Proprietary Software......................................................3.22(b)
Prudent Industry Practices....................................................1.1
Qualified Fees.........................................................2.5(a)(vi)
Qualified Retention Plan...................................................5.1(k)
Real Estate Deed..............................................................1.1
Regulatory Challenge.......................................................5.3(c)
Reimbursement Agreements......................................................1.1
Related Party Agreement.......................................................1.1
Rental Transaction............................................................1.1
Rental Transactions to Full-Time Equivalents Ratio............................1.1
Rental Vehicle................................................................1.1
Representation Failure.....................................................7.2(a)
Representatives............................................................5.2(a)
Repurchase Program............................................................1.1
Retained Business.............................................................1.1
Rev Proc 96-60............................................................5.15(a)
RSI........................................................................2.3(q)
Ryder License Agreement....................................................2.3(q)
SEC...........................................................................1.1
Section 338(h)(10) Allocation Statement....................................6.3(b)
Seller...................................................................Preamble
Seller Closing Deadline....................................................8.2(a)
Seller Entities...............................................................1.1
Seller Entities Employees.................................................3.18(a)
Seller Evaluation Material....................................................1.1
Seller Financial Statements................................................3.6(a)
Seller Parties...........................................................Preamble
Seller Parties Disclosure Schedule......................................Article 3
Seller Parties Employees..................................................3.18(a)
Seller SEC Documents.......................................................3.6(a)
Sixt.......................................................................2.4(f)
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Software..................................................................3.22(a)
Subsidiaries..................................................................1.1
Support Vehicles..............................................................1.1
Tax...........................................................................1.1
Tax Package...................................................................6.4
Tax Return....................................................................1.1
Telephone Numbers.............................................................1.1
Termination Amount.........................................................8.6(b)
Testing Period.............................................................8.3(i)
TFFC..........................................................................1.1
TFFC MV Leases................................................................1.1
Third Party...................................................................1.1
Third Party Consents.......................................................3.4(d)
Title IV Plan.............................................................3.18(e)
Trade Secrets.............................................................3.22(a)
Trademark Assignments.........................................................1.1
Trademarks................................................................3.22(a)
Transfer Taxes............................................................5.10(b)
Transfer Tax Returns......................................................5.10(b)
Treasury Regulations..........................................................1.1
Truck Rental Fleet............................................................1.1
Undisclosed Joint Liability...................................................1.1
UPAC Premium Finance Arrangement..............................................1.1
U.S. Benefit Plan.............................................................1.1
Vehicle Manufactuer...........................................................1.1
WARN Act......................................................................1.1
Welfare Plan..................................................................1.1
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ASSET AND STOCK PURCHASE AGREEMENT (the "AGREEMENT"), dated as of
August 22, 2002, by and among Budget Group, Inc., a Delaware corporation
("SELLER"), the Subsidiaries of Seller listed on SCHEDULE 1.1(a) (collectively
with Seller, the "SELLER PARTIES"), Cendant Corporation, a Delaware corporation
("PARENT") and Cherokee Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("BUYER").
W I T N E S S E T H:
WHEREAS, Seller and its Subsidiaries conduct automotive rental
businesses and operations throughout the United States, Canada, the Caribbean
region, Latin America and the Asia-Pacific region, directly or through various
Franchisees, Dealers, licensees and sub-licensees under the brand names Budget
and Ryder, including the rental of automobiles, trucks and other vehicles in the
daily rental market (excluding any business conducted in Europe, the Middle East
and Africa, collectively, the "ACQUIRED BUSINESS");
WHEREAS, on July 29, 2002, all of Seller Parties filed voluntary
petitions (the "PETITIONS") for relief commencing cases (the "CHAPTER 11 CASES")
under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. sections 101
ET SEQ. (as amended, the "BANKRUPTCY CODE"), in the United States Bankruptcy
Court for the District of Delaware (the "BANKRUPTCY COURT"); and
WHEREAS, Buyer desires to purchase and assume from Seller Parties, and
Seller Parties desire to sell, convey, assign and transfer to Buyer, the assets
and properties of Seller Parties relating to the Acquired Business specified
herein, together with certain specified obligations and liabilities relating
thereto, all in the manner and subject to the terms and conditions set forth
herein and in the Ancillary Agreements and in accordance with sections 105, 363
and 365 of the Bankruptcy Code.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants herein contained and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 DEFINED TERMS. For the purposes of this Agreement, the
following terms shall have the following meanings:
"13-WEEK CASH FLOW PROJECTIONS" means, with respect to the relevant
13-week period, a projected statement of cash flow for the operations of Seller
Entities for such period in respect of the Acquired Business, detailing the
sources and uses of such cash flow, in form and scope consistent with the
Initial 13-Week Cash Flow Projections.
"363 ORDER" means an order of the Bankruptcy Court, in substance and
form satisfactory to Buyer under this Agreement pursuant to sections 105 and 363
of the Bankruptcy Code and not inconsistent with the terms of this Agreement,
unless otherwise agreed among Buyer and Seller Parties. Subject, in the case of
clauses (a)(ii)(A) and (b) below to changes that are reasonably acceptable to
Buyer, the 363 Order shall provide, among other things: (a) that the transfer of
the Acquired Assets by Seller Parties to Buyer and the assumption of the Assumed
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Liabilities by Buyer from Seller Parties: (i) is or will be a legal, valid and
effective transfer of the Acquired Assets; (ii) vests or will vest Buyer with
good title to the Acquired Assets free and clear of all Liabilities and
Encumbrances (including Liabilities and Encumbrances (A) that purport to give to
any Person a right or option to retain any rights in or to Seller Parties'
Trademarks or Marks and Logos or other Intellectual Property, (B) that purport
to give to any Person a right or option to effect any forfeiture, modification,
right of first refusal, repurchase or termination of Seller Parties' or Buyer's
interest in the Acquired Assets or any similar rights or (C) in respect of
Taxes), except those expressly assumed or permitted by Buyer hereunder; and
(iii) constitutes reasonably equivalent value and fair consideration under the
Bankruptcy Code and under the laws of the United States, any state, territory,
possession, or the District of Columbia; (b) that all Persons, including, but
not limited to, all debt security holders, equity security holders,
governmental, tax and regulatory authorities, lenders, parties to or
beneficiaries under any Benefit Plan, trade and other creditors, asserting or
having Liabilities or Encumbrances of any kind or nature whatsoever against any
of Seller Parties or the Acquired Assets (whether legal or equitable, secured or
unsecured, matured or unmatured, contingent or non-contingent, senior or
subordinated), arising under or out of, in connection with, or in any way
relating to, Seller Parties, the Acquired Assets, the operation of Seller
Parties' businesses prior to the Closing Date, or the transfer of the Acquired
Assets to Buyer, other than the Assumed Liabilities and Permitted Encumbrances,
shall be forever barred, estopped and permanently enjoined from asserting,
prosecuting or otherwise pursuing against Buyer, Parent, their Affiliates, any
of the Acquired Companies or their Subsidiaries, or any of their respective
assets, property, successors or assigns, or the Acquired Assets, Seller Parties'
Liabilities (other than Assumed Liabilities) to such Persons or such Person's
Encumbrances (other than Permitted Encumbrances) against Seller Parties or their
respective property; (c) that the Bankruptcy Court retains jurisdiction to
enforce the provisions of this Agreement in all respects, including retaining
jurisdiction to protect Buyer and its Affiliates against any of the Excluded
Liabilities; (d) that the provisions of the 363 Order are nonseverable and
mutually dependent; (e) that the transactions contemplated by this Agreement are
undertaken by Buyer in good faith, as that term is used in section 363(m) of the
Bankruptcy Code; and (f)(i) a declaration that no Acquired Company nor any of
their respective assets or properties are directly or indirectly liable for or
subject to any Undisclosed Joint Liability or Liability relating to Taxes that
has been or may be asserted against any Seller Party, their estates, or any
Affiliate of Seller Parties (other than the Acquired Companies) or of the
Acquired Companies to the extent that any such Liability is based in whole or in
part upon the fact that any such Acquired Company was at any time an Affiliate
of Seller Parties or a member of the same affiliated group (within the meaning
of section 1504 of the Code) or state combined, unitary or similar group of
Seller Parties or any of their Affiliates (other than the Acquired Companies),
and enjoin any and all holders of any such Liability from asserting, prosecuting
or otherwise pursuing any such Liability against any Acquired Company or any of
their respective assets or properties; and (ii) PROVIDED, HOWEVER, that if the
Bankruptcy Court will refuse to approve a 363 Order containing the declaration
specified above in clause (f)(i) above the 363 Order shall provide that Seller
Parties shall jointly and severally indemnify Buyer, Parent and their successors
and assigns, affiliates, employees, directors, agents and representatives from
and against and shall reimburse the same for and in respect of any and all
Liability relating to Taxes referred to in clause (f)(i) above, including,
without limitation, all penalties, interest, costs and expenses (including
attorney fees) incurred for, in connection with
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or in respect of such Taxes. The 363 Order and the 365 Order may be consolidated
in a single order of the Bankruptcy Court.
"365 ORDER" means an order or orders of the Bankruptcy Court in
substance and form satisfactory to Buyer, approving the assumption by Seller
Parties, and assignment by Seller Parties to Buyer, of all Assumed Contracts and
Assumed Leases pursuant to sections 105 and 365 of the Bankruptcy Code and not
inconsistent with the terms of this Agreement, unless otherwise agreed among
Buyer and Seller Parties. The 365 Order shall provide: (a) that all defaults of
Seller Parties under the Assumed Contracts and Assumed Leases arising or
accruing prior to the date of the 365 Order (without giving effect to any
acceleration clauses or any default provisions in such contracts of a kind
specified in section 365(b)(2) of the Bankruptcy Code) have been cured or will
be promptly cured by Seller Parties and that Buyer shall have no liability or
obligation with respect to any default or obligation arising or accruing prior
to Closing; PROVIDED, HOWEVER, that to the extent such Assumed Contracts or
Assumed Leases are in default as a result of any failure to post, procure, or
maintain in an adequate amount performance or surety bonds or any other form of
financial assurance, including letters of credit and cash deposits, Buyer shall
post, procure, and maintain such performance or surety bonds and (b) that the
Assumed Contracts and Assumed Leases will be assumed and assigned to, and remain
in full force and effect for the benefit of, Buyer, notwithstanding any
provision in such Assumed Contracts or Assumed Leases or in applicable Law
(including those of a type described in sections 365(b)(2) and (f) of the
Bankruptcy Code) that prohibits, restricts, or conditions in any way such
assignment or transfer including, change of control, payment or Liabilities
triggered by the sale of the Acquired Assets or any portion thereof, use and
going dark restrictions. The 365 Order and the 363 Order may be consolidated in
a single order of the Bankruptcy Court.
"A.I. CREDIT CORPORATION PREMIUM FINANCE ARRANGEMENT" means the
Premium Finance Agreement, dated June 20, 2002, between Seller Parties and A.I.
Credit Corporation.
"ACCOUNTING FIRM" means an independent accounting firm reasonably
acceptable to Buyer and Seller Parties. If Buyer and Seller Parties cannot
mutually agree on the identity of the Accounting Firm, the Accounting Firm shall
be selected by lot from accounting firms of recognized national and
international standing, other than Ernst & Young LLP or any Affiliate thereof or
the auditor of Parent, Buyer, Seller Parties or any of their Affiliates (it
being understood that if there are no accounting firms among the New York
offices of one of the "Big Four" accounting firms that are so eligible, the
accounting firms of BDO Seidman, LLP and Grant Thornton, if not auditors of
Parent, Buyer, Seller or any of their Affiliates, shall be included among the
firms to be selected by lot). Any expenses relating to the engagement of the
Accounting Firm shall be shared equally by Buyer, on the one hand, and Seller
Parties, on the other. The Accounting Firm shall be instructed to use every
reasonable effort to perform its services as promptly as practicable after such
submission.
"ACQUIRED COMPANIES" means each of the Persons specified on
SCHEDULE 1.1(b).
"ADDITIONAL DIP ASSET-BACKED FLEET FINANCING" means asset-backed fleet
financing in an aggregate principal amount not exceeding $750,000,000, made
available to TFFC by one or more financial institutions or other entities on
similar terms and conditions as those contained in the DIP Asset-Backed Fleet
Financing, other than (i) the rate of interest payable
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thereon and the amount of monthly rent payments required to be made in
connection therewith and (ii) the credit enhancement required thereunder, which
shall be in the form of overcollateralization, cash or stand-by letters of
credit advanced or issued under the DIP Financing or the DIP L/C Rollover.
"ADJUSTED EBITDAR" means the consolidated net income of the Seller and
its Subsidiaries (excluding any Subsidiaries or earnings from operations outside
the United States (including Puerto Rico) and Canada) before (i) interest
expense (other than interest expense under vehicle fleet financing programs),
(ii) interest income (other than interest income on restricted cash),
(iii) taxes, (iv) depreciation (other than depreciation of vehicles),
amortization, non recurring items and other non-cash items (including any
writedowns in the value of assets under Statement of Financial Accounting
Standards 142), (v) any reversal of reserves to income (except to the extent any
such reserve was established and reversed during the same period) in excess of
$250,000 individually or $500,000 in the aggregate in any calendar month, other
than (A) any reversal of self insurance reserves for public liability, public
damage, workers compensation and medical insurance arising from actuarial
reviews, (B) any reversal of (i) the reserve for uncollectible subrogation
receivables not exceeding $2.0 million in each of September 2002 and December
2002 and (ii) a reserve for general and administrative expenses in an amount not
exceeding $1.5 million in December 2002 (the items referred to in clauses
(i) and (ii) above are reflected in the Five Months Forecast) and (C) reversal
of vehicle reserves, (vi) all extraordinary gains or losses, (vii) any gain or
loss in respect of any sale of assets (other than sales of vehicles) or
(viii) restructuring expenses (including any legal, accounting, investment
banking, advisory, brokerage, administrative, issuance, up-front, placement,
structuring, commitment, underwriting, financing, "due diligence", rating
agencies or similar fees, commissions, disbursements and expenses (whether or
not referred to as fees, commissions, disbursements or expenses), breakage cost,
increased interest rate, prepayment penalties or fees or similar costs incurred
or agreed to be paid or reimbursed in connection with the transactions
contemplated by this Agreement or the Chapter 11 Cases or any financings or
relating to any severance, retention or other compensation expenses relating to
the transactions contemplated by this Agreement or the Chapter 11 Cases),
determined in accordance with GAAP.
"AFFILIATE" of any Person means any Person that controls, is
controlled by, or is under common control with such Person. As used herein, the
term "CONTROL" (including the terms "CONTROLLING," "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") means the possession, directly or indirectly, and
individually or together with any other Person, of the power to direct or to
cause the direction of the management and policies of a Person, whether through
ownership of voting securities or other interests, by contract or otherwise.
"ALTERNATIVE TRANSACTION" means (i) the sale, lease or other
disposition (other than in connection with a liquidation of any of Seller
Parties pursuant to Chapter 7 of the Bankruptcy Code or pursuant to Chapter 11
of the Bankruptcy Code, provided that none of the assets or properties of any of
Seller Parties sold or disposed of in such liquidation is acquired to be used as
a going concern or as part of a going concern) of (x) all or substantially all
of the Acquired Business or (y) all or substantially all of the assets or
properties of the Acquired Business, (ii) the sale of an equity interest in any
of Seller Parties, (iii) any business combination of any of Seller Parties
(including, without limitation, a merger or consolidation and/or sale, lease or
other disposition of all or substantially all of its assets and properties
and/or Subsidiaries thereof) with
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one or more Persons other than Buyer or one or more of its Affiliates or
(iv) the restructuring, recapitalization, reorganization (whether on a
stand-alone basis, or otherwise) or liquidation (other than pursuant to Chapter
7 of the Bankruptcy Code or pursuant to Chapter 11 of the Bankruptcy Code,
provided that none of the assets or properties of any of Seller Parties sold or
disposed of in such liquidation is acquired to be used as a going concern or as
part of a going concern) of any of Seller Parties involving any of the Acquired
Assets or any of them; PROVIDED, HOWEVER, that any transaction contemplated by
clauses (ii) or (iii) shall not constitute an Alternative Transaction for
purposes of this Agreement unless it results, directly or indirectly, and
individually or together with any other transactions (whether related or not),
in the transfer of ownership or control of all or substantially all of the
Acquired Business or of all or substantially all of the assets or properties of
the Acquired Business.
"AMENDED AND RESTATED CREDIT FACILITY" means the $422,000,000 Amended
and Restated Credit Agreement, dated as of June 19, 1998, among Seller, as
borrower, the lenders party thereto, Credit Suisse First Boston, as
co-syndication agent and administrative agent and NationsBanc Montgomery
Securities LLC, as co-syndication agent and documentation agent, as amended by
(i) the First Amendment to Amended and Restated Credit Agreement, dated as of
September 11, 1998, (ii) the Second Amendment to Amended and Restated Credit
Agreement, dated as of March 18, 1999, (iii) the Third Amendment to Amended and
Restated Credit Agreement, dated as of December 22, 1999, (iv) the Fourth
Amendment and Waiver to Amended and Restated Credit Agreement, dated as of
September 30, 2000, (v) the Fifth Amendment to Amended and Restated Credit
Agreement, dated as of January 10, 2001, (vi) the Sixth Amendment to Amended and
Restated Credit Agreement, dated as of February 9, 2001, (vii) the Seventh
Amendment and Consent to Amended and Restated Credit Agreement, dated as of June
19, 2001, (viii) the Eighth Amendment and Consent to Amended and Restated Credit
Agreement, dated as of July 31, 2001, (ix) the Ninth Amendment, Waiver and
Consent to Amended and Restated Credit Agreement, dated as of December 20, 2001,
(x) the Tenth Amendment, Waiver and Consent to Amended and Restated Credit
Agreement, dated as of February 7, 2002, (xi) the Eleventh Amendment, Waiver and
Consent to Amended and Restated Credit Agreement, dated as of March 7, 2002,
(xii) the Twelfth Amendment, Waiver and Consent to the Amended and Restated
Credit Agreement, dated as of April 8, 2002, (xiii) the Thirteenth Amendment,
Waiver and Consent to the Amended and Restated Credit Agreement, dated as of May
31, 2002, (xiv) the Fourteenth Amendment, Waiver and Consent to the Amended and
Restated Credit Agreement, dated as of June 28, 2002 and (xv) the Fifteenth
Amendment, Waiver and Consent to the Amended and Restated Credit Agreement,
dated as of July 15, 2002.
"ANCILLARY AGREEMENTS" means the Assignments and Bills of Sale,
Assumption Agreements, Lease Assignments and the Trademark Assignments.
"ASSIGNMENT AND BILL OF SALE" means each Assignment and Bill of Sale
in substantially the form set forth as EXHIBIT A.
"ASSUMED BENEFIT PLANS" means the Benefit Plans listed on
SCHEDULE 1.1(d).
"ASSUMED CONTRACTS" means the Contracts specified in SECTION 2.3(a)
through SECTION 2.3(r).
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"ASSUMED INDEBTEDNESS" means, without duplication, the following
indebtedness of Seller Parties: (i) indebtedness under the Demand Notes
(including interest accrued thereon); (ii) indebtedness under the Nissan
Facility in an aggregate principal amount not exceeding $72,000,000, PLUS
ordinary interest (but not interest in excess of ordinary interest resulting
from the occurrence of a default or event of default thereunder) accrued and
unpaid thereon from (but excluding) the monthly payment date thereunder
immediately preceding the Closing Date; (iii) indebtedness under the DIP
Financing (including the related Reimbursement Agreements) in an aggregate
principal amount not exceeding $100,000,000, PLUS ordinary interest (but not
interest in excess of ordinary interest resulting from the occurrence of a
default or event of default thereunder) from (but excluding) the Interest
Payment Date (as defined in the DIP Financing) immediately preceding the Closing
Date, and the Letter of Credit Fee (as defined in Annex B to the DIP Financing)
accrued and unpaid for the calendar month in which the Closing occurs;
(iv) indebtedness under the Amended and Restated Credit Facility and the DIP L/C
Rollover (including the related Reimbursement Agreements) in an aggregate
principal amount not exceeding $422,000,000, PLUS (A) ordinary interest (but not
interest in excess of ordinary interest resulting from the occurrence of a
default or event of default thereunder) accrued and unpaid thereon from (but
excluding) (1) the Quarterly Payment Date (as defined in the Amended and
Restated Credit Agreement) immediately preceding the Closing Date (in the case
of the Amended and Restated Credit Facility) and (2) the Payment Date (as
defined in the case of the DIP L/C Rollover) immediately preceding the Closing
Date (in the case of the DIP L/C Rollover) and (B) amounts payable pursuant to
Section 3.3.4 of the Amended and Restated Credit Facility and Section 3.1.4 of
the DIP L/C Rollover in respect of the period for which such amounts and payable
commencing on the Quarterly Payment Date (in the case of the Amended and
Restated Credit Facility) or the Payment Date (in the case of the DIP L/C
Rollover) immediately preceding the Closing Date; (v) indebtedness under the
A.I. Credit Corporation Premium Finance Arrangement in an aggregate amount not
exceeding $2,311,356.88; (vi) indebtedness under the UPAC Premium Finance
Arrangement in an aggregate amount not exceeding $202,174.71; and
(vii) indebtedness under the Commercial Umbrella Premium Finance Arrangement in
an aggregate amount not exceeding $5,230,113.
"ASSUMED LEASES" means the Leases specified in SECTION 2.3(s).
"ASSUMPTION AGREEMENT" means each Assumption Agreement in
substantially the form set forth as EXHIBIT B.
"AUTOMOTIVE FLEET UTILIZATION RATIO" means, for each calendar month,
the ratio of (i) Automotive Rental Days for such month to (ii) the PRODUCT of
(x) the average Automotive Rental Fleet and (y) the actual number of days in
such month, determined in a manner consistent with the Operating Metric
Forecast.
"AUTOMOTIVE RENTAL DAYS" means, for a calendar month with respect to
the vehicles in the Automotive Rental Fleet, the aggregate number of days that
such vehicles have been subject to Rental Transactions that was closed in such
calendar month (whether such days occurred in such month or a prior period),
determined in a manner consistent with the Operating Metric Forecast.
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"AUTOMOTIVE RENTAL FLEET" means, as of any day of determination, the
aggregate number of Rental Vehicles (including Owned Vehicles other than
Existing Trucks or Support Vehicles), used, held for use or for retail sale
(other than retail sales in Hawaii and the Seattle area) by Seller Parties in
connection with the Acquired Business in the United States (including Puerto
Rico).
"AUTOMOTIVE RENTAL REVENUE" means, for each calendar month and with
respect to the vehicles in the Automotive Rental Fleet, the rental revenue
derived from Rental Transactions (including time and mileage charges and loss
damage-waiver insurance fees or charges) relating to such vehicles which were
closed in such calendar month (whether such revenue was earned with respect to
days in such month or a prior period), determined in a manner consistent with
the Operating Metric Forecast.
"AUTOMOTIVE RENTAL REVENUE TO AUTOMOTIVE RENTAL DAYS RATIO" means, for
each calendar month, the ratio of (i) Automotive Rental Revenue for such month
to (ii) Automotive Rental Days for such month, determined in a manner consistent
with the Operating Metric Forecast.
"BENEFIT PLAN" means each Pension Plan, Welfare Plan, employment,
consulting, bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock option, stock purchase, phantom stock,
performance, retirement, thrift, savings, stock bonus, excess benefit,
supplemental unemployment, paid time off, perquisite, fringe benefit, vacation,
sick leave, severance, termination, disability, death benefit, hospitalization,
medical, dental, life insurance, welfare benefit or other plan, program,
agreement or arrangement (whether written or unwritten), in each case
maintained, entered into or contributed to, or required to be maintained or
contributed to, by Seller or by any ERISA Affiliate or by any of their
respective Subsidiaries for the benefit of any present or former employee of any
Seller in connection with the Acquired Business.
"BRACI ADMINISTRATIVE SERVICES AGREEMENT" means the Administrative
Services Agreement, dated as of January 1, 1970, between Budget Rent a Car
Corporation of America and Budget Rent a Car International, Inc.
"BRACI LICENSE AGREEMENT" means the License Agreement, dated June 8,
1965, between Budget Rent a Car Corporation of America and Budget Rent-A-Car
International, Inc.
"BULK SALES LAWS" means all "bulk-transfer" Laws of any and all
jurisdictions (whether in United States or foreign).
"BUSINESS ACQUISITION AGREEMENTS" means any agreements, arrangements
or understandings pursuant to which any of the Acquired Business was acquired by
Seller or any of its Subsidiaries.
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which
banks are open for business in New York City, New York.
"BUSINESS RECORDS" means all books, records, ledgers and files or
other similar information used or held for use in the operation or conduct of
the Acquired Business by any
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Seller Entity, including price lists, customer lists, vendor lists, mailing
lists, warranty information, catalogs, sales promotion literature, advertising
materials, brochures, records of operation, standard forms of documents, manuals
of operations or business procedures, research materials, Tax Returns,
contracts, instruments, filings, administrative and pricing manuals, records
(including, without limitation, claim records, sales records, underwriting
records, financial records, compliance records and tax records), personnel
records, corporate minute books and other materials to the extent relating,
directly or indirectly, to the Acquired Business by any Seller Entity, whether
or not in the possession of Seller or any of its Subsidiaries or their
respective representatives, stored in hardcopy form or on magnetic, optical or
other media; PROVIDED, HOWEVER, that Business Records shall not include any Tax
Returns of any Seller Party other than Tax Returns relating to the Acquired
Assets that are of a type that will not be required to be filed by Seller
Parties with respect to such Acquired Assets for periods ending after the
Closing Date.
"CASH PURCHASE PRICE" means an amount equal to $107,500,000, LESS the
amount of Qualified Fees in excess of $42,000,000 (or $45,000,000 in the
circumstances contemplated by the proviso of SECTION 2.5(a)(vi)) paid by or on
behalf of Seller Entities from June 30, 2002 until the Closing.
"CODE" means the United States Internal Revenue Code of 1986, as
amended.
"COMMERCIAL UMBRELLA PREMIUM FINANCE ARRANGEMENT" means the Premium
Finance Arrangement, dated June 28, 2002, between Seller Parties and Continental
Casualty Company.
"COMPETITION LAWS" means the Competition Act (Canada) and the
Investment Canada Act of 1985 (Canada) and all Laws of jurisdictions other than
the United States designed or intended to prohibit, restrict or regulate
antitrust conducts or competition or Investments by foreign Persons.
"CONFIDENTIALITY AGREEMENT" means the agreement between Seller and
Parent, dated December 21, 2001.
"CONTRACT" means any arrangement, note, bond, commitment, franchise,
guarantee, indemnity, indenture, instrument, lease, license or other agreement,
understanding, instrument or obligation, whether written or oral, all
amendments, supplements and modifications of or for any of the foregoing and all
rights and interests arising thereunder or in connection therewith.
"DEALER" means any dealer or agent counterparty of any Seller Entity
to a dealer or agency Contract, pursuant to which such Person operates a truck
rental business pursuant to a grant from such Seller Entity.
"DEMAND NOTES" means: (i) the Subordinated Notes, dated April 29,
1997, by Budget Rent A Car Corporation in favor of TFFC (Series 1997-2);
(ii) the Demand Note, dated April 29, 1997, by Budget Rent A Car Corporation in
favor of TFFC (Series 1997-2); (iii) the Demand Note, dated June 19, 1998, by
Seller in favor of TFFC (Series 1998-3); (iv) the Demand Note, dated June 19,
1998, by Seller in favor of TFFC (Series 1998-4); (v) the Demand Note,
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dated June 25, 1999, by Seller in favor of TFFC (Series 1999-3); (vi) the Demand
Note, dated June 25, 1999, by Seller in favor of TFFC (Series 1999-4); (vii) the
Demand Note, dated April 18, 2001, by Seller in favor of TFFC (Series 2001-2);
(viii) the Amended and Restated Demand Note, dated July 12, 2002, by Seller in
favor of TFFC (Series 2001-3); (ix) the Demand Note dated August 6, 2002 by
Seller in favor of TFFC (Series 2002-1); and (x) the other demand notes issued
by Seller in favor of TFFC in connection with the DIP Asset-Backed Fleet
Financing and the Additional DIP Asset-Backed Fleet Financing, if any.
"DERIVATIVE AGREEMENT" means any (i) options, warrants, convertible
securities, stock appreciation rights or similar securities with an exercise or
conversion privilege at a price related to, or derived from the value of, any
"equity security" (as defined in Rule 3a11-1 promulgated under the Securities
Exchange Act of 1934, as amended) or any debt security and (ii) any interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate floor agreement, interest rate exchange agreement,
currency exchange agreement, forward contract, repurchase and reverse repurchase
contract, or any other agreement or arrangement designed to protect against
fluctuations in interest rates or currency values, including any arrangement
whereby, directly or indirectly, the party thereto has the right to receive
periodic payments calculated by applying either a fixed or floating rate of
interest on a stated notional amount in exchange for periodic payments made by
such party calculated by applying a fixed or floating rate of interest on the
same notional amount or otherwise.
"DIP ASSET-BACKED FLEET FINANCING" means the debtor-in-possession
asset-backed fleet financing, in an aggregate principal amount of $750,000,000,
to be extended to TFFC pursuant to (i) the Series 2002-1 Supplement, dated as of
August 6, 2002, to the Amended and Restated Base Indenture, dated as of December
1, 1996, among TFFC, Seller and Deutsche Bank Trust Company Americas, as Trustee
and (ii) the Series 2002-1 Note Purchase Agreement, dated as of August 6, 2002,
among TFFC, Seller, as Servicer, DB Structured Products, Inc., as Series 2002-1
Note Purchaser and Deutsche Bank AG, New York Branch, as Agent.
"DIP FINANCING" means the senior secured debtor-in-possession
financing, extended pursuant to the Debtor-in-Possession Credit Agreement, dated
as of August 7, 2002 among Seller, certain direct and indirect subsidiaries of
Seller, the Lenders party thereto and General Electric Capital Corporation, as
Administrative Agent.
"DIP L/C ROLLOVER" means a senior secured debtor-in-possession letter
of credit facility extended pursuant to the Credit and Guaranty Agreement dated
as of August 19, 2002, among Seller, certain Subsidiaries of Seller, certain
financial institutions, as Lenders and Credit Suisse First Boston, as
Administrative Agent.
"DOCUMENTS" means all agreements, statements, certificates and other
documents at any time evidencing or otherwise relating to, pertaining, or
executed in connection with, each Assumed Contract or Assumed Lease.
"ENCUMBRANCE" means any lien (including Tax liens), charge,
encumbrance, security interest, mortgage, pledge, easement, conditional sale or
other title retention agreement, covenant or other similar restriction or right
affecting the Acquired Assets (including voting
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rights of the Equity Securities of the Acquired Companies) or the assets of the
Acquired Companies.
"ENVIRONMENTAL CLAIM" means any Action, cause of action or notice
(written or oral) by any Person alleging potential liability (including
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from (i) the presence, or
release into the environment, of any Materials of Environmental Concern at any
location, whether or not owned or operated by any Seller Entity or the Acquired
Business or (ii) any circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
"ENVIRONMENTAL LAW" means all federal, interstate, state, local and
foreign laws and regulations relating to pollution or protection of human
health, safety, or the environment (including ambient air, surface water, ground
water, land surface or subsurface strata), including laws and regulations
relating to emissions, discharges, releases or threatened releases of Materials
of Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
"EQUITY SECURITY" means, with respect to any Person, any and all
shares, interests, participations, options, warrants, rights in, voting trust
certificate, limited partnership interest or other equivalents (however
designated, whether voting or non-voting) in the equity or capital of such
Person, whether outstanding on the date hereof or issued hereafter.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means any trade or business, whether or not
incorporated, that together with any of Seller Parties would be deemed a "single
employer" within the meaning of section 4001(b) of ERISA.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
"EXCLUDED COMPANIES" means any Subsidiary of Seller that is not a
Seller Party or an Acquired Company.
"FAIR MARKET VALUE" means, with respect to any asset, property or
service, the value that would be obtained in an arm's length transaction between
an informed and willing seller, supplier or provider, as the case may be, under
no compulsion to sell the relevant asset or property or provide the relevant
service, and an informed purchaser under no compulsion to purchase such asset,
property or service.
"FINAL ORDER" means an order or judgment, the operation or effect of
which has not been stayed, reversed, or amended and as to which order or
judgment (or any revision, modification, or amendment thereof) the time to
appeal or to seek review or rehearing has expired and as to which no appeal or
petition for review or rehearing was filed or, if filed, remains pending.
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"FIVE MONTHS FORECAST" means the statement of projected consolidated
results of operations of Seller and its Subsidiaries with respect to the United
States (including Puerto Rico) and Canada, for the period commencing on August
1, 2002 and ending on December 31, 2002, attached as SCHEDULE 1.1(c).
"FIXTURES" means all furniture, furnishings, computers and other
tangible personal property owned or leased by Seller Entities and located on the
Premises, including desks, tables, chairs, file cabinets and other storage
devices.
"FORD AGREEMENTS" means (a) the Supply Agreement, dated as of April
29, 1997, among Ford Motor Company, Team Rental Group, Inc., and Budget Rent a
Car Corporation, (b) the Advertising Agreement, dated as of April 29, 1997,
among Ford Motor Company, Budget Rent a Car Corporation and Budget Rent a Car
Systems, Inc., each as amended by the Settlement Agreement and Release, dated as
of December 22, 1999, among Ford Motor Company, Seller (formerly, Team Rental
Group, Inc.) and Budget Rent a Car Corporation, (c) the 2003 Model Daily Rental
Repurchase Program, dated as of June 14, 2002, (d) the letter, dated July 17,
2002, from Ford Motor Company to Budget Rent a Car Corporation as an agent and
servicer for TFFC and (e) the arrangements with Ford Motor Company and Ford
Motor Credit Company described in the order of the Bankruptcy Court, dated
July 31, 2002.
"FORD LINE OF CREDIT" means the "floor plan" variable line of credit
extended from time to time by Ford Motor Company, as evidenced by (a) the
Amended and Restated Vehicle Title Nominee Agreement, dated as of June 19, 1998,
among Seller, certain of its Subsidiaries and TFFC, (b) the Vehicle Lien Nominee
Agreement, dated as of March 5, 2001, among Ford Motor Credit Company, Bankers
Trust Company and Budget Rent-A-Car Systems, Inc., as amended, (c) the Agreement
and Acknowledgment of Seller, dated March 5, 2001, with Ford Motor Credit
Company, (d) the Wholesale Financing Guaranty, dated as of May 15, 2001, made by
Seller in favor of Ford Motor Credit Company, (e) the letter agreement, dated as
of May 17, 2002, among Ford Motor Credit Company, Ford Motor Company, Seller,
Budget Rent a Car Corporation, Budget Rent-A-Car Systems, Inc. and NYRAC Inc.,
(f) the letter agreement, dated as of May 21, 2002, among Ford Motor Credit
Company, Ford Motor Company and TFFC, (g) the letter of acknowledgment, dated as
of May 22, 2002, among Ford Motor Company, Ford Motor Credit Company and Credit
Suisse First Boston and (h) the arrangements with Ford Motor Company and Ford
Motor Credit Company described in the order of the Bankruptcy Court, dated July
31, 2002.
"FORD MV LEASE" means the motor vehicle lease agreement to be entered
into by Seller Parties and BGI Leasing, Inc. with respect to vehicles provided
by Ford Motor Company to Seller Parties and as to which Seller Parties, as of
July 29, 2002, had received notice of the posting of the purchase thereof to the
Ford Line of Credit but for which the relevant dealer has not paid the purchase
price therefor.
"FOREIGN BENEFIT PLAN" means each Benefit Plan that is not subject to
United States Laws, including, but not limited to government-mandated individual
employment agreements with individuals earning in excess of $100,000 (or the
equivalent thereof in any other currency) per year but excluding any other
government-mandated benefit plans, programs and arrangements.
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"FRANCHISEE" means any franchisee, licensee or sub-licensee
counterparty of any Seller Entity to a franchise, license or sub-license
Contract, pursuant to which such Person operates a vehicle rental or sales
operation pursuant to a grant from such Seller Entity.
"FULL-TIME EQUIVALENTS" means, for each calendar month, the aggregate
number of hours as to which counter agents, service agents and rapid return
personnel of the Seller Entities in the United States (including Puerto Rico)
were paid customary salary and other compensation (including vacation and sick
time), DIVIDED by the hours that would be worked in such calendar month based on
a normal 40-hour workweek throughout such calendar month, determined in a manner
consistent with the Operating Metric Forecast.
"GAAP" means the generally accepted accounting principles in the
United States consistently applied during the periods involved.
"GOVERNMENTAL BODY" means any (i) legislative, executive, political,
judicial or administrative unit of any governmental entity, or
quasi-governmental agency (foreign, federal, state or local) or any department,
commission, board, agency, bureau, official or other regulatory, administrative
or judicial authority thereof, (ii) any self-regulatory organization, agency or
commission or (iii) any court or arbitral tribunal.
"INITIAL 13-WEEK CASH FLOW PROJECTIONS" means the 13-Week Cash Flow
Projections for the period ending November 1, 2002, attached as SCHEDULE 1.1(e).
"INVESTMENT" means, with respect to any Person, any direct or indirect
advance, loan, account receivable, deposit or other extension of credit
(including, without limitation, by means of any guarantee or similar
arrangement) or any payment or capital or other contribution to (by means of
transfers of property to others, payments for property or services for the
account or use of others, or otherwise), or any purchase or ownership of any
stocks, bonds, notes, debentures or other securities of any other Person or any
forgiveness of indebtedness of such Person or any gift to such Person, and
"INVEST" and "INVESTED" shall have correlative meanings.
"IRS" means the United States Internal Revenue Service.
"LAW" means any national, foreign, federal, state, provincial or local
law, statute, ordinance, rule, regulation, code, order, judgment, injunction or
decree of any jurisdiction (whether foreign or domestic).
"LEASE" means a lease for any of the Leased Premises.
"LEASE ASSIGNMENT" means each assignment agreement with respect to a
Lease in substantially the form set forth as EXHIBIT C.
"LEASED PREMISES" means all the real property that is leased by any
Seller Entity from Third Parties and used or held for use by any Seller Entity
or any of their respective Franchisees or Dealers primarily in the operation or
conduct of the Acquired Business, including any concession, occupancy, use or
similar rights of any Seller Entity, Franchisee or Dealer.
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"LIABILITIES" means any and all: (a) debts; (b) claims (including,
"claims" as that term is defined in sections 101(5)(A) and 101(5)(B) of the
Bankruptcy Code, except that a right to equitable remedy shall also be
considered a claim whether or not the breach gives rise to a right to payment);
(c) judgments, demands, guarantees, interest, penalties, fines or other charges
or assessments, whether assessed or assessable; (d) rights of setoff, offset or
recoupment held, or any other claims, rights or defenses that may be asserted,
by any Person; (e) any obligations to comply with any settlement agreements,
voluntary assurances any other similar decrees, agreements and settlements
entered with any Person; (f) any and all Environmental Claims; (g) any and all
liabilities for Taxes; (h) any and all obligations of any Person to its
employees, including obligations under any Benefit Plan; and (i) other
liabilities, commitments and obligations, whether or not fixed, contingent or
absolute, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whether imposed by agreement, understanding, Law,
equity or otherwise, including under sections 502(g), 502(h) and 502(i) of the
Bankruptcy Code, whether or not required by GAAP to be reflected in financial
statements or disclosed in the notes thereto.
"MATERIAL ADVERSE EFFECT" means any change(s), event(s),
development(s) or circumstance(s) which, individually or in the aggregate, could
be reasonably expected (a) to have a materially adverse effect, either in the
short term or long term, on the business, results of operations, assets,
condition (financial or otherwise) or prospects of Seller Entities, taken as a
whole, (b) to materially impair the ability of any Seller Party to perform its
obligations under this Agreement or any Ancillary Agreement to which it is a
party or (c) to have a materially adverse effect on or prevent or materially
delay the consummation of any of the transactions contemplated hereby or by the
Ancillary Agreements; PROVIDED, HOWEVER, that for purposes of clause (a) above,
any adverse effect resulting primarily and directly from the following shall be
disregarded in determining whether there has been a Material Adverse Effect: (i)
the filing of the Chapter 11 Cases; (ii) the announcement of the transactions
contemplated hereby and by the Ancillary Agreements; (iii) changes in the United
States economy generally which do not disproportionately affect the Acquired
Business in any material respect; or (iv) changes in the vehicle rental industry
generally which do not disproportionately affect Seller Entities in any material
respect; PROVIDED FURTHER, HOWEVER, in the case of each of the foregoing clauses
(iii) and (iv) above, that changes resulting from (A) the commencement or
material worsening of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States or (B)
any terrorist activities, shall not be so disregarded.
"MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, radioactive
materials, asbestos, petroleum and petroleum products.
"MINORITY INVESTEES" means each of the Persons listed on
SCHEDULE 1.1(f).
"NISSAN FACILITY" means the Amended and Restated Nissan Motor
Acceptance Corporation 2002 Vehicle Financing and Security Agreement, dated as
of January 9, 2002, between Nissan Motor Acceptance Corporation and Budget
Rent-A-Car Systems, Inc.
"OPERATING METRIC FORECAST" means the Operating Metric Forecast
attached as SCHEDULE 1.1(g).
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"OWNED REAL PROPERTY" means the owned real property used in connection
with the Acquired Business and specified in SECTION 3.16(b) OF THE SELLER
PARTIES DISCLOSURE SCHEDULE.
"OWNED VEHICLES" means all Rental Vehicles subject to a TFFC MV Leases
and Ford MV Leases which are deemed pursuant to state law to be a finance leases
and all Support Vehicles owned by Seller Parties.
"PENSION PLAN" means each "employee pension benefit plan" within the
meaning of section 3(2) of ERISA.
"PERMITS" means all permits, licenses, certificates, franchises and
other authorizations, consents, registrations, waivers and approvals of any
Governmental Body.
"PERMITTED ENCUMBRANCES" means: (a) other than in respect of any
Premises, any (i) Encumbrances imposed pursuant to the DIP Asset-Backed Fleet
Financing and DIP Financing, (ii) Encumbrances imposed post-Petition pursuant to
Bankruptcy Court order consented to by Buyer, (iii) Encumbrances existing on the
date hereof pursuant to the Amended and Restated Credit Facility and the
documents and instruments related thereto, (iv) Encumbrances pursuant to the
Collateral Agreement, dated as of April 29, 1997, among Budget Funding
Corporation, Credit Suisse First Boston, as Liquidity Agent, Credit Enhancer and
Collateral Agent, Credit Suisse First Boston Corporation, as Dealer, and
Deutsche Bank Trust Company Americas, as Depositary, (v) Encumbrances existing
on the date hereof pursuant to the Amended and Restated Base Indenture, dated as
of December 1, 1996, among TFFC, as Issuer, Budget Group, Inc. (formerly known
as Team Rental Group, Inc.), as Servicer, Budget Group, Inc. (formerly known as
Tem Rental Group, Inc.), as Budget Interestholder (formerly known as Team
Interestholder), and a Deutsche Bank Trust Company Americas and the various
Series Supplements thereto, (vi) Encumbrances pursuant to the Ford Line of
Credit, (vii) Encumbrances existing on the date hereof pursuant to the Nissan
Facility, (viii) Encumbrances on deposits made by one or more Seller Entities to
secure obligations under insurance contracts or Airport Concessions or pursuant
to the Surety Bond Collateral Agreement, dated as of February 14, 2002, between
Gulf Insurance Company, Seller and certain other Persons, the Cash Collateral
Pledge Agreement, dated as of February 14, 2002, between Seller and Gulf
Insurance Company and the Security Agreement, dated October 1, 1997, between
Seller, Continental Casualty Company, Transportation Insurance Company, Columbia
Casualty Insurance Company and Transcontinental Technical Services, Inc.,
(ix) Encumbrances contained in any Assumed Contract or Assumed Lease; and
(x) Encumbrances for current Taxes not yet due and payable; PROVIDED, that any
such Encumbrance pursuant to this clause (x) does not, and would not reasonably
be expected to, materially impair the continued use, operation or value of the
asset to which it relates; and (b) in respect of any Premises, any Permitted
Property Encumbrance.
"PERMITTED PROPERTY ENCUMBRANCES" means each of the following: (i)
statutory liens for current Taxes not yet due and payable; (ii) mechanics',
carriers', workers', materialmen's, warehousemen's and similar Encumbrances
against a Premises arising or incurred in the ordinary course of the business
consistent with past practice for sums not due and payable or payments which are
being contested in good faith by appropriate proceedings and which would not,
and would not reasonably be expected to, individually or in the aggregate,
materially detract from the use, operation or value of such Premises; (iii) with
respect to any Leased
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Premises, the Encumbrances contained in the corresponding Lease and any
Encumbrance on the title of the fee owner; (iv) local, state and federal laws,
ordinances or governmental regulations including but not limited to, building
and zoning laws, ordinances and regulations now or hereafter in effect relating
to the Premises; (v) zoning restrictions, easements, rights-of-way,
encroachments and other similar restrictions on use that do not materially
detract from the value of, or interfere with the ordinary conduct of the
business conducted or proposed to be conducted at, the property affected by such
Encumbrances; and (vi) Encumbrances disclosed in SECTION 3.16(a) OF SELLER
PARTIES DISCLOSURE SCHEDULE.
"PERSON" means any individual, corporation, partnership, limited
liability company, firm, association, joint venture, joint stock company, trust,
unincorporated organization or other entity or any Governmental Body.
"PREMISES" means the Leased Premises and the Owned Real Property.
"PRUDENT INDUSTRY PRACTICES" means those practices, methods,
equipment, specifications and standards of and performance, as the same may
change from time to time, as are commonly used by companies engaged in the
vehicle rental business of the type and size similar or comparable to the
Acquired Business. Prudent Industry Practices are not intended to be limited to
the optimum practice or method to the exclusion of all others, but rather to
include reasonable and prudent practices and methods (other than the filing of
the Petition).
"REAL ESTATE DEED" means each deed with respect to the Owned Real
Property.
"REIMBURSEMENT AGREEMENTS" means: (i) the Letter of Credit
Reimbursement Agreement, dated as of April 29, 1997, among Budget Rent-A-Car
Systems, Inc., those Subsidiaries, Affiliates and Non-Affiliates of Budget
Group, Inc. identified on the signature pages thereto, Team Fleet Financing
Corporation, Budget Rent a Car Corporation, as Guarantor, and Credit Suisse
First Boston, as Credit Enhancer (Series 1997-1); (ii) the Letter of Credit
Reimbursement Agreement, dated as of April 29, 1997, among Budget Funding
Corporation, Budget Rent-A-Car Systems, Inc., those Subsidiaries, Affiliates and
Non-Affiliates of Budget Group, Inc. identified on the signature pages thereto,
Team Fleet Financing Corporation, Budget Rent a Car Corporation, as Guarantor,
and Credit Suisse First Boston, as Credit Enhancer (Series 1997-2); (iii) the
Enhancement Letter of Credit Application and Agreement, dated as of February 10,
2000, among Budget Rent-A-Car Systems, Inc., those Subsidiaries, Affiliates and
Non-Affiliates of Budget Group, Inc. identified on the signature pages thereto,
Team Fleet Financing Corporation, Budget Group, Inc., as Guarantor, and Credit
Suisse First Boston, as Credit Enhancer (Series 1998-3); (iv) the Enhancement
Letter of Credit Application and Agreement, dated as of February 10, 2000, among
Budget Rent-A-Car Systems, Inc., those Subsidiaries, Affiliates and
Non-Affiliates of Budget Group, Inc. identified on the signature pages thereto,
Team Fleet Financing Corporation, Budget Group, Inc., as Guarantor, and Credit
Suisse First Boston, as Credit Enhancer (Series 1998-4); (v) the Enhancement
Letter of Credit Application and Agreement, dated as of February 10, 2000, among
Budget Rent-A-Car Systems, Inc., those Subsidiaries, Affiliates and
Non-Affiliates of Budget Group, Inc. identified on the signature pages thereto,
Team Fleet Financing Corporation, Budget Group, Inc., as Guarantor, and Credit
Suisse First Boston, as Credit Enhancer (Series 1999-3); (vi) the Enhancement
Letter of Credit Application and Agreement, dated as of February 10, 2000, among
Budget Rent-A-Car Systems,
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Inc., those Subsidiaries, Affiliates and Non-Affiliates of Budget Group, Inc.
identified on the signature pages thereto, Team Fleet Financing Corporation,
Budget Group, Inc., as Guarantor, and Credit Suisse First Boston, as Credit
Enhancer (Series 1999-4); (vii) the Enhancement Letter of Credit Application and
Agreement, dated as of April 18, 2001, among Budget Rent-A-Car Systems, Inc.,
those Subsidiaries, Affiliates and Non-Affiliates of Budget Group, Inc.
identified on the signature pages thereto, Team Fleet Financing Corporation,
Budget Group, Inc., as Guarantor, and Credit Suisse First Boston, as Credit
Enhancer (Series 2001-2); (viii) the Enhancement Letter of Credit Application
and Agreement, dated as of November 29, 2001, among Budget Rent-A-Car Systems,
Inc., those Subsidiaries, Affiliates and Non-Affiliates of Budget Group, Inc.
identified on the signature pages thereto, Team Fleet Financing Corporation,
Budget Group, Inc., as Guarantor, and Credit Suisse First Boston, as Credit
Enhancer (Series 2001-3); and (ix) the reimbursement arrangements in respect of
letters of credit, executed by Seller Parties in connection with the DIP
Financing and the DIP L/C Rollover.
"RELATED PARTY AGREEMENT" means any Contract between any one or more
of Seller Entities, on the one hand, and any one or more of their respective
current or former directors, officers or other employees, any of their
respective relatives or any Affiliate thereof (other than a Seller Entity),
including, without limitation, the related party transactions disclosed in the
Seller SEC Documents.
"RENTAL TRANSACTION" means a rental transaction relating to a vehicle
in the Automotive Rental Fleet or the Truck Rental Fleet which is closed during
such calendar month, determined in a manner consistent with the Operating Metric
Forecast. For purposes of this Agreement, a "RENTAL TRANSACTION" is deemed
closed (i) except as set forth in clauses (ii) and (iii) below, at the time the
vehicle is returned by the relevant customer to Seller Party that rented such
vehicle to such customer, (ii) with respect to the rental of vehicles for a
period exceeding thirty consecutive calendar days, on the last day of each
thirty-day rental period and (iii) with respect to one-way vehicle rentals, the
first day on which the relevant vehicle is rented.
"RENTAL TRANSACTIONS TO FULL-TIME EQUIVALENTS RATIO" means with
respect to a calendar month, the ratio of (i) the aggregate number of Rental
Transactions in such calendar month to (ii) the Full-Time Equivalents for such
calendar month.
"RENTAL VEHICLE" means any vehicle owned, leased or operated by any
Seller Entity (including the Owned Vehicles) for purposes of renting such
vehicle to customers of the Acquired Business.
"REPURCHASE PROGRAM" means a program pursuant to which a Vehicle
Manufacturer or an Affiliate thereof has agreed with any of Seller Entities to
repurchase or guarantee the auction sale price of vehicles manufactured by such
Vehicle Manufacturer or any of its Affiliates.
"RETAINED BUSINESS" means the businesses of Seller and its
Subsidiaries (other than the Acquired Business) and shall include the Excluded
Assets and Excluded Liabilities.
"SEC" means the United States Securities and Exchange Commission.
"SELLER ENTITIES" means Seller Parties and the Acquired Companies.
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"SELLER EVALUATION MATERIAL" means all information, data, reports,
interpretations, forecasts, contracts, agreements and records, whether in oral
or written form, electronically stored or otherwise (including any such
information furnished prior to the execution of this Agreement), concerning
Seller Entities or their Subsidiaries furnished to Buyer, Parent or their
Representatives by Seller Entities, their Subsidiaries or any of their
Representatives, and all notes, reports, analyses, compilations, studies and
other materials prepared by Buyer or Parent or any of their Representatives (in
whatever form maintained, whether documentary, electronically stored or
otherwise), containing or based upon, in whole or in part, any such information;
PROVIDED, that the term "SELLER EVALUATION MATERIAL" shall not include
information which (i) is or becomes available to the public other than as a
result of a disclosure by Parent, Buyer or any of their Representatives, or
anyone to whom Parent, Buyer or any of their Representatives, transmits any
Seller Evaluation Materials, (ii) is or becomes known or available to any party
on a non-confidential basis from a source (other than the other parties to this
Agreement or any of their Representatives) who, insofar as is actually known by
Buyer or Parent, is not prohibited from transmitting the information by a
contractual, legal, fiduciary or other obligation or (iii) is independently
developed by Buyer, Parent or any of their Representatives without the use of
any information that would itself be deemed Seller Evaluation Material.
"SUBSIDIARIES" of any entity means, at any date, any Person: (i) the
accounts of which would be consolidated with those of the applicable entity in
such entity's consolidated financial statements if such financial statements
were prepared in accordance with GAAP as of such date; or (ii) of which
securities, membership interests or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests or
more than 50% of the profits or losses of which are, as of such date, owned,
controlled or held by the applicable entity or one or more direct or indirect
subsidiaries of such entity.
"SUPPORT VEHICLES" means all trucks, vans, buses, dollies and other
vehicles (including those held for employees' benefit and marketing purposes)
owned, leased or operated by any Seller Entity and not constituting Rental
Vehicles but utilized by Seller Parties in support of or in connection with the
Acquired Business.
"TAX" means: (i) any and all taxes, assessments, customs, duties,
levies, fees, tariffs, imposts, deficiencies and other governmental charges of
any kind whatsoever (including taxes on or with respect to net or gross income,
franchise, profits, gross receipts, capital, sales, use, ad valorem, value
added, transfer, real property transfer, transfer gains, inventory, capital
stock, license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, real or personal property, estimated
taxes, rent, excise, occupancy, recordation, bulk transfer, intangibles, gross
receipt, personal property, alternative minimum, real property, doing business,
withholding, payroll, stamp and capital), together with any interest thereon,
penalties, fines, additions to tax or additional amounts with respect thereto,
imposed by the United States (federal, state or local) or other governmental
authority or applicable jurisdiction; and (ii) any liability for the payment of
any amounts described in (i) as a result of being a member of an affiliated,
consolidated, combined, unitary or similar group or as a result of transferor or
successor liability.
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"TAX RETURN" means any return (including any information return),
declaration, report, statement, schedule, attachment, notice, form, or other
document or information (including any amendment to any of the foregoing) filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax (whether or not such Tax is imposed on the filer thereof)
or in connection with the administration, implementation, or enforcement of or
compliance with any law relating to any Tax.
"TELEPHONE NUMBERS" means all operating telephone numbers for the
Premises and all other telephone numbers relating to the Acquired Business and
controlled (by agreement, lease or otherwise) by any Seller Entity on the date
hereof and which under existing agreements, regulations and law, may be
transferred to Buyer on the Closing Date.
"TFFC" means Team Fleet Financing Corporation, a Delaware corporation
and a wholly-owned Subsidiary of Seller.
"TFFC MV LEASES" means any one of the following: (i) Amended and
Restated Master Motor Vehicle Lease Agreement Group I, dated as of June 19,
1998, by and among TFFC, as lessor, those direct and indirect subsidiaries of
Seller, that are listed on Schedule 1 thereto, as lessees, and Seller, as
guarantor, as amended by Amendment No. 1 thereto; (ii) Motor Vehicle Lease
Agreement Series 1996-1, dated as of December 1, 1996, by and among TFFC, as
lessor, direct and indirect subsidiaries of Seller, as lessees, and Seller, as
guarantor; (iii) Motor Vehicle Lease Agreement Series 1997-1, dated as of April
1, 1997, by and among TFFC, as lessor, direct and indirect subsidiaries of
Seller, as lessees, and Seller, as guarantor; (iv) Master Motor Vehicle Lease
Agreement Group V, dated as of April 18, 2001, among TFFC, as lessor, Seller, as
guarantor, Budget Rent-A-Car Systems, Inc. and those companies listed on
schedule I thereto, as lessees; and (v) Motor Vehicle Lease Agreement Series
1997-2, dated as of April 29, 1997, among TFFC, as lessor, Seller, as guarantor,
Budget Rent-A-Car Systems, Inc. and those companies listed on schedule I
thereto, as lessees; (vi) the motor vehicle leases entered into in connection
with the DIP Asset-Backed Fleet Financing and (vii) the motor vehicle leases
entered into in connection with the Additional DIP Asset-Backed Fleet Financing.
"THIRD PARTY" means with respect to any Person, another Person that is
not an Affiliate of such Person.
"TRADEMARK ASSIGNMENTS" means the Trademark Assignments substantially
in the form attached hereto as EXHIBIT D.
"TREASURY REGULATIONS" means the United States Income Tax Regulations
including Temporary Regulations, promulgated under the Code, as such regulations
may be amended, modified or supplemented from time to time (including
corresponding provisions of succeeding regulations).
"TRUCK RENTAL FLEET" means, as of any day of determination, the
aggregate number of trucks and cargo vans (excluding pickup trucks other than
pickup trucks that are Existing Trucks), used, held for use or for sale by
Seller Parties in connection with the conduct of the Acquired Business in the
United States (including Puerto Rico).
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"UNDISCLOSED JOINT LIABILITY" means any Liability evidenced by a proof
of claim filed in the Chapter 11 Cases that asserts a Liability that is a joint
and several liability of any Acquired Company, and such Liability was
undisclosed on the date hereof.
"UPAC PREMIUM FINANCE ARRANGEMENT" means the Premium Finance
Arrangement, dated as of April 24, 2002, between Seller Parties and Universal
Premium Acceptance Corp.
"U.S. BENEFIT PLAN" means each Benefit Plan that is subject to United
States Law.
"VEHICLE MANUFACTURER" means any manufacturer of vehicles used by
Seller Entities in connection with the Acquired Business.
"WARN ACT" means the Worker Adjustment Retraining Notification Act.
"WELFARE PLAN" means each "employee welfare benefit plan" (within the
meaning of section 3(1) of ERISA).
Section 1.2 OTHER DEFINITIONAL AND INTERPRETIVE MATTERS.
(a) GENDER AND NUMBER. Any reference in this Agreement to gender
shall include all genders, and words imparting the singular number only shall
include the plural and vice versa.
(b) HEADINGS. The provisions of the Table of Contents, the
division of this Agreement into Articles, Sections and other subdivisions and
the insertion of headings are for convenience of reference only and shall not
affect or be utilized in construing or interpreting this Agreement. All
references in this Agreement to any "Article," "Section," "Schedule" or
"Exhibit" are to the corresponding Article, Section, Schedule or Exhibit, as
applicable, of this Agreement unless otherwise specified.
(c) HEREIN. The words "herein," "hereinafter," "hereof," and
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires.
(d) INCLUDING. The word "including" or any variation thereof means
"including, without limitation" and shall not be construed to limit any general
statement that it follows to the specific or similar items or matters
immediately following it.
(e) KNOWLEDGE. The phrase "knowledge of Seller Parties" (or words
of similar import) means the actual or constructive knowledge of the officers at
the vice president level or above of any of Seller Parties listed on
SCHEDULE 1.2(e), after due investigation.
(f) SCHEDULES AND EXHIBITS. The Schedules and Exhibits attached to
this Agreement shall be construed with and as an integral part of this Agreement
to the same extent as if the same had been set forth verbatim herein.
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ARTICLE 2
PURCHASE AND SALE OF THE ACQUIRED ASSETS
Section 2.1 PURCHASE AND SALE OF ACQUIRED ASSETS. Upon the terms and
subject to the conditions of this Agreement, at the Closing, Seller Parties
shall sell, transfer, assign, convey and deliver to Buyer, and Buyer shall
purchase, acquire and accept from Seller Parties, all right, title and interest
of Seller Parties in, to and under the Acquired Assets free and clear of all
Liabilities (other than Assumed Liabilities) and Encumbrances (other than
Permitted Encumbrances).
Section 2.2 CONSIDERATION. In consideration of the sale, transfer,
assignment, conveyance and delivery by Seller Parties of the Acquired Assets to
Buyer, Buyer shall (and Parent shall cause Buyer to), at the Closing, (i) pay to
Seller Parties the Cash Purchase Price and (ii) assume, or to the extent
required by SECTION 2.9(f), pay the Assumed Liabilities, it being understood
that Parent shall not assume any of the Assumed Liabilities. The Cash Purchase
Price payable pursuant to clause (i) above shall be paid by Buyer to Seller
Parties at Closing, as allocated for the accounts of such Seller Parties by wire
transfer of immediately available funds to accounts designated by Seller's
written instructions to Buyer. Seller shall provide such account information to
Buyer at least five Business Days prior to the Closing.
Section 2.3 ACQUIRED ASSETS. For purposes of this Agreement and subject to
SECTION 2.5(b), the term "ACQUIRED ASSETS" means (i) the Equity Securities of
the Acquired Companies (other than the Subsidiaries of the Acquired Companies)
and in the Minority Investees and (ii) all the assets, properties, rights, title
and other interests of Seller Parties primarily used or held for use in
connection with the Acquired Business, whether tangible or intangible, real,
personal or mixed, set forth or described in paragraphs (a) through (ll) below
(including Contracts and Leases entered into by Seller Parties following the
date hereof which constitute Assumed Contracts or Assumed Leases) whether or not
any of such assets, properties or rights have any value for accounting purposes
or are carried or reflected on or specifically referred to in Seller's financial
statements (PROVIDED, that the Acquired Assets shall not include the Excluded
Assets):
(a) all franchise, prime license, license, sublicense, agency and
dealer Contracts to which any of Seller Parties is a party listed in
SECTION 3.15(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE and the franchise,
prime license, license, sublicense, agency and dealer Contracts relating to the
Acquired Business entered into by Seller Parties following the date hereof in
compliance with SECTION 5.1(dd);
(b) all marketing and barter Contracts to which any of Seller
Parties is a party listed in SECTIONS 3.15(b) and 3.15(u) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, respectively, and such other written marketing Contracts
relating to the Acquired Business entered into by any of Seller Parties in the
ordinary course of business consistent with past practice and which may be
terminated by Seller Parties by giving 90 days' (or such shorter period
specified therein) notice to the other party thereof, without (i) any penalty or
other payment by any Seller Party, (ii) imposing any requirement that Seller
Parties sell or dispose of any assets or properties and (iii) imposing any
limitations on the conduct of business by any Seller Party;
(c) all CorpRate Contracts to which any of Seller Parties is a
party listed in SECTION 3.15(c) OF THE SELLER PARTIES DISCLOSURE SCHEDULE or not
required to be listed therein
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pursuant to SECTION 3.15(c), and such other written CorpRate Contracts relating
to the Acquired Business entered into by any of Seller Parties in the ordinary
course of business consistent with past practice and which may be terminated by
Seller Parties by giving 90 days' (or such shorter period specified therein)
notice to the other party thereof, without (i) any penalty or other payment by
any Seller Party, (ii) imposing any requirement that Seller Parties sell or
dispose of any assets or properties and (iii) imposing any limitations on the
conduct of business by any Seller Party;
(d) all association Contracts to which any of Seller Parties is a
party listed in SECTION 3.15(d) OF THE SELLER PARTIES DISCLOSURE SCHEDULE or not
required to be listed therein pursuant to SECTION 3.15(d), and such other
written association Contracts relating to the Acquired Business entered into by
any of Seller Parties in the ordinary course of business consistent with past
practice and which may be terminated by Seller Parties by giving 90 days' (or
such shorter period specified therein) notice to the other party thereof,
without (i) any penalty or other payment by any Seller Party, (ii) imposing any
requirement that Seller Parties sell or dispose of any assets or properties and
(iii) imposing any limitations on the conduct of business by any Seller Party;
(e) all joint venture, limited liability company and partnership
Contracts to which any of Seller Parties is a party listed in SECTION 3.15(e) OF
THE SELLER PARTIES DISCLOSURE SCHEDULE;
(f) all affiliation Contracts to which any of Seller Parties is a
party listed in SECTION 3.15(f) OF THE SELLER PARTIES DISCLOSURE SCHEDULE and
such other written affiliation Contracts relating to the Acquired Business
entered into by any of Seller Parties in the ordinary course of business
consistent with past practice and which may be terminated by Seller Parties by
giving 90 days' (or such shorter period specified therein) notice to the other
party thereof, without (i) any penalty or other payment by any Seller Party,
(ii) imposing any requirement that Seller Parties sell or dispose of any assets
or properties and (iii) imposing any limitations on the conduct of business by
any Seller Party;
(g) all general sales agency, travel agency and tour operator
Contracts to which any of Seller Parties is a party listed in SECTION 3.15(g) OF
THE SELLER PARTIES DISCLOSURE SCHEDULE, and such other written general sales
agency, travel agency and tour operator Contracts relating to the Acquired
Business entered into by any of Seller Parties in the ordinary course of
business consistent with past practice and which may be terminated by Seller
Parties by giving 90 days' (or such shorter period specified therein) notice to
the other party thereof, without (i) any penalty or other payment by any Seller
Party, (ii) imposing any requirement that Seller Parties sell or dispose of any
assets or properties and (iii) imposing any limitations on the conduct of
business by any Seller Party;
(h) all Contracts with Vehicles Manufacturers and Repurchase
Programs to which any of Seller Parties is a party listed in SECTIONS 3.15(h)
AND 3.28(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE (including the Ford
Agreements);
(i) all bus and truck lease Contracts to which any of Seller
Parties is a party listed in SECTION 3.15(i) OF THE SELLER PARTIES DISCLOSURE
SCHEDULE, and such other written bus and
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truck lease Contracts relating to the Acquired Business entered into by any of
Seller Parties in the ordinary course of business consistent with past practice
solely for purposes of replacing service buses and trucks which are Support
Vehicles on the date of this Agreement and up to four service buses and trucks
which are not replacements of such service buses and trucks;
(j) all fuel supply Contracts to which any of Seller Parties is a
party listed in SECTION 3.15(j) OF THE SELLER PARTIES DISCLOSURE SCHEDULE and
such other written fuel supply Contracts relating to the Acquired Business
entered into by any of Seller Parties in the ordinary course of business
consistent with past practice and which may be terminated by Seller Parties by
giving 90 days' (or such shorter period specified therein) notice to the other
party thereof, without (i) any penalty or other payment by any Seller Party,
(ii) imposing any requirement that Seller Parties sell or dispose of any assets
or properties and (iii) imposing any limitations on the conduct of business by
any Seller Party;
(k) (i) all vendor Contracts to which any of Seller Parties is a
party listed in SECTIONS 3.15(k) OF THE SELLER PARTIES DISCLOSURE SCHEDULE or
not required to be listed therein pursuant to SECTIONS 3.15(k) (other than
vendor Contracts not required to be listed in SECTION 3.15(k) OF THE SELLER
PARTIES DISCLOSURE SCHEDULE with any Affiliate of Seller Parties or any
director, officer, agent or any relative thereof), (ii) such other written
vendor Contracts relating to the Acquired Business entered into by any of Seller
Parties in the ordinary course of business consistent with past practice (x)
solely for purposes of replacing vendor Contracts listed in SECTION 3.15(k) OF
THE SELLER PARTIES DISCLOSURE SCHEDULE or not required to be listed therein upon
the termination thereof, to the extent each such replacement vendor Contract (A)
has a term not exceeding one year from the date of execution thereof and (B)
does not require any of Seller Parties to make payments thereunder in amounts
exceeding the amounts payable by Seller Parties under the vendor Contract so
replaced (other than normal immaterial ordinary course increases) and (y) not
contemplated by clause (x) above, which provide for payments thereunder not
exceeding $25,000 for any individual Contract or $250,000 for all such Contracts
in the aggregate, in each case in any calendar year and (iii) all other
Contracts to which any of Seller Parties is a party listed in SECTION 3.15(m) OF
THE DISCLOSURE SCHEDULE, other than those Contracts specified therein (i) that
are not transferred and assumed by Buyer pursuant to the Agreements and (ii)
that shall be terminated prior to Closing;
(l) all Contracts relating to Assumed Indebtedness;
(m) the TFFC MV Leases and the Ford MV Lease (including, in each
case, the guaranties of any Seller Party in respect of lease payments due
thereunder) and the TEAM Interest and the Budget Interest (each as defined in
the Amended and Restated Base Indenture, dated as of December 1, 1996, among
TFFC, Seller and Deutsche Bank Trust Company Americas, as Trustee, and the
various supplements thereto);
(n) all insurance or reinsurance Contracts and/or policies and
similar arrangements under which any Seller Party is an insured party listed in
SECTION 3.25(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE (the "ACQUIRED
INSURANCE CONTRACTS");
(o) all collective bargaining Contracts to which any of Seller
Parties is a party listed in SECTION 3.15(l) OF THE SELLER PARTIES DISCLOSURE
SCHEDULE, and any collective bargaining
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Contracts relating to the Acquired Business entered into by any of Seller
Parties following the date hereof in compliance with SECTION 5.1(r);
(p) all Assumed Benefit Plans (including the Assumed Benefit Plans
Contracts) and all assets associated therewith (including, without limitation,
all assets held in trust);
(q) all License Agreements to which any of Seller Parties is a
party and relating to the Acquired Business listed in SECTION 3.22(c) OF THE
SELLER PARTIES DISCLOSURE SCHEDULE; PROVIDED, HOWEVER, that with respect to the
rights, title and interest of Seller Parties in, to and under the License
Agreement between Ryder Systems, Inc. ("RSI") and Ryder TRS, Inc., dated as of
October 17, 1996, as amended (the "RYDER LICENSE AGREEMENT"), subject to the
limitations, if any, imposed by a Final Order or pursuant to a settlement
agreement reasonably acceptable to Buyer, between Seller Parties and RSI
resulting from the dispute between Seller Parties and RSI described in
SECTION 3.13(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE;
(r) all Airport Concessions to which any of Seller Parties is a
party listed in SECTION 3.17(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, and
such other Airport Concessions relating to the Acquired Business to which any of
Seller Parties becomes a party in the ordinary course of business consistent
with past practice;
(s) (i) all Leases to which any of Seller Parties is a party
listed in SECTION 3.16(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE and not
excluded from the transactions contemplated hereby pursuant to SECTION 2.4(a),
and the Fixtures and appurtenances at the Premises subject thereto owned by any
Seller Party and (ii) the Leases relating to the Acquired Business entered into
by Seller Parties following the date hereof in compliance with SECTION 5.1(dd);
(t) fee simple title to all Owned Real Property owned by any
Seller Party listed in SECTION 3.16(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
and the Fixtures and appurtenances thereat owned by any Seller Party;
(u) all Rental Vehicles and Support Vehicles owned by Seller
Parties (in each case, including Owned Vehicles);
(v) all tools, machinery, replacement and spare parts and supplies
relating to the Acquired Business;
(w) all Intellectual Property (other than the License Agreements
referred to in SECTION 2.3(q), which shall be subject to the provisions
thereof);
(x) the Permits held by or in connection with the Acquired
Business, to the extent such Permits are assignable to Buyer;
(y) the Business Records and the Documents;
(z) all accounts receivable relating to the Acquired Business,
including, without limitation, (i) credit card receivables, direct bill
receivables, tour receivables, Vehicle
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Manufacturer receivables, Franchisee receivables and subrogation receivables,
excluding the receivables referred to in SECTION 2.4(h) and (ii) customer,
Franchisee and Dealer deposits, security or collateral;
(aa) all credits, prepaid expenses (including garage and gas
inventory), deferred charges, advance payments, security deposits and prepaid
items (and, in each case, security interests or liens from Third Parties
relating thereto) related to any Acquired Asset or the Acquired Business;
(bb) all vendor allowances, including volume and promotional
incentive allowances and any other credits of Seller Entities received by or
accruing to such Persons related to vendor Contracts that are being assumed by
Buyer or vendor Contracts with respect to which Buyer is assuming liabilities;
(cc) all claims, judgments or causes of action of Seller Entities
to the extent relating to any of the Acquired Assets or the Acquired Business,
including claims for manufacturer's or vendor's warranties with respect to the
Acquired Assets or products liability related to the Acquired Assets, and claims
related to the value, condition or title to the Acquired Assets;
(dd) counterclaims, set-offs, recoupment rights or defenses with
respect to the Assumed Liabilities;
(ee) insurance claims and proceeds payable in respect of any
casualty event related to any Acquired Asset or the Acquired Business;
(ff) any and all rights of Seller Parties under the Business
Acquisition Agreements (except for indemnification with respect to third-party
claims, which shall be retained by Seller Parties to the extent of any
third-party claims against Seller Parties made at any time);
(gg) all confidentiality and similar agreements entered into by any
Seller Party or any of their respective representatives in connection with a
sale of the Acquired Business;
(hh) all right, title and interest in and to the Telephone Numbers
and all rights and interests in and to the Telephone Numbers used by any Seller
Party;
(ii) all bank accounts and lock-box accounts relating to the
Acquired Business or held by any Acquired Company;
(jj) all cash, cash deposits, surety, security and similar
deposits, and negotiable and non-negotiable instruments of Seller Parties (other
than the Cash Purchase Price and other amounts payable by Buyer to Seller
Parties pursuant to this Agreement);
(kk) all goodwill relating to the Acquired Business; and
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(ll) avoidance actions (if any) under Chapter 5 of the Bankruptcy
Code (including Actions under section 544, 545, 547, 548, 549 or 550 thereof)
against (i) the Acquired Companies or (ii) Buyer, Parent or their Affiliates.
Section 2.4 EXCLUDED ASSETS. It is hereby expressly acknowledged and agreed
that the Acquired Assets shall not include, and no Seller Party is selling,
transferring, assigning, conveying or delivering to Buyer, and Buyer is not
purchasing, acquiring or accepting from any Seller Party, any of the rights,
properties or assets set forth or described in paragraphs (a) through (k) below
(the rights, properties and assets expressly excluded by this SECTION 2.4 from
the Acquired Assets being referred to herein as the "EXCLUDED ASSETS"):
(a) Contracts and Leases to which any Seller Party is a party or
by which its assets or properties are bound not transferred hereunder to Buyer
pursuant to SECTIONS 2.3(a) through 2.3(s), including those listed on
SCHEDULE 2.4(a) and all Contracts relating to the Retained Business;
(b) all owned real property not listed in SECTION 3.16(b) OF THE
SELLER PARTIES DISCLOSURE SCHEDULE and the Fixtures and appurtenances thereat;
(c) all cash or other property delivered by Buyer to Seller
Parties, and all rights of Seller Parties under this Agreement and the Ancillary
Agreements;
(d) the Equity Securities of any Person other than the Acquired
Companies and the Minority Investees;
(e) all minute books, stock transfer and similar records and
corporate seals of all Seller Parties;
(f) the rights of Budget Rent a Car International Inc. in respect
of the Actions instituted by Budget Rent a Car International Inc. against Sixt
AG and Sixt GmbH and Co. Autovermietung KG (collectively, "SIXT"), including (i)
pursuant to the judgment, dated April 15, 1999, by the Higher Regional Court of
Munich (Case No. 29 U 4446/98 4 HKO 8409/97 LG Munich) and (ii) under Case No. 6
U 6232/96 9 HKO-19905/96, for breach of contract based on the allegedly improper
passing of reservations by Sixt;
(g) all Tax refunds attributable to Taxes imposed on any Seller
Party;
(h) all intercompany accounts receivable due from any Seller Party
or Excluded Company to another Seller Party or Excluded Company;
(i) all assets, properties, rights and other interests to the
extent used or held for use by Seller Parties solely in connection with the
Retained Business, whether tangible or intangible, real, personal or mixed,
whether or not any of such assets, properties or rights have any value for
accounting purposes or are carried or reflected on or specifically referred to
in Seller's financial statements;
(j) the insurance or reinsurance Contracts and/or policies and
similar arrangements under which any Seller Entity is an insured party listed on
SCHEDULE 2.4(j); and
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(k) avoidance actions under Chapter 5 of the Bankruptcy Code
(including Actions under section 544, 545, 547, 548, 549 or 550 thereof) brought
or that could be brought against any Person other than (i) the Acquired
Companies or (ii) Buyer, Parent or their Affiliates.
Section 2.5 ASSUMED LIABILITIES.
(a) For purposes of this Agreement, the term "ASSUMED LIABILITIES"
means all Liabilities of Seller Parties set forth or described in paragraphs (i)
through (vi) below (provided that, notwithstanding anything to the contrary
contained in this Agreement, the Assumed Liabilities shall not include any of
the Excluded Liabilities):
(i) under the Assumed Indebtedness;
(ii) expressly contained in any Assumed Contract or Assumed Lease,
or portion thereof, that first arise after the Closing Date;
(iii) with respect to (A) the Assumed Benefit Plans that are Pension
Plans, obligations for the benefit obligations accrued as of the Closing
Date, (B) the Assumed Benefit Plans that are Welfare Plans, obligations for
benefits arising from events or circumstances occurring on or before the
Closing Date, (C) the Assumed Benefit Plans that are Pension Plans or
Welfare Plans, obligations for administrative expenses for the current plan
year, as provided under the administrative contracts set forth on SCHEDULE
2.5(a)(iii) (the "ASSUMED BENEFIT PLANS CONTRACTS") and (D) the Assumed
Benefit Plans that are not Pension Plans or Welfare Plans, all obligations
thereunder;
(iv) such Actions to which any Seller Party is a party and
disclosed in SECTION 3.13(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, or
not meeting the threshold for disclosure therein and such Actions arising
after the date hereof in the ordinary course consistent with past practice;
(v) such operating Liabilities (including Liabilities relating to
accidents involving vehicles of the Acquired Business) (A) reflected on or
of a category reserved against on the June 30 Balance Sheet and outstanding
on the Closing Date and (B) incurred on or after July 1, 2002 relating
exclusively to the operation or conduct of the Acquired Business in the
ordinary course consistent with past practice (including accrued and unpaid
payroll in the ordinary course of business) outstanding on the Closing Date
and not excluded from the transactions contemplated hereby pursuant to
SECTION 2.6; and
(vi) Liabilities in respect of legal, accounting, investment
banking, advisory, brokerage, administrative, issuance, up-front,
placement, structuring, commitment, underwriting, financing, "due
diligence", rating agencies or similar fees, commissions, disbursements and
expenses (whether or not referred to as fees, commissions, disbursements or
expenses), breakage cost, increased interest rate as a result of an event
of default, amortization event or payment prior to stated maturity (based
on the original amortization or repayment schedule of the relevant
indebtedness), prepayment penalties or fees and similar costs incurred or
agreed to be paid or reimbursed by Seller Entities in connection with the
transactions contemplated by this Agreement, the DIP Asset-Backed Fleet
Financing, the DIP Financing, the DIP L/C Rollover, the Additional DIP
Asset-
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Backed Fleet Financing, any other post-Petition financing or extension of
credit or the Chapter 11 Cases or otherwise payable in connection with the
prepayment of any of the Assumed Indebtedness, the DIP Asset-Backed Fleet
Financing or the Additional DIP Asset-Backed Fleet Financing ("QUALIFIED
FEES"), not to exceed $42,000,000 LESS an amount equal to the aggregate
amount of Qualified Fees paid by or on behalf of Seller Entities from June
30, 2002 until the Closing; PROVIDED, HOWEVER, that if subsequent to
November 9, 2002 (A) all the conditions set forth in SECTIONS 7.1 and 7.2
have been satisfied, other than the condition set forth in SECTION 7.2(h),
(B) the condition set forth in SECTION 7.2(h) is not waived by Buyer, (C)
Seller Parties have notified Buyer in writing that Seller Parties intend to
incur or caused to be incurred indebtedness under the Additional DIP
Asset-Backed Fleet Financing and (D) definitive agreements relating to the
Additional DIP Asset-Backed Fleet Financing have been executed and
delivered and the Bankruptcy Court has entered an order approving such
definitive agreements, then the Liabilities in respect of Qualified Fees to
be assumed by Buyer shall not exceed $45,000,000 LESS an amount equal to
the aggregate amount of Qualified Fees paid by or on behalf of Seller
Entities from June 30, 2002 until the Closing.
(b) Buyer and Seller Parties shall seek to reject Contracts and
Leases identified by Buyer on or before 30 days prior to the Sale Hearing (as
defined in the Bidding Procedures) included in the Acquired Assets which would
otherwise have been Assumed Contracts or Assumed Leases; PROVIDED, HOWEVER,
nothing contained herein shall obligate Seller Parties to seek such rejection
unless and until such time as they have agreed with Buyer on the additional
amount of cash or other consideration to be paid by Buyer in exchange for such
rejection.
Section 2.6 EXCLUDED LIABILITIES. Buyer shall not assume or be obligated
(and Seller Parties and their Subsidiaries shall retain their respective
obligations) to pay, perform or otherwise assume or discharge any Liabilities of
Seller or any Subsidiary of Seller, which constitute Excluded Liabilities, for
which Seller or such Subsidiary of Seller shall remain and be solely and
exclusively liable. For purposes of this Agreement, the term "EXCLUDED
LIABILITIES" means all Liabilities that are not expressly included in the
definition of Assumed Liabilities, including those set forth in paragraphs (a)
through (p) below, whether or not any such Liability has a value for accounting
purposes or is carried or reflected on or specifically referred to in Seller's
(or any of its Subsidiaries') financial statements:
(a) all Liabilities related or attributable to Taxes of, imposed
on, related or attributable to any Seller Party or any Excluded Company;
(b) all Liabilities arising out of, relating to or in connection
with, the Retained Business and the Excluded Assets;
(c) all Liabilities arising out of, secured by or related to, or
Encumbrance on, any Acquired Asset, other than Liabilities secured by Permitted
Encumbrances;
(d) all Liabilities or Encumbrances caused by or resulting from
violations, conflicts, breaches or defaults by any Seller Entity of, or under,
any Assumed Contract or Assumed Lease prior to the Closing, or any Liability of
any Seller Party that constitutes, may
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constitute or is alleged to constitute a tort or violation of requirement of any
Law (including any penalties or fines imposed or related thereto (whether civil
or criminal)), other than (i) those relating to Actions assumed pursuant to
SECTION 2.5(a)(iv) or (ii) torts or violations of Law arising in the ordinary
course of the Acquired Business (including matters arising from vehicle
accidents);
(e) all Liabilities of Seller Parties and their Affiliates to
current or former employees of Seller Parties and their Affiliates relating to
or arising out of any period ending prior to the Closing arising out of unlawful
discrimination, wrongful termination, violations of Law, breach of the terms of
any Assumed Benefit Plan or failure to pay or discharge such employees' wages or
benefits when due;
(f) all Liabilities arising under or relating to the Assumed
Benefit Plans, other than Liabilities expressly assumed by Buyer under
SECTION 2.5(a)(iii);
(g) all Liabilities under Benefit Plans that are not Assumed
Benefit Plans;
(h) any Liabilities arising from or relating to equity-based
incentive compensation awards (including but not limited to stock options and
grants of restricted stock) granted by Seller or any of its Affiliates to Seller
Entities Employees;
(i) any Liabilities (w) relating to indebtedness for borrowed
money, (x) evidenced by bonds, debentures, notes or similar instruments, (y)
relating to indebtedness of others guaranteed by any Seller Entity and (z) in
respect of letters of credit acceptance facilities, letters of guaranty or
similar instruments, in each case, other than Assumed Indebtedness, Assumed
Contracts or Assumed Leases;
(j) any obligation or commitment of any Seller Party to any Person
relating to any obligation or requirement to use any investment or commercial
bank or other financial institution as an advisor, arranger, manager, agent,
placement agent or underwriter in connection with the refinancing or
restructuring of any Assumed Indebtedness or any indebtedness of TFFC or any
other Seller Entity with such Person;
(k) all Liabilities for (i) fees, commissions or expenses (whether
or not referred to as fees, commissions or expenses) to the extent not assumed
by Buyer pursuant to SECTION 2.5(a)(vi) and (ii) any transaction relating to the
Excluded Assets or the Retained Business;
(l) all Liabilities of any Seller Parties or any Affiliate of any
Seller Parties related to the issuance or sale of any Equity Security of any
Seller Party, and any Liabilities arising directly or indirectly from the
rescission of a purchase or sale of a "security" (as that term is defined in
section 101(4) of the Bankruptcy Code) of a Seller Party or any Affiliate of a
Seller Party for damages arising from the purchase or sale of such security, or
from the reimbursement or contribution of such a Liability;
(m) all Liabilities of Seller Parties resulting from the arbitral
award rendered on January 24, 2002 and February 8, 2002 by the National and
International Arbitration Chamber
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of Milan in favor of Francesco Dragotto and Giuseppe Dragotto (Arbitration
proceeding No. 5100), and any attorney fees, interest and other amounts payable
in connection therewith;
(n) any and all Liabilities relating to, in connection with or
arising out of: (i) the Action entitled Ryder Systems, Inc. v. Budget Group,
Inc. and Ryder TRS, Inc. 02 Civ. 1598 (BSJ) filed on or about March 1, 2002, and
pending in the United States District Court for the Southern District of New
York and any and all other Liabilities of any Seller Party to Ryder Systems,
Inc. concerning any unapproved use of the "Ryder TRS" trademark in marketing
activities; and (ii) the Action entitled Gerina Woods-McCoy v. Budget Rent A Car
Systems, Inc., Civ. Action No. 02-S-735-N, filed on or about June 28, 2002, and
pending in the United States District Court for the Middle District of Alabama,
Northern Division;
(o) all Liabilities of any of Seller Parties to Sixt AG, Sixt GmbH
and Co. Autovermietung KG or any Affiliate thereof; and
(p) any Liability of Seller Parties with respect to
indemnification of any officer, director, employee or other agent or
representative of any Seller Entity.
The listing of any specific item or matter as an Excluded Liability shall
in no respect (i) limit the generality of the first paragraph of SECTION 2.6 or
(ii) create any implication that any item or matter not so listed is an Assumed
Liability.
Section 2.7 CLOSING. The closing of the transactions contemplated in this
Agreement (the "CLOSING") shall take place at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, Four Times Square, New York, New York 10036 at 10:00
a.m. on the second Business Day after the satisfaction or waiver of the last
unsatisfied or unwaived condition set forth in ARTICLE 7 (other than those
conditions contemplated to be satisfied at the Closing), or at such other time
and place as is mutually agreed in writing by Seller and Buyer. The date of the
Closing is referred to herein as the "CLOSING DATE."
Section 2.8 DELIVERIES BY SELLER PARTIES. At the Closing, Seller Parties
shall deliver (or, in the case of clause (c), make available) to Buyer the
following:
(a) the Ancillary Agreements duly executed by the applicable
Seller Entities (in the case of the real estate deeds, the Lease Assignments and
the Trademark Assignments such documents shall also be duly acknowledged and in
proper form for recording);
(b) stock certificates together with duly executed stock powers
(affixed with all required stamps evidencing payment of transfer duties)
evidencing the Equity Securities of the Acquired Companies and the Minority
Investees, except that stock powers shall not be required in respect of Equity
Securities of Acquired Companies and Minority Investees which are held by other
Acquired Companies and, in the case of unincorporated entities, other applicable
evidence of, and transfer documents for, the Equity Securities therein;
(c) the Business Records and the Documents;
(d) the Governmental Consents and the Third Party Consents
procured by Seller Parties or their Affiliates;
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(e) a duly executed certificate ("FIRPTA CERTIFICATE") of
non-foreign status from each Seller Party in the form and manner that complies
with section 1445 of the Code and the Treasury Regulations promulgated
thereunder (notwithstanding anything to the contrary contained herein, if any
Seller Party fails to provide to Buyer a FIRPTA Certificate and Buyer elects to
proceed with the Closing, Buyer shall be entitled to withhold from the Cash
Purchase Price, the amount required to be withheld pursuant to section 1445 of
the Code), unless and until such FIRPTA certificate is provided;
(f) a duly executed IRS Form 8023 from Seller with respect to each
applicable Acquired Company (that Buyer has instructed Seller to make an
Election for pursuant to SECTION 6.3);
(g) certified copies of the 363 Order and the 365 Order;
(h) a certificate of the chief executive officer or president of
each Seller Party, dated the Closing Date, certifying the fulfillment of the
conditions set forth in SECTION 7.2(a) and SECTION 7.2(b);
(i) the resignations (effective as of or prior to the Closing
Date) of all directors (or in the case of unincorporated entities, managing
partners, members or persons of similar role and responsibility), of each
Acquired Company, in terms satisfactory in substance and form to Buyer;
(j) all such other bills of sale, assignments and other
instruments of sale, assignment, transfer or conveyance (including vehicle
registrations) as Buyer may reasonably request or as may be otherwise necessary
to evidence and effect the sale, transfer, assignment, conveyance and delivery
of the Acquired Assets to Buyer and to put Buyer in actual possession or control
of the Acquired Assets; and
(k) a pay-off letter executed by each administrative agent on
behalf of the lenders under each of the Amended and Restated Credit Agreement,
the DIP Financing and the DIP L/C Rollover to the effect that all obligations of
Seller Parties thereunder will be satisfied in full upon receipt of the
deliveries contemplated by SECTION 2.9(f) (other than those obligations,
including indemnification and expense reimbursement obligations which are not
Assumed Liabilities and which by their express terms survive the termination of
the Contracts evidencing any of the foregoing), together with appropriate
evidence that (i) all liens and encumbrances on any asset and property
constituting security therefor have been released and (ii) all letters of credit
issued under the Amended and Restated Credit Agreement, the DIP Financing and
the DIP L/C Rollover shall be released and returned concurrently with Buyer
taking the actions contemplated by SECTION 2.9(f).
Section 2.9 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver to
the applicable Seller Party or, in the case of clause (f) below, to the Person
entitled thereto, the following:
(a) the Cash Purchase Price due at Closing as provided in
SECTION 2.2, by wire transfer of immediately available funds to an account or
accounts designated by Seller for it, and on behalf of and as agent for the
other Seller Parties and as approved by the Bankruptcy Court;
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(b) the Ancillary Agreements duly executed by Buyer or one of its
Affiliates, as the case may be;
(c) a certificate of a senior executive officer of Buyer, dated
the Closing Date, certifying the fulfillment of the conditions set forth in
SECTION 7.3(a) and SECTION 7.3(b);
(d) all such other documents and instruments as Seller Parties may
reasonably request or as may be otherwise necessary or desirable to evidence and
effect the assumption by Buyer of the Assumed Liabilities;
(e) evidence of the obtaining of or the filing with respect to,
any Governmental Consents procured by Buyer; and
(f) replacement letters of credit, cash or such other instruments
as may be necessary to effect the cash payment of the then outstanding
indebtedness of Seller Parties under the Amended and Restated Credit Agreement,
the DIP Financing and the DIP L/C Rollover (in each case, to the extent such
indebtedness constitutes Assumed Indebtedness), including the release and return
to the issuers thereof of all letters of credit issued thereunder and then
outstanding.
Section 2.10 CURE COSTS. Notwithstanding any other provision of this
Agreement (other than as set forth in SECTION 2.3(q), Seller Parties shall pay
or otherwise discharge on or before Closing all necessary costs to cure then
existing breaches or defaults under, and take such actions as are necessary to
achieve assumption by Seller Parties of, and assignment by Seller Parties to
Buyer of, the Assumed Contracts and the Assumed Leases (the "CURE COSTS"). All
Cure Costs will be agreed upon by Seller Parties and each party entitled to
receipt of a cure payment, or will be determined by the Bankruptcy Court, in
accordance with the 365 Order. To the extent any Cure Costs actually paid by
Seller Parties constitute payment in respect of amounts accrued following the
Closing Date, Buyer shall reimburse Seller Parties for such portion of Cure
Costs.
Section 2.11 TRANSITION AND SUPPORT ARRANGEMENTS FOR RETAINED BUSINESS.
Each of Seller Parties and Buyer shall negotiate in good faith and enter into
mutually satisfactory arrangements (i) based on the terms set forth on
SCHEDULE 2.11(i), pursuant to which Buyer shall provide reasonable support
services to the Retained Business and (ii) based on the terms set forth on
SCHEDULE 2.11(ii), pursuant to which Buyer shall license the use of certain
Marks and Logos in connection with the operations of the Retained Business.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES
Except as specifically set forth in the Seller Parties Disclosure Schedule
prepared and signed by each Seller Party and attached hereto (the "SELLER
PARTIES DISCLOSURE SCHEDULE"), Seller Parties, jointly and severally, represent
and warrant to Buyer that all of the statements contained in this ARTICLE 3 are
true and complete as of the date of this Agreement (or, if made as of a
specified date, as of such date). Each exception set forth in the Seller Parties
Disclosure Schedule is identified by reference to a specific Section of this
Agreement. Any matter disclosed by Seller Parties in any particular Section of
the Seller Parties Disclosure Schedule shall not be deemed disclosed for
purposes of any other Section of the Seller Parties Disclosure Schedule.
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Section 3.1 ORGANIZATION AND QUALIFICATION. Each Seller Entity is a legal
entity duly organized, validly existing and in good standing under the Laws of
the state or jurisdiction of its organization and has all requisite corporate or
other organizational power and authority to own, lease and operate its assets
and to conduct its business. Each Seller Entity is duly qualified to do business
and is in good standing in each other jurisdiction where the ownership, lease or
operation of its assets or the nature of the business conducted by it requires
such qualification, except where the failure to be so qualified would not be
reasonably likely to have a Material Adverse Effect. Seller Parties have made
available to Buyer true, complete and correct copies of the certificate of
incorporation and by-laws (or other comparable organizational documents) for
each Seller Entity, each as currently in effect.
Section 3.2 CAPITALIZATION OF THE ACQUIRED COMPANIES.
(a) A complete and accurate list of the authorized and outstanding
Equity Securities of each of the Acquired Companies is set forth in SECTION
3.2(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, together with the identity of
each holder of such Equity Securities. The authorized Equity Securities of each
of the Acquired Companies is held either by one or more Seller Parties or one or
more Acquired Companies. Such Person owns all of the outstanding Equity
Securities beneficially and of record and free and clear of any Encumbrances
(other than Encumbrances pursuant to the Assumed Indebtedness). Upon delivery to
Buyer of the certificates (or other appropriate evidence thereof ) representing
the outstanding Equity Securities of the Acquired Companies and of the Minority
Investees owned by Seller Parties, at the Closing, Buyer will acquire good and
valid title to such Equity Securities, free and clear of any Liabilities or
Encumbrances.
(b) All of the outstanding Equity Securities of each Acquired
Company are duly authorized, validly issued, fully paid and nonassessable, and
not issued in violation of any preemptive or similar rights. Seller Parties have
the sole, absolute and unrestricted right, power and capacity to sell, assign
and transfer all of the outstanding Equity Securities of each Acquired Company
to Buyer free and clear of any Liabilities or Encumbrances.
(c) Other than pursuant to this Agreement, there are no
outstanding subscriptions, options, warrants, puts, calls, agreements,
understandings, claims or other commitments or rights of any type or other
securities (i) requiring the issuance, sale, transfer, repurchase, redemption or
other acquisition of any Equity Securities of any of the Acquired Companies,
(ii) restricting the transfer of any of the Equity Securities of any of the
Acquired Companies or (iii) relating to the voting of any of the Equity
Securities of any of the Acquired Companies. There are no issued or outstanding
bonds, debentures, notes or other indebtedness of any Acquired Company having
the right to vote (or convertible into, or exchangeable for, securities having
the right to vote), upon the happening of a certain event or otherwise, on any
matters on which the equity holders of any Acquired Company may vote.
(d) Except as set forth in SECTION 3.2(d) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, none of the Seller Entities owns any equity interest, or
any interest convertible or exchangeable into an equity interest, in any Person
(other than an Acquired Company or an Excluded Company).
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Section 3.3 CORPORATE POWER AND AUTHORITY. Each Seller Party has all
requisite corporate or other organizational power and authority to enter into
and deliver this Agreement, the Ancillary Agreements to which it is a party and
any agreements, documents or instruments to be executed and delivered in
connection herewith and therewith and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of this
Agreement, the Ancillary Agreements to which it is a party and any agreements,
documents or instruments to be executed and delivered in connection herewith and
therewith by each Seller Party and the consummation by each Seller Party of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate or other organizational action on the part of such Seller
Party and no other corporate or other organizational proceedings on the part of
any of Seller Parties is necessary to authorize this Agreement and the Ancillary
Agreements or to consummate the transactions contemplated hereby and thereby.
This Agreement, the Ancillary Agreements to which it is a party and any
agreements, documents or instruments to be executed and delivered in connection
herewith and therewith have been duly executed and delivered by each Seller
Party and, assuming the entry of the 363 Order and the 365 Order, constitute the
legal, valid and binding obligation of each Seller Party, enforceable against
such Seller Party in accordance with its terms.
Section 3.4 CONFLICTS; CONSENTS AND APPROVALS. Neither the execution and
delivery of this Agreement, the Ancillary Agreements and any other agreements,
documents and instruments to be executed and delivered in connection with this
Agreement or any of the Ancillary Agreements, nor, upon the entry of the 363
Order and the 365 Order, the consummation of the transactions contemplated
hereby and thereby, will:
(a) conflict with, or result in a breach of any provision of, the
organizational documents of (i) any Seller Entity or (ii) any other Subsidiary
of Seller which is a party to the Ancillary Agreements or any other agreements,
documents and instruments to be executed and delivered in connection with this
Agreement or the Ancillary Agreements;
(b) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event that, with the giving of
notice, the passage of time or otherwise, would constitute a default) under, or
entitle any Person (with the giving of notice, the passage of time or otherwise)
to terminate, accelerate, modify or declare a default under, or result in the
creation of any Liability in respect of, or cause an Encumbrance upon, any of
the properties or assets of the Acquired Companies or upon any Acquired Assets,
including, under any of the terms, conditions or provisions of (i) any Contract
to which any Seller Entity is a party or by which any of their respective
properties or assets (including the Acquired Assets) is bound or (ii) any Permit
(other than Permits that are not material to the operation of the Acquired
Business or the use, holding or ownership of any of the Acquired Assets and
which are readily obtainable by any Person without undue burden, expense or
delay) or filing to which any Seller Entity or any Subsidiary of any Seller
Entity is subject or by which any of their respective properties or assets
(including the Acquired Assets) is bound, except in the case of Acquired Assets
and assets of Acquired Companies, those violations, breaches, defaults,
terminations, cancellations, accelerations, creations, impositions, suspensions,
or revocations that are excused by or unenforceable as a result of Seller
Parties' filing of the Petition(s) or the applicability of the Bankruptcy Code
(but only to the extent such excuse, lack of enforceability or application of
the
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Bankruptcy Code will continue to apply in favor of Buyer and its successors and
assigns following the Closing);
(c) violate any Law applicable to any Seller Entity or Acquired
Company or any of their respective properties or assets (including the Acquired
Assets) or to the Acquired Business;
(d) require any action, consent or approval of any
non-governmental third party, other than consents and approvals of any
non-governmental third party (i) set forth in SECTION 3.4(d) OF THE SELLER
PARTIES DISCLOSURE SCHEDULE or (ii) excused by or rendered unnecessary as a
result of Sellers Parties' filing of the Petition(s) or the applicability of the
Bankruptcy Code (but only to the extent such excuse, rendering or application of
the Bankruptcy Code will continue to apply in favor of Buyer and its successors
and assigns following the Closing) (the "THIRD PARTY CONSENTS"); or
(e) require any action, consent or approval of, or review by, or
registration or filing by Seller Parties or the Acquired Companies with any
Governmental Body, other than consents, approvals, or authorizations of, or
declarations or filings (i) set forth in SECTION 3.4(e) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE or (ii) excused by or rendered unnecessary as a result of
Sellers Parties' filing of the Petition(s) or the applicability of the
Bankruptcy Code (but only to the extent such excuse, rendering or application of
the Bankruptcy Code will continue to apply in favor of Buyer and its successors
and assigns following the Closing) (the "GOVERNMENTAL CONSENTS").
Section 3.5 TITLE TO PROPERTY; ADEQUACY OF ASSETS.
(a) Except as set forth in SECTION 3.5(a) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, Seller Entities have (and immediately prior to the Closing
will have) good and valid title to (and, in the case of Owned Real Property,
marketable title to), or a valid and binding leasehold interest or license in,
all assets comprising the Acquired Assets and all other assets or properties of
the Acquired Companies and their Subsidiaries, and possession thereof, in each
case, free and clear of any Liabilities or Encumbrances (other than Permitted
Encumbrances). Except as set forth in SECTION 3.5(a) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, no options or rights of first offer or rights of first
refusal or similar rights or options have been granted by any Seller Entity to
any Person (other than Buyer) to (i) purchase, lease or otherwise acquire any
interest in any of the Acquired Assets or in any asset or property of any of the
Acquired Companies, except for such Acquired Assets which are not material to
the conduct of the Acquired Business, (ii) become a Franchisee or Dealer (or
operate the automotive rental business as Franchisee or Dealer in any territory
other than the Territory for which such Franchisee or Dealer is currently
licensed by Seller) or (iii) use any of the Intellectual Property.
(b) Upon entry of the 363 Order and the 365 Order and payment of
the Cash Purchase Price at the Closing, Buyer or the Acquired Companies will
have good and valid title (and, in the case of Owned Real Property, marketable
title to), or a valid and binding leasehold interest, concession or license in
(i) all assets comprising the Acquired Assets free and clear of all Liabilities
(other than Assumed Liabilities) and Encumbrances (other than Permitted
Encumbrances, including for this purpose Encumbrances under Contracts of
Acquired
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Companies) and (ii) all assets of Acquired Companies and their Subsidiaries free
and clear of all Encumbrances (other than Permitted Encumbrances).
(c) The assets to be transferred to Buyer pursuant to this
Agreement are all the properties and assets (i) owned by Seller Parties (other
than the Excluded Assets) and (ii) necessary for the Acquired Business to be
conducted as currently conducted and as contemplated to be conducted.
(d) Subject to the entry of the 365 Order, all Contracts and
Leases to be transferred pursuant to this Agreement are assumable by Seller
Parties and assignable by Seller Parties to Buyer.
(e) BRAC (Bermuda) Holdings Limited and BRAC Reinsurance Company,
Ltd. are wholly-owned Subsidiaries of Seller and do not own, directly or
indirectly, any right, title or interest in, to and under any of the Acquired
Assets or the Acquired Business, or any other assets or properties (except for
amounts due from Seller Parties which do not constitute Assumed Liabilities).
Section 3.6 SEC FILINGS; SELLER FINANCIAL STATEMENTS.
(a) Except as set forth in SECTION 3.6(a) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, since December 31, 1999, each Seller Entity has filed in a
timely manner all required reports, schedules, forms, statements and other
documents (including exhibits and all other information incorporated therein)
that it was required to file with the SEC (the "SELLER SEC DOCUMENTS"). As of
their respective filing dates, (i) the Seller SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such Seller SEC Documents and (ii) no Seller SEC Document when filed (or when
amended and restated or as supplemented by a subsequently filed Seller SEC
Document) contained any untrue statement of a material fact or omitted 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. The financial statements of Seller and its Subsidiaries (the
"SELLER FINANCIAL STATEMENTS") included in the Seller SEC Documents complied as
to form, as of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with GAAP (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) (except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position of Seller
and its Subsidiaries as of the dates thereof and the consolidated results of
their operations, cash flows and changes in their financial position for the
periods then ended (subject, in the case of unaudited interim statements, to
normal year-end audit adjustments that are not material). As of its filing date,
each Seller SEC Document did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
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(b) SECTION 3.6(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains the unaudited consolidating statements of income of Seller and its
Subsidiaries for the quarterly period ending on March 31, 2002, and the related
consolidating balance sheet of Seller and its Subsidiaries as at the end of such
quarterly period (the "MARCH 31 FINANCIAL STATEMENTS"), and the unaudited
consolidating statements of income of Seller and its Subsidiaries for the
six-month period ending on June 30, 2002 (the "JUNE 30 INCOME STATEMENT"), and
the related consolidating balance sheet of Seller and its Subsidiaries as of the
end of such six-month period (the "JUNE 30 BALANCE SHEET," and together with the
June 30 Income Statement, the "JUNE 30 FINANCIAL STATEMENTS"). Except as set
forth in SECTION 3.6(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, the March 31
Financial Statements and the June 30 Financial Statements have been prepared in
accordance with GAAP and fairly present in all material respects the financial
position of Seller and its Subsidiaries and the consolidating results of
operations as of March 31, 2002 and June 30, 2002, respectively.
(c) SECTION 3.6(c) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains the audited statement of income of Budget Rent a Car Australia Pty.
Ltd. ("BUDGET AUSTRALIA") and the audited consolidated statement of income of
Budget Rent a Car Operations Pty. Ltd. ("OPERATIONS PTY.") and Camfox Pty. Ltd.
("CAMFOX" and together with Budget Australia and Operations Pty., the
"AUSTRALIAN SELLER ENTITIES") for the year ended on December 31, 2001, and the
related balance sheet of Budget Australia and the consolidated balance sheet of
Operations Pty. and Camfox as at the end of such annual period (the "AUSTRALIAN
FINANCIAL STATEMENTS"). The Australian Financial Statements have been prepared
in accordance with generally accepted accounting principles in Australia
consistently applied during the periods involved and fairly present in all
material respects the financial position of Budget Australia and the
consolidated financial position of Operations Pty. and Camfox and their results
of operations as of December 31, 2001.
(d) SECTION 3.6(d) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains the statement of income of each of Budget Rent-A-Car of Canada Limited
and the audited statement of income of Compact Rent-A-Car Limited (the "CANADIAN
SELLER ENTITIES") in each case for the year ended on December 31, 2001, and the
related balance sheet of each Canadian Seller Entity as at the end of such
annual period. Such financial statements of (i) Compact Rent-A-Car Limited have
been prepared in accordance with generally accepted accounting principles in
Canada consistently applied during the periods involved and fairly present in
all material respects the financial position of Compact Rent-A-Car Limited and
its results of operations as of December 31, 2001 and (ii) Budget Rent-A-Car of
Canada Limited, have been prepared in accordance with GAAP and fairly present in
all material respects the financial position of Budget Rent-A-Car of Canada
Limited and its results of operations as of December 31, 2001.
(e) SECTION 3.6(e) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains the audited consolidated statement of income of Budget Rent a Car
Limited and its subsidiaries (the "NEW ZEALAND SELLER ENTITIES") for the year
ended on December 31, 2001, and the related consolidated balance sheet of the
New Zealand Seller Entities as at the end of such annual period (the "NEW
ZEALAND FINANCIAL STATEMENTS"). The New Zealand Financial Statements have been
prepared in accordance with generally accepted accounting principles in New
Zealand consistently applied during the periods involved and fairly present in
all material respects the
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consolidated financial position of the New Zealand Seller Entities and their
results of operations as of December 31, 2001.
(f) Except as set forth in SECTION 3.6(f) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, since June 30, 2002, Seller Entities have not (i) made (or
committed to make) any payments or distributions to any of its Affiliates or to
any directors, officers or any of their respective relatives or any Affiliate
thereof (other than a Seller Entity), other than pursuant to the Related Party
Agreements listed in SECTION 3.11 OF THE SELLER PARTIES DISCLOSURE SCHEDULE,
director fees, salaries, bonuses, payment of benefits or reimbursement of
expenses in the ordinary course of business consistent with past practice or
under the Assumed Benefit Plans, (ii) made (or committed to make) any payment in
respect of Qualified Fees or similar fees or expenses and (iii) made or
(committed to make) any Investment in the Retained Business, any Excluded
Company or in any Person (other than a Seller Entity or a wholly-owned
Subsidiary thereof).
Section 3.7 VEHICLES, ETC.
(a) SECTION 3.7(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains the following information which is substantially correct in all
material respects (except that no information need to be provided under clauses
(C), (D) or (E) with respect to leased Existing Trucks): (i) a list of all
trucks and cargo vans (other than pick-up trucks, except for the pick-up trucks
so listed) used as Rental Vehicles (the "EXISTING TRUCKS") as of June 30, 2002
or as of a date after June 30, 2002; and (ii) for each Existing Truck, (A) the
Seller Entity owner or lessee thereof, (B) whether such Existing Truck is owned
or leased, (C) the original purchase price thereof, (D) the current net book
value thereof, (E) the current monthly depreciation charges in respect thereof
(expressed as a percentage of the original purchase price), (F) the respective
VIN number or equivalent thereof, (G) the manufacturer and model year, (H) the
mileage thereof or, if such Existing Truck is subject to a Rental Transaction on
June 30, 2002 or such later date, the mileage thereof immediately prior to the
relevant Seller Entity entering into such Rental Transaction, (I) except for
Existing Trucks used in connection with the Acquired Business in Australia, the
box size thereof and (J) the location thereof or, if such Existing Truck is
subject to a Rental Transaction on June 30, 2002 or such later date, the
location thereof immediately prior to the relevant Seller Entity entering into
such Rental Transaction.
(b) SECTION 3.7(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains the following information which is substantially correct in all
material respects (except that no information need to be provided under clauses
(B), (C), (D), (E) or (F) with respect to leased Rental Vehicles or leased
Support Vehicles): (i) a list of all Rental Vehicles (other than Existing
Trucks) and Support Vehicles (in each case, including Owned Vehicles) used or
held for use by any Seller Entity in connection with the Acquired Business or
otherwise (other than in connection with the Retained Business) as of June 30,
2002 or as of a date after June 30, 2002; and (ii) for each such Rental Vehicle,
Support Vehicle and Owned Vehicle (A) whether such vehicle is owned or leased,
(B) the original purchase price thereof, (C) the date such vehicle was delivered
to the purchaser thereof, (D) the then current net book value thereof, (E) the
current monthly depreciation charges in respect thereof (expressed as a
percentage of the original purchase price), (F) the respective VIN number or
equivalent thereof, (G) the manufacturer, and model year (except in the case of
leased vehicles operated in Australia) and (H) except for
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Support Vehicles, vehicles used in connection with the Acquired Business in
Australia and dollies, the mileage or kilometers thereof or, if such vehicle is
a Rental Vehicle and is subject to a Rental Transaction on June 30, 2002 or such
later date, the mileage or kilometers of such Rental Vehicle immediately prior
to the relevant Seller Entity entering into such Rental Transaction. All
vehicles listed on SECTION 3.7(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE are
owned by a Seller Entity and all vehicles used or held for use in connection
with the Acquired Business in the United States (including Puerto Rico) are
owned by TFFC or BGI Leasing Inc., except for not more than 5,000 vehicles.
(c) As of June 30, 2002 (or if the Rental Vehicle is subject to a
Rental Transaction on June 30, 2002, then as of the date which is immediately
prior to the date on which the relevant Seller Entity entered into such Rental
Transaction), none of the Existing Trucks listed on SECTION 3.7(a) OF THE SELLER
PARTIES DISCLOSURE SCHEDULE nor the Rental Vehicles and the Support Vehicles (in
each case, including the Owned Vehicles) listed on SECTION 3.7(b) OF THE SELLER
PARTIES DISCLOSURE SCHEDULE have been the subject of theft, loss, casualty, or
destruction, have not been sold or otherwise disposed of (except for such
thefts, losses, casualties, destruction, sales or dispositions which are
immaterial in amount and within the range customarily experienced by Seller
Parties). Except as set forth in the immediately preceding sentence, each Rental
Vehicle and Support Vehicle (in each case, including each Owned Vehicle) is
readily available to Seller Entities for use in connection with the Acquired
Business.
(d) Seller Parties have adequate information systems consistent
with Prudent Industry Practices to determine the location (or, if rented, the
location to which it is assigned) of each Rental Vehicle and Support Vehicle (in
each case, including each Owned Vehicle) used or held for use by any Seller
Entity in connection with the Acquired Business.
Section 3.8 ABSENCE OF CHANGES. Since December 31, 2001, (i) except for
the filing of the Petitions, the Acquired Business has been conducted and
operated in the ordinary course consistent with past practice and Prudent
Industry Practices, (ii) there has not been any Material Adverse Effect, (iii)
the Acquired Business has not experienced any material damage (whether or not
physical), destruction or loss (whether or not covered by insurance) to its
tangible property, software or electronic systems, in each case owned by Seller
Entities and used in connection with the Acquired Business and (iv) there has
been no material change in the accounting principles, practices, methods or
policies of Seller Entities.
Section 3.9 NO UNDISCLOSED LIABILITIES.
(a) Except (i) as and to the extent reflected on the June 30
Balance Sheet or (ii) as incurred on or after July 1, 2002 in the ordinary
course of the Acquired Business consistent with past practice, neither the
Acquired Business nor the Acquired Companies are subject to, and the Acquired
Assets are not subject to, any Liabilities or Encumbrances (other than Assumed
Liabilities and Permitted Encumbrances). SECTION 3.9(a) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE contains true, accurate and correct copies of all Contracts
(except for such Contracts so indicated therein) evidencing indebtedness for
borrowed money of each Acquired Company as of June 30, 2002 or as of a date
after June 30, 2002 and the respective amounts outstanding thereunder as of such
date. The proceeds from each such borrowing have been used
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solely in the Acquired Business conducted by the Acquired Company that has
incurred such indebtedness or any of its Subsidiaries.
(b) Except as set forth in SECTION 3.9(b) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, no Acquired Company is under any obligation (whether
pursuant to a writing, oral statement, course of dealing or otherwise) to fund,
underwrite, provide vehicles or financing therefor, or guarantee or otherwise
support, in whole or in part, any obligations of Franchisees, Dealers, agents or
other Third Parties. Except as set forth SECTION 3.9(b) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, no Contract with any Franchisee, Dealer or agent relating
to the Acquired Business has any guarantee of income or volume, and no such
agreement provides for any financial recourse to any Seller Entity in the event
that income or volume goals are not met or for any other reason.
(c) SECTION 3.9(c) OF THE SELLER PARTIES DISCLOSURE SCHEDULE sets
forth the amounts due by Seller Entities to each Vehicle Manufacturer or any
Affiliates thereof as of June 30, 2002, the maturity date(s) thereof and any
Encumbrances created or purported to be created as collateral therefor.
(d) Except as set forth in SECTION 3.9(d) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, Seller Entities have made payments in full, when due, of
all amounts payable under the TFFC MV Leases, and prior to the date of this
Agreement none of such payments has been made with proceeds from draws under
letters of credit issued pursuant to the Amended and Restated Credit Agreement.
(e) SECTION 3.9(e) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, complete and accurate list of all letters of credit issued
under the Amended and Restated Credit Agreement or pursuant to the DIP Financing
as of the date hereof, including, with respect to each such letter of credit (i)
the date of issuance, (ii) the expiration date, (iii) the amount, (iv) the
amount of any draws thereunder and (v) the purpose for which such letter of
credit was issued.
Section 3.10 ACCOUNTS RECEIVABLE; ACCOUNTS PAYABLE.
(a) Except as set forth in SECTION 3.10(a) OF THE SELLER PARTY
DISCLOSURE SCHEDULE, all accounts receivable of the Acquired Business arising
after January 1, 2002 and prior to the Closing are shown in the Business
Records, represent BONA FIDE transactions and arose and will arise in the
ordinary course of business. No such accounts receivable has been assigned or
otherwise sold to any Person and no Seller Entity has discharged or agreed to
discharge the obligor thereunder other than (i) upon such obligor making payment
in full of all amounts due under each such account receivable or (ii) for a
valid and legitimate business reason. For purposes of this SECTION 3.10(a), a
valid and legitimate business reason shall not include addressing the cash or
liquidity needs of Seller Entities.
(b) SECTION 3.10(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a list of accounts payable of the Acquired Business which are past due
by at least one day as of July 1, 2002 based on their current terms or which
contain payment terms that exceed 60 days. For each such account payable,
SECTION 3.10(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE sets forth: (i) the
payor and payee thereof; (ii) the amount outstanding thereunder; and (iii) the
approximate
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number of days such account is past due. Seller Entities have not made any
payments under any such accounts payable of the Acquired Business prior to the
stated maturity thereof, other than for a valid and legitimate business reason.
Section 3.11 AFFILIATE TRANSACTIONS. Except as set forth in SECTION 3.11 OF
THE SELLER PARTIES DISCLOSURE SCHEDULE, the Acquired Companies are not a party
to, nor are their properties or assets bound by, and none of the Acquired Assets
or Assumed Liabilities will be comprised of, any Related Party Agreement. All
Related Party Agreements have been effected, or provide for, as applicable,
assets, property or services to be provided at Fair Market Value, at the date of
the applicable Related Party Agreement. None of Seller Entities is party to any
Contract with Ritz Services, Inc. which may not be terminated upon Closing with
no cost to Buyer.
Section 3.12 COMPLIANCE WITH LAWS.
(a) Except as set forth in SECTION 3.12(a) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, (i) each Seller Entity has complied in all material
respects with all Laws applicable to the Acquired Business or the Acquired
Assets and (ii) no material investigation or review by any Governmental Body
with respect to the Acquired Business or the Acquired Assets (including the
Acquired Companies) or the Assumed Liabilities is or was pending, or, to the
knowledge of Seller Parties, threatened, against any Seller Entity, nor has any
Governmental Body indicated in writing an intention to conduct the same.
(b) Except as set forth in SECTION 3.12(b) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, none of Seller Entities has any unresolved regulatory
complaints or investigations (whether initiated by one or more Franchisees,
Dealers or a customer of Seller, its Subsidiaries or a Governmental Body)
relating to the Acquired Business, except for unresolved complaints or
investigations which could not reasonably be expected to result in Liability to
any Seller Party of $10,000 or more, individually, or $500,000 or more, in the
aggregate.
Section 3.13 LITIGATION.
(a) Except as set forth in SECTION 3.13(a) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, there is no action, suit, proceeding, investigation,
pleading, charge, complaint, claim or demand ("ACTION") pending or, to the
knowledge of Seller Parties, threatened, against any Seller Entity or any
executive, officer or director thereof that relates to the Acquired Business,
the Acquired Assets or the Assumed Liabilities or in respect of which an
Acquired Company is a defendant, except for Actions pending or threatened which
could not reasonably be expected to result in Liability to any Seller Party of
$10,000 or more, individually or $750,000 or more, in the aggregate.
(b) Except as set forth in SECTION 3.13(b) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, none of Seller Entities, the Acquired Business, the
Acquired Assets or the Assumed Liabilities or the assets or Liabilities of any
Acquired Company is subject to any material outstanding order, writ, injunction,
judgment or decree relating to methods of doing business or relationships with
past, existing or future users or purchasers of services or assets of the
Acquired Business. Seller Parties are in compliance in all material respects
with all orders, writs,
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injunctions, judgments and decrees set forth in SECTION 3.13(b) OF THE SELLER
PARTIES DISCLOSURE SCHEDULE.
Section 3.14 CORPORATE LOCATIONS; PERMITS; ETC.
(a) SECTION 3.14(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true and correct list of all corporate locations at which Seller
Entities conduct the business of the Acquired Business.
(b) Except as set forth in SECTION 3.14(b) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE: (i) all of the business of the Acquired Business in
Australia is conducted exclusively through the Australian Seller Entities;
(ii) all of the business of the Acquired Business in Canada is conducted
exclusively through the Canadian Seller Entities and through Franchisees which,
together with Budget Rent a Car, are parties to franchise Contracts to be
transferred to Buyer hereunder; and (iii) all of the business of the Acquired
Business in New Zealand is conducted exclusively through the New Zealand Seller
Entities.
(c) SECTION 3.14(c) OF THE SELLER PARTIES DISCLOSURE SCHEDULE sets
forth a true and correct list of all Permits and applications for such Permits
with respect to the operation of the Acquired Business or the use, holding or
ownership of any of the Acquired Assets, other than Permits that are not
material to the operation of the Acquired Business or the use, holding or
ownership of any of the Acquired Assets and which are readily obtainable by any
Person without undue burden, expense or delay. Such Permits have been duly
obtained from the appropriate Governmental Body in each applicable jurisdiction
and are in full force and effect.
(d) Each holder of a Permit has operated in all material respects
in compliance with all terms thereof. No event has occurred which permits the
revocation or termination of any of the Permits or the imposition of any
restriction thereon, or that would prevent any of the Permits from being renewed
on a routine basis or in the ordinary course. Except as set forth in
SECTION 3.14(d) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, no Seller Party or
Acquired Company is in default (either with the giving of notice or lapse of
time or the occurrence of any other condition, event or circumstance) under any
such Permit in any material respect.
(e) There are no Actions pending nor, to the knowledge of Seller
Parties, threatened, that seek the revocation, cancellation, suspension,
modification or refusal to renew of any such Permit and the transactions
contemplated by this Agreement and the Ancillary Agreements shall not cause any
such revocation, cancellation, suspension, modification or refusal to renew any
such Permits. All required filings with respect to such Permits have been timely
made and all required applications for renewal thereof have been timely filed.
There is not now issued, outstanding or, to the knowledge of Seller Parties,
threatened, any notice by any Governmental Body of violation or complaint, or
any application or proceeding (other than applications, proceedings, or
complaints that generally affect Seller Parties' industry as a whole) relating
to the Acquired Business or the Acquired Assets.
Section 3.15 CONTRACTS.
(a) SECTION 3.15(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, complete and accurate list of all franchise, prime license,
license, dealer or agency Contracts to
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which any Seller Entity is a party and which relate to the Acquired Business.
SECTION 3.15(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE provides: (i) for each
franchise, prime license and license Contract the date (including the date of
any amendments thereof), (ii) for each franchise, prime license, license and
Dealer Contract the names of the Franchisee or Dealer and Seller Entity party
thereto, (iii) for each franchise, prime license, license and Dealer Contract
the applicable fee and royalty arrangement (whether flat, royalty free, or flat
and royalty component), (iv) for each such Contract an indication of whether
such Franchisee or Dealer (that conducts business under the Budget brand name)
participates in the association and CorpRate programs of the Acquired Business
and (v) for each such Contract whether such agreement applies to cars, trucks,
or both. Except as set forth in SECTION 3.15(a) OF THE SELLER PARTIES DISCLOSURE
SCHEDULE, all dealer or agency Contracts listed therein entered into in
connection with Seller Entities' truck rental business, (i) may be terminated by
Seller Entities by giving 90 days' (or such shorter period specified therein)
notice to the relevant Dealer, without (A) any penalty or other payment by any
of Seller Entities, (B) imposing any requirement that Seller Entities sell or
dispose of any assets or properties and (C) imposing any limitations on the
conduct of business by any Seller Entity and (ii) do not require any Dealer or
agent thereunder to make payments to Seller Parties in connection with any
services other than certain information services or support provided by Seller
Parties to such Dealer or agent in connection therewith.
(b) SECTION 3.15(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, complete and accurate list of all marketing Contracts to which
any Seller Entity is a party and which relate to the Acquired Business. For each
such Contract, SECTION 3.15(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
provides: (i) the date (including the date of any amendments thereof), (ii) the
names of the parties thereto and (iii) the type of service provided. Except as
set forth in SECTION 3.15(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, all
marketing Contracts listed therein may be terminated by Seller Entities by
giving 90 days' (or such shorter period specified therein) notice to the other
party thereof, without (i) any penalty or other payment on any of Seller
Entities, (ii) imposing any requirement that Seller Entities sell or dispose of
any assets or properties and (iii) imposing any limitations on the conduct of
business by any Seller Entity.
(c) SECTION 3.15(c) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, complete and accurate list of all CorpRate Contracts to which
any Seller Entity is a party and which relate to the Acquired Business as
conducted by such Persons, in which the receipts thereunder exceeded in the most
recently concluded calendar year, or are reasonably expected to exceed during
the calendar year ending on December 31, 2002, $50,000. Except as set forth in
SECTION 3.15(c) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, all CorpRate
Contracts listed therein may be terminated by Seller Entities by giving 90 days'
(or such shorter period specified therein) notice to the other party thereof,
without (i) any penalty or other payment on any of Seller Entities, (ii)
imposing any requirement that Seller Entities sell or dispose of any assets or
properties and (iii) imposing any limitations on the conduct of business by any
Seller Entity.
(d) SECTION 3.15(d) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, complete and accurate list of all association Contracts to
which any Seller Entity is a party and which relate to the Acquired Business, in
which the receipts thereunder exceeded in the most recently concluded calendar
year, or are reasonably expected to exceed during the calendar year ending on
December 31, 2002, $50,000. Except as set forth in SECTION 3.15(d) OF THE SELLER
PARTIES DISCLOSURE SCHEDULE, all association Contracts listed therein may be
terminated by Seller
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Entities by giving 90 days' (or such shorter period specified therein) notice to
the other party thereof, without (i) any penalty or other payment on any of
Seller Entities, (ii) imposing any requirement that Seller Entities sell or
dispose of any assets or properties and (iii) imposing any limitations on the
conduct of business by any Seller Entity.
(e) SECTION 3.15(e) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, complete and accurate list of all joint venture, limited
liability company and partnership Contracts to which any Seller Entity is a
party and which relate to the Acquired Business.
(f) SECTION 3.15(f) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, complete and accurate list of all affiliation Contracts
(including airline loyalty or similar programs) to which any Seller Entity is a
party and which relate to the Acquired Business. Except as set forth in
SECTION 3.15(f) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, all affiliation
Contracts listed therein may be terminated by Seller Entities by giving 90 days'
(or such shorter period specified therein) notice to the other party thereof,
without (i) any penalty or other payment on any of Seller Entities, (ii)
imposing any requirement that Seller Entities sell or dispose of any assets or
properties and (iii) imposing any limitations on the conduct of business by any
Seller Entity.
(g) SECTION 3.15(g) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, complete and accurate list of all general sales agency, travel
agency and tour operator Contracts, to which any Seller Entity is a party and
which relate to the Acquired Business. Except as set forth in SECTION 3.15(g) OF
THE SELLER PARTIES DISCLOSURE SCHEDULE, all general sales agency, travel agency
and tour operator Contracts listed therein may be terminated by Seller Entities
by giving 90 days' (or such shorter period specified therein) notice to the
other party thereof, without (i) any penalty or other payment on any of Seller
Entities, (ii) imposing any requirement that Seller Entities sell or dispose of
any assets or properties and (iii) imposing any limitations on the conduct of
business by any Seller Entity.
(h) SECTION 3.15(h) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, complete and accurate list of all Contracts with Vehicle
Manufacturers, including Repurchase Programs, which relate to the Acquired
Business.
(i) SECTION 3.15(i) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, complete and accurate list of all bus and truck lease Contracts
(other than the TFFC MV Leases and the Ford MV Lease) to which any Seller Entity
is a party.
(j) SECTION 3.15(j) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, complete and accurate list of all fuel supply Contracts to
which any Seller Entity is a party and which relate to the Acquired Business.
Except as set forth in SECTION 3.15(j) OF THE SELLER PARTIES DISCLOSURE
SCHEDULE, all fuel supply Contracts listed therein may be terminated by Seller
Entities by giving 90 days' (or such shorter period specified therein) notice to
the other party thereof, without (i) any penalty or other payment on any of
Seller Entities, (ii) imposing any requirement that Seller Entities sell or
dispose of any assets or properties and (iii) imposing any limitations on the
conduct of business by any Seller Entity.
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(k) SECTION 3.15(k) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, complete and accurate list of all vendor (including reservation
services, and benefit service providers) Contracts to which any Seller Entity is
a party and which relate to the Acquired Business, in which the aggregate
payments thereunder exceeded in the most recently concluded calendar year, or
are reasonably expected to exceed during the calendar year ending on December
31, 2002, $100,000 or which is not in the ordinary course of business. Except as
set forth in SECTION 3.15(k) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, all
vendor Contracts listed therein may be terminated by Seller Entities by giving
90 days' (or such shorter period specified therein) notice to the other party
thereof, without (i) any penalty or other payment on any of Seller Entities,
(ii) imposing any requirement that Seller Entities sell or dispose of any assets
or properties and (iii) imposing any limitations on the conduct of business by
any Seller Entity.
(l) SECTION 3.15(l) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, complete and accurate list of all collective bargaining
Contracts to which any Seller Entity is a party and which relate to the Acquired
Business.
(m) To the extent not disclosed or not required to be disclosed in
SECTIONS 3.9, 3.15(a) through 3.15(l), 3.15(n), 3.15(u), 3.16(a) through
3.16(h), 3.17(a), 3.18(b), 3.18(c), 3.19(a), 3.22, 3.25 and 3.28(b),
SECTION 3.15(m) OF THE SELLER PARTIES DISCLOSURE SCHEDULE contains a true,
complete and accurate list of all Contracts relating to the Acquired Business
(x) which involve (or could reasonably be expected to involve) the receipt or
payment in any calendar year of more than $100,000 or which is not terminable
without Liability, penalty or premium (whether imposed by contract, Law,
regulation or otherwise) on 30 or fewer days' notice, (y) with customers which
accounts for 0.5% or more of the revenues of the Acquired Business in the last
fiscal year or (z) which was not entered into in the usual and ordinary course
of business consistent with past practice.
(n) SECTION 3.15(n) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, correct and complete copy of all Contracts (except for such
Contracts so indicated therein) to which any Seller Entity is a party which
evidence the obligations of Seller Entities under or with respect to the Assumed
Indebtedness to which Seller Parties are a party as of the date of this
Agreement.
(o) Except as specifically set forth in SECTION 3.15(o) OF THE
SELLER PARTIES DISCLOSURE SCHEDULE, Seller Parties have made available to Buyer
or its representatives true, correct and complete copies of all Contracts listed
on or required to be disclosed pursuant to SECTION 3.15(a) through SECTION
3.15(n) and SECTION 3.15(u) each a "BUSINESS CONTRACT." None of the Contracts
set forth in SECTION 3.15(o) OF THE SELLER PARTIES DISCLOSURE SCHEDULE is
required to be disclosed in SECTIONS 3.15(a) (other than the agency agreements
listed on SECTION 3.15(o) OF THE SELLER PARTIES DISCLOSURE SCHEDULE) or is
otherwise material to the Acquired Business, individually or together with any
other Contracts listed in SECTION 3.15(o) OF THE SELLER PARTIES DISCLOSURE
SCHEDULE.
(p) Each Business Contract complies with all applicable Laws and
is valid, binding and enforceable against each Seller Entity that is a party
thereto and the Third Parties party thereto in accordance with its terms. Except
as set forth in SECTION 3.15(p) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, each
Seller Entity and, to the knowledge of Seller Parties, each
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counterparty to any Business Contract is performing its obligations thereunder,
and is not in violation, conflict with, or breach of any provision of, or has
lost any benefit under, or acted in a manner that would constitute a default (or
allowed to occur an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Encumbrance upon any of the Acquired Assets or the
respective properties or assets of the Acquired Companies, except that Seller
Parties have not made certain payments under certain Business Contracts (other
than the TFFC MV Leases) in connection with or in anticipation of the Chapter 11
Cases. No Assumed Contract has been originated, or is subject to, the Laws of
any jurisdiction which would make the transfer and assignment of such Assumed
Contract unlawful.
(q) Except as described in SECTION 3.15(q) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, with respect to each Business Contract, none of the rights
or remedies under such Contracts in favor of Seller or any of its Subsidiaries
have been amended, modified, waived, supplemented, subordinated or otherwise
altered other than in good faith and in the ordinary course of business and all
the terms of each Business Contract (including any such amendment, modification,
waiver, supplement, subordination or other alteration of any Business Contract)
are included among the Documents made available to Buyer or its representatives
prior to the date hereof and to be transferred to Buyer pursuant to
SECTION 2.8(c).
(r) Except as set forth in SECTION 3.15(r) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, each franchise, license and dealer Contract was issued on a
standard form, generally used by Seller Entities to enter into such type of
Contract at such time in connection with the Acquired Business.
(s) Except as set forth in SECTION 3.15(s) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, none of Seller Entities is a party to any Contract in
connection with the Acquired Business that purports to (x) restrict the freedom
of any Seller Entity or any of its Affiliates to compete or engage in any line
of business or with any Person or in any geographical area or territory, in each
case, for any length of time or under any brand name, trademarks or tradenames
or (y) require any Seller Entity or any of its Affiliates to conduct business
exclusively with one or more Persons in a specified territory or geographical
area.
(t) None of the Seller Entities is a party to any Contract, except
for (i) the Contracts set forth in SECTIONS 3.9, 3.15(a) through 3.15(s),
3.15(u), 3.16(a) through (h), 3.17(a), 3.18(b), 3.18(c), 3.19(a), 3.22(c), 3.25,
and 3.28(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, (ii) such other Contracts
to which any of the Seller Entities is a party but are not required to be
disclosed therein and (iii) in the case of Seller Parties, Contracts that
constitute Excluded Assets.
(u) Except as set forth in SECTION 3.15(u) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, none of Seller Entities is a party to any "barter"
agreements with respect to the Acquired Business, nor is any Seller Entity
liable for any outstanding barter obligations nor the owner of any outstanding
barter receivables with respect to the Acquired Business.
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Section 3.16 REAL ESTATE.
(a) SECTION 3.16(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a complete and correct list of all Leases. Prior to the date hereof,
true, correct and complete copies of all Leases relating to the Leased Premises
and all amendments thereto have been made available by Seller Parties to Buyer,
except for the leases under which Seller Parties are required to make monthly
lease payments of not more than $2,500 individually and which are set forth in
SECTION 3.16(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE. All such Leases are
valid, binding and in full force and effect and are enforceable by the lessee
thereunder and, except as set forth in SECTION 3.16(a) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, grant such lessee the exclusive right to use and occupy the
Leased Premises. Each applicable Seller Entity, as applicable, has, and shall
have as of the Closing, good and valid leasehold title to each of the Leased
Premises. Except as set forth in SECTION 3.16(a) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, all material covenants to be performed by the applicable
Seller Entity, as applicable, and, to the knowledge of Seller Parties, all
material covenants to be performed by the lessor or sublessor under each Lease,
have been performed in all material respects, and no event has occurred or
circumstance exists which, with the delivery of notice or the passage of time or
both, would constitute such a breach or default by the applicable Seller Entity,
or the lessor or sublessor, or which would permit the termination, modification
or acceleration of performance of the obligations of the applicable Seller
Entity, or the lessor or sublessor, under any Lease, except for such violations,
breaches, defaults, terminations, cancellations, accelerations, creations,
impositions, suspensions, or revocations that are excused by or unenforceable as
a result of Seller Parties' filing of the Petition(s), and except that Seller
Parties have not made certain payments under certain Leases in connection with
or in anticipation of the Chapter 11 Cases.
(b) SECTION 3.16(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, correct and complete list of all Owned Real Property, including
the address of each parcel of Owned Real Property, the Seller Entity which owns
such Owned Real Property and the current use (or uses) of such Owned Real
Property. The applicable Seller Entities have, and shall have as of the Closing,
good, valid and marketable title in fee simple to each of the Owned Real
Property and to all buildings, structures and other improvements thereon and all
fixtures thereto (other than leased equipment), in each case, free and clear of
any Encumbrances (other than Permitted Property Encumbrances) and except as set
forth in SECTION 3.16(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE.
(c) Except as set forth in SECTION 3.16(c) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, no Seller Entity has received any written notice that (i)
any condemnation proceeding is pending or threatened with respect to the
Premises or (ii) any material zoning, building or similar law, code, ordinance,
order or regulation is or will be violated by the continued maintenance,
operation or use of any buildings or other improvements on any of the Premises.
(d) No certificate, permit or license from any Governmental Body
having jurisdiction over any of the Premises or any agreement, easement or other
right which is necessary to permit the lawful use and operation of the buildings
and improvements on any of the Premises or which is necessary to permit the
lawful use and operation of all driveways, roads and other means of egress and
ingress to and from any of the Premises has not been obtained or
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is not in full force and effect, and, to the knowledge of Seller Parties, there
is no pending threat of modification or cancellation of any of the same.
(e) Except as set forth in SECTION 3.16(e) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, all buildings, structures and other improvements on any of
the Premises and all fixtures thereto are structurally sound with no known
material defects and are in good operating condition and repair and are adequate
for the use and operation of the Premises to which they relate in the conduct of
the Acquired Business as presently conducted and require no maintenance, repairs
or replacements, except for ordinary routine maintenance, repairs or
replacements, which are not material in nature or cost.
(f) Except as set forth in SECTION 3.16(f) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, no Seller Entity is a party to, or is obligated under any
option, right of first refusal or other contractual right to sell, dispose of or
lease any of the Premises or any portion thereof or interest therein to any
Person or entity other than Buyer.
(g) Subject to the entry of the 365 Order, except as set forth in
SECTION 3.16(g) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, no consent is
required for the assignment of any Lease contemplated hereby.
(h) Prior to the date hereof, except as set forth in
SECTION 3.16(h) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, Seller Parties have
made available to Buyer for review true, correct and complete copies of all
deeds, mortgages, surveys, licenses, leases, title insurance policies (including
any underlying documents relating to Encumbrances), if any, or equivalent
documentation with respect to the Premises and other material documents relating
to or affecting the title to the Premises. The agreements, instruments and
documents listed in SECTION 3.16(h) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
are not, individually or together with any other agreements, instruments or
documents listed therein, material to the Acquired Business.
Section 3.17 AIRPORT CONCESSIONS.
(a) SECTION 3.17(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a complete and correct list of all airport concessions or licenses
(whether evidenced in the form of a Contract or otherwise) entered into by,
granted to or applicable to any Seller Entity and which relate to the Acquired
Business (collectively, "AIRPORT CONCESSIONS"). Prior to the date hereof true,
correct and complete copies of all Airport Concessions have been made available
by Seller Parties to Buyer. Except as set forth in SECTION 3.17(a) OF THE SELLER
PARTIES DISCLOSURE SCHEDULE, all Airport Concessions are valid, binding and in
full force and effect and are enforceable by Seller Entity as concessionaire (or
licensee, however designated, the "CONCESSIONAIRE") thereunder.
(b) Except as set forth in SECTION 3.17(b) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, each Airport Concession grants the applicable
Concessionaire (a) the right to use and occupy the counter areas in the
terminals on an exclusive basis and the right to use and occupy the rental
operations area and related parking areas designated therein and (b)
non-exclusive right to use and occupy such other areas of the applicable airport
as may be necessary or convenient for the operation of the Acquired Business at
such airport. Except as set forth in
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SECTION 3.17(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, all material
covenants to be performed by the applicable Seller Entity and, to the knowledge
of Seller Entities, all material covenants to be performed by (x) the applicable
airport authority or airport operator or (y) the applicable Franchisee under
each Airport Concession, have been performed in all material respects, and no
event has occurred or circumstance exists which, with the delivery of notice or
the passage of time or both, would constitute a breach or default under the
applicable Airport Concession, or which would permit the termination,
modification or revocation of such Airport Concession, except that Seller
Parties have not made certain payments under certain Airport Concessions in
connection with or in anticipation of the Chapter 11 Cases.
(c) Subject to the entry of the 365 Order, except as set forth in
SECTION 3.17(c) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, no consent is
required for the assignment of any Airport Concession contemplated hereby.
Section 3.18 EMPLOYEE; EMPLOYEE BENEFIT MATTERS.
(a) SECTION 3.18(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE sets
forth a true, complete and correct list, as of June 23, 2002, of each employee
of Seller Parties in connection with the Acquired Business ("SELLER PARTIES
EMPLOYEES") and of each Acquired Company, ("ACQUIRED COMPANY EMPLOYEES", and
together with the Seller Parties Employees, the "SELLER ENTITIES EMPLOYEES"),
together with each such employee's (i) starting date of employment, (ii) job
title, (iii) present hourly or, if salaried, annual compensation rate and
(iv) status of employment (i.e., active, inactive, leave of absence, short or
long-term disability, etc.).
(b) Except as set forth in SECTION 3.18(b) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, there are no employment contracts or severance agreements
with any Seller Entity Employees, and no Seller Entities Employee is a party to
(or otherwise the beneficiary of) any agreement or arrangement which could give
rise to any such employee becoming entitled to any severance, termination or
other comparable payments or benefits. Except as set forth in SECTION 3.18(b) OF
THE SELLER PARTIES DISCLOSURE SCHEDULE, there are no consulting or similar
agreements with any Person providing for the rendering of consulting or similar
services to any Seller Entity in connection with the Acquired Business and the
payment by any Seller Entity of compensation of any kind in consideration of any
such services.
(c) SECTION 3.18(c) OF THE SELLER PARTIES DISCLOSURE SCHEDULE sets
forth a true and complete list of all Benefit Plans. With respect to each
Benefit Plan, where applicable, Seller Parties have delivered or made available
to Buyer: (i) except as set forth in SECTION 3.18(c) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, true and complete copies of the Benefit Plan and any
amendments thereto (or if the Benefit Plan is not a written Benefit Plan, a
written description thereof), (ii) any related trust or other funding vehicle,
(iii) any reports or summaries required under applicable Law, (iv) the most
recent determination letter received from the IRS with respect to each Benefit
Plan intended to qualify under section 401 of the Code and (v) any material
communications to employees. Each Benefit Plan has been established, operated
and administered in all material respects in accordance with its terms and all
applicable Laws, including ERISA and the Code and any analogous Law of the
relevant jurisdictions to the extent applicable. Each Pension Plan which is
intended to be qualified under section 401(a) of the Code has received a
favorable determination letter from the IRS that it is so qualified, and, to the
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knowledge of Seller Parties, no circumstances exist that could reasonably be
expected to result in revocation of any such favorable determination letter. The
Seller Parties have caused to be timely filed with the Pension Benefit Guaranty
Corporation any required notice of a "reportable event" (as defined in Section
4043 of ERISA) that has occurred with respect to each Pension Plan that is
intended to be qualified under section 401(a) of the Code.
(d) No liability under Title IV or section 302 of ERISA has been
incurred by any Seller Entity or any ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a material risk to Buyer of
incurring any liability under Title IV or section 302 of ERISA in respect of
Seller or any ERISA Affiliate, other than liability for premiums due the Pension
Benefit Guaranty Corporation (which premiums have been paid when due). Insofar
as the representation made in this SECTION 3.18(d) applies to sections 4064,
4069 or 4204 of Title IV of ERISA, it is made with respect to any employee
benefit plan, program, agreement or arrangement subject to Title IV of ERISA to
which Seller or any ERISA Affiliate made, or was required to make, contributions
during the five-year period ending on the last day of the most recent plan year
ended prior to the Closing Date. No Benefit Plan is a single-employer plan (as
defined in section 3(41) of ERISA) subject to Title IV or section 302 of ERISA
except the Budget Group, Inc. Employees' Pension Plan (the " BUDGET PENSION
PLAN"). With respect to the Budget Pension Plan, as reported in the January 2002
Actuarial Valuation Report as of January 1, 2001 for the Plan Year and Taxable
Year Ending December 31, 2001 (the "ACTUARIAL VALUATION REPORT"), as of January
1, 2001 the market value of assets held in trust with respect to the Budget
Pension Plan exceeds the actuarial accrued liability thereunder, based on the
actuarial assumptions used for ongoing plan funding purposes in the Actuarial
Valuation Report.
(e) The PBGC has not instituted proceedings to terminate any
Benefit Plan that is subject to Title IV or section 302 of ERISA (each, a "TITLE
IV PLAN"), and no condition exists that presents a material risk that such
proceedings will be instituted.
(f) Except as set forth in SECTION 3.18(f) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements will not, either alone or in combination
with another event, (i) entitle any current or former employee or officer of any
Seller Entity to sale or retention bonuses, severance pay, unemployment
compensation or any other payment, (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due, any such employee or
officer or (iii) require the immediate funding or financing of any compensation
or benefits which, in each case, could reasonably become a Liability of Buyer.
Except as set forth in SECTION 3.18(f) OF THE SELLER PARTIES DISCLOSURE
SCHEDULE, no amounts payable under the Benefit Plans will fail to be deductible
for federal income tax purposes by virtue of section 162(m) or section 280G of
the Code.
(g) SECTION 3.18(g) OF THE SELLER PARTIES DISCLOSURE SCHEDULE sets
forth each Title IV Plan covering current or former employees of any Seller
Entity that is a "multiemployer plan," as defined in section 3(37) of ERISA.
With respect to each such Title IV Plan that is a "multiemployer pension plan":
(i) no Seller Party nor any ERISA Affiliate has made or suffered a "complete
withdrawal" or a "partial withdrawal," as such terms are respectively defined in
sections 4203 and 4205 of ERISA (or any liability resulting therefrom has been
satisfied in full), (ii) no event has occurred that presents a material risk of
a partial withdrawal, (iii) no Seller Party
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nor any ERISA Affiliate has any contingent liability under section 4204 of ERISA
and (iv) to the knowledge of Seller Parties, no circumstances exist that present
a material risk that any such plan will go into reorganization.
(h) Except as set forth in SECTION 3.18(h) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, no Benefit Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for any
present or former employees of any Seller Entity for periods extending beyond
their retirement or other termination of service, other than (i) coverage
mandated by applicable Law, (ii) death benefits under any "pension plan" or
(iii) benefits the full cost of which is borne by such employee of any Seller
Entity (or his or her beneficiary). Except as set forth in SECTION 3.18(h) OF
THE SELLER PARTIES DISCLOSURE SCHEDULE, no Seller Entity has ever represented,
promised or contracted (whether in oral or written form) to any employee(s) that
such employee(s) would be provided with retiree health or life benefits which
could reasonably be expected to result in Liability to Buyer.
(i) No Seller Entity, any ERISA Affiliate, or any Benefit Plan,
any trust created thereunder nor any trustee or administrator thereof has
engaged in a transaction or has taken or failed to take any action in connection
with which any such Person or any party dealing with the Benefit Plans or any
such trust could be subject to either a civil penalty assessed pursuant to
section 409 or 502(i) of ERISA or a tax imposed pursuant to section 4975 or 4976
of the Code which could reasonably become a Liability of Buyer.
(j) With respect to each Foreign Benefit Plan: (i) all employer
and employee contributions to each Foreign Benefit Plan required by Law or by
the terms of such Foreign Benefit Plan have been made, or if applicable, accrued
in accordance with GAAP, (ii) the fair market value of the assets of each funded
Foreign Benefit Plan, the liability of each insurer for any Foreign Benefit Plan
funded through insurance or the book reserve established for any Foreign Benefit
Plan, together with any accrued contributions, is sufficient to procure or
provide for the accrued benefit obligations, as of the Closing Date, with
respect to all current and former participants in such plan according to the
actuarial assumptions and valuations most recently used to determine employer
contributions to such Foreign Benefit Plan and no transaction contemplated by
this Agreement shall cause such assets or insurance obligations to be less than
such benefit obligations and (iii) each Foreign Benefit Plan required to be
registered has been registered and has been maintained in good standing with
applicable Governmental Bodies.
(k) There has been no material failure of a U.S. Benefit Plan that
is a group health plan (as defined in section 5000(b)(1) of the Code) to meet
the requirements of section 4980B(f) of the Code with respect to a qualified
beneficiary (as defined in section 4980B(g) of the Code). No Seller Party nor
any ERISA Affiliate has contributed to a nonconforming group health plan (as
defined in section 5000(c) of the Code) and no ERISA Affiliate of any Seller
Party has incurred a tax under section 5000(a) of the Code which could
reasonably become a liability of Buyer or any of its Subsidiaries.
(l) Except as set forth in SECTION 3.18(f) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, there are no pending or, to the knowledge of Seller
Parties, threatened or anticipated claims by or on behalf of any Benefit Plan,
by any employee or beneficiary under any Benefit
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Plan or otherwise involving any Benefit Plan (other than routine and immaterial
claims for benefits).
Section 3.19 LABOR RELATIONS AND EMPLOYMENT.
(a) Except to the extent set forth in SECTION 3.19(a) OF THE
SELLER PARTIES DISCLOSURE SCHEDULE: (i) there is no labor strike, dispute,
slowdown, stoppage or lockout actually pending, or to the knowledge of Seller
Parties, threatened against or affecting any material portion of the Acquired
Business, (ii) no union or similar labor organization or employee association
claims to represent the employees of any Seller Entity other than under the
collective bargaining agreements listed in SECTION 3.19(a) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, (iii) no Seller Entity is a party to or bound by any
collective bargaining or similar agreement with any labor organization, or work
rules, works councils, or practices agreed to with any labor organization or
employee association applicable to employees of any Seller Entity, (iv) to the
knowledge of Seller Parties, there are no current union organizing activities,
nor has there been any union organizing activity within the past two years among
the employees of any Seller Entity, (v) there are no written personnel policies,
handbooks, manuals rules or procedures applicable to employees of any Seller
Entity, other than those set forth in SECTION 3.19(a) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, true and correct copies of which have heretofore been
delivered or made available to Buyer, (vi) each Seller Entity has at all times
been in material compliance with all applicable Laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health with respect to employees of Seller Entities,
and are not engaged in any unfair labor practices as defined in the National
Labor Relations Act or other applicable Law, with respect to employees of any
Seller Entity, (vii) there is no unfair labor practice charge or complaint
against any of Seller Entities pending or, to the knowledge of Seller Parties,
threatened before the National Labor Relations Board or any similar state, local
or foreign agency with respect to employees of any Seller Entity, (viii) there
is no grievance arising out of any collective bargaining agreement or other
grievance procedure with respect to employees of any Seller Entity pending or,
to the knowledge of Seller Parties, threatened against any of Seller Entities,
(ix) no charges with respect to or relating to any employees of any Seller
Entity or against any Acquired Company are pending or, to the knowledge of
Seller Parties, threatened before the Equal Employment Opportunity Commission or
any other agency responsible for the prevention of unlawful employment
practices, (x) no Seller Entity has received notice of the intent of any
Governmental Body responsible for the enforcement of labor or employment laws to
conduct an investigation with respect to or relating to the Acquired Business or
the Acquired Companies and no such investigation is in progress and (xi) there
are no Actions pending or, to the knowledge of Seller Parties, threatened in any
forum by or on behalf of any present or former employee of any Seller Entity or
any applicant for employment or classes of the foregoing alleging that any
Seller Entity engaged in any conduct that constitutes, or could reasonably be
expected to constitute a breach of any express or implied contract or
employment, any Law governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the employment
relationship.
(b) During the past two years, Seller Entities (with respect to
the Acquired Business) have not effectuated: (i) a "plant closing" (as defined
in the WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or
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facility of any Seller Entity (with respect to the Acquired Business); or (ii) a
"mass layoff" (as defined in the WARN Act) affecting any site of employment or
facility of Seller (with respect to the Acquired Business)); nor has any Seller
Entity been affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any similar state,
local or foreign Law.
Section 3.20 CUSTOMERS. Except as set forth in SECTION 3.20 OF THE SELLER
PARTIES DISCLOSURE SCHEDULE, Seller Entities and, to the knowledge of Seller
Parties, each Person acting as an agent (including all Franchisees and Dealers)
of the Acquired Business, is in compliance in all material respects with all
Laws having the purpose or effect of prohibiting unlawful discrimination against
customers or potential customers.
Section 3.21 ENVIRONMENTAL MATTERS. Except as set forth in SECTION 3.21 OF
THE SELLER PARTIES DISCLOSURE SCHEDULE:
(a) The Acquired Business and Seller Entities are in compliance in
all material respects with all applicable Environmental Laws, which compliance
includes, but is not limited to, the possession by the Acquired Business, Seller
Entities of all Permits required under applicable Environmental Laws, and
compliance with the terms and conditions thereof. None of the Acquired Business
or Seller Entities has received any communication (written or oral), whether
from a Governmental Body, citizens group, employee or otherwise, that alleges
that any Seller Entity or the Acquired Business is not in such compliance, and,
to the knowledge of Seller Parties, there are no circumstances that may prevent
or interfere with such compliance in the future. All Permits currently held by
the Acquired Business or Seller Entities pursuant to the Environmental Laws are
identified in SECTION 3.21(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE.
(b) Except as set forth in SECTION 3.21(b) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, there is no Environmental Claim pending or, to the
knowledge of Seller Parties, threatened against the Acquired Business, any
Seller Entity or Acquired Asset or, to the knowledge of Seller Parties, against
any Person whose Liability for any Environmental Claim any Seller Entity has or
may have retained or assumed either contractually or by operation of Law.
(c) Except as set forth in SECTION 3.21(c) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including the release, emission,
discharge, presence or disposal of any Material of Environmental Concern that
could form the basis of any Environmental Claim against any Seller Entity, the
Acquired Business, or Acquired Assets or, to the knowledge of Seller Parties,
against any Person whose Liability for any Environmental Claim the Acquired
Business or any Seller Entity has or may have retained or assumed either
contractually or by operation of Law.
(d) Without limiting the generality of the foregoing, (i) all
on-site locations where any Seller Entity, or the Acquired Business has stored
or disposed of Materials of Environmental Concern are identified in
SECTION 3.21(d) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, (ii) all underground
storage tanks, and the capacity and contents of such tanks, located at any
Acquired Asset or property owned, operated, or leased by any Seller Entity, or
the Acquired Business are identified in SECTION 3.21(d) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE,
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(iii) except as set forth in SECTION 3.21(d) OF THE SELLER PARTIES DISCLOSURE
SCHEDULE, there is no asbestos contained in or forming part of any building,
building component, structure or office space at any Acquired Asset or property
owned, operated, or leased by any Seller Entity, or the Acquired Business, (iv)
except as set forth in SECTION 3.21(d) OF THE SELLER PARTIES DISCLOSURE
SCHEDULE, no polychlorinated biphenyls (PCB's) are used or stored by any Seller
Entity, or to the knowledge of Seller Parties, by any other Person, at any
Acquired Asset or property owned, operated, or leased by any Seller Entity, or
the Acquired Business and (v) except as set forth in SECTION 3.21(d) OF THE
SELLER PARTIES DISCLOSURE SCHEDULE, all underground storage tanks owned,
operated, or leased by any Seller Entity, or the Acquired Business, and which
are subject to regulation under the federal Resource Conservation and Recovery
Act (or equivalent state or local law regulating underground storage tanks) meet
the technical standards prescribed at Title 40 Code of Federal Regulations Part
280 which became effective December 22, 1998 (or any applicable state or local
law requirements which are more stringent than such technical standards or which
became effective before such date).
Section 3.22 INTELLECTUAL PROPERTY.
(a) As used herein, the term "INTELLECTUAL PROPERTY" means all of
the following used or held for use in the Acquired Business and any applications
or registrations therefor: trademarks, service marks, trade names, Internet
domain names, designs, logos, slogans and general intangibles of like nature,
together with all goodwill (collectively, "TRADEMARKS"); patents, copyrights;
computer programs, including any and all software implementations of algorithms,
models and methodologies whether in source code or object code form, databases
and compilations, including any and all data and collections of data, all
documentation, including user manuals and training materials, related to any of
the foregoing and the content and information contained on any Web site
(collectively, "SOFTWARE"); and confidential or proprietary information,
technology, know-how, customer lists, Personal Information, inventions,
processes, models and methodologies (collectively, "TRADE SECRETS").
(b) SECTION 3.22(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE sets
forth, for all Intellectual Property owned by any Seller Entity, a complete and
accurate list, of all United States domestic and foreign: (i) patents and patent
applications, (ii) Trademark registrations (including Internet domain name
registrations) and applications and material unregistered Trademarks, (iii)
copyright registrations, copyright applications and material unregistered
copyrights and (iv) Software which is owned by any Seller Party or any Acquired
Company ("PROPRIETARY SOFTWARE").
(c) SECTION 3.22(c) OF THE SELLER PARTIES DISCLOSURE SCHEDULE sets
forth a complete and accurate list of all Contracts granting, obtaining, or
restricting any right to use or practice any rights under any Intellectual
Property other than, with respect to Software, readily available off-the-shelf
Software subject to shrink wrap or click-through licenses, to which any Seller
Entity is a party, including license agreements, settlement agreements and
covenants not to sue (collectively, the "LICENSE AGREEMENTS"), and identifies
which License Agreements (i) grant to a Third Party any Intellectual Property
rights, (ii) grant to a Seller Entity any Intellectual Property rights, (iii)
restrict the use by any Seller Entity of Intellectual Property owned by any
Seller Entity and (iv) relate to the Acquired Business.
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(d) Except as set forth in SECTION 3.22(d) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE: (i) Seller Entities own or have the right to use all
Intellectual Property, free and clear of all Encumbrances; (ii) all Intellectual
Property owned or used by any Seller Entity has been duly maintained, is valid
and subsisting, in full force and effect and has not been cancelled, expired or
abandoned; (iii) there are no actions that must be taken by any Seller Entity
within 120 days from the date hereof, including filings or payments with the
United States Patent and Trademark Office or such other appropriate United
States domestic or foreign Governmental Body for purposes of obtaining,
maintaining, perfecting, preserving, or renewing any rights in the Intellectual
Property owned by any Seller Entity; (iv) no Seller Entity is infringing or
otherwise violating the intellectual property or other proprietary rights of any
Third Party, nor has any Seller Entity received written notice from any Third
Party within the last six years regarding any actual or potential infringement
or other violation by Seller or any Subsidiary of any intellectual property or
other proprietary right of such Third Party or challenging the validity of any
Intellectual Property; (v) no Third Party is infringing or otherwise violating
any Intellectual Property owned by any Seller Entity; (vi) no Seller Entity has
licensed or sublicensed its rights in any Intellectual Property, or received or
been granted any such rights, other than pursuant to the License Agreements;
(vii) the License Agreements are valid and binding obligations of each Seller
Entity party thereto, enforceable in accordance with their terms, and there
exists no event or condition which will result in a violation or breach of, or
constitute a default by the applicable Seller Entity (except (A) for such
violations, breaches, defaults, terminations, cancellations, accelerations,
creations, impositions, suspensions, or revocations that are excused by or
unenforceable as a result of Seller Parties' filing of the Petition(s) and (B)
that Seller Parties have not made certain payments under certain License
Agreements in connection with or in anticipation of the Chapter 11 Cases) or, to
the knowledge of Seller Parties, the Third Parties thereto, under any such
License Agreement; (viii) each of Seller Entities takes all measures necessary
to protect the confidentiality of Trade Secrets; (ix) no Trade Secret of any
Seller Entity has been disclosed or authorized to be disclosed to any Third
Party other than pursuant to a written nondisclosure agreement that adequately
protects the applicable Seller Entity's proprietary interests in and to such
Trade Secrets; (x) all Proprietary Software set forth in SECTION 3.22(b) OF THE
SELLER PARTIES DISCLOSURE SCHEDULE was either developed (A) by employees of
Seller or any of its Subsidiaries within the scope of their employment or (B) by
independent contractors who have assigned all of their rights to Seller or any
of its Subsidiaries pursuant to written agreement; and (xi) none of Seller
Entities share ownership of any Intellectual Property with any Third Party.
(e) Seller Entities have complied in all material respects with
applicable data protection or privacy laws governing the use of personal
information, including obtaining from customers express consent to use, store,
display, distribute, and transfer, electronically or otherwise, such personal
information. Seller Entities are in compliance in all material respects with any
privacy policies or related policies, programs or other notices that concern the
personal information collected by Seller Entities or through the Internet Web
sites operated by or on behalf of the Company (the "PERSONAL INFORMATION").
(f) Neither this Agreement nor the transactions contemplated by
this Agreement or the Ancillary Agreements, will result in (i) the loss or
impairment (except for such losses or impairments that are excused by or
unenforceable as a result of Seller's or Seller Parties' filing of the
Petition(s)) of any rights of any Seller Entity to own, use, or to bring any
action for
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the infringement or other violation of, any of the Intellectual Property, nor
will such consummation require the consent of any Third Party with respect of
any Intellectual Property, (ii) any Third Party being granted rights or access
to, or the placement in or release from escrow of, any Intellectual Property,
(iii) Buyer or any Seller Entity granting to any Third Party rights to
Intellectual Property greater than the rights granted by Seller Entities
pursuant to any License Agreement prior to the Closing, (iv) Buyer or any Seller
Entity being bound by, or subject to, any non-compete or other restriction on
the operation or scope of its businesses greater than the restrictions to which
Seller Entities are bound prior to the Closing or (v) Buyer or any Seller Entity
being obligated to pay any royalties or other amounts to any Third Party in
excess of the amounts payable by Seller Entities prior to the Closing pursuant
to any License Agreement.
Section 3.23 TAXES.
(a) Except as set forth in SECTION 3.23(a)(i) THROUGH (iii) OF THE
SELLER PARTIES DISCLOSURE SCHEDULE:
(i) Each Seller Party has (A) duly and timely filed (or there has
been filed on its behalf) with the appropriate Tax authority all income,
sales and other material Tax Returns required to be filed by it, and all
such Tax Returns are true, correct and complete and (B) timely paid in full
(or there has been paid on its behalf) all Taxes due and payable or claimed
to be due and payable from it by any Tax authority;
(ii) no United States federal, state, local or foreign audits or
other administrative proceedings have formally commenced or are presently
pending with regard to any income, sales or other material Taxes or Tax
Returns of or including any Seller Party, and no notification has been
received that such an audit or other proceeding is pending or threatened
with respect to any such Taxes or any Tax Return; and
(iii) there are no Encumbrances for Taxes upon the Acquired Assets
except for statutory liens for Taxes not yet due and payable.
(b) Except as set forth in SECTION 3.23(b)(i) through (xiv) OF THE
SELLER PARTIES DISCLOSURE SCHEDULE:
(i) each Acquired Company has (x) duly and timely filed (or there
has been filed on its behalf) with the appropriate Tax authority all Tax
Returns required to be filed by it, and all such Tax Returns are true,
correct and complete, (y) timely paid (or there has been paid on its
behalf) in full all Taxes due and payable and (z) established in the
financial statements reserves that, as of the date thereof, were adequate
for the payment of any Taxes not yet due and payable. Since the date of the
most recent financial statements of each Acquired Company, none of the
Acquired Companies has incurred any Liability for Taxes other than in the
ordinary course of business consistent with past practice;
(ii) each Acquired Company has complied in all respects with all
applicable Laws relating to the payment and withholding of Taxes and has,
within the time and manner prescribed by Law, withheld and paid over to the
proper Tax authority all amounts required to be withheld and paid over for
all periods under all applicable Laws
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including withholding in connection with payments to employees, independent
contractors, creditors, partners, stockholders or other Third Parties;
(iii) no waiver, extension or comparable consent given by any
Acquired Company regarding the application of the statute of limitations
with respect to any Taxes or Tax Return is outstanding nor is any request
for any such waiver or consent pending. No deficiency for Taxes has been
proposed or asserted against any Acquired Company that has not been
resolved or paid in full;
(iv) no power of attorney which is currently in force has been
granted by or with respect to any Acquired Company with respect to any Tax
Return or matter relating to Taxes;
(v) no Acquired Company has been a member of any federal, state,
local or foreign consolidated, unitary, combined, affiliated or similar
group of corporations other than the group in which Seller is the common
parent;
(vi) no United States federal, state, local or foreign audits or
Actions have formally commenced or are presently pending with regard to any
Taxes or Tax Returns of or including any Acquired Company, and no
notification has been received that such an audit or Action is pending or
threatened with respect to any Taxes due from or with respect to any
Acquired Company or any Tax Return filed by or with respect to any Acquired
Company;
(vii) no Acquired Company has agreed to, or is required to include
in income any adjustment pursuant to section 481(a) of the Code (or any
similar provision of state, local and foreign Law) by reason of a change in
accounting method or otherwise (nor has any Tax authority proposed in
writing any such adjustment or change of accounting method);
(viii) no Acquired Company 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);
(ix) there are no Encumbrances for Taxes upon the assets or
properties of any Acquired Company except for statutory liens for Taxes not
yet due and payable;
(x) no jurisdiction where any Acquired Company does not file a Tax
Return has made a claim that such Acquired Company is required to file a
Tax Return for such jurisdiction;
(xi) no Acquired Company has entered into any agreement (whether
written or oral) with respect to the performance of services for which
payment thereunder would result in a non-deductible expense to such
Acquired Company pursuant to sections 162 or 280G of the Code. No Person is
entitled to receive any gross-up payment from any Acquired Company in the
event that the excise Tax of section 4999(a) of the Code is imposed on such
Person;
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(xii) no Acquired Company is a party to, is bound by, or has an
obligation under, any Tax sharing agreement, Tax indemnification agreement
(other than (x) a customary commercial agreement to indemnify for Taxes
contained in any Lease or (y) an employment agreement for which a gross-up
payment (described in SECTION 3.23(b)(xi)) is required to be made) or
similar Contract and no Acquired Company has a potential liability or
obligation to any Person as a result of, or pursuant to, any such Contract;
(xiii) no Acquired Company has received a ruling from any Tax
authority. No closing agreement pursuant to section 7121 of the Code (or
any predecessor provision) or any similar provision of any state, local or
foreign Law has been entered into by or with respect to any Acquired
Company; and
(xiv) no Acquired Company has engaged or participated directly or
indirectly, in any "listed transaction" (within the meaning of sections
6011 and 6111 of the Code and the Treasury Regulations thereunder).
(c) Each Acquired Company has previously delivered or made
available to Buyer complete and accurate copies of (i) all audit reports, letter
rulings, technical advice memoranda relating to United States federal, state,
local and foreign Taxes due from or with respect to such Acquired Company, (ii)
United States federal Tax Returns, and those state, local or foreign Tax Returns
filed by such Acquired Company and (iii) any closing agreements entered into by
such Acquired Company with any Tax authority. Each Acquired Company will
immediately deliver to Buyer all materials with respect to the foregoing for all
matters arising after the date hereof.
Section 3.24 COMPLIANCE WITH INSURANCE LAWS.
(a) The business and operations of Seller Entities have been
conducted in compliance in all material respects with all applicable insurance
statutes, regulations, orders, decrees, rules, pronouncements, ordinances,
bulletins, market conduct recommendations, licensing requirements, writs,
injunctions, directives, judgments, settlement agreements, principles of common
law, constitutions and treaties enacted, promulgated, issued, enforced or
entered by any Governmental Body regulating the business, activities or
operations of Seller Entities (collectively, "INSURANCE LAWS"). Notwithstanding
the generality of the foregoing, each Seller Entity, its Affiliates, Franchisees
and Dealers has marketed, sold and issued their respective products in
compliance with Insurance Laws applicable to the Acquired Business and in the
respective jurisdictions in which such products have been sold, including,
without limitation in compliance with (i) all applicable prohibitions against
"redlining" or withdrawal of business lines, (ii) all applicable requirements
relating to disclosures to customers and insured and (iii) all applicable
requirements relating to insurance product projections and illustrations. In
addition, except as set forth in SECTION 3.24(a) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE (x) there is no pending or, to the knowledge of Seller
Parties, threatened charge by any Governmental Body that any Seller Entity has
violated, nor any pending or, to the knowledge of Seller Parties, threatened
investigation by any Government Body with respect to possible violations of, any
applicable Insurance Laws; and (x) no Seller Entity is subject to any order or
decree of any
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Government Body relating specifically to such Person (as opposed to insurance
companies generally).
(b) Except as set forth in SECTION 3.24(b) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, each Seller Entity and its employees have all Permits and
insurance and other exemptions, classifications, and similar documents required
under applicable Insurance Laws for its conduct of the Acquired Business (each
of which, an "INSURANCE PERMIT") as it is currently conducted in each
jurisdiction (as listed in SECTION 3.24(b) OF THE SELLER PARTIES DISCLOSURE
SCHEDULE) in which such Persons require such Insurance Permits. The Acquired
Business has been and is being conducted in compliance in all material respects.
(c) All such received Insurance Permits are in full force and
effect, and there is no Action pending or, to the knowledge of Seller Parties,
threatened which could reasonably be expected to lead to the revocation,
amendment, failure to renew, limitation, modification, suspension or restriction
of any such Insurance Permit. No Seller Entity is operating under any agreement
or understanding with the regulatory authority of any state which in any way
restricts its authority to conduct the Acquired Business or requires any such
Person to take, or refrain from taking, any action relating to the conduct of
the Acquired Business otherwise permitted by Law.
(d) Seller Parties have made available for inspection by Buyer
complete copies of all registrations, filings and submissions made since January
1, 1996 by any Seller Entity (including its employees) pursuant to or under any
Insurance Laws.
Section 3.25 INSURANCE.
(a) SECTION 3.25(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
contains a true, accurate and complete description of all policies of collision,
fire, casualty, liability, workmen's compensation and other forms of insurance,
reinsurance and similar arrangements (including polices providing coverage with
respect to so-called vicarious liability laws) pursuant to which any Seller
Entity seeks to limit, or transfer to a Third Party, financial or other risk,
owned or held by Seller and each of its Subsidiaries, applicable to any Seller
Entity or any of their respective assets, in each case relating to or in
connection with the Acquired Business. All such policies are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the date of the Closing have been paid, and no notice of cancellation
or termination has been received with respect to any such policy. For each such
agreement, SECTION 3.25(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE provides:
(i) the date thereof; (ii) the name of the insurer; (iii) Seller Entities
covered thereby; (iv) the premiums (or similar consideration) paid therefor for
each contract/calendar year for the relevant policy since January 1, 2000; and
(v) expiration date. Such policies are (v) sufficient for compliance in all
material respects with Law and of all agreements to which Seller or any of its
Subsidiaries is a party, (w) valid, outstanding and enforceable policies, (x)
provide adequate insurance coverage for the assets and operations of Seller and
each of its Subsidiaries, (y) will remain in full force and effect through the
respective dates set forth in SECTION 3.25(a) OF THE SELLER PARTIES DISCLOSURE
SCHEDULE without the payment of additional premiums and (z) will not in any way
be affected by, or terminate or lapse by reason of, the transactions
contemplated hereby. Prior to the date of this Agreement, Seller Parties have
provided Buyer with a list of all claims made under the insurance policies and
other
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forms of insurance, reinsurance and similar agreements described in
SECTION 3.25(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE and of all payments
made to the insured party or parties thereunder since January 1, 2000, and the
information contained in such list is true, accurate and complete.
(b) SECTION 3.25(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
identifies all risks with respect to the Acquired Business which Seller Parties,
their Board of Directors or officers have designated as being self-insured.
(c) SECTION 3.25(c) OF THE SELLER PARTIES DISCLOSURE SCHEDULE
identifies: (i) each type of insurance offered by Seller Entities, Franchisees
or Dealers to renters of Rental Vehicles; (ii) premiums charged therefor; and
(iii) a description of the terms of any Third Party insurance or reinsurance
purchased in respect thereof. Seller Parties have provided Buyer with copies of
(x) all materials pursuant to which such insurance coverage is offered to
customers of the Acquired Business and (y) the policies of such Third Party
insurance or reinsurance. Prior to the date of this Agreement, Seller Parties
have provided Buyer with a true, correct and complete claims history in respect
of each such type of insurance coverage offered to customers of the Acquired
Business.
(d) Except as set forth in SECTION 3.25(d) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, (i) each of the policies being transferred to Buyer
pursuant to SECTION 2.3(n) provides insurance coverage for the exclusive benefit
of the Acquired Business, including Persons granted rights thereunder as
additional named insured in the ordinary course of business, (ii) prior to the
Closing, no Person shall have any rights, contractual or otherwise to assert any
claim or right of recovery or obtain any benefit under any such policies in
connection with the Retained Business and (iii) prior to the Closing, the
administration and servicing of claims arising under or relating to the policies
covering the Acquired Business are performed separate and apart from the
administration and servicing of claims arising under or relating to policies
covering the Retained Business.
Section 3.26 BOOKS AND RECORDS. Except as set forth in SECTION 3.26 OF THE
SELLER PARTIES DISCLOSURE SCHEDULE, each Seller Entity has at all times since
formation maintained Business Records which accurately reflect all its material
transactions in reasonable detail, and have at all time maintained accounting
controls, policies and procedures reasonably designed to provide that such
transactions are executed in accordance with its management's general or
specific authorization, and recorded in a manner which permits the preparation
of financial statements in accordance with GAAP and applicable regulatory
accounting requirements and other account and financial data, and the
documentation pertaining thereof is retained, protected and duplicated in
accordance with applicable regulatory requirements.
Section 3.27 FRANCHISEE MATTERS.
(a) Seller Parties have delivered to Buyer a true and complete
copy of the current uniform franchise offering circular and other disclosure
statements of Seller or of any of its Subsidiaries in connection with its sale
of franchises to subfranchisors and Franchisees (the "OFFERING CIRCULARS"). As
of their respective dates, such documents complied in all material respects with
the requirements of the Federal Trade Commission Act of 1914, as amended, to the
extent applicable, and to applicable Laws; and none of such documents contained
any untrue
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statement of a material fact or omitted to state 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.
(b) Except as set forth in SECTION 3.27(b) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, to the knowledge of Seller Parties, (i) each Franchisee and
Dealer (excluding Franchisees and Dealers of the Retained Business), operates,
and has since June 30, 2002 operated substantially in accordance with the
policies, procedures and guidelines of the Acquired Business as the same may be,
or have been, in effect from time to time and (ii) there is no Action pending or
threatened against any such Franchisee in connection with the conduct of the
Acquired Business.
(c) Neither Seller Parties nor any Dealer or agent of Seller
Parties is subject to any state franchise law in connection with the conduct or
operation of the Acquired Business through Dealers or agents.
Section 3.28 VEHICLE RETURN PURSUANT TO REPURCHASE PROGRAMS; VEHICLE
ORDERS.
(a) Seller Parties have, since January 1, 2002, sold, returned or
otherwise disposed of, and have caused each other lessee under a TFFC MV Lease
to sell, return or otherwise dispose of each vehicle subject to a Repurchase
Program (other than a vehicle that has suffered a casualty loss) to the related
manufacturer official auction or other facility designated by the relevant
Vehicle Manufacturer or Affiliate thereof at the relevant lessee's sole expense
after the minimum term or mileage limit under such Repurchase Program for such
vehicle is achieved, but prior to the expiration of the maximum term and/or
prior to reaching the maximum mileage limit under such Repurchase Program for
such vehicle, other than isolated cases not exceeding more than 25 vehicles in
any calendar month on average. Seller Parties have disposed, and have caused
each other lessee under a TFFC MV Lease to dispose, of all vehicles not subject
to a Repurchase Program in accordance with the provisions of the applicable TFFC
MV Lease.
(b) SECTION 3.28(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE sets
forth each outstanding vehicle purchase or lease order placed by Seller Entities
with Vehicle Manufacturers relating to the Acquired Business and providing for
payments thereunder of $50,000 or more, specifying (i) the date of the relevant
order, (ii) the number, type and year model of the vehicles covered by such
order, (iii) the purchase price per vehicle and (iv) the expected date of
delivery thereof.
(c) None of the vehicles owned by TFFC are leased, rented or
otherwise used in connection with the Retained Business.
Section 3.29 DISCLOSURE. No representation or warranty by any Seller Party
contained in this Agreement and no statement contained in any certificate or
other document required to be delivered by or on behalf of Seller or any of its
Subsidiaries pursuant to this Agreement contains or will contain (as applicable)
any untrue statement of material fact, or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was or
will be made, in order to make the statements herein or therein not misleading
or necessary in order to fully and
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fairly provide the information required to be provided in any such document,
schedule, list, certificate or other writing.
Section 3.30 BROKERS. Other than Lazard Freres & Co. LLC, the fees and
expenses of which will be paid by Seller, no broker, investment banker,
financial advisor or other Person is or will be entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with this Agreement, any Ancillary Agreement or the transactions contemplated by
this Agreement or any Ancillary Agreement based upon arrangements made by or on
behalf of Seller or any Subsidiary of Seller.
Section 3.31 USE OF CERTAIN FUNDS. None of the amounts required to be paid
by Seller Parties under the Assumed Contracts and Assumed Leases on or after
July 15, 2002 and which have not been paid in connection with or in anticipation
of the Chapter 11 Cases have been used to make any Investment in the Retained
Business, except for $3,000,000, which have been Invested or may be Invested in
the Retained Business in Europe, the Middle East or Africa as permitted pursuant
to the Thirteenth Amendment to the Amended and Restated Credit Facility.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Parent and Buyer, jointly and severally, represent and warrant to Seller
Parties as of the date hereof and as of the Closing Date that:
Section 4.1 ORGANIZATION AND QUALIFICATION.
(a) Each of Parent and Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its assets and to conduct its business.
(b) Buyer is a wholly-owned subsidiary of Parent.
Section 4.2 CORPORATE POWER AND AUTHORITY; AUTHORIZATION.
(a) Each of Parent and Buyer has all requisite corporate or other
organizational power and authority to enter into and deliver this Agreement, the
Ancillary Agreements to which it is a party and any agreements, documents or
instruments to be executed and delivered in connection herewith and therewith
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement, the Ancillary Agreements
to which it is a party and any agreements, documents or instruments to be
executed and delivered in connection herewith and therewith by Parent and/or
Buyer and the consummation by Parent and/or Buyer of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate and other organizational action on the part of Parent and Buyer. This
Agreement, the Ancillary Agreements to which it is a party and any agreements,
documents or instruments to be executed and delivered in connection herewith and
therewith has been duly executed and delivered by each of Parent and Buyer and
constitutes the legal, valid and binding obligation of Parent and Buyer,
enforceable against them in accordance with its terms.
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(b) The execution and delivery of this Agreement by Parent and
Buyer, and the consummation by Parent and Buyer of the transactions contemplated
hereby have been duly authorized by all necessary corporate action of Parent and
Buyer.
Section 4.3 CONFLICTS; CONSENTS AND APPROVALS. Neither the execution and
delivery of this Agreement, the Ancillary Agreements and any other agreements,
documents and instruments to be executed and delivered in connection with this
Agreement or any of the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby, will:
(a) conflict with, or result in a breach of any provision of, the
organizational documents of each of Parent and Buyer;
(b) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event that, with the giving of
notice, the passage of time or otherwise, would constitute a default) under, or
entitle any Person (with the giving of notice, the passage of time or otherwise)
to terminate, accelerate, modify or call a default under, or result in the
creation of any Encumbrance upon any of the properties or assets of each of
Parent and Buyer under any of the terms, conditions or provisions of (i) any
note, bond, mortgage, credit agreement, indenture, deed of trust, license,
contract, undertaking, agreement, lease, arrangement, understanding or other
instrument or obligation to which each of Parent and Buyer is a party or to
which any of their properties or assets may be bound or (ii) any permit,
registration, approval, license or other authorization or filing to which each
of Parent and Buyer is subject or to which any of their respective properties or
assets may be subject;
(c) require any action, consent or approval of any
non-governmental Third Party;
(d) violate any Law or any regulation of any self-regulatory
organization applicable to each of Parent and Buyer or any of their respective
properties or assets;
(e) require any action, consent or approval of, or review by, or
registration or filing by each of Parent and Buyer with, any Governmental Body,
other than (i) approvals under Competition Laws in jurisdictions in which
notifications are required or advisable and (ii) such Governmental Consents set
forth in SECTION 3.4(e) OF THE SELLER PARTIES DISCLOSURE SCHEDULE to be procured
by Buyer; or
(f) except in the case of SECTION 4.3(d) and SECTION 4.3(e), for
any of the items specified therein that would not, individually or in the
aggregate, have a material adverse effect on the ability of each of Parent and
Buyer to consummate the transactions contemplated hereby or by the Ancillary
Agreements.
Section 4.4 BROKERS. Other than Salomon Smith Barney, the fees and
expenses of which will be paid by Buyer or an Affiliate of Buyer, no broker,
investment banker, financial advisor or other Person is or will be entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with this Agreement, any Ancillary Agreement or the transactions
contemplated by this Agreement or any Ancillary Agreement based upon
arrangements made by or on behalf of Parent or Buyer.
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Section 4.5 SUFFICIENCY OF FUNDS. At the Closing, Buyer will have
sufficient funds or financing available for the payment of the Cash Purchase
Price and the discharge of the indebtedness outstanding at Closing under the
Amended and Restated Credit Facility, the DIP Facility and the DIP L/C Rollover,
in each case to the extent such amounts constitute Assumed Indebtedness.
ARTICLE 5
CERTAIN COVENANTS
Section 5.1 CONDUCT OF BUSINESS. After the date hereof, subject to any
obligations imposed on each Seller Party as a debtor or debtor-in-possession
under the Bankruptcy Code or order of the Bankruptcy Court, Seller Parties
shall, and shall cause the Acquired Companies and their Subsidiaries to, conduct
their business in the ordinary course, consistent with past practice and in
accordance with Prudent Industry Practices. Without limiting the foregoing and
without regard to whether the Bankruptcy Code or the Bankruptcy Court so
requires or permits, from and after the date of this Agreement through the
Closing, except as contemplated by this Agreement, Seller Parties shall, and
shall cause the Acquired Companies and their Subsidiaries, to:
(a) use reasonable best efforts to preserve the relationships of
the Acquired Business with the Franchisees, Dealers, customers, suppliers,
licensors, licensees, distributors and others with whom the Acquired Business
conducts or transacts business;
(b) except for breaches and defaults of the type referred to in
section 365(b)(2) of the Bankruptcy Code, use reasonable best efforts to perform
in all material respects all of its obligations under all Contracts and other
agreements and instruments relating to or affecting the Acquired Business or the
Acquired Assets;
(c) not (i) amend in any material respect its certificate of
incorporation or by-laws or similar organizational documents, (ii) issue, sell,
transfer, pledge, dispose of or encumber any shares of any class or series of
its or their Equity Securities or voting debt, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of any class or series of its Equity Securities or any
voting debt (except to another Seller Entity), (iii) declare, set aside or pay
any dividend or other distribution payable in cash, stock or property with
respect to any shares of any class or series of its Equity Securities (except to
another Seller Entity), (iv) split, combine or reclassify any shares of any
class or series of its Equity Securities, (v) redeem, purchase or otherwise
acquire directly or indirectly any shares of any class or series of its or their
Equity Securities, or any instrument or security which consists of or includes a
right to acquire such securities (except, in each case, from another Seller
Entity) or (vi) form or establish any new Subsidiaries or Affiliates;
(d) not permit, other than in the ordinary course of business
consistent with past practice, any of the assets of the Acquired Business to be
sold, licensed, mortgaged, leased, subleased, licensed, transferred or subjected
to any Liability or Encumbrance (other than Permitted Encumbrances);
(e) not terminate, release, assign any rights under or discharge
any other party thereunder of any of their obligations under any Assumed
Contract or any Assumed Lease, and
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not amend any of the terms and conditions thereof, in each case except in the
ordinary course of business consistent with past practice;
(f) (i) subject to clause (ii) below, timely comply with all
monetary and non-monetary obligations under the Assumed Contracts and Assumed
Leases as in effect on the date hereof and (ii) make timely payment in full of
all amounts due under the TFFC MV Leases and all other vehicle leases (including
all guaranties in respect thereof) with funds other than from draws of letters
of credit issued pursuant to the Amended and Restated Credit Agreement or the
DIP L/C Rollover; PROVIDED, HOWEVER, that Seller Parties shall be permitted to
make or cause to be made payments under the TFFC MV Leases with proceeds from
draws under letters of credit issued pursuant to the Amended and Restated Credit
Agreement and the DIP L/C Rollover, to the extent an amount equal to each such
draw is concurrently (x) applied by Seller Parties to reimburse previously drawn
letters of credit issued pursuant to the Amended and Restated Credit Agreement
or the DIP L/C Rollover, (y) applied by Seller Parties to provide credit
enhancement for purposes of the DIP Asset-Backed Fleet Financing or the
Additional DIP Asset-Backed Fleet Financing or (z) deposited by Seller Parties
pursuant to an escrow arrangement reasonably satisfactory to Buyer for purposes
of being transferred to Buyer hereunder at Closing;
(g) (i) collect accounts receivable and pay accounts payable and
perform all other obligations of the Acquired Business (including obligations
with respect to self-insurance) when they become due and payable in accordance
with the current terms thereof, (ii) not pay accounts payable prior to the
stated maturity thereof (other than for a valid and legitimate business reason),
(iii) not discharge any obligor from its obligations under any account
receivable other than upon payment in full of all amounts payable thereunder
(other than for a valid and legitimate business reason (for purposes of this
clause (iii), a valid and legitimate business reason shall not include
addressing the cash or liquidity needs of any of Seller Entities) and (iv) not
forgive any indebtedness held by any of Seller Entities;
(h) (i) not make any payments under or in respect of any
pre-Petition indebtedness for borrowed money (other than Assumed Indebtedness),
(ii) in the case of the Acquired Companies, not incur any indebtedness for
borrowed money other than (A) in the case of TFFC, Budget Funding Corporation
and BGI Leasing, Inc., pursuant to the DIP Asset-Backed Fleet Financing, the
Additional DIP Asset-Backed Fleet Financing and the Ford Line of Credit and (B)
in the case of Acquired Companies other than TFFC, BGI Leasing, Inc. and Budget
Funding Corporation, indebtedness not exceeding in the aggregate $15,000,000 and
(iii) not use or permit any of the proceeds from any indebtedness permitted to
be incurred pursuant to clause (ii)(B) above to be used other than solely in the
Acquired Business conducted by the Acquired Company that incurs such
indebtedness or any of its Subsidiaries;
(i) not layoff any employees, other than layoffs of employees of
the Acquired Business that are in the ordinary course of business and which do
not materially impair the operations of the Acquired Business;
(j) not make or agree to make any Investment in any Person (other
than in any other Seller Entity or a wholly-owned Subsidiary of a Seller Entity
other than with respect to the Retained Business) or in the Retained Business
(except in each case to the extent contemplated by SECTION 3.31), other than
Investments in the form of deferred purchase price for
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services provided by Seller Parties to its customers in the ordinary course of
business consistent with past practice;
(k) not increase the compensation or benefits provided to, or
change payroll periods or vacation accrual policies in respect of, any employee
of the Acquired Business or establish, increase or make any retention,
severance, deferred compensation, pension retirement, profit sharing or sales
bonus arrangement with any employee of the Acquired Business other than (i) in
the ordinary course of business consistent with past practice or (ii) as
contemplated by Sellers' retention plan set forth in SECTION 5.1(k) OF THE
SELLER PARTIES DISCLOSURE SCHEDULE (the "QUALIFIED RETENTION PLAN") and approved
by the Bankruptcy Court, in each case, after consultation with Buyer;
(l) not establish any new Benefit Plan or amend or modify any
existing Benefit Plan (except, in each case, to the extent not inconsistent with
SECTION 5.1(k) or as contemplated by SECTION 7.2(g)), to the extent such action
would affect any employee of the Acquired Business, or make any sales bonus
payments to any employee of the Acquired Business other than commission payments
made in the ordinary course of business consistent with past practice and
consented to by Buyer, which consent shall not be unreasonably withheld or
delayed;
(m) use reasonable best efforts to obtain and renew all material
Permits held by or in connection with the Acquired Business;
(n) administer insurance claims involving or relating to the
Acquired Business in the ordinary course of business consistent with past
practice. Subject to the foregoing, the claims administration performed by
Seller and its Subsidiaries regarding and with respect to the Acquired Business
shall include, but not be limited to: (i) the provisions of forms necessary for
submission and processing of claims; (ii) the receipt of notices and review of
all claims, and the creation and maintenance of files with respect to, and
administration to final disposition and payment of, each such claim; (iii)
prompt acknowledgment to claimants of the receipt of notices received from
claimants in connection with any claim to the extent required by applicable Law;
(iv) prompt investigation of any claim, as necessary, to determine its validity
and compensability, including verification of coverage; (v) performance of all
administrative and clerical work in connection with any claim; (vi) notification
to claimants of declined claims and the reasons for such declinations; (vii)
provision of the services of claim experts on matters relating to claims; (viii)
compliance with claims file maintenance, record retention and reconciliation
requirements in conformity with ordinary course standards; (ix) prosecution and
defense of disputes involving claims; (x) engagement and direction, as
necessary, of outside counsel consultants or other professionals in connection
with the processing and handling of claims; (xi) the establishment of adequate
reserves in respect of claims and (xii) generally, all such other acts and
things reasonably necessary in the administration and settlement of claims
regarding or relating to the Acquired Business;
(o) not change any of its or their accounting principles,
practices, methods or policies (including any reserving and depreciation
methods, practices and policies) used by it or them, in each case except (i) as
may be required as a result of a change in Law or GAAP or (ii)
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for changes to accounting principles, practices, methods or policies which are
immaterial and of which Buyer is given written notice by Seller Parties prior to
the implementation thereof;
(p) not terminate, cancel or amend, or cause the termination,
cancellation or amendment of, any insurance coverage (and any surety bonds,
letters of credit, cash collateral or other deposits related thereto required to
be maintained with respect to such coverage) maintained by it or them with
respect to the Acquired Business which is not replaced by a comparable insurance
coverage, other than in the ordinary course of business consistent with past
practice and consented to by Buyer, which consent shall not be unreasonably
withheld or delayed;
(q) use reasonable best efforts to (i) preserve and protect the
Intellectual Property, (ii) maintain the Business Records in the ordinary course
and in accordance with GAAP and (iii) maintain, preserve and protect all of the
Acquired Assets in the condition in which they exist on the date of this
Agreement, except for ordinary wear and tear or for assets no longer used or
useful in the Acquired Business;
(r) not enter into any new collective bargaining agreements or
amend or modify any existing collective bargaining agreements, in each case,
applicable to employees of the Acquired Business; PROVIDED, HOWEVER, that Seller
Parties may negotiate successor collective bargaining agreements to those listed
on SECTION 3.19(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, and may negotiate
other collective bargaining agreements or arrangements as required by Law or for
the purpose of implementing the agreements listed on SECTION 3.19(a) OF THE
SELLER PARTIES DISCLOSURE SCHEDULE; PROVIDED, FURTHER, that all such agreements
are negotiated and entered into in the ordinary course of business consistent
with past practice;
(s) not enter into any settlement or release with respect to any
material Action relating to or affecting the Acquired Business (unless such
Action constitutes an Excluded Asset or an Excluded Liability) without the
consent of Buyer (which consent shall not be unreasonably withheld or delayed),
other than in the ordinary course of business consistent with past practice;
(t) not grant, terminate, transfer, or otherwise materially alter
any licenses or other Contracts relating to any proprietary Intellectual
Property owned, used by or relating to the Acquired Business without the prior
written consent of Buyer, which consent shall not be unreasonably withheld or
delayed;
(u) not enter into any new joint venture, limited liability
company agreement, partnership agreement or similar agreement;
(v) not enter into any Related Party Agreement or Derivative
Agreement (other than interest rate protection agreements entered into in
connection with or required pursuant to the Assumed Indebtedness, the DIP
Asset-Backed Fleet Financing, the Additional DIP Asset-Backed Fleet Financing,
the Amended and Restated Series 1997-2 Supplement, dated as of June 20, 2001, to
the Amended and Restated Base Indenture, dated as of December 1, 1996, among
TFFC, Seller and Bankers Trust Company as Trustee and the Amended and Restated
Liquidity Agreement, dated as of June 20, 2001, among Budget Funding
Corporation, the liquidity lenders thereto and Deutsche Bank AG, as Liquidity
Agent);
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(w) not make any Tax election, file any amended Tax Return, enter
into any closing agreement or request a Tax ruling from a Tax authority, settle
any Tax Claim, surrender any right to claim a refund of Taxes, or consent to any
extension or waiver of the limitation period applicable to any Taxes, Tax Return
and Tax Claim, in each case (i) with respect to any Acquired Company or Acquired
Assets, without the consent of Buyer, which consent shall not be unreasonably
withheld or delayed and (ii) with respect to any Seller Party, other than in the
ordinary course of business consistent with past practice;
(x) (i) prepare and timely file all Tax Returns required to be
filed by each Seller Entity in a manner consistent with past practice, (ii)
timely pay all Taxes due and payable in respect of any Tax Returns of each
Seller Entity and (iii) promptly notify Buyer of any federal or state income or
franchise (or other material) Tax Action or audit pending or threatened against
or with respect to any Seller Entity (or any significant developments with
respect to any ongoing Tax matters);
(y) not permit any of Seller Entities to adopt a plan of complete
or partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization, reorganization or any comparable transaction, other than
solely for purposes of disposing of all or any part of the Retained Business;
(z) not, at any time during the Chapter 11 Cases, file a motion or
otherwise seek to convert to a Chapter 7 case;
(aa) (i) within seven Business Days after the last day of each
calendar month, deliver to Buyer a list of each account payable of the
Acquired Business in excess of $10,000 then outstanding, together with the
name of the relevant creditor, the date of incurrence thereof and its
stated maturity, accompanied by a certificate of the chief financial
officer of Seller stating that the information contained in such list is
true, accurate and correct in all material respects;
(ii) five Business Days prior to the expected Closing Date,
deliver to Buyer a list of each payment in an amount of $100,000 or more
made by any Seller Entity in connection with the Acquired Business from the
date of this Agreement to the date such report is so delivered, accompanied
by a certificate of the chief financial officer of Seller stating that the
information contained in such list is true, accurate and correct in all
material respects;
(iii) within 20 days from the last day of each calendar
month, deliver to Buyer consolidating statements of income for the calendar
month then ended, and the related balance sheet of Seller and its
Subsidiaries operating in the United States and Canada (the "DOMESTIC
SELLER ENTITIES") as of the end of such calendar month, in each case
prepared in accordance with GAAP and accompanied by (w) a schedule of all
capital expenditures made by the Domestic Seller Entities during such
calendar month, (x) a schedule of payments made during such calendar month
by the Domestic Seller Entities under or pursuant to Related Party
Agreements, (y) a schedule of all intercompany balances and obligations of
the Domestic Seller Entities as of the end of such calendar month and (z) a
certificate of the chief financial officer of Seller stating
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that such financial statements fairly present the financial condition and
results of operations of the Domestic Seller Entities and that the other
information accompanied thereto is true, accurate and correct in all
material respects;
(iv) within 30 days from the last day of each calendar
month, deliver to Buyer consolidating statements of income for the calendar
month then ended, and the related balance sheet of Seller and its
Subsidiaries (other than with respect to each Subsidiary of Seller for
which consolidating statements of income and related balance sheet for such
month delivered pursuant to clause (iv) above and the Excluded Companies
(the "INTERNATIONAL SELLER ENTITIES")), in each case prepared in accordance
with GAAP and accompanied by (w) a schedule of all capital expenditures
made during such calendar month by the International Seller Entities during
such calendar month, (x) a schedule of payments made during such calendar
month by the International Seller Entities under or pursuant to Related
Party Agreements, (y) a schedule of all intercompany balances and
obligations of the International Seller Entities as of the end of such
calendar month and (z) a certificate of the chief financial officer of
Seller stating that such financial statements fairly present the financial
condition and results of operation of the International Seller Entities and
that the other information accompanied thereto is true, accurate and
correct in all material respects;
(v) on or prior to September 13, 2002, deliver to Buyer
the 13-Week Cash Flow Projections for the period commencing on September
13, 2002, and on or prior to the second Friday of each calendar month
subsequent to September 13, 2002, the 13-Week Cash Flow Projections for the
period commencing with the immediately succeeding Saturday, accompanied by
a certificate of the chief financial officer of Seller stating that the
information contained in such 13-Week Cash Flow Projections has been
prepared in accordance with the provisions of this Agreement and based on
assumptions that are reasonable;
(vi) within seven Business Days after the last day of each
calendar month, deliver to Buyer a detailed report of (A) all paid or
incurred Qualified Fees during such calendar month, (B) all payments made
during such calendar month to directors and officers of Seller Entities or
any of their Affiliates, their respective relatives and Affiliates and (C)
all payments under all Related Party Agreements, accompanied by a
certificate of the chief financial officer of Seller stating that the
information contained in such report is true, accurate and correct in all
material respects;
(vii) within two Business Days of the delivery thereof to
TFFC, copies of all monthly vehicles statements and quarterly non-program
vehicle reports required to be delivered pursuant to the TFFC MV Leases;
(viii) within two Business Days of the delivery thereof to
the applicable lessor, trustee, holder or lender under the DIP Asset-Backed
Fleet Financing, DIP L/C Rollover, the Amended and Restated Credit
Facility, the Additional DIP Asset-Backed Fleet Financing and the Ford Line
of Credit, copies of all statements, reports
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certificates, financial statements and other information required to be
delivered pursuant to such instruments;
(ix) within seven Business Days (or 15 Business Days in the
case of Adjusted EBITDAR) after the last day of each calendar month,
deliver to Buyer a report setting forth the Adjusted EBITDAR, Automotive
Fleet Utilization Ratio, Automotive Rental Revenue to Rental Days Ratio,
Rental Transactions to Full-Time Equivalents Ratio, Automotive Rental Days,
Automotive Rental Fleet, Automotive Rental Revenue, Full-Time Equivalents
and Rental Transactions, in each case, for the most recently ended calendar
month, accompanied by a certificate of the chief financial officer of
Seller stating that the information contained in such report has been
prepared in accordance with the provisions of this Agreement and is true,
accurate and correct in all material respects;
(x) within 20 Business Days of this Agreement, Seller
Parties shall deliver to Buyer a reporting setting forth the Seller Entity
that owns each of the vehicles listed in SECTION 3.7(b) OF THE SELLER
PARTIES DISCLOSURE SCHEDULE;
(xi) within five Business Days of entering into any
amendment, modification or supplement to any Contract relating to any of
the Assumed Indebtedness, the TFFC MV Leases or the Ford MV Lease, Seller
Parties shall deliver a copy of each such amendment, modification or
supplement to Buyer; and
(xii) five Business Days prior to the Closing Date, deliver
to Buyer a detailed report of all amounts constituting Assumed Indebtedness
that will be outstanding at Closing, accompanied by a certificate of the
chief financial officer of Seller stating that the information contained in
such report is true, accurate and correct in all material respects;
(bb) not purchase or acquire any vehicles, except to the extent
such vehicles (i) are purchased or acquired (including by way of leasing) for
use in connection with the Acquired Business through TFFC or, in connection with
the Ford Line of Credit, through BGI Leasing, Inc. and (ii) are subject to a
Repurchase Program and are listed in SECTION 3.28(b) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE; PROVIDED, HOWEVER, that Seller Entities may purchase or
acquire vehicles (including by way of leasing) that are not subject to
Repurchase Programs (A) if such vehicles are passenger vehicles (i.e., cars,
sport utility vehicles, passenger vans and pickup trucks) and the purchase price
therefor does not exceed, individually or in the aggregate, (1) $49,900,000 for
passenger vehicles to be used in connection with the Acquired Business in the
United States (including Puerto Rico) and Canada and (2) $25,000,000 for
passenger vehicles to be used in connection with the Acquired Business in
Australia and New Zealand and (B) if such vehicles are non-passenger vehicles to
be used in connection with the Acquired Business in the United States and the
purchase price therefor does not exceed, individually or in the aggregate,
$100,000;
(cc) continue to sell or dispose of the Existing Trucks in the
ordinary course of business consistent with past practice and Prudent Industry
Practices; PROVIDED, HOWEVER, (i) that Seller Parties shall use reasonable best
efforts to conduct such sales or dispositions so that
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Existing Trucks shall be sold or disposed of in such a manner that (A) the
highest accumulated mileage shall be sold or disposed of prior to those
comparable Existing Trucks with lower mileage and (B) earlier model years shall
be disposed of prior to comparable Existing Trucks of later model years and (ii)
Seller Parties may implement from time to time such reasonable changes to its
past practice relating to the sale or disposition of the Existing Trucks as may
be necessary in light of the liquidity requirements of Seller Parties;
(dd) not (i) enter into any new franchise, prime license, license,
sublicense or barter agreements; PROVIDED, HOWEVER, that Seller Parties may
enter into new franchise, prime license, license or sublicense agreements with
third parties (other than directors, officers employees or agents of any of
Seller Parties (or any Affiliate of any such director, officer, employee or
agent)) (A) with respect to any territory more than 25 miles from any location
where any Seller Party conducts an automotive rental business and (B) on terms
no less favorable than those contained in Seller Parties' current standard form
of prime license agreement attached as SECTION 5.1(dd) OF THE SELLER PARTIES
DISCLOSURE SCHEDULE, (ii) not enter into any new dealer agreements in connection
with Seller Parties' truck rental business; PROVIDED, HOWEVER, that Seller
Parties may enter into new dealer agreements with third parties (other than
directors, officers employees or agents of any of Seller Parties (or any
Affiliate of any such director, officer, employee or agent)) if each such dealer
agreement (A) is entered into in Seller Parties' current standard form of dealer
agreement and (B) may be terminated by 90 days' (or shorter period) written
notice by each Seller Party that is a party thereto without (1) any penalty or
other payment by such Seller Party (other than payments to which Buyer consents
in writing), (2) imposing any requirement that Seller Parties sell or dispose of
any assets or properties and (3) imposing any limitations on the conduct of
business by any Seller Party or (iii) open new automotive rental business
locations, other than new automotive rental business locations (w) to replace
existing automotive rental business locations, including those currently
operated by Seller Parties pursuant to the License Agreement, dated as of May 1,
1995, as amended, between Sears, Roebuck and Co. and Budget Rent a Car
Corporation, (x) pursuant to the Sub-Lease Agreement, dated as of March 13,
2002, between Wal-Mart Stores, Inc. and Budget Rent a Car Systems, Inc. as in
effect as of the date hereof, (y) pursuant to the Master Lease Agreement, dated
as of September 18, 2001, as amended, between The Pep Boys - Manny, Moe & Jack,
The Pep Boys Manny, Moe & Jack California, Pep Boys - Manny, Moe & Jack of
Delaware, Inc. and Budget Rent a Car Systems, Inc. as in effect as of the date
hereof or (z) locations that service any airport;
(ee) (i) not consent to the termination of any Airport Concession
or lease agreement with respect to premises located within any airport, (ii) use
reasonable best efforts to maintain, keep and renew each existing Airport
Concession in full force and effect, (iii) pay all rents and fees due and
payable in accordance with the terms thereof and make and maintain all required
deposits relating to each such Airport Concession and (iv) use reasonable best
efforts to resolve or settle all existing and future disputes or Actions and
secure Airport Concessions or lease agreements following the resolution or
settlement of any such dispute or Action with respect to the operation of any
automotive rental location within any airport, in each case other than with
respect to the San Juan, Puerto Rico airport;
(ff) not enter into, amend, modify or terminate any Contract with
Vehicle Manufacturers; PROVIDED, HOWEVER, that Seller Parties may enter into,
amend or modify any
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Contract with Vehicle Manufacturers to the extent that such Contract (i) is
applicable to models for a single year, (ii) is on terms and conditions
substantially similar to the existing terms and conditions under the current
applicable Contract with the relevant Vehicle Manufacturer and (iii) the Seller
Party which is a party to such Contract has given Buyer written notice,
accompanied by the proposed Contract, at least three Business Days prior to
execution of such Contract;
(gg) not to amend, modify or supplement the terms and conditions of
the Assumed Indebtedness, the TFFC MV Leases or the Ford MV Leases in each case
to the extent any such amendment, modification or supplement could be reasonably
expected to affect Buyer adversely;
(hh) not take any action or fail to take any action that would
reasonably be expected to result (i) in any of Seller Parties' representations
and warranties set forth in this Agreement being or becoming untrue or incorrect
in any material respect or (ii) in any of the conditions to Closing set forth in
ARTICLE 7 not being satisfied;
(ii) not make any payment to any director or officer of any of
Seller Entities or any of their Affiliates, or their respective relatives or
Affiliates, other than pursuant to the Qualified Retention Plan, the Assumed
Benefit Plans, the Related Party Agreements listed in SECTION 3.11 OF THE SELLER
PARTIES DISCLOSURE SCHEDULE and, subject to SECTION 5.1(k), director fees,
salaries, bonuses, payments of benefits and reimbursement of expenses in the
ordinary course of business consistent with past practice and payments set forth
in SECTION 5.1(ii) OF THE SELLER PARTIES DISCLOSURE SCHEDULE;
(jj) continue to prepay for Yellow Page advertising and listing,
security deposits for Airport Concessions and other customary prepaid expenses
relating thereto, in each case, in the ordinary course of business consistent
with past practice;
(kk) use reasonable best efforts to minimize the amount of
Qualified Fees incurred by Seller Parties following the date hereof; and
(ll) contest the Action instituted by RSI against Seller Parties
described in SECTION 3.13(a) OF THE SELLER PARTIES DISCLOSURE SCHEDULE and any
other Action instituted or commenced by RSI or any Affiliate thereof regarding
unlawful use of tradenames or trademarks, use all reasonable efforts to have
vacated, lifted, reverse or overturned any decree, judgment, injunction or other
order against Seller Parties rendered or entered in connection therewith, and
not enter into any settlement with respect to any such dispute without the prior
written consent of Buyer (which consent shall not be unreasonably withheld),
unless such settlement includes an absolute and unconditional release of Seller
Parties and Buyer from any and all claims and liabilities relating to or arising
from any such disputes.
Section 5.2 ACCESS AND INFORMATION.
(a) Seller Parties shall, and shall cause their Subsidiaries,
accountants, auditors, counsel and other representatives to, give Buyer and its
Affiliates and to their respective directors, officers, employees, accountants,
agents, counsel, insurance brokers, insurance companies, lenders and other
financing sources and other representatives (collectively, "REPRESENTATIVES")
reasonable access during Seller Parties' normal business hours throughout the
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period prior to the Closing to all of Seller Entities' properties, books,
Business Contracts, commitments, financial and operating data, Tax Returns and
materials related to Taxes, accounting work papers, reports of examination and
records relating to the Acquired Business, the Acquired Assets or the Assumed
Liabilities. Without limiting the generality of the foregoing, Buyer and its
Affiliates shall be entitled to make (or cause to be made) such other
investigations of the Acquired Business, the Acquired Assets (including the
Acquired Companies), the Liabilities, Encumbrances and the condition (financial
or otherwise) of such businesses, assets and liabilities as Buyer or Parent
deems necessary or advisable in connection with the transactions contemplated by
this Agreement or the Ancillary Agreements (including, but not limited to,
conducting prior to the expected Closing Date a physical inspection and
preparing an inventory of Rental Vehicles and Support Vehicles (in each case,
including Owned Vehicles) in a manner that does not unreasonably interfere with
the business of Seller Entities and otherwise consistent with Prudent Industry
Practices), and Seller Parties shall reasonably cooperate with any such
investigations. Upon reasonable notice from Buyer, Seller Parties shall furnish
to Buyer updated information of the type described in SECTION 3.7(a) and (b) in
advance of such physical inspection.
(b) Through the Closing Date, Parent Buyer and Seller Parties
shall provide each other or each other's respective counsel the opportunity to
review in advance and comment on all filings with any Governmental Body
pertaining to the transactions contemplated in this Agreement and the Ancillary
Agreements and will keep each other informed of the status of matters pertaining
thereto. It is expressly understood by the parties that the representatives of
each of the parties shall have the right to attend and participate in any
hearing, proceeding, meeting, conference or similar event before or with a
Governmental Body or rating agency or other organization relating to this
Agreement or the Ancillary Agreements or the transactions contemplated hereby or
thereby. In furtherance of the foregoing, the parties shall provide each other
reasonable advance notice of any such hearing, proceeding, meeting, conference
or similar event.
(c) As soon as practicable after the execution of this Agreement,
Seller Parties shall permit Buyer to electronically link Seller's financial
reporting system related to the Acquired Business to Parent's financial
reporting system ("HYPERION"). Access to Hyperion will be provided by Buyer's
financial reporting staff and the tasks necessary to complete the link to
Hyperion will be led by Buyer's accounting staff, with the necessary assistance
from Seller's accounting staff and other technical staff; provided that neither
such installment nor the operation or use by Parent of Hyperion shall interfere
with or disrupt the normal operation of Seller's business or its financial
reporting system or violate any applicable software licenses. Buyer will provide
the necessary Hyperion software to be installed on a computer in Seller's
accounting department; PROVIDED, HOWEVER, that the information retrieved from
Seller's financial reporting system will not be made available to persons who
are directly involved in pricing or any other competitive activity at Parent or
any of its Subsidiaries.
(d) Seller Parties shall keep Buyer informed of all material
developments in the negotiations relating to the DIP Financing, the DIP
Asset-Backed Fleet Financing, the DIP L/C Rollover and the Additional
Asset-Backed Fleet Financing, and promptly provide copies of all documents
(including drafts) relating thereto, including term sheets, commitment letters,
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purchase agreements, vehicle lease agreements, credit agreements, security
agreements and other related agreements or documents.
Section 5.3 EFFORTS TO EFFECT TRANSACTION; CERTAIN FILINGS.
(a) Subject to SECTION 5.3(d), Seller Parties, Parent and Buyer
shall (i) use reasonable best efforts to cooperate with each other in
determining which other filings are required or advisable to be made, prior to
the Closing Date with, and which Permits are required to be obtained prior to
the Closing Date from any Governmental Body in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
in this Agreement and the Ancillary Agreements, (ii) use reasonable best efforts
to take, or cause to be taken, all actions and do, or cause to be done, all
things necessary, proper, advisable or appropriate to consummate and make
effective the transactions contemplated by this Agreement and the Ancillary
Agreements, as soon as practicable, including using all reasonable best efforts
to obtain all necessary or advisable Permits in connection with the requirements
of all Governmental Bodies in respect of the transactions contemplated in this
Agreement and the Ancillary Agreements, and to effect all necessary
registrations and filings and (iii) cooperate with each other in determining
which Permits are required to be obtained by Buyer the operation the Acquired
Business by Buyer following the Closing. In connection with the foregoing,
Seller Parties will provide Parent and Buyer, and Parent and Buyer will provide
Seller Parties, with copies of all correspondence, filings, or communications
(or memoranda setting forth the substance thereof) between such party or any of
its representatives, on the one hand, and any Governmental Body, on the other
hand, with respect to this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby.
(b) In furtherance of the foregoing but subject to SECTION 5.3(d),
each Seller Party, Parent and Buyer shall: (i) make or cause to be made all
filings required of each of them or any of their respective Subsidiaries or
Affiliates under the applicable Competition Laws with respect to the
transactions contemplated by this Agreement as promptly as practicable and, in
any event, within five Business Days after the date of this Agreement, (ii)
comply at the earliest practicable date with any request under any applicable
Competition Laws for additional information, documents, or other materials
received by each of them or any of their respective Affiliates from any
Governmental Body in respect of such filings or such transactions, (iii)
cooperate with each other in connection with any such filing and in connection
with resolving any investigation or other inquiry of any Governmental Body under
any Competition Laws with respect to any such filing or any such transaction and
(iv) advise the other parties promptly of any material communication received by
such party from any other Governmental Body regarding any of the transactions
contemplated in this Agreement and the Ancillary Agreements, and of any
understandings, undertakings or agreements (oral or written) such party proposes
to make or enter into with any Governmental Body in connection with the
transactions contemplated in this Agreement and the Ancillary Agreements.
(c) Subject to SECTION 5.3(d), if any Action is instituted (or
threatened to be instituted) challenging any transaction contemplated in this
Agreement and the Ancillary Agreements as violative of any applicable
Competition Laws (a "REGULATORY CHALLENGE"), each Seller Party, Parent and Buyer
shall cooperate in all respects with each other and use its respective
reasonable efforts in order to contest and resist any such Regulatory Challenge
and
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have vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent, that is in effect and
that prohibits, prevents or restricts the consummation of the transactions
contemplated by this Agreement.
(d) Notwithstanding anything to the contrary contained in this
Agreement, Parent, Buyer and their Affiliates shall not be required to (i) sell,
hold separate, license or otherwise dispose of or conduct any of their
businesses or assets in a specified manner, or agree to sell, hold separate,
license or otherwise dispose of or conduct any of their businesses or assets in
a specified manner, (ii) permit the sale, holding separate, licensing or other
disposition of, any portion of the Acquired Assets or the Acquired Business or
(iii) conduct all or any portion of the Acquired Business in a specified manner,
in each such case, whether as a condition to obtaining any approval from a
Governmental Body or any other Person or for any other reason.
Section 5.4 BANKRUPTCY FILINGS.
(a) Within two Business Days of the date of this Agreement, Seller
Parties shall file with the Bankruptcy Court a motion, supporting papers,
notices and proposed Overbid Procedures Order seeking the Bankruptcy Court's
approval of (i) the provisions of SECTIONS 5.1 and 5.5 and ARTICLE 8 of this
Agreement and observance and performance of such provisions by Seller Parties
during the pendency of the Chapter 11 Cases, (ii) the date, time and place for,
and prescribing the form and manner of notice of, a hearing to consider approval
of the 363 Order and the 365 Order and (iii) this Agreement and the Ancillary
Agreements, Seller Parties' performance under this Agreement and the Ancillary
Agreements, and the transfer to Buyer of the Acquired Assets (including all the
Equity Securities of the Acquired Companies and the Minority Investees), the
assumption and assignment to Buyer of the Assumed Contracts and Assumed Leases
and the assumption by Buyer of the Assumed Liabilities.
(b) Seller Parties shall provide Buyer with copies of all motions,
applications and supporting papers prepared by or on behalf of Seller Parties
(including forms of orders and notices to interested parties) relating in any
way to Buyer, the Acquired Assets (including the Acquired Companies), the
Assumed Liabilities, the Acquired Business, or the transactions contemplated by
this Agreement and the Ancillary Agreements at least one full Business Day prior
to the filing thereof in the Chapter 11 Cases.
(c) Within two Business Days of the date of this Agreement, Seller
Parties shall file with the Bankruptcy Court a motion, supporting papers,
notices and proposed order in substance and form satisfactory to Buyer in its
sole and absolute discretion, and other motions, supporting papers and notices
necessary to effect the transactions contemplated in this Agreement and the
Ancillary Agreements.
(d) Seller Parties shall give appropriate notice, and provide
appropriate opportunity for hearing, to all parties entitled thereto, of all
motions, orders, hearings, or other proceedings relating to this Agreement and
the Ancillary Agreements or the transactions contemplated hereby and thereby.
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Section 5.5 BIDDING PROCEDURES.
(a) Buyer and Seller Parties acknowledge that this Agreement is
the culmination of an extensive process undertaken by Seller Parties to identify
and negotiate a transaction with a bidder who was prepared to pay the highest
and best purchase price for the assets of Seller and its Subsidiaries while
assuming or otherwise satisfying specified liabilities in order to maximize
value for each Seller Party's constituents. The parties also acknowledge that
under the Bankruptcy Code, Seller Parties must take reasonable steps to
demonstrate that they have sought to obtain the highest and best price possible
for the assets, including, but not limited to, giving notice of the transactions
contemplated by this Agreement to creditors and other interested parties as
ordered by the Bankruptcy Court, providing information about the Acquired
Business and Acquired Assets to responsible bidders subject to appropriate
confidentiality agreements, entertaining higher and better offers from
responsible bidders, and, if necessary, conducting an auction. To facilitate the
foregoing, Seller Parties shall, within two Business Days of the date of this
Agreement, seek the entry of an order (in the form attached as EXHIBIT E) (a)
approving the bidding procedures attached as EXHIBIT F (the "BIDDING
PROCEDURES"), the amount, timing, terms of payment and priority of the
Termination Amount as set forth in ARTICLE 8 and the provisions of SECTION 5.1
and (b) providing for, among other things, the procedures set forth below (the
"OVERBID PROCEDURES ORDER").
(b) Seller Parties shall give notice of the transactions
contemplated by this Agreement and the Ancillary Agreements to such Persons and
in such manner as the Bankruptcy Court shall direct, and to such additional
Persons as Buyer requests.
(c) Unless this Agreement has been terminated in accordance with
its terms, until the earlier of the entry of the Overbid Procedures Order and
September 17, 2002, none of Seller Parties nor any of their Representatives
shall (i) solicit, initiate or encourage (including by way of furnishing
information), or take any other action to facilitate, any inquiry or the making
of any proposal that constitutes, or can reasonably be expected to lead to, an
Alternative Transaction; (ii) participate in any discussions or negotiations
that could possibly lead to an Alternative Transaction; (iii) enter into any
agreement regarding a possible Alternative Transaction or (iv) make or authorize
any statement, recommendation or solicitation in support of a possible
Alternative Transaction; PROVIDED, HOWEVER, that if the Board of Directors of
Seller determines in good faith that it is necessary to do so to comply with its
fiduciary duties under the Bankruptcy Code or applicable corporate law, Seller
Parties may, in response to an unsolicited inquiry: (x) provide public and
non-public information concerning the Acquired Business and its assets to those
Persons who first have delivered an inquiry meeting the requirements of the
Bidding Procedures; PROVIDED that such Person executes a confidentiality
agreement in accordance with the Bidding Procedures; and (y) participate in
negotiations or discussions concerning such inquiry. Seller Parties shall
promptly notify Buyer orally and in writing of all inquiries or proposals or
requests for information received from any party, the identity of the Person
making such inquiry, proposal or request and provide copies of any written
proposals. Seller Parties shall keep Buyer fully informed of the status
(including amendments or proposed amendments) of any written proposal. Upon
request by Buyer, Seller Parties will identify and furnish to Buyer all
information provided in response to any such inquiry, proposal or request.
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Section 5.6 INTERCOMPANY AMOUNTS; OTHER AGREEMENTS.
(a) At or prior to the Closing, all intercompany receivables or
payables and loans then existing between any of Seller Parties, or any of the
Excluded Companies, on the one hand, and any of the Acquired Companies, on the
other hand, shall be settled in full by way of capital contribution or as
otherwise agreed by Buyer and Seller Parties. For the avoidance of doubt,
nothing in this SECTION 5.6(a) shall require Seller Parties to pay or otherwise
settle prior to or at Closing any amounts accrued but not yet payable under the
TFFC MV Leases and the Ford MV Leases (except to the extent required pursuant to
SECTION 2.10), or to pay or otherwise settle prior to or at Closing obligations
of Seller Parties under the Demand Notes, which shall be assumed by Buyer
hereunder pursuant to clauses (i) or (ii) of SECTION 2.5(a), as the case may be.
(b) At or prior to the Closing, Seller Parties shall, and shall
cause the Excluded Companies to, withdraw from, or otherwise terminate any
contractual rights they may have in, to or under the Acquired Insurance
Contracts being acquired by Buyer pursuant to this Agreement.
(c) Subject to this SECTION 5.6(c), Buyer shall make available to
Seller Parties and the Excluded Companies any insurance proceeds from any
Acquired Insurance Contract for which the premiums have been paid by Seller
Entities in respect of any Assumed Liability, to the extent Seller Parties are
determined to be liable therefor or such Acquired Insurance Contract provides
insurance coverage with respect to any Excluded Liability. Buyer shall submit
any claims under each Acquired Insurance Contract to the relevant insurance
company or companies, and Buyer shall have the sole and absolute authority to
manage any and all claims filed under any Acquired Insurance Contract. Seller
Parties shall cooperate with and assist Buyer in making claims under the
Acquired Insurance Contracts in respect of such Assumed Liabilities and
collecting recoveries with respect thereto. Subject to the foregoing, if any
limits apply to amounts payable under any Acquired Insurance Contract, payments
under each Acquired Insurance Contract shall be allocated between Buyer and
Seller Parties on a first come/first served basis.
Section 5.7 UPDATES OF SCHEDULES.
(a) Within seven Business Days after the last day of each calendar
month and within five Business Days prior to the expected Closing Date, Seller
Parties shall prepare and deliver to Buyer a supplement to SECTIONS 3.15(a),
3.15(b), 3.15(c), 3.15(d), 3.15(f), 3.15(g), 3.15(i), 3.15(j), 3.15(k), 3.15(m),
3.15(s), 3.16(a), 3.17(a), 3.19(a) and 3.22(c) OF SELLER PARTIES DISCLOSURE
SCHEDULE to reflect all Contracts entered into following the date hereof that
constitute Assumed Contracts pursuant to SECTIONS 2.3(a), 2.3(b), 2.3(c),
2.3(d), 2.3(f), 2.3(g), 2.3(i), 2.3(j), 2.3(k), 2.3(o), 2.3(q), 2.3(r) and
2.3(s). Seller Parties shall provide copies of all such Contracts to Buyer
concurrently with each such supplement and other information related thereto
requested by Buyer and shall further supplement the Seller Parties Disclosure
Schedule to include any information omitted therein or to reflect Contracts
entered into by Seller Entities after the delivery thereof and which are Assumed
Contracts or Assumed Leases.
(b) Promptly upon becoming aware thereof, Seller Parties shall
prepare and deliver to Buyer a supplement to SECTION 3.13(a) OF SELLER PARTIES
DISCLOSURE SCHEDULE to reflect
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all Actions to which any Seller Party is a party following the date hereof that
constitute Assumed Liabilities pursuant to SECTION 2.5(a)(iv).
(c) From time to time promptly upon becoming aware thereof, Seller
Parties shall supplement or amend the Seller Parties Disclosure Schedule with
respect to any matter (i) which may arise hereafter and which, if existing or
occurring at or prior to the date hereof, would have been required to be set
forth or described in the Seller Parties Disclosure Schedule or (ii) which makes
it necessary to correct any information in the Seller Parties Disclosure
Schedule or in any representation and warranty of the parties herein.
(d) Notwithstanding the foregoing, for purposes of determining the
accuracy of the representations and warranties of the parties contained in this
Agreement, the Seller Parties Disclosure Schedule on the date hereof shall be
deemed to include only that information contained therein on the date of this
Agreement and the supplements thereto pursuant to clause (a) above and shall be
deemed to exclude any other information contained in any subsequent supplement
or amendment thereto.
Section 5.8 TAX RETURNS; TAX SHARING AGREEMENTS. Seller shall prepare (or
cause to be prepared) all Tax Returns required to be filed by each of Seller
Parties and shall pay (or cause to be paid) all Taxes required to be paid by it
or any of Seller Parties. As of the Closing, all Tax sharing agreements, Tax
indemnification agreements (other than (x) a customary commercial agreement to
indemnify for Taxes contained in any Lease or (y) an employment agreement for
which a gross-up payment (described in SECTION 3.23(b)(xi)) is required to be
made) or similar Contracts, with respect to or involving any of the Acquired
Companies shall be terminated as of the Closing Date and, after the Closing
Date, none of the Acquired Companies shall have any further rights or
obligations under any such agreement or contract.
Section 5.9 PURCHASE PRICE ALLOCATION.
(a) As promptly as practicable after the date hereof, Buyer and
Seller (on behalf of it, and as agent for each other Seller Party) shall agree
to an allocation of the Cash Purchase Price that will be paid to, or for the
benefit of, each Seller Party, which allocation shall be reasonable and in
accordance with the principles of section 1060 of the Code and the Treasury
Regulations thereunder. If Buyer and Seller cannot agree on the amounts and
allocations described in the preceding sentence, such amounts and allocations
shall be prepared by the Accounting Firm. The allocation determined pursuant to
this SECTION 5.9(a) shall be final, conclusive and binding on Buyer and each of
Seller Parties for tax purposes only.
(b) As promptly as practicable after the date hereof, with respect
to each Seller Party, Buyer and Seller (on behalf of it, and as agent for each
other Seller Party) shall agree to an allocation of the Cash Purchase Price
allocated to each Seller Party pursuant to SECTION 5.9(a) and the Assumed
Liabilities attributable to each such Seller Party among the Acquired Assets
attributable to each such Seller Party, which allocations shall be reasonable
and in accordance with section 1060 of the Code and the Treasury Regulations
thereunder. If Buyer and Seller cannot agree on the amounts and allocations
described in the preceding sentence, such amounts and allocations shall be
prepared by the Accounting Firm. The allocation determined pursuant to this
SECTION 5.9(b) shall be final, conclusive and binding on Buyer and each of
Seller
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Parties for tax purposes only. Buyer and each Seller Party shall file an asset
acquisition statement on IRS Form 8594 (or any replacement or successor form)
reflecting the allocation of the portion of the Cash Purchase Price and the
Assumed Liabilities attributable to each such Seller Party among the Acquired
Assets attributable to each such Seller Party.
(c) Buyer and each Seller Party shall (i) be bound by the
allocations determined pursuant to SECTIONS 5.9(a) and (b) for purposes of all
Tax related matters, (ii) prepare and file all Tax Returns to be filed with any
Tax authority in a manner consistent with such allocations determined pursuant
to SECTIONS 5.9(a) and (b) and (iii) take no position inconsistent with such
allocations determined pursuant to SECTIONS 5.9(a) and (b) in any Tax Return,
any Action before any Tax or other Governmental Body or otherwise. If any of the
allocations determined pursuant to SECTION 5.9(a) or (b) are disputed by any Tax
authority, the party receiving notice of such dispute shall promptly notify and
consult with the other party hereto concerning resolution of such dispute, and
Buyer and each Seller Party shall cooperate in good faith in responding to such
challenge in order to preserve the effectiveness of the allocations determined
pursuant to SECTIONS 5.9(a) and (b).
(d) Notwithstanding anything to the contrary contained in this
SECTION 5.9, the amount, if any, paid by Buyer pursuant to SECTION 2.5(b) shall
be allocated by Buyer and Seller among the Seller Parties and the Acquired
Assets of each Seller Party in accordance with, and subject to, the principles
of, and obligations set forth in, this SECTION 5.9.
Section 5.10 TRANSFER TAXES.
(a) To the extent provided in the 363 Order, in accordance with
section 1146(c) of the Bankruptcy Code, the instruments transferring the
Acquired Assets to Buyer shall contain the following endorsement:
"Because this [instrument] has been authorized pursuant to
Order of the United States Bankruptcy Court for the District
of Delaware relating to a chapter 11 plan of the Grantor, it
is exempt from transfer taxes, stamp taxes or similar taxes
pursuant to 11 U.S.C. Section 1146(c)."
(b) To the extent the endorsement described in SECTION 5.10(a) is
not applicable or effective, Seller Parties shall pay 50% and Buyer shall pay
50% of any real property transfer or gains Tax, sales Tax, use Tax, excise Tax,
stamp Tax, stock transfer Tax or, registration Tax documentary Tax or other
similar Tax incurred in connection with the transactions contemplated by this
Agreement (collectively, "TRANSFER TAXES"). No later than 15 days prior to the
date any Tax Return that must be filed by Seller (or the applicable Seller
Party) in connection with Transfer Taxes required to be paid pursuant to this
SECTION 5.10(b) (such Tax Returns, "TRANSFER TAX RETURNS") is due, Seller (or
the applicable Seller Party) shall prepare, on a basis consistent with the
allocations determined in accordance with SECTION 5.9, all Transfer Tax Returns
and provide copies of such Transfer Tax Returns to Buyer for its review and
consent, which consent shall not be unreasonably withheld or delayed. Seller (or
the applicable Seller Party) shall file any such Transfer Tax Return prepared
pursuant to this SECTION 5.10(b) that is required to be filed by Seller (or any
applicable Seller Party) under applicable law.
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Notwithstanding anything to the contrary in this Agreement, if such Transfer
Taxes are not paid on or prior to the Closing, Buyer shall be entitled to escrow
(on reasonable terms) from the Cash Purchase Price an amount of cash equal to
$3,000,000 to secure Seller Parties' obligations under this SECTION 5.10(b).
Section 5.11 VEHICLE RETURN PURSUANT TO REPURCHASE PROGRAMS; DISPOSITION OF
VEHICLES. Seller Parties shall, and shall cause each other lessee under a TFFC
MV Lease to: (i) sell or return each vehicle subject to a Repurchase Program
(other than a vehicle that has suffered a casualty loss) to the nearest related
manufacture official auction or other facility designated by the relevant
Vehicle Manufacturer or Affiliate thereof at the relevant lessee's sole expense
after the minimum term or mileage limit under such Repurchase Program for such
vehicle is achieved, but prior to the expiration of the maximum term and/or
prior to reaching the maximum mileage limit under such Repurchase Program for
such vehicle, other than isolated cases not exceeding 25 vehicles in any
calendar month on average; and (ii) sell or dispose of all vehicles not subject
to a Repurchase Program in accordance with the provisions of the applicable TFFC
MV Lease. Each such lessee agrees that the vehicles will be in vehicle turn-in
condition as specified in the applicable Repurchase Program.
Section 5.12 COOPERATION IN CONNECTION WITH REFINANCING. Seller Parties
shall, and shall cause their Affiliates to, cooperate with Parent, Buyer and
their respective Affiliates, in connection with any proposed refinancing by
Buyer of all or any part of the Assumed Indebtedness and of the indebtedness of
TFFC, Budget Funding Corporation and BGI Leasing, Inc. upon consummation of the
transactions contemplated hereby. Buyer will be responsible for any reasonable
out-of-pocket costs and expenses incurred by Seller Parties pursuant to this
SECTION 5.12. Such cooperation shall include, without limitation, providing all
such accurate and complete information relating to Seller Entities' vehicle
fleet as Buyer may reasonably request, assisting in the preparation of offering
documents and materials, rating agencies presentations and direct access to
Seller Parties' financing sources.
Section 5.13 CONFIDENTIALITY.
(a) From the date hereof and until the Closing, subject to
SECTIONS 5.13(b) and 5.13(c), Buyer and Parent shall keep, and shall cause their
Affiliates and their Representatives to keep, all the Seller Evaluation Material
confidential and will not, without the prior written consent of Seller, disclose
any Seller Evaluation Material, in whole or in part, and will not use the Seller
Evaluation Material, directly or indirectly, for any purpose other than in
connection with this Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby.
(b) Buyer and Parent agree to disclose Seller Evaluation Material
to their Representatives only if and to the extent that such Representatives
need to know the Seller Evaluation Material for the purpose of the transactions
contemplated by this Agreement and the Ancillary Agreements and are informed by
Buyer or Parent of the confidential nature of the Seller Evaluation Material.
Buyer and Parent each agree to be responsible for any breach of this
SECTION 5.13 by Representatives of Buyer or Parent.
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(c) Notwithstanding the foregoing, Buyer, Parent or any of their
Representatives may disclose any of Seller Evaluation Materials (to the extent
such disclosure is reasonably related to the purpose of approving or
consummating the transactions contemplated by this Agreement) to creditors of
Seller Parties that agree pursuant to a written agreement containing
confidentiality provisions substantially similar to those set forth in this
SECTION 5.13, to keep such Seller Evaluation Materials confidential, to the
creditors' committee formed in connection with the Chapter 11 Cases and in
connection with appearances by Buyer or any Affiliate thereof in the Bankruptcy
Court to the extent the Seller Evaluation Materials so disclosed reasonably
relate to the purpose of such appearances. Buyer shall deliver to Seller a copy
of each such written confidentiality agreement with creditors of Seller Parties
as promptly as reasonably practicable after any such confidentiality agreement
is executed and delivered to Buyer.
(d) If Buyer, Parent or any of their Representatives, or any
Person to whom any of the foregoing have, directly or indirectly, transmitted
Seller Evaluation Material, are requested or required by Law (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigation demand, any informal or formal investigation by any Governmental
Body, stock exchange regulation or otherwise) to disclose any Seller Evaluation
Material, each of Buyer and Parent agrees: (x) to promptly notify Seller of the
existence, terms and circumstances surrounding such request, (y) to consult with
Seller on the advisability of taking legally available steps to resist or narrow
such request and (z) if disclosure of any Seller Evaluation Material is
required, to furnish only that portion of Seller Evaluation Material, which is
required to be disclosed and to use reasonable efforts to cooperate with any
reasonable action by Seller Parties to obtain an appropriate protective order of
other reliable assurance that confidential treatment will be accorded to Seller
Evaluation Material.
(e) If the transactions contemplated by this Agreement are not
consummated and this Agreement is terminated in accordance with the terms
hereof, Buyer and Parent will redeliver to Seller or destroy all tangible Seller
Evaluation Material and any other tangible material containing any information
in the Seller Evaluation Material (whether prepared by a Seller Entity, their
Representatives or otherwise), and will not retain any copies, extracts or other
reproductions in whole or in part of such tangible material. If requested by
Seller, an appropriate officer of Buyer or Parent will certify to Seller that
all such Seller Evaluation Material has been so redelivered or destroyed.
Notwithstanding the delivery or destruction of the Seller Evaluation Material
required by this SECTION 5.13(e), all duties and obligations existing under this
SECTION 5.13 (including with respect to any oral Seller Evaluation Material)
will remain in full force and effect.
Section 5.14 NO SOLICITATION OF EMPLOYEES. Without the consent of Seller,
until the later of December 21, 2002 and the termination of this Agreement,
Buyer, Parent and their Representatives who have knowledge of the transactions
contemplated by this Agreement and the Ancillary Agreements will not take any
action to solicit any officer or key employee of Seller to terminate his or her
employment with Seller (except for employment as contemplated by SECTION 6.1
after the Closing), it being understood that the foregoing shall not prohibit a
solicitation directed at the public in general, by a professional employment
agency or to any employee who approaches Buyer or Parent without being initially
solicited by Buyer or Parent;
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PROVIDED, HOWEVER, that the obligations of Buyer and Parent under this SECTION
5.14 shall terminate automatically upon Closing.
Section 5.15 CERTAIN TAX REPORTING.
(a) CERTAIN PAYROLL REPORTING MATTERS. If so instructed by Buyer
(in its sole discretion), Seller Parties shall elect with Buyer (the "96-60
ELECTION") the "ALTERNATIVE PROCEDURE" set forth in section 5 of Revenue
Procedure 96-60, 1996-2 C.B. 399 ("REV PROC 96-60"). In accordance with the
96-60 Election, Seller Parties shall provide Buyer with the amounts of wages
paid from January 1, 2002 to the Closing Date to Affected Employees,
withholdings from such wages and any other information required pursuant to Rev
Proc 96-60. Provided Seller Parties have provided Buyer the information set
forth in the immediately preceding sentence, Buyer shall file Form W-2 for all
wages paid to Affected Employees for the period January 1, 2002 to December 31,
2002.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Seller Parties shall calculate, report and pay all federal, state and
local employment tax obligations (e.g., FICA, Medicare, FUTA and SUTA) with
respect to Affected Employees for any period or portion thereof ending on or
prior to Closing Date (including, but not limited to, Form 941, all state and
local employee withholding tax obligations and state unemployment insurance
forms, in each case, for any period or portion of any period ending on or prior
to the Closing Date).
Section 5.16 SEC REPORTS. Notwithstanding that the Seller and its
Subsidiaries may not be subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, Seller and its Subsidiaries shall file with the SEC
and provide Buyer with the quarterly report on Form 10-Q for the fiscal quarter
ended June 30, 2002 and the related certification required under Section 906 of
the Sarbanes-Oxley Act of 2002, as promptly as practicable but in no event later
than five Business Days prior to the Closing Date.
ARTICLE 6
ADDITIONAL POST-CLOSING COVENANTS
Section 6.1 BENEFIT AND EMPLOYMENT MATTERS.
(a) Prior to the Closing Date (to be effective on the Closing
Date), Buyer will offer regular full-time or part-time employment, as
applicable, to each full-time and part-time Seller Parties Employee with
comparable compensation, benefits and in the same geographic area as applicable
to such Seller Parties Employee immediately before the Closing Date. Seller
Parties Employees who accept offers of employment made by Buyer pursuant to this
SECTION 6.1(a) and commence employment with Buyer and its Affiliates immediately
upon Closing shall be referred to herein as the "AFFECTED EMPLOYEES;" PROVIDED,
HOWEVER, that any Seller Parties Employee who is not actively at work on the
Closing Date on account of sickness, vacation or short-term disability shall be
deemed a "Affected Employee" upon his or her return to active employment with
Buyer after the Closing Date. Except as specifically provided for in this
Agreement, Seller Parties shall be responsible for and shall indemnify, defend
and hold harmless Buyer and its Affiliates from any liabilities relating to any
current or former employee of Seller
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Parties who is not an Affected Employee (including, without limitation, any
liabilities arising under any Benefit Plan or other compensation program,
arrangement or agreement of Seller Parties). Seller Parties shall make their
employees available to Buyer, at reasonable times and in a manner intended not
to disrupt ongoing operations, for the purpose of making employment offers to
such employees.
(b) With respect to those employee benefit plans of Buyer or any
of its Subsidiaries ("BUYER PLANS") in which Buyer, in its sole discretion,
shall determine that Affected Employees may participate as of or following the
Closing Date, Buyer shall, and shall cause its Subsidiaries to, credit the prior
service of the Affected Employees with Seller Parties for purposes of
eligibility and vesting under such Buyer Plans to the extent that such service
was recognized under the analogous Benefit Plans; PROVIDED, HOWEVER, that such
service need not be credited to the extent it would result in a duplication of
benefits. Affected Employees shall also be given credit for any deductible or
co-payment amounts paid in respect of the Buyer Plan year in which the Closing
occurs, to the extent that, following the Closing, they participate in any Buyer
Plan during such plan year for which deductibles or co-payments are required.
Buyer shall, and shall cause its Subsidiaries to, waive (i) any preexisting
condition restriction (other than a restriction to which the Affected Employee
is subject immediately prior to the time of the Closing) under the terms of the
analogous Benefit Plan immediately prior to the Closing or (ii) any waiting
period limitation which would otherwise be applicable to an Affected Employee on
or after the Closing to the extent such Affected Employee had satisfied any
similar waiting period limitation under an analogous Benefit Plan prior to the
Closing.
(c) With respect to any Affected Employees who are given notice of
termination of employment during the first nine months immediately following the
Closing Date, Buyer shall provide each such Affected Employee with severance
benefits equal to those provided as of the date hereof under the applicable
Seller Entity severance plan in which such Affected Employee currently
participates.
(d) Nothing in this SECTION 6.1 shall be deemed to require that
the employment of any Affected Employee be continued for any specific period of
time after the Closing Date. Except as expressly provided in this SECTION 6.1,
nothing in this SECTION 6.1, express or implied, shall be construed to prevent
Buyer or its Affiliates from (i) terminating, or modifying the terms of
employment of, any Affected Employee following the Closing Date or (ii)
terminating or modifying to any extent or in any respect employee benefit plan,
program, agreement or arrangement that Buyer or its Affiliates, as applicable,
may establish or maintain. Buyer shall be responsible for and shall indemnify,
defend and hold harmless Seller and its Affiliates from any liabilities arising
from the termination, following the Closing Date, of any Affected Employee.
(e) Prior to Closing, Seller shall deliver to Buyer a list of all
employees who have suffered an "employment loss" (as defined in the WARN Act)
during the three months prior to the Closing Date.
(f) Subject to the consummation of the transaction pursuant to the
terms of this Agreement, effective as of Closing, Buyer shall be obligated to
provide, or to cause Parent to provide, the benefits set forth on
SCHEDULE 6.1(f).
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(g) With respect to the following plans: Automobile Mechanics
Local 701 - International Association of Machinists and Aerospace Workers,
AFL-CIO Mechanics Welfare Fund - Chicago; Teamsters Garage Employees Union Local
272 Management Pension Fund; Machinist Money Purchase Pension Fund - Auto Lodge
447; Western Conference of Teamsters Local 117 - Seattle; Western Conference of
Teamsters Local 78 - Oakland; W PA Teamsters and Employees Pension Fund Local -
Local 926 Pittsburgh; Union De Tronquistas De PR Local 901 - Puerto Rico; and
Teamsters Local 117, Supplemental Income 401K Plan - Seattle (collectively, the
"MULTIEMPLOYER PLANS"), after the Closing:
(i) Buyer will be obligated to make contributions to each
Multiemployer Plan in accordance with all collective bargaining agreements
relating thereto and shall contribute to such plan with respect to such
operations for substantially the same number of contribution base units for
which Seller Parties had an obligation to contribute to such plan.
(ii) Unless and until a variance or exemption is obtained in
accordance with section 4204(c) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), Buyer will provide to each Multiemployer
Plan, for a period of five plan years commencing with the first plan year
beginning after the Closing, a bond issued by a corporate surety company
that is an acceptable surety for purposes of section 412 of ERISA, or an
amount held in escrow by a bank or similar financial institution
satisfactory to such Multiemployer Plan, or such other security as may be
permitted under section 4204(a)(1)(B) of ERISA or regulations thereunder,
in an amount equal to the greater of:
(A) the average annual contribution required to be made by
the Seller Parties to the Multiemployer Plan with respect to the
operations thereunder for the three plan years preceding the plan year
in which the Closing occurs, or
(B) the annual contribution that the Seller Parties were
required to make with respect to the operations under the
Multiemployer Plan for the last plan year before the plan year in
which the Closing occurs,
which applicable bond or escrow shall be paid to such Multiemployer Plan if
Buyer withdraws from such Multiemployer Plan, or fails to make a contribution to
such Multiemployer Plan when due, at any time during the first five plan years
beginning after the Closing.
(iii) If Buyer withdraws from a Multiemployer Plan in a complete
withdrawal or a partial withdrawal with respect to the union employees
within the period referred to in the preceding subsection (ii), Buyer will
be primarily liable and Seller Parties agree to be secondarily liable for
any withdrawal liability the Seller Parties would have had at the Closing
Date to such Multiemployer Plan, but for the application of section 4204 of
ERISA, if the withdrawal liability of Buyer with respect to such
Multiemployer Plan is not paid.
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(iv) Buyer agrees that any action on its part that causes
withdrawal liability (either partial or complete) during the period
referred to in subsection (ii) hereof shall be for valid business reasons
only. In the event of a subsequent sale of the assets of the Acquired
Business by Buyer during such period, Buyer agrees to comply with the
provisions of section 4204(a)(1) of ERISA.
(v) If all, or substantially all, of the Seller Parties' assets
are distributed, or if the Seller Parties are liquidated before the end of
the first five plan years beginning after Closing, then, except as may
otherwise be required by law, Seller Parties shall provide a bond, an
amount in escrow or such other security as may be permitted under section
4204(a)(1)(B) of ERISA or regulations thereunder, equal to the present
value of the withdrawal liability Seller Parties would have had but for the
application of section 4204 of ERISA, which bond, amount in escrow or other
security may be applied toward the satisfaction of Seller's secondary
liability described in subsection (iii) hereof.
(vi) Buyer agrees to provide the applicable Seller Parties with
reasonable advance notice of any action or event which could result in the
imposition of withdrawal liability contemplated by this SECTION 6.1(g), and
in any event Buyer shall immediately furnish such Seller Parties with a
copy of any notice of withdrawal liability it may receive with respect to a
Multiemployer Plan, together with all the pertinent details. In the event
that any such withdrawal liability shall be assessed against Buyer, Buyer
further agrees to provide the applicable Seller Parties with reasonable
advance notice of any intention on the part of Buyer not to make full
payment of any withdrawal liability when the same shall become due.
Section 6.2 BOOKS AND RECORDS; PERSONNEL. For a period of six years after
the Closing Date, Buyer shall maintain all Business Records that are transferred
to Buyer hereunder. At all times during which Buyer maintains such Business
Records (including electronic access to the extent such Business Records are in
electronic form and the information can be provided separate and apart from all
other information relating to Buyer, any of its Affiliates or their respective
businesses), Buyer shall allow Seller Parties and their accountants and counsel
access to all such Business Records, properties and personnel that are
reasonably required in the administration of the Chapter 11 Cases or
anticipation of, or preparation for, any existing or future Action involving a
Seller Party, Tax Return preparation or defense, litigation or Excluded
Liability. Such access shall be afforded during regular business hours and upon
reasonable written notice at Buyer's principal place of business or at any
location where such Business Records are stored; PROVIDED, HOWEVER, that any
such access shall not interfere with the normal conduct of the business or
operations of Buyer and its Affiliates. Seller Parties shall be responsible for
any actual out-of-pocket costs and expenses incurred by Buyer and its Affiliates
in connection with granting Seller Parties access to such Business Records,
properties and personnel pursuant to this SECTION 6.2. If, prior to the
expiration of such six-year period, Buyer proposes to dispose of any such
Business Records, Buyer shall (and Parent shall cause Buyer to) provide Seller
with written notice and, if requested, shall deliver the same to Seller at
Seller's expense.
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Section 6.3 SECTION 338(h)(10) ELECTIONS.
(a) Seller, in respect of each or any Seller Party, if so
instructed by Buyer, shall jointly make a timely election under section
338(h)(10) of the Code (and any comparable elections under state and local
income tax Law) with Buyer with respect to any domestic Acquired Company
(individually, any such election referred to herein as an "ELECTION" and,
collectively, such elections referred to herein as the "ELECTIONS"). On or prior
to the Closing Date, Seller (in respect of each Seller Party that Buyer has
instructed Seller to make an Election pursuant to this SECTION 6.3(a)) and Buyer
shall exchange completed and executed original copies of IRS Form 8023 and any
applicable similar state or local forms with respect to the Elections.
Notwithstanding the foregoing, Seller shall not be required to make an Election
with respect to any Acquired Company if the aggregate tax basis of the assets of
such Acquired Company exceeds the "Aggregate Deemed Sales Price" allocable to
such Acquired Company unless such Election has no adverse Tax effect on Seller
or any Seller Party.
(b) In connection with any Election with respect to an Acquired
Company, as promptly as practicable after the date hereof, Buyer and Seller
shall agree to: (i) a determination of the "Aggregate Deemed Sales Price" and
the "Adjusted Grossed Up Basis" (each, as defined under applicable Treasury
Regulations) with respect to any such Acquired Company and (ii) an allocation of
each such Aggregate Deemed Sales Price and Adjusted Grossed Up Basis among the
assets of any such Acquired Company, which allocations shall be made in
accordance with section 338 of the Code and any applicable Treasury Regulations
and the portion of the Cash Purchase Price, if any, and the Assumed Liabilities,
if any, attributable to such Acquired Company that have been allocated to such
Acquired Company pursuant to SECTION 5.9 (each, a "SECTION 338(h)(10) ALLOCATION
STATEMENT"). If Buyer and Seller cannot agree on the amount(s) and allocation(s)
described in the preceding sentence, such amount(s) and allocation(s) shall be
prepared by the Accounting Firm. Any Section 338(h)(10) Allocation Statement
prepared pursuant to this SECTION 6.3(b) shall be final, conclusive and binding
on Buyer and each Seller Party.
(c) Buyer and each Seller Party: (i) shall be bound by the
determinations of the Section 338(h)(10) Allocation Statements determined
pursuant to SECTION 6.3(b) consistently therewith for purposes of determining
any Taxes, (ii) shall prepare and file all Tax Returns to be filed with any Tax
authority in a manner consistent with the Section 338(h)(10) Allocation
Statements and (iii) shall take no position inconsistent with the Section
338(h)(10) Allocation Statements in any Tax Return, any Action before any Tax
authority or otherwise. In the event that a Section 338(h)(10) Allocation
Statement is disputed by any Tax authority, the party receiving notice of such
dispute shall promptly notify and consult with the other party hereto concerning
resolution of such dispute.
(d) Each Seller Party and Buyer shall cooperate in the preparation
and timely filing of (i) Forms 8023 with respect to any Election and any
comparable state or local forms or reports and (ii) to the extent permissible by
or required by Law, any corrections, amendments, or supplements thereto. To the
extent necessary for the valid filing of any such corrections, amendments,
supplements, forms or reports, each Seller Party and Buyer shall cooperate in
the timely execution thereof. Neither Seller nor Buyer shall, or shall permit
any of their Affiliates to, take any action to modify any of the forms or
reports (including any corrections, amendments,
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or supplements thereto) that are required for the making of any Election after
their execution or to modify or revoke any of the Elections following the filing
of the Forms 8023 without the prior written consent of the other party.
(e) Notwithstanding anything to the contrary contained in this
SECTION 6.3, the amount, if any, paid by Buyer pursuant to SECTION 2.5(b) and
allocated to an Acquired Company (for which an Election has been made pursuant
to SECTION 6.3(a)) pursuant to SECTION 5.9(d) shall be: (i) taken into account
for purposes of determining Aggregate Deemed Sales Price and Adjusted Grossed Up
Basis and (ii) allocated by Buyer and Seller among the assets of such Acquired
Company in accordance with, and subject to, the principles and obligations set
forth in this SECTION 6.3.
Section 6.4 TAX COOPERATION. Seller Parties and Buyer agree to furnish or
cause to be furnished to each other, upon request, as promptly as practicable,
such information (including access to books and records) and assistance relating
to the Acquired Assets (including the Acquired Companies) as is reasonably
requested for the filing of any Tax Returns (including any Transfer Tax Return
required to be filed pursuant to SECTION 5.10(b)), for the preparation of any
audit and for the prosecution or defense of any Action or other matter related
to Taxes or any Tax Return. Any information obtained under this SECTION 6.4
shall be kept confidential except (i) as may be otherwise necessary in
connection with the filing of Tax Returns or claims for refund or in conducting
an audit or other proceeding or (ii) as may be consented to by Seller Parties or
Buyer, as applicable. Without limiting the foregoing, Buyer shall, as promptly
as practicable, cause the Acquired Companies and their Subsidiaries to prepare
and provide to Seller a package of Tax information materials, including
schedules and work papers (the "TAX PACKAGE") required by Seller to enable
Seller to prepare and file its U.S. federal consolidated (and any applicable
state unitary, combined or similar) income Tax Return. The Tax Package shall be
completed in accordance with past practice, including past practice as to
providing such information and as to the method of computation of separate
taxable income or other relevant measure of income of the Acquired Companies.
Section 6.5 USE OF NAME. Seller Parties agree that promptly following the
Closing Date, Seller and its Affiliates shall, except to the extent provided in
the license agreement to be entered into pursuant to SECTION 2.11, cease and
desist, and cause all other Persons to cease and desist, from all further use of
the names "Budget" or "Ryder" and any variation or derivation thereof and any
trademarks, service marks, trade names, domain names, trade dress, logos,
business and product names, slogans and registrations and applications for
registration thereof (the "MARKS AND LOGOS") and will (i) adopt new Marks and
Logos which are not confusingly similar to the Marks and Logos, (ii) file
amendments to the certificate or articles of incorporation, as the case may be,
of Seller with the Delaware Secretary of State (or other appropriate
Governmental Body) and shall make appropriate filings with any other applicable
registry(ies) changing Seller's and its Subsidiaries' corporate names and any
d/b/a's to names that do not include any of the Marks and Logos or words
confusingly similar thereto and (iii) neither Seller nor any of its Subsidiaries
shall make any further use of the Marks and Logos.
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Section 6.6 REMITTANCE OF FUNDS.
(a) Any interest, commissions, fees and other payments, including
without limitation, payments in respect of principal and interest, received by
Seller Parties or any Affiliate thereof relating to the Acquired Business after
the Closing Date in any capacity, whether accrued prior to or on the Closing
Date, including with respect to any TFFC MV Lease, franchise or other Contract
included in the Acquired Business, shall as of the Closing Date be for the
account of Buyer. Any such amounts received by Seller Parties and their
Affiliates after the Closing Date shall be received by Seller Parties and their
Affiliates in trust for Buyer and Seller Parties will, and will cause their
Affiliates to, subject to the consummation of the Closing, immediately pay such
amounts to an accounted designated by Buyer upon receipt thereof.
(b) Any interest, commissions, fees and other payments, including
payments in respect of principal and interest, received by Buyer in any capacity
in respect of any Excluded Asset or Retained Business (whether because the
Closing has not yet occurred or otherwise) shall be received by Buyer in trust
for Seller Parties and Buyer will immediately pay such amounts to an account
designated by Seller upon receipt thereof.
Section 6.7 MAIL RECEIVED AFTER THE CLOSING. Following the Closing, Buyer
may receive and open all mail addressed to Seller or any of its Affiliates and
deal with the contents thereof in its reasonable discretion to the extent that
such mail and the contents thereof relate to the Acquired Business, the Acquired
Assets or any of the Assumed Liabilities. Buyer shall deliver or cause to be
delivered to Seller, at Seller's expense, all mail received by Buyer after the
Closing addressed to any Seller Entity which does not relate to the Acquired
Business, the Acquired Assets or the Assumed Liabilities until the earlier of
(i) one year after the Closing and (ii) the entry of a final order in the
Chapter 11 Cases.
Section 6.8 FURTHER ASSURANCES.
(a) At any time and from time to time after Seller Parties shall
execute and deliver to Buyer such instruments of transfer, conveyance,
assignment and confirmation, in addition to those executed and delivered by
Seller Parties at Closing, and take such action as Buyer may reasonably deem
necessary or desirable in order to more effectively transfer, convey and assign
to Buyer and to confirm Buyer's title to all of the Acquired Assets, to put
Buyer in actual possession and operating control thereof and to permit Buyer to
exercise all rights with respect thereto and otherwise to give full effect to
the provisions of this Agreement.
(b) If, notwithstanding the 363 Order and the 365 Order, any
transfer or assignment by Seller Parties to, or any assumption by Buyer of, any
interest in, or liability, obligation or commitment under, any Acquired Asset
requires a Governmental Consent or a Third Party Consent and any such consent is
not obtained prior to the Closing and Buyer, in its sole discretion, waives the
condition set forth in SECTION 7.2(d) with respect to such Governmental Consent
or Third Party Consent, then, if Buyer so elects, such Acquired Asset shall not
be transferred to Buyer at the Closing Date and Seller Parties shall cooperate
(at their own expense) in any lawful and reasonable arrangement reasonably
proposed by Buyer under which Buyer shall obtain the economic benefits under the
asset, claim or right with respect to which the consent has not been obtained.
Such reasonable arrangement may include (i) the
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subcontracting, sublicensing or subleasing to Buyer of any and all rights of
Seller Parties against the other party to such third-party agreement arising out
of a breach or cancellation thereof by the other party and (ii) the enforcement
by Seller Parties of such rights.
ARTICLE 7
CONDITIONS PRECEDENT TO CLOSING
Section 7.1 GENERAL CONDITIONS. The respective obligations of Buyer and
Seller Parties to effect the Closing are subject to the fulfillment, prior to or
at the Closing, of each of the following conditions:
(a) No statute, rule, regulation, executive order, decree,
decision, ruling or preliminary or permanent injunction shall have been enacted,
entered, promulgated or enforced by any Governmental Body, that enjoins,
prevents or prohibits confirmation of the transactions contemplated by this
Agreement or any of the Ancillary Agreements.
(b) Any applicable waiting period (and any extension thereof)
under applicable Competition Law shall have expired or been terminated, and all
approvals under such applicable Competition Law in jurisdiction which filings
relating to the transactions contemplated by this Agreement or the Ancillary
Agreement are required and under the Competition Law of Australia and New
Zealand shall have been obtained.
(c) The 363 Order and the 365 Order shall have been entered and
shall not have been stayed or vacated.
(d) No Action shall have been taken or remain pending and unstayed
by any Governmental Body seeking to restrain or materially and adversely alter
the transactions contemplated by this Agreement.
Section 7.2 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligations
of Buyer to effect the Closing are subject to the fulfillment, prior to or at
the Closing, of each of the following additional conditions, any of which may be
waived in writing by Buyer:
(a) The representations and warranties of Seller Parties contained
in this Agreement or in any certificate delivered pursuant to this Agreement
(without regard to any qualifications therein as to materiality or Material
Adverse Effect) shall be true and correct in all material respects at and as of
the date hereof and at and as of the Closing Date (except to the extent that
such representations and warranties are made as of a specified date, in which
case, such representations and warranties shall be true and correct in all
material respects as of such date); PROVIDED, HOWEVER, that the representations
and warranties of Seller Parties contained in this Agreement or in any
certificate delivered pursuant to this Agreement shall be deemed true and
correct in all material respects at and as of the date hereof and at and as of
the Closing Date notwithstanding that a representation and warranty of Seller
Parties contained in this Agreement is not true and correct in all material
respects (a "REPRESENTATION FAILURE") if (i) the Representation Failure was the
result of an inadvertent error or omission by Seller Parties and (ii) to the
extent the impact of Representation Failure can be measured adequately or
reasonably estimated in monetary terms, the adverse impact of each
Representation Failure does not exceed in the aggregate, together with the
impact of all other Representation Failures, $10,000,000, it
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being understood that if the impact of a Representation Failure can not be
measured adequately or reasonably estimated in monetary terms, this proviso
shall not apply to such a Representation Failure; and PROVIDED, FURTHER, that
the representations and warranties of Seller Parties contained in this Agreement
or in any certificate delivered pursuant to this Agreement shall not be deemed
to be true and correct in all material respects if the adverse impact of any
Representation Failure which can be measured adequately or reasonably estimated
in monetary terms, together with the impact of all other Representation
Failures, exceeds $10,000,000.
(b) Seller Parties shall have performed all obligations and
agreements and complied in all material respects with all covenants required by
this Agreement to be performed or complied with by Seller Parties prior to or at
the Closing.
(c) Buyer shall have received a certificate of the chief executive
officer of each Seller Party as to the satisfaction of the conditions set forth
in SECTION 7.2(a) and SECTION 7.2(b).
(d) All Governmental Consents and Third Party Consents shall have
been obtained and shall remain in full force and effect, except for Third Party
Consents required pursuant to Contracts (in each case other than Airport
Concessions and Leases in any airport or area adjacent thereto) to which any of
the Acquired Companies is a party and which are not, individually or in the
aggregate, material to the Acquired Business or to the Acquired Business
conducted by the Acquired Company that is a party to such Contract.
(e) Since the date hereof, there shall have been no change,
effect, event, occurrence or state of facts that, individually or in the
aggregate, would be reasonably expected to have a Material Adverse Effect.
(f) Seller Parties shall have delivered all other documents
specified in SECTION 2.8 to Buyer.
(g) The Benefit Plans listed on items 1 through 9, 11, 12 and 13in
SECTION 3.18(b) OF THE SELLER PARTIES DISCLOSURE SCHEDULE, shall have been
amended effective as of not later than the Closing to be consistent with
SCHEDULES 1.1(c) and 6.1(f).
(h) The 363 Order and the 365 Order shall have become Final
Orders.
(i) Each of the BRACI Administrative Services Agreement and the
BRACI License Agreement shall have been terminated, in each case on terms
satisfactory in substance and form to Buyer.
(j) Seller Parties shall have delivered to Buyer a report setting
forth the aggregate amount of Qualified Fees paid by Seller Parties from June
30, 2002 until the Closing, an itemized list of each Qualified Fee so paid
specifying the Person to which such payment has been made, the amount of such
payment, the date thereof, accompanied by a certificate of the chief financial
officer of Seller stating that the information contained in such list is true,
accurate and complete in all respects and all supporting documentation for each
such payment.
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Section 7.3 CONDITIONS PRECEDENT TO SELLER PARTIES' OBLIGATIONS. The
obligations of Seller Parties to effect the Closing of the transactions
contemplated hereby are subject to the fulfillment, prior to or at the Closing,
of each of the following additional conditions, any of which may be waived in
writing by Seller Parties:
(a) The representations and warranties of each of Parent and Buyer
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof or in connection with the transactions contemplated
hereby (without regard to any qualifications therein as to materiality or
material adverse effect) shall be true and correct in all material respects at
and as of the date hereof and at and as of the Closing Date (except to the
extent that such representations and warranties are made as of a specified date,
in which case such representations and warranties shall be true and correct in
all material respects as of such date).
(b) Buyer and Parent shall have performed in all material respects
all obligations and agreements and complied in all material respects with all
covenants required by this Agreement to be performed or complied with by it
prior to or at the Closing.
(c) Seller shall have received a certificate of an officer of
Buyer and Parent as to the satisfaction of the conditions set forth in
SECTION 7.3(a) and SECTION 7.3(b).
(d) Buyer shall have delivered all documents specified in
SECTION 2.9 to Seller Parties.
ARTICLE 8
TERMINATION; TERMINATION AMOUNT
Section 8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time prior to the Closing Date by mutual written agreement of
Buyer and Seller Parties.
Section 8.2 TERMINATION BY EITHER BUYER OR SELLER PARTIES. This
Agreement may be terminated at any time prior to the Closing Date by either
Buyer or Seller Parties:
(a) upon written notice to the other party, (i) by Buyer, if the
Closing shall not have occurred by November 9, 2002 (the "BUYER CLOSING
DEADLINE") and (ii) by Seller Parties, if the Closing shall not have occurred by
December 6, 2002 (the "SELLER CLOSING DEADLINE" and together with the Buyer
Closing Deadline, the "CLOSING DEADLINES"); PROVIDED, HOWEVER, that the right to
terminate this Agreement under this SECTION 8.2(a) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to be consummated on or
prior to the Closing Deadline; and PROVIDED, FURTHER, that if the Closing shall
not have occurred by the Buyer Closing Deadline solely as a result of any
applicable waiting period (or any extension thereof) under any Competition Law
relating to the transactions contemplated by this Agreement or the Ancillary
Agreements (the "APPLICABLE WAITING PERIOD") not having expired or been
terminated, the Closing Deadline shall be deemed to read "December 31, 2002";
and PROVIDED, FURTHER, that if at any time Buyer or Seller Parties have the
right to terminate this Agreement pursuant to this SECTION 8.2(a) but neither
does so within five Business Days after the applicable Closing Deadline, then
such Closing Deadline shall be extended by an additional thirty days; or
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(b) if a Governmental Body shall have issued a Final Order or
taken any other nonappealable final action having the effect of restraining,
enjoining or otherwise prohibiting the transactions contemplated hereby.
Section 8.3 TERMINATION BY BUYER. This Agreement may be terminated at
any time prior to the Closing Date by Buyer if:
(a) there has been a breach by any Seller Party of any
representation or warranty contained in this Agreement or in any certificate
delivered pursuant to this Agreement which breach is not curable or, if curable,
is not cured within 15 days after written notice of such breach given by Buyer
to Seller Parties and which has caused, or could reasonably be expected to
cause, the condition set forth in SECTION 7.2(a) not to be satisfied;
(b) there has been a breach by any of Seller Parties of any of the
covenants or agreements contained in this Agreement, which breach is not curable
or, if curable, is not cured within 15 days after written notice of such breach
given by Buyer to Seller Parties;
(c) the Bankruptcy Court shall not have entered the Overbid
Procedures Order satisfying the requirements of SECTION 5.5 not later than
September 10, 2002;
(d) (i) any of Seller Parties or any Chapter 11 trustee appointed
for any Seller Parties shall (A) accept a proposal providing for, relating to or
supporting an Alternative Transaction, (B) seek the approval by the Bankruptcy
Court of an Alternative Transaction (whether pursuant to Section 363, in a
Chapter 11 plan or otherwise) or, other than as expressly permitted by, and
following the approval and entry by the Bankruptcy Court of, the Overbid
Procedures Order, take any other action to pursue an Alternative Transaction,
(C) file or support, or advocate in any court, a Chapter 11 plan, motion or
other pleading requesting the Bankruptcy Court to approve an Alternative
Transaction or which, if adopted, granted, approved or confirmed, could
reasonably be expected to lead to consummation of an Alternative Transaction, or
(D) other than as expressly permitted by, and following the approval and entry
by the Bankruptcy Court of, the Overbid Procedures Order, take any action which
is otherwise inconsistent with the consummation of the transactions contemplated
by this Agreement; or (ii) the Committee of Unsecured Creditors in connection
with the Chapter 11 Cases shall (A) withdraw or announce the withdrawal of its
support to the transaction contemplated by this Agreement (including, without
limitation, the Bidding Procedures and the Termination Amount), other than
following a breach by Buyer or Parent which would permit Seller Parties to
terminate this Agreement pursuant to SECTIONS 8.4(a) or 8.4(b) or (B) file or
support, or advocate in any court, a Chapter 11 plan, motion or other pleading
requesting the Bankruptcy Court to approve an Alternative Transaction or which,
if adopted, granted, approved or confirmed, could reasonably be expected to lead
to the confirmation of an Alternative Transaction, other than as expressly
permitted by, and following the approval and entry by the Bankruptcy Court of,
the Overbid Procedures Order;
(e) the 363 Order and the 365 Order containing the provisions
required by this Agreement shall not have been entered not later than October
28, 2002 (or shall be vacated or stayed as of such date);
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(f) the 363 Order and the 365 Order containing the provisions
required by this Agreement shall not have become Final Orders by November 8,
2002; PROVIDED, HOWEVER, that if the Applicable Waiting Period shall not have
expired or terminated on or before November 8, 2002, then the November 8, 2002
date set forth in this clause (f) shall be extended to the earlier of (i) the
fifth Business Day after such Applicable Waiting Period expires and (ii)
December 31, 2002 (the "FINAL ORDER DEADLINE");
(g) the Bankruptcy Court enters an order approving an Alternative
Transaction or confirming a Chapter 11 plan not incorporating the transactions
contemplated by this Agreement;
(h) any of the Seller Parties' Chapter 11 Cases shall be converted
into a case under Chapter 7 of the Bankruptcy Code or dismissed;
(i) Seller Parties shall have failed to (i) obtain a cumulative
Adjusted EBITDAR for any period commencing on August 1, 2002 and ending on the
last day of each calendar month commencing on August 31, 2002 (each such period,
a "TESTING PERIOD") equal to or larger than the cumulative Adjusted EBITDAR
projected for such Testing Period in the Operating Metric Forecast and (ii)
achieve at least one of the following projected ratios or the projected Rental
Transactions as set forth in the Operating Metric Forecast for the calendar
month ending on the same day as the day on which the relevant Testing Period
expires: (A) the Automotive Fleet Utilization Ratio; (B) the Automotive Rental
Revenue to Rental Days Ratio; (C) the Rental Transactions to Full-Time
Equivalents Ratio; or (D) Rental Transactions;
(j) Seller Parties shall not have entered into definitive
agreements satisfactory in substance and form to Buyer (including, but not
limited to, with respect to the ability of Buyer to prepay all amounts
outstanding thereunder concurrently with the Closing without penalty, fee or
breakage fee or similar payment or cost) with respect to each of the Ford MV
Lease by August 30, 2002 or any of the orders entered by the Bankruptcy Court in
connection with the DIP Financing, the DIP Asset-Backed Fleet Financing, the DIP
L/C Rollover or the Ford Line of Credit shall not be reasonably satisfactory in
substance and form to Buyer; PROVIDED, HOWEVER, that if Seller Parties enter
into the documents attached as SCHEDULE 8.2(j) with respect to the Ford MV Lease
by August 30, 2002, the definitive documentation with respect thereto shall be
deemed satisfactory in substance and form to Buyer;
(k) TFFC, Budget Funding Corporation or BGI Leasing, Inc. shall
commence a voluntary bankruptcy, reorganization, arrangements, insolvency or
liquidation proceeding or any other proceeding under any federal or state
bankruptcy or similar law; or an involuntary bankruptcy, insolvency or
liquidation proceeding or any other proceeding under any federal or state
bankruptcy or similar law case is commenced against any of TFFC, Budget Funding
Corporation or BGI Leasing, Inc. and the petition is not controverted within 10
days, or is not dismissed within 30 days, after commencement of the case; or
(l) any event of default or amortization event under or relating
to any of the DIP Financing, the DIP L/C Rollover, the DIP Asset-Backed Fleet
Financing, the Additional DIP Asset-Backed Fleet Financing or the Ford Line of
Credit shall have occurred and be continuing, to the extent (A) in the case of
the DIP Financing and the DIP L/C Rollover, the amounts due
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under the DIP Financing on the DIP L/C Rollover, as the case may be, have become
due and payable prior to the stated maturity thereof (based on the original
amortization or repayment schedule) and (B) in the case of the DIP Asset-Backed
Fleet Financing, the Additional DIP Asset-Backed Fleet Financing or the Ford
Line of Credit, any action is taken to terminate the related vehicle lease
agreements.
If Buyer elects to terminate this Agreement pursuant to (i)
SECTION 8.3(e), it must do so on or before the tenth Business Day after the
later of (A) October 28, 2002 and (B) the date upon which a 363 order not
complying with the requirements of this Agreement is entered or (ii)
SECTION 8.3(i), it must do so, with respect to each Testing Period, within ten
Business days after Buyer receives the last report required to be delivered
pursuant to SECTION 5.1(aa)(ix) for such Testing Period. If Buyer fails to
terminate this Agreement (A) pursuant to SECTION 8.3(e) by the date set forth in
clause (i) above, Buyer shall not thereafter be entitled to terminate this
Agreement pursuant to SECTION 8.3(e) or (B) pursuant to SECTION 8.3(i) by the
date set forth in clause (ii) above, Buyer shall not thereafter be entitled to
terminate this Agreement pursuant to SECTION 8.3(i) as a result of Seller
Parties failure to satisfy the requirements of SECTION 8.3(i) for the applicable
Testing Period.
Section 8.4 TERMINATION BY SELLER PARTIES. This Agreement may be
terminated prior to the Closing Date by Seller Parties if:
(a) there has been a breach by Buyer or Parent of any
representation or warranty contained in this Agreement which breach is not
curable or, if curable, is not cured within ten days after written notice of
such breach given by Seller Parties to Buyer or Parent, as the case may be, and
which has caused or could reasonably be expected to cause the condition set
forth in SECTION 7.3(a) not to be satisfied;
(b) there has been a breach by Buyer or Parent of any of the
covenants or agreements contained in this Agreement, which breach is not curable
or, if curable, is not cured within ten days after written notice of such breach
given by Seller Parties to Buyer or Parent, as the case may be;
(c) any Seller Party enters into a binding commitment with respect
to, or consummates, an Alternative Transaction; or
(d) (i) the 363 Order and the 365 Order shall have been entered on
or before October 28, 2002, but shall not have become Final Orders by the Final
Order Deadline, (ii) Seller Parties have requested in writing that Buyer waive
its right to terminate this Agreement under SECTION 8.3(f) (which request shall
not be made (or if made, shall not be effective) until the later of entry of (A)
the 363 Order and the 365 Order and (B) any order disposing of a motion under
Fed. R. Bankr. P. 7052, 9023 or 9024 relating to the 363 Order and the 365
Order) and (iii) Buyer has refused or failed to waive its right to terminate
this Agreement under SECTION 8.3(f) within 30 days of receiving the request
referred to in clause (ii) above.
Section 8.5 EFFECT OF TERMINATION. In the event of termination of the
Agreement pursuant to this ARTICLE 8, written notice thereof shall as promptly
as practicable be given to the other parties to this Agreement, and this
Agreement shall terminate and the transactions
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contemplated hereby shall be abandoned, without further action by any of the
parties hereto. If this Agreement is terminated as provided herein (a) there
shall be no liability or obligation on the part of Seller Parties, Buyer or
their respective officers and directors, and all obligations of the parties
shall terminate, except for the obligations of the parties pursuant to this
SECTION 8.5 and SECTIONS 5.13, 8.6, 9.3, 9.7, 9.10, 9.11 and 9.14; PROVIDED,
HOWEVER, that notwithstanding the foregoing or any other provision hereof, a
party that is in breach of its representations, warranties, covenants or
agreements set forth in this Agreement shall be liable for all damages caused by
such breach, including, without limitation, any expenses incurred by the other
party in connection with this Agreement and the transactions contemplated
hereby; and PROVIDED, FURTHER, Buyer's right to damages from Seller Parties
hereunder shall be limited to the Termination Amount (or appropriate percentage
thereof) and shall constitute liquidated damages and (b) all filings,
applications and other submissions made pursuant to the transactions
contemplated by this Agreement shall, to the extent practicable, be withdrawn
from the Governmental Body or Person to which made.
Section 8.6 EXPENSES; TERMINATION AMOUNT.
(a) Subject to SECTION 2.5(a)(vi), costs and expenses incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such cost or expense.
(b) If this Agreement is terminated, Seller Parties, jointly and
severally, shall pay in cash to Buyer as a termination fee and/or as liquidated
damages, the applicable percentages set forth below of an amount equal to
$15,000,000 (the "TERMINATION AMOUNT"):
(i) upon termination of this Agreement pursuant to
SECTIONS 8.3(a), 8.3(b), 8.3(d), 8.3(g), or 8.4(c), Seller Parties shall
pay to Buyer an amount equal to (A) 23.34% of the Termination Amount (i.e.,
$3,500,000) within two Business Days of such termination and (B) 76.66% of
the Termination Amount (i.e., $11,500,000) on or before the earlier of (x)
the date of closing of Alternative Transaction (if any) and (y) the sixth
month anniversary of the termination of this Agreement; PROVIDED, HOWEVER,
that: (i) notwithstanding the foregoing if Buyer terminates this Agreement
pursuant to SECTION 8.3(a), Buyer's recovery shall be limited to 23.34% of
the Termination Amount (i.e., $3,500,000) if and only if (A) the breaches
of representations and warranties by Seller Parties giving rise to such
termination do not, individually or in the aggregate with all other
breaches of representations and warranties by Seller Parties under this
Agreement, constitute or have a Material Adverse Effect, (B) the
representations or warranties of Seller Parties whose breach gives rise to
the termination were true and correct (to the extent that the condition set
forth in SECTION 7.2(a) was satisfied on the date of this Agreement) when
first given or made, (C) such representations and warranties of Seller
Parties have become untrue or incorrect (to the extent Buyer has a
termination right under SECTION 8.3(a)) solely as a result of an event(s)
or occurrence(s) which was and is outside the control of, and which was not
and is not caused by or remediable by, any of Seller Parties or their
Affiliates and (D) Seller Parties have not breached any of their covenants
in any material respect; (ii) if Buyer terminates this Agreement pursuant
to SECTION 8.3(b), Buyer's recovery shall be limited to 23.34% of the
Termination Amount (i.e., $3,500,000) if but only if the breaches giving
rise to such termination do not, individually
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or in the aggregate with all other breaches by Seller Parties under this
Agreement, constitute or have (A) a Material Adverse Effect, (B) a material
adverse effect on the value to Buyer of the Acquired Business or the
Acquired Assets or of the transactions contemplated hereby or (C) a
material adverse effect on consummation of the transactions contemplated
hereby on a timely basis; and (iii) if this Agreement is terminated
pursuant to SECTION 8.3(d)(ii) or SECTION 8.3(g), Buyer's recovery shall be
limited to 23.34% of the Termination Amount (i.e., $3,500,000) unless an
Alternative Transaction closes on or before (A) six months after the
termination of this Agreement pursuant to SECTION 8.3(d)(ii) or (B) one
year after the termination of this Agreement pursuant to SECTION 8.3(g), in
which case the remaining 76.66% (i.e., $11,500,000) shall be due on the
date of closing of such Alternative Transaction, without any need of
written demand therefor by Buyer; and
(ii) upon termination of this Agreement pursuant to
SECTIONS 8.2(a) (if any of Seller Parties is the terminating party),
8.3(c), 8.3(e), 8.3(f), 8.3(h), 8.3(j), 8.3(k) or 8.3(l) Seller Parties
shall pay to Buyer 23.34% of the Termination Amount (i.e., $3,500,000)
within two Business Days of such termination; PROVIDED, HOWEVER, that if
Buyer terminates this Agreement pursuant to SECTION 8.3(e), Buyer shall not
be entitled to any portion of the Termination Amount if by October 23, 2002
Seller Parties shall have notified Buyer in writing of their desire to
extend the October 28, 2002 deadline set forth in SECTION 8.3(e) to and
including November 28, 2002 and Buyer terminates this Agreement pursuant to
SECTION 8.3(e) prior to November 28, 2002; PROVIDED, FURTHER, that if (A)
Buyer terminates this Agreement pursuant to SECTION 8.3(e), and (B) any of
Seller Parties obtains approval of Bankruptcy Court for an Alternative
Transaction within 275 days of the termination of this Agreement pursuant
to Section 8.3(e) and (C) a proposal for the Alternative Transaction so
approved was in existence prior to such termination, then Seller Parties
shall pay to Buyer an additional amount in cash equal to 76.66% of the
Termination Amount (i.e., $11,500,000) on the date of closing of such
Alternative Transaction, without need of any written demand therefor by
Buyer.
For purposes of clauses (i) and (ii) of this SECTIONS 8.6(b), the closing
of an Alternative Transaction shall be deemed to occur on the earliest of (i)
the date any payment in respect thereof or relating thereto is made, (ii) the
date on which any asset or property is transferred, conveyed, assigned or leased
pursuant thereto, (iii) the date on which any Equity Securities are issued
pursuant thereto and (iv) the date of substantial consummation of any plan of
reorganization or liquidation.
(c) No portion of the Termination Amount shall be payable to Buyer
if (i) this Agreement is terminated (A) pursuant to SECTIONS 8.1 or (B) because
the necessary approvals under the applicable Competition Law relating to the
transactions contemplated by this Agreement or the Ancillary Documents have been
denied and (ii) no event has occurred (or failed to occur) which has or could at
the time of the termination described in clause (B) above, form the basis for
termination of this Agreement by Buyer under any other provision of this
Agreement.
(d) If Buyer terminates or is entitled to terminate this Agreement
pursuant to more than one Section of this Agreement, Buyer shall be entitled to
receive from Seller Parties
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an amount equal to the highest percentage of the Termination Amount prescribed
by all such Sections.
(e) The obligations of Seller Parties to pay the Termination
Amount as provided herein shall be, pursuant to section 364(c) of the Bankruptcy
Code, entitled to administrative expense status with priority over any and all
administrative expenses of the kind specified in sections 503(b) and 507(b) of
the Bankruptcy Code in each of the Chapter 11 Cases and senior to all other
superpriority administrative expenses in such cases, except any superpriority
administrative expenses granted pursuant to the interim orders of the Bankruptcy
Court dated August 5, 2002 or to be granted pursuant to Final Orders of the
Bankruptcy Court, authorizing and approving the DIP Financing and the DIP L/C
Rollover.
(f) Seller Parties agree and acknowledge that Buyer's due
diligence, efforts, negotiation and execution of this Agreement have involved
substantial investment of management time and have required significant
commitment of financial, legal and other resources by Buyer and its Affiliates
and that such due diligence, efforts, negotiation and execution have provided
value to Seller Parties.
ARTICLE 9
MISCELLANEOUS PROVISIONS
Section 9.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND CERTAIN
COVENANTS. The representations and warranties of and covenants to be performed
on or prior to the Closing by Seller Parties, Parent and Buyer set forth in this
Agreement or any document or instrument delivered pursuant hereto shall not
survive the Closing.
Section 9.2 GUARANTEE BY PARENT. Parent hereby guarantees the performance
of all the obligations of Buyer contained in this Agreement (other than with
respect to the assumption of the Assumed Liabilities, other than under the
Amended and Restated Credit Agreement, the DIP Financing and the DIP L/C
Rollover).
Section 9.3 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given upon receipt if (i)
mailed by certified or registered mail, return receipt requested, postage
prepaid (ii) sent by express carrier, fee prepaid, (iii) sent via facsimile with
receipt confirmed or (iv) delivered personally, addressed as follows or to such
other address or addresses of which the respective party shall have notified the
other.
(a) If to Seller Parties, to:
Budget Group, Inc.
4225 Naperville Road
Lisle, IL 60532
Fax: (630) 955-7517
Attention: General Counsel
with a copy to
Sidley Austin Brown & Wood
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Bank One Plaza
10 S. Dearborn Street
Chicago, IL 60603
Fax: (312) 853-7036
Attention: Larry J. Nyhan, Esq.
If to Buyer, to:
Cendant Corporation
Six Sylvan Way
Parsippany, NJ 07054
Fax: (973) 496-5335
Attention: General Counsel
and
9 West 57th Street, 37th Floor
New York, NY 10019
Fax: (212) 413-1800
with a copy to
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Fax: (212) 735-2000
Attention: David Fox, Esq. and Alesia Ranney-Marinelli, Esq.
Section 9.4 BULK SALES LAWS. Each Seller Party each hereby waives
compliance by each such party with the provisions of the "bulk sales," "bulk
transfer" or similar laws of any state.
Section 9.5 AMENDMENT OF AGREEMENT. This Agreement may be amended with
respect to any provision contained herein at any time by action of the parties
hereto; PROVIDED, HOWEVER, that such amendment shall be evidenced by a written
instrument duly executed on behalf of each party by its duly authorized officer
or employee.
Section 9.6 ENTIRE AGREEMENT. The agreement of the parties, which consists
of this Agreement, the Schedules and Exhibits hereto and the documents referred
to herein, sets forth the entire agreement and understanding between the parties
and supersedes any prior agreement or understanding, written or oral, relating
to the subject matter of this Agreement including the Confidentiality Agreement.
Section 9.7 ASSIGNMENT. This Agreement and the rights and obligations of
the parties hereunder may not be assigned by any party hereto without the other
parties' written consent; PROVIDED, HOWEVER, that (i) Buyer may assign any or
all of its rights and obligations to a direct or indirect wholly-owned
Subsidiary of Parent (PROVIDED that no such assignment shall relieve
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Buyer of its obligations under this Agreement) and (ii) Seller may assign any or
all of its rights to a successor or assignee of all or part of the Retained
Business. Any assignment in violation of this SECTION 9.7 shall be null and
void.
Section 9.8 PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other than
Buyer and Seller Parties, and their successors or permitted assigns, any rights
or remedies under or by reason of this Agreement.
Section 9.9 SEVERABILITY. The provisions of this Agreement are severable,
and if any one or more provisions are deemed illegal or unenforceable the
remaining provisions shall remain in full force and effect unless the deletion
of such provision shall cause this Agreement to become materially adverse to
Buyer on the one hand or Seller Parties on the other hand, in which event the
parties shall use reasonable best efforts to arrive at an accommodation that
best preserves for the parties the benefits and obligations of the offending
provision.
Section 9.10 GOVERNING LAW; CONSENT TO JURISDICTION. Except to the extent
the mandatory provisions of the Bankruptcy Code apply, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts made and to be performed entirely in such state without
regard to principles of conflicts or choice of laws or any other law that would
make the laws of any other jurisdiction other than the State of New York
applicable hereto. The parties agree that, except as provided herein without
limitation of any party's right to appeal any order of the Bankruptcy Court, (a)
the Bankruptcy Court shall retain jurisdiction to enforce the terms of this
Agreement and to decide any claims or disputes which may arise or result from,
or be connected with, this Agreement, any breach or default hereunder, or the
transactions contemplated herein; and (b) any and all Actions or causes of
action relating to the foregoing shall be filed and maintained only in the
Bankruptcy Court, and the parties hereby consent and submit to the jurisdiction
of the Bankruptcy Court.
Section 9.11 WAIVER OF JURY TRIAL. The parties hereto hereby irrevocably
and unconditionally waive trial by jury in any legal action or proceeding
relating to the Agreement and the agreements entered into in connection herewith
and any amendment, waiver, consent or other document that amends, waives,
supplements or otherwise modifies the Agreement or any of the agreements entered
into in connection herewith and therewith.
Section 9.12 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Section 9.13 PUBLIC ANNOUNCEMENT. Prior to the signing of this Agreement,
Seller Parties, Parent and Buyer shall prepare a mutually agreeable release
announcing the transaction contemplated hereby. Except for such press release,
none of Seller Parties, Parent or Buyer shall, without the approval of the
other, make any press release or other announcement concerning the existence of
this Agreement or the terms of the transactions contemplated by this Agreement,
except as and to the extent that any such party shall be so obligated by Law, in
which case the other parties shall be advised and the parties shall use their
reasonable best efforts
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to cause a mutually agreeable release or announcement to be issued; PROVIDED,
HOWEVER, that the foregoing shall not preclude communications or disclosures
necessary to comply with accounting, stock exchange or federal securities Law
disclosure obligations.
Section 9.14 NO STRICT CONSTRUCTION. The parties have participated jointly
in the negotiation and drafting of this Agreement. Consequently, in the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
each be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provision of this Agreement.
Section 9.15 DISCLAIMER OF WARRANTIES. EXCEPT AS TO THOSE MATTERS EXPRESSLY
COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT, SELLER PARTIES
ARE SELLING THE ACQUIRED ASSETS ON AN "AS IS, WHERE IS" BASIS AND SELLER PARTIES
DISCLAIM ALL OTHER WARRANTIES, REPRESENTATIONS AND GUARANTIES WHETHER EXPRESS OR
IMPLIED, SELLER PARTIES MAKE NO REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE AND NO IMPLIED WARRANTIES WHATSOEVER.
Parent and Buyer acknowledge that neither Seller Parties nor any of its
Affiliates or representatives or any other Person has made any representation or
warranty, express or implied, as to the accuracy or completeness of any
memoranda, charts, summaries or schedules heretofore made available by Seller
Parties or their Affiliates or representatives to Parent or Buyer or any other
information that is not included in this Agreement, the Exhibits and Schedules
attached hereto or the Seller Parties Disclosure Schedule, and neither Seller
Parties nor any of their Affiliates or Representatives or any other Person will
have or be subject to any liability to Parent, Buyer, any Affiliate of Parent or
Buyer or any other Person resulting from the distribution of any such
information to, or use of any such information by, Parent, Buyer, any Affiliate
of Parent or Buyer or any of their Representatives; PROVIDED, HOWEVER, that the
foregoing shall in no manner limit the rights of Buyer hereunder (in particular
under ARTICLE 8).
Section 9.16 EFFECT OF INVESTIGATION. No investigation conducted by Parent,
Buyer, any of their Affiliates and any of their Representatives made heretofore
or hereafter shall affect the representations and warranties of Seller Parties
which are contained herein.
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IN WITNESS WHEREOF, each party has caused this Asset and Stock Purchase
Agreement to be duly executed on its behalf by its duly authorized officer as of
the date first written above.
BUDGET GROUP, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
CHEROKEE ACQUISITION CORPORATION
By: /s/ Eric J. Bock
-------------------------------
Name: Eric J. Bock
Title: Executive Vice President and
Corporate Secretary
CENDANT CORPORATION
By: /s/ Eric J. Bock
-------------------------------
Name: Eric J. Bock
Title: Executive Vice President and
Corporate Secretary
BGI AIRPORT PARKING, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
<Page>
BGI SHARED SERVICES, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
BGI SHARED SERVICES, LLC
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
VEHICLE RENTAL ACCESS COMPANY, LLC
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
PREMIER CAR RENTAL LLC
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
<Page>
AUTO RENTAL SYSTEMS, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
RYDER TRS, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
RYDER MOVE MANAGEMENT, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
MASTERING THE MOVE REALTY, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
<Page>
THE MOVE SHOP, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
RYDER RELOCATION SERVICES, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
BUDGET STORAGE CORPORATION
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
BUDGET RENT A CAR CORPORATION
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
<Page>
CONTROL RISK CORPORATION
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
PHILIP JACOBS INSURANCE AGENCY, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
BUDGET RENT-A-CAR INTERNATIONAL,
INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
BUDGET CAR SALES, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
<Page>
TCS PROPERTIES, LLC
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
IN MOTORS VI, LLC
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
VALCAR RENTAL CAR SALES, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
DIRECTORS ROW MANAGEMENT
COMPANY, LLC
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
<Page>
TEAM CAR SALES OF SOUTHERN
CALIFORNIA, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
TEAM CAR SALES OF SAN DIEGO, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
TEAM CAR SALES OF RICHMOND, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
TEAM CAR SALES OF PHILADELPHIA, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
<Page>
TEAM CAR SALES OF DAYTON, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
TEAM CAR SALES OF CHARLOTTE, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
WARREN WOOTEN FORD, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
PAUL WEST FORD, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
<Page>
CARSON CHRYSLER PLYMOUTH DODGE
JEEP EAGLE, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
BUDGET SALES CORPORATION
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
RESERVATION SERVICES, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
TEAM REALTY SERVICES, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
<Page>
TEAM HOLDINGS CORPORATION
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
BUDGET RENT-A-CAR SYSTEMS, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
BUDGET -RENT-A-CAR OF ST. LOUIS, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
BUDGET -RENT-A-CAR OF THE MIDWEST,
INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
<Page>
BVM, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
DAYTON AUTO LEASE COMPANY, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
MOSIANT CAR SALES, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
NYRAC INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
<Page>
BUDGET RENT A CAR CARIBE
CORPORATION
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
BUDGET FLEET FINANCE CORPORATION
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
TRANSPORTATION AND STORAGE
ASSOCIATES
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
BRAC CREDIT CORPORATION
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
<Page>
TEAM FLEET SERVICES CORPORATION
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
BUDGET RENT A CAR ASIA-PACIFIC, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title:
BUDGET RENT A CAR OF JAPAN, INC.
By: /s/ Sanford Miller
-------------------------------
Name:
Title: