EXHIBIT 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
MADE AS OF
OCTOBER 10, 1997
BY AND AMONG
CAREY INTERNATIONAL, INC.
CAREY LIMOUSINE INDIANA, INC.
INDY CONNECTION LIMOUSINES, INC.
TRANSIT TOURS, INC.
KD & ASSOCIATES PROFESSIONAL CORPORATION
CRAIG DEL FABRO AND
KIM DEL FABRO
TABLE OF CONTENTS
Sections Page
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Section 1. The Merger........................................................................ 2
Section 2. Transactions at The Closing....................................................... 6
Section 3. Conditions of the Closing......................................................... 10
Section 4. Covenants......................................................................... 14
Section 5. Representations and Warranties.................................................... 24
Section 6. Indemnification................................................................... 48
Section 7. Terminations; Amendments; Waivers................................................. 53
Section 8. Miscellaneous..................................................................... 55
Schedules
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Schedule 2(b)(v) Stock Option Recipients
Schedule 4.12 Outstanding Financial Obligations
Schedule 5.1(b) Consents and Approvals
Schedule 5.1(d) Stockholder List
Schedule 5.1(e) Pooling-of-Interests Accounting
Schedule 5.1(g) Financial Statements
Schedule 5.1(j) Adverse Changes
Schedule 5.1(k)(i) Receivables
Schedule 5.1(k)(ii) Banking Relationships and Accounts
Schedule 5.1(l)(iii) Tax Matters
Schedule 5.1(m)(i) Tangible Personal Property
Schedule 5.1(m)(ii) Vehicles
Schedule 5.1(n) Real Property
Schedule 5.1(p)(i) Insurance
Schedule 5.1(p)(ii) Current Insurance
Schedule 5.1(q) Outstanding Commitments
Schedule 5.1(s) Transactions with Related Parties
Schedule 5.1(t) Licenses and Permits
Schedule 5.1(u) Employee List
Schedule 5.1(v) Employee Benefits
Schedule 5.1(x) Litigation
Schedule 5.1(y)(i) Customer List
Schedule 5.1(y)(ii) Proprietary Assets
Exhibits
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Exhibit 2 (a)(iv) Opinion of Counsel to INDY and TTI
Exhibit 2 (b)(iv) Opinion of Counsel to Carey and Carey Indiana
Exhibit 2 (c)(i) Executive Employment and Non-Competition Agreement
Exhibit 2 (c)(ii) Consulting and Non-Competition Agreement
Exhibit 2 (c)(iii) Escrow Agreement
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS Amended and Restated Agreement and Plan of Merger ( the "Agreement"), is
made as of the 10th day of October 1997, by and among Carey International, Inc.,
a Delaware corporation ("Carey"), Carey Limousine Indiana, Inc., a Delaware
corporation ("Carey Indiana"), INDY Connection Limousines, Inc., an Indiana
corporation ("INDY"), Transit Tours, Inc., an Indiana corporation ("TTI" and,
together with INDY, the "Companies" and, individually with INDY, a "Company"),
Craig Del Fabro, a resident of Clayton, Indiana ("CDF"), KD & Associates
Professional Corporation, an Indiana professional corporation ("KDA"), and Kim
Del Fabro, a resident of Carmel, Indiana ("KDF" and, together with KDA and CDF,
the "Principals").
W I T N E S S E T H
WHEREAS, the Principals hold a majority of all of the issued and
outstanding shares of capital stock of INDY, INDY holds all of the issued and
outstanding shares of capital stock of TTI, and Carey holds all the issued and
outstanding shares of capital stock of Carey Indiana;
WHEREAS, the parties desire to merge TTI with and into INDY, then to merge
INDY with and into Carey Indiana, in accordance with the terms and conditions
of this Agreement (collectively, such mergers are referred to herein as the
"Merger");
WHEREAS, upon consummation of the Merger, each of the Companies will cease
to exist and Carey Indiana will be the surviving corporation and a wholly-owned
subsidiary of Carey; and,
WHEREAS, the Parties executed the original Agreement on October 10, 1997,
and have determined that certain ambiguities existed in that agreement which
should be clarified and certain events have occurred which should be reflected
in the final
agreement and have therefor determined to execute this Amended and Restated
Agreement and Plan of Merger, effective as of the 10th day of October, 1997;
NOW, THEREFORE, in consideration of the mutual agreements, representations,
warranties, and covenants set forth herein, the parties agree as follows:
1. THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, at
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the Effective Time, and subsequent to the merger of TTI with and into INDY, INDY
shall be merged with and into Carey Indiana and the corporate existence of each
of the Companies shall cease. Following the Merger, Carey Indiana shall
continue as the surviving corporation (the "Surviving Corporation").
1.2 Effective Time and Closing. As soon as practicable after satisfaction
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or waiver of all conditions to the Merger, but in any event on or before October
31, 1997, the parties (a) shall cause certificates of merger (the "Certificates
of Merger") with respect to the Merger to be filed and recorded, and (b) shall
take all such further actions as may be required by law to make the Merger
effective. The Merger shall be effective at such time as the Certificates of
Merger with respect to the merger of INDY with and into Carey Indiana are filed
with (a) the Secretary of State of Indiana and (b) the Secretary of State of
Delaware (the "Effective Time"). Simultaneously with the filing of the
Certificates of Merger, a closing (the "Closing") shall take place on October
31, 1997 or another date as is mutually agreed upon at the offices Locke
Reynolds Boyd & Weisell at 1000 Capital Center South, 201 North Illinois Street,
Indianapolis, Indiana 46204 or at such other location as is mutually agreed by
the parties.
1.3 Effects of the Merger. The Merger shall have the effects specified in
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the Indiana Corporation Law (the "ICL") and the Delaware General Corporation Law
(the "DGCL").
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1.4 Tax Consequences. It is intended that the Merger shall constitute a
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reorganization within the meaning of Section 368(a) of the United States
Internal Revenue Code (the "Code") and that this Agreement shall constitute a
"plan of reorganization" for the purposes of Section 368 of the Code.
1.5 Certificate of Incorporation and By-Laws. The certificate of
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incorporation and by-laws of Carey Indiana, in each case as in effect at the
Effective Time, shall be the certificate of incorporation and by-laws of the
Surviving Corporation.
1.6 Directors and Officers. At the Effective Time, the directors and
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officers of Carey Indiana shall be the directors and officers of the Surviving
Corporation, each to hold office until their respective successors are duly
elected or appointed and qualified.
1.7 Conversion of Stock. At the Effective Time, each share of common
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stock, without par value per share, of INDY (the "INDY Common Stock") that is
issued and outstanding immediately prior to the Effective Time shall be
converted without any action on the part of the holder thereof into the number
of shares of Common Stock, par value $.01 per share, of Carey (the "Carey Common
Stock") or fraction thereof determined by dividing $16.493894 by the closing
price of the Carey Common Stock as reported on The NASDAQ National Market
("NASDAQ") on the date that this Agreement is duly executed (the "Merger
Consideration"), it being agreed that the closing price on such date was
$16.625. Notwithstanding the foregoing, in the event that the average closing
price of the Carey Common Stock as reported on NASDAQ for the ten (10) trading
days ending on the day immediately prior to the Closing Date (the "Ten Day
Average Closing Price") is more than Two Dollars ($2.00) above or below the
closing price of the Carey Common Stock as reported on NASDAQ on the date that
this Agreement is duly executed, then the closing price of the Carey Common
Stock used to calculate the Merger Consideration shall be the Ten Day Average
Closing Price. In connection with the merger of TTI with and into INDY, each
share of TTI capital stock shall be cancelled without the payment of any
consideration therefore.
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1.8 Exchange of and Payment for the Company Shares. (a) Certificates
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representing outstanding shares of INDY Common Stock shall be surrendered and
exchanged for the Merger Consideration (the "Merger Consideration") as provided
in Section 1.7 at the Closing or as soon thereafter as is reasonably possible.
Notwithstanding the foregoing, Carey may waive the requirement that certificates
representing outstanding shares of INDY Common Stock shall be surrendered and
exchanged for the Merger Consideration at the Closing, in which event such
certificates shall be exchanged for the Merger Consideration at the Closing. To
the extent required by the Code, Carey may require, as condition to the issuance
of the Merger Consideration, the delivery by the INDY stockholders of a
substitute form W-9 or a substitute therefor. Until surrendered as contemplated
by this Section 1.8, any certificate which immediately prior to the Effective
Time shall have represented any shares of INDY Common Stock shall be deemed at
and after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration. Notwithstanding the foregoing, in the event
that an INDY stockholder is unable to surrender a certificate representing
outstanding shares of INDY Common Stock because it has been lost, destroyed or
stolen, such shareholder shall deliver to Carey, an affidavit stating that such
shareholder has full right and title to such outstanding shares represented by
certificates that have been lost, destroyed or stolen, and such shareholder
shall, in lieu of providing certificates, deliver at the option of Carey, either
an indemnity bond or agreement of indemnification satisfactory to Carey.
(b) No dividends or other distributions declared after the Effective
Time with respect to Carey Common Stock shall be paid to any stockholder of INDY
until such INDY stockholder surrenders all certificates representing any of the
shares of INDY Common Stock in accordance with this Section 1.8. After the
surrender of such certificate(s) in accordance with this Section 1.8, any such
stockholder shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to the Merger Consideration.
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(c) Notwithstanding any other provision of this Agreement, no
certificates or scrip representing a fractional share of Carey Common Stock
shall be issued upon the surrender or exchange of certificates which prior to
the Effective Time shall have represented any shares of INDY Common Stock, no
dividend or distribution of Carey shall relate to any fractional share, and such
fractional share interests will not entitle the owner thereof to vote or to any
rights of a stockholder of Carey. In lieu of any fractional share, there shall
be paid to INDY stockholders an amount of cash equal to the closing price of the
Carey Common Stock used to calculate the Merger Consideration pursuant to
Section 1.7 of this Agreement as multiplied by the fraction of any such
fractional share.
(d) The Merger Consideration and cash in lieu of any fractional share
shall be deemed, when issued or paid hereunder, to have been issued or paid, as
the case may be, in full satisfaction of all rights pertaining to all
outstanding shares of INDY Common Stock.
1.9 Post-Closing Balance Sheet. Not more than fourteen (14) days after
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the Closing Date, the Principals shall prepare and deliver to Carey and Coopers
& Lybrand L.L.P., Washington, D.C. ("Coopers"), the consolidated financial
statements of the Companies for the one month period ending October 31, 1997,
including a statement of income and a balance sheet (the "Closing Date Balance
Sheet"). The Closing Date Balance Sheet shall (a) be prepared in accordance
with generally accepted accounting principles ("GAAP"), consistently applied,
(b) make full and adequate provision for all reserves, liabilities and
obligations (fixed or contingent) of the Companies as of such date, to the
extent such liabilities, alone or in the aggregate, are required to be reflected
or reserved against in accordance with GAAP, consistently applied, and (c)
determine the amount of the stockholders' equity of the Companies as of such
date (the "Closing Date Net Worth"). Within fourteen (14) days after Coopers'
receipt of the Closing Date Balance Sheet, Coopers shall (a) review it and make
any adjustments therein and in the Closing Date Net Worth required to be made in
accordance with GAAP, consistently applied; and (b) provide a copy of the
Closing Date Balance Sheet as adjusted by it to
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the Principals and Carey. The Closing Date Net Worth as so adjusted by Coopers
shall be the "Final Closing Date Net Worth." Within fourteen (14) days after
the Principals' and the Companies' receipt of the Final Closing Date Net Worth,
as determined by Coopers, the Principals shall review the Final Closing Date Net
Worth and shall state their objections if any thereto and identify the reasons
therefore. The Principals and Carey shall attempt to agree on the amount of
each determination to which any party objects within fifteen (15) days
thereafter. In the event that the Principals and Carey are unable to agree on
such amount, an independent certified public accountant mutually selected by the
Principals and Carey shall make the final determinations regarding the amounts
in dispute.
1.10 Employees. After the Merger, except as otherwise agreed in writing by
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Carey and CDF hereto, Carey Indiana shall be under no obligation to continue the
employment of any employees of the Companies.
2. TRANSACTIONS AT THE CLOSING.
(a) At the Closing, the Principals and Companies will deliver to
Carey and Carey Indiana the following:
(i) stock certificates evidencing a minimum of 90% of all of
the outstanding shares of capital stock of each of the Companies;
(ii) written resignations of each director and officer of each
of the Companies, effective as of the Closing Date;
(iii) the original minute books, stock record books and
corporate seals, if any, of the Companies;
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(iv) the opinion of counsel to the Companies and Principals in
the form attached hereto as Exhibit 2(a)(iv);
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(v) INDY's certificate of incorporation, as amended, certified
by the Office of the Secretary of State of Indiana, and a true and correct copy
of the by-laws of INDY as certified by the Secretary of INDY;
(vi) a file marked copy of the Articles of Merger pursuant to
which TTI was merged with and into INDY, certified by the Secretary of INDY;
(vii) all other documents, certificates and instruments
required to be delivered by the Principals or the Companies at or prior to the
Closing pursuant to this Agreement;
(viii) a copy of each written Company Contract (as defined
below);
(ix) the Customer List (as defined below); and
(x) a certificate signed by the officers of the Companies and
Principals which states the Companies' consolidated net worth as of the Closing
Date, determined in accordance with GAAP, consistently applied, including any
legal and accounting expenses, related to the Merger or this Agreement.
(b) At the Closing, Carey and Carey Indiana will deliver to the
Companies the following:
(i) stock certificates representing the Merger Consideration
to be issued pursuant to this Agreement to the stockholders of INDY who tender
at the Closing certificates representing their shares of INDY Common Stock, and
such Carey stock certificates shall be registered in the names of such
stockholders as such names appear
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on Schedule 5.1(d); provided that stock certificates registered in the name of
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each CDF and KDA representing the number of shares of Carey Common Stock equal
to Four Hundred Ten Thousand Five Hundred Dollars ($410,500) and Eighty-Nine
Thousand Five Hundred Dollars ($89,500), respectively, of Carey Common Stock,
divided by the closing price of Carey Common Stock used to calculate the Merger
Consideration pursuant to Section 1.7 of this Agreement shall be redelivered to
Carey by CDF and KDA pursuant to the terms of the Escrow Agreement.
(ii) intentionally omitted
(iii) Carey checks in the amount of the cash value of any
fractional shares, payable to such stockholders in their names as they appear on
Schedule 2(b)(iii);
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(iv) the opinion of Carey and Carey Indiana's counsel in the
form attached hereto as Exhibit 2(b)(iv);
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(v) a stock option agreement to each of the ten employees of
the Companies for a number of shares stipulated for those whose names and
current salary are listed on Schedule 2(b)(v) to purchase an aggregate of Fifty
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Thousand (50,000) shares of Carey Common Stock under Carey's 1997 Equity
Incentive Plan, which agreements shall provide that the options provided for
therein are exercisable at the closing price of the Carey Common Stock on NASDAQ
on the Closing Date and vest over a four-year period (the option shares shall be
allocated among the ten employees on said schedule pro rata based upon the
relative salaries of said employees); and
(vi) all other documents, certificates, instruments or writings
required to be delivered by Carey or Carey Indiana at or prior to the Closing
pursuant to this Agreement.
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(c) At the Closing, the Principals, Companies, Carey and/or Carey
Indiana, as applicable, will exchange the following, which in each case shall be
duly executed by the parties thereto:
(i) an executive employment and non-competition agreement
between Carey and CDF substantially in the form attached hereto as Exhibit
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2(c)(i) (the "Executive Employment Agreement");
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(ii) a consulting and non-competition agreement between Carey
and KDA substantially in the form attached hereto as Exhibit 2(c)(ii) (the
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"Consulting Agreement"); and
(iii) an escrow agreement among Carey, CDF, KDA, and First
America Bank N.A., as escrow agent, (the "Escrow Agent"), which escrow agreement
shall be substantially in the form attached hereto as Exhibit 2(c)(iii) (the
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"Escrow Agreement").
3. CONDITIONS OF CLOSING
3.1 Conditions to Obligations of Carey and Carey Indiana. The obligations
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of Carey and Carey Indiana to consummate the transactions contemplated by this
Agreement are subject to the satisfaction at or prior to the Closing, or waiver
by Carey and Carey Indiana in writing, in whole or in part, of each of the
following conditions:
(a) All of the representations and warranties of the Principals and
the Companies in Section 5.1 of this Agreement (considered collectively) and
each of those representations and warranties (considered individually), must
have been accurate in all material respects as of the date of this Agreement and
must be accurate in all material respects as of the Closing Date, as if made on
the Closing Date, and the Principals shall have caused the Companies to have
delivered to Carey all of the schedules and exhibits
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attendant to this Agreement as well as a certificate dated the Closing Date and
executed by the Principals and the Companies to such effect. In the event that
any Schedules are delivered to Carey after this Agreement is executed, they must
be satisfactory to Carey in its sole satisfaction.
(b) All of the covenants and obligations that the Principals or the
Companies are required to perform or to comply with pursuant to this Agreement
at or prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), must have been duly
performed and complied with in all material respects.
(c) Carey and Carey Indiana shall have received the opinion of
counsel to the Principals and the Companies, dated the Closing Date and in form
and substance satisfactory to Carey and its counsel, substantially to the effect
set forth on Exhibit 2(a)(iv).
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(d) The Principals and the Companies shall have executed and
delivered to Carey all documents, certificates, instruments and items referenced
in Sections 2(a) and (c).
(e) The Principals and the Companies shall have delivered to Carey
and Carey Indiana a certificate of the Secretary of each of the Companies
certifying as to requisite corporate or other action authorizing the
transactions contemplated by this Agreement and the incumbency of officers and
directors.
(f) The Principals and the Companies shall have delivered to Carey
and Carey Indiana such other certificates, documents and opinions as Carey and
its counsel shall reasonably require.
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(g) All approvals, consents, permits or licenses from any federal,
state or local governmental agency or body required in connection with the
consummation of the transactions contemplated hereby shall have been duly
obtained to the extent that such approvals, consents, permits or licenses can be
legally obtained prior to Closing, including, but not limited to, the approval
of any regulatory authority of the transfer to Carey and Carey Indiana of
control of each of the Companies' interstate and intrastate common carrier
rights, if any.
(h) No preliminary or permanent injunctive or other order shall have
been issued by any federal or state regulatory body, agency or court prohibiting
the consummation of the transactions contemplated hereby; no governmental agency
or body shall have instituted or notified any party of its intention to
institute or threaten to institute any suit, action, or legal or administrative
proceeding to restrain, enjoin or otherwise question the validity or legality of
the transactions contemplated by this Agreement, and no order or decree so
restraining or enjoining such transactions shall be in effect; and no other
consent or approval required for the consummation of the transactions
contemplated hereby by any third party shall not have been obtained and be duly
effective.
(i) Carey and Carey Indiana shall have received a certificate signed
by the officers of the Companies and the Principals which states the Companies'
consolidated net worth as of the Closing Date is equal to or greater than One
Million Six Hundred Thousand Dollars ($1,600,000), determined in accordance with
GAAP, consistently applied, including any legal and accounting expenses of the
Companies and the Principals prior to the Merger.
(j) The transaction contemplated hereby will qualify as a private
placement, and the Principals will assist Carey and Carey Indiana in procuring
letters from the INDY shareholders evidencing that a sufficient number of INDY
shareholders qualify as accredited investors under the Securities Act of 1933,
as amended.
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(k) This Agreement and the Merger shall have been approved by the
Board of Directors of Carey.
(l) Carey shall be satisfied that the Merger shall qualify as a
reorganization within the meaning of Section 368(a) of the Code.
(m) Carey shall have received a letter from Coopers to the effect
that the Merger shall qualify for pooling of interests accounting treatment.
3.2 Conditions to Obligations of the Principals and the Companies. The
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obligations of the Principals and the Companies to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing, or waiver by such parties in writing, in whole or in part, of each
of the following conditions:
(a) All of the representations and warranties in Section 5.2 of this
Agreement (considered collectively), and each of those representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all material
respects as of the Closing Date, as if made on the Closing Date.
(b) All of the covenants and obligations that Carey and Carey Indiana
are required to perform or to comply with pursuant to this Agreement at or prior
to the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
compiled with in all material respects.
(c) The Principals and the Companies shall have received the opinion
of counsel to Carey and Carey Indiana, dated the Closing Date and in form and
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substance satisfactory to the Principals and the Companies and their counsel,
substantially to the effect set forth in Exhibit 2(b)(iv).
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(d) Carey and Carey Indiana shall have executed and delivered to the
Principals and the Companies all documents, certificates, instruments, and items
referenced in Sections 2(b) and (c).
(e) Carey and Carey Indiana shall have delivered to the Principals
and the Companies certificates of their Secretaries, certifying as to requisite
corporate or other action authorizing the transactions contemplated by this
Agreement, and to the incumbency of all officers signing this Agreement and any
instruments to be delivered hereunder.
(f) Carey and Carey Indiana shall have delivered to the Principals
and the Companies such other certificates, documents and opinions as the
Principals and the Companies shall reasonably require.
4. COVENANTS
4.1 Confidentiality. Carey and Carey Indiana on one hand, and the
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Companies and the Principals on the other, will, and will cause their respective
agents and employees to, hold in strict confidence, unless compelled to disclose
by judicial or administrative process or, in the opinion of their counsel, by
other requirements of law, all Confidential Information (as hereinafter defined)
of the other and will not disclose the same to any third party. For purposes
hereof, "Confidential Information" shall mean all information of any kind
concerning the Companies or Carey (including any of its subsidiaries), as the
case may be, or the existence, substance or terms of any discussions,
negotiations or any communications between the Principals or the Companies and
Carey or Carey Indiana related to this Agreement or transaction contemplated
hereby, including, but not limited to, the terms of this Agreement or any
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draft thereof, except information (i) ascertainable or obtained from public or
published information, (ii) received from a third party not known to the
receiving party to be under an obligation to keep such information confidential,
(iii) that is or becomes known to the public (other than through a breach of
this Agreement), (iv) that was in the receiving party's possession before
disclosure thereof to it in connection with this Agreement or (v) that was
independently developed by the receiving party.
4.2 Covenant Not To Compete
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(a) Covenant. The Principals agree that commencing on the Closing
Date and continuing until the later of (i) two (2) years after the termination
of their respective Executive Employment and Consulting Agreements and (ii) five
(5) years after the date of this Agreement they shall not, without the prior
written consent of Carey, which consent will not be unreasonably withheld,
directly, indirectly, either on the behalf of the Principals or on behalf of any
other person (as used in this Section 4.2 " Carey" means Carey or any of its
subsidiaries and licensees):
(i) attempt in any manner to persuade a customer or client of
Carey to cease to do business or to reduce the amount of business which such
customer or client has customarily done or contemplated doing with Carey;
(ii) employ or attempt to employ any person who is then, or
within one (1) year prior to, was in the employ of or in a contracting
relationship with Carey;
(iii) agree to serve as an agent, contractor, joint venture
party, partner, consultant, or employee of a customer or client in a manner
which would have the effect of reducing the amount of business derived by Carey
with such customer or client or diverting away from Carey business from any
customer or client of Carey for any of the products or services of the type
usually rendered by Carey for any such customer or client;
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(iv) solicit or divert (or attempt to solicit or divert)
business of any customer or client of Carey in the areas of products or services
of the type usually provided by Carey for any such customer or client for the
benefit of anyone other than Carey. "Solicit or divert (or attempt to solicit or
divert)" shall also include direct personal calls and distributing
announcements, notices or other materials to a customer or client;
(v) service or attempt to service any customer or client of
Carey, or perform work for any customer or client of Carey of the type
customarily provided by Carey or contemplated to be provided by Carey;
(vi) disclose or distribute to any third parties customer or
client workpapers, data, software and other written materials (and all copies
thereof) prepared for internal use by Carey or used in connection with the
business or operations of Carey; or
(vii) engage in or in any manner be connected with or employed by
any person, firm, corporation, proprietorship, partnership or other entity in
competition with Carey or engaged in the business of providing automobile or
limousine transportation, chauffeured cars for hire, or limousine rentals or in
any other enterprise which is or may be in competition with any line of business
conducted or contemplated to be conducted by Carey within a radius of one
hundred (100) miles of any office of Carey, its affiliates, licensees, or
subsidiaries.
(b) "Customer" or "client" includes any person or entity (including,
but not limited to, state, local, municipal or federal government entities) who
is then a customer or client of Carey, its affiliates or subsidiaries, or anyone
who was a customer or client at any time during the prior twelve-months or
prospective customers or clients with which the Principals have knowledge
(actual or constructive) that Carey has been negotiating with to become a
customer or client of Carey at any time after the Closing Date.
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(c) The Principals acknowledge that in any event they will be able to
earn a livelihood without violating the foregoing covenants. The Principals
represent and warrant to Carey that they are not a party to any other agreement
containing a non-competition agreement or other restriction with respect to any
service or business which they are to perform under the Executive Employment
Agreement and the Consulting Agreement.
(d) Right to Injunction. The breach or threatened breach by the
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Principals and of any of the provisions of this Section 4 shall entitle Carey to
a permanent injunction or other injunctive relief in order to prevent or
restrain any such breach or threatened breach by the Principals or their
partners, agents, representatives, employees, independent contractors or any
entity of which they are a partner, joint venturer, stockholder, contractor,
proprietor, officer, director, employee or agent, or any and all persons or
entities directly or indirectly acting for or with them. The rights and
remedies of Carey under this Section 4 shall be in addition to and not in
limitation of any of the rights, remedies, or damages available to it at law or
equity. In the event that an action is successfully brought to enjoin the
Principals from violating the provisions of this Section 4.2, Carey shall be
entitled to collect from the Principals reasonable costs and attorneys' fees in
addition to any other rights or claims Carey may have against the Principals.
(e) Survival. The provisions of this Section 4.2 shall survive the
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termination of this Agreement.
(f) Severability. The Principals have carefully read and considered
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the provisions of this Section 4.2 and, having done so, agree that the
restrictions set forth herein (including, but not limited to, the time period of
the restrictions and the geographical areas of the restrictions) are fair and
reasonable and are reasonably required for the protection of the interests of
Carey. In the event that any provision of this Section 4.2 related to a time
period or areas of restriction shall be declared by a
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court of competent jurisdiction to exceed the maximum time period or area such
court deems reasonable and enforceable, said time period or areas of restriction
shall be deemed to become and hereafter shall be the maximum time period or
areas which such court deems reasonable and enforceable.
4.3 Conduct of the Companies' Business. Prior to the Closing, the
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Companies shall adhere, and the Principals shall cause the Companies to adhere,
to the following:
(a) operate the Companies only in the usual, regular and ordinary
manner and, to the extent consistent with such operation, use their best efforts
to preserve their present business organization and goodwill of the Companies
intact, preserve their present relationships with persons having business
dealings with them, and, unless such termination is approved by Carey, keep
available the services of each of the Companies' present officers, employees,
independent contractors and other service providers;
(b) not amend the charter or by-laws of either of the Companies;
(c) maintain the books and records of each Company in the usual
regular and ordinary manner, on a basis consistent with prior practice;
(d) maintain all of the properties relating to each of the Companies
in customary repair, order and condition, reasonable wear and tear and damage by
fire or unavoidable casualty excepted, and maintain insurance upon all of the
properties relating to the Companies and with respect to the conduct of the
Companies on such amounts and of such kinds comparable to that in effect on the
date hereof; and;
(e) take no action that would make any representation or warranty
contained in Section 5 untrue or incorrect.
-17-
4.4 CDF's Cooperation. For a period of three (3) years following the
------------------
Closing Date, CDF agrees to cooperate with Carey so as to afford Carey the full
goodwill and ongoing value of the Companies' assets and operations and to
undertake to make telephone calls, write letters, participate in sales calls,
and do whatever else is necessary, in the judgement of Carey, to assure the
Companies' customers that the transaction contemplated by this Agreement is such
that the Companies' customers can be assured of continued high quality service.
CDF shall put forth his best effort to assure continued use of the Companies'
services by their customers.
4.5 Notification Of Certain Matters. Each of the parties to this
-------------------------------
Agreement (the "Notifying Party") shall give prompt notice to the other parties
of (a) the occurrence or non-occurrence of any event that would be likely to
cause any representation or warranty of the Notifying Party contained in this
Agreement to be untrue or inaccurate in any material respect at or prior to the
Closing and (b) any failure of the Notifying Party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder. The delivery of any notice pursuant to this Section 4.4 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
4.6 Exclusive Negotiating Rights. Until the Closing, or the earlier
----------------------------
termination of this Agreement in accordance with its terms, the Principals, the
Companies and each officer, director, employee, consultant, advisor, agent or
investment banker of any of the Companies or the Principals shall not, directly
or indirectly, (a) solicit, initiate or knowingly encourage or take any action
knowingly to facilitate the submission of inquiries, proposals or offers from
any person relating to (i) any acquisition or purchase of any material asset or
assets of either of the Companies or any shares of equity securities of the
Companies, (ii) any tender offer (including a self-tender offer) or exchange
offer involving shares of INDY Common Stock, (iii) any merger, consolidation,
business combination, sale of substantially all assets, recapitalization,
liquidation, dissolution or similar transaction involving either of the
Companies other than the
-18-
transactions contemplated by this Agreement, or (iv) any other transaction the
consummation of which would or could reasonably be expected to impede, interfere
with, prevent or materially delay the Merger or which would or could reasonably
be expected to materially dilute the benefits to Carey and Carey Indiana of the
transactions contemplated hereby (the transactions referred to in clauses (i) -
(iv) are collectively referred to herein as "Alternative Transactions" and
individually referred to herein as an "Alternative Transaction"), or agree to or
endorse any Alternative Transaction, or (b) enter into, continue or participate
in any discussions or negotiations regarding any Alternative Transaction, or
furnish to any person or entity (other than Carey) any information with respect
to its business, properties or assets or any Alternative Transaction, or
otherwise cooperate in any way with, assist or participate in, or facilitate or
encourage any effort or attempt by any person to seek, effect or make any
Alternative Transaction; provided, however, that the foregoing shall not
-------- -------
prohibit the Companies from (x) furnishing information pursuant to a
confidentiality agreement which does not conflict with the terms of this
Agreement to a third party who has initiated contact with the Companies
regarding a bona fide unsolicited Alternative Transaction under circumstances
---------
not constituting a breach of this Section 4.5 (a "Permitted Contact") and (y)
engaging in discussions or negotiations with a third party who has initiated a
Permitted Contact regarding an Alternative Transaction; provided, further, that
-------- -------
the Companies shall not take any of the foregoing actions referred to in clauses
(x) and (y) until after reasonable notice to and consultation with Carey with
respect to any such actions and that INDY shall continue to consult with Carey
after taking any such actions, except to the extent that it receives the written
opinion of its outside counsel that such continued consultation would constitute
a breach of its fiduciary duties to the stockholders of INDY under Indiana law.
If any of the Companies or the Principals receives an inquiry, proposal or offer
regarding an Alternative Transaction, the Companies shall within one (1)
business day of their receipt of such proposal inform Carey of the terms and
conditions of such inquiry, proposal or offer and identity of the person or
entity making it.
-19-
4.7 Further Assurances. The Principals and the Companies will have all
-------------------
present officers and directors of each of the Companies execute whatever minutes
of meetings or other instruments and take whatever action as may be necessary or
desirable to, (a) effect, perfect or confirm of record or otherwise Carey
Indiana's full right, title and interest in and to the respective businesses,
properties and assets of INDY and TTI, free and clear of all Encumbrances (as
defined below), (b) allow the Companies to collect, realize upon, gain
possession of, or otherwise acquire full right, title and interest in and to
such businesses, properties and assets, or to carry out the intent and purposes
of the transactions contemplated hereby, and (c) permit Carey Indiana to take
dominion over the assets of the Companies.
4.8 Access And Information. The Principals will cause the Companies to
----------------------
afford, and the Companies will afford, Carey's representatives with access to
the Companies' management, properties, books and records and furnish to Carey
and its representatives all additional financial and operating data and other
information as to the Companies' businesses and properties as Carey may from
time to time reasonably request.
4.9 Best Efforts. Subject to the terms and conditions hereof, each party
------------
to this Agreement agrees to fully cooperate with the others and the others'
counsel, accountants and representatives in connection with any steps required
to be taken as part of its obligations under this Agreement. Each party to this
Agreement agrees that it will use its best efforts consistent with reasonable
business practice to cause all conditions to its obligations and to the other
parties under this Agreement to be satisfied as promptly as possible, and will
not undertake a course of action inconsistent with this Agreement or which would
make any of its representations, warranties, agreements or covenants in this
Agreement untrue in any material respect or any conditions precedent to its
obligations under this Agreement unable to be satisfied at or prior to the
Closing.
4.10 Voting. Each of the Principals agrees to vote his shares of INDY
------
Common Stock to approve this Agreement and the Merger at any meeting or in any
written
-20-
consent of INDY stockholders, and to otherwise use his best efforts to obtain
the stockholder approval necessary under the ICL with respect to the Companies
to effect the Merger, except to the extent that the Principals receive a written
opinion of counsel stating that the taking of such actions would constitute a
violation of their fiduciary duties as stockholders or directors under Indiana
law.
4.11 Customer List. In order to transfer to Carey full access to the
-------------
Customer List (as defined below), the Principals shall cause the Companies to
deliver to Carey, prior to or simultaneous with the Closing, the nature and
location of all materials containing information relevant to the Customer List,
including, but not limited to, rolodex cards, log books, bills, receipts,
electronic data and computer print-outs.
4.12 Release of Personal Guarantees. Following the Closing, Carey shall
------------------------------
cause the release of certain personal guarantees of CDF in connection with
certain outstanding local bank debt as set forth in Schedule 4.12.
-------------
4.13 Public Announcements. Carey, the Principals and the Companies shall
--------------------
not make any public announcements, notices or other communications ("Public
Announcements") regarding this Agreement and the transactions contemplated
hereby to parties other than the parties hereto and their respective advisors
without the prior written approval (which shall not be unreasonably withheld or
delayed) of (i) Carey, in the case of proposed Public Announcements by the
Principals and the Companies, and (ii) the Principals and the Companies, in the
case of proposed Public Announcements by Carey.
4.14 Restrictions on Resale. Carey has informed the Companies and the
-----------------------
Principals that Carey intends to account for the Merger as a pooling-of-
interests under Accounting Principals Board Opinion No. 16 ("Opinion 16") .
Carey has also informed the Principals that its ability to account for the
Merger as a pooling-of-interests was a material factor considered by Carey in
Carey's decision to enter into this Agreement.
-21-
Therefore, pursuant to Opinion No. 16, prior to the publication and
dissemination by Carey of consolidated financial results which include results
of the combined operations of the Companies and Carey for at least thirty (30)
days on a consolidated basis following the Effective Time, the INDY Stockholders
shall not sell, offer to sell, or otherwise transfer or dispose of, any shares
of the Carey Common Stock received by INDY Stockholders, engage in put, call,
short-sale, straddle or similar transactions, or in any other way reduce the
INDY Stockholder's risk of owning shares of Carey. The certificates evidencing
the Carey Common Stock to be received by the INDY Stockholders will bear a
legend substantially in the form set forth below:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY
ATTEMPTED SALE, TRANSFER OR ASSIGNMENT, PRIOR TO THE PUBLICATION AND
DISSEMINATION OF FINANCIAL STATEMENTS FILED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION BY THE ISSUER WHICH INCLUDE THE RESULTS
OF AT LEAST THIRTY (30) DAYS OF COMBINED OPERATIONS OF THE ISSUER AND THE
COMPANY ACQUIRED BY THE ISSUER FOR WHICH THESE SHARES ARE ISSUED. UPON THE
WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER WILL REMOVE
THIS RESTRICTIVE LEGEND WHEN THIS REQUIREMENT HAS BEEN MET.
In addition, certificates representing the Merger Consideration to be
issued to affiliates of INDY as defined by the Securities Act of 1933, as
amended, will bear a legend requiring compliance with the requirements of Rule
145 of the Securities Act of 1933, as amended in connection with any resale of
the share of such Merger Consideration.
4.15 Carey and CDF will use all reasonable efforts (in any effects within
ten (10) days after the Closing Date) to assure that all approvals, consents,
permits or licenses from any federal, state or local governmental agency or body
required in connection with the consummation of the transactions contemplated
hereby shall have been duly
-22-
obtained, including, but not limited to, the approval of any regulatory
authority of the transfer to Carey and Carey Indiana of control of each of the
Companies' interstate and intrastate common carrier rights, if any, including
application for new authority with respect to any authority to which is not
subject to transfer.
4.16 Tax-Free Reorganization. The Principals have no present intent to
-----------------------
transfer or otherwise dispose of their ownership interest in the shares of Carey
Common Stock received as Merger Consideration in connection with this Agreement,
and Carey and the Principals each agree that they will not take any action that
would prevent this transaction from being treated as a tax-free reorganization
under Section 368(a) of the Code, and none of the Principals nor the Companies
know of any reason why the Merger will not qualify as reorganization under
Section 368(a) of the Code.
5. REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of Principals and Companies. In order
----------------------------------------------------------
to induce Carey to enter into this Agreement, the Principals and the Companies
hereby jointly and severally represent and warrant to Carey as follows:
(a) Organization, Power, Etc. INDY and KDA are each corporations duly
------------------------
organized and validly existing under the laws of the State of Indiana. The
merger of TTI into INDY was duly authorized and is effective. Neither INDY nor
KDA are required to be qualified as a foreign corporation in any jurisdiction.
Each of the Companies and KDA has all requisite power and authority to own,
operate, and lease its properties and to carry on its business as now being
conducted. The Companies and KDA have all requisite power and authority, and the
Principals (other than KDA) have full capacity, to enter into this Agreement and
all other agreements contemplated hereby and to perform their obligations
hereunder and thereunder. The execution and delivery of this agreement has been
duly authorized by the board of directors of each of the Companies, and KDA, by
KDF as the sole stockholder of KDA, and no other action is necessary to
-23-
authorize this Agreement or the consummation of the transactions so contemplated
other than the approval of the holders of a majority of the outstanding shares
of INDY Common Stock. This Agreement constitutes the legal, valid and binding
obligation of the Principals and the Companies, enforceable against them in
accordance with its terms. The Companies and KDA have previously furnished to
Carey true and complete copies of their charters and by-laws, as amended to
date.
(b) Effect of Agreement. Except as set forth in Schedule 5.1(b), the
------------------- ---------------
execution, delivery and performance of this Agreement by the Principals and the
Companies and consummation of the transactions contemplated hereby will not
require the consent, approval or authorization of any person or public
authority, will not violate any provision of the charter or by-laws of either of
the Companies or KDA, will not violate, with or without the giving of notice
and/or the passage of time, any provision of law applicable to the Principals
and the Companies, and will not conflict with or constitute a default under, or
result in the creation of any Encumbrance upon, any of the properties or assets
of the Companies pursuant to any indenture, mortgage, deed of trust or other
agreement or instrument, or any order, judgment, award, decree, statute,
ordinance, regulation or any other restriction of any kind or character, to
which any of the Principals or the Companies are a party or by which any of the
Principals or the Companies or any of their assets and properties may be bound.
(c) Capitalization. The authorized equity securities of INDY consists
--------------
of Two Million (2,000,000) shares, of which: (i) One Million Seven Hundred Fifty
Thousand (1,750,000) are shares of Common Stock , each with no par value (the
"Indy Common Stock"), of which Seven Hundred Twenty-Seven Thousand Five Hundred
Forty-Two (727,542) shares are issued and outstanding, and (ii) Two Hundred
Fifty Thousand (250,000) are shares of Preferred Stock, each with no par value,
of which no shares are issued and outstanding. The authorized equity securities
of TTI, prior to the effectiveness of the merger of TTI with and into INDY,
consisted of One Thousand (1,000) shares of common stock, each with no par value
per share (the "TTI Common Stock"), Eight
-24-
Hundred (800) of which shares are issued and outstanding. All outstanding
shares of INDY Common Stock have been duly authorized and validly issued and are
fully paid and non-assessable. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights or other contracts, commitments, agreements or understandings (written or
oral) that require either of the Companies to issue, sell, transfer, purchase or
redeem any of its capital stock or other securities. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation or similar
rights with respect to either of the Companies. As of the Closing Date, there
will be no agreements, voting trusts, proxies or other agreements or
understandings with respect to the voting or ownership of the capital stock of
either of the Companies.
(d) Ownership and Title to the Shares. The Stockholders set forth in
---------------------------------
Schedule 5.1(d) (the "Stockholders") are the sole record and beneficial holders
- ---------------
of all of the issued and outstanding shares of the INDY Common Stock, owning the
number of shares set forth opposite their names on Schedule 5.1(d). To the
---------------
Principals' and Companies' knowledge, the Stockholders own their respective
shares free and clear of any Encumbrances except as set forth in Schedule
--------
5.1(d), and the Principals have the ability to vote their shares. INDY was,
prior to the effectiveness of the merger with TTI with and into INDY, the sole
and record and beneficial owner of all the outstanding shares of TTI Common
Stock. The current addresses and social security number or other federal tax
identification numbers of each of the Stockholders are set forth on Schedule
--------
5.1(d). None of the Principals or the Companies directly or indirectly controls
- ------
or owns an interest in any other person, corporation, partnership, joint venture
or other business entity engaged in the chauffeured car-for-hire or leasing
business.
(e) Pooling-of-Interests Accounting. Neither of the Companies have
-------------------------------
ever been a subsidiary or division of another corporation or a part of an
acquisition which was later rescinded and, within the past two years, there has
not been any sale or spin-off of a significant amount of assets of either of the
Companies or any affiliate of the
-25-
Companies other than in the ordinary course of business. Except as set forth on
Schedule 5.1(e), the Companies own no capital stock of Carey. The Companies
- ---------------
have not acquired any of their capital stock during the past two years. Neither
of the Companies has any obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of the capital stock of either Company or any
interest therein or to pay any dividend or make any distribution in respect
thereof. Except as provided above, neither the voting stock structure of the
Companies nor the relative ownership of shares among any of INDY's Stockholders
has been altered or changed within the last two (2) years in contemplation of
the Merger. Except as set forth in Schedule 5.1(e), none of the shares of INDY
---------------
Company Stock were issued pursuant to awards, grants or bonuses. Except as set
forth above, to the best of the Principal's knowledge, there has been no
transaction or action taken with respect to the equity ownership of the
Companies in contemplation of the Merger which would prevent Carey from
accounting for the Merger under the pooling-of-interests method of accounting in
accordance with Opinion No. 16 of the Accounting Principles Board ("Opinion No.
16"). If required, the Principals shall or shall cause the Companies to execute
any documentation reasonably required by Carey's independent public accountant
to enable Carey to account for the Merger as a pooling-of-interests.
(f) Subsidiaries. Neither of the Companies owns, nor has any
------------
agreements or understanding (written or oral) to acquire, any equity securities
or other securities of any corporation, general or limited partnership, limited
liability company, joint venture, or other entity of business, or any direct or
indirect equity or ownership interest in any other business. The business of
each of the Companies is, and since October 1, 1995, has been conducted solely
through the Companies, and not through any subsidiary, affiliate or joint
venture of the Principals or the Companies or any other entity or person.
Neither the Principals nor the Companies owns or controls, directly or
indirectly, any business or company competitive with the Companies or any
business or company that provides services to the Companies or any other
chauffeured car-for-hire or leasing services company.
-26-
(g) Financial Statements. The Companies have provided to Carey (i)
--------------------
the consolidated financial statements of the Companies, including a statement of
income, balance sheet, and statement of cash flows, for the fiscal years ended
September 30, 1994, 1995 and 1996, which consolidated financial statements have
been reviewed by Deloitte & Touche LLP, and the monthly internal financial
statements of the Companies from October 1, 1996 through September 30, 1997,
which financial statements are attached as Schedule 5.1(g) (collectively, the
---------------
"Financial Statements"); (ii) the tax returns of the Companies for fiscal years
1994, 1995 and 1996 and (iii) a schedule of monthly revenues of the Companies
from October 1, 1996 through September 30, 1997 which include a break-out of
revenue by direct bill, credit card, cash, which indicates whether such revenue
includes tax, tips, tolls and commissions, which financial statements are
attached as Schedule 5.1(g) (collectively, the "Financial Statements"). The
---------------
Financial Statements are complete and correct and accurately present the
financial condition and results of operations of the Companies all in conformity
with GAAP consistently applied.
(h) Books and Records. The books and records of each of the Companies
-----------------
are complete and correct, have been maintained in accordance with good business
practices, and accurately reflect the basis for the financial condition and
results of operations of the Companies as set forth in the Financial Statements.
(i) Absence of Undisclosed Liabilities. Except as and to the extent
----------------------------------
of the amounts specifically reflected on or reserved against in the Companies'
balance sheet as of September 30, 1997 included in the Financial Statements (the
"Balance Sheet"), the Companies do not have any liabilities or obligations of
any nature whatsoever, due or to become due, accrued, absolute, contingent or
otherwise, except for immaterial liabilities and obligations incurred in the
ordinary course of business which are consistent with past practice. The
Principals and the Companies do not know of any basis for the assertion against
the Companies of any liability or obligation not fully reflected or reserved
against in the Balance Sheet or incurred in the ordinary course of business and
consistent with past practice since the date thereof.
-27-
(j) Absence of Adverse Change. Since September 30, 1997 (the "Balance
-------------------------
Sheet Date"), there has been no material adverse change in the business,
financial position, assets, liabilities, results of operations or prospects of
either of the Companies, nor are there any conditions that exist which, if they
materialized would adversely effect either of the Companies, other than
transactions expressly contemplated to occur in connection with the transactions
contemplated hereby or as set forth on Schedule 5.1(j). The Principals and the
---------------
Companies have not:
(i) taken any action or made any change in the business or
operations of either of the Companies, other than in the ordinary course of
business consistent with past practice;
(ii) entered into or agreed to enter into any transaction,
agreement or commitment, or suffered the occurrence of any event or events (a)
that has interfered or is reasonably likely to interfere with the normal and
usual operations of the business of either of the Companies or (b) that, singly
or in the aggregate, has resulted or is reasonable likely to result in a
material adverse change with respect to either of the Companies;
(iii) incurred or increased any indebtedness for borrowed money
or any capital lease obligations, or assumed, guaranteed, endorsed or otherwise
become responsible for the obligations of any other individual, partnership,
firm, or corporation (except to endorse checks for collection for deposit in the
ordinary course of business), or made any loan or advance to any individual,
partnership, firm or corporation other than in the normal course of business;
(iv) mortgaged, pledged, or otherwise encumbered, or, other
than in the ordinary course of business consistent with past practice, sold,
transferred or otherwise disposed of, any of the properties or assets of the
Companies, including any
-28-
canceled, released, hypothecated or assigned indebtedness owed to the Companies,
or any claims held by the Companies;
(v) made any investment of a capital nature in excess of Two
Thousand Five Hundred Dollars ($2,500) or entered into a commitment for such
investment either by purchase of stock or securities, contributions to capital,
property transfer or otherwise, or by the purchase of any property or assets of
any other individual, partnership, firm or corporation; or made any loans or
advances to any other person, other than reasonable travel or other advances to
employees in the ordinary course of business consistent with past practices
without the prior written consent of Carey;
(vi) other than payment to NBD Indiana, Inc. as agreed to by
Carey, paid any long-term liability, otherwise than in accordance with its
terms;
(vii) failed to make any scheduled or other payment by its due
date;
(viii) incurred any material damage, destruction or loss to any
asset owned by either of the Companies or used in either of the Companies'
business;
(ix) entered into any amendment, waiver or modification to any
existing material agreement, contract, lease, indenture or commitment (whether
written or oral); or
(x) agreed, contracted or committed to do any of the
foregoing, or agreed to pay after the Closing any expenses or fees of counsel,
accountants or consultants for services in preparation for or in connection with
this Agreement or the transactions contemplated hereunder.
-29-
(k) Receivables; Banking Relationships. Schedule 5.1k(i) provides an
---------------------------------- ----------------
accurate and complete breakdown and aging of all accounts receivable, notes
receivable and other receivables of the Companies as of the Balance Sheet Date.
All existing receivables of the Companies represent valid obligations of third
parties arising from bona fide transactions entered into in the ordinary course
---------
of business. Schedule 5.1k(ii) lists (a) each account maintained by or for the
-----------------
benefit of either of the Companies at any bank or other financial institution
since the Balance Sheet Date.
(l) Tax Matters.
-----------
(i) the Companies and any consolidated, combined or unitary
group of which the Companies are or were a member, (individually, a "Tax
Affiliate" and, collectively the "Tax Affiliates") have prepared and timely
filed with the appropriate United States, state and local government agencies
and all foreign countries and political subdivisions thereof all tax returns,
declarations, and reports, estimates, information returns and statements
("Returns") required to be filed and all such returns are correct and complete.
The Companies and any Tax Affiliates have timely and properly paid, or entered
into executed agreements to pay, in full all Taxes that are shown to be due on
such Returns or claimed to be due by any taxing authority. The Companies and any
Tax Affiliates have complied with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes and timely and properly
withheld from employee wages and paid over to proper government authorities all
amounts required to be so withheld and paid over under all applicable laws,
except as disclosed on Schedule 5.1(l)(i).
(ii) there are no liens for Taxes upon the assets of the
Companies or of any Tax Affiliate. Neither the Companies nor any of their Tax
Affiliates has requested any extension at time within which to file any Return
which Return has not since been filed, except as disclosed on Schedule
5.1(l)(ii). Except as disclosed on Schedule 5.1(l)(ii), no deficiency for any
taxes has been proposed, asserted or assessed
-30-
against the Companies or any of their Tax Affiliates which has not been resolved
and paid in full. There are no outstanding waivers or consents given by the
Companies or any of their Tax Affiliates regarding the application of the
statute of limitations with respect to any Taxes or Returns.
(iii) neither the Companies nor any Tax Affiliate is a party,
nor are there any circumstances that would cause them to be a party, to any
pending action or proceeding, nor is any action or proceeding threatened by any
governmental authority for assessment or collection of Taxes, and no claim for
assessment or collection of taxes has been asserted against the Companies or any
Tax Affiliates other than an audit by the Indiana Department of Revenue of the
companies that is currently pending, as disclosed on Schedule 5.1(l)(iii).
(iv) for purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies or other assessments, including without limitation,
all net income, gross income, gross receipts, sales, use, ad valorem, transfers,
----------
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, property or other taxes, customs, duties, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign).
(v) the Companies are and at all times since their
incorporation have been C corporations as defined by the Code.
(m) Tangible Properties and Vehicles.
--------------------------------
(i) Schedule 5.1(m)(i) contains a true and complete list of
------------------
all tangible personal property, including, without limitation, furniture,
fixtures, equipment, computer hardware and software (but excluding Vehicles
defined below) owned by or leased to either of the Companies (the "Tangible
Personal Property"), other than minor
-31-
items valued at less than One Hundred Dollars ($100.00). Except with respect to
Tangible Personal Property listed as being leased on Schedule 5.1(m)(i), the
------------------
Companies have good and marketable title free and clear of all Encumbrances to
the Tangible Personal Property. With respect to any Tangible Personal Property
leased by either of the Companies, all leases, conditional sale contracts,
franchises or licenses pursuant to which either of the Companies may hold or use
(or permit others to hold or use) such Tangible Personal Property are valid and
in full force and effect, and there is not under any of such instruments any
existing default or event of default or event which with notice or lapse of time
or both would constitute such a default; and the possession and use of such
property by either of the Companies has not been disturbed and no claim has been
asserted against any of the Companies adverse to its rights in such leasehold
interests. The Tangible Personal Property and the Vehicles constitute all
tangible personal property necessary to conduct the business of each of the
Companies in the manner in which they have been and are being conducted. All
Tangible Personal Property is adequate and usable for the purposes for which it
is currently used and each item of Tangible Personal Property, whether owned or
leased, is in good operating condition, reasonable wear and tear excepted, and
has been properly maintained and repaired. During the past three (3) years,
there has not been any material interruption of the operations of the business
of either of the Companies due to the condition of any of the Tangible Personal
Property.
(ii) Schedule 5.1(m)(ii) contains a true and complete list of
-------------------
all motor vehicles used in the operation of the business of each of the
Companies (the "Vehicles"), including, without limitation, Vehicles owned by or
leased to the Companies (the "Company Vehicles"), or Vehicles for which the
Companies are under obligation of any nature by guarantee or otherwise, and sets
forth, with respect to each Vehicle, the year, make, serial number, model,
mileage as of September 30, 1997, and whether such Vehicle is owned or leased.
Schedule 5.1(m)(ii) sets forth a description of any outstanding financial
- -------------------
obligations of the Principals or the Companies (including financial obligations
of third parties which are guaranteed by the Principals or the Companies) on
-32-
any Vehicles, including the date of obligation, deposit, financing source,
interest rate, term, dates and amounts of first and last payments, total amount
financed, monthly payment, balloon payment (if any), outstanding balance, and
extent and nature of the Companies' obligations with respect to such vehicles.
Except as shown in Schedule 5.1(m)(ii) the Companies have good and marketable
-------------------
title, free and clear of all Encumbrances to all the Company Vehicles. With
respect to Vehicles as to which the Companies have outstanding financial
obligations, all leases, conditional sales contracts and financing documents
pertaining to such Vehicles are in full force and effect, and there is not under
any of such instruments any existing default or event of default which with
notice or lapse of time or both would constitute such a default. Vehicles are
adequate and useable for the purposes for which they are currently used and each
such Vehicle is in good operating condition, reasonable wear and tear excepted,
and has been properly maintained and repaired. During the past three (3) years,
there has not been any material interruption of the operations of the Companies'
business due to condition of the Vehicles used in the operation of the
Companies' business.
(n) Premises. Schedule 5.1(n) sets forth a true and complete list and
-------- ---------------
description of all real property leased by either of the Companies or used in
their business (each a "Leased Premises"). A true and correct copy of the lease,
as amended to date, with respect to each Leased Premises has been delivered to
Carey. Each lease covering Leased Premises is in full force and effect (there
existing no default under any such lease which, with the lapse of time or notice
or otherwise, would entitle the lessor to terminate the same), conveys the
leased real estate purported to be conveyed thereunder and, is enforceable by
the Companies. The Companies have the right to use their respective Leased
Premises in accordance with the terms of such leases free and clear of all
Encumbrances or other interests or rights of third parties, except those which
do not or would not have a material adverse effect on the Leased Premises as
used in the Companies' business. Each of the Leased Premises is structurally
sound, adequately maintained, fully equipped with all necessary utilities and is
in good condition and repair, consistent with the uses to which it is presently
being put or intended to be put. All
-33-
structures, improvements and fixtures on the Leased Premises and the current
uses of the Leased Premises conform in all material respects to any and all
applicable federal, state and local laws, building, health and safety and other
ordinances, laws, rules and regulations. There is no violation of any material
covenant, restriction or other agreement or understanding, oral or written,
affecting or relating to title or use of any Leased Premises. There are no
pending or threatened condemnation or similar proceedings or assessments
affecting any of the Leased or Owned Premises, nor is any such condemnation or
assessment contemplated by any governmental authority. Neither Company owns any
real property.
(o) Environmental Matters. To the knowledge of the Principals:
----------------------
(i) no governmental or private notice of violation, action,
suit or other proceeding to enforce or impose liability under any Environmental
Laws (as defined below), and no investigation or inquiry under any Environmental
Laws, is pending or threatened against either of the Companies, or any person or
entity for whose conduct either of the Companies are or may be held responsible,
which would affect the business of either of the Companies;
(ii) no Leased Premises is contaminated with any Hazardous
Materials (as defined below). There are no on-site or off-site locations used
(currently or in the past) in the Companies' businesses or by either of the
Companies in connection with their respective businesses for the treatment,
storage or disposal of Hazardous Materials;
(iii) without limiting the generality of the foregoing, there
are no underground storage tanks at any Leased Premises, nor are there any PCB-
containing transformers at or on any Leased Premises;
-34-
(iv) there are no liabilities in connection with either of the
Companies' businesses relating to the off-site treatment, storage or disposal of
Hazardous Materials; and
(v) there are no asbestos-containing materials located at any
Leased Premises.
(p) Insurance. Except as disclosed on Schedule 5.1(p)(i), the
---------
Companies have at all times since their inception through the date hereof, and
will continue to be through the Closing, insured with reasonable amounts of
coverage by responsible insurers in respect to their properties, assets and
businesses against risks normally insured against by companies in similar lines
of business under similar circumstances. Schedule 5.1(p)(ii) correctly describes
-------------------
(by, type, carrier, policy number, limits, premium and expiration date) the
insurance coverage carried by the Companies at any time during the last fiscal
year, and coverage carried by the Companies on the date hereof, each of which
current coverage will remain in full force and effect through the Closing. None
of the Companies (i) has failed to give any notice or present any claim under
any such policy or binder in due and timely fashion, (ii) has received notice of
cancellation or non-renewal of any such policy or binder, (iii) is aware of any
threatened or proposed cancellation or non-renewal of any such policy or binder,
(iv) has received notice or is aware of any insurance premiums which will be
materially increased in the future or (v) has permitted any such policy to lapse
for any period of time. There are no outstanding claims under any such policy
which have gone unpaid for more than forty-five (45) days, or as to which the
insurer has disclaimed liability.
(q) Outstanding Commitments. Schedule 5.1(q) sets forth a list of all
----------------------- ---------------
existing contracts, agreements, understandings, arrangements, leases,
commitments, licenses, and installment and conditional sales agreements, whether
written or oral, relating to each of the Companies (collectively, the "Company
Contracts") and, with respect to oral Company Contracts, an accurate and
complete summary of the material
-35-
provisions. The Principals have caused the Companies to deliver or make
available to Carey true, correct and complete copies of all written Company
Contracts. The execution, delivery and performance by the Companies of each of
their Company Contracts has been authorized by all necessary corporate action.
All of the Company Contracts are in full force and effect. The Companies and
each other party to each of the Company Contracts have performed all the
obligations required to be performed by them to date, have received no notice of
default and are not in default (with due notice or lapse of time or both) under
any of the Company Contracts. The Principals and the Companies have no present
expectation or intention of not fully performing all their obligations under
each of the Company Contracts, and neither the Principals nor the Companies have
any knowledge of any breach or anticipated breach by any other party to any of
the Company Contracts. None of the Company Contracts have been terminated, no
notice has been given by any party thereto of any alleged default thereunder by
any party thereto, and neither the Principals nor the Companies are aware of any
intention or right of any party to any Company Contract to default another party
to any Company Contract. There exists no actual or, to the knowledge of the
Principals or the Companies, threatened termination, cancellation or limitation
of the business relationship of the Companies with any party to any Company
Contract.
(r) Certain Payments. Neither of the Companies nor any director,
----------------
officer, agent, or employee of the Companies, or any other person associated
with or acting for or on behalf of the Companies, has directly or indirectly,
(i) made any contribution, gift, bribe, rebate, payoff, influence payment,
kickback, or other payment to any person, entity or agency, private or public,
regardless of form, whether in money, property, or services (a) to obtain
favorable treatment in securing business, (b) to pay for favorable treatment for
business secured, (c) to obtain special concessions or for special concessions
already obtained, for or in respect of the Company or (d) in violation of any
federal, state or local law, or (ii) established or maintained any fund or asset
that has not been recorded in the books and records of the Company.
-36-
(s) Transactions With Related Parties. Except as set forth on
---------------------------------
Schedule 5.1(s) hereto, no stockholder, director, officer or employee of each of
- ---------------
the Companies, or member of the family of any such person, or any corporation,
partnership, trust or other entity in which any such person, or any member of
the family of any such person, has an interest, beneficial or otherwise, or is
an officer, director, trustee, partner or holder of any equity interest, is a
party to any transaction with the Companies which will represent an obligation
of the Companies after the Closing, including any contract, agreement or other
arrangement providing for the employment of, furnishing of services by, rental
of real or personal property from, or otherwise requiring payments or involving
other obligations to or from, any such person or firm.
(t) Licenses, Permits, Authorizations, Etc. Schedule 5.1(t)
-------------------------------------------------------
identifies and provides a brief description of all licenses, permits, pending
applications, consents, approvals and authorizations of or from any public,
governmental or regulatory agency, used in or otherwise necessary for the
conduct of the business of each of the Companies, including, without limitation,
Certificates of Public Convenience and Necessity and other operating
certificates applied for and/or currently outstanding and issued by any and all
regulatory bodies (including, without limitation, the City of Indianapolis and
the State Indiana) (collectively, the "Permits"), providing with respect to each
Permit the name of the agency issuing the Permit and, if the holder is other
than the Companies, the holder's relationship to the Companies. Each chauffeur
who operates a Vehicle, and every Vehicle, has all required Permits. The holder
of each Permit has complied with all conditions and requirements imposed by the
Permits and the Companies have not received any notice of, and neither the
Companies nor the Principals have any knowledge that, any appropriate authority
intends to cancel or terminate any of the Permits or that valid grounds for such
cancellation or termination exist. Each Company owns or has the right to use its
respective Permits in accordance with the terms thereof without any conflict or
alleged conflict or infringement with the rights of others and subject to no
Encumbrance, and each Permit is valid and in full force
-37-
and effect, and will not be terminated or adversely affected by the transactions
contemplated hereby.
(u) Employees.
---------
(i) on the attached Schedule 5.1(u) is a true and complete
---------------
list showing the name, address, telephone number, job description, current
salary and anticipated salary for 1998, amount of accrued vacation and other
benefits, as of the date hereof, of all full-time and all part-time employees of
each of the Companies. None of such persons has an employment agreement or
understanding, whether oral or written, with the Companies which is not
terminable on thirty (30) days or less notice by the Companies without cost or
other liability to Companies. No person listed in Schedule 5.1(u) has indicated
---------------
that he or she intends to terminate his or her employment with the Companies or
seek a material change in his or her duties or status either before or after the
Closing. Each employee or independent contractor of the Companies who is
required to be licensed under any applicable federal, state or local law is so
licensed.
(ii) neither of the Companies is a party to or bound by any
collective bargaining agreement with any labor organization, group or
association covering any of its employees, and neither of the Companies nor the
Principals has any knowledge of any attempt to organize any employees of any of
the Companies by any person, unit or group seeking to act as their bargaining
agent. There are no pending or threatened charges (by employees, their
representatives or governmental authorities) of unfair labor practices or of
employment discrimination or of any other wrongful action with respect to any
aspect of employment of any person employed or formerly employed by any of the
Companies. No event has occurred or circumstance exists that could provide a
reasonable basis for any work stoppage or labor dispute.
(v) Employee Benefits.
-38-
(i) Schedule 5.1(v) sets forth a true and complete list of
---------------
each benefit plan, arrangement or agreement under which benefits (including, but
not limited to, severance benefits) are provided to employees or other providers
of services that is maintained as of the date of this Agreement (the "Plans") by
each of the Companies or by any trade or business, whether or not incorporated
(an "ERISA Affiliate"), all of which together with the Companies would be deemed
a "single employer" within the meaning of Sections 414(b), (c), (m) or (o) of
the Code or Section 4001 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA").
(ii) the Principals have heretofore caused the Companies to
deliver to Carey true and complete copies (or, if not in written form,
summaries) of each of the Plans and all related documents, including, but not
limited to, (a) the actuarial report for such Plan (if applicable) for each of
the last two years, (b) the annual report for such Plan (if applicable) for each
of the last two (2) years and (c) the most recent determination letter from the
Internal Revenue Service (if applicable) for such Plan (and any application for
such determination letter, if one is pending), and Schedule 5.1(v) sets forth a
---------------
true and complete list of all of such documents.
(iii) except as set forth in Schedule 5.1(v), (a) each of
---------------
the Plans has been operated and administered in all material respects in
compliance with applicable laws, including, but not limited to, ERISA and the
Code; (b) each of the Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified and each Plan which is intended to
meet the requirements for tax-favored treatment under Subchapter B of Chapter 1
of Subtitle A of the Code meets such requirements in all material respects; (c)
with respect to each Plan which is subject to Title IV of ERISA, the present
value of accrued benefits under such Plan, based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report prepared by such
Plan's actuary with respect to such Plan, did not, as of its latest valuation
date, exceed the then current value of the assets of such Plan allocable to such
accrued benefits; (d) no Plan provides benefits, including without limitation
death or medical
-39-
benefits (whether or not insured), with respect to current or former employees
of the Companies or any ERISA Affiliate beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law, (ii)
death benefits or retirement benefits under any "employee pension plan", as that
term is defined in Section 3(2) of ERISA, (iii) deferred compensation benefits
accrued as liabilities on the books of the Companies or (iv) benefits, the full
cost of which is borne by the current or former employee (or his beneficiary);
(e) no liability under Title IV of ERISA has been incurred by the Companies or
any ERISA Affiliate that has not been satisfied in full, and no condition exists
that presents a material risk to the Companies or any ERISA Affiliate of
incurring a material liability thereunder; (f) no Plan is a "multi employer
pension plan," as such term is defined in Section 3(37) or 4001(a)(3) of ERISA;
(g) all contributions or other amounts payable by the Companies as of the
Closing Date with respect to each Plan in respect of current or prior plan years
have been paid or accrued in accordance with GAAP, Section 302 of ERISA and
Section 412 of the Code, and there is no accumulated funding deficiency with
respect to any Plan; (h) neither the Principals, the Companies, nor any ERISA
Affiliate, has engaged in a transaction in connection with the Companies or any
ERISA Affiliate, or any other person or entity, which could subject the
Companies or any ERISA Affiliate to a material liability under Section 409 of
ERISA, a material civil penalty assessed pursuant to Section 502(i) or (l) of
ERISA or a material tax imposed pursuant to Section 4975 of the Code; (i) no
event has occurred and no condition exists with respect to any Plan that could
subject the Companies or any ERISA Affiliate to any material tax, fine or
penalty imposed by the Code or ERISA; (j) there are no pending, or to the
Principal's knowledge, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the Plans or any trusts
related thereto; (k) neither the Principals, the Companies nor any ERISA
Affiliate has any material liability or contingent liability to the Pension
Benefit Guaranty Corporation, the Internal Revenue Service, any multi-employer
plan or the Department of Labor with respect to any employee pension benefit
plan currently or previously maintained by the Companies or any ERISA Affiliate;
and (l) all material required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports and summary plan descriptions) with
-40-
respect to the employee pension benefit plans and employee welfare benefit plans
maintained by the Companies or any ERISA Affiliate for its employees have been
properly and timely filed with the appropriate government agency and distributed
to participants as required, and the Companies have complied in all material
respects with the requirements of COBRA.
(iv) except as set forth in Schedule 5.1(v) neither the
---------------
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (a) result in any material payment
(including, without limitation, deferred compensation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or any
employee of the Companies, or any of their affiliates under any Plan or
otherwise, (b) materially increase any benefits otherwise payable under any Plan
or otherwise, or (c) result in any acceleration of the time of payment or
vesting of any such benefits to any material extent.
(w) Compliance with Law. Each of the Companies has complied with and
-------------------
is not in default under, all laws, ordinances, legal requirements, rules,
regulations and orders applicable to it, its assets and the business conducted
by them that would have a material adverse effect on the operations and
financial statements of the Companies. There is no existing law, rule,
regulation or order, and neither the Companies nor the Principals is aware of
any proposed law, rule, regulation or order, whether federal or state, which
would prohibit or materially restrict the Companies, from, or otherwise
materially adversely affect the Companies in, conducting their respective
business.
(x) Litigation. Except as described in Schedule 5.1(x), there are no
---------- --------------
(i) actions, suits or proceedings pending or threatened against or otherwise
materially and adversely affecting any of the Principals or the Companies, at
law or in equity, or before or by any federal, state, municipal or other
governmental or non-governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign;
-41-
(ii) no arbitration proceedings relating to any of the Principals or the
Companies; (iii) no governmental inquiries pending nor threatened against or
involving any of the Principals or the Companies. There are no outstanding
orders, writs, judgments, injunctions, settlement agreements, consent decrees,
or decrees of any court, governmental agency or arbitration tribunal against,
involving or affecting either the Principals or the Companies. None of the
Principals or the Companies is in default with respect to any order, writ
injunction or decree known to or served upon it from any court or of any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign. There is no action or
suit by either the Principals or the Companies pending or threatened against
others, nor is there a basis for any such action, suit or proceeding other than
as previously disclosed in writing to Carey.
(y) Customer List and Proprietary Assets.
------------------------------------
(i) the customer list delivered at the Closing as Schedule
--------
5.1(y)(i) (the "Customer List") is a correct, complete and current customer list
- ---------
containing the name, address and telephone number of all customers, customer
liaisons and arrangers currently serviced by the Companies and, to the extent
maintained by the Companies, the same information with respect to all customers,
customer liaisons and arrangers serviced by the Companies and its predecessors
since October 1, 1993. The Principals and the Companies have never, and no other
party has ever, sold, leased, traded, or revealed the Customer List to any
competitor of the Companies or any other person, corporation, or entity.
(ii) Schedule 5.1(y)(ii) identifies and provides a brief
-------------------
description of all Proprietary Assets (as hereinafter defined) owned or licensed
to, or otherwise used by each of the Companies regarding: standards and methods
of operating, marketing, advertising and public relations, courtesy and
appearance standards, charge card services, reservation services, insurance
programs and equipment standards for
-42-
conducting a chauffeured vehicle service business, including improvements in
operating procedures and mix of products and services which may be promoted and
sold to customers of each of the Companies. Schedule 5.1(y)(ii) lists each
-------------------
trademark and service mark owned by or licensed to, or otherwise used by, each
of the Companies and states with respect to each such trademark or service mark,
whether it is registered with the U.S. Patent and Trademark Office or any state
governmental agency. Except as set forth in Schedule 5.1(y)(ii), each of the
-------------------
Companies has good, valid and marketable title to all of its Proprietary Assets
(included, but not limited to, the Customer List), free and clear of all
Encumbrances, and has a valid right to use all such Proprietary Assets. Except
as set forth in Schedule 5.1(y)(ii), neither of the Companies is obligated to
-------------------
make any payment to any person or entity for the use of any of its Proprietary
Asset. Except as set forth in Schedule 5.1(y)(ii), neither of the Companies has
-------------------
developed jointly with any other person or entity any of its Proprietary Asset
with respect to which such other person has any rights. Each of the Companies
has taken reasonably prudent steps to protect and maintain the confidentiality
and secrecy of all of its Proprietary Assets (except Proprietary Assets whose
value would be unimpaired by public disclosure) and otherwise to maintain and
protect the value of all such Proprietary Assets.
(iii) none of the Companies' Proprietary Assets infringes or
conflicts with any Proprietary Asset owned or used by any other person or
entity. Neither of the Companies is infringing, misappropriating or making any
unlawful use of, and neither of the Companies has at any time infringed,
misappropriated or made any unlawful use of, or received any notice or other
communication (in writing or otherwise) of any actual, alleged, possible or
potential infringement, misappropriation or unlawful use of, any Proprietary
Asset owned or used by any other person or entity. To the knowledge of the
Companies and the Principals, no other person or entity is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset owned
or used by any other person or entity infringes or conflicts with, any of the
Companies' Proprietary Assets.
-43-
(iv) Schedule 5.1(y)(iv) lists all telephone numbers relating
-------------------
to the business of each Company which has been advertised in the Yellow Pages
and/or White Pages as well as any other telephone numbers used by either of the
Companies for the purpose of taking reservations for its business since 1995.
All telephone numbers listed on Schedule 5.1(y)(iv) are in good working order
-------------------
and no claim has been asserted against either of the Companies adverse to its
rights in any such telephone numbers.
(z) Brokerage. The Principals and the Companies represent and warrant
---------
to Carey that they have not incurred an obligation or liability, contingent or
otherwise, for brokerage, finder's fees or agents' commissions or other similar
payment in connection with this Agreement.
(aa) Securities Representations. The Companies and each of the
--------------------------
Stockholders will receive and have a reasonable opportunity to review a copy of
that certain Prospectus, as amended or supplemented to date, which is a part of
Carey's Registration Statement on Form S-4 (Reg. No. 333-34897) prior to the
meeting of such stockholders approving this Agreement and the Merger.
(bb) Disclosure. No representation or warranty by the Principals
----------
or the Companies contained in this Agreement and no statement contained in any
Exhibit or Schedule attached hereto contains or will contain any untrue
statement of material fact or omits or will omit to state a material fact
necessary to prevent any such statements from being misleading. The
representations and warranties set forth in this Section 5.1 shall be true and
correct on the date of this Agreement and on the Closing Date.
(cc) Tax-Free Reorganization. The Principals have no present intent to
-----------------------
transfer or otherwise dispose of their ownership interest in the shares of Carey
Common Stock received as Merger Consideration in connection with this Agreement,
and Carey and the Principals each agree that they will not take any action that
would prevent this transaction from being treated as a tax-free reorganization
under Section 368(a) of the
-44-
Code, and none of the Principals nor the Companies know of any reason why the
Merger will not qualify as reorganization under Section 368(a) of the Code.
5.2 Representations and Warranties of Carey. Carey and Carey Indiana
---------------------------------------
hereby jointly and severally represent and warrant to the Principals and the
Companies as follows:
(a) Organization, Power, Etc. Each of Carey and Carey Indiana is a
-------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and authority to enter into
this Agreement and all other agreements contemplated hereby and to perform its
obligations hereunder and thereunder. Carey Indiana is duly authorized to
transact business in the State of Indiana.
(b) Authority Relative to Agreement. The execution, delivery and
-------------------------------
performance of this Agreement and the documents contemplated hereby and the
consummation of the transactions contemplated hereby and thereby by Carey and
Carey Indiana have been, or prior to the Closing will be, duly and effectively
authorized by all necessary corporation action. This Agreement and each of the
other agreements, documents and instruments to be executed and delivered by
Carey have been or will be duly executed and delivered by, and constitute the
valid and binding obligation of Carey and Carey Indiana, as the case may be,
enforceable against them in accordance with their terms.
(c) Conflicts. Carey is not subject to any order, judgment, decree or
---------
any charter or by-law provisions or a party to or bound by any material
mortgage, deed of trust, lease, agreement or other instrument which would
prevent the consummation of the transactions contemplated hereunder, or
compliance by it with the terms, conditions and provisions hereof, and such
consummation and compliance will not, and will not with the giving of notice or
the passage of time, constitute a default or the event of default
-45-
under or a violation of or grounds for termination of or any other change to any
such order, judgment, decree, provision, mortgage, deed of trust, lease,
agreement, or any other instrument.
(d) Litigation. No litigation, administrative proceedings or
----------
governmental investigations are pending or, to the knowledge of Carey,
threatened against or relating to Carey or Carey Indiana or their properties or
businesses which would materially affect the transactions contemplated by this
Agreement.
(e) Disclosure. No representation or warranty by Carey contained
----------
in this Agreement and no statement contained in any Exhibit or Schedule attached
hereto contains or will contain any untrue statement of material fact or omits
or will omit to state a material fact necessary to prevent any such statements
from being misleading.
(f) Registration of the Carey Shares Issued as the Merger
-----------------------------------------------------
Consideration. The shares of the Carey Common Stock to be issued as Merger
- --------------
Consideration have been registered under Carey's Registration Statement on Form
S-4 (Reg. No. 333-34897) in compliance with the Securities Act of 1933, as
amended (the "Act"). Based in part upon the representations of the Principals
and the Companies set forth in Section 5.1 (aa) of this Agreement, after the
Carey Common Stock to be issued as Merger Consideration has been issued under
the terms of this Agreement, it may be freely sold by the holders thereof
without registration under the Act, subject to the restrictions on resale to
provide for pooling of interest accounting treatment as specified on Section
4.1(iv) of this Agreement and, in the case of affiliates of the Companies, to
their compliance with Rules 144 and 145 under the Act.
-46-
6. INDEMNIFICATION
6.1 Agreements to Indemnify.
-----------------------
(a) As used in this Section 6: (i) "Damages" means claims, damages,
liabilities, losses, judgments, settlements, and expenses, including, without
limitation, all reasonable fees and disbursements of counsel incident to the
investigation or defense of any claim or proceeding or threatened claim or
proceeding; (ii) "Indemnifying Parties" means the parties obligated to provide
indemnification under this Section 6.1; and (iii) "Indemnified Party" means the
party entitled to indemnification under this Section 6.1.
(b) On the terms and subject to the limitations set forth in this
Agreement, the Principals shall jointly and severally indemnify, defend and hold
Carey and Carey Indiana harmless from, against and in respect of any and all
Damages incurred by Carey or Carey Indiana arising from or in connection with:
(i) any breach of any representation, warranty, covenant or agreement made by
the Principals or the Companies in this Agreement; (ii) the Termination
Agreement entered into by INDY with Limousine Acquisition Corporation ("LAC") on
August 7, 1997; and (iii) KDA's pledge of KDA's shares to NBD Indiana, Inc.
(c) The representations, warranties, covenants and agreements of the
Principals and the Companies set forth in this Agreement shall, for purposes of
this Section 6, be deemed to have survived the Closing Date notwithstanding any
contrary terms of this Agreement, for the period during which claims for
indemnification may be made pursuant to Section 6, and whenever such
representations, warranties, covenants and agreements are referred to in this
Section 6, the text of the same shall be deemed to be set forth in their
entirety herein, and the same are hereby incorporated herein by such references.
Each such representation, warranty, covenant and agreement shall be deemed to
have been relied upon by the party or parties to which made, notwithstanding any
investigation or inspection made by or on behalf of such party or parties, and
-47-
notwithstanding any knowledge acquired (or capable of being acquired) by such
party or parties, whether before or after the execution and delivery of this
Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or
compliance with any such representation, warranty, covenant or agreement, and
shall not be affected in any respect by any such investigation, inspection or
knowledge.
6.2 Terms of Indemnity Obligations. The indemnity obligations of the
------------------------------
Indemnifying Parties under this Agreement shall be subject to the following
terms:
(a) The indemnity obligations of the Indemnifying Parties shall
expire no later than one (1) year following the Closing Date with respect to any
matter for which a claim for indemnification has not been made by such date; and
provided that the indemnity obligations of the Indemnifying Parties for claims
timely asserted by an Indemnified Party in the manner provided in this Agreement
shall continue until such claims are finally resolved and discharged.
(b) The Merger Consideration allocated for CDF in connection with
this Agreement representing the number of Carey shares equal to Four Hundred Ten
Thousand Five Hundred Dollars ($410,500) divided by the closing price of the
Carey Common Stock used to calculate the Merger Consideration pursuant to
Section 1.7, as well as the Merger Consideration allocated for KDF and KDA in
connection with this Agreement representing the number of Carey shares equal to
Eighty-Nine Thousand Five Hundred Dollars ($89,500) divided by the closing price
of the Carey Common Stock used to calculate the Merger Consideration pursuant to
Section 1.7, shall be registered in the names of CDF and KDA respectively and
shall be placed in an Escrow Account in accordance with the terms and conditions
of the Escrow Agreement attached as Exhibit 6.2(b) of this Agreement (the
"Escrow Agreement") for the purpose of providing collateral funds for
indemnifying Carey for any and all Damages for which Carey is entitled to be
indemnified pursuant to this Section 6. Funds deposited by the Principals to
satisfy their obligations under Section 6 of this Agreement may be substituted
from time to time as
-48-
provided for in the Escrow Agreement. Such Merger Consideration and/or
substituted funds will be held in an Escrow Account for a period of one (1) year
by which time Carey will cause an accounting to be performed, which accounting
will determine whether the Principals have any indemnity obligations under this
Section 6. Funds for indemnification shall not be limited to the Merger
Consideration placed in the Escrow Account delivered by CDF and KDF as sole
stockholder of KDA to Carey.
(c) In no event shall CDF, KDF and KDA be liable for any indemnity
obligation under this Section 6 unless the aggregate amount of Damages exceeds
Fifty Thousand Dollars ($50,000). To the extent that the aggregate amount of
Damages exceeds Fifty Thousand Dollars ($50,000), CDF, KDF and KDA shall be
liable for all indemnity damages thereafter, in an amount not to exceed Five
Hundred Thousand Dollars ($500,000).
6.3 Notice of Claim. The Indemnified Party shall promptly notify the
---------------
Indemnifying Parties in writing of any Claim asserted by a third person that
might give rise to any indemnity obligation hereunder (a "Third Party Claim").
Failure of any Indemnified Party to promptly give such notice shall not relieve
the Indemnifying Parties of their obligation to indemnify under this Section 6.
Together with or following such notice, the Indemnified Party shall deliver to
the Indemnifying Parties copies of all notices and documents received by Carey
relating to the Third Party Claim (including court papers).
6.4 Defense and Settlement of Third-Party Claims. The Indemnifying
--------------------------------------------
Parties shall have the right (without prejudice to the right of the Indemnified
Parties to participate at their own expense through counsel of their own
choosing) to defend against any Third Party Claim at their expense and through
counsel of their own choosing and to control such defense if they give written
notice of their intention to do so within fifteen (15) business days of their
receipt of notice of Third Party Claim, and in such event the Indemnified
Parties shall cooperate fully in the defense of such Third Party Claim and
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shall make available to the Indemnifying Parties or their counsel all pertinent
information under its control relating thereto. The Indemnified Parties shall
have the right to elect to settle any Third Party Claim; provided, however, the
Indemnifying Parties shall not have any indemnification obligation with respect
to any monetary payment to any third party required by such settlement unless
they shall have consented thereto in writing. The Indemnifying Parties shall
have the right to elect to settle any Third Party Claim subject to the consent
of the Indemnified Parties; provided, however, that if the Indemnified Parties
fail to give such consent within fifteen (15) business days of being requested
to do so, the Indemnified Parties shall, at their expense, assume the defense of
such Third Party Claim and regardless of the outcome of such matter, the
Indemnifying Parties' liability hereunder shall be limited to the amount of any
such proposed settlement. The foregoing provisions notwithstanding, in no event
may the Indemnifying Parties (a) adjust, compromise or settle any Third Party
Claim (i) unless such adjustment, compromise or settlement unconditionally
releases Carey and Carey Indiana from all liability or (ii) if such adjustment,
compromise or settlement affects the absolute and sole right of Carey or Carey
Indiana to own or use any of any their assets (including, without limitation,
contract rights) or (b) defend any Third Party Claim which, if adversely
determined, would materially impair the financial condition (as defined below),
results of operations, business or prospects of Carey or Carey Indiana. To the
extent that the Indemnified Parties assume the defense of a Third Party Claim,
the Indemnifying Parties shall have the right to participate at their own
expense in the defense or settlement of such claim.
6.5 Control of Tax Proceedings. (a) If a claim shall be made by any
--------------------------
taxing authority which, if successful, would result in an indemnity payment by
the Principals pursuant to this Section 6 (a "Tax Claim"), or if an audit or
administrative proceeding is commenced by any taxing authority with respect to
Taxes that could give rise to a Tax Claim (a "Tax Audit"), the Principals shall
have the right, at their option, upon timely notice to Carey, to assume and
control the conduct of any such Tax Audit and the defense of any suit, action or
proceeding with respect to any such Tax Claim at their own
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expense and with their own counsel (without prejudice to the right of Carey to
participate at its own expense through counsel of its own choosing), so long as
the Principals have and acknowledge full indemnification responsibility under
this Section 6 for all of the Taxes which are asserted by the tax authority to
be the subject of the Tax Audit or Tax Claim provided that no indemnification
shall be made as a result of timing differences, excluding any penalties or
interest related to such timing differences.
(b) In any case in which the Principals are entitled to and elect to
control the contest, as provided in Section 6.5(a) above, the Principals, at
their sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings, and conferences with the taxing authority with respect to
any Tax Claim; may, at their sole option, either pay the Taxes claimed and sue
for a refund where applicable law permits such refund suits, or may contest the
Tax Claim in any permissible manner, and prosecute such contest to a
determination in court of initial jurisdiction, and to determination in an
appellate court, and may settle the Tax Claim at any stage in the judicial
process; provided, however, that the Principals may not do so without the
written consent of Carey, which consent may not be unreasonably withheld, unless
such settlement would materially impair the financial condition, results of
operations, business or prospects of the Companies or Carey, in which case Carey
may withhold such consent in its sole discretion (either initially or at some
later time) at any stage of the administrative and judicial process.
7. TERMINATION; AMENDMENTS; WAIVERS
7.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing Date:
(a) by mutual consent of Carey, Carey Indiana, the Principals and the
Companies;
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(b) by Carey or the Companies if the Closing shall not have occurred
on or before December 31, 1997, unless the failure of the Closing to occur by
such date shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements of such party set
forth herein;
(c) by Carey if there has been a material misrepresentation or
material breach of the representations, warranties, covenants or obligations of
the Principals or the Companies set forth herein, provided that in the case of a
breach of any such covenant or obligation, such breach has not been cured within
ten (10) business days or Carey has not received written notice from the
Principals or the Companies that such breach will be cured within sixty (60)
days after Carey has notified the Principals or the Companies of such breach;
(d) by the Principals and the Companies if there has been a material
misrepresentation or material breach of the representations, warranties,
covenants and obligations of Carey or the Companies set forth herein, provided
that in the case of a breach of any such covenant or obligation, such breach has
not been cured within ten (10) business days or the Principals or Companies have
not received written notice from Carey that such breach will be cured within
sixty (60) days after the Principals and/or Companies have notified Carey of
such breach.
(e) by the Companies if, prior to the consummation of the Merger, (i)
the Companies receive a bona fide written proposal or offer regarding an
---------
Alternative Transaction from a third party, (ii) the Board of Directors of INDY
determines in good faith, based upon a written opinion of INDY's outside
counsel, that the failure to accept such proposal or offer would violate the
Board's fiduciary duties under applicable Indiana law and (iii) the Companies
have provided Carey with at least five (5) business days written notice of
proposal or offer, including a copy thereof, and of the determination of its
Board of Directors and opinion of its outside counsel referred to in clause (ii)
above; provided, however, that a condition to the effectiveness of the
-----------------
termination of this
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Agreement and the abandonment of the Merger pursuant to this subsection (e) is
the payment to Carey in same day funds of the sum of Six Hundred Thousand
Dollars ($600,000).
The power of termination provided for by this Section 7.1 will be effective
only after written notice thereof shall have been given to the other parties.
If this Agreement is terminated in accordance with this Section 7.1, this
Agreement shall be abandoned without further action by the parties.
7.2 Effect of Termination. In the event of termination of this Agreement
----------------------
pursuant to Section 7.1, this Agreement shall forthwith become void and have no
effect, and no party shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except
(a) Sections 4.1 and 8.1 shall survive any termination of this Agreement, and
(b) notwithstanding anything to the contrary contained in this Agreement, no
party shall be relieved of or released from any liabilities or damages arising
out of its breach of any provision of this Agreement.
7.3 Amendment. This Agreement may not be amended except by an instrument
----------
in writing signed on behalf of each of the parties hereto.
7.4 Extension; Waiver. At any time prior to the Closing Date, the parties
------------------
hereto may, subject to Section 7.3, (a) extend the time for the performance of
any of the obligations or other acts of the parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed by or on behalf of such party, but such extension or
waiver or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
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8. MISCELLANEOUS
8.1 Expenses. The Companies, Carey and Carey Indiana shall pay the fees
--------
and expenses of their respective counsel, accountants, other experts and all
other expenses incident to the negotiation, preparation and execution of this
Agreement, except for Fifteen Thousand Dollars ($15,000) in fees and expenses
associated with the preparation and delivery of an audit and the Final Closing
Date Balance Sheet by Coopers which shall be paid by the Companies.
8.2 Certain Tax Matters. The Principals shall cause the Companies to
-------------------
prepare and file any required Return for any taxable period ending on or before
the Closing Date and that is due on or before the Closing Date. Carey shall
cause the Companies to prepare and file all required returns due after the
Closing Date.
8.3 Definitions. As used in this Agreement:
-----------
An "Affiliate" of any entity shall mean any person, corporation,
partnership or business organization which, directly or indirectly, controls, is
controlled by or is under common control with, such entity.
"Control" shall mean direct or, either together with others acting as a
group or otherwise, indirect ownership or possession of the right or power, by
vote of stockholders or directors, or by contract, agreement or other
arrangement, to direct, determine, prevent or otherwise dictate managerial,
operational or other actions or activities of any firm, corporation or business
organization.
"Encumbrance" means any charge, claim, right, property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including, without limitation, any
restriction of use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership held by another party.
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"Environmental Laws" means, individually and collectively, the Clean Air
Act, the Clean Water Act, the Resource Conservation and Recovery Act of 1976,
the Hazardous Materials Transportation Act, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Emergency Planning and
Community Right-to-Know Act or any other federal, state or local law,
regulation, ordinance, rule or by-law regulating the use, presence, storage,
transportation or disposal of Hazardous Materials.
"Hazardous Materials" means, individually and collectively, toxic,
hazardous, explosive or otherwise dangerous materials, substances, pollutants,
contaminants or wastes (as those terms are used in the Environmental Laws),
petroleum products, polychlorinated biphenyls, asbestos, ureaformaldehye foam,
waste oil or radioactive materials.
"Proprietary Asset" means any (a) patent, patent application, trademark
(whether registered or unregistered), trademark application, trade name,
fictitious business name, service mark (whether registered or unregistered),
service mark application, copyright (whether registered or unregistered),
copyright application, mask work, mask work application, trade secret, know-how,
confidential information, customer list, franchise, system, computer software,
computer program, invention, design, blueprint, engineering drawing, proprietary
product, technology, proprietary right or other intellectual property right or
intangible asset; or (b) license or right to use or exploit any of the
foregoing.
8.4 Entire Agreement. This Agreement and the other agreements to be
----------------
delivered pursuant hereto constitute the entire agreement among the parties
hereto with respect to the subject matter hereof.
8.5 Binding Effect; Benefit. This Agreement shall inure to the benefit of
-----------------------
and be binding upon the parties hereto and their respective heirs, successors
and assigns. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto, or their respective heirs,
successors and assigns, any
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rights, remedies, obligations or liabilities under or by reason of this
Agreement. As used herein, the successors of Carey shall be deemed to include
any affiliate of Carey conducting a chauffeured car-for-hire business.
8.6 Section and Other Headings. The section and other headings contained
--------------------------
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
8.7 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given if delivered in person or
sent by certified mail, postage and certification charges prepaid, as follows:
If to the Principals
or the Companies: Craig Del Fabro
President
INDY Connection Limousines, Inc.
5700 West Minnesota Bldg. B
P. O. Box 42126
Indianapolis, IN 46242
KD & Associates Professional Corporation
13092 Harrison Drive
Carmel, Indiana 46033
Kim Del Fabro
13092 Harrison Drive
Carmel, Indiana 46033
with a copy to
Locke, Reynolds, Boyd & Weisell
1000 Capital Center South
201 North Illinois Street
Indianapolis, IN 46204
Attn: Jeffrey B. Bailey, Esq.
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If to Carey: Carey International, Inc.
4530 Wisconsin Avenue, N.W.
Washington, DC 20016
Fax: (202) 895-1201
Vincent A. Wolfington
Chairman of the Board
with a copy to:
Nutter, McClennen & Fish, LLP
One International Place
Boston, MA 02110
Attn: James E. Dawson, Esq.
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8.8 Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Delaware.
8.9 Counterparts. This Agreement may be executed in any number of
-------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
8.10 Severability. In the event that any provision of this Agreement or
-------------
the application thereof to any person or in any circumstances shall be
determined to be invalid, unlawful or unenforceable to any extent, the remainder
of this Agreement and the application of such provision to persons or
circumstances other than that to those as to which it is determined to be
invalid, unlawful, or unenforceable, shall not be affected thereby and each
remaining provision of this Agreement shall continue to be valid and may be
enforced to the fullest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as an instrument under seal as of the date first above written.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as an instrument under seal as of the date first above written.
CAREY INTERNATIONAL, INC.
By: \s\ Devin J. Murphy
-----------------------
Its Senior Vice President
and Chief Development Officer
CAREY LIMOUSINE INDIANA, INC.
By: \s\ Devin J. Murphy
-----------------------
Its Senior Vice President
and Chief Development Officer
INDY CONNECTION LIMOUSINES, INC.
By: \s\ Craig Del Fabro
-----------------------
Craig Del Fabro, President
TRANSIT TOURS, INC.
By: \s\ Craig Del Fabro
-----------------------
Craig Del Fabro, President
KD & ASSOCIATES
PROFESSIONAL CORPORATION
By: \s\ Kim Del Fabro
--------------------
Kim Del Fabro, President
\s\ Craig Del Fabro
-----------------------
Craig Del Fabro
\s\ Kim Del Fabro
-----------------------
Kim Del Fabro
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