-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Sk2EVxxMgYtCxWcSM9jCNvp/P+eBpJjRcxP4bblpKKNfqWCDbAWHbI6oGcm4NEWY GCE+Z1ZAcozicOWQIZKXEQ== 0000950144-96-009051.txt : 19961216 0000950144-96-009051.hdr.sgml : 19961216 ACCESSION NUMBER: 0000950144-96-009051 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 17 FILED AS OF DATE: 19961213 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SQUARE INDUSTRIES INC CENTRAL INDEX KEY: 0000093134 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AUTOMOTIVE REPAIR, SERVICES & PARKING [7500] IRS NUMBER: 132610905 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-17190 FILM NUMBER: 96680390 BUSINESS ADDRESS: STREET 1: 921 BERGEN AVE CITY: JERSEY CITY STATE: NJ ZIP: 07306 BUSINESS PHONE: 2017980090 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL PARKING CORP CENTRAL INDEX KEY: 0000949298 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AUTOMOTIVE REPAIR, SERVICES & PARKING [7500] IRS NUMBER: 621052916 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 2401 21ST AVE S STREET 2: STE 200 CITY: NASHVILLE STATE: TN ZIP: 37212 BUSINESS PHONE: 6152974255 SC 14D1 1 SCHEDULE 14D-1 SQUARE IND--CENTRAL PARKING 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 --------------------- SQUARE INDUSTRIES, INC. (Name of Subject Company) CENTRAL PARKING SYSTEM - - EMPIRE STATE, INC. AND CENTRAL PARKING CORPORATION (Bidder) --------------------- COMMON STOCK, PAR VALUE $0.01 PER SHARE (Title of Class of Securities) --------------------- 8522351 (CUSIP Number of Class of Securities) --------------------- MONROE J. CARELL, JR. CHAIRMAN AND CHIEF EXECUTIVE OFFICER CENTRAL PARKING CORPORATION 2401 21ST AVENUE SOUTH, SUITE 200 NASHVILLE, TENNESSEE 37212 (615) 297-4255 (Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications on Behalf of the Bidder) --------------------- COPY TO MARK MANNER HARWELL HOWARD HYNE GABBERT & MANNER, P.C. 1800 FIRST AMERICAN CENTER NASHVILLE, TENNESSEE 37238 (615) 256-0500 CALCULATION OF FILING FEE
============================================================================================ TRANSACTION VALUATION* AMOUNT OF FILING FEE - -------------------------------------------------------------------------------------------- $51,465,715 $10,294 ============================================================================================ * Determined solely for the purpose of calculating the filing fee. This amount is the sum of (i) $37,226,536, which was calculated by multiplying $31.00, the per share tender offer price, by 1,200,856, the number of outstanding shares of Common Stock, and (ii) $14,239,179, which was calculated by multiplying the amount of the excess, if any, of $31.00 over the exercise price per share of outstanding options and warrants to purchase shares of Common Stock by the number of shares of Common Stock subject to such options and warrants. [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount Previously Paid: Not applicable. Filing Party: Not applicable. Form or Registration No.: Not applicable. Date Filed: Not applicable.
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1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person CENTRAL PARKING CORPORATION 62-1052916 2 Check the appropriate Box if a Member of a Group (a) [ ] (See Instructions) (b) [ ] 3 SEC Use Only 4 Source of Funds (See Instructions) BK 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item 2(e) [ ] or 2(f) 6 Citizenship or Place of Organization TENNESSEE 7 Aggregate Amount Beneficially Owned by Each Reporting Person 0 8 Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See [ ] Instructions) 9 Percent of Class Represented by Amount in Row (7) 0.0% 10 Type of Reporting Person (See Instructions) CO
1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC. 62-1662458 2 Check the appropriate Box if a Member of a Group (a) [ ] (See Instructions) (b) [ ] 3 SEC Use Only 4 Source of Funds (See Instructions) BK 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item 2(e) [ ] or 2(f) 6 Citizenship or Place of Organization NEW YORK 7 Aggregate Amount Beneficially Owned by Each Reporting Person 0 8 Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See [ ] Instructions) 9 Percent of Class Represented by Amount in Row (7) 0.0% 10 Type of Reporting Person (See Instructions) CO
2 3 This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to the offer by Central Parking System -- Empire State, Inc., a New York corporation ("Purchaser"), and an indirect wholly-owned subsidiary of Central Parking Corporation, a Tennessee corporation ("Parent"), to purchase all of the outstanding shares of common stock, par value $.01 per share (the "Shares"), of Square Industries, Inc., a New York corporation (the "Company"), at a price of $31.00 per Share, payable $28.50 per Share net to the seller in cash promptly following completion of the Offer, without interest thereon, and an additional $2.50 per Share to be deposited by Parent in escrow as contingent consideration for distribution, in whole or in part, either to the seller or Parent based upon the resolution of two specific matters, subject to adjustment as provided in the escrow agreement, upon the terms and subject to the conditions set forth in Purchaser's Offer to Purchase dated December 13, 1996 (the "Offer to Purchase") and in the related Letter of Transmittal (which together constitute the "Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Square Industries, Inc., a New York corporation, which has its principal executive offices at 921 Bergen Avenue, Jersey City, New Jersey 07306. (b) The class of equity securities being sought is all the outstanding shares of common stock, par value $.01 per share, of the Company. The information set forth in the Introduction and Section 1 ("Terms of the Offer; Expiration Date; Treatment of Stock Options; Contingency of Payment of Certain Amounts of the Offer Price, Merger Consideration and Option Consideration; Escrow Agreement") of the Offer to Purchase is incorporated herein by reference. (c) The information concerning the principal market in which the Shares are traded and certain high and low sales prices for the Shares in such principal market is set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase and is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d) and (g) This Statement is filed by Purchaser and Parent. The information concerning the name, state or other place of organization, principal business and address of the principal office of Purchaser and Parent, and the information concerning the name, business address, present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment or occupation is conducted, material occupations, positions, offices or employment during the last five years and citizenship of each of the executive officers and directors of Purchaser and Parent are set forth in the Introduction, Section 8 ("Certain Information Concerning Purchaser and Parent") and Exhibit I of the Offer to Purchase and are incorporated herein by reference. (e) and (f) During the last five years, none of Purchaser or Parent, and, to the best knowledge of Purchaser and Parent, none of the persons listed in Exhibit I of the Offer to Purchase, has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. ITEM 3. PAST CONTRACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) The information set forth in Section 8 ("Certain Information Concerning Purchaser and Parent") and Section 10 ("Background of the Offer; Contacts with the Company; the Merger Agreement; Employment, Consultancy and Confidentiality and Noncompete Agreements; Agreement to Support the Transaction") of the Offer to Purchase is incorporated herein by reference. (b) The information set forth in the Introduction, Section 7 ("Certain Information Concerning the Company"), Section 8 ("Certain Information Concerning Purchaser and Parent"), Section 10 ("Background of the Offer; Contacts with the Company; The Merger Agreement; Employment, Consultancy and Confidentiality and Noncompete Agreements; Agreement to Support the Transaction") and Section 11 ("Purpose of the 3 4 Offer; Plans for the Company After the Offer and the Merger") of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)-(c) The information set forth in Section 9 ("Financing of the Offer and the Merger") of the Offer to Purchase is incorporated herein by reference. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(e) The information set forth in the Introduction, Section 10 ("Background of the Offer; Contacts with the Company; The Merger Agreement; Employment Consultancy and Confidentiality and Noncompete Agreements; Agreement to Support the Transaction") and Section 11 ("Purpose of the Offer; Plans for the Company After the Offer and the Merger") of the Offer to Purchase is incorporated herein by reference. (f) and (g) The information set forth in Section 13 ("Effect of the Offer on the Market for the Shares, Exchange Listing and Exchange Act Registration") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) and (b) The information set forth in Section 8 ("Certain Information Concerning Purchaser and Parent") of the Offer to Purchase is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Introduction, Section 8 ("Certain Information Concerning Purchaser and Parent"), Section 10 ("Background of the Offer; Contacts with the Company; The Merger Agreement; Employment Consultancy and Confidentiality and Noncompete Agreements; Agreement to Support the Transaction") and Section 11 ("Purpose of the Offer; Plans for the Company After the Offer and the Merger") of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in the Introduction and Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 8 ("Certain Information Concerning Purchaser and Parent") of the Offer to Purchase is incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION. (a) Not applicable. (b)-(c) and (e) The information set forth in Section 15 ("Certain Legal Matters and Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 13 ("Effect of the Offer on the Market for the Shares, Exchange Listing and Exchange Act Registration") of the Offer to Purchase is incorporated herein by reference. (f) The information set forth in the Offer to Purchase, the Letter of Transmittal and the Agreement and Plan of Merger, dated as of December 6, 1996, among Parent, Purchaser and the Company, copies of which are attached hereto as Exhibits (a)(1), (a)(2) and (c)(1), respectively, is incorporated herein by reference. 4 5 ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) -- Form of Offer to Purchase dated December 13, 1996. (a)(2) -- Form of Letter of Transmittal. (a)(3) -- Form of Notice of Guaranteed Delivery. (a)(4) -- Form of Letter from J.C. Bradford & Co. to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(5) -- Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Nominees to Clients. (a)(6) -- Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) -- Summary Advertisement as published in The Wall Street Journal on December 13, 1996. (a)(8) -- Press Release issued by Parent on December 9, 1996. (b)(1) -- Form of $150,000,000 Credit Agreement dated December 12, 1996 by and among various banks with SunTrust Bank, Nashville, N.A. as Agent and Parent and certain of its subsidiaries. (c)(1) -- Agreement and Plan of Merger, dated as of December 6, 1996, by and among Parent, Purchaser and the Company. (c)(2) -- Form of Employment Agreement between Parent and Brett Harwood. (c)(3) -- Form of Noncompetition Agreements between Parent and each of Lowell Harwood, Sanford Harwood, and Leslie Harwood Ehrlich. (c)(4) -- Form of Consultancy Agreement with each of Lowell Harwood and Sanford Harwood. (c)(5) -- Escrow Agreement dated December 6, 1996 by and among Parent, Purchaser, Lowell Harwood, Sanford Harwood and First American National Bank as Escrow Agent. (c)(6) -- Agreement to Support the Transaction, dated December 6, 1996 by and among Parent, Purchaser, Lowell Harwood, Mrs. Lowell Harwood, Sanford Harwood, Brett Harwood, Mrs. Brett Harwood, Brett Harwood as custodian for his minor children, Leslie Harwood Ehrlich, Craig Harwood, Scott Harwood and Scott Harwood as custodian for his minor children. (c)(7) -- Confidentiality Agreement dated July 10, 1996 between Parent and the Company. (d) -- None. (e) -- Not applicable. (f) -- None.
5 6 After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC. By: ------------------------------------ Name: Monroe J. Carell, Jr. Title: Chairman and Chief Executive Officer December 13, 1996 After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. CENTRAL PARKING CORPORATION By: ------------------------------------ Name: Monroe J. Carell, Jr. Title: Chairman and Chief Executive Officer December 13, 1996 6 7 EXHIBIT INDEX
PAGE IN SEQUENTIAL EXHIBIT NUMBERING NUMBER DESCRIPTION OF EXHIBITS SYSTEM - ------- ----------------------------------------------------------------------- ---------- (a)(1) -- Form of Offer to Purchase dated December 13, 1996...................... (a)(2) -- Form of Letter of Transmittal.......................................... (a)(3) -- Form of Notice of Guaranteed Delivery.................................. (a)(4) -- Form of Letter from J.C. Bradford & Co. to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees.................................... (a)(5) -- Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Nominees to Clients................................................ (a)(6) -- Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9................................................. (a)(7) -- Summary Advertisement as published in The Wall Street Journal on December 13, 1996...................................................... (a)(8) -- Press Release issued by Parent on December 9, 1996..................... (b)(1) -- Form of $150,000,000 Credit Agreement dated December 12, 1996 by and among various banks with SunTrust Bank, Nashville, N.A. as Agent and Parent and certain of its subsidiaries................................. (c)(1) -- Agreement and Plan of Merger, dated as of December 6, 1996, by and among Parent, Purchaser and the Company................................ (c)(2) -- Form of Employment Agreement between Parent and Brett Harwood.......... (c)(3) -- Form of Noncompetition Agreements between Parent and each of Lowell Harwood, Sanford Harwood, and Leslie Harwood Ehrlich................... (c)(4) -- Form of Consultancy Agreement with each of Lowell Harwood and Sanford Harwood................................................................ (c)(5) -- Escrow Agreement dated December 6, 1996 by and among Parent, Purchaser, Lowell Harwood, Sanford Harwood and First American National Bank as Escrow Agent........................................................... (c)(6) -- Agreement to Support the Transaction, dated December 6, 1996 by and among Parent, Purchaser, Lowell Harwood, Mrs. Lowell Harwood, Sanford Harwood, Brett Harwood, Mrs. Brett Harwood, Brett Harwood as custodian for his minor children, Leslie Harwood Ehrlich, Craig Harwood, Scott Harwood and Scott Harwood as custodian for his minor children. (c)(7) -- Confidentiality Agreement dated July 10, 1996 between Parent and the Company. (d) -- None. (e) -- Not applicable. (f) -- None.
EX-99.A.1 2 OFFER TO PURCHASE 1 Offer to Purchase for Cash All Outstanding Shares of Common Stock of SQUARE INDUSTRIES, INC. at $31.00 Per Share (payable $28.50 per Share net in cash, without interest thereon, and an additional $2.50 per Share to be deposited by Parent in escrow as contingent consideration for distribution, in whole or in part, either to the seller or to Parent upon the resolution of two specific matters, and subject to adjustment as provided in the escrow agreement) by CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC. an indirect wholly-owned subsidiary of CENTRAL PARKING CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JANUARY 14, 1997, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES WHICH, TOGETHER WITH ANY SHARES THEN OWNED BY CENTRAL PARKING CORPORATION OR CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC., REPRESENTS AT LEAST SIXTY-SIX AND TWO-THIRDS PERCENT (66 2/3%) OF THE SHARES ON A FULLY DILUTED BASIS (FULLY DILUTED SHALL INCLUDE, WITHOUT LIMITATION, ALL SHARES ISSUABLE UPON THE CONVERSION OF ANY CONVERTIBLE SECURITIES OR UPON THE EXERCISE OF ANY OPTIONS, WARRANTS OR RIGHTS, UNLESS THE HOLDER THEREOF SHALL HAVE ENTERED INTO AN AGREEMENT TO CASH OUT SUCH OPTIONS, WARRANTS OR RIGHTS IN CONJUNCTION WITH THE AGREEMENT AND PLAN OF MERGER). THE OFFER IS ALSO CONDITIONED UPON, AMONG OTHER THINGS, THE EXPIRATION OR TERMINATION OF ANY APPLICABLE ANTITRUST WAITING PERIODS. --------------------- THE BOARD OF DIRECTORS OF SQUARE INDUSTRIES, INC. (THE "COMPANY") HAS UNANIMOUSLY APPROVED EACH OF THE OFFER AND THE MERGER AND DETERMINED THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY (OTHER THAN CENTRAL PARKING CORPORATION AND ITS SUBSIDIARIES), AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. --------------------- IMPORTANT Any shareholder desiring to tender all or any portion of such shareholder's shares of common stock, par value $.01 per share (the "Shares"), of the Company should either (1) complete and sign the Letter of Transmittal (or a facsimile thereof) in accordance with the instructions in the Letter of Transmittal and (a) mail or deliver it together with the certificate(s) evidencing tendered Shares, and any other required documents, to the Depositary or (b) tender such Shares pursuant to the procedure for book-entry transfer set forth in Section 3, or (2) request such shareholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such shareholder. Any shareholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if such shareholder desires to tender such Shares. A shareholder who desires to tender Shares and whose certificates evidencing such Shares are not immediately available, or who cannot comply with the procedure for book-entry transfer on a timely basis, may tender such Shares by following the procedure for guaranteed delivery set forth in Section 3. Questions or requests for assistance may be directed to the Information Agent or to the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent or from brokers, dealers, commercial banks or trust companies. --------------------- THE DEALER MANAGER FOR THE OFFER IS: J.C. BRADFORD LOGO --------------------- December 13, 1996 2 TABLE OF CONTENTS
PAGE ---- Introduction...................................................................... 1 1. Terms of the Offer; Expiration Date; Treatment of Stock Options; Contingency of Payment of Certain Amounts of The Offer Price, Merger Consideration and Option Consideration; Escrow Agreement................................................... 3 2. Acceptance for Payment and Payment for Shares..................................... 6 3. Procedures for Tendering Shares................................................... 7 4. Withdrawal Rights................................................................. 9 5. Certain Federal Income Tax Consequences........................................... 10 6. Price Range of Shares; Dividends.................................................. 10 7. Certain Information Concerning the Company........................................ 11 8. Certain Information Concerning Purchaser and Parent............................... 15 9. Financing of the Offer and the Merger............................................. 17 10. Background of the Offer; Contacts with the Company; The Merger Agreement; Employment, Consultancy and Confidentiality and Noncompete Agreements; Agreement to Support the Transaction........................................................ 18 11. Purpose of the Offer; Plans for the Company After the Offer and the Merger........ 28 12. Dividends and Distributions....................................................... 30 13. Effect of the Offer on the Market for the Shares, Exchange Listing and Exchange Act Registration.................................................................. 30 14. Certain Conditions of the Offer................................................... 31 15. Certain Legal Matters and Regulatory Approvals.................................... 33 16. Fees and Expenses................................................................. 35 17. Miscellaneous..................................................................... 35 Exhibit I. Directors and Executive Officers of Parent and Purchaser
i 3 To the Holders of Common Stock of SQUARE INDUSTRIES, INC.: INTRODUCTION Central Parking System -- Empire State, Inc., a New York corporation ("Purchaser") and an indirect wholly-owned subsidiary of Central Parking Corporation, a Tennessee corporation ("Parent"), hereby offers to purchase all outstanding shares of common stock, par value $.01 per share (the "Shares"), of Square Industries, Inc., a New York corporation (the "Company"), at a price of $31.00 per Share, payable $28.50 per Share net to the seller in cash at the closing (the "Closing") of the Offer, without interest, and an additional $2.50 per Share to be deposited by Parent in escrow as contingent consideration for distribution, in whole or in part, to either the seller or Parent based upon the resolution of two specific matters, subject to adjustment as provided in the Escrow Agreement (as described in Section 1) (the "Offer Price"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). The Offer is being made pursuant to an Agreement and Plan of Merger dated as of December 6, 1996 (the "Merger Agreement") among Parent, Purchaser and the Company. Tendering shareholders will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes, with respect to the purchase of Shares by Purchaser pursuant to the Offer. Purchaser will pay all charges and expenses of J.C. Bradford & Co., which is acting as Dealer Manager for the Offer (in such capacity, the "Dealer Manager"), SunTrust Bank, Atlanta (the "Depositary") and Kissel-Blake Inc., (the "Information Agent") incurred in connection with the Offer. See Section 16. THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") UNANIMOUSLY APPROVED EACH OF THE OFFER AND THE MERGER (AS DEFINED BELOW) AND HAS DETERMINED THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY (OTHER THAN PARENT AND ITS SUBSIDIARIES), AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. The Blackstone Group L.P. ("Blackstone"), the Company's financial advisor, has delivered to the Board its written opinion dated December 6, 1996, to the effect that, as of such date and based upon and subject to certain matters stated in such opinion, the Offer Price and Merger Consideration to be received by the holders of Shares (other than Parent and its subsidiaries) in the Offer and the Merger is fair to such holders from a financial point of view. A copy of the opinion of Blackstone is contained in the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to shareholders concurrently herewith and shareholders of the Company are urged to read the opinion in its entirety for a description of the assumptions made, factors considered and procedures followed by Blackstone. In addition, certain affiliates of the Company owning 650,540 Shares and options and warrants to purchase 387,500 Shares have entered into an Agreement to Support the Transaction pursuant to which such affiliates agree to tender their shares and enter into agreements to cash out their options and warrants, subject to certain exceptions. See Section 10. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES WHICH, TOGETHER WITH ANY SHARES THEN OWNED BY PARENT OR PURCHASER, REPRESENTS AT LEAST SIXTY-SIX AND TWO-THIRDS PERCENT (66 2/3%) OF THE SHARES ON A FULLY DILUTED BASIS (FULLY DILUTED SHALL INCLUDE, WITHOUT LIMITATION, ALL SHARES ISSUABLE UPON THE CONVERSION OF ANY CONVERTIBLE SECURITIES OR UPON THE EXERCISE OF ANY OPTIONS, WARRANTS OR RIGHTS, UNLESS THE HOLDER THEREOF SHALL HAVE ENTERED INTO AN AGREEMENT TO CASH OUT SUCH OPTIONS, WARRANTS OR RIGHTS IN CONJUNCTION WITH THE MERGER AGREEMENT)(THE "MINIMUM CONDITION"). THE OFFER IS ALSO CONDITIONED UPON, AMONG OTHER THINGS, THE EXPIRATION OR TERMINATION OF ANY APPLICABLE ANTITRUST WAITING PERIODS. SEE SECTION 14, WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER. 1 4 The Merger Agreement provides that, among other things, as soon as practicable after the purchase of Shares pursuant to the Offer and the satisfaction of the other conditions set forth in the Merger Agreement and in accordance with the relevant provisions of the New York Business Corporation Law (the "NYBCL"), Purchaser will be merged with and into the Company (the "Merger"). Following consummation of the Merger, the Company will continue as the surviving corporation (the "Surviving Corporation") as an indirect wholly-owned subsidiary of Parent. At the effective time of the Merger (the "Effective Time"), each Share issued and outstanding immediately prior to the Effective Time (other than (i) Shares held in the treasury of the Company, Shares owned by Parent or any direct or indirect subsidiary of Parent or of the Company (which shall be canceled at the Effective Time) and (ii) Shares which are held by shareholders validly exercising appraisal rights pursuant to Section 910 of the NYBCL) will be converted into the right to receive $28.50 net in cash at the closing of the Merger, without interest thereon, and an additional $2.50 per Share to be deposited by Parent in escrow as contingent consideration for distribution, in whole or in part, to either the shareholders, optionholders or warrant holders of the Company or to Parent upon the resolution of two specific matters, subject to adjustment as provided in the escrow agreement (as described further in Section 1) or any higher price that may be paid per Share in the Offer (the "Merger Consideration"). The Merger Agreement is more fully described in Section 10. The Merger Agreement provides that, promptly upon the purchase by Purchaser of at least a majority of outstanding Shares pursuant to the Offer, Purchaser shall be entitled to designate up to such number of directors, rounded up to the next whole number, to the Board as will give Purchaser representation on the Board equal to the product of the total number of directors on the Board multiplied by the percentage that the aggregate number of Shares beneficially owned by Purchaser and its affiliates at such time bears to the total number of Shares then outstanding. In the Merger Agreement, the Company has agreed to take all actions necessary to cause Purchaser's designees to be designated as directors of the Company, including increasing the size of the Board or securing the resignations of incumbent directors or both. The Offer is the first step and the Merger is the second step in Purchaser's proposed acquisition of the entire equity interest in the Company. Following completion of the Offer, if required by applicable law, the Merger Agreement will be submitted for adoption by the shareholders of the Company. Under the NYBCL, the affirmative vote or written consent of holders of two-thirds of all of the outstanding shares of the Company entitled to vote on the Merger, including any Shares owned by Purchaser or Parent, would be required to adopt the Merger Agreement. However, if Purchaser owns at least 90% of each class and series of outstanding voting shares of the Company, no vote or consent of the shareholders of the Company will be required to consummate the Merger. The Company has advised Purchaser that as of December 6, 1996, 1,200,856 Shares were issued and outstanding and that (i) no Shares were held in the treasury of the Company, (ii) no Shares were held by the subsidiaries of the Company, and (iii) 555,400 Shares were subject to issuance upon the exercise of outstanding options and warrants. The Company has advised Purchaser that since December 6, 1996, the date of the Merger Agreement, the Company has not issued any Shares or any options to purchase Shares. As a result, as of the date of this Offer to Purchase, Purchaser believes the Minimum Condition would be satisfied (i) if the holders of all outstanding options and warrants agree to cash out such options and warrants pursuant to written agreements, as provided in the Merger Agreement, when there shall have been validly tendered in accordance with the terms of the Offer and not withdrawn prior to the expiration of the Offer at least 800,571 Shares and (ii) if the holders of none of the outstanding options and warrants agree to cash out such options and warrants pursuant to written agreements (whether or not such options or warrants are exercised), as provided in the Merger Agreement, when there shall have been validly tendered in accordance with the terms of the Offer and not withdrawn prior to the expiration of the Offer at least 1,170,837 Shares. The actual number of Shares which must be validly tendered and not withdrawn in order to satisfy the Minimum Condition will be between the foregoing numbers depending upon the actual number of options and warrants as to which the optionholders and warrant holders shall have entered into cash out agreements as described above. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 2 5 1. TERMS OF THE OFFER; EXPIRATION DATE; TREATMENT OF STOCK OPTIONS; CONTINGENCY OF PAYMENT OF CERTAIN AMOUNTS OF THE OFFER PRICE, MERGER CONSIDERATION AND OPTION CONSIDERATION; ESCROW AGREEMENT. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), Purchaser will accept for payment and pay for all Shares (and deposit the amounts required to be placed in escrow as contingent consideration as discussed below) validly tendered on or prior to the Expiration Date (as hereinafter defined) and not withdrawn as permitted by Section 4. The term "Expiration Date" means 12:00 midnight, New York City time, on Tuesday, January 14, 1997, unless and until Purchaser shall have extended the period during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire. The Company and Purchaser have agreed that the Offer shall expire 21 business days after it is commenced and shall not be extended without the prior written consent of the Company, provided Purchaser may extend the Offer one time for no more than 10 days and only if at least 80% of all of the outstanding Shares have been tendered prior to such extension. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering shareholder to withdraw such shareholder's Shares. See Section 4. Subject to the applicable regulations of the Securities and Exchange Commission (the "Commission"), Purchaser also expressly reserves the right, in its sole discretion (but subject to the terms and conditions of the Merger Agreement), at any time and from time to time, (i) to terminate the Offer and not accept for payment any Shares upon the occurrence of any of the conditions specified in Section 14, and (ii) to waive any condition or otherwise amend the Offer in any respect, by oral or written notice of such delay, termination, waiver or amendment to the Depositary and by a public announcement thereof. The Merger Agreement provides that, unless previously approved by the Company in writing, Purchaser will not (i) decrease the price per Share payable in the Offer, (ii) change the form of the consideration to be paid in the Offer, or (iii) modify the conditions to the Offer or impose conditions to the Offer in addition to those set forth in Section 14. Purchaser acknowledges that (i) Rule 14e-l(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires Purchaser to pay the consideration offered or return the Shares tendered promptly after the termination or withdrawal of the Offer, and (ii) Purchaser may not delay acceptance for payment of, or payment for, any Shares upon the occurrence of any of the conditions specified in Section 14 without extending the period of time during which the Offer is open. Any such extension, delay, termination, waiver or amendment will be followed as promptly as practicable by public announcement thereof, such announcement in the case of an extension to be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that material changes be promptly disseminated to shareholders in a manner reasonably designed to inform them of such changes) and without limiting the manner in which Purchaser may choose to make any public announcement, Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release to the Dow Jones News Service. If Purchaser makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, Purchaser will extend the Offer to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. Subject to the terms of the Merger Agreement, if, prior to the Expiration Date, Purchaser should decide to increase the consideration being offered in the Offer, such increase in the consideration being offered will be applicable to all shareholders whose Shares are accepted for payment pursuant to the Offer and, if, at the time notice of any such increase in the consideration being offered is first published, sent or given to holders of such Shares, the Offer is scheduled to expire at any time earlier than the period ending on the tenth business day from and including the date that such notice is first so published, sent or given, the Offer will be extended at least until the expiration of such ten-business-day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. 3 6 The Company has provided Purchaser with the Company's shareholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares whose names appear on the Company's shareholder list and will be furnished for subsequent transmittal to beneficial owners of Shares, to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder list or, if applicable, who are listed as participants in a clearing agency's security position listing. Treatment of Stock Options. Promptly following the completion of the Offer, each holder of a then outstanding option under the Company's 1992 Stock Option Plan or warrant to purchase Shares heretofore granted, will, upon the delivery of an executed agreement by such holder thereof, receive (whether such option or warrants are immediately exercisable or not) in settlement thereof, a cash payment from the Company in an amount equal to the product of (i) the difference between $28.50 and the per share exercise price of such options or warrants (the "Option Consideration") and (ii) the total number of Shares which the holder of each such option or warrant is entitled to purchase under such option or warrant, as provided above (the "Option Shares"). In addition, $2.50 per Option Share will be deposited by Purchaser in escrow as contingent consideration for distribution, in whole or in part, to the optionholders and warrant holders of the Company or to Purchaser upon the resolution of two specific matters discussed below, subject to adjustment as provided in the Escrow Agreement (as defined below). Contingency of Payment of Certain Amounts of the Offer Price, Merger Consideration and Option Consideration; Escrow Agreement. The Merger Agreement provides that, of the Offer Price and Merger Consideration, $28.50 net per Share, without interest thereon, will be paid to the shareholder in cash promptly following the completion of the Offer or the closing of the Merger and the Option Consideration will be paid to the optionholders and warrant holders entering into cash out agreements (in each case, the "Initial Cash Portion") and an additional $2.50 per Share or Option Share will be deposited by Parent into an escrow account (the "Escrowed Funds") held by First American National Bank (the "Escrow Agent") as contingent consideration to be distributed, in whole or in part, to the shareholders, optionholders and warrant holders or Parent upon the resolution of two specific matters, subject to adjustment (the "Offer Contingent Consideration") pursuant to an Escrow Agreement dated December 6, 1996 (the "Escrow Agreement") by and among Company, Parent, the Escrow Agent and the Escrow Committee (as hereinafter defined). The Escrowed Funds are to be held by the Escrow Agent for certain periods (the "Escrow Period") and are being held solely because of certain contingent matters, which, if favorably resolved, could result in additional value to the Company. (a) Of the Escrowed Funds, $1.99 per Share shall be held by the Escrow Agent (the "Wooster Escrow") for up to 12 months unless extended as discussed below, with respect to the Company's property at 75 Wooster, New York, New York (the "Wooster Property"). If during the Escrow Period, the Wooster Property is leased under a commercially reasonable lease agreement under the terms set forth in the Escrow Agreement, which include an annual rental rate of at least $900,000 (a "Conforming Lease"), or the Wooster Property is sold on commercially reasonable terms at a purchase price of at least $9,000,000 (a "Conforming Sale"), then the entire Wooster Escrow shall be promptly distributed on a pro rata basis to the shareholders, optionholders and warrant holders of the Company entitled thereto by reason of their entitlement to the Offer Price, Merger Consideration and Option Consideration. If a Conforming Lease is being negotiated but has not been executed or a contract for a Conforming Sale executed by the potential purchaser is presented to Parent during the Escrow Period, but such Conforming Lease is not presented or such Conforming Sale is not closed during the Escrow Period, the Escrow Period may be extended for 90 days. In the event that a Conforming Lease (or Conforming Sale) is not so presented during the Escrow Period, Parent shall be entitled to receive the entire Wooster Escrow without any further claim by the shareholders, optionholders and warrant holders of the Company. In the event that during the Escrow Period, the Wooster Property is leased on commercially reasonable terms, including the terms included in the Escrow Agreement, but with a rental of less than $900,000 per annum, Parent shall be entitled to receive from the Wooster Escrow a sum in the aggregate equal to 10 times the difference between $900,000 and the actual annual rental, up to the maximum amount of the Wooster Escrow and the balance of the Wooster Escrow, if any, shall be distributed to the shareholders, optionholders and warrant holders of the Company pro rata based upon the proportions set forth in the Escrow 4 7 Agreement. In the event that during the Escrow Period, the Wooster Property is sold at a purchase price of less than $9,000,000, payable in cash at closing, Parent shall be entitled to receive from the Wooster Escrow a sum in the aggregate equal to the difference between $9,000,000 and the actual sales price, up to the maximum amount of the Wooster Escrow, and the balance of the Wooster Escrow, if any, shall be distributed to the shareholders, optionholders and warrant holders of the Company pro rata based upon the proportions set forth in the Escrow Agreement. In the event that during the Escrow Period (i) the Wooster Property is leased for a sum in excess of $900,000 per year on commercially reasonable terms, including the terms included in the Escrow Agreement, Parent shall pay over to the Escrow Agent an additional sum of five times the difference between $900,000 and the actual annual rental; or (ii) the Wooster Property is sold for a sum in excess of $9,000,000, payable in cash at closing, Parent shall pay over to the Escrow Agent an additional sum of 50% of the difference between $9,000,000 and the actual sales price, for distribution to the shareholders, optionholders and warrant holders of the Company together with the entire Wooster Escrow on a pro rata basis as additional Offer Price, Merger Consideration or Option Consideration. In the event of any variation of the other terms set forth in the Escrow Agreement, Parent, Purchaser and the Escrow Committee agree to use their reasonable efforts to negotiate an equitable distribution of the Wooster Escrow. (b) $0.51 per Share of the Escrowed Funds shall be held in escrow by the Escrow Agent (the "Occupancy Tax Escrow") for up to 12 months, unless extended as discussed below. In the event the total commercial rent occupancy tax liability of the Company or the Surviving Corporation for all tax periods from June 1, 1984 through May 31, 1991, in the aggregate (including all interest, penalties and principal) (the "Occupancy Tax Liability") is less than or equal to $800,000, the Escrow Agent shall promptly distribute the entire Occupancy Tax Escrow to the shareholders, optionholders and warrant holders of the Company on a pro rata basis based upon the proportions set forth in the Escrow Agreement. If the Occupancy Tax Liability is more than $800,000 but less than or equal to $900,000, the Escrow Agent shall pay to Parent the Occupancy Tax Escrow funds equal to the difference between the amount of the Occupancy Tax Liability and $800,000, and any remaining Occupancy Tax Escrow funds shall be distributed to the shareholders, optionholders and warrant of the Company holders on a pro rata basis based upon the proportions set forth in the Escrow Agreement. If the Occupancy Tax Liability is more than $900,000 but less than or equal to $1,000,000, the Escrow Agent shall pay to Parent the Occupancy Tax Escrow funds equal to 110% of the difference between the amount of the Occupancy Tax Liability and $800,000, and any remaining Occupancy Tax Escrow funds shall be distributed to the shareholders, optionholders and warrant holders of the Company on a pro rata basis based upon the proportions set forth in the Escrow Agreement. If the Occupancy Tax Liability is more than $1,000,000, the Escrow Agent shall pay to Parent the Occupancy Tax Escrow funds equal to 120% of the difference between the amount of the Occupancy Tax Liability and $800,000, and any remaining Occupancy Tax Escrow funds shall be distributed to the shareholders, optionholders and warrant holders of the Company on a pro rata basis based upon the proportions set forth in the Escrow Agreement. In the determination of the Occupancy Tax Liability, funds received from certain lessors or owners of property for payment of the commercial rent occupancy tax required by such lease or management agreement for any tax periods from June 1, 1984 through May 31, 1991, will be credited against the Occupancy Tax Liability. Parent shall be required to make reasonable commercial efforts to exercise its rights to recover such funds under the terms of the Company's or the Surviving Corporation's agreements with respect thereto. The Escrow Period may be extended by either the Escrow Committee or the Parent if the tax liability for all tax periods from June 1, 1984 through May 31, 1991 is not finally resolved as of 12 months after the Effective Time provided in no event may the Escrow Period extend beyond three years after the Effective Time. The Escrowed Funds shall be invested by the Escrow Agent only in short-term government securities. Any interest on the Escrowed Funds shall accrue on a pro rata basis to the party receiving such funds. The expenses of the Escrow Agreement will be paid out of the Escrowed Funds. The shareholders, optionholders and warrant holders of the Company may not transfer their contingent rights with respect to the Escrow except by will, intestate succession or operation of law. The interests of the shareholders, optionholders and warrant holders of the Company with respect to the Escrowed Funds shall be represented by a committee comprised of Lowell Harwood and Sanford Harwood (collectively the "Escrow Committee"). The Escrow Committee shall have the right to object to or agree to, on behalf of the shareholders, optionholders and warrant holders of the Company any proposed resolution of the contingencies described above. In the event that the Escrow 5 8 Committee and Parent are unable to resolve any matters concerning the contingencies described above, the matter shall be determined by binding arbitration and the Escrow Committee shall represent the interests of the shareholders, optionholders and warrant holders of the Company in such arbitration. The rights to receive the Escrowed Funds shall not be evidenced by a certificate or any document other than the Escrow Agreement and the Merger Agreement, and do not represent an interest in Purchaser, Parent or the Surviving Corporation. Because of the contingent nature of the matters comprising the Wooster Escrow and the Occupancy Tax Escrow, which are beyond the control of Purchaser, Parent and the Company, it is uncertain whether any Escrowed Funds will ever be distributed to the shareholders, optionholders and warrant holders of the Company. The foregoing is a summary of the Escrow Agreement and is qualified in its entity by reference to the text of the Escrow Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1 and which may be obtained from the offices of the Commission. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Purchaser will accept for payment, and will pay for, all Shares (subject to the amounts placed in escrow as described in Section 1) validly tendered prior to the Expiration Date and not withdrawn promptly after the later to occur of (i) the Expiration Date, (ii) the expiration or termination of any applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and (iii) the satisfaction or waiver of the conditions to the Offer set forth in Section 14. Subject to applicable rules of the Commission, Purchaser expressly reserves the right to delay acceptance for payment of, or delay payment for, Shares pending receipt of any regulatory approvals specified in Section 15 or in order to comply in whole or in part with any other applicable law. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares (the "Share Certificates") or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company, or Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in Section 3, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined below) in connection with a book-entry transfer, and (iii) any other documents required under the Letter of Transmittal. The term "Agent's Message" means a message, transmitted by a Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Purchaser may enforce such agreement against such participant. On or promptly after the date of this Offer to Purchase, Parent anticipates filing with the Federal Trade Commission (the "FTC") and the Antitrust Division of the Department of Justice (the "Antitrust Division") a Premerger Notification and Report Form under the HSR Act in connection with the purchase of Shares pursuant to the Offer. Accordingly, it is anticipated that the waiting period under the HSR Act applicable to the Offer will expire at 11:59 p.m., New York City time, on December 30, 1996. Prior to the expiration or termination of such waiting period, the FTC or the Antitrust Division may extend such waiting period by requesting additional information or documentary material from Parent. If such a request is made with respect to the purchase of Shares in the Offer, the waiting period will expire at 11:59 p.m., New York City time, on the tenth calendar day after substantial compliance by Parent with such a request. Thereafter, the waiting period may be extended only by court order. The waiting period under the HSR Act may be terminated prior to its expiration by the FTC and the Antitrust Division. Parent will request early termination of the waiting period, although there can be no assurance that this request will be granted. Pursuant to the Merger Agreement, Purchaser may postpone the acceptance for payment for Shares tendered if the applicable waiting period under the HSR Act shall not have expired or been terminated. See Section 15 for additional information regarding the HSR Act. 6 9 For purposes of the Offer, Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not withdrawn as, if and when Purchaser gives oral or written notice to the Depositary of Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary (less the amounts comprising contingent consideration to be deposited in escrow as described in Section 1) which will act as agent for tendering shareholders for the purpose of receiving payments from Purchaser and transmitting such payments to tendering shareholders whose Shares have been accepted for payment. Under no circumstances will interest on the Initial Cash Portion of the purchase price for Shares be paid, regardless of any delay in making such payment. If any tendered Shares are not accepted for payment for any reason pursuant to the terms and conditions of the Offer, or if Share Certificates are submitted evidencing more Shares than are tendered, Share Certificates evidencing unpurchased Shares will be returned, without expense to the tendering shareholder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure set forth in Section 3, such Shares will be credited to an account maintained at such Book-Entry Transfer Facility), as promptly as practicable following the expiration or termination of the Offer. 3. PROCEDURES FOR TENDERING SHARES. In order for a shareholder validly to tender Shares pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares, and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and either (i) the Share Certificates evidencing tendered Shares must be received by the Depositary at such address or such Shares must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary, in each case prior to the Expiration Date, or (ii) the tendering shareholder must comply with the guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Book-Entry Transfer. The Depositary will establish accounts with respect to the Shares at the Book-Entry Transfer Facilities for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of any Book-Entry Transfer Facility may make a book-entry delivery of Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at such Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer at a Book-Entry Transfer Facility, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other required documents, must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the tendering shareholder must comply with the guaranteed delivery procedure described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. Signature Guarantees. Signatures on all Letters of Transmittal must be guaranteed by a firm which is a member of the Medallion Signature Guarantee Program, or by any other "eligible guarantor institution," as 7 10 such term is defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing being referred to as an "Eligible Institution"), except in cases where Shares are tendered (i) by a registered holder of Shares who has not completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. If a Share Certificate is registered in the name of a person other than the person who or which signs the Letter of Transmittal, or if payment is to be made or a Share Certificate not accepted for payment or not tendered is to be returned to a person other than the registered holder(s), then the Share Certificate must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the Share Certificate, with the signature(s) on such Share Certificate or stock powers guaranteed by an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to the Offer and such shareholder's Share Certificates evidencing such Shares are not immediately available or such shareholder cannot deliver the Share Certificates and all other required documents to the Depositary prior to the Expiration Date, or such shareholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered, provided that all of the following conditions are satisfied: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by Purchaser, is received by the Depositary prior to the Expiration Date as provided below; and (iii) the Share Certificates (or a Book-Entry Confirmation) evidencing all tendered Shares, in proper form for transfer, in each case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by the Letter of Transmittal, are received by the Depositary within five New York Stock Exchange, Inc. trading days after the date of execution of such Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram, telex or facsimile transmission to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the form of Notice of Guaranteed Delivery made available by Purchaser. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer (less amounts comprising contingent consideration to be placed in escrow as described in Section 1) will be made only after timely receipt by the Depositary of the Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by the Letter of Transmittal. Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by Purchaser in its sole discretion, which determination shall be final and binding on all parties. Purchaser reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of which may, in the opinion of its counsel, be unlawful. Purchaser also reserves the absolute right to waive any condition of the Offer or any defect or irregularity in the tender of any Shares of any particular shareholder, whether or not similar defects or irregularities are waived in the case of other shareholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. Other Requirements. By executing the Letter of Transmittal as set forth above, a tendering shareholder irrevocably appoints designees of Purchaser as such shareholder's proxies, each with full power of substitution 8 11 and resubstitution, in the manner set forth in the Letter of Transmittal, to the full extent of such shareholder's rights with respect to the Shares tendered by such shareholder and accepted for payment by Purchaser (and with respect to any and all other Shares or other securities issued or issuable in respect of such Shares on or after December 6, 1996. All such proxies shall be considered coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, Purchaser accepts such Shares for payment. Upon such acceptance for payment, all prior proxies given by such shareholder with respect to such Shares (and such other Shares and securities) will be revoked without further action, and no subsequent proxies may be given nor any subsequent written consent executed by such shareholder (and, if given or executed, will be deemed not to be effective) with respect thereto. The designees of Purchaser will, with respect to the Shares for which the appointment is effective, be empowered to exercise all voting and other rights of such shareholder as they, in their sole discretion, may deem proper, at any annual or special meeting of the Company's shareholders or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon Purchaser's payment for such Shares, Purchaser must be able to exercise full voting rights with respect to such Shares (and such other Shares and securities). The acceptance for payment by Purchaser of Shares pursuant to any of the procedures described above constitutes a binding agreement between the tendering shareholder and Purchaser upon the terms and subject to the conditions of the Offer. UNDER THE FEDERAL INCOME TAX LAWS, THE DEPOSITARY WILL BE REQUIRED TO WITHHOLD 31% OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN SHAREHOLDERS PURSUANT TO THE OFFER. TO PREVENT SUCH BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT TO CERTAIN SHAREHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER, EACH SHAREHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH SHAREHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL. 4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer may be withdrawn by the tendering shareholder at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn by such shareholder at any time after February 11, 1997, unless theretofore accepted for payment by Purchaser pursuant to the Offer. If Purchaser extends the Offer, is delayed in accepting for payment or paying for Shares, or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to Purchaser's rights under the Offer, the Depositary may on behalf of Purchaser retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering shareholders are entitled to withdrawal rights as described in this Section 4. Any such delay will be an extension of the Offer to the extent required by law. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover page of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in the first sentence of this paragraph. Withdrawals may not be rescinded, and any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered at any time prior to the Expiration Date by following one of the procedures described in Section 3. 9 12 All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by Purchaser, in its sole discretion, whose determination will be final and binding. None of Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares pursuant to the Offer or in the Merger will be a taxable transaction for federal income tax purposes and may also be a taxable transaction under applicable state, local or foreign tax laws. Because (i) the Expiration Date falls in 1997, (ii) Purchaser does not intend to purchase any Shares until such date, and (iii) tendering shareholders may withdraw their tender of Shares prior to such date, the taxable event should occur in 1997 with respect to the Initial Cash Portion and in the year of receipt with respect to the Escrowed Funds, if any, regardless of the date a shareholder submits his or her Shares to the Depositary. In general, a shareholder will recognize gain or loss for federal income tax purposes equal to the difference between the amount of cash received in exchange for the Shares sold (including amounts, if any, distributed from the Escrowed Funds) and such shareholder's adjusted tax basis in such Shares. For federal income tax purposes, such gain or loss will be capital gain or loss if the Shares are capital assets in the hands of such shareholder, and will be long-term capital gain or loss if such Shares have been held for more than one year. A shareholder's ability to deduct capital losses may be limited. THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF SHAREHOLDERS, INCLUDING FINANCIAL INSTITUTIONS, BROKER-DEALERS, SHAREHOLDERS WHO ACQUIRED SHARES PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES AND FOREIGN CORPORATIONS. THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL AND FOREIGN TAX LAWS. 6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are traded principally on the Nasdaq Stock Market's National Market ("Nasdaq/NMS"). The following table sets forth, for the quarters indicated, the high and low sales prices per Share on Nasdaq/NMS as reported in published financial sources.
HIGH LOW ------ ------ 1994: First Quarter................................................................ $ 6.00 $ 4.25 Second Quarter............................................................... 4.00 2.75 Third Quarter................................................................ 3.375 2.50 Fourth Quarter............................................................... 3.00 2.375 1995: First Quarter................................................................ $5.125 $2.625 Second Quarter............................................................... 6.75 5.00 Third Quarter................................................................ 6.75 5.50 Fourth Quarter............................................................... 8.625 5.50 1996: First Quarter................................................................ $ 9.25 $7.875 Second Quarter............................................................... 12.50 9.00 Third Quarter................................................................ 24.25 9.50 Fourth Quarter (through December 11)......................................... 31.75 20.50
10 13 The Company has never declared or paid a cash dividend on its Common Stock and does not anticipate paying any cash dividends in the foreseeable future. On December 6, 1996, the last full trading day prior to the announcement of the execution of the Merger Agreement and of Purchaser's intention to commence the Offer, the closing price per Share as reported on Nasdaq/NMS was $28.25. On December 11, 1996, the last full trading day prior to the commencement of the Offer, the closing price per Share as reported on Nasdaq/NMS was $28.438. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. 7. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set forth herein, the information concerning the Company contained in this Offer to Purchase, including financial information, has been furnished by the Company or has been taken from or based upon publicly available documents and records on file with the Commission and other public sources. Neither Purchaser, Parent nor the Dealer Manager assumes any responsibility for the accuracy or completeness of the information concerning the Company furnished by the Company or contained in such documents and records or for any failure by the Company to disclose events which may have occurred or may affect the significance or accuracy of any such information but which are unknown to Purchaser and Parent. General. The Company is a New York corporation with its principal executive offices located at 921 Bergen Avenue, Jersey City, New Jersey 07306. The Company has been engaged since its organization in 1968 in the parking industry, principally in the operation and management of parking lots and garages and, since May 1980, in the operation of a self-service gasoline station in New York. In connection with its parking operations, the Company from time to time acquires, holds, develops, operates and sells real properties which were originally acquired or leased with the view to conducting a parking operation thereon or therein. As of November 30, 1996, the Company operated or managed 117 locations with an aggregate parking capacity of over 61,000 cars. As of such date, it was conducting parking operations in New York, New Jersey, Pennsylvania, Maryland, Massachusetts, Delaware, Indiana, Georgia and the Province of Ontario, with more than 60% of the facilities being operated through ownership or lease, and the balance being operated under management agreements. Financial Information. Set forth below is certain selected consolidated financial information relating to the Company and its subsidiaries which has been excerpted or derived from the financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995, as amended (the "Form 10-K") and the unaudited financial statements contained in the Company's Quarterly Report on Form 10-Q for the interim period ended September 30, 1996 (the "Form 10-Q"). More comprehensive information is included in the Form 10-K, the Form 10-Q and other documents filed by the Company with the Commission. The financial information that follows is qualified in its entirety by reference to such reports and other documents, including the financial statements and related notes contained therein. Such reports and other documents may be examined and copies may be obtained from the offices of the Commission in the manner set forth below. 11 14 SQUARE INDUSTRIES, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED FEBRUARY 28 OR 29, TEN MONTHS ENDED YEAR ENDED NINE MONTHS ENDED --------------------------- DECEMBER 31, DECEMBER 31, SEPTEMBER 30, 1992 1993 1994 1994 1995 1996 ------- ------- ------- ---------------- ------------ ----------------- Parking service revenue.............. $61,800 $62,855 $59,775 $ 50,936 $ 61,772 $45,668 Service station revenue.............. 5,382 4,923 4,295 3,494 4,159 3,280 Costs and expenses..... 71,883 67,278 65,283 53,714 64,227 47,852 Elimination of provision for increased labor costs................ -- -- -- -- (410) -- Earnings (loss) before extraordinary item... (4,701) 500 (1,213) 716 2,114 1,096 Provision (benefit) for income taxes......... 28 646 (398) 196 (125) 432 Extraordinary item -- income tax benefit from utilization of net operating loss carry forwards....... 133 100 -- -- -- -- Net earnings (loss).... (4,596) (46) (815) 520 2,239 1,315 Earnings (loss) per share: Before extraordinary item.............. (3.88) (.12) (.61) .42 1.55 .84 Extraordinary item... .11 .08 -- -- -- -- Net earnings (loss)............ (3.77) (.04) (.61) .42 1.55 .84 Total assets........... 35,824 34,854 35,012 32,789 37,222 42,637 Long-term debt, including current portion.............. 23,347 22,123 30,986 18,268 19,259 22,327 Cash dividends paid.... -- -- -- -- -- --
12 15 In connection with Parent's review of the Company and in the course of the negotiations between the Company and Parent described in Section 10, the Company provided Parent with certain projected results of operations of the Company, which Parent and Purchaser believe is not publicly available, the most recently updated of which is included in the information summarized below. The projected results of operations do not take into account any of the potential effects of the transactions contemplated by the Offer and the Merger. SQUARE INDUSTRIES, INC. PROJECTED RESULTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT PER SHARE DATA) PROJECTED FINANCIAL STATEMENTS PRO FORMA CONSOLIDATED COMPANY FINANCIAL SUMMARY (DOLLARS IN THOUSANDS)
YEAR ENDED DECEMBER 31, -------------------- 1996P 1997P ------- ------- STATEMENTS OF OPERATIONS Revenues Parking Service Revenue............................................ $64,878 $70,243 Service Station Revenue............................................ 4,338 4,512 ------- ------- Total......................................................... 69,216 74,755 Costs and Expenses Cost of Parking Services(1)........................................ 50,575 56,316 Operating Costs -- Service Station................................. 4,352 4,526 General and Administrative Expenses................................ 9,074 9,114 ------- ------- Total......................................................... 64,001 69,956 Pre-tax Operating Income.............................................. 5,215 4,799 Write-off of Assets................................................ 0 0 Write-off of Bank Re-financing Costs(2)............................ 311 308 Litigation Gain.................................................... (651) 0 Interest Expense, net.............................................. 1,342 1,364 ------- ------- Pre-tax Income (Loss).............................................. 4,213 3,127 EBITDA before G&A Expense(3).......................................... 16,606 16,390 EBITDA after G&A Expense(3)........................................... 7,532 7,276 Cash Flow Items: Depreciation and Amortization...................................... 1,451 1,627 Deferred Rent(4)................................................... 806 790 Accruals(5)........................................................ 60 60 Capital Expenditures............................................... $ 5,798(6) $ 2,025
13 16
DECEMBER 31, 1996P ------------ BALANCE SHEET: Cash.......................................................................... $ 2,457 Current Assets................................................................ 3,555 Net Property, Plant and Equipment............................................. 29,917 Other Assets.................................................................. 6,193 ------ Total Assets.......................................................... 42,122 Current Liabilities........................................................... 6,859 Current Portion of Long Term Debt............................................. 1,115 Long Term Debt................................................................ 19,809 Customer Security Deposits.................................................... 317 ------ Total Liabilities..................................................... 28,100 Shareholders' Equity(7)....................................................... 14,022 ------ Total Liabilities and Equity.......................................... $ 42,122
- --------------- (1) Includes $60,000 in provision for commercial rent taxes and in 1996 a reduction for a $1.0 million portion of a litigation gain. (2) Non-cash expense for a corporate line of credit, reclassified from G&A Expenses and represents amortization of $992,000 of refinancing costs over a 4 year period. Amount to be amortized in 1998 is $309,000 and in 1999 is $64,000. (3) EBITDA is pre-tax operating income before interest, depreciation and amortization, rent averaging and accruals. 1996 EBITDA includes the $1.651 million litigation gain. (4) Rent Expense, classified under Cost of Parking Services, is computed by taking an average of all lease payments over the life of the lease. Deferred Rent arises due to the difference between rent expense and the actual lease payment. (5) $60,000 provision for rent taxes. (6) Includes $3.2 million for 75 Wooster Street acquisition/improvements. (7) Includes deferred rent of $4,053,000 in 1996P. TO THE KNOWLEDGE OF PARENT AND PURCHASER, THE COMPANY DOES NOT AS A MATTER OF COURSE PUBLICLY DISCLOSE PROJECTIONS OR ESTIMATES AS TO FUTURE REVENUES, EARNINGS, FINANCIAL CONDITION OR OPERATING PERFORMANCE. WHILE PRESENTED WITH NUMERICAL SPECIFICITY, PROJECTED INFORMATION OF THE TYPE FURNISHED ABOVE IS BASED ON ESTIMATES AND ASSUMPTIONS THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT SUCH ESTIMATES AND ASSUMPTIONS WILL BE ACCURATE, AND THE ACTUAL RESULTS MAY BE SIGNIFICANTLY HIGHER OR LOWER THAN THOSE SET FORTH ABOVE. IN ADDITION, THESE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND FORECASTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE SUCH INFORMATION WAS MADE AVAILABLE TO PARENT BY THE COMPANY. NONE OF PARENT, PURCHASER OR THE COMPANY INTENDS TO UPDATE OR OTHERWISE REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE SHOWN TO BE IN ERROR. NONE OF PARENT, PURCHASER, THE COMPANY OR ANY OTHER ENTITY OR PERSON ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OR VALIDITY OF THE FOREGOING PROJECTIONS. The Company is subject to the informational filing requirements of the Exchange Act and, in accordance therewith, is required to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information as to particular dates concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company is required to be disclosed in proxy statements distributed to the Company's shareholders and filed with the Commission. Such reports, proxy statements and other information should be available for inspection at the 14 17 public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and also should be available for inspection at the following regional offices: New York Regional Office, 75 Park Place, 14th Floor, New York, New York 10007; and Chicago Regional Office, Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials may be obtained by mail, upon payment of the Commission's customary fees, by writing to its principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a web site (http://www.sec.gov) that contains reports, proxy and information statements and other reports regarding issuers that file electronically with the Commission. The Shares are traded on Nasdaq/NMS, and reports, proxy material and other information concerning the Company may be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006. 8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT. Purchaser is a newly incorporated New York corporation organized for the purpose of acquiring the Company and has not carried on any activities other than in connection with the Offer and the Merger. The principal offices of Purchaser are located at 2401 21st Avenue South, Suite 200, Nashville, Tennessee 37212. Purchaser is an indirect wholly-owned subsidiary of Parent. Until immediately prior to the time that Purchaser will purchase Shares pursuant to the Offer, it is not anticipated that Purchaser will have any significant assets or liabilities or engage in activities other than those incident to its formation and capitalization and the transactions contemplated by the Offer and the Merger. Because Purchaser is newly formed and has minimal assets and capitalization, no meaningful financial information regarding Purchaser is available. Parent's predecessor corporation, Central Parking System, Inc., was founded in 1968. Parent, a Tennessee corporation, is a leading provider of parking services in the United States. Parent operates over 1,360 parking facilities containing over 546,000 spaces, including 109 international facilities, located in 32 states, the District of Columbia, Puerto Rico, the United Kingdom, Mexico and Germany. Parent provides parking consulting services in Malaysia and Spain and has a business development office in Amsterdam. From its inception, Parent has sought to increase the level of integrity and professionalism in the parking industry. Parent's leadership position in the parking industry is a result of applying professional management strategies to a consolidating industry historically managed by small local operators, understanding the needs of the parking public, applying technology to parking services, retaining employees through proprietary training programs, and utilizing an incentive compensation system that rewards performance. The name, citizenship, business address, principal occupation or employment, and five-year employment history for each of the directors and executive officers of Purchaser and Parent and certain other information are set forth in Exhibit I hereto. The common stock of Parent, par value $.01 per share, is listed and traded on the NYSE under the symbol "PK." Parent has no other class of stock and has no long-term debt other than the Acquisition Facility described in Section 10. The following selected financial and operating data relating to Parent and its subsidiaries has been derived from the consolidated financial statements contained in Parent's Annual Report on Form 10-K for the year ended September 30, 1995 and the unaudited consolidated financial information contained in Parent's Quarterly Report on Form 10-Q for the nine months ended June 30, 1996. More comprehensive financial information is included in such Annual Report and the other documents filed by Parent with the Commission, and the consolidated financial data set forth below is qualified in its entirety by reference to such reports and other documents, including the consolidated financial statements contained therein. Parent is also subject to the informational requirements of the Exchange Act and in accordance therewith files periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Parent is required to disclose in such proxy statements certain information, as of particular dates, concerning its directors and officers, their remuneration, stock options granted to them, the principal holders of its securities and material interests of such persons in transactions with Parent. Such reports, proxy statements and other information should also be available for inspection and copying at the offices of the Commission in the same manner as set forth with respect to the Company in Section 7. 15 18 CENTRAL PARKING CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL AND OPERATING DATA (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED SEPTEMBER 30, NINE MONTHS ENDED --------------------------------------- JUNE 30, 1992 1993 1994 1995 1996 ------- ------- -------- -------- ----------------- STATEMENT OF EARNINGS DATA: Revenues: Parking............................ $26,940 $69,589 $ 82,890 $ 94,383 $ 81,568 Management contract................ 19,054 25,829 29,278 31,772 24,867 ------- ------- -------- -------- -------- Total revenues................ 45,994 95,418 112,168 126,155 106,435 Cost and expenses: Cost of parking.................... 24,391 66,168 76,952 87,192 73,169 Cost of management contracts....... 6,232 9,087 9,812 9,650 7,642 General and administrative......... 9,113 12,374 14,196 15,711 13,024 ------- ------- -------- -------- -------- Total costs and expenses...... 39,736 87,629 100,960 112,553 93,835 Operating earnings............ 6,258 7,789 11,208 13,602 12,600 Net gains on sales of property and equipment.......................... 2,424 1,122 2,214 81 1,182 Earnings before income taxes.......... 8,430 8,650 14,143 15,507 15,929 Income taxes.......................... 3,045 3,416 5,179 5,563 5,529 Net earnings.......................... 5,385 5,234 8,964 9,944 10,400 PER SHARE DATA: Net earnings.......................... $ 0.35 $ 0.34 $ 0.58 $ 0.65 $ 0.60 Weighted average common shares(1)..... 15,372 15,372 15,372 15,372 17,446
SEPTEMBER 30, --------------------------------------- JUNE 30, 1992 1993 1994 1995 1996 ------- ------- -------- -------- ----------------- BALANCE SHEET DATA: Cash and cash equivalents............. $ 2,542 $ 3,193 $ 12,026 10,218 $ 28,614 Working capital....................... (3,873) (4,466) 1,987 2,676 17,703 Total assets.......................... 45,097 46,950 60,029 70,440 102,210 Long-term debt, less current portion............................ 7,594 -- -- -- -- Shareholders' equity.................. 18,315 23,249 31,861 41,360 73,153
YEAR ENDED SEPTEMBER 30, NINE MONTHS ENDED ------------------------------------- JUNE 30, 1992 1993 1994 1995 1996 ------- ------- ------- ------- ----------------- OTHER DATA: Depreciation and amortization........... $ 1,384 $ 2,274 $ 2,594 $ 2,882 $ 2,517
- --------------- (1) Reflects the recapitalization, initial public offering of shares, and subsequent three-for-two stock split of Parent. Parent declared an initial quarterly cash dividend of $0.02 per share, adjusted for the stock split, on December 18, 1995 and has paid a similar dividend following the end of each subsequent quarter. The Board of Directors' intent is to continue declaring a cash dividend each quarter depending on Parent's profitability and capital necessary to finance operations and expansion. Except as described in this offer to Purchase, (i) none of Purchaser, Parent nor, to the best knowledge of Purchaser and Parent, any of the persons listed in Exhibit I to this Offer to Purchase or any affiliate or majority-owned subsidiary of Purchaser, Parent or any of the persons so listed beneficially owns or has any right to acquire, directly or indirectly, any Shares, and (ii) neither Purchaser nor Parent nor, to the best 16 19 knowledge of Purchaser and Parent, any of the persons or entities referred to above nor any director, executive officer or subsidiary of any of the foregoing has effected any transaction in the Shares during the past 60 days. Except as provided in the Merger Agreement and as otherwise described in this Offer to Purchase, none of Purchaser, Parent nor, to the best knowledge of Purchaser and Parent, any of the persons listed in Exhibit I to this Offer to Purchase, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or voting of such securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss, guarantees of profits, division of profits or loss or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, since January 1, 1993, neither Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of the persons listed on Exhibit I hereto, has had any business relationship or transaction with the Company or any of its executive officers, directors or affiliates that is required to be reported under the rules and regulations of the Commission applicable to the Offer. Except as set forth in this Offer to Purchase, since January 1, 1993, there have been no contacts, negotiations or transactions between any of Purchaser, Parent or any of their respective subsidiaries or, to the best knowledge of Purchaser and Parent, any of the persons listed in Exhibit I to this Offer to Purchase, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets or any other transaction. Certain Additional Information Required to be Disclosed by the NYBCL. Parent has a profit-sharing plan for domestic employees to which employer contributions are made at the discretion of Parent's Board of Directors. Voluntary after-tax contributions not in excess of 10% of compensation may be made by non-highly compensated employees. Eligible employees who work more than 1,000 hours during the plan year and are 20 years or older may become participants in the plan after one year of continuous service, if the employee was employed prior to reaching age 65 and if the employee is not a member of a collective bargaining unit. An employee's interest in the plan vests after two years at the rate of 20% each year, so that an employee is fully vested at the end of seven continuous years of service. Parent has a tuition reimbursement program which provides financial assistance to certain full-time employees with at least one year of service prior to enrollment. Reimbursement for tuition is contingent on, among other things, Parent's approval, attendance outside normal working hours and completion of the course with a passing grade. Parent also has a policy of reimbursing certain relocation expenses to eligible employees associated with the transfer of such employee in the interest of Parent. Eligibility is determined on a case-by-case basis. Certain travel, food and lodging expenses may be reimbursed to such employee by Parent. Parent has historically participated in a number of charitable activities, including activities benefiting a local children's hospital, a local elementary school and the Juvenile Diabetes Foundation. Parent is from time-to-time subject to claims and suits arising in the ordinary course of business. Parent has not been a party to any proceeding finally adjudicated within the previous five years involving any violation by Parent of the Federal National Labor Relations Act, Occupational Safety and Health Act of 1970, Fair Labor Standards Act, or Employee, Retirement and Income Security Act, as amended. Over the past five years, Parent has settled a small number of proceedings by posting additional informational and compliance notices pursuant to requests by the National Labor Relations Board. 9. FINANCING OF THE OFFER AND THE MERGER. The total amount of funds required by Purchaser to consummate the Offer and the Merger and to pay related fees and expenses is estimated to be approximately $53 million. Purchaser will obtain all of such funds from Parent or its affiliates. Parent and its affiliates currently intend to provide such funds from the revolving credit provisions of a $150,000,000 loan agreement (the "Acquisition Facility") with SunTrust Bank, Nashville, N.A. ("STB") and certain other lenders (the "Lenders") dated December 12, 1996. The Acquisition Facility, which is unsecured, expires January 31, 2000, provided that the Lenders may extend the term until January 31, 2001, upon the request of Parent. 17 20 Revolving loans under the Acquisition Facility bear interest at one of two rates chosen by Parent, either (i) STB's "base rate" (defined as the higher of STB's prime lending rate or the Federal Funds Rate plus 1/2%), or (ii) the LIBOR rate plus a margin ranging from .25% to 1.50%, which margin depends on (x) the occurrence of certain dates or events, (y) Parent's ratio of funded debt to EBITDA (earnings before interest, tax, depreciation and amortization), and (z) the rating from Standard and Poor's or Moody's for Parent's senior unsecured debt rating. Parent must permanently reduce the amount available for borrowing under the Acquisition Facility to $120,000,000 by February 28, 1997, provided that the Lenders may extend such date to April 30, 1997 upon the payment of a certain commitment fee by Parent. Parent must also permanently reduce the amount available for borrowing under the Acquisition Facility to $85,000,000 by September 30, 1997 or upon the occurrence of certain earlier events, provided that the Lenders may extend the September 30 date to December 31, 1997 and again to March 31, 1998, in each case upon the payment of a certain extension fee by Parent. Parent anticipates that borrowings under the Acquisition Facility will be repaid out of cash flow, a refinancing, or the proceeds of a debt or equity offering, although Parent currently has no plans with respect to any such refinancing or offering. The Acquisition Facility contains customary representation, warranties and covenant of Parent and its subsidiaries, including financial covenants relating to maintenance of ratios and restrictions on further indebtedness. The description of the Acquisition Facility contained herein is qualified in its entirety by reference to the text of the Acquisition Facility filed as an exhibit to the Schedule 14D-1, a copy of which may be obtained from the offices of the Commission. 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE MERGER AGREEMENT; EMPLOYMENT, CONSULTANCY AND CONFIDENTIALITY AND NONCOMPETE AGREEMENTS. Background of the Offer; Contacts with the Company Monroe J. Carell, Jr., the Chairman of the Board of Parent, and Lowell Harwood, the Chairman of the Board of the Company, became acquainted through industry meetings, and at such meetings and in other conversations from time to time have discussed trends and general strategic opportunities in the parking industry. As part of its strategy, Parent has from time to time evaluated possible acquisition candidates. In late 1989, representatives of Parent had informal and tentative contacts with representatives of the Company concerning strategic alternatives of both parties which led to the execution of a confidentiality agreement which remained in effect from January 1990 until December 1995. No substantive discussions regarding a transaction between the Company and Parent were held during this period although in late 1995, the Company supplied limited financial information concerning the Company to Parent pursuant to such confidentiality agreement. In connection with its acquisition strategy, in April 1996, Parent requested that its financial advisor, Bradford, prepare a list of issues with respect to the operations and financial condition of the Company based upon publicly available information. On May 7, 1996, representatives of Parent contacted and engaged in general discussions with representatives of the Company regarding the possible acquisition of the Company by Parent. The Company has advised Parent that on May 10, 1996, the Company engaged Blackstone to serve as its financial advisor in connection with the evaluation of various business options, including the sale of the Company. The Company has also advised Parent that beginning in July 1996 and continuing until December 1, 1996, a number of parties, including Parent, were contacted by Blackstone to ascertain their interest concerning an acquisition of the Company and were requested to submit proposals concerning the terms of such an acquisition. Pursuant to such contacts between Blackstone and Parent, on July 10, 1996, the Company and Parent executed a Confidentiality Agreement, a copy of which is attached as an exhibit to the Schedule 14D-1 (the "Confidentiality Agreement"). Pursuant to the Confidentiality Agreement, Parent was provided with certain nonpublic financial and other information concerning the business and operations of the Company and agreed to refrain from disclosing such information. On August 1, 1996, Blackstone provided Parent with the procedures to be followed by parties interested in an acquisition of the Company. On August 12, 1996, Parent and Bradford executed an engagement letter whereby Bradford was retained to serve as Parent's financial advisor with respect to a possible acquisition of 18 21 the Company. In August and September 1996, Parent and its representatives conducted their own preliminary due diligence review of the Company based on publicly available information and the Offering Memorandum provided to Parent by Blackstone and prepared analyses concerning the operational and financial impact of an acquisition of the Company by Parent. On August 19, 1996, Parent submitted to the Company an initial indication of interest in the acquisition of the Company at a price of $21.00 per Share payable in cash or $24.00 per Share payable in the common stock of Parent, subject to completion of due diligence and other contingencies. On August 29, 1996, Blackstone informed Parent that the Company considered Parent's initial proposal as inadequate. Throughout August and September, Parent requested and was provided additional information concerning the operations and financial condition of the Company and continued its evaluation of the financial and operational impact of an acquisition of the Company by Parent. On September 5, 1996, Blackstone informed Parent that the Board of Directors of the Company desired to continue discussions with Parent concerning an acquisition of the Company by Parent. On September 23-25, 1996, representatives of Parent, including Bradford and Parent's counsel and accountants, traveled to New York and conducted further due diligence of the Company and its operations. During this visit, senior management of the Company and the Parent engaged in discussions of the financial condition and current operations of the Company and strategic alternatives in the event of an acquisition of the Company by Parent. The Company has informed Parent that other parties were invited to conduct due diligence and engaged in similar discussions with the Company during this general time period. On October 1, 1996, representatives of Parent and Bradford and counsel for Parent traveled to New York to attend a presentation by management of the Company. Shortly thereafter, Blackstone submitted to Parent a draft of a proposed acquisition agreement and requested Parent's comments as well as a proposal setting forth the terms upon which Parent would acquire the Company. On October 22, 1996, Parent submitted an offer to acquire all of the Shares at a price of $30.00 per Share payable in cash or, alternatively, a price of $34.00 per Share payable in the common stock of Parent, and delivered to the Company a proposed acquisition agreement. The Company has advised Parent that two other parties submitted acquisition proposals. On November 4, 1996, management of Parent and the Company met in New York to discuss Parent's proposal and the Company informed Parent that it was unwilling to consummate a transaction at the submitted price, but desired to continue negotiations with Parent. On November 7, 1996 Parent submitted an offer to acquire all of the Shares at a price of $31.00 per Share payable in cash or, alternatively, a price of $40.00 per Share payable in the common stock of Parent, and delivered to the Company a revised acquisition agreement. The Company has advised Parent that one other party had submitted another proposal to acquire the Company in early November. On November 15, 1996, the Company informed Parent that it wished to continue negotiations with Parent with respect to Parent's $31.00 all cash offer. During the period from November 15, 1996 to December 5, 1996, the Company and Parent negotiated the terms of the Merger Agreement. On the evening of December 6, 1996, following meetings of the respective Boards of Directors earlier that afternoon approving the transaction, Parent, Purchaser and the Company entered into the Merger Agreement and the parties announced the execution thereof prior to the opening of business on December 9, 1996. The Merger Agreement The following is a summary of the Merger Agreement, a copy of which has been filed as an exhibit to the Schedule 14D-1 and which may be obtained from the Commission. Such summary is qualified in its entirety by reference to the Merger Agreement. The Offer. The Merger Agreement provides for the commencement of the Offer as soon as practicable, but in any event within five business days of the initial public announcement of Purchaser's intention to commence the Offer. The obligation of Purchaser to commence the Offer and to accept for payment and to pay for any Shares tendered pursuant to the Offer is subject to the satisfaction of the Minimum Condition and 19 22 certain other conditions that are described in Section 14 hereof and in the Merger Agreement. Purchaser and Parent have agreed that no change in the Offer may be made which (i) decreases the price per Share payable in the Offer, (ii) changes the form of consideration to be paid in the Offer, or (iii) modifies the conditions to the Offer or imposes conditions to the Offer in addition to those set forth in Section 14 hereof and in the Merger Agreement, unless previously approved by the Company in writing. Purchaser and Parent have agreed that the Offer shall expire 21 business days after it is commenced and shall not be extended without the prior written consent of the Company; provided Purchaser may extend the Offer one time for no more than 10 days and only if at least 80% of all of the outstanding Shares have been tendered prior to such extension. The Merger. The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, and in accordance with the NYBCL, at the Effective Time, Purchaser will be merged with and into the Company. As a result of the Merger, the separate corporate existence of the Company will cease, and the Company will continue as the Surviving Corporation and an indirect wholly-owned subsidiary of Parent. Upon consummation of the Merger, each issued and outstanding Share (other than (i) any Shares held in the treasury of the Company, Shares owned by Parent or any direct or indirect subsidiary of Parent or the Company (which shall be canceled at the Effective Time), and (ii) Shares as to which the holder thereof shall have validly exercised such holder's appraisal rights, if any, under Section 910 of the NYBCL) will be converted into the right to receive the Merger Consideration. Pursuant to the Merger Agreement, each share of common stock, par value $.01 per share, of Purchaser issued and outstanding immediately prior to the Effective Time will be converted into one validly issued, fully paid and nonassessable share of common stock, par value $.01 per share, of the Surviving Corporation. The Merger Agreement provides that the directors of Purchaser immediately prior to the Effective Time will be the initial directors of the Surviving Corporation and that the officers of the Purchaser immediately prior to the Effective Time will be the initial officers of the Surviving Corporation. The Merger Agreement also provides that, at the Effective Time, the Certificate of Incorporation and Bylaws of the Purchaser, as in effect immediately prior to the Effective Time, will be the Certificate of Incorporation and Bylaws of the Surviving Corporation until thereafter amended as provided therein and in the NYBCL. Agreements of Parent, Purchaser and the Company. Pursuant to the Merger Agreement, the Company, acting through the Board, will, subject to its fiduciary duties under applicable law based on an opinion of outside legal counsel, if applicable, duly call, give notice of, convene and hold an annual or special meeting of its shareholders as soon as practicable following consummation of the Offer for the purpose of considering and taking action on the Merger Agreement and the transactions contemplated thereby (the "Shareholders' Meeting"). In the event Purchaser purchases ninety percent (90%) or more of the outstanding Shares in the Offer, the Merger will be consummated without a Shareholders' Meeting. Proxy Statement. The Merger Agreement provides that, if shareholder approval of the Merger is required, the Company will, as soon as practicable, (i) file with the Commission under the Exchange Act, and use its reasonable best efforts to have cleared by the Commission, a proxy statement and related proxy materials (the "Proxy Statement") with respect to the Shareholders' Meeting; (ii) will cause the Proxy Statement to be mailed to shareholders of the Company at the earliest practicable time; and (iii) will otherwise comply in all material respects in respect of all applicable legal requirements in respect of any shareholder's meeting. The Company has also agreed, subject to its fiduciary duties under applicable law based on an opinion of outside legal counsel, to include in the Proxy Statement the recommendation of the Board that the shareholders of the Company approve and adopt the Merger Agreement and the transactions contemplated thereby, including, without limitation, the Merger. To the extent permitted by applicable law, Parent and Purchaser have each agreed to vote all shares beneficially owned by them in favor of the Merger. Conduct of Business. Pursuant to the Merger Agreement, the Company has agreed, among other things, that the Company will use its commercially reasonable efforts to preserve the business organization of the Company intact and to maintain its existing relations with its suppliers, customers, employees and business associates. In addition, the Company will conduct its business only in the ordinary and usual course consistent with certain information provided to Parent. During the period from the date of the Merger Agreement until the earlier to occur of the Effective Time or the termination of the Merger Agreement, the Company has also 20 23 agreed that, except as required under or permitted by the Merger Agreement or as disclosed in the Disclosure Schedule to the Merger Agreement, or as otherwise consented to in writing by Parent, each of the Company and its subsidiaries will not, among other things: (A) declare, set aside or pay any dividends or other distributions payable in cash, stock or property with respect to the Shares, or split, combine or reclassify the outstanding Shares; (B) issue, sell, pledge, dispose of or encumber any additional shares of, or securities convertible or exchangeable for, or any warrants, options, calls, commitments or rights of any kind to acquire any shares of its capital stock of any class other than Shares issuable pursuant to warrants or options outstanding as of the date of the Merger Agreement under the Stock Option Plan; (C) amend its respective certificate of incorporation, bylaws or other governing documents; (D) settle or compromise any material debt, encumbrance, claims or litigation in excess of $100,000 in the aggregate or, except in the ordinary and usual course of business, modify, amend or terminate any of its contracts or waive, release or assign any material rights or claims; (E) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any of its assets or incur or modify any indebtedness or other liability other than in the ordinary and usual course of business and as provided in the Merger Agreement; (F) acquire directly or indirectly by redemption or otherwise any shares of capital stock of the Company; (G) enter into, amend or terminate any lease of real property other than in the ordinary and usual course of business as provided in the Merger Agreement; (H) except in the ordinary and usual course of business, authorize capital expenditures in excess of $100,000 or make any significant acquisition of, or investment in, assets or stock of any other person or entity; (I) except in the ordinary and usual course of business as disclosed to Parent, (i) grant any severance or termination pay to, or enter into any employment or severance agreement with any director, officer or other employee of the Company, except as set forth in the Merger Agreement, or (ii) establish, adopt, enter into, make any new grants or awards under or amend, any bonus, profit sharing, thrift, savings, compensation, stock purchase, stock bonus, stock option, restricted stock, pension, retirement, employee stock ownership, deferred compensation, employment, collective bargaining, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or employees; (J) make any tax election or permit any insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated without notice to the Parent, except in the ordinary and usual course of business, and shall maintain insurance upon all of its properties and operations in such amounts and of such kinds comparable to that in effect on the date of the Merger Agreement on such properties and with respect to such operations; (K) in any material respect fail to (i) maintain its books, accounts and records in the usual, regular and ordinary manner, on a basis consistent with prior years, (ii) comply with all contractual and other obligations of the Company and its subsidiaries, and (iii) comply with all applicable laws to which it is subject; or (L) authorize or enter into an agreement to do any of the foregoing. Company Board Representation. The Merger Agreement provides that, promptly upon the purchase by Purchaser of a majority of the outstanding Shares pursuant to the Offer, Purchaser will be entitled to designate up to such number of directors, rounded up to the next whole number, on the Board of Directors of the Company as will give Purchaser representation on the Board equal to the product of the total number of directors on the Board (giving effect to the directors elected pursuant to this sentence and including current directors serving as officers of the Company), multiplied by the percentage that the aggregate number of Shares beneficially owned by Purchaser or any affiliate of Purchaser at such time bears to the total number of Shares then outstanding, and the Company will, at such time, promptly take all actions necessary to cause Purchaser's designees to be elected as directors of the Company, including increasing the size of the Board or securing the resignations of incumbent directors or both. The Merger Agreement also provides that, at such times, the Company will cause persons designated by Purchaser to constitute the same percentage of (i) each committee of the Board (some of the members of which may be required to be independent under applicable law), (ii) each board of directors of each subsidiary of the Company, and (iii) each committee of each such board, in each case only to the extent permitted by applicable law, as Purchaser's designees are of the Board of Directors of the Company. Amendment and Waiver. Subject to certain restrictions, the Merger Agreement may be amended by the mutual agreement of the parties thereto, by action taken or authorized by their respective Boards of Directors, at any time prior to the Effective Time provided, however, that, after approval of the Merger by the shareholders of the Company, no amendment may be made which by law requires further approval by such 21 24 shareholders without such further approval; provided further, that after the completion of the Offer and the purchase of the Shares thereunder, the Merger Agreement will not be amended by the Company without the approval of a majority of the persons who are directors of the Company on the date of the Merger Agreement; and provided further, however, that certain provisions in the Merger Agreement governing indemnification of officers and directors and employment matters may not be amended subsequent to the Effective Time. Access to Information; Confidentiality. Pursuant to the Merger Agreement, upon reasonable notice and subject to certain restrictions contained in the Merger Agreement from the date of the Merger Agreement until the Effective Time, the Company will afford to Parent and to the officers, employees, counsel, accountants and other authorized representatives of Parent access during normal business hours prior to the Effective Time to its properties, books, records and contracts, and shall furnish Parent with all information concerning its business properties and personnel as Parent may reasonably request. Parent and Purchaser have agreed to keep such information confidential in accordance with the Confidentiality Agreement. No Solicitation of Transactions. The Merger Agreement provides that neither the Company nor any of the officers and directors of the Company shall, and the Company shall direct and use its reasonable best efforts to cause the employees, agents and representatives of the Company or any of its subsidiaries (including, without limitation, any investment banker, attorney or accountant retained by the Company) not to, initiate, solicit or encourage, directly or indirectly, any proposal or offer to acquire all or any substantial part of the business and properties of the Company and its subsidiaries or any capital stock of the Company and its subsidiaries, whether by merger, purchase of assets, tender offer or otherwise, whether for cash, securities or any other consideration or combination thereof; provided, however, that the Company may respond to certain unsolicited requests for information and participate in negotiations with such parties as required by its fiduciary obligations under applicable state law or the exercise of its duties under Rule 14e-2 under the Exchange Act, subject to the terms and conditions described in the Merger Agreement. The Merger Agreement requires that the Company immediately cease and cause to be terminated any solicitation, initiation, encouragement, activity, discussion or negotiation existing as of the date of the Merger Agreement with any parties concerning an acquisition proposal. The Company has also agreed to notify Parent promptly if any such proposal or offer, or any inquiry or contact with any person or entity with respect thereto, is made. Subject to the Board's fiduciary duties, the Company has further agreed not to enter into any definitive agreement with any other person or entity unless it has delivered to Parent at least two business days prior to execution by the Company a copy of the definitive agreement and Parent shall have failed, within such two day period, to amend the terms of the Merger Agreement so that the Merger would be, in the good faith determination of the Board, at least as favorable to the Company's shareholders as the proposed acquisition. Affiliate Agreements. The Company shall cause certain of the affiliates of the Company who own Shares or options or warrants to purchase Shares which equal in the aggregate 1,038,040 Shares to tender such Shares or enter into agreements to cash out such options and warrants and to enter into an Agreement to Support the Transaction (the "Support Agreement") as described below. The Company has also agreed to cause (i) Lowell Harwood, Sanford Harwood and Leslie Harwood Ehrlich to enter into Non-Competition Agreements described below, (ii) Brett Harwood to enter into an Employment Agreement described below, (iii) Lowell Harwood and Sanford Harwood to enter into a Consultancy Agreement described below, and (iv) the nonunion manager level and above employees granted severance payments as disclosed in the Merger Agreement to enter into Non-Competition Agreements equal to the duration of the severance granted. Treatment of Stock Options. At or prior to the Effective Time, the Company shall cause pursuant to agreements as provided in the Merger Agreement, each outstanding option and each outstanding warrant, whether or not then exercisable, to be either canceled or modified to entitle the holder thereof, to receive in settlement thereof an amount in cash (after giving effect to any required tax withholdings) equal to the difference between $28.50, and the exercise price per Share of such option or warrant multiplied by the number of Shares previously subject to such option or warrant, such, that, on and as of the Effective Time, there shall be no outstanding stock options or warrants of the Company. In addition, $2.50 per Option Share will be deposited by Purchaser into escrow as contingent consideration for distribution, in whole or in part, to 22 25 the optionholders and warrant holders upon resolution of two specific matters, subject to adjustment as provided in the Escrow Agreement. Escrow. The Merger Agreement provides that, of the Offer Price and Merger Consideration, $2.50 per Share and per Option Share will be placed into an escrow account held by the Escrow Agent pursuant to the Escrow Agreement. The Escrowed Funds are to be held by the Escrow Agent for certain periods and are being held solely because of certain contingent matters, which, if favorably resolved, would result in additional value to the Company. See Section 1 for a description of the Escrow Agreement. Loan Arrangements. The Merger Agreement provides that promptly after the purchase by Purchaser of the Shares upon the expiration of the Offer, Purchaser shall (i) either repay or refinance the obligations of the Company and its subsidiaries pursuant to the Credit Agreement among National Westminster Bank USA (Fleet Bank), the Company and 808 Square Corp. dated July 5, 1988 as amended to date (the "Natwest Debt"), and (ii) simultaneously therewith repay in full certain loans made to the Company by Lowell Harwood and Sanford Harwood in June, 1995 in the original principal amount of $500,000, plus interest. Indemnification and Insurance. The Merger Agreement provides that, for a period of six years from and after the Effective Time, the Surviving Corporation shall, to the fullest extent permitted under applicable law, indemnify, defend and hold harmless each present and former officer, director or employee of the Company from and against all losses, claims, damages, costs, expenses, liabilities or judgments or amounts that are paid in settlement with the approval of the indemnifying party (which approval shall not be unreasonably withheld) of or in connection with any claim, action, suit, proceeding or investigation based in whole or in part on or arising in whole or in part out of the fact that such person is or was a director, officer or employee of the Company, pertaining to any matter existing or occurring at or prior to the Effective Time, including liabilities arising as a result of the Merger Agreement and the transactions contemplated thereby, to the fullest extent permitted under the NYBCL, and the Surviving Corporation will pay all expenses in advance of the final disposition of any such action or proceeding. The Merger Agreement provides that for a period of six years after the Effective Time, the Surviving Corporation shall cause to be maintained in effect the current policies of directors' and officers' liability insurance maintained by the Company (provided that the Surviving Corporation may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are no less advantageous) with respect to claims or matters existing or occurring before the Effective Time; provided, that Surviving Corporation shall not be required to pay an annual premium for such insurance in excess of two times the last annual premium paid by the Company prior to the date of the Merger Agreement, but in such case shall purchase as much coverage as possible for such amount. Employee Benefits. The Merger Agreement provides that the Parent agrees to cause the Surviving Corporation and its subsidiaries, immediately after the Effective Time, shall honor the employment agreements, arrangements and programs between the Company or its subsidiaries and their respective employees in accordance with their terms as in effect on the date of the Merger Agreement (collectively, the "Employee Arrangements"), to the same extent that the Company and its subsidiaries would be required to perform them in the event that the Merger were not consummated. The Merger Agreement provides that for a period of one year following the Effective Time, Parent shall cause the Surviving Corporation to provide the garage manager employees and other employees senior thereto of the Company and its subsidiaries (excluding employees covered by collective bargaining agreements whose benefits shall be governed by the collective bargaining agreements in accordance with their terms as in effect on the date of the Merger Agreement) who are not covered by spousal insurance arrangements with retirement, pension, medical insurance, life insurance and other similar benefits following the Effective Time which are, in the aggregate, substantially comparable to such benefits under the plans and arrangements maintained for its employees by the Parent as of the date of the Merger Agreement, provided nothing shall require the Surviving Corporation to continue the employment of the Company's employees beyond that required by any applicable existing employment agreement. Parent further agrees to cause the Surviving Corporation to honor, comply with and perform all obligations of the Company and the subsidiaries under certain severance arrangements as set forth in the Merger Agreement for a period of one year following the Effective Time. 23 26 Further Action. The Merger Agreement provides that, subject to its terms and conditions, each of Parent and the Company will make promptly its respective filing, and thereafter make any other required submissions under the HSR Act and all other required regulatory approvals and authorizations with respect to the Offer, the Merger and the other transactions contemplated by the Merger Agreement (collectively, the "Transactions"), and, except as contemplated by the Merger Agreement, each of the parties to the Merger Agreement will use its commercially reasonable best efforts to take or cause to be done, all other things necessary or advisable to consummate and make effective as promptly as practicable the Transactions, to obtain in a timely manner all necessary waivers, consents, and approvals and to effect all necessary registrations and filings, and to otherwise satisfy or cause to be satisfied all conditions precedent to its obligations under the Merger Agreement or to vest the Surviving Corporation with full title to all properties, assets, rights, approvals and franchises of either Purchaser or the Company. Representations and Warranties. The Merger Agreement contains various customary representations and warranties of the parties thereto, including representations by the Company as to the absence of certain change or events concerning the Company's business, compliance with law, regulatory approvals, litigation, employee benefit plans, labor matters, leases and contracts, intellectual property, environmental matters, brokers and taxes. Conditions to the Merger. The respective obligations of Parent, Purchaser and the Company to effect the Merger are subject to the satisfaction of the following conditions at or prior to the Effective Time: (i) if required by applicable law, the Merger Agreement and the Merger will have been approved by the holders of at least two thirds of the outstanding Shares at the Shareholders' Meeting; (ii) any applicable waiting period under the HSR Act will have expired or be terminated; (iii) there shall not be threatened, instituted or pending any action, proceeding or other application before any court or governmental authority or other regulatory or administrative agency or commission, by any government or governmental authority or by any other person, which challenges or seeks to restrain or prohibit consummation of the Offer and the Merger, or which seeks to impose any material restriction on the Parent or the Company in connection with consummation of the Merger, and no court or governmental or regulatory authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether preliminary or permanent) which is in effect and prohibits consummation of the transactions contemplated by the Merger Agreement or imposes material restrictions on the Parent or the Company in connection with consummation of the Merger; and (iv) the Offer shall have been made and Purchaser shall have purchased Shares pursuant to the Offer. The obligation of the Company to effect the Merger is also subject to the conditions that (i) each of Parent and Purchaser shall have performed in all material respects all material obligations and complied with all material covenants and conditions required by the Merger Agreement to be performed or complied by it at or prior to the Effective Time, and (ii) the representations and warranties of the Parent and Purchaser contained in the Merger Agreement shall be true at the Effective Time, except for (a) changes contemplated under the Merger Agreement, (b) those representations and warranties which address matters only as of a particular date (which shall remain true and correct as of such date), and (c) where the failure to be true and correct would not have a material adverse effect on the financial condition, properties, business or results of operations of the Parent. The obligations of Parent and Purchaser to effect the Merger are also subject to the conditions that: (i) the Company shall have performed in all material respects each agreement or covenant to be performed by it at or prior to the Effective Time; (ii) the representations and warranties of the Company contained in the Merger Agreement shall be true at the Effective Time, except for (a) changes contemplated under the Merger Agreement, (b) those representations and warranties which address matters only as of a particular date (which shall remain true and correct as of such date), and (c) where the failure of the representations and warranties to be true and correct in the aggregate would not have a Material Adverse Effect on the Company (Material Adverse Effect as used in the preceding clause shall mean items which in the aggregate would have (1) a recurring annual pre-tax income effect of $400,000 or more or (2) a non-recurring income, balance sheet or financial condition effect of $4,000,000 or more); (iii) Parent and Purchaser shall have received evidence that the Natwest Debt can be satisfied without incurring payment for accrued deferred interest 24 27 (which evidence has been received); (iv) all consents, authorizations, orders and approvals of (or filings or registration with) any governmental commission, board or other regulatory body required in connection with the execution, delivery and performance of the Merger, the Merger Agreement and the Transactions shall have been obtained or made, except for filings in connection with the Merger and any other documents required to be filed after the Effective Time; and (v) since the date of Merger Agreement, there shall not have occurred a Material Adverse Change with respect to the Company (for purposes of the preceding clause, Material Adverse Change shall mean changes or events which in the aggregate would have (a) a recurring annual pre-tax income effect of $400,000 or more or (b) a non-recurring income, balance sheet or financial condition effect of $4,000,000 or more). Termination. The Merger Agreement provides that it may be terminated and the Merger may be abandoned at any time prior to the Effective Time, notwithstanding any requisite approval of the Merger Agreement by the shareholders of the Company: (a) by mutual written consent duly authorized by the respective Boards of Directors of Parent, Purchaser and the Company; (b) by Parent or the Company if (i) any court of competent jurisdiction or other governmental authority or entity shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the Merger or holding that any law applicable to the Merger declares the Merger to be illegal and such order, decree, ruling or other action shall have become final and nonappealable, (ii) the requisite approval of shareholders shall not have been obtained at a meeting duly convened therefor, or (iii) the Effective Time shall not have occurred on or before May 31, 1997, unless the absence of such occurrence is due to the failure of the party seeking to terminate to perform in all material respects any obligation under the Merger Agreement required to be performed by it at or prior to the Effective Time; (c) by Parent following the purchase of the Shares in the Offer, if (i) the Company shall have breached in any material respect any of its representations, warranties, covenants or agreements contained in the Merger Agreement other than as a direct result of any action or inaction by Parent to the extent such breach would constitute a Material Adverse Effect as previously defined, (ii) the Board shall fail to make or shall have withdrawn or modified in a manner adverse to Parent or Purchaser its approval or recommendation of the Offer, the Merger Agreement or the Merger or the Board, upon reasonable request by the Parent, shall fail to reaffirm such approval or recommendation, or shall have resolved to do any of the foregoing or (iii) (a) all of the conditions to the obligations of the Company to effect the Merger shall have been satisfied, and (b) other than as a direct result of any action or inaction by Parent any condition to the obligations of Parent to effect the Merger is not capable of being satisfied prior to May 31, 1997; (d) by the Company, upon approval of the Board, if (i) the Parent or Purchaser shall have breached in any material respect any of their representations, warranties, covenants or agreements contained in the Merger Agreement, (ii) prior to the purchase of Shares in the Offer, the Board receives an unsolicited written offer with respect to a merger, consolidation or sale of all or substantially all of the Company's assets or if an unsolicited tender or exchange offer for the Shares is commenced, and the Board determines in the reasonable exercise of its duties under applicable law, that such transaction is more favorable from a financial point of view to the shareholders of the Company than the Offer and the Merger and that approval, acceptance or recommendation of such transaction is consistent with the fiduciary obligation of the Board of Directors under applicable law as determined in good faith by the Board of Directors based upon an opinion of outside legal counsel (a "Third Party Acquisition"), (iii) the Offer shall be terminated in accordance with its terms or shall expire without the purchase of any of the Shares pursuant thereto; or (iv) (a) all of the conditions to the obligations of Parent to effect the Merger shall have been satisfied, and (b) any condition to the obligations of the Company to effect the Merger is not capable of being satisfied prior to May 31, 1997. Fees and Expenses. Except as set forth below, the Merger Agreement provides that all expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby will be paid by the party incurring such expenses. The Merger Agreement provides for the payment by the Company to Parent of a termination fee in the amount of $2,500,000, including all of Parent's expenses and fees, within five business days of the occurrence of any of the following events: (i) if the Merger Agreement is terminated (a) by Parent because the Board shall have failed to make or shall have withdrawn or modified, in a manner adverse to Parent or Purchaser, its 25 28 approval or recommendation of the Offer, the Merger Agreement or the Merger or the Board, upon reasonable request by the Parent, shall fail to reaffirm such approval or recommendation, or shall have resolved to do any of the foregoing; (b) by the Company if, prior to the purchase of Shares in the Offer, the Board approves a Third Party Acquisition; or (ii) as a result of the failure of certain affiliates of the Company to tender their Shares in the Offer or support the Merger, based upon a claim that such action is required in the exercise of their fiduciary duties, and the purchase of Shares in the Offer or the Merger is not consummated. Employment and Consultancy Agreements Brett Harwood Employment Agreement. Pursuant to the Merger Agreement, the Company will cause Brett Harwood, currently the President and Chief Operating Officer and a Director of the Company, to enter into an Employment Agreement with Parent and a subsidiary of Parent ("Employer") to serve as Executive Vice President of Employer in New Jersey within the New York City metropolitan area, with a base salary of $200,000 per year, customary employee benefits, stock options and certain incentive compensation (the "Incentive Compensation"). The term of the Employment Agreement is three years, subject to earlier termination by Employer for cause. The Incentive Compensation comprises 10% of all Gross Operating Income (NOI less 5% of operating expenses G&A burden) derived from new leases or 10% of pre-tax operating profit from newly-acquired companies where Mr. Harwood was primarily responsible for such new lease or acquisition, and 10% of all Gross Operating Income (NOI less 5% of operating expenses G&A burden) derived from new management agreements for which Mr. Harwood was primarily responsible. Mr. Harwood is entitled to receive stock options, which vest over a period of five years, under Parent's stock option plan for 10,000 shares of Parent's common stock on each of the commencement of his employment with Parent and the first anniversary thereof. The Employment Agreement also entitles Mr. Harwood, his immediate family or certain of his affiliates to purchase up to a 25% interest in any real estate or real estate venture acquired by Employer or any affiliate of Employer, including Parent, primarily as a result of Mr. Harwood's efforts. For all opportunities generated by Mr. Harwood in the form of the fee acquisition of Employer leasehold interests and the subsequent realization of value above the value of such asset operated as a parking facility, Mr. Harwood or his affiliates will be entitled to participate in realization of such property value maximization. Mr. Harwood may borrow up to $10,000,000 at a minimum interest rate of 10% from Employer, with payment terms to be determined by Mr. Harwood and Employer, to enable him to invest in such real estate or real estate venture described above. If Mr. Harwood leaves the employ of Employer during the initial three-year employment term, he shall be entitled to the Incentive Compensation for the period during which he was employed, and for up to two and one-half years from the commencement of operations generating such Incentive Compensation, provided that during such period, Mr. Harwood complies with the noncompetition provisions of the Employment Agreement (described below) without geographic limitation. If Mr. Harwood is not offered renewal of the Employment Agreement at the end of three years, or is offered such renewal and does not elect to continue his employment, he shall be entitled to receive the Incentive Compensation for five years from the commencement of operations generating such Incentive Compensation, provided that he abides by the noncompetition provisions, without geographical limitation, during the payment of Incentive Compensation following termination of his employment. Mr. Harwood has agreed generally to refrain from engaging in the same or similar business as Parent during the term of the Employment Agreement and for a period of one year after the expiration of his employment thereunder (subject to extension in connection with the Incentive Compensation described above), without geographic limitation and for a period of five years from the expiration of the Employment Agreement with any parking property of Parent or the Company. The foregoing is a summary of the Employment Agreement and is qualified in its entirety by reference to the text of the Employment Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1 and may be obtained from the Commission. Lowell Harwood Consultancy Agreement. Pursuant to the Merger Agreement, the Company will cause Lowell Harwood, currently the Chairman of the Board Directors and Chief Executive Officer of the Company, to enter into a Consultancy Agreement with Central Parking System, Inc., a subsidiary of Parent, with 26 29 compensation of $120,000 per year and incentive compensation based upon a percentage of income derived from new acquisitions or business opportunities generated by Mr. Harwood. The term of the Consultancy Agreement will be one year. In addition, Parent has agreed to cause Lowell Harwood to be elected to its Board of Directors. The Consultancy Agreement will be subject and subordinate to the Confidentiality and Noncompete Agreement between Parent and Mr. Harwood as discussed below. The foregoing is a summary of the Consultancy Agreement and is qualified in its entirety by reference to the text of the Consultancy Agreement, a copy of which is attached as an Exhibit to the Schedule 14D-1 and which may be obtained from the Commission. Sanford Harwood Consultancy Agreement. Pursuant to the Merger Agreement, the Company will cause Sanford Harwood to enter into a Consultancy Agreement with Central Parking System, Inc., a subsidiary of Parent, with compensation of $10,000.00 per month for a six month period. The Consultancy Agreement will be subject and subordinate to the Confidentiality and Noncompete Agreement between Parent and Sanford Harwood as discussed below. The foregoing is a summary of the Consultancy Agreement and is qualified in its entirety by reference to the text of the Consultancy Agreement, a copy of which is attached as an Exhibit to the Schedule 14D-1 and which may be obtained from the Commission. Confidentiality and Noncompete Agreements. The Company has agreed to cause Lowell Harwood, Sanford Harwood and Leslie Harwood Ehrlich each to enter into a Confidentiality and Noncompete Agreement with Parent and Surviving Corporation. Pursuant to the Noncompete Agreement, each of the above agrees as follows: (i) not to give to any person, firm, association, or governmental agency any confidential information concerning the affairs, business, clients, customers or other relationships of Parent, Company or Surviving Corporation except as required by law or to use such information for its own purposes or for the benefit of any person or organization other than Surviving Corporation and to use its best efforts to prevent the disclosure of such information by others, (ii) that during the Noncompete Period and with in the Noncompete Area, subject to certain exceptions, such person will not directly or indirectly (A) acquire, lease, manage, consult for, serve as agent or subcontractor for, finance, invest in, own any part of or exercise management control over any parking business or business that provides any services competitive with the services provided by the Company or Parent; (B) solicit for employment or employ any nonclerical person who at the Effective Time or thereafter became an employee of Parent or Surviving Corporation unless such person is no longer employed by Parent or Surviving Corporation for at least six (6) months; or (C) with respect to any customer, supplier or property owner with whom Parent or Surviving Corporation contracts in connection with its business, either solicit the same in a manner that could adversely affect Parent or Surviving Corporation, or make statements to the same that disparage Parent or Surviving Corporation or its operations in any way, and (iii) to furnish such information as may be in its possession and cooperate with Surviving Corporation as may be requested in connection with any claims or legal actions in which surviving Corporation is or may become a party. The Noncompete Area shall mean a fifty mile radius of each location from which the business of the Company or Parent is operating at Closing; provided, however, that certain activities are expressly permitted pursuant to the agreements. The Noncompete Period for Lowell Harwood and Sanford Harwood will be five years and for Leslie Harwood Ehrlich will be one year. The foregoing is a summary of the Confidentiality and Noncompete Agreements and is qualified in its entirety by reference to the text of the Confidentiality and Noncompete Agreements, a form of which is filed as an exhibit to the Schedule 14D-1 and which may be obtained from the Commission. Agreement to Support the Transaction. Certain of the affiliates of the Company who own Shares and options or warrants to purchase Shares which equal, in the aggregate 1,038,040 Shares have entered into an Agreement to Support the Transaction (the "Support Agreement"). Pursuant to the Support Agreement, these affiliates have agreed to (i) tender all of their Shares in the Offer and enter into agreements to cash out all of their options and warrants as provided in the Merger Agreement and use their reasonable best efforts to recommend the Offer to and seek approval of the Merger from the other shareholders of the Company, unless the Board shall conclude, in good faith, in compliance with the Merger Agreement, not to recommend, or to withdraw or modify its recommendation of, the Offer or the Merger to the shareholders of the Company in a situation which would permit the termination of the Merger Agreement, (ii) not seek indemnification, contribution, recourse or redress of any kind against the Company in their capacities as shareholders in 27 30 connection with negotiating and approving the Merger and related transactions and any transaction with the Company in which such person has a direct or indirect conflict of interest, and (iii) to maintain the confidentiality of certain proprietary and confidential information regarding the Company. The foregoing is a summary of the Support Agreement and is qualified in its entirety by reference to the text of the Support Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1 and which may be obtained from the Commission. 11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE MERGER. Purpose of the Offer. The purpose of the Offer and the Merger is for Parent to acquire control of, and the entire equity interest in, the Company. The purpose of the Merger is for Parent to acquire all Shares not purchased pursuant to the Offer. Upon consummation of the Merger, Company will become an indirect wholly-owned subsidiary of Parent. The Offer is being made pursuant to the Merger Agreement. In the Merger Agreement, the Company has agreed to take all action necessary to convene, if necessary a meeting of its shareholders as soon as practicable after the consummation of the Offer for the purpose of considering and taking action on the Merger Agreement and the transactions contemplated thereby. Parent and Purchaser have agreed that all Shares owned by them and their subsidiaries will be voted in favor of the Merger Agreement and the transactions contemplated thereby. If Purchaser purchases Shares pursuant to the Offer, the Merger Agreement provides that Purchaser will be entitled to designate representatives to serve on the Board in proportion to Purchaser's ownership of Shares following such purchase. See Section 10. Purchaser expects that such representation would permit Purchaser to exert substantial influence over the Company's conduct of its business and operations. Appraisal Rights. No appraisal rights are available in connection with the Offer. However, if the Merger is consummated, shareholders may have certain rights under the NYBCL to dissent and demand appraisal of, and to receive payment in cash for, their Shares. Pursuant to Section 910 of the NYBCL, any shareholder entitled to vote who does not assent to the Merger has the right to receive fair market value for his Shares if he files with the Company written objection to the Merger. As outlined in Section 623 of the NYBCL, the dissenting shareholder must file his objection before the meeting of shareholders at which the Merger is submitted to vote or at such meeting but before the vote. Such objection is not required from any shareholder to whom the Company did not give notice of the meeting or where the proposed action is to be authorized by written consent of the shareholders without a meeting. Within 10 days after the shareholder authorization of the Merger, the Company must given written notice of the Merger to the dissenting shareholders and to those from whom objection was not required. Those shareholders from whom objection was not earlier required but who wish to dissent to the Merger may file a written notice of election to dissent with the Company. A dissenting shareholder cannot dissent as to less than all the Shares held of record that he owns beneficially and for which he has the right to dissent. Within 15 days after the expiration of the period within which shareholders may file their notices of election to dissent, or within 15 days after the Merger, whichever is later (but in no case later than ninety days from the date the shareholders approved the Merger), the Company or the Surviving Corporation, as the case may be, must make a written offer by registered mail to each shareholder who has filed such notice of election to pay for his Shares at a specified price which the Company, or the Surviving Corporation, as the case may be, considers to be their fair value. Such offer shall be made at the same price per Share to all dissenting shareholders of the same class, or if divided into series, of the same series and shall be accompanied by a balance sheet for the Company as of the latest available date, which shall not be earlier than 12 months before the making of such offer, and a profit and loss statement or statements for not less than a twelve month period ended on the date of such balance sheet. If within 30 days after the making of such offer, the Company, or the Surviving Corporation, as the case may be, and any shareholder agree upon the price to be paid for his Shares, payment therefor shall be made within 60 days after the making of the offer or the consummation of the Merger, whichever is later, upon the surrender of the certificates for any such Shares represented by certificates. 28 31 The following procedure shall apply if the Company or the Surviving Corporation, as the case may be, fails to make the offer within such period of 15 days, or if it makes the offer and any dissenting shareholder or shareholders fail to agree with it within the period of 30 days thereafter upon the price to be paid for their Shares: (1) The Company, or the Surviving Corporation, as the case may be, shall, within 20 days after the expiration of whichever is applicable of the two periods last mentioned, institute a special proceeding in the Supreme Court of New York sitting in the judicial district in which the principal office of the Company is located to determine the rights of dissenting shareholders and to fix the fair value of their Shares. (2) If the Company, or the Surviving Corporation, as the case may be, fails to institute such proceeding within such period of 20 days, any dissenting shareholder may institute such proceeding for the same purpose not later than 30 days after the expiration of such 20 day period. If such proceeding is not instituted within such 30 day period, all dissenter's rights shall be lost unless the Supreme Court of New York, for good cause shown, otherwise directs. (3) The Supreme Court of New York shall determine whether each dissenting shareholder, as to whom the Company, or the Surviving Corporation, as the case may be, requests the Court to make such determination, is entitled to receive payment for his Shares. If the Company, or the Surviving Corporation, as the case may be, does not request any such determination or if the Court finds that any dissenting shareholder is so entitled, it shall proceed to fix the value of the Shares, which, for the purposes of this section, shall be the fair value as of the close of business on the day prior to the date the shareholders approved the Merger. (4) Within 60 days after final determination of the proceeding, the corporation shall pay to each dissenting shareholder the amount found to be due him, upon surrender of the certificate for any such Shares represented by certificates. The Commission has adopted Rule 13e-3 under the Exchange Act, which is applicable to certain "going private" transactions and which may under certain circumstances be applicable to the Merger or another business combination following the purchase of Shares pursuant to the Offer in which Purchaser seeks to acquire the remaining Shares not held by it. Purchaser believes, however, that if the Merger is consummated within one year of the purchase of Shares pursuant to the Offer, Rule 13e-3 will not be applicable to the Merger. Purchaser believes that if the Merger is not consummated within one year of its purchase of Shares pursuant to the Offer, Rule 13e-3 may be applicable to the Merger. Rule 13e-3 requires, among other things, that certain financial information concerning the Company and certain information relating to the fairness of the proposed transaction and the consideration offered to minority shareholders in such transaction be filed with the Commission and disclosed to shareholders prior to consummation of the transaction. Plans for the Company. It is currently expected that, following consummation of the Offer, initially the business and operations of the Company will, except as set forth in this Offer to Purchase, be continued by the Company substantially as they are currently being conducted. Parent will continue to evaluate the business and operations of the Company during the pendency of the Offer and after the consummation of the Offer and the Merger, and will take such actions as it deems appropriate under the circumstances then existing. Parent intends to seek additional information about the Company during this period. Thereafter, Parent intends to review such information as part of a comprehensive review of the Company's business, operations, capitalization and management with a view to maximizing the Company's potential in conjunction with Parent's businesses. It is expected that the business and operations of the Company would form an important part of Parent's future business plans. Except as indicated in this Offer to Purchase, Parent does not have any present plans or proposals that relate to or would result in an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries, a sale or transfer of a material amount of assets of the Company or any of its subsidiaries or any material change in the Company's capitalization or dividend policy or any other material changes in the Company's corporate structure or business. After the Effective Time, the Board of Directors of the Surviving Corporation shall be comprised solely of Monroe J. Carell, Jr. 29 32 and the Surviving Corporation shall be managed by the officers of Parent, provided that Brett Harwood shall enter into an Employment Agreement with Parent and its subsidiary and each of Lowell Harwood and Sanford Harwood shall enter into a Consultancy Agreement with a subsidiary of Parent, as discussed in Section 10. 12. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that the Company shall not, prior to the Effective Time, without the prior written consent of Parent, (i) split, combine or reclassify the outstanding Shares; (ii) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to the Shares; or (iii) issue, sell, pledge, dispose of or encumber any additional shares of, or securities convertible or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire any shares of its capital stock of any class other than Shares issuable pursuant to warrants or options outstanding on the date hereof under the Stock Option Plan. 13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, EXCHANGE LISTING AND EXCHANGE ACT REGISTRATION. The purchase of Shares by Purchaser pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and will reduce the number of holders of Shares, which could adversely affect the liquidity and market value of the remaining Shares held by the public. Depending upon the number of shares of Common Stock purchased pursuant to the Offer, the Common Stock may no longer meet the standards for continued inclusion in the Nasdaq/NMS. If, as a result of the purchase of Common Stock pursuant to the Offer, the Common Stock no longer meets the criteria for continuing inclusion in the Nasdaq/NMS, the market for the Common Stock could be adversely affected. According to the published guidelines of the Nasdaq/NMS, the Common Stock would not meet the criteria for continued inclusion in the Nasdaq/NMS if, among other things, the number of publicly-held shares of Common Stock were less than 200,000, the aggregate market value of the publicly-held shares of Common Stock were less than $1,000,000, there were fewer than 400 total shareholders or 300 shareholders of round lots or there were fewer than two market makers for the shares of Common Stock. If these standards were not met, quotations might continue to be published in the over-the-counter "additional list" or one of the "local lists" unless, as set forth in the published guidelines of the Nasdaq Stock Market, the number of publicly-held shares of Common Stock (excluding shares of Common Stock held by officers, directors and beneficial owners of more than 10% of the shares of Common Stock) were less than 100,000, there were fewer than 300 holders in total, or there were not at least two active market makers for the Common Stock (one of which may be a market maker entering a stabilizing bid). If the Common Stock is no longer eligible for Nasdaq Stock Market quotation, quotations might still be available from other sources. Parent intends to de-list the Shares from Nasdaq/NMS as soon as possible after the Expiration Date. The extent of the public market for the Common Stock and availability of such quotations would, however, depend upon such factors as the number of holders and/or the aggregate market value of the publicly-held shares of Common Stock at such time, the interest in maintaining a market in the Common Stock on the part of securities firms, the possible termination of registration of the Common Stock under the Exchange Act and other factors. The Shares are currently "margin securities," as such term is defined under the rules of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares. Depending upon factors similar to those described above regarding listing and market quotations, following the Offer it is possible that the Shares might no longer constitute "margin securities" for purposes of the margin regulations of the Federal Reserve Board, and, therefore, could no longer be used as collateral for loans made by brokers. The Shares are currently registered under the Exchange Act. Such registration may be terminated upon application by the Company to the Commission if the Shares are not listed on a national securities exchange and there are fewer than 300 record holders. The termination of the registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to holders of Shares and to the Commission and would make certain provisions of the Exchange Act, such as the short- 30 33 swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy statement in connection with shareholders' meetings and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, among others, no longer applicable to the Shares. In addition, "affiliates" of the Company and persons holding "restricted securities" (as such terms are defined in Rule 144 promulgated under the Securities Act of 1933, as amended ("Rule 144")) of the Company may be deprived of the ability to dispose of such securities pursuant to Rule 144. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities" or be eligible for listing on a securities exchange or Nasdaq/NMS reporting. Purchaser currently intends to cause the Company to terminate the registration of the Shares under the Exchange Act as soon after consummation of the Offer as the requirements for termination of registration are met and to have the Shares de-listed from Nasdaq/NMS as soon as the requirements for delisting are met. 14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer, subject to the terms of the Merger Agreement, Purchaser shall not be required to accept for payment or pay for any Shares tendered pursuant to the Offer, and may terminate or amend the Offer and may postpone the acceptance for payment of and payment for Shares tendered, if (i) the Minimum Condition is not satisfied; (ii) any applicable waiting period under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer, or (iii) at any time on or after the date of the Merger Agreement, and prior to the acceptance for payment of Shares, any of the following conditions shall exist: a. there shall have been instituted or be pending any action or proceeding by any governmental or quasi-governmental authority or agency, domestic or foreign, before any court or governmental, administrative or regulatory authority or agency, of competent jurisdiction, domestic or foreign, (i) challenging or seeking to make illegal, materially delay or otherwise directly or indirectly restrain or prohibit the making of the Offer, the acceptance for payment of, or payment for, any Shares by the Parent, Purchaser or any other affiliate of the Parent, or the consummation of any other transaction contemplated by the Merger Agreement, including the Offer and the Merger, or seeking to obtain material damages in connection with any transaction; (ii) seeking to prohibit or limit materially the ownership or operation by the Company, the Parent or any of their subsidiaries of all or any material portion of the business or assets of the Company, the Parent and their respective subsidiaries taken as a whole, or to compel the Company, the Parent or any of their subsidiaries to dispose of or hold separate all or any material portion of the business or assets of the Company, the Parent and their respective subsidiaries taken as a whole, as a result of the transactions contemplated by the Merger Agreement, including the Offer and the Merger; (iii) seeking to impose or confirm material limitations on the ability of the Parent, Purchaser or any other affiliate of the Parent to exercise effectively full rights of ownership of any Shares, including, without limitation, the right to vote any Shares acquired by Purchaser pursuant to the Offer or otherwise on all matters properly presented to the Company's shareholders, including, without limitation, the approval and adoption of the Merger Agreement and the transactions contemplated hereby; (iv) seeking to require divestiture by the Parent, Purchaser or any other affiliate of the Parent of any Shares; or (v) which otherwise has a material adverse effect on the financial condition, business, properties or results of operations of the Company and its subsidiaries taken as a whole or the Parent and its subsidiaries taken as a whole. b. there shall have been any action taken, or any statute, rule, regulation, legislation, interpretation, judgment, order or injunction enacted, entered, enforced, promulgated, amended, issued or deemed applicable to (i) the Parent, the Company or any subsidiary or affiliate of the Parent or the Company or (ii) any transaction contemplated by the Merger Agreement, including the Offer and the Merger, by any legislative body, court, government or governmental, administrative or regulatory authority or agency, domestic or foreign, other than the routine application of the waiting period provisions of the HSR Act to the Offer or the Merger, which is reasonably likely in the good faith judgment of the Parent to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; 31 34 c. there shall have occurred (i) any general suspension of, or limitation on prices for, trading in securities on the New York Stock Exchange or the Nasdaq/NMS, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) a commencement of a war or armed hostilities or other national or international crisis directly or indirectly involving the United States or (iv) in the case of any of the foregoing existing on the date hereof, in the good faith judgment of the Parent a material acceleration or worsening thereof; d. (i) it shall have been publicly disclosed or the Parent shall have otherwise learned that beneficial ownership (determined for the purposes of this paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the outstanding Shares has been acquired by any person, other than the Parent or any of its affiliates or any affiliates of the Harwood Family or (ii) (A) the Board or any committee thereof shall have failed to make, shall have withdrawn or modified in a manner adverse to the Parent or Purchaser the approval or recommendation of the Offer, the Merger or the Merger Agreement, or approved or recommended any Third Party Acquisition, takeover proposal or any other acquisition of Shares other than the Offer and the Merger or (B) the Board or any committee thereof shall have resolved to do any of the foregoing; e. any representation or warranty of the Company in the Merger Agreement shall not be true and correct on or after the date of the Merger Agreement, except for (i) changes contemplated by the Merger Agreement, (ii) those representations and warranties which address matters only as of a particular date (which shall remain true and correct as of such date) and (iii) where the failure to be true and correct would not have a Material Adverse Effect on the Company; for purposes of this provision, (A) representations and warranties of the Company in the Merger Agreement which are qualified by materiality shall be determined without regard to the materiality limitation, except as provided in (iii) above and (B) Material Adverse Effect shall mean items which in the aggregate would have (x) a recurring annual pre-tax income effect of $400,000 or more or (y) a non-recurring income, balance sheet or financial condition effect of $4,000,000 or more; f. the Company shall have failed to perform in any material respect any obligation or to comply in any material respect with any agreement or covenant of the Company to be performed or complied with by it under the Merger Agreement prior to the expiration of the Offer; g. the Company shall have failed to deliver executed (i) Confidentiality and Noncompete Agreements from each of Lowell Harwood, Sanford Harwood, and Leslie Harwood Ehrlich, (ii) Employment Agreement from Brett Harwood, and (iii) Consultancy Agreement from Lowell Harwood and Sanford Harwood, each as described in Section 10; h. any change shall have occurred in the business, operations, assets, financial condition or results of operations of the Company or any of its subsidiaries that, in the reasonable judgment of Parent, is or is reasonably likely to constitute a Material Adverse Change with respect to the Company; for purposes of this provision, Material Adverse Change shall mean changes or events which in the aggregate would have (i) a recurring annual pre-tax income effect of $400,000 or more or (ii) a non-recurring income, balance sheet or financial condition effect of $4,000,000 or more; i. the Company shall have failed to take any steps reasonably required to be taken under the NYBCL (including, without limitation, the requirements of Section 912 of the NYBCL) to allow Parent and Purchaser to promptly consummate the Merger and exercise full ownership rights over the Shares without violating any provision of the NYBCL; or j. the Merger Agreement shall have been terminated in accordance with its terms; or k. Purchaser and the Company may mutually agree that Purchaser shall terminate the Offer or postpone the acceptance for payment of or payment for Shares thereunder; which, in the reasonable good faith judgment of Purchaser in any such case, and regardless of the circumstances (including any action or inaction by Parent or any of its affiliates) giving rise to any such condition, makes it inadvisable to proceed with such acceptance for payment. 32 35 The foregoing conditions are for the sole benefit of Purchaser and Parent and may be asserted by Purchaser or the Parent regardless of the circumstances giving rise to any such condition or may be waived by Purchaser or Parent in whole or in part at any time and from time to time in their sole discretion. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances; and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. 15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS. General. The business of the Company and its subsidiaries is subject to certain federal, state and local regulations. Based upon its examination of publicly available information with respect to the Company and the review of certain information furnished by the Company to Parent and discussions of representatives of Parent with representatives of the Company during Parent's investigation of the Company (see Section 10), neither Purchaser nor Parent is aware of any certification, license or other regulatory permit that appears to be material to the business of the Company and its subsidiaries, taken as a whole, which might be adversely affected by the acquisition of Shares by Purchaser pursuant to the Offer, or of any approval or other action by any domestic (federal, state, or local) or foreign governmental, administrative or regulatory authority or agency which would be required prior to the acquisition of Shares by Purchaser pursuant to the Offer and which would have a material effect on the business of the Company and its subsidiaries, taken as a whole. Should any such approval or other action be required, it is Purchaser's present intention to seek such approval or action. Purchaser does not currently intend, however, to delay the purchase of Shares tendered pursuant to the Offer pending the outcome of any such action or the receipt of any such approval (subject to Purchaser's right to decline to purchase Shares if any of the conditions in Section 14 shall have occurred). There can be no assurance that any such approval or other action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to the business of the Company, Purchaser or Parent or that certain parts of the business of the Company, Purchaser or Parent might not have to be disposed of or held separate or other substantial conditions complied with in order to obtain such approval or other action or in the event that such approval were not obtained or such other action were not taken. Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions, including conditions relating to the legal matters discussed in this Section 15. See Section 14. State Takeover Statutes. The Company is incorporated under the laws of the State of New York. Section 912 of the NYBCL provides that any corporation to which the NYBCL applies, including the Company, shall not engage in any "business combination" (defined to include mergers and consolidations) with an "interested shareholder" (defined generally as a person who is the beneficial owner of 20% or more of the outstanding voting stock of such New York corporation) for a period of five years following the date that such shareholder became an interested shareholder unless prior to such date the board of directors of the corporation approved either the business combination or the transaction that resulted in the shareholder's becoming an interested shareholder. The Merger Agreement provides that the Company's Board has made all determinations and taken all such other actions as are necessary or appropriate under the NYBCL to ensure that it does not apply to the Offer, the Merger or the other transactions contemplated by the Merger Agreement. At a meeting on December 6, 1996, the Company's Board of Directors approved the Merger Agreement, the Merger, the Offer and Purchaser's purchase of the Shares pursuant to the Offer. Accordingly, the provisions of Section 912 of the NYBCL have been satisfied with respect to the Offer and the Merger. Article 16 of the NYBCL requires a bidder for the shares of a New York corporation to file a registration statement with the attorney general and satisfy certain disclosure requirements. The Company and Purchaser have filed such a registration statement and this Offer to Purchase sets forth the information required to be disclosed pursuant to Article 16 of the NYBCL. A number of other states have adopted laws and regulations applicable to attempts to acquire securities of corporations which are incorporated, or have substantial assets, shareholders, principal executive offices or principal places of business, or whose business operations otherwise have substantial economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of the United States invalidated on constitutional grounds 33 36 the Illinois Business Takeover Statute, which, as a matter of state securities law, made takeovers of corporations meeting certain requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana could, as a matter of corporate law and, in particular, with respect to those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without the prior approval of the remaining shareholders. The state law before the Supreme Court was by its terms applicable only to corporations that had a substantial number of shareholders in the state and were incorporated there. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a federal district court in Oklahoma ruled that certain Oklahoma corporate governance statutes were unconstitutional insofar as they applied to corporations incorporated outside of Oklahoma because they could subject such corporations to inconsistent regulations. In December 1988, a federal district court in Florida held in Grand Metropolitan PLC v. Butterworth that the provisions of the Florida Affiliated Transactions Act and the Florida Control Share Acquisition Act were unconstitutional as applied to corporations incorporated outside of Florida. The Company, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted takeover laws such as those described above. Purchaser does not know whether any of these laws will, by their terms, apply to the Offer or the Merger and has not necessarily complied with any such laws. Should any person seek to apply any state takeover law, Purchaser will take such action as then appears desirable, which may include challenging the validity or applicability of any such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover laws are applicable to the Offer or the Merger, and an appropriate court does not determine that they are inapplicable or invalid as applied to the Offer, Purchaser might be required to file certain information with, or receive approvals from, the relevant state authorities. In addition, if enjoined, Purchaser might be unable to accept for payment any Shares ordered pursuant to the Offer, or be delayed in continuing or consummating the Offer and the Merger. In such case, Purchaser may not be obligated to accept for payment any Shares tendered. See Section 14. Antitrust. Under the HSR Act and the rules that have been promulgated thereunder by the FTC, certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division and the FTC and certain waiting period requirements have been satisfied. The acquisition of Shares by Purchaser pursuant to the Offer is subject to such requirements. See Section 2. In addition, New York and other states may have antitrust laws which could impact the ability of Parent and Purchaser to consummate the Transactions. Pursuant to the HSR Act, on or promptly after the date of this Offer to Purchase, Parent anticipates filing a Premerger Notification and Report Form in connection with the purchase of Shares pursuant to the Offer with the Antitrust Division and the FTC. Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares pursuant to the Offer may not be consummated until the expiration of a 15 calendar day waiting period following the filing by Parent. Accordingly, it is anticipated that the waiting period under the HSR Act applicable to the purchase of Shares pursuant to the Offer will expire at 11:59 p.m., New York City time, on December 30, 1996, unless such waiting period is earlier terminated by the FTC and the Antitrust Division or extended by a request from the FTC or the Antitrust Division for additional information or documentary material prior to the expiration of the waiting period. Pursuant to the HSR Act, Parent will request early termination of the waiting period applicable to the Offer. There can be no assurance, however, that the 15-day HSR Act waiting period will be terminated early. If either the FTC or the Antitrust Division were to request additional information or documentary material from Parent with respect to the Offer, the waiting period with respect to the Offer would expire at 11:59 p.m., New York City time, on the 10th calendar day after the date of substantial compliance by Parent with such request. Thereafter, the waiting period could be extended only by court order. If the acquisition of Shares is delayed pursuant to a request by the FTC or the Antitrust Division for additional information or documentary material pursuant to the HSR Act, the Offer may, but need not, be extended and, in any event, the purchase of and payment for Shares will be deferred until 10 days after the request is substantially complied with, unless the extended period expires on or before the date when the initial 15-day period would otherwise have expired, or unless the waiting period is sooner terminated by the FTC and the Antitrust Division. Only one extension of such waiting period pursuant to a 34 37 request for additional information is authorized by the HSR Act and the rules promulgated thereunder, except by court order. Any such extension of the waiting period will not give rise to any withdrawal rights not otherwise provided for by applicable law. See Section 4. It is a condition to the Offer that the waiting period applicable under the HSR Act to the Offer expire or be terminated. See Section 2 and Section 14. The FTC and the Antitrust Division frequently scrutinize the legality under the antitrust laws of transactions such as the proposed acquisition of Shares by Purchaser pursuant to the Offer. At any time before or after the purchase of Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or seeking the divestiture of Shares purchased by Purchaser or the divestiture of substantial assets of Parent, the Company or their respective subsidiaries. Private parties and state attorneys general may also bring legal action under federal or state antitrust laws under certain circumstances. Based upon an examination of information available to Parent relating to the businesses in which Parent, the Company and their respective subsidiaries are engaged, Parent and Purchaser believe that the Offer will not violate the antitrust laws. Nevertheless, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made or, if such a challenge is made, what the result would be. See Section 14 for certain conditions to the Offer, including conditions with respect to litigation. 16. FEES AND EXPENSES. Except as set forth below, neither Parent nor Purchaser will pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Shares pursuant to the Offer. Bradford is acting as Dealer Manager in connection with the Offer and has provided certain financial advisory services to Parent in connection with the acquisition of the Company. Parent has agreed to pay Bradford a fee of up to $100,000 for any fairness opinion rendered in connection with the transactions contemplated by the Merger Agreement. Furthermore, if Purchaser consummates a business combination with the Company pursuant to which the business of the Company is combined with that of Purchaser, or if Purchaser acquires, directly or indirectly, a majority of the outstanding capital stock, or a majority of the assets of the Company, then Bradford will be entitled to receive a fee of 1.25% of the aggregate value of the transaction subject to an agreed upon maximum fee. Based on the valuation of the Offer and the Merger, Parent anticipates paying Bradford a fee of approximately $775,000. Fees paid by Purchaser for any fairness opinion will be credited against fees paid in the event the business of the Company is acquired by Purchaser. Parent has also agreed to reimburse Bradford for all reasonable out-of-pocket expenses incurred by it, including the reasonable fees and expenses of legal counsel, and to indemnify it against certain liabilities and expenses in connection with its engagement, including certain liabilities under the federal securities laws. Purchaser and Parent have retained Kissel-Blake, Inc., as the Information Agent, and SunTrust Bank, Atlanta, as the Depositary, in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telecopy, telegraph and personal interview and may request banks, brokers, dealers and other nominee shareholders to forward materials relating to the Offer to beneficial owners. The Information Agent and the Depositary each will receive reasonable and customary compensation for their services in connection with the Offer, will be reimbursed for out-of-pocket expenses, and will be indemnified against certain liabilities and expenses in connection therewith, including under federal securities laws. Brokers, dealers, commercial banks and trust companies will be reimbursed by Purchaser for customary handling and mailing expenses incurred by them in forwarding material to their customers. 17. MISCELLANEOUS. The Offer is being made solely by this Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. Purchaser is not aware of any jurisdiction where the making of the Offer is prohibited by any administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good faith effort to comply with any such state statute. If, after such good faith effort, Purchaser cannot comply with any such state statute, the Offer will not be made to (nor will tenders be 35 38 accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by the Dealer Manager or by one or more registered brokers or dealers licensed under the laws of such jurisdiction. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF PURCHASER, PARENT OR THE COMPANY NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. Pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, Parent and Purchaser have filed with the Commission the Schedule 14D-1, together with exhibits, furnishing certain additional information with respect to the Offer. The Schedule 14D-1 and any amendments thereto, including exhibits, may be inspected at, and copies may be obtained from, the same places and in the same manner as set forth in Section 7 (except that they will not be available at the regional offices of the Commission). CENTRAL PARKING CORPORATION December 13, 1996 Facsimiles of the Letter of Transmittal will be accepted. The Letter of Transmittal and certificates evidencing Shares and any other required documents should be sent or delivered by each shareholder or his broker, dealer, commercial bank, trust company or other nominee to the Depository at one of its addresses set forth below. 36 39 The Depositary for the Offer is: SUNTRUST BANK, ATLANTA By Facsimile Transmission: (FOR ELIGIBLE INSTITUTIONS ONLY) (404) 865-5371 Confirm Receipt of Guaranteed Delivery by Telephone: (800) 568-3476 By Mail: By Hand: By Overnight Carrier: SunTrust Bank, Atlanta SunTrust Bank, Atlanta SunTrust Bank, Atlanta P.O. Box 4625 58 Edgewood Ave. 58 Edgewood Ave. Atlanta, GA 30302 Room 225 Room 225 Atlanta, GA 30303 Atlanta, GA 30303
Questions or requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers listed below. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of the Guaranteed Delivery may be obtained from the Information Agent. A shareholder may also contact brokers, dealers, commercial banks or trust companies for assistance concerning the Offer. The Information Agent for the Offer is: KISSEL-BLAKE INC. 110 Wall Street New York, New York 10005 CALL TOLL FREE 1-800-554-7733 Banks and Brokerage Firms please call: (212) 344-6733 The Dealer Manager for the Offer is: J.C. Bradford & Co. 330 Commerce Street Nashville, Tennessee 37201 (615) 315-1750 Attention: Tina Redding 40 TENDER OFFER EXHIBIT I DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER 1. Directors and Executive Officers of Parent. The following table sets forth the name, current business address, citizenship and present principal occupation or employment, and material occupations, positions, offices or employments and business addresses thereof for the past five years of each director and executive officer of Parent. Unless otherwise indicated, (i) the current business address of each person is Central Parking Corporation, 2401 21st Avenue South, Suite 200, Nashville, Tennessee 37212, (ii) all other addresses are within the United States, (iii) each such person is a citizen of the United States and has held his or her present position as set forth below for the past five years, and (iv) each occupation set forth opposite an individual's name refers to employment with Parent.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL POSITIONS NAME HELD DURING THE PAST FIVE YEARS AND BUSINESS ADDRESSES THEREOF - ------------------------- ------------------------------------------------------------------ Monroe J. Carell, Jr..... Chief Executive Officer and Chairman of the Board of Directors of Parent since 1979; trustee of Vanderbilt University in Nashville, Tennessee, since 1991; member of the Board of Trust of the Urban Land Institute; member of the Board of Directors of Vanderbilt University Medical Center. James H. Bond............ President, Chief Operating Officer, and a member of the Board of Directors of Parent since October 1990; with Parent since 1971 in various positions including regional manager and Senior Vice President. Stephen A. Tisdell....... Chief Financial Officer of Parent since February 1993; from May 1992 to February 1993, President and owner of Tisdell Consulting, whose principal business activity was a financial consulting company and whose principal business address was 805 Foxboro Court, Brentwood, Tennessee 37027; from June 1991 until May 1992; Executive Vice President, Treasurer, and Secretary of Maison Blanche, Inc., whose principal business activity was the operation of retail clothing stores and whose principal business address is 1500 Main Street, Baton Rouge, Louisiana 70802; from February 1987 until June 1991, Group Vice President -- Finance and Chief Accounting Officer of Service Merchandise Corporation, whose principal business activity is the operation of retail catalog showrooms and whose principal business address is 7100 Service Merchandise Drive, Brentwood, Tennessee 37027. Emanuel J. Eads.......... Senior Vice President of the Parent since 1985; with Parent since 1974 in various positions including general manager and regional manager. Jeffrey L. Wolfe......... Senior Vice President of Parent since May 1994; with Parent from June 1990 until May 1994 as a regional manager and from September 1988 until May 1990 as a general manager. Henry J. Abbott.......... Vice President -- General Counsel of Parent since 1986 and Secretary since 1980; with Parent since 1977. Alan J. Kahn............. Senior Vice President -- European Operations of Parent since April 1996; with Parent in various positions including general manager and regional manager since 1982. Greg Susick.............. Senior Vice President of Parent since 1996; with Parent in various positions including general manager and regional manager since 1989. Chris Callas............. Corporate Controller of Parent since November 1996. From 1990 to 1996, Vice President-Controller of Worldspan, L.P., whose principal business activity is travel agency automation and airline reservation processing and whose principal business address is 300 Galleria Parkway, Atlanta, GA 30339.
41
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL POSITIONS NAME HELD DURING THE PAST FIVE YEARS AND BUSINESS ADDRESSES THEREOF - ------------------------- ------------------------------------------------------------------ William R. Porter........ Senior Vice President -- Acquisitions, of Parent since November 1996. From 1991 to October 1996, Executive Vice President -- Marketing, Ace Parking, whose principal business activity is parking management and whose principal business address is 645 Ash Street, San Diego, CA 92101. John W. Eakin............ Director of Parent since August 1993. Since April 1996, President of Highwood/Eakin & Smith Region whose principal business activity is real estate development and management and whose principal business address is 2100 West End Avenue, Nashville, Tennessee 37203. From September 1987 to April 1996, President of Eakin & Smith, Inc. which in April 1996 mergered with Highwoods Properties, Inc. Director of Highwoods Properties Inc. Since 1994, member of the advisory board of First American National Bank. Edward G. Nelson......... Director of Parent since August 1993. Since 1985, President and Chairman of the Board of Nelson Capital Corp., whose principal business activity is merchant banking and whose principal business address is 3401 West End Avenue, Suite 300, Nashville, Tennessee 37203. Director of Advocat Inc., a long-term care facility owner and operator; Osborn Communications Company, an owner and operator research organization; and Berlitz International, Inc., a language services company. Trustee of Vanderbilt University. Cecil Conlee............. Director of Parent since February 1996. Since 1989, Chairman and Chief Executive Officer of CGR Advisors, whose principal business activity is real estate investment advice and portfolio management services and whose principal business address is 950 East Paces Ferry Road, Suite 2275, Atlanta, Georgia 30326. Director of Oxford Industries, Inc. and Rodamco N.V.; trustee of Corporate Property Investors, International Council of Shopping Centers and Vanderbilt University; member and past trustee of the Urban Land Institute; director of Central Atlanta Progress, The Corporation for Olympic Development Atlanta, and the Southern Center for International Studies. William C. O'Neil, Jr.... Director of Parent since August 1993. Since September 1989, Chairman of the Board, President, and Chief Executive Officer of ClinTrials Research Inc., whose principal business activity is a clinical research organization and whose principal business address is One Burton Hills Boulevard, Suite 210, Nashville, Tennessee 37215. Director of Advocat Inc., ATRIX Laboratories, Inc., a drug delivery company, Sigma Aldrich Chemical Company, a manufacturer of research chemicals and American HealthCorp., a specialty healthcare services company. P.E. Sadler.............. Director of Parent since February 1996. Since 1992, Chairman and Chief Executive Officer of ActaMed Corporation, whose principal business activity is health care technology and whose principal business address is 7000 Central Parkway, Suite 600, Atlanta, Georgia 30328. From 1979 to 1991, Chairman and Chief Executive Officer of MicroBilt Corporation. Former Director of Endata Corporation, First Financial Management Corporation and Knowledgeware; Chairman of ActaVest Corporation and CareerOps, Inc.
2 42 2. Directors and Executive Officers of Purchaser. The following table sets forth the name, current business address, citizenship and present principal occupation or employment, and material occupations, positions, offices or employment and business addresses thereof for the past five years of each director and executive officer of Purchaser. Unless otherwise indicated, the current business address of each person is c/o Central Parking Corporation, 2401 21st Avenue South, Suite 200, Nashville, Tennessee 37212. Unless otherwise indicated, all other addresses are within the United States. Unless otherwise indicated, each such person is a citizen of the United States and has held his or her present position as set forth below for the past five years. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with Parent.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL POSITIONS NAME HELD DURING THE PAST FIVE YEARS AND BUSINESS ADDRESSES THEREOF - ------------------------- ------------------------------------------------------------------ Monroe J. Carell, Jr..... Chairman, Chief Executive Officer and sole Director of Purchaser; Chief Executive Officer and Chairman of the Board of Directors of Parent since 1979; trustee of Vanderbilt University in Nashville, Tennessee, since 1991; member of the Board of Trust of the Urban Land Institute; member of the Board of Directors of Vanderbilt University Medical Center. James H. Bond............ President and Chief Operating Officer of the Purchaser; President, Chief Operating Officer, and a member of the Board of Directors of Parent since October 1990; with Parent since 1971 in various positions including regional manager and Senior Vice President. Henry J. Abbott.......... Secretary of the Purchaser; Vice President -- General Counsel of the Parent since 1986 and Secretary since 1980; with Parent since 1977.
3 EX-99.A.2 3 LETTER OF TRANSMITTAL 1 LETTER OF TRANSMITTAL To Tender Shares of Common Stock of SQUARE INDUSTRIES, INC. Pursuant to the Offer to Purchase Dated December 13, 1996 of CENTRAL PARKING SYSTEM--EMPIRE STATE, INC. an indirect wholly-owned subsidiary of CENTRAL PARKING CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JANUARY 14, 1997, UNLESS THE OFFER IS EXTENDED The Depositary for the Offer is: SUNTRUST BANK, ATLANTA By Facsimile Transmission: (FOR ELIGIBLE INSTITUTIONS ONLY) (404) 865-5371 Confirm Receipt of Guaranteed Delivery by Telephone: (800) 568-3476 By Mail: By Hand: By Overnight Carrier: SunTrust Bank, Atlanta SunTrust Bank, Atlanta SunTrust Bank, Atlanta P.O. Box 4625 58 Edgewood Ave. 58 Edgewood Ave. Atlanta, GA 30302 Room 225 Room 225 Atlanta, GA 30303 Atlanta, GA 30303
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by stockholders either if certificates evidencing Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in Section 2 of the Offer to Purchase (as defined below)) is utilized, if delivery of Shares is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company or Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer Facilities") pursuant to the book-entry transfer procedure described in Section 3 of the Offer to Purchase. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. 2 Shareholders whose certificates evidencing Shares ("Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other documents required hereby to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) or who cannot complete the procedure for delivery by book-entry transfer on a timely basis and who wish to tender their Shares must do so pursuant to the guaranteed delivery procedure described in Section 3 of the Offer to Purchase. See Instruction 2. [ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING: Name of Tendering Institution ------------------------------------------------------------------------------ Check Box of Applicable Book-Entry Transfer Facility: (check one) [ ] The Depository Trust Company [ ] Philadelphia Depository Trust Company Account Number ------------------------------------------------------------------------------ Transaction Code Number ------------------------------------------------------------------------------ [ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s) ----------------------------------------------------------------------------- Window Ticket No. (if any) ----------------------------------------------------------------------------- Date of Execution of Notice of Guaranteed Delivery ----------------------------------------------------------------------------- Name of Institution that Guaranteed Delivery ----------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------ DESCRIPTION OF SHARES TENDERED - ------------------------------------------------------------------------------------------------ NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) SHARES CERTIFICATE(S) AND SHARE(S) TENDERED ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY) - ------------------------------------------------------------------------------------------------ TOTAL NUMBER OF SHARES SHARE EVIDENCED NUMBER OF CERTIFICATE BY SHARE SHARES NUMBER(S)* CERTIFICATE(S)* TENDERED** - ------------------------------------------------------------------------------------------------ TOTAL SHARES - ------------------------------------------------------------------------------------------------ * Need not be completed by stockholders delivering Shares by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered to the Depositary are being tendered hereby. See Instruction 4. - ------------------------------------------------------------------------------------------------
2 3 NOTE: SIGNATURE MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to Central Parking System--Empire State, Inc. ("Purchaser"), a New York corporation and an indirect wholly-owned subsidiary of Central Parking Corporation, a Tennessee corporation ("Parent"), the above-described shares of common stock, par value $.01 per share (the "Shares"), of Square Industries, Inc. (the "Company"), pursuant to Purchaser's offer to purchase all the outstanding Shares for $31.00 per share, payable $28.50 net to the seller in cash promptly following the completion of the Offer for each outstanding Share, without interest thereon, and an additional $2.50 per Share to be deposited by Parent in escrow as contingent consideration for distribution, in whole or in part, to either the seller or Parent based upon the resolution of two specific matters, subject to adjustment as provided in the escrow agreement, upon the terms and subject to the conditions set forth in the Offer to Purchase dated December 13, 1996 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together constitute the "Offer"). Subject to, and effective upon, acceptance for payment of the Shares tendered herewith, in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser all right, title and interest in and to all the Shares that are being tendered hereby (or orders the registration of such Shares delivered by book-entry transfer) and all dividends, distributions (including, without limitation, distributions of additional Shares) and rights declared, paid or distributed in respect of such Shares on or after December 6, 1996 (collectively, "Distributions"), and irrevocably appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares and all Distributions, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver Share Certificates evidencing such Shares and all Distributions, or transfer ownership of such Shares and all Distributions on the account books maintained by a Book-Entry Transfer Facility, together, in either case, with all accompanying evidences of transfer and authenticity, to or upon the order of Purchaser, (ii) present such Shares and all Distributions for transfer on the books of the Company, and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares and all Distributions, all in accordance with the terms of the Offer. The undersigned hereby irrevocably appoints Monroe J. Carell, Jr. and Stephen A. Tisdell, and each of them, as the attorneys and proxies of the undersigned, each with full power of substitution, to vote in such manner as each such attorney and proxy or his or her substitute shall, in his or her sole discretion, deem proper and otherwise act (by written consent or otherwise) with respect to all the Shares tendered hereby that have been accepted for payment by Purchaser prior to the time of any vote or other action and all Shares and other securities issued in Distributions in respect of such Shares, which the undersigned is entitled to vote at any meeting of shareholders of the Company (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise. This proxy and power of attorney is coupled with an interest in the Shares tendered hereby, is irrevocable and is granted in consideration of, and is effective upon, the acceptance for payment of such Shares by Purchaser in accordance with the terms of the Offer. Such acceptance for payment shall revoke all other proxies and powers of attorney granted by the undersigned at any time with respect to such Shares (and all Shares and other securities issued in Distributions in respect of such Shares), and no subsequent proxy or power of attorney shall be given or written consent executed (and, if given or executed, shall not be effective) by the undersigned with respect thereto. The undersigned understands that, in order for Shares to be deemed validly tendered, immediately upon Purchaser's acceptance of such Shares for payment, Purchaser must be able to exercise full voting and other rights with respect to such Shares and all Distributions, including, without limitation, voting at any meeting of the Company's shareholders then scheduled. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby and all Distributions, and that when such Shares are accepted for payment by Purchaser, Purchaser will acquire good, marketable and unencumbered title 3 4 thereto and to all Distributions, free and clear of all liens, restrictions, charges and encumbrances, and that none of such Shares and Distributions will be subject to any adverse claim. The undersigned, upon request, shall execute and deliver all additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby and all Distributions. In addition, the undersigned shall remit and transfer promptly to the Depositary for the account of Purchaser all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer, and, pending such remittance and transfer or appropriate assurance thereof, Purchaser shall be entitled to all rights and privileges as owner of each such Distribution and may withhold the entire purchase price of the Shares tendered hereby, or deduct from such purchase price the amount or value of such Distribution as determined by Purchaser in its sole discretion. No authority herein conferred or agreed to be conferred shall be affected by, and all such authority shall survive, the death or incapacity of the undersigned. All obligations of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The undersigned understands that tenders of Shares pursuant to any of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute the undersigned's acceptance of the terms and conditions of the Offer. Purchaser's acceptance of such Shares for payment will constitute a binding agreement between the undersigned and Purchaser upon the terms and subject to the conditions of the Offer. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please issue the check for the purchase price of all Shares purchased, and return all Share Certificates evidencing Shares not purchased or not tendered in the name(s) of the registered holder(s) appearing above under "Description of Shares Tendered." Similarly, unless otherwise indicated in the box entitled "Special Delivery Instructions," please mail the check for the purchase price of all Shares purchased and all Share Certificates evidencing Shares not tendered or not purchased (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above under "Description of Shares Tendered." In the event that the boxes entitled "Special Payment Instructions" and "Special Delivery Instructions" are both completed, please issue the check for the purchase price of all Shares purchased and return all Share Certificates evidencing Shares not purchased or not tendered in the name(s) of, and mail such check and Share Certificates to, the person(s) so indicated. The undersigned recognizes that Purchaser has no obligation, pursuant to the Special Payment Instructions, to transfer any Shares from the name of the registered holder(s) thereof if Purchaser does not purchase any of the Shares tendered hereby. 4 5 --------------------------------------------------- SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if the check for the purchase price of Shares purchased or Share Certificates evidencing Shares not tendered or not purchased are to be issued in the name of someone other than the undersigned. Issue check and/or certificate(s) to: Name -------------------------------------------------------------------- (PLEASE PRINT) Address ------------------------------------------------------------------ ------------------------------------------------------------------ (INCLUDE ZIP CODE) ------------------------------------------------------------------ (TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER) (SEE SUBSTITUTE FORM W-9 ON INSIDE BACK COVER) Check appropriate box: [ ] The Depository Trust Company [ ] Philadelphia Depository Trust Company --------------------------------------------------- (ACCOUNT NUMBER) --------------------------------------------------- SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if the check for the purchase price of Shares purchased or Share Certificates evidencing Shares not tendered or not purchased are to be mailed to someone other than the undersigned, or to the undersigned at an address other than that shown under "Description of Shares Tendered." Mail check and/or certificate(s) to: Name -------------------------------------------------------------------- (PLEASE PRINT) Address ------------------------------------------------------------------ ------------------------------------------------------------------ (INCLUDE ZIP CODE) ------------------------------------------------------------------ 5 6 IMPORTANT SHAREHOLDERS: SIGN HERE (PLEASE COMPLETE SUBSTITUTE FORM W-9 ON INSIDE BACK COVER) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SIGNATURE(S) OF HOLDER(S) Dated:__________, 1997 (Must be signed by registered holder(s) exactly as such registered holder(s) appear(s) on Share Certificates or on a security position listing or by a person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5.) Name(s): ------------------------------------------------------------------------ ------------------------------------------------------------------------ (PLEASE PRINT) Capacity (full title): ---------------------------------------------------------- Address: ------------------------------------------------------------------------ ------------------------------------------------------------------------ (INCLUDE ZIP CODE) Area Code and Telephone No.: ---------------------------------------------------- Taxpayer Identification or Social Security No.: --------------------------------- (SEE SUBSTITUTE FORM W-9 ON INSIDE BACK COVER) GUARANTEE OF SIGNATURE(S) (IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5) SPACE BELOW IS FOR USE BY FINANCIAL INSTITUTIONS ONLY. FINANCIAL INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE BELOW 6 7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. Guarantee of Signatures. All signatures on this Letter of Transmittal must be medallion guaranteed by a firm that is a member of the Medallion Signature Guarantee Program, or by any other "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (each of the foregoing being referred to as an "Eligible Institution"), unless (i) this Letter of Transmittal is signed by the registered holder(s) of the Shares (which term, for purposes of this document, shall include any participant in a Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) tendered hereby and such holder(s) has (have) completed neither the box entitled "Special Payment Instructions" nor the box entitled "Special Delivery Instructions" on the reverse hereof or (ii) such Shares are tendered for the account of an Eligible Institution. See Instruction 5. 2. Delivery of Letter of Transmittal and Share Certificates. This Letter of Transmittal is to be used either if Share Certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if Shares are to be delivered by book-entry transfer pursuant to the procedure set forth in Section 3 of the Offer to Purchase. Share Certificates evidencing all physically tendered Shares, or a confirmation of a book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility of all Shares delivered by book-entry transfer as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or an Agent's Message in the case of a book-entry delivery, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the reverse hereof prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). If Share Certificates are forwarded to the Depositary in multiple deliveries, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. Shareholders whose Share Certificates are not immediately available, who cannot deliver their Share Certificates and all other required documents to the Depositary prior to the Expiration Date or who cannot complete the procedure for delivery by book-entry transfer on a timely basis may tender their Shares pursuant to the guaranteed delivery procedure described in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by Purchaser, must be received by the Depositary prior to the Expiration Date; and (iii) the Share Certificates evidencing all physically delivered Shares in proper form for transfer by delivery, or a confirmation of a book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility of all Shares delivered by book-entry transfer, in each case together with a Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry delivery, an Agent's Message), and any other documents required by this Letter of Transmittal, must be received by the Depositary within five New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery, all as described in Section 3 of the Offer to Purchase. The method of delivery of this Letter of Transmittal, Share Certificates and all other required documents, including delivery through any Book-Entry Transfer Facility, is at the option and risk of the tendering shareholder, and the delivery will be deemed made only when actually received by the Depositary. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. By execution of this Letter of Transmittal (or a facsimile hereof), all tendering shareholders waive any right to receive any notice of the acceptance of their Shares for payment. 3. Inadequate Space. If the space provided herein under "Description of Shares Tendered" is inadequate, the Share Certificate numbers, the number of Shares evidenced by such Share Certificates and the number of Shares tendered should be listed on a separate schedule and attached hereto. 4. Partial Tenders (not applicable to shareholders who tender by book-entry transfer). If fewer than all of the Shares evidenced by any Share Certificate delivered to the Depositary herewith are to be tendered 7 8 hereby, fill in the number of Shares that are to be tendered in the box entitled "Number of Shares Tendered." In such cases, new Share Certificate(s) evidencing the remainder of the Shares that were evidenced by the Share Certificates delivered to the Depositary herewith will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the box entitled "Special Delivery Instructions" on the reverse hereof, as soon as practicable after the expiration or termination of the Offer. All Shares evidenced by Share Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the Share Certificates evidencing such Shares without alteration, enlargement or any other change whatsoever. If any Share tendered hereby is owned of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the Shares tendered hereby are registered in the names of different holders, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of such Shares. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of Share Certificates or separate stock powers are required, unless payment is to be made to, or Share Certificates evidencing Shares not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), in which case, the Share Certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such Share Certificate(s). Signatures on such Share Certificate(s) and stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, the Share Certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such Share Certificate(s). Signatures on such Share Certificate(s) and stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any Share Certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to Purchaser of such person's authority so to act must be submitted. 6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6, Purchaser will pay all stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price of any Shares purchased is to be made to, or Shares Certificate(s) evidencing Shares not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such other person will be deducted from the purchase price of such Shares purchased, unless evidence satisfactory to Purchaser of the payment of such taxes, or exemption therefrom, is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Share Certificates evidencing the Shares tendered hereby. 7. Special Payment and Delivery Instructions. If a check for the purchase price of any Shares tendered hereby is to be issued, or Share Certificate(s) evidencing Shares not tendered or not purchased are to be issued, in the name of a person other than the person(s) signing this Letter of Transmittal or if such check or any such Share Certificate is to be sent to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal but at an address other than that shown in the box entitled "Description of Shares Tendered" on the reverse hereof, the appropriate boxes on the reverse of this Letter of Transmittal must be completed. 8 9 8. Questions and Requests for Assistance or Additional Copies. Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses or telephone numbers set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained from the Information Agent or from brokers, dealers, commercial banks or trust companies. 9. Substitute Form W-9. Each tendering shareholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on the Substitute Form W-9 which is provided under "Important Tax Information" below, and to certify, under penalties of perjury, that such number is correct and that such shareholder is not subject to backup withholding of federal income tax. If a tendering shareholder has been notified by the Internal Revenue Service that such shareholder is subject to backup withholding, such shareholder must cross out item (2) of the Certification box of the Substitute Form W-9, unless such shareholder has since been notified by the Internal Revenue Service that such shareholder is no longer subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the tendering shareholder to 31% federal income tax withholding on the payment of the purchase price of all Shares purchased from such shareholder. If the tendering shareholder has not been issued a TIN and has applied for one or intends to apply for one in the near future, such shareholder should write "Applied For" in the space provided for the TIN in Part I of the Substitute Form W-9, and sign and date the Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% on all payments of the purchase price to such shareholder until a TIN is provided to the Depositary. Important: This Letter of Transmittal (or facsimile hereof), properly completed and duly executed, or an Agent's Message in the case of a book-entry delivery (together with any required signature guarantees and Share Certificates or confirmation of book-entry transfer and all other required documents), or a properly completed and duly executed Notice of Guaranteed Delivery must be received by the Depositary prior to the Expiration Date (as defined in the Offer to Purchase). IMPORTANT TAX INFORMATION Under the federal income tax law, a shareholder whose tendered Shares are accepted for payment is required to provide the Depositary (as payer) with such shareholder's correct TIN on Substitute Form W-9 below. If such shareholder is an individual, the TIN is such shareholder's social security number. If the Depositary is not provided with the correct TIN, the shareholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such shareholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding of 31% (as described below). Certain shareholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, such individual must submit an Internal Revenue Service Form W-8, signed under penalties of perjury, attesting to such individual's exempt status. A Form W-8 may be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the shareholder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a shareholder with respect to Shares purchased pursuant to the Offer, the shareholder is required to notify the Depositary of such shareholder's correct TIN by completing the form below certifying (a) that the TIN provided on Substitute Form W-9 is correct (or that such shareholder is awaiting a TIN), and (b) that (i) such shareholder has not been notified 9 10 by the Internal Revenue Service that such shareholder is subject to backup withholding as a result of failure to report all interest or dividends or (ii) the Internal Revenue Service has notified such shareholder that such shareholder is no longer subject to backup withholding. WHAT NUMBER TO GIVE THE DEPOSITARY The shareholder is required to give the Depositary the social security number or employer identification number of the record holder of the Shares tendered hereby. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. If the tendering shareholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, the shareholder should write "Applied For" in the space provided for the TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% of all payments of the purchase price to such shareholder until a TIN is provided to the Depositary. 10 11 PAYER'S NAME: ------------------------------------------------------ SUBSTITUTE PART 1 - Taxpayer Identification ---------------------------- FORM W-9 Number SOCIAL SECURITY NUMBER OR------------------------- Department of the For all accounts, enter taxpayer EMPLOYER IDENTIFICATION Treasury Internal identification number in the box NUMBER Revenue Service at right. (For most individuals, this is your social security (If awaiting TIN, number. If you do not have a write "Applied For") number, OR see "Obtaining a Number" in the enclosed Guidelines.) Certify by signing and dating Number below. Note: If the account is in more than one name, see the chart in the enclosed Guidelines to determine which number to give the payer. Payer's Request for PART II -- For Payees Exempt from Backup Withholding, see the Taxpayer Identification enclosed Guidelines and complete as instructed therein. Number (TIN) CERTIFICATION -- Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of failure to report all interest or dividends, or the IRS has notified me that I am no longer subject to backup withholding. CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of under reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (See also instructions in the enclosed Guidelines.) SIGNATURE DATE , 199 ---------------------------------------------------------- ------------ ---
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE OFFER. FOR ADDITIONAL DETAILS, PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9. --------------------- The Information Agent for the Offer is: KISSEL-BLAKE INC. 110 Wall Street New York, New York 10005 (212) 344-6733 Toll-Free: 1-800-554-7733 --------------------- The Dealer Manager for the Offer Is: J.C. Bradford Logo 330 Commerce Street Nashville, TN 37201 (615) 315-1750 --------------------- December 13, 1996 11 EX-99.A.3 4 NOTICE OF GUARANTEED DELIVERY 1 NOTICE OF GUARANTEED DELIVERY for Tender of Shares of Common Stock of SQUARE INDUSTRIES, INC. (Not To Be Used For Signature Guarantees) This Notice of Guaranteed Delivery, or one substantially in the form hereof, must be used to accept the Offer (as defined below) (i) if certificates ("Shares Certificates") evidencing shares of common stock, par value $.01 per share (the "Shares") of Square Industries, Inc., are not immediately available, (ii) if Share Certificates and all other required documents cannot be delivered to SunTrust Bank, Atlanta, as Depositary (the "Depositary"), prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase (as defined below)), or (iii) if the procedure for delivery by book-entry transfer cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram or facsimile transmission (for eligible institutions only) to the Depositary. See Section 3 of the Offer to Purchase. The Depositary for the Offer is: SUNTRUST BANK, ATLANTA By Facsimile Transmission: (FOR ELIGIBLE INSTITUTIONS ONLY) (404) 865-5371 Confirm Receipt of Guaranteed Delivery by Telephone: (800) 568-3476 By Mail: By Hand: By Overnight Carrier SunTrust Bank, Atlanta SunTrust Bank, Atlanta SunTrust Bank, Atlanta P.O. Box 4625 58 Edgewood Avenue 58 Edgewood Avenue Atlanta, GA 30302 Room 225 Room 225 Atlanta, GA 30303 Atlanta, GA 30303
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. 2 Ladies and Gentlemen: The undersigned hereby tenders to Central Parking System -- Empire State, Inc., a New York corporation and an indirect wholly-owned subsidiary of Central Parking Corporation, a Tennessee corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated December 13, 1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares specified below pursuant to the guaranteed delivery procedure described in Section 3 of the Offer to Purchase. Number of Shares: ------------------------------------- Certificate Nos. (If Available): - ------------------------------------------------------ Check one box if Shares will be delivered by book-entry transfer: [ ] The Depository Trust Company [ ] Philadelphia Depository Trust Company - ------------------------------------------------------ NAME OF TENDERING INSTITUTION Account No. ------------------------------------------- - ------------------------------------------------------ - ------------------------------------------------------ (SIGNATURE(S) OF HOLDER(S)) Dated: , 199 ----------------------------------------- -- Name(s) of Holders: - ------------------------------------------------------ - ------------------------------------------------------ PLEASE TYPE OR PRINT - ------------------------------------------------------ ADDRESS - ------------------------------------------------------ ZIP CODE - ------------------------------------------------------ AREA CODE AND TELEPHONE NO. GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., or which is a commercial bank or trust company having an office or correspondent in the United States, guarantees to deliver to the Depositary, at one of its addresses set forth above, Share Certificates evidencing the Shares tendered hereby, in proper form for transfer, or confirmation of book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company or Philadelphia Depository Trust Company, in each case with delivery of a Letter of Transmittal (or facsimile thereof) properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry delivery, and any other required documents, all within five New York Stock Exchange trading days of the date hereof. - -------------------------------------------- -------------------------------------------- NAME OF FIRM AUTHORIZED SIGNATURE - -------------------------------------------- -------------------------------------------- ADDRESS TITLE Name - -------------------------------------------- ------------------------------------------- ZIP CODE PLEASE TYPE OR PRINT Date , 199 - -------------------------------------------- ------------------------------- --- AREA CODE AND TELEPHONE NO.
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.A.4 5 BROKER LETTER 1 J.C. BRADFORD & CO. 330 Commerce Street Nashville, Tennessee 37201 (615) 315-1750 --------------------- Offer to Purchase for Cash All Outstanding Shares of Common Stock of SQUARE INDUSTRIES, INC. at $31.00 Per Share (payable $28.50 per Share net in cash, without interest thereon, and an additional $2.50 per Share, to be deposited by Parent in escrow as contingent consideration, for distribution in whole or in part, either to the seller or to Parent upon the resolution of two specific matters, subject to adjustment as provided in the escrow agreement) by CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC. an indirect wholly-owned subsidiary of CENTRAL PARKING CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JANUARY 14, 1997, UNLESS THE OFFER IS EXTENDED. To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by Central Parking System -- Empire State, Inc., a New York corporation ("Purchaser") and an indirect wholly-owned subsidiary of Central Parking Corporation, a Tennessee corporation ("Parent"), to act as Dealer Manager in connection with Purchaser's offer to purchase all outstanding shares of common stock, par value $.01 per share (the "Shares"), of Square Industries, Inc. (the "Company"), at a price of $31.00 per Share, payable $28.50 net to the seller in cash at closing, without interest thereon and an additional $2.50 per Share to be deposited by Parent in escrow as contingent consideration for distribution, in whole or in part as provided in the escrow agreement, to either the seller or to Parent upon the resolution of two specific matters, subject to adjustment, upon the terms and subject to the conditions set forth in Purchaser's Offer to Purchase, dated December 13, 1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer") enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THE NUMBER OF SHARES WHICH, TOGETHER WITH ANY SHARES THEN OWNED BY PARENT OR PURCHASER, REPRESENTS AT LEAST SIXTY-SIX AND TWO THIRDS PERCENT (66 2/3%) OF THE SHARES ON A FULLY DILUTED BASIS (FULLY DILUTED SHALL INCLUDE, WITHOUT LIMITATION, ALL SHARES ISSUABLE UPON THE CONVERSION OF ANY CONVERTIBLE SECURITIES OR UPON THE EXERCISE OF ANY OPTIONS, WARRANTS OR RIGHTS, UNLESS THE HOLDER THEREOF SHALL HAVE ENTERED INTO AN AGREEMENT TO CASH OUT SUCH OPTIONS, WARRANTS OR RIGHTS IN CONJUNCTION WITHIN THE MERGER AGREEMENT). THE OFFER IS ALSO CONDITIONED UPON, AMONG OTHER THINGS, THE EXPIRATION OR TERMINATION OF ANY APPLICABLE ANTITRUST WAITING PERIODS. 2 Enclosed for your information and use are copies of the following documents: 1. Offer to Purchase, dated December 13, 1996; 2. Letter of Transmittal to be used by holders of Shares in accepting the Offer and tendering Shares; 3. Notice of Guaranteed Delivery to be used to accept the Offer if the Shares and all other required documents are not immediately available or cannot be delivered to SunTrust Bank, Atlanta (the "Depositary") by the Expiration Date (as defined in the Offer to Purchaser) or if the procedure for book-entry transfer cannot be completed by the Expiration Date; 4. A letter to shareholders of the Company from Lowell Harwood, President and Chief Executive Officer of the Company, together with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by the Company; 5. A letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 6. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and 7. Return envelope addressed to the Depositary. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JANUARY 14, 1997, UNLESS THE OFFER IS EXTENDED. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates evidencing such Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities (as defined in the Offer to Purchase)), (ii) a Letter of Transmittal (or facsimile thereof) properly completed and duly executed or an Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry delivery and (iii) any other required documents in accordance with the instructions contained in the Letter of Transmittal. If a holder of Shares wishes to tender Shares, but cannot deliver such holder's certificates or other required documents, or cannot comply with the procedure for book-entry transfer, prior to the expiration of the Offer, a tender of Shares may be effected by following the guaranteed delivery procedure described in Section 3 of the Offer to Purchase. Purchaser will not pay any fees or commissions to any broker, dealer or other person (other than the Dealer Manager, the Depositary and the Information Agent as described in the Offer) in connection with the solicitation of tenders of Shares pursuant to the Offer. However, Purchaser will reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. Purchaser will pay or cause to be paid any stock transfer taxes payable with respect to the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquires you may have the respect to the Offer should be addressed to J.C. Bradford & Co., or Kissel-Blake Inc. (the "Information Agent") at their respective addresses and telephone numbers set forth on the back cover page of the Offer to Purchase. 3 Additional copies of the enclosed material may be obtained from the Information Agent, at the address and telephone numbers set forth on the back of the Offer to Purchase. Very truly yours, J. C. BRADFORD & CO. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU OR ANY OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. EX-99.A.5 6 CLIENT LETTER 1 Offer to Purchase for Cash All Outstanding Shares of Common Stock of SQUARE INDUSTRIES, INC. at $31.00 Per Share (payable $28.50 net per Share in cash, without interest thereon, and an additional $2.50 per Share to be deposited by Parent in escrow as contingent consideration for distribution, in whole or in part, to either seller or Parent upon the resolution of two specific matters, subject to adjustment as provided in the escrow agreement) by CENTRAL PARKING SYSTEM - - EMPIRE STATE, INC. an indirect wholly-owned subsidiary of CENTRAL PARKING CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JANUARY 14, 1997, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration are an Offer to Purchase, dated December 13, 1996 (the "Offer to Purchase"), and a related Letter of Transmittal (which together constitute the "Offer") in connection with the offer by Central Parking System -- Empire State, Inc., a New York corporation ("Purchaser") and an indirect wholly-owned subsidiary of Central Parking Corporation, a Tennessee corporation ("Parent"), to purchase all outstanding shares of common stock, par value $.01 per share (the "Shares"), of Square Industries, Inc. (the "Company"), at a price of $31.00 per share, payable $28.50 net per Share in cash, without interest thereon, and an additional $2.50 per Share to be deposited by Parent in escrow as contingent consideration for distribution, in whole or in part, to either seller or Parent based upon the resolution of two specific matters, subject to adjustment as provided in the escrow agreement, upon the terms and subject to the conditions set forth in the Offer. We are (or our nominee is) the holder of record of Shares held by us for your account. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish to have us tender on your behalf any or all of the Shares held by us for your account, upon the terms and subject to the conditions set forth in the Offer. Your attention is invited to the following: 1. The tender price is $31.00 per Share, payable $28.50 net per Share in cash, without interest thereon, and an additional $2.50 per Share to be deposited by Parent in escrow as contingent 2 consideration for distribution, in whole or in part, to either seller or Parent based upon the resolution of two specific matters, subject to adjustment as provided in the escrow agreement. 2. The Offer is being made for all outstanding Shares. 3. The Board of Directors of the Company has determined that each of the Offer and the Merger (as defined in the Offer to Purchase) is fair to, and in the best interests of, the stockholders of the Company (other than Parent and its subsidiaries), and recommends that stockholders accept the Offer and tender their Shares pursuant to the Offer. 4. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on Tuesday, January 14, 1997, unless the Offer is extended. 5. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer a number of Shares which, together with any Shares then owned by Parent or Purchaser, represents at least sixty-six and two thirds percent (66 2/3%) of the Shares on a fully diluted basis. Fully diluted shall include, without limitation, all Shares issuable upon the conversion of any convertible securities or upon the exercise of any options, warrants or rights, unless the holder thereof shall have entered into an agreement to cash out such options, warrants or rights in conjunction with the Merger Agreement. The Offer is also conditioned upon, among other things, the expiration or termination of applicable antitrust waiting periods. 6. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes with respect to the purchase of Shares by Purchaser pursuant to the Offer. If you wish to have us tender any or all of your Shares, please so instruct us by completing, executing and returning to us the instruction form contained in this letter. An envelope in which to return your instructions to us is enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good faith effort to comply with any such state statute. If, after such good faith effort, Purchaser cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by J. C. Bradford & Co. or one or more registered brokers or dealers licensed under the laws of such jurisdiction. 3 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK of SQUARE INDUSTRIES, INC. by CENTRAL PARKING SYSTEM - - EMPIRE STATE, INC. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated December 13, 1996, and the related Letter of Transmittal (which together constitute the "Offer"), in connection with the offer by Central Parking System -- Empire State, Inc., a New York corporation and an indirect wholly-owned subsidiary of Central Parking Corporation, a Tennessee corporation, to purchase all outstanding shares of common stock, par value $.01 per share (the "Shares"), of Square Industries, Inc., a New York corporation. This will instruct you to tender the number of Shares indicated below (or, if no number is indicated below, all Shares) that are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Dated: ____________, 199_ SIGN HERE --------------------------------------------- - -------------------------------------------- --------------------------------------------- SIGNATURE(S) Number of Shares to be Tendered __________ __________ _______________ Shares* PLEASE TYPE OR PRINT NAME(S) __________ - -------------------------------------------- __________ PLEASE TYPE OR PRINT ADDRESS __________ __________ AREA CODE AND TELEPHONE NUMBER __________ TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
- --------------- * Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered EX-99.A.6 7 GUIDELINES FOR CERTIFICATION 1 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the Payer. - --------------------------------------------------------- GIVE THE FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY NUMBER OF-- ========================================================= GIVE THE EMPLOYER FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF-- - --------------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals (joint The actual owner of account) the account or, if combined funds, the first individual on the account(1) 3. Husband and wife (joint The actual owner of account) the account or, if joint funds, the first individual on the account(1) 4. Custodian account of a minor The minor(2) (Uniform Gift to Minors Act) 5. Adult and minor (joint account) The adult, or if the minor is the only contributor, the minor(1) 6. Account in the name of guardian The ward, minor, or or committee for a designated incompetent ward, minor, or incompetent person(3) person 7. a. The usual revocable savings The grantor- trust account (grantor is trustee(1) also trustee) b. So-called trust account that The actual owner(1) is not a legal or valid trust under State law 8. Sole proprietorship account The owner(4) 9. A valid trust, estate, or Legal entity (Do pension trust not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The corporation 11. Religious, charitable, or The organization educational organization account 12. Partnership account held in the The partnership name of the business 13. Association, club, or other The organization tax-exempt organization 14. A broker or registered nominee The broker or nominee 15. Account with the Department of The public entity Agriculture in the name of a public entity (such as a State or local government, school district or prison) that receives agricultural program payments
- -------------------------------------------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. If the owner does not have an employer identification number, furnish the owner's social security number. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on interest, dividends, and broker transactions payments include the following: - A corporation. - A financial institution. - An organization exempt from tax under section 501(a), or an individual retirement plan, or a custodial account under Section 403(b)(7). - The United States or any agency or instrumentality thereof. - A State, the District of Columbia, a possession of the United States, or any political subdivision or instrumentality thereof. - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - An international organization or any agency, or instrumentality thereof. - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - A real estate investment trust. - A common trust fund operated by a bank under section 584(a). - An entity registered at all times under the Investment Company Act of 1940. - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - Payments of patronage dividends where the amount received is not paid in money. - Payments made by certain foreign organizations. - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. NOTE: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - Payments described in section 6049(b)(5) to nonresident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Beginning January 1, 1993, payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.A.7 8 SUMMARY ADVERTISEMENT 1 This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer (as defined below) is made solely by the Offer to Purchase dated December 13, 1996, and the related Letter of Transmittal, and is being made to all holders of Shares. Purchaser (as defined below) is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good faith effort to comply with any such state statute. If, after such good faith effort, Purchaser cannot comply with any such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by J.C. Bradford & Co. or one or more registered brokers or dealers licensed under the laws of such jurisdiction. Notice of Offer to Purchase for Cash All Outstanding Shares of Common Stock of SQUARE INDUSTRIES, INC. at $31.00 Per Share (payable $28.50 per Share net in cash, without interest thereon and an additional $2.50 per Share to be deposited by Purchaser in escrow as contingent consideration for distribution, in whole or in part, to either the seller or Purchaser upon the resolution of two specific matters, subject to adjustment as provided in the escrow agreement) by CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC. an indirect wholly-owned subsidiary of CENTRAL PARKING CORPORATION Central Parking System -- Empire State, Inc., a New York corporation ("Purchaser") and an indirect wholly-owned subsidiary of Central Parking Corporation, a Tennessee corporation ("Parent"), is offering to purchase all outstanding shares of common stock, par value $.01 per share (the "Shares"), of Square Industries, Inc., a New York corporation (the "Company"), at a price of $28.50 per Share, net to the seller in cash, without interest thereon and an additional $2.50 per Share to be deposited by Purchaser in escrow as contingent consideration for distribution, in whole or in part, to either the seller or Purchaser upon the resolution of two specific matters, subject to adjustment as provided in the escrow agreement (the "Escrowed Funds"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated December 13, 1996 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer"). Following the Offer, Purchaser intends to effect the Merger described below. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JANUARY 14, 1997, UNLESS THE OFFER IS EXTENDED The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer a number of Shares which, together with any Shares then owned by Parent or Purchaser, represents at least sixty-six and two-thirds percent (66 2/3%) of the Shares on a fully diluted basis (fully diluted shall include, without limitation, all Shares issuable upon the conversion of any convertible securities or upon the exercise of any options, warrants or rights, unless the holder thereof shall have entered into an agreement to cash out such options, warrants or rights in conjunction with the Merger Agreement). The Offer is also conditioned upon, among other things, the expiration or termination of any applicable antitrust waiting periods. The Offer is being made pursuant to an Agreement and Plan of Merger dated as of December 6, 1996 (the "Merger Agreement") among Parent, Purchaser and the Company. The Merger Agreement provides that, among other things, as soon as practicable after the purchase of Shares pursuant to the Offer and the satisfaction of the other conditions set forth in the Merger Agreement and in accordance with relevant provisions of the New York Business Corporation Law (the "NYBCL"), the Purchaser will be merged with and into the Company (the "Merger"). Following consummation of the Merger, the Company will continue as the surviving corporation (the "Surviving Corporation"). At the effective time of the Merger (the "Effective Time"), each Share issued and outstanding immediately prior to the Effective Time (other than Shares held in the treasury of the Company, Shares owned by Parent or any direct or indirect subsidiary of Parent or of the Company and Shares which are held by shareholders validly exercising appraisal rights pursuant to Section 910 of the NYBCL) will be converted into the right to receive $28.50 per Share net in cash, and an additional $2.50 per Share to be deposited by Purchaser in escrow as contingent consideration for distribution, in whole or in part, to either the shareholder or Purchaser based upon the resolution of two specific matters, subject to adjustment pursuant to the escrow agreement, or any higher price that may be paid per Share in the Offer, without interest except as provided in the escrow agreement (the "Merger Consideration"). THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY DETERMINED THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY (OTHER THAN PARENT AND ITS SUBSIDIARIES) AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. For purposes of the Offer, Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not withdrawn as, if and when Purchaser gives oral or written notice to SunTrust Bank, Atlanta (the "Depositary") of the Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor (less the Escrowed Funds) with the Depositary, which will act as agent for the tendering shareholders for the purpose of receiving payments from the Purchaser and transmitting such payments to the tendering shareholders whose Shares have been accepted for payment. Under no circumstances will interest on the purchase price for Shares be paid, regardless of any delay in making such payment except as provided in the escrow agreement. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer (less the Escrowed Funds) will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares (the "Share Certificates") or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities (as defined in Section 2 of the Offer to Purchase) pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of 2 Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined in Section 2 of the Offer to Purchase) in connection with a book-entry transfer, and (iii) any other documents required by the Letter of Transmittal. The term "Expiration Date" shall mean 12:00 midnight New York City time, on Tuesday, January 14, 1997, unless and until Purchaser, shall have extended the period of time for the Offer, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire. Purchaser expressly reserves the right, in its sole discretion (but subject to the terms and conditions of the Merger Agreement including consent by the Company), at any time and from time to time, to extend for any reason the period of time during which the Offer is open, including upon the occurrence of any of the conditions specified in Section 14 of the Offer to Purchase, by giving oral or written notice of such extension to the Depositary. Any such extension will be followed as promptly as practicable by public announcement thereof, such announcement to be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date of the Offer. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the rights of a tendering shareholder to withdraw such shareholder's Shares. Tenders of Shares made pursuant to the Offer may be withdrawn by the tendering shareholder at any time prior to the Expiration Date, thereafter such tenders are irrevocable, except that they may also be withdrawn by such shareholder at any time after February 11, 1997 unless thereafter accepted for payment by Purchaser pursuant to the Offer. For the withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover page of the Offer to Purchase. Any such notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover page of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If Share Certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share Certificates, the serial numbers shown on such Share Certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to Purchase), unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer as set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must specify the name and number of the account at the Book-Entry-Transfer Facility to be credited with the withdrawn Shares, in which case a notice of withdrawal will be effective if delivered to the Depositary as set forth in Section 4 of the Offer to Purchase. Withdrawals may not be rescinded, and any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered at any time prior to the Expiration Date by following one of the procedures described in Section 3 of the Offer to Purchase. All questions as to the form and validity (including the time of receipt) of any notice of withdrawal will be determined by Purchaser, in its sole discretion, whose determination will be final and binding. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided Purchaser with the Company's shareholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares whose names appear on the Company's shareholder list and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Questions and requests for assistance or for additional copies of the Offer to Purchase and the related Letter of Transmittal and other tender offer materials may be directed to the Information Agent or the Dealer Manager as set forth below, and copies will be furnished promptly at Purchaser's expense. No fees or commissions will be paid to brokers, dealer or other person (other than the Information Agent and the Dealer Manager) for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: KISSEL-BLAKE INC. 110 Wall Street New York, New York Banks and Brokerage Firms please call: (212) 344-6733 OR CALL TOLL FREE 1-800-554-7733 The Dealer Manager for the Offer is: J.C. Bradford & Co. 330 Commerce Street Nashville, Tennessee 37201 (615) 315-1750 Attention: Tina Redding December 13, 1996 EX-99.A.8 9 PRESS RELEASE DATED DECEMBER 9, 1996 1 FOR IMMEDIATE RELEASE Contact: Stephen Tisdell Chief Financial Officer (615) 297-4255 X265 stisdell@parking.com CENTRAL PARKING CORPORATION AGREES TO ACQUIRE SQUARE INDUSTRIES -------------------- ACQUISITION EXPECTED TO ADD TO FISCAL 1997 EARNINGS NASHVILLE, Tennessee (December 9, 1996) - Central Parking Corporation (NYSE:PK) today announced that it has signed a definitive purchase agreement to acquire all the outstanding shares of Square Industries, Inc. (Nasdaq/NM: SQAI) ("Square Industries"). Pursuant to the agreement, Central Parking Corporation will pay an aggregate of $31.00 per share for each outstanding share of Square Industries common stock. Of that amount, $28.50 will be paid net to the seller in cash; and an additional $2.50 per share will be deposited by Central Parking Corporation in escrow as contingent consideration for distribution to either the shareholders of Square Industries or Central Parking Corporation based upon the resolution of two specific matters, subject to adjustment as provided in the escrow agreement. Square Industries currently has approximately 1.2 million shares of common stock outstanding. The transaction will be a cash tender offer followed by a cash merger to acquire any shares not previously tendered. As a result of the transaction, Square Industries will become a wholly-owned subsidiary of Central Parking Corporation. The transaction has been recommended by the Boards of Directors of Central Parking Corporation and Square Industries. Central Parking Corporation expects to file its notice of cash tender offer with the Securities and Exchange Commission on December 13, 1996 and to launch the offer immediately thereafter. J.C. Bradford & Co. will be the Dealer Manager for the Tender Offer and advised Central Parking Corporation in the transaction. The cash tender offer is subject to Central Parking Corporation receiving at least 66 2/3% (sixty-six and two-thirds percent) of the outstanding stock of Square Industries. The cash required for the transaction will be provided to Central Parking Corporation pursuant to a combination of current cash and a new $150 million credit arrangement. -MORE- 2 Central Parking Agrees to Purchase Square Industries Page 2 December 9, 1996 - -------------------------------------------------------------------------------- Of the escrowed funds, $1.99 per share is consideration which is contingent on the execution of a lease meeting certain criteria with respect to one specific property, and may be held in escrow for up to 12 months. $0.51 per share is consideration which is contingent on the resolution of certain tax issues, and may be held for up to three years. The escrow agreement provides that any interest earned on the escrowed funds will be distributed to the party receiving the funds and that certain expenses will be paid out of the escrowed funds. Monroe J. Carell, Jr., Chairman and Chief Executive Officer of Central Parking Corporation, remarked, "We are confident that this proposed acquisition will contribute positively to our continued growth in earnings, starting in our 1997 fiscal year. The majority of parking facilities which Square Industries controls and manages are in geographic areas where we already have established operations. Since most of Square's facilities are in cities where Central Parking Corporation currently operates, we will be able to achieve significant cost savings as we integrate the acquired properties. We have successfully complemented our internal growth in the past through other strategic acquisitions, and we believe this transaction represents another logical and profitable way of enhancing our overall competitive position." Lowell Harwood, Chairman and Chief Executive Officer of Square Industries, added, "We look forward to joining forces with Central Parking Corporation. We believe that Square Industries' leadership in the Northeast will complement and strengthen Central Parking Corporation's overall competitive position in the parking industry." Square Industries, headquartered in Jersey City, New Jersey, currently operates approximately 117 parking facilities containing over 61,000 spaces located primarily in the Northeast (New York City, 49; Philadelphia, 30; Newark, 17; Pittsburgh, 11 and other cities, 10). Square's facilities include Rockefeller Center and One Penn Plaza as well as sports complexes such as Shea Stadium, home of the New York Mets, and Corel Centre/Palladium in Ottawa, Canada. Square Industries reported revenue of $65.9 million for the year ended December 31, 1995. Square Industries was advised by The Blackstone Group in connection with the transaction. Central Parking Corporation reported revenue of $143.3 million for its fiscal year ended September 30, 1996. Headquartered in Nashville, Tennessee, Central Parking Corporation is a leading provider of parking services in the United States. The Company currently operates in excess of 1,360 parking facilities containing over 546,000 parking spaces located in 32 states, the District of Columbia, the United Kingdom, Mexico, Puerto Rico and Germany. The Company provides parking consulting services in Malaysia and Spain and has a business development office in Amsterdam. - END - EX-99.B.1 10 FORM OF CREDIT AGREEMENT 1 CREDIT AGREEMENT THIS CREDIT AGREEMENT is made and entered into as of this 12th day of December, 1996, by and between CENTRAL PARKING CORPORATION, a Tennessee corporation ("CPC"), CENTRAL PARKING SYSTEM, INC., a Tennessee corporation ("CPS"), and CENTRAL PARKING SYSTEM REALTY, INC. a Tennessee corporation ("CPSR") (CPC, CPS, and CPSR are jointly and severally referred to herein as "Borrowers"), SUNTRUST BANK, NASHVILLE, N.A. ("STB"), and the other banks and lending institutions who become Lenders pursuant to Section 12.12 herein (STB and such other banks and lending institutions are referred to collectively as the "Lenders"), and SUNTRUST BANK, NASHVILLE, N.A., Agent in its capacity as agent for the Lenders and each successive agent for such Lenders as may be appointed from time to time pursuant to Article XII herein (the "Agent"). RECITALS 1. The Borrowers desire that the Lenders extend the Borrowers credit pursuant to the terms of this Credit Agreement. 2. The Lenders are willing to extend the Borrowers credit pursuant to the terms and conditions contained herein. NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the parties hereto agree as follows: Article I. Definitions. 2 As used in this Agreement, the following terms shall have the following meanings, unless the context expressly otherwise requires: The terms defined in this article have the meanings attributed to them in this article. Singular terms shall include the plural as well as the singular, and vice versa. Words of masculine, feminine or neuter gender shall mean and include the correlative words of other genders. All references herein to a separate instrument are to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof. All accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made, in accordance with generally accepted accounting principles applied on a consistent basis. All references herein to "generally accepted accounting principles" refer to such principles as they exist at the date of application thereof. All references herein to designated "Articles", "Sections" and other subdivisions or to lettered Exhibits are to the designated Articles, Sections and other subdivisions hereof and the Exhibits annexed hereto unless the context otherwise clearly indicates. All Article, Section, other subdivision and Exhibit captions herein are used for reference only and in no way limit or describe the scope or intent of, or in any way affect, this Agreement. "Advance" or "Advances" shall mean any and all amounts advanced by Lenders to or for the account of Borrowers hereunder or under the Revolving Credit Loan and all amounts advanced by the Swing Line Lender under the Swing Line Loan, including, without limitation, advances of loan proceeds, payments in overdraft, and amounts -2- 3 evidenced by Letters of Credit. The terms "Advance" and "Loan" are used interchangeably in this Agreement. "Affiliate" of any specified Person means any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with such specified Person. For purposes of this definition, "control" when used with respect to any specified Person means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controls" and "controlled" have meanings correlative to the foregoing. "Agent" means SunTrust Bank, Nashville, N.A. or its successor as appointed pursuant to the provisions of Article XII herein. "Agreement" means this Credit Agreement (including all exhibits hereto) as the same may be modified, amended, or supplemented from time to time. "Applicable Margin" means: (i) From the Closing Date through that date which is the earlier of the St. Louis JV Sale or April 30, 1997: 1.50% per annum; (ii) From the earlier of the St. Louis JV Sale or April 30, 1997 through that date which is five (5) Business Days from Agent's receipt of CPC's quarterly consolidated Financial Statements for the period ending March 31, 1997: 1.25% per annum. (iii) From that date which is five (5) Business Days from Agent's receipt of CPC's quarterly consolidated Financial Statements for the period ending -3- 4 March 31, 1997 through that date which is five (5) Business Days from Agent's receipt of a senior unsecured debt rating from Standard and Poor's Corporation or Moody's Investors Services, Inc. for CPC (on a consolidated basis), the Applicable Margin shall be determined in accordance with the following table: CPC's Ratio of Funded Debt/EBITDA
CPC's Ratio of Funded Debt/ Total Capitalization >3.0 <3.0/>2.0 <2.0>1.0 <1.0 >0.50 1.25% 1.0% .75% .625% - - <0.50/>040 1.0% .75% .625% .50% - <0.40/>0.30 .75% .625% .50% .375% - <0.30 .625% .50% .375% .25%
For purposes of determining the Applicable Margin in the table set forth above, CPC's ratios (as determined on a consolidated basis) of Funded Debt to EBITDA and Funded Debt to Total Capitalization will be measured quarterly on the Determination Date; and (iv) From that date which is five (5) Business Days from Agent's receipt of the senior unsecured debt rating from Standard and Poor's Corporation or Moody's Investors Services, Inc. for CPC (on a consolidated basis) until the Maturity Date, the Applicable Margin shall be based on the most recently published rating as follows: -4- 5
Standard & Poor's Applicable and Moody's Rating Margin Lower than BB+ or Bal 1.25% per annum BB+ or Bal 1.00% per annum BBB- or Baa3 .75% per annum BBB or Baa2 .50% per annum BBB+ or Baal .375% per annum A- or A3 or above .25% per annum
"Applicable Rate" means either the Base Rate Option or the LIBOR Rate Option, except in the case of an Advance under the Swing Line Loan, the Applicable Rate shall mean the Swing Line Rate. "Assignment and Acceptance" means an Assignment and Acceptance form executed by a Lender assigning its interest in the Revolving Credit Loan, or any portion therein (other than as participation), to an Eligible Assignee in a form reasonably satisfactory to Agent. "Base Rate" means the rate of interest equal to the higher of (i) the rate of interest most recently announced by Agent as its reference, base, or prime lending rate, as the case may be, for Dollar loans in the United States; or (ii) the Federal Funds Rate (as in effect from time to time) plus one-half of one percent (1/2%) per annum. The Base Rate is determined daily. "Base Rate Option" shall mean that rate of interest equal to the Base Rate. "Borrowers" shall have the same meaning attributed to that term in the preamble to this Agreement. -5- 6 "Borrowing Request" means a request in the form of Exhibit A hereto submitted by CPC on behalf of Borrowers for an Advance as described in Section 2.05 of this Agreement. "Business Day" means any day other than a Saturday, Sunday or day on which commercial banks are authorized to close for business in New York City or the State of Tennessee and if the applicable Business Day relates to any Advances made under the LIBOR Rate Option, any day on which dealings are carried out in the London interbank market. "Closing Date" means the 12th day of December, 1996. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute. "Conditions Precedent" means those matters or events that must be completed or must occur or exist prior to Lenders' being obligated to fund any Advance, including, but not limited to, those matters described in Article V hereof. "Consolidated Entity" or "Consolidated Entities" means: (a) the Borrowers, (b) all present and future Guarantors, (c) all present and future Subsidiaries, Controlled Partnerships, and Controlled LLC's of any of the Borrowers or Guarantors, and (d) any Person the financial statements of which are consolidated with any other Consolidated Entity identified in subparts (a), (b), and (c) hereof. "Consolidated Net Income" shall mean for any fiscal period the consolidated net income before extraordinary items of CPC and all Persons whose financial statements are consolidated with those of CPC, as calculated in accordance with GAAP. -6- 7 "Consolidated Net Worth" means the excess of (A) total assets over (B) total liabilities, for CPC and all Persons whose financial statements are consolidated with those of CPC, as determined in accordance with GAAP. "Controlled LLC" means a limited liability company, the ownership and management of which is held by and/or controlled by any of the Borrowers or any Consolidated Entity. "Controlled Partnership" means a general partnership or joint venture of which any of the Borrowers or any other Consolidated Entity is a general partner or joint venturer, or a limited partnership which has one of the Borrowers or any other Consolidated Entity as a general partner and with respect to which general partnership, joint venture, or limited partnership, the Borrowers or any other Consolidated Entity serving as general partner or joint venturer is entitled to receive not less than 51% of any distributions of cash or other Property made to the partners or joint venturers thereof. "Debt" means, with respect to any Person, all obligations of such Person, contingent or otherwise, which in accordance with GAAP would be classified on a balance sheet of such Person as liabilities of such Person, but in any event including (a) liabilities secured by any mortgage, pledge or lien existing on Property owned by such Person and subject to such mortgage, pledge or lien, whether or not the liability secured thereby shall have been assumed by such Person, (b) all indebtedness and other similar monetary obligations of such Person, (c) all guaranties, obligations in respect of letters of credit, endorsements (other than endorsements of negotiable instruments for purposes of collection in the ordinary course of business), obligations to purchase goods or services for the purpose of supplying funds for the purchase or payment of Debt of -7- 8 others and other contingent obligations in respect of, or to purchase, or otherwise acquire, or advance funds for the purchase of, Debt of others, (d) all obligations of such Person to indemnify another Person to the extent of the amount of indemnity, if any, which would be payable by such Person at the time of determination of Debt and (e) all obligations of such Person under capital leases. "Default Rate" means interest rate equal to two percent (2%) per annum above the Base Rate. "Default" or "Event of Default" means the occurrence of any of the events specified in Section 8.01 hereof, whether or not any requirement for notice or lapse of time or other condition precedent has been satisfied. "Default Conditions" or "Default Condition" means the occurrence of any of the events specified in Section 8.03 hereof. "Determination Date" shall be that date which is five (5) Business Days subsequent to Agent's receipt of CPC's most recent Financial Statements and most recent quarterly consolidated calculations of the Funded Debt to EBITDA Ratio and the Funded Debt to Total Capitalization Ratio. "EBITDA" (Earnings Before Interest, Taxes, Depreciation and Amortization) means for CPC as determined on a consolidated basis, for any period, an amount equal to the sum of: (A) all pre-tax income, plus (B) depreciation, plus (C) amortization, plus (D) total interest expense (net of interest income). "Eligible Assignee" means: (i) a commercial bank organized under the laws of the United States or any state thereof having total assets in excess of $1,000,000,000 or -8- 9 any commercial finance or asset based lending Affiliate of any such commercial bank which has complied with Section 12.12 herein, or (ii) any Lender. "Environmental Law" means any federal, state, or local law, statute, ordinance, or regulation applicable or pertaining to health, industrial hygiene, waste materials, removal of waste materials, oil, gas, underground storage tanks, Hazardous Substances, other environmental conditions on, under, or affecting any of the Borrowers' Property. "Equity Proceeds" means the net proceeds obtained by any Consolidated Entity through the public or private placement of shares of stock of any Consolidated Entity or the issuance of subordinated debt of any Consolidated Entity (the form, substance, and terms of which subordinated debt shall first be determined to be acceptable to Lenders). "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, including (unless the context otherwise requires) any rules or regulations promulgated thereunder. "Facing Fee" means the product of (a) .125% multiplied by (b) the face amount of any Letter of Credit. "Federal Funds Rate" means for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of Atlanta, or, if such rate is not so published for any day that is a Business Day, the average of the -9- 10 quotations for such day on such transactions received by the Agent from three (3) Federal funds brokers of recognized standing selected by the Agent. "Financial Statements" means (i) the consolidated financial statement or statements of Borrowers and Consolidated Entities, described or referenced in Section 4.06 hereof and delivered with this Agreement to Agent for distribution to Lenders, and (ii) subsequent financial statements required to be provided pursuant to this Agreement. "Fiscal Quarter" means each of the quarters of the Fiscal Year ending on the last day of each March, June, September, and December. "Fiscal Year" or "Annually" means the twelve-month accounting period ending September 30th of each year and presently used by the Borrowers respectively as their fiscal year for accounting purposes. "Funded Debt" shall mean, without duplication, all indebtedness for money borrowed, purchase money mortgages, capitalized leases, amounts evidenced by the aggregate face amount of all outstanding letters of credit, conditional sales contracts and similar title retention debt instruments, all Debt guaranteed by CPC and all Persons whose financial statements are consolidated with the financial statement of CPC, and all other direct and contingent Debt. The calculation of Funded Debt shall include all Funded Debt of CPC and all Persons whose financial statements are consolidated with the financial statements of CPC, plus all Funded Debt of other Persons, which has been guaranteed by CPC and any Person whose financial statements are consolidated with the financial statements of CPC or which is supported by a letter of credit issued for the account of CPC and any Person whose financial statements are consolidated with the -10- 11 financial statements of CPC, or as to which and to the extent which CPC and any other Person whose financial statements are consolidated with the financial statements of CPC or their assets have become liable for payment thereof. "Funding Account" shall mean that certain account maintained by CPC with Agent, bearing account no. ________. "GAAP" means generally accepted accounting principles in the United States. "Guarantor" and "Guarantors" mean each and all of Central Parking Systems of the U.K. and all other Person described on Exhibit G herein. "Guaranty" and "Guarantees" mean the guaranty agreements executed by each of the Guarantors in form and substance approved by Lenders. "Hazardous Substances" means those substances included within the definition of hazardous substances, hazardous materials, toxic substances, or solid waste under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss. 9601, et seq.; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. ss. 6901, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801, et seq.; any applicable state law and in the regulations promulgated pursuant to such acts and laws, and such other substances, materials, and waste which are or become regulated under any Environmental Law. "Interest Expense" shall mean the aggregate interest expense and amortization of deferred loan costs of CPC and all Persons whose financial statements are consolidated with the financial statement of CPC, on a consolidated basis for such period (calculated without regard to any limitations on the payment thereof), imputed interest on capitalized -11- 12 lease obligations of CPC and all Persons whose financial statements are consolidated with the financial statement of CPC, and net costs under interest rate protection agreements for CPC and all Persons whose financial statements are consolidated with the financial statements of CPC, all as determined in conformity with GAAP. "Interest Rate Period" shall be applicable only to Advances calculated using the LIBOR Rate Option, and shall mean a one month, two month, three month, or six month time period selected by Borrowers pursuant to Section 2.04 herein. No Interest Rate Period may end on a date beyond the Maturity Date. "Lender" or "Lenders" means STB, the other banks and lending institutions listed on the signature pages hereof and each permitted assignee thereof, if any, pursuant to Section 12.12, but shall not include any participant. "Letter of Credit Application Agreement" means that certain Application and Agreement for Issuance of a Letter of Credit in the form of Exhibit B hereto or any other similar form required by the Agent appropriately completed by any one of the Borrowers pursuant to Section 2.02(a) herein. "Letter of Credit Fee" means an amount equal to the product of: (a) the Applicable Margin effective as of the date the Letter of Credit is issued, multiplied by (b) the face amount of the Letter of Credit. "Letters of Credit" has the same meaning as set forth in Section 2.02 herein. "LIBOR Rate" means the offered rates for deposits in U.S. Dollars for, as applicable, either one (1) month periods, two (2) month periods, three (3) month periods, or six (6) month periods, as selected by Borrowers in accordance with the terms of -12- 13 Section 2.04, as quoted on the Telerate System subscribed to by Agent, and which appears on Telerate Page 3750 as of 11:00 a.m., London time, two (2) Business Days prior to the beginning of any applicable Interest Rate Period. If any of such one-month or two-month or three-month or six-month rate, as the case may be, is unavailable on the Telerate System, then such rate shall be determined by and based on any other interest rate reporting service of generally recognized standing designated in advance in writing by the Agent to the Borrowers. "LIBOR Rate Option" means that rate of interest equal to the LIBOR Rate, plus the Applicable Margin. "Lien" means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute, or contract, and including, but not limited to, the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale, or trust receipt or a lease, consignment, or bailment for security purposes. The term "Lien" shall include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting the Property. For the purposes of this Agreement, Borrowers shall be deemed to be the owner of any Property that any of Borrowers has acquired or holds subject to a conditional sale agreement, financing lease, or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes. -13- 14 "Loan" or "Loans" means any borrowing by Borrowers under this Agreement, and/or any extension of credit by Lenders or Swing Line Lender to or for Borrowers pursuant to this Agreement, the Revolving Credit Loan, the Swing Line Loan, or any other Loan Document, including any renewal, amendment, extension, or modification thereof. "Loan Documents" means, collectively, each document, paper or certificate executed, furnished or delivered in connection with this Agreement (whether before, at, or after the Closing Date), including, without limitation, this Agreement, the Revolving Credit Notes, the Swing Line Note, the Guarantees, and all other documents, certificates, reports, and instruments that this Agreement requires or that were executed or delivered (or both) at Agent's request. "Majority Lenders" means those Lenders with an aggregate Pro Rata Share equal to 66 2/3%. "Material Subsidiary" means any Consolidated Entity, now owned or hereafter existing or acquired, which has become a Guarantor and which comprises ten percent (10%) or more of CPC's EBITDA in any Fiscal Quarter. "Maturity Date" for the Revolving Credit Loan and the Swing Line Loan shall mean the earlier of (i) January 31, 2000, or (ii) the date the repayment of either or both of the Revolving Credit Loan or Swing Line Loan is accelerated pursuant to Article VIII herein. "Maximum Total Amount" means the principal amount of $150,000,000, as reduced to $120,000,000 pursuant to Section 2.01(b) herein and as further reduced to -14- 15 $85,000,000 pursuant to Section 2.01(c) herein, less the aggregate face amounts of all outstanding Letters of Credit, less the aggregate outstanding principal amount of the Swing Line Note. "PBGC" means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. "Permitted Encumbrances" means: (i) taxes, assessments, and other governmental charges that are not delinquent or that are being contested in good faith by appropriate proceedings duly pursued; (ii) mechanic's, materialmen's, contractors', landlords', or other similar Liens arising in the ordinary course of business, securing obligations that are not delinquent or that are being contested in good faith by appropriate proceedings duly pursued; and (iii) restrictions, exceptions, reservations, easements, and restrictive covenants affecting any of Borrowers' real property and that do not materially and adversely affect such real property. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government, or any agency or political subdivision thereof, or any other form of entity. "Plan" means any employee benefit or other plan established or maintained, or to which contributions have been made, by the Borrowers or any Consolidated Entity and covered by Title IV of ERISA or to which Section 412 of the Code applies. "Principal Office" means the principal office of the Agent located at 201 Fourth Avenue North, Nashville, Tennessee 37219. -15- 16 "Pro Rata Share" means the percentage of interest held by each of the Lenders as set forth opposite their respective signature hereto, as such percentage may be adjusted from time to time as a result of assignments or amendments made pursuant to this Agreement. "Property" or "Properties" means any interest in any kind of property or asset, whether real, personal, or mixed, or tangible or intangible. "Revolving Credit Loan" means the aggregate amount of all Advances under the Revolving Credit Notes. "Revolving Credit Loan Commitment" means, relative to any Lender, such Lender's obligation to make Advances pursuant to Section 2.01(a) of this Agreement. "Revolving Credit Note" and "Revolving Credit Notes" means, as the context may require: (a) any of the revolving credit notes executed by the Borrowers, jointly and severally, payable to the order of any Lender, substantially in the form of Exhibit C hereto, originally in the principal amounts each such Lender's Pro Rata Share bears to the Maximum Total Amount, evidencing the aggregate indebtedness of the Borrowers to such Lender resulting from the outstanding Revolving Credit Loan, as each such Revolving Credit Note may from time to time be amended, increased, decreased, extended, renewed, restated, and/or changed in any way, and all other promissory notes accepted from time to time in amendment, renewal, payment and/or substitution thereof and/or therefor, and/or (b) collectively, all of the foregoing. -16- 17 "Square Industries, Inc. Acquisition" means the acquisition by CPC of a controlling interest in Square Industries, Inc., a New York corporation, all as described on Exhibit D hereto. "St. Louis JV Sale" has the meaning set forth on Exhibit D-1 hereto. "Subsidiary" means any corporation of which more than fifty percent (50%) of the issued and outstanding Voting Stock is owned or controlled at the time as of which any determination is being made directly or indirectly by any Person. "Swing Line Lender" shall mean the Agent and its successors and assigns. "Swing Line Loan" means all Advances made under the Swing Line Note up to the Swing Line Subcommitment. "Swing Line Note" means the revolving credit note of the Borrowers, jointly and severally, payable to the order of the Swing Line Lender, in substantially the form of Exhibit E hereto, in the principal amount of up to $5,000,000 issued pursuant to Section 2.03 herein, as such may be from time to time supplemented, modified, amended, renewed or extended. "Swing Line Rate" shall be a rate of interest equal to the LIBOR Rate Option for one-month periods plus one-half of one percent (.50%) per annum. "Swing Line Subcommitment" shall mean $5,000,000. "Total Capitalization" means an amount equal to the sum of Funded Debt plus Consolidated Net Worth. -17- 18 "Voting Stock" means securities of any class of a corporation, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or persons performing similar functions). Article II. The Credit. Section 2.01 The Revolving Credit Loan. (a) Subject to the conditions and pursuant to the terms of the Loan Documents and in reliance upon the representations, warranties, and covenants set forth in the Loan Documents, in the aggregate for all Lenders up to the Maximum Total Amount and on any Business Day occurring prior to the Maturity Date, each Lender severally agrees to make Advances (relative to such Lender) to the Borrowers under the Revolving Credit Loan equal to such Lender's Pro Rata Share of the aggregate amount of the borrowing of total Advances requested by the Borrowers to be made on such day (that are not requested by the Borrowers to be made under the Swing Line Loan). (b) On or prior to February 28, 1997, the Borrowers shall cause the Maximum Total Amount to be permanently reduced to a principal amount of no greater than $120,000,000; provided that if the Borrowers fail to permanently reduce the Maximum Total Amount to an amount no greater than $120,000,000 on or before February 28, 1997, the Borrowers shall pay to Agent no later than March 1, 1997 for distribution to Lenders based on their Pro Rata Share a one-time commitment fee equal to $225,000. Should the Borrowers fail to permanently reduce the Maximum Total Amount to an amount no greater than $120,000,000 on or before February 28, 1997 and should the Borrowers pay to Agent the commitment fee of $225,000 no later than March 1, 1997, then the Maximum Total Amount may remain at $150,000,000 until the earlier of the St. Louis JV Sale or April 30, 1997, at which time the Maximum Total Amount shall be reduced -18- 19 to $120,000,000. Should the Borrowers comply with the terms of the immediately preceding sentence, but should the Borrowers fail to reduce the Maximum Total Amount to $120,000,000 on or before the earlier of the St. Louis JV Sale or April 30, 1997, then the Borrowers shall be deemed to have breached their agreements contained herein and an Event of Default shall be deemed to exist. Should the Borrowers fail to permanently reduce the Maximum Total Amount to an amount no greater than $120,000,000 on or before February 28, 1997 and should the Borrowers fail to pay to Agent the commitment fee of $225,000 by March 1, 1997, then the Borrowers shall be deemed to have breached their agreements contained herein and an Event of Default shall be deemed to exist. (c) Notwithstanding any provision contained herein or in any Revolving Credit Note to the contrary, the Borrowers shall cause the Maximum Total Amount to be permanently reduced to a principal amount of no greater than $85,000,000 upon the earlier to occur of: (i) September 30, 1997, or (ii) notification by Borrowers to Agent that the Square Industries, Inc. Acquisition will not occur, or (iii) notification by Borrowers to agent that the Square Industries, Inc. Acquisition will occur only as a transaction in which the Borrowers exchange shares of stock for a controlling interest in Square Industries, Inc., or (d) CPC raises Equity Proceeds of at least $35,000,000. At any time not more than ten (10) Business Days prior to September 30, 1997 and not less than five (5) Business Days prior to September 30, 1997, the Borrowers may request that the Lenders extend the date set forth in subpart (i) of the preceding paragraph from September 30, 1997 to December 31, 1997. The Borrowers shall submit such a request in writing delivered to Agent and accompanied by a $50,000 extension fee. The Lenders have no -19- 20 obligation to extend the date, but in the event that the Lenders, in the exercise of their sole discretion, agree to extend the date set forth in subpart (i) above, the Agent shall so notify the Borrowers in writing prior to September 30, 1997 and the Agent shall distribute the $50,000 extension fee to the Lenders based on their Pro Rata Share. In the event that the Lenders elect not to extend the date set forth in subpart (i) above, the Agent shall so notify the Borrowers in writing prior to September 30, 1997 and the Agent shall return the extension fee to the Borrowers together with such notice. In the event that the Lenders extend the date in subpart (i) above to December 31, 1997, then at any time not more than ten (10) Business Days prior to December 31, 1997 and not less than five (5) Business Days prior to December 31, 1997, the Borrowers may request that the Lenders extend the date set forth in subpart (i), as previously extended, from December 31, 1997 to March 31, 1998. The Borrowers shall submit such a request in writing delivered to Agent and accompanied by a $50,000 extension fee. The Lenders have no obligation to extend the date, but in the event that the Lenders, in the exercise of their sole discretion, agree to extend the date, the Agent shall so notify the Borrowers in writing prior to December 31, 1997 and the Agent shall distribute the $50,000 extension fee to the Lenders based on their Pro Rata Share. In the event that the Lenders elect not to extend the date to March 31, 1998, the Agent shall so notify the Borrowers in writing prior to December 31, 1997 and the Agent shall return the extension fee to the Borrowers together with such notice. (d) The Maximum Total Amount available to be advanced under the Revolving Credit Loan shall be reduced dollar-for-dollar by the sum of: (i) the face amount of any outstanding Letter of Credit, and (ii) the principal amount outstanding from time to time under the Swing -20- 21 Line Note. In no event shall the Borrowers permit the sum of (x) the face amount of outstanding Letters of Credit; plus (y) the outstanding principal amount of the Swing Line Note, plus (z) the outstanding principal amount of the Revolving Credit Loan to exceed the Maximum Total Amount. (e) On the terms and subject to the conditions hereof and the Revolving Credit Notes, and provided no Event of Default or Default Condition shall have occurred, the Borrowers, jointly and severally, may borrow, repay, and reborrow under the Revolving Credit Loan. (f) The failure of any Lender to make an Advance under its Revolving Credit Loan Commitment shall not relieve any other Lender of its obligations, if any, hereunder to make Advances under such Lender's Revolving Credit Loan Commitment, but no Lender shall be responsible for the failure of any other Lender to make an Advance to be made by such other Lender on the date of any requested borrowing. Section 2.02 Letters of Credit. (a) Provided no Event of Default or Default Condition exists, and subject to the terms and conditions of the Loan Documents, the Lenders have agreed that the Agent on behalf of the Lenders will issue to third party beneficiaries on Borrowers' account (or on the account of any one of the entities comprising the Borrowers), standby letters of credit ("Letters of Credit") in the face amount of up to $40,000,000 in the aggregate; provided and except, the Borrowers agree that subsequent to January 31, 1997, Borrowers shall cause the aggregate amount of all outstanding Letters of Credit to be reduced to a cumulative, aggregate face amount equal to no more than $15,000,000. Subsequent to January 31, 1997, Agent on behalf of the Lenders shall not be required to issue Letters of Credit in an aggregate face amount exceeding $15,000,000. In connection with the issuance of each Letter of Credit, -21- 22 the Borrowers shall complete a Letter of Credit Application Agreement, and such other documentation in form and substance as required by Agent, and the Borrowers shall cause the Guarantors to guarantee the Borrowers' performance of such agreements pursuant to a guaranty in form and substance as required by Agent. (b) In connection with the issuance of any Letter of Credit, the Borrowers shall pay to Agent a Letter of Credit Fee calculated on a twelve (12) month basis and to be apportioned and paid by Agent to each of the Lenders pursuant to the Pro Rata Share of each Lender; provided that if the term of any Letter of Credit is in excess of twelve (12) months, the Letter of Credit Fee shall be increased to include the time period in excess of twelve (12) months; provided that the Letter of Credit Fee for the $36,400,000 Letter of Credit issued in connection with the St. Louis JV Sale shall not be annualized but shall be based on the time period measured from the date of issuance to the expiration date. (c) In connection with the issuance of any Letter of Credit, the Borrowers shall pay to Agent a Facing Fee calculated on a twelve (12) month basis and to be retained by Agent; provided that if the term of any Letter of Credit is in excess of twelve (12) months, the Facing Fee shall be increased to include the time period in excess of twelve (12) months; provided that the Facing Fee for the $36,400,000 Letter of Credit issued in connection with the St. Louis JV Sale shall not be annualized but shall be based on the time period measured from date of issuance to the expiration date. (d) The Borrowers hereby authorize CPC to act as their agent to request from Agent the issuance of any Letter of Credit. Any request for the issuance of a Letter of Credit shall be accompanied by a Letter of Credit Application Agreement. The Agent agrees to use its best efforts to issue and deliver to CPC on behalf of the Borrowers (or any one of them) each requested Letter of Credit within three (3) Business Days following submission by CPC of a properly completed Letter of Credit Application Agreement. -22- 23 (e) No Letter of Credit shall be issued for a term that extends beyond the Maturity Date. The language of each Letter of Credit, including the requirements for a draw thereunder, shall be subject to the reasonable approval of the Agent. (f) The issuance of any Letter of Credit shall reduce the Borrowers' ability to receive Advances under the Revolving Credit Loan. Additionally, any payment by Agent under a Letter of Credit shall be treated as an Advance under the Revolving Credit Loan, and the terms and provisions of repayment shall be treated as an Advance under the Revolving Credit Loan. (g) The Lenders shall participate in all Letters of Credit requested by CPC on behalf of the Borrowers. Each Lender, upon issuance of a Letter of Credit by the Agent, shall be deemed to have purchased without recourse a risk participation from the Agent in such Letter of Credit and the obligations arising thereunder, in each case in an amount equal to its Pro Rata Share of all obligations under such Letter of Credit and shall absolutely, unconditionally, and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to the Agent therefor and discharge when due, its Pro Rata Share of all obligations arising under such Letter of Credit. Without limiting the scope and nature of each Lender's participation in any Letter of Credit, to the extent that the Agent has not been reimbursed as required hereunder or under any such Letter of Credit, each such Lender shall pay to the Agent its Pro Rata Share of such unreimbursed drawing in same day funds on the day of notification by the Agent of an unreimbursed drawing. The obligation of each Lender to so reimburse the Agent shall be absolute and unconditional and shall not be affected by the occurrence of a Default Condition or an Event of Default or any other occurrence or event. Section 2.03 Swing Line Loan. -23- 24 (a) Swing Line Subcommitment. Subject to and upon the terms and conditions herein set forth, the Swing Line Lender severally establishes in favor of the Borrowers, its Swing Line Subcommitment. The Swing Line Lender, subject to and upon the terms and conditions set forth herein, from time to time, agrees to make to the Borrowers Advances under the Swing Line Loan in an aggregate principal amount outstanding at any time not to exceed the Swing Line Subcommitment. Borrowers, jointly and severally, shall be entitled to repay and reborrow Advances under the Swing Line Loan in accordance with the provisions hereof and the Swing Line Note. (b) Amount and Terms of Swing Line Loan. Each Advance under the Swing Line Loan shall be made from the Swing Line Lender at the Swing Line Rate in accordance with the borrowing procedure specified in Section 2.05(c). Each Advance under the Swing Line Loan shall be in a principal amount of not less than $100,000 and shall be in multiples of $100,000. The Borrowers, jointly and severally, shall be required to repay any Advance made under the Swing Line Loan in full within thirty (30) days after the Advance is made. (c) Repayment of Swing Line Loan by Revolving Credit Loan. If (i) after giving effect to any request for an Advance, the aggregate principal amount of the Revolving Credit Loan (including the face amount of all outstanding Letters of Credit), plus Advances under the Swing Line Loan would exceed the maximum amount of the respective Revolving Credit Note held by the Swing Line Lender, or (ii) there are any outstanding Advances under the Swing Line Loan upon the occurrence of an Event of Default, then each Lender hereby agrees, upon the request of the Swing Line Lender, -24- 25 to make an Advance under the Revolving Credit Loan in an amount equal to such Lender's Pro Rata Share of the outstanding principal amount of the Swing Line Loan (the "Refundable Swing Line Loan") outstanding on the date such notice is given. On or before 11:00 a.m. (Nashville, Tennessee time) on the first Business Day following receipt by each Lender of a request to make the Advances referenced in the preceding sentence, each such Lender (other than the Swing Line Lender) shall deposit in an account specified by the Agent to the Lenders from time to time the amount as requested in same day funds, whereupon such funds shall be immediately delivered to the Swing Line Lender (and not the Borrowers) and applied to repay the Refundable Swing Line Loan. On the day such Advances are made by the Lenders, the Swing Line Lender's Pro Rata Share of the Refundable Swing Line Loan shall be deemed to be paid with the proceeds of the Advance made by the Swing Line Lender. Upon the making of any Advance under the Revolving Credit Loan pursuant to this subpart (c), the amount so funded shall become due under each Lender's Revolving Credit Note and shall no longer be owed under the Swing Line Note. Additionally, the Applicable Rate on such Refundable Swing Line Loan shall be the LIBOR Rate Option, calculated on a one month Interest Rate Period. Each Lender's obligation to make Advances under its Revolving Credit Note referred to in this subpart (c) shall be absolute and unconditional and shall not be affected by any circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. (d) Purchasing of Participations. In the event that (i) the Borrowers or any Guarantor is subject to any bankruptcy or insolvency proceedings, or (ii) if the Swing -25- 26 Line Lender otherwise requests, each Lender shall acquire without recourse or warranty an undivided participation interest in the Swing Line Loan equal to such Lender's Pro Rata Share by paying to the Swing Line Lender, in same day funds, an amount equal to such Lender's Pro Rata Share of the Swing Line Loan. From and after the date on which any Lender purchases an undivided participation interest in the Swing Line Loan pursuant to this clause, the Swing Line Lender shall distribute to such Lender (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participation interest is outstanding and funded) its ratable amount of all payments of principal and interest in respect of the Swing Line Loan in like funds as received; provided, however, that in the event such payment received by the Swing Line Lender is required to be returned to the Borrower, such Lender shall return to the Swing Line Lender the portion of any amounts which such Lender had received from the Swing Line Lender in like funds. Section 2.04 Interest Rate. (a) The Applicable Rate for Advances under the Revolving Credit Loan shall either be the Base Rate Option or the LIBOR Rate Option, as selected by Borrowers pursuant to the procedure specified in parts (b) and (c) below. The applicable Rate for the Swing Line Loan shall be the Swing Line Rate. (b) So long as the Borrowers comply with Section 2.05 herein, the Borrowers may elect that any Advance under the Revolving Credit Loan shall bear interest at either the Base Rate Option or the LIBOR Rate Option. In the event that the Borrowers fail to designate an Applicable Rate, or in the event the Borrowers fails to make an interest rate -26- 27 election in strict compliance herewith, then it shall be conclusively presumed that the Borrowers have selected the LIBOR Rate Option with a one (1) month Interest Rate Period. (c) Within two (2) Business Days prior to the expiration of any applicable Interest Rate Period, the Borrowers shall designate a new Applicable Rate. In the event that the Borrowers fails to designate a new Applicable Rate within two (2) Business Days prior to the expiration of any applicable Interest Rate Period, then it shall be conclusively presumed that the Borrowers have selected the LIBOR Rate Option with a one (1) month Interest Rate Period as the Applicable Rate to be effective on the expiration of such Interest Rate Period. (d) In the event that the Borrowers select the Base Rate Option as the Applicable Rate, then the Base Rate Option shall remain effective until two (2) Business days subsequent to the date Agent receives notice that Borrowers have elected to change the Applicable Rate to a LIBOR Rate Option. (e) Upon the occurrence of an Event of Default, the indebtedness described herein and all obligations hereunder shall bear interest at the Default Rate. (f) All interest shall be calculated on the basis of a 360-day year and actual days elapsed. Section 2.05 Borrowing Procedure. (a) In General. The Borrowers hereby authorize CPC to act as their agent to request from Agent all Advances, and the Borrowers authorize the Agent to cause all Advances to be deposited into the Funding Account. Neither the Agent nor the Lenders shall have any obligation to ensure that CPC distributes Advances in any particular -27- 28 manner. Neither the Agent nor the Lenders shall have any liability to any of the Borrowers or to any Person arising out of or in connection with the manner in which CPC distributes or disburses monies from the Funding Account. Any one of the Persons who hold the following titles at CPC is authorized to request an Advance: Chairman of the Board of Directors, President, or Chief Financial Officer. (b) Revolving Credit Loan. CPC shall give the Agent at least three (3) Business Day's prior written notice of a proposed Advance under the Revolving Credit Loan by presentation of a Borrowing Request. With regard to requests for Advances under the Revolving Credit Loan, the following shall apply: (a) in the event that the Borrowers designate the Base Rate Option as the Applicable Rate, the requested Advance must be in a minimum amount of $500,000 and in increments of $100,000; and (b) in the event the Borrowers designate the LIBOR Rate Option as the requested Applicable Rate, the requested Advance must be in a minimum amount of $5,000,000 and in increments of $500,000. (c) Swing Line Note. CPC may give the Agent oral notice of a request for an Advance under the Swing Line Note no later than 11:00 A.M. (Nashville, Tennessee time) followed by facsimile transmission sent to Agent. Borrowers shall specify that such request is a request under the Swing Line Note, and subject to availability under the Swing Line Note and provided the request is made no later than 11:00 A.M. (Nashville, Tennessee time), the Agent shall make the Advance by crediting the Funding Account no later than the close of business on the day of the borrowing. With regard to requests for Advances under the Swing Line Loan, the following shall apply: Advances shall be in a minimum amount of $100,000 and in increments of $100,000. -28- 29 (d) No Liability. The Agent and the Lenders shall have no liability to Borrowers (or to any of them) arising out of their compliance with the borrowing procedure specified in this Section 2.05, except for acts of gross negligence or willful misconduct. (e) Warranty. The giving of notice on behalf of CPC that the Borrowers are requesting an Advance shall constitute a warranty by the Borrowers that as of the date of the request and as of the date the Advance is made: (i) no Event of Default or Default Condition has occurred; and (ii) the representations and warranties contained in Article IV of this Agreement remain true, correct, and accurate, except that the representation contained in Section 4.13 herein shall not be deemed to be a continuing representation. Section 2.06 Use of Proceeds. Proceeds of the Revolving Credit Loan and the Swing Line Loan shall be used to finance the acquisition of four (4) parking garages in the St. Louis, Missouri area, to finance the Square Industries, Inc. Acquisition, to fund Borrowers' working capital and capital expenditures needs, for Borrowers' general corporate purposes, and to repay and to cancel all outstanding amounts owed to STB under a $20,000,000 credit facility. Section 2.07 Participation. Any Lender shall have the right to enter into one or more participation agreements with one or more Affiliates, banks, or financial institutions on such terms and conditions as such Lender shall deem advisable. Borrowers shall furnish a sufficient number of copies of reports and certificates to Lenders so that Lenders and each participating lender shall receive a copy of each such document. Section 2.08 Term of This Agreement. This Agreement shall be binding on the Borrowers so long as any portion of the indebtedness described herein remains outstanding, -29- 30 provided and except, Borrowers' representations, warranties, and indemnity agreements shall survive the payment in full of such indebtedness. Section 2.09 Payments to Principal Office; Debit Authority. Each payment under the Revolving Credit Loan shall be made without defense, setoff, or counterclaim to Agent at its Principal Office in U.S. Dollars for the account of Lenders and in immediately available funds before 1:00 p.m. (Nashville, Tennessee time) on the date such payment is due. The Agent may, but shall not be obligated to, debit the amount of any such payment which is not made by such time to any deposit account of any of the Borrowers with the Agent. Each payment under the Swing Line Loan shall be made to Agent at its Principal Office in U.S. Dollars and in immediately available funds before 1:00 p.m. (Nashville, Tennessee time) on the date such payment is due. Section 2.10 (a) Required Prepayment. Whenever the aggregate amount outstanding under the Revolving Credit Loan exceeds the Maximum Total Amount, the Borrowers shall immediately pay to Lenders such amounts as may be necessary to cause the aggregate principal amount outstanding under the Revolving Credit Loan to be equal to or less than the Maximum Total Amount. Whenever the amount outstanding under any individual Revolving Credit Note exceeds the maximum amount permitted to be outstanding under such Revolving Credit Note, the Borrowers shall immediately pay to the respective Lender such amounts as may be necessary to cause the principal amount outstanding under such Revolving Credit Note to be equal to or less than such Revolving Credit Note's maximum permitted amount; and whenever the amount outstanding under the -30- 31 Swing Line Note exceeds the maximum amount permitted to be outstanding under the Swing Line Loan, Borrowers shall immediately pay to Agent such amounts as may be necessary to cause the principal amount outstanding under the Swing Line Note to be equal to or less than the maximum amount permitted to be outstanding under the Swing Line Loan; (b) Optional Prepayment. (i) Upon ten (10) days prior written notice delivered from Borrowers to Agent, the Borrowers may prepay the Revolving Credit Notes and/or the Swing Line Note in whole or in part with accrued interest to the date of such prepayment or the amount prepaid, provided that each partial prepayment shall be in a principal amount of not less than $5,000,000 in the case of the Revolving Credit Notes and $10,000 in the case of the Swing Line Note. Any such prepayments shall be subject to payment of the amounts described in Section 2.11, in the manner set forth therein, but not to any other prepayment charge, fee or premium. All prepayments will be applied first to unpaid expenses (if any), then to breakage costs (if any), then to accrued interest, then to principal in the inverse order of maturity, allocated, in the case of the Revolving Credit Notes, pro-rata among the Revolving Credit Notes. (ii) Upon ten (10) days prior written notice delivered from Borrowers to Agent, the Borrowers may permanently reduce the maximum principal amount that may be borrowed under the Revolving Credit Loan; provided that such reduction shall be in a principal amount of at least $5,000,000 and in integrals of -31- 32 $1,000,000 and provided that such reduction shall also be subject to the amounts described in Section 2.11 herein. In the event that a permanent reduction is made by the Borrowers in the amount that may be borrowed under the Revolving Credit Loan, the Maximum Total Amount and the Revolving Credit Loan Commitment shall be reduced accordingly. Section 2.11 Funding Losses. The Borrowers shall compensate each Lender, upon such Lender's written request to the Borrowers (which request shall set forth the basis for requesting such amounts in reasonable detail and which request shall be made in good faith and which request, in the event of a prepayment under Section 2.10(b), shall be delivered no later than five (5) days prior to the date of prepayment), for all losses, expenses and liabilities (including, without limitation, any interest paid by such Lender to lenders of funds borrowed by it to make or carry its Loans to which a LIBOR Rate applies in either case to the extent not recovered by such Lender in connection with the reemployment of such funds and including loss of anticipated profits), which such Lender may sustain if (a) any repayment (including mandatory prepayments) of any amounts to which the LIBOR Rate Option applies occurs on a date that is not the last Business Day of a month (in the case of Advances to which the one-month LIBOR Rate applies) or on the last Business Day of the second month after the beginning of a two-month term (in the case of Advances to which the two-month LIBOR Rate applies) or the last Business Day of the third month after the beginning of a three-month term (in the case of Advances to which the three-month LIBOR Rate applies), or on the last Business Day of the sixth month after the beginning of a six-month term (in the case of Advances to which the six-month LIBOR Rate applies), and/or (b) Borrowers fail to borrow any Advance requested to be borrowed in a -32- 33 Borrowing Request after submitting such Borrowing Request, it being understood that Borrowers shall not be liable for consequential or incidental losses, expenses or liabilities. Section 2.12 Apportionment of Payments. Aggregate principal and interest payments in respect of Advances under the Revolving Credit Loan shall be apportioned among all outstanding Revolving Credit Loan Commitments to which such payments relate proportionately to the Lenders' respective Pro Rata Share of such Revolving Credit Loan Commitments. In the event the Agent receives payment under the Revolving Credit Loan prior to 1:00 P.M. (Nashville, Tennessee time), then the Agent shall distribute to each Lender its share of all such payments received by the Agent no later than the end of the Business Day following the Business Day of Agent's receipt of such payments. Payments received subsequent to 1:00 P.M. (Nashville, Tennessee time) shall be treated as received on the next succeeding Business Day. Payments received by Agent for the Swing Line Loan shall not be apportioned, but shall be delivered to the Swing Line Lender. Section 2.13 Sharing of Payments, Etc. If any Lender shall obtain any payment or reduction (including, without limitation, any amounts received as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code) of the indebtedness relating to Advances under the Revolving Credit Loan (whether voluntary, involuntary, through the exercise of any right of set-off or otherwise) in excess of its Pro Rata Share of payments or reductions of the Revolving Credit Loan, such Lender shall forthwith (a) notify each of the other Lenders and Agent of such receipt, and (b) purchase from the other Lenders such participations in the Revolving Credit Loan as shall be necessary to cause such purchasing Lender to share the excess payment or reduction, net of costs incurred in connection therewith, ratably with each of them, -33- 34 provided that if all or any portion of such excess payment or reduction is thereafter recovered from such purchasing Lender or additional costs are incurred, the purchase shall be rescinded and the purchase price restored to the extent of such recovery or such additional costs, but without interest unless the Lender obligated to return such funds is required to pay interest on such funds. Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Section 2.13 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of such participation. Section 2.14 Right of Offset, Etc. Each of the Borrowers hereby agree that, in addition to (and without limitation of) any right of set-off, banker's lien or counterclaim the Lenders may otherwise have, the Lenders shall be entitled, at their option, to offset balances held by any of them at any of their offices against any principal of or interest on the indebtedness described herein which is not paid when due by reason of a failure by the Borrowers to make any payment when due to such Lender (regardless whether such balances are then due to the Borrowers), in which case such offsetting Lender shall promptly notify the Borrowers, provided that its failure to give such notice shall not affect the validity thereof. Section 2.15 Commitment Fee. Commencing on March 31, 1997 and on the last day of each Fiscal Quarter thereafter and on the Maturity Date, the Borrowers shall pay to the Agent for distribution to the Lenders based on their Pro Rata Share a commitment fee equal to one quarter of one percent (.25%) per annum calculated on the average unused portion of the Revolving Credit Loan for the preceding Fiscal Quarter (or portion thereof); provided that the -34- 35 payment made on March 31, 1997 shall be for a time period from the Closing Date to March 31, 1997. The commitment fee shall be calculated based on a year of 360 days. Section 2.16 Usury. The parties to this Agreement intend to conform strictly to applicable usury laws as presently in effect. Accordingly, if the transactions contemplated hereby would be usurious under applicable law (including the laws of the United States of America and the State of Tennessee), then, in that event, notwithstanding anything to the contrary in any Loan Document or agreement executed in connection with the indebtedness described herein, Borrowers, Agent, and Lenders agree as follows: (i) the aggregate of all consideration that constitutes interest under applicable law which is contracted for, charged, or received under any of the Loan Documents or agreements, or otherwise in connection with the indebtedness described herein, shall under no circumstance exceed the maximum lawful rate of interest permitted by applicable law, and any excess shall be credited on the indebtedness by the holder thereof (or, if the indebtedness described herein shall have been paid in full, refunded to Borrowers); and (ii) in the event that the maturity of the indebtedness described herein is accelerated as a result of any Event of Default or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest may never include more than the maximum amount of interest permitted by applicable law, and excess interest, if any, for which this Agreement provides, or otherwise, shall be cancelled automatically as of the date of such acceleration or prepayment and, if previously paid, shall be credited on the indebtedness described herein (or, if the indebtedness shall have been paid in full, refunded to Borrowers). Section 2.17 Interest Rate Not Ascertainable, Etc. In the event that the Agent shall in good faith have determined that on any date for determining the LIBOR Rate, by reason of any -35- 36 changes arising after the date of this Agreement affecting the London interbank market or the Agent's position in such market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of LIBOR Rate, then, and in any such event, the Agent shall forthwith give notice (by telephone confirmed in writing) to the Borrowers of such determination and a summary of the basis for such determination. At the expiration of any Interest Rate Period then in effect and until the Agent notifies the Borrowers that the circumstances giving rise to the suspension described herein no longer exist (which notice shall be given forthwith after such determination is made by the Agent), all Loans shall bear interest at the Base Rate Option. Section 2.18 Illegality. (a) In the event that the Agent shall have determined any time that the making or continuance of any Advance bearing interest at the LIBOR Rate Option has become unlawful by compliance by any of the Lenders in good faith with any applicable law, governmental rule, regulation, guideline or order (whether or not having the force of law and whether or not failure to comply therewith would be unlawful), then, in any such event, the Agent shall give prompt notice (by telephone confirmed in writing) to the Borrowers of such determination and a summary of the basis for such determination. (b) Upon the giving of the notice to the Borrower referred to in Section 2.18(a), the Borrowers' right to elect a LIBOR Rate Option shall be immediately suspended, and all Advances shall bear interest at the Base Rate Option. Section 2.19 Increased Costs. (a) If by reason of (i) after the date hereof, the introduction of or any change (including, without limitation, any change by way of imposition or increase of reserve requirements) in or in the interpretation of any law or regulation, or (ii) the -36- 37 compliance with any guideline or request from any central bank or other governmental authority or quasi-governmental authority exercising control over banks or financial institutions generally (whether or not having the force of law): (A) the Agent or any Lender shall be subject to any tax, duty or other charge with respect to any Advances bearing interest at the LIBOR Rate Option (all such Advances being collectively referred to as the "LIBOR Loans") or its obligation to make LIBOR Loans, or the basis of taxation of payments to the Agent or any Lender of the principal of or interest on its LIBOR Loans or its obligation to make LIBOR Loans shall have changed (except for changes in the tax on the overall net income of the Agent or such Lender, or similar taxes, pursuant to the laws of jurisdictions with taxing authority over the Agent or such Lender); or (B) any reserve (including, without limitation, any reserve imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, the Agent or any Lender shall be imposed or deemed applicable or any other condition affecting its LIBOR Loans or its obligation to make LIBOR Loans shall be imposed on the Agent or any Lender or the London interbank market; and as a result thereof there shall be any increase in the cost to the Agent or any Lender of agreeing to make or making, funding or maintaining LIBOR Loans (except to the extent already included in the determination of the interest rate for LIBOR Loans), or there shall be a reduction in the amount received or receivable by the Agent or any Lender, then the Borrowers shall from time to time, upon written notice from and demand in good faith by the Agent on the Borrowers, -37- 38 pay to the Agent for the account of the Lenders (or any Lender) within five (5) Business Days after the date of such notice and demand, additional amounts sufficient to indemnify the Agent or such Lender against such increased cost; provided, however, that nothing in this section shall require Borrowers to indemnify the Agent or any Lender for withholding taxes. (b) If the Agent shall in good faith determine that at any time, because of the circumstances described in Section 2.19(a)(i) or (ii) arising after the date of this Agreement affecting the Agent or any Lender or the London interbank market or the Agent or any Lender's position in such market, the calculations for the interest rates for LIBOR Loans as determined by the Agent or any Lender will not adequately and fairly reflect the cost to the Agent or any Lender of funding such LIBOR Loans, the Agent shall forthwith give notice (by telephone confirmed in writing) to the Borrowers of such advice, and a summary of the basis for such determination, and then, and in any such event and until Agent notifies the Borrowers that such circumstances no longer exist (which notice shall be given forthwith after such determination is made by the Agent): (i) The Borrowers' right to request, and the Agent's and any Lender's obligation to make or permit portions of the indebtedness described herein to remain outstanding past the last day of the then current Interest Rate Period as LIBOR Loans shall be immediately suspended; and (ii) After the last day of the then-current Interest Rate Period, all indebtedness described herein shall bear interest at the Base Rate Option. Section 2.20 Extension. Upon the written request of Borrowers given at any time between December 1st through December 31st, 1999, the Lenders, with the written consent of all other -38- 39 Lenders, may agree to extend the term of this Agreement until January 31, 2001. Agent shall provide Borrowers with notice of Lenders' decision prior to January 31, 2000. Article III. Guarantors. Section 3.01 Guarantors. The joint and several obligations of the Borrowers under the Loan Documents shall be guaranteed jointly and severally by each of the Guarantors pursuant to the Guarantees. Article IV. Representations and Warranties. To induce Lenders to enter this Agreement and extend credit under this Agreement, the Borrowers covenant, represent and warrant to Lenders that as of the date hereof: Section 4.01 Corporate Existence. Each of the Borrowers is a corporation duly organized, legally existing, and in good standing under the laws of the state of its incorporation, and each of the Borrowers is duly qualified as a foreign corporation in all jurisdictions in which the Property owned or the business transacted by it makes such qualification necessary, except where failure to so qualify does not have a material adverse effect on any of the Borrowers, their respective business, or their respective Properties. The Borrowers will not commence doing business in any state unless and until the Borrowers shall have qualified to do business in such state. Section 4.02 Power and Authorization. Each of the Borrowers is duly authorized and empowered to execute, deliver, and perform under all Loan Documents; the respective board of directors of the Borrowers has authorized the Borrowers to execute and perform under the Loan Documents; and all other corporate and shareholder action on Borrowers' part required -39- 40 for the due execution, delivery, and performance of the Loan Documents has been duly and effectively taken. Section 4.03 Binding Obligations. This Agreement is, and the Loan Documents when executed and delivered in accordance with this Agreement will be, legal, valid and binding upon and against the Borrowers and their respective Properties enforceable in accordance with their respective terms, subject to no defense, counterclaim, set-off, or objection of any kind. Section 4.04 No Legal Bar or Resultant Lien. The Borrowers' execution, delivery and performance of the Loan Documents do not constitute a default under, and will not violate any provisions of the articles of incorporation (or charter), bylaws, articles of organization, and/or operating agreement of the respective Borrowers, any contract, agreement, law, regulation, order, injunction, judgment, decree, or writ to which any of the Borrowers is subject, or result in the creation or imposition of any Lien upon any Properties of any of the Borrowers. Section 4.05 No Consent. The Borrowers' execution, delivery, and performance of the Loan Documents do not require the consent or approval of any other Person. Section 4.06 Financial Condition. The Financial Statements which have been delivered to Lenders for each of the Borrowers dated September 30, 1995 have been prepared in accordance with GAAP consistently applied, and the Financial Statements present fairly the financial condition of Borrowers as of the date or dates and for the period or periods stated therein. No material adverse change in the financial condition of any of the Borrowers has occurred since the date of the most recent Financial Statements. Section 4.07 Investments, Advances, and Guarantees. None of the Borrowers nor any of the Consolidated Entities has made investments in, advances to, or guaranties of the obligations -40- 41 of any Person, or committed or agreed to undertake any of these actions or obligations, except as referred to or reflected in the Financial Statements. Section 4.08 Liabilities and Litigation. None of the Borrowers nor any of the Consolidated Entities has any material liabilities (individually or in the aggregate) direct or contingent, except as referred to or reflected in the Financial Statements. There is no litigation, legal or administrative proceeding, investigation, or other action of any nature pending or, to the knowledge of Borrowers threatened against or affecting the Borrowers or any of the Consolidated Entities that involves the possibility of any judgment or liability not fully covered by insurance and that may materially and adversely affect the business or the Properties of any of the Borrowers or the Consolidated Entities or their respective ability to carry on their business as now conducted. Section 4.09 Taxes; Governmental Charges. The Borrowers and each of the Consolidated Entities have filed or caused to be filed all tax returns and reports required to be filed and have paid all taxes, assessments, fees, and other governmental charges levied upon each of them or upon any of their respective Properties or income, which are due and payable, including interest and penalties. The Borrowers and each of the Consolidated Entities have made all required withholding deposits. Section 4.10 No Default. None of the Borrowers nor any of the Consolidated Entities is in default in any respect that materially and adversely affects its business, Properties, operations, or condition, financial or otherwise, under any indenture, mortgage, deed of trust, credit agreement, note, agreement, or other instrument to which any of the Borrowers or any of the Consolidated Entities is a party or by which any of them or their Properties are bound. None -41- 42 of the Borrowers nor any of the Consolidated Entities is in violation of their respective Articles of Incorporation (or Charter), Bylaws, Articles of Organization, or operating agreements. No Default Conditions hereunder have occurred or are continuing as of the date hereof. Section 4.11 Compliance with Laws, Etc. The Borrowers and the Consolidated Entities are not in violation of any law, judgment, decree, order, ordinance, or governmental rule or regulation to which any of the Borrowers or any of their respective Properties is subject in any respect that materially and adversely affects their respective business, Properties, or financial condition. The Borrowers and the Consolidated Entities have not failed to obtain any license, permit, franchise, or other governmental authorization necessary to the ownership of any of their respective Properties or to the conduct of their business, which if not obtained would have or has a material, adverse effect on any of the Borrowers or Consolidated Entities. All improvements on the real estate owned by, leased to, or used by Borrowers and the Consolidated Entities conform in all material respects to all applicable state and local laws, zoning and building ordinances and health and safety ordinances, and such real estate is zoned for the various purposes for which such real estate and improvements thereon are presently being used. Section 4.12 ERISA. Each of the Borrowers and each of the Consolidated Entities is in compliance in all material respects with the applicable provisions of ERISA. None of the Borrowers nor any of the Consolidated Entities has incurred any "accumulated funding deficiency" within the meaning of ERISA which is material, and none of the Borrowers nor any of the Consolidated Entities has incurred any material liability to PBGC in connection with any Plan. -42- 43 Section 4.13 Consolidated Entities. The current Consolidated Entities are depicted on Exhibit H hereto. Each of the Consolidated Entities is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation or formation, has all requisite power and authority, licenses, permits, and authorizations necessary to own Property and to carry on its business as now being conducted, and is qualified to do business in every jurisdiction required by law, except in those instances where the failure to be so qualified or to obtain such licenses, permits, and authorizations does not have a material adverse effect on such Consolidated Entity. Section 4.14 No Material Misstatements. No information, exhibit, or report furnished or to be furnished by Borrowers to Lender in connection with this Agreement, contain any material misstatement of fact or fail to state any material fact, the omission of which would render the statements therein materially false or misleading. Section 4.15 Solvency. Each of the Borrowers is solvent. Each of the Borrowers is generally paying its debts as they mature and the fair value of Borrowers' assets substantially exceeds the sum total of their respective liabilities. Section 4.16 Regulation U. None of the Borrowers is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System. No part of the indebtedness described herein shall be used at any time to purchase or to carry margin stock within the meaning of Regulation U or to extend credit to others for the purpose of purchasing or carrying any margin stock if to do so would cause the Lenders to violate the provisions of Regulation U. -43- 44 Section 4.17 Filings. To the date hereof, CPC has filed all reports and statements required to be filed with the Securities and Exchange Commission. As of their respective dates, the reports and statements referred to above complied in all material respects with all rules and regulations promulgated by the Securities and Exchange Commission and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Section 4.18 Title, Etc. Each of the Borrowers and each of the Consolidated Entities has good title to its Properties, free and clear of all Liens except those referenced or reflected in the Financial Statements, and except for any defects in title which would not have a material adverse effect on the business, Properties, financial condition or operations of the Borrowers and the Consolidated Entities or on the ability of the Borrowers to perform their respective obligations under this Agreement or any of the other Loan Documents. Borrowers and the Consolidated Entities possess all trademarks, copyrights, trade names, patents, licenses, and rights therein, adequate for the conduct of its business as now conducted and presently proposed to be conducted, except for such that would not have a material adverse effect on the business, Properties, financial condition or operations of the Borrowers or the Consolidated Entities or on the ability of the Borrowers to perform their respective obligations under this Agreement or any of the other Loan Documents. Section 4.19 Investment Company Act. None of the Borrowers nor any of the Consolidated Entities is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. -44- 45 Section 4.20 Personal Holding Company; Subchapter S. None of the Borrowers are a "personal holding company" as defined in Section 542 of the Code, and none of the Borrowers are a "Subchapter S" corporation within the meaning of the Code. Article V. Conditions Precedent. Section 5.01 Initial Conditions. Lenders' obligation to extend credit and to issue any Letter of Credit and Swing Line Lender's obligation to make an Advance under the Swing Line Loan hereunder is subject to the Conditions Precedent that Agent shall have received (or agreed in writing to waive or defer receipt of) all of the following, each duly executed, dated and delivered as of the date hereof, in form and substance satisfactory to Agent and its counsel: (a) Notes and Loan Documents. This Agreement, the Revolving Credit Notes, the Swing Line Note, the Guarantees of each of the Guarantors, any Letter of Credit Application Agreements, and other documents executed in connection with this Agreement (the "Loan Documents"). (b) Resolutions. Certified copies of resolutions of the Board of Directors of each of the corporate Borrowers and each of the Guarantors authorizing or ratifying the execution, delivery, and performance, respectively, of Loan Documents to which each is a party. (c) Certificate of Existence. A certificate of existence of each of the Borrowers and each of the Guarantors from the state or commonwealth in which each of the Borrowers and Guarantors is incorporated or organized, which certificate shall contain no facts objectionable to Agent. -45- 46 (d) Consents, Etc. Certified copies of all documents evidencing any necessary corporate action, consents, and governmental approvals (if any) with respect to this Agreement and the Loan Documents. (e) Officer's Certificate. A certificate of the secretary or any assistant secretary of each of the Borrowers and each of the Guarantors certifying: (i) the names of the officer or officers of each of the Borrowers and each of the Guarantors authorized to sign the respective Loan Documents, together with a sample of the true signature of such officer(s), and (ii) as to representations and warranties of, and litigation involving, each of the Borrowers and each of the Guarantors. (f) Charter and By-Laws and Organizational Documents. A copy of each of the Borrowers' and the Guarantors' respective by-laws and charter or articles of incorporation and/or articles of organization and operating agreement, if applicable, (including all amendments thereto) certified by the secretary or any assistant secretary of each of the Borrowers and Guarantors, as applicable, and in the case of the charter or articles of incorporation, by the Secretary of State of the state or commonwealth in which each of the Borrowers and the Guarantors is incorporated, as being true and complete copies of the current charter or articles of incorporation and by-laws of each of the Borrowers. (g) Attorneys Opinion Letter. An opinion letter from counsel to the Borrowers and the Guarantors opining as to such matters as required by Agent. (h) Payment of Fees, Etc. Payment of all outstanding fees and expenses to Agent, Swing Line Lender, or any Lender, including all of Agent's reasonable legal fees. -46- 47 (i) Other. Such other documents as Agent may reasonably request. Section 5.02 All Borrowings. The Lenders' obligation to extend credit pursuant to this Agreement and to issue any Letter of Credit and Swing Line Lender's obligation to make an Advance under the Swing Line Loan is subject to the following additional Conditions Precedent which shall be met each time an Advance under the Revolving Credit Loan (including the request for the issuance of a Letter of Credit) or the Swing Line Note is requested and an Advance is made: (a) The representations of each of the Borrowers contained in Article IV are true and correct as of the date of the requested Advance, with the same effect as though made on the date additional funds are advanced; (b) There has been no material adverse change in any of the Borrowers' consolidated financial condition or other condition since the date of the last borrowing hereunder; (c) No Default Conditions and no Event of Default have occurred and continue to exist; (d) No material litigation (including, without limitation, derivative actions), arbitration proceedings or governmental proceedings not disclosed in writing by any of the Borrowers to the Agent prior to the date of the execution and delivery of this Agreement is pending or known to be threatened against any of the Borrowers or the Consolidated Entities and no material development not so disclosed has occurred in any litigation, arbitration proceedings or governmental proceedings so disclosed, which could reasonably be expected to adversely affect the financial position or business of any of the Borrowers or the Consolidated Entities or impair the ability of any of the Borrowers to perform their respective obligations under this Agreement or any other Loan Documents. -47- 48 Article VI. Affirmative Covenants. Each of the Borrowers covenants that, during the term of this Agreement (including any extensions hereof) and until all indebtedness described herein shall have been finally paid in full, unless Agent shall otherwise first consent in writing, each of the Borrowers shall: Section 6.01 Financial Statements and Reports. Promptly furnish to Agent and to each Lender: (a) Annual Reports. As soon as available, and in any event within ninety (90) days after the close of each Fiscal Year of each of the Borrowers, the audited consolidated Financial Statements of CPC setting forth the audited consolidated balance sheets of CPC as at the end of such year, and the audited consolidated statements of income, statements of cash flows, and statements of retained earnings of CPC for such year, setting forth in each case in comparative form (beginning when comparative data are available) the corresponding figures for the preceding Fiscal Year accompanied by the report of CPC's certified public accountants, and by an unaudited consolidating balance sheet and unaudited consolidating statements of income, and statements of retained earnings of CPC and of each of the Borrowers duly certified by CPC's chief financial officer as being correct reflections of the information used for the audited consolidated Financial Statements. The audit opinion in respect of the Financial Statements of Borrowers shall be the opinion of a firm of independent certified public accountants acceptable to Agent and shall be accompanied by such certificates as reasonably required by Agent; -48- 49 (b) Quarterly and Year-to-Date Reports. As soon as available and in any event within forty-five (45) days after the end of each Fiscal Quarter, the consolidated balance sheets of CPC and of each of the Borrowers as of the end of such Fiscal Quarter, and the consolidated and consolidating statements of income of CPC and of each of the Borrowers for such quarter and for a period from the beginning of the Fiscal Year to the close of such Fiscal Quarter, all certified by the chief financial officer or chief accounting officer of CPC and of each of the Borrowers as being true and correct to the best of his or her knowledge; (c) Compliance Reports. As soon as available and in any event within forty-five (45) days after the end of each Fiscal Quarter, the calculations by Borrowers of the financial covenants contained in Article VII A herein, all in a format similar to that described on Exhibit F hereto, along with a certificate of compliance certified by the president or chief financial officer of CPC stating that such officer has no knowledge of any Event of Default or Default Condition, or if such officer has obtained such knowledge, disclosing the nature, details, and period of existence of such event; (d) SEC Filings and Public Information. At the same time as they are filed with the Securities and Exchange Commission, copies of CPC's 10-Q and 10-K reports; and (e) Other Information. Promptly upon its becoming available, such other material information about Borrowers, Guarantors, or the indebtedness described herein as Agent may reasonably request from time to time. -49- 50 All such balance sheets and other Financial Statements referred to in Sections 6.01(a) and (b) hereof shall conform to GAAP on a basis consistent with those of previous Financial Statements. Section 6.02 Annual Certificates of Compliance. Concurrently with the furnishing of the annual Financial Statements pursuant to Section 6.01(a) hereof, furnish or cause to be furnished to Agent and each Lender a certificate of compliance in a form reasonably satisfactory to Agent prepared by one of the nationally recognized "Big Six" accounting firms stating that in making the examination necessary for their audit they have obtained no knowledge of any Default Condition or Event of Default, or event which, after notice or lapse of time (or both), would constitute a Default Condition or Event of Default or, if they have obtained such knowledge, disclosing the nature, details, and period of existence of such event. Section 6.03 Taxes and Other Liens. Pay and discharge promptly all taxes, assessments, and governmental charges or levies imposed upon any of the Borrowers or the Consolidated Entities or upon any of their respective income or Property as well as all claims of any kind (including claims for labor, materials, supplies, and rent) which, if unpaid, might become a Lien upon any or all of any of the Borrowers' Property; provided, however, that neither the Borrowers nor any of the Consolidated Entities shall be required to pay any such tax, assessment, charge, levy, or claim if the amount, applicability, or validity thereof shall currently be contested in good faith by appropriate proceedings diligently conducted and if the Borrowers or the Consolidated Entities, as applicable, shall establish reserves therefor adequate under GAAP. -50- 51 Section 6.04 Maintenance. (a) Maintain and cause each Consolidated Entity to maintain its corporate, partnership, joint venture, limited partnership, and/or limited liability company existence, name, rights, and franchises; (b) observe and comply and cause each Consolidated Entity to observe and comply (to the extent necessary so that any failure will not materially and adversely affect the business or Property of the Borrowers or the Consolidated Entities) with all applicable laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, certificates, franchises, permits, licenses, authorizations, and requirements of all federal, state, county, municipal, and other governments; and (c) maintain and cause each Consolidated Entity to maintain its Property (and any Property leased by or consigned to it or held under title retention or conditional sales contracts) in good and workable condition at all times and make all repairs, replacements, additions, and improvements to its Property reasonably necessary and proper to ensure that the business carried on in connection with its Property may be conducted properly and efficiently at all times. Section 6.05 Further Assurances. Promptly cure any defects in the creation, issuance, and delivery of the Loan Documents. Borrowers at their expense promptly will execute and deliver to Agent upon request all such other and further documents, agreements, and instruments in compliance with or accomplishment of the covenants and agreements of Borrowers in the Loan Documents, or to correct any omissions in the Loan Documents, all as may be reasonably necessary or appropriate in connection therewith. -51- 52 Section 6.06 Performance of Obligations. (a) Pay the indebtedness described herein according to the terms of the Loan Documents; and (b) do and perform, and cause to be done and to be performed, every act and discharge all of the obligations provided to be performed and discharged by Borrowers under the Loan Documents, at the time or times and in the manner specified. Section 6.07 Insurance. Maintain and continue to maintain, and cause each Consolidated Entity to maintain and continue to maintain, with financially sound and reputable insurers, insurance satisfactory in type, coverage and amount to Agent against such liabilities, casualties, risks, and contingencies and in such types and amounts as is customary in the case of corporations engaged in the same or similar businesses and similarly situated. Upon request of Agent, Borrowers will furnish or cause to be furnished to Agent from time to time a summary of the insurance coverage of Borrowers and the Consolidated Entities in form and substance satisfactory to Agent and if requested will furnish Agent copies of the applicable policies. Section 6.08 Accounts and Records. Keep books of record and account, in which full, true, and correct entries will be made of all dealings or transactions in accordance with GAAP, except only for changes in accounting principles or practices with which Borrowers' certified public accountants concur and which changes have been reported to Agent in writing and with an explanation thereof. Section 6.09 Right of Inspection. Permit and cause each Consolidated Entity to permit any officer, employee, or agent of Agent or any Lender as may be designated by Agent to visit and inspect any of the Property of Borrowers or the Consolidated Entities, to examine -52- 53 Borrowers' and the Consolidated Entities' books of record and accounts, to take copies and extracts from such books of record and accounts, and to discuss the affairs, finances, and accounts of Borrowers and the Consolidated Entities with the respective officers, accountants, and auditors of Borrowers and the Consolidated Entities, all at such reasonable times and as often as Agent may reasonably desire. Section 6.10 Notice of Certain Events. Promptly notify Agent if any of the Borrowers learns of the occurrence of (i) any event that constitutes a Default Condition or Event of Default together with a detailed statement by a responsible officer of the steps being taken as a result thereof; or (ii) the receipt of any notice from, or the taking of any other action by, the holder of any promissory note, debenture, or other evidence of Debt of any of the Borrowers or any of the Consolidated Entities with respect to a claimed default, together with a detailed statement by a responsible officer of the respective Borrowers or Consolidated Entities specifying the notice given or other action taken by such holder and the nature of the claimed default and what action the affected Borrowers or Consolidated Entities are taking or proposes to take with respect thereto; or (iii) any legal, judicial, or regulatory proceedings affecting Borrowers or Consolidated Entities in which the amount involved is material and is not covered by insurance or which, if adversely determined, would have a material and adverse effect on the business or the financial condition of any of the Borrowers or any of the Consolidated Entities; or (iv) any dispute between any of the Borrowers or Consolidated Entities and any governmental or regulatory authority or any other Person, entity, or agency which, if adversely determined, might interfere with the normal business operations of the Borrowers or the Consolidated Entities; or (v) any material adverse changes, either individually or in the aggregate, in the -53- 54 assets, liabilities, financial condition, business, operations, affairs, or circumstances of any of the Borrowers or the Consolidated Entities from those reflected in the Financial Statements or from the facts warranted or represented in any Loan Document. Section 6.11 ERISA Information and Compliance. Comply and cause each of the Consolidated Entities to comply with ERISA and all other applicable laws governing any pension or profit sharing plan or arrangement to which any of the Borrowers or any of the Consolidated Entities is a party. The Borrowers shall provide and shall cause each of the Consolidated Entities to provide Agent with notice of any "reportable event" or "prohibited transaction" or the imposition of a "withdrawal liability" within the meaning of ERISA. Section 6.12 Management. Give immediate notice to Agent of any material change in the management of any of the Borrowers. Section 6.13 Additional Guarantees. Within thirty (30) days after any of the Borrowers or any of the Consolidated Entities acquires any Person that is or becomes a Consolidated Entity; Borrowers shall cause such new Consolidated Entity to execute a Guaranty in the form of the Guarantees executed by the Guarantors, and to deliver to Agent such Guarantees and other documents, instruments and items with respect thereto that are similar to those documents, instruments and items delivered by the Guarantors with regard to their Guarantees. Additionally, in such case Agent shall, should Lender so request, be entitled to receive a counsel's opinion letter issued by counsel acceptable to Agent regarding such matters involving such Consolidated Entity as may be required by Agent. Immediately upon any Person becoming a Consolidated Entity, Borrowers shall give notice thereof to Agent. Borrowers shall pay the costs and expenses, including without limitation Agent's legal fees and expenses, in connection with the -54- 55 preparation, negotiation, execution and review of the Guaranty of such Consolidated Entity and the other items described in this Section. Section 6.14 Permitted Acquisitions, Investments, Loans and Advances. Provided that no breach, default, Default Condition or Event of Default has occurred under this Agreement or any of the other Loan Documents, and provided that no "Event of Default" has occurred under any Guaranty, Borrowers may make the following acquisitions, investments, loans and advances without the necessity of obtaining the consent of Agent or any Lender (but Borrowers agree to deliver prompt notice thereof to Agent and to each Lender, with such information relative thereto as Agent may request): (a) Acquisitions for a value of $10,000,000 or less per acquisition, of Property to be wholly-owned by any of the Borrowers, or of a Person that will be a wholly-owned Subsidiary of any of the Borrowers; (b) Investments, loans, and advances made to Borrowers and to any Guarantors; and (c) Prior to December 31, 1997, investments, loans and advances to any Consolidated Entity that is not a Borrower or a Guarantor in an aggregate, outstanding cumulative amounts and/or an aggregate, outstanding cumulative value equal to $20,000,000.00 or less; provided that subsequent to December 31, 1997, investments, loans, and advances to Consolidated Entities that are not a Borrower or a Guarantor shall not exceed an aggregate, outstanding cumulative amount and/or an aggregate, outstanding cumulative value equal to $15,000,000, or less. -55- 56 Borrowers agree that if any loan, acquisition, advance or investment is made or paid for by the transfer or exchange of Property other than cash, the amount of such loan, acquisition, advance or investment shall be deemed to have been made in an original principal or capital amount equal to the lesser of (i) the book value or (ii) the fair market value of such Property as determined by Agent. Section 6.15 Equity Proceeds. Give to Agent five (5) Business Days prior notice of any proposed transaction intended to raise Equity Proceeds. Article VII. Negative Covenants. Each of the Borrowers covenants and agrees that, during the term of this Agreement and any extensions hereof and until the indebtedness described herein has been paid and satisfied in full, unless Agent shall otherwise first consent in writing, the Borrowers will not, either directly or indirectly, and will not allow any of the Consolidated Entities to: Section 7.01 Debts, Guarantees, and Other Obligations. Incur, create, assume, or in any manner become or be liable with respect to any Debt; provided that subject to all other provisions of this Article VII, the foregoing prohibitions shall not apply to: (a) Any indebtedness to Swing Line Lender or to Lenders as set forth in this Credit Agreement; (b) liabilities, direct or contingent, of any of the Borrowers and Consolidated Entities existing on the date of this Agreement that are referenced or reflected in the Financial Statements; (c) endorsements of negotiable or similar instruments for collection or deposit in the ordinary course of business; -56- 57 (d) trade payables or similar obligations (other than for borrowed money or purchase money obligations) from time to time incurred in the ordinary course of business not to exceed amounts historically and customarily incurred by the Borrowers; (e) taxes, assessments, or other governmental charges that are not assessed or are being contested in good faith by appropriate action promptly initiated and diligently conducted, if Borrowers shall have made any reserve therefor required by GAAP; (f) unsecured indebtedness (direct or contingent) to others in excess of $15,000,000 in the aggregate; provided that subsequent to December 31, 1997, unsecured indebtedness (direct or contingent) to others shall not exceed $10,000,000 in the aggregate; and (g) indebtedness owed by one of the Borrowers to another of the Borrowers or owed by any of the Guarantor to one of the Borrowers or to another Guarantor. Section 7.02 Liens. Create, incur, assume, or permit to exist any Lien on any of their respective Property (real, personal, or mixed now owned or hereafter acquired) except, subject to all other provisions of this Article, the foregoing restrictions shall not apply to: (a) Liens securing the payment of any of the indebtedness described in this Credit Agreement; and (b) Permitted Encumbrances. Section 7.03 Investments, Loans, and Advances Make or permit to remain outstanding any loans or advances to or investments in any Person, except that, subject to all other provisions of this Article, the foregoing restriction shall not apply to: -57- 58 (a) investments in direct obligations of the United States of America or any agency thereof; (b) investments in direct obligations of any political subdivisions of the United States of America or any State of the United States of America having a senior unsecured senior debt rating from Standard and Poor's Corporation or Moody's Investors Services, Inc. of AA or better; (c) investments in commercial paper of the highest credit rating of Standard and Poor's Corporation or Moody's Investors Services, Inc., or upon the discontinuance or either or both of such services, any other nationally recognized rating service, (d) investments in certificates of deposit having maturities of less than one year, or repurchase agreements issued by commercial banks in the United States of America having capital and surplus in excess of $50,000,000, or commercial paper of the highest quality; (e) investments in money market funds so long as the entire investment therein is fully insured or so long as the fund is a fund operated by a commercial bank of the type specified in (d) above; and (f) investments and loans permitted by Section 6.14 herein. Section 7.04 Distributions, and Redemptions; Issuance of Stock. Purchase, redeem, or otherwise acquire for value any of its stock now or hereafter outstanding, or return any capital to its stockholders, or make any distribution of its assets to its stockholders as such. Section 7.05 Sales and Leasebacks. Enter into any arrangement, directly or indirectly, with any Person by which any of the Borrowers shall sell or transfer any Property, whether now -58- 59 owned or hereafter acquired, and by which such of the Borrowers shall then or thereafter rent or lease as lessee such Property or any part thereof or other Property that Borrowers intend to use for substantially the same purpose or purposes as the Property sold or transferred. Section 7.06 Nature of Business. Suffer or permit any material change to be made in the character of the business of any of the Borrowers or the Consolidated Entities, as carried on as of the date hereof. Section 7.07 Mergers, Consolidations, Etc. Merge, consolidate or reorganize with or into, or sell, assign, lease, or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its Property (whether now owned or hereafter acquired) to, or become an Affiliate of, any Person; provided, however, that with Agent's express prior written consent and provided that no Event of Default and no Default Condition has occurred, Borrowers may merge, reorganize or consolidate with any Person as long as, immediately after and giving effect to any such merger, reorganization or consolidation no event shall occur or would reasonably be expected to occur which constitutes a Default Condition or an Event of Default and, in the case of any such merger or consolidation to which Borrowers are a party, such of the Borrowers is the surviving corporation; provided, however, this section shall not be read to require the consent of Agent to an acquisition merger that complies with Section 6.14(a) in which CPC is either the survivor or the parent of a wholly-owned survivor. Section 7.08 Proceeds of Loan. Permit the proceeds of the Advances to be used for any purpose other than those permitted under this Agreement. Section 7.09 Disposition of Assets. Dispose of any of the assets of any of the Borrowers or the Consolidated Entities other than in the ordinary course of Borrowers' or such of the Consolidated Entities' (as applicable) present business upon terms standard in Borrowers' or such of the Consolidated Entities' (as applicable) industry. -59- 60 Section 7.10 Limitation on Business. Engage in any business other than the business in which the Borrowers or the Consolidated Entities are currently engaged. Section 7.11 Inconsistent Agreements. Enter into any agreement containing any provision which would be violated or breached by the performance by Borrowers of their obligations. Section 7.12 Fiscal Year. Change their respective Fiscal Year. Article VII A Financial Covenants. CPC covenants and agrees that, during the term of this Agreement and any extensions hereof and until the indebtedness described herein has been paid and satisfied in full, unless Agent shall otherwise first consent in written, CPC will not: Section 7A.01 Financial Covenants. (a) Minimum Net Worth. Permit its Consolidated Net Worth to be less than a minimum amount equal to: (a) $70,000,000, plus (b) on an annual basis for each Fiscal Year beginning with the 1997 Fiscal Year, a cumulative amount equal to 50% of annual Consolidated Net Income, plus (c) 100% of the net proceeds of any Equity Proceeds up to $35,000,000 raised by CPC subsequent to December 12, 1996, plus (d) 50% of the net proceeds of any Equity Proceeds in excess of $35,000,000 raised by CPC subsequent to December 12, 1996. (b) Funded Debt to EBITDA. Permit the ratio of CPC's Funded Debt (determined on a consolidated basis) divided by CPC's EBITDA (determined on a consolidated basis) to exceed a ratio of 4.0 to 1.0. as calculated on the Fiscal Quarter ending March 31, 1997 and as calculated on the Fiscal Quarter ending June 30, 1997, or permit the ratio of CPC's Funded Debt (determined on a consolidated basis) divided by CPC's EBITDA (determined on a -60- 61 consolidated basis) to exceed a ratio of 3.0 to 1.0 as calculated on September 30, 1997 and on each succeeding Fiscal Quarter thereafter. The calculation made as of the Fiscal Quarter ended June 30, 1997 shall be an annualized calculation of EBITDA using only the results of the Fiscal Quarters ended March 31, 1997 and June 30, 1997. The calculation made as of the Fiscal Quarter ended September 30, 1997 shall be an annualized calculation of EBITDA using only the results of the Fiscal Quarters ended March 31, 1997, June 30, 1997, and September 30, 1997. Commencing with the Fiscal Quarter ended on December 31, 1997, the calculations made herein shall be made on a trailing four (4) Fiscal Quarter basis. (c) EBITDA, Plus Leases to Interest Expense, Plus Leases Ratio. Commencing on March 31, 1997 and at the conclusion of each succeeding Fiscal Quarter, permit CPC's ratio of EBITDA, Plus Leases (determined on a consolidated basis) to CPC's Interest Expense, Plus Leases (determined on a consolidated basis) to be less than 1.15 to 1.0. The calculation made as of the Fiscal Quarter ended March 31, 1997 shall be an annualized calculation of EBITDA, Plus Leases and an annualized calculations of Interest Expense Plus Leases using only the results of the Fiscal Quarter ended March 31, 1997. The calculation made as of the Fiscal Quarter ended June 30, 1997 shall be an annualized calculation of EBITDA, Plus Leases and an annualized calculation of Interest Expense Plus Leases using only the results of the Fiscal Quarters ended March 31, 1997 and June 30, 1997. The calculation made as of the Fiscal Quarter ended September 30, 1997 shall be an annualized calculation of EBITDA, Plus Leases and an annualized calculation of Interest Expense Plus Leases using only the results of the Fiscal -61- 62 Quarters ended March 31, 1997, June 30, 1997, and September 30, 1997. Commencing with the Fiscal Quarter ended on December 31, 1997, the calculations made herein shall be made on a trailing four (4) Fiscal Quarter basis. As used herein, "EBITDA, Plus Leases" for any period shall mean an amount equal to the sum of: (a) EBITDA, plus (b) an amount equal to lease payments made on CPC's consolidated capitalized and/or operating leases. As used herein "Interest Expense, Plus Leases" for any period shall mean an amount equal to the sum of: (a) Interest Expense, plus (b) an amount equal to CPC's consolidated capitalized an/or operating leases. (d) Funded Debt to Total Capitalization. Permit CPC's ratio of Funded Debt (determined on a consolidated basis) to CPC's Total Capitalization (determined on a consolidated basis) to exceed .70 to 1.0 at any time from the date hereof up to but not including June 30, 1997, and permit CPC's ratio of Funded Debt (determined on a consolidated basis) to CPC's Total Capitalization (determined on a consolidated basis) to exceed .60 to 1.0 as calculated as of June 30, 1997 and at any time thereafter prior to September 30, 1997, and permit CPC's ratio of Funded Debt (determined on a consolidated basis) to CPC's ratio of Total Capitalization (determined on a consolidated basis) to exceed .50 to 1.0 as calculated as of September 30, 1997 or at any time thereafter. Article VIII. Events of Default. Section 8.01 Events of Default. Any of the following events shall be considered an Event of Default as those terms are used in this Agreement: -62- 63 (a) Principal and Interest Payments. The Borrowers fail to make payment by 1:00 P.M. (Nashville, Tennessee time) within five (5) days when due of any installment of principal or interest on the Revolving Credit Notes or Swing Line Note or the Borrowers fail to pay within five (5) days when due any payment due hereunder or under any of the Loan Documents; or the indebtedness described herein exceeds the Maximum Total Amount, and the Borrowers fail within five (5) days thereafter to make any payments required herein to reduce the indebtedness described herein to an amount equal to or less than the Maximum Total Amount; or (b) Representations and Warranties. Any representation or warranty made by any of the Borrowers in any Loan Document is incorrect in any material respect as of the date thereof; or any representation, statement (including financial statements), certificate, or data furnished or made by Borrowers in any Loan Document with respect to any indebtedness is untrue in any material respect, as of the date as of which the facts therein set forth were stated or certified; or (c) Obligations. Any of the Borrowers fail to perform any of their respective obligations as required by and contained in any Loan Document; or (d) Involuntary Bankruptcy or Receivership Proceedings. A receiver, custodian, liquidator, or trustee of any of the Borrowers or Guarantors, or of any of their respective property, is appointed by the order or decree of any court or agency or supervisory authority having jurisdiction; or any of the Borrowers or the Guarantors is adjudicated bankrupt or insolvent; or any of the Property of any of the Borrowers or the Guarantors is sequestered by court order or a petition is filed against any of the -63- 64 Borrowers or the Guarantors under any state or federal bankruptcy, reorganization, debt arrangement, insolvency, readjustment of debt, dissolution, liquidation, or receivership law of any jurisdiction, whether now or hereafter in effect; or (e) Voluntary Petitions. Any of the Borrowers or any of the Guarantors takes affirmative steps to prepare to file, or any of the Borrowers or any of the Guarantors files a petition in voluntary bankruptcy or to seek relief under any provision of any bankruptcy, reorganization, debt arrangement, insolvency, readjustment of debt, dissolution, or liquidation law of any jurisdiction, whether now or hereafter in effect, or consents to the filing of any petition against it under any such law; or (f) Assignments for Benefit of Creditors, Etc. Any of the Borrowers or any of the Guarantors makes an assignment for the benefit of its creditors, or admits in writing its inability to pay its debts generally as they become due, or consents to the appointment of a receiver, trustee, or liquidator of any of the Borrowers or any of the Guarantors or of all or any part of its respective Properties; or (g) Discontinuance of Business, Etc. Any of the Borrowers or any of the Guarantors discontinues its usual business, or any of the Borrowers or any of the Guarantors becomes an Affiliate of any Person, or any Person who is not presently an owner of a controlling interest in such of the Borrowers or any of the Guarantors becomes a controlling person; or (h) Undischarged Judgments. If a final, non-appealable judgment for the payment of money in excess of $250,000 is rendered by any court or other governmental -64- 65 authority against any of the Borrowers or any of the Guarantors which is not fully covered by valid collectible insurance; or (i) Violation of Laws, Etc. Any of the Borrowers violates or otherwise fails to comply with any law, rule, regulation, decree, order, or judgment under the laws of the United States of America, or of any state or jurisdiction thereof the effect of which has a material and adverse impact on any of the Borrowers; or any of the Borrowers fails or refuses at any and all times to remain current in its or their financial reporting requirements pursuant to such laws, rules, and regulations or pursuant to the rules and regulations of any exchange upon which the shares of any of the Borrowers are traded; or (j) Execution of Guaranty by a Consolidated Entity. Should any Consolidated Entity not execute and deliver to Agent the guaranty and other items required by Section 6.13 herein. Section 8.02 Remedies. Upon the happening of any Event of Default set forth above, with the exception of those events set forth in Section 8.01(d) and 8.01(e): (i) Agent, acting pursuant to Lenders' direction as set forth in Article XII, may declare the entire principal amount of all indebtedness then outstanding, including interest accrued thereon, to be immediately due and payable without presentment, demand, protest, notice of protest, or dishonor or other notice of default of any kind, all of which Borrowers hereby expressly waive, (ii) at Lenders' sole discretion and option, all obligations of any of the Lenders under this Agreement shall immediately cease and terminate unless and until each of the Lenders shall reinstate such obligations in writing; or (iii) Lenders may bring an action to protect or enforce -65- 66 their rights under the Loan Documents or seek to collect the indebtedness described herein by any lawful means. Upon the happening of any event specified in Section 8.01(d) and Section 8.01(e) above: (i) all indebtedness described herein, including all principal, accrued interest, and other charges or monies due in connection therewith shall be immediately and automatically due and payable in full, without presentment, demand, protest, or dishonor or other notice of any kind, all of which Borrowers hereby expressly waive, (ii) all obligations of Lenders under this Agreement shall immediately cease and terminate unless and until each of the Lenders shall reinstate such obligations in writing; or (iii) Lenders may bring an action to protect or enforce their rights under the Loan Documents or seek to collect the indebtedness described herein and/or enforce the obligations evidenced herein by any lawful means. Section 8.03 Default Conditions. Any of the following events shall be considered a Default Condition: (a) Any of the Borrowers suffer a material adverse change in its financial condition; and (b) Should any event occur that except for the giving of notice and/or the passage of time would be an Event of Default. Upon the occurrence of a Default Condition or at any time thereafter until such Default Condition no longer exists, the Borrowers agree that the Lenders, in their sole discretion, and without notice to Borrowers, may immediately cease making any Advances, all without liability whatsoever to Borrowers or any other Person whomsoever, all of which is expressly waived hereby. Borrowers release the Lenders and the Agent from any and all liability whatsoever, -66- 67 whether direct, indirect, or consequential, and whether seen or unforeseen, resulting from or arising out of or in connection with Lenders' determination to cease making Advances pursuant to this Section. Article IX. General Provisions. Section 9.01 Notices. All communications under or in connection with this Agreement or any of the other Loan Documents shall be in writing and shall be mailed by first class certified mail, postage prepaid, or otherwise sent by telex, telegram, telecopy, or other similar form of rapid transmission confirmed by mailing (in the manner stated above) a written confirmation at substantially the same time as such rapid transmission, or personally delivered to an officer of the receiving party. All such communications shall be mailed, sent, or delivered as follows: (a) if to Borrowers, to its address shown below, or to such other address as Borrowers may have furnished to Agent in writing: 2401 21st Avenue South Suite 200 Nashville, Tennessee 37212 Attn: Monroe J. Carell, Jr. (b) if to Agent, to its address shown below, or to such other address or to such individual's or department's attention as it may have furnished Borrowers in writing: SunTrust Bank, Nashville, N.A., Agent 201 Fourth Avenue, North Nashville, Tennessee 37244 Attention: Allen Oakley (c) if to Lenders, to the address of each of the Lenders as shown beside the respective signature of each of the Lenders. -67- 68 Any communication so addressed and mailed by certified mail shall be deemed to be given when so mailed. Section 9.02 Invalidity. In the event that any one or more of the provisions contained in any Loan Document for any reason shall be held invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of any Loan Document. Section 9.03 Survival of Agreements. All representations and warranties of Borrowers in this Agreement and all covenants and agreements in this Agreement not fully performed before the Closing Date of this Agreement shall survive the Closing Date. Section 9.04 Successors and Assigns. Borrowers may not assign their respective rights or delegate duties under this Agreement or any other Loan Document. All covenants and agreements contained by or on behalf of Borrowers in any Loan Document shall bind the Borrowers' successors and assigns and shall inure to the benefit of the Agent, each Lender, the Swing Line Lender, and their respective successors and assigns. Section 9.05 Waivers. Pursuant to T.C.A. Section 47-50-112, no action or course of dealing on the part of Agent, the Swing Line Lender, or any Lender, its officers, employees, consultants, or agents, nor any failure or delay by Agent, Swing Line Lender, or any Lender with respect to exercising any right, power, or privilege of Agent, Swing Line Lender, or any Lender under any of the Loan Documents shall operate as a waiver thereof, except as otherwise provided in this Agreement. Acting pursuant to the requirements of Article XII herein, Agent may from time to time waive any requirement hereof, including any of the Conditions Precedent; however no waiver shall be effective unless in writing and signed by the Agent. The execution -68- 69 by Agent of any waiver shall not obligate Agent, Swing Line Lender, or any Lender to grant any further, similar, or other waivers. Section 9.06 Cumulative Rights. Rights and remedies of Agent, Swing Line Lender, or any Lender under each Loan Document shall be cumulative, and the exercise or partial exercise of any such right or remedy shall not preclude the exercise of any other right or remedy. Section 9.07 Construction. This Agreement and the other Loan Documents constitute a contract made under and shall be construed in accordance with and governed by the laws of the State of Tennessee. Section 9.08 Time of Essence. Time is of the essence with regard to each and every provision of this Agreement. Section 9.09 Costs, Expenses, and Taxes. Borrowers agree to pay on demand all reasonable out-of-pocket costs and expenses of Agent and Swing Line Lender (including the reasonable fees and out-of-pocket expenses of counsel for Agent and Swing Line Lender) incurred by Agent and Swing Line Lender in connection with the preparation, execution, delivery, administration, enforcement, or protection of Agent's, Swing Line Lender's, or Lenders' rights under the Loan Documents (including any suit for declaratory judgment or interpretation of the provisions hereof). Section 9.10 Entire Agreement; No Oral Representations Limiting Enforcement. This Agreement represents the entire agreement between the parties hereto except for such other agreements set forth in the Loan Documents, and any and all oral statements heretofore made regarding the matters set forth herein are merged herein. -69- 70 Section 9.11 Amendments. The parties hereto agree that this Agreement may not be modified or amended except in writing signed by the parties hereto. Section 9.12 Joint and Several Liability. Each of the Borrowers are jointly and severally liable for all representations, warranties, covenants, promises, and agreements of the Borrowers hereunder and under any of the Loan Documents. All references to the Borrowers shall be to each of the Borrowers on a joint and several basis. Section 9.13 Distribution of Information. The Borrowers hereby authorize the Agent, the Swing Line Lender, and each Lender, as the Agent, the Swing Line Lender, and each Lender may elect in its sole discretion, to discuss with and furnish to any Affiliate, to any government or self-regulatory agency with jurisdiction over the Agent, the Swing Line Lender, and each Lender, or to any participant or prospective participant, all financial statements, audit reports and other information pertaining to the Borrowers, the Guarantors and/or the Consolidated Entities whether such information was provided by Borrowers or prepared or obtained by the Agent or third parties. Neither the Agent nor any of its employees, officers, directors or agents make any representation or warranty regarding any audit reports or other analyses of Borrowers which the Agent may elect to distribute, whether such information was provided by Borrowers or prepared or obtained by the Agent or third parties, nor shall the Agent or any of its employees, officers, directors or agents be liable to any Person receiving a copy of such reports or analyses for any inaccuracy or omission contained in such reports or analyses or relating thereto. -70- 71 Article X. Jury Waiver. Section 10.01 Jury Waiver. IF ANY ACTION OR PROCEEDING INVOLVING THIS LOAN AGREEMENT OR ANY LOAN DOCUMENT IS COMMENCED IN ANY COURT OF COMPETENT JURISDICTION, BORROWERS, AGENT, SWING LINE LENDER, AND EACH LENDER HEREBY WAIVE THEIR RIGHTS TO DEMAND A JURY TRIAL. Article XI. Hazardous Substances. Section 11.01 Representation and Indemnity Regarding Hazardous Substances. (a) Borrowers have no knowledge of any spills, releases, discharges, or disposal of Hazardous Substances that have occurred or are presently occurring on or onto any of its Property or on any of the Property of any Consolidated Entity; or of any spills or disposal of Hazardous Substances that have occurred or are occurring off any of its Property (or the property of any Consolidated Entity) as a result of any construction on or operation and use of such Property; in each case under this paragraph (a) so as to violate any Environmental Law in a manner that would have a material adverse effect on the business, Properties or financial condition of any of the Borrowers on the Consolidated Entities or on the ability of any of the Borrowers or the Guarantors to perform their respective obligations under this Agreement or any of the other Loan Documents. (b) The Borrowers represent that its Property and any current operation concerning its Property (and the Property of any of the Consolidated Entities) and its business operations are not in violation of any applicable Environmental Law, and the Borrowers have no actual knowledge or any notice from any governmental body claiming -71- 72 that such Property or such business operations or operations or uses of the Property have or may result in any violation of any Environmental Law or requiring or calling attention to the need for any work, repairs, corrective actions, construction alterations or installation on or in connection with the Property or any of the Borrowers' business in order to comply with any Environmental Law with which Borrowers have not complied, in each case under this paragraph (b) wherein such violation would have a material adverse effect on the business, Properties, or financial condition of the Borrowers and/or any of the Consolidated Entities. If there are any such notices which would have such effect with which Borrowers have not complied, Borrowers shall provide Agent with copies thereof. If Borrowers receive any such notice which would have such effect, Borrowers will immediately provide a copy to Agent. (c) Borrowers, jointly and severally, agree to indemnify and hold Agent, Swing Line Lender, and Lenders harmless from and against any and all claims, demands, damages, losses, liens, liabilities, penalties, fines, lawsuits, and other proceedings, costs and expenses (including, without limitation, reasonable attorneys' fees), arising directly or indirectly from or out of, or in any way connected with (i) the presence of any Hazardous Substances on any of its Property or the Property of any Consolidated Entity in violation of any Environmental Law; (ii) any violation or alleged violation of any Environmental Law relating to Hazardous Substances on any of its Property or the Property of any Consolidated Entity, whether attributable to events occurring before or after Borrowers' acquisition of any of its Property or the acquisition of such property by any Consolidated Entity; (iii) any violation of any Environmental Law by any of the -72- 73 Borrowers or any of the Consolidated Entities resulting from the conduct of its business, use of its Property, or otherwise; or (iv) any inaccuracy in the certifications contained in Section 11.01(a). Article XII. The Agent. Section 12.01 Appointment of Agent. Each Lender hereby designates STB as Agent to administer all matters concerning the Loans and to act as herein specified. Each Lender hereby irrevocably authorizes, and each holder of any Revolving Credit Note by the acceptance of a Revolving Credit Note shall be deemed irrevocably to authorize, the Agent to take such actions on its behalf under the provisions of this Agreement, the other Loan Documents and all other instruments and agreements referred to herein or therein, and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Agent may perform any of its duties hereunder by or through its agents or employees. The Lenders agree that neither the Agent nor any of its directors, officers, employees or agents shall be liable for any action taken or omitted to be taken by it or them hereunder or in connection herewith, except for its or their own gross negligence or willful misconduct. The Lenders agree that the Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any of the Lenders, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise be imposed upon or exist against the Agent. Section 12.02 Authorization of Agent with Respect to the Loan Documents. (a) Each Lender hereby authorizes the Agent to enter into each of the Loan Documents and to take all -73- 74 action contemplated thereby, all in its capacity as Agent for the ratable benefit of the Lenders. All rights and remedies under the Loan Documents may be exercised by the Agent for the benefit of the Agent and the Lenders upon the terms thereof. The Lenders further agree that the Agent may assign its rights and obligations under any of the Loan Documents to any Affiliate of the Agent, if necessary or appropriate under applicable law, which assignee in each such case shall (subject to compliance with any requirements of applicable law governing the assignment of such Loan Documents) be entitled to all the rights of the Agent under and with respect to the applicable Loan Document. (b) The Agent shall administer the Loans described herein and the Loan Documents on behalf of and for the benefit of the Lenders in all respects as if the Agent were the sole Lender under the Loan Documents, except that: (i) The Agent shall administer the Loans and the Loan Documents with a degree of care at least equal to that customarily employed by the Agent in the administration of similar credit facilities for its own account. (ii) The Agent shall not, without the consent of the Majority Lenders, take any of the following actions: (A) agree to a waiver of any material requirements, covenants, or obligations of any of the Borrowers or Guarantors contained herein; (B) agree to any amendment to or modification of any of the terms of any of the Loan Documents; (C) waive any Event of Default or Default Condition as set forth in the Credit Agreement; -74- 75 (D) accelerate the indebtedness described in the Credit Agreement following an Event of Default; or (E) initiate litigation or pursue other remedies to enforce the obligations contained in any Loan Document or to collect the indebtedness described herein. (iii) The Agent shall not, without the consent of all of the Lenders, take any of the following actions: (A) extend the maturity of any payment of principal of or interest on the indebtedness described herein; (B) reduce any fees paid to or for the benefit of Lenders under the Credit Agreement; (C) reduce the rate of interest charged on the indebtedness described herein; (D) release any Guaranty of any Material Subsidiary; (E) waive, amend, modify or change the Conditions Precedent; (F) postpone any date fixed for the payment in respect of principal of, or interest on the indebtedness described herein, or any fees hereunder; (G) modify the definition of Majority Lenders; or (H) modify this Section 12.02(b)(iii). -75- 76 (c) The Agent, upon its receipt of actual notice thereof, shall notify the Lenders of: (i) each proposed action that would require the consent of the Lenders as set forth herein, or (ii) any action proposed to be taken by the Agent in the administration of the Loans and Loan Documents not in the ordinary course of business; provided that any failure of the Agent to give the Lenders any such notice shall not alone be the basis for any liability of the Agent to the Lenders except for the Agent's gross negligence or willful misconduct. (d) The Lenders agree that the Agent shall incur no liability under or in respect of this Agreement with respect to anything which it may do or refrain from doing in the reasonable exercise of its judgment or which may seem to it to be necessary or desirable in the circumstances, except for its gross negligence or willful misconduct. Agent shall incur no liability to any of the Lenders for giving consent on behalf of the Lenders when under the terms of this Agreement consent may not be unreasonably withheld. (e) The Agent shall not be liable to the Lenders or to any Lender in acting or refraining from acting under this Agreement or any other Loan Document in accordance with the instructions of the Majority Lenders or all of the Lenders, where expressly required by this Agreement, and any action taken or failure to act pursuant to such instructions shall be binding on all Lenders. In each circumstance where any consent of or direction from the Majority Lenders or all of the Lenders is required or requested by Agent, the Agent shall send to the Lenders a notice setting forth a description in reasonable detail of the matter as to which consent or direction is requested and the -76- 77 Agent's proposed course of action with respect thereto. In the event the Agent shall not have received a response from any Lender within five (5) Business Days after Agent sends such notice, such Lender shall be deemed to have agreed to the course of action proposed by the Agent. Section 12.03 Agent's Duties Limited; No Fiduciary Duty. The Lenders agree that the Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the other Loan Documents. The Lenders agree that none of the Agent nor any of its respective officers, directors, employees or agents shall be liable for any action taken or omitted by it as such hereunder or in connection herewith, unless caused by its or their gross negligence or willful misconduct. The Agent shall not have by reason of this Agreement a fiduciary relationship to or in respect of any Lender, and nothing in this Agreement, express or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of this Agreement or the other Loan Documents except as expressly set forth herein. SECTION 12.04 NO RELIANCE ON THE AGENT. (A) EACH LENDER REPRESENTS AND WARRANTS TO THE AGENT AND THE OTHER LENDERS THAT INDEPENDENTLY AND WITHOUT RELIANCE UPON THE AGENT, EACH LENDER, TO THE EXTENT IT DEEMS APPROPRIATE, HAS MADE AND SHALL CONTINUE TO MAKE (I) ITS OWN INDEPENDENT INVESTIGATION OF THE FINANCIAL CONDITION AND AFFAIRS OF THE BORROWERS, THE GUARANTORS, AND THE CONSOLIDATED ENTITIES IN CONNECTION WITH THE TAKING OR NOT TAKING OF ANY ACTION IN CONNECTION HEREWITH, AND (II) ITS OWN APPRAISAL OF THE CREDIT WORTHINESS OF THE BORROWERS, THE GUARANTORS, AND THE CONSOLIDATED -77- 78 ENTITIES, AND, EACH LENDER FURTHER AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE AGENT SHALL HAVE NO DUTY OR RESPONSIBILITY, EITHER INITIALLY OR ON A CONTINUING BASIS, TO PROVIDE ANY LENDER WITH ANY CREDIT OR OTHER INFORMATION WITH RESPECT THERETO, WHETHER COMING INTO ITS POSSESSION BEFORE THE MAKING OF THE LOANS OR AT ANY TIME OR TIMES THEREAFTER. AS LONG AS ANY OF THE LOANS ARE OUTSTANDING AND/OR ANY AMOUNT IS AVAILABLE TO BE REQUESTED OR BORROWED HEREUNDER, OR THIS AGREEMENT AND THE LOAN DOCUMENTS HAVE NOT BEEN CANCELLED AND TERMINATED, EACH LENDER SHALL CONTINUE TO MAKE ITS OWN INDEPENDENT EVALUATION OF THE FINANCIAL CONDITION AND AFFAIRS OF THE BORROWERS, THE GUARANTORS, AND THE CONSOLIDATED ENTITIES. (b) The Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, collectability, priority or sufficiency of this Agreement, the Revolving Credit Notes, the Swing Line Note, the Guarantees, the other Loan Documents, or any other documents contemplated hereby or thereby, or the financial condition of the Borrowers, the Guarantors, or any of the Consolidated Entities, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement, the Revolving Credit Notes, the Swing Line Note, the Guarantees, the other Loan Documents or the other documents contemplated hereby or thereby, or the financial condition of the Borrowers, -78- 79 the Guarantors, or any of the Consolidated Entities or the existence or possible existence of any Default Condition or Event of Default. Section 12.05 Certain Rights of Agent. The Lenders agree that if the Agent shall request instructions from the Majority Lenders (or all of the Lenders where unanimity is expressly required under the terms of this Agreement) with respect to any action or actions (including the failure to act) in connection with this Agreement, the Agent shall be entitled to refrain from such act or taking such act, unless and until the Agent shall have received instructions from the Majority Lenders (or all of the Lenders where unanimity is expressly required under the terms of this Agreement); and the Agent shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance with the instructions of the Majority Lenders (or, with regard to acts for which the consent of all of the Lenders is expressly required under the terms of this Agreement, in accordance with the instructions of all of the Lenders). Section 12.06 Reliance by Agent. The Lenders agree that the Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other documentary, teletransmission or telephone message reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person. The Lenders agree that the Agent may consult with legal counsel (including counsel for any Lender), independent public accountants and other experts selected by it and shall not be liable for any action taken or -79- 80 omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. Section 12.07 Indemnification of Agent. To the extent the Agent is not reimbursed and indemnified by the Borrowers, each Lender will reimburse and indemnify the Agent, ratably according to their respective Pro Rata Share, for, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including fees of experts, consultants and counsel and disbursements) or disbursements of any kind or nature whatsoever that may be imposed on, incurred by or asserted against the Agent in performing its duties hereunder, in any way relating to or arising out of this Agreement or the other Loan Documents; provided that no Lender shall be liable to the Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. The obligations and indemnifications arising under this Section 12.07 shall survive termination of this Agreement, repayment of the Loans and indebtedness arising in connection with the Letters of Credit and expiration of the Letters of Credit. Section 12.08 The Agent in its Individual Capacity. With respect to its obligation to lend under this Agreement, the Loan made by it and the Revolving Credit Note issued to it, the Agent shall have the same rights and powers hereunder as any other Lender or holder of a Revolving Credit Note and may exercise the same as though it were not performing the duties of Agent specified herein; and the terms "Lenders," "Majority Lenders," "holders of Revolving Credit Notes," or any similar terms shall, unless the context clearly otherwise indicates, include the Agent in its individual capacity. The Agent also may exercise the rights and remedies of the -80- 81 Swing Line Lender. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of banking, trust, financial advisory or other business with the Borrowers, the Guarantors, the Consolidated Entities, or any Affiliate of the Borrowers as if it were not performing the duties specified herein as Agent, and may accept fees and other consideration from the Borrowers for services in connection with this Agreement and otherwise without having to account for the same to the Lenders. Section 12.09 Holders of Notes. The Agent and the Borrowers may deem and treat the payee of any Revolving Credit Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof shall have been filed with the Agent and the Borrowers. Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Revolving Credit Note shall be conclusive and binding on any subsequent holder, transferee or assignee of such Revolving Credit Note. Section 12.10 Successor Agent. (a) The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrowers and may be removed at any time with cause by the Majority Lenders; provided, however, the Agent may not resign or be removed until (i) a successor Agent has been appointed and shall have accepted such appointment, (ii) the successor Agent has assumed all responsibility for issuance of the Letters of Credit and the successor Agent has assumed in the place and stead of the Agent all existing liability under outstanding Letters of Credit, and (iii) the successor Agent has assumed in the place and stead of the Agent all liability and responsibility of the Swing Line Lender, including the purchase by the successor Agent from the Agent of the Swing Line Lender's position in the Swing Line Note. The -81- 82 transactions described in the immediately preceding sentence shall be accomplished pursuant to written agreements reasonably satisfactory to the Agent and the successor Agent. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within thirty (30) days after the retiring Agent's giving of notice of resignation or the Majority Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a bank that maintains an office in the United States, or a commercial bank organized under the laws of the United States of America or any State thereof, or any Affiliate of such bank, having a combined capital and surplus of at least $100,000,000. (b) Upon the acceptance of any appointment as the Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article XII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement. Section 12.11 Notice of Default or Event of Default. In the event that the Agent or any Lender shall acquire actual knowledge, or shall have been notified, of any Default Condition or Event of Default (other than through a notice by one party hereto to all other parties), the Agent or such Lender shall promptly notify the Agent, and the Agent shall take such action and assert such rights under this Agreement as the Majority Lenders shall request in writing, and the Agent shall not be subject to any liability by reason of its acting pursuant to any such request. If, -82- 83 following notification by Agent to Lenders, the Majority Lenders (or all of the Lenders if required hereunder) shall fail to request the Agent to take action or to assert rights under this Agreement in respect of any Default Condition or Event of Default within five (5) Business Days after their receipt of the notice of any Default Condition or Event of Default from the Agent or any Lender, or shall request inconsistent action with respect to such Default Condition or Event of Default, the Agent may, but shall not be required to, take such action and assert such rights (other than rights under Article VIII hereof) as it deems in its discretion to be advisable for the protection of the Lenders. Section 12.12 Benefit of Agreement. (a) Any Lender may make, carry or transfer Loans at, to or for the account of, any of its branch offices or the office of an Affiliate of such Lender, provided that no such action shall increase the cost of the Loans to the Borrowers. (b) Each Lender may assign a portion of its interests, rights and obligations under this Agreement, including all or a portion of any of its Revolving Credit Loan Commitment (including without limitation its commitment to participate in Letters of Credit) to any Eligible Assignee; provided, however, that (i) the amount of the Revolving Credit Loan Commitment of the assigning Lender subject to each assignment (determined as of the date the assignment and acceptance with respect to such assignment is delivered to the Agent) shall not be less than an amount equal to $5,000,000 or greater integral multiples thereof, and (ii) the parties to each such assignment shall execute and deliver to the Agent and the Borrowers an Assignment and Acceptance, together with a Revolving Credit Note or Revolving Credit Notes subject to such assignment and, unless such assignment is to an Affiliate of such Lender, a processing and -83- 84 recordation fee of $3,000. Borrowers shall not be responsible for such processing and recordation fee or any costs or expenses incurred by any Lender or the Agent in connection with such assignment. From and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five (5) Business Days after the execution thereof, the assignee thereunder shall be a party hereto and to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement. Notwithstanding the foregoing, the assigning Lender must retain after the consummation of such Assignment and Acceptance, a minimum aggregate amount of Revolving Credit Loan Commitment of $10,000,000; provided, however, no such minimum amount shall be required with respect to any such assignment made at any time there exists an Event of Default hereunder. Within five (5) Business Days after receipt of the notice and the Assignment and Acceptance, Borrowers, at their own expense, shall execute and deliver to the Agent, in exchange for the surrendered Revolving Credit Note or Revolving Credit Notes, a new Revolving Credit Note or Revolving Credit Notes to the order of the Eligible Assignee in a principal amount equal to the applicable Revolving Credit Loan Commitment assumed by it pursuant to such Assignment and Acceptance, as well as a and new Revolving Credit Note or Revolving Credit Notes to the assigning Lender in the amount of its retained Revolving Credit Loan Commitment. Such new Revolving Credit Notes to the Eligible Assignee and to the assigning Lender shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Revolving Credit Note or Revolving Credit Notes, shall be dated the date of the surrendered Revolving Credit Note or Revolving Credit Notes that they replace, and shall otherwise be in substantially the form attached hereto as Exhibit C. -84- 85 (c) No assignment of all or any portion of this Agreement by any Lender shall be permitted without compliance with the provisions of Section 2.12(b) hereof, or if such assignment would violate any applicable securities law. In connection with its execution and delivery hereof each Lender represents that it is acquiring its interest herein for its own account for investment purposes and not with a view to further distribution thereof, and shall require any proposed assignee to furnish similar representations to the Agent and the Borrowers. (d) Each Lender may, without the consent of Borrowers or the Agent but subject to the provisions of Section 2.07, sell participations in its respective Revolving Credit Loan Commitment and Letter of Credit commitments to such Lender's Affiliate(s), but sales of participations to Persons other than such Lender's Affiliates shall be made only with the prior consent of the Agent and in all events subject to said section. Provided, however, that (i) no Lender may sell a participation in its aggregate Revolving Credit Loan Commitment and Letter of Credit commitments (after giving effect to any permitted assignment hereof) unless it retains an aggregate exposure of at least $10,000,000 (except that no such limitation shall be applicable to any such participation sold at any time there exists an Event of Default hereunder), (ii) such Lender's obligations under this Agreement shall remain unchanged, (iii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (v) Borrowers and the Agent and other Lenders shall continue to deal solely and directly with each Lender in connection with such Lender's rights and obligations as provided in this Agreement and the other Loan Documents. Each Lender shall promptly notify in writing the Agent of any sale of a participation hereunder. -85- 86 (e) Any Lender or participant may, in connection with the assignment or participation or proposed assignment or participation, pursuant to this Section 12.12, disclose to the assignee or participant or proposed assignee or participant any information relating to Borrowers, Guarantors, or the Consolidated Entities furnished to such Lender by or on behalf of Borrowers, Guarantors, or any of the Consolidated Entities. With respect to any disclosure of confidential, non-public, proprietary information, such proposed assignee or participant shall agree to use the information only for the purpose of making any necessary credit judgments with respect to this credit facility and not to use the information in any manner prohibited by any law, including without limitation, the securities laws of the United States. The proposed participant or assignee shall agree in writing not to disclose any of such information except (i) to directors, employees, auditors or counsel to whom it is necessary to show such information, each of whom shall be informed of the confidential nature of the information and agree to maintain the confidentiality thereof as described herein, (ii) in any statement or testimony pursuant to a subpoena or order by any court, governmental body or other agency asserting jurisdiction over such entity, or as otherwise required by law (provided prior notice is given to Borrowers and the Agent unless otherwise prohibited by the subpoena, order or law), and (iii) upon the request or demand of any regulatory agency or authority with proper jurisdiction. The proposed participant or assignee, and such representatives, shall further agree to return to Borrowers all documents or other written material and copies thereof received from any Lender, the Agent or Borrowers relating to such confidential information. -86- 87 (f) Any Lender may at any time assign all or any portion of its rights in this Agreement and the Revolving Credit Notes issued to it to a Federal Reserve Bank; provided that no such assignment shall release the assigning Lender from any of its obligations hereunder. ENTERED INTO the date first above written. BORROWERS: CENTRAL PARKING CORPORATION By: -------------------------------- Title: ----------------------------- CENTRAL PARKING SYSTEM, INC. By: -------------------------------- Title: ----------------------------- CENTRAL PARKING SYSTEM REALTY, INC. By: -------------------------------- Title: ----------------------------- AGENT: SUNTRUST BANK, NASHVILLE, N.A., Agent By: -------------------------------- Title: ----------------------------- -87- 88 LENDERS: SUNTRUST BANK, NASHVILLE, N.A. By: -------------------------------- Title: ----------------------------- Address: 201 Fourth Avenue North Nashville, Tennessee 37219 Pro Rata Share: 100% -88- EX-99.C.1 11 AGREEMENT AND PLAN OF MERGER 1 AGREEMENT AND PLAN OF MERGER AMONG CENTRAL PARKING CORPORATION, CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC. AND SQUARE INDUSTRIES, INC. DATED AS OF DECEMBER 6, 1996 2 TABLE OF CONTENTS
PAGE ---- ARTICLE I THE OFFER ........................................................................................... 1 1.1 The Tender Offer ..................................................................................... 1 1.2 Consent by the Company ............................................................................... 2 1.3 Shareholder Lists ................................................................................... 3 1.4 Directors ........................................................................................... 4 1.5 Loan Arrangements ................................................................................... 4 ARTICLE II THE MERGER; CLOSING; EFFECTIVE TIME ................................................................. 5 2.1 The Merger. ......................................................................................... 5 2.2 Closing ............................................................................................. 5 2.3 Effective Time ....................................................................................... 5 2.4 The Certificate of Incorporation ..................................................................... 5 2.5 The By-Laws ......................................................................................... 5 2.6 Directors ........................................................................................... 5 2.7 Officers ............................................................................................. 6 2.8 Effect of Merger ..................................................................................... 6 ARTICLE III CONVERSION OR CANCELLATION OF SHARES IN THE MERGER ................................................... 6 3.1 Conversion or Cancellation of Shares. ............................................................... 6 3.2 Payment for Shares. ................................................................................. 7 3.3 Transfer of Shares After the Effective Time ......................................................... 8 3.4 Dissenting Shares..................................................................................... 8 3.5 Treatment of Stock Options and Warrants ............................................................. 8 3.6 Investment of Exchange Fund ......................................................................... 9 ARTICLE IV REPRESENTATIONS AND WARRANTIES ....................................................................... 9 4.1 Representations and Warranties of the Company ....................................................... 9 4.2 Representations and Warranties of the Purchaser and Merger Sub ..................................... 17 ARTICLE V COVENANTS ......................................................................................... 20 5.1 Interim Operations of the Company ................................................................. 20 5.2 Acquisition Proposals ............................................................................. 22 5.3 Stock Options and Warrants ......................................................................... 23 5.4 Shareholder Approval ............................................................................... 23 5.5 Filings; Other Action ............................................................................. 24 5.6 Access; Confidentiality ........................................................................... 24 5.7 Notification of Certain Matters ................................................................... 25 5.8 Publicity ......................................................................................... 26 5.9 Consents; Approvals ............................................................................... 26 5.10 HSR Act Compliance; Other Filings................................................................... 26 5.11 Indemnification; Directors' and Officers' Insurance ............................................... 26
i 3 5.12 Employment Matters ................................................................................. 28 5.13 Affiliate Agreements ............................................................................... 28 5.14 Further Actions ................................................................................... 29 ARTICLE VI CONDITIONS TO THE MERGER ........................................................................... 29 6.1 Conditions to Obligations of the Purchaser and Merger Sub to Effect the Merger ............................................................................... 29 6.2 Conditions to Obligations of the Company to Effect the Merger ..................................... 30 ARTICLE VII TERMINATION ....................................................................................... 31 7.1 Termination by Mutual Consent ..................................................................... 31 7.2 Termination by either the Purchaser or the Company ................................................. 31 7.3 Termination by the Purchaser ....................................................................... 32 7.4 Termination by the Company ......................................................................... 32 7.5 Effect of Termination and Abandonment ............................................................. 33 7.6 Break-up Fee. ..................................................................................... 33 ARTICLE VIII ESCROW ............................................................................................. 34 8.1 Escrow Agreement. ................................................................................. 34 8.2 Escrow Committee ................................................................................... 34 8.3 Non Transferability of Escrowed Funds............................................................... 35 ARTICLE IX MISCELLANEOUS AND GENERAL ......................................................................... 35 9.1 Payment of Expenses ............................................................................... 35 9.2 Survival ........................................................................................... 35 9.3 Modification or Amendment ......................................................................... 35 9.4 Waiver of Conditions ............................................................................... 36 9.5 Counterparts ....................................................................................... 36 9.6 Governing Law ..................................................................................... 36 9.7 Notices ........................................................................................... 36 9.8 Entire Agreement, etc............................................................................... 37 9.9 Assignment; Merger Sub ............................................................................. 37 9.10 Parties in Interest ............................................................................... 37 9.11 Obligation of the Purchaser ....................................................................... 37 9.12 Captions ........................................................................................... 38 9.13 Integration of Disclosure Schedule. ............................................................... 38 9.14 Arbitration......................................................................................... 38
ii 4 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of December 6, 1996, among Square Industries, Inc., a New York corporation (the "Company"), Central Parking Corporation, a Tennessee corporation (the "Purchaser"), and Central Parking System -- Empire State, Inc., a New York corporation and an indirect wholly-owned subsidiary of the Purchaser ("Merger Sub"), the Company and Merger Sub sometimes being hereinafter collectively referred to as the "Constituent Corporations." RECITALS WHEREAS, the Boards of Directors of the Purchaser and the Company each have determined that it is in the best interests of their respective shareholders for the Purchaser to acquire the Company upon the terms and subject to the conditions set forth herein; and WHEREAS, the Company, the Purchaser and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with this Agreement; NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, the parties hereto hereby agree as follows: ARTICLE I THE OFFER 1.1 The Tender Offer. Provided that this Agreement shall not have been terminated in accordance with Article VII, as promptly as practicable, but in no event later than the fifth business day after the initial public announcement of this Agreement (which announcement shall occur as promptly as practicable but in no event later than the first business day following the execution hereof, Merger Sub shall commence a cash tender offer (the "Offer") to acquire all of the shares of the Company's common stock, par value $.01 per share (the "Shares"), at a price of $28.50 per Share net to the seller in cash at the closing of the Offer, without interest thereon and an additional $2.50 per Share to be deposited by Purchaser and held in escrow as contingent consideration for distribution in whole or in part to either the shareholders of the Company or Purchaser based upon resolution of certain matters, subject to adjustment pursuant to the Escrow Agreement (the "Offer Contingent Consideration") as provided in Article VIII, (the $28.50 and the Offer Contingent Consideration collectively the "Offer Price") and shall consummate the Offer in accordance with its terms. The obligation of Merger Sub to commence the Offer and to accept for payment and to pay for Shares tendered pursuant to the Offer shall be subject only to (i) the condition that there shall be validly tendered in accordance with the terms of the Offer and not withdrawn prior to the expiration of the Offer a number of Shares which, together with any Shares then owned by Purchaser or Merger Sub represents at least sixty-six and two-thirds percent (66 2/3%) of the Shares on a fully diluted basis (fully diluted 1 5 shall include, without limitation, all Shares issuable upon the conversion of any convertible securities or upon the exercise of any options, warrants or rights, unless the holder of such options, warrants or rights shall have entered into a binding agreement to cash out such options, warrants or rights in accordance with Section 3.5) (the "Minimum Condition") and (ii) the satisfaction of the conditions set forth in Annex A (the "Conditions"). The Offer shall expire 21 business days after it is commenced and shall not be extended without the prior written consent of the Company; provided Purchaser may extend the Offer one time for no more than ten (10) days and only if at least 80% of all of the outstanding Shares have been tendered prior to such extension. The Purchaser and Merger Sub expressly reserve the right to waive any such condition, to increase the price per Share payable in the Offer and to make any other changes in the terms and conditions of the Offer; provided, however, that unless the Purchaser and the Merger Sub shall have obtained the prior written approval of the Company, no change may be made in the Offer which (i) decreases the price per share payable in the Offer, (ii) changes the form of the consideration to be paid in the Offer, or (iii) modifies the Conditions to the Offer or imposes conditions to the Offer in addition to the Minimum Condition and those set forth in Annex A. As soon as practicable on the date of the commencement of the Offer, Merger Sub shall file with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments and supplements thereto, the "Schedule 14D-1") with respect to the Offer. The Schedule 14D-1 shall contain or shall incorporate by reference an offer to purchase (the "Offer to Purchase") and forms of the related letter of transmittal and any related summary advertisement (the Schedule 14D-1, the Offer to Purchase and such other documents, together with all supplements and amendments thereto, being referred to herein collectively as the "Offer Documents"). The Offer Documents will comply in all material respects with the provisions of applicable federal securities laws. The Purchaser, Merger Sub and the Company agree to correct promptly any information provided by any of them for use in the Offer Documents which shall have become materially false or misleading, and the Purchaser and Merger Sub further agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer Documents as so corrected to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. The Company and its counsel shall be given the opportunity to review and comment upon the Schedule 14D-1 prior to its filing with, or being sent to, the SEC. Merger Sub shall, and the Purchaser shall cause Merger Sub to, accept for payment all Shares validly tendered and not withdrawn pursuant to the Offer as promptly as practicable after the satisfaction or waiver by Merger Sub or the Purchaser of the Conditions (including without limitation the Minimum Condition) and shall pay for such Shares as promptly as practicable following the expiration of the Offer. The Purchaser hereby guarantees the obligation of Merger Sub to consummate the Offer, subject to the Minimum Condition and the Conditions. 1.2 Consent by the Company. The Company hereby approves of and consents to the Offer and represents and warrants that the Board of Directors of the Company (i) has unanimously approved and adopted this Agreement and the transactions contemplated hereby, including the Offer and the Merger, (ii) has determined that this Agreement and the transactions contemplated hereby, including without limitation, each of the Offer and the 2 6 Merger are fair to and in the best interests of the holders of Shares (other than Purchaser and Merger Sub), (iii) has resolved to recommend that the shareholders of the Company accept the Offer and approve and adopt this Agreement and the transaction contemplated hereby, and (iv) has approved the transactions contemplated hereby and has made all such determinations and taken all such other actions as are necessary or appropriate under Section 912 of the New York Business Corporation Law (the "NYBCL") to ensure that such Section 912 does not apply to any of the transactions contemplated hereunder. The Blackstone Group L.P. has advised the Company on December 6, 1996 that the Offer Price and Merger Consideration (as defined in Section 3.1) to be received by the holders of the Shares pursuant to this Agreement, subject to the escrow provided in Article VIII, is fair to such holders from a financial point of view (the "Fairness Opinion") and has authorized the Company to include such Fairness Opinion (or references thereto) in the Offer Documents and in the Schedule 14D-9 and the Proxy Statement referred to in Section 4.1(j). As soon as practicable on the date of the commencement of the Offer, the Company shall file with the SEC and mail to the holders of Shares, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto, the "Schedule 14D-9") containing the recommendation of the Company's Board of Directors. The Schedule 14D-9 will comply in all material respects with the provisions of applicable federal securities laws. The Company, the Purchaser and Merger Sub agree to correct promptly any information provided by any of them for use in the Schedule 14D-9 which shall have become materially false or misleading, and the Company further agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. The Purchaser, Merger Sub and their counsel shall be given the opportunity to review and comment upon the Schedule 14D-9 prior to its filing with, or being sent to, the SEC. 1.3 Shareholder Lists. In connection with the Offer, the Company shall promptly furnish Merger Sub with a list of the record holders of Shares and mailing labels containing the names and addresses of all record holders of Shares and lists of securities positions of Shares held in stock depositories, each as of the most recent date practicable, together with all other available listings and computer files containing names, addresses and security positions of record holders and non-objecting beneficial owners of Shares as of the most recent date practicable and shall promptly furnish Merger Sub with such additional information, including updated lists of the holders of Shares, mailing labels and lists of securities positions, to the extent available, and such other assistance as Merger Sub or its agents may reasonably request in connection with the Offer and communicating the Offer to the record and beneficial holders of Shares. Subject to the requirements of applicable law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer or the Merger, the Purchaser and Merger Sub shall and each of the Purchaser and Merger Sub shall cause its affiliates to (i) hold in confidence all such information, (ii) use such information only in connection with the Offer and Merger and (iii) if this Agreement shall be terminated pursuant to Article VII, return all such information to the Company. 3 7 1.4 Directors. (a) Promptly upon the purchase by Merger Sub of at least a majority of the outstanding Shares pursuant to the Offer, Merger Sub shall be entitled, subject to compliance with Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to designate such number of directors, rounded up to the next greatest whole number, on the Board of Directors of the Company as will give Merger Sub representation on the Board of Directors of the Company equal to that number of directors which equals the product of the total number of directors on the Board of Directors of the Company (giving effect to the directors appointed or elected pursuant to this sentence and including current directors serving as officers of the Company) multiplied by the percentage that the aggregate number of Shares beneficially owned by Merger Sub or any affiliate of Merger Sub (including for the purposes of this Section 1.4 such Shares as are accepted for payment pursuant to the Offer, but excluding Shares held by the Company or its affiliates) bears to the number of Shares outstanding. At such times, the Company will also cause (i) each committee of the Board of Directors of the Company, (ii) if requested by Merger Sub, the Board of Directors of each of the Company's subsidiaries and (iii) if requested by Merger Sub, each committee of such board to include such persons designated by Merger Sub constituting the same percentage of each such committee or board as Merger Sub's designees are of the Board of Directors of the Company. The Company shall, upon request by Merger Sub, promptly increase the size of the Board of Directors of the Company or exercise its best efforts to secure the resignations of such number of directors as is necessary to enable Merger Sub designees to be elected to the Board of Directors of the Company and shall cause Merger Sub's designees to be so elected. (b) Subject to applicable law, the Company shall promptly take all action necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under this Section 1.4 and shall include in the Schedule 14D-9 mailed to shareholders promptly upon the commencement of the Offer (or an amendment thereof or an information statement pursuant to Rule 14f-1 if Merger Sub has not theretofore designated directors) such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 1.4. The Purchaser and Merger Sub will supply the Company and be solely responsible for any information with respect to itself and its nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. 1.5 Loan Arrangements. Promptly after the purchase by Merger Sub of the Shares upon the expiration of the Offer, Merger Sub shall (i) either repay or refinance the obligations of the Company and its subsidiaries pursuant to the Credit Agreement among National Westminster Bank USA (Fleet Bank), the Company and 808 Square Corp. dated July 5, 1988 as amended to date (the "Natwest Debt") and (ii) simultaneously therewith repay in full certain loans made by Lowell and Sanford Harwood in June, 1995 in the original principal amount of $500,000, plus interest. 4 8 ARTICLE II THE MERGER; CLOSING; EFFECTIVE TIME 2.1 The Merger. Upon the terms and conditions set forth in this Agreement, at the Effective Time (as defined in Section 2.3) in accordance with the NYBCL Merger Sub shall be merged with and into the Company and the separate corporate existence of Merger Sub shall thereupon cease (the "Merger"). The Company shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the "Surviving Corporation") and shall continue to be governed by the laws of the State of New York, and the separate corporate existence of the Company with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger, except as set forth in Section 2.4 and 2.5. 2.2 Closing. The closing of the Merger (the "Closing") shall take place at the offices of Harwell Howard Hyne Gabbert & Manner, P.C., 1800 First American Center, Nashville, Tennessee at 11:00 A.M. on the first business day after the latest to occur of: (i) the date the Merger is approved and adopted by the shareholders of the Company pursuant to Section 5.4, if such approval and adoption is required by applicable law; or (ii) the date on which the last to be fulfilled or waived of the conditions set forth in Article VI hereof shall be fulfilled or waived in accordance with this Agreement; or at such other place and time and/or on such other date as the Company and the Purchaser may agree. 2.3 Effective Time. Simultaneous with or as soon as practicable following the Closing, the Company and the Purchaser will cause a Certificate of Merger (the "Certificate of Merger") to be executed and filed with the Secretary of State of New York in accordance with the NYBCL. The Certificate of Merger will become effective on the date of filing of the Certificate of Merger with the Secretary of State of New York, or as promptly as practicable as the Company and Purchaser shall agree should be specified in the Certificate of Merger and such time is hereinafter referred to as the "Effective Time." 2.4 The Certificate of Incorporation. The Certificate of Incorporation of Merger Sub ("Certificate") in effect at the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation, until duly amended in accordance with the terms thereof and the NYBCL. 2.5 The By-Laws. The By-Laws of Merger Sub in effect at the Effective Time shall be the By-Laws of the Surviving Corporation, until duly amended in accordance with the terms thereof and the NYBCL. 2.6 Directors. The directors of Merger Sub at the Effective Time shall, from and after the Effective Time, be the initial directors of the Surviving Corporation until their respective successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Certificate and By-Laws. 5 9 2.7 Officers. The officers of Merger Sub at the Effective Time shall, from and after the Effective Time, be the initial officers of the Surviving Corporation until their respective successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Certificate of Incorporation and By-Laws. 2.8 Effect of Merger. The Merger shall have the effects of a Merger set forth in Section 906 of the NYBCL. ARTICLE III CONVERSION OR CANCELLATION OF SHARES IN THE MERGER 3.1 Conversion or Cancellation of Shares. The manner of converting or canceling shares of the Company and Merger Sub in the Merger shall be as follows: (a) At the Effective Time, each Share of the Company issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares as defined in Section 3.4 and Shares canceled in accordance with Section 3.1(b)) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive, without interest, an amount net in cash equal to $28.50 per Shareholder and an additional $2.50 per Share to be deposited by Purchaser and held by the Escrow Agent in escrow as contingent consideration for distribution in whole or in part to either the Shareholders of the Company or Purchaser based upon resolution of certain matters subject to adjustment pursuant to the Escrow Agreement as described in Article VIII (the "Merger Contingent Consideration" and together with the Offer Contingent Consideration and the Option Contingent Consideration as defined in Section 3.5 the "Contingent Consideration") (the $28.50 and the Merger Contingent Consideration collectively the "Merger Consideration"). All such Shares, by virtue of the Merger and without any action on the part of the holders thereof (other than Dissenting Shares), shall no longer be outstanding and shall be canceled and retired and shall cease to exist, and each holder of a certificate representing any such Shares shall thereafter cease to have any rights with respect to such Shares, except the right to receive the Merger Consideration subject to escrowed amounts for such Shares upon the surrender of such certificate in accordance with Section 3.2. (b) At the Effective Time, each Share issued and held in the Company's treasury and each Share owned by the Purchaser, Merger Sub or any direct or indirect wholly-owned subsidiary of the Purchaser or the Company at the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, cease to be outstanding, shall be canceled and retired without payment of any consideration therefor and shall cease to exist. (c) At the Effective Time, each share of common stock, par value $.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of Merger Sub or the holder(s) 6 10 of such shares, be converted into one share of common stock, par value $.01 per share of the Surviving Corporation. 3.2 Payment for Shares. At or prior to the Effective Time, the Purchaser shall make available or cause to be made available to the paying agent appointed by the Purchaser with the Company's prior approval (the "Paying Agent") amounts sufficient in the aggregate to provide all funds necessary for the Paying Agent to make payments pursuant to Section 3.1(a) hereof (other than the Contingent Consideration which is to be deposited with the Escrow Agent pursuant to Article VIII) to holders of Shares issued and outstanding immediately prior to the Effective Time (other than Shares canceled pursuant to Section 3.1(b)). In addition, at or prior to the Effective Time, the Purchaser shall deposit the Merger Contingent Consideration with the Escrow Agent as provided in Article VIII. Promptly after the Effective Time, Paying Agent shall cause to be mailed to each person who was, at the Effective Time, a holder of record of issued and outstanding Shares (other than Dissenting Shares) a form (mutually agreed to by the Purchaser and the Company) of letter of transmittal and instructions for use in effecting the surrender of the certificates which, immediately prior to the Effective Time, represented any of such Shares in exchange for payment therefor. Upon surrender to the Paying Agent of such certificates, together with such letter of transmittal, duly executed and completed in accordance with the instructions thereto, the Paying Agent shall promptly cause to be paid to the persons entitled thereto a check in the amount to which such persons are entitled, after giving effect to any required tax withholdings and the escrow described in Article VIII. No interest will be paid or will accrue on the amount payable upon the surrender of any such certificate, except to the extent provided in the Escrow Agreement as defined in Article VIII. If payment is to be made to a person other than the registered holder of the certificate surrendered, it shall be a condition of such payment that the certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer and that the person requesting such payment shall pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of the certificate surrendered or establish to the satisfaction of the Surviving Corporation or the Paying Agent that such tax has been paid or is not applicable. One year following the Effective Time, the Surviving Corporation shall be entitled to cause the Paying Agent to deliver to it any funds (including any interest received with respect thereto) made available to the Paying Agent which have not been disbursed to holders of certificates formerly representing Shares outstanding on the Effective Time, and thereafter such holders shall be entitled to look to the Surviving Corporation with respect to the cash payable upon due surrender of their certificates. The Surviving Corporation shall pay all charges and expenses, including those of the Paying Agent, in connection with the exchange of cash for Shares and the Purchaser shall reimburse the Surviving Corporation for such charges and expenses. In the event any certificates shall have been lost, stolen or destroyed, the Paying Agent shall issue in exchange for such lost, stolen or destroyed certificates, upon the making of an affidavit of that fact by the holder thereof, such Merger Consideration as may be required pursuant to Section 3.1; provided, however that the Purchaser may, in its discretion and as a condition precedent to the issuance and delivery thereof, require the owner of such lost, stolen or destroyed certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against the Purchaser or the Paying Agent with respect to the certificates alleged to have been lost, stolen or destroyed. 7 11 3.3 Transfer of Shares After the Effective Time. No transfers of Shares which were outstanding immediately prior to the Effective Time shall be made on the stock transfer books of the Surviving Corporation at or after the Effective Time. If, after the Effective Time, certificates are presented as provided in this Agreement to the Surviving Corporation, they shall be canceled and exchanged for cash as provided in this Article III. 3.4 Dissenting Shares. (a) Notwithstanding any provision of this Agreement to the contrary, Shares which are outstanding immediately prior to the Effective Time and which are held by shareholders who have not voted such Shares in favor of the Merger or consented thereto in writing and who shall have available to them and who shall have demanded properly in writing appraisal for such Shares in accordance with Sections 623 and 910 of the NYBCL (collectively, the "Dissenting Shares") shall not be converted into or represent the right to receive the Merger Consideration, but such shareholders shall be entitled only to such rights as are granted by Section 910 of the NYBCL. Such shareholders shall be entitled to receive payment of the appraised value of such Shares held by them in accordance with the provisions of Section 910 of the NYBCL, except that all Dissenting Shares held by shareholders who shall have failed to perfect or who effectively shall have withdrawn or lost their rights of appraisal of such Shares under Section 910 of the NYBCL shall thereupon be deemed to have converted into and to have been exchangeable for, as of the Effective Time, the right to receive the Merger Consideration, without any interest thereon, upon surrender, in the manner provided in Section 3.2, of the certificate or certificates that formerly evidenced such Shares. (b) The Company shall give the Purchaser (i) prompt notice of any demands for appraisal received by the Company, withdrawals of any such demands and any other instruments served pursuant to the NYBCL and received by the Company and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under the NYBCL. The Company shall not, except with the prior written consent of the Purchaser, make any payment with respect to any demands for appraisal or offer to settle or settle any such demands unless otherwise required by law. 3.5 Treatment of Stock Options and Warrants. Promptly after the closing of the Offer, each holder of a then outstanding option or warrant to purchase Shares heretofore granted, all as more particularly described in the Disclosure Schedule, will, upon the consent of each such holder thereof, receive (whether such option or warrants are immediately exercisable or not) in settlement thereof, (a) a cash payment from the Company in an amount equal to the product of (i) the difference between the Offer Price less the Option Contingent Consideration (as defined below), and the per share exercise price of such options or warrants (the "Option Consideration") and (ii) the total number of Shares which the holder of each such option or warrant is entitled to purchase under such option or warrant, as provided above (the "Option Shares") and (b) a deposit by Purchaser of $2.50 per Option Share to be held in escrow as contingent consideration for distribution to the optionholders and warrant holders of the Company or to be disbursed in whole or in part 8 12 to Purchaser based upon the resolution of certain matters, subject to adjustment pursuant to the Escrow Agreement (the "Option Contingent Consideration"). 3.6 Investment of Exchange Fund. The Paying Agent shall invest all funds received by Paying Agent, as reasonably directed by Purchaser on a daily basis. Any interest and other income resulting from such investments shall be paid to Purchaser. ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.1 Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchaser and Merger Sub that: (a) Corporation Organization and Qualification. Except as disclosed in the Disclosure Schedule, each of the Company and the Subsidiaries (as defined below) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power and authority to carry on its business as it is now being conducted. Each of the Company and the Subsidiaries is in good standing as a foreign corporation in each jurisdiction where the properties owned, leased or operated, or the business conducted, by it require such qualification, except where the failure to be so qualified or in such good standing will not have a material adverse effect on the financial condition, properties, business or results of operations of the Company and the Subsidiaries taken as a whole. A true and complete list of the Company's subsidiaries, (individually, a "Subsidiary", and collectively, the "Subsidiaries") together with the jurisdiction of incorporation of each Subsidiary and the percentage of each Subsidiaries' outstanding capital stock owned by the Company or another Subsidiary, is set forth in the disclosure schedule delivered to the Purchaser and dated the date hereof (the "Disclosure Schedule"). The Company has heretofore furnished to the Purchaser a complete and correct copy of its and each of the Subsidiaries' Certificate of Incorporation (or other applicable organizational documents) and By-laws as currently in effect. Neither the Company nor any of the Subsidiaries is in violation of any of the provisions of their respective Certificate of Incorporation (or other applicable organizational documents) and By-laws, except for any such violations as would not have a material adverse effect on the financial condition, properties, business or results of operations of the Company and the Subsidiaries taken as a whole. Except as set forth on the Disclosure Schedule, the Company does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any corporation, partnership, joint venture or other entity. (b) Authorized Capital. The authorized capital stock of the Company consists of 2,000,000 Shares, of which 1,199,156 Shares were issued and outstanding on November 4, 1996. All of the issued and outstanding Shares have been duly authorized and are validly issued, fully paid and nonassessable, subject to Section 630 of the NYBCL. The Company has no Shares reserved for issuance, except that, as of November 4, 1996, there were an aggregate of 407,100 Shares reserved for issuance in connection with options 9 13 granted under the Company's 1992 Stock Option Plan, all as more particularly described in the Disclosure Schedule and 150,000 Shares were reserved for issuance pursuant to five year Common Stock Purchase Warrants issued on October 30, 1995 to Lowell and Sanford Harwood, as more particularly described in the Disclosure Schedule (the "Stock Option Plan"). Except as set forth above, there are no shares of capital stock of the Company authorized, issued or outstanding and except as set forth above, there are no preemptive rights nor any outstanding subscriptions, options, warrants, rights, convertible securities or other agreements or commitments of any character obligating the Company to issue, transfer or sell any of its issued or unissued capital stock or other securities. Except as set forth in the Disclosure Schedule and except for the Voting Agreement dated May 30, 1991 between Lowell and Sanford Harwood, the Collateral Pledge Agreement to Regent National Bank and the Pledge Agreements between the Subsidiaries and National Westminster Bank USA (Fleet Bank) relating to the capital stock of the Subsidiaries, each as more particularly described in the Disclosure Schedule, there are no voting rights or other agreements or understandings to which the Company or any of the Subsidiaries is a party with respect to the voting or transfer of the capital stock of the Company or the Subsidiaries. (c) Corporate Authority. (i) The Company has the requisite corporate power and authority to execute and deliver this Agreement and, subject to obtaining any necessary approval of its shareholders, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Company's Board of Directors and, except for the adoption of this Agreement and the approval of the Merger by its shareholders, no other corporate proceedings on the part of the Company are necessary to authorize this Agreement and the consummation by the Company of the transactions contemplated hereby. This Agreement is a valid and binding agreement of the Company, and assuming this Agreement constitutes a legal, valid and binding agreement of each of Merger Sub and the Purchaser, this Agreement is enforceable against the Company in accordance with its terms, except that (A) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights and (B) the remedy of specific performance and injunctive relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (ii) Except as set forth in the Disclosure Schedule, the execution and delivery of this Agreement by the Company do not, and the consummation by the Company of the transactions contemplated by this Agreement will not, constitute or result in (A) a breach or violation of, or a default under, the Certificate of Incorporation (or applicable organizational documents) or By-Laws of the Company or the Subsidiaries, or (B) a breach or violation of, or a default under, termination of, or the acceleration or the creation of a lien, pledge, security interest or other encumbrance on the assets of the Company or the Subsidiaries or the Shares held by affiliates of the Company (with or without the giving of notice or the lapse of time) pursuant to, any provision of any material agreement, lease, contract, note, mortgage, indenture, or other material obligation ("Contracts") of the Company or any law, rule, ordinance or regulation or judgment, decree, order, award or governmental or non-governmental permit or license to which the Shares held by affiliates 10 14 of the Company, the Company or the Subsidiaries, or their assets are subject, except, in the case of clause (B) above, for such breaches, violations, defaults, terminations, accelerations or charges that, in the aggregate, are not reasonably likely to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and the Subsidiaries taken as a whole or that could not prevent, materially delay or materially burden the transactions contemplated by this Agreement. (d) Governmental Filings. Except for (i) the filings by the Purchaser and the Company required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing of the Schedule 14D-9 and the Proxy Statement with the SEC pursuant to the Exchange Act, (iii) making of the Merger filing with the Secretary of State of the State of New York in connection with the Merger, and (iv) the other consents and filings described in the Disclosure Schedule (collectively, the "Regulatory Filings"), no declaration, filing or negotiation with or notice to, or authorization, consent or approval of, any governmental or regulatory body or authority is necessary for the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby, other than such declarations, filings, registrations, notices, authorizations, consents or approvals, which if not made or obtained, would not, in the aggregate, have a material adverse effect on the financial condition, properties, business or results of operations of the Company and the Subsidiaries taken as a whole or materially delay or restrict the Company's ability to consummate the Merger. (e) Compliance; Permits. (i) Except as disclosed in the Disclosure Schedule, neither the Company nor any of the Subsidiaries is in conflict with, or in default or violation of, any law, rule, regulation, order, judgment or decree applicable to the Company or any of the Subsidiaries or by which the Company or any of the Subsidiaries or any of their respective properties is bound or affected, except where such conflicts, defaults and violations would not, in the aggregate, have a material adverse effect on the financial condition, properties, business or results of operation of the Company and the Subsidiaries taken as a whole. (ii) The Company and the Subsidiaries hold all permits, licenses, easements, variances, exceptions, consents, certificates, orders and approvals from governmental authorities which are material to the operation of the business of the Company and the Subsidiaries taken as a whole (collectively, the "Company Permits") except where the failure to hold or maintain any of the foregoing would not, in the aggregate, have a material adverse effect on the financial condition, properties, business or results of operations of the Company and the Subsidiaries taken as a whole. The Company and the Subsidiaries are in compliance with the terms of the Company Permits, except where the failure to so comply would not, in the aggregate, have a material adverse effect on the financial condition, properties, business or results of operation of the Company and the Subsidiaries taken as a whole. 11 15 (f) Company Reports; Financial Statements. The Company has delivered to the Purchaser true and complete copies of (i) each registration statement, report on Form 8-K, and proxy statement or information statement filed by it since December 31, 1995, (ii) the Company's Annual Report on Form 10-K for the year ended December 31, 1995, (iii) the Company's Registration Statement on Form S-8 (Commission Number 333-05746); and (iv) the Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 1996, June 30, 1996 and September 30, 1996, each in the form (including exhibits and any amendments thereto) filed with the SEC (collectively, the "Company Reports"). As of their respective dates, the Company Reports were prepared in all material respects in accordance with the requirements of the Securities Act of 1933, as amended, (the "Securities Act") and the Exchange Act, as applicable, and the rules and regulations of the SEC applicable thereto and the Company Reports did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. Other than the Company Reports, the Company has not filed any other definitive reports or statements with the SEC since December 31, 1995. (g) Absence of Certain Changes. Except as disclosed in the Company Reports or otherwise disclosed in the Disclosure Schedule, since December 31, 1995, the Company has conducted its business only in, and has not engaged in any material transaction other than according to, the ordinary and usual course of such business, and (i) there has not been any material adverse change in the financial condition, properties, business or results of operations of the Company and the Subsidiaries taken as a whole, (ii) the Company has not made any declaration, setting aside or payment of any dividend or other distribution with respect to the capital stock of the Company or in discharge or cancellation of any indebtedness owing to its shareholders and (iii) the Company has not made any change in accounting methods, principles, or practices except as required by generally accepted accounting principles and there has not been any revaluation by the Company or any of the Subsidiaries or any of their respective assets. (h) No Undisclosed Liabilities. Except as disclosed in the Company Reports or the Disclosure Schedule, neither the Company nor any of the Subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) which are, in the aggregate, material to the business, operations or financial condition of the Company and the Subsidiaries taken as a whole, except liabilities (i) adequately provided for in the Company's balance sheet (including the related notes thereto) as of September 30, 1996, (ii) incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected on the Company's balance sheet (including the related notes thereto) as of September 30, 1996, (iii) incurred since September 30, 1996 in the ordinary course of business and consistent with past practice, or (iv) liabilities incurred in connection with this Agreement. (i) Litigation. Except as disclosed in the Company Reports or the Disclosure Schedule, there are no actions, suits, government investigations or proceedings pending or, to the knowledge of the management of the Company threatened against or involving the Shares of the Company or the Subsidiaries or their assets involving, in the 12 16 aggregate, potential liability on the part of the Company or the Subsidiaries in excess of any applicable insurance coverage with respect thereto and excluding deductible amounts. There is no order, injunction or decree, in each case of continuing effect, outstanding against the Company or any of the Subsidiaries. Since September 30, 1991, neither the Company nor any of the Subsidiaries has received notice of any material violation of any law, rule, regulation, ordinance or order of any court or federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality (including, without limitation, legislation and regulations applicable to civil rights, public health and safety and occupational health). (j) Proxy Statement. All of the information relating to the Company and its subsidiaries supplied by the Company for inclusion in the Proxy Statement (as defined below), if any such Proxy Statement is required, will not, at the time the Proxy Statement is mailed, contain any statement which, at the time and in the light of the circumstances under which it is made, be false or misleading with respect to any material fact, or omit to state any material fact necessary in order to make the statements therein not false or misleading or, at the time of the Special Meeting (as defined in Section 5.4) or at the Effective Time, as then amended or supplemented to correct any statement which has become false or misleading in any material respect in any earlier communication with respect to the solicitation of any proxy for such meeting. The Proxy Statement will comply in all material respects, both as to form and otherwise, with the requirements of the Exchange Act and the rules and regulations thereunder. Neither the Schedule 14D-9 nor any of the information relating to the Company and its subsidiaries supplied by the Company for inclusion in the Offer Documents will, at the respective times filed with the SEC or first sent or given to the shareholders of the Company, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Schedule 14D-9 will comply in all material respects with the Exchange Act. Notwithstanding the foregoing, the Company makes no representation or warranty pursuant to this Section 4.1(j) with respect to any information supplied by Purchaser or Merger Sub or any of their affiliates which is contained in any of the foregoing documents. The letter to shareholders, Notice of Meeting, Proxy Statement and form of proxy, or the information statement, as the case may be, to be distributed to shareholders in connection with the Merger, or any schedules required to be filed with the SEC in connection therewith are collectively referred to herein as the "Proxy Statement." (k) Employee Benefits. The Company Reports and Disclosure Schedule together contain a list of all "employee benefit plans," within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), currently maintained, sponsored, or contributed to by the Company on behalf any employee of the Company or the Subsidiaries or such employees' beneficiaries (each a "Plan" and, collectively, the "Plans"), including, without limitation, any multiemployer plan within the meaning of Sections 3(37) and 4001(a)(3) of ERISA ("Multiemployer Plan"). With respect to each Plan (other than each Multiemployer Plan), true and correct copies of the documents embodying the Plans have been delivered or made available to the Purchaser. Except as set forth in the Disclosure Schedule or the Company Reports, and except to the extent that 13 17 any inaccuracy in the following statements, in the aggregate, would not have a material adverse effect upon the financial condition, properties, business or results of operations of the Company and the Subsidiaries taken as a whole: (i) each Plan (other than a Multiemployer Plan) intended to be qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), has received a favorable determination letter from the Internal Revenue Service ("IRS") that the Plan is qualified and that its related trust has been determined to be exempt from taxation under Section 501(a) of the Code and the IRS has taken no action to revoke such determination or qualification; (ii) the Company is in material compliance with the terms of each Plan and the requirements applicable to each Plan prescribed by ERISA and the Code; (iii) to the Company's knowledge, there are no material actions, lawsuits or claims pending or instituted against any Plan or its fiduciaries (other than routine claims for benefits, and appeals of such claims); and (iv) to the Company's knowledge, no Plan is under audit by the IRS or the Department of Labor. (l) Properties. Except as set forth in the Disclosure Schedule and except for Permitted Encumbrances (as defined below), the Company and the Subsidiaries own free and clear of any liens, charges, claims, or encumbrances (collectively, "Encumbrances") all of their material properties and assets reflected on the consolidated balance sheet for the period ended September 30, 1996, included in the most recent Company Report, which they purport to own, and all properties and assets acquired by them after September 30, 1996, except such properties and assets as have been disposed of in the ordinary course of business since such date. As used herein, "Permitted Encumbrances" means (i) those Encumbrances disclosed on, or reflected in the September 30, 1996 consolidated balance sheets included in the Company Reports, (ii) statutory Encumbrances for current taxes or assessments not yet due or delinquent or which are being contested in good faith, (iii) statutory mechanics', carriers', workers', repairmens', and other similar statutory Encumbrances arising or incurred in the ordinary course of business with respect to charges not yet due and payable, and (iv) such other Encumbrances, if any, which do not materially detract from the value of, or interfere with the present use of, the property subject thereto or affected thereby. The Disclosure Schedule contains a complete list of all of the real property owned, leased or managed by the Company and the Subsidiaries. (m) Labor Matters. Except as set forth in the Disclosure Schedule, (i) there are no controversies pending or, to the knowledge of the Company threatened, between the Company and any of the Subsidiaries and any of their respective employees, which controversies are reasonably likely to have a material adverse effect upon the financial condition, properties, business or results of operations of the Company and the Subsidiaries taken as a whole, (ii) neither the Company nor any of the Subsidiaries is a party to any collective bargaining agreement or other labor union contract applicable to persons employed by the Company or the Subsidiaries nor does the Company know of any activities or proceedings of any labor union to organize any such employees, and (iii) neither the Company nor any of the Subsidiaries has any knowledge of any strikes, slowdowns, work stoppages, or lockouts, by or with respect to any employees of the Company or any of the Subsidiaries which are reasonably likely to have a material adverse effect upon the financial condition, properties, business or results of operations of the Company and the Subsidiaries taken as a whole. 14 18 (n) Taxes. Except as set forth in the Disclosure Schedule or the Company Reports, the Company and each of the Subsidiaries has filed, or caused to be filed, all federal, state, local and foreign income, sales, use, property, payroll, franchise, withholding, employment, social security, excise, occupancy, real estate, parking, transfer, gains and other tax returns required to be filed by it, and has paid or withheld, or caused to be paid or withheld, all taxes of any nature whatsoever, with any related penalties and interest (any of the foregoing referred to herein as a "Tax"), that are shown on such tax returns as due and payable, other than (i) such Taxes as are being contested in good faith and for which adequate reserves have been established or (ii) where the failure to so file, pay or withhold, in the aggregate, is not reasonably likely to have a material adverse effect upon the financial condition, properties, business or results of operations of the Company and the Subsidiaries taken as a whole. As of September 30, 1996, the Company's liability for New York City commercial rent occupancy Taxes does not exceed $1,247,160.00 and the Company has adequately accrued for such liabilities on its balance sheet as of September 30, 1996; provided, to the extent the Company's liability exceeds such amount but the Company receives money from certain of its lessors or owners of the property leased or managed by the Company to satisfy such tax liability as provided in certain leases or management agreements, then such amounts actually received will be deducted from the liability of the Company. (o) Environmental Matters. Except as set forth in the Disclosure Schedule and except in all cases as, in the aggregate, are not reasonably likely to have a material adverse effect upon the financial condition, properties, business or results of operations of the Company and the Subsidiaries taken as a whole, the Company and each of the Subsidiaries (i) have obtained all applicable permits, licenses and other authorizations which are required under federal, state and local laws relating to pollution or protection of the environment, including laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants or hazardous substances, materials or wastes into the ambient air, surface water, ground water or land or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants or hazardous substances, materials or wastes by the Company or the Subsidiaries ("Environmental Laws") with respect to all real property owned by the Company; (ii) to the Company's knowledge, are in compliance with all terms and conditions of any such required permits, licenses and authorization, and all applicable requirements of the Environmental Laws with respect to all real property owned by the Company and (iii) as of the date hereof have not 15 19 received any written notice of any violation of, noncompliance with, or liability imposed under, any Environmental Laws which is reasonably likely to result in a claim against the Company or any of the Subsidiaries. This Section 4.1(o) shall be the exclusive representation and warranty section covering environmental matters and no other representations with respect thereto are made or shall be deemed to have been made under any other section of this Agreement. (p) Brokers and Finders. Neither the Company nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the transactions contemplated hereby, except that the Company has employed The Blackstone Group L.P. as its financial advisors, the arrangements with which have been disclosed in writing to the Purchaser prior to the date hereof. (q) Shareholder Approval. The affirmative vote of shareholders of the Company required for approval and adoption of this Agreement and the Merger is two-thirds of the outstanding shares of the Company's common stock. (r) Transactions with Related Parties. Except as set forth in the Company Reports or the Disclosure Schedule, (a) there have been no transactions by the Company or the Subsidiaries with any officer or director of the Company or beneficial owner of more than five percent of the Company's common stock or their affiliates ("Related Parties") since December 31, 1995, which are required to be disclosed pursuant to the Exchange Act and (b) there are no material agreements or understandings now in effect between the Company or the Subsidiaries and any Related Party. (s) Leases and Contracts. (i) The Disclosure Schedule attached hereto sets forth a complete and accurate list of all contracts, including, agreements, leases, subleases, options and commitments, oral or written, and all assignments or amendments thereof, affecting or relating to the business of the Company and its subsidiaries, the Shares held by affiliates of the Company or any asset or any interest therein, to which either the Company and/or the Subsidiaries are a party or by which Company, the Subsidiaries, their assets or the business of the Company and its subsidiaries is bound or affected, including, without limitation, service contracts, management agreements, equipment leases and building leases pertaining to any part of the Real Estate, and which involve annual payments in excess of $100,000 (collectively, the "Leases and Contracts"). The Company has previously provided or made available to Purchaser accurate and complete copies of all written Leases and Contracts including all schedules, exhibits and appendices thereof, and written summaries of key terms of all oral Leases and Contracts. (ii) Each of the Leases and Contracts is in full force and effect and is valid, binding and enforceable in accordance with its respective terms, except as 16 20 enforcement may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally and by general principles of equity. (iii) No event or condition has happened or presently exists which constitutes a material default or breach or, after notice or lapse of time or both, would constitute a material default or breach by the Company, or to the knowledge of the Company, any other party under any of the Leases and Contracts. In addition, no event of default constituting a payment default has happened or presently exists under the Natwest Debt and no such event of default will occur prior to the closing of the Offer. There are no material counterclaims or offsets under any of the Leases and Contracts. (iv) Except as set forth in the Disclosure Schedule, there does not exist any security interest, lien, encumbrance or claim of others created or suffered to exist on any interest created under any of the Leases and Contracts (except for those that result from or relate to leased assets). (t) Intellectual Property. All trademarks, service marks, trade names, patents, inventions, processes, copyrights and applications therefor, whether registered or at common law (collectively, the "Intellectual Property"), owned by the Company or the Subsidiaries are listed and described in Disclosure Schedule attached hereto. No proceedings have been instituted or are pending or, to the best knowledge of Company, threatened which challenge the validity of the ownership by the Company or the Subsidiaries of any such Intellectual Property. Neither the Company nor the Subsidiaries have licensed anyone to use any such Intellectual Property, and the neither the Company nor the Subsidiaries have any knowledge of the use or the infringement of any of such Intellectual Property by any other person. The Company and the Subsidiaries own or possess adequate and enforceable licenses or other rights to use all Intellectual Property now used in the conduct of its business. (u) No Misrepresentations or Omissions. To the knowledge of the Company, there is no fact which would have a material adverse effect on the Shares, assets, liabilities, business, conduct, prospects, operations or financial condition of the Company and the Subsidiaries which has not been set forth or described in this Agreement, in the Disclosure Schedule hereto, or in the Company Reports. None of the information included in this Agreement, the Annexes hereto and Disclosure Schedule hereto, contains any untrue statement of a material fact or is misleading in any material respect or omits to state any material fact necessary in order to make any of the statements herein or therein not misleading in light of the circumstances in which they were made. 4.2 Representations and Warranties of the Purchaser and Merger Sub. The Purchaser and Merger Sub represent and warrant to the Company that: 17 21 (a) Corporation Organization and Qualification. Each of the Purchaser and Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation and is in good standing as a foreign corporation in each jurisdiction where the properties owned, leased or operated, or the business conducted, by it require such qualification, except where the failure to be so qualified or in such good standing would not have a material adverse effect on the financial condition, properties, business or results of operations of the Purchaser and Merger Sub, taken as a whole. (b) Corporate Authority. (i) The Purchaser and Merger Sub each have all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby by the Purchaser and Merger Sub have been duly and validly authorized by the respective Board of Directors of the Purchaser and Merger Sub and by the Purchaser as the sole shareholder of Merger Sub, and no other corporate actions on the part of the Purchaser or Merger Sub are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Purchaser and Merger Sub, and, assuming this Agreement constitutes a valid and binding obligation of the Company, this Agreement constitutes a valid and binding agreement of the Purchaser and Merger Sub, enforceable against the Purchaser and Merger Sub in accordance with its terms, except that (A) such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights and (B) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (ii) The execution and delivery of this Agreement by the Purchaser and Merger Sub do not, and the consummation of the transactions contemplated hereby by the Purchaser and Merger Sub (including, without limitation, the Offer and the Merger) will not, constitute or result in (A) a breach or violation of, or a default under the Amended and Restated Charter of the Purchaser or the Certificate of Incorporation of Merger Sub or By-Laws of the Purchaser or Merger Sub or (B) a breach or violation of, a default under, the acceleration of or the creation of a lien, pledge, security interest or other encumbrance on assets (with or without the giving of notice or the lapse of time) pursuant to, any provision of any Contract of the Purchaser or Merger Sub or any law, ordinance, rule or regulation or judgment, decree, order, award or governmental or non-governmental permit or license to which the Purchaser or Merger Sub is subject, except in the case of clause (B) above, for such breaches, violations, defaults or accelerations that, in the aggregate, could not prevent or materially delay the transactions contemplated by this Agreement. (c) Governmental Filings; No Violations. Except for (i) the filings by the Purchaser and the Company required by the HSR, (ii) the making of the Merger filings with the Secretary of State of New York in connection with the Merger, (iii) the approval of, and issuance of appropriate licenses by, the New Jersey Casino Control Commission with respect 18 22 to operations of certain properties in Atlantic City, New Jersey on and after the consummation of the Offer and (iv) the other consents and filings described on Annex B (the filings and approvals referred to in clauses (i) through (iv) above are collectively referred to as the "Purchaser Statutory Approvals"), no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any governmental or regulatory body or authority is necessary for the execution and delivery of this Agreement by the Purchaser or Merger Sub of the transactions contemplated hereby, other than such declarations, filings, registrations, notices, authorizations, consents or approvals which, if not made or obtained, would not have a material adverse effect on the financial condition, properties, business or results of operation of the Purchaser and the Subsidiaries taken as a whole or affect Merger Sub's ability to consummate the Merger. (d) Accuracy of Information. All of the information relating to the Purchaser and Merger Sub supplied by Purchaser or Merger Sub for inclusion in (i) the Proxy Statement, (ii) the Offer Documents, and (iii) any amendments or supplements to the foregoing, will not, on the date the Proxy Statement is first mailed to shareholders, at the time of the Special Meeting or at the Effective Time, or, with respect to the Offer Documents at the time the Offer Documents are filed with the SEC or are first published, sent or given to shareholders of the Company, at the time of the Special Meeting or at the Effective Time, contain any statement which, at such time and in light of the circumstances under which it will be made, be false or misleading with respect to any material fact, or omit to state a material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Special Meeting which has become false or misleading. Notwithstanding the foregoing, Purchaser and Merger Sub make no representation or warranty pursuant to this Section 4.2(d) with respect to any information supplied by the Company or its affiliates other than Purchaser or Merger Sub which is contained in any of the foregoing documents. (e) Brokers and Finders. Neither the Purchaser nor Merger Sub nor any of their respective officers, directors or employees has employed any broker or finder or incurred any liability for brokerage fees, commissions or finder's fees as to which the Company will have any liability in connection with the transactions contemplated hereby. (f) Funds. The Purchaser and Merger Sub have available sufficient funds to enable them to acquire the Shares pursuant to the Offer and the Merger and to pay all fees and expenses related thereto and to carry out all of their other obligations under this Agreement. Purchaser has delivered to the Company true and complete 19 23 copies of all agreements and commitments relating to the financing by Purchaser and Merger Sub of the transactions contemplated by this Agreement and such agreements and commitments are in full force and effect. Except for the satisfaction of the conditions to the Offer set forth in Annex A, all conditions to obtaining such financing have been satisfied as of the date hereof. (g) Capitalization and Net Worth. The authorized capital stock of Merger Sub consists of 1,000 shares of Common Stock, par value $0.01 per share, of which 1,000 shares were issued and outstanding on the date hereof. As of the date hereof, all of the issued and outstanding shares of capital stock of Merger Sub are owned indirectly by Purchaser. The Purchaser and/or Merger Sub have, and shall maintain until the Effective Time, an aggregate minimum "Tangible Net Worth" (as hereinafter defined) of at least $15 million. For purposes hereof, "Tangible Net Worth" shall mean the excess of total assets over total liabilities determined in accordance with generally accepted accounting principles, excluding from the determination of total assets all assets which would be classified as intangible assets under generally accepted accounting principles and treating as liabilities the face amount of all indebtedness as to which Purchaser and/or Merger Sub is the guarantor. ARTICLE V COVENANTS 5.1 Interim Operations of the Company. The Company and each of the Subsidiaries covenants and agrees that, prior to the earlier of the Effective Time or the termination of this Agreement (unless the Purchaser shall otherwise consent in writing and except as otherwise contemplated by this Agreement): (a) the business of the Company and the Subsidiaries shall be conducted only in the ordinary and usual course consistent with (i) the information contained in Annex C (the "Annex C Information") and (ii) the capital expenditures budget provided to Purchaser for the remainder of the 1996 calendar year which total approximately $220,000 (the "Budget"), and, to the extent consistent therewith, the Company and the Subsidiaries shall use its and their commercially reasonable efforts to preserve its business organization intact and maintain its existing relations with customers, suppliers, employees and business associates; (b) the Company and each of the Subsidiaries shall not (i) amend its Certificate of Incorporation (or applicable organizational documents) or By-Laws; (ii) split, combine or reclassify the outstanding Shares; or (iii) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to the Shares; (c) except as set forth in the Disclosure Schedule, the Company and the Subsidiaries shall not (i) issue, sell, pledge, dispose of or encumber any additional shares 20 24 of, or securities convertible or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire any shares of its capital stock of any class other than Shares issuable pursuant to warrants or options outstanding on the date hereof under the Stock Option Plan; (ii) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any assets or incur or modify any indebtedness or other liability other than in the ordinary and usual course of business consistent with the Annex C Information and the Budget; (iii) enter into, amend or terminate any lease of real property other than in the ordinary course of business consistent with the Annex C Information and the Budget; (iv) acquire directly or indirectly by redemption or otherwise any shares of the capital stock of the Company or (v) except in the ordinary course of business consistent with the Budget, authorize capital expenditures in excess of $100,000 or make any significant acquisition of, or investment in, assets or stock of any other person or entity; (d) except in the ordinary and usual course of business as disclosed in the Company Reports, Disclosure Schedule, Annex C Information and the Budget, the Company shall not grant any severance or termination pay to, or enter into any employment or severance agreement with, any director, officer or other employee of the Company other than pursuant to contractual obligations existing on the date hereof and set forth in the Disclosure Schedule or as contemplated by Annex D of this Agreement; and except in the ordinary and usual course of business as disclosed in the Company Reports, Disclosure Schedule, Annex C Information and the Budget, or pursuant to contractual obligations existing on the date hereof or contemplated by Annex D of this Agreement or as may be required or desirable under applicable law or by any governmental agency, the Company shall not establish, adopt, enter into, make any new grants or awards under or amend, any bonus, profit sharing, thrift, savings, compensation, stock purchase, stock bonus, stock option, restricted stock, pension, retirement, employee stock ownership, deferred compensation, employment, collective bargaining, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or employees; (e) except as disclosed in the Annex C Information and the Budget, the Company shall not settle or compromise any material debt, encumbrance, claims or litigation in excess of $100,000 in the aggregate or, except in the ordinary and usual course of business, modify, amend or terminate any of its contracts or waive, release or assign any material rights or claims; (f) the Company shall not make any tax election or permit any insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated without notice to the Purchaser, except in the ordinary and usual course of business and shall maintain insurance upon all of its properties and operations in such amounts and of such kinds comparable to that in effect on the date hereof on such properties and with respect to such operations; (g) the Company shall not in any material respect fail to (i) maintain its books, accounts and records in the usual, regular and ordinary manner, on a basis consistent 21 25 with prior years, (ii) comply with all contractual and other obligations of the Company and the Subsidiaries, and (iii) comply with all applicable laws to which it is subject; and (h) the Company shall not authorize or enter into an agreement to do any of the foregoing. 5.2 Acquisition Proposals. (a) Neither the Company nor any of the officers and directors of the Company shall, and the Company shall direct and use its reasonable best efforts to cause the employees, agents and representatives of the Company or any Subsidiary (including, without limitation, any investment banker, attorney or accountant retained by the Company) not to, initiate, solicit or encourage, directly or indirectly, any proposal or offer to acquire all or any substantial part of the business and properties of the Company and the Subsidiaries or any capital stock of the Company and the Subsidiaries, whether by merger, purchase of assets, tender offer or otherwise, whether for cash, securities or any other consideration or combination thereof (any such transaction being referred to herein as an "Acquisition Transaction"). The Company shall immediately cease and cause to be terminated any existing solicitation, initiation, encouragement, activity, discussion or negotiation with any parties conducted heretofore by the Company or any Company representatives with respect to any Acquisition Transaction existing on the date hereof. (b) Notwithstanding any other provisions of this Agreement, in response to an unsolicited proposal or inquiry with respect to an Acquisition Transaction, (i) the Company may engage in discussions or negotiations regarding such proposal or inquiry with a third party who (without solicitation or initiation, directly or indirectly, by or with the Company or any Company representative after the date of this Agreement) seeks to initiate such discussions or negotiations and may negotiate with and furnish to such third party information concerning the Company and its business, properties and assets, and (ii) if such Acquisition Transaction is a tender offer subject to the provisions of Section 14(d) under the Exchange Act, the Company's Board of Directors may take and disclose to the Company's shareholders a position contemplated by Rule 14e-2(a) under the Exchange Act, in each case, if, but only if, the Board of Directors of the Company determines in good faith, based upon an opinion of outside legal counsel, that a failure to furnish the information or participate in the discussions or negotiations could reasonably conflict with the proper discharge of the fiduciary duties of the Company's directors. (c) In the event the Company shall determine to provide any information or negotiate as described in paragraph (b) above, or shall receive any offer of the type referred to in paragraph (b) above, it shall (i) immediately provide the Purchaser a copy of all information provided to the third party, (ii) inform the Purchaser that information is to be provided, that negotiations are to take place or that an offer has been received, as the case may be, and (iii) furnish to the Purchaser the identity of the person receiving such information or the proponent of such offer, if applicable, and, if an offer has been received, unless the Board of Directors of the Company concludes that such disclosure could reasonably conflict with its fiduciary duties under applicable law based on an opinion of outside legal counsel, a description of the material terms thereof. 22 26 (d) The Company may terminate this Agreement, withdraw, modify or not make its recommendation referred to in Section 5.4 and enter into a definitive agreement for an Acquisition Transaction if, but only if, (i) the Company shall have determined in good faith after consultation with its independent financial advisors that such Acquisition Transaction would be more favorable to the Company's shareholders from a financial point of view than the Merger, (ii) the Company is advised by its financial advisor that such third party has the financial wherewithal to consummate the Acquisition Transaction, (iii) the Board of Directors of the Company shall conclude in good faith based upon an opinion of outside legal counsel that such action is necessary in order for the Board of Directors of the Company to act in a manner that could not reasonably conflict with the proper discharge of its fiduciary obligations under applicable law and (iv) the Company shall have furnished the Purchaser with a copy of the definitive agreement at least two business days prior to its execution and the Purchaser shall have failed within such two business days to offer to amend the terms of this Agreement so that the Merger would be, in the good faith determination of the Board of Directors of the Company, at least as favorable to the Company's shareholders from a financial point of view as the Acquisition Transaction. 5.3 Stock Options and Warrants. At or prior to the Effective Time, the Company shall cause, pursuant to the agreements referred to pursuant to Section 3.5, each stock option outstanding pursuant to the Stock Option Plan ("Option") and each outstanding warrant, whether or not then exercisable, to be either canceled or modified to entitle the holder thereof, to receive an amount in cash (after giving effect to any required tax withholdings) equal to the difference between the Merger Consideration, subject to the escrow in Article VIII, and the exercise price per Share of such Option or warrant multiplied by the number of Shares previously subject to such Option or warrant, such that, on and as of the Effective Time, there shall be no outstanding stock options or warrants of the Company. 5.4 Shareholder Approval. (a) If approval of all or a portion of this Agreement or one or more of the transactions contemplated hereby is required by the shareholders of the Company by the NYBCL, as soon as practicable, the Company will take all steps necessary duly to call, give notice of, convene and hold a meeting of its shareholders (the "Special Meeting") as soon as practicable for the purpose of adopting and approving this Agreement (to the extent required by applicable law) and the transactions contemplated hereby and for such other purposes as may be necessary or desirable. (b) The Purchaser and Merger Sub agree that, at the Special Meeting, all of the Shares then owned by them and their affiliates will be voted in favor of this Agreement, the Merger and the transactions contemplated hereby. (c) Except to the extent necessary so as not to reasonably conflict with the proper discharge of the fiduciary obligation of the Board of Directors under applicable law determined in good faith by the Board of Directors of the Company based upon an opinion of outside legal counsel, the Company will prepare and file with the SEC the Proxy Statement with respect to the Special Meeting containing all information required by the Exchange Act. The Company (i) will use its best efforts to have the Proxy Statement cleared 23 27 by the SEC as promptly as practicable, (ii) will promptly thereafter mail the Proxy Statement to shareholders of the Company and (iii) will otherwise comply in all material respects with all applicable legal requirements in respect of the aforesaid Special Meeting. Except to the extent otherwise required by the fiduciary duties of the Board of Directors under applicable law determined in good faith by the Board of Directors of the Company based upon an opinion of outside legal counsel, the Proxy Statement shall contain the recommendation of the Board of Directors in favor of the Merger and the recommendation that the shareholders vote for and adopt the Merger and this Agreement. (d) The Company covenants that with respect to information regarding the Company, supplied by Company for inclusion in Proxy Statement the Proxy Statement shall not, at the time the Proxy Statement is filed with the SEC, at the time the Proxy Statement is first mailed to the Company's stockholders, at the time of the Special Meeting and at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. If at any time prior to the Effective Time any event or circumstance relating to the Company or any of the Subsidiaries, or its or their respective officers or directors, should be discovered by the Company which should be set forth in an amendment to the Proxy Statement or a supplement thereto, the Company shall promptly inform Purchaser and shall promptly file such amendment or supplement to the Proxy Statement. 5.5 Filings; Other Action. Subject to the terms and conditions herein provided and the fiduciary duties of the Board of Directors under applicable law, the Company, the Purchaser and Merger Sub shall: (a) promptly make their respective filings and thereafter make any other required submissions under the Regulatory Filings with respect to the Offer and the Merger; and (b) use their reasonable efforts to promptly take, or cause to be taken, all other action and do, or cause to be done, all other things necessary, proper or appropriate under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement as soon as reasonably practicable. The Purchaser shall cause Merger Sub to perform all of its obligations under this Agreement. 5.6 Access; Confidentiality. 1. Upon reasonable notice and subject to the restrictions contained within this Section 5.6, the Company shall afford the Purchaser's officers, employees, counsel, accountants and other authorized representatives ("Representatives") access, during normal business hours throughout the period prior to the Effective Time, to its properties, books, contracts and records and, during such period, the Company shall furnish promptly to the Purchaser all information concerning its business, properties and personnel as the Purchaser or its Representatives may reasonably request. (b) The Purchaser will not, and will cause its Representatives not to, use any information obtained pursuant to this Section 5.6 for any purpose unrelated to the consummation of the transactions contemplated by this Agreement. Each of the Merger Sub and the Purchaser will hold and will cause its Representatives, as well as the authorized representatives of the financial institutions considering providing any financing, to hold in strict confidence, unless compelled to disclose by judicial or administrative process or 24 28 otherwise as may be required by law, all documents and information concerning the Company furnished to the Merger Sub or the Purchaser in connection with the transactions contemplated by this Agreement (except to the extent that (i) such information is or becomes readily ascertainable from public or published information or trade sources or (ii) such information is obtained from third parties without violation of any other confidentiality agreements with the Company) and will not release or disclose such information to any other person, except its Representatives and other financial institutions considering providing financing in connection with this Agreement (it being understood that such persons shall be informed by the Merger Sub or the Purchaser, as the case may be, of the confidential nature of such information and shall be directed by such parties to treat such information confidentially). If the transactions contemplated by this Agreement are not consummated, such confidence shall be maintained except to the extent such information becomes readily ascertainable from public or published information or trade sources and, if requested by the Company, Merger Sub and the Purchaser will return to the Company all copies of written information furnished by the Company to the Merger Sub or the Purchaser or their Representatives. In addition, if requested by the Company, the Merger Sub or the Purchaser will and will cause its Representatives to destroy all documents, memoranda, notes and other writings prepared based on the confidential information of the Company. Purchaser, Merger Sub and Company agree that the foregoing is not intended to supersede the Confidentiality Agreement dated July 10, 1996 between Purchaser and the Company, which shall remain in full force and effect. 5.7 Notification of Certain Matters. Each of the Company, the Purchaser and Merger Sub shall give prompt notice to each other of: (i) the occurrence, or non-occurrence, of any event the occurrence, or non-occurrence, of which would be likely to cause any representation or warranty contained in this Agreement to be untrue or inaccurate and (ii) any failure of the Company, the Purchaser or Merger Sub, as the case may be, materially to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder, provided, however, that the delivery of any notice pursuant to this Section shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. Each of the Company, the Purchaser and Merger Sub shall give prompt notice to the other parties of any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement. 5.8 Publicity. The parties (i) shall consult with each other prior to issuing any press release or any written public statement with respect to this Agreement or the transactions contemplated hereby, and (ii) shall not issue any such press release or written public statement without the prior written consent of the other parties hereto unless required by law. Notwithstanding anything herein to the contrary, the parties agree to jointly issue a press release, in form and substance satisfactory to both parties, promptly upon the execution and delivery of this Agreement. 5.9 Consents; Approvals. The Company at the request of Purchaser, shall use its reasonable best efforts to assist Purchaser in its efforts to obtain all consents, waivers, approvals, authorizations or orders (including, without limitation, all United States and 25 29 foreign governmental and regulatory agencies) required in connection with the authorization, execution and delivery of this Agreement by the Company and the Purchaser and consummation by them of the transactions contemplated hereby. The Company shall not be obligated to deliver any such consent and obtaining such consents shall not be a condition to the consummation of the Offer or the Merger. 5.10 HSR Act Compliance; Other Filings. As soon as practicable after the execution of this Agreement, Purchaser and the Company shall prepare and file all other filings, applications, and registrations required under the HSR Act, the Exchange Act, or other applicable law with respect to the transactions contemplated by this Agreement. Purchaser shall furnish to the Company and its representatives and professional advisors all information concerning Purchaser, Merger Sub, and their respective officers, directors, affiliates, and stockholders that is reasonably necessary for the Company (A) to prepare, ascertain the accuracy and completeness of, and file a Pre-Merger Notification and Report pursuant to the HSR Act, and (B) to respond to any request from the Federal Trade Commission or the United States Department of Justice for additional information or documentary materials in connection with the filing of a Pre-Merger Notification and Report under the HSR Act. The Company shall keep, and shall cause each of its officers, directors, affiliates, representatives, and professional advisors to keep, all such information confidential to the same extent that Purchaser is required to keep information confidential pursuant to the Confidentiality Agreement. The Company shall furnish to Purchaser and Merger Sub and the representatives and professional advisors all information concerning the Company and its officers, directors, affiliates, and shareholders that is reasonably necessary for Purchaser and Merger Sub to take the actions specified in clauses (A) and (B) of the preceding sentence. 5.11 Indemnification; Directors' and Officers' Insurance. (a) The Company shall, to the fullest extent permitted under applicable law, and for six years from and after the Effective Time, the Surviving Corporation shall, to the fullest extent permitted under applicable law, indemnify, defend and hold harmless each person who is now, or has been at any time prior to the date hereof or who becomes prior to the Effective Time, an officer, director or employee of the Company (the "Indemnified Parties") from and against all losses, claims, damages, costs, expenses, liabilities or judgments or amounts that are paid in settlement with the approval of the indemnifying party (which approval shall not be unreasonably withheld) of or in connection with any claim, action, suit, proceeding or investigation based in whole or in part on or arising in whole or in part out of the fact that such person is or was a director, officer or employee of the Company, pertaining to any matter existing or occurring at or prior to the Effective Time ("Indemnified Liabilities"), including liabilities arising as a result of this Agreement and the transactions contemplated hereby, to the full extent permitted under the NYBCL, and the Surviving Corporation will pay expenses in advance of the final disposition of any such action or proceeding to each Indemnified Party to the full extent permitted by law. Without limiting the foregoing, in the event any such claim, action, suit, proceeding or investigation is brought against any Indemnified Party, (i) the Company (or the Surviving Corporation after the Effective Time) shall retain counsel on behalf of the Indemnified Party, subject to approval of the Indemnified Party; (ii) the Company (or after the Effective Time, the Surviving Corporation) 26 30 shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received; (iii) the Company (or after the Effective Time, the Surviving Corporation) will use all reasonable efforts to assist in the vigorous defense of any such matter, provided that neither the Company nor the Surviving Corporation shall be liable for any settlement of any claim effected without its written consent, which consent, however, shall not be unreasonably withheld. Any Indemnified Party wishing to claim indemnification under this Section 5.11, upon learning of any such claim, action, suit, proceeding or investigation, shall notify the Company or the Surviving Corporation (but the failure so to notify an indemnifying party shall not relieve it from any liability which it may have under this Section 5.11 except to the extent such failure prejudices such party). The indemnifying party is required to retain only one law firm to represent the Indemnified Parties with respect to such matter (in addition to local counsel) unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of any two or more Indemnified Parties. (b) For a period of six years after the Effective Time, the Surviving Corporation shall cause to be maintained in effect the current policies of directors' and officers' liability insurance maintained by the Company (provided that the Surviving Corporation may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are no less advantageous) with respect to claims or matters existing or occurring before the Effective Time; provided, that Surviving Corporation shall not be required to pay an annual premium for such insurance in excess of two times the last annual premium paid by the Company prior to the date hereof, but in such case shall purchase as much coverage as possible for such amount. (c) For purposes of this Section 5.11, Purchaser and Surviving Corporation agree that they will not transfer a material portion of the Surviving Corporation's assets unless such transferee agrees to be bound by this Section 5.11 and such transferee has a tangible net worth at least equal to the tangible net worth of the Surviving Corporation. This Section 5.11 shall survive the consummation of the Merger. 27 31 The provisions of this Section 5.11 are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party, his heirs and his representatives. The rights provided Indemnified Parties shall be in addition to, and not in lieu of, any rights to indemnity which such parties may have under the Certificate or By-Laws of the Company or the Surviving Corporation or any other agreements or otherwise. 5.12 Employment Matters. (a) The Purchaser hereby agrees to cause the Surviving Corporation and the Subsidiaries, immediately after the Effective Time, to honor the employment agreements, arrangements and programs between the Company or the Subsidiaries and their respective employees in accordance with their terms as in effect on the date hereof as set forth in the Disclosure Schedule (collectively, the "Employee Arrangements"), to the same extent that the Company and the Subsidiaries would be required to perform them in the event that the Merger contemplated by this Agreement were not consummated. (b) For a period of one year following the Effective Time, the Purchaser shall cause the Surviving Corporation to provide the garage manager and other employees senior thereto of the Company and the Subsidiaries (excluding for purposes of this paragraph (b) employees covered by collective bargaining agreements whose benefits shall be governed by the collective bargaining agreements in accordance with their terms as in effect on the date hereof) who are not covered by spousal insurance arrangements with retirement, pension, medical insurance, life insurance and other similar benefits following the Effective Time which are, in the aggregate, substantially comparable to such benefits under the plans and arrangements maintained for its employees by the Purchaser as of the date hereof, provided nothing in this Section 5.12 shall require the Surviving Corporation to continue the employment of the Company's employees beyond that required by any applicable existing employment agreement. Purchaser further agrees to cause the Surviving Corporation to honor, comply with and perform all obligations of the Company and the Subsidiaries under the severance arrangements set forth on Annex D for a period of one year following the Effective Time. 5.13 Affiliate Agreements. The Company shall cause the persons listed in Annex E hereto to (i) tender in the Offer or enter into the agreement to "cash-out" their options and warrants as provided in Section 3.5 which represent the number of Shares set forth opposite their respective names and which in the aggregate constitutes 1,038,040 Shares as of the date hereof and (ii) to enter into the Agreement to Support the Transaction attached as Annex F hereto. The Company shall cause (i) Lowell Harwood and Sanford Harwood to enter into the Non-Competition Agreements attached as Annex G hereto, (ii) Brett Harwood to enter into an Employment Agreement attached as Annex H hereto, (iii) Lowell Harwood and Sanford Harwood to enter into a Consulting Agreement with terms agreed upon between the parties and (iv) Leslie Harwood Ehrlich to enter into a Non-Competition Agreement similar to the Non-Competition Agreement attached hereto as Annex G, but with a one (1) year term. The Company will cause the nonunion manager level and above employees granted severance payments as disclosed on Annex D to enter into Non-Competition Agreements equal to the duration of the severance granted. 28 32 5.14 Further Actions. Upon the terms and subject to the conditions hereof, each of the parties hereto in good faith shall use all commercially reasonable efforts to take, or cause to be done, all other things necessary or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, to obtain in a timely manner all necessary waivers, consents, and approvals and to effect all necessary registrations and filings, and to otherwise satisfy or cause to be satisfied all conditions precedent to its obligations under this Agreement or to vest the Surviving Corporation with full title to all properties, assets, rights, approvals and franchises of either constituent corporation. ARTICLE VI CONDITIONS TO THE MERGER 6.1 Conditions to Obligations of the Purchaser and Merger Sub to Effect the Merger. The respective obligations of the Purchaser and Merger Sub to consummate the Merger are subject to the fulfillment of each of the following conditions, any or all of which may be waived in whole or in part by the Purchaser or Merger Sub, as the case may be, to the extent permitted by applicable law: (a) Shareholder Approval. This Agreement shall have been duly approved by the holders of two-thirds of the Shares, in accordance with the NYBCL and the Certificate and By-Laws of the Company. (b) Legal Proceeding; Order. There shall not be threatened, instituted or pending any action, proceeding or other application before any court or governmental authority or other regulatory or administrative agency or commission, by any government or governmental authority or by any other person, which challenges or seeks to restrain or prohibit consummation of the transactions contemplated by this Agreement, or which seeks to impose any material restriction on the Purchaser or the Company in connection with consummation of the Merger. No court or governmental or regulatory authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether preliminary or permanent) which is in effect and prohibits consummation of the transactions contemplated by this Agreement or imposes material restrictions on the Purchaser or the Company in connection with consummation of the Merger. (c) HSR Act. The waiting period (and any extension thereof) applicable to the consummation of the Merger under HSR Act shall have expired or been terminated. (d) Offer. The Purchaser shall have made, or caused to be made, the Offer and shall have purchased, or caused to be purchased, Shares pursuant to the Offer. (e) Covenants. Each of the agreements or covenants of the Company to be performed at or prior to the Closing Date pursuant to the terms hereof shall have been duly performed in all material respects and the Company shall have performed in all 29 33 material respects all of the acts required to be performed by it at or prior to the Closing Date by the terms hereof. (f) Compliance. The representations and warranties of the Company herein contained shall be true at the Effective Time with the same effect as though made at such time, except for (i) changes contemplated hereunder, (ii) those representations and warranties which address matters only as of a particular date (which shall remain true and correct as of such date), and (iii) where the failure of the representations and warranties to be true and correct in the aggregate would not have a Material Adverse Effect on the Company. For purposes of this provision, representations and warranties of the Company in this Agreement which are qualified by materiality shall be true without regard to the materiality limitation, except as provided in (iii) above. Material Adverse Effect as used in this provision shall mean items which in the aggregate would have (i) a recurring annual pre-tax income effect of $400,000 or more or (ii) a non-recurring income, balance sheet or financial condition effect of $4,000,000 or more. (g) Natwest Debt. Purchaser and Merger Sub shall have received evidence that the Natwest Debt can be satisfied without incurring payment for accrued deferred interest. (h) Regulatory Consents. All consents, authorizations, orders and approvals of (or filings or registration with) any governmental commission, board or other regulatory body required in connection with the execution, delivery and performance of the Merger, this Agreement and the transactions contemplated thereby shall have been obtained or made, except for filings in connection with the Merger and any other documents required to be filed after the Effective Time. (i) No Material Adverse Change. Since the date of this Agreement, there shall not have occurred a Material Adverse Change with respect to the Company. For purposes of this provision, Material Adverse Change shall mean changes or events which in the aggregate would have (i) a recurring annual pre-tax income effect of $400,000 or more or (ii) a non-recurring income, balance sheet or financial condition effect of $4,000,000 or more. 6.2 Conditions to Obligations of the Company to Effect the Merger. The obligations of the Company to consummate the Merger are subject to the fulfillment of each of the following conditions, any or all of which may be waived in whole or in part by the Company to the extent permitted by applicable law: (a) Shareholder Approval. This Agreement shall have been duly approved by the holders of two-thirds of the Shares, in accordance with the NYBCL and the Certificate and By-Laws of the Company. (b) Legal Proceeding; Order. There shall not be threatened, instituted or pending any action, proceeding or other application before any court or governmental authority or other regulatory or administrative agency or commission, by any government 30 34 or governmental authority or by any other person, which challenges or seeks to restrain or prohibit consummation of the transactions contemplated by this Agreement, or which seeks to impose any material restriction on the Purchaser or the Company in connection with the consummation of the Merger. No court or governmental or regulatory authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any order (whether preliminary or permanent) which is in effect and prohibits the consummation of the transactions contemplated by this Agreement or imposes material restrictions on the Purchaser or the Company in connection with the consummation of the Merger. (c) HSR Act. The waiting period applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated. (d) Offer. The Purchaser shall have made, or caused to be made, the Offer and shall have purchased, or caused to be purchased, Shares pursuant to the Offer. (e) Compliance. The representations and warranties of the Purchaser and Merger Sub herein contained shall be true at the Effective Time with the same effect as though made at such time, except for (i) changes contemplated hereunder, (ii) those representations and warranties which address matters only as of a particular date (which shall remain true and correct as of such date), and (iii) where the failure to be true and correct would not have a material adverse effect on the financial condition, properties, business or results of operations of the Purchaser. The Purchaser and Merger Sub shall have in all material respects performed all material obligations and complied with all material covenants and conditions required by this Agreement to be performed or complied with by them at or prior to the Effective Time. ARTICLE VII TERMINATION 7.1 Termination by Mutual Consent. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, before or after the approval by holders of Shares, by the mutual written consent of Merger Sub, the Purchaser and the Company duly authorized by their respective Boards of Directors. 7.2 Termination by either the Purchaser or the Company. This Agreement may be terminated and the Merger may be abandoned by action of the Board of Directors of either Merger Sub or the Purchaser on the one hand or the Company on the other hand if (i) the Merger shall not have been consummated by May 31, 1997, (ii) the requisite approval of shareholders required by Sections 6.1(a) and 6.2(a) shall not have been obtained at a meeting duly convened therefor, or (iii) if any state or federal court of competent jurisdiction or other governmental authority or entity shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the Merger or holding that any law applicable to the Merger declares the Merger to be illegal, and such order, decree, ruling or other action shall have become final and nonappealable; 31 35 provided, however, that neither the Merger Sub nor the Purchaser on the one hand, and the Company, on the other hand, may terminate this Agreement if the absence of such occurrence is due to the failure by Merger Sub or the Purchaser on the one hand, and the Company on the other hand, to perform in all material respects each of its or their obligations under this Agreement required to be performed prior to the Effective Time. 7.3 Termination by the Purchaser. This Agreement may be terminated following the purchase of the Shares in the Offer and the Merger may be abandoned at any time thereafter and prior to the Effective Time, before or after the approval by holders of Shares, by action of the Board of Directors of the Purchaser, if (i) other than as a direct result of any action or inaction by Purchaser, the Company shall have breached any of its representations, warranties, covenants or agreements contained in this Agreement and such breach would constitute a Material Adverse Effect as defined in Section 6.1(f) (for purposes of this provision, representations, warranties, covenants and agreements which are qualified by materiality shall be true without regard to the materiality limitation, except as provided in 6.1(f)(iii), (ii) the Board of Directors of the Company shall fail to make or shall have withdrawn or modified in a manner adverse to the Purchaser or Merger Sub its approval or recommendation of the Offer, this Agreement or the Merger or the Board of Directors of the Company, upon reasonable request by the Purchaser, shall fail to reaffirm such approval or recommendation, or shall have resolved to do any of the foregoing or (iii) (A) all of the conditions to the obligations of the Company to effect the Merger set forth in Section 6.2 shall have been satisfied, and (B) other than as a direct result of any action or inaction by Purchaser, any condition to the obligations of Purchaser to effect the Merger set forth in Section 6.1 is not capable of being satisfied prior to the end of the period referred to in Section 7.2. 7.4 Termination by the Company. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, before or after the approval by holders of Shares, by action of the Board of Directors of the Company, if (i) the Purchaser or Merger Sub shall have breached in any material respect any of their representations, warranties, covenants or agreements contained in this Agreement, (ii) prior to the purchase of Shares in the Offer, the Board of Directors of the Company receives an unsolicited written offer with respect to a merger, consolidation or sale of all or substantially all of the Company's assets or if an unsolicited tender or exchange offer for the Shares is commenced, and the Board of Directors of the Company determines in the reasonable exercise of its duties under applicable law (based upon such factors and in reliance upon such third party advisors as the Board of Directors deems reasonable, including, to the extent deemed necessary by the Board of Directors, receipt of an opinion to such effect from The Blackstone Group L.P. or other nationally recognized investment banking firm), that such transaction is more favorable from a financial point of view to the shareholders of the Company than the Offer and the Merger and that approval, acceptance or recommendation of such transaction is consistent with the fiduciary obligation of the Board of Directors under applicable law as determined in good faith by the Board of Directors based upon an opinion of outside legal counsel, (iii) if the Offer shall be terminated in accordance with its terms or shall expire without the purchase of any of the Shares pursuant thereto or (iv) (A) all of the conditions to the obligations of Purchaser to effect the Merger set forth in Section 6.1 32 36 shall have been satisfied, and (B) any condition to the obligations of the Company to effect the Merger set forth in Section 6.2 is not capable of being satisfied prior to the end of the period referred to in Section 7.2. 7.5 Effect of Termination and Abandonment. In the event of termination of this Agreement and abandonment of the Merger pursuant to this Article VII, no party hereto (or any of its directors or officers) shall have any liability or further obligation to any other party to this Agreement, except (i) as provided in Section 9.2 and 7.6 and (ii) nothing herein shall relieve any party from liability for any willful or intentional breach hereof. 7.6 Break-up Fee. If this Agreement is terminated in accordance with the provisions of Section 7.3(ii), or 7.4(ii) or as a result of the failure of the Affiliates to tender their Shares in the Offer or support the Merger, based upon a claim that such action is required in the exercise of their fiduciary duties and the purchase of Shares in the Offer or the Merger shall not be consummated, then in such case the Company shall promptly (but in no event later than five business days after such termination) pay to Purchaser a termination fee in cash of $2,500,000, including all of Purchaser's expenses and fees. The provision for the payment of these costs and compensatory expenses in this Section 7.6 are an integral part of the transactions contemplated by this Agreement and without these provisions Purchaser would not have entered into this Agreement. Accordingly, if payment shall become due and payable pursuant to this Section 7.6, and, in order to obtain such payment, suit is commenced which results in a judgment against Company, the Company shall pay to Purchaser, Purchaser's reasonable costs and expenses, including attorneys' fees, in connection with such suit, together with court costs and prejudgment interest. 33 37 ARTICLE VIII ESCROW 8.1 Escrow Agreement. Purchaser, Company and First American National Bank (the "Escrow Agent") will as soon as reasonably practicable after the execution of this Agreement enter into an Escrow Agreement (the "Escrow Agreement") in the form attached as Annex I. References in this Agreement to this Article or the escrow obligations created hereby, shall be references to the Escrow Agreement. The provisions of the Escrow Agreement are incorporated as if fully stated herein. A portion of the Offer Price and the Merger Consideration including the Option Merger Consideration equal to approximately $4.4 Million in the aggregate shall be deposited by the Purchaser and held in escrow as Contingent Consideration for the shareholders, optionholders and warrantholders of the Company by the Escrow Agent in compliance with the terms and conditions of the Escrow Agreement. The funds held in escrow pursuant to this Article VIII will be invested by the Escrow Agent provided the funds may only be invested in short-term government securities. The escrowed funds are subject to and held solely for the purpose of providing for the following contingencies: (a) Wooster Property. $1.99 per Share of the Offer Price or Merger Consideration or Option Merger Consideration (as the case may be) shall be held in escrow by the Escrow Agent (the "Wooster Escrow") as described in the Escrow Agreement. (b) Occupancy Tax Escrow. $.51 per Share of the Offer Price, Merger Consideration or Option Merger Consideration, as the case may be, shall be held in escrow by the Escrow Agent (the "Occupancy Tax Escrow") as described in the Escrow Agreement. 8.2 Escrow Committee. In all matters respecting the Escrow Agreement the Escrow Committee (as defined in the Escrow Agreement) shall represent the former shareholders, optionholders and warrantholders of the Company. The Escrow Committee will agree to serve as such. The Escrow Committee shall act by majority (if more than 1 person) and may act upon written consent or telephonic or personal meetings. If one or more of the members of the Escrow Committee resign or become unable to serve: (1) the remaining member or members shall comprise the Escrow Committee, (2) the remaining member or members are empowered to appoint a replacement for such terminated member and they shall give notice to Purchaser thereof, and (3) if there are no members of the Escrow Committee, the former shareholders, optionholders and warrantholders of the Company shall promptly elect a member or members of the Escrow Committee based on their proportional contingent right to the Escrowed Funds, but if after three months of there not being members of the Escrow Committee and during this period they fail to make such appointments and give notice thereof to Purchaser within such three months then Purchaser will appoint an independent third party to the Escrow Committee to represent the former shareholders, optionholders and warrantholders under the Escrow Agreement. Purchaser, 34 38 Surviving Corporation and the Escrow Agent shall be entitled to rely upon any statements or other communications by or purported to be on behalf of the Escrow Committee without the necessity of determining the validity of the actions taken. Actions taken by the Escrow Committee (or failures to act) shall be deemed binding and conclusive on all former shareholders, optionholders or warrantholders of the Company. 8.3 Non Transferability of Escrowed Funds. The funds held in escrow shall be held for the benefit of the shareholders of Company and Purchaser only and shall not be transferrable by any potential recipient thereof, except by will, intestate succession or operation of law. ARTICLE IX MISCELLANEOUS AND GENERAL 9.1 Payment of Expenses. Whether or not the Offer and/or the Merger shall be consummated (but subject to Section 7.5(ii) above), each party hereto shall pay its own expenses incident to preparing for, entering into and carrying out this Agreement and the consummation of the Offer and the Merger. 9.2 Survival. The agreements of the Company, the Purchaser and Merger Sub contained in Sections 3.2 (but only to the extent that such Section expressly relates to actions to be taken after the Effective Time), 3.3, 3.4, 3.5, 5.11, 5.12, 5.13, 8.1, 8.2, 8.3 and 9.1 shall survive the consummation of the Merger. The agreements of the Company, the Purchaser and Merger Sub contained in Sections 7.5, 7.6 and 9.1 shall survive the termination of this Agreement. All other representations, warranties, agreements and covenants in this Agreement shall not survive the consummation of the Merger or the termination of this Agreement. 9.3 Modification or Amendment. Subject to the applicable provisions of the NYBCL, this Agreement may be amended by the parties hereto by action taken by or on behalf of their respective Boards of Directors at any time prior to the Effective Time; provided, however, that, after approval of the Merger by the shareholders of the Company, no amendment may be made which by law requires further approval by such shareholders without such further approval; provided further, however, that after the closing of the Offer and the purchase of the Shares thereunder by Purchaser or Merger Sub, this Agreement will not be amended by the Company without the approval of a majority of the persons who are directors of the Company on the date hereof; and provided further, however, that Section 5.11 and 5.12 may not be amended subsequent to the Effective Time. This Agreement may not be amended except by an instrument in writing signed by the parties hereto. 9.4 Waiver of Conditions. The conditions to each of the parties' obligations (other than the conditions set forth in Section 6.1(c) and 6.2(c)) to consummate the Merger are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable law. 35 39 9.5 Counterparts. This Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. 9.6 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 9.7 Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given: (a) if delivered personally or sent by facsimile, on the date received if received prior to 5:00 p.m., (b) if delivered by overnight courier, on the day after mailing, and (c) if mailed, five (5) days after mailing with postage prepaid. Any such notice shall be sent as follows: TO PURCHASER OR MERGER SUB: Central Parking Corporation 2401 21st Avenue South Suite 200 Nashville, Tennessee 37212 Attention: Chairman WITH COPIES TO: Mark Manner, Esq. Harwell Howard Hyne Gabbert & Manner, P.C. 315 Deaderick Street Suite 1800 Nashville, Tennessee 37238 TO COMPANY: Square Industries, Inc. 921 Bergen Avenue Jersey City, New Jersey 07306 Attention: Chairman of the Board WITH COPIES TO: Daniel R. Kaplan, Esq. Proskauer Rose Goetz & Mendelsohn LLP 1585 Broadway 36 40 New York, New York 10036 and Leo Silverstein, Esq. Brock, Fensterstock, Silverstein, McAuliffe & Wade, LLP One Citicorp Center 153 East 53rd Street 56th Floor New York, New York 10022 or to such other persons or addresses as may be designated in writing by the party to receive such notice. 9.8 Entire Agreement, etc. This Agreement (including the Disclosure Schedule and any exhibits or schedules hereto) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties both written and oral, among the parties, with respect to the subject matter hereof, and, except as otherwise expressly provided herein, are not intended to confer upon any other person any rights or remedies hereunder except for the provisions of Sections 5.11 and 5.12. 9.9 Assignment; Merger Sub. This Agreement shall not be assignable by operation of law or otherwise; provided, however, that the Purchaser may designate, by written notice to the Company, another wholly-owned direct or indirect subsidiary to be a Constituent Corporation in lieu of Merger Sub, in the event of which, all references herein to Merger Sub shall be deemed references to such other subsidiary except that all representations and warranties made herein with respect to Merger Sub as of the date of this Agreement shall be deemed representations and warranties made with respect to such other subsidiary as of the date of such designation. 9.10 Parties in Interest. This Agreement shall be binding upon and inure to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, except for Section 5.11 (which is intended to be for the benefit of the Indemnified Parties and may be enforced by such Indemnified Parties) and Section 5.12 (which is intended to be for the benefit of certain employees and may be enforced by such employees). 9.11 Obligation of the Purchaser. Whenever this Agreement requires Merger Sub to take any action, such requirement shall be deemed to include an undertaking on the part of the Purchaser to cause Merger Sub to take such action. 9.12 Captions. The Article, Section and paragraph captions herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. 37 41 9.13 Integration of Disclosure Schedule. The Disclosure Schedule is an integral part of this Agreement and is considered a part of this Agreement as if fully set forth herein. 9.14 Arbitration. Any dispute among the parties hereto shall be settled by final and binding arbitration in New York, New York in accordance with the then effective rules of the American Arbitration Association, and judgment upon the award rendered may be entered in any court having jurisdiction thereof. In any action or proceeding brought to enforce any provision of this Agreement, the prevailing party shall be entitled to recover its costs from the opposing party, including reasonable legal fees and expenses 38 42 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto on the date first above written. Square Industries, Inc. By: ----------------------------------- Its: ----------------------------------- Central Parking Corporation By: ----------------------------------- Its: ----------------------------------- Central Parking System -- Empire State, Inc. By: ----------------------------------- Its: ----------------------------------- 39 43 ANNEX A Conditions to the Offer The capitalized terms used in this Annex shall have the meaning set forth in the attached Agreement. Notwithstanding any other provision of the Offer, subject to the terms of this Agreement, Merger Sub shall not be required to accept for payment or pay for any Shares tendered pursuant to the Offer, and may terminate or amend the Offer and may postpone the acceptance for payment of and payment for Shares tendered, if (i) the Minimum Condition is not satisfied; (ii) any applicable waiting period under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer, or (iii) at any time on or after the date of this Agreement, and prior to the acceptance for payment of Shares, any of the following conditions shall exist: (a) there shall have been instituted or be pending any action or proceeding by any governmental or quasi-governmental authority or agency, domestic or foreign, before any court or governmental, administrative or regulatory authority or agency, of competent jurisdiction, domestic or foreign, (i) challenging or seeking to make illegal, materially delay or otherwise directly or indirectly restrain or prohibit the making of the Offer, the acceptance for payment of, or payment for, any Shares by the Purchaser, Merger Sub or any other affiliate of the Purchaser, or the consummation of any other transaction contemplated by this Agreement, including the Offer and the Merger, or seeking to obtain material damages in connection therewith; (ii) seeking to prohibit or limit materially the ownership or operation by the Company, the Purchaser or any of their subsidiaries of all or any material portion of the business or assets of the Company, the Purchaser and their respective subsidiaries taken as a whole, or to compel the Company, the Purchaser or any of their respective subsidiaries to dispose of or hold separate all or any material portion of the business or assets of the Company, the Purchaser and any of their respective subsidiaries taken as a whole, as a result of the transactions contemplated by this Agreement, including the Offer and the Merger; (iii) seeking to impose or confirm material limitations on the ability of the Purchaser, Merger Sub or any other affiliate of the Purchaser to exercise effectively full rights of ownership of any Shares, including, without limitation, the right to vote any Shares acquired by Merger Sub pursuant to the Offer or otherwise on all matters properly presented to the Company's shareholders, including, without limitation, the approval and adoption of this Agreement and the transactions contemplated hereby; (iv) seeking to require divestiture by the Purchaser, Merger Sub or any other affiliate of the Purchaser of any Shares; or (v) which otherwise has a material adverse effect on the financial condition, business, properties or results of operations of the Company and the Subsidiaries taken as a whole or the Purchaser and its subsidiaries taken as a whole. (b) there shall have been any action taken, or any statute, rule, regulation, legislation, interpretation, judgment, order or injunction enacted, entered, enforced, promulgated, amended, issued or deemed applicable to (i) the Purchaser, the A-1 44 Company or any subsidiary or affiliate of the Purchaser or the Company or (ii) any transaction contemplated by this Agreement, including the Offer and the Merger, by any legislative body, court, government or governmental, administrative or regulatory authority or agency, domestic or foreign, other than the routine application of the waiting period provisions of the HSR Act to the Offer or the Merger, which is reasonably likely in the good faith judgment of the Purchaser to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; (c) there shall have occurred (i) any general suspension of, or limitation on prices for, trading in securities on the New York Stock Exchange or the Nasdaq national market system, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) a commencement of a war or armed hostilities or other national or international crisis directly or indirectly involving the United States or (iv) in the case of any of the foregoing existing on the date hereof, in the good faith judgment of the Purchaser a material acceleration or worsening thereof; (d) (i) it shall have been publicly disclosed or the Purchaser shall have otherwise learned that beneficial ownership (determined for the purposes of this paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the outstanding Shares has been acquired by any person, other than the Purchaser or any of its affiliates or any affiliates of the Harwood family or (ii) (A) the Board of Directors of the Company or any committee thereof shall have failed to make, shall have withdrawn or modified in a manner adverse to the Purchaser or Merger Sub the approval or recommendation of the Offer, the Merger or this Agreement, or approved or recommended any Acquisition Transaction, takeover proposal or any other acquisition of Shares other than the Offer and the Merger or (B) the Board of Directors of the Company or any committee thereof shall have resolved to do any of the foregoing; (e) any representation or warranty of the Company in this Agreement shall not be true and correct as if such representation or warranty was made as of such time on or after the date of this Agreement, except for (i) changes contemplated by this Agreement, (ii) those representations and warranties which address matters only as of a particular date (which shall remain true and correct as of such date) and (iii) where the failure to be true and correct would not have a Material Adverse Effect on the Company; for purposes of this provision, (A) representations and warranties of the Company in this Agreement which are qualified by materiality shall be determined without regard to the materiality limitation, except as provided in (iii) above and (B) Material Adverse Effect shall mean items which in the aggregate would have (x) a recurring annual pre-tax income effect of $400,000 or more or (y) a non-recurring income, balance sheet or financial condition effect of $4,000,000 or more; (f) the Company shall have failed to perform in any material respect any obligation or to comply in any material respect with any agreement or covenant of A-2 45 the Company to be performed or complied with by it under this Agreement prior to the expiration of the Offer; (g) the Company shall have failed to deliver prior to the expiration of the offer executed (i) Noncompetition Agreements in substantially the form included in Annex G attached hereto from each of Lowell and Sanford Harwood, (ii) Employment Agreement from Brett Harwood in substantially the form included in Annex H attached hereto, (iii) Consulting Agreement from Lowell Harwood and Sanford Harwood and (iv) Noncompetition Agreement from Leslie Harwood Ehrlich as contemplated in Section 5.13 of this Agreement; (h) any change shall have occurred since the date hereof in the business, operations, assets, financial condition or results of operations of the Company or any of the Subsidiaries that, in the reasonable good faith judgment of Purchaser, is or is reasonably likely to constitute a Material Adverse Change with respect to the Company; for purposes of this provision, Material Adverse Change shall mean changes or events which in the aggregate would have (i) a recurring annual pre-tax income effect of $400,000 or more or (ii) a non-recurring income, balance sheet or financial condition effect of $4,000,000 or more; (i) the Company shall have failed to take any steps reasonably required to be taken under the NYBCL (including, without limitation, the requirements of Section 912 of the NYBCL) to allow Purchaser and Merger Sub to promptly consummate the Merger and exercise full ownership rights over the Shares without violating any provision of the NYBCL; or (j) this Agreement shall have been terminated in accordance with its terms; (k) Merger Sub and the Company may mutually agree that Merger Sub shall terminate the Offer or postpone the acceptance for payment of or payment for Shares thereunder; which, in the reasonable good faith judgment of Merger Sub in any such case, and regardless of the circumstances (including any action or inaction by the Purchaser or any of its affiliates) giving rise to any such condition, makes it inadvisable to proceed with such acceptance for payment. The foregoing conditions are for the sole benefit of Merger Sub and the Purchaser and may be asserted by Merger Sub or the Purchaser regardless of the circumstances giving rise to any such condition or may be waived by Merger Sub or the Purchaser in whole or in part at any time and from time to time in their sole discretion. The failure by the Purchaser or Merger Sub at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts A-3 46 and circumstances; and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. A-4 47 ANNEX B Purchaser Statutory Approvals A-5 48 ANNEX C Additional Information A-6 49 ANNEX D Severance Arrangements to be adopted after consultation with final bidders A-7 50 ANNEX E
Employee Shares Stock Owned Options Warrants Total ------- ------- ------- --------- Lowell Harwood ...................... 268,796(a) 100,000 75,000 443,796 Sanford Harwood ...................... 218,651 50,000 75,000 343,651 Brett Harwood ........................ 57,720(b) 80,000 ---- 137,720 Leslie Harwood Ehrlich .............. 33,879 ---- ---- 33,879 Craig Harwood ........................ 33,880 ---- ---- 33,880 Scott Harwood ........................ 37,614(c) 7,500 ---- 45,114 ------- ------- ------- --------- Total 650,540 237,500 150,000 1,038,040
(a) Includes 18,674 Shares owned by Mrs. Lowell Harwood and 60,000 Shares owned by certain foundations over which he has the power of disposition. (b) Includes 12 Shares owned by Mrs. Brett Harwood and 13,000 Shares owned as custodian or trustee for his minor children. (c) Includes 9,500 Shares owned as custodian for his minor children. A-8 51 ANNEX F Agreement to Support the Transaction A-9 52 ANNEX G Confidentiality and Non Competition Agreement A-10 53 ANNEX H Employment Agreement for Brett Harwood A-11 54 Annex I Form of Escrow Agreement A-12 EX-99.C.2 12 FORM OF EMPLOYMENT AGREEMENT 1 EMPLOYMENT AGREEMENT THIS AGREEMENT made and entered into effective this ____ day of __________, 1997, by and among CENTRAL PARKING CORPORATION, INC., a Tennessee corporation ("Parent"), CENTRAL PARKING SYSTEM, INC., a Tennessee corporation wholly owned by Parent, with its principal place of business in Nashville, Tennessee, ("EMPLOYER"), and BRETT HARWOOD, ("EMPLOYEE"). W I T N E S S E T H WHEREAS, the parties hereto have reached an understanding as to their contract of employment, and desire to reduce same to writing. NOW, THEREFORE, in consideration of the premises, the parties hereto have agreed as follows: 1. EMPLOYER does hereby employ EMPLOYEE as Executive Vice President of EMPLOYER. EMPLOYER agrees to make available an office to EMPLOYEE at one of its locations in New Jersey within the New York metropolitan area in connection with the performance by EMPLOYEE of the duties set forth in Section 2. 2. EMPLOYEE agrees to serve in the capacity referenced in paragraph 1 to perform all the duties required thereof, including but not limited to, marketing, acquisition of new parking opportunities (whether in the form of acquisition of fee, leases or management agreements), supervising personnel reasonably necessary to perform his duties hereunder, maintaining true and correct records, reporting same to EMPLOYER as required, and to devote substantial time and best efforts thereto necessary to perform such services. 3. EMPLOYER agrees to pay commencing with the date hereof EMPLOYEE for said services the sum of Two Hundred Thousand Dollars ($200,000.00) gross per annum (Base), plus incentive compensation (the "Incentive Compensation") as set forth below: - 10% of all Gross Operating Income (NOI less 5% of operating expenses G&A burden) derived from new leases or 10% of pre tax operating profit from newly acquired companies, in each case where EMPLOYEE was primarily responsible for such lease or acquisition. - 10% of all Gross Operating Income (NOI less 5% of operating expenses G&A burden) derived from new management agreements where EMPLOYEE was primarily responsible for securing the management agreement. 2 - Incentive compensation will be paid to EMPLOYEE for the greater of the period during which EMPLOYEE is employed by EMPLOYER or any of its affiliates, or for five years from the date of commencement of operation pursuant to the lease or management agreement (the "Incentive Compensation Period"), provided, however, (a) In the event that Employee leaves the employ of the Company during the Term of Employment as defined in Section 5, the Employee shall be entitled to the Incentive Compensation for the period during which he was employed, and for an additional period following the termination of his employment up to an aggregate duration not to exceed two and one half (2 1/2) years from the date of commencement of operation pursuant to the lease or management agreement, provided that during such period of time after termination of employment, the Employee complies with the noncompetition provisions of subsection (i) of Section 6 of this Agreement for the period during which Employee is paid Incentive Compensation (the "General Noncompete"); and (b) In the event that Employee is not offered renewal of the Term of Employment at the end of three (3) years, or in the event that Employee is offered such renewal and does not elect to continue his employment, the Employee shall be entitled to continue to receive the Incentive Compensation for the full Incentive Compensation Period, provided that Employee abides by the provisions of the General Noncompete during the payment of Incentive Compensation following termination of his employment. - Incentive Compensation will be paid to EMPLOYEE annually within forty-five days after the EMPLOYER'S fiscal year end. 4. EMPLOYER agrees that with respect to the acquisition of any real estate or the equity interest in a corporation, partnership or joint venture substantially all of its assets of which are real estate or real estate interests (a "Real Estate Company") by EMPLOYER or any affiliate of EMPLOYER including Parent (collectively the "EMPLOYER AFFILIATED GROUP") resulting primarily from the efforts of EMPLOYEE, EMPLOYER shall provide or cause to be provided the opportunity for EMPLOYEE or at his direction his immediately family or an entity of which at least 75% of its equity interests is beneficially owned by EMPLOYEE and his family (collectively the "EMPLOYEE AFFILIATED GROUP") to acquire 25% (or such lesser amount as the EMPLOYEE determines) of the equity interest in such real estate or Real Estate Company on the same terms and conditions as the EMPLOYER AFFILIATED GROUP. For all opportunities generated by EMPLOYEE in the form of the fee acquisition of EMPLOYER leasehold interests and the subsequent realization of value above the value of such asset operated as a parking facility, EMPLOYEE or EMPLOYEE'S affiliates will be entitled to participate in realization of such property value maximization. EMPLOYER agrees to lend EMPLOYEE up to an aggregate of $10 million in order to assist EMPLOYEE in making the necessary investments related to the opportunities described hereinabove. Such loans shall bear interest at NationsBank Prime plus 2% (provided, however, that the minimum interest rate shall be 10%), shall only be secured by EMPLOYEE AFFILIATED GROUP interest in the properties and shall be payable at such times as EMPLOYER and EMPLOYEE may agree. In the event the EMPLOYER AFFILIATED GROUP sells part or all of its interest in the real estate or the Real Estate Company, EMPLOYER shall provide the EMPLOYEE AFFILIATED GROUP through EMPLOYEE the opportunity to participate in the sale pro rata based on their respective interests on the same terms and conditions. 5. This contract shall have a term of three (3) years, but may be terminated immediately by EMPLOYER upon the commission by EMPLOYEE of an act involving theft, embezzlement, fraud, intentional mishandling of Company funds or any other material act or 2 3 omission which is materially injurious to the financial condition or business reputation of EMPLOYER. 6. It is understood and agreed that in the course of employment, EMPLOYEE will become familiar with EMPLOYER'S clientele, contracts, and methods of operation. In consideration thereof, and as part of the consideration for this agreement, EMPLOYEE agrees that except as provided in Annex A, during the term hereof he will not, directly or indirectly, as an individual or through any other person or entity, participate as an employee, director, consultant, owner, advisor or in any other capacity in the same or similar business as the EMPLOYER during the term hereof and (i) for a period of one (1) year from the expiration of his employment hereunder without geographical limitation and (ii) for a period of five (5) years following expiration of the Term of Employment hereunder with Parent or Square Industries, Inc. ("Square") with respect to parking locations owned, leased or managed by Parent or Square during said five year period. 7. A. EMPLOYER shall provide health, disability and life insurance, automobile allowance, and profit sharing and other benefits on terms no less favorable than EMPLOYER'S Senior Vice Presidents, in accordance with the ordinary policies of EMPLOYER, as the same may be modified from time to time. The automobile allowance to be provided to EMPLOYEE shall at his option be either (i) $600 per month or the provision of an automobile of the same model and type as made available as the other Senior Vice Presidents of EMPLOYER. In addition, EMPLOYEE shall be entitled to receive options under the Parent's Stock Option Plan to purchase 10,000 shares of the Company's Common Stock on each of (i) the date of the commencement of employment and (ii) the first anniversary date of such date. Each option shall be exercisable in five equal installments with the installments of the first option to vest on September 30 of each of 1997, 1998, 1999, 2000 and 2001 and the installments of the second option to vest on September 30 of each of 1998, 1999, 2000, 2001 and 2002. B. In the event of a disability resulting in the termination of EMPLOYEE's employment, EMPLOYEE shall be entitled to the disability payments provided under the disability policy provided in Section 7 in lieu of the compensation provided in Section 3 hereunder. In the event of the death of EMPLOYEE during the term of his employment, the Incentive Compensation provided in Section 3 shall continue to be paid to his heirs under the terms hereof for the period provided therein. C. EMPLOYER and Parent agree that EMPLOYEE during the term of this Agreement shall be the representative of the Parent to the National Parking Association and EMPLOYER or Parent shall bear all related fees and expenses with respect to such representation. 8. In the event of a Change of Control of EMPLOYER or PARENT and the failure thereafter of EMPLOYER to continue to offer EMPLOYER employment on the same terms and conditions set forth herein, EMPLOYEE shall be entitled to a lump sum payment at the time of termination of three (3) years of the latest year's annual compensation immediately prior to the Change of Control, provided EMPLOYEE agrees to abide by the non-compete provisions of paragraph 6 of this Agreement. A Change of Control shall mean the acquisition 3 4 within a 12 month period by a person or persons not affiliated with EMPLOYER or Parent of all the outstanding shares of capital stock of EMPLOYER or PARENT. 9. Any dispute among the parties hereto shall be settled by binding arbitration in Newark, New Jersey in accordance with the then effective rules of the American Arbitration Association, and judgment upon the award rendered may be entered in any court having jurisdiction thereof. In any action or proceeding brought to enforce any provision of this Agreement, the prevailing party shall be entitled to recover its costs from the opposing party, including reasonable legal fees and expenses. 10. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of New Jersey. 11. PARENT agrees to cause EMPLOYER to perform the terms and conditions of this Agreement. WITNESS our hands the day and date first above written. CENTRAL PARKING SYSTEM By: ------------------------------------- ATTEST Title: ---------------------------------- CENTRAL PARKING CORPORATION By: - ----------------------------------- ------------------------------------- APPROVED Title: ---------------------------------- - ----------------------------------- ---------------------------------------- APPROVED BRETT HARWOOD 4 5 ANNEX A EXCLUSIONS FROM NONCOMPLETE AGREEMENT 1. EMPLOYEE may acquire, own and lease real estate used in the Business in the Noncompete Area, provided that Central Parking Corporation is offered right to first refusal to operate or manage parking located thereon unless the real estate subject to an existing agreement at the time of the acquisition, in which case, Central Parking Corporation's right of first refusal will be delayed until the termination of such existing agreement. 2. EMPLOYEE may continue to own and lease real estate currently owned or leased by corporations of which EMPLOYEE is a shareholder and Director within the Noncompete Area with parking operations, provided that Central Parking Corporation is offered right of first refusal to operate or manage parking located thereon. The parties acknowledge that the currently owned properties consist of the following: Location City/State -------- ---------- 206 E. 59th Street New York/NY 135 Sip Avenue Jersey City/NJ 801 Pavonia Jersey City/NJ 275 Washington Street Boston/MA 421 North Seventh Street Philadelphia/PA 1919 Market Street Philadelphia/PA For purposes of this Confidentiality and Noncompete Agreement, Central Parking shall notify EMPLOYEE of its intention to exercise its right to first refusal as provided in paragraphs 1 or 2 above within fifteen (15) business days of its receipt of notice of such right. 3. EMPLOYEE will be permitted to practice law and have clients and if such clients include parking service providers or parking owners, EMPLOYEE will seek EMPLOYER's consent, where such consent will not be unreasonably withheld. EX-99.C.3 13 FORM OF NONCOMPETITION AGREEMENTS 1 CONFIDENTIALITY AND NONCOMPETE AGREEMENT This Confidentiality and Noncompete Agreement is entered into as of the ______ day of ____________, 199__, between ___________________ ("Shareholder"), and Central Parking Corporation, a Tennessee corporation ("Purchaser") and ________________, a New York corporation (the "Surviving Corporation"). WHEREAS, Purchaser, Square Industries, Inc., a New York corporation (the "Company"), and Central Parking System -- Empire State, Inc., a New York corporation and a wholly-owned subsidiary of the Purchaser ("Merger Sub") entered into an Agreement and Plan of Merger (the "Merger Agreement"), dated as of December 6, 1996 pursuant to which Company will merge with and into Merger Sub with Company surviving as a wholly owned subsidiary of Purchaser; NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements made herein and in the Merger Agreement, the Offer Price, the Merger Consideration and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound thereby, agree as follows: 1. Non-Compete. (a) Shareholder recognizes and acknowledges that all information pertaining to the parking ownership and management business of the Company, Purchaser and Surviving Corporation (the "Business") and the related affairs, clients, customers or other relationships of Company, Purchaser and Surviving Corporation that is not generally known to the real estate or parking industries or to the public generally is confidential and is a unique and valuable asset of Purchaser and Surviving Corporation. Access to and knowledge of this information were and are essential to the performance of Surviving Corporation's operation. Shareholder will not give to any person, firm, association, or governmental agency any information concerning the affairs, business, clients, customers or other relationships of Purchaser, Company or Surviving Corporation except as required by law. Shareholder will not make use of this type of information for its own purposes or for the benefit of any person or organization other than Surviving Corporation. Shareholder shall use its best efforts to prevent the disclosure of this information by others. All records, memoranda, etc. relating to the Business which is deemed confidential hereunder whether made by Company, Shareholder or otherwise coming into its possession will remain the property of Surviving Corporation. 2 (b) Shareholder hereby covenants and agrees with Purchaser and Surviving Corporation that, during the "NONCOMPETE PERIOD" and within the "NONCOMPETE AREA," it shall not directly or indirectly: (i) acquire, lease, manage, consult for, serve as agent or subcontractor for, finance, invest in, own any part of or exercise management control over any parking business or business that provides any services competitive with the services provided by the Business; (ii) solicit for employment or employ any nonclerical person who at Closing or thereafter became an employee of Purchaser or Surviving Corporation unless such person is no longer employed by Purchaser or Surviving Corporation for at least six (6) months; or (iii) with respect to any customer, supplier or property owner with whom Purchaser or Surviving Corporation contracts in connection with the Business, either solicit the same in a manner that reasonably could adversely affect Purchaser or Surviving Corporation, or make statements to the same that disparage Purchaser or Surviving Corporation or its operations in any way. The "NONCOMPETE PERIOD" shall commence at Closing and terminate on the fifth anniversary thereof. The "NONCOMPETE AREA" shall mean a fifty (50) mile radius of each location from which the Business of Company is operated as of Closing. Ownership of less than five percent (5%) of the stock of a publicly-held company shall not be deemed a breach of this covenant. Provided; however, nothing in the Agreement shall prohibit Shareholder from engaging in the activities disclosed on Exhibit 1 attached hereto. (c) In the event Purchaser or Surviving Corporation materially breaches that certain Consultancy Agreement dated ____________, 199__, between Purchaser and Shareholder, then paragraph 1(b) of this Agreement shall terminate and be of no further force and effect. [THIS PROVISION WOULD BE IN LOWELL'S AND SANFORD'S AGREEMENTS ONLY] 2. Enforcement. (a) Shareholder acknowledges that its breach or threatened or attempted breach of any provision of Section 1 would cause irreparable harm to Purchaser or Surviving Corporation not compensable in monetary damages and that Purchaser and Surviving Corporation shall be entitled, in addition to all other applicable remedies, to a temporary and permanent injunction and a decree for specific performance of the terms of Section 1. Nothing herein contained shall be construed as prohibiting Purchaser or Surviving Corporation from pursuing any other remedy available to it for such breach or threatened breach. (b) All parties hereto acknowledge the necessity of protection against the competition of Shareholder and that the nature and scope of such protection as been carefully considered by the parties. The period provided and area covered are expressly acknowledged and agreed to be fair, reasonable and necessary. In the event any covenant contained in Section 1 is held to be invalid, illegal or unenforceable because of the duration of such covenant, the geographic area covered thereby or otherwise, the parties agree that the court making such determination shall have the power to reduce the duration, the area and/or other provision(s) of any such covenant to the maximum permissible and to include 2 3 as much of its nature and scope as will render it enforceable, and, in its reduced form said covenant shall be valid, legal and enforceable. 3. No Agency. Shareholder shall have no right, authority or power to act for or on behalf of Surviving Corporation. 4. General Assistance. Shareholders will furnish information as may be in its possession and cooperate with Surviving Corporation as may be requested in connection with any claims or legal actions in which Surviving Corporation is or may become a party. 5. Assignment; Successors and Assigns. The obligations of Shareholder hereunder are personal in nature and are not assignable or delegable by it. Any prohibited assignment or delegation will be null and void. Purchaser or Surviving Corporation may assign and delegate this Agreement to a successor of substantially all of its business assets or to a party involved in the parking industry. The provisions hereof shall inure to the benefit of and be binding upon the permitted successors and assigns of the parties hereto. 6. Governing Law. This Agreement shall be interpreted under, subject to and governed by the substantive laws of the State of Tennessee, and all questions concerning its validity, construction, and administration shall be determined in accordance thereby. 7. Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which shall together constitute one and the same instrument. 8. Invalidity. The invalidity or unenforceability of any provision of this Agreement shall not affect any other provision hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted. Furthermore, in lieu of such illegal, invalid, or unenforceable provision there shall be added automatically as a part of this Agreement a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid and enforceable. 9. Exclusiveness. [SUBJECT TO PROVISION OF SECTION 1(C),] this Agreement constitutes the entire understanding and agreement between the parties with respect to the subject matter hereof and supersedes any and all other agreements, oral or written, between the parties. [BOLD LANGUAGE FOR LOWELL'S AND SANFORD'S AGREEMENTS ONLY] 10. Modification; Waiver. This Agreement may not be modified or amended except in writing signed by the parties. No term or condition of this Agreement will be deemed to have been waived except in writing by the party charged with waiver. A waiver 3 4 shall operate only as to the specific term or condition waived and will not constitute a waiver for the future or act on anything other than that which is specifically waived. 11. Arbitration. Any dispute among the parties hereto shall be settled by binding arbitration in Nashville, Tennessee in accordance with the then effective rules of the American Arbitration Association, and judgment upon the award rendered may be entered in any court having jurisdiction thereof. In any action or proceeding brought to enforce any provision of this Agreement, the prevailing party shall be entitled to recover its costs from the opposing party, including reasonable legal fees and expenses. 12. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been made when delivered or mailed first-class postage prepaid by registered mail, return receipt requested, or when delivered if by hand, overnight delivery service or confirmed facsimile transmission, to the following: (a) If to Purchaser or Surviving Corporation, c/o Central Parking, Central Parking Corporation at 2401 21st Avenue South, Suite 200, Nashville, TN 37212, Attention: Chairman, or at such other address as may have been furnished to Shareholder by Purchaser or Surviving Corporation in writing; or (b) If to Shareholder, at ______________________________ or such other address as may have been furnished to Purchaser or Surviving Corporation by Shareholder in writing. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. CENTRAL PARKING CORPORATION -------------------------------- By: --------------------------- Title: --------------------------- 4 5 EXHIBIT 1 EXCLUSIONS FROM NONCOMPETE AGREEMENT 1. Shareholder may acquire, own and lease real estate used in the Business in the Noncompete Area, provided that Central Parking Corporation is offered right of first refusal to operate or manage parking located thereon unless the real estate is subject to an existing agreement at the time of the acquisition, in which case, Central Parking Corporation's right of first refusal will be delayed until the termination of such existing agreement 2. Shareholder may broker real estate located in the Noncompete Area, provided Central Parking Corporation is offered right of first refusal to manage parking located thereon unless the real estate is subject to an existing agreement at the time of the acquisition, in which case, Central Parking Corporation's right of first refusal will be delayed until the termination of such existing agreement 3. Shareholder may continue to own and lease real estate currently owned or leased by Shareholder within the Noncompete Area with parking operations, provided that Central Parking Corporation is offered right of first refusal to operate or manage parking located thereon. The parties acknowledge that the currently owned properties consist of the following: Location City/State 206 E. 59th Street New York/NY 135 Sip Avenue Jersey City/NJ 801 Pavonia Jersey City,/NJ 275 Washington Street Boston/ MA 421 North Seventh Street Philadelphia/PA 20th and Market Street Philadelphia/PA For purposes of this Confidentiality and Noncompete Agreement, Central Parking shall notify Shareholder of its intention to exercise its right of first refusal as provided in paragraphs 1, 2 or 3 above within fifteen (15) business days of its receipt of notice of such right. 5 EX-99.C.4 14 FORM OF CONSULTING AGREEMENT 1 CONSULTANCY AGREEMENT This Agreement made and entered into as of this 1st day of January, 1997 between Central Parking Systems, Inc., a Tennessee corporation ("CPS") and Lowell Harwood, an individual who presently resides in New York City (hereinafter "Harwood"). W I T N E S S E T H WHEREAS, Harwood is knowledgeable of real estate opportunities for parking facilities in the United States; and WHEREAS, CPS has need for the experience and expertise of Harwood. NOW, THEREFORE, the parties hereto agree as follows: 1. Term. The term of the Consultancy Agreement will be for one year running from January 1, 1997 through December 31, 1997. 2. Compensation. In consideration of the duties to be performed by Harwood pursuant hereto, CPS will pay to Harwood the sum of One Hundred Twenty Thousand Dollars ($120,000) payable at the rate of Ten Thousand Dollars ($10,000) per month on or before the last day of each calendar month during the term hereof. In addition, Harwood will be entitled incentive compensation as provided in Exhibit 2. 3. Duties. Harwood will advise and consult CPS in connection with the acquisition, ownership, leasing, operation and/or management of storage and parking facilities for automobiles and motor vehicles throughout the United States. Harwood will be reimbursed the reasonable out-of pocket expenses he incurs in connection with the performance of services set forth herein provided that he first obtains CPS' written approval of such expenses in advance. 4. This Agreement is subject and subordinate to that certain Confidentiality and Noncompete Agreement dated ______________, 1997 between Central Parking Corporation and Harwood. Harwood agrees that all services rendered by him in connection with this Agreement will be for the sole benefit of CPS and Harwood agrees that this Consultancy Agreement is not to be 2 construed or interpreted as in any way derogating the effect of the Confidentiality and Noncompete Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of January 1, 1997. CENTRAL PARKING SYSTEM, INC. ATTEST: By: ---------------------------- ------------------------------------ Monroe J. Carell, Jr., Chairman ATTEST: By: ---------------------------- ------------------------------------ Lowell Harwood 3 EXHIBIT 2 TO CONSULTING AGREEMENT FOR LOWELL HARWOOD - - Lowell Harwood would be offered a seat on the Board of Directors of Central Parking Corporation as proposed in the Letter from Monroe Carell dated October 22, 1996. - - In addition, Lowell Harwood would be eligible for incentive payments for every acquisition or business opportunity realized by Central Parking Corporation that he originates or identifies, after consummation of the transaction. - 10% of all Gross Operating Income (NOI less 5% of operating expenses G&A burden) derived from new leases or 10% of pretax operating profit from newly acquired companies, in each case where Lowell Harwood was primarily responsible for such lease or acquisition. - 10% of all Gross Operating Income (NOI less 5% of operating expenses G&A burden) derived from new management agreements where Lowell Harwood was primarily responsible for securing the management agreement. - Incentive compensation will be paid to Lowell Harwood for seven one-half years from the date of commencement of operation pursuant to the lease on management agreement or company acquisition. - Incentive compensation will be paid to Lowell Harwood annually within forty-five (45) days after the fiscal year end. - Incentive compensation will be in addition to reimbursement of any expenses incurred in acquiring new leases, management contracts and properties, provided Harwood complies with the provisions of Section 3 of the Consulting Agreement. 4 CONSULTANCY AGREEMENT This Agreement made and entered into as of this 1st day of January, 1997 between Central Parking Systems, Inc., a Tennessee corporation ("CPS") and Sanford Harwood, an individual who presently resides in New York City (hereinafter "Harwood"). W I T N E S S E T H WHEREAS, Harwood is knowledgeable of real estate opportunities for parking facilities in the United States; and WHEREAS, CPS has need for the experience and expertise of Harwood. NOW, THEREFORE, the parties hereto agree as follows: 1. Term. The term of the Consultancy Agreement will be for six months running from January 1, 1997 through June 30, 1997. 2. Compensation. In consideration of the duties to be performed by Harwood pursuant hereto, CPS will pay to Harwood the sum of Sixty Thousand Dollars ($60,000) payable at the rate of Ten Thousand Dollars ($10,000) per month on or before the last day of each calendar month during the term hereof. 3. Duties. Harwood will advise and consult CPS in connection with the acquisition, ownership, leasing, operation and/or management of storage and parking facilities for automobiles and motor vehicles throughout the United States. Harwood will be reimbursed the reasonable out-of pocket expenses he incurs in connection with the performance of services set forth herein provided that he first obtains CPS' written approval of such expenses in advance. 4. This Agreement is subject and subordinate to that certain Confidentiality and Noncompete Agreement dated ______________, 1997 between Central Parking Corporation and Harwood. Harwood agrees that all services rendered by him in connection with this Agreement will be for the sole benefit of CPS and Harwood agrees that this Consultancy Agreement is not to be construed or interpreted as in any way derogating the effect of the Confidentiality and Noncompete Agreement. 5 IN WITNESS WHEREOF, the parties have executed this Agreement as of January 1, 1997. CENTRAL PARKING SYSTEM, INC. ATTEST: By: ---------------------------- ------------------------------------ Monroe J. Carell, Jr., Chairman ATTEST: By: ---------------------------- ------------------------------------ Sanford Harwood EX-99.C.5 15 ESCROW AGREEMENT 1 ESCROW AGREEMENT THIS ESCROW AGREEMENT (the "Agreement") is entered into this 6th day of December, 1996 by and among Central Parking Corporation, a Tennessee corporation ("Purchaser"), Square Industries, Inc., a New York corporation (the "Company"), First American National Bank ("Escrow Agent"), and Lowell Harwood and Sanford Harwood (such individuals, collectively, the "Escrow Committee"). RECITALS WHEREAS, Purchaser, the Company, and Central Parking System -- Empire State, Inc., a New York corporation and a wholly-owned subsidiary of the Purchaser ("Merger Sub"), have entered into an Agreement and Plan of Merger (the "Merger Agreement"), dated as of December 6, 1996, pursuant to which Company will merge with Merger Sub with the Company surviving as a wholly-owned subsidiary of Purchaser ("Surviving Corporation"); and WHEREAS, Pursuant to the Merger Agreement, Purchaser will commence a cash tender offer (the "Offer") to acquire all the outstanding stock of the Company; and WHEREAS, Pursuant to the Merger Agreement, a portion of the Offer Price, the Merger Consideration and the Option Consideration (collectively the "Consideration"), shall be deposited by Purchaser and held in escrow as contingent consideration for distribution to the shareholders, optionholders and warrantholders of the Company (collectively the "Shareholders") or to be disbursed in whole or in part to Purchaser based upon resolution of the matters described in Section 1.2 hereof; and WHEREAS, the parties believe that there may be significant value that will result from the resolution of certain contingent events which should accrue to the benefit of the Shareholders but which can not currently be determined; and WHEREAS, the resolution of such matters is dependent upon contingent events beyond the control of the parties; and WHEREAS, the Merger Agreement authorizes the Escrow Committee to represent the interests of the Shareholders with respect to the Contingencies (as hereinafter defined); and WHEREAS, capitalized terms not otherwise defined in this Agreement shall have the respective definitions assigned to them in the Merger Agreement. NOW, THEREFORE, in consideration of the premises of the Merger Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties have agreed to establish an escrow (the "Escrow") pursuant to which a portion of the Consideration is to be deposited by Purchaser to be held as contingent consideration for the Shareholders or disbursed in whole or in part to Purchaser based upon resolution of the matters described in Section 1.2 hereof (collectively, the "Contingencies") pursuant to the terms of this Agreement. Accordingly, the parties hereto agree as follows: SECTION 1. ESCROW. 1.1. Establishment of Escrow. Simultaneously with the deposit of sufficient funds with the Depositary as required to consummate the tender offer, Purchaser is delivering directly to the Escrow Agent a portion of the Consideration, the payment of which is contingent upon the resolution of the matters described in Section 1.2 hereof, equaling $2.50 per Share for each Share tendered in the Offer by the Shareholders and for each Share which the holder of any option or warrant is entitled to purchase under such option or warrant to the extent that the holder of such option or warrant has agreed to the "cash-out" provisions of Section 3.5 of the Merger Agreement. In addition, at the Effective Time, Purchaser will deliver to the Escrow Agent $2.50 per Share of the remaining Shares outstanding. The Depositary shall keep a list of (i) all Shareholders who have tendered Shares which have been accepted for payment by Purchaser in the Offer and the number of Shares so tendered, (ii) the number of Shares converted into Option Consideration promptly after the closing of the Offer and (iii) the Shareholders whose Shares are converted into Merger Consideration in the Merger 2 and the number of shares so converted (the "Escrow Certificate"). The Escrow Agent shall invest such Escrowed Funds, provided the Escrowed Funds may only be invested in short-term government securities (30 day maximum). Any interest earned on the Escrowed Funds shall become part of the Escrowed Funds and be available to be distributed pursuant to this Escrow Agreement. The contingent rights in the Escrow are an integral part of the Consideration and shall be held as contingent consideration for the Shareholders in the proportions set forth in the Escrow Certificate. Such rights shall not be evidenced by a certificate or any document other than this Escrow Agreement and the Merger Agreement, and do not represent an interest in Purchaser, Merger Sub or Surviving Corporation. 1.2. Contingent Matters. The Escrowed Funds have been deposited by the Purchaser with the Escrow Agent because of certain outstanding contingent matters, which if resolved favorably could result in additional value to the Company. The parties believe that in the event of a favorable resolution of either or both of these contingencies the Shareholders should be entitled to the distribution of the Escrowed Funds in whole or in part in accordance with the terms hereof. The contingent matters contemplated by this Escrow Agreement are set forth in Section 1.2.1 and 1.2.2. 1.2.1. The Wooster Escrow. $1.99 per Share of the Escrowed Funds (the "Wooster Escrow") shall be held by the Escrow Agent for a period of up to twelve (12) months from the Effective Time unless extended as provided in this Section 1.2.1 (the "Escrow Period") solely in connection with the resolution of the matters described in this Section 1.2.1. If during the Escrow Period, the Company's property at 75 Wooster, New York, New York is leased under a commercially reasonable lease agreement containing at least the terms included in Exhibit 1.2(a) attached hereto, which include an annual rental rate of no less than $900,000.00, (a "Conforming Lease") or the Wooster property is sold on commercially reasonable terms that contain at least the terms included in Exhibit 1.2(b) (a "Conforming Sale"), then the entire Wooster Escrow shall be promptly delivered to the Depositary to be distributed on a pro rata basis to the Shareholders based upon their contingent rights thereto (based upon the proportions set forth in the Escrow Certificate) upon notice from the Escrow Committee or Purchaser to the Escrow Agent that such lease, executed by the lessee, has been presented to Purchaser or Surviving Corporation for execution (or a Conforming Sale has been consummated). If a Conforming Lease is being negotiated but has not been executed or a contract for a Conforming Sale executed by the potential purchaser is presented to Purchaser during the Escrow Period, but such Conforming Lease is not presented or such Conforming Sale is not closed during the Escrow Period, the Escrow Period may be extended for ninety (90) days, in which case a Conforming Lease executed or a Conforming Sale closed during such extension shall qualify as a Conforming Lease or a Conforming Sale for purposes of the Wooster Escrow. In the event that a Conforming Lease (or Conforming Sale) is not so presented during the Escrow Period, as may be extended as provided above, Purchaser shall be entitled to receive the entire Wooster Escrow without any further claim by Shareholders. In the event that during the Escrow Period, the property is leased on commercially reasonable terms, including the terms included in Exhibit 1.2(a), but with a rental of less than $900,000.00 per annum, Purchaser shall be entitled to receive from the Wooster Escrow a sum in the aggregate equal to ten (10) times the difference between $900,000.00 and the actual annual rental, up to the maximum amount of the Wooster Escrow, if any, and the balance of the Wooster Escrow shall be delivered to the Depositary to be distributed to the Shareholders pro rata based upon the proportions set forth in the Escrow Certificate. In the event that during the Escrow Period, the property is sold at a purchase price of less than $9,000,000.00, payable in cash at closing, Purchaser shall be entitled to receive from the Wooster Escrow a sum in the aggregate equal to the difference between $9,000,000.00 and the actual sales price, up to the maximum amount of the Wooster Escrow and the balance of the Wooster Escrow, if any, shall be delivered to the Depositary to be distributed to the Shareholders pro rata based upon the proportions set forth in the Escrow Certificate. In the event that during the Escrow Period (i) the property is leased for a sum in excess of $900,000.00 per year, on commercially reasonable terms including the terms included in Exhibit 1.2(a), Purchaser shall pay over to the Escrow Agent an additional sum of five (5) times the difference between $900,000.00 and the actual annual rental; or (ii) the property is sold for a sum in excess of $9,000,000.00, payable in cash at closing, Purchaser shall pay over to the Escrow Agent an additional sum of fifty percent (50%) of the difference between $9,000,000.00 and the actual sales price, which shall be delivered to the Depositary for distribution to the 2 3 Shareholders of the Company together with the entire Wooster Escrow on a pro-rata basis as additional Consideration. In the event of any variation of the other terms set forth on Exhibit 1.2, the parties agree to use their reasonable efforts to negotiate an equitable distribution of the Wooster Escrow. Any interest on the Wooster Escrow shall accrue on a pro rata basis to the party receiving such funds. All requests for distribution of the Wooster Escrow pursuant to this Section 1.2.1 shall be made in accordance with and shall be subject to Section 2 of this Agreement. 1.2.2. Occupancy Tax Escrow. $.51 per Share of the Escrowed Funds shall be held in escrow by the Escrow Agent during the Escrow Period solely in connection with the resolution of the matters described in this Section 1.2.2 (the "Occupancy Tax Escrow"). In the event the total commercial rent occupancy tax liability of the Company or the Surviving Corporation for all tax periods from June 1, 1984 through May 31, 1991, in the aggregate (including all interest, penalties and principal) (the "Occupancy Tax Liability") is less than or equal to $800,000, the Escrow Agent shall promptly deliver to the Depositary the entire Occupancy Tax Escrow to be distributed to the Shareholders on a pro rata basis based upon the proportions set forth in the Escrow Certificate. If the Occupancy Tax Liability is more than $800,000 but less than or equal to $900,000, the Escrow Agent shall pay to Purchaser the Occupancy Tax Escrow funds equal to the difference between the amount of the Occupancy Tax Liability and $800,000, and any remaining Occupancy Tax Escrow funds shall be delivered to the Depositary to be distributed to the Shareholders on a pro rata basis based upon the proportions set forth in the Escrow Certificate. If the Occupancy Tax Liability is more than $900,000 but less than or equal to $1,000,000, the Escrow Agent shall pay to Purchaser the Occupancy Tax Escrow funds equal to 110% of the difference between the amount of the Occupancy Tax Liability and $800,000, and any remaining Occupancy Tax Escrow funds shall be delivered to the Depositary to be distributed to the Shareholders on a pro rata basis based upon the proportions set forth in the Escrow Certificate. If the Occupancy Tax Liability is more than $1,000,000, the Escrow Agent shall pay to Purchaser the Occupancy Tax Escrow funds equal to 120% of the difference between the amount of the Occupancy Tax Liability and $800,000, and any remaining Occupancy Tax Escrow funds shall be delivered to the Depositary to be distributed to the Shareholders on a pro rata basis based upon the proportions set forth in the Escrow Certificate. In the determination of the Occupancy Tax Liability, funds received from certain lessors or owners of property for payment of the commercial rent occupancy tax required by such lease or management agreement for any tax periods from June 1, 1984 through May 31, 1991, will be credited against the Occupancy Tax Liability provided that Purchaser shall be required to make reasonable commercial efforts to exercise its rights to recover such funds under the terms of the Company's or the Surviving Corporation's agreements with respect thereto. The Escrow Period may be extended by either the Escrow Committee or the Purchaser if the tax liability for all tax periods ending on or prior to May 31, 1991 is not finally resolved as of 12 months after the Effective Time provided in no event may the Escrow Period extend beyond three years after the Effective Time. Any interest on the Occupancy Tax Escrow shall accrue on a pro rata basis to the party receiving such funds. All requests for distribution of the Occupancy Tax Escrow pursuant to this Section 1.2.2 shall be made in accordance with and shall be subject to Section 2 of this Agreement. 1.2.3. No Commingling. There shall be no commingling of the Wooster Escrow and the Occupancy Tax Escrow, each of which is available solely to satisfy its respective Contingency. Any expenses or costs of the Escrow Agent in connection with disputes shall be allocated solely to the escrow relating to the Contingency which is the subject of the dispute. Any expenses relating generally to the escrow will be allocated proportionately to the Wooster Escrow and the Occupancy Tax Escrow. SECTION 2. DISTRIBUTION OF FUNDS. 2.1. Distributions. The Escrowed Funds will be distributed in accordance with the procedures described in this Section 2. 2.2. Right to Release of Funds. Subject to any conflicting provisions of Section 3 below, any time prior to the termination of this Escrow Agreement, Purchaser may give written notice to the Escrow Committee or the Escrow Committee may give written notice to Purchaser (in either case, with a copy to the Escrow Agent) 3 4 of the resolution of either of the Contingencies (the "Notice"). Any Notice shall briefly set forth the basis of the Notice and a reasonable estimate of the amount to be distributed to the Depositary for distribution to each of the Shareholders and Purchaser. 2.3. Holdback by Escrow Agent. Upon receipt by the Escrow Agent of such a Notice, the Escrow Agent shall hold in escrow such portion of the Escrowed Funds which will be sufficient to pay such resolution of the Contingencies, until there has been a determination of the pending Contingencies in accordance with the provisions of Section 2.4 hereof and such Escrowed Funds are distributable pursuant to Section 2.5. 2.4. Resolution of Contingencies. If within ten (10) days after Notice as provided in Section 2.2 Purchaser or Escrow Committee, as applicable, shall not have received written objection (in the form specified later in this Section 2.4) to the resolution of such Contingency, then the Contingency shall be deemed to have been resolved as provided in such Notice. If within this ten (10) day period, written objection to such Notice is received from the other party (which written objection shall state the nature and basis of the objection to the Notice or the amount thereof, all in good faith, and a copy of which shall be sent to the Escrow Agent), then for a period of ten (10) days after receipt of such objection the parties shall attempt to settle the disputed resolution of such Contingency. If they are unable to settle the dispute, the unresolved issue or issues shall be settled in accordance with Section 5 hereof. The Purchaser and the Escrow Committee, jointly (or, in the event of an arbitration proceeding pursuant to Section 5, the prevailing party) shall promptly certify the final determination of any resolution of such Contingency under this Section 2.4 by written instruction to the Escrow Agent, upon which the Escrow Agent shall be entitled to rely (provided that any unilateral notice by the prevailing party in any arbitration proceeding is accompanied by a certified copy of the arbitration award). 2.5. Distribution of Funds. Contingencies as to which a final determination has been made pursuant to Section 2.4 shall be distributed in accordance with this Section 2.5 promptly upon final determination of such Contingency. The Escrow Agent shall distribute such Escrowed Funds, free and clear of any interest of the other party as provided in any Notice which is not contested or as provided in any joint Notice from Purchaser and Escrow Committee of any contested Notice. SECTION 3. TERMINATION OF ESCROW. The Escrow will terminate one (1) year after the Effective Time unless extended pursuant to Section 1.2 hereof. Immediately prior to such termination, in the event there is then pending any contested resolution of a Contingency which has (have) not been finally determined, the Purchaser or Escrow Committee shall certify to the Escrow Agent in writing (with a copy to the other party) the continuing validity of its Notice regarding such Contingency and the Contingency shall be resolved in accordance with Section 2.4. Upon termination of the Escrow, the Escrow Agent shall release and deliver to the Depositary for distribution to the Shareholders the Escrowed Funds to be delivered to the Shareholders pursuant to this Escrow Agreement in proportion to the Shareholders' respective contingent rights as then reflected in the Escrow Certificate held by the Depositary, free and clear of any escrow or contingencies. SECTION 4. ESCROW AGENT. 4.1 Appointment. Purchaser and the Escrow Committee hereby designate and appoint First American National Bank, as Escrow Agent to serve in accordance with the terms and conditions of this Agreement. The Escrow Agent hereby accepts such appointment and agrees to act as Escrow Agent in accordance with such terms and conditions. 4.2 Compensation and Expenses. Purchaser and the Escrow Committee agree that the Escrow Agent shall be compensated for its services hereunder out of the Escrowed Funds in accordance with Exhibit 4.2 hereto. Escrow Agent shall also be entitled to reimbursement from the Escrowed Funds for all reasonable expenses paid or incurred by it in the administration of its duties hereunder, including, but not limited to, reasonably incurred transactional charges, counsel, advisors' and agents' fees and disbursements. In the event a portion of the Escrowed Funds is distributed to the Purchaser and a portion is delivered to the Depositary to 4 5 be distributed to the Shareholders under the terms of this Escrow Agreement, the amount paid to the Escrow Agent shall be deducted on a pro rata basis from the amount distributed to the Purchaser and the Shareholders. 4.3 Resignation and Discharge. The Escrow Agent may resign and be discharged from its duties or obligations hereunder at any time by giving notice of such resignation to the Purchaser and the Escrow Committee specifying a date (not less than 30 days after the giving of such notice) when such resignation shall take effect. Promptly after such notice, a successor Escrow Agent shall be appointed at the joint direction of the Purchaser and Escrow Committee, and such successor Escrow Agent will become Escrow Agent hereunder upon the resignation date specified in the notice. The Escrow Agent shall continue to serve until its successor accepts the Escrow and receives the Escrowed Funds. The Purchaser and the Escrow Committee may agree at any time to substitute a new Escrow Agent by giving notice thereof to the Escrow Agent then acting, provided that in the event the Escrow Agent is removed it shall be entitled to receive its compensation pursuant to Section 4.2 hereof earned prior to the date of removal. 4.4 Liability of Escrow Agent. The Escrow Agent undertakes to perform only such duties as are specifically set forth in this Agreement, and shall have no implied duties or obligations and shall not be charged with knowledge or notice of any fact or circumstance not set forth herein. The Escrow Agent, acting or refraining from acting in good faith, shall not be liable for any mistake of fact or error of judgment by it or for any acts or omissions by it of any kind taken in good faith, unless caused by willful misconduct or gross negligence. Escrow Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or any of its terms, unless evidenced by a writing delivered to Escrow Agent, signed by the proper party or parties. Escrow Agent shall be entitled to rely on any written document delivered to it by the Purchaser and the Escrow Committee which the Escrow Agent in good faith reasonably believes to be genuine, to have been signed or presented by the person or parties purporting to sign the same and to conform to the provisions of this Agreement. 4.5 Indemnification of Escrow Agent. From and at all times after the date of this Agreement, Purchaser shall, to the fullest extent permitted by law and to the extent provided herein, indemnify and hold harmless Escrow Agent and each director, officer, employee, attorney, agent and affiliate of Escrow Agent against any and all actions, claims (whether or not valid), losses, damages, liabilities, costs and expenses of any kind or nature whatsoever (including without limitation reasonable attorneys' fees, costs and expenses) incurred by or asserted against any of the Escrow Agent from and after the date hereof, whether direct, indirect or consequential, as a result of or arising from or in any way relating to any claim, demand, suit, action or proceeding (including any inquiry or investigation) by any person, whether threatened or initiated, asserting a claim for any legal or equitable remedy against any person under any statute or regulation, including, but not limited to, any federal or state securities laws, or under any common law or equitable cause or otherwise, arising from or in connection with the negotiation, preparation, execution, performance or failure of performance of this Agreement or any transactions contemplated herein, whether or not the Escrow Agent is a party to any such action, proceeding, suit or the target of any such inquiry or investigation; provided, however, that the Escrow Agent shall not have the right to be indemnified for any liability determined by a court of competent jurisdiction, subject to no further appeal, to have resulted from the gross negligence or willful misconduct of the Escrow Agent. If any such action or claim shall be brought or asserted against the Escrow Agent, the Escrow Agent shall promptly notify Purchaser in writing, and Purchaser shall assume the defense thereof, including the employment of counsel satisfactory to the Escrow Agent and the payment of all expenses. Escrow Agent shall, in its sole discretion, have the right to employ separate counsel in any such action and to participate in the defense thereof, and the fees and expenses of such counsel shall be paid by the Escrow Agent unless (a) Purchaser agrees to pay such fees and expenses, or (b) Purchaser shall fail to assume the defense of such action, or (c) the named parties to any such action or proceeding (including any impleaded parties) include both Escrow Agent and Purchaser and the Escrow Agent shall have been advised in writing by counsel that there are one or more legal defenses available to it which are different from or additional to those available to Purchaser. The obligations of Purchaser under this Section 4.5 shall survive any termination of this Agreement and the resignation or removal of Escrow Agent. 5 6 4.6 Further Assurances. Purchaser and the Escrow Committee shall deliver or cause to be delivered to Escrow Agent such further documents and instruments and shall do and cause to be done such further acts as Escrow Agent shall reasonably request (it being understood that Escrow Agent shall have no obligation to make any such request) to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder. 4.7 Reports to Parties. The Escrow Agent shall, at least once during each twelve-month period of the Escrow, deliver to the Depositary a report showing the value (in dollars) of the Escrowed Funds and the status of the Escrowed Funds. The Escrow Agent will request the Depositary to distribute to each Shareholder a report showing the above plus the value (in dollars) of such Shareholder's contingent rights in the Escrow. SECTION 5. DISPUTES. Any dispute that may arise under this Escrow Agreement with respect to (a) any Notice by Purchaser or Escrow Committee; (b) the delivery, ownership, or right to possession of the Escrowed Funds or any portion thereof; (c) the instructions given to the Escrow Agent; and (d) any other questions arising under this Agreement, shall be settled by (i) mutual agreement of the parties to such dispute (evidenced by appropriate instructions in writing to the Escrow Agent jointly by the Purchaser and the Escrow Committee, upon which the Escrow Agent may rely) or (ii) by a binding and final arbitration in accordance with the rules and procedures of the American Arbitration Association, whose determination shall be final and conclusive. The Purchaser shall cooperate in the voluntary exchange of information to expedite any such arbitration, including without limitation, providing access to the Surviving Corporation's tax and financial information as required to verify occupancy tax matters. The Arbitration shall be conducted in New York City and shall be submitted to a panel of three arbitrators who shall be recognized as experts in the New York City Commercial Real Estate Market and issues related thereto, one of which shall be selected by Purchaser, one of which shall be selected by the Escrow Committee and the third of which shall be selected by the first two. The Escrow Agent shall be under no duty to institute or defend any such proceedings and none of the costs and expenses of any such proceedings shall be borne by the Escrow Agent. Prior to the settlement of any dispute as provided in this Section 5, the Escrow Agent is authorized and directed to retain in its possession, without liability to anyone (but subject to Section 4.4 hereof), the portion of the Escrowed Funds that is the subject of or involved in the dispute. The Escrow Agent shall be entitled to rely on a copy of the arbitration award with respect to any such dispute delivered to it and certified as true and correct by the prevailing party. If the Purchaser is the prevailing party in any such dispute, it shall be entitled to recover as an addition to the Escrowed Funds distributable pursuant to the final resolution of the Contingency in dispute, Escrowed Funds equal to all reasonable costs and expenses including legal fees, incurred by Purchaser in connection with the dispute. If the Shareholders are the prevailing party in any such dispute, they shall be entitled to recover from the Purchaser, all reasonable costs and expenses, including legal fees and Escrow Agent fees and expenses incurred by the Shareholders in connection with the dispute. SECTION 6. ALLOCATION OF INTEREST. Any interest earned on the Escrowed Funds during the Escrow Period, but not distributed to either the Shareholders or the Purchaser at the end of any taxable period will be deemed interest income of the Escrow pursuant to Section 468B of the Internal Revenue Code of 1986, as amended and will not be treated as interest income to the Shareholders or Purchaser prior to distribution. SECTION 7. MISCELLANEOUS. 7.1. No Waiver. No failure to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, provided that the exercise of the remedies hereunder are exclusive of any other remedies provided by law or contract. 7.2. Governing Law; Amendments. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Tennessee, without giving effect to principles of conflict or laws. This 6 7 Agreement may not be changed orally or modified, amended or supplemented without an express written agreement executed by Escrow Agent and the other parties. 7.3. Assignment. This Agreement, and the terms, covenants and conditions hereof, shall be binding upon and inure to the benefit of each party's respective successors and legal representatives. Neither Purchaser nor the Escrow Committee may assign any right or delegate any obligation under this Agreement without the prior written consent of Escrow Committee or Purchaser as the case may be and any such attempted assignment or delegation will be null and void. A Shareholder may not transfer its contingent rights with respect to the Escrow except by will, intestate succession, or operation of law. 7.4. Headings. Section headings used herein are for convenience only and are not to affect the construction of or be taken into consideration in interpreting this Agreement. 7.5. 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 when taken together shall constitute one and the same instrument. 7.6. Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given: (a) if delivered personally or sent by facsimile, on the date received, (b) if delivered by overnight courier, on the day after mailing, and (c) if mailed, five (5) days after mailing with postage prepaid. Any such notice shall be sent as follows: if to the Purchaser: Central Parking Corporation 2401 21st Avenue South, Suite 200 Nashville, TN 37212 Attention: Chairman (with copies to) Mark Manner, Esq. Harwell Howard Hyne Gabbert & Manner, P.C. 1800 First American Center 315 Deaderick Street Nashville, Tennessee, 37238; if to the Escrow Committee: Lowell Harwood c/o Leo Silverstein Brock Fensterstock Silverstein McAuliffe & Wade, LLC 153 East 53rd Street, 56th Floor New York, New York 10022-4611 Sanford Harwood c/o Leo Silverstein Brock Fensterstock Silverstein McAuliffe & Wade, LLC 153 East 53rd Street, 56th Floor New York, New York 10022-4611 (with copies to) Daniel R. Kaplan, Esq. Proskauer Rose Goetz & Mendelsohn LLP 1585 Broadway New York, New York 10036 7 8 and Leo Silverstein, Esq. Brock Fensterstock Silverstein McAuliffe & Wade, LLP One Citicorp Center 153 East 53rd Street 56th Floor New York, New York 10022 If to the Escrow Agent: First American National Bank First American Center, 4th Floor 315 Deaderick Street Nashville, Tennessee 37237-0404 Attention: Tammy Johnston or to such other addresses as may be designated in writing by the party to receive such notice. The Depositary can be notified at SunTrust Bank, Atlanta, 58 Edgewood Avenue, Room 225, Atlanta, Georgia 30303, Attention: Letitia Radford. 7.7. Entire Agreement, etc. This Agreement constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties both written and oral, among the parties, with respect to the subject matter hereof, and, except as otherwise expressly provided herein, are not intended to confer upon any other person any rights or remedies hereunder. 7.8. Parties in Interest. This Agreement shall be binding upon and inure to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person, other than the Shareholders, any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 8 9 IN WITNESS WHEREOF, the parties hereto have duly executed this Escrow Agreement as of the date first above written. PURCHASER By: -------------------------------------- Title: -------------------------------------- COMPANY By: -------------------------------------- Title: -------------------------------------- ESCROW COMMITTEE -------------------------------------- -------------------------------------- -------------------------------------- ESCROW AGENT By: -------------------------------------- Title: -------------------------------------- 9 10 EXHIBIT 1.2 (a) A Conforming Lease shall include at least the following terms: 1. provide for an annual rental rate of no less than $900,000.00 2. have a non-cancelable term of at least fifteen (15) years 3. contain triple net lease provisions 4. provide for at least a two percent annual rental escalation 5. grant no more than one year free rent and 6. grant no more than a $750,000 build out allowance (b) A Conforming Sale shall include at least the following terms: 1. a sale price of no less than $9,000,000.00 before deduction for or the payment of any broker fees payable in cash at closing. 10 EX-99.C.6 16 AGREEMENT TO SUPPORT THE TRANSACTION 1 AGREEMENT TO SUPPORT THE TRANSACTION This Agreement (the "AGREEMENT") is made and entered into as of the 6th day of December, 1996 in favor of CENTRAL PARKING CORPORATION, a Tennessee corporation ("PURCHASER"), and CENTRAL PARKING SYSTEM -- EMPIRE STATE, INC., a New York corporation and wholly-owned indirect subsidiary of Purchaser ("MERGER SUB"), by Lowell Harwood, Mrs. Lowell Harwood, Sanford Harwood, Brett Harwood, Mrs. Brett Harwood, Brett Harwood as custodian and trustee for his minor children, Leslie Harwood Ehrlich, Craig Harwood, Scott Harwood and Scott Harwood as custodian for his minor children (collectively, the "SIGNIFICANT SHAREHOLDERS"). W I T N E S S E T H: WHEREAS, effective simultaneously herewith Purchaser, Merger Sub and Square Industries, Inc. ( the "Company") have entered into an Agreement and Plan of Merger dated as of the date hereof (the "Plan of Merger") pursuant to which the Merger Sub will offer to purchase all of the outstanding common stock of the Company; and WHEREAS, under the conditions set forth herein the Significant Shareholders have agreed to tender all of their shares of common stock, par value $.01 of the Company (the "Company Common Stock") to Merger Sub in the Offer. NOW, THEREFORE, in order to induce Purchaser and Merger Sub to enter into the Plan of Merger and in consideration of the foregoing and the covenants and agreements set forth herein, and good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: ARTICLE 1. 1.1 Agreement to Tender Shares. The Significant Shareholders agree to tender all of their Shares (including any Shares owned by foundations or trusts over which the Shareholder has the power of disposition) of Company Common Stock to Merger Sub in the Offer prior to the expiration of the Offer and to enter into agreements to cash out all of their outstanding options and warrants as provided in Section 3.5 of the Plan of Merger. In the event the Board of Directors of the Company shall conclude, in good faith, in compliance with Section 5.2 of the Plan of Merger, not to recommend, or to withdraw or modify its recommendation of, the Offer or the Merger to the shareholders of the Company in a situation which would permit the termination of the Plan of Merger pursuant to Sections 7.3(ii) or 7.4(ii) of the Plan of Merger, then the Significant Shareholders shall no longer be required to tender their Shares in the Offer pursuant to this Section 1.1 and may withdraw any Shares tendered. 1.2 Support of Merger by Significant Shareholders. The Significant Shareholders 2 agree in their capacity as shareholders to support the Offer and the Merger, to use their reasonable best efforts to recommend the Offer to the Company's other shareholders, to seek approval of the Merger, and to take all actions and execute all documents reasonably requested by Purchaser to carry out the foregoing matters, the Offer and the Plan of Merger, including, but not limited to the execution of written consent actions. In the event the Board of Directors of the Company, including the Significant Shareholders in their capacity as directors, shall conclude, in good faith, in compliance with Section 5.2 of the Plan of Merger, not to recommend, or to withdraw or modify its recommendation of, the Offer or the Merger to the shareholders of the Company in a situation which would permit the termination of the Plan of Merger pursuant to Sections 7.3(ii) or 7.4(ii) of the Plan of Merger, then the Significant Shareholders shall no longer be required to support the Offer and the Merger as provided in this Section 1.2. 1.3 Corporation Not Liable. From and after the Effective Date, Significant Shareholders will not seek indemnification, contribution, recourse or redress of any kind against Company or any of its subsidiaries in connection with any indemnification or similar obligations pursuant to corporate law, or contractual rights with respect to: (a) in their positions and capacities as Company shareholders with respect to any claims they may have as Company shareholders against the Company and/or any officers or directors or employees of Company and its subsidiaries with respect to the actions of Company and its subsidiaries and its officers and directors and employees in connection with negotiating and approving the Merger and related transactions; and (b) any transaction with the Company (or any of its subsidiaries) in which such person has a direct or indirect conflict of interest. provided, however, this waiver shall not affect the right of such persons to indemnification under the Merger Agreement. Significant Shareholders agree, however, that in the event that they receive any benefits as shareholders or former shareholders of the Company as a result of actions taken by shareholders or former shareholders of the Company against the Company or Purchaser based on wrongdoing of the Company or its officers or directors (including, but not limited to, fiduciary duty breach) relating to the Merger then all such benefits shall be promptly returned to the Company or Purchaser (or the Company and Purchaser can fail to pay such benefits to the Significant Shareholder). 2 3 1.4 Confidentiality Covenant by Significant Shareholders. Other than their support of the Offer and the Merger contemplated hereby, Significant Shareholders covenant and agree that they will not divulge, furnish, publish or use for any purpose whatsoever, including but not limited to for any of their personal benefit or for the direct or indirect benefit of any other person or business entity, whether or not for monetary gain, any information which is not generally known in the real estate or parking industries, regarding the Company, the Merger or the transactions contemplated by the Plan of Merger or of Purchaser or its subsidiaries, including without limitation, any information relating to any business methods, marketing and business plans, financial contacts, financial data, systems, customers, suppliers, procedures, techniques, research, knowledge or processes used or developed by Purchaser or its subsidiaries, or any other proprietary or confidential information relating to Purchaser or its subsidiaries and their respective businesses. Each will inform any of its representatives who receive information relating to the Merger (the "Representatives") to treat such information confidentially and not to use it other than for the purpose of analyzing and evaluating the Merger. Each shall cause it and its Representatives to not trade securities of Purchaser or Company or tip other persons until there is a public announcement of the Merger. 1.5 Bankruptcy, etc. Each of the Significant Shareholders represents that as to himself or herself, he or she is not involved as a debtor in any proceedings in any court under any bankruptcy law or any other insolvency or debtor's relief law, whether federal or state, or for the appointment of a trustee, receiver, liquidator, assignee, sequesteror or other similar official for a Significant Shareholder or any of their property. ARTICLE 2. 2.1 Definitions. All terms which are capitalized and not defined herein shall have the same meanings as given them in the Plan of Merger. 2.2 Several Obligations. The obligations of each of the Significant Shareholders under this agreement are several and not joint. 2.3 Assignment by Purchaser. Purchaser may freely assign this Agreement to an affiliate; provided Purchaser remains liable for any of its obligations hereunder, without the express written consent of Significant Shareholder(s). No Significant Shareholder(s) may assign any right or delegate any obligation under this Agreement without the prior written consent of Purchaser, and any prohibitive assignment or delegation will be null and void. Purchaser will not unreasonably withhold consent to a transfer of Company Common Stock from a Significant Shareholder to this Agreement if the transferee agrees in writing to be bound by the terms of this Agreement. 2.4. Notices. All notices, requests, consents and other communications hereunder 3 4 shall be in writing and shall be deemed to have been made when delivered or mailed first-class postage prepaid by registered mail, return receipt requested, or when delivered if by hand, overnight delivery service or confirmed facsimile transmission, to the following: (a) If to Purchaser, Merger Sub or Surviving Corporation, c/o Central Parking, Central Parking Corporation at 2401 21st Avenue South, Suite 200, Nashville, TN 37212, Attention: Chairman, or at such other address as may have been furnished to Significant Shareholders by Purchaser in writing; or (b) If to Significant Shareholder(s), at c/o Leo Silverstein, Brock, Fensterstock, Silverstein, McAuliffe & Wade, LLC, 153 E. 53rd Street, 56th Floo, New York, New York 10022 or such other address as may have been furnished to Purchaser by Significant Shareholder(s) in writing. 2..5. Controlling Law. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of New York. 2.6. Headings. Any paragraph headings in this Agreement are for convenience of reference only and shall not be considered or referred to in resolving questions of interpretation. 2.7 Binding Nature. Subject to Paragraph 2.3, this Agreement shall be binding upon and shall inure to the exclusive benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. 2.8. Validity of Provisions. If any provision of this Agreement shall be held to be illegal, invalid or unenforceable under any applicable law, then such contravention or invalidity shall not invalidate the entire Agreement. Such provision shall be deemed to be automatically modified to the extent necessary to render it legal, valid and enforceable, and if no such modification shall render it legal, valid and enforceable, then this Agreement shall be construed as if not containing the provision held to be invalid, and the rights and obligations of the parties shall be construed and enforced accordingly. 2.9. Waiver. Neither the failure nor any delay on the part of any party hereto in exercising any rights, power or remedies hereunder shall operate as a waiver thereof, or of any other right, power or remedy; nor shall any single or partial exercise of any right, power or remedy preclude any further or other exercise thereof, or the exercise of any other right, power or remedy. 2.10. Entire Agreement. This Agreement, those documents expressly referred to herein, and other documents of even date herewith embody the complete Agreement and understanding among the parties with respect to the subject matter hereof, and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. 4 5 2.11. Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. ARTICLE 3. 3.1 Effectiveness. This agreement is effective upon the execution of the Plan of Merger. 5 6 IN WITNESS WHEREOF, this agreement has been duly executed as of the date first written above. SIGNIFICANT SHAREHOLDERS: ------------------------- ---------------------------------------------- Lowell Harwood ---------------------------------------------- Mrs. Lowell Harwood ---------------------------------------------- Sanford Harwood ---------------------------------------------- Brett Harwood ---------------------------------------------- Mrs. Brett Harwood ---------------------------------------------- Brett Harwood, as custodian and trustee for his minor children ---------------------------------------------- Leslie Harwood Ehrlich ---------------------------------------------- Craig Harwood ---------------------------------------------- Scott Harwood ---------------------------------------------- Scott Harwood, as custodian for his minor children 6 EX-99.C.7 17 CONFIDENTIALLY AGREEMENT DATED JULY 10, 1996 1 EXHIBIT (c)(7) July 10, 1996 Square Industries, Inc. c/o The Blackstone Group L.P. 345 Park Avenue New York, NY 10154 CONFIDENTIALITY AGREEMENT Dear Sirs: In connection with our possible interest in an acquisition of or merger with Square Industries, Inc. (the "Transaction"), you or your Representatives (as defined below) are furnishing us or our Representatives with certain information (written or oral) which is either non-public, confidential or proprietary in nature. This information shed to us or our Representatives, together with any notes, analyses, compilations, forecasts, studies, memoranda, computer-stored data or other documents prepared by us or our Representatives which contain or otherwise reflect such information, is hereinafter referred to as the "Information". As used in this agreement, the term "Representative" means, as to any person, such person's affiliates and its and their respective directors, officers, employees, partners, shareholders, members, agents, advisors (including financial advisors, attorneys and accountants) and other representatives. In consideration of your furnishing us with the Information, we agree that the Information will be kept confidential and shall not, without your prior written consent, be disclosed by us or our Representatives, in any manner whatsoever, in whole or in part, and shall not be used by us or our Representatives other than in connection with evaluating a possible Transaction. For purposes hereof, the term "Information" shall not include such portion of the information which (i) is or becomes generally available to the public other than as a result of a disclosure by us or our Representatives or (ii) is or becomes available to us or our Representatives on a nonconfidential basis from a source which, to our knowledge, is not prohibited from disclosing such information to us or our Representatives. With respect to the latter it shall be assumed that any source which provides us with information has been prohibited from disclosing the Information to us or our Representatives unless the Company prior to any disclosure has been advised by us of the source and the Company has not advised us of the prohibition. We agree to reveal the Information only to our Representatives who need to know the Information for the purpose of evaluating the possible Transaction, who are informed by us of the confidential nature of the Information and who shall agree to act in accordance with the 2 terms and conditions of this agreement. We shall be responsible for any breach of this agreement by our Representatives. Without your prior written consent, except as required by law (as advised by counsel), and in which case prior notice will be given to you, we and our Representatives will not disclose to any person the fact that the Information has been made available, that discussions or negotiations are taking place or have taken place concerning a possible Transaction involving us and Square Industries, Inc. (the "Company") or any of the terms, conditions or other facts with respect to any such possible Transaction, including the status thereof. The term "person" as used in this agreement shall be interpreted broadly to include the media and any governmental representative or authority, company, partnership, joint venture group, partner, co-venturer, individual or other entity. All copies of the Information, except for that portion of the Information which consists of notes, analyses, compilations, forecasts, studies, memoranda, other computer-stored data or other documents prepared by us or our Representatives ("Internal Materials"), will be returned to you immediately upon your request. In addition, Internal Materials will be kept confidential for a period of five (5) years from the date hereof. Notwithstanding such return, we and our Representatives will continue to be bound by our obligations of confidentiality (including with respect to oral Information) and our other obligations as provided hereunder. It is understood that all (i) communications regarding a possible Transaction, (ii) requests for additional information, (iii) requests for facility tours or management meetings and (iv) discussions or questions regarding procedures, will be submitted or directed to The Blackstone Group L.P. ("Blackstone"). We acknowledge that none of you, Blackstone or your or their Representatives, makes any express or implied representation or warranty as to the accuracy or completeness of the Information, and each of you, Blackstone and your and their Representatives, expressly disclaims any and all liability that may be based on the Information, efforts therein or omissions therefrom. We agree that we are not entitled to rely on the accuracy or completeness of the Information and that any reliance would be as specifically provided in the definitive agreement, if any, regarding the Transaction. In the event that we or any of our Representatives are required to disclose any of the Information pursuant to any applicable law, regulation or legal process, we will provide you with prompt notice thereof so that you may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this agreement. In the event that such protective order or other remedy is not obtained, or that the Company waives compliance with the provisions of this agreement, we will furnish only that portion of the Information which we are advised by counsel is legally required and will exercise our reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Information. We agree that you reserve the right, in your sole and absolute discretion, to reject any or all proposals, to decline to furnish further information and to terminate discussions and 2 3 negotiations with us at any time. The exercise by you of these rights shall not affect the enforceability of any provision of this agreement. We agree that until the expiration of two (2) years from the date of this agreement, we shall not, without the prior approval of the Board of Directors of the Company, (i) in any manner acquire, agree to acquire or make any proposal to acquire, directly or indirectly, any securities of the Company or any of its subsidiaries, (ii) propose to enter into, directly or indirectly, any merger or business combination involving the Company or any of its subsidiaries or to purchase, directly or indirectly, a material portion of the assets of the Company or any of its subsidiaries, (iii) make, or in any way participate, directly or indirectly, in any "solicitation" of "proxies" (as such terms are defined under Regulation 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) to vote, or seek to advise or influence any person with respect to the voting of any voting securities of the Company or any of its subsidiaries, (iv) form, join or in any way participate in a "group" (within the meaning of Section 13(d) of the Exchange Act and the rules and regulations thereunder) with respect to any voting securities of the Company or any of its subsidiaries, (v) otherwise act, alone or in concert with others, to seek to control or influence the management, Board of Directors or policies of the Company or any of its subsidiaries, (vi) disclose any intention, plan or arrangement inconsistent with the foregoing or (vii) advise, assist or encourage any other persons in connection with any of the foregoing. We also agree during such period not to (a) request the Company or its Representatives, directly or indirectly, to amend or waive any provision of this paragraph (including this sentence) or (b) take any action which might require the Company to make a public announcement regarding the possibility of an acquisition, business combination or merger. Until two (2) years from the date of this agreement, except with the prior written consent of the Company, we agree not to, and will direct our Representatives not to, (a) based on the Information hold any discussions with lessors, property owners, suppliers, customers and/or any other person with whom the Company or any of its subsidiaries have a relationship regarding the Company or any of its subsidiaries for the purpose of negotiating or executing a lease or management contract with respect to any parking facility or property to include a parking facility which facility or property is included in the Information or (b) solicit for hire any of the executive officers or management-level employees of the Company or any of its subsidiaries. We hereby acknowledge that we are aware, and that we will advise our Representatives who are furnished Information, that securities laws prohibit any person who has received from an issuer material, non-public information concerning the matters which are the subject of this agreement from purchasing or selling securities of such issuer or from communicating such information to any other person. We understand and agree that no failure or delay by you or your Representatives in exercising any right, power or privilege hereunder shall operate as a waiver hereof nor shall any single or partial exercise thereof preclude any other or further exercise of any right, power or privilege hereunder. We acknowledge that remedies at law may be inadequate to protect against breach of this agreement, and we hereby in advance agree to the granting of specific performance and/or injunctive relief in your favor without proof of actual damage without the 3 4 Company being required to post any bond or any security. Such relief shall not be deemed to be the exclusive relief for a breach by us or our Representatives of this agreement but shall be in addition to all other remedies available to you at law or equity. In addition, in the event that any portion of this agreement shall be held to be invalid or unenforceable for any reason, it is hereby agreed that such invalidity or unenforceability shall not affect the other portions of this agreement. We hereby confirm that we are not acting as a broker for or a representative of any person and are considering the Transaction only for our own account. Any assignment of this agreement by us without your prior written consent shall be void. Except as otherwise provided herein, the terms and provisions of this agreement will terminate three years from the date hereof. We agree that this agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. We hereby irrevocably consent to the exclusive jurisdiction of the federal and state courts located in the City of New York (and appellate courts therefrom) for any actions or proceedings arising out of or relating to this agreement, irrevocably waive any objection to the venue of any such action or proceeding in any such court and unconditionally waive any objection that such action or proceeding has been brought in an inconvenient forum and agree not to plead or claim the same. Please confirm your agreement with the foregoing, by signing and returning to the undersigned the duplicate copy of this agreement enclosed herewith. Very truly yours, Central Parking Corp. By: ----------------------------- Name: Monroe J. Carell, Jr. Title: Chairman and CEO Accepted: Square Industries, Inc. By: ----------------------- Name: Title: 4 -----END PRIVACY-ENHANCED MESSAGE-----