Exhibit 99.5
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EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
Dated as of September 10, 2003,
among
OPEN WHEEL RACING SERIES LLC,
OPEN WHEEL ACQUISITION CORPORATION
and
CHAMPIONSHIP AUTO RACING TEAMS, INC.
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TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger................................................... 1
SECTION 1.02. Closing...................................................... 2
SECTION 1.03. Effective Time............................................... 2
SECTION 1.04. Effects...................................................... 3
SECTION 1.05. Certificate of Incorporation and By-laws..................... 3
SECTION 1.06. Directors.................................................... 3
SECTION 1.07. Officers..................................................... 3
ARTICLE II
Effect on the Capital Stock of the Constituent Corporations; Exchange of
Certificates
SECTION 2.01. Effect on Capital Stock...................................... 3
SECTION 2.02. Exchange of Certificates..................................... 5
ARTICLE III
Representations and Warranties of the Company
SECTION 3.01. Organization, Standing and Power............................. 8
SECTION 3.02. Company Subsidiaries; Equity Interests....................... 9
SECTION 3.03. Capital Structure............................................ 10
SECTION 3.04. Authority; Execution and Delivery; Enforceability............ 12
SECTION 3.05. No Conflicts; Consents....................................... 13
SECTION 3.06. SEC Documents; Undisclosed Liabilities....................... 15
SECTION 3.07. Information Supplied......................................... 16
SECTION 3.08. Absence of Certain Changes or Events......................... 17
SECTION 3.09. Tax Matters.................................................. 18
SECTION 3.10. Absence of Changes in Benefit Plans.......................... 21
SECTION 3.11. ERISA Compliance............................................. 22
SECTION 3.12. Litigation................................................... 24
SECTION 3.13. Compliance with Applicable Laws.............................. 24
SECTION 3.14. Environmental Matters........................................ 24
SECTION 3.15. Contracts.................................................... 25
SECTION 3.16. Intellectual Property Matters................................ 28
SECTION 3.17. Brokers...................................................... 30
SECTION 3.18. Opinion of Financial Advisor................................. 30
SECTION 3.19. Insurance.................................................... 31
SECTION 3.20. Title to Property............................................ 32
SECTION 3.21. Labor Matters................................................ 32
ARTICLE IV
Representations and Warranties of Parent and Sub
SECTION 4.01. Organization, Standing and Power............................. 33
SECTION 4.02. Sub.......................................................... 33
SECTION 4.03. Authority; Execution and Delivery; Enforceability............ 33
SECTION 4.04. No Conflicts; Consents....................................... 34
SECTION 4.05. Information Supplied......................................... 35
SECTION 4.06. Brokers...................................................... 36
SECTION 4.07. Financing.................................................... 36
SECTION 4.08. Stock Ownership.............................................. 36
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business by the Company........................... 37
SECTION 5.02. Company Takeover Proposals................................... 41
ARTICLE VI
Additional Agreements
SECTION 6.01. Preparation of Proxy Statement; Stockholders Meeting......... 43
SECTION 6.02. Access to Information; Confidentiality....................... 45
SECTION 6.03. Reasonable Best Efforts; Notification........................ 46
SECTION 6.04. Stock Options................................................ 47
SECTION 6.05. Indemnification.............................................. 47
SECTION 6.06. Fees and Expenses............................................ 48
SECTION 6.07. Public Announcements......................................... 49
SECTION 6.08. Transfer Taxes............................................... 49
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SECTION 6.09. Rights Agreements; Consequences if Rights Triggered.......... 49
SECTION 6.10. No Additional Representations................................ 50
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation To Effect The Merger... 50
SECTION 7.02. Conditions to Obligations of Parent and Sub.................. 51
SECTION 7.03. Conditions to Obligation of the Company...................... 53
SECTION 7.04. Frustration of Closing Conditions............................ 53
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination.................................................. 53
SECTION 8.02. Effect of Termination........................................ 56
SECTION 8.03. Amendment.................................................... 56
SECTION 8.04. Extension; Waiver............................................ 56
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver.... 57
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties................ 58
SECTION 9.02. Notices...................................................... 58
SECTION 9.03. Definitions.................................................. 59
SECTION 9.04. Interpretation; Disclosure Letters........................... 60
SECTION 9.05. Severability................................................. 61
SECTION 9.06. Counterparts................................................. 62
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries............... 62
SECTION 9.08. Governing Law................................................ 62
SECTION 9.09. Assignment................................................... 62
SECTION 9.10. Enforcement; Waiver of Jury Trial............................ 63
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Exhibit A Amended Certificate of Incorporation
iv
AGREEMENT AND PLAN OF MERGER dated as of September 10,
2003 (this "Agreement"), among OPEN WHEEL RACING SERIES LLC, a
Delaware limited liability company ("Parent"), OPEN WHEEL
ACQUISITION CORPORATION, a Delaware corporation and a wholly
owned subsidiary of Parent ("Sub"), and CHAMPIONSHIP AUTO
RACING TEAMS, INC., a Delaware corporation (the "Company").
WHEREAS the Boards of Directors of each of the Company and Sub has
approved and declared advisable, and the Board of Managers of Parent has
approved, this Agreement and the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of common stock, par value
$0.01 per share, of the Company (the "Company Common Stock"), including the
associated Company Rights (as defined in Section 3.03(a)), not owned by Parent,
Sub or the Company, other than the Appraisal Shares (as defined in Section
2.01(d)), will be converted into the right to receive in cash the Per Share
Merger Consideration (as defined in Section 2.01(c) below); and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company
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at the Effective Time (as defined in Section 1.03). At the Effective Time, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation") and shall succeed to
and assume all the rights and obligations of Sub in accordance with the DGCL.
The Merger and the other transactions contemplated by this Agreement are
referred to in this Agreement collectively as the "Transactions".
SECTION 1.02. Closing. The closing (the "Closing") of the Merger
shall take place at the offices of Cravath, Swaine & Xxxxx LLP, 000 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m., New York City time, on the
business day following the satisfaction (or, to the extent permitted by Law (as
defined in Section 3.05(a)) waiver by the applicable party or parties of the
conditions set forth in Article VII (other than those conditions that by their
terms cannot be satisfied until the time of the Closing but subject to the
satisfaction (or, to the extent permitted by Law, waiver by the applicable party
or parties) of such conditions), or at such other place, time and date as Parent
and the Company shall agree in writing; provided, however, that if all the
conditions set forth in Article VII shall not have been satisfied (or, to the
extent permitted by applicable Law, waived by the applicable party or parties)
on such business day, then the Closing shall take place on the first business
day after the date on which all such conditions shall have been satisfied (or,
to the extent permitted by applicable Law, waived by the applicable party or
parties). The date on which the Closing occurs is referred to in this Agreement
as the "Closing Date".
SECTION 1.03. Effective Time. Prior to the Closing, the Company
shall prepare, and on the Closing Date or as soon as practicable thereafter the
Company shall file with the Secretary of State of the State of Delaware, a
certificate of merger in form reasonably satisfactory to Parent (the
"Certificate of Merger") executed in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required under the DGCL.
The Merger shall become effective at such time as the Certificate of Merger is
duly filed with such Secretary of State, or at such other time as Parent and the
Company shall agree and specify in the Certificate of Merger (the
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time the Merger becomes effective being the "Effective Time").
SECTION 1.04. Effects. The Merger shall have the effects set forth
in the DGCL, including in Section 259 thereof.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The
certificate of incorporation of the Surviving Corporation shall be amended at
the Effective Time to read in the form of Exhibit A (subject to Section 6.05).
(b) The by-laws of Sub as in effect immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein (subject to Section 6.05) or
by applicable Law.
SECTION 1.06. Directors. The directors of Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected or appointed and qualified, as the case may be.
ARTICLE II
Effect on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be
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converted into and become one fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent- Owned Stock. At the
Effective Time, each issued and outstanding share of Company Capital Stock that
is owned by the Company, Parent or Sub shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and no cash or
other consideration shall be delivered or deliverable in exchange therefor. At
the Effective Time, each issued and outstanding share of Company Capital Stock
that is owned by any subsidiary of the Company or Parent (other than Sub) shall
be converted into and become one fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Surviving Corporation.
(c) Conversion of Company Common Stock. (i) Subject to Sections
2.01(b) and 2.01(d), each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (together with any Company Rights if
still outstanding) shall be converted into the right to receive, in exchange for
such share of Company Common Stock, the amount of cash, without interest, equal
to the quotient, rounded down to the nearest whole cent (the "Per Share Merger
Consideration"), of (A) $8,242,156 and (B) the aggregate number of shares of
Company Common Stock outstanding immediately prior to the Effective Time,
including the shares which would be cancelled at the Effective Time pursuant to
Section 2.01(b). Based on 14,718,134 shares of Company Common Stock outstanding
the Per Share Merger Consideration would be $0.56.
(ii) The cash payable upon conversion of shares of Company Common
Stock pursuant to this Section 2.01(c) is referred to collectively as the
"Merger Consideration". As of the Effective Time, all such shares of Company
Common Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock (a "Certificate") shall
cease to have any rights with respect thereto, except the right to receive
Merger Consideration upon surrender of
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such certificate in accordance with Section 2.02, without interest.
(d) Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, shares of Company Capital Stock that are issued and outstanding
immediately prior to the Effective Time and that are held by any person who is
entitled to demand and properly demands appraisal of such shares pursuant to,
and who complies in all respects with, Section 262 of the DGCL ("Section 262")
and who, as of the Effective Time, shall not have effectively withdrawn or
otherwise forfeited appraisal rights (collectively, the "Appraisal Shares")
shall not be converted into Merger Consideration as provided in Section 2.01(c),
but rather the holders of Appraisal Shares shall be entitled to payment in
accordance with Section 262; provided, however, that if any such holder shall
fail to perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262, then the right of such holder to be paid in
accordance with Section 262 shall cease and such Appraisal Shares shall be
deemed to have been converted as of the Effective Time into, and to have become
exchangeable solely for the right to receive, Merger Consideration pursuant to
Section 2.01(c). The Company shall give prompt notice to Parent of any demands
received by the Company for appraisal of any shares of Company Capital Stock,
and Parent shall have the right to participate in and direct all negotiations
and proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, without the prior written consent of Parent, make any payment
with respect to, or settle or offer to settle, any such demands, or agree to do
any of the foregoing.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to
the Effective Time, Parent shall select a bank or trust company reasonably
acceptable to the Company to act as paying agent (the "Paying Agent") for the
payment of the Merger Consideration upon surrender of Certificates. Parent shall
directly provide to the Paying Agent immediately following the Effective Time
all the cash necessary to pay for the shares of Company Common Stock that were
converted into the right to receive Merger Consideration pursuant to Section
2.01(c) (such cash being hereinafter referred to as the "Exchange Fund").
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(b) Exchange Procedure. As promptly as practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of
Certificates whose shares were converted into the right to receive Merger
Consideration pursuant to Section 2.01(c), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Paying Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor the amount of cash into which the shares of Company Common
Stock theretofore represented by such Certificate shall have been converted
pursuant to Section 2.01(c), and the Certificate so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of Company Common Stock
that is not registered in the transfer records of the Company, payment may be
made to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other Taxes (as defined in Section 3.09(n)) required
by reason of the payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of Parent that such Tax has been
paid or is not applicable. Until surrendered as contemplated by this Section
2.02, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the amount of cash,
without interest, into which the shares of Company Common Stock theretofore
represented by such Certificate have been converted pursuant to Section 2.01. No
interest shall be paid or accrue on the cash payable upon surrender of any
Certificate.
(c) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid in accordance with
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the terms of this Article II upon conversion of any shares of Company Common
Stock shall be paid in full satisfaction of all rights pertaining to such shares
of Company Common Stock and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of shares of Company Common Stock that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, any certificates
formerly representing shares of Company Common Stock are presented to the
Surviving Corporation or the Paying Agent for any reason, they shall be canceled
and exchanged as provided in this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of Company Common Stock for nine (9)
months after the Effective Time shall be delivered to Parent and any holder of
Company Common Stock who has not by then complied with this Article II shall
thereafter look only to Parent for payment of its claim for Merger
Consideration.
(e) No Liability. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Law. If any Certificate has not been surrendered
prior to the date on which Merger Consideration in respect of such Certificate
would otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 3.05(b)), any such Merger Consideration in respect of such
Certificate shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily basis.
Pending payment of such funds to the holders of Certificates for shares of
Company Capital Stock, such funds will be held and shall be invested by the
Paying Agent as Parent directs (so long as such directions do not impair the
rights of holders of Company Capital Stock) in the direct obligations of the
United States, obligations for which the full faith and
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credit of the United States is pledged to provide for the payment of principal
and interest or commercial paper rated of the highest quality by Xxxxx'x
Investors Services, Inc. or Standard & Poor's. Parent will promptly replace any
monies lost through any investment made pursuant to this Section 2.02(f). If for
any reason (including losses) the Exchange Fund is inadequate to pay the amounts
to which holders of the Company Common Stock shall be entitled under this
Article II, Parent and the Surviving Corporation shall in any event be liable
for payment thereof. The Exchange Fund shall not be used except as provided in
this Agreement. Any interest and other income resulting from such investments
shall be paid to Parent or the Surviving Corporation, as Parent directs.
(g) Lost, Stolen or Destroyed Certificates. If any Certificate has
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent will deliver in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
pursuant to this Article II.
ARTICLE III
Representations and Warranties of the Company
The Company represents and warrants to Parent and Sub that, except
as set forth in the letter dated as of the date of this Agreement and as amended
in accordance with Section 9.04, from the Company to Parent and Sub (the
"Company Disclosure Letter"):
SECTION 3.01. Organization, Standing and Power. The Company and each
of its subsidiaries (the "Company Subsidiaries") (a) is duly organized, validly
existing and in good standing (to the extent such jurisdiction recognizes the
concept of good standing) under the laws of the jurisdiction in which it is
organized, (b) has full corporate or limited liability company power and
authority,
9
as applicable, and (c) possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, lease or otherwise
hold its properties and assets and to conduct its business as presently
conducted, in each case other than (except in the case of clauses (a) and (b)
above with respect to the Company and the Company Subsidiaries) such failures
that, individually or in the aggregate, have not had and are not reasonably
likely to have a Company Material Adverse Effect (as defined in Section
3.08(b)). The Company and each Company Subsidiary is duly qualified to do
business in each jurisdiction where the nature of its business or the ownership
or leasing of its properties make such qualification necessary, other than
failures to so qualify that, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect. The Company has
made available to Parent, Sub or their Representatives (as defined in Section
9.03) true and complete copies of the certificate of incorporation of the
Company, as amended through the date of this Agreement (as so amended, the
"Company Charter"), and the by-laws of the Company, as amended through the date
of this Agreement (as so amended, the "Company By-laws"), and the comparable
charter and organizational documents of each Company Subsidiary, in each case as
amended through the date of this Agreement.
SECTION 3.02. Company Subsidiaries; Equity Interests. (a) Section
3.02(a) of the Company Disclosure Letter sets forth, as of the date of this
Agreement, a list of each Company Subsidiary and its jurisdiction of
organization. All the outstanding shares of capital stock or limited liability
company interests, as applicable, of each Company Subsidiary (i) are duly
authorized and have been validly issued and are fully paid and nonassessable, as
applicable, and free of preemptive rights and (ii) are owned by the Company, by
another Company Subsidiary or by the Company and another Company Subsidiary,
free and clear of all pledges, liens, charges, mortgages, encumbrances and
security interests of any kind or nature whatsoever (collectively, "Liens").
There are no Contracts (as defined in Section 3.05(a)) or arrangements with
respect to the ownership, voting or disposition of any shares of stock of any
Company Subsidiary.
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(b) Except for its interests in the Company Subsidiaries, the
Company does not, as of the date of this Agreement, own, directly or indirectly,
any capital stock, membership interest, partnership interest, joint venture
interest or other equity interest in any person.
SECTION 3.03. Capital Structure. (a) The authorized capital stock of
the Company consists of 50,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, par value $0.01 per share (the "Company Preferred
Stock", and together with the Company Common Stock, the "Company Capital
Stock"). At the close of business on September 8, 2003, (i) 14,718,134 shares of
Company Common Stock were issued and outstanding, (ii) no shares of Company
Common Stock were held by the Company in its treasury, (iii) 1,272,850 shares of
Company Common Stock were subject to outstanding Company Employee Stock Options
(as defined in Section 3.11(g)), (iv) 1,500,000 shares of Company Common Stock
were reserved for issuance pursuant to the Company Stock Plans (as defined in
Section 3.11(g)), (v) no shares of Company Common Stock were reserved for and
subject to issuance in connection with the rights (the "Company Rights") issued
pursuant to the Amended and Restated Rights Agreement dated as of October 16,
2002 (as amended from time to time, the "Company Rights Agreement"), between the
Company and Xxxxx Fargo Minnesota, N.A., as Rights Agent, and (vi) no shares of
Company Preferred Stock were issued and outstanding. Except as set forth above,
at the close of business on September 8, 2003, no shares of Company Common Stock
were issued, reserved for issuance or outstanding.
(b) Section 3.03(b) of the Company Disclosure Letter sets forth a
true and complete list, as of the close of business on September 8, 2003, of all
outstanding Company Employee Stock Options and all other rights, if any, to
purchase or receive Company Common Stock or stock in any Company Subsidiary or
other rights issued or granted by the Company or any Company Subsidiary, the
number of shares subject thereto, the grant dates and exercise prices thereof
and the names of the holders thereof. The Company has made available to Parent,
Sub or their Representatives true and complete copies of all option agreements
governing Company Employee Stock Options. During the period from September 8,
2003 to the date of this Agreement, there have
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been no issuances by the Company of shares of Company Capital Stock other than
issuances of shares of Company Common Stock pursuant to the exercise of Company
Employee Stock Options outstanding on such date as required by their terms as in
effect on the date of this Agreement.
(c) All outstanding shares of Company Capital Stock are, and all
such shares that may be issued prior to the Effective Time will be when issued,
duly authorized, validly issued, fully paid and nonassessable and not subject to
or issued in violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right under any
provision of the DGCL, the Company Charter, the Company By-laws or any Contract
to which the Company or any Company Subsidiary is a party or otherwise bound.
(d) There are no bonds, debentures, notes or other indebtedness of
the Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which holders of Company
Common Stock may vote ("Voting Company Debt"). Except as set forth above, there
are no options, warrants, calls, rights, convertible or exchangeable securities,
"phantom" stock rights, stock appreciation rights, stock-based performance
units, profit participation rights, rights of repurchase, other rights (other
than rights that may have arisen under a Company Stock Plan) linked to the price
of Company Capital Stock, commitments, Contracts, arrangements or undertakings
of any kind to which the Company or any Company Subsidiary is a party or by
which any of them is bound (i) obligating the Company or any Company Subsidiary
to issue, deliver, sell or grant, or cause to be issued, delivered, sold or
granted additional shares of capital stock or other voting securities or equity
interests in, or any security convertible or exchangeable into or exercisable
for any capital stock of or other voting security or equity interest in, the
Company or any Company Subsidiary or any Voting Company Debt, or (ii) obligating
the Company or any Company Subsidiary to issue, grant, extend or enter into any
such option, warrant, call, right, security, unit, commitment, Contract,
arrangement or undertaking. There are not any outstanding contractual
obligations of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any
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shares of capital stock of the Company or any Company Subsidiary. The Company
has made available to Parent, Sub or their Representatives a true and complete
copy of the Company Rights Agreement, as amended to the date of this Agreement.
(e) Neither the Company nor any Company Subsidiary is a party to any
voting agreement, and, to the Company's Knowledge (as defined in Section 9.03),
there are no irrevocable proxies and no other agreements with respect to the
voting of the Company Capital Stock, other than those described in the Schedule
13D filed by Parent on August 18, 2003.
SECTION 3.04. Authority; Execution and Delivery; Enforceability. (a)
The Company has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the Transactions in accordance with the
terms of this Agreement, subject, in the case of the consummation of the Merger
to receipt of the Company Stockholder Approval (as defined in Section 3.04(c)).
The execution and delivery by the Company of this Agreement and the consummation
by the Company of the Transactions in accordance with the terms of this
Agreement have been duly authorized by all necessary corporate action on the
part of the Company and no other corporate proceedings on the part of the
Company are necessary to approve this Agreement or to consummate the
Transactions, subject, in the case of the consummation of the Merger, to receipt
of the Company Stockholder Approval. The Company has duly executed and delivered
this Agreement, and, assuming due execution and delivery hereof by Parent and
Sub, this Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
(b) The Board of Directors of the Company (the "Company Board"), at
a meeting duly called and held, duly adopted resolutions (with each
disinterested director voting in favor thereof)(i) approving this Agreement, the
Merger and the other Transactions, (ii) determining that the terms of the Merger
and the other Transactions are fair to and in the best interests of the Company
and its stockholders, (iii) recommending that the Company's stockholders adopt
this Agreement and (iv) declaring that this Agreement is advisable. Assuming the
accuracy of
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Parent's and Sub's representations and warranties in Section 4.08, such
resolutions and the previous actions taken by the Company Board are sufficient
to render inapplicable the provisions of Section 203 of the DGCL to (i) the
formation of Parent, (ii) this Agreement, (iii) the Merger, (iv) the other
Transactions, and (v) the acquisition of 1,172,400 shares of Company Common
Stock by the Xxxxxxxx Parties (as defined in Section 4.08 hereof) on September
12, 2002. No other state takeover statute or similar statute or regulation
applies or purports to apply to the Company with respect to this Agreement, the
Merger or any other Transaction.
(c) Assuming the accuracy of Parent's and Sub's representations and
warranties in Section 4.08, the only vote of holders of any class or series of
Company Capital Stock necessary to approve and adopt this Agreement and the
Merger is the adoption of this Agreement by the holders of a majority of the
outstanding Company Common Stock (the "Company Stockholder Approval"). The
affirmative vote of the holders of Company Capital Stock, or any of them, is not
necessary to consummate any Transaction other than the Merger.
SECTION 3.05. No Conflicts; Consents. (a) The execution and delivery
by the Company of this Agreement do not, and the consummation of the Merger and
the other Transactions and the compliance with the terms hereof will not,
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit under, or
result in the creation of any Lien upon any of the properties or assets of the
Company or any Company Subsidiary under, any provision of (i) the Company
Charter, the Company By-laws or the comparable charter or organizational
documents of any Company Subsidiary, (ii) any material contract (whether written
or oral), lease, license, indenture, note, bond, agreement, permit, concession,
franchise or other instrument (other than a Company Benefit Plan (as defined in
Section 3.10)) (a "Contract") to which the Company or any Company Subsidiary is
a party or by which any of their respective properties or assets is bound or
(iii) subject to the filings and other matters referred to in Section 3.05(b),
any material
14
judgment, order or decree ("Judgment") or material statute, law, ordinance, rule
or regulation ("Law"), in each case, applicable to the Company or any Company
Subsidiary or their respective properties or assets.
(b) No material consent, approval, license, permit, order or
authorization ("Consent") of, or material registration, declaration or filing
with, or material permit from, any domestic or foreign (whether national,
federal, state, provincial, local or otherwise) government or any court of
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (each, a
"Governmental Entity") is required to be obtained or made by the Company or any
Company Subsidiary in connection with the execution, delivery and performance of
this Agreement by the Company or the consummation of the Transactions, other
than (i) the filing with the Securities and Exchange Commission (the "SEC") of
(A) a proxy statement relating to the adoption of this Agreement by the
Company's stockholders (as amended or supplemented from time to time, the "Proxy
Statement"), (B) a Transaction Statement on Schedule 13E-3 (as amended or
supplemented from time to time, the "Schedule 13E-3") and (C) such reports under
Sections 13 and 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as may be required in connection with this Agreement, the
Merger and the other Transactions, (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of the other jurisdictions in which the Company is
qualified to do business, (iii) such filings as may be required in connection
with the Taxes described in Section 6.08, (iv) such filings as may be required
under the rules and regulations of the New York Stock Exchange, Inc., or (v)
such other items required solely by reason of the participation of Parent (as
opposed to any third party) in the Transactions.
(c) Assuming the accuracy of Parent's and Sub's representations and
warranties in Section 4.08, the Company and the Company Board have taken all
action necessary to (i) render the Company Rights inapplicable to (A) the
formation of Parent, (B) this Agreement, (C) the Merger, (D) the other
Transactions and (E) the acquisition of 1,172,400 shares of Company Common Stock
by the Xxxxxxxx
15
Parties on September 12, 2002, and (ii) ensure that (A) neither Parent nor any
of its affiliates or associates is or will become an "Acquiring Person" (as
defined in the Company Rights Agreement) by reason of this Agreement, the Merger
or any other Transaction, (B) a "Distribution Date" (as defined in the Company
Rights Agreement) or a "Shares Acquisition Date" (as defined in the Company
Rights Agreement) shall not occur by reason of this Agreement, the Merger or any
other Transaction and (C) the Company Rights shall expire immediately prior to
the Effective Time.
SECTION 3.06. SEC Documents; Undisclosed Liabilities. (a) The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company with the SEC since January 1, 2002 (the
"Company SEC Documents").
(b) As of its respective date, each Company SEC Document complied in
all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act"), as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Document, 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 in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements (the "Company Financial Statements") of the Company included in the
Company SEC Documents comply in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles ("GAAP") (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Each certification
included in the Company SEC Documents pursuant to Sections 302 and 906 of the
16
Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act") was accurate when made.
(c) Other than as disclosed in the Company Financial Statements, as
of the date of this Agreement, neither the Company nor any Company Subsidiary
has any material liabilities or material obligations of any nature (whether
accrued, absolute, contingent or otherwise) other than liabilities that,
individually or in the aggregate, have not had or are not reasonably likely to
have a Company Material Adverse Effect.
(d) None of the Company Subsidiaries is subject to the reporting
requirements of Section 13(a) or Section 15(d) of the Exchange Act.
SECTION 3.07. Information Supplied. (a) At the time the Proxy
Statement is filed with the SEC, at any time it is amended or supplemented or at
the time it is first mailed to stockholders of the Company, neither the Proxy
Statement, as amended or supplemented, if applicable, nor the Schedule 13E-3, as
amended or supplemented, if applicable, will 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, except that no
representation or warranty is made by the Company in this Section 3.07(a) with
respect to statements made or incorporated by reference therein based on
information supplied solely by Parent, Sub or their Representatives for
inclusion or incorporation by reference in such documents.
(b) Each document required to be filed by the Company with the SEC
or required to be distributed or otherwise disseminated to the Company's
stockholders in connection with the Merger and the other Transactions, including
the Proxy Statement and the Schedule 13E-3 (other than portions of the Schedule
13E-3 attributable to Parent or Sub), and any amendments or supplements thereto,
when filed, distributed or disseminated, as applicable, will comply in all
material respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation or warranty is
made by the Company with respect to statements made or
17
incorporated by reference therein based on information supplied solely by
Parent, Sub or their Representatives for inclusion or incorporation by reference
therein.
SECTION 3.08. Absence of Certain Changes or Events. (a) From
December 31, 2002 to the date of this Agreement, the Company has conducted its
business in the ordinary course.
(b) From December 31, 2002 to the date of this Agreement, there has
not been a material adverse effect on the Company or any material adverse change
in the Company's relationship with the Teams (as defined in Section 3.15(k))
taken as a whole, provided that any net decrease during such time period in the
number of teams participating or planning to participate in races sanctioned by
the Company or any Company Subsidiary (not taking into account any decrease in
participation of Teams owned or operated by any direct or indirect owners of
Parent) will be considered a material adverse change in the Company's
relationship with the Teams taken as a whole, in each case other than any state
of facts, change, development, effect, condition or occurrence (i) disclosed on
the Company Disclosure Letter or otherwise disclosed in writing to Parent, Sub
or their representatives prior to the Final Disclosure Date (as defined in
Section 9.04) or (ii) arising out of or relating to (A) the economy, political
conditions or the securities markets in general, (B) actions taken at Parent's
request or with its consent, (C) the failure to take actions prohibited by this
Agreement or with respect to which Parent refused to provide its consent, (D)
the announcement or existence of the Transactions, (E) the industry in which the
Company operates and not specifically related to the Company, (F) sponsors,
sponsorships or the venues at which the Company or a Company Subsidiary conducts
or plans to conduct its races, or (G) changes in the market price of the Company
Common Stock (a "Company Material Adverse Effect").
(c) From December 31, 2002 to the date of this Agreement, there has
not been:
(i) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to
any Company Capital
18
Stock or any repurchase for value by the Company of any Company Capital
Stock;
(ii) any split, combination or reclassification of any Company
Capital Stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares
of Company Capital Stock;
(iii) (A) any granting by the Company or any Company Subsidiary to
any director or officer of the Company or any Company Subsidiary of any
increase in cash compensation, except increases in the ordinary course of
business of not more than 2% per annum or increases required under
employment agreements disclosed in Section 3.15 of the Company Disclosure
Letter, (B) any granting by the Company or any Company Subsidiary to any
such director or officer of any increase in severance or termination pay,
except increases required under any employment, severance or termination
agreements disclosed in Section 3.15 of the Company Disclosure Letter, or
(C) any entry by the Company or any Company Subsidiary into any
employment, severance or termination agreement with any such director or
officer;
(iv) any change in accounting methods, principles or practices by
the Company or any Company Subsidiary materially affecting the reported
consolidated assets, liabilities or results of operations of the Company,
except insofar as may have been required by a change in GAAP or applicable
Law; or
(v) any material elections with respect to Taxes by the Company or
any Company Subsidiary or settlement or compromise by the Company or any
Company Subsidiary of any material Tax liability or refund.
SECTION 3.09. Tax Matters. (a) The Company and each Company
Subsidiary has timely filed, or has caused to be timely filed on its behalf, all
Tax Returns (as defined below) required to be filed by it prior to the date of
this Agreement. All such Tax Returns are true, complete and accurate in all
material respects. All Taxes shown to be due on such Tax Returns have been
timely paid.
19
(b) Taxes incurred by the Company and the Company Subsidiaries but
not yet due and payable do not exceed the reserve for Taxes set forth on the
most recent financial statements contained in the Company SEC Documents for all
Tax periods and portions thereof through the date of such financial statements.
No material Taxes will be incurred by the Company or any Company Subsidiary for
periods ending after the date of the most recent financial statements contained
in the Company SEC Documents through the Effective Time other than in the
ordinary course of business.
(c) No audit is currently pending with respect to any Tax Return of
the Company or any Company Subsidiary nor, to the Company's Knowledge, has an
audit, examination or other similar review been threatened by any Tax Authority
(as defined below). Neither the Company nor any Company Subsidiary has waived
any statute of limitations in respect of Taxes or agreed to any extension of
time for the assessment of any Tax. There are no outstanding rulings of, or
requests for rulings by, any Tax Authority addressed to the Company or any
Company Subsidiary, that are, or if issued would be, binding on the Company or
any Company Subsidiary. No written claim has been made in the past five years by
a Tax Authority in a jurisdiction where the Company does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction.
(d) The federal income Tax Returns of the Company and each Company
Subsidiary (whether or not consolidated in the Tax Returns for the Company
Group) have been examined by and fully and finally settled with the United
States Internal Revenue Service, or have closed by virtue of the expiration of
the applicable statute of limitations, for all tax years ended on or before
December 31, 1999. Copies of all Tax Returns of the Company and the Company
Subsidiaries as filed, including any amendments thereof, relating to income for
periods ending after December 31, 1999 have been made available, and shall be
delivered on request, to Parent, Sub or their Representatives. All assessments
for Taxes due with respect to such completed and settled examinations or any
concluded litigation have been fully paid.
20
(e) There are no material Liens for Taxes (other than for current
Taxes not yet due and payable) on the assets of the Company or any Company
Subsidiary.
(f) Neither the Company nor any Company Subsidiary has been a member
of an affiliated group filing a consolidated federal income Tax Return other
than the group in which the Company is the common parent (the "Company Group").
Neither the Company nor any Company Subsidiary is a party to any Tax allocation
or sharing agreement or any other material agreement with respect to Taxes, in
each case other than agreements between or among the Company and the Company
Subsidiaries and no other person. The Company and the Company Subsidiaries do
not have any liability for the Taxes of any person other than the Company and
the Company Subsidiaries (i) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign law), (ii) as a transferee or
successor, (iii) by contract, or (iv) otherwise.
(g) The Company and the Company Subsidiaries have withheld and paid
all material Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
(h) Neither the Company nor any Company Subsidiary will be required,
as a result of a change in method of accounting for any period ending on or
before or including the Effective Time, to include any adjustment under Section
481(c) of the Code (or any similar or corresponding provision or requirement
under any other Tax Law) in Taxable income for any period ending on or after the
Effective Time.
(i) The Company is not subject to any limitations under Code
Sections 382 or 383 on the use of its federal net operating loss or credit
carryforwards.
(j) The Company is not obligated to make any payments, and is not a
party to any agreement that under certain circumstances could obligate it to
make any payments, that will not be deductible under Code Section 162(m) or
Section 280G.
21
(k) The Company has not been a United States real property holding
corporation within the meaning of Code Section 897(c)(2).
(l) Neither the Company nor the Company Subsidiaries have a
permanent establishment in any country with which the United States of America
has a relevant Tax treaty, as defined in such relevant Tax treaty, and does not
otherwise operate or conduct business through any branch in any country other
than the United States.
(m) The Company has never been either a "distributing corporation"
or a "controlled corporation" in connection with a distribution of stock
qualifying for tax-free treatment, in whole or in part, pursuant to Section 355
of the Code.
(n) For purposes of this Agreement:
"Tax Authority" means any domestic, foreign, federal, national,
state, county, municipal, provincial or other local government, any subdivision,
agency, commission or authority thereof, or any quasi-governmental body
exercising tax regulatory authority.
"Taxes" includes all forms of taxation imposed by any domestic or
foreign (whether national, federal, state, provincial, local, or otherwise)
Governmental Entity, including income, franchise, property, sales, use, excise,
employment, unemployment, payroll, social security, estimated, value added, ad
valorem, transfer, recapture, withholding and other Taxes of any kind, including
all interest, penalties and additions thereto.
"Tax Return" means all domestic or foreign (whether national,
federal, state, provincial, local or otherwise) returns, declarations,
statements, reports, schedules, forms and information returns and any amended
Tax return relating to Taxes.
SECTION 3.10. Absence of Changes in Benefit Plans. Since December
31, 2002, there has not been any adoption or amendment in any material respect
by the Company or any Company Subsidiary of any collective bargaining agreement
or any bonus, employee pension benefit
22
plans (as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) ("Company Pension Plans"), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) ("Company Welfare Plans"),
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
providing benefits to any current or former employee, officer or director of the
Company or any Company Subsidiary (collectively, "Company Benefit Plans"). As of
the date of this Agreement there are not any severance or termination agreements
or arrangements between the Company or any Company Subsidiary and any current or
former officer or director of the Company or any Company Subsidiary
(collectively, the "Company Benefit Agreements").
SECTION 3.11. ERISA Compliance. (a) Section 3.11 of the Company
Disclosure Letter sets forth, as of the date of this Agreement, a list and brief
description of all Company Benefit Plans maintained, or contributed to, by the
Company or any Company Subsidiary (or to which the Company or any Company
Subsidiary is obligated to make payments or otherwise may have any liability)
for the benefit of any current or former employees, consultants, officers or
directors of the Company or any Company Subsidiary. Each Company Benefit Plan
has been administered in compliance with its terms and applicable Law, other
than instances of noncompliance that, individually and in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect. The Company has
made available to Parent, Sub or their Representatives true and complete copies
of (i) each Company Benefit Plan (or, in the case of any unwritten Company
Benefit Plan, a description thereof) and all amendments thereto, (ii) the two
most recent annual reports on Form 5500 filed with the Internal Revenue Service
with respect to each Company Benefit Plan (if any such report was required),
(iii) the most recent summary plan description for each Company Benefit Plan for
which such summary plan description is required and all summaries of material
modifications and (iv) each trust agreement and group annuity contract relating
to any Company Benefit Plan and all amendments thereto.
23
(b) All Company Pension Plans have been the subject of determination
letters from the Internal Revenue Service to the effect that such Company
Pension Plans are qualified and exempt from Federal income taxes under Sections
401(a) and 501(a), respectively, of the Internal Revenue Code of 1986, as
amended (the "Code"), and no such determination letter has been revoked nor, to
the Company's Knowledge, has revocation been threatened, nor has any such
Company Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect that would adversely
affect its qualification or materially increase its costs.
(c) No Company Pension Plan is subject to Title IV of ERISA.
(d) Each material Company Welfare Plan (including any such plan
covering retirees or other former employees) may be amended or terminated
without material liability (other than for claims or benefits incurred prior to
such amendment or termination) to the Company or any Company Subsidiary on or at
any time after the Effective Time.
(e) The execution and delivery by the Company of this Agreement do
not, and the consummation of the Merger and the other Transactions and the
compliance with the terms hereof will not, (i) entitle any employee, officer or
director of the Company or any Company Subsidiary to severance pay, (ii)
accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any Company Benefit Plan or Company Benefit Agreement or (iii) result in any
breach or violation of, or a default under, any Company Benefit Plan or Company
Benefit Agreement other than any such items that, individually or in the
aggregate, are not reasonably likely to have a Company Material Adverse Effect.
(f) Other than routine claims for benefits, there are no actions,
audits, investigations, suits, or claims pending, or, to the Company's
Knowledge, threatened against any Company Benefit Plan, any fiduciary of any
Company Benefit Plan or against the assets of any Company
24
Benefit Plan that, individually or in the aggregate, are reasonably likely to
have a Company Material Adverse Effect.
(g) Each holder of a Company Employee Stock Option has consented or,
prior to the Closing, will consent to the termination of such Company Employee
Stock Option immediately prior to the Closing. For purposes of this Agreement:
"Company Employee Stock Option" means any option to purchase Company Common
Stock granted under any Company Stock Plan, and "Company Stock Plan" means the
Company's 1997 Director Stock Option Plan, 1997 Stock Option Plan, the Company's
2001 Long Term Stock Incentive Plan and the American Racing Series, Inc. & B.P.
Automotive Stock Option Plan or any other stock option plan of the Company or
any Company Subsidiary which issued options to purchase shares of the Company,
in each case as amended through the date of this Agreement.
SECTION 3.12. Litigation. As of the date of this Agreement, there is
no suit, action or proceeding pending or, to the Company's Knowledge, directly
threatened against the Company, any Company Subsidiary or any current or past
director or officer, in their capacity as such, nor is there any monetary
Judgment outstanding against the Company or any Company Subsidiary in excess of
$250,000 or any Judgment providing for non-monetary relief outstanding against
the Company or any Company Subsidiary that is reasonably likely to have a
Company Material Adverse Effect.
SECTION 3.13. Compliance with Applicable Laws. Each of the Company
and the Company Subsidiaries is in compliance with all applicable Laws, except
for instances of noncompliance that, individually and in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect.
SECTION 3.14. Environmental Matters. (a) Except for such instances
as, individually or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect, (i) each of the Company and each Company
Subsidiary is, and since its organization has been, in compliance with all
Environmental Laws (as defined below), (ii) none of the Company or any Company
Subsidiary
25
has any liability under any Environmental Law arising out of or relating to the
use, storage, release or disposal of Hazardous Substances, (iii) each of the
Company and each Company Subsidiary possesses, and is in compliance with, all
registrations and other consents required under Environmental Laws to conduct
its business as presently conducted, (iv) as of the date of this Agreement,
there is no suit, action or proceeding pending, or, to the Company's Knowledge,
threatened in writing against, or, to the Company's Knowledge, any pending or
threatened investigation by any Governmental Entity of, the Company or any
Company Subsidiary alleging a violation of, or liability under, any
Environmental Law and (v) neither the Company nor any Company Subsidiary has
received any written notice that alleges that it is in violation of, or subject
to liability under, any Environmental Law. For purposes of this Agreement,
"Environmental Laws" means all applicable and binding domestic and foreign
(whether national, federal, state, provincial, local or otherwise) Laws or
Judgments issued by any Governmental Entity in each case relating to pollution
or protection of the environment, the management or release of Hazardous
Substances or human health and safety. For purposes of this Agreement,
"Hazardous Substances" means any hazardous substance as defined by 42 U.S.C.
9601(14), any pollutant or contaminant as defined by 42 U.S.C. 9601(33), any
petroleum or petroleum products, and any other material, chemical or substance
regulated by any Environmental Law.
(b) Neither the Company nor any Company Subsidiary has assumed or is
responsible for, by Contract or otherwise, any liabilities or obligations
arising under any Environmental Law, or is currently performing any
investigation, response or other corrective action under any Environmental Law.
(c) To the Company's Knowledge, (i) there are no underground storage
tanks or related piping, or impoundments, at any real property currently owned
or leased by the Company or any Company Subsidiary, and (ii) any former such
tanks, piping, or impoundments, on any such property which have been removed or
closed, have been removed or closed in accordance with applicable Environmental
Laws.
26
SECTION 3.15. Contracts. Except for Contracts filed as exhibits to
the Company SEC Documents, Section 3.15 of the Company Disclosure Letter sets
forth, as of the date of this Agreement, a true and complete list of all of the
following Contracts to which the Company or any Company Subsidiary is a party:
(a) material Contracts not made in the ordinary course of business;
(b) license agreements or royalty agreements, whether the Company or
any Company Subsidiary is the licensor or licensee thereunder (excluding
licenses that are commonly available on standard commercial terms, such as
software "shrink-wrap" licenses);
(c) non-disclosure agreements (whether the Company or any Company
Subsidiary is the beneficiary or the obligated party thereunder);
(d) Contracts or commitments (including groups of related Contracts
or commitments) involving future expenditures or liabilities, actual or
potential, in excess of $50,000 after the date hereof or otherwise material to
the business of the Company and the Company Subsidiaries, taken as a whole;
(e) Contracts or commitments relating to commission arrangements
with others that are material to the business of the Company and the Company
Subsidiaries, taken as a whole;
(f) employment contracts, consulting contracts, severance
agreements, "stay-bonus" agreements and similar arrangements, including
Contracts (A) to employ or terminate executive officers or other personnel and
other contracts with present or former officers or directors of the Company or
any Company Subsidiary or (B) that will result in the payment by, or the
creation of any liability of the Company, any Company Subsidiary, Parent or Sub
to pay any severance, termination, "golden parachute," or other similar payments
to any present or former personnel following termination of employment or
otherwise as a result of the consummation of the Transactions;
27
(g) Contracts providing for indemnification by the Company or any
Company Subsidiary with respect to material liabilities of the business of the
Company and the Company Subsidiaries, taken as a whole;
(h) promissory notes, loans, agreements, indentures, evidences of
indebtedness, letters of credit, guarantees, or other instruments relating to an
obligation for borrowed money, whether the Company or any Company Subsidiary
shall be the borrower, lender or guarantor thereunder;
(i) Contracts containing covenants limiting in any material respect
the ability of the Company or any Company Subsidiary to engage in any line of
business or compete with any person that relates directly or indirectly to the
business of the Company and the Company Subsidiaries;
(j) any Contract with the federal, state or local government or any
agency or department thereof;
(k) any Contract with any officer, director, holder of more than 5%
of the outstanding shares of Company Common Stock or any person formed for the
purpose of racing in a series sanctioned by the Company or any Company
Subsidiary (such persons, collectively, the "Teams");
(l) leases of real or personal property (including groups of related
leases) involving annual payments of more than $50,000;
(m) Contracts or commitments regarding the promotion of racing
events for the 2003 racing season and any later seasons;
(n) Contracts or commitments concerning a partnership or joint
venture;
(o) Contracts or commitments related to sponsorships for the 2003
racing season and any later seasons; and
(p) any other Contract or series of related Contracts that are
material to the business of the Company
28
and the Company Subsidiaries, taken as a whole, as it is currently conducted.
True and complete copies of all of the Contracts listed in Section 3.15 of the
Company Disclosure Letter, including all amendments and supplements thereto,
have been made available to Parent, Sub or their Representatives. Neither the
Company nor any Company Subsidiary has any oral Contracts. Neither the Company
nor any Company Subsidiary is in material violation of or material default under
any Contract listed in Section 3.15 of the Company Disclosure Letter.
SECTION 3.16. Intellectual Property Matters. (a) Section 3.16 of the
Company Disclosure Letter lists, as of the date of this Agreement, all Company
Registered Proprietary Rights (as defined below) (including all Proprietary
Rights (as defined below), all pending applications seeking registration of
Proprietary Rights and trademark and service marks that the Company or any
Company Subsidiary has used with the intent of creating or benefiting from any
common law rights relating to such marks) and lists any proceedings or actions
pending as of the date of this Agreement before any court, tribunal or
administrative body (including the PTO or equivalent authority anywhere in the
world) related to any of the Company Registered Proprietary Rights. Section 3.16
of the Company Disclosure Letter also lists, as of the date of this Agreement,
all Contracts (including all inbound licenses) to which the Company or any
Company Subsidiary is a party with respect to any Proprietary Rights.
(b) The Company Proprietary Rights constitute all the Proprietary
Rights necessary to the conduct of the business of the Company and the Company
Subsidiaries, taken as a whole, as it is currently conducted. The Company or a
Company Subsidiary owns exclusively all Company Proprietary Rights. Each of the
Company Proprietary Rights owned or used by the Company or any Company
Subsidiary immediately prior to the date of this Agreement will be owned or
available for use by the Company or a Company Subsidiary on identical terms and
conditions immediately subsequent to the Effective Time, subject to termination
in accordance with the terms of any Contracts governing the use of such Company
Proprietary Rights. The Company has taken all
29
actions reasonably necessary to maintain and protect each material item of the
Company Proprietary Rights that it or any Company Subsidiary owns or uses.
(c) The operation of the business of the Company as conducted does
not infringe or misappropriate the Proprietary Rights of any person, or
constitute unfair competition or an unfair trade practice under any applicable
Law, and neither the Company nor any Company Subsidiary has received written
notice from any person claiming that such operation or any act, product,
technology or service of the Company infringes or misappropriates the
Proprietary Rights of any person or constitutes unfair competition or trade
practices under any applicable Law. To the extent that the Company has received
any written notice related to the above or is aware of any pending, anticipated,
or threatened dispute or action against the Company or any Company Subsidiary
relating to infringement or misappropriation of the Proprietary Rights of any
person, there is no basis for any action against the Company or any Company
Subsidiary that is reasonably likely to have a Company Material Adverse Effect.
(d) Each item of Company Registered Proprietary Rights is valid and
subsisting, and all necessary registration, maintenance, renewal fees, annuity
fees and Taxes due through the date of this Agreement in connection with such
Company Registered Proprietary Rights have been paid and all necessary documents
and certificates in connection with such Company Registered Proprietary Rights
have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Company Registered Proprietary Rights
including all change of name documents required to be filed to maintain chain of
title.
(e) To the Company's Knowledge, no person is infringing or
misappropriating any Company Proprietary Rights.
(f) For purposes of this Agreement, the following definitions apply:
30
"Company Proprietary Right" means any Proprietary Right that (i) is
owned by, (ii) is licensed to, or (iii) was developed or created by or for the
Company or any Company Subsidiary.
"Company Registered Proprietary Rights" means all Registered
Proprietary Rights owned by, filed in the name of, assigned to or applied by or
for, the Company or any Company Subsidiary.
"Proprietary Rights" means all (i) U.S. and foreign patents, patent
applications, patent disclosures and improvements thereto, including xxxxx
patents and utility models and applications therefor, (ii) U.S. and foreign
trademarks, service marks, trade dress, logos, trade names and corporate names
and the goodwill associated therewith and registrations and applications for
registration thereof, (iii) U.S. and foreign copyrights and registrations and
applications for registration thereof, (iv) U.S. and foreign mask work rights
and registrations and applications for registration thereof, (v) rights in trade
secrets, (vi) domain name registrations, (vii) other proprietary rights, and
(viii) licenses granting any rights with respect to any of the foregoing.
"Registered Proprietary Rights" means all United States,
international and foreign: (i) issued patents and patent applications (including
provisional applications), (ii) registered trademarks and servicemarks,
applications to register trademarks and servicemarks, intent-to-use
applications, other registrations or applications to trademarks or servicemarks,
(iii) registered copyrights and applications for copyright registration, (iv)
any mask work registrations and applications to register mask works, and (v) any
other Proprietary Right that is the subject of an application, certificate,
filing, registration or other document issued by, filed with, or recorded by,
any state, government or other public legal authority.
SECTION 3.17. Brokers. No broker, investment banker, financial
advisor or other person, other than Bear, Xxxxxxx & Co. Inc., the fees and
expenses of which will be paid by the Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
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connection with the Merger and the other Transactions based upon arrangements
made by or on behalf of the Company.
SECTION 3.18. Opinion of Financial Advisor. The Company has received
the opinion of Bear, Xxxxxxx & Co. Inc., dated the date of this Agreement, to
the effect that, as of such date, the consideration to be received is fair, from
a financial point of view, to the unaffiliated shareholders of the Company,
other than (i) Parent and its affiliates, (ii) individuals who own and operate
teams or entities that participate in the businesses owned or operated by the
Company or any of the Company Subsidiaries, and (iii) any shareholders who have
entered into agreements with Parent with respect to any matter related to their
shares. The Company will deliver a true and complete copy of such opinion to
Parent promptly after receipt thereof.
SECTION 3.19. Insurance. Section 3.19 of the Company Disclosure
Letter contains a list, as of the date of this Agreement, of all material
insurance policies and binders of insurance covering any of the business,
properties, assets or operations of the Company and the Company Subsidiaries
(the "Insurance Policies"), the premiums and coverage of the Insurance Policies,
and all claims in excess of $50,000 made under any of the Insurance Policies
since January 1, 2002. All of the Insurance Policies are in full force and
effect and following the Effective Time, shall continue to be legal, valid,
binding and enforceable on identical terms. The Company has completed the
application for each of the Insurance Policies accurately. The Company has
received no notice of cancelation or termination with respect to any Insurance
Policy, and no event (including signing this Agreement or consummating the
Merger) has occurred or is planned to occur which would constitute a breach or
default, or permit termination, modification or acceleration under any Insurance
Policy. To the Company's Knowledge, there are no facts upon which an insurer
might reasonably be justified in reducing or denying coverage or materially
increasing premiums on any of the Insurance Policies. There are no outstanding
unpaid claims under any of the Insurance Policies. The Insurance Policies are
sufficient for compliance with all requirements of applicable Law and of all
Contracts to which the Company and the Company Subsidiaries are party, and in
the reasonable judgment of
32
management of the Company, are adequate insurance coverage for the assets and
operations of the Company and the Company Subsidiaries as conducted as of the
date of this Agreement. Each party required to be listed as an additional
insured on any Insurance Policy pursuant to any Contracts entered into by the
Company or any Company Subsidiary has been and is listed as an additional
insured as required by such Contract.
SECTION 3.20. Title to Property. Neither the Company nor any Company
Subsidiary owns any real property. The Company or a Company Subsidiary has good
and marketable title to, or valid leasehold interests in, or other valid rights
to use, all of the material properties and assets used in its business, free and
clear of all Liens, other than those Liens that have not had and are not
reasonably likely to have a Company Material Adverse Effect.
SECTION 3.21. Labor Matters. Neither the Company nor any Company
Subsidiary is a party to any labor agreement with respect to its employees with
any labor organization, group or association. As of the date of this Agreement,
no petition for certification as the exclusive bargaining representative for any
of the employees is pending before the National Labor Relations Board. To the
Company's Knowledge, no union organizing activity has occurred with respect to
the employees in the two (2) years preceding the date of this Agreement. There
is no unfair labor practice charge or complaint against the Company pending
before the National Labor Relations Board or any other domestic or foreign
governmental agency arising out of the Company's or any Company Subsidiary's
activities, and to the Company's Knowledge, there are no facts or information
that would give rise thereto. There is no labor strike or labor disturbance
pending or, to the Company's Knowledge, threatened against the Company or any
Company Subsidiary, nor is any grievance currently being asserted against it,
and neither the Company nor any Company Subsidiary has experienced a work
stoppage or other labor difficulty in the two (2) years preceding the date of
this Agreement. There are no material controversies pending or, to the Company's
Knowledge, threatened between the Company or any Company Subsidiary and the
employees, and to the Company's Knowledge, there are no facts that could
reasonably result in such controversy.
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(a) Compliance. The Company and each Company Subsidiary is in
compliance in all material respects with all applicable Laws respecting
employment practices, terms and conditions of employment, wages and hours, equal
employment opportunity, and the payment of social security and similar taxes and
is not engaged in any unfair labor practice that, individually or in the
aggregate, is reasonably likely to have a Company Material Adverse Effect.
ARTICLE IV
Representations and Warranties of Parent and Sub
Parent and Sub, jointly and severally, represent and warrant to the
Company that:
SECTION 4.01. Organization, Standing and Power. Each of Parent and
Sub is duly organized, validly existing and in good standing (to the extent such
jurisdiction recognizes the concept of good standing) under the laws of the
jurisdiction in which it is organized and has full limited liability company or
corporate power and authority, as applicable, to conduct its business as
presently conducted, other than where the failure to be in good standing,
individually or in the aggregate, is not reasonably likely to have a material
adverse effect on Parent (a "Parent Material Adverse Effect"). Parent has made
available to the Company true and complete copies of the certificate of
incorporation, by-laws and other comparable charter and organizational
documents, in each case as amended to the date of this Agreement, for each of
Parent and Sub.
SECTION 4.02. Sub. (a) Since the date of its incorporation, Sub has
not carried on any business or conducted any operations other than the execution
of this Agreement, the performance of its obligations hereunder and matters
ancillary thereto.
(b) The authorized capital stock of Sub consists of 1,000 shares of
common stock, par value $0.01 per share, all of which have been validly issued,
are fully paid and
34
nonassessable and are owned by Parent free and clear of any Lien.
SECTION 4.03. Authority; Execution and Delivery; Enforceability.
Each of Parent and Sub has all requisite limited liability company or corporate
power and authority, as applicable, to execute and deliver this Agreement and to
consummate the Transactions. The execution and delivery by each of Parent and
Sub of this Agreement and the consummation by it of the Transactions have been
duly authorized by all necessary limited liability company or corporate action,
as applicable, on the part of Parent and Sub. Each of the Board of Managers of
Parent and the Board of Directors of Sub, at a meeting duly called and held,
duly and unanimously adopted resolutions approving this Agreement, the Merger
and the other Transactions and, in the case of the Board of Directors of Sub,
declaring its advisability. Parent, as sole stockholder of Sub, has adopted this
Agreement. Each of Parent and Sub has duly executed and delivered this
Agreement, and, assuming due execution and delivery hereof by the Company, this
Agreement constitutes the legal, valid and binding obligation of each of Parent
and Sub, enforceable against it in accordance with its terms.
SECTION 4.04. No Conflicts; Consents. (a) The execution and delivery
by each of Parent and Sub of this Agreement do not, and the consummation of the
Merger and the other Transactions and the compliance with the terms hereof will
not, conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or to loss of a material
benefit under, or result in the creation of any Lien upon any of the properties
or assets of Parent or any of its subsidiaries under, any provision of (i) the
certificate of incorporation, by-laws or other comparable charter and
organizational documents of Parent or any of its subsidiaries, (ii) any Contract
to which Parent or any of its subsidiaries is a party or by which any of their
respective properties or assets is bound or (iii) subject to the filings and
other matters referred to in Section 4.04(b), any Judgment or Law, in each case,
applicable to Parent or any of its subsidiaries or their respective properties
or assets.
35
(b) No Consent of, or registration, declaration or filing with, or
permit from any Governmental Entity is required to be obtained or made by or
with respect to Parent or any of its subsidiaries in connection with the
execution, delivery and performance of this Agreement by Parent or any of its
subsidiaries or the consummation of the Transactions, other than (i) the filing
with the SEC of (A) the Schedule 13E-3 and (B) such reports under Sections 13
and 16 of the Exchange Act, as may be required in connection with this
Agreement, the Merger and the other Transactions, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, and
(iii) such filings as may be required in connection with the Taxes described in
Section 6.08.
SECTION 4.05. Information Supplied. (a) At the time the Proxy
Statement is filed with the SEC, at any time it is amended or supplemented or at
the time it is first mailed to stockholders of the Company, the Proxy Statement,
as amended or supplemented, will not 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, except that this representation and
warranty is made by Parent or Sub in this Section 4.05(a) solely with respect to
statements made or incorporated by reference therein based on information
supplied by Parent, Sub or their Representatives for inclusion or incorporation
by reference in such documents. The Schedule 13E-3, at the time it is filed with
the SEC or at any time it is amended or supplemented, if applicable, will not
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, except that no representation or warranty is made by Parent or Sub
in this Section 4.05(a) with respect to statements made or incorporated by
reference therein based on information supplied solely by the Company or its
Representatives for inclusion or incorporation by reference therein. None of the
information supplied or to be supplied by Parent, Sub or their Representatives
for inclusion or incorporation by reference in the Proxy Statement or Schedule
13E-3 will, at the time any such document is filed with the SEC, at any
36
time it is amended or supplemented or at the time it is first mailed to the
Company's stockholders, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
(b) The Schedule 13E-3 (other than portions of the Schedule 13E-3
attributable to the Company), and any amendments or supplements thereto, when
filed, will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder, except that
no representation or warranty is made by Parent with respect to statements made
or incorporated by reference therein based on information supplied solely by the
Company or its Representatives for inclusion or incorporation by reference
therein.
SECTION 4.06. Brokers. No broker, investment banker, financial
advisor or other person, other than Ernst & Young Corporate Finance LLP, the
fees and expenses of which will be paid by Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Merger and the other Transactions based upon arrangements made by or on
behalf of Parent or Sub.
SECTION 4.07. Financing. At the Effective Time, Parent and Sub will
have available all of the funds necessary for the acquisition of the shares of
Company Common Stock pursuant to Section 2.01(c) of this Agreement. Immediately
prior to the record date for the Company Stockholders Meeting, the Xxxxxxxx
Parties (defined below) will have contributed all of their shares of Company
Capital Stock to Parent.
SECTION 4.08. Stock Ownership. None of Parent, Sub and their
respective "associates" (as such term is defined in Section 203(c)(2) of the
DGCL) or affiliates, in each case, other than Xx. Xxxxxx X. Xxxxxxxx, Xxxxxxxx
Racing, Inc., Indeck Energy Services, Inc., and Indeck-Ilion Cogeneration Corp.
(the "Xxxxxxxx Parties"), beneficially owns, or, at any time during the three
years preceding August 11, 2003, has owned, any Company Common Stock. None of
Parent, Sub and their respective associates or affiliates (in each case, other
than the Xxxxxxxx
37
Parties) at any time during the three years preceding August 11, 2003 has been
an "interested stockholder" of the Company, as such term is defined in Section
203(c)(5) of the DGCL. As of the date of this Agreement, the Xxxxxxxx Parties
own (of record and beneficially) in the aggregate 3,377,400 shares of Company
Common Stock and do not own of record or beneficially any shares of Company
Common Stock other than such shares. As of the Effective Time, Parent or Sub or
both own (of record and beneficially) in the aggregate the number of shares of
Company Common Stock set forth on Schedule 4.08 and do not own of record or
beneficially any shares of Company Common Stock other than such shares. At no
time during the three years preceding September 11, 2002, was any Xxxxxxxx Party
an interested stockholder of the Company.
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business by the Company. (a) Except for
matters set forth in Section 5.01 of the Company Disclosure Letter or otherwise
contemplated by this Agreement, from the date of this Agreement to the Effective
Time the Company shall, and shall cause each Company Subsidiary to, conduct its
business in light of the existing circumstances in the ordinary course,
including operating in compliance with Law and making all required filings with
the SEC. In addition, and without limiting the generality of the foregoing,
except for matters set forth in the Company Disclosure Letter or otherwise
contemplated by this Agreement, from the date of this Agreement to the Effective
Time, the Company shall not, and shall not permit any Company Subsidiary to, do
any of the following without the prior written consent of Parent (which consent
shall not be unreasonably withheld, delayed or conditioned):
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other than
dividends and distributions by a direct or indirect wholly owned
subsidiary of the Company to its parent, (B) split, combine or reclassify
any of its capital stock or
38
issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, or (C)
purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any Company Subsidiary or any other securities thereof or any
options, warrants, calls or rights to acquire any such shares or other
securities;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock or other voting securities or equity interests, (B) any Voting
Company Debt, (C) any securities convertible or exchangeable into, or
exercisable for, any such shares, voting securities, equity interests or
Voting Company Debt, or (D) any options, warrants, calls, rights,
convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights or stock-based performance units, profit participation
rights, rights of repurchase, other rights linked to the price of Company
Capital Stock, commitments, Contracts, arrangements or undertakings
obligating it to issue, deliver, sell or grant any such shares, voting
securities, equity interests or Voting Company Debt, in each case other
than (1) the issuance of Company Common Stock (and associated Company
Rights) upon the exercise of Company Employee Stock Options outstanding on
the date of this Agreement and in accordance with their present terms and
(2) the issuance of Company Common Stock upon the exercise of Company
Rights if the Company is not in breach of Section 6.09;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing any equity interest in or portion of the assets of,
or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division
thereof or (B) any assets that are material, individually or in the
aggregate, to the Company and the Company Subsidiaries, taken as a whole,
except purchases in
39
the ordinary course of business consistent with prior practice;
(v) make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets, liabilities or
results of operations of the Company, except insofar as may have been
required by a change in GAAP or applicable Law;
(vi) sell, lease (as lessor), license or otherwise dispose of or
subject to any Lien any properties or assets that are material,
individually or in the aggregate, to the Company and the Company
Subsidiaries, taken as a whole, except sales of assets or licensing
transactions in the ordinary course of business consistent with prior
practice;
(vii) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any Company Subsidiary, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for indebtedness for
borrowed money so long as such indebtedness (together with all other
indebtedness for borrowed money) does not exceed an aggregate principal
amount of $2,000,000 or (B) make any loans or capital contributions to, or
investments in, any other person, other than to or in the Company or any
direct or indirect wholly owned subsidiary of the Company;
(viii) make or agree to make any new capital expenditure or
expenditures that, individually, is in excess of $50,000 or, in the
aggregate, are in excess of $50,000;
(ix) make any election with respect to Taxes or settle or compromise
any material Tax liability or refund;
40
(x) (A) grant to any director or executive officer of the Company of
any Company Subsidiary any increase in cash compensation, except increases
in the ordinary course of business of not more than 2% per annum or
increases required under employment agreements in effect as of the date of
this Agreement, (B) grant to any such director or executive officer any
increase in severance or termination pay, except increases required under
any employment, severance or termination agreements in effect as of the
date of this Agreement, or (C) enter into any employment, severance,
termination or other agreement with any such director or executive
officer;
(xi) adopt or amend in any material respect any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan, arrangement or
understanding providing benefits to any current or former employee,
officer or director of the Company or any Company Subsidiary;
(xii) enter into, modify or terminate (i) any Contract listed on
Section 3.15 of the Company Disclosure Letter, and (ii) any Contract
entered into on or after the date of this Agreement, that if it had been
entered into prior to the date of this Agreement, would have had to be
listed on Section 3.15 of the Company Disclosure Letter;
(xiii) enter into, modify or terminate any sponsorship or promoter
Contract;
(xiv) enter into, modify or terminate any Contract with any
affiliate of the Company or any Company Subsidiary; or
(xv) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. Except as otherwise permitted by Section 5.02,
the Company and Parent shall not, and shall
41
not permit any of their respective subsidiaries to, take any action that would,
or that is reasonably likely to, result in (i) any of the representations and
warranties of such party set forth in this Agreement becoming untrue, other than
for such failures to be true and correct that, individually or in the aggregate,
have not resulted and are not reasonably likely to result in the condition in
Section 7.02(a) (in the case of the Company) or Section 7.03(a) (in the case of
Parent) not being satisfied or (ii) any condition to the Merger set forth in
Article VII not being satisfied.
(c) Designated Representative of Parent and Sub. If any consent is
required of Parent or Sub pursuant to this Agreement, Xxxxx Xxxxxxxxx is hereby
designated as the authorized representative of Parent or Sub for such purposes.
Parent or Sub may change its authorized representative by giving notice to the
Company pursuant to the procedures set forth in Section 9.02.
SECTION 5.02. Company Takeover Proposals. (a) The Company shall not,
nor shall it authorize or permit any Company Subsidiary to, nor shall it
authorize or permit any of its or any Company Subsidiary's Representatives to,
(i) enter into any agreement with respect to any Company Takeover Proposal (as
defined in Section 5.02(e)), except (A) in accordance with Section 8.05(b) (and
after compliance with all the procedures set forth therein) or (B) a
confidentiality agreement in accordance with this Section 5.02(a) or (ii)
furnish to any person any information with respect to a Company Takeover
Proposal, except, prior to obtaining each of the Company Stockholder Approval
and the Unaffiliated Stockholders Approval (as defined in Section 6.01(b)),
pursuant to a confidentiality agreement and subject to compliance with Section
5.02(c).
(b) Neither the Company Board nor any committee thereof shall (i)
withdraw or modify in a manner adverse to Parent or Sub, or propose publicly to
withdraw or modify, in a manner adverse to Parent or Sub, the recommendation by
the Company Board or any such committee of this Agreement or the Merger, in each
case unless the Company Board determines in good faith, after consultation with
outside counsel, that it is necessary to do so to comply with its fiduciary
duties (any such withdrawal, modification or
42
proposal being referred to herein as an "Adverse Recommendation Change"), (ii)
approve any letter of intent, agreement in principle, acquisition agreement or
similar agreement relating to any Company Takeover Proposal or (iii) approve or
recommend, or propose publicly to approve or recommend, any Company Takeover
Proposal. Notwithstanding the foregoing, if, prior to obtaining each of the
Company Stockholder Approval and the Unaffiliated Stockholders Approval, the
Company Board receives a Superior Company Proposal (as defined in Section
5.02(e)) then the Company Board may, in accordance with Section 8.05(b)
(including the notice provisions and the payment of the fee therein), approve
and recommend such Superior Company Proposal and cause the Company to terminate
this Agreement and concurrently enter into a definitive agreement providing for
the implementation of such Superior Company Proposal. The Company shall, after
the Due Diligence Termination Date, at any time requested by Parent, publicly
reaffirm its recommendation of this Agreement and the Merger (unless it
determines in good faith after consultation with outside counsel, that it cannot
do so consistent with its fiduciary duties), and provided that any failure to so
reaffirm (whether or not as a result of a determination described in the
preceding parenthetical) shall constitute an Adverse Recommendation Change.
(c) The Company promptly shall advise Parent orally and in writing
of any Company Takeover Proposal or any inquiry from a third party made to a
director or officer of the Company, or to a Representative of the Company of
which a director or officer of the Company becomes aware, with respect to the
making of a Company Takeover Proposal, the identity of the person making any
such Company Takeover Proposal or inquiry and the material terms of any such
Company Takeover Proposal or inquiry. The Company shall keep Parent informed of
the status (including any change to the material terms) of any such Company
Takeover Proposal or inquiry.
(d) Nothing contained in this Section 5.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14d-9 or Rule 14e-2(a) of the SEC or from making any disclosure to the
Company's stockholders if, in the good faith judgment
43
of the Company Board, after consultation with outside counsel, failure to so
disclose would be inconsistent with its obligations under applicable Law, it
being understood that if any such disclosure constitutes an Adverse
Recommendation Change, Parent shall have the rights provided in the event of an
Adverse Recommendation Change.
(e) For purposes of this Agreement:
"Company Takeover Proposal" means (i) any proposal or offer for a
merger, consolidation, dissolution, recapitalization or other business
combination involving the Company or (ii) any proposal or offer to acquire in
any manner, directly or indirectly, over 20% of the equity securities or
consolidated total assets of the Company, in each case other than the
Transactions.
"Superior Company Proposal" means any proposal made by a third party
to acquire, directly or indirectly, including pursuant to a tender or exchange
offer, a merger, a consolidation, a liquidation or dissolution, a
recapitalization, a purchase of warrants or otherwise, more than 50% of the
Company Common Stock or all or substantially all of the assets of the Company
and the Company subsidiaries, taken as a whole, on terms which the Company Board
determines in good faith to be more favorable to the holders of Company Common
Stock than the Transactions (after consultation with a financial advisor),
taking into account all the terms and conditions of such proposal and this
Agreement (including any proposal by Parent to amend the terms of the
Transactions).
ARTICLE VI
Additional Agreements
SECTION 6.01. Preparation of Proxy Statement; Stockholders Meeting.
(a) As promptly as practicable following the date of this Agreement, (i) the
Company shall prepare and after obtaining the approval of Parent, which approval
shall not be unreasonably withheld, delayed or conditioned, file with the SEC
the Proxy Statement in preliminary form, and (ii) each of the Company, Parent
and Sub shall prepare and file with the SEC the Schedule 13E-3,
44
and each of the Company and Parent shall use its reasonable best efforts to
respond as promptly as practicable to any comments of the SEC with respect
thereto. Each of the Company, Parent and Sub shall notify the others promptly of
the receipt of any comments from the SEC or its staff and of any request by the
SEC or its staff for amendments or supplements to the Proxy Statement or the
Schedule 13E-3 or for additional information and shall supply the others with
copies of all correspondence between it or any of its Representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Schedule 13E-3, as applicable. If at any time prior to receipt
of the Company Stockholder Approval there shall occur any event that should be
set forth in an amendment or supplement to the Proxy Statement or the Company or
Parent shall otherwise determine that any amendment or supplement should be made
to the Proxy Statement in accordance with applicable Law, the Company shall as
promptly as practicable prepare and mail to its stockholders such an amendment
or supplement. The Company shall not mail any Proxy Statement, or any amendment
or supplement thereto, to which Parent reasonably objects. The Company shall use
its reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after filing with the SEC.
(b) The Company shall, as promptly as practicable following the date
of this Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders Meeting") to obtain (i) the Company
Stockholder Approval and (ii) the approval of this Agreement and the Merger by
the holders of the majority of shares of Company Common Stock present or
represented by proxy at such meeting that is not held by Disqualified Holders
(as defined below) voting "for" and "against" such approval (treating for this
purpose holders who have delivered, prior to the Company obtaining the Company
Stockholder Approval, written demands for appraisal in accordance with Section
262(d) of the DGCL and who, as of such time, shall not have effectively
withdrawn or otherwise forfeited appraisal rights as voting "no") (such
approval, the "Unaffiliated Stockholders Approval"). "Disqualified Holders"
means Parent and its affiliates. The Company shall, through the Company Board
and in the Proxy Statement, recommend to its stockholders that they
45
give each of the Company Stockholder Approval and the Unaffiliated Stockholders
Approval, except to the extent that the Company Board shall have withdrawn or
modified its recommendation of this Agreement or the Merger as permitted by
Section 5.02(b). Without limiting the generality of the foregoing, the Company
agrees that its obligations pursuant to the first sentence of this Section
6.01(b) shall not be affected by (i) the commencement, public proposal, public
disclosure or communication to the Company of any Company Takeover Proposal or
(ii) the withdrawal or modification by the Company Board of its approval or
recommendation of this Agreement or the Merger.
(c) Parent shall cause all shares of Company Common Stock owned by
Parent, Sub or any other subsidiary or affiliate of Parent to be voted in favor
of the adoption of this Agreement. Notwithstanding the foregoing, if the Company
Board shall have made an Adverse Recommendation Change, then Parent shall cause
the Excluded Xxxxxxxx Shares (as defined below) to be voted in accordance with
the recommendation of the Company Board. "Excluded Xxxxxxxx Shares" means those
shares of Company Common Stock that must be voted in accordance with the
recommendation of the Company Board pursuant to the voting agreements between
Xx. Xxxxxx X. Xxxxxxxx and the Company dated September 11, 2002 and October 16,
2002.
SECTION 6.02. Access to Information; Confidentiality. The Company
shall, and shall cause each Company Subsidiary to, afford to Parent, and to
Parent's Representatives, reasonable access during normal business hours during
the period prior to the Effective Time to all their respective properties,
books, Contracts, commitments, personnel and records and, during such period,
the Company shall, and shall cause each Company Subsidiary to, furnish promptly
to Parent (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of Federal
or state securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request; provided, however,
that the Company or any Company Subsidiary may withhold any document or
information that is subject to the terms of a confidentiality agreement with a
third party. Without limiting the generality of the foregoing, the Company
46
shall, within two business days of request therefor, provide to Parent the
information described in Rule 14a-7(a)(2)(ii) of the SEC and any information to
which a holder of Company Common Stock would be entitled under Section 220 of
the DGCL (assuming such holder met the requirements of such section). All
information exchanged pursuant to this Section 6.02 shall be subject to the
confidentiality agreements set forth on Schedule 6.02 (the "Confidentiality
Agreements").
SECTION 6.03. Reasonable Best Efforts; Notification. (a) Upon the
terms and subject to the conditions set forth in this Agreement, unless, to the
extent permitted by Section 5.02(b), the Company Board approves or recommends a
Superior Company Proposal, each of the parties hereto shall use its reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other Transactions, including
(i) the obtaining of all necessary actions or nonactions, Consents and waivers
from Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities, if any) and the taking of
all reasonable steps as may be necessary to obtain a Consent or waiver from, or
to avoid an action or proceeding by, any Governmental Entity, (ii) in the case
of the Company, the obtaining of all necessary Consents or waivers from third
parties, (iii) in the case of the Company, the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of any of the Transactions, including seeking to
have any stay, order or injunction entered by any court or other Governmental
Entity vacated or reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of this Agreement. In connection with and without limiting the
foregoing, the Company and the Company Board shall (i) take all action necessary
to ensure that no state takeover statute or similar statute or regulation is or
becomes applicable to any Transaction or this Agreement and (ii) if any state
takeover statute or similar statute or regulation becomes
47
applicable to any Transaction or this Agreement, take all action necessary to
ensure that the Merger and the other Transactions may be consummated as promptly
as practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
Transactions. Notwithstanding the foregoing, the Company and its Representatives
shall not be prohibited under this Section 6.03 from taking any action permitted
by Sections 5.02(b) or (d). Parent and Sub will use reasonable efforts to
cooperate with the Company, at the Company's request, in the performance of the
Company's obligations in clauses (ii) and (iii) above.
SECTION 6.04. Stock Options. Prior to the Effective Time, the
Company Board shall adopt resolutions to terminate effective as of the Effective
Time each Company Employee Stock Option.
SECTION 6.05. Indemnification. (a) To the fullest extent permitted
by Law, the Surviving Corporation (or any successor entity) shall honor all the
Company's obligations to indemnify (including any obligations to advance funds
for expenses) the current or former directors or officers of the Company for
acts or omissions by such directors and officers occurring prior to the
Effective Time to the extent that such obligations of the Company exist on the
date of this Agreement, whether pursuant to the Company Charter, the Company
By-laws, the individual indemnity agreements set forth in Section 6.05 of the
Company Disclosure Letter or otherwise, and such obligations shall survive the
Merger and shall continue in full force and effect in accordance with the terms
of the Company Charter, the Company By-laws and such individual indemnity
agreements from the Effective Time until the expiration of the applicable
statute of limitations with respect to any claims against such directors or
officers arising out of such acts or omissions.
(b) From the Effective Time until May 15, 2004, the Surviving
Corporation shall maintain or cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company with respect to claims arising from or related to facts or events which
occurred at or before the Effective Time. Prior to the Effective Time, the
Company may obtain tail
48
coverage with respect to such policies, provided that the Company shall not pay
more than $500,000 with respect to premiums for such coverage. In the event that
the Company does not obtain such tail prior to the Effective Time, Parent or the
Surviving Corporation shall be required to obtain such tail, subject to the
limitations set forth above.
(c) Prior to entering into any agreement or arrangement with respect
to, or effecting, any proposed merger into or consolidation with any other
person or sale, exchange, dividend or other distribution or liquidation of all
or a significant portion of the Surviving Corporation's assets in one or a
series of transactions or any significant recapitalization or reclassification
of the Surviving Corporation's outstanding securities that does not directly or
indirectly provide for the assumption of the obligations of the Surviving
Corporation set forth in this Section 6.05 by the purchaser or successor entity
in such transaction, the Surviving Corporation shall arrange in connection
therewith alternative means of providing for the obligations of the Surviving
Corporation set forth in this Section 6.05, including the assumption of such
obligations by another party, insurance, surety bonds or the creation of an
escrow, in each case in an amount, upon terms and conditions and, if applicable,
from a nationally recognized or other creditworthy entity so that, thereafter,
the current or former directors and officers of the Company are in substantially
the same position as they were in immediately prior to the applicable
transaction.
SECTION 6.06. Fees and Expenses. (a) Except as provided below, all
fees and expenses incurred in connection with the Merger and the other
Transactions shall be paid by the party incurring such fees or expenses, whether
or not the Merger is consummated.
(b) The Company shall pay to Parent a fee of $350,000 if: (i) the
Company terminates this Agreement pursuant to Section 8.01(d)(ii); (ii) Parent
terminates this Agreement pursuant to Section 8.01(c)(ii); or (iii) (A) after
the date of this Agreement, any person makes a Company Takeover Proposal, (B)
the Merger shall not have occurred on or before the Outside Date (as defined in
Section 8.01(b)(i)), (C) this Agreement is thereafter
49
terminated by Parent or the Company pursuant to Section 8.01(b)(i) (but only if
the Company Stockholders Meeting has not been held by the date that is two days
prior to the date of such termination), and (D) within 12 months of such
termination, the Company consummates the transactions contemplated by a Company
Takeover Proposal (solely for the purposes of this Section 6.06(b)(iii)(D) and
the next sentence of this Section 6.06(b), the term Company Takeover Proposal
shall have the meaning set forth in the definition of Company Takeover Proposal
contained in Section 5.02(e) except that all references therein to "20%" shall
be deemed references to "40%"). Any fee due under this Section 6.06(b) shall be
paid by wire transfer of same-day funds, in the case of clauses (i) and (ii) of
the previous sentence, on the date of termination of this Agreement or the next
business day if the date of termination of this Agreement is not a business day,
or in the case of clause (iii) of the previous sentence, on the date on which
the Company consummates the transactions contemplated by such Company Takeover
Proposal.
SECTION 6.07. Public Announcements. Parent and Sub, on the one hand,
and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Merger and the
other Transactions and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by
applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange.
SECTION 6.08. Transfer Taxes. All stock transfer, real estate
transfer, documentary, stamp, recording and other similar Taxes (including
interest, penalties and additions to any such Taxes) ("Transfer Taxes") incurred
in connection with the Transactions shall be paid by the Surviving Corporation,
and the Company shall cooperate with Parent and Sub in preparing, executing and
filing any Tax Returns with respect to such Transfer Taxes.
SECTION 6.09. Rights Agreements; Consequences if Rights Triggered.
Except as approved in writing by Parent or contemplated by this Agreement, the
Company Board shall
50
not (i) amend the Company Rights Agreement, (ii) redeem the Company Rights or
(iii) take any action with respect to, or make any determination under, the
Company Rights Agreement, in each case, unless the Company Board determines in
good faith, after compliance with applicable provisions of this Agreement and
after consultation with outside counsel, that such action is necessary to do so
to comply with its fiduciary duties.
SECTION 6.10. No Additional Representations.
(a) Parent acknowledges and agrees that (i) it is entering into this
Agreement and the Transactions without any representation or warranty, express
or implied, by the Company or any of its Representatives except as expressly set
forth in this Agreement and (ii) the accuracy, completeness or reasonableness of
any projection or forecast delivered by or on behalf of the Company to Parent,
Sub or any of their Representatives shall not be considered in determining
whether any condition to Parent's or Sub's obligations with respect to the
Merger has been satisfied.
(b) The Company acknowledges and agrees that (i) it is entering into
this Agreement and the Transactions without any representation or warranty,
express or implied, by Parent, Sub or any of their Representatives except as
expressly set forth in this Agreement and (ii) the accuracy, completeness or
reasonableness of any projection or forecast delivered by or on behalf of
Parent, Sub or any of their Representatives to the Company shall not be
considered in determining whether any condition to the Company's obligations
with respect to the Merger has been satisfied.
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation To Effect The
Merger. The respective obligation of each party hereto to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
51
(a) Stockholder Approval. The Company shall have obtained the
Company Stockholder Approval and the Unaffiliated Stockholders Approval.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or Law preventing the consummation of the Merger, or
preventing Parent from owning the shares of the Surviving Corporation or from
operating any material part of the business of the Surviving Corporation and its
subsidiaries, taken as a whole, shall be in effect; provided, however, that
prior to asserting this condition the applicable party shall have used its
reasonable efforts to prevent the entry of any such injunction or other order
and to appeal as promptly as possible any such injunction or other order that
may be entered.
SECTION 7.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Company in this Agreement shall be true and correct in all
material respects, as of the date of this Agreement and as of the Closing Date,
except to the extent that such representations and warranties expressly relate
to an earlier date (in which case on and as of such earlier date).
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects any material obligation and complied in
all material respects with any material agreement or covenant of the Company to
be performed or complied with by it under this Agreement prior to or at the time
of the Closing.
(c) Company Certificate. The Company shall have furnished a
certificate, signed by its Chief Executive Officer, certifying compliance with
the conditions set forth in Sections 7.02(a) and (b).
52
(d) Dissenting Shareholders. No more than 16% of the shares of
Company Common Stock outstanding immediately prior to the Effective Time shall
be Appraisal Shares.
(e) Litigation. Other than pending suits, actions or proceedings as
disclosed on the Company Disclosure Letter, any pending or threatened suits,
actions or proceedings by Parent, Sub or any of their affiliates, or any
derivative suit, action or proceeding pending in Delaware that under applicable
and controlling law would expire, or with respect to which all plaintiffs would
lose standing, at the Effective Time, there shall be no pending or threatened
suit, action or proceeding that advances non-frivolous claims against Parent,
Sub, the Company or any Company Subsidiary (i) that Parent reasonably believes
would not be covered by the Insurance Policies, unless the damages sought that
would not be covered by the Insurance Policies, would not, in Parent's
reasonable judgment, exceed a total of $250,000 for such suits, actions or
proceedings, or (ii) that seeks any equitable relief, which, if successful,
would prevent (A) the consummation of the Merger, provided that such action,
suit or proceeding seeking to prevent the consummation of the Merger is pending,
(B) Parent from owning the shares of the Surviving Corporation or (C) Parent
from operating any material part of the business of the Surviving Corporation
and its subsidiaries, taken as a whole.
(f) Management of CART, Inc. The by-laws of CART, Inc., a Michigan
corporation ("CART"), shall have been amended to disband the Franchise Board,
and to provide for the management of CART by a board of directors to be elected
by the Company, as sole stockholder of CART.
(g) No Bankruptcy. The Company shall generally be able to pay its
debts as and when such debts become due, shall not have admitted in writing its
inability to pay its debts generally, and shall not have made a general
assignment for the benefit of creditors. No petition shall have been filed by or
against the Company seeking liquidation, winding up, reorganization, relief,
appointment of a receiver, trustee or similar official for it or for any
substantial part of its property or assets, or to commence a case as to the
Company pursuant to 11
53
U.S.C. Section 301 or 303 or any similar state law (a "Bankruptcy Petition"),
unless such Bankruptcy Petition is dismissed prior to the Effective Time and in
no event later than sixty (60) days of its filing. No such Bankruptcy Petition
shall be pending as of the Closing.
(h) Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred and be continuing a Company Material Adverse Effect.
SECTION 7.03. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub in this Agreement shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of the
Closing Date, except to the extent such representations and warranties expressly
relate to an earlier date (in which case on and as of such earlier date).
(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed in all material respects any material obligation of Parent
or Sub, as the case may be, and complied in all material respects with any
material agreement or covenant of Parent or Sub, as the case may be, to be
performed or complied with by it under this Agreement prior to or at the time of
the Closing.
SECTION 7.04. Frustration of Closing Conditions. None of the
Company, on the one hand, or Parent or Sub, on the other hand, may rely on the
failure of any condition set forth in Article VII to be satisfied if such
failure was caused primarily by the failure of the Company, on the one hand, or
Parent or Sub, on the other hand, to use reasonable best efforts to consummate
the Merger and the other Transactions, as required by and subject to Section
6.03.
54
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination. This Agreement may be terminated at any
time:
(a) prior to the Effective Time, whether before or after receipt of
the Company Stockholder Approval or the Unaffiliated Stockholders Approval, by
mutual written consent of the Parent, Sub and the Company;
(b) prior to the Effective Time, whether before or after receipt of
the Company Stockholder Approval or the Unaffiliated Stockholders Approval, by
either Parent or the Company:
(i) if the Merger does not occur on or before the later of
February 15, 2004 and the date that is 61 days from the date of any
filing of an involuntary Bankruptcy Petition that (A) the Company
reasonably expects will be dismissed, (B) the Company is using its
reasonable best efforts to have dismissed and (C) is filed prior to
February 15, 2004 (the "Outside Date"), unless the failure to
consummate the Merger is the result of a material breach of this
Agreement by the party seeking to terminate this Agreement;
(ii) if any Governmental Entity issues an order or injunction
or takes any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, injunction or other
action shall have become final and nonappealable, unless such order,
injunction or other action is the result of a material breach of
this Agreement by the party seeking to terminate this Agreement;
provided, however, that prior to seeking to terminate, such party
shall have used its reasonable best effects to prevent such order,
injunction or other action and to appeal as promptly as practicable
any such orders, injunctions or other actions; or
55
(iii) if, upon a vote at a duly held meeting to obtain the
Company Stockholder Approval or the Unaffiliated Stockholders
Approval, as the case may be, the Company Stockholder Approval or
the Unaffiliated Stockholders Approval, as the case may be, is not
obtained; provided, however, that this Agreement may not be
terminated by a party pursuant to this Section 8.01(b)(iii) if such
party is then in breach of Section 6.01(c);
(c) (i)prior to the Effective Time, whether before or after receipt
of the Company Stockholder Approval or the Unaffiliated Stockholders Approval,
by Parent if the Company breaches or fails to perform in any material respect
any of its representations, warranties or covenants contained in this Agreement,
which breach or failure to perform (A) would give rise to the failure of a
condition set forth in Section 7.01 or Section 7.02, and (B) cannot be or has
not been cured within 30 days after the giving of written notice to the Company
of such breach; or
(ii) prior to obtaining each of the Company Stockholder
Approval and the Unaffiliated Stockholders Approval, by Parent (A)
in the event an Adverse Recommendation Change has occurred, (B) if,
pursuant to Section 6.09 and without the approval in writing of
Parent, the Company Board amends the Company Rights Agreement,
redeems the Company Rights or takes any action with respect to, or
makes any determination under, the Company Rights Agreement to
comply with its fiduciary duties and, as a result of such amendment,
redemption, action or determination, any person other than Parent or
any of its affiliates is permitted to become an Acquiring Person (as
currently defined in the Company Rights Agreement) or (C) the
Company enters into any definitive agreement to implement a Company
Takeover Proposal;
(d) (i)prior to the Effective Time, whether before or after receipt
of the Company Stockholder Approval or the Unaffiliated Stockholders Approval,
by the Company if Parent or Sub breaches or fails to perform in any material
respect any of its representations, warranties or
56
covenants contained in this Agreement, which breach or failure to perform cannot
be or has not been cured within 30 days after the giving of written notice to
Parent of such breach; or
(ii) prior to obtaining each of the Company Stockholder
Approval and the Unaffiliated Stockholders Approval by the Company
in accordance with Section 8.05(b); provided, however, that the
Company shall have complied with all provisions thereof, including
the notice provisions therein; or
(e) at any time during the period from the date of this Agreement
until 5:00 p.m., New York City time, on September 18, 2003 or any earlier time
that Parent identifies in writing to the Company (the "Due Diligence Termination
Date"), by Parent if Parent in its discretion determines that it is inadvisable
to proceed with the Transactions for any reason whatsoever.
SECTION 8.02. Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than Section
3.17, Section 4.06, Section 4.07, the last sentence of Section 6.02, Section
6.06, this Section 8.02 and Article IX, which provisions shall survive such
termination, and except to the extent that such termination results from the
willful and material breach by a party of any representation, warranty or
covenant set forth in this Agreement. The Confidentiality Agreements shall
survive termination of this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties hereto at any time before or after receipt of the Company Stockholder
Approval or the Unaffiliated Stockholders Approval, as the case may be;
provided, however, that after receipt of the Company Stockholder Approval, there
shall be made no amendment or waiver that by applicable Law requires further
approval by the stockholders of the Company without the further approval of such
stockholders. Subject to Section 9.04,
57
this Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
SECTION 8.04. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto may (a) extend the time for the performance of any of
the obligations or other acts of the other parties, (b) waive any inaccuracies
in the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 8.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. Any failure or delay by any party hereto to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 8.05. Procedure for Termination, Amendment, Extension or
Waiver. (a) A termination of this Agreement pursuant to Section 8.01, an
amendment of this Agreement pursuant to Section 8.03 or an extension or waiver
pursuant to Section 8.04 shall, in order to be effective, require in the case of
Parent, Sub or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors.
(b) The Company may terminate this Agreement pursuant to Section
8.01(d)(ii) only if (i) the Company Board has received a Company Takeover
Proposal, (ii) the Company Board shall have determined in good faith that such
Company Takeover Proposal constitutes a Superior Company Proposal, (iii) the
Company has notified Parent in writing of the determination described in clause
(ii) above, which notice shall describe all material terms of such Company
Takeover Proposal; (iv) at least three business days following receipt by Parent
of the notice referred to in clause (iii) above, and taking into account any
revised proposal made by Parent since receipt of the notice referred to in
clause (iii) above, such Superior Company Proposal remains a Superior Company
Proposal and the Company Board has again made the determination referred to in
clause (ii) above (although no additional time period shall be required
following such determination), (v) the
58
Company is in compliance with Section 5.02, (vi) the Company Board concurrently
approves, and the Company concurrently enters into, a definitive agreement
providing for the implementation of such Superior Company Proposal and (vii) the
Company has paid Parent the fee pursuant to Section 6.06(b).
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.01 shall not limit any covenant or agreement of the parties hereto
which by its terms contemplates performance after the Effective Time.
SECTION 9.02. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties hereto at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Open Wheel Racing Series LLC
c/o 21st Century Racing Holdings LLC
000 Xxxxxxxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
Fax: (000) 000-0000
with copies to:
Open Wheel Racing Series LLC
c/x Xxxxxx Capital, L.L.C.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
59
Open Wheel Racing Series LLC
c/o Big Bang Racing LLC
000 X. Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx
Fax: (000) 000-0000
Xxxxxx Xxxxxx White & XxXxxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxx, Esq.
Fax: (000) 000-0000
Xxxxxxxx Racing, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx, Esq.
Fax: (000) 000-0000
XxXxxxxxxx & Xxxxxxxx, LLP
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx XxXxxxxxxx, Esq.
Fax: (000) 000-0000
(b) if to the Company, to
0000 Xxxxxxxx Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Carlisle Peet, Esq.
General Counsel
Fax: (000) 000-0000
60
with a copy to:
Cravath, Swaine & Xxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
SECTION 9.03. Definitions. For purposes of this Agreement:
An "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person. For the purposes of this
Agreement, (a) none of Parent, Sub and any Disqualified Holder is an affiliate
of the Company and (b) the Company is not an affiliate of Parent, Sub or any
Disqualified Holder.
The "Company's Knowledge" means matters of which the officers and
directors of the Company or any of the Company's Subsidiaries know or should
have known after reasonable inquiry.
A "material adverse effect" on a party means any state of facts,
change, development, effect, condition or occurrence that is material and
adverse to the business, financial condition or results of operations of such
party and its subsidiaries, taken as a whole, or that materially impairs the
ability of such party to perform its obligations under this Agreement or
consummate the Merger.
A "person" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
A "Representative" of any person means any officer, director or
employee of, or any investment banker, attorney or other advisor or
representative of, such person.
61
A "subsidiary" of any person means another person, an amount of the
voting securities or other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
SECTION 9.04. Interpretation; Disclosure Letters. (a) When a
reference is made in this Agreement to a Section, Exhibit or Schedule, such
reference shall be to a Section of, or an Exhibit or Schedule to, this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The words "hereof", "herein",
"hereby" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. The words "date hereof" shall refer to the date of this
Agreement. The term "or" is not exclusive. The word "extent" in the phrase "to
the extent" shall mean the degree to which a subject or other thing extends, and
such phrase shall not mean simply "if". The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms. Any agreement or instrument defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement or
instrument as from time to time amended, modified or supplemented. References to
a person are also to its permitted successors and assigns.
(b) Any matter disclosed in any section of the Company Disclosure
Letter shall be deemed disclosed for all purposes and all sections of the
Company Disclosure Letter if the reference to such matter in the Company
Disclosure Letter makes apparent the relationship between the matter disclosed
and the other representation that the disclosure qualifies.
62
(c) The Company will deliver the Company Disclosure Letter to Parent
no later than 5:00 p.m. New York City time on September 15, 2003 or such earlier
time and date as the parties agree to in writing (the "Final Disclosure Date")
and will xxxx such document as "final" (the "Final Company Disclosure Letter").
The Company acknowledges that Parent has not consented or agreed to the Company
Disclosure Letter, or any part thereof, and that the Company Disclosure Letter
will have no force or effect until Parent has approved in writing the Final
Company Disclosure Letter. If Parent has not approved in writing the Final
Company Disclosure Letter, or any amendment thereto, prior to the Due Diligence
Termination Date, Parent shall be deemed to have terminated this Agreement
pursuant to Section 8.01(e).
SECTION 9.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced as a result of any
applicable Law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
SECTION 9.06. Counterparts. This Agreement may be executed in one or
more counterparts (including via telecopy or facsimile), all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties hereto and delivered
to the other parties. Each party hereto need not sign the same counterpart.
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, taken together with the Company Disclosure Letter and the
Confidentiality Agreements, (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both
63
written and oral, among the parties hereto with respect to the Transactions and
(b) except for the provisions of Article II Section 6.05, are not intended to
confer upon any person other than the parties hereto any rights or remedies.
SECTION 9.08. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
SECTION 9.09. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties hereto
without the prior written consent of the other parties. Any purported assignment
without such consent shall be void. Subject to the preceding sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and assigns.
SECTION 9.10. Enforcement; Waiver of Jury Trial. (a) The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any Delaware state court or any Federal court located in
the State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto
irrevocably and unconditionally submits to the exclusive jurisdiction of any
Delaware state court or any Federal court located in the State of Delaware for
the purposes of any suit, action or other proceedings arising out of this
Agreement or any Transaction (and each party agrees that no such suit, action or
proceeding arising out of to this Agreement or any Transaction shall be brought
by it or any of its affiliates except in such courts). Each party hereto further
agrees that, to the fullest extent permitted by applicable Law, service of any
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process, summons, notice or document by U.S. registered mail to such party's
respective address set forth above shall be effective service of process for any
suit, action or proceeding in Delaware with respect to any matters to which it
has submitted to jurisdiction in this Section 9.10. Each of the parties hereto
irrevocably and unconditionally waives (and agrees not to plead or claim) any
objection to the laying of venue of any suit, action or proceeding arising out
of this Agreement or any Transaction in any Delaware State court or any Federal
court located in the State of Delaware, or that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
(b) Each party hereto hereby waives, to the fullest extent permitted
by applicable Law, any right it may have to a trial by jury in respect of any
suit, action or proceeding directly or indirectly arising out of, under or in
connection with this Agreement or any Transaction. Each party hereto, (i)
certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such party would not, in the event of
any suit, action or proceeding, seek to enforce the foregoing waiver and (ii)
acknowledges that it and the other parties hereto have been induced to enter
into this Agreement by, among other things the mutual waivers and certifications
in this Section 9.10(b).
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IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed
this Agreement, all as of the date first written above.
OPEN WHEEL RACING SERIES LLC,
by
/s/ Xxxxx Xxxxxxxxx
--------------------------
Name: Xxxxx Xxxxxxxxx
Title: Manager
OPEN WHEEL ACQUISITION CORPORATION,
by
/s/ Xxxxx Xxxxxxxxx
--------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
CHAMPIONSHIP AUTO RACING TEAMS, INC.,
by
/s/ Xxxxxxxxxxx Xxxx
---------------------------
Name: Xxxxxxxxxxx Xxxx
Title: President and CEO
