AGREEMENT AND PLAN OF MERGER
among
GENERAL ELECTRIC COMPANY,
FOUR POINTS ACQUISITION, INC.
and
XXXXXX INDUSTRIES, INC.
Dated as of July 16, 2000
TABLE OF CONTENTS
Page
Article I THE OFFER....................................................1
Section 1.1 The Offer..........................................1
Section 1.2 Company Action.....................................3
Section 1.3 Directors..........................................4
Article II THE MERGER..................................................5
Section 2.1 The Merger.........................................5
Section 2.2 Effect of the Merger...............................5
Section 2.3 Closing............................................5
Section 2.4 Consummation of the Merger.........................6
Section 2.5 Articles of Incorporation; By-Laws; Directors
and Officers......................................6
Section 2.6 Effect on Capital Stock............................6
Section 2.7 Exchange of Certificates...........................7
Section 2.8 Stock Options......................................9
Section 2.9 Dissenting Shares.................................10
Section 2.10 Tax Consequences..................................10
Section 2.11 Adjustment of Exchange Ratio......................10
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............10
Section 3.1 Organization and Qualification....................11
Section 3.2 Subsidiaries......................................11
Section 3.3 Authority Relative to Agreements..................12
Section 3.4 Non-Contravention.................................12
Section 3.5 Capitalization....................................12
Section 3.6 SEC Filings.......................................13
Section 3.7 Financial Statements..............................13
Section 3.8 Absence of Certain Changes or Events..............14
Section 3.9 Governmental Approvals............................14
Section 3.10 Compliance with Laws; No Default..................15
Section 3.11 Information Supplied..............................15
Section 3.12 Litigation........................................15
Section 3.13 Intellectual Property Rights......................16
Section 3.14 Taxes.............................................18
Section 3.15 Employee Benefit Plans............................19
Section 3.16 Environmental Matters.............................21
Section 3.17 Customer Relationships............................21
Section 3.18 Certain Transactions..............................22
Section 3.19 Title to Properties; Absence of Liens and
Encumbrances.....................................22
Section 3.20 Insurance.........................................22
Section 3.21 State Takeover Statutes; Certain Charter
Provisions.......................................23
Section 3.22 Rights Agreement..................................23
Section 3.23 Material Contracts................................23
Section 3.24 Opinion of Financial Advisor......................24
Section 3.25 Brokers...........................................24
Article IV REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION...25
Section 4.1 Organization and Qualification.....................25
Section 4.2 Authorization of Agreement, Non-Contravention,
Etc...............................................25
Section 4.3 SEC Filings........................................26
Section 4.4 Financial Statements...............................26
Section 4.5 Absence of Certain Changes or Events...............26
Section 4.6 Parent Shares......................................26
Section 4.7 Information Supplied...............................27
Section 4.8 Reorganization.....................................27
Section 4.9 Operations and Assets of Acquisition...............27
Section 4.10 Brokers............................................27
Article V CERTAIN AGREEMENTS..........................................27
Section 5.1 Conduct of the Company's Business..................27
Section 5.2 Stockholder Approval; Preparation of Proxy
Statement.........................................29
Section 5.3 Access to Information..............................30
Section 5.4 Further Assurances.................................31
Section 5.5 Inquiries and Negotiations.........................31
Section 5.6 Notification of Certain Matters, Etc,..............34
Section 5.7 Indemnification....................................34
Section 5.8 Employee Benefits..................................35
Section 5.9 Section 16 Matters.................................35
Section 5.10 Tax Treatment......................................36
Section 5.11 Affiliate Letters..................................36
Article VI CONDITIONS TO THE MERGER...................................36
Section 6.1 Conditions to the Obligations of the Parties.......36
Article VII TERMINATION AND ABANDONMENT...............................36
Section 7.1 Termination and Abandonment........................36
Section 7.2 Effect of Termination..............................37
Article VIII MISCELLANEOUS............................................38
Section 8.1 Nonsurvival of Representations and Warranties......38
Section 8.2 Expenses, Etc......................................38
Section 8.3 Publicity..........................................38
Section 8.4 Execution in Counterparts..........................38
Section 8.5 Notices............................................38
Section 8.6 Waivers............................................40
Section 8.7 Entire Agreement...................................40
Section 8.8 Applicable Law.....................................40
Section 8.9 Binding Effect, Benefits...........................41
Section 8.10 Assignability......................................41
ii
Section 8.11 Amendments.........................................41
Section 8.12 Interpretation.....................................41
iii
Index of Defined Terms
----------------------
Page
Acquisition.......................................................1
Alternative Transaction..........................................31
Certificates......................................................7
Closing...........................................................6
Closing Date......................................................6
Code..............................................................1
Company...........................................................1
Company Option Plans..............................................9
Company Plans....................................................20
Company SEC Filings..............................................13
Company Stock Options.............................................9
Company Stock Plans..............................................13
Company Stock Rights.............................................13
Company Stockholder Approval.....................................12
Continuing Directors..............................................5
D&O Insurance....................................................34
Dissenting Shares................................................10
Dissenting Stockholder...........................................10
Effective Time....................................................6
Environmental Event..............................................22
ERISA............................................................20
ERISA Affiliate..................................................21
Exchange Act......................................................1
Exchange Agent....................................................7
Exchange Fund.....................................................7
Exchange Ratio....................................................2
Excluded Shares...................................................7
Form S-4..........................................................3
Governmental Entity..............................................15
HSR Act..........................................................15
Indemnified Liabilities..........................................34
Indemnified Persons..............................................34
Insurance Policies...............................................23
Intellectual Property............................................17
Licensed Intellectual Property...................................17
Licenses.........................................................17
Liens............................................................12
Loss Contract....................................................22
Material Adverse Effect..........................................11
Material Contracts...............................................24
Merger............................................................1
Merger Consideration..............................................7
MGBCL.............................................................3
Minimum Condition.................................................2
Net Variable Margin..............................................22
NYSE..............................................................2
Offer.............................................................1
Offer Documents...................................................3
Option Agreement..................................................1
Outside Date......................................................3
Owned Intellectual Property......................................17
Parent............................................................1
Parent Options....................................................9
Parent SEC Filings...............................................26
Parent Shares.....................................................2
Preliminary Prospectus............................................3
Payment Event....................................................33
Proxy Statement..................................................15
Rights Agreement.................................................13
Schedule 14D-9....................................................4
SEC...............................................................3
Securities Act....................................................3
Shares............................................................1
Stockholders Meeting.............................................29
Subsidiary.......................................................12
Superior Proposal................................................31
Support Agreement.................................................1
Surviving Corporation.............................................1
Tax..............................................................19
Tax Return.......................................................19
Third Party......................................................31
Third Party Software.............................................17
Transaction.......................................................1
Unanimous.........................................................3
Violation........................................................15
ii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 16, 2000, among GENERAL
ELECTRIC COMPANY, a New York corporation ("Parent"), FOUR POINTS ACQUISITION,
INC., a Missouri corporation and a wholly owned subsidiary of Parent
("Acquisition"), and XXXXXX INDUSTRIES, INC., a Missouri corporation (the
"Company").
WHEREAS, the Board of Directors of the Company and Acquisition each has,
in light of and subject to the terms and conditions set forth herein, (i)
determined that a business combination between Parent and the Company is fair to
their respective stockholders and in the best interests of such stockholders and
(ii) accordingly has approved an exchange offer (the "Offer") as described
herein and a merger (the "Merger") of Acquisition with and into the Company,
with the Company as the Surviving Corporation (the "Surviving Corporation"),
upon the terms and subject to the conditions set forth herein;
WHEREAS, for Federal income tax purposes, it is intended that the Offer
and the Merger shall be treated as an integrated transaction (together, the
"Transaction") and shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, in order to induce Parent to execute and deliver this
Agreement, (i) Parent and the Company are entering into a stock option agreement
(the "Option Agreement"), pursuant to which the Company is granting Parent the
option to purchase shares of common stock, par value $0.25 per share (the
"Shares"), of the Company upon the terms and subject to the conditions set forth
therein and (ii) Parent and certain stockholders of the Company are entering
into a support agreement (the "Support Agreement"), pursuant to which such
stockholders have agreed to tender their Shares into the Offer and vote for the
Merger;
WHEREAS, by resolutions duly adopted, the respective Boards of Directors
of the Company and Acquisition have approved and adopted this Agreement and the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, the Company, Parent and Acquisition hereby agree as
follows:
THE OFFER
Section 1.1 The Offer.
(a) Provided that this Agreement has not been terminated pursuant to the
terms hereof, as promptly as reasonably practicable, but no later than the tenth
business day after the public announcement of the execution of this Agreement
(counting the business day on which such announcement is made), Acquisition
shall commence (within the meaning of Rule 14d-2 under the Securities Exchange
Act of 1934 (the "Exchange Act")), the Offer to exchange a
number of duly authorized, validly issued, fully paid and non-assessable shares
of common stock, par value $0.06 per share (the "Parent Shares"), of Parent
equal to the Exchange Ratio for each outstanding Share, including the associated
Rights issued pursuant to the Rights Agreement (as defined herein). The
"Exchange Ratio" shall mean $30 divided by the Average Parent Price. The
Exchange Ratio shall be rounded to the nearest ten-thousandth of a share. The
"Average Parent Price" shall mean the average of the daily volume-weighted sales
prices per share of the Parent Shares on the New York Stock Exchange, Inc., (the
"NYSE") (as reported by Bloomberg Financial Markets or, if not reported thereby,
any other authoritative source) for each of the ten consecutive trading days
ending on the trading day that is two trading days prior to the date on which
the Shares are accepted for payment in the Offer.
(b) The obligation of Acquisition to accept for payment and to pay for any
Shares tendered pursuant to the Offer shall be subject only to (i) the condition
that there shall be validly tendered a number of Shares which, together with the
Shares then beneficially owned by Parent (not counting any Shares issuable
pursuant to the Option Agreement), represents at least two-thirds of the total
number of outstanding Shares, assuming the exercise of all options, rights and
convertible securities issued by the Company which may be exercised or converted
prior to the Effective Time and the issuance of all Shares that the Company is
obligated to issue thereunder (the "Minimum Condition"), and (ii) the other
conditions set forth in Annex I hereto. Acquisition expressly reserves the right
to increase the Exchange Ratio or to make any other changes in the terms and
conditions of the Offer; provided, however, that (i) the Minimum Condition may
be amended or waived only with the prior written consent of the Company and (ii)
no change may be made that changes the form of consideration to be paid,
decreases the price per Share or the number of Shares sought in the Offer,
imposes conditions to the Offer in addition to those set forth in Annex I,
extends the expiration date of the Offer beyond the initial expiration date of
the Offer (except as provided in (c), below) or makes any other change which is
adverse to the holders of the Shares. Subject to the terms and conditions of the
Offer and this Agreement, Acquisition shall accept for payment all Shares
validly tendered and not withdrawn pursuant to the Offer as soon as it is
permitted to do so under applicable law and shall pay for such Shares promptly
thereafter. Notwithstanding anything to the contrary set forth herein, no
certificates representing fractional Parent Shares shall be issued in connection
with the exchange of Parent Shares for Shares upon consummation of the Offer,
and in lieu thereof each tendering stockholder who would otherwise be entitled
to a fractional Parent Share in the Offer will be paid an amount in cash equal
to the product obtained by multiplying (A) the fractional share interest to
which such holder would otherwise be entitled by (B) the closing price of the
Parent Shares on the NYSE (as reported in The Wall Street Journal or, if not
reported therein, any other authoritative source) on the date Acquisition
accepts Shares for payment in the Offer.
(c) The Offer shall initially be scheduled to expire 20 business days
following the commencement thereof. If the conditions to the Offer are not
satisfied or waived on any scheduled expiration date of the Offer and such
conditions could reasonably be expected to be satisfied, Parent shall cause
Acquisition to, and Acquisition shall, extend the Offer, from time to time for
such amount of time as is reasonably necessary to permit such conditions to be
satisfied or waived; provided that (i) no single extension shall exceed 10
business days and (ii) Acquisition shall not be required to extend the Offer
beyond November 30, 2000 (the "Outside Date"). Notwithstanding the foregoing,
Acquisition may, without the consent of the Company,
2
(i) extend the Offer for any period required by any rule or regulation of the
Securities and Exchange Commission (the "SEC") applicable to the Offer and (ii)
if more than two-thirds but less than 90% of the outstanding Shares shall have
been validly tendered pursuant to the Offer as of the scheduled or extended
expiration date, extend the Offer for an aggregate period of not more than ten
business days beyond the latest expiration date that would otherwise be
permitted under clause (i) of this sentence.
(d) As soon as practicable on the date of commencement of the Offer, Parent
shall file with the SEC a registration statement on Form S-4 to register the
offer and sale of Parent Shares pursuant to the Offer (the "Form S-4"). The Form
S-4 will include a preliminary prospectus containing the information required
under Rule 14d-4(b) promulgated under the Exchange Act (the "Preliminary
Prospectus"). As soon as practicable on the date of commencement of the Offer,
Parent and Acquisition shall (i) file with the SEC a Tender Offer Statement on
Schedule TO with respect to the Offer which will contain or incorporate by
reference all or part of the Preliminary Prospectus and form of the related
letter of transmittal and (ii) cause the Offer Documents to be disseminated to
holders of Shares. Parent and Acquisition agree that they shall cause the Form
S-4, the Schedule TO, the Offer to Purchase and all amendments or supplements
thereto (which together constitute the "Offer Documents") to comply in all
material respects with the Exchange Act, the Securities Act of 1933 (the
"Securities Act") and the rules and regulations thereunder and other applicable
laws. Each of Parent, Acquisition and the Company agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect, and Parent and Acquisition further agree to take all steps necessary to
cause the Offer Documents as so corrected to be filed with the SEC and the other
Offer Documents as so corrected to be disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws. The
Company and its counsel shall be given reasonable opportunity to review and
comment on the Offer Documents prior to the filing of such documents with the
SEC. Parent and Acquisition agree to provide the Company and its counsel with
any comments Parent, Acquisition or their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after receipt of such
comments.
Section 1.2 Company Action. The Company hereby consents to the Offer and
represents that its Board of Directors, at a meeting duly called and held, has
(i) unanimously determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, are fair to and in the best
interests of the Company's stockholders, (ii) unanimously approved and adopted
this Agreement and the transactions contemplated hereby, including the Offer and
the Merger, in accordance with the requirements of the Missouri General and
Business Corporation Law ("MGBCL") and (iii) subject to Section 5.5(b) of this
Agreement, unanimously resolved to recommend that stockholders of the Company
accept the Offer and tender their Shares pursuant to the Offer and approve and
adopt this Agreement and the Merger. The Company hereby consents to the
inclusion in the Offer Documents of the recommendations of the Company's Board
of Directors described in this Section 1.2(a). As used herein "unanimous" or
similar formulations when used to refer to actions by the Company Board shall
mean "by the unanimous vote of the directors present, with one director absent.
(b) As soon as practicable on the day that the Offer is commenced, the
Company shall file with the SEC and disseminate to holders of Shares, in each
case as and to the extent required by applicable federal securities laws, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9")
3
that, subject to its fiduciary duties under applicable law, shall reflect the
recommendations of the Company's Board of Directors referred to above. The
Company agrees that it shall cause the Schedule 14D-9 to comply in all material
respects with the Exchange Act and the rules and regulations thereunder and
other applicable laws. The Company agrees to provide Parent and its counsel with
any comments the Company or its counsel may receive from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the receipt of such comments.
The Company, Parent and Acquisition each agree promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false or misleading in any material respect. The
Company agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. Parent and its counsel shall be given an opportunity to review and comment
on the Schedule 14D-9 prior to its being filed with the SEC.
(c) The Company will promptly furnish Parent with a list of its
stockholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of Shares and lists of
securities positions of Shares held in stock depositories, in each case true and
correct as of the most recent practicable date, and will provide to Parent such
additional information (including updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent may
reasonably request in connection with the Offer. Parent and Acquisition and
their agents shall hold in confidence the information contained in any such
labels, listings and files, will use such information only in connection with
the Offer and the Merger and, if this Agreement shall be terminated, will, upon
request, deliver, and will use their reasonable efforts to cause their agents to
deliver, to the Company (or destroy) all copies and any extracts or summaries
from such information then in their possession or control.
Section 1.3 Directors. Effective upon the acceptance for payment of any
Shares pursuant to the Offer, Parent shall be entitled to designate the number
of directors, rounded up to the next whole number, on the Company's Board of
Directors that equals the product of (i) the total number of directors on the
Company's Board of Directors (giving effect to the election of any additional
directors pursuant to this Section) and (ii) the percentage that the number of
Shares beneficially owned by Parent and/or Acquisition (including Shares
accepted for payment) bears to the total number of Shares outstanding, and the
Company shall take all action necessary to cause Parent's designees to be
elected or appointed to the Company's Board of Directors, including increasing
the number of directors, and seeking and accepting resignations of incumbent
directors. At such time, to the extent requested by Parent, the Company will
also use its best efforts to cause individuals designated by Parent to
constitute the number of members, rounded up to the next whole number, on (i)
each committee of the Board and (ii) each board of directors of each Subsidiary
of the Company (and each committee thereof) that represents the same percentage
as such individuals represent on the Board of Directors of the Company.
Notwithstanding the provisions of this Section 1.3, the parties hereto shall use
their respective best efforts to ensure that at least two of the members of the
Company's Board of Directors shall, at all times prior to the Effective Time, be
directors of the Company who were directors of the Company on the date hereof
(the "Continuing Directors"); provided that if there shall be in office fewer
than two Continuing Directors for any reason, the Company's Board of Directors
shall cause a person designated by the remaining Continuing Director to fill
such vacancy who shall
4
be deemed to be a Continuing Director for all purposes of this Agreement, or if
no Continuing Directors then remain, the other directors of the Company then in
office shall designate two persons to fill such vacancies who are not officers
or employees or affiliates of the Company, Parent or Acquisition or any of their
respective Subsidiaries and such persons shall be deemed to be Continuing
Directors for all purposes of this Agreement.
(b) The Company's obligations to appoint Parent's designees to the
Company's Board of Directors shall be subject to Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all
actions, and shall include in the Schedule 14D-9 such information with respect
to the Company and its officers and directors, as Section 14(f) and Rule 14f-1
require in order to fulfill its obligations under this Section, so long as
Parent shall have provided to the Company on a timely basis the information
referred to in the following sentence. Parent shall supply to the Company in
writing and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
(c) Following the election or appointment of Parent's designees pursuant to
Section 1.3(a) and until the Effective Time, the approval of a majority of the
Continuing Directors shall be required to authorize (and such authorization
shall constitute the authorization of the Company's Board of Directors and no
other action on the part of the Company, including any action by any other
director of the Company, shall be required to authorize) any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Company's Board of Directors, any extension of time for performance of any
obligation or action hereunder by Parent or Acquisition, any waiver of
compliance with any of the agreements or conditions contained herein for the
benefit of the Company, any consent or action by the Board of Directors of the
Company hereunder and any other action of the Company hereunder which adversely
affects the holders of Shares (other than Parent or Acquisition).
Article II.
THE MERGER
Section 2.1 The Merger.
Subject to the terms and conditions of this Agreement, at the Effective
Time (as hereinafter defined), in accordance with this Agreement and the MGBCL,
Acquisition shall be merged with and into the Company. Following the Merger, the
separate existence of Acquisition shall cease and the Company shall continue as
the surviving corporation.
Section 2.2 Effect of the Merger.
Upon the effectiveness of the Merger, the Surviving Corporation shall
succeed to and assume all the rights and obligations of the Company and
Acquisition in accordance with the MGBCL and the Merger shall otherwise have the
effects set forth in the applicable provisions of the MGBCL.
Section 2.3 Closing.
5
Subject to the satisfaction or waiver of the conditions to the obligations
of the parties to effect the Merger set forth herein, the consummation of the
Merger (the "Closing") will take place as promptly as practicable, but in no
event later than 10:00 a.m. on the second business day following the
satisfaction or waiver of all the conditions (other than conditions which, by
their nature are to be satisfied at closing, but subject to those conditions) to
the obligations of the parties to effect the Merger set forth herein (the
"Closing Date"), at the offices of Xxxxx Xxxxxxxxxx XXX, Xxx Xxxx, Xxx Xxxx
00000, unless another time, date or place is agreed to by the parties hereto.
Section 2.4 Consummation of the Merger.
Upon the Closing, the parties hereto will cause the Merger to be
consummated by filing with the Secretary of State of the State of Missouri
properly executed articles of merger in accordance with the MGBCL, which shall
be effective upon the issuance of a certificate of merger by the Missouri
Secretary of State (the time of such effectiveness being the "Effective Time").
Section 2.5 Articles of Incorporation; By-Laws; Directors and
Officers. The Articles of Incorporation of Acquisition in effect at the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation (except that such Articles of Incorporation shall be amended to
provide that the name of the Surviving Corporation shall be the name of the
Company) until thereafter amended in accordance with the provisions thereof and
as provided by the MGBCL. The By-Laws of Acquisition in effect at the Effective
Time shall be the By-Laws of the Surviving Corporation until thereafter amended
in accordance with the provisions thereof, the Articles of Incorporation of the
Surviving Corporation and the MGBCL.
(b) From and after the Effective Time and until their respective
successors are duly elected or appointed and qualified, or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
Articles of Incorporation and By-Laws, (i) the directors of Acquisition at the
Effective Time shall be the directors of the Surviving Corporation and (ii) the
officers of the Company at the Effective Time shall be the officers of the
Surviving Corporation.
Section 2.6 Effect on Capital Stock.
At the Effective Time, by virtue of the Merger and without any action on
the part of any holder of Shares or any shares of capital stock of Acquisition:
(a) Common Stock of Acquisition. Each share of common stock, par
value $.01 per share, of Acquisition that is issued and outstanding immediately
prior to the Effective Time shall be converted into and become one fully paid
and nonassessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
(b) Cancellation of Excluded Shares. Each Share that is owned by
Parent or Acquisition or held in the treasury of the Company, but not Shares
held in any Company benefit plan (collectively, the "Excluded Shares") shall
automatically be canceled and retired and shall
6
cease to exist, and no cash or other consideration shall be delivered or
deliverable in exchange therefor.
(c) Conversion of Shares. Each Share issued and outstanding
immediately prior to the Effective Time (other than Excluded Shares and
Dissenting Shares, as defined below) shall be converted into the right to
receive a number of duly authorized, validly issued, fully paid and
non-assessable Parent Shares equal to the Exchange Ratio or any higher
consideration paid in the Offer (the "Merger Consideration").
Section 2.7 Exchange of Certificates. At the Effective Time, Parent
shall deposit, or shall cause to be deposited, with a banking or other financial
institution mutually acceptable to Parent and the Company (the "Exchange
Agent"), for the benefit of the holders of Shares, for exchange in accordance
with this Article II, certificates representing the Parent Shares to be issued
in connection with the Merger and cash in lieu of fractional shares (such cash
and certificates for Parent Shares, together with any dividends or distributions
with respect thereto (relating to record dates for such dividends or
distributions after the Effective Time), being hereinafter referred to as the
"Exchange Fund") to be issued pursuant to Section 2.6 and paid pursuant to this
Section 2.7 in exchange for outstanding Shares.
(b) Promptly after the Effective Time, Parent shall cause the
Exchange Agent to mail to each holder of record of Shares (i) a letter of
transmittal specifying that delivery shall be effected, and risk of loss and
title to such Shares shall pass, only upon delivery of the certificates
representing such shares ("Certificates") to the Exchange Agent and which letter
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 Certificates
in exchange for the consideration contemplated by Section 2.6 and this Section
2.7, including cash in lieu of fractional shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, the holder of the shares represented by such Certificate shall be
entitled to receive in exchange therefor (x) a certificate representing that
number of whole Parent Shares and (y) a check representing the amount of cash in
lieu of fractional shares, if any, and unpaid dividends and distributions, if
any, that such holder has the right to receive in respect of the Certificate
surrendered pursuant to the provisions of this Article II, after giving effect
to any required withholding tax, and the shares represented by the Certificate
so surrendered shall forthwith be canceled. No interest will be paid or accrued
on the cash payable to holders of Shares. In the event of a transfer of
ownership of Shares that is not registered in the transfer records of the
Company, a certificate representing the proper number of Parent Shares, together
with a check for the cash to be paid pursuant to Section 2.7 may be issued to
such a transferee if the Certificate representing such Shares is presented to
the Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared with a record date after the Effective
Time on Parent Shares shall be paid with respect to any Shares represented by a
Certificate until such Certificate is surrendered for exchange as provided
herein. Following surrender of any such Certificate, there shall be paid to the
holder of the certificates representing whole Parent Shares issued in exchange
therefor,
7
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
payable with respect to such whole Parent Shares and not paid, less the amount
of any withholding taxes which may be required thereon, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole Parent Shares, less
the amount of any withholding taxes which may be required thereon. Parent will
provide the Exchange Agent with the cash necessary to make the payments
contemplated by this Section 2.7(c).
(d) From and after the Effective Time, there shall be no transfers
on the stock transfer books of the Company of the Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for certificates for Parent Shares and cash deliverable in respect
thereof pursuant to this Agreement in accordance with the procedures set forth
in this Article 2.
(e) No fractional Parent Shares shall be issued pursuant hereto. In
lieu of the issuance of any fractional share of Parent Shares, cash adjustments
will be paid to holders in respect of any fractional share of Parent Shares that
would otherwise be issuable, and the amount of such cash adjustment shall be
equal to the product obtained by multiplying such stockholder's fractional share
of Parent Shares that would otherwise be issuable by the closing price per share
of Parent Shares on the NYSE on the Closing Date as reported by The Wall Street
Journal (or, if not reported thereby, any other authoritative source).
(f) Any portion of the Exchange Fund (including the proceeds of any
investments thereof and any Parent Shares) that remains unclaimed by the former
stockholders of the Company six months after the Effective Time shall be
delivered to Parent. Any former stockholders of the Company who have not
theretofore complied with this Article II shall thereafter look only to Parent,
and Parent shall comply with such requests, made in accordance with the terms of
this Agreement, for payment of their Parent Shares, cash and unpaid dividends
and distributions on Parent Shares deliverable in respect of each Share such
stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon.
(g) Any portion of the Merger Consideration remaining unclaimed by
holders of Shares immediately prior to such time as such amounts would otherwise
escheat to or become property of any Governmental Entity (as defined in Section
3.9) shall, to the extent permitted by law, become the property of the Surviving
Corporation free and clear of any claims or interest of any person previously
entitled thereto. Notwithstanding the foregoing, none of Parent, the Company,
the Surviving Corporation, the Exchange Agent or any other person shall be
liable (except to the extent provided by applicable law) to any former holder of
Shares for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(h) In the event any Certificate shall have 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 the posting by such person
of a bond in such amount as the Surviving Corporation
8
may reasonably request as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the Parent Shares and cash
deliverable in respect thereof pursuant to this Agreement.
Section 2.8 Stock Options. As of the Effective Time, each
outstanding option to purchase capital stock of the Company (the "Company Stock
Options"), whether or not exercisable and whether or not vested, under the
Company's 1990 Incentive Stock Option Plan or 1996 Long-Term Incentive Plan
(together, the "Company Option Plans"), shall be converted into an option to
purchase Parent Shares. Each Company Stock Option so converted shall be
exercisable upon the same terms and conditions as under the applicable Company
Option Plan and the applicable option agreement issued thereunder, except that
(x) each Company Stock Option shall vest and become immediately exercisable at
the Effective Time, (y) each such Company Stock Option shall be exercisable for
that whole number of Parent Shares (rounded to the nearest whole share) equal to
the number of Shares subject to such Company Stock Option immediately prior to
the Effective Time multiplied by the Exchange Ratio, and (z) the option price
per Parent Share shall be an amount equal to the option price per Share subject
to such Company Stock Option in effect immediately prior to the Effective Time
divided by the Exchange Ratio (the option price per share, as so determined,
being rounded to the nearest whole cent).
(b) Parent shall (i) on or prior to the Effective Time, reserve for
issuance the number of Parent Shares that will become subject to options to
purchase Parent Shares ("Parent Options") pursuant to Section 2.8(a), (ii) from
and after the Effective Time, upon exercise of the Parent Options in accordance
with the terms thereof, make available for issuance all Parent Shares covered
thereby, (iii) at the Effective Time, assume the Company Option Plans, with the
result that all obligations of the Company under the Company Option Plans,
including with respect to Company Stock Options outstanding at the Effective
Time, shall be obligations of Parent following the Effective Time and (iv) as
promptly as practicable after the Effective Time, issue to each holder of an
outstanding Company Stock Option a document evidencing the foregoing assumption
by Parent.
(c) The parties shall take all actions so that the Company Stock
Options converted by Parent qualify following the Effective Time as incentive
stock options as defined in Section 422 of the Code to the extent permitted
under Section 422 of the Code and to the extent the Company Stock Options
qualified as incentive stock options prior to the Effective Time.
(d) Parent shall, as promptly as practicable but in any event no
later than three days after the Closing Date, file a registration statement on
Form S-8 under the Securities Act, covering the Parent Shares issuable upon the
exercise of Parent Options created upon the assumption by Parent of Company
Stock Options under Section 2.8(a), and will maintain the effectiveness of such
registration, and the current status of the prospectus contained therein, until
the exercise or expiration of such Parent Options.
(e) The parties will cooperate to take all reasonable steps
necessary to give effect to Section 2.8(a).
9
(f) Except as permitted by Section 5.1, the Company agrees that it
will not grant any stock options, stock appreciation rights, stock units,
deferred stock awards or other rights to acquire Shares or any other interest in
Company common stock or any other equity security of the Company and will not
take any action to accelerate the exercisability or vesting of Company Stock
Options and/or permit cash payments to holders of Company Stock Options with
respect to such Company Stock Options.
Section 2.9 Dissenting Shares.
Notwithstanding anything in this Agreement to the contrary, any Shares
held by a person (a "Dissenting Stockholder") who does not vote to approve the
Merger and complies with all the provisions of the MGBCL concerning the right of
holders of Shares to dissent from the Merger and require payment of fair value
(as defined in the MGBCL) for their Shares ("Dissenting Shares") shall not be
converted as described in Section 2.6, but shall be converted into the right to
receive such consideration as may be determined to be due to such Dissenting
Stockholder pursuant to the MGBCL. If, after the Effective Time, such Dissenting
Stockholder withdraws his demand or fails to perfect or otherwise loses his
rights as a Dissenting Stockholder to payment of fair value, in any case
pursuant to the MGBCL, his Shares shall be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration. The Company
shall give Parent (i) prompt notice of any demands for fair value for Shares
received by the Company and (ii) the opportunity to participate in and direct
all negotiations and proceedings with respect to any such demands. The Company
shall not, without the prior written consent of Parent, make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any such demands.
All payment made to any Dissenting Stockholders shall be made by the Company out
of the Company's own funds and shall not be reimbursed by Parent or any
affiliate of Parent.
Section 2.10 Tax Consequences.
It is intended by the parties hereto that the Transaction shall constitute
a "reorganization" within the meaning of Section 368(a) of the Code. The parties
hereto adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(a) and 1.368-3(a) of the United States Income Tax Regulations.
Section 2.11 Adjustment of Exchange Ratio.
In the event Parent changes or establishes a record date for changing the
number of Parent Shares issued and outstanding during or after the determination
of the Exchange Radio pursuant to Section 1.1(a) and prior to the Effective Time
as a result of a stock split, stock dividend, recapitalization, subdivision,
reclassification, combination or similar transaction with respect to the
outstanding Parent Shares and the record date therefor shall be prior to the
Effective Time, the Exchange Ratio applicable to the merger or the offer or the
Offer or the Merger, as the case may be, and any other calculations based on or
relating to Parent Shares shall be appropriately adjusted to reflect such stock
split, stock dividend, recapitalization, subdivision, reclassification,
combination or similar transaction.
Article III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Acquisition that,
except as set forth in the Disclosure Schedules ("Schedules" or "Disclosure
Schedules") hereto:
10
Section 3.1 Organization and Qualification.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Missouri and has all requisite corporate
power and authority to own or lease and operate its properties and assets and to
carry on its business as it is now being conducted. The Company is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction in which the character of its properties and assets owned or
leased or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified would not have a Material Adverse
Effect (as hereinafter defined) on the Company. As used herein, "Material
Adverse Effect" shall mean, with respect to any party, any event, circumstance,
change or effect that is, individually or in the aggregate, reasonably likely to
be materially adverse to the business, assets, financial condition or results of
operations of such party and its subsidiaries, taken as a whole, other than
effects due to (i) general economic or market conditions or (ii) matters
generally affecting the Freight Railroad or Rail Transit Railroad industries.
The Company has heretofore made available to Acquisition complete and correct
copies of its minute books and its Articles of Incorporation and By-Laws.
Section 3.2 Subsidiaries. Except for shares of, or other ownership
interests in, the Subsidiaries (as hereinafter defined), the Company does not
own of record or beneficially, directly or indirectly, (i) any shares of
outstanding capital stock or securities convertible into or exchangeable or
exercisable for capital stock of any other corporation or (ii) any participating
interest in any partnership, joint venture or other similar non-corporate
business enterprise. Each Subsidiary is a corporation, partnership or limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite corporate, partnership or limited liability company power and
authority to own or lease and operate its properties and assets and to carry on
its business as it is now being conducted. Each Subsidiary is duly qualified as
a foreign corporation to do business, and is in good standing, in each
jurisdiction in which the character of its properties and assets owned or leased
or the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not have a Material Adverse Effect on the
Company. The respective Articles of Incorporation and By-Laws or other
organizational documents of the Subsidiaries of the Company do not contain any
provision limiting or otherwise restricting the ability of the Company to
control its Subsidiaries. Each Subsidiary, its jurisdiction of incorporation or
organization is set forth in Section 3.2 of the Disclosure Schedules. The
Company has heretofore made available to Acquisition complete and correct copies
of the minute books and the charter and by-laws (or other organizational
documents) of all Subsidiaries.
(b) All the outstanding shares of capital stock of, or other
ownership interests in, each Subsidiary are validly issued, fully paid and
nonassessable (and no such shares have been issued in violation of any
preemptive or similar rights) and are owned by the Company or by a wholly-owned
Subsidiary of the Company, free and clear of any liens, claims, charges,
encumbrances or adverse claims ("Liens"), and there are no proxies outstanding
or restrictions on voting with respect to any such shares.
11
(c) For purposes of this Agreement, the term "Subsidiary" shall mean
any corporation or other business entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time owned by
the Company and/or one or more other Subsidiaries.
Section 3.3 Authority Relative to Agreements.
The Company has all requisite corporate power and authority to
execute and deliver this Agreement and the Stock Option Agreement and, in the
case of the Merger, subject to the approval and adoption of this Agreement by a
two-thirds vote of the stockholders of the Company (the "Company Stockholder
Approval"), to perform its obligations hereunder. The execution, delivery and
performance of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby have been duly authorized by the Company's
Board of Directors and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement and the transactions contemplated
hereby, other than, in the case of the Merger, the Company Stockholder Approval.
This Agreement has been duly executed and delivered by the Company and, subject
to such stockholder approval, constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. The Board of Directors of the Company has, as of the date of this
Agreement, (i) determined that the Offer and the Merger are in the best
interests of the Company and its shareholders, and (ii) approved this Agreement
and the transactions contemplated hereby.
Section 3.4 Non-Contravention.
The execution and delivery of each of this Agreement and the Stock Option
Agreement by the Company do not and the consummation by the Company of the
transactions contemplated hereby and thereby will not (i) conflict with any
provision of the Articles of Incorporation or By-Laws of the Company, (ii)
except as set forth in Section 3.4 of the Disclosure Schedule, result (with the
giving of notice or the lapse of time or both) in any violation of or default or
loss of a benefit under, or permit the acceleration or termination of any
obligation under, any material mortgage, indenture, lease, agreement or other
instrument, permit, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company or
any Subsidiary or their respective properties or (iii) result in the creation or
imposition of any material lien, charge or encumbrance of any nature whatsoever
upon any asset of the Company or any Subsidiary. Holders of the Shares will not
have appraisal rights under the MGBCL as a result of, or in connection with, the
Offer.
Section 3.5 Capitalization.
The authorized capital stock of the Company consists of 50,000,000 Shares.
At the close of business on July 14, 2000, 11,387,226 Shares were issued and
outstanding, all of which were duly and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
right and 30,000 Shares were held in the Company's treasury. Each of the
Company's stock option, the Director Stock Option Plan or restricted stock plans
(the "Company Stock Plans") and options to acquire Shares or shares of
restricted stock of the Company outstanding on the date hereof (the "Company
Stock Rights"), including, without limitation, information concerning the date
of vesting of such options or the lapse of restrictions on such restricted
stock, strike prices of such options and the acceleration of such vesting or
removal of such restrictions, in either case, by virtue of the Merger or the
other transactions contemplated hereby, are set forth on Section 3.5 of the
Disclosure Schedule. As of July 14, 2000, 713,279
12
Shares were reserved for issuance under the Company Stock Plans. Except (x) for
options to purchase an aggregate of 701,450 Shares granted pursuant to the
Company Stock Plans and (y) rights issued under the Rights Agreement, dated as
of April 26, 1999 (the "Rights Agreement"), between the Company and UMB Bank,
N.A., as rights agent, no subscription, warrant, option, convertible security,
stock appreciation or other right (contingent or other) to purchase or acquire,
or any securities convertible into or exchangeable or exercisable for, any
shares of or other interest in any class of capital stock of the Company or any
Subsidiary is authorized or outstanding and there is not any commitment of the
Company or any Subsidiary to issue any shares, warrants, options or other such
rights or to distribute to holders of any class of its capital stock any
evidences of indebtedness or assets. Neither the Company nor any Subsidiary has
any obligation (contingent or other) to purchase, redeem or otherwise acquire
any shares of its capital stock or any interest therein or to pay any dividend
or make any other distribution in respect thereof.
Section 3.6 SEC Filings.
The Company has made available to Acquisition true and complete copies of
each form, report, schedule, definitive proxy statement and registration
statement filed by the Company with the SEC subsequent to January 1, 1998 and on
or prior to the date hereof (collectively, the "Company SEC Filings"), which are
all forms, reports, schedules, statements and other documents (other than
preliminary material) that the Company was required to file with the SEC. The
Company SEC Filings (including, without limitation, any financial statements or
schedules included therein) (i) complied with the requirements of the Securities
Act, or the Exchange Act, as the case may be, and (ii) did not at the time of
filing (or if amended, supplemented or superseded by a filing prior to the date
hereof, on the date of that filing) 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 the light of the circumstances under
which they were made, not misleading. None of the Subsidiaries is required to
file any forms, reports, schedules, statements or other documents with the SEC.
Section 3.7 Financial Statements.
The consolidated financial statements of the Company included in the
Company SEC Filings have been prepared in accordance with generally accepted
accounting principles consistently applied and consistent with prior periods,
subject, in the case of unaudited interim consolidated financial statements, to
year-end adjustments (which consist of normal recurring accruals) and the
absence of certain footnote disclosures. The consolidated balance sheets of the
Company included in the Company SEC Filings fairly present the consolidated
financial position of the Company as of their respective dates, and the related
consolidated statements of operations, cash flows and stockholders' equity
included in the Company SEC Filings fairly present the consolidated results of
operations of the Company for the respective periods then ended, subject, in the
case of unaudited interim financial statements, to year-end adjustments (which
consist of normal recurring accruals) and the absence of certain footnote
disclosures. None of the Company and its Subsidiaries has any material
liabilities or obligations (whether absolute, accrued, contingent or otherwise),
except for those (i) that are accrued or reserved against in the Company's
financial statements (or reflected in the notes thereto) included in the Company
SEC Filings or (ii) that were incurred subsequent to December 31, 1999 in the
ordinary course of business and consistent with past practice.
13
Section 3.8 Absence of Certain Changes or Events.
Since March 31, 2000, except as expressly contemplated by this Agreement
or as set forth in Section 3.8 of the Disclosure Schedule, neither the Company
nor any Subsidiary has (i) issued any stock, bonds or other corporate
securities, (ii) borrowed any amount, guaranteed any indebtedness or incurred
any material liabilities (absolute or contingent), except in the ordinary course
of business, (iii) discharged or satisfied any lien or incurred or paid any
obligation or liability (absolute or contingent) other than current liabilities
shown on the consolidated balance sheet of the Company as of March 31, 2000 and
current liabilities incurred since the date of such balance sheet in the
ordinary course of business, (iv) declared or made any payment or distribution
to stockholders, other than regular semi-annual cash dividends, or purchased or
redeemed any shares of its capital stock or other securities, (v) mortgaged,
pledged or subjected to Lien any of its assets, tangible or intangible, other
than Liens for current real property taxes not yet due and payable and
transactions in the ordinary course, (vi) sold, assigned or transferred any of
its tangible assets, or canceled any debts or claims, except in the ordinary
course of business or as otherwise contemplated hereby, (vii) sold, assigned or
transferred any patents, trademarks, trade names, copyrights, trade secrets or
other intangible assets, (viii) made any changes in officer or executive
compensation other than in the ordinary course, (ix) waived any rights of
substantial value, other than in the ordinary course of business, (x) entered
into any transaction, except in the ordinary course of business or as otherwise
contemplated hereby, (xi) take any action that if taken after the date of this
Agreement, would constitute a breach of any of the covenants set forth in
Section 5.1, other than actions specifically identified in the Company's three
year plan (as presented to Parent), as an action to be taken at such time, and
any action disclosed in a press release issued by the Company after March 31,
2000 and prior to the date hereof, (xii) agreed, in writing or otherwise, to
take any of the actions listed in clauses (i) through (xi) above, or (xiii)
suffered any Material Adverse Effect.
Section 3.9.....Governmental Approvals.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any federal, state, local or foreign governmental or
regulatory authority ("Governmental Entity") is required to be made or obtained
by the Company in connection with the execution and delivery of this Agreement
or the Stock Option Agreement by the Company or the consummation by the Company
of the transactions contemplated hereby and thereby, except for (i) compliance
by the Company with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act") and similar statutes or regulations of foreign
jurisdictions, (ii) the filing of articles of merger with the Secretary of State
of the State of Missouri in accordance with the MGBCL, (iii) the filing with the
SEC of (1) a proxy statement in definitive form for distribution to the
stockholders of the Company in advance of the Stockholders Meeting in accordance
with Regulation 14A promulgated under the Exchange Act (such proxy statement, as
amended or supplemented from time to time, being herein referred to as the
"Proxy Statement"), (2) the Schedule 14D-9 and (3) such reports under and such
other compliance with the Exchange Act and Securities Act and the rules and
regulations thereunder as may be required in connection with this Agreement and
the transactions contemplated hereby and (iv) such consents, approvals, orders
or authorizations which if not obtained, or registrations, declarations or
filings which if not made, would not have a Material Adverse Effect on the
Company.
14
Section 3.10 Compliance with Laws; No Default. Except as set forth in
Section 3.10 of the Disclosure Schedule, neither the Company nor any Subsidiary
is in default under or in violation of any order of any court, governmental
authority or arbitration board or tribunal to which the Company or such
Subsidiary is or was subject or in violation of any laws, ordinances,
governmental rules or regulations (including, but not limited to, those relating
to export controls, labor and employment matters and foreign corrupt practices)
to which the Company or any Subsidiary is or was subject, except for such
defaults or violations that, in the aggregate, are not material. Except as set
forth in Section 3.10 of the Disclosure Schedule, neither the Company nor any
Subsidiary has failed to obtain any licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its properties or to
the conduct of its business, which failure would have a Material Adverse Effect
on the Company, and, after giving effect to the transactions contemplated
hereby, all such licenses, permits, franchises and other governmental
authorizations will continue to be valid and in full force and effect.
(b) No violation of, default or event of default under, loss of
benefit under, or right to terminate or accelerate (a "Violation") exists (and
no event has occurred which, with notice or the lapse of time or both, would
constitute a Violation) of any term, condition or provision of (x) the
certificate or articles of incorporation or by-laws (or other organizational
documents) of the Company or any of its Subsidiaries, (y) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement, obligation
or commitment, instrument, permit, concession, franchise or license to which the
Company or any of its Subsidiaries is now a party or by which the Company or any
of its Subsidiaries or any of their respective properties or assets is bound
except in the case of (x) and (y) for Violations which, in the aggregate, are
not material.
Section 3.11 Information Supplied. Each of the Schedule 14D-9 and
the other documents required to be filed by the Company with the SEC in
connection with the Offer, the Merger and the other transactions contemplated
hereby, including the Proxy Statement, and the information supplied by the
Company to Parent for inclusion or incorporation by reference in any such
documents, will comply as to form in all material respects with the requirements
of the Exchange Act and the Securities Act, as the case may be, and will not, on
the date of its filing or dissemination, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 3.11,
no representation or warranty is made by the Company with respect to statements
made or incorporated by reference in the Schedule 14D-9 based on information
supplied by Parent or Acquisition expressly for inclusion or incorporation by
reference therein or based on information which is not made in or incorporated
by reference in such documents but which should have been disclosed pursuant to
Section 3.11.
Section 3.12 Litigation.
Section 3.12 of the Company Disclosure Schedule sets forth a complete and
accurate (a) summary description of each investigation, action, suit or
proceeding pending against the Company or any of its Subsidiaries, or to the
knowledge of the Company, threatened against the
15
Company or any of its Subsidiaries, at law or in equity or before or by any
federal or state commission, board, bureau, agency, regulatory or administrative
instrumentality or other Governmental Entity or any arbitratory or arbitration
tribunal and (b) a summary description of any outstanding judgment order or
decree entered in any lawsuit or proceeding imposing material obligations
against the Company or any of its Subsidiaries. There are no investigations,
actions, suits or proceedings pending against the Company or its Subsidiaries
or, to the knowledge of the Company, threatened against the Company or its
Subsidiaries (or any of their respective properties, rights or franchises), at
law or in equity, or before or by any federal or state commission, board,
bureau, agency, regulatory or administrative instrumentality or other
Governmental Entity or any arbitrator or arbitration tribunal, that would
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect on the Company, and, to the knowledge of the Company, no
development has occurred with respect to any pending or threatened action, suit
or proceeding that would reasonably be expected to result in a Material Adverse
Effect on the Company or would reasonably be expected to prevent, materially
impair or materially delay the consummation of the transactions contemplated
hereby. Neither the Company nor any of its Subsidiaries is subject to any
judgment, order or decree entered in any lawsuit or proceeding which would
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect on the Company.
Section 3.13 Intellectual Property Rights.
(a) "Intellectual Property" shall mean: (i) United States,
international, and foreign patents, patent applications and statutory invention
registrations, (ii) trademarks, service marks, domain names, trade dress, logos,
and other source identifiers, including registrations and applications for
registration thereof, (iii) copyrights, including registrations and applications
for registration thereof, (iv) computer software, data, databases, and related
documentation, and (v) confidential and proprietary information, including trade
secrets and know-how. "Third Party Software" shall mean all computer software
sold or licensed to the Company by any person other than the Company or its
affiliates and which is material to the operation of the business of the Company
(other than commercially available "off the shelf" software). Company Software
is software manufactured, distributed, sold, licensed or marketed by the
Company. Software means Third Party Software and Company Software.
(b) Section 3.13 of the Disclosure Schedule sets forth a true and
complete list of all (i) patents and patent applications, registered trademarks
and trademark applications, registered copyrights and copyright applications,
Software and other Intellectual Property, in each case owned by the Company and
material to the business of the Company, and (ii) all licenses of Intellectual
Property and Software (A) to the Company from any third party, and (B) by the
Company to any third party (collectively, the "Licenses"). For purposes of this
Section 3.13(b), an item shall not be deemed material unless its loss would
decrease annual revenues by more than $5 million.
(c) The operation of the business of the Company, and the use in
connection therewith of (i) the Intellectual Property and Software owned by the
Company (the "Owned Intellectual Property") and (ii) the Intellectual Property
and Software licensed to the Company
16
pursuant to the Licenses or other licenses material to the Company (the
"Licensed Intellectual Property"), do not conflict with or infringe the
Intellectual Property rights of any third party.
(d) The Company is the sole owner, free and clear of any lien or
encumbrance, of the entire right, title and interest in and to the Owned
Intellectual Property and Licenses, and is entitled to use the Owned
Intellectual Property and Licensed Intellectual Property in the ordinary course
of the business of the Company as now conducted.
(e) The Owned Intellectual Property and the Licensed Intellectual
Property include all of the Intellectual Property used in the ordinary
day-to-day conduct of the business of the Company, and there are no other items
of Intellectual Property that are material to such ordinary day-to-day conduct
of such business. The Owned Intellectual Property and, to the knowledge of the
Company, the Licensed Intellectual Property, is subsisting, valid and
enforceable, and has not been adjudged invalid or unenforceable in whole or
part.
(f) No legal proceedings have been asserted, are pending, or, to the
knowledge of the Company, threatened against the Company (i) based upon or
challenging or seeking to deny or restrict the use by the Company of any of the
Owned Intellectual Property or Licensed Intellectual Property, (ii) alleging
that the Licensed Intellectual Property is being licensed or sublicensed in
conflict with the terms of any license or other agreement, or (iii) alleging
infringement of the Intellectual Property rights of any third party.
(g) Other than in the ordinary course of business, the Company has
not granted any license or other right to any third party with respect to the
Owned Intellectual Property or Licensed Intellectual Property. The consummation
of the transactions contemplated by this Agreement will not result in the
termination or impairment of any of the Owned Intellectual Property.
(h) With respect to each License: (i) such License is valid and
binding and in full force and effect and represents the entire agreement between
the respective licensor and licensee with respect to the subject matter of such
License; (ii) such License will not cease to be valid and binding and in full
force and effect on terms identical to those currently in effect as a result of
the consummation of the transactions contemplated by this Agreement, nor will
the consummation of the transactions contemplated by this Agreement constitute a
breach or default under such License or otherwise give the licensor a right to
terminate such License; (iii) the Company has not (A) received any notice of
termination or cancellation under such License, (B) received any notice of
breach or default under such License, which breach has not been cured, and (C)
granted to any other third party any rights, adverse or otherwise, under such
License that would constitute a breach of such License; and (iv) to the
Company's knowledge, neither the Company nor any other party to such license is
in breach or default thereof in any material respect, and no event has occurred
that, with notice or lapse of time, would constitute such a breach or default or
permit termination, modification or acceleration under such license.
(i) To the knowledge of the Company, the Company Software is free of
all material viruses, worms, trojan horses and other material known contaminants
and does not contain any bugs, errors or problems of a material nature that
disrupt its operations in any
17
material respect or have a materially adverse impact on the operation of other
software programs or operating systems. The Company Software is free of all
viruses, worms, trojan horses and other material known contaminants, and does
not contain any bugs, errors, or problems of a material nature that disrupt its
operation or have an adverse impact on the operation of other software programs
or operating systems, except as would not have a Material Adverse Effect. The
Company has obtained all approvals necessary for exporting the Software outside
the United States and importing the Company Software into any country in which
the Company Software is now sold or licensed for use, and all such export and
import approvals in the United States and throughout the world are valid,
current, outstanding and in full force and effect. No rights in the Company
Software have been transferred to any third party except to the customers of
Company to whom the Company has licensed such Company Software in the ordinary
course of business. None of the Company Software is licensed pursuant to an
"open source" or "GNU" license, or incorporates or is based on any computer
software that is licensed pursuant to an "open source" or "GNU" license. The
Company has the right to use all software development tools, library functions,
compilers, and other Third Party Software that is material to the business of
the Company, or that is required to operate or modify the Software.
Section 3.14 Taxes. Except as set forth in Section 3.14(a) of the
Disclosure Schedule, each of the Company and its Subsidiaries has (i) timely
filed all material Tax Returns (as hereinafter defined) required to be filed by
it in respect of any Taxes (as hereinafter defined), which Tax Returns were
true, correct and complete in all material respects, (ii) timely paid all Taxes
shown on such Tax Returns, (iii) established reserves that are adequate for the
payment of all material Taxes not yet due and payable with respect to the
results of operations of the Company and the Subsidiaries through the date
hereof, and (iv) to the best knowledge of the Company, complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes and timely withheld from employee wages and paid over
to the proper governmental authorities all material amounts required to be so
withheld and paid over.
(b) (i) Except as set forth in Section 3.14(b) of the Disclosure
Schedule, there is no deficiency, claim, audit, action, suit, proceeding or
investigation now pending or threatened in writing against or with respect to
the Company or any Subsidiary in respect of any material Taxes, (ii) there are
no issues that have been raised by the relevant taxing authority or are
currently pending in connection with the examination of Tax Returns required to
have been filed by or with respect to the Company and its Subsidiaries other
than issues that, if resolved against the Company or its Subsidiaries, would not
result in the imposition of Taxes that are material and (iii) there are no
requests for rulings or determinations in respect of any Taxes pending between
the Company or any Subsidiary and any taxing authority.
(c) (i) Within the last five years, neither the Company nor any
Subsidiary has been a member of an affiliated group filing consolidated,
combined or unitary Tax Returns other than a group for which the Company was the
common parent and (ii) neither Company nor its Subsidiaries has any obligation
under any agreement or arrangement with any person other than the Company and
its Subsidiaries with respect to material Taxes of such other person (including
pursuant to Treasury Reg. sec. 1.1502-6).
19
(d) Neither the Company nor any Subsidiary has executed or entered
into (or prior to the Effective Time will execute or enter into) with the
Internal Revenue Service or any taxing authority any agreement or other document
extending or having the effect of extending the period for assessments or
collection of any material Taxes for which the Company or any Subsidiary would
be liable, which period has not since expired.
(e) For purposes of this Agreement, "Tax" (and with correlative
meaning, "Taxes") shall mean all net income, gross receipts, value-added,
capital net worth, customs, franchise, sales, use, ad valorem, property,
payroll, withholding, excise, severance, transfer, employment, alternative or
add-on minimum, stamp, occupation, premium, environmental or windfall profits,
and other taxes together with any interest and any penalties, additions to tax
or additional amounts imposed by any federal, state, local, foreign or other
taxing authority.
(f) For purposes of this Agreement, "Tax Return" means all federal,
state, local and foreign tax returns, estimates, information statements and
reports relating to Taxes.
(g) Neither the Company nor any of its affiliates has taken or
agreed to take any action or knows of any fact, circumstance, plan or intention
that is or would be reasonably likely to prevent the Transaction from qualifying
as a "reorganization" within the meaning of Section 368(a) of the Code.
(h) Except as disclosed in Section 3.14(h) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to any
agreement, contract, arrangement, or plan that has resulted or would result,
individually or in the aggregate, in connection with this Agreement or any
change of control of the Company or any of its Subsidiaries, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code;
and neither the Company nor any of its Subsidiaries have made any payments, or
is a party to an agreement that could require it to make any payments (including
any deemed payment of compensation upon exercise of any option), that would not
be fully deductible by reason of Section 162(m) of the Code.
Section 3.15 Employee Benefit Plans.
(a) Section 3.15(a) of the Disclosure Schedule sets forth a true and
correct list of each deferred compensation plan, stock option, incentive
compensation plan, equity compensation plan, "welfare plan" (within the meaning
of section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")); "pension plan" (within the meaning of section 3(2) of
ERISA); each employment, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is sponsored, maintained or contributed to or required to be contributed to
by the Company or any Subsidiary for the benefit of any employee or former
employee of the Company or any Subsidiary. Such plans are referred to
collectively herein as the "Company Plans".
(b) The Company has heretofore made available to Parent with
respect to each of the Company Plans true and correct copies of each of the
following documents if applicable: (i) the Company Plan document and any related
trust agreement or other funding arrangement, (ii) the most recent determination
letter from the Internal Revenue Service for such Plan, (iii) the
19
most recent summary plan description and related summaries of material
modifications, (iv) the Form 5500 tax forms for each of the last two years, and
(v) the most recently prepared actuarial report and financial statement.
(c) Each of the Company Plans is in material compliance with its
terms and the applicable provisions of applicable law, including without
limitation, the Code and ERISA and the Company and it Subsidiaries have
performed all obligations required to be performed by them thereafter; each of
the Company Plans intended to be "qualified" within the meaning of section
401(a) of the Code has received a determination letter from the Internal Revenue
Service that the Company Plan is qualified and the Company knows of no condition
or event that would reasonably be expected to adversely affect such status.
Neither the Company, any Subsidiary, nor any trade or business, whether or not
incorporated, which together with the Company would be deemed a "single
employer" within the meaning of Section 4001 of ERISA (an "ERISA Affiliate") has
had in the previous six years (i) any liability, contingent or otherwise, under
Title IV of ERISA or Section 412 of the Code, or (ii) an obligation to
contribute to any "multiemployer plan" (as defined in Section 3(37) of ERISA).
There are no pending, or to the knowledge of the Company, threatened or
anticipated disputes, law suits, investigations, audits, complaints or claims
(other than routine claims for benefits) by, on behalf of, with respect to or
against any of the Company Plans or any trusts related thereto except as, would
not be reasonably likely to result in any material liability to the Company or
any Subsidiary.
(d) With respect to each Company Plan, there has not occurred, and
no person or entity is contractually bound to enter into, any nonexempt
"prohibited transaction" within the meaning of Section 4975 of the Code or
Section 406 of ERISA, nor any transaction that would result in a civil penalty
being imposed under Section 409 or 502(i) of ERISA, except for any such
transactions which, individually or in the aggregate, would not be reasonably
likely to result in any material liability to the Company or any Subsidiary.
(e) All contributions, premiums or payments required to be made with
regard to any Company Plan have been made on or before their due dates, and all
such contributions have been fully deducted for income tax purposes and have not
been, nor would reasonably be expected to be, challenged or disallowed by any
governmental authority. The Company and the Subsidiaries have accrued or
reserved for all liabilities under the Company Plans as required by GAAP or
applicable non-US accounting standards and customary practices.
(f) No union or other collective bargaining unit has been certified
as representing any of the employees of the Company or any Subsidiary, nor has
the Company or any Subsidiary agreed to recognize any union or other collective
bargaining unit. Currently there are no organizational campaigns, petitions or
other unionization activities seeking recognition of any collective bargaining
unit for employees of the Company or any Subsidiary. There are no labor disputes
pending or threatened involving strikes, work stoppages, slowdowns or lockouts
with respect to employee of the Company or any Subsidiary. There are no
grievance proceedings or claims of unfair labor practices filed with, to the
Company's knowledge, threatened to be filed with the National Labor Relations
Board against the Company or any Subsidiary. The Company and each Subsidiary is
in compliance in all material respects with all applicable laws relating to the
employment of labor, including those relating to wages, hours, collective
bargaining,
20
occupational safety and health standards, discrimination in employment,
withholding of taxes, worker classification, immigration, plant closings and
mass layoffs and workers' compensation.
(g) Neither the Company nor any Subsidiary is party to any agreement
with any employee the benefits of which (including, without limitation,
severance benefits) are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving the Company or any
Subsidiary of the nature of any of the transactions contemplated by this
Agreement.
Section 3.16 Environmental Matters.
Except as set forth in Section 3.16 of the Disclosure Schedule, each of
the Company and the Subsidiaries conducts its business and operations in
material compliance with all applicable environmental laws, ordinances and
regulations, and to the Company's knowledge there is no claim, action, suit,
proceeding, hearing or investigation (or basis therefor), based on or related to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, or hazardous or toxic
material or waste (collectively, an "Environmental Event") by the Company or any
Subsidiary. There is no claim, action, suit, proceeding, hearing or
investigation (or basis therefor) based on or related to an Environmental Event
by the Company or any Subsidiary which would have a Material Adverse Effect on
the Company. Except as set forth in Section 3.16 of the Disclosure Schedule, to
the best knowledge of the Company, no notice or information of any material
Environmental Event was given to any person or entity that occupied any of the
premises occupied by or used by the Company or any Subsidiary prior to the date
such premises were so occupied. Without limiting the generality of the
foregoing, the Company has received no notice or information (and has no basis
to believe) that either the Company or any Subsidiary has disposed of or placed
on or in any property or facility used in its business any waste materials,
hazardous materials or hazardous substances in a manner that would give rise to
a material liability.
Section 3.17 Customer Relationships.(a) Neither the Company nor any
Subsidiary has, since December 31, 1999, lost, or been notified that it will
lose or suffer diminution in its relationship with any material customer, and,
to the best knowledge of the Company, no representative of any customer has
notified the Company or any Subsidiary that, in the event of a change of
ownership of the Company such as contemplated by this Agreement, the Company or
any Subsidiary would, lose or suffer diminution in its relationship with any
material customer.
(b) No contract is, and no bid outstanding as of the date of this
Agreement (if accepted or awarded) would result in, a Loss Contract, in each
case in the reasonable judgment of management as of the date of this Agreement.
For purposes of the foregoing, "Loss Contract" means any Contract (A) with a
total contract value in excess of $1,000,000 or (B) of or related to Syseca,
Inc., that, to the knowledge of Company or any Subsidiary (with the exercise of
reasonable care), has a negative Net Variable Margin as defined in Section
3.17(b) or 3.17(c) of the Disclosure Schedule. Schedule 3.17(b)(1) represents
outstanding bids for the U.S. operations. In the reasonable judgment of
management, the Net Variable Margins shown are reasonable expectations.
21
(c) Section 3.17(c) of the Disclosure Schedule sets forth with
respect to each contract that is subject to the percentage completion accounting
rules and outstanding as of March 31, 2000 with a total contract value in excess
of $1,000,000, the following: (i) job in backlog, (ii) sales, (iii) Net Variable
Margin, (iv) sales recognized to date, and (v) Net Variable Margin to date.
(d) Section 3.17(d) of the Disclosure Schedule sets forth by product
family the year to date Net Variable Margin and the Company's backlog as of May
2000. The analysis is a reasonable estimation of the Net Variable Margin of the
Company's freight backlog as of May 31, 2000.
Section 3.18 Certain Transactions.
Except as set forth in Section 3.18 of the Disclosure Schedule, there are
no material transactions or arrangements between the Company or any Subsidiary
and (i) any director or executive officer of the Company or (ii) any other
person or entity controlling or under common control with the Company.
Section 3.19 Title to Properties; Absence of Liens and Encumbrances.
Except as reflected in the balance sheet (including any related notes
thereto) dated December 31, 1999 included in the Company SEC Filings or as set
forth in Section 3.19 of the Disclosure Schedule or with respect to inventory or
other assets that are not material to the Company disposed of since December 31,
1999 in the ordinary course of business and consistent with past practice, each
of the Company and the Subsidiaries has good and valid title to all its owned
assets and properties, in each case free and clear of all liens, claims,
charges, security interests or other encumbrances, other than (x) liens for
taxes not yet due or delinquent or (y) security interests securing indebtedness
not in default for the purchase price of or lease rental payments on property
purchased or leased under capital lease arrangements in the ordinary course of
business or (z) such imperfections and irregularities of title or Liens as do
not affect the use of the properties or assets subject thereto or affected
thereby or otherwise materially impair business operations at such properties.
Any real property and buildings held under lease by the Company or any of the
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings.
Section 3.20 Insurance.
Section 3.20 of the Disclosure Schedule sets forth a list of all material
insurance policies of the Company and the Subsidiaries (the "Insurance
Policies"). The Insurance Policies are in full force and effect and provide
insurance in such amounts and against such risks as are customary for companies
of similar size in the same business as the Company and the Subsidiaries.
Neither the Company nor any Subsidiary is in material breach or default, and no
event has occurred which, with notice or the lapse of time, would constitute
such a breach or default, or permit termination or modification of the policy.
All premiums with respect to the Insurance Policies have been paid, and no
notice of cancellation or termination has been received with respect to any such
Insurance Policy. With respect to each of the litigation matters set forth
22
in Section 3.20 of the Disclosure Schedule, no carrier of any Insurance Policy
has asserted any denial of coverage. The Insurance Policies will remain in full
force and effect and will not in any way be affected by, or terminate or lapse
by reason of, any of the transactions contemplated hereby.
Section 3.21 State Takeover Statutes; Certain Charter Provisions.
The Board of Directors of the Company has approved this Agreement, the
Stock Option Agreement, the Support Agreement, the Merger and the other
transactions contemplated hereby and thereby, and such approval is sufficient to
render inapplicable to the Merger the provisions of Section 351.459 of the
MGBCL. The Board of Directors has also amended the By-Laws of the Company to add
a provision stating that Section 351.407 of the MGBCL (which related to "control
share acquisitions" as defined in Section 351.015(4) of the MGBCL) does not
apply to control share acquisitions of the Company. Such By-Law amendment is
sufficient to render the provisions of Section 351.407 of the MGBCL inapplicable
to the Shares acquired in the Offer or pursuant to the Option Agreement, and to
Shares subject to the Support Agreement.
Section 3.22 Rights Agreement.
This Agreement constitutes "Prior Written Approval" (as defined in the
Rights Agreement) of the acquisition of beneficial ownership of Shares by Parent
and its subsidiaries, including Acquisition, pursuant to this Agreement, the
Stock Option Agreement, the Support Agreement, the Offer, the Merger and the
other transactions contemplated hereby and thereby. Accordingly, (x) none of
Parent, Acquisition or any other subsidiary of Parent is an Acquiring Person (as
defined in the Rights Agreement) by virtue of the execution of this Agreement,
the Stock Option Agreement, the Support Agreement or the consummation of the
Offer, the Merger or the other transactions contemplated hereby or thereby and
(y) a Distribution Date or a Stock Acquisition Date (as such terms are defined
in the Rights Agreement) does not occur by reason of the execution of this
Agreement, the Stock Option Agreement, the Support Agreement or the consummation
of the Offer, the Merger or the other transactions contemplated hereby or
thereby. A correct and complete copy of the Rights Agreement, as amended to
date, has been made available to Parent.
Section 3.23 Material Contracts. Subsections (i) through (vii) of Section
3.23 of the Disclosure Schedule contain a list of the following types of
contracts and agreements to which the Company or any Subsidiary is a party as of
the date hereof (such contracts, agreements and arrangements as are required to
be set forth in Section 3.23(a) of the Disclosure Schedule being the "Material
Contracts"):
(i) each contract and agreement which (A) is likely to involve
consideration of more than $5,000,000, in the aggregate, during
the calendar year ending December 31, 2000, (B) is likely to
involve consideration of more than $5,000,000, in the aggregate,
over the remaining term of the such contract, and which, in
either case, cannot be canceled by the Company or any Subsidiary
without penalty or further payment and without more than 90
days' notice;
23
(ii) all material broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market
research, marketing, consulting and advertising contracts and
agreements to which the Company or, to the knowledge of the
Company, any Subsidiary is a party except any such contract that
can be canceled by the Company or any Subsidiary without penalty
or further payment and without more than 90 days' notice;
(iii)all management contracts (excluding contracts for employment)
and contracts with other consultants, including any contracts
involving the payment of royalties or other amounts calculated
based upon the revenues or income of the Company or any
Subsidiary or income or revenues related to any product of the
Company or any Subsidiary to which the Company or any Subsidiary
is a party;
(iv) all contracts and agreements evidencing indebtedness for
borrowed money in excess of $5,000,000;
(v) all material contracts or arrangements and agreements with any
Governmental Authority to which the Company or to the
knowledge of the Company, any Subsidiary is a party;
(vi) all contracts and agreements that limit, or purport to limit,
the ability of the Company or any Subsidiary to compete in any
line of business or which any person or entity or in any
geographic area or during any period of time; and
(vii)all material contracts or arrangement that result in any person
or entity holding a power of attorney from the Company or, any
Subsidiary that relates to the Company, any Subsidiary or their
respective businesses.
(b) Neither the execution of this Agreement nor the consummation of
any transaction contemplated hereby shall constitute a default, give rise to
cancellation rights, or otherwise adversely affect any of the Company's rights
under any Material Contract. The Company has furnished or made available to
Parent true and complete copies of all Material Contracts, including amendments
thereto.
Section 3.24 Opinion of Financial Advisor.
The Company has received the opinion of Bear Xxxxxxx & Co., dated July 16,
2000, to the effect that the consideration to be received in the Offer and the
Merger by the holders of Shares is fair to such holders from a financial point
of view, a copy of which opinion has been (or promptly will be) delivered to
Parent.
Section 3.25 Brokers.
24
No person is entitled to any brokerage or finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement and as a result of any action taken by or on behalf of the
Company, other than Bear Xxxxxxx & Co. pursuant to an engagement letter dated
July 12, 1999, a copy of which has been made available to Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Parent and Acquisition jointly and severally, represent and warrant
to the Company as follows:
Section 4.1 Organization and Qualification.
Each of Parent and Acquisition is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation and
has all requisite corporate power and authority to own or lease and operate its
properties and assets and to carry on its business as it is now being conducted.
Each of Parent and Acquisition is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of its properties and assets owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not prevent or materially delay consummation of the Offer and the Merger
or otherwise prevent Parent and Acquisition from performing any of their
material obligations under this Agreement.
Section 4.2 Authorization of Agreement, Non-Contravention, Etc.
Each of Parent and Acquisition has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by each of
Parent and Acquisition and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate and
stockholder action on the part of each of Parent and Acquisition. This Agreement
has been duly executed and delivered by each of Parent and Acquisition and
constitutes the legal, valid and binding obligation of each of Parent and
Acquisition, enforceable against each of Parent and Acquisition in accordance
with its terms. The execution and delivery of this Agreement by each of Parent
and Acquisition does not, and the consummation by Acquisition of the
transactions contemplated hereby will not, (i) conflict with any provision of
the Articles of Incorporation or By-Laws of Parent or Acquisition or (ii) result
(with the giving of notice or the lapse of time or both) in any violation of or
default under any mortgage, indenture, lease, agreement or other instrument,
permit, concession, grant, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent, its subsidiaries or
their respective properties other than (in the case of clause (ii) above) such
as would not prevent or materially delay consummation of the Offer and the
Merger or otherwise prevent Parent and Acquisition from performing any of their
material obligations under this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be made or obtained by Parent or Acquisition in connection
with the execution and delivery of this Agreement by Parent or Acquisition or
the consummation by Parent or Acquisition of the transactions contemplated
hereby, except for (i) compliance by Parent with the
25
HSR Act and similar statutes or regulations of foreign jurisdictions, (ii) the
filing of articles of merger with the Secretary of State of the State of
Missouri in accordance with the MGBCL and (iii) the filing with the SEC of (1)
the Offer Documents and (2) such reports under and such other compliance with
the Exchange Act and Securities Act and the rules and regulations thereunder as
may be required in connection with this Agreement and the transactions
contemplated hereby. As of the date hereof, Parent does not beneficially own any
Shares.
Section 4.3 SEC Filings.
Parent has made available to the Company true and complete copies of each
form, report, schedule, definitive proxy statement and registration statement
filed by Parent with the SEC subsequent to January 1, 1998 and on or prior to
the date hereof (collectively, the "Parent SEC Filings"), which are all forms,
reports, schedules, statements and other documents (other than preliminary
material) that Parent was required to file with the SEC. The Parent SEC Filings
(including, without limitation, any financial statements or schedules included
therein) (i) complied with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time of filing (or if
amended, supplemented or superseded by a filing prior to the date hereof, on the
date of that filing) 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 the light of the circumstances under which they
were made, not misleading.
Section 4.4 Financial Statements.
The consolidated financial statements of Parent included in the Parent SEC
Filings have been prepared in accordance with generally accepted accounting
principles consistently applied and consistent with prior periods, subject, in
the case of unaudited interim consolidated financial statements, to year-end
adjustments (which consist of normal recurring accruals) and the absence of
certain footnote disclosures. The consolidated balance sheets of Parent included
in the Parent SEC Filings fairly present the consolidated financial position of
Parent as of their respective dates, and the related consolidated statements of
operations, cash flows and stockholders' equity included in the Parent SEC
Filings fairly present the consolidated results of operations of Parent for the
respective periods then ended, subject, in the case of unaudited interim
financial statements, to year-end adjustments (which consist of normal recurring
accruals) and the absence of certain footnote disclosures.
Section 4.5 Absence of Certain Changes or Events.
Since December 31, 1999, Parent and its Subsidiaries, taken as a whole,
have not suffered any Material Adverse Effect.
Section 4.6 Parent Shares.
All of the Parent Shares issuable in exchange for Shares in the Offer and
the Merger in accordance with this Agreement will be, when so issued, duly
authorized, validly issued, fully paid and non-assessable and free of preemptive
rights. The issuance of such Parent Shares will
26
be registered under the Securities Act and registered or exempt from
registration under applicable state securities laws.
Section 4.7 Information Supplied. Each of the Offer Documents and the
other documents required to be filed by Parent with the SEC in connection with
the Offer, the Merger and the other transactions contemplated hereby, and the
information supplied by Parent to the Company in connection with the Schedule
14D-9, will comply as to form, in all material respects, with the requirements
of the Exchange Act and the Securities Act, as the case may be, and will not, on
the date of its filing or dissemination, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 4.7, no
representation or warranty is made by Parent with respect to statements made or
incorporated by reference in the Offer Documents based on information supplied
by the Company expressly for inclusion or incorporation by reference therein.
Section 4.8 Reorganization.
Neither Parent nor any of its affiliates has taken or agreed to take any
action or knows of any fact, circumstance, plan or intention that is or would be
reasonably likely to prevent the Transaction from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code. Section 4.9
Operations and Assets of Acquisition.
Acquisition was formed solely for the purpose of the Merger and engaging
in the transactions contemplated hereby and has no assets or liabilities, and
will have no assets or liabilities, except as necessary for such purpose.
Acquisition has not engaged, and will not engage, in any other business or
activity of any kind or type whatsoever and has conducted and will conduct its
operations only as contemplated hereby.
Section 4.10 Brokers.
No person is entitled any brokerage, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement and as a result of any action taken by or on behalf of Parent or
any of its subsidiaries.
ARTICLE V
CERTAIN AGREEMENTS
Section 5.1 Conduct of the Company's Business.
The Company covenants and agrees that, between the date of this Agreement
and the date designees of Parent constitute a majority of the members of the
Board of Directors of the Company, unless Parent shall otherwise consent in
writing (such consent not to be unreasonably
27
withheld or delayed) or as set forth in Section 5.1 of the Disclosure Schedule
or as otherwise expressly contemplated by this Agreement:
(a) the business of the Company and the Subsidiaries shall be
conducted only in, and the Company and the Subsidiaries shall not take or
propose to take any action except in, the ordinary course of business and
consistent with past practice;
(b) neither the Company nor any Subsidiary shall, directly or
indirectly, do or propose to do, any of the following: (i) issue, sell, pledge,
dispose of, grant or encumber (or permit any Subsidiary to issue, sell, pledge,
dispose of, grant or encumber) any assets of the Company or any Subsidiary,
except inventory and immaterial assets in the ordinary course of business and
consistent with past practice; (ii) except as contemplated hereby, amend or
propose to amend its Certificate or Articles of Incorporation or By-Laws (or
similar organizational documents); (iii) split, combine, subdivide or reclassify
any outstanding shares of its capital stock, or declare, set aside or pay any
dividend payable in cash, stock, property or otherwise with respect to such
shares (except for any dividends paid in the ordinary course to the Company or
to any wholly-owned Subsidiary); (iv) redeem, purchase, acquire or offer to
acquire (or permit any Subsidiary to redeem, purchase, acquire or offer to
acquire) any shares of its capital stock; or (v) enter into any contract,
agreement, commitment or arrangement with respect to any of the matters set
forth in this paragraph (b);
(c) neither the Company nor any Subsidiary shall (i) issue, sell,
pledge or dispose of, or agree to issue, sell, pledge or dispose of, any
additional shares of, or securities convertible or exchangeable for, or any
options, warrants or rights of any kind to acquire any shares of, its capital
stock of any class or other property or assets or ownership interest (including
without limitation, any phantom interest) whether pursuant to the Company Stock
Plans or otherwise; provided that the Company may issue Shares upon the exercise
of currently outstanding Company Stock Rights that are stock options; (ii)
acquire (including without limitation, by merger, consolidation or acquisition
of stock or assets or any other business combination) any corporation,
partnership or other business organization or division thereof (or any material
amount of assets, other than pending acquisitions or minority investments, in
each case publicly announced prior to the date hereof); (iii) incur any
indebtedness for borrowed money or issue any debt securities in an amount
exceeding $5 Million in the aggregate, except for working capital loans in the
ordinary course of business; (iv) enter into, terminate or modify any material
contract, lease, agreement or commitment, except in the ordinary course of
business and consistent with past practice; (v) terminate, modify, assign,
waive, release or relinquish any contract rights or amend any material rights or
claims not in the ordinary course of business, (vi) authorize, or make any
commitment with respect to any capital expenditures in excess of $500,000 in the
aggregate; (vii) make or direct to be made any capital investments or equity
investments in any entity, other than investments in any wholly-owned
subsidiary, (viii) except as permitted hereby enter into or amend any contract,
agreement, commitment or arrangement with respect to any matter set forth in
this Section 5.1(c); or (ix) settle or compromise any claim, action, suit or
proceeding pending or threatened against the Company, or, if the Company may be
liable or obligated to provide indemnification, against the Company's directors
or officers, before any court, governmental agency or arbitrator, except in the
ordinary course of business;
28
provided that nothing herein shall require any action that might impair or
otherwise affect the obligation of any insurance carrier under any insurance
policy maintained by the Company;
(d) neither the Company nor any Subsidiary shall grant any increase
in the salary or other compensation of its employees except (i) pursuant to the
terms of employment agreements in effect on the date hereof and previously
disclosed to Parent and (ii) in the case of employees who are not executive
officers of the Company as set forth in Section 5.1(e) of the Disclosure
Schedule, in the ordinary course of business and consistent with past practice,
or grant any bonus to any employee other than bonuses that are immaterial in
amount to employees who are not executive officers or senior level management
key employees of the Company or set forth on Section 5.1(d) of the Disclosure
Schedule or enter into any employment agreement or make any loan to or enter
into any material transaction of any other nature with any employee of the
Company or any Subsidiary;
(e) neither the Company nor any Subsidiary shall (except for salary
increases for employees who are not executive officers of the Company, or set
forth on Section 5.1(d) of the Disclosure Schedule in the ordinary course of
business and consistent with past practice) adopt or amend, in any respect,
except as contemplated hereby or as may be required by applicable law or
regulation, any collective bargaining, bonus, profit sharing, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund, plan or
arrangement for the benefit or welfare of any directors, officers or employees
(including, without limitation, any such plan or arrangement relating to
severance or termination pay);
(f) except as required by law, tax regulation, SEC pronouncement
or GAAP, amend any accounting policies or procedures;
(g) make any material tax election or settle or compromise any
material United States federal, state, local or other non-United States income
tax liability, except in the ordinary course of business or in a manner
consistent with past practice;
(h) neither the Company nor any Subsidiary shall take any action that
would make any representation or warranty of the Company hereunder inaccurate in
any respect at, or as of any time prior to, the Effective Time, or omit to take
any action necessary to prevent any such representation or warranty from being
inaccurate in any respect at any such time; and
(i) each of the Company and the Subsidiaries shall use its best
efforts, to the extent not prohibited by the foregoing provisions of this
Section 5.1, to maintain its relationships with its suppliers, customers and
employees, and if and as requested by Parent, the Company shall schedule, and
the management of the Company shall participate in, meetings of representatives
of Parent with employees of the Company or any Subsidiary; and
(j) announce an intention, enter into any formal or informal
agreement or otherwise make a commitment, to do any of the foregoing.
Section 5.2 Stockholder Approval; Preparation of Proxy Statement. If the
Company Stockholder Approval is required by law, the Company shall, as promptly
as practicable following the expiration of the Offer, duly call, give notice of,
convene and hold a meeting of its
29
stockholders (the "Stockholders Meeting") for the purpose of obtaining the
Company Stockholder Approval. Subject to the fiduciary duties of the Board under
applicable law, the Company shall, through its Board of Directors, recommend to
its stockholders that the Company Stockholder Approval be given. Notwithstanding
the foregoing, if Parent or Acquisition shall acquire beneficial ownership of at
least 90% of the outstanding Shares, the parties shall take all necessary and
appropriate action to cause the merger of Acquisition and the Company to become
effective as soon as practicable after the expiration of the Offer without a
Stockholders Meeting in accordance with the short form merger provisions of the
MGBCL.
(b) If the Company Stockholder Approval is required by law, Parent
shall, as soon as practicable following the expiration of the Offer, prepare and
file with the SEC a post-effective amendment to the Form S-4 which shall include
a preliminary Proxy Statement as a prospectus and shall use all reasonable
efforts to respond to any comments of the SEC or its staff and to cause such
post-effective amendment to be declared effective, and the Proxy Statement to be
mailed to the Company's stockholders, as promptly as practicable. Parent shall
notify the Company 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 Form S-4 or for additional information and will supply the Company with
copies of all correspondence between Parent or any of its representatives, on
the one hand, and the SEC or its staff, on the other hand, with respect to the
Form S-4 or the Merger. Parent shall give the Company an opportunity to comment
on any correspondence with the SEC or its staff or any proposed material to be
included in the Form S-4 prior to transmission to the SEC or its staff and shall
not transmit any such material to which the Company reasonably objects. If at
any time prior to the Stockholders Meeting there shall occur any event that
should be set forth in an amendment or supplement to the Form S-4, Parent shall
promptly prepare and mail to the Company stockholders such an amendment or
supplement.
(c) Parent agrees to cause all Shares owned by Parent or any
subsidiary of Parent to be voted in favor of the Company Stockholder Approval.
Section 5.3 Access to Information.(a) The Company shall, and shall cause
the Subsidiaries and its and their respective officers, directors, employees,
representatives and agents to, afford, from the date hereof to the Effective
Time, the officers, employees, representatives and agents of Acquisition
reasonable access during regular business hours to its officers, employees,
agents, properties, books, records and workpapers, and shall promptly furnish
Acquisition all financial, operating and other information and data as
Acquisition, through its officers, employees or agents, may reasonably request.
(b) Except as required by law, Acquisition shall hold, and will
cause its respective officers, employees, representatives and agents to hold,
any confidential information of the Company or any of its Subsidiaries in
accordance with the Confidentiality Agreement between the Company and Parent.
(c) No investigation pursuant to this Section 5.3 shall affect, add
to or subtract from any representations or warranties of the parties hereto or
the conditions to the obligations of the parties hereto to effect the Merger.
30
Section 5.4 Further Assurances.(a) Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable,
including, without limitation, using all commercially reasonable efforts to (i)
make promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act and in the other countries where a merger filing
is necessary or advisable with respect to the Transactions and (ii) obtain all
permits, consents, approvals, authorizations, qualifications and orders of
Governmental Entities and parties to contracts with the Company and the
Subsidiaries as are necessary for the consummation of the Offer and the Merger.
(b) Parent shall use all reasonable efforts to cause the Parent
Shares to be issued upon the consummation of the Offer and in the Merger and to
be issuable upon exercise of Parent Options to be approved for listing on the
NYSE, subject to official notice of issuance, as promptly as practicable after
the date hereof.
Section 5.5 Inquiries and Negotiations.
(a) From the date hereof until the Effective Time or earlier
termination of this Agreement, the Company, the Subsidiaries and their
respective officers, directors, employees, representatives and other agents or
otherwise will not, directly or indirectly (i) solicit, initiate or knowingly
encourage the submission of any Alternative Transaction, including any Superior
Proposal, or (ii) participate in any discussions or negotiations regarding, or
furnish to any person, any non-public information with respect to, or otherwise
cooperate in any way with respect to, or assist or participate in or facilitate
any Alternative Transaction with any person, corporation, entity or "group" (as
defined in Section 13(d) of the Exchange Act) other than Parent and its
affiliates, representatives and agents (each, a "Third Party") except that the
Company may take any action referred to in this clause (ii) if (A) the Board
determines in good faith (after consultation with outside counsel) that such
action is required by the fiduciary duties of the Board under applicable law,
(B) the Board determines in good faith that the Alternative Transaction
constitutes a Superior Proposal, and (C) the Company has given prior written
notice to Parent and Acquisition and entered into a customary confidentiality
agreement on terms no less favorable to the Company that those contained in the
Confidentiality Agreement (provided that such confidentiality agreement need not
contain terms which restrict the ability of the Third Party to make a proposal
to the Company's Board of Directors). The Company shall promptly notify Parent
orally and in writing if any proposal, offer, inquiry or other contact is
received by, any information is requested from, or any discussions or
negotiations are sought to be initiated or continued with, the Company in
respect of an Alternative Transaction, and shall, in any such notice to Parent,
indicate the identity of the Third Party and the terms and conditions of any
proposals or offers or the nature of any inquiries or contacts, and thereafter
shall keep Parent informed, on a reasonably current basis, of all material
developments affecting the status and terms of any such proposals or offers or
the status of any such discussions or negotiations. The Company shall not
release any Third Party from, or waive any provision of, any confidentiality or
standstill agreement, other than any such provision that would prevent or
otherwise restrict the ability of a Third Party to make a proposal to the
Company's Board of Directors. As of the date hereof, the Company shall cease,
and shall cause the Subsidiaries and the officers, directors,
31
employees, representatives and other agents of the Company and the Subsidiaries,
to cease, all discussions, negotiations and communications with all Third
Parties and demand the immediate return of all confidential information
previously provided to Third Parties.
(b) As used in this Agreement, the term "Alternative Transaction"
shall mean any bona fide written proposal or offer from any Third Party relating
to any (i) merger, consolidation, recapitalization, tender or exchange offer,
debt restructuring or similar transaction involving the Company, (ii) sale of
more than 20% of the common stock or other capital stock of the Company or (iii)
sale of assets (including stock of Subsidiaries) representing more than 20% of
the assets of the Company and its subsidiaries, taken as a whole, including a
sale by any means specified in clause (i) of this sentence. As used in this
Agreement, the term "Superior Proposal" shall mean any bona fide written
proposal, not solicited, initiated or encouraged in violation of this Section
5.5, made by a Third Party to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, all of the equity securities of the
Company entitled to vote generally in the election of directors or all or
substantially all of the assets of the Company, if and only if, the Board
reasonably determines (after consultation with its financial advisor and outside
counsel) (x) that the proposed transaction would be more favorable from a
financial point of view to its stockholders than the Offer and the Merger and
the transactions contemplated hereby taking into account at the time of
determination any changes to the terms of this Agreement that as of that time
had been proposed by Parent, and (y) that the person or entity making such
Superior Proposal is capable of consummating such Alternative Transaction (based
upon, among other things, the availability of financing and the degree of
certainty of obtaining financing, the expectation of obtaining required
regulatory approvals and the identity and background of such person).
(c) Except as set forth in this Section 5.5(c), neither the Board nor
any committee thereof shall withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Acquisition, the approval or
recommendation by the Board or any such committee of this Agreement, the Offer,
the Merger or any other transaction. Notwithstanding the foregoing, prior to the
time of acceptance for payment of Shares pursuant to the Offer, the Board may
withdraw or modify its approval or recommendation of the Offer and the Merger if
the Board determines in good faith (i) after consultation with outside counsel,
that such action is required by the fiduciary duties of the Board under
applicable law and (ii) that the Alternative Transaction constitutes a Superior
Proposal. Notwithstanding the foregoing, nothing in this Agreement shall (x)
require the Board to act in a manner inconsistent with its duty of candor under
applicable law, (y) limit the Board's ability to make any disclosure to the
Company's stockholders that the Board determines in good faith (after
consultation with outside counsel) is required to be made to satisfy its
fiduciary duties under applicable law or (z) limit the Company's ability to make
any disclosure required by applicable law.
(d) Nothing contained in this Section 5.5 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders, if the Board determines in good faith,
after having received advice from outside counsel, that such action is required
under applicable law; provided, however, that neither the Company nor the Board
nor any committee thereof shall, except as permitted by Section 5.5(c),
32
withdraw or modify, or propose publicly to withdraw or modify, its position with
respect to this Agreement, the Offer, the Merger or any other transactions or
shall approve or recommend, or propose publicly to approve or recommend, any
Alternative Transaction, including a Superior Proposal.
(e) If a Payment Event (as hereinafter defined) occurs, the Company
shall pay to Parent, within two business days following such Payment Event, a
fee of $10.5 million in cash.
(f) For purposes of this Agreement, the term "Payment Event" shall
mean (x) the termination of this Agreement by the Company pursuant to 7.1(c),
(y) the termination of this Agreement by Parent pursuant to Section 7.1(d) or
(z) (A) after the date hereof and prior to the termination of this Agreement a
third party shall have made a bona fide proposal or offer for an Alternative
Transaction and (B) within 12 months of the date of termination of this
Agreement (other than by reason of Parent's failure to comply with or perform,
or its breach of, in any material respect any of its agreements or covenants
contained herein), the Company shall enter into an agreement with respect to, or
consummate an Alternative Transaction (substituting 25% for 20% in the
definition thereof).
(g) The Company acknowledges that the agreements contained in this
Section 5.5 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement; accordingly, if the Company fails to promptly pay any amount due
pursuant to this Section 5.5, and, in order to obtain such payment, Parent
commences a suit that results in a judgment against the Company for the fee set
forth in this Section 5.5, the Company shall also pay to Parent its reasonable
costs and expenses incurred (including, without limitation, reasonable fees and
expenses of counsel) in connection with such litigation.
(h) This Section 5.5 shall survive any termination of this Agreement,
however caused and is intended to benefit Parent and shall be binding on the
successors and assigns of the Company.
(i) The Company may terminate this Agreement and enter into a letter
of intent, agreement-in-principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") with respect to such Alternative
Transaction provided that, prior to any such termination, (i) the Company has
provided Parent written notice that it intends to terminate this Agreement
pursuant to Section 7.1(d), identifying the Alternative Transaction then
determined to be more favorable and the parties thereto and delivering an
accurate description of all material terms (including any changes or adjustments
to such terms as a result of negotiations or otherwise) of the Acquisition
Agreement to be entered into for such Alternative Transaction, and (ii) at least
three full business days after the Company has provided the notice referred to
in clause (i) above, the Company delivers to Parent (A) a written notice of
termination of this Agreement pursuant to Section 7.1(c), (B) the termination
fee as provided in Section 5.5(e), (C) a written acknowledgment from the Company
that (x) the termination of this Agreement and the entry into the Acquisition
Agreement for the Alternative Transaction will be a "Payment Event" (as defined
in this Agreement) and (y) the Company Stock Option Agreement shall be honored
33
in accordance with its terms and (D) a written acknowledgment from each other
party to such Alternative Transaction that it is aware of the substance of the
Company's acknowledgment under clause (C) above and waives any right it may have
to contest the matters thus acknowledged by the Company.
Section 5.6 Notification of Certain Matters, Etc. The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence, or failure to occur, of any event that such
party believes would be likely to cause any of its representations or warranties
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Effective Time and (ii) any material
failure of the Company or Parent, as the case may be, or any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that failure to give such notice shall not constitute a waiver of any defense
that may be validly asserted.
(b) Parent shall not take any action that would make any
representation or warranty of Parent hereunder inaccurate in any material
respect at, or as of any time prior to, the Effective Time, or omit to take any
action necessary to prevent any such representation or warranty from being
inaccurate in any material respect at any such time.
Section 5.7 Indemnification.
(a) Parent will cause the Surviving Corporation to provide, until
the sixth anniversary of the Closing Date, the directors and officers of the
Company who are currently covered by the Company's existing insurance and
indemnification policy an insurance and indemnification policy that provides
coverage for events occurring prior to the Effective Time (the "D&O Insurance")
that is no less favorable than the Company's existing policy or, if
substantially equivalent coverage is unavailable, the best available coverage;
provided, that Parent shall not be required to pay an annual premium for the D&O
Insurance in excess of 200% of the last annual premium paid by the Company prior
to the date hereof (which annual premium the Company represents and warrants to
be $216,000 in the aggregate), but in such case shall purchase as much coverage
as possible for such amount.
(b) After the Effective Time, Parent will cause the Surviving
Corporation to indemnify and hold harmless each person who is now, or has been
prior to the date hereof or who becomes prior to the Effective Time, an officer
or director of the Company or any of its subsidiaries (the "Indemnified
Persons") against (i) all losses, claims, damages, costs, expenses (including
without limitation counsel fees and expenses), settlement, payments or
liabilities arising out of or in connection with any claim, demand, action suit,
proceeding or investigation based in whole or in part on, or arising in whole or
in part out of, the fact that such person is or was an officer or director of
the Company or any of its subsidiaries, whether or not pertaining to any matter
existing or occurring at or prior to the Effective Time and whether or not
asserted or claimed prior to or at or after the Effective Time (the "Indemnified
Liabilities") and (ii) all Indemnified Liabilities based in whole or in part on,
or arising in whole or in part out of, or pertaining to, this Agreement or the
transactions contemplated hereby, in each case to the fullest extent required or
permitted under applicable law (including with respect to the advancement of
34
expenses). Each Indemnified Person is intended to be a third party beneficiary
of this Section 5.7 and may specifically enforce its terms. This Section 5.7
shall not limit or otherwise adversely affect any rights any Indemnified Person
may have under any agreement with the Company or under the Company's articles of
incorporation or bylaws.
(c) This Section 5.7 shall survive the consummation of the Merger,
is intended to benefit the Indemnified Parties, and shall be binding on the
successors and assigns of Parent and the Surviving Corporation.
Section 5.8 Employee Benefits.(a) From and after the Effective Time, the
Surviving Corporation and its Subsidiaries will honor in accordance with their
terms all existing employment, severance, consulting and salary continuation
agreements between the Company or any of its Subsidiaries and any current or
former executive officer or director of the Company or any of its Subsidiaries
of a type required to be filed (or described in a document filed) with the SEC
pursuant to the Exchange Act, which agreements are described on Schedule 5.8 or
included in the Company SEC Filings, subject to any modifications thereto agreed
to by any such officers or directors with the Surviving Corporation.
(b) In addition to honoring the agreements referred to in Schedule
5.8, until the first anniversary of the Effective Time, Parent will cause the
Surviving Corporation to provide the benefits (including health benefits,
severance policies and general employment policies and procedures) which are
comparable in the aggregate, to benefits that are available to employees of the
Company and its Subsidiaries as of the date hereof, provided that nothing in
this Section 5.8(b) shall be deemed to prevent the Surviving Corporation or any
of its Subsidiaries from making any change required by applicable law.
(c) To the extent permitted under applicable law, each employee of
the Company or its Subsidiaries shall be given credit for all service with the
Company or its Subsidiaries (or service credited by the Company or its
Subsidiaries) under all employee benefit plans, programs, policies and
arrangements maintained by Parent or the Surviving Corporation in which they
participate or in which they become participants for purposes of eligibility,
vesting and benefit accrual including, without limitation, for purposes of
determining (i) short-term and long-term disability benefits, (ii) severance
benefits, (iii) vacation benefits and (iv) benefits under any retirement plan;
provided, however, that no service credit for benefit accrual purposes shall be
provided under any defined benefit pension plan or in any other circumstance
that would result in duplicative accrual of benefits for the same periods of
service.
Section 5.9 Section 16 Matters.
Prior to the Effective Time, Parent and the Company shall take all such
steps as may reasonably be required to cause any dispositions of Shares
(including derivative securities with respect to the Shares) or acquisition of
Parent Shares (including derivative securities with respect to the Parent
Shares) resulting from the transactions contemplated by this Agreement by each
individual who is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to the Company to be exempt under Rule 16b-3
promulgated under the Exchange Act, such steps to be taken in accordance with
the No-Action Letter, dated January 12, 1999, issued by the SEC regarding such
matters.
35
Section 5.10 Tax Treatment.
Each of Parent, Acquisition and the Company shall, and shall cause their
respective subsidiaries to use all commercially reasonable efforts to cause the
Transaction to qualify as a "reorganization" within the meaning of Section
368(a) of the Code and each of Parent, Acquisition and the Company agrees that
it will not take, and will cause its Subsidiaries to not take any action, or
fail to take any action, which action or failure would be reasonably likely to
cause such tax treatment not to be obtained.
Section 5.11 Affiliate Letters.
As promptly as practicable, the Company shall deliver to Parent a letter
identifying all Persons who are at the time this Agreement is submitted for
adoption by the stockholders of the Company, "affiliates" of the Company for
purposes of Rule 145 under the Securities Act. The Company shall use all
reasonable efforts to deliver or cause to be delivered to Parent, prior to the
expiration of the Offer, an Affiliate Letter in the form attached hereto as
Exhibit A from each such person.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to the Obligations of the Parties.
The respective obligations of the parties to consummate the Merger are
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) if required by applicable law, this Agreement shall have been
duly approved by the holders of two-thirds of the outstanding Shares, in
accordance with applicable law and the Articles of Incorporation and By-Laws of
the Company.
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority which prohibits,
restrains or enjoins the consummation of the Merger; and
(c) Acquisition shall have accepted for payment and paid for Shares
pursuant to the Offer, provided that Parent and Acquisition may not assert this
condition if the failure to accept Shares for payment resulted from a breach of
this Agreement by Parent or Acquisition.
ARTICLE VII
TERMINATION AND ABANDONMENT
Section 7.1 Termination and Abandonment.
This Agreement may be terminated and the Offer and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval by the stockholders of the Company:
36
(a) by mutual action of the Board of Directors of Parent and the
Company;
(b) by either the Company or Parent if (i) any statute, rule,
regulation, executive order, decree, ruling or injunction existing or
hereinafter enacted of or by any Governmental Entity of competent jurisdiction
which makes the consummation of the Offer or the Merger illegal or otherwise
prevents or prohibits the consummation of the Offer or the Merger shall be in
effect and shall have become final and nonappealable, (ii) Acquisition shall
have terminated the Offer, or the Offer shall have expired, without the
acceptance for payment of Shares thereunder or (iii) the acceptance for payment
of Shares pursuant to the Offer shall not have occurred on or prior to the
Outside Date; unless, in any case, such event has been caused by or resulted
from the breach of this Agreement by the party seeking such termination;
(c) by the Company if, prior to acceptance for payment of Shares
pursuant to the Offer, the Company shall enter into a definitive written
agreement with respect to a Superior Proposal, as provided in Section 5.5(i),
provided that the Company shall have complied in all material respects with
Section 5.5(a) hereof and that the fee payable under Section 5.5(b) hereof shall
have been paid;
(d) by Parent, if, prior to the purchase of Shares in the Offer, the
Board of Directors of the Company shall have publicly withdrawn, modified or
amended in a manner adverse to Acquisition its approval or recommendation of the
Merger;
(e) by the Company if, (i) Acquisition shall have failed to commence
the Offer within ten business days of the date of this Agreement or (ii) prior
to the purchase of Shares in the Offer, (A) Parent shall have failed to perform
in all material respects its covenants and obligations contained in this
Agreement, which failure to perform has not been cured within ten business days
after the giving of notice to Parent or (B) the representations and warranties
set forth in Section 4.8 hereof shall not be true in all material respects.
(f) by Parent if (i) Acquisition shall have failed to commence the
Offer within ten business days of the date hereof due to the failure to be
satisfied of any condition set forth in Annex I hereto and (ii) such condition
could not reasonably be expected to be satisfied.
Any party desiring to terminate this Agreement pursuant to this Section
7.1 shall give notice to the other party in accordance with Section 8.5.
Section 7.2 Effect of Termination.
Except as provided in Sections 5.5 and 8.2, in the event of the termination
of this Agreement and the abandonment of the Merger pursuant to Section 7.1,
this Agreement shall thereafter become void and have no effect, and no party
hereto shall have any liability to any other party hereto or its stockholders or
directors or officers in respect thereof, except that nothing herein shall
relieve any party from liability for any fraud or willful breach prior to the
date of such termination; provided, however, that the Confidentiality Agreement
shall survive any termination of this Agreement.
37
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant hereto shall survive the Effective Time, provided
that this Section 8.1 shall not limit any covenant or agreement of the parties,
which covenants and agreements shall survive in accordance with their terms.
Section 8.2 Expenses, Etc. Except as provided in Section 5.5, in the
event that the transactions contemplated by this Agreement are not consummated,
neither the Company, on the one hand, nor Acquisition, on the other hand, shall
have any obligation to pay any of the fees and expenses of the other incident to
the negotiation, preparation and execution of this Agreement, including the fees
and expenses of counsel, accountants, investment bankers and other experts.
(b) In the event that the transactions contemplated by this
Agreement are consummated, the Company shall pay all of the fees and expenses of
Acquisition incident to the negotiation, preparation and execution of this
Agreement, including the fees and expenses of counsel, accountants, investment
bankers and other advisors.
Section 8.3 Publicity.
The Company and Parent shall consult with each other before issuing any
press release or making any other public announcement concerning this Agreement
or the transactions contemplated hereby and shall not issue any such press
release or make any such statement without the prior consent of the other party,
except that either party may make such public disclosure that it believes in
good faith to be required by law (in which event such party required to make the
release or announcement shall use its best efforts to allow the other party
reasonable time to comment on such release or announcement in advance of such
issuance).
Section 8.4 Execution in Counterparts.
For the convenience of the parties, this Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 8.5 Notices.All notices that are required or may be given pursuant
to the terms of this Agreement shall be in writing and shall be sufficient in
all respects if given in writing and delivered by hand or national overnight
courier service, transmitted by telecopy or mailed by registered or certified
mail, postage prepaid, as follows (each such notice to be effective upon
receipt):
If to Parent or Acquisition to:
GE Transportation Systems
0000 Xxxx Xxxx Xxxx
00
Xxxx, XX 00000 Telecopy: 000-000-0000
Attention: Chief Financial Officer
with copies to:
General Electric Company
0000 Xxxxxx Xxxxxxxx, X0
Xxxxxxxxx, XX 00000
Telecopy: 000-000-0000
Attention: Xxxxxxx Xxxxxxx
and a copy to:
Xxxxxxx & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: 212-848-7179
Attention: Xxxx X Xxxxxxxx Xx.
If to the Company, to:
Xxxxxx Industries, Inc.
0000 X.X. Xxxxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 000-000-0000
Attention: Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxx
and a copy to:
Xxxxxxxx & Xxxxxx L.L.P.
0000 Xxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Telecopy: 000-000-0000
Attention: Xxxxx X. Xxxxxx
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto.
Section 8.6 Waivers.
The Company, on the one hand, and Parent, on the other hand, may, by
written notice to the other, (i) extend the time for the performance of any of
the obligations or other actions of the other under this Agreement; (ii) waive
any inaccuracies in the representations or warranties of the other contained in
this Agreement or in any document delivered pursuant to this Agreement; (iii)
waive compliance with any of the conditions of the other contained in this
Agreement; or (iv) waive performance of any of the obligations of the other
under this Agreement. Except as provided in the preceding sentence, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
Section 8.7 Entire Agreement.
This Agreement, its Exhibits and Schedules and the other documents
executed at the time of execution hereof or the Effective Time in connection
herewith constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof. No representation, warranty, promise, inducement or
statement of intention has been made by any party that is not embodied in this
Agreement or such other documents, and none of the parties shall be bound by, or
be liable for, any alleged representation, warranty, promise, inducement or
statement of intention not embodied herein or therein.
Section 8.8 Applicable Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to principles of conflict of laws,
except to the extent the corporate law of the State of Missouri is applicable
hereto.
The parties hereto agree that any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of, this Agreement
may be brought in the United States District Court for the District of Delaware
or any other Delaware State court (and in the appropriate appellate courts), and
each of the parties hereby (i) consents to the jurisdiction of such courts in
any such suit, action or proceeding, (ii) irrevocably waives any objection which
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
which is brought in any such court has been brought in an inconvenient forum and
(iii) agrees not to bring any action related to this agreement or the
transactions contemplated hereby in any other court (except to enforce the
judgment of such courts). Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party in the manner provided for notices
in Section 8.5 shall be deemed effective service of process on such party. Each
of Parent, Acquisition and the Company hereby irrevocably waives all right to
trial
40
by jury in any action, proceeding or counterclaim (whether based on contract,
tort or otherwise) arising out of or relating to this Agreement or the actions
of Parent, Acquisition or the Company in the negotiation, administration,
performance and enforcement hereof.
Section 8.9 Binding Effect, Benefits.
Except as otherwise stated herein, this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective permitted
successors and assigns. Except as otherwise stated herein, nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective permitted successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement; provided, however, that the provisions of Section 5.7 hereof shall
accrue to the benefit of, and shall be enforceable by, each of the current and
former directors and officers of the Company.
Section 8.10 Assignability.
Neither this Agreement nor any of the parties' rights hereunder shall be
assignable by any party hereto without the prior written consent of the other
party hereto.
Section 8.11 Amendments.
This Agreement may be varied, amended or supplemented at any time before
or after the approval and adoption of this Agreement by the stockholders of the
Company by action of the respective boards of directors of the Company and
Acquisition, without action by the stockholders thereof; provided that, after
approval and adoption of this Agreement by the Company's stockholders, no such
variance, amendment or supplement shall, without consent of such stockholders,
reduce the amount or alter the form of the consideration that the holders of the
capital stock of the Company shall be entitled to receive upon the Effective
Time pursuant to Article II hereof. Without limiting the generality of the
foregoing, this Agreement may only be amended, varied or supplemented by an
instrument in writing, signed by the parties hereto.
Section 8.12 Interpretation.
As used herein, "best efforts" or similar formulations shall mean "all
commercially reasonable efforts." References to the "knowledge" of the Company,
or similar formulations, shall mean to the actual knowledge after due inquiry of
the executive officers of the Company. As used herein, "including" or similar
formulations shall mean "including without limitation."
41
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement and Plan of Merger as of the day and year first above written.
XXXXXX INDUSTRIES, INC.
By:
-----------------------------
Name:
Title:
FOUR POINTS ACQUISITION, INC.
By:
-----------------------------
Name:
Title:
GENERAL ELECTRIC COMPANY
By:
-----------------------------
Name:
Title:
42
ANNEX I
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, but subject to the terms
of the Merger Agreement and any applicable rules and regulations of the SEC
(including Rule 14e-1(c) relating to Acquisition's obligation to pay for or
return tendered shares after termination of the Offer), Acquisition shall not be
required to accept for payment or pay for any Shares tendered pursuant to the
Offer and may extend, terminate or amend the Offer if (i) the Minimum Condition
has not been satisfied, (ii) any applicable waiting period under the HSR Act or
similar statutes or regulations of foreign jurisdictions has not expired or
terminated, (iii) the Form S-4 shall not have become effective under the
Securities Act or shall be the subject of any stop order or proceedings seeking
a stop order or (iv) the Parent Shares to be issued in the Offer and the Merger
shall not have been approved for listing on the NYSE, subject to official notice
of issuance, or (v) at any time after the date of this Agreement, and prior to
the expiration date of the Offer, any of the following events shall occur and be
continuing:
(a) there shall be instituted or pending any action, proceeding or
litigation by any Governmental Entity which directly or indirectly seeks to (i)
prevent, prohibit, or make illegal, the acceptance for payment, payment for or
purchase of Shares by Parent, Acquisition or any other affiliate of Parent or
the consummation of the Offer, the Merger or the other transactions contemplated
by the Merger Agreement, (ii) render Acquisition unable to accept for payment,
pay for or purchase some or all of the Shares, (iii) impose material limitations
on the ability of Parent effectively to exercise full rights of ownership of the
Shares, including the right to vote the Shares purchased by it on all matters
properly presented to the Company's stockholders or (iv) impose material damages
in connection with the transactions contemplated by the Merger Agreement;
(b) there shall have been any statute, rule, regulation, legislation
or interpretation enacted, promulgated, amended, issued or deemed applicable to
(i) Parent, the Company or any of their respective Subsidiaries or an Affiliate
of either Parent or the Company or (ii) any transaction contemplated by the
Merger Agreement, by any United States or non-United States legislative body or
Governmental Entity with appropriate jurisdiction (other than the routine
application of the waiting period provisions of the HSR Act or similar statutes
or regulations of foreign jurisdictions applicable to the Offer or the Merger)
that is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the NYSE (other than a shortening
of trading hours or any coordinated trading halt triggered solely as a result of
a specified increase or decrease in a market index), (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, or (iii) any limitation (whether or not mandatory) by any
government or Governmental Entity on the extension of credit by banks or other
lending institutions;
(d) (i) the representations and warranties of the Company contained
in this Agreement shall not be true and correct (except to the extent that the
aggregate of all breaches thereof would not have a Material Adverse Effect on
the Company) at the date hereof and as of
the consummation of the Offer with the same effect as if made at and as of the
consummation of the Offer (except to the extent such representations
specifically relate to an earlier date, in which case such representations shall
be true and correct as of such earlier date, and in any event, subject to the
foregoing Material Adverse Effect qualification), (ii) the Company shall have
failed to perform in all material respects its covenants and obligations
contained in this Agreement, which failure to perform has not been cured within
ten business days after the giving of written notice to the Company or (iii)
except as disclosed in the Company SEC Filings or Schedule 3.8, there shall have
occurred since March 31, 2000 any events or changes which constitute a Material
Adverse Effect on the Company;
(e) the Company Board shall have withdrawn, or modified or changed in
a manner adverse to Parent and Acquisition (including by amendment of the
Schedule 14D-9), its recommendation of the Offer, this Agreement or the Merger
or the Company Board shall have resolved to do any of the foregoing; or
(f) this Agreement shall have terminated in accordance with its
terms, which in the reasonable judgment of Parent, in any such case, and
regardless of the circumstances (including any action or inaction by Parent)
giving rise to such condition makes it inadvisable to proceed with the Offer or
the acceptance for payment of or payment for the Shares.
The foregoing conditions are for the sole benefit of Parent and Acquisition and
may be waived by Parent and Acquisition, in whole or in part at any time and
from time to time, in the sole discretion of Parent and Acquisition. The failure
by Parent and Acquisition at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
