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CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
March 27, 1996, by and among Xxxxx Corporation, an Ohio corporation ("Parent"),
Eaton Acquisition Corporation, a Delaware corporation and a subsidiary of Parent
(the "Purchaser"), and CAPCO Automotive Products Corporation, a Michigan
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the acquisition of the Company by Parent on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, on March 19, 1996, the Purchaser commenced a tender offer
(the "Initial Offer") to purchase all of the shares of the Company's common
stock, par value $.01 per share (the "Common Shares") (including the associated
preferred share purchase rights (the "Rights") issued pursuant to the Rights
Agreement, dated as of April 30, 1994, between the Company and Xxxxxx Trust and
Savings Bank, as Rights Agent (the "Rights Agreement"), which Rights together
with the Common Shares are hereinafter referred to as the "Shares"), at a price
per Common Share of $11.00 net to the seller in cash subject to the conditions
set forth in the Offer to Purchase, dated March 19, 1996 and in the related
letter of transmittal;
WHEREAS, the Board of Directors of the Company (the "Company Board")
has (i) approved the Initial Offer as amended pursuant to this Agreement (the
"Amended Offer") in order to, among other things, increase to $12.50 net to the
seller in cash, the price to be paid thereunder for each outstanding Common
Share (the "Offer Price"), and (ii) adopted this Agreement and is recommending
that the Company's shareholders accept the Amended Offer, tender their Shares to
the Purchaser and approve this Agreement;
WHEREAS, the respective Boards of Directors of the Purchaser
and the Company have approved the merger of the Purchaser with and into the
Company, as set forth below (the "Merger"), in accordance with the Michigan
Business Corporation Act (the "MBCA") and the General Corporation Law of
Delaware (the "GCL") and upon the terms and subject to the conditions set forth
in this Agreement, whereby each of the issued and outstanding Common Shares not
owned directly or indirectly by Parent, the Purchaser or the Company will be
converted into the right to receive the Offer Price in cash;
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WHEREAS, Parent, the Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Amended Offer and the Merger and also to prescribe various conditions to the
Amended Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, Parent, the Purchaser and the Company agree as follows:
ARTICLE I
THE AMENDED OFFER
SECTION 1.01 The Amended Offer.
(a) As promptly as practicable following the execution hereof,
Parent and the Purchaser shall issue a press release announcing that the
Purchaser is increasing the price to be paid for each outstanding Common Share
to $12.50 net to the seller in cash. Provided that this Agreement shall not have
been terminated in accordance with Article VIII hereof and so long as none of
the events set forth in Annex I hereto (the "Tender Offer Conditions") shall
have occurred and no circumstance shall exist which would result in a failure to
satisfy any of the Tender Offer Conditions, as promptly as practicable but in no
event later than the fifth business day after the date of this Agreement, the
Purchaser shall file with the Securities and Exchange Commission (the "SEC") an
amendment to the Purchaser's Tender Offer Statement on Schedule 14D-1 (together
with any supplements or amendments thereto, the "Offer Documents"), which shall
contain (as an exhibit) a supplement to the Purchaser's Offer to Purchase dated
March 19, 1996 (the "Offer to Purchase") which shall be mailed to the holders of
Shares with respect to the Amended Offer, which shall amend the Initial Offer as
described in the preceding sentence and shall amend Section 14 of the Offer to
Purchase to modify the conditions of the Amended Offer to conform to the Tender
Offer Conditions; it being understood that, except for the foregoing amendments
or as otherwise provided herein, the Amended Offer shall be on the same terms
and subject to the same conditions as the Initial Offer. The obligation of the
Purchaser to accept for payment or pay for any Common Shares tendered pursuant
to the Amended Offer will be subject only to the satisfaction of the conditions
set forth in Annex I hereto. Without the prior
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written consent of the Company, the Purchaser shall not decrease the price per
Common Share or change the form of consideration payable in the Amended Offer,
decrease the number of Shares sought to be purchased in the Amended Offer,
change the conditions set forth in Annex I, waive the Minimum Condition (as
defined in Annex I), impose additional conditions to the Amended Offer or amend
any other term of the Amended Offer in any manner adverse to the holders of
Common Shares. Subject to the terms of the Amended Offer and this Agreement and
the satisfaction of all the conditions of the Amended Offer set forth in Annex I
hereto as of any expiration date, the Purchaser will accept for payment and pay
for all Common Shares validly tendered and not withdrawn pursuant to the Amended
Offer as soon as practicable after such expiration date of the Amended Offer;
provided that the Purchaser shall have the right, in its sole discretion, to
extend the Amended Offer from time to time for up to a maximum of 10 additional
business days, notwithstanding the prior satisfaction of the Tender Offer
Conditions. Each of Parent and the Purchaser shall use its reasonable best
efforts to avoid the occurrence of any event specified in Annex I or to cure any
such event that shall have occurred.
(b) The Offer Documents will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or the Purchaser with respect to information supplied by the Company in writing
for inclusion in the Offer Documents. Each of Parent and the Purchaser, on the
one hand, and the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect and the
Purchaser further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
shareholders of the Company, in each case, as and to the extent required by
applicable federal securities laws.
SECTION 1.02 Company Actions.
(a) The Company shall file with the SEC and mail to the holders
of Shares, as promptly as practicable on
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the date of the filing by Parent and the Purchaser of the Offer Documents, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") reflecting the
recommendation of the Company Board that holders of Shares tender their Shares
pursuant to the Amended Offer and shall disseminate the Schedule 14D-9 as
required by Rule 14d-9 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Schedule 14D-9 will set forth, and the Company
hereby represents, that the Company Board, at a meeting duly called and held,
has (i) determined by unanimous vote of its directors that each of the
transactions contemplated hereby, including each of the Amended Offer and the
Merger, is fair to and in the best interests of the Company and its
shareholders, (ii) approved the Amended Offer and adopted this Agreement in
accordance with the MBCA, (iii) recommended acceptance of the Amended Offer and
approval of this Agreement by the Company's shareholders (if such approval is
required by applicable law), and (iv) taken all other action necessary to render
the Rights inapplicable to the Amended Offer and the Merger; provided, however,
that such recommendation and approval may be withdrawn, modified or amended to
the extent that the Company Board determines in good faith, upon advice from its
outside counsel, that failure to take such action would be a breach of the
Company Board's fiduciary obligations under applicable law. The Company further
represents that, prior to the execution hereof, CS First Boston Corporation
("First Boston") has delivered to the Company Board its written opinion that the
consideration to be received for the Common Shares (other than Common Shares
held by Parent or the Purchaser, any wholly-owned subsidiary of Parent or the
Purchaser, in the treasury of the Company or by any wholly-owned subsidiary of
the Company) pursuant to the Amended Offer and the Merger is fair to the
Company's shareholders from a financial point of view. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations of the
Company Board described in this Section 1.02(a).
(b) The Schedule 14D-9 will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by the
Company with respect to information supplied by Parent or the Purchaser in
writing for inclusion in the Schedule
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14D-9. Each of the Company, on the one hand, and Parent and the Purchaser, on
the other hand, agree promptly to correct any information provided by either of
them for use in the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and to be disseminated to the holders of Shares, in
each case, as and to the extent required by applicable federal securities law.
(c) In connection with the Amended Offer, the Company will
promptly furnish the Purchaser with mailing labels, security position listings,
any non-objecting beneficial owner lists and any available listing or computer
list containing the names and addresses of the record holders of the Common
Shares as of the most recent practicable date and shall furnish the Purchaser
with such additional information (including, but not limited to, updated lists
of holders of Common Shares and their addresses, mailing labels and lists of
security positions and non-objecting beneficial owner lists) and such other
assistance as the Purchaser or its agents may reasonably request in
communicating the Amended Offer to the Company's record and beneficial
shareholders. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent, the Purchaser and their
affiliates, associates, agents and advisors, shall keep such information
confidential and use the information contained in any such labels, listings and
files only in connection with the Amended Offer and the Merger and, if this
Agreement shall be terminated, will deliver to the Company all copies of such
information then in their possession.
SECTION 1.03 Directors.
(a) Subject to compliance with applicable law, promptly upon
the payment by the Purchaser for the Common Shares pursuant to the Amended
Offer, and from time to time thereafter, Parent shall be entitled to designate
such number of directors, rounded up to the next whole number, on the Company
Board as is equal to the product of the total number of directors on the Company
Board (determined after giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number of Common
Shares beneficially owned by Parent or its affiliates bears to the total number
of fully diluted Common Shares then outstanding, and the Company shall, upon
request of Parent, promptly take all actions necessary to cause Parent's
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designees to be so elected, including, if necessary, seeking the resignations of
one or more existing directors; provided, however, that prior to the Effective
Time (as defined in Section 2.02), the Company Board shall always have at least
two members who are neither officers, directors, shareholders or designees of
the Purchaser or any of its affiliates ("Purchaser Insiders"). If the number of
directors who are not Purchaser Insiders is reduced below two prior to the
Effective Time, the remaining director who is not a Purchaser Insider shall be
entitled to designate a person to fill such vacancy who is not an officer,
director, shareholder or designee of the Purchaser or any of its affiliates and
who shall be a director not deemed to be a Purchaser Insider for all purposes of
this Agreement.
(b) The Company's obligations to appoint Parent's designees to
the Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. The Company shall promptly take all actions required pursuant to
such Section and Rule in order to fulfill its obligations under this Section
1.03 and shall include in the Schedule 14D-9 such information with respect to
the Company and its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.03. Parent will
supply and be solely responsible for any information with respect to itself and
its officers, directors and affiliates required by such Section and Rule to the
Company.
(c) Following the election or appointment of Parent's designees
pursuant to this Section 1.03 and prior to the Effective Time, any amendment of
the Articles of Incorporation or By-laws of the Company or amendment or
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or the Purchaser or waiver of any of the Company's rights hereunder or any other
consent or action of the Company Board relating to the transactions contemplated
by this Agreement which would reasonably be expected to have a material adverse
effect on the shareholders of the Company (other than Parent or the Purchaser),
will require the concurrence of a majority of the directors of the Company then
in office who are not Purchaser Insiders (or in the case where there are two or
fewer directors who are not Purchaser Insiders, the concurrence of one director
who is not a Purchaser Insider).
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ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the
satisfaction or waiver of the conditions hereof, and in accordance with the
applicable provisions of this Agreement and the MBCA, at the Effective Time the
Purchaser shall be merged with and into the Company. Following the Merger, the
separate corporate existence of the Purchaser shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation"). At the
option of Parent, and provided that such amendment does not delay the Effective
Time, the Merger may be structured so that, and this Agreement shall thereupon
be amended to provide that, the Company shall be merged with and into the
Purchaser or another direct or indirect wholly owned subsidiary of Parent, with
the Purchaser or such other subsidiary of Parent continuing as the Surviving
Corporation; provided, however, that the Company shall be deemed not to have
breached any of its representations and warranties herein if and to the extent
such breach would have been attributable to such election. In such event, the
parties agree to execute an appropriate amendment to this Agreement in order to
reflect the foregoing and, where appropriate, to provide that the Purchaser
shall be the Surviving Corporation.
SECTION 2.02 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Sections 7.01(a) and
7.01(b), but subject to Section 7.01(c) and 7.01(d), the Company shall execute,
in the manner required by the MBCA and the GCL, as the case may be, and deliver
to the Department of Commerce of the State of Michigan and the Secretary of
State of the State of Delaware a duly executed and verified certificate of
merger, and the parties shall take such other and further actions as may be
required by law to make the Merger effective. The time the Merger becomes
effective in accordance with applicable law is referred to as the "Effective
Time."
SECTION 2.03 Effects of the Merger. The Merger shall have the effects
set forth in the MBCA and the GCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and the Purchaser shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and the Purchaser shall become the debts, liabilities and duties of the
Surviving Corporation.
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SECTION 2.04 Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) The Articles of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
of the Surviving Corporation until thereafter amended in accordance with the
provisions thereof and hereof and applicable law.
(b) Subject to the provisions of Section 6.06 of this
Agreement, the By-Laws of the Purchaser in effect at the Effective Time shall be
the By-Laws of the Surviving Corporation until amended in accordance with the
provisions thereof and applicable law.
SECTION 2.05 Directors. Subject to applicable law, the directors of the
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
SECTION 2.06 Officers. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
SECTION 2.07 Conversion of Common Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof,
each Common Share issued and outstanding immediately prior to the Effective Time
(other than any Common Shares held by Parent, the Purchaser, any wholly owned
subsidiary of Parent or the Purchaser, in the treasury of the Company or by any
wholly owned subsidiary of the Company, which Common Shares, by virtue of the
Merger and without any action on the part of the holder thereof, shall be
cancelled and retired and shall cease to exist with no payment being made with
respect thereto), shall be cancelled and retired and shall be converted into the
right to receive in cash the Offer Price (the "Merger Price"), payable to the
holder thereof, without interest thereon, upon surrender of the certificate
formerly representing such Common Share.
SECTION 2.08 Conversion of Purchaser Common Stock. The Purchaser has
100 shares of common shares, par value $.01 per share, outstanding all of which
are entitled to vote with respect to approval of this Agreement. At the
Effective Time, each share of common stock of the Purchaser issued and
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outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and become one validly issued, fully paid and non-assessable share of
common stock, par value $.01 per share, of the Surviving Corporation.
SECTION 2.09. Options. Prior to the Effective Time, the Company Board
(or, if appropriate, any Committee thereof) shall adopt appropriate resolutions
and take all other actions necessary to provide for the cancellation, effective
at the Effective Time, of all the outstanding stock options, stock appreciation
rights, limited stock appreciation rights and performance units (the "Options")
heretofore granted under any stock option, performance unit or similar plan of
the Company (the "Stock Plans"). Immediately prior to the Effective Time, (i)
each Option, whether or not then vested or exercisable, shall no longer be
exercisable but shall entitle each holder thereof, in cancellation and
settlement therefor, to payments in cash (subject to any applicable withholding
taxes, the "Cash Payment"), at the Effective Time, equal to the product of (x)
the total number of Common Shares subject or related to such Option, whether or
not then vested or exercisable, and (y) the excess of the Merger Price over the
exercise price per Common Share subject or related to such Option, each such
Cash Payment to be paid to each holder of an outstanding Option at the Effective
Time; provided, however, that any Person subject to Section 16 of the Exchange
Act shall be provided with a cash compensation arrangement providing such
individual with the opportunity to receive a cash payment equal to the benefits
of which he or she would be deprived by reason of Section 16(b) of the Exchange
Act, and (ii) each Common Share previously issued in the form of grants of
restricted stock or grants of contingent shares shall fully vest. As provided
herein, the Stock Plans and any other plan, program or arrangement providing for
the issuance or grant of any other interest in respect of the capital stock of
the Company or any subsidiary shall terminate as of the Effective Time. The
Company will take all reasonable steps to ensure that none of the Parent, the
Company or any of their respective subsidiaries is or will be bound by any
Options, other options, warrants, rights or agreements which would entitle any
Person, other than Parent or its affiliates, to own any capital stock of the
Surviving Corporation or any of its subsidiaries or to receive any payment in
respect thereof. The Company will use its reasonable best efforts to obtain all
necessary consents to ensure that after the Effective Time, the only rights of
the holders of Options to purchase Common Shares in respect of such Options will
be to receive the Cash Payment in cancellation and settlement thereof.
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(b) All Stock Plans shall terminate as of the Effective Time
and the Company shall ensure that following the Effective Time no holder of an
Option or any participant in any Stock Plans shall have any right thereunder to
acquire any capital stock of the Company, Parent or the Surviving Corporation.
SECTION 2.10 Shareholders' Meeting.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through the Company Board, shall, in accordance
with applicable law and the Company's Articles of Incorporation and By-laws:
(i) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "Special Meeting") as soon as
practicable following the acceptance for payment of and payment for
Common Shares by the Purchaser pursuant to the Amended Offer for the
purpose of considering and taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy
statement relating to this Agreement, and use its reasonable best
efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined)
and, after consultation with Parent, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy
statement and cause a definitive proxy statement (the "Proxy
Statement") to be mailed to its shareholders and (y) subject to the
fiduciary duties of the Company Board under applicable law, to obtain
the necessary approvals of the Merger and this Agreement by its
shareholders; and
(iii) subject to the fiduciary obligations of the Company
Board under applicable law as provided in Section 1.02(a), include in
the Proxy Statement the recommendation of the Company Board that
shareholders of the Company vote in favor of the approval of this
Agreement.
(b) Parent agrees that it will vote, or cause to be voted, all
of the Common Shares then owned by it, the Purchaser or any of its other
subsidiaries in favor of the approval of this Agreement.
SECTION 2.11 Merger Without Meeting of Shareholders. Notwithstanding
Section 2.10, in the event that Parent,
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the Purchaser or any other subsidiary of Parent shall acquire at least 90% of
the outstanding shares of each outstandingclass of capital stock of the Company
pursuant to the Amended Offer, the parties hereto agree to take all necessary
and appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment of and payment for Common Shares by
the Purchaser pursuant to the Amended Offer without a meeting of shareholders of
the Company, in accordance with Section 735 of the MBCA and Section 253 of the
GCL.
ARTICLE III
PAYMENT FOR SHARES
SECTION 3.01 Payment for Common Shares.
(a) From and after the Effective Time, Chemical Mellon
Shareholder Services, L.L.C. or such other bank or trust company as shall be
mutually acceptable to Parent and the Company shall act as paying agent (the
"Paying Agent") in effecting the payment of the Merger Price in respect of
certificates (the "Certificates") that, prior to the Effective Time, represented
Common Shares entitled to payment of the Merger Price pursuant to Section 2.07.
At the Effective Time, Parent or the Purchaser shall deposit, or cause to be
deposited, in trust with the Paying Agent the aggregate Merger Price to which
holders of Common Shares shall be entitled at the Effective Time pursuant to
Section 2.07.
(b) Promptly after the Effective Time, the Paying Agent shall
mail to each record holder of Certificates that immediately prior to the
Effective Time represented Common Shares (other than Certificates representing
Common Shares held by Parent or the Purchaser, any wholly owned subsidiary of
Parent or the Purchaser, in the treasury of the Company or by any wholly owned
subsidiary of the Company) a form of letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Paying Agent
and instructions for use in surrendering such Certificates and receiving the
Merger Price in respect thereof. Upon the surrender of each such Certificate,
the Paying Agent shall pay the holder of such Certificate the Merger Price
multiplied by the number of Common Shares formerly represented by such
Certificate, in consideration therefor, and such Certificate shall forthwith be
cancelled. Until so surrendered, each such Certificate (other than Certificates
representing Common Shares held by Parent
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or the Purchaser, any wholly owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly owned subsidiary of the Company) shall
represent solely the right to receive the aggregate Merger Price relating
thereto. No interest or dividends shall be paid or accrued on the Merger Price.
If the Merger Price (or any portion thereof) is to be delivered to any person
other than the person in whose name the Certificate formerly representing Common
Shares surrendered therefor is registered, it shall be a condition to such right
to receive such Merger Price that the Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
person surrendering such Common Shares shall pay to the Paying Agent any
transfer or other taxes required by reason of the payment of the Merger Price to
a person other than the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of the Paying Agent that such tax has been
paid or is not applicable.
(c) Promptly following the date which is 120 days after the
Effective Time, the Paying Agent shall deliver to the Surviving Corporation all
cash, Certificates and other documents in its possession relating to the
transactions described in this Agreement, and the Paying Agent's duties shall
terminate. Thereafter, each holder of a Certificate formerly representing a
Common Share may surrender such Certificate to the Surviving Corporation and
(subject to applicable abandoned property, escheat and similar laws) receive in
consideration therefor the aggregate Merger Price relating thereto, without any
interest or dividends thereon.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of any Common Shares which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates formerly representing Common Shares are presented
to the Surviving Corporation or the Paying Agent, they shall be surrendered and
cancelled in return for the payment of the aggregate Merger Price relating
thereto, as provided in this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser
that except as set forth in the Company Disclosure Schedule (as hereinafter
defined):
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SECTION 4.01 Organization and Qualification; Subsidiaries. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Michigan. Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. The Company and each of its
subsidiaries has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not have a
Material Adverse Effect on the Company. The term "Material Adverse Effect on the
Company", as used in this Agreement, means any change in or effect on the
business, assets, financial condition or results of operation of the Company or
any of its subsidiaries that is materially adverse to the Company and its
subsidiaries taken as a whole.
SECTION 4.02 Charter; By-Laws and Rights Agreement. The
Company has heretofore made available to Parent and the Purchaser a complete and
correct copy of the articles of incorporation and the by-laws or comparable
organizational documents, each as amended to the date hereof, of the Company and
each of its subsidiaries and has made available a complete and correct copy of
the Rights Agreement as amended to the date hereof.
SECTION 4.03 Capitalization; Subsidiaries. The authorized
capital stock of the Company consists of 30,000,000 Common Shares and 10,000,000
shares of Series Preferred Stock, par value $.01 per share (the "Series
Preferred Stock") and 60,000 shares of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Junior Preferred Stock", and together with
the Series Preferred Stock, the "Preferred Stock"). As of the close of business
on March 15, 1996, 11,061,350 Common Shares were issued and outstanding, all of
which are entitled to vote on this Agreement, and no Common Shares were held in
treasury. As of the close of business on March 15, 1996 there were no shares of
Preferred Stock issued and outstanding. The Company has no shares reserved for
issuance, except that, as of March 15, 1996, there were 523,600 Common Shares
reserved for issuance pursuant to outstanding Options granted under the Stock
Plans and 60,000 shares of Series A Junior Participating Preferred Stock
reserved for issuance upon exercise of the Rights. As
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of the date hereof, the Company has options to purchase 523,600 Common Shares
outstanding issued to persons listed (including exercise price and expiration
date) in Section 4.03 of the disclosure schedule delivered to Parent by the
Company on the date hereof (the "Company Disclosure Schedule"). Since March 15,
1996, the Company has not issued any shares of capital stock except pursuant to
the exercise of Options outstanding as of such date. All the outstanding Common
Shares are, and all Common Shares which may be issued pursuant to the exercise
of outstanding Options will be, when issued in accordance with the respective
terms thereof, duly authorized, validly issued, fully paid and nonassessable and
are not subject to, nor were they issued in violation of, any pre-emptive
rights. There are no bonds, debentures, notes or other indebtedness having
general voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company or any of its subsidiaries issued and
outstanding. Except as set forth above or for the Rights and except for the
transactions contemplated by this Agreement, there are no existing options,
warrants, calls, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of its subsidiaries, obligating the Company or any of its
subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its subsidiaries or securities convertible into or
exchangeable for such shares or equity interests and neither the Company nor any
of its subsidiaries is obligated to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement, arrangement or
commitment. Except as contemplated by this Agreement or the Rights Agreement and
except for the Company's obligations in respect of the Options under the Stock
Plans, there are no outstanding contractual obligations of the Company or any of
its subsidiaries to repurchase, redeem or otherwise acquire any Common Shares or
the capital stock of the Company or any of its subsidiaries. Each of the
outstanding shares of capital stock of each of the Company's subsidiaries is
duly authorized, validly issued, fully paid, and to the extent applicable,
nonassessable, and, except as set forth in Section 4.03 of the Company
Disclosure Schedule such shares of the Company's subsidiaries as are owned by
the Company or by a subsidiary of the Company are owned in each case free and
clear of any lien, claim, option, charge, security interest, limitation,
encumbrance and restriction of any kind (any of the foregoing being a "Lien").
Set forth in Section 4.03 of the Company Disclosure Schedule is a complete and
correct list of each subsidiary (direct or indirect) of the Company and any
joint ventures, partnerships or similar
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15
arrangements in which the Company has an interest (and the amount and percentage
of any such interest). No entity in which the Company owns, directly or
indirectly, less than a 50% equity interest is, individually or when taken
together with all such other entities, material to the business of the Company
and its subsidiaries taken as a whole.
SECTION 4.04 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly and validly authorized and
approved by the Company Board and no other corporate proceedings on the part of
the Company are necessary to authorize or approve this Agreement or to
consummate the transactions contemplated hereby (other than, with respect to the
Merger, the approval of this Agreement by the affirmative vote of the holders of
a majority of the then outstanding Common Shares entitled to vote thereon, to
the extent required by applicable law). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due and valid
authorization, execution and delivery of this Agreement by Parent and the
Purchaser, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) Assuming (i) the filings required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act")
are made and the waiting periods thereunder have been terminated or have
expired, (ii) the requirements of the Exchange Act and any applicable state
securities, "blue sky" or takeover law are met, (iii) the filing of the
certificates of merger and other appropriate merger documents, if any, as
required by the MBCA and the GCL, is made and (iv) approval of this agreement by
a majority of the holders of Common Shares, if required by the MBCA, is
received, none of the execution and delivery of this Agreement by the Company,
the consummation by the Company of the transactions contemplated hereby or
compliance by the Company with any of the provisions hereof will (i) conflict
with or violate the Articles of Incorporation or By-Laws of the Company or the
comparable organizational documents of any of
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16
its subsidiaries, (ii) conflict with or violate any statute, ordinance, rule,
regulation, order, judgment or decree applicable to the Company or any of its
subsidiaries, or by which any of them or any of their respective properties or
assets may be bound or affected, or (iii) result in a violation or breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in any loss of any
material benefit, or the creation of any Lien on any of the property or assets
of the Company or any of its subsidiaries (any of the foregoing referred to in
clause (ii) or this clause (iii) being a "Violation") pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective properties may be bound or affected, except in the case
of the foregoing clauses (ii) or (iii) for any such Violations which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company, or would not, individually or in the aggregate,
reasonably be expected to prevent or materially delay consummation of the
transactions contemplated by this Agreement.
(b) None of the execution and delivery of this Agreement by
the Company, the consummation by the Company of the transactions contemplated
hereby or compliance by the Company with any of the provisions hereof will
require any consent, waiver, approval, authorization or permit of, or
registration or filing with or notification to (any of the foregoing being a
"Consent"), any United States or Brazilian government or subdivision thereof, or
any United States or Brazilian administrative, governmental or regulatory
authority, agency, commission, tribunal or body (a "Governmental Entity"),
except for (i) compliance with any applicable requirements of the Exchange Act
and any state securities, "blue sky" or takeover law, (ii) the filing of
certificates of merger, pursuant to the MBCA and the GCL, (iii) compliance with
the HSR Act and any requirements of any foreign or supranational Antitrust Laws
(as hereinafter defined), (iv) such filings, authorizations, orders and
approvals, as set forth on the Company Disclosure Schedule, required under
foreign laws, and (v) Consents the failure of which to obtain or make would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or reasonably be expected to prevent or materially delay consummation of the
transactions contemplated by this Agreement.
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SECTION 4.06 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports,
schedules, registration statements and definitive proxy statements required to
be filed by the Company with the SEC since May 6, 1994 (as they have been
amended since the time of their filing, collectively, the "SEC Reports"). As of
their respective dates, the SEC Reports (including but not limited to any
financial statements or schedules included or incorporated by reference therein)
complied in all material respects with the requirements of the Exchange Act or
the Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations of the SEC promulgated thereunder applicable, as the case may be, to
such SEC Reports, and none of the SEC Reports contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Company has
heretofore furnished to Parent the latest available drafts of filings to be made
with the SEC pursuant to the Exchange Act and the rules and regulation
promulgated thereunder in each case which have not been filed with the SEC,
including without limitation drafts of the Company's annual report on Form 10-K
for fiscal year 1995 and the Company's Annual Report to Shareholders,
(collectively, the "Draft Filings"). Except to the extent revised or superseded
by a subsequent filing with the SEC made prior to the date hereof, none of the
SEC Reports filed by the Company since December 31, 1994 and prior to the date
hereof contain any untrue statement of a material fact required to be stated or
incorporated by reference therein, or necessary to make the statement made
therein, in light of the circumstances under which they were made, not
misleading. Each of the Draft Filings will comply when filed as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated thereunder, and will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated or
incorporated by reference therein, or necessary to make the statement made
therein, in light of the circumstances under which they were made, not
misleading.
(b) The consolidated balance sheets as of December 31, 1995
and 1994 and the consolidated statements of income, common shareholders' equity
and cash flows for each of the three years in the period ended December 31, 1995
(including the related notes and schedules thereto) of the Company contained in
the draft Form 10-K for the year ended December 31, 1995 present fairly in all
material respects the
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18
consolidated financial position and the consolidated results of operations and
cash flows of the Company and its consolidated subsidiaries as of the dates or
for the periods presented therein and were prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved except as otherwise noted therein, including
the related notes.
(c) Except as reflected, reserved against or otherwise
disclosed in the financial statements of the Company included in the SEC Reports
or as otherwise disclosed in the SEC Reports, in each case, filed prior to the
date of this Agreement, the Draft Filings or as set forth in Section 4.06(d) of
the Company Disclosure Schedule, as of the date hereof, neither the Company nor
any of its subsidiaries have any liabilities or obligations (absolute, accrued,
fixed, contingent or otherwise) which would be required to be reflected on a
balance sheet or the notes thereto prepared in accordance with GAAP, other than
liabilities incurred in the ordinary course of business consistent with past
practice since December 31, 1995 which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
(d) The Company has heretofore furnished to Parent a complete
and correct copy of any amendments or modifications which have not yet been
filed with the SEC to agreements (including the Rights Agreement), documents or
other instruments which previously had been filed by the Company with the SEC
pursuant to the Securities Act and the rules and regulations promulgated
thereunder or the Exchange Act and the rules and regulations promulgated
thereunder.
SECTION 4.07 Environmental Laws and Regulations. Except as disclosed in
the SEC Reports, the Company and its subsidiaries are in compliance with all
applicable United States federal and state laws and regulations and Brazilian
laws and regulations, as in effect on the date hereof, relating to the
protection of the environment (collectively, "Environmental Laws"), except for
violations of Environmental Laws that, individually or in the aggregate, would
not have a Material Adverse Effect on the Company.
SECTION 4.08 Compliance with Applicable Laws. Except with respect to
Environmental Laws which are covered in Section 4.07, the Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities, except for such permits, licenses,
variances, exemptions, orders and approvals the failure of which to hold would
not have a Material Adverse Effect
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19
on the Company (the "Company Permits"). The Company and its subsidiaries are in
compliance with the terms of the Company Permits, except for such failures to
comply which, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. Except with respect to Environmental Laws which
are covered in Section 4.07, the business operations of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
SECTION 4.09 Change of Control. The transactions contemplated by this
Agreement will not constitute a "change of control" under, require the consent
from or the giving of notice to a third party pursuant to, or accelerate vesting
or repurchase rights under the terms, conditions or provisions of any
employment, compensation, termination or severance agreement, or other
instrument or obligation of the Company or any of its subsidiaries. The total
amounts payable to the executives identified in Section 4.09 of the Company
Disclosure Schedule, as a result of the transactions contemplated by this
Agreement and/or any subsequent employment termination (excluding any cash-out
or acceleration of options and restricted stock but including any "gross-up"
payments with respect thereto), based on compensation data applicable as of the
date hereof, calculated assuming effective tax rates of 39.6%, will not exceed
the amount set forth on such schedule.
SECTION 4.10 Litigation. Except as disclosed in the SEC Reports filed
prior to the date of this Agreement, there is as of the date hereof no suit,
claim, action, proceeding or investigation pending or, to the knowledge of the
Company, threatened, against the Company or any of its subsidiaries before any
Governmental Entity which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company or would prevent or
materially delay the consummation of the transactions contemplated by this
Agreement. Except as disclosed in the SEC Reports filed prior to the date of
this Agreement, neither the Company nor any of its subsidiaries is subject to
any outstanding order, writ, injunction or decree which, individually or in the
aggregate, would have a Material Adverse Effect on the Company or would prevent
or materially delay the consummation of the transactions contemplated hereby.
SECTION 4.11 Information. None of the information supplied by the
Company in writing specifically for inclusion or incorporation by reference in
(i) the Offer Documents, (ii) the Proxy Statement or (iii) any other document to
be
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20
filed with the SEC or any other Governmental Entity in connection with the
transactions contemplated by this Agreement (the "Other Filings") will, at the
respective times filed with the SEC or other Governmental Entity and, in
addition, in the case of the Proxy Statement, at the date it or any amendment or
supplement is mailed to shareholders, at the time of the Special Meeting and at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder, except that no representation is made by the Company
with respect to statements made therein based on information supplied by Parent
or the Purchaser in writing specifically for inclusion in the Proxy Statement.
SECTION 4.12 Certain Approvals. Section 780 of Chapter 7A and Chapter
7B of the MBCA are not applicable to the Company and the Company Board has not
taken any action which would subject the Company to the requirements of such
statutes.
SECTION 4.13 Employee Benefit Plans. The Company has delivered to
Parent true, complete and correct copies of each writing constituting a part of
the employee benefit plans of the Company and its subsidiaries, including
without limitation the Stock Plans, any employment agreements or any severance
agreements, arrangements or plans (such writings to include, as applicable, plan
documents, benefit descriptions, benefit schedules, trust agreements, and
insurance contracts and other funding vehicles) and, in the case of any
unwritten employee benefit plan, a written description thereof (collectively the
"Employee Plans"). All Employee Plans that are "employee benefit plans" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), maintained or contributed to by the Company and its
subsidiaries are in compliance with the applicable provisions of ERISA and the
Internal Revenue Code of 1986, as amended (the "Code"), except for instances of
non-compliance that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company.
SECTION 4.14 Taxes.
(a) The Company and each of its subsidiaries has duly filed
all federal, state, local and foreign income
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21
Tax Returns (as hereinafter defined) required to be filed by it, and all other
material Tax Returns required to be filed by it except in the case of such other
Tax Returns where the failure to so file will not have a Material Adverse Effect
on the Company, and has duly paid or caused to be paid all Taxes (as hereinafter
defined) shown to be due on such Tax Returns in respect of the periods covered
by such returns and has made adequate provision in the Company's financial
statements for payment of all material Taxes anticipated to be payable in
respect of all taxable periods or portions thereof ending on or before the date
hereof. The Company Disclosure Schedule lists the periods through which the Tax
Returns required to be filed by the Company have been examined by the Internal
Revenue Service (the "IRS"), the Brazilian taxing authority ("Brazilian Taxing
Authority") or other appropriate taxing authority, or the period during which
any assessments may be made by the IRS, the Brazilian Taxing Authority or other
appropriate taxing authority has expired. All material deficiencies and
assessments asserted as a result of such examinations or other audits by
federal, state, local or foreign taxing authorities have been paid, fully
settled or adequately provided for in the Company's financial statements, and no
issue or claim has been asserted in writing for any material Taxes by any taxing
authority for any prior period, the adverse determination of which would result
in a deficiency which would have a Material Adverse Effect on the Company,
other than those heretofore paid or provided for in the Company's financial
statements. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Return of the Company or
any of its subsidiaries. Except as set forth in the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries is a party to any agreement,
contract or arrangement that could result, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code. Neither the Company nor any of its subsidiaries (i) has been a
member of a group filing consolidated returns for federal income tax purposes,
or (ii) is a party to a tax sharing or tax indemnity agreement or any other
agreement of a similar nature that remains in effect.
(b) For purposes of this Agreement, the term "Taxes" means all
taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, transfer, license,
payroll, withholding, capital stock and franchise taxes, imposed by the United
States or any state, local or foreign government or subdivision or agency
thereof, including any interest, penalties or additions thereto. For purposes of
this Agreement, the term "Tax Return" means any report, return or other
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information or document required to be supplied to a taxing authority in
connection with Taxes.
SECTION 4.15 Rights Agreement. The Company has taken all necessary
action pursuant to the Rights Agreement to provide that no "Triggering Event" or
"Distribution Date" (as such terms are defined in the Rights Agreement) will
occur, in each case as a result of the announcement, commencement or
consummation of the Amended Offer or Merger, the execution or delivery of this
Agreement or the consummation of the transactions contemplated hereby.
SECTION 4.16 Brokers. Except for the engagement of First Boston, none
of the Company, any of its subsidiaries, or any of their respective officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement. The Company has previously
delivered to Parent a copy of the Company's engagement letter with First Boston
and the addendum thereto.
SECTION 4.17 Opinion of Financial Advisor. The Company has received the
written opinion of First Boston, its financial advisor, to the effect that, as
of March 27, 1996, the consideration to be received in the Amended Offer and the
Merger, taken as a whole, by the Company's shareholders is fair to the Company's
shareholders from a financial point of view. The Company has previously
delivered to Parent a copy of such opinion.
SECTION 4.18 Absence of Certain Changes. Except as previously disclosed
in the SEC Reports or the draft annual report to shareholders included in the
Draft Filings or as otherwise disclosed in Section 4.18 of the Company
Disclosure Schedule or as otherwise contemplated by this Agreement, since
December 31, 1995 (i) there has not been any Material Adverse Effect on the
Company (without regard, however, to changes in conditions generally applicable
to the industries in which the Company and its subsidiaries are involved or
general economic conditions); (ii) the businesses of the Company and each of its
subsidiaries have been conducted only in the ordinary course; (iii) neither the
Company nor any of its subsidiaries has incurred any material liabilities
(direct, contingent or otherwise) or engaged in any material transaction or
entered into any material agreement outside the ordinary course of business;
(iv) neither the Company nor any of its subsidiaries has taken any action
referred to in Section 6.01 hereof except as permitted thereby; (v) there has
not been any material revaluation by
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23
the Company of any of its assets, including but not limited to materially
writing down the value of inventory or materially writing off notes or accounts
receivable other than in the ordinary course of business; (vi) there has not
been any declaration, setting aside or payment of any dividends or distributions
in respect of the Shares or any redemption, purchase or other acquisition of any
of its securities, except the regular quarterly dividend on the Shares at the
rate of $.04 per Share; (vii) there has not been any issuance of any shares of
capital stock of the Company of any of its subsidiaries (other than in
connection with the exercise of Options) or any grant or issuance of any
options, calls, warrants, or other rights, agreements, arrangements or
commitments of any kind or character relating to the issuance of capital stock
of the Company or any of its subsidiaries; (viii) there has not been any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan or agreement or arrangement, or any other increase in the
compensation payable or to become payable to any present or former directors,
officers or employees of the Company or any of its subsidiaries, except for
increases in base compensation in the ordinary course of business, or any
employment, consulting or severance agreement or arrangement entered into with
any such present or former directors, officers or employees; and (ix) there has
been no change by the Company in accounting principles, practices or methods.
SECTION 4.19 Labor Matters. No work stoppage involving the Company or
any of its subsidiaries is pending or threatened which would reasonably be
expected to have a Material Adverse effect on the Company. Neither the Company
nor any of its subsidiaries is involved in, threatened with or affected by any
labor dispute, arbitration, lawsuit or administrative proceeding which would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Except as set forth in the SEC Reports, employees
of the Company or of any of its subsidiaries are not represented by any labor
union or any collective bargaining organization and, to the best knowledge of
the Company or its subsidiaries, no labor union is attempting to organize
employees of the Company or any of its subsidiaries.
SECTION 4.20 Vote Required. The affirmative vote of the holders of a
majority of the outstanding Common Shares entitled to vote with respect to this
Agreement is the only vote of the holders of any class or series of the
Company's
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24
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as
follows:
SECTION 5.01 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of Ohio and
each material subsidiary of Parent is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization. The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Parent and each of
its material subsidiaries (including the Purchaser) has the requisite corporate
power and authority to own, operate or lease its properties and to carry on its
business as it is now being conducted, and is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction in which the nature of
its business or the properties owned, operated or leased by it makes such
qualification, licensing or good standing necessary, except where the failure to
have such power or authority, or the failure to be so qualified, licensed or in
good standing, would not have a Material Adverse Effect on Parent. The term
"Material Adverse Effect on Parent", as used in this Agreement, means any change
in or effect on the business, assets, financial condition or results of
operation of Parent or any of its subsidiaries that would be materially adverse
to Parent and its subsidiaries taken as a whole.
SECTION 5.02 Authority Relative to this Agreement. Each of Parent and
the Purchaser has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Parent and the Purchaser and the
consummation by Parent and the Purchaser of the transactions contemplated hereby
have been duly and validly authorized and approved by the respective Boards of
Directors of Parent and the Purchaser and by Parent as sole stockholder of the
Purchaser and no other corporate proceedings on the part of Parent or the
Purchaser are necessary to authorize or approve this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been
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25
duly executed and delivered by each of Parent and the Purchaser and, assuming
the due and valid authorization, execution and delivery by the Company,
constitutes a valid and binding obligation of each of Parent and the Purchaser
enforceable against each of them in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) Assuming (i) the filings required under the HSR Act are
made and the waiting periods thereunder have been terminated or have expired,
(ii) the requirements of the Exchange Act and any applicable state securities,
"blue sky" or takeover law are met and (iii) the filing of the certificates of
merger and other appropriate merger documents, if any, as required by the MBCA
and the GCL is made, none of the execution and delivery of this Agreement by
Parent or the Purchaser, the consummation by Parent or the Purchaser of the
transactions contemplated hereby or compliance by Parent or the Purchaser with
any of the provisions hereof will (i) conflict with or violate the
organizational documents of Parent or the Purchaser, (ii) conflict with or
violate any statute, ordinance, rule, regulation, order, judgment or decree
applicable to Parent or the Purchaser or any of their subsidiaries, or by which
any of them or any of their respective properties or assets may be bound or
affected, or (iii) result in a Violation pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or the Purchaser, or any of their
subsidiaries, is a party or by which any of their respective properties or
assets may be bound or affected, except in the case of the foregoing clauses
(ii) and (iii) for any such Violations which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent or
would not, individually or in the aggregate, reasonably be expected to prevent
or materially delay consummation of the transactions contemplated by this
Agreement.
(b) None of the execution and delivery of this Agreement by
Parent and the Purchaser, the consummation by Parent and the Purchaser of the
transactions contemplated hereby or compliance by Parent and the Purchaser with
any of the provisions hereof will require any Consent of any Governmental
Entity, except for (i) compliance with any applicable requirements of the
Exchange Act and any state securities
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26
"blue sky" or takeover law, (ii) the filing of certificates of merger pursuant
to the MBCA and the GCL, (iii) compliance with the HSR Act and any requirements
of any foreign or supranational Antitrust Laws and (iv) Consents the failure of
which to obtain or make would not, individually or in the aggregate, have a
Material Adverse Effect on Parent or materially adversely affect the ability of
Parent or reasonably be expected to prevent or materially delay consummation of
the transactions contemplated by this Agreement.
SECTION 5.04 Information. None of the information supplied or to be
supplied by Parent and the Purchaser in writing specifically for inclusion in
(i) the Schedule 14D-9, (ii) the Proxy Statement or (iii) the Other Filings
will, at the respective times filed with the SEC or such other Governmental
Entity and, in addition, in the case of the Proxy Statement, at the date it or
any amendment or supplement is
mailed to shareholders, at the time of the Special Meeting and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
SECTION 5.05 Financing. Parent has and will cause the Purchaser to have
available to it the funds necessary to consummate the Amended Offer and the
Merger and the transactions contemplated hereby.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as permitted,
required or specifically contemplated by, or otherwise described in, this
Agreement or otherwise with the prior written consent of Parent, during the
period from the date of this Agreement to the Effective Time, the Company will,
and will cause each of its subsidiaries to, conduct its operations only in the
ordinary and usual course of business consistent with past practice and will use
its reasonable efforts, and will cause each of its subsidiaries to use its
reasonable efforts, to preserve intact the business organization of the Company
and each of its subsidiaries, to keep available the services of its and their
present officers and key employees, and to preserve the good will of those
having business relationships with it, including, without limitation,
maintaining satisfactory relationships with
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27
licensors, suppliers, distributors, customers and others having business
relationships with the Company. Without limiting the generality of the
foregoing, and except as otherwise expressly permitted, required or specifically
contemplated by, or otherwise described in, this Agreement, the Company will
not, and will not permit any of its subsidiaries to, prior to the Effective
Time, without the prior written consent of Parent:
(a) adopt any amendment to its Articles of Incorporation or
By-Laws or comparable organizational documents or the Rights Agreement;
(b) (i) issue, reissue, pledge or sell, or authorize the
issuance, reissuance, pledge or sale of (A) additional shares of capital stock
of any class, or securities convertible into capital stock of any class, or any
rights, warrants or options to acquire any convertible securities or capital
stock, other than the issuance of Common Shares (and the related Rights), in
accordance with the terms of the instruments governing such issuance on the date
hereof, pursuant to the exercise of Options outstanding on the date hereof, or
(B) any other securities in respect of, in lieu of, or in substitution for,
Shares outstanding on the date hereof or (ii) make any other changes in its
capital structure;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock other than
between any of the Company and any of its wholly owned subsidiaries, except for
the regular quarterly dividend on the Common Shares not in excess of $0.04 per
Common Share with a record and payment date in accordance with recent practice;
provided that such dividend may not be declared if Common Shares are accepted
for payment in accordance with the Amended Offer and this Agreement prior to
June 1, 1996;
(d) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities;
(e) except for (i) increases in salary, wages and benefits
granted to employees of the Company or its subsidiaries (who are not officers)
in conjunction with promotions or other changes in job status or normal
compensation reviews in the ordinary course of business consistent with
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past practice, or (ii) increases in salary, wages and benefits to employees of
the Company pursuant to collective bargaining agreements entered into in the
ordinary course of business consistent with past practice: increase the
compensation or fringe benefits payable or to become payable to its directors,
officers or employees (whether from the Company or any of its subsidiaries), or
pay or award any benefit not required by any existing plan or arrangement to any
officer, director or employee (including, without limitation, the granting of
stock options, stock appreciation rights, shares of restricted stock or
performance units pursuant to the Stock Plans or otherwise), or grant any
severance or termination pay to any officer, director or other employee of the
Company or any of its subsidiaries (other than as required by existing
agreements or policies described in the Company Disclosure Schedule), or enter
into any employment or severance agreement with, any director, officer or other
employee of the Company or any of its subsidiaries or establish, adopt, enter
into, amend or waive any performance or vesting criteria under any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, savings, welfare, deferred compensation,
employment, termination, severance or other employee benefit plan, agreement,
trust, fund, policy or arrangement for the benefit or welfare of any current or
former directors, officers or current or former employees of the Company or its
subsidiaries (any of the foregoing being an "Employee Benefit Arrangement"),
except, in each case, to the extent required by applicable law or regulation;
(f) acquire, sell, lease or dispose of any material assets or
securities, or enter into any commitment to do any of the foregoing or enter
into any commitment or transaction outside the ordinary course of business other
than transactions between a wholly owned subsidiary of the Company and the
Company or another wholly owned subsidiary of the Company;
(g) (i) incur, assume or pre-pay any long-term debt or incur
or assume any short-term debt, except that the Company and its subsidiaries may
incur or pre-pay debt in the ordinary course of business in amounts and for
purposes consistent with past practice, (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except in the ordinary course
of business consistent with past practice, or (iii) make any loans, advances or
capital contributions to, or investments in, any other person except in the
ordinary course of business consistent with past practice and except for loans,
advances,
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29
capital contributions or investments between any wholly owned subsidiary of the
Company and the Company or another wholly owned subsidiary of the Company;
(h) other than in the ordinary course of business consistent
with past practice, (i) modify, amend or terminate any material contract, (ii)
except as required by law, waive, release, relinquish, settle, compromise or
assign any material contract (or any of the Company's rights thereunder), right
or claim, or (iii) cancel or forgive any indebtedness owed to the Company or any
of its subsidiaries except in ordinary course of business consistent with past
practice; provided, however, that the Company may not under any circumstance
waive or release any of its rights under any written confidentiality agreement
(except that provisions limiting control-related activities may be waived if the
Company's Board of Directors determines in good faith, upon the advice of its
outside counsel, that its fiduciary duties require it to do so) to which it is a
party;
(i) make any material tax election not required by law or,
except as required by law, settle or compromise any material tax liability;
(j) acquire (by merger, consolidation or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof;
(k) enter into any contract or agreement other than in the
ordinary course of business that would be material to the Company and its
subsidiaries taken as a whole;
(l) except as may be required as a result of a change in law
or in generally accepted accounting principles, make any change in its methods
of accounting; or
(m) agree in writing or otherwise to take any of the foregoing
actions prohibited under this Section 6.01 or any action which would cause any
representation or warranty in this Agreement to be or become untrue or incorrect
in any material respect.
SECTION 6.02 Access to Information; Confidentiality. (a) From the date
of this Agreement until the Effective Time, the Company will, and will cause its
subsidiaries, and each of their respective officers, directors, employees,
counsel, advisors and representatives (collectively, the "Company
Representatives") to, give Parent and the Purchaser and their respective
officers, employees, counsel, advisors
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and representatives (collectively, the "Parent Representatives") reasonable
access (subject, however, to existing confidentiality and similar non-disclosure
obligations and the preservation of attorney client and work product
privileges), during normal business hours, to the offices and other facilities
and to the books and records of the Company and its subsidiaries and will cause
the Company Representatives and the Company's subsidiaries to furnish Parent,
the Purchaser and the Parent Representatives to the extent available with such
financial and operating data and such other information with respect to the
business and operations of the Company and its subsidiaries as Parent and the
Purchaser may from time to time reasonably request. The Company shall furnish
promptly to Parent and the Purchaser a copy of each report, schedule,
registration statement and other document filed by it or its subsidiaries during
such period pursuant to the requirements of federal or state securities laws.
(b) Prior to the Effective Time, Parent and the Purchaser shall not
disclose (other than to their respective officers, directors, employees,
counsel, advisors and representatives who have been advised of the
confidentiality obligations hereunder and who need to have access to the non-
public information mentioned below), and shall not permit their respective
officers, directors, employees, counsel, advisors and representatives to so
disclose, any non-public information obtained from the Company in connection
with this Agreement and the transactions contemplated hereby until such time as
such information is otherwise publicly available (other than due to disclosure
by Parent or the Purchaser in breach of any obligation of confidentiality to the
Company or its subsidiaries) or except as otherwise required by applicable law
or judicial process. In the event this Agreement is terminated pursuant to
Section 8.01 hereof, Parent and the Purchaser shall, if requested by the
Company, return such information to the Company if it is in its original form
and destroy all other such information.
SECTION 6.03 Reasonable Best Efforts.
(a) Subject to the terms and conditions provided herein, each of the
Company, Parent and the Purchaser shall, and the Company shall cause each of its
subsidiaries to, cooperate and use their respective reasonable best efforts to
take, or cause to be made, all filings necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including but not limited to
cooperation in the preparation and filing of the Offer Documents, the Schedule
14D-9, the Proxy Statement, any required filings under the
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31
HSR Act, or other foreign filings and any amendments to any thereof.
In addition, if at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent or the Purchaser or any of
their respective subsidiaries should be discovered by the Company or Parent, as
the case may be, which should be set forth in an amendment to the Offer
Documents or Schedule 14D-9, the discovering party will promptly inform the
other party of such event or circumstance. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, including the execution of additional instruments,the proper
officers and directors of each party to this Agreement shall use their
reasonable best efforts to take all such necessary action.
(b) Each of the parties will use its reasonable best efforts to obtain
as promptly as practicable all Consents of any Governmental Entity or any other
person required in connection with, and waivers of any Violations that may be
caused by, the consummation of the transactions contemplated by the Amended
Offer and this Agreement.
SECTION 6.04 Public Announcements. The Company, on the one hand, and
Parent and the Purchaser, on the other hand, agree to consult promptly with each
other prior to issuing any press release or otherwise making any public
statement with respect to the Offer, the Amended Offer, the Merger and the other
transactions contemplated hereby, agree to provide to the other party for review
a copy of any such press release or statement, and shall not issue any such
press release or make any such public statement prior to such consultation and
review, unless required by applicable law or any listing agreement with a
securities exchange.
SECTION 6.05 Employee Benefit Arrangements. Parent agrees that the
Company will honor and, from and after the Effective Time, Parent will cause the
Surviving Corporation to honor, all obligations under Employee Benefit
Arrangements to which the Company and/or any of its subsidiaries is presently a
party which are listed in Section 6.05 of the Company Disclosure Schedule.
Notwithstanding the foregoing, from and after the Effective Time, subject to the
remaining provisions of this Section 6.05, the Surviving Corporation shall have
the right to amend, modify, alter or terminate any Employee Benefit
Arrangements, provided that any such action shall not adversely affect the
rights or benefits of any employees or other beneficiaries which shall have
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32
arisen thereunder prior to such amendment, modification, alteration or
termination, and shall not affect any rights or benefits for which the agreement
of the other party or a beneficiary is required as a condition to any such
amendment, modification, alteration or termination; and provided, further, that
neither Parent nor any subsidiary of Parent (including without limitation the
Surviving Corporation) shall at any time take any action to amend, modify, alter
or terminate the CAPCO Automotive Products Corporation Directors Unfunded
Deferred Fee Plan, as in effect on the date hereof, with respect to any
individual who is a participant therein as of the date hereof, without that
individual's written consent. Notwithstanding the foregoing, for a period of one
year following the Effective Time, Parent shall cause the Surviving Corporation
to continue to provide to individuals who are employees of the Company and/or
its subsidiaries immediately prior to the Effective Time (each, a "Company
Employee" and collectively, the "Company Employees") Fringe Benefits (as
hereinafter defined) which are in the aggregate no less favorable than those
provided to such employees as of the date hereof; provided that nothing in this
sentence shall be deemed to limit or otherwise affect the right of the Surviving
Corporation to terminate the employment or change the place of work,
responsibilities, status or designation of any Company Employee or group of
Company Employees as the Surviving Corporation may determine in the exercise of
its business judgment and in compliance with the terms of any applicable
employment or retainer agreement to which the Company and/or any of its
subsidiaries is presently a party and which is listed in Section 6.05 of the
Company Disclosure Schedule, and all applicable laws. For purposes of all
Employee Benefit Arrangements (including without limitation plans or programs of
Parent, the Surviving Corporation and other affiliates of Parent after the
Effective Time), all service with the Company or any of its subsidiaries prior
to the Effective Time shall be treated as service with Parent, the Surviving
Corporation and other affiliates of Parent for purposes of eligibility and
vesting thereunder, and Parent, the Surviving Corporation and the other
affiliates of Parent shall cause all such Employee Benefit Arrangements
(including without limitation plans or programs of Parent, the Surviving
Corporation and the other affiliates of Parent after the Effective Time) in
which Company Employees participate for the first time after the Effective Time
(x) to waive any pre-existing condition limitations otherwise applicable after
the Effective Time to any Company Employee, and (y) to provide that any expenses
incurred by Company Employees (and their dependents) during the calendar year of
the Effective Time shall be taken into account for purposes of satisfying
applicable deductible, coinsurance and maximum out-of-pocket
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33
provisions (and like adjustments or limitations on coverage) under such Employee
Benefit Arrangements. "Fringe Benefits" means only the following benefits: the
CAPCO Automotive Products Corporation Incentive Compensation Plan for Management
and any health, dental, pension, vacation, sick pay, prescription drug,
professional membership dues, life insurance, disability, severance, retirement
or savings plan, policy, program or arrangement.
SECTION 6.06 Indemnification.
(a) Parent agrees that all rights to indemnification now
existing in favor of any director or officer of the Company and its subsidiaries
(the "Indemnified Parties") as provided in their respective charters or by-laws
shall survive the Merger and shall continue in full force and effect for a
period of not less than six years from the Effective Time. After the Effective
Time, Parent agrees to cause the Surviving Corporation to honor all rights to
indemnification referred to in the preceding sentence.
(b) Parent agrees that the Company, and from and after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
for not less than four years (except as provided in the last sentence of this
Section 6.06(b)) from the Effective Time the current policies of the directors'
and officers' liability insurance maintained by the Company; provided that the
Surviving Corporation may substitute therefor other policies not less
advantageous (other than to a de minimis extent) to the beneficiaries of the
current policies and provided that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time; and provided, further, that the Surviving Corporation shall not
be required to pay an annual premium in excess of 100% of the last annual
premium paid by the Company prior to the date hereof (which the Company
represents to be $720,000 for the 12-month period ending May 9, 1996) and if the
Surviving Corporation is unable to obtain the insurance required by this Section
6.06(b) it shall obtain the greatest comparable insurance coverage as possible
for an annual premium equal to such maximum amount. Notwithstanding the
foregoing, at any time on or after the second anniversary of the Effective Time,
Parent may, at its election, undertake to provide funds to the Surviving
Corporation to the extent necessary so that the Surviving Corporation may
self-insure with respect to the level of insurance coverage required under this
Section 6.06(b) in lieu of causing to remain in effect any directors' and
officers' liability insurance policy.
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(c) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Parent thereof. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) Parent or the Surviving
Corporation shall have the right, from and after the purchase of Shares pursuant
to the Amended Offer, to assume the defense thereof and Parent shall not be
liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, (ii) the Indemnified Parties will cooperate
in the defense of any such matter and (iii) Parent shall not be liable for any
settlement effected without its prior written consent; and provided further that
Parent shall not have any obligation hereunder to any Indemnified Party when and
if a court of competent jurisdiction shall ultimately determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
SECTION 6.07 Notification of Certain Matters. Parent and the Company
shall promptly notify each other of (a) the occurrence or non-occurrence of any
fact or event which would be reasonably likely (i) to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time or (ii)
to cause any material covenant, condition or agreement under this Agreement not
to be complied with or satisfied in all material respects and (b) any failure of
the Company or Parent, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder in any material respect; provided, however, that no such notification
shall affect the representations or warranties of any party or the conditions to
the obligations of any party hereunder. Each of the Company, Parent and the
Purchaser shall give prompt notice to the other parties hereof of any notice or
other communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement.
SECTION 6.08 Rights Agreement. The Company covenants and agrees that it
will not (i) redeem the Rights, (ii) amend the Rights Agreement in any material
respect or (iii) take any action which would allow any Person (as defined in the
Rights Agreement) other than Parent or the Purchaser to acquire beneficial
ownership of 20% or more of the Common Shares without causing a Distribution
Date or a
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Triggering Event (as each term is defined in the Rights Agreement) to
occur.
SECTION 6.09 State Takeover Laws. The Company shall, upon the request
of the Purchaser, take all reasonable steps to assist in any challenge by the
Purchaser to the validity or applicability to the transactions contemplated by
this Agreement, including the Amended Offer and the Merger, of any state
takeover law.
SECTION 6.10 Disposition of Litigation.
(a) The parties hereto shall immediately dismiss, without
prejudice, with each party bearing its own costs and litigation expenses, all
proceedings pending between them and their affiliates (including their
respective directors), (collectively, the "Litigation") and each shall
thereafter sign and deliver such further papers as may be necessary to effect
such dismissals. The Company agrees that it will not settle any litigation
currently pending, or commenced after the date hereof, against the Company or
any of its directors by any shareholder of the Company relating to the Amended
Offer, the Merger or this Agreement, without the prior written consent of
Parent.
(b) The Company will not voluntarily cooperate with any third
party which has sought or may hereafter seek to restrain or prohibit or
otherwise oppose the Amended Offer or the Merger and will cooperate with Parent
and the Purchaser to resist any such effort to restrain or prohibit or otherwise
oppose the Amended Offer or the Merger.
SECTION 6.11 Proxy Contests. Parent hereby agrees to withdraw and
rescind and shall promptly cause to be withdrawn and rescinded (i) the notice by
Parent, dated March 13, 1996, pursuant to Section 3.5 of the Company's By-Laws,
(ii) the notice by Cede & Co., dated March 14, 1996, pursuant to Section 3.5 of
the Company's By-Laws, and (iii) the Schedule 14A filed with the SEC, in each
case, relating to the nomination of the persons named in such notices for
election to the Company Board at the Annual Meeting of the Company's
Shareholders. The Company shall as soon as possible indefinitely postpone its
annual meeting of shareholders currently scheduled for May 14, 1996, and shall
take no action unless compelled by legal process to reschedule such annual
meeting or to call a special meeting of shareholders of the Company except in
accordance with this Agreement, unless and until this Agreement has been
terminated in accordance with its terms.
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SECTION 6.12 No Solicitation.
(a) The Company, its affiliates and their respective officers,
directors, employees, representatives and agents shall immediately cease any
existing discussions or negotiations, if any, with any parties conducted
heretofore with respect to any acquisition or exchange of all or any material
portion of the assets of, or any equity interest in, the Company or any of its
subsidiaries or any business combination with the Company or any of its
subsidiaries. The Company agrees that, prior to the Effective Time, it shall
not, and shall not authorize or permit any of its subsidiaries or any of its or
its subsidiaries' directors, officers, employees, agents or representatives,
directly or indirectly, to solicit, initiate, knowingly encourage or actively
facilitate, or furnish or disclose non-public information in furtherance of, any
inquiries or the making of any proposal with respect to any merger, liquidation,
recapitalization, consolidation or other business combination involving the
Company or its subsidiaries or acquisition of any capital stock or any material
portion of the assets (except for acquisition of assets in the ordinary course
of business consistent with past practice) of the Company or its subsidiaries,
or any combination of the foregoing (an "Acquisition Transaction"), or
negotiate, explore or otherwise engage in substantive discussions with any
person (other than Purchaser, Parent or their respective directors, officers,
employees, agents and representatives) with respect to any Acquisition
Transaction or enter into any agreement, arrangement or understanding requiring
it to abandon, terminate or fail to consummate the Merger or any other
transactions contemplated by this Agreement; provided that the Company may
furnish information to, and negotiate or otherwise engage in substantive
discussions with, any party who delivers a written proposal for an Acquisition
Transaction if the Company Board determines in good faith by a majority vote,
based upon advice from its outside legal counsel, that failing to take such
action would constitute a breach of the fiduciary duties of the Company Board,
and such a proposal is more favorable to the Company's shareholders from a
financial point of view than the transactions contemplated by this Agreement.
(b) From and after the execution of this Agreement, the
Company shall promptly advise the Purchaser in reasonable detail of the receipt,
directly or indirectly, of any inquiries, discussions, negotiations or proposals
relating to an Acquisition Transaction, including without limitation identifying
the offeror and the terms of any proposal relating to an Acquisition
Transaction. The Company shall promptly advise Parent of any material
development
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relating to such proposal, including the results of any discussions or
negotiations with respect thereto.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of each of the following
conditions:
(a) Shareholder Approval. The shareholders of the Company
shall have duly approved the transactions contemplated by this Agreement, if
required by applicable law.
(b) Purchase of Common Shares. The Purchaser shall have
accepted for payment and paid for Common Shares pursuant to the Amended Offer in
accordance with the terms hereof; provided that this condition shall be deemed
to have been satisfied with respect to Parent and the Purchaser if the Purchaser
fails to accept for payment or pay for Common Shares pursuant to the Amended
Offer in violation of the terms of the Amended Offer.
(c) Injunctions; Illegality. The consummation of the Merger
shall not be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any Governmental
Entity and there shall not have been any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger by any Governmental Entity which
prevents the consummation of the Merger or has the effect of making the purchase
of Common Shares illegal.
(d) HSR Act. Any waiting period (and any extension thereof)
under the HSR Act applicable to the Merger shall have expired or terminated.
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the shareholders of the Company (with
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any termination by Parent also being an effective termination by the Purchaser):
(a) by the mutual written consent of Parent and the Company,
by action of their respective Boards of Directors;
(b) by the Company if (i) the Purchaser fails to commence the
Amended Offer as provided in Section 1.01 hereof, (ii) the Purchaser shall not
have accepted for payment and paid for Common Shares pursuant to the Amended
Offer in accordance with the terms thereof on or before June 30, 1996 (provided
that if any Governmental Entity has made a request for additional information
under the HSR Act, such date shall be extended to a date which is 30 days after
substantial compliance with such request, but in no event later than July 31,
1996) (the latest such date being referred to as the "Outside Date") or (iii)
the Purchaser fails to purchase validly tendered Common Shares in violation of
the terms of the Amended Offer or this Agreement;
(c) by Parent or the Company if the Amended Offer is
terminated or withdrawn pursuant to its terms without any Common Shares being
purchased thereunder; provided, however, that neither Parent nor the Company may
terminate this Agreement pursuant to this Section 8.01(c) if such party shall
have materially breached this Agreement or, in the case of Parent, if it or
the Purchaser is in material violation of the terms of the Amended Offer;
(d) by Parent or the Company if any court or other
Governmental Entity shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise prohibiting the
acceptance for payment of, or payment for, Common Shares pursuant to the Amended
Offer or the Merger and such order, decree or ruling or other action shall have
become final and nonappealable, provided, that Parent shall, if necessary to
prevent the taking of such action, or the enforcement, promulgation, amendment,
issuance or application of any statute, rule, regulation, legislation, order or
injunction, offer to accept an order to divest such of the Company's or its
subsidiaries', as applicable, or Parent's assets and businesses as may be
necessary to forestall such injunction or order and to hold separate such assets
and business pending such divestiture, but only if the amount of such assets and
businesses is not material in relation to the assets or profitability of the
Company and its subsidiaries taken as a whole;
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(e) by the Company if, prior to the purchase of Common Shares
pursuant to the Amended Offer in accordance with the terms of this Agreement,
the Company Board approves an agreement to effect a proposal made by a third
party to acquire all the outstanding Common Shares pursuant to a tender offer or
a merger, or purchase all or substantially all of the assets of the Company, on
terms which a majority of the members of the Company Board have determined in
good faith (i) based upon the advice of a nationally recognized investment
banker, to be more favorable to the Company and its shareholders than the
transactions contemplated by this Agreement and (ii) based upon the advice from
its outside counsel, that failure to approve such proposal and terminate this
Agreement would constitute a breach of fiduciary duties of the Company Board
under applicable law; provided that the termination described in this Section
8.01(e) shall not be effective unless and until the Company shall have paid to
Parent all of the fees and expenses described in Section 8.03(b);
(f) by Parent if the Company breaches its covenant in Section
6.08;
(g) by the Company prior to the consummation of the Amended
Offer, if (i) any of the representations and warranties of Parent or the
Purchaser contained in this Agreement were untrue or incorrect in any material
respect when made or have since become, and at the time of termination remain,
incorrect in any material respect which breach would adversely affect the
ability of Parent or the Purchaser to consummate the Amended Offer and the
Merger, or (ii) Parent or the Purchaser shall have breached or failed to comply
in any material respect with any of their respective obligations under this
Agreement, which breach shall not have been cured prior to the earlier of (A) 10
days following notice of such breach and (B) two business days prior to the date
on which the Amended Offer expires;
(h) by Parent prior to the purchase of Common Shares pursuant
to the Amended Offer, if (i) there shall have been a breach of any
representation or warranty on the part of the Company contained in this
Agreement which would reasonably be expected to have Material Adverse Effect on
the Company or which would reasonably be expected to prevent (or materially
delay) the consummation of the Amended Offer, (ii) there shall have been a
breach of any covenant or agreement on the part of the Company contained in this
Agreement which would reasonably be expected to have a Material Adverse Effect
on the Company or which would reasonably be expected to prevent (or materially
delay) the consummation of the Amended
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Offer, which shall not have been cured prior the earlier of (A) 10 days
following notice of such breach and (B) two business days prior to the date on
which the Amended Offer expires, or (iii) the Company Board shall have withdrawn
or modified (including by amendment of the Schedule 14D-9) in a manner adverse
to the Purchaser its approval or recommendation of the Amended Offer, this
Agreement or the Merger and shall not have reinstated such approval or
recommendation within three business days thereof, shall have approved or
recommended another offer or transaction, or shall have resolved to effect any
of the foregoing;
(i) by Parent prior to the purchase of Common Shares pursuant
to the Amended Offer if the Minimum Condition (as defined in Annex I) shall not
have been satisfied by the expiration date of the Amended Offer and on or prior
to such date any of the following shall have occurred: (A) the acquisition of
the Company by merger, tender offer or otherwise by any person other than
Parent, the Purchaser or any affiliate thereof (a "Third Party"); (B) the
acquisition by a Third Party of 20.0% or more of the assets of the Company and
its subsidiaries, taken as a whole; (C) the acquisition by a Third Party of
beneficial ownership of more than 20.0% of the outstanding Common Shares; (D)
the adoption by the Company of a plan of liquidation or the declaration or
payment of an extraordinary dividend; or (E) the repurchase by the Company or
any of its subsidiaries of 20.0% or more of the outstanding Common Shares at a
price in excess of $12.50 per Share; or
(j) by Parent prior to the purchase of Shares pursuant to the
Amended Offer, if the Minimum Condition shall not have been satisfied by the
expiration date of the Amended Offer and on or prior to such date any person
(other than Parent or the Purchaser) shall have made a proposal or public
announcement or communication to the Company with respect to an Acquisition
Transaction.
SECTION 8.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.01, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or shareholders, other than the provisions of Section
6.02(b), Section 8.02 and Section 8.03, which shall survive any such
termination. Nothing contained in this Section 8.02 shall relieve any party from
liability for any breach of this Agreement.
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SECTION 8.03 Fees and Expenses.
(a) Whether or not the Merger is consummated, except as
otherwise specifically provided herein, all costs and expenses incurred in
connection with the Amended Offer, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.
(b) In the event that this Agreement is terminated pursuant to
Section 8.01(e), (f), (h)(iii) or (i), then the Company shall promptly (and in
any event within one business day after such termination) reimburse Parent for
the expenses of Parent and the Purchaser (including printing fees, filing fees
and fees and expenses of its legal and financial advisors) related to the
Initial Offer, this Agreement, the transactions contemplated hereby and any
related financing (collectively, "Expenses") up to a maximum of $500,000, and
pay Parent a termination fee of $5,000,000 (the "Termination Fee").
(c) In the event that this Agreement is terminated pursuant to
Section 8.01(j) and within 12 months of the date of termination of this
Agreement a transaction constituting an Acquisition Transaction is consummated
or the Company or any of its subsidiaries enters into an agreement with respect
to, approves or recommends or takes any action to facilitate such a transaction,
the Company shall promptly (and in any event within one business day thereafter)
reimburse Parent for its Expenses up to a maximum of $500,000 and pay Parent the
Termination Fee.
(d) The prevailing party in any legal action undertaken to
enforce this Agreement or any provision hereof shall be entitled to recover from
the other party the costs and expenses (including attorneys' and expert witness
fees) incurred in connection with such action.
SECTION 8.04 Amendment. Subject to Section 1.03(c), this Agreement may
be amended by the Company, Parent and the Purchaser at any time before or after
any approval of this Agreement by the shareholders of the Company but, after any
such approval, no amendment shall be made which decreases the Merger Price or
which adversely affects the rights of the Company's shareholders hereunder
without the approval of such shareholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of all the parties.
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c), at any time
prior to the Effective Time, the parties hereto may (i) extend the time for the
performance of
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42
any of the obligations or other acts of any other party hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein by any other
party or in any document, certificate or writing delivered pursuant hereto by
any other party or (iii) waive compliance with any of the agreements of any
other party or with any conditions to its own obligations. Any agreement on the
part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. Notwithstanding the foregoing, the agreements set forth in
Section 3.01, the last sentence of the second paragraph of Section 6.03(a),
Section 6.06 and Section 6.07 shall survive the Effective Time indefinitely
(except to the extent a shorter period of time is explicitly specified therein).
SECTION 9.02 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the
instruments referred to herein) constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party (except that Parent may assign its rights and Purchaser may assign its
rights, interest and obligations to any affiliate or direct or indirect
subsidiary of Parent without the consent of the Company provided that no such
assignment shall relieve Parent of any liability for any breach by such
assignee. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
SECTION 9.03 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of
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43
this Agreement, each of which shall remain in full force and effect.
SECTION 9.04 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or the Purchaser:
Xxxxx Corporation
Eaton Center
0000 Xxxxxxxx Xxxxxx, X.X.
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
If to the Company:
CAPCO Automotive Products Corporation
000 X. Xx. Xxxxx Xxxx.
Xxxxx 000
Xxxxx Xxxx, Xxxxxxx 00000
Attention: X. X. Xxxxxxxxxxx
with a copy to:
White & Case
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx., Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
provided that notice of any change of address shall be effective only upon
receipt thereof.
SECTION 9.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
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44
SECTION 9.06 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.07 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 9.08 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and, except with respect
to Sections 1.03(c), 2.09 and 6.06, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
SECTION 9.09 Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person, shall mean
any other person directly or indirectly controlling, controlled by, or under
common control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise;
(b) the term "Person" or "person" shall include individuals,
corporations, partnerships, trusts, other entities and groups (which term shall
include a "group" as such term is defined in Section 13(d)(3) of the Exchange
Act); and
(c) the term "Subsidiary" or "subsidiaries" means, with
respect to Parent, the Company or any other person, any corporation,
partnership, joint venture or other legal entity of which Parent, the Company or
such other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, stock or other equity
interests the holders of which are generally entitled to more than 50% of the
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
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45
SECTION 9.10 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity, provided that this
Section 9.10 shall have no force and effect from and after the termination of
this Agreement in accordance with Section 8.01 and the payment by the Company of
any Expenses and the Termination Fee in accordance with Section 8.03.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
XXXXX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
and General Counsel
EATON ACQUISITION CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President and
Secretary
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
By: /s/ F. Xxxxx Xxxxxxxxxxxx
-------------------------------
Name: F. Xxxxx Xxxxxxxxxxxx
Title: Chairman, CEO & President
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47
Annex I
Conditions to the Amended Offer. Notwithstanding any other provisions
of the Amended Offer, the Purchaser shall not be required to accept for payment
or pay for any tendered Common Shares, unless (i) there are validly tendered and
not properly withdrawn prior to the expiration date for the Amended Offer (the
"Expiration Date") that number of Common Shares which, when aggregated with the
805,000 Common Shares currently beneficially owned by Parent, represent at least
a majority of the total number of outstanding Common Shares on a fully diluted
basis on the date of purchase (not taking into account the Rights) (the "Minimum
Condition") and (ii) any applicable waiting period under the HSR Act or under
any applicable foreign statutes or regulations shall have expired or been
terminated. Furthermore, notwithstanding any other provisions of the Amended
Offer, the Purchaser may, subject to the terms of the Merger Agreement, amend or
terminate the Amended Offer or postpone the acceptance for payment of or payment
for tendered Common Shares if at any time on or after March 27, 1996 (unless
otherwise indicated below) and before the time of payment for any Common Shares,
any of the following events (each, an "Event") shall occur:
(a) there shall be any action taken, or any statute,
rule, regulation, legislation, interpretation, judgment, order or
injunction enacted, enforced, promulgated, amended, issued or deemed
applicable to the Amended Offer, by any legislative body, court,
government or governmental, administrative or regulatory authority or
agency, domestic or Brazilian, other than the routine application of
the waiting period provisions of the HSR Act to the Amended Offer or to
the Merger, that would reasonably be expected to: (i) make illegal or
otherwise prohibit or materially delay consummation of the Amended
Offer or the Merger or seek to obtain material damages or make
materially more costly the making of the Offer, (ii) prohibit or
materially limit the ownership or operation by Parent or the Purchaser
of all or any material portion of the business or assets of the Company
or any of its subsidiaries taken as a whole or compel Parent or the
Purchaser to dispose of or hold separately all or any material portion
of the business or assets of Parent or the Purchaser or the Company or
any of its subsidiaries taken as a whole, or seek to impose any
material limitation on the ability of Parent or the Purchaser to
conduct its business or own such assets, (iii) impose material
limitations on the ability of Parent or the Purchaser effectively to
acquire, hold or exercise full rights of ownership of the shares of
Common Shares, including, without limitation, the right
48
to vote any Common Shares acquired or owned by the Purchaser or Parent
on all matters properly presented to the Company's shareholders, or
(iv) require divestiture by Parent or the Purchaser of any Common
Shares; provided, that Parent shall, if necessary to prevent the taking
of such action, or the enforcement, promulgation, amendment, issuance
or application of any statute, rule, regulation, legislation, order or
injunction, offer to accept an order to divest such of the Company's or
its subsidiaries', as applicable, or Parent's assets and businesses as
may be necessary to forestall such injunction or order and to hold
separate such assets and business pending such divestiture, but only if
the amount of such assets and businesses is not material in relation to
the assets or profitability of the Company and its subsidiaries taken
as a whole;
(b) there shall have occurred any development that
has, or would reasonably be expected to have, a material adverse effect
on the business, assets, financial condition or results of operations
of the Company and its subsidiaries taken as a whole; or
(c) (i) it shall have been publicly disclosed or
Purchaser shall have otherwise learned that beneficial ownership
(determined for the purposes of this paragraph as set forth in Rule
13d-3 promulgated under the Exchange Act) of more than 20.0% of the
outstanding Common Shares has been acquired by any person (including
the Company or any of its subsidiaries or affiliates) or group (as
defined in Section 13(d)(3) under the Exchange Act), (ii) the Company
Board or any committee thereof shall have withdrawn, or shall have
modified or amended in a manner adverse to Parent or the Purchaser, the
approval, adoption or recommendation, as the case may be, of the
Amended Offer, or the Merger Agreement, or approved or recommended any
other takeover proposal or other acquisition of Common Shares other
than the Amended Offer and the Merger, (iii) any corporation,
partnership, person or other entity or group shall have entered into a
definitive agreement or an agreement in principle with the Company with
respect to a tender offer or exchange offer for any Common Shares or a
merger, consolidation or other business combination with or involving
the Company or any of its subsidiaries, or (iv) the Company Board or
any committee thereof shall have resolved to do any of the foregoing;
or
(d) the Company and the Purchaser and Parent shall
have reached an agreement that the Amended Offer
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49
or the Merger Agreement be terminated, or the Merger Agreement shall
have been terminated in accordance with its terms; or
(e) any of the representations and warranties of the
Company set forth in the Merger Agreement that are qualified as to
materiality shall not be true and correct, or any such representations
and warranties that are not so qualified shall not be true and correct
in any respect which would reasonably be expected to have a material
adverse effect on the business, assets, financial condition or results
of operations of the Company and its subsidiaries taken as a whole, in
each case as if such representations and warranties were made at the
time of such determination except as to any such representation or
warranty which speaks as of a specific date, which must be untrue or
incorrect in the foregoing respects as of such specific date; or
(f) the Company shall have failed to perform in any
material respect or to comply in any material respect with any of its
obligations, covenants or agreements under the Merger Agreement; or
(g) there shall have occurred, and continued to exist,
(i) any general suspension of, or limitation on prices for, trading in
securities on the New York Stock Exchange, (ii) any decline of at least
25% in either the Dow Xxxxx Average of Industrial Stocks or the
Standard & Poor's 500 Index from the close of business on the last
trading day immediately preceding the date of the Merger Agreement,
(iii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or Brazil and, in the
case of Brazil, would reasonably be expected to have a material adverse
effect on the business, assets, financial condition or results of
operations of the Company and its subsidiaries taken as a whole, (iv) a
commencement of a war, armed hostilities or other national or
international crisis directly or indirectly involving the United States
or Brazil and, in the case of Brazil, would reasonably be expected to
have a material adverse effect on the business, assets, financial
condition or results of operations of the Company and its subsidiaries
taken as a whole, or (v) in the case of any of the foregoing clauses
(i) through (iv) existing at the time of the commencement of the
Amended Offer, a material acceleration or worsening thereof.
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50
The foregoing conditions (including those set forth in clauses
(i) and (ii) of the initial paragraph) are for the benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to any such conditions and may be waived by Parent or
the Purchaser in whole or in part at any time and from time to time in their
reasonable discretion, in each case, subject to the terms of the Merger
Agreement. The failure by Parent or the Purchaser 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. Any determination by the Purchaser concerning the events
described in this Annex I will be final and binding on all parties.
The Amended Offer may be terminated by Purchaser if the Merger
Agreement is terminated pursuant to its terms.
The capitalized terms used in this Annex I shall have the
meanings set forth in the Agreement to which it is annexed, except that the term
"Merger Agreement" shall be deemed to refer to the Agreement to which this Annex
I is appended.
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