SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
PLM INTERNATIONAL, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party
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4. Date Filed:
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December 17, 2001
[PLM LETTERHEAD]
Dear Stockholder: AGREEMENTS CONTEMPLATED THEREBY,
INCLUDING THE MERGER, AND (III)
You are invited to attend a special RECOMMENDED THAT PLM'S STOCKHOLDERS
meeting of stockholders of PLM APPROVE THE MERGER PROPOSAL.
International, Inc. ("PLM") at the law
offices of Nixon Peabody LLP, 437
Madison Avenue, 24th Floor, New York, Among the factors considered by the PLM
New York, on January 8, 2002, at 10:00 Board of Directors in evaluating the
a.m., local time. At the special merger was the opinion dated December
meeting, you will be asked to consider 21, 2000 of Imperial Capital LLC that,
and approve the merger of MILPI as of such date, the cash consideration
Acquisition Corp. ("MILPI") with and to be received by PLM stockholders
into PLM, pursuant to an Agreement and pursuant to the tender offer and the
Plan of Merger dated as of December 22, merger was fair from a financial point
2000. of view to such stockholders. The
written opinion of Imperial Capital is
The merger is the second and final step attached as Annex B to the enclosed
of MILPI's acquisition of PLM. The first proxy statement and you should read it
step was a tender offer by MILPI for all carefully and in its entirety.
of the outstanding shares of common
stock of PLM at a price of $3.46 per The enclosed proxy statement provides
share, to the seller in cash, which was you with a summary of the merger
completed on February 7, 2001. The agreement and the merger, and provides
second step of MILPI's acquisition of additional information about the parties
PLM consists of the merger of MILPI with involved. Following the approval of the
and into PLM. Upon completion of the merger proposal by PLM stockholders, the
merger, each share of PLM common stock, closing of the merger will occur as
other than shares held by MILPI and promptly as practicable after the
dissenting PLM stockholders who perfect special meeting, subject to the
their appraisal rights, will be satisfaction or waiver of the conditions
converted into the right to receive the to the closing of the merger.
same $3.46 in cash, without interest.
PLEASE READ THE PROXY STATEMENT
The affirmative vote of holders of a CAREFULLY. WHETHER OR NOT YOU PLAN TO
majority of the shares of PLM common ATTEND THE SPECIAL MEETING, YOU ARE
stock outstanding and entitled to vote REQUESTED TO PROMPTLY COMPLETE, SIGN AND
at the special meeting is necessary to DATE THE ENCLOSED PROXY CARD AND RETURN
approve the merger proposal. As a result IT IN THE ENVELOPE PROVIDED. THIS WILL
of the tender offer, MILPI owns NOT PREVENT YOU FROM VOTING YOUR SHARES
6,284,261 shares of PLM common stock, or IN PERSON IF YOU SUBSEQUENTLY CHOOSE TO
83.2% of the outstanding common stock, ATTEND THE SPECIAL MEETING.
which is sufficient for MILPI to assure
approval of the merger proposal at the On behalf of our Board of Directors, we
special meeting. As a result, the thank you for your continued support and
affirmative vote of other PLM again urge you to vote for the proposed
stockholders will not be required to merger.
approve the merger proposal.
Very truly yours,
THE BOARD OF DIRECTORS OF PLM HAS
UNANIMOUSLY (I) DETERMINED THAT THE
MERGER AGREEMENT AND THE MERGER ARE
ADVISABLE AND FAIR TO, AND IN THE BEST
INTERESTS OF, PLM AND PLM's Stephen M. Bess
STOCKHOLDERS, (II) APPROVED AND ADOPTED President and Chief Executive Officer
THE MERGER AGREEMENT AND THE
TRANSACTIONS AND THE RELATED
PLM INTERNATIONAL, INC.
120 Montgomery Street
Suite 1350
San Francisco, California 94104
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 8, 2002
To PLM Stockholders: THE PLM BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS APPROVE THE
NOTICE IS HEREBY GIVEN that a special MERGER PROPOSAL.
meeting of stockholders of PLM
International, Inc., a Delaware
corporation ("PLM"), will be held at Under Delaware law, stockholders of PLM
10:00 a.m. on January 8, 2002 at the law are eligible to exercise appraisal
offices of Nixon Peabody LLP, 437 rights in connection with the merger. A
Madison Avenue, New York, New York. A stockholder that does not vote in favor
proxy card and proxy statement for the of the merger proposal and complies with
special meeting are enclosed. other necessary procedural requirements
will have the right to dissent from the
The special meeting is for the purpose merger and to seek appraisal of the fair
of: value of their shares if the merger is
completed. For a description of
1. Considering and voting upon the appraisal rights and the procedures to
Agreement and Plan of Merger (the be followed to assert them, stockholders
"merger agreement"), dated as of should review the provisions of Section
December 22, 2000, by and between MILPI 262 of the Delaware General Corporation
Acquisition Corp. ("MILPI") and PLM, and Law. A copy of these provisions is
the merger (the "merger") contemplated included as Annex C to the accompanying
thereby. A copy of the merger agreement proxy statement.
is attached as Annex A to the
accompanying proxy statement. The merger
agreement and the merger contemplated Your vote is important. Whether or not
thereby are referred to in the you plan to attend the special meeting,
accompanying proxy statement as the please complete, date and sign the
"merger proposal." enclosed proxy card and return it in the
enclosed envelope. If you attend the
2. Transacting such other business as special meeting, you may revoke your
may properly come before the special proxy and vote personally on each matter
meeting and any adjournments thereof. At brought before the special meeting.
present, our Board of Directors is not
aware of any other business that will be By Order of the Board of Directors,
presented for consideration at the
special meeting.
Approval of the merger proposal requires Stephen M. Bess
the affirmative vote of the holders of President and Chief Executive Officer
at least a majority of the votes
entitled to be cast by holders of PLM San Francisco, California
common stock. Stockholders of record of December 17, 2001
PLM at the close of business on December
11, 2001 are entitled to notice of, and
to vote at, the special meeting and at
any and all adjournments or
postponements thereof.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN
YOUR PROXY CARD IN THE ENCLOSED ENVELOPE PROMPTLY.
This proxy statement, dated December 17, 2001,
will first be mailed to stockholders on or about
December 17, 2001.
SUMMARY TERM SHEET
This proxy statement solicits your vote in favor of the approval of the
merger of MILPI Acquisition Corp. with and into PLM International, Inc.,
pursuant to an Agreement and Plan of Merger dated as of December 22, 2000. Upon
completion of the merger:
o Each outstanding share of PLM common stock (other than shares held
by MILPI and by shareholders who perfect their appraisal rights)
will be converted into the right to receive $3.46, without interest,
payable in cash (see pages 19 to 20);
o Each outstanding option to purchase PLM common stock will be
converted into the right to receive cash in an amount equal to the
excess, if any, of $3.46 over the exercise price of the option (see
page 22); and
o PLM will become a wholly owned subsidiary of MILPI Holdings, LLC and
will cease to be a publicly traded company (see pages 17 and 19).
We plan to complete the merger as soon as possible following the special
meeting, subject to satisfaction or waiver of the conditions to the merger.
Although we cannot predict exactly when all conditions will be satisfied, we
hope to complete the merger promptly following the special meeting (see pages
20 and 22).
QUESTIONS AND ANSWERS ABOUT THE MERGER PROPOSAL
Q: WHAT AM I BEING ASKED TO VOTE ON? Q: WHAT WILL I RECEIVE IN THE MERGER?
A: You are being asked to vote to A: If the merger is completed, our
approve and adopt the merger agreement stockholders (other than MILPI and
entered into between PLM and MILPI and stockholders who perfect their appraisal
the merger contemplated by the merger rights) will receive $3.46 in cash,
agreement. without interest, for each share of PLM
common stock they own.
Q: WITH WHOM ARE WE MERGING?
Q: DOES MILPI HAVE THE CASH TO PAY FOR
A: MILPI will merge with and into THE SHARES?
PLM. MILPI is a wholly owned subsidiary
of MILPI Holdings, LLC ("MILPI A: MILPI has informed us that it
Holdings"), which is wholly owned by has sufficient financial resources to
four separate trusts. Following the pay the merger consideration, and
closing of the merger, two of the trusts MILPI's obligation to pay for PLM shares
will liquidate their assets and, in is not conditioned on any financing. Two of the
connection with the liquidation, sell or four trusts have committed to provide
otherwise dispose of their interests in MILPI's direct parent, MILPI Holdings,
MILPI Holdings. Each of the four trusts with the funding necessary for the completion
are partially owned by AFG ASIT of the merger. MILPI Holdings, in turn has
Corporation ("AFG ASIT"), which acts as committed to provide MILPI with such funds.
managing trustee for each of the four MILPI anticipates that approximately 70% of
trusts. AFG ASIT is wholly owned by these funds will be obtained from existing
Equis II Corporation ("Equis II"), which resources and internally generated funds of
is wholly owned by Semele Group, Inc. the two trusts and that approximately 30% of
("Semele"). Semele is a Delaware these funds will be obtained by means of a
corporation and the common stock of short-term, unsecured loan from PLM.
Semele is traded on the OTC Bulletin
Board under the symbol VSLF.OB. MILPI
was formed for the purpose of entering Q: WHY IS THE BOARD OF DIRECTORS
into a business combination transaction RECOMMENDING THAT I VOTE TO APPROVE AND
with us and has carried on no activities ADOPT THE MERGER PROPOSAL?
other than in connection with the
acquisition of PLM. As a result of the A: In the opinion of the Board of
proposed merger, MILPI will own all of Directors, the terms and provisions of
our stock. the merger agreement and the merger are
fair to and in the best interests of PLM
and its stockholders. To review the
background of and reasons for the
merger, see pages 6 to 11.
Q: WHEN AND WHERE IS THE SPECIAL A: We plan to complete the merger
MEETING? as soon as possible after the special
meeting, subject to the satisfaction or
A: The special meeting of waiver of the conditions to the merger.
stockholders of PLM will be held at Although we cannot predict exactly when
10:00 a.m. on January 8, 2002 at the law all conditions will be satisfied, we
offices of Nixon Peabody LLP, 437 hope to complete the merger promptly
Madison Avenue, 24th Floor, New York, following the special meeting.
New York.
Q: WHEN CAN I EXPECT TO RECEIVE THE
Q: WHO CAN VOTE AT THE PLM SPECIAL MERGER CONSIDERATION FOR MY SHARES?
MEETING?
A: Once you have submitted your
A: You can vote at the special properly completed letter of
meeting if you owned shares of PLM transmittal, PLM stock certificates and
common stock (the "shares") at the close other required documents (which will be
of business on December 11, 2001 (the sent to you in a separate mailing) to
"record date"). As of the close of Mellon Investor Services LLC (the
business on that day, approximately "Paying Agent" for the merger), the
7,554,510 shares were outstanding. Paying Agent will send you the merger
consideration as promptly as practicable
Q: HOW MANY VOTES ARE REQUIRED TO following the completion of the merger.
APPROVE THE MERGER PROPOSAL? MILPI will issue a press release once
the merger has been completed.
A: The affirmative vote of the
holders of a majority of all outstanding Q: WHEN SHOULD I SEND IN MY STOCK
shares of PLM common stock as of the CERTIFICATES?
close of business on the record date is
required to approve the merger proposal. A: After the special meeting, you
MILPI already owns a majority of such will be sent a letter of transmittal to
shares as a result of the tender offer complete and return to the Paying Agent.
("tender offer" or "offer") made In order to receive the merger
pursuant to the merger agreement, and consideration as promptly as practicable
has agreed to vote in favor of the following the completion of the merger,
merger proposal. Thus, the approval of you must send the Paying Agent your
the merger proposal is assured without validly completed letter of transmittal
the vote of any other stockholder. together with your PLM stock
certificates as instructed in the
Q: WHAT HAPPENS IF I DO NOT VOTE? separate mailing.
A: Since the affirmative vote of Q: WHAT DO I NEED TO DO NOW?
the holders of a majority of the
outstanding shares is required to A: Just indicate your vote on your
approve the merger agreement and the proxy card, sign and mail your proxy
merger, your failure to vote will have card in the enclosed return envelope as
the same effect as a vote against the soon as possible so that your shares may
merger. However, because MILPI owns a be represented at the special meeting.
majority of the shares and has agreed to The meeting will take place on January
vote in favor of the merger proposal, 8, 2002. Our Board of Directors
the approval of the merger proposal is unanimously recommends that you vote FOR
assured without the vote of any the approval of the merger proposal.
stockholder other than MILPI.
Accordingly, if the merger takes place, Q: IF MY SHARES ARE HELD IN "STREET"
you will still be paid the merger NAME BY MY BROKER, WILL MY BROKER VOTE
consideration, unless you exercise your MY SHARES FOR ME?
appraisal rights.
A: Your broker will vote your
Q: WHAT RIGHTS DO I HAVE IF I OPPOSE THE shares only if you provide instructions
MERGER? to your broker on how to vote. You
should instruct your broker to vote your
A: Stockholders who oppose the shares by following the directions
merger may exercise appraisal rights but provided to you by your broker. Without
only if they comply with the procedures instructions, your broker will not vote
of Section 262 of the Delaware General any of your shares held in "street" name
Corporation Law, summarized on pages 17 and the effect will be the same as a
to 18, and included in its entirety as vote against the merger proposal.
Annex C to this proxy statement.
Q: CAN I CHANGE MY VOTE AFTER I HAVE
Q: WHEN WILL THE MERGER OCCUR? MAILED IN MY SIGNED PROXY CARD?
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A: Yes. You can change your vote at A: Your receipt of the merger
any time before we vote your proxy at consideration will be a taxable
the special meeting. You can do so in transaction for U.S. federal income tax
one of three ways. First, you can send a purposes and possibly for state, local
written notice stating that you would and foreign income tax purposes as well.
like to revoke your proxy to the The tax consequences of the merger to
Secretary of PLM at the address given you will depend entirely upon your own
below. Second, you can request a new financial and tax situation. You should
proxy card and complete and send it to consult your tax and legal advisors for
the Secretary of PLM at the address a full understanding of the tax
given below. Third, you can attend the consequences of the merger to you.
special meeting and vote in person. You
should send any written notice or Q: WHO CAN ANSWER FURTHER QUESTIONS?
request for a new proxy card to the
attention of the Secretary, PLM A: If you would like additional
International, Inc., 120 Montgomery St., copies of this proxy statement or a new
Suite 1350, San Francisco, California proxy card or if you have questions
94104. about the merger, you should contact the
Investor Relations Department of PLM at
Q: WHAT ARE THE TAX CONSEQUENCES OF THE (800) 626-7549.
MERGER TO ME?
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TABLE OF CONTENTS
PAGE PAGE
SUMMARY TERM SHEET..............................i ANNEX A - AGREEMENT AND PLAN OF
QUESTIONS AND ANSWERS ABOUT THE MERGER PROPOSAL.i MERGER......................................A-1
SUMMARY.........................................1 ANNEX B - OPINION OF IMPERIAL
INTRODUCTION....................................3 CAPITAL.....................................B-1
THE COMPANIES...................................3 ANNEX C - DELAWARE GENERAL
THE SPECIAL MEETING.............................4 CORPORATION LAW SECTION 262.................C-1
Date, Time and Place..........................4
Matters to be Considered......................4
Record Date; Shares Outstanding and Entitled
to Vote.....................................4
Quorum; Vote Required.........................4
Share Ownership of Management and Certain
Stockholders................................4
Voting and Revocation of Proxies..............4
Proxy Solicitation............................5
THE MERGER PROPOSAL.............................5
Purpose, Structure and Effect of the Merger...5
Background of the Transaction.................6
Reasons for the Merger and Board of
Directors Recommendation...................10
Recommendation of Our Board of Directors.....11
Opinion of PLM's Financial Advisor...........12
Interests of Officers and Directors in the
Transaction................................14
Completion and Effectiveness of Merger.......15
Structure of the Merger and Conversion of
PLM Common Stock...........................15
Certain Federal Income Tax Considerations....15
Accounting Treatment.........................16
Regulatory Approvals.........................16
State Takeover Laws..........................16
Delisting and Deregistration of PLM
Common Stock after the Merger..............17
APPRAISAL RIGHTS...............................17
CHANGE OF CONTROL..............................18
SOURCE AND AMOUNT OF FUNDS.....................18
THE TRANSACTION AGREEMENTS.....................19
The Merger Agreement.........................19
The Escrow Agreement.........................24
The Confidentiality Agreement................25
The Transition Services, Employment and
Consulting Agreements......................25
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND
MANAGEMENT...................................27
OTHER MATTERS..................................28
STOCKHOLDER PROPOSALS..........................28
WHERE YOU CAN FIND MORE
INFORMATION..................................28
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SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION ABOUT THE MERGER PROPOSAL
CONTAINED IN THIS DOCUMENT AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. THIS SUMMARY IS NOT INTENDED TO BE A COMPLETE DESCRIPTION AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION
CONTAINED IN THIS PROXY STATEMENT OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT OR IN THE DOCUMENTS ATTACHED AS ANNEXES OR EXHIBITS HERETO. TO
UNDERSTAND THE MERGER PROPOSAL MORE FULLY AND FOR A COMPLETE DESCRIPTION OF THE
LEGAL TERMS OF THE MERGER PROPOSAL, YOU SHOULD READ CAREFULLY THIS ENTIRE
DOCUMENT AND THE DOCUMENTS WE REFER YOU TO. WE HAVE INCLUDED PAGE REFERENCES
PARENTHETICALLY TO DIRECT YOU TO THE PLACE IN THIS DOCUMENT WHERE YOU CAN FIND A
MORE COMPLETE DESCRIPTION OF THE TOPICS PRESENTED IN THE SUMMARY.
THE COMPANIES shares of PLM common stock outstanding
(PAGE 3) and entitled to vote at the special
meeting. Stockholders will have one vote
PLM primarily manages a diversified at the special meeting for each share of
portfolio of over $700 million (based on PLM common stock owned by them on the
original equipment cost) of record date.
transportation and related equipment for
various investment programs sponsored by VOTE REQUIRED. Approval of the
PLM and for other third-party investors. merger proposal will require the
affirmative vote of the holders of a
MILPI is a newly formed Delaware majority of the shares of PLM common
corporation organized in connection with stock outstanding on the record date.
the offer and the merger and has not Because MILPI currently owns in excess
carried on any activities other than in of 50% of the common stock of PLM and
connection with the offer and the will vote the shares in favor of the
merger. MILPI is 100% owned by MILPI merger proposal, the approval of the
Holdings. MILPI Holdings is owned by merger is assured.
four separate trusts. Following the
closing of the merger, two of the trusts SOLICITATION OF PROXIES. PLM will
will liquidate their assets and, in bear the cost of soliciting proxies from
connection with the liquidation, sell or stockholders. In addition to
otherwise dispose of their interests in solicitation by mail, our directors,
MILPI Holdings. Each of the four trusts officers and regular employees may
are partially owned by AFG ASIT, which solicit proxies from stockholders by
acts as managing trustee for each of the telephone, telegram, personal interview
four trusts. AFG ASIT is wholly owned by or otherwise. Our directors, officers
Equis II, which is wholly owned by and employees will not receive
Semele, a Delaware corporation whose additional compensation but may be
common stock is listed on the Nasdaq reimbursed for out-of-pocket expenses in
Small Cap Market under the symbol VSLF. connection with their solicitation of
proxies. Brokers, nominees, fiduciaries
THE SPECIAL MEETING and other custodians have been requested
(PAGE 4) to forward soliciting material to the
beneficial owners of shares of PLM
MATTERS TO BE CONSIDERED AT THE common stock held of record by them, and
SPECIAL MEETING. We will hold the such custodians will be reimbursed by us
special meeting at the law offices of for their reasonable expenses.
Nixon Peabody LLP, 437 Madison Avenue,
24th Floor, New York, New York, at 10:00 OUR RECOMMENDATION TO STOCKHOLDERS
a.m. on January 8, 2002. Stockholders (PAGES 4, 11)
will be asked to consider and vote upon
the merger proposal and to transact such Our Board of Directors has
other business as may properly come unanimously determined that the merger
before the special meeting. agreement and merger are advisable and
fair to, and in the best interests of,
RECORD DATE; SHARES ENTITLED TO PLM and its stockholders and has
VOTE. You are entitled to vote at the approved and adopted the merger
meeting if you owned shares of common agreement and merger and recommends that
stock of PLM as of the close of business you vote in favor of the merger
on December 11, 2001, the record date. proposal.
On the record date, there were
approximately 7,554,510
OPINION OF FINANCIAL ADVISOR UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
(PAGE 12) (PAGE 15)
In deciding to approve the merger Your receipt of the merger
agreement and the transactions consideration will be a taxable
contemplated thereby, including the transaction for U.S. federal income tax
tender offer and the merger, our Board purposes and possibly for state, local
of Directors considered an opinion dated and foreign income tax purposes as well.
December 21, 2000 of Imperial Capital, The tax consequences of the merger to
its financial advisor. The opinion you will depend entirely upon your own
stated that, as of such date and based financial and tax situation. You should
upon and subject to the assumptions, consult your tax and legal advisors for
qualifications and limitations set forth a full understanding of the tax
in its written opinion, the $3.46 per consequences of the merger to you.
share in cash to be received by the
holders of common stock in the offer and CONDITIONS TO THE MERGER
the merger was fair, from a financial (PAGES 16, 22)
point of view, to such holders. The
opinion of Imperial Capital is attached Consummation of the merger is
as Annex B to this proxy statement. We subject to various conditions, including
encourage you to read this opinion the approval of the merger by the
carefully and in its entirety. requisite vote of PLM stockholders and
the absence of any law, court order or
INTERESTS OF OFFICERS AND DIRECTORS IN THE injunction prohibiting the merger, which
TRANSACTION conditions are summarized on pages 22 to 23
(PAGE 14) of this proxy statement and listed in their
entirety in the merger agreement.
Certain officers and directors of
MILPI and PLM may have interests in the APPRAISAL RIGHTS
merger that are different from or in (PAGE 17)
addition to your interests as a
stockholder. For example, certain of our Under Section 262 of the Delaware
employees have entered into agreements General Corporation Law, PLM
relating to their employment following stockholders have the right to dissent
the consummation of the merger. from the merger and demand appraisal of,
and to receive payment in cash of the
COMPLETION OF THE MERGER, STRUCTURE fair market value of, their shares. A
OF THE MERGER full discussion of these appraisal
(PAGE 15) rights is included on pages 17 to 18 of
this proxy statement and the relevant
Subject to the satisfaction or provisions of the Delaware General
waiver of the remaining conditions to Corporation Law are included as Annex C
the merger, as promptly as practicable to this proxy statement.
after the merger proposal is approved,
MILPI will merge with and into PLM and
the merger will become effective. At the
effective time of the merger, the
separate existence of MILPI will cease,
PLM will become a wholly owned
subsidiary of MILPI Holdings and will
continue as the surviving corporation.
In addition, each share of PLM common
stock that is issued and outstanding
immediately prior to the effective time
(other than shares held by PLM as
treasury shares, shares held by MILPI
and shares for which the holders thereof
have properly exercised their appraisal
rights) will be automatically converted
into the right to receive cash in the
amount of $3.46 per share.
The merger agreement is attached as
Annex A to this proxy statement. We
encourage you to read the agreement in
its entirety, as it is the legal
document that governs the merger.
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INTRODUCTION
This proxy statement and the accompanying form of proxy are being furnished
to the holders of shares of common stock, $.01 par value, of PLM International,
Inc., a Delaware corporation, in connection with the solicitation of proxies by
the Board of Directors of PLM for use at the special meeting of the stockholders
of PLM to be held on January 8, 2002, at the law offices of Nixon Peabody LLP,
437 Madison Avenue, 24th Floor, New York, New York, at 10:00 a.m., local time.
THE COMPANIES
PLM is a Delaware corporation formed in 1987. The principal offices of PLM
are located at 120 Montgomery Street, Suite 1350, San Francisco, California
94104 and its telephone number is (415) 445-3201. PLM primarily manages a
diversified portfolio of over $700 million (based on original equipment cost) of
transportation and related equipment for various investment programs sponsored
by PLM and for other third-party investors. PLM owned 100% of the stock of
American Finance Group, Inc., which holds and leases industrial and commercial
equipment for its own account and for third-party investors, until March 1, 2000
when PLM sold it to Guaranty Federal Bank. Additionally, PLM operated a trailer
leasing business comprised of approximately 22 trailer rental yards, and
trailers owned and managed by PLM, until September 30, 2000, when it sold its
trailer leasing operations to Marubeni America Corporation for $70 million in
cash and the assumption of $48.6 million in debt and other liabilities. In
connection with the sale of the trailer leasing operations, PLM's Board of
Directors adopted a plan of partial liquidation of PLM and on November 3, 2000,
PLM paid a partial liquidating distribution of $5.00 per share to PLM
stockholders.
MILPI is a newly formed Delaware corporation organized in connection with
the offer and the merger and has not carried on any activities other than in
connection with the offer and the merger. The principal offices of MILPI are
located at 200 Nyala Farms, Westport, Connecticut 06880 and its telephone number
is (203) 341-0515. Until immediately prior to the time that MILPI purchased PLM
stock pursuant to the tender offer, MILPI did not have any significant assets or
liabilities or engage in activities other than those incident to its formation
and capitalization and the transactions contemplated by the tender offer and the
merger. Because MILPI is newly formed and has minimal assets and capitalization,
no meaningful financial information regarding MILPI is available.
MILPI is 100% owned by MILPI Holdings. MILPI Holdings is owned by four
trusts: AFG Investment Trust A, AFG Investment Trust B, AFG Investment Trust C,
and AFG Investment Trust D (the "four trusts"). In connection with its review of
the preliminary proxy materials, the staff of the Securities and Exchange
Commission informed the two trusts that it believes that two of the trusts may
be unregistered investment companies within the meaning of the Investment
Company Act of 1940. Although the trusts do not believe that they are
unregistered investment companies, AFG Investment Trusts A and B will liquidate
their assets in order to resolve with the SEC staff the question of whether the
two trusts are unregistered investment companies. In connection with the
liquidation, AFG Investment Trusts A and B will sell or otherwise dispose of
their interests in MILPI Holdings. In addition, MILPI Holdings has amended its
operating agreement so that the additional funds necessary to complete the
merger will not be provided by AFG Investment Trusts A and B. Instead, AFG
Investment Trusts C and D will provide the additional funds, with a portion of
the funds being loaned to the two trusts by PLM.
AFG ASIT is managing trustee of the four trusts, has a 1% economic interest
in each of the four trusts, has an 8.25% economic interest in the special
beneficiary of the four trusts and owns approximately 99% of the Class B Units
of each of the four trusts, which gives it approximately a 62% voting interest
in the four trusts. AFG ASIT is 100% owned by Equis II and Equis II is 100%
owned by Semele. In addition to its interests in Equis II, Semele holds an
ownership interest in a 274 acre land parcel located in Southern California
known as the Rancho Malibu property and an equity interest in a company that
owns a ski resort, a local public utility and land which is held for
development. Semele also has an interest in a limited partnership having a tax
interest in a diversified pool of lease contracts owned by an institutional
investor and in limited partnerships that are engaged in equipment leasing and
real estate, including two commercial buildings located in Washington D.C. and
in Sydney, Australia, respectively, that are leased to an investment-grade
educational institution. The common stock of Semele is traded on the OTC
Bulletin Board under the symbol VSLF.OB.
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THE SPECIAL MEETING
DATE, TIME AND PLACE
The special meeting is scheduled to be held at the law offices of Nixon
Peabody LLP, 437 Madison Avenue, 24th Floor, New York, New York, on January 8,
2002, beginning at 10:00 a.m., local time.
MATTERS TO BE CONSIDERED
At the special meeting, PLM stockholders will be asked to consider and vote
upon the merger proposal. Approval of the merger proposal by the stockholders of
PLM is a condition to PLM's participation in the merger.
THE BOARD OF DIRECTORS OF PLM HAS UNANIMOUSLY (I) DETERMINED THAT THE
MERGER AGREEMENT AND THE MERGER ARE ADVISABLE AND FAIR TO, AND IN THE BEST
INTERESTS OF, PLM AND PLM'S STOCKHOLDERS, (II) APPROVED AND ADOPTED THE MERGER
AGREEMENT AND THE TRANSACTIONS AND RELATED AGREEMENTS CONTEMPLATED THEREBY,
INCLUDING THE MERGER, AND (III) RECOMMENDED THAT PLM'S STOCKHOLDERS APPROVE THE
MERGER PROPOSAL.
Our Board of Directors knows of no other matters that will be presented for
consideration at the special meeting. If any other matters properly come before
the special meeting, the persons named in the enclosed form of proxy or their
substitutes will vote in accordance with their best judgment on such matters.
RECORD DATE; SHARES OUTSTANDING AND ENTITLED TO VOTE
Our Board of Directors has fixed the close of business on December 11, 2001
as the record date for the determination of the holders of PLM's common stock
entitled to notice of and to vote at the special meeting.
Only holders of record of PLM common stock as of the close of business on
the record date will be entitled to notice of and to vote at the special
meeting. As of the record date, there were approximately 7,554,510 shares of PLM
common stock outstanding and entitled to vote at the special meeting, held by
approximately [ ] stockholders of record, with each share entitled to one vote.
QUORUM; VOTE REQUIRED
The presence, in person or represented by proxy, of the holders of a
majority of the shares of common stock issued and outstanding and entitled to
vote at the special meeting will constitute a quorum. Approval of the merger
proposal will require the affirmative vote of the holders of a majority of the
shares of PLM common stock outstanding on the record date. Because MILPI owns in
excess of 50% of the shares of PLM and these shares will be present at the
special meeting and voted in favor of the merger proposal, the approval of the
merger is assured.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN STOCKHOLDERS
As of the close of business on the record date, MILPI beneficially owned
6,284,261 shares of PLM common stock (collectively representing approximately
83.2% of the voting power of PLM common stock). MILPI has agreed to vote for
approval of the merger proposal.
As of the close of business on the record date, PLM's directors and
executive officers and their affiliates may be deemed to be the beneficial
owners of 6,284,261 shares of PLM common stock (collectively representing
approximately 83.2% of the voting power of PLM common stock).
VOTING AND REVOCATION OF PROXIES
Stockholders are requested to complete, date, sign and promptly return the
accompanying form of proxy in the enclosed envelope. Shares of PLM common stock
represented by properly executed proxies received by PLM
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and not revoked will be voted at the special meeting in accordance with the
instructions contained in the proxy cards. If instructions are not given,
proxies will be voted FOR authorization of the merger proposal. However, brokers
do not have discretionary authority to vote shares held in street name.
Therefore, the failure of beneficial owners of shares held in street name to
give voting instructions to brokers will result in broker non-votes. Broker
non-votes, abstentions and the failure to vote will have the same affect as
votes cast against authorization of the proposed merger.
If any other matters are properly presented at the special meeting for
consideration, the persons named in the enclosed form of proxy and acting under
the proxy will have discretion to vote on such matters in accordance with their
best judgment. Because our by-laws require advance notice of any business to be
properly transacted at a meeting of stockholders, our Board of Directors does
not expect any other matters to be presented at the special meeting, and the
persons named in the enclosed form of proxy will not use their discretionary
authority to present any material matters not discussed in this proxy statement.
In addition, we do not expect any changes to the terms of the merger proposal
described in this proxy statement, and the persons named in the enclosed form of
proxy will not use their discretionary authority to approve any changes to the
merger proposal that are materially different than the terms of the merger
proposal described in this proxy statement without giving stockholders an
opportunity to change their vote.
Any proxy card signed and returned by a stockholder may be revoked at any
time before it is voted either by delivering to the Secretary of PLM, at PLM
International, Inc., 120 Montgomery Street, Suite 1350, San Francisco,
California 94104, written notice of such revocation or a duly executed proxy
bearing a later date or by attending the special meeting and voting in person.
Attendance at the special meeting will not, in and of itself, constitute
revocation of a proxy.
PROXY SOLICITATION
We will bear the costs of solicitation of proxies and the cost of
preparing, printing and mailing this proxy statement in connection with the
special meeting. In addition to solicitation by mail, our directors, officers
and regular employees may solicit proxies from stockholders by telephone,
telegram, personal interview or otherwise. Our directors, officers and employees
will not receive additional compensation but may be reimbursed for out-of-pocket
expenses in connection with their solicitation of proxies. Brokers, nominees,
fiduciaries and other custodians have been requested to forward soliciting
material to the beneficial owners of shares of PLM common stock held of record
by them, and such custodians will be reimbursed by us for their reasonable
expenses.
YOU SHOULD NOT SEND ANY STOCK CERTIFICATES REPRESENTING SHARES OF PLM
COMMON STOCK WITH YOUR PROXY. INSTEAD, YOU WILL RECEIVE A SEPARATE MAILING WITH
INSTRUCTIONS TO MAIL YOUR STOCK CERTIFICATES WITH YOUR LETTER OF TRANSMITTAL TO
THE PAYING AGENT.
THE MERGER PROPOSAL
PURPOSE, STRUCTURE AND EFFECT OF THE MERGER
The purpose of the merger is for MILPI to acquire all of the outstanding
capital stock of PLM and to provide PLM stockholders (other than MILPI and those
who perfect their appraisal rights) with $3.46 in cash for each share of PLM
common stock that they hold. In connection with the merger: (i) PLM will become
a wholly owned subsidiary of MILPI Holdings; and (ii) the holders of PLM common
stock (other than MILPI and those who perfect their appraisal rights) will
receive $3.46 per share of common stock, in cash.
The structure of the merger calls for MILPI to be merged with and into PLM.
PLM will be the surviving corporation and will be a wholly owned subsidiary of
MILPI Holdings. Under the merger agreement, the officers and directors of MILPI
immediately prior to the effective time of the merger shall be the officers and
directors of the surviving corporation on and immediately following the
effective time of the merger.
If the merger is consummated, the stockholders of PLM will no longer have
any equity interest in PLM, and therefore will not share in its future earnings
and growth. Instead, each stockholder (other than those who
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perfect their appraisal rights) will receive, upon surrender to the Paying Agent
of a letter of transmittal and their PLM stock certificate or certificates, the
merger consideration. Following the effective time of the merger, PLM will apply
to the Securities and Exchange Commission for the deregistration of the PLM
common stock and will no longer be subject to periodic reporting requirements
under the Securities Exchange Act of 1934, as amended ("1934 Act"), and the PLM
common stock will be delisted from the American Stock Exchange.
BACKGROUND OF THE TRANSACTION
DISCUSSIONS WITH MILPI
In 1996, Equis Financial Group L.P. ("EFG"), a representative of MILPI,
sold to PLM its lease origination business, a customer list and the name
American Finance Group. In 1997, EFG offered to purchase PLM for $5.00 per share
with certain contingencies. This offer was rejected by our Board of Directors,
for reasons including the inadequacy of the amount offered. Also in 1997, three
officers of EFG and two non-affiliated individuals formed a committee (the
"Committee") to solicit proxies from stockholders of PLM with respect to certain
proposals submitted for a vote at PLM's annual meeting of stockholders that were
designed to: amend PLM's bylaws and certificate of incorporation; terminate a
stockholder rights plan (poison pill) in effect at that time; and add two of the
Committee's designees to PLM's Board of Directors. The intent of the proxy
solicitation was to make it easier for a third party to purchase PLM without the
approval of PLM's Board of Directors. The Committee's proxy solicitation did not
receive enough votes to elect directors, and the other proposals did not receive
enough votes to be adopted. PLM terminated the rights plan on its own,
immediately prior to the annual meeting at which the proxy vote occurred.
In 1997 and 1998, EFG periodically made inquiries to PLM as to whether or
not PLM would be interested in discussing a sale of PLM or of PLM's subsidiary,
PLM Financial Services Inc. ("FSI"). In March of 1999, EFG sent a letter to
PLM's Board of Directors offering to purchase PLM for $7.50 per share. In April
of 1999, representatives of EFG held discussions with representatives of PLM to
review certain public information; and then EFG increased its offer to $7.75 per
share plus all of the after-tax proceeds from the sale of PLM's wholly owned
subsidiary American Finance Group, Inc. ("AFG") in excess of $23,000,000. In May
of 1999, EFG signed a confidentiality agreement with PLM enabling it to receive
confidential information. It also contained a customary standstill provision
that precluded certain actions by EFG to acquire shares of PLM for five years
without the consent of PLM's Board of Directors. By letter dated May 20, 1999,
EFG increased the proposed purchase price to $8.45 per share. This offer was
subject to numerous conditions, including the substantiation of the values of
the equipment held by PLM's affiliates and the consent of all of PLM's lenders
to waive the acceleration of their loans upon a change of control. During 1999,
PLM's operations included the trailer leasing business ("Trailer Leasing"),
investment management operations ("Investment Management") and AFG. In 2000, PLM
sold AFG and Trailer Leasing, and on November 3, 2000, stockholders of PLM
received $5.00 per share as a partial liquidating distribution.
On May 27, 1999, PLM's Board of Directors met to discuss the offer from EFG
and, in addition to seeking a higher price, asked EFG to remove all conditions
from its offer. EFG was unwilling to either increase its offer or to remove all
conditions. Nonetheless, EFG and PLM thereafter exchanged information and EFG
was provided with introductions to PLM's lenders. By the middle of August 1999,
both parties determined to abandon the above-described transaction, however at
that time EFG expressed an interest in making a direct equity investment in PLM.
By letter dated September 1, 1999, the Board of Directors of PLM informed EFG
that it was not interested in the proposal and discussions between EFG and PLM
were terminated.
On November 3, 1999, the Board of Directors of PLM engaged Imperial Capital
to pursue strategic and financial alternatives for maximizing stockholder value
on a near term basis, including a possible transaction or series of transactions
representing a merger, consolidation, or any other business combination, a sale
of all or a substantial amount of the business, securities, or assets of PLM, or
a recapitalization or spin-off.
In November of 1999, Imperial Capital prepared a letter containing public
information about PLM, which was sent, along with a confidentiality agreement,
to 200 parties whom Imperial Capital or PLM believed would be interested in
acquiring PLM or a significant portion thereof. Of these parties, approximately
50, including MILPI (through its representative EFG), expressed an interest in
receiving further information and signed and returned to
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Imperial Capital the confidentiality Agreement. During December 1999 and January
2000, Imperial Capital prepared two confidential information memorandums, and
distributed them to those parties who had signed the confidentiality agreement.
One of the memoranda prepared by Imperial Capital described Trailer Leasing and
the other described Investment Management. Imperial Capital received a number of
expressions of interest for Trailer Leasing, for Investment Management and for
PLM as a whole. EFG submitted an expression of interest regarding Investment
Management. As a result of the responses received by Imperial Capital, PLM's
Board of Directors instructed Imperial Capital to proceed first with a sale of
Trailer Leasing. PLM closed the sale of Trailer Leasing to Marubeni America
Corporation on September 29, 2000.
In October 2000, Imperial Capital was directed by the PLM Board of
Directors to prepare a new confidential information memorandum describing PLM in
its then current form (primarily Investment Management). Imperial Capital
distributed this new confidential memorandum to approximately 14 parties who had
either initially submitted bids (or expressions of interest), or had otherwise
expressed interest, to purchase Investment Management, including MILPI. Among
other things, this new confidential information memorandum contained the
financial projections which are attached as Annex C to this proxy statement.
These financial projections were prepared by us, and reflect various assumptions
with respect to general business and economic conditions, anticipated results
and other matters. These projections are therefore subject to significant
business, economic and competitive uncertainties beyond our control, and they do
not take into account any changes in PLM's operations or capital structure which
may result from the merger. Consequently, these projections are likely to vary
from our actual results of operations, and those variations could be material.
In mid-October of 2000, after receiving the confidential information
memorandum, MILPI, in conjunction with The Diversified Group ("Diversified"),
orally submitted a bid of $3.00 per share to Imperial Capital, subject to
conducting due diligence. On October 25, 2000, based upon feedback from Imperial
Capital that its $3.00 bid was insufficient, Diversified submitted to Imperial
Capital a written indication of interest in acquiring PLM at $3.25 per share.
On October 23, 2000, Jan Melgaard, President of Sigma Aircraft Management,
LLC, a consultant to MILPI, visited PLM and met with Doug Fowler, Senior
Aircraft Attorney of PLM, and Richard Brock, CFO of PLM, to conduct due
diligence on aircraft owned by PLM's affiliates.
Based upon further feedback from Imperial Capital that its new bid of $3.25
per share was still insufficient, on October 30, 2000, Diversified submitted a
letter to PLM, whereby it increased its bid to $3.50 per share. This bid was not
subject to any financing contingency or any contingency associated with the
outcome of material litigation. As a condition to continued due diligence, and
entering into negotiations intended to produce a definitive agreement,
Diversified required PLM to agree to a three-week exclusivity period during
which PLM could not enter into any letter of intent or other written agreements
relating to the transactions with other parties unless it paid Diversified a fee
of $1,000,000. Such letter agreement was signed that day. Later on the same day,
James A. Coyne, Vice President of MILPI, Robert N. Tidball, Chairman of the
Board of Directors of PLM, Stephen M. Bess, President and Chief Executive
Officer and a Director of PLM, Susan C. Santo, Vice President, General Counsel
and Secretary of PLM, and Peter Gatto, Director of Taxation of PLM, as well as
representatives of Diversified, Imperial Capital and legal counsel to PLM,
discussed by telephone a proposed structure for the transaction.
On November 1 and 2, 2000, Mr. Coyne visited PLM to conduct due diligence
and met with Messrs. Tidball and Bess, Ms. Santo and John McCarthy, PLM's
Director of Financial Analysis and Planning.
On November 15, 2000, Messrs. Coyne and Reese discussed the proposed terms
and structure of a transaction that would not include Diversified, with
Diversified's consent. On November 16, 2000, Mr. Coyne sent Imperial Capital a
written confirmation of such terms, which terms were revised by Mr. Coyne on
November 17, 2000.
On November 17, 2000, counsel for MILPI delivered to counsel for PLM a
first draft of a definitive merger agreement and a form of voting and tender
agreement for certain stockholders of PLM. Advisors to and counsel for PLM
objected to several provisions of the draft merger agreement, including the
terms of the tender offer, conditions to the tender offer, terms restricting
PLM's ability to negotiate with third parties regarding a superior proposal, and
the ability of the parties to terminate the merger agreement.
-7-
From November 20 through November 22, 2000, legal counsel to MILPI visited
PLM to conduct further due diligence.
On December 4 and 5, 2000, Mr. Coyne, along with MILPI's legal counsel, met
with Messrs. Bess and Tidball and Ms. Santo of PLM, representatives of Imperial
Capital and PLM's legal counsel, at the offices of PLM's legal counsel, to
negotiate the terms of the merger agreement, including those terms specifically
mentioned above. Among other things, MILPI agreed to eliminate or revise certain
terms of the tender offer, conditions to the tender offer, terms restricting
PLM's ability to negotiate with third parties regarding a superior proposal, and
the ability of the parties to terminate the merger agreement.
On December 11, 2000, the Board of Directors of PLM held a special meeting
to discuss the auction process Imperial Capital had been conducting. All of the
members of PLM's Board of Directors were present. Also present were
representatives of Imperial Capital (to discuss the auction process and to
answer questions from the Board), legal counsel to PLM, and Mr. Coyne, who
attended a portion of the meeting. The Board of Directors discussed all firm
proposals which had been received, including the consideration offered, the
status and availability of financing for each proposal, the extent to which each
bidder had conducted due diligence, and the readiness and ability of each bidder
to promptly execute and effect a transaction. The Board of Directors was advised
that, except for MILPI, no persons had expressed an interest in acquiring the
shares at a price equal to or greater than MILPI's offer of $3.50 per share that
was not subject to the outcome of material litigation. Imperial Capital further
advised the Board of Directors that it was prepared to issue an opinion that the
receipt of $3.50 per share by the stockholders of PLM would be fair to such
holders from a financial point of view. After such discussions, the Board of
Directors determined that MILPI's offer of $3.50 per share, which was not
subject to a financing contingency or to the outcome of any material litigation,
was superior to all other offers, and it instructed legal counsel to PLM to
continue negotiations with MILPI to finalize the merger agreement. On December
13, 2000, Imperial Capital delivered the above-described opinion. From December
11, 2000 through December 20, 2000, the parties continued negotiations. On
December 20, 2000, as a result of continued due diligence and negotiations
between the parties concerning certain provisions of the merger agreement, MILPI
informed PLM of its intent to decrease the bid price per share in conjunction
with modifying certain conditions to the offer.
On December 21, 2000, MILPI revised its bid to $3.46 per share and agreed
to modify certain conditions to the offer. Later that day, the Board of
Directors of PLM met to consider the offer price and merger consideration and
the other terms and conditions of the merger agreement. All members of the Board
of Directors were present. Also present were representatives of Imperial Capital
and legal counsel to PLM. At the Board of Directors meeting, the Board asked
Imperial Capital whether it could deliver an opinion that payment of $3.46 was
fair to the PLM stockholders from a financial point of view. Imperial Capital
stated that it was of the opinion that the consideration to be received by PLM's
stockholders pursuant to the offer and in connection with the merger is fair to
such holders from a financial point of view, and that such opinion replaces the
opinion it issued on December 13, 2000. The Board of Directors unanimously voted
to approve the merger agreement, the escrow agreement and the voting agreement
and the transactions contemplated thereby, including the merger and the offer,
and authorized Mr. Tidball to execute and deliver such agreements as promptly as
practicable.
On December 22, 2000, PLM and MILPI executed the merger agreement and the
escrow agreement, and PLM, MILPI and certain stockholders of PLM executed the
voting agreement. On December 22, 2000, both PLM and MILPI issued press releases
announcing the execution of the merger agreement.
On December 29, 2000, MILPI filed with the SEC a Schedule TO and commenced
the tender offer, and PLM filed with the SEC a Schedule 14D-9 responding to the
Schedule TO.
On January 5, 2001, PLM entered into the transition services agreements
with three of its executive officers.
On February 7, 2001, MILPI announced that it had accepted for payment and
paid for all PLM shares tendered into the offer. Such shares represent
approximately 83.2% of the outstanding shares of PLM.
Also on February 7, 2001, in accordance with the terms of the merger
agreement, seven of PLM's eight directors resigned from the Board of Directors
and the remaining director, Robert N. Tidball, elected two persons
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designated by MILPI, Gary D. Engle and James A. Coyne, to serve as directors of
PLM. At the same time, Mr. Tidball resigned as Chairman of the Board. Mr. Engle
was then elected as his replacement as Chairman.
On April 2, 2001, the transition services agreement between PLM and Susan
C. Santo, one of its executive officers, was amended.
On April 20, 2001, Mr.Tidball resigned as a director.
On May 16, 2001, Timothy P. Perkins, Stephen M. Bess and Richard K. Brock
were elected as directors. On the same day, a board resolution decreased the
number of directors from eight to three and Messrs. Bess and Brock resigned as
directors as a result of the decrease in the number of directors. After their
resignations were accepted, Messrs. Engle, Perkins and Coyne were the remaining
directors.
On June 8, 2001, the transition services agreement between PLM and Mr.
Brock was amended. At the same time, PLM entered into an engagement letter with
Mr. Brock to retain his services as a consultant.
On August 2, 2001, the transition services agreement between PLM and Mr.
Bess was amended.
As of September 12, 2001, a board resolution increased the number of
directors from three to four and John Einarsen was appointed to the board.
DISCUSSIONS WITH PARTIES OTHER THAN MILPI
On October 26, 2000, representatives of a third-party, along with its
advisor, visited PLM to conduct initial due diligence. On or about November 21,
2000, this third-party informed Imperial Capital that it was unlikely to proceed
in its evaluation of PLM, or submit a bid, until all material litigation was
settled. However, when Imperial Capital informed representatives of this
third-party that PLM was in discussion with a potential buyer who would assume
all risks associated with material litigation, the third-party indicated it
would carry on with its due diligence, and, on November 28, 2000, it submitted
to Imperial Capital a written bid to acquire PLM for $2.07 per share. The bid
was not subject to any financing contingency or to the settlement of material
litigation. Imperial Capital informed this third-party that such bid was
significantly below other bids already received.
On November 1, 2000, representatives of another third-party and its advisor
met with representatives of PLM and Imperial Capital to discuss a possible
acquisition of PLM. On November 9, 2000, representatives of this third-party
indicated in a telephone conversation with Imperial Capital that it was unlikely
to submit a bid for PLM. The following day, November 10, 2000, its
representatives again indicated in a telephone conversation with Imperial
Capital that it would not submit a bid for PLM.
On November 8 and 9, 2000, representatives of another third-party and its
advisors visited PLM and met with PLM's management to discuss the operations of
PLM. On November 15, 2000, after completion of initial due diligence,
representatives of this third-party orally informed Imperial Capital that it
would be willing to pay $2.75 per share for all outstanding shares of PLM.
Imperial Capital thereafter informed these representatives that PLM had already
received a bid of more than $3.00 per share, and in response to such
information, these representatives indicated they would conduct further
evaluation to determine if they were willing to increase the amount this
third-party would pay per share. The following day, on November 16, 2000, this
third-party submitted a written indication of interest at $3.25 per share,
subject to obtaining financing, settlement of material litigation and completion
of due diligence.
On November 21, 2000, Imperial Capital spoke with representatives of this
third-party regarding its bid of November 16, 2000, and informed such
representatives that PLM had received a bid in excess of the November 16 bid,
and that such other bid was not subject to any financing contingency or any
contingency related to the outcome of material litigation. This third-party
reiterated to Imperial Capital its interest in acquiring PLM, and stated to
Imperial Capital that its advisors would shortly visit PLM to conduct further
due diligence to determine whether it was willing to increase its offer.
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From November 29 through December 1, 2000, representatives of, and advisors
to, this third-party visited PLM to conduct further due diligence and to discuss
operations and financial and legal matters with management of PLM. On December
4, 2000, its representatives informed Imperial Capital by telephone that the
third-party would not offer more than $3.25 per share, which was still subject
to settlement of all material litigation. However, it was willing to consider
making an offer for a significantly lesser amount which would not be conditioned
upon the settlement of all material litigation, and it might be willing to agree
to pay PLM's stockholders an additional amount if all material litigation was
favorably settled. Its representatives also indicated the third-party would
provide a comfort letter from its bank as to its ability to finance the
transaction. After Imperial Capital discussed the matter with representatives of
the Board, Imperial Capital orally informed the third-party that such offer was
insufficient.
The next day, on December 5, 2000, representatives of the third-party
called Imperial Capital to inform Imperial Capital that the third-party was
evaluating whether it could increase or modify its offer. On December 8, 2000,
the third-party submitted a new written bid to PLM for $3.60 per share. However,
such bid remained conditioned upon the outcome of all material litigation,
obtaining necessary financing and completion of additional due diligence. On
December 11, 2000, Imperial Capital spoke via telephone with representatives of
the third-party regarding the bid it submitted on December 8, 2000, and the
third party reiterated that it was unwilling to pay $3.60 per share unless all
material litigation was favorably resolved. The third-party also informed
Imperial Capital that its financing had yet to be finalized.
Later that week, representatives of this third-party orally withdrew the
party's December 8 bid and offered $3.25 per share, subject only to financing
and completion of their due diligence. Members of PLM's Board of Directors
discussed this offer with representatives of the third-party, who confirmed that
it was the third-party's best and final offer.
On November 17, 2000, another third-party submitted a written bid of $3.50
per share to PLM subject to due diligence, the settlement of all material
litigation and a financing contingency. As of that date, this third-party had
not conducted significant due diligence nor had it or its advisors visited PLM.
On November 21, Imperial Capital spoke with representatives of this third-party
to discuss PLM's requirements for an acceptable bid, but the third-party never
modified its offer.
REASONS FOR THE MERGER AND BOARD OF DIRECTORS RECOMMENDATION
In reaching its determination to approve the merger and the offer and to
recommend them to PLM's stockholders, the Board of Directors of PLM considered
the following factors, each of which in the view of the Board of Directors,
supported such determinations:
(i) the amount of consideration to be received by PLM's stockholders
in the offer and the merger pursuant to the merger agreement, as
well as the fact that stockholders would receive a cash payment
with no financing condition;
(ii) PLM's prospects if it were to remain independent, including the
risks inherent in remaining independent, and the prospects of PLM
going forward as an independent company;
(iii) the financial condition, historical results of operations and
business and strategic objectives of PLM, as well as the risks
involved in achieving those objectives;
(iv) other historical information concerning PLM's business,
prospects, financial performance and condition, operations,
technology, management and competitive position;
(v) the fact that the $3.46 per share to be paid in the offer and as
the consideration in the merger represents a premium of
approximately 56% over $2.22, the per-share average closing price
of PLM shares on the AMEX for the 30 trading days prior to
December 21, 2000;
(vi) current financial market conditions, and historical market
prices, volatility and trading information with respect to the
common stock of PLM;
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(vii) the presentation from Imperial Capital and the written opinion
dated December 21, 2000 of Imperial Capital that, as of such date
and based upon and subject to the matters set forth therein, the
$3.46 in cash to be paid in the offer and the merger was fair
from a financial point of view to PLM stockholders;
(viii) the high likelihood that the proposed acquisition would be
consummated, in light of the experience and financial
capabilities of MILPI and its affiliates, and that the proposed
acquisition could be consummated more quickly than a long-form
merger and, on the other hand, the risks to PLM if the
acquisition were not consummated or were not consummated for a
significant period of time, including a potential negative effect
on (a) PLM's operating results and (b) PLM's stock price;
(ix) the terms of the merger agreement, including the parties'
representations, warranties and covenants, and the conditions to
their respective obligations;
(x) the fact that pursuant to the merger agreement, PLM is not
prohibited from responding to any unsolicited Acquisition
Proposal (as defined in the merger agreement) to acquire PLM in
the manner provided in the merger agreement, and PLM may
terminate the merger agreement and accept a Superior Proposal (as
defined in the merger agreement) subject to PLM's compliance with
the terms of the merger agreement and PLM's obligation to pay the
Termination Fee and Expenses (as defined in the merger agreement)
in the amount and in the manner described in the merger
agreement. The merger agreement defines Superior Proposal as a
bona fide unsolicited written Acquisition Proposal to acquire a
majority of the voting power of the shares of PLM common stock
then outstanding or all or substantially all the assets of PLM
for consideration consisting of cash or securities which the PLM
Board of Directors concludes in good faith (after consultation
with and receipt of advice from PLM's financial advisors and
outside legal counsel), taking into account all legal, financial,
regulatory and other aspects of the proposal and the person
making the proposal, (a) would, if consummated, result in a
transaction that is more favorable to PLM's stockholders (in
their capacities as stockholders), from a financial point of
view, than the Transactions (as defined in the merger agreement),
and (b) is reasonably capable of being completed, including a
conclusion that its financing, to the extent required, is then
committed or is, in the good faith judgment of the PLM Board of
Directors (after consultation with and receipt of advice from
PLM's financial advisors and outside legal counsel), reasonably
capable of being financed by the person making such acquisition
proposal; and
(xi) the fact that pursuant to the merger agreement, MILPI agreed to
pay PLM liquidated damages if MILPI breached the merger agreement
and such breach resulted in a failure to consummate the
Transactions on or before June 30, 2001.
The members of the Board of Directors evaluated the various factors listed
above in light of their knowledge of the business, financial condition and
prospects of PLM, and based upon the advice of financial and legal advisors. In
light of the number and variety of factors that the Board of Directors
considered in connection with their evaluation of the offer and the merger, the
Board of Directors did not find it practicable to assign relative weights to the
foregoing factors and, accordingly, the Board of Directors did not do so. In
addition to the factors listed above, the Board of Directors considered the fact
that consummation of the offer and the merger would eliminate the opportunity of
the stockholders to participate in any potential future growth in the value of
PLM, but determined that this loss of opportunity was reflected by the price of
$3.46 per share to be paid in the offer and the merger.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
The Board of Directors of PLM has unanimously (i) determined that the terms
of the merger are advisable and fair to, and in the best interests of, the
stockholders of PLM, (ii) approved and adopted the merger agreement and the
transactions and the related agreements contemplated thereby, including the
merger, and (iii) recommended that PLM's stockholders approve the merger
proposal.
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OPINION OF PLM'S FINANCIAL ADVISOR
Imperial Capital was engaged by PLM's Board of Directors in November 1999
to act as exclusive financial advisor to PLM to explore strategic and financial
alternatives, including a possible transaction or series of transactions
representing a merger, consolidation or any other business combination, or a
sale of all or a substantial amount of the business, securities or assets of
PLM.
In connection with the merger agreement, on December 21, 2000 Imperial
Capital rendered its opinion to the Board of Directors. The opinion stated that,
as of such date and based upon and subject to certain matters stated therein,
the consideration to be received by PLM common stockholders in the transaction
is fair to such stockholders from a financial point of view. A copy of the
opinion, which sets forth the assumptions made, matters considered, the scope
and limitations on the review undertaken and the procedures followed by Imperial
Capital, is attached as Annex B to this document and is incorporated into this
proxy statement by reference. You are urged to read the Imperial Capital opinion
carefully and in its entirety for assumptions made, matters considered and
limits of the review by Imperial Capital. Stockholders should note that the
opinion expressed by Imperial Capital was prepared at the request and for the
information of our Board of Directors and does not constitute a recommendation
to any holder of PLM common stock as to how to vote with respect to the
transaction. The Imperial Capital opinion does not address the business decision
of our Board of Directors to engage in the transaction or the relative merits of
any alternatives discussed by our Board of Directors. No limitations were placed
on Imperial Capital by the Board of Directors with respect to the investigation
made, the procedures followed or the factors considered in preparing and
rendering its opinion.
In connection with rendering its opinion, Imperial Capital, among other
things:
o Analyzed certain historical business and financial information
relating to PLM, including our Annual Report on Form 10-K for the
year ended December 31, 1999 and our Quarterly Report on Form 10-Q
for the period ended September 30, 2000;
o Reviewed certain financial forecasts and other data provided to
Imperial Capital by PLM, including business plans prepared by our
senior management;
o Conducted discussions with members of our senior management with
respect to the historical operations, businesses and prospects of
PLM, the strategic objectives of PLM and possible benefits that may
be realized from the merger;
o Reviewed public information with respect to certain other companies
with financial profiles that Imperial Capital deemed to be relevant;
o Reviewed the historical market prices and trading activity for our
common stock and compared them with those of certain publicly traded
companies that Imperial Capital deemed relevant;
o Prepared and delivered to over 200 potential financial and strategic
buyers an executive summary describing PLM and subsequently prepared
and delivered to over 50 interested parties a confidential
information memorandum describing PLM;
o Reviewed four written letters of interest to purchase the shares of
PLM; and
o Conducted such other financial studies, analyses and investigation
as Imperial Capital deemed appropriate.
In preparing its opinion and with our consent, Imperial Capital relied on
the accuracy and completeness of the foregoing financial and other information
and did not assume responsibility for independent verification of such
information or conduct any independent valuation or appraisal of any of our
assets, nor was Imperial Capital furnished with any such appraisals. With
respect to the financial forecasts, Imperial Capital assumed, with our consent,
that the financial forecasts were reasonably prepared on bases reflecting the
best currently available
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estimates and judgments of our management as to the future financial performance
of PLM. Imperial Capital also relied upon assurances of our senior management
that they were unaware of any facts that would make the information or financial
forecasts provided to Imperial Capital incomplete or misleading. Imperial
Capital assumed no responsibility for, and expressed no view as to, such
forecasts or the assumptions on which they were based.
The Imperial Capital opinion was based upon economic, monetary and market
conditions existing on the date of the opinion. Imperial Capital expressed no
opinion, nor should one be implied, as to the current fair market value of PLM's
common stock or the prices at which PLM's common stock will trade at any time.
The following paragraphs summarize the significant analyses performed by
Imperial Capital in arriving at its opinion.
AUCTION PROCESS ANALYSIS. Imperial Capital conducted an auction process,
which Imperial Capital believes helps to establish the relative market for a
business. Imperial Capital believes that a company is best able to determine the
fair value of its operations by soliciting bids from a number of the most
logical buyers of such operations. As part of the auction process for PLM and
its business, Imperial Capital distributed an executive summary describing the
operations of PLM to more than 200 parties. These parties included financial and
strategic buyers. This information was delivered with a confidentiality
agreement which, if signed, would allow the parties who signed it to receive
non-public information about PLM. Imperial Capital received more than 50 signed
confidentiality agreements and subsequently sent to those parties a confidential
information memorandum describing Trailer Leasing and a confidential information
memorandum describing Investment Management. This process allowed PLM to receive
expressions of interest for Trailer Leasing, Investment Management and for the
entire company. After reviewing the expressions of interest, PLM determined that
it would be in the best interests of the PLM stockholders to sell Trailer
Leasing first and then to sell the common stock of PLM at a later date.
After closing the sale of Trailer Leasing in September 2000, Imperial
Capital distributed a confidential information memorandum describing the
remaining operations of PLM as of October 2000. This memorandum was sent to the
same parties who had submitted expressions of interest for Investment Management
and to other interested parties. Four parties submitted expressions of interest
for PLM. A summary of the expressions of interest and the resulting negotiations
for parties other than MILPI is included in the description of the background of
the transaction on pages 6 to 10. As mentioned under that description, two of
the bidders submitted bids in excess of $3.46 per share, each conditioned on the
outcome of material litigation. Given such condition (a condition not present in
the MILPI bid), Imperial Capital discounted the true value of such bids
accordingly. Those negotiations resulted in PLM's Board of Directors determining
to accept MILPI's bid of $3.46 per share and MILPI and PLM entering into the
merger agreement.
DISCOUNTED CASH FLOW ANALYSIS. Imperial Capital analyzed the unleveraged
after-tax cash flows of PLM based on financial projections prepared by our
management for 7 years. These projections were based on management's assumptions
that the court approves as structured the equitable class action settlement
relating to PLM Equipment Growth Fund V, PLM Equipment Growth Fund VI and PLM
Equipment Growth & Income Fund VII. The discounted cash flow analysis determined
the present value of the unleveraged after-tax cash flows generated over the
projection period and then added a terminal value based on ranges of multiples
of EBITDA. Imperial Capital also analyzed the present value of unleveraged
after-tax cash flows assuming a range of perpetual growth rates that Imperial
Capital deemed relevant. For purposes of its analysis, and because PLM's
Investment Management Business is a liquidating business rather than a growth
business, Imperial Capital chose zero as the terminal value for PLM. Further,
given the nature of PLM's business, market position, volatility of revenues,
cash flow and earnings, and illiquidity of its equity and/or ownership interests
as a small public company, Imperial Capital chose a discount rate of 25% for
which to discount PLM's projected cash flow. This discounted cash flow analysis
indicated a net present value of PLM stock of approximately $3.37 per share.
LIQUIDATION ANALYSIS. Imperial Capital analyzed the liquidation value of
PLM as of November 30, 2000. This analysis is relevant because PLM's primary
business is investment management, a business that is liquidating over the next
seven years based on the anticipated termination dates of the various investment
programs managed by PLM. The liquidation analysis is used to estimate the
proceeds that would be assumed to be received in a liquidation of PLM. This
liquidation analysis indicated a value of PLM stock of approximately $3.40 per
share.
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PREMIUM ANALYSIS. Imperial Capital reviewed the stock trading history of
PLM common stock and took into consideration that, on November 3, 2000, PLM made
a $5.00 partial liquidating distribution to stockholders. On November 6, 2000,
PLM's common stock traded on the AMEX ex-distribution and closed at $2.25 per
share. The average closing price of PLM shares for the 30 trading days ending on
December 21, 2000 was $2.22 per share. The $3.46 per share consideration
represents a premium of approximately 53.8% over the $2.25 per share bid and a
premium of approximately 55.9% over the $2.22 per share bid.
Imperial Capital would normally utilize traditional premium analyses in
relation to comparable companies and comparable transactions as a factor in
reaching its conclusion regarding the fairness of a transaction from a financial
point of view. However, Imperial Capital determined that such analyses would not
be meaningful with respect to the current transaction. In reaching its
determination, Imperial Capital considered, among other things, that:
o PLM could properly be viewed as effectively operating in liquidation
mode, rather than as a going concern;
o PLM was a defendant in litigation which, in the event of a final
judgment or settlement adverse to PLM, could have a material adverse
effect on the value of PLM and on PLM's ability to enter into a
transaction similar to the current transaction; and
o There were no comparable transactions either in PLM's industry or of
PLM's size.
The summary of the Imperial Capital opinion set forth above does not
purport to be a complete description of the data and analyses presented or
considered by Imperial Capital. The preparation of a fairness opinion involves
various determinations as to the most appropriate and relevant quantitative
methods of financial analyses and the application of those methods to the
particular circumstances and, therefore, such an opinion is not readily
susceptible to partial analysis or summary description. Accordingly, Imperial
Capital's analysis must be considered as a whole and that considering any
portion of Imperial Capital's analysis and of the factors considered, without
considering all analyses and factors, could create a misleading or incomplete
view of the process underlying the Imperial Capital opinion.
In the ordinary course of its business and in accordance with applicable
state and federal securities laws, Imperial Capital may trade PLM securities for
its own account and for the accounts of customers and, accordingly, may at any
time hold long or short positions in such securities.
Under the terms of an engagement letter, Imperial Capital was to be paid a
retainer fee of $50,000, a fee of $175,000 for any fairness opinion rendered to
PLM and success fees of varying percentages of the aggregate consideration
received in a transaction involving (i) all of PLM (1.50%), (ii) Trailer Leasing
(1.0%), and (iii) Investment Management (1.75%). PLM also agreed, under a
separate agreement, to indemnify Imperial Capital, its affiliates and each of
its directors, officers, agents and employees and each person, if any,
controlling Imperial Capital or any of its affiliates against certain
liabilities, including liabilities under federal securities laws.
PLM paid Imperial Capital the $50,000 retainer fee in November 1999, a fee
of $175,000 for rendering a fairness opinion in connection with PLM's sale of
Trailer Leasing in May 2000, and a net success fee of approximately $925,000
upon the sale of Trailer Leasing in September 2000. PLM also reimbursed Imperial
Capital for its out of pocket expenses in connection with the sale of Trailer
Leasing. PLM paid Imperial Capital a fee of $175,000 for rendering its December
2000 opinion (which amount the parties had agreed would be paid regardless of
the result of the opinion). In addition, PLM paid Imperial Capital a net success
cash fee of approximately $315,000 on February 16, 2001 and reimbursed its out
of pocket expenses. However, Imperial Capital will not be entitled to any
additional fees or compensation in the event the merger is not approved or
otherwise consummated.
INTERESTS OF OFFICERS AND DIRECTORS IN THE TRANSACTION
In considering the recommendation of the PLM Board of Directors with
respect to the merger proposal, PLM stockholders should be aware that certain
members of management and of the PLM Board of Directors have interests in the
transaction that may be different from, or in addition to, the interests of the
PLM stockholders. For
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example, certain of our employees entered into agreements relating to their
employment following the consummation of the merger. See "The Transaction
Agreements -- The Transition Services and Employment Agreements." The merger
agreement also provides current and former officers and directors with certain
rights to indemnification as described below. See "The Transaction Agreements--
The Merger Agreement-- Director and Officer Liability." The PLM Board of
Directors was aware of such interests and considered them, among other matters,
in approving the merger agreement, the merger and the related transactions.
COMPLETION AND EFFECTIVENESS OF MERGER
The merger will be completed when all of the conditions to completion of
the merger are satisfied or waived, including approval of the merger proposal by
the stockholders of PLM. Except for stockholder approval, all other conditions
to the merger have, to date, been satisfied. So long as there continues to be no
prohibition by any provision of applicable law and no injunction or prohibition
by any order, judgment, decree, injunction or ruling by a governmental entity,
the merger will become effective upon the filing of a certificate of merger with
the Secretary of State of the State of Delaware. We intend to complete the
merger as promptly as possible following the special meeting.
STRUCTURE OF THE MERGER AND CONVERSION OF PLM COMMON STOCK
In accordance with the merger agreement and Delaware law, MILPI will be
merged with and into PLM. As a result of the merger, the separate corporate
existence of MILPI will cease and PLM will survive the merger as a wholly owned
subsidiary of MILPI Holdings. The merger requires the approval of a majority of
the holders of PLM common stock and will be consummated as promptly as
practicable after the receipt of such PLM stockholder approval, subject to the
satisfaction or waiver of other conditions to the merger.
In the merger, all of the outstanding shares of PLM common stock (other
than shares held by MILPI and those shares as to which dissenters' rights have
been properly perfected) will be canceled in exchange for the right to receive
$3.46 in cash, without interest.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income tax consequences
of the merger to holders whose shares of PLM common stock are converted into the
right to receive cash in the merger (whether upon receipt of the merger
consideration or pursuant to the proper exercise of dissenters' rights). The
discussion applies only to holders of shares of PLM common stock in whose hands
such shares are capital assets (generally assets held for investment), and may
not apply to PLM common stock received pursuant to the exercise of employee
stock options or otherwise as compensation, or to holders of PLM stock who are
not citizens or residents of the United States of America.
THE TAX DISCUSSION SET FORTH BELOW IS BASED UPON PRESENT LAW (WHICH MAY BE
SUBJECT TO CHANGE, POSSIBLY ON A RETROACTIVE BASIS). BECAUSE INDIVIDUAL
CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF PLM COMMON STOCK SHOULD CONSULT SUCH
HOLDER'S OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX EFFECTS OF THE MERGER
TO SUCH HOLDER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER
TAX LAWS.
The receipt of cash pursuant to the merger (whether as merger consideration
or pursuant to the proper exercise of dissenters' rights) will be a taxable
transaction for U.S. federal income tax purposes (and also may be a taxable
transaction under applicable state, local and foreign income tax laws). In
general, for U.S. federal income tax purposes, a holder of PLM common stock will
recognize gain or loss equal to the difference between such holder's adjusted
tax basis in the stock converted to cash in the merger and the amount of cash
received therefor. Such gain or loss generally will be capital gain or loss.
Certain non-corporate holders (including individuals) will be subject to tax on
the net amount of such capital gain at a maximum rate of 20% provided the shares
of PLM common stock were held for more than 12 months. The deduction of capital
losses is subject to certain limitations under U.S. federal income tax law.
Holders of PLM common stock should consult their own tax advisors in this
regard.
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Payments in connection with the merger may be subject to backup withholding
at a 31% rate. Backup withholding generally applies if a holder (i) fails to
furnish such holder's social security number or taxpayer identification number
("TIN"), (ii) furnishes an incorrect TIN, (iii) fails properly to report
interest or dividends, or (iv) under certain circumstances, fails to provide a
certified statement, signed under penalties of perjury, that the TIN provided is
such holder's correct number and that such holder is not subject to backup
withholding. Backup withholding is not an additional tax but merely an advance
payment, which may be refunded to the extent it results in an overpayment of
U.S. federal income tax provided certain information is furnished to the
Internal Revenue Service. Certain persons, including corporations and financial
institutions, generally are exempt from backup withholding. Certain penalties
apply for failure to furnish correct information and for failure to include the
reportable payments in income. Each holder of PLM stock should consult with such
holder's own tax advisor as to such holder's qualifications for exemption from
withholding and the procedure for obtaining such exemption.
ACCOUNTING TREATMENT
The merger will be accounted for using the purchase method of accounting
with MILPI as the acquiror.
REGULATORY APPROVALS
PLM is not aware of any pending legal proceeding relating to the merger.
Except as described in this subsection, PLM is not aware of any governmental
license or regulatory permit that appears to be material to its business that
might be adversely affected by MILPI's acquisition of shares as contemplated
herein or of any approval or other action by any governmental, administrative or
regulatory authority or agency, domestic or foreign, that would be required for
the acquisition or ownership of shares by MILPI as contemplated herein.
In connection with its review of the preliminary proxy materials, the staff
of the Securities and Exchange Commission informed the four trusts that it
believes two of the trusts may be unregistered investment companies within the
meaning of the Investment Company Act of 1940. Although the trusts do not
believe that they are unregistered investment companies, AFG Investment Trusts A
and B will liquidate their assets in order to resolve with the SEC staff the
question of whether the two trusts are unregistered investment companies. In
connection with the liquidation, AFG Investment Trusts A and B will sell or
otherwise dispose of their interests in MILPI Holdings. In addition, MILPI
Holdings has amended its operating agreement so that the additional funds
necessary to complete the merger will not be provided by AFG Investment Trusts A
and B. Instead, AFG Investment Trusts C and D will provide the additional funds,
with a portion of the funds being loaned to the two trusts by PLM.
STATE TAKEOVER LAWS
PLM is incorporated under the laws of the State of Delaware. In general,
Section 203 of the Delaware General Corporation Law prevents an "interested
stockholder" (generally a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock, or an affiliate or associate
thereof) from engaging in a "business combination" (defined to include mergers
and certain other transactions) with a Delaware corporation for a period of
three years following the date such person became an interested stockholder
unless, among other things, prior to such date the Board of Directors of the
corporation approved either the business combination or the transaction in which
the interested stockholder became an interested stockholder. On December 21,
2000, prior to the execution of the merger agreement, PLM's Board of Directors,
by unanimous vote of all directors present at a meeting held on such date,
approved and adopted the merger agreement and determined and declared that each
of the offer and the merger are fair and advisable to, and in the best interest
of, the stockholders of PLM. Accordingly, Section 203 is inapplicable to the
merger agreement and the transactions contemplated thereby, including the
merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987, in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of
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corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of stockholders in the state and were incorporated there.
PLM, directly or through its subsidiaries, conducts business in a number of
states throughout the United States, some of which have enacted takeover laws.
PLM and MILPI do not know whether any of these laws will, by their terms, apply
to the merger and have not made any attempt to comply with any such laws. Should
any person seek to apply any state takeover law, PLM and MILPI will take such
action as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the merger,
and an appropriate court does not determine that it is inapplicable or invalid
as applied to the merger, PLM and/or MILPI might be required to file certain
information with, or receive approvals from, the relevant state authorities or
PLM's stockholders. In addition, if enjoined, PLM and MILPI might be delayed in
continuing or consummating the merger.
DELISTING AND DEREGISTRATION OF PLM COMMON STOCK AFTER THE MERGER
If the merger is completed, PLM will apply to the Securities and Exchange
Commission for the deregistration of the PLM common stock and will no longer be
subject to periodic reporting requirements under the 1934 Act, and the PLM
common stock will be delisted from the American Stock Exchange.
APPRAISAL RIGHTS
Under the Delaware General Corporation Law (the "Delaware General
Corporation Law"), even if the merger is approved by the holders of the
requisite number of shares of PLM common stock, you are entitled to refuse the
merger consideration to which you would otherwise be entitled under the merger
agreement and to instead exercise appraisal rights and obtain payment of the
"fair value" for your shares under the terms of the Delaware General Corporation
Law. In order to effectively exercise your appraisal rights, you must satisfy
each of the following primary requirements.
o You must hold shares in PLM as of the date you make your demand for
appraisal rights and continue to hold shares in PLM through the effective
date of the merger.
o You must deliver to PLM a written notice of your demand of payment of the
fair value for your shares prior to the taking of the vote at the special
meeting.
o You must not have voted in favor of or consented to the merger and the
merger agreement.
If you fail to comply with any of the above conditions or otherwise fail to
comply with the requirements of Section 262 of the Delaware General Corporation
Law, you will have no appraisal rights with respect to your shares. See Section
262 of the Delaware General Corporation Law, a copy of which is attached hereto
as Annex C.
The determination of fair value takes into account all relevant factors,
but excludes any appreciation or depreciation in anticipation of the applicable
merger. The costs of the appraisal proceeding may be determined by the Delaware
Court of Chancery and allocated among the parties, as the Delaware Court of
Chancery deems equitable under the circumstances. Upon your application for
appraisal, the Delaware Court of Chancery may order all or a portion of the
expenses incurred by you in connection with the appraisal proceeding, including
reasonable attorneys' fees and the fees and expenses of experts, to be charged
pro rata against the value of all shares entitled to appraisal. In the absence
of a determination or assessment, you will bear your own expenses.
Written demands, notices or other communications concerning the exercise of
appraisal rights should be addressed to:
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PLM International, Inc.
120 Montgomery Street
Suite 1350
San Francisco, California 94104
Attention: Secretary
(415) 445-3201
All written notices must be executed by, or with the consent of, the holder
of record. The notice must identify you and indicate your intention to demand
payment of the fair value for your shares. In the notice, your name should be
stated as it appears on your stock certificate(s). If your shares are owned of
record in a fiduciary capacity, such as by a trustee, guardian or custodian,
your demand must be executed by or for the fiduciary. If you own the shares with
another person, such as in a joint tenancy or tenancy in common, your demand
must be executed by or for all joint owners. An authorized agent, including an
agent for two or more joint owners, may execute your demand for appraisal.
However, the agent must identify you and any other owners of the shares and
expressly disclose the fact that, in exercising the demand, he or she is acting
as agent for you and any other owners.
IF YOU ARE CONTEMPLATING THE EXERCISE OF THE RIGHTS SUMMARIZED ABOVE IN
CONNECTION WITH THE MERGER, YOU ARE URGED TO CONSULT WITH YOUR OWN LEGAL
COUNSEL. THE DESCRIPTION OF SECTION 262 CONTAINED IN THIS DOCUMENT IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO ANNEX C ATTACHED TO THIS PROXY STATEMENT AND THE
DELAWARE GENERAL CORPORATION LAW. FAILURE TO FOLLOW PRECISELY ALL OF THE STEPS
REQUIRED BY SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW WILL RESULT IN
THE LOSS OF YOUR APPRAISAL RIGHTS. ANY DEMANDS, NOTICES, CERTIFICATES OR OTHER
DOCUMENTS REQUIRED TO BE DELIVERED IN CONNECTION WITH YOUR EXERCISE OF APPRAISAL
RIGHTS SHOULD BE SENT TO PLM AT THE ADDRESS INDICATED ABOVE. THE PROCESS OF
DISSENTING REQUIRES STRICT COMPLIANCE WITH TECHNICAL PREREQUISITES. THOSE
WISHING TO DISSENT SHOULD CONSULT WITH THEIR OWN LEGAL COUNSEL IN CONNECTION
WITH COMPLIANCE UNDER THE DELAWARE GENERAL CORPORATION LAW.
CHANGE OF CONTROL
On February 7, 2001, MILPI accepted for payment and paid for all of the
shares of PLM common stock validly tendered in its tender offer at an aggregate
purchase price of approximately $21.7 million using funds provided to MILPI
Holdings by the four trusts, as described below in "SOURCE AND AMOUNT OF FUNDS."
Consequently, MILPI Holdings, as the sole owner of MILPI, may be deemed to own
beneficially an aggregate of 6,284,261 shares, or approximately 83.2% of the
outstanding shares of common stock of PLM. Pursuant to the merger agreement,
MILPI was entitled, upon purchase of and payment for shares under the tender
offer, to designate such number of directors to the Board of Directors of PLM as
would give MILPI representation proportionate to its ownership interest.
Pursuant thereto, Mr. Bess, Randall L.W. Caudill, Douglas P. Goodrich, Warren G.
Lichtenstein, Howard M. Lorber, Harold R. Somerset and Robert L. Witt resigned
from their positions on the PLM Board of Directors. On April 20, 2001, Mr.
Tidball resigned his position on the board. On May 16, 2001, Timothy P. Perkins,
Mr. Bess and Mr. Brock were appointed to the PLM Board of Directors. On the same
day, a board resolution decreased the number of directors from eight to three
and Messrs. Bess and Brock resigned. On September 12, 2001, a board resolution
increased the number of directors from three to four and John Einarsen was
appointed to the PLM Board of Directors. Messrs. Engle, Coyne, Perkins and
Einarsen are thus directors of PLM and may be deemed to be affiliates of PLM.
SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by MILPI to purchase shares pursuant to
the merger is estimated to be approximately $4.4 million. The merger is not
conditioned upon MILPI entering into any financing arrangements. AFG Investment
Trusts C and D have committed to provide MILPI's direct parent, MILPI Holdings,
with the funding necessary for the completion of merger. MILPI Holdings, in turn
has committed to provide MILPI with such funds. MILPI anticipates that
approximately 70% of these funds (or approximately $3.1 million) will be
obtained from existing resources and internally generated funds of AFG
Investment Trusts C and D, and that
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approximately 30% of these funds (or approximately $1.3 million) will be
obtained by means of a 364 day, unsecured loan from PLM to the two trusts. The
loan will carry interest at LIBOR plus 200 basis points, provided, however, that
the interest rate may not at any time be higher than 2% over the base rate from
time to time announced by Fleet Bank of Massachusetts, N.A.
THE TRANSACTION AGREEMENTS
THE FOLLOWING DISCUSSION OF THE TERMS AND CONDITIONS OF THE MERGER
AGREEMENT, AND CERTAIN RELATED AGREEMENTS, WHILE MATERIALLY COMPLETE, IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PROVISIONS OF SUCH AGREEMENTS,
EACH OF WHICH IS INCORPORATED HEREIN IN ITS ENTIRETY BY REFERENCE AS STATED
BELOW. TERMS NOT OTHERWISE DEFINED IN THIS DISCUSSION HAVE THE MEANINGS SET
FORTH IN THE MERGER AGREEMENT.
THE MERGER AGREEMENT
The merger agreement is attached to this proxy statement as Annex A and is
incorporated herein in its entirety by reference.
THE TENDER. The merger agreement provides that MILPI shall be required to
commence the offer on or before the third business day following receipt from
PLM of certain information and documents necessary to commence the offer,
including, but not limited to, shareholder mailing information. The obligation
of MILPI to accept for payment PLM common stock tendered pursuant to the offer
was subject to the satisfaction of certain conditions set forth in the merger
agreement, all of which were satisfied or waived. On February 7, 2001, MILPI
accepted for payment and paid for 6,284,261 shares of PLM common stock pursuant
to the offer.
The merger agreement provides that, promptly following the purchase of, and
payment for, a number of shares of PLM common stock that satisfies the Minimum
Condition, and from time to time thereafter, MILPI shall be entitled to
designate the number of directors, rounded up to the next whole number, on the
Board of Directors of PLM that equals the product of the total number of
directors on the Board of Directors of PLM, and the percentage that the voting
power of the shares of PLM common stock beneficially owned by MILPI (including
the shares of PLM common stock paid for pursuant to the offer or the Related
Option), upon such acceptance for payment, bears to the total voting power of
all of the shares of PLM common stock then outstanding under such circumstances,
PLM is required to take all action within its power to cause MILPI's designees
to be elected or appointed to the Board of Directors of PLM, including by
increasing the number of directors and by seeking and accepting resignations of
incumbent directors. On February 7, 2001, following MILPI's acceptance and
payment of the shares tendered in the offer, Messrs. Bess, Caudill, Goodrich,
Lichtenstein, Lorber, Somerset and Witt tendered, and PLM accepted, their
resignations, and Mr. Tidball, the Continuing Director, appointed MILPI's
designees, Mr. Engle and Mr. Coyne, to PLM's Board of Directors. Also in April
2001, Mr. Tidball tendered, and PLM accepted, his resignation, and on May 16,
2001 Messrs. Engle and Coyne appointed Messrs. Perkins, Bess and Brock to PLM's
Board of Directors. On May 16, 2001, Messrs. Bess and Brock resigned. On
September 12, 2001, John Einarsen was appointed to the PLM Board of Directors.
THE MERGER. The merger agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with Delaware law, MILPI will be
merged with and into PLM. As a result of the merger, PLM will continue as the
surviving corporation, and the separate corporate existence of MILPI will cease
in accordance with Delaware law. Upon consummation of the merger, each issued
and outstanding share of PLM common stock (other than any PLM common stock held
in the treasury of PLM and any PLM common stock which is held by stockholders
who have not voted in favor of the merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for such stock in
accordance with Delaware law) will convert into the right to receive from MILPI
the merger consideration.
Pursuant to the merger agreement, each share of common stock of MILPI
issued and outstanding immediately prior to the Effective Time will be converted
automatically into one fully paid and non-assessable share of common stock, par
value $.01 per share, of the surviving corporation and shall constitute the only
issued and outstanding capital stock of the surviving corporation following the
merger.
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The merger agreement provides that the members of the Board of Directors of
the surviving corporation following the merger shall be the directors of MILPI
immediately prior to the Effective Time, and that such directors will continue
in office until the earlier of their respective death, resignation or removal
and the time that their respective successors are duly elected or appointed and
qualified. The merger agreement also provides that the officers of the surviving
corporation following the merger shall be the officers listed in a schedule to
the merger agreement and that such officers will continue in office until the
earlier of their respective death, resignation or removal and the time that
their respective successors are duly elected or appointed and qualified. Subject
to the terms of the merger agreement, the Certificate of Incorporation and
by-laws of PLM will be amended as of the Effective Time to be identical with the
Certificate of Incorporation and by-laws, respectively, of MILPI and will be the
Certificate of Incorporation and by-laws, respectively, of the surviving
corporation until thereafter duly amended.
STOCKHOLDERS' MEETING. Pursuant to the merger agreement, and as required by
applicable law, PLM is convening a special meeting of stockholders and has
agreed to take all other actions necessary, in accordance with such applicable
law and PLM's Certificate of Incorporation and by-laws, to convene such meeting
for the purpose of considering and taking action upon the merger and the merger
agreement. Subject to certain provisions of the merger agreement, PLM's Board of
Directors has recommended approval of the merger agreement and the merger by
PLM's stockholders and will take all lawful action to solicit and obtain such
approval. MILPI has acquired in the offer a majority in voting power of the
outstanding PLM shares, and MILPI has sufficient voting power to approve the
merger even if no other stockholder votes in favor of the merger.
PROXY STATEMENT. Pursuant to the terms of the merger agreement and as
required by applicable law in order to consummate the merger, PLM has, promptly
following the acceptance and payment of the tendered shares by MILPI, prepared
and filed with the SEC this proxy statement relating to the merger agreement and
the merger, and used commercially reasonable efforts to have the proxy statement
cleared with the SEC and thereafter mailed to its stockholders, along with all
other necessary proxy materials, in order to obtain the necessary approvals by
its stockholders of the merger agreement and the merger.
CONDUCT OF BUSINESS BY PLM PENDING THE MERGER. The merger agreement
provides that, from the date of the merger agreement until the date on which PLM
shall have caused MILPI's designees to be appointed to PLM's Board of Directors
as contemplated by the merger agreement, or unless MILPI shall otherwise agree
in writing, PLM shall conduct its business, and shall cause its subsidiaries to
carry on their respective businesses, in the usual, regular and ordinary course
in substantially the same manner as theretofore conducted. Furthermore, except
as provided below, PLM must, and must cause its subsidiaries to, use
commercially reasonable efforts to conduct their businesses in a manner
consistent with the budgets and plans theretofore made available to MILPI, use
commercially reasonable efforts to preserve intact their present business
organizations, keep available the services of their employees and consultants
and preserve their relationships and goodwill with customers, suppliers,
licensors, licensees, distributors, investors and others having business
dealings with them, and use commercially reasonable efforts to protect its
intellectual property rights to the end that its and its subsidiaries' goodwill
and on-going businesses shall not be impaired in any material respect as of the
Closing Date.
The merger agreement also provides that, subject to certain exceptions,
prior to the date on which PLM shall have caused MILPI's designees to be
appointed to PLM's Board of Directors pursuant to the terms thereof, PLM shall
not and shall not permit its subsidiaries to: (i) declare, set aside, or pay any
dividends on, or make any other distributions (including partnership
distributions) in respect of, any of its capital stock or other equity
interests, other than dividends and distributions by any direct or indirect
subsidiary of PLM to its parent; split, combine or reclassify any of its capital
stock or other equity interests or, other than pursuant to the exercise or
conversion of PLM stock options, issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock; or purchase, redeem or otherwise acquire, other than pursuant to
the exercise or conversion of PLM stock options, any shares of capital stock or
other equity interests of PLM or any of its subsidiaries or any other equity
securities thereof or any rights, warrants or options to acquire any such shares
or other securities other than purchases, redemptions or acquisitions of equity
securities of wholly owned subsidiaries of PLM or rights, warrants or options to
acquire such securities; (ii) grant, award, modify or enter into any
compensation or change of control arrangement with any employee of PLM or any of
its subsidiaries; (iii) except as otherwise provided for in the merger
agreement, modify or enter into any employment, consulting or other service
agreement with any person or otherwise hire any new employees, consultants or
other agents; (iv) except for
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issuances of capital stock or other equity interests of a subsidiary of PLM to
PLM or a wholly owned subsidiary of PLM, issue, deliver, sell, pledge, dispose
of or otherwise encumber any shares of PLM's or any of its subsidiaries' capital
stock or other equity interests including any PLM stock options, any other
voting securities of PLM or its subsidiaries or any securities convertible into,
or any rights, warrants or options to acquire, any such shares or voting
securities (other than the issuance of PLM common stock upon the exercise of PLM
stock options) or amend the terms of any such securities, rights, warrants or
options or take any action to accelerate the vesting thereof (other than any
amendments in connection with the acceleration of vesting of currently
outstanding PLM stock options or necessary to enable PLM to pay off all
outstanding PLM stock options on or before the Effective Date); (v) amend the
Certificate of Incorporation, by-laws or other governing documents of PLM or any
of its subsidiaries; (vi) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets or
equity interests of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization or
division thereof, or any assets that are material, individually or in the
aggregate, to PLM or any of its subsidiaries; (vii) subject to a lien or other
encumbrance or sell, lease, license or otherwise dispose of any of its material
properties or assets or any intellectual property rights, except in the ordinary
course of business consistent with past practices and except for transactions
between a wholly owned subsidiary of PLM and PLM or another wholly owned
subsidiary of PLM, or adopt a plan of complete or partial liquidation; (viii)
incur or modify any indebtedness for borrowed money or the deferred purchase
price of any property or services (excluding trade payables and other accrued
current liabilities arising in the ordinary course of business) or guarantee any
such indebtedness of another person; issue or sell any debt securities of PLM or
any of its subsidiaries; guarantee any debt securities of another person (other
than indebtedness to, guarantees of, or issuances or sales to PLM or a wholly
owned subsidiary of PLM); enter into any "keep well" or other agreement to
maintain any financial condition of another person; or enter into any capital
lease obligations; (ix) make any loans, advances or capital contributions to, or
investments in, any other person, other than to PLM or any direct or indirect
subsidiary of PLM, or, except in an amount or amounts not to exceed $300,000 in
the aggregate, settle or compromise any material claims or litigation; (x)
except in the ordinary course of business in an amount or amounts not to exceed
$50,000 in the aggregate, make any capital expenditures, whether or not pursuant
to plan; (xi) take any action that would cause any of PLM's representations and
warranties in the merger agreement to become untrue in any material respect; and
(xii) authorize, or commit or agree to take, any of the foregoing actions.
The merger agreement provides also that, from the date thereof until the
date on which PLM shall have caused MILPI's designees to be appointed to PLM's
Board of Directors pursuant to the terms thereof, PLM shall cause certain of its
affiliates to (a) carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as theretofore conducted, (b)
other than the repurchase of units to the extent permitted by any settlement of
the Koch Action, refrain from acquiring or agreeing to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets or
equity interests of, or by any other manner, any other Person or division
thereof, or any assets that are material, individually or in the aggregate, to
such affiliate, (c) refrain from making any capital expenditures other than in
connection with the repair, maintenance or improvement of currently held assets,
(d) only for those affiliates whose governing documents permit or are currently
being amended (subject to court approval in the Koch Action) to permit
reinvestment of proceeds into the purchase of additional equipment, refrain from
declaring, setting aside or making any distributions in respect of its equity
interests except in the ordinary course consistent with past practice, and (e)
refrain from adopting any stockholder rights plan or similar plan or
arrangement. Notwithstanding anything in the merger agreement to the contrary,
in no event will PLM be required to take any action to cause any of its
affiliates (other than its subsidiaries) to take any action or refrain from
taking any action solely to the extent that the taking of such action by PLM
would violate any fiduciary duties under applicable law or the governing
documents of such affiliate owed by PLM as a manager or general partner of such
affiliate.
ACCESS TO INFORMATION. The merger agreement provides that, from the date
thereof until the closing of the merger or the earlier termination of the merger
agreement, and subject to applicable law and to the terms of the Confidentiality
Agreement dated as of November 23, 1999 between PLM and MILPI (the
"Confidentiality Agreement"), PLM shall, and shall cause its affiliates to,
afford to MILPI and MILPI's accountants, counsel and other representatives (1)
full and reasonable access during normal business hours (and at such other times
as the parties may mutually agree) to their properties, books, contracts,
commitments, records and personnel and, during such period, furnish promptly to
MILPI copies of each report, schedule and other document filed or received by
them pursuant to the requirements of the 1934 Act and the Securities Act of
1933, as amended, and all other information concerning their business,
properties and personnel as MILPI may reasonably request, including
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information regarding customers, suppliers and personnel, and (2) the
opportunity to meet with such persons to discuss their business and relations
with PLM or its affiliates. PLM is also required to permit, and to cause its
affiliates to permit, MILPI full access to the intellectual property rights.
MILPI is required to conduct its review in a manner reasonably calculated not to
disrupt PLM's business and operations or those of its affiliates.
Notwithstanding the above, no investigation by MILPI or its representatives will
limit any representation or warranty of PLM contained in the merger agreement.
COMPANY STOCK OPTIONS AND OTHER EMPLOYEE BENEFITS. The merger agreement
also provides that, in connection with the merger, the offer and the
transactions contemplated thereby, (i) at the Offer Conditions Satisfaction
Date, without any action on the part of the holder thereof, each unvested PLM
stock option which remains as of such time unexercised in whole or in part shall
be automatically and immediately vested and fully exercisable; (ii) in the event
any holder of any PLM stock options exercises any such options or surrenders any
such options to PLM (which may take the form of a letter to PLM requesting a
cash out of such holder's options pursuant to the provisions of the merger
agreement), in either case on or after the Offer Conditions Satisfaction Date
and before the Effective Time, PLM shall pay to such holder cash in an amount
equal to the excess, if any, of the Offer Price over the exercise price of such
options; and (iii) the Board of Directors of PLM (or a duly appointed committee
thereof responsible for the administration of PLM stock option plans in
accordance with the terms of each such plan) shall, prior to or as of the Offer
Conditions Satisfaction Date, take all necessary actions, pursuant to and in
accordance with the terms of PLM stock option plans and the instruments
evidencing PLM stock options, to provide for the accelerated vesting described
in the merger agreement.
Pursuant to the merger agreement, MILPI has also agreed to maintain, with
respect to certain employees of PLM, PLM's severance policy as in effect on the
date of the merger agreement and to recognize all services of such employees at
the levels set forth on an exhibit to the merger agreement for purposes of
calculating applicable severance amounts payable pursuant to the policy. MILPI
will also maintain, from and after the Effective Time to the extent permitted by
the sponsor or other issuer thereof, without change (except as required pursuant
to the terms of the merger agreement), with respect to each officer or employee
of PLM, PLM's currently existing policies of group health insurance for the
duration of the current policy year.
DIRECTOR AND OFFICER LIABILITY. MILPI has agreed that all rights to
indemnification existing as of the date of the merger agreement in favor of any
director, officer, employee or agent of PLM or any of its subsidiaries (the
"Indemnified Parties") as provided by law in their respective certificates of
incorporation, by-laws or other governing documents or in indemnification
agreements with PLM or any of its subsidiaries, or otherwise in effect as of the
date of the merger agreement, shall survive the offer and the merger and shall
continue in full force and effect. Without limiting the generality of the
foregoing, in the event any Indemnified Party is or becomes involved in any
capacity in any action, proceeding or investigation in connection with any
matter, including the transactions contemplated by the merger agreement,
occurring prior to or at the Effective Time, the surviving corporation will, to
the extent required by any such right to indemnification existing at law, in
PLM's or any of its subsidiaries' certificates of incorporation, by-laws or
other governing documents or in any such indemnification agreements, pay such
Indemnified Party's legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith.
COMMERCIALLY REASONABLE EFFORTS. The merger agreement provides that,
subject to its terms and conditions, PLM and MILPI will use commercially
reasonable efforts to take, or cause to be taken, all appropriate actions and
do, or cause to be done, all things necessary, proper or advisable under
applicable law or otherwise to consummate the transactions contemplated by the
merger agreement.
CONDITIONS TO OBLIGATIONS OF EACH PARTY. The obligations of PLM and MILPI
to effect the merger are subject to the fulfillment at or prior to the Effective
Time of the following conditions:
(a) MILPI shall have purchased shares of PLM common stock pursuant to the
offer; provided that this condition shall be deemed to have been satisfied with
respect to the obligation of MILPI to effect the merger if MILPI fails to accept
for payment, or to pay for, shares of PLM common stock pursuant to the offer, in
violation of the terms of the offer or the merger agreement;
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(b) if required by applicable law in order to consummate the merger, the
merger agreement and the merger shall have been approved and adopted by
requisite vote of the stockholders of PLM at the special meeting in accordance
with applicable law and the rules of the American Stock Exchange or any other
stock exchange or market, but only if MILPI shall have used its best efforts to
satisfy such condition;
(c) the waiting period applicable to the consummation of the Merger under
the HSR Act and any other applicable merger control laws shall have expired or
been terminated and any material consents from third parties which are required
to be received prior to the Closing Date with respect to the transactions
contemplated by the merger agreement shall have been received; and
(d) the consummation of the merger shall not be prohibited by any provision
of applicable law or restrained, enjoined or prohibited by any order, judgment,
decree, injunction or ruling by a governmental entity of competent jurisdiction.
The conditions described in (a) and (c) have been fulfilled, the condition
described in (d) has to date been fulfilled, and the condition described in (b)
will be fulfilled at the special meeting of shareholders when MILPI votes its
shares in favor of the merger proposal.
TERMINATION. The merger agreement may be terminated and the merger
abandoned at any time prior to the Effective Time, whether before or after
approval by the stockholders of PLM:
(a) by mutual written consent of PLM and MILPI;
(b) by MILPI or PLM if
(i) any Governmental Entity of competent jurisdiction shall have
issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction or ruling which, after
commercially reasonable efforts on the part of MILPI and PLM
to resist, resolve or lift, permanently restrains, enjoins
or otherwise prohibits the merger and such order, judgment,
decree, injunction or ruling shall have become final and
nonappealable; or
(ii) the purchase of shares of PLM common stock pursuant to the
offer shall not have been consummated on or before June 30,
2001, provided that the right to terminate the merger
agreement under this clause (ii) shall not be available to
MILPI or PLM if its failure to perform any material covenant
or obligation under the merger agreement has been the cause
of or resulted in the failure of the purchase of shares of
PLM common stock pursuant to the offer to occur on or before
such date; or
(iii) the merger is not consummated on or before the first
anniversary of the date of the merger agreement, provided
that the right to terminate the merger agreement under this
clause (iii) shall not be available to MILPI or PLM if its
failure to perform in any material respect any covenant or
obligation under the merger agreement is the cause of or
results in the failure of the merger to occur on or before
such date;
(c) by MILPI if the Board of Directors of PLM, or any committee thereof,
shall (i) modify in any adverse manner or withdraw the approval of the
PLM Board of Directors or any part thereof (including by amending the
Schedule 14D-9), (ii) approve or recommend a Superior Proposal
pursuant to the terms of the merger agreement or (iii) resolve to take
any of the actions specified in clauses (i) or (ii) above; or
(d) by PLM if PLM enters into any Acquisition Agreement with any person
concerning a Superior Proposal, but only if (i) PLM's Board of
Directors, after consultation with and receipt of advice from PLM's
financial advisors and outside legal counsel, determines in good faith
that the proposed Acquisition Agreement constitutes a Superior
Proposal and that the failure to enter into such Acquisition Agreement
could reasonably be deemed to constitute a breach of its fiduciary
duties under applicable law, and (ii) two days have elapsed following
MILPI's receipt of written
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notice from PLM advising MILPI that the Board of Directors of PLM has
received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal, identifying the Person making
such Superior Proposal, and advising MILPI that the Board of Directors
of PLM has determined, upon the advice of PLM's financial advisors and
outside legal counsel, that it will no longer recommend approval of
the merger.
EFFECT OF TERMINATION. If the merger agreement is terminated as described
above, the merger agreement shall terminate and there shall be no liability
under the merger agreement on the part of PLM, MILPI or their respective
officers or directors; provided, however, that, the provisions of the merger
agreement concerning brokers, confidentiality, termination fees, expenses,
liquidated damages, governing law, and litigation expenses shall survive any
termination of the merger agreement and provided further, that each of PLM and
MILPI shall remain liable for any breaches with respect to such party's
covenants, representations and warranties under the merger agreement.
EXPENSES. The merger agreement provides that all costs and expenses
incurred in connection with the merger agreement and the transactions
contemplated thereby shall be paid by the party incurring such costs and
expenses, whether or not the merger is consummated. Notwithstanding the above,
PLM must pay MILPI $1,000,000 (the "Termination Fee"), plus third-party fees and
expenses incurred by MILPI in connection with the merger agreement and the
transactions contemplated thereby (which PLM and MILPI have agreed would be
equal to $500,000), if MILPI terminates the merger agreement (i) as described
under paragraph (b)(i) or (b)(ii), above, under the caption "Termination,"
provided that MILPI would not be entitled to the Termination Fee under these
provisions if the events or circumstances giving rise to such termination right
were beyond the control of PLM and PLM used commercially reasonable efforts to
attempt to cause such events or circumstances to not occur or cease to exist,
(ii) as described under paragraph (c), above, under the caption "Termination,"
(iii) upon any breach of the Related Agreement or any determination by a court
with jurisdiction thereover that the Related Agreement is unenforceable, but
only if the court challenge is brought by a party thereto other than MILPI, (iv)
if PLM terminates the merger agreement pursuant to paragraph (d), above, under
the caption "Termination", or (v) under certain circumstances and pursuant to
the terms and conditions of the merger agreement if, within a year of the date
of the merger agreement, MILPI terminates the merger agreement and PLM
subsequently enters into an alternative definitive purchase agreement with any
person with whom PLM had previously the possibility of an Acquisition Proposal.
LIQUIDATED DAMAGES. In the event of a breach of the merger agreement by
MILPI which results in the failure of PLM and MILPI to consummate the
transactions contemplated by the merger agreement on or before June 30, 2001,
(a) MILPI must pay to PLM, as liquidated damages, $1,000,000, and (b) neither
MILPI nor any of its Affiliates may, for a period of twelve months following
such breach, unless such action involves an offer to purchase shares of PLM
common stock at an Alternative Price in excess of the Offer Price, (i) acquire,
publicly offer to acquire or agree to acquire, directly or indirectly, by
purchase or otherwise, any voting securities or direct or indirect rights to
acquire any voting securities of PLM or any of its Affiliates or, except in the
ordinary course of business, any assets of PLM or any of its Affiliates, (ii)
make or in any way participate in, directly or indirectly, any solicitation of
proxies (as such terms are used in the rules of the Securities and Exchange
Commission) or consents to vote, or seek to advise or influence any person or
entity with respect to the voting of, any voting securities of PLM, (iii) make
any public announcement with respect to, or submit a proposal for, or offer of
(with or without conditions), any merger, consolidation, business combination,
tender or exchange offer, restructuring, recapitalization or other extraordinary
transaction involving PLM or any of its securities or material assets, (iv)
form, join or in any way participate in any "group" (as defined in Section
13(d)(3) of the 1934 Act) in connection with any voting securities of PLM, (v)
otherwise act, alone or in concert with others, to seek to control or influence
the management, Board or Directors or policies of PLM, or (vi) have any
discussions or enter into any arrangements, understandings or agreements
(whether written or oral) with, or advise, assist or encourage, any other Person
in connection with any of the foregoing.
THE ESCROW AGREEMENT
On December 22, 2000 MILPI and PLM entered into an Escrow Agreement with
Bank of San Francisco (the "Escrow Agent"), to act as the escrow agent in
connection with the merger agreement, offer and merger. The Escrow Agreement,
which is incorporated herein by reference, was filed with the SEC as Exhibit
10.2 to the Form 8-K filed by PLM on December 28, 2000 in connection with the
offer.
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Pursuant to the merger agreement, MILPI delivered to the Escrow Agent cash
in the amount of $1,200,000, and PLM delivered to the Escrow Agent cash in the
amount of $1,700,000, in each case to be held and disbursed pursuant to the
terms of the Escrow Agreement. Pursuant to the terms of the Escrow Agreement,
MILPI and PLM were entitled to a return of their respective escrow funds
following MILPI's acceptance of and payment for all shares of PLM common stock
tendered and not withdrawn prior to the Offer Conditions Satisfaction Date
pursuant to the offer. Accordingly, the Escrow Agent has returned to MILPI and
PLM their respective escrow funds. The Escrow Agent has been paid $3,800 for its
services and has been reimbursed for its reasonable costs and expenses. MILPI
and PLM have indemnified the Escrow Agent.
THE CONFIDENTIALITY AGREEMENT
On November 23, 1999, PLM entered into a Confidentiality Agreement with
Equis Financial Group, Inc., an affiliate of MILPI and the recipient (the
"Recipient") of certain confidential non-public information concerning PLM (the
"Evaluation Material"). The Confidentiality Agreement which is incorporated
herein by reference, was filed with the SEC as an Exhibit to the Schedule to be
filed by MILPI on December 29, 2000.
As a condition to PLM disclosing the Evaluation Material, the Recipient
agreed, among other things: (i) to treat confidentially the Evaluation Material,
(ii) to use the Evaluation Material only for the purpose of determining whether
to enter into a transaction with PLM, (iii) not to disclose or allow disclosure
to others of Evaluation Material, except that the recipient may disclose
Evaluation Material to its directors, officers, employees, affiliates, agents,
partners, advisors or representatives (collectively, its "Representatives") only
to the extent necessary to permit such Representatives to assist in determining
whether to enter into a transaction with PLM, (iv) not to disclose to any person
other than its Representatives the fact that the parties are having or have had
discussions concerning a transaction, unless it must make disclosure so as to
not commit a violation of law, in which case, prior to disclosure, it must
promptly advise PLM of such fact, (v) to promptly notify PLM of the receipt of
any request or requirement (by deposition, interrogatories, requests for
information or documents in legal proceedings, subpoenas, civil investigative
demand or similar process), in connection with any proceeding, to disclose any
Evaluation Material so that PLM may seek an appropriate protective order or
other remedy and/or waive compliance with the provisions of the Confidentiality
Agreement, and (vi) in the event the Recipient decides not to proceed with a
transaction, to promptly return all Evaluation Material. PLM agreed that neither
it nor any of its representatives would, without the Recipient's prior written
consent, disclose to any person that it was engaged in discussions concerning a
possible transaction. In addition, pursuant to the Confidentiality Agreement,
the Recipient agreed that, until November 23, 2000, it and its affiliates will
not knowingly, as a result of knowledge or information obtained from the
Evaluation Material or otherwise in connection with a possible transaction,
divert any business from PLM, or solicit for employment an employee of PLM or
any of its affiliates.
THE TRANSITION SERVICES, EMPLOYMENT AND CONSULTING AGREEMENTS
BESS. PLM entered into a transition services and employment agreement with
Stephen M. Bess on January 5, 2001, and a first amendment to the agreement on
August 2, 2001, each of which are incorporated herein by reference. The
agreement was filed as an exhibit to the amendment to Schedule 14D-9 filed by
PLM on February 6, 2001, and the amendment was filed as an exhibit to the Form
8-K filed by PLM on November 13, 2001.
Pursuant to the agreement, as amended, PLM engaged the exclusive services
of Mr. Bess during the period commencing on February 6, 2001 and ending on
August 6, 2001 to serve in a senior management capacity. During such period, PLM
paid Mr. Bess a monthly salary of $36,500. On or about August 6, 2001, pursuant
to the agreement, as amended, PLM paid Mr. Bess a retention bonus in the amount
of $105,000 and a severance bonus in the amount of $316,000.
In connection with the transition services and employment agreement, Mr.
Bess executed and delivered to PLM a release of all claims against PLM (except
with respect to certain agreements relating to indemnification, the granting of
stock options and executive deferred compensation, each of which will continue
in full force and effect), including pursuant to any other employment,
consulting, services, compensation, bonus, severance, golden parachute, change
in control and other agreements between Mr. Bess and PLM or any of its
affiliates.
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Effective August 7, 2001, Mr. Bess became an at-will employee of PLM,
pursuant to the first amendment to the transition services and employment
agreement. PLM agreed to pay Mr. Bess, as of that date, $20,833 per month, of
which $15,833 represents base salary and $5,000 is consideration for Mr. Bess'
agreement to sign the release described above. PLM will continue to maintain for
Mr. Bess the dental, health, life insurance, disability and long-term care
benefit plans and arrangements of PLM in which he participated, or such other
benefit plans and arrangements that would provide him with substantially
equivalent benefits. These benefits will be maintained for a period of 24 months
from August 7, 2001, or until Mr. Bess is no longer employed by PLM, if shorter.
However, in no event will these benefits be continued for less than six months.
Mr. Bess is presently acting as President and Chief Executive Officer of PLM
Financial Services, Inc.
BROCK. PLM entered into a transition services and employment agreement with
Richard K. Brock on January 5, 2001, and an amendment to the agreement on June
8, 2001, each of which are incorporated herein by reference. The agreement was
filed as an exhibit to the Amendment to Schedule 14D-9 filed by PLM on February
6, 2001, and the amendment was filed as an exhibit to the Form 8-K filed by PLM
on Novevber 13, 2001.
Pursuant to the agreement, as amended, PLM engaged the exclusive services
of Mr. Brock during the period commencing on February 6, 2001 and ending on June
10, 2001 to serve in a senior management capacity. During such period, PLM paid
Mr. Brock a monthly salary of $21,167. On or about June 8, 2001, pursuant to the
agreement, as amended, PLM paid Mr. Brock a retention bonus in the amount of
$27,000 and a severance bonus in the amount of $81,000. Finally, PLM agreed to
maintain for Mr. Brock, during the period from June 8, 2001 until August 7,
2002, the dental, health, life insurance, disability and long-term care benefit
plans and arrangements of PLM in effect on January 5, 2001 in which he
participated, or such other benefit plans and arrangements that would provide
him with substantially equivalent benefits.
In connection with the transition services and employment agreement, Mr.
Brock executed and delivered to PLM a release of all claims against PLM (except
with respect to certain agreements relating to indemnification, the granting of
stock options and executive deferred compensation, each of which will continue
in full force and effect), including pursuant to any other employment,
consulting, services, compensation, bonus, severance, golden parachute, change
in control and other agreements between Mr. Brock and PLM or any of its
affiliates.
On June 8, 2001, PLM entered into an engagement letter with Mr. Brock
pursuant to which PLM engaged the exclusive services of Mr. Brock to provide
services related to the transition or the integration of PLM with MILPI and its
affiliates. Pursuant to the engagement letter, PLM agreed to pay Mr. Brock a
consulting fee of $5,291.75 per week during the period from June 11, 2001
through August 6, 2001, and $3,311 per week thereafter.
SANTO. PLM entered into a transition services, employment and consulting
agreement with Susan C. Santo on January 5, 2001, and an amendment to the
agreement on April 2, 2001, each of which are incorporated herein by reference.
The agreement was filed as an exhibit to the Amendment to Schedule 14D-9 filed
by PLM on February 6, 2001, and the amendment was filed as an exhibit to the
Form 8-K filed by PLM on Novevber 13, 2001.
Pursuant to the agreement, as amended, PLM engaged the exclusive services
of Ms. Santo during the period commencing on February 6, 2001 and ending on
August 6, 2001 (the "Employment Period") to serve in a senior management
capacity, and engaged the non-exclusive services of Ms. Santo during the period
commencing on August 6, 2001 and ending on October 13, 2001 (the "Consulting
Period") to provide legal services and services related to the transition or the
integration of PLM with MILPI and its affiliates. During the Employment Period,
PLM paid Ms. Santo a monthly salary of $23,007. During the Consulting Period,
PLM paid Ms. Santo a monthly retainer of $7,667 for up to ten hours of services
per month. Pursuant to the agreement, as amended, PLM paid Ms. Santo a retention
bonus in the amount of $88,800 on April 13, 2001, and a severance bonus in the
amount of $54,000 on October 13, 2001. Finally, PLM agreed to maintain for Ms.
Santo, during the period from April 13, 2001 until April 13, 2002, the dental,
health, life insurance, disability and long-term care benefit plans and
arrangements of PLM in effect on January 5, 2001 in which she participated, or
such other benefit plans and arrangements that would provide her with
substantially equivalent benefits.
In connection with the transition services, employment and consulting
agreement, Ms. Santo executed and delivered to PLM a release of all claims
against PLM (except with respect to certain agreements relating to
indemnification, the granting of stock options and executive deferred
compensation, each of which will continue in
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full force and effect), including pursuant to any other employment, consulting,
services, compensation, bonus, severance, golden parachute, change in control
and other agreements between Ms. Santo and PLM or any of its affiliates.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us with respect
to beneficial ownership of PLM's common stock by (a) each stockholder known by
us to be the beneficial owner of more than 5% of the common stock, (b) each of
our directors, executive officers, and key executive officers of our
subsidiaries, and (c) all of our directors and executive officers as a group.
Unless noted otherwise, the address for each such person is 200 Nyala Farms,
Westport, Connecticut 06880.
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES OF COMMON PERCENT OF COMMON STOCK(1)
STOCK(1)
- ------------------------------------------------------------------------------------------------------------------
MILPI Acquisition Corp (2)....................... 6,284,261 83.23%
Gary D. Engle.................................... 6,284,261 83.23%
James A. Coyne................................... 6,284,261 83.23%
Timothy P. Perkins............................... 0 *
John Einarsen.................................... 0 *
Stephen M. Bess.................................. 0 *
120 Montgomery Street
Suite 1350
San Francisco, California 94104
Dimensional Fund Advisors, Inc.(3)............... 496,900 6.58%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Oak Forest Investment Management, Inc.(4)........ 464,200 6.14%
6701 Democracy Boulevard, Suite 402
Bethesda, Maryland 20817
Ingalls & Snyder LLC.(5)......................... 458,000 6.0%
61 Broadway
New York, New York 10006
All directors and executive officers as a group (5 6,284,261 83.23%
persons).........................................
- ------------------
* Less than 2%.
(1) Computed on the basis of 7,554,510 shares of common stock outstanding
(excluding treasury stock) as of December 11, 2001. Beneficial ownership
as reported in the above table has been determined in accordance with
Rule 13d-3 under the 1934 Act.
(2) MILPI is 100% owned by MILPI Holdings. MILPI Holdings is owned by four
trusts: AFG Investment Trust A, AFG Investment Trust B, AFG Investment
Trust C, and AFG Investment Trust D. AFG ASIT Corporation is managing
trustee of the four trusts, has a 1% economic interest in each of the
four trusts, has an 8.25% economic interest in the special beneficiary
of the four trusts and owns approximately 99% of the Class B Units of
each of the four trusts, which gives it approximately a 62% voting
interest in the four trusts. AFG ASIT is 100% owned by Equis II and
Equis II is 100% owned by Semele. As a result of such holdings, each of
MILPI Holdings, the four trusts, AFG ASIT, Equis II and Semele may be
deemed to be beneficial owners of all of the shares owned by MILPI by
virtue of their power to cause MILPI to vote and dispose of such shares.
(3) As reported on Schedule 13G filed with the Securities and Exchange
Commission on February 2, 2001, Dimensional Fund Advisors Inc. holds
496,900 shares as investment advisor, although the beneficial ownership
of Dimensional Fund Advisors Inc. may have changed as a result of the
completion of the tender offer. Dimensional Fund Advisors Inc. is
registered under Section 203 of the Investment Company Act of 1940, and
serves as investment manager to certain other commingled group trusts
and separate accounts (the "Funds"). In its role as investment advisor
or investment manager, Dimensional Fund Advisors reports
-27-
that it possesses voting and/or investment power over the PLM shares,
that all such shares are owned by the Funds and that it disclaims
beneficial ownership of all such shares.
(4) As reported on Schedule 13G/A filed with the Securities and Exchange
Commission on February 8, 2000, Oak Forest Investment Management holds
464,200 shares as an investment advisor registered under the Investment
Company Act of 1940, although the beneficial ownership of Oak Forest
Investment Management may have changed as a result of the completion of
the tender offer. In its role as investment advisor, Oak Forest
Investment Management reports that it possesses both the power to vote
and to dispose or direct the disposition of all such shares.
(5) As reported on Schedule 13G filed with the Securities and Exchange
Commission on February 13, 2001, Ingalls & Snyder LLC holds 458,000
shares as a broker or dealer registered under Section 15 of the 1934
Act, although the beneficial ownership of Ingalls & Snyder LLC may have
changed as a result of the tender offer. In its role as broker or
dealer, Ingalls & Snyder reports that it possesses shared dispositive
power over the PLM shares, that the PLM shares were acquired by it in
the ordinary course of business and not with the purpose of changing or
influencing the control of PLM.
OTHER MATTERS
The Board of Directors of PLM is not aware of any other business that will
be presented for consideration at the special meeting other than as described in
this proxy statement.
STOCKHOLDER PROPOSALS
Pursuant to PLM's by-laws, a stockholder who desires to present a proposal
at a meeting of stockholders of PLM without inclusion of such proposal in PLM's
proxy materials relating to the meeting must give timely notice of the proposal
in writing to the Secretary of PLM. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of PLM
not less than 50 days nor more than 75 days prior to the meeting; provided,
however, that if less than 65 days' prior notice or prior public disclosure of
the date of the meeting is given or made to stockholders, a stockholder's notice
must be so received not later than the close of business on the 15th day
following the day on which notice of the date of the meeting was mailed or
public disclosure was made, whichever occurs first. PLM reserves the right to
reject, rule out of order, or take other appropriate action with respect to any
proposal that does not comply with these and other applicable requirements.
All notices of proposals of stockholders should be sent to the attention of
the Secretary, PLM International, Inc., 120 Montgomery Street, Suite 1350, San
Francisco, California 94104.
WHERE YOU CAN FIND MORE INFORMATION
PLM files annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Stockholders may read
and copy any reports, statements or other information that PLM files at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
about the public reference rooms. Our filings are also available from commercial
document retrieval services and at the Internet web site maintained by the SEC
at http:www.sec.gov.
The SEC allows us to "incorporate by reference" information into this proxy
statement, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this proxy statement, except
for any information superseded by information contained directly in this proxy
statement. This proxy statement incorporates by reference the documents set
forth below that we have previously filed with the SEC. These documents contain
important information about us and our financial condition.
-28-
PLM SEC FILINGS (FILE NO. 1-9670) PERIOD
Annual Report on Form 10-K Year ended December 31, 2000
Annual Report on Form 10-K/A Year ended December 31, 2000
Quarterly Report on Form 10-Q Quarter ended March 31, 2001
Quarterly Report on Form 10-Q Quarter ended June 30, 2001
Quarterly Report on Form 10-Q Quarter ended September 30, 2001
Current Report on Form 8-K Filed September 5, 2001
Current Report on Form 8-K Filed November 13, 2001
Schedule 14D-9 Filed December 29, 2000
Amendment to Schedule 14D-9 Filed February 6, 2001
Amendment to Schedule 14D-9 Filed February 8, 2001
Documents incorporated by reference are available from us without charge,
excluding all exhibits unless we have specifically incorporated by reference an
exhibit in this proxy statement, by requesting them in writing or by telephone
from PLM at the following address:
PLM International, Inc.
120 Montgomery Street
Suite 1350
San Francisco, California 94104
Attention: Investor Relations
Telephone: (415) 445-3201
(800) 626-7549
-29-
ANNEX A - AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 22, 2000
BETWEEN
MILPI ACQUISITION CORP.
AND
PLM INTERNATIONAL, INC.
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TABLE OF CONTENTS
PAGE
ARTICLE I The Offer...........................................................................1
Section 1.1 The Offer..................................................................1
Section 1.2 Company Action.............................................................3
Section 1.3 Directors..................................................................4
ARTICLE II The Merger.........................................................................5
Section 2.1 The Merger.................................................................5
Section 2.2 Closing....................................................................6
Section 2.3 Effective Time of the Merger...............................................6
Section 2.4 Effect of the Merger.......................................................6
ARTICLE III The Surviving Corporation.........................................................6
Section 3.1 Certificate of Incorporation...............................................6
Section 3.2 By-laws....................................................................7
Section 3.3 Board of Directors; Officers...............................................7
ARTICLE IV Conversion of Shares...............................................................7
Section 4.1 Merger Consideration.......................................................7
Section 4.2 Stockholders' Rights at the Effective Time.................................8
Section 4.3 Surrender and Exchange of Share Certificates...............................8
Section 4.4 No Further Rights..........................................................9
Section 4.5 Dissenting Shares..........................................................9
ARTICLE V Representations and Warranties of Company..........................................10
Section 5.1 Organization and Qualification............................................10
Section 5.2 Capitalization............................................................10
Section 5.3 Authority Relative to this Agreement and the Transactions.................11
Section 5.4 No Conflicts, Required Filings and Consents...............................11
Section 5.5 Reports and Financial Statements; Liabilities.............................12
Section 5.6 Litigation................................................................13
Section 5.7 Absence of Certain Changes or Events......................................14
Section 5.8 Employee Benefit Plans....................................................15
Section 5.9 Labor Relations...........................................................17
Section 5.10 Taxes....................................................................17
Section 5.11 Compliance with Applicable Laws..........................................18
Section 5.12 Voting Requirements......................................................19
Section 5.13 Assets of Company and Its Subsidiaries...................................19
Section 5.14 Material Contracts.......................................................20
Section 5.15 Intellectual Property....................................................21
Section 5.16 Interested Party Transactions............................................21
Section 5.17 Environmental Matters....................................................22
Section 5.18 Restrictions on Business Activities......................................23
A-2
Section 5.19 Certain Business Practices...............................................23
Section 5.20 Insurance................................................................23
Section 5.21 Brokers; Expenses........................................................23
Section 5.22 Board Approval...........................................................24
Section 5.23 Opinion of Company's Fairness Opinion Advisor............................24
Section 5.24 Investment Company.......................................................24
ARTICLE VI Representations and Warranties of Buyer...........................................25
Section 6.1 Organization and Qualification............................................25
Section 6.2 Authority Relative to this Agreement and the Transactions.................25
Section 6.3 No Conflicts, Required Filings and Consents...............................25
Section 6.4 Litigation................................................................26
Section 6.5 Brokers...................................................................26
Section 6.6 Financing.................................................................26
ARTICLE VII Conduct of Business Pending the Merger...........................................26
Section 7.1 Conduct of Company Pending the Merger.....................................26
Section 7.2 Conduct of Company's Affiliates (Excluding its Subsidiaries)
Pending the Merger.....................................................28
Section 7.3 Special Meeting...........................................................29
Section 7.4 Further Action; Consents; Filings.........................................29
Section 7.5 Escrow....................................................................30
Section 7.6 Company Stock Options.....................................................30
ARTICLE VIII Additional Agreements...........................................................31
Section 8.1 Access to Information; Confidentiality....................................31
Section 8.2 Proxy Statement...........................................................32
Section 8.3 Related Agreement.........................................................32
Section 8.4 Public Announcements......................................................33
Section 8.5 Indemnification of Company's Directors and Officers.......................33
Section 8.6 Notice of Breaches and Certain Events.....................................33
Section 8.7 Transfer and Gains Taxes and Certain Other Taxes and Expenses.............34
Section 8.8 Acquisition Proposals.....................................................34
Section 8.9 Cash Balance..............................................................36
Section 8.10 Severance Policy.........................................................36
Section 8.11 Health Benefits..........................................................37
ARTICLE IX Conditions Precedent..............................................................37
Section 9.1 Conditions to Each Party's Obligation to Effect the Merger................37
ARTICLE X Termination, Amendment and Waiver..................................................38
Section 10.1 Termination..............................................................38
Section 10.2 Effect of Termination....................................................39
Section 10.3 Fees and Expenses........................................................39
Section 10.4 Amendment................................................................40
Section 10.5 Waiver...................................................................40
Section 10.6 Liquidated Damages.......................................................40
A-3
ARTICLE XI General Provisions................................................................41
Section 11.1 Non-Survival of Representations, Warranties and Agreements...............41
Section 11.2 Notices..................................................................41
Section 11.3 Specific Performance.....................................................42
Section 11.4 Entire Agreement.........................................................42
Section 11.5 Assignments; Parties in Interest.........................................42
Section 11.6 Governing Law............................................................42
Section 11.7 Headings; Disclosure.....................................................43
Section 11.8 Certain Definitions and Rules of Construction............................43
Section 11.9 Counterparts.............................................................49
Section 11.10 Severability............................................................49
Section 11.11 Litigation..............................................................49
Exhibit 1.1 .........Conditions to the Offer
Exhibit 3.3 .........Officers of the Surviving Corporation
Exhibit 5.1 .........Affiliates of Company
Exhibit 5.2 .........Company Stock Options
Exhibit 5.5 .........Liabilities of Company and Its Subsidiaries
Exhibit 5.8 .........Benefit Plans of Company and Its ERISA Affiliates
Exhibit 5.14 .........Contracts of Company and Its Affiliates
Exhibit 5.15 .........Intellectual Property Rights of Company and Its Subsidiaries
Exhibit 7.1 .........Conduct of Business Pending the Merger
Exhibit 7.1(a)(iii)(A).....Transition Services and Employment Agreement (Bess)
Exhibit 7.1(a)(iii)(B).....Transition Services and Employment Agreement (Brock)
Exhibit 7.1(a)(iii)(C).....Transition Services, Employment and Consulting Agreement (Santo)
Exhibit 7.5 .........Escrow Agreement
Exhibit 8.9 .........Cash Balance
Exhibit 8.10 .........Severance Policy
Exhibit 9.1 .........Material Third Party Consents
A-4
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of December
22, 2000, is entered into by and between MILPI ACQUISITION CORP., a Delaware
corporation ("BUYER"), and PLM INTERNATIONAL, INC. a Delaware corporation
("COMPANY"). Capitalized terms used in this Agreement and not defined in context
shall have the meanings ascribed to them in Section 11.8(a).
WHEREAS, the respective Boards of Directors of Buyer and Company have
approved this Agreement, the Offer and the Merger and deem it advisable and in
the best interests of their respective stockholders to consummate the Offer and
the Merger on the terms and conditions set forth herein; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, as a condition and inducement to Buyer's willingness to enter into
this Agreement, Robert Tidball, Doug Goodrich, Steel Partners II, L.P., Steel
Partners L.L.C. and Warren G. Lichtenstein are entering into a voting and tender
agreement (the "RELATED AGREEMENT") pursuant to which they, among other things,
agree to tender their shares of Company Common Stock pursuant to the Offer,
grant to Buyer the Related Option, and vote their shares of Company Common Stock
in favor of the Merger;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
THE OFFER
Section 1.1 THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article X and that none of the events set forth in EXHIBIT 1.1
hereto shall have occurred or be existing, Buyer shall, on or before the third
Business Day following the later of (1) receipt from Company of the materials
described in the first sentence of Section 1.2(a), and (2) receipt from Company
of its Schedule 14d-9 in a form that satisfies the requirements of all
applicable Law, commence (within the meaning of Rule 14d-2(a) of the Securities
Act) an offer (the "OFFER") to purchase any and all outstanding shares of the
common stock of Company, par value $.01 per share ("COMPANY COMMON STOCK"), for
a purchase price of $3.46 per share (subject to appropriate adjustment in the
event of any stock splits, reverse stock splits, combinations, stock dividends,
recapitalizations, redenominations of share capital and similar events), less
any dividends declared or paid after the date hereof and on or before the Offer
Completion Date (the "OFFER PRICE"), net to the seller thereof, in cash, subject
to reduction for any applicable withholding taxes and, but only if such payment
is to be made other than to the registered holder of the Company Common Stock,
any applicable stock transfer taxes payable by
A-5
such holder. The Offer will be made pursuant to an offer to purchase and related
letter of transmittal containing the terms and conditions set forth in this
Agreement. The initial expiration date of the Offer shall be the 25th Business
Day from and after the date the Offer is commenced (the "INITIAL EXPIRATION
DATE"). The obligation of Buyer to accept for payment, purchase and pay for any
shares of Company Common Stock tendered pursuant to the Offer shall be subject,
except as provided in Section 1.1(b), only to the satisfaction of (i) the
condition that at least 50.1% of the then outstanding shares of Company Common
Stock (including any shares of Company Common Stock owned by Buyer, or any
Affiliate of Buyer, on the date such shares are purchased pursuant to the Offer)
have been validly tendered and not withdrawn prior to the expiration of the
Offer (the "MINIMUM CONDITION"), and (ii) the other conditions set forth in
EXHIBIT 1.1 hereto; PROVIDED, HOWEVER, that Buyer expressly reserves the right
to waive any of the conditions to the Offer (other than the Minimum Condition)
and to make any changes in the terms or conditions of the Offer (other than the
Minimum Condition) in its sole discretion, subject to Section 1.1(b).
Notwithstanding the previous sentence, Buyer may waive the Minimum Condition so
long as (x) it has irrevocably waived all other conditions to the Offer (and
may, as a legal matter, irrevocably waive such conditions and otherwise purchase
shares of Company Common Stock pursuant to the Offer), (y) Buyer has irrevocably
exercised or irrevocably committed to exercise the Related Option, and (z) the
shares of Company Common Stock acquired pursuant to the Offer and through such
Related Option exercise would satisfy the Minimum Condition.
(b) Without the prior written consent of Company, Buyer shall not
(i) decrease the Offer Price, (ii) decrease the percentage of shares of Company
Common Stock sought in the Offer, (iii) change the form of consideration payable
in the Offer, (iv) impose any conditions to the Offer in addition to the Minimum
Condition and the conditions set forth in EXHIBIT 1.1 hereto, (v) except as
provided below or as required by any rule, regulation, interpretation or
position of the SEC applicable to the Offer, change the expiration date of the
Offer, or (vi) otherwise amend or change any material term or condition of the
Offer in a manner adverse to the holders of shares of Company Common Stock.
Notwithstanding anything in this Agreement to the contrary, without the consent
of Company, Buyer shall have the right to extend the Offer beyond the Initial
Expiration Date in any of the following events: (A) from time to time, but in no
event later than the date that is 60 days from the Initial Expiration Date, if,
at the Initial Expiration Date (or the extended expiration date of the Offer, if
applicable), any of the conditions to the Offer (other than the Minimum
Condition, to which this clause does not apply) shall not have been satisfied or
waived, until such conditions are satisfied or waived, (B) for any period
required by any rule, regulation, interpretation or position of the SEC or the
staff thereof applicable to the Offer or any period required by applicable Law,
(C) if all conditions to the Offer other than the Minimum Condition are
satisfied or waived, for one or more periods not to exceed ten Business Days
each (but no more than an aggregate of 30 Business Days for all such
extensions), or (D) if all conditions to the Offer are satisfied or waived but
the number of shares of Company Common Stock validly tendered and not withdrawn
is less than 90% of the then outstanding shares of Company Common Stock, for an
aggregate period not to exceed 20 Business Days (for all such extensions),
provided that Buyer shall accept and promptly pay for all shares of Company
Common Stock tendered prior to the date of such extension pursuant to this
clause (D) (the "OFFER CONDITIONS SATISFACTION DATE") and shall waive any
condition to the consummation of the Merger (other than the condition in Section
9.1(c)) that may fail to be satisfied during such extension. In addition, Buyer
shall, if requested by Company, from time to
A-6
time extend the Offer if, at the Initial Expiration Date (or any extended
expiration date of the Offer, including pursuant to this sentence, if
applicable), any of the following have not been satisfied: (1) the Minimum
Condition, (2) the HSR Condition, (3) the conditions set forth in clause (a),
clause (b), clause (g) or clause (h) of EXHIBIT 1.1 hereto, and/or (4) provided
that such conditions can be satisfied by Company on or before the 40th Business
Day following the Initial Expiration Date, and provided that Company immediately
ceases, and does not subsequently enter into, any discussions or negotiations
with any Person concerning an Acquisition Proposal pursuant to Section 8.8(a),
the conditions set forth in clause (c)(ii), clause (d), clause (e) or clause (j)
of EXHIBIT 1.1 hereto, for one or more periods not to exceed ten Business Days
each (but for no longer than an aggregate of 40 Business Days after the Initial
Expiration Date). Upon prior satisfaction or waiver of all of the conditions to
the Offer and subject to the terms and conditions of this Agreement, Buyer shall
accept for payment, purchase and pay for, in accordance with the terms of the
Offer, all shares of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer as soon as reasonably practicable after the Offer
Conditions Satisfaction Date and then, solely to the extent purchasable and
payable pursuant to the terms of this Agreement but not previously purchased or
paid for, again after the expiration of the Offer.
(c) As soon as reasonably practicable on the date of commencement of
the Offer, Buyer shall file or cause to be filed with the SEC a Tender Offer
Statement on Schedule TO (together with any amendments or supplements thereto,
the "SCHEDULE TO") with respect to the Offer. Buyer agrees that the Schedule TO
will comply as to form and content in all material respects with the applicable
provisions of the federal securities Laws, will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under with they were made, not misleading, and will contain
the offer to purchase and form of the related letter of transmittal (such
Schedule TO and such documents included therein pursuant to which the Offer will
be made, together with any supplements or amendments thereto, the "OFFER
DOCUMENTS"). Buyer and Company each agree to correct promptly any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect and to
supplement the information provided by it specifically for use in the Schedule
TO or the other Offer Documents to include any information that shall become
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Buyer agrees to take all steps
necessary to cause the Offer Documents as so corrected or supplemented to be
filed with the SEC and disseminated to holders of shares of Company Common
Stock, in each case, as and to the extent required by applicable federal
securities Laws. Company and its counsel shall be given a reasonable opportunity
to review and comment on the Offer Documents prior to their being filed with the
SEC. Buyer agrees to provided to Company and its counsel any comments or other
communications that Buyer or its counsel may receive from the SEC with respect
to the Offer Documents promptly after receipt thereof.
Section 1.2 COMPANY ACTION.
(a) Company shall cause its transfer agent promptly to furnish Buyer
with a list of Company's shareholders, mailing labels and any available listings
or computer files containing the names and addresses of all record holders of
shares of Company Common Stock and lists of securities positions of shares of
Company Common Stock held in stock depositories.
A-7
Company shall also provide to Buyer such additional information (including
updated lists of shareholders, mailing labels and lists of securities
positions), and such other assistance, as Buyer or its agents may reasonably
request in connection with the Offer. 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 transactions
contemplated hereby, including the Offer, the Merger, the Related Option and the
purchase of shares of Company Common Stock contemplated by the Offer
(collectively, the "TRANSACTIONS"), Buyer and its Affiliates and agents shall
(i) hold in confidence the information contained in any such lists, labels,
listings or files, (ii) use such information only in connection with the Offer
and the Merger, and (iii) if this Agreement is terminated, deliver to Company
all copies of, and any extracts or summaries from, such information then in
their possession or control.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Company shall file with the SEC and disseminate to holders of shares
of Company Common Stock, in each case as and to the extent required by
applicable federal securities Laws, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any amendments or supplements thereto, the
"SCHEDULE 14D-9") that shall reflect the Company Board Approval. Company and
Buyer each agree to correct promptly any information provided by it for use in
the Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect and to supplement the information
provided by it specifically for use in the Schedule 14D-9 to include any
information that shall become necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. Company agrees
to take all steps necessary to cause the Schedule 14D-9 as so corrected or
supplemented to be filed with the SEC and disseminated to holders of shares of
Company Common Stock, in each case, as and to the extent required by applicable
federal securities Laws. Buyer and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 prior to its being filed
with the SEC. Company agrees to provide to Buyer and its counsel any comments or
other communications that Company or its counsel may receive from the SEC with
respect to the Schedule 14D-9 promptly after receipt thereof. Buyer and Company
each agree to provide promptly such information necessary for the preparation of
the exhibits and schedules to the Schedule 14D-9 and the Offer Documents which
the party responsible therefor shall reasonably request.
Section 1.3 DIRECTORS.
(a) Promptly following the purchase of, and payment for, a number of
shares of Company Common Stock that satisfies the Minimum Condition, and from
time to time thereafter, Buyer shall be entitled to designate the number of
directors, rounded up to the next whole numbers, on the Board of Directors of
Company that equals the product of (i) the total number of directors on the
Board of Directors of Company (giving effect to the election of any additional
directors pursuant to this Section 1.3), and the percentage that the voting
power of the shares of Company Common Stock beneficially owned by Buyer
(including the shares of Company Common Stock paid for pursuant to the Offer or
the Related Option), upon such acceptance for payment, bears to the total voting
power of all of the shares of Company Common Stock then outstanding, and Company
shall take all action within its power to cause Buyer's designees to be elected
or appointed to the Board of Directors of Company, including by increasing the
number of directors and by seeking and accepting resignations of incumbent
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directors. At such time, Company will also, upon request of Buyer, use
commercially reasonable efforts to cause individual directors designated by
Buyer to constitute the number of members, rounded up to the next whole number,
on (i) each committee of the Board of Directors of Company other than any such
committee of such Board of Directors established to take action under this
Agreement, and (ii) each Board of Directors (or similar body) of each Subsidiary
of Company, and each committee thereof, that represents that same percentage as
such individuals represented on the Board of Directors of Company.
Notwithstanding the foregoing, in the event that Buyer's designees are to be
appointed or elected to the Board of Directors of Company, until the Effective
Time, such Board of Directors shall have at least one director who (x) is a
director on the date of this Agreement or otherwise not an Affiliate of Buyer,
and (y) is not an officer of Company or any of its Subsidiaries (the "CONTINUING
DIRECTOR"). Company shall maintain, for so long as the Continuing Director shall
serve as a Director, a policy of directors' and officers' liability insurance
covering such Continuing Director, and the Surviving Corporation shall
thereafter purchase tail coverage lasting for six years for such policy of
directors' and officers' liability insurance.
(b) Company's obligations to appoint the designees of Buyer to its
Board of Directors shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder. Company shall promptly take all actions and
shall include in the Schedule 14D-9 (or an amendment thereof or an information
statement pursuant to Rule 14f-a if Buyer has not theretofore designated
directors) all such information with respect to Company and its officers and
directors as Section 14(f) and Rule 14f-1 require in order to fulfill its
obligations under this Section 1.3. Buyer shall supply to Company, and be solely
responsible for, any information with respect to themselves and their nominees,
officers, directors and Affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of the designees of Buyer
pursuant to this Section 1.3 and until the Effective Time, the approval of the
Continuing Director shall be required to authorize (and such authorization shall
constitute the authorization of Company's Board of Directors and no other action
on the part of Company, including any action by any other directors of Company,
shall be required to authorize) (i) any termination of this Agreement by
Company, (ii) any amendment of this Agreement requiring action by Company's
Board of Directors, (iii) any amendment of the certificate of incorporation or
by-laws of Company or any of its Subsidiaries, (iv) any extension of time for
performance of any obligation or action hereunder or under the Offer by Buyer,
or (v) any waiver of compliance with, or enforcement of, any of the agreements
or conditions contained in this Agreement, or under the Offer for the benefit of
Company and any material transaction with Buyer or any Affiliate thereof.
ARTICLE II
THE MERGER
Section 2.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement (including Section 7.3), at the Effective Time, Buyer shall file
with the Secretary of State of the State of Delaware a certificate of merger
(the "CERTIFICATE OF MERGER"), and shall be merged with and into Company (the
"MERGER") and the separate existence of Buyer shall thereupon
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cease. Company shall continue as the surviving corporation in the Merger
(thereafter referred to as the "SURVIVING CORPORATION") under the laws of the
State of Delaware under the name "PLM International, Inc." Throughout this
Agreement, the term "COMPANY" shall refer to such entity prior to the Merger and
the term "SURVIVING CORPORATION" shall refer to it in its status as the
surviving corporation in the Merger.
Section 2.2 CLOSING. The closing of the Merger (the "CLOSING") shall take
place as promptly as practicable (and in any event within two business days)
after satisfaction or waiver of the conditions set forth in Article IX. The
Closing shall be held at the offices of Nixon Peabody LLP, 437 Madison Avenue,
New York, New York 10022, unless another place is agreed to in writing by the
parties hereto. The date on which the Closing occurs is referred to herein as
the "CLOSING DATE".
Section 2.3 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective
upon the filing with the Secretary of State of the State of Delaware of the
Certificate of Merger, or at such later time as is specified therein, with
respect to the Merger pursuant to and in compliance with this Agreement and
Section 251 of the General Corporation Law of the State of Delaware (the
"DELAWARE LAW"). The Certificate of Merger shall be filed immediately following
the commencement of the Closing. When used in this Agreement, the term
"EFFECTIVE TIME" shall mean the time at which the Certificate of Merger becomes
effective in accordance with the Delaware Law.
Section 2.4 EFFECT OF THE MERGER. The Merger shall, from and after the
Effective Time, have all the effects provided by applicable Law. If, at any time
after the Effective Time, the Surviving Corporation shall consider or be advised
that any further deeds, conveyances, assignments or assurances in Law or any
other acts are necessary, desirable or proper to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation the title to any property or
rights of Company or Buyer, by reason or as a result of the Merger, or otherwise
to carry out the purposes of this Agreement, Company and Buyer agree that the
Surviving Corporation and its proper officers and directors shall execute and
deliver all such deeds, conveyances, assignments and assurances in Law and do
all things necessary, desirable or proper to vest, perfect or confirm title to
such property or rights in the Surviving Corporation and otherwise to carry out
the purposes of this Agreement, and that the proper officers and directors of
the Surviving Corporation are fully authorized in the name of each of Company
and Buyer or otherwise to take any and all such action.
ARTICLE III
THE SURVIVING CORPORATION
Section 3.1 CERTIFICATE OF INCORPORATION. The certificate of incorporation
of Company shall be amended at the Effective Time to be identical with the
certificate of incorporation of Buyer and shall be the certificate of
incorporation of the Surviving Corporation until thereafter duly amended.
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Section 3.2 BY-LAWS. The by-laws of Company shall be amended as of the
Effective Time to be identical with the by-laws of Buyer and shall be the
by-laws of the Surviving Corporation until thereafter duly amended.
Section 3.3 BOARD OF DIRECTORS; OFFICERS. The members of the Board of
Directors of the Surviving Corporation following the Merger shall be the
directors of Buyer immediately prior to the Effective Time, and such directors
shall continue in office until the earlier of their respective death,
resignation or removal and the time that their respective successors are duly
elected or appointed and qualified. The officers of the Surviving Corporation
following the Merger shall be the officers listed on SCHEDULE 3.3 hereto, and
such officers shall continue in office until the earlier of their respective
death, resignation or removal and the time that their respective successors are
duly elected or appointed and qualified.
ARTICLE IV
CONVERSION OF SHARES
Section 4.1 MERGER CONSIDERATION.
(a) As of the Effective Time, by virtue of the Merger and without
any action on the part of any stockholder of Company or Buyer:
(i) Each share of common stock, par value $.01 per share, of
Buyer that is issued and outstanding immediately prior to the Effective Time
shall be automatically converted without any further action into one fully paid
and non-assessable share of common stock, par value $.01 per share, of the
Surviving Corporation, and shall constitute the only issued and outstanding
capital stock of the Surviving Corporation following the Merger.
(ii) Each share of the Company Common Stock that is owned by
Company as treasury stock shall be canceled and shall cease to exist, and no
cash, securities or other consideration shall be delivered in exchange therefor.
(iii) Each share of Company Common Stock, other than the
shares canceled pursuant to Section 4.1(a)(ii), that is issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive from Buyer cash in the amount of $3.46 (the "MERGER CONSIDERATION").
(b) If, at any time during the period between the date of this
Agreement and the Effective Time, Company changes the number of shares of
Company Common Stock issued and outstanding as a result of a stock split,
reverse stock split, stock dividend, recapitalization, redenomination of share
capital or other similar transaction with an effective date or record date, as
applicable, prior to the Effective Time, the Merger Consideration shall be
appropriately adjusted.
(c) In connection with the Merger:
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(i) At the Effective Time, without any action on the part of
the holder thereof, each outstanding option to purchase shares of Company Common
Stock granted under any Company stock option plan, including any stock option
plan intended to be qualified under Section 423 of the Code (each such option a
"COMPANY STOCK OPTION" and each such plan a "COMPANY STOCK OPTION PLAN") which
remains as of such time unexercised in whole or in part, shall be converted into
the vested right to receive from Buyer, pursuant to Section 4.3, cash in an
amount equal to the excess, if any, of the Merger Consideration over the
exercise price of such Company Stock Option (the "COMPANY STOCK OPTION
CONSIDERATION").
(ii) The Board of Directors of Company (or a duly appointed
committee thereof responsible for the administration of the Company Stock Option
Plans in accordance with the terms of each such plan) shall, prior to or as of
the Effective Time, take all necessary actions, pursuant to and in accordance
with the terms of the Company Stock Option Plans and the instruments evidencing
the Company Stock Options, to provide for the conversion of the Company Stock
Options in accordance with subparagraph (i) above.
Section 4.2 STOCKHOLDERS' RIGHTS AT THE EFFECTIVE TIME. On and after the
Effective Time, the certificates that immediately prior to the Effective Time
represented shares of Company Common Stock (the "CERTIFICATES") shall cease to
represent any rights with respect to Company Common Stock and shall only
represent the right to receive the Merger Consideration.
Section 4.3 SURRENDER AND EXCHANGE OF SHARE CERTIFICATES.
(a) On or before the Closing Date, Buyer shall provide to a paying
agent designated by it (the "PAYING AGENT") sufficient cash to allow the Merger
Consideration and the Company Stock Option Consideration to be paid to the
holders of each share of Company Common Stock and each Company Stock Option then
entitled to be so paid.
(b) On the Closing Date, Buyer shall instruct the Paying Agent to
mail to each Person who was a holder of record of shares of Company Common Stock
or to each holder of Company Stock Options (pursuant to a list to be provided by
Company) immediately prior to the Effective Time (i) a letter of transmittal,
(ii) instructions for use in effecting the surrender of the Certificates
nominally representing Company Common Stock in exchange for the Merger
Consideration, and (iii) instructions for use in effecting the surrender of the
instruments nominally evidencing the Company Stock Options in exchange for the
Company Stock Option Consideration.
(c) After the Closing, each holder of a Certificate or of a Company
Stock Option shall surrender and deliver such Certificate or Company Stock
Option to the Paying Agent together with a duly completed and executed
transmittal letter. Upon such surrender and delivery, the holder shall receive
the Merger Consideration or the Company Stock Option Consideration, as
applicable. Until so surrendered and exchanged, each Certificate formerly
representing an outstanding share of Company Stock Common Stock shall, after the
Effective Time, be deemed for all purposes to evidence only the right to receive
the Merger Consideration as provided in Section 4.1(a)(iii), and each Company
Stock Option shall, after the Effective
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Time, be deemed for all purposes to evidence only the right to receive the
Company Stock Option Consideration as provided in Section 4.1(c)(i).
(d) At the Effective Time, the stock transfer books of Company shall
be closed and no transfer of shares of Company Common Stock shall be recorded
thereafter, other than transfers of shares of Company Common Stock that have
occurred prior to the Effective Time. In the event that, after the Effective
Time, Certificates are presented for transfer to the transfer agent for Company
or the Surviving Corporation, they shall be delivered to the Paying Agent and
exchanged for the Merger Consideration as provided for in this Section 4.3.
(e) Any Merger Consideration that remains undistributed to the
holders of Company Common Stock or Company Stock Options as of the Effective
Time after twelve months have elapsed following the Effective Time shall be
delivered to the Surviving Corporation by the Paying Agent, upon demand, and any
such holders who have not previously complied with this Section 4.3 shall
thereafter look only to the Surviving Corporation for payment of their claim for
the Merger Consideration or Option Consideration.
(f) Neither the Paying Agent, nor either of Company or Buyer shall
be liable to any holder of shares of Company Common Stock with respect to any
Merger Consideration or Company Stock Option Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
(g) In the event any Certificates or Company Stock Options shall
have been lost, stolen or destroyed, the Paying Agent shall deliver the Merger
Consideration or Company Stock Option Consideration to which the holder thereof
is entitled in exchange for such lost, stolen or destroyed Certificates or
Company Stock Options only upon the making of an affidavit of that fact by the
record holder thereof and the delivery of such bond as the Paying Agent may
reasonably require.
(h) No transfer taxes shall be payable by any holder of Company
Common Stock in respect of the payment of the Merger Consideration under this
Section 4.3, except that if any Merger Consideration is to be paid to any Person
other than the record holder of such Company Common Stock, it shall be a
condition of such payment that the Person requesting such payment shall first
pay to the Surviving Corporation any transfer taxes payable by reason thereof,
or of any prior transfer of such surrendered Certificate, or establish to the
satisfaction of the Surviving Corporation that such taxes have been paid or are
not payable.
Section 4.4 NO FURTHER RIGHTS. From and after the Effective Time, holders
of Certificates theretofore evidencing shares of Company Common Stock shall
cease to have any rights as stockholders of Company, except as provided herein
or by Law.
Section 4.5 DISSENTING SHARES. Notwithstanding Section 4.1, shares of
Company Common Stock outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger or consented thereto
in writing, and who has demanded appraisal for such shares in accordance with
the Delaware Law, shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect, withdraws or otherwise loses
its right to appraisal. If, after the Effective Time, such holder fails to
perfect,
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withdraws or loses its right to appraisal, such shares of Company
Common Stock shall be treated as if they had been converted as of the Effective
Time into a right to receive the Merger Consideration.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Buyer that, except (other than with
respect to any representation or warranty relating to the accuracy or
completeness of any Exhibit hereto) as disclosed in the Company Disclosure
Schedule which has been delivered to Buyer prior to the execution of this
Agreement (the "COMPANY DISCLOSURE SCHEDULE"):
Section 5.1 ORGANIZATION AND QUALIFICATION. Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Each of Company's Affiliates (a list of which is set forth in
EXHIBIT 5.1 hereto together with the jurisdiction of its organization, each
state in which it is qualified or otherwise licensed to do business and the
identity of the holder of its capital stock or other equity interests (excluding
capital stock and other equity interests that are publicly traded)) is a
corporation, limited liability company or limited partnership duly organized,
validly existing and, if applicable, in good standing under the laws of the
jurisdiction in which it was formed. Each of Company and its Affiliates has the
requisite corporate power and authority to carry on its business as it is now
being conducted and is duly qualified or licensed to do business, and, if
applicable, is in good standing, in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified, licensed or in good standing, or to have such power and authority,
when taken together with all other such failures would not have a Company
Material Adverse Effect. Company has heretofore made available to Buyer a
complete and correct copy of the certificate of incorporation, by-laws or other
governing documents, each as amended to the date hereof, of Company and each of
its Affiliates. In each case where one of Company's Subsidiaries is a manager or
general partner of one of Company's Affiliates, the Company entity that is the
manager or general partner (a) has observed all corporate formalities, (b) has
not co-mingled any of its funds with those of Company's Affiliates (excluding
its Subsidiaries), and (c) has reasonably sufficient capital to conduct its
business as presently conducted. Company is not a manager or general partner of
any Person.
Section 5.2 CAPITALIZATION. The authorized capital stock of Company
consists of 50,000,000 shares of Company Common Stock and 10,000,000 shares of
preferred stock, par value $.01 per share (the "COMPANY PREFERRED STOCK"). As of
September 30, 2000, (a) 7,448,510 shares of Company Common Stock were issued and
outstanding, all of which were validly issued, fully paid and non-assessable,
(b) an aggregate of 774,216 shares of Company Common Stock were reserved for
issuance under stock options to be issued pursuant to Company Stock Option
Plans, and (c) no shares of Company Preferred Stock were issued or outstanding.
As of September 30, 2000, there were outstanding Company Stock Options to
purchase 601,000 shares of Company Common Stock, a list of which Company Stock
Options, together with their respective exercise prices, is set forth on EXHIBIT
5.2 hereto. Between
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September 30, 2000 and December 14, 2000, Company Stock Options were exercised
for 106,000 shares of Company Common Stock, as a result of which, as of December
14, 2000, 7,554,510 shares of Company Common Stock were issued and outstanding,
all of which were validly issued, fully paid and non-assessable. Except as set
forth on the Company Disclosure Schedule, no Company Stock Options will be
subject to accelerated vesting or exercisability in connection with the
execution and delivery of this Agreement or the Merger. No shares of capital
stock of Company or any of its Subsidiaries have been issued between September
30, 2000 and the date hereof other than pursuant to the exercise or conversion
of any Company Stock Options. Since September 30, 2000 through the date hereof,
no options to purchase shares of Company Common Stock have been granted.
(a) Except as set forth in this Section 5.2, there are no preemptive
or other outstanding rights, options, warrants, conversion rights (including
pursuant to convertible securities), stock appreciation rights, redemption
rights, repurchase rights, employee stock purchase rights or plans, agreements,
arrangements, calls, commitments or rights of any kind relating to the issued or
unissued capital stock of Company or any of its Subsidiaries or obligating
Company or any of its Subsidiaries to issue or sell any shares of capital stock
of, or other equity interests in, Company or any of its Subsidiaries. All shares
of capital stock of Company and its Subsidiaries subject to issuance pursuant to
Company Stock Options or the Related Option, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and, if applicable,
non-assessable. Without limiting the generality of the foregoing, neither
Company nor any of its Subsidiaries nor, to Company's knowledge, any of its
Affiliates (excluding its Subsidiaries) has adopted a shareholder rights plan or
similar plan or arrangement. As of the date of this Agreement, there are no
outstanding contractual obligations of Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of, or other
equity interests in, Company or any of its Subsidiaries or to provide material
funds to, or make any material investment (in the form of a loan, capital
contribution or otherwise) in, any Person.
Section 5.3 AUTHORITY RELATIVE TO THIS AGREEMENT AND THE TRANSACTIONS.
Company has all necessary power and authority to execute and deliver this
Agreement and the Related Agreement, to perform its obligations hereunder and
thereunder and to consummate the Transactions. The execution and delivery of
this Agreement and the Related Agreement by Company, and the consummation by
Company of the Transactions, have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Company are necessary to authorize the execution and delivery of this Agreement
or the Related Agreement or to consummate the Transactions other than, with
respect to the Merger, the adoption of this Agreement by the affirmative vote of
the holders of a majority of the outstanding shares of Company Common Stock
entitled to be voted at the Special Meeting and the filing and recordation of
appropriate merger documents as required by the Delaware Law. This Agreement and
the Related Agreement have been duly and validly executed and delivered by
Company and, assuming the due authorization, execution and delivery by the other
parties hereto and thereto, constitutes a legal, valid and binding obligation of
Company, enforceable against Company in accordance with its terms.
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Section 5.4 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Company does
not, and the performance of this Agreement and consummation of the Transactions
by Company will not (i) conflict with or violate the certificate of
incorporation, by-laws or other governing documents of Company or any of its
Affiliates, (ii) assuming the consents, approvals, authorizations and waivers
specified in Section 5.4(b) have been received and the waiting periods referred
to therein have expired, and any condition precedent to such consent, approval,
authorization or waiver has been satisfied, conflict with or violate any Law
applicable to Company or any of its Affiliates or by which any property or asset
of Company or any of its Affiliates is bound or affected, or (iii) result in any
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 right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien or other encumbrance on any property or asset of Company or
any of its Affiliates pursuant to, any contract, agreement, note, bond,
mortgage, indenture, credit agreement, lease, license, permit, franchise or
other instrument or obligation to which Company or any of its Affiliates is a
party or by which Company or any of its Affiliates, or any property or asset of
Company or any of its Affiliates, is bound or affected, except in the case of
clauses (ii) and (iii) for any such conflicts, violations, breaches, defaults or
other occurrences of the type referred to above which would not have a Company
Material Adverse Effect.
(b) The execution and delivery of this Agreement by Company does
not, and the performance of this Agreement by Company will not, require any
consent, approval, authorization, waiver or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic, foreign or
supranational (a "GOVERNMENTAL ENTITY"), except for applicable requirements of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), the
Securities Act of 1933, as amended (the "SECURITIES ACT"), state securities or
"blue sky" laws ("BLUE SKY LAWS"), the pre-merger notification requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), such filings, approvals, consents and waivers as may be required under
other Merger Control Laws, filing and recordation of the Certificate of Merger
as required by the Delaware Law, and filings required by the rules of the
American Stock Exchange or any other stock exchange or market, except where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not have a Company Material Adverse
Effect.
Section 5.5 REPORTS AND FINANCIAL STATEMENTS; LIABILITIES. (a)
Company and each of its Affiliates that is so required have filed with the SEC
all forms, reports, schedules, registration statements, definitive proxy
statements, information statements and other filings (the "SEC REPORTS")
required to be filed by them with the SEC since January 1, 1998. As of their
respective dates, each of the SEC Reports complied in all material respects with
the requirements of the Exchange Act and the Securities Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such SEC
Reports. As of their respective dates (subject to any amendments filed after
such dates but prior to the date hereof) and as of the date any information from
such SEC Reports has been incorporated by reference, 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
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statements therein, in light of the circumstances under which they were made,
not misleading. Company and each of its Affiliates that is so required have
filed all material contracts and agreements and other documents or instruments
required to be filed as exhibits to the SEC Reports.
(b) The consolidated balance sheets of Company as of December 31,
1999, 1998 and 1997 and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the
three-year period ended December 31, 1999 (including the related notes and
schedules thereto) contained in Company's Form 10-K for the year ended December
31, 1999 (the "COMPANY FINANCIAL STATEMENTS") present fairly, in all material
respects, the consolidated financial position and the consolidated results of
operations, retained earnings and cash flows of Company and its consolidated
Subsidiaries as of the dates or for the periods presented therein in conformity
with United States generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved except as otherwise noted
therein, including in the related notes.
(c) The consolidated balance sheets and the related statements of
operations and cash flows (including, in each case, the related notes and
schedules thereto) of Company contained in its Form 10-Q for the quarterly
period ended September 30, 2000 (the "COMPANY QUARTERLY FINANCIAL STATEMENTS")
have been prepared in accordance with the requirements for interim financial
statements contained in Regulation S-X, which do not require all the information
and footnotes necessary for a fair presentation of financial position, results
of operations and cash flows in conformity with GAAP. The Company Quarterly
Financial Statements reflect all adjustments necessary to present fairly in
accordance with GAAP (except as indicated and for normal year-end audit
adjustments, which will not be material), in all material respects, the
consolidated financial position, results of operations and cash flows of Company
and its consolidated Subsidiaries for all periods presented therein.
(d) As of December 8, 2000, except for those liabilities that are
set forth in EXHIBIT 5.5 hereto and SCHEDULE 5.5 hereto (which Exhibit and
Schedule shall specify the party to whom such liabilities accrue), and except
for liabilities that do not exceed $10,000 individually or $100,000 in the
aggregate, neither Company nor any of its Subsidiaries has outstanding any
indebtedness, obligations or liabilities of any nature whatsoever (whether
absolute, accrued, contingent or otherwise, and whether due or to become due or
asserted or unasserted), and, to Company's knowledge, there is no basis for the
assertion of any claim or liability of any nature whatsoever against Company or
any of its Subsidiaries.Section 5.6 LITIGATION. Except as fully disclosed in the
SEC Reports and except for the Koch Action and the McBride Action, there is no
civil, criminal or administrative suit, action or proceeding pending or, to the
knowledge of Company, threatened against or affecting Company or any of its
Subsidiaries or, to the knowledge of Company, any of its other Affiliates that
is reasonably expected to have a Company Material Adverse Effect, nor is there
any judgment, decree, injunction or order of any Governmental Entity or
arbitrator outstanding against Company, any of its Subsidiaries or, to the
knowledge of Company, any of its other Affiliates
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having, or which is reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as fully disclosed in the SEC Reports, in the Company
Financial Statements, in the Company Quarterly Financial Statements or as
permitted by Section 7.1(a) for events after the date hereof, since September
30, 2000, Company and each of its Subsidiaries has conducted its business only
in the ordinary course and in a manner consistent with past practice and since
such date there has not been (i) any Company Material Adverse Effect, (ii) other
than the declaration of a distribution in partial liquidation paid on November
3, 2000, any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of
Company's or its Subsidiaries' capital stock or other equity interests, (iii)
except for exercises of Company Stock Options, any redemption, purchase or other
acquisition of any of Company's or any of its Subsidiaries' capital stock or
other equity interests, (iv) any split, combination or reclassification of any
of Company's or its Subsidiaries' capital stock or other equity interests, or,
except with respect to Company Stock Options, any issuance or the authorization
of any issuance of any other securities in respect of, in lieu of or in
substitution for shares of Company's or its Subsidiaries' capital stock or other
equity interests, (v) any granting by Company or any of its Subsidiaries to any
officer of Company or any of its Subsidiaries of any increase in compensation or
any rights with respect to compensation in the event of a "change in control"
(however defined) of Company, except in the ordinary course of business
consistent with past practice or as required under employment agreements in
effect as of September 30, 2000, (vi) any granting by Company or any of its
Subsidiaries to any officer or any group or class of employees of Company or any
of its Subsidiaries of any increase in severance or termination pay, except as
required under employment, severance or termination agreements or plans in
effect as of September 30, 2000 or as previously disclosed to Buyer, (vii) any
entry by Company or any of its Subsidiaries into any employment, severance or
termination agreement with any officer of Company or any of its Affiliates, or
any increase in benefits available under or establishment of any Benefit Plan
except in the ordinary course of business consistent with past practice or as
previously disclosed to Buyer, or (viii) any material change in accounting
methods, principles or practices by Company, except insofar as may have been
required by a change in GAAP.
(b) Except as fully disclosed in the SEC Reports of Company's
Affiliates (excluding its Subsidiaries) or as permitted by Section 7.2 for
events after the date hereof, since September 30, 2000, each of such Affiliates
has conducted its business only in the ordinary course and in a manner
consistent with past practice and since such date there has not been any
circumstance, event or occurrence or series of circumstances, events or
occurrences which individually or in the aggregate with all other circumstances,
events or occurrences would be reasonably likely to have a material adverse
effect on the business, assets, operations, financial condition, revenues or
results of operations of any of such Affiliates, other than any material adverse
effect caused by conditions resulting from (i) the announcement of the Offer or
the pendency of the consummation of this Agreement, (ii) the taking of any
action contemplated by this Agreement, or (iii) the cessation of the employment
with Company, for whatever reason, of any or all of Steve Bess, Susan Santo and
Rick Brock; PROVIDED, HOWEVER, that for purposes of determining whether such a
material adverse effect has occurred, the parties will not consider (1)
A-18
the Koch
Action or the results or effects thereof (but only if Company abides by the
ruling of any court with jurisdiction over the Koch Action, or, without the
consent of Buyer, does not modify the settlement of the Koch Action as currently
proposed), or (2) any claim brought or that could be brought by Marubeni America
Corporation ("MARUBENI") or its Affiliates arising out of or relating to any
breach of, or claim for indemnification under, the Asset Purchase Agreement,
dated May 24, 2000, as amended, among Marubeni, PLM Financial Services, Inc.,
PLM Equipment Growth Fund, PLM Equipment Growth Fund II, PLM Equipment Growth
Fund III, PLM Equipment Growth Fund IV, PLM Equipment Growth Fund V, PLM
Equipment Growth Fund VI, PLM Equipment Growth Fund VII and Professional Lease
Management Income Fund I, LLC, unless Company has knowledge as of the date
hereof of the circumstance, event or occurrence or series of circumstances,
events or occurrences giving rise to such claim.
Section 5.8 EMPLOYEE BENEFIT PLANS.
(a) EXHIBIT 5.8 hereto sets forth a complete and correct list of all
existing (i) "employee benefit plans", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and (ii)
any other material pension plans or employee benefit arrangements or payroll
practices (including severance pay, vacation pay, company awards, salary
continuation for disability, sick leave, deferred compensation, bonus or other
incentive compensation, stock option or stock purchase arrangements or policies)
maintained, or contributed to, by Company, its Subsidiaries or any trade or
business (whether or not incorporated) which is treated with Company or its
Subsidiaries as a single employer under Section 414(b), (c), (m) or (o) of the
Code (an "ERISA AFFILIATE") with respect to current or former employees of
Company, its Subsidiaries or their ERISA Affiliates (all such plans,
arrangements or practices that currently exist or have been in existence at any
time during the last three years are hereinafter referred to as the "BENEFIT
PLANS"). Each Benefit Plan is in writing and Company has previously made
available to Buyer a true and complete copy of each existing Benefit Plan
document, including all amendments thereto, and a true and complete copy of each
material document, if any, prepared in connection with each such Benefit Plan,
including a copy of (A) each trust or other funding arrangement, (B) each
summary plan description and summary of material modifications, (C) the most
recently filed Form 5500, including all attachments thereto, (D) the most
recently received IRS determination letter for each such Benefit Plan, and (E)
the most recently prepared actuarial report and financial statement in
connection with each such Benefit Plan. Neither Company nor any of its
Subsidiaries has any express or implied commitment to (X) create or incur
material liability with respect to or cause to exist any other employee benefit
plan, program or arrangement, (Y) enter into any material contract or agreement
to provide compensation or benefits to any individual, or (Z) materially modify,
change or terminate any Benefit Plan, other than with respect to a modification,
change or termination required by ERISA or the Code or a merger of a previously
acquired 401(k) or welfare plan.
(b) No "accumulated funding deficit" as defined in Section 412 of
the Code exists with respect to any Benefit Plan, whether or not waived. No
"reportable event" within the meaning of Section 4043 of ERISA, and no event
described in Section 4062 or 4063 of ERISA has occurred with respect to any
Benefit Plan. Neither Company nor any ERISA Affiliate of Company has (i) engaged
in, or is a successor corporation or parent corporation to an entity that has
engaged in, a transaction described in sections 4069 or 4212(c) of ERISA, or
(ii) incurred or
A-19
reasonably expects to incur (A) any material liability under Title IV of ERISA
arising in connection with the termination of, or a complete or partial
withdrawal from, any plan covered or previously covered by Title IV of ERISA, or
(B) any material liability under Section 4971 of the Code that in either case
could become a liability of the Surviving Corporation or Buyer or any of its
Affiliates after the Effective Time. As of September 30, 2000, there was no
material unfunded liability under any of the Benefit Plans, computed using
reasonable actuarial assumptions and determined as if all benefits under such
Benefit Plans were vested and payable as of such date. No event has occurred
since September 30, 2000 which would cause Company to believe that as of the
date of this Agreement there is any such material unfunded liability.
(c) Each of the Benefit Plans intended to qualify under Section
401(a) of the Code has received a favorable determination letter (or opinion
letter in the case of a prototype plan) from the IRS that such Benefit Plan is
so qualified or is within the remedial amendment period for applying for such a
determination letter, and nothing has occurred with respect to the operation of
any such Benefit Plan which, either individually or in the aggregate, would
cause the loss of such qualification or the imposition of any material
liability, penalty or tax under ERISA or the Code.
(d) There has been no non-exempt prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Benefit Plan. Company, its Subsidiaries and their ERISA Affiliates are not
currently liable for any excise tax or penalty in connection with any Benefit
Plan arising under the Code or ERISA, including but not limited to Section 4971,
4972, 4975, 4979, 4980, 4980B or 4980D of the Code or Section 502 of ERISA, and
to the knowledge of Company no fact or event exists which could give rise to any
liability except, in each case, for any such liability which would not have a
Company Material Adverse Effect.
(e) All contributions and premiums required by Law or by the terms
of any Benefit Plan or any agreement relating thereto have been timely made
(without regard to any waivers granted with respect thereto) in all material
respects.
(f) The liabilities of each Benefit Plan that has been terminated or
otherwise wound up have been fully discharged in material compliance with
applicable Law.
(g) There has been no violation of ERISA with respect to the filing
of applicable returns, reports, documents and notices regarding any of the
Benefit Plans with the Secretary of Labor or the Secretary of the Treasury or
the furnishing of such notices or documents to the participants or beneficiaries
of the Benefit Plans which, either individually or in the aggregate, could
result in a material liability to Company or any of its Subsidiaries.
(h) To the knowledge of Company, there are no pending legal
proceedings which have been asserted or instituted against any of the Benefit
Plans or their assets, Company, any of its Subsidiaries, any ERISA Affiliate, or
the plan administrator or any fiduciary of any of the Benefit Plans with respect
to the operation of such plans (other than routine, uncontested benefits
claims).
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(i) Each of the Benefit Plans has been maintained, in all material
respects, in accordance with its terms and all provisions of applicable Laws.
All amendments and actions required to bring each of the Benefit Plans into
conformity in all material respects with all of the applicable provisions of
ERISA and other applicable Laws have been made or taken except to the extent
that such amendments or actions are not required by Law to be made or taken
until a date after the Closing Date.
(j) Company, its Subsidiaries and their ERISA Affiliates do not
maintain and have no liability under a welfare benefit plan providing continuing
benefits after the termination of employment (other than as required by Section
4980B of the Code and at the former employee's own expense). Company, its
Subsidiaries and each of their ERISA Affiliates have complied in all material
respects with the notice and continuation requirements of Section 4980B of the
Code and the regulations thereunder. Company, its Subsidiaries and their ERISA
Affiliates do not maintain, sponsor or contribute to, and to the knowledge of
Company have never maintained, sponsored or contributed to, any benefit plan
subject to Title IV of ERISA, including but not limited to a multiple employer
plan subject to Sections 4063 and 4064 of ERISA or a multiemployer plan as
defined in Section 4001(a)(3) of ERISA, and no fact or event exists which could
give rise to any liability under Title IV of ERISA.
(k) Neither the execution and delivery of this Agreement nor the
consummation of the Transactions will (i) result in any material payment
(including severance, unemployment compensation or golden parachute) becoming
due to any director, employee or independent contractor of Company or its
Affiliates, (ii) materially increase any benefits otherwise payable under any
Benefit Plan, or (iii) result in the acceleration of the time of payment or
vesting of any such benefits to any material extent other than vesting of
Company Stock Options in accordance with their terms or this Agreement. No
payments or benefits under any Benefit Plan or other agreement of Company or its
Subsidiaries will be considered an excess parachute payment of Section 280G of
the Code or result in a deduction limitation under Section 162(m) of the Code.
(l) To the knowledge of Company, all individuals providing services
to Company, its Subsidiaries and their ERISA Affiliates have been properly
characterized and treated as being either an employee or an independent
contractor of such Person.
Section 5.9 LABOR RELATIONS. There are no labor controversies pending or
threatened with respect to Company or its Subsidiaries, and neither Company nor
any of its U.S. Subsidiaries is a party to any collective bargaining agreement
with any labor union or other representative of employees. No non-U.S.
Subsidiary of Company is a party to any collective bargaining agreement with any
labor union or other representative of employees or any works' council or
similar entity under applicable Laws. To the knowledge of Company, there is no
pending or threatened union organization activity by or among any of its or its
Subsidiaries' employees.
Section 5.10 TAXES. Company, each of its Subsidiaries and, to the knowledge
of Company, each of its Affiliates have duly filed all material federal, state,
local and foreign income, franchise, excise, real and personal property and
other Tax returns and reports (including, but not limited to, those filed on a
consolidated, combined or unitary basis) required
A-21
to have been filed by them prior to the date hereof. All of the foregoing
returns and reports of Company, its Subsidiaries and, to the knowledge of
Company, its other Affiliates are true and correct in all material respects, and
Company, its Subsidiaries and, to the knowledge of Company, its other Affiliates
have paid or, prior to the Closing Date will pay, all Taxes owed (whether or not
shown as being due on such returns or reports). Company, its Subsidiaries and,
to the knowledge of Company, its other Affiliates have paid and will pay all
installments of estimated taxes due on or before the Closing Date. Company and
its Subsidiaries and, to the knowledge of Company, its other Affiliates have
paid or made adequate provision in accordance with GAAP in the SEC Reports, the
Company Financial Statements and the Company Quarterly Financial Statements for
all Taxes payable in respect of all periods ending on or prior to the date of
this Agreement and will have paid or provided for all Taxes payable in respect
of all periods covered thereby. The sum of all income Taxes payable by Company
and its Subsidiaries in respect of all periods ending on or prior to December
31, 2000 will not be greater than $9,600,000 unless the taxable income of
Company and its Subsidiaries in respect of December 2000 exceeds $200,000, in
which case such $9,600,000 will be increased by 39% of the amount by which such
December 2000 taxable income exceeds $200,000. As of the date hereof, all
deficiencies proposed as a result of any audits have been paid or settled.
Company, each of its Subsidiaries and, to the knowledge of Company, each of its
Affiliates has paid, collected or withheld, or caused to be paid, collected or
withheld, all amounts of Tax required to be paid, collected or withheld, other
than such Taxes for which adequate reserves in the SEC Reports, the Company
Financial Statements and the Company Quarterly Financial Statements have been
established or which are being contested in good faith, except as would not have
a Company Material Adverse Effect. Neither Company nor any of its Subsidiaries
has waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency. There are no
claims, Tax audits or assessments pending against Company, any of its
Subsidiaries or, to the knowledge of Company, any of its Affiliates, and neither
Company nor any of its Subsidiaries nor, to the knowledge of Company, any of its
other Affiliates has been notified (formally or informally) in writing of any
proposed Tax claims or assessments against any of them. There are no Liens or
other encumbrances on any of the assets of Company or its Subsidiaries that
arose out of the failure to pay any Taxes. Neither Company nor any of its
Subsidiaries nor, to the knowledge of Company, any of its other Affiliates (i)
has been a member of a consolidated group filing a consolidated federal income
Tax return (other than a consolidated group of which Company is the common
parent), or (ii) has any liability for Taxes of any other Person (other than
Company and its Subsidiaries) arising from the application of Treasury
Regulations section 1.1502-6 promulgated under the Code or any analogous Law, as
a transferee or successor by contract or otherwise. No consent under Section
341(f) of the Code has been filed with respect to Company, any of its
Subsidiaries or, to the knowledge of Company, any of its Affiliates. Except as
set forth in the Company Disclosure Schedule, there is no contract, agreement,
plan or arrangement covering any Person that, individually or collectively,
would give rise to the payment of any amount that would not be deductible by
Buyer, Company or any of the Affiliates of Company by reason of Section 280G of
the Code.
Section 5.11 COMPLIANCE WITH APPLICABLE LAWS. Company, its Subsidiaries
and, to the knowledge of Company, its other Affiliates hold all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities ("PERMITS") necessary for them to own, lease or operate their
properties and assets and to carry on their businesses substantially as now
conducted or presently intended to be conducted, except for such permits,
licenses, variances,
A-22
exemptions, orders and approvals the failure of which to hold would not have a
Company Material Adverse Effect. The Permits are valid and in full force and
effect except as would not have a Company Material Adverse Effect. Except as set
forth in the SEC Reports filed prior to the date hereof, the businesses of each
of Company, its Subsidiaries and, to the knowledge of Company, its other
Affiliates have not been, and are not being, conducted in violation of any
Permit or any Law, arbitration award, agency requirement, license or permit of
any Governmental Entity (a "GOVERNMENTAL REGULATION"), except for violations or
possible violations that, individually or in the aggregate, are not reasonably
likely to have a Company Material Adverse Effect or prevent or materially burden
or materially impair the ability of Company to consummate the Transactions.
Except as set forth in the SEC Reports filed prior to the date hereof, no
material investigation or review by any Governmental Entity with respect to
Company, any of its Subsidiaries or, to the knowledge of Company, any of its
other Affiliates is pending or, to Company's knowledge, threatened, nor has any
Governmental Entity indicated an intention to conduct any such investigation or
review. No material change is required in Company's, any of its Subsidiaries'
or, to the knowledge of Company, any of its other Affiliates' operations,
properties or procedures to comply with any Permit or Governmental Regulation,
and Company has not received any notice or communication of any material
noncompliance with any Permit or Governmental Regulation that has not been cured
as of the date hereof, except as would not have a Company Material Adverse
Effect.
Section 5.12 VOTING REQUIREMENTS. In the event Section 253 of the Delaware
Law is inapplicable and not available to effectuate the Merger, the affirmative
vote of the holders of a majority of the Company Common Stock outstanding as of
the record date for the Special Meeting is the only vote of the holders of any
class or series of Company's capital stock or other securities necessary to
adopt this Agreement and to approve the Merger on behalf of Company.
Section 5.13 ASSETS OF COMPANY AND ITS SUBSIDIARIES. Company and each of
its Subsidiaries has good and valid title to all of its material properties and
assets, free and clear of all Liens and other encumbrances, except liens for
Taxes not yet due and payable and for which adequate reserves are reflected on
the balance sheets contained in the Company Quarterly Financial Statements. All
leases, easements, licenses, rights of way, and other rights pursuant to which
Company or any of its Subsidiaries lease from others or otherwise have the right
to use material real or personal property, individually or in the aggregate
material to the business of Company ("PROPERTY RIGHTS"), are valid and binding
and are in full force and effect and enforceable against Company or its
Subsidiaries and the other parties thereto, as applicable, in accordance with
their respective terms and there is not, with respect to Company or its
Subsidiaries or, to Company's knowledge, with respect to the other parties
thereto, any existing default or event of default (or event which with notice or
lapse of time, or both, would constitute a default or event of default) under
any such Property Right, except where the lack of such validity and
effectiveness or the existence of such default or event of default does not and
will not constitute a Company Material Adverse Effect. Company has made
available to Buyer true and accurate copies of the documents creating or
reflecting the Property Rights. No consent of any Person is needed in order for
each Property Right to continue in full force and effect in accordance with its
terms without penalty, acceleration or rights of early termination by reason of
the consummation of the Transactions, except for consents the absence of which
would not have a Company Material Adverse Effect. The tangible and intangible
assets owned or leased by Company and its Subsidiaries are all of the assets
used in their respective businesses or necessary
A-23
for them to conduct their respective businesses as presently conducted. All
material items of tangible property used by Company or its Subsidiaries in their
businesses are in operable condition and adequate for the purposes used (normal
wear and tear excepted).
Section 5.14 MATERIAL CONTRACTS.
(a) As of December 8, 2000, neither Company nor any of its
Subsidiaries is a party or is subject to any contract, note, bond, mortgage,
indenture, credit agreement, lease, license, agreement, understanding,
instrument, bid or proposal (excluding any contract or arrangement that is or is
associated with a Benefit Plan), or any amendment or modification thereto
(collectively, "CONTRACTS"), that (i) is required to be described in or filed as
an exhibit to any SEC Report that is not so described in or filed as required by
the Securities Act or the Exchange Act, as the case may be, (ii) was made other
than in the ordinary course of business or the performance of which will extend
over a period greater than 30 days, (iii) obligates Company or any of its
Subsidiaries to sell or deliver any product or service at a price that does not
cover the cost (including labor, materials and production overhead) plus the
customary profit margin associated with such product or service, (iv)
constitutes an employment, consulting, non-competition, severance, golden
parachute, change in control or indemnification agreement, (v) constitutes an
advertising, public relations, franchise, distributorship or sales agency
agreement, (vi) involves a commitment or payment in excess of $10,000 for the
future purchase of services or equipment, (vii) is among any stockholders (or
other equityholders) of Company or any of its Subsidiaries or grants any right
of first refusal or is for a partnership or joint venture or the acquisition,
sale or lease of any assets or capital stock (or other equity interests) of
Company or any of its Subsidiaries or involves a sharing of profits or
constitutes a shareholder rights or similar plan, (viii) constitutes a mortgage,
pledge, conditional sales contract, security agreement, factoring agreement or
other similar agreement with respect to any real or tangible person property of
Company or any of its Subsidiaries, (ix) constitutes a loan agreement, credit
agreement, promissory note, guarantee, subordination agreement, letter of credit
or any similar type of agreement, (x) is between Company or any of its
Subsidiaries and any Governmental Entity, (xi) relates to the discharge, storage
or removal of Hazardous Materials, (xii) involves a retainer with any attorneys,
accountants, actuaries, appraisers, investment bankers or other professional
advisors, or (xiii) commits Company or any of its Subsidiaries to enter into any
of the foregoing agreements.
(b) As of December 8, 2000, none of Company's Affiliates is a party
or is subject to any Contract that (i) is required to be described in or filed
as an exhibit to any SEC Report that is not so described in or filed as required
by the Securities Act or the Exchange Act, as the case may be, (ii) constitutes
an employment, consulting, non-competition, severance, golden parachute, change
in control or indemnification agreement, or (iii) commits any of Company's
Affiliates to enter into any of the foregoing agreements.
(c) A list of all Contracts described in Section 5.14(a) or 5.14(b)
to which Company or any of its Affiliates is a party, or by which any of them is
bound, is set forth in EXHIBIT 5.14 hereto. All such Contracts to which Company
or any of its Affiliates is a party, or by which any of them is bound, are valid
and binding and are in full force and effect and enforceable against Company,
its Affiliates and, to the knowledge of Company, the other party or parties
thereto in accordance with their respective terms, and no consent of any Person
is
A-24
needed in order for each such contract to continue in full force and effect in
accordance with its terms without penalty, acceleration or rights of early
termination by reason of the consummation of the Transactions, except for any
failure to be in full force and effect or failure to obtain a consent that would
not, in the aggregate with all other such failures, have a Company Material
Adverse Effect. No current or previous party to any such Contract to which
Company or any of its Affiliates is a party or by which Company or any of its
Affiliates is bound has given any notice of, or made any claim with respect to,
any breach or default thereunder. Neither Company nor any of its Affiliates is
in violation or breach of or default in any material respect under any such
Contract to which it is a party or by which it is bound, nor, to Company's
knowledge, is any other party to any such Contract in violation or breach of or
default in any material respect under any such Contract.
Section 5.15 INTELLECTUAL PROPERTY.
(a) Company and its Subsidiaries, directly or indirectly, own,
license or otherwise have legally enforceable rights to use, or can acquire on
reasonable terms and without material expense, all patents, trademarks, trade
names, service marks, copyrights and any applications therefor, technology,
know-how, computer software and applications and tangible or intangible
proprietary information or materials, that are material to and used in the
business of Company and its Subsidiaries as presently conducted ("INTELLECTUAL
PROPERTY RIGHTS"). A list of all of the Intellectual Property Rights is set
forth in EXHIBIT 5.15 hereto.
(b) In the case of Intellectual Property Rights owned by Company or
one of its Subsidiaries, either Company or one of its Subsidiaries owns such
Intellectual Property Rights free and clear of any material Liens and other
encumbrances. Company or one of its Subsidiaries has an adequate right to the
use of the Intellectual Property Rights or the material covered thereby in
connection with the services or products in respect of which such Intellectual
Property Rights are being used. The manufacture, sale, licensing or use of any
of the services or products of Company or any of its Subsidiaries as now
manufactured, sold, licensed or used or proposed for manufacture, sale,
licensing or use by Company or any of its Subsidiaries in the ordinary course of
Company's business as presently conducted does not infringe on any copyright,
patent, trade mark, service mark or trade secret of a third party where such
infringement would have a Company Material Adverse Effect. The use by Company or
any of its Subsidiaries of any trademarks, service marks, trade names, trade
secrets, copyrights, patents, technology or know-how and applications used in
the business of Company and any of its Subsidiaries as presently conducted does
not infringe on any other Person's trademarks, service marks, trade names, trade
secrets, copyrights, patents, technology or know-how and applications where such
infringement would have a Company Material Adverse Effect. Except as set forth
in the Company Disclosure Schedule, Company has not received any information
challenging the ownership by Company or any of its Subsidiaries or the validity
of any of the Intellectual Property Rights. All registered patents, trademarks,
service marks and copyrights held by Company and its Subsidiaries are valid and
subsisting, except to the extent any failure to be valid and subsisting does not
constitute a Company Material Adverse Effect. To the knowledge of Company, there
is no material unauthorized use, infringement or misappropriation of any of the
Intellectual Property Rights by any third party, including any employee or
former employee of Company or any of its Subsidiaries. No Company Intellectual
Property Right is subject to any known outstanding decree, order, judgment, or
stipulation restricting in any manner the licensing
A-25
thereof by Company or any of its Subsidiaries, except to the extent any such
restriction does not constitute a Company Material Adverse Effect.
Section 5.16 INTERESTED PARTY TRANSACTIONS. Since December 31, 1998,
or as described in the SEC Reports, no event has occurred that would be required
to be reported by Company pursuant to Item 404 of Regulation S-K promulgated by
the SEC. Except as expressly set forth in the SEC Reports or the Company
Disclosure Schedule, there are no material agreements, arrangements,
understandings or commitments of any kind (including indebtedness for borrowed
money or the deferred purchase price of property or services, obligations
evidenced by notes, bonds, indentures or similar instruments, guarantees,
financial support or keep whole arrangements, or interest rate agreements,
currency hedging agreements or similar hedging instruments) between or involving
Company or any one or more of its Subsidiaries on the one hand, and any of
Company's Affiliates (excluding its Subsidiaries), on the other hand.
Section 5.17 ENVIRONMENTAL MATTERS. Except as disclosed in the SEC Reports:
(a) Company and its Affiliates (i) are in compliance with all
Environmental Laws, and are not subject to any asserted liability or, to
Company's knowledge, any unasserted liability (including liability with respect
to current or former Affiliates or operations), under any Environmental Laws,
(ii) hold or have applied for all Environmental Permits required for their
properties or operations, except where the failure to hold or have applied for
such Environmental Permits would not have a Company Material Adverse Effect, and
(iii) are in compliance with their respective Environmental Permits, except
where the failure to be in compliance would not have a Company Material Adverse
Effect.
(b) Neither Company nor any of its Affiliates has received any
written notice, demand, letter, claim or request for information alleging that
Company or any of its Affiliates is or may be in violation of, or liable under,
any Environmental Law.
(c) Neither Company nor any of its Affiliates (i) has entered into
or agreed to any consent decree or order or is subject to any judgment, decree
or judicial order relating to compliance with Environmental Laws, Environmental
Permits or the investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Materials and, to the knowledge of Company and
its Affiliates, no investigation, litigation or other proceeding is pending or
threatened in writing with respect thereto, or (ii) has received any written
notice asserting that it is an indemnitor in connection with any threatened or
asserted claim by any third-party indemnitee for any liability under any
Environmental Law or relating to any Hazardous Materials.
(d) None of the real property now or, to the knowledge of Company,
previously owned or leased by Company or any of its Affiliates is listed on or,
to the knowledge of Company, proposed for listing on the "National Priorities
List" under CERCLA, as updated through the date hereof, or any similar state or
foreign list of sites requiring investigation or cleanup.
For purposes of this Agreement:
A-26
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended as of the date hereof.
"ENVIRONMENTAL LAWS" means any applicable federal, state, local, foreign or
supranational statute, Law, ordinance, regulation, rule, code, treaty, writ or
order and any enforceable judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree, judgment,
stipulation, injunction, permit, authorization, policy, opinion or agency
requirement, in each case having the force and effect of Law, relating to the
pollution, protection, investigation or restoration of the environment, health
and safety or natural resources, including those relating to the use, handling,
presence, transportation, treatment, storage, disposal, release, threatened
release or discharge of Hazardous Materials or noise, odor, wetlands, pollution,
contamination or any injury or threat of injury to Persons or property or to the
siting, construction, operation, closure and post-closure care of waste
disposal, handling and transfer facilities.
"ENVIRONMENTAL PERMITS" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
"HAZARDOUS MATERIALS" means (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls, or (ii) any chemical, material or other
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any Environmental Law.
Section 5.18 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no Contract,
judgment, injunction, order or decree binding upon Company or any of its
Subsidiaries or any of their properties which has had or could reasonably be
expected to have the effect of prohibiting or materially impairing (i) any
material business practices of Company, any of its Subsidiaries or, to the
knowledge of Company or its Subsidiaries, Buyer or its Affiliates, or (ii) the
conduct of any material business by Company, any of its Subsidiaries or, to the
knowledge of Company or its Subsidiaries, Buyer or its Affiliates, as currently
conducted by Company and its Subsidiaries.
Section 5.19 CERTAIN BUSINESS PRACTICES. Neither Company nor any of its
Subsidiaries nor any director, officer, employee or agent of Company or any of
its Subsidiaries has in any material respect (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful payments relating to
political activity, (ii) made any unlawful payment to any foreign or domestic
government official or employee or to any foreign or domestic political party or
campaign or violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended, (iii) consummated any transaction, made any payment, entered into
any agreement or arrangement or taken any other action in violation of Section
1128B(b) of the Social Security Act, as amended, or (iv) made any other unlawful
payment.
Section 5.20 INSURANCE. Company has adequate insurance covering all of the
customarily insurable liabilities, including product liability, director and
officer liability, and general and casualty liabilities, with financially secure
insurers. Company has purchased, or will purchase on or before the date on which
Company shall have caused Buyer's designees to be appointed to Company's Board
of Directors pursuant to Section 1.3, tail coverage lasting for six years for
each of the policies of directors' and officers' liability insurance maintained
by
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Company with respect to claims arising from facts, circumstances, occurrences or
events that occurred, or will occur, on or before such date; provided, however,
that Company will not pay more than $743,000 for such insurance.
Section 5.21 BROKERS; EXPENSES. Except for Imperial Capital, LLC
("COMPANY'S FAIRNESS OPINION ADVISOR"), whose fees shall be paid by Company, no
agent, broker, finder, investment banker or other firm or Person is or will be
entitled to any broker's or finder's fee or other similar commission or fee in
connection with the Transactions based upon arrangements made by or on behalf of
Company. Company has provided to Buyer a good faith estimate and description of
the expenses of Company and its Subsidiaries that Company expects to incur or
has incurred in connection with the Transactions.
Section 5.22 BOARD APPROVAL. The Board of Directors of Company, by
resolutions duly adopted by unanimous vote of those voting at a meeting duly
called and held and not subsequently rescinded or modified in any way (the
"COMPANY BOARD APPROVAL"), has duly (i) determined that this Agreement and the
Transactions (including the Offer, the Merger and the Related Option) are
advisable, fair to and in the best interests of Company and its stockholders,
(ii) approved and adopted this Agreement, the Related Agreement and the
Transactions (including the Offer, the Merger and the Related Option), (iii)
resolved to recommend that the shareholders of Company accept the Offer, tender
their shares of Company Common Stock pursuant to the Offer and approve and adopt
this Agreement and the Merger, (iv) consented to the inclusion of this Company
Board Approval in the Offer Documents, the Schedule 14D-9 and, if applicable,
the Proxy Statement, and (v) directed that, if applicable, this Agreement and
the Merger be submitted for consideration by Company's stockholders at the
Special Meeting. The Company Board Approval constitutes approval of this
Agreement and the Transactions (including the Offer, the Merger and the Related
Option) for purposes of Section 203 of the Delaware Law so that consummation of
the Transactions (including the Offer, the Merger and the Related Option) will
not cause Buyer or any of its Affiliates to become an interested stockholder of
Company for purposes of Section 203 of the Delaware Law. To the knowledge of
Company, except for Section 203 of the Delaware Law (the restriction on business
combinations of which has been rendered inapplicable), no state takeover statute
is applicable to the Transactions (including the Offer, the Merger and the
Related Option). The Company Board Approval constitutes approval of this
Agreement and the Transactions (including the Offer, the Merger and the Related
Option) for purposes of Article 11 of the certificate of incorporation, as
amended, of Company (and of any similar provision of the certificate of
incorporation, by-laws or other governing documents of any of Company's
Affiliates) so that neither the consummation of the Transactions (including the
Offer, the Merger and the Related Option), nor any other presently contemplated
transaction or Business Combination (as defined in such Article 11) involving
Buyer or any of its Affiliates, on the one hand, and Company or any of its
Affiliates, on the other hand, will cause Buyer or any of its Affiliates to
become an interested stockholder of Company pursuant to such Article 11 (or such
other similar provision).
Section 5.23 OPINION OF COMPANY'S FAIRNESS OPINION ADVISOR. Company has
received the opinion ("COMPANY'S FAIRNESS OPINION") of Company's Fairness
Opinion Advisor, dated the date of this Agreement, to the effect that, as of
such date, the Merger and the Offer, individually and collectively, are fair to
the holders of Company Common Stock from a financial point of view, a copy of
which opinion has been provided to Buyer. Company has been
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authorized by Company's Fairness Opinion Advisor to permit the inclusion of
Company's Fairness Opinion (and references thereto) in the Offer Documents, the
Schedule 14D-9 and, if applicable, the Proxy Statement.
Section 5.24 INVESTMENT COMPANY. None of Company and its Affiliates is, or
is controlled by, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Company that, except as disclosed in the
Buyer Disclosure Schedule which has been delivered to Company prior to the
execution of this Agreement (the "BUYER DISCLOSURE SCHEDULE"):
Section 6.1 ORGANIZATION AND QUALIFICATION. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Buyer has the requisite corporate power and authority to carry on
its business as it is now being conducted and is duly qualified or licensed to
do business, and, if applicable, is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification or licensing necessary, except where the
failure to be so qualified, licensed or in good standing, or to have such power
and authority, when taken together with all other such failures would not have a
Buyer Material Adverse Effect.
Section 6.2 AUTHORITY RELATIVE TO THIS AGREEMENT AND THE TRANSACTIONS.
Buyer has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions to which it is a party. The execution and delivery of this
Agreement by Buyer, and the consummation by Buyer of the Transactions, have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Buyer are necessary to authorize the
execution and delivery of this Agreement or to consummate the Transactions other
than, with respect to the Merger, the filing and recordation of appropriate
merger documents as required by the Delaware Law. This Agreement has been duly
and validly executed and delivered by Buyer and, assuming the due authorization,
execution and delivery hereof by the other parties hereto, constitutes a legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms.
Section 6.3 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Buyer does not,
and the performance of this Agreement and consummation of the Transactions by
Buyer will not (i) conflict with or violate the certificate of incorporation,
by-laws or other governing documents of Buyer, as applicable, (ii) assuming the
consents, approvals, authorizations and waivers specified in Section 5.4(b) have
been received and the waiting periods referred to therein have expired, and any
condition precedent to such consent, approval, authorization or waiver has been
satisfied, conflict with or violate any Laws applicable to Buyer or its
Subsidiaries or by which any property or asset of Buyer or any of its
Subsidiaries is bound or affected, or (iii) result in any
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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 right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien or other encumbrance on any property or asset of Buyer or any
of its Subsidiaries pursuant to, any note, bond, mortgage, indenture or credit
agreement, or, to Buyer's knowledge as of the date of this Agreement, any other
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Buyer or any of its Subsidiaries is a party or by which
Buyer or any of its Subsidiaries, or any property or asset of Buyer or any of
its Subsidiaries, is bound or affected, except in the case of clauses (ii) or
(iii) for any such conflicts, violations, breaches, defaults or other
occurrences of the type referred to above which would not have a Buyer Material
Adverse Effect.
(b) The execution and delivery of this Agreement by Buyer does not,
and the performance of this Agreement by Buyer will not, require any consent,
approval, authorization, waiver or permit of, or filing with or notification to,
any Governmental Entity, except for applicable requirements of the Exchange Act,
the Securities Act, Blue Sky Laws, the HSR Act, such filings, filings,
approvals, consents and waivers as may be required under the Merger Control
Laws, filing and recordation of the Certificate of Merger as required by
Delaware Law, and filings required by the rules of the American Stock Exchange
or any other stock exchange or market, and except where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not have a Buyer Material Adverse Effect.
Section 6.4 LITIGATION. As of the date hereof, there is no civil, criminal
or administrative suit, action or proceeding pending or, to the knowledge of
Buyer, threatened against or affecting Buyer or any of its Subsidiaries that, if
adversely determined against Buyer or any of its Subsidiaries, would materially
impair or delay the parties' ability to consummate the Transactions.
Section 6.5 BROKERS. No agent, broker, finder, investment banker or other
firm or Person is or will be entitled to any broker's or finder's fee or other
similar commission or fee in connection with the Transactions based upon
arrangements made by or on behalf of Buyer.
Section 6.6 FINANCING. Buyer has sufficient funds to pay the liquidated
damages as provided by Section 10.6. Buyer will have, prior to the expiration of
the Offer or the Merger, as applicable, sufficient funds to consummate the
Transactions, including the payment in full of the Offer Price and/or the Merger
Consideration for all shares of Company Common Stock validly tendered in the
Offer or outstanding at the Effective Time.
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER
Section 7.1 CONDUCT OF COMPANY PENDING THE MERGER.
(a) From and after the date hereof until the date on which Company
shall have caused Buyer's designees to be appointed to Company's Board of
Directors pursuant to Section 1.3, except as contemplated by this Agreement or
unless Buyer shall otherwise agree in writing, Company covenants and agrees that
it shall, and shall cause its Subsidiaries to, (i) carry on their
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respective businesses in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted and, except as provided below, use
commercially reasonable efforts to conduct their businesses in a manner
consistent with the budgets and plans heretofore made available to Buyer, (ii)
use commercially reasonable efforts to preserve intact their present business
organizations, keep available the services of their employees and consultants
and preserve their relationships and goodwill with customers, suppliers,
licensors, licensees, distributors, investors and others having business
dealings with them, and (iii) use commercially reasonable efforts to protect the
Intellectual Property Rights to the end that its and its Subsidiaries' goodwill
and on-going businesses shall not be impaired in any material respect as of the
Closing Date. Without limiting the generality of the foregoing, except as
expressly contemplated by this Agreement or as set forth on EXHIBIT 7.1 hereto
or unless Buyer shall otherwise agree in writing, prior to the date on which
Company shall have caused Buyer's designees to be appointed to Company's Board
of Directors pursuant to Section 1.3, Company shall not and shall not permit its
Subsidiaries to:
(i) Declare, set aside, or pay any dividends on, or make any
other distributions (including partnership distributions) in respect of, any of
its capital stock or other equity interests, other than dividends and
distributions by any direct or indirect Subsidiary of Company to its parent;
split, combine or reclassify any of its capital stock or other equity interests
or, other than pursuant to the exercise or conversion of Company Stock Options,
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock; or purchase, redeem or
otherwise acquire, other than pursuant to the exercise or conversion of Company
Stock Options, any shares of capital stock or other equity interests of Company
or any of its Subsidiaries or any other equity securities thereof or any rights,
warrants or options to acquire any such shares or other securities other than
purchases, redemptions or acquisitions of equity securities of wholly owned
Subsidiaries of Company or rights, warrants or options to acquire such
securities.
(ii) Grant, award, modify or enter into any compensation or
change of control arrangement with any employee of Company or any of its
Subsidiaries.
(iii) Modify or enter into any employment, consulting or other
service agreement with any Person or otherwise hire any new employees,
consultants or other agents; PROVIDED, HOWEVER, that Company may, within 15 days
of the date hereof, enter into (A) a Transition Services and Employment
Agreement with Stephen M. Bess, (B) a Transition Services and Employment
Agreement with Richard K. Brock, and (C) a Transition Services, Employment and
Consulting Agreement with Susan C. Santo, in each case in the form attached
hereto as EXHIBIT 7.1(A)(III)(A), EXHIBIT 7.1(A)(III)(B), and EXHIBIT
7.1(A)(III)(C), respectively.
(iv) Except for issuances of capital stock or other equity
interests of a Subsidiary of Company to Company or a wholly owned Subsidiary of
Company, issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of Company's or any of its Subsidiaries' capital stock or other equity
interests, including any Company Stock Options, any other voting securities of
Company or its Subsidiaries or any securities convertible into, or any rights,
warrants or options to acquire, any such shares or voting securities (other than
the issuance of Company Common Stock upon the exercise of Company Stock Options)
or amend the terms of any such securities, rights, warrants or options or take
any action to accelerate the
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vesting thereof (other than any amendments in connection with the acceleration
of vesting of currently outstanding Company Stock Options or necessary to enable
Company to pay off all outstanding Company Stock Options on or before the
Effective Date).
(v) Amend the certificate of incorporation, by-laws or other
governing documents of Company or any of its Subsidiaries.
(vi) Acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets or equity interests
of, or by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof, or any
assets that are material, individually or in the aggregate, to Company or any of
its Subsidiaries.
(vii) Subject to a Lien or other encumbrance or sell, lease,
license or otherwise dispose of any of its material properties or assets or any
Intellectual Property Rights, except in the ordinary course of business
consistent with past practices and except transactions between a wholly owned
Subsidiary of Company and Company or another wholly owned Subsidiary of Company,
or adopt a plan of complete or partial liquidation.
(viii) Incur or modify any indebtedness for borrowed money or
the deferred purchase price of any property or services (excluding trade
payables and other accrued current liabilities arising in the ordinary course of
business) or guarantee any such indebtedness of another Person; issue or sell
any debt securities of Company or any of its Subsidiaries; guarantee any debt
securities of another Person (other than indebtedness to, guarantees of, or
issuances or sales to Company or a wholly owned Subsidiary of Company); enter
into any "keep well" or other agreement to maintain any financial condition of
another Person; or enter into any capital lease obligations.
(ix) Make any loans, advances or capital contributions to, or
investments in, any other Person, other than to Company or any direct or
indirect Subsidiary of Company, or, except in an amount or amounts not to exceed
$300,000 in the aggregate, settle or compromise any material claims or
litigation.
(x) Except in the ordinary course of business in an amount or
amounts not to exceed $50,000 in the aggregate, make any capital expenditures,
whether or not pursuant to plan.
(xi) Take any action that would cause any of Company's
representations and warranties herein to become untrue in any material respect.
(xii) Authorize, or commit or agree to take, any of the
foregoing actions.
(b) Company shall promptly provide Buyer with copies of all filings
made by it or its Affiliates with any Governmental Entity in connection with
this Agreement and the Transactions contemplated hereby.
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(c) Company shall, before filing a material amended Tax return,
changing any material method of Tax accounting or settling or compromising any
material Tax litigation, Tax claim, income Tax or other Tax liability of Company
or any of its Affiliates, consult with Buyer and its advisors as to the
positions and elections that will be taken or made with respect to such matter
and shall not enter into any such settlement or compromise without the consent
of Buyer.
Section 7.2 CONDUCT OF COMPANY'S AFFILIATES (EXCLUDING ITS SUBSIDIARIES)
PENDING THE MERGER. From and after the date hereof until the date on which
Company shall have caused Buyer's designees to be appointed to Company's Board
of Directors pursuant to Section 1.3, Company shall cause its Affiliates
(excluding its Subsidiaries) to (a) carry on their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted, (b) other than the repurchase of units to the extent
permitted by any settlement of the Koch Action, refrain from acquiring or
agreeing to acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets or equity interests of, or by any other
manner, any other Person or division thereof, or any assets that are material,
individually or in the aggregate, to such Affiliate, (c) refrain from making any
capital expenditures other than in connection with the repair, maintenance or
improvement of currently held assets, (d) only for those Affiliates whose
governing documents permit or are currently being amended (subject to court
approval in the Koch Action) to permit reinvestment of proceeds into the
purchase of additional equipment, refrain from declaring, setting aside or
making any distributions in respect of its equity interests except in the
ordinary course consistent with past practice, and (e) refrain from adopting any
shareholder rights plan or similar plan or arrangement. Notwithstanding anything
in this Agreement to the contrary, in no event shall Company be required to take
any action to cause any of its Affiliates (other than its Subsidiaries) to take
any action or refrain from taking any action solely to the extent that the
taking of such action by Company would violate any fiduciary duties under
applicable Law or the governing documents of such Affiliate owed by Company as a
manager or general partner of such Affiliate.
Section 7.3 SPECIAL MEETING.
(a) If required by applicable Law in order to consummate the Merger,
Company shall take all actions necessary, in accordance with applicable Law and
its certificate of incorporation and by-laws, to convene a special meeting of
its stockholders (the "SPECIAL MEETING") as promptly as reasonably practicable
following the date on which Buyer completes the purchase of the shares of
Company Common Stock pursuant to the Offer (the "OFFER COMPLETION DATE"), for
the purpose of considering and taking action upon the Merger and this Agreement.
Subject to Section 8.8(b), Company's Board of Directors shall recommend approval
of the Merger and this Agreement and shall take all lawful action to solicit and
obtain such approval.
(b) If Buyer shall acquire at least 90% of the outstanding shares of
Company Common Stock, pursuant to the Offer or otherwise, the parties agree,
subject to satisfaction or (to the extent permitted hereunder) waiver of all
conditions to the Merger, to take all necessary and appropriate action to cause
the Merger to be effective as soon as reasonably practicable after the Offer
Completion Date without the Special Meeting.
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Section 7.4 FURTHER ACTION; CONSENTS; FILINGS.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use commercially reasonable efforts to take, or cause to be
taken, all appropriate actions and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective as promptly as practicable the Transactions and to cooperate
with each other in connection with the foregoing. Without limiting the
generality of the foregoing, each of the parties agrees to take all appropriate
actions to obtain from Governmental Entities any Governmental Authorizations
required to be obtained or made by Buyer, Company or any of their Subsidiaries
in connection with the authorization, execution and delivery of this Agreement
and the consummation of the Transactions, and to make all necessary filings, and
thereafter make any other required submissions, that are required under (i) the
Exchange Act, the Securities Act or the Blue Sky Laws, (ii) the HSR Act or any
other Merger Control Laws, and (iii) any other applicable Law. The parties
hereto shall cooperate with each other in connection with the making of all such
filings, including by providing copies of all such documents to the nonfiling
party and its advisors prior to filing and, if requested, by accepting all
reasonable additions, deletions or changes suggested by the nonfiling party or
its advisors in connection therewith.
(b) Each of Buyer and Company shall file, as soon as practicable
after the commencement of the Offer, notifications under the HSR Act. Buyer and
Company shall, and shall cause their Subsidiaries who are required to do so to,
file any other applications or notices required under other Merger Control Laws,
respond as promptly as practicable to all inquiries or requests that may be made
pursuant to any Merger Control Laws for additional information or documentation,
and respond as promptly as practicable to all inquiries and requests received
from any Governmental Entity in connection with antitrust matters or matters
relating to Permits. Each of Buyer and Company, to the extent applicable,
further agrees to file contemporaneously with the filing of the applications any
requests for waivers of applicable Governmental Authorizations as may be
available and to expeditiously prosecute such waiver requests and diligently
submit any additional information or amendments for which any Governmental
Entity may ask with respect to such waiver requests. The parties shall cooperate
with each other in connection with the making of all such filings or responses,
including providing copies of all such documents to the other parties and its
advisors prior to filing or responding.
(c) Prior to the date on which Company shall have caused Buyer's
designees to be appointed to Company's Board of Directors pursuant to Section
1.3, Company shall, and shall cause its Subsidiaries to, use commercially
reasonable efforts to assist Buyer in its integration of the acquisition of
Company, including the prompt and orderly transition of employees, customers and
suppliers of Company's and its Affiliates' businesses and providing assistance
to Buyer in connection with the integration of Company's and its Affiliates'
lines of business and services with those of Buyer.
Section 7.5 ESCROW. Buyer and Company have entered into an Escrow Agreement, in
the form attached as EXHIBIT 7.5 hereto (the "ESCROW AGREEMENT"), with Bank of
San Francisco (the "ESCROW AGENT"). Buyer has delivered to the Escrow Agent cash
in the amount of $1,200,000, and Company has delivered to the Escrow Agent cash
in the amount of $1,700,000, each of which the Escrow Agent will hold, pursuant
to the Escrow Agreement, in an interest-
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bearing account with an institution the deposits in which are insured by an
agency of the United States or, upon joint instructions of Buyer and Company,
invested in securities issued by the United States or any department or agency
thereof. Buyer and Company acknowledge and agree that the Escrow Agent will
release and pay over such amounts, including the proceeds and income derived
(directly or indirectly) therefrom, to Buyer and/or Company solely as provided
in the Escrow Agreement.
Section 7.6 COMPANY STOCK OPTIONS. In connection with the Transactions:
(a) At the Offer Conditions Satisfaction Date, without any action on
the part of the holder thereof, each unvested Company Stock Option which remains
as of such time unexercised in whole or in part shall be automatically and
immediately vested and fully exercisable.
(b) In the event any holder of any Company Stock Options exercises
any Company Stock Options or surrenders any Company Stock Options to Company
(which may take the form of a letter to Company requesting a cash out of such
holder's Company Stock Options pursuant to this Section 7.6(b)), in either case
on or after the Offer Conditions Satisfaction Date and before the Effective
Time, Company shall pay to such holder cash in an amount equal to the excess, if
any, of the Offer Price over the exercise price of such Company Stock Option.
(c) The Board of Directors of Company (or a duly appointed committee
thereof responsible for the administration of the Company Stock Option Plans in
accordance with the terms of each such plan) shall, prior to or as of the Offer
Conditions Satisfaction Date, take all necessary actions, pursuant to and in
accordance with the terms of the Company Stock Option Plans and the instruments
evidencing the Company Stock Options, to provide for the accelerated vesting
described in Section 7.6(a).
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) From the date hereof until the Closing or the earlier
termination of this Agreement in accordance with its terms, Company shall, and
shall cause its Affiliates to, afford to Buyer and Buyer's accountants, counsel
and other representatives full and reasonable access during normal business
hours (and at such other times as the parties may mutually agree) to their
properties, books, contracts, commitments, records and personnel and, during
such period, furnish promptly to Buyer (a) a copy of each report, schedule and
other document filed or received by them pursuant to the requirements of the
Exchange Act and the Securities Act, and (b) all other information concerning
their business, properties and personnel as Buyer may reasonably request,
including information regarding customers, suppliers and personnel and the
opportunity to meet with such Persons to discuss their business and relations
with Company or its Affiliates. Company shall, and shall cause its Affiliates
to, permit Buyer full access to the Intellectual Property Rights. Buyer shall
conduct its review in a manner reasonably calculated
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not to disrupt Company's or its Affiliates' business and operations. No
investigation pursuant to this Section 8.1 shall limit any representation or
warranty of Company.
(b) Buyer shall hold, and shall cause its employees, agents and
representatives to hold, in confidence all "Confidential Information" in
accordance with the terms of the Confidentiality Agreement, dated November 23,
1999, between Buyer and Imperial Capital, LLC (the "CONFIDENTIALITY AGREEMENT"),
which shall remain in full force and effect in accordance with the terms
thereof, including in the event of any termination of this Agreement.
(c) Company shall hold, and shall cause its employees, agents and
representatives to hold, in confidence, unless compelled to disclose by
non-appealable judicial or administrative process or, in the opinion of its
counsel, by applicable Law, all documents and information concerning Buyer or
any of its Affiliates furnished to Company or any of its Affiliates in
connection with the Transactions, except to the extent that such information can
be shown to have been (i) previously known to Company, (ii) in the public domain
through no fault of Company, or (iii) later lawfully acquired by Company from
other sources not under a confidentiality obligation to Buyer or any of its
Affiliates.
Section 8.2 PROXY STATEMENT.
(a) If required by applicable Law in order to consummate the Merger,
Company shall prepare a proxy statement satisfying all requirements of the
Exchange Act for the purposes of holding the Special Meeting. Such proxy
statement in the form mailed by Company to its stockholders, together with any
and all amendments or supplements thereto, are herein referred to as the "PROXY
STATEMENT."
(b) If applicable, Buyer will furnish Company with such information
concerning it and its Subsidiaries as is necessary in order to cause the Proxy
Statement, insofar as it relates to Buyer and its Subsidiaries, to comply with
applicable Law. Buyer agrees to promptly advise Company if, at any time prior to
the Special Meeting, any information provided by it in the Proxy Statement is or
becomes incorrect or incomplete in any material respect and to provide Company
with the information needed to correct such inaccuracy or omission. Buyer will
furnish Company with such supplemental information as may be necessary in order
to cause the Proxy Statement, insofar as it relates to Buyer and its
Subsidiaries, to comply with applicable Law after the mailing thereof to the
stockholders of Company.
(c) If applicable, Company will include in the Proxy Statement such
information concerning Company and its Subsidiaries as is necessary in order to
cause such Proxy Statement, insofar as it relates to Company and its
Subsidiaries, to comply with applicable Law. If, at any time prior to the
Special Meeting, any information included or incorporated by reference by
Company in the Proxy Statement is or becomes incorrect or incomplete in any
material respect, Company shall correct such inaccuracy or omission. Company
will include or incorporate such supplemental information as may be necessary in
order to cause the Proxy Statement, insofar as it relates to Company and its
Subsidiaries, to comply with applicable Law after the mailing thereof to the
stockholders of Company.
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(d) If required by applicable Law in order to consummate the Merger,
Company shall (i) promptly file with the SEC, use commercially reasonable
efforts to have cleared with the SEC and thereafter mail to its stockholders, as
promptly as practicable after the Offer Completion Date, the Proxy Statement and
all other proxy materials necessary or appropriate for the Special Meeting, (ii)
use commercially reasonable efforts to obtain the necessary approvals by its
stockholders of this Agreement and the Merger, and (iii) otherwise comply with
all legal requirements applicable to stockholders meetings.
Section 8.3 RELATED AGREEMENT. Simultaneously with the execution and
delivery of this Agreement and as material consideration for the execution and
delivery of this Agreement by Buyer, Robert Tidball, Doug Goodrich, Steel
Partners II, L.P., Steel Partners L.L.C. and Warren G. Lichtenstein are entering
into the Related Agreement pursuant to which they, among other things, agree to
tender their shares of Company Common Stock pursuant to the Offer, grant to
Buyer the Related Option, and vote their shares of Company Common Stock in favor
of the Merger.
Section 8.4 PUBLIC ANNOUNCEMENTS. On or before the Closing Date, neither
Buyer nor Company shall (nor shall they permit any of their respective
Affiliates to), without prior consultation with the other parties and such other
parties' review of and consent to any public announcement concerning the
Transactions, issue any press release or make any public announcement with
respect to Transactions during such period, and Buyer and Company shall, to the
extent practicable, allow the other parties reasonable time to review and
comment on such release or announcement in advance of its issuance and use
reasonable efforts in good faith to reflect the reasonable and good faith
comments of such other party; provided, however, that no party shall be
prevented from making any disclosure required by Law at the time so required
because of any delay on the part of another party. The parties intend that the
initial announcement of the terms of the Transactions shall be made by a joint
press release of Buyer and Company.
Section 8.5 INDEMNIFICATION OF COMPANY'S DIRECTORS AND OFFICERS. Buyer
agrees that all rights to indemnification existing as of the date hereof in
favor of any director, officer, employee or agent of Company or any of its
Subsidiaries ("INDEMNIFIED PARTIES") as provided by Law in their respective
certificates of incorporation, by-laws or other governing documents or in
indemnification agreements with Company or any of its Subsidiaries, or otherwise
in effect as of the date hereof, shall survive the Offer and the Merger and
shall continue in full force and effect. Without limiting the generality of the
foregoing, in the event any Indemnified Party is or becomes involved in any
capacity in any action, proceeding or investigation in connection with any
matter, including the Transactions, occurring prior to or at the Effective Time,
the Surviving Corporation shall, to the extent required by any such right to
indemnification existing at Law, in Company's or any of its Subsidiaries'
certificates of incorporation, by-laws or other governing documents or in any
such indemnification agreements, pay as incurred such Indemnified Party's legal
and other expenses (including the cost of any investigation and preparation)
incurred in connection therewith.
Section 8.6 NOTICE OF BREACHES AND CERTAIN EVENTS.
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(a) Company shall give prompt notice to Buyer, and Buyer shall give
prompt notice to Company, of (i) any representation or warranty made by it
contained in this Agreement which, to its knowledge, has become untrue or
inaccurate in any material respect, or (ii) the failure by it, to its knowledge,
to comply with or satisfy in any material respect any covenant, condition, or
agreement to be complied with or satisfied by it under this Agreement; PROVIDED,
HOWEVER, that such notification shall not excuse or otherwise affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
(b) Company shall give prompt notice to Buyer, and Buyer shall give
prompt notice to Company, of (i) any notice or other communication from any
Person alleging that the consent of such Person is or may be required in
connection with any of the Transactions, (ii) any notice or other communication
from any Governmental Entity in connection with this Agreement or the
Transactions, (iii) any actions, suits, claims, investigations, orders, decrees,
complaints or proceedings commenced, or to its knowledge, threatened against,
relating to or involving or otherwise affecting Company, Buyer or any of their
respective Affiliates that relate to the consummation of the Transactions, and
(iv) any substantial damage to any material asset of Company or any of its
Affiliates.
(c) Buyer shall give prompt notice to Company of the occurrence, to
its knowledge, of any of the events described in clause (c)(ii), clause (d),
clause (e), clause (f), clause (g) or clause (i) of EXHIBIT 1.1 hereto;
PROVIDED, HOWEVER, that such notification shall not excuse or otherwise affect
the representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
Section 8.7 TRANSFER AND GAINS TAXES AND CERTAIN OTHER TAXES AND EXPENSES.
Buyer agrees that the Surviving Corporation will pay all real property transfer,
gains and other similar taxes and all documentary stamps, filing fees, recording
fees and sales and use taxes, if any, and any penalties or interest with respect
thereto, payable in connection with consummation of the Merger without any
offset, deduction, counterclaim or deferment of the payment of the Merger
Consideration.
Section 8.8 ACQUISITION PROPOSALS.
(a) Company agrees that it shall not nor shall any of its Affiliates
or any of its or its Affiliates' officers, directors, employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Affiliates), directly or indirectly, initiate,
solicit, induce, encourage or knowingly facilitate (including by way of
furnishing information) any inquiries or the making of any proposal or offer
with respect to a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving, or any purchase or sale of all or any significant portion
of the assets of Company or more than 5% of the Company Common Stock or the
capital stock or other equity interests of any of its Affiliates (other than any
repurchases of limited partnership interests of Affiliates as may be required
under any settlement of the Koch Action) or the assets any of its Subsidiaries
(any such proposal or offer (other than a proposal or offer made by Buyer) being
hereinafter referred to as an "ACQUISITION PROPOSAL"). Company further agrees
that neither it nor any of its Affiliates nor any of its or its Affiliates'
officers,
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directors, employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Affiliates) shall,
directly or indirectly, have any discussion with or provide any confidential
information or data to any Person relating to an Acquisition Proposal, or engage
in any negotiations concerning an Acquisition Proposal, or knowingly facilitate
any effort or attempt to make or implement an Acquisition Proposal or accept an
Acquisition Proposal. Notwithstanding the foregoing, (A) in the event that any
of Company's Affiliates (excluding its Subsidiaries) shall be requested to
provide information to any of such Affiliate's partners or members (or any
assignee of any of such partners or members) who requests such information in
accordance with the provisions of such Affiliate's governing documents or as
provided by Law, such Affiliate shall be permitted to provide to such Person the
information requested if and only to the extent that (i) such Affiliate, after
consultation with and receipt of advice from Company's outside legal counsel,
shall have made a good faith determination that the requested information is
required to be so provided by Law or by such Affiliate's governing documents,
(ii) prior to providing any such information, Company notifies Buyer of such
request, and (iii) neither Company nor any of its Affiliates takes any other
actions prohibited by this Section 8.8(a), and (B) Company and its Board of
Directors shall be permitted (1) to comply with Rule 14e-2 promulgated under the
Exchange Act with regard to an Acquisition Proposal, and (2) in response to an
unsolicited bona fide written Acquisition Proposal by any Person, to engage in
any discussions or negotiations with, or provide any information to, any Person
in response to an unsolicited bona fide written Acquisition Proposal by any such
Person, if and only to the extent that (i) neither the Offer Completion Date nor
the Special Meeting shall have occurred, (ii) Company's Board of Directors, upon
the advice of Company's financial advisors and outside legal counsel, concludes
in good faith that such Acquisition Proposal could reasonably be expected to
result in a Superior Proposal and, after consultation with and receipt of advice
from Company's outside legal counsel, that the failure to take such action could
reasonably be deemed to constitute a breach of its fiduciary duties under
applicable Law, (iii) prior to providing any information or data to any Person
in connection with an Acquisition Proposal by any such Person, Company's Board
of Directors receives from such Person an executed confidentiality agreement on
terms substantially similar to those contained in the Confidentiality Agreement
(including the standstill provisions contained therein, unless Company shall
have amended the Confidentiality Agreement to modify any standstill provisions
therein to be no more restrictive of Buyer than such Person is restricted
pursuant to such confidentiality agreement), (iv) prior to providing any
information or data to any Person or entering into discussions or negotiations
with any Person, Company's Board of Directors notifies Buyer immediately upon
receipt thereof of such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or negotiations sought to be
initiated or continued with, any of its representatives indicating, in
connection with such notice, the name of such Person and the material terms and
conditions of any proposals or offers, and (v) Company's Board of Directors uses
its good faith efforts to minimize the costs and expenses to Company associated
with any such actions, so long as such cost-minimization efforts would not
prevent Company from carrying out its fiduciary duties under applicable Law.
Company agrees that it will keep Buyer informed, on a current basis, of the
status and terms of any Acquisition Proposals and the status of any such
discussions or negotiations. Company agrees that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any Persons conducted heretofore with respect to any Acquisition Proposal and
enforce the right to recover or cause to be destroyed all information regarding
Company or its Affiliates in
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the possession of such Persons and their respective Affiliates, representatives
and advisors. Company agrees that it will take the necessary steps to promptly
inform the individuals or entities referred to in the first sentence of this
Section 8.8(a) of the obligations undertaken in this Section 8.8(a) and that any
breach of the provisions of this Section 8.8(a) by any officer or director of
Company or its Affiliates or any investment banker, financial advisor, attorney,
accountant or other representative of Company or its Affiliates will be deemed a
breach by Company.
(b) Except as permitted in this Section 8.8(b), neither Company's
Board of Directors nor any committee thereof shall (i) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Buyer, or take
any action not explicitly permitted by this Agreement that would be inconsistent
with, the approval or recommendation by such Board of Directors or committee of
the Transactions, (ii) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal, or (iii) cause Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "ACQUISITION AGREEMENT") related to any Acquisition
Proposal. Notwithstanding the foregoing, in the event that, prior to the Offer
Completion Date, Company's Board of Directors, after consultation with and
receipt of advice from Company's financial advisors and outside legal counsel,
determines in good faith that an Acquisition Proposal constitutes a Superior
Proposal and that the failure to take such action could reasonably be deemed to
constitute a breach of its fiduciary duties under applicable Law, Company's
Board of Directors may (x) modify in any adverse manner or withdraw its approval
or recommendation of the Merger in connection with the Special Meeting, (y)
approve or recommend a Superior Proposal, and (z) if it so chooses, cause
Company to enter into an Acquisition Agreement with respect to such Superior
Proposal but, in each of the cases, only if (A) two days have elapsed following
Buyer's receipt of written notice from Company advising Buyer that the Board of
Directors of Company has received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal, identifying the Person making
such Superior Proposal, and advising Buyer that the Board of Directors of
Company has determined, upon the advice of Company's financial advisors and
outside legal counsel, that it will no longer recommend approval of the Merger,
(B) Company has paid the Termination Fee (plus the third-party fees and expenses
provided in Section 10.3(b)) to Buyer, and (C) Company has terminated this
Agreement in accordance with its terms. During the two-day period referred to in
clause (A) of the immediately preceding sentence, Buyer shall not enter into any
agreement with the Person making the Superior Proposal concerning an Acquisition
Proposal with regard to Company.
(c) During the period from the date of this Agreement until the
Effective Time or earlier termination of this Agreement, Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it or any of its Affiliates is a party (other than
any involving Buyer). During such period, Company agrees to enforce, to the
fullest extent permitted under applicable Law, the provisions of any such
agreement, including by obtaining injunctions to prevent any breaches of such
agreements or to enforce specifically the terms and provisions thereof in any
court of the United States or any state thereof having competent jurisdiction.
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(d) During the period from the date of this Agreement until the
Effective Time or earlier termination of this Agreement, Company shall not enter
into any shareholder rights or similar plan.
Section 8.9 CASH BALANCE. Without incurring any indebtedness, Company shall
have, on the Initial Expiration Date and on the Offer Conditions Satisfaction
Date, a minimum cash balance, when combined with any amounts deposited with the
Escrow Agent by Company pursuant to the Escrow Agreement, of not less than the
amount shown on EXHIBIT 8.9 hereto.
Section 8.10 SEVERANCE POLICY. Buyer shall maintain, with respect to each
of the employees listed on Exhibit 8.10 hereto, Company's severance policy as in
effect on the date hereof and as described in Exhibit 8.10 hereto, and shall
recognize all service of each such employee with Company at the levels set forth
on Exhibit 8.10 hereto for purposes of calculating applicable severance amounts
payable pursuant to the policy; provided, however, that Buyer shall have no
obligation to continue the vesting of any additional benefits for any employee
under such policy and shall have no obligation to extend the benefits of such
policy to any employee not listed on Exhibit 8.10 hereto. With respect to those
severance agreements listed on Schedule 5.5 hereto, from and after the Offer
Conditions Satisfaction Date, Buyer agrees to assume and be bound by the terms
of such agreements.
Section 8.11 HEALTH BENEFITS. From and after the Effective Time, to the
extent permitted by the sponsor or other issuer thereof, Buyer shall maintain,
without change (except as required pursuant to the terms thereof), with respect
to each officer or employee of Company, Company's currently existing policies of
group health insurance for the duration of the current policy year. Buyer shall,
not later than one month prior to the end of such policy year, commence a review
and evaluation of Company's group health insurance in light of projected
insurance costs, market conditions generally, the insurance benefits provided to
employees of Affiliates of Buyer and such other considerations as Buyer may
determine.
ARTICLE IX
CONDITIONS PRECEDENT
Section 9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) Buyer shall have purchased shares of Company Common Stock
pursuant to the Offer; provided that this condition shall be deemed to have been
satisfied with respect to the obligation of Buyer to effect the Merger if Buyer
fails to accept for payment, or to pay for, shares of Company Common Stock
pursuant to the Offer in violation of the terms of the Offer or this Agreement.
(b) If required by applicable Law in order to consummate the Merger,
this Agreement and the Merger shall have been approved and adopted by the
requisite vote of the holders of Company Common Stock at the Special Meeting in
the manner required by Law and
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the rules of the American Stock Exchange or any other stock exchange or market,
but only if Buyer shall have used its best efforts to satisfy such condition.
(c) The waiting period applicable to the consummation of the Merger
under the HSR Act and any other applicable Merger Control Laws shall have
expired or been terminated and any material consents from third parties listed
on EXHIBIT 9.1 hereto which are required to be received prior to the Closing
Date with respect to the Transactions shall have been received.
(d) The consummation of the Merger shall not be prohibited by any
provision of applicable Law or restrained, enjoined or prohibited by any order,
judgment, decree, injunction or ruling by a Governmental Entity of competent
jurisdiction.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of Company:
(a) By mutual written consent of Buyer and Company.
(b) By Buyer or Company if (i) any Governmental Entity of competent
jurisdiction shall have issued, enacted, entered, promulgated or enforced any
order, judgment, decree, injunction or ruling which, after commercially
reasonable efforts on the part of Buyer and Company to resist, resolve or lift,
permanently restrains, enjoins or otherwise prohibits the Merger and such order,
judgment, decree, injunction or ruling shall have become final and
nonappealable, or (ii) the purchase of shares of Company Common Stock pursuant
to the Offer shall not have been consummated on or before June 30, 2001,
provided that the right to terminate this Agreement under this Section
10.1(b)(ii) shall not be available to any party whose failure to perform any
material covenant or obligation under this Agreement has been the cause of or
resulted in the failure of the purchase of shares of Company Common Stock
pursuant to the Offer to occur on or before such date.
(c) By Buyer or Company if the Merger shall not have been
consummated on or before the first anniversary of the date of this Agreement,
provided that the right to terminate this Agreement under this Section 10.1(c)
shall not be available to any party whose failure to perform in any material
respect any covenant or obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date.
(d) By Buyer if the Board of Directors of Company, or any committee
thereof, shall (i) modify in any adverse manner or withdraw the Company Board
Approval or any part thereof (including by amending the Schedule 14D-9), (ii)
approve or recommend a Superior Proposal pursuant to Section 8.8(b), or (iii)
resolve to take any of the actions specified in clauses (i) or (ii) above.
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(e) By Company if Company shall enter into any Acquisition Agreement
with any Person concerning a Superior Proposal, but only if (i) Company's Board
of Directors, after consultation with and receipt of advice from Company's
financial advisors and outside legal counsel, determines in good faith that the
proposed Acquisition Agreement constitutes a Superior Proposal and that the
failure to enter into such Acquisition Agreement could reasonably be deemed to
constitute a breach of its fiduciary duties under applicable Law, and (ii) two
days have elapsed following Buyer's receipt of written notice from Company
advising Buyer that the Board of Directors of Company has received a Superior
Proposal, specifying the material terms and conditions of such Superior
Proposal, identifying the Person making such Superior Proposal, and advising
Buyer that the Board of Directors of Company has determined, upon the advice of
Company's financial advisors and outside legal counsel, that it will no longer
recommend approval of the Merger.
Section 10.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 10.1, this Agreement and the Related Agreement
shall forthwith terminate and there shall be no liability hereunder on the part
of any of Company, Buyer or their respective officers or directors; provided,
however, that Sections 5.21 and 6.5 (Brokers), the second to last sentence of
Section 8.1 (Confidentiality), Section 8.8 to the extent that the Termination
Fee is required to be paid, until such Termination Fee (plus the third-party
fees and expenses provided in Section 10.3(b)) is paid, this Section 10.2,
Section 10.3 (Fees and Expenses), 10.6 (Liquidated Damages), Section 11.6
(Governing Law) and 11.11 (Litigation) shall survive the termination and remain
in full force and effect; and, provided, further, that each party shall remain
liable for any breaches prior to the termination of this Agreement with respect
to such party's covenants hereunder and representations and warranties
hereunder.
Section 10.3 FEES AND EXPENSES.
(a) Whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, except as otherwise provided in this Section
10.3 or in Section 8.8 or Section 10.2.
(b) Buyer and Company agree that Company shall be obligated to pay
to Buyer the sum of $1,000,000 (the "TERMINATION FEE"), plus third-party fees
and expenses (including investment banking fees, financing fees, third-party due
diligence fees, accounting fees and legal fees) incurred by Buyer in connection
with this Agreement and the Transactions (which the parties agree shall be equal
to no more and no less than $500,000) solely as follows:
(i) If Buyer shall terminate this Agreement pursuant to
Section 10.1(b), provided that Buyer shall not be entitled to the Termination
Fee pursuant to this Section 10.3(b)(i) if the events or circumstances giving
rise to such termination right were beyond the control of Company and Company
used commercially reasonable efforts to attempt to cause such events or
circumstances to (A) not occur, or (B) cease to exist.
(ii) If Buyer shall terminate this Agreement pursuant to
Section 10.1(d).
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(iii) Upon any breach of the Related Agreement or any
determination by a court with jurisdiction thereover that the Related Agreement
is unenforceable, but only if the court challenge was brought by a party thereto
other than Buyer.
(iv) If Company shall terminate this Agreement pursuant to
Section 10.1(e).
(v) If Buyer shall terminate this Agreement and then, on or
before the first anniversary of the date hereof, Company enters into a
definitive purchase agreement, with an Alternative Price in excess of the Offer
Price, with any Person with whom Company entered into or otherwise initiated,
solicited or conducted any discussions or negotiations concerning an Acquisition
Proposal prior to the termination of this Agreement but after the date hereof;
PROVIDED, HOWEVER, that if such definitive purchase agreement is entered into
after the six-month anniversary of the date hereof, the parties to such
definitive purchase agreement must have closed the transactions contemplated
thereby, whether such closing occurs before or after the first anniversary of
the date hereof.
(c) The Termination Fee (plus the third-party fees and expenses
provided in Section 10.3(b)) shall be paid prior to, and shall be a
pre-condition to the effectiveness of, any termination of this Agreement by
Company pursuant to Section 10.1(e). Except as otherwise set forth in Section
10.3(b)(v), the Termination Fee (plus the third-party fees and expenses provided
in Section 10.3(b)) shall be paid within two Business Days following any
termination of this Agreement by Buyer pursuant to Section 10.1. All payments
under Section 10.3(b) shall be made by wire transfer of immediately available
funds to an account designated by Buyer.
Section 10.4 AMENDMENT. This Agreement may be amended by the parties hereto
at any time before or after approval hereof by the stockholders of Company, but,
after such approval, no amendment shall be made which under applicable Law would
require approval of Company's stockholders without the further approval of such
stockholders; provided, however, that from and after the date on which Company
shall have caused Buyer's designees to be appointed to Company's Board of
Directors pursuant to Section 1.3 until the Effective Time, if there is no
Continuing Director, then this Agreement cannot be amended except as required by
Law. This Agreement may not be amended except by an instrument in writing signed
on behalf of each of the parties hereto.
Section 10.5 WAIVER. At any time prior to the Closing, the parties hereto
may, to the extent permitted by applicable Law, (a) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(b) waive any inaccuracies in the representations and warranties by any other
party contained herein or in any documents delivered by any other party pursuant
hereto, and (c) waive compliance with any of the agreements of any other party
or with any conditions to its own obligations contained herein; provided,
however, that from and after the date on which Company shall have caused Buyer's
designees to be appointed to Company's Board of Directors pursuant to Section
1.3 until the Effective Time, if there is no Continuing Director, then Company
can neither waive nor extend the aforementioned items or performances of the
aforementioned actions except as required by Law. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
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Section 10.6 LIQUIDATED DAMAGES. In the event of a breach of this Agreement
by Buyer which results in the failure of the parties to consummate the
Transactions on or before June 30, 2001, (a) Buyer shall pay to Company, as
liquidated damages, $1,000,000, and (b) neither Buyer nor any of its Affiliates
shall, for a period of twelve months following such breach, unless such action
involves an offer to purchase shares of Company Common Stock at an Alternative
Price in excess of the Offer Price, (i) acquire, publicly offer to acquire or
agree to acquire, directly or indirectly, by purchase or otherwise, any voting
securities or direct or indirect rights to acquire any voting securities of
Company or any of its Affiliates or, except in the ordinary course of business,
any assets of Company or any of its Affiliates, (ii) make or in any way
participate in, directly or indirectly, any solicitation of proxies (as such
terms are used in the rules of the Securities and Exchange Commission) or
consents to vote, or seek to advise or influence any Person or entity with
respect to the voting of, any voting securities of Company, (iii) make any
public announcement with respect to, or submit a proposal for, or offer of (with
or without conditions) any merger, consolidation, business combination, tender
or exchange offer, restructuring, recapitalization or other extraordinary
transaction involving Company or any of its securities or material assets, (iv)
form, join or in any way participate in any "group" (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) in connection with
any voting securities of Company, (v) otherwise act, alone or in concert with
others, to seek to control or influence the management, Board or Directors or
policies of Company, or (vi) have any discussions or enter into any
arrangements, understandings or agreements (whether written or oral) with, or
advise, assist or encourage, any other Person in connection with any of the
foregoing.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations and warranties in this Agreement shall not survive the date
on which Company shall have caused Buyer's designees to be appointed to
Company's Board of Directors pursuant to Section 1.3.
Section 11.2 NOTICES. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by facsimile (with
confirmation of receipt), or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to Company:
PLM International, Inc.
One Market
Steuart Street Tower, Suite 800
San Francisco, California 94105
Attention: Stephen Bess
Facsimile: (415) 905-7256
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With copies to:
Greene Radovsky Malone & Share LLP
Four Embarcadero Center, Suite 400
San Francisco, California 94111
Attention: Joseph S. Radovsky
Facsimile: (415) 777-4961
If to Buyer:
MILPI Acquisition Corp.
200 Nyala Farms Road
Westport, Connecticut 06880
Attention: James A. Coyne
Facsimile: (203) 341-9988
With copies to:
Nixon Peabody LLP
437 Madison Avenue
New York, New York 10022
Attention: Richard F. Langan, Jr.
Facsimile: (212) 940-3111
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section 11.2.
Section 11.3 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. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order 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 right or remedy to which such party may be entitled under
this Agreement, at Law or in equity.
Section 11.4 ENTIRE AGREEMENT. This Agreement (including the documents and
instruments referred to herein), together with the Confidentiality Agreement and
the Related Agreement, constitutes the entire agreement and supersedes all other
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof.
Section 11.5 ASSIGNMENTS; PARTIES IN INTEREST. Neither this Agreement nor
any of the rights, interests or obligations hereunder may be assigned by any of
the parties hereto (whether by operation of Law or otherwise) without the prior
written consent of the other parties. Subject to the foregoing, this Agreement
shall be binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to or shall confer
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upon any Person not a party hereto any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, including to confer third party
beneficiary rights, except for the provisions of Article IV and Sections 4.1(c),
7.6, 8.10 and 8.11.
Section 11.6 GOVERNING LAW. This Agreement shall be governed in all
respects by the Laws of the State of Delaware (without giving effect to the
provisions thereof relating to conflicts of Law). The exclusive venue for the
adjudication of any dispute or proceeding arising out of this Agreement or the
performance hereof shall be the courts located in Dover County, Delaware, and
the parties hereto and their Affiliates each consents to and hereby submits to
the jurisdiction of any court located in Dover County, Delaware or Federal
courts in Delaware.
Section 11.7 HEADINGS; DISCLOSURE. 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. Any disclosure by
Company or Buyer in any portion of its respective Disclosure Schedule shall be
deemed disclosure in each other portion of such Disclosure Schedule to which
such disclosure reasonably relates on its face.
Section 11.8 CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION.
(a) As used in this Agreement:
"ACQUISITION AGREEMENT" has the meaning set forth in Section 8.8(b).
"ACQUISITION PROPOSAL" has the meaning set forth in Section 8.8(a).
"AFFILIATE" as applied to any Person, shall mean any other Person directly
or indirectly controlling, controlled by, or under common control with that
Person, including, with respect to Company, each of the limited liability
companies, limited partnerships and other investment programs for which Company
or any of its Subsidiaries serves, directly or indirectly, as a manager or
general partner or in any similar capacity (including Professional Lease
Management Income Fund I, LLC and the PLM Equipment Growth Fund series of
investment partnerships); for 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.
"AGREEMENT" has the meaning set forth in the preamble to this Agreement.
"ALTERNATIVE PRICE" shall mean the price per share (after giving effect to
any stock splits, reverse stock splits, combinations, stock dividends,
recapitalizations, redenominations of share capital and similar events declared,
paid or made after the date hereof) paid or offered or agreed to be paid. In
calculating the Alternative Price, (i) if any portion of the consideration is to
be paid in the form of securities or assets other than cash, the value of such
securities or assets shall be determined based upon fair market value on the day
prior to consummation of the transaction, (ii) amounts paid into escrow and
contingent payments shall be included as part of the consideration, and (iii)
the consideration shall also include the aggregate amount of (A) dividends or
other distributions declared by Company after the date hereof other than normal
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recurring dividends in amounts not materially greater than currently paid, and
(B) amounts paid by Company to purchase any securities of Company after the date
hereof.
"BENEFIT PLANS" has the meaning set forth in Section 5.8(a).
"BLUE SKY LAWS" has the meaning set forth in Section 5.4(b).
"BUSINESS DAY" shall mean any day other than Saturday, Sunday or any other
day on which commercial banks in New York, New York are authorized or required
by law to close.
"BUYER" has the meaning set forth in the preamble to this Agreement.
"BUYER DISCLOSURE SCHEDULE" has the meaning set forth in Article VI,
Introduction.
"BUYER MATERIAL ADVERSE EFFECT" shall mean any circumstance, event or
occurrence or series of circumstances, events or occurrences which individually
or in the aggregate with all other circumstances, events or occurrences would
have a material adverse effect on Buyer's ability to consummate the Transactions
(including the Offer and the Merger).
"CERCLA" has the meaning set forth in Section 5.17.
"CERTIFICATE OF MERGER" has the meaning set forth in Section 2.1.
"CERTIFICATES" has the meaning set forth in Section 4.2.
"CLOSING" has the meaning set forth in Section 2.2.
"CLOSING DATE" has the meaning set forth in Section 2.2.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"COMPANY" has the meaning set forth in the preamble to this Agreement.
"COMPANY BOARD APPROVAL" has the meaning set forth in Section 5.22.
"COMPANY COMMON STOCK" has the meaning set forth in Section 1.1(a).
"COMPANY DISCLOSURE SCHEDULE" has the meaning set forth in Article V,
Introduction.
"COMPANY FINANCIAL STATEMENTS" has the meaning set forth in Section 5.5(b).
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any circumstance, event or
occurrence or series of circumstances, events or occurrences which individually
or in the aggregate with all other circumstances, events or occurrences would be
reasonably likely to have a material adverse effect on (i) the business, assets,
operations, financial condition, revenues or results of operations of Company
and its Subsidiaries taken as a whole (which shall not be deemed to occur unless
there is a reduction in value or damages in excess of $250,000), other than any
Company Material Adverse Effect caused or resulting from (A) the announcement of
the Offer or the
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pendency of the consummation of this Agreement, (B) the taking of any action
contemplated or permitted by this Agreement, or (C) the cessation of the
employment with Company, for whatever reason, of any or all of Steve Bess, Susan
Santo and Rick Brock, or (ii) Company's ability to consummate the Transactions
(including the Offer and the Merger). For purposes of determining whether a
Company Material Adverse Effect has occurred, the parties will not consider (1)
the Koch Action or the results or effects thereof (but only if Company abides by
the ruling of any court with jurisdiction over the Koch Action, or, without the
consent of Buyer, does not modify the settlement of the Koch Action as currently
proposed), (2) the McBride Action or the results or effects thereof, and/or (3)
any claim brought or that could be brought by Marubeni or any of its Affiliates,
or Guaranty Federal Bank, F.S.B. ("GUARANTY Federal") or any of its Affiliates,
arising out of or relating to any breach of, or claim for indemnification under,
the Asset Purchase Agreement, dated May 24, 2000, among Company, Marubeni and
certain of Company's former Affiliates, as amended (or that certain agreement
with Marubeni described in Section 5.7(b)), or the Stock Sale Agreement, dated
October 26, 1999, as amended, between Company and Guaranty Federal, as
applicable, unless Company has knowledge as of the date hereof of the
circumstance, event or occurrence or series of circumstances, events or
occurrences giving rise to such claim.
"COMPANY PREFERRED STOCK" has the meaning set forth in Section 5.2(a).
"COMPANY QUARTERLY FINANCIAL STATEMENTS" has the meaning set forth in
Section 5.5(c).
"COMPANY STOCK OPTION" has the meaning set forth in Section 4.1(c)(i).
"COMPANY STOCK OPTION CONSIDERATION" has the meaning set forth in Section
4.1(c)(i).
"COMPANY STOCK OPTION PLAN" has the meaning set forth in Section 4.1(c)(i).
"COMPANY'S FAIRNESS OPINION" has the meaning set forth in Section 5.23.
"COMPANY'S FAIRNESS OPINION ADVISOR" has the meaning set forth in Section
5.21.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in Section 8.1.
"CONTINUING DIRECTOR" has the meaning set forth in Section 1.3(a).
"CONTRACTS" has the meaning set forth in Section 5.14.
"DELAWARE LAW" has the meaning set forth in Section 2.3.
"EFFECTIVE TIME" has the meaning set forth in Section 2.3.
"ENVIRONMENTAL LAWS" has the meaning set forth in Section 5.17.
"ENVIRONMENTAL PERMITS" has the meaning set forth in Section 5.17.
"ERISA" shall have the meaning set forth in Section 5.8(a).
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"ERISA AFFILIATE" has the meaning set forth in Section 5.8(a).
"ESCROW AGENT" has the meaning set forth in Section 7.5.
"ESCROW AGREEMENT" has the meaning set forth in Section 7.5.
"EXCHANGE ACT" has the meaning set forth in Section 5.4(b).
"GAAP" has the meaning set forth in Section 5.5(b).
"GOVERNMENTAL ENTITY" has the meaning set forth in Section 5.4(b).
"GOVERNMENTAL REGULATION" has the meaning set forth in Section 5.11.
"GUARANTY FEDERAL" has the meaning set forth in the definition of Company
Material Adverse Effect.
"HAZARDOUS MATERIALS" has the meaning set forth in Section 5.17.
"HSR ACT" has the meaning set forth in Section 5.4(b).
"HSR CONDITION" has the meaning set forth in EXHIBIT 1.1 to this Agreement.
"INDEMNIFIED PARTIES" has the meaning set forth in Section 8.5.
"INITIAL EXPIRATION DATE" has the meaning set forth in Section 1.1(a).
"INTELLECTUAL PROPERTY RIGHTS" has the meaning set forth in Section
5.15(a).
"IRS" shall mean the U.S. Internal Revenue Service.
"KOCH ACTION" means (i) the lawsuit filed as a putative class action on
January 22, 1997 in the Circuit Court of Mobile County, Mobile, Alabama, Case
No. CV-97-251, against Company and certain of its Subsidiaries, and (ii) the
lawsuit filed as a putative class action on May 28, 1997 in the San Francisco
Superior Court, San Francisco, California, Case No. 987062, and any related
matters filed under the Federal Arbitration Act in the United States District
Court for the Northern District of California.
"LAWS" shall mean any domestic (federal, state or local), foreign or
supranational law, rule, regulation, order, judgment or decree.
"LIEN" shall mean any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, preemptive
right, easement, servitude, transfer restriction under any shareholder or
similar agreement, encumbrance or any other restriction or limitation whatsoever
other than, with respect to Liens on securities, restrictions imposed by federal
and applicable state securities Laws.
"MARUBENI" has the meaning set forth in Section 5.7(b).
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"MARUBENI AGREEMENT" has the meaning set forth in Section 5.7(b).
"MCBRIDE ACTION" means the lawsuit styled as McBride v. PLM International,
Inc., U.S. District Court for the Northern District of California, Case No. C95
02818 CW.
"MERGER" has the meaning set forth in Section 2.1.
"MERGER CONSIDERATION" has the meaning set forth in Section 4.1(a)(iii).
"MERGER CONTROL LAWS" means the HSR Act and the Laws of any other
Governmental Entity with respect to competition, mergers or other business
combinations.
"MINIMUM CONDITION" has the meaning set forth in Section 1.1(a).
"OFFER" has the meaning set forth in Section 1.1(a).
"OFFER COMPLETION DATE" has the meaning set forth in Section 7.3(a).
"OFFER CONDITIONS SATISFACTION DATE" has the meaning set forth in Section
1.1(b).
"OFFER DOCUMENTS" has the meaning set forth in Section 1.1(c).
"OFFER PRICE" has the meaning set forth in Section 1.1(a).
"PAYING AGENT" has the meaning set forth in Section 4.3(a).
"PERMITS" has the meaning set forth in Section 5.11.
"PERSON" shall include individuals, corporations, partnerships, limited
liability companies, 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).
"PROPERTY RIGHTS" has the meaning set forth in Section 5.13.
"PROXY STATEMENT" has the meaning set forth in Section 8.2(a).
"RELATED AGREEMENT" has the meaning set forth in the preamble to this
Agreement.
"RELATED OPTION" has the meaning set forth in the Related Agreement.
"SCHEDULE 14D-9" has the meaning set forth in Section 1.2(b).
"SCHEDULE TO" has the meaning set forth in Section 1.1(c).
"SEC" shall mean the U.S. Securities and Exchange Commission.
"SEC REPORTS" has the meaning set forth in Section 5.5(a).
"SECURITIES ACT" has the meaning set forth in Section 5.4(b).
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"SPECIAL MEETING" has the meaning set forth in Section 7.3(a).
"SUBSIDIARY" shall mean, with respect to Buyer, Company or any other
Person, any corporation, partnership, joint venture or other legal entity of
which Buyer, 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, excluding, with
respect to Company, each of the limited liability companies, limited
partnerships and other investment programs for which Company or any of its
Subsidiaries serves, directly or indirectly, as a manager or general partner or
in any similar capacity (including Professional Lease Management Income Fund I,
LLC and the PLM Equipment Growth Fund series of investment partnerships).
"SUPERIOR PROPOSAL" means a bona fide unsolicited written Acquisition
Proposal to acquire a majority of the voting power of the shares of Company
Common Stock then outstanding or all or substantially all the assets of Company
for consideration consisting of cash or securities which the Board of Directors
of Company concludes in good faith (after consultation with and receipt of
advice from Company's financial advisors and outside legal counsel), taking into
account all legal, financial, regulatory and other aspects of the proposal and
the Person making the proposal, (i) would, if consummated, result in a
transaction that is more favorable to Company's stockholders (in their
capacities as stockholders), from a financial point of view, than the
Transactions, and (ii) is reasonably capable of being completed, including a
conclusion that its financing, to the extent required, is then committed or is,
in the good faith judgment of the Board of Directors of Company (after
consultation with and receipt of advice from Company's financial advisors and
outside legal counsel), reasonably capable of being financed by the Person
making such Acquisition Proposal.
"SURVIVING CORPORATION" has the meaning set forth in Section 2.1.
"TAX" shall mean any federal, state, local, foreign or provincial income,
gross receipts, property, sales, service, use, license, lease, excise,
franchise, employment, payroll, withholding, employment, unemployment insurance,
workers' compensation, social security, alternative or added minimum, ad
valorem, value added, stamp, business license, occupation, premium,
environmental, windfall profit, customs, duties, estimated, transfer or excise
tax, or any other tax, custom, duty, premium, governmental fee or other
assessment or charge of any kind whatsoever, together with any interest, penalty
or addition to tax imposed by any Governmental Entity.
"TERMINATION FEE" has the meaning set forth in Section 10.3(b).
"TRANSACTIONS" has the meaning set forth in Section 1.2(a).
(b) Other Rules of Construction.
(i) References in this Agreement to any gender shall include
references to all genders. Unless the context otherwise requires, references in
the singular include references in the plural and vice versa. References to a
party to this Agreement or to other agreements described herein means those
Persons executing such agreements.
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(ii) The words "include", "including" or "includes" shall be
deemed to be followed by the phrase "without limitation" or the phrase "but not
limited to" in all places where such words appear in this Agreement. The word
"or" shall be deemed to be inclusive.
(iii) This Agreement is the joint drafting product of Buyer
and Company, and each provision has been subject to negotiation and agreement
and shall not be construed for or against either party as drafter thereof.
(iv) In each case in this Agreement where this Agreement or a
Contract is represented or warranted to be enforceable will be deemed to include
as a limitation to the extent that enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar Laws affecting the enforcement of creditors' rights generally and to
general equitable principles, whether applied in equity or at Law.
(v) All references in this Agreement to financial terms shall
be deemed to refer to such terms as they are defined under GAAP, consistently
applied.
(vi) References in this Agreement to a Person's "knowledge"
shall be deemed to refer to such Person's actual knowledge or, in the case of a
Person that is not an individual, the actual knowledge of such Person's
officers, directors, managers, general partners and their equivalents.
Section 11.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts which together shall constitute a single agreement.
Section 11.10 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economics or legal
substance of the Transactions are not affected in any manner materially adverse
to any party. Upon determination that any term or other provision hereof is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable Law in an acceptable manner to the end that the Transactions are
fulfilled to the extent possible.
Section 11.11 LITIGATION. In the event of any litigation between Buyer,
Company or any third-party beneficiary hereof concerning the terms of this
Agreement or the Transactions, the prevailing party will be entitled to
reimbursement of its reasonable costs and expenses, including reasonable
attorneys fees incurred in trial, appellate and post-appellate proceedings.
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IN WITNESS WHEREOF, Buyer and Company have caused this Agreement and Plan
of Merger to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
MILPI ACQUISITION CORP.
By: /S/ James A. Coyne
--------------------------------------
James A. Coyne, Vice President
PLM INTERNATIONAL, INC.
By: /S/ Robert Tidall
--------------------------------------
Robert Tidball, Chairman
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ANNEX B - OPINION OF IMPERIAL CAPITAL
December 21, 2000
The Board of Directors
PLM International, Inc.
One Market
Steuart Street Tower, Eighth Floor
San Francisco, California 94105
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of PLM International, Inc. (the "Company"), of the
aggregate consideration to be received by the shareholders of the Company in
connection with the sale of the common stock of the Company to a newly formed
corporation affiliated with Equis Financial Group (the "Buyer"). By way of
background, on December 11, 2000, the Board held a special meeting to consider
the Buyer's offer of $3.50 per share and, in connection therewith and at the
Board's request, we issued our opinion, dated December 13, 2000, with respect to
the fairness of such offer from a financial point of view (the "Initial
Opinion"). Subsequent to the issuance of the Initial Opinion, the Buyer revised
the terms of its offer. Pursuant to the terms of the revised offer (the
"Transaction"), the Buyer will tender cash consideration equal to $3.46 per
share (the "Consideration") for 100% of the outstanding shares of the Company.
The tender offer is conditioned upon the Buyer receiving at least 50.1% of the
outstanding shares of the Company. Upon a successful tender, the Buyer will
subsequently merge with the Company and will pay the remaining shareholders the
Consideration.
In connection with the rendering of this opinion, we have:
(i) analyzed certain historical business and financial information relating
to the Company, including the Company's Form 10-K for the year ended
December 31, 1999 and the Company's Form 10-Q for the period ended
September 30, 2000;
(ii) reviewed certain financial forecasts and other data provided to us by
the Company, including business plans prepared by senior management of
the Company;
(ii) conducted discussions with members of senior management of the Company
with respect to the historical operations, businesses and prospects of
the Company, the strategic objectives of the Company and possible
benefits which might be realized from the Transaction;
(iii) reviewed public information with respect to certain other companies with
financial profiles which we deemed to be relevant;
(iv) reviewed the historical market prices and trading activity for the
Company's common stock and compared them with those of certain publicly
traded companies which we deemed to be relevant;
(v) prepared and delivered to over 200 potential financial and strategic
buyers an executive summary describing the Company and subsequently
prepared and delivered to over 50 interested parties a confidential
information memorandum describing the Company;
(vi) reviewed four written letters of interest to purchase the shares of the
Company; and
(vii) conducted such other financial studies, analyses and investigation as we
deemed appropriate.
With your consent, we have relied upon the accuracy and completeness of the
foregoing financial and other information and have not assumed responsibility
for independent verification of such information or conducted
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any independent valuation or appraisal of any assets of the Company, nor have we
been furnished with any such appraisals. With respect to the financial
forecasts, we have assumed, with your consent, that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of management of the Company as to the future financial performance of
the Company. We have also relied upon the assurances of senior management of the
Company that they are unaware of any facts that would make the information or
financial forecasts provided to us incomplete or misleading. We assume no
responsibility for, and express no view as to such forecasts or the assumptions
on which they are based.
Our opinion expressed herein has been prepared for the information of the Board
of Directors of the Company, and our opinion is rendered in connection with the
sale of the common stock of the Company to the Buyer. This opinion does not
constitute a recommendation to any holder of common stock as to whether such
holder should tender his shares to the Buyer. This opinion does not address the
business decision of the basis for recommendation in Schedule 14D-9 to engage in
the Transaction or address the relative merits of any alternatives discussed by
the Board of Directors. No opinion is expressed herein, nor should one be
implied, as to the fair market value of the Company's common stock or the prices
at which it may trade at any time. It is understood that this opinion may not be
disclosed or otherwise referred to or used for any other purpose without our
prior written consent, except as may otherwise be required by law or by a court
of competent jurisdiction; provided, however, that this opinion may be
reproduced in full in the Schedule 14D-9 related to the Transaction.
In the ordinary course of its business and in accordance with applicable state
and federal securities laws, Imperial Capital, LLC may trade the securities of
the Company for its own account and for the accounts of customers and,
accordingly, may at any time hold long or short positions in such securities.
Imperial Capital, LLC is currently acting as financial advisor to the Board of
Directors of the Company in connection with the sale of the Company and will
receive a fee in connection with the rendering of this opinion and upon the sale
of the Company. Additionally, Imperial Capital, LLC has performed investment
banking services for affiliates of the Buyer in the past.
Based on and subject to the foregoing, we are of the opinion that as of the date
hereof, the Consideration to be received by the shareholders of the Company in
the Transaction is fair to such shareholders from a financial point of view.
This opinion replaces the Initial Opinion in its entirety.
Very truly yours,
/S/ IMPERIAL CAPITAL, LLC
- --------------------------
IMPERIAL CAPITAL, LLC
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ANNEX C - DELAWARE GENERAL CORPORATION LAW SECTION 262
Section 262. Appraisal rights.
(a) Any stockholder of a corporation of this State who holds shares of stock on
the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to ss. 228 of this
title shall be entitled to an appraisal by the Court of Chancery of the fair
value of the stockholder's shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of
stock of a constituent corporation in a merger or consolidation to be effected
pursuant to ss. 251 (other than a merger effected pursuant to ss. 251(g) of this
title), ss. 252, ss. 254, ss. 257, ss. 258, ss. 263 or ss. 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of ss. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under
this section shall be available for the shares of any class or series of stock
of a constituent corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to ss.ss. 251, 252, 254, 257,
258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such merger or
consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in respect
thereof, which shares of stock (or depository receipts in respect thereof) or
depository receipts at the effective date of the merger or consolidation will be
either listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than 2,000
holders;
c. Cash in lieu of fractional shares or fractional depository receipts described
in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash in lieu
of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party to
a merger effected under ss. 253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be available
for the shares of the subsidiary Delaware corporation.
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(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsection (b) or (c) hereof that appraisal rights are available for any or all
of the shares of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the appraisal of
such stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of such
stockholder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such stockholder's shares. A proxy or
vote against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective;
or
(2) If the merger or consolidation was approved pursuant to ss. 228 or ss. 253
of this title, each constituent corporation, either before the effective date of
the merger or consolidation or within ten days thereafter, shall notify each of
the holders of any class or series of stock of such constituent corporation who
are entitled to appraisal rights of the approval of the merger or consolidation
and that appraisal rights are available for any or all shares of such class or
series of stock of such constituent corporation, and shall include in such
notice a copy of this section; provided that, if the notice is given on or after
the effective date of the merger or consolidation, such notice shall be given by
the surviving or resulting corporation to all such holders of any class or
series of stock of a constituent corporation that are entitled to appraisal
rights. Such notice may, and, if given on or after the effective date of the
merger or consolidation, shall, also notify such stockholders of the effective
date of the merger or consolidation. Any stockholder entitled to appraisal
rights may, within 20 days after the date of mailing of such notice, demand in
writing from the surviving or resulting corporation the appraisal of such
holder's shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holder's shares. If such notice did not
notify stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders of
any class or series of stock of such constituent corporation that are entitled
to appraisal rights of the effective date of the merger or consolidation or (ii)
the surviving or resulting corporation shall send such a second notice to all
such holders on or within 10 days after such effective date; provided, however,
that if such second notice is sent more than 20 days following the sending of
the first notice, such second notice need only be sent to each stockholder who
is entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is required
to give either notice that such notice has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more than 10
days prior to the date the notice is given, provided, that if the notice is
given on or after the effective date of the merger or consolidation, the record
date shall be such effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the close of
business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation, the
surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
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consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders
who have complied with this section and who have become entitled to appraisal
rights. The Court may require the stockholders who have demanded an appraisal
for their shares and who hold stock represented by certificates to submit their
certificates of stock to the Register in Chancery for notation thereon of the
pendency of the appraisal proceedings; and if any stockholder fails to comply
with such direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court shall
appraise the shares, determining their fair value exclusive of any element of
value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares, together
with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon application
of a stockholder, the Court may order all or a portion of the expenses incurred
by any stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorney's fees and the fees and expenses of
experts, to be charged pro rata against the value of all the shares entitled to
an appraisal.
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(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the shares of
such objecting stockholders would have been converted had they assented to the
merger or consolidation shall have the status of authorized and unissued shares
of the surviving or resulting corporation.
(8 Del. C. 1953,ss.262; 56 Del. Laws, c. 50; 56 Del. Laws, c. 186,ss.24; 57 Del.
Laws, c. 148,ss.ss.27-29; 59 Del. Laws, c. 106,ss.12; 60 Del. Laws, c.
371,ss.ss.3-12; 63 Del. Laws, c. 25,ss.14; 63 Del. Laws, c. 152,ss.ss.1, 2; 64
Del. Laws, c. 112,ss.ss.46-54; 66 Del. Laws, c. 136,ss.ss.30-32; 66 Del. Laws,
c. 352,ss.9; 67 Del. Laws, c. 376,ss.ss.19, 20; 68 Del. Laws, c. 337,ss.ss.3, 4;
69 Del. Laws, c. 61,ss.10; 69 Del. Laws, c. 262,ss.ss.1-9; 70 Del. Laws, c.
79,ss.16; 70 Del. Laws, c. 186,ss.1; 70 Del. Laws, c. 299,ss.ss.2, 3; 70 Del.
Laws, c. 349,ss.22; 71 Del. Laws, c. 120,ss.15; 71 Del. Laws, c.
339,ss.ss.49-52.)
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