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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TRINITY INDUSTRIES, INC.,
TCMC ACQUISITION CORP.,
THRALL CAR MANUFACTURING COMPANY
AND
THRALL CAR MANAGEMENT COMPANY, INC.
AUGUST 13, 2001
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TABLE OF CONTENTS
<Table>
ARTICLE 1 DEFINITIONS.....................................................................................1
ARTICLE 2 MERGER; CLOSING................................................................................11
2.1 The Merger.....................................................................................11
2.1.1 The Merger.....................................................................................11
2.1.2 Effective Time of the Merger...................................................................11
2.1.3 Effect of the Merger...........................................................................11
2.1.4 Articles of Incorporation; Bylaws; Directors and Officers......................................11
2.2 Terms of the Merger............................................................................11
2.2.1 Merger Consideration...........................................................................11
2.2.2 Adjustment Amount..............................................................................12
2.2.3 Exchange Procedure.............................................................................13
2.2.4 No Further Ownership Rights in Company Shares..................................................13
2.2.5 Merger Sub Common Stock........................................................................13
2.2.6 Treasury Stock.................................................................................13
2.2.7 Escrow Agreement; Stock Powers.................................................................13
2.2.8 Payment of Additional Merger Consideration.....................................................14
2.3 Closing........................................................................................15
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF NEWCO........................................................15
3.1 Organization and Good Standing.................................................................16
3.1.1 Newco..........................................................................................16
3.1.2 Company........................................................................................16
3.1.3 Subsidiaries...................................................................................16
3.2 Authority; No Conflict.........................................................................16
3.2.1 Authority......................................................................................16
3.2.2 No Conflict....................................................................................17
3.3 Capitalization.................................................................................18
3.3.1 Newco..........................................................................................18
3.3.2 Company........................................................................................18
3.3.3 Subsidiaries...................................................................................18
3.4 Financial Statements...........................................................................18
3.5 Books and Records..............................................................................19
3.6 Title to Properties; Encumbrances..............................................................19
3.7 Condition and Sufficiency of Assets............................................................20
3.8 Accounts Receivable............................................................................20
3.9 Inventory......................................................................................20
3.10 No Undisclosed Liabilities.....................................................................21
3.11 Taxes..........................................................................................21
3.12 No Material Adverse Change.....................................................................22
3.13 Employee Benefits..............................................................................22
3.14 Employees......................................................................................26
3.15 Compliance with Legal Requirements; Governmental Authorizations................................28
3.15.1 Legal Requirements.............................................................................28
3.15.2 Governmental Authorizations....................................................................28
3.16 Legal Proceedings; Orders......................................................................29
3.16.1 Legal Proceedings..............................................................................29
3.16.2 Orders.........................................................................................29
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3.17 Absence of Certain Changes and Events..........................................................30
3.18 Contracts; No Defaults.........................................................................32
3.19 Insurance......................................................................................35
3.20 Environmental, Health and Safety Matters.......................................................36
3.21 Intellectual Property..........................................................................37
3.22 Certain Payments...............................................................................38
3.23 Relationships with Related Persons.............................................................38
3.24 Brokers or Finders.............................................................................39
3.25 Customers and Suppliers........................................................................39
3.26 Solvency.......................................................................................39
3.27 Shares Acquired for Investment.................................................................39
3.28 Receipt of Information.........................................................................39
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB........................................39
4.1 Organization and Good Standing.................................................................39
4.2 Authority; No Conflict.........................................................................40
4.2.1 Authority......................................................................................40
4.2.2 No Conflict....................................................................................40
4.3 Capitalization.................................................................................41
4.4 SEC Documents; Financial Statements............................................................41
4.5 Books and Records..............................................................................42
4.6 Taxes..........................................................................................42
4.7 No Material Adverse Change.....................................................................43
4.8 Compliance with Legal Requirements; Governmental Authorizations................................43
4.9 Legal Proceedings; Orders......................................................................44
4.10 Contracts; No Default..........................................................................45
4.11 Environmental Matters..........................................................................45
4.12 Certain Payments...............................................................................46
4.13 Brokers or Finders.............................................................................46
4.14 Ownership of Merger Sub; No Prior Activities...................................................46
4.15 Issuance of Parent Common Stock................................................................46
ARTICLE 5 CONDUCT OF BUSINESS PRIOR TO CLOSING DATE......................................................47
5.1 Access and Investigation.......................................................................47
5.2 Operation of the Businesses of Company and its Subsidiaries....................................47
5.3 Negative Covenants.............................................................................47
5.4 Certain Actions by Parent......................................................................49
5.5 Payment of Indebtedness by Related Persons.....................................................50
5.6 No Shopping....................................................................................50
5.7 Advice of Proceedings..........................................................................50
5.8 Reports and Returns............................................................................50
5.8.1 Newco and Company Reports and Returns..........................................................50
5.8.2 Parent and Merger Sub Reports and Returns......................................................50
5.9 Administration of Plans........................................................................51
5.10 Certain Actions................................................................................51
5.11 Maintenance of Insurance.......................................................................51
5.12 Ownership of Subsidiaries......................................................................51
5.13 Release of Mortgage............................................................................51
ARTICLE 6 ADDITIONAL COVENANTS AND AGREEMENTS............................................................51
6.1 Consents; Cooperation..........................................................................51
6.1.1 Obtaining Approvals............................................................................51
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6.1.2 Resolving Objections...........................................................................52
6.1.3 Limitation.....................................................................................52
6.2 Public Disclosure..............................................................................52
6.3 Best Efforts and Further Assurances............................................................52
6.4 Assist in Obtaining Governmental Authorizations................................................53
6.5 Blue Sky Laws..................................................................................53
6.6 New York Stock Exchange Listing................................................................53
6.7 Tax Allocation of the Merger Consideration.....................................................53
6.8 Transfer Taxes.................................................................................54
6.9 Standstill Time................................................................................54
6.10 Newco Financial Covenants......................................................................56
6.11 Dissenter's Rights.............................................................................56
6.12 Employment Matters.............................................................................57
6.13 Notification of Breach.........................................................................58
6.14 Payment of Cash Balances.......................................................................58
6.15 Rights Agreement Amendment.....................................................................59
6.16 Additional Tax Matters.........................................................................59
6.16.1 EIN; Successor Employer Reporting..............................................................59
6.16.2 Filing of Tax Returns; Reimbursement for Payroll and Sales/Use Taxes...........................59
6.16.3 Refunds........................................................................................59
6.16.4 Cooperation on Tax Matters.....................................................................59
6.17 York Facility..................................................................................60
ARTICLE 7 CONDITIONS PRECEDENT TO CLOSING................................................................60
7.1 Conditions Precedent to Obligations of Parent and Merger Sub...................................60
7.1.1 Representations and Warranties.................................................................61
7.1.2 Performance by Newco and Company...............................................................61
7.1.3 No Proceedings.................................................................................61
7.1.4 Regulatory Approvals and Consents..............................................................61
7.1.5 Officer's Certificate..........................................................................61
7.1.6 No Material Adverse Effect on Company..........................................................61
7.1.7 Escrow Agreement...............................................................................61
7.1.8 Stockholder's Agreement........................................................................62
7.1.9 Claims Releases................................................................................62
7.1.10 Registration Rights Agreement..................................................................62
7.1.11 Noncompetition Agreement.......................................................................62
7.1.12 Keepwell Letter................................................................................62
7.1.13 UCC Financing Statement........................................................................62
7.1.14 Pledge Agreement...............................................................................62
7.1.15 No Adverse Order...............................................................................62
7.1.16 Secretary's Certificates.......................................................................62
7.1.17 Use of York Facility...........................................................................63
7.1.18 Clinton Deed...................................................................................63
7.2 Conditions Precedent to Obligations of Newco and Company.......................................63
7.2.1 Representations and Warranties.................................................................63
7.2.2 Performance by Parent and Merger Sub...........................................................64
7.2.3 No Proceedings.................................................................................64
7.2.4 Regulatory Approval and Consents...............................................................64
7.2.5 Officer's Certificate..........................................................................64
7.2.6 No Material Adverse Effect on Parent...........................................................64
7.2.7 Escrow Agreement...............................................................................64
7.2.8 Stockholder's Agreement........................................................................64
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7.2.9 Registration Rights Agreement..................................................................64
7.2.10 No Adverse Order...............................................................................64
7.2.11 Rights Agreement Amendment.....................................................................64
7.2.12 Pledge Agreement...............................................................................64
7.2.13 New York Stock Exchange Listing................................................................65
7.2.14 Secretary's Certificates.......................................................................65
ARTICLE 8 TERMINATION....................................................................................65
8.1 Termination Events.............................................................................65
8.2 Effect of Termination..........................................................................66
8.3 Termination Fee................................................................................66
8.4 Extension; Waiver..............................................................................67
ARTICLE 9 INDEMNIFICATION; REMEDIES......................................................................67
9.1 Survival; Right to Indemnification Not Affected by Knowledge...................................67
9.2 General Indemnification by Newco...............................................................67
9.3 Indemnification by Newco for Environmental Matters.............................................68
9.4 Procedure for Indemnification --Tax Claims.....................................................69
9.5 Indemnification and Payment of Damages by Parent...............................................69
9.6 Time Limitations...............................................................................70
9.7 Limitations on Indemnification Amount -- Newco.................................................71
9.8 Limitations on Indemnification Amount -- Parent................................................71
9.9 Procedure for Indemnification -- Third Party Claims............................................72
9.10 Procedure for Indemnification -- Other Claims..................................................73
9.11 Insurance And Tax Benefit; Reserve.............................................................73
9.12 Subrogation....................................................................................73
9.13 Exclusive Remedy -- Indemnified Persons........................................................73
9.14 Exclusive Remedy -- Newco......................................................................74
ARTICLE 10 GENERAL PROVISIONS.............................................................................74
10.1 Expenses.......................................................................................74
10.2 Confidentiality................................................................................74
10.3 Notices........................................................................................74
10.4 Further Assurances.............................................................................75
10.5 Waiver.........................................................................................75
10.6 Entire Agreement and Modification..............................................................75
10.7 Assignments, Successors and No Third-Party Rights..............................................76
10.8 Severability...................................................................................76
10.9 Section Headings, Construction.................................................................76
10.10 Governing Law..................................................................................76
10.11 Counterparts...................................................................................76
10.12 Shareholder Action.............................................................................76
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EXHIBITS
Exhibit 2.2.2 Accounting Practices and Policies
Exhibit 2.2.8(a) Baseline Market Deliveries
Exhibit 2.2.8(b) Market Deliveries Determination Procedures
Exhibit 5.10(a) Certain Actions
Exhibit 6.7(b) Allocation Schedule
Exhibit 6.7(c) Form 8023
Exhibit 7.1.7 Form of Escrow Agreement
Exhibit 7.1.8 Form of Stockholder's Agreement
Exhibit 7.1.9(a) List of Persons to Execute Claims Releases
Exhibit 7.1.9(b) Form of Claims Release
Exhibit 7.1.10 Form of Registration Rights Agreement
Exhibit 7.1.11 Form of Noncompetition Agreement
Exhibit 7.1.12 Form of Keepwell Letter
Exhibit 7.2.11 Form of Rights Agreement Amendment
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") is made as of
August 13, 2001, by and among Trinity Industries, Inc., a Delaware corporation
("PARENT"), TCMC Acquisition Corp., an Illinois corporation ("MERGER SUB"),
Thrall Car Manufacturing Company, an Illinois corporation ("COMPANY"), and
Thrall Car Management Company, Inc., a Delaware corporation ("NEWCO").
WHEREAS, the parties hereto desire to effect the merger of Merger Sub
with and into Company (the "MERGER") upon the terms and conditions set forth
herein;
WHEREAS, Parent is the sole shareholder of Merger Sub;
WHEREAS, Newco is the sole shareholder of Company;
WHEREAS, the respective Boards of Directors of Parent, Merger Sub,
Newco and Company have approved the Merger on the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the respective shareholders of Merger Sub, Newco and Company
have approved the Merger on the terms and conditions set forth in this
Agreement;
WHEREAS, the respective Boards of Directors of Parent and Newco have
approved the execution and delivery at the Closing (as defined below) of (a) the
Stockholder's Agreement (the "STOCKHOLDER'S AGREEMENT") between Parent and Newco
in substantially the form of Exhibit 7.1.8, (b) the Escrow Agreement (the
"ESCROW AGREEMENT") among Parent, Newco and Escrow Agent (as defined below) in
substantially the form of Exhibit 7.1.9, and (c) the Registration Rights
Agreement (the "REGISTRATION RIGHTS AGREEMENT") between Parent and Newco in
substantially the form of Exhibit 7.1.10;
WHEREAS, the Board of Directors of Newco has approved the execution and
delivery at the Closing of (a) a Claims Release (as defined below) by Newco in
favor of Company in substantially the form of Exhibit 7.1.11(b) and (b) a
Noncompetition Agreement (as defined below) in substantially the form of Exhibit
7.1.14(b) (this Agreement, the Stockholder's Agreement, the Escrow Agreement,
the Registration Rights Agreement, Newco's Claims Release and the Noncompetition
Agreement are collectively referred to as the "OPERATIVE AGREEMENTS"); and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the mutual
promises, representations, warranties and covenants hereinafter set forth, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article 1:
"ACCOUNTANTS" is defined in Section 2.2.2.
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"ACCOUNTS RECEIVABLE" is defined in Section 3.8.
"ACQUIRED ASSETS" is defined in Section 6.7.
"ADDITIONAL MERGER CONSIDERATION PAYMENT" is defined in Section 2.2.8.
"AFFILIATE" means any Person that, directly or indirectly, controls, or
is controlled by or under common control with, another Person. For the purposes
of this definition, "CONTROL" (including the terms "CONTROLLED by" and "UNDER
COMMON CONTROL WITH"), as used with respect to any Person, means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities or by
contract or otherwise.
"AGREEMENT" is defined in the preamble of this Agreement.
"ALLOCATION SCHEDULE" is defined in Section 6.7.
"ANTIDILUTION ADJUSTMENT" is defined in Section 2.2.1.
"ANTITRUST LAWS" is defined in Section 6.1.2.
"APPLICABLE CONTRACT" means any Contract (a) to which Company or any of
its Subsidiaries is a party, (b) under which Company or any of its Subsidiaries
has or may become subject to any obligation or liability or (c) by which Company
or any of its Subsidiaries or any of the assets owned or used by Company or any
of its Subsidiaries is or may become bound.
"BALANCE SHEET" is defined in Section 3.4.
"BASELINE MARKET DELIVERIES" is defined in Section 2.2.8.
"BEST EFFORTS" means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible without incurring undue expense.
"BREACH" means, with respect to any representation, warranty, covenant,
obligation or other provision of this Agreement or any instrument delivered
pursuant to this Agreement, any inaccuracy in or breach of, or any failure to
perform or comply with, such representation, warranty, covenant, obligation or
other provision.
"CALCULATION DATE" is defined in Section 2.2.8.
"CALCULATION NOTICE" is defined in Section 2.2.8.
"CALENDAR YEAR" is defined in Section 2.2.8.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended), or any successor law, and regulation and
rules issued pursuant to that Act or any successor law.
"CLAIMS RELEASE" is defined in Section 7.1.9.
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"CLOSING" is defined in Section 2.3.
"CLOSING DATE" means the date and time as of which the Closing actually
takes place.
"COBRA" is defined in Section 3.13.
"COBRA EMPLOYEE" is defined in Section 6.12.1.
"COMPANY" is defined in the preamble of this Agreement.
"COMPANY SHARES" means 8,079.25 shares of Company's common stock, $0.01
per share par value.
"CONFIDENTIAL INFORMATION" is defined in Section 3.21.
"CONSENT" means any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
"CONSOLIDATED TANGIBLE NET WORTH" means, on the date of determination,
(a) the total stockholder's equity of Newco as the same would appear on the
consolidated balance sheet of Newco prepared in accordance with GAAP as of the
date of such determination, minus (b) the aggregate amount shown on such
consolidated balance sheet for goodwill (whether representing the excess of cost
over book value of assets acquired or otherwise), patents, trademarks, trade
names, copyrights and deferred charges, and all other similar assets which would
be classified as intangible assets under GAAP and minus (c) any amount of
treasury stock shown on the consolidated balance sheet.
"CONSTITUENT CORPORATIONS" means together, Merger Sub and Company.
"CONTEMPLATED TRANSACTIONS" means all of the transactions contemplated
by this Agreement, including:
(a) the Merger;
(b) the execution, delivery and performance of the
Stockholder's Agreement, the Claims Releases, the Escrow Agreement, the
Registration Rights Agreement, the Keepwell Letter and the
Noncompetition Agreement; and
(c) the performance by Parent, Merger Sub, Company and Newco
of their respective covenants and obligations under this Agreement.
"CONTRACT" means any agreement, contract or obligation (whether written
or oral and whether express or implied) that is legally binding.
"CURRENT CREDIT" is defined in Section 2.2.8.
"CURRENT CREDIT AMOUNT" is defined in Section 2.2.8.
"CURRENT DEFICIT" is defined in Section 2.2.8.
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"CURRENT DEFICIT AMOUNT" is defined in Section 2.2.8.
"DAMAGES" is defined in Section 9.2.
"DOL" means the United States Department of Labor.
"EFFECTIVE TIME" is defined in Section 2.1.2.
"EIN" is defined in Section 6.16.1.
"EMPLOYEE" is defined in Section 6.12.1.
"ENCUMBRANCE" means any charge, claim, community property interest,
equitable interest, Lien, option, right of first refusal or restriction of any
kind, including any restriction on use, voting, transfer, receipt of income or
exercise of any other attribute of ownership.
"ENVIRONMENT" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life and any other
environmental medium.
"ENVIRONMENTAL LAWS" means any applicable Legal Requirement as of the
date of this Agreement concerning or relating to the Environment, to the
protection of the public health and welfare, or to safe and healthful working
conditions.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor law and regulations and rules issued pursuant to that
Act or any successor law.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) which is treated as a "single employer" with Company under Section
414(b), (c), (m) or (o) of the IRC.
"ESCROW AGENT" means Chase Bank, N.A., or any national bank agreed to
by Parent and Newco.
"ESCROW AGREEMENT" is defined in the recitals in this Agreement.
"ESCROWED SHARES" is defined in Section 2.2.7.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"FACILITY" means any real property, leasehold or other interest in real
property currently or formerly owned or operated by Company or any of its
Subsidiaries.
"FAMILY" means Richard Duchossois, his children and their respective
spouses and his grandchildren and their respective spouses.
"FINAL CALCULATION NOTICE" is defined in Section 2.2.8.
"FINAL WORKING CAPITAL NOTICE" is defined in Section 2.2.2.
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"FINANCIAL COVENANT PERIOD" is defined in Section 6.10.
"FOREIGN COLLECTIVELY BARGAINED EMPLOYEE BENEFIT PLAN" means each
Foreign Employee Benefit Plan that covers or benefits any current or former
employee of Company or any of its Subsidiaries that is not a Foreign
Governmental Employee Benefit Plan and that is sponsored by any Person other
than Company or any of its Subsidiaries.
"FOREIGN EMPLOYEE BENEFIT PLAN" means each "employee benefit plan" (as
defined in Section 3(3) of ERISA), cafeteria plan, flexible spending
arrangement, sick leave and vacation policy, bonus, stock option, stock
purchase, restricted stock, incentive compensation, deferred compensation,
retirement, severance, medical, life, dental, disability or other welfare
benefit plan, or any other benefit plans, programs, agreements, policies, or
arrangements and all employment termination, severance, assignment, or other
employment contracts or employment agreements governed, required, or imposed by
the law of any jurisdiction outside of the United States, whether written or
oral, and any insurance policies or arrangements related thereto, maintained,
sponsored, established, or contributed to or required to be contributed, or with
respect to which any liability is borne, outside the fifty (50) states of the
United States by Company or any of its Subsidiaries including but not limited
to, any Foreign Governmental Employee Benefit Plan.
"FOREIGN GOVERNMENTAL EMPLOYEE BENEFIT PLAN" means any Foreign Employee
Benefit Plan sponsored by any government or Governmental Body.
"GAAP" means generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet and the
other financial statements referred to in Section 3.4 were prepared.
"GENERAL INCREASE" is defined in Section 3.17.
"GOVERNMENTAL AUTHORIZATION" means any approval, consent, license,
permit, waiver, foreign registration or other authorization issued, granted,
given or otherwise made available by or under the authority of any Governmental
Body or pursuant to any Legal Requirement.
"GOVERNMENTAL BODY" means any: (a) nation, state, county, city, town,
village, district or other governmental jurisdiction of any nature; (b) federal,
state, local, municipal, foreign or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official or entity and any court or other tribunal); (d)
multinational governmental organization or body; or (e) body exercising or
entitled to exercise any administrative, executive, judicial, legislative,
police, regulatory or taxing authority or power of any nature.
"GROUP BENEFITS PLAN" is defined in Section 6.12.1.
"HAZARDOUS SUBSTANCE" means any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Laws, or that is otherwise regulated pursuant to
Environmental Laws, including any admixture or solution thereof, and
specifically including petroleum and all derivatives thereof or synthetic
substitutes therefore and asbestos or asbestos-containing materials.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.
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"IBCA" means the Illinois Business Corporation Act, as amended.
"INCLUDED CLAIM" is defined in Section 9.7.1.
"INDEMNIFIED PERSONS" is defined in Section 9.2.
"INTELLECTUAL PROPERTY" is defined in Section 3.21.
"INTERIM BALANCE SHEET" is defined in Section 3.4.
"IRC" means the Internal Revenue Code of 1986, as amended, or any
successor law, and regulations issued by the IRS pursuant to the Internal
Revenue Code of 1986, as amended, or any successor law.
"IRS" means the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"KEEPWELL LETTER" is defined in Section 7.1.12.
"KNOWLEDGE" means, with respect to an individual, that, with respect to
a particular fact or other matter, such individual is actually aware of such
fact or other matter. "KNOWLEDGE" means, in the case of a Person (other than an
individual), that, with respect to a particular fact or other matter, any
individual who is serving, or who has at any time served, as a director,
officer, partner, executor or trustee of such Person (or in any similar
capacity) has, or at any time had, Knowledge of such fact or other matter;
provided, however, that with respect to (a) Newco, Company or any of their
Subsidiaries, "KNOWLEDGE" means the "KNOWLEDGE" of any of Craig Duchossois,
Michael Flannery, Martin Graham, Robert Fealy, H. Christian Schmalbruch, James
Gerber, Craig Dowden, or any Person hired to replace one of the foregoing
between the date hereof and the Closing Date (collectively, the "COMPANY
KNOWLEDGE GROUP"); and (b) Parent or Merger Sub, "KNOWLEDGE" means the
"KNOWLEDGE" of any of Timothy R. Wallace, John L. Adams, Jim S. Ivy, Michael G.
Fortado, John M. Lee or S. Theis Rice (collectively, the "PARENT KNOWLEDGE
GROUP").
"LEGAL REQUIREMENT" means any federal, state, local, municipal,
foreign, international, multinational or other administrative Order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty.
"LIEN" means any mortgage, deed of trust, lien, pledge, adverse claim,
voting agreement, security interest or encumbrance of any nature whatsoever but,
with respect to real property, shall exclude ordinary utility and other similar
easements of record that do not materially interfere with the use of such
property.
"MARKET DELIVERIES" is defined in Section 2.2.8.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means, when used
in connection with any entity, any events, changes or effects that (a) are or
would reasonably be expected to be materially adverse to the business,
properties, assets, condition (financial or otherwise) or results of operations
(including the income statement) of such entity and its Subsidiaries taken as a
whole; (b) are materially impairing or would reasonably be expected to
materially impair the ability of such entity to perform its obligations under
this Agreement or the other Operative Agreements; or (c) are preventing or
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materially delaying or would reasonably be expected to prevent or materially
delay the consummation by such entity of the Contemplated Transactions, but
excluding, in each case, (x) any change in the trading price of the Parent
Common Stock on the NYSE, (y) any change in business conditions in the railcar
industry or in the United States or world economy generally or (z) with regard
to Parent or Company, any substantial work slow down, any loss of employees, any
loss of significant numbers of customers, any loss of significant numbers of
vendors or other similar matters directly attributable to the Contemplated
Transactions.
"MATERIAL INTEREST" means direct or indirect "beneficial ownership" (as
defined in Rule 13d-3 under the Exchange Act) of (i) voting securities or other
voting interests representing at least 35% of the voting power of a Person or
(ii) equity securities or other equity interests representing at least 35% of
the outstanding equity ownership in a Person.
"MERGER" is defined in the recitals of this Agreement.
"MERGER CONSIDERATION" is defined in Section 2.2.1.
"MERGER SUB" is defined in the preamble of this Agreement.
"NEWCO" is defined in the preamble of this Agreement.
"NEWCO CLAIM" is defined in Section 9.8.1.
"NEWCO SHARES" means 8,079.25 shares of Newco's common stock, no par
value.
"NEWCO'S DISCLOSURE LETTER" means the disclosure letter dated the date
of this Agreement delivered by Newco and Company to Parent and Merger Sub
concurrently with the execution and delivery of this Agreement.
"NONCOMPETITION AGREEMENT" is defined in Section 7.1.11.
"NYSE" means the New York Stock Exchange.
"OPERATIVE AGREEMENTS" is defined in the recitals of this Agreement.
"ORDER" means any award, decision, injunction, judgment, order, ruling,
subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" means an action taken by a Person that:
(a) is consistent with the past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person; (b) is not
required to be authorized by the Board of Directors of such Person (or by any
Person or group of Persons exercising similar authority); and (c) is similar in
nature and magnitude to actions customarily taken, without any authorization by
the Board of Directors (or by any Person or group of Persons exercising similar
authority), in the ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such Person.
"ORGANIZATIONAL DOCUMENTS" means (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
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partnership; (d) the articles or certificate of organization and limited
liability company agreement of a limited liability company; (e) any charter or
similar document adopted or filed in connection with the creation, formation or
organization of a Person; and (f) any amendment to any of the foregoing.
"PARENT" is defined in the preamble of this Agreement.
"PARENT COMMON STOCK" means the common stock, par value $1.00 per
share, of Parent.
"PARENT COVERED CONTRACT" means a Contract that is currently in effect
and has been filed by Parent, or is required to be filed by Parent, with the SEC
in accordance with Regulation S-K.
"PARENT'S DISCLOSURE LETTER" means the disclosure letter dated the date
of this Agreement delivered by Parent and Merger Sub to Company and Newco
concurrently with the execution and delivery of this Agreement.
"PARENT FINANCIAL STATEMENTS" is defined in Section 4.4.
"PARENT SEC DOCUMENTS" defined in Section 3.28.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PENSION PLAN" means any Plan and any "employee benefit plan" (as
defined in Section 3(3) of ERISA) of any ERISA Affiliate, regardless of whether
such plan benefits or ever has benefited any current or former employee,
director, or beneficiary of Company or its Subsidiaries, that in each case is
subject to Title IV of ERISA or Section 412 of the IRC, including any
"multiemployer plan" (as defined in Section 3(37) of ERISA) and including any
such plan listed on Exhibit 5.10(a).
"PERSON" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or Governmental Body.
"PLAN" means all plans, whether written or oral, sponsored,
established, maintained or contributed to or required to be contributed to
currently by Company or any of its Subsidiaries or any ERISA Affiliate for the
benefit of any current or former employee or director, or any beneficiary
thereof, of Company or any of its Subsidiaries, excluding any such plan, policy
or arrangement listed on Exhibit 5.10(a), including: (a) any "employee benefit
plan" (as defined in Section 3(3) of ERISA), cafeteria plan, flexible spending
arrangement, sick leave and vacation policy, bonus, stock option, stock
purchase, restricted stock, incentive compensation, deferred compensation,
retirement, severance, medical, life, dental, disability or other welfare
benefit plan, or any other benefit plans, programs, agreements, policies, or
arrangements, subject to U.S. law, and (b) all employment termination,
severance, or other employment contracts or employment agreements providing for
an annual salary exceeding $100,000 (other than those required or imposed by the
law of any jurisdiction outside of the United States and offer letters providing
for "at will" employment).
"PLEDGE AGREEMENT" is defined in Section 7.1.14.
"PROCEEDING" means any action, arbitration, audit, hearing, known
investigation, litigation or suit (whether civil, criminal, administrative or
investigative) commenced, brought, conducted or heard by or before any
Governmental Body or arbitrator.
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"QSSS" is defined in Section 3.11.
"QUALIFIED PLAN" means any Plan intended to be "qualified" within the
meaning of Section 401(a) of the IRC.
"REGISTRATION RIGHTS AGREEMENT" is defined in the recitals of this
Agreement.
"RELATED PERSON" means, with respect to a particular individual: (a)
each member of such individual's Family; (b) each Affiliate of such individual;
(c) each Person in which such individual or members of such individual's Family
hold (individually or in the aggregate) a Material Interest; and (d) each Person
with respect to which such individual or one or more members of such
individual's Family serves as a director, officer, partner, executor or trustee
(or in a similar capacity). "RELATED PERSON" means, with respect to a Person
(other than an individual): (u) each Affiliate of such Person; (v) each Person
that holds a Material Interest in such specified Person; (w) each Person that
serves as a director, officer, partner, executor or trustee of such specified
Person (or in a similar capacity); (x) each Person in which such specified
Person holds a Material Interest; (y) each Person with respect to which such
specified Person serves as a general partner or a trustee (or in a similar
capacity); and (z) any Related Person of any individual described in clause (v)
or (w). Without limiting the foregoing, as of the date hereof, each of
Duchossois Industries, Inc., Duchossois TECnology Partners, LLC, Chamberlain
Manufacturing Corporation, The Chamberlain Group, Inc. and any Subsidiary of any
of the foregoing, meet the definition of "RELATED PERSON" with respect to Newco
and Company, and, notwithstanding the foregoing, Churchill Downs, Incorporated
and its Subsidiaries do not meet and shall never be deemed to meet the
definition of "RELATED PERSON" with respect to Newco or Company.
"RELEASE" means any depositing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
migration or other release or disposal into the Environment.
"REPRESENTATIVE" means with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor or other representative
of such Person, including legal counsel, accountants and financial advisors.
"RIGHTS AGREEMENT" is defined in Section 4.3.
"RIGHTS AGREEMENT AMENDMENT" is defined in Section 7.2.11.
"S CORPORATION" is defined in Section 3.11.
"SEC" means the Securities and Exchange Commission of the United
States.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"STANDSTILL TIME" means the period from the date hereof until the first
to occur of (a) the Closing Date, (b) the date of the termination of this
Agreement with respect to a termination pursuant to Sections 8.1.2, 8.1.3,
8.1.4, 8.1.5, 8.1.7 or 8.1.8 and (c) the first anniversary of the date of the
termination of the Agreement with respect to a termination pursuant to Sections
8.1.1, 8.1.6, 8.1.9 or 8.10, provided, however, if between such termination date
and such first anniversary an event described in Sections 8.1.3, 8.1.4, 8.1.5,
8.1.7 or 8.1.8 shall occur, the "STANDSTILL TIME" shall then mean the period
from the date hereof until the date of the occurrence of such event.
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"STOCKHOLDER'S AGREEMENT" is defined in the recitals of this Agreement.
"SUBSIDIARY" means with respect to any Person (the "OWNER"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's Board of
Directors or similar governing body or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "SUBSIDIARY" means a
Subsidiary of Company. Notwithstanding the foregoing, "SUBSIDIARY" does not
include Solimar, Inc., Grupo Thrall de Mexico, S.A. de C.V. or TCMC Equipment
Leasing, Inc.
"SUBSIDIARY SHARES" is defined Section 3.3.
"SURVIVING CORPORATION" is defined in Section 2.1.1.
"TAX" means any federal, state, local, municipal or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under IRC
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty or addition thereto, whether disputed or not.
"TAX CLAIM" is defined in Section 9.4.
"TAX RETURN" means any return (including any information return),
report, statement, schedule, notice, form or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"THIRD PARTY INTELLECTUAL PROPERTY RIGHTS" is defined in Section 3.21.
"THRALL COMPANY" means Thrall Company, a Delaware corporation.
"THREATENED" means, with respect to any claim, Proceeding, dispute,
action or other matter, a demand or statement has been made (whether oral (that
is credible) or in writing) or a notice has been given (whether oral (that is
credible) or in writing), that would lead a prudent person to conclude that such
a claim, Proceeding, dispute, action or other matter is likely to be asserted,
commenced, taken or otherwise pursued in the future.
"TOTAL DEBT" means (without duplication) on a consolidated basis the
sum of: (a) all obligations for borrowed money (whether a direct obligor on a
promissory note, bond, debenture or other similar instrument, as a contingent
obligation for undrawn and uncancelled letters of credit or similar instruments,
as a reimbursement obligor for a drawing under a letter of credit or similar
instrument, or as any type of obligor), plus (b) all capital lease obligations
(other than the interest component of such obligations) of Newco and its
Subsidiaries.
"WORKING CAPITAL" means, as of any date, the amount of working capital
determined in accordance with Exhibit 2.2.2.
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"WORKING CAPITAL ADJUSTMENT" is defined in Section 2.2.2.
"WORKING CAPITAL STATEMENT" is defined in Section 2.2.2.
ARTICLE 2
MERGER; CLOSING
2.1 The Merger.
2.1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement and in accordance with the IBCA, at the Effective Time,
Merger Sub shall be merged with and into Company. From and after the Effective
Time, the separate corporate existence of Merger Sub shall cease, and Company
shall continue as the surviving corporation in the Merger (the "SURVIVING
CORPORATION") and shall continue to be governed by the laws of the State of
Illinois and shall succeed to and assume all rights and obligations of Merger
Sub in accordance with the IBCA.
2.1.2 Effective Time of the Merger. As soon as practicable following
the Closing, the parties shall file Articles of Merger, together with all other
documents, notices and filings required by the IBCA, executed in accordance with
relevant provisions of the IBCA, with the Secretary of State of the State of
Illinois, and shall make all other filings or recordings required under the IBCA
to effect the Merger. The Merger shall become effective at such time as the
Articles of Merger are duly filed with the Secretary of State of the State of
Illinois, or at such other time as Merger Sub and Company shall agree and
specify in the Articles of Merger (the "EFFECTIVE TIME").
2.1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in Section 11.50 of the IBCA. If at any time the
Surviving Corporation shall consider or be advised that any further assignments,
assurances in law or other acts or instruments are necessary or desirable to
vest, perfect, or confirm in the Surviving Corporation the title to any property
or rights of the Constituent Corporations, the Constituent Corporations and
their proper officers and directors shall and will do all such acts and things
as may be necessary or proper to vest, effect or confirm title to such property
or rights in the Surviving Corporation and otherwise to carry out the purposes
of this Agreement.
2.1.4 Articles of Incorporation; Bylaws; Directors and Officers. The
Articles of Incorporation and Bylaws of Merger Sub, in each case as in effect at
the Effective Time, shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation. At the Effective Time, the Board of Directors and
officers of the Surviving Corporation shall be comprised of the directors and
officers of Merger Sub, to hold office until their respective successors are
duly elected or appointed and qualified.
2.2 Terms of the Merger.
2.2.1 Merger Consideration. At the Effective Time, by virtue of the
Merger and without any action by the holder of Company Shares, the Company
Shares issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive in the aggregate (a) Seven Million One
Hundred Fifty Thousand (7,150,000) shares of Parent Common Stock (subject to
appropriate adjustment if the outstanding shares of Parent Common Stock are
changed into a different number of shares or a different class as a result of a
stock split, reverse stock split, stock dividend, subdivision, reclassification,
split, combination, exchange, recapitalization or similar transaction between
the date of this Agreement and the Effective Time (such adjustments being
collectively referred to as the "ANTIDILUTION
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ADJUSTMENT")), (b) an amount in cash equal to One Hundred Sixty-Five Million
Five Hundred Fifty Thousand Dollars ($165,550,000) (subject to the adjustment
described below in Section 2.2.2) ((a) and (b) are collectively referred to as
the "MERGER CONSIDERATION"), and (c) the right to receive Additional Merger
Consideration Payments in accordance with Section 2.2.8. Delivery by Parent of
any Additional Merger Consideration Payment to Newco shall satisfy Parent's
delivery requirements with regard to such Additional Merger Consideration
Payment.
2.2.2 Adjustment Amount.
(a) Promptly after the Closing Date, the Surviving Corporation
shall preliminarily determine the Working Capital Adjustment (as
defined below), if any, in accordance with GAAP, applying Exhibit 2.2.2
hereof. The Surviving Corporation shall set forth such preliminary
determination on a written statement (the "WORKING CAPITAL STATEMENT")
and promptly after making such preliminary determination shall retain
Ernst & Young LLP to perform certain agreed upon procedures as
determined by Surviving Corporation on the Working Capital Statement.
After completion of such engagement by Ernst & Young LLP, the Surviving
Corporation shall deliver the Working Capital Statement to Newco within
seventy-five (75) days after the Closing Date. If within thirty (30)
days following delivery of a copy of the Working Capital Statement,
Newco does not give Parent written notice objecting to the calculations
set forth on the Working Capital Statement (such notice must contain a
statement in reasonable detail of the basis of Newco's objection), the
Working Capital Adjustment reflected on the Working Capital Statement
shall be conclusive and binding on the parties.
If Newco timely gives such notice of objection, then the
issues in dispute shall be promptly submitted to a nationally
recognized firm of certified public accountants selected by the mutual
agreement of the Surviving Corporation and Newco (other than Ernst &
Young LLP or Arthur Andersen LLP, such other firm being referred to as
the "ACCOUNTANTS") for resolution. If Surviving Corporation and Newco
cannot promptly agree on the selection of the Accountants, then the
Accountants will be selected by the agreement of Ernst & Young LLP and
Arthur Andersen LLP. If issues in dispute are submitted to the
Accountants for resolution, (i) each party shall promptly furnish to
the Accountants such workpapers and other documents and information
relating to the disputed issues as the Accountants may request and are
available to that party (or its independent public accountants), and
shall be afforded the opportunity to present to the Accountants any
material relating to the determination and to discuss the determination
with the Accountants; (ii) the determination of the Working Capital
Adjustment by the Accountants, as set forth in a written notice ("FINAL
WORKING CAPITAL NOTICE") delivered to both parties by the Accountants,
shall be binding and conclusive on the parties; and (iii) the Surviving
Corporation and Newco shall each bear 50% of the fees of the
Accountants for such determination.
(b) The "WORKING CAPITAL ADJUSTMENT" shall mean the difference
between negative Two Hundred Seventy Thousand Dollars (-$270,000) and
the Company's Working Capital, as shown on the Working Capital
Statement, unless a dispute is submitted to the Accountants, pursuant
to clause (a) above, in which case the "WORKING CAPITAL ADJUSTMENT"
shall be as shown on the Final Working Capital Notice.
(c) On or before the tenth business day following the final
determination of the Working Capital Adjustment, (i) if Company's
Working Capital, as shown on the Working Capital Statement or Final
Working Capital Notice, as appropriate, is less than negative Two
Hundred Seventy Thousand Dollars (-$270,000), then Newco shall pay to
Parent in cash an amount equal to the Working Capital Adjustment, and
(ii) if Company's Working Capital, as
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shown on the Working Capital Statement, is greater than negative Two
Hundred Seventy Thousand Dollars (-$270,000), then Parent shall pay to
Newco in cash an amount equal to the Working Capital Adjustment. Any
payment made pursuant to the previous sentence shall be made by wire
transfer of immediately available funds to the account designated in
writing by Parent or Newco, as applicable, no later than the tenth
business day after the final determination of the Working Capital
Adjustment.
2.2.3 Exchange Procedure. After the Effective Time, Newco shall
surrender to the Surviving Corporation for cancellation all the certificates
that immediately prior to the Effective Time represented the Company Shares,
duly endorsed and executed as the Surviving Corporation may require. When the
certificates shall have been so delivered, the cash portion of the Merger
Consideration shall be paid by wire transfer of immediately available funds (to
the account designated in writing by Newco at least two (2) business days before
the Closing) and the Parent Common Stock portion of the Merger Consideration
shall be issued to Newco registered in the name of Newco (in denominations of
not less than fifty thousand (50,000) shares each as designated in writing by
Newco at least five (5) business days before the Closing). At the Effective
Time, Newco, as the holder of certificates evidencing the Company Shares
outstanding immediately prior to the Effective Time, shall cease to have any
rights with respect to such stock, and its sole right shall be to receive the
Merger Consideration and, subject to certain conditions, Additional Merger
Consideration Payments.
2.2.4 No Further Ownership Rights in Company Shares. As of the
Effective Time, all Company Shares shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and the holder
of a certificate representing any Company Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration and,
subject to certain conditions, Additional Merger Consideration Payments, without
interest. All rights to receive the Merger Consideration and, subject to certain
conditions, Additional Merger Consideration Payments, shall be deemed, when paid
or issued hereunder, to have been paid or issued, as the case may be, in full
satisfaction of all rights pertaining to the Company Shares. After the Effective
Time, there shall be no further registration of transfers on Company's stock
transfer books of Company Shares. If after the Effective Time, a certificate
that immediately prior to the Effective Time represented issued and outstanding
Company Shares is presented to the Surviving Corporation for any reason, it
shall be canceled and exchanged as provided in Section 2.2.3.
2.2.5 Merger Sub Common Stock. As of the Effective Time, each share of
common stock of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become one validly issued, fully paid
and non-assessable share of common stock of the Surviving Corporation.
2.2.6 Treasury Stock. Any shares of Company held in the treasury of
Company immediately prior to the Effective Time shall be canceled and returned
and cease to exist as of the Effective Time, and no consideration shall be
delivered in exchange therefor.
2.2.7 Escrow Agreement; Stock Powers. At the Closing, Newco and Parent
shall execute and deliver to each other the Escrow Agreement, pursuant to which
Newco shall contemporaneously therewith deliver to the Escrow Agent, if the
Closing Date is on or prior to December 31, 2001, an aggregate of Six Million
Five Hundred Thousand (6,500,000) shares of Parent Common Stock (subject to
Antidilution Adjustment), or, if the Closing Date is after December 31, 2001, an
aggregate of Four Million Six Hundred Forty-Two Thousand One Hundred
Seventy-Five (4,642,175) shares of Parent Common Stock (subject to Antidilution
Adjustment) (the "ESCROWED SHARES"). The Escrowed Shares shall be held under the
terms and conditions of the Escrow Agreement. At the Closing, Newco shall
deliver twenty (20) stock powers to the Escrow Agent executed in blank with the
signatures guaranteed
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by a national bank if reasonably requested by the Escrow Agent. If after Closing
additional stock powers are reasonably requested by the Escrow Agent or Parent,
Newco shall execute and deliver to the Escrow Agent such stock powers.
2.2.8 Payment of Additional Merger Consideration.
(a) If on any Calculation Date, as determined in accordance
with clause (b) below, the aggregate amount of the Current Credit
Amounts, if any, for all Calendar Years ending prior to such
Calculation Date exceeds the sum of (i) the aggregate amount of all
Additional Merger Consideration Payments, if any, made prior to such
Calculation Date and (ii) the aggregate amount of the Current Deficit
Amounts, if any, for all Calendar Years ending prior to such
Calculation Date, Parent shall pay to Newco a cash amount (an
"ADDITIONAL MERGER CONSIDERATION PAYMENT") equal to such excess amount.
The payment of each Additional Merger Consideration Payment shall be by
wire transfer in immediately available funds to the account designated
in writing by Newco (x) if no notice of objection regarding the
determination and calculation set forth on the Calculation Notice (as
defined below) is given by Newco to the Surviving Corporation within
ten (10) days following the Calculation Date (as defined below), within
fifteen (15) days following the Calculation Date (as defined below)
relating to such Additional Merger Consideration Payment or (y) if
Newco timely gives notice of objection regarding the determination and
calculation set forth on the Calculation Notice (such notice must
contain a statement in reasonable detail of the basis of Newco's
objection) to the Surviving Corporation within ten (10) days following
the Calculation Date, within five (5) days following the earlier of the
mutual agreement of Newco and the Surviving Corporation as to such
Additional Merger Consideration Payment or the receipt by the Surviving
Corporation of the Final Calculation Notice relating to such Additional
Merger Consideration Payment.
(b) On a date (a "CALCULATION DATE") within forty-five (45)
days after the end of each Calendar Year, the Surviving Corporation
shall (i) determine the Market Deliveries for such Calendar Year; (ii)
determine (X) the amount (the "CURRENT CREDIT") by which the Market
Deliveries for such Calendar Year exceeds the Baseline Market
Deliveries for such Calendar Year and the related Current Credit Amount
for such Calendar Year or (Y) the amount (the "CURRENT DEFICIT") by
which the Baseline Market Deliveries for such Calendar Year exceeds the
Market Deliveries for such Calendar Year and the related Current
Deficit Amount for such Calendar Year, as the case may be; (iii)
calculate whether an Additional Merger Consideration Payment is payable
pursuant to clause (a) above as a result of such determinations for
such Calculation Date; and (iv) give written notice (a "CALCULATION
NOTICE") to Newco setting forth its determinations and calculations.
If Newco timely gives notice of objection regarding the
determination and calculation set forth on the Calculation Notice, then
Newco and the Surviving Corporation shall attempt in good faith to
resolve the objection, and if they are unable to do so within ten (10)
days of delivery by Newco to the Surviving Corporation of Newco's
objection, then the issues in dispute shall then be promptly submitted
to the Executive Director of the American Association of Railroads or
his or her designee for resolution. If the issues in dispute are
submitted to the Executive Director of the American Association of
Railroads or his or her designee for resolution, (i) each party shall
promptly furnish such Person such documents and information relating to
the disputed issues as such Person may request and are available to
that party, and shall be afforded the opportunity to present to such
Person any material relating to the determination and to discuss the
determination with such Person; (ii) the determination by such Person
of the issues in dispute, as set forth in a written notice (the "FINAL
CALCULATION NOTICE") delivered to both parties by such Person, shall
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be binding and conclusive on the parties; and (iii) the Surviving
Corporation and Newco shall each bear 50% of the fees of the Executive
Director of the American Association of Railroads or his or her
designee for such determination.
(c) For the purposes of this Section 2.2.8, the following
terms shall have the meanings specified below.
(i) "BASELINE MARKET DELIVERIES" means, with respect
to each Calendar Year, the railcar market delivery amount set
forth opposite such Calendar Year under the caption "Baseline
Market Delivery Amount" on Exhibit 2.2.8(a).
(ii) "CALENDAR YEAR" shall mean each of the following
years: 2002, 2003, 2004, 2005 and 2006.
(iii) "CURRENT CREDIT AMOUNT" means, with respect to
each Calendar Year for which there is a Current Credit, the
product of multiplying (A) such Current Credit by (B) Two
Thousand Dollars ($2,000).
(iv) "CURRENT DEFICIT AMOUNT" means, with respect to
each Calendar Year for which there is a Current Deficit, the
product of multiplying (A) such Current Deficit by (B) Two
Thousand Dollars ($2,000).
(v) "MARKET DELIVERIES" means, with respect to each
Calendar Year, the railcar market deliveries in North America
during such Calendar Year, as determined in accordance with
the procedures in Exhibit 2.2.8(b).
(d) The aggregate amount of all Additional Merger
Consideration Payments made by Parent pursuant to this Section 2.2.8
shall not exceed Forty-Five Million Dollars ($45,000,000).
(e) There shall be no reimbursement by Newco of any Additional
Merger Consideration Payment made by Parent to Newco.
2.3 Closing. The closing of the Merger (the "CLOSING") shall take place at the
offices of Haynes and Boone, L.L.P., at 901 Main Street, Suite 3100, Dallas,
Texas 75202, at 10:00 a.m., Dallas time as soon as possible but not later than
the tenth business day after the last to be fulfilled or waived of the
conditions set forth in Article 7 shall be fulfilled or waived in accordance
therewith, provided, however, that if such tenth business day falls on or after
December 10, 2001 and prior to January 4, 2002, then the Closing shall take
place on January 4, 2002.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF NEWCO
To induce Parent and Merger Sub to enter into this Agreement and to consummate
the Contemplated Transactions, and except as may otherwise be expressly
indicated in Newco's Disclosure Letter, Newco represents and warrants to Parent
and Merger Sub as follows:
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3.1 Organization and Good Standing.
3.1.1 Newco. Newco is a corporation duly organized, validly existing
and in good standing under the laws of Delaware, with full corporate power and
authority to conduct its business as it is now being conducted. Newco has full
corporate power and authority to own or use the properties and assets that it
purports to own or use. Newco has delivered to Parent copies of the
Organizational Documents of Newco, as currently in effect.
3.1.2 Company. Company is a corporation duly organized, validly
existing and in good standing under the laws of Illinois, with full corporate
power and authority to conduct its business as it is now being conducted.
Company has full corporate power and authority to own or use the properties and
assets that it purports to own or use, and to perform all its obligations under
Applicable Contracts to which it is a party. Company is duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification, except for any such failure that when taken
together with all such failures would not reasonably be expected to have a
Material Adverse Effect with respect to Company. Part 3.1.2 of Newco's
Disclosure Letter contains a complete and accurate list of each jurisdiction,
domestic and foreign, in which Company is authorized to do business. Newco has
delivered to Parent copies of the Organizational Documents of Company, as
currently in effect.
3.1.3 Subsidiaries. Each Subsidiary of Company is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, as appropriate, with full corporate, partnership
or similar power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable Contracts to which such
Subsidiary is a party. Each Subsidiary of Company is duly qualified to do
business as a foreign entity and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification, except for any such failure that when taken
together with all such failures would not reasonably be expected to have a
Material Adverse Effect with respect to Company. Part 3.1.3 of Newco's
Disclosure Letter contains, with respect to each Subsidiary of Company, a
complete and accurate list of each Subsidiary's name, form of entity, its
jurisdiction of incorporation or organization, as appropriate, and other
jurisdictions, domestic and foreign, in which it is authorized to do business.
Newco has delivered to Parent copies of the Organizational Documents of each
Subsidiary of Company, as currently in effect.
3.2 Authority; No Conflict.
3.2.1 Authority.
(a) This Agreement constitutes the legal, valid and binding
obligation of Company. Company has taken all necessary corporate action
and received all necessary shareholder approval to authorize the
execution and delivery by it of this Agreement and to perform its
obligations under this Agreement. Company has the absolute and
unrestricted right, power, authority and capacity to execute and
deliver this Agreement and to perform its obligations under this
Agreement.
(b) This Agreement constitutes the legal, valid and binding
obligation of Newco. Upon the execution and delivery by Newco of the
other Operative Agreements, the other Operative Agreements will
constitute the legal, valid and binding obligations of Newco. Newco has
taken all necessary corporate action and received all necessary
shareholder approval to
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authorize the execution and delivery by it of the Operative Agreements
and to perform its obligations under the Operative Agreements. Newco
has the absolute and unrestricted right, power, authority and capacity
to execute the Operative Agreements and to perform its obligations
under the Operative Agreements.
3.2.2 No Conflict. Neither the execution and delivery of the Operative
Agreements nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time),
(a) contravene, conflict with or result in a violation of (A)
any provision of the Organizational Documents of Newco, Company or any
of Company's Subsidiaries or (B) any resolution adopted by the Boards
of Directors of Newco, Company, or any of Company's Subsidiaries;
(b) except as set forth in Part 3.2.2 of Newco's Disclosure
Letter, contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to which Newco,
Company, any of Company's Subsidiaries or any of the assets owned or
used by Company or any of its Subsidiaries, may be subject;
(c) except as set forth in Part 3.2.2 of Newco's Disclosure
Letter, contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by Company or any of its
Subsidiaries or that otherwise relates to the business of, or any of
the assets owned or used by, Company or any of its Subsidiaries;
(d) cause the Surviving Corporation or any of the Surviving
Corporation's Subsidiaries to become subject to, or to become liable
for the payment of, any Tax; it being understood that the Surviving
Corporation will become a "C" corporation for federal income tax
purposes following the Closing;
(e) except as set forth in Part 3.2.2 of Newco's Disclosure
Letter, contravene, conflict with, or result in a violation or breach
of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any Applicable
Contract that is required to be listed on Part 3.18 of Newco's
Disclosure Letter; or
(f) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by Company or
any of its Subsidiaries that are material to the business of Company or
any of its Subsidiaries.
Except as set forth in Part 3.2.2 of Newco's Disclosure Letter and
except for those Consents the failure of which to obtain would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect
with respect to Company or the Surviving Corporation, neither Newco, Company nor
any of Company's Subsidiaries is required or will be required to give any notice
to or obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
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3.3 Capitalization.
3.3.1 Newco. The authorized capital stock of Newco consists of 10,000
shares of common stock, no par value, of which amount 8,079.25 shares are issued
and outstanding and constitute the Newco Shares, and no shares are held in the
treasury of Newco. There are no securities, options, warrants, calls,
commitments or other agreements of any character that provide for the purchase,
issuance or transfer of any shares of capital stock or debt securities of Newco,
nor are there any outstanding securities granted or issued by Newco that are
convertible into or exchangeable or exercisable for any shares of the capital
stock of Newco and none are authorized.
3.3.2 Company. The authorized capital stock of Company consists of
10,000 shares of common stock, $0.01 per share par value, of which amount
8,079.25 shares are issued and outstanding and constitute the Company Shares,
and no shares are held in the treasury of Company. There are no securities,
options, warrants, calls, commitments or other agreements of any character that
provide for the purchase, issuance or transfer of any shares of capital stock or
debt securities of Company, nor are there any outstanding securities granted or
issued by Company that are convertible into or exchangeable or exercisable for
any shares of the capital stock of Company and none are authorized. The Company
Shares are owned of record and beneficially by Newco, free and clear of all
Encumbrances. No legend (other than a customary restrictive legend under the
Securities Act) or other reference to any purported Encumbrance appears upon any
certificate representing the Company Shares. All of the Company Shares have been
duly authorized and validly issued, are fully paid and nonassessable and were
issued free of any preemptive rights. None of the Company Shares or other
securities of Company was issued or transferred in violation of the Securities
Act or any other Legal Requirement. Company does not own, and does not have any
Applicable Contract to acquire, any equity securities or other securities of any
Person or any direct or indirect equity or ownership interest in any other
business.
3.3.3 Subsidiaries. Part 3.3.3 of Newco's Disclosure Letter sets forth
the authorized capital stock of each Subsidiary of Company as well as the par
value and number of shares that are issued and outstanding for each Subsidiary
of Company (collectively, the "SUBSIDIARY SHARES"). No Subsidiary Shares are
held in the treasury of any of Company's Subsidiaries. There are no securities,
options, warrants, calls, commitments or other agreements of any character that
provide for the purchase, issuance or transfer of any shares of capital stock or
debt securities of any of Company's Subsidiaries, nor are there any outstanding
securities granted or issued by any of Company's Subsidiaries that are
convertible into or exchangeable or exercisable for any shares of the capital
stock of any of Company's Subsidiaries, and none is authorized. All issued and
outstanding Subsidiary Shares are owned of record and beneficially by the
Persons and in the amounts or percentages designated on Part 3.3.3 of Newco's
Disclosure Letter, free and clear of all Encumbrances. No legend (other than a
customary restrictive legend under the Securities Act) or other reference to any
purported Encumbrance appears upon any certificate representing any Subsidiary
Shares. All of the Subsidiary Shares have been duly authorized and validly
issued, are fully paid and nonassessable and were issued free of any preemptive
rights. None of the Subsidiary Shares was issued or transferred in violation of
the Securities Act or any other Legal Requirement. No Subsidiary of Company owns
or has any Applicable Contract to acquire, any equity securities or other
securities of any Person or any direct or indirect equity or ownership interest
in any other business.
3.4 Financial Statements. Newco has delivered to Parent: (a) the audited balance
sheet of Company and its Subsidiaries on a consolidated basis as of December 31
in each of the years 1997 through 1999, and the related audited statements of
income, cash flows and changes in shareholders' equity for each of the fiscal
years then ended, including the notes thereto; (b) the audited balance sheet of
Company and its Subsidiaries on a consolidated basis as of December 31, 2000
(including the notes thereto, the "BALANCE SHEET"), and the related audited
statements of income, cash flows and changes in shareholders' equity for
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the fiscal year then ended, including the notes thereto; and (c) the unaudited
balance sheet of Company and its Subsidiaries on a consolidated basis as of June
30, 2001 (the "INTERIM BALANCE SHEET") and the related unaudited statements of
income, cash flows and changes in shareholders' equity for the six months then
ended. Such financial statements and notes thereto fairly present the financial
condition and the results of operations, changes in shareholders' equity and
cash flow of Company and its Subsidiaries on a consolidated basis as at the
respective dates of, and for the periods referred to in, such financial
statements, all in accordance with GAAP, except as otherwise noted therein and
subject, in the case of interim financial statements, to (a) normal recurring
year-end adjustments (the effect of which will not, individually or in the
aggregate, be materially adverse) and (b) the absence of notes (that, if
presented, would not differ from those included in the Balance Sheet). The
financial statements referred to in this Section 3.4 reflect the consistent
application of GAAP throughout the periods involved, except as disclosed in the
notes to such financial statements. No financial statements of any Person other
than Company and its Subsidiaries are required by GAAP to be included in the
financial statements of Company and its Subsidiaries on a consolidated basis.
3.5 Books and Records. The books of account, minute books, stock record books
and other records of Company and each of its Subsidiaries, all of which have
been made available to Parent, are complete and correct and have been maintained
in accordance with sound business practices, including the maintenance of an
adequate system of internal controls. The minute books of Company and each of
its Subsidiaries contain accurate and complete records of all meetings held of,
and actions taken by, the shareholders of Company, the shareholders or other
comparable holders of voting securities of each of Company's Subsidiaries, the
Boards of Directors or other comparable governing bodies of Company and each of
its Subsidiaries, and committees of the Boards of Directors or other comparable
governing bodies of Company and each of its Subsidiaries, and no meeting of any
such shareholders, holders of voting securities, Boards of Directors or
committees of Company or any of its Subsidiaries has been held for which minutes
have not been prepared and are not contained in such minute books. At the
Closing, all of those books and records will be in the possession of Company or
its Subsidiaries, as appropriate. Part 3.5 of Newco's Disclosure Letter contains
a complete and accurate list of all checking, savings or other type of deposit
accounts of Company and its Subsidiaries and the authorized signatories on such
accounts.
3.6 Title to Properties; Encumbrances. Part 3.6 of Newco's Disclosure Letter
contains a complete and accurate list of all real property, real property
leaseholds or other real property interests therein owned by Company and its
Subsidiaries. Newco has delivered or made available to Parent, to the extent in
the possession of Newco, Company or any of its Subsidiaries, copies of the deeds
and other instruments (as recorded) by which Company or its Subsidiaries
acquired such real property and interests, and copies of all title insurance
policies, opinions, abstracts and surveys in the possession of Newco, Company or
any Subsidiary of Company and relating to such property or interests. Company
and each of its Subsidiaries owns (with good and marketable title in the case of
real property, subject only to the matters permitted by the following sentence)
all the properties and assets (whether real, personal or mixed and whether
tangible or intangible) reflected as owned in the books and records of Company
or such Subsidiary, as appropriate, including all of the properties and assets
reflected in the Balance Sheet or the Interim Balance Sheet (except for (a)
properties and assets listed in Exhibit 5.10(a), (b) assets held under
capitalized leases disclosed or not required to be disclosed in Part 3.6 of
Newco's Disclosure Letter and (c) personal property sold since the date of the
Balance Sheet or the Interim Balance Sheet, as the case may be, in the Ordinary
Course of Business) and all of the properties and assets purchased or otherwise
acquired by Company or such Subsidiary, as appropriate, since the date of the
Balance Sheet (except for personal property acquired and sold since the date of
the Balance Sheet in the Ordinary Course of Business and consistent with past
practice).
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All properties and assets reflected in the Balance Sheet or the Interim
Balance Sheet are free and clear of all Encumbrances and are not, in the case of
real property, subject to any rights of way, building use restrictions,
exceptions, variances, reservations or limitations of any nature, except, with
respect to all such properties and assets, (a) mortgages or security interests
shown on the Balance Sheet or the Interim Balance Sheet as securing specified
liabilities or obligations, with respect to which no default (or event that,
with notice or lapse of time or both, would constitute a default) exists; (b)
mortgages or security interests incurred in connection with the purchase of
property or assets after the date of the Interim Balance Sheet (such mortgages
and security interests being limited to the property or assets so acquired),
with respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists; (c) liens for current taxes not yet
due; and (d) with respect to real property, (i) imperfections of title, if any,
none of which, individually or in the aggregate, is substantial in amount,
materially detracts from the value or materially impairs the present use of the
property subject thereto or materially impairs the operations of Company or any
of its Subsidiaries, (ii) zoning laws, variances and other land use restrictions
that do not materially impair the present use of the property subject thereto
and (iii) any matters disclosed in the title commitments referenced in Part 3.6
of Newco's Disclosure Letter except (v) the Clinton, Illinois bond mortgages,
(w) the Clinton, Illinois Portec mortgage, (x) the Clinton, Illinois lease, (y)
the Clinton, Illinois 1856 Reversionary Interest Deed and (z) the Clinton,
Illinois 1958 Quitclaim Deed. All buildings, plants and structures owned by
Company or any of its Subsidiaries lie wholly within the boundaries of the real
property owned by Company or such Subsidiary, as appropriate, and do not
encroach upon the property of, or otherwise conflict with the property rights
of, any other Person.
3.7 Condition and Sufficiency of Assets. To the Knowledge of Company, the
buildings, plants and structures of Company and its Subsidiaries are
structurally sound, are in good operating condition and repair (normal wear and
tear excepted) and are adequate for the uses to which they are being put, and
none of such buildings, plants or structures is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs. To the Knowledge
of Company, the building, plants and structures of Company and each of its
Subsidiaries are sufficient for the continued conduct of Company's or such
Subsidiary's, as appropriate, businesses after the Closing in the same manner as
conducted prior to the Closing. To the Knowledge of Company, the equipment of
Company and its Subsidiaries is in good operating condition and repair (normal
wear and tear excepted) and none of such equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost.
3.8 Accounts Receivable. All accounts receivable of Company and its Subsidiaries
that are reflected on the Balance Sheet or the Interim Balance Sheet or on the
Working Capital Statement (collectively, the "ACCOUNTS RECEIVABLE") represent
valid obligations arising from sales actually made or services actually
performed in the Ordinary Course of Business. The reserve for doubtful accounts
on the Working Capital Statement shall be adequate in all material respects and
calculated consistent with past practice as of the Closing Date. Part 3.8 of
Newco's Disclosure Letter contains a complete and accurate list of all Accounts
Receivable as of the date of the Interim Balance Sheet, which list also sets
forth the aging of such Accounts Receivable.
3.9 Inventory. All inventory of Company and its Subsidiaries, whether or not
reflected in the Balance Sheet or the Interim Balance Sheet, consists of a
quality and quantity usable and salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all of which have
been written off or written down to net realizable value on the Balance Sheet or
the Interim Balance Sheet or on the accounting records of Company or any of its
Subsidiaries, as the case may be. All inventories not written off have been
priced at the lower of cost or net realizable value on a LIFO and FIFO method
for domestic and foreign operations, respectively. The reserve for excess and
obsolete inventory as of the Closing Date shall be calculated consistent with
past practice.
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3.10 No Undisclosed Liabilities. Except as set forth in Part 3.10 of Newco's
Disclosure Letter, except for liabilities or obligations reflected or reserved
against in the Balance Sheet or the Interim Balance Sheet, and except for
current liabilities incurred in the Ordinary Course of Business since the
respective dates thereof, neither Company nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent or otherwise).
3.11 Taxes.
(a) Newco duly and timely filed an election, effective July
19, 2001, to be, and at all times since then it has been, an S
corporation, as defined by Section 1361 of the IRC (an "S
CORPORATION"). Newco's election has not been terminated or revoked, and
at all times since the filing of such election, Newco's stockholders
have been eligible to be stockholders in an S corporation. Company is
and since July 19, 2001 has been a qualified subchapter S subsidiary,
as defined by Section 1361 of the IRC (a "QSSS"). An election to be
treated as a QSSS has been duly and timely filed for Company and such
election has not been terminated or revoked. Company was an S
corporation from the date of making an election to be an S corporation
on February 3, 1989 until July 19, 2001. Thrall Company is and since
July 30, 1999 has been a QSSS. An election to be treated as a QSSS has
been duly and timely filed for Thrall Company and such election has not
been terminated or revoked. Except as set forth on Part 3.11 of Newco's
Disclosure Letter, Newco has delivered to Parent, or made available to
Parent's outside tax accountants, true and correct copies of (i) the
statements, if any, that Newco, Company and Thrall Company have
received from the IRS regarding their status as either an S corporation
or a QSSS, (ii) Newco's election (Form 2553) to be treated as an S
corporation, (iii) the election (Form 8869) for Company and Thrall
Company to be treated as a QSSS, and (iv) the four (4) most recently
filed U.S. federal income Tax Returns and foreign income Tax Returns of
each of Company and its Subsidiaries.
(b) Except as set forth on Part 3.11 of Newco's Disclosure
Letter, (i) Newco and Company have timely filed and caused each of
Company's Subsidiaries to timely file all material Tax Returns that any
such entity was required to file pursuant to applicable Legal
Requirements, (ii) all such Tax Returns were correct and complete in
all material respects, (iii) all Taxes due and owing by Newco, Company
and any of Company's Subsidiaries (whether or not shown on any Tax
Return) have been paid, (iv) the Balance Sheet and Interim Balance
Sheet reflect an adequate reserve (other than a reserve for deferred
income taxes established to reflect differences between book basis and
tax basis of assets and liabilities) for all Taxes payable by Newco,
Company and Company's Subsidiaries for all taxable periods and portions
thereof through the dates of the Balance Sheet and the Interim Balance
Sheet, (v) neither Newco, Company nor any of Company's 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 or the
collection of Taxes, (vi) no deficiencies, adjustments or claims for
any Taxes have been proposed, asserted or assessed against Newco,
Company or any of Company's Subsidiaries, (vii) there are no
Encumbrances for Taxes other than for current Taxes not yet due upon
any assets of Newco, Company or any of Company's Subsidiaries, (viii)
none of the Tax Returns of Newco, Company or any of Company's
Subsidiaries have been selected for or are now under audit or
examination by any taxing authority or other Governmental Body, and
there are no suits, actions, proceedings or investigations pending or,
to the Knowledge of Newco, Company or any of Company's Subsidiaries,
Threatened against Newco, Company or any of Company's Subsidiaries with
respect to any Taxes, (ix) all Taxes that are required by law to be
withheld or collected by Newco, Company or any of Company's
Subsidiaries have been duly withheld and collected and, to the extent
required by Applicable Law, have been paid to the proper Governmental
Body or
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properly segregated or deposited, (x) neither Newco, Company nor any of
Company's Subsidiaries has been a member of an affiliated group filing
a consolidated federal income Tax Return or has liability for the Taxes
of any Person (other than Newco, Company or any of Company's
Subsidiaries) under Section 1.1502-6 of the Treasury Regulations or any
similar provision of state, local or foreign law, as transferee or
successor, by contract or otherwise, (xi) neither Newco, Company nor
any of Company's Subsidiaries is party to any Tax sharing or other
agreement or arrangement that will require any payment with respect to
Taxes, (xii) Newco is a domestic corporation, and (xiii) neither Newco,
Company nor any of Company's Subsidiaries is a real property holding
company within the meaning of Section 897(c) of the IRC.
(c) Except as set forth in Part 3.11 of Newco's Disclosure
Letter, (i) no property of Company or any of Company's Subsidiaries is
"tax exempt use property" within the meaning of Section 168(h) of the
IRC or under any similar provision of state or local law, (ii) neither
Company nor any of Company's Subsidiaries is a party to any lease made
pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended, or under any similar provision of state or local law, (iii) no
property of Company or any of Company's Subsidiaries secures any debt
the interest on which is tax-exempt under Section 103(a) of the IRC or
under any similar provision of state or local law, and (iv) neither
Company nor any of Company's Subsidiaries is a borrower or guarantor of
any outstanding industrial revenue bonds, and is not a tenant,
principal user or related Person to any principal user (within the
meaning of Section 144(a) of the IRC) of any property which has been
financed or improved with the proceeds of any industrial revenue bonds
or under any similar provision of state or local law.
3.12 No Material Adverse Change. Since the date of the Balance Sheet, there has
not been any Material Adverse Change with respect to Company.
3.13 Employee Benefits.
(a) Part 3.13(a) of Newco's Disclosure Letter contains a true
and complete list of each of the Plans.
(b) Neither Company nor any of its Subsidiaries maintains or
is obligated to provide benefits under any life, medical or health plan
(other than as an incidental benefit under a Qualified Plan) which
provides benefits to retirees or other terminated employees other than
benefit continuation rights under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"). No Plan is a
"multiple employer welfare arrangement" within the meaning of Section
3(40) of ERISA.
(c) Except as set forth in Part 3.13(c) of Newco's Disclosure
Letter, neither Company, any of its Subsidiaries nor any ERISA
Affiliate contributes to or has any obligation to contribute to or has
any liability (contingent or otherwise) to any "multiemployer plan," as
that term is defined in Section 4001 of ERISA.
(d) Each of the Plans and its administration is currently in
compliance in all material respects with ERISA and the IRC and all
other applicable Legal Requirements and with any applicable collective
bargaining agreement and has been operated in accordance with the terms
and provisions of the plan document.
(e) Company and its Subsidiaries have performed all of their
material obligations under all Plans, and all contributions and other
payments required to be made by Company or any of its Subsidiaries to
any Plan have been made or reserves adequate for such contributions or
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other payments have been set aside therefor and have been reflected in
the Balance Sheet and the Interim Balance Sheet.
(f) No Contemplated Transaction will result in any material
liability to the PBGC under Section 302(c)(11), 4062, 4063, 4064 or
4069 of ERISA, or otherwise, with respect to Company, any of its
Subsidiaries, any ERISA Affiliate or any other corporation or
organization controlled by or under common control with any of the
foregoing within the meaning of Section 4001 of ERISA.
(g) Except as set forth in Part 3.13(g) of Newco's Disclosure
Letter, there are no pending or, to the Knowledge of Company,
Threatened material claims by or on behalf of any Plan, or by any
Person covered thereby, other than ordinary claims for benefits
submitted by participants or beneficiaries.
(h) Except as set forth in Part 3.13(h) of Newco's Disclosure
Letter, no employer securities, employer real property or other
employer property is included in the assets of any Plan.
(i) Except as set forth in Part 3.13(i) of Newco's Disclosure
Letter, with respect to each Pension Plan subject to Title IV of ERISA,
the present value of projected benefit obligations under such actuarial
assumptions used for funding purposes in the most recent actuarial
report prepared by the Plan's actuary with respect to such Plan did
not, as of its latest valuation date, exceed the then current market
value of the assets of such Plan allocable to such projected benefit
obligations. No accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the IRC) has been incurred with respect
to any such Pension Plan, whether or not waived; and no event has
occurred or circumstance exists that may result in an accumulated
funding deficiency as of the last day of the current plan year of any
such Pension Plan. Company is not required to provide security to a
Pension Plan under Section 401(a)(29) of the IRC or Section 307 of
ERISA.
Except as set forth in Part 3.13(i) of Newco's Disclosure
Letter, no Pension Plan has been terminated, the PBGC has not
instituted or Threatened a proceeding to terminate any Pension Plan
pursuant to Subtitle 1 of Title IV of ERISA and no condition or set of
circumstances exists which presents a material risk of termination of
any of the Pension Plans by the PBGC and none of the Qualified Plans
subject to Title IV of ERISA has been the subject of a reportable event
(as defined in Section 4043 of ERISA) as to which a notice would be
required to be filed with the PBGC. Company has paid in full all
insurance premiums due to the PBGC with regard to the Plans.
(j) To the Knowledge of Company, Newco has delivered or made
available to Parent:
(i) copies of the current Plan document and any
amendments thereto and copies of any related trust, and (A)
the most recent summary plan descriptions of such Plans for
which Company or any of its Subsidiaries is required to
prepare, file, and distribute summary plan descriptions, and
(B) all summaries and descriptions furnished to participants
and beneficiaries within the two (2) years preceding the date
of this Agreement regarding Plans for which a plan description
or summary plan description is not required;
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(ii) all collective bargaining agreements pursuant to
which contributions have been made or obligations incurred
(including both pension and welfare benefits) by Company and
any of its Subsidiaries, and all collective bargaining
agreements pursuant to which contributions are being made or
obligations are owed by such entities;
(iii) all actuarial reports, submitted within the
three (3) years preceding the date hereof by the actuary of
each Qualified Plan currently in force or for which Company or
any of its Subsidiaries currently has any liability
(contingent or otherwise);
(iv) a sample copy of the form currently used by
Company and its Subsidiaries for providing all notifications
required to be given to employees under Section 601 et seq. of
ERISA, Section 4980B of the IRC, and Section 9801 et seq. of
the IRC regulating the notice requirements of Group Health
Plans (as defined in Section 607(1) of ERISA);
(v) the Form 5500 filed in each of the most recent
three (3) plan years with respect to each Plan and Pension
Plan, including all schedules thereto and any opinions of
independent accountants relating thereto;
(vi) all written material Contracts, with third party
administrators or service providers currently in force that
relate to any Plan;
(vii) all material written employee manuals and
policies;
(viii) all material insurance policies that insure
any of the Plans that currently benefit any current or former
employees of Company or any of its Subsidiaries;
(ix) with respect to Plans that are Qualified Plans,
the most recent determination letter for each such Plan; and
(x) all documents that set forth the terms of each
Foreign Employee Benefit Plan and Foreign Collectively
Bargained Employee Benefit Plan.
(k) Neither Company nor any of its Subsidiaries has engaged in
or knowingly permitted to occur and no other party has engaged in or
permitted to occur any transaction prohibited by Section 406 of ERISA
or "prohibited transaction" under Section 4975(c) of the IRC with
respect to any Plan, except for any transactions which are exempt under
Section 408 of ERISA or Section 4975 of the IRC which would result in a
material penalty under ERISA or the IRC.
(l) Except for any formal written qualification requirement
with respect to which the remedial amendment period set forth in
Section 401(b) of the IRC, and any regulations, rulings or other IRS
releases thereunder, has not expired or except as set forth in Part
3.13(l) of Newco's Disclosure Letter, (i) each Plan that is intended to
be a Qualified Plan has received a favorable determination letter from
the IRS and is qualified in form and operation under Section 401(a) of
the IRC, and each trust for each such Plan is exempt from federal
income tax under Section 501(a) of the IRC, and (ii) to the Knowledge
of Company, no event has occurred or circumstance exists that gives
rise to disqualification or loss of tax-exempt status of any such Plan
or trust.
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(m) Neither Company nor any of its Subsidiaries has filed or
has been required to file any registration statements with the SEC with
respect to any Plans.
(n) Except as set forth in Part 3.13(n) of Newco's Disclosure
Letter, to the Knowledge of Company, neither Company nor any of its
Subsidiaries has received any written notice of a material increase in
premium costs of Plans that are insured.
(o) Except as set forth in Part 3.13(o) of Newco's Disclosure
Letter, neither the execution of this Agreement nor the consummation of
the Contemplated Transactions will result in the payment, vesting, or
acceleration of any benefit under any Plan, assuming that no employee
incurs a termination of employment or reduction in hours, in connection
with Contemplated Transactions. There are no contracts or arrangements
providing for payments that could result in a loss of deduction for
Company under Section 280G of the IRC.
(p) To the Knowledge of Company, neither Company nor any of
its Subsidiaries have received any written notice from the IRS, the
PBGC, or the DOL relating to any Plan regarding an audit of any Plan or
the assessment of a material penalty.
(q) Foreign Employee Benefit Plans.
(i) Part 3.13(q) of Newco's Disclosure Letter
contains a true and complete list of each Foreign Employee
Benefit Plan other than a Foreign Governmental Employee
Benefit Plan.
(ii) Each Foreign Employee Benefit Plan other than a
Foreign Collectively Bargained Employee Benefit Plan or a
Foreign Governmental Employee Benefit Plan has been maintained
in compliance in all material respects with its terms and with
the requirements of any and all applicable laws, statutes,
rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory
authorities. All contributions, premiums or other payments
required to be made by Company or any of its Subsidiaries with
respect to each Foreign Employee Benefit Plan have been timely
made and have been paid in full. To the Knowledge of Company,
neither Company nor any of its Subsidiaries has made any
announcement, agreement, or proposal or has incurred or is
likely to incur on or prior to Closing any material obligation
in connection with the amendment of, termination of, or
withdrawal from any Foreign Employee Benefit Plan.
(iii) The present value of the accrued benefit
liabilities (whether or not vested) attributable to employees
of Company or any of its Subsidiaries or for which Company or
any of its Subsidiaries is or may be liable under each Foreign
Employee Benefit Plan that is a pension or retirement plan
(including, without limitation, any superannuation fund) or
that provides for actuarially-determined benefits, determined
as of the end of the most recently ended fiscal year of
Company or any such Subsidiary, on the basis of actuarial
assumptions, each of which is reasonable, did not exceed the
current value of the assets of such Foreign Employee Benefit
Plan allocated to such benefit liabilities, or, alternatively,
Company or any such Subsidiary has established adequate
reserves for the present value of such accrued benefit
liabilities, determined as described herein, in the Balance
Sheet and the Interim Balance Sheet.
(iv) No action, litigation, audit examination,
investigation or administrative proceeding has been made,
commenced or Threatened with respect to any Foreign
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Employee Benefit Plan that would reasonably be expected to
result in a material liability of Company or any of its
Subsidiaries. No Foreign Employee Benefit Plan that is not a
Foreign Governmental Employee Benefit Plan provides for
post-employment or retiree health, life insurance and/or other
welfare benefits and has unfunded liabilities, and neither
Company nor any of its Subsidiaries has any obligation to
provide any such benefits to any active employees following
such employees' retirement or termination of service, to any
retired or former employees, or to any beneficiary of any
retired or former employee following such employees' death.
(v) There are no material liabilities of Company or
any of its Subsidiaries with respect to any Foreign Employee
Benefit Plan that are not accrued or otherwise disclosed in
the Balance Sheet and the Interim Balance Sheet. With respect
to each Foreign Employee Benefit Plan (other than a Foreign
Governmental Employee Benefit Plan), to the Knowledge of
Company, neither Company nor any of its Subsidiaries has
received any written notice of a material increase in the
benefits relating to any such Foreign Employee Benefit Plan
from the level of benefits for the most recent fiscal year
ended thereof. To the Knowledge of Company, neither Company
nor any of its Subsidiaries has received any written notice of
a material increase in the benefits relating to any Foreign
Collectively Bargained Employee Benefit Plan from the level of
benefits for the most recent fiscal year ended thereof.
(vi) The execution of this Agreement and the
consummation of the Contemplated Transactions will not
constitute a triggering event under any Foreign Employee
Benefit Plan, whether or not legally enforceable, which
(either alone or upon the occurrence of any additional or
subsequent event) will or may result in any payment,
acceleration, vesting or increase in benefits to any employee
or former employee or director of Company or any of its
Subsidiaries. Except as set forth in Part 3.13(q) of Newco's
Disclosure Letter, no Foreign Employee Benefit Plan (other
than a Foreign Governmental Employee Benefit Plan) provides
for the payment of severance, termination, change of control
or similar-type payments or benefits. Company has delivered or
made available to the Parent or its counsel true and complete
copies of each Foreign Employee Benefit Plan, other than a
Foreign Governmental Employment Benefit Plan, together with
all amendments thereto, and, if applicable, all current trust
agreements and other documents establishing other funding
arrangements, together with all amendments thereto, and the
latest financial statements and actuarial valuation report, as
applicable, thereof.
3.14 Employees.
(a) Part 3.14(a) of Newco's Disclosure Letter contains a
complete and accurate list of the following:
(i) all collective bargaining agreements and other
Applicable Contracts with any labor union or other employee
representative of a group of employees; and
(ii) the name and current annual compensation of each
director and each officer of Company and each of its
Subsidiaries.
Newco has delivered or made available to Parent true and complete
copies of all written Applicable Contracts set forth in Part 3.14(a) of
Newco's Disclosure Letter.
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(b) All of the aforesaid Applicable Contracts are in material
compliance with all applicable Legal Requirements, and Company and each
of its Subsidiaries are in material compliance with all Legal
Requirements regarding employment, including, but not limited to, wage
and hour, equal employment, civil rights, collective bargaining,
worker's compensation, the collection and payment of withholding and/or
social security taxes and similar taxes, and occupational safety and
health standards. Neither Company nor any of its Subsidiaries has
received any written complaints from any Governmental Body or any
employee or other Person alleging material violations of any
employment-related Legal Requirements.
(c) Company and each of its Subsidiaries are in material
compliance with the terms of all Applicable Contracts described above.
Part 3.14(c) of Newco's Disclosure Letter sets forth a complete and
accurate list of the following:
(i) any unfair labor practice complaints or other
Proceedings against Company or any of its Subsidiaries
pending, or to the Knowledge of Company Threatened, before the
National Labor Relations Board or any other similar labor
relations tribunal; and
(ii) Proceedings arising out of or under any
collective bargaining agreement.
(d) Except as set forth in Part 3.14 of Newco's Disclosure
Letter and except as required by any Legal Requirement of any
jurisdiction outside of the United States or an employment agreement
required by a Legal Requirement of any jurisdiction outside of the
United States, the employment of all persons and officers employed by
Company and its Subsidiaries is terminable without any severance
obligation of any kind on the part of the employer, and the
consummation of the Contemplated Transactions will not trigger any
payments to any officers, directors or employees (in their capacities
as such) of Company or any of its Subsidiaries. All material sums due
for employee compensation and benefits and all material vacation and
sick time owing to any employees have been duly and adequately accrued
on the books of Company or its Subsidiaries pursuant to the Ordinary
Course of Business. All employees of Company and its Subsidiaries are
citizens of the country in which they are employed or are authorized to
be employed in such country in accordance with all material applicable
Legal Requirements.
(e) Neither Company nor any of its Subsidiaries has
experienced since January 1, 1999 any material work stoppages or
material slowdowns by their employees. Neither Company nor any of its
Subsidiaries has been involved in since January 1, 1999 material
negotiations regarding the terms of (i) any representation or (ii) any
labor contract, in either case, relating to any employees of Company or
any of its Subsidiaries not covered by a union or collective bargaining
agreement as of January 1, 1999.
(f) Company and each of its Subsidiaries, as appropriate,
subscribes to, or is otherwise insured under, the workers compensation
or similar statute in the states and other jurisdictions, domestic and
foreign, where Company or such Subsidiary operates. Part 3.14(f) of
Newco's Disclosure Letter describes all currently open claims and
summaries of the total claim history for employees of Company and its
Subsidiaries with respect to employment related injury or illness in
the United States since October 1, 1995, and Company has provided a
list of all such claims either closed or open with total paid and
reserved amounts in excess of $50,000. Part 3.14(f) of Newco's
Disclosure Letter is complete and accurate in all material respects
with regard to all open claims in excess of $50,000. Neither Company
nor any of its Subsidiaries has received any material report or
material notice from the United States Occupational Safety and
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Health Administration or any other domestic or foreign Governmental
Body that performs a similar function to such agency.
3.15 Compliance with Legal Requirements; Governmental Authorizations.
3.15.1 Legal Requirements. Except as set forth in Part 3.15.1 of
Newco's Disclosure Letter and excluding those Legal Requirements covered in
Sections 3.11, 3.13, 3.14, 3.16, 3.20 or 3.22,
(a) Company and its Subsidiaries are, and at all times have
been, in material compliance with each Legal Requirement that is or was
applicable to any such entity or to the conduct or operation of any
such entity's business or the ownership or use of any of such entity's
assets except for possible violations thereof which, individually or in
the aggregate, would reasonably be expected to have a Material Adverse
Effect with respect to Company;
(b) no event has occurred or circumstance exists that (with or
without notice or lapse of time) (i) may constitute or result in a
material violation by Company or any of its Subsidiaries of, or a
failure on the part of Company or any of its Subsidiaries to comply in
any material respect with, any Legal Requirement or (ii) may give rise
to any obligation on the part of Company or any of its Subsidiaries to
undertake, or to bear all or any portion of the cost of, any remedial
action of any nature that, in either case, would, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect
with respect to Company; and
(c) neither Company nor any of its Subsidiaries has received
any notice or other communication (whether oral (that is credible) or
written) from any Governmental Body or any other Person regarding (i)
any actual, alleged, possible or potential violation of, or failure to
comply with, any Legal Requirement or (ii) any actual, alleged,
possible or potential obligation on the part of Company or any of its
Subsidiaries to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature.
3.15.2 Governmental Authorizations. Part 3.15.2 of Newco's Disclosure
Letter contains a complete and accurate list of each material Governmental
Authorization that is held by Company or any of its Subsidiaries (except for
those Governmental Authorizations listed on Part 3.20 of Newco's Disclosure
Letter) or that otherwise relates to the business of, or to any of the assets
owned or used by, Company or any of its Subsidiaries. Each Governmental
Authorization listed or required to be listed in Part 3.15.2 of Newco's
Disclosure Letter is valid and in full force and effect. Except as set forth in
Part 3.15.2 of Newco's Disclosure Letter and except for those Governmental
Authorizations listed on Part 3.20 of Newco's Disclosure Letter,
(a) to the Knowledge of Company, each of Company and its
Subsidiaries is in material compliance with all of the terms and
requirements of each material Governmental Authorization identified or
required to be identified in Part 3.15.2 of Newco's Disclosure Letter;
(b) to the Knowledge of Company, no event has occurred or
circumstance exists that may (with or without notice or lapse of time)
(i) constitute or result, directly or indirectly, in a material
violation of or a failure to comply in any material respect with any
term or requirement of any material Governmental Authorization listed
or required to be listed in Part 3.15.2 of Newco's Disclosure Letter or
(ii) result directly or indirectly in the revocation, withdrawal,
suspension, cancellation or termination of, or any modification to, any
material Governmental Authorization listed or required to be listed in
Part 3.15.2 of Newco's Disclosure Letter;
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(c) neither Company nor any of its Subsidiaries has received
any notice or other communication (whether oral (that is credible) or
written) from any material Governmental Body or any other Person
regarding (i) any actual, alleged, possible or potential material
violation of or failure to comply in any material respect with any term
or requirement of any material Governmental Authorization or (ii) any
actual, proposed, possible or potential revocation, withdrawal,
suspension, cancellation, termination of or modification to any
material Governmental Authorization; and
(d) all applications required to have been filed for the
renewal of the material Governmental Authorizations listed or required
to be listed in Part 3.15.2 of Newco's Disclosure Letter have been duly
filed on a timely basis with the appropriate Governmental Bodies and
all other filings required to have been made with respect to such
material Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.15.2 of Newco's
Disclosure Letter collectively constitute all of the Governmental Authorizations
necessary to permit Company and its Subsidiaries lawfully to conduct and operate
their businesses in the manner they currently conduct and operate such
businesses and to permit Company and its Subsidiaries to own and use their
assets in the manner in which they currently own and use such assets (except for
those Governmental Authorizations listed on Part 3.20 of Newco's Disclosure
Letter).
3.16 Legal Proceedings; Orders.
3.16.1 Legal Proceedings. Except as set forth in Part 3.16.1 of Newco's
Disclosure Letter and without reference to Proceedings with respect to
environmental matters described in Section 3.20, there is no pending Proceeding
that has been commenced by or against Newco, Company or any of its Subsidiaries
with respect to which there is a reasonable likelihood of an adverse
determination or judgment against Newco, Company or any of Company's
Subsidiaries, except for those that are not, individually or in the aggregate,
reasonably expected to cause a material economic loss or loss of a material
benefit to Company and its Subsidiaries taken as a whole. No Proceeding with
respect to which there is a reasonable likelihood of an adverse determination or
judgment against Newco, Company or any of its Subsidiaries, except for those
that are not, individually or in the aggregate, reasonably expected to cause a
material economic loss or loss of a material benefit to Company and its
Subsidiaries taken as a whole has, to the Knowledge of Company, been Threatened
and no event has occurred or circumstance exists for which any member of the
Company Knowledge Group has preliminarily concluded that such event or
circumstance may give rise to or serve as a basis for the commencement of any
such Proceeding with respect to which there is a reasonable likelihood of an
adverse determination or judgment against Newco, Company or any of its
Subsidiaries, except for those that are not, individually or in the aggregate,
reasonably expected to cause a material economic loss or loss of a material
benefit to Company and its Subsidiaries taken as a whole. Newco has delivered or
made available to Parent copies of all pleadings, correspondence and other
documents relating to each Proceeding listed in Part 3.16.1 of Newco's
Disclosure Letter.
3.16.2 Orders.
(a) Except as set forth in Part 3.16.2 of Newco's Disclosure
Letter and without regard to Orders with respect to environmental
matters described in Section 3.20, there is no (i) Order to which
Company or any of its Subsidiaries, or any of the assets owned or used
by Company or any of its Subsidiaries, is subject that would,
individually or in the aggregate, reasonably be expected to cause a
material economic loss or loss of a material benefit to
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Company and its Subsidiaries taken as a whole; (ii) Newco is not
subject to any Order that relates to the business of, or any of the
assets owned or used by, Company or any of its Subsidiaries that would,
individually or in the aggregate, reasonably be expected to cause a
material economic loss or loss of a material benefit to Company and its
Subsidiaries taken as a whole; and (iii) no officer, director, agent or
employee of Company or any of its Subsidiaries is subject to any Order
that prohibits such officer, director, agent or employee from engaging
in or continuing any conduct, activity or practice relating to the
business of Company or any of its Subsidiaries.
(b) Except as set forth in Part 3.16.2 of Newco's Disclosure
Letter and without regard to Orders with respect to environmental
matters described in Section 3.20, (i) Company and its Subsidiaries are
and always have been in full compliance with all of the terms and
requirements of each Order to which they or any of the assets owned or
used by them is or has been subject, except where the failure to be in
full compliance would not reasonably be expected to cause a material
economic loss or loss of a material benefit to Company and its
Subsidiaries taken as a whole; (ii) no event has occurred or
circumstance exists for which any member of the Company Knowledge Group
has preliminarily concluded that such event or circumstance may
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any
Order to which Company or any of its Subsidiaries, or any of the assets
owned or used by Company or any of its Subsidiaries, is subject that
may reasonably be expected to cause a material economic loss or loss of
a material benefit to Company and its Subsidiaries taken as a whole;
and (iii) none of Company or any of its Subsidiaries has received any
notice or other communication (whether oral (that is credible) or
written) from any Governmental Body or any other Person regarding any
actual, alleged, possible or potential violation of, or failure to
comply with, any term or requirement of any Order to which Company or
any of its Subsidiaries, or any of the assets owned or used by Company
or any of its Subsidiaries, is or has been subject, except where a
violation or failure to comply would not reasonably be expected to
cause a material economic loss or loss of a material benefit to Company
and its Subsidiaries taken as a whole.
3.17 Absence of Certain Changes and Events. Except as set forth in Part 3.17 of
Newco's Disclosure Letter, since the date of the Balance Sheet, Company and its
Subsidiaries have conducted their businesses only in the Ordinary Course of
Business and from the date of the Balance Sheet through the date hereof there
has not been any:
(a) change in Company's or any of its Subsidiaries' authorized
or issued capital stock; grant of any stock option or right to purchase
shares of capital stock of Company or any of its Subsidiaries; issuance
of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement or other
acquisition by Company or any of its Subsidiaries of any shares of any
such capital stock except for acquisitions from former employees,
directors and consultants in accordance with agreements providing for
the repurchase of securities in connection with a termination of
service to Company or any of its Subsidiaries; declaration or payment
of any dividend or other distribution or payment in respect of shares
of capital stock of Company or any of its Subsidiaries (except for
dividends paid in cash or otherwise contemplated pursuant to Section
5.10); or any split, combination or reclassification of any capital
stock of Company or any of its Subsidiaries or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of their capital stock;
(b) amendment to the Organizational Documents of Company or
any of its Subsidiaries;
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(c) except as otherwise approved in writing by Parent,
increase (except in the Ordinary Course of Business) in the
compensation or rate of compensation or commission payable or to become
payable by Company or any of its Subsidiaries to any director, officer,
salaried employee, sales person or agent of Company or any of its
Subsidiaries, or any General Increase in the compensation or rate of
compensation payable or to become payable to any hourly or salaried
employees of Company or any of its Subsidiaries ("GENERAL INCREASE" for
purposes hereof shall mean any increase applicable to a class or group
of employees and does not include increases granted to individual
employees for merit, length of service, change in position or
responsibility or other reasons applicable to specific employees of
Company or any of its Subsidiaries and not generally to a class or
group thereof), or any aggregate increase in compensation to any
director, officer or salaried employee of Company or any of its
Subsidiaries, of more than ten percent (10%), or any hiring of any
employee at a salary in excess of $100,000 per annum, or any
termination of any key employee or any employee whose compensation was
in excess of $100,000 per annum;
(d) except as provided in a Plan or collective bargaining
agreement, adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement or other Plan for or with any employees
of Company or any of its Subsidiaries;
(e) damage to or destruction or loss of any asset or property
of Company or any of its Subsidiaries in excess of $100,000 per damage,
destruction or loss, whether or not covered by insurance, adversely
affecting the properties, assets, business, financial condition or
prospects of Company or any of its Subsidiaries;
(f) entry into, termination of, or receipt of notice of
termination of any license, distributorship, dealer, sales
representative, joint venture, credit or similar agreement;
(g) sale (other than sales of inventory in the Ordinary Course
of Business), lease or other disposition of any material assets or
property of Company or any of its Subsidiaries or mortgage, pledge or
imposition of any material Encumbrance on any asset or property of
Company or any of its Subsidiaries, including the sale, lease or other
disposition of any of the Intellectual Property;
(h) release, cancellation, material modification or waiver of
any material obligation, indebtedness, liability or Lien owing to or
held by Company or any of its Subsidiaries, unless such obligation,
indebtedness, liability or Lien has been paid in full at the time of
release;
(i) waivers, compromises or settlements by Company or any of
its Subsidiaries of any right or claim of Company or any of its
Subsidiaries in excess of $500,000 in the aggregate; or any institution
or settlement of, or agreement to settle, any Proceeding relating to
Company or any of its Subsidiaries or any property of Company or any of
its Subsidiaries;
(j) assumptions or guarantees (except in the Ordinary Course
of Business) by Company or any of its Subsidiaries of the obligations
of any Person, but in no event in excess of $500,000 when all such
assumptions, guarantees and endorsements are aggregated;
(k) any capital expenditure or expenditures or agreement to
make any capital expenditure or expenditures which, in the aggregate,
are in excess of $500,000;
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(l) entrance into or agreement to enter into by Company or any
of its Subsidiaries any operating lease providing for payments in
excess of $500,000 in any calendar year;
(m) change in the accounting methods used by Company or any of
its Subsidiaries, except insofar as required by a change in GAAP or
other applicable laws or regulations;
(n) accelerated or delayed collection of accounts receivable
in advance of or beyond their regular due dates or the dates when the
same would have been collected except in the Ordinary Course of
Business;
(o) delayed or accelerated payment of any account payable or
other liability beyond or in advance of its due date or the date when
such liability would have been paid except in the Ordinary Course of
Business;
(p) acquisition or any agreement to make an acquisition by
Company or any of its Subsidiaries, (i) by merging or consolidating
with, or purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof
or (ii) any assets that are material, individually or in the aggregate,
to Company or any of its Subsidiaries, except purchases of inventory in
the Ordinary Course of Business;
(q) material work interruptions, material labor grievances or
material claims filed, general labor dispute or Threat of a general
labor dispute or any attempt or Threat of any attempt by a union to
organize any employees of Company or any of its Subsidiaries who are
not now covered under an existing union or collective bargaining
agreement;
(r) except in the Ordinary Course of Business, granting of
powers of attorney by Company or any of its Subsidiaries; or except in
the Ordinary Course of Business any material change in the banking or
safe deposit arrangements of Company or any of its Subsidiaries;
(s) plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets,
property or rights, other than inventory, of Company or any of its
Subsidiaries or requiring the consent of any party to the transfer and
assignment of any such assets, property or rights;
(t) purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside the Ordinary Course of Business; or
(u) agreement, whether oral or written, by Company or any of
its Subsidiaries to do any of the foregoing.
3.18 Contracts; No Defaults.
(a) Part 3.18 of Newco's Disclosure Letter contains a complete
and accurate list as of the date hereof, and Newco has delivered or
made available to Parent true and complete copies of:
(i) each Applicable Contract that involves
performance of services or delivery of goods or materials by
Company or any of its Subsidiaries of an amount or value in
excess of $500,000;
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(ii) each Applicable Contract that involves
performance of services or delivery of goods or materials to
Company or any of its Subsidiaries of an amount or value in
excess of $500,000;
(iii) each Applicable Contract that was not entered
into in the Ordinary Course of Business and that involves
expenditures or receipts of Company or any of its Subsidiaries
in excess of $500,000;
(iv) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement and other
Applicable Contract affecting the ownership of, leasing of,
title to, use of, or any leasehold or other interest in, any
real or personal property (except personal property leases and
installment and conditional sales agreements having a value
per item or aggregate payments of less than $500,000 and with
terms of less than one year);
(v) each licensing agreement or other Applicable
Contract with respect to patents, trademarks, copyrights or
other intellectual property, including agreements with current
or former employees, consultants or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual
Property Assets;
(vi) each joint venture, partnership and other
Applicable Contract (however named) involving a sharing of
profits, losses, costs or liabilities by Company or any of its
Subsidiaries with any other Person;
(vii) each Applicable Contract containing covenants
that in any way purport to restrict the business activity of
Company or any of its Subsidiaries or limit the freedom of
Company or any of its Subsidiaries to engage in any line of
business or to compete with any Person;
(viii) each Applicable Contract providing for
payments to or by any Person based on sales, purchases or
profits, other than direct payments for goods;
(ix) each power of attorney by Company or any of its
Subsidiaries that is currently effective and outstanding;
(x) each material Applicable Contract entered into
other than in the Ordinary Course of Business that contains or
provides for an express undertaking by Company or any of its
Subsidiaries to be responsible for consequential damages;
(xi) each Applicable Contract for capital
expenditures in excess of $500,000;
(xii) each written warranty, guaranty or other
similar undertaking with respect to contractual performance
extended by Company or any of its Subsidiaries other than in
the Ordinary Course of Business;
(xiii) each material Applicable Contract to which
Company is a party containing a change of control provision;
and
(xiv) each material amendment, supplement and
modification (whether oral or written) in respect of any of
the foregoing.
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(b) Except as set forth in Part 3.18 of Newco's Disclosure
Letter,
(i) neither Newco nor any Related Person of Newco
(except for those Persons that will, immediately after the
Effective Time, be Subsidiaries of the Surviving Corporation)
has or may acquire any rights under, or has or may become
subject to any obligation or liability under, any Contract
that relates to the business of, or any of the assets owned
by, Company or any of its Subsidiaries; and
(ii) to the Knowledge of Company, no officer,
director, agent, employee, consultant or contractor of Company
or any of its Subsidiaries is bound by any Contract that
purports to limit the ability of such officer, director,
agent, employee, consultant or contractor to (A) engage in or
continue any conduct, activity or practice relating to the
business of Company or any of its Subsidiaries or (B) assign
to Company any of its Subsidiaries or to any other Person any
rights to any invention, improvement or discovery.
(c) Except as set forth in Part 3.18 of Newco's Disclosure
Letter,
(i) as of the date hereof, each Applicable Contract
required to be identified in Part 3.18 of Newco's Disclosure
Letter is in full force and effect and is valid and
enforceable in accordance with its terms (except for those
that will expire or terminate pursuant to the terms thereof
between the date hereof and the Closing Date);
(ii) Company and each of its Subsidiaries are in
material compliance with all applicable terms and requirements
of each material Applicable Contract;
(iii) as of the date hereof, each other Person that
has or has had any obligation or liability under any material
Applicable Contract is, and at all times has been, in material
compliance with all applicable terms and requirements of such
Applicable Contract;
(iv) as of the date hereof, no event has occurred or
circumstance exists with respect to which any member of the
Company Knowledge Group has preliminarily concluded that such
event or circumstance (with or without notice or lapse of
time) may contravene, conflict with, or result in a violation
or breach of, or give Company, any of its Subsidiaries or any
other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate or modify, any material Applicable
Contract; and
(v) neither Company nor any of its Subsidiaries has
received from any other Person at any time any notice or other
communication (whether oral (that is credible) or written)
regarding any actual, alleged, possible or potential violation
or breach of or default under, any material Applicable
Contract by Company or any of its Subsidiaries.
(d) There are no renegotiations of, attempts to renegotiate or
outstanding rights to renegotiate any amounts paid or payable to
Company or any of its Subsidiaries under any current or completed
material Contract with any Person and, to the Knowledge of Company, no
such Person has Threatened any such renegotiation.
(e) The Applicable Contracts relating to the sale, design,
manufacture or provision of products or services by Company or any of
its Subsidiaries have been entered into in the
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Ordinary Course of Business and have been entered into without the
commission of any act alone or in concert with any other Person or any
consideration having been paid or promised, that is or would be in
violation of any Legal Requirement.
3.19 Insurance.
(a) Newco has delivered or made available to Parent: true and
complete copies of all (i) policies of insurance to which Company or
any of its Subsidiaries is a party or under which Company, any of its
Subsidiaries or any director of Company or any of its Subsidiaries, is
or has been covered at any time within the one (1) year preceding the
date of this Agreement; (ii) pending applications for policies of
insurance; and (iii) surety bonds regarding Company or any of its
Subsidiaries and any letters of credit regarding such surety bonds.
Company and its Subsidiaries have maintained substantially equivalent
insurance coverage as set forth in such current policies within the
period beginning three (3) years preceding the date of this Agreement
and ending the date of this Agreement. As of the date hereof, the full
policy limits (subject to deductibles provided in such policies) are
available and unimpaired under each such policy and no insurer under
any of such policies has a basis to void such policy on grounds of
non-disclosure on the part of Company or any of its Subsidiaries
thereunder. Except as set forth in Part 3.19 of Newco's Disclosure
Letter, as of the date hereof, each such policy is in full force and
effect and will not in any way be affected by, terminate or lapse by
reason of the Contemplated Transactions.
(b) Part 3.19 of Newco's Disclosure Letter sets forth: (i) all
self-insurance arrangements by or affecting Company or any of its
Subsidiaries, including any reserves established thereunder; (ii) all
contracts or arrangements, other than a policy of insurance, for the
transfer or sharing of any risk by Company or any of its Subsidiaries;
and (iii) all obligations of Company and any of its Subsidiaries to
third parties with respect to insurance (including such obligations
under leases and service agreements) and identifies the policy under
which such coverage is provided.
(c) Part 3.19 of Newco's Disclosure Letter sets forth, by
year, for the current policy year and each of the two (2) preceding
policy years for Newco, Company or any of Company's Subsidiaries: (i) a
summary of the loss experience under each umbrella and excess policy;
(ii) a statement describing each open claim under any such insurance
policy for an amount in excess of $10,000, which sets forth: (A) the
name of the claimant; (B) a description of such policies by insurer,
type of insurance and period of coverage; and (C) the amount and a
brief description of the claim; and (iii) a statement describing the
loss experience for all claims that were self-insured, including the
number and aggregate cost of such claims.
(d) All policies to which Company or any of its Subsidiaries
is a party or that provide coverage to Newco, Company, any of Company's
Subsidiaries or any director or officer of Company or any of its
Subsidiaries: (i) are valid, outstanding and enforceable; (ii) are
sufficient for compliance with all Legal Requirements and Applicable
Contracts; and (iii) do not provide for any retrospective premium
adjustment or other experience-based liability on the part of Company
or any of its Subsidiaries.
(e) With respect to insurance policies delivered or made
available (or required to be delivered or made available) to Parent
under this Section 3.19, none of Newco, Company or any of Company's
Subsidiaries has received (i) any refusal of coverage or any notice
that a defense will be afforded with reservation of rights or (ii) any
notice of cancellation or any other
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indication that any insurance policy is no longer in full force or
effect or will not be renewed or that the issuer of any policy is not
willing or able to perform its obligations thereunder.
(f) With respect to insurance policies delivered or made
available (or required to be delivered or made available) to Parent
under this Section 3.19, Company or its Subsidiaries, as appropriate,
have paid all premiums due, and have otherwise performed all of its
respective obligations, under each policy to which Company or any of
its Subsidiaries is a party or that provides coverage to Company, any
of its Subsidiaries, or any director of Company or any of its
Subsidiaries, as appropriate.
(g) Company or its appropriate Subsidiary has given notice as
required by the applicable policy to the insurer of all material claims
of Company or any of its Subsidiaries that may be insured thereby.
3.20 Environmental, Health and Safety Matters.
Part 3.20 of Newco's Disclosure Letter contains materially complete and
accurate copies of or identifies each material Governmental
Authorization required under applicable Environmental Laws that are
held by Company or any of its Subsidiaries. To the Knowledge of
Company, each such Governmental Authorization is valid and in full
force and effect, and any application presently required to be
submitted to any Governmental Body for the renewal of any such
Governmental Authorization has been submitted as necessary for the
renewal of such Governmental Authorization. Except as set forth in Part
3.20 of Newco's Disclosure Letter,
(a) Company and the Facilities are and have been in compliance
in all material respects with Environmental Laws;
(b) neither Company, any of its Subsidiaries nor any Facility
has received from any Person any communication (whether oral (that is
credible) or written) of any actual or potential violation of
Environmental Laws or of any liability arising under Environmental Laws
or of any actual or potential obligation on the part of Company or any
of its Subsidiaries to undertake, or to bear all or any portion of the
cost of any remedial action of any nature;
(c) there has been no Release or, to the Knowledge of Company,
Threatened Release of any Hazardous Substance at, onto, under, or from
any Facility and, to the Knowledge of Company, no Hazardous Substances
are present in the Environment at, on or under the Facilities in
amounts or locations that would give rise to liability under
Environmental Laws;
(d) no Facility contains (i) underground or aboveground
storage tanks, (ii) "PCB items" or "PCB-Contaminated Electrical
Equipment," as those terms are defined in 40 C.F.R. Section 761.3,
(iii) asbestos, or (iv) urea-formaldehyde;
(e) there are no pending, or to the Knowledge of Company,
Threatened claims regarding the use of any offsite disposal facility by
Company, its Subsidiaries or the Facilities for transport, disposal,
recycling or other management of Hazardous Substances;
(f) there are no pending nor, to the Knowledge of Company,
Threatened claims by any Person (i) resulting from or arising under or
pursuant to any Environmental Law, with respect to or affecting the
conduct or operation of the business of Company, any of its
Subsidiaries or any of the Facilities; or (ii) against any Person whose
liability for any claim
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Company or any of its Subsidiaries has or may have retained or assumed
either contractually or by operation of law; and
(g) Newco has provided to Parent true and correct copies of
all environmental and health and safety studies, reports, audits,
investigations, monitoring, analyses, and assessments of Company, any
of its Subsidiaries or any Facility within its possession and control,
including offsite disposal facilities, that are now or have been
previously owned, used, leased, operated or managed, in whole or in
part, by Company, any of its Subsidiaries or any Facility, or in
connection with the conduct or operation of the business of Company or
any of its Subsidiaries.
Notwithstanding any other provision of this Agreement, no
representation or warranty is made in this Section 3.20 regarding the
real property associated with Company's Chicago Heights, Illinois
facility.
3.21 Intellectual Property.
(a) Company and its Subsidiaries own, or are licensed or
otherwise possess legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights, maskworks and any
applications and registrations therefor, net lists, schematics,
technology, know-how, trade secrets, inventions, ideas, algorithms,
processes, computer software programs or applications (in source code
and/or object code form), and tangible or intangible proprietary
information or material ("INTELLECTUAL PROPERTY") that are used in and
necessary to the business of Company and its Subsidiaries as currently
conducted by Company and its Subsidiaries. Company and its Subsidiaries
have not (i) licensed any of the Intellectual Property in source code
form to any party other than Company or any of its Subsidiaries or (ii)
entered into any currently enforceable exclusive agreements relating to
the Intellectual Property.
(b) Part 3.21(b) of Newco's Disclosure Letter sets forth the
following:
(i) all patents and patent applications, and all
trademarks, trade names and service marks and all related
registrations and applications related thereto, and all
registered and applications to register copyrights and
maskworks, included in Company's or any of its Subsidiaries'
Intellectual Property, including the jurisdictions in which
each such Intellectual Property right has been issued or
registered or in which any application for such issuance and
registration has been filed;
(ii) all Applicable Contracts pursuant to which any
Person is authorized to use any of Company's or any of its
Subsidiaries' Intellectual Property; and
(iii) all Applicable Contracts pursuant to which
Company or any of its Subsidiaries is authorized to use any
Intellectual Property ("THIRD PARTY INTELLECTUAL PROPERTY
RIGHTS").
(c) There is no material unauthorized use, disclosure,
infringement or misappropriation of any Intellectual Property rights of
Company or any of its Subsidiaries or any Third Party Intellectual
Property Rights by any third party, including any employee or former
employee of Company or any of its Subsidiaries, except as set forth in
Part 3.21 of Newco's Disclosure Letter. Neither Company nor any of its
Subsidiaries has entered into any agreement to indemnify any other
person against any charge of infringement of any Intellectual Property,
other than indemnification provisions contained in purchase orders or
license agreements arising in the Ordinary Course of Business.
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(d) Neither Company nor any of its Subsidiaries is in, or will
be in as a result of the execution and delivery of this Agreement or
the performance of the Contemplated Transactions, breach of any
license, sublicense or other agreement relating to the Intellectual
Property.
(e) Except as set forth in Part 3.21 of Newco's Disclosure
Letter, all patents, registered trademarks, service marks, copyrights
and maskworks held by Company or any of its Subsidiaries are valid and
enforceable, there are no taxes, maintenance fees or other actions with
respect thereto which are due within ninety (90) days following the
Closing Date, and none of the foregoing have been or currently are
involved in any interference, reissue, reexamination, opposition,
cancellation or similar proceeding. Except as set forth in Part 3.21 of
Newco's Disclosure Letter, neither Company nor any of its Subsidiaries
has been sued in any suit, action or Proceeding that involves a claim
of infringement of any Intellectual Property of any third party, and,
to the Knowledge of Company, no such action is Threatened. The
manufacturing, marketing, licensing, use or sale of Company's and its
Subsidiaries' products does not infringe any Intellectual Property of
any third party. Neither Company nor any of its Subsidiaries has
brought any currently pending action, suit or proceeding for
infringement of Intellectual Property or breach of any license or
agreement involving Intellectual Property against any third party.
(f) Company or its Subsidiaries, as appropriate, have secured
valid written assignments or agreements to assign from all consultants
and employees who contributed to the creation or development of
Company's or any of its Subsidiaries' Intellectual Property of the
rights to such contributions that Company or its Subsidiaries do not
already own by operation of law.
(g) To the Knowledge of Company, Company and its Subsidiaries,
as appropriate, have taken all commercially appropriate steps to
protect and preserve the confidentiality of all Intellectual Property
owned by Company or any of its Subsidiaries to the extent not otherwise
protected by patents ("CONFIDENTIAL INFORMATION"). To the Knowledge of
Company, all use, disclosure or appropriation by Company or any of its
Subsidiaries of Confidential Information not owned by Company or any of
its Subsidiaries has been pursuant to the terms of a written agreement
between Company or such Subsidiary and the owner of such confidential
information, or is otherwise lawful.
3.22 Certain Payments. To the Knowledge of Company, none of Company, any of its
Subsidiaries, or any director, officer, agent or employee of Company or any of
its Subsidiaries, or any other Person associated with or acting for or on behalf
of Company or any of its Subsidiaries, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback or other
payment to any Person, private or public, regardless of form, whether in money,
property or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained for or in
respect of Company, any of its Subsidiaries or any Affiliate of Company or its
Subsidiaries, or (iv) in violation of any Legal Requirement or (b) established
or maintained any fund or asset that has not been recorded in the books and
records of Company or any of its Subsidiaries.
3.23 Relationships with Related Persons. Except as set forth in Part 3.23 of
Newco's Disclosure Letter, none of Newco, any Related Person of Newco, Company
or any of its Subsidiaries has, or since January 1, 1998 has had, any interest
in any property (whether real, personal or mixed and whether tangible or
intangible), used in Company's or any of its Subsidiaries' businesses. None of
Newco, any Related Person of Newco, Company or any of its Subsidiaries have
since January 1, 1998 owned (of record or as a beneficial owner) an equity
interest, or any other financial or profit interest in, a Person
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that has (i) had business dealings or a financial interest in any transaction
with Company or any of its Subsidiaries or (ii) engaged in competition with
Company or any of its Subsidiaries with respect to any line of the products or
services of Company or any of its Subsidiaries in any market presently served by
Company or any of its Subsidiaries except for less than one percent of the
outstanding capital stock of any such business that is publicly traded on any
recognized exchange or in the over-the-counter market. None of Newco, any
Related Person of Newco, Company or any of its Subsidiaries is a party to any
Contract with, or has any claim or right against, Company or any of its
Subsidiaries.
3.24 Brokers or Finders. Except for the fee to be paid to Goldman Sachs & Co.,
which will be paid by Newco without the use of any funds of Company, Newco,
Company and their respective agents have no obligation or liability, contingent
or otherwise, to pay any brokerage or finders' fees or agents' commissions or
other similar payment in connection with this Agreement.
3.25 Customers and Suppliers. Part 3.25 of Newco's Disclosure Letter sets forth
(a) a list of the ten (10) largest customers of Company and each of its
Subsidiaries in the terms of revenue during the fiscal year ended December 31,
2000, showing the approximate total revenue received from each such customer
during such fiscal year and (b) a list of the ten (10) largest suppliers of
Company and each of its Subsidiaries, in terms of purchases during the fiscal
year ended December 31, 2000, showing the approximate total purchases by Company
and each of its Subsidiaries, as appropriate, from each supplier during such
fiscal year. As of the date hereof, since January 1, 2001, there has not been
any material adverse change in the business relationship of Company or any of
its Subsidiaries with any material customer or supplier of Company or any of its
Subsidiaries.
3.26 Solvency. Newco is solvent and will not be rendered insolvent by the
occurrence of the Merger and is entering into this Agreement without any actual
intent to hinder, delay or defraud any creditor of Newco.
3.27 Shares Acquired for Investment. Newco is acquiring the Parent Shares for
its own account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act. Newco is an "accredited investor" as such
term is defined in Rule 501(a) under the Securities Act.
3.28 Receipt of Information. Newco acknowledges that Newco has received and
reviewed the following documents from Parent: (a) Parent's Annual Report to
Stockholders for its fiscal year ended March 31, 2001, (b) Parent's Annual
Report on Form 10-K for the year ended March 31, 2001, and (c) Parent's Proxy
Statement for its 2001 annual meeting of stockholders (collectively, the "PARENT
SEC DOCUMENTS"). Newco has had an opportunity to ask questions of and receive
satisfactory answers from Parent sufficient to enable Newco to evaluate the
merits and risks of the acquisition of the shares of Parent Common Stock to be
issued pursuant to the Merger.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
To induce Company and Newco to enter into this Agreement and to
consummate the Contemplated Transactions and except as may otherwise be
expressly indicated in Parent's Disclosure Letter, Parent and Merger Sub,
jointly and severally, represent and warrant to Company and Newco that:
4.1 Organization and Good Standing. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with full corporate power and authority to conduct its business as it is now
being conducted. Parent has full corporate power and authority to own or use the
properties and assets that it purports to own or use, and to perform all of its
obligations under
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the material Contracts to which it is a party. Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois, with full corporate power and authority to conduct its business as it
is now being conducted. Merger Sub has full corporate power and authority to own
or use the properties and assets that it purports to own or use, and to perform
all of its obligations under the material Contracts to which it is a party.
Parent owns, beneficially and of record, all of the issued and outstanding
shares of capital stock of Merger Sub. Parent is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification, except for any failure that when taken together with all such
failures would not reasonably be expected to have a Material Adverse Effect with
respect to Parent.
4.2 Authority; No Conflict.
4.2.1 Authority. This Agreement constitutes the legal, valid and
binding obligation of Parent and Merger Sub. Upon the execution and delivery by
Parent of the other Operative Agreements to which it is a party, such other
Operative Agreements will constitute the legal, valid and binding obligations of
Parent. Merger Sub has taken all necessary corporate action and received all
necessary shareholder approval to authorize the execution and delivery by it of
this Agreement and to perform its obligations under this Agreement. Parent has
taken all necessary corporate action to authorize the execution and delivery by
it of the Operative Agreements to which it is a party and to perform its
obligations under such Operative Agreements. Parent and Merger Sub have the
absolute and unrestricted right, power and authority to execute and deliver the
Operative Agreements to which they are a party and to perform their obligations
under the Operative Agreements to which they are a party.
4.2.2 No Conflict. Neither the execution and delivery of the Operative
Agreements nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i)
any provision of the Organizational Documents of Parent, Merger Sub or
any of Parent's material Subsidiaries, or (ii) any resolution adopted
by the Boards of Directors of Parent, Merger Sub or any of Parent's
material Subsidiaries;
(b) except as set forth in Part 4.2.2 of Parent's Disclosure
Letter, contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to which Parent,
Merger Sub, any of Parent's material Subsidiaries or any of the assets
owned or used by Parent, Merger Sub or any of Parent's material
Subsidiaries may be subject;
(c) contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by Parent, Merger Sub or any of
Parent's material Subsidiaries or that otherwise relates to the
business of, or any of the assets owned or used by, Parent, Merger Sub
or any of Parent's material Subsidiaries;
(d) except as set forth in Part 4.2.2 of Parent's Disclosure
Letter, contravene, conflict with, or result in a violation or breach
of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any material
Contract of Parent or any of Parent's material Subsidiaries; or
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(e) result in the imposition or creation of any Encumbrance
upon or with respect to any of the material assets owned or used by
Parent or any of Parent's material Subsidiaries.
Except as set forth in Part 4.2.2 of Parent's Disclosure
Letter or those Consents the failure of which to obtain would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect
with respect to Parent, Parent is not and will not be required to obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
4.3 Capitalization. Except as set forth in Part 4.3 of Parent's Disclosure
Letter, the authorized capital stock of Parent consists of 100,000,000 shares of
Parent Common Stock and 1,500,000 shares of preferred stock, par value $1.00 per
share, of which 1,000,000 shares have been designated as Series A Junior
Participating Preferred Stock. As of the date hereof, Parent has issued and
outstanding 36,973,294 shares of Parent Common Stock, plus any shares issued
pursuant to stock option plans of Parent since July 31, 2001, 5,842,192 shares
of Parent Common Stock, less any shares issued pursuant to stock option plans of
Parent since July 31, 2001, are reserved for issuance pursuant to outstanding
stock options, 6,812,748 shares of Parent Common Stock are held in treasury and
no shares of preferred stock, par value $1.00 per share are issued. Except as
set forth in Part 4.3 of Parent's Disclosure Letter and other than the
aforementioned outstanding stock options, stock option and incentive plans of
Parent, the Supplemental Profit Sharing Plan for Employees of Parent and Certain
Affiliates as Restated on January 1, 2000, as amended, and the rights to acquire
Series A Junior Participating Preferred Stock issued under the Rights Agreement,
dated as of March 11, 1999, between Parent and The Bank of New York (the "RIGHTS
AGREEMENT"), as of the date hereof, there are no securities, options, warrants,
calls, commitments or other agreements of any character that provide for the
issuance of any shares of capital stock of Parent, nor are there any outstanding
securities granted or issued by Parent that are convertible into or exchangeable
or exercisable for any shares of the capital stock of Parent and none are
authorized.
4.4 SEC Documents; Financial Statements. As of their respective filing dates,
(a) the Parent SEC Documents complied in all material respects with the
requirements of the Exchange Act, and (b) none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading.
The financial statements of Parent, including the notes thereto, included in the
Parent SEC Documents (the "PARENT FINANCIAL STATEMENTS") were complete and
correct in all material respects as of their respective dates, complied as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto as of their
respective dates, and were prepared in accordance with generally accepted United
States accounting principles, applied on a basis consistent throughout the
periods indicated and consistent with each other (except as may be indicated in
the notes thereto). The Parent Financial Statements fairly present the financial
condition and the results of operations, changes in stockholders' equity and
cash flow of Parent and its Subsidiaries on a consolidated basis as at the
respective dates of and for the periods referred to in the Parent Financial
Statements, all in accordance with generally accepted United States accounting
principles, except as otherwise noted therein. All required reports, schedules,
forms, statements and other documents that Parent was or is, as applicable,
required to file after January 1, 2001 and prior to the Effective Time complied
or will comply, as applicable, as of their respective filing dates, in all
material respects with the requirements of the Exchange Act, and none of such
reports, schedules, forms, statements or other documents contained or will
contain, as applicable, as of their respective filing dates, any untrue
statement of a material fact or omitted or will omit, as applicable, to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made, not
misleading.
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4.5 Books and Records. The books of account, minute books and stock record books
of Parent and each of its Subsidiaries are complete and correct and have been
maintained in accordance with sound business practices and the requirements of
Section 13(b)(2) of the Exchange Act (regardless of whether or not Parent or any
of its Subsidiaries are subject to that Section), including the maintenance of
an adequate system of internal controls. The minute books of Parent and each of
its Subsidiaries contain accurate and complete records of all meetings held of,
and actions taken by, the stockholders of Parent, the stockholders or other
comparable holders of voting securities of each of Parent's Subsidiaries, the
Boards of Directors or other comparable governing bodies of Parent and each of
its Subsidiaries, and no meeting of any such stockholders, holders of voting
securities, Boards of Directors or committees of Parent or any of its
Subsidiaries has been held for which minutes have not been prepared and are not
contained in such minute books.
4.6 Taxes. Except as set forth in Part 4.6 of Parent's Disclosure Letter:
(a) Parent and its Subsidiaries have timely filed all material
Tax Returns and reports required to be filed by them, and as of the
time of filing, each such return was true, complete and correct in all
material respects;
(b) Parent and its Subsidiaries have timely paid all Taxes
shown to be due on such Tax Returns and all other material Taxes
currently due and payable;
(c) the Parent Financial Statements reflect an adequate
reserve (other than a reserve for deferred income taxes established to
reflect differences between book basis and tax basis of assets and
liabilities) for all Taxes payable by Parent and its Subsidiaries for
all taxable periods and portions thereof through the date of the Parent
Financial Statements;
(d) no material deficiencies for any Taxes have been proposed,
asserted or assessed against Parent and its Subsidiaries, and no
requests for waivers of the time to assess any such Taxes are pending;
(e) the federal income Tax Returns of Parent and each of its
Subsidiaries have been examined by and settled with the IRS and are not
subject to audit for all years through 1993 as well as for tax year
1997;
(f) all assessments for Taxes due with respect to such
completed and settled examinations or any concluded litigation have
been fully and timely paid;
(g) there are no Encumbrances for Taxes (other than for
current Taxes not yet due and payable) on the assets of Parent and its
Subsidiaries;
(h) no federal or material state income or franchise Tax
Return of Parent or any of its Subsidiaries with respect to which the
applicable statute of limitations has not expired has been selected for
or is now under audit or examination by any taxing authority or other
Governmental Body, and there are no Proceedings pending or, to the
Knowledge of Parent or any of its Subsidiaries, Threatened against
Parent or any of its Subsidiaries with respect to any such Tax Returns;
and
(i) neither Parent nor any of its Subsidiaries is a party to
any Tax sharing or other agreement or arrangement that will require any
payment with respect to Taxes.
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4.7 No Material Adverse Change. Since the date of the most recent balance sheet
included in the Parent Financial Statements, there has not been any Material
Adverse Change with respect to Parent.
4.8 Compliance with Legal Requirements; Governmental Authorizations.
(a) Except as set forth in Part 4.8 of Parent's Disclosure
Letter or the Parent SEC Documents and excluding those Legal
Requirements covered in Sections 4.6, 4.9, 4.11 or 4.12,
(i) each of Parent and its Subsidiaries is, and at
all times has been, in material compliance with each Legal
Requirement that is applicable to it or to the conduct or
operation of its business or the ownership or use of its
assets, except for possible violations thereof which,
individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect with respect to
Parent;
(ii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) (A) may
constitute or result in a material violation by Parent or any
of its Subsidiaries of, or a failure on the part of Parent or
any of its Subsidiaries to comply in any material respect
with, any Legal Requirement or (B) may give rise to any
obligation on the part of Parent or any of its Subsidiaries to
undertake, or to bear all or any portion of the cost of, any
remedial action of any nature that, in either case, would,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect with respect to Parent; and
(iii) neither Parent nor any of its Subsidiaries has
received any notice or other communication (whether oral (that
is credible) or written) from any Governmental Body or any
other Person regarding (A) any actual, alleged, possible or
potential violation of, or failure to comply with, any Legal
Requirement or (B) any actual, alleged, possible or potential
obligation on the part of Parent or any of its Subsidiaries to
undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
(b) Each material Governmental Authorization held by Parent or
its Subsidiaries is valid and in full force and effect. Except as
described in Part 4.8 of Parent's Disclosure Letter:
(i) to the Knowledge of Parent, each of Parent and
its Subsidiaries is in material compliance with the terms and
requirements of each material Governmental Authorization held
by it;
(ii) to the Knowledge of Parent, no event has
occurred or circumstance exists that may (with or without
notice or lapse of time) (A) constitute or result directly or
indirectly in a material violation of or a failure to comply
in any material respect with any term or requirement of any
material Governmental Authorization held by Parent or any of
its Subsidiaries or (B) result directly or indirectly in the
revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any material
Governmental Authorization held by Parent or any of its
Subsidiaries;
(iii) neither Parent nor any of its Subsidiaries has
received any notice or other communication (whether oral (that
is credible) or written) from any Governmental Body or any
other Person regarding (A) any actual, alleged, possible or
potential material violation of or failure to comply in any
material respect with any term or requirement of any material
Governmental Authorization or (B) any actual, proposed,
possible or
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potential revocation, withdrawal, suspension, cancellation,
termination of or modification to any material Governmental
Authorization; and
(iv) all applications required to have been filed for
the renewal of all material Governmental Authorizations held
by Parent or any of its Subsidiaries have been duly filed on a
timely basis with the appropriate Governmental Bodies and all
other filings required to have been made with respect to such
material Governmental Authorizations have been duly made on a
timely basis with the appropriate Governmental Bodies.
Parent and its Subsidiaries have all of the material Governmental
Authorizations necessary to permit Parent and its Subsidiaries lawfully to
conduct and operate their businesses in the manner they currently conduct and
operate such businesses and to permit Parent and its Subsidiaries to own and use
their assets in the manner in which they currently own and use such assets.
4.9 Legal Proceedings; Orders.
(a) Except as disclosed in Part 4.9(a) of Parent's Disclosure
Letter, there is no pending Proceeding (i) that has been commenced by
or against Parent or any of its Subsidiaries with respect to which
there is a reasonable likelihood of an adverse determination or
judgment against Parent or any of its Subsidiaries, except for those
that are not, individually or in the aggregate, reasonably expected to
cause a material economic loss or loss of material benefit to Parent
and its Subsidiaries taken as a whole; or (ii) that challenges, or that
may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. No
Proceeding (with respect to which there is a reasonable likelihood of
an adverse determination or judgment against Parent or any of its
Subsidiaries, except for those that are not, individually or in the
aggregate, reasonably expected to cause a material economic loss or
loss of material benefit to Parent and its Subsidiaries taken as a
whole) has, to the Knowledge of Parent, been Threatened and no event
has occurred or circumstance exists for which any member of the Parent
Knowledge Group has preliminarily concluded that such event or
circumstance may give rise to or serve as a basis for the commencement
of any Proceeding with respect to which there is a reasonable
likelihood of an adverse determination or judgment against Parent or
any of its Subsidiaries, except for those that are not, individually or
in the aggregate, reasonably expected to cause a material economic loss
or material loss of benefit to Parent and its Subsidiaries taken as a
whole.
(b) (i) Except as disclosed in Part 4.9(b) of Parent's
Disclosure Letter, there is no Order to which Parent or any of its
Subsidiaries, or any of the assets owned or used by Parent or any of
its Subsidiaries, is subject that would, individually or in the
aggregate, reasonably be expected to cause a material economic loss or
loss of material benefit to Company and its Subsidiaries taken as a
whole.
(ii) Except as disclosed in Part 4.9(b) of Parent's
Disclosure Letter, (A) Parent and its Subsidiaries are and always have
been in full compliance with all of the terms and requirements of each
Order to which they or any of the assets owned or used by them, is or
has been subject, except where the failure to be in full compliance
would not reasonably be expected to cause a material economic loss or
loss of material benefit to Parent and its Subsidiaries taken as a
whole; (B) no event has occurred or circumstance exists for which any
member of the Parent Knowledge Group has preliminarily concluded that
such event or circumstance may constitute or result in (with or without
notice or lapse of time) a violation of or failure to comply with any
term or requirement of any Order to which Parent or any of its
Subsidiaries, or any of the assets owned or used by Parent or any of
its Subsidiaries, is subject that may reasonably be expected to
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cause a material economic loss or loss of material benefit to Parent
and its Subsidiaries taken as a whole; and (C) none of Parent or any of
its Subsidiaries has received any notice or other communication
(whether oral (that is credible) or written) from any Governmental Body
or any other Person regarding any actual, alleged, possible or
potential violation of, or failure to comply with, any term or
requirement of any Order to which Parent or any of its Subsidiaries, or
any of the assets owned or used by Parent or any of its Subsidiaries,
is or has been subject, except where a violation or failure to comply
would not reasonably be expected to cause a material economic loss or
loss of material benefit to Parent and its Subsidiaries taken as a
whole.
4.10 Contracts; No Default.
(a) Except as set forth in Part 4.10 of Parent's Disclosure
Letter,
(i) as of the date hereof, each Parent Covered
Contract is in full force and effect (except for those that
will expire or terminate pursuant to the terms thereof between
the date hereof and the Closing Date);
(ii) Parent and each of its Subsidiaries are in
material compliance with all applicable terms and requirements
of each Parent Covered Contract;
(iii) as of the date hereof, each other Person that
has or has had any obligation or liability under any Parent
Covered Contract is, and at all times has been, in material
compliance with all applicable terms and requirements of each
Parent Covered Contract;
(iv) as of the date hereof, no event has occurred or
circumstance exists with respect to which any member of the
Parent Knowledge Group has preliminarily concluded that such
event or circumstance (with or without notice or lapse of
time) may contravene, conflict with, or result in a violation
or breach of, or give Parent, any of its Subsidiaries or any
other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate or modify, any Parent Covered
Contract; and
(v) neither Parent nor any of its Subsidiaries has
given to or received from any other Person at any time any
notice or other communication (whether oral (that is credible)
or written) regarding any actual, alleged, possible or
potential violation or breach of or default under, any Parent
Covered Contract by Parent or any of its Subsidiaries.
(b) There are no renegotiations of, attempts to renegotiate or
outstanding rights to renegotiate any amounts paid or payable to Parent
or any of its Subsidiaries under any Parent Covered Contract and, to
the Knowledge of Parent, no such Person has Threatened such
renegotiation.
4.11 Environmental Matters. Except as set forth in Part 4.11 of Parent's
Disclosure Letter or the Parent SEC Documents,
(a) Parent and its Subsidiaries are and have been in
compliance in all material respects with Environmental Laws;
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(b) neither Parent nor any of its Subsidiaries has received
from any Person any communication (whether oral (that is credible) or
written) of any actual or potential violation of Environmental Laws in
any material respect or of any material liability arising under
Environmental Laws or of any actual or potential material obligation on
the part of Parent or any of its Subsidiaries to undertake, or to bear
all or any portion of the cost of any remedial action of any nature;
(c) there has been no Release or, to the Knowledge of Parent,
Threatened Release of any Hazardous Substance at, onto, under or from
any real property, leasehold or other interest in real property
currently or formerly owned or operated by Parent or any of its
Subsidiaries and, to the Knowledge of Parent, no Hazardous Substances
are present in the Environment at, on or under such real property in
amounts or locations that would give rise to liability under
Environmental Laws;
(d) there are no pending, nor to the Knowledge of Parent,
Threatened claims regarding the use of any offsite disposal facility by
Parent or its Subsidiaries for transport, disposal, recycling, or other
management of Hazardous Substances; and
(e) there are no pending, nor to the Knowledge of Parent or
any of its Subsidiaries, Threatened claims by any Person (i) resulting
from or arising under or pursuant to any Environmental Law, with
respect to or affecting the conduct or operation of the business of
Parent, its Subsidiaries, or any real property, leasehold or other
interest in real property currently or formerly owned or operated by
Parent or any of its Subsidiaries; or (ii) against any Person whose
liability for any claim Parent or any of its Subsidiaries may have
retained or assumed either contractually or by operation of law.
4.12 Certain Payments. To the Knowledge of Parent, none of Parent, any of its
Subsidiaries, or any director, officer, agent or employee of Parent or any of
its Subsidiaries, or any other Person associated with or acting for or on behalf
of Parent or any of its Subsidiaries, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback or other
payment to any Person, private or public, regardless of form, whether in money,
property or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained for or in
respect of Parent, any of its Subsidiaries or any Affiliate of Parent or its
Subsidiaries or (iv) in violation of any Legal Requirement or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of Parent or any of its Subsidiaries.
4.13 Brokers or Finders. Except for the fee payable to Dresdner Kleinwort
Wasserstein, Inc., Parent and its agents have no obligation or liability,
contingent or otherwise, to pay any brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
4.14 Ownership of Merger Sub; No Prior Activities. Merger Sub was formed solely
for the purpose of engaging in the Merger and is wholly owned by Parent. As of
the date hereof and the Effective Time, except for obligations or liabilities
incurred in connection with its incorporation or organization and the Merger and
except for this Agreement and any other agreements or arrangements contemplated
by this Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, any obligations or liabilities or engaged in any business activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any Person.
4.15 Issuance of Parent Common Stock. The Parent Common Stock to be issued as a
portion of the Merger Consideration (a) will be, when issued, duly authorized,
validly issued, fully paid and
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nonassessable, (b) will not, when issued, be subject to preemptive rights
created by statute, Parent's Organizational Documents or any agreement to which
Parent is a party or by which Parent is bound, and (c) will, when issued, be
free of any Encumbrances (except for (i) any Encumbrances created as a result of
actions taken by, or Contracts entered into by, Newco or, prior to the Closing
Date, Company, (ii) the Escrow Agreement, and (iii) the Stockholder's
Agreement). Subject to the validity of Newco's representation and warranty set
forth in Section 3.28 regarding its knowledge of investments and its status as
an "accredited investor," the issuance of the Parent Common Stock portion of the
Merger Consideration will not require registration under the Securities Act.
ARTICLE 5
CONDUCT OF BUSINESS PRIOR TO CLOSING DATE
5.1 Access and Investigation. Between the date of this Agreement and the Closing
Date, Company shall, and Newco shall cause Company and its Representatives to,
afford Parent and its Representatives reasonable access during normal working
hours to the personnel, properties, contracts, books and records and other
documents and data of Company and its Subsidiaries; provided, however, that
Newco and Company may restrict the foregoing access to the extent that in the
reasonable judgment of Newco or Company, any Legal Requirement applicable to
Company or any of its Subsidiaries requires Company or any of its Subsidiaries
to restrict access to any properties, contracts, books and records or other
documents or data of Company or any of its Subsidiaries, as applicable. No
information or knowledge obtained in any investigation pursuant to this Section
5.1 shall affect or be deemed to modify any representation or warranty contained
herein or the conditions to the obligations of the parties to consummate the
Merger.
5.2 Operation of the Businesses of Company and its Subsidiaries. Between the
date of this Agreement and the Closing Date, except as otherwise expressly
permitted by this Agreement, Company shall, and Newco shall cause Company to,
(a) conduct the business of Company and its Subsidiaries only in the Ordinary
Course of Business; and (b) use Best Efforts to preserve intact the current
business organization of Company and its Subsidiaries, keep available the
services of the current officers, employees and agents of Company and its
Subsidiaries, and maintain the relations and goodwill with suppliers, customers,
landlords, creditors, employees, agents and others having business relationships
with Company and its Subsidiaries. Company shall pay and cause its Subsidiaries
(x) to pay debts and Taxes when due, subject to good faith disputes over such
debts, and (y) to pay or perform other obligations when due, subject to good
faith disputes.
5.3 Negative Covenants. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Company
shall not, Newco shall cause Company not to, and Company shall cause each of its
Subsidiaries not to, without the prior written consent of Parent,
(a) take any affirmative action, or fail to take any
reasonable action within its control, as a result of which any of the
changes or events listed in Section 3.17 would occur or reasonably be
expected to occur;
(b) issue, deliver, sell, pledge or otherwise encumber any
shares of the capital stock of Company or any of its Subsidiaries, any
other voting securities of Company or any of its Subsidiaries or any
securities convertible into or exchangeable for any capital stock or
other voting securities of Company or any of its Subsidiaries, or any
rights, warrants or options to acquire any such shares, voting
securities or convertible securities;
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(c) other than in the Ordinary Course of Business, (i) grant
to any employee, officer or director of Company or any of its
Subsidiaries, or obligate Company or any of its Subsidiaries to pay,
any material increase in severance or termination pay; (ii) enter into
any employment, consulting, indemnification, severance or termination
agreement with any such employee, officer or director; (iii) establish,
adopt, enter into or amend or obligate Company or any of its
Subsidiaries to establish, adopt, enter into or amend in any material
respect any collective bargaining agreement, recognition agreement,
Foreign Employee Benefit Plan or Plan, except as required by applicable
law or regulation or except as necessary to maintain the qualified
status of such plans under the IRC; (iv) take any action to accelerate
any rights or benefits under any collective bargaining agreement,
recognition agreement or similar agreement; (v) accelerate, amend or
change the period of exercisability or vesting of options to acquire
the securities of Company or any of its Subsidiaries; or (vi) terminate
any Applicable Contract with any employee of any of Company's
Subsidiaries in the United Kingdom earning more than L.35,000 per year;
(d) other than for working capital purposes, (i) incur or
permit any of Company's Subsidiaries to incur any indebtedness for
borrowed money or guarantee any such indebtedness of another Person,
issue or sell any debt securities or warrants or other rights to
acquire any debt securities of Company or any of its Subsidiaries,
guarantee any debt securities of another Person, enter into any "keep
well" or other agreement to maintain any financial statement condition
of another Person or enter into any arrangement having the economic
effect of any of the foregoing; or (ii) make any loans, advances or
capital contributions to, or investments in, any other Person, other
than to Company or any of its Subsidiaries;
(e) other than in the Ordinary Course of Business, (i) make or
change any material election in respect of Taxes, (ii) adopt or change
any accounting method in respect of Taxes, (iii) file any amendment to
a material income or franchise Tax Return, (iv) enter into any closing
agreement or (v) settle any material claim or assessment in respect of
Taxes, unless with respect to an action described in clauses (iii),
(iv) or (v), Newco has notified the Tax Director of Parent and sent the
Tax Director of Parent a copy of the relevant documents relating to
same;
(f) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than those incurred in the Ordinary Course of
Business, or waive the benefits of, or agree to modify in any manner,
any confidentiality, standstill or similar agreement to which Company
or any of its Subsidiaries is a party;
(g) except as described in Exhibit 5.10(a) or as part of the
Contemplated Transactions, enter into any transaction, agreement,
arrangement or understanding with Newco or any of its Affiliates;
(h) enter into or amend or agree to enter into or amend any
material Applicable Contract pursuant to which any other party is
granted exclusive marketing or other exclusive rights of any type or
scope with respect to any of the products or technology of Company or
any of its Subsidiaries (except for such material Applicable Contracts
that expire or terminate or are amended pursuant to the terms thereof
between the date of this Agreement and the Closing Date);
(i) other than in the Ordinary Course of Business, reduce the
amount of any insurance coverage provided by existing insurance
policies with respect to Company or any of its Subsidiaries;
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(j) take any action that would, or that could reasonably be
expected to, result in any of the representations and warranties of
Newco or Company set forth in this Agreement becoming untrue;
(k) commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where Company in good faith
determines that failure to commence suit would result in the material
impairment of a valuable aspect of its business or the business of any
of its Subsidiaries, or (iii) for a breach of this Agreement;
(l) terminate or revoke (i) the QSSS elections of Company and
Thrall Company under Treas. Reg. Section 1.1361-3(b) of the IRC or (ii)
the Subchapter S election of Newco under Treas. Reg. Section 1.1362-2
of the IRC;
(m) fail to comply with Legal Requirements regarding Company,
any of its Subsidiaries, or the business of Company or any of its
Subsidiaries in all material respects;
(n) except as set forth in Part 5.3(n) of Newco's Disclosure
Letter, other than in the Ordinary Course of Business or as required
pursuant to a Legal Requirement, adopt, enter into or become bound by
any Plan, employment-related Applicable Contract or collective
bargaining agreement, or amend, modify or terminate (partially or
completely) any Plan, employment-related Applicable Contract or
collective bargaining agreement, except as listed on Exhibit 5.10(a);
or
(o) except as set forth in Part 5.3(o) of Newco's Disclosure
Letter, other than in the Ordinary Course of Business or as required
pursuant to a Legal Requirement, establish or modify any (i) targets,
goals, pools or similar provisions in respect of any fiscal year under
any Plan, employment-related Applicable Contract or other employee
compensation arrangement; or (ii) salary ranges, increase guidelines or
similar provisions in respect of any Plan, employment-related
Applicable Contract or other employee compensation arrangement, except
for published salary information.
5.4 Certain Actions by Parent. From the date hereof until the Effective Time,
Parent shall not, and shall not permit any of its Subsidiaries to:
(a) declare, set aside or pay any extraordinary dividends
(other than normal quarterly dividends in such amounts as determined by
the Board of Directors of Parent), or make any other extraordinary
distributions in respect of, any of Parent's capital stock, except for
dividends on Parent's common stock payable solely in shares of Parent's
common stock;
(b) sell, transfer or otherwise dispose of any of its assets
out of the Ordinary Course of Business, unless it receives
consideration equal to the fair market value of such assets (as
determined in good faith by the Board of Directors of Parent);
(c) except for the rights issued pursuant to the Rights
Agreement, issue any shares of Parent's capital stock with greater
rights per share than a share of Parent Common Stock; or
(d) acquire or agree to acquire any railcar manufacturer for a
total consideration of greater than Fifty Million Dollars ($50,000,000)
by merging or consolidating with such railcar manufacturer or by
purchasing a substantial portion of the assets of such railcar
manufacturer, or by any other manner;
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(e) amend its Organizational Documents in any manner that
would reasonably be expected to result in a Material Adverse Effect
with respect to Newco; or
(f) amend the Rights Agreement in any manner materially
adverse to Newco or the Contemplated Transaction; provided, however,
Parent may amend the Rights Agreement to permit any Person (other than,
except with Newco's written consent, Newco or an Affiliate of Newco) to
own a specific amount of Parent's Common Stock.
5.5 Payment of Indebtedness by Related Persons. Newco shall cause all
indebtedness owed to Company by Newco or any Related Person of Newco (other than
wholly owned Subsidiaries of Company) to be paid in full prior to Closing.
5.6 No Shopping. Company shall not, and Newco shall not permit Company to,
directly or indirectly, through any officer, director, agent, Representative or
otherwise, (a) solicit, initiate or encourage submission of proposals or offers
from any Person (other than Parent or Merger Sub) relating to any acquisition or
purchase of all or a material amount of the assets of, or any equity interest
in, Company or any of its Subsidiaries or any merger, consolidation or business
combination with Company or any of its Subsidiaries; (b) participate in any
discussions or negotiations regarding, or furnish to any Person (other than
Parent or Merger Sub) any information with respect to, any of the foregoing; or
(c) otherwise cooperate in any way with, or assist or participate in, facilitate
or encourage, any effort or attempt by any other Person to do or seek any of the
foregoing. Newco and Company shall promptly notify Parent and Merger Sub if
Newco or Company receives any such proposal or offer or any inquiry or contact
with respect thereto.
5.7 Advice of Proceedings. Newco and Company shall promptly advise Parent orally
and in writing if Company or any of its Subsidiaries shall become subject to any
material Order or material Proceeding or become aware of any Threatened material
claim.
5.8 Reports and Returns.
5.8.1 Newco and Company Reports and Returns. Subject to Section 5.3(e),
Newco and Company shall, and Company shall cause each of its Subsidiaries to,
duly and timely, file all material reports and returns required to be filed with
any Governmental Body prior to Closing, which reports and returns shall be
prepared in accordance with all applicable regulatory requirements in all
material respects. Subject to Section 5.3(e), Newco, Company and each of
Company's Subsidiaries shall promptly pay all Taxes and other quasi-governmental
charges levied or assessed upon any such Person or its respective properties
prior to the date on which penalties attach thereto and all lawful claims which,
if unpaid when due and payable, might become an Encumbrance upon any property of
any such Person. Newco, Company and each of Company's Subsidiaries shall duly
and timely make all deposits required of them with respect to any Taxes
(including, without limitation, employee withholding Taxes). Notwithstanding the
foregoing, Newco, Company and each of Company's Subsidiaries may withhold
payment of Taxes and deposits the validity, amount or imposition of which is
contested in good faith and for which appropriate reserves, in accordance with
GAAP, are established.
5.8.2 Parent and Merger Sub Reports and Returns. Parent and Merge Sub
shall, and Parent shall cause each of its Subsidiaries to, duly and timely, file
all material reports and returns required to be filed with any Governmental Body
prior to Closing, which reports and returns shall be prepared in accordance with
all applicable regulatory requirements in all material respects. Parent, Merger
Sub and each of Parent's Subsidiaries shall promptly pay all Taxes and other
quasi-governmental charges levied or assessed upon any such Person or its
respective properties prior to the date on which penalties attach thereto and
all lawful claims which, if unpaid when due and payable, might become an
Encumbrance
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upon any property of any such Person. Parent, Merger Sub and each of Parent's
Subsidiaries shall duly and timely make all deposits required of them with
respect to any Taxes (including, without limitation, employee withholding
Taxes). Notwithstanding the foregoing, Parent, Merger Sub and each of Parent's
Subsidiaries may withhold payment of Taxes and deposits the validity, amount or
imposition of which is contested in good faith and for which appropriate
reserves, in accordance with GAAP, are established.
5.9 Administration of Plans. Company and its Subsidiaries shall
administer each Plan, or cause the same to be so administered, in all material
respects in accordance with the applicable provisions of the IRC, ERISA and all
other applicable Legal Requirements. Company shall promptly notify Parent in
writing of any receipt by Newco, Company or any of its Subsidiaries (and furnish
Parent with copies) of any material notice of investigation or Proceeding by the
IRS, DOL, PBGC or other Person involving any Plan, or any material notice by
Company or any of its Subsidiaries to the IRS or the DOL regarding any voluntary
compliance procedures with respect to any Plan.
5.10 Certain Actions. Prior to the Closing, Company and its
Subsidiaries shall, and Newco shall cause Company and Company's Subsidiaries to:
(a) transfer the assets and certain liabilities associated
with such assets, the liabilities and the ownership of the entities in
the manner described on Exhibit 5.10(a) to Newco and Newco shall
acquire such assets and assume such liabilities; and
(b) pay in full (or have assumed in full by another Person)
all interest-bearing debt of Company or any of its Subsidiaries and
obtain (i) the release of all Liens securing such debt and (ii) the
termination of all Uniform Commercial Code financing statements
securing such debts.
5.11 Maintenance of Insurance. Company shall use its Best Efforts to keep in
effect until the Effective Time all insurance policies to which it or any of its
Subsidiaries is a party or that provide coverage to Company or any of its
Subsidiaries (or replace any such insurance coverage with insurance coverage
reasonably equivalent thereto).
5.12 Ownership of Subsidiaries. Prior to the Closing, Company shall cause 100%
of the ownership of the capital stock of each Subsidiary other than Thrall
Vagonka Studenka, a.s. to be owned by Company or its Subsidiaries.
5.13 Release of Mortgage. Prior to the Closing, Company shall have the right to
release any and all mortgages or similar encumbrances relating to real property
owned by Thrall Vagonka Studenka, a.s., including, but not limited to, the CZK
93,000,000 mortgage in favor of the State Environmental Fund and the CZK
100,000,000 mortgage registered in favor of Union Bank and shall vigorously seek
to have any and all such mortgages or similar encumbrances released.
ARTICLE 6
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 Consents; Cooperation.
6.1.1 Obtaining Approvals. Each of Parent, Merger Sub, Newco and
Company shall promptly apply for or otherwise seek, and use its Best Efforts to
obtain, all Consents, Governmental Authorizations and approvals required to be
obtained for the consummation of the Merger or the other Contemplated
Transactions, including those required under the HSR Act. Newco and Company
shall use Best Efforts
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to obtain all necessary Consents, waivers and approvals required under the
Contracts of Newco, Company or any of Company's Subsidiaries identified in Part
3.2 of Newco's Disclosure Letter. The parties hereto shall consult and cooperate
with one another, and consider in good faith the views of one another, in
connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to the HSR Act or any
other Legal Requirement.
6.1.2 Resolving Objections. Each of Parent, Merger Sub, Newco and
Company shall vigorously seek to resolve such objections, if any, as may be
asserted by any Governmental Body with respect to the Contemplated Transactions
under the HSR Act, and any other Legal Requirement that is designed to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade (collectively, "ANTITRUST LAWS"). In connection therewith, if
any Proceeding is instituted or Threatened challenging any Contemplated
Transaction as violative of any Antitrust Law, Newco and Company, if requested
by Parent, and Parent and Merger Sub, if requested by Newco or Company, shall
cooperate with the other parties hereto and vigorously contest and resist any
Proceeding and vigorously seek to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other Order, whether temporary, preliminary
or permanent, that is in effect and that prohibits, prevents, or restricts
consummation of the Merger or any other Contemplated Transaction.
Notwithstanding the provisions of the immediately preceding sentence, it is
expressly understood and agreed that neither party shall have any obligation to
litigate or contest any Proceeding or any Order beyond July 15, 2002. Each of
Parent, Merger Sub, Newco and Company shall vigorously take such action as may
be required to cause the expiration of the notice periods under the HSR Act or
other Antitrust Laws with respect to the Contemplated Transactions as promptly
as possible after the execution of this Agreement.
6.1.3 Limitation. Notwithstanding anything to the contrary in this
Agreement, Parent shall not be required to divest any of its or its
Subsidiaries' businesses, product lines or assets, or to take or agree to take
any other action or agree to any limitation that would reasonably be expected to
have a Material Adverse Effect with respect to Parent or the Surviving
Corporation after the Effective Time. Notwithstanding anything to the contrary
in this Agreement, Company shall not, without the written approval of Parent,
divest any of its or its Subsidiaries' businesses, product lines or assets, or
take or agree to take any other action or agree to any limitation that would
reasonably be expected to have a Material Adverse Effect with respect to Parent
or the Surviving Corporation after the Effective Time.
6.2 Public Disclosure. Unless otherwise permitted by this Agreement, Parent and
Merger Sub, on the one hand, and Newco and Company, on the other hand, shall
consult with each other before issuing any press release or otherwise making any
public statement or making any other public (or non-confidential) disclosure
(whether or not in response to any inquiry) regarding the terms of this
Agreement and the transactions contemplated hereby, and no party shall issue any
such press release or make any such statement or disclosure without the prior
approval of the other (which approval shall not be unreasonably withheld),
except as may be required by law or by obligations pursuant to any listing
agreement with any national securities exchange. The parties agree that Parent
shall be entitled to prepare (in its sole discretion) and file a Form 8-K and
any other periodic reports with the SEC pursuant to the Exchange Act concerning
the Rights Agreement Amendment and the announcement of the Merger and a
subsequent Form 8-K and any other periodic reports describing this Agreement and
the Merger and filing the Operative Agreements as exhibits to such Form 8-K and
such other periodic reports. Newco and Company shall cooperate with Parent in
connection with the preparation of the reports on Form 8-K and any other
periodic reports.
6.3 Best Efforts and Further Assurances. Each of the parties to this Agreement
shall use its Best Efforts to effectuate the Merger and the other Contemplated
Transactions and to fulfill and cause to be fulfilled the conditions in Article
7. Each party hereto, at the reasonable request of another party hereto,
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shall execute and deliver such other instruments and do and perform such other
acts and things as may be necessary or desirable for effecting completely the
consummation of this Agreement and the Contemplated Transactions.
6.4 Assist in Obtaining Governmental Authorizations. Each party shall assist the
other parties in obtaining all Governmental Authorizations necessary or
appropriate for the continued operation of the Surviving Corporation and its
Subsidiaries at and after the Effective Time.
6.5 Blue Sky Laws. Parent shall take such steps as may be necessary to comply
with the securities and blue sky laws of all jurisdictions that are applicable
to the issuance of the shares of Parent Common Stock to be issued in connection
with the Merger. Newco shall use its Best Efforts to assist Parent as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
that are applicable in connection with the issuance of the shares of Parent
Common Stock to be issued in connection with the Merger.
6.6 New York Stock Exchange Listing. Parent shall use Best Efforts to list on
the NYSE, upon official notice of issuance, the shares of Parent Common Stock to
be issued as part of the Merger Consideration.
6.7 Tax Allocation of the Merger Consideration.
(a) The election of each of Company and Thrall Company to be
taxed as a QSSS under Section 1361 of the IRC will terminate on the
Closing Date. As a result, for federal and state income and franchise
tax purposes, the Merger will be treated as a deemed taxable sale by
Newco of all the assets of Company and Thrall Company acquired by
Surviving Corporation on the Closing Date (the "ACQUIRED ASSETS") and
the deemed assumption of the liabilities of Company and Thrall Company
assumed by the Surviving Corporation on the Closing Date.
(b) Parent and Newco agree that for federal and state income
and franchise tax purposes the consideration to be received by Newco in
the deemed sale of the Acquired Assets (plus the amount of liabilities
deemed to be assumed and other relevant items) shall be allocated among
the Acquired Assets in accordance with the methodology set forth on a
schedule substantially in the form of Exhibit 6.7(b) attached hereto
(the "ALLOCATION SCHEDULE"). The Allocation Schedule shall be agreed to
by the parties not later than 60 days after the Closing Date. The
Allocation Schedule shall comply with the requirements of Section 1060
of the IRC. Each of the parties shall report the Merger for all federal
and state income and franchise tax purposes, including without
limitation in all Tax Returns prepared and filed by or for such party
and with respect to any Section 338 Elections, in accordance with the
allocations set forth in Exhibit 6.7(b). Newco and Parent shall each
prepare and file an IRS Form 8594 for the deemed sale of the Acquired
Assets and assumption of liabilities with their respective federal
income Tax Returns for the taxable year that includes the Closing Date.
Each of the parties shall provide prompt notice to the other of the
commencement of any audit or the assertion of any proposed deficiency
or adjustment by any taxing authority or agency that challenges the
allocation set forth in the Allocation Schedule.
(c) Although both parties believe that the Merger should be
treated for U.S. federal income tax purposes as a taxable sale of
Acquired Assets to Parent under Treasury Regulation Section
1.1361-5(b)(3), in order to assure the tax treatment of the Merger as a
deemed purchase of assets, Parent and Newco shall make a protective
election under Section 338(h)(10) of the IRC with respect to the
acquisition of Company, which for U.S. federal income tax purposes,
shall be made on a Form 8023 (or successor form), substantially in the
form of Exhibit 6.7(c) hereto
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(including the footnotes/statements thereon). Parent and Newco also
shall make a similar election for state income/franchise tax purposes
(using a state election form) as may be required under Applicable Law.
(d) Parent and Newco agree that any adjustments to the total
amount of consideration to be received by Newco (whether by reason of
the Working Capital Adjustment in Section 2.2.2, the receipt of
Additional Merger Consideration Payments pursuant to Section 2.2.8, or
indemnity clams made pursuant to Article 9) will be treated as
adjustments to the amount of consideration to be allocated among the
Acquired Assets in accordance with the methodology set forth on the
Allocation Schedule and in accordance with the requirements of Section
1060 of the IRC. Parent and Newco also agree that the Additional Merger
Consideration Payments shall be allocated to the Class VII assets
(goodwill and going concern value) as defined in Treas. Reg.
1.338-6(b)(2)(vii).
6.8 Transfer Taxes. Newco and Parent shall each pay 50% of any state, local,
foreign or provincial sales, use, real property transfer, stock transfer, stock
or similar tax (including any interest or penalties with respect thereto)
payable in connection with the consummation of the Contemplated Transactions.
6.9 Standstill Time.
(a) During the Standstill Time, except upon the prior written
approval of Parent, neither Newco nor Company will, directly or
indirectly, through one or more intermediaries or otherwise, singly or
as part of a partnership, limited partnership, syndicate or other group
(as those terms are used within the meaning of Section 13(d)(3) of the
Exchange Act):
(i) make, or in any way participate in, any
"solicitation" of "proxies" (as such terms are defined or used
in Regulation 14A under the Exchange Act) with respect to any
Parent Common Stock (including by the execution of actions by
written consent), become a "participant" in any "election
contest" (as such terms are defined or used in Regulation 14A
under the Exchange Act) with respect to Parent or seek to
advise, encourage or influence any Person with respect to the
voting of any Parent Common Stock;
(ii) initiate, propose or otherwise solicit, or
participate in the solicitation of stockholders for the
approval of one or more stockholder proposals with respect to
Parent as described in Rule 14a-8 under the Exchange Act or
knowingly induce any Person to initiate any stockholder
proposal relating to Parent;
(iii) form, join or in any way participate in a
"group," (within the meaning of Section 13d-3 of the Exchange
Act), act in concert with any other Person or otherwise take
any action or actions that would cause it to be deemed a
"person" (for purposes of Section 13(d) of the Exchange Act),
with respect to acquiring or voting any Parent Common Stock;
(iv) participate in or encourage the formation of any
"group" (within the meaning of Section 13d-3 of the Exchange
Act) that owns or seeks or offers to acquire beneficial
ownership of securities of Parent or rights to acquire such
securities or that seeks or offers to affect the control or
management of Parent or for the purpose of circumventing any
provision of this Section 6.9;
(v) seek election to, seek to place a representative
on, or seek the removal of any member of, the Board of
Directors of Parent;
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(vi) call or seek to have called any meeting of the
stockholders of Parent, or sign a written consent authorizing
any action to be taken without a meeting of the stockholders
of Parent;
(vii) solicit, seek or offer to effect, negotiate
with or provide any information to any Person with respect to,
make any statement or proposal, whether written or oral,
either alone or in concert with others, to the Board of
Directors of Parent, to any director or officer of Parent or
to any other stockholder of Parent with respect to, or
otherwise formulate any plan or proposal or make any public
announcement, proposal, offer or filing under the Exchange
Act, any similar or successor statute or otherwise, or take
action to cause Parent to make any such filing, with respect
to:
(A) any form of business combination or
transaction involving Parent (other than the
Contemplated Transactions) or any Affiliate thereof,
including, without limitation, a merger, exchange
offer or liquidation of Parent's or any of its
material Subsidiaries' assets;
(B) any form of restructuring,
recapitalization or similar transaction with respect
to Parent or any Affiliate thereof, including,
without limitation, a merger, exchange offer or
liquidation of Parent's or any of its material
Subsidiaries' assets;
(C) any acquisition or disposition of
material assets of Parent or any of its material
Subsidiaries;
(D) any request to amend, waive or terminate
the provisions of this Section 6.9; or
(E) any proposal or other statement
inconsistent with the terms of this Section 6.9;
provided, however, that Newco and Company may discuss the
affairs and prospects of Parent, the status of any investment
by Newco or Company in Parent and any of the matters described
in clauses (A) through (E) of this paragraph at any time, and
from time to time, with the Board of Directors of Parent or
any director or executive officer of Parent or any director or
executive officer of any Subsidiary of Parent, and Newco and
Company may discuss any matter, including any of the
foregoing, with or among each other, or with their outside
legal and financial advisors, if as a result of any such
discussions neither of them is required to make, and neither
of them makes, any public announcement or filing under the
Exchange Act otherwise prohibited by this Section 6.9 as a
result thereof;
(viii) otherwise act, alone or in concert with others
(including by providing financing for another party), to seek
or offer to control or influence, in any manner, the
management, Board of Directors or policies of Parent;
(ix) advise, assist, finance, knowingly instigate or
knowingly encourage any third party to take any of the actions
enumerated in this Section 6.9; or
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(x) disclose or publicly announce any intention, plan
or arrangement inconsistent with the foregoing.
If Newco or Company receives any proposal (oral (that is credible) or written),
offer or inquiry regarding any of the matters described in this Section 6.9, it
shall promptly notify Parent in writing of the nature and content of such
matter, including the names of the Persons involved with such matter.
(b) During the Standstill Time, Newco and Company shall be
present, in person or by proxy, and without further action hereby agree
that they shall be deemed to be present, at all properly called
meetings of stockholders of Parent of which Newco and Company have
notice so that all Parent Common Stock beneficially owned by Newco and
Company shall be counted for purposes of determining the presence of a
quorum at such meetings. Except as otherwise expressly permitted by
this Section 6.9, during the Standstill Time, at all meetings of
Parent's stockholders at which Parent Common Stock owned beneficially
by Newco or Company are entitled to vote, Newco and Company shall vote
all such Parent Common Stock in accordance with the recommendation or
direction of the Board of Directors of Parent, including, without
limitation (i) in all elections of directors of Parent and (ii) on all
other matters submitted for stockholder approval that are supported by
the Board of Directors of Parent; provided, that Newco and Company may
vote the Parent Common Stock owned by them as they determine in their
sole discretion with respect to any of the following transactions
approved by the Board of Directors that are presented at a meeting of
Parent's stockholders for their approval: (w) the issuance of any
preferred stock if after such issuance Parent will have issued, since
the date of this Agreement, preferred stock with an aggregate purchase
price of more than Fifty Million Dollars ($50,000,000) or the issuance
of any equity securities with voting rights that are greater in any
respect than those of the Parent Common Stock, (x) any disposition of
Parent (by way of merger, sale of assets or otherwise) of a substantial
part of its assets, (y) any recapitalization of Parent (other than a
recapitalization for the purpose of forming a holding company or to
effect a change in Parent's state of incorporation), including, without
limitation, any leveraged buyout of Parent or similar going-private
transaction, or (z) any liquidation of, or consolidation involving,
Parent
(c) If this Agreement is terminated pursuant to Article 8,
then the provisions of Section 6.9(b) shall also terminate.
6.10 Newco Financial Covenants. From the Closing Date until the tenth
anniversary of the Closing Date (the "FINANCIAL COVENANT PERIOD"), Newco shall
at all times maintain a minimum Consolidated Tangible Net Worth of Twenty Five
Million Dollars ($25,000,000) and shall not at any time permit its Total Debt to
exceed its Consolidated Tangible Net Worth. Within forty-five (45) days after
the end of (a) the fiscal quarter in which the Effective Time occurs and (b)
each subsequent fiscal quarter during the Financial Covenant Period, Newco shall
provide Parent with an unaudited balance sheet for Newco, prepared on a
consolidated basis, dated the last day of such fiscal quarter. Within ninety
(90) days after the end of each fiscal year during the Financial Covenant
Period, Newco shall provide Parent an unaudited balance sheet for Newco,
prepared on a consolidated basis, dated the last day of such fiscal year. Each
such balance sheet shall be accompanied by a certificate from Newco's Chief
Financial Officer certifying that such balance sheet conforms with the
requirements of this Section 6.10 and certifying as to Newco's Consolidated
Tangible Net Worth and that Newco's Total Debt does not exceed Newco's
Consolidated Tangible Net Worth as of the date of such balance sheet.
6.11 Dissenter's Rights. Newco hereby irrevocably waives any rights that Newco
may have under the IBCA to exercise dissenter's rights with respect to the
Merger.
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6.12 Employment Matters.
6.12.1 As of Closing, Parent shall, or shall cause Company to: (a)
provide to each current employee of Company that is not currently covered by the
terms of a collective bargaining agreement and that is not a current or former
employee of Solimar, Inc., Grupo Thrall de Mexico, S.A. de C.V. or TCMC
Equipment Leasing, Inc. ("EMPLOYEE") such employee benefits as are provided as
of the Closing to similarly situated employees of Parent and (b) be responsible
for providing to each former employee of Company who, as of Closing, is covered
under COBRA continuation coverage under the Duchossois Industries, Inc. Group
Benefits Plan (the "GROUP BENEFITS PLAN") COBRA continuation coverage under the
medical and dental plans of Parent ("COBRA EMPLOYEE") for the remainder of such
former employee's statutory COBRA coverage period. Notwithstanding the
foregoing, Company shall not be required to continue the employment of any
particular Employee after Closing, and the employment of any such Employee may
be terminated at any time after the Closing in accordance with the applicable
law. Parent shall take all actions necessary so that Employees will receive
credit for eligibility and vesting purposes, but not for the accrual of
retirement benefits, for their periods of service with Company and affiliates of
Company prior to Closing under any employee benefit plan, program, or
arrangement established, maintained, continued or made available by Parent on or
after Closing in which such Employees are eligible to participate.
6.12.2 Newco shall be responsible for (a) all claims for welfare
benefits (other than medical and dental benefits) which are incurred prior to
the Closing by any Employee (or the eligible dependent of any Employee) that are
payable under the terms and conditions of the Group Benefits Plan and (b) all
claims for welfare benefits, including medical and dental benefits, that are
either existing or incurred but not reported prior to the Closing by any former
employee of Company who, as of the Closing, is covered by COBRA that are payable
under the terms and conditions of the Group Benefits Plan. Except as listed on
Exhibit 5.10(a), the Surviving Corporation shall be responsible (x) for
reimbursement of Newco for all medical and dental claims incurred by any
Employee or COBRA Employee (or any eligible dependent of any Employee or COBRA
Employee) prior to the Closing that are payable under the terms and conditions
of the Group Benefits Plan, regardless of whether such claims are reported prior
to the Closing, to the extent such claims are paid by Newco after the Closing
and to the extent such claims do not exceed the reserves for the payment of such
claims shown on the books of Company as of the Closing plus $50,000; and (y) for
the welfare benefit claims, including medical and dental claims, that are
payable under the terms and conditions of the welfare benefit plans established
by Parent or the Surviving Corporation with respect to the Employees incurred
from and after the Closing by (i) any Employee (or any eligible dependent of any
Employee), (ii) each employee of the Company on leave of absence, with recall
rights, on workers' compensation or on disability as of the Closing, except that
Newco shall be responsible for continuing long-term disability benefits in pay
status as of the Closing under the Group Benefits Plan for the period specified
thereunder, and (iii) each former employee of Company, who, as of the Closing,
is eligible for or receiving COBRA continuation coverage under the welfare
benefit plans established by Parent or Surviving Corporation. For purposes of
this Section 6.12.2, a claim for welfare benefits shall be deemed to be
incurred: in the case of medical, health or dental benefits, when the medical,
health or dental service or supply is provided, and in the case of disability,
life insurance and any other welfare benefits, when the event directly giving
rise to the claim occurs. The Surviving Corporation or Parent, as applicable,
shall recognize under applicable welfare plans, policies and arrangements of
Parent such copayments and deductibles paid by such Employee or dependent under
the Plans prior to the Closing and shall not exclude any preexisting conditions
of any such Employee or dependent that were not excluded under the Plans
immediately prior to the Closing.
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6.12.3 Nothing herein expressed or implied by this Agreement shall
confer upon any Employee, or legal representative thereof, any rights or
remedies, including, without limitation, any right to employment for any
specified period, of any nature or kind whatsoever, under or by reason of this
Agreement.
6.12.4 Company shall cooperate with Newco in providing reasonable
access to each Employee's personnel and related file from and after Closing and
shall use its best efforts to make such personnel and related files, or complete
copies thereof, available to Newco in connection with a legal or regulatory
claim, action or sanction relating thereto, provided that Newco provides
reasonable advance notice of its intent to review such files.
6.12.5 As soon as practicable after the Closing, Newco shall take all
necessary and legally permissible actions to cause the transfer of the assets of
each Qualified Plan set forth in Part 6.12.5 of Newco's Disclosure Letter from
the trusts holding such assets to the trust or trusts established by Parent or
the Surviving Corporation. Not less than ten (10) days prior to such transfer,
Parent shall provide to Newco evidence that each such trust is exempt from tax
under Section 501(a) of the Code. The assets to be transferred pursuant to this
Section 6.12.5 shall be in cash or a combination of cash, securities or other
property, except that the notes reflecting any participant loan from such
Qualified Plan that is a defined contribution plan shall be transferred in kind.
The actual amount transferred shall be adjusted to reflect any normal and
legally permissible expenses, including plan distributions, properly
attributable the individual accounts of such Qualified Plan during the period,
if any, following the Closing and preceding such transfer.
6.12.6 Prior to the Closing, Company shall make (a) contributions to
the Thrall Car Manufacturing Company Pension Plan for Hourly-Paid Employees at
the Winder and Cartersville Plants in an amount equal to $316,988 for the 2000
plan year and in an amount to $114,077 for the 2001 plan year, and (b) a
contribution to the Thrall Car Manufacturing Company Pension Plan for the
Hourly-Paid Employees at the Clinton, Illinois Plant in an amount equal to
$219,615 for the 2001 plan year.
6.13 Notification of Breach. Within five (5) days prior to the Closing, Timothy
R. Wallace and John L. Adams shall ask the other members of the Parent Knowledge
Group if any of such Persons are aware of a breach of a representation or
warranty or a covenant or obligation of Newco, Company or any of Company's
Subsidiaries contained in this Agreement. If prior to the Closing Date, Timothy
R. Wallace or John L. Adams have concluded that a breach of a representation or
warranty or a covenant or obligation of Newco, Company or any of Company's
Subsidiaries has occurred which would result in an indemnification claim against
Newco, Company or any of Company's Subsidiaries in excess of One Million Dollars
($1,000,000) pursuant to Section 9.2.1 or 9.2.2, Parent shall notify Newco and
Company of such conclusion. Notwithstanding the foregoing, any failure (a) by
Timothy R. Wallace or John L. Adams to ask the other members of the Parent
Knowledge Group if any of them were aware of a breach of a representation or
warranty or a covenant or obligation of Newco, Company or any of Company's
Subsidiaries or (b) by Parent to make such notification to Newco or Company
shall not nullify or otherwise waive Parent's right to indemnification with
respect to such breach or assert any other rights under this Agreement and shall
not constitute a defense by Newco or Company to such claim for indemnification.
6.14 Payment of Cash Balances. As soon as practicable after the Closing Date but
not later than the tenth business day after the Closing Date, the Surviving
Corporation shall pay Newco an amount in cash equal to the amount of cash in
Company's and its Subsidiaries' checking, savings and other deposit accounts at
the Effective Time. At the Closing, Newco shall provide Parent with a complete
and accurate list of such checking, savings and other deposit accounts.
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6.15 Rights Agreement Amendment. Parent shall execute and use its Best Efforts
to cause the Rights Agreement Amendment to become effective.
6.16 Additional Tax Matters.
6.16.1 EIN; Successor Employer Reporting.
(a) Newco shall retain and use Company's federal employer
identification number ("EIN") and all state tax account identification
numbers following the Closing. Parent shall cause the Surviving
Corporation to obtain and use a new federal EIN and new state tax
account identification numbers following the Closing.
(b) Parent shall cause the Surviving Corporation to prepare
and file applicable wage reporting and withholding forms (e.g., Forms
W-2, W-3, W-4, W-5) as a successor employer for federal tax purposes
under the alternative procedure set forth in Rev. Proc. 96-60, 1996-2
C.B. 399, and using its new federal EIN.
6.16.2 Filing of Tax Returns; Reimbursement for Payroll and Sales/Use
Taxes.
(a) Newco's and Company's income from January 1, 2001 through
the Closing Date shall be included in Newco's federal and state income
and franchise Tax Returns, including the income, if any, resulting from
the actions taken by Newco, Company and Company's Subsidiaries pursuant
to Section 5.10 hereof. Newco shall prepare or cause to be prepared and
file or cause to be filed on a timely basis (i) Company's payroll and
sales/use Tax Returns for the Taxable period ending on the Closing
Date; (ii) all other Tax Returns with respect to Newco, Company and
Company's Subsidiaries that are required to be filed on or before the
Closing Date; and (iii) the federal and state partnership Tax Returns
of Thrall International Holdings LLC for all Taxable periods ending
prior to and including the Closing Date.
(b) Parent shall prepare or cause to be prepared and file or
cause to be filed on a timely basis all other Tax Returns with respect
to Company and Company's Subsidiaries.
(c) Parent shall pay or cause the Surviving Corporation to pay
to Newco within five (5) business days after the Closing Date, the
amount of any payroll and sales/use Taxes that Newco is required to
remit with the filing of Company's payroll and sales/use Tax Tax
Returns for the Taxable period ending on the Closing Date to the extent
such Taxes also were reserved on the Working Capital Statement.
6.16.3 Refunds. Any refunds of U.S. federal or state income or
franchise Taxes of Company plus any interest received with respect thereto that
relate to Taxable periods or portions thereof ending on or before the Closing
Date and that have been borne by Company (prior to the Closing) or Newco, and
any refunds of property Taxes related to assets described on Exhibit 5.10(a),
shall be for the account of Newco and, if received by the Surviving Corporation
(or any of its Affiliates) after the Closing Date, shall be paid to Newco within
fifteen (15) days of receipt by such Person.
6.16.4 Cooperation on Tax Matters.
(a) Parent shall cause the Surviving Corporation and its
Subsidiaries to (i) retain all books and records relating to Taxes for
all Taxable periods beginning before the Closing Date until the
expiration of the associated statutes of limitations (including any
extensions thereof), and (ii) give Newco reasonable written notice
prior to transferring, destroying or discarding any
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such books and records and, if Newco requests, allow Newco to take
possession of such books and records.
(b) After the Closing Date, Newco and Parent, at their sole
and separate expense, shall:
(i) assist (and cause their respective Affiliates to
assist) the other party in preparing any Tax Returns that such
other party is responsible for preparing and filing in
accordance with Section 6.16.2;
(ii) reasonably cooperate in preparing for any audits
of, or disputes with Governmental Bodies regarding, any Taxes
of Newco, Company and Company's Subsidiaries for Taxable
periods for which the other party may have an indemnification
obligation;
(iii) make available to the other party and to any
Governmental Body as reasonably requested all information,
records and documents relating to Taxes of Newco, Company and
Company's Subsidiaries for Taxable periods for which the other
party may have an indemnification obligation;
(iv) provide notice within thirty (30) days to the
other party in writing of any pending or threatened Tax audit
or assessment of Newco, Company and Company's Subsidiaries for
Taxable periods for which the other may have an
indemnification obligation; and
(v) furnish the other party with copies of all
correspondence received from any Governmental Body in
connection with any Tax audit or information request with
respect to any such Taxable period for which the other party
may have an indemnification obligation.
6.17 York Facility. Newco shall use its Best Efforts to provide to Parent, prior
to the Closing Date, evidence in form and substance acceptable to Parent that,
without any expense on the part of Parent, any restrictive covenant related to
the manufacture of railcars at Company's manufacturing facility in York,
England, shall have been released for the continuing benefit of Parent and its
Subsidiaries, and that no further restriction or obligation exists that in the
future would impair or restrict the manufacture of railcars at Company's
manufacturing facility in York, England. Alternatively, Newco shall use its Best
Efforts to provide to the reasonable satisfaction of Parent the opportunity to
utilize the facility in York, England on substantially the same economic terms
and conditions as enjoyed by Company on the date hereof.
ARTICLE 7
CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions Precedent to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub under this Agreement shall be subject to
the fulfillment of each and all of the following conditions at or before the
Closing (unless an earlier time is specified in this Agreement, in which case on
or before such earlier time), each of which is individually hereby deemed
material, and any one or more of which may be waived in writing by Parent:
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7.1.1 Representations and Warranties. Each of the representations and
warranties made by Newco in this Agreement (except for the representations and
warranties in (a) the first sentence of Section 3.1.1, (b) the first sentence of
Section 3.1.2 and (c) Section 3.3) shall be true and correct as of the date when
made and (except for changes contemplated by this Agreement and except to the
extent any such representation and warranty speaks as of an earlier date, in
which case such representation or warranty shall have been true and correct as
of such date) shall be true and correct on and as of the Closing Date to the
same extent and with the same effect as if made on and as of the Closing Date,
except, in all cases, where any failure or failures to be true and correct has
not had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect with respect to Company. Each of the
representations and warranties in (a) the first sentence of Section 3.1.1, (b)
the first sentence of Section 3.1.2 and (c) Section 3.3 shall be true and
correct in all material respects as of the date when made and (except for
changes contemplated by this Agreement and except to the extent any such
representation or warranty speaks as of an earlier date, in which case such
representation and warranty shall have been true and correct in all material
respects as of such date) shall be true and correct in all material respects on
and as of the Closing Date to the same extent and with the same effect as if
made on and as of the Closing Date.
7.1.2 Performance by Newco and Company. Newco and Company shall have
materially performed and complied with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by them on or before
the Closing (unless an earlier time is specified in this Agreement, in which
case on or before such earlier time).
7.1.3 No Proceedings. No Proceeding that has a reasonable likelihood of
resulting in an unfavorable outcome shall be pending before any Governmental
Body (a) wherein an unfavorable injunction, judgment, Order, decree, ruling, or
charge would have the legal effect of (i) preventing consummation of any of the
Contemplated Transactions, (ii) causing any of the Contemplated Transactions to
be rescinded following consummation, (iii) having a material adverse effect on
the right of the Surviving Corporation to own the assets of Company, to operate
the business of Company or to control any Subsidiary of Company, or (iv) having
a material adverse effect on the right of any of Company's Subsidiaries to own
its assets and to operate its business or (b) asserting that any Person, other
than Newco, (i) is the holder or the beneficial owner of, or has any right to
acquire or to obtain beneficial ownership of, any capital stock, of, or any
other voting, equity or other ownership interest in, Company or any of its
Subsidiaries, or (ii) is entitled to all or any portion of the Merger
Consideration.
7.1.4 Regulatory Approvals and Consents. There shall have been duly and
validly obtained all Governmental Authorizations and Orders of all Governmental
Bodies required in connection with the Operative Agreements, including, if
required by applicable law, those Consents set forth in Part 3.2.2(b) and (c) of
Newco's Disclosure Letter, and all such Consents, Governmental Authorizations
and Orders shall be in full force and effect as of the Closing and the waiting
period (and any extension thereof) applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
7.1.5 Officer's Certificate. At the Closing, Newco shall have delivered
to Parent a certificate, dated the Closing Date, executed by the President of
Newco, confirming that the conditions in Sections 7.1.1 and 7.1.2 have been
satisfied.
7.1.6 No Material Adverse Effect on Company. Since the date of this
Agreement, there shall have been no Material Adverse Effect with respect to
Company.
7.1.7 Escrow Agreement. At the Closing, Newco and the Escrow Agent
shall have delivered to Parent the Escrow Agreement in the form attached hereto
as Exhibit 7.1.7, with such changes as are reasonably requested by the Escrow
Agent, including, but not limited to, those affecting its duties and
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liabilities and permissible investments (as long as such investments are
comparable with respect to risk) thereunder, duly executed by Newco and the
Escrow Agent.
7.1.8 Stockholder's Agreement. At the Closing, Newco shall have
delivered to Parent the Stockholder's Agreement, in the form attached hereto as
Exhibit 7.1.8, duly executed by Newco.
7.1.9 Claims Releases. At the Closing, Newco and each of the other
Persons listed on Exhibit 7.1.9(a) shall have delivered to Parent a Claims
Release (individually, a "CLAIMS RELEASE", and, collectively, the "CLAIMS
RELEASES") in the form attached hereto as Exhibit 7.1.9(b), duly executed by
Newco and each such other Person.
7.1.10 Registration Rights Agreement. At the Closing, Newco shall have
delivered to Parent the Registration Rights Agreement, in the form attached
hereto as Exhibit 7.1.10, duly executed by Newco.
7.1.11 Noncompetition Agreement. At the Closing, Newco shall have
delivered to Parent the Noncompetition Agreement (the "NONCOMPETITION
AGREEMENT") in the form attached hereto as Exhibit 7.1.11, duly executed by
Newco, Richard Duchossois and Craig Duchossois.
7.1.12 Keepwell Letter. At the Closing, Newco shall have delivered to
Parent the Keepwell Letter (the "KEEPWELL LETTER") in the form attached hereto
as Exhibit 7.1.12, duly executed by Duchossois Industries, Inc.
7.1.13 UCC Financing Statement. At the Closing, Newco shall have
delivered to Parent a Uniform Commercial Code Financing Statement in a form to
be agreed to by Newco and Parent prior to Closing, duly executed by Newco, which
shall not become effective unless and until Duchossois Industries, Inc. is in
default under the Keepwell Letter.
7.1.14 Pledge Agreement. At the Closing, Newco shall have delivered to
Parent the Pledge Agreement (the "PLEDGE AGREEMENT") in a form to be agreed to
by Newco and Parent prior to Closing, duly executed by Newco, which shall not
become effective unless and until Duchossois Industries, Inc. is in default
under the Keepwell Letter.
7.1.15 No Adverse Order. No Governmental Body shall have issued,
enacted, promulgated, enforced or entered into any Order which is in effect and
has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
7.1.16 Secretary's Certificates.
(a) At the Closing, Newco shall have delivered to Parent a
certificate, dated the Closing Date, executed by the Secretary of Newco
(i) attaching a true and complete copy of all resolutions of the Board
of Directors of Newco evidencing corporate action (in form and
substance satisfactory to Parent and its counsel) taken by Newco in
connection with the matters contemplated by the Operative Agreements,
(ii) attaching a true and complete copy of all resolutions of the
shareholders of Newco evidencing the approval (in form and substance
satisfactory to Parent and its counsel), if required by applicable law,
of the matters contemplated by the Operative Agreements, (iii) setting
forth the incumbency of the officer or officers of Newco who sign any
of the Operative Agreements, including therein a signature specimen of
such officer or officers and (iv) covering such other matters, and with
such other attachments thereto, as Parent may reasonably request.
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(b) At the Closing, Company shall have delivered to Parent a
certificate, dated the Closing Date, executed by the Secretary of
Company (i) attaching a true and complete copy of all resolutions of
the Board of Directors of Company evidencing corporate action (in form
and substance satisfactory to Parent and its counsel) taken by Company
in connection with the matters contemplated by this Agreement, (ii)
attaching a true and complete copy of all resolutions of the
shareholders of Company evidencing the approval (in form and substance
satisfactory to Parent and its counsel) of the matters contemplated by
this Agreement, (iii) setting forth the incumbency of the officer or
officers of Company who sign this Agreement, including therein a
signature specimen of such officer or officers, and (iv) covering such
other matters, and with such other attachments thereto, as Parent may
reasonably request.
(c) At the Closing, each of Company's Subsidiaries shall have
provided to Parent a certificate, dated the Closing Date, executed by
the Secretary or equivalent officer of such Subsidiary covering such
matters, and with such attachments thereto, as Parent may reasonably
request.
7.1.17 Use of York Facility. Newco shall have provided to Parent
evidence in form and substance acceptable to Parent that, without any expense on
the part of Parent, any restrictive covenant related to the manufacture of
railcars at Company's manufacturing facility in York, England shall have been
released for the continuing benefit of Parent and its Subsidiaries, and that no
further restriction or obligation exists that in the future would impair or
restrict the manufacture of railcars at Company's manufacturing facility in
York, England. Alternatively, Newco shall provide to the reasonable satisfaction
of Parent the opportunity to utilize the facility in York, England on
substantially the same economic terms and conditions as enjoyed by Company as of
the date hereof.
7.1.18 Clinton Deed. Newco shall have provided to Parent a copy of the
recorded deed to the real property upon which the Company's "main facility" in
Clinton, Illinois is located, evidencing fee ownership of such real property by
Company and subject to no mortgages.
7.2 Conditions Precedent to Obligations of Newco and Company. The obligations of
Newco and Company under this Agreement shall be subject to the fulfillment of
each and all of the following conditions at or before the Closing (unless an
earlier time is specified in this Agreement, in which case on or before such
specified time), each of which is individually hereby deemed material, and any
one or more of which may be waived in writing by Newco:
7.2.1 Representations and Warranties. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement (except for the
representations and warranties in (a) the first and third sentences of Section
4.1 and (b) Section 4.3) shall be true and correct as of the date when made and
(except for changes contemplated by this Agreement and except to the extent any
such representation and warranty speaks as of an earlier date, in which case
such representation or warranty shall have been true and correct as of such
date) shall be true and correct on and as of the Closing Date to the same extent
and with the same effect as if made on and as of the Closing Date, except, in
all cases, where any failure or failures to be true and correct has not had and
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect with respect to Parent. Each of the representations and
warranties on (a) the first and third sentences of Section 4.1 and (b) Section
4.3 shall be true and correct on all material respects as of the date when made
and (except for changes contemplated by this Agreement and except to the extent
that any such representation and warranty speaks as of an earlier date, in which
case such representation or warranty shall have been true and correct in all
material respects as of such date) shall be true and correct on all material
respects on and as of the Closing Date to the same extent and with the same
effect as if made on and as of the Closing Date.
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7.2.2 Performance by Parent and Merger Sub. Parent and Merger Sub shall
have materially performed and complied with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by them
on or before the Closing (unless an earlier time is specified in this Agreement,
in which case on or before such earlier time).
7.2.3 No Proceedings. No Proceeding that has a reasonable likelihood of
resulting in an unfavorable outcome shall be pending or Threatened before any
Governmental Body wherein an unfavorable injunction, judgment, Order, decree,
ruling, or charge would have the legal effect of (a) preventing consummation of
any of the Contemplated Transactions, or (b) causing any of the Contemplated
Transactions to be rescinded following consummation.
7.2.4 Regulatory Approval and Consents. There shall have been duly and
validly obtained all Governmental Authorizations and Orders of all Governmental
Bodies required in connection with the Operative Agreements, including those
Consents set forth in Part 4.2.2(1-3) of Parent's Disclosure Letter, if required
by applicable law, as well as those Consents set forth in Part 4.2.2 (4-6) of
Parent's Disclosure Letter, and all such Consents, Governmental Authorizations
and Orders shall be (a) on terms and conditions reasonably acceptable to Parent
and (b) in full force and effect as of the Closing and the waiting period (and
any extension thereof) applicable to the consummation of the Merger under the
HSR Act shall have expired or been terminated.
7.2.5 Officer's Certificate. At the Closing, Parent shall have
delivered to Newco a certificate, dated the Closing Date, executed by the
President of Parent, confirming that the conditions in Sections 7.2.1 and 7.2.2
have been satisfied.
7.2.6 No Material Adverse Effect on Parent. Since the date of this
Agreement, there shall have been no Material Adverse Effect with respect to
Parent.
7.2.7 Escrow Agreement. At the Closing, Parent and the Escrow Agent
shall have delivered to Newco the Escrow Agreement in the form attached hereto
as Exhibit 7.1.7, with such changes as are reasonably requested by the Escrow
Agent, including, but not limited to, those affecting its duties and liabilities
and permissible investments (as long as such investments are comparable with
respect to risk) thereunder, duly executed by Parent and the Escrow Agent.
7.2.8 Stockholder's Agreement. At the Closing, Parent shall have
delivered to Newco the Stockholder's Agreement, in the form attached hereto as
Exhibit 7.1.8, duly executed by Parent.
7.2.9 Registration Rights Agreement. At the Closing, Parent shall have
delivered to Newco the Registration Rights Agreement, in the form attached
hereto as Exhibit 7.1.10, duly executed by Parent.
7.2.10 No Adverse Order. No Government Body shall have issued, enacted,
promulgated, enforced or entered any Order which is in effect and has the effect
of making the Merger illegal or otherwise prohibiting consummation of the
Merger.
7.2.11 Rights Agreement Amendment. At the Closing, Parent shall have
delivered to Newco evidence that the Rights Agreement, dated as of March 11,
1999, between Parent and The Bank of New York has been amended in substantially
the form attached hereto as Exhibit 7.2.11 (the "RIGHTS AGREEMENT AMENDMENT").
7.2.12 Pledge Agreement. At the Closing, Parent shall have delivered to
Newco the Pledge Agreement in a form to be agreed by Newco and Parent prior to
Closing, duly executed by Parent, which
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shall not become effective unless and until Duchossois Industries, Inc. is in
default under the Keepwell Letter.
7.2.13 New York Stock Exchange Listing. The Shares of Parent Common
Stock to be issued as part of the Merger Consideration shall be approved for
listing on the NYSE upon official notice of issuance thereto, and no event shall
have occurred that would reasonably be expected to cause the Parent Common Stock
to be delisted from the NYSE.
7.2.14 Secretary's Certificates.
(a) At the Closing, Parent shall have delivered to Newco a
certificate, dated the Closing Date, executed by the Secretary of
Parent (i) attaching a true and complete copy of all resolutions of the
Board of Directors of Parent evidencing corporate action (in form and
substance satisfactory to Newco and its counsel) taken by Parent in
connection with the matters contemplated by the Operative Agreements,
(ii) setting forth the incumbency of the officer or officers of Parent
who sign any of the Operative Agreements, including therein a signature
specimen of such officer or officers, and (iii) covering such other
matters, and with such other attachments thereto, as Newco may
reasonably request.
(b) At the Closing, Merger Sub shall have delivered to Newco a
certificate, dated the Closing Date, executed by the Secretary of
Merger Sub (i) attaching a true and complete copy of all resolutions of
the Board of Directors of Merger Sub evidencing corporate action (in
form and substance satisfactory to Newco and its counsel) taken by
Merger Sub in connection with the matters contemplated by this
Agreement, (ii) attaching a true and complete copy of all resolutions
of the shareholders of Merger Sub evidencing the approval (in form and
substance satisfactory to Newco and its counsel) of the Merger, (iii)
setting forth the incumbency of the officer or officers of Merger Sub
who sign this Agreement, including therein a signature specimen of such
officer or officers, and (iv) covering such other matters, and with
such other attachments thereto, as Newco may reasonably request.
ARTICLE 8
TERMINATION
8.1 Termination Events. This Agreement may, by written notice given prior to or
at the Closing, be terminated:
8.1.1 by Parent if either Newco or Company Breaches or fails to perform
in any material respect any of its representations, warranties or covenants
contained in this Agreement, which Breach or failure to perform (a) would give
rise to the failure of a condition set forth in Section 7.1.1 or 7.1.2 and (b)
cannot be cured or has not been cured within fifteen (15) days after the giving
of written notice to Newco of such Breach (provided that neither Parent nor
Merger Sub is then in willful and material Breach of any representation,
warranty or covenant contained in this Agreement);
8.1.2 by Newco if either Parent or Merger Sub Breaches or fails to
perform in any material respect any of its representations, warranties or
covenants contained in this Agreement, which Breach or failure to perform (a)
would give rise to the failure of a condition set forth in Section 7.2.1 or
7.2.2 and (b) cannot be or has not been cured within fifteen (15) days after the
giving of written notice to Parent of such Breach (provided that neither Newco
nor Company is then in willful and material Breach of any representation,
warranty or covenant contained in this Agreement);
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8.1.3 by Newco if (a) the individuals who as of the date of this
Agreement constituted the Board of Directors of Parent and (b) any other
individuals who become directors of Parent between the date of this Agreement
and the Closing Date and whose election to the Board of Directors of Parent or
whose nomination for election to the Board of Directors of Parent by the
stockholders of Parent were approved by a majority of the directors of Parent
then in office who are referred to in clause (a) or this clause (b), cease for
any reason to constitute a majority of the Board of Directors of Parent;
8.1.4 by Newco, if in a transaction or series of transactions that was
not approved by the Board of Directors of Parent, any Person (collectively with
such Person's Affiliates) acquires 35% or more of the issued and outstanding
Parent Common Stock;
8.1.5 by Newco, if as a result of closing a tender offer or exchange
offer that was not approved or recommended by the Board of Directors of Parent
prior to the commencement of such tender offer or exchange offer, any Person
(collectively with such Person's Affiliates) acquires 35% or more of the issued
and outstanding Parent Common Stock;
8.1.6 by Newco, upon written notice to Parent provided within three (3)
business days after Newco receives notice from Parent (which notice Parent shall
provide) of a proposed transaction or series of related proposed transactions
that is approved by the Board of Directors of Parent pursuant to which any
Person (collectively with such Person's Affiliates) will acquire more than 35%
of the issued and outstanding Parent Common Stock;
8.1.7 by Newco, upon the redemption by Parent or agreement by Parent to
redeem rights to acquire Series A Junior Participating Preferred Stock issued
under the Rights Agreement;
8.1.8 by Newco, upon consummation of a sale of or agreement to sell all
or substantially all of Parent's or its Subsidiaries' assets that requires
approval of Parent's stockholders pursuant to Delaware General Corporation Law;
8.1.9 by mutual written consent of Parent and Newco; or
8.1.10 by either Parent or Newco, if the Closing has not occurred
(other than through the failure of Parent or Merger Sub, if Parent is seeking to
terminate the Agreement, or of Newco or Company, if Newco is seeking to
terminate this Agreement, to comply fully with its obligations under this
Agreement) on or before July 15, 2002.
8.2 Effect of Termination. Except for terminations described in Section 8.3,
each party's right of termination under Section 8.1 is in addition to any other
rights it may have under this Agreement or otherwise and the exercise of a right
of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 8.1, all further obligations of the parties under
this Agreement will terminate, except that the obligations in Article 9 and
Sections 6.2, 6.9(a), 8.3, 10.1 and 10.2 will survive; provided, however, that
if this Agreement is terminated by a party because of the Breach of the
Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
8.3 Termination Fee. If this Agreement is validly terminated by Newco pursuant
to Sections 8.1.3, 8.1.4, 8.1.5, 8.1.7 or 8.1.8 or because the waiting period
under the HSR Act has not expired or been terminated and such waiting period
would have expired or been terminated prior to July 15, 2002, but for
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the occurrence between the date hereof and July 15, 2002 of (a) a merger or
other combination of Parent or any of its Subsidiaries with another Person, (b)
an acquisition or disposition of stock or assets by Parent or any of its
Subsidiaries, or (c) any other similar transaction or occurrence, then Parent
shall pay to Newco a termination fee in the amount of Thirteen Million Five
Hundred Thousand Dollars ($13,500,000). This termination fee shall be the
exclusive remedy for Newco and Company if this Agreement is terminated for any
of the reasons set forth in this Section 8.3, and Newco and Company hereby
waive, release and discharge forever Parent and Merger Sub for all liabilities
(including, but not limited to, incidental and consequential damages), whether
known or unknown that either Newco or Company may have under applicable law.
8.4 Extension; Waiver. At any time prior to the Effective Time, the parties may
(a) extend the time for the performance of any the obligations or acts of the
other parties, (b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
ARTICLE 9
INDEMNIFICATION; REMEDIES
9.1 Survival; Right to Indemnification Not Affected by Knowledge. All
representations, warranties, covenants and obligations in this Agreement,
Newco's Disclosure Letter, Parent's Disclosure Letter and any other certificate
or document delivered pursuant to this Agreement will survive the Closing. The
right to indemnification based on such representations, warranties, covenants
and obligations will not be affected by any investigation conducted by any party
with respect to, or any Knowledge acquired by any party (or capable of being
acquired) at any time, whether before or after the execution and delivery of
this Agreement or the Closing Date, with respect to the accuracy or inaccuracy
of or compliance with any such representation, warranty, covenant or obligation.
The waiver of any condition based on the accuracy of any representation or
warranty or on the performance of or compliance with any covenant or obligation
will not affect the right to indemnification, payment of damages or other remedy
based on such representation, warranty, covenant or obligation.
9.2 General Indemnification by Newco. Newco shall indemnify and hold harmless
Parent, the Surviving Corporation (from and after the Closing) and their
respective Representatives and Affiliates (collectively, the "INDEMNIFIED
PERSONS") from and against any and all losses, liabilities, claims, damages
(excluding incidental and consequential damages, other than incidental and
consequential damages for which Parent is liable to third parties), expenses
(including reasonable costs of investigation and defense and reasonable
attorneys' fees), whether or not involving a third-party claim (collectively,
"DAMAGES"), that any Indemnified Person may incur or become subject to arising,
directly or indirectly, out of or in connection with:
9.2.1 any Breach of any representation or warranty made by Newco in
this Agreement, Newco's Disclosure Letter or any other certificate or document
delivered by Newco or Company pursuant to this Agreement (provided that each
representation or warranty of Newco contained herein or therein that is subject
to a materiality, Material Adverse Effect, Material Adverse Change or similar
qualification shall be deemed to be not so qualified in determining the
existence of any Breach thereof on the part of Newco for the purpose of Article
9);
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9.2.2 any Breach of any representation or warranty made by Newco in
this Agreement or Newco's Disclosure Letter as if such representation or
warranty were made on and as of the Closing Date, except to the extent any such
representation or warranty speaks as of an earlier date (provided that each
representation or warranty of Newco contained herein or therein that is subject
to a materiality, Material Adverse Effect, Material Adverse Change or similar
qualification shall be deemed to be not so qualified in determining the
existence of any Breach thereof on the part of Newco for the purposes of Article
9);
9.2.3 any Breach by Newco or Company of any covenant or obligation of
Newco or Company in this Agreement;
9.2.4 any product warranty claims relating to the products manufactured
by Company or any of its Subsidiaries prior to the Closing that are in excess of
product warranty reserves reflected for such purpose on the Working Capital
Statement;
9.2.5 any liabilities for federal and state income and franchise Taxes
relating to Newco, Company or any of Company's Subsidiaries, if any, that
accrued or relate to the period prior to the Closing that are in excess of the
amounts accrued and reflected for such purpose on the Working Capital Statement;
or
9.2.6 any event, condition, circumstance, activity, practice, incident,
action, omission or plan (whether or not such event, condition, circumstance,
activity, practice, incident, action, omission or plan constitutes a Breach of a
representation, warranty or covenant contained in this Agreement) relating in
any way (a) to any of the actions, assets, or the use of such assets prior to
the Closing Date, or liabilities referred to in Section 5.10, including any
increase in Tax liability due to any of such actions, assets, use of such
assets, or liabilities or (b) to the real property formerly owned by Company,
any of its predecessor entities, any of Company's Subsidiaries, any predecessor
to any of Company's Subsidiaries, any of Company's former Subsidiaries or any
predecessor to any such former Subsidiary; provided however, that with respect
to such real property described in this clause (b), Newco's indemnity shall
apply to only those Damages (including without limitation reasonable costs of
investigation, remediation, containment or other management of any Hazardous
Substance and fees and expenses of any consultants or contractors), including
Damages based on negligence prior to Closing of Company or any of its
Subsidiaries, strict liability or CERCLA or analogous state laws, that any of
the Indemnified Persons may incur or become subject to under any Environmental
Laws arising out of or in any way relating to the condition of or operations on
such real property.
9.3 Indemnification by Newco for Environmental Matters. Newco shall indemnify
and hold harmless the Indemnified Persons from and against any and all Damages
(including without limitation reasonable costs of investigation, remediation,
containment or other management of any Hazardous Substance and fees and expenses
of any consultants or contractors), including Damages based on negligence prior
to Closing of Company or any of its Subsidiaries, strict liability or CERCLA or
analogous state laws, that any of the Indemnified Persons may incur or become
subject to under any Environmental Laws arising out of or in any way relating to
the condition or operation of the Facilities or the operation of the business by
Company or any of its Subsidiaries prior to Closing, provided, however, the
Indemnified Persons shall not be entitled to any indemnification for any Damages
identified as a result of the conduct of any post-Closing ASTM Phase 2 soil
and/or groundwater environmental assessment, unless such assessment is (a)
undertaken to meet an Indemnified Person's legal duties under Environmental Law,
including the mitigation of potential liability under Environmental Law;
provided, that with respect to mitigation, Parent must have received an opinion
of outside legal counsel that the duty to mitigate is based on clear and
convincing evidence not based on information included in Newco's Disclosure
Letter; further, provided, that Parent shall have notified Newco in advance of
its intention to
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seek such legal opinion, (b) necessary for the construction or modification of
any structure, equipment or utilities, including any necessary preconstruction
investigative or site work or (c) based upon credible evidence disclosed by an
employee or former employee of Surviving Corporation, Company or any Subsidiary
of Surviving Corporation or Company related to the Environment at a Facility
prior to Closing and that was not disclosed in Newco's Disclosure Letter.
Notwithstanding any other provision of this Agreement, Newco shall have
no indemnification obligation (i) for Breaches of Section 3.20 pursuant to
Section 9.2 or (ii) pursuant to this Section 9.3, in either case, for Damages
relating to or involving capital expenditures or operation changes to the
Facilities resulting from alleged violations of Environmental Law prior to the
Closing Date, other than capital expenditures or operation changes as required
to directly remediate the condition giving rise to the underlying
indemnification obligation and make any necessary repairs related to such
remediation.
Parent shall be entitled to control and make any and all decisions
regarding any remediation, any related Proceeding and, except as provided in the
last sentence of this paragraph, any other Proceeding with respect to which
indemnity may be sought under this Section 9.3, provided, however, Parent shall
provide Newco with reasonable notice and opportunity to review, comment and
actively participate in any such remediation or related Proceeding, and any
comment, review and participation by Newco shall not constitute a waiver of
Newco's right to assert that Parent is not entitled to indemnification pursuant
to this Section 9.3 or any other Section hereof. The Indemnified Persons' right
to indemnification under this Section 9.3 shall not extend to costs of
investigation, remediation, containment or other management of any Hazardous
Substance in excess of those reasonably necessary to achieve compliance with the
least stringent applicable standards then in effect under Environmental Law that
would not result in the imposition of any significant restriction on the
operations of the business of Surviving Corporation or any of its Subsidiaries
as a railcar manufacturing company or any of the Facilities as a railcar
manufacturing facility. The procedure described in Section 9.9 will apply to any
claim solely for monetary damages relating to a matter covered by this Section
9.3.
9.4 Procedure for Indemnification --Tax Claims.
(a) If Parent receives notice of the assertion of any claim,
the commencement of any Proceeding, or the imposition of any penalty or
assessment by a Governmental Body against Newco, Company or Company's
Subsidiaries for a Taxable period or periods ending on or before the
Closing Date (a "TAX CLAIM"), and if Parent intends to seek indemnity
from Newco therefor, then Parent shall provide Newco with prompt
written notice of the Tax Claim, but in any event no later than thirty
(30) calendar days after receipt of notice of the Tax Claim. The
failure by Parent to notify Newco of a Tax Claim shall not relieve
Newco of any indemnification responsibility, unless such failure
materially prejudices the ability of Newco to defend such Tax Claim.
Newco shall have the sole right to control the defense or settlement of
such Tax Claim with counsel of its choosing at Newco's sole expense;
provided, however, that Parent shall be permitted, at Parent's sole
expense, to be present at any audit or Proceeding in respect of such
Tax Claim; provided, further, that Newco shall not settle or compromise
any Tax Claim without Parent's prior written consent, which consent
shall not unreasonably be withheld or delayed.
(b) Parent shall have the sole right to represent the
interests of the Surviving Corporation and its Subsidiaries in the
defense of any claim for Taxes relating to Taxable periods ending after
the Closing Date, and to employ counsel of its choice at its expense.
9.5 Indemnification and Payment of Damages by Parent. Parent shall indemnify and
hold harmless Newco from and against any and all Damages that Newco may incur or
become subject to arising, directly or indirectly, out of or in connection with:
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9.5.1 any Breach of any representation or warranty made by Parent or
Merger Sub in this Agreement, Parent's Disclosure Letter or in any other
certificate or document delivered by Parent or Merger Sub pursuant to this
Agreement (provided that each representation or warranty of Parent or Merger Sub
contained herein or therein that is subject to materiality, Material Advance
Effect, Material Adverse Change or similar qualification shall be deemed to be
not so qualified in determining the existence of any Breach thereof on the part
of Parent or Merger Sub for the purposes of this Article 9);
9.5.2 any Breach of any representation or warranty made by Parent or
Merger Sub in this Agreement or Parent's Disclosure Letter as if such
representation and warranty were made on and as of the Closing Date, except to
the extent any such representation or warranty speaks as of an earlier date
(provided that each representation or warranty of Parent or Merger Sub contained
herein or therein that is subject to a materiality, Material Adverse Effect,
Material Adverse Change or similar qualification shall be deemed to be not so
qualified in determining the existence of any Breach thereof on the part of
Parent or Merger Sub for the purposes of Article 9);
9.5.3 any Breach by Parent or Merger Sub of any covenant or obligation
of Parent or Merger Sub in this Agreement; or
9.5.4 any product warranty claims relating to the products manufactured
by Parent or any of its Subsidiaries prior to the Closing that are in excess of
product warranty reserves reflected for such purpose on the balance sheet of
Parent as of the Closing.
9.6 Time Limitations.
9.6.1 A claim against Newco pursuant to Sections 9.2.1, 9.2.2 or 9.2.3
(other than with respect to Breaches of Sections 3.3, 3.11, 3.13 or 3.20) must
be made in writing to Newco on or before the second anniversary of the Closing
Date specifying the factual basis of such claim in reasonable detail to the
extent then known by the Indemnified Person making such claim.
9.6.2 A claim against Newco based on a Breach of Section 3.3 or a claim
for indemnification pursuant to Section 9.2.6 may be made in writing to Newco at
any time specifying the factual basis of such claim in reasonable detail to the
extent then known by the Indemnified Person making such claim.
9.6.3 A claim against Newco based on a Breach of Section 3.11 or 3.13
or a claim for indemnification pursuant to Section 9.2.5 must be made in writing
to Newco on or before the termination of the applicable statute of limitations
(including extensions thereto) specifying the factual basis of such claim in
reasonable detail to the extent then known by the Indemnified Person making such
claim.
9.6.4 A claim against Newco based on a Breach of Section 3.20 that
relates to an environmental issue set forth on Part 3.20 of Newco's Disclosure
Letter or a claim for indemnification pursuant to Section 9.2.4 or pursuant to
Section 9.3 that relates to an environmental issue set forth in Part 3.20 of
Newco's Disclosure Letter must be made in writing to Newco on or before the
fifth anniversary of the Closing Date specifying the factual basis of such claim
in reasonable detail to the extent then known by the Indemnified Person making
such claim.
9.6.5 A claim against Newco based on a Breach of Section 3.20 that
relates to an environmental issue not set forth on Part 3.20 of Newco's
Disclosure Letter or a claim for indemnification pursuant to Section 9.3 that
relates to an environmental issue not set forth in Part 3.20 of Newco's
Disclosure Letter must be made in writing to Newco on or before the tenth
anniversary of the
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Closing Date specifying the factual basis of such claim in reasonable detail to
the extent then known by the Indemnified Person making such claim.
9.6.6 A claim against Parent pursuant to Sections 9.5.1, 9.5.2 or 9.5.3
(other than with respect to Breaches of Sections 4.3, 4.6 or 4.11) must be made
in writing to Parent on or before the second anniversary of the Closing Date
specifying the factual basis of such claim in reasonable detail to the extent
then known by Newco.
9.6.7 A claim against Parent based on a Breach of Section 4.3 may be
made in writing at any time specifying the factual basis of such claim in
reasonable detail to the extent then known by Newco.
9.6.8 A claim against Parent based on a Breach of Section 4.6 must be
made in writing to Parent on or before the termination of the applicable statute
of limitations (including extensions thereto) specifying the factual basis of
such claim in reasonable detail to the extent then known by Newco.
9.6.9 A claim against Parent based on a Breach of Section 4.11 or a
claim for indemnification pursuant to Section 9.5.4 must be made in writing to
Parent on or before the fifth anniversary of the Closing Date specifying the
factual basis of such claim in reasonable detail to the extent then known by
Newco.
9.7 Limitations on Indemnification Amount -- Newco
9.7.1 Except as set forth in Section 9.7.3, the Indemnified Persons
shall not be entitled to make any claim against Newco for indemnification
pursuant to Sections 9.2.1 (other than with respect to Breaches of Sections 3.3
or 3.11), 9.2.2 (other than with respect to Breaches of Sections 3.3 or 3.11),
9.2.4 or 9.3 unless and until the Damages with respect to such claim or Damages
relating to a series of similar claims arising out of the same or similar facts
or circumstances exceed Fifty Thousand Dollars ($50,000) (an "INCLUDED CLAIM").
For the purpose of determining whether the Damages with respect to a claim or
series of similar claims reach the monetary threshold to be classified as an
Included Claim, (a) all product warranty claims will be aggregated with each
other, (b) all claims for medical and dental benefits will be aggregated with
each other and (c) all workers' compensation claims will be aggregated with each
other.
9.7.2 Except as set forth in Section 9.7.3, Newco shall be only
obligated to indemnify for those Included Claims, in the aggregate, above the
first Four Million Dollars ($4,000,000) of Included Claims; provided that
Newco's obligation to indemnify for Included Claims pursuant to (a) Sections
9.2.1 (other than with respect to Breaches of Sections 3.3, 3.11 or 3.20) and
9.2.2 (other than with respect to Breaches of Sections 3.3, 3.11 or 3.20) shall
be limited to Fifteen Million Dollars ($15,000,000) in the aggregate; (b)
Section 9.2.4 shall be limited to Ten Million Dollars ($10,000,000) in the
aggregate; and (c) Section 9.3 and Breaches of Section 3.20 shall be limited to
Twenty Million Dollars ($20,000,000) in the aggregate.
9.7.3 The limitations of Sections 9.7.1 and 9.7.2 shall not apply to
(a) any indemnity claim based on Sections 9.2.3, 9.2.5 or 9.2.6 or (b) any
indemnity claim based on any Breach of any representation or warranty set forth
in Sections 3.3 or 3.11.
9.8 Limitations on Indemnification Amount -- Parent.
9.8.1 Except as set forth in Section 9.8.3, Newco shall not be entitled
to make any claim against Parent for indemnification pursuant to Sections 9.5.1
(other than with respect to Breaches of Sections 4.3 or 4.6), 9.5.2 (other than
with respect to Breaches of Section 4.3 or 4.6) or 9.5.4 unless and
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until the Damages with respect to such claim or Damages relating to a series of
similar claims arising out of the same or similar facts or circumstances exceed
Fifty Thousand Dollars ($50,000) (a "NEWCO CLAIM").
9.8.2 Except as set forth in Section 9.8.3, Parent shall be only
obligated to indemnify for those Newco Claims, in the aggregate, above the first
Four Million Dollars ($4,000,000) of Newco Claims; provided that Parent's
obligation to indemnify for Newco Claims pursuant to (a) Sections 9.5.1 (other
than with respect to Breaches of Sections 4.3, 4.6 or 4.11) and 9.5.2 (other
than with respect to Breaches of Sections 4.3, 4.6 or 4.11) shall be limited to
Fifteen Million Dollars ($15,000,000) in the aggregate; (b) Section 9.5.4 shall
be limited to Ten Million Dollars ($10,000,000) in the aggregate; and (c)
Breaches of Section 4.11 shall be limited to Twenty Million Dollars
($20,000,000) in the aggregate.
9.8.3 The limitations of Sections 9.8.1 and 9.8.2 will not apply to (a)
any indemnity claim based on Section 9.5.3 or (b) any indemnity claim based on
any Breach of any representation or warranty set forth in Sections 4.3 or 4.6.
9.9 Procedure for Indemnification -- Third Party Claims.
9.9.1 Promptly after receipt by an indemnified party under Section 9.2,
9.3 or 9.5 of notice of the commencement of any Proceeding against it, such
indemnified party shall, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of the commencement of
such claim, but the failure to notify the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnifying party's failure to give
such notice.
9.9.2 If any Proceeding referred to in Section 9.9.1 is brought against
an indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party shall be entitled to
participate in such Proceeding and, to the extent that it wishes (unless (a)
indemnifying party is also a party to such Proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate or (b)
the indemnifying party fails to provide reasonable assurance to the indemnified
party of its financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding, in which case the identified
party may retain its own counsel and be reimbursed for its expenses incurred in
connection therewith pursuant to this Article 9), to assume the defense of such
Proceeding with counsel reasonably satisfactory to the indemnified party and,
after notice from the indemnifying party to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party shall
not, as long as it diligently conducts such defense, be liable to the
indemnified party under this Article 9 for any fees of other counsel or any
other expenses with respect to the defense of such Proceeding, in each case
subsequently incurred by the indemnified party in connection with the defense of
such Proceeding, other than reasonable costs of investigation and except as
provided above. If the indemnifying party assumes the defense of a Proceeding,
(x) it will be conclusively established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of and subject to
indemnification; (y) no compromise or settlement of such claims may be effected
by the indemnifying party without the indemnified party's consent unless (A)
there is no finding or admission of any violation of Legal Requirements by an
indemnified party or any violation of the rights of any Person by an indemnified
party and no effect on any other claims that may be made against the indemnified
party and (B) the sole relief provided is monetary damages that are paid in full
by the indemnifying party or other determination binding solely on the
indemnifying party; and (z) the indemnified party shall have no liability with
respect to any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the commencement of any
Proceeding and the indemnifying party does not, within thirty (30) days after
the indemnified party's
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notice is given, give notice to the indemnified party of its election to assume
the defense of such Proceeding, the indemnifying party shall be bound by any
determination made in such Proceeding or any compromise or settlement effected
by the indemnified party.
9.9.3 Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its Affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
indemnified party may, by notice to the indemnifying party, assume the exclusive
right to defend, compromise or settle such Proceeding, but the indemnifying
party shall not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
9.10 Procedure for Indemnification -- Other Claims. A claim for indemnification
for any matter not involving a third-party claim may be asserted by written
notice to the party from whom indemnification is sought.
9.11 Insurance And Tax Benefit; Reserve. The amount of Damages subject to
indemnification under this Article 9 shall be reduced by (a) the amount, if any,
that the indemnified party receives under any insurance policy with respect to
such Damages and the indemnified party shall, in good faith, pursue claims for
insurance proceeds to which it is entitled; (b) the amount, if any, of the
present value of any net tax benefit that the indemnified party may receive or
otherwise enjoy with respect to the matter that gave rise to the Damages; and
(c) the amount, if any, of any specific designated reserve or accrued
liabilities provided for in Company's financial statements in respect of the
subject matter of the claim for indemnification. If the amount by which the
reserve shown on the Working Capital Statement for payment of medical and dental
claims exceeds the amount paid by Surviving Corporation under Section 6.12.2 to
Newco to reimburse Newco for such claims, the excess amount shall be transferred
and added to the amount of the reserve shown on the Working Capital Statement
for payment of workers' compensation claims.
9.12 Subrogation. To the extent that any indemnified party has the right to
recover the amount of (or part of the amount of) any claims such indemnified
party may seek to assert against an indemnifying party pursuant to Article 9 by
way of a claim against any third party on the basis of the same or substantially
similar facts or circumstances as gave rise to the claim against the
indemnifying party, the indemnified party shall cause the indemnifying party to
be subrogated to the indemnified party in respect of its claim against any such
third party. In such case the indemnifying party shall be entitled to conduct in
the name of the indemnified party any claim, action, suit or other proceeding
against that third party and the indemnified party shall make available or cause
its Representatives and Affiliates to make available to the indemnifying party
such persons and all such information or materials as the indemnifying party may
reasonably require for pursuing the claim against such third party, subject to
reimbursement for out of pocket expenses related thereto and without
unreasonable disruption of the business or operations of the indemnified party.
9.13 Exclusive Remedy -- Indemnified Persons. In the absence of fraud or
intentional misrepresentation, an Indemnified Person's rights under this Article
9 shall be such person's sole and exclusive remedy for Damages arising from any
matter described in Sections 9.2 and 9.3. Except as provided in the previous
sentence, the Indemnified Persons hereby waive, release and discharge forever
Newco from all liabilities, whether known or unknown, and any right of
contribution and/or indemnity such Indemnified Persons may have under applicable
law, including, but not limited to, Environmental Laws. The provisions of this
Section 9.13 shall be absolute and continuing and shall survive the termination
of this Agreement. Notwithstanding this Section 9.13, if this Agreement is
terminated by Parent or Merger Sub because of a Breach of the Agreement by Newco
or Company or because one or
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more conditions to Parent's or Merger Sub's obligations under this agreement is
not satisfied as a result of Newco's or Company's failure to comply with its
obligations under this Agreement, Parent's or Merger Sub's right to pursue all
legal remedies will survive such termination unimpaired.
9.14 Exclusive Remedy -- Newco. Except for those matters described in Section
8.3 for which the termination fee described in such Section 8.3 is Newco's and
Company's exclusive remedy, in the absence of fraud or intentional
misrepresentation, Newco's and Company's (prior to Closing with respect to
Company's) rights under this Article 9 shall be their sole and exclusive remedy
for Damages arising from any matter described in Section 9.5. Except as provided
in the previous sentence, Newco and Company (prior to Closing with respect to
Company) hereby waive, release and discharge forever Parent and Merger Sub from
all liabilities, whether known or unknown and any right of contribution and/or
indemnity Newco or Company (prior to Closing with respect to Company) may have
under applicable law, including, but not limited to, Environmental Laws. The
provisions of this Section 9.14 shall be absolute and continuing and shall
survive the termination of this Agreement. Notwithstanding this Section 9.14, if
this Agreement is terminated by Newco or Company because of a Breach of the
Agreement by Parent or Merger Sub or because one or more conditions to Newco's
or Parent's obligations under this Agreement is not satisfied as a result of
Parent's or Merger Sub's failure to comply with its obligations under this
Agreement, Newco's or Company's right to pursue all legal remedies will survive
such termination unimpaired.
ARTICLE 10
GENERAL PROVISIONS
10.1 Expenses. Except as otherwise expressly provided in this Agreement, each
party to this Agreement shall bear its respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel and accountants. Newco shall cause Company not to incur
any out-of-pocket expenses in connection with the Contemplated Transactions. In
the event of termination of this Agreement, the obligation of each party to pay
its own expenses will be subject to any rights of such party arising from a
Breach of this Agreement by another party.
10.2 Confidentiality. Except as contemplated by Section 6.2, between the date of
this Agreement and the Closing Date, the parties shall maintain in confidence,
and shall cause their Representatives to maintain in confidence, and not use to
the detriment of another party any written, oral or other information obtained
in confidence from another party or Company in connection with this Agreement or
the Contemplated Transactions, unless (a) such information is already known to
such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
Contemplated Transactions, (c) the furnishing or use of such information is
required by legal proceedings or (d) the disclosure is required by Legal
Requirements.
10.3 Notices. All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested or (c) when received by the addressee,
if sent by a nationally recognized overnight delivery service (receipt
requested), in each case to the appropriate addresses and telecopier numbers set
forth below (or to such other addresses and telecopier numbers as a party may
designate by notice to the other parties):
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To Newco or Company:
c/o Duchossois Industries, Inc.
Attn: Corporate Secretary
845 Larch Avenue
Elmhurst, Illinois 60126-1196
Facsimile: (630) 530-6051
To Parent or Merger Sub:
Trinity Industries, Inc.
Attn: General Counsel
2525 Stemmons Freeway
Dallas, TX 75207
Facsimile: (214) 589-8824
With a copy to:
Haynes and Boone, LLP
Attn: Michael M. Boone
901 Main Street, Suite 3100
Dallas, Texas 75202
Facsimile: (214) 651-5940
10.4 Further Assurances. The parties agree (a) to furnish upon request to each
other such further information, (b) to execute and deliver to each other such
other documents and (c) to do such other acts and things, all as the other party
may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
10.5 Waiver. Subject to the provisions hereof, the rights and remedies of the
parties to this Agreement are cumulative and not alternative. Neither the
failure nor any delay by any party in exercising any right, power or privilege
under this Agreement or the documents referred to in this Agreement will operate
as a waiver of such right, power or privilege, and no single or partial exercise
of any such right, power or privilege will preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable law, (a) no
claim or right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
parties; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents referred
to in this Agreement.
10.6 Entire Agreement and Modification. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. Each party acknowledges and agrees that (a) the
representations and warranties made to such party in this Agreement are the only
representations, warranties or other assurances of any kind (i) given by or on
behalf of any other party or parties providing such representations, warranties,
or other assurances and (ii) on which such party is relying in entering into
this Agreement; and (b) no other statement, promise, forecast or projection made
by or on behalf of any
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other party or parties or Representatives thereof may form the basis of any
claim by such party under or in connection with this Agreement. This Agreement
may not be amended except by a written agreement executed by Parent and Newco.
10.7 Assignments, Successors and No Third-Party Rights. No party may assign any
of its rights under this Agreement without the prior consent of the other
parties except that Parent and/or Merger Sub may assign any of its rights under
this Agreement to any Subsidiary of Parent. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
10.8 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
10.9 Section Headings, Construction. The headings of Sections in this Agreement
are provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
10.10 Governing Law. This Agreement will be governed by the laws of the State of
Delaware without regard to conflicts of laws principles.
10.11 Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
10.12 Shareholder Action. Execution of this Agreement by Newco shall constitute
written action by Newco pursuant to the IBCA approving the Merger as the sole
shareholder of Company.
* * * * *
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
PARENT:
TRINITY INDUSTRIES, INC.
By: /s/ JOHN M. LEE
--------------------------------------------------
Name: John M. Lee
Title: Vice President
Business Development
MERGER SUB:
TCMC ACQUISITION CORP.
By: /s/ JOHN M. LEE
--------------------------------------------------
Name: John M. Lee
Title: Vice President
Business Development
COMPANY:
THRALL CAR MANUFACTURING COMPANY
By: /s/ CRAIG J. DUCHOSSOIS
-------------------------------------------------
Name: Craig J. Duchossois
Title: President and Chief Executive Officer
NEWCO:
THRALL CAR MANAGEMENT COMPANY, INC.
By: /s/ CRAIG J. DUCHOSSOIS
--------------------------------------------------
Name: Craig J. Duchossois
Title: Chairman and President
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Exhibit 2.2.2
Pursuant to paragraph 2.2.2 of the Agreement, the Working Capital
Statement shall be prepared in accordance with the following procedures:
1. As of the Closing Date, the Surviving Company shall prepare a statement
of financial position ("Closing Balance Sheet") prepared in accordance
with GAAP applying the practices and policies used by the Company in
preparing its Balance Sheet and Interim Balance Sheet ("Accounting
Practices").
2. The Company's Working Capital as of the Closing Date shall be
calculated as the difference between the amounts corresponding to the
accounts shown in paragraph a. through i. below, it being understood
that assets shall be presented as positive values and liabilities shall
be presented as negative values:
a. accounts receivable, net of any reserve for uncollectible
debts;
b. raw material, work in process, finished goods and other
inventories, calculated on a first in, first out basis, less
any reserve for shrinkage and excess and obsolete goods;
c. prepaid expenses, other than (i) amounts related to
intercompany payments made to a Related Party with respect to
employee medical and dental costs disbursed through such
Related Party's Voluntary Employee Benefit Association, and
(ii) prepaid acquisition costs;
d. advances to suppliers;
e. accounts payable to vendors, including uncleared payments;
f. accrued liabilities including, but not limited to, accruals
for payroll, vacation pay, payroll, property and other taxes
(other than income taxes), holiday pay, bonuses, profit
sharing, workers compensation claims, employee group medical
and like liabilities (other than those claims retained
pursuant to Section 5.10);
g. deposits received from customers;
h. reserves for product warranties, environmental liabilities,
general liabilities and like liabilities; and
i. any other asset or liability, as the case may be, that is not
a retained asset or liability pursuant to Section 5.10(a), or
that does not constitute:
(i) cash and cash equivalents that represent good funds
in the Company's bank accounts and all marketable
securities and other investments on the Company's
books on the Closing Date (which cash, cash
equivalent
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and investments shall be due to Newco pursuant to
Section 6.14 of the Agreement);
(ii) fixed assets, net of the reserve for accumulated
depreciation;
(iii) cash surrender value of life insurance policies;
(iv) goodwill and other intangibles;
(v) investments in unconsolidated subsidiaries;
(vi) last-in, first-out inventory reserves;
(vii) short-term and long-term debt (including the current
portion of long-term debt and any accrued interest or
fees associated therewith);
(viii) all advances and loans to, or receivables from,
Related Parties, other than loans between the Company
and its Subsidiaries;
(ix) shareholders' investment, or any component thereof;
(x) pension plan assets or liabilities recorded pursuant
to FAS 87 and 88; or
(xi) reserves for, and refunds of, income taxes.
3. By way of illustration, Example 2.2.2 reflects the application of the
procedures described in paragraphs 1. and 2. above as it would relate
to the Company's monthly balance sheets for the six monthly periods
ending June 30, 2001. The balance sheet for each of the monthly periods
shown in Example 2.2.2 was prepared in accordance with the books and
records of the Company. Should any such balance sheet be determined to
not properly reflect the amounts recorded on the books and accounts of
the Company in all material respects, an adjustment to the baseline
Working Capital amount shall be made to correctly reflect the
applicable balance sheet amounts.
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EXHIBIT 7.1.8
FORM OF STOCKHOLDER'S AGREEMENT
This Stockholder's Agreement, dated as of __________, 200__ (the
"AGREEMENT"), is made by and between Trinity Industries, Inc., a Delaware
corporation (the "COMPANY"), and Thrall Car Management Company, Inc., a Delaware
corporation ("NEWCO") (Newco and any other party, including a Permitted
Transferee, who, in accordance with the terms of this Agreement, executes and
delivers to the Company a written document in the form attached hereto as
EXHIBIT A, agreeing to be bound by this Agreement, are collectively referred to
herein as the "HOLDERS" and individually, a "HOLDER").
WHEREAS, Newco and the Company have executed an Agreement and Plan of
Merger (the "MERGER AGREEMENT"), dated as of August 13, 2001, pursuant to which
the Company will acquire by a statutory merger (through a wholly owned
subsidiary) Thrall Car Manufacturing Company, an Illinois corporation and wholly
owned subsidiary of Newco ("THRALL"), and in partial consideration therefor, the
issued and outstanding shares of Common Stock of Thrall will be converted into
Seven Million One Hundred Fifty Thousand (7,150,000) shares of the Company's
common stock, $1.00 par value (the "COMMON STOCK"), subject to the terms and
conditions of the Merger Agreement and this Agreement; and
WHEREAS, capitalized terms used herein shall have the meanings given
them in the Merger Agreement, unless otherwise expressly defined herein;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and in the Merger Agreement and as inducement to the Company and Newco to
enter into the Merger Agreement, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACCEPTABLE DESIGNEE" means any individual whose business reputation
and experience, in the reasonable judgment of the Board of Directors, is
comparable or superior to that of Craig Duchossois and whose business interests
are not in conflict with the Company's.
"AFFILIATE" means any Person that, directly or indirectly, controls or
is controlled by or under common control with, another Person. For the purposes
of this definition, "control" (including the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities or by
contract or otherwise.
"AGREEMENT" is defined in the preamble to this Stockholder's Agreement.
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"ASSOCIATE" has the meaning set forth in Rule 12b-2 promulgated under
the Exchange Act.
"AUTHORITY" means any federal, state, local or foreign court,
administrative agency or governmental or regulatory authority or body.
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"CHANGE OF CONTROL" means, with respect to Newco or a Permitted
Transferee (other than an individual), (i) the acquisition of Newco or the
Permitted Transferee, as the case may be, by another Person other than a Related
Person or Permitted Transferee by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger,
consolidation or combination, but excluding any merger effected primarily for
the purpose of changing the domicile of such entity and excluding a transfer by
gift or bequest), (ii) a sale, lease, exchange or other transfer (excluding
transfer by way of pledge or hypothecation) in one transaction or a series of
related transactions, of all or substantially all of the assets of Newco or the
Permitted Transferee, as the case may be, or (iii) the liquidation or
dissolution of Newco or the Permitted Transferee, as the case may be, if at the
time of such dissolution or liquidation such Person is the owner, beneficially
or of record, of Shares in an amount in excess of those Shares owned by such
Person immediately prior to the date hereof (Newco shall be deemed to own, as of
the time immediately prior to the date of this Agreement, _______ [Fill in exact
number of shares (approximately 600,000) shares owned on the date of the Merger
Agreement] Shares for purposes of this definition).
"CLOSING DATE" means ___________, 200_.
"CLOSING PRICE" means, with respect to any securities on any date, the
last sale price of such securities on such date on the national securities
exchange on which such securities are listed and principally traded, or if such
securities are not listed on any national securities exchange, as reported by
NASDAQ at the close of business on such date, or if such securities are not
listed on any national securities exchange or reported by NASDAQ, the average of
the high bid and low bid asked quotations for such securities as reported by the
NASD automated quotation system at the close of business on such date, or if on
any such date such securities are not quoted or so listed by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such securities mutually selected
by the Company and the Selling Holder.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means shares of the Company's common stock, $1.00 par
value.
"COMPANY" means Trinity Industries, Inc., a Delaware corporation, and
its successors.
"COMPETITOR" means any Person directly or indirectly engaged in the
business of manufacturing railcars or leasing railcars, if the Person generated
at least $100 million in revenues from railcar leasing in each of the Person's
last three fiscal years.
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"DESIGNEE" means Craig Duchossois during the period that he is a member
of the Board of Directors, and thereafter each Successor Designee during the
period that such Person is a member of the Board of Directors.
"DISPOSITION" is defined in Section 6(a) of this Agreement.
"ENCUMBRANCE" means any charge, claim, community property interest,
equitable interest, lien, option, right of first refusal or restriction of any
kind, including any restriction on use, voting, transfer, receipt of income or
exercise of any other attribute of ownership.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"FAMILY" means Richard Duchossois, his children and their respective
spouses and his grandchildren and their respective spouses.
"FAMILY AFFILIATE" means Richard Duchossois and each of his four
children (collectively, the "FAMILY AFFILIATES").
"HOLDER" and "HOLDERS" are defined in the preamble to this Agreement.
"HOLDING PERIOD" means the period beginning on the Closing Date and
ending on the close of business on the earlier to occur of the following: (a)
the second anniversary of the Closing Date and (b) the date on which any of the
events listed in Sections 8.1.4, 8.1.5, 8.1.6, 8.1.7, 8.1.8 or 8.1.9 of the
Merger Agreement occurs.
"MARKET PRICE" means, with respect to any class of securities on any
date, the average of the daily Closing Price of such securities for the 20
consecutive trading days immediately prior to such date.
"MARKET SALE" is defined in Section 6(e) of this Agreement.
"MATERIAL INTEREST" means direct or indirect "beneficial ownership" (as
defined in Rule 13d-3 under the Exchange Act) of (i) voting securities or other
voting interests representing at least 35% of the outstanding voting power of a
Person or (ii) equity securities or other equity interests representing at least
35% of the outstanding equity ownership in a Person.
"MERGER AGREEMENT" is defined in the recitals of this Agreement.
"NEWCO" is defined in the preamble to this Agreement.
"OFFER" is defined in Section 6(e) of this Agreement.
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"OFFER PRICE" means, with respect to any Disposition of Shares
permitted by this Agreement, the bona fide proposed price per Share in such
Disposition.
"ORGANIZATIONAL DOCUMENTS" means (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation or organization of a Person; and (e) any amendment
to any of the foregoing.
"PERMITTED TRANSFEREE" means (i) any Related Person with respect to
Newco or (ii) any Family Affiliate, in each case, who acquires any Shares and
executes and delivers to the Company a written document in the form attached
hereto as EXHIBIT A, agreeing to be bound by this Agreement prior to or as of
the acquisition of such Shares.
"PERMITTED PERCENTAGE" is defined in Section 5(a) of this Agreement.
"PROHIBITED HOLDER" is defined in Section 6(b)(v) of this Agreement.
"REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights
Agreement entered into as of the date hereof between the Company and Newco
pursuant to the terms of the Merger Agreement.
"RELATED PERSON" means, with respect to a particular individual: (a)
each member of such individual's Family; (b) each Affiliate of such individual;
(c) each Person in which such individual or members of such individual's Family
hold (individually or in the aggregate) a Material Interest; and (d) each Person
with respect to which such individual or one or more members of such
individual's Family serves as a director, officer, partner, executor or trustee
(or in a similar capacity). "RELATED PERSON" means, with respect to a Person
other than an individual: (u) each Affiliate of such Person; (v) each Person
that holds a Material Interest in such specified Person; (w) each Person that
serves as a director, officer, partner, executor or trustee of such specified
Person (or in a similar capacity); (x) each Person in which such specified
Person holds a Material Interest; (y) each Person with respect to which such
specified Person serves as a general partner or a trustee (or in a similar
capacity); and (z) each Related Person of any individual described in clause (v)
or (w). Without limiting the foregoing, each of Duchossois Industries, Inc.,
Duchossois TECnology Partners, LLC, Chamberlain Manufacturing Corporation, The
Chamberlain Group, Inc. and any Subsidiary of any of the foregoing, meet the
definition of "Related Person" with respect to Newco, and Churchill Downs, Inc.
and its Subsidiaries do not meet and shall never be deemed to meet the
definition of "Related Person" with respect to Newco or any Family Affiliate.
"RIGHTS PLAN" means that certain Rights Agreement, dated as of March
11, 1999, as amended, between the Company and The Bank of New York.
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"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"SELLING HOLDER" is defined in Section 6(e).
"SHARES" means the shares of Common Stock acquired by Newco pursuant to
the Merger Agreement, together with any Voting Securities (including, without
limitation, Common Stock) of the Company now owned or hereafter acquired by
Newco or any of the Family Affiliates or subsequent Holders.
"STANDSTILL PERIOD" means the period beginning on the Closing Date and
terminating on: (i) the seventy-eighth (78th) month anniversary of the Closing
Date if there is no Designee that is a member of the Board of Directors on the
fifth anniversary of the Closing Date or if there is a Designee serving as a
member of the Board of Directors on the fifth anniversary of the Closing Date
and the Designee has not, on or before such fifth anniversary date, notified the
Company in writing, in the form attached hereto as EXHIBIT B, of the Designee's
election to extend the Standstill Period to the tenth anniversary of the Closing
Date, or (ii) the tenth anniversary of the Closing Date if there is a Designee
serving as a member of the Board of Directors on the fifth anniversary of the
Closing Date and such Designee has delivered to the Company an extension
notification in the form attached hereto as EXHIBIT B on or before the fifth
anniversary of the Closing Date.
"SUBSIDIARY" has the meaning set forth in the Merger Agreement.
"SUCCESSOR DESIGNEE" means a nominee (other than Craig Duchossois) for
the Board of Directors designated by the Holders in accordance with Section 8.
"THIRD PERSON" means a Person other than a Holder.
"THRALL" is defined in the recitals to this Agreement.
"VOTING SECURITIES" means any equity securities of the Company
generally entitled to vote in the election of directors at any meeting of the
stockholders of the Company.
SECTION 2. THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Holders as follows:
(a) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Authority. The Company has the full power and authority to execute,
deliver and carry out the terms and provisions of this Agreement and to
consummate the transactions contemplated hereby, and has taken all necessary
action to authorize the execution, delivery and performance of this Agreement.
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(c) Enforceability. This Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting creditors' rights generally.
(d) No Conflicts. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with,
result in the breach of any of the terms or conditions of, constitute a default
under or violate, accelerate or permit the acceleration of any other similar
right of any other party under, the Organizational Documents of the Company, any
law, rule or regulation or any agreement, lease, mortgage, note, bond,
indenture, license or other document or undertaking, to which the Company is a
party or by which the Company or its properties may be bound, nor will such
execution, delivery and consummation violate any order, writ, injunction or
decree of any Authority to which the Company or any of its properties is
subject, the effect of any of which, either individually or in the aggregate,
would impair the ability of the Company to perform its obligations hereunder.
SECTION 3. NEWCO'S REPRESENTATIONS AND WARRANTIES.
Newco represents and warrants to the Company as follows:
(a) Organization and Good Standing. Newco is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
(b) Authority. Newco has the full power and authority to execute,
deliver and carry out the terms and provisions of this Agreement and consummate
the transactions contemplated hereby, and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement.
(c) Enforceability. This Agreement has been duly and validly
authorized, executed and delivered by Newco, and constitutes a legal, valid and
binding agreement of Newco, enforceable against Newco in accordance with its
terms, except to the extent that such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting creditors' rights generally.
(d) Beneficial Ownership. As of the date hereof, Newco is the record
and beneficial owner of _____________ [7,150,000 plus the approximately 600,000
shares owned on the date of the Merger Agreement] Shares, and except for the
restrictions set forth in this Agreement, Newco owns such Shares free and clear
of any Encumbrance. As of the date hereof, none of the Family Affiliates own any
Shares of record or beneficially. Except for the rights of Newco and the Family
Affiliates to acquire Shares pursuant to the Merger Agreement and this
Agreement, none of Newco or the Family Affiliates possesses any rights to
acquire any additional Voting Securities.
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(e) Accredited Investor. Newco is an "accredited investor" within the
meaning of Regulation D under the Securities Act and it is acquiring the Shares
of its own account and not with a view to the public distribution thereof.
(f) No Conflicts. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with,
result in the breach of any of the terms or conditions of, constitute a default
under or violate, accelerate or permit the acceleration of any other similar
right of any other party under, the Organizational Documents of Newco, any law,
rule or regulation, or any agreement, lease, mortgage, note, bond, indenture,
license or other document or undertaking, to which Newco or any Family Affiliate
is a party or by which Newco or any Family Affiliate or any of their respective
properties may be bound, nor will such execution, delivery and consummation
violate any order, writ, injunction or decree of any Authority to which Newco or
any Family Affiliate or any of their respective properties is subject, the
effect of any of which, either individually or in the aggregate, would impair
the ability of Newco or any of the Family Affiliates to perform their respective
obligations hereunder.
SECTION 4. COVENANTS OF THE HOLDERS.
(a) Restrictions on Conduct Relating to Corporate Control. During the
Standstill Period, except (i) upon the prior written approval of the Company or
(ii) as otherwise specifically permitted by this Agreement, none of Newco or any
Family Affiliate or subsequent Holder shall, directly or indirectly, through one
or more intermediaries or otherwise, singly or as part of a partnership, limited
partnership, syndicate or other group (as those terms are used within the
meaning of Section 13(d)(3) of the Exchange Act, which meanings shall apply for
all purposes of this Agreement):
(i) make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are defined or used in Regulation 14A under
the Exchange Act) with respect to any Voting Securities (including by
the execution of actions by written consent), become a "participant" in
any "election contest" (as such terms are defined or used in Regulation
14A under the Exchange Act) with respect to the Company or seek to
advise, encourage or influence any Person (except for Persons described
in Section 6(b) hereof who are otherwise bound by this Agreement) with
respect to the voting of any Voting Securities; provided, however, that
none of Newco or any Family Affiliate or subsequent Holder shall be
prevented hereunder from being a "participant" in support of the
management of the Company, by reason of the membership of a Designee on
the Board of Directors or the inclusion of a Designee on the slate of
nominees for election to the Board of Directors proposed by the Board
of Directors;
(ii) initiate, propose or otherwise solicit, or participate in
the solicitation of, stockholders for the approval of one or more
stockholder proposals with respect to the Company as described in Rule
14a-8 under the Exchange Act or knowingly induce any other individual
or entity to initiate any stockholder proposal relating to the Company;
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(iii) form, join or in any way participate in a "group"
(within the meaning of Section 13(d)(3) of the Exchange Act), act in
concert with any other Person or otherwise take any action or actions
which would cause it to be deemed a "person" (for purposes of Section
13(d) of the Exchange Act) (other than to the extent it is a "person"
at the time of consummation of the transactions contemplated by the
Merger Agreement and this Agreement), with respect to acquiring,
disposing of or voting any Voting Securities, except as may result from
Dispositions permitted by this Agreement;
(iv) participate in or encourage the formation of any "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) which owns
or seeks or offers to acquire beneficial ownership of securities of the
Company or rights to acquire such securities or which seeks or offers
to affect the control or management of the Company or for the purpose
of circumventing any provision of this Agreement;
(v) deposit any Voting Securities in a voting trust or subject
any Voting Securities to any arrangement or agreement with respect to
the voting of such Voting Securities unless the provisions of the
voting trust or arrangement or agreement conform and do not conflict
with any of the provisions of this Agreement and all of the parties to
the voting trust or arrangement or agreement are otherwise, or agree to
be, bound by this Agreement;
(vi) seek election to, seek to place a representative on, or
seek the removal of any member of, the Board of Directors, except
pursuant to Section 8 hereof;
(vii) call or seek to have called any meeting of the
stockholders of the Company, or sign a written consent authorizing any
action to be taken without a meeting of the stockholders of the
Company;
(viii) solicit, seek or offer to effect, negotiate with or
provide any information to any Person (except for Persons described in
Section 6(b) hereof who are otherwise bound by this Agreement) with
respect to, make any statement or proposal, whether written or oral,
either alone or in concert with others, to the Board of Directors, to
any director or officer of the Company or to any other stockholder of
the Company with respect to, or otherwise formulate any plan or
proposal or make any public announcement, proposal, offer or filing
under the Exchange Act, any similar or successor statute or otherwise,
or take action to cause the Company to make any such filing, with
respect to:
A. any form of business combination or transaction
involving the Company (other than transactions contemplated by
this Agreement, including, without limitation, giving the
Company an Offer pursuant to Section 6(e), or the Merger
Agreement) or any Affiliate thereof, including, without
limitation, a merger, exchange offer or liquidation of the
Company's or any of its material Subsidiaries' assets;
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B. any form of restructuring, recapitalization or
similar transaction with respect to the Company or any
Affiliate thereof, including, without limitation, a merger,
exchange offer or liquidation of the Company's or any of its
material Subsidiaries' assets;
C. any acquisition or disposition of material assets
of the Company or any of its material Subsidiaries;
D. any request to amend, waive or terminate the
provisions of this Agreement; or
E. any proposal or other statement inconsistent with
the terms of this Agreement;
provided, however, that Newco, the Family Affiliates and
subsequent Holders may discuss the affairs and prospects of the
Company, the status of their investment in the Company and any of the
matters described in clauses (A) through (E) of this paragraph at any
time, and from time to time, with the Board of Directors or any
director or executive officer of the Company or any director or
executive officer of any subsidiary of the Company and Newco, the
Family Affiliates and subsequent Holders may discuss any matter,
including any of the foregoing, with or among Newco, the Family
Affiliates and subsequent Holders, or with their outside legal and
financial advisors, if as a result of any such discussions they are not
required to make, and do not make, any public announcement or filing
under the Exchange Act otherwise prohibited by this Agreement as a
result thereof;
(ix) otherwise act, alone or in concert with others (including
by providing financing for another party), to seek or offer to control
or influence, in any manner, the management, Board of Directors or
policies of the Company; provided, however, that this provision shall
not prevent the then Designee from participating in, or otherwise
seeking to affect the outcome of, discussions and votes of the Board of
Directors with respect to matters coming before it;
(x) advise, assist, finance, knowingly instigate or knowingly
encourage any third party to take any of the actions enumerated in this
Section 4(a); or
(xi) disclose or publicly announce any intention, plan or
arrangement inconsistent with the foregoing.
If Newco, Richard Duchossois or Craig Duchossois receives any written
or credible oral proposal, offer or inquiry regarding any of the matters
described in this Section 4(a), such Person shall promptly notify the Company in
writing of the nature and content of such matter, including the names of the
Persons involved with such matter.
(b) Prohibitions Against a Change of Control. During the Standstill
Period, there shall not occur a Change of Control with respect to Newco or any
Permitted Transferee.
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(c) Voting. During the Standstill Period, Newco and each of the
subsequent Holders that own Shares shall be present, in person or by proxy, and
without further action hereby agree that they shall be deemed to be present, at
all properly called meetings of stockholders of the Company of which Newco and
the subsequent Holders have notice so that all Voting Securities beneficially
owned by such Persons shall be counted for purposes of determining the presence
of a quorum at such meetings. Except as otherwise expressly permitted by this
Agreement, during the Standstill Period, at all stockholder meetings at which
Voting Securities owned beneficially by Newco and/or the subsequent Holders are
entitled to vote, Newco and each of the subsequent Holders shall vote all such
Voting Securities in accordance with the recommendation or direction of the
Board of Directors, including, without limitation (i) in all elections of
directors of the Company as long as the Company is in compliance with Sections
8(a) and (b) of this Agreement and (ii) on all other matters submitted for
stockholder approval that are supported by the Board of Directors; provided,
that Newco and the subsequent Holders may vote the Voting Securities owned by
them as they determine in their sole discretion with respect to any of the
following transactions approved by the Board of Directors that are presented at
a meeting of stockholders of the Company for their approval: (W) the issuance of
any preferred stock if after such issuance the Company will have issued, since
the date of this Agreement, preferred stock with an aggregate purchase price of
more than $50 million or the issuance of any equity security with voting rights
that are greater in any respect than those of the Common Stock, (X) any
disposition of the Company (by way of merger, sale of assets or otherwise) or a
substantial part of its assets, (Y) any recapitalization of the Company (other
than a recapitalization for the purpose of forming a holding company or to
effect a change in the Company's state of incorporation), including, without
limitation, any leveraged buyout of the Company or similar going-private
transaction, or (Z) any liquidation of, or consolidation involving, the Company.
SECTION 5. RESTRICTIONS AGAINST THE ACQUISITION OF VOTING SECURITIES.
(a) Restrictions Against Acquisitions. During the Standstill Period,
none of Newco or any Related Person or subsequent Holder shall acquire, offer or
propose to acquire, or agree to acquire, directly or indirectly, by purchase or
otherwise, or exercise any attribute of beneficial ownership (as defined on the
date hereof in Rule 13d-3 of the Commission under Section 13(d) of the Exchange
Act) with respect to, any Voting Securities of the Company, or direct or
indirect rights or options to acquire (through purchase, exchange, conversion or
otherwise) any Voting Securities of the Company except:
(i) in connection with the consummation of the transactions
contemplated by the Merger Agreement;
(ii) by way of stock dividend, stock split, reorganization,
recapitalization, merger, consolidation or other like distributions
made available to holders of Common Stock generally;
(iii) through purchases from time to time, in the open market
or in privately negotiated transactions, up to an aggregate number of
Voting Securities which, when added to the Voting Securities then owned
by Newco, the Family Affiliates, the
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subsequent Holders and their respective Affiliates and Associates
(other than Shares permitted to be acquired under Section 5(a)(iv)),
would result in such Persons owning together no more than 19.9% of the
then outstanding Voting Securities (such percentage being referred to
herein as the "PERMITTED PERCENTAGE"); or
(iv) in the case of a Designee or former Designee, pursuant to
the terms of any director's stock option, stock purchase or other
similar plans, if any.
(b) Limitation on Percentage Owned. Notwithstanding Section 5(a),
without the prior written approval of the Board of Directors, Newco, the Related
Persons and the subsequent Holders may at no time collectively own (without
including any Voting Securities owned or acquired by a Designee or former
Designee pursuant to the terms of any director's stock option, stock purchase or
other similar plans, if any) more than the Permitted Percentage of Voting
Securities; provided, however, that Newco, the Family Affiliates and the
subsequent Holders may collectively own more than the Permitted Percentage of
Voting Securities to the extent resulting from any repurchase of Voting
Securities by the Company.
(c) Legend for Shares Acquired Other Than Pursuant to the Merger
Agreement. Promptly upon the acquisition by Newco or any Family Affiliate or
subsequent Holder of any Voting Securities other than pursuant to the Merger
Agreement, such Person shall surrender the certificates representing such Shares
to the Company and the Company shall place the last two sentences of the legend
in Section 7 and, if applicable, the first sentence of the legend in Section 7,
on such certificates and thereafter reissue such certificates to such Person.
SECTION 6. DISPOSITION OF SHARES AND THE COMPANY'S RIGHT OF FIRST
REFUSAL.
(a) Holding Period Restrictions on Transfer. During the Holding Period,
none of Newco or any subsequent Holder shall sell, assign, transfer, pledge,
hypothecate, encumber, grant any option with respect to or otherwise dispose of
any interest in (or enter into any agreement or understanding with respect to
the foregoing), directly or indirectly, any Shares (a "DISPOSITION") except:
(i) to a Permitted Transferee; or
(ii) to a bona fide financial institution in connection with
the grant of a pledge or other encumbrance securing a bona fide loan so
long as the pledgee agrees in writing prior to the creation of the
pledge that upon any transfer to the pledgee or purchaser at
foreclosure of any Shares upon any foreclosure or otherwise, such
Shares and the pledgee thereof shall remain and become subject to the
restrictions contained in this Agreement.
(b) Post-Holding Period Restrictions on Transfer. Except as otherwise
provided in this Section 6, after the Holding Period and until the termination
of the Standstill Period, subject to the provisions of Section 6(e) hereof, none
of Newco or any subsequent Holder shall effect a Disposition of any Shares
except:
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(i) to the Company or in a transaction approved by the Chief
Executive Officer of the Company in writing prior to such transaction;
(ii) to a Permitted Transferee;
(iii) pursuant to any tender or exchange offer made pursuant
to Section 14(d) of the Exchange Act (A) that is recommended to the
stockholders of the Company by the Board of Directors or (B) with
respect to which the Board of Directors has stated it will remain
neutral and has taken action to redeem its Rights Plan, (it being
understood that none of Newco or any subsequent Holder shall tender its
Shares pursuant to such tender or exchange offer until the Company has
publicly taken a position to recommend such offer or has stated that it
will remain neutral and has taken action to redeem the Rights Plan) in
accordance with Rule 14e-2 of the Exchange Act, any successor
regulation or otherwise;
(iv) to a bona fide financial institution in connection with
the grant of a pledge or other encumbrance securing a bona fide loan so
long as the pledgee agrees in writing prior to the creation of the
pledge that upon any transfer to the pledgee or purchaser at
foreclosure of any Shares upon any foreclosure or otherwise, such
Shares and the pledgee thereof shall remain and become subject to the
restrictions contained in this Agreement;
(v) to a Third Person pursuant to bona fide open market
"brokers' transactions" as permitted by the provisions of Rule 144
under the Securities Act (other than pursuant to the provisions of
clause (k) thereof); provided, however, that none of Newco or any
subsequent Holder shall effect a Disposition under this clause (v) if
such Person knows or has reasonable grounds to believe that such Third
Person and such Third Person's Affiliates, or any group of which such
Third Person may be a member holds in the aggregate more than (a) 5%,
if such Third Person is not entitled to file a Schedule 13G with
respect to the ownership of Voting Securities of the Company and (b)
10% if and for so long as such Third Person is entitled to file a
Schedule 13G with respect to the ownership of Voting Securities of the
Company (any such Third Person who would hold in excess of the
referenced percentage being referred to herein as a "PROHIBITED
HOLDER") of the outstanding Voting Securities after such transaction;
(vi) to a Third Person (other than a Competitor) in a valid
private placement to a Person that (A) Newco or the subsequent Holder
reasonably believes after due inquiry would not be a Prohibited Holder
following such transaction and obtains a written representation from
the purchaser to that effect or (B) agrees in writing to be bound by
the terms of this Agreement and the Board of Directors approves such
transaction; or
(vii) pursuant to an underwritten public offering under the
Securities Act in accordance with the terms of the Registration Rights
Agreement, pursuant to which the managing underwriter agrees to effect
the sale of the Voting Securities in a manner which shall effect a
broad distribution thereof and provided that neither
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Newco nor any subsequent Holder shall effect a Disposition in an
underwritten public offering if such Person knows or has reasonable
grounds to believe that a Third Person purchasing Shares in the
offering is a Competitor or would be a Prohibited Holder after giving
effect to the purchase (other than the underwriters or any selected
dealers).
(c) Restrictions on Transfer to a Competitor. Except as otherwise
provided in this Section 6, neither Newco nor any subsequent Holder shall effect
any Disposition of any Shares to a Competitor until after the tenth anniversary
of the Closing Date.
(d) Restrictions on Transfer to Prohibited Holders. Neither Newco nor
any subsequent Holder shall effect a Disposition of any Shares, if such Person
knows or has reasonable grounds to believe that the purchaser would be a
Prohibited Holder after giving effect to such Disposition until after the tenth
anniversary of the Closing Date.
(e) Right of First Refusal.
(i) At any time that Newco and the subsequent Holders
collectively own 8% or more of the total outstanding Voting Securities,
notwithstanding any other provision of this Agreement, during the
Standstill Period, neither Newco or any subsequent Holder (a "SELLING
HOLDER") shall effect any Disposition (other than to a Permitted
Transferee) of more than 1,000,000 Shares in the aggregate in any
twelve month period without first making an offer in writing in
accordance with this Section 6(e) to sell such Shares to the Company at
the Offer Price or the Market Price, as applicable, and upon such other
bona fide terms and conditions upon which the Selling Holder proposes
to make such Disposition (the "OFFER"). Upon receipt of such Offer
(which shall also set forth the proposed method of payment, the amount
and class of Shares to be sold, the identity (if known) of the Person
to whom the Selling Holder proposes to effect the Disposition of such
Shares, the other material terms (to the extent known) upon which such
Disposition is to be made and all other relevant information reasonably
requested by the Company), the Company shall have 10 days to accept
such Offer by delivering a written notice to the Selling Holder
irrevocably electing to purchase all, but not less than all, of the
Shares covered thereby; provided, however, that if the proposed
Disposition is to be made pursuant to a tender or exchange offer made
pursuant to Section 14(d) of the Exchange Act which is recommended to
the stockholders of the Company by the Board of Directors or with
respect to which the Company remains neutral and has taken action to
redeem the Rights Plan in accordance with Rule 14e-2 of the Exchange
Act, any successor regulation or otherwise, the Company shall have one
day less than the number of days remaining before such tender or
exchange offer, as it may be amended, expires to accept such Offer and
notify the Selling Holder of the number of Shares the Company is
electing to purchase. If the Company elects to accept such Offer, the
closing of the purchase pursuant thereto shall occur, with payment in
immediately available funds, on the latest of (i) 5 days after the
acceptance by the Company of such Offer, (ii) the closing date provided
for in the Offer or (iii) the end of such period of time as the Company
and the Selling Holder may reasonably require in order to comply with
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applicable laws and regulations. Transfers pursuant to Section 6(a),
6(b)(i), 6(b)(ii) and 6(b)(iv) hereof are not subject to the provisions
of this Section 6(e).
(ii) If the Offer specifies that the Shares are to be sold in
the market in a method whereby the price cannot be determined at the
time of the making of the Offer (a "MARKET SALE"), the purchase price
for the Shares proposed to be sold shall be equal to the greater of (i)
the negotiated price, if any, between the Company and the Selling
Holder and (ii) the Market Price of such Shares on the date of such
Offer. Market Sales shall be deemed to be for cash.
(iii) If the purchase price specified in the Offer includes
any property other than cash, such purchase price shall be deemed to be
the amount of any cash included in the purchase price plus the value
(determined as provided below) of such other property included in such
price. The value of any non-cash property shall be determined in the
following manner:
A. The value of securities which are publicly traded
shall be deemed to be the Market Price of such securities on
the date of the Offer; and
B. The value of any other property shall be
determined by an appropriate expert mutually selected by the
Company and the Selling Holder. The determination of the
dollar value of the non-cash consideration at issue by any
such expert shall be made promptly (but in no event more than
15 business days after receipt of the Offer) and shall be
conclusive and binding on all the parties hereto.
(iv) The Disposition to any Third Party of such Voting
Securities shall not be made until such determination referred to in
Section 6(e)(iii)(B) has been completed and delivered to all the
parties hereto. The Company shall have the later of (i) five business
days after the receipt of such determination by the expert referred to
in Section 6(e)(iii)(B) and (ii) the applicable time period set forth
in Section 6(e)(i) within which to accept such Offer.
(v) If the Company has not exercised its option to purchase
the Shares pursuant to the Offer, the Selling Holder shall be free, for
a period of 60 days (or, if longer, 60 days from the effective date of
a registration statement under the Securities Act, if such registration
is required) from the date of the Company's rejection of the Offer
(which, unless the Company shall have given written notice of its
rejection of the Offer, shall be deemed to have occurred on the last
day on which the Company could accept the Offer in accordance
herewith), to sell all of the Shares proposed to be sold to the third
party transferee, subject to the provisions of this Agreement, at a
price equal to or greater than the price specified in the Offer and in
the manner and on terms no less favorable to the Selling Holder than
were specified in the Offer. If the Shares are not sold within such
60-day period, they shall again become subject to the procedures
provided in this Section 6. If the Shares are sold pursuant to the
Offer, then the Selling Holder shall give the Company written notice
promptly upon such Disposition by the Selling Holder.
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(f) Notice of Disposition. To the extent that a Disposition of Shares
hereunder was not subject to Section 6(e) above, Newco or the subsequent Holder,
as the case may be, shall give the Company prompt written notice after such
Disposition by such Person and shall describe in reasonable detail in such
notice the provisions of this Section 6 pursuant to which such Disposition was
effected and the detail relating to the sale (including the amount and class of
Shares to be sold, the identity (if known) of the Person to whom such Person
effected the Disposition of such Shares, the other material terms (to the extent
known) upon which such Disposition was made and all other relevant information
reasonably requested by the Company).
(g) Excluded Shares. Notwithstanding anything to the contrary in
Sections 6(a) through (f), the ___________ [the approximately 600,000 Shares
owned by Newco on the date of the Merger Agreement] owned by Newco on the date
of this Agreement shall not be subject to the provisions of Sections 6(a)
through (f) of this Agreement.
(h) Dispositions Null and Void. Dispositions of Shares in violation of
the provisions of this Agreement shall be null and void and the Shares subject
to such Disposition shall remain subject to this Agreement.
SECTION 7. LEGEND ON CERTIFICATES.
(a) Legend. Each of Newco and the subsequent Holders hereby
acknowledges and agrees that each of the certificates representing the Shares
held by such Person shall be subject to stop transfer instructions and shall
include the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED, SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF ONLY IF REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THESE
SHARES ARE SUBJECT TO CERTAIN LIMITATIONS ON TRANSFER AND A VOTING AGREEMENT SET
FORTH IN A STOCKHOLDER'S AGREEMENT DATED AS OF ___________, 200__ BETWEEN
TRINITY INDUSTRIES, INC. AND NEWCO. A COPY OF SUCH AGREEMENT IS ON FILE WITH THE
SECRETARY OF TRINITY INDUSTRIES, INC.
(b) Removal of Legends. Within one business day after receipt by the
Company of a written demand by Newco, a Family Affiliate or subsequent Holder,
the Company agrees to instruct the transfer agent to (i) terminate the stop
transfer instructions and remove the legend with respect to Shares being
transferred pursuant to Section 6(b)(v) or 6(b)(vi) of this Agreement, (ii)
terminate stop transfer instructions and remove all but the first sentence of
the above legend with respect to Shares being transferred pursuant to Section
6(b)(i) or 6(b)(iii), and (iii) remove the first sentence of the above legend if
the Company is furnished an opinion of counsel reasonably satisfactory to the
Company that such Shares may be freely transferred under applicable securities
laws, but only with respect to the Shares being transferred.
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SECTION 8. DIRECTORS DESIGNATED BY THE HOLDERS.
(a) Nomination of Designee. As promptly as practicable after the
Closing Date, and subject to applicable law, the Company shall take or cause to
be taken all necessary actions to appoint or elect to the Board of Directors,
and at each annual meeting of the stockholders of the Company following the
Closing Date and prior to the termination of the Standstill Period, for so long
as Newco, the Family Affiliates and the subsequent Holders own in the aggregate
more than 7.5% of the then outstanding Voting Securities of the Company, the
Company shall nominate, or cause to be nominated Craig Duchossois as a member of
the Board of Directors. If Craig Duchossois or any Successor Designee is unable
or unwilling at any time to serve as a member of the Board of Directors, then
the holders of a majority of the Shares then held by Newco, the Family
Affiliates and the subsequent Holders may provide the Company written notice
containing the name of a proposed Successor Designee (as determined by the
holders of a majority of the Shares then held by Newco, the Family Affiliates
and the subsequent Holders) and all information required by Regulation 14A and
Schedule 14A under the Exchange Act with respect to such proposed Successor
Designee. If the proposed Successor Designee is an Acceptable Designee, then,
subject to applicable law, the Company shall nominate, or cause to be nominated
the Successor Designee as a member of the Board of Directors.
(b) Election of Designee. Subject to applicable law, during the
Standstill Period, the Company shall use its reasonable efforts to cause the
election of the Designee to the Board of Directors at the next meeting of the
Company's stockholders at which directors are to be elected, and the Company
shall use its reasonable efforts to cause the reelection of the Designee to the
Board of Directors at each meeting of stockholders of the Company at which the
Designee's term as a director for election will expire. Reasonable efforts under
this clause (b) shall include the solicitation of proxies in favor of the
election of the Designee, it being understood that efforts consistent with those
used for other members of the slate of nominees recommended by the Board of
Directors shall be deemed reasonable.
(c) Resignation of Designee. Newco shall take all actions necessary to
cause the Designee to resign immediately (i) upon the fifth anniversary of the
Closing Date if the Standstill Period is not extended as provided for herein and
the Board of Directors requests the Designee's resignation or (ii) upon the
tenth anniversary of the Closing Date if the Standstill Period is extended as
provided in Section 1 and the Board of Directors requests the Designee's
resignation.
(d) Nomination for Filling Vacancies. During the Standstill Period, if
and so long as Newco and the subsequent Holders own in the aggregate 19.9% of
the then outstanding Voting Securities of the Company, the holders of a majority
of the Shares held by Newco and the subsequent Holders may recommend (as
determined by the holders of a majority of the Shares held by such Persons) to
the Company a potential nominee to fill the vacancy on the Board of Directors;
provided, however, the Company is not obligated to nominate such potential
nominee.
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SECTION 9. NEWCO RESPONSIBLE FOR FAMILY AFFILIATES AND PERMITTED
TRANSFEREES.
Newco shall cause each of the Family Affiliates and Permitted
Transferees to comply with the terms of this Agreement, and Newco shall be
responsible for any failure by the Family Affiliates and Permitted Transferees
to comply with such terms.
SECTION 10. FILING NOTIFICATION.
To the extent that any of Newco, a Family Affiliate, subsequent Holder
or the Company is required to make any filings with the Commission in connection
with the transactions contemplated by this Agreement, such party shall give the
other parties a reasonable opportunity to review and comment on such filings
prior to the filing thereof with the Commission.
SECTION 11. SPECIFIC PERFORMANCE.
Each of the parties hereto recognizes and acknowledges that this
Agreement is an integral part of the transactions contemplated in the Merger
Agreement, that the Company would not have entered into the Merger Agreement
unless this Agreement was executed and that a breach by a party of any covenants
or agreements contained in this Agreement shall cause the other party to sustain
injury for which it would not have an adequate remedy at law for money damages.
Therefore each of the parties hereto agrees that in the event of any such
breach, the aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and agreements and preliminary and
permanent injunctive and other equitable relief in addition to any other remedy
to which it may be entitled, at law or in equity, and the parties hereto further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable relief.
SECTION 12. AMENDMENT AND MODIFICATION.
This Agreement may be amended, modified and supplemented only by
written agreement of the Company and the holders of at least a majority of the
Shares held by the Holders.
SECTION 13. NOTICES.
All notices, requests, demands and other communications required or
permitted under this Agreement must be in writing and shall be deemed to have
been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed by registered mail, return receipt requested or
(c) when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below:
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If to Newco, to:
c/o Duchossois Industries, Inc.
Attn: Corporate Secretary
845 Larch Avenue
Elmhurst, Illinois 60126-1196
Attention: Corporate Secretary
Facsimile: (630) 530-6051
or to such other Person or address as Newco shall furnish to the
Company.
If to the Company, to:
Trinity Industries, Inc.
2525 Stemmons Freeway
Dallas, Texas 75207-2401
Attention: Michael G. Fortado
Facsimile: (214) 589-8824
With a copy, to:
Haynes and Boone, LLP
901 Main Street, Suite 3100
Dallas, Texas 75202
Attention: Michael M. Boone
Facsimile: (214) 651-5940
or to such other Person or address as the Company shall furnish to the
Holder in writing.
SECTION 14. SEVERABILITY.
Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall fail to be in effect only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement or of any such provision.
SECTION 15. ASSIGNMENT.
This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but except as otherwise provided for or permitted herein
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any party hereto without the prior written consent of the
other party.
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SECTION 16. GOVERNING LAW.
This Agreement and the legal relations among the parties hereto shall
be governed by and construed in accordance with the laws of Delaware, regardless
of the laws that might otherwise govern under applicable principles of conflict
of laws thereof.
SECTION 17. NUMBER OF SHARES.
All references to specific numbers of shares and references to the
Common Stock in this Agreement shall be with regard to the capitalization of the
Company on the date hereof and are subject to the appropriate adjustments for
any stock split, reverse stock split, stock dividend, subdivision,
reclassification, split, combination, exchange, recapitalization or similar
transaction.
SECTION 18. COUNTERPARTS.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 19. HEADINGS.
The headings of the Sections of this Agreement are inserted for
convenience only and shall not constitute a part hereof or affect in any way the
meaning or interpretation of this Agreement.
SECTION 20. ENTIRE AGREEMENT.
This Agreement, the Merger Agreement and all agreements referenced
herein and therein set forth the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein, and supersede
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto.
SECTION 21. THIRD PARTIES.
Except as specifically set forth or referred to herein, nothing herein
expressed or implied is intended or shall be construed to confer upon or give to
any Person, other than the parties hereto and their successors or assigns, any
rights or remedies under or by reason of this Agreement.
SECTION 22. TERMINATION.
(a) Termination Following Change of Control. This Agreement shall
terminate on the date that the individuals who as of the date of this Agreement
constituted the Board of Directors of the Company (together with any new
directors whose election or appointment by the Board of Directors or whose
nomination for election by the stockholders of the Company was approved by a
vote of a majority of the directors then still in office who either were
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directors at the beginning of such period or whose election or nomination for
election was previously so approved), cease for any reason to constitute a
majority of the Board of Directors then in office, excluding any director
elected pursuant to Section 8 of this Agreement.
(b) Termination With Respect to a Holder. This Agreement shall
terminate with respect to a Holder (other than Newco but including subsequent
Holders) as of the date that such Holder does not own of record or beneficially
any Voting Securities.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
TRINITY INDUSTRIES, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
THRALL CAR MANAGEMENT COMPANY, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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EXHIBIT A
FORM OF COUNTERPART SIGNATURE PAGE
This Addendum Agreement (this "Addendum Agreement") made this _____ day
of _________, 200_, among _______________ (the "New Holder"), Trinity
Industries, Inc., a Delaware corporation (the "Company"), and such stockholders
(the "Holders") of the Company who are parties to that certain Stockholders
Agreement dated as of ______ __, 200_ (the "Agreement") among the Company and
the Holders.
WITNESSETH:
WHEREAS, the Company and a Holder entered into the Agreement to impose
certain restrictions and obligations upon the Holders and the shares of capital
stock of the Company (the "Shares") owned by such Holders;
WHEREAS, the New Holder is desirous of acquiring Shares from Newco; and
WHEREAS, the Company and the Holders have required in the Agreement
that, except as expressly provided in the Agreement, all Persons acquiring
Shares from Newco or another Holder must enter into an Addendum Agreement
binding the New Holders to the Agreement to the same extent as if it were an
original party thereto, so as to promote the mutual interests of the Company,
the Holders and the New Holders by imposing the same restrictions and
obligations on the New Holder and the Shares owned by the New Holder as were
imposed upon the Holders under the Agreement.
NOW, THEREFORE, in consideration of the mutual promises of the parties,
and as a condition of the acquisition of the Shares, the New Holder acknowledges
that the New Holder has read the Agreement. The New Holder shall be bound by,
and shall have the benefit of, all the terms and conditions set out in the
Agreement to the same extent as if the New Holder were a "Holder" as defined in
the Agreement.
The New Holder represents and warrants to the Company as follows:
(a) Organization and Good Standing. If the New Holder is a corporation,
the New Holder is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization.
(b) Authority. The New Holder has the full power and authority to
execute, deliver and carry out the terms and provisions of this Addendum
Agreement and the Agreement and consummate the transactions contemplated hereby,
and has taken all necessary action to authorize the execution, delivery and
performance of this Addendum Agreement and the Agreement.
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(c) Enforceability. This Addendum Agreement and the Agreement have been
duly and validly authorized, executed and delivered by the New Holder, and
constitutes a legal, valid and binding agreement of the New Holder, enforceable
against the New Holder in accordance with its terms, except to the extent that
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting creditors'
rights generally.
(d) Beneficial Ownership. As of the date hereof, the New Holder is the
record and beneficial owner of _____________ Shares, and except for the
restrictions set forth in the Agreement, the New Holder owns such Shares free
and clear of any Encumbrance. The New Holder does not possess any rights to
acquire any additional Voting Securities.
(e) Accredited Investor. The New Holder is an "accredited investor"
within the meaning of Regulation D under the Securities Act and it is acquiring
its Shares of its own account and not with a view to the public distribution
thereof.
(f) No Conflicts. The execution and delivery of this Addendum Agreement
and the Agreement and the consummation of the transactions contemplated hereby
will not conflict with, result in the breach of any of the terms or conditions
of, constitute a default under or violate, accelerate or permit the acceleration
of any other similar right of any other party under, the Organizational
Documents of the New Holder (other than a New Holder who is an individual), any
law, rule or regulation, or any agreement, lease, mortgage, note, bond,
indenture, license or other document or undertaking, to which the New Holder is
a party or by which the New Holder or its properties may be bound, nor will such
execution, delivery and consummation violate any order, writ, injunction or
decree of any Authority to which the New Holder or any of its properties is
subject, the effect of any of which, either individually or in the aggregate,
would impair the ability of the New Holder to perform its obligations hereunder.
This Addendum Agreement shall be attached to and become a part of the
Agreement.
New Holder
----------------------------------------
Name:
Address for notices under the Agreement:
----------------------------------------
----------------------------------------
----------------------------------------
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The spouse of the New Holder acknowledges that such spouse has read the
Agreement. Such spouse is fully aware of, understands and fully consents and
agrees to the terms and conditions of the Agreement and that such spouse's
awareness, understanding, consent and agreement is evidenced by such spouse's
execution and delivery of this Addendum Agreement.
----------------------------------------
Name of Spouse:
Agreed to on behalf of the Holder and the Company pursuant to the
Agreement.
TRINITY INDUSTRIES, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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EXHIBIT B
FORM OF STANDSTILL NOTICE
____________ __, 200_
Trinity Industries, Inc.
2525 Stemmons Freeway
Dallas, Texas 75207
Attn: General Counsel
Re: Agreement to Extend Standstill Period
Ladies and Gentlemen:
Reference is hereby made to the Stockholders Agreement dated ______ __, 200_,
among Trinity Industries, Inc., a Delaware corporation (the "Company") and the
stockholders named therein (the "Stockholders Agreement"). The undersigned
hereby delivers to the Company notification pursuant to the Stockholders
Agreement that the Standstill Period is extended to the tenth anniversary of the
Closing Date. Initially capitalized terms used but not defined herein have the
meanings set forth in the Stockholders Agreement.
----------------------------------------
[Craig Duchossois or Successor Designee]
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EXHIBIT 7.1.10
FORM OF REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") dated as of
August 13, 2001, is made by and between Trinity Industries, Inc., a Delaware
corporation ("PARENT"), and Thrall Car Management Company, Inc., a Delaware
corporation ("NEWCO").
WHEREAS, Parent, Newco, TCMC Acquisition Corp., an Illinois corporation
("MERGER SUB"), and Thrall Car Manufacturing Company, an Illinois corporation
and wholly owned subsidiary of Newco ("COMPANY"), have entered into an Agreement
and Plan of Merger dated as of August 13, 2001 (the "MERGER AGREEMENT"),
pursuant to which Merger Sub will merge with and into Company, with Company
becoming a wholly owned subsidiary of Parent;
WHEREAS, pursuant to the Merger Agreement, Newco will acquire Seven
Million One Hundred Fifty Thousand (7,150,000) shares (collectively, the
"SHARES") of Parent's common stock, $1.00 par value per share ("COMMON STOCK");
and
WHEREAS, Parent wishes to grant to Newco certain registration rights
with respect to the Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
premises, representations, warranties and covenants hereinafter set forth, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article 1:
"AGREEMENT" is defined in the preamble of this Agreement.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day in
which commercial banks in Dallas, Texas are closed.
"COMMON STOCK" is defined in the recitals to this Agreement.
"DEMAND REGISTRATION" is defined in Section 2.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law, all as the same shall be in effect at the time.
"HOLDER INDEMNITEES" is defined in Section 2.7.
112
"HOLDERS" means (i) Newco and (ii) any valid transferee of Shares under
the Stockholder's Agreement dated the date hereof between Parent and Newco from
Newco or from a Holder described in this subparagraph (ii).
"INDEMNIFIED PARTY" is defined in Section 2.7.
"INDEMNIFYING PARTY" is defined in Section 2.7.
"LOSSES" is defined in Section 2.7.
"MERGER AGREEMENT" is defined in the recitals to this Agreement.
"MERGER SUB" is defined in the recitals to this Agreement.
"NEWCO" is defined in the preamble to this Agreement.
"NEWCO INDEMNITEES" is defined in Section 2.7.
"NOTICE" is defined in Section 2.1.
"PARENT" is defined in the preamble to this Agreement.
"PARTICIPATING HOLDERS" means the Holders offering Registrable
Securities for sale pursuant to a Demand Registration or a Piggy-Back
Registration.
"PIGGY-BACK REGISTRATION" is defined in Section 2.2.
"QUALIFIED SELLING STOCKHOLDERS" means (i) the Participating Holders
and (ii) any other Selling Stockholder (or group of Selling Stockholders whose
rights to participate in a Piggy-Back Registration arise out of a single
agreement with Parent) that owns at least the same number of shares of
then-outstanding Common Stock as the Holders.
"REGISTRABLE SECURITIES" means (i) the Shares and (ii) any Common Stock
issued or issuable at any time or from time to time in respect of the Shares or
the Common Stock described in this subparagraph (ii) upon a stock split, stock
dividend, recapitalization or other similar event involving Parent.
The terms "REGISTER," "REGISTERED", and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering by the SEC
of the effectiveness of such registration statement.
"REGISTRATION EXPENSES" means all expenses of registration, other than
Selling Expenses, incurred by Parent in complying with Sections 2.1 and 2.2
hereof, including, without limitation, all registration, qualification and
filing fees, exchange listing fees, printing expenses, escrow fees and
disbursements of counsel for Parent, fees and expenses with respect to blue sky
or other state securities laws and the expense of any special audits incident to
or required by any such registration and amendments or supplements in connection
therewith.
"REQUEST" is defined in Section 2.1.
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"RESTRICTED SECURITIES" has the meaning given to such term in Rule 144
promulgated under the Securities Act.
"SEC" means the Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor law and the regulations and rules issued pursuant to that Act or any
successor law, all as the same shall be in effect at the time.
"SELLING EXPENSES" means the underwriting discounts, selling
commissions and stock transfer taxes applicable to the Registrable Securities
registered by a Holder and all fees and expenses of counsel and any accountants
for such Holder.
"SELLING STOCKHOLDERS" means the stockholders of Parent offering
securities for sale pursuant to a Demand Registration or a Piggy-Back
Registration.
"SHARES" is defined in the recitals to this Agreement.
"UNDERWRITTEN PUBLIC OFFERING" means a public offering in which the
Common Stock is offered and sold on a firm commitment basis through one or more
underwriters, all pursuant to an underwriting agreement between Parent and/or
one or more stockholders of Parent and such underwriter(s).
ARTICLE 2
REGISTRATION RIGHTS
2.1 Requested Registration.
(a) Subject to the terms hereof (and except as otherwise
provided in Section 2.11), at any time and from time to time after the
second anniversary of the date of this Agreement, the Holder(s) may
make a written request (the "REQUEST") that Parent register under the
Securities Act on Form S-3 (or if Parent is not eligible to use Form
S-3, then Form S-1 or Form S-2), or any similar form then in effect,
all or any portion of the Registrable Securities held by the Holders (a
"DEMAND REGISTRATION"). The Request shall (i) specify the number of
shares of Registrable Securities intended to be offered and sold (which
amount shall be no less than Two Million Five Hundred Thousand
(2,500,000) shares of Common Stock), (ii) express the present intention
of the Holders participating in such request to offer or cause the
offering of such Registrable Securities for distribution, and (iii)
describe the nature or method of the proposed offer and sale thereof.
Within ten (10) Business Days after receipt of the Request, Parent will
give written notice of the receipt thereof (the "NOTICE") to all the
Holders who did not participate in the Request. Parent shall include in
any Demand Registration all Registrable Securities with respect to
which Parent has received written requests for the inclusion therein
within ten (10) Business Days after the delivery by Parent of the
Notice. Each such request for inclusion of Registrable Securities shall
(i) specify the number of shares of Registrable Securities intended to
be offered and sold and (ii) contain the undertaking of the Holder to
provide all such information and materials and take all such action as
may be required in order to permit Parent to comply with all applicable
requirements
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of the SEC and to obtain any desired acceleration of the effective date
of such Demand Registration.
(b) As soon as practicable after receipt of a Request, Parent
shall use all reasonable efforts to promptly effect such Demand
Registration (including, without limitation, filing post-effective
amendments, appropriate qualifications under applicable blue sky laws
or other compliance).
(c) Notwithstanding the foregoing, (i) Parent shall not be
obligated to cause any special audit to be undertaken in connection
with any Demand Registration and (ii) Parent shall be entitled to
postpone for a reasonable period of time the filing of any Demand
Registration otherwise required to be prepared and filed by it (A) to
the extent necessary to prepare the financial statements of Parent for
the fiscal period most recently ended prior to the Request; (B) if
filing a Demand Registration would materially adversely affect
(including, without limitation, through the premature disclosure
thereof) a proposed financing, reorganization, recapitalization,
merger, consolidation or similar transaction; or (C) if Parent notifies
the Holders participating in the Request that in the good faith
judgment of the Board of Directors of Parent, such registration would
be seriously detrimental to Parent, and the Board of Directors of
Parent has concluded to defer the filing of such registration
statement; provided, however, that in the event of a delay pursuant to
clause (B), Parent shall not be entitled to delay the filing for more
than ninety (90) days and in the event of a delay pursuant to clause
(C), Parent shall not be entitled to delay the filing for more than one
hundred eighty (180) days.
(d) Parent shall be obligated to register Registrable
Securities for the Holders pursuant to this Section 2.1 on two
occasions only.
(e) Notwithstanding any request for a Demand Registration,
Parent, at its sole option, may initiate a registration for Common
Stock for its own account relating to an Underwritten Public Offering.
In such event, any outstanding request by the Holders for a Demand
Registration shall immediately be converted into a right to sell
Registrable Securities pursuant to and subject to Section 2.2 hereof
and shall not be considered a Demand Registration.
(f) For purposes of this Section 2.1, Parent shall be entitled
to accept as a valid Request from the Holders a Request from Newco (or
from Mr. Craig Duchossois if Newco no longer exists or ceases to be
controlled by Mr. Richard Duchossois, or from the person designated by
the Holders of a majority of the Registrable Securities then
outstanding if Mr. Craig Duchossois is unable or unwilling to so
serve).
2.2 Parent Registration.
(a) Subject to the terms hereof (and except as otherwise
provided in Section 2.10), if at any time or from time to time after
the second anniversary of the date of this Agreement, Parent shall
determine to register any of its Common Stock for its own account
relating to an Underwritten Public Offering, Parent shall:
(i) promptly, but in any event at least thirty (30)
days before Parent files a registration statement pursuant to
an Underwritten Public Offering, give to each Holder written
notice thereof; and
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(ii) include in such registration (a "PIGGY-BACK
REGISTRATION") (and any related qualification under blue sky
laws or other compliance), and in the underwriting involved
therein, such Registrable Securities as each Holder may
request in a writing delivered to Parent within twenty (20)
days after the delivery of Parent's written notice delivered
pursuant to Section 2.2(a)(i) above.
(b) Parent shall have the right to terminate or withdraw any
Piggy-Back Registration initiated by it under this Section 2.2 prior to
the effectiveness of such registration whether or not any Holder has
elected to include its Registrable Securities in such registration,
provided, however, that in such event, Parent shall promptly pay all
reasonable out-of-pocket costs and expenses of the Holders (including,
without limitation, all reasonable fees and disbursements of one law
firm chosen to represent the Holders) incurred in connection with such
terminated registration.
(c) Without limiting the generality or effect of any other
provision hereof, Parent shall not be required to effect any Piggy-Back
Registration pursuant to this Section 2.2 incidental to the
registration of any of its securities in connection with mergers,
acquisitions, exchange offers, subscription offers, dividend
reinvestment plans or stock option or other employee benefit plans.
2.3 Underwriting.
(a) The underwriter or underwriters of any Demand Registration
shall be selected by the Holders delivering the Request, which
underwriter or underwriters shall be reasonably acceptable to Parent,
and the underwriter or underwriters of any Piggy-Back Registration
shall be selected by Parent. Each Holder's rights under this Article 2
shall be conditioned upon such Holder's participation as a
Participating Holder in such underwriting, and the inclusion of
Registrable Securities in the underwriting shall be limited to the
extent provided herein. Parent, each Participating Holder and all other
Selling Stockholders shall enter into an underwriting agreement in
customary form with the managing underwriter selected for such
Underwritten Public Offering as provided above. If a Holder refuses to
enter into, and perform such Holder's obligations as a Participating
Holder under, such underwriting agreement, then the Registrable
Securities held by such Holder will not be included in any registration
effected pursuant thereto.
(b) If the managing underwriter for a Piggy-Back Registration
determines in its reasonable judgment that the inclusion of such
Registrable Securities would materially adversely affect such offering,
the managing underwriter may limit some or all of the Registrable
Securities that may be included in the registration and underwriting as
follows: the number of Registrable Securities that may be included in
the registration and underwriting by a Participating Holder shall be
determined by multiplying the number of shares of securities of all
Selling Stockholders that the managing underwriter is willing to
include in such registration and underwriting, times a fraction, the
numerator of which is the number of Registrable Securities requested to
be included in such registration and underwriting by such Participating
Holder, and the denominator of which is either (i) at any time that the
Holders hold in the aggregate less than 15% of the then-outstanding
shares of Common Stock, the total number of securities that all Selling
Stockholders have requested to have included in such registration and
underwriting, or (ii) at any time that the Holders hold in the
aggregate at
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least 15% of the then-outstanding shares of Common Stock, the total
number of securities that all Qualified Selling Stockholders have
requested to have included in such registration and underwriting. To
facilitate the allocation of shares in accordance with the above
provisions, Parent may round the number of shares allocable to any such
Participating Holder to the nearest one hundred (100) shares. If any
Participating Holder disapproves of the terms of any such underwriting,
it may elect to withdraw therefrom by written notice to Parent and the
managing underwriter, delivered not less than seven days before the
effective date of such registration.
2.4 Expenses of Registration. All Registration Expenses incurred in connection
with all registrations pursuant to Sections 2.1 and 2.2 shall be borne by
Parent. Unless otherwise stated herein, all Selling Expenses relating to
securities registered on behalf of any Participating Holder shall be borne by
such Participating Holder.
2.5 Registration Procedures. In the case of each registration, qualification or
compliance effected by Parent pursuant to this Agreement, Parent will keep each
Participating Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense, Parent shall:
(a) prepare and file with the SEC a registration statement
with respect to such securities and use all reasonable efforts to cause
such registration statement to become and remain effective with respect
to a registration statement filed regarding an Underwritten Public
Offering, for the lesser of (i) 90 days or (ii) until the distribution
described in such registration statement has been completed;
(b) furnish to each underwriter participating in the
Underwritten Public Offering associated with such registration, such
number of copies of a prospectus, including a preliminary prospectus,
in conformity with the requirements of the Securities Act, and such
other documents as such underwriter may reasonably request in order to
facilitate the public sale of the Registrable Securities by such
underwriter, and promptly furnish to each underwriter and Participating
Holder notice of any stop-order or similar notice issued by the SEC or
any state agency charged with the regulation of securities, and notice
of NYSE or any other securities exchange listing relating to the
Registrable Securities sought to be registered;
(c) furnish prospectuses, including preliminary prospectuses
and amendments and supplements thereto, to the Participating Holders,
all in accordance with applicable securities laws;
(d) apply to register or otherwise qualify the Registrable
Securities offered by the Participating Holders or any of them under
all applicable blue sky laws of any state;
(e) notify the Participating Holders promptly of (i) any
action by the SEC to suspend the effectiveness of such registration
statement or the institution or threatening of any proceeding for such
purpose (a "stop order") or (ii) the receipt by Parent of any
notification with respect to the suspension of the qualification of the
Registrable Securities included in such registration pursuant to the
registration statement in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. Immediately upon
receipt of any such notice, the Participating Holders shall cease to
offer or sell any Registrable Securities included in such registration
pursuant to the registration statement in the jurisdiction to which
such stop order or suspension relates. Parent shall use all reasonable
efforts to prevent the issuance of
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any such stop order or the suspension of any such qualification and, if
any such stop order is issued or any such qualification and, if any
such stop order is issued or any such qualification is suspended, to
obtain as soon as possible the withdrawal or revocation thereof, and
shall notify the Participating Holders at the earliest practicable date
of the date on which the Participating Holders may offer and sell
Registrable Securities pursuant to the registration statement; and
(f) Parent shall notify the Participating Holders promptly of
the occurrence of any event or the existence of any facts that, in the
judgment of Parent, should be set forth in such registration statement.
Immediately upon receipt of such notice, the Participating Holders
shall cease to offer or sell any Registrable Securities pursuant to
such registration statement, cease to deliver or use such registration
statement and, if so requested by the Parent, return to Parent, at
Parent's expense, all copies (other than permanent file copies) of such
registration statement. Parent shall, as promptly as practicable, take
such action as may be necessary to amend or supplement such
registration statement in order to set forth or reflect such event or
facts. Parent shall furnish copies of such proposed amendment or
supplement to the Participating Holders and shall not file or
distribute such amendment or supplement without the prior consent of
Participating Holders, which consent shall not be unreasonably
withheld.
2.6 Cooperation. In connection with any registration effected by Parent pursuant
to this Agreement, Parent shall
(a) enter into such customary agreements (including an
underwriting agreement containing such representations and warranties
by Parent and such other terms and provisions, including
indemnification provisions, as are customarily contained in
underwriting agreements for comparable offerings) and take all such
other actions as the Participating Holders or the underwriters, if any,
participating in such registration may reasonably request in order to
expedite or facilitate such registration;
(b) furnish, at the request of the Participating Holders or
any underwriter participating in such registration, (i) a comfort
letter or letters, dated the date of the final prospectus with respect
to the registration and/or the date of the closing for the registration
from the independent certified public accountants of Parent and
addressed to the Participating Holders and any underwriters
participating in such registration, which letter or letters shall state
that such accountants are independent with respect to Parent within the
meaning of Rule 1.01 of the Code of Professional Ethics of the American
Institute of Certified Public Accountants and shall address such
matters as the Participating Holders and underwriters may reasonably
request and as may be customary in transactions of a similar nature for
similar entities and (ii) an opinion, dated the date of the closing for
the registration, of the counsel representing Parent with respect to
such registration (which counsel may be the General Counsel of Parent
or other counsel reasonably satisfactory to the Participating Holders),
addressed to the Participating Holders and any such underwriters, which
opinion shall address such matters as they may reasonably request and
as may be customary in transactions of a similar nature for similar
entities; and
(c) make available for inspection by the Participating
Holders, the underwriters, if any, participating in such registration
(which inspecting underwriters shall, if reasonably possible, be
limited to any manager or managers for such participating
underwriters), counsel for the Participating Holders, one accountant or
accounting firm retained by Participating
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Holders and any such underwriters, or any other agent retained by the
Participating Holders or such underwriters, all financial and other
records, corporate documents and properties of Parent, and supply such
additional information, as they shall reasonably request; provided that
any such party shall keep the contents thereof confidential.
2.7 Indemnification.
(a) To the extent permitted by law, Parent will indemnify and
hold harmless each Participating Holder and each of its officers and
directors and partners, if any, and each person controlling each
Participating Holder within the meaning of Section 15 of the Securities
Act (the "HOLDER INDEMNITEES"), against all expenses, claims, losses,
damages or liabilities (or actions in respect thereof) (including,
without limitation, reasonable fees and other expenses actually
incurred in connection with any suit, action or proceeding)
(collectively, "LOSSES") to the extent to which such Holder Indemnitee
is subject, including any of the foregoing incurred in settlement of
any litigation, commenced or threatened, to the extent such Losses
arise out of or are based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document filed with the SEC
pursuant to this Agreement, or any amendment or supplement thereto,
incident to any such registration, qualification or compliance effected
pursuant to this Agreement, or arise out of or are based on any
omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading, or any violation by Parent of the Securities Act in
connection with any such registration, qualification or compliance
effected pursuant to this Agreement, and Parent will reimburse each
Holder Indemnitee for any legal or other expenses reasonably incurred
in connection with investigating, preparing or defending any such Loss;
provided, however, that the indemnity contained herein shall not apply
to amounts paid in settlement of any Loss if settlement is effected
without the consent of Parent (which consent shall not unreasonably be
withheld); provided, further, that Parent will not be liable in any
such case to the extent that any such Loss arises out of or is based on
any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information
furnished to Parent expressly for inclusion in such registration by a
Holder Indemnitee specifically for use therein. Notwithstanding the
foregoing, insofar as the foregoing indemnity relates to any such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) made in the preliminary prospectus but eliminated or remedied
in the amended prospectus on file with the SEC at the time the
registration statement becomes effective or in the final prospectus
filed with the SEC pursuant to the applicable rules of the SEC or in
any supplement or addendum thereto, the indemnity contained herein
shall not inure to the benefit of any Holder Indemnitee if a copy of
the final prospectus filed pursuant to such rules, together with all
supplements and addenda thereto, was not furnished to the person or
entity asserting the Loss at or prior to the time required by the
Securities Act.
(b) To the extent permitted by law, each Participating Holder
will, severally but not jointly, if Registrable Securities held by such
Participating Holder are included in the securities as to which a
registration, qualification or compliance is being effected pursuant to
the terms hereof, indemnify and hold harmless Parent, each of Parent's
directors and officers, each person who controls Parent within the
meaning of Section 15 of the Securities Act, and each other Selling
Stockholder, each of such person's officers and directors and each
person controlling such persons within the meaning of Section 15 of the
Securities Act (collectively,
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the "PARENT INDEMNITEES"), against all Losses to the extent to which
such Parent Indemnitee is subject, including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, to
the extent such Losses arise out of or are based on any untrue
statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document filed with the SEC pursuant to this Agreement, or any
amendment or supplement thereto incident to any such registration,
qualification or compliance effected pursuant to the Agreement, or
arise out of or are based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading, or any violation by such
Participating Holder of the Securities Act in connection with any such
registration, qualification or compliance effected pursuant to this
Agreement, and will reimburse each Parent Indemnitee for any legal or
other expenses reasonably incurred in connection with investigating,
preparing or defending any such Loss, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document
filed with the SEC pursuant to this Agreement in reliance upon and in
conformity with information furnished to Parent by such Participating
Holder expressly for inclusion in such registration; provided, however,
that the indemnity contained herein shall not apply to amounts paid in
settlement of any Loss if settlement is effected without the consent of
the Participating Holder (which consent shall not be unreasonably
withheld). Notwithstanding the foregoing, insofar as the foregoing
indemnity relates to any such untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in the preliminary
prospectus but eliminated or remedied in the amended prospectus on file
with the SEC at the time the registration statement becomes effective
or in the final prospectus filed pursuant to applicable rules of the
SEC or in any supplement or addendum thereto, the indemnity contained
herein shall not inure to the benefit of any Parent Indemnitee if a
copy of the final prospectus filed pursuant to such rules, together
with all supplements and addenda thereto, was not furnished to the
person or entity asserting the Loss at or prior to the time required by
the Securities Act. The liability of a Participating Holder under this
Section 8(b) shall in no event exceed the proceeds received by it from
sales of Registrable Securities giving rise to such obligations.
(c) Each party entitled to indemnification under this Section
2.7 (the "INDEMNIFIED PARTY") shall give notice to the party required
to provide indemnification (the "INDEMNIFYING PARTY") promptly after
such Indemnified Party has actual knowledge of any action or proceeding
commenced against, or written demand made on, any such party in respect
of which indemnity may be sought, and shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation
resulting therefrom; provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in
such defense at such party's expense, and provided further that the
failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
Agreement unless the failure to give such notice is materially
prejudicial to an Indemnifying Party's ability to defend such action;
and, provided further, that the Indemnifying Party shall not assume the
defense for matters as to which there is a conflict of interest or as
to which the Indemnifying Party is asserting separate or different
defenses, which defenses are inconsistent with the defenses of the
Indemnified Party. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or
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enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such
claim or litigation. No Indemnified Party shall consent to entry of any
judgment or enter into any settlement without the consent of each
Indemnifying Party.
(d) If the indemnification provided for in this Section 2.7 is
unavailable to an Indemnified Party in respect of any Loss referred to
therein, then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such Loss (i) in such proportion
as is appropriate to reflect the relative benefits received by Parent,
on the one hand, and all Selling Stockholders, on the other, from the
offering of Parent's securities, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of Parent, on the one
hand, and the Selling Stockholders, on the other, in connection with
the statements or omissions that resulted in such Loss, as well as any
other relevant equitable considerations. The relative benefits received
by Parent, on the one hand, and the Selling Stockholders, on the other,
shall be the net proceeds from the offering (before deducting expenses)
received by Parent, on the one hand, and the Selling Stockholders, on
the other. The relative fault of Parent, on the one hand, and the
Selling Stockholders, on the other, shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement
of material fact or the omission or alleged omission to state a
material fact relates to information supplied by Parent or by the
Selling Stockholders and the parties' relevant intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission. Parent and the Selling Stockholders agree that
it would not be just and equitable if contribution pursuant to this
Section 2.7(d) were based solely upon the number of entities from whom
contribution was requested or by any other method of allocation which
does not take account of the equitable considerations referred to above
in this Section 2.7(d). The amount paid or payable by an Indemnified
Party as a result of the Loss referred to above in this Section 2.7(d)
shall be deemed to include any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or
defending any such action or claim, subject to the provisions of
Section 2.7(c) hereof. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act).
2.8 Holdback Agreements. Each Participating Holder, if requested by the managing
underwriter in a registration pursuant to this Agreement, shall not effect any
public sale or distribution of securities of Parent of the same class as the
securities included in such Demand Registration or Piggy-Back Registration,
including a sale pursuant to Rule 144, during such period of time following the
closing date of each offering made pursuant to such Demand Registration or
Piggy-Back Registration as may be requested by Parent or such managing
underwriter. In no event shall such period exceed the shorter of one hundred
eighty (180) days or the shortest period of time so requested from any other
Selling Stockholder that holds more than 5% of the outstanding amount of the
same class of securities as included in such Demand Registration or Piggy-Back
Registration.
2.9 Certain Information. Each Participating Holder agrees, with respect to any
Registrable Securities included in any registration, to furnish to Parent such
information regarding such Participating Holder, the Registrable Securities and
the distribution proposed by such Participating Holder as Parent may reasonably
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in Sections 2.1 and 2.2.
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2.10 Rule 144 Reporting. With a view to making available the benefits of certain
rules and regulations of the SEC that may at any time permit the sale of
Restricted Securities to the public without registration, Parent agrees to use
its best lawful efforts to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all
times during which Parent is subject to the reporting requirements of
the Exchange Act;
(b) file with the SEC in a timely manner all reports and other
documents required of Parent under the Securities Act and the Exchange
Act at all times during which Parent is subject to such reporting
requirements; and
(c) so long as any Holder owns any Registrable Securities that
are Restricted Securities, to furnish to such Holder forthwith upon
request a written statement by Parent as to Parent's compliance with
the reporting requirements of said Rule 144 and with regard to the
Securities Act and the Exchange Act at all times during which Parent is
subject to such reporting requirements, a copy of the most recent
annual or quarterly report of Parent, and such other non-confidential
reports and documents of Parent and other non-confidential information
in the possession of or reasonably obtainable by Parent as such
Purchaser may reasonably request in availing such Purchaser of any rule
or regulation of the SEC allowing Purchaser to sell any such shares
without registration.
2.11 Termination. The registration rights granted in Sections 2.1 and 2.2 shall
terminate, and such registration rights will not be exercisable by any Holder at
such time as all shares of Registrable Securities held by such Holder may
immediately be sold under Rule 144 promulgated under the Securities Act (as
amended from time to time) during any ninety-day (90-day) period.
ARTICLE 3
MISCELLANEOUS
3.1 Governing Law. This Agreement shall be governed in all respects by the
internal laws of the State of Delaware.
3.2 Transfers. A transfer of the registration rights provided for in this
Agreement shall only be valid if Parent is given written notice at the time of
said transfer, stating the name and address of said transferee and identifying
the Registrable Securities with respect to which the registration rights are
being transferred, and, provided, that the transferee of such rights assumes the
obligations of a Holder under this Agreement by signing a counterpart signature
page to this Agreement in substantially the form of EXHIBIT A.
3.3 Amendment. This Agreement may be amended, modified and supplemented only by
written agreement of Parent and the holders of at least a majority of the Shares
issued pursuant to the Merger Agreement.
3.4 Notices. All notices, requests, demands and other communications required or
permitted under this Agreement must be in writing and shall be deemed to have
been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed by registered mail, return receipt requested or
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(c) when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
If to Newco, to:
c/o Duchossois Industries, Inc.
Attention: Corporate Secretary
845 Larch Avenue
Elmhurst, Illinois 60126-1196
Facsimile: (630) 530-6051
or to such other person or address as Newco shall furnish to Parent.
If to Parent, to:
Trinity Industries, Inc.
Attention: General Counsel
2525 Stemmons Freeway
Dallas, Texas 75207
Facsimile: (214) 589-8824
with a copy to:
Haynes and Boone, LLP
901 Main Street
Suite 3100
Dallas, Texas 75202
Attention: Michael M. Boone
Facsimile: (214) 651-5940
If to a Holder (other than Newco), to:
Such Holder's address set forth on such Holder's Counterpart
Signature Page or to such other person or address as such
Holder shall furnish to Parent in writing.
3.5 Delays or Omissions. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to any party to this
Agreement shall impair any such right, power or remedy of such party nor shall
it be construed to be a waiver of any breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party to this Agreement, shall be cumulative and not alternative.
3.6 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this
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Agreement is held to be prohibited by or invalid under applicable law, such
provision shall fail to be in effect only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement or of any such
provision.
3.7 Assignment. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but except as otherwise provided for or
permitted herein neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any party hereto without the prior
written consent of the other party.
3.8 Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.9 Headings. The headings of the Sections of this Agreement are inserted for
convenience only and shall not constitute a part hereof or affect in any way the
meaning or interpretation of this Agreement.
3.10 Entire Agreement. This Agreement, the Merger Agreement and all agreements
referenced herein and therein set forth the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein, and
supersede all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.
3.11 Third Parties. Except as specifically set forth or referred to herein,
nothing herein expressed or implied is intended or shall be construed to confer
upon or give to any person or entity, other than the parties hereto and their
successors or assigns, any rights or remedies under or by reason of this
Agreement.
* * * * *
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IN WITNESS WHEREOF, the undersigned or each of their respective duly
authorized officers or representatives have executed this Agreement effective
upon the date first set forth above.
PARENT:
TRINITY INDUSTRIES, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
NEWCO:
THRALL CAR MANAGEMENT COMPANY, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT A
FORM OF COUNTERPART SIGNATURE PAGE
This Addendum Agreement (this "ADDENDUM AGREEMENT") dated as of
____________, 200___, is made by and between _______________________ (the "NEW
HOLDER"), Trinity Industries, Inc., a Delaware corporation ("PARENT"), Thrall
Car Management Company, Inc., a Delaware corporation ("NEWCO") and all Holders,
if any, that have previously entered into an Addendum Agreement to that certain
Registration Rights Agreement (the "AGREEMENT") dated as of ___________________,
200__, by and between Parent and Newco.
WHEREAS, Parent and Newco entered into the Agreement to grant
registration rights to Newco with respect to Seven Million One Hundred Fifty
Thousand (7,150,000) shares of Parent's common stock, $1.00 par value per share;
and
WHEREAS, the Agreement provides that the registration rights granted
thereunder may, under certain conditions, be transferred by Newco or a Holder;
and
WHEREAS, the Holder identified below desires to transfer to New Holder
the registration rights granted under the Agreement.
NOW, THEREFORE, in consideration of the mutual promises of the parties,
and as a condition to the transfer to New Holder of the registration rights
granted in the Agreement, New Holder and Parent hereby agree that New Holder
shall be bound by, and shall have the benefit of, all of the terms and
conditions set out in the Agreement (including the indemnification obligations
of Section 2.7 thereof) to the same extent as if New Holder were a "HOLDER" (as
defined in the Agreement) with respect to the Registrable Securities (as defined
in the Agreement) described below.
This Addendum Agreement shall be attached to and become part of the
Agreement.
* * * * *
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IN WITNESS WHEREOF, the undersigned or each of their respective duly
authorized officers have executed this Addendum Agreement effective as of the
date first set forth above.
NEW HOLDER:
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Name:
New Holder's
Address for
notices under the
Agreement:
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Description of Registrable Securities:
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Accepted and agreed to:
TRINITY INDUSTRIES, INC.:
By:
---------------------------------
Name:
---------------------------------
Title:
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[HOLDER]:
By:
---------------------------------
Name:
---------------------------------
Title:
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