==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------
SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
CALIBER SYSTEM, INC.
------------------------------------------------------
(Name of Issuer)
COMMON STOCK
NO PAR VALUE
------------------------------------------------------
(Title of Class of Securities)
769748104
------------------------------------------------------
(CUSIP Number)
Kenneth R. Masterson
Federal Express Corporation
2005 Corporate Avenue
Memphis, TN 38132
(901) 396-3600
------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
October 5, 1997
------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this Schedule because of Rule 13d-1(b)(3) or (4), check the following
box: [ ]
Note: Six copies of this Statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
(Continued on following pages)
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CUSIP No. 769748104 13D
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
FEDERAL EXPRESS CORPORATION (I.R.S. Identification Number 71-0427007)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
NUMBER 7 SOLE VOTING POWER
OF SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 5,332,942
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON WITH 10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,332,942
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.6%
14 TYPE OF REPORTING PERSON
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!*
Item 1. Security and Issuer
The class of equity securities to which this statement relates
is the common stock without par value (the "Common Stock"), of Caliber System,
Inc., an Ohio corporation (the "Issuer"). The principal executive offices of
the Issuer are located at 3925 Embassy Parkway, Akron, OH 44333.
Item 2. Identity and Background
The name of the person filing this statement is Federal Express
Corporation, a Delaware corporation ("Federal Express").
The address of the principal business and the principal office
of Federal Express is 2005 Corporate Avenue, Memphis, TN 38132. The name,
business address, present principal occupation or employment, and citizenship
of each director and executive officer of Federal Express is set forth on
Schedule A.
Federal Express is a leading global provider of express
services for time-definite transportation of documents, packages and freight.
Federal Express offers its services throughout the world using an extensive
fleet of aircraft and vehicles and leading-edge information technologies.
During the last five years, neither Federal Express nor any
other person controlling Federal Express nor, to the best of its knowledge,
any of the persons listed on Schedule A attached hereto, has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors)
or has been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
Not applicable.
Item 4. Purpose of Transaction
On October 5, 1997, Federal Express, the Issuer, Fast Holding
Inc. (the "Parent"), Fast Merger Sub Inc. and Tires Merger Sub Inc. entered
into an Agreement and Plan of Merger (the "Merger Agreement") providing for,
subject to the terms and conditions set forth in the Merger Agreement, (i) the
merger of Fast Merger Sub Inc., a wholly owned indirect subsidiary of Federal
Express, with and into Federal Express and (ii) the merger of Tires Merger Sub
Inc., a wholly-owned indirect subsidiary of Federal Express, with and into the
Issuer (the "Tires Sub Merger"). At the effective time of the Merger, (i)
each outstanding share of Common Stock will be converted into the right to
receive 0.8 shares of common stock, par value $0.10 per share, of Parent
("Parent Stock") and (ii) each outstanding share of common stock of Federal
Express will be converted into the right to receive one share of Parent. As a
result of the mergers, Federal Express and the Issuer will become wholly-owned
direct subsidiaries of Parent. Consummation of the mergers is subject to
approval by the stockholders of Federal Express and the Issuer, the expiration
of the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and certain other customary closing
conditions.
In connection with the Merger Agreement, (i) G. James Roush and
Sarah Roush Werner (each a "Shareholder" with respect to the Free Shares, and
a "Beneficiary" with respect to the Trust Shares (as such terms are defined in
the Voting Agreement)) and (ii) G. James Roush and Richard A. Chenoweth (each
a "Trustee") entered into a Voting Agreement with Federal Express dated as of
October 5, 1997 (the "Voting Agreement"). The Beneficiaries and the Trustees,
among others, are parties to an Amended and Restated Voting Trust Agreement
effective as of November 1, 1992 (the "Trust Agreement"). Pursuant to the
Voting Agreement, each Beneficiary has agreed to instruct the Trustees, in
accordance with the Trust Agreement, and each Trustee has agreed, to the
extent so instructed in accordance with the Trust Agreement, to vote any
shares of Common Stock subject to the Trust Agreement, and each Shareholder
has agreed to vote any shares of Common Stock held by them and not subject to
the Trust Agreement, in favor of the Merger Agreement, the Tires Sub Merger
and the other transactions contemplated by the Merger Agreement (collectively,
the "Proposal"). The aggregate number of shares of Common Stock subject to
the Voting Agreement is 5,332,942.
The Voting Agreement will terminate upon the termination of the
Merger Agreement in accordance with its terms.
The summary contained in this Schedule 13D of certain
provisions of the Voting Agreement and the Merger Agreement is qualified in
its entirety by reference to the Voting Agreement and the Merger Agreement
attached as Exhibits 1 and 2 hereto, respectively, and incorporated herein by
reference.
Item 5. Interest in Securities of the Issuer
(a) For the purpose of Rule 13d-3 promulgated under the
Exchange Act, Federal Express has shared voting power with respect to (and
therefore may be deemed to beneficially own) 5,332,942 shares of Common Stock,
representing approximately 13.6% of the outstanding shares of Common Stock
(39,206,414 shares as of September 13, 1997). Except as set forth in Item 5,
neither Federal Express nor any other person controlling Federal Express, nor,
to the best of its knowledge after reasonable inquiry, any director or
executive officer of Federal Express owns beneficially any shares of Common
Stock.
(b) Federal Express does not have sole power to vote or to
direct the vote of any shares of Common Stock. Federal Express does not have
sole power to dispose or to direct the disposition of any shares of Common
Stock. Federal Express has shared power to vote or to direct the vote of the
5,332,942 shares of Common Stock presently held by the Beneficiaries with
respect to the Proposal.
(c) None.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
Except for the Merger Agreement and the Voting Agreement as
described above, there are no contracts, arrangements, understandings or
relationships (legal or otherwise) between Federal Express and any other person
with respect to any securities of the Issuer, including, but not limited to,
transfer or voting of any of the securities, finder's fees, joint ventures,
loan or option arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits
Exhibit 1: Voting Agreement dated as of October 5, 1997 between Federal
Express Corporation, G. James Roush, Richard A. Chenoweth and
Sarah Roush Werner
Exhibit 2: Agreement and Plan of Merger dated as October 5, 1997 between
Federal Express Corporation, Caliber System, Inc., Fast Holding
Inc., Fast Merger Sub Inc. and Tires Merger Sub Inc.
SIGNATURES
After reasonable inquiry and to the best knowledge and belief
of the undersigned, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
Date: October 15, 1997
FEDERAL EXPRESS CORPORATION
By: /s/: Michael W. Hillard
------------------------------------------
Name: Michael W. Hillard
Title: Vice President, Controller & Chief
Accounting Officer
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF FEDERAL EXPRESS CORPORATION
The name, business address, title, present principal occupation
or employment of each of the directors and executive officers of Federal
Express Corporation ("Federal Express") are set forth below. If no business
address is given the director's or officer's business address is 2005
Corporate Avenue, Memphis, TN 38132. Unless otherwise indicated, each office
set forth opposite an individual's name refers to such individual's office with
Federal Express. Unless otherwise indicated below, all of the persons listed
below are citizens of the United States of America.
<TABLE>
<CAPTION>
Directors and Executive Officers
--------------------------------
Name and Business Address Present Principal Occupation Including Name of Employer
- ------------------------- -------------------------------------------------------
<S> <C>
Ralph D. DeNunzio President, Harbor Point Associates, Inc.
Charles T. Manatt Chairman, Manatt, Phelps & Phillips
George J. Mitchell Special Counsel, Verner, Liipfert, Bernhard, McPherson
and Han
Jackson W. Smart, Jr. Chairman, Executive Committee, First Commonwealth,
Inc. and Chairman and Chief Executive Officer, MSP
Communication, Inc.
Joshua I. Smith Chairman, President and Chief Executive Officer, The
MAXIMA Corporation
Judith L. Estrin President and Chief Executive Officer, Precept Software
Philip Greer Senior Managing Principal, Weiss, Peck & Greer, L.L.C.
J.R. Hyde, III President of Pittco, Inc.
Frederick W. Smith Chairman, President and Chief Executive Officer
Robert H. Allen Managing Partner, Challenge Investment Partners
Robert L. Cox Partner, Waring Cox
Paul S. Walsh Chairman, President and Chief Executive Officer, The
Pillsbury Company
Peter S. Willmott Chief Executive Officer and President, Zenith Electronics
Corporation
</TABLE>
<TABLE>
<CAPTION>
Executive Officers (who are not also Directors)
-----------------------------------------------
Name and Business Address Present Principal Occupation Including Name of Employer
- ------------------------- -------------------------------------------------------
<S> <C>
Alan B. Graf, Jr. Executive Vice President and Chief Financial Officer
Kenneth R. Masterson Executive Vice President, General Counsel and Secretary
Theodore L. Weise Executive Vice President, Worldwide Operations
David J. Bronczek Senior Vice President, Europe, Middle East and Africa
G. Edmond Clark Senior Vice President, Operations Support and Engineering
Michael L. Ducker Senior Vice President, Asia and Pacific
Leonard B. Feiler Senior Vice President, Central Support Services
William G. Fraine Senior Vice President, Worldwide Sales
T. Michael Glenn Senior Vice President, Marketing, Customer Service and
Corporate Communications
Dennis H. Jones Senior Vice President and Chief Information Officer
Joseph C. McCarty, III Senior Vice President, Latin America and Caribbean
Gilbert D. Mook Senior Vice President, Air Operations
James A. Perkins Senior Vice President and Chief Personnel Officer
David F. Rebholz Senior Vice President, United States and Canada
Tracy G. Schmidt Senior Vice President, Air Ground Terminals and
Transportation
Laurie A. Tucker Senior Vice President, Logistics, Electronic Commerce and
Catalog
Michael W. Hillard Vice President, Controller and Chief Accounting Officer
</TABLE>
Exhibit 1
VOTING AGREEMENT
AGREEMENT, dated as of October 5, 1997 between (i) Federal
Express Corporation, a Delaware corporation ("Buyer"), (ii) G. James
Roush and Sarah Roush Werner (each, with respect to the Free Shares (as
defined below), a "Shareholder", and a "Shareholder Party" and with respect
to the Trust Shares (as defined below), a "Beneficiary"), and (iii) G.
James Roush and Richard A. Chenoweth (each a "Trustee", and together, the
"Trustees", in each case together with any successors in their capacity as
trustees under the Trust Agreement (as defined below)). Capitalized terms
used but not separately defined herein shall have the meanings assigned to
such terms in the Merger Agreement (as defined below).
WHEREAS, the Beneficiaries and the Trustees, among others, are
parties to an Amended and Restated Voting Trust Agreement effective as of
November 1, 1992 (the "Trust Agreement");
WHEREAS, the Beneficiaries beneficially own, and the
Shareholder Parties are record and beneficial owners of, shares of common
stock, without par value, of the Company (the "Shares") and certain of such
Shares are subject to the Trust Agreement;
WHEREAS, in order to induce Buyer to enter into an Agreement
and Plan of Merger, dated as of the date hereof (the "Merger Agreement"),
among Buyer, Caliber System, Inc., an Ohio corporation (the "Company"),
Fast Holding Inc., a Delaware corporation, Fast Merger Sub Inc., a Delaware
corporation, and Tires Merger Sub, Inc., a Delaware corporation, Buyer has
requested the Beneficiaries, Shareholder and the Trustees, and the
Beneficiaries, Shareholder and the Trustees have agreed, to enter into this
Agreement with respect to the Shares;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Voting Agreement
Section 1.1. Voting Agreement. (a) Each Beneficiary hereby
agrees to instruct the Trustees in accordance with the Trust Agreement, and
each Trustee hereby agrees, to the extent so instructed in accordance with the
Trust Agreement, to vote any Trust Shares held by them at the time of any vote
to approve and adopt the Merger Agreement (attached as Appendix A hereto), the
Tires Sub Merger and the transactions contemplated by the Merger Agreement and
any actions related thereto at any meeting of the stockholders of the Company,
and at any adjournment thereof, at which such Merger Agreement and other
related agreements (or any amended version thereof), or such other actions,
are submitted for the consideration and vote of the stockholders of the
Company (the "Meeting") in favor of the approval and adoption of the Merger
Agreement, the Tires Sub Merger and the transactions contemplated by the
Merger Agreement (collectively, the "Proposal").
(b) Each Shareholder Party hereby agrees to vote such person's
Free Shares held by them at the time of the Meeting in favor of the
Proposal at the Meeting. Section 1.2. Revocation of Proxy. Each
Shareholder Party and Trustee hereby revokes any and all previous proxies
granted with respect to the Shares; provided, however, that nothing
contained herein shall in any way affect the validity of the Trust
Agreement.
Section 1.2. Revocation of Proxy . Each Shareholder Party
and Trustee hereby revokes any and all previous proxies granted with
respect to the Shares; provided, however, that nothing contained herein
shall in any way affect the validity of the Trust Agreement.
ARTICLE 2
Representations and Warranties of Shareholder Parties
Each Shareholder Party represents and warrants, severally and
not jointly, to Buyer that:
Section 2.1. Authorization. Such Shareholder Party has the
legal capacity to execute, deliver and perform this Agreement. This Agreement
constitutes a valid and binding Agreement of such Shareholder Party. If a
Shareholder Party is married and the Shares set forth on Annex A or Annex B
hereto opposite such Shareholder Party's name constitute community property
under applicable laws, this Agreement has been duly authorized, executed and
delivered by, and constitutes the valid and binding agreement of, such
Shareholder Party's spouse. If this Agreement is being executed in a
representative or fiduciary capacity, the Person signing this Agreement has
full power and authority to enter into and perform this Agreement.
Section 2.2. Non-Contravention. The execution, delivery and
performance by such Shareholder Party of this Agreement and the consummation
of the transactions contemplated hereby do not and will not (i) result in any
breach or violation of or be in conflict with or constitute a default under
any term of any agreement, law, rule, regulation, judgment, injunction, order,
decree or arrangement to which such Shareholder Party is a party or by which
such Shareholder Party is bound or (ii) require any consent or other action by
any Person under, constitute a default under, or give rise to any right of
termination, cancellation or acceleration or to a loss of any benefit to which
such Shareholder Party is entitled under any provision of any agreement or
other instrument binding on such Shareholder Party.
Section 2.3. Ownership of Shares. (a) The Shareholder Party
is the record (except for certain Shares held through revocable trusts) and
beneficial owner of the number of Shares set forth opposite the name of such
Shareholder Party on Annex A hereto (the "Free Shares"), free and clear of any
Lien and any other limitation or restriction. The Shareholder Party has sole
voting power, sole power of disposition, sole power of conversion, sole power
to demand appraisal rights and sole power to agree to all of the matters set
forth in this Agreement, in each case with respect to all of the Free Shares
with no limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement and subject, in the
case of Shares which constitute community property under applicable law, to
the rights and powers of such Shareholder Party's spouse under applicable
community property laws. None of the Free Shares is subject to any voting
trust or other agreement or arrangement with respect to the voting of such
Shares.
(b) Each Beneficiary is the beneficial holder of the number of
Shares set forth opposite the name of such Beneficiary on Annex B hereto (the
"Trust Shares"), free and clear of any Lien and any other limitation or
restriction other than as set forth in the Trust Agreement. Each Beneficiary
has sole power to issue instructions with respect to the matters set forth in
Section 1 hereof, sole power of disposition, sole power of conversion, sole
power to demand appraisal rights and sole power to agree to all of the matters
set forth in this Agreement, in each case with respect to all of the Trust
Shares with no limitations, qualifications or restrictions on such rights,
subject to applicable securities laws and the terms of this Agreement and the
Trust Agreement.
Section 2.4. Total Shares. Except for the Free Shares and the
Trust Shares, such Shareholder Party does not own any (i) shares of capital
stock or voting securities of the Company, (ii) securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company or (iii) other than any stock option relating to
such Shareholder Party's service as a director of the Company, options or
other rights to acquire from the Company any capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of the Company.
Section 2.5. Finder's Fees. No investment banker, broker,
finder or other intermediary is entitled to a fee or commission from Buyer or
the Company in respect of this Agreement based upon any arrangement or
agreement made by or on behalf of such Shareholder Party.
ARTICLE 3
Representations and Warranties of Trustees
Each Trustee represents and warrants, severally and not
jointly, to Buyer that:
Section 3.1. Authorization. The execution, delivery and
performance by such Trustee of this Agreement and the consummation of the
transactions contemplated hereby are within the powers of such Trustee and
have been duly authorized by all necessary action on the part of the Trustee.
This Agreement constitutes a valid and binding agreement of the Trustee.
Section 3.2. Non-contravention. The execution, delivery and
performance by Trustee of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i) violate any
applicable law, rule, regulation, judgment, injunction, order or decree,
(ii) require any consent or other action by any Person under, constitute a
default under, or give rise to any right of termination, cancellation or
acceleration or to a loss of any material benefit to which such Trustee or
any Beneficiary is entitled under any provision of any agreement or other
instrument binding on such Trustee or any Beneficiary or (iii) conflict
with or result in a breach of the Trust Agreement.
ARTICLE 4
Representations and Warranties of Buyer
Buyer represents and warrants to the Beneficiaries and the Trustees:
Section 4.1. Corporate Authorization. The execution, delivery
and performance by Buyer of this Agreement and the consummation by Buyer of
the transactions contemplated hereby are within the corporate powers of Buyer
and have been duly authorized by all necessary corporate action. This
Agreement constitutes a valid and binding agreement of Buyer.
ARTICLE 5
Miscellaneous
Section 5.1. Further Assurances. Buyer, the Shareholder
Parties and the Trustees will execute and deliver, or cause to be executed and
delivered, all further documents and instruments and use their reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, to consummate and make effective the transactions contemplated by
this Agreement.
Section 5.2. Amendments; Termination. Any provision of this
Agreement may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed, in the case of an amendment, by each
party to this Agreement or in the case of a waiver, by the party against
whom the waiver is to be effective. This Agreement shall terminate upon
the termination of the Merger Agreement in accordance with its terms.
Section 5.3. Expenses. Any cost and expense incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense.
Section 5.4. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto, except that
Buyer may transfer or assign its rights and obligations to any Affiliate of
Buyer.
Section 5.5. Governing Law. This Agreement shall be construed
in accordance with and governed by the laws of the State of Delaware.
Section 5.6. Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.
Section 5.7. Severability. If any term, provision or covenant
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions and covenants of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 5.8. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this
Agreement is not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof in
addition to any other remedy to which they are entitled at law or in equity.
Section 5.9. Voting Trust Agreement. If any term,
provision or covenant of this Agreement is inconsistent with any provision
of the Trust Agreement, the terms of the Trust Agreement shall prevail.
Section 5.10. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy
or similar writing) and shall be given,
if to any of the Shareholder Parties or the Trustees, to such
Person at the address indicated on the signature pages hereof, in each
case,
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
New York, NY 10019-7475
Attention: Robert A. Kindler
if to the Buyer, to:
Federal Express Corporation
1980 Nonconnah Boulevard
Memphis, TN 38132
Fax: (901) 395-5034
Attention: Kenneth R. Masterson
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
825 Eighth Avenue
New York, NY 10017
Attention: Dennis S. Hersch
or to such other address or telecopy number such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice,
request or other communication shall be effective (a) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified in this
Section and the appropriate telecopy confirmation is received, (b) if by
overnight delivery service with proof of delivery, the next business day or
(c) if given by any other means, when delivered at the address specified in
this Section.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
FEDERAL EXPRESS CORPORATION
By: /s/ Kenneth R. Masterson
-------------------------------------
Name: Kenneth R. Masterson
Title: Executive Vice President,
General Counsel and Secretary
G. JAMES ROUSH, as Shareholder and Trustee
By: /s/ G. James Roush
-------------------------------------
Name: G. James Roush
Address: c/o John E. Lynch, Jr.
Caliber System, Inc.
3925 Embassy Boulevard
Akron, OH 44333
RICHARD A. CHENOWETH, as Trustee
By: /s/ Richard A. Chenoweth
-------------------------------------
Name: Richard A. Chenoweth
Address: c/o John E. Lynch, Jr.
Caliber System, Inc.
3925 Embassy Boulevard
Akron, OH 44333
SARAH ROUSH WERNER
By: /s/ Sarah Roush Warner
-------------------------------------
Name: Sarah Roush Warner
Address: c/o John E. Lynch, Jr.
Caliber System, Inc
3925 Embassy Boulevard
Akron, OH 44333
Annex A
Free Shares
Shareholder No. of Shares Owned
- ----------- -------------------
G. James Roush 34,237
Sarah Roush Werner 697,466
Annex B
Trust Shares
Beneficiary No. of Shares Owned
- ----------- -------------------
G. James Roush 2,000,000
Sarah Roush Werner 2,601,239
Exhibit 2
AGREEMENT AND PLAN OF MERGER
dated as of
October 5, 1997
among
FEDERAL EXPRESS CORPORATION,
CALIBER SYSTEM, INC.,
FAST HOLDING INC.,
FAST MERGER SUB INC.,
AND
TIRES MERGER SUB INC.
TABLE OF CONTENTS
Page
----
ARTICLE 1
The Mergers
Section 1.1. Tires Sub Merger........................................1
Section 1.2. Buyer Sub Merger........................................2
Section 1.3. Surrender and Payment...................................3
Section 1.4. Cancellation of Parent Stock............................6
Section 1.5. The Merger Date.........................................6
Section 1.6. Dissenting Shares.......................................6
Section 1.7. Stock Options of the Company............................7
Section 1.8. Adjustments.............................................8
Section 1.9. Fractional Shares.......................................8
ARTICLE 2
The Surviving Corporations
Section 2.1. Articles and Certificate of Incorporation; Bylaws.......9
Section 2.2. Directors and Officers.................................10
ARTICLE 3
Representations and Warranties of the Company
Section 3.1. Corporate Existence and Power..........................10
Section 3.2. Corporate Authorization................................11
Section 3.3. Governmental Authorization.............................11
Section 3.4. Non-Contravention......................................12
Section 3.5. Capitalization.........................................12
Section 3.6. Material Subsidiaries..................................13
Section 3.7. SEC Filings ...........................................14
Section 3.8. Financial Statements...................................14
Section 3.9. Disclosure Documents...................................14
Section 3.10. Information Supplied...................................15
Section 3.11. Absence of Certain Changes.............................16
Section 3.12. No Undisclosed Material Liabilities....................17
Section 3.13. Litigation; Investigations.............................18
Section 3.14. Taxes..................................................18
Section 3.15. ERISA and Labor Matters................................20
Section 3.16. Compliance with Laws...................................23
Section 3.17. Intellectual Property Rights...........................23
Section 3.18. Environmental Matters..................................24
Section 3.19. Pooling; Tax Treatment.................................25
Section 3.20. Opinion of Financial Advisor...........................26
Section 3.21. Antitakeover Statutes..................................26
Section 3.22. Rights Agreement.......................................26
Section 3.23. Finders' Fees..........................................26
ARTICLE 4
Representations and Warranties of Buyer
Section 4.01. Corporate Existence and Power..........................27
Section 4.02. Corporate Authorization................................27
Section 4.03. Governmental Authorization.............................28
Section 4.04. Non-Contravention......................................28
Section 4.05. Capitalization.........................................28
Section 4.06. SEC Filings............................................29
Section 4.07. Financial Statements...................................29
Section 4.08. Disclosure Documents...................................30
Section 4.09. Information Supplied...................................30
Section 4.10. Absence of Certain Changes.............................31
Section 4.11. No Undisclosed Material Liabilities....................31
Section 4.12. Litigation; Investigations.............................32
Section 4.13. Compliance with Laws...................................32
Section 4.14. Pooling; Tax Treatment.................................32
Section 4.15. Finders' Fees..........................................32
ARTICLE 5
Covenants of the Company
Section 5.01. Conduct of the Company.................................33
Section 5.02. Shareholder Meeting; Proxy Material....................36
Section 5.03. Other Offers...........................................36
ARTICLE 6
Covenants of Buyer
Section 6.01. Conduct of Buyer.......................................38
Section 6.02. Shareholder Meeting; Proxy Material....................38
ARTICLE 7
Covenants of Buyer, the Company and Parent
Section 7.01. Reasonable Best Efforts................................38
Section 7.02. Cooperation............................................39
Section 7.03. Public Announcements...................................39
Section 7.04. Access to Information..................................39
Section 7.05. Further Assurances.....................................40
Section 7.06. Notices of Certain Events..............................40
Section 7.07. Tax-free Reorganization; Pooling.......................40
Section 7.08. Affiliates.............................................41
Section 7.09. Director and Officer Liability.........................41
Section 7.10. Registration Statement; Form S-8.......................43
Section 7.11. Governmental Authorization.............................43
Section 7.12. Listing of Stock.......................................43
Section 7.13. Certain Corporate Matters with Respect to Parent.......43
Section 7.14. Employment.............................................44
Section 7.15. Certain Additional Benefits Matters....................44
ARTICLE 8
Conditions to the Mergers
Section 8.01. Conditions to the Obligations of Each Party............44
Section 8.02. Conditions to the Obligations of Buyer.................45
Section 8.03. Conditions to the Obligations of the Company...........46
ARTICLE 9
Termination
Section 9.01. Termination............................................47
Section 9.02. Effect of Termination..................................48
ARTICLE 10
Miscellaneous
Section 10.01. Notices...............................................48
Section 10.02. Entire Agreement; Non-Survival of
Representations and Warranties......................50
Section 10.03. Amendments; No Waivers................................50
Section 10.04. Expenses..............................................51
Section 10.05. Successors and Assigns................................51
Section 10.06. Governing Law.........................................52
Section 10.07. Jurisdiction..........................................52
Section 10.08. Counterparts; Effectiveness...........................52
Exhibit A Forms of Affiliate's Pooling Letters
TABLE OF DEFINITIONS
Term Section
- ----- -------
1933 Act 3.03(d)
1934 Act 3.03(c)
368 Reorganization 3.19(b)
Acquisition Proposal 5.03
Adjusted Option 1.07(a)(i)
Benefit Arrangements 3.15(d)
Buyer preamble
Buyer 10-K 4.06
Buyer Balance Sheet 4.07
Buyer Balance Sheet Date 4.07
Buyer Disclosure Documents 4.08(a)
Buyer Disclosure Schedule Article 4
Buyer Merger Consideration 1.02(b)
Buyer Merger Sub preamble
Buyer Merger Sub Common Stock 1.02(b)
Buyer Party 4.02
Buyer Preferred Stock 4.05(a)
Buyer Proxy Statement 4.08(b)
Buyer SEC Documents 4.06
Buyer Shareholder Meeting 6.02(a)
Buyer Stock 1.02(b)
Buyer Sub Merger 1.02(a)
Buyer Surviving Corporation 1.02(a)
Buyer Surviving Corporation Common Stock 1.02(b)
Claim 7.09(a)
Code 1.07(b)
Company preamble
Company 10-K 3.06(a)
Company 10-Qs 3.06(a)
Company Balance Sheet 3.08
Company Balance Sheet Date 3.08
Company Benefit Arrangements 3.15(d)
Company Certificate of Merger 1.05(a)
Company Disclosure Documents 3.09(a)
Company Disclosure Schedule Article 3
Company Merger Consideration 1.01(b)
Company Merger Sub preamble
Company Merger Sub Common Stock 1.01(b)
Company Proxy Statement 3.09(a)
Company Returns 3.14(a)(i)
Company SEC Documents 3.07
Company Securities 3.05
Company Shareholder Meeting 5.02(a)
Company Software 3.17(b)
Company Sub Merger 1.01(a)
Company Subsidiary Securities 3.06(b)
Company Surviving Corporation 1.01(a)
Company Surviving Corporation Common Stock 1.01(b)
Company Stock 1.01(b)
Company Stock Options 1.07(a)(i)
Company Stock Plans 1.07(a)(i)
D&O Insurance 7.09(c)
Delaware Law 1.05
Employee Benefit Plan 3.15(a)
Employee Plan 3.15(a)
Employee Plans 3.15(a)
Environmental Laws 3.18(e)(i)
Environmental Permits 3.18(e)(ii)
ERISA 3.15(a)
ERISA Affiliate 3.15(a)
Excess Shares 1.09
Exchange Agent 1.03(a)
Form S-4 4.08
GAAP 3.08
HSR Act 3.03(b)
Indemnified Party 7.09(a)
Lien 3.04(d)
Material Adverse Effect 3.01
Material Subsidiary 3.06(a)
Merger Consideration 1.02(b)
Merger Date 1.05(c)
Mergers 1.04
Multiemployer Plan 3.15(b)
Names 3.17
NYSE 1.09
Ohio Law 1.01(b)
Parent preamble
Parent Common Stock 1.01(b)
Pension Plans 3.15(a)
Person 1.03(c)
Pre-Merger Matters 7.09(a)
Providing Party 7.04
Receiving Party 7.04
Regulation S-X 3.11(i)
Retirement Plans 3.15(b)
Rights Agreement 3.22(a)
SEC 3.07
Subsequent Buyer SEC Documents 4.06
Subsequent Company SEC Documents 3.07
Subsidiary 1.01(b)
Superior Proposal 5.03
Tax Return 3.14(b)
Taxes 3.14(b)
Taxing Authorities 3.14(b)
Valuation Report 3.15(a)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of October 5, 1997 among
Federal Express Corporation, a Delaware corporation ("Buyer"), Caliber System,
Inc., an Ohio corporation ( the "Company"), Fast Holding Inc., a Delaware
corporation and a wholly-owned subsidiary of Buyer ("Parent"), Fast Merger Sub
Inc., a Delaware corporation and a wholly-owned subsidiary of Parent ("Buyer
Merger Sub"), and Tires Merger Sub Inc., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Tires Merger Sub").
The parties hereto agree as follows:
ARTICLE 1
The Mergers
Section 1.1. Tires Sub Merger. (a) Upon the terms and subject
to the conditions set forth herein, on the Merger Date, Tires Merger Sub shall
merge into the Company (the "Tires Sub Merger") and the separate existence of
Tires Merger Sub shall cease. The Company shall be the surviving corporation
in the Tires Sub Merger (hereinafter sometimes referred to as the "Tires
Surviving Corporation") and its separate corporate existence, with all its
purposes, objects, rights, privileges, powers and franchises, shall continue
unaffected and unimpaired by the Tires Sub Merger.
(b) Pursuant to the Tires Sub Merger:
(i) Each share of common stock without par value of the
Company (the "Company Stock") held by the Company as treasury stock
immediately prior to the Merger Date shall be canceled and no payment shall be
made with respect thereto;
(ii) Each share of Company Stock outstanding immediately
prior to the Merger Date shall, except as otherwise provided in Section
1.1(b)(i) or as provided in Section 1.6 with respect to shares of Company
Stock as to which dissenters' rights have been exercised (which shares shall
be treated in accordance with Section 1701.85 of the General Corporation Law
of Ohio (the "Ohio Law")), be converted into the right to receive 0.8 shares
(the "Tires Merger Consideration") of common stock, par value $0.10 per share,
of Parent ("Parent Common Stock"); and
(iii) At the Merger Date, each share of common stock, par
value $0.01 per share, of Tires Merger Sub ("Tires Merger Sub Common Stock")
outstanding immediately prior to the Merger Date shall be converted into an
equal number of shares of common stock, par value $0.01 per share, of the
Tires Surviving Corporation ("Tires Surviving Corporation Common Stock").
From and after the Merger Date, all shares of Company Stock
converted in accordance with Section 1.1(b)(ii) shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each holder of such shares shall cease to have any rights with respect
thereto, except the right to receive the Tires Merger Consideration, the right
to exercise dissenters' rights in accordance with and subject to the
provisions of the Ohio Law and the other rights specified in this Agreement.
From and after the Merger Date, all certificates representing Tires Merger Sub
Common Stock shall be deemed for all purposes to represent the number of
shares of Tires Surviving Corporation Common Stock into which they were
converted in accordance with Section 1.1(b)(iii). For the purposes of this
Agreement, "Subsidiary", when used with respect to any Person means any other
Person, whether incorporated or unincorporated, of which securities or other
ownership interests having ordinary power to elect a majority of the board of
directors or other persons performing similar functions are directly or
indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries. For purposes of this Agreement, "Person" means an individual,
a corporation, a limited liability company, a partnership, an association, a
trust or any other entity or organization, including, without limitation, a
government or political subdivision or any agency or instrumentality thereof.
Section 1.2. Buyer Sub Merger. (a) Upon the terms and subject
to the conditions set forth herein, on the Merger Date, Buyer Merger Sub shall
merge into Buyer (the "Buyer Sub Merger") and the separate existence of Buyer
Merger Sub shall cease. Buyer shall be the surviving corporation in the Buyer
Sub Merger (hereinafter sometimes referred to as the "Buyer Surviving
Corporation") and its separate corporate existence, with all its purposes,
objects, rights, privileges, powers and franchises, shall continue unaffected
and unimpaired by the Buyer Sub Merger.
(b) Pursuant to the Buyer Sub Merger:
(i) Each share of common stock, par value $0.10 per share,
of Buyer (the "Buyer Stock") held by Buyer as treasury stock immediately prior
to the Merger Date shall be canceled and no payment shall be made with respect
thereto;
(ii) Each share of Buyer Stock outstanding immediately prior
to the Merger Date shall, except as otherwise provided in Section 1.2(b)(i),
be converted into the right to receive one share of Parent Common Stock (the
"Buyer Merger Consideration" and, together with the Tires Merger
Consideration, the "Merger Consideration"); and
(iii) At the Merger Date, each share of common stock, par
value $0.01 per share, of Buyer Merger Sub ("Buyer Merger Sub Common Stock"),
outstanding immediately prior to the Merger Date shall be converted into an
equal number of shares of common stock, par value $0.01 per share, of the
Buyer Surviving Corporation ("Buyer Surviving Corporation Common Stock").
From and after the Merger Date, all shares of Buyer Stock converted in
accordance with Section 1.2(b)(ii) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of such shares shall cease to have any rights with respect thereto,
except the right to receive the Buyer Merger Consideration and the other
rights specified in this Agreement. From and after the Merger Date, all
certificates representing Buyer Sub Common Stock shall be deemed for all
purposes to represent the number of shares of the Buyer Surviving
Corporation Common Stock into which they were converted in accordance with
Section 1.2(b)(iii).
Section 1.3. Surrender and Payment. (a) Prior to the Merger
Date, Buyer shall cause Parent to appoint an agent reasonably satisfactory
to the Company (the "Exchange Agent") for the purpose of exchanging
certificates representing shares of Company Stock for the Tires Merger
Consideration. Parent will make available to the Exchange Agent, as
needed, certificates representing the Parent Common Stock in respect of the
Tires Merger Consideration to be paid in respect of shares of Company
Stock, in accordance with the terms of Section 1.1(b). Promptly after the
Merger Date, Parent shall send, or shall cause the Exchange Agent to send,
to each holder of shares of Company Stock at the Merger Date a letter of
transmittal for use in such exchange (which shall specify that delivery of
the Tires Merger Consideration shall be effected, and risk of loss and
title shall pass, only upon proper delivery of the certificates
representing shares of Company Stock, to the Exchange Agent). Upon the
conversion of Buyer Stock into Parent Common Stock in accordance with
Section 1.2(b), all shares of Buyer Stock so converted shall be canceled
and cease to exist, and each certificate theretofore representing any such
shares shall, without any action on the part of the holder thereof, be
deemed to represent an equivalent number of shares of Parent Common Stock.
(b) Each holder of shares of Company Stock that have been
converted into a right to receive the Tires Merger Consideration, upon
surrender to the Exchange Agent of a certificate or certificates
representing such shares of Company Stock, together with a properly
completed letter of transmittal covering such shares of Company Stock, will
be entitled to receive the Tires Merger Consideration payable in respect of
such shares of Company Stock, cash in lieu of any fractional shares and
certain dividends or other distributions in accordance with Section 1.3(g).
Until so surrendered, each such certificate shall, after the Merger Date,
represent for all purposes only the right to receive the Tires Merger
Consideration, cash in lieu of any fractional shares and certain dividends
or other distributions in accordance with Section 1.3(g).
(c) If any portion of the Tires Merger Consideration is to be paid
to a Person other than the registered holder of the shares of Company Stock
represented by the certificate or certificates surrendered in exchange
therefor, it shall be a condition to such payment that the certificate or
certificates so surrendered shall be properly endorsed or otherwise be in
proper form for transfer and that the Person requesting such payment shall pay
to the Exchange Agent any transfer or other taxes required as a result of such
payment to a Person other than the registered holder of such shares of Company
Stock or establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
(d) After the Merger Date, there shall be no further registration
of transfers of shares of Company Stock. If, after the Merger Date,
certificates representing shares of Company Stock or Buyer Stock are presented
to the respective surviving corporations in the Mergers, they shall be
canceled and exchanged for the consideration provided for, and in accordance
with the procedures set forth, in this Article 1.
(e) Any portion of the Tires Merger Consideration made
available to the Exchange Agent pursuant to Section 1.3(a) that remains
unclaimed by the holders of shares of Company Stock twelve months after the
Merger Date shall be returned to Parent, upon demand, and any such holder
who has not exchanged his shares of Company Stock for the Tires Merger
Consideration in accordance with this Section 1.3 prior to that time shall
thereafter look only to Parent for his claim for Tires Merger
Consideration, any cash in lieu of any fractional shares and certain
dividends or other distributions in accordance with Section 1.3(g).
Notwithstanding the foregoing, Parent shall not be liable to any holder of
shares of Company Stock for any amount paid to a public official pursuant
to applicable abandoned property laws. Any amounts remaining unclaimed by
holders of shares of Company Stock two years after the Merger Date (or such
earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any governmental entity) shall, to the
extent permitted by applicable law, become the property of Parent free and
clear of any claim or interest of any Person previously entitled thereto.
(f) Any portion of the Tires Merger Consideration made
available to the Exchange Agent pursuant to Section 1.3(a) to pay for
shares of Company Stock in respect of which dissenters rights have been
perfected shall be returned to Parent, upon demand.
(g) No dividends or other distributions with respect to the
Parent Common Stock constituting all or a portion of the Tires Merger
Consideration shall be paid to the holder of any unsurrendered certificate
representing Company Stock until such certificates are surrendered as
provided in this Section 1.3. Subject to the effect of applicable laws,
following such surrender, there shall be paid, without interest, to the
record holder of the certificates representing the Parent Common Stock (i)
at the time of such surrender, the amount of dividends or other
distributions with a record date after the Merger Date payable prior to or
on the date of such surrender with respect to such whole shares of Parent
Common Stock, and not paid, and the amount of cash payable in lieu of any
fractional shares, less the amount of any withholding taxes which may be
required thereon under any provision of federal, state, local or foreign
tax law, and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Merger Date but prior
to the date of surrender and a payment date subsequent to the date of
surrender payable with respect to such whole shares of Parent Common Stock,
less the amount of any withholding taxes which may be required thereon
under any provision of federal, state, local or foreign tax law. Parent
shall make available to the Exchange Agent cash for these purposes.
(h) If any certificate representing Company Stock shall have
been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such certificate to be lost, stolen or
destroyed and, if required by Parent, the posting by such Person of a bond
in such reasonable amount as Parent may direct as indemnity against any
claim that may be made against it with respect to such certificate, the
Exchange Agent shall issue in exchange for such lost, stolen or destroyed
certificate the Tires Merger Consideration and, if applicable, any unpaid
dividends and distributions on shares of Parent Common Stock deliverable in
respect thereof and any cash in lieu of fractional shares, in each case
pursuant to this Agreement.
Section 1.4. Cancellation of Parent Stock. All outstanding
shares of the capital stock of Parent immediately prior to the Merger Date
shall be canceled immediately upon consummation of the Buyer Sub Merger. The
Tires Sub Merger and the Buyer Sub Merger are sometimes together referred to
as the "Mergers".
Section 1.5. The Merger Date. As soon as practicable (but in
no event more than two business days) after the satisfaction or, to the extent
permitted hereunder or under applicable law, waiver of all conditions to each
of the Mergers, (a) the Company shall file the certificate of merger required
to effect the Tires Sub Merger (the "Company Certificate of Merger") with the
Ohio Secretary of State and make all other filings or recordings required by
the Ohio Law in connection with the Tires Sub Merger, (b) Buyer shall file a
copy of this Agreement with the Delaware Secretary of State and make all other
filings or recordings required by the Delaware Law in connection with the
Buyer Sub Merger, and (c) the Mergers shall become effective, it being
understood that the Buyer Sub Merger shall become effective immediately prior
to the Tires Sub Merger in accordance with the terms of such Company
Certificate of Merger and this Agreement (such time and date are referred to
as the "Merger Date"). Notwithstanding the first sentence of this Section
1.5, the Merger Date shall occur no earlier than ten days after the date on
which the shareholders of the Company shall have approved the Tires Sub Merger
and, in any event, no earlier than January 2, 1998.
Section 1.6. Dissenting Shares. Notwithstanding Section
1.1 or Section 1.2, as applicable, shares of Company Stock outstanding
immediately prior to the Merger Date and held by a holder who has not voted
in favor of the Tires Sub Merger and who has exercised dissenters' rights
in respect of such shares of Company Stock in accordance with the Ohio Law
shall not be converted into a right to receive the Tires Merger
Consideration unless such holder fails to perfect or withdraws or otherwise
loses his dissenters' or objecting shareholders' rights. Shares of Company
Stock in respect of which dissenters rights have been exercised shall be
treated in accordance with Section 1701.85 of the Ohio Law. If after the
Merger Date such holder fails to perfect or withdraws or otherwise loses
his right to demand the payment of fair value for shares of Company Stock
under Ohio Law, such shares of Company Stock shall be treated as if they
had been converted as of the Merger Date into a right to receive the Tires
Merger Consideration, cash in lieu of any fractional shares and certain
dividends or other distributions in accordance with Section 1.3(g). The
Company shall give Buyer prompt notice of any demands received by the
Company for the exercise of dissenters rights with respect to shares of
Company Stock and Buyer shall have the right to participate in all
negotiations and proceedings with respect to such demands. The Company
shall not, except with the prior written consent of Buyer, make any payment
with respect to, or settle or offer to settle, any such demands. In the
event any amounts shall become due and payable in respect of any such
demands, such amounts shall be paid by the Company.
Section 1.7. Stock Options of the Company. (a) As soon as
practicable following the date of this Agreement, the Directors of the Company
(or, if appropriate, any committee administering the Company Stock Plans, as
defined below) shall adopt such resolutions or take such other actions as may
be required to effect the following:
(i) adjust the terms of all outstanding options to purchase
shares of Company Stock (the "Company Stock Options") granted under any plan
or arrangement providing for the grant of options to purchase shares of
Company Stock to current or former officers, directors, employees or
consultants of the Company (the "Company Stock Plans"), whether vested or
unvested, as necessary to provide that, at the Merger Date, each Company Stock
Option outstanding immediately prior to the Merger Date shall be amended and
converted into an option to acquire, on the same terms and conditions as were
applicable under the Company Stock Option, the number of shares of Parent
Common Stock (rounded down to the nearest whole share) determined by
multiplying the number of shares of Company Stock subject to such Company
Stock Option by 0.8, at a price per share of Parent Common Stock equal to (A)
the aggregate exercise price for the shares of Company Stock otherwise
purchasable pursuant to such Company Stock Option divided by (B) the aggregate
number of shares of Parent Common Stock deemed purchasable pursuant to such
Company Stock Option (each, as so adjusted, an "Adjusted Option"); provided
that such exercise price shall be rounded up to the nearest whole cent; and
(ii) make such other changes to the Company Stock Plans as
Parent and the Company may agree are appropriate to give effect to the Merger.
(b) The adjustments provided herein with respect to any Company
Stock Options that are "incentive stock options" as defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code") shall be and are
intended to be effected in a manner which is consistent with Section 424(a) of
the Code.
(c) Prior to the Merger Date, Parent shall adopt an option plan
which shall provide for the issuance of the Adjusted Options at the Merger
Date and by virtue of the Merger and without the need of any further corporate
action, Parent shall assume all obligations of the Company under the Company
Stock Plans, including with respect to the Company Stock Options outstanding
at the Merger Date.
(d) No later than the Merger Date, Parent shall prepare and
file with the SEC a registration statement on Form S-8 (or another
appropriate form) registering a number of shares of Parent Common Stock
equal to the number of shares subject to the Adjusted Options. Such
registration statement shall be kept effective (and the current status of
the initial offering prospectus or prospectuses required thereby shall be
maintained) at least for so long as any Adjusted Options may remain
outstanding.
(e) As soon as practicable after the Merger Date, Parent
shall deliver to the holders of Company Stock Options appropriate notices
setting forth such holders' rights pursuant to the respective Company Stock
Plans and the agreements evidencing the grants of such Company Stock
Options and that such Company Stock Options and agreements shall be assumed
by Parent and shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 1.7 after giving
effect to the Merger).
(f) A holder of an Adjusted Option may exercise
such Adjusted Option in whole or in part in accordance with its terms by
delivering a properly executed notice of exercise to Parent, together with
the consideration therefor and any required United States Federal
withholding tax information and payment.
(g) Except as otherwise contemplated by this Section 1.7 and
except to the extent required under the respective terms of the Company
Stock Options or other applicable agreements, all restrictions or
limitations on transfer and vesting with respect to Company Stock Options
awarded under the Company Stock Plans or any other plan, program or
arrangement of the Company, to the extent that such restrictions or
limitations shall not have already lapsed, shall remain in full force and
effect with respect to such options after giving effect to the Merger and
the assumption by Parent as set forth above.
Section 1.8. Adjustments. If at any time during the period
between the date of this Agreement and the Merger Date, any change in the
outstanding shares of Buyer Stock or Company Stock shall occur, including
by reason of any reclassification, recapitalization, stock split or
combination, exchange or readjustment of shares, or any stock dividend
thereon with a record date during such period, the Merger Consideration
shall be appropriately adjusted.
Section 1.9. Fractional Shares. No fractional shares of Parent
Common Stock shall be issued in the Tires Sub Merger, but in lieu thereof each
holder of Company Stock otherwise entitled to a fractional share of Parent
Common Stock will be entitled to receive, from the Exchange Agent in
accordance with the provisions of this Section 1.9, a cash payment in lieu of
such fractional shares of Parent Common Stock representing such holder's
proportionate interest, if any, in the net proceeds from the sale by the
Exchange Agent in one or more transactions (which sale transactions shall be
made at such times, in such manner and on such terms as the Exchange Agent
shall determine in its reasonable discretion) on behalf of all such holders of
the aggregate of the fractional shares of Parent Common Stock which would
otherwise have been issued (the "Excess Shares"). The sale of the Excess
Shares by the Exchange Agent shall be executed on the New York Stock Exchange,
Inc. (the "NYSE") through one or more member firms of the NYSE and shall be
executed in round lots to the extent practicable. Until the net proceeds of
such sale or sales have been distributed to the holders of shares of Company
Stock, the Exchange Agent will hold such proceeds in trust for the holders of
Company Stock. Parent shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including, without limitation, the expenses
and compensation of the Exchange Agent, incurred in connection with such sale
of the Excess Shares. As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Company Stock in lieu of any
fractional shares of Parent Common Stock the Exchange Agent shall make
available such amounts to such holders of shares of Company Stock without
interest.
ARTICLE 2
The Surviving Corporations
Section 2.1. Articles and Certificate of Incorporation;
Bylaws. (a) The articles of incorporation and bylaws of the Company in effect
at the Merger Date shall be the articles of incorporation and bylaws,
respectively, of the Tires Surviving Corporation until amended in accordance
with applicable law. The Tires Surviving Corporation shall succeed to all of
the rights, privileges, powers and franchises, of a public as well as of a
private nature, of the Company and Tires Merger Sub, all of the properties and
assets and all of the debts of the Company and Tires Merger Sub, choses in
action and other interests due or belonging to the Company and Tires Merger
Sub and shall be subject to, and responsible for, all of the debts,
liabilities and duties of the Company and Tires Merger Sub with the effect set
forth in the Ohio Law.
(b) The certificate of incorporation and bylaws of Buyer in effect
at the Merger Date shall be the certificate of incorporation and bylaws,
respectively, of the Buyer Surviving Corporation until amended in
accordance with applicable law. The Buyer Surviving Corporation shall
succeed to all of the rights, privileges, powers and franchises, of a
public as well as of a private nature, of Buyer and Buyer Merger Sub, all
of the properties and assets of and all of the debts of Buyer and Buyer
Merger Sub, choses in action and other interests due or belonging to Buyer
and Buyer Merger Sub and shall be subject to, and responsible for, all of
the debts, liabilities and duties of Buyer and Buyer Merger Sub with the
effect set forth in the Delaware Law.
Section 2.2. Directors and Officers. From and after the
Merger Date, until successors are duly elected or appointed and qualified
in accordance with applicable law, and subject to Section 7.15 of the
Company Disclosure Schedule, (a) the directors of Buyer Merger Sub
immediately prior to the Merger Date shall be the directors of the Tires
Surviving Corporation, (b) the directors of Buyer immediately prior to the
Merger Date shall be the directors of the Buyer Surviving Corporation, (c)
the directors of Buyer immediately prior to the Merger Date shall be the
directors of Parent, (d) the officers of the Company immediately prior to
the Merger Date shall be the officers of the Tires Surviving Corporation
and (e) the officers of Buyer immediately prior to the Merger Date shall be
the officers of the Buyer Surviving Corporation.
ARTICLE 3
Representations and Warranties of the Company
Except as set forth in the disclosure schedule (each section of which
qualifies the correspondingly numbered representation and warranty only,
except where the information in any such section is disclosed in such a way
to make its relevance to any other representation or warranty readily
apparent, in which case, such section shall be deemed to also qualify such
other representation and warranty) of the Company attached hereto (the
"Company Disclosure Schedule") or as otherwise provided herein, the Company
represents and warrants to Buyer that:
Section 3.1. Corporate Existence and Power. The Company is
a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Ohio, and has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted and is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except (i)
where the failure to have such licenses, authorizations, permits, consents
or approvals and (ii) for those jurisdictions where the failure to be so
qualified or in good standing, is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on the Company. For
purposes of this Agreement, a "Material Adverse Effect" means, with respect
to any Person, a material adverse effect on the financial condition,
business, assets or results of operations of such Person and its
Subsidiaries taken as a whole or on the ability of such Person to perform
its obligations hereunder in all material respects. The Company has
heretofore delivered to Buyer true and complete copies of the Company's
articles of incorporation and bylaws as currently in effect.
Section 3.2. Corporate Authorization. (a) The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby are within the
Company's corporate powers and, except for the required approval of the
shareholders of the Company in connection with the consummation of the Tires
Sub Merger, have been duly authorized by all necessary corporate action. The
affirmative vote of a majority of the shares of the entire voting power is the
only vote of any class or series of the Company's capital stock necessary to
approve and adopt this Agreement and the transactions contemplated by this
Agreement. This Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms.
(b) The Directors of the Company, at a meeting duly called and
held, have (i) determined that this Agreement and the transactions
contemplated hereby (including the Tires Sub Merger) are fair to and in the
best interests of the shareholders of the Company, (ii) approved and
adopted this Agreement and the transactions contemplated hereby (including
the Tires Sub Merger), and (iii) resolved to recommend approval and
adoption of this Agreement by the shareholders of the Company, subject to
the terms hereof.
Section 3.3. Governmental Authorization. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated by this Agreement require no
action, by or in respect of, or filing with, any governmental body, agency,
official or authority other than (a) the filing of the Company Certificate of
Merger in accordance with the Ohio Law; (b) compliance with any applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"); (c) compliance with any applicable requirements of
the Securities and Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "1934 Act"); (d) compliance with any
applicable requirements of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "1933 Act"); (e) compliance
with any applicable foreign or state securities or Blue Sky laws; (f)
compliance with any applicable pre-merger notification or similar statutes and
rules of the European Community (or certain of its member states), Canada and
Mexico; (g) any applicable requirements of the Department of Transportation;
(h) filings and notices not required to be made or given until after the
Merger Date and (i) immaterial actions or filings relating to ordinary
operational matters.
Section 3.4. Non-Contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated by this Agreement do not and will not
(a) contravene or conflict with the articles of incorporation or bylaws of the
Company, (b) assuming compliance with the matters referred to in Section 3.3,
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company or any Subsidiary of the Company, (c) constitute a
default (or an event which with notice, the lapse of time or both would become
a default) under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Company or any Subsidiary of
the Company or to a loss of any benefit to which the Company or any Subsidiary
of the Company is entitled under any provision of any agreement, contract or
other instrument binding upon the Company or any Subsidiary of the Company or
any license, franchise, permit or other similar authorization held by the
Company or any Subsidiary of the Company, or (d) result in the creation or
imposition of any Lien on any asset of the Company or any Subsidiary of the
Company, other than, in the case of the events specified in clauses (b), (c)
and (d), any such event which, individually or in the aggregate, has not had,
and is not reasonably likely to have, a Material Adverse Effect on the
Company. For purposes of this Agreement, "Lien" means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset.
Section 3.5. Capitalization. As of September 15, 1997, the
authorized capital stock of the Company consists of 200,000,000 shares of
Company Stock and 40,000,000 shares of serial preferred stock. As of
September 13, 1997, there were (i) 39,206,414 shares of Company Stock
outstanding and (ii) no shares of serial preferred stock outstanding. As
of September 18, 1997, there were employee and director stock options to
purchase an aggregate of 663,681 shares of Company Stock outstanding (none
of which options were exercisable, other than options in respect of 22,460
shares of Company Stock). All outstanding shares of capital stock of
Company have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in this Section 3.5, and for changes
since September 15, 1997 resulting from the exercise of stock options
outstanding on such date, there are outstanding (a) no shares of capital
stock or other voting securities of the Company, (b) no securities of the
Company convertible into or exchangeable for shares of capital stock or
voting securities of the Company, and (c) no options or other rights to
acquire from the Company, and no obligation of the Company to issue, any
capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company (the
items in clauses (a), (b) and (c) being referred to collectively as the
"Company Securities"). There are no outstanding obligations of the Company
or any Subsidiary of the Company to repurchase, redeem or otherwise acquire
any Company Securities.
Section 3.6. Material Subsidiaries. (a) Each Material
Subsidiary of the Company is duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, has all
corporate powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except (i)
where the failure to have such licenses, authorizations, consents or approvals
and (ii) for those jurisdictions where failure to be so qualified or licensed
is not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on the Company. All Material Subsidiaries and their respective
jurisdictions of incorporation are identified in the Company's annual report
on Form 10-K for the fiscal year ended December 31, 1996 (the "Company 10-K").
For the purposes of this Agreement, "Material Subsidiary" means those
Subsidiaries of the Company required to be identified as significant
subsidiaries of the Company in the Company 10-K pursuant to Regulation S-X
1.02(w).
(b) All of the outstanding capital stock of, or other ownership
interests in, each Material Subsidiary of the Company, is owned by the
Company, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including, without limitation, any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). There are no outstanding (i) securities
of the Company or any Subsidiary of the Company convertible into or
exchangeable for shares of capital stock or other voting securities or
ownership interests in any Subsidiary of the Company, and (ii) options or
other rights to acquire from the Company or any Subsidiary of the Company, and
no other obligation of the Company or any Subsidiary of the Company to issue,
any capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for, any capital stock, voting
securities or ownership interests in, any Subsidiary of the Company (the items
in clauses (i) and (ii) being referred to collectively as the "Company
Subsidiary Securities"). There are no outstanding obligations of the Company
or any Subsidiary of the Company to repurchase, redeem or otherwise acquire
any outstanding Company Subsidiary Securities.
Section 3.7. SEC Filings. The Company has delivered to
Buyer (i) the Company's annual reports on Form 10-K for its fiscal years
ended December 31, 1996, 1995 and 1994, (ii) its quarterly reports on Form
10-Q for its fiscal quarters ended after December 31, 1996 (the "Company
10-Qs"), (iii) its proxy or information statements relating to meetings of,
or actions taken without a meeting by, the shareholders of the Company held
since December 31, 1996, and (iv) all of its other reports, statements,
schedules and registration statements filed with the Securities and
Exchange Commission (the "SEC") since January 1, 1996 and through the date
of this Agreement. The Company has filed all required reports, schedules,
forms, statements and other documents with the SEC since January 1, 1995
(collectively, the "Company SEC Documents"). As of their respective dates,
or if amended, as of the date of the last such amendment, the Company SEC
Documents complied, and all documents required to be filed by the Company
with the SEC after the date hereof and prior to the Merger Date (the
"Subsequent Company SEC Documents") will comply, in all material respects
with the requirements of the 1933 Act or the 1934 Act, as the case may be,
and the applicable rules and regulations promulgated thereunder, and none
of the Company SEC Documents contained, and the Subsequent Company SEC
Documents will not contain, any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
Section 3.8. Financial Statements. The audited
consolidated financial statements and unaudited consolidated interim
financial statements of the Company included in its annual reports on Form
10-K and the quarterly reports on Form 10-Q referred to in Section 3.7
fairly present, in all material respects, in conformity with United States
generally accepted accounting principles ("GAAP") applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of the Company and its consolidated Subsidiaries as of
the dates thereof and their consolidated results of operations and cash
flows for the periods then ended (subject to normal year-ended adjustments
in the case of any unaudited interim financial statements). For purposes
of this Agreement, "Company Balance Sheet" means the consolidated balance
sheet of the Company as of December 31, 1996 set forth in the Company 10-K
and "Company Balance Sheet Date" means December 31, 1996.
Section 3.9. Disclosure Documents. (a) Each document required
to be filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "Company Disclosure Documents"),
including, without limitation, the proxy or information statement of the
Company (the "Company Proxy Statement"), if any, to be filed with the SEC in
connection with the adoption of this Agreement by the holders of Company
Stock, and any amendments or supplements thereto, will, when filed, comply as
to form in all material respects with the applicable requirements of the 1934
Act.
(b) At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to shareholders of the Company, and at the
time such shareholders vote on the adoption of this Agreement, the Company
Proxy Statement, as supplemented or amended, if applicable, will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of the
filing of any Company Disclosure Document other than the Company Proxy
Statement and at the time of any distribution thereof, such Company Disclosure
Document will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
The representations and warranties contained in this Section 3.9(b) will not
apply to statements included in or omissions from the Company Disclosure
Documents based upon information furnished to the Company in writing by Buyer
or Parent specifically for use therein.
Section 3.10. Information Supplied. The information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the Buyer Proxy Statement (as defined hereinafter) or any
amendment or supplement thereto will not, at the time the Buyer Proxy
Statement is first mailed to stockholders of Buyer and at the time such
stockholders vote on the issuance of Parent Common Stock in connection with
this Agreement, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading, (ii) the Form S-4 or any amendment or supplement thereto will
not, at the time the Form S-4 or any amendment or supplement thereto
becomes effective under the 1933 Act and on the Merger Date, contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (iii) any Buyer Disclosure Document (other than the
Buyer Proxy Statement, the Form S-4 and any amendments or supplements to
either) will not, at the time of effectiveness of such Buyer Disclosure
Document and at the time of any distribution thereof, contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
Section 3.11. Absence of Certain Changes. Since the Company
Balance Sheet Date and except as set forth in the Company SEC Documents, the
Company and its Subsidiaries have conducted their business in the ordinary
course consistent with past practice and there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which has had or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company
other than any of the foregoing (i) relating to the economy or securities
markets in general, (ii) relating to the Company's industry in general or
(iii) arising from the announcement or pendency of this Agreement or the
transactions contemplated hereby;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the Company
(other than payment of the Company's regular quarterly dividend on Company
Common Stock in an amount not exceeding $0.10 per share and having customary
record and payment dates), or any repurchase, redemption or other acquisition
by the Company or any Subsidiary of the Company of any amount of outstanding
shares of capital stock or other securities of, or other ownership interests
in, the Company or any of its Subsidiaries;
(c) (except for amendments to the Company's Rights Agreement
contemplated by Section 3.22) any amendment of any material term of any
outstanding security of the Company or any Subsidiary of the Company;
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of the Company of any indebtedness from any third party for
borrowed money other than in the ordinary course of business and in amounts
and on terms consistent with past practices;
(e) any creation or assumption by the Company or any Subsidiary of
the Company of any Lien on any material asset other than in the ordinary
course of business consistent with past practices;
(f) any making of any loan, advance or capital contribution to
or investment in any Person other than loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries of the Company
or to employees of the Company made in the ordinary course of business
consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any
Subsidiary of the Company which, individually or in the aggregate, has had or
is reasonably likely to have a Material Adverse Effect on the Company;
(h) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any Subsidiary of the Company
relating to its assets or business (including, without limitation, the
acquisition or disposition of any assets) (other than transactions and
commitments contemplated by this Agreement) inconsistent with the Company's
budget and/or spending plans disclosed to Buyer prior to the date of this
Agreement or any relinquishment by the Company or any Subsidiary of the
Company of any material contract, license or right;
(i) any change in any method of accounting or accounting principle
or practice by the Company or any Subsidiary of the Company, except for any
such change required by GAAP or Regulation S-X promulgated under the 1934 Act
("Regulation S-X");
(j) any (i) grant by the Company or any of its Subsidiaries of any
severance or termination pay to, or entry into any employment, termination or
severance arrangement with, any director, officer or employee of the Company
or any Subsidiary of the Company other than any such grant or arrangement to
or with any employee of any Subsidiary of the Company in the ordinary course
in an amount not exceeding an amount equal to the annual compensation plus
expenses relating to "COBRA" and out-placement benefits of such employee; (ii)
entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of the Company or any Subsidiary, (iii) increase in
benefits payable under any existing severance or termination pay policies or
employment agreements or (iv) increase in compensation, bonus or other
benefits payable to directors, officers or employees of the Company or any
Subsidiary, other than in the ordinary course of business.
Section 3.12. No Undisclosed Material Liabilities. There are
no liabilities, commitments or obligations (whether pursuant to contracts or
otherwise) of the Company or any Subsidiary of the Company of any kind
whatsoever which, individually or in the aggregate, have had or are reasonably
likely to have a Material Adverse Effect on the Company, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which is reasonably
likely to result in such a liability, commitment or obligation, including,
without limitation, any fines, disciplinary actions or other adverse actions
that may be taken or reported concerning the conduct of the Company or any of
its Subsidiaries, other than:
(a) liabilities, commitments or obligations disclosed or provided
for in the Company Balance Sheet (including the notes thereto) or in the
Company 10-K;
(b) liabilities, commitments or obligations incurred in the
ordinary course of business consistent with past practice since the Company
Balance Sheet Date; and
(c) liabilities, commitments or obligations under this Agreement.
Section 3.13. Litigation; Investigations. Except as set
forth in the Company SEC Documents, there is no action, claim, suit,
investigation, proceeding or examination pending against or affecting, or
to the knowledge of the Company, threatened or reasonably likely to be
brought against or affecting, the Company or any Subsidiary of the Company
or any of their respective properties before any court or arbitrator or any
governmental body, agency, authority or official which, individually or in
the aggregate, has had or is reasonably likely to have a Material Adverse
Effect on the Company. The foregoing representation and warranty does not
include or relate to any action, claim, suit, investigation, proceeding or
examination, pending or threatened, challenging or seeking to prevent,
enjoin, alter or delay the Mergers or any of the transactions contemplated
hereby.
Section 3.14. Taxes. (a) Except as set forth in the
Company Balance Sheet (including the notes thereto) or on Schedule 3.14,
(i) all tax returns, statements, reports and forms (collectively, the
"Company Returns") required to be filed with any taxing authority by, or
with respect to, the Company and its Subsidiaries have been filed in
accordance with all applicable laws; (ii) the Company and its Subsidiaries
have timely paid all taxes shown as due and payable on the Company Returns
that have been so filed, and, as of the time of filing, the Company Returns
and any other information required to be shown thereon were correct and
complete in all respects (other than taxes which are being contested in
good faith and which are adequately provided for, under GAAP, on the
Company Balance Sheet); (iii) the Company and its Subsidiaries have made
provision for all Taxes payable by the Company and its Subsidiaries for
which no Company Return has yet been filed; (iv) there is no action, suit,
proceeding, audit or claim now proposed or pending against or with respect
to the Company or any of its Subsidiaries in respect of any Tax where there
is a reasonable possibility of an adverse determination; (v) neither the
Company nor any of its Subsidiaries has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code; (vi) neither the Company nor any of its Subsidiaries has been a
member of an affiliated, consolidated, combined or unitary group other than
one of which the Company was the common parent; (vii) all Returns filed
with respect to tax years of the Company and its Subsidiaries through the
tax year ended December 31, 1989, have been examined and closed or are
returns with respect to which the applicable period for assessment under
applicable law, after giving effect to extensions or waivers, has expired;
(viii) neither the Company nor any Subsidiary (or any member of any
affiliated, consolidated, combined or unitary group of the Company or any
Subsidiary is or has been a member) has been granted any extension or
waiver of the statute of limitations period applicable to any return, which
period (after giving effect to such extension or waiver) has not yet
expired; (ix) at no time during the two years preceding the date hereof
has there been pending any request for a ruling or determination between
the Company or any Subsidiary and any Taxing Authority in respect of any
Tax, net operating loss, net capital loss, investment tax credit, foreign
tax credit, charitable deduction, depreciation or amortization deduction or
other tax deduction or credit; (x) none of the property owned or used by
the Company or any subsidiary is subject to a tax benefit transfer lease
executed in accordance with Section 168(f)(8) of the Code; (xi) none of
the property owned or used by the Company or any Subsidiary is subject to a
lease, other than a "true" lease for federal income tax purposes; (xii)
none of the property owned by the Company or any Subsidiary is "tax-exempt
use property" within the meaning of Section 168(h) of the Code; (xiii) a
protective carryover election has been filed in connection with each
transaction consummated by the Company or any Subsidiary prior to January
20, 1994 that constituted a "qualified stock purchase" within the meaning
of Section 338 of the Code; (xiv) neither the Company nor any of its
Subsidiaries has any contractual obligations under any tax sharing
agreement or similar agreement or tax indemnity agreement with any
corporation or person which is not a member of the affiliated group of
corporations of which the Company is the common parent; and (xv) neither
the Company nor any of its Subsidiaries owns any interest in real property
in the State of New York. For purposes of the representations contained in
this Section 3.14, none of these representations shall be deemed to have
been breached unless such breach would have, individually or in the
aggregate, a Material Adverse Effect on the Company.
(b) For purposes of this Agreement, "Taxes" means all United
States Federal, state, local and foreign taxes, levies and other
assessments, including, without limitation, all income, sales, use, goods
and services, value added, capital, capital gains, net worth, transfer,
profits, withholding, payroll, employer health, unemployment insurance
payments, excise, real property and personal property taxes, and any other
taxes, assessments or similar charges in the nature of a tax, including,
without limitation, interest, additions to tax, fines and penalties,
imposed by a governmental or public body, agency, official or authority
(the "Taxing Authorities"). "Tax Return" means any return, report,
information return or other document (including any related or supporting
information) required to be filed with any Taxing Authority in connection
with the determination, assessment, collection, administration or
imposition of any Taxes.
Section 3.15. ERISA and Labor Matters. (a) Section 3.15(a) of
the Company Disclosure Schedule contains a list identifying each "employee
benefit plan", as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), which is subject to any provision of ERISA and
is maintained, administered or contributed to by the Company or any Affiliate
of the Company and covers any employee or former employee of the Company or
any Subsidiary of the Company or under which the Company or any Subsidiary of
the Company has any liability. Copies of such plans (and, if applicable,
related trust agreements) and all amendments thereto and written
interpretations thereof have been furnished to Buyer together with the three
most recent annual reports (Form 5500 including, if applicable, Schedule B
thereto) prepared in connection with any such plan and the most recent
actuarial valuation report prepared in connection with any such plan. Such
plans are referred to collectively herein as the "Employee Plans". For
purposes of this Section, "ERISA Affiliate" of the Company means any other
Person which, together with the Company, would be treated as a single employer
under Section 414 of the Code. The only Employee Plans which individually or
collectively would constitute an "employee pension benefit plan" as defined in
Section 3(2) of ERISA (the "Pension Plans") are identified as such in the list
referred to above.
(b) No Employee Plan constitutes a "multiemployer plan", as
defined in Section 3(37) of ERISA (a "Multiemployer Plan"). No "accumulated
funding deficiency", as defined in Section 412 of the Code, has been incurred
with respect to any Employee Plan subject to Title IV of ERISA, whether or not
waived. The Company knows of no "reportable event", within the meaning of
Section 4043 of ERISA, and no event described in Section 4041, 4042, 4062 or
4063 of ERISA has occurred in connection with any Employee Plan, other than a
reportable event that is not reasonably likely to have a Material Adverse
Effect on the Company. No condition exists and no event has occurred that
could constitute grounds for termination of any Employee Plan other than any
such terminations that would not individually or in the aggregate be
reasonably likely to have a Material Adverse Effect. Neither the Company nor
any of its ERISA Affiliates has any material unsatisfied liability under Title
IV of ERISA in connection with the termination of, or complete or partial
withdrawal from, any plan covered or previously covered by Title IV of ERISA.
Nothing done or omitted to be done and no transaction or holding of any asset
under or in connection with any Employee Plan has or will make the Company or
any Subsidiary, any officer or director of the Company or any Subsidiary
subject to any liability under Title I of ERISA or liable for any tax pursuant
to Section 4975 of the Code that is reasonably likely to have a Material
Adverse Effect on the Company.
(c) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during
the period from its adoption to date, and each trust forming a part thereof
is exempt from tax pursuant to Section 501(a) of the Code. The Company has
furnished to Buyer copies of the most recent IRS determination letters with
respect to each such Employee Plan. Each Employee Plan has been maintained
in compliance with its terms and with the requirements prescribed by any
and all statutes, orders, rules and regulations, including but not limited
to ERISA and the Code, which are applicable to the Employee Plan, excluding
any instances of non-compliance that would not individually or in the
aggregate be reasonably likely to have a Material Adverse Effect on the
Company.
(d) Section 3.15(d) of the Company Disclosure Schedule contains
a list of each material employment, severance or other similar contract,
arrangement or policy and each plan or arrangement (written or oral)
providing for insurance coverage (including any self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment
benefits, vacation benefits, retirement benefits or for deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation or
other forms of incentive compensation or post-retirement insurance,
compensation or benefits which is not an Employee Plan, is entered into,
maintained or contributed to, as the case may be, by the Company or any of
its Affiliates and covers any employee or former employee of the Company or
any of its Subsidiaries. Such contracts, plans and arrangements as are
described above, copies or descriptions of all of which have been furnished
previously to Buyer are referred to collectively herein as the "Benefit
Arrangements". Each Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and
all statutes, orders, rules and regulations that are applicable to such
Benefit Arrangement, excluding any instances of non-compliance that would
not individually or in the aggregate be reasonably likely to have a
Material Adverse Effect on the Company.
(e) Except as would not be reasonably likely to have a Material
Adverse Effect on the Company, no Employee Plan, Benefit Arrangement or
related document contains any provision that would prevent the Company or
any Subsidiary from amending or terminating any post-retirement health,
medical or life insurance benefits and no agent or representative of the
Company or any of its Affiliates has made any statements that would limit
the ability of the Company or any of its Subsidiaries to amend or terminate
any such benefits.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its
Affiliates relating to, or change in employee participation or coverage
under, any Employee Plan or Benefit Arrangement which would increase
materially the expense of maintaining such Employee Plan or Benefit
Arrangement above the level of the expense incurred in respect thereof for
the fiscal year ended on the Company Balance Sheet Date.
(g) The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any Employee Plan, Benefit Arrangement, trust or loan that will or
may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase
in benefits or obligation to fund benefits with respect to any employee or
former employee of the Company or any of its Subsidiaries, or result in the
triggering or imposition of any restrictions or limitations on the right of
Parent, the Company or any Subsidiary of the Company to amend or terminate
any Employee Plan and receive the full amount of any excess assets
remaining or resulting from such amendment or termination, subject to
applicable taxes. Except as otherwise identified in Section 3.15(d) of the
Company Disclosure Schedule, there is no contract, agreement, plan or
arrangement covering any employee or former employee of the Company or any
Subsidiary that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Sections 162(a)(1), 162(i)(2) or 280G of the Code.
(h) Neither the Company nor any of its Subsidiaries is a party
to any collective bargaining agreement. There are no labor unions
voluntarily recognized or certified to represent any bargaining unit of
employees at the Company or any of its Subsidiaries. No work stoppage,
labor strike or slowdown against the Company or any of its Subsidiaries is
pending or threatened. Neither the Company nor any of its Subsidiaries is
involved in or threatened with any labor dispute or grievance which
individually or in the aggregate has had or is reasonably likely to have a
Material Adverse Effect on the Company. To the knowledge of the Company
there is no organizing effort or representation question at issue with
respect to any employee of the Company or any of its Subsidiaries. No
collective bargaining agreement to which the Company or any of its
Subsidiaries is or may be a party is currently under negotiation or
renegotiation and no existing collective bargaining agreement is due for
expiration, renewal or renegotiation within the one year period after the
date hereof.
Section 3.16. Compliance with Laws. Except for any matter that
is not reasonably likely to have a Material Adverse Effect on the Company,
since January 1, 1996, neither the Company nor any of its Subsidiaries is
in violation of, or has violated, any applicable provisions of any laws,
statutes, ordinances or regulations.
Section 3.17. Intellectual Property Rights. (a) The
Company and its Subsidiaries own or have rights to use, free and clear of
all Liens, and have not assigned, hypothecated or otherwise encumbered, the
names "Caliber System," "RPS" and "Roberts Express" (the "Names") and any
of the Company's related material trademarks, trade names, service marks or
logos except for such trademarks, trade names, service marks or logos the
failure of which to own or have rights to use individually or in the
aggregate is not reasonably likely to have a Material Adverse Effect on the
Company. The Company has no knowledge of any current pending or threatened
infringement or challenge by any Person with respect to the Names and the
related logos.
(b) Each of the Company and its Subsidiaries owns outright or
holds valid and enforceable licenses to all copies of the operating and
applications computer software programs and databases material to the
conduct by the Company and its Subsidiaries of their respective businesses
(other than programs and databases that are generally commercially
available) as of the date hereof (collectively, the "Company Software")
except for such Company Software the failure of which to own or validly
license individually or in the aggregate is not reasonably likely to have a
Material Adverse Effect on the Company. To the Company's knowledge, none
of the Company Software used by the Company and its Subsidiaries, and no
use thereof, infringes upon or violates any patent, copyright, trade secret
or other proprietary right of any other Person and, to the Company's
knowledge, no claim with respect to any such infringement or violation is
pending or threatened, except for any such infringement or violation which,
individually or in the aggregate, has not had and is not reasonably likely
to have a Material Adverse Effect on the Company. Upon consummation of the
transactions contemplated by this Agreement, except for Company Software
sold or otherwise disposed of in the ordinary course of business after the
date hereof, each of the Company and its Subsidiaries (i) will continue to
own all the Company Software owned by it, free and clear of all claims,
Liens, encumbrances, obligations and liabilities and (ii) with respect to
all agreements for the lease or license of Company Software which require
consents or other actions as a result of the consummation of the
transactions contemplated by this Agreement in order for the Company and
its Subsidiaries to continue to use and operate such Company Software after
the consummation of the transactions contemplated by this Agreement, shall
have obtained such consents or taken such other actions so required prior
to the Merger Date, except for such consents or actions that if not
obtained or taken, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect on the Company.
Section 3.18. Environmental Matters. (a) (i) Except as set
forth in the Company 10-K or the Company 10-Qs, no notice, notification,
demand, request for information, citation, summons or order has been received,
no complaint has been filed, no penalty has been assessed, no investigation,
action, claim, suit, proceeding or review is pending, or, to the knowledge of
the Company or any Subsidiary, threatened by any governmental entity or other
Person with respect to any matters relating to the Company or any Subsidiary
and arising out of any Environmental Law which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on the
Company; and
(ii) the Company and each Subsidiary are in compliance with
all Environmental Laws and have, and are in compliance with, all Environmental
Permits, except where any noncompliance or failure to receive Environmental
Permits is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on the Company; and
(iii) there are no liabilities of, or relating to, the Company
or any Subsidiary of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, arising under or relating to
any Environmental Law which, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on the Company.
(b) There are no liabilities disclosed in any environmental
assessment, investigation, study, audit, test, review or other analysis
conducted of which the Company has knowledge in relation to the current or
prior business of the Company or any Subsidiary or any property or facility
now or previously owned, leased or operated by the Company or any Subsidiary
which individually or in the aggregate are reasonably likely to exceed
$10,000,000 which have not been disclosed to Buyer in writing as of the date
hereof.
(c) Neither the Company nor any Subsidiary owns, leases or
operates or has owned, leased or operated any real property, or conducts or
has conducted any operations, in New Jersey or Connecticut to which either
the Connecticut Transfer Act or the New Jersey Industrial Site Recovery Act
is applicable.
(d) Neither the Company nor any Subsidiary owns or operates or has
owned or operated any underground storage tank which has been closed in place,
other than in compliance with Environmental Laws, as in effect on the date
hereof or abandoned and, each underground storage tank owned, leased or
operated by the Company or any Subsidiary of the Company is in compliance with
Environmental Laws and, as of the date hereof, meets the standards, including
new system performance standards and upgrading requirements contained in
Subtitle I of the Resource Conservation and Recovery Act, 42 U.S.C. 6991, et
seq., as amended, and any rules or regulations promulgated thereunder,
including 40 C.F.R. Section 280.20, et seq., except to the extent that any
compliance, assessment or remediation costs arising from or relating to
underground storage tanks would not, individually or in the aggregate, be
reasonably likely to result in liabilities in excess of $10,000,000.
(e) For purposes of this Section, the following terms shall have
the meanings set forth below:
(i) "Environmental Laws" means any federal, state, local and
foreign law (including, without limitation, common law), treaty, judicial
decision, regulation, rule, judgment, order, decree, injunction, permit,
license or governmental restriction or any agreement or contract with any
governmental authority or other third party, whether now or hereafter in
effect, relating to human health and safety, the environment or to pollutants,
contaminants, wastes or chemicals or toxic, radioactive, ignitable, corrosive,
reactive or otherwise hazardous substances, wastes or materials;
(ii) "Environmental Permits" means all permits, licenses,
franchises, certificates, approvals and other similar authorizations of
governmental authorities relating to or required by Environmental Laws and
affecting, or relating in any way to the business of the Company or any
Subsidiary as currently conducted; and
(iii) "Company" and Subsidiary" shall include any entity which
is, in whole or in part, a predecessor of the Company or any Subsidiary.
Section 3.19. Pooling; Tax Treatment. (a) The Company
intends that the Mergers be accounted for under the "pooling of interests"
method under the requirements of Opinion No. 16 (Business Combinations) of
the Accounting Principles Board of the American Institute of Certified
Public Accountants (APB No. 16), as amended by Statements of the Financial
Accounting Standards Board, and the related interpretations of the American
Institute of Certified Public Accountants, the Financial Accounting
Standards Board, and the rules and regulations of the SEC.
(b) Neither the Company nor any of its Affiliates has taken or
agreed to take any action that would prevent the Mergers from qualifying (i)
for "pooling of interests" accounting treatment as described in (a) above or
(ii) as a reorganization within the meaning of Section 368 of the Code (a "368
Reorganization") or a transfer governed by Section 351 of the Code.
Section 3.20. Opinion of Financial Advisor. The Directors of
the Company have received the opinion of Goldman, Sachs & Co., financial
advisor to the Company, to the effect that, as of the date of this Agreement,
the Tires Merger Consideration is fair to the shareholders of the Company from
a financial point of view, and such opinion has not been withdrawn.
Section 3.21. Antitakeover Statutes. The Directors of the
Company have taken or will take all appropriate and necessary actions such
that Section 1704 of the Ohio Law will not have any effect on the Mergers or
the other transactions contemplated by this Agreement. No other "fair price,"
"moratorium," "control share acquisition," or other similar antitakeover
statute or regulation is applicable to the Tires Sub Merger or the other
transactions contemplated by this Agreement.
Section 3.22. Rights Agreement. (a) The Company has
adopted an amendment to the Rights Agreement dated August 22, 1996 between
the Company and First Chicago Trust Company of New York (as successor to
Keybank National Association) (the "Rights Agreement") with the effect
that neither Buyer, Parent nor Buyer Merger Sub shall be deemed to be
either an Acquiring Person (as defined in the Rights Agreement), the
Distribution Date (as defined in the Rights Agreement) shall not be deemed
to occur and that the Rights will not separate from the Company Stock, as a
result of entering into this Agreement or consummating the Tires Sub Merger
and/or the other transactions contemplated hereby.
(b) The Company has taken all necessary action with respect to all
of the outstanding Rights (as defined in the Rights Agreement) so that, as of
immediately prior to the Merger Date, as a result of entering into this
Agreement or consummating the Tires Sub Merger and/or the other transactions
contemplated by this Agreement, (A) neither the Company nor Buyer will have
any obligations under the rights or the Rights Agreement as a result of the
Mergers and (B) the holders of the rights will have no rights under the Rights
or the Rights Agreement as a result of the Mergers.
Section 3.23. Finders' Fees. Except for Goldman, Sachs & Co.,
a copy of whose engagement agreement has been provided to Buyer, there is no
investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of the Company or any of its
Subsidiaries who might be entitled to any fee or commission in connection with
the transactions contemplated by this Agreement.
ARTICLE 4
Representations and Warranties of Buyer
Except as set forth in the disclosure schedule (each section of which
qualifies the correspondingly numbered representation and warrant only,
except where the information in any such section is disclosed in such a way
to make its relevance to any other representation or warranty readily
apparent, in which case, such section shall be deemed to also qualify such
other representation and warranty) of Buyer attached hereto (the "Buyer
Disclosure Schedule"), Buyer represents and warrants to the Company that:
Section 4.1. Corporate Existence and Power. (a) Buyer is
a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, and has all corporate powers and
all governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted and is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except (i)
where the failure to have such licenses, authorizations, permits, consents
or approvals and (ii) for those jurisdictions where the failure to be so
qualified or in good standing is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on Buyer. Buyer has
heretofore delivered to the Company true and complete copies of Buyer's
certificate of incorporation and bylaws as currently in effect.
(b) Each of Parent, Buyer Merger Sub and Tires Merger Sub is a
corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, and has all corporate powers
and all governmental licenses, authorizations, permits, consents and
approvals required to carry on its business as now conducted. Since their
respective dates of incorporation, none of Parent, Buyer Merger Sub and
Tires Merger Sub has engaged in any activities other than in connection
with the transactions contemplated hereby.
Section 4.2. Corporate Authorization. The execution, delivery
and performance by each of Buyer, Parent, Buyer Merger Sub and Tires Merger
Sub (each, a "Buyer Party") of this Agreement and the consummation by each
Buyer Party of the transactions contemplated hereby are within the
corporate powers of such Buyer Party and, except for the required approval
of the stockholders of Buyer of the issuance of Parent Common Stock in
connection with this Agreement pursuant to the rules of the NYSE, have been
duly authorized by all necessary corporate action. This Agreement has been
duly executed and delivered by each Buyer Party which is a party thereto
and constitutes a valid and binding agreement of such Buyer Party
enforceable against such Buyer Party in accordance with its terms.
Section 4.3. Governmental Authorization. The execution,
delivery and performance by each Buyer Party of this Agreement and the
consummation by such Buyer Party of the transactions contemplated by this
Agreement require no action, by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of
this Agreement in accordance with the Delaware Law; (b) compliance with any
applicable requirements of the HSR Act; (c) compliance with any applicable
requirements of the 1934 Act; (d) compliance with any applicable requirements
of the 1933 Act; (e) compliance with any applicable foreign or state
securities or Blue Sky laws; (f) compliance with any applicable pre-merger
notification or similar statutes and rules of the European Community (or
certain of its member states), Canada and Mexico; (g) any applicable
requirements of the Department of Transportation; (h) filings and notices not
required to be made or given until after the Merger Date and (i) immaterial
actions or filings relating to ordinary operational matters.
Section 4.4. Non-Contravention. The execution, delivery
and performance by each Buyer Party of this Agreement and the consummation
by such Buyer Party of the transactions contemplated by this Agreement do
not and will not (a) contravene or conflict with the certificate of
incorporation or bylaws of such Buyer Party, (b) assuming compliance with
the matters referred to in Section 4.3, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to Buyer or any
Subsidiary of Buyer, (c) constitute a default (or an event which with
notice, the lapse of time or both would become a default) under or give
rise to a right of termination, cancellation or acceleration of any right
or obligation of Buyer or any Subsidiary of Buyer or to a loss of any
benefit to which Buyer or any Subsidiary of Buyer is entitled under any
provision of any agreement, contract or other instrument binding upon Buyer
or any Subsidiary of Buyer or any license, franchise, permit or other
similar authorization held by Buyer or any Subsidiary of Buyer, or (d)
result in the creation or imposition of any Lien on any asset of Buyer or
any Subsidiary of Buyer, other than, in the case of the events specified in
clauses (b), (c) and (d), any such event which, individually or in the
aggregate, has not had, and is not reasonably likely to have, a Material
Adverse Effect on Buyer.
Section 4.5. Capitalization. As of August 4, 1997, the
authorized capital stock of (a) Buyer consisted of 200,000,000 shares of
Buyer Stock and 4,000,000 shares of series preferred stock without par
value ("Buyer Preferred Stock"), (b) Parent consisted of 200,000,000
shares of Parent Common Stock, (c) Buyer Merger Sub consisted of 1,000
shares of Buyer Merger Sub Stock, and (d) Tires Merger Sub consisted of
1,000 shares of Tires Merger Sub Common Stock. As of August 4, 1997, there
were 115,011,018 shares of Buyer Stock outstanding and no shares of Buyer
Preferred Stock outstanding. As of August 4, 1997, an aggregate of
7,580,010 shares of Buyer Stock were reserved for issuance or issuable
under employee benefit or other compensation plans or programs or dividend
reinvestment plans of Buyer. All outstanding shares of capital stock of
each Buyer Party have been duly authorized and validly issued and are fully
paid and nonassessable. All shares of Parent Common Stock, when issued in
the Mergers, will be duly authorized and validly issued and will be fully
paid and non-assessable.
Section 4.6. SEC Filings. Buyer has furnished to the
Company (i) Buyer's annual reports on Form 10-K for its fiscal years ended
May 31, 1997 (the "Buyer 10-K"), 1996 and 1995, (ii) its quarterly reports
on Form 10-Q for its fiscal quarters ended after May 31, 1997, (iii) its
proxy or information statements relating to meetings of, or actions taken
without a meeting by, Buyer's shareholders held since May 31, 1997, and
(iv) all of its other reports, statements, schedules and registration
statements filed with the SEC since May 31, 1997 and through the date of
this Agreement. Buyer has filed all required reports, schedules, forms,
statements and other documents with the SEC since January 1, 1995
(collectively, the "Buyer SEC Documents"). As of their respective dates,
or if amended, as of the date of the last such amendment, the Buyer SEC
Documents complied, and all documents required to be filed by Buyer with
the SEC after the date hereof and prior to the Merger Date (the "Subsequent
Buyer SEC Documents") will comply, in all material respects with the
requirements of the 1933 Act or the 1934 Act, as the case may be, and the
applicable rules and regulations promulgated thereunder, and none of the
Buyer SEC Documents contained, and the Subsequent Buyer SEC Documents will
not contain, any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading.
Section 4.7. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial
statements of Buyer included in its annual reports on Form 10-K and the
quarterly reports on Form 10-Q referred to in Section 4.6 fairly present,
in all material respects, in conformity with GAAP applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of Buyer and its consolidated Subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows
for the periods then ended (subject to normal year-ended adjustments in the
case of any unaudited interim financial statements). For purposes of this
Agreement, "Buyer Balance Sheet" means the consolidated balance sheet of
Buyer as of May 31, 1997 set forth in the Buyer 10-K and "Buyer Balance
Sheet Date" means May 31, 1997.
Section 4.8. Disclosure Documents. (a) Each document required
to be filed by Buyer and Parent with the SEC in connection with the
transactions contemplated by this Agreement (the "Buyer Disclosure
Documents"), including, without limitation, the proxy or information
statement and registration statement of Buyer and Parent (the "Form S-4"),
to be filed with the SEC in connection with the issuance of Parent Common
Stock pursuant to this Agreement and any amendments or supplements thereto,
will, when filed, comply as to form in all material respects with the
applicable requirements of the 1933 Act and the 1934 Act.
(b) At the time the proxy statement which forms a part of the
Form S-4 (the "Buyer Proxy Statement") or any amendment or supplement
thereto is first mailed to shareholders of Buyer, at the time such
shareholders vote on the issuance of Parent Common Stock in connection with
this Agreement, the Buyer Proxy Statement, as supplemented or amended, if
applicable, will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. At the time of the filing of any Buyer Disclosure Document
other than the Buyer Proxy Statement and at the time of any distribution
thereof, such Buyer Disclosure Document will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 4.8 will not apply
to statements included in or omissions from the Buyer Disclosure Documents
based upon information furnished to Buyer or Parent in writing by the
Company specifically for use therein.
Section 4.9. Information Supplied. The information supplied
or to be supplied by Buyer or Parent for inclusion or incorporation by
reference in (i) the Company Proxy Statement or any amendment or supplement
thereto will not, at the time the Company Proxy Statement is first mailed to
shareholders of the Company and at the time such shareholders vote on the
approval and adoption of this Agreement, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they
were made, not misleading, and (ii) any Company Disclosure Document (other
than the Company Proxy Statement, and any amendments or supplements to either)
will not, at the time of effectiveness of such Company Disclosure Document and
at the time of any distribution thereof, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
Section 4.10. Absence of Certain Changes. Since the Buyer
Balance Sheet Date and except as set forth in the Buyer SEC Documents, Buyer
and its Subsidiaries have conducted their business in the ordinary course
consistent with past practice and there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which has had or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Buyer other
than any of the foregoing (i) relating to the economy or securities markets in
general, (ii) relating to Buyer's industry in general or (iii) arising from
the announcement or pendency of this Agreement or the transactions
contemplated hereby;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of Buyer, or
any repurchase, redemption or other acquisition by Buyer or any Subsidiary
of Buyer of any amount of outstanding shares of capital stock or other
securities of, or other ownership interests in, Buyer or any of its
Subsidiaries;
(c) any amendment of any material term of any outstanding
security of Buyer or any Subsidiary of Buyer; or
(d) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of Buyer or any
Subsidiary of Buyer which, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on Buyer.
Section 4.11. No Undisclosed Material Liabilities. There are
no liabilities, commitments or obligations (whether pursuant to contracts
or otherwise) of Buyer or any Subsidiary of Buyer of any kind whatsoever
which, individually or in the aggregate, have had or are reasonably likely
to have a Material Adverse Effect on Buyer, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances which is reasonably likely to
result in such a liability, commitment or obligation, including, without
limitation, any fines, disciplinary actions or other adverse actions that
may be taken or reported concerning the conduct of Buyer or any of its
Subsidiaries, other than:
(a) liabilities, commitments or obligations disclosed or provided
for in the Buyer Balance Sheet (including the notes thereto) or in the Buyer
10-K;
(b) liabilities, commitments or obligations incurred in the
ordinary course of business consistent with past practice since the Buyer
Balance Sheet Date; and
(c) liabilities, commitments or obligations under this Agreement.
Section 4.12. Litigation; Investigations. Except as set forth
in the Buyer SEC Documents, there is no action, claim, suit, investigation,
proceeding or examination pending against or affecting, or to the knowledge
of Buyer, threatened or reasonably likely to be brought against or
affecting, Buyer or any Subsidiary of Buyer or any of their respective
properties before any court or arbitrator or any governmental body, agency,
authority or official which, individually or in the aggregate, has had or
is reasonably likely to have a Material Adverse Effect on Buyer. The
foregoing representation and warranty does not include or relate to any
action, claim, suit, investigation, proceeding or examination, pending or
threatened, challenging or seeking to prevent, enjoin, alter or delay the
Mergers or any of the transactions contemplated hereby.
Section 4.13. Compliance with Laws. Except for any matter
that is not reasonably likely to have a Material Adverse Effect on Buyer,
since January 1, 1996, neither Buyer nor any of its Subsidiaries is in
violation of, or has violated, any applicable provisions of any laws,
statutes, ordinances or regulations.
Section 4.14. Pooling; Tax Treatment. (a) Buyer intends that
the Mergers be accounted for under the "pooling of interests" method under
the requirements of Opinion No. 16 (Business Combinations) of the
Accounting Principles Board of the American Institute of Certified Public
Accountants (APB No. 16), as amended by Statements of the Financial
Accounting Standards Board, and the related interpretations of the American
Institute of Certified Public Accountants, the Financial Accounting
Standards Board, and the rules and regulations of the SEC.
(b) Neither Buyer nor any of its Affiliates has taken or agreed to
take any action that would prevent the Mergers from qualifying (i) for
"pooling of interests" accounting treatment as described in (a) above or (ii)
as a reorganization within the meaning of Section 368, or a transfer governed
by Section 351, of the Code.
Section 4.15. Finders' Fees. Except for Merrill Lynch & Co.,
Inc., a copy of whose engagement agreement has been provided to the Company,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of the Buyer or any of its
Subsidiaries who might be entitled to any fee or commission in connection with
the transactions contemplated by this Agreement.
ARTICLE 5
Covenants of the Company
The Company agrees that:
Section 5.1. Conduct of the Company. From the date hereof
until the Merger Date, except as provided in the Company Disclosure Schedule
or as otherwise consented to by Buyer (which consent shall not be unreasonably
withheld or delayed), the Company shall, and shall cause its Subsidiaries to,
conduct their business in all material respects in the ordinary course
consistent with past practice and use their commercially reasonable efforts to
preserve intact their business organizations and relationships with third
parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, except as
expressly permitted in this Agreement, from the date hereof until the Merger
Date:
(a) The Company will not adopt or propose any change in its
articles of incorporation or bylaws;
(b) The Company will not, and will not permit any Subsidiary of
the Company to, merge or consolidate with any other Person or, other than
as provided in the Company's capital expenditure budget (included as
Section 5.01(b) of the Company Disclosure Schedule) in the ordinary course
of business, acquire a material amount of assets of any other Person;
(c) The Company will not, and will not permit any Subsidiary of
the Company to, sell, lease, license or otherwise dispose of any material
assets or property except (i) pursuant to existing contracts or commitments
and (ii) in the ordinary course consistent with past practice;
(d) The Company will not, and will not permit any Subsidiary of
the Company to, declare, set aside or pay any dividend (other than the
payment of the Company's regular quarterly dividend on Company Stock in an
amount not exceeding $0.10 per share) or make any other distribution with
respect to any shares of the Company's capital stock;
(e) The Company will not, and will not permit any Subsidiary of
the Company to, create or assume any Lien on any material asset other than
in the ordinary course consistent with past practices;
(f) The Company will not, and will not permit any Subsidiary of
the Company to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any Company Securities, any Company
Subsidiary Securities or any securities convertible into or exchangeable
for, or any rights, warrants or options to acquire, any Company Securities
or Company Subsidiary Securities other than pursuant to the exercise of a
Company Stock Option;
(g) The Company (i) will not split, combine or reclassify, or take
any other similar action with respect to, any capital stock of the Company,
and (ii) the Company will not, and will not permit any Subsidiary of the
Company to, repurchase, redeem or otherwise acquire an amount of shares of
capital stock of, or other ownership interests in, the Company or any
Subsidiary of the Company, which repurchase, redemption or other acquisition,
individually or in the aggregate, is material to the Company and its
Subsidiaries, taken as a whole;
(h) Except for borrowings or guarantees in the ordinary course of
business consistent with past practice, the Company will not, and will not
permit any Subsidiary of the Company to, incur or assume any indebtedness from
any third party for borrowed money or guarantee any such indebtedness;
(i) Except for (i) loans, advances or capital contributions to or
investments in Subsidiaries of the Company, (ii) loans or advances to
employees in the ordinary course of business consistent with past practice or
(iii) investments in securities consistent with past practices, the Company
will not, and will not permit any Subsidiary of the Company to, make any
material loans, advances or capital contributions to, or investments in, any
other Person;
(j) The Company will not, and will not permit any of its
subsidiaries to, (i) grant any severance or termination pay to, or enter
into any employment, termination or severance arrangement with, any
director, officer or employee of the Company or any Subsidiary of the
Company, (ii) enter into any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with
any director, officer or employee of the Company or any Subsidiary, (iii)
increase benefits payable under any existing severance or termination pay
policies or employment agreements or (iv) increase compensation, bonus or
other benefits payable to directors, officers or employees of the Company
or any Subsidiary, other than in the ordinary course of business;
(k) The Company will not, and will not permit any of its
Subsidiaries to, authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution of the Company
or any Material Subsidiary of the Company, or any plan of division or share
exchange involving the Company or any of its Material Subsidiaries;
(l) The Company will not, and will not permit any Subsidiary of
the Company to, change any material method of accounting or any material
accounting principle or practice used by the Company or any Subsidiary of
the Company, except for any such change required by reason of a change in
GAAP or Regulation S-X;
(m) Neither the Company nor any Subsidiary shall, to the extent it
may affect or relate to the Company or any Subsidiary, make or change any tax
election, change any annual tax accounting period, adopt or change any method
of tax accounting, file any amended Return, enter into any closing agreement,
settle any Tax claim or assessment, surrender any right to claim a Tax refund,
consent to any extension or waiver of the limitations period applicable to any
Tax claim or assessment or take or omit to take any other action, if any such
action or omission would have the effect of, in the aggregate, materially
increasing the Tax liability, or in the aggregate, materially reducing any Tax
asset of the Company or any Subsidiary of the Company except to the extent (i)
consistent with past practice or in the ordinary course of business, provided,
however, that such action or omission will not have a Material Adverse Effect
on the Company or (ii) such increase or reduction is adequately provided for,
under GAAP, on the Company Balance Sheet. Furthermore, this Section 5.1(m)
shall not preclude good faith efforts to comply with the Tax Matters Agreement
by and between the Company and Sub-10 entered into in connection with the
spin-off of Sub-10 on January 2, 1996.
(n) All Returns not required to be filed on or before the date
hereof (i) shall be filed when due in accordance with all applicable laws and
(ii) as of the time of filing, shall correctly reflect the facts regarding the
income, business, assets, operations activities and status of the Company, its
Subsidiaries and any other information required to be shown therein;
(o) Neither the Company nor any Subsidiary shall reserve any
amount for or make any payment of Taxes to any person or any Taxing
Authority, except for such Taxes as are due or payable or have been
properly estimated in accordance with applicable law as applied in a manner
consistent with past practice of the Company or any such Subsidiary, as the
case may be; and
(p) The Company will not, and will not permit any Subsidiary of
the Company to, agree to do any of the foregoing.
Section 5.2. Shareholder Meeting; Proxy Material. (a) Subject
to Section 5.3, the Company shall cause a meeting of its shareholders (the
"Company Shareholder Meeting") to be duly called and held as soon as
reasonably practicable for the purpose of voting on the approval and adoption
of this Agreement and, to the extent submitted to the Company's shareholders
for approval, the transactions contemplated by this Agreement, and the
Directors of the Company shall recommend adoption of this Agreement by the
Company's shareholders; provided that such meeting need not be called and held
and, prior to the Company Shareholder Meeting, such recommendation may be
withdrawn, modified or amended to the extent that, as a result of the
commencement or receipt of an Acquisition Proposal with respect to the
Company, the Directors of the Company determine in good faith that such
Acquisition Proposal constitutes a Superior Proposal.
(b) Subject to Section 5.3, in connection with the Company
Shareholder Meeting, the Company will (i) promptly prepare and file with
the SEC, will use commercially reasonable efforts to have cleared by the
SEC and will thereafter mail to its shareholders as promptly as practicable
the Company Proxy Statement and all other proxy materials for such meeting,
(ii) use commercially reasonable efforts to obtain the necessary approvals
by its shareholders of this Agreement and the transactions contemplated
hereby, and (iii) otherwise comply with all legal requirements applicable
to such meeting.
Section 5.3. Other Offers. From the date hereof until the
termination of this Agreement, the Company will not, and will cause its
Subsidiaries and the directors, officers, employees, financial advisors and
other agents or representatives of the Company or any of its Subsidiaries
not to, directly or indirectly, take any action to solicit, initiate or
encourage any Acquisition Proposal with respect to the Company or engage in
negotiations with, or disclose any non-public information relating to the
Company or any Subsidiary of the Company or afford access to the
properties, books or records of the Company or any Subsidiary of the
Company to, any Person that has informed the Company that it is considering
making, or has made, an Acquisition Proposal with respect to the Company,
provided however, that the Company may, in response to an unsolicited bona
fide written proposal regarding an Acquisition Proposal by any Person,
disclose such non-public information to or engage in negotiations with such
Person, if the Board of Directors of the Company determines in good faith
that such Acquisition Proposal is reasonably likely to be a Superior
Proposal, and, provided further, that prior to furnishing non-public
information to, or entering into discussions or negotiations with, such
Person, the Company receives from such Person an executed confidentiality
agreement with terms no less favorable to the Company than those contained
in the Letter Agreement dated as of March 5, 1997 between Buyer and the
Company ("Confidentiality Agreement") (provided that such confidentiality
agreement need not include the same standstill provisions as those in the
Confidentiality Agreement, it being understood that if there are no
standstill provisions in such confidentiality agreement or if such
provisions are more favorable to the other party than those in the
Confidentiality Agreement, the Confidentiality Agreement shall be deemed
amended to exclude the existing standstill provision or include such more
favorable provisions, as the case may be). The Company will promptly (and
in no event later than 24 hours after receipt of the relevant Acquisition
Proposal with respect to the Company), notify (which notice shall be
provided orally and in writing and shall identify the Person making the
relevant Acquisition Proposal with respect to the Company and set forth the
material terms thereof) Buyer after receipt of any Acquisition Proposal or
any indication from any Person that such Person is considering making an
Acquisition Proposal with respect to the Company or any request for
nonpublic information relating to the Company or any Subsidiary of the
Company or for access to any properties, books or records of the Company or
any Subsidiary of the Company by any Person that may be considering making,
or has made, an Acquisition Proposal with respect to the Company and will
keep Buyer fully informed of the status and details of any such Acquisition
Proposal with respect to the Company. The Company shall give Buyer at
least one business day's advance notice of any information to be supplied
to, and at least two days' advance notice of any agreement to be entered
into with, any Person making such Acquisition Proposal with respect to the
Company. The Company shall, and shall cause its Subsidiaries and the
directors, officers, employees, financial advisors and other agents or
representatives of the Company or any of its Subsidiaries to, cease
immediately and cause to be terminated all activities, discussions or
negotiations, if any, with any Persons conducted heretofore with respect to
any Acquisition Proposal with respect to the Company. For purposes of this
Agreement, "Acquisition Proposal" means any offer or proposal for, or any
indication of interest in, (i) a merger or other business combination
involving the Company or any Subsidiary of the Company or (ii) the
acquisition in any manner of an equity interest in an amount equal to or
greater than 20% of the class of such equity security then outstanding, or
a substantial portion of the assets of, the Company or any Subsidiary of
the Company, in each case other than the transactions contemplated by this
Agreement. For purposes of this Agreement, "Superior Proposal" means an
Acquisition Proposal with respect to the Company which the Directors of the
Company determine in good faith (based on the advice of an investment
banking firm of national reputation taking into account all of the terms
and conditions of the Acquisition Proposal, including any conditions to
consummation) to be more favorable and provide greater value to the
Company's shareholders than the Tires Sub Merger.
ARTICLE 6
Covenants of Buyer
Buyer agrees that:
Section 6.1. Conduct of Buyer. From the date hereof until the
Merger Date, Buyer shall, and shall cause its Subsidiaries to, conduct
their business in all material respects in the ordinary course consistent
with past practice and use their commercially reasonable efforts to
preserve intact their business organizations and relationships with third
parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, except as
expressly permitted in this Agreement, from the date hereof until the
Merger Date Buyer will not declare, set aside or pay any dividend or make
any other distribution with respect to any shares of Buyer's capital stock.
Section 6.2. Shareholder Meeting; Proxy Material. (a) Buyer
shall cause a meeting of its shareholders (the "Buyer Shareholder Meeting") to
be duly called and held as soon as reasonably practicable for the purpose of
voting on the issuance of Parent Common Stock in connection with this
Agreement. The Board of Directors of Buyer shall recommend approval of the
issuance of Parent Common Stock in connection with this Agreement by Buyer's
shareholders.
(b) In connection with the Buyer Shareholder Meeting, Buyer (i)
will promptly prepare and file with the SEC, will use its reasonable best
efforts to have cleared by the SEC and will thereafter mail to its
shareholders as promptly as practicable the Buyer Proxy Statement and all
other proxy materials for such meeting, (ii) will use its reasonable best
efforts to obtain the necessary approvals by its shareholders of this
Agreement and the transactions contemplated hereby and (iii) will otherwise
comply with all legal requirements applicable to such meeting.
ARTICLE 7
Covenants of Buyer, the Company and Parent
Section 7.1. Reasonable Best Efforts. (a) Subject to the
terms and conditions of this Agreement, each party will use its reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the Mergers and the other transactions contemplated
by this Agreement.
(b) Neither Buyer nor the Company shall take any action, or
omit to take any action, that would cause its representations and warranties
contained herein to be inaccurate such that the conditions in Article 8 would
not be satisfied.
Section 7.2. Cooperation. Without limiting the generality of
Section 7.1(a), Buyer and the Company shall together, or pursuant to an
allocation of responsibility to be agreed between them, coordinate and
cooperate (i) in connection with the preparation of the Company Disclosure
Documents and the Buyer Disclosure Documents, (ii) in determining whether any
action by or in respect of, or filing with, any governmental body, agency,
official or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the Mergers or the other transactions
contemplated by this Agreement and (iii) in seeking any such actions,
consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the Company Disclosure
Documents and the Buyer Disclosure Documents, and timely seeking to obtain any
such actions, consents, approvals or waivers. Subject to the terms and
conditions of this Agreement, Parent, Buyer and the Company will each use its
reasonable best efforts to have the Form S-4 declared effective by the SEC
under the 1933 Act as promptly as practicable after the Form S-4 is filed with
the SEC.
Section 7.3. Public Announcements. Buyer and the Company will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated by
this Agreement and, except, as may be required by applicable law or any
listing or similar agreement with any national securities exchange, will not
issue any such press release or make any such public statement prior to such
consultation.
Section 7.4. Access to Information. From the date hereof
until the Merger Date, the Company and Buyer (each, in such capacity, a
"Providing Party") will give (or cause to be given) to the other party (the
"Receiving Party"), its counsel, financial advisors, auditors and other
authorized representatives full access, during regular business hours, to
the offices, properties, books and records of the Providing Party, will
furnish (or cause to be furnished) to the Receiving Party, its counsel,
financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such Receiving Party
may reasonably request and will instruct the employees, counsel and
financial advisors of the Providing Party and its Subsidiaries to cooperate
with the Receiving Party in its investigation of the business of the
Providing Party and its Subsidiaries; provided that no investigation
pursuant to this Section shall affect any representation or warranty given
by the Providing Party to the Receiving Party hereunder. Unless otherwise
required by applicable law, each party hereto agrees that it shall, and it
shall cause its Subsidiaries and its and their respective officers,
directors, employees, auditors and agents to, hold in confidence all non-
public information so acquired and to use such information solely for
purposes of effecting the transactions contemplated by this Agreement. The
information obtained pursuant to this Section shall be subject to any
confidentiality agreements or other confidentiality obligations currently
binding upon the Providing Party or any of its Subsidiaries; provided that
the Providing Party shall use commercially reasonable efforts to obtain any
waivers under such agreements or obligations to permit the Providing Party
to comply with its obligations hereunder.
Section 7.5. Further Assurances. At and after the Merger
Date, the directors and officers of each of the surviving corporations in
the Mergers will be authorized to execute and deliver, in the name and on
behalf of (x) the Company or Tires Merger Sub, and (y) Buyer or Buyer
Merger Sub, any deeds, bills of sale, assignments or assurances and to take
and do, in the name and on behalf of (x) the Company or Tires Merger Sub,
and (y) Buyer or Buyer Merger Sub, any other actions and things to vest,
perfect or confirm of record or otherwise in such surviving corporation any
and all right, title and interest in, to and under any of the rights,
properties or assets of the Company or Buyer, as applicable, acquired or to
be acquired by such surviving corporation as a result of, or in connection
with, the Mergers.
Section 7.6. Notices of Certain Events. Each of the
Company and Buyer shall promptly notify the other parties hereto of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with
the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or involving or
otherwise affecting such party that, if pending on the date of this Agreement,
would have been required to have been disclosed pursuant to Section 3.13 or
Section 4.12 only or that relate to the consummation of the transactions
contemplated by this Agreement.
Section 7.7. Tax-free Reorganization; Pooling. (a) Prior to
the Merger Date, each party shall use its reasonable best efforts to cause
each of the Mergers to qualify as a 368 Reorganization, and will not take any
action reasonably likely to cause either of the Mergers not to so qualify.
Buyer shall not take, or cause the Company to take, any action after the
Merger Date reasonably likely to cause either of the Mergers not to qualify as
a 368 Reorganization.
(b) Each party will use its reasonable best efforts to cause the
Mergers to qualify for pooling of interests accounting treatment as described
in Section 3.19 and Section 4.14 and will not take any action (or suffer any
omission) reasonably likely to cause the Mergers not to so qualify.
Section 7.8. Affiliates. (a) At least 40 days prior to the
Merger Date, the Company shall deliver to Buyer a letter identifying all known
Persons who may be deemed affiliates of the Company for the purposes of Rule
145 of the 1933 Act or for purposes of applicable SEC accounting releases with
respect to pooling of interests accounting treatment. The Company shall use
its reasonable best efforts to obtain a written agreement from each Person who
may be so deemed as soon as practicable and, in any event, at least 30 days
prior to the Merger Date, substantially in the form of Exhibit A-1 hereto.
(b) At least 40 days prior to the Merger Date, Buyer shall
deliver to the Company a letter identifying all known Persons who may be
deemed affiliates of Buyer for the purposes of Rule 145 of the 1933 Act or
for the purposes of applicable SEC accounting releases with respect to
pooling of interests accounting treatment. Buyer shall use its reasonable
best efforts to obtain a written agreement from each Person who may be so
deemed as soon as practicable and, in any event, at least 30 days prior to
the Merger Date, substantially in the form of Exhibit A-2 hereto.
Section 7.9. Director and Officer Liability. (a) From and
after the Merger Date, Parent shall cause the Tires Surviving Corporation to
indemnify, defend and hold harmless any Person who is on the date hereof, or
has been at any time prior to the date hereof, or who becomes prior to the
Merger Date, an officer, director, or employee or agent (the "Indemnified
Party") of the Company or any of its Subsidiaries against all losses, claims,
damages, liabilities, costs and expenses (including attorney's fees and
expenses), judgments, fines, losses, and amounts paid in settlement in
connection with any actual or threatened action, suit, claim, proceeding or
investigation (each a "Claim") to the extent that any such Claim is based on,
or arises out of, (i) the fact that such Person is or was a director, officer,
employee or agent of the Company or any of its Subsidiaries at any time prior
to the Merger Date or is or was serving at the request of the Company or any
of its Subsidiaries as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise at any time
prior to the Merger Date, or (ii) this Agreement or any of the transactions
contemplated hereby or thereby in each case to the extent that any such Claim
pertains to any matter or fact arising, existing, or occurring prior to or at
the Merger Date, regardless of whether such Claim is asserted or claimed prior
to, at or after the Merger Date (the matters described in clauses (i) and (ii)
the "Pre-Merger Matters"), to the fullest extent indemnified under the
Company's articles of incorporation, bylaws in effect as of the date hereof or
indemnification agreements in effect at the date hereof, including provisions
relating to advancement of expenses incurred in the defense of any action or
suit; provided that such indemnification shall be subject to any limitation
imposed from time to time under applicable laws. Parent and the Tires
Surviving Corporation shall also honor the indemnification agreements between
the Company or any of its Subsidiaries, as the case may be, and any officer or
director of the Company or any such Subsidiary, as the case may be, existing
on the date of this Agreement.
(b) Parent and the Tires Surviving Corporation agree that all
rights to indemnification and all limitations or exculpation of liabilities
existing in favor of the Indemnified Party as provided in the Company's
articles of incorporation and bylaws as in effect as of the date hereof shall
continue in full force and effect with respect to Pre-Merger Matters, without
any amendment thereto, for a period of six years from the Merger Date to the
extent such rights are consistent with Ohio Law; provided that, in the event
any Claim or Claims with respect to any such Pre-Merger Matters are asserted
or made within such six year period, all rights to indemnification in respect
of any such Claim or Claims shall continue until disposition of any and all
such Claims; provided however, that any determination required to be made with
respect to whether an Indemnified Party's conduct complies with the standards
set forth under Ohio Law, the Company's articles of incorporation or bylaws
or such agreements, as the case may be, shall be made by independent legal
counsel selected by the Indemnified Party and reasonably acceptable to Parent,
retained at Parent's expense; and provided further, that nothing in this
Section 7.9 shall impair any rights or obligations of any present or former
directors or officers of the Company.
(c) Parent or the Tires Surviving Corporation shall maintain the
Company's officers' and directors' liability insurance policy as of the Merger
Date ("D&O Insurance") with respect to Pre-Merger Matters for a period of not
less than six years after the Merger Date, provided, that Parent or the Tires
Surviving Corporation may substitute therefor policies of substantially
similar coverage and amounts containing terms no less advantageous to such
former directors or officers; provided further that in satisfying its
obligations under this Section, Parent shall not be obligated to pay premiums
in excess of 150% of the premium for D&O Insurance paid by the Company per
annum in its last full fiscal year, which amount has previously been disclosed
to Buyer but provided further that Parent shall nevertheless be obligated to
provide such coverage as may be obtained for such amount.
(d) The terms of Section 7.9(a) - 7.9(c) shall also apply, mutatis
mutandis, to Buyer, and Parent shall have obligations with respect to Buyer
corresponding to those of Parent with respect to the Company set forth in
Section 7.9.
Section 7.10. Registration Statement; Form S-8. Buyer
shall cause Parent to (i) promptly prepare and file with the SEC the Form
S-4 with respect to the Parent Common Stock (and a registration statement
on Form S-8 as necessary to register shares of Parent Common Stock
underlying the Adjusted Options) issuable in connection with the Mergers
and shall cause Parent to use its reasonable best efforts to cause the Form
S-4 (and such registration statement on Form S-8) to be declared effective
by the SEC as soon as practicable and (ii) take any action required to be
taken under applicable Blue Sky law in connection with such issuance of
Parent Common Stock or pursuant to any Adjusted Option.
Section 7.11. Governmental Authorization. Buyer shall cause
Parent to take all actions by or in respect of, or filing with, any
governmental body, agency, official or authority required for the
execution, delivery and performance by Parent of this Agreement and the
consummation by Parent of the transactions contemplated by this Agreement,
including (a) compliance with any applicable requirements of the HSR Act;
(b) compliance with any applicable requirements of the 1934 Act; (c)
compliance with any applicable requirements of the 1933 Act; (d)
compliance with any applicable foreign or state securities or Blue Sky
laws; (e) compliance with any applicable requirements of (i) the New
Jersey Industrial Site Recovery Act, as amended, and any rules or
regulations promulgated thereunder and (ii) the Connecticut Hazardous Waste
Establishment Transfer Act, as amended, and any rules or regulations
promulgated thereunder; (f) any applicable requirements of the Department
of Transportation and (g) compliance with any applicable requirements under
pre-merger notification or similar statutes and rules of the European
Community, its member states, Canada and Mexico.
Section 7.12. Listing of Stock. Buyer shall make
application to the NYSE or such other stock exchanges as shall be agreed
for the listing of the Parent Common Stock to be used in connection with
the Mergers (and the shares of Parent Common Stock underlying any Adjusted
Options) and to use its reasonable best efforts to cause such Parent Common
Stock to be listed on the NYSE, subject to official notice of issuance.
Section 7.13. Certain Corporate Matters with Respect to
Parent. (a) Buyer shall cause Parent to take all necessary corporate action
for the establishment of the Parent stock option plan contemplated by Section
1.7 hereof and agrees to vote the shares of capital stock of Parent owned by
it in favor of the adoption of such plan as required under the laws of the
State of Delaware.
(b) From the date hereof until the Merger Date, Buyer shall cause
Parent (x) not to take any action inconsistent with the provisions of this
Agreement and (y) not to conduct business or activity other than in connection
with this Agreement.
Section 7.14. Employment. Buyer and Parent currently
intend to offer employment after the Merger Date to each employee at the
Company's Akron, Ohio headquarters who is willing to relocate his or her
place of employment to Memphis, Tennessee or any other location designated
by Buyer and Parent. As of the Merger Date, Parent shall assume the
obligation of the Company to perform any and all Management Retention
Agreements identified in the Company Disclosure Schedules.
Section 7.15. Certain Additional Benefits Matters. Buyer, the
Company and Parent hereby agree (a) that the Company (or, as appropriate,
Buyer and Parent) shall take all such actions as are necessary to carry out
the matters described in Section 7.15 of the Company Disclosure Schedule
and (b) that such actions shall not constitute a violation of any other
provision of this Agreement, including, without limitation, Section 5.1.
ARTICLE 8
Conditions to the Mergers
Section 8.1. Conditions to the Obligations of Each Party. The
obligations of the Company to consummate the Tires Sub Merger and of Buyer to
consummate the Buyer Sub Merger are subject to the satisfaction of the
following conditions:
(a) this Agreement and the transactions contemplated by this
Agreement shall have been approved and adopted by the shareholders of the
Company in accordance with the Ohio Law;
(b) the issuance of Parent Common Stock in connection with this
Agreement shall have been approved by the shareholders of Buyer in accordance
with the rules and regulations of the NYSE;
(c) any applicable waiting period under the HSR Act relating to
the Mergers shall have expired;
(d) no provision of any applicable law or regulation and no
judgment, injunction, order or decree of a court of competent jurisdiction
shall prohibit the consummation of either of the Mergers;
(e) the Form S-4 shall have been declared effective under the 1933
Act and no stop order suspending the effectiveness of the Form S-4 shall be in
effect and no proceedings for such purpose shall be pending before or
threatened by the SEC;
(f) the shares of Parent Common Stock to be issued in the Mergers
(as well as the shares of Parent Common Stock to be issued upon exercise of
the Adjusted Options) shall have been approved for listing on the NYSE,
subject to official notice of issuance;
(g) all actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit the
consummation of the Tires Sub Merger and the Buyer Sub Merger shall have been
made or obtained other than any such actions or filings, the failure of which
to make or obtain shall not be reasonably likely to have a Material Adverse
Effect on Buyer or the Company; and
(h) Buyer and the Company shall have received a letter of Arthur
Andersen LLP and Ernst & Young LLP, respectively, and otherwise in form and
substance reasonably satisfactory to Buyer and the Company, that confirms
Buyer's management's assessment (in the case of Arthur Andersen LLP) and the
Company's management's assessment (in the case of Ernst & Young LLP) that the
Mergers will qualify for pooling of interests accounting treatment under GAAP.
Section 8.2. Conditions to the Obligations of Buyer. The
obligations of Buyer to consummate the Buyer Sub Merger are subject to the
satisfaction of the following further conditions:
(a) (i) The Company shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior to
the Merger Date, (ii) the representations and warranties of the Company
contained in this Agreement shall be true and correct at and as of the Merger
Date, as if made at and as of the Merger Date (except to the extent expressly
made as of an earlier date, in which case as of such date), except where the
failure of such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or "Material
Adverse Effect" set forth therein) is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company and
(iii) Buyer shall have received a certificate signed by an executive officer
of the Company to the foregoing effect.
(b) Holders of not more than 5% of the outstanding shares of
Company Stock shall have perfected dissenters' rights in respect of such
Company Stock pursuant to Section 1701.85 of the Ohio Law.
(c) Buyer shall have received an opinion of its tax counsel, Davis
Polk & Wardwell, in form and substance reasonably satisfactory to Buyer,
and dated as of the Merger Date, to the effect that the Mergers will
constitute transactions described in Section 351 and/or Section 368(a) of
the Code and that neither Buyer nor its shareholders shall recognize gain
or loss for U.S. Federal income tax purposes as a result of the Mergers
(other than with respect to cash paid in lieu of fractional shares). In
rendering such opinion, Davis Polk & Wardwell may require delivery of and
rely upon the customary representations letters delivered by Parent, Buyer
and its Subsidiaries in form and substance reasonably satisfactory to Davis
Polk & Wardwell.
Section 8.3. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Tires Sub Merger are
subject to the satisfaction of the following further conditions:
(a) (i) Buyer shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Merger Date, (ii) the representations and warranties of Buyer contained in
this Agreement shall be true and correct at and as of the Merger Date, as
if made at and as of the Merger Date (except to the extent expressly made
as of an earlier date, in which case as of such date), except where the
failure of such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or "Material
Adverse Effect" set forth therein) is not reasonably like to have,
individually or in the aggregate, a Material Adverse Effect on Buyer and
(iii) the Company shall have received a certificate signed by an executive
officer of Buyer to the foregoing effect.
(b) The Company shall have received an opinion of its tax counsel,
Cravath, Swaine & Moore, in form and substance reasonably satisfactory to the
Company, and dated as of the Merger Date, to the effect that the Mergers will
constitute transactions described in Section 351 and/or Section 368(a) of the
Code and that neither the Company nor its shareholders shall recognize gain or
loss for U.S. Federal income tax purposes as a result of the Mergers (other
than with respect to cash paid in lieu of fractional shares). In rendering
such opinion, Cravath, Swaine & Moore may require delivery of and rely upon
the customary representations letters delivered by the Company and its
Subsidiaries in form and substance reasonably satisfactory to Cravath, Swaine
& Moore.
ARTICLE 9
Termination
Section 9.1. Termination. This Agreement may be terminated
and the Mergers may be abandoned at any time prior to the Merger Date
(notwithstanding any approval of this Agreement by the shareholders of the
Company or Buyer):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer, if the Mergers have not been
consummated by June 30, 1998; provided, however, that the right to terminate
this Agreement pursuant to this Section 9.01(b) shall not be available to any
party whose willful failure to perform any of its obligations under this
Agreement results in the failure of the Mergers to be consummated by such
time;
(c) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of either of the Mergers illegal or
otherwise prohibited or if any judgment, injunction, order or decree enjoining
Buyer or the Company from consummating their respective Mergers is entered and
such judgment, injunction, order or decree shall have become final and
non-appealable (provided that any judgment, injunction, order or decree other
than a temporary restraining order shall be deemed to have become final and
non-appealable thirty days following the entry thereof);
(d) (i) by the Company, if the approval of the shareholders of
Buyer contemplated by this Agreement shall not have been obtained by reason of
the failure to obtain the required vote at a duly held meeting of shareholders
or any adjournment thereof or (ii) by Buyer, if the Directors of the Company
determine not to call or hold the Company Shareholders' Meeting as provided
in Section 5.2 or if the approvals of the shareholders of the Company
contemplated by this Agreement shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of shareholders or
any adjournment thereof;
(e) by Buyer, if prior to the Company Shareholder Meeting, the
Directors of the Company shall have withdrawn, modified or changed in a manner
adverse to Buyer their approval or recommendation of this Agreement;
(f) by Buyer, upon a breach of any representation, warranty,
covenant or agreement of the Company, or if any representation or warranty of
the Company shall become untrue, the effect of which is a Material Adverse
Effect on the Company, in either case such that the conditions set forth in
Section 8.2(a) would be incapable of being satisfied by June 30, 1998 (or as
otherwise extended);
(g) by the Company, upon a breach of any representation, warranty,
covenant or agreement of Buyer, or if any representation or warranty of Buyer
shall become untrue, the effect of which is a Material Adverse Effect on
Buyer, in either case such that the conditions set forth in Section 8.3(a)
would be incapable of being satisfied by June 30, 1998 (or as otherwise
extended);
(h) by the Company, upon payment to Buyer of the amounts referred
to in Section 10.4(b), if prior to the Company Shareholder Meeting, the
Directors of the Company shall have withdrawn or modified in a manner adverse
to Buyer their approval or recommendation of this Agreement or the Tires Sub
Merger in order to permit the Company to execute a definitive agreement in
connection with a Superior Proposal.
The party desiring to terminate this Agreement pursuant to
this Section 9.1 shall give written notice of such termination to the other
party in accordance with Section 10.1.
Section 9.2. Effect of Termination. If this Agreement is
terminated pursuant to Section 9.1, this Agreement shall become void and of no
effect with no liability on the part of any party hereto, except that (a) the
agreements contained in the last sentence of Section 7.4, this Section 9.2 and
in Article 10 shall survive the termination hereof and (b) no such termination
shall relieve any party of any liability or damages resulting from any wilful
breach by that party of this Agreement.
ARTICLE 10
Miscellaneous
Section 10.1. Notices. Except as provided in Section 5.3, all
notices, requests and other communications to any party hereunder shall be in
writing (including telecopy or similar writing) and shall be given,
if to any Buyer Party, to:
Federal Express Corporation
1980 Nonconnah Boulevard
Memphis, TN 38132
Fax: (901) 395-5034
Attention: Kenneth R. Masterson
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Fax: (212) 450-4800
Attention: Dennis S. Hersch
if to the Company, to:
Caliber System, Inc.
3925 Embassy Parkway
Akron, OH 44333
Fax: (330) 665-8937
Attention: John E. Lynch, Jr.
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Fax: (212) 474-3700
Attention: Robert A. Kindler
and
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Fax: (212) 755-7306
Attention: Robert A. Profusek
or to such other address or telecopy number as such party may hereafter
specify for the purpose by notice to the other parties hereto. Each such
notice, request or other communication shall be effective (a) if given by
telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section and the appropriate telecopy confirmation is
received (b) if by overnight delivery service, which shall be Buyer, with
proof of delivery, the next business day or (c) if given by any other
means, when delivered at the address specified in this Section.
Section 10.2. Entire Agreement; Non-Survival of
Representations and Warranties. (a) This Agreement and the Confidentiality
Agreement constitute the entire agreement among the parties with respect to
the subject matter hereof and thereof and supersede all prior agreements,
understandings and negotiations, both written and oral, between the parties
with respect to such subject matter. None of this Agreement or any other
agreement contemplated hereby or thereby (or any provision hereof or thereof)
is intended to confer on any Person other than the parties hereto or thereto
any rights or remedies (except that Sections 7.9 and 7.15 are intended to
confer rights and remedies on the Persons specified therein).
(b) The representations and warranties contained herein shall not
survive the Merger Date.
Section 10.3. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Merger Date if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company, Buyer and Parent or, in the case of a waiver, by
the party against whom the waiver is to be effective; provided that after the
adoption of this Agreement by the shareholders of (i) the Company, no such
amendment or waiver shall, without the further approval of such shareholders,
alter or change (A) the amount or kind of consideration to be received in
exchange for any shares of capital stock of the Company, or (B) any of the
terms or conditions of this Agreement if such alteration or change would
adversely affect the holders of any shares of capital stock of the Company and
(ii) Buyer, no such amendment or waiver shall, without the further approval of
such shareholders, alter or change (A) the amount or kind of consideration to
be received in exchange for any shares of capital stock of Buyer or (B) any of
the terms or conditions of this Agreement if such alteration or change would
adversely affect the holders of any shares of capital stock of Buyer.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 10.4. Expenses. (a) Except as otherwise provided
in this Section, all costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense.
(b) The Company agrees to pay Buyer in immediately available funds
by wire transfer an amount equal to
(i) $50,000,000 promptly, but in no event later than two
business days, after the termination of this Agreement as a result of the
occurrence of any of the events in (A) Section 9.1(d)(ii) or (B) Section
9.1(e); provided, however, that the Company shall not be obligated to pay
such amount if immediately prior to the time such amount would otherwise be
payable, the condition set forth in Section 8.3(a) would not have been
satisfied; or
(ii) $100,000,000, promptly, but in no event later than two
business days, after the termination of this Agreement as a result of the
occurrence of any of the events set forth in Section 9.1(h).
(c) In the event of a termination of this Agreement pursuant to
Section 9.1(d)(ii) or Section 9.1(e) when an Acquisition Proposal is
pending, the Company agrees to pay to Buyer in immediately available funds
by wire transfer an amount (in addition to the amounts specified in Section
10.4(b)(i)) equal to $50,000,000 if, within 12 months of such termination,
the Company shall enter into an agreement providing for, or there shall be
consummated, a transaction which would constitute an Acquisition Proposal.
Such additional amount shall be paid within two business days of the date
such agreement is entered into or such transaction is consummated, as the
case may be.
(d) Buyer agrees to pay to the Company in immediately available
funds by wire transfer an amount equal to $50,000,000 promptly, but in no
event later than two business days, after the termination of this Agreement
as a result of the occurrence of any of the events set forth in Section
9.1(d)(i); provided, however, that Buyer shall not be obligated to pay such
amount if immediately prior to the time such amount would otherwise be
payable, the condition set forth in Section 8.2(a) would not have been
satisfied.
Section 10.5. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; provided that
no party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the other parties
hereto; provided further that Buyer may assign its rights, but not its
obligations, under this Agreement to a wholly-owned subsidiary of Buyer.
Section 10.6. Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the State of Delaware
(without regard to principles of conflict of laws).
Section 10.7. Jurisdiction. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of
or in connection with, this Agreement or the transactions contemplated by
this Agreement may be brought against any of the parties in the United
States District Court for the Southern District of New York or any state
court sitting in the City of New York, Borough of Manhattan, and each of
the parties hereto hereby consents to the exclusive jurisdiction of such
courts (and of the appropriate appellate courts) in any such suit, action
or proceeding and waives any objection to venue laid therein. Process in
any such suit, action or proceeding may be served on any party anywhere in
the world, whether within or without the State of New York. Without
limiting the generality of the foregoing, each party hereto agrees that
service of process upon such party at the address referred to in Section
10.1, together with written notice of such service to such party, shall be
deemed effective service of process upon such party.
Section 10.8. Counterparts; Effectiveness. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the
other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
FEDERAL EXPRESS CORPORATION
By: /s/ Kenneth R. Masterson
-----------------------------------------
Name: Kenneth R. Masterson
Title: Executive Vice President, General
Counsel and Secretary
FAST HOLDING INC.
By: /s/ Scott E. Hansen
-----------------------------------------
Name: Scott E. Hansen
Title: Vice President
FAST MERGER SUB INC.
By: /s/ Scott E. Hansen
-----------------------------------------
Name: Scott E. Hansen
Title: Vice President
TIRES MERGER SUB INC.
By: /s/ Scott E. Hansen
-----------------------------------------
Name: Scott E. Hansen
Title: Vice President
CALIBER SYSTEM, INC.
By: /s/ Daniel J. Sullivan
-----------------------------------------
Name: Daniel J. Sullivan
Title: Chairman, President and Chief
Executive Officer
