As filed with the Securities and Exchange Commission on December 15, 1994
Registration No. 33-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________
FLORIDA PROGRESS CORPORATION
(Exact name of registrant as specified in its charter)
Florida 59-2147112
(State of Incorporation) (I.R.S. Employer
Identification No.)
One Progress Plaza
St. Petersburg, Florida 33701
Telephone Number (813) 824-6400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
David R. Kuzma
Vice President and Treasurer
Florida Progress Corporation
3201 34th Street South
St. Petersburg, FL 33711
(813) 866-4553
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of the Registration Statement.
___________________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
__________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Proposed Maximum Proposed Maximum
Class of Securities Amount to be Offering Price Per Aggregate Offering Amount of
to be Registered Registered Unit (1) Price (1) Registration Fee
<S> <C> <C> <C> <C>
Common Stock, without
par value (2) . . . . 350,000 Shs. $30.50 $10,675,000 $3,682
(1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) and based
on the average of the high and low sales prices of the Common Stock in New York Stock Exchange Composite
Transactions on December 12, 1994.
(2) Includes rights to purchase units of Series A Junior Participating Preferred Stock.
</TABLE>
______________________
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
Legend for left hand margin of cover of prospectus:
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
Subject to Completion, Dated December 15, 1994
350,000 SHARES
FLORIDA PROGRESS CORPORATION
COMMON STOCK
___________________
This Prospectus relates to up to 350,000 shares (the "Shares") of Common
Stock, without par value ("Common Stock"), of Florida Progress Corporation, a
Florida corporation (the "Company"), which may be offered and sold by the
selling stockholders named herein (the "Selling Stockholders") pursuant to this
Prospectus from time to time. The Shares were acquired from the Company under
a certain agreement more particularly described herein under the heading
"Recent Developments." The Company will receive no part of the proceeds from
the sale of the Shares.
The distribution of the Shares by the Selling Stockholders may be effected
by ordinary brokers' transactions, block trades, purchases by a broker or
dealer as principal, fixed price offerings, exchange distributions or special
offerings in accordance with the rules of the New York Stock Exchange, Pacific
Stock Exchange or any other exchange on which the Common Stock is traded, and
transactions in which the broker solicits purchasers. See "Plan of
Distribution." The Company will pay the expenses of registration of the
Shares. The Selling Stockholders will pay all fees and expenses of their own
legal counsel and accountants and all commissions or transfer taxes, if any.
The Company and the Selling Stockholders have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"). See "Selling Stockholders."
The Shares are traded on the New York Stock Exchange and The Pacific Stock
Exchange under the symbol FPC.
______________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
_____________________________
The date of this Prospectus is ________________, 199__.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC"). Reports, proxy statements and other
information filed by the Company can be inspected and copied at the SEC's
Public Reference Room, 450 Fifth Street, N.W., Washington, DC 20549, and at the
following Regional Offices of the SEC: Seven World Trade Center, 13th Floor,
New York, New York 10048; and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and copies of such material can be obtained from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Washington, DC 20549, at
prescribed rates. In addition, reports, proxy material and other information
concerning the Company may be inspected at the New York Stock Exchange, 20
Broad Street, New York, New York 10005, and at The Pacific Stock Exchange, 301
Pine Street, San Francisco, California 94104.
This Prospectus constitutes a part of a registration statement on Form S-3
(together with all amendments and exhibits, the "Registration Statement") filed
by the Company with the SEC under the Securities Act. This Prospectus does not
contain all of the information included in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
SEC. Reference is made to the Registration Statement for further information
with respect to the Company and the Shares offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the SEC (File
No. 1-8349), as amended, are incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1993,
as filed with the SEC on March 25, 1994;
2. Quarterly Reports on Form 10-Q for the quarters ended March
31, 1994, June 30, 1994 and September 30, 1994, as filed with the SEC on May 9,
1994, August 5, 1994 and November 14, 1994, respectively.
3. Current Reports on Form 8-K dated January 17, 1994, April 21,
1994, July 21, 1994, October 20, 1994 and November 17, 1994, as filed with the
SEC on January 26, 1994, April 21, 1994, July 25, 1994, October 24, 1994 and
November 22, 1994, respectively.
4. The description of the Common Stock contained in Item 4 of the
Company's Registration Statement on Form 8-B (No. 1-8349) that was filed with
the SEC on May 21, 1982, as updated by the following reports of the Company,
each of which is also incorporated herein by reference: Part II, Item 2 of
Quarterly Report on Form 10-Q for the quarter ended March 31, 1985 that was
filed with the SEC on May 14, 1985; Part II, Item 4 of Quarterly Report on
Form 10-Q for the quarter ended March 31, 1990 that was filed with the SEC
on May 14, 1990; and the Current Report on Form 8-K dated November 21, 1991
that was filed with the SEC on November 27, 1991.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Shares offered hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part of this
Prospectus from the date of filing of such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein (or in the
accompanying Prospectus Supplement, if any) or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or replaces such statement. Any such statement so modified or
superseded shall not be deemed, except as modified or superseded, to constitute
a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the information that has been incorporated in this
Prospectus by reference, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference therein. Requests for such
copies should be directed to: Florida Progress Corporation, Investor Services,
P.O. Box 33042, St. Petersburg, Florida 33733, or telephone toll free
1-800-352-1121.
THE COMPANY
Florida Progress Corporation is a diversified electric utility holding
company headquartered in St. Petersburg, Florida and was incorporated in
Florida on January 21, 1982. The Company's primary subsidiary is Florida Power
Corporation ("Florida Power"). Florida Power was incorporated in Florida in
1899 and is an operating utility engaged in the generation, purchase,
transmission, distribution and sale of electricity primarily within the State
of Florida. Florida Power's service area covers about 20,000 square miles in
central and northern Florida and along the west coast of the state and includes
St. Petersburg and Clearwater as well as the areas surrounding Walt Disney
World, Orlando, Ocala and Tallahassee.
The Company's diversified operations are owned directly or indirectly
through Progress Capital Holdings, Inc. ("PCH"), a Florida corporation and
wholly owned subsidiary of the Company that was incorporated in 1988. PCH
holds the capital stock of, and provides funding for, the Company's diversified
subsidiaries, which include the following:
Electric Fuels Corporation -- Formed in 1976, Electric Fuels is a
coal mining and transportation services company serving utility and industrial
companies, including Florida Power. Its major businesses include coal mining,
procurement and transportation; bulk commodities transportation; and railcar
and marine repair facilities.
Mid-Continent Life Insurance Company -- Acquired in 1986,
Mid-Continent is a life insurance company headquartered in Oklahoma City which
has been in business since 1909. Its principal product is a low-premium death
benefit policy.
Progress Credit Corporation -- Formed in 1983, Progress Credit is a
financial services company with lending and leasing activities primarily
involving commercial aircraft, real estate projects, locomotives and medical
equipment. Progress Credit is not entering into new transactions, unless they
facilitate the Company's business withdrawal strategies, and plans to sell,
over time, most of its assets. Talquin Corporation, a former subsidiary of PCH
incorporated in 1981, was merged with and into Progress Credit effective
September 30, 1993. Talquin formerly was involved with investing in and
developing real estate and in manufacturing and distributing building products.
The Company has divested Talquin's building products operations and intends to
sell the remaining real estate investments over time.
The Company has its principal offices at One Progress Plaza, St.
Petersburg, Florida 33701, and its telephone number is (813) 824-6400.
RECENT DEVELOPMENTS
The Shares were issued by the Company to the Selling Stockholders in
connection with the acquisition of FM Industries, Inc., a Texas corporation
("FMI"), headquartered in Fort Worth, Texas, pursuant to an Agreement and
Plan of Merger dated as of December 1, 1994, by and among the Company, EFC
Merger Corp., FMI and the Selling Stockholders (the "Merger Agreement"). As a
result of the acquisition, FMI became an indirect wholly owned subsidiary of
the Company. FMI carries on the business of manufacturing, reconditioning and
distributing railcar cushioning units, train dynamics analyzer hardware and
software, and hydraulic hammers and compactors used in the construction
industry.
SELLING STOCKHOLDERS
The Shares are being registered pursuant to the terms of the Merger
Agreement, pursuant to which the Company acquired FMI from the Selling
Stockholders. See "Recent Developments." The following table sets forth
at December 1, 1994, and as adjusted to reflect the sale by the Selling
Stockholders of the Shares offered hereby, certain information with respect to
the beneficial ownership of the Common Stock by the Selling Stockholders:
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership Shares
Prior to Being Beneficial Ownership
Offering(1) Offered (1) After Offering
----------------------- ----------- --------------------
Name Shares Percent Shares Percent
- --------------------------------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Sam Braunagel . . . . . . . . . . 175,000 * 87,500 87,500 *
Leo Kane . . . . . . . . . . . . . 35,000 * 17,500 17,500 *
Allan J. Kvasnicka . . . . . . . . 122,500 * 61,250 61,250 *
John Marion. . . . . . . . . . . . 19,250 * 9,625 9,625 *
John Mason . . . . . . . . . . . . 19,250 * 9,625 9,625 *
O. Elwyn Seay (2). . . . . . . . . 105,000 * 52,500 52,500 *
Anne B. Windfohr . . . . . . . . . 154,000 * 77,000 77,000 *
Craig W. Wycoff. . . . . . . . . . 70,000 * 35,000 35,000 *
____________________
* Less than one percent.
(1) Under the rules of the Securities and Exchange Commission, a person is deemed to be the beneficial owner
of a security if such person has or shares the power to vote or direct the voting of such security or the power
to dispose or direct the disposition of such security. A person is also deemed to be a beneficial owner of any
security if that person has the right to acquire beneficial ownership within 60 days. Accordingly, more than
one person may be deemed to be a beneficial owner of the same securities. Unless otherwise indicated by
footnote, the named individuals have sole voting and investment power with respect to the shares of Common
Stock beneficially owned.
(2) Mr. Seay is President of FMI.
</TABLE>
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Stockholders, or by
pledgees, donees, transferees or other successors in interest. Such sales may
be made on the New York Stock Exchange, The Pacific Stock Exchange or any one
or more exchanges on which the Common Stock is traded or in the
over-the-counter market, or otherwise at prices and at terms then prevailing or
at prices related to the then current market price, or in negotiated
transactions. The Shares may be sold in one or more of the following ways:
(a) ordinary brokers' transactions; (b) a block trade in which the broker or
dealer so engaged will attempt to sell the Shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction; (c)
purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (d) "fixed price offerings"
off the floor of the exchanges or "exchange distributions" and "special
offerings" of shares in accordance with the rules of such exchange; and (e)
transactions in which the broker solicits purchasers. In effecting sales,
brokers or dealers engaged by the Selling Stockholders may arrange for other
brokers or dealers to participate. Brokers or dealers will receive commissions
or discounts from the Selling Stockholders in amounts to be negotiated
immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In addition, any
securities covered by this Prospectus which qualify for sale pursuant to Rule
144 may be sold under Rule 144 rather than pursuant to this Prospectus.
Upon the Company being notified by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of Shares
through a block trade, fixed price offering, special offering, exchange
distribution or secondary distribution, or a purchase by a broker or dealer or
transaction in which the broker solicits purchasers, a supplemented prospectus
will be filed, if required, pursuant to Rule 424 under the Act, disclosing (i)
the name of each such Selling Stockholder and of the participating
broker-dealer(s), (ii) the number of Shares involved, (iii) the price at which
such Shares were sold, (iv) the commissions paid or discounts or concessions
allowed to such broker-dealer(s), where applicable, and (v) other facts
material to the transaction.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 250,000,000 shares
of Common Stock without par value and 10,000,000 shares of preferred stock
without par value. No shares of preferred stock are outstanding. The Common
Stock is traded on the New York and Pacific Stock Exchanges under the ticker
symbol FPC. The following descriptions summarize certain relevant attributes
of the Common Stock, but they do not purport to be complete and are qualified
in their entirety by reference to the complete descriptions appearing in the
following documents: (i) the Company's Restated Articles of Incorporation, as
amended (the "Company's Articles"), (ii) the Company's By-laws, as amended,
(iii) Florida Power's Amended Articles of Incorporation, as amended ("Florida
Power's Articles"), (iv) Florida Power's By-laws, as amended and (v) the
Shareholder Rights Agreement dated November 21, 1991, between the Company and
Chemical Bank (as successor to Manufacturers Hanover Trust Company), as Rights
Agent (the "Shareholder Rights Agreement").
Dividend Rights. Subject to the preferential rights of preferred
shareholders and the restrictions referred to below, dividends may be declared
on the Common Stock out of funds legally available for the payment thereof.
All shares of Common Stock participate equally with respect to dividends.
Dividend Restrictions. The Company's Articles do not limit the dividends
that may be paid on the Company's Common Stock. However, the primary source
for payment of the Company's dividends consists of dividends paid to it by
Florida Power. Florida Power's Articles and its Indenture dated as of January
1, 1944, as supplemented, under which it issues first mortgage bonds (the
"Mortgage Bond Indenture"), both contain provisions restricting dividends in
certain circumstances. At December 15, 1994, Florida Power's ability to pay
dividends was not, nor was it expected to be, limited by these restrictions.
Florida Power's Articles provide that no dividends (other than dividends
payable in common stock) shall be paid, nor shall any common stock be acquired
for value, if the aggregate amount thereof since April 30, 1944, including the
amount then proposed to be expended, plus all other charges to retained
earnings since April 30, 1944, exceeds (a) all credits to retained earnings
since April 30, 1944, plus (b) all amounts credited to capital surplus after
April 30, 1944, arising from the donation to Florida Power of cash or
securities (other than securities junior to the preferred stock and preference
stock as to assets and dividends) or transfers of amounts from retained
earnings to capital surplus. Florida Power's Articles also provide that cash
dividends on common stock shall be limited to 75% of net income available for
common stock if common stock equity falls below 25% of total capitalization,
and to 50% if common stock equity falls below 20%. On September 30, 1994,
Florida Power's common stock equity was approximately 52% of total
capitalization.
The Mortgage Bond Indenture provides that dividends will not be paid
(except a dividend in Florida Power's own common stock) upon Florida Power's
common stock except out of net income of Florida Power subsequent to
December 31, 1943.
The Company and PCH have entered into an Amended and Restated Support
Agreement dated as of February 1, 1991, pursuant to which the Company has
agreed to cause PCH to have at the last day of each month a net worth
(defined generally as the sum of capital stock and retained earnings minus the
sum of treasury stock and intangible assets) equal to $150,000,000, plus 50% of
PCH's consolidated net income since January 1, 1990 (and not minus any
consolidated net loss), plus the net proceeds to PCH of any capital stock or
equity contribution issued to or made by the Company or any subsidiary of the
Company since January 1, 1990, other than an equity contribution consisting
of capital stock or assets of a subsidiary of the Company. As of September 30,
1994, PCH's net worth was approximately $95,500,000 higher than the amount
required under this agreement.
The Company's other subsidiaries do not have any material restrictions on
the dividends that may be paid to the Company.
Voting Rights; Classified Board. Each holder of Common Stock is entitled
to one vote for each share held. The Company's Board of Directors consists of
twelve persons and is classified into three classes serving staggered
three-year terms. Cumulative voting is not permitted. The effect of the
classified Board, together with the Fair Price Provision and the Shareholder
Rights Agreement (each described below) may make it difficult for any person to
acquire control of the Company and remove management by means of a hostile
takeover.
Liquidation Rights. All shares of Common Stock of the Company rank
equally, and are entitled to share ratably, in the distribution of all
available assets upon any dissolution, liquidation or winding up of the
Company.
Fair Price Provision. Unless otherwise approved by the Company's Board of
Directors, the Company's Articles provide that certain business combinations
require 75% shareholder approval unless certain fair price and procedural
requirements are met.
Affiliated Transaction and Control-Share Acquisition Statutes. The Common
Stock of the Company is subject to the "affiliated transaction" and
"control-share acquisition" provisions of the Florida Business Corporation
Act, Sections 607.0901 and 607.0902, Florida Statutes, respectively. These
provide that, subject to certain exceptions, an "affiliated transaction" must
be approved by the holders of two-thirds of the voting shares other than
those beneficially owned by an "interested shareholder" and that "control
shares" acquired in specified control-share acquisitions have voting rights
only to the extent conferred by a resolution approved by the shareholders,
excluding holders of shares defined as "interested shares."
Shareholder Rights Agreement. The Company's Shareholder Rights Agreement
as originally adopted provides that attached to each share of Common Stock is
one right (a "Right") which, when exercisable, entitles the holder of the Right
to purchase one one-hundredth of a share of Series A Junior Participating
Preferred Stock at a purchase price (the "Purchase Price") of $130, subject to
adjustment. The number of Rights attached to each share of Common Stock is
subject to adjustment, and as a result of the three-for-two Common Stock split
to shareholders of record on June 30, 1992, each share of Common Stock now has
attached to it approximately two-thirds of one Right. In certain events (such
as a person or group becoming the owner of 15% or more of the Common Stock or
a merger or other transaction with an entity controlled by such acquiring
person or group), exercise of the Rights would entitle the holders thereof
(other than the acquiring person or group) to receive Common Stock of the
Company or a surviving corporation, or cash, property or other securities, with
a market value equal to twice the Purchase Price. Accordingly, exercise of the
Rights may cause substantial dilution to a person who attempts to acquire the
Company. The Rights automatically attach to each outstanding share of Common
Stock, including the Shares offered hereby. There is no monetary value
presently assigned to the Rights, and they will not trade separately from the
Common Stock unless and until they become exercisable. The Rights, which
expire on December 5, 2001, may be redeemed at a price of $.01 per Right so
long as they are not exercisable. The Shareholder Rights Agreement may
have certain antitakeover effects, although it is not intended to preclude any
acquisition or business combination that is at a fair price and otherwise in
the best interests of the Company and its shareholders as determined by the
Board. However, a shareholder could potentially disagree with the Board's
determination of what constitutes a fair price or the best interests of the
Company and its shareholders.
Other Provisions. The outstanding shares of Common Stock are, and the
Shares offered hereby upon issuance and payment therefor will be, fully paid
and non-assessable. The Common Stock has no preemptive rights and no
conversion rights.
Transfer Agent and Registrar. Chemical Bank, New York, New York, is the
transfer agent and registrar for the Common Stock.
LEGAL MATTERS
Certain matters relating to the legality of the Shares offered hereby will
be passed upon for the Company by Kenneth E. Armstrong, Esq., Vice President,
General Counsel and Secretary of the Company.
EXPERTS
The financial statements and schedules included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993, incorporated herein
by reference, have been audited by KPMG Peat Marwick LLP, independent certified
public accountants, to the extent and for the periods indicated in their report
with respect thereto. Said financial statements and schedules have been
incorporated herein by reference in reliance upon their report given on the
authority of said firm as experts in accounting and auditing. KPMG's report
refers to changes in the methods of accounting for income taxes and
post-retirement benefits other than pensions.
The statements made herein and in the documents incorporated herein by
reference that relate to matters of law or express legal conclusions are made
on authority of Kenneth E. Armstrong, Esq., Vice President, General Counsel and
Secretary of the Company, as an expert, and are included herein on the
authority of such counsel.
<PAGE>
PART II.
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
SEC Registration Fee . . . . . . . . . . . . . . . . . $ 3,682
New York Stock Exchange Listing Fee. . . . . . . . . . . 1,225
Pacific Stock Exchange Listing Fee . . . . . . . . . . . 500
Accounting Fees and Expenses . . . . . . . . . . . . . . 10,000*
Legal Fees and Blue Sky Expenses . . . . . . . . . . . . 60,000*
Transfer Agent Fees and Expenses . . . . . . . . . . . . 1,000*
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 3,593*
Total. . . . . . . . . . . . . . . . . . . . . . . . . .$80,000*
__________________
*Estimated.
Item 15. Indemnification of Directors and Officers.
The Florida Business Corporation Act, as amended (the "Florida Act"),
provides that, in general, a business corporation may indemnify any person who
is or was a party to any proceeding (other than an action by, or in the right
of, the corporation) by reason of the fact that he or she is or was a director
or officer of the corporation, against liability incurred in connection with
such proceeding, provided certain standards are met, including that such
officer or director acted in good faith and in a manner reasonably believed to
be in, or not opposed to, the best interests of the corporation, and provided
further that, with respect to any criminal action or proceeding, the officer or
director had no reasonable cause to believe his or her conduct was unlawful.
In the case of proceedings by or in the right of the corporation, the Florida
Act provides that, in general, a corporation may indemnify any person who was
or is a party to such proceeding by reason of the fact that he or she is or was
a director or officer of the corporation against expenses and amounts paid in
settlement actually and reasonably incurred in connection with the defense or
settlement of such proceeding, including the appeal thereof, provided that such
person acted in good faith and in a manner he or she reasonably believed to be
in, or not opposed to, the best interest of the corporation, and provided
further that no indemnity shall be made in respect of any claim as to which
such person is adjudged liable unless a court of competent jurisdiction
determines upon application that such person is fairly and reasonably entitled
to indemnity. To the extent that any officers or directors are successful on
the merits or otherwise in the defense of any of the proceedings described
above, the Florida Act provides that the corporation is required to indemnify
such officers or directors against expenses actually and reasonably incurred in
connection therewith. However, the Florida Act further provides that, in
general, indemnification or advancement of expenses shall not be made to or on
behalf of any officer or director if a judgment or other final adjudication
establishes that his or her actions, or omissions to act, were material to the
cause of action so adjudicated and constitute: (i) a violation of the criminal
law, unless the director or officer had reasonable cause to believe his or her
conduct was lawful or had no reasonable cause to believe it was unlawful; (ii)
a transaction from which the director or officer derived an improper personal
benefit; (iii) in the case of a director, a circumstance under which the
director has voted for or assented to a distribution made in violation
of the Florida Act or the corporation's articles of incorporation; or (iv)
willful misconduct or a conscious disregard for the best interest of the
corporation in a proceeding by or in the right of the corporation to procure a
judgment in its favor or in a proceeding by or in the right of a shareholder.
Article XI of the Company's By-laws provides that the Company shall indemnify
any director, officer or employee or any former director, officer or employee
to the full extent permitted by law.
The underwriters, if any, will also agree to indemnify the directors and
officers of the Company against certain liabilities to the extent set forth in
the respective Underwriting Agreement.
The Company has purchased insurance with respect to, among other things,
the liabilities that may arise under the statutory provisions referred to
above. The directors and officers of the Company also are insured against
certain liabilities, including certain liabilities arising under the Securities
Act of 1933, as amended, which might be incurred by them in such capacities and
against which they are not indemnified by the Company.
Item 16. Exhibits.
4.(a)* - Restated Articles of Incorporation, as amended, of the Company.
(Filed as Exhibit 3(a) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1991, as filed with the SEC on
March 30, 1992.)
4.(b)* - Rights Agreement, dated November 21, 1991, between the Company and
Chemical Bank (as successor to Manufacturers Hanover Trust
Company), with form of Rights Certificate attached thereto as
Exhibit A. (Filed as Exhibit 4(a) to the Company's Form 8-K dated
November 21, 1991, as filed with the SEC on November 27, 1991.)
4.(c)* - Amended Articles of Incorporation, as amended, of Florida Power.
(Filed as Exhibit 3(a) to the Florida Power Annual Report on Form
10-K for the year ended December 31, 1991, as filed with the SEC in
file No. 1-3274 on March 30, 1992.)
4.(d)* - Indenture, dated as of January 1, 1944 (the "Indenture"), between
Florida Power and Guaranty Trust Company of New York and The
Florida National Bank of Jacksonville, as Trustees. (Filed as
Exhibit B-18 to Florida Power's Registration Statement on Form A-2
(No. 2-5293) filed with the SEC on January 24, 1944.)
4.(e)* - Seventh Supplemental Indenture, dated as of July 1, 1956, between
Florida Power and Guaranty Trust Company of New York and The
Florida National Bank of Jacksonville, as Trustees, with reference
to the modification and amendment of the Indenture. (Filed as
Exhibit 4(b) to Florida Power's Registration Statement on Form S-3
(No. 33-16788) filed with the SEC on September 27, 1991.)
4.(f)* - Eighth Supplemental Indenture, dated as of July 1, 1958, between
Florida Power and Guaranty Trust Company of New York and The
Florida National Bank of Jacksonville, as Trustees, with reference
to the modification and amendment of the Indenture. (Filed as
Exhibit 4(c) to Florida Power's Registration Statement on Form S-3
(No. 33-16788) filed with the SEC on September 27, 1991.)
4.(g)* - Sixteenth Supplemental Indenture, dated as of February 1, 1970,
between Florida Power and Morgan Guaranty Trust Company of New York
and The Florida National Bank of Jacksonville, as Trustees,
with reference to the modification and amendment of the Indenture.
(Filed as Exhibit 4(d) to Florida Power's Registration Statement on
Form S-3 (No. 33-16788) filed with the SEC on September 27, 1991.)
4.(h)* - Twenty-Ninth Supplemental Indenture dated as of September 1, 1982,
between Florida Power and Morgan Guaranty Trust Company of New York
and Florida National Bank, as Trustees, with reference to the
modification and amendment of the Indenture. (Filed as Exhibit
4(c) to Florida Power's Registration Statement on Form S-3 (No.
2-79382) filed with the SEC on September 17, 1982.)
4.(i)* - Thirty-Eighth Supplemental Indenture dated as of July 25, 1994,
between the Company and First Chicago Trust Company of New York, as
successor Trustee, Morgan Guaranty Trust Company of New York, as
resigning Trustee, and First Union National Bank of Florida, as
resigning Co-Trustee, with reference to confirmation of First
Chicago Trust Company of New York as successor Trustee under the
Indenture. (Filed as Exhibit 4.(f) to Florida Power's Registration
Statement on Form S-3 (No. 33-55273) filed with the SEC on August
29, 1994.)
4.(j) - Specimen Common Stock certificate of the Company.
4.(k) - Agreement and Plan of Merger dated as of December 1, 1994, by and
among the Company, EFC Merger Corp., FMI and the Selling
Stockholders.
5 - Opinion of Kenneth E. Armstrong, Esq. regarding the legality of the
Common Stock to be issued.
23.(a) - Consent of KPMG Peat Marwick LLP, independent certified public
accountants.
23.(b) - Consent of Kenneth E. Armstrong, Esq. is contained in his opinion
filed as Exhibit 5.
24 - Powers of Attorney are included on the signature page of this
Registration Statement.
_________
* Incorporated herein by reference.
<PAGE>
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described in Item 15, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy
as expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of St. Petersburg, State of Florida, on the 15th day of
December, 1994.
FLORIDA PROGRESS CORPORATION
By: /s/ Jack B. Critchfield
Jack B. Critchfield, Chairman
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned officers and
directors of Florida Progress Corporation (the "Company"), a Florida
corporation, for himself or herself and not for one another, does
hereby constitute and appoint KENNETH E. ARMSTRONG, DAVID R. KUZMA, JEFFREY R.
HEINICKA and DOUGLAS E. WENTZ, and each of them, a true and lawful attorney in
his or her name, place and stead, in any and all capacities, to sign his or her
name to any and all amendments, including post-effective amendments, to this
registration statement, and to cause the same to be filed with the Securities
and Exchange Commission, granting unto said attorneys and each of them full
power and authority to do and perform any act and thing necessary and proper
to be done in the premises, as fully to all intents and purposes as the
undersigned could do if personally present, and each of the undersigned for
himself or herself hereby ratifies and confirms all that said attorneys or any
one of them shall lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C> <C>
(i) /s/ Jack B. Critchfield Chairman, Chief Executive December 15, 1994
Jack B. Critchfield Officer and Director
Principal Executive Officer
(ii) /s/ Jeffrey R. Heinicka Senior Vice President and December 15, 1994
Jeffrey R. Heinicka Chief Financial Officer
Principal Financial Officer
(iii) /s/ John Scardino, Jr. Vice President and Controller December 15, 1994
John Scardino, Jr.
Principal Accounting Officer
(iv) A majority of the Directors, including (i) above:
Signature Title Date
/s/ Michael P. Graney Director December 15, 1994
Michael P. Graney
/s/ Allen J. Keesler, Jr. Director December 15, 1994
Allen J. Keesler, Jr.
/s/ Richard Korpan Director December 15, 1994
Richard Korpan
/s/ Clarence V. McKee Director December 15, 1994
Clarence V. McKee
/s/ Vincent J. Naimoli Director December 15, 1994
Vincent J. Naimoli
/s/ Richard A. Nunis Director December 15, 1994
Richard A. Nunis
/s/ Charles B. Reed Director December 15, 1994
Charles B. Reed
/s/ Joan D. Ruffier Director December 15, 1994
Joan D. Ruffier
Director
Robert T. Stuart, Jr.
/s/ Paul R. Verkuil Director December 15, 1994
Paul R. Verkuil
/s/ Jean Giles Wittner Director December 15, 1994
Jean Giles Wittner
/TABLE
<PAGE>
EXHIBIT INDEX
4.(a)* -Restated Articles of Incorporation, as amended, of the Company.
(Filed as Exhibit 3(a) to the Company's Annual Report on Form
10-K for the year ended December 31, 1991, as filed with the SEC
on March 30, 1992.)
4.(b)* -Rights Agreement, dated November 21, 1991, between the Company
and Chemical Bank (as successor to Manufacturers Hanover Trust
Company), with form of Rights Certificate attached thereto as
Exhibit A. (Filed as Exhibit 4(a) to the Company's Form 8-K
dated November 21, 1991, as filed with the SEC on November 27,
1991.)
4.(c)* -Amended Articles of Incorporation, as amended, of Florida Power.
(Filed as Exhibit 3(a) to the Florida Power Annual Report on
Form 10-K for the year ended December 31, 1991, as filed
with the SEC in file No. 1-3274 on March 30, 1992.)
4.(d)* -Indenture, dated as of January 1, 1944 (the "Indenture"),
between Florida Power and Guaranty Trust Company of New York and
The Florida National Bank of Jacksonville, as Trustees.
(Filed as Exhibit B-18 to Florida Power's Registration Statement
on Form A-2 (No. 2-5293) filed with the SEC on January 24,
1944.)
4.(e)* -Seventh Supplemental Indenture, dated as of July 1, 1956,
between Florida Power and Guaranty Trust Company of New York and
The Florida National Bank of Jacksonville, as Trustees, with
reference to the modification and amendment of the Indenture.
(Filed as Exhibit 4(b) to Florida Power's Registration Statement
on Form S-3 (No. 33-16788) filed with the SEC on September 27,
1991.)
4.(f)* -Eighth Supplemental Indenture, dated as of July 1, 1958, between
Florida Power and Guaranty Trust Company of New York and The
Florida National Bank of Jacksonville, as Trustees, with
reference to the modification and amendment of the Indenture.
(Filed as Exhibit 4(c) to Florida Power's Registration Statement
on Form S-3 (No. 33-16788) filed with the SEC on September 27,
1991.)
4.(g)* -Sixteenth Supplemental Indenture, dated as of February 1, 1970
between Florida Power and Morgan Guaranty Trust Company of New
York and The Florida National Bank of Jacksonville, as Trustees,
with reference to the modification and amendment of the
Indenture. (Filed as Exhibit 4(d) to Florida Power's
Registration Statement on Form S-3 (No. 33-16788) filed with the
SEC on September 27, 1991.)
4.(h)* -Twenty-Ninth Supplemental Indenture dated as of September 1,
1982, between Florida Power and Morgan Guaranty Trust Company of
New York and Florida National Bank, as Trustees, with reference
to the modification and amendment of the Indenture. (Filed as
Exhibit 4(c) to Florida Power's Registration Statement on Form
S-3 (No. 2-79382) filed with the SEC on September 17, 1982.)
4.(i)* -Thirty-Eighth Supplemental Indenture dated as of July 25, 1994,
between the Company and First Chicago Trust Company of New York,
as successor Trustee, Morgan Guaranty Trust Company of New York,
as resigning Trustee, and First Union National Bank of Florida,
as resigning Co-Trustee, with reference to confirmation of First
Chicago Trust Company of New York as successor Trustee under the
Indenture. (Filed as Exhibit 4.(f) to Florida Power's
Registration Statement on Form S-3 (No. 33-55273) filed with the
SEC on August 29, 1994.)
4.(j) -Specimen Common Stock certificate of the Company.
4.(k) -Agreement and Plan of Merger dated as of December 1, 1994, by
and among the Company, EFC Merger Corp., FMI and the Selling
Stockholders.
5 -Opinion of Kenneth E. Armstrong, Esq. regarding the legality of
the Common Stock to be issued.
23.(a) -Consent of KPMG Peat Marwick LLP, independent certified public
accountants.
23.(b) -Consent of Kenneth E. Armstrong, Esq. is contained in his
opinion filed as Exhibit 5.
24 -Powers of Attorney are included on the signature page of this
Registration Statement.
_________
* Incorporated herein by reference.
i:\efc\regstmt.asc
EXHIBIT 4.(j)
SPECIMEN
COMMON STOCK COMMON STOCK
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA SHARES
See reverse for
certain definitions
CUSIP 341109 106
FLORIDA PROGRESS CORPORATION
THIS IS TO CERTIFY THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK WITHOUT PAR VALUE OF
Florida Progress Corporation transferable on the books of the Corporation by
the holder hereof in person or by duly authorized attorney upon surrender of
this certificate properly endorsed. This certificate and the shares
represented hereby are issued and shall be held subject to all the provisions
of the Amended Articles of Incorporation, as amended, of the Corporation, to
all of which the holder by acceptance hereof assents.
This certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation, and the facsimile signatures of
its duly authorized officers.
Dated:
Countersigned and Registered: Chemical Bank (New York)
By Transfer Agent and Registrar
Authorized Officer
Vice President and Treasurer
Chairman and Chief Executive Officer
FLORIDA PROGRESS CORPORATION
________________
THE PROVISIONS OF THE CORPORATION'S AMENDED ARTICLES OF INCORPORATION, AS
AMENDED, SHOWING THE CLASSES AND SERIES OF STOCK AUTHORIZED TO BE ISSUED BY THE
CORPORATION AND THE DISTINGUISHING CHARACTERISTICS THEREOF ARE HEREBY
INCORPORATED BY REFERENCE TO THE SAME EXTENT AS IF HEREIN SET FORTH AT LENGTH;
A COPY OF SAID PROVISIONS, CERTIFIED BY AN OFFICER OF THE CORPORATION, WILL BE
FURNISHED BY THE CORPORATION OR BY ITS TRANSFER AGENT, WITHOUT COST, TO AND
UPON THE REQUEST OF THE HOLDER OF THIS CERTIFICATE. REQUESTS MADE MAY BE
ADDRESSED TO THE SECRETARY OF FLORIDA PROGRESS CORPORATION, ST. PETERSBURG,
FLORIDA, OR TO THE CORPORATION'S TRANSFER AGENT.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according
to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - ........ Custodian ......
(Cust) (Minor)
under Uniform Gifts to Minors Act ........... (State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, __________________ hereby sell, assign and transfer
unto
[Please insert social security or other identifying number of assignee]
_______________________________________________________________________________
[Please print or typewrite name and address of assignee]
_______________________________________________________________________________
_________________________________________________________________________shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ________________________________________,
Attorney to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.
Dated________________________________
Notice: The signature to the assignment must correspond with the name as
written upon the face of the certificate in every particular, without
alteration or enlargement or any change whatever.
________________________________
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER OF THIS CERTIFICATE TO
CERTAIN RIGHTS AS SET FORTH IN THE SHAREHOLDER RIGHTS AGREEMENT (THE "RIGHTS
AGREEMENT") BETWEEN FLORIDA PROGRESS CORPORATION (THE "COMPANY") AND CHEMICAL
BANK, AS SUCCESSOR TO MANUFACTURERS HANOVER TRUST COMPANY, (THE "RIGHTS AGENT")
DATED AS OF NOVEMBER 21, 1991 (THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE
HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN
THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES
AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE COMPANY WILL MAIL TO
THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT, AS IN EFFECT ON
THE DATE OF MAILING, WITHOUT CHARGE, PROMPTLY AFTER RECEIPT OF A WRITTEN
REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF
SUCH PERSON OR BY ANY SUBSEQUENT HOLDER MAY BECOME NULL AND VOID. THE RIGHTS
SHALL NOT BE EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER IN ANY
JURISDICTION WHERE THE REQUISITE QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER,
OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT
HAVE BEEN OBTAINED OR BE OBTAINABLE.
EXHIBIT 4.(k)
AGREEMENT AND PLAN OF MERGER
by and among
FLORIDA PROGRESS CORPORATION
EFC MERGER CORP.
FM INDUSTRIES, INC.
and
ANNE B. WINDFOHR, JOHN MARION, JOHN MASON, SAM BRAUNAGEL,
ALLAN J. KVASNICKA, CRAIG W. WYCOFF,
O. ELWYN SEAY and LEO KANE
As of December 1, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Articles of Merger; Effective Time. . . . . . . . . . . . . . 3
2.3 Matters Preliminary to the Merger . . . . . . . . . . . . . . 3
2.4 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Articles of Incorporation and Bylaws. . . . . . . . . . . . . 4
2.6 Directors and Officers. . . . . . . . . . . . . . . . . . . . 4
2.7 Property and Liabilities of Constituent Corporations. . . . . 4
ARTICLE 3
CONVERSION AND EXCHANGE OF STOCK . . . . . . . . . . . . . . . . . . . . 4
3.1 Stock of Merger Corporation . . . . . . . . . . . . . . . . . 4
3.2 Stock of FMI. . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Exchange of Stock Certificates. . . . . . . . . . . . . . . . 5
3.4 Escrow of Shares. . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Risk of Market Fluctuations; No Other Adjustments . . . . . . 6
ARTICLE 4
ESCROW OF STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Establishment of Escrow . . . . . . . . . . . . . . . . . . . 7
4.2 Terms and Conditions of Escrow. . . . . . . . . . . . . . . . 7
4.3 Distribution of Escrow. . . . . . . . . . . . . . . . . . . . 8
4.4 Handling Claims Against Escrow. . . . . . . . . . . . . . . .10
4.5 Rights to Escrowed Shares During Pendency of Escrow . . . . .14
4.6 Recourse to Escrow Not Exclusive. . . . . . . . . . . . . . .15
ARTICLE 5
CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 6
SECURITIES LAW MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.1 Status Under Securities Law; Intent . . . . . . . . . . . . . 16
6.2 Sophistication, Disclosure, Resale, etc . . . . . . . . . . . 16
ARTICLE 7
POST CLOSING REGISTRATION OF SECURITIES. . . . . . . . . . . . . . . . . 17
7.1 Registration Under Securities Act, Etc. . . . . . . . . . . . 17
7.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Capital Stock.. . . . . . . . . . . . . . . . . . . . . . . . 23
8.2 Restrictions on Stock.. . . . . . . . . . . . . . . . . . . . 23
8.3 Authority Relative to this Agreement. . . . . . . . . . . . . 24
8.4 No Violations.. . . . . . . . . . . . . . . . . . . . . . . . 24
8.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.6 Ownership of Florida Progress Corporation Stock . . . . . . . 24
8.7 No Interest in Properties, Competitors, Etc.. . . . . . . . . 24
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS AND FMI. . . . . . . . . . . . . . . . . . . . . . . 25
9.1 Organization and Standing.. . . . . . . . . . . . . . . . . . 25
9.2 Capitalization; Capital Stock.. . . . . . . . . . . . . . . . 25
9.3 Restrictions on Stock.. . . . . . . . . . . . . . . . . . . . 25
9.4 Qualification To Do Business. . . . . . . . . . . . . . . . . 26
9.5 Subsidiaries; Interests in Other Businesses; Changes in
Ownership of FMI. . . . . . . . . . . . . . . . . . . . . . . 26
9.6 Authority Relative to this Agreement. . . . . . . . . . . . . 26
9.7 No Violations.. . . . . . . . . . . . . . . . . . . . . . . . 26
9.8 Financial Statements. . . . . . . . . . . . . . . . . . . . . 27
9.9 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . 27
9.10 Title to Assets and Properties. . . . . . . . . . . . . . . . 28
9.11 Accounts Receivable.. . . . . . . . . . . . . . . . . . . . . 28
9.12 Inventories.. . . . . . . . . . . . . . . . . . . . . . . . . 29
9.13 Personal Property . . . . . . . . . . . . . . . . . . . . . . 29
9.14 Owned Real Property . . . . . . . . . . . . . . . . . . . . . 30
9.15 FMI Contractual Obligations . . . . . . . . . . . . . . . . . 31
9.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . 32
9.17 Tax Matters.. . . . . . . . . . . . . . . . . . . . . . . . . 33
9.18 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.19 Compliance With Applicable Laws.. . . . . . . . . . . . . . . 35
9.20 Labor Relations.. . . . . . . . . . . . . . . . . . . . . . . 35
9.21 Employee Welfare Benefits.. . . . . . . . . . . . . . . . . . 36
9.22 Insurance Coverage. . . . . . . . . . . . . . . . . . . . . . 37
9.23 Banks.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.24 Returns and Cancellations . . . . . . . . . . . . . . . . . . 37
9.25 Customers and Suppliers.. . . . . . . . . . . . . . . . . . . 37
9.26 No Interest in Properties, Competitors, Etc.. . . . . . . . . 38
9.27 Environmental Matters . . . . . . . . . . . . . . . . . . . . 38
9.28 OSHA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.29 Absence of Changes. . . . . . . . . . . . . . . . . . . . . . 40
<PAGE>
9.30 Approvals and Consents. . . . . . . . . . . . . . . . . . . . 42
9.31 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 10
REPRESENTATIONS AND WARRANTIES OF FPC. . . . . . . . . . . . . . . . . . 43
10.1 Organization and Standing.. . . . . . . . . . . . . . . . . . 43
10.2 Authority; No Violation . . . . . . . . . . . . . . . . . . . 43
10.3 Financial Statements. . . . . . . . . . . . . . . . . . . . . 44
10.4 Statements Made . . . . . . . . . . . . . . . . . . . . . . . 44
10.5 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 44
10.6 No Material Adverse Change. . . . . . . . . . . . . . . . . . 45
10.7 Approvals and Consents. . . . . . . . . . . . . . . . . . . . 45
10.8 Certain Matters Concerning Tax-Free Reorganization. . . . . . 45
10.9 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . 45
ARTICLE 11
REPRESENTATIONS AND WARRANTIES OF MERGER CORPORATION . . . . . . . . . . 45
11.1 Organization and Standing.. . . . . . . . . . . . . . . . . . 45
11.2 Authority; No Violation . . . . . . . . . . . . . . . . . . . 46
11.3 Approvals and Consents. . . . . . . . . . . . . . . . . . . . 46
11.4 Statements Made . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 12
TRANSACTIONS AND OBLIGATIONS PRIOR TO THE CLOSING. . . . . . . . . . . . 47
12.1 Actions Prior to Closing. . . . . . . . . . . . . . . . . . . 47
12.2 Conduct of the Business Until Closing.. . . . . . . . . . . . 48
12.3 Certain Permitted Actions . . . . . . . . . . . . . . . . . . 49
12.4 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . 49
12.5 Corporate Action; Approvals and Consents. . . . . . . . . . . 50
12.6 Prohibition on Solicitation or Consideration of Other Offers. 50
12.7 Access to Properties and Records, Etc.. . . . . . . . . . . . 50
12.8 Survey and Inspection of Property . . . . . . . . . . . . . . 51
12.9 Supplemental Disclosure . . . . . . . . . . . . . . . . . . . 51
12.10Additional Reports. . . . . . . . . . . . . . . . . . . . . . 51
12.11Capital Expenditures. . . . . . . . . . . . . . . . . . . . . 52
12.12Employment of O. Elwyn Seay . . . . . . . . . . . . . . . . . 52
12.13Satisfaction of Conditions. . . . . . . . . . . . . . . . . . 52
ARTICLE 13
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF FPC AND MERGER CORPORATION. . . . . . . . . . . . . . . . . . . . . . 52
13.1 Accuracy of Representations and Warranties. . . . . . . . . . 52
13.2 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.3 Certified Articles and Bylaws . . . . . . . . . . . . . . . . 53
13.4 Good Standing Certificates. . . . . . . . . . . . . . . . . . 53
13.5 No Litigation, Etc. . . . . . . . . . . . . . . . . . . . . . 53
13.6 Operation in the Ordinary Course. . . . . . . . . . . . . . . 53
13.7 Consents and Waivers. . . . . . . . . . . . . . . . . . . . . 53
13.8 HSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.9 Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 54
13.10[Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.11Incumbency. . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.12Certified Resolutions . . . . . . . . . . . . . . . . . . . . 54
13.13Accuracy of Documents . . . . . . . . . . . . . . . . . . . . 54
13.14Stockholders Certificate Regarding Information for Registration
Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.15Conversion of Preferred Stock . . . . . . . . . . . . . . . . 54
13.16Opinion of FMI and the Stockholders' Counsel. . . . . . . . . 54
13.17Environmental Contingencies.. . . . . . . . . . . . . . . . . 55
13.18Employment of O. Elwyn Seay . . . . . . . . . . . . . . . . . 55
13.19Investigation of Certain Matters. . . . . . . . . . . . . . . 55
13.20Opinions, Reports, Etc. . . . . . . . . . . . . . . . . . . . 55
13.21Dissenters' Rights. . . . . . . . . . . . . . . . . . . . . . 55
13.22Independent Accountant's Opinion. . . . . . . . . . . . . . . 55
13.23Material Adverse Change . . . . . . . . . . . . . . . . . . . 56
13.24Resignations of Directors . . . . . . . . . . . . . . . . . . 56
13.25Termination of Right of First Refusal Agreement and Subscription
Agreement and Investment Letter . . . . . . . . . . . . . . . 56
13.26Termination of Corporate Acquisitions Agreements. . . . . . . 56
13.27Supplemental Disclosures on Exhibit 16.3. . . . . . . . . . . 56
ARTICLE 14
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF FMI
AND THE STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.1 Accuracy of Representations and Warranties. . . . . . . . . . 56
14.2 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.3 Active Status and Good Standing.. . . . . . . . . . . . . . . 57
14.4 No Litigation, Etc. . . . . . . . . . . . . . . . . . . . . . 57
14.5 Consents and Waivers. . . . . . . . . . . . . . . . . . . . . 57
14.6 HSR.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.7 Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 57
14.8 Incumbency. . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.9 Certified Resolutions . . . . . . . . . . . . . . . . . . . . 57
14.10Material Adverse Change . . . . . . . . . . . . . . . . . . . 58
14.11Opinion of FPC's General Counsel. . . . . . . . . . . . . . . 58
14.12Supplemental Disclosures on Exhibit 16.3. . . . . . . . . . . 58
ARTICLE 15
RESTRICTIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 58
15.1 Noncompetition. . . . . . . . . . . . . . . . . . . . . . . . 58
15.2 Nonsolicitation . . . . . . . . . . . . . . . . . . . . . . . 59
15.3 Non-Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 59
15.4 Enforcement.. . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 16
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
16.1 Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
16.2 Indemnification by the Stockholders - Individual Representations,
Warranties and Covenants. . . . . . . . . . . . . . . . . . . 61
16.3 Indemnification by the Stockholders - Collective Representations,
Warranties and Covenants. . . . . . . . . . . . . . . . . . . 62
16.4 Indemnification by FPC. . . . . . . . . . . . . . . . . . . . 63
16.5 Procedures for Indemnification. . . . . . . . . . . . . . . . 64
16.6 Defense of Third Party Claims . . . . . . . . . . . . . . . . 66
16.7 Settlement of Third Party Claims. . . . . . . . . . . . . . . 66
16.8 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . 67
16.9 Limitations on Indemnification Obligations; Dealing with Unresolved
Claims at Deadline Date . . . . . . . . . . . . . . . . . . . 67
16.10Settlement of Indemnification Obligations; Setoff.. . . . . . 69
16.11Arbitration of Indemnification Claims.. . . . . . . . . . . . 70
16.12Remedies Upon Breach. . . . . . . . . . . . . . . . . . . . . 71
ARTICLE 17
CERTAIN ACCOUNTING AND TAX MATTERS; POST CLOSING MATTERS . . . . . . . . 71
17.1 Closing Balance Sheet . . . . . . . . . . . . . . . . . . . . 71
17.2 Pooling of Interest . . . . . . . . . . . . . . . . . . . . . 71
17.3 Tax-Free Reorganization; Continuity of Interest . . . . . . . 71
ARTICLE 18
STOCKHOLDERS' REPRESENTATIVES. . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE 19
TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
19.1 Right to Terminate. . . . . . . . . . . . . . . . . . . . . . 72
19.2 Effectiveness of Termination. . . . . . . . . . . . . . . . . 73
19.3 Liability Upon Termination. . . . . . . . . . . . . . . . . . 73
ARTICLE 20
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
20.1 No Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . 73
20.2 Survival of Representations, Warranties, Etc. . . . . . . . . 73
20.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
20.4 Specific Enforcement. . . . . . . . . . . . . . . . . . . . . 74
20.5 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 74
20.6 Press Releases. . . . . . . . . . . . . . . . . . . . . . . . 74
20.7 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 74
20.8 Securities Law. . . . . . . . . . . . . . . . . . . . . . . . 75
20.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
20.10Assignability . . . . . . . . . . . . . . . . . . . . . . . . 78
20.11Venue; Process. . . . . . . . . . . . . . . . . . . . . . . . 78
20.12Further Assurances. . . . . . . . . . . . . . . . . . . . . . 78
20.13Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 78
20.14Applicable Law; Construction and Interpretation . . . . . . . 78
20.15Time of the Essence . . . . . . . . . . . . . . . . . . . . . 79
20.16Integration of Agreement. . . . . . . . . . . . . . . . . . . 79
20.17Submission of Draft . . . . . . . . . . . . . . . . . . . . . 79
20.18Effect of Investigation . . . . . . . . . . . . . . . . . . . 79
<PAGE>
INDEX TO DEFINED TERMS
Term Page
AAA Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Allocated Dollar Limit . . . . . . . . . . . . . . . . . . . . . . . . . 62
Articles of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Constituent Corporations . . . . . . . . . . . . . . . . . . . . . . . . .1
Deadline Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Decision Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Electing Out Date. . . . . . . . . . . . . . . . . . . . . . . . . . 17, 18
Environment Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Escrow Termination Date. . . . . . . . . . . . . . . . . . . . . . . . . .8
External Environment Audit . . . . . . . . . . . . . . . . . . . . . . . 51
FMI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
FMI Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
FMI Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
FMI Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
FMI Furniture and Fixtures . . . . . . . . . . . . . . . . . . . . . . . 30
FMI Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . 32
FMI Owned Real Property. . . . . . . . . . . . . . . . . . . . . . . . . 30
FMI Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
FMI Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
FPC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
FPC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Hazardous Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Indemnification Claim. . . . . . . . . . . . . . . . . . . . . . . . . . 64
Indemnitee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Indemnitor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Initially Covered Shares . . . . . . . . . . . . . . . . . . . . . . . . 17
Interim Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Internal Environmental Audit . . . . . . . . . . . . . . . . . . . . . . 51
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 31
Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Merger Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Negotiation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Non-Electing Out Stockholders. . . . . . . . . . . . . . . . . . . . . . 17
Ordinary Course of Business. . . . . . . . . . . . . . . . . . . . . . . .2
Ownership Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . .2
Permitted Real Property Exceptions . . . . . . . . . . . . . . . . . . . .3
Pooling of interests . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Pre-Merger FMI Common Stock. . . . . . . . . . . . . . . . . . . . . . . .5
Prohibited transaction . . . . . . . . . . . . . . . . . . . . . . . . . 37
PRSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Qualified plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Seay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Securities Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . .3
Separate Matters Limit . . . . . . . . . . . . . . . . . . . . . . . . . 61
Stockholder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Stockholders' Representatives. . . . . . . . . . . . . . . . . . . . . . 72
Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . .3
Texas BCA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Third Party Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Ultimate parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Year End Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is dated as of the 1st day of December
1994, by and among FLORIDA PROGRESS CORPORATION ("FPC"), a Florida corporation;
EFC MERGER CORP. (the "Merger Corporation"), a Texas corporation; and FM
INDUSTRIES, INC., ("FMI"), a Texas corporation; (FPC, Merger Corporation and
FMI being sometimes collectively referred to as the "Constituent
Corporations"); and ANNE B. WINDFOHR, JOHN MARION, JOHN MASON, SAM BRAUNAGEL,
ALLAN J. KVASNICKA, CRAIG W. WYCOFF, O. ELWYN SEAY, and LEO KANE (each
individually, a "Stockholder" and collectively, the "Stockholders").
WITNESSETH:
WHEREAS, the Stockholders own collectively 7,250 shares, par value $.10 per
share, of the common stock of FMI (the "FMI Common Stock"), and 70,000 shares,
par value $.10 per share, of the convertible preferred stock of FMI (the "FMI
Preferred Stock"), collectively constituting all of the outstanding capital
stock of FMI;
WHEREAS, Merger Corporation is a corporation duly organized and existing
under the laws of the State of Texas, with authorized capital stock of 1,000
shares of common stock, par value $1.00 per share, all of which immediately
prior to the Effective Time, as defined in Section 2.2 hereof, will be issued
and outstanding and held by FPC;
WHEREAS, FMI is a corporation duly organized and existing under the laws of
the State of Texas;
and
WHEREAS, FMI and Merger Corporation deem it advisable to merge Merger
Corporation with and into FMI upon the terms and conditions hereinafter set
forth, all in a transaction intended to qualify as a tax-free reorganization
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code (the
"Merger").
NOW, THEREFORE, the Constituent Corporations and the Stockholders agree to
effect the Merger provided for in this Agreement and Plan of Merger (the
"Agreement") on the terms and conditions set forth herein.
ARTICLE 1
DEFINITIONS
In addition to such other terms as elsewhere defined herein, the following
terms shall have the following meanings for all purposes of this Agreement and
all other documents issued under or delivered pursuant thereto, unless the
context requires otherwise:
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the United States Securities and Exchange
Commission.
"FPC Closing Date Closing Price" shall mean the closing price of the common
stock of FPC on the Closing Date, as reported on the New York Stock Exchange
Composite Transactions Tape.
"Knowledge" or "know" shall mean actual conscious knowledge, after
reasonable investigation. When such term is used with respect to FMI's
management, the knowledge shall include only the knowledge of FMI's operating
management listed on Exhibit 1 and FMI's directors.
"Material" shall mean, unless otherwise specifically indicated in the
particular section of this Agreement, (i) relative to evaluating
representations, warranties and/or covenants of FMI or any of the
Stockholders for purposes of indemnification under Article 16, $10,000, (ii)
relative to evaluating representations, warranties and/or covenants of FMI or
any of the Stockholders for purposes of determining satisfaction of conditions
precedent to the closing of the Merger, $100,000 in the aggregate, and (iii)
solely for the purpose of evaluating representations, warranties and/or
covenants concerning the business and/or financial condition of FPC and its
Affiliates, $25,000,000.
"Ownership Percentage" shall mean: 25% with respect to Sam Braunagel; 22%
with respect to Anne B. Windfohr; 17.5% with respect to Allan J. Kvasnicka; 15%
with respect to O. Elwyn Seay; 10% with respect to Craig W. Wycoff; 5% with
respect to Leo Kane; 2.75% with respect to John Marion; and 2.75% with respect
to John Mason.
"Ordinary Course of Business" shall mean the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"Permitted Encumbrances" shall mean (i) liens for taxes not yet due and
payable, and (ii) the liens, mortgages, claims, security interests, and
encumbrances relating to the assets and properties of FMI that have been
properly disclosed to FPC and Merger Corporation on an appropriate Exhibit to
this Agreement.
"Permitted Real Property Exceptions" shall mean, as to any parcel of FMI
Owned Real Property, easements, rights of way, licenses, covenants,
restrictions and other similar charges or encumbrances, imperfections in title,
and other matters which appear on Chicago Title Insurance Company Policy No.
44000850078681 (issued March 31, 1989) (the "Title Policy") or if not appearing
thereon, which are disclosed in writing to FPC and do not in the aggregate
materially adversely affect the current uses of such real property.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
ARTICLE 2
GENERAL
2.1 The Merger. In accordance with the provisions of this Agreement and
the Texas Business Corporation Act (the "Texas BCA"), at the Effective Time,
Merger Corporation shall be merged with and into FMI, which shall be the
surviving corporation (hereinafter sometimes the "Surviving Corporation"), and
the Surviving Corporation shall thereupon (i) be a wholly owned subsidiary of
FPC, (ii) continue its corporate existence under the laws of the State of
Texas, (iii) retain its present name and (iv) succeed to all rights, assets,
liabilities and obligations of Merger Corporation and the Surviving Corporation
in accordance with and as more particularly set forth in this Agreement and the
Texas BCA. The separate corporate existence of Merger Corporation shall
terminate as of the Effective Time.
2.2 Articles of Merger; Effective Time. At the Closing, the parties hereto
shall cause the Merger to be consummated by the execution and filing of
Articles of Merger, substantially in the form as set forth as Exhibit 2.2, with
the Secretary of State of the State of Texas (the "Articles of Merger"),
together with the appropriate fees and franchise taxes, in accordance with the
provisions of Article 5.04 of the Texas BCA. The Merger shall become effective
immediately upon the issuance of a Certificate of Merger by the Secretary of
State of the State of Texas with respect to the Merger following the filing
of the Articles of Merger, which filing shall be made contemporaneously with
the Closing. The time and date when the Merger shall become effective is
hereinafter referred to as the "Effective Time."
2.3 Matters Preliminary to the Merger. FMI and the Stockholders agree
that prior to the Merger they shall cause Anne B. Windfohr, John Marion and
John Mason, as all of the owners of the FMI Preferred Stock, to convert all of
the issued and outstanding shares of the FMI Preferred Stock into an aggregate
of 2,750 shares of the common stock of FMI (Anne B. Windfohr - 2,200 shares;
John Marion - 275 shares; and John Mason - 275 shares).
2.4 Capitalization. The number of authorized shares of the capital stock
of the Surviving Corporation shall continue to be 100,000 shares of common
stock, par value $.10 per share and 100,000 shares of convertible preferred
stock, par value $.10 per share.
2.5 Articles of Incorporation and Bylaws. At the Effective Time, the
Articles of Incorporation of FMI, as in effect immediately prior to the
Effective Time, until further amended, shall be and remain the Articles of
Incorporation of the Surviving Corporation. At the Effective Time, the Bylaws
of FMI, as in effect immediately prior to the Effective Time, shall be and
remain the Bylaws of the Surviving Corporation until altered, amended, or
repealed.
2.6 Directors and Officers. Immediately after the Effective Time, the
directors of the Surviving Corporation shall be the persons who are elected by
FPC, as the sole stockholder of the Surviving Corporation immediately after the
Effective Time, and they shall hold office until their successors have
been elected and have qualified in accordance with law and the Bylaws of the
Surviving Corporation. Immediately after the Effective Time, the officers of
the Surviving Corporation shall be the persons elected by the newly elected
directors of the Surviving Corporation, and they shall hold office until their
successors have been elected and have qualified in accordance with law and the
Bylaws of the Surviving Corporation.
2.7 Property and Liabilities of Constituent Corporations. The identity,
existence, purposes, powers, objects, franchises, privileges, rights and
immunities of FMI shall continue unaffected and unimpaired by the Merger and
the corporate franchises, existence and rights of Merger Corporation shall
be merged into FMI. At the Effective Time, Merger Corporation shall be merged
into the Surviving Corporation and the separate existence of Merger Corporation
shall cease. The Surviving Corporation shall, from and after the Effective
Time, possess all the rights, privileges, powers, and franchises of
whatsoever nature and description, of a public as well as of a private nature,
of Merger Corporation and of FMI (prior to the Merger); and all rights,
privileges, powers, and franchises of each of Merger Corporation and of FMI
(prior to the Merger), and all property, real, personal, and mixed, and debts
due to either of Merger Corporation or of FMI (prior to the Merger) on whatever
account shall be vested in the Surviving Corporation; and all property, rights,
privileges, powers, and franchises, and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they
were of Merger Corporation and FMI (prior to the Merger), and the title to any
real estate vested by deed or otherwise in either of Merger Corporation or FMI
(prior to the Merger) shall not revert or be in any way impaired by reason of
the Merger. From and after the Effective Time, all rights of creditors and all
liens upon the property of Merger Corporation or of FMI (prior to the Merger)
shall be preserved unimpaired, and all debts, liabilities, and duties of Merger
Corporation and of FMI (prior to the Merger) shall thenceforth attach to the
Surviving Corporation, and may be enforced against it to the same extent as if
said debts, liabilities, and duties had been incurred or contracted by it.
ARTICLE 3
CONVERSION AND EXCHANGE OF STOCK
3.1 Stock of Merger Corporation. Each share of common stock of Merger
Corporation validly issued and outstanding immediately prior to the Effective
Time shall, at the Effective Time and by virtue of the Merger, thereupon be
converted into and become one share of FMI Common Stock. Each share of such
FMI Common Stock issued pursuant to this section shall be validly issued, fully
paid and nonassessable.
3.2 Stock of FMI. Each share of FMI Common Stock issued and outstanding
immediately prior to the Effective Time (excluding shares held by FMI as
treasury stock, which shares shall be cancelled and extinguished at the
Effective Time with no cash or securities or other property payable in respect
thereof) shall at the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into 70 shares of
validly issued, fully paid and nonassessable common stock of FPC, without par
value ("FPC Common Stock"). The FMI Common Stock so converted is herein
sometimes referred to as "Pre-Merger FMI Common Stock." There shall be no FMI
Preferred Stock outstanding at or immediately prior to the Effective Time; any
and all previously outstanding FMI Preferred Stock shall have been converted
into FMI Common Stock prior to the Effective Time. The conversion ratio of
each share of Pre-Merger FMI Common Stock outstanding immediately prior to the
Effective Time for 70 shares of FPC Common Stock, as set forth in the first
sentence of this Section 3.2, shall be subject to adjustment as follows: in the
event that, subsequent to the date of this Agreement but prior to the Effective
Time, the outstanding shares of FPC Common Stock shall have been, (i) without
consideration, increased, decreased, changed into or exchanged for a different
number or kind of shares or securities through reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split or other like changes in FPC's capitalization or (ii) increased
through the issuance of FPC Common Stock at a consideration of $20 or less,
then in either such event an appropriate and proportionate adjustment shall be
made in the number and kind of shares of securities to be thereafter delivered
to the holders of FMI Common Stock pursuant to the consummation of the Merger,
it being understood that in no event shall other than FPC Common Stock, as then
constituted, be issued in exchange for FMI Common Stock pursuant to the
consummation of the Merger.
3.3 Exchange of Stock Certificates.
(a) At Closing immediately after the Effective Time, each holder of an
outstanding certificate or certificates theretofore representing shares of
Pre-Merger FMI Common Stock shall surrender the same to the Surviving
Corporation or to an agent or agents designated by the Surviving Corporation,
and shall thereupon be entitled to receive therefor certificates (up to three
of which may, at the election of each Stockholder, be in denominations not
exceeding 10,000 shares with the balance of the shares divided between one
certificate for escrowed shares and one certificate for the remaining shares)
representing the number of full shares of FPC Common Stock into which the
shares of Pre-Merger FMI Common Stock represented by the certificate or
certificates so surrendered shall have been converted pursuant to Section
3.2. Until so surrendered, each such outstanding certificate which immediately
prior to the Effective Time represented shares of Pre-Merger FMI Common Stock
shall be deemed for all corporate purposes (subject to the further provisions
of this Section 3.3) to evidence ownership of the number of shares of
FPC Common Stock into which such shares of Pre-Merger FMI Common Stock shall
have been so converted.
(b) After the Effective Time, there shall be no further registry of
transfers on the records of FMI of shares of FMI Common Stock outstanding
immediately prior to the Effective Time, and if certificates representing such
shares are presented to the Surviving Corporation, they shall be cancelled and
replaced with certificates representing shares of FPC Common Stock as herein
provided.
(c) No dividends or distributions will be paid to persons entitled to
receive certificates representing shares of FPC Common Stock pursuant to
Section 3.2 until such persons shall have surrendered their certificates which
prior to the Effective Time represented Pre-Merger FMI Common Stock; provided,
however, when certificates which prior to the Effective Time represented
Pre-Merger FMI Common Stock shall have been so surrendered, there shall be paid
to the holders thereof, but without interest thereon, all dividends and
distributions payable (and with a record date subsequent to the Effective Time)
on the shares of FPC Common Stock into which such certificates shall have been
so converted.
3.4 Escrow of Shares. The Stockholders each acknowledge that an escrow
will be established at Closing and that, as provided in Article 4 of this
Agreement, ten percent (10%) of the shares of voting common stock of FPC
received by the Stockholders in exchange for their FMI Common Stock (an
aggregate of 70,000 shares of voting common stock of FPC subject to any
adjustments pursuant to Section 3.2) shall be deposited into such escrow, to be
held by FPC and dealt with all as more particularly provided in Article 4.
3.5 Fractional Shares. No fractional shares of FPC Common Stock and no
scrip or certificates therefor will be issued in connection with the Merger,
and no holder of fractional shares will be entitled to voting, dividend, or any
other rights as a stockholder with respect to such fractional interest. Any
Stockholder who would otherwise be entitled to receive a fractional interest in
a share of FPC Common Stock will receive, upon surrender of the certificates
representing Pre-Merger FMI Common Stock, a cash distribution in lieu of such
fractional share in the amount obtained by multiplying such fraction by
the closing price of the FPC Common Stock on the day preceding the Closing
Date, as reported on the New York Stock Exchange Composite Transactions Tape.
No interest shall be payable with respect to payment of such cash distribution.
The board of directors of the Surviving Corporation is empowered to adopt
further rules and regulations concerning the liquidation of fractional
interests.
3.6 Risk of Market Fluctuations; No Other Adjustments. The Stockholders
each understand that the shares of common stock of FPC are publicly traded on
the New York Stock Exchange and the Pacific Stock Exchange and that the market
price of such stock may increase or decrease from time to time. The
Stockholders and FPC each acknowledge that the number of shares of common stock
of FPC to be received by the Stockholders pursuant to the consummation of the
Merger has been fixed at the time of the execution of this Agreement and no
adjustments to the number of shares of common stock of FPC to be received by
the Stockholders pursuant to the consummation of the Merger will be made,
except as provided for and under the limited circumstances described in Section
3.2. By way of example and not by way of limitation, market fluctuations in
the price of the common stock of FPC, whether an increase or decrease, will not
result in any adjustment in the number of shares of FPC Common Stock into which
the shares of Pre-Merger FMI Common Stock held by the Stockholders are to be
converted pursuant to the Merger and will not entitle any party to this
Agreement to terminate this Agreement or to claim any failure of a condition
precedent to Closing.
ARTICLE 4
ESCROW OF STOCK
4.1 Establishment of Escrow. On the Closing Date, an escrow shall be
established for the purpose of holding certain of the shares of common stock of
FPC which each of the Stockholders will be entitled to receive pursuant to the
consummation of the Merger. At such time as (i) each Stockholder shall
surrender, to the Surviving Corporation or to the agent or agents designated by
the Surviving Corporation, the certificate or certificates representing such
Stockholder's shares of Pre-Merger FMI Common Stock, and (ii) the certificates
are to be issued representing the number of full shares of FPC Common Stock
into which the shares of Pre-Merger FMI Common Stock represented by the
certificate or certificates so surrendered are to be exchanged, FPC or the
agent or agents designated by the Surviving Corporation shall issue a separate
certificate for each Stockholder representing ten percent (10%) of the shares
of FPC Common Stock issuable to such Stockholder, which separate certificate,
at such Stockholder's direction (which direction is hereby given) shall be
considered delivered to such Stockholder and in turn redelivered to FPC to hold
in escrow, simultaneously with the delivery to such Stockholder of certificates
representing the remainder of the shares of FPC Common Stock issuable hereunder
to such Stockholder. The aggregate number of shares of FPC Common Stock to be
represented by certificates held in escrow by FPC pursuant to the provisions of
this Section 4.1 shall be 70,000 shares (with the specific number of shares
represented by the certificates to be delivered on behalf of each Stockholder
being as set forth in Exhibit 4.1 and collectively and in each case subject to
any adjustments provided for in Section 3.2). These certificates shall be held
by FPC in escrow as herein provided. On the Closing Date, in order to help
effectuate the establishment of the escrow hereunder, each Stockholder shall
deliver to FPC duly executed stock powers in blank with respect to the shares
of the FPC Common Stock receivable by the respective Stockholder which are to
be held in escrow by FPC as provided in this Article 4, in each case, if so
requested by FPC, with signatures guaranteed by a bank or trust company or a
member of the New York Stock Exchange and accompanied either by any and all
requisite revenue stamps evidencing the payment of all state transfer taxes, or
adequate funds therefor.
4.2 Terms and Conditions of Escrow. The shares of FPC Common Stock to be
held in escrow by FPC shall be held by FPC during the term of the escrow to
secure and further indemnify FPC against and in respect of the indemnification
obligations of the Stockholders provided for under Sections 16.2 and 16.3 of
this Agreement, upon the following terms and conditions:
(a) Stock dividends and shares resulting from stock splits, in respect of
shares still held from time to time in the escrow shall be delivered by the
registered owner, or at the direction of the registered owner (which direction
is hereby given), into the escrow as received, to be held thereafter by FPC
subject to the provisions of this Agreement.
(b) Cash dividends in respect of the shares still held from time to time in
the escrow shall be delivered directly to the registered owner (subject to the
obligation under certain circumstances to return such dividends to FPC, all as
more particularly herein described and only to the extent so specifically
provided).
(c) FPC shall hold the shares constituting the escrow for a period which
expires on the Escrow Termination Date (as defined below) and such shares shall
be distributed, all as more particularly described in this Article 4; provided
however that with respect to those certain contingencies identified on Exhibit
16.3, certain shares may be held in escrow by FPC past the Escrow Termination
Date and distributed as provided for in Section 4.3. For these purposes, the
"Escrow Termination Date" shall mean the date of completion of the first audit
of the combined enterprises' financial statements, which (if the Closing Date
is before December 31, 1994) is anticipated to be no later than March 31, 1995.
For these purposes, the combined enterprises' financial statements shall mean
the combined or consolidated financial statements of Progress Capital Holdings,
Inc., its subsidiaries and FMI.
4.3 Distribution of Escrow.
(a) On or before the Escrow Termination Date, FPC shall deliver the
escrowed shares held in the escrow to itself to cover any indemnification
obligation in accordance with the provisions of Section 4.4 (and in such event
each Stockholder shall be required to deliver to FPC the cash dividends that
have been received by such Stockholder with respect to any escrowed shares so
delivered), or to the Stockholders entitled thereto as provided for in Section
4.4; provided, however, no delivery to the Stockholders shall be made until the
portion of the escrow deliverable to FPC pursuant to Section 4.4 shall have
been first delivered; and provided further that if on the Escrow Termination
Date the parties have not fully resolved any of the contingencies involving
claims or losses which were known as of the Closing Date and identified on
Exhibit 16.3 (as such Exhibit may be updated and agreed upon at Closing) and
for which FPC is to be indemnified, then, for such indemnification obligations,
FPC may elect whether to seek recourse for such contingencies from escrowed
shares, from nonescrowed shares or from a combination thereof, and if FPC
elects to seek recourse in whole or in part from escrowed shares, then
a reserve of escrowed shares shall be held in escrow by FPC from the portion
otherwise payable to the Stockholders until the specific contingency is
resolved.
(b) Once such contingency is resolved following the retention of shares in
the escrow following the Escrow Termination Date, any shares then remaining
after satisfying the Stockholders' indemnification obligations relating to such
contingency shall be distributed to the Stockholders.
(c) For purposes of any such contingency which is in the nature of an
environmental contingency, (i) such contingency shall be considered resolved
for all purposes of this Agreement, including specifically Section 16.9(a), if
and when FPC (or any subsidiary thereof) receives written confirmation from
each of the federal, state and local governmental agencies which FPC reasonably
believes has jurisdiction over such environmental matter to the effect that the
closure plan for such environmental matter has been satisfactorily completed or
(ii) if such governmental agency(ies) does(do) not issue such written
confirmation for that type of environmental matter, such contingency shall be
considered resolved for all purposes of this Agreement, including specifically
Section 16.9(a), if and when the independent reputable environmental consulting
firm which was responsible for the clean up and remediation issues a written
certification or report that the action taken for the environmental clean
up and remediation has been satisfactorily completed.
(d) For each such contingency as to which FPC elects to seek recourse from
escrowed shares, the number of reserved shares shall be equal to (i) the number
of shares specifically identified on Exhibit 16.3 as being the number of shares
associated with the specific contingency and based on the maximum reasonably
anticipated liability with respect to the specific contingency less (ii) if
any, the number of shares associated with the specific contingency and based on
the maximum reasonably anticipated liability with respect to this specific
contingency which FPC elects to address by recourse to shares outside the
escrow; provided, however, that as to each of such contingencies which involves
environmental matters, the number of shares reserved in escrow for such
contingency shall not exceed (X) the number of shares specifically identified
on Exhibit 16.3 as being the number of shares associated with the specific
contingency and based on the maximum reasonably anticipated liability with
respect to the specific contingency (or if FPC, in its sole discretion, obtains
from an independent reputable environmental consulting firm a definitive
written quantification of the extent of the environmental contingency, then
a number of shares based on such definitive quantification) less (Y) that
number of shares which is based on the amount of the anticipated liability that
Halliburton Company has, in writing, definitively agreed to be the amount that
Halliburton will contribute towards the cost of the environmental clean up
and/or remediation. For example, if the maximum reasonably anticipated
liability for a particular environmental contingency appearing on Exhibit 16.3
is $290,000 and the number of shares associated therewith is 10,000 and an
independent reputable environmental consulting firm engaged by FPC issues a
written definitive quantification of the extent of the environmental
contingency stating that the quantification is $200,000 and Halliburton Company
has in writing definitively agreed to contribute $55,000 towards the
environmental cleanup and/or remediation and the FPC Closing Date Closing Price
is $29.00, then the number of shares reserved past the Escrow Termination Date
with respect to such environmental contingency shall not exceed 5,000
(($200,000 - $55,000) divided by $29.00).
(e) If after the Escrow Termination Date and prior to the final resolution
of such contingency, FPC obtains from an independent reputable environmental
consulting firm a definitive written quantification of the extent of the
environmental contingency, and the number of shares then being held
in the escrow to cover such environmental contingency exceeds the number of
shares necessary to cover such environmental contingency based on the written
quantification received from such consulting firm, FPC will distribute to the
Stockholders the number of shares equal to such excess. Similarly, if after
the Escrow Termination Date and prior to the final resolution of such
contingency, Halliburton Company definitively agrees in writing to the amount
that Halliburton will contribute towards the cost of the environmental clean up
and/or remediation, FPC will distribute to the Stockholders a number of shares
equal to that number of shares which is based on the amount of the anticipated
liability that Halliburton Company has, in writing, definitively agreed to be
the amount that Halliburton will contribute towards the cost of the
environmental clean up and/or remediation; provided however that if, at such
time, a written quantification has been obtained pursuant to the first sentence
of this Section 4.3(e) and the number of shares necessary to cover such
environmental contingency based on such written quantification is greater than
the number of shares then being held in the escrow to cover such environmental
contingency, FPC will instead distribute to the Stockholders a number of shares
equal to (x) that number of shares which is based on the amount of the
anticipated liability that Halliburton Company has, in writing, definitively
agreed to be the amount that Halliburton will contribute towards the cost of
the environmental clean up and/or remediation, less (y) the amount by which the
number of shares necessary to cover such environmental contingency based on the
written quantification received from the independent reputable environmental
consulting firm exceeds the number of shares then being held in the escrow to
cover such environmental contingency.
(f) Any adjustment made hereunder in the number of reserved shares shall not
in any way operate to cause the maximum reasonably anticipated liability to be
anything other than a reasonable estimate of the liability or in any way
operate as a limitation on FPC's ability to seek recourse from the Stockholders
for ultimately realized losses associated with such contingencies.
4.4 Handling Claims Against Escrow.
(a) If, prior to the Escrow Termination Date, FPC shall have any claim
against any of the Stockholders pursuant to Section 16.2 or Section 16.3 of
this Agreement and wishes to seek recourse with respect to such claim against
the escrowed shares, it shall promptly give written notice thereof to the
Stockholders, including in such notice a brief description of the facts upon
which such claim is based, the amount thereof, whether the claim arises
pursuant to Section 16.2 or Section 16.3, and if the claim arises pursuant to
Section 16.2, the name of the Stockholder against whom FPC asserts the claim.
If the indemnification arises under Section 16.2, FPC shall also deliver a copy
of the written notice concerning the claim to each of the Stockholders'
Representatives; provided however that failure to provide the Stockholders'
Representatives with a copy of such written notice shall not in any way cause
the claim against the respective escrowed shares to be defective. If the
indemnification arises under Section 16.3, FPC must notify each Stockholder by
notifying the Stockholders' Representatives and the Stockholder; provided
however that failure to provide any particular Stockholder with a copy of such
written declaration shall not in any way cause the claim against the respective
escrowed shares to be defective.
(b)(i) As to any claim identified as being made pursuant to Section 16.3,
the Stockholders' Representatives will evaluate such claim in good faith. If
both of the Stockholders' Representatives, on behalf of the Stockholders, agree
to the allowance of such claim, such Stockholders' Representatives shall
give written notice to FPC, within 30 days after receipt of the notice of claim
from FPC (unless the notice of claim is received 40 days or less prior to the
Escrow Termination Date and the notice specifically states that the Escrow
Termination Date shall occur on a date which is 40 days or less from such date
of receipt, in which case the Stockholders' Representatives shall give written
notice to FPC within 15 days after receipt of the notice of claim from FPC)
consenting to the delivery of the escrowed shares out of the escrow account to
FPC for application of the escrowed shares to the liability for such claim.
(ii) As to any claim identified as being made pursuant to Section 16.2, the
Stockholder against whose shares the claim is made will evaluate such claim in
good faith. If such Stockholder agrees to the allowance of such claim, such
Stockholder will give written notice to FPC, within 30 days after receipt of
the notice of claim from FPC (unless the notice of claim is received 40 days or
less prior to the Escrow Termination Date and the notice specifically states
that the Escrow Termination Date shall occur on a date which is 40 days or less
from such date of receipt, in which case the Stockholder shall give written
notice to FPC within 15 days after receipt of the notice of claim from FPC)
consenting to the delivery of the escrowed shares out of the escrow account to
FPC for application of the escrowed shares to the liability for such claim.
(c)(i) As to any claim identified as being made pursuant to Section 16.3
(other than claims identified on Exhibit 16.3), FPC shall within 10 business
days following receipt of the written consent from both of the Stockholders'
Representatives (but no later than the Escrow Termination Date) deliver out of
the escrow to itself the lesser of (1) the number of escrowed shares in whole
shares, having an aggregate market value (as determined on the basis of the FPC
Closing Date Closing Price) most nearly equal to the amount of the liability
for the claim or claims thus to be satisfied, or (2) all of the escrowed
shares. In addition, each of the Stockholders whose shares are so delivered
out of escrow will promptly deliver to FPC the cash dividends that have been
received by such Stockholder with respect to any of such Stockholder's escrowed
shares so delivered to FPC.
(ii) As to any claim identified on Exhibit 16.3, FPC shall within 10
business days following receipt of the written consent from both of the
Stockholders' Representatives deliver out of the escrow to itself the lesser of
(1) the number of escrowed shares in whole shares, having an aggregate market
value (as determined on the basis of the FPC Closing Date Closing Price) most
nearly equal to the amount of the liability for the claim or claims or portions
thereof which FPC elects (in accordance with the provisions of Section 4.3) to
be satisfied from escrowed shares, or (2) all of the escrowed shares. In
addition, each of the Stockholders whose shares are so delivered out of escrow
will promptly deliver to FPC the cash dividends that have been received by such
Stockholder with respect to any of such Stockholder's escrowed shares so
delivered to FPC.
(iii) As to any claim identified as being made pursuant to Section 16.2,
FPC shall within 10 business days following receipt of the written consent from
the particular Stockholder (but no later than the Escrow Termination Date)
deliver out of the escrow to itself the lesser of (1) the number of escrowed
shares (of those ascribed to such Stockholder) in whole shares, having an
aggregate market value (as determined on the basis of the FPC Closing Date
Closing Price) most nearly equal to the amount of the liability for the claim
or claims thus to be satisfied, or (2) all of the escrowed shares ascribed to
such Stockholder. In addition, the Stockholder whose shares are so delivered
out of escrow will promptly deliver to FPC the cash dividends that have been
received by such Stockholder with respect to any of such Stockholder's escrowed
shares so delivered to FPC.
(d)(i) If, as to a claim identified as being pursuant to Section 16.3
(other than claims identified on Exhibit 16.3), both of the Stockholders'
Representatives do not give such written consent to FPC within said 30 day
period (or such shorter period as may apply under the provisions hereof), or
if, as to a claim identified as being pursuant to Section 16.2, the particular
Stockholder does not give such written consent to FPC within said 30 day period
(or such shorter period as may apply under the provisions hereof), FPC shall
continue to hold the escrowed shares in the escrow until the earliest of (1)
when the rights of the Stockholders and FPC with respect to the escrowed shares
have been agreed upon between such parties, (2) when such rights are finally
determined by a binding arbitration decision or non-appealable decision of a
court of competent jurisdiction or (3) the Escrow Termination Date.
(ii) If, as to a claim identified on Exhibit 16.3, both of the
Stockholders' Representatives do not give such written consent to FPC within
said 30 day period (or such shorter period as may apply under the provisions
hereof), FPC shall continue to hold in the escrow that number of escrowed
shares having an aggregate market value (as determined on the basis of the FPC
Closing Date Closing Price) most nearly equal to the amount of the liability
for the claim or claims or portions thereof which FPC elects (in accordance
with the provisions of Section 4.3) to be satisfied from escrowed shares, and
such shares shall be held in the escrow until the earliest of (1) when the
rights of the Stockholders and FPC with respect to the escrowed shares have
been agreed upon between such parties or (2) when such rights are finally
determined by a binding arbitration decision or non-appealable decision of a
court of competent jurisdiction. If, at the time when such claim is resolved,
whether by agreement, binding arbitration decision or court decision, the
resolution is such that FPC is entitled to indemnification and thus is
entitled to recourse to escrowed shares, FPC shall deliver out of the escrow to
itself the lesser of (A) the number of such escrowed shares in whole shares,
having an aggregate market value (as determined on the basis of the FPC Closing
Date Closing Price) most nearly equal to the amount of the liability for the
claim or claims thus to be satisfied, or (B) all of the escrowed shares. In
addition, each of the Stockholders whose shares are so delivered out of escrow
will promptly deliver to FPC the cash dividends that have been received by such
Stockholder with respect to any of such Stockholder's escrowed shares so
delivered to FPC. Once such contingency is resolved following the retention of
shares in the escrow following the Escrow Termination Date, any shares then
remaining after satisfying the Stockholders' indemnification obligations
relating to such contingency shall be distributed to the Stockholders.
(iii) FPC may rely on any determination by an arbitrator in a binding
arbitration or a court of competent jurisdiction. If any such arbitrator or
court shall determine that such escrowed shares are to be delivered out of the
escrow to FPC, FPC shall, within 10 business days following receipt of a copy
of such determination, deliver out of the escrow to itself the lesser of (A)
the number of such escrowed shares in whole shares, having an aggregate market
value (as determined on the basis of the FPC Closing Date Closing Price) mo st
nearly equal to the amount of the liability for the claim or claims thus to be
satisfied, or (B) all of such escrowed shares. In addition, each of the
Stockholders whose shares are so delivered out of escrow will promptly deliver
to FPC the cash dividends that have been received by such Stockholder with
respect to any of such Stockholder's escrowed shares so delivered to FPC.
(iv) As to any claim made by FPC pursuant to Section 16.2 or Section 16.3
(other than claims identified on Exhibit 16.3) which is not agreed to by the
affected Stockholder or by the Stockholders' Representatives, as the case may
be, FPC and the affected Stockholder or the Stockholders' Representatives, as
the case may be, shall use their respective reasonable efforts to resolve such
claim before the Escrow Termination Date. If by the Escrow Termination Date
(i) the rights of the Stockholders and FPC with respect to the escrowed shares
have not been agreed upon between such parties and (ii) if submitted to
arbitration or a court of competent jurisdiction, such rights have not been
finally determined by a binding arbitration decision or non-appealable decision
of the court, then on the Escrow Termination Date, FPC will deliver out of the
escrow account to itself the lesser of (A) the number of such escrowed shares
in whole shares, having an aggregate market value (as determined on the basis
of the FPC Closing Date Closing Price) most nearly equal to FPC's reasonable
estimate of the amount of the loss associated with the claim or claims
remaining unsatisfied, or (B) all of such escrowed shares; and, in addition,
each of the Stockholders whose shares are so delivered out of escrow will
promptly deliver to FPC the cash dividends that have been received by such
Stockholder with respect to any of such Stockholder's escrowed shares so
delivered to FPC. In such event, after the Escrow Termination Date, if it
should be finally determined by mutual agreement between the Stockholders and
FPC, a binding arbitration determination or non-appealable determination by a
court of competent jurisdiction that FPC is not entitled to indemnification for
any or all of such claim or claims, FPC will issue to those Stockholders whose
escrowed shares were delivered out of escrow to FPC to cover such claim or
claims, the lesser of (A) the number of such shares in whole shares, having an
aggregate market value (as determined on the basis of the FPC Closing Date
Closing Price) most nearly equal to the amount of the claim or claims in which
it was determined that FPC was not entitled to indemnification (together with
the dividends attributable to such shares that were returned to FPC by such
Stockholders as well as any dividends that would have been declared and
received by the Stockholders on such shares while FPC held such shares) or (B)
the total number of shares previously distributed to FPC from escrow to cover
the claim or claims (together with the dividends attributable to such shares
that were returned to FPC by such Stockholders).
(v) Upon satisfaction by the Stockholders of a claim for indemnification
from escrowed shares, if requested by the Stockholder or the Stockholders'
Representatives, as the case may be, FPC shall diligently pursue or defend (or
in the sole reasonable discretion of FPC, allow the Stockholder or
Stockholders' Representatives to pursue or defend, on behalf of FPC or FMI, as
the case may be) recovery of any loss or defense of any claim associated with
an indemnification claim which was satisfied with escrowed shares. If FPC
pursues recovery of the loss or defense of any claim, FPC will use its
reasonable best efforts to keep the Stockholder or the Stockholders'
Representatives, as the case may be, advised of the status of the pursuit of
the recovery or the defense of the claim and will consult in good faith with
the Stockholder or the Stockholders' Representatives, as the case may be, as to
the appropriate action to take in the matter. If FPC allows a Stockholder or
the Stockholders' Representatives to pursue recovery of the loss or defense of
any claim, the Stockholder or the Stockholders' Representatives, as the
case may be, will use its or their reasonable best efforts to keep FPC advised
of the status of the matter and will consult in good faith with FPC, as to the
appropriate action to take in pursing the recovery or defending the claim and
FPC shall cooperate with the Stockholder or the Stockholders' Representatives,
as the case may be, in accordance with the provisions of Section 16.8. If FPC
or FMI subsequently recovers any or all of such loss associated with the claim
or do not ultimately suffer any or all of such loss associated with the claim,
FPC will issue to the Stockholders whose escrowed shares were delivered out of
escrow to FPC to cover such loss, the lesser of (A) the number of shares in
whole shares, having an aggregate market value (as determined on the basis of
the FPC Closing Date Closing Price) most nearly equal to the amount of the
recovery or avoided loss (together with the dividends attributable to such
shares that were returned to FPC by such Stockholders as well as any dividends
that would have been declared and received by the Stockholders on such shares
while FPC held such shares), or (B) the total number of shares previously
distributed to FPC from the escrow to cover the estimated loss (together with
the dividends attributable to such shares that were returned to FPC by such
Stockholders as well as any dividends that would have been declared and
received by the Stockholders on such shares while FPC held such shares). For
example, if by the Escrow Termination Date, FMI has not collected certain
accounts receivable existing on the Closing Date and, as a result, 1,000 shares
of FPC Common Stock collectively are delivered out of the escrow to FPC and the
associated cash dividends are paid back to FPC, then if subsequent to the
Escrow Termination Date the accounts receivable are collected in full, FPC
would be obligated to issue to the Stockholders, on a proportionate basis,
1,000 shares of FPC Common Stock and the related dividends.
(e)In any case under this Section 4.4 where all of the escrowed shares or
all of the escrowed shares ascribed to a particular Stockholder, as the case
may be, are delivered out of the escrow to satisfy claims, the Stockholders or
the affected Stockholder, as the case may be, shall be considered to have
satisfied that portion of the applicable claim which is equal to (i) the number
of escrowed shares so delivered multiplied by (ii) the FPC Closing Date Closing
Price. Any portion of such claim not satisfied from escrowed shares can be
recovered from the Stockholders or the affected Stockholder, as the case
may be, in accordance with the provisions of, and subject to the limitations
of, Article 16 of this Agreement.
4.5 Rights to Escrowed Shares During Pendency of Escrow. The Stockholders
shall have all indicia of ownership of the escrowed shares while they are held
in escrow, including without limitation, the rights to vote such shares and
receive distributions thereon and shall have the obligation to pay all taxes,
assessments and charges with respect thereto and to include proportionately and
when received the taxable portion or portions of such distributions as income
for tax purposes.
4.6 Recourse to Escrow Not Exclusive. The rights of FPC to seek
indemnification from the escrowed shares shall be in addition to, and not be in
limitation of, the rights of FPC under any other provision of this Agreement,
including without limitation, Article 16; provided however that until the
Escrow Termination Date, any indemnification from the Stockholders sought by
FPC shall be satisfied first from the escrowed shares. By way of examples, and
not by way of limitation, (a) if prior to the Escrow Termination Date it is
agreed that FPC is entitled to indemnification by the Stockholders collectively
for a claim of $500,000 and there have been no prior indemnification payments
hereunder to FPC by or on behalf of the Stockholders, such indemnification
claim must be satisfied out of the escrowed shares subject to the proportionate
liability limitations provided for in this Agreement and (b) if prior to the
Escrow Termination Date it is agreed that FPC is entitled to indemnification by
the Stockholders collectively for a claim which exceeds the indemnification
value of the escrowed shares but is less than the product of 350,000 and the
FPC Closing Date Closing Price and there have been no prior indemnification
payments hereunder to FPC by or on behalf of the Stockholders, such
indemnification claim must be satisfied first by delivery of all of the
escrowed shares and then, to the extent the amount of the claim exceeds the
indemnification value of all of the escrowed shares, such excess may be
recovered directly from the Stockholders, subject to the proportionate
liability limitations provided for in this Agreement.
ARTICLE 5
CLOSING
Subject to the terms and conditions of this Agreement, the closing of the
transactions contemplated hereby (the "Closing") shall be held at the offices
of Youngblood & Owens, L.C., Plaza of the Americas, Suite 600, 600 N. Pearl
Street, Dallas, Texas at 9:00 a.m. on December 1, 1994, or at such other place,
date and time as the parties to this Agreement may otherwise agree; provided
that the Closing Date shall be no earlier than November 30, 1994 and, unless
otherwise mutually agreed by the parties, no later than December 31, 1994 (such
closing date being referred to in this Agreement as the "Closing Date").
<PAGE>
ARTICLE 6
SECURITIES LAW MATTERS
6.1 Status Under Securities Law; Intent.
(a) The Stockholders severally understand and agree that the shares of FPC
Common Stock will not have been registered under (i) the Securities Act, (ii)
Chapter 517, Florida Statutes or (iii) any other state securities laws. Each
Stockholder severally represents and warrants to FPC that he or she (1) will
be acquiring the common stock of FPC for his or her own account, for investment
and without a view to, or in connection with, any resale or distribution
thereof in violation of applicable state or federal securities laws; (2) does
not on the date hereof, and will not on the date of the Closing, have any
contract, understanding or arrangement with any person to sell, pledge,
hypothecate or dispose of to such person, or to anyone else, any portion of the
FPC Common Stock; and (3) has no present plans or intention to enter into, and
on the Closing Date will not have any plans or intention to enter into, any
such contract, understanding or arrangement.
(b) Each Stockholder separately agrees and covenants not to sell, pledge,
hypothecate, or otherwise dispose of or attempt to dispose of any portion of
the FPC Common Stock in violation of the Securities Act or other Federal or any
state securities laws or this Agreement and in any event until public
issuance of consolidated financial results of FPC covering at least 30 days of
post acquisition combined operations; and that it will hold such FPC Common
Stock indefinitely unless and until (i) such shares of common stock are
registered under the Securities Act and appropriate state securities laws and
continue to be so registered at the time of any sale, pledge, hypothecation or
other disposition or (ii) FPC has received an opinion of counsel satisfactory
to it that any proposed disposition of such FPC Common Stock will not violate
the terms of this Agreement and that no registration under such statutes is
required. Each Stockholder separately consents to the placing of a legend on
such Stockholder's certificates for the shares of FPC Common Stock issued to
such Stockholder, stating that such shares have not been registered and
setting forth the above-mentioned restrictions on transfer, and to the placing
of a stop transfer restriction or order on the books of FPC and with any
transfer agents against such shares, until they may be legally sold or
otherwise transferred.
6.2 Sophistication, Disclosure, Resale, etc. Each Stockholder separately
acknowledges, represents, warrants or covenants as the case may be, as follows:
(a) The Stockholder considers himself or herself to be a sophisticated
investor with respect to electric utilities and the businesses conducted by
FPC's diversified subsidiaries, having had the requisite knowledge and
experience in financial and business matters to evaluate the merits and risks
of acquiring the common stock of FPC.
(b) The Stockholder has been furnished with copies of documents requested
concerning FPC and has had an opportunity to meet with representatives of FPC
to ask questions and receive answers regarding the businesses of FPC and the
businesses' respective financial conditions in order to assist in evaluating
the merits and risks of entering into this transaction.
(c) Each Stockholder acknowledges receipt of the following:
(i)FPC's Annual Report Form 10-K for the year ended December 31, 1993.
(ii) FPC's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1994, June 30, 1994 and September 30, 1994.
(iii) FPC's Current Reports on Form 8-K dated January 17, 1994, April 21,
1994, July 21, 1994, October 20, 1994 and November 17, 1994.
(iv) FPC's 1993 Annual Report to Stockholders.
(v) FPC's definitive Proxy Statement dated March 7, 1994.
ARTICLE 7
POST CLOSING REGISTRATION OF SECURITIES
7.1 Registration Under Securities Act, Etc.
(a) If any Stockholder does not desire to have the FPC Common Stock to be
received by such Stockholder pursuant to the consummation of the Merger covered
by the registration statement to be filed by FPC pursuant to this Article 7,
such Stockholder must so notify FPC in writing within 10 days after the date of
this Agreement (the "Electing Out Date"). All Stockholders who do not so
notify FPC within such 10 day period will be referred to herein as the
"Non-Electing Out Stockholders" and will have their respective shares included
in the registration statement to be filed by FPC pursuant to this Article 7.
(b) Promptly following (i) the later of the Closing Date or the Electing
Out Date and (ii) the receipt from each Non-Electing Out Stockholder of the
information required pursuant to Section 7.1(h), FPC will file with the
Commission under the Securities Act (with respect to 50% of the FPC Common
Stock of all Non-Electing Out Stockholders), at FPC's own expense, an
appropriate registration statement (whether on a Form S-3 containing a
re-offering prospectus, or as otherwise determined by FPC) covering 50% of the
shares of FPC Common Stock of each Non-Electing Out Stockholder (the "Initially
Covered Shares"), such registration statement to comply as to form and content
in all material respects to the Commission's forms, rules and regulations.
Thereafter, at its own expense, FPC will use its reasonable best efforts to
cause such registration statement to be declared effective as a shelf
registration such that the sale by the Non-Electing Out Stockholders of their
respective Initially Covered Shares will be duly registered.
(c) At any time after December 31, 1995, but on one occasion only, a
Stockholder can request in writing by notice to FPC that the remaining 50% of
the shares of FPC Common Stock received by the Non-Electing Out Stockholders
upon consummation of the Merger be registered, in which event, FPC shall give
written notice to each of the Non-Electing Out Stockholders advising that FPC
has been requested to file an additional registration statement to register
such additional FPC Common Stock. If any Non-Electing Out Stockholder does not
desire to have such Stockholder's additional FPC Common Stock covered by such
additional registration statement to be filed by FPC pursuant to this Article
7, such Stockholder must so notify FPC in writing within 10 days after the date
of such notice (the "Second Electing Out Date"). All Stockholders who do not
so notify FPC within such 10 day period will have their respective additional
shares included in the additional registration statement to be filed by FPC
pursuant to this Article 7. Promptly following the later of (i) the Second
Electing Out Date and (ii) the receipt from each Non-Electing Out Stockholder
of an update of the information required pursuant to Section 7.1(h), FPC will
file with the Commission under the Securities Act, at its own expense, an
appropriate additional registration statement covering the remaining 50% of the
shares of FPC Common Stock of each Non-Electing Out Stockholder, such
additional registration statement to comply as to form and content in all
material respects to the Commission's forms, rules and regulations.
Thereafter, at its own expense, FPC will use its reasonable best efforts to
cause such additional registration statement to be declared effective as a
shelf registration such that the sale by the Non-Electing Out Stockholders of
their respective shares will be duly registered. In no event shall FPC be
obligated to file more than a total of two registration statements pursuant to
Sections 7.1(b) and (c) hereof.
(d) FPC will use its reasonable best efforts to promptly prepare and file
with the Commission amendments and supplements to such registration statements
and to the prospectuses used in connection therewith as may be necessary to
keep such registration statements effective as shelf registrations and to
comply with the provisions of the Securities Act with respect to the
disposition of FPC Common Stock received by the Non-Electing Out Stockholders
pursuant to this Agreement and held by them, until the earlier of (i) such time
as all of such shares of FPC Common Stock owned by the Non-Electing Out
Stockholders have been disposed of in accordance with the intended methods of
disposition by the Non-Electing Out Stockholders or (ii) the expiration of
three years after the Closing Date; it being understood in any event that no
public distribution by any of the Stockholders of FPC Common Stock shall be
made until FPC shall have publicly reported, following the Closing, quarterly
financial results covering at least 30 days of post-acquisition combined
operations.
(e) FPC will furnish to each of the Non-Electing Out Stockholders a copy of
any amendment or supplement to the registration statements or prospectuses
prior to the filing thereof and shall not file any amendment or supplement to
which any such Stockholder shall have reasonably objected on the grounds
that the amendment or supplement does not comply in all material respects with
the requirements of the Securities Act or of the rules or regulations
thereunder.
(f)FPC shall promptly furnish to each of the Non-Electing Out Stockholders
conformed copies of the registration statements and of each amendment and
supplement thereto (in each case including all exhibits), copies of the
prospectuses included in such registration statement in conformity with the
requirements of the Securities Act, such documents, if any, incorporated by
reference in such registration statements or prospectuses, and such other
documents, in each case as such Stockholder may reasonably request.
(g)Notwithstanding anything herein to the contrary, if the general counsel
of FPC believes in reasonable good faith that, because of an event or state of
facts which occurs or is discovered subsequent to the filing of any such
registration statement or post-effective amendment thereto, continued sales of
FPC Common Stock under an effective registration statement or post-effective
amendment thereto filed pursuant to this Article 7 might subject FPC to
liability under the federal securities laws unless such registration statement
or post-effective amendment thereto and/or prospectus related thereto is
updated, amended or supplemented, then upon written notice from FPC to the
Non-Electing Out Stockholders, each such Stockholder agrees that it will cease
making further offers or sales of FPC Common Stock pursuant to such
registration statement or post-effective amendment thereto for a period of 30
days from such written notice or, if later, until (i) the registration
statement, post-effective amendment and/or prospectus has been updated, amended
or supplemented, (ii) the updated, amended or supplemented registration
statement, post-effective amendment and/or prospectus has been filed with the
Commission and any other appropriate securities authorities and (iii) the
updated, amended or supplemented registration statement, post-effective
amendment and/or prospectus has been declared effective or otherwise properly
approved by such regulatory authorities. If FPC gives such written notice to
the Stockholders, then during the period which runs for 30 days from the giving
of such written notice or promptly after such 30 day period expires, FPC will
update, amend or supplement the registration statement, post-effective
amendment and/or prospectus and file the update, amendment and/or supplement
with the Commission and any other appropriate securities authorities; and,
after such filing, FPC will use its reasonable best efforts to cause the
update, amendment and/or supplement declared effective or otherwise properly
approved by such regulatory authorities.
(h) Each of the Non-Electing Out Stockholders will furnish to FPC without
expense to FPC (by way of completion and delivery to FPC of a questionnaire in
the form of Exhibit 7.1(h) hereto and/or in such other fashion as may be
acceptable to FPC) and as promptly as practicable after the Electing Out
Date all material statements with respect to such Stockholder, if any, which
are required to be made in such registration statements and prospectuses in
accordance with the Securities Act and the rules and regulations of the
Commission thereunder and which will in all material respects conform to all of
the requirements of the Securities Act and such rules and regulations and which
will be sufficient so as to permit the disclosures in the registration
statements, with respect to such Stockholder and the plan of distribution not
to contain any untrue statement of a material fact or any omission of a
material fact required to be stated therein with respect to same and not to be
misleading. At Closing and at any time as may be requested thereafter by FPC
(including at least once per year by completing and delivering to FPC an
updated questionnaire in the form of Exhibit 7.1(h) and/or in such other
fashion as may be acceptable to FPC), each Non-Electing Out Stockholder will
confirm in writing that all material statements with respect to such
Stockholder provided to FPC, which are required to be made in the registration
statements and prospectuses in accordance with the Securities Act and the rules
and regulations of the Commission thereunder, conform in all material respects
to all of the requirements of the Securities Act and such rules and regulations
and that, as to the information included in the registration statement with
respect to such Stockholder and the plan of distribution, there is no untrue
statement or alleged untrue statement of a material fact, or any omission or
alleged omission to state therein a material fact required to be stated therein
with respect to same or necessary to make the statements therein with respect
to same not misleading. Each Non-Electing Out Stockholder agrees to update in
writing all statements with respect to such Stockholder provided to FPC, which
are of a nature required to be made in the registration statements and
prospectuses in accordance with the Securities Act and the rules and
regulations of the Commission thereunder and to assure that at all times as to
the information included in the registration statements with respect to such
Stockholder and the plan of distribution, there is no untrue statement or
alleged untrue statement of a material fact, or any omission or alleged
omission to state therein a material fact required to be stated therein with
respect to same or necessary to make the statements therein with respect to
same not misleading.
(i)Each of the Non-Electing Out Stockholders understands and acknowledges
that any public distribution of any of the shares of FPC Common Stock by such
Stockholder pursuant to the provisions of this Agreement, including any offer
of such shares, requires either the delivery of a current prospectus in
accordance with the requirements of the Securities Act and the rules and
regulations of the Commission thereunder or, so long as such shares are traded
on a national securities exchange, compliance with the requirements of Rule 153
under the Securities Act.
(j)To further evidence their respective agreements with respect to dealing
with the FPC Common Stock, each of the Non-Electing Out Stockholders agrees to
execute and deliver to FPC at Closing a Stockholder Acknowledgement in the form
set forth as Exhibit 7.1(j) hereto and following the Closing, shall abide by
the terms of the Stockholder Acknowledgement, including without limitation
providing notice to FPC concerning all sales, transfers and dispositions of FPC
Common Stock and certain proposed sales, transfers and dispositions thereof as
provided more particularly in such Stockholder Acknowledgement.
(k)FPC will use its reasonable best efforts to register, qualify or
exempt all FPC Common Stock covered by the registration statements under the
securities or blue sky laws of such jurisdictions as each Non-Electing Out
Stockholder shall reasonably request, to keep such registration, qualification
or exemption in effect for so long as such registration statements remain in
effect, and do any and all other acts and things which may be necessary or
advisable to enable such Stockholder to consummate the disposition in such
jurisdictions of its shares of FPC Common Stock covered by such registration
statements, except that FPC shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not, but for the requirements of this subsection, be obligated
to be so qualified, or to subject itself to taxation in any such jurisdiction,
or to consent to general service of process in any such jurisdiction.
(l)FPC will comply in all material respects with all applicable rules and
regulations of the Commission.
(m) FPC will file listing applications with the New York Stock Exchange,
with respect to all of the FPC Common Stock covered by the registration
statements referenced in this Article 7, no later than the date the initial
registration statement is declared effective by the Commission and will use its
reasonable best efforts to cause such shares to be listed on such exchange.
7.2 Indemnification.
(a) Indemnification by FPC. With respect to the registration of FPC Common
Stock under the Securities Act pursuant to this Article 7, FPC will, and hereby
does, to the extent permitted by law, indemnify and hold harmless each
Non-Electing Out Stockholder against any losses, claims, damages, liabilities
or expenses (including, without limitation, the costs and expenses of
investigating, preparing for and defending any legal proceeding, including
reasonable attorneys' fees), to which such Stockholder may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof) arise
out of or are based upon (x) any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any document incorporated by reference
therein, or (y) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided that FPC shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or expense (or action or
proceeding in respect thereof) arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to FPC by any of the Stockholders
specifically for use in preparation thereof or (ii) a failure of a Stockholder
to deliver a prospectus or otherwise comply with any of the applicable
securities laws in connection with the distribution of the FPC Common Stock.
(b) Indemnification by the Stockholders. With respect to the registration
of the FPC Common Stock under the Securities Act pursuant to this Article 7,
each Non-Electing Out Stockholder will, and hereby does, to the extent
permitted by law, indemnify and hold harmless FPC, and each director of
FPC, each officer of FPC who shall sign such registration statement and each
other person, if any, who controls FPC within the meaning of the Securities
Act, from and against any losses, claims, damages, liabilities or expenses
(including, without limitation, the costs and expenses of investigating,
preparing for and defending any legal proceeding, including reasonable
attorneys' fees), to which FPC or any such director, officer or controlling
person may become subject under the Securities Act or otherwise, insofar
as such losses, claims, damages, expenses or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (x) any untrue
statement or alleged untrue statement of a material fact contained
in such registration statement, any preliminary prospectus, final prospectus or
summary prospectus included therein, or any amendment or supplement thereto, or
any document incorporated by reference therein if such statement was made in
reliance upon and in conformity with written information furnished to FPC by
such Stockholder specifically for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement, (y) any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, if such omission was in reliance upon and in
conformity with written information furnished to FPC by such Stockholder
specifically for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement or (z) a failure by such Stockholder to deliver a prospectus or
otherwise comply with any of the applicable securities laws in connection with
the distribution of the FPC Common Stock. Specifically, each Non-Electing Out
Stockholder shall be responsible under this subsection (b) only for such
Stockholder's untrue and alleged untrue statements and omissions or alleged
omissions, and shall not be responsible for the untrue or alleged untrue
statements, or the omissions or alleged omissions of, any other Non-Electing
Out Stockholder.
(c) Indemnification Unavailable. If the indemnification provided for in
this Article 7 is unavailable as a matter of law to an indemnified party in
respect of any losses, claims, damages or liabilities referred to herein, then
each indemnifying party under any paragraph of this Article 7, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by such indemnified party on the one hand and the
indemnifying parties on the other or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of such indemnified party on the
one hand and the indemnifying parties on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of such indemnified party and the indemnifying parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by such parties and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties agree that it would not be just and
equitable if contribution pursuant to this Section 7.2(c) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating, defending or settling
any such action or claim. Each Non-Electing Out Stockholder shall be
responsible under this subsection (c) only for such Stockholder's actions,
statements, and omissions and shall not be responsible for the actions,
statements and omissions of any other Non-Electing Out Stockholder.
(d)Limitations Inapplicable. The limitations as to time and dollar amount
contained in Article 16 shall not be applicable to the indemnification
obligations of any of the parties contained in this Section 7.2.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Each Stockholder hereby separately and individually and not jointly
represents and warrants to FPC and Merger Corporation the following:
8.1 Capital Stock.
(a)Such Stockholder is the lawful owner of the shares of FMI Common Stock
and/or shares of FMI Preferred Stock listed opposite such Stockholder's name on
Exhibit 8.1.
(b)During the two years prior to the initiation of discussions of the
transactions contemplated by this Agreement and through the date hereof, and
except for the distribution of FMI Preferred Stock from the Burnett FM
Partnership to its partners and the anticipated conversion of the FMI Preferred
Stock into FMI Common Stock, FMI has not reacquired any shares of FMI Common
Stock, FMI Preferred Stock or any other voting stock of FMI that were owned by
such Stockholder and had been outstanding during such two year period and FMI
has not made any other changes in the terms of the FMI Common Stock, FMI
Preferred Stock or any other voting stock of FMI that has been owned by such
Stockholder and had been outstanding during such two year period.
(c)Such Stockholder has received all dividends that have been declared and
are otherwise payable with respect to the shares of FMI Common Stock and FMI
Preferred Stock owned by such Stockholder.
8.2 Restrictions on Stock.
(a) Except as described on Exhibit 8.2, such Stockholder is not a party to
any agreement, written or oral, creating rights in respect of such
Stockholder's FMI Common Stock or such Stockholder's FMI Preferred Stock in any
third person or relating to the voting of such Stockholder's FMI Common Stock
or such Stockholder's FMI Preferred Stock.
(b) Except as described on Exhibit 8.2, such Stockholder's FMI Common Stock
and/or FMI Preferred Stock as set forth as owned by such Stockholder on Exhibit
8.2 is free and clear of all security interests, claims, liens, encumbrances,
equities, charges or other interests of third parties.
(c) Except as described on Exhibit 8.2, there are no existing warrants,
options, stock purchase agreements, redemption agreements, restrictions of any
nature, calls or rights to subscribe of any character relating to such
Stockholder's FMI Common Stock or such Stockholder's FMI Preferred Stock,
nor does such Stockholder own any securities convertible into FMI Common Stock
other than the FMI Preferred Stock owned by such Stockholder, if any.
8.3 Authority Relative to this Agreement. Such Stockholder has duly
executed and delivered this Agreement, and to the extent necessary, the
execution, delivery and performance of this Agreement by such Stockholder has
been duly authorized by such Stockholder. No further action is necessary on
the part of such Stockholder to make this Agreement valid and binding upon such
Stockholder and enforceable against such Stockholder in accordance with the
terms hereof or to carry out the transactions contemplated hereby.
8.4 No Violations. Subject to obtaining the consents referred to in
Section 9.30 of this Agreement, the execution, delivery and performance of this
Agreement by such Stockholder will not (i) violate any provisions of law or any
order of any court or any governmental unit to which such Stockholder is
subject, or by which the FMI Common Stock or FMI Preferred Stock of such
Stockholder may be bound, (ii) conflict with, result in a breach of, or
constitute a default under any indenture, mortgage, lease, agreement, or other
instrument to which such Stockholder is a party or by which such Stockholder or
any of the FMI or the FMI Common Stock or FMI Preferred Stock of such
Stockholder may be bound, or (iii) result in the creation of any lien, charge,
or encumbrance upon the FMI Common Stock or FMI Preferred Stock of such
Stockholder.
8.5 Litigation.
(a) Except as listed and described on Exhibit 8.5, such Stockholder is not a
party to, and there is no basis for, any litigation, proceeding or
administrative investigation, and none is pending or threatened, against such
Stockholder, such Stockholder's FMI Common Stock or such Stockholder's FMI
Preferred Stock, which is, or if adversely determined might be, material to the
transactions contemplated by this Agreement.
(b) Except as listed and described on Exhibit 8.5, there is not, and there
is no basis for, any outstanding order, writ, injunction or decree of any
court, government, governmental authority or arbitration against or affecting
the Stockholder, the Stockholder's FMI Common Stock or the Stockholder's FMI
Preferred Stock material to the transactions contemplated by this Agreement.
8.6 Ownership of Florida Progress Corporation Stock. Such Stockholder,
when considered together with anyone else who might be considered part of such
Stockholder's "group" (as defined in Section 13(d)(3) of the Securities
Exchange Act), does not own and as a result of the Merger will not own
5% or more of the outstanding common stock of FPC.
8.7 No Interest in Properties, Competitors, Etc. Except as set forth on
Exhibit 8.7 to this Agreement, neither such Stockholder nor any member of such
Stockholder's family (i) owns, directly or indirectly, in whole or in part, any
of the properties necessary for the business of FMI as currently conducted or
(ii) owns, directly or indirectly, any interest in (except for the ownership of
marketable securities of publicly owned corporations, representing in no case
more than one percent of the outstanding shares of such class of securities) or
controls or is an employee, officer, director or partner of, participant in or
consultant to any corporation, association, partnership, limited partnership,
joint venture or other business organization which is a competitor, supplier,
customer, landlord or tenant of FMI.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS AND FMI
The Stockholders and FMI hereby represent and warrant to FPC and Merger
Corporation the following:
9.1 Organization and Standing. FMI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas and
has the corporate power and authority to carry on its businesses as they are
now being conducted and to own, lease and/or operate its properties in the
places where its businesses are conducted and where such properties are owned,
leased or operated. A true and correct copy of (1) its Articles of
Incorporation, and all amendments thereto to date, certified as of a recent
date by the Secretary of State of the State of Texas, and (2) its Bylaws, as
now in effect, certified by its corporate secretary, are attached hereto as
Exhibits 9.1(a) and 9.1(b), respectively. The minute books of FMI will be made
available for inspection by FPC and its representatives at any reasonable time
or times prior to the Closing and will be complete and correct as of the date
of any such inspection.
9.2 Capitalization; Capital Stock.
(a) The authorized capital stock of FMI consists only of 100,000 shares of
FMI Common Stock and 100,000 shares of FMI Preferred Stock, and as of the date
hereof there are outstanding 7,250 shares of FMI Common Stock and 70,000 shares
of FMI Preferred Stock, all of which have been validly issued and are fully
paid and are nonassessable; and, all of such outstanding capital stock of FMI
is owned by the Stockholders as set forth on Exhibit 8.1.
(b) During the two years prior to the initiation of discussions of the
transactions contemplated by this Agreement and through the date hereof, FMI
has not reacquired any shares of the FMI Common Stock, the FMI Preferred Stock
or any other voting stock of FMI that have been outstanding during such
two year period and has not made any other changes in the terms of the FMI
Common Stock, the FMI Preferred Stock or any other voting stock of FMI that
have been outstanding during such two year period except for the conversion of
FMI Preferred Stock into FMI Common Stock contemplated to occur prior
to Closing.
9.3 Restrictions on Stock.
(a) Except as described on Exhibit 9.3, FMI is not a party to, and to the
knowledge of FMI's management, no Stockholder is a party to, any agreement,
written or oral, creating rights in respect of the FMI Common Stock or the FMI
Preferred Stock in any third person or relating to the voting of the FMI Common
Stock or the FMI Preferred Stock.
(b) Except as described on Exhibit 9.3 and except for the FMI Preferred
Stock which is convertible into FMI Common Stock, there are no existing
warrants, options, stock purchase agreements, redemption agreements,
restrictions of any nature, calls or rights to subscribe of any character
relating to the FMI Common Stock or the FMI Preferred Stock to which FMI is a
party or of which FMI's management has knowledge, nor are there any securities
convertible into FMI Common Stock.
9.4 Qualification To Do Business. Except for failures to be so qualified
which would not, in the aggregate, have a material adverse effect on the FMI
Common Stock, the FMI Preferred Stock or the financial condition, business,
results of operations, properties or prospects of FMI, FMI is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which, by reason of the character of its properties owned
or leased or the nature of its activities or otherwise, it is required to be so
qualified, and each such jurisdiction is listed on Exhibit 9.4 to this
Agreement. Exhibit 9.4 also contains the address (including city, county,
state, or other jurisdiction and zip code) of each location where any of FMI's
properties are located and each trade name under which FMI operates
at each such address and any additional business and trade names under which
FMI has operated at each such address in the 5 years preceding the date of this
Agreement.
9.5 Subsidiaries; Interests in Other Businesses; Changes in Ownership of
FMI.
There are no subsidiaries of FMI or any other corporation, partnership or other
business organization in which FMI owns, directly or indirectly, any capital
stock or other equity interest, or with respect to which FMI, alone or in
combination with others, is a control person. FMI has not been a subsidiary of
any other corporation at any time during the 2 years preceding the date of this
Agreement. During the two years preceding the date of this Agreement, there
have been no changes in the stock ownership of FMI other than that occasioned
by the distribution by Burnett FM Partnership of the FMI Preferred Stock to the
partners of Burnett FM Partnership in proportion to their respective
partnership interests.
9.6 Authority Relative to this Agreement. FMI has the full power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by FMI, and no further corporate or other action is necessary on the
part of FMI to make this Agreement valid and binding upon FMI and enforceable
against FMI in accordance with the terms hereof or to carry out the
transactions contemplated hereby.
9.7 No Violations. Subject to obtaining the consents referred to in
Section 9.30 of this Agreement, the execution, delivery and performance of this
Agreement by FMI will not (i) violate FMI's Articles of Incorporation or
Bylaws, (ii) violate any provisions of law or any order of any court or any
governmental unit to which FMI is subject, or by which the assets or properties
of FMI or the FMI Common Stock or FMI Preferred Stock may be bound, (iii) (a)
conflict with, result in a breach of, or constitute a default under any
indenture, mortgage, lease, agreement, or other instrument to which FMI
is a party or by which FMI or any of the assets or properties of FMI or the FMI
Common Stock or FMI Preferred Stock may be bound, or (b) result in the creation
of any lien, charge, or encumbrance upon any of the assets or properties of FMI
or the FMI Common Stock or FMI Preferred Stock, or result in the acceleration
of the maturity of any payment date of any of the liabilities of FMI, except as
set forth on Exhibit 9.7, or increase or adversely affect the obligations of
FMI thereunder or (iv) violate any term or provision of, or result in a
default, give rise to any right of termination, cancellation or acceleration
or cause the loss of any right or option under any contract to which FMI is a
party.
9.8 Financial Statements. Contemporaneously with the execution of this
Agreement, the following financial statements of FMI have been redelivered and
reacknowledged to FPC: the financial statements of FMI for the fiscal year
ended December 31, 1993 (the "Year End Statements"), audited by Arthur Andersen
& Co., together with the unqualified report thereon of such firm, and the
interim, unaudited financial statements of FMI for the nine months of operation
ended September 30, 1994 (the "Interim Statements"), all of which statements
(1) are in all material respects in accordance with the books and records of
FMI; (2) are true and accurate statements in all material respects and fairly
set forth the financial condition and results of the operations of such
corporation as of the relevant dates thereof and for the periods covered
thereby; (3) have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied; and (4) contain and
reflect all necessary material adjustments for a fair presentation of the
results of operations and financial condition for the periods covered by the
statements, subject to the qualification that the Interim Statements are
subject to normal year-end adjustments (the aggregate of which will not be
material) and lack complete footnotes and other presentation items. FMI has
not received any advice or notification from its independent certified public
accountants that FMI has used any improper accounting practice that would have
the effect of not reflecting or incorrectly reflecting in the Year End
Statements, the Interim Statements or the books and records of FMI any material
properties, assets, liabilities, revenues, or expenses of FMI and, to the
knowledge of FMI's management and the Stockholders, no such improper accounting
practice has been used. The Year End Statements and the Interim Statements do
not contain or reflect any material items of special or nonrecurring income, or
other material income not earned in the ordinary course of business, except as
set forth in the notes thereto. The books, records, and accounts of FMI
maintained with respect to the businesses of FMI accurately and fairly reflect
in all material respects, in reasonable detail, the transactions and the assets
and liabilities of FMI with respect to the businesses of FMI. FMI has not
engaged in any transaction with respect to the businesses of FMI, maintained
any bank account for the businesses of FMI, or used any of the funds of FMI in
the conduct of the businesses of FMI, except for transactions, bank accounts,
and funds which have been and are reflected in all material respects in the
normally maintained books and records of FMI.
9.9 Absence of Undisclosed Liabilities. Except as disclosed on the Interim
Statements or on Exhibit 9.9 to this Agreement, FMI was not, as of September
30, 1994, obligated for nor were any of its assets or properties subject, as of
September 30, 1994, to an amount of liabilities and obligations of any kind in
the aggregate (whether known or unknown, secured or unsecured, accrued,
absolute, direct or indirect, contingent or otherwise, and whether due or to
become due) that are materially in excess of the aggregate amount of
liabilities and obligations shown on the Interim Statements and Exhibit 9.9.
There are no facts in existence on the date hereof known to FMI's management or
any of the Stockholders that might reasonably serve as the basis now or in the
future for any material liabilities or material obligations other than those
material liabilities and material obligations specifically disclosed in
the Interim Statements or in this Agreement or the exhibits hereto.
9.10 Title to Assets and Properties. Except for dispositions in the
ordinary course of business consistent with past practice made since September
30, 1994, FMI has good and marketable title to all of the properties,
machinery, equipment and assets, both real and personal, shown or reflected on
the Interim Statements or acquired since September 30, 1994, and such
properties and assets are subject to no mortgage, guaranty, judgment,
execution, pledge, lien, conditional sales agreement, security agreement,
encumbrance or charge, except as disclosed pursuant to this Agreement (with
respect to which no default exists), except for Permitted Encumbrances and
Permitted Real Property Exceptions. All such properties and assets referred to
above are operated in conformity with all applicable building and zoning
ordinances and regulations and all other applicable laws, ordinances and
regulations, except as set forth in Exhibit 9.10 and except to the extent that
such nonconformity would not have a material adverse effect on the business or
assets of FMI; and, to the knowledge of FMI's management, there are no such
nonconformities, whether or not the nonconformity would have a material adverse
effect on the business or assets of FMI.
9.11 Accounts Receivable. All of the accounts receivable reflected on the
balance sheet of FMI included in the Interim Statements represented, as of the
date thereof, and if remaining uncollected as of the Closing will continue to
represent, sales actually made or services actually performed in the ordinary
course of business in bona fide transactions completed in accordance with the
terms and provisions contained in any documents related thereto and have been
collected in full or are or will be collectible in full (less any reserve for
doubtful accounts set forth in the Interim Statements) within the period from
the Closing Date through the date which is the earlier of (a) 75 days from the
Closing Date or (b) February 15, 1995. Any accounts receivable created after
the date of the Interim Statements and before the Closing Date by FMI will be
bona fide accounts receivable at the time of their creation, and at the
Closing will have been collected in full or will be collectible in full (less
any reserve for doubtful accounts) within the period from the Closing Date
through the date which is the earlier of (x) 75 days from the Closing Date or
(y) February 15, 1995. There are no setoffs, counterclaims, or disputes
asserted against, and no discounts or allowances from, the accounts receivable
reflected on the balance sheet of FMI included in the Interim Statements other
than in amounts which, in the aggregate, are not in excess of the amounts
thereof reserved against on the Interim Statements, nor on the Closing Date
will there be any additional such setoffs, counterclaims or disputes asserted
against, or discounts or allowances from, FMI's accounts receivable in excess
of amounts thereof reserved against as of the Closing Date. Any indemnification
claim with respect to collections of accounts receivable asserted prior to the
Escrow Termination Date by FPC (and notwithstanding how long before the Escrow
Termination Date the claim was asserted) will be paid to FPC on, but not
before, the Escrow Termination Date; except that such claim need not be paid on
the Escrow Termination Date if at any time after the claim is made and before
the Escrow Termination Date such accounts receivable have been collected by
FMI.
9.12 Inventories. Exhibit 9.12 sets forth a list as of a recent date,
which date is so specified thereon, of all of the inventories of FMI, including
inventories of raw materials, work-in-process and finished goods, together with
identification of where such inventory was located on such date and whether
such inventory is held in an FMI facility, held on consignment by a third party
or held in a third party distribution warehouse. The inventory set forth on
Exhibit 9.12 shall represent the inventory included in the Interim Statements,
as adjusted to reflect only acquisitions or dispositions of inventory occurring
in the ordinary course of business between the date of the Interim Statements
and the recent date reflected on Exhibit 9.12. All of the inventories of FMI,
including inventories of raw materials, work-in-process and finished goods,
wherever located, are, and all the inventories of FMI on the Closing Date will
be, in all material respects, of a quantity and quality usable or salable in
the ordinary course of business of FMI (net of any applicable inventory reserve
recorded on the Interim Statements and on the Closing Date), are now and on the
Closing Date will be located on or in route to the regular business premises
of FMI or as otherwise specifically set forth in the consigned inventory list
attached as part of Exhibit 9.12 hereto, and has been or will be acquired by
FMI only in bona fide transactions entered into in the ordinary course of
business. The inventories of FMI (net of recorded applicable reasonable
inventory reserves) are not valued in excess of the lower of weighted average
cost or net realizable market value.
9.13 Personal Property.
(a)Exhibit 9.13 sets forth a true and correct list and a brief description
(including vehicle registration or tag numbers) as of a recent date, which date
is so specified thereon, of all motor vehicles, trucks, forklifts, and other
rolling stock owned by FMI, and all assignable warranties of third parties
related thereto (collectively, taking into account all acquisitions and
dispositions in the ordinary course of business consistent with past practice
since such recent date of such property listing, the "FMI Vehicles"). Exhibit
9.13 contains a true and correct list and a brief description, as of a recent
date, which date is so specified thereon, of all machinery, equipment
(including office equipment and machines), tools, computers, computer software,
telephones and telephone systems, parts, accessories, and the like wherever
located and any and all assignable warranties of third parties with respect
thereto owned by FMI (excluding items of equipment having a book value of less
than $1,000) (collectively, taking into account all acquisitions and
dispositions in the ordinary course of business consistent with past
practice since such recent date of such property listing, the "FMI Equipment").
All of the material FMI Vehicles and all of the material FMI Equipment, which
in each case are used in or necessary to the conduct of FMI's business as
presently conducted by FMI, are in good operating condition (reasonable
wear and tear excepted) and have been adequately maintained at all times while
owned by or under the control of FMI, are reasonably fit for the purposes for
which the FMI Vehicles and FMI Equipment are presently used, and are adequate
and usable for the continued operation of the businesses of FMI as the
same are presently conducted. None of the material FMI Vehicles or material
FMI Equipment which is used in or necessary to the conduct of FMI's business as
presently conducted by FMI is in need of maintenance or repairs necessary to
perform their respective functions except for ordinary, routine maintenance and
repairs, which heretofore has been performed as needed in accordance with good
industry standards, the cost of which is not reasonably expected to vary from
historic patterns. Exhibit 9.13 contains a true and correct list and a brief
description as of a recent date, which date is so specified thereon, of all
furniture, fixtures, and leasehold improvements, wherever located, and any and
all assignable warranties covering such furniture, fixtures, and leasehold
improvements and all other items of personal property owned by FMI (excluding
items of furniture and fixtures and other personal property owned by FMI and
listed on another Exhibit hereto or having a book value of less than $1,000)
(collectively, taking into account all acquisitions and dispositions in the
ordinary course of business consistent with past practice since such recent
date of such property listing, the "FMI Furniture and Fixtures"). FMI has good
and marketable title to all FMI Furniture and Fixtures, FMI Equipment, FMI
Vehicles, and other items of personal property (whether or not disclosed in any
Exhibit to this Agreement), free and clear of any and all material encumbrances
except as disclosed on Exhibit 9.13 and except for Permitted Encumbrances.
(b)Exhibit 9.13(b) contains a true and correct list and brief description of
all items of personal property leased by FMI (as lessee) as of a recent date,
which date is so specified. True, correct and complete copies of all documents
evidencing the leases described in Exhibit 9.13(b) shall have been delivered to
FPC prior to the date of this Agreement or shall be delivered to FPC promptly
following the date hereof. Each of the leases described on Exhibit 9.13(b) is
now, and will be on the Closing Date, in full force and effect; and, there are
not now, and will not be on the Closing Date, any existing defaults or events
of default, real or claimed, or events which with notice or lapse of time or
both would constitute defaults, thereunder. Except as described on Exhibit
9.13(b), all such leases are fully assignable without the consent of any third
party.
9.14 Owned Real Property.
(a)Exhibit 9.14(a) contains a true and correct list of each parcel of real
property owned by FMI (including options to purchase real property)
(collectively, together with all right, title, and interest in the buildings,
fixtures, and improvements located thereon, all water lines, rights of way,
uses, licenses, easements, hereditaments, tenements, and appurtenances
belonging or appertaining thereto and all assignable warranties of third
parties with respect thereto, the "FMI Owned Real Property"). Attached
to Exhibit 9.14(a) is a copy of the Title Policy. FMI has good and marketable
fee simple title to the FMI Owned Real Property, free and clear of any and all
liens, mortgages and encumbrances whatsoever except for Permitted Encumbrances
and Permitted Real Property Exceptions. Copies of all documents evidencing
mortgages, liens, charges, or other encumbrances upon the FMI Owned Real
Property shall have been delivered to FPC prior to the date of this Agreement
or shall be delivered to FPC promptly following the date hereof.
(b)FMI does not lease and is not the lessee under any lease with respect to
any real property.
(c)The improvements on the FMI Owned Real Property do not violate any
applicable state or local laws, use restrictions, building ordinances, or
health and safety ordinances except as set forth in Exhibit 9.14(c) and except
to the extent that such violation would not have a material adverse effect on
the business or assets of FMI; and, to the knowledge of FMI's management, there
are no such violations, whether or not the violation would have a material
adverse effect on the business or assets of FMI. There is no private
restrictive covenant or governmental use restriction (including zoning) known
to FMI's management on all or any portion of the FMI Owned Real Property which
prohibits the current use of the FMI Owned Real Property.
(d)Except as set forth on Exhibit 9.14(d), the improvements on the FMI Owned
Real Property are in all material respects in good condition (normal wear and
tear excepted) and have been properly maintained at all times while owned by or
under the control of FMI, are reasonably fit for the purposes for which such
improvements are presently used, and are adequate and usable for the continued
operation of the businesses of FMI as the same are presently conducted. None
of such improvements is in need of material maintenance or repairs except for
ordinary, routine maintenance and repairs, which heretofore has been performed
as needed in accordance with good industry standards, the cost of which is not
reasonably expected to vary from historic patterns.
(e)There are no pending or, to the knowledge of FMI's management, threatened
condemnations, planned public improvements, annexation, special assessments,
zoning, or subdivision changes, or other adverse claims affecting the FMI Owned
Real Property.
(f)All licenses, permits and approvals required for the occupancy and
operation of the FMI Owned Real Property (with appurtenant parking uses) have
been obtained and are in full force and effect except as set forth in Exhibit
9.14(f) and except to the extent that such failure to have would not have
a material adverse effect on the business or assets of FMI; and, to the
knowledge of FMI's management, there are no such absences of licenses, permits
or approvals, whether or not the absence of same would have a material adverse
effect on the business or assets of FMI. FMI has received no notices of
violations in connection with such items.
(g)FMI does not have in its possession any studies or reports which indicate
any defects in the design or construction of any of the improvements on the FMI
Owned Real Property.
(h)There are no past due taxes, assessments, or other charges affecting the
FMI Owned Real Property.
9.15 FMI Contractual Obligations. All material FMI Contracts as of October
31, 1994 are listed on Exhibit 9.15 or on Exhibit 9.13(b), and true and correct
copies of all FMI Contracts have been made available to FPC. For purposes
hereof, "material" shall not include routine contracts, agreements or
commitments which do not exceed $25,000 in amount and which are made in the
usual and ordinary course of business of FMI. For these purposes, "FMI
Contracts" means all of the contracts, leases, warranties, commitments,
agreements, arrangements, credit guaranties, and purchase and sales orders,
whether oral or written, pursuant to which FMI enjoys any right or benefit,
together with the right to receive income in respect of such contracts, leases,
warranties, commitments, agreements, arrangements, and purchase and sales
orders on and after the Closing Date. Except as indicated in Exhibit 9.15,
each of the FMI Contracts is in full force and effect and there are no existing
defaults or events of default, real or claimed, or events which with notice or
lapse of time or both would constitute defaults. There is no FMI Contract that
contains any contractual requirement with which there is a reasonable
likelihood that FMI or any other party thereto will be unable to comply.
Except as indicated on Exhibit 9.15, there exists no actual or, to the best
knowledge of FMI's management and the Stockholders, any threatened termination,
cancellation, or limitation of, or any amendment, modification, or change to
any FMI Contract, which would have a material adverse effect on the business or
condition, financial or otherwise, of FMI, including without limitation, (i)
the business relationship of FMI with any customer, distributor, or related
group of customers or distributors whose purchases individually or in the
aggregate are material to the operations and financial condition of FMI, (ii)
the requirements of any customer or related group of customers of FMI whose
purchases individually or in the aggregate are material to the operations and
financial condition of FMI, or (iii) the business relationship of FMI with any
material supplier to FMI. None of the FMI Contracts is for materials,
supplies, equipment, or services in excess of normal requirements of FMI or as
needed for reasonably anticipated business. FMI has not granted any power
of attorney with respect to the businesses of FMI or the assets or properties
of FMI that remains outstanding.
9.16 Intellectual Property. Except as listed on Exhibit 9.16, FMI owns or
has the right to use all intellectual property necessary for the operation of
the businesses of FMI as presently conducted and as presently proposed to be
conducted. Exhibit 9.16 contains a true and accurate list (by item, where
such information is reasonably available, or otherwise by type) of all
intellectual property which FMI owns or has the right to use. All of FMI's
material patents, designs, art work, designs-in-progress, formulations,
know-how, prototypes, inventions, trademarks, trade names, trade styles,
service marks and copyrights; registrations and applications therefor, both
registered and unregistered, foreign and domestic; trade secrets or processes;
confidential or proprietary information; and computer software and
modifications thereof, both source and object code licensed to or from or
authored by FMI together with all documentation, manuals, flow charts and logic
diagrams related thereto including but not limited to those items listed on
Exhibit 9.16 shall be collectively referred to as the "FMI Intellectual
Property". Each item of FMI Intellectual Property owned or used by FMI
immediately prior to the Closing hereunder will be owned or available for use
by FMI on identical terms and conditions immediately subsequent to the Closing
hereunder. FMI has taken all appropriate action as reasonably determined by
FMI's management to be in the best interest of FMI to maintain and protect each
item of FMI Intellectual Property. To the knowledge of FMI's management, no
material misstatement or omission was made in any applications for patents
filed with any regulatory or governmental authority with respect to any FMI
Intellectual Property constituting patents or in connection with any patents
pending for products or processes included in the FMI Intellectual Property.
No FMI Intellectual Property infringes upon or conflicts with any rights
claimed therein by third parties, and no use by FMI of any FMI Intellectual
Property licensed to it violates the terms of any agreement pursuant to which
it is licensed or violates or infringes upon the asserted rights of others.
FMI does not manufacture products which are the subject of patents, patent
applications, copyrights, copyright applications, trademarks, trademark
applications, trade styles, service marks, or trade secrets owned by or
licensed to third parties, other than as described on Exhibit 9.16. Except as
set forth on Exhibit 9.16, neither the manufacture, use or sale by FMI of its
products, or any component or part thereof, nor any manufacturing operation or
machinery employed by FMI, violates or infringes upon any claims of any United
States or foreign patent or patent application owned or held by any third
party. FMI has performed in all material respects all the obligations required
to be performed by it to date, and there is no default, in any material
respect, under any of the licenses or other rights to use any trade names,
trademarks, copyrights, patents, inventions or other processes now
used in the conduct of FMI's businesses. Except as set forth on Exhibit 9.16,
FMI has never received any charge, complaint, claim, demand or notice alleging
any interference, infringement, misappropriation or violation of any
intellectual property rights of any third party. Except as set forth on
Exhibit 9.16, to the knowledge of FMI's management, no third party has
interfered with, infringed upon, misappropriated or otherwise come into
conflict with any FMI Intellectual Property. Exhibit 9.16 identifies each
license, agreement or other permission which FMI has granted to any third party
with respect to any of the FMI Intellectual Property. Except as set forth in
Exhibit 9.16, with respect to each item of FMI Intellectual Property, (i) FMI
possesses all right, title and interest in and to the item, free and clear of
any liens, encumbrances or security interests, license or other restriction,
(ii) the item is not subject to any outstanding injunction, judgment, order,
decree, ruling or charge, (iii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand is pending or threatened
which challenges the legality, validity, enforceability, use or ownership of
the item, and (iv) FMI has not agreed to indemnify any person for or against
any interference, infringement, misappropriation or other conflict with respect
to the item.
9.17 Tax Matters.
(a)Except as previously disclosed to the President or a Vice President of
FPC or of any of FPC's affiliates, FMI has duly prepared and filed in a timely
manner, and as of the Closing Date will have timely filed, consistent with past
practices, all federal, state, local and foreign tax returns and reports
required to be filed on or prior to the Closing Date, taking into account any
extensions of the filing deadlines which have been validly granted to FMI, and
such returns are and will be true and correct in all material respects. Except
as previously disclosed to the President or a Vice President of FPC or of any
of FPC's affiliates, FMI has paid in full, or by the Closing Date will have
paid in full, consistent with past practices, or adequate reserves or accruals
shall have been made for the payment of, all federal, state, local and foreign
income, profits, franchise, gross receipts, payroll, employment, withholding,
property, sales, use, excise and all other taxes, duties and assessments
(including penalties and interest in respect thereof, if any) that have become
or are due regarding any taxable year or period ended on or prior to the
Closing Date, whether shown on such returns or not (except in respect of state,
local and foreign taxes which are in the aggregate immaterial in amount).
Except as previously disclosed to the President or a Vice President of FPC or
of any of FPC's affiliates, adequate reserves or accruals have been set up for
the payment of all such taxes anticipated to be payable in respect of periods
through the date hereof and shall have been set up and be existing as of the
Closing Date for the payment of all taxes anticipated as of the Closing Date to
be then payable in respect of the period through the Closing Date.
(b)There have not been any deficiencies or assessments asserted in writing
by the United States Internal Revenue Service (the "IRS") or any other taxing
authority with respect to any federal, state or local tax returns and reports.
(c)FMI has not executed or filed with the IRS or any other taxing authority
any agreement extending the period for assessment or collection of any income
or other taxes or any consent pursuant to Section 341(f) of the Code.
(d)All taxes required to be withheld on or prior to the Closing Date from
FMI employees for federal income taxes, Social Security taxes and Medicare
taxes and for state, county and municipal income and other taxes have been
properly withheld and, if required on or prior to the Closing Date, have been
deposited with the appropriate governmental agency.
(e)There are no pending audits of any of FMI's federal, state, local or
foreign tax returns, declarations or reports. No claim or investigation is
pending or, to the knowledge of FMI's management, threatened, by any state,
local, or other jurisdiction alleging that FMI has a duty to file tax returns
and pay taxes or is otherwise subject to the taxing authority of any
jurisdiction not listed on Exhibit 9.17 nor has FMI received any notice or
questionnaire from any such jurisdiction which suggests or asserts that
FMI may have a duty to file such returns and pay such taxes, or otherwise is
subject to the taxing authority of such jurisdiction. Exhibit 9.17 provides a
brief description of any pending property, sales, use or other tax dispute
relating to or arising out of the businesses of FMI or affecting the assets or
properties of FMI, including the nature and amount of the controversy, the
respective positions of the parties as to any material amounts claimed to be
due thereunder, and the current status thereof.
9.18 Litigation.
(a)Except as listed and described on Exhibit 9.18, FMI is not a party to any
litigation, proceeding or administrative investigation, and none is pending or
threatened, against the FMI Common Stock, the FMI Preferred Stock, FMI or its
assets or properties, which is, or if adversely determined might be, material
to FMI's businesses or prospects or to the transactions contemplated by this
Agreement. By way of explanation and not in limitation of the preceding
representation, except as listed and described on Exhibit 9.18, FMI is not a
party to any pending or threatened products liability litigation, proceedings,
claims or investigations.
(b)Except as listed and described on Exhibit 9.18, there is not any
outstanding order, writ, injunction or decree of any court, government,
governmental authority or arbitration against or affecting the FMI Common
Stock, the FMI Preferred Stock, FMI or its assets or properties, material to
FMI's businesses or prospects or to the transactions contemplated by this
Agreement.
(c)Except as listed and described on Exhibit 9.18, FMI is not a party to any
pending or threatened proceeding involving any payments, claims, charges,
assessments, adjustments, premium payments or other obligations that are or may
be asserted against FMI arising out of or relating to insurance or similar
arrangements (including but not limited to any retro-insurance premium
adjustment obligations or workers' compensation insurance claims) based upon
claims, injuries or other events that have occurred prior to the date of this
Agreement.
9.19 Compliance With Applicable Laws.
(a)Except as listed and described on Exhibit 9.19, the conduct of the
businesses of FMI in all material respects has not violated and does not
violate or infringe any federal, state, local or foreign law, statute,
ordinance, license or regulation that has been or presently is in effect, or
that to the knowledge of FMI's management is proposed to be adopted, the
enforcement of which would materially adversely affect either the business of
FMI or the value of the FMI Common Stock and/or the FMI Preferred Stock.
FMI has and has maintained all licenses and permits required by all local,
state and federal authorities and regulating bodies material to its businesses
and the transactions contemplated by this Agreement except as set forth in
Exhibit 9.19 and except to the extent that the failure to maintain such
licenses or permits would not have a material adverse effect on the business or
assets of FMI; and, to the knowledge of FMI's management, FMI has not failed to
maintain any required licenses or permits, whether or not such failure would
have a material adverse effect on the business or assets of FMI.
(b)The Stockholders, FMI and the officers and employees of FMI, in the
conduct of the businesses of FMI and acting on its behalf, have each complied
with, and none of them has violated, any federal, state or local law, ordinance
or regulation regulating or prohibiting anti-competitive conduct, activities or
policies, including but not limited to, the Sherman and Clayton Antitrust Acts
and the Robinson-Patman Act, as amended.
(c)Neither FMI nor any director, officer, employee or other person acting on
behalf of any of them has knowingly used any funds of FMI for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, or has knowingly made any direct or indirect unlawful
payments to government officials or employees from corporate funds, or
established or maintained any unlawful or unrecorded funds, or violated any
provision of the Foreign Corrupt Practices Act of 1977 or any rules or
regulations promulgated thereunder.
9.20 Labor Relations.
(a)Exhibit 9.20(a) contains a true and correct list of all present salaried
employees, all present employees whose aggregate compensation during 1993 was
in excess of $50,000, all present employees whose aggregate compensation during
1994 is expected to exceed $50,000, and all independent sales representatives,
distributors, manufacturer's representatives, consultants, and independent
contractors employed or engaged by FMI, their total remuneration for the year
ended December 31, 1993, their current remuneration, and a description of all
perquisites and fringe benefits they receive or are eligible to receive.
(b)FMI, within the last three years, has not experienced any slowdown, work
interruption, strike, or work stoppage by employees of FMI.
(c)Except as described in Exhibit 9.20(c) and except for oral employment
agreements which are terminable at will without any obligations to make any
further payment, FMI is not a party to nor does FMI have any obligation
pursuant to any oral or written agreement, collective bargaining or
otherwise, with any party regarding the rates of pay or working conditions of
any of the employees of FMI, nor is FMI obligated under any agreement to
recognize or bargain with any labor organization or union on behalf of such
employees. Neither FMI nor any of its officers, directors, or employees has
been charged or, to the knowledge of FMI's management, threatened with the
charge of any unfair labor practice.
(d)FMI is in compliance with all applicable federal and state laws and
regulations concerning the employer-employee relationship and with all
agreements relating to the employment of FMI's employees, including applicable
wage and hour laws, worker compensation statutes, unemployment laws,
and social security laws except as set forth in Exhibit 9.20(d) and except to
the extent that such noncompliance would not have a material adverse effect on
the business or assets of FMI; and, to the knowledge of FMI's management, there
is no such noncompliance, whether or not the noncompliance would have a
material adverse effect on the business or assets of FMI. Except as described
in Exhibit 9.20(d), there are no pending or, to the knowledge of FMI's
management, threatened claims, investigations, charges, citations, hearings,
consent decrees, or litigation concerning: wages, compensation, bonuses,
commissions, awards, or payroll deductions; equal employment or human rights
violations regarding race, color, religion, sex, national origin, age,
handicap, veteran's status, marital status, disability, or any other recognized
class, status, or attribute under any federal, state, or foreign equal
employment law prohibiting discrimination; representation petitions or unfair
labor practices; grievances or arbitrations pursuant to current or expired
collective bargaining agreements; occupational safety and health; workers'
compensation; wrongful termination, negligent hiring, invasion of privacy
or defamation; or immigration.
(e)FMI is not liable for any unpaid wages, bonuses, or commissions (other
than those not yet due) or any tax, penalty, assessment, or forfeiture for
failure to comply with any of the foregoing.
(f)Except as described on Exhibit 9.20(f), all officers, employees, and
agents of FMI are employees at will and for indefinite terms and there is no
outstanding agreement or arrangement with respect to severance payments.
9.21 Employee Welfare Benefits. Except as set forth on Exhibit 9.21 to
this Agreement, FMI does not have in force, is not a party to and does not
maintain any welfare plan, benefit plan or pension plan within the respective
meanings of Section 3(1) or Section 3(2) of the Employee Retirement Income
Security Act of 1974 ("ERISA"). There has been no, and prior to the Closing
there will not be any, act or omission by FMI or any trustee or administrator
with respect to any such plan, trust or agreement that did or will not comply
in all material respects with the terms thereof, ERISA, the Code and other
applicable laws. All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports and Summary Plan Descriptions) have been
filed or distributed appropriately with respect to each such plan. Each of
FMI's benefit plans and pension plans meets the requirements of a "qualified
plan" under Code Section 401(a). There has been no "prohibited transaction"
(as that term is defined in Section 4975 of the Code and Section 406 of ERISA)
by any such plan, trust or agreement, or by any trustee or administrator
thereof in such capacity. There is no material accumulated funding deficiency
within the meaning of ERISA or any liability (including but not limited to any
withdrawal liability) to any such plan, trust or agreement, or to the Pension
Benefit Guaranty Corporation established under ERISA in connection with any
such plan. FMI is not a party to, or in any other manner participating in, any
multi-employer pension plan within the meaning of Section 3(37) of ERISA.
9.22 Insurance Coverage. FMI maintains policies of fire, casualty,
liability, use and occupancy and other insurance covering all of its properties
and assets, in amounts customarily obtained by businesses in the region in
which such properties or assets are located and maintains certain other
policies of insurance all as more particularly set forth on Exhibit 9.22.
Exhibit 9.22 to this Agreement lists each policy of insurance (including
without limitation policies providing property, casualty, liability, and
workers' compensation coverage and policies for employee medical, disability
and life coverage) to which FMI is or has been a party, a named insured or
otherwise the beneficiary of coverage at any time and as to each such policy
sets forth its identification number, the insurer, type of policy (specifically
identifying any retro-policies or similar policies that may give rise to future
premium adjustments, claims or other obligations on the part of FMI based on
experience or past events), coverage limits, applicable deductible amounts,
annual premium and expiration date. Such policies or like policies are as of
the date of this Agreement, and will be on the Closing Date, outstanding and
duly in force, and FMI's management has not received nor shall have received
any notice of or otherwise have any knowledge of any proposed cancellation or
change in the premium or any other term of any such policy. True and
complete copies of all such policies have previously been delivered to FPC.
9.23 Banks. The name of each bank in which FMI has an account or safety
deposit box, the account and safety deposit box numbers and the names of all
persons entitled to draw thereon or withdraw therefrom are set forth on Exhibit
9.23 to this Agreement.
9.24 Returns and Cancellations. There are no claims with respect to
returns, or trial use arrangements which could result in the return of, in
excess of an aggregate of $75,000, of products of FMI by reason of alleged
overshipments, defective or unsatisfactory products, the expiration of trial
use arrangements or otherwise. Other than consignment arrangements set forth
and described on Exhibit 9.24, there are no FMI products in the hands of
customers under an understanding that such FMI products would be returnable
other than pursuant to the standard returns policy set forth in FMI's
contracts. Neither FMI nor any of the Stockholders knows or has reason to
believe that either the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby will result in any
cancellations or withdrawals of accepted and unfilled orders for the sale,
license, lease or other transfer of FMI products.
9.25 Customers and Suppliers. Attached hereto as Exhibit 9.25 is a
schedule of all customers with FMI as of the date hereof whose purchases
individually have accounted for more than five percent of the sales of FMI
during the ten month period ended October 31, 1994 and a schedule of all
suppliers to FMI as of October 31, 1994 whose sales to FMI individually have
accounted for more than five percent of the purchases by FMI during the ten
month period ended October 31, 1994. There has been no termination,
cancellation, limitation, material modification or material change since
December 31, 1993, in the business relationship of FMI with any customer or
group of customers or supplier or group of suppliers whose purchases or sales,
as the case may be, individually or in the aggregate accounted for more than
five percent of aggregate gross revenues or purchases for the previous fiscal
year of FMI and neither FMI nor any Stockholder is aware of any event,
happening or fact that would lead them to believe that any of such customers or
suppliers will terminate their business relationship with FMI.
9.26 No Interest in Properties, Competitors, Etc. Except as set forth on
Exhibit 9.26 to this Agreement, neither any director or officer of FMI or any
member of their families nor, to the knowledge of FMI's management, any
Stockholder or any member of any of their families (i) owns, directly or
indirectly, in whole or in part, any of the properties necessary for the
business of FMI as currently conducted or (ii) owns, directly or indirectly,
any interest in (except for the ownership of marketable securities of publicly
owned corporations, representing in no case more than one percent of the
outstanding shares of such class of securities) or controls or is an employee,
officer, director or partner of, participant in or consultant to any
corporation, association, partnership, limited partnership, joint venture or
other business organization which is a competitor, supplier, customer, landlord
or tenant of FMI.
9.27 Environmental Matters.
(a)Except as set forth in Exhibit 9.27 hereto, FMI, with respect to its
businesses,
(i)is in compliance with all laws, rules, and regulations relating to
environmental protection. FMI has not (x) been notified that it is potentially
liable under, or (y) received any requests for information or other
correspondence concerning any site or facility under, nor has FMI any reason
to believe that it is considered potentially liable under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
any similar law;
(ii) has accurately prepared and timely filed with the appropriate
jurisdictions all reports and filings required pursuant to any federal, state,
or local law, regulation, statute, or order applicable to or affecting FMI, the
businesses of FMI or the assets or properties of FMI;
(iii) has not entered into or received any consent decree, compliance order,
or administrative order relating to environmental protection;
(iv) has not entered into or received nor is FMI in default under any
judgment, order, writ, injunction or decree of any federal, state, or municipal
court or other governmental authority relating to environmental protection;
(v)has obtained all environmental permits which are required under federal,
state, or local laws, rules, and regulations in connection with the business of
FMI or the ownership, use, or lease of its assets and properties, and Exhibit
9.27 contains a complete list and description of each such environmental
permit. Except as described in Exhibit 9.27, FMI is in compliance with each
such environmental permit (including any information provided on the
applications therefor) and no environmental permit restricts FMI from operating
any FMI Equipment covered by such environmental permit to the full capacity of
such FMI Equipment, 24 hours a day, seven days a week;
(b)Except as set forth on Exhibit 9.27 and except for environmental matters
set forth on Exhibit 16.3, with respect to the businesses of FMI,
(i)there are no actions, suits, claims, arbitration proceedings, or
complaints pending or, to the knowledge of FMI's management, threatened or
under consideration by any governmental authority, municipality, community,
citizen, or other entity, against FMI relating to environmental protection, nor
is there any basis for any such action, suit, claim, proceeding, or complaint;
(ii) there has been no disposal, release, burial, or placement of
hazardous or toxic substances, pollutants, contaminants, petroleum, gas
products, or asbestos-containing materials (as any of such terms may be defined
under current federal, state, or local law) (hereinafter collectively referred
to as "Hazardous Materials") (either (A) since April 1, 1989, or (B) if
occurring prior to April 1, 1989, which as of April 1, 1989 had not created a
condition which was a violation of any then applicable law but which condition
created thereby has since become a violation of applicable law) on, in, at, or
about (x) any of the FMI Owned Real Property or (y) any facilities used for or
in connection with the businesses of FMI; and since April 1, 1989, there has
been no disposal, release, burial, or placement of Hazardous Materials, in a
manner which is in violation of applicable law, on, in, at, or about any other
facility to which Hazardous Materials from FMI may have been taken at any time
since April 1, 1989. Exhibit 9.27 contains a list of all facilities or
locations to which Hazardous Materials from FMI may have been taken since April
1, 1989;
(iii) there has been no disposal, release, burial, or placement of Hazardous
Materials on any property or facility not owned or operated in the present or
the past by FMI which may result or has resulted in contamination of or beneath
any of the FMI Owned Real Property or any other properties or facilities used
by or for the benefit of FMI (other than a disposal, release, burial or
placement for which such other owner has full liability (including for any and
all fines and remediation associated with such contamination) and for which
such other owner has, and can reasonably be expected to continue to have,
more than sufficient financial ability to satisfy);
(iv) all above-ground and underground storage tanks located on the FMI
Owned Real Property which have been placed thereon since April 1, 1989 or which
are otherwise known to exist by FMI's management have been identified in
Exhibit 9.27 together with a description of the materials stored therein and/or
previously stored therein and a statement as to whether such tanks are
currently used by FMI;
(v)no lien has arisen on any of the assets or properties of FMI under or as
a result of any federal, state, or local law, rule, or regulation relating to
environmental protection; and
(vi) except for audits conducted by or on behalf of FPC and Merger
Corporation in connection with the transactions contemplated by this Agreement,
no audit or other investigation has been conducted as to environmental matters
at any of FMI's properties by any private party.
9.28 OSHA. FMI is in compliance with all applicable laws relating to
employee health and safety and since April 1, 1989, the condition of the assets
or properties of FMI has not violated any applicable legal requirements or
otherwise could be made the basis of any claim, proceeding, or investigation
based on OSHA violations or otherwise related to employee health and safety,
except as set forth in Exhibit 9.28 and except to the extent that such
noncompliance or such violations would not have a material adverse effect on
the business or assets of FMI; and, to the knowledge of FMI's management, there
is no such noncompliance and there are no such violations, whether or not the
noncompliance or violation would have a material adverse effect on the business
or assets of FMI.
9.29 Absence of Changes. Except as set forth in Exhibit 9.29, since
December 31, 1993 through the date of this Agreement, there has not been any
transaction or occurrence in which FMI has:
(a)suffered any material adverse change in its business, operations,
condition (financial or otherwise), liabilities, assets, earnings, or prospects
nor has there been any event which has had or may have a material adverse
effect on any of the foregoing;
(b)incurred any obligations or liabilities of any nature other than items
incurred in the regular and ordinary course of business consistent with past
practice, or increased (or experienced any change in the assumptions underlying
or the methods of calculating) any bad debt, contingency, or other reserve,
other than in the ordinary course of business consistent with past practice;
(c)paid, discharged, or satisfied any claim, lien, encumbrance, obligation,
or liability (whether absolute, accrued, contingent, and whether due or to
become due), other than the payment, discharge, or satisfaction in the ordinary
course of business consistent with past practice of claims, liens,
encumbrances, obligations, or liabilities which are reflected or reserved
against in the Year End Statements or which were incurred since December 31,
1993 in the ordinary course of business consistent with past practice;
(d)permitted, allowed, or suffered any of its properties or assets (real,
personal or mixed, tangible, or intangible) to be subjected to any mortgage,
pledge, lien, encumbrance, restriction, or charge of any kind, other than liens
or encumbrances specifically listed on Exhibit 9.29;
(e)written down or written up the value of any FMI Inventory (including
write-downs by reason of shrinkage or markdowns), determined as collectible any
accounts receivable of FMI or any portion thereof which were previously
considered uncollectible, or written off as uncollectible any accounts
receivable of FMI or any portion thereof, except for write-downs, write-ups,
and write-offs in the ordinary course of business consistent with past
practice, none of which is material in amount;
(f)cancelled any debts or waived any claims or rights;
(g)disposed of or permitted to lapse any right to the use of any patent,
trademark, assumed name, service mark, trade name, copyright, license, or
application therefor or disposed of or disclosed to any person not authorized
to have such information any trade secret, proprietary information, formula,
process, or know-how not previously a matter of public knowledge or existing in
the public domain except to the extent not known by FMI's management, or if so
known, then also except to the extent such disposal, lapse or disclosure would
not have a material adverse impact on the business or assets of FMI;
(h)except for the capital expenditures or commitments described on Exhibit
9.29, made any capital expenditure or commitment in any one case in excess of
$25,000 for additions to property, plant, equipment, intangible, or capital
assets, other than for emergency repairs or replacement;
(i)incurred any long term indebtedness;
(j)paid, loaned, distributed, or advanced any amounts to, sold, transferred,
or leased any properties or assets (real, personal or mixed, tangible or
intangible) to, purchased, leased, licensed, or otherwise acquired any
properties or assets from, granted or incurred any obligation for any increase
in the compensation to (including, without limitation, any increase pursuant to
any bonus, pension, profit-sharing, retirement, or other plan or commitment),
or entered into any other agreement or arrangement with (i) any stockholder,
officer, employee, or director of FMI, (ii) any corporation or partnership in
which any Affiliate of FMI is an officer, director, or holder directly or
indirectly of five percent (5%) or more of the outstanding equity or debt
securities, or (iii) any person controlling, controlled by, or under common
control with any such partner, stockholder, officer, director, or Affiliate of
FMI except for (A) compensation paid at the rate of compensation in effect at
December 31, 1993 or payable in accordance with and in amounts not greater than
provided for in written agreements entered into on or prior to December 31,
1993, (B) compensation adjustments to officers and directors as set forth on
Exhibit 9.29(j), (C) compensation adjustments for other employees made in the
ordinary course of business consistent with past practices, and (D) routine
travel advances to officers and employees;
(k)made any declaration or setting aside or payment of any dividend or other
distribution in respect of any of its capital stock, or any direct or indirect
redemption, purchase or other acquisition of the FMI Common Stock or the FMI
Preferred Stock; provided it being understood that prior to the Closing the FMI
Preferred Stock is to be converted into and exchanged for FMI Common Stock as
expressly contemplated elsewhere in this Agreement;
(l)issued or sold any shares of its capital stock or any other securities or
granted any options for the purchase thereof;
(m) entered into any collective bargaining or labor agreement (oral or
written), or experienced any slowdown, work interruption, strike, or work
stoppage;
(n)sold, transferred, or otherwise disposed of any of the assets or
properties of FMI except in the ordinary course of business consistent with
past practice;
(o)made any change in any method of accounting or accounting principle,
practice, or policy;
(p)suffered casualty losses or damages in excess of $25,000 in the aggregate
(whether or not insured against);
(q)made or agreed to make any charitable contributions or incurred or agreed
to incur any non-business expenses in excess of $5,000 in the aggregate;
(r)amended its Articles of Incorporation or Bylaws;
(s)taken any other action which is not in the ordinary course of business
consistent with past practice unless such action is otherwise permitted by the
terms of this Agreement; or
(t)agreed so as to legally bind FMI, whether in writing or otherwise, to
take any of the actions set forth in this Section 9.29, unless such action is
otherwise permitted by this Agreement.
9.30 Approvals and Consents. Except for the expiration or termination of
all applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), the filing and recording of the
Articles of Merger in accordance with the Texas BCA and issuance of a
Certificate of Merger by the Texas Secretary of State, and as otherwise
indicated on Exhibit 9.30, no authorization, consent, approval, designation, or
declaration by, or filing with, any public body, governmental authority,
bureau, or agency, and no approval or consent from any party to any FMI
Contract, is necessary or required as a condition to the validity of this
Agreement and the consummation of the transactions contemplated hereby.
9.31 Disclosure. No representation or warranty made by FMI or the
Stockholders in this Agreement, the exhibits hereto or any of the documents and
papers required to be delivered by or on behalf of FMI and the Stockholders
pursuant to this Agreement or in connection with the consummation
of the transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES OF FPC
Except as disclosed in Exhibit 10 to this Agreement, FPC hereby represents
and warrants the following:
10.1 Organization and Standing. FPC is a duly organized Florida
corporation. FPC has full corporate power and authority to carry on its
business as now conducted and to own and lease its properties and assets and is
duly licensed or qualified to do business and is in good standing in each state
or jurisdiction where its ownership or leasing of property or assets or the
conduct of its business requires such licensing or qualification, except where
the failure to be so licensed or qualified would not have a material adverse
effect on the business, financial condition or results of operations of FPC
taken as a whole. The shares of FPC Common Stock to be issued pursuant to the
terms of this Agreement, when issued, will be duly authorized, validly issued,
fully paid and non-assessable, and subject to no preemptive rights; and, upon
the effective date of the Registration Statement and so long as such
Registration Statement remains effective, the sale of such shares by the
Stockholders to third parties shall be registered under the Securities Act of
1933 subject to no restrictions regarding sale, resale or other transfer other
than (i) the prospectus delivery requirements and other restrictions arising
pursuant to applicable federal and state securities laws, including without
limitation the notification requirements and other procedures set forth in
Section 7.1(j) and the related Stockholder Acknowledgement and (ii) the
provisions described in Section 6.1(b) and Section 7.1(d) hereof imposed in
order to ensure pooling-of-interests accounting treatment for FPC and its
subsidiaries.
10.2 Authority; No Violation.
(a) FPC has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action in respect thereof on the part of FPC and no other corporate
proceedings on the part of FPC other than the issuance of the FPC Common Stock
are necessary to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by FPC, and
constitutes a valid and binding obligation of FPC enforceable against FPC in
accordance with its terms (subject to applicable bankruptcy, insolvency and
similar laws affecting creditor's rights generally and subject, as to
enforceability, to general principles of equity (whether applied in a
proceeding in equity or at law)).
(b)Neither the execution and delivery of this Agreement nor the consummation
by FPC of the transactions contemplated hereby, nor compliance by FPC with any
of the terms of the provisions hereof, will (i) conflict with or result in a
breach of any provision of the articles of incorporation or by-laws of
FPC or (ii) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to FPC or any of its properties or
assets or violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time, or both
would constitute a default) under, result in the termination of, accelerate the
performance required by, or result in a right of termination or acceleration or
the creation of any encumbrance upon any of the properties or assets of FPC
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which FPC is a party, or by which its properties or assets may be
bound or affected, except, in the case of this clause (ii), for such
violations, conflicts, breaches or defaults which, either individually or in
the aggregate, would not have a material adverse effect on the business,
financial condition or results of operation of FPC or the ability
of FPC to consummate the transactions contemplated hereby.
10.3 Financial Statements. FPC has previously delivered to the
Stockholders copies of (1)(a) audited consolidated balance sheets of FPC as of
December 31, 1993 and December 31, 1992 and (b) audited consolidated statements
of income, changes in stockholder's equity and statements of cash flow of FPC
for the years ending December 31, 1992 and December 31, 1993 (collectively, the
"FPC Audited Financial Statements"), together with reports on the FPC Audited
Financial Statements by FPC's independent accountants and (ii) unaudited
consolidated statement of income, changes in stockholder's equity and statement
of cash flow of FPC for the period ending September 30, 1994 and unaudited
consolidated balance sheet as of September 30, 1994, of FPC (collectively, the
"FPC Interim Financial Statements," and together with the FPC Audited Financial
Statements, the "FPC Financial Statements"). The FPC Financial Statements
(except for the failure to include all of the notes thereto required by GAAP
in the FPC Interim Financial Statements and except for normal year end
adjustments, the aggregate of which will not be material) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered by such statements (except as may be indicated in the notes thereto)
and fairly present in all material respects the consolidated financial position
of FPC as of the respective dates thereof and the results of its operations and
the changes in its financial position for the respective periods covered
thereby.
10.4 Statements Made. No representation, warranty or statement made by FPC
in this Agreement or in any exhibit, written statement, or certificate
furnished by or on behalf of FPC to FMI or any Stockholder in connection with
the transactions contemplated hereby contains or will contain any untrue
statement of material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
10.5 Legal Proceedings. There are no legal proceedings pending or, to the
best knowledge of FPC, any legal proceedings threatened, nor is there any
order, injunction or decree outstanding against or relating to FPC or its
respective properties, assets or business, any of which would reasonably be
expected to have a material adverse effect on FPC's ability to meet its
obligations hereunder, nor does FPC know of any material basis for any such
legal proceedings. To the best knowledge of FPC, no action or proceeding has
been instituted or threatened before any court or other governmental body by
any person or public authority seeking to restrain or prohibit or to obtain
damages with respect to the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.
10.6 No Material Adverse Change. Since September 30, 1994, there has not
been any material adverse change in the business, condition, financial or
otherwise, or results of operations of FPC and its subsidiaries taken as a
whole.
10.7 Approvals and Consents. Except for the expiration or termination of
all applicable waiting periods under the HSR Act, the filing and recording of
the Articles of Merger in accordance with the Texas BCA and the issuance of a
Certificate of Merger by the Texas Secretary of State, no consent, approval or
authorization is required in connection with the execution or delivery of this
Agreement by FPC or the consummation by FPC of the transactions contemplated
hereby.
10.8 Certain Matters Concerning Tax-Free Reorganization. All of the FPC
Common Stock which will be issued to the Stockholders in exchange for FMI
Common Stock pursuant to the consummation of the Merger will be voting stock of
FPC. Substantially all of the FMI properties and substantially all of the
properties of Merger Corporation owned by each prior to the Merger will be
owned by FMI immediately after the consummation of the Merger. FPC
acknowledges that it is the parties' desire that all of the above are to be
accomplished in a manner consistent with the requirements for qualification of
the Merger as a tax free reorganization under Code Section 368(a)(1)(A) and
368(a)(2)(E) and FPC will not take any action which is inconsistent therewith.
FPC is not aware of any reason why the Merger, as contemplated in this
Agreement, would not qualify as a tax free reorganization under Code Section
368(a)(1)(A) and 368(a)(2)(E).
10.9 Undisclosed Liabilities. FPC and the consolidated group of which it
is a member does not have any material liabilities or material obligations of
any nature, whether accrued, absolute, contingent or otherwise, asserted or
unasserted, known or unknown, which would be shown on a balance sheet
prepared in accordance with GAAP, except for liabilities and obligations stated
on the FPC Financial Statements.
ARTICLE 11
REPRESENTATIONS AND WARRANTIES OF MERGER CORPORATION
Except as disclosed in Exhibit 11 to this Agreement, Merger Corporation
hereby represents and warrants the following:
11.1 Organization and Standing. Merger Corporation is a duly organized
Texas corporation, with authorized capital stock of 1,000 shares of common
stock all of which is issued and outstanding and owned by FPC. Merger
Corporation has full corporate power and authority to carry on its business as
now conducted and to own and lease its properties and assets
11.2 Authority; No Violation.
(a)Merger Corporation has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action in respect thereof on the part of Merger Corporation and no
other corporate proceedings on the part of Merger Corporation are necessary to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Merger Corporation, and constitutes a
valid and binding obligation of Merger Corporation enforceable against
Merger Corporation in accordance with its terms (subject to applicable
bankruptcy, insolvency and similar laws affecting creditor's rights generally
and subject, as to enforceability, to general principles of equity
(whether applied in a proceeding in equity or at law)).
(b)Neither the execution and delivery of this Agreement nor the consummation
by Merger Corporation of the transactions contemplated hereby, nor compliance
by Merger Corporation with any of the terms of the provisions hereof, will (i)
conflict with or result in a breach of any provision of the articles of
incorporation or by-laws of Merger Corporation or (ii) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Merger Corporation or any of its properties or assets or violate,
conflict with, result in a breach of any provisions of, constitute a
default (or an event which, with notice or lapse of time, or both would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in a right of termination or
acceleration or the creation of any encumbrance upon any of the properties or
assets of Merger Corporation under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Merger Corporation
is a party, or by which its properties or assets may be bound or affected,
except, in the case of this clause (ii), for such violations, conflicts,
breaches or defaults which, either individually or in the aggregate,
would not have a adverse effect on the business, financial condition or results
of operation of Merger Corporation or the ability of Merger Corporation to
consummate the transactions contemplated hereby.
11.3 Approvals and Consents. Except for the expiration or termination of
all applicable waiting periods under the HSR Act, the filing and recording of
the Articles of Merger in accordance with the Texas BCA and the issuance of the
Certificate of Merger by the Texas Secretary of State, no consent, approval or
authorization is required in connection with the execution or delivery of this
Agreement by Merger Corporation or the consummation by Merger Corporation of
the transactions contemplated hereby.
11.4 Statements Made. No representation, warranty or statement made by in
this Agreement or in any exhibit, written statement, or certificate furnished
by or on behalf of Merger Corporation to FMI or any Stockholder in connection
with the transactions contemplated hereby contains or will contain any
untrue statement of fact or omits or will omit to state a fact necessary to
make the statements contained herein or therein not misleading.
ARTICLE 12
TRANSACTIONS AND OBLIGATIONS PRIOR TO THE CLOSING
12.1 Actions Prior to Closing. From the date of this Agreement through the
Closing Date, except to the extent expressly contemplated by this Agreement,
FMI covenants that FMI shall not, without the prior written consent of FPC, and
each of the Stockholders covenant that such Stockholder will not, without the
written consent of FPC, take any action (where the action is outside of the
ordinary responsibilities of such Stockholder in his or her capacity as a
stockholder in connection with the ordinary course of FMI's business) or fail
to take any action (where the action is within the ordinary responsibilities of
such Stockholder in his or her capacity as a stockholder in connection with the
ordinary course of FMI's business) so as to allow FMI to:
(a)suffer any material adverse change in the assets or properties of FMI or
in the operations, condition (financial or otherwise), liabilities, earnings,
or prospects of FMI relative to that as of the date of this Agreement;
(b)enter into any transaction, take any action nor fail to take any action
which would result in, or could reasonably be expected to result in or cause,
any of the representations, warranties, disclosures, agreements or covenants of
any of the Stockholders and/or FMI contained in this Agreement, the exhibits
hereto or any document delivered pursuant to this Agreement or in connection
with the consummation of the transactions contemplated hereby not being true
and complete at and as of the time immediately after the occurrence of such
transaction or after the action is taken or failed to be taken, and also on the
Closing Date;
(c)other than in the ordinary course of business, enter into any contract
which extends for a period in excess of six months or which involves aggregate
liability in excess of $50,000;
(d)make any change in any method of accounting or accounting principle,
practice or policy, or increase (or change any assumption underlying or method
of calculating) any bad debt, contingency, or other reserve other than in the
ordinary course of business consistent with past practice;
(e)write-down or write-up the value of any FMI Inventory (including
write-downs by reason of shrinkage or mark downs), except for write-downs,
write-ups, and write-offs in the ordinary course of business consistent with
past practice, none of which are material in amount;
(f)dispose of or permit to lapse any right to the use of any patent,
trademark, assumed name, service mark, trade name, copyright, license, or
application therefor or dispose of or disclose to any person not authorized to
have such information, any trade secret, proprietary information, formula,
process, or know-how not previously a matter of public knowledge or existing in
the public domain;
(g)grant or incur any obligation for any material increase in the
compensation of any officer or employee of FMI (including, without limitation,
any increase pursuant to any bonus, pension, profit-sharing, retirement, or
other plan or commitment), except in accordance with and in amounts not greater
than amounts provided in existing agreements between FMI and its employees or
amounts previously approved by the board of directors of FMI prior to June 30,
1994, as more particularly set forth on Exhibit 9.29(j);
(h)waive or terminate (except in the ordinary course of business consistent
with past practices), or breach, any provision under any of the FMI Contracts;
(i)either declare, set aside or pay any dividend or distribution to its
stockholders, or declare a stock split;
(j)pay off any note payable to or make any payment to any stockholder,
debenture holder, officer or director of FMI, except for those sums paid as
regular compensation or reimbursements of reasonable out-of-pocket expenses to
the officers and directors of FMI, consistent with past practices;
(k)engage in any other transactions with any of the Stockholders;
(l)incur any increase in its liabilities from that reflected in the Interim
Statements except in the ordinary course of business consistent with past
practices; or
(m) amend FMI's Articles of Incorporation or Bylaws.
12.2 Conduct of the Business Until Closing. Except as FPC may otherwise
consent in writing, from the date of this Agreement through the Closing Date,
FMI hereby covenants that it will do the following, and the Stockholders
covenant that such Stockholders will not, without the written consent of
FPC, take any action (where the action is outside of the ordinary
responsibilities of such Stockholder in his or her capacity as a stockholder in
connection with the ordinary course of FMI's business) inconsistent with, the
following, or fail to take any action (where the action is within the ordinary
responsibilities of such Stockholder in his or her capacity as a stockholder in
connection with the ordinary course of FMI's business) which action would be
reasonably necessary to carry out, the following:
(a)operate the businesses of FMI substantially as previously operated and
only in the regular and ordinary course, not make any purchase or sale, or
introduce any new method of management or operation except in the ordinary
course of business and in a manner consistent with past practices, and
use its reasonable best efforts to maintain and preserve intact the goodwill,
reputation, present business organization, and relationships of FMI with
persons having business dealings with them, and maintain the services of
present employees of FMI;
(b)maintain the material assets and properties of FMI, real and personnel,
in good order and condition, reasonable wear and use excepted, and maintain all
policies of insurance covering the assets and properties of FMI in amounts and
on terms substantially equivalent to those in effect on the date hereof;
(c)take all steps reasonably necessary to maintain the FMI Intellectual
Property and other intangible assets of FMI;
(d)pay all accounts payable when due and collect all accounts receivable in
accordance with prudent business practices;
(e)comply with all laws applicable to the conduct of the businesses of FMI
except where the failure to comply would not have a material adverse effect on
the business or assets of FMI (provided that FMI shall remain obligated to
notify FPC of all known noncompliances, whether or not the failure to comply
would have a material adverse effect on the business or assets of FMI); and
(f)maintain the books and records of FMI in the usual, regular, and ordinary
manner, on a basis consistent with past practices; and, consistent with past
practices, prepare and file all federal, state, local and foreign tax returns
and amendments thereto required to be filed by FMI after taking into account
any extensions of time granted by such taxing authorities.
12.3 Certain Permitted Actions. Notwithstanding the covenants of Sections
12.1 and 12.2 or any other covenants, representations or warranties contained
herein, FMI shall be permitted between the date of this Agreement and the
Closing Date (i) to continue to pay the scheduled dividends (including the
accrued, but unpaid, dividends at the time the FMI Preferred Stock is converted
into FMI Common Stock) on the FMI Preferred Stock, (ii) to continue to pay
monthly to Corporate Acquisitions, Inc. $7,500 as a consulting fee under the
consulting agreement with Corporate Acquisitions, Inc. plus the reimbursement
of any reasonable out-of-pocket expenses consistent with FMI's past practices
and amounts, and (iii) to continue to pay to the outside directors of FMI
outside directors' board meeting fees consistent with FMI's past practices and
amounts.
12.4 Hart-Scott-Rodino. Prior to, or as promptly as practicable after, the
execution of this Agreement, the parties to this Agreement and any "ultimate
parent" (as that term is defined under Title II of the HSR Act) of any of the
parties shall make or have made all filings and submissions under the HSR Act
as may be required to be made in connection with this Agreement and the
transactions contemplated hereby. FMI will furnish to FPC and Merger
Corporation, and FPC and Merger Corporation will furnish to FMI, such
information and assistance as the other may reasonably request in connection
with the preparation of any such filings or submissions. Each party will
promptly provide each other party with such copies of all correspondence,
filings or communications (or memoranda setting forth the substance thereof)
between such party or any of its representatives, on the one hand, and any
governmental agency or authority or members of their respective staffs, on the
other hand, with respect to this Agreement and the transactions contemplated
hereby, as are necessary for the other party to fulfill its obligations under
the HSR Act.
12.5 Corporate Action; Approvals and Consents. Except as FPC may otherwise
consent in writing, prior to completion of the Closing on the Closing Date, FMI
hereby covenants that it will take or cause to be taken all corporate and other
action and will obtain in writing as promptly as possible all approvals and
consents required to be obtained in order to effectuate the consummation of the
transactions contemplated hereby, including those consents referred to in or
disclosed pursuant to Section 9.30 hereof, all at the expense of FMI, except as
set forth in the last sentence of Section 20.5, and without agreeing to any
modification or change to the provisions of any FMI Contract. Except as FPC
may otherwise consent in writing, prior to completion of the Closing on the
Closing Date, each of the Stockholders hereby covenants that he or she will
take or cause to be taken all actions and will obtain in writing as
promptly as possible all approvals and consents required to be obtained by such
Stockholder, if any, in order to effectuate the consummation of the
transactions contemplated hereby, all at the expense of such Stockholder. All
such approvals and consents shall be in writing and in form and substance
satisfactory to FPC and Merger Corporation, and executed counterparts thereof
will be delivered to FPC and Merger Corporation promptly after receipt thereof
but in no event later than the Closing.
12.6 Prohibition on Solicitation or Consideration of Other Offers. Except
as FPC may otherwise consent in writing (which consent may be granted or
withheld in the absolute discretion of FPC) prior to completion of the Closing
on the Closing Date or, if earlier, until the termination of this Agreement,
the Stockholders and FMI hereby covenant that they will take such steps as are
reasonably necessary to assure that the Stockholders, FMI and FMI's directors
and officers: (1) will not solicit, entertain, encourage, discuss or negotiate
with any other person (including the Stockholders or members of management of
FMI), or provide any person with nonpublic information relating to, the
possible merger, consolidation, reorganization or acquisition of FMI, or a sale
of all or substantially all of FMI's assets or effect same, (2) will not
solicit, entertain, encourage, discuss, negotiate or effect a sale of a
controlling interest in the FMI Common Stock or FMI Preferred Stock of FMI,
regardless of whether such transaction involves the issuance of additional
securities or the sale of securities by a Stockholder including to an ESOP, (3)
will not solicit, entertain, encourage, discuss or negotiate any offers to sell
any of FMI's assets (except in the ordinary course of business) or effect same,
and (4) will notify FPC and Merger Corporation upon receipt of any unsolicited
offer to enter into any of the transactions described in this paragraph.
12.7 Access to Properties and Records, Etc. Between the date of this
Agreement and the Closing, FPC, Merger Corporation and their counsel,
accountants and other representatives will be given full access during normal
business hours to all of the properties, personnel, books, tax returns,
contracts, commitments and records of FMI, and FPC and Merger Corporation will
be furnished with all such additional documents (certified if requested) and
information with respect to the affairs of FMI as FPC, Merger Corporation or
their counsel or accountants may from time to time reasonably request. FPC and
Merger Corporation will conduct their investigations and deal with the
information so obtained in accordance with and subject to the Confidentiality
Agreement dated February 2, 1994 between FMI and Progress Rail Services
Corporation.
12.8 Survey and Inspection of Property.
Until the Closing or, if earlier, termination of this Agreement:
(a) FPC's and Merger Corporation's agents, employees and independent
contractors shall have the right and privilege after notice to, and
coordination with, FMI management to enter upon the FMI Owned Real Property
prior to the Closing Date to inspect such real property and to conduct soil
borings and other geological, engineering, percolation, hydrologic,
feasibility, or landscaping tests or studies, all at FPC's and Merger
Corporation's sole cost and expense (the "Internal Environmental Audit"); and
(b) FPC and Merger Corporation may, at FPC's and Merger Corporation's sole
cost and expense, retain an environmental engineering consultant to perform an
environmental audit (the "External Environment Audit") of the businesses
conducted by FMI. FMI shall provide full access to all of its facilities,
including the FMI Owned Real Property, and shall provide its reasonable
cooperation in connection with the performance of any such Environmental Audit.
12.9 Supplemental Disclosure. Between the date of this Agreement and the
Closing, (a) each Stockholder hereby severally covenants that he or she will
promptly advise FPC or Merger Corporation in writing of any fact which, if
existing or known by such Stockholder at the date of this Agreement,
would have been required to be set forth in or disclosed pursuant to Article 8
of this Agreement and will supplement promptly or amend the Exhibits to Article
8 with respect to any matter hereafter arising or discovered which, if existing
or known by such Stockholder at the date of this Agreement, would have been
required to be set forth or listed in any such Exhibit and (b) FMI hereby
covenants that it will promptly advise FPC or Merger Corporation in writing of
any fact which, if existing or known by it at the date of this Agreement, would
have been required to be set forth in or disclosed pursuant to this Agreement
and will supplement promptly or amend the Exhibits hereto with respect to any
matter hereafter arising or discovered by FMI or by any of the Stockholders
which, if existing or known by it at the date of this Agreement, would have
been required to be set forth or listed in any such Exhibit, including any
default by FMI or any other party under any FMI Contract; provided, however,
that in either case and for the purpose of the rights and obligations of the
parties hereunder, any such supplemental disclosure shall not be deemed to have
been disclosed as of the date of this Agreement unless so agreed to in writing
by FPC or Merger Corporation or after such disclosure to FPC in writing FPC
elects to close anyway; and, in either such event, such disclosure shall be
considered to amend the Exhibits hereto.
12.10 Additional Reports. From the date of this Agreement through the
Closing Date, FMI will deliver to FPC or Merger Corporation, promptly after
they become available, true and correct copies of all internal management and
control reports (including aging of accounts receivables, listings of accounts
payable, and inventory control reports) and financial statements related to
FMI. Each such report shall be in accordance with the books and records of
FMI, and, in the case of financial statements, shall present fairly the
financial condition of FMI as of the dates indicated and the results of
operations for the periods then ended, and be prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved (with any interim financial statements being subject to normal
year end adjustments and lacking certain footnotes and other presentation
items), and shall reflect adequate reserves for all known liabilities and
reasonably anticipated losses.
12.11 Capital Expenditures. From the date of this Agreement through the
Closing Date, FMI shall cause its management to discuss with FPC or Merger
Corporation any capital expenditure in excess of $25,000 proposed to be made
prior to making and prior to entering into any contract or commitment for
such capital expenditure, other than emergency capital expenditures. No
capital expenditure in excess of $25,000 (other than emergency capital
expenditures for repairs and maintenance of the assets and properties of FMI)
shall be made by FMI prior to the Closing Date without the prior consent of FPC
or Merger Corporation, which consent shall not be unreasonably withheld or
delayed. FMI will promptly notify FPC or Merger Corporation of the nature and
extent of emergency capital expenditures made by FMI without the prior written
consent of FPC or Merger Corporation.
12.12 Employment of O. Elwyn Seay. Simultaneously at the Closing, O. Elwyn
Seay shall execute an Employment Agreement with FMI, substantially in the form
attached hereto as Exhibit 12.12 and shall confirm in writing that any previous
employment agreements or understandings with FMI are terminated and of no
further force and effect.
12.13 Satisfaction of Conditions. From the date of this Agreement through
the Closing Date, FMI and the Stockholders collectively shall use reasonable
efforts to cause to be satisfied all conditions to the obligation of FPC and
Merger Corporation to consummate the transactions contemplated hereby, and FPC
and Merger Corporation shall use reasonable efforts to cause to be satisfied
all conditions to the obligation of FMI and the Stockholders to consummate the
transactions contemplated hereby.
ARTICLE 13
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF FPC AND MERGER CORPORATION
The obligations of FPC and Merger Corporation under this Agreement are
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (the fulfillment of any of which may be waived in writing
by FPC and Merger Corporation):
13.1 Accuracy of Representations and Warranties. The representations and
warranties and statements of the Stockholders and FMI contained in this
Agreement, all exhibits hereto and any documents delivered in connection
herewith shall not only have been true and complete as of the date of
this Agreement and when made but shall also be true and complete as though
again made on the Closing Date, except to the extent that (i) they are
incorrect as of the Closing Date by reason of events occurring after the date
of this Agreement in compliance with the terms hereof or (ii) such inaccuracies
do not in the aggregate have a material adverse effect on the business and
assets of FMI and the Stockholders have, on or prior to the Closing, agreed in
writing to the aggregate dollar amount of such effect.
13.2 Compliance. The Stockholders and FMI shall have performed and
complied with all agreements, covenants and conditions required by this
Agreement and all exhibits hereto to be performed and complied with by them at
or prior to the Closing.
13.3 Certified Articles and Bylaws. FPC and Merger Corporation shall have
received a copy of FMI's Articles of Incorporation, certified by the Secretary
of State of the State of Texas dated within 30 days prior to the Closing Date
and an officer's certificate of FMI certifying the Articles of Incorporation
and the Bylaws of FMI as of the Closing Date.
13.4 Good Standing Certificates. FPC and Merger Corporation shall have
received a certificate executed by the Secretary of State of the State of Texas
dated within 30 days prior to the Closing Date certifying that FMI is a
corporation in good standing under the laws of such state and shall have
received a certificate from the secretary of state of each other state where
FMI is qualified to do business dated within 30 days prior to the Closing Date
certifying that FMI is a corporation in good standing under the laws of such
state.
13.5 No Litigation, Etc. There shall not be any action, litigation,
proceeding, investigation, regulation, or legislation pending or threatened
which seeks to enjoin, restrain, prohibit or invalidate the consummation of the
transactions contemplated hereby, or to obtain damages from any party in
connection with such transactions or in respect of the consummation of the
transactions contemplated hereby, or which seeks to enjoin the operation of a
portion of the assets or properties of FMI which, in the reasonable judgment of
FPC and Merger Corporation, would be reasonably likely to involve material
expense to FMI or lapse of time that would be materially adverse to the
interests of FMI or otherwise make it inadvisable for FPC and Merger
Corporation to consummate the transactions contemplated by this Agreement.
13.6 Operation in the Ordinary Course. FMI shall have operated the
businesses of FMI in the ordinary course (except as otherwise permitted by this
Agreement or as agreed to by FPC or Merger Corporation as evidenced by FPC's or
Merger Corporation's written consent).
13.7 Consents and Waivers. FMI shall have obtained in writing the
consents, approvals, and authorizations referred to in Section 9.30 of this
Agreement. Further, FPC and Merger Corporation shall have received a true and
correct copy of each consent and waiver otherwise required for the execution
of this Agreement and the consummation of the transactions contemplated hereby.
All required authorizations, orders, or approvals of any governmental
commission, board, or other regulatory body shall have been obtained, and FPC
and Merger Corporation shall be reasonably satisfied with the terms,
conditions, and restrictions of and obligations under each such consent,
waiver, authorization, order, or approval.
13.8 HSR. All applicable waiting periods under the HSR Act shall have
expired or been terminated.
13.9 Certificates. FMI and the Stockholders shall have delivered to FPC
and Merger Corporation the certificates attached hereto as Exhibit 13.9.
13.10 [Reserved]
13.11 Incumbency. FPC and Merger Corporation shall have received a
certificate of incumbency of FMI executed by the President and Secretary of FMI
listing the officers of FMI authorized to execute this Agreement, certifying as
to the authority of each such officer to execute all appropriate agreements,
documents, and instruments on behalf of FMI in connection with the consummation
of the transactions contemplated herein.
13.12 Certified Resolutions. FPC and Merger Corporation shall have received
a certificate of the Secretary of FMI containing a true and correct copy of the
resolutions duly adopted by the board of directors of FMI and the Stockholders
approving and authorizing this Agreement and the transactions contemplated
hereby. The Secretary of FMI shall also certify that such resolutions have not
been rescinded, revoked, modified, or otherwise affected and remain in full
force and effect.
13.13 Accuracy of Documents. Examination by FPC and Merger Corporation
shall not have disclosed any material inaccuracy in the representations and
warranties of FMI and the Stockholders set forth in this Agreement or in the
Exhibits attached hereto or in any of the documents and instruments delivered
to FPC or Merger Corporation pursuant hereto.
13.14 Stockholders Certificate Regarding Information for Registration
Statement. Each of the Non-Electing Out Stockholders shall have provided to
FPC a certificate confirming all material statements with respect to such
Stockholder provided to FPC, which are of a nature required to be made in the
registration statement and prospectus in accordance with the Securities Act and
the rules and regulations of the Commission thereunder, and confirming that, as
to the information included in the registration statement with respect to such
Stockholder and the FPC Common Stock owned or to be owned by such Stockholder,
there is no untrue statement or alleged untrue statement of a material fact, or
any omission or alleged omission to state therein a material fact required to
be stated therein with respect to same or necessary to make the statements
therein with respect to same not misleading.
13.15 Conversion of Preferred Stock. FMI shall have provided to FPC and
Merger Corporation evidence reasonably satisfactory to FPC and Merger
Corporation that all of the FMI Preferred Stock has been converted into FMI
Common Stock and as a result, the aggregate number of shares of FMI
Common Stock immediately before the Closing shall be 10,000 shares.
13.16 Opinion of FMI and the Stockholders' Counsel. FPC and Merger
Corporation shall have received the written opinion of Youngblood & Owens, LC,
counsel for FMI and the Stockholders, dated as of the Closing Date, in form,
scope, and substance as set forth on Exhibit 13.16.
13.17 Environmental Contingencies. The Internal Environmental Audit, the
External Environmental Audit and any other environmental audits or
investigations conducted as described in Section 12.8 shall not have disclosed
any presence of any unacceptable hazardous or toxic substances, underground
petroleum deposits, storage tanks or other condition or situation which in the
reasonable discretion of FPC and Merger Corporation will or may involve exp
ense to FMI or any successor in estimated remedial costs (including fees and
expenses of counsel, engineers and other consultants) that would be materially
adverse to the interests of FPC and Merger Corporation or will or may expose
FPC or Merger Corporation to an unacceptable amount of liability, clean-up
work, litigation, claims, fines or penalties.
13.18 Employment of O. Elwyn Seay. Simultaneously at the Closing, O. Elwyn
Seay shall have executed an Employment Agreement with FMI, substantially in the
form attached hereto as Exhibit 12.12, and shall have confirmed in writing that
any previous employment agreements or understandings with FMI are terminated
and of no further force and effect.
13.19 Investigation of Certain Matters. FPC and Merger Corporation and
their counsel and accountants shall have made, after the date of this
Agreement, any additional verifying investigations, including but not limited
to structural and site investigations, environmental audits, physical
inventory, inventory of work-in-process and raw material valuation, review of
financial statements and underlying working papers and such other
investigations as may confirm the value of the FMI Common Stock, the
FMI Preferred Stock and the assets and the businesses of FMI and the extent of
the liabilities affecting the value of FMI's businesses or its future
prospects; and, such verifying investigations shall not have disclosed any
significant differences from the anticipated conditions or assumptions on which
FPC and Merger Corporation has based its decision to enter into this Agreement,
including but not limited to those arising from a reduction in or absence of
any anticipated assets or an increase in actual or contingent liabilities.
13.20 Opinions, Reports, Etc. All opinions, reports, appraisals and studies
concerning FMI received by FPC and Merger Corporation shall have been
reasonably satisfactory to FPC and Merger Corporation.
13.21 Dissenters' Rights. None of the Stockholders shall have taken any
action or steps to be entitled pursuant to the provisions of the Texas BCA to
exercise dissenters' rights or otherwise make a written demand for payment of
the fair value of their shares.
13.22 Independent Accountant's Opinion. FPC and Merger Corporation shall
have received a written opinion from their independent public accountant
stating that the Merger may be accounted for, in accordance with generally
accepted accounting principles, as a "pooling of interests" for accounting
purposes.
13.23 Material Adverse Change. There shall not have occurred any material
adverse change in the businesses or assets of FMI including without limitation
any damage to or destruction or loss of any material assets or contracts of FMI
(regardless of whether insured).
13.24 Resignations of Directors. FPC, Merger Corporation and FMI shall have
received resignations from each director of FMI dated as of the Closing Date in
form and substance satisfactory to FPC and Merger Corporation.
13.25 Termination of Right of First Refusal Agreement and Subscription
Agreement and Investment Letter. Each of the Stockholders shall have executed
an agreement terminating and waiving all rights under (a) that certain Right of
First Refusal Agreement among themselves and FMI, and (b) Sections 5
and 6 of that certain Subscription Agreement and Investment Letter dated March
30, 1989, and granting a mutual release with respect to the rights and
obligations thereunder, all satisfactory in form and substance to FPC and
Merger Corporation.
13.26 Termination of Corporate Acquisitions Agreements. FMI and Corporate
Acquisitions, Inc. shall have entered into an agreement terminating as of the
Closing Date the consulting agreement and any other agreements between
Corporate Acquisitions, Inc. and FMI and such termination agreement shall
waive all past and future obligations thereunder.
13.27 Supplemental Disclosures on Exhibit 16.3. FMI and the Stockholders
shall have agreed in writing to any update of Exhibit 16.3 reasonably desired
by FPC after the date of this Agreement and on or prior to the Closing Date.
ARTICLE 14
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF FMI
AND THE STOCKHOLDERS
The obligations of FMI and the Stockholders under this Agreement are subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions (the fulfillment of any one of which may be waived in writing by
such parties):
14.1 Accuracy of Representations and Warranties. The representations and
warranties and statements of FPC and Merger Corporation contained in this
Agreement shall not only have been true and complete on the date of this
Agreement and when made but shall also be true and complete as though
again made on the Closing Date, except to the extent that they are incorrect as
of the Closing Date by reason of events occurring after the date of this
Agreement in compliance with the terms hereof.
14.2 Compliance. FPC and Merger Corporation shall each have performed and
complied with all agreements, covenants and conditions required by this
Agreement and all exhibits hereto to be performed and complied with by each of
them at or prior to the Closing.
14.3 Active Status and Good Standing. The Stockholders shall have received
a certificate executed by the Secretary of State of the State of Florida dated
within 30 days prior to the Closing Date certifying that FPC is a corporation
in active status under the laws of such state and shall have received
a certificate executed by the Secretary of State of the State of Texas dated
within 30 days prior to the Closing Date certifying that the Merger Corporation
is a corporation in good standing under the laws of such state.
14.4 No Litigation, Etc. There shall not be any action, litigation,
proceeding, investigation, regulation, or legislation pending or threatened
which seeks to enjoin, restrain, prohibit or invalidate the consummation of the
transactions contemplated hereby, or to obtain damages from any party in
connection with such transactions or in respect of the consummation of the
transactions contemplated hereby.
14.5 Consents and Waivers. FPC and Merger Corporation shall have obtained
in writing the consents, approvals, and authorizations referred to in Section
10.7 and 11.3 of this Agreement. Further, FMI shall have received a true and
correct copy of each consent and waiver otherwise required for the execution of
this Agreement and the consummation of the transactions contemplated hereby.
All required authorizations, orders, or approvals of any governmental
commission, board, or other regulatory body shall have been obtained, and FMI
and the Stockholders shall be reasonably satisfied with the terms, conditions,
and restrictions of and obligations under each such consent, waiver,
authorization, order, or approval.
14.6 HSR. All applicable waiting periods under the HSR Act shall have
expired or been terminated.
14.7 Certificates. FPC and Merger Corporation shall have delivered to FMI
and the Stockholders all such certificates, dated as of the Closing Date, as
FMI and the Stockholders shall reasonably request to evidence the fulfillment
by FPC and Merger Corporation, as of the Closing Date, of the terms and
conditions of this Agreement, including but not limited to certificates with
respect to the matters set forth in Sections 14.1, 14.2., 14.4, and 14.5.
14.8 Incumbency. FMI and the Stockholders shall have received (i) a
certificate of incumbency of FPC executed by the authorized officers of FPC
listing the officers of FPC authorized to execute this Agreement, certifying as
to the authority of each such officer to execute all appropriate agreements,
documents, and instruments on behalf of FPC in connection with the consummation
of the transactions contemplated herein and (ii) a certificate of incumbency of
Merger Corporation executed by the authorized officers of Merger Corporation
listing the officers of Merger Corporation authorized to execute this
Agreement, certifying as to the authority of each such officer to execute all
appropriate agreements, documents, and instruments on behalf of Merger
Corporation in connection with the consummation of the transactions
contemplated herein.
14.9 Certified Resolutions. FMI and the Stockholders shall have received
(i) a certificate of the Secretary, Assistant Secretary or other authorized
officer of FPC containing a true and correct copy of the resolutions duly
adopted by the board of directors of FPC approving and authorizing this
Agreement and the transactions contemplated hereby and (i) a certificate of the
Secretary, Assistant Secretary or other authorized officer of Merger
Corporation containing a true and correct copy of the resolutions duly
adopted by the board of directors of Merger Corporation and of the sole
stockholder of Merger Corporation approving and authorizing this Agreement and
the transactions contemplated hereby. In each case, the Secretary, assistant
secretary or other authorized officer so executing the certificate shall also
certify that such resolutions have not been rescinded, revoked, modified, or
otherwise affected and remain in full force and effect.
14.10 Material Adverse Change. There shall not have occurred any material
adverse change in the businesses or assets of FPC including without limitation
any damage to or destruction or loss of any material assets or contracts of FPC
and its subsidiaries, taken as a whole (regardless of whether insured).
14.11 Opinion of FPC's General Counsel. FMI and the Stockholders shall have
received the written opinion of FPC's General Counsel, dated as of the Closing
Date, in form, scope, and substance as set forth on Exhibit 14.11.
14.12 Supplemental Disclosures on Exhibit 16.3. FMI and the Stockholders
shall have agreed in writing to any update of Exhibit 16.3 reasonably desired
by FPC after the date of this Agreement and on or prior to the Closing Date,
such agreement not to be unreasonably withheld.
ARTICLE 15
RESTRICTIVE COVENANTS
15.1 Noncompetition.
(a)In addition to any other noncompetition obligation to which O. Elwyn Seay
("Seay") will be subject pursuant to the terms of the employment agreement he
will enter into with FMI at the Closing, Seay agrees that, for a period of five
years from and after the Closing Date, Seay shall not, directly or indirectly,
within the United States, enter into, engage in, be employed by, consult with,
conduct or have any ownership interest in any business in competition with any
of the businesses conducted by FMI, Progress Rail Services Corporation ("PRSC")
or with any of the successors to either of them on or prior to the Closing
Date, or solicit, sell or service any of the customers of any of the businesses
conducted by FMI, PRSC or any of the successors to either of them, on or prior
to the Closing Date, with products and/or services similar to the products or
services offered by FMI, PRSC or any of their respective successors thereto, as
of or prior to the Closing Date.
(b)Each Stockholder (with the exception of Seay, who shall instead be
subject to the provisions of Section 15.1(a)) agrees that, for a period of five
years from and after the Closing Date, such Stockholder shall not, directly or
indirectly, within the United States, enter into, engage in, be employed
by, consult with, conduct or have any ownership interest in any business in
competition with any businesses in which FMI is or was engaged on or prior to
the Closing Date, or solicit, sell or service any person who was a customer of
FMI as of or prior to the Closing Date, with products and/or services
similar to the products or services offered by FMI as of or prior to the
Closing Date.
(c)Conduct shall be prohibited by this Section 15.1 regardless of how it is
carried out, whether as an independent contractor, partner or joint venturer,
or as an officer, director, stockholder, agent, employee or salesman for any
person, firm, partnership, corporation or other entity. The foregoing
restrictions shall not apply to the ownership by Seay or any other Stockholder
of no more than one percent of the then outstanding securities of any company
whose stock is traded on a national securities exchange or is quoted on NASDAQ.
15.2 Nonsolicitation.
(a)Each Stockholder agrees that, for a period of five years from and after
the Closing Date, the Stockholder will refrain from soliciting and will not,
either directly or indirectly, as independent contractor, employee, consultant,
agent, partner or joint venturer, or as an officer, director, stockholder,
agent or employee of any firm, person, partnership or corporation, or
otherwise, solicit the employees of FMI (as long as they are employed by FMI),
PRSC or any of the successors to either of them, to leave the service of their
employer.
(b)Conduct shall be prohibited by this Section 15.2 regardless of how it is
carried out, whether as an independent contractor, partner or joint venturer,
or as an officer, director, stockholder, agent, employee or salesman for any
person, firm, partnership, corporation or other entity. The foregoing
restrictions shall not be deemed to be violated if the solicitation is made by
a company in which the Stockholder owns no more than one percent of the then
outstanding securities where such stock is traded on a national securities
exchange or is quoted on NASDAQ.
15.3 Non-Disclosure. Each Stockholder acknowledges that during the course
of such Stockholder's relationship with FMI and through the Closing Date such
Stockholder may have received or obtained or may receive or obtain proprietary
and confidential technical and business information with respect to the
business operations of FMI, including, by way of illustration and not
limitation, technical know-how, tooling techniques, customer lists, research
data, business and financial methods and practices, business plans, and
marketing, pricing and selling techniques (collectively, the "Confidential
Information"); provided however that the term Confidential Information shall
not include that portion of such information, if any, which (i) is publicly
available and has not become such by action of any Stockholder, (ii) is
disclosed to the Stockholder by a third party who is not in breach of an
obligation of confidentiality or (iii) becomes publicly available after the
date of this Agreement through no act of any Stockholder. Each Stockholder
further acknowledges that FMI would be substantially damaged by any association
of such Stockholder with a competitive business enterprise in which such
Stockholder used the Confidential Information gained during such Stockholder's
association with FMI to compete directly with FMI. In view of the foregoing,
each Stockholder agrees that such Stockholder will not, at any time after the
Closing, without FPC's prior written approval, print, publish, divulge or
communicate in any manner to any person, firm, corporation or other entity,
except as required by law, or use, directly or indirectly, any Confidential
Information. Such Stockholder further agrees that such Stockholder will keep
confidential all records, papers and computer data and any copies thereof
relating to the Confidential Information.
15.4 Enforcement.
(a)It is agreed and understood by and among the parties to this Agreement
that the restrictive covenants set forth in Sections 15.1, 15.2 and 15.3 of
this Agreement are each individually essential elements of this Agreement and
that, but for the Agreement of each Stockholder to comply with such covenants,
FPC and Merger Corporation would not have agreed to enter into this Agreement.
Such covenants of each Stockholder shall be construed as agreements independent
of any other provision of this Agreement and independent of each other. The
existence of any claim or cause of action of any of the Stockholders against
FPC, Merger Corporation or any Affiliate thereof, whether predicated on this
Agreement, or otherwise, shall not constitute a defense to the enforcement by
FPC of such restrictive covenants.
(b)It is agreed by the parties to this Agreement that if any portion of the
restrictive covenants set forth in Sections 15.1 or 15.2 of this Agreement is
held to be unreasonable, arbitrary or against public policy, then each such
covenant shall be considered divisible both as to time and geographical area,
with each month of a specified period being deemed a separate period of time
and each state being deemed a separate geographical area, it being the
intention of the parties that a lesser period of time or geographical area
shall be enforced so long as the same is not unreasonable, arbitrary or against
public policy. The parties to this Agreement agree that, in the event any
court of competent jurisdiction determines that a specified time period or a
specified geographical area is unreasonable, arbitrary or against public
policy, a lesser time period or geographical area which is determined to be
reasonable, nonarbitrary and not against public policy may be enforced against
the Stockholders.
(c)The parties hereto agree that damages at law will be an insufficient
remedy to FPC and Merger Corporation in the event that the restrictive
covenants of this Article 15 of this Agreement are violated and that, in
addition to any remedies or rights that may be available to FPC or Merger
Corporation, FPC and Merger Corporation shall also be entitled, upon
application to a court of competent jurisdiction, to obtain injunctive relief
to enforce the provisions of this Article 15.
ARTICLE 16
INDEMNIFICATION
16.1 Losses. For the purposes of this Article 16, "Losses" shall mean any
and all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, costs, and expenses (including without limitation,
interest, penalties, and reasonable attorneys' and other professional fees and
expenses and other costs and expenses incident to any suit, action,
investigation or other proceeding, whether before or at trial or upon appeal).
16.2 Indemnification by the Stockholders - Individual Representations,
Warranties and Covenants.
(a)Indemnification. Each of the Stockholders covenants and agrees that,
notwithstanding the delivery of any instruments of conveyance, and any transfer
of the FMI Common Stock or any liquidation or dissolution of FMI, such
Stockholder (subject to the limitation of liability provided for in Section
16.2(b) below) will indemnify and hold harmless FPC from, for and against any
Losses arising in connection with or from:
(i)any inaccuracy, untruth or incompleteness in, or breach of, any
representation or warranty made by such Stockholder in Article 8 of this
Agreement, the exhibits associated therewith or any closing document associated
therewith delivered to FPC by such Stockholder in connection with the
consummation of the Merger (to the extent the document so delivered addresses
or involves matters specifically concerning such Stockholder and/or the stock
in FMI owned by such Stockholder); and
(ii) any failure of such Stockholder, whether prior to, at or after the
Closing, duly to perform or observe any covenant or agreement on the part of
such Stockholder to be performed or observed which is contained in any of
Section 2.2, Section 2.3, Section 3.3, Section 3.4, Section 4.1, Section 4.2,
Section 4.3, Section 4.4, Section 4.5, Section 6.1, Section 6.2, Section 12.1,
Section 12.2, Section 12.4, Section 12.5, Section 12.6, Section 12.9, Section
12.13, Section 15.1, Section 15.2, Section 15.3, Section 16.2, Section 16.8,
Section 16.9, Section 16.10, Section 16.11, Section 17.2, Section 17.3,
Section 20.1, Section 20.5, Section 20.6, Section 20.7, Section 20.8, Section
20.10 or Section 20.12 of this Agreement.
(b)Separate Matter Limitation. In no event shall any Stockholder's
liability under this Section 16.2, when added to such Stockholder's liability
under Section 16.3, exceed such Stockholder's Separate Matters Limit. For
these purposes, the "Separate Matters Limit" for a Stockholder shall be equal
to the dollar value of the shares of FPC Common Stock received by such
Stockholder pursuant to the consummation of the Merger, valued at the FPC
Closing Date Closing Price, including shares delivered, with respect to such
Stockholder, into the escrow established pursuant to Article 4. For example,
if a particular Stockholder had received 35,000 shares of FPC Common Stock
pursuant to the consummation of the Merger (which included 3,500 shares in the
escrow) and the applicable closing price of FPC Common Stock was $28.00, the
Separate Matters Limit for such Stockholder would be $980,000 (35,000 X
$28.00). By way of further example, if such Stockholder were to satisfy
$300,000 of an indemnification claim made under Section 16.3 and a separate
indemnifiable claim were then to be made against such Stockholder under Section
16.2 in the amount of $800,000, such Stockholder would be responsible as to
such claim for an amount equal to $680,000 ($980,000 - $300,000).
16.3 Indemnification by the Stockholders - Collective Representations,
Warranties and Covenants.
(a)Indemnification. The Stockholders covenant and agree that,
notwithstanding the delivery of any instruments of conveyance, any transfer of
the FMI Common Stock or any liquidation or dissolution of FMI, the Stockholders
(jointly and severally but subject to the limitations of liability provided for
in Section 16.3(b) below) will indemnify and hold harmless FPC from, for and
against any Losses arising in connection with or from:
(i)any inaccuracy, untruth or incompleteness in, or breach of, any
representation or warranty made by FMI and/or the Stockholders in Article 9 of
this Agreement, the exhibits associated therewith or any closing document
associated therewith delivered to FPC by FMI or by any of the Stockholders in
connection with the consummation of the Merger (to the extent the document so
delivered addresses or involves matters concerning FMI);
(ii) any failure of FMI, whether prior to or at the Closing, duly to
perform or observe any covenant or agreement hereunder on the part of FMI to be
performed or observed; and
(iii) any of the contingencies specifically identified on Exhibit 16.3, as
such Exhibit may be updated and agreed to at the Closing; but, as to any
environmental contingencies appearing thereon, only for the portion of the
aggregate Losses relating to such environmental contingencies that exceeds the
$25,000 accrual referenced on Exhibit 9.9. As to each such contingency,
Exhibit 16.3 sets forth (A) the number of shares associated with the specific
contingency which represent a maximum reasonably anticipated liability with
respect to the specific contingency, and (B) a date by which the parties
reasonably expect the specific contingency to be resolved.
(b)Limitations.
(i)Ownership Percentage Limitation. As to each Indemnification Claim (as
defined below), in no event shall a Stockholder's liability under this Section
16.3 exceed the product of (x) such Stockholder's Ownership Percentage
multiplied by (y) the lesser of (1) the amount of the Indemnification
Claim or (2) such Stockholder's Allocated Dollar Limit. For example, if a
particular Stockholder had an Ownership Percentage of 5% and if there were to
arise an indemnifiable claim of $2,000,000 under Section 16.3, such
Stockholder's liability for such claim would be limited to $100,000 (.05 X
$2,000,000).
(ii) Allocated Dollar Limit. In no event shall any Stockholder's liability
under this Section 16.3 exceed such Stockholder's Allocated Dollar Limit; and
in no event shall the total of such Stockholder's liability under this Section
16.3 and such Stockholder's liability under Section 16.2 exceed such
Stockholder's Separate Matters Limit. For these purposes, the "Allocated
Dollar Limit" for a Stockholder shall be equal to (x) such Stockholder's
Ownership Percentage multiplied by (y) the product of (1) 350,000 and (2) the
FPC Closing Date Closing Price. For example, if a particular Stockholder
had an Ownership Percentage of 5% and the closing price of the FPC Common Stock
was $28.57, such Stockholder's Allocated Dollar Limit would be $500,000 (.05 X
350,000 X $28.57). By way of further example, if a Stockholder's Separate
Matters Limit was $980,000 and if an indemnifiable claim of $600,000 made under
Section 16.2 were to have been satisfied by such Stockholder and thereafter an
indemnifiable claim of $12,000,000 were to be made under this Section 16.3,
such Stockholder would not be responsible for $500,000 of such claim (.05 X
350,000 X $28.57) but instead would be responsible for only $380,000 of such
claim ($980,000 - $600,000).
(iii) Basket Limit. FPC's right to indemnification against any Losses which
it or any of its Affiliates may suffer, incur or sustain arising out of or
attributable to the matters described in this Section 16.3 is also subject to
the limitation that FPC shall not be indemnified unless the aggregate amount of
Losses incurred, sustained or suffered by FPC and/or FPC's Affiliates with
respect to such matters described in this Section 16.3 exceeds $100,000 (the
"Basket"), in which case only the amount of Losses in excess of the Basket
shall be indemnifiable. This Basket limitation applies only to indemnification
under this Section 16.3 and shall not operate to require any minimum amount of
Losses before indemnification under Section 16.2 may be sought.
(c)Certain Indemnification Claims Pursuant to Section 16.3(a)(iii). As to
any environmental contingencies listed on Exhibit 16.3 which involve
environmental conditions in existence on April 1, 1989, FPC shall not be
entitled to require payment of the indemnification claim by the Stockholders
until FPC has caused FMI to have used reasonable good faith efforts to seek
indemnification from Halliburton Company for losses associated with such
environmental contingencies, based on FMI's rights to indemnification from
Halliburton Company under that certain Asset Purchase Agreement dated March
22, 1989. For purposes of any such contingency which is in the nature of an
environmental contingency, (i) such contingency shall be considered resolved
for all purposes of this Agreement, including specifically Section 16.9(a), if
and when FPC (or any subsidiary thereof) receives written confirmation
from each of the federal, state and local governmental agencies which FPC
reasonably believes has jurisdiction over such environmental matter to the
effect that the closure plan for such environmental matter has been
satisfactorily completed or (ii) if such governmental agency(ies) does(do) not
issue such written confirmation for that type of environmental matter, such
contingency shall be considered resolved for all purposes of this Agreement,
including specifically Section 16.9(a), if and when the independent
reputable environmental consulting firm which was responsible for the clean up
and remediation issues a written certification or report that the action taken
for the environmental clean up and remediation has been satisfactorily
completed.
16.4 Indemnification by FPC. FPC covenants and agrees that,
notwithstanding the delivery of any instruments of conveyance, and any
liquidation or dissolution of FPC, FPC will indemnify and hold harmless FMI and
the Stockholders from, for and against any Losses arising out of or resulting
from:
(i)any inaccuracy, untruth or incompleteness in, or breach of, any
representation or warranty made by FPC and/or the Merger Corporation, the
exhibits associated therewith or any closing document associated therewith
delivered to FMI and/or the Stockholders by FPC or Merger Corporation
in connection with the consummation of the Merger (to the extent such document
addresses matters concerning FPC or Merger Corporation); and
(ii) any failure of FPC or Merger Corporation, whether prior to, at or
after the Closing, duly to perform or observe any covenant or agreement
hereunder on the part of FPC or Merger Corporation to be performed or observed.
16.5 Procedures for Indemnification. As used herein, the term "Indemnitor"
means the party against whom indemnification hereunder is sought, and the term
"Indemnitee" means the party seeking indemnification hereunder.
(a)A claim for indemnification hereunder ("Indemnification Claim") shall be
made by Indemnitee by delivery of a written declaration to Indemnitor
requesting indemnification and specifying the basis on which indemnification is
sought and the amount of asserted Losses and, in the case of a Third
Party Claim (as defined in Section 16.6 hereof), containing (by attachment or
otherwise) such other information as Indemnitee shall have concerning such
Third Party Claim. If the Indemnitor is a Stockholder and the indemnification
arises under Section 16.2, the Indemnitee shall also deliver a copy of the
written declaration concerning the Indemnification Claim to each of the
Stockholders' Representatives; provided however that failure to provide the
Stockholders' Representatives with a copy of such written declaration shall not
in any way cause the claim for indemnification against the Stockholder to be
defective. If the Indemnitor is a Stockholder and the indemnification arises
under Section 16.3, the Indemnitee must notify the Stockholder by notifying the
Stockholders' Representatives and the Stockholder; provided however that
failure to provide any particular Stockholder with a copy of such written
declaration shall not in any way cause the claim for indemnification against
any of the other Stockholders to be defective.
(b)If the Indemnification Claim involves a Third Party Claim, the procedures
set forth in Section 16.6 hereof shall be observed by Indemnitee and
Indemnitor.
(c)If the Indemnification Claim involves a matter other than a Third Party
Claim, the Indemnitor shall have 15 business days from the receipt of written
declaration of such claim to object to such Indemnification Claim (except that
as to a contingency set forth on Exhibit 16.3, no Indemnitor may object thereto
based on the underlying basis of such Indemnification Claim if it is confirmed
in writing by an independent reputable environmental consulting firm that
remediation of the environmental contingency is required by any federal, state
or local law, rule or regulation) by delivery of a written notice of such
objection to Indemnitee specifying in reasonable detail the basis for such
objection; provided that as to an Indemnification Claim based on Section 16.3,
a written notice of such objection by one or both of the Stockholders'
Representatives within such time period shall constitute objections by each of
the Stockholders. Failure of the Indemnitor to timely so object to an
Indemnification Claim based on Section 16.2 shall constitute a final and
binding acceptance of the Indemnification Claim by the Indemnitor and the
Indemnification Claim shall be paid in accordance with subsection (d) hereof.
As to an Indemnification Claim based on Section 16.3, unless an Indemnitor or
the Stockholders' Representatives timely so objects, there shall be deemed to
be a final and binding acceptance of the Indemnification Claim by the
Indemnitor and the Indemnification Claim shall be paid in accordance with
subsection (d) hereof. Furthermore, as to an Indemnification Claim based on
Section 16.3, even if the Stockholders' Representatives have properly objected
to the Indemnification Claim, any Stockholder may accept or settle the
Indemnification Claim (as to such Stockholder's proportionate share (based on
his or her Ownership Interest) of such claim), in which event, such
Stockholder's proportionate share (based on his or her Ownership Interest) of
the Indemnification Claim (or the agreed settlement thereof) shall be paid by
such Stockholder in accordance with subsection (d) hereof. If an objection is
timely interposed by the Indemnitor (or as to an Indemnification Claim based on
Section 16.3, by either the Indemnitor or the Stockholders' Representatives)
and the dispute is not resolved by the Indemnitor (or as to an Indemnification
Claim based on Section 16.3, by either the Indemnitor or the Stockholders'
Representatives on behalf of the Indemnitor) and the Indemnitee on or before
the date which is 45 days from the date the Indemnitee receives such objection
(such period is hereinafter the "Negotiation Period"), such dispute, at the
request of either the Indemnitor or the Indemnitee, shall be resolved by
binding arbitration in accordance with the rules of the American Arbitration
Association, as more particularly provided for in Section 16.11.
Notwithstanding the above sentence to the contrary, to the extent such
Indemnification Claim exceeds $500,000, or to the extent such Indemnification
Claim plus all previous Indemnification Claims which were allowed by, or are
currently being decided by, arbitration pursuant to Section 16.11 exceeds
$1,000,000, then such dispute does not have to be resolved by arbitration in
accordance with Section 16.11 but may be resolved in any manner, including by
court proceedings, or if the parties agree, by arbitration (but not necessarily
in accordance with Section 16.11); provided however that if the Indemnification
Claims are being asserted by one or more Stockholders against FPC, then such
Stockholders may elect to resolve the dispute by arbitration in accordance with
Section 16.11 and, upon such election, FPC shall be bound to resolve such
dispute by arbitration in accordance with Section 16.11.
(d)Upon determination of the amount of an Indemnification Claim, whether by
agreement between Indemnitor (or as to an Indemnification Claim based on
Section 16.3, by either the Indemnitor or the Stockholders' Representatives on
behalf of the Indemnitor) and Indemnitee or by a binding arbitration decision
or by a nonappealable decision of a court of competent jurisdiction, Indemnitor
shall pay the amount of such Indemnification Claim (i) if the Indemnitor is
FPC, with FPC Common Stock (valued on the basis of the FPC Closing Date Closing
Price), together with the associated cash dividends on such shares from the
date of Closing, within 10 days of the date such amount is determined or (ii)
if the Indemnitor is a Stockholder, in the manner set forth in Section 16.10,
within 10 days of the date such amount is determined.
(e)For any Indemnification Claim based on Section 16.3 as to which the
Stockholders' Representatives have properly objected (whether or not a
Stockholder has also objected), the Stockholders' Representatives are hereby
authorized by each Stockholder (until FPC receives in writing a notice from
such Stockholder to the effect that such authorization has been revoked) to
reach agreement with FPC, as the Indemnitee, on behalf of each Stockholder
(including any Stockholder who has submitted a separate objection), with
respect to determining the amount of such Indemnification Claim; and any such
agreement by the Stockholders' Representatives shall be binding on the
Stockholders.
16.6 Defense of Third Party Claims. Should any claim be made, or suit or
proceeding (including, without limitation, a binding arbitration or an audit by
any taxing authority) be instituted against Indemnitee which, if prosecuted
successfully, would be a matter for which Indemnitee is entitled to
indemnification under this Agreement (a "Third Party Claim"), the obligations
and liabilities of the parties hereunder with respect to such Third Party Claim
shall be subject to the terms and conditions set forth in this Section 16.6.
The Indemnitee shall give the Indemnitor (or as to an Indemnification Claim
based on Section 16.3, to the Indemnitor and the Stockholders' Representatives)
written notice of any such claim after receipt by the Indemnitee of notice
thereof, and the Indemnitor (or as to an Indemnification Claim based on Section
16.3, the Indemnitor or the Stockholders' Representatives on behalf of the
Indemnitor) will undertake the defense thereof by representatives of its own
choosing reasonably acceptable to the Indemnitee. The assumption of the
defense of any such claim by the Indemnitor (or as to an Indemnification Claim
based on Section 16.3, the Indemnitor or the Stockholders' Representatives
on behalf of the Indemnitor) shall be an acknowledgement by the Indemnitor of
its obligation to indemnify the Indemnitee with respect to such claim
hereunder. If, however, the Indemnitor (or as to an Indemnification Claim
based on Section 16.3, the Indemnitor and also the Stockholders'
Representatives on behalf of the Indemnitor) fails or refuses to undertake the
defense of such claim within 10 days after written notice of such claim has
been given to the Indemnitor (or as to an Indemnification Claim based on
Section 16.3, the Indemnitor and the Stockholders' Representatives) by the
Indemnitee, the Indemnitee shall have the right to undertake the defense,
compromise and, subject to Section 16.7, settlement of such claim with counsel
of its own choosing. In the circumstances described in the preceding sentence,
the Indemnitee shall, promptly upon its assumption of the defense of such
claim, make an Indemnification Claim as specified in Section 16.5(a) which
shall be deemed an Indemnification Claim that is not a Third Party Claim for
the purposes of the procedures set forth herein. Notwithstanding any decision
by the Indemnitor (or as to an Indemnification Claim based on Section 16.3, the
Indemnitor or the Stockholders' Representatives on behalf of the Indemnitor) to
undertake the defense of the claim, the Indemnitee shall be entitled at its own
expense and through counsel of its own choosing to participate in the defense
of such claim and the settlement negotiations relating thereto. Such
participation shall not relieve any Indemnitor of its obligation to indemnify
the Indemnitee under this Article 16.
16.7 Settlement of Third Party Claims. No settlement of a Third Party
Claim involving the asserted liability of Indemnitor under this Article 16
shall be made without the prior written consent by or on behalf of Indemnitor
(or as to an Indemnification Claim based on Section 16.3, either the Indemnitor
or the Stockholders' Representatives on behalf of the Indemnitor), which
consent shall not be unreasonably withheld or delayed. Consent shall be
presumed in the case of settlements of $20,000 or less where the Indemnitor (or
as to an Indemnification Claim based on Section 16.3, the Indemnitor and also
the Stockholders' Representatives on behalf of the Indemnitor) has not
responded within 7 business days of notice of a proposed settlement. In the
event of any dispute regarding the reasonableness of a proposed settlement, the
party that will bear the larger financial loss resulting from such settlement
as between the Indemnitor and the Indemnitee shall make the final determination
in respect thereto, which determination shall be final and binding on all
involved parties.
16.8 Cooperation. For purposes of this Article 16 and where referenced in
Article 4, the parties to this Agreement shall execute such powers of attorney
as may reasonably be necessary or appropriate to permit participation of
counsel selected by any party hereto and, as may reasonably be related to any
such claim or action, shall provide access, to the extent reasonably necessary
under the circumstances, to the counsel, accountants and other representatives
of each party during normal business hours to all properties, personnel, books,
tax records, contracts, commitments and all other business records of such
other party and will furnish to such other party copies of all such documents
as may reasonably be requested (certified, if requested).
16.9 Limitations on Indemnification Obligations; Dealing with Unresolved
Claims at Deadline Date.
(a)The indemnification obligations hereunder for any of the contingencies
involving claims or losses which were known as of the Closing Date and are
specifically identified on Exhibit 16.3 (as such Exhibit may be updated and
agreed to at the Closing) shall continue until such specifically identified
contingencies are resolved or settled. Subject to the provisions of Section
16.9(b), indemnification obligations hereunder relating to misrepresentations
concerning those items expected to be identified in the process of auditing the
balance sheets must be settled on or before the date of completion of the first
audit of the combined or consolidated enterprises' financial statements. For
these purposes, the combined enterprises' financial statements shall mean the
combined financial statements of Progress Capital Holdings, Inc., its
subsidiaries and FMI. Subject to the provisions of Section 16.9(b), all other
indemnification obligations hereunder (other than the indemnification
obligations described in the first two sentences of this Section 16.9(a)) must
be resolved and settled within one year from the Closing Date. The respective
dates for resolution and settlement of claims (other than an Indemnification
Claim made pursuant to Section 16.3(a)(iii)) set forth in this Section 16.9(a)
are herein respectively referred to as the "Deadline Date."
(b)If by the respective Deadline Date (i) the rights of the Stockholders and
FPC with respect to an Indemnification Claim asserted by FPC (other than an
Indemnification Claim made pursuant to Section 16.3(a)(iii)) have not been
agreed upon between such parties and (ii) if submitted to arbitration or a
court of competent jurisdiction, such rights have not been finally determined
by a binding arbitration decision or nonappealable decision of the court, then
on the respective Deadline Date the Stockholders shall be required to deliver
to FPC a number of shares of FPC Common Stock in whole shares, having an
aggregate market value (as determined on the basis of the FPC Closing Date
Closing Price) most nearly equal to FPC's reasonable estimate of the amount of
the loss associated with the claim or claims remaining unsatisfied (or if any
of the Stockholders no longer hold sufficient shares to satisfy such estimate,
the Stockholder will deliver any shares still held and cover the excess of the
Stockholder's portion of the estimate by delivery of cash); and, in addition,
each of the Stockholders who delivers shares (or cash deemed to replace such
shares) will promptly also deliver to FPC the cash dividends that have been
received by such Stockholder with respect to any of such Stockholder's shares
so delivered to FPC (or with respect to the deemed shares represented by the
cash so delivered to FPC). In such event, after the Deadline Date, if it
should be finally determined by mutual agreement between the Stockholders
and FPC, a binding arbitration decision or non-appealable decision of the court
that FPC is not entitled to indemnification for any part or all of such claim
or claims, FPC will issue to those Stockholders who delivered shares (or cash,
as the case may be) to FPC to cover such claim or claims, the lesser of (A)
the number of such shares in whole shares, having an aggregate market value (as
determined on the basis of the FPC Closing Date Closing Price) most nearly
equal to the amount of the claim or claims in which it was determined that FPC
was not entitled to indemnification (together with the dividends attributable
to such shares or deemed shares, including any dividends that would have been
declared and received by the Stockholders on such shares had the Stockholders
held such shares or deemed shares during the period FPC held such shares) or
(B) the total number of shares (or cash, as the case may be) previously
distributed to FPC to cover the claim or claims (together with the dividends
attributable to such shares or deemed shares, including any dividends that
would have been declared and received by the Stockholders on such shares had
the Stockholders held such shares or deemed shares during the period
FPC held such shares).
(c) Upon the payment by a Stockholder of an Indemnification Claim because
of an inability to resolve the claim by the Deadline Date and if so requested
by the Stockholder or the Stockholders' Representatives, as the case may be,
FPC shall diligently pursue or defend (or in the sole reasonable discretion of
FPC, allow the Stockholder or Stockholders' Representatives to pursue or
defend, on behalf of FPC or FMI, as the case may be) recovery of any loss or
defense of any claim associated with the Indemnification Claim. If FPC pursues
recovery of the loss or defense of any claim, FPC will use its reasonable best
efforts to keep the Stockholder or the Stockholders' Representatives, as the
case may be, advised of the status of the pursuit of the recovery or defense of
the claim and will consult in good faith with the Stockholder or the
Stockholders' Representatives, as the case may be, as to the appropriate
action to take in pursuing the matter. If FPC allows a Stockholder or the
Stockholders' Representatives to pursue recovery of the loss or defense of any
claim, the Stockholder or the Stockholders' Representatives, as the case may
be, will use its or their reasonable best efforts to keep FPC advised of
the status of the matter and will consult in good faith with FPC, as to the
appropriate action to take in pursuing the recovery or defending the claim and
FPC shall cooperate with the Stockholder or Stockholders' Representatives, as
the case may be, in accordance with Section 16.8. If as a result of pursuing
such claim or defending such claim FPC or FMI subsequently recovers any or all
of such loss associated with the claim or ultimately does not suffer any or all
of such loss associated with the claim, FPC will promptly thereafter issue to
the Stockholders who delivered stock or cash to cover such estimate, the lesser
of (A) the number of shares in whole shares, having an aggregate market value
(as determined on the basis of the FPC Closing Date Closing Price) most nearly
equal to the amount of the recovery or avoided loss (together with the
dividends attributable to such shares from the Closing Date to the date of such
issuance), or (B) the number of shares in whole shares, having an aggregate
market value (as determined on the basis of the FPC Closing Date Closing Price)
most nearly equal to the amount of the claim covered by the Stockholders
(together with the dividends attributable to such shares from the Closing Date
to the date of such issuance). For example, if by the Deadline Date, FMI has
not collected certain accounts receivable existing on the Closing Date and, as
a result, 1,000 shares of FPC Common Stock collectively are delivered by the
Stockholders to FPC (together with the related cash dividends), then if
subsequent to the Deadline Date and as a result of FPC diligently pursuing the
collection of such accounts receivable, the accounts receivable are collected
in full, FPC would be obligated to issue to the Stockholders, on a
proportionate basis, 1,000 shares of FPC Common Stock and the dividends
attributable to such shares from the Closing Date to the date of such issuance.
(d)Upon the resolution or settlement of the indemnification obligations for
any of the contingencies involving claims or losses which were known as of the
Closing Date and are specifically identified on Exhibit 16.3 (as such Exhibit
may be updated and agreed to at the Closing), the Stockholders shall be
required to deliver to FPC a number of shares of FPC Common Stock in whole
shares, having an aggregate market value (as determined on the basis of the FPC
Closing Date Closing Price) most nearly equal to the amount of the
indemnification obligation to be payable as determined by such resolution or
settlement (or if any of the Stockholders no longer hold sufficient shares to
satisfy such amount, the Stockholder will deliver any shares still held and
cover the excess of the Stockholder's portion of the amount by delivery of
cash); and, in addition, each of the Stockholders who delivers shares (or cash
deemed to replace such shares) will promptly also deliver to FPC the cash
dividends that have been received by such Stockholder with respect to any of
such Stockholder's shares so delivered to FPC (or with respect to the deemed
shares represented by the cash so delivered to FPC).
(e) All matters for which no Indemnification Claim has been made as of the
respective applicable Deadline Date (other than those matters specifically
identified on Exhibit 16.3, as such Exhibit may be updated and agreed to at the
Closing) will thereafter no longer be subject to indemnification hereunder.
16.10 Settlement of Indemnification Obligations; Setoff.
(a)The amount by which the Stockholders are liable to FPC for
Indemnification Claims hereunder (either by agreement of the parties, pursuant
to an arbitration award or otherwise) shall first be covered by recourse
against the escrowed shares attributable to the respective Stockholder that
remain on deposit in the escrow at such time, and the excess of such
Indemnification Claims over the value of such escrowed shares (as determined on
the basis of the FPC Closing Date Closing Price) may be recovered by FPC as
provided in subsection (b) of this Section 16.10.
(b)The indemnification obligations of the Stockholders contained in this
Article 16 must be satisfied by the delivery to FPC of FPC Common Stock, valued
on the basis of the FPC Closing Date Closing Price; provided that if at the
time such indemnification obligation is to be satisfied no stock remains in the
escrow and the Stockholder does not continue to own sufficient FPC Common Stock
to satisfy the obligation, the portion of the indemnification obligation which
exceeds the shares of FPC Common Stock which are delivered (valued on the basis
of the FPC Closing Date Closing Price) shall be satisfied instead by a payment
of cash.
16.11 Arbitration of Indemnification Claims.
(a)Conduct of Arbitration. Any dispute, controversy or claim arising out of
or relating to indemnification under this Agreement which is to be resolved by
arbitration shall be resolved, decided or settled by arbitration in accordance
with and through the American Arbitration Association Rules in effect when such
case is placed in arbitration (the "AAA Rules"), except as modified herein.
Such arbitration shall be held in the State of Texas. The arbitration shall be
conducted by a single neutral arbitrator who shall be appointed by the American
Arbitration Association. The party requesting arbitration shall set forth in a
written statement in adequate detail the issues to be arbitrated and deliver
such written statement to the arbitrator and to the other parties to the
dispute; and within 15 days from the receipt of such written statement, the
other parties involved in the dispute may set forth in adequate detail in a
separate written statement additional related issues to be arbitrated which
separate written statement shall be delivered to the arbitrator and to the
party requesting arbitration. Within 10 days of delivering such separate
written statement, each party to the dispute shall furnish to the other parties
and to the arbitrator a notice ("Decision Notice") setting forth the decision
(on a word for word basis) that such party wishes the arbitrator to make with
respect to the issues to be arbitrated. Within 10 days after the giving of
the latter of the Decision Notices, the parties shall attend a meeting
("Meeting") at a mutually acceptable time and place to discuss fully the
content of such Decision Notices and based thereon determine whether any of the
parties wish to modify their Decision Notices in any way. Any such
modifications shall be discussed with each party involved in the disputed
matter, so that when each party finalizes its Decision Notices, it shall do so
with full knowledge of the content of the other party's final Decision Notice.
The finalization of such Decision Notices and the delivery of same by each
party to the other parties shall occur at the Meeting unless by mutual
agreement they agree to have one or more additional Meetings for such purposes.
The arbitrator shall not take any evidence directly from witnesses and shall
not consider any documents other than this Agreement and the Decision Notices
presented by the parties. The arbitrator shall, as expeditiously as possible
(and if possible within 45 days after the selection of the arbitrator) render a
written decision on the matter submitted for arbitration. Such arbitrator
shall be required to adopt a decision set forth in the final Decision Notices
and shall have no power whatsoever to reach any other result. Such arbitrator
shall adopt the decision that in his or her judgment is the more fair,
equitable and in conformance with the intent and spirit of this Agreement,
taken as a whole. Such award shall be final and binding upon both parties.
Judgment upon the award rendered by the arbitrator may be entered in any court
of competent jurisdiction in any state, or application may be made to such
court for a judicial acceptance of the award and an enforcement, as the law
of such jurisdiction may require or allow. The substantive law to be applied
to any case determined pursuant to this Section 16.11 is that of the State of
Texas. The expenses of the arbitration shall be borne among the parties to the
arbitration as determined by the arbitrator; provided that each party shall pay
for and bear the cost of preparing its own statements and decision notices.
The party prevailing in such arbitration may recover its reasonable attorneys'
fees.
(b)Notice. All notices to be given in connection with the arbitration shall
be in writing pursuant to the provisions of Section 20.9 hereof.
16.12 Remedies Upon Breach. Upon a breach of any provision of this
Agreement by any party hereto, except as provided in Article 7, the rights and
remedies shall be determined exclusively and solely under the provisions of
this Agreement, more specifically, this Article 16, Articles 4, 15 and 19,
Section 20.4, Section 20.11 and Section 20.14.
ARTICLE 17
CERTAIN ACCOUNTING AND TAX MATTERS; POST CLOSING MATTERS
17.1 Closing Balance Sheet. As soon as practicable after the Closing Date,
but in any event within 90 days after the Closing Date, FPC shall cause FMI to
prepare a balance sheet with respect to FMI as of the close of business on the
Closing Date, which balance sheet shall be prepared on the same basis, in the
same format and using substantially similar methods, principles and procedures
as used in preparing the balance sheet included in the Year End Statements, all
in accordance with generally accepted accounting principles consistently
applied.
17.2 Pooling of Interest. Each of the Stockholders acknowledges that FPC
and Merger Corporation expect that the Merger will qualify for pooling of
interest accounting treatment under generally accepted accounting principles
and agrees that such Stockholder will not take any action or omit to take any
action which is identified on Exhibit 17.2 to the extent such action could, or
is of such a similar nature to a matter identified on Exhibit 17.2 that it is
reasonable for one to believe that such action or inaction could, result in the
inability for FPC and Merger Corporation to treat the acquisition as qualifying
for such accounting treatment.
17.3 Tax-Free Reorganization; Continuity of Interest.
(a)Each of the Stockholders and FPC acknowledge that the Merger is intended
to qualify as a tax-free reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code and agrees to report the acquisition
transaction for federal and, if applicable, state income tax purposes as
such.
(b)No Stockholder has any present plan, intention, or arrangement to dispose
of any of the FPC Common Stock received pursuant to the Closing of this
Agreement if such disposition would reduce the fair market value of the FPC
Common Stock (with such fair market value measured as of the Closing
Date) retained by such Stockholder to an amount less than 50% of the fair
market value of the FMI Common Stock held by such Stockholder immediately
before the Closing and no Stockholder will have such a plan, intention or
arrangement as of the Closing Date.
ARTICLE 18
STOCKHOLDERS' REPRESENTATIVES
The Stockholders hereby irrevocably designate and appoint John Mason and
Allan Kvasnicka as their agents and attorneys in fact (the "Stockholders'
Representatives") with full power and authority until all indemnification
rights hereunder have been satisfied or otherwise expired to execute, deliver,
and receive on their behalf all notices, requests, and other communications
hereunder, to fix and alter on their behalf the date, time and place of the
Closing, to waive, amend or modify any provisions of this Agreement,
to deal with any indemnification claim asserted by FPC under Section 16.3 and
to take such other action on their behalf in connection with this Agreement,
the Closing, and the transactions contemplated hereby as such agent or agents
deem appropriate; provided, however, that no such waiver, amendment or
modification may be made if it would decrease the number of shares to be issued
to the Stockholders under Article 3 hereof or increase the extent of their
obligation to indemnify FPC under Article 16 hereof.
ARTICLE 19
TERMINATION
19.1 Right to Terminate. This Agreement may be terminated at any time
prior to the Closing, and the transactions contemplated hereby may be abandoned
at any such time, as provided below:
(a)FPC, FMI and the Stockholders may terminate this Agreement by mutual
consent of all such parties hereto;
(b)FPC or Merger Corporation may terminate this Agreement by giving written
notice to FMI and the Stockholders (i) in the event FMI or any of the
Stockholders has breached any representation, warranty or covenant contained in
this Agreement so as to cause a condition precedent to closing set forth
in Article 13 to be unsatisfied, FPC or Merger Corporation has notified FMI and
the Stockholders of the breach, and the breach has continued without cure for a
period of 15 days after the notice of breach, or (ii) if the Closing shall not
have occurred on or before December 31, 1994 by reason of a failure of any
condition precedent under Article 13 hereof (unless the failure results
primarily from FPC or Merger Corporation breaching any representation, warranty
or covenant contained in this Agreement); and
(c)FMI or the Stockholders may terminate this Agreement by giving written
notice to FPC and Merger Corporation (i) in the event FPC or Merger Corporation
has breached any representation, warranty or covenant contained in this
Agreement so as to cause a condition precedent to closing set forth in Article
14 to be unsatisfied, FMI or any of the Stockholders has notified FPC and
Merger Corporation of the breach, and the breach has continued without cure for
a period of 15 days after the notice of breach, or (ii) if the Closing shall
not have occurred on or before December 31, 1994 by reason of a failure of any
condition precedent under Article 14 hereof (unless the failure results
primarily from FMI or any of the Stockholders breaching any representation,
warranty or covenant contained in this Agreement).
19.2 Effectiveness of Termination. Termination of this Agreement and
abandonment of the transactions contemplated hereby shall be deemed effective
on the date mutually agreed upon by the parties, or, in the event of
termination by unilateral action, on the date specified in a written notice to
the other parties.
19.3 Liability Upon Termination. Upon proper termination by unilateral
action pursuant to this Article 19, the party having defaulted in the
performance of a covenant or having made an untrue statement (including without
limitation any statement which is discovered to be untrue as a result of a
supplemental disclosure made pursuant to Section 12.9) shall be liable to the
terminating party only to the extent of (and not exceeding) (i) the reasonable
attorneys' fees incurred by the terminating party in connection with this
Agreement and in anticipation of the consummation of the transactions
contemplated hereby and (ii) the portion of the filing fees associated with the
HSR Act filings paid by the terminating party.
ARTICLE 20
GENERAL
20.1 No Brokers. Each of the parties to this Agreement represents and
warrants, each to the others, that it has not utilized the services of any
finder, broker or agent except that the Stockholders acknowledge that they are
solely responsible for any investment banking fees and expenses that may be
due and owing to Corporate Acquisitions, Inc. Each of the parties agrees to
indemnify the other parties against and hold them harmless from any and all
liabilities to any person, firm or corporation claiming any broker's or
finder's fee or commission of any kind on account of services rendered on
behalf of such corporation in connection with the transactions contemplated by
this Agreement.
20.2 Survival of Representations, Warranties, Etc. Each of the
Stockholders, FPC and Merger Corporation covenants and agrees that his, her or
its representations, warranties, covenants, statements and agreements contained
in this Agreement and the exhibits hereto and any document delivered in
connection herewith shall survive the Closing Date and until expiration of the
period for indemnification with respect to the respective representations,
warranties, covenants, statements and agreements as more particularly set forth
in Section 16.9. FMI's representations, warranties, covenants, statements and
agreements contained in this Agreement and the exhibits hereto and any document
delivered in connection herewith shall not survive the Closing Date; provided
that the nonsurvival of FMI's representations, warranties, covenants,
statements and agreements (i) shall not in any way affect the survival of the
representations, warranties, covenants, statements and agreements of the
Stockholders, including those made together with FMI or (ii) in any way limit
(based on any theory of contribution or otherwise) the indemnification
obligations hereunder of the Stockholders.
20.3 Waivers. No waiver of any breach or delay in enforcing the terms of
this Agreement shall be valid and effective unless the same shall be in writing
and signed by the waiving party. No waiver of any breach or delay in enforcing
the terms of this Agreement shall operate or be construed as a waiver of any
subsequent breach. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein, therein and in any document
delivered in connection herewith or therewith.
20.4 Specific Enforcement. The parties agree and acknowledge that in the
event of a breach by any of the parties of any other material provision of this
Agreement, damages at law will be an insufficient remedy to the other party.
Accordingly, the parties agree that, in addition to any other remedies or
rights that may be available to any of them, the parties shall also each be
entitled, upon application to a court of competent jurisdiction, to obtain
temporary or permanent injunctions to compel specific performance of the
obligations of the other party under this Agreement.
20.5 Expenses. Each of the parties to this Agreement shall pay its own
expenses in connection with this Agreement and the transactions contemplated
hereby, including the fees and expenses of its counsel and its certified public
accountants and other experts. Notwithstanding the foregoing, FPC and
Merger Corporation, on the one hand, and the Stockholders, jointly and
severally on the other hand, will bear 50% of the reasonably incurred filing
fees associated with the HSR filings.
20.6 Press Releases. FPC shall not make or release, FMI shall not make or
release, and each Stockholder shall not make or release, any statement or
public disclosure concerning this Agreement or the transactions contemplated by
this Agreement to any medium of public communication except (1) upon
the prior written agreement of FPC and the Stockholders' Representatives, or
(2) as its counsel may advise is required by law, and then, as to FMI or any of
the Stockholders, only after giving FPC an opportunity to comment thereon, and,
as to FPC, only after giving the Stockholders' Representatives an opportunity
to comment thereon.
20.7 Confidentiality. All documents and information (written and oral)
furnished to the parties to this Agreement or to which such parties are given
access shall be treated by each party as the sole property of the party
furnishing the information until consummation of the transactions contemplated
by this Agreement and, upon termination of this Agreement for any reason
without completion of the Closing, the party receiving the information shall
return to the party which furnished such information all documents or other
materials containing, reflecting or referring to such information, shall keep
confidential all such information, and shall not directly or indirectly use
such information for any competitive purpose. The obligations under this
Section 20.7 shall not apply to disclosures required by applicable law, or to
any information which was already in the possession of the party receiving the
information prior to the disclosure thereof by the party furnishing the
information; was then generally known to the public; became known to the public
through no fault of the party receiving the information; or was disclosed to
the party receiving the information by a third party not bound by an obligation
of confidentiality. If the transactions contemplated by this Agreement are not
consummated, then each of the parties to this Agreement agrees to keep
confidential and shall not use for its own benefit any of the information
(unless in the public domain) obtained from any other party and shall promptly
return to such other parties all schedules, documents or other written
information (without retaining copies thereof) previously obtained from such
other parties.
20.8 Securities Law. Each party acknowledges and is aware that applicable
state and federal securities laws prohibit any person who has material
non-public information about a company from purchasing or selling the
securities of that company. FMI and each of the Stockholders further
acknowledge that, during the course of the transactions contemplated by this
Agreement, FMI and its employees, agents and Affiliates and the Stockholders
may become privy to material non-public information regarding FPC and/or Merger
Corporation or their Affiliates. FMI and each of the Stockholders agree and
acknowledge that such material non-public information will be the property of
the entity which such information concerns. FMI and each of the Stockholders
covenant and agree that they will not, and will not suffer or permit any of
their employees, agents or Affiliates to, disclose to any third person or make
use of any such material non-public information in connection with the purchase
or sale of any securities. The foregoing covenants regarding material
non-public information shall not apply to the extent that such information is
publicly disclosed by FPC or Merger Corporation or any of their Affiliates or
otherwise publicly disclosed in accordance with law by a person other than FPC
or Merger Corporation, or their respective employees, agents or Affiliates.
20.9 Notices. Any notice, request, demand or other communication which is
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given (1) if transmitted by telecopy, electronic
telephone line facsimile transmission or other similar electronic or digital
transmission method, when transmitted; (2) if sent by a nationally recognized
next day delivery service that obtains a receipt on delivery, the day after it
is sent; (3) if mailed, first class registered or certified United States mail,
postage prepaid, five days after it is sent; and (4) in any other case, when
actually received. In each case, notice shall be sent to:
If to FPC or Merger Corporation:
c/o Progress Rail Services Corporation
Barnett Tower
One Progress Plaza
St. Petersburg, Florida 33701
Telecopier: (813) 824-6601
Attn: Vice President
With copies to:
Florida Progress Corporation
Progress Capital Holdings, Inc.
Barnett Tower
One Progress Plaza
St. Petersburg, Florida 33701
Telecopier: (813) 824-6537
Attn: General Counsel
and
Gary I. Teblum
Trenam, Simmons, Kemker, Scharf, Barkin
Frye & O'Neill
P.O. Box 1102
Tampa, Florida 33601
If to the Stockholders:
Anne B. Windfohr
c/o John Mason
President
Burnett Oil Co., Inc.
801 Cherry Street, Suite 1500
Fort Worth, Texas 76102
John Marion
c/o John Mason
President
Burnett Oil Co., Inc.
801 Cherry Street, Suite 1500
Fort Worth, Texas 76102
John Mason
John Mason
President
Burnett Oil Co., Inc.
801 Cherry Street, Suite 1500
Fort Worth, Texas 76102
Sam Braunagel
Sam Braunagel
2927 Maple Ave. #205
Dallas, Texas 75201
Allan J. Kvasnicka
Allan J. Kvasnicka
President
Corporate Acquisitions, Inc.
5430 LBJ Freeway, Suite 1600
Dallas, Texas 75240
Craig W. Wycoff
Craig W. Wycoff
Senior Associate
Corporate Acquisitions, Inc.
5430 LBJ Freeway, Suite 1600
Dallas, Texas 75240
O. Elwyn Seay
O. Elwyn Seay
c/o FM Industries, Inc.
8600 Will Rogers Blvd.
Fort Worth, Texas 76132
Leo Kane
Leo Kane
c/o FM Industries, Inc.
8600 Will Rogers Blvd.
Fort Worth, Texas 76132
With respect to John Mason, John Marion and/or Anne Windfohr, with a copy
to:
Don Plattsmier
Kelly, Hart & Hallman
201 Main Street, Suite 2500
Fort Worth, Texas 76102
If to FMI:
FM Industries, Inc.
Three Lincoln Centre, Suite 1600
5430 LBJ Freeway
Dallas, Texas 75240
Attn: Allan Kvasnicka
Telecopier: 214-788-5462
With a copy to:
Douglas A. Tatum
Youngblood & Owens, LC
Plaza of the Americas
600 North Pearl, Suite 600
Dallas, Texas 75201
or to such other address as a party may have specified in writing to the other
parties using the procedures specified above in this Section 20.9.
20.10 Assignability. No party hereto may assign either this Agreement or
any of his, her or its rights, interests or obligations hereunder without the
prior written consent of all other parties; provided however that after the
Closing FPC may, without prior consent of FMI or the Stockholders, (i) assign
all or part of FPC's rights and interests hereunder to one or more of its
affiliates and (ii) designate one or more of its affiliates to perform its
obligations hereunder (in any or all of which cases FPC nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
20.11 Venue; Process. The parties to this Agreement agree that jurisdiction
and venue in any action brought pursuant to this Agreement to enforce its terms
or otherwise with respect to the relationships between the parties shall
properly lie in the Circuit Court of the Sixth Judicial Circuit of the
State of Florida in and for Pinellas County or in the United States District
Court for the Middle District of Florida, Tampa Division. Such jurisdiction
and venue are merely permissive; jurisdiction and venue shall also continue to
lie in any court where jurisdiction and venue would otherwise be proper. The
parties agree that they will not object that any action commenced in the
foregoing jurisdictions is commenced in a forum non conveniens. The parties
further agree that the mailing by certified or registered mail, return receipt
requested, of any process required by any such court shall constitute valid
and lawful service of process against them, without the necessity for service
by any other means provided by statute or rule of court.
20.12 Further Assurances. Each party to this Agreement will execute and
deliver, or cause to be executed and delivered, such additional or further
documents, agreements or instruments and shall cooperate with one another in
all respects for the purpose of carrying out the transactions contemplated
by this Agreement.
20.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original, but all of which
together shall constitute one and the same instrument, and shall become
effective when each of the parties has executed at least one of the
counterparts even if all the parties have not executed the same counterpart.
20.14 Applicable Law; Construction and Interpretation.
(a)This Agreement shall be construed pursuant to and governed by the
substantive laws of the State of Texas (but any provision of Texas law shall
not apply if the application of such provision would result in the application
of the law of a state or jurisdiction other than Texas).
(b)The headings of the various sections in this Agreement are inserted for
the convenience of the parties and shall not affect the meaning, construction
or interpretation of this Agreement.
(c)Any provision of this Agreement which is determined by a court of
competent jurisdiction to be prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or nonauthorization without invalidating the
remaining provisions hereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction. In any such case, such
determination shall not affect any other provision of this Agreement, and the
remaining provisions of this Agreement shall remain in full force and effect.
If any provision or term of this Agreement is susceptible to two or more
constructions or interpretations, one or more of which would render the
provision or term void or unenforceable, the parties agree that a construction
or interpretation which renders the term or provision valid shall be favored.
20.15 Time of the Essence. Time is of the essence under this Agreement.
20.16 Integration of Agreement. This Agreement supersedes all prior
agreements, oral and written, between the parties hereto with respect to the
subject matter hereof. Neither this Agreement, nor any provision hereof, may
be changed, waived, discharged, supplemented, or terminated orally, but only by
an agreement in writing signed by the party against which the enforcement of
such change, waiver, discharge, or termination is sought.
20.17 Submission of Draft. The submission of a draft of this Agreement or a
summary of some or all of its provisions does not constitute an offer to
acquire or to sell FMI, it being understood and agreed that neither FPC, Merger
Corporation, FMI nor any of the Stockholders shall be legally obligated
with respect to an acquisition of FMI unless and until this Agreement has been
executed by all parties hereto and a fully executed copy has been delivered.
20.18 Effect of Investigation. Any inspection, preparation, or compilation
of information or Exhibits, or audit of the inventories, properties, financial
condition, or other matters relating to FMI conducted by or on behalf of FPC or
Merger Corporation pursuant to this Agreement shall in no way limit, affect, or
impair the ability of FPC or Merger Corporation to rely upon the
epresentations, warranties, covenants, and agreements of FMI and the
Stockholders set forth herein or limit, affect or impair the indemnification
obligations hereunder of any of the Stockholders. All statements contained
in any certificate or Exhibit delivered by or on behalf of FMI or any of the
Stockholders pursuant to this Agreement shall be deemed representations and
warranties hereunder by FMI or the respective Stockholder, as the case may be.
Any information included on any Exhibit in response to the disclosure required
in such Exhibit shall be deemed to be included in any other Exhibit to this
Agreement if (i) it is apparent from the face of the disclosure made in the
first Exhibit that such disclosure is also responsive to the disclosure
required in the other Exhibit and (ii) the disclosure in the first Exhibit
contains all information which would be required to be disclosed with respect
to such matter in the other Exhibit.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by each of the individual
parties hereto and signed by an officer thereunto duly authorized and attested
under the corporate seal by the Secretary or Assistant Secretary of each of the
corporate parties, all on the date first above written.
WITNESSES: FLORIDA PROGRESS CORPORATION
/s/Ralph S. Mucci
- ----------------------- By: /s/Richard D. Keller
------------------------
Group Vice-President
/s/Gary I. Teblum
- -----------------------
ATTEST: FM INDUSTRIES, INC.
(Corporate Seal)
/s/William R. Frazier By: /s/O. Elwyn Seay
- ----------------------- -----------------------
Secretary President
ATTEST: EFC MERGER CORP.
(Corporate Seal)
/s/Ralph S. Mucci By: /s/James V. Smallwood
- ----------------------- ----------------------
Assistant Secretary Vice President
WITNESSES:
/s/Don C. Plattsman /s/Anne B. Windfohr
- ----------------------- ---------------------
ANNE B. WINDFOHR
/s/John W. Mason
- -----------------------
/s/Don C. Plattsman /s/John Marion
- ----------------------- --------------------
JOHN MARION
/s/John W. Mason
- -----------------------
/s/Sam Braunagel /s/John Mason
- ----------------------- --------------------
JOHN MASON
/s/Craig W. Wycoff
- -----------------------
/s/Craig W. Wycoff /s/Sam Braunagel
- ----------------------- --------------------
SAM BRAUNAGEL
/s/John W. Mason
- -----------------------
/s/Leo Kane /s/Allan J. Kvasnicka
- ----------------------- ---------------------
ALLAN J. KVASNICKA
/s/O. Elwyn Seay
- -----------------------
/s/Sam Braunagel /s/Craig W. Wycoff
- ----------------------- --------------------
CRAIG W. WYCOFF
/s/John W. Mason
- -----------------------
/s/Leo Kane /s/O. Elwyn Seay
- ----------------------- --------------------
O. ELWYN SEAY
/s/Allan J. Kvasnicka
- -----------------------
/s/O. Elwyn Seay /s/Leo Kane
- ----------------------- --------------------
LEO KANE
/s/Allan J. Kvasnicka
- -----------------------
<PAGE>
EXHIBITS
<PAGE>
EXHIBIT 7.1(j)
STOCKHOLDER ACKNOWLEDGEMENT
WHEREAS, the undersigned (the "Stockholder") is to be issued shares of
Common Stock (the "Shares") of Florida Progress Corporation (the "Company")
pursuant to the merger and acquisition of FM Industries, Inc.;
NOW THEREFORE, in consideration of the agreement of the Company to pursue
registration of the Stockholder's Shares with the Securities and Exchange
Commission (the "Commission") on a Form S-3 Registration Statement (the
"Registration Statement"), which contains therein a reoffer prospectus (the
"Reoffer Prospectus"), and intending to be legally bound, the undersigned
hereby agrees as follows:
1. The Stockholder acknowledges receipt of a Memorandum dated November
22, 1994 from the Company describing the responsibilities of the Selling
Stockholders under the Reoffer Prospectus (the "Memorandum"), and further
acknowledges that the Stockholder has carefully read the Memorandum and, to the
extent necessary, has discussed the Memorandum with the Stockholder's counsel
or counsel for FM Industries, Inc.
2. The Stockholder shall not offer to sell, sell or otherwise dispose
of, and shall not purchase or solicit others to purchase, shares of Common
Stock of the Company in violation of any federal or state securities laws,
including without limitation the Securities Act of 1933, and the Securities
Exchange Act of 1934 and Rules 10b-2, 10b-6 and 10b-7 thereunder.
3. If the Stockholder plans to sell any Shares covered by the Reoffer
Prospectus otherwise than in an ordinary brokerage transaction in which the
broker does not solicit purchases, the Stockholder will notify the Company in
advance of such proposed sale in accordance with the Memorandum, and will not
complete the sale until after the Stockholder either has received a prospectus
supplement describing the sale or has received confirmation from the Company
that no such supplement is required.
4. In addition to any notice that may be required pursuant to paragraph
3 above, the Stockholder shall promptly notify the Company in writing following
each sale of any of the Stockholder's Shares, whether such sale is pursuant to
an ordinary brokerage transaction or otherwise. Such notice shall state the
number of Shares sold by the Stockholder, shall describe the manner in which
the sale was consummated, and shall be delivered by mail or telecopy to the
Company at 3201 34th Street South, St. Petersburg, FL 33711 Attn: Douglas E.
Wentz, telecopy number (813) 866-4021.
By__________________________________
Signature of Selling Stockholder
_______________________ ____________________________________
Date Print Name of Selling Stockholder
EXHIBIT 5
Florida Progress Corporation
One Progress Plaza
St. Petersburg, FL 33701
813/824-6508
Fax: 813/824-6501
Kenneth E. Armstrong
Vice President, General Counsel
and Secretary
December 15, 1994
Florida Progress Corporation
One Progress Plaza
St. Petersburg, FL 33701
Re: Issuance and Sale of Shares of Common Stock, Without Par Value
Ladies and Gentlemen:
On December 1, 1994, Florida Progress Corporation (the "Company") issued
700,000 shares of the Company's Common Stock, without par value (the "Shares"),
to the shareholders (the "Selling Stockholders") of FM Industries, Inc. ("FMI")
in connection with the acquisition of FMI pursuant to an Agreement and Plan of
Merger dated as of December 1, 1994 (the "Merger Agreement") by and among the
Company, EFC Merger Corp., FMI and the Selling Stockholders named therein. The
Board of Directors of the Company authorized the issuance of the Shares
pursuant to the Merger Agreement, and further authorized its officers to take
the necessary action to register the Shares for resale from time to time by the
Selling Stockholders and to file a Registration Statement on Form S-3 with the
Securities and Exchange Commission (the "Commission") pursuant to Rule 415
under the Securities Act of 1933 (the "Act").
As your counsel, I have participated in the preparation of a Registration
Statement on Form S-3 which the Company expects to file with the Commission on
or about December 15, 1994, relating to the registration of 350,000 of the
Shares, together with the associated Rights (as such term is defined in the
Shareholder Rights Agreement dated November 21, 1991 between the Company and
Chemical Bank, successor to Manufacturers Hanover Trust Company, as Rights
Agent (the "Shareholder Rights Agreement")) (such 350,000 Shares, together with
the associated Rights, being hereinafter collectively referred to as the "New
Stock"). I also have examined the Merger Agreement, the Company's Restated
Articles of Incorporation, as amended, its current Bylaws, the Shareholder
Rights Agreement, and the resolutions adopted by the Company's Board of
Directors on November 17, 1994 with respect to the Shares.
Florida Progress Corporation
December 15, 1994
Page 2
Based upon and subject to the foregoing, I am of the opinion that:
1. The Company is a corporation duly organized and existing under the
laws of the State of Florida;
2. When the Company issued the Shares to the Selling Stockholders, all
requisite corporate action had been taken with respect to the issuance and sale
of the Shares by the Company, and the Shares were duly authorized, validly
issued, fully paid and non-assessable; and
3. After the Registration Statement shall have become effective, all
requisite corporate action will have been taken by the Company with respect to
the registration of the New Stock for resale by the Selling Stockholders, and
the New Stock, when sold by the Selling Stockholders, will continue to be duly
authorized, validly issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-3, referred to above, and to the use of my
name under the captions "Legal Matters" and "Experts" in the related
Prospectus.
Very truly yours,
/s/Kenneth E. Armstrong
Kenneth E. Armstrong
Vice President, General Counsel
and Secretary
I:\EFC\Opinion.EX5
EXHIBIT 23.(a)
KPMG PEAT MARWICK LLP
Certified Public Accountants
P.O. Box 31002
St. Petersburg, FL 33732
The Board of Directors
Florida Progress Corporation
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus. Our
report refers to changes in the methods of accounting for income taxes and
postretirement benefits other than pensions.
/s/KPMG Peat Marwick LLP
December 15, 1994
